[Congressional Record Volume 156, Number 80 (Tuesday, May 25, 2010)]
[Senate]
[Pages S4239-S4394]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




           RESTORING AMERICAN FINANCIAL STABILITY ACT OF 2010

  On Thursday, May 20, 2010, the Senate passed H.R. 4173, as amended, 
as follows:

                               H.R. 4173

       Resolved, That the bill from the House of Representatives 
     (H.R. 4173) entitled ``An Act to provide for financial 
     regulatory reform, to protect consumers and investors, to 
     enhance Federal understanding of insurance issues, to 
     regulate the over-the-counter derivatives markets, and for 
     other purposes.'', do pass with the following amendments:
       Strike all after the enacting clause and insert the 
     following:

     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.
Sec. 171. Leverage and risk-based capital requirements.

                TITLE II--ORDERLY LIQUIDATION AUTHORITY

Sec. 201. Definitions.
Sec. 202. Judicial review.
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.
Sec. 212. Prohibition of circumvention and prevention of conflicts of 
              interest.
Sec. 213. Ban on senior executives and directors.
Sec. 214. Prohibition on taxpayer funding.

 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 of the Office 
              of Thrift Supervision.
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.
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.

[[Page S4240]]

                           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--WALL STREET TRANSPARENCY AND ACCOUNTABILITY

Sec. 701. Short title.

        Subtitle A--Regulation of Over-the-Counter Swaps Markets

                      PART I--Regulatory Authority

Sec. 711. Definitions.
Sec. 712. Review of regulatory authority.
Sec. 713. Recommendations for changes to portfolio margining laws.
Sec. 714. Abusive swaps.
Sec. 715. Authority to prohibit participation in swap activities.
Sec. 716. Prohibition against Federal Government bailouts of swaps 
              entities.
Sec. 717. New product approval--CFTC-SEC process.
Sec. 718. Determining status of novel derivative products.

                  PART II--Regulation of Swap Markets

Sec. 721. Definitions.
Sec. 722. Jurisdiction.
Sec. 723. Clearing.
Sec. 724. Swaps; segregation and bankruptcy treatment.
Sec. 725. Derivatives clearing organizations.
Sec. 726. Rulemaking on conflict of interest.
Sec. 727. Public reporting of swap transaction data.
Sec. 728. Swap data repositories.
Sec. 729. Reporting and recordkeeping.
Sec. 730. Large swap trader reporting.
Sec. 731. Registration and regulation of swap dealers and major swap 
              participants.
Sec. 732. Conflicts of interest.
Sec. 733. Swap execution facilities.
Sec. 734. Derivatives transaction execution facilities and exempt 
              boards of trade.
Sec. 735. Designated contract markets.
Sec. 736. Margin.
Sec. 737. Position limits.
Sec. 738. Foreign boards of trade.
Sec. 739. Legal certainty for swaps.
Sec. 740. Multilateral clearing organizations.
Sec. 741. Enforcement.
Sec. 742. Retail commodity transactions.
Sec. 743. Other authority.
Sec. 744. Restitution remedies.
Sec. 745. Enhanced compliance by registered entities.
Sec. 746. Insider trading.
Sec. 747. Antidisruptive practices authority.
Sec. 748. Commodity whistleblower incentives and protection.
Sec. 749. Conforming amendments.
Sec. 750. Study on oversight of carbon markets.
Sec. 751. Energy and Environmental Markets Advisory Committee.
Sec. 752. International harmonization.
Sec. 753. Antimarket manipulation authority.
Sec. 754. Effective date.

         Subtitle B--Regulation of Security-Based Swap Markets

Sec. 761. Definitions under the Securities Exchange Act of 1934.
Sec. 762. Repeal of prohibition on regulation of security-based swap 
              agreements.
Sec. 763. Amendments to the Securities Exchange Act of 1934.
Sec. 764. Registration and regulation of security-based swap dealers 
              and major security-based swap participants.
Sec. 765. Rulemaking on conflict of interest.
Sec. 766. Reporting and recordkeeping.
Sec. 767. State gaming and bucket shop laws.
Sec. 768. Amendments to the Securities Act of 1933; treatment of 
              security-based swaps.
Sec. 769. Definitions under the Investment Company Act of 1940.
Sec. 770. Definitions under the Investment Advisors Act of 1940.
Sec. 771. Other authority.
Sec. 772. Jurisdiction.
Sec. 773. 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. Disqualifying felons and other ``bad actors'' from 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.

[[Page S4241]]

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. Removal of statutory references to credit 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.
Sec. 939D. Initial credit rating assignments.

  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. Designated Federal Entity Inspectors General Independence.
Sec. 989C. Strengthening Inspector General accountability.
Sec. 989D. Removal of inspectors general of designated Federal 
              entities.
Sec. 989E. Additional oversight of financial regulatory system.

   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. Small business data collection.
Sec. 1072. GAO study on the effectiveness and impact of various 
              appraisal methods.
Sec. 1073. Prohibited payments to mortgage originators.
Sec. 1074. Minimum standards for residential mortgage loans.
Sec. 1075. Prohibition on certain prepayment penalties.
Sec. 1076. Assistance for economically vulnerable individuals and 
              families.
Sec. 1077. Remittance transfers.
Sec. 1078. Department of the Treasury study on ending the 
              conservatorship of Fannie Mae, Freddie Mac, and reforming 
              the housing finance system.
Sec. 1079. Reasonable fees and rules for payment card transactions.
Sec. 1079A. Use of Consumer Reports.

                   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.

[[Page S4242]]

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. Small business fairness and regulatory transparency.
Sec. 1105. 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.
Sec. 1159. GAO audit of the Federal Reserve facilities; Publication of 
              Board actions.

    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.

                      TITLE XIII--PAY IT BACK ACT

Sec. 1301. Short title.
Sec. 1302. Amendment to reduce TARP authorization.
Sec. 1303. Report.
Sec. 1304. Amendments to Housing and Economic Recovery Act of 2008.
Sec. 1305. Federal Housing Finance Agency report.
Sec. 1306. Repayment of unobligated ARRA funds.

                        TITLE XIV--MISCELLANEOUS

Sec. 1401. Restrictions on use of Federal funds to finance bailouts of 
              foreign governments.

                   TITLE XV--CONGO CONFLICT MINERALS

Sec. 1501. Sense of Congress on exploitation and trade of columbite-
              tantalite, cassiterite, gold, and wolframite originating 
              in Democratic Republic of Congo.
Sec. 1502. Disclosure to Securities and Exchange Commission relating to 
              columbite-tantalite, cassiterite, gold, and wolframite 
              originating in Democratic Republic of Congo.
Sec. 1503. Report.

     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.

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       (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) predominantly engaged in, including through a branch 
     in the United States, financial activities, as defined in 
     paragraph (6).
       (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) predominantly engaged in financial activities as 
     defined in paragraph (6).
       (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) Predominantly engaged.--A company is ``predominantly 
     engaged in financial activities'' if--
       (A) the annual gross revenues derived by the company and 
     all of its subsidiaries from activities that are financial in 
     nature (as defined in section 4(k) of the Bank Holding 
     Company Act of 1956) and, if applicable, from the ownership 
     or control of one or more insured depository institutions, 
     represents 85 percent or more of the consolidated annual 
     gross revenues of the company; or
       (B) the consolidated assets of the company and all of its 
     subsidiaries related to activities that are financial in 
     nature (as defined in section 4(k) of the Bank Holding 
     Company Act of 1956) and, if applicable, related to the 
     ownership or control of one or more insured depository 
     institutions, represents 85 percent or more of the 
     consolidated assets of the company.
       (7) 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 requirements for determining if 
     a company is predominantly engaged in financial activities, 
     as defined in subsection (a)(6).
       (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

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     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) Anti-evasion.--
       (1) Determinations.--In order to avoid evasion of this Act, 
     the Council, on its own initiative or at the request of the 
     Board of Governors, may determine, 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, 
     that--
       (A) material financial distress related to financial 
     activities conducted directly or indirectly by a company 
     incorporated or organized under the laws of the United States 
     or any State or the financial activities in the United States 
     of a company incorporated or organized in a country other 
     than the United States would pose a threat to the financial 
     stability of the United States based on consideration of the 
     factors in subsection (b)(2);
       (B) the company is organized or operates in such a manner 
     as to evade the application of this title;
       (C) such financial activities of the company shall be 
     supervised by the Board of Governors and subject to 
     prudential standards in accordance with this title consistent 
     with paragraph (2); and
       (D) upon making a determination under subsection (c)(1), 
     the Council shall submit a report to the appropriate 
     committees of Congress detailing the reasons for making such 
     determination under this subsection.
       (2) Consolidated supervision of only financial activities; 
     Establishment of an intermediate holding company.
       (A) Establishment of an intermediate holding company.--Upon 
     a determination under paragraph (1), the company may 
     establish an intermediate holding company in which the 
     financial activities of such company and its subsidiaries 
     will be conducted (other than the activities described in 
     section 167(b)(2) in compliance with any regulations or 
     guidance provided by the Board of Governors). Such 
     intermediate holding company shall be subject to the 
     supervision of the Board of Governors and to prudential 
     standards under this title as if the intermediate holding 
     company is a nonbank financial company supervised by the 
     Board of Governors.
       (B) Action of the board of governors.--To facilitate the 
     supervision of the financial activities subject to the 
     determination in paragraph (1), the Board of Governors may 
     require a company to establish an intermediate holding 
     company, as provided for in section 167, which would be 
     subject to the supervision of the Board of Governors and to 
     prudential standards under this title as if the intermediate 
     holding company is a nonbank financial company supervised by 
     the Board of Governors.
       (3) Notice and opportunity for hearing and final 
     determination; judicial review.--Subsections (d), (f), and 
     (g) shall apply to determinations made by the Council 
     pursuant to paragraph (1) in the same manner as such 
     subsections apply to nonbank financial companies.
       (4) Covered financial activities.--For purposes of this 
     subsection, the term ``financial activities'' means 
     activities that are financial in nature (as defined in 
     section 4(k) of the Bank Holding Company Act of 1956) and 
     include the ownership or control of one or more insured 
     depository institutions and shall not include internal 
     financial activities conducted for the company or any 
     affiliates thereof including internal treasury, investment, 
     and employee benefit functions.

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       (5) Only financial activities subject to prudential 
     supervision.--Nonfinancial activities of the company shall 
     not be subject to supervision by the Board of Governors and 
     prudential standards of the Board. For purposes of this Act, 
     the financial activities that are the subject of the 
     determination in paragraph (1) shall be subject to the same 
     requirements as a nonbank financial company. Nothing in this 
     paragraph shall prohibit or limit the authority of the Board 
     of Governors to apply prudential standards under this title 
     to the financial activities that are subject to the 
     determination in paragraph (1).
       (d) 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.
       (e) 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).
       (f) 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.
       (g) 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).
       (h) 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

[[Page S4246]]

     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

[[Page S4247]]

     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

[[Page S4248]]

     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.

[[Page S4249]]

       (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

[[Page S4250]]

     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

[[Page S4251]]

     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

[[Page S4252]]

     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.

     SEC. 171. LEVERAGE AND RISK-BASED CAPITAL REQUIREMENTS.

       (a) Definitions.--
       (1) Generally applicable leverage capital requirements.--
     The term ``generally applicable leverage capital 
     requirements'' means--
       (A) the minimum ratios of tier 1 capital to average total 
     assets, as established by the appropriate Federal banking 
     agencies to apply to insured depository institutions under 
     the prompt corrective action regulations implementing section 
     38 of the Federal Deposit Insurance Act, regardless of total 
     consolidated asset size or foreign financial exposure; and
       (B) includes the regulatory capital components in the 
     numerator of that capital requirement, average total assets 
     in the denominator of that capital requirement, and the 
     required ratio of the numerator to the denominator.
       (2) Generally applicable risk-based capital requirements.--
     The term ``generally applicable risk-based capital 
     requirements'' means--
       (A) the risk-based capital requirements as established by 
     the appropriate Federal banking agencies to apply to insured 
     depository institutions under the agency's Prompt Corrective 
     Action regulations that implement section 38 of the Federal 
     Deposit Insurance Act, regardless of total consolidated asset 
     size or foreign financial exposure; and
       (B) includes the regulatory capital components in the 
     numerator of those capital requirements, the risk-weighted 
     assets in the denominator of those capital requirements, and 
     the required ratio of the numerator to the denominator.
       (b) Minimum Capital Requirements.--
       (1) Minimum leverage capital requirements.--The appropriate 
     Federal banking agencies shall establish minimum leverage 
     capital requirements on a consolidated basis for insured 
     depository institutions, depository institution holding 
     companies, and nonbank financial companies identified under 
     section 113. The minimum leverage capital requirements 
     established under this paragraph shall not be less than the 
     generally applicable leverage capital requirements, which 
     shall serve as a floor for any capital requirements the 
     agency may require, nor quantitatively lower than the 
     generally applicable leverage capital requirements that were 
     in effect for insured depository institutions as of the date 
     of enactment of this Act.
       (2) Minimum risk-based capital requirements.--The 
     appropriate Federal banking agencies shall establish minimum 
     risk-based capital requirements on a consolidated basis for 
     insured depository institutions, depository institution 
     holding companies, and nonbank financial companies identified 
     under section 113. The minimum risk-based capital 
     requirements established under this paragraph shall not be 
     less than the generally applicable risk-based capital 
     requirements, which shall serve as a floor for any capital 
     requirements the agency may require, nor quantitatively lower 
     than the generally applicable risk-based capital requirements 
     that were in effect for insured depository institutions as of 
     the date of enactment of this Act.
       (3) Capital requirements to address activities that pose 
     risks to the financial system.--
       (A) In general.--Subject to the recommendations of the 
     Council, in accordance with section 120, the Federal banking 
     agencies shall develop capital requirements applicable to all 
     institutions covered by this section that address the risks 
     that the activities of such institutions pose, not only to 
     the institution engaging in the activity, but to other public 
     and private stakeholders in the event of adverse performance, 
     disruption, or failure of the institution or the activity.
       (B) Content.--Such rules shall address, at a minimum, the 
     risks arising from--
       (i) significant volumes of activity in derivatives, 
     securitized products purchased and sold, financial guarantees 
     purchased and sold, securities borrowing and lending, and 
     repurchase agreements and reverse repurchase agreements;
       (ii) concentrations in assets for which the values 
     presented in financial reports are based on models rather 
     than historical cost or prices deriving from deep and liquid 
     2-way markets; and
       (iii) concentrations in market share for any activity that 
     would substantially disrupt financial markets if the 
     institution is forced to unexpectedly cease the activity.

                TITLE II--ORDERLY LIQUIDATION AUTHORITY

     SEC. 201. DEFINITIONS.

       (a) In General.--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

[[Page S4253]]

     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) 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 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.), a governmental entity, 
     or a regulated entity, as defined under section 1303 of the 
     Federal Housing Enterprises Financial Safety and Soundness 
     Act of 1992 (12 U.S.C. 4502(20)).
       (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) Court.--The term ``Court'' means the United States 
     District Court for the District of Columbia.
       (16) SIPC.--The term ``SIPC'' means the Securities Investor 
     Protection Corporation.
       (b) Definitional Criteria.--For purpose of the definition 
     of the term ``financial company'' under subsection (a)(10), 
     no company shall be deemed to be 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)), if the consolidated revenues of such company 
     from such activities constitute less than 85 percent of the 
     total consolidated revenues of such company, as the 
     Corporation, in consultation with the Secretary, shall 
     establish by regulation. In determining whether a company is 
     a financial company under this title, the consolidated 
     revenues derived from the ownership or control of a 
     depository institution shall be included.

     SEC. 202. JUDICIAL REVIEW.

       (a) Commencement of Orderly Liquidation.--
       (1) Petition to district court.--
       (A) District court review.--
       (i) Petition to district court.--Subsequent to a 
     determination by the Secretary under section 203 that a 
     financial company satisfies the criteria in section 203(b), 
     the Secretary shall notify the Corporation and the covered 
     financial company. If the board of directors (or body 
     performing similar functions) of the covered financial 
     company acquiesces or consents to the appointment of the 
     Corporation as a receiver, the Secretary shall appoint the 
     Corporation as a receiver. If the board of directors (or body 
     performing similar functions) of the covered financial 
     company does not acquiesce or consent to the appointment of 
     the Corporation as receiver, the Secretary shall petition the 
     United States District Court for the District of Columbia for 
     an order authorizing the Secretary to appoint the Corporation 
     as a 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 Court. The petition shall 
     be filed under seal.
       (iii) Determination.--On a strictly confidential basis, and 
     without any prior public disclosure, the Court, after notice 
     to the covered financial company and a hearing in which the 
     covered financial company may oppose the petition, shall 
     determine whether the determination of the Secretary that the 
     covered financial company is in default or in danger of 
     default and satisfies the definition of a financial company 
     under section 201(10) is arbitrary and capricious.
       (iv) Issuance of order.--If the Court determines that the 
     determination of the Secretary that the covered financial 
     company is in default or in danger of default and satisfies 
     the definition of a financial company under section 201(10)--

       (I) is not arbitrary and capricious, the Court shall issue 
     an order immediately authorizing the Secretary to appoint the 
     Corporation as receiver of the covered financial company; or
       (II) is arbitrary and capricious, the Court 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).

       (v) Petition granted by operation of law.--If the Court 
     does not make a determination within 24 hours of receipt of 
     the petition--

       (I) the petition shall be granted by operation of law;
       (II) the Secretary shall appoint the Corporation as 
     receiver; and
       (III) liquidation under this title shall automatically and 
     without further notice or action be commenced and the 
     Corporation may immediately take all actions authorized under 
     this title.

       (B) Effect of determination.--The determination of the 
     Court 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 Court shall provide immediately for the 
     record a written statement of each reason supporting the 
     decision of the Court, 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 district court.--
       (A) Appeal to court of appeals.--
       (i) In general.--Subject to clause (ii), the United States 
     Court of Appeals for the District of Columbia Circuit shall 
     have jurisdiction of an appeal of a final decision of the 
     Court 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 Court 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 and satisfies 
     the definition of a financial company under section 201(10) 
     is arbitrary and capricious.
       (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 and satisfies 
     the definition of a financial company under section 201(10) 
     is arbitrary and capricious.
       (b) Establishment and Transmittal of Rules and 
     Procedures.--
       (1) In general.--Not later than 6 months after the date of 
     enactment of this Act, the Court 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 (a)(1).
       (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) the Committee on the Judiciary of the Senate;
       (B) the Committee on Banking, Housing, and Urban Affairs of 
     the Senate;
       (C) the Committee on the Judiciary of the House of 
     Representatives; and
       (D) the Committee on Financial Services of the House of 
     Representatives.
       (c) 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.
       (d) Time Limit on Receivership Authority.--
       (1) Baseline period.--Any appointment of the Corporation as 
     receiver under this section shall terminate at the end of the 
     3-year period beginning on the date on which such appointment 
     is made.
       (2) Extension of time limit.--The time limit established in 
     paragraph (1) may be extended by the Corporation for up to 1 
     additional year, if the Chairperson of the Corporation 
     determines and certifies in writing to the Committee on 
     Banking, Housing, and Urban Affairs of the Senate and the 
     Committee on Financial Services of the House of 
     Representatives that continuation of the receivership is 
     necessary--
       (A) to--
       (i) maximize the net present value return from the sale or 
     other disposition of the assets of the covered financial 
     company; or
       (ii) minimize the amount of loss realized upon the sale or 
     other disposition of the assets of the covered financial 
     company; and

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       (B) to protect the stability of the financial system of the 
     United States.
       (3) Second extension of time limit.--
       (A) In general.--The time limit under this subsection, as 
     extended under paragraph (2), may be extended for up to 1 
     additional year, if the Chairperson of the Corporation, with 
     the concurrence of the Secretary, submits the certifications 
     described in paragraph (2).
       (B) Additional report required.--Not later than 30 days 
     after the date of commencement of the extension under 
     subparagraph (A), the Corporation 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 describing the need for the extension and 
     the specific plan of the Corporation to conclude the 
     receivership before the end of the second extension.
       (4) Ongoing litigation.--The time limit under this 
     subsection, as extended under paragraph (3), may be further 
     extended solely for the purpose of completing ongoing 
     litigation in which the Corporation as receiver is a party, 
     provided that the appointment of the Corporation as receiver 
     shall terminate not later than 90 days after the date of 
     completion of such litigation, if--
       (A) the Council determines that the Corporation used its 
     best efforts to conclude the receivership in accordance with 
     its plan before the end of the time limit described in 
     paragraph (3);
       (B) the Council determines that the completion of longer-
     term responsibilities in the form of ongoing litigation 
     justifies the need for an extension; and
       (C) the Corporation submits a report approved by the 
     Council not later than 30 days after the date of the 
     determinations by the Council under subparagraphs (A) and (B) 
     to the Committee on Banking, Housing, and Urban Affairs of 
     the Senate and the Committee on Financial Services of the 
     House of Representatives, describing--
       (i) the ongoing litigation justifying the need for an 
     extension; and
       (ii) the specific plan of the Corporation to complete the 
     litigation and conclude the receivership.
       (5) Regulations.--The Corporation may issue regulations 
     governing the termination of receiverships under this title.
       (6) No liability.--The Corporation and the Deposit 
     Insurance Fund shall not be liable for unresolved claims 
     arising from the receivership after the termination of the 
     receivership.
       (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 Court, 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 Court; 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).
       (g) Study of Prompt Corrective Action Implementation by the 
     Appropriate Federal Agencies.--
       (1) Study.--The Comptroller General of the United States 
     shall conduct a study regarding the implementation of prompt 
     corrective action by the appropriate Federal banking 
     agencies.
       (2) Issues to be studied.--In conducting the study under 
     paragraph (1), the Comptroller General shall evaluate--
       (A) the effectiveness of implementation of prompt 
     corrective action by the appropriate Federal banking agencies 
     and the resolution of insured depository institutions by the 
     Corporation; and
       (B) ways to make prompt corrective action a more effective 
     tool to resolve the insured depository institutions at the 
     least possible long-term cost to the Deposit Insurance Fund.
       (3) Report to council.--Not later than 1 years after the 
     date of enactment of this Act, the Comptroller General shall 
     submit a report to the Council on the results of the study 
     conducted under this subsection.
       (4) Council report of action.--Not later than 6 months 
     after the date of receipt of the report from the Comptroller 
     General under paragraph (3), the Council 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 actions taken in response 
     to the report, including any recommendations made to the 
     Federal primary financial regulatory agencies under section 
     120.

     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;
       (F) an evaluation of the effects on creditors, 
     counterparties, and shareholders of the financial company and 
     other market participants; and
       (G) an evaluation of whether the company satisfies the 
     definition of a financial company under section 201.
       (b) Determination by the Secretary.--Notwithstanding any 
     other provision of Federal or State law, the Secretary shall 
     take action in accordance with section 202(a)(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;
       (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; and
       (7) the company satisfies the definition of a financial 
     company under section 201.
       (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

[[Page S4255]]

     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 shall file a report with 
     the Committee on Banking, Housing, and Urban Affairs of the 
     Senate and the Committee on Financial Services of the House 
     of Representatives--
       (i) setting forth information on the financial condition of 
     the covered financial company as of the date of the 
     appointment, including a description of its assets and 
     liabilities;
       (ii) describing the plan of, and actions taken by, the 
     Corporation to wind down the covered financial company;
       (iii) explaining each instance in which the Corporation 
     waived any applicable requirements of part 366 of title 12, 
     Code of Federal Regulations (or any successor thereto) with 
     respect to conflicts of interest by any person in the private 
     sector who was retained to provide services to the 
     Corporation in connection with such receivership;
       (iv) describing the reasons for the provision of any 
     funding to the receivership out of the Fund;
       (v) setting forth the expected costs of the orderly 
     liquidation of the covered financial company;
       (vi) setting forth the identity of any claimant that is 
     treated in a manner different from other similarly situated 
     claimants under subsection (b)(4), (d)(4), or (h)(5)(E), the 
     amount of any additional payment to such claimant under 
     subsection (d)(4), and the reason for any such action; and
       (vii) which report the Corporation shall publish on an 
     online website maintained by the Corporation, subject to 
     maintaining appropriate confidentiality.
       (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.
       (C) Congressional testimony.--The Corporation and the 
     primary financial regulatory agency, if any, of the financial 
     company for which the Corporation was appointed receiver 
     under this title shall appear before Congress, if requested, 
     not later than 30 days after the date on which the 
     Corporation first files the reports required under 
     subparagraph (A).
       (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(a) 
     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, so 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)(11), funds for the orderly liquidation of the covered 
     financial company. All funds provided by the Corporation 
     under this subsection shall have a priority of claims under 
     subparagraph (A) or (B) of section 210(b)(1), as applicable, 
     including funds used for--
       (1) making loans to, or purchasing any debt obligation of, 
     the covered financial company or any covered subsidiary;
       (2) purchasing or guaranteeing against loss the assets of 
     the covered financial company or any covered subsidiary, 
     directly or through an entity established by the Corporation 
     for such purpose;
       (3) assuming or guaranteeing the obligations of the covered 
     financial company or any covered subsidiary to 1 or more 
     third parties;
       (4) taking a lien on any or all assets of the covered 
     financial company or any covered subsidiary, including a 
     first priority lien on all

[[Page S4256]]

     unencumbered assets of the covered financial company or any 
     covered subsidiary to secure repayment of any transactions 
     conducted under this subsection;
       (5) selling or transferring all, or any part, of such 
     acquired assets, liabilities, or obligations of the covered 
     financial company or any covered subsidiary; and
       (6) making payments pursuant to subsections (b)(4), (d)(4), 
     and (h)(5)(E) of section 210.

     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, and 
     address the potential for conflicts of interest between or 
     among individual receiverships established under this title 
     or under the Federal Deposit Insurance Act. 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.

[[Page S4257]]

       (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

[[Page S4258]]

     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

[[Page S4259]]

       (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

[[Page S4260]]

     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), (C), and (D) of subsection (b)(1), 
     but senior to all other unsecured liabilities defined in 
     subsection (b)(1)(E), 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) Wages, salaries, or commissions, including vacation, 
     severance, and sick leave pay earned by an individual (other 
     than an individual described in subparagraph (G)), but only 
     to the extent of $11,725 for each individual (as indexed for 
     inflation, by regulation of the Corporation) earned not later 
     than 180 days before the date of appointment of the 
     Corporation as receiver.
       (D) Contributions owed to employee benefit plans arising 
     from services rendered not later than 180 days before the 
     date of appointment of the Corporation as receiver, to the 
     extent of the number of employees covered by each such plan, 
     multiplied by $11,725 (as indexed for inflation, by 
     regulation of the Corporation), less the aggregate amount 
     paid to such employees under subparagraph (C), plus the 
     aggregate amount paid by the receivership on behalf of such 
     employees to any other employee benefit plan.
       (E) Any other general or senior liability of the covered 
     financial company (which is not a liability described under 
     subparagraph (F), (G), or (H)).
       (F) Any obligation subordinated to general creditors (which 
     is not an obligation described under subparagraph (G) or 
     (H)).
       (G) Any wages, salaries, or commissions including vacation, 
     severance, and sick leave pay earned, owed to senior 
     executives and directors of the covered financial company.
       (H) 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 initiate and continue operations essential to 
     implementation of the receivership or any bridge financial 
     company;

[[Page S4261]]

       (iii) to maximize the present value return from the sale or 
     other disposition of the assets of the covered financial 
     company; or
       (iv) 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

[[Page S4262]]

       (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,

[[Page S4263]]

     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 3rd 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

[[Page S4264]]

     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 3rd 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 3rd 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(a)(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

[[Page S4265]]

     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) Limitations.--
       (i) Prohibition.--The Corporation shall not make any 
     payments or credit amounts to any claimant or category of 
     claimants that would result in any claimant receiving more 
     than the face value amount of any claim that is proven to the 
     satisfaction of the Corporation.
       (ii) No obligation.--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.

[[Page S4266]]

       (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)(11), 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)(D)(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)(11), 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,

[[Page S4267]]

     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

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     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 (6), 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 (6), 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.--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.
       (5) 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, plus an interest rate 
     surcharge to be determined by the Secretary, which shall be 
     greater than the difference between--
       (i) the current average rate on an index of corporate 
     obligations of comparable maturity; and
       (ii) the current average rate 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.
       (6) 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 for each 
     covered financial company would exceed--
       (A) an amount that is equal to 10 percent of the total 
     consolidated assets of the covered financial company, based 
     on the most recent financial statement available, during the 
     30-day period immediately following the date of appointment 
     of the Corporation as receiver (or a shorter time period if 
     the Corporation has calculated the amount described under 
     subparagraph (B)); and
       (B) the amount that is equal to 90 percent of the fair 
     value of the total consolidated assets of each covered 
     financial company that are available for repayment, after the 
     time period described in subparagraph (A).
       (7) 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.
       (8) 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) the authorities of the Corporation contained in this 
     title shall not be used to assist the Deposit Insurance Fund 
     or to assist any financial company under applicable law other 
     than this Act;
       (ii) the authorities of the Corporation relating to the 
     Deposit Insurance Fund, or any other responsibilities of the 
     Corporation under applicable law other than this title, shall 
     not be used to assist a covered financial company pursuant to 
     this title; and
       (iii) the Deposit Insurance Fund may not be used in any 
     manner to otherwise circumvent the purposes of 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.
       (9) 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, including taking any actions 
     specified under section 204(d) and subsection (h)(2)(G)(iv) 
     and (h)(9) of this section, and payments to third parties. 
     The Corporation may, at any time, amend any orderly 
     liquidation plan approved by the Secretary with the 
     concurrence of the Secretary.
       (10) Implementation expenses.--
       (A) In general.--Reasonable implementation expenses of the 
     Corporation incurred after the date of enactment of this Act 
     shall be treated as expenses of the Council.
       (B) Requests for reimbursement.--The Corporation shall 
     periodically submit a request for reimbursement for 
     implementation expenses to the Chairperson of the Council, 
     who shall arrange for prompt reimbursement to the Corporation 
     of reasonable implementation expenses.
       (C) Definition.--As used in this paragraph, the term 
     ``implementation expenses''--
       (i) means costs incurred by the Corporation beginning on 
     the date of enactment of this Act, as part of its efforts to 
     implement this title that do not relate to a particular 
     covered financial company; and
       (ii) includes the costs incurred in connection with the 
     development of policies, procedures, rules, and regulations 
     and other planning activities of the Corporation consistent 
     with carrying out this title.
       (o) Assessments.--
       (1) Risk-based assessments.--
       (A) 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.
       (B) Assessments.--The Corporation shall charge one or more 
     risk-based assessments in accordance with the provisions of 
     subparagraph (D), if 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.
       (C) 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.
       (D) Application of assessments.--To meet the requirements 
     of subparagraph (C), the Corporation shall--
       (i) impose assessments, as soon as practicable, on any 
     claimant that received additional payments or amounts from 
     the Corporation pursuant to subsection (b)(4), (d)(4), or 
     (h)(5)(E), except for payments or amounts necessary to 
     initiate and continue operations essential to implementation 
     of the receivership or any bridge financial company, to 
     recover on a cumulative basis, the entire difference 
     between--

       (I) the aggregate value the claimant received from the 
     Corporation on a claim pursuant to this title (including 
     pursuant to subsection (b)(4), (d)(4), and (h)(5)(E)), as of 
     the date on which such value was received; and
       (II) the value the claimant was entitled to receive from 
     the Corporation on such claim solely from the proceeds of the 
     liquidation of the covered financial company under this 
     title; and

[[Page S4269]]

       (ii) if the amounts to be recovered on a cumulative basis 
     under clause (i) are insufficient to meet the requirements of 
     subparagraph (C), after taking into account the 
     considerations set forth in paragraph (4), impose assessments 
     on--

       (I) eligible financial companies; and
       (II) financial companies with total consolidated assets 
     equal to or greater than $50,000,000,000 that are not 
     eligible financial companies.

       (E) Provision of financing.--Payments or amounts necessary 
     to initiate and continue operations essential to 
     implementation of the receivership or any bridge financial 
     company described in subparagraph (E)(i) shall not include 
     the provision of financing, as defined by rule of the 
     Corporation, to third parties.
       (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, in consultation with the Secretary, 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 prescribe 
     regulations to carry out this subsection. The Corporation 
     shall consult with the Secretary in the development and 
     finalization of such regulations.
       (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.
       (s) Recoupment of Compensation From Senior Executives and 
     Directors.--
       (1) In general.--The Corporation, as receiver of a covered 
     financial company, may recover from any current or former 
     senior executive or director substantially responsible for 
     the failed condition of the covered financial company any 
     compensation received during the 2-year period preceding the 
     date on which the Corporation was appointed as the receiver 
     of the covered financial company, except that, in the case of 
     fraud, no time limit shall apply.
       (2) Cost considerations.--In seeking to recover any such 
     compensation, the Corporation shall weigh the financial and 
     deterrent benefits of such recovery against the cost of 
     executing the recovery.
       (3) Rulemaking.--The Corporation shall promulgate 
     regulations to implement the requirements of this subsection, 
     including defining the term ``compensation'' to mean any 
     financial remuneration, including salary, bonuses, 
     incentives, benefits, severance, deferred compensation, or 
     golden parachute benefits, and any profits realized from the 
     sale of the securities of the covered financial company.

     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)

[[Page S4270]]

     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,''.
       (d) FDIC Inspector General Reviews.--
       (1) Scope.--The Inspector General of the Corporation shall 
     conduct, supervise, and coordinate audits and investigations 
     of the liquidation of any covered financial company by the 
     Corporation as receiver under this title, including 
     collecting and summarizing--
       (A) a description of actions taken by the Corporation as 
     receiver;
       (B) a description of any material sales, transfers, 
     mergers, obligations, purchases, and other material 
     transactions entered into by the Corporation;
       (C) an evaluation of the adequacy of the policies and 
     procedures of the Corporation under section 203(d) and 
     orderly liquidation plan under section 210(n)(14);
       (D) an evaluation of the utilization by the Corporation of 
     the private sector in carrying out its functions, including 
     the adequacy of any conflict-of-interest reviews; and
       (E) an evaluation of the overall performance of the 
     Corporation in liquidating the covered financial company, 
     including administrative costs, timeliness of liquidation 
     process, and impact on the financial system.
       (2) Frequency.--Not later than 6 months after the date of 
     appointment of the Corporation as receiver under this title 
     and every 6 months thereafter, the Inspector General of the 
     Corporation shall conduct the audit and investigation 
     described in paragraph (1).
       (3) Reports and testimony.--The Inspector General of the 
     Corporation shall include in the semiannual reports required 
     by section 5(a) of the Inspector General Act of 1978 (5 
     U.S.C. App.), a summary of the findings and evaluations under 
     paragraph (1), and shall appear before the appropriate 
     committees of Congress, if requested, to present each such 
     report.
       (4) Funding.--
       (A) Initial funding.--The expenses of the Inspector General 
     of the Corporation in carrying out this subsection shall be 
     considered administrative expenses of the receivership.
       (B) Additional funding.--If the maximum amount available to 
     the Corporation as receiver under this title is insufficient 
     to enable the Inspector General of the Corporation to carry 
     out the duties under this subsection, the Corporation shall 
     pay such additional amounts from assessments imposed under 
     section 210.
       (5) Termination of responsibilities.--The duties and 
     responsibilities of the Inspector General of the Corporation 
     under this subsection shall terminate 1 year after the date 
     of termination of the receivership under this title.
       (e) Treasury Inspector General Reviews.--
       (1) Scope.--The Inspector General of the Department of the 
     Treasury shall conduct, supervise, and coordinate audits and 
     investigations of actions taken by the Secretary related to 
     the liquidation of any covered financial company under this 
     title, including collecting and summarizing--
       (A) a description of actions taken by the Secretary under 
     this title;
       (B) an analysis of the approval by the Secretary of the 
     policies and procedures of the Corporation under section 203 
     and acceptance of the orderly liquidation plan of the 
     Corporation under section 210; and
       (C) an assessment of the terms and conditions underlying 
     the purchase by the Secretary of obligations of the 
     Corporation under section 210.
       (2) Frequency.--Not later than 6 months after the date of 
     appointment of the Corporation as receiver under this title 
     and every 6 months thereafter, the Inspector General of the 
     Department of the Treasury shall conduct the audit and 
     investigation described in paragraph (1).
       (3) Reports and testimony.--The Inspector General of the 
     Department of the Treasury shall include in the semiannual 
     reports required by section 5(a) of the Inspector General Act 
     of 1978 (5 U.S.C. App.), a summary of the findings and 
     assessments under paragraph (1), and shall appear before the 
     appropriate committees of Congress, if requested, to present 
     each such report.
       (4) Termination of responsibilities.--The duties and 
     responsibilities of the Inspector General of the Department 
     of the Treasury under this subsection shall terminate 1 year 
     after the date on which the obligations purchased by the 
     Secretary from the Corporation under section 210 are fully 
     redeemed.
       (f) Primary Financial Regulatory Agency Inspector General 
     Reviews.--
       (1) Scope.--Upon the appointment of the Corporation as 
     receiver for a covered financial company supervised by a 
     Federal primary financial regulatory agency or the Board of 
     Governors under section 165, the Inspector General of the 
     agency or the Board of Governors shall make a written report 
     reviewing the supervision by the agency or the Board of 
     Governors of the covered financial company, which shall--
       (A) evaluate the effectiveness of the agency or the Board 
     of Governors in carrying out its supervisory responsibilities 
     with respect to the covered financial company;
       (B) identify any acts or omissions on the part of agency or 
     Board of Governors officials that contributed to the covered 
     financial company being in default or in danger of default;
       (C) identify any actions that could have been taken by the 
     agency or the Board of Governors that would have prevented 
     the company from being in default or in danger of default; 
     and
       (D) recommend appropriate administrative or legislative 
     action.
       (2) Reports and testimony.--Not later than 1 year after the 
     date of appointment of the Corporation as receiver under this 
     title, the Inspector General of the Federal primary financial 
     regulatory agency or the Board of Governors shall provide the 
     report required by paragraph (1) to such agency or the Board 
     of Governors, and along with such agency or the Board of 
     Governors, as applicable, shall appear before the appropriate 
     committees of Congress, if requested, to present the report 
     required by paragraph (1). Not later than 90 days after the 
     date of receipt of the report required by paragraph (1), such 
     agency or the Board of Governors, as applicable, shall 
     provide a written report to Congress describing any actions 
     taken in response to the recommendations in the report, and 
     if no such actions were taken, describing the reasons why no 
     actions were taken.

     SEC. 212. PROHIBITION OF CIRCUMVENTION AND PREVENTION OF 
                   CONFLICTS OF INTEREST.

       (a) No Other Funding.--Funds for the orderly liquidation of 
     any covered financial company under this title shall only be 
     provided as specified under this title.
       (b) Limit on Governmental Actions.--No governmental entity 
     may take any action to circumvent the purposes of this title.
       (c) Conflict of Interest.--In the event that the 
     Corporation is appointed receiver for more than 1 covered 
     financial company or is appointed receiver for a covered 
     financial company and receiver for any insured depository 
     institution that is an affiliate of such covered financial 
     company, the Corporation shall take appropriate action, as 
     necessary to avoid any conflicts of interest that may arise 
     in connection with multiple receiverships.

     SEC. 213. BAN ON SENIOR EXECUTIVES AND DIRECTORS.

       (a) Prohibition Authority.--The Board of Governors or, if 
     the covered financial company was not supervised by the Board 
     of Governors, the Corporation, may exercise the authority 
     provided by this section.
       (b) Authority To Issue Order.--The appropriate agency 
     described in subsection (a) may take any action authorized by 
     subsection (c), if the agency determines that--
       (1) a senior executive or a director of the covered 
     financial company, prior to the appointment of the 
     Corporation as receiver, has, directly or indirectly--
       (A) violated--
       (i) any law or regulation;
       (ii) any cease-and-desist order which has become final;
       (iii) any condition imposed in writing by a Federal agency 
     in connection with any action on any application, notice, or 
     request by such company or senior executive; or
       (iv) any written agreement between such company and such 
     agency;
       (B) engaged or participated in any unsafe or unsound 
     practice in connection with any financial company; or
       (C) committed or engaged in any act, omission, or practice 
     which constitutes a breach of the fiduciary duty of such 
     senior executive or director;
       (2) by reason of the violation, practice, or breach 
     described in any clause of paragraph (1), such senior 
     executive or director has received financial gain or other 
     benefit by reason of such violation, practice, or breach and 
     such violation, practice, or breach contributed to the 
     failure of the company; and
       (3) such violation, practice, or breach--
       (A) involves personal dishonesty on the part of such senior 
     executive or director; or
       (B) demonstrates willful or continuing disregard by such 
     senior executive or director for the safety or soundness of 
     such company.
       (c) Authorized Actions.--
       (1) In general.--The appropriate agency for a financial 
     company, as described in subsection (a), may serve upon a 
     senior executive or director described in subsection (b) a 
     written notice of the intention of the agency to prohibit any 
     further participation by such person, in any manner, in the 
     conduct of the affairs of any financial company for a period 
     of time determined by the appropriate agency to be 
     commensurate with such violation, practice, or breach, 
     provided such period shall be not less than 2 years.
       (2) Procedures.--The due process requirements and other 
     procedures under section 8(e) of the Federal Deposit 
     Insurance Act shall apply to actions under this section as if 
     the covered financial company were an insured depository 
     institution and the senior executive or director were an 
     institution-affiliated party, as those terms are defined in 
     that Act.
       (d) Regulations.--The Corporation and the Board of 
     Governors, in consultation with the Council, shall jointly 
     prescribe rules or regulations to administer and carry out 
     this section, including rules, regulations, or guidelines to 
     further define the term senior executive for the purposes of 
     this section.

     SEC. 214. PROHIBITION ON TAXPAYER FUNDING.

       (a) Liquidation Required.--All financial companies put into 
     receivership under this title shall be liquidated. No 
     taxpayer funds shall be used to prevent the liquidation of 
     any financial company under this title.
       (b) Recovery of Funds.--All funds expended in the 
     liquidation of a financial company under this title shall be 
     recovered from the disposition of assets of such financial 
     company, or shall be the responsibility of the financial 
     sector, through assessments.
       (c) No Losses to Taxpayers.--Taxpayers shall bear no losses 
     from the exercise of any authority under this title.

 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--

[[Page S4271]]

       (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.--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--
       (A) the supervision of--
       (i) any savings and loan holding company; and
       (ii) any subsidiary (other than a depository institution) 
     of a savings and loan holding company; and
       (B) 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.
       (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 and under section 5(q) 
     of such Act relating to tying arrangements is transferred to 
     the Board of Governors.
       (B) Comptroller of the currency.--Except as provided in 
     paragraph (1) and 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) and 
     subparagraph (A), 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.--
     Except as provided in paragraph (1) and subparagraph (A), 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 the Office of the 
     Comptroller of the Currency.
       (c) 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; and
       ``(C) any Federal savings association;
       ``(2) the Federal Deposit Insurance Corporation, in the 
     case of--
       ``(A) any insured State nonmember bank;
       ``(B) any foreign bank having an insured branch; and
       ``(C) any State savings association;
       ``(3) the Board of Governors of the Federal Reserve System, 
     in the case of--
       ``(A) any 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 and any subsidiary (other 
     than a depository institution) of a bank holding company; and
       ``(G) any savings and loan holding company and any 
     subsidiary (other than a depository institution) of a savings 
     and loan holding company.''.
       (2) 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 or bank was a bank holding 
     company.
       ``(B) Rules of construction.--
       ``(i) Effect on other authority.--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.
       ``(ii) Holding companies.--Nothing in this paragraph or 
     subsection (c) may be construed as authorizing any Federal 
     banking agency other than the appropriate Federal banking 
     agency for a bank holding company or a savings and loan 
     holding company to initiate enforcement proceedings, issue 
     directives, or take other remedial action against a bank 
     holding company, a savings and loan holding company, or any 
     subsidiary thereof (other than a depository institution).''.
       (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].''.
       (d) 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''.

[[Page S4272]]

       (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) Continuation of Existing Orders, Resolutions, 
     Determinations, Agreements, Regulations, and Other 
     Materials.--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.
       (c) 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 (b) 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 (b) 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 (b) that will be enforced by the 
     Board of Governors; and
       (B) publish a list of such regulations in the Federal 
     Register.
       (d) Status of Regulations Proposed or Not Yet Effective.--
       (1) Proposed regulations.--Any proposed regulation of the 
     Office of Thrift Supervision that the Office of Thrift 
     Supervision, 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 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 that the 
     Office of Thrift Supervision, 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 or the Board of Governors, as 
     appropriate, according to its terms.

     SEC. 317. REFERENCES IN FEDERAL LAW TO FEDERAL BANKING 
                   AGENCIES.

       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.

     SEC. 318. FUNDING.

       (a) Funding of Office of the Comptroller of the Currency.--
     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. 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.''.
       (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.''.
       (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 OF 
                   THE OFFICE OF THRIFT SUPERVISION.

       (a) In General.--Before the transfer date, the Office of 
     the Comptroller of the Currency, the Corporation, and the 
     Board of Governors shall--
       (1) 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;
       (2) determine jointly, from time to time--
       (A) 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;
       (B) which personnel are appropriate to facilitate the 
     orderly transfer of functions by this title; and
       (C) 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
       (3) take such actions as may be necessary to provide for 
     the orderly implementation of this title.

[[Page S4273]]

       (b) 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--
       (1) 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 subsection (a);
       (2) 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 subsection (a); and
       (3) 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 subsection (a).
       (c) 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 subsection (b).

     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) 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.
       (3) Appointment authority for excepted service 
     transferred.--
       (A) In general.--Except as provided in subparagraph (B), 
     any appointment authority of the Office of Thrift Supervision 
     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.
       (4) 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.
       (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.--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.
       (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 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) 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

[[Page S4274]]

       (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; 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 or a joint 
     office of Federal home loan banks 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) 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.
       (d) 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.

     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 in connection with functions transferred to the 
     Office of the Comptroller of the

[[Page S4275]]

     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.--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--
       (1) the average consolidated total assets of the insured 
     depository institution during the assessment period; minus
       (2) the sum of--
       (A) the average tangible equity of the insured depository 
     institution during the assessment period; and
       (B) in the case of an insured depository institution that 
     is a custodial bank (as defined by the Corporation, based on 
     factors including the percentage of total revenues generated 
     by custodial businesses and the level of assets under 
     custody) or a banker's bank (as that term is used in section 
     5136 of the Revised Statutes (12 U.S.C. 24)), an amount that 
     the Corporation determines is necessary to establish 
     assessments consistent with the definition under section 
     7(b)(1) of the Federal Deposit Insurance Act (12 U.S.C. 
     1817(b)(1)) for a custodial bank or a banker's bank.

     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

[[Page S4276]]

     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.

       (a) In General.--The Commission shall adjust any net worth 
     standard for an accredited investor, as set forth in the 
     rules of the Commission under the Securities Act of 1933, so 
     that the individual net worth of any natural person, or joint 
     net worth with the spouse of that person, at the time of 
     purchase, is more than $1,000,000 (as such amount is adjusted 
     periodically by rule of the Commission), excluding the value 
     of the primary residence of such natural person, except that 
     during the 4-year period that begins on the date of enactment 
     of this Act, any net worth standard shall be $1,000,000, 
     excluding the value of the primary residence of such natural 
     person.
       (b) Review and Adjustment.--
       (1) Initial review and adjustment.--
       (A) Initial review.--The Commission may undertake a review 
     of the definition of the term

[[Page S4277]]

     ``accredited investor'', as such term applies to natural 
     persons, to determine whether the requirements of the 
     definition, excluding the requirement relating to the net 
     worth standard described in subsection (a), should be 
     adjusted or modified for the protection of investors, in the 
     public interest, and in light of the economy.
       (B) Adjustment or modification.--Upon completion of a 
     review under subparagraph (A), the Commission may, by notice 
     and comment rulemaking, make such adjustments to the 
     definition of the term ``accredited investor'', excluding 
     adjusting or modifying the requirement relating to the net 
     worth standard described in subsection (a), as such term 
     applies to natural persons, as the Commission may deem 
     appropriate for the protection of investors, in the public 
     interest, and in light of the economy.
       (2) Subsequent reviews and adjustment.--
       (A) Subsequent reviews.--Not earlier than 4 years after the 
     date of enactment of this Act, and not less frequently than 
     once every 4 years thereafter, the Commission shall undertake 
     a review of the definition, in its entirety, of the term 
     ``accredited investor'', as defined in section 230.215 of 
     title 17, Code of Federal Regulations, or any successor 
     thereto, as such term applies to natural persons, to 
     determine whether the requirements of the definition should 
     be adjusted or modified for the protection of investors, in 
     the public interest, and in light of the economy.
       (B) Adjustment or modification.--Upon completion of a 
     review under subparagraph (A), the Commission may, by notice 
     and comment rulemaking, make such adjustments to the 
     definition of the term ``accredited investor'', as defined in 
     section 230.215 of title 17, Code of Federal Regulations, or 
     any successor thereto, as such term applies to natural 
     persons, as the Commission may deem appropriate for the 
     protection of investors, in the public interest, and in light 
     of the economy.

     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 3 
     years 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

[[Page S4278]]

     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

[[Page S4279]]

     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.

[[Page S4280]]

       (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.

[[Page S4281]]

       (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

[[Page S4282]]

       ``(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.

[[Page S4283]]

       ``(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 
     nonmember bank, and the Board may, by order, exempt a 
     transaction of a State member 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

[[Page S4284]]

     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:

[[Page S4285]]

     ``(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;

[[Page S4286]]

       (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;

[[Page S4287]]

       (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--WALL STREET TRANSPARENCY AND ACCOUNTABILITY

     SEC. 701. SHORT TITLE.

       This title may be cited as the ``Wall Street Transparency 
     and Accountability Act of 2010''.

        Subtitle A--Regulation of Over-the-Counter Swaps Markets

                      PART I--REGULATORY AUTHORITY

     SEC. 711. DEFINITIONS.

       In this subtitle, the terms ``prudential regulator'', 
     ``swap'', ``swap dealer'', ``major swap participant'', ``swap 
     data repository'', ``associated person of a swap dealer or 
     major swap participant'', ``eligible contract participant'', 
     ``swap execution facility'', ``security-based swap'', 
     ``security-based swap dealer'', ``major security-based swap 
     participant'', ``swap data repository'', and ``associated 
     person of a security-based swap dealer or major security-
     based swap participant'' have the meanings given the terms in 
     section 1a of the Commodity Exchange Act (7 U.S.C. 1a).

     SEC. 712. REVIEW OF REGULATORY AUTHORITY.

       (a) Regulatory Authority.--
       (1) In general.--Except as provided in paragraphs (4) and 
     (8), the Commodity Futures Trading Commission and the 
     Securities and Exchange Commission shall each prescribe such 
     regulations as may be necessary to carry out the purposes of 
     this title.
       (2) Coordination, consistency, and comparability.--Both 
     Commissions required under paragraph (1) to prescribe 
     regulations shall consult and coordinate with each other for 
     the purposes of assuring, to the extent possible, that the 
     regulations prescribed by each such Commission are consistent 
     and comparable with the regulations prescribed by the other.
       (3) Procedures and deadline.--Such regulations shall be 
     prescribed in accordance with applicable requirements of 
     title 5, United States

[[Page S4288]]

     Code, and, shall be issued in final form not later than 180 
     days after the date of enactment of this Act.
       (4) Applicability.--The requirements of paragraph (1) shall 
     not apply to an order issued--
       (A) in connection with or arising from a violation or 
     potential violation of any provision of the Commodity 
     Exchange Act (7 U.S.C. 1 et seq.);
       (B) in connection with or arising from a violation or 
     potential violation of any provision of the securities laws; 
     or
       (C) in any proceeding that is conducted on the record in 
     accordance with sections 556 and 557 of title 5, United 
     States Code.
       (5) Effect.--Nothing in this subsection authorizes any 
     consultation or procedure for consultation that is not 
     consistent with the requirements of subchapter II of chapter 
     5, and chapter 7, of title 5, United States Code (commonly 
     known as the ``Administrative Procedure Act'').
       (6) Rules; orders.--In developing and promulgating rules or 
     orders pursuant to this subsection, each Commission shall 
     consider the views of the prudential regulators.
       (7) Treatment of similar products and entities.--
       (A) In general.--In adopting rules and orders under this 
     subsection, the Commodity Futures Trading Commission and the 
     Securities and Exchange Commission shall treat functionally 
     or economically similar products or entities described in 
     paragraphs (1) and (2) in a similar manner.
       (B) Effect.--Nothing in this subtitle requires the 
     Commodity Futures Trading Commission or the Securities and 
     Exchange Commission to adopt joint rules or orders that treat 
     functionally or economically similar products or entities 
     described in paragraphs (1) and (2) in an identical manner.
       (8) Mixed swaps.--The Commodity Futures Trading Commission 
     and the Securities and Exchange Commission shall jointly 
     prescribe such regulations regarding mixed swaps, as 
     described in section 1a(47)(D) of the Commodity Exchange Act 
     (7 U.S.C. 1a(47)(D)) and in section (68)(D) of the Securities 
     Exchange Act of 1934 (15 U.S.C. (68)(D)), as may be necessary 
     to carry out the purposes of this title.
       (b) Limitation.--
       (1) Commodity futures trading commission.--Nothing in this 
     title, unless specifically provided, confers jurisdiction on 
     the Commodity Futures Trading Commission to issue a rule, 
     regulation, or order providing for oversight or regulation 
     of--
       (A) security-based swaps; or
       (B) with regard to its activities or functions concerning 
     security-based swaps--
       (i) security-based swap dealers;
       (ii) major security-based swap participants;
       (iii) security-based swap data repositories;
       (iv) persons associated with a security-based swap dealer 
     or major security-based swap participant;
       (v) eligible contract participants with respect to 
     security-based swaps; or
       (vi) swap execution facilities with respect to security-
     based swaps.
       (2) Securities and exchange commission.--Nothing in this 
     title, unless specifically provided, confers jurisdiction on 
     the Securities and Exchange Commission or State securities 
     regulators to issue a rule, regulation, or order providing 
     for oversight or regulation of--
       (A) swaps; or
       (B) with regard to its activities or functions concerning 
     swaps--
       (i) swap dealers;
       (ii) major swap participants;
       (iii) swap data repositories;
       (iv) persons associated with a swap dealer or major swap 
     participant;
       (v) eligible contract participants with respect to swaps; 
     or
       (vi) swap execution facilities with respect to swaps.
       (3) Prohibition on certain futures associations and 
     national securities associations.--
       (A) Futures associations.--Notwithstanding any other 
     provision of law (including regulations), unless otherwise 
     authorized by this title, no futures association registered 
     under section 17 of the Commodity Exchange Act (7 U.S.C. 21) 
     may issue a rule, regulation, or order for the oversight or 
     regulation of, or otherwise assert jurisdiction over, for any 
     purpose, any security-based swap, except that this shall not 
     limit the authority of a national futures association to 
     examine for compliance with and enforce its rules on 
     advertising and capital adequacy.
       (B) National securities associations.--Notwithstanding any 
     other provision of law (including regulations), unless 
     otherwise authorized by this title, no national securities 
     association registered under section 15A of the Securities 
     Exchange Act of 1934 (15 U.S.C. 78o-3) may issue a rule, 
     regulation, or order for the oversight or regulation of, or 
     otherwise assert jurisdiction over, for any purpose, any 
     swap, except that this shall not limit the authority of a 
     national securities association to examine for compliance 
     with and enforce its rules on advertising and capital 
     adequacy.
       (c) Objection to Commission Regulation.--
       (1) Filing of petition for review.--
       (A) In general.--If either Commission referred to in this 
     section determines that a final rule, regulation, or order of 
     the other Commission conflicts with subsection (a)(4) or (b), 
     then the complaining Commission may obtain review of the 
     final rule, regulation, or order in the United States Court 
     of Appeals for the District of Columbia Circuit by filing in 
     the court, not later than 60 days after the date of 
     publication of the final rule, regulation, or order, a 
     written petition requesting that the rule, regulation, or 
     order be set aside.
       (B) Expedited proceeding.--A proceeding described in 
     subparagraph (A) shall be expedited by the United States 
     Court of Appeals for the District of Columbia Circuit.
       (2) Transmittal of petition and record.--
       (A) In general.--A copy of a petition described in 
     paragraph (1) shall be transmitted not later than 1 business 
     day after the date of filing by the complaining Commission to 
     the Secretary of the responding Commission.
       (B) Duty of responding commission.--On receipt of the copy 
     of a petition described in paragraph (1), the responding 
     Commission shall file with the United States Court of Appeals 
     for the District of Columbia Circuit--
       (i) a copy of the rule, regulation, or order under review 
     (including any documents referred to therein); and
       (ii) any other materials prescribed by the United States 
     Court of Appeals for the District of Columbia Circuit.
       (3) Standard of review.--The United States Court of Appeals 
     for the District of Columbia Circuit shall--
       (A) give deference to the views of neither Commission; and
       (B) determine to affirm or set aside a rule, regulation, or 
     order of the responding Commission under this subsection, 
     based on the determination of the court as to whether the 
     rule, regulation, or order is in conflict with subsection 
     (a)(4) or (b), as applicable.
       (4) Judicial stay.--The filing of a petition by the 
     complaining Commission pursuant to paragraph (1) shall 
     operate as a stay of the rule, regulation, or order until the 
     date on which the determination of the United States Court of 
     Appeals for the District of Columbia Circuit is final 
     (including any appeal of the determination).
       (d) Adoption of Rules on Uncleared Swaps.--Notwithstanding 
     subsections (b) and (c), the Commodity Futures Trading 
     Commission and the Securities and Exchange Commission shall, 
     after consulting with each other Commission, adopt rules--
       (1) to require the maintenance of records of all activities 
     relating to transactions in swaps and security-based swaps 
     under the respective jurisdictions of the Commodity Futures 
     Trading Commission and the Securities and Exchange Commission 
     that are uncleared;
       (2) to make available, consistent with section 8 of the 
     Commodity Exchange Act (7 U.S.C. 12), to the Securities and 
     Exchange Commission information relating to swaps 
     transactions that are uncleared; and
       (3) to make available to the Commodity Futures Trading 
     Commission information relating to security-based swaps 
     transactions that are uncleared.
       (e) Definitions.--Notwithstanding subsections (b) and (c), 
     the Commodity Futures Trading Commission and the Securities 
     and Exchange Commission shall jointly adopt rules to define 
     the term ``security-based swap agreement'' in section 
     1a(47)(A)(v) of the Commodity Exchange Act (7 U.S.C. 
     1a(47)(A)(v)) and in section 3(a)(78) of the Securities 
     Exchange Act of 1934 (15 U.S.C. 78c(a)(78)).
       (f) Global Rulemaking Timeframe.--Unless otherwise provided 
     in a particular provision of this title, or an amendment made 
     by this title, the Commodity Futures Trading Commission or 
     the Securities and Exchange Commission, or both, shall 
     individually, and not jointly, promulgate rules and 
     regulations required of each Commission under this title or 
     an amendment made by this title not later than 180 days after 
     the date of enactment of this Act.
       (g) Expedited Rulemaking Process.--The Commodity Futures 
     Trading Commission or the Securities and Exchange Commission, 
     or both, may use emergency and expedited procedures 
     (including any administrative or other procedure as 
     appropriate) to carry out this title and the amendments made 
     by this title if, in either of the Commissions' discretion, 
     it considers it necessary to do so.

     SEC. 713. RECOMMENDATIONS FOR CHANGES TO PORTFOLIO MARGINING 
                   LAWS.

       Not later than 180 days after the date of enactment of this 
     Act, the Securities and Exchange Commission, the Commodity 
     Futures Trading Commission, and the prudential regulators 
     shall submit to the appropriate committees of Congress 
     recommendations for legislative changes to the Federal laws 
     to facilitate the portfolio margining of securities and 
     commodity futures and options, commodity options, swaps, and 
     other financial instrument positions.

     SEC. 714. ABUSIVE SWAPS.

       The Commodity Futures Trading Commission or the Securities 
     and Exchange Commission, or both, individually may, by rule 
     or order--
       (1) collect information as may be necessary concerning the 
     markets for any types of--
       (A) swap (as defined in section 1a of the Commodity 
     Exchange Act (7 U.S.C. 1a)); or
       (B) security-based swap (as defined in section 1a of the 
     Commodity Exchange Act (7 U.S.C. 1a)); and
       (2) issue a report with respect to any types of swaps or 
     security-based swaps that the Commodity Futures Trading 
     Commission or the Securities and Exchange Commission 
     determines to be detrimental to--
       (A) the stability of a financial market; or
       (B) participants in a financial market.

     SEC. 715. AUTHORITY TO PROHIBIT PARTICIPATION IN SWAP 
                   ACTIVITIES.

       Except as provided in section 4 of the Commodity Exchange 
     Act (7 U.S.C. 6) (as amended by section 738), if the 
     Commodity Futures Trading Commission or the Securities and 
     Exchange Commission determines that the regulation of swaps 
     or security-based swaps markets in a foreign country 
     undermines the stability of the United States financial 
     system, either Commission, in consultation with the Secretary 
     of the Treasury, may prohibit an entity domiciled in the 
     foreign country from participating in the United States in 
     any swap or security-based swap activities.

[[Page S4289]]

     SEC. 716. PROHIBITION AGAINST FEDERAL GOVERNMENT BAILOUTS OF 
                   SWAPS ENTITIES.

       (a) Prohibition on Federal Assistance.--Notwithstanding any 
     other provision of law (including regulations), no Federal 
     assistance may be provided to any swaps entity with respect 
     to any swap, security-based swap, or other activity of the 
     swaps entity.
       (b) Definitions.--In this section:
       (1) Federal assistance.--The term ``Federal assistance'' 
     means the use of any funds, including advances from any 
     Federal Reserve credit facility, discount window, or pursuant 
     to the third undesignated paragraph of section 13 of the 
     Federal Reserve Act (12 U.S.C. 343) (relating to emergency 
     lending authority), Federal Deposit Insurance Corporation 
     insurance, or guarantees for the purpose of--
       (A) making any loan to, or purchasing any stock, equity 
     interest, or debt obligation of, any swaps entity;
       (B) purchasing the assets of any swaps entity;
       (C) guaranteeing any loan or debt issuance of any swaps 
     entity; or
       (D) entering into any assistance arrangement (including tax 
     breaks), loss sharing, or profit sharing with any swaps 
     entity.
       (2) Swaps entity.--The term ``swaps entity'' means any swap 
     dealer, security-based swap dealer, major swap participant, 
     major security-based swap participant, swap execution 
     facility, designated contract market, national securities 
     exchange, central counterparty, clearing house, clearing 
     agency, or derivatives clearing organization that is 
     registered under--
       (A) the Commodity Exchange Act (7 U.S.C. 1 et seq.);
       (B) the Securities Exchange Act of 1934 (15 U.S.C. 78a et 
     seq.); or
       (C) any other Federal or State law (including regulations).

     SEC. 717. NEW PRODUCT APPROVAL--CFTC--SEC PROCESS.

       (a) Amendments to the Commodity Exchange Act.--Section 
     2(a)(1)(C) of the Commodity Exchange Act (7 U.S.C. 
     2(a)(1)(C)) is amended--
       (1) in clause (i) by striking ``This'' and inserting ``(I) 
     Except as provided in subclause (II), this''; and
       (2) by adding at the end of clause (i) the following:

       ``(II) This Act shall apply to and the Commission shall 
     have jurisdiction with respect to accounts, agreements, and 
     transactions involving, and may permit the listing for 
     trading pursuant to section 5c(c) of, a put, call, or other 
     option on 1 or more securities (as defined in section 2(a)(1) 
     of the Securities Act of 1933 or section 3(a)(10) of the 
     Securities Exchange Act of 1934 on the date of enactment of 
     the Futures Trading Act of 1982), including any group or 
     index of such securities, or any interest therein or based on 
     the value thereof, that is exempted by the Securities and 
     Exchange Commission pursuant to section 36(a)(1) of the 
     Securities Exchange Act of 1934 with the condition that the 
     Commission exercise concurrent jurisdiction over such put, 
     call, or other option; provided, however, that nothing in 
     this paragraph shall be construed to affect the jurisdiction 
     and authority of the Securities and Exchange Commission over 
     such put, call, or other option.''.

       (b) Amendment to the Securities Exchange Act of 1934.--The 
     Securities Exchange Act of 1934 is amended by adding the 
     following section after section 3A (15 U.S.C. 78c-1):

     ``SEC. 3B. SECURITIES-RELATED DERIVATIVES.

       ``(a) Any agreement, contract, or transaction (or class 
     thereof) that is exempted by the Commodity Futures Trading 
     Commission pursuant to section 4(c)(1) of the Commodity 
     Exchange Act (7 U.S.C. 6(c)(1)) with the condition that the 
     Commission exercise concurrent jurisdiction over such 
     agreement, contract, or transaction (or class thereof) shall 
     be deemed a security for purposes of the securities laws.
       ``(b) With respect to any agreement, contract, or 
     transaction (or class thereof) that is exempted by the 
     Commodity Futures Trading Commission pursuant to section 
     4(c)(1) of the Commodity Exchange Act (7 U.S.C. 6(c)(1)) with 
     the condition that the Commission exercise concurrent 
     jurisdiction over such agreement, contract, or transaction 
     (or class thereof), references in the securities laws to the 
     `purchase' or `sale' of a security shall be deemed to 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 such agreement, contract, or transaction, as the 
     context may require.''.
       (c) Amendment to Securities Exchange Act of 1934.--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) Notwithstanding the provisions of paragraph (2), the 
     time period within which the Commission is required by order 
     to approve a proposed rule change or institute proceedings to 
     determine whether the proposed rule change should be 
     disapproved is stayed pending a determination by the 
     Commission upon the request of the Commodity Futures Trading 
     Commission or its Chairman that the Commission issue a 
     determination as to whether a product that is the subject of 
     such proposed rule change is a security pursuant to section 
     718 of the Wall Street Transparency and Accountability Act of 
     2010.''.
       (d) Amendment to Commodity Exchange Act.--Section 5c(c)(1) 
     of the Commodity Exchange Act (7 U.S.C. 7a-2(c)(1)) is 
     amended--
       (1) by striking ``Subject to paragraph (2)'' and inserting 
     the following:
       ``(A) Election.--Subject to paragraph (2)''; and
       (2) by adding at the end the following:
       ``(B) Certification.--The certification of a product 
     pursuant to this paragraph shall be stayed pending a 
     determination by the Commission upon the request of the 
     Securities and Exchange Commission or its Chairman that the 
     Commission issue a determination as to whether the product 
     that is the subject of such certification is a contract of 
     sale of a commodity for future delivery, an option on such a 
     contract, or an option on a commodity pursuant to section 718 
     of the Wall Street Transparency and Accountability Act of 
     2010.''.

     SEC. 718. DETERMINING STATUS OF NOVEL DERIVATIVE PRODUCTS.

       (a) Process for Determining the Status of a Novel 
     Derivative Product.--
       (1) Notice.--
       (A) In general.--Any person filing a proposal to list or 
     trade a novel derivative product that may have elements of 
     both securities and contracts of sale of a commodity for 
     future delivery (or options on such contracts or options on 
     commodities) may concurrently provide notice and furnish a 
     copy of such filing with both the Securities and Exchange 
     Commission and the Commodity Futures Trading Commission. Any 
     such notice shall state that notice has been made with both 
     Commissions.
       (B) Notification.--If no concurrent notice is made pursuant 
     to subparagraph (A), within 5 business days after determining 
     that a proposal that seeks to list or trade a novel 
     derivative product may have elements of both securities and 
     contracts of sale of a commodity for future delivery (or 
     options on such contracts or options on commodities), the 
     Securities and Exchange Commission or the Commodity Futures 
     Trading Commission, as applicable, shall notify the other 
     Commission and provide a copy of such filing to the other 
     Commission.
       (2) Request for determination.--
       (A) In general.--No later than 21 days after receipt of a 
     notice under paragraph (1), or upon its own initiative if no 
     such notice is received, the Commodity Futures Trading 
     Commission may request that the Securities and Exchange 
     Commission issue a determination as to whether a product is a 
     security, as defined in section 3(a)(10) of the Securities 
     Exchange Act of 1934 (15 U.S.C. 78c(a)(10)).
       (B) Request.--No later than 21 days after receipt of a 
     notice under paragraph (1), or upon its own initiative if no 
     such notice is received, the Securities and Exchange 
     Commission may request that the Commodity Futures Trading 
     Commission issue a determination as to whether a product is a 
     contract of sale of a commodity for future delivery, an 
     option on such a contract, or an option on a commodity 
     subject to the Commodity Futures Trading Commission's 
     exclusive jurisdiction under section 2(a)(1)(A) of the 
     Commodity Exchange Act (7 U.S.C. 2(a)(1)(A)).
       (C) Requirement relating to request.--A request under 
     subparagraph (A) or (B) shall be made by submitting such 
     request, in writing, to the Securities and Exchange 
     Commission or the Commodity Futures Trading Commission, as 
     applicable.
       (D) Effect.--Nothing in this paragraph shall be construed 
     to prevent--
       (i) the Commodity Futures Trading Commission from 
     requesting that the Securities and Exchange Commission grant 
     an exemption pursuant to section 36(a)(1) of the Securities 
     Exchange Act of 1934 (15 U.S.C. 78mm(a)(1)) with respect to a 
     product that is the subject of a filing under paragraph (1); 
     or
       (ii) the Securities and Exchange Commission from requesting 
     that the Commodity Futures Trading Commission grant an 
     exemption pursuant to section 4(c)(1) of the Commodity 
     Exchange Act (7 U.S.C. 6(c)(1)) with respect to a product 
     that is the subject of a filing under paragraph (1).
     Provided, however, that nothing in this subparagraph shall be 
     construed to require the Commodity Futures Trading Commission 
     or the Securities and Exchange Commission to issue an 
     exemption requested pursuant to this subparagraph; provided 
     further, That an order granting or denying an exemption 
     described in this subparagraph and issued under paragraph 
     (3)(B) shall not be subject to judicial review pursuant to 
     subsection (b).
       (E) Withdrawal of request.--A request under subparagraph 
     (A) or (B) may be withdrawn by the Commission making the 
     request at any time prior to a determination being made 
     pursuant to paragraph (3) for any reason by providing written 
     notice to the head of the other Commission.
       (3) Determination.--Notwithstanding any other provision of 
     law, no later than 120 days after the date of receipt of a 
     request--
       (A) under subparagraph (A) or (B) of paragraph (2), unless 
     such request has been withdrawn pursuant to paragraph (2)(E), 
     the Securities and Exchange Commission or the Commodity 
     Futures Trading Commission, as applicable, shall, by order, 
     issue the determination requested in subparagraph (A) or (B) 
     of paragraph (2), as applicable, and the reasons therefore; 
     or
       (B) under paragraph (2)(D), unless such request has been 
     withdrawn, the Securities and Exchange Commission or the 
     Commodity Futures Trading Commission, as applicable, shall 
     grant an exemption or provide reasons for not granting such 
     exemption, provided that any decision by the Securities and 
     Exchange Commission not to grant such exemption shall not be 
     reviewable under section 25 of the Securities Exchange Act of 
     1934 (15 U.S.C. 78y).
       (b) Judicial Resolution.--
       (1) In general.--The Commodity Futures Trading Commission 
     or the Securities and Exchange Commission may petition the 
     United States Court of Appeals for the District of Columbia 
     Circuit for review of a final order of the other Commission, 
     with respect to a novel derivative product that may have 
     elements of both securities and contracts of sale of a 
     commodity for future delivery (or options on such contracts 
     or options on commodities) that it believes affects its 
     statutory jurisdiction, including an order or

[[Page S4290]]

     orders issued under subsection (a)(3)(A), by filing in such 
     court, within 60 days after the date of entry of such order, 
     a written petition requesting a review of the order. Any such 
     proceeding shall be expedited by the Court of Appeals.
       (2) Transmittal of petition and record.--A copy of a 
     petition described in paragraph (1) shall be transmitted not 
     later than 1 business day after filing by the complaining 
     Commission to the responding Commission. On receipt of the 
     petition, the responding Commission shall file with the court 
     a copy of the order under review and any documents referred 
     to therein, and any other materials prescribed by the court.
       (3) Standard of review.--The court, in considering a 
     petition filed pursuant to paragraph (1), shall give no 
     deference to, or presumption in favor of, the views of either 
     Commission.
       (4) Judicial stay.--The filing of a petition by the 
     complaining Commission pursuant to paragraph (1) shall 
     operate as a stay of the order, until the date on which the 
     determination of the court is final (including any appeal of 
     the determination).

                  PART II--REGULATION OF SWAP MARKETS

     SEC. 721. DEFINITIONS.

       (a) In General.--Section 1a of the Commodity Exchange Act 
     (7 U.S.C. 1a) is amended--
       (1) by redesignating paragraphs (2), (3) and (4), (5) 
     through (17), (18) through (23), (24) through (28), (29), 
     (30), (31) through (33), and (34) as paragraphs (6), (8) and 
     (9), (11) through (23), (26) through (31), (34) through (38), 
     (40), (41), (44) through (46), and (51), respectively;
       (2) by inserting after paragraph (1) the following:
       ``(2) Appropriate federal banking agency.--The term 
     `appropriate Federal banking agency' has the meaning given 
     the term in section 3 of the Federal Deposit Insurance Act 
     (12 U.S.C. 1813).
       ``(3) Associated person of a security-based swap dealer or 
     major security-based swap participant.--The term `associated 
     person of a security-based swap dealer or major security-
     based swap participant' has the meaning given the term in 
     section 3(a) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78c(a)).
       ``(4) Associated person of a swap dealer or major swap 
     participant.--
       ``(A) In general.--The term `associated person of a swap 
     dealer or major swap participant' means--
       ``(i) any partner, officer, director, or branch manager of 
     a swap dealer or major swap participant (including any 
     individual who holds a similar status or performs a similar 
     function with respect to any partner, officer, director, or 
     branch manager of a swap dealer or major swap participant);
       ``(ii) any person that directly or indirectly controls, is 
     controlled by, or is under common control with, a swap dealer 
     or major swap participant; and
       ``(iii) any employee of a swap dealer or major swap 
     participant.
       ``(B) Exclusion.--Other than for purposes of section 
     4s(b)(6), the term `associated person of a swap dealer or 
     major swap participant' does not include any person 
     associated with a swap dealer or major swap participant the 
     functions of which are solely clerical or ministerial.
       ``(5) Board.--The term `Board' means the Board of Governors 
     of the Federal Reserve System.'';
       (3) by inserting after paragraph (6) (as redesignated by 
     paragraph (1)) the following:
       ``(7) Cleared swap.--The term `cleared swap' means any swap 
     that is, directly or indirectly, submitted to and cleared by 
     a derivatives clearing organization registered with the 
     Commission.'';
       (4) in paragraph (9) (as redesignated by paragraph (1)), by 
     striking ``except onions'' and all that follows through the 
     period at the end and inserting the following: ``except 
     onions (as provided in section 13-1) and motion picture box 
     office receipts (or any index, measure, value, or data 
     related to such receipts), and all services, rights, and 
     interests (except motion picture box office receipts, or any 
     index, measure, value or data related to such receipts) in 
     which contracts for future delivery are presently or in the 
     future dealt in.'';
       (5) by inserting after paragraph (9) (as redesignated by 
     paragraph (1)) the following:
       ``(10) Commodity pool.--
       ``(A) In general.--The term `commodity pool' means any 
     investment trust, syndicate, or similar form of enterprise 
     operated for the purpose of trading in commodity interests, 
     including any--
       ``(i) commodity for future delivery, security futures 
     product, or swap;
       ``(ii) agreement, contract, or transaction described in 
     section 2(c)(2)(C)(i) or section 2(c)(2)(D)(i);
       ``(iii) commodity option authorized under section 4c; or
       ``(iv) leverage transaction authorized under section 19.
       ``(B) Further definition.--The Commission, by rule or 
     regulation, may include within, or exclude from, the term 
     `commodity pool' any investment trust, syndicate, or similar 
     form of enterprise if the Commission determines that the rule 
     or regulation will effectuate the purposes of this Act.'';
       (6) by striking paragraph (11) (as redesignated by 
     paragraph (1)) and inserting the following:
       ``(11) Commodity pool operator.--
       ``(A) In general.--The term `commodity pool operator' means 
     any person--
       ``(i) engaged in a business that is of the nature of a 
     commodity pool, investment trust, syndicate, or similar form 
     of enterprise, and who, in connection therewith, solicits, 
     accepts, or receives from others, funds, securities, or 
     property, either directly or through capital contributions, 
     the sale of stock or other forms of securities, or otherwise, 
     for the purpose of trading in commodity interest, including 
     any--

       ``(I) commodity for future delivery, security futures 
     product, or swap;
       ``(II) agreement, contract, or transaction described in 
     section 2(c)(2)(C)(i) or section 2(c)(2)(D)(i);
       ``(III) commodity option authorized under section 4c; or
       ``(IV) leverage transaction authorized under section 19; or

       ``(ii) who is registered with the Commission as a commodity 
     pool operator.
       ``(B) Further definition.--The Commission, by rule or 
     regulation, may include within, or exclude from, the term 
     `commodity pool operator' any person engaged in a business 
     that is of the nature of a commodity pool, investment trust, 
     syndicate, or similar form of enterprise if the Commission 
     determines that the rule or regulation will effectuate the 
     purposes of this Act.'';
       (7) in paragraph (12) (as redesignated by paragraph (1)), 
     in subparagraph (A)--
       (A) in clause (i)--
       (i) in subclause (I), by striking ``made or to be made on 
     or subject to the rules of a contract market or derivatives 
     transaction execution facility'' and inserting ``, security 
     futures product, or swap'';
       (ii) by redesignating subclauses (II) and (III) as 
     subclauses (III) and (IV);
       (iii) by inserting after subclause (I) the following:

       ``(II) any agreement, contract, or transaction described in 
     section 2(c)(2)(C)(i) or section 2(c)(2)(D)(i)''; and

       (iv) in subclause (IV) (as so redesignated), by striking 
     ``or'';
       (B) in clause (ii), by striking the period at the end and 
     inserting a semicolon; and
       (C) by adding at the end the following:
       ``(iii) is registered with the Commission as a commodity 
     trading advisor; or
       ``(iv) the Commission, by rule or regulation, may include 
     if the Commission determines that the rule or regulation will 
     effectuate the purposes of this Act.'';
       (8) in paragraph (17) (as redesignated by paragraph (1)), 
     in subparagraph (A), in the matter preceding clause (i), by 
     striking ``paragraph (12)(A)'' and inserting ``paragraph 
     (18)(A)'';
       (9) in paragraph (18) (as redesignated by paragraph (1))--
       (A) in subparagraph (A)--
       (i) in the matter following clause (vii)(III)--

       (I) by striking ``section 1a (11)(A)'' and inserting 
     ``paragraph (17)(A)''; and
       (II) by striking ``$25,000,000'' and inserting 
     ``$50,000,000''; and

       (ii) in clause (xi), in the matter preceding subclause (I), 
     by striking ``total assets in an amount'' and inserting 
     ``amounts invested on a discretionary basis, the aggregate of 
     which is'';
       (10) by striking paragraph (22) (as redesignated by 
     paragraph (1)) and inserting the following:
       ``(22) Floor broker.--
       ``(A) In general.--The term `floor broker' means any 
     person--
       ``(i) who, in or surrounding any pit, ring, post, or other 
     place provided by a contract market for the meeting of 
     persons similarly engaged, shall purchase or sell for any 
     other person--

       ``(I) any commodity for future delivery, security futures 
     product, or swap; or
       ``(II) any commodity option authorized under section 4c; or

       ``(ii) who is registered with the Commission as a floor 
     broker.
       ``(B) Further definition.--The Commission, by rule or 
     regulation, may include within, or exclude from, the term 
     `floor broker' any person in or surrounding any pit, ring, 
     post, or other place provided by a contract market for the 
     meeting of persons similarly engaged who trades for any other 
     person if the Commission determines that the rule or 
     regulation will effectuate the purposes of this Act.'';
       (11) by striking paragraph (23) (as redesignated by 
     paragraph (1)) and inserting the following:
       ``(23) Floor trader.--
       ``(A) In general.--The term `floor trader' means any 
     person--
       ``(i) who, in or surrounding any pit, ring, post, or other 
     place provided by a contract market for the meeting of 
     persons similarly engaged, purchases, or sells solely for 
     such person's own account--

       ``(I) any commodity for future delivery, security futures 
     product, or swap; or
       ``(II) any commodity option authorized under section 4c; or

       ``(ii) who is registered with the Commission as a floor 
     trader.
       ``(B) Further definition.--The Commission, by rule or 
     regulation, may include within, or exclude from, the term 
     `floor trader' any person in or surrounding any pit, ring, 
     post, or other place provided by a contract market for the 
     meeting of persons similarly engaged who trades solely for 
     such person's own account if the Commission determines that 
     the rule or regulation will effectuate the purposes of this 
     Act.'';
       (12) by inserting after paragraph (23) (as redesignated by 
     paragraph (1)) the following:
       ``(24) 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 upon on the inception of the 
     contract covering the exchange.
       ``(25) Foreign exchange swap.--The term `foreign exchange 
     swap' means a transaction that solely involves--
       ``(A) an exchange of 2 different currencies on a specific 
     date at a fixed rate that is agreed upon on the inception of 
     the contract covering the exchange; and
       ``(B) a reverse exchange of the 2 currencies described in 
     subparagraph (A) at a later date and at a fixed rate that is 
     agreed upon on the inception of the contract covering the 
     exchange.'';

[[Page S4291]]

       (13) by striking paragraph (28) (as redesignated by 
     paragraph (1)) and inserting the following:
       ``(28) Futures commission merchant.--
       ``(A) In general.--The term `futures commission merchant' 
     means an individual, association, partnership, corporation, 
     or trust--
       ``(i) that--

       ``(I) is engaged in soliciting or in accepting orders for--

       ``(aa) the purchase or sale of a commodity for future 
     delivery;
       ``(bb) a security futures product;
       ``(cc) a swap;
       ``(dd) any agreement, contract, or transaction described in 
     section 2(c)(2)(C)(i) or section 2(c)(2)(D)(i);
       ``(ee) any commodity option authorized under section 4c; or
       ``(ff) any leverage transaction authorized under section 
     19; or

       ``(II) is acting as a counterparty in any agreement, 
     contract, or transaction described in section 2(c)(2)(C)(i) 
     or section 2(c)(2)(D)(i); and
       ``(III) in or in connection with the activities described 
     in subclause (I) or (II), accepts any money, securities, or 
     property (or extends credit in lieu thereof) to margin, 
     guarantee, or secure any trades or contracts that result or 
     may result therefrom; or

       ``(ii) that is registered with the Commission as a futures 
     commission merchant.
       ``(B) Further definition.--The Commission, by rule or 
     regulation, may include within, or exclude from, the term 
     `futures commission merchant' any person who engages in 
     soliciting or accepting orders for, or acting as a 
     counterparty in, any agreement, contract, or transaction 
     subject to this Act, and who accepts any money, securities, 
     or property (or extends credit in lieu thereof) to margin, 
     guarantee, or secure any trades or contracts that result or 
     may result therefrom, if the Commission determines that the 
     rule or regulation will effectuate the purposes of this 
     Act.'';
       (14) in paragraph (30) (as redesignated by paragraph (1)), 
     in subparagraph (B), by striking ``state'' and inserting 
     ``State'';
       (15) by striking paragraph (31) (as redesignated by 
     paragraph (1)) and inserting the following:
       ``(31) Introducing broker.--
       ``(A) In general.--The term `introducing broker' means any 
     person (except an individual who elects to be and is 
     registered as an associated person of a futures commission 
     merchant)--
       ``(i) who--

       ``(I) is engaged in soliciting or in accepting orders for--

       ``(aa) the purchase or sale of any commodity for future 
     delivery, security futures product, or swap;
       ``(bb) any agreement, contract, or transaction described in 
     section 2(c)(2)(C)(i) or section 2(c)(2)(D)(i);
       ``(cc) any commodity option authorized under section 4c; or
       ``(dd) any leverage transaction authorized under section 
     19; and

       ``(II) does not accept any money, securities, or property 
     (or extend credit in lieu thereof) to margin, guarantee, or 
     secure any trades or contracts that result or may result 
     therefrom; or

       ``(ii) who is registered with the Commission as an 
     introducing broker.
       ``(B) Further definition.--The Commission, by rule or 
     regulation, may include within, or exclude from, the term 
     `introducing broker' any person who engages in soliciting or 
     accepting orders for any agreement, contract, or transaction 
     subject to this Act, and who does not accept any money, 
     securities, or property (or extend credit in lieu thereof) to 
     margin, guarantee, or secure any trades or contracts that 
     result or may result therefrom, if the Commission determines 
     that the rule or regulation will effectuate the purposes of 
     this Act.'';
       (16) by inserting after paragraph (31) (as redesignated by 
     paragraph (1)) the following:
       ``(32) Major security-based swap participant.--The term 
     `major security-based swap participant' has the meaning given 
     the term in section 3(a) of the Securities Exchange Act of 
     1934 (15 U.S.C. 78c(a)).
       ``(33) Major swap participant.--
       ``(A) In general.--The term `major swap participant' means 
     any person who is not a swap dealer, and--
       ``(i) maintains a substantial position in swaps for any of 
     the major swap categories as determined by the Commission, 
     excluding--

       ``(I) positions held for hedging or mitigating commercial 
     risk; and
       ``(II) positions maintained by any employee benefit plan 
     (or any contract held by such a plan) as defined in 
     paragraphs (3) and (32) of section 3 of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1002) for 
     the primary purpose of hedging or mitigating any risk 
     directly associated with the operation of the plan; or

       ``(ii) whose outstanding swaps create substantial 
     counterparty exposure that could have serious adverse effects 
     on the financial stability of the United States banking 
     system or financial markets; or
       ``(iii)(I) is a financial entity, other than an entity 
     predominantly engaged in providing financing for the purchase 
     of an affiliate's merchandise or manufactured goods, that is 
     highly leveraged relative to the amount of capital it holds; 
     and
       ``(II) maintains a substantial position in outstanding 
     swaps in any major swap category as determined by the 
     Commission.
       ``(B) Definition of substantial position.--For purposes of 
     subparagraph (A), the Commission shall define by rule or 
     regulation the term `substantial position' at the threshold 
     that the Commission determines to be prudent for the 
     effective monitoring, management, and oversight of entities 
     that are systemically important or can significantly impact 
     the financial system of the United States.
       ``(C) Scope of designation.--For purposes of subparagraph 
     (A), a person may be designated as a major swap participant 
     for 1 or more categories of swaps without being classified as 
     a major swap participant for all classes of swaps.
       ``(D) Capital.--In setting capital requirements for a 
     person that is designated as a major swap participant for a 
     single type or single class or category of swaps or 
     activities, the prudential regulator and the Commission shall 
     take into account the risks associated with other types of 
     swaps or classes of swaps or categories of swaps engaged in 
     and the other activities conducted by that person that are 
     not otherwise subject to regulation applicable to that person 
     by virtue of the status of the person as a major swap 
     participant.'';
       (17) by inserting after paragraph (38) (as redesignated by 
     paragraph (1)) the following:
       ``(39) Prudential regulator.--The term `prudential 
     regulator' means--
       ``(A) the Office of the Comptroller of the Currency, in the 
     case of--
       ``(i) any national banking association;
       ``(ii) any Federal branch or agency of a foreign bank; or
       ``(iii) any Federal savings association;
       ``(B) the Federal Deposit Insurance Corporation, in the 
     case of--
       ``(i) any insured State bank;
       ``(ii) any foreign bank having an insured branch; or
       ``(iii) any State savings association;
       ``(C) the Board of Governors of the Federal Reserve System, 
     in the case of--
       ``(i) any noninsured State member bank;
       ``(ii) any branch or agency of a foreign bank with respect 
     to any provision of the Federal Reserve Act (12 U.S.C. 221 et 
     seq.) which is made applicable under the International 
     Banking Act of 1978 (12 U.S.C. 3101 et seq.);
       ``(iii) any foreign bank which does not operate an insured 
     branch;
       ``(iv) any agency or commercial lending company other than 
     a Federal agency; or
       ``(v) 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 (12 U.S.C. 
     3105(c)(1)), including such proceedings under the Financial 
     Institutions Supervisory Act of 1966 (12 U.S.C. 1464 et 
     seq.); and
       ``(D) the Farm Credit Administration, in the case of a swap 
     dealer, major swap participant, security-based swap dealer, 
     or major security-based swap participant that is an 
     institution chartered under the Farm Credit Act of 1971 (12 
     U.S.C. 2001 et seq.).'';
       (18) in paragraph (40) (as redesignated by paragraph (1))--
       (A) by striking subparagraph (B);
       (B) by redesignating subparagraphs (C), (D), and (E) as 
     subparagraphs (B), (C), and (F), respectively;
       (C) in subparagraph (C) (as so redesignated), by striking 
     ``and'';
       (D) by inserting after subparagraph (C) (as so 
     redesignated) the following:
       ``(D) a swap execution facility registered under section 
     5h;
       ``(E) a swap data repository; and'';
       (19) by inserting after paragraph (41) (as redesignated by 
     paragraph (1)) the following:
       ``(42) Security-based swap.--The term `security-based swap' 
     has the meaning given the term in section 3(a) of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78c(a)).
       ``(43) Security-based swap dealer.--The term `security-
     based swap dealer' has the meaning given the term in section 
     3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 
     78c(a)).'';
       (20) in paragraph (46) (as redesignated by paragraph (1)), 
     by striking ``subject to section 2(h)(7)'' and inserting 
     ``subject to section 2(h)(5)'';
       (21) by inserting after paragraph (46) (as redesignated by 
     paragraph (1)) the following:
       ``(47) Swap.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the term `swap' means any agreement, contract, or 
     transaction--
       ``(i) that is a put, call, cap, floor, collar, or similar 
     option of any kind that is for the purchase or sale, 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) that 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) that 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--

       ``(I) an interest rate swap;
       ``(II) a rate floor;
       ``(III) a rate cap;
       ``(IV) a rate collar;
       ``(V) a cross-currency rate swap;
       ``(VI) a basis swap;
       ``(VII) a currency swap;
       ``(VIII) a foreign exchange swap;

[[Page S4292]]

       ``(IX) a total return swap;
       ``(X) an equity index swap;
       ``(XI) an equity swap;
       ``(XII) a debt index swap;
       ``(XIII) a debt swap;
       ``(XIV) a credit spread;
       ``(XV) a credit default swap;
       ``(XVI) a credit swap;
       ``(XVII) a weather swap;
       ``(XVIII) an energy swap;
       ``(XIX) a metal swap;
       ``(XX) an agricultural swap;
       ``(XXI) an emissions swap; and
       ``(XXII) a commodity swap;

       ``(iv) that is an agreement, contract, or transaction that 
     is, or in the future becomes commonly known to the trade as a 
     swap;
       ``(v) including any security-based swap agreement which 
     meets the definition of `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; or
       ``(vi) that is any combination or permutation of, or option 
     on, any agreement, contract, or transaction described in any 
     of clauses (i) through (v).
       ``(B) Exclusions.--The term `swap' does not include--
       ``(i) any contract of sale of a commodity for future 
     delivery (or option on such a contract), leverage contract 
     authorized under section 19, security futures product, or 
     agreement, contract, or transaction described in section 
     2(c)(2)(C)(i) or section 2(c)(2)(D)(i);
       ``(ii) any sale of a nonfinancial commodity or security for 
     deferred shipment or delivery, so long as the transaction is 
     intended to be 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, that is subject to--

       ``(I) the Securities Act of 1933 (15 U.S.C. 77a et seq.); 
     and
       ``(II) the Securities Exchange Act of 1934 (15 U.S.C. 78a 
     et seq.);

       ``(iv) any put, call, straddle, option, or privilege 
     relating to a 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 
     that is subject to--

       ``(I) the Securities Act of 1933 (15 U.S.C. 77a et seq.); 
     and
       ``(II) the Securities Exchange Act of 1934 (15 U.S.C. 78a 
     et seq.);

       ``(vi) any agreement, contract, or transaction providing 
     for the purchase or sale of 1 or more securities on a 
     contingent basis that is subject to the Securities Act of 
     1933 (15 U.S.C. 77a et seq.) and the Securities Exchange Act 
     of 1934 (15 U.S.C. 78a et seq.), unless the agreement, 
     contract, or transaction predicates the 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) of the Securities Act 
     of 1933 (15 U.S.C. 77b(a));
       ``(viii) any agreement, contract, or transaction that is--

       ``(I) based on a security; and
       ``(II) entered into directly or through an underwriter (as 
     defined in section 2(a) of the Securities Act of 1933 (15 
     U.S.C. 77b(a))) by the issuer of such security for the 
     purposes of raising capital, unless the agreement, contract, 
     or transaction is entered into to manage a risk associated 
     with capital raising;

       ``(ix) any agreement, contract, or transaction a 
     counterparty of which is a Federal Reserve bank, the Federal 
     Government, or a Federal agency that is expressly backed by 
     the full faith and credit of the United States; and
       ``(x) any security-based swap, other than a security-based 
     swap as described in subparagraph (D).
       ``(C) Rule of construction regarding master agreements.--
       ``(i) In general.--Except as provided in clause (ii), the 
     term `swap' includes a master agreement that provides for an 
     agreement, contract, or transaction that is a swap under 
     subparagraph (A), together with each supplement to any master 
     agreement, without regard to whether the master agreement 
     contains an agreement, contract, or transaction that is not a 
     swap pursuant to subparagraph (A).
       ``(ii) Exception.--For purposes of clause (i), the master 
     agreement shall be considered to be a swap only with respect 
     to each agreement, contract, or transaction covered by the 
     master agreement that is a swap pursuant to subparagraph (A).
       ``(D) Mixed swap.--The term `security-based swap' includes 
     any agreement, contract, or transaction that is as described 
     in section 3(a)(68)(A) of the Securities Exchange Act of 1934 
     (15 U.S.C. 78c(a)(68)(A)) and also is based on 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 a single security or a narrow-based security 
     index), or the occurrence, non-occurrence, or the extent of 
     the occurrence of an event or contingency associated with a 
     potential financial, economic, or commercial consequence 
     (other than an event described in subparagraph (A)(iii)).
       ``(E) Treatment of foreign exchange swaps and forwards.--
       ``(i) In general.--Foreign exchange swaps and foreign 
     exchange forwards shall be considered swaps under this 
     paragraph unless the Secretary makes a written determination 
     that either foreign exchange swaps or foreign exchange 
     forwards or both--

       ``(I) should be not be regulated as swaps under this Act; 
     and
       ``(II) are not structured to evade the Wall Street 
     Transparency and Accountability Act of 2010 in violation of 
     any rule promulgated by the Commission pursuant to section 
     111(c) of that Act.

       ``(ii) Congressional notice; effectiveness.--The Secretary 
     shall submit any written determination under clause (i) to 
     the appropriate committees of Congress, including the 
     Committee on Agriculture, Nutrition, and Forestry of the 
     Senate and the Committee on Agriculture of the House of 
     Representatives. Any such written determination by the 
     Secretary shall not be effective until it is submitted to the 
     appropriate committees of Congress.
       ``(iii) Reporting.--Notwithstanding a written determination 
     by the Secretary under clause (i), all foreign exchange swaps 
     and foreign exchange forwards shall be reported to either a 
     swap data repository, or, if there is no swap data repository 
     that would accept such swaps or forwards, to the Commission 
     pursuant to section 4r within such time period as the 
     Commission may by rule or regulation prescribe.
       ``(iv) Business standards.--Notwithstanding clauses (ix) 
     and (x) of subparagraph (B) and clause (ii), any party to a 
     foreign exchange swap or forward that is a swap dealer or 
     major swap participant shall conform to the business conduct 
     standards contained in section 4s(h).
       ``(v) Secretary.--For purposes of this subparagraph only, 
     the term `Secretary' means the Secretary of the Treasury.
       ``(F) Exception for certain foreign exchange swaps and 
     forwards.--
       ``(i) Registered entities.--Any foreign exchange swap and 
     any foreign exchange forward that is listed and traded on or 
     subject to the rules of a designated contract market or a 
     swap execution facility, or that is cleared by a derivatives 
     clearing organization shall not be exempt from any provision 
     of this Act or amendments made by the Wall Street 
     Transparency and Accountability Act of 2010 prohibiting fraud 
     or manipulation.
       ``(ii) Retail transactions.--Nothing in subparagraph (E) 
     shall affect, or be construed to affect, the applicability of 
     this Act or the jurisdiction of the Commission with respect 
     to agreements, contracts, or transactions in foreign currency 
     pursuant to section 2(c)(2).
       ``(48) Swap data repository.--The term `swap data 
     repository' means any person that collects, calculates, 
     prepares, or maintains information or records with respect to 
     transactions or positions in, or the terms and conditions of, 
     swaps entered into by third parties.
       ``(49) Swap dealer.--
       ``(A) In general.--The term `swap dealer' means any person 
     who--
       ``(i) holds itself out as a dealer in swaps;
       ``(ii) makes a market in swaps;
       ``(iii) regularly engages in the purchase and sale of swaps 
     in the ordinary course of business; or
       ``(iv) engages in any activity causing the person to be 
     commonly known in the trade as a dealer or market maker in 
     swaps.
       ``(B) Inclusion.--A person may be designated as a swap 
     dealer for a single type or single class or category of swap 
     or activities and considered not to be a swap dealer for 
     other types, classes, or categories of swaps or activities.
       ``(C) Capital.--In setting capital requirements for a 
     person that is designated as a swap dealer for a single type 
     or single class or category of swap or activities, the 
     prudential regulator and the Commission shall take into 
     account the risks associated with other types of swaps or 
     classes of swaps or categories of swaps engaged in and the 
     other activities conducted by that person that are not 
     otherwise subject to regulation applicable to that person by 
     virtue of the status of the person as a swap dealer.
       ``(D) 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.
       ``(50) Swap execution facility.--The term `swap execution 
     facility' means a facility 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 facility or system, through any 
     means of interstate commerce, including any trading facility, 
     that--
       ``(A) facilitates the execution of swaps between persons; 
     and
       ``(B) is not a designated contract market.''; and
       (22) in paragraph (51) (as redesignated by paragraph (1)), 
     in subparagraph (A)(i), by striking ``partipants'' and 
     inserting ``participants''.
       (b) Authority To Define Terms.--The Commodity Futures 
     Trading Commission may adopt a rule to define--
       (1) the term ``commercial risk''; and
       (2) any other term included in an amendment to the 
     Commodity Exchange Act (7 U.S.C. 1 et seq.) made by this 
     subtitle.
       (c) Modification of Definitions.--To include transactions 
     and entities that have been structured to evade this subtitle 
     (or an amendment made by this subtitle), the Commodity 
     Futures Trading Commission shall adopt a rule to further 
     define the terms ``swap'', ``swap dealer'', ``major swap 
     participant'', and ``eligible contract participant''.
       (d) Exemptions.--Section 4(c)(1) of the Commodity Exchange 
     Act (7 U.S.C. 6(c)(1)) is amended by striking ``except that'' 
     and all that follows through the period at the end and 
     inserting the following: ``except that--
       ``(A) unless the Commission is expressly authorized by any 
     provision described in this subparagraph to grant exemptions, 
     with respect to

[[Page S4293]]

     amendments made by subtitle A of the Wall Street Transparency 
     and Accountability Act of 2010--
       ``(i) with respect to--

       ``(I) paragraphs (2), (3), (4), (5), and (7), clause 
     (vii)(III) of paragraph (17), paragraphs (23), (24), (31), 
     (32), (38), (39), (41), (42), (46), (47), (48), and (49) of 
     section 1a, and sections 2(a)(13), 2(c)(D), 4a(a), 4a(b), 
     4d(c), 4d(d), 4r, 4s, 5b(a), 5b(b), 5(d), 5(g), 5(h), 5b(c), 
     5b(i), 8e, and 21; and
       ``(II) section 206(e) of the Gramm-Leach-Bliley Act (Public 
     Law 106-102; 15 U.S.C. 78c note); and

       ``(ii) in subsection (c) of section 111 and section 132; 
     and
       ``(B) the Commission and the Securities and Exchange 
     Commission may by rule, regulation, or order jointly exclude 
     any agreement, contract, or transaction from section 
     2(a)(1)(D)) if the Commission determines that the exemption 
     would be consistent with the public interest.''.
       (e) Conforming Amendments.--
       (1) Section 2(c)(2)(B)(i)(II) of the Commodity Exchange Act 
     (7 U.S.C. 2(c)(2)(B)(i)(II)) is amended--
       (A) in item (cc)--
       (i) in subitem (AA), by striking ``section 1a(20)'' and 
     inserting ``section 1a''; and
       (ii) in subitem (BB), by striking ``section 1a(20)'' and 
     inserting ``section 1a''; and
       (B) in item (dd), by striking ``section 1a(12)(A)(ii)'' and 
     inserting ``section 1a(18)(A)(ii)''.
       (2) Section 4m(3) of the Commodity Exchange Act (7 U.S.C. 
     6m(3)) is amended by striking ``section 1a(6)'' and inserting 
     ``section 1a''.
       (3) Section 4q(a)(1) of the Commodity Exchange Act (7 
     U.S.C. 6o-1(a)(1)) is amended by striking ``section 1a(4)'' 
     and inserting ``section 1a(9)''.
       (4) Section 5(e)(1) of the Commodity Exchange Act (7 U.S.C. 
     7(e)(1)) is amended by striking ``section 1a(4)'' and 
     inserting ``section 1a(9)''.
       (5) Section 5a(b)(2)(F) of the Commodity Exchange Act (7 
     U.S.C. 7a(b)(2)(F)) is amended by striking ``section 1a(4)'' 
     and inserting ``section 1a(9)''.
       (6) Section 5b(a) of the Commodity Exchange Act (7 U.S.C. 
     7a-1(a)) is amended, in the matter preceding paragraph (1), 
     by striking ``section 1a(9)'' and inserting ``section 1a''.
       (7) Section 5c(c)(2)(B) of the Commodity Exchange Act (7 
     U.S.C. 7a-2(c)(2)(B)) is amended by striking ``section 
     1a(4)'' and inserting ``section 1a(9)''.
       (8) Section 6(g)(5)(B)(i) of the Securities Exchange Act of 
     1934 (15 U.S.C. 78f(g)(5)(B)(i)) is amended--
       (A) in subclause (I), by striking ``section 1a(12)(B)(ii)'' 
     and inserting ``section 1a(18)(B)(ii)''; and
       (B) in subclause (II), by striking ``section 1a(12)'' and 
     inserting ``section 1a(18)''.
       (9) The Legal Certainty for Bank Products Act of 2000 (7 
     U.S.C. 27 et seq.) is amended--
       (A) in section 402--
       (i) in subsection (a)(7), by striking ``section 1a(20)'' 
     and inserting ``section 1a'';
       (ii) in subsection (b)(2), by striking ``section 1a(12)'' 
     and inserting ``section 1a'';
       (iii) in subsection (c), by striking ``section 1a(4)'' and 
     inserting ``section 1a''; and
       (iv) in subsection (d)--

       (I) in the matter preceding paragraph (1), by striking 
     ``section 1a(4)'' and inserting ``section 1a(9)'';
       (II) in paragraph (1)--

       (aa) in subparagraph (A), by striking ``section 1a(12)'' 
     and inserting ``section 1a''; and
       (bb) in subparagraph (B), by striking ``section 1a(33)'' 
     and inserting ``section 1a'';

       (III) in paragraph (2)--

       (aa) in subparagraph (A), by striking ``section 1a(10)'' 
     and inserting ``section 1a'';
       (bb) in subparagraph (B), by striking ``section 
     1a(12)(B)(ii)'' and inserting ``section 1a(18)(B)(ii)'';
       (cc) in subparagraph (C), by striking ``section 1a(12)'' 
     and inserting ``section 1a(18)''; and
       (dd) in subparagraph (D), by striking ``section 1a(13)'' 
     and inserting ``section 1a''; and
       (B) in section 404(1), by striking ``section 1a(4)'' and 
     inserting ``section 1a''.

     SEC. 722. JURISDICTION.

       (a) Exclusive Jurisdiction.--Section 2(a)(1)(A) of the 
     Commodity Exchange Act (7 U.S.C. 2(a)(1)(A)) is amended in 
     the first sentence--
       (1) by inserting ``the Wall Street Transparency and 
     Accountability Act of 2010 (including an amendment made by 
     that Act) and'' after ``otherwise provided in'';
       (2) by striking ``(c) through (i) of this section'' and 
     inserting ``(c) and (f)'';
       (3) by striking ``contracts of sale'' and inserting ``swaps 
     or contracts of sale''; and
       (4) by striking ``or derivatives transaction execution 
     facility registered pursuant to section 5 or 5a'' and 
     inserting ``pursuant to section 5''.
       (b) Regulation of Swaps Under Federal and State Law.--
     Section 12 of the Commodity Exchange Act (7 U.S.C. 16) is 
     amended by adding at the end the following:
       ``(h) Regulation of Swaps as Insurance Under State Law.--A 
     swap--
       ``(1) shall not be considered to be insurance; and
       ``(2) may not be regulated as an insurance contract under 
     the law of any State.''.
       (c) Agreements, Contracts, and Transactions Traded on an 
     Organized Exchange.--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'' at the end;
       (2) by redesignating clause (ii) as clause (iii); and
       (3) by inserting after clause (i) the following:
       ``(ii) a swap; or''.
       (d) Applicability.--Section 2 of the Commodity Exchange Act 
     (7 U.S.C. 2) (as amended by section 723(a)(3)) is amended by 
     adding at the end the following:
       ``(i) Applicability.--The provisions of this Act relating 
     to swaps that were enacted by the Wall Street Transparency 
     and Accountability Act of 2010 (including any rule prescribed 
     or regulation promulgated under that Act), shall not apply to 
     activities outside the United States unless those 
     activities--
       ``(1) have a direct and significant connection with 
     activities in, or effect on, commerce of the United States; 
     or
       ``(2) contravene such rules or regulations as the 
     Commission may prescribe or promulgate as are necessary or 
     appropriate to prevent the evasion of any provision of this 
     Act that was enacted by the Wall Street Transparency and 
     Accountability Act of 2010.''.
       (e) Just and Reasonable Rates.--Section 2(a)(1)(C) of the 
     Commodity Exchange Act (7 U.S.C. 2(a)(1)(C)) (as amended by 
     section 717(a)) is amended by adding at the end the 
     following:
       ``(vi) Notwithstanding the exclusive jurisdiction of the 
     Commission with respect to accounts, agreements, and 
     transactions involving swaps or contracts of sale of a 
     commodity for future delivery under this Act, no provision of 
     this Act shall be construed--

       ``(I) to supersede or limit the authority of the Federal 
     Energy Regulatory Commission under the Federal Power Act (16 
     U.S.C. 791a et seq.) or the Natural Gas Act (15 U.S.C. 717 et 
     seq.);
       ``(II) to restrict the Federal Energy Regulatory Commission 
     from carrying out the duties and responsibilities of the 
     Federal Energy Regulatory Commission to ensure just and 
     reasonable rates and protect the public interest under the 
     Acts described in subclause (I); or
       ``(III) to supersede or limit the authority of a State 
     regulatory authority (as defined in section 3(21) of the 
     Federal Power Act (16 U.S.C. 796(21)) that has jurisdiction 
     to regulate rates and charges for the sale of electric energy 
     within the State, or restrict that State regulatory authority 
     from carrying out the duties and responsibilities of the 
     State regulatory authority pursuant to the jurisdiction of 
     the State regulatory authority to regulate rates and charges 
     for the transmission or sale of electric energy.

       ``(vii) Nothing in clause (vi) shall affect the 
     Commission's authority with respect to the trading, 
     execution, or clearing of any agreement, contract, or 
     transaction on or subject to the rules of a registered 
     entity, including a designated contract market, derivatives 
     clearing organization, or swaps execution facility.''.
       (f) Public Interest Waiver.--Section 4(c) of the Commodity 
     Exchange Act (7 U.S.C. 6(c)) (as amended by section 721(d)) 
     is amended by adding at the end the following:
       ``(6) If the Commission determines that the exemption would 
     be consistent with the public interest and the purposes of 
     this Act, the Commission shall, in accordance with paragraphs 
     (1) and (2), exempt from the requirements of this Act an 
     agreement, contract, or transaction that is entered into--
       ``(A) pursuant to a tariff or rate schedule approved or 
     permitted to take effect by the Federal Energy Regulatory 
     Commission;
       ``(B) pursuant to a tariff or rate schedule establishing 
     rates or charges for, or protocols governing, the sale of 
     electric energy approved or permitted to take effect by the 
     regulatory authority of the State or municipality having 
     jurisdiction to regulate rates and charges for the sale of 
     electric energy within the State or municipality; or
       ``(C) between entities described in section 201(f) of the 
     Federal Power Act (16 U.S.C. 824(f)).''.

     SEC. 723. CLEARING.

       (a) Clearing Requirement.--
       (1) In general.--Section 2 of the Commodity Exchange Act (7 
     U.S.C. 2) is amended--
       (A) by striking subsections (d), (e), (g), and (h); and
       (B) by redesignating subsection (i) as subsection (g).
       (2) Swaps; limitation on participation.--Section 2 of the 
     Commodity Exchange Act (7 U.S.C. 2) (as amended by paragraph 
     (1)) is amended by inserting after subsection (c) the 
     following:
       ``(d) Swaps.--Nothing in this Act (other than subparagraphs 
     (A), (B), (C), and (D) of subsection (a)(1), subsections (f) 
     and (g), sections 1a, 2(c)(2)(A)(ii), 2(e), 2(h), 4(c), 4a, 
     4b, and 4b-1, subsections (a), (b), and (g) of section 4c, 
     sections 4d, 4e, 4f, 4g, 4h, 4i, 4j, 4k, 4l, 4m, 4n, 4o, 4p, 
     4r, 4s, 4t, 5, 5b, 5c, 5e, and 5h, subsections (c) and (d) of 
     section 6, sections 6c, 6d, 8, 8a, and 9, subsections (e)(2) 
     and (f) of section 12, subsections (a) and (b) of section 13, 
     sections 17, 20, 21, and 22(a)(4), and any other provision of 
     this Act that is applicable 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) Mandatory clearing of swaps.--Section 2 of the 
     Commodity Exchange Act (7 U.S.C. 2) is amended by inserting 
     after subsection (g) (as redesignated by paragraph (1)(B)) 
     the following:
       ``(h) Clearing Requirement.--
       ``(1) Submission.--
       ``(A) In general.--Except as provided in paragraphs (9) and 
     (10), 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) Open access.--The rules of a registered derivatives 
     clearing organization shall--
       ``(i) prescribe that all swaps with the same terms and 
     conditions are economically equivalent and may be offset with 
     each other within the derivatives clearing organization; and

[[Page S4294]]

       ``(ii) provide for nondiscriminatory clearing of a swap 
     executed bilaterally or on or through the rules of an 
     unaffiliated designated contract market or swap execution 
     facility, subject to the requirements of section 5(b).
       ``(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.--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 Act;

       ``(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.--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.--The Commission shall adopt rules to 
     further identify any group, category, type, or class of swaps 
     not submitted for approval under paragraph (2) that the 
     Commission deems should be accepted for clearing. In adopting 
     such rules, the 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 
     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 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 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 rules adopted under 
     such subparagraph.
       ``(C) In general.--In accordance with subparagraph (A), the 
     Commission shall, consistent with the public interest, adopt 
     rules under the expedited process described in subparagraph 
     (D) to establish criteria for determining that a swap, or any 
     group, category, type, or class of swap is required to be 
     cleared.
       ``(D) Expedited rulemaking authority.--
       ``(i) Procedure.--The promulgation of regulations under 
     subparagraph (A) may be made without regard to--

       ``(I) the notice and comment provisions of section 553 of 
     title 5, United States Code; and
       ``(II) chapter 35 of title 44, United States Code (commonly 
     known as the `Paperwork Reduction Act').

       ``(ii) Agency rulemaking.--In carrying out subparagraph 
     (A), the Commission shall use the authority provided under 
     section 808 of title 5, United States Code.
       ``(5) Prevention of evasion.--
       ``(A) In general.--The Commission may prescribe rules under 
     this subsection (and issue interpretations of rules 
     prescribed under this subsection) as determined by the 
     Commission to be necessary to prevent evasions of the 
     mandatory clearing requirements under this Act.
       ``(B) Duty of commission to investigate and take certain 
     actions.--To the extent the Commission finds that a 
     particular swap, group, category, type, or class of swaps 
     would otherwise be subject to mandatory clearing but no 
     derivatives clearing organization has listed the swap, group, 
     category, type, or class of swaps for clearing, the 
     Commission shall--
       ``(i) investigate the relevant facts and circumstances;
       ``(ii) within 30 days issue a public report containing the 
     results of the investigation; and
       ``(iii) take such actions as the Commission determines to 
     be necessary and in the public interest, which may include 
     requiring the retaining of adequate margin or capital by 
     parties to the swap, group, category, type, or class of 
     swaps.
       ``(C) Effect on authority.--Nothing in this paragraph 
     shall--
       ``(i) authorize the Commission to require a derivatives 
     clearing organization to list for clearing a swap, group, 
     category, type, or class of swaps if the clearing of the 
     swap, group, category, type, or class of swaps would 
     adversely affect the business operations of the derivatives 
     clearing organization, threaten the financial integrity of 
     the derivatives clearing organization, or pose a systemic 
     risk to the derivatives clearing organization; and
       ``(ii) affect the authority of the Commission to enforce 
     the open access provisions of paragraph (1) with respect to a 
     swap, group, category, type, or class of swaps that is listed 
     for clearing by a derivatives clearing organization.
       ``(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 date of enactment of this 
     subsection.--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 date of enactment of 
     this subsection.--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.--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 clearing 
     requirement.--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 a swap execution facility 
     registered under section 5h or a 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 
     swap execution facility makes the swap available to trade or 
     a swap transactions where a commercial end user opts to use 
     the clearing exemption under paragraph (9).
       ``(9) 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 from clearing.
       ``(10) End user clearing exemption.--
       ``(A) Definition of commercial end user.--
       ``(i) In general.--In this paragraph, the term `commercial 
     end user' means any person other than a financial entity 
     described in clause (ii) who, as its primary business 
     activity, owns, uses, produces, processes, manufactures, 
     distributes, merchandises, or markets goods, services,

[[Page S4295]]

     or commodities (which shall include but not be limited to 
     coal, natural gas, electricity, ethanol, crude oil, gasoline, 
     propane, distillates, and other hydrocarbons) either 
     individually or in a fiduciary capacity.
       ``(ii) Financial entity.--The term `financial entity' 
     means--

       ``(I) a swap dealer, major swap participant, security-based 
     swap dealer, or major security-based swap participant;
       ``(II) a person predominantly engaged in activities that 
     are in the business of banking or financial in nature, as 
     defined in Section 4(k) of the Bank Holding Company Act of 
     1956;
       ``(III) a person predominantly engaged in activities that 
     are financial in nature;
       ``(IV) a commodity pool or a private fund as defined in 
     section 202(a) of the Investment Advisers Act of 1940 (15 
     U.S.C. 80b-2(a)); or
       ``(V) a person that is registered or required to be 
     registered with the Commission.

       ``(B) End user clearing exemption.--
       ``(i) In general.--Subject to clause (ii), in the event 
     that a swap is subject to the mandatory clearing requirement 
     under paragraph (1), and 1 of the counterparties to the swap 
     is a commercial end user, that counterparty--

       ``(I)(aa) may elect not to clear the swap, as required 
     under paragraph (1); or
       ``(bb) may elect to require clearing of the swap; and
       ``(II) if the end user makes an election under subclause 
     (I)(bb), shall have the sole right to select the derivatives 
     clearing organization at which the swap will be cleared.

       ``(ii) Limitation.--A commercial end user may only make an 
     election under clause (i) if the end user is using the swap 
     to hedge its own commercial risk.
       ``(C) Treatment of affiliates.--
       ``(i) In general.--An affiliate of a commercial end user 
     (including affiliate entities predominantly engaged in 
     providing financing for the purchase of the merchandise or 
     manufactured goods of the commercial end user) may make an 
     election under subparagraph (B)(i) only if the affiliate, 
     acting on behalf of the commercial end user and as an agent, 
     uses the swap to hedge or mitigate the commercial risk of the 
     commercial end user parent or other affiliate of the 
     commercial end user that is not a financial entity.
       ``(ii) Prohibition relating to certain affiliates.--An 
     affiliate of a commercial end user shall not use the 
     exemption under subparagraph (B) if the affiliate is--

       ``(I) a swap dealer;
       ``(II) a security-based swap dealer;
       ``(III) a major swap participant;
       ``(IV) a major security-based swap participant;
       ``(V) 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 paragraph (1) or (7) of subsection 
     (c) of that Act (15 U.S.C. 80a-3(c));
       ``(VI) a commodity pool;
       ``(VII) a bank holding company with over $50,000,000,000 in 
     consolidated assets; or
       ``(VIII) an affiliate of any entity described in subclauses 
     (I) through (VII).

       ``(D) Abuse of exemption.--The Commission may prescribe 
     such rules or issue interpretations of the rules as the 
     Commission determines to be necessary to prevent abuse of the 
     exemption described in subparagraph (B). The Commission may 
     also request information from those entities claiming the 
     clearing exemption as necessary to prevent abuse of the 
     exemption described in subparagraph (B).
       ``(E) Option to clear.--
       ``(i) Swaps required to be cleared entered into with a 
     financial entity.--With respect to any swap that is required 
     to be cleared by a derivatives clearing organization and 
     entered into by a swap dealer or a major swap participant 
     with a financial entity, the financial entity shall have the 
     sole right to select the derivatives clearing organization at 
     which the swap will be cleared.
       ``(ii) Swaps not required to be cleared entered into with a 
     financial entity or commercial end user.--With respect to any 
     swap that is not required to be cleared by a derivatives 
     clearing organization and entered into by a swap dealer or a 
     major swap participant with a financial entity or commercial 
     end user, the financial entity or commercial end user--

       ``(I) may elect to require clearing of the swap; and
       ``(II) shall have the sole right to select the derivatives 
     clearing organization at which the swap will be cleared.''.

       (b) Commodity Exchange Act.--Section 2 of the Commodity 
     Exchange Act (7 U.S.C. 2) is amended by adding at the end the 
     following:
       ``(j) Audit Committee Approval.--Exemptions from the 
     requirements of subsection (h)(2)(F) to clear a swap and 
     subsection (b) to trade a swap through a board of trade or 
     swap execution facility shall be available to a counterparty 
     that is an issuer of securities that are registered under 
     section 12 of the Securities Exchange Act of 1934 (15 U.S.C. 
     78l) or that is required to file reports pursuant to section 
     15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78o) 
     only if the issuer's audit committee has reviewed and 
     approved its decision to enter into swaps that are subject to 
     such exemptions.''.
       (c) Grandfather Provisions.--
       (1) Legal certainty for certain transactions in exempt 
     commodities.--Not later than 60 days after the date of 
     enactment of this Act, a person may submit to the Commodity 
     Futures Trading Commission a petition to remain subject to 
     section 2(h) of the Commodity Exchange Act (7 U.S.C. 2(h)) 
     (as in effect on the day before the date of enactment of this 
     Act).
       (2) Consideration; authority of commodity futures trading 
     commission.--The Commodity Futures Trading Commission--
       (A) shall consider any petition submitted under 
     subparagraph (A) in a prompt manner; and
       (B) may allow a person to continue operating subject to 
     section 2(h) of the Commodity Exchange Act (7 U.S.C. 2(h)) 
     (as in effect on the day before the date of enactment of this 
     Act) for not longer than a 1-year period.
       (3) Agricultural swaps.--
       (A) In general.--Except as provided in paragraph (2), no 
     person shall offer to enter into, enter into, or confirm the 
     execution of, any swap in an agricultural commodity (as 
     defined by the Commodity Futures Trading Commission).
       (B) Exception.--Notwithstanding paragraph (1), a person may 
     offer to enter into, enter into, or confirm the execution of, 
     any swap in an agricultural commodity pursuant to section 
     4(c) of the Commodity Exchange Act (7 U.S.C. 6(c)) or any 
     rule, regulation, or order issued thereunder (including any 
     rule, regulation, or order in effect as of the date of 
     enactment of this Act) by the Commodity Futures Trading 
     Commission to allow swaps under such terms and conditions as 
     the Commission shall prescribe.
       (4) Required reporting.--If the exception described in 
     paragraph (2) applies, and there is no facility that makes 
     the swap available to trade, the counterparties shall comply 
     with any recordkeeping and transaction reporting requirements 
     that may be prescribed by the Commission with respect to 
     swaps subject to the requirements of paragraph (1).

     SEC. 724. SWAPS; SEGREGATION AND BANKRUPTCY TREATMENT.

       (a) Segregation Requirements for Cleared Swaps.--Section 4d 
     of the Commodity Exchange Act (7 U.S.C. 6d) (as amended by 
     section 732) is amended by adding at the end the following:
       ``(f) Swaps.--
       ``(1) Registration requirement.--It shall be unlawful for 
     any person to accept any money, securities, or property (or 
     to extend any credit in lieu of money, securities, or 
     property) from, for, or on behalf of a swaps customer to 
     margin, guarantee, or secure a swap cleared by or through a 
     derivatives clearing organization (including money, 
     securities, or property accruing to the customer as the 
     result of such a swap), unless the person shall have 
     registered under this Act with the Commission as a futures 
     commission merchant, and the registration shall not have 
     expired nor been suspended nor revoked.
       ``(2) Cleared swaps.--
       ``(A) Segregation required.--A futures commission merchant 
     shall treat and deal with all money, securities, and property 
     of any swaps customer received to margin, guarantee, or 
     secure a swap cleared by or though a derivatives clearing 
     organization (including money, securities, or property 
     accruing to the swaps customer as the result of such a swap) 
     as belonging to the swaps customer.
       ``(B) Commingling prohibited.--Money, securities, and 
     property of a swaps customer described in subparagraph (A) 
     shall be separately accounted for and shall not be commingled 
     with the funds of the futures commission merchant or be used 
     to margin, secure, or guarantee any trades or contracts of 
     any swaps customer or person other than the person for whom 
     the same are held.
       ``(3) Exceptions.--
       ``(A) Use of funds.--
       ``(i) In general.--Notwithstanding paragraph (2), money, 
     securities, and property of a swaps customer of a futures 
     commission merchant described in paragraph (2) may, for 
     convenience, be commingled and deposited in the same 1 or 
     more accounts with any bank or trust company or with a 
     derivatives clearing organization.
       ``(ii) Withdrawal.--Notwithstanding paragraph (2), such 
     share of the money, securities, and property described in 
     clause (i) as in the normal course of business shall be 
     necessary to margin, guarantee, secure, transfer, adjust, or 
     settle a cleared swap with a derivatives clearing 
     organization, or with any member of the derivatives clearing 
     organization, may be withdrawn and applied to such purposes, 
     including the payment of commissions, brokerage, interest, 
     taxes, storage, and other charges, lawfully accruing in 
     connection with the cleared swap.
       ``(B) Commission action.--Notwithstanding paragraph (2), in 
     accordance with such terms and conditions as the Commission 
     may prescribe by rule, regulation, or order, any money, 
     securities, or property of the swaps customer of a futures 
     commission merchant described in paragraph (2) may be 
     commingled and deposited as provided in this section with any 
     other money, securities, or property received by the futures 
     commission merchant and required by the Commission to be 
     separately accounted for and treated and dealt with as 
     belonging to the swaps customer of the futures commission 
     merchant.
       ``(4) Permitted investments.--Money described in paragraph 
     (2) may be invested in obligations of the United States, in 
     general obligations of any State or of any political 
     subdivision of a State, and in obligations fully guaranteed 
     as to principal and interest by the United States, or in any 
     other investment that the Commission may by rule or 
     regulation prescribe, and such investments shall be made in 
     accordance with such rules and regulations and subject to 
     such conditions as the Commission may prescribe.
       ``(5) Commodity contract.--A swap cleared by or through a 
     derivatives clearing organization shall be considered to be a 
     commodity contract as such term is defined in section 761 of 
     title 11, United States Code, with regard to all money, 
     securities, and property of any swaps customer received by a 
     futures commission merchant or a derivatives clearing 
     organization to margin, guarantee, or secure the swap 
     (including money, securities, or property accruing to the 
     customer as the result of the swap).
       ``(6) Prohibition.--It shall be unlawful for any person, 
     including any derivatives clearing organization and any 
     depository institution, that has received any money, 
     securities, or

[[Page S4296]]

     property for deposit in a separate account or accounts as 
     provided in paragraph (2) to hold, dispose of, or use any 
     such money, securities, or property as belonging to the 
     depositing futures commission merchant or any person other 
     than the swaps customer of the futures commission 
     merchant.''.
       (b) Bankruptcy Treatment of Cleared Swaps.--Section 761 of 
     title 11, United States Code, is amended--
       (1) in paragraph (4), by striking subparagraph (F) and 
     inserting the following:
       ``(F)(i) any other contract, option, agreement, or 
     transaction that is similar to a contract, option, agreement, 
     or transaction referred to in this paragraph; and
       ``(ii) with respect to a futures commission merchant or a 
     clearing organization, any other contract, option, agreement, 
     or transaction, in each case, that is cleared by a clearing 
     organization;''; and
       (2) in paragraph (9)(A)(i), by striking ``the commodity 
     futures account'' and inserting ``a commodity contract 
     account''.
       (c) Segregation Requirements for Uncleared Swaps.--Section 
     4s of the Commodity Exchange Act (as added by section 731) is 
     amended by adding at the end the following:
       ``(l) Segregation Requirements.--
       ``(1) Segregation of assets held as collateral in uncleared 
     swap transactions.--
       ``(A) Notification.--A swap dealer or major swap 
     participant shall be required to notify the counterparty of 
     the swap dealer or major swap participant at the beginning of 
     a swap transaction that the counterparty has the right to 
     require segregation of the funds or other property supplied 
     to margin, guarantee, or secure the obligations of the 
     counterparty.
       ``(B) Segregation and maintenance of funds.--At the request 
     of a counterparty to a swap that provides funds or other 
     property to a swap dealer or major swap participant to 
     margin, guarantee, or secure the obligations of the 
     counterparty, the swap dealer or major swap participant 
     shall--
       ``(i) segregate the funds or other property for the benefit 
     of the counterparty; and
       ``(ii) in accordance with such rules and regulations as the 
     Commission may promulgate, maintain the funds or other 
     property in a segregated account separate from the assets and 
     other interests of the swap dealer or major swap participant.
       ``(2) Applicability.--The requirements described in 
     paragraph (1) shall--
       ``(A) apply only to a swap between a counterparty and a 
     swap dealer or major swap participant that is not submitted 
     for clearing to a derivatives clearing organization; and
       ``(B)(i) not apply to variation margin payments; or
       ``(ii) not preclude any commercial arrangement regarding--
       ``(I) the investment of segregated funds or other property 
     that may only be invested in such investments as the 
     Commission may permit by rule or regulation; and
       ``(II) the related allocation of gains and losses resulting 
     from any investment of the segregated funds or other 
     property.
       ``(3) Use of independent third-party custodians.--The 
     segregated account described in paragraph (1) shall be--
       ``(A) carried by an independent third-party custodian; and
       ``(B) designated as a segregated account for and on behalf 
     of the counterparty.
       ``(4) Reporting requirement.--If the counterparty does not 
     choose to require segregation of the funds or other property 
     supplied to margin, guarantee, or secure the obligations of 
     the counterparty, the swap dealer or major swap participant 
     shall report to the counterparty of the swap dealer or major 
     swap participant on a quarterly basis that the back office 
     procedures of the swap dealer or major swap participant 
     relating to margin and collateral requirements are in 
     compliance with the agreement of the counterparties.''.

     SEC. 725. DERIVATIVES CLEARING ORGANIZATIONS.

       (a) Registration Requirement.--Section 5b of the Commodity 
     Exchange Act (7 U.S.C. 7a-1) is amended by striking 
     subsections (a) and (b) and inserting the following:
       ``(a) Registration Requirement.--
       ``(1) In general.--Except as provided in paragraph (2), it 
     shall be unlawful for a derivatives clearing organization, 
     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 with respect 
     to--
       ``(A) a contract of sale of a commodity for future delivery 
     (or an option on the contract of sale) or option on a 
     commodity, in each case, unless the contract or option is--
       ``(i) excluded from this Act by subsection (a)(1)(C)(i), 
     (c), or (f) of section 2; or
       ``(ii) 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
       ``(B) a swap.
       ``(2) Exception.--Paragraph (1) shall not apply to a 
     derivatives clearing organization that is registered with the 
     Commission.
       ``(b) Voluntary Registration.--A person that clears 1 or 
     more agreements, contracts, or transactions that are not 
     required to be cleared under this Act may register with the 
     Commission as a derivatives clearing organization.''.
       (b) Registration for Depository Institutions and Clearing 
     Agencies; Exemptions; Compliance Officer; Annual Reports.--
     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.--A person that is required to be 
     registered as a derivatives clearing organization under this 
     section shall register with the Commission regardless of 
     whether the person is also licensed as 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) Existing Depository Institutions and Clearing 
     Agencies.--
       ``(1) In general.--A depository institution or clearing 
     agency registered with the Securities and Exchange Commission 
     under the Securities Exchange Act of 1934 (15 U.S.C. 78a et 
     seq.) that is required to be registered as a derivatives 
     clearing organization under this section is deemed to be 
     registered under this section to the extent that, before the 
     date of enactment of this subsection--
       ``(A) the depository institution cleared swaps as a 
     multilateral clearing organization; or
       ``(B) the clearing agency cleared swaps.
       ``(2) Conversion of depository institutions.--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 depository institution, be converted 
     into a State corporation, partnership, limited liability 
     company, or similar legal form pursuant to a plan of 
     conversion, if the conversion is not in contravention of 
     applicable State law.
       ``(i) 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 determines that the derivatives clearing 
     organization is subject to comparable, comprehensive 
     supervision and regulation by the Securities and Exchange 
     Commission or the appropriate government authorities in the 
     home country of the organization. Such conditions may 
     include, but are not limited to, requiring that the 
     derivatives clearing organization be available for inspection 
     by the Commission and make available all information 
     requested by the Commission.
       ``(j) Designation of Chief Compliance Officer.--
       ``(1) In general.--Each derivatives clearing organization 
     shall designate an individual to serve as a chief compliance 
     officer.
       ``(2) Duties.--The chief compliance officer shall--
       ``(A) report directly to the board or to the senior officer 
     of the derivatives clearing organization;
       ``(B) review the compliance of the derivatives clearing 
     organization with respect to the core principles described in 
     subsection (c)(2);
       ``(C) in consultation with the board of the derivatives 
     clearing organization, a body performing a function similar 
     to the board of the derivatives clearing organization, or the 
     senior officer of the derivatives clearing organization, 
     resolve any conflicts of interest that may arise;
       ``(D) be responsible for administering each policy and 
     procedure that is required to be established pursuant to this 
     section;
       ``(E) ensure compliance with this Act (including 
     regulations) relating to agreements, contracts, or 
     transactions, including each rule prescribed by the 
     Commission under this section;
       ``(F) establish procedures for the remediation of 
     noncompliance issues identified by the compliance officer 
     through any--
       ``(i) compliance office review;
       ``(ii) look-back;
       ``(iii) internal or external audit finding;
       ``(iv) self-reported error; or
       ``(v) validated complaint; and
       ``(G) establish and follow appropriate procedures for the 
     handling, management response, remediation, retesting, and 
     closing of noncompliance issues.
       ``(3) Annual reports.--
       ``(A) In general.--In accordance with rules prescribed by 
     the Commission, the chief compliance officer shall annually 
     prepare and sign a report that contains a description of--
       ``(i) the compliance of the derivatives clearing 
     organization of the compliance officer with respect to this 
     Act (including regulations); and
       ``(ii) each policy and procedure of the derivatives 
     clearing organization of the compliance officer (including 
     the code of ethics and conflict of interest policies of the 
     derivatives clearing organization).
       ``(B) Requirements.--A compliance report under subparagraph 
     (A) shall--
       ``(i) accompany each appropriate financial report of the 
     derivatives clearing organization that is required to be 
     furnished to the Commission pursuant to this section; and
       ``(ii) include a certification that, under penalty of law, 
     the compliance report is accurate and complete.''.
       (c) Core Principles for Derivatives Clearing 
     Organizations.--Section 5b(c) of the Commodity Exchange Act 
     (7 U.S.C. 7a-1(c)) is amended by striking paragraph (2) and 
     inserting the following:
       ``(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 each core 
     principle described in this paragraph and any requirement 
     that the Commission may impose by rule or regulation pursuant 
     to section 8a(5).
       ``(ii) Discretion of derivatives clearing organization.--
     Subject to any rule or regulation prescribed by the 
     Commission, a derivatives clearing organization shall have 
     reasonable discretion in establishing the manner by which the 
     derivatives clearing organization complies with each core 
     principle described in this paragraph.
       ``(B) Financial resources.--
       ``(i) In general.--Each derivatives clearing organization 
     shall have adequate financial,

[[Page S4297]]

     operational, and managerial resources, as determined by the 
     Commission, to discharge each responsibility of the 
     derivatives clearing organization.
       ``(ii) Minimum amount of financial resources.--Each 
     derivatives clearing organization shall possess financial 
     resources that, 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 derivatives clearing organization to 
     cover the operating costs of the derivatives clearing 
     organization for a period of 1 year (as calculated on a 
     rolling basis).

       ``(C) Participant and product eligibility.--
       ``(i) In general.--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 derivatives clearing 
     organization; and
       ``(II) appropriate standards for determining the 
     eligibility of agreements, contracts, and transactions 
     submitted to the derivatives clearing organization for 
     clearing.

       ``(ii) Required procedures.--Each derivatives clearing 
     organization shall establish and implement procedures to 
     verify, on an ongoing basis, the compliance of each 
     participation and membership requirement of the derivatives 
     clearing organization.
       ``(iii) Requirements.--The participation and membership 
     requirements of each derivatives clearing organization 
     shall--

       ``(I) be objective;
       ``(II) be publicly disclosed; and
       ``(III) permit fair and open access.

       ``(D) Risk management.--
       ``(i) In general.--Each derivatives clearing organization 
     shall ensure that the derivatives clearing organization 
     possesses the ability to manage the risks associated with 
     discharging the responsibilities of the derivatives clearing 
     organization through the use of appropriate tools and 
     procedures.
       ``(ii) Measurement of credit exposure.--Each derivatives 
     clearing organization shall--

       ``(I) not less than once during each business day of the 
     derivatives clearing organization, measure the credit 
     exposures of the derivatives clearing organization to each 
     member and participant of the derivatives clearing 
     organization; and
       ``(II) monitor each exposure described in subclause (I) 
     periodically during the business day of the derivatives 
     clearing organization.

       ``(iii) Limitation of exposure to potential losses from 
     defaults.--Each derivatives clearing organization, through 
     margin requirements and other risk control mechanisms, shall 
     limit the exposure of the derivatives clearing organization 
     to potential losses from defaults by members and participants 
     of the derivatives clearing organization to ensure that--

       ``(I) the operations of the derivatives clearing 
     organization would not be disrupted; and
       ``(II) nondefaulting members or participants would not be 
     exposed to losses that nondefaulting members or participants 
     cannot anticipate or control.

       ``(iv) Margin requirements.--The margin required from each 
     member and participant of a derivatives clearing organization 
     shall be sufficient to cover potential exposures in normal 
     market conditions.
       ``(v) Requirements regarding models and parameters.--Each 
     model and parameter used in setting margin requirements under 
     clause (iv) shall be--

       ``(I) risk-based; and
       ``(II) reviewed on a regular basis.

       ``(E) Settlement procedures.--Each derivatives clearing 
     organization shall--
       ``(i) complete money settlements on a timely basis (but not 
     less frequently than once each business day);
       ``(ii) employ money settlement arrangements to eliminate or 
     strictly limit the exposure of the derivatives clearing 
     organization to settlement bank risks (including credit and 
     liquidity risks from the use of banks to effect money 
     settlements);
       ``(iii) ensure that money settlements are final when 
     effected;
       ``(iv) maintain an accurate record of the flow of funds 
     associated with each money settlement;
       ``(v) possess the ability to comply with each term and 
     condition of any permitted netting or offset arrangement with 
     any other clearing organization;
       ``(vi) regarding physical settlements, establish rules that 
     clearly state each obligation of the derivatives clearing 
     organization with respect to physical deliveries; and
       ``(vii) ensure that each risk arising from an obligation 
     described in clause (vi) is identified and managed.
       ``(F) Treatment of funds.--
       ``(i) Required standards and procedures.--Each derivatives 
     clearing organization shall establish standards and 
     procedures that are designed to protect and ensure the safety 
     of member and participant funds and assets.
       ``(ii) Holding of funds and assets.--Each derivatives 
     clearing organization shall hold member and participant funds 
     and assets in a manner by which to minimize the risk of loss 
     or of delay in the access by the derivatives clearing 
     organization to the assets and funds.
       ``(iii) Permissible investments.--Funds and assets invested 
     by a derivatives clearing organization shall be held in 
     instruments with minimal credit, market, and liquidity risks.
       ``(G) Default rules and procedures.--
       ``(i) In general.--Each derivatives clearing organization 
     shall have rules and procedures designed to allow for the 
     efficient, fair, and safe management of events during which 
     members or participants--

       ``(I) become insolvent; or
       ``(II) otherwise default on the obligations of the members 
     or participants to the derivatives clearing organization.

       ``(ii) Default procedures.--Each derivatives clearing 
     organization shall--

       ``(I) clearly state the default procedures of the 
     derivatives clearing organization;
       ``(II) make publicly available the default rules of the 
     derivatives clearing organization; and
       ``(III) ensure that the derivatives clearing organization 
     may take timely action--

       ``(aa) to contain losses and liquidity pressures; and
       ``(bb) to continue meeting each obligation of the 
     derivatives clearing organization.
       ``(H) Rule enforcement.--Each derivatives clearing 
     organization shall--
       ``(i) maintain adequate arrangements and resources for--

       ``(I) the effective monitoring and enforcement of 
     compliance with the rules of the derivatives clearing 
     organization; and
       ``(II) the resolution of disputes;

       ``(ii) have the authority and ability to discipline, limit, 
     suspend, or terminate the activities of a member or 
     participant due to a violation by the member or participant 
     of any rule of the derivatives clearing organization; and
       ``(iii) report to the Commission regarding rule enforcement 
     activities and sanctions imposed against members and 
     participants as provided in clause (ii).
       ``(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 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--

       ``(I) the timely recovery and resumption of operations of 
     the derivatives clearing organization; and
       ``(II) the fulfillment of each obligation and 
     responsibility of the derivatives clearing organization; and

       ``(iii) periodically conduct tests to verify that the 
     backup resources of the derivatives clearing organization are 
     sufficient to ensure daily processing, clearing, and 
     settlement.
       ``(J) Reporting.--Each derivatives clearing organization 
     shall provide to the Commission all information that the 
     Commission determines to be necessary to conduct oversight of 
     the derivatives clearing organization.
       ``(K) Recordkeeping.--Each derivatives clearing 
     organization shall maintain records of all activities related 
     to the business of the derivatives clearing organization as a 
     derivatives clearing organization--
       ``(i) in a form and manner that is acceptable to the 
     Commission; and
       ``(ii) for a period of not less than 5 years.
       ``(L) Public information.--
       ``(i) In general.--Each derivatives clearing organization 
     shall provide to market participants sufficient information 
     to enable the market participants to identify and evaluate 
     accurately the risks and costs associated with using the 
     services of the derivatives clearing organization.
       ``(ii) Availability of information.--Each derivatives 
     clearing organization shall make information concerning the 
     rules and operating procedures governing the clearing and 
     settlement systems of the derivatives clearing organization 
     available to market participants.
       ``(iii) Public disclosure.--Each derivatives clearing 
     organization shall disclose publicly and to the Commission 
     information concerning--

       ``(I) the terms and conditions of each contract, agreement, 
     and other transaction cleared and settled by the derivatives 
     clearing organization;
       ``(II) each clearing and other fee that the derivatives 
     clearing organization charges the members and participants of 
     the derivatives clearing organization;
       ``(III) the margin-setting methodology, and the size and 
     composition, of the financial resource package of the 
     derivatives clearing organization;
       ``(IV) daily settlement prices, volume, and open interest 
     for each contract settled or cleared by the derivatives 
     clearing organization; and
       ``(V) any other matter relevant to participation in the 
     settlement and clearing activities of the derivatives 
     clearing organization.

       ``(M) Information-sharing.--Each derivatives clearing 
     organization shall--
       ``(i) enter into, and abide by the terms of, each 
     appropriate and applicable domestic and international 
     information-sharing agreement; and
       ``(ii) use relevant information obtained from each 
     agreement described in clause (i) in carrying out the risk 
     management program of the derivatives clearing organization.
       ``(N) Antitrust considerations.--Unless necessary or 
     appropriate to achieve the purposes of this Act, a 
     derivatives clearing organization shall not--
       ``(i) adopt any rule or take any action that results in any 
     unreasonable restraint of trade; or
       ``(ii) impose any material anticompetitive burden.
       ``(O) Governance fitness standards.--
       ``(i) Governance arrangements.--Each derivatives clearing 
     organization shall establish governance arrangements that are 
     transparent--

       ``(I) to fulfill public interest requirements; and
       ``(II) to support the objectives of owners and 
     participants.

[[Page S4298]]

       ``(ii) Fitness standards.--Each derivatives clearing 
     organization shall establish and enforce appropriate fitness 
     standards for--

       ``(I) directors;
       ``(II) members of any disciplinary committee;
       ``(III) members of the derivatives clearing organization;
       ``(IV) any other individual or entity with direct access to 
     the settlement or clearing activities of the derivatives 
     clearing organization; and
       ``(V) any party affiliated with any individual or entity 
     described in this clause.

       ``(P) Conflicts of interest.--Each derivatives clearing 
     organization shall--
       ``(i) establish and enforce rules to minimize conflicts of 
     interest in the decision-making process of the derivatives 
     clearing organization; and
       ``(ii) establish a process for resolving conflicts of 
     interest described in clause (i).
       ``(Q) Composition of governing boards.--Each derivatives 
     clearing organization shall ensure that the composition of 
     the governing board or committee of the derivatives clearing 
     organization includes market participants.
       ``(R) Legal risk.--Each derivatives clearing organization 
     shall have a well-founded, transparent, and enforceable legal 
     framework for each aspect of the activities of the 
     derivatives clearing organization.
       ``(S) Modification of core principles.--The Commission may 
     conform the core principles established in this paragraph to 
     reflect evolving United States and international 
     standards.''.
       (d) Conflicts of Interest.--The Commodity Futures Trading 
     Commission shall adopt rules mitigating conflicts of interest 
     in connection with the conduct of business by a swap dealer 
     or a major swap participant with a derivatives clearing 
     organization, board of trade, or a swap execution facility 
     that clears or trades swaps in which the swap dealer or major 
     swap participant has a material debt or material equity 
     investment.
       (e) Reporting Requirements.--Section 5b of the Commodity 
     Exchange Act (7 U.S.C. 7a-1) (as amended by subsection (b)) 
     is amended by adding at the end the following:
       ``(k) Reporting Requirements.--
       ``(1) Duty of derivatives clearing organizations.--Each 
     derivatives clearing organization that clears swaps shall 
     provide to the Commission all information that is determined 
     by the Commission to be necessary to perform each 
     responsibility of the Commission under this Act.
       ``(2) Data collection and maintenance 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--
       ``(A) swaps data reported to swap data repositories; and
       ``(B) swaps traded on swap execution facilities.
       ``(3) Reports on security-based swap agreements to be 
     shared with the securities and exchange commission.--
       ``(A) In general.--A derivatives clearing organization that 
     clears security-based swap agreements (as defined in section 
     3(a)(79) of the Securities Exchange Act) shall, upon request, 
     make available to the Securities and Exchange Commission all 
     books and records relating to such security-based swap 
     agreements, consistent with the confidentiality and 
     disclosure requirements of section 8.
       ``(B) Jurisdiction.--Nothing in this paragraph shall affect 
     the exclusive jurisdiction of the Commission to prescribe 
     recordkeeping and reporting requirements for a derivatives 
     clearing organization that is registered with the 
     Commission.''
       ``(4) Information sharing.--Subject to section 8, and upon 
     request, the Commission shall share information collected 
     under paragraph (2) with--
       ``(A) the Board;
       ``(B) the Securities and Exchange Commission;
       ``(C) each appropriate prudential regulator;
       ``(D) the Financial Stability Oversight Council;
       ``(E) the Department of Justice; and
       ``(F) any other person that the Commission determines to be 
     appropriate, including--
       ``(i) foreign financial supervisors (including foreign 
     futures authorities);
       ``(ii) foreign central banks; and
       ``(iii) foreign ministries.
       ``(5) Confidentiality and indemnification agreement.--
     Before the Commission may share information with any entity 
     described in paragraph (4)--
       ``(A) the Commission shall receive a written agreement from 
     each entity stating that the entity shall abide by the 
     confidentiality requirements described in section 8 relating 
     to the information on swap transactions that is provided; and
       ``(B) each entity shall agree to indemnify the Commission 
     for any expenses arising from litigation relating to the 
     information provided under section 8.
       ``(6) Public information.--Each derivatives clearing 
     organization that clears swaps shall provide to the 
     Commission (including any designee of the Commission) 
     information under paragraph (2) in such form and at such 
     frequency as is required by the Commission to comply with the 
     public reporting requirements contained in section 
     2(a)(13).''.
       (f) Public Disclosure.--Section 8(e) of the Commodity 
     Exchange Act (7 U.S.C. 12(e)) is amended in the last 
     sentence--
       (1) by inserting ``, central bank and ministries,'' after 
     ``department'' each place it appears; and
       (2) by striking ``. is a party.'' and inserting ``, is a 
     party.''.
       (g) Legal Certainty for Identified Banking Products.--
       (1) Repeals.--The Legal Certainty for Bank Products Act of 
     2000 (7 U.S.C. 27 et seq.) is amended--
       (A) by striking sections 404 and 407 (7 U.S.C. 27b, 27e);
       (B) in section 402 (7 U.S.C. 27), by striking subsection 
     (d); and
       (C) in section 408 (7 U.S.C. 27f)--
       (i) in subsection (c)--

       (I) by striking ``in the case'' and all that follows 
     through ``a hybrid'' and inserting ``in the case of a 
     hybrid'';
       (II) by striking ``; or'' and inserting a period; and
       (III) by striking paragraph (2);

       (ii) by striking subsection (b); and
       (iii) by redesignating subsection (c) as subsection (b).
       (2) Legal certainty for bank products act of 2000.--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 (7 U.S.C. 1 et seq.) shall 
     not apply to, and the Commodity Futures Trading Commission 
     shall not exercise regulatory authority under the Commodity 
     Exchange Act (7 U.S.C. 1 et seq.) 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)(79) of the 
     Securities Exchange Act of 1934 do not include any identified 
     bank product.
       ``(b) Exception.--An appropriate Federal banking agency may 
     except an identified banking product of a bank under its 
     regulatory jurisdiction from the exclusion 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 a `swap' under section 
     1a(46) of the Commodity Exchange Act (7 U.S.C. 1a) or a 
     `security-based swap' under that 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 bank 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(46) 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. 726. RULEMAKING ON CONFLICT OF INTEREST.

       (a) In General.--Not later than 180 days after the date of 
     enactment of the Wall Street Transparency and Accountability 
     Act of 2010, the Commodity Futures Trading Commission shall 
     determine whether to adopt rules to establish limits on the 
     control of any derivatives clearing organization that clears 
     swaps, or swap execution facility or board of trade 
     designated as a contract market that posts swaps or makes 
     swaps available for trading, by a bank holding company (as 
     defined in section 2 of the Bank Holding Company Act of 1956 
     (12 U.S.C. 1841)) with total consolidated assets of 
     $50,000,000,000 or more, a nonbank financial company (as 
     defined in section 102) supervised by the Board of Governors 
     of the Federal Reserve System, an affiliate of such a bank 
     holding company or nonbank financial company, a swap dealer, 
     major swap participant, or associated person of a swap dealer 
     or major swap participant.
       (b) Purposes.--The Commission shall adopt rules if it 
     determines, after the review described in subsection (a), 
     that such rules are necessary or appropriate to improve the 
     governance of, or to mitigate systemic risk, promote 
     competition, or mitigate conflicts of interest in connection 
     with a swap dealer or major swap participant's conduct of 
     business with, a derivatives clearing organization, contract 
     market, or swap execution facility that clears or posts swaps 
     or makes swaps available for trading and in which such swap 
     dealer or major swap participant has a material debt or 
     equity investment.

     SEC. 727. PUBLIC REPORTING OF SWAP TRANSACTION DATA.

       Section 2(a) of the Commodity Exchange Act (7 U.S.C. 2(a)) 
     is amended by adding at the end the following:
       ``(13) Public availability of swap transaction data.--
       ``(A) Definition of real-time public reporting.--In this 
     paragraph, the term `real-time public reporting' means to 
     report data relating to a swap transaction as soon as 
     technologically practicable after the time at which the swap 
     transaction has been executed.
       ``(B) Purpose.--The purpose of this section is to authorize 
     the Commission to make swap transaction and pricing data 
     available to the public in such form and at such times as the 
     Commission determines appropriate to enhance price discovery.
       ``(C) General rule.--The Commission is authorized and 
     required to provide by rule for the

[[Page S4299]]

     public availability of swap transaction and pricing data as 
     follows:
       ``(i) With respect to those swaps that are subject to the 
     mandatory clearing requirement described in subsection (h)(2) 
     (including those swaps that are exempted from the requirement 
     pursuant to subsection (h)(10)), the Commission shall require 
     real-time public reporting for such transactions.
       ``(ii) With respect to those swaps that are not subject to 
     the mandatory clearing requirement described in subsection 
     (h)(2), but are cleared at a registered derivatives clearing 
     organization, the Commission shall require real-time public 
     reporting for such transactions.
       ``(iii) With respect to swaps that are not cleared at a 
     registered derivatives clearing organization and which are 
     reported to a swap data repository or the Commission under 
     subsection (h), the Commission 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 such swap trading volumes and positions.
       ``(iv) With respect to swaps that are exempt from the 
     requirements of subsection (h)(1), pursuant to subsection 
     (h)(10), the Commission shall require real-time public 
     reporting for such transactions.
       ``(D) Registered entities and public reporting.--The 
     Commission may require registered entities to publicly 
     disseminate the swap transaction and pricing data required to 
     be reported under this paragraph.
       ``(E) Rulemaking required.--With respect to the rule 
     providing for the public availability of transaction and 
     pricing data for swaps described in clauses (i) and (ii) of 
     subparagraph (C), the rule promulgated by the Commission 
     shall contain provisions--
       ``(i) to ensure such information does not identify the 
     participants;
       ``(ii) to specify the criteria for determining what 
     constitutes a large notional swap transaction (block trade) 
     for particular markets and contracts;
       ``(iii) to specify the appropriate time delay for reporting 
     large notional swap transactions (block trades) to the 
     public; and
       ``(iv) that take into account whether the public disclosure 
     will materially reduce market liquidity.
       ``(F) Timeliness of reporting.--Parties to a swap 
     (including agents of the parties to a swap) shall be 
     responsible for reporting swap transaction information to the 
     appropriate registered entity in a timely manner as may be 
     prescribed by the Commission.
       ``(14) Semiannual and annual public reporting of aggregate 
     swap data.--
       ``(A) In general.--In accordance with subparagraph (B), the 
     Commission shall issue a written report on a semiannual and 
     annual basis to make available to the public information 
     relating to--
       ``(i) the trading and clearing in the major swap 
     categories; and
       ``(ii) the market participants and developments in new 
     products.
       ``(B) Use; consultation.--In preparing a report under 
     subparagraph (A), the Commission shall--
       ``(i) use information from swap data repositories and 
     derivatives clearing organizations; and
       ``(ii) consult with the Office of the Comptroller of the 
     Currency, the Bank for International Settlements, and such 
     other regulatory bodies as may be necessary.''.

     SEC. 728. SWAP DATA REPOSITORIES.

       The Commodity Exchange Act is amended by inserting after 
     section 20 (7 U.S.C. 24) the following:

     ``SEC. 21. SWAP DATA REPOSITORIES.

       ``(a) Registration Requirement.--
       ``(1) In general.--It shall be unlawful for any person, 
     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 swap data 
     repository.
       ``(2) Inspection and examination.--Each registered swap 
     data repository shall be subject to inspection and 
     examination by any representative of the Commission.
       ``(3) Compliance with core principles.--
       ``(A) In general.--To be registered, and maintain 
     registration, as a swap data repository, the swap data 
     repository shall comply with--
       ``(i) the core principles described in this subsection; and
       ``(ii) any requirement that the Commission may impose by 
     rule or regulation pursuant to section 8a(5).
       ``(B) Reasonable discretion of swap data repository.--
     Unless otherwise determined by the Commission by rule or 
     regulation, a swap data repository described in subparagraph 
     (A) shall have reasonable discretion in establishing the 
     manner in which the swap data repository complies with the 
     core principles described in this subsection.
       ``(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 
     data repository.
       ``(2) Data collection and maintenance.--The Commission 
     shall prescribe data collection and data maintenance 
     standards for swap data 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 in connection with their clearing of 
     swaps.
       ``(4) Sharing of information with securities and exchange 
     commission.--Registered swap data repositories shall make 
     available to the Securities and Exchange Commission, upon 
     request, all books and records relating to security-based 
     swap agreements that are maintained by such swap data 
     repository, consistent with the confidentiality and 
     disclosure requirements of section 8. Nothing in this 
     paragraph shall affect the exclusive jurisdiction of the 
     Commission to prescribe recordkeeping and reporting 
     requirements for a swap data repository that is registered 
     with the Commission.
       ``(c) Duties.--A swap data repository shall--
       ``(1) accept data prescribed by the Commission for each 
     swap under subsection (b);
       ``(2) confirm with both counterparties to the swap the 
     accuracy of the data that was submitted;
       ``(3) maintain the data described in paragraph (1) in such 
     form, in such manner, and for such period as may be required 
     by the Commission;
       ``(4)(A) provide direct electronic access to the Commission 
     (or any designee of the Commission, including another 
     registered entity); and
       ``(B) provide the information described in paragraph (1) in 
     such form and at such frequency as the Commission may require 
     to comply with the public reporting requirements contained in 
     section 2(a)(13);
       ``(5) at the direction of the Commission, establish 
     automated systems for monitoring, screening, and analyzing 
     swap data, including compliance and frequency of end user 
     clearing exemption claims by individual and affiliated 
     entities;
       ``(6) maintain the privacy of any and all swap transaction 
     information that the swap data repository receives from a 
     swap dealer, counterparty, or any other registered entity; 
     and
       ``(7) on a confidential basis pursuant to section 8, upon 
     request, and after notifying the Commission of the request, 
     make available all data obtained by the swap data repository, 
     including individual counterparty trade and position data, 
     to--
       ``(A) each appropriate prudential regulator;
       ``(B) the Financial Stability Oversight Council;
       ``(C) the Securities and Exchange Commission;
       ``(D) the Department of Justice; and
       ``(E) any other person that the Commission determines to be 
     appropriate, including--
       ``(i) foreign financial supervisors (including foreign 
     futures authorities);
       ``(ii) foreign central banks;
       ``(iii) foreign ministries; and
       ``(8) 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.
       ``(d) Confidentiality and Indemnification Agreement.--
     Before the swap data repository may share information with 
     any entity described above--
       ``(1) the swap data repository shall receive a written 
     agreement from each entity stating that the entity shall 
     abide by the confidentiality requirements described in 
     section 8 relating to the information on swap transactions 
     that is provided; and
       ``(2) each entity shall agree to indemnify the swap data 
     repository and the Commission for any expenses arising from 
     litigation relating to the information provided under section 
     8.
       ``(e) Designation of Chief Compliance Officer.--
       ``(1) In general.--Each swap data repository shall 
     designate an individual to serve as a chief compliance 
     officer.
       ``(2) Duties.--The chief compliance officer shall--
       ``(A) report directly to the board or to the senior officer 
     of the swap data repository;
       ``(B) review the compliance of the swap data repository 
     with respect to the core principles described in subsection 
     (f);
       ``(C) in consultation with the board of the swap data 
     repository, a body performing a function similar to the board 
     of the swap data repository, or the senior officer of the 
     swap data repository, resolve any conflicts of interest that 
     may arise;
       ``(D) be responsible for administering each policy and 
     procedure that is required to be established pursuant to this 
     section;
       ``(E) ensure compliance with this Act (including 
     regulations) relating to agreements, contracts, or 
     transactions, including each rule prescribed by the 
     Commission under this section;
       ``(F) establish procedures for the remediation of 
     noncompliance issues identified by the chief compliance 
     officer through any--
       ``(i) compliance office review;
       ``(ii) look-back;
       ``(iii) internal or external audit finding;
       ``(iv) self-reported error; or
       ``(v) validated complaint; and
       ``(G) establish and follow appropriate procedures for the 
     handling, management response, remediation, retesting, and 
     closing of noncompliance issues.
       ``(3) Annual reports.--
       ``(A) In general.--In accordance with rules prescribed by 
     the Commission, the chief compliance officer shall annually 
     prepare and sign a report that contains a description of--
       ``(i) the compliance of the swap data repository of the 
     chief compliance officer with respect to this Act (including 
     regulations); and
       ``(ii) each policy and procedure of the swap data 
     repository of the chief compliance officer (including the 
     code of ethics and conflict of interest policies of the swap 
     data repository).
       ``(B) Requirements.--A compliance report under subparagraph 
     (A) shall--
       ``(i) accompany each appropriate financial report of the 
     swap data repository that is required to be furnished to the 
     Commission pursuant to this section; and
       ``(ii) include a certification that, under penalty of law, 
     the compliance report is accurate and complete.

[[Page S4300]]

       ``(f) Core Principles Applicable To Swap Data 
     Repositories.--
       ``(1) Antitrust considerations.--Unless necessary or 
     appropriate to achieve the purposes of this Act, a swap data 
     repository shall not
       ``(A) adopt any rule or take any action that results in any 
     unreasonable restraint of trade; or
       ``(B) impose any material anticompetitive burden on the 
     trading, clearing, or reporting of transactions.
       ``(2) Governance arrangements.--Each swap data repository 
     shall establish governance arrangements that are 
     transparent--
       ``(A) to fulfill public interest requirements; and
       ``(B) to support the objectives of the Federal Government, 
     owners, and participants.
       ``(3) Conflicts of interest.--Each swap data repository 
     shall--
       ``(A) establish and enforce rules to minimize conflicts of 
     interest in the decision-making process of the swap data 
     repository; and
       ``(B) establish a process for resolving conflicts of 
     interest described in subparagraph (A).
       ``(g) Required Registration for Swap Data Repositories.--
     Any person that is required to be registered as a swap data 
     repository under this section shall register with the 
     Commission regardless of whether that person is also licensed 
     as a bank or registered with the Securities and Exchange 
     Commission as a swap data repository.
       ``(h) Rules.--The Commission shall adopt rules governing 
     persons that are registered under this section.''.

     SEC. 729. REPORTING AND RECORDKEEPING.

       The Commodity Exchange Act is amended by inserting after 
     section 4q (7 U.S.C. 6o-1) the following:

     ``SEC. 4R. REPORTING AND RECORDKEEPING FOR UNCLEARED SWAPS.

       ``(a) Required Reporting of Swaps Not Accepted by Any 
     Derivatives Clearing Organization.--
       ``(1) In general.--Each swap that is not accepted for 
     clearing by any derivatives clearing organization shall be 
     reported to--
       ``(A) a swap data repository described in section 21; or
       ``(B) in the case in which there is no swap data repository 
     that would accept the swap, to the Commission pursuant to 
     this section within such time period as the Commission may by 
     rule or regulation prescribe.
       ``(2) Transition rule for preenactment swaps.--
       ``(A) Swaps entered into before the date of enactment of 
     the wall street transparency and accountability act of 
     2010.--Each swap entered into before the date of enactment of 
     the Wall Street Transparency and Accountability Act of 2010, 
     the terms of which have not expired as of the date of 
     enactment of that Act, shall be reported to a registered swap 
     data repository or the Commission by a date that is not later 
     than--
       ``(i) 30 days after issuance of the interim final rule; or
       ``(ii) such other period as the Commission determines to be 
     appropriate.
       ``(B) Commission rulemaking.--The Commission shall 
     promulgate an interim final rule within 90 days of the date 
     of enactment of this section providing for the reporting of 
     each swap entered into before the date of enactment as 
     referenced in subparagraph (A).
       ``(C) Effective date.--The reporting provisions described 
     in this section shall be effective upon the enactment of this 
     section.
       ``(3) Reporting obligations.--
       ``(A) Swaps in which only 1 counterparty is a swap dealer 
     or major swap participant.--With respect to a swap in which 
     only 1 counterparty is a swap dealer or major swap 
     participant, the swap dealer or major swap participant shall 
     report the swap as required under paragraphs (1) and (2).
       ``(B) Swaps in which 1 counterparty is a swap dealer and 
     the other a major swap participant.--With respect to a swap 
     in which 1 counterparty is a swap dealer and the other a 
     major swap participant, the swap dealer shall report the swap 
     as required under paragraphs (1) and (2).
       ``(C) Other swaps.--With respect to any other swap not 
     described in subparagraph (A) or (B), the counterparties to 
     the swap shall select a counterparty to report the swap as 
     required under paragraphs (1) and (2).
       ``(b) Duties of Certain Individuals.--Any individual or 
     entity that enters into a swap shall meet each requirement 
     described in subsection (c) if the individual or entity did 
     not--
       ``(1) clear the swap in accordance with section 2(h)(1); or
       ``(2) have the data regarding the swap accepted by a swap 
     data repository in accordance with rules (including 
     timeframes) adopted by the Commission under section 21.
       ``(c) Requirements.--An individual or entity described in 
     subsection (b) shall--
       ``(1) upon written request from the Commission, provide 
     reports regarding the swaps held by the individual or entity 
     to the Commission in such form and in such manner as the 
     Commission may request; and
       ``(2) maintain books and records pertaining to the swaps 
     held by the individual or entity in such form, in such 
     manner, and for such period as the Commission may require, 
     which shall be open to inspection by--
       ``(A) any representative of the Commission;
       ``(B) an appropriate prudential regulator;
       ``(C) the Securities and Exchange Commission;
       ``(D) the Financial Stability Oversight Council; and
       ``(E) the Department of Justice.
       ``(d) Identical Data.--In prescribing rules under this 
     section, the Commission shall require individuals and 
     entities described in subsection (b) to submit to the 
     Commission a report that contains data that is not less 
     comprehensive than the data required to be collected by swap 
     data repositories under section 21.''.

     SEC. 730. LARGE SWAP TRADER REPORTING.

       The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended 
     by adding after section 4s (as added by section 731) the 
     following:

     ``SEC. 4T. LARGE SWAP TRADER REPORTING.

       ``(a) Prohibition.--
       ``(1) In general.--Except as provided in paragraph (2), it 
     shall be unlawful for any person to enter into any swap that 
     the Commission determines to perform a significant price 
     discovery function with respect to registered entities if--
       ``(A) the person directly or indirectly enters into the 
     swap during any 1 day in an amount equal to or in excess of 
     such amount as shall be established periodically by the 
     Commission; and
       ``(B) the person directly or indirectly has or obtains a 
     position in the swap equal to or in excess of such amount as 
     shall be established periodically by the Commission.
       ``(2) Exception.--Paragraph (1) shall not apply if--
       ``(A) the person files or causes to be filed with the 
     properly designated officer of the Commission such reports 
     regarding any transactions or positions described in 
     subparagraphs (A) and (B) of paragraph (1) as the Commission 
     may require by rule or regulation; and
       ``(B) in accordance with the rules and regulations of the 
     Commission, the person keeps books and records of all such 
     swaps and any transactions and positions in any related 
     commodity traded on or subject to the rules of any board of 
     trade, and of cash or spot transactions in, inventories of, 
     and purchase and sale commitments of, such a commodity.
       ``(b) Requirements.--
       ``(1) In general.--Books and records described in 
     subsection (a)(2)(B) shall--
       ``(A) show such complete details concerning all 
     transactions and positions as the Commission may prescribe by 
     rule or regulation;
       ``(B) be open at all times to inspection and examination by 
     any representative of the Commission; and
       ``(C) 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)(79) 
     of the Securities Exchange Act of 1934), and consistent with 
     the confidentiality and disclosure requirements of section 8.
       ``(2) Jurisdiction.--Nothing in paragraph (1) shall affect 
     the exclusive jurisdiction of the Commission to prescribe 
     recordkeeping and reporting requirements for large swap 
     traders under this section.
       ``(c) Applicability.--For purposes of this section, the 
     swaps, futures, and cash or spot transactions and positions 
     of any person shall include the swaps, futures, and cash or 
     spot transactions and positions of any persons directly or 
     indirectly controlled by the person.
       ``(d) Significant Price Discovery Function.--In making a 
     determination as to whether a swap performs or affects a 
     significant price discovery function with respect to 
     registered entities, the Commission shall consider the 
     factors described in section 4a(a)(3).''.

     SEC. 731. REGISTRATION AND REGULATION OF SWAP DEALERS AND 
                   MAJOR SWAP PARTICIPANTS.

       The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended 
     by inserting after section 4r (as added by section 729) the 
     following:

     ``SEC. 4S. REGISTRATION AND REGULATION OF SWAP DEALERS AND 
                   MAJOR SWAP PARTICIPANTS.

       ``(a) Registration.--
       ``(1) Swap dealers.--It shall be unlawful for any person to 
     act as a swap dealer unless the person is registered as a 
     swap dealer with the Commission.
       ``(2) Major swap participants.--It shall be unlawful for 
     any person to act as a major swap participant unless the 
     person is 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.--
       ``(A) In general.--The application shall be made in such 
     form and manner as prescribed by the Commission, and shall 
     contain such information, as the Commission considers 
     necessary concerning the business in which the applicant is 
     or will be engaged.
       ``(B) Continual reporting.--A person that is registered as 
     a swap dealer or major swap participant shall continue to 
     submit to the Commission reports that contain such 
     information pertaining to the business of the person as the 
     Commission may require.
       ``(3) Expiration.--Each registration under this section 
     shall expire at such time as the Commission may prescribe by 
     rule or regulation.
       ``(4) Rules.--Except as provided in subsections (c), (e), 
     and (f), the Commission may prescribe rules applicable to 
     non-bank swap dealers and non-bank major swap participants, 
     including rules that limit the activities of swap dealers and 
     major swap participants.
       ``(5) Transition.--Rules under this section shall provide 
     for the registration of swap dealers and major swap 
     participants not later than 1 year after the date of 
     enactment of the Wall Street Transparency and Accountability 
     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 the swap dealer or major swap 
     participant, if the swap dealer or major swap participant 
     knew, or in the

[[Page S4301]]

     exercise of reasonable care should have known, of the 
     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 the 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 the person also is a depository institution or is 
     registered with the Securities and Exchange Commission as a 
     major security-based swap participant.
       ``(d) Rulemakings.--
       ``(1) In general.--The Commission shall adopt rules for 
     persons that are registered as swap dealers or major swap 
     participants under this section.
       ``(2) Exception for prudential requirements.--
       ``(A) In general.--The Commission may not prescribe rules 
     imposing prudential requirements on swap dealers or major 
     swap participants for which there is a prudential regulator.
       ``(B) Applicability.--Subparagraph (A) does not limit the 
     authority of the 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 prescribe 
     under paragraph (2)(B) to help ensure the safety and 
     soundness of the swap dealer or major swap participant.
       ``(2) Rules.--
       ``(A) Swap dealers and major swap participants that are 
     depository institutions.--The appropriate Federal banking 
     agencies, in consultation with the Commission and the 
     Securities and Exchange Commission, shall 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.--The Commission shall 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); 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 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) than for swaps that are 
     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) (except for section 
     4f(a)(3)) in accordance with section 4f(b); 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 (15 U.S.C. 78o(b)) (except for section 
     15(b)(11) of that Act (15 U.S.C. 78o(b)(11)) in accordance 
     with section 15(c)(3) of the Securities Exchange Act of 1934 
     (15 U.S.C. 78o(c)(3)).

       ``(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 Act or the Securities 
     Exchange Act of 1934 (15 U.S.C. 78a et seq.).
       ``(4) Margin.--
       ``(A) Swap dealers and major swap participants that are 
     depository institutions.--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).
       ``(B) Swap dealers and major swap participants that are not 
     depository institutions.--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). Any such initial and 
     variation margin requirements shall be as strict as or 
     stricter than the margin requirements prescribed under 
     paragraph (4)(A).
       ``(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 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 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) Comparability of capital and margin requirements.--
       ``(A) In general.--The appropriate Federal banking 
     agencies, the Commission, and the Securities and Exchange 
     Commission shall periodically (but not less frequently than 
     annually) consult on minimum capital requirements and minimum 
     initial and variation margin requirements.
       ``(B) Comparability.--The entities described in 
     subparagraph (A) shall, to the maximum extent practicable, 
     establish and maintain comparable minimum capital 
     requirements and minimum initial and variation margin 
     requirements, including the use of non cash collateral, for--
       ``(i) swap dealers; and
       ``(ii) major swap participants.
       ``(7) 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.
       ``(8) Applicability with respect to counterparties.--
     Paragraph (4) shall not apply to initial and variation margin 
     for swaps in which 1 of the counterparties is not--
       ``(A) a swap dealer;
       ``(B) a major swap participant; or
       ``(C) a financial entity as described in section 
     2(h)(9)(A)(ii), and such counterparty is eligible for and 
     utilizing the commercial end user clearing exemption under 
     section 2(h)(9).
       ``(f) Reporting and Recordkeeping.--
       ``(1) In general.--Each registered swap dealer and major 
     swap participant--
       ``(A) shall make such reports as are required by the 
     Commission by rule or regulation regarding the transactions 
     and positions and financial condition of the registered swap 
     dealer or major swap participant;
       ``(B)(i) for which there is a prudential regulator, shall 
     keep books and records of all activities related to the 
     business as a swap dealer or major swap participant in such 
     form and manner and for such period as may be prescribed by 
     the Commission by rule or regulation; and
       ``(ii) for which there is no prudential regulator, shall 
     keep books and records in such form and manner and for such 
     period as may be prescribed by the Commission by rule or 
     regulation; and
       ``(C) shall keep books and records described in 
     subparagraph (B) open to inspection and examination by any 
     representative of the Commission.
       ``(2) Rules.--The Commission shall adopt rules governing 
     reporting and recordkeeping for swap dealers and major swap 
     participants.
       ``(g) Daily Trading Records.--
       ``(1) In general.--Each registered swap dealer and major 
     swap participant shall maintain daily trading records of the 
     swaps of the registered swap dealer and major swap 
     participant and all related records (including related cash 
     or forward transactions) and recorded communications, 
     including electronic mail, instant messages, and recordings 
     of telephone calls, for such period as may be required by the 
     Commission by rule or regulation.
       ``(2) Information requirements.--The daily trading records 
     shall include such information as the Commission shall 
     require by rule or regulation.
       ``(3) Counterparty records.--Each registered swap dealer 
     and major swap participant shall maintain daily trading 
     records for each counterparty in a manner and form that is 
     identifiable with each swap transaction.
       ``(4) Audit trail.--Each registered swap dealer and major 
     swap participant shall maintain a complete audit trail for 
     conducting comprehensive and accurate trade reconstructions.

[[Page S4302]]

       ``(5) Rules.--The Commission shall adopt rules governing 
     daily trading records for swap dealers and major 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 the Commission by rule or 
     regulation that relate to--
       ``(A) fraud, manipulation, and other abusive practices 
     involving swaps (including swaps that are offered but not 
     entered into);
       ``(B) diligent supervision of the business of the 
     registered swap dealer and major swap participant;
       ``(C) adherence to all applicable position limits; and
       ``(D) such other matters as the Commission determines to be 
     appropriate.
       ``(2) Special rule; fiduciary duties to certain entities.--
       ``(A) Governmental entities.--A swap dealer that provides 
     advice regarding, or offers to enter into, or enters into a 
     swap with a State, State agency, city, county, municipality, 
     or other political subdivision of a State or a Federal agency 
     shall have a fiduciary duty to the State, State agency, city, 
     county, municipality, or other political subdivision of a 
     State, or the Federal agency, as appropriate.
       ``(B) Pension plans; endowments; retirement plans.--A swap 
     dealer that provides advice regarding, or offers to enter 
     into, or enters into a swap with a pension plan, endowment, 
     or retirement plan shall have a fiduciary duty to the pension 
     plan, endowment, or retirement plan, as appropriate.
       ``(3) Business conduct requirements.--Business conduct 
     requirements adopted by the Commission 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;
       ``(iii) any other material incentives or conflicts of 
     interest that the swap dealer or major swap participant may 
     have in connection with the swap; and
       ``(iv)(I) for cleared swaps, upon the request of the 
     counterparty, the daily mark from the appropriate derivatives 
     clearing organization; and
       ``(II) for uncleared swaps, the daily mark of the swap 
     dealer or the major swap participant;
       ``(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(18) 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 appropriate in the public 
     interest, for the protection of investors, or otherwise in 
     furtherance of the purposes of this Act.
       ``(4) Rules.--The Commission shall prescribe rules under 
     this subsection governing business conduct standards for swap 
     dealers and major swap participants.
       ``(i) Documentation and Back Office Standards.--
       ``(1) In general.--Each registered swap dealer and major 
     swap participant shall conform with such standards as may be 
     prescribed by the Commission by rule or regulation that 
     relate to timely and accurate confirmation, processing, 
     netting, documentation, and valuation of all swaps.
       ``(2) Rules.--The Commission shall adopt rules governing 
     documentation and back office standards for swap dealers and 
     major swap participants.
       ``(j) Duties.--Each registered swap dealer and major swap 
     participant at all times shall 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) Risk management procedures.--The swap dealer or major 
     swap participant shall establish robust and professional risk 
     management systems adequate for managing the day-to-day 
     business of the swap dealer or major swap participant.
       ``(3) Disclosure of general information.--The swap dealer 
     or major swap participant shall disclose to the Commission 
     and to the prudential regulator for the swap dealer or major 
     swap participant, as applicable, 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.
       ``(4) 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 and to the 
     prudential regulator for the swap dealer or major swap 
     participant, as applicable, on request.
       ``(5) 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 
     ensure that the activities of any person within the firm 
     relating to research or analysis of the price or market for 
     any commodity or swap or acting in a role of providing 
     clearing activities or making determinations as to accepting 
     clearing customers are separated by appropriate informational 
     partitions within the firm from the review, pressure, or 
     oversight of persons whose involvement in pricing, trading, 
     or clearing activities might potentially bias their judgment 
     or supervision and contravene the core principles of open 
     access and the business conduct standards described in this 
     Act; and
       ``(B) address such other issues as the Commission 
     determines to be appropriate.
       ``(6) Antitrust considerations.--Unless necessary or 
     appropriate to achieve the purposes of this Act, a swap 
     dealer or major swap participant shall not--
       ``(A) adopt any process or take any action that results in 
     any unreasonable restraint of trade; or
       ``(B) impose any material anticompetitive burden on trading 
     or clearing.
       ``(k) Designation of Chief Compliance Officer.--
       ``(1) In general.--Each swap dealer and major swap 
     participant shall designate an individual to serve as a chief 
     compliance officer.
       ``(2) Duties.--The chief compliance officer shall--
       ``(A) report directly to the board or to the senior officer 
     of the swap dealer or major swap participant;
       ``(B) review the compliance of the swap dealer or major 
     swap participant with respect to the swap dealer and major 
     swap participant requirements described in this section;
       ``(C) in consultation with the board of directors, a body 
     performing a function similar to the board, or the senior 
     officer of the organization, resolve any conflicts of 
     interest that may arise;
       ``(D) be responsible for administering each policy and 
     procedure that is required to be established pursuant to this 
     section;
       ``(E) ensure compliance with this Act (including 
     regulations) relating to swaps, including each rule 
     prescribed by the Commission under this section;
       ``(F) establish procedures for the remediation of 
     noncompliance issues identified by the chief compliance 
     officer through any--
       ``(i) compliance office review;
       ``(ii) look-back;
       ``(iii) internal or external audit finding;
       ``(iv) self-reported error; or
       ``(v) validated complaint; and
       ``(G) establish and follow appropriate procedures for the 
     handling, management response, remediation, retesting, and 
     closing of noncompliance issues.
       ``(3) Annual reports.--
       ``(A) In general.--In accordance with rules prescribed by 
     the Commission, the chief compliance officer shall annually 
     prepare and sign a report that contains a description of--
       ``(i) the compliance of the swap dealer or major swap 
     participant with respect to this Act (including regulations); 
     and
       ``(ii) each policy and procedure of the swap dealer or 
     major swap participant of the chief compliance officer 
     (including the code of ethics and conflict of interest 
     policies).
       ``(B) Requirements.--A compliance report under subparagraph 
     (A) shall--
       ``(i) accompany each appropriate financial report of the 
     swap dealer or major swap participant that is required to be 
     furnished to the Commission pursuant to this section; and
       ``(ii) include a certification that, under penalty of law, 
     the compliance report is accurate and complete.''.

     SEC. 732. CONFLICTS OF INTEREST.

       Section 4d of the Commodity Exchange Act (7 U.S.C. 6d) is 
     amended--
       (1) by redesignating subsection (c) as subsection (e); and
       (2) by 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 
     ensure 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 persons whose involvement in trading or clearing 
     activities might potentially bias the judgment or supervision 
     of the persons; and
       ``(2) address such other issues as the Commission 
     determines to be appropriate.
       ``(d) Designation of Chief Compliance Officer.--
       ``(1) In general.--Each futures commission merchant shall 
     designate an individual to serve as a chief compliance 
     officer.
       ``(2) Duties.--The chief compliance officer shall--

[[Page S4303]]

       ``(A) report directly to the board or to the senior officer 
     of the futures commission merchant;
       ``(B) review the compliance of the futures commission 
     merchant with respect to requirements described in this 
     section;
       ``(C) in consultation with the board of directors, a body 
     performing a function similar to the board, or the senior 
     officer of the organization, resolve any conflicts of 
     interest that may arise;
       ``(D) be responsible for administering each policy and 
     procedure that is required to be established pursuant to this 
     section;
       ``(E) ensure compliance with this Act (including 
     regulations and each rule prescribed by the Commission under 
     this section) relating, but not limited, to--
       ``(i) contracts of sale of a commodity for future delivery;
       ``(ii) options on the contracts described in clause (i);
       ``(iii) commodity options;
       ``(iv) retail commodity transactions;
       ``(v) security futures products;
       ``(vi) leverage contracts; and
       ``(vii) swaps;
       ``(F) establish procedures for the remediation of 
     noncompliance issues identified by the chief compliance 
     officer through any--
       ``(i) compliance office review;
       ``(ii) look-back;
       ``(iii) internal or external audit finding;
       ``(iv) self-reported error; or
       ``(v) validated complaint; and
       ``(G) establish and follow appropriate procedures for the 
     handling, management response, remediation, retesting, and 
     closing of noncompliance issues.
       ``(3) Annual reports.--
       ``(A) In general.--In accordance with rules prescribed by 
     the Commission, the chief compliance officer shall annually 
     prepare and sign a report that contains a description of--
       ``(i) the compliance of the futures commission merchant 
     with respect to this Act (including regulations); and
       ``(ii) each policy and procedure of the futures commission 
     merchant of the chief compliance officer (including the code 
     of ethics and conflict of interest policies).
       ``(B) Requirements.--A compliance report under subparagraph 
     (A) shall--
       ``(i) accompany each appropriate financial report of the 
     futures commission merchant that is required to be furnished 
     to the Commission pursuant to this section; and
       ``(ii) include a certification that, under penalty of law, 
     the compliance report is accurate and complete.''.

     SEC. 733. SWAP EXECUTION FACILITIES.

       The Commodity Exchange Act is amended by inserting after 
     section 5g (7 U.S.C. 7b-2) the following:

     ``SEC. 5H. SWAP EXECUTION FACILITIES.

       ``(a) Registration.--
       ``(1) In general.--No person may operate a facility for the 
     trading or processing of swaps unless the facility is 
     registered as a swap execution facility or as a designated 
     contract market under this section.
       ``(2) Dual registration.--Any person that is registered as 
     a swap execution facility under this section shall register 
     with the Commission regardless of whether the person also is 
     registered with the Securities and Exchange Commission as a 
     swap execution facility.
       ``(b) Trading and Trade Processing.--A swap execution 
     facility that is registered under subsection (a) may--
       ``(1) make available for trading any swap; and
       ``(2) facilitate trade processing of any swap.
       ``(c) Identification of Facility Used To Trade Swaps by 
     Contract Markets.--A board of trade that operates a contract 
     market shall, to the extent that the board of trade also 
     operates a swap execution facility and uses the same 
     electronic trade execution system for listing and executing 
     trades of swaps on or through the contract market and the 
     swap execution facility, identify whether the electronic 
     trading of such swaps is taking place on or through the 
     contract market or the swap execution facility.
       ``(d) Core Principles for Swap Execution Facilities.--
       ``(1) Compliance with core principles.--
       ``(A) In general.--To be registered, and maintain 
     registration, as a swap execution facility, the swap 
     execution facility shall comply with--
       ``(i) the core principles described in this subsection; and
       ``(ii) any requirement that the Commission may impose by 
     rule or regulation pursuant to section 8a(5).
       ``(B) Reasonable discretion of swap execution facility.--
     Unless otherwise determined by the Commission by rule or 
     regulation, a swap execution facility described in 
     subparagraph (A) shall have reasonable discretion in 
     establishing the manner in which the swap execution facility 
     complies with the core principles described in this 
     subsection.
       ``(2) Compliance with rules.--A swap execution facility 
     shall--
       ``(A) monitor and enforce compliance with any rule of the 
     swap execution facility, including--
       ``(i) the terms and conditions of the swaps traded or 
     processed on or through the swap execution facility; and
       ``(ii) any limitation on access to the swap execution 
     facility;
       ``(B) establish and enforce trading, trade processing, and 
     participation rules that will deter abuses and have the 
     capacity to detect, investigate, and enforce those rules, 
     including means--
       ``(i) to provide market participants with impartial access 
     to the market; and
       ``(ii) to capture information that may be used in 
     establishing whether rule violations have occurred;
       ``(C) establish rules governing the operation of the 
     facility, including rules specifying trading procedures to be 
     used in entering and executing orders traded or posted on the 
     facility, including block trades; and
       ``(D) provide by its rules that when a swap dealer or major 
     swap participant enters into or facilitates a swap that is 
     subject to the mandatory clearing requirement of section 
     2(h)(2)(F), the swap dealer or major swap participant shall 
     be responsible for compliance with the mandatory trading 
     requirement of section 113(d) of the Wall Street Transparency 
     and Accountability Act of 2010.
       ``(3) Swaps not readily susceptible to manipulation.--The 
     swap execution facility shall permit trading only in swaps 
     that are not readily susceptible to manipulation.
       ``(4) Monitoring of trading and trade processing.--The swap 
     execution facility shall--
       ``(A) establish and enforce rules or terms and conditions 
     defining, or specifications detailing--
       ``(i) trading procedures to be used in entering and 
     executing orders traded on or through the facilities of the 
     swap execution facility; and
       ``(ii) procedures for trade processing of swaps on or 
     through the facilities of the swap execution facility; and
       ``(B) 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.--The 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 section;
       ``(B) provide the information to the Commission on 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, a swap execution facility that is a trading 
     facility shall adopt for each of the contracts of the 
     facility, as is necessary and appropriate, position 
     limitations or position accountability for speculators.
       ``(B) Position limits.--For any contract that is subject to 
     a position limitation established by the Commission pursuant 
     to section 4a(a), the swap execution facility shall set its 
     position limitation at a level no higher than the Commission 
     limitation.
       ``(C) Position enforcement.--For any contract that is 
     subject to a position limitation established by the 
     Commission pursuant to section 4a(a), a swap execution 
     facility shall reject any proposed swap transaction if, based 
     on information readily available to a swap execution 
     facility, any proposed swap transaction would cause a swap 
     execution facility customer that would be a party to such 
     swap transaction to exceed such position limitation.
       ``(7) Financial integrity of transactions.--The swap 
     execution facility shall establish and enforce rules and 
     procedures for ensuring the financial integrity of swaps 
     entered on or through the facilities of the swap execution 
     facility, including the clearance and settlement of the swaps 
     pursuant to section 2(h)(1).
       ``(8) Emergency authority.--The swap execution facility 
     shall adopt rules to provide for the exercise of emergency 
     authority, in consultation or cooperation with the 
     Commission, as is necessary and appropriate, including the 
     authority to liquidate or transfer open positions in any swap 
     or to suspend or curtail trading in a swap.
       ``(9) Timely publication of trading information.--
       ``(A) In general.--The 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.
       ``(B) Capacity of swap execution facility.--The swap 
     execution facility shall be required to have the capacity to 
     electronically capture trade information with respect to 
     transactions executed on the facility.
       ``(10) Recordkeeping and reporting.--
       ``(A) In general.--A swap execution facility shall--
       ``(i) maintain records of all activities relating 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, in a form and manner 
     acceptable to the Commission, such information as the 
     Commission determines to be necessary or appropriate for the 
     Commission to perform the duties of the Commission under this 
     Act.
       ``(B) Requirements.--The Commission shall adopt data 
     collection and reporting requirements for swap execution 
     facilities that are comparable to corresponding requirements 
     for derivatives clearing organizations and swap data 
     repositories.
       ``(11) Antitrust considerations.--Unless necessary or 
     appropriate to achieve the purposes of this Act, the swap 
     execution facility shall not--
       ``(A) adopt any rules or taking any actions that result in 
     any unreasonable restraint of trade; or
       ``(B) impose any material anticompetitive burden on trading 
     or clearing.
       ``(12) Conflicts of interest.--The swap execution facility 
     shall--
       ``(A) establish and enforce rules to minimize conflicts of 
     interest in its decision-making process; and

[[Page S4304]]

       ``(B) establish a process for resolving the conflicts of 
     interest.
       ``(13) Financial resources.--
       ``(A) In general.--The swap execution facility shall have 
     adequate financial, operational, and managerial resources to 
     discharge each responsibility of the swap execution facility.
       ``(B) Determination of resource adequacy.--The financial 
     resources of a swap execution facility shall be considered to 
     be adequate if the value of the financial resources exceeds 
     the total amount that would enable the swap execution 
     facility to cover the operating costs of the swap execution 
     facility for a 1-year period, as calculated on a rolling 
     basis.
       ``(14) System safeguards.--The swap execution facility 
     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 automated systems, that--
       ``(i) are reliable and secure; and
       ``(ii) have adequate scalable capacity;
       ``(B) establish and maintain emergency procedures, backup 
     facilities, and a plan for disaster recovery that are 
     designed to allow for--
       ``(i) the timely recovery and resumption of operations; and
       ``(ii) the fulfillment of the responsibilities and 
     obligation of the swap execution facility; and
       ``(C) periodically conduct tests to verify that the backup 
     resources of the swap execution facility are sufficient to 
     ensure continued--
       ``(i) order processing and trade matching;
       ``(ii) price reporting;
       ``(iii) market surveillance and
       ``(iv) maintenance of a comprehensive and accurate audit 
     trail.
       ``(15) Designation of chief compliance officer.--
       ``(A) In general.--Each swap execution facility shall 
     designate an individual to serve as a chief compliance 
     officer.
       ``(B) Duties.--The chief compliance officer shall--
       ``(i) report directly to the board or to the senior officer 
     of the facility;
       ``(ii) review compliance with the core principles in this 
     subsection;
       ``(iii) in consultation with the board of the facility, a 
     body performing a function similar to that of a board, or the 
     senior officer of the facility, resolve any conflicts of 
     interest that may arise;
       ``(iv) be responsible for establishing and administering 
     the policies and procedures required to be established 
     pursuant to this section;
       ``(v) ensure compliance with this Act and the rules and 
     regulations issued under this Act, including rules prescribed 
     by the Commission pursuant to this section; and
       ``(vi) establish procedures for the remediation of 
     noncompliance issues found during compliance office reviews, 
     look backs, internal or external audit findings, self-
     reported errors, or through validated complaints.
       ``(C) Requirements for procedures.--In establishing 
     procedures under subparagraph (B)(vi), the chief compliance 
     officer shall design the procedures to establish the 
     handling, management response, remediation, retesting, and 
     closing of noncompliance issues.
       ``(D) Annual reports.--
       ``(i) In general.--In accordance with rules prescribed by 
     the Commission, the chief compliance officer shall annually 
     prepare and sign a report that contains a description of--

       ``(I) the compliance of the swap execution facility with 
     this Act; and
       ``(II) the policies and procedures, including the code of 
     ethics and conflict of interest policies, of the swap 
     execution facility.

       ``(ii) Requirements.--The chief compliance officer shall--

       ``(I) submit each report described in clause (i) with the 
     appropriate financial report of the swap execution facility 
     that is required to be submitted to the Commission pursuant 
     to this section; and
       ``(II) include in the report a certification that, under 
     penalty of law, the report is accurate and complete.

       ``(e) Exemptions.--The Commission may exempt, conditionally 
     or unconditionally, a swap execution facility from 
     registration under this section if the Commission finds that 
     the facility is subject to comparable, comprehensive 
     supervision and regulation on a consolidated basis by the 
     Securities and Exchange Commission, a prudential regulator, 
     or the appropriate governmental authorities in the home 
     country of the facility.
       ``(f) Rules.--The Commission shall prescribe rules 
     governing the regulation of alternative swap execution 
     facilities under this section.''.

     SEC. 734. 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, 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''; and
       (B) in paragraph (2) of subsection (g) (as redesignated by 
     section 723(a)(1)(B)), by striking ``section 5a of this Act'' 
     and all that follows through ``5d of this Act'' and inserting 
     ``section 5b of this Act''.
       (2) 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).

     SEC. 735. DESIGNATED CONTRACT MARKETS.

       (a) Criteria for Designation.--Section 5 of the Commodity 
     Exchange Act (7 U.S.C. 7) is amended by striking subsection 
     (b).
       (b) Core Principles for Contract Markets.--Section 5 of the 
     Commodity Exchange Act (7 U.S.C. 7) is amended by striking 
     subsection (d) and inserting the following:
       ``(d) Core Principles for Contract Markets.--
       ``(1) Designation as contract market.--
       ``(A) In general.--To be designated, and maintain a 
     designation, as a contract market, a board of trade shall 
     comply with--
       ``(i) any core principle described in this subsection; and
       ``(ii) any requirement that the Commission may impose by 
     rule or regulation pursuant to section 8a(5).
       ``(B) Reasonable discretion of contract market.--Unless 
     otherwise determined by the Commission by rule or regulation, 
     a board of trade described in subparagraph (A) shall have 
     reasonable discretion in establishing the manner in which the 
     board of trade complies with the core principles described in 
     this subsection.
       ``(2) Compliance with rules.--
       ``(A) In general.--The board of trade shall establish, 
     monitor, and enforce compliance with the rules of the 
     contract market, including--
       ``(i) access requirements;
       ``(ii) the terms and conditions of any contracts to be 
     traded on the contract market; and
       ``(iii) rules prohibiting abusive trade practices on the 
     contract market.
       ``(B) Capacity of contract market.--The board of trade 
     shall have the capacity to detect, investigate, and apply 
     appropriate sanctions to any person that violates any rule of 
     the contract market.
       ``(C) Requirement of rules.--The rules of the contract 
     market shall provide the board of trade with the ability and 
     authority to obtain any necessary information to perform any 
     function described in this subsection, including the capacity 
     to carry out such international information-sharing 
     agreements as the Commission may require.
       ``(3) Contracts not readily subject to manipulation.--The 
     board of trade shall list on the contract market only 
     contracts that are not readily susceptible to manipulation.
       ``(4) Prevention of market disruption.--The board of trade 
     shall have the capacity and responsibility to prevent 
     manipulation, price distortion, and disruptions of the 
     delivery or cash-settlement process through market 
     surveillance, compliance, and enforcement practices and 
     procedures, including--
       ``(A) methods for conducting real-time monitoring of 
     trading; and
       ``(B) comprehensive and accurate trade reconstructions.
       ``(5) Position limitations or accountability.--
       ``(A) In general.--To reduce the potential threat of market 
     manipulation or congestion (especially during trading in the 
     delivery month), the board of trade shall adopt for each 
     contract of the board of trade, as is necessary and 
     appropriate, position limitations or position accountability 
     for speculators.
       ``(B) Maximum allowable position limitation.--For any 
     contract that is subject to a position limitation established 
     by the Commission pursuant to section 4a(a), the board of 
     trade shall set the position limitation of the board of trade 
     at a level not higher than the position limitation 
     established by the Commission.
       ``(6) Emergency authority.--The board of trade, in 
     consultation or cooperation with the Commission, shall adopt 
     rules to provide for the exercise of emergency authority, as 
     is necessary and appropriate, including the authority--
       ``(A) to liquidate or transfer open positions in any 
     contract;
       ``(B) to suspend or curtail trading in any contract; and
       ``(C) to require market participants in any contract to 
     meet special margin requirements.
       ``(7) Availability of general information.--The board of 
     trade shall make available to market authorities, market 
     participants, and the public accurate information 
     concerning--
       ``(A) the terms and conditions of the contracts of the 
     contract market; and
       ``(B)(i) the rules, regulations, and mechanisms for 
     executing transactions on or through the facilities of the 
     contract market; and
       ``(ii) the rules and specifications describing the 
     operation of the contract market's--
       ``(I) electronic matching platform; or
       ``(II) trade execution facility.
       ``(8) Daily publication of trading information.--The board 
     of trade shall make public daily information on settlement 
     prices, volume, open interest, and opening and closing ranges 
     for actively traded contracts on the contract market.
       ``(9) Execution of transactions.--
       ``(A) In general.--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 centralized market of the board of 
     trade.
       ``(B) Rules.--The rules of the board of trade 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.

[[Page S4305]]

       ``(10) Trade information.--The board of trade shall 
     maintain rules and procedures to provide for the recording 
     and safe storage of all identifying trade information in a 
     manner that enables the contract market to use the 
     information--
       ``(A) to assist in the prevention of customer and market 
     abuses; and
       ``(B) to provide evidence of any violations of the rules of 
     the contract market.
       ``(11) Financial integrity of transactions.--The board of 
     trade shall establish and enforce--
       ``(A) rules and procedures for ensuring the financial 
     integrity of transactions entered into on or through the 
     facilities of the contract market (including the clearance 
     and settlement of the transactions with a derivatives 
     clearing organization); and
       ``(B) rules to ensure--
       ``(i) the financial integrity of any--

       ``(I) futures commission merchant; and
       ``(II) introducing broker; and

       ``(ii) the protection of customer funds.
       ``(12) Protection of markets and market participants.--The 
     board of trade shall establish and enforce rules--
       ``(A) to protect markets and market participants from 
     abusive practices committed by any party, including abusive 
     practices committed by a party acting as an agent for a 
     participant; and
       ``(B) to promote fair and equitable trading on the contract 
     market.
       ``(13) Disciplinary procedures.--The board of trade shall 
     establish and enforce disciplinary procedures that authorize 
     the board of trade to discipline, suspend, or expel members 
     or market participants that violate the rules of the board of 
     trade, or similar methods for performing the same functions, 
     including delegation of the functions to third parties.
       ``(14) Dispute resolution.--The board of trade shall 
     establish and enforce rules regarding, and provide facilities 
     for alternative dispute resolution as appropriate for, market 
     participants and any market intermediaries.
       ``(15) Governance fitness standards.--The board of trade 
     shall establish and enforce appropriate fitness standards for 
     directors, members of any disciplinary committee, members of 
     the contract market, and any other person with direct access 
     to the facility (including any party affiliated with any 
     person described in this paragraph).
       ``(16) Conflicts of interest.--The board of trade shall 
     establish and enforce rules--
       ``(A) to minimize conflicts of interest in the decision-
     making process of the contract market; and
       ``(B) to establish a process for resolving conflicts of 
     interest described in subparagraph (A).
       ``(17) Composition of governing boards of contract 
     markets.--The governance arrangements of the board of trade 
     shall be designed to promote the objectives of market 
     participants.
       ``(18) Recordkeeping.--The board of trade shall maintain 
     records of all activities relating to the business of the 
     contract market--
       ``(A) in a form and manner that is acceptable to the 
     Commission; and
       ``(B) for a period of at least 5 years.
       ``(19) Antitrust considerations.--Unless necessary or 
     appropriate to achieve the purposes of this Act, the board of 
     trade shall not--
       ``(A) adopt any rule or taking any action that results in 
     any unreasonable restraint of trade; or
       ``(B) impose any material anticompetitive burden on trading 
     on the contract market.
       ``(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 have 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 responsibilities and obligations of the 
     board of trade; 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.
       ``(21) Financial resources.--
       ``(A) In general.--The board of trade shall have adequate 
     financial, operational, and managerial resources to discharge 
     each responsibility of the board of trade.
       ``(B) Determination of adequacy.--The financial resources 
     of the board of trade shall be considered to be adequate if 
     the value of the financial resources exceeds the total amount 
     that would enable the contract market to cover the operating 
     costs of the contract market for a 1-year period, as 
     calculated on a rolling basis.''.

     SEC. 736. MARGIN.

       Section 8a(7) of the Commodity Exchange Act (7 U.S.C. 
     12a(7)) is amended--
       (1) in subparagraph (C), by striking ``, excepting the 
     setting of levels of margin'';
       (2) by redesignating subparagraphs (D) through (F) as 
     subparagraphs (E) through (G), respectively; and
       (3) by inserting after subparagraph (C) the following:
       ``(D) margin requirements, provided that the rules, 
     regulations, or orders shall--
       ``(i) be limited to protecting the financial integrity of 
     the derivatives clearing organization;
       ``(ii) be designed for risk management purposes to protect 
     the financial integrity of transactions; and
       ``(iii) not set specific margin amounts;''.

     SEC. 737. POSITION LIMITS.

       (a) Aggregate Position Limits.--Section 4a(a) of the 
     Commodity Exchange Act (7 U.S.C. 6a(a)) is amended--
       (1) by inserting after ``(a)'' the following:
       ``(1) In general.--'';
       (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 
     registered entities'';
       (3) in the second sentence--
       (A) by inserting ``, including any group or class of 
     traders,'' after ``held by any person''; and
       (B) by striking ``on an electronic trading facility with 
     respect to a significant price discovery contract,'' and 
     inserting ``swaps traded on or subject to the rules of an 
     swaps execution facility, or swaps not traded on or subject 
     to the rules of an swaps execution facility that perform a 
     significant price discovery function with respect to a 
     registered entity,''; and
       (4) by adding at the end the following:
       ``(2) Aggregate position limits.--The Commission shall, by 
     rule or regulation, establish limits (including related hedge 
     exemption provisions) on the aggregate number or amount of 
     positions in contracts based on 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) with respect to an agreement, contract, or 
     transaction that settles against, or in relation to, any 
     price (including the daily or final settlement price) of 1 or 
     more contracts listed for trading on a registered entity, 
     contracts traded on a foreign board of trade that provides 
     members or other participants located in the United States 
     with direct access to the electronic trading and order 
     matching system of the foreign board of trade;
       ``(C) swaps traded on or subject to the rules of a swap 
     execution facility; and
       ``(D) swaps not traded on or subject to the rules of a swap 
     execution facility that perform or affect a significant price 
     discovery function with respect to a registered entity.
       ``(3) Significant price discovery function.--In making a 
     determination as to whether a swap performs or affects a 
     significant price discovery function with respect to 
     registered entities, the Commission shall consider, as 
     appropriate, the following factors:
       ``(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 
     registered entity based on 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 registered entity based on 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 registered entity 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 registered 
     entity.
       ``(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 
     that the Commission establishes under this section with 
     respect to position limits.''.
       (b) Conforming Amendments.--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 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 swap execution 
     facility''.

     SEC. 738. FOREIGN BOARDS OF TRADE.

       (a) In General.--Section 4(b) of the Commodity Exchange Act 
     (7 U.S.C. 6(b)) is amended--
       (1) in the first sentence, by striking ``The Commission'' 
     and inserting the following:
       ``(2) Persons located in the united states.--
       ``(A) In general.--The Commission'';
       (2) in the second sentence, by striking ``Such rules and 
     regulations'' and inserting the following:
       ``(B) Different requirements.--Rules and regulations 
     described in subparagraph (A)'';
       (3) in the third sentence--
       (A) by striking ``No rule or regulation'' and inserting the 
     following:
       ``(C) Prohibition.--Except as provided in paragraphs (1) 
     and (2), no rule or regulation'';
       (B) by striking ``that (1) requires'' and inserting the 
     following: ``that--
       ``(i) requires''; and
       (C) by striking ``market, or (2) governs'' and inserting 
     the following: ``market; or

[[Page S4306]]

       ``(ii) governs''; and
       (4) by inserting before paragraph (2) (as designated by 
     paragraph (1)) the following:
       ``(1) Foreign boards of trade.--
       ``(A) In general.--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--
       ``(i) 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
       ``(ii) 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--

       ``(aa) the information that the foreign board of trade will 
     make publicly available;
       ``(bb) the position limits that the foreign board of trade 
     or foreign futures authority will adopt and enforce;
       ``(cc) 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
       ``(dd) 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 such information as is 
     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.

       ``(B) Existing foreign boards of trade.--Subparagraph (A) 
     shall not be effective with respect to any foreign board of 
     trade to which, prior to the date of enactment of this 
     paragraph, the Commission granted direct access permission 
     until the date that is 180 days after that date of 
     enactment.''.
       (b) Liability of Registered Persons Trading on a Foreign 
     Board of Trade.--Section 4 of the Commodity Exchange Act (7 
     U.S.C. 6) is amended--
       (1) in subsection (a), in the matter preceding paragraph 
     (1), by inserting ``or by subsection (e)'' after ``Unless 
     exempted by the Commission pursuant to subsection (c)''; and
       (2) by adding at the end the following:
       ``(e) Liability of Registered Persons Trading on a Foreign 
     Board of Trade.--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).''.
       (c) Contract Enforcement for Foreign Futures Contracts.--
     Section 22(a) of the Commodity Exchange Act (7 U.S.C. 25(a)) 
     (as amended by section 739) is amended by adding at the end 
     the following:
       ``(6) 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. 739. LEGAL CERTAINTY FOR SWAPS.

       Section 22(a) of the Commodity Exchange Act (7 U.S.C. 
     25(a)) is amended by striking paragraph (4) and inserting the 
     following:
       ``(4) Contract enforcement between eligible 
     counterparties.--
       ``(A) In general.--No hybrid instrument sold to any 
     investor shall be void, voidable, or unenforceable, and no 
     party to a hybrid instrument shall be entitled to rescind, or 
     recover any payment made with respect to, the 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) Swaps.--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 to an agreement, 
     contract, or transaction shall be entitled to rescind, or 
     recover any payment made with respect to, the 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--
       ``(i) to meet the definition of a swap under section 1a; or
       ``(ii) to be cleared in accordance with section 2(h)(1).
       ``(5) Legal certainty for long-term swaps entered into 
     before the date of enactment of the wall street transparency 
     and accountability act of 2010.--
       ``(A) In general.--Any swap entered into before the date of 
     enactment of the Wall Street Transparency and Accountability 
     Act of 2010, the terms of which have not expired as of the 
     date of enactment, shall not be subject to the mandatory 
     clearing requirements under this Act.
       ``(B) Effect on swaps.--Unless specifically reserved in the 
     applicable bilateral trading agreement, neither the enactment 
     of the Wall Street Transparency and Accountability Act of 
     2010, nor any requirement under that Act or an amendment made 
     by that Act, shall constitute a termination event, force 
     majeure, illegality, increased costs, regulatory change, or 
     similar event under a bilateral trading agreement (including 
     any related credit support arrangement) that would permit a 
     party to terminate, renegotiate, modify, amend, or supplement 
     1 or more transactions under the bilateral trading agreement.
       ``(C) Position limits.--Any position limit established 
     under the Wall Street Transparency and Accountability Act of 
     2010 shall not apply to a position acquired in good faith 
     prior to the effective date of any rule, regulation, or order 
     under the Act that establishes the position limit; provided, 
     however, that such positions shall be attributed to the 
     trader if the trader's position is increased after the 
     effective date such position limit rule, regulation, or 
     order.''.

     SEC. 740. MULTILATERAL CLEARING ORGANIZATIONS.

       Sections 408 and 409 of the Federal Deposit Insurance 
     Corporation Improvement Act of 1991 (12 U.S.C. 4421, 4422) 
     are repealed.

     SEC. 741. ENFORCEMENT.

       (a) Enforcement Authority.--The Commodity Exchange Act is 
     amended by inserting after section 4b (7 U.S.C. 6b) the 
     following:

     ``SEC. 4B-1. ENFORCEMENT AUTHORITY.

       ``(a) Commission.--Except as provided in subsections (b), 
     (c), and (d), the Commission shall have primary authority to 
     enforce the amendments made by the Wall Street Transparency 
     and Accountability Act of 2010 with respect to any person.
       ``(b) Appropriate Federal Banking Agencies.--The 
     appropriate Federal banking agency for swap dealers or major 
     swap participants that are depository institutions, as that 
     term is defined under section 3 of the Federal Deposit 
     Insurance Act (12 U.S.C. 1813), shall have exclusive 
     authority to enforce the provisions of section 4s(e) and 
     other prudential requirements of this Act, with respect to 
     depository institutions that are swap dealers or major swap 
     participants.
       ``(c) Referrals.--
       ``(1) Prudential regulators.--If the prudential regulator 
     for a swap dealer or major swap participant has cause to 
     believe that the swap dealer or major swap participant, or 
     any affiliate or division of the swap dealer or major swap 
     participant, may have engaged in conduct that constitutes a 
     violation of the nonprudential requirements of this Act 
     (including section 4s or rules adopted by the Commission 
     under that section), the prudential regulator shall promptly 
     notify the Commission in a written report that includes--
       ``(A) a request that the Commission initiate an enforcement 
     proceeding under this Act; and
       ``(B) an explanation of the facts and circumstances that 
     led to the preparation of the written report.
       ``(2) Commission.--If the Commission has cause to believe 
     that a swap dealer or major swap participant that has a 
     prudential regulator may have engaged in conduct that 
     constitutes a violation of any prudential requirement of 
     section 4s or rules adopted by the Commission under that 
     section, the Commission may notify the prudential regulator 
     of the conduct in a written report that includes--
       ``(A) a request that the prudential regulator initiate an 
     enforcement proceeding under this Act or any other Federal 
     law (including regulations); and
       ``(B) an explanation of the concerns of the Commission, and 
     a description of the facts and circumstances, that led to the 
     preparation of the written report.
       ``(d) Backstop Enforcement Authority.--
       ``(1) Initiation of enforcement proceeding by prudential 
     regulator.--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 
     written report under subsection (c)(1), the prudential 
     regulator may initiate an enforcement proceeding.
       ``(2) Initiation of enforcement proceeding by commission.--
     If the prudential regulator

[[Page S4307]]

     does not initiate an enforcement proceeding before the end of 
     the 90-day period beginning on the date on which the 
     prudential regulator receives a written report under 
     subsection (c)(2), the Commission may initiate an enforcement 
     proceeding.''.
       (b) Conforming Amendments.--
       (1) Section 4b of the Commodity Exchange Act (7 U.S.C. 6b) 
     is amended--
       (A) in subsection (a)(2), by striking ``or other agreement, 
     contract, or transaction subject to paragraphs (1) and (2) of 
     section 5a(g),'' and inserting ``or swap,'';
       (B) in subsection (b), by striking ``or other agreement, 
     contract or transaction subject to paragraphs (1) and (2) of 
     section 5a(g),'' and inserting ``or swap,''; and
       (C) by adding at the end the following:
       ``(e) 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 registered entity, in or in connection with any order to 
     make, or the making of, any contract of sale of any commodity 
     for future delivery (or option on such a contract), or any 
     swap, on a group or index of securities (or any interest 
     therein or based on the value thereof)--
       ``(1) to employ any device, scheme, or artifice to defraud;
       ``(2) to make any untrue statement of a material fact or to 
     omit to state a material fact necessary in order to make the 
     statements made, in the light of the circumstances under 
     which they were made, not misleading; or
       ``(3) to engage in any act, practice, or course of business 
     which operates or would operate as a fraud or deceit upon any 
     person.''.
       (2) Section 4c(a)(1) of the Commodity Exchange Act (7 
     U.S.C. 6c(a)(1)) is amended by inserting ``or swap'' before 
     ``if the transaction is used or may be used''.
       (3) Section 6(c) of the Commodity Exchange Act (7 U.S.C. 9) 
     is amended in the first sentence by inserting ``or of any 
     swap,'' before ``or has willfully made''.
       (4) Section 6(d) of the Commodity Exchange Act (7 U.S.C. 
     13b) is amended in the first sentence, in the matter 
     preceding the proviso, by inserting ``or of any swap,'' 
     before ``or otherwise is violating''.
       (5) Section 6c(a) of the Commodity Exchange Act (7 U.S.C. 
     13a-1(a)) is amended in the matter preceding the proviso by 
     inserting ``or any swap'' after ``commodity for future 
     delivery''.
       (6) Section 9 of the Commodity Exchange Act (7 U.S.C. 13) 
     is amended--
       (A) in subsection (a)--
       (i) in paragraph (2), by inserting ``or of any swap,'' 
     before ``or to corner''; and
       (ii) in paragraph (4), by inserting ``swap data 
     repository,'' before ``or futures association'' and
       (B) in subsection (e)(1)--
       (i) by inserting ``swap data repository,'' before ``or 
     registered futures association''; and
       (ii) by inserting ``, or swaps,'' before ``on the basis''.
       (7) Section 9(a) of the Commodity Exchange Act (7 U.S.C. 
     13(a)) is amended by adding at the end the following:
       ``(6) Any person to abuse the end user clearing exemption 
     under section 2(h)(4), as determined by the Commission.''.
       (8) Section 8(b) of the Federal Deposit Insurance Act (12 
     U.S.C. 1818(b)) is amended by adding at the end the 
     following:
       ``(11) Swaps.--
       ``(A) In general.--Subject to subparagraph (B), this 
     section shall apply to any swap dealer, major swap 
     participant, security-based swap dealer, major security-based 
     swap participant, derivatives clearing organization, swap 
     data repository, or swap execution facility, regardless of 
     whether the dealer, participant, organization, repository, or 
     facility is an insured depository institution, for which the 
     Board, the Corporation, or the Office of the Comptroller of 
     the Currency is the appropriate Federal banking agency or 
     prudential regulator for purposes of the amendments made by 
     the Wall Street Transparency and Accountability Act of 2010.
       ``(B) Limitation.--The authority described in subparagraph 
     (A) shall be limited by, and exercised in accordance with, 
     section 4b-1 of the Commodity Exchange Act.''.
       (9) Section 2(c)(2)(B) of the Commodity Exchange Act (7 
     U.S.C. 2(c)(2)(B)) is amended--
       (A) by striking ``(dd),'' each place it appears;
       (B) in clause (iii), by inserting ``, and accounts or 
     pooled investment vehicles described in clause (vi),'' before 
     ``shall be subject to''; and
       (C) by adding at the end the following:
       ``(vi) This Act applies to, and the Commission shall have 
     jurisdiction over, an account or pooled investment vehicle 
     that is offered for the purpose of trading, or that trades, 
     any agreement, contract, or transaction in foreign currency 
     described in clause (i).''.
       (10) Section 2(c)(2)(C) of the Commodity Exchange Act (7 
     U.S.C. 2(c)(2)(C)) is amended--
       (A) by striking ``(dd),'' each place it appears;
       (B) in clause (ii)(I), by inserting ``, and accounts or 
     pooled investment vehicles described in clause (vii),'' 
     before ``shall be subject to''; and
       (C) by adding at the end the following:
       ``(vii) This Act applies to, and the Commission shall have 
     jurisdiction over, an account or pooled investment vehicle 
     that is offered for the purpose of trading, or that trades, 
     any agreement, contract, or transaction in foreign currency 
     described in clause (i).''.
       (11) Section 1a(19)(A)(iv)(II) of the Commodity Exchange 
     Act (7 U.S.C. 1a(19)(A)(iv)(II)) (as redesignated by section 
     721(a)(1)) is amended by inserting before the semicolon at 
     the end the following: ``provided, however, that for purposes 
     of section 2(c)(2)(B)(vi) and section 2(c)(2)(C)(vii), the 
     term `eligible contract participant' shall not include a 
     commodity pool in which any participant is not otherwise an 
     eligible contract participant''.

     SEC. 742. RETAIL COMMODITY TRANSACTIONS.

       (a) In General.--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) Applicability.--Except as provided in clause (ii), 
     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) Exceptions.--This subparagraph shall not apply to--

       ``(I) an agreement, contract, or transaction described in 
     paragraph (1) or subparagraphs (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 within 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 the line of 
     business of the seller and buyer; or

       ``(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) Enforcement.--Sections 4(a), 4(b), and 4b apply to 
     any agreement, contract, or transaction described in clause 
     (i), as if the agreement, contract, or transaction was a 
     contract of sale of a commodity for future delivery.
       ``(iv) Eligible commercial entity.--For purposes of this 
     subparagraph, an agricultural producer, packer, or handler 
     shall be considered to be an eligible commercial entity for 
     any agreement, contract, or transaction for a commodity in 
     connection with the line of business of the agricultural 
     producer, packer, or handler.
       ``(v) Actual delivery.--For purposes of clause (ii)(III), 
     the term `actual delivery' does not include delivery to a 
     third party in a financed transaction in which the commodity 
     is held as collateral.''.
       (b) Gramm-Leach-Bliley Act.--Section 206(a) of the Gramm-
     Leach-Bliley Act (Public Law 106-102; 15 U.S.C. 78c note) is 
     amended, in the matter preceding paragraph (1), by striking 
     ``For purposes of'' and inserting ``Except as provided in 
     subsection (e), for purposes of''.
       (c) Conforming Amendments Relating to Retail Foreign 
     Exchange Transactions.--
       (1) Section 2(c)(2)(B)(i)(II) of the Commodity Exchange Act 
     (7 U.S.C. 2(c)(2)(B)(i)(II)) is amended--
       (A) in item (aa), by inserting ``United States'' before 
     ``financial institution'';
       (B) by striking items (dd) and (ff);
       (C) by redesignating items (ee) and (gg) as items (dd) and 
     (ff), respectively; and
       (D) in item (dd) (as so redesignated), by striking the 
     semicolon and inserting ``; or''.
       (2) Section 2(c)(2) of the Commodity Exchange Act (7 U.S.C. 
     2(c)(2)) (as amended by subsection (a)(2)) is amended by 
     adding at the end the following:
       ``(E) Prohibition.--
       ``(i) Definition of federal regulatory agency.--In this 
     subparagraph, the term `Federal regulatory agency' means--

       ``(I) the Commission;
       ``(II) the Securities and Exchange Commission;
       ``(III) an appropriate Federal banking agency;
       ``(IV) the National Credit Union Association; and
       ``(V) the Farm Credit Administration.

       ``(ii) Prohibition.--A person described in subparagraph 
     (B)(i)(II) for which there is a Federal regulatory agency 
     shall not offer to, or enter into with, a person that is not 
     an eligible contract participant, any agreement, contract, or 
     transaction in foreign currency described in subparagraph 
     (B)(i)(I) except pursuant to a rule or regulation of a 
     Federal regulatory agency allowing the agreement, contract, 
     or transaction under such terms and conditions as the Federal 
     regulatory agency shall prescribe.
       ``(iii) Requirements of rules and regulations.--

       ``(I) In general.--The rules and regulations described in 
     clause (ii) shall prescribe appropriate requirements with 
     respect to--

       ``(aa) disclosure;
       ``(bb) recordkeeping;
       ``(cc) capital and margin;
       ``(dd) reporting;
       ``(ee) business conduct;
       ``(ff) documentation; and
       ``(gg) such other standards or requirements as the Federal 
     regulatory agency shall determine to be necessary.

       ``(II) Treatment.--The rules or regulations described in 
     clause (ii) shall treat all agreements, contracts, and 
     transactions in foreign currency described in subparagraph 
     (B)(i)(I), and all agreements, contracts, and transactions

[[Page S4308]]

     in foreign currency that are functionally or economically 
     similar to agreements, contracts, or transactions described 
     in subparagraph (B)(i)(I), similarly.''.

     SEC. 743. OTHER AUTHORITY.

       Unless otherwise provided by the amendments made by this 
     subtitle, the amendments made by this subtitle do not divest 
     any appropriate Federal banking agency, the Commodity Futures 
     Trading Commission, the Securities and Exchange Commission, 
     or other Federal or State agency of any authority derived 
     from any other applicable law.

     SEC. 744. RESTITUTION REMEDIES.

       Section 6c(d) of the Commodity Exchange Act (7 U.S.C. 13a-
     1(d)) is amended by adding at the end the following:
       ``(3) Equitable remedies.--In any action brought under this 
     section, the Commission may seek, and the court shall have 
     jurisdiction to impose, on a proper showing, on any person 
     found in the action to have committed any violation, 
     equitable remedies including--
       ``(A) restitution to persons who have sustained losses 
     proximately caused by such violation (in the amount of such 
     losses); and
       ``(B) disgorgement of gains received in connection with 
     such violation.''.

     SEC. 745. ENHANCED COMPLIANCE BY REGISTERED ENTITIES.

       (a) Core Principles for Contract Markets.--Section 5(d) of 
     the Commodity Exchange Act (7 U.S.C. 7(d)) (as amended by 
     section 735(b)) is amended by striking paragraph (1) and 
     inserting the following:
       ``(1) Designation.--
       ``(A) In general.--To be designated as, and to maintain the 
     designation of, a board of trade as a contract market, the 
     board of trade shall comply with--
       ``(i) the core principles described in this subsection; and
       ``(ii) any requirement that the Commission may impose by 
     rule or regulation pursuant to section 8a(5).
       ``(B) Discretion of board of trade.--Unless the Commission 
     determines otherwise by rule or regulation, the board of 
     trade shall have reasonable discretion in establishing the 
     manner by which the board of trade complies with each core 
     principle.''.
       (b) Core Principles.--Section 5b(c)(2) of the Commodity 
     Exchange Act (7 U.S.C. 7a-1(c)(2)) (as amended by section 
     725(c)) is amended by striking subparagraph (A) and inserting 
     the following:
       ``(A) Registration.--
       ``(i) In general.--To be registered and to maintain 
     registration as a derivatives clearing organization, a 
     derivatives clearing organization shall comply with--

       ``(I) the core principles described in this paragraph; and
       ``(II) any requirement that the Commission may impose by 
     rule or regulation pursuant to section 8a(5).

       ``(ii) Discretion of commission.--Unless the Commission 
     determines otherwise by rule or regulation, a derivatives 
     clearing organization shall have reasonable discretion in 
     establishing the manner by which the derivatives clearing 
     organization complies with each core principle.''.
       (c) Effect of Interpretation.--Section 5c(a) of the 
     Commodity Exchange Act (7 U.S.C. 7a-2(a)) is amended by 
     striking paragraph (2) and inserting the following:
       ``(2) Effect of interpretation.--An interpretation issued 
     under paragraph (1) may provide the exclusive means for 
     complying with each section described in paragraph (1).''.
       (d) New Contracts, New Rules, and Rule Amendments.--
       (1) In general.--A registered entity may elect to list for 
     trading or accept for clearing any new contract, or other 
     instrument, or may elect to approve and implement any new 
     rule or rule amendment, by providing to the Commission (and 
     the Secretary of the Treasury, in the case of a contract of 
     sale of a government security for future delivery (or option 
     on such a contract) or a rule or rule amendment specifically 
     related to such a contract) a written certification that the 
     new contract or instrument or clearing of the new contract or 
     instrument, new rule, or rule amendment complies with this 
     Act (including regulations under this Act).
       (2) Rule review.--The new rule or rule amendment described 
     in paragraph (1) shall become effective, pursuant to the 
     certification of the registered entity, on the date that is 
     10 business days after the date on which the Commission 
     receives the certification (or such shorter period as 
     determined by the Commission by rule or regulation) unless 
     the Commission notifies the registered entity within such 
     time that it 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).
       (3) Stay of certification for rules.--
       (A) A notification by the Commission pursuant to paragraph 
     (2) shall stay the certification of the new rule or rule 
     amendment for up to an additional 90 days from the date of 
     the notification.
       (B) A rule or rule amendment subject to a stay pursuant to 
     subparagraph (A) shall become effective, pursuant to the 
     certification of the registered entity, at the expiration of 
     the period described in subparagraph (A) unless the 
     Commission--
       (i) withdraws the stay prior to that time; or
       (ii) notifies the registered entity during such period that 
     it objects to the proposed certification on the grounds that 
     it is inconsistent with this Act (including regulations under 
     this Act).
       (4) Prior approval.--
       (A) In general.--A registered entity may request that the 
     Commission grant prior approval to any new contract or other 
     instrument, new rule, or rule amendment.
       (B) Prior approval required.--Notwithstanding any other 
     provision of this section, a designated contract market shall 
     submit to the Commission for prior approval each rule 
     amendment that materially changes the terms and conditions, 
     as determined by the Commission, in any contract of sale for 
     future delivery of a commodity specifically enumerated in 
     section 1a(10) (or any option thereon) traded through its 
     facilities if the rule amendment applies to contracts and 
     delivery months which have already been listed for trading 
     and have open interest.
       (C) Deadline.--If prior approval is requested under 
     subparagraph (A), the Commission shall take final action on 
     the request not later than 90 days after submission of the 
     request, unless the person submitting the request agrees to 
     an extension of the time limitation established under this 
     subparagraph.
       (5) Approval.--
       (A) Rules.--The Commission shall approve a new rule, or 
     rule amendment, of a registered entity unless the Commission 
     finds that the new rule, or rule amendment, is inconsistent 
     with this subtitle (including regulations).
       (B) Contracts and instruments.--The Commission shall 
     approve a new contract or other instrument unless the 
     Commission finds that the new contract or other instrument 
     would violate this subtitle (including regulations).
       (C) Special rule for review and approval of event contracts 
     and swaps contracts.--
       (i) Event contracts.--In connection with the listing of 
     agreements, contracts, transactions, or swaps in excluded 
     commodities that are based upon the occurrence, extent of an 
     occurrence, or contingency (other than a change in the price, 
     rate, value, or levels of a commodity described in section 
     1a(2)(i)), by a designated contract market or swap execution 
     facility, the Commission may determine that such agreements, 
     contracts, or transactions are contrary to the public 
     interest if the agreements, contracts, or transactions 
     involve--

       (I) activity that is unlawful under any Federal or State 
     law;
       (II) terrorism;
       (III) assassination;
       (IV) war;
       (V) gaming; or
       (VI) other similar activity determined by the Commission, 
     by rule or regulation, to be contrary to the public interest.

       (ii) Prohibition.--No agreement, contract, or transaction 
     determined by the Commission to be contrary to the public 
     interest under clause (i) may be listed or made available for 
     clearing or trading on or through a registered entity.
       (iii) Swaps contracts.--

       (I) In general.--In connection with the listing of a swap 
     for clearing by a derivatives clearing organization, the 
     Commission shall determine, upon request or on its own 
     motion, the initial eligibility, or the continuing 
     qualification, of a derivatives clearing organization to 
     clear such a swap under those criteria, conditions, or rules 
     that the Commission, in its discretion, determines.
       (II) Requirements.--Any such criteria, conditions, or rules 
     shall consider--

       (aa) the financial integrity of the derivatives clearing 
     organization; and
       (bb) any other factors which the Commission determines may 
     be appropriate.
       (iv) Deadline.--The Commission shall take final action 
     under clauses (i) and (ii) in not later than 90 days from the 
     commencement of its review unless the party seeking to offer 
     the contract or swap agrees to an extension of this time 
     limitation.
       (e) Violation of Core Principles.--Section 5c of the 
     Commodity Exchange Act (7 U.S.C. 7a-2) is amended by striking 
     subsection (d).

     SEC. 746. INSIDER TRADING.

       Section 4c(a) of the Commodity Exchange Act (7 U.S.C. 
     6c(a)) is amended by adding at the end the following:
       ``(3) Contract of sale.--It shall be unlawful for any 
     employee or agent of any department or agency of the Federal 
     Government who, by virtue of the employment or position of 
     the employee or agent, acquires information that may affect 
     or tend to affect the price of any commodity in interstate 
     commerce, or for future delivery, or any swap, and which 
     information has not been disseminated by the department or 
     agency of the Federal Government holding or creating the 
     information in a manner which makes it generally available to 
     the trading public, or disclosed in a criminal, civil, or 
     administrative hearing, or in a congressional, 
     administrative, or Government Accountability Office report, 
     hearing, audit, or investigation, to use the information in 
     his personal capacity and for personal gain to enter into, or 
     offer to enter into--
       ``(A) a contract of sale of a commodity for future delivery 
     (or option on such a contract);
       ``(B) an option (other than an option executed or traded on 
     a national securities exchange registered pursuant to section 
     6(a) of the Securities Exchange Act of 1934 (15 U.S.C. 
     78f(a)); or
       ``(C) a swap.
       ``(4) Nonpublic information.--
       ``(A) Imparting of nonpublic information.--It shall be 
     unlawful for any employee or agent of any department or 
     agency of the Federal Government who, by virtue of the 
     employment or position of the employee or agent, acquires 
     information that may affect or tend to affect the price of 
     any commodity in interstate commerce, or for future delivery, 
     or any swap, and which information has not been disseminated 
     by the department or agency of the Federal Government holding 
     or creating the information in a manner which makes it 
     generally

[[Page S4309]]

     available to the trading public, or disclosed in a criminal, 
     civil, or administrative hearing, or in a congressional, 
     administrative, or Government Accountability Office report, 
     hearing, audit, or investigation, to impart the information 
     in his personal capacity and for personal gain with intent to 
     assist another person, directly or indirectly, to use the 
     information to enter into, or offer to enter into--
       ``(i) a contract of sale of a commodity for future delivery 
     (or option on such a contract);
       ``(ii) an option (other than an option executed or traded 
     on a national securities exchange registered pursuant to 
     section 6(a) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78f(a)); or
       ``(iii) a swap.
       ``(B) Knowing use.--It shall be unlawful for any person who 
     receives information imparted by any employee or agent of any 
     department or agency of the Federal Government as described 
     in subparagraph (A) to knowingly use such information to 
     enter into, or offer to enter into--
       ``(i) a contract of sale of a commodity for future delivery 
     (or option on such a contract);
       ``(ii) an option (other than an option executed or traded 
     on a national securities exchange registered pursuant to 
     section 6(a) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78f(a)); or
       ``(iii) a swap.
       ``(C) Theft of nonpublic information.--It shall be unlawful 
     for any person to steal, convert, or misappropriate, by any 
     means whatsoever, information held or created by any 
     department or agency of the Federal Government that may 
     affect or tend to affect the price of any commodity in 
     interstate commerce, or for future delivery, or any swap, 
     where such person knows, or acts in reckless disregard of the 
     fact, that such information has not been disseminated by the 
     department or agency of the Federal Government holding or 
     creating the information in a manner which makes it generally 
     available to the trading public, or disclosed in a criminal, 
     civil, or administrative hearing, or in a congressional, 
     administrative, or Government Accountability Office report, 
     hearing, audit, or investigation, and to use such 
     information, or to impart such information with the intent to 
     assist another person, directly or indirectly, to use such 
     information to enter into, or offer to enter into--
       ``(i) a contract of sale of a commodity for future delivery 
     (or option on such a contract);
       ``(ii) an option (other than an option executed or traded 
     on a national securities exchange registered pursuant to 
     section 6(a) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78f(a)); or
       ``(iii) a swap.

     Provided, however, that nothing in this subparagraph shall 
     preclude a person that has provided information concerning, 
     or generated by, the person, its operations or activities, to 
     any employee or agent of any department or agency of the 
     Federal Government, voluntarily or as required by law, from 
     using such information to enter into, or offer to enter into, 
     a contract of sale, option, or swap described in clauses (i), 
     (ii), or (iii).''.

     SEC. 747. ANTIDISRUPTIVE PRACTICES AUTHORITY.

       Section 4c(a) of the Commodity Exchange Act (7 U.S.C. 
     6c(a)) (as amended by section 746) is amended by adding at 
     the end the following:
       ``(5) Disruptive practices.--It shall be unlawful for any 
     person to engage in any trading, practice, or conduct on or 
     subject to the rules of a registered entity that--
       ``(A) violates bids or offers;
       ``(B) demonstrates intentional or reckless disregard for 
     the orderly execution of transactions during the closing 
     period; or
       ``(C) is, is of the character of, or is commonly known to 
     the trade as, `spoofing' (bidding or offering with the intent 
     to cancel the bid or offer before execution).
       ``(6) Rulemaking authority.--The Commission may make and 
     promulgate such rules and regulations as, in the judgment of 
     the Commission, are reasonably necessary to prohibit the 
     trading practices described in paragraph (5) and any other 
     trading practice that is disruptive of fair and equitable 
     trading.
       ``(7) Use of swaps to defraud.--It shall be unlawful for 
     any person to enter into a swap knowing, or acting in 
     reckless disregard of the fact, that its counterparty will 
     use the swap as part of a device, scheme, or artifice to 
     defraud any third party.''.

     SEC. 748. COMMODITY WHISTLEBLOWER INCENTIVES AND PROTECTION.

       The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended 
     by adding at the end the following:

     ``SEC. 23. COMMODITY WHISTLEBLOWER INCENTIVES AND PROTECTION.

       ``(a) Definitions.--In this section:
       ``(1) Covered judicial or administrative action.--The term 
     `covered judicial or administrative action' means any 
     judicial or administrative action brought by the Commission 
     under this Act that results in monetary sanctions exceeding 
     $1,000,000.
       ``(2) Fund.--The term `Fund' means the Commodity Futures 
     Trading Commission Customer Protection Fund established under 
     subsection (g).
       ``(3) Monetary sanctions.--The term `monetary sanctions', 
     when used with respect to any judicial or administrative 
     action means--
       ``(A) any monies, including penalties, disgorgement, 
     restitution, 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.
       ``(4) 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.
       ``(5) Related action.--The term `related action', when used 
     with respect to any judicial or administrative action brought 
     by the Commission under this Act, means any judicial or 
     administrative action brought by an entity described in 
     subclauses (i) through (vi) of subsection (g)(2)(B) 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) Successful resolution.--The term `successful 
     resolution', when used with respect to any judicial or 
     administrative action brought by the Commission under this 
     Act, includes any settlement of such action.
       ``(7) Whistleblower.--The term `whistleblower' means any 
     individual, or 2 or more individuals acting jointly, who 
     provides information relating to a violation of this Act 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 Act (including regulations under 
     the Act) by making awards to whistleblowers who provide 
     information that leads 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) a appropriate regulatory agency;
       ``(ii) the Department of Justice;
       ``(iii) a registered entity;
       ``(iv) a registered futures association; or
       ``(v) a self-regulatory organization as defined in section 
     3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 
     78c(a)); or
       ``(vi) 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 submits information to the 
     Commission that is based on the facts underlying the covered 
     action submitted previously by another whistleblower;
       ``(D) to any whistleblower who fails to submit information 
     to the Commission in such form as the Commission may, by rule 
     or regulation, 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 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.--
       ``(1) In general.--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.
       ``(2) Appeals.--Any determination described in paragraph 
     (1) 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.

[[Page S4310]]

       ``(3) Review.--The court shall review the determination 
     made by the Commission in accordance with section 7064 of 
     title 5, United States Code.
       ``(g) Commodity Futures Trading Commission Customer 
     Protection Fund.--
       ``(1) Establishment.--There is established in the Treasury 
     of the United States a revolving fund to be known as the 
     `Commodity Futures Trading Commission Customer Protection 
     Fund'.
       ``(2) Use of fund.--The Fund shall be available to the 
     Commission, without further appropriation or fiscal year 
     limitation, for--
       ``(A) the payment of awards to whistleblowers as provided 
     in subsection (a); and
       ``(B) the funding of customer education initiatives 
     designed to help customers protect themselves against fraud 
     or other violations of this Act, or the rules and regulations 
     thereunder.
       ``(3) Deposits and credits.--There shall be deposited into 
     or credited to the Fund--
       ``(A) any monetary judgment collected by the Commission in 
     any judicial or administrative action brought by the 
     Commission under this Act, that is not otherwise distributed 
     to victims of a violation of this Act or the rules and 
     regulations thereunder underlying such action, unless the 
     balance of the Fund at the time the monetary judgment is 
     collected exceeds $100,000,000; and
       ``(B) 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 Commission's judgment, 
     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.
       ``(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, and form a part of, 
     the Fund.
       ``(5) Reports to congress.--Not later than October 30 of 
     each year, the Commission shall transmit to the Committee on 
     Agriculture, Nutrition, and Forestry of the Senate, and the 
     Committee on Agriculture of the House of Representatives a 
     report on--
       ``(A) the Commission's whistleblower award program under 
     this section, including a description of the number of awards 
     granted and the types of cases in which awards were granted 
     during the preceding fiscal year;
       ``(B) customer education initiatives described in paragraph 
     (2)(B) that were funded by the Fund during the preceding 
     fiscal year;
       ``(C) the balance of the Fund at the beginning of the 
     preceding fiscal year;
       ``(D) the amounts deposited into or credited to the Fund 
     during the preceding fiscal year;
       ``(E) the amount of earnings on investments of amounts in 
     the Fund during the preceding fiscal year;
       ``(F) the amount paid from the Fund during the preceding 
     fiscal year to whistleblowers pursuant to subsection (b);
       ``(G) the amount paid from the Fund during the preceding 
     fiscal year for customer education initiatives described in 
     paragraph (2)(B);
       ``(H) the balance of the Fund at the end of the preceding 
     fiscal year; and
       ``(I) a complete set of audited financial statements, 
     including a balance sheet, income statement, and 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 (b); 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), unless the individual who is alleging 
     discharge or other discrimination in violation of 
     subparagraph (A) is an employee of the federal government, in 
     which case the individual shall only bring an action under 
     section 1221 of title 5 United States Code.
       ``(ii) Subpoenas.--A subpoena requiring the attendance of a 
     witness at a trial or hearing conducted under this subsection 
     may be served at any place in the United States.
       ``(iii) Statute of limitations.--An action under this 
     subsection may not be brought more than 2 years after the 
     date on which the violation reported in subparagraph (A) is 
     committed.
       ``(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) the amount of back pay otherwise owed to the 
     individual, 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's fees.
       ``(2) Confidentiality.--
       ``(A) Information provided.--
       ``(i) In general.--Except as provided in subparagraph (B), 
     all information provided to the Commission by a whistleblower 
     shall be confidential and privileged as an evidentiary matter 
     (and shall not be subject to civil discovery or other legal 
     process) in any proceeding in any Federal or State court or 
     administrative agency, and shall be exempt from disclosure, 
     in the hands of a department or agency of the Federal 
     Government, under section 552 of title 5, United States Code 
     (commonly known as the `Freedom of Information Act') or 
     otherwise, unless and until required to be disclosed to a 
     defendant or respondent in connection with a public 
     proceeding instituted by the Commission or any entity 
     described in subparagraph (B).
       ``(ii) Construction.--For purposes of section 552 of title 
     5, United States Code, this paragraph shall be considered to 
     be a statute described in subsection (b)(3)(B) of that 
     section.
       ``(iii) Effect.--Nothing in this paragraph is intended 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.
       ``(B) 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 or appropriate to accomplish the 
     purposes of this Act and protect customers and in accordance 
     with clause (ii), be made available to--

       ``(I) the Department of Justice;
       ``(II) an appropriate department or agency of the Federal 
     Government, acting within the scope of its jurisdiction;
       ``(III) a registered entity, registered futures 
     association, or self-regulatory organization as defined in 
     section 3(a) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78c(a));
       ``(IV) a State attorney general in connection with any 
     criminal investigation;
       ``(V) an appropriate department or agency of any State, 
     acting within the scope of its jurisdiction; and
       ``(VI) a foreign futures authority.

       ``(ii) Maintenance of information.--Each of the entities, 
     agencies, or persons described in clause (i) shall maintain 
     information described in that clause as confidential and 
     privileged, in accordance with the requirements in 
     subparagraph (A).
       ``(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) 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.
       ``(j) Implementing Rules.--The Commission shall issue final 
     rules or regulations implementing the provisions of this 
     section not later than 270 days after the date of enactment 
     of the Wall Street Transparency and Accountability Act of 
     2010.
       ``(k) Original Information.--Information submitted to the 
     Commission by a whistleblower in accordance with rules or 
     regulations implementing this section shall not lose its 
     status as original information solely because the 
     whistleblower submitted such information prior to the 
     effective date of such rules or regulations, provided such 
     information was submitted after the date of enactment of the 
     Wall Street Transparency and Accountability Act of 2010.
       ``(l) Awards.--A whistleblower may receive an award 
     pursuant to this section regardless of whether any violation 
     of a provision of this Act, 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 the Wall Street Transparency and Accountability 
     Act of 2010.
       ``(m) Provision of False Information.--A whistleblower who 
     knowingly and willfully makes any false, fictitious, or 
     fraudulent statement or representation, or who makes or uses 
     any false writing or document knowing the same to contain any 
     false, fictitious, or fraudulent statement or entry, shall 
     not be entitled to an award under this section and shall be 
     subject to prosecution under section 1001 of title 18, United 
     States Code.''.

     SEC. 749. CONFORMING AMENDMENTS.

       (a) Section 2(c)(1) of the Commodity Exchange Act (7 U.S.C. 
     2(c)(1)) is amended, in the matter preceding subparagraph 
     (A), by striking ``5a (to the extent provided in section 
     5a(g)),''.
       (b) Section 4d of the Commodity Exchange Act (7 U.S.C. 6d) 
     (as amended by section 724) is amended--
       (1) in subsection (a)--
       (A) in the matter preceding paragraph (1)--
       (i) by striking ``engage as'' and inserting ``be a''; and
       (ii) by striking ``or introducing broker'' and all that 
     follows through ``or derivatives transaction execution 
     facility'';
       (B) in paragraph (1), by striking ``or introducing 
     broker''; and
       (C) in paragraph (2), by striking ``if a futures commission 
     merchant,''; and
       (2) by adding at the end the following:
       ``(g) It shall be unlawful for any person to be an 
     introducing broker unless such person shall have registered 
     under this Act with the Commission as an introducing broker 
     and such registration shall not have expired nor been 
     suspended nor revoked.''.
       (c) Section 4m(3) of the Commodity Exchange Act (7 U.S.C. 
     6m(3)) is amended--
       (1) by striking ``(3) Subsection (1) of this section'' and 
     inserting the following:
       ``(3) Exception.--
       ``(A) In general.--Paragraph (1)''; and
       (2) by striking ``to any investment trust'' and all that 
     follows through the period at the end

[[Page S4311]]

     and inserting the following: ``to any commodity pool that is 
     engaged primarily in trading commodity interests.
       ``(B) Engaged primarily.--For purposes of subparagraph (A), 
     a commodity trading advisor or a commodity pool shall be 
     considered to be `engaged primarily' in the business of being 
     a commodity trading advisor or commodity pool if it is or 
     holds itself out to the public as being engaged primarily, or 
     proposes to engage primarily, in the business of advising on 
     commodity interests or investing, reinvesting, owning, 
     holding, or trading in commodity interests, respectively.
       ``(C) Commodity interests.--For purposes of this paragraph, 
     commodity interests shall include contracts of sale of a 
     commodity for future delivery, options on such contracts, 
     security futures, swaps, leverage contracts, foreign 
     exchange, spot and forward contracts on physical commodities, 
     and any monies held in an account used for trading commodity 
     interests.''.
       (d) Section 5c of the Commodity Exchange Act (7 U.S.C. 7a-
     2) is amended--
       (1) in subsection (a)(1)--
       (A) by striking ``, 5a(d),''; and
       (B) by striking ``and section (2)(h)(7) with respect to 
     significant price discovery contracts,''; and
       (2) in subsection (f)(1), by striking ``section 4d(c) of 
     this Act'' and inserting ``section 4d(e)''.
       (e) Section 5e of the Commodity Exchange Act (7 U.S.C. 7b) 
     is amended by striking ``or revocation of the right of an 
     electronic trading facility to rely on the exemption set 
     forth in section 2(h)(3) with respect to a significant price 
     discovery contract,''.
       (f) Section 6(b) of the Commodity Exchange Act (7 U.S.C. 
     8(b)) is amended in the first sentence by striking ``, or to 
     revoke the right of an electronic trading facility to rely on 
     the exemption set forth in section 2(h)(3) with respect to a 
     significant price discovery contract,''.
       (g) Section 12(e)(2)(B) of the Commodity Exchange Act (7 
     U.S.C. 16(e)(2)(B)) is amended--
       (1) by striking ``section 2(c), 2(d), 2(f), or 2(g) of this 
     Act'' and inserting ``section 2(c), 2(f), or 2(i) of this 
     Act''; and
       (2) by striking ``2(h) or''.
       (h) Section 17(r)(1) of the Commodity Exchange Act (7 
     U.S.C. 21(r)(1)) is amended by striking ``section 4d(c) of 
     this Act'' and inserting ``section 4d(e)''.
       (i) Section 22(b)(1)(A) of the Commodity Exchange Act (7 
     U.S.C. 25(b)(1)(A)) is amended by striking ``section 2(h)(7) 
     or''.
       (j) Section 408(2)(C) of the Federal Deposit Insurance 
     Corporation Improvement Act of 1991 (12 U.S.C. 4421(2)(C)) is 
     amended--
       (1) by striking ``section 2(c), 2(d), 2(f), or (2)(g) of 
     such Act'' and inserting ``section 2(c), 2(f), or 2(i) of 
     that Act''; and
       (2) by striking ``2(h) or''.

     SEC. 750. STUDY ON OVERSIGHT OF CARBON MARKETS.

       (a) Interagency Working Group.--There is established to 
     carry out this section an interagency working group (referred 
     to in this section as the ``interagency group'') composed of 
     the following members or designees:
       (1) The Chairman of the Commodity Futures Trading 
     Commission (referred to in this section as the 
     ``Commission''), who shall serve as Chairman of the 
     interagency group.
       (2) The Secretary of Agriculture.
       (3) The Secretary of the Treasury.
       (4) The Chairman of the Securities and Exchange Commission.
       (5) The Administrator of the Environmental Protection 
     Agency.
       (6) The Chairman of the Federal Energy Regulatory 
     Commission.
       (7) The Commissioner of the Federal Trade Commission.
       (8) The Administrator of the Energy Information 
     Administration.
       (b) Administrative Support.--The Commission shall provide 
     the interagency group such administrative support services as 
     are necessary to enable the interagency group to carry out 
     the functions of the interagency group under this section.
       (c) Consultation.--In carrying out this section, the 
     interagency group shall consult with representatives of 
     exchanges, clearinghouses, self-regulatory bodies, major 
     carbon market participants, consumers, and the general 
     public, as the interagency group determines to be 
     appropriate.
       (d) Study.--The interagency group shall conduct a study on 
     the oversight of existing and prospective carbon markets to 
     ensure an efficient, secure, and transparent carbon market, 
     including oversight of spot markets and derivative markets.
       (e) Report.--Not later than 180 days after the date of 
     enactment of this Act, the interagency group shall submit to 
     Congress a report on the results of the study conducted under 
     subsection (b), including recommendations for the oversight 
     of existing and prospective carbon markets to ensure an 
     efficient, secure, and transparent carbon market, including 
     oversight of spot markets and derivative markets.

     SEC. 751. ENERGY AND ENVIRONMENTAL MARKETS ADVISORY 
                   COMMITTEE.

       Section 2(a) of the Commodity Exchange Act (7 U.S.C. 2(a)) 
     (as amended by section 727) is amended by adding at the end 
     the following:
       ``(15) Energy and environmental markets advisory 
     committee.--
       ``(A) Establishment.--
       ``(i) In general.--An Energy and Environmental Markets 
     Advisory Committee is hereby established.
       ``(ii) Membership.--The Committee shall have 9 members.
       ``(iii) Activities.--The Committee's objectives and scope 
     of activities shall be--

       ``(I) to conduct public meetings;
       ``(II) to submit reports and recommendations to the 
     Commission (including dissenting or minority views, if any); 
     and
       ``(III) otherwise to serve as a vehicle for discussion and 
     communication on matters of concern to exchanges, firms, end 
     users, and regulators regarding energy and environmental 
     markets and their regulation by the Commission.

       ``(B) Requirements.--
       ``(i) In general.--The Committee shall hold public meetings 
     at such intervals as are necessary to carry out the functions 
     of the Committee, but not less frequently than 2 times per 
     year.
       ``(ii) Members.--Members shall be appointed to 3-year 
     terms, but may be removed for cause by vote of the 
     Commission.
       ``(C) Appointment.--The Commission shall appoint members 
     with a wide diversity of opinion and who represent a broad 
     spectrum of interests, including hedgers and consumers.
       ``(D) Reimbursement.--Members shall be entitled to per diem 
     and travel expense reimbursement by the Commission.
       ``(E) FACA.--The Committee shall not be subject to the 
     Federal Advisory Committee Act (5 U.S.C. App.).''.

     SEC. 752. 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. 753. ANTIMARKET MANIPULATION AUTHORITY.

       (a) Prohibition Regarding Manipulation and False 
     Information.--Subsection (c) of section 6 of the Commodity 
     Exchange Act (7 U.S.C. 9, 15) is amended to read as follows:
       ``(c) Prohibition Regarding Manipulation and False 
     Information.--
       ``(1) Prohibition against manipulation.--It shall be 
     unlawful for any person, directly or indirectly, to use or 
     employ, or attempt to use or employ, in connection with any 
     swap, or a contract of sale of any commodity in interstate 
     commerce, or for future delivery on or subject to the rules 
     of any registered entity, any manipulative or deceptive 
     device or contrivance, in contravention of such rules and 
     regulations as the Commission shall promulgate by not later 
     than 1 year after the date of enactment of the Restoring 
     American Financial Stability Act of 2010.
       ``(A) Special provision for manipulation by false 
     reporting.--Unlawful manipulation for purposes of this 
     paragraph shall include, but not be limited to, delivering, 
     or causing to be delivered for transmission through the mails 
     or interstate commerce, by any means of communication 
     whatsoever, a false or misleading or inaccurate report 
     concerning crop or market information or conditions that 
     affect or tend to affect the price of any commodity in 
     interstate commerce, knowing, or acting in reckless disregard 
     of the fact, that such report is false, misleading or 
     inaccurate.
       ``(B) Effect on other law.--Nothing in this paragraph shall 
     affect, or be construed to affect, the applicability of 
     section 9(a)(2).
       ``(2) Prohibition regarding false information.--It shall be 
     unlawful for any person to make any false or misleading 
     statement of a material fact to the Commission, including in 
     any registration application or any report filed with the 
     Commission under this Act, or any other information relating 
     to a swap, or a contract of sale of a commodity, in 
     interstate commerce, or for future delivery on or subject to 
     the rules of any registered entity, or to omit to state in 
     any such statement any material fact that is necessary to 
     make any statement of a material fact made not misleading in 
     any material respect, if the person knew, or reasonably 
     should have known, the statement to be false or misleading.
       ``(3) Other manipulation.--In addition to the prohibition 
     in paragraph (1), it shall be unlawful for any person, 
     directly or indirectly, to manipulate or attempt to 
     manipulate the price of any swap, or of any commodity in 
     interstate commerce, or for future delivery on or subject to 
     the rules of any registered entity.
       ``(4) Enforcement.--
       ``(A) Authority of commission.--If the Commission has 
     reason to believe that any person (other than a registered 
     entity) is violating or has violated this subsection, or any 
     other provision of this Act (including any rule, regulation, 
     or order of the Commission promulgated in accordance with 
     this subsection or any other provision of this Act), the 
     Commission may serve upon the person a complaint.
       ``(B) Contents of complaint.--A complaint under 
     subparagraph (A) shall--
       ``(i) contain a description of the charges against the 
     person that is the subject of the complaint; and
       ``(ii) have attached or contain a notice of hearing that 
     specifies the date and location of the hearing regarding the 
     complaint.
       ``(C) Hearing.--A hearing described in subparagraph 
     (B)(ii)--
       ``(i) shall be held not later than 3 days after service of 
     the complaint described in subparagraph (A);
       ``(ii) shall require the person to show cause regarding 
     why--

       ``(I) an order should not be made--

       ``(aa) to prohibit the person from trading on, or subject 
     to the rules of, any registered entity; and
       ``(bb) to direct all registered entities to refuse all 
     privileges to the person until further notice of the 
     Commission; and

       ``(II) the registration of the person, if registered with 
     the Commission in any capacity, should not be suspended or 
     revoked; and

[[Page S4312]]

       ``(iii) may be held before--

       ``(I) the Commission; or
       ``(II) an administrative law judge designated by the 
     Commission, under which the administrative law judge shall 
     ensure that all evidence is recorded in written form and 
     submitted to the Commission.

       ``(5) Subpoena.--For the purpose of securing effective 
     enforcement of the provisions of this Act, for the purpose of 
     any investigation or proceeding under this Act, and for the 
     purpose of any action taken under section 12(f) of this Act, 
     any member of the Commission or any Administrative Law Judge 
     or other officer designated by the Commission (except as 
     provided in paragraph (7)) may administer oaths and 
     affirmations, subpoena witnesses, compel their attendance, 
     take evidence, and require the production of any books, 
     papers, correspondence, memoranda, or other records that the 
     Commission deems relevant or material to the inquiry.
       ``(6) Witnesses.--The attendance of witnesses and the 
     production of any such records may be required from any place 
     in the United States, any State, or any foreign country or 
     jurisdiction at any designated place of hearing.
       ``(7) Service.--A subpoena issued under this section may be 
     served upon any person who is not to be found within the 
     territorial jurisdiction of any court of the United States in 
     such manner as the Federal Rules of Civil Procedure prescribe 
     for service of process in a foreign country, except that a 
     subpoena to be served on a person who is not to be found 
     within the territorial jurisdiction of any court of the 
     United States may be issued only on the prior approval of the 
     Commission.
       ``(8) Refusal to obey.--In case of contumacy by, or refusal 
     to obey a subpoena issued to, any person, the Commission may 
     invoke the aid of any court of the United States within the 
     jurisdiction in which the investigation or proceeding is 
     conducted, or where such person resides or transacts 
     business, in requiring the attendance and testimony of 
     witnesses and the production of books, papers, 
     correspondence, memoranda, and other records. Such court may 
     issue an order requiring such person to appear before the 
     Commission or member or Administrative Law Judge or other 
     officer designated by the Commission, there to produce 
     records, if so ordered, or to give testimony touching the 
     matter under investigation or in question.
       ``(9) Failure to obey.--Any failure to obey such order of 
     the court may be punished by the court as a contempt thereof. 
     All process in any such case may be served in the judicial 
     district wherein such person is an inhabitant or transacts 
     business or wherever such person may be found.
       ``(10) Evidence.--On the receipt of evidence under 
     paragraph (4)(C)(iii), the Commission may--
       ``(A) prohibit the person that is the subject of the 
     hearing from trading on, or subject to the rules of, any 
     registered entity and require all registered entities to 
     refuse the person all privileges on the registered entities 
     for such period as the Commission may require in the order;
       ``(B) if the person is registered with the Commission in 
     any capacity, suspend, for a period not to exceed 180 days, 
     or revoke, the registration of the person;
       ``(C) assess such person--
       ``(i) a civil penalty of not more than an amount equal to 
     the greater of--

       ``(I) $140,000; or
       ``(II) triple the monetary gain to such person for each 
     such violation; or

       ``(ii) in any case of manipulation or attempted 
     manipulation in violation of this subsection or section 
     9(a)(2), a civil penalty of not more than an amount equal to 
     the greater of--

       ``(I) $1,000,000; or
       ``(II) triple the monetary gain to the person for each such 
     violation; and

       ``(D) require restitution to customers of damages 
     proximately caused by violations of the person.
       ``(11) Orders.--
       ``(A) Notice.--The Commission shall provide to a person 
     described in paragraph (10) and the appropriate governing 
     board of the registered entity notice of the order described 
     in paragraph (10) by--
       ``(i) registered mail;
       ``(ii) certified mail; or
       ``(iii) personal delivery.
       ``(B) Review.--
       ``(i) In general.--A person described in paragraph (10) may 
     obtain a review of the order or such other equitable relief 
     as determined to be appropriate by a court described in 
     clause (ii).
       ``(ii) Petition.--To obtain a review or other relief under 
     clause (i), a person may, not later than 15 days after notice 
     is given to the person under clause (i), file a written 
     petition to set aside the order with the United States Court 
     of Appeals--

       ``(I) for the circuit in which the petitioner carries out 
     the business of the petitioner; or
       ``(II) in the case of an order denying registration, the 
     circuit in which the principal place of business of the 
     petitioner is located, as listed on the application for 
     registration of the petitioner.

       ``(C) Procedure.--
       ``(i) Duty of clerk of appropriate court.--The clerk of the 
     appropriate court under subparagraph (B)(ii) shall transmit 
     to the Commission a copy of a petition filed under 
     subparagraph (B)(ii).
       ``(ii) Duty of commission.--In accordance with section 2112 
     of title 28, United States Code, the Commission shall file in 
     the appropriate court described in subparagraph (B)(ii) the 
     record theretofore made.
       ``(iii) Jurisdiction of appropriate court.--Upon the filing 
     of a petition under subparagraph (B)(ii), the appropriate 
     court described in subparagraph (B)(ii) shall have 
     jurisdiction to affirm, set aside, or modify the order of the 
     Commission, and the findings of the Commission as to the 
     facts, if supported by the weight of evidence, shall in like 
     manner be conclusive.''.
       (b) Cease and Desist Orders, Fines.--Section 6(d) of the 
     Commodity Exchange Act (7 U.S.C. 13b) is amended to read as 
     follows:
       ``(d) If any person (other than a registered entity), is 
     violating or has violated subsection (c) or any other 
     provisions of this Act or of the rules, regulations, or 
     orders of the Commission thereunder, the Commission may, upon 
     notice and hearing, and subject to appeal as in other cases 
     provided for in subsection (c), make and enter an order 
     directing that such person shall cease and desist therefrom 
     and, if such person thereafter and after the lapse of the 
     period allowed for appeal of such order or after the 
     affirmance of such order, shall fail or refuse to obey or 
     comply with such order, such person shall be guilty of a 
     misdemeanor and, upon conviction thereof, shall be fined not 
     more than the higher of $140,000 or triple the monetary gain 
     to such person, or imprisoned for not less than six months 
     nor more than one year, or both, except that if such failure 
     or refusal to obey or comply with such order involves any 
     offense within subsection (a) or (b) of section 9 of this 
     Act, such person shall be guilty of a felony and, upon 
     conviction thereof, shall be subject to the penalties of said 
     subsection (a) or (b): Provided, That any such cease and 
     desist order under this subsection against any respondent in 
     any case of manipulation shall be issued only in conjunction 
     with an order issued against such respondent under subsection 
     (c). Each day during which such failure or refusal to obey or 
     comply with such order continues shall be deemed a separate 
     offense.''.
       (c) Manipulations; Private Rights of Action.--Section 
     22(a)(1) of the Commodity Exchange Act (7 U.S.C. 25(a)(1)) is 
     amended by striking subparagraph (D) and inserting the 
     following:
       ``(D) who purchased or sold a contract referred to in 
     subparagraph (B) hereof or swap if the violation 
     constitutes--
       ``(i) the use or employment of, or an attempt to use or 
     employ, in connection with a swap, or a contract of sale of a 
     commodity, in interstate commerce, or for future delivery on 
     or subject to the rules of any registered entity, any 
     manipulative device or contrivance in contravention of such 
     rules and regulations as the Commission shall promulgate by 
     not later than 1 year after the date of enactment of the 
     Restoring American Financial Stability Act of 2010; or
       ``(ii) a manipulation of the price of any such contract or 
     swap or the price of the commodity underlying such contract 
     or swap.''.
       (d) Effective Date.--
       (1) The amendments made by this section shall take effect 
     on the date on which the final rule promulgated by the 
     Commodity Futures Trading Commission pursuant to this Act 
     takes effect.
       (2) Paragraph (1) shall not preclude the Commission from 
     undertaking prior to the effective date any rulemaking 
     necessary to implement the amendments contained in this 
     section.

     SEC. 754. EFFECTIVE DATE.

       Unless otherwise provided in this title, this subtitle 
     shall take effect on the date that is 180 days after the date 
     of enactment of this Act.

         Subtitle B--Regulation of Security-Based Swap Markets

     SEC. 761. DEFINITIONS UNDER THE SECURITIES EXCHANGE ACT OF 
                   1934.

       (a) Definitions.--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 ``(not including 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) in subparagraph (B)(i)--
       (i) in subclause (I), by striking ``or government 
     securities dealer'' and inserting ``government securities 
     dealer, security-based swap dealer, or major security-based 
     swap participant''; and
       (ii) in subclause (II), by inserting ``security-based swap 
     dealer, major security-based swap participant,'' after 
     ``government securities dealer,'';
       (B) in subparagraph (C), by striking ``or government 
     securities dealer'' and inserting ``government securities 
     dealer, security-based swap dealer, or major security-based 
     swap participant''; and
       (C) in subparagraph (D), 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 
     of the Commodity Exchange Act (7 U.S.C. 1a).
       ``(66) Major swap participant.--The term `major swap 
     participant' has the same meaning as in section 1a of the 
     Commodity Exchange Act (7 U.S.C. 1a).
       ``(67) Major security-based swap participant.--

[[Page S4313]]

       ``(A) In general.--The term `major security-based swap 
     participant' means any person--
       ``(i) who is not a security-based swap dealer; and
       ``(ii)(I) who maintains a substantial position in security-
     based swaps for any of the major security-based swap 
     categories, as such categories are determined by the 
     Commission, excluding--

       ``(aa) positions held for hedging or mitigating commercial 
     risk; and
       ``(bb) positions maintained by any employee benefit plan 
     (or any contract held by such a plan), as that term is 
     defined in paragraphs (3) and (32) of section 3 of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1002), for the primary purpose of hedging or mitigating any 
     risk directly associated with the operation of the plan;

       ``(II) whose outstanding security-based swaps create 
     substantial counterparty exposure that could have serious 
     adverse effects on the financial stability of the United 
     States banking system or financial markets; or
       ``(III) that is a financial entity that--

       ``(aa) is highly leveraged relative to the amount of 
     capital such entity holds; and
       ``(bb) maintains a substantial position in outstanding 
     security-based swaps in any major security-based swap 
     category, as such categories are determined by the 
     Commission.

       ``(B) Definition of substantial position.--For purposes of 
     subparagraph (A), the Commission shall define, by rule or 
     regulation, the term `substantial position' at the threshold 
     that the Commission determines to be prudent for the 
     effective monitoring, management, and oversight of entities 
     that are systemically important or can significantly impact 
     the financial system of the United States.
       ``(C) Scope of designation.--For purposes of subparagraph 
     (A), a person may be designated as a major security-based 
     swap participant for 1 or more categories of security-based 
     swaps without being classified as a major security-based swap 
     participant for all classes of security-based swaps.
       ``(D) Capital.--In setting capital requirements for a 
     person that is designated as a major security-based swap 
     participant for a single type or single class or category of 
     security-based swap or activities, the prudential regulator 
     and the Commission shall take into account the risks 
     associated with other types of security-based swaps or 
     classes of security-based swaps or categories of security-
     based swaps engaged in and the other activities conducted by 
     that person that are not otherwise subject to regulation 
     applicable to that person by virtue of the status of the 
     person as a major security-based swap participant.
       ``(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--
       ``(i) is a swap, as that term is defined under section 1a 
     of the Commodity Exchange Act; and
       ``(ii) is based on--

       ``(I) an index that is a narrow-based security index, 
     including any interest therein or on the value thereof;
       ``(II) a single security or loan, including any interest 
     therein or 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) 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).
       ``(C) Exclusions.--The term `security-based swap' does not 
     include any agreement, contract, or transaction that meets 
     the definition of a security-based swap only because such 
     agreement, contract, or transaction references, is based 
     upon, or settles through the transfer, delivery, or receipt 
     of an exempted security under paragraph (12), as in effect on 
     the date of enactment of the Futures Trading Act of 1982 
     (other than any municipal security as defined in paragraph 
     (29) as in effect on the date of enactment of the Futures 
     Trading Act of 1982), unless such agreement, contract, or 
     transaction is of the character of, or is commonly known in 
     the trade as, a put, call, or other option.
       ``(D) Mixed swap.--The term `security-based swap' includes 
     any agreement, contract, or transaction that is as described 
     in subparagraph (A) and also is based on 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 a single security or a narrow-based security 
     index), or the occurrence, non-occurrence, or the extent of 
     the occurrence of an event or contingency associated with a 
     potential financial, economic, or commercial consequence 
     (other than an event described in subparagraph (A)(ii)(III)).
       ``(69) Swap.--The term `swap' has the same meaning as in 
     section 1a of the Commodity Exchange Act (7 U.S.C. 1a).
       ``(70) Person associated with a security-based swap dealer 
     or major security-based swap participant.--
       ``(A) In general.--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--
       ``(i) 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);
       ``(ii) 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
       ``(iii) any employee of such security-based swap dealer or 
     major security-based swap participant.
       ``(B) Exclusion.--Other than for purposes of section 
     15F(l)(2), 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' does not include any person 
     associated with a security-based swap dealer or major 
     security-based swap participant whose functions are solely 
     clerical or ministerial.
       ``(71) Security-based swap dealer.--
       ``(A) In general.--The term `security-based swap dealer' 
     means any person who--
       ``(i) holds themself out as a dealer in security-based 
     swaps;
       ``(ii) makes a market in security-based swaps;
       ``(iii) regularly engages in the purchase and sale of 
     security-based swaps in the ordinary course of a business; or
       ``(iv) engages in any activity causing it to be commonly 
     known in the trade as a dealer or market maker in security-
     based swaps.
       ``(B) Designation by type or class.--A person may be 
     designated as a security-based swap dealer for a single type 
     or single class or category of security-based swap or 
     activities and considered not to be a security-based swap 
     dealer for other types, classes, or categories of security-
     based swaps or activities.
       ``(C) Capital.--In setting capital requirements for a 
     person that is designated as a security-based swap dealer for 
     a single type or single class or category of security-based 
     swap or activities, the prudential regulator and the 
     Commission shall take into account the risks associated with 
     other types of security-based swaps or classes of security-
     based swaps or categories of security-based swaps engaged in 
     and the other activities conducted by that person that are 
     not otherwise subject to regulation applicable to that person 
     by virtue of the status of the person as a security-based 
     swap dealer.
       ``(72) 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)).
       ``(73) Board.--The term `Board' means the Board of 
     Governors of the Federal Reserve System.
       ``(74) Prudential regulator.--The term `prudential 
     regulator' has the same meaning as in section 1a of the 
     Commodity Exchange Act (7 U.S.C. 1a).
       ``(75) Security-based swap data repository.--The term 
     `security-based swap data repository' means any person that 
     collects, calculates, prepares, or maintains information or 
     records with respect to transactions or positions in, or the 
     terms and conditions of, security-based swaps entered into by 
     third parties.
       ``(76) Swap dealer.--The term `swap dealer' has the same 
     meaning as in section 1a of the Commodity Exchange Act (7 
     U.S.C. 1a).
       ``(77) Swap execution facility.--The term `swap execution 
     facility' means a facility in which multiple participants 
     have the ability to execute or trade security-based swaps by 
     accepting bids and offers made by other participants that are 
     open to multiple participants in the facility or system, or 
     confirmation facility, that--
       ``(A) facilitates the execution of security-based swaps 
     between persons; and
       ``(B) is not a designated contract market.
       ``(78) Security-based swap agreement.--
       ``(A) In general.--For purposes of sections 9, 10, 16, 20, 
     and 21A of this Act, and section 17 of the Securities Act of 
     1933 (15 U.S.C. 77q), 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.''.
       (b) Authority To Further Define Terms.--The Securities and 
     Exchange Commission may, by rule, further define the terms 
     ``security-based swap'', ``security-based swap dealer'', 
     ``major security-based swap participant'', and ``eligible 
     contract participant'' with regard to security-based swaps 
     (as such terms are defined in the amendments made by 
     subsection (a)) for the purpose of including transactions and 
     entities that have been structured to evade this subtitle or 
     the amendments made by this subtitle.
       (c) Other Incorporated Definitions.--Except as the context 
     otherwise requires, in this subtitle, the terms ``prudential 
     regulator'', ``swap'', ``swap dealer'', ``major swap 
     participant'', ``swap data repository'', ``associated person 
     of a swap dealer or major swap participant'', ``eligible 
     contract participant'', ``swap execution facility'', 
     ``security-based swap'', ``security-based swap dealer'', 
     ``major security-based swap participant'', ``security-based 
     swap data repository'', and ``associated person of a 
     security-based swap dealer or major security-based swap 
     participant'' have the same meanings as in section 1a of the 
     Commodity Exchange Act (7 U.S.C. 1a), as amended by this Act.

[[Page S4314]]

     SEC. 762. REPEAL OF PROHIBITION ON REGULATION OF SECURITY-
                   BASED SWAP AGREEMENTS.

       (a) Repeal.--Sections 206B and 206C of the Gramm-Leach-
     Bliley Act (Public Law 106-102; 15 U.S.C. 78c note) are 
     repealed.
       (b) Conforming Amendments to the Securities Act of 1933.--
       (1) Section 2A of the Securities Act of 1933 (15 U.S.C. 
     77b-1) is amended--
       (A) by striking subsection (a) and reserving that 
     subsection; and
       (B) by striking ``(as defined in section 206B of the Gramm-
     Leach-Bliley Act)'' each place that such term appears and 
     inserting ``(as defined in section 3(a)(78) of the Securities 
     Exchange Act of 1934)''.
       (2) Section 17 of the Securities Act of 1933 (15 U.S.C. 
     77q) is amended--
       (A) in subsection (a)--
       (i) by inserting ``(including security-based swaps)'' after 
     ``securities''; and
       (ii) by striking ``(as defined in section 206B of the 
     Gramm-Leach-Bliley Act)'' and inserting ``(as defined in 
     section 3(a)(78) of the Securities Exchange Act)''; and
       (B) in subsection (d), by striking ``206B of the Gramm-
     Leach-Bliley Act'' and inserting ``3(a)(78) of the Securities 
     Exchange Act of 1934''.
       (c) 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 subsection (a) and reserving that 
     subsection; and
       (B) by striking ``(as defined in section 206B of the Gramm-
     Leach-Bliley Act)'' each place that the term appears;
       (2) in section 9 (15 U.S.C. 78i)--
       (A) in subsection (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, any security not so registered, 
     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, a security-based swap, or a security-
     based swap agreement with respect to such security, to induce 
     the purchase or sale of any security registered on a national 
     securities exchange, any security not so registered, any 
     security-based swap, or any 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, 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, any security not so registered, any security-based 
     swap, or any security-based swap agreement with respect to 
     such security, for the purpose of inducing the purchase or 
     sale of such security, such security-based swap, or such 
     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 that person knew or had reasonable ground to 
     believe was so false or misleading.
       ``(5) For a consideration, received directly or indirectly 
     from a broker, dealer, 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, a security-based swap, or security-based swap 
     agreement with respect to such security, to induce the 
     purchase of any security registered on a national securities 
     exchange, any security not so registered, any security-based 
     swap, or any 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.''; and
       (B) in subsection (i), by striking ``(as defined in section 
     206B of the Gramm-Leach-Bliley Act)'';
       (3) in section 10 (15 U.S.C. 78j)--
       (A) in subsection (b), by striking ``(as defined in section 
     206B of the Gramm-Leach-Bliley Act),'' each place that term 
     appears; and
       (B) in the matter following subsection (b), by striking 
     ``(as defined in section 206B of the Gramm-Leach-Bliley 
     Act)'';
       (4) in section 15 (15 U.S.C. 78o)--
       (A) in subsection (c)(1)(A), by striking ``(as defined in 
     section 206B of the Gramm-Leach-Bliley Act),'';
       (B) in subparagraphs (B) and (C) of subsection (c)(1), by 
     striking ``(as defined in section 206B of the Gramm-Leach-
     Bliley Act)'' each place that term appears;
       (C) by redesignating subsection (i), as added by section 
     303(f) of the Commodity Futures Modernization Act of 2000 
     (Public Law 106-554; 114 Stat. 2763A-455)), as subsection 
     (j); and
       (D) in subsection (j), as redesignated by subparagraph (C), 
     by striking ``(as defined in section 206B of the Gramm-Leach-
     Bliley Act)'';
       (5) 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 (15 U.S.C. 78c 
     note))'';
       (B) in subsection (a)(3)(B), by inserting ``or security-
     based swaps'' after ``security-based swap agreement'';
       (C) in the first sentence of subsection (b), by striking 
     ``(as defined in section 206B of the Gramm-Leach-Bliley 
     Act)'';
       (D) in the third sentence of subsection (b), by striking 
     ``(as defined in section 206B of the Gramm-Leach Bliley 
     Act)'' and inserting ``or a security-based swap''; and
       (E) in subsection (g), by striking ``(as defined in section 
     206B of the Gramm-Leach-Bliley Act)'';
       (6) 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)'';
       (7) 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. 763. AMENDMENTS TO THE SECURITIES EXCHANGE ACT OF 1934.

       (a) Clearing for Security-based Swaps.--The Securities 
     Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended by 
     inserting after section 3B (as added by section 717 of this 
     Act):

     ``SEC. 3C. CLEARING FOR SECURITY-BASED SWAPS.

       ``(a) Clearing Requirement.--
       ``(1) Submission.--
       ``(A) In general.--Except as provided in paragraphs (9) and 
     (10), 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 title.
       ``(B) Open access.--The rules of a registered clearing 
     agency shall--
       ``(i) prescribe that all security-based swaps with the same 
     terms and conditions are economically equivalent and may be 
     offset with each other within the clearing agency; and
       ``(ii) provide for nondiscriminatory clearing of a 
     security-based swap executed bilaterally or on or through the 
     rules of an unaffiliated national securities exchange or swap 
     execution facility, subject to the requirements of section 
     5(b).
       ``(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.--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 the 
     Commission may still permit such security-based swap, or the 
     group, category, type, or class of security-based swaps to be 
     cleared.

[[Page S4315]]

       ``(D) Rules.--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.--The Commission shall 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 deems should be accepted 
     for clearing. In adopting such rules, the 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 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 
     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 factor the Commission determines 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 of paragraph (1), taking into account the factors 
     established in clauses (i) through (vi) of subparagraph (A) 
     and the rules adopted in such subparagraph.
       ``(C) In general.--In accordance with subparagraph (A), the 
     Commission shall, consistent with the public interest, adopt 
     rules under the expedited process described in subparagraph 
     (D) to establish criteria for determining that a swap, or any 
     group, category, type, or class of swap is required to be 
     cleared.
       ``(D) Expedited rulemaking authority.--
       ``(i) Procedure.--The promulgation of regulations under 
     subparagraph (A) may be made without regard to--

       ``(I) the notice and comment provisions of section 553 of 
     title 5, United States Code; and
       ``(II) chapter 35 of title 44, United States Code (commonly 
     known as the `Paperwork Reduction Act').

       ``(ii) Agency rulemaking.--In carrying out subparagraph 
     (A), the Commission shall use the authority provided under 
     section 808 of title 5, United States Code.
       ``(5) Prevention of evasion.--
       ``(A) In general.--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.
       ``(B) Duty of commission to investigate and take certain 
     actions.--To the extent the Commission finds that a 
     particular security-based swap or any group, category, type, 
     or class of security-based swaps that would otherwise be 
     subject to mandatory clearing but no clearing agency has 
     listed the security-based swap or the group, category, type, 
     or class of security-based swaps for clearing, the Commission 
     shall--
       ``(i) investigate the relevant facts and circumstances;
       ``(ii) within 30 days issue a public report containing the 
     results of the investigation; and
       ``(iii) take such actions as the Commission determines to 
     be necessary and in the public interest, which may include 
     requiring the retaining of adequate margin or capital by 
     parties to the security-based swap or the group, category, 
     type, or class of security-based swaps.
       ``(C) Effect on authority.--Nothing in this paragraph--
       ``(i) authorize the Commission to require a clearing agency 
     to list for clearing a security-based swap or any group, 
     category, type, or class of security-based swaps if the 
     clearing of the security-based swap or the group, category, 
     type, or class of security-based swaps would adversely affect 
     the business operations of the clearing agency, threaten the 
     financial integrity of the clearing agency, or pose a 
     systemic risk to the clearing agency; and
       ``(ii) affect the authority of the Commission to enforce 
     the open access provisions of paragraph (1) with respect to a 
     security-based swap or the group, category, type, or class of 
     security-based swaps that is listed for clearing by a 
     clearing agency.
       ``(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 a swap execution facility 
     registered under section 3D or a swap execution facility that 
     is exempt from registration under section 3D(e).
       ``(B) Exception.--The requirements of clauses (i) and (ii) 
     of subparagraph (A) shall not apply--
       ``(i) if no national securities exchange or security-based 
     swap execution facility makes the security-based swap 
     available to trade; or
       ``(ii) to swap transactions where a commercial end user 
     opts to use the clearing exemption under paragraph (10).
       ``(9) 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 from clearing.
       ``(10) End user clearing exemption.--
       ``(A) Definition of commercial end user.--
       ``(i) In general.--In this paragraph, the term `commercial 
     end user' means any person other than a financial entity 
     described in clause (ii) who, as its primary business 
     activity, owns, uses, produces, processes, manufactures, 
     distributes, merchandises, or markets services or commodities 
     (which shall include coal, natural gas, electricity, ethanol, 
     crude oil, distillates, and other hydrocarbons) either 
     individually or in a fiduciary capacity.
       ``(ii) Financial entity.--The term `financial entity' 
     means--

       ``(I) a swap dealer, major swap participant, security-based 
     swap dealer, or major security-based swap participant;
       ``(II) a person predominantly engaged in activities that 
     are in the business of banking or financial in nature, as 
     defined in Section 4(k) of the Bank Holding Company Act of 
     1956;
       ``(III) a person predominantly engaged in activities that 
     are financial in nature;
       ``(IV) a private fund as defined in section 202(a) of the 
     Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)) or a 
     commodity pool as defined in section 1a of the Commodity 
     Exchange Act (7 U.S.C. 1a); or
       ``(V) a person that is registered or required to be 
     registered with the Commission, but does not include a public 
     company which registers its securities with the Commission.

       ``(B) End user clearing exemption.--
       ``(i) In general.--Subject to clause (ii), in the event 
     that a security-based swap is subject to the mandatory 
     clearing requirement under paragraph (1), and 1 of the 
     counterparties to the security-based swap is a commercial end 
     user that counterparty--

       ``(I)(aa) may elect not to clear the security-based swap, 
     as required under paragraph (1); or
       ``(bb) may elect to require clearing of the security-based 
     swap; and
       ``(II) if the end user makes an election under subclause 
     (I)(bb), shall have the sole right to select the clearing 
     agency at which the security-based swap will be cleared.

       ``(ii) Limitation.--A commercial end user may only make an 
     election under clause (i) if the end user is using the 
     security-based swap to hedge its own commercial risk.
       ``(C) Treatment of affiliates.--
       ``(i) In general.--An affiliate of a commercial end user 
     (including affiliate entities predominantly engaged in 
     providing financing for the purchase of the merchandise or 
     manufactured goods of the commercial end user) may make an 
     election under subparagraph (B)(i) only if the affiliate, 
     acting on behalf of the commercial end user and as an agent, 
     uses the security-based swap to hedge or mitigate the 
     commercial risk of the commercial end user parent or other 
     affiliates of the commercial end user that is not a financial 
     entity.
       ``(ii) Prohibition relating to certain affiliates.--An 
     affiliate of a commercial end user shall not use the 
     exemption under subparagraph (B) if the affiliate is--

       ``(I) a security-based swap dealer;
       ``(II) a security-based security-based swap dealer;
       ``(III) a major security-based swap participant;
       ``(IV) a major security-based security-based swap 
     participant;
       ``(V) 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 paragraph (1) or (7) of subsection 
     (c) of that section 3 (15 U.S.C. 80a-3(c));
       ``(VI) a commodity pool;
       ``(VII) a bank holding company with over $50,000,000,000 in 
     consolidated assets; or
       ``(VIII) an affiliate of any entity described in subclauses 
     (I) through (VII).

[[Page S4316]]

       ``(iii) Abuse of exemption.--The Commission may prescribe 
     such rules, or issue interpretations of the rules, as the 
     Commission determines to be necessary to prevent abuse of the 
     exemption described in subparagraph (B).
       ``(D) Option to clear.--
       ``(i) Security-based swaps required to be cleared entered 
     into with a financial entity.--With respect to any 
     securities-based swap that is required to be cleared by a 
     clearing agency and entered into by a securities-based swap 
     dealer or a major securities-based swap participant with a 
     financial entity, the financial entity shall have the sole 
     right to select the clearing agency at which the securities-
     based swap will be cleared.
       ``(ii) Security-based swaps not required to be cleared 
     entered into with a financial entity or commercial end 
     user.--With respect to any securities-based swap that is not 
     required to be cleared by a clearing agency and entered into 
     by a securities-based swap dealer or a major securities-based 
     swap participant with a financial entity or commercial end 
     user, the financial entity or commercial end user--

       ``(I) may elect to require clearing of the securities-based 
     swap; and
       ``(II) shall have the sole right to select the clearing 
     agency at which the securities-based swap will be cleared.

       ``(b) Audit Committee Approval.--Exemptions from the 
     requirements of this section to clear or trade a security-
     based swap through a national securities exchange or 
     security-based swap execution facility shall be available to 
     a counterparty that is an issuer of securities that are 
     registered under section 12 or that is required to file 
     reports pursuant to section 15(d), only if the issuer's audit 
     committee has reviewed and approved the issuer's decision to 
     enter into security-based swaps that are subject to such 
     exemptions.
       ``(c) Public Availability of Security-based Swap 
     Transaction Data.--
       ``(1) In general.--
       ``(A) Definition of real-time public reporting.--In this 
     paragraph, the term `real-time public reporting' means to 
     report data relating to a security-based swap transaction as 
     soon as technologically practicable after the time at which 
     the security-based swap transaction has been executed.
       ``(B) Purpose.--The purpose of this section is to authorize 
     the Commission to make security-based swap transaction and 
     pricing data available to the public in such form and at such 
     times as the Commission determines appropriate to enhance 
     price discovery.
       ``(C) General rule.--The Commission is authorized to 
     provide by rule for the public availability of security-based 
     swap transaction and pricing data as follows:
       ``(i) With respect to those security-based swaps that are 
     subject to the mandatory clearing requirement described in 
     subsection (a)(1) (including those security-based swaps that 
     are exempted from those requirements), the Commission shall 
     require real-time public reporting for such transactions.
       ``(ii) With respect to those security-based swaps that are 
     not subject to the mandatory clearing requirement described 
     in subsection (a)(1), but are cleared at a registered 
     clearing agency, the Commission shall require real-time 
     public reporting for such transactions.
       ``(iii) With respect to security-based swaps that are not 
     cleared at a registered clearing agency and which are 
     reported to a security-based swap data repository or the 
     Commission under subsection (a), the Commission 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 such security-based swap trading volumes 
     and positions.
       ``(iv) With respect to security-based swaps that are exempt 
     from the requirements of subsection (a)(1), but are subject 
     to the requirements of subsection (a)(8), the Commission 
     shall require real-time public reporting for such 
     transactions.
       ``(D) Registered entities and public reporting.--The 
     Commission may require registered entities to publicly 
     disseminate the security-based swap transaction and pricing 
     data required to be reported under this paragraph.
       ``(E) Rulemaking required.--With respect to the rule 
     providing for the public availability of transaction and 
     pricing data for security-based swaps described in clauses 
     (i) and (ii) of subparagraph (C), the rule promulgated by the 
     Commission shall contain provisions--
       ``(i) to ensure such information does not identify the 
     participants;
       ``(ii) to specify the criteria for determining what 
     constitutes a large notional security-based swap transaction 
     (block trade) for particular markets and contracts;
       ``(iii) to specify the appropriate time delay for reporting 
     large notional security-based swap transactions (block 
     trades) to the public; and
       ``(iv) that take into account whether the public disclosure 
     will materially reduce market liquidity.
       ``(F) Timeliness of reporting.--Parties to a security-based 
     swap (including agents of the parties to a security-based 
     swap) shall be responsible for reporting security-based swap 
     transaction information to the appropriate registered entity 
     in a timely manner as may be prescribed by the Commission.
       ``(2) Semiannual and annual public reporting of aggregate 
     security-based swap data.--
       ``(A) In general.--In accordance with subparagraph (B), the 
     Commission shall issue a written report on a semiannual and 
     annual basis to make available to the public information 
     relating to--
       ``(i) the trading and clearing in the major security-based 
     swap categories; and
       ``(ii) the market participants and developments in new 
     products.
       ``(B) Use; consultation.--In preparing a report under 
     subparagraph (A), the Commission shall--
       ``(i) use information from security-based swap data 
     repositories and clearing agencies; and
       ``(ii) consult with the Office of the Comptroller of the 
     Currency, the Bank for International Settlements, and such 
     other regulatory bodies as may be necessary.
       ``(C) Transition rule for preenactment security-based 
     swaps.--
       ``(i) Security-based swaps entered into before the date of 
     enactment of the wall street transparency and accountability 
     act of 2010.--Each security-based swap entered into before 
     the date of enactment of the Wall Street Transparency and 
     Accountability Act of 2010, the terms of which have not 
     expired as of the date of enactment of that Act, shall be 
     reported to a registered security-based swap data repository 
     or the Commission by a date that is not later than--

       ``(I) 30 days after the date of issuance of the interim 
     final rule; or
       ``(II) such other period as the Commission determines to be 
     appropriate.

       ``(ii) Commission rulemaking.--The Commission shall 
     promulgate an interim final rule within 90 days of the date 
     of enactment of this section providing for the reporting of 
     each security-based swap entered into before the date of 
     enactment as referenced in clause (i).
       ``(D) Effective date.--The reporting provisions described 
     in this paragraph shall be effective upon the date of 
     enactment of this section.
       ``(d) Designation of Chief Compliance Officer.--
       ``(1) In general.--Each registered clearing agency shall 
     designate an individual to serve as a chief compliance 
     officer.
       ``(2) Duties.--The chief compliance officer shall--
       ``(A) report directly to the board or to the senior officer 
     of the clearing agency;
       ``(B) in consultation with its board, a body performing a 
     function similar thereto, or the senior officer of the 
     registered clearing agency, resolve any conflicts of interest 
     that may arise;
       ``(C) be responsible for administering each policy and 
     procedure that is required to be established pursuant to this 
     section;
       ``(D) ensure compliance with this title (including 
     regulations issued under this title) relating to agreements, 
     contracts, or transactions, including each rule prescribed by 
     the Commission under this section;
       ``(E) establish procedures for the remediation of 
     noncompliance issues identified by the compliance officer 
     through any--
       ``(i) compliance office review;
       ``(ii) look-back;
       ``(iii) internal or external audit finding;
       ``(iv) self-reported error; or
       ``(v) validated complaint; and
       ``(F) establish and follow appropriate procedures for the 
     handling, management response, remediation, retesting, and 
     closing of noncompliance issues.
       ``(3) Annual reports.--
       ``(A) In general.--In accordance with rules prescribed by 
     the Commission, the chief compliance officer shall annually 
     prepare and sign a report that contains a description of--
       ``(i) the compliance of the registered clearing agency or 
     security-based swap execution facility of the compliance 
     officer with respect to this title (including regulations 
     under this title); and
       ``(ii) each policy and procedure of the registered clearing 
     agency of the compliance officer (including the code of 
     ethics and conflict of interest policies of the registered 
     clearing agency).
       ``(B) Requirements.--A compliance report under subparagraph 
     (A) shall--
       ``(i) accompany each appropriate financial report of the 
     registered clearing agency that is required to be furnished 
     to the Commission pursuant to this section; and
       ``(ii) include a certification that, under penalty of law, 
     the compliance report is accurate and complete.''.
       (b) Clearing Agency Requirements.--Section 17A of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78q-1) is amended 
     by adding at the end the following:
       ``(g) Registration Requirement.--It shall be unlawful for a 
     clearing agency, 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 clearing agency with respect to a security-
     based swap.
       ``(h) Voluntary Registration.--A person that clears 
     agreements, contracts, or transactions that are not required 
     to be cleared under this title may register with the 
     Commission as a clearing agency.
       ``(i) Standards for Clearing Agencies Clearing Security-
     based Swap Transactions.--To be registered and to maintain 
     registration as a clearing agency that clears security-based 
     swap transactions, a clearing agency shall comply with such 
     standards as the Commission may establish by rule. In 
     establishing any such standards, and in the exercise of its 
     oversight of such a clearing agency pursuant to this title, 
     the Commission may conform such standards or oversight to 
     reflect evolving United States and international standards. 
     Except where the Commission determines otherwise by rule or 
     regulation, a clearing agency shall have reasonable 
     discretion in establishing the manner in which it complies 
     with any such standards.
       ``(j) Rules.--The Commission shall adopt rules governing 
     persons that are registered as clearing agencies for 
     security-based swaps under this title.
       ``(k) Exemptions.--
       ``(1) In general.--The Commission may exempt, conditionally 
     or unconditionally, a clearing agency from registration under 
     this section for the clearing of security-based swaps if the 
     Commission determines that the clearing agency

[[Page S4317]]

     is subject to comparable, comprehensive supervision and 
     regulation by the Commodity Futures Trading Commission or the 
     appropriate government authorities in the home country of the 
     agency. Such conditions may include, but are not limited to, 
     requiring that the clearing agency be available for 
     inspection by the Commission and make available all 
     information requested by the Commission.
       ``(2) Derivatives clearing organizations.--A person that is 
     required to be registered as a derivatives clearing 
     organization under the Commodity Exchange Act, whose 
     principal business is clearing commodity futures and options 
     on commodity futures transactions and swaps and which is a 
     derivatives clearing organization registered with the 
     Commodity Futures Trading Commission under the Commodity 
     Exchange Act (7 U.S.C. 1 et seq.), shall be unconditionally 
     exempt from registration under this section solely for the 
     purpose of clearing security-based swaps, unless the 
     Commission finds that such derivatives clearing organization 
     is not subject to comparable, comprehensive supervision and 
     regulation by the Commodity Futures Trading Commission.
       ``(l) Modification of Core Principles.--The Commission may 
     conform the core principles established in this section to 
     reflect evolving United States and international 
     standards.''.
       (c) Security-based Swap Execution Facilities.--The 
     Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is 
     amended by inserting after section 3C (as added by subsection 
     (a) of this section) the following:

     ``SEC. 3D. SECURITY-BASED SWAP EXECUTION FACILITIES.

       ``(a) Registration.--
       ``(1) In general.--No person may operate a facility for the 
     trading or processing of security-based swaps, unless the 
     facility is registered as a security-based swap execution 
     facility or as a national securities exchange under this 
     section.
       ``(2) Dual registration.--Any person that is registered as 
     a security-based swap execution facility under this section 
     shall register with the Commission regardless of whether the 
     person also is registered with the Commodity Futures Trading 
     Commission as a swap execution facility.
       ``(b) Trading and Trade Processing.--A security-based swap 
     execution facility that is registered under subsection (a) 
     may--
       ``(1) make available for trading any security-based swap; 
     and
       ``(2) facilitate trade processing of any security-based 
     swap.
       ``(c) Identification of Facility Used To Trade Security-
     based Swaps by National Securities Exchanges.--A national 
     securities exchange shall, to the extent that the exchange 
     also operates a security-based swap execution facility and 
     uses the same electronic trade execution system for listing 
     and executing trades of security-based swaps on or through 
     the exchange and the facility, identify whether electronic 
     trading of such security-based swaps is taking place on or 
     through the national securities exchange or the security-
     based swap execution facility.
       ``(d) Core Principles for Security-based Swap Execution 
     Facilities.--
       ``(1) Compliance with core principles.--
       ``(A) In general.--To be registered, and maintain 
     registration, as a security-based swap execution facility, 
     the security-based swap execution facility shall comply 
     with--
       ``(i) the core principles described in this subsection; and
       ``(ii) any requirement that the Commission may impose by 
     rule or regulation.
       ``(B) Reasonable discretion of security-based swap 
     execution facility.--Unless otherwise determined by the 
     Commission, by rule or regulation, a security-based swap 
     execution facility described in subparagraph (A) shall have 
     reasonable discretion in establishing the manner in which it 
     complies with the core principles described in this 
     subsection.
       ``(2) Compliance with rules.--A security-based swap 
     execution facility shall--
       ``(A) monitor and enforce compliance with any rule 
     established by such security-based swap execution facility, 
     including--
       ``(i) the terms and conditions of the security-based swaps 
     traded or processed on or through the facility; and
       ``(ii) any limitation on access to the facility;
       ``(B) establish and enforce trading, trade processing, and 
     participation rules that will deter abuses and have the 
     capacity to detect, investigate, and enforce those rules, 
     including means--
       ``(i) to provide market participants with impartial access 
     to the market; and
       ``(ii) to capture information that may be used in 
     establishing whether rule violations have occurred; and
       ``(C) establish rules governing the operation of the 
     facility, including rules specifying trading procedures to be 
     used in entering and executing orders traded or posted on the 
     facility, including block trades.
       ``(3) Security-based swaps not readily susceptible to 
     manipulation.--The security-based swap execution facility 
     shall permit trading only in security-based swaps that are 
     not readily susceptible to manipulation.
       ``(4) Monitoring of trading and trade processing.--The 
     security-based swap execution facility shall--
       ``(A) establish and enforce rules or terms and conditions 
     defining, or specifications detailing--
       ``(i) trading procedures to be used in entering and 
     executing orders traded on or through the facilities of the 
     security-based swap execution facility; and
       ``(ii) procedures for trade processing of security-based 
     swaps on or through the facilities of the security-based swap 
     execution facility; and
       ``(B) monitor trading in security-based 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.--The security-based 
     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 on 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, a security-based swap execution facility that 
     is a trading facility shall adopt for each of the contracts 
     of the facility, as is necessary and appropriate, position 
     limitations or position accountability for speculators.
       ``(B) Position limits.--For any contract or agreement that 
     is subject to a position limitation established by the 
     Commission pursuant to section 10B, the security-based swap 
     execution facility shall set its position limitation at a 
     level no higher than the limitation established by the 
     Commission.
       ``(C) Position enforcement.--For any contract or agreement 
     that is subject to a position limitation established by the 
     Commission pursuant to section 10B, a security-based swap 
     execution facility shall reject any proposed security-based 
     swap transaction if, based on information readily available 
     to a security-based swap execution facility, any proposed 
     security-based swap transaction would cause a security-based 
     swap execution facility customer that would be a party to 
     such swap transaction to exceed such position limitation.
       ``(7) Financial integrity of transactions.--The security-
     based swap execution facility shall establish and enforce 
     rules and procedures for ensuring the financial integrity of 
     security-based swaps entered on or through the facilities of 
     the security-based swap execution facility, including the 
     clearance and settlement of security-based swaps pursuant to 
     section 3C(a)(1).
       ``(8) Emergency authority.--The security-based swap 
     execution facility shall adopt rules to provide for the 
     exercise of emergency authority, in consultation or 
     cooperation with the Commission, as is necessary and 
     appropriate, including the authority to liquidate or transfer 
     open positions in any security-based swap or to suspend or 
     curtail trading in a security-based swap.
       ``(9) Timely publication of trading information.--
       ``(A) In general.--The security-based swap execution 
     facility shall make public timely information on price, 
     trading volume, and other trading data on security-based 
     swaps to the extent prescribed by the Commission.
       ``(B) Capacity of security-based swap execution facility.--
     The security-based swap execution facility shall be required 
     to have the capacity to electronically capture trade 
     information with respect to transactions executed on the 
     facility.
       ``(10) Recordkeeping and reporting.--
       ``(A) In general.--A security-based swap execution facility 
     shall--
       ``(i) maintain records of all activities relating 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, in a form and manner 
     acceptable to the Commission, such information as the 
     Commission determines to be necessary or appropriate for the 
     Commission to perform the duties of the Commission under this 
     title.
       ``(B) Requirements.--The Commission shall adopt data 
     collection and reporting requirements for security-based swap 
     execution facilities that are comparable to corresponding 
     requirements for clearing agencies and security-based swap 
     data repositories.
       ``(11) Antitrust considerations.--Unless necessary or 
     appropriate to achieve the purposes of this title, the 
     security-based swap execution facility shall not--
       ``(A) adopt any rules or taking any actions that result in 
     any unreasonable restraint of trade; or
       ``(B) impose any material anticompetitive burden on trading 
     or clearing.
       ``(12) Conflicts of interest.--The security-based 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 the conflicts of 
     interest.
       ``(13) Financial resources.--
       ``(A) In general.--The security-based swap execution 
     facility shall have adequate financial, operational, and 
     managerial resources to discharge each responsibility of the 
     security-based swap execution facility, as determined by the 
     Commission.
       ``(B) Determination of resource adequacy.--The financial 
     resources of a security-based swap execution facility shall 
     be considered to be adequate if the value of the financial 
     resources--
       ``(i) enables 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) exceeds the total amount that would enable the 
     security-based swap execution facility to cover the operating 
     costs of the security-based swap execution facility for a 1-
     year period, as calculated on a rolling basis.

[[Page S4318]]

       ``(14) System safeguards.--The security-based swap 
     execution facility 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 automated systems, that--
       ``(i) are reliable and secure; and
       ``(ii) have adequate scalable capacity;
       ``(B) establish and maintain emergency procedures, backup 
     facilities, and a plan for disaster recovery that are 
     designed to allow for--
       ``(i) the timely recovery and resumption of operations; and
       ``(ii) the fulfillment of the responsibilities and 
     obligation of the security-based swap execution facility; and
       ``(C) periodically conduct tests to verify that the backup 
     resources of the security-based swap execution facility are 
     sufficient to ensure continued--
       ``(i) order processing and trade matching;
       ``(ii) price reporting;
       ``(iii) market surveillance; and
       ``(iv) maintenance of a comprehensive and accurate audit 
     trail.
       ``(15) Designation of chief compliance officer.--
       ``(A) In general.--Each security-based swap execution 
     facility shall designate an individual to serve as a chief 
     compliance officer.
       ``(B) Duties.--The chief compliance officer shall--
       ``(i) report directly to the board or to the senior officer 
     of the facility;
       ``(ii) review compliance with the core principles in this 
     subsection;
       ``(iii) in consultation with the board of the facility, a 
     body performing a function similar to that of a board, or the 
     senior officer of the facility, resolve any conflicts of 
     interest that may arise;
       ``(iv) be responsible for establishing and administering 
     the policies and procedures required to be established 
     pursuant to this section;
       ``(v) ensure compliance with this title and the rules and 
     regulations issued under this title, including rules 
     prescribed by the Commission pursuant to this section;
       ``(vi) establish procedures for the remediation of 
     noncompliance issues found during--

       ``(I) compliance office reviews;
       ``(II) look backs;
       ``(III) internal or external audit findings;
       ``(IV) self-reported errors; or
       ``(V) through validated complaints; and

       ``(vii) establish and follow appropriate procedures for the 
     handling, management response, remediation, retesting, and 
     closing of noncompliance issues.
       ``(C) Annual reports.--
       ``(i) In general.--In accordance with rules prescribed by 
     the Commission, the chief compliance officer shall annually 
     prepare and sign a report that contains a description of--

       ``(I) the compliance of the security-based swap execution 
     facility with this title; and
       ``(II) the policies and procedures, including the code of 
     ethics and conflict of interest policies, of the security-
     based security-based swap execution facility.

       ``(ii) Requirements.--The chief compliance officer shall--

       ``(I) submit each report described in clause (i) with the 
     appropriate financial report of the security-based swap 
     execution facility that is required to be submitted to the 
     Commission pursuant to this section; and
       ``(II) include in the report a certification that, under 
     penalty of law, the report is accurate and complete.

       ``(e) Exemptions.--The Commission may exempt, conditionally 
     or unconditionally, a security-based swap execution facility 
     from registration under this section if the Commission finds 
     that the facility is subject to comparable, comprehensive 
     supervision and regulation on a consolidated basis by the 
     Commodity Futures Trading Commission.
       ``(f) Rules.--The Commission shall prescribe rules 
     governing the regulation of security-based swap execution 
     facilities under this section.''.
       (d) 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 amended by inserting after section 
     3D (as added by subsection (b)) the following:

     ``SEC. 3E. SEGREGATION OF ASSETS HELD AS COLLATERAL IN 
                   SECURITY-BASED SWAP TRANSACTIONS.

       ``(a) Registration Requirement.--It shall be unlawful for 
     any person to accept any money, securities, or property (or 
     to extend any credit in lieu of money, securities, or 
     property) from, for, or on behalf of a security-based swaps 
     customer or to margin, guarantee, or secure a security-based 
     swap cleared by or through a clearing agency (including 
     money, securities, or property accruing to the customer as 
     the result of such a security-based swap), unless the person 
     shall have registered under this title with the Commission as 
     a broker, dealer, or security-based swap dealer, and the 
     registration shall not have expired nor been suspended nor 
     revoked.
       ``(b) Cleared Security-based Swaps.--
       ``(1) Segregation required.--A broker, dealer, or security-
     based swap dealer shall treat and deal with all money, 
     securities, and property of any security-based swaps customer 
     received to margin, guarantee, or secure a security-based 
     swap cleared by or through a clearing agency (including 
     money, securities, or property accruing to the security-based 
     swaps customer as the result of such a security-based swap) 
     as belonging to the security-based swaps customer.
       ``(2) Commingling prohibited.--Money, securities, and 
     property of a security-based swaps customer described in 
     paragraph (1) shall be separately accounted for and shall not 
     be commingled with the funds of the broker, dealer, or 
     security-based swap dealer or be used to margin, secure, or 
     guarantee any trades or contracts of any security-based swaps 
     customer or person other than the person for whom the same 
     are held.
       ``(c) Exceptions.--
       ``(1) Use of funds.--
       ``(A) In general.--Notwithstanding subsection (b), money, 
     securities, and property of a security-based swaps customer 
     of a broker, dealer, or security-based swap dealer described 
     in subsection (b) may, for convenience, be commingled and 
     deposited in the same 1 or more accounts with any bank or 
     trust company or with a clearing agency.
       ``(B) Withdrawal.--Notwithstanding subsection (b), such 
     share of the money, securities, and property described in 
     subparagraph (A) as in the normal course of business shall be 
     necessary to margin, guarantee, secure, transfer, adjust, or 
     settle a cleared security-based swap with a clearing agency, 
     or with any member of the clearing agency, may be withdrawn 
     and applied to such purposes, including the payment of 
     commissions, brokerage, interest, taxes, storage, and other 
     charges, lawfully accruing in connection with the cleared 
     security-based swap.
       ``(2) Commission action.--Notwithstanding subsection (b), 
     in accordance with such terms and conditions as the 
     Commission may prescribe by rule, regulation, or order, any 
     money, securities, or property of the security-based swaps 
     customer of a broker, dealer, or security-based swap dealer 
     described in subsection (b) may be commingled and deposited 
     as provided in this section with any other money, securities, 
     or property received by the broker, dealer, or security-based 
     swap dealer and required by the Commission to be separately 
     accounted for and treated and dealt with as belonging to the 
     security-based swaps customer of the broker, dealer, or 
     security-based swap dealer.
       ``(d) Permitted Investments.--Money described in subsection 
     (b) may be invested in obligations of the United States, in 
     general obligations of any State or of any political 
     subdivision of a State, and in obligations fully guaranteed 
     as to principal and interest by the United States, or in any 
     other investment that the Commission may by rule or 
     regulation prescribe, and such investments shall be made in 
     accordance with such rules and regulations and subject to 
     such conditions as the Commission may prescribe.
       ``(e) Prohibition.--It shall be unlawful for any person, 
     including any clearing agency and any depository institution, 
     that has received any money, securities, or property for 
     deposit in a separate account or accounts as provided in 
     subsection (b) to hold, dispose of, or use any such money, 
     securities, or property as belonging to the depositing 
     broker, dealer, or security-based swap dealer or any person 
     other than the swaps customer of the broker, dealer, or 
     security-based swap dealer.''.
       (e) Trading in Security-based Swaps.--Section 6 of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78f) is amended by 
     adding at the end the following:
       ``(l) Security-based Swaps.--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).''.
       (f) Additions of Security-based Swaps to Certain 
     Enforcement Provisions.--Section 9(b) of the Securities 
     Exchange Act of 1934 (15 U.S.C. 78i(b)) is amended by 
     striking paragraphs (1) through (3) and inserting the 
     following:
       ``(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 such person 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 such person 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.''.
       (g) Rulemaking Authority To Prevent Fraud, Manipulation and 
     Deceptive Conduct in Security-based Swaps.--Section 9 of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78i) is amended by 
     adding at the end the following:
       ``(j) 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, 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.''.

[[Page S4319]]

       (h) 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:

     ``SEC. 10B. POSITION LIMITS AND POSITION ACCOUNTABILITY FOR 
                   SECURITY-BASED SWAPS AND LARGE TRADER 
                   REPORTING.

       ``(a) Position Limits.--As a means reasonably designed to 
     prevent fraud and manipulation, the Commission shall, 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 size of 
     positions in any security-based swap that may be held by any 
     person. In establishing such limits, the Commission may 
     require any person to aggregate positions in--
       ``(1) any security-based swap and any security or loan or 
     group of securities or loans on which such security-based 
     swap is based, which such security-based swap references, or 
     to which such security-based swap is related as described in 
     paragraph (68) of section 3(a), and any other instrument 
     relating to such security or loan or group or index of 
     securities or loans; or
       ``(2) any security-based swap and--
       ``(A) any security or group or index of securities, the 
     price, yield, value, or volatility of which, or of which any 
     interest therein, is the basis for a material term of such 
     security-based swap as described in paragraph (68) of section 
     3(a); and
       ``(B) any other instrument relating to the same security or 
     group or index of securities described under subparagraph 
     (A).
       ``(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 the Commission may 
     establish under this section with respect to position limits.
       ``(c) SRO Rules.--
       ``(1) In general.--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--
       ``(A) to adopt rules regarding the size of positions in any 
     security-based swap that may be held by--
       ``(i) any member of such self-regulatory organization; or
       ``(ii) any person for whom a member of such self-regulatory 
     organization effects transactions in such security-based 
     swap; and
       ``(B) to adopt rules reasonably designed to ensure 
     compliance with requirements prescribed by the Commission 
     under this subsection.
       ``(2) Requirement to aggregate positions.--In establishing 
     the limits under paragraph (1), the self-regulatory 
     organization may require such member or person to aggregate 
     positions in--
       ``(A) any security-based swap and any security or loan or 
     group or narrow-based security narrow-based security index of 
     securities or loans on which such security-based swap is 
     based, which such security-based swap references, or to which 
     such security-based swap is related as described in section 
     3(a)(68), and any other instrument relating to such security 
     or loan or group or narrow-based security index of securities 
     or loans; or
       ``(B)(i) any security-based swap; and
       ``(ii) any security-based swap and any other instrument 
     relating to the same security or group or narrow-based 
     security index of securities.
       ``(d) Large Trader Reporting.--The Commission, by rule or 
     regulation, may require any person that effects transactions 
     for such person's own account or the account of others in any 
     securities-based swap or uncleared security-based swap and 
     any security or loan or group or narrow-based security index 
     of securities or loans as set forth in paragraphs (1) and (2) 
     of subsection (a) under this section to report such 
     information as the Commission may prescribe regarding any 
     position or positions in any security-based swap or uncleared 
     security-based swap and any security or loan or group or 
     narrow-based security index of securities or loans and any 
     other instrument relating to such security or loan or group 
     or narrow-based security index of securities or loans as set 
     forth in paragraphs (1) and (2) of subsection (a) under this 
     section.''.
       (i) Public Reporting and Repositories for Security-based 
     Swaps.--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 Availability of Security-based Swap 
     Transaction Data.--
       ``(1) In general.--
       ``(A) Definition of real-time public reporting.--In this 
     paragraph, the term `real-time public reporting' means to 
     report data relating to a security-based swap transaction as 
     soon as technologically practicable after the time at which 
     the security-based swap transaction has been executed.
       ``(B) Purpose.--The purpose of this section is to authorize 
     the Commission to make security-based swap transaction and 
     pricing data available to the public in such form and at such 
     times as the Commission determines appropriate to enhance 
     price discovery.
       ``(C) General rule.--The Commission is authorized to 
     provide by rule for the public availability of security-based 
     swap transaction and pricing data as follows:
       ``(i) With respect to those security-based swaps that are 
     subject to the mandatory clearing requirement described in 
     section 3C(a)(1) (including those security-based swaps that 
     are exempted from the requirement pursuant to section 
     3C(a)(10)), the Commission shall require real-time public 
     reporting for such transactions.
       ``(ii) With respect to those security-based swaps that are 
     not subject to the mandatory clearing requirement described 
     in subsection section 3C(a)(1), but are cleared at a 
     registered clearing agency, the Commission shall require 
     real-time public reporting for such transactions.
       ``(iii) With respect to security-based swaps that are not 
     cleared at a registered clearing agency and which are 
     reported to a security-based swap data repository or the 
     Commission under section 3C(a), the Commission 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 such security-based swap trading volumes 
     and positions.
       ``(iv) With respect to security-based swaps that are exempt 
     from the requirements of section 3C(a)(1), but are subject to 
     the requirements of section 3C(a)(8), the Commission shall 
     require real-time public reporting for such transactions.
       ``(D) Registered entities and public reporting.--The 
     Commission may require registered entities to publicly 
     disseminate the security-based swap transaction and pricing 
     data required to be reported under this paragraph.
       ``(E) Rulemaking required.--With respect to the rule 
     providing for the public availability of transaction and 
     pricing data for security-based swaps described in clauses 
     (i) and (ii) of subparagraph (C), the rule promulgated by the 
     Commission shall contain provisions--
       ``(i) to ensure such information does not identify the 
     participants;
       ``(ii) to specify the criteria for determining what 
     constitutes a large notional security-based swap transaction 
     (block trade) for particular markets and contracts;
       ``(iii) to specify the appropriate time delay for reporting 
     large notional security-based swap transactions (block 
     trades) to the public; and
       ``(iv) that take into account whether the public disclosure 
     will materially reduce market liquidity.
       ``(F) Timeliness of reporting.--Parties to a security-based 
     swap (including agents of the parties to a security-based 
     swap) shall be responsible for reporting security-based swap 
     transaction information to the appropriate registered entity 
     in a timely manner as may be prescribed by the Commission.
       ``(2) Semiannual and annual public reporting of aggregate 
     security-based swap data.--
       ``(A) In general.--In accordance with subparagraph (B), the 
     Commission shall issue a written report on a semiannual and 
     annual basis to make available to the public information 
     relating to--
       ``(i) the trading and clearing in the major security-based 
     swap categories; and
       ``(ii) the market participants and developments in new 
     products.
       ``(B) Use; consultation.--In preparing a report under 
     subparagraph (A), the Commission shall--
       ``(i) use information from security-based swap data 
     repositories and derivatives clearing organizations; and
       ``(ii) consult with the Office of the Comptroller of the 
     Currency, the Bank for International Settlements, and such 
     other regulatory bodies as may be necessary.
       ``(n) Security-based Swap Data Repositories.--
       ``(1) Registration requirement.--It shall be unlawful for 
     any person, 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 security-based swap data repository.
       ``(2) Inspection and examination.--Each registered 
     security-based swap data repository shall be subject to 
     inspection and examination by any representative of the 
     Commission.
       ``(3) Compliance with core principles.--
       ``(A) In general.--To be registered, and maintain 
     registration, as a security-based swap data repository, the 
     security-based swap data repository shall comply with--
       ``(i) the core principles described in this subsection; and
       ``(ii) any requirement that the Commission may impose by 
     rule or regulation.
       ``(B) Reasonable discretion of security-based swap data 
     repository.--Unless otherwise determined by the Commission, 
     by rule or regulation, a security-based swap data repository 
     described in subparagraph (A) shall have reasonable 
     discretion in establishing the manner in which the security-
     based swap data repository complies with the core principles 
     described in this subsection.
       ``(4) 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 
     registered security-based swap data repository.
       ``(B) Data collection and maintenance.--The Commission 
     shall prescribe data collection and data maintenance 
     standards for security-based swap data 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 
     in connection with their clearing of security-based swaps.
       ``(5) Duties.--A security-based swap data repository 
     shall--
       ``(A) accept data prescribed by the Commission for each 
     security-based swap under subsection (b);
       ``(B) confirm with both counterparties to the security-
     based swap the accuracy of the data that was submitted;
       ``(C) maintain the data described in subparagraph (A) in 
     such form, in such manner, and for

[[Page S4320]]

     such period as may be required by the Commission;
       ``(D)(i) provide direct electronic access to the Commission 
     (or any designee of the Commission, including another 
     registered entity); and
       ``(ii) provide the information described in subparagraph 
     (A) in such form and at such frequency as the Commission may 
     require to comply with the public reporting requirements set 
     forth in subsection (m);
       ``(E) at the direction of the Commission, establish 
     automated systems for monitoring, screening, and analyzing 
     security-based swap data;
       ``(F) maintain the privacy of any and all security-based 
     swap transaction information that the security-based swap 
     data repository receives from a security-based swap dealer, 
     counterparty, or any other registered entity; and
       ``(G) on a confidential basis pursuant to section 24, upon 
     request, and after notifying the Commission of the request, 
     make available all data obtained by the security-based swap 
     data repository, including individual counterparty trade and 
     position data, to--
       ``(i) each appropriate prudential regulator;
       ``(ii) the Financial Stability Oversight Council;
       ``(iii) the Commodity Futures Trading Commission;
       ``(iv) the Department of Justice; and
       ``(v) any other person that the Commission determines to be 
     appropriate, including--

       ``(I) foreign financial supervisors (including foreign 
     futures authorities);
       ``(II) foreign central banks; and
       ``(III) foreign ministries.

       ``(H) Confidentiality and indemnification agreement.--
     Before the security-based swap data repository may share 
     information with any entity described in subparagraph (G)--
       ``(i) the security-based swap data repository shall receive 
     a written agreement from each entity stating that the entity 
     shall abide by the confidentiality requirements described in 
     section 24 relating to the information on security-based swap 
     transactions that is provided; and
       ``(ii) each entity shall agree to indemnify the security-
     based swap data repository and the Commission for any 
     expenses arising from litigation relating to the information 
     provided under section 24.
       ``(6) Designation of chief compliance officer.--
       ``(A) In general.--Each security-based swap data repository 
     shall designate an individual to serve as a chief compliance 
     officer.
       ``(B) Duties.--The chief compliance officer shall--
       ``(i) report directly to the board or to the senior officer 
     of the security-based swap data repository;
       ``(ii) review the compliance of the security-based swap 
     data repository with respect to the core principles described 
     in paragraph (7);
       ``(iii) in consultation with the board of the security-
     based swap data repository, a body performing a function 
     similar to the board of the security-based swap data 
     repository, or the senior officer of the security-based swap 
     data repository, resolve any conflicts of interest that may 
     arise;
       ``(iv) be responsible for administering each policy and 
     procedure that is required to be established pursuant to this 
     section;
       ``(v) ensure compliance with this title (including 
     regulations) relating to agreements, contracts, or 
     transactions, including each rule prescribed by the 
     Commission under this section;
       ``(vi) establish procedures for the remediation of 
     noncompliance issues identified by the chief compliance 
     officer through any--

       ``(I) compliance office review;
       ``(II) look-back;
       ``(III) internal or external audit finding;
       ``(IV) self-reported error; or
       ``(V) validated complaint; and

       ``(vii) establish and follow appropriate procedures for the 
     handling, management response, remediation, retesting, and 
     closing of noncompliance issues.
       ``(C) Annual reports.--
       ``(i) In general.--In accordance with rules prescribed by 
     the Commission, the chief compliance officer shall annually 
     prepare and sign a report that contains a description of--

       ``(I) the compliance of the security-based swap data 
     repository of the chief compliance officer with respect to 
     this title (including regulations); and
       ``(II) each policy and procedure of the security-based swap 
     data repository of the chief compliance officer (including 
     the code of ethics and conflict of interest policies of the 
     security-based swap data repository).

       ``(ii) Requirements.--A compliance report under clause (i) 
     shall--

       ``(I) accompany each appropriate financial report of the 
     security-based swap data repository that is required to be 
     furnished to the Commission pursuant to this section; and
       ``(II) include a certification that, under penalty of law, 
     the compliance report is accurate and complete.

       ``(7) Core principles applicable to security-based swap 
     data repositories.--
       ``(A) Antitrust considerations.--Unless necessary or 
     appropriate to achieve the purposes of this title, the swap 
     data repository shall not--
       ``(i) adopt any rule or take any action that results in any 
     unreasonable restraint of trade; or
       ``(ii) impose any material anticompetitive burden on the 
     trading, clearing, or reporting of transactions.
       ``(B) Governance arrangements.--Each security-based swap 
     data repository shall establish governance arrangements that 
     are transparent--
       ``(i) to fulfill public interest requirements; and
       ``(ii) to support the objectives of the Federal Government, 
     owners, and participants.
       ``(C) Conflicts of interest.--Each security-based swap data 
     repository shall--
       ``(i) establish and enforce rules to minimize conflicts of 
     interest in the decision-making process of the security-based 
     swap data repository; and
       ``(ii) establish a process for resolving any conflicts of 
     interest described in clause (i).
       ``(8) Required registration for security-based swap data 
     repositories.--Any person that is required to be registered 
     as a security-based swap data repository under this 
     subsection shall register with the Commission, regardless of 
     whether that person is also licensed under the Commodity 
     Exchange Act as a swap data repository.
       ``(9) Rules.--The Commission shall adopt rules governing 
     persons that are registered under this subsection.''.

     SEC. 764. 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.--
       ``(1) Security-based swap dealers.--It shall be unlawful 
     for any person to act as a security-based swap dealer unless 
     the person is registered as a security-based swap dealer with 
     the Commission.
       ``(2) Major security-based swap participants.--It shall be 
     unlawful for any person to act as a major security-based swap 
     participant unless the 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.--
       ``(A) In general.--The application shall be made in such 
     form and manner as prescribed by the Commission, and shall 
     contain such information, as the Commission considers 
     necessary concerning the business in which the applicant is 
     or will be engaged.
       ``(B) Continual reporting.--A person that is registered as 
     a security-based swap dealer or major security-based swap 
     participant shall continue to submit to the Commission 
     reports that contain such information pertaining to the 
     business of the person as the Commission may require.
       ``(3) Expiration.--Each registration under this section 
     shall expire at such time as the Commission may prescribe by 
     rule or regulation.
       ``(4) Rules.--Except as provided in subsections (c), (e), 
     and (f), the Commission may prescribe rules applicable to 
     security-based swap dealers and major security-based swap 
     participants, including rules that limit the activities of 
     non-bank security-based swap dealers and non-bank major 
     security-based swap participants.
       ``(5) Transition.--Not later than 1 year after the date of 
     enactment of the Wall Street Transparency and Accountability 
     Act of 2010, the Commission shall issue rules under this 
     section to provide for the registration of security-based 
     swap dealers and major security-based swap participants.
       ``(6) 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 the 
     security-based swap dealer or major security-based swap 
     participant, if the security-based swap dealer or major 
     security-based swap participant knew, or in the exercise of 
     reasonable care should have known, of the statutory 
     disqualification.
       ``(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 the person also 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 the person also is 
     registered with the Commodity Futures Trading Commission as a 
     major swap participant.
       ``(d) Rulemaking.--
       ``(1) In general.--The Commission shall adopt rules for 
     persons that are registered as security-based swap dealers or 
     major security-based swap participants under this section.
       ``(2) Exception for prudential requirements.--
       ``(A) In general.--The Commission may not prescribe rules 
     imposing prudential requirements on 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).
       ``(B) Applicability.--Subparagraph (A) does not limit the 
     authority of the Commission to prescribe appropriate business 
     conduct, reporting, and recordkeeping requirements on 
     security-based swap dealers or major security-based swap 
     participants that are depository institutions to protect 
     investors.
       ``(e) Capital and Margin Requirements.--
       ``(1) In general.--
       ``(A) Security-based swap dealers and major security-based 
     swap participants that

[[Page S4321]]

     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 shall by rule or regulation 
     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) Rules.--
       ``(A) Security-based swap dealers and major security-based 
     swap participants that are depository institutions.--The 
     appropriate Federal banking agencies, in consultation with 
     the Commission and the Commodity Futures Trading Commission, 
     shall 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.--The 
     Commission shall 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 cleared, substantially higher capital 
     requirements for security-based swaps that are not cleared by 
     a clearing agency than for security-based swaps that are 
     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.--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.
       ``(B) Security-based swap dealers and major security-based 
     swap participants that are not depository institutions.--The 
     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).
       ``(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 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 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) Comparability of capital and margin requirements.--
       ``(A) In general.--The appropriate Federal banking 
     agencies, the Commission, and the Securities and Exchange 
     Commission shall periodically (but not less frequently than 
     annually) consult on minimum capital requirements and minimum 
     initial and variation margin requirements.
       ``(B) Comparability.--The entities described in 
     subparagraph (A) shall, to the maximum extent practicable, 
     establish and maintain comparable minimum capital 
     requirements and minimum initial and variation margin 
     requirements, including the use of noncash collateral, for--
       ``(i) security-based swap dealers; and
       ``(ii) major security-based swap participants.
       ``(7) Requested margin.--If any party to a security-based 
     swap that is exempt from the margin requirements of paragraph 
     (4)(A) or paragraph (4)(B) 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.
       ``(8) Applicability with respect to counterparties.--
     Paragraphs (4) and (5) shall not apply to initial and 
     variation margin for security-based swaps in which 1 of the 
     counterparties is not--
       ``(A) a security-based swap dealer;
       ``(B) a major security-based swap participant; or
       ``(C) a financial entity as described in section 
     3C(a)(10)(A)(ii), and such counterparty is eligible for and 
     utilizing the commercial end user clearing exemption under 
     section 3C(a)(10).
       ``(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 required by the 
     Commission, by rule or regulation, regarding the transactions 
     and positions and financial condition of the registered 
     security-based swap dealer or major security-based swap 
     participant;
       ``(B)(i) for which there is a prudential regulator, shall 
     keep books and records of all activities related to the 
     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 the Commission by rule or 
     regulation; and
       ``(ii) for which there is no prudential regulator, shall 
     keep books and records in such form and manner and for such 
     period as may be prescribed by the Commission by rule or 
     regulation; and
       ``(C) shall keep books and records described in 
     subparagraph (B) open to inspection and examination by any 
     representative of the Commission.
       ``(2) Rules.--The Commission shall adopt rules governing 
     reporting and recordkeeping for security-based swap dealers 
     and major security-based swap participants.
       ``(g) Daily Trading Records.--
       ``(1) In general.--Each registered security-based swap 
     dealer and major security-based swap participant shall 
     maintain daily trading records of the security-based swaps of 
     the registered security-based swap dealer and major security-
     based swap participant and all related records (including 
     related cash or forward transactions) and recorded 
     communications, including electronic mail, instant messages, 
     and recordings of telephone calls, for such period as may be 
     required by the Commission by rule or regulation.
       ``(2) Information requirements.--The daily trading records 
     shall include such information as the Commission shall 
     require by rule or regulation.
       ``(3) Customer records.--Each registered security-based 
     swap dealer and major security-based swap participant shall 
     maintain daily trading records for each customer or 
     counterparty in a manner and form that is identifiable with 
     each security-based swap transaction.
       ``(4) Audit trail.--Each registered security-based swap 
     dealer and major security-based swap participant shall 
     maintain a complete audit trail for conducting comprehensive 
     and accurate trade reconstructions.
       ``(5) Rules.--The Commission shall adopt rules governing 
     daily trading records for 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 the Commission, by rule or regulation, that 
     relate to--
       ``(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 the business of the 
     registered security-based swap dealer and major security-
     based swap participant;
       ``(C) adherence to all applicable position limits; and
       ``(D) such other matters as the Commission determines to be 
     appropriate.
       ``(2) Special rule; fiduciary duties to certain entities.--

[[Page S4322]]

       ``(A) Governmental entities.--A security-based swap dealer 
     that provides advice regarding, or offers to enter into, or 
     enters into a security-based swap with a State, State agency, 
     city, county, municipality, or other political subdivision of 
     a State, or a Federal agency shall have a fiduciary duty to 
     the State, State agency, city, county, municipality, or other 
     political subdivision of the State, or the Federal agency, as 
     appropriate.
       ``(B) Pension plans; endowments; retirement plans.--A 
     security-based swap dealer that provides advice regarding, or 
     offers to enter into, or enters into a security-based swap 
     with a pension plan, endowment, or retirement plan shall have 
     a fiduciary duty to the pension plan, endowment, or 
     retirement plan, as appropriate.
       ``(3) Business conduct requirements.--Business conduct 
     requirements adopted by the Commission under this subsection 
     shall--
       ``(A) establish the standard of care for a security-based 
     swap dealer or major security-based swap participant to 
     verify that any 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 transaction (other than a security-based swap dealer 
     or a 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;
       ``(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; and
       ``(iv)(I) for cleared security-based swaps, upon the 
     request of the counterparty, the daily mark from the 
     appropriate clearing agency; and
       ``(II) for uncleared security-based swaps, the daily mark 
     of the security-based swap dealer or the major security-based 
     swap participant;
       ``(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) of section 1a(18) of the Commodity Exchange 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 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 appropriate in the public 
     interest, for the protection of investors, or otherwise in 
     furtherance of the purposes of this title.
       ``(4) Rules.--The Commission shall prescribe rules under 
     this subsection governing business conduct standards for 
     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 such standards as may be prescribed by the 
     Commission, by rule or regulation, that relate to timely and 
     accurate confirmation, processing, netting, documentation, 
     and valuation of all security-based swaps.
       ``(2) Rules.--The Commission shall adopt rules governing 
     documentation and back office standards for security-based 
     swap dealers and major security-based swap participants.
       ``(j) Duties.--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) Risk management procedures.--The security-based swap 
     dealer or major security-based swap participant shall 
     establish robust and professional risk management systems 
     adequate for managing the day-to-day business of the 
     security-based swap dealer or major security-based swap 
     participant.
       ``(3) Disclosure of general information.--The security-
     based swap dealer or major security-based swap participant 
     shall disclose to the Commission and to the prudential 
     regulator for the security-based swap dealer or major 
     security-based swap participant, as applicable, 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.
       ``(4) 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 and to the 
     prudential regulator for the security-based swap dealer or 
     major security-based swap participant, as applicable, on 
     request.
       ``(5) 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 
     ensure that the activities of any person within the firm 
     relating to research or analysis of the price or market for 
     any security-based swap or acting in a role of providing 
     clearing activities or making determinations as to accepting 
     clearing customers are separated by appropriate informational 
     partitions within the firm from the review, pressure, or 
     oversight of persons whose involvement in pricing, trading, 
     or clearing activities might potentially bias their judgment 
     or supervision and contravene the core principles of open 
     access and the business conduct standards described in this 
     title; and
       ``(B) address such other issues as the Commission 
     determines to be appropriate.
       ``(6) Antitrust considerations.--Unless necessary or 
     appropriate to achieve the purposes of this title, the 
     security-based swap dealer or major security-based swap 
     participant shall not--
       ``(A) adopt any process or take any action that results in 
     any unreasonable restraint of trade; or
       ``(B) impose any material anticompetitive burden on trading 
     or clearing.
       ``(k) Designation of Chief Compliance Officer.--
       ``(1) In general.--Each security-based swap dealer and 
     major security-based swap participant shall designate an 
     individual to serve as a chief compliance officer.
       ``(2) Duties.--The chief compliance officer shall--
       ``(A) report directly to the board or to the senior officer 
     of the security-based swap dealer or major security-based 
     swap participant;
       ``(B) review the compliance of the security-based swap 
     dealer or major security-based swap participant with respect 
     to the security-based swap dealer and major security-based 
     swap participant requirements described in this section;
       ``(C) in consultation with the board of directors, a body 
     performing a function similar to the board, or the senior 
     officer of the organization, resolve any conflicts of 
     interest that may arise;
       ``(D) be responsible for administering each policy and 
     procedure that is required to be established pursuant to this 
     section;
       ``(E) ensure compliance with this title (including 
     regulations) relating to security-based swaps, including each 
     rule prescribed by the Commission under this section;
       ``(F) establish procedures for the remediation of 
     noncompliance issues identified by the chief compliance 
     officer through any--
       ``(i) compliance office review;
       ``(ii) look-back;
       ``(iii) internal or external audit finding;
       ``(iv) self-reported error; or
       ``(v) validated complaint; and
       ``(G) establish and follow appropriate procedures for the 
     handling, management response, remediation, retesting, and 
     closing of noncompliance issues.
       ``(3) Annual reports.--
       ``(A) In general.--In accordance with rules prescribed by 
     the Commission, the chief compliance officer shall annually 
     prepare and sign a report that contains a description of--
       ``(i) the compliance of the security-based swap dealer or 
     major swap participant with respect to this title (including 
     regulations); and
       ``(ii) each policy and procedure of the security-based swap 
     dealer or major security-based swap participant of the chief 
     compliance officer (including the code of ethics and conflict 
     of interest policies).
       ``(B) Requirements.--A compliance report under subparagraph 
     (A) shall--
       ``(i) accompany each appropriate financial report of the 
     security-based swap dealer or major security-based swap 
     participant that is required to be furnished to the 
     Commission pursuant to this section; and
       ``(ii) include a certification that, under penalty of law, 
     the compliance report is accurate and complete.
       ``(l) Enforcement and Administrative Proceeding 
     Authority.--
       ``(1) Primary enforcement authority.--
       ``(A) Securities and exchange commission.--Except as 
     provided in subparagraph (B), the Commission shall have 
     primary authority to enforce subtitle B, and the amendments 
     made by subtitle B of the Wall Street Transparency and 
     Accountability Act of 2010, with respect to any person.
       ``(B) Appropriate federal banking agencies.--The 
     appropriate Federal banking agency for security-based swap 
     dealers or major security-based swap participants that are 
     depository institutions, as that term is defined under 
     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 title, with respect to depository 
     institutions that are security-based swap dealers or major 
     security-based swap participants.
       ``(C) Referral.--
       ``(i) Violations of nonprudential requirements.--If the 
     appropriate Federal banking agency for security-based swap 
     dealers or 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

[[Page S4323]]

     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 title. The recommendation 
     shall be accompanied by a written explanation of the concerns 
     giving rise to the recommendation.
       ``(ii) Violations of prudential requirements.--If the 
     Commission has cause to believe that a securities-based swap 
     dealer or major securities-based swap participant that has a 
     prudential regulator may have engaged in conduct that 
     constitute a violation of the prudential requirements of 
     subsection (e) or rules adopted thereunder, the Commission 
     may recommend in writing to the prudential regulator that the 
     prudential regulator initiate an enforcement proceeding as 
     authorized under this title. The recommendation shall be 
     accompanied by a written explanation of the concerns giving 
     rise to the recommendation.
       ``(2) Censure, denial, suspension; notice and hearing.--The 
     Commission, by order, shall censure, place limitations on the 
     activities, functions, or operations of, or revoke the 
     registration of any security-based swap dealer or major 
     security-based swap participant that has registered with the 
     Commission pursuant to subsection (b) if the Commission 
     finds, on the record after notice and opportunity for 
     hearing, that such censure, placing of limitations, or 
     revocation 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, enumerated 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) within 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, enumerated in subparagraph 
     (G) of such paragraph (4).
       ``(3) Associated persons.--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, enumerated 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) within 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, enumerated in subparagraph 
     (G) of such paragraph (4).
       ``(4) Unlawful conduct.--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.''.

     SEC. 765. RULEMAKING ON CONFLICT OF INTEREST.

       (a) In General.--Not later than 180 days after the date of 
     enactment of the Wall Street Transparency and Accountability 
     Act of 2010, the Securities and Exchange Commission shall 
     determine whether to adopt rules to establish limits on the 
     control of any clearing agency that clears security-based 
     swaps, or on the control of any security-based swap execution 
     facility or national securities exchange that posts or makes 
     available for trading security-based swaps, by a bank holding 
     company (as defined in section 2 of the Bank Holding Company 
     Act of 1956 (12 U.S.C. 1841)) with total consolidated assets 
     of $50,000,000,000 or more, a nonbank financial company (as 
     defined in section 102) supervised by the Board of Governors 
     of the Federal Reserve System, affiliate of such a bank 
     holding company or nonbank financial company, a security-
     based swap dealer, major security-based swap participant, or 
     person associated with a security-based swap dealer or major 
     security-based swap participant.
       (b) Purposes.--The Commission shall adopt rules if the 
     Commission determines, after the review described in 
     subsection (a), that such rules are necessary or appropriate 
     to improve the governance of, or to mitigate systemic risk, 
     promote competition, or mitigate conflicts of interest in 
     connection with a security-based swap dealer or major 
     security-based swap participant's conduct of business with, a 
     clearing agency, national securities exchange, or security-
     based swap execution facility that clears, posts, or makes 
     available for trading security-based swaps and in which such 
     security-based swap dealer or major security-based swap 
     participant has a material debt or equity investment.

     SEC. 766. REPORTING AND RECORDKEEPING.

       (a) In General.--The Securities Exchange Act of 1934 (15 
     U.S.C. 78a et seq.) is amended by inserting after section 13 
     the following:

     ``SEC. 13A. REPORTING AND RECORDKEEPING FOR CERTAIN SECURITY-
                   BASED SWAPS.

       ``(a) Required Reporting of Security-based Swaps Not 
     Accepted by Any Clearing Agency or Derivatives Clearing 
     Organization.--
       ``(1) In general.--Each security-based swap that is not 
     accepted for clearing by any clearing agency or derivatives 
     clearing organization shall be reported to--
       ``(A) a security-based swap data repository described in 
     section 10B(n); or
       ``(B) in the case in which there is no security-based swap 
     data repository that would accept the security-based swap, to 
     the Commission pursuant to this section within such time 
     period as the Commission may by rule or regulation prescribe.
       ``(2) Transition rule for preenactment security-based 
     swaps.--
       ``(A) Security-based swaps entered into before the date of 
     enactment of the wall street transparency and accountability 
     act of 2010.--Each security-based swap entered into before 
     the date of enactment of the Wall Street Transparency and 
     Accountability Act of 2010, the terms of which have not 
     expired as of the date of enactment of that Act, shall be 
     reported to a registered security-based swap data repository 
     or the Commission by a date that is not later than--
       ``(i) 30 days after issuance of the interim final rule; or
       ``(ii) such other period as the Commission determines to be 
     appropriate.
       ``(B) Commission rulemaking.--The Commission shall 
     promulgate an interim final rule within 90 days of the date 
     of enactment of this section providing for the reporting of 
     each security-based swap entered into before the date of 
     enactment as referenced in subparagraph (A).
       ``(C) Effective date.--The reporting provisions described 
     in this section shall be effective upon the date of the 
     enactment of this section.
       ``(3) Reporting obligations.--
       ``(A) Security-based swaps in which only 1 counterparty is 
     a security-based swap dealer or major security-based swap 
     participant.--With respect to a security-based swap in which 
     only 1 counterparty is a security-based swap dealer or major 
     security-based swap participant, the security-based swap 
     dealer or major security-based swap participant shall report 
     the security-based swap as required under paragraphs (1) and 
     (2).
       ``(B) Security-based swaps in which 1 counterparty is a 
     security-based swap dealer and the other a major security-
     based swap participant.--With respect to a security-based 
     swap in which 1 counterparty is a security-based swap dealer 
     and the other a major security-based swap participant, the 
     security-based swap dealer shall report the security-based 
     swap as required under paragraphs (1) and (2).
       ``(C) Other security-based swaps.--With respect to any 
     other security-based swap not described in subparagraph (A) 
     or (B), the counterparties to the security-based swap shall 
     select a counterparty to report the security-based swap as 
     required under paragraphs (1) and (2).
       ``(b) Duties of Certain Individuals.--Any individual or 
     entity that enters into a security-based swap shall meet each 
     requirement described in subsection (c) if the individual or 
     entity did not--
       ``(1) clear the security-based swap in accordance with 
     section 3C(a)(1); or
       ``(2) have the data regarding the security-based swap 
     accepted by a security-based swap data repository in 
     accordance with rules (including timeframes) adopted by the 
     Commission under this title.
       ``(c) Requirements.--An individual or entity described in 
     subsection (b) shall--
       ``(1) upon written request from the Commission, provide 
     reports regarding the security-based swaps held by the 
     individual or entity to the Commission in such form and in 
     such manner as the Commission may request; and
       ``(2) maintain books and records pertaining to the 
     security-based swaps held by the individual or entity in such 
     form, in such manner, and for such period as the Commission 
     may require, which shall be open to inspection by--
       ``(A) any representative of the Commission;
       ``(B) an appropriate prudential regulator;
       ``(C) the Commodity Futures Trading Commission;
       ``(D) the Financial Stability Oversight Council; and

[[Page S4324]]

       ``(E) the Department of Justice.
       ``(d) Identical Data.--In prescribing rules under this 
     section, the Commission shall require individuals and 
     entities described in subsection (b) to submit to the 
     Commission a report that contains data that is not less 
     comprehensive than the data required to be collected by 
     security-based swap data repositories under this title.''.
       (b) Beneficial Ownership Reporting.--Section 13 of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78m) is amended--
       (1) in subsection (d)(1), 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 that the Commission may define by rule, and'' after 
     ``Alaska Native Claims Settlement Act,''; and
       (2) in subsection (g)(1), 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 that the Commission 
     may define by rule'' after ``subsection (d)(1) of this 
     section''.
       (c) Reports by Institutional Investment Managers.--Section 
     13(f)(1) of the Securities Exchange Act of 1934 (15 U.S.C. 
     78m(f)(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 that the Commission may define 
     by rule,'' after ``subsection (d)(1) of this section''.
       (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 striking ``broker or dealer'' 
     and inserting ``broker, dealer, security-based swap dealer, 
     or a major security-based swap participant''.
       (e) Security-based Swap Beneficial Ownership.--Section 13 
     of the Securities Exchange Act of 1934 (15 U.S.C. 78m) is 
     amended by adding at the end the following:
       ``(o) Beneficial Ownership.--For purposes of this section 
     and section 16, a person shall be deemed to acquire 
     beneficial ownership of an equity security based on the 
     purchase or sale of a security-based swap, only to the extent 
     that the Commission, by rule, determines after consultation 
     with the prudential regulators and the Secretary of the 
     Treasury, that the purchase or sale of the security-based 
     swap, or class of security-based swap, provides incidents of 
     ownership comparable to direct ownership of the equity 
     security, and that it is necessary to achieve the purposes of 
     this section that the purchase or sale of the security-based 
     swaps, or class of security-based swap, be deemed the 
     acquisition of beneficial ownership of the equity 
     security.''.

     SEC. 767. 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) Limitation on Judgments.--
       ``(1) In general.--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 the actual damages to that person 
     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 under this title.
       ``(2) Rule of construction.--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.
       ``(3) State bucket shop laws.--No State law which 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--
       ``(A) any put, call, straddle, option, privilege, or other 
     security subject to this title (except 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;
       ``(B) any security-based swap between eligible contract 
     participants; or
       ``(C) any security-based swap effected on a national 
     securities exchange registered pursuant to section 6(b).
       ``(4) Other state provisions.--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 paragraph may not 
     be construed as limiting any State antifraud law of general 
     applicability. A security-based swap may not be regulated as 
     an insurance contract under any provision of State law.''.

     SEC. 768. 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 in section 1a of the Commodity Exchange Act 
     (7 U.S.C. 1a).
       ``(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) Notwithstanding the provisions of section 3 or 4, 
     unless a registration statement meeting the requirements of 
     section 10(a) 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(18) of the Commodity 
     Exchange Act (7 U.S.C. 1a(18)).''.

     SEC. 769. DEFINITIONS UNDER THE INVESTMENT COMPANY ACT OF 
                   1940.

       Section 2(a) of the Investment Company Act of 1940 (15 
     U.S.C. 80a-2) is amended by adding at the end the following:
       ``(54) The terms `commodity pool', `commodity pool 
     operator', `commodity trading advisor', `major swap 
     participant', `swap', `swap dealer', and `swap execution 
     facility' have the same meanings as in section 1a of the 
     Commodity Exchange Act (7 U.S.C. 1a).''.

     SEC. 770. DEFINITIONS UNDER THE INVESTMENT ADVISORS ACT OF 
                   1940.

       Section 202(a) of the Investment Advisers Act of 1940 (15 
     U.S.C. 80b-2) is amended by adding at the end the following:
       ``(29) The terms `commodity pool', `commodity pool 
     operator', `commodity trading advisor', `major swap 
     participant', `swap', `swap dealer', and `swap execution 
     facility' have the same meanings as in section 1a of the 
     Commodity Exchange Act (7 U.S.C. 1a).''.

     SEC. 771. OTHER AUTHORITY.

       Unless otherwise provided by its terms, this subtitle does 
     not divest any appropriate Federal banking agency, the 
     Securities and Exchange Commission, the Commodity Futures 
     Trading Commission, or any other Federal or State agency, of 
     any authority derived from any other provision of applicable 
     law.

     SEC. 772. JURISDICTION.

       (a) In General.--Section 36 of the Securities Exchange Act 
     of 1934 (15 U.S.C. 78mm) is amended by adding at the end the 
     following:
       ``(c) Derivatives.--The Commission shall not grant 
     exemptions from the security-based swap provisions of the 
     Wall Street Transparency and Accountability Act of 2010 or 
     the amendments made by that Act, except as expressly 
     authorized under the provisions of that Act.''.
       (b) Rule of Construction.--Section 30 of the Securities 
     Exchange Act of 1934 (15 U.S.C. 78dd) is amended by adding at 
     the end the following:
       ``(c) Rule of Construction.--No provision of this title 
     that was added by the Wall Street Transparency and 
     Accountability Act of 2010, or any rule or regulation 
     thereunder, shall apply to any person insofar as such person 
     transacts a business in security-based swaps without the 
     jurisdiction of the United States, unless such person 
     transacts such business in contravention of such rules and 
     regulations as the Commission may prescribe as necessary or 
     appropriate to prevent the evasion of any provision of this 
     title that was added by the Wall Street Transparency and 
     Accountability Act of 2010. This subsection shall not be 
     construed to limit the jurisdiction of the Commission under 
     any provision of this title, as in effect prior to the date 
     of enactment of the Wall Street Transparency and 
     Accountability Act of 2010.''.

     SEC. 773. EFFECTIVE DATE.

       Unless otherwise specifically provided in this subtitle, 
     this subtitle, the provisions of this subtitle, and the 
     amendments made by this subtitle shall become effective 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.

[[Page S4325]]

       (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,

[[Page S4326]]

     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

[[Page S4327]]

     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

[[Page S4328]]

     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.

[[Page S4329]]

       ``(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,

[[Page S4330]]

     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

[[Page S4331]]

       ``(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--

[[Page S4332]]

       (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.

       (a) In General.--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.

[[Page S4333]]

       ``(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.--

[[Page S4334]]

       ``(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.''.
       (b) Protection for Employees of Nationally Recognized 
     Statistical Rating Organizations.--Section 1514A(a) of title 
     18, United States Code, is amended--
       (1) by inserting ``or nationally recognized statistical 
     rating organization (as defined in section 3(a) of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78c),'' after 
     ``78o(d)),''; and
       (2) by inserting ``or nationally recognized statistical 
     rating organization'' after ``such company''.

     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. DISQUALIFYING FELONS AND OTHER ``BAD ACTORS'' FROM 
                   REGULATION D OFFERINGS.

       Not later than 1 year after the date of enactment of this 
     Act, the Commission shall issue rules for the 
     disqualification of offerings and sales of securities made 
     under section 230.506 of title 17, Code of Federal 
     Regulations, that--
       (1) are substantially similar to the provisions of section 
     230.262 of title 17, Code of Federal Regulations, or any 
     successor thereto; and
       (2) disqualify any offering or sale of securities by a 
     person that--
       (A) is subject to a final order of a State securities 
     commission (or an agency or officer of a State performing 
     like functions), a State authority that supervises or 
     examines banks, savings associations, or credit unions, a 
     State insurance commission (or an agency or officer of a 
     State performing like functions), an appropriate Federal 
     banking agency, or the National Credit Union Administration, 
     that--
       (i) bars the person from--

       (I) association with an entity regulated by such 
     commission, authority, agency, or officer;
       (II) engaging in the business of securities, insurance, or 
     banking; or
       (III) engaging in savings association or credit union 
     activities; or

       (ii) constitutes a final order based on a violation of any 
     law or regulation that prohibits fraudulent, manipulative, or 
     deceptive conduct within the 10-year period ending on the 
     date of the filing of the offer or sale; or
       (B) has been convicted of any felony or misdemeanor in 
     connection with the purchase or sale of any security or 
     involving the making of any false filing with the Commission.

     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

[[Page S4335]]

     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

[[Page S4336]]

       ``(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--

[[Page S4337]]

       ``(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. REMOVAL OF STATUTORY REFERENCES TO CREDIT RATINGS.

       (a) Federal Deposit Insurance Act.--The Federal Deposit 
     Insurance Act (12 U.S.C. 1811 et seq.) is amended--

[[Page S4338]]

       (1) in section 7(b)(1)(E)(i), by striking ``credit rating 
     entities, and other private economic'' and insert ``private 
     economic, credit,'';
       (2) in section 28(d)--
       (A) in the subsection heading, by striking ``Not of 
     Investment Grade'';
       (B) in paragraph (1), by striking ``not of investment 
     grade'' and inserting ``that does not meet standards of 
     credit-worthiness as established by the Corporation'';
       (C) in paragraph (2), by striking ``not of investment 
     grade'';
       (D) by striking paragraph (3);
       (E) by redesignating paragraph (4) as paragraph (3); and
       (F) in paragraph (3), as so redesignated--
       (i) by striking subparagraph (A);
       (ii) by redesignating subparagraphs (B) and (C) as 
     subparagraphs (A) and (B), respectively; and
       (iii) in subparagraph (B), as so redesignated, by striking 
     ``not of investment grade'' and inserting ``that does not 
     meet standards of credit-worthiness as established by the 
     Corporation''; and
       (3) in section 28(e)--
       (A) in the subsection heading, by striking ``Not of 
     Investment Grade'';
       (B) in paragraph (1), by striking ``not of investment 
     grade'' and inserting ``that does not meet standards of 
     credit-worthiness as established by the Corporation''; and
       (C) in paragraphs (2) and (3), by striking ``not of 
     investment grade'' each place that it appears and inserting 
     ``that does not meet standards of credit-worthiness 
     established by the Corporation''.
       (b) Federal Housing Enterprises Financial Safety and 
     Soundness Act of 1992.--Section 1319 of the Federal Housing 
     Enterprises Financial Safety and Soundness Act of 1992 (12 
     U.S.C. 4519) is amended by striking ``that is a nationally 
     registered statistical rating organization, as such term is 
     defined in section 3(a) of the Securities Exchange Act of 
     1934,''.
       (c) Investment Company Act of 1940.--Section 
     6(a)(5)(A)(iv)(I) Investment Company Act of 1940 (15 U.S.C. 
     80a-6(a)(5)(A)(iv)(I)) is amended by striking ``is rated 
     investment grade by not less than 1 nationally registered 
     statistical rating organization'' and inserting ``meets such 
     standards of credit-worthiness as the Commission shall 
     adopt''.
       (d) Revised Statutes.--Section 5136A of title LXII of the 
     Revised Statutes of the United States (12 U.S.C. 24a) is 
     amended--
       (1) in subsection (a)(2)(E), by striking ``any applicable 
     rating'' and inserting ``standards of credit-worthiness 
     established by the Comptroller of the Currency'';
       (2) in the heading for subsection (a)(3) by striking 
     ``Rating or Comparable Requirement'' and inserting 
     ``Requirement'';
       (3) subsection (a)(3), by amending subparagraph (A) to read 
     as follows:
       ``(A) In general.--A national bank meets the requirements 
     of this paragraph if the bank is one of the 100 largest 
     insured banks and has not fewer than 1 issue of outstanding 
     debt that meets standards of credit-worthiness or other 
     criteria as the Secretary of the Treasury and the Board of 
     Governors of the Federal Reserve System may jointly 
     establish.''.
       (4) in the heading for subsection (f), by striking 
     ``Maintain Public Rating or'' and inserting ``Meet Standards 
     of Credit-worthiness''; and
       (5) in subsection (f)(1), by striking ``any applicable 
     rating'' and inserting ``standards of credit-worthiness 
     established by the Comptroller of the Currency''.
       (e) Securities Exchange Act of 1934.--Section 3(a) 
     Securities Exchange Act of 1934 (15 U.S.C. 78a(3)(a)) is 
     amended--
       (1) in paragraph (41), by striking ``is rated in one of the 
     two highest rating categories by at least one nationally 
     registered statistical rating organization'' and inserting 
     ``meets standards of credit-worthiness as established by the 
     Commission''; and
       (2) in paragraph (53)(A), by striking ``is rated in 1 of 
     the 4 highest rating categories by at least 1 nationally 
     registered statistical rating organization'' and inserting 
     ``meets standards of credit-worthiness as established by the 
     Commission''.
       (f) World Bank Discussions.--Section 3(a)(6) of the 
     amendment in the nature of a substitute to the text of H.R. 
     4645, as ordered reported from the Committee on Banking, 
     Finance and Urban Affairs on September 22, 1988, as enacted 
     into law by section 555 of Public Law 100-461, (22 U.S.C. 
     286hh(a)(6)), is amended by striking ``credit rating'' and 
     inserting ``credit-worthiness''.
       (g) Effective Date.--The amendments made by this section 
     shall take effect 2 years after the date of enactment of this 
     Act.
       (1) In general.--Commission shall undertake a study on the 
     feasability and desirability of--
       (A) standardizing credit ratings terminology, so that all 
     credit rating agencies issue credit ratings using identical 
     terms;
       (B) standardizing the market stress conditions under which 
     ratings are evaluated;
       (C) requiring a quantitative correspondence between credit 
     ratings and a range of default probabilities and loss 
     expectations under standardized conditions of economic 
     stress; and
       (D) standardizing credit rating terminology across asset 
     classes, so that named ratings correspond to a standard range 
     of default probabilities and expected losses independent of 
     asset class and issuing entity.
       (2) Report.--Not later than 1 year after the date of 
     enactment of this Act, the Commission shall submit to 
     Congress a report containing the findings of the study under 
     paragraph (1) and the recommendations, if any, of the 
     Commission with respect to the study.

     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).

     SEC. 939D. INITIAL CREDIT RATING ASSIGNMENTS.

       Section 15E of the Securities Exchange Act of 1934 (15 
     U.S.C. 78o-7), as amended by this Act, is amended by adding 
     at the end the following:
       ``(w) Initial Credit Rating Assignments.--
       ``(1) Definitions.--In this subsection the following 
     definitions shall apply:
       ``(A) Board.--The term `Board' means the Credit Rating 
     Agency Board established under paragraph (2).
       ``(B) Qualified nationally recognized statistical rating 
     organization.--The term `qualified nationally recognized 
     statistical rating organization', with respect to a category 
     of structured finance products, means a nationally recognized 
     statistical rating organization that the Board determines, 
     under paragraph (3)(B), to be qualified to issue initial 
     credit ratings with respect to such category.
       ``(C) Regulations.--
       ``(i) Category of structured finance products.--

       ``(I) In general.--The term `category of structured finance 
     products'--

       ``(aa) shall include any asset backed security and any 
     structured product based on an asset-backed security; and
       ``(bb) shall be further defined and expanded by the 
     Commission, by rule, as necessary.

       ``(II) Considerations.--In issuing the regulations required 
     under subclause (I), the Commission shall consider--

       ``(aa) the types of issuers that issue structured finance 
     products;
       ``(bb) the types of investors who purchase structured 
     finance products;
       ``(cc) the different categories of structured finance 
     products according to--
         ``(AA) the types of capital flow and legal structure 
     used;
         ``(BB) the types of underlying products used; and
         ``(CC) the types of terms used in debt securities;
       ``(dd) the different values of debt securities; and
       ``(ee) the different numbers of units of debt securities 
     that are issued together.
       ``(ii) Reasonable fee.--The Board shall issue regulations 
     to define the term `reasonable fee'.

[[Page S4339]]

       ``(2) Credit rating agency board.--
       ``(A) In general.--Not later than 180 days after the date 
     of enactment of the Restoring American Financial Stability 
     Act of 2010, the Commission shall--
       ``(i) establish the Credit Rating Agency Board, which shall 
     be a self-regulatory organization;
       ``(ii) subject to subparagraph (C), select the initial 
     members of the Board; and
       ``(iii) establish a schedule to ensure that the Board 
     begins assigning qualified nationally recognized statistical 
     rating organizations to provide initial ratings not later 
     than 1 year after the selection of the members of the Board.
       ``(B) Schedule.--The schedule established under 
     subparagraph (A)(iii) shall prescribe when--
       ``(i) the Board will conduct a study of the securitization 
     and ratings process and provide recommendations to the 
     Commission;
       ``(ii) the Commission will issue rules and regulations 
     under this section;
       ``(iii) the Board may issue rules under this subsection; 
     and
       ``(iv) the Board will--

       ``(I) begin accepting applications to select qualified 
     national recognized statistical rating organizations; and
       ``(II) begin assigning qualified national recognized 
     statistical rating organizations to provide initial ratings.

       ``(C) Membership.--
       ``(i) In general.--The Board shall initially be composed of 
     an odd number of members selected from the industry, with the 
     total numerical membership of the Board to be determined by 
     the Commission.
       ``(ii) Specifications.--Of the members initially selected 
     to serve on the Board--

       ``(I) not less than a majority of the members shall be 
     representatives of the investor industry who do not represent 
     issuers;
       ``(II) not less than 1 member should be a representative of 
     the issuer industry;
       ``(III) not less than 1 member should be a representative 
     of the credit rating agency industry; and
       ``(IV) not less than 1 member should be an independent 
     member.

       ``(iii) Terms.--Initial members shall be appointed by the 
     Commission for a term of 4 years.
       ``(iv) Nomination and election of members.--

       ``(I) In general.--Prior to the expiration of the terms of 
     office of the initial members, the Commission shall establish 
     fair procedures for the nomination and election of future 
     members of the Board.
       ``(II) Modifications of the board.--Prior to the expiration 
     of the terms of office of the initial members, the 
     Commission--

       ``(aa) may increase the size of the board to a larger odd 
     number and adjust the length of future terms; and
       ``(bb) shall retain the composition of members described in 
     clause (ii).
       ``(v) Responsibilities of members.--Members shall perform, 
     at a minimum, the duties described in this subsection.
       ``(vi) Rulemaking authority.--The Commission shall, if it 
     determines necessary and appropriate, issue further rules and 
     regulations on the composition of the membership of the Board 
     and the responsibilities of the members.
       ``(D) Other authorities of the board.--The Board shall have 
     the authority to levy fees from qualified nationally 
     recognized statistical rating organization applicants, and 
     periodically from qualified nationally recognized statistical 
     rating organizations as necessary to fund expenses of the 
     Board.
       ``(E) Regulation.--The Commission has the authority to 
     regulate the activities of the Board, and issue any further 
     regulations of the Board it deems necessary, not in 
     contravention with the intent of this section.
       ``(3) Board selection of qualified nationally recognized 
     statistical rating organization.--
       ``(A) Application.--
       ``(i) In general.--A nationally recognized statistical 
     rating organization may submit an application to the Board, 
     in such form and manner as the Board may require, to become a 
     qualified nationally recognized statistical rating 
     organization with respect to a category of structured finance 
     products.
       ``(ii) Contents.--An application submitted under clause (i) 
     shall contain--

       ``(I) information regarding the institutional and technical 
     capacity of the nationally recognized statistical rating 
     organization to issue credit ratings;
       ``(II) information on whether the nationally recognized 
     statistical rating organization has been exempted by the 
     Commission from any requirements under any other provision of 
     this section; and
       ``(III) any additional information the Board may require.

       ``(iii) Rejection of applications.--The Board may reject an 
     application submitted under this paragraph if the nationally 
     recognized statistical rating organization has been exempted 
     by the Commission from any requirements under any other 
     provision of this section.
       ``(B) Selection.--The Board shall select qualified national 
     recognized statistical rating organizations with respect to 
     each category of structured finance products from among 
     nationally recognized statistical rating organizations that 
     submit applications under subparagraph (A).
       ``(C) Retention of status and obligations after 
     selection.--An entity selected as a qualified nationally 
     recognized statistical rating organization shall retain its 
     status and obligations under the law as a nationally 
     recognized statistical rating organization, and nothing in 
     this subsection grants authority to the Commission or the 
     Board to exempt qualified nationally recognized statistical 
     rating organizations from obligations or requirements 
     otherwise imposed by Federal law on nationally recognized 
     statistical rating organizations.
       ``(4) Requesting an initial credit rating.--An issuer that 
     seeks an initial credit rating for a structured finance 
     product--
       ``(A) may not request an initial credit rating from a 
     nationally recognized statistical rating organization; and
       ``(B) shall submit a request for an initial credit rating 
     to the Board, in such form and manner as the Board may 
     prescribe.
       ``(5) Assignment of rating duties.--
       ``(A) In general.--For each request received by the Board 
     under paragraph (4)(B), the Board shall select a qualified 
     nationally recognized statistical rating organization to 
     provide the initial credit rating to the issuer.
       ``(B) Method of selection.--
       ``(i) In general.--The Board shall--

       ``(I) evaluate a number of selection methods, including a 
     lottery or rotating assignment system, incorporating the 
     factors described in clause (ii), to reduce the conflicts of 
     interest that exist under the issuer-pays model; and
       ``(II) prescribe and publish the selection method to be 
     used under subparagraph (A).

       ``(ii) Consideration.--In evaluating a selection method 
     described in clause (i)(I), the Board shall consider--

       ``(I) the information submitted by the qualified nationally 
     recognized statistical rating organization under paragraph 
     (3)(A)(ii) regarding the institutional and technical capacity 
     of the qualified nationally recognized statistical rating 
     organization to issue credit ratings;
       ``(II) evaluations conducted under paragraph (7);
       ``(III) formal feedback from institutional investors; and
       ``(IV) information from subclauses (I) and (II) to 
     implement a mechanism which increases or decreases 
     assignments based on past performance.

       ``(iii) Prohibition.--The Board, in choosing a selection 
     method, may not use a method that would allow for the 
     solicitation or consideration of the preferred national 
     recognized statistical rating organizations of the issuer.
       ``(iv) Adjustment of process.--The Board shall issue rules 
     describing the process by which it can modify the assignment 
     process described in clause (i).
       ``(C) Right of refusal.--
       ``(i) Refusal.--A qualified nationally recognized 
     statistical rating organization selected under subparagraph 
     (A) may refuse to accept a selection for a particular request 
     by--

       ``(I) notifying the Board of such refusal; and
       ``(II) submitting to the Board a written explanation of the 
     refusal.

       ``(ii) Selection.--Upon receipt of a notification under 
     clause (i), the Board shall make an additional selection 
     under subparagraph (A).
       ``(iii) Inspection reports.--The Board shall annually 
     submit any explanations of refusals received under clause 
     (i)(II) to the Commission, and such explanatory submissions 
     shall be published in the annual inspection reports required 
     under subsection (p)(3)(C).
       ``(6) Disclaimer required.--Each initial credit rating 
     issued under this subsection shall include, in writing, the 
     following disclaimer: `This initial rating has not been 
     evaluated, approved, or certified by the Government of the 
     United States or by a Federal agency.'.
       ``(7) Evaluation of performance.--
       ``(A) In general.--The Board shall prescribe rules by which 
     the Board will evaluate the performance of each qualified 
     nationally recognized statistical rating organization, 
     including rules that require, at a minimum, an annual 
     evaluation of each qualified nationally recognized 
     statistical rating organization.
       ``(B) Considerations.--The Board, in conducting an 
     evaluation under subparagraph (A), shall consider--
       ``(i) the results of the annual examination conducted under 
     subsection (p)(3);
       ``(ii) surveillance of credit ratings conducted by the 
     qualified nationally recognized statistical rating 
     organization after the credit ratings are issued, including--

       ``(I) how the rated instruments perform;
       ``(II) the accuracy of the ratings provided by the 
     qualified nationally recognized statistical rating 
     organization as compared to the other nationally recognized 
     statistical rating organizations; and
       ``(III) the effectiveness of the methodologies used by the 
     qualified nationally recognized statistical rating 
     organization; and

       ``(iii) any additional factors the Board determines to be 
     relevant.
       ``(C) Request for reevaluation.--Subject to rules 
     prescribed by the Board, and not less frequently than once a 
     year, a qualified nationally recognized statistical rating 
     organization may request that the Board conduct an evaluation 
     under this paragraph.
       ``(D) Disclosure.--The Board shall make the evaluations 
     conducted under this paragraph available to Congress.
       ``(8) Rating fees charged to issuers.--
       ``(A) Limited to reasonable fees.--A qualified nationally 
     recognized statistical rating organization shall charge an 
     issuer a reasonable fee, as determined by the Commission, for 
     an initial credit rating provided under this section.
       ``(B) Fees.--Fees may be determined by the qualified 
     national recognized statistical rating organizations unless 
     the Board determines it is necessary to issue rules on fees.
       ``(9) No prohibition on additional ratings.--Nothing in 
     this section shall prohibit an issuer from requesting or 
     receiving additional credit ratings with respect to a debt 
     security, if the initial credit rating is provided in 
     accordance with this section.
       ``(10) No prohibition on independent ratings offered by 
     nationally recognized statistical rating organizations.--
       ``(A) In general.--Nothing in this section shall prohibit a 
     nationally recognized statistical

[[Page S4340]]

     rating organization from independently providing a credit 
     rating with respect to a debt security, if--
       ``(i) the nationally recognized statistical rating 
     organization does not enter into a contract with the issuer 
     of the debt security to provide the initial credit rating; 
     and
       ``(ii) the nationally recognized statistical rating 
     organization is not paid by the issuer of the debt security 
     to provide the initial credit rating.
       ``(B) Rule of construction.--For purposes of this section, 
     a credit rating described in subparagraph (A) may not be 
     construed to be an initial credit rating.
       ``(11) Public communications.--Any communications made with 
     the public by an issuer with respect to the credit rating of 
     a debt security shall clearly specify whether the credit 
     rating was made by--
       ``(A) a qualified nationally recognized statistical rating 
     organization selected under paragraph (5)(A) to provide the 
     initial credit rating for such debt security; or
       ``(B) a nationally recognized statistical rating 
     organization not selected under paragraph (5)(A).
       ``(12) Prohibition on misrepresentation.--With respect to a 
     debt security, it shall be unlawful for any person to 
     misrepresent any subsequent credit rating provided for such 
     debt security as an initial credit rating provided for such 
     debt security by a qualified nationally recognized 
     statistical rating organization selected under paragraph 
     (5)(A).
       ``(13) Initial credit rating revision after material change 
     in circumstance.--If the Board determines that it is 
     necessary or appropriate in the public interest or for the 
     protection of investors, the Board may issue regulations 
     requiring that an issuer that has received an initial credit 
     rating under this subsection request a revised initial credit 
     rating, using the same method as provided under paragraph 
     (4), each time the issuer experiences a material change in 
     circumstances, as defined by the Board.
       ``(14) Conflicts.--
       ``(A) Members or employees of the board.--
       ``(i) Loan of money or securities prohibited.--

       ``(I) In general.--A member or employee of the Board shall 
     not accept any loan of money or securities, or anything above 
     nominal value, from any nationally recognized statistical 
     rating organization, issuer, or investor.
       ``(II) Exception.--The prohibition in subclause (I) does 
     not apply to a loan made in the context of disclosed, routine 
     banking and brokerage agreements, or a loan that is clearly 
     motivated by a personal or family relationship.

       ``(ii) Employment negotiations prohibition.--A member or 
     employee of the Board shall not engage in employment 
     negotiations with any nationally recognized statistical 
     rating organization, issuer, or investor, unless the member 
     or employee--

       ``(I) discloses the negotiations immediately upon 
     initiation of the negotiations; and
       ``(II) recuses himself from all proceedings concerning the 
     entity involved in the negotiations until termination of 
     negotiations or until termination of his employment by the 
     Board, if an offer of employment is accepted.

       ``(B) Credit analysts.--
       ``(i) In general.--A credit analyst of a qualified 
     nationally recognized statistical rating organization shall 
     not accept any loan of money or securities, or anything above 
     nominal value, from any issuer or investor.
       ``(ii) Exception.--The prohibition described in clause (i) 
     does not apply to a loan made in the context of disclosed, 
     routine banking and brokerage agreements, or a loan that is 
     clearly motivated by a personal or family relationship.
       ``(15) Evaluation of credit rating agency board.--Not later 
     than 5 years after the date that the Board begins assigning 
     qualified nationally recognized statistical rating 
     organizations to provide initial ratings, the Commission 
     shall submit to Congress a report that provides 
     recommendations of--
       ``(A) the continuation of the Board;
       ``(B) any modification to the procedures of the Board; and
       ``(C) modifications to the provisions in this 
     subsection.''.

  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, the Board of Governors of 
     the Federal Reserve System, 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--

       ``(I) that is not a qualified residential mortgage that is 
     transferred, sold, or conveyed through the issuance of an 
     asset-backed security by the securitizer; or
       ``(II) that is a qualified residential mortgage that is 
     transferred, sold, or conveyed through the issuance of an 
     asset-backed security by the securitizer, if 1 or more of the 
     assets that collateralize the asset-backed security are not 
     qualified residential mortgages; or

       ``(ii) less than 5 percent of the credit risk for an asset 
     that is not a qualified residential mortgage 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;
       ``(ii) the minimum duration of the risk retention required 
     under this section; and
       ``(iii) that a securitizer is not required to retain any 
     part 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 all of the assets that 
     collateralize the asset-backed security are qualified 
     residential mortgages;
       ``(D) apply, regardless of whether the securitizer is an 
     insured depository institution; and
       ``(E) with respect to a commercial mortgage, specify the 
     permissible types, forms, and amounts of risk retention that 
     would meet the requirements of subparagraph (B), such as--
       ``(i) retention of a specified amount or percentage of the 
     total credit risk of the asset;
       ``(ii) retention of the first-loss position by a third-
     party purchaser that specifically negotiates for the purchase 
     of such first-loss position and provides due diligence on all 
     individual assets in the pool before the issuance of the 
     asset-backed securities;
       ``(iii) a determination by a Federal banking agency or the 
     Commission that the underwriting standards and controls for 
     the asset are adequate; and
       ``(iv) provision of adequate representations and warranties 
     and related enforcement mechanisms; and
       ``(F) 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--

[[Page S4341]]

       ``(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.
       ``(4) Exemption for qualified residential mortgages.--
       ``(A) In general.--The Federal banking agencies, the 
     Commission, the Secretary of Housing and Urban Development, 
     and the Director of the Federal Housing Finance Agency shall 
     jointly issue regulations to exempt qualified residential 
     mortgages from the risk retention requirements of this 
     subsection.
       ``(B) Qualified residential mortgage.--The Federal banking 
     agencies, the Commission, the Secretary of Housing and Urban 
     Development, and the Director of the Federal Housing Finance 
     Agency shall jointly define the term `qualified residential 
     mortgage' for purposes of this subsection, taking into 
     consideration underwriting and product features that 
     historical loan performance data indicate result in a lower 
     risk of default, such as--
       ``(i) documentation and verification of the financial 
     resources relied upon to qualify the mortgagor;
       ``(ii) standards with respect to--

       ``(I) the residual income of the mortgagor after all 
     monthly obligations;
       ``(II) the ratio of the housing payments of the mortgagor 
     to the monthly income of the mortgagor;
       ``(III) the ratio of total monthly installment payments of 
     the mortgagor to the income of the mortgagor;

       ``(iii) mitigating the potential for payment shock on 
     adjustable rate mortgages through product features and 
     underwriting standards;
       ``(iv) mortgage guarantee insurance obtained at the time of 
     origination for loans with combined loan-to-value ratios of 
     greater than 80 percent; and
       ``(v) prohibiting or restricting the use of balloon 
     payments, negative amortization, prepayment penalties, 
     interest-only payments, and other features that have been 
     demonstrated to exhibit a higher risk of borrower default.
       ``(5) Condition for qualified residential mortgage 
     exemption.--The regulations issued under paragraph (4) shall 
     provide that an asset-backed security that is collateralized 
     by tranches of other asset-backed securities shall not be 
     exempt from the risk retention requirements of this 
     subsection.
       ``(6) Certification.--The Commission shall require an 
     issuer to certify, for each issuance of an asset-backed 
     security collateralized exclusively by qualified residential 
     mortgages, that the issuer has evaluated the effectiveness of 
     the internal supervisory controls of the issuer with respect 
     to the process for ensuring that all assets that 
     collateralize the asset-backed security are qualified 
     residential mortgages.
       ``(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

[[Page S4342]]

     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

[[Page S4343]]

       ``(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--

[[Page S4344]]

       (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

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       ``(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.'';

[[Page S4346]]

       (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

[[Page S4347]]

     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

[[Page S4348]]

     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

[[Page S4349]]

       (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

[[Page S4350]]

       (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.

[[Page S4351]]

       (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

[[Page S4352]]

     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. DESIGNATED FEDERAL ENTITY INSPECTORS GENERAL 
                   INDEPENDENCE.

       Section 8G of the Inspector General Act of 1978 (5 U.S.C. 
     App.) is amended--
       (1) in subsection (a)(4)--
       (A) in the matter preceding subparagraph (A), by inserting 
     ``the board or commission of the designated Federal entity, 
     or in the event the designated Federal entity does not have a 
     board or commission,'' after ``means'';
       (B) in subparagraph (A), by striking ``and'' after the 
     semicolon; and
       (C) by adding after subparagraph (B) the following:
       ``(C) with respect to the Federal Labor Relations 
     Authority, such term means the members of the Authority 
     (described under section 7104 of title 5, United States 
     Code);
       ``(D) with respect to the National Archives and Records 
     Administration, such term means the Archivist of the United 
     States;
       ``(E) with respect to the National Credit Union 
     Administration, such term means the National Credit Union 
     Administration Board (described under section 102 of the 
     Federal Credit Union Act (12 U.S.C. 1752a);
       ``(F) with respect to the National Endowment of the Arts, 
     such term means the National Council on the Arts;
       ``(G) with respect to the National Endowment for the 
     Humanities, such term means the National Council on the 
     Humanities; and
       ``(H) with respect to the Peace Corps, such term means the 
     Director of the Peace Corps;''; and
       (2) in subsection (h), by inserting ``if the designated 
     Federal entity is not a board or commission, include'' after 
     ``designated Federal entities and''.

     SEC. 989C. STRENGTHENING INSPECTOR GENERAL ACCOUNTABILITY.

       Section 5(a) of the Inspector General Act of 1978 (5 U.S.C. 
     App.) is amended--
       (1) in paragraph (12), by striking ``and'' after the 
     semicolon;
       (2) in paragraph (13), by striking the period and inserting 
     a semicolon; and
       (3) by adding at the end the following:
       ``(14)(A) an appendix containing the results of any peer 
     review conducted by another Office of Inspector General 
     during the reporting period; or
       ``(B) if no peer review was conducted within that reporting 
     period, a statement identifying the date of the last peer 
     review conducted by another Office of Inspector General;
       ``(15) a list of any outstanding recommendations from any 
     peer review conducted by another Office of Inspector General 
     that have not been fully implemented, including a statement 
     describing the status of the implementation and why 
     implementation is not complete; and
       ``(16) a list of any peer reviews conducted by the 
     Inspector General of another Office of the Inspector General 
     during the reporting period, including a list of any 
     outstanding recommendations made from any previous peer 
     review (including any peer review conducted before the 
     reporting period) that remain outstanding or have not been 
     fully implemented.''.

     SEC. 989D. REMOVAL OF INSPECTORS GENERAL OF DESIGNATED 
                   FEDERAL ENTITIES.

       Section 8G(e) of the Inspector General Act of 1978 (5 
     U.S.C. App.) is amended--
       (1) by redesignating the sentences following ``(e)'' as 
     paragraph (2); and
       (2) by striking ``(e)'' and inserting the following:
       ``(e)(1) In the case of a designated Federal entity for 
     which a board or commission is the head of the designated 
     Federal entity, a removal under this subsection may only be 
     made upon the written concurrence of a \2/3\ majority of the 
     board or commission.''.

     SEC. 989E. ADDITIONAL OVERSIGHT OF FINANCIAL REGULATORY 
                   SYSTEM.

       (a) Council of Inspectors General on Financial Oversight.--
       (1) Establishment and membership.--There is established a 
     Council of Inspectors General on Financial Oversight (in this 
     section referred to as the ``Council of Inspectors General'') 
     chaired by the Inspector General of the Department of the 
     Treasury and composed of the inspectors general of the 
     following:
       (A) The Board of Governors of the Federal Reserve System.
       (B) The Commodity Futures Trading Commission.
       (C) The Department of Housing and Urban Development.
       (D) The Department of the Treasury.
       (E) The Federal Deposit Insurance Corporation.
       (F) The Federal Housing Finance Agency.
       (G) The National Credit Union Administration.
       (H) The Securities and Exchange Commission.
       (I) The Troubled Asset Relief Program (until the 
     termination of the authority of the Special Inspector General 
     for such program under section 121(k) of the Emergency 
     Economic Stabilization Act of 2008 (12 U.S.C. 5231(k))).
       (2) Duties.--
       (A) Meetings.--The Council of Inspectors General shall meet 
     not less than once each quarter, or more frequently if the 
     chair considers it appropriate, to facilitate the sharing of 
     information among inspectors general and to discuss the 
     ongoing work of each inspector general who is a member of the 
     Council of Inspectors General, with a focus on concerns that 
     may apply to the broader financial sector and ways to improve 
     financial oversight.
       (B) Annual report.--Each year the Council of Inspectors 
     General shall submit to the Council and to Congress a report 
     including--
       (i) for each inspector general who is a member of the 
     Council of Inspectors General, a section within the exclusive 
     editorial control of such inspector general that highlights 
     the concerns and recommendations of such inspector general in 
     such inspector general's ongoing and completed work, with a 
     focus on issues that may apply to the broader financial 
     sector; and
       (ii) a summary of the general observations of the Council 
     of Inspectors General based on the views expressed by each 
     inspector general as required by clause (i), with a focus on 
     measures that should be taken to improve financial oversight.
       (3) Working groups to evaluate council.--
       (A) Convening a working group.--The Council of Inspectors 
     General may, by majority vote, convene a Council of 
     Inspectors General Working Group to evaluate the 
     effectiveness and internal operations of the Council.
       (B) Personnel and resources.--The inspectors general who 
     are members of the Council of Inspectors General may detail 
     staff and resources to a Council of Inspectors General 
     Working Group established under this paragraph to enable it 
     to carry out its duties.
       (C) Reports.--A Council of Inspectors General Working Group 
     established under this paragraph shall submit regular reports 
     to the Council and to Congress on its evaluations pursuant to 
     this paragraph.
       (b) Response to Report by Council.--The Council shall 
     respond to the concerns raised in the report of the Council 
     of Inspectors General under subsection (a)(2)(B) for such 
     year.

   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.

[[Page S4353]]

       ``(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

[[Page S4354]]

       (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 (b) 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) except for section 505 as it applies to 
     section 501(b);
       (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.);
       (P) the Truth in Savings Act (12 U.S.C. 4301 et seq.); and
       (Q) section 626 of the Omnibus Appropriations Act, 2009 
     (Public Law 111-8).
       (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. The term does not 
     include the Federal Trade Commission Act.
       (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

[[Page S4355]]

     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.

[[Page S4356]]

       (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 or utilizing an 
     existing 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 the Federal Trade Commission 
     or other Federal agencies to route complaints to such 
     agencies, 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, the Federal Trade Commission, other Federal 
     agencies, and State agencies, consistent with Federal law 
     applicable to personally identifiable information. The 
     prudential regulators, the Federal Trade Commission, 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;

[[Page S4357]]

       (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.''.
       (e) Office of Service Member Affairs.--
       (1) In general.--The Director shall establish an Office of 
     Service Member Affairs, which shall be responsible for 
     developing and implementing initiatives for service members 
     and their families intended to--
       (A) educate and empower service members and their families 
     to make better informed decisions regarding consumer 
     financial products and services;
       (B) coordinate with the unit of the Bureau established 
     under subsection (b)(3), in order to monitor complaints by 
     service members and their families and responses to those 
     complaints by the Bureau or other appropriate Federal or 
     State agency; and
       (C) coordinate efforts among Federal and State agencies, as 
     appropriate, regarding consumer protection measures relating 
     to consumer financial products and services offered to, or 
     used by, service members and their families.
       (2) Coordination.--
       (A) Regional services.--The Director is authorized to 
     assign employees of the Bureau as may be deemed necessary to 
     conduct the business of the Office of Service Member Affairs, 
     including by establishing and maintaining the functions of 
     the Office in regional offices of the Bureau located near 
     military bases, military treatment facilities, or other 
     similar military facilities.
       (B) Agreements.--The Director is authorized to enter into 
     memoranda of understanding and similar agreements with the 
     Department of Defense, including any branch or agency as 
     authorized by the department, in order to carry out the 
     business of the Office of Service Member Affairs.
       (3) Definition.--As used in this subsection, the term 
     ``service member'' means any member of the United States 
     Armed Forces and any member of the National Guard or 
     Reserves.

     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, the Federal Trade 
     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

[[Page S4358]]

     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

[[Page S4359]]

     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 and except as provided in 
     section 1061(b)(5), 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.

       (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 been 
     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.

[[Page S4360]]

       (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)(1) 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)(1), 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)(1) 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)(1) 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)(1), 
     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)(1) 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)(1).
       (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)(1) to facilitate the ability of consumers to 
     identify persons described in subsection (a)(1) registered 
     with the Bureau.
       (C) Recordkeeping.--The Bureau may require a person 
     described in subsection (a)(1), 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)(1), 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) Enforcement Authority.--
       (1) The bureau to have enforcement authority.--Except as 
     provided in paragraph (3) and section 1061(b)(5), with 
     respect to any person described in subsection (a)(1), 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.
       (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 negotiate an agreement for coordinating with 
     respect to enforcement actions by each agency regarding the 
     offering or provision of consumer financial products or 
     services by any covered person that is described in 
     subsection (a)(1), or service providers thereto. The 
     agreement shall include procedures for notice to the other 
     agency, where feasible, prior to initiating a civil action to 
     enforce any 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 and except 
     as provided in section 1061(b)(5), 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)(1) under 
     such law for purposes of assuring compliance with

[[Page S4361]]

     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)(1), subject to those provisions 
     of law.
       (e) Service Providers.--A service provider to a person 
     described in subsection (a)(1) 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.

[[Page S4362]]

       (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, but only to the 
     extent that such person--
       (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)(i), 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 subject to a finance charge.
       (C) Limitations.--
       (i) In general.--Notwithstanding subparagraph (B), and 
     except as provided in clause (ii), 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.
       (ii) Exception.--Subparagraph (A) and clause (i) of this 
     subparagraph do not apply to any merchant, retailer, or 
     seller of nonfinancial goods or services, to the extent that 
     such person is subject to any enumerated consumer law or any 
     law for which authorities are transferred under subtitle F or 
     H.
       (D) Rules.--
       (i) Authority of other agencies.--No provision of this 
     title shall 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.
       (ii) Small businesses.--A merchant, retailer, or seller of 
     nonfinancial goods or services that would otherwise be 
     subject to the authority of the Bureau solely by virtue of 
     the application of subparagraph (B)(iii) shall be deemed not 
     to be engaged significantly in offering or providing consumer 
     financial products or services under subparagraph (C)(i), if 
     such person--

       (I) only extends credit for the sale of nonfinancial goods 
     or services, as described in subparagraph (A)(i);
       (II) retains such credit on its own accounts (except to 
     sell or convey such debt that is delinquent or otherwise in 
     default); and
       (III) meets the relevant industry size threshold to be a 
     small business concern, based on annual receipts, pursuant to 
     section 3 of the Small Business Act (15 U.S.C. 632) and the 
     implementing rules thereunder.

       (iii) Initial year.--A merchant, retailer, or seller of 
     nonfinancial goods or services shall be deemed to meet the 
     relevant industry size threshold described in clause 
     (ii)(III) during the first year of operations of that 
     business concern if, during that year, the receipts of that 
     business concern reasonably are expected to meet that size 
     threshold.
       (E) Exception from state enforcement.--To the extent that 
     the Bureau may not exercise authority under this subsection 
     with respect to a merchant, retailer, or seller of 
     nonfinancial goods or services, no action by a State attorney 
     general or State regulator with respect to a claim made under 
     this title may be brought under subsection 1042(a), with 
     respect to an activity described in any of clauses (i) 
     through (iii) of subparagraph (A) by such merchant, retailer, 
     or seller of nonfinancial goods or services.
       (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

[[Page S4363]]

     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

[[Page S4364]]

     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.
       (f) Consideration of Seasonal Income.--The rules of the 
     Bureau under this section shall provide, with respect to an 
     extension of credit secured by residential real estate or a 
     dwelling, if documented income of the borrower, including 
     income from a small business, is a repayment source for an 
     extension of credit secured by residential real estate or a 
     dwelling, the creditor may consider the seasonality and 
     irregularity of such income in the underwriting of and 
     scheduling of payments for such credit.

     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

[[Page S4365]]

     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, to the 
     extent appropriate, 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) 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 regarding 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

[[Page S4366]]

     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.--Except as provided in paragraph (2), 
     the attorney general (or the equivalent thereof) of any State 
     may bring a civil action in the name of such State in any 
     district court of the United States in that State or in State 
     court that is located in that State and that has jurisdiction 
     over the defendant, to enforce provisions of this title or 
     regulations issued under this title, 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 under this title with 
     respect to any entity that is State-chartered, incorporated, 
     licensed, or otherwise authorized to do business under State 
     law (except as provided in paragraph (2)), and to secure 
     remedies under provisions of this title or remedies otherwise 
     provided under other provisions of law with respect to such 
     an entity.
       (2) Action by state against national bank or federal 
     savings association to enforce rules.--
       (A) In general.--Except as permitted under subparagraph 
     (B), the attorney general (or equivalent thereof) of any 
     State may not bring a civil action in the name of such State 
     against a national bank or Federal savings association with 
     respect to an act or omission that would be a violation of a 
     provision of this title.
       (B) Enforcement of rules permitted.--The attorney general 
     (or the equivalent thereof) of any State may bring a civil 
     action in the name of such State against a national bank or 
     Federal savings association in any district court of the 
     United States in the State or in State court that is located 
     in that State and that has jurisdiction over the defendant to 
     enforce a regulation prescribed by the Bureau under a 
     provision of this title and to secure remedies under 
     provisions of this title or remedies otherwise provided under 
     other law.
       (3) 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 as authorized by subsection (a) to enforce any 
     provision of this title, including any regulation prescribed 
     by the Bureau 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 Bureau, 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 Bureau 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 enactment of this Act, 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 State consumer financial law is preempted 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 any preemption determination 
     under this subparagraph may be made by a court, or by 
     regulation or order of the

[[Page S4367]]

     Comptroller of the Currency on a case-by-case basis, in 
     accordance with applicable law; or
       ``(C) the State consumer financial law is preempted by a 
     provision of Federal law other than this title.
       ``(2) Savings clause.--This title and section 24 of the 
     Federal Reserve Act (12 U.S.C. 371) do 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 or section 24 of the Federal Reserve Act (12 
     U.S.C. 371) 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) 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.
       ``(e) Application of State Consumer Financial Law to 
     Subsidiaries and Affiliates.--Notwithstanding any provision 
     of this title or section 24 of Federal Reserve Act (12 U.S.C. 
     371), 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.
       ``(f) 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.
       ``(g) 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:
       ``(h) 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 or 
     section 24 of the Federal Reserve Act (12 U.S.C. 371) 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:
       ``(i) Visitorial Powers.--
       ``(1) In general.--In accordance with the decision of the 
     Supreme Court of the United States in Cuomo v. Clearing House 
     Assn., L. L. C. (129 S. Ct. 2710 (2009)), no provision of 
     this title which relates to visitorial powers or otherwise 
     limits or restricts the visitorial authority 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 an 
     action against a national bank in a court of appropriate 
     jurisdiction to enforce an applicable law and to seek relief 
     as authorized by such law.
       ``(j) 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.--The provisions of sections 
     5136C(i) of the Revised Statutes of the United States shall 
     apply to Federal savings associations, and any subsidiary 
     thereof, to the same extent and in the same manner as if such 
     savings associations, or subsidiaries thereof, were national 
     banks or subsidiaries of national banks, respectively.''
       ``(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.

[[Page S4368]]

       (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

[[Page S4369]]

     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.

[[Page S4370]]

       (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.

[[Page S4371]]

       (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

[[Page S4372]]

     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.--The authority of the Federal 
     Trade Commission under an enumerated consumer law to 
     prescribe rules, issue guidelines, or conduct a study or 
     issue a report mandated under such law shall be transferred 
     to the Bureau on the designated transfer date. Nothing in 
     this title shall be construed to require a mandatory transfer 
     of any employee of the Federal Trade Commission.
       (B) Bureau authority.--
       (i) In general.--The Bureau shall have all powers and 
     duties under the enumerated consumer laws to prescribe rules, 
     issue guidelines, or to conduct studies or issue reports 
     mandated by such laws, that were vested in the Federal Trade 
     Commission on the day before the designated transfer date.
       (ii) Federal trade commission act.--Subject to subtitle B, 
     the Bureau may enforce a rule prescribed under the Federal 
     Trade Commission Act by the Federal Trade Commission with 
     respect to an unfair or deceptive act or practice to the 
     extent that such rule applies to a covered person or service 
     provider with respect to the offering or provision of a 
     consumer financial product or service as if it were a rule 
     prescribed under section 1031 of this title.
       (C) Authority of the federal trade commission.--
       (i) In general.--No provision of this title shall be 
     construed as modifying, limiting, or otherwise affecting the 
     authority of the Federal Trade Commission under the Federal 
     Trade Commission Act or any other law, other than the 
     authority under an enumerated consumer law to prescribe 
     rules, issue official guidelines, or conduct a study or issue 
     a report mandated under such law.
       (ii) Commission authority relating to rules prescribed by 
     the bureau.--Subject to subtitle B, the Federal Trade 
     Commission shall have authority to enforce under the Federal 
     Trade Commission Act (15 U.S.C. 41 et seq.) a rule prescribed 
     by the Bureau under this title with respect to a covered 
     person subject to the jurisdiction of the Federal Trade 
     Commission under that Act, and a violation of such a rule by 
     such a person shall be treated as a violation of a rule 
     issued under section 18 of that Act (15 U.S.C. 57a) with 
     respect to unfair or deceptive acts or practices.
       (D) Coordination.--To avoid duplication of or conflict 
     between rules prescribed by the Bureau under section 1031 of 
     this title and the Federal Trade Commission under section 
     18(a)(1)(B) of the Federal Trade Commission Act that apply to 
     a covered person or service provider with respect to the 
     offering or provision of consumer financial products or 
     services, the agencies shall negotiate an agreement with 
     respect to rulemaking by each agency, including consultation 
     with the other agency prior to proposing a rule and during 
     the comment period.
       (E) Deference.--No provision of this title shall be 
     construed as altering, limiting, expanding, or otherwise 
     affecting the deference that a court affords to the--
       (i) Federal Trade Commission in making determinations 
     regarding the meaning or interpretation of any provision of 
     the Federal Trade Commission Act, or of any other Federal law 
     for which the Commission has authority to prescribe rules; or
       (ii) Bureau in making determinations regarding the meaning 
     or interpretation of any provision of a Federal consumer 
     financial law (other than any law described in clause (i)).
       (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.

[[Page S4373]]

       (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.--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--
       (1) 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
       (2) existed on the day before 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

[[Page S4374]]

       (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, hud, ncua, occ, and 
     ots.--Each employee transferred from the Federal Deposit 
     Insurance Corporation, 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--

[[Page S4375]]

       (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

[[Page S4376]]

     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. 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

[[Page S4377]]

     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. 1072. 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. 1073. PROHIBITED PAYMENTS TO MORTGAGE ORIGINATORS.

       Section 129 of the Truth in Lending Act (15 U.S.C. 1639) is 
     amended by inserting after subsection (j) the following:
       ``(k) Prohibition on Steering Incentives.--
       ``(1) In general.--For any consumer credit transaction 
     secured by real property or a dwelling, no loan originator 
     shall receive from any person and no person shall pay to a 
     loan originator, directly or indirectly, compensation that 
     varies based on the terms of the loan (other than the amount 
     of the principal).
       ``(2) Restructuring of financing origination fee.--
       ``(A) In general.--For any consumer credit transaction 
     secured by real property or a dwelling, a loan originator may 
     not arrange for a consumer to finance through the rate any 
     origination fee or cost except bona fide third party 
     settlement charges not retained by the creditor or loan 
     originator.
       ``(B) Exception.--Notwithstanding subparagraph (A), a loan 
     originator may arrange for a consumer to finance through the 
     rate an origination fee or cost if--
       ``(i) the loan originator does not receive any other 
     compensation, directly or indirectly, from the consumer 
     except the compensation that is financed through the rate;
       ``(ii) no person who knows or has reason to know of the 
     consumer-paid compensation to the loan originator, other than 
     the consumer, pays any compensation to the loan originator, 
     directly or indirectly, in connection with the transaction; 
     and
       ``(iii) the consumer does not make an upfront payment of 
     discount points, origination points, or fees, however 
     denominated (other than bona fide third party settlement 
     charges).
       ``(3) Rules of construction.--No provision of this 
     subsection shall be construed as--
       ``(A) limiting or affecting the amount of compensation 
     received by a creditor upon the sale of a consummated loan to 
     a subsequent purchaser;
       ``(B) restricting a consumer's ability to finance, at the 
     option of the consumer, including through principal or rate, 
     any origination fees or costs permitted under this 
     subsection, or the loan originator's right to receive such 
     fees or costs (including compensation) from any person, 
     subject to paragraph (2)(B), so long as such fees or costs do 
     not vary based on the terms of the loan (other than the 
     amount of the principal) or the consumer's decision about 
     whether to finance such fees or costs; or
       ``(C) prohibiting incentive payments to a loan originator 
     based on the number of loans originated within a specified 
     period of time.
       ``(4) Loan originator.--For the purposes of this section, 
     the term `loan originator'--
       ``(A) means any person who, for direct or indirect 
     compensation or gain, or in the expectation of direct or 
     indirect compensation or gain, with respect to credit to be 
     secured by real property or a dwelling--
       ``(i) arranges for an extension, renewal, or continuation 
     of such credit;
       ``(ii) takes an application for credit or assists a 
     consumer in applying for such credit; or
       ``(iii) offers or negotiates terms of such credit;
       ``(B) does not include any person who is not otherwise 
     described in subparagraph (A) and who performs purely 
     administrative or clerical tasks on behalf of a person who is 
     described in subparagraph (A); and
       ``(C) does not include a person that only performs real 
     estate brokerage activities and is licensed or registered in 
     accordance with applicable State law, unless the person is 
     compensated by a lender or other loan originator or by any 
     agent of such lender or other loan originator.''.

     SEC. 1074. MINIMUM STANDARDS FOR RESIDENTIAL MORTGAGE LOANS.

       (a) In General.--No rule, order, or guidance issued by the 
     Bureau under this title shall be construed as requiring a 
     depository institution to apply mortgage underwriting 
     standards that do not meet the minimum underwriting standards 
     required by the appropriate prudential regulator of the 
     depository institution.
       (b) Ability To Repay.--
       (1) TILA amendment.--Section 129 of the Truth in Lending 
     Act (15 U.S.C. 1639), as amended by section 1074 of this Act, 
     is further amended by inserting after subsection (k) the 
     following:
       ``(l) Ability To Repay.--
       ``(1) In general.--No creditor may make a loan secured by 
     real property or a dwelling unless the creditor, based on 
     verified and documented information, determines that, at the 
     time the loan is consummated, the consumer has a reasonable 
     ability to repay the loan, according to its terms, and all 
     applicable taxes, insurance, and assessments.
       ``(2) Multiple loans.--If the creditor knows, or has reason 
     to know, that 1 or more loans secured by the same real 
     property or dwelling will be made to the same consumer, the 
     creditor shall, based on verified and documented information, 
     determine that the consumer has a reasonable ability to repay 
     the combined payments of all loans on the same real property 
     or dwelling according to the terms of those loans and all 
     applicable taxes, insurance, and assessments.
       ``(3) Basis for determination.--A determination under this 
     subsection of a consumer's ability to repay a loan described 
     in paragraph (1) shall include consideration of the 
     consumer's credit history, current income, expected income 
     the consumer is reasonably assured of receiving, current 
     obligations, debt-to-income ratio or the residual income the 
     consumer will have after paying non-mortgage debt and 
     mortgage-related obligations, employment status, and other 
     financial resources other than the consumer's equity in the 
     dwelling or real property that secures repayment of the loan.
       ``(4) Income verification.--A creditor shall verify amounts 
     of income or assets that such creditor relies on to determine 
     repayment ability, including expected income or assets, by 
     reviewing the consumer's Internal Revenue Service Form W-2, 
     tax returns, payroll receipts, financial institution records, 
     or other third-party documents that provide reasonably 
     reliable evidence of the consumer's income or assets. In

[[Page S4378]]

     order to safeguard against fraudulent reporting, any 
     consideration of a consumer's income history in making a 
     determination under this subsection shall include the 
     verification of such income by the use of--
       ``(A) Internal Revenue Service transcripts of tax returns; 
     or
       ``(B) a method that quickly and effectively verifies income 
     documentation by a third party subject to rules prescribed by 
     the Board.
       ``(5) Presumption of ability to repay.--Any creditor with 
     respect to any consumer loan secured by real property or a 
     dwelling is presumed to have complied with this subsection 
     with respect to such loan if the creditor--
       ``(A) verifies the consumer's ability to repay as provided 
     in paragraphs (1), (2), (3), and (4); and
       ``(B) determines the consumer's ability to repay using the 
     maximum rate permitted under the loan during the first 5 
     years following consummation and a payment schedule that 
     fully amortizes the loan and taking into account current 
     obligations and all applicable taxes, insurance, and 
     assessments.
       ``(6) Exceptions to presumption.--Notwithstanding paragraph 
     (5), no presumption of compliance shall be applied to a 
     loan--
       ``(A) for which the regular periodic payments for the loan 
     may--
       ``(i) result in an increase of the principal balance; or
       ``(ii) allow the consumer to defer repayment of principal.
       ``(B) the terms of which 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; 
     or
       ``(C) for which the total points and fees payable in 
     connection with the loan exceed 3 percent of the total loan 
     amount, where `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)), except that, for the purposes of 
     computing the total points and fees under this subparagraph, 
     the total points and fees attributable to any premium for 
     mortgage guarantee insurance provided by an agency of the 
     Federal Government or an agency of a State shall exclude any 
     amount of the points and fees for such insurance greater than 
     1 percent of the total loan amount.
       ``(7) Exemption.--
       ``(A) The Board may revise, add to, or subtract from the 
     criteria under paragraphs (5) and (6) and subparagraphs (B) 
     and (C) of this paragraph upon a finding that such 
     regulations are necessary or appropriate to effectuate the 
     purposes of this title, to prevent circumvention or evasion 
     thereof, or to facilitate compliance with this subsection.
       ``(B) Bridge loans.--This subsection does not apply to a 
     temporary or `bridge' loan with a term of 12 months or less, 
     including to any loan to purchase a new dwelling where the 
     consumer plans to sell a current dwelling within 12 months.
       ``(C) Reverse mortgages.--This subsection does not apply 
     with respect to any reverse mortgage.
       ``(8) Seasonal income.--If documented income, including 
     income from a small business, is a repayment source for an 
     extension of credit secured by residential real estate or a 
     dwelling, a creditor may consider the seasonality and 
     irregularity of such income in the underwriting of and 
     scheduling of payments for such credit.''.
       (2) Conforming amendment.--Section 129 of the Truth in 
     Lending Act (15 U.S.C. 1639), as amended by this Act, is 
     amended--
       (A) by redesignating subsections (k), (l), and (m) as 
     subsections (m), (n), and (o), respectively; and
       (B) in subsection (o), as so redesignated, by striking 
     ``(l)(2)'' and inserting ``(n)(2)''.

     SEC. 1075. 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));

[[Page S4379]]

       ``(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. 1076. 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. 1077. 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;

[[Page S4380]]

       ``(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;''.

     SEC. 1078. DEPARTMENT OF THE TREASURY STUDY ON ENDING THE 
                   CONSERVATORSHIP OF FANNIE MAE, FREDDIE MAC, AND 
                   REFORMING THE HOUSING FINANCE SYSTEM.

       (a) Study Required.--
       (1) In general.--The Secretary of the Treasury shall 
     conduct a study of and develop recommendations regarding the 
     options for ending the conservatorship of the Federal 
     National Mortgage Association (in this section referred to as 
     ``Fannie Mae'') and the Federal Home Loan Mortgage 
     Corporation (in this section referred to as ``Freddie Mac''), 
     while minimizing the cost to taxpayers, including such 
     options as--
       (A) the gradual wind-down and liquidation of such entities;
       (B) the privatization of such entities;
       (C) the incorporation of the functions of such entities 
     into a Federal agency;
       (D) the dissolution of Fannie Mae and Freddie Mac into 
     smaller companies; or
       (E) any other measures the Secretary determines 
     appropriate.
       (2) Analyses.--The study required under paragraph (1) shall 
     include an analysis of--
       (A) the role of the Federal Government in supporting a 
     stable, well-functioning housing finance system, and whether 
     and to what extent the Federal Government should bear risks 
     in meeting Federal housing finance objectives;
       (B) how the current structure of the housing finance system 
     can be improved;
       (C) how the housing finance system should support the 
     continued availability of mortgage credit to all segments of 
     the market;
       (D) how the housing finance system should be structured to 
     ensure that consumers continue to have access to 30-year, 
     fixed rate, pre-payable mortgages and other mortgage products 
     that have simple terms that can be easily understood;
       (E) the role of the Federal Housing Administration and the 
     Department of Veterans Affairs in a future housing system;
       (F) the impact of reforms of the housing finance system on 
     the financing of rental housing;
       (G) the impact of reforms of the housing finance system on 
     secondary market liquidity;
       (H) the role of standardization in the housing finance 
     system;
       (I) how housing finance systems in other countries offer 
     insights that can help inform options for reform in the 
     United States; and
       (J) the options for transition to a reformed housing 
     finance system.
       (b) Report and Recommendations.--Not later than January 31, 
     2011, the Secretary of the Treasury shall submit the report 
     and recommendations required under subsection (a) to the 
     Committee on Banking, Housing, and Urban Affairs of the 
     Senate and the Committee on Financial Services of the House 
     of Representatives.

     SEC. 1079. REASONABLE FEES AND RULES FOR PAYMENT CARD 
                   TRANSACTIONS.

       The Electronic Fund Transfer Act (15 U.S.C. 1693 et seq.) 
     is amended--
       (1) by redesignating sections 920 and 921 as sections 921 
     and 922, respectively; and
       (2) by inserting after section 919 the following:

     ``SEC. 920. REASONABLE FEES AND RULES FOR PAYMENT CARD 
                   TRANSACTIONS.

       ``(a) Reasonable Interchange Transaction Fees for 
     Electronic Debit Transactions.--
       ``(1) Regulatory authority.--The Board shall have authority 
     to establish rules, pursuant to section 553 of title 5, 
     United States Code, regarding any interchange transaction fee 
     that an issuer or payment card network may charge with 
     respect to an electronic debit transaction.
       ``(2) Reasonable fees.--The amount of any interchange 
     transaction fee that an issuer or payment card network may 
     charge with respect to an electronic debit transaction shall 
     be reasonable and proportional to the actual cost incurred by 
     the issuer or payment card network with respect to the 
     transaction.
       ``(3) Rulemaking required.--The Board shall issue final 
     rules, not later than 9 months after the date of enactment of 
     the Consumer Financial Protection Act of 2010, to establish 
     standards for assessing whether the amount of any interchange 
     transaction fee described in paragraph (2) is reasonable and 
     proportional to the actual cost incurred by the issuer or 
     payment card network with respect to the transaction.

[[Page S4381]]

       ``(4) Considerations.--In issuing rules required by this 
     section, the Board shall--
       ``(A) consider the functional similarity between--
       ``(i) electronic debit transactions; and
       ``(ii) checking transactions that are required within the 
     Federal Reserve bank system to clear at par;
       ``(B) distinguish between--
       ``(i) the actual incremental cost incurred by an issuer or 
     payment card network for the role of the issuer or the 
     payment card network in the authorization, clearance, or 
     settlement of a particular electronic debit transaction, 
     which cost shall be considered under paragraph (2); and
       ``(ii) other costs incurred by an issuer or payment card 
     network which are not specific to a particular electronic 
     debit transaction, which costs shall not be considered under 
     paragraph (2); and
       ``(C) consult, as appropriate, with the Comptroller of the 
     Currency, the Board of Directors of the Federal Deposit 
     Insurance Corporation, the Director of the Office of Thrift 
     Supervision, the National Credit Union Administration Board, 
     the Administrator of the Small Business Administration, and 
     the Director of the Bureau of Consumer Financial Protection.
       ``(5) Exemption for small issuers.--This subsection shall 
     not apply to issuers that, together with affiliates, have 
     assets of less than $10,000,000,000, and the Board shall 
     exempt such issuers from rules issued under paragraph (3).
       ``(6) Effective date.--Paragraph (2) shall become effective 
     12 months after the date of enactment of the Consumer 
     Financial Protection Act of 2010.
       ``(b) Limitation on Anti-competitive Payment Card Network 
     Restrictions.--
       ``(1) No restrictions on offering discounts for use of a 
     competing payment card network.--A payment card network shall 
     not, directly or through any agent, processor, or licensed 
     member of the network, by contract, requirement, condition, 
     penalty, or otherwise, inhibit the ability of any person to 
     provide a discount or in-kind incentive for payment through 
     the use of a card or device of another payment card network, 
     provided that the discount or in-kind incentive only 
     differentiates between payment card networks and not between 
     other issuers.
       ``(2) No restrictions on offering discounts for use of a 
     form of payment.--A payment card network shall not, directly 
     or through any agent, processor, or licensed member of the 
     network, by contract, requirement, condition, penalty, or 
     otherwise, inhibit the ability of any person to provide a 
     discount or in-kind incentive for payment by the use of cash, 
     check, debit card, or credit card.
       ``(3) No restrictions on setting transaction minimums or 
     maximums.--A payment card network shall not, directly or 
     through any agent, processor, or licensed member of the 
     network, by contract, requirement, condition, penalty, or 
     otherwise, inhibit the ability of any person to set a minimum 
     or maximum dollar value for the acceptance by that person of 
     credit cards, provided that such minimum or maximum dollar 
     value does not differentiate between issuers or between 
     payment card networks.
       ``(c) Definitions.--For purposes of this section, the 
     following definitions shall apply:
       ``(1) Debit card.--The term `debit card'--
       ``(A) means any card, or other payment code or device, 
     issued or approved for use through a payment card network to 
     debit an asset account for the purpose of transferring money 
     between accounts or obtaining goods or services, whether 
     authorization is based on signature, PIN, or other means;
       ``(B) includes general use prepaid cards, as that term is 
     defined in section 915(a)(2)(A) (15 U.S.C. 1693l-1(a)(2)(A)); 
     and
       ``(C) does not include paper checks.
       ``(2) Credit card.--The term `credit card' has the same 
     meaning as in section 103 of the Truth in Lending Act (15 
     U.S.C. 1602).
       ``(3) Discount.--The term `discount'--
       ``(A) means a reduction made from the price that customers 
     are informed is the regular price; and
       ``(B) does not include any means of increasing the price 
     that customers are informed is the regular price.
       ``(4) Electronic debit transaction.--The term `electronic 
     debit transaction' means a transaction in which a person uses 
     a debit card to debit an asset account.
       ``(5) Interchange transaction fee.--The term `interchange 
     transaction fee' means any fee established by a payment card 
     network that has been established for the purpose of 
     compensating an issuer or payment card network for its 
     involvement in an electronic debit transaction.
       ``(6) Issuer.--The term `issuer' means any person who 
     issues a debit card, or credit card, or the agent of such 
     person with respect to such card.
       ``(7) Payment card network.--The term `payment card 
     network' means an entity that directly, or through licensed 
     members, processors, or agents, provides the proprietary 
     services, infrastructure, and software that route information 
     and data to conduct transaction authorization, clearance, and 
     settlement, and that a person uses in order to accept as a 
     form of payment a brand of debit card, credit card or other 
     device that may be used to carry out debit or credit 
     transactions.''.

     SEC. 1079A. USE OF CONSUMER REPORTS.

       Section 615 of the Fair Credit Reporting Act (15 U.S.C. 
     1681m) is amended--
       (1) in subsection (a)--
       (A) by redesignating paragraphs (2) and (3) as paragraphs 
     (3) and (4), respectively;
       (B) by inserting after paragraph (1) the following:
       ``(2) provide to the consumer written or electronic 
     disclosure--
       ``(A) of a numerical credit score as defined in section 
     609(f)(2)(A) used by such person in taking any adverse action 
     based in whole or in part on any information in a consumer 
     report; and
       ``(B) of the information set forth in subparagraphs (B) 
     through (E) of section 609(f)(1);''; and
       (C) in paragraph (4) (as so redesignated), by striking 
     ``paragraph (2)'' and inserting ``paragraph (3)''; and
       (2) in subsection (h)(5)--
       (A) in subparagraph (C), by striking ``; and'' and 
     inserting a semicolon;
       (B) in subparagraph (D), by striking the period and 
     inserting ``; and''; and
       (C) by inserting at the end the following:
       ``(E) include a statement informing the consumer of--
       ``(i) a numerical credit score as defined in section 
     609(f)(2)(A), used by such person in connection with the 
     credit decision described in paragraph (1) based in whole or 
     in part on any information in a consumer report; and
       ``(ii) the information set forth in subparagraphs (B) 
     through (E) of section 609(f)(1).''.

                   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.''.

[[Page S4382]]

       (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,

[[Page S4383]]

     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'';

[[Page S4384]]

       (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

[[Page S4385]]

     (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

[[Page S4386]]

     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

[[Page S4387]]

     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. SMALL BUSINESS FAIRNESS AND REGULATORY 
                   TRANSPARENCY.

       (a) Panel Requirement.--Section 609(d) of title 5, United 
     States Code, is amended by striking ``means the'' and all 
     that follows and inserting the following: ``means--
       ``(1) the Environmental Protection Agency;
       ``(2) the Consumer Financial Protection Bureau of the 
     Federal Reserve System; and
       ``(3) the Occupational Safety and Health Administration of 
     the Department of Labor.''.
       (b) Initial Regulatory Flexibility Analysis.--Section 603 
     of title 5, United States Code, is amended by adding at the 
     end the following:
       ``(d)(1) For a covered agency, as defined in section 
     609(d)(2), each initial regulatory flexibility analysis shall 
     include a description of--
       ``(A) any projected increase in the cost of credit for 
     small entities;
       ``(B) any significant alternatives to the proposed rule 
     which accomplish the stated objectives of applicable statutes 
     and which minimize any increase in the cost of credit for 
     small entities; and
       ``(C) advice and recommendations of representatives of 
     small entities relating to issues described in subparagraphs 
     (A) and (B) and subsection (b).

[[Page S4388]]

       ``(2) A covered agency, as defined in section 609(d)(2), 
     shall, for purposes of complying with paragraph (1)(C)--
       ``(A) identify representatives of small entities in 
     consultation with the Chief Counsel for Advocacy of the Small 
     Business Administration; and
       ``(B) collect advice and recommendations from the 
     representatives identified under subparagraph (A) relating to 
     issues described in subparagraphs (A) and (B) of paragraph 
     (1) and subsection (b).''.
       (c) Final Regulatory Flexibility Analysis.--Section 604(a) 
     of title 5, United States Code, is amended--
       (1) in paragraph (4), by striking ``and'' at the end;
       (2) in paragraph (5), by striking the period at the end and 
     inserting ``; and''; and
       (3) by adding at the end the following:
       ``(6) for a covered agency, as defined in section 
     609(d)(2), a description of the steps the agency has taken to 
     minimize any additional cost of credit for small entities.''.

     SEC. 1105. 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.

       (a) Federal Reserve Act.--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 
     sufficient to protect taxpayers from and that any such 
     program is terminated in a timely and orderly fashion losses. 
     The policies and procedures established by the Board shall 
     require that a Federal reserve bank assign, consistent with 
     sound risk management practices and to ensure protection for 
     the taxpayer, a lendable value to all collateral for a loan 
     executed by a Federal reserve bank under this paragraph in 
     determining whether the loan is secured satisfactorily for 
     purposes of this paragraph.
       ``(ii) The Board shall establish procedures to prohibit 
     borrowing from programs and facilities by borrowers that are 
     insolvent. Such procedures may include a certification from 
     the chief executive officer (or other authorized officer) of 
     the borrower, at the time the borrower initially borrows 
     under the program or facility (with a duty by the borrower to 
     update the certification if the information in the 
     certification materially changes), that the borrower is not 
     insolvent. A borrower shall be considered insolvent for 
     purposes of this subparagraph, if the borrower is in 
     bankruptcy, resolution under title II of the Restoring 
     American Financial Stability Act of 2010, or any other 
     Federal or State insolvency proceeding.
       ``(iii) A program or facility that is structured to remove 
     assets from the balance sheet of a single and specific 
     company, or that is established for the purpose of assisting 
     a single and specific company avoid bankruptcy, resolution 
     under title II of the Restoring American Financial Stability 
     Act of 2010, or any other Federal or State insolvency 
     proceeding, shall not be considered a program or facility 
     with broad-based eligibility.
       ``(iv) 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;
       ``(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) The information submitted to Congress under 
     subparagraph (C) related to--
       ``(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;
       ``(iii) identifying details concerning the assets or 
     collateral held by, under, or in connection with such a 
     program or facility,

     shall be kept confidential, upon the written request of the 
     Chairman of the Board, in which case such information shall 
     be made available only to the Chairpersons and Ranking 
     Members of the Committees described in subparagraph (C).
       ``(E) If an entity to which a Federal reserve bank has 
     provided a loan under this paragraph becomes a covered 
     financial company, as defined in section 203 of the Restoring 
     American Financial Stability Act of 2010, at any time while 
     such loan is outstanding, and the Federal reserve bank incurs 
     a realized net loss on the loan, then the Federal reserve 
     bank shall have a claim equal to the amount of the net 
     realized loss against the covered entity, with the same 
     priority as an obligation to the Secretary of the Treasury 
     under sections 210(n) and 210(o) of the Restoring American 
     Financial Stability Act of 2010.''.
       (b) Conforming Amendment.--Section 507(a)(2) of title 11, 
     United States Code, is amended by inserting ``claims of any 
     Federal reserve bank related to loans made through programs 
     or facilities authorized under the third undesignated 
     paragraph of the Federal Reserve Act (12 U.S.C. 343),'' after 
     ``this title,''.

     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.

[[Page S4389]]

       ``(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 and a request for approval of such plan. The 
     Corporation shall exercise the authority under this section 
     to issue guarantees up to that specified maximum amount upon 
     passage of the joint resolution of approval, as provided in 
     subsection (d). Absent such approval, the Corporation shall 
     issue no such guarantees.
       (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. The 
     Corporation shall exercise the authority under this section 
     to issue guarantees up to that specified maximum amount upon 
     passage of the joint resolution of approval, as provided in 
     subsection (d). Absent such approval, the Corporation shall 
     issue no such guarantees.
       (d) Resolution of Approval.--
       (1) Additional debt guarantee authority.--A request by the 
     President under this section shall be considered granted by 
     Congress upon adoption of a joint resolution approving such 
     request. Such joint resolution shall be considered in the 
     Senate under expedited procedures.
       (2) Fast track consideration in senate.--
       (A) Reconvening.--Upon receipt of a request 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 request under subsection (c), and ending 
     on the 7th day after that date (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.--
       (A) Coordination with action by house of representatives.--
     If, before the passage by the Senate of a joint resolution of 
     the Senate, the

[[Page S4390]]

     Senate receives a joint resolution, from the House of 
     Representatives, then the following procedures shall apply:
       (i) The joint resolution of the House of Representatives 
     shall not be referred to a committee.
       (ii) With respect to a joint resolution of the Senate--

       (I) the procedure in the Senate 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 House of Representatives.

       (B) Treatment of joint resolution of house of 
     representatives.--If the Senate fails to introduce or 
     consider a joint resolution under this section, the joint 
     resolution of the House of Representatives shall be entitled 
     to expedited floor procedures under this subsection.
       (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) Rules of the senate.--This subsection is enacted by 
     Congress--
       (i) as an exercise of the rulemaking power of the Senate, 
     and as such it is deemed a part of the rules of the Senate, 
     but applicable only with respect to the procedure to be 
     followed in the Senate 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 
     the Senate to change the rules (so far as relating to the 
     procedure of the Senate) at any time, in the same manner, and 
     to the same extent as in the case of any other rule of the 
     Senate.
       (4) Definition.--As used in this subsection, the term 
     ``joint resolution'' means only a joint resolution--
       (A) that is introduced not later than 3 calendar days after 
     the date on which the request referred to in subsection (c) 
     is received by Congress;
       (B) that does not have a preamble;
       (C) the title of which is as follows: ``Joint resolution 
     relating to the approval of a plan to guarantee obligations 
     under section 1155 of the Restoring American Financial 
     Stability Act of 2010''; and
       (D) the matter after the resolving clause of which is as 
     follows: ``That Congress approves the obligation of any 
     amount described in section 1155(c) of the Restoring American 
     Financial Stability Act of 2010.''.
       (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) an exceptional and broad reduction in the general 
     ability of financial market participants--
       (i) to sell financial assets without an unusual and 
     significant discount; or
       (ii) to borrow using financial assets as collateral without 
     an unusual and significant increase in margin; or
       (B) an unusual and significant reduction in the ability of 
     financial 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) Federal Deposit Insurance Act.--Section 13(c)(4)(G) of 
     the Federal Deposit Insurance Act (12 U.S.C. 1823(c)(4)(G)) 
     is amended--
       (1) in clause (i)--
       (A) in subclause (I), by inserting ``for which the 
     Corporation has been appointed receiver'' before ``would have 
     serious''; and
       (B) in the undesignated matter following subclause (II), by 
     inserting ``for the purpose of winding up the insured 
     depository institution for which the Corporation has been 
     appointed receiver'' after ``provide assistance under this 
     section''; and
       (2) in clause (v)(I), by striking ``The'' and inserting 
     ``Not later than 3 days after making a determination under 
     clause (i), the''.
       (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,

[[Page S4391]]

     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.''.

     SEC. 1159. GAO AUDIT OF THE FEDERAL RESERVE FACILITIES; 
                   PUBLICATION OF BOARD ACTIONS.

       (a) GAO Audit.--
       (1) In general.--Notwithstanding section 714(b) of title 
     31, United States Code, or any other provision of law, the 
     Comptroller General of the United States (in this subsection 
     referred to as the ``Comptroller General'') shall conduct a 
     one-time audit of all loans and other financial assistance 
     provided during the period beginning on December 1, 2007 and 
     ending on the date of enactment of this Act by the Board of 
     Governors under the Asset-Backed Commercial Paper Money 
     Market Mutual Fund Liquidity Facility, the Term Asset-Backed 
     Securities Loan Facility, the Primary Dealer Credit Facility, 
     the Commercial Paper Funding Facility, the Term Securities 
     Lending Facility, the Term Auction Facility, Maiden Lane, 
     Maiden Lane II, Maiden Lane III, the agency Mortgage-Backed 
     Securities program, foreign currency liquidity swap lines, 
     and any other program created as a result of the third 
     undesignated paragraph of section 13 of the Federal Reserve 
     Act.
       (2) Assessments.--In conducting the audit under paragraph 
     (1), the Comptroller General shall assess--
       (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;
       (D) the policies governing the use, selection, or payment 
     of third-party contractors by or for any credit facility; and
       (E) whether there were conflicts of interest with respect 
     to the manner in which such facility was established or 
     operated.
       (3) Timing.--The audit required by this subsection shall be 
     commenced not later than 30 days after the date of enactment 
     of this Act, and shall be completed not later than 12 months 
     after that date of enactment.
       (4) Report required.--The Comptroller General shall submit 
     a report on the audit conducted under paragraph (1) to the 
     Congress not later than 12 months after the date of enactment 
     of this Act, and such report shall be made available to--
       (A) the Speaker of the House of Representatives;
       (B) the majority and minority leaders of the House of 
     Representatives;
       (C) the majority and minority leaders of the Senate;
       (D) the Chairman and Ranking Member of the Committee on 
     Banking, Housing, and Urban Affairs of the Senate and of the 
     Committee on Financial Services of the House of 
     Representatives; and
       (E) any member of Congress who requests it.
       (b) Audit of Federal Reserve Bank Governance.--
       (1) Audit.--
       (A) In general.--Not later than 1 year after the date of 
     enactment of this Act, the Comptroller General shall complete 
     an audit of the governance of the Federal reserve bank 
     system.
       (B) Required examinations.--The audit required under 
     subparagraph (A) shall--
       (i) examine the extent to which the current system of 
     appointing Federal reserve bank directors effectively 
     represents ``the public, without discrimination on the basis 
     of race, creed, color, sex or national origin, and with due 
     but not exclusive consideration to the interests of 
     agriculture, commerce, industry, services, labor, and 
     consumers'' in the selection of bank directors, as such 
     requirement is set forth under section 4 of the Federal 
     Reserve Act;
       (ii) examine whether there are actual or potential 
     conflicts of interest created when the directors of Federal 
     reserve banks, which execute the supervisory functions of the 
     Board of Governors of the Federal Reserve System, are elected 
     by member banks;
       (iii) examine the establishment and operations of each 
     facility described in subsection (a)(1) and each Federal 
     reserve bank involved in the establishment and operations 
     thereof; and
       (iv) identify changes to selection procedures for Federal 
     reserve bank directors, or to other aspects of Federal 
     reserve bank governance, that would--

       (I) improve how the public is represented;
       (II) eliminate actual or potential conflicts of interest in 
     bank supervision;
       (III) increase the availability of information useful for 
     the formation and execution of monetary policy; or
       (IV) in other ways increase the effectiveness or efficiency 
     of reserve banks.

       (2) Report required.--A report on the audit conducted under 
     paragraph (1) 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 audit is completed, and such report 
     shall be made available to--
       (A) the Speaker of the House of Representatives;
       (B) the majority and minority leaders of the House of 
     Representatives;
       (C) the majority and minority leaders of the Senate;
       (D) the Chairman and Ranking Member of the Committee on 
     Banking, Housing, and Urban Affairs of the Senate and of the 
     Committee on Financial Services of the House of 
     Representatives; and
       (E) any member of Congress who requests it.
       (c) Publication of Board Actions.--Notwithstanding any 
     other provision of law, the Board of Governors shall publish 
     on its website, not later than December 1, 2010, with respect 
     to all loans and other financial assistance it has provided 
     during the period beginning on December 1, 2007 and ending on 
     the date of enactment of this Act under the Asset-Backed 
     Commercial Paper Money Market Mutual Fund Liquidity Facility, 
     the Term Asset-Backed Securities Loan Facility, the Primary 
     Dealer Credit Facility, the Commercial Paper Funding 
     Facility, the Term Securities Lending Facility, the Term 
     Auction Facility, Maiden Lane, Maiden Lane II, Maiden Lane 
     III, the agency Mortgage-Backed Securities program, foreign 
     currency liquidity swap lines, and any other program created 
     as a result of the third undesignated paragraph of section 13 
     of the Federal Reserve Act--
       (1) the identity of each business, individual, entity, or 
     foreign central bank to which the Board of Governors has 
     provided such assistance;
       (2) the type of financial assistance provided to that 
     business, individual, entity, or foreign central bank;
       (3) the value or amount of that financial assistance;
       (4) the date on which the financial assistance was 
     provided;
       (5) the specific terms of any repayment expected, including 
     the repayment time period, interest charges, collateral, 
     limitations on executive compensation or dividends, and other 
     material terms; and
       (6) the specific rationale for each such facility or 
     program.

    TITLE XII--IMPROVING ACCESS TO MAINSTREAM FINANCIAL INSTITUTIONS

     SEC. 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--

[[Page S4392]]

       (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.

                      TITLE XIII--PAY IT BACK ACT

     SEC. 1301. SHORT TITLE.

       This title may be cited as the ``Pay It Back Act''.

     SEC. 1302. AMENDMENT TO REDUCE TARP AUTHORIZATION.

       Section 115(a) of the Emergency Economic Stabilization Act 
     of 2008 (12 U.S.C. 5225(a)) is amended--
       (1) in paragraph (3)--
       (A) by striking ``If'' and inserting ``Except as provided 
     in paragraph (4), if'';
       (B) by striking ``, $700,000,000,000, as such amount is 
     reduced by $1,259,000,000, as such amount is reduced by 
     $1,244,000,000'' and inserting ``$550,000,000,000''; and
       (C) by striking ``outstanding at any one time''; and
       (2) by adding at the end the following:
       ``(4) If the Secretary, with the concurrence of the 
     Chairman of the Board of Governors of the Federal Reserve 
     System, determines that there is an immediate and substantial 
     threat to the economy arising from financial instability, the 
     Secretary is authorized to purchase troubled assets under 
     this Act in an amount equal to amounts received by the 
     Secretary before, on, or after the date of enactment of the 
     Pay It Back Act for repayment of the principal of financial 
     assistance by an entity that has received financial 
     assistance under the TARP or any other program enacted by the 
     Secretary under the authorities granted to the Secretary 
     under this Act, but only--
       ``(A) to the extent necessary to address the threat; and
       ``(B) upon transmittal of such determination, in writing, 
     to the appropriate committees of Congress.''.

     SEC. 1303. REPORT.

       Section 106 of the Emergency Economic Stabilization Act of 
     2008 (12 U.S.C. 5216) is amended by inserting at the end the 
     following:
       ``(f) Report.--The Secretary of the Treasury shall report 
     to Congress every 6 months on amounts received and 
     transferred to the general fund under subsection (d).''.

     SEC. 1304. AMENDMENTS TO HOUSING AND ECONOMIC RECOVERY ACT OF 
                   2008.

       (a) Sale of Fannie Mae Obligations and Securities by the 
     Treasury; Deficit Reduction.--Section 304(g)(2) of the 
     Federal National Mortgage Association Charter Act (12 U.S.C. 
     1719(g)(2)) is amended--
       (1) by redesignating subparagraph (C) as subparagraph (D); 
     and
       (2) by inserting after subparagraph (B) the following:
       ``(C) Deficit reduction.--The Secretary of the Treasury 
     shall deposit in the General Fund of the Treasury any amounts 
     received by the Secretary from the sale of any obligation 
     acquired by the Secretary under this subsection, where such 
     amounts shall be--
       ``(i) dedicated for the sole purpose of deficit reduction; 
     and

[[Page S4393]]

       ``(ii) prohibited from use as an offset for other spending 
     increases or revenue reductions.''.
       (b) Sale of Freddie Mac Obligations and Securities by the 
     Treasury; Deficit Reduction.--Section 306(l)(2) of the 
     Federal Home Loan Mortgage Corporation Act (12 U.S.C. 
     1455(l)(2)) is amended--
       (1) by redesignating subparagraph (C) as subparagraph (D); 
     and
       (2) by inserting after subparagraph (B) the following:
       ``(C) Deficit reduction.--The Secretary of the Treasury 
     shall deposit in the General Fund of the Treasury any amounts 
     received by the Secretary from the sale of any obligation 
     acquired by the Secretary under this subsection, where such 
     amounts shall be--
       ``(i) dedicated for the sole purpose of deficit reduction; 
     and
       ``(ii) prohibited from use as an offset for other spending 
     increases or revenue reductions.''.
       (c) Sale of Federal Home Loan Banks Obligations by the 
     Treasury; Deficit Reduction.--Section 11(l)(2) of the Federal 
     Home Loan Bank Act (12 U.S.C. 1431(l)(2)) is amended--
       (1) by redesignating subparagraph (C) as subparagraph (D); 
     and
       (2) by inserting after subparagraph (B) the following:
       ``(C) Deficit reduction.--The Secretary of the Treasury 
     shall deposit in the General Fund of the Treasury any amounts 
     received by the Secretary from the sale of any obligation 
     acquired by the Secretary under this subsection, where such 
     amounts shall be--
       ``(i) dedicated for the sole purpose of deficit reduction; 
     and
       ``(ii) prohibited from use as an offset for other spending 
     increases or revenue reductions.''.
       (d) Repayment of Fees.--Any periodic commitment fee or any 
     other fee or assessment paid by the Federal National Mortgage 
     Association or Federal Home Loan Mortgage Corporation to the 
     Secretary of the Treasury as a result of any preferred stock 
     purchase agreement, mortgage-backed security purchase 
     program, or any other program or activity authorized or 
     carried out pursuant to the authorities granted to the 
     Secretary of the Treasury under section 1117 of the Housing 
     and Economic Recovery Act of 2008 (Public Law 110-289; 122 
     Stat. 2683), including any fee agreed to by contract between 
     the Secretary and the Association or Corporation, shall be 
     deposited in the General Fund of the Treasury where such 
     amounts shall be--
       (1) dedicated for the sole purpose of deficit reduction; 
     and
       (2) prohibited from use as an offset for other spending 
     increases or revenue reductions.

     SEC. 1305. FEDERAL HOUSING FINANCE AGENCY REPORT.

       The Director of the Federal Housing Finance Agency shall 
     submit to Congress a report on the plans of the Agency to 
     continue to support and maintain the Nation's vital housing 
     industry, while at the same time guaranteeing that the 
     American taxpayer will not suffer unnecessary losses.

     SEC. 1306. REPAYMENT OF UNOBLIGATED ARRA FUNDS.

       (a) Rejection of ARRA Funds by State.--Section 1607 of the 
     American Recovery and Reinvestment Act of 2009 (Public Law 
     111-5; 123 Stat. 305) is amended by adding at the end the 
     following:
       ``(d) Statewide Rejection of Funds.--If funds provided to 
     any State in any division of this Act are not accepted for 
     use by the Governor of the State pursuant to subsection (a) 
     or by the State legislature pursuant to subsection (b), then 
     all such funds shall be--
       ``(1) rescinded; and
       ``(2) deposited in the General Fund of the Treasury where 
     such amounts shall be--
       ``(A) dedicated for the sole purpose of deficit reduction; 
     and
       ``(B) prohibited from use as an offset for other spending 
     increases or revenue reductions.''.
       (b) Withdrawal or Recapture of Unobligated Funds.--Title 
     XVI of the American Recovery and Reinvestment Act of 2009 
     (Public Law 111-5; 123 Stat. 302) is amended by adding at the 
     end the following:

     ``SEC. 1613. WITHDRAWAL OR RECAPTURE OF UNOBLIGATED FUNDS.

       ``Notwithstanding any other provision of this Act, if the 
     head of any executive agency withdraws or recaptures for any 
     reason funds appropriated or otherwise made available under 
     this division, and such funds have not been obligated by a 
     State to a local government or for a specific project, such 
     recaptured funds shall be--
       ``(1) rescinded; and
       ``(2) deposited in the General Fund of the Treasury where 
     such amounts shall be--
       ``(A) dedicated for the sole purpose of deficit reduction; 
     and
       ``(B) prohibited from use as an offset for other spending 
     increases or revenue reductions.''.
       (c) Return of Unobligated Funds by End of 2012.--Section 
     1603 of the American Recovery and Reinvestment Act of 2009 
     (Public Law 111-5; 123 Stat. 302) is amended by--
       (1) striking ``All funds'' and inserting ``(a) In 
     General.--All funds''; and
       (2) adding at the end the following:
       ``(b) Repayment of Unobligated Funds.--Any discretionary 
     appropriations made available in this division that have not 
     been obligated as of December 31, 2012, are hereby rescinded, 
     and such amounts shall be deposited in the General Fund of 
     the Treasury where such amounts shall be--
       ``(1) dedicated for the sole purpose of deficit reduction; 
     and
       ``(2) prohibited from use as an offset for other spending 
     increases or revenue reductions.
       ``(c) Presidential Waiver Authority.--
       ``(1) In general.--The President may waive the requirements 
     under subsection (b), if the President determines that it is 
     not in the best interest of the Nation to rescind a specific 
     unobligated amount after December 31, 2012.
       ``(2) Requests.--The head of an executive agency may also 
     apply to the President for a waiver from the requirements 
     under subsection (b).''.

                        TITLE XIV--MISCELLANEOUS

     SEC. 1401. RESTRICTIONS ON USE OF FEDERAL FUNDS TO FINANCE 
                   BAILOUTS OF FOREIGN GOVERNMENTS.

       The Bretton Woods Agreements Act (22 U.S.C. 286 et seq.) is 
     amended by adding at the end the following:

     ``SEC. 68. RESTRICTIONS ON USE OF FEDERAL FUNDS TO FINANCE 
                   BAILOUTS OF FOREIGN GOVERNMENTS.

       ``(a) In General.--The President shall direct the United 
     States Executive Director of the International Monetary 
     Fund--
       ``(1) to evaluate any proposed loan to a country by the 
     Fund if the amount of the public debt of the country exceeds 
     the gross domestic product of the country;
       ``(2) to determine whether or not the loan will be repaid 
     and certify that determination to Congress.
       ``(b) Opposition to Loans Unlikely To Be Repaid.--If the 
     Executive Director determines under subsection (a)(2) that a 
     loan by the International Monetary Fund to a country will not 
     be repaid, the President shall direct the Executive Director 
     to use the voice and vote of the United States to vote in 
     opposition to the proposed loan.''.

                   TITLE XV--CONGO CONFLICT MINERALS

     SEC. 1501. SENSE OF CONGRESS ON EXPLOITATION AND TRADE OF 
                   COLUMBITE-TANTALITE, CASSITERITE, GOLD, AND 
                   WOLFRAMITE ORIGINATING IN DEMOCRATIC REPUBLIC 
                   OF CONGO.

       It is the sense of Congress that the exploitation and trade 
     of columbite-tantalite, cassiterite, gold, and wolframite in 
     the eastern Democratic Republic of Congo is helping to 
     finance extreme levels of violence in the eastern Democratic 
     Republic of Congo, particularly sexual and gender-based 
     violence, and contributing to an emergency humanitarian 
     situation therein, warranting the provisions of section 13(o) 
     of the Securities Exchange Act of 1934, as added by section 
     1302.

     SEC. 1502. DISCLOSURE TO SECURITIES AND EXCHANGE COMMISSION 
                   RELATING TO COLUMBITE-TANTALITE, CASSITERITE, 
                   GOLD, AND WOLFRAMITE ORIGINATING IN DEMOCRATIC 
                   REPUBLIC OF CONGO.

       Section 13 of the Securities Exchange Act of 1934 (15 
     U.S.C. 78m), as amended by section 763 of this Act, is 
     further amended by adding at the end the following new 
     subsection:
       ``(o) Disclosures to Commission Relating to Columbite-
     tantalite, Cassiterite, Gold, and Wolframite Originating in 
     Democratic Republic of Congo.--
       ``(1) In general.--Not later than 180 days after the date 
     of the enactment of this subsection, the Commission shall 
     promulgate rules requiring any person described in paragraph 
     (2)--
       ``(A) to disclose annually to the Commission in a report--
       ``(i) whether the columbite-tantalite, cassiterite, gold, 
     or wolframite that was necessary as described in paragraph 
     (2)(A)(ii) in the year for which such report is submitted 
     originated or may have originated in the Democratic Republic 
     of Congo or an adjoining country; and
       ``(ii) a description of the measures taken by the person, 
     which may include an independent audit, to exercise due 
     diligence on the source and chain of custody of such 
     columbite-tantalite, cassiterite, gold, or wolframite, or 
     derivatives of such minerals, in order to ensure that the 
     activities of such person that involve such minerals or 
     derivatives did not directly or indirectly finance or benefit 
     armed groups in the Democratic Republic of Congo or an 
     adjoining country; and
       ``(B) make the information disclosed under subparagraph (A) 
     available to the public on the Internet website of the 
     person.
       ``(2) Person described.--
       ``(A) In general.--A person is described in this paragraph 
     if--
       ``(i) the person is required to file reports to the 
     Commission under subsection (a)(2); and
       ``(ii) columbite-tantalite, cassiterite, gold, or 
     wolframite is necessary to the functionality or production of 
     a product manufactured by such person.
       ``(B) Derivatives.--For purposes of this paragraph, if a 
     derivative of a mineral is necessary to the functionality or 
     production of a product manufactured by a person, such 
     mineral shall also be considered necessary to the 
     functionality or production of a product manufactured by the 
     person.
       ``(3) Revisions and waivers.--The Commission shall revise 
     or temporarily waive the requirements described in paragraph 
     (1) if the President determines that such revision or waiver 
     is in the public interest.
       ``(4) Termination of disclosure requirements.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the requirements of paragraph (1) shall terminate on the date 
     that is 5 years after the date of the enactment of this 
     subsection.
       ``(B) Extension by secretary of state.--The date described 
     in subparagraph (A) shall be extended by 1 year for each year 
     in which the Secretary of State certifies that armed parties 
     to the ongoing armed conflict in the Democratic Republic of 
     Congo or adjoining countries continue to be directly involved 
     and benefitting from commercial activity involving columbite-
     tantalite, cassiterite, gold, or wolframite.
       ``(5) Adjoining country defined.--In this subsection, the 
     term `adjoining country', with

[[Page S4394]]

     respect to the Democratic Republic of Congo, means a country 
     that shares an internationally recognized border with the 
     Democratic Republic of Congo.''.

     SEC. 1503. REPORT.

       Not later than 2 years after the date of the enactment of 
     this Act, the Comptroller General of the United States shall 
     submit to Congress a report that includes the following:
       (1) An assessment of the effectiveness of section 13(o) of 
     the Securities Exchange Act of 1934, as added by section 
     1302, in promoting peace and security in the eastern 
     Democratic Republic of Congo.
       (2) A description of the problems, if any, encountered by 
     the Securities and Exchange Commission in carrying out the 
     provisions of such section 13(o).
       (3) A description of the adverse impacts of carrying out 
     the provisions of such section 13(o), if any, on communities 
     in the eastern Democratic Republic of Congo.
       (4) Recommendations for legislative or regulatory actions 
     that can be taken--
       (A) to improve the effectiveness of the provisions of such 
     section 13(o) to promote peace and security in the eastern 
     Democratic Republic of Congo;
       (B) to resolve the problems described pursuant to paragraph 
     (2), if any; and
       (C) to mitigate the adverse impacts described pursuant 
     paragraph (3), if any.
       Amend the title so as to read: ``An Act 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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