[Congressional Record (Bound Edition), Volume 155 (2009), Part 23]
[House]
[Pages 31059-31300]
[From the U.S. Government Publishing Office, www.gpo.gov]




         WALL STREET REFORM AND CONSUMER PROTECTION ACT OF 2009

  The SPEAKER pro tempore. Pursuant to House Resolution 964 and rule 
XVIII, the Chair declares the House in the Committee of the Whole House 
on the State of the Union for the further consideration of the bill, 
H.R. 4173.

                              {time}  1725


                     In the Committee of the Whole

  Accordingly, the House resolved itself into the Committee of the 
Whole House on the State of the Union for the further consideration of 
the bill (H.R. 4173) 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, with Ms. Loretta Sanchez of California (Acting 
Chair) in the chair.
  The Clerk read the title of the bill.
  The Acting CHAIR. When the Committee of the Whole rose on Wednesday, 
December 9, 2009, all time for general debate had expired pursuant to 
House Resolution 956.
  Pursuant to House Resolution 964, no further general debate shall be 
in order. The bill, as amended, shall be considered for amendment under 
the 5-minute rule and shall be considered as read.
  The text of the bill, as amended, is as follows:

                               H.R. 4173

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``The Wall Street Reform and 
     Consumer Protection Act of 2009''.

     SEC. 2. TABLE OF CONTENTS.

       The table of contents for this Act is as follows:

Sec. 1. Short title.
Sec. 2. Table of contents.

              TITLE I--FINANCIAL STABILITY IMPROVEMENT ACT

Sec. 1000. Short title; definitions.
Sec. 1000A. Restrictions on the Federal Reserve System pending audit 
              report.

          Subtitle A--The Financial Services Oversight Council

Sec. 1001. Financial Services Oversight Council established.
Sec. 1002. Resolution of disputes among Federal financial regulatory 
              agencies.
Sec. 1003. Technical and professional advisory committees.
Sec. 1004. Financial Services Oversight Council meetings and council 
              governance.
Sec. 1005. Council staff and funding.
Sec. 1006. Reports to the Congress.
Sec. 1007. Applicability of certain Federal laws.
Sec. 1008. Oversight by GAO.

   Subtitle B--Prudential Regulation of Companies and Activities for 
                      Financial Stability Purposes

Sec. 1101. Council and Board authority to obtain information.
Sec. 1102. Council prudential regulation recommendations to Federal 
              financial regulatory agencies.
Sec. 1103. Subjecting financial companies to stricter prudential 
              standards for financial stability purposes.
Sec. 1104. Stricter prudential standards for certain financial holding 
              companies for financial stability purposes.
Sec. 1105. Mitigation of systemic risk.
Sec. 1106. Subjecting activities or practices to stricter prudential 
              standards for financial stability purposes.
Sec. 1107. Stricter regulation of activities and practices for 
              financial stability purposes.
Sec. 1108. Effect of rescission of identification.
Sec. 1109. Emergency financial stabilization.
Sec. 1110. Corporation must receive warrants when paying or risking 
              taxpayer funds.
Sec. 1111. Examinations and enforcement actions for insurance and 
              resolutions purposes.
Sec. 1112. Study of the effects of size and complexity of financial 
              institutions on capital market efficiency and economic 
              growth.
Sec. 1113. Exercise of Federal Reserve authority.
Sec. 1114. Stress tests.
Sec. 1115. Contingent Capital.
Sec. 1116. Restriction on proprietary trading by designated financial 
              holding companies.
Sec. 1117. Rule of construction.

   Subtitle C--Improvements to Supervision and Regulation of Federal 
                        Depository Institutions

Sec. 1201. Definitions.
Sec. 1202. Amendments to the Home Owners' Loan Act relating to transfer 
              of functions.
Sec. 1203. Amendments to the revised statutes.
Sec. 1204. Power and duties transferred.
Sec. 1205. Transfer date.
Sec. 1206. Expiration of term of comptroller.
Sec. 1207. Office of Thrift Supervision abolished.
Sec. 1208. Savings provisions.
Sec. 1209. Regulations and orders.
Sec. 1210. Coordination of transition activities.
Sec. 1211. Interim responsibilities of office of the comptroller of the 
              currency and office of thrift supervision.
Sec. 1212. Employees transferred.
Sec. 1213. Property transferred.
Sec. 1214. Funds transferred.
Sec. 1215. Disposition of affairs.
Sec. 1216. Continuation of services.
Sec. 1217. Contracting and leasing authority.
Sec. 1218. Treatment of savings and loan holding companies.
Sec. 1219. Practices of certain mutual thrift holding companies 
              preserved.
Sec. 1220. Implementation plan and reports.
Sec. 1221. Composition of board of directors of the Federal Deposit 
              Insurance Corporation.
Sec. 1222. Amendments to section 3.
Sec. 1223. Amendments to section 7.
Sec. 1224. Amendments to section 8.
Sec. 1225. Amendments to section 11.
Sec. 1226. Amendments to section 13.
Sec. 1227. Amendments to section 18.
Sec. 1228. Amendments to section 28.
Sec. 1229. Amendments to the Alternative Mortgage Transaction Parity 
              Act of 1982.
Sec. 1230. Amendments to the Bank Holding Company Act of 1956.
Sec. 1231. Amendments to the Bank Protection Act of 1968.
Sec. 1232. Amendments to the Bank Service Company Act.
Sec. 1233. Amendments to the Community Reinvestment Act of 1977.
Sec. 1234. Amendments to the Depository Institution Management 
              Interlocks Act.
Sec. 1235. Amendments to the Emergency Homeowners' Relief Act.
Sec. 1236. Amendments to the Equal Credit Opportunity Act.
Sec. 1237. Amendments to the Federal Credit Union Act.
Sec. 1238. Amendments to the Federal Financial Institutions Examination 
              Council Act of 1978.
Sec. 1239. Amendments to the Federal Home Loan Bank Act.
Sec. 1240. Amendments to the Federal Reserve Act.
Sec. 1241. Amendments to the Financial Institutions Reform, Recovery, 
              and Enforcement Act of 1989.
Sec. 1242. Amendments to the Housing Act of 1948.
Sec. 1243. Amendments to the Housing and Community Development Act of 
              1992 and the Federal Housing Enterprises Financial Safety 
              and Soundness Act of 1992.
Sec. 1244. Amendment to the Housing and Urban-Rural Recovery Act of 
              1983.
Sec. 1245. Amendments to the National Housing Act.
Sec. 1246. Amendments to the Right to Financial Privacy Act of 1978.
Sec. 1247. Amendments to the Balanced Budget and Emergency Deficit 
              Control Act of 1985.
Sec. 1248. Amendments to the Crime Control Act of 1990.
Sec. 1249. Amendment to the Flood Disaster Protection Act of 1973.
Sec. 1250. Amendment to the Investment Company Act of 1940.
Sec. 1251. Amendment to the Neighborhood Reinvestment Corporation Act.
Sec. 1252. Amendments to the Securities Exchange Act of 1934.
Sec. 1253. Amendments to title 18, United States Code.
Sec. 1254. Amendments to title 31, United States Code.

[[Page 31060]]

Sec. 1255. Requirement for Countercyclical Capital Requirements.
Sec. 1256. Transfer of authority to the Board with respect to savings 
              and loan holding companies.

  Subtitle D--Further Improvements to the Regulation of Bank Holding 
                 Companies and Depository Institutions

Sec. 1301. Treatment of industrial loan companies, savings 
              associations, and certain other companies under the bank 
              holding company act.
Sec. 1302. Registration of certain companies as bank holding companies.
Sec. 1303. Reports and examinations of bank holding companies; 
              regulation of functionally regulated subsidiaries.
Sec. 1304. Requirements for financial holding companies to remain well 
              capitalized and well managed.
Sec. 1305. Standards for interstate acquisitions.
Sec. 1306. Enhancing existing restrictions on bank transactions with 
              affiliates.
Sec. 1307. Eliminating exceptions for transactions with financial 
              subsidiaries.
Sec. 1308. Lending limits applicable to credit exposure on derivative 
              transactions, repurchase agreements, reverse repurchase 
              agreements, and securities lending and borrowing 
              transactions.
Sec. 1309. Restriction on conversions of troubled banks and thrifts.
Sec. 1310. Lending limits to insiders.
Sec. 1311. Limitations on purchases of assets from insiders.
Sec. 1312. Rules regarding capital levels of bank holding companies.
Sec. 1313. Enhancements to factors to be considered in certain 
              acquisitions.
Sec. 1314. Elimination of elective investment bank holding company 
              framework.
Sec. 1315. Examination fees for large bank holding companies.

     Subtitle E--Improvements to the Federal Deposit Insurance Fund

Sec. 1401. Accounting for actual risk to the Deposit Insurance Fund.
Sec. 1402. Creating a risk-focused assessment base.
Sec. 1403. Elimination of procyclical assessments.
Sec. 1404. Enhanced access to information for deposit insurance 
              purposes.
Sec. 1405. Transition reserve ratio requirements to reflect new 
              assessment base.

  Subtitle F--Improvements to the Asset-backed Securitization Process

Sec. 1501. Short title.
Sec. 1502. Credit risk retention.
Sec. 1503. Periodic and other reporting under the Securities Exchange 
              Act of 1934 for asset-backed securities.
Sec. 1504. Representations and warranties in asset-backed offerings.
Sec. 1505. Exempted transactions under the Securities Act of 1933.
Sec. 1506. Study on the macroeconomic effects of risk retention 
              requirements.

               Subtitle G--Enhanced Dissolution Authority

Sec. 1601. Short title.
Sec. 1602. Definitions.
Sec. 1603. Systemic risk determination.
Sec. 1604. Resolution; stabilization.
Sec. 1605. Judicial review.
Sec. 1606. Directors not liable for acquiescing in appointment of 
              receiver.
Sec. 1607. Termination and exclusion of other actions.
Sec. 1608. Rulemaking.
Sec. 1609. Powers and duties of corporation.
Sec. 1610. Clarification of prohibition regarding concealment of assets 
              from receiver or liquidating agent.
Sec. 1611. Office of Resolution.
Sec. 1612. Miscellaneous provisions.
Sec. 1613. Amendment to Federal Deposit Insurance Act.
Sec. 1614. Application of executive compensation limitations.

  Subtitle H--Additional Improvements for Financial Crisis Management

Sec. 1701. Additional improvements for financial crisis management.
Sec. 1702. Certain restrictions related to foreign currency swap 
              authority.
Sec. 1703. Additional oversight of financial regulatory system.

                       Subtitle I--Miscellaneous

Sec. 1801. Inclusion of minorities and women; Diversity in agency 
              workforce.

             Subtitle J--International Policy Coordination

Sec. 1901. International policy coordination.

             Subtitle K--International Financial Provisions

Sec. 1951. Access to United States financial market by foreign 
              institutions.

TITLE II--CORPORATE AND FINANCIAL INSTITUTION COMPENSATION FAIRNESS ACT

Sec. 2001. Short title.
Sec. 2002. Shareholder vote on executive compensation disclosures.
Sec. 2003. Compensation committee independence.
Sec. 2004. Enhanced compensation structure reporting to reduce perverse 
              incentives.

          TITLE III--OVER-THE-COUNTER DERIVATIVES MARKETS ACT

Sec. 3001. Short title.

                 Subtitle A--Regulation of Swap Markets

Sec. 3101. Definitions.
Sec. 3102. Jurisdiction.
Sec. 3103. Clearing.
Sec. 3104. Public reporting of aggregate swap data.
Sec. 3105. Swap repositories.
Sec. 3106. Reporting and recordkeeping.
Sec. 3107. Registration and regulation of swap dealers and major swap 
              participants.
Sec. 3108. Segregation of assets held as collateral in swap 
              transactions.
Sec. 3109. Conflicts of interest.
Sec. 3110. Swap execution facilities.
Sec. 3111. Derivatives transaction execution facilities and exempt 
              boards of trade.
Sec. 3112. Designated contract markets.
Sec. 3113. Position limits.
Sec. 3114. Enhanced authority over registered entities.
Sec. 3115. Foreign boards of trade.
Sec. 3116. Legal certainty for swaps.
Sec. 3117. Multilateral clearing organizations.
Sec. 3118. Primary enforcement authority.
Sec. 3119. Enforcement.
Sec. 3120. Retail commodity transactions.
Sec. 3121. Large swap trader reporting.
Sec. 3122. Authority to ban abusive swaps.
Sec. 3123. International harmonization.
Sec. 3124. Authority to ban access to the United States Financial 
              System.
Sec. 3125. Other authority.
Sec. 3126. Antitrust.
Sec. 3127. Effective date.

         Subtitle B--Regulation of Security-Based Swap Markets

Sec. 3201. Definitions under the Securities Exchange Act of 1934.
Sec. 3202. Repeal of prohibition on regulation of security-based swaps.
Sec. 3203. Amendments to the Securities Exchange Act of 1934.
Sec. 3204. Registration and regulation of swap dealers and major swap 
              participants.
Sec. 3205. National security exchange registration requirements.
Sec. 3206. Reporting and recordkeeping.
Sec. 3207. State gaming and bucket shop laws.
Sec. 3208. Amendments to the Securities Act of 1933; treatment of 
              security-based swaps.
Sec. 3209. Other authority.
Sec. 3210. Jurisdiction.
Sec. 3211. Effective date.

                       Subtitle C--Miscellaneous

Sec. 3301. Study on feasibility of requiring use of standardized 
              algorithmic descriptions for financial derivatives.
Sec. 3302. Study of desirability and feasibility of establishing single 
              regulator for all transactions involving financial 
              derivatives.
Sec. 3303. Recommendations for changes to insolvency laws.
Sec. 3304. Prohibition against government assistance.

           TITLE IV--CONSUMER FINANCIAL PROTECTION AGENCY ACT

Sec. 4001. Short title.
Sec. 4002. Definitions.

                Subtitle A--Establishment of the Agency

Sec. 4101. Establishment of the Consumer Financial Protection Agency.
Sec. 4102. Director.
Sec. 4103. Consumer Financial Protection Oversight Board.
Sec. 4104. Executive and administrative powers.
Sec. 4105. Administration.
Sec. 4106. Consumer Advisory Board.
Sec. 4107. Coordination.
Sec. 4108. Reports to the Congress.
Sec. 4109. Funding; fees and assessments; penalties and fines.
Sec. 4110. Amendments relating to other administrative provisions.
Sec. 4111. Effective date.

         Subtitle B--General Powers of the Director and Agency

Sec. 4201. Mandate and objectives.
Sec. 4202. Authorities.
Sec. 4203. Examination and enforcement for small banks, thrifts, and 
              credit unions.
Sec. 4204. Simultaneous and coordinated supervisory action.
Sec. 4205. Limitations on authority of agency and director.
Sec. 4206. Collection of information; confidentiality regulations.
Sec. 4207. Monitoring; assessments of significant regulations; reports.
Sec. 4208. Authority to restrict mandatory predispute arbitration.

[[Page 31061]]

Sec. 4209. Registration and supervision of nondepository covered 
              persons.
Sec. 4210. Effective date.

                    Subtitle C--Specific Authorities

Sec. 4301. Prohibiting unfair, deceptive, or abusive acts or practices.
Sec. 4302. Disclosures.
Sec. 4303. Sales practices.
Sec. 4304. Pilot disclosures.
Sec. 4305. Adopting operational standards to deter unfair, deceptive, 
              or abusive practices.
Sec. 4306. Duties.
Sec. 4307. Consumer rights to access information.
Sec. 4308. Prohibited acts.
Sec. 4309. Treatment of remittance transfers.
Sec. 4310. Effective date.
Sec. 4311. No authority to require the offering of financial products 
              or services.
Sec. 4312. Appraisal independence requirements.

                 Subtitle D--Preservation of State Law

Sec. 4401. Relation to State law.
Sec. 4402. Preservation of enforcement powers of States.
Sec. 4403. Preservation of existing contracts.
Sec. 4404. State law preemption standards for national banks and 
              subsidiaries clarified.
Sec. 4405. Visitorial standards.
Sec. 4406. Clarification of law applicable to nondepository institution 
              subsidiaries.
Sec. 4407. State law preemption standards for Federal savings 
              associations and subsidiaries clarified.
Sec. 4408. Visitorial standards.
Sec. 4409. Clarification of law applicable to nondepository institution 
              subsidiaries.
Sec. 4410. Effective date.

                     Subtitle E--Enforcement Powers

Sec. 4501. Definitions.
Sec. 4502. Investigations and administrative discovery.
Sec. 4503. Hearings and adjudication proceedings.
Sec. 4504. Litigation authority.
Sec. 4505. Relief available.
Sec. 4506. Referrals for criminal proceedings.
Sec. 4507. Employee protection.
Sec. 4508. Effective date.

     Subtitle F--Transfer of Functions and Personnel; Transitional 
                               Provisions

Sec. 4601. Transfer of certain functions.
Sec. 4602. Designated transfer date.
Sec. 4603. Savings provisions.
Sec. 4604. Transfer of certain personnel.
Sec. 4605. Incidental transfers.
Sec. 4606. Interim authority of the Secretary.

                  Subtitle G--Regulatory Improvements

Sec. 4701. Collection of deposit account data.
Sec. 4702. Small business data collection.
Sec. 4703. Annual financial autopsy.

                   Subtitle H--Conforming Amendments

Sec. 4801. Amendments to the Inspector General Act of 1978.
Sec. 4802. Amendments to the Privacy Act of 1974.
Sec. 4803. Amendments to the Alternative Mortgage Transaction Parity 
              Act of 1982.
Sec. 4804. Amendments to the Consumer Credit Protection Act.
Sec. 4805. Amendments to the Expedited Funds Availability Act.
Sec. 4806. Amendments to the Federal Deposit Insurance Act.
Sec. 4807. Amendments to the Gramm-Leach-Bliley Act.
Sec. 4808. Amendments to the Home Mortgage Disclosure Act of 1975.
Sec. 4809. Amendments to division D of the Omnibus Appropriations Act, 
              2009.
Sec. 4810. Amendments to the Homeowners Protection Act of 1998.
Sec. 4811. Amendments to the Real Estate Settlement Procedures Act of 
              1974.
Sec. 4812. Amendments to the Right to Financial Privacy Act of 1978.
Sec. 4813. Amendments to the Secure and Fair Enforcement for Mortgage 
              Licensing Act of 2008.
Sec. 4814. Amendments to the Truth in Savings Act.
Sec. 4815. Amendments to the Telemarketing and Consumer Fraud and Abuse 
              Prevention Act.
Sec. 4816. Membership in Financial Literacy and Education Commission.
Sec. 4817. Effective date.

      Subtitle I--Improvements to the Federal Trade Commission Act

Sec. 4901. Amendments to the Federal Trade Commission Act.

                        TITLE V--CAPITAL MARKETS

     Subtitle A--Private Fund Investment Advisers Registration Act

Sec. 5001. Short title.
Sec. 5002. Definitions.
Sec. 5003. Elimination of private adviser exemption; Limited exemption 
              for foreign private fund advisers; Limited intrastate 
              exemption.
Sec. 5004. Collection of systemic risk data.
Sec. 5005. Elimination of disclosure provision.
Sec. 5006. Exemption of and reporting by venture capital fund advisers.
Sec. 5007. Exemption of and reporting by certain private fund advisers.
Sec. 5008. Clarification of rulemaking authority.
Sec. 5009. GAO study.
Sec. 5010. Effective date; Transition period.
Sec. 5011. Qualified client standard.

   Subtitle B--Accountability and Transparency in Rating Agencies Act

Sec. 6001. Short title.
Sec. 6002. Enhanced regulation of nationally recognized statistical 
              rating organizations.
Sec. 6003. Standards for private actions.
Sec. 6004. Issuer disclosure of preliminary ratings.
Sec. 6005. Change to designation.
Sec. 6006. Timeline for regulations.
Sec. 6007. Elimination of exemption from fair disclosure rule.
Sec. 6008. Advisory Board.
Sec. 6009. Removal of statutory references to credit ratings.
Sec. 6010. Review of reliance on ratings.
Sec. 6011. Publication of rating histories on the EDGAR system.
Sec. 6012. Effect of Rule 436(g).
Sec. 6013. Studies.

                  Subtitle C--Investor Protection Act

Sec. 7001. Short title.

                           Part 1--Disclosure

Sec. 7101. Investor Advisory Committee established.
Sec. 7102. Clarification of the Commission's authority to engage in 
              consumer testing.
Sec. 7103. Establishment of a fiduciary duty for brokers, dealers, and 
              investment advisers, and harmonization of regulation.
Sec. 7104. Commission study on disclosure to retail customers before 
              purchase of products or services.
Sec. 7105. Beneficial ownership and short-swing profit reporting.
Sec. 7106. Revision to recordkeeping rules.
Sec. 7107. Study on enhancing investment advisor examinations.
Sec. 7108. GAO study of financial planning.

                    Part 2--Enforcement and Remedies

Sec. 7201. Authority to restrict mandatory pre-dispute arbitration.
Sec. 7202. Comptroller General study to review securities arbitration 
              system.
Sec. 7203. Whistleblower protection.
Sec. 7204. Conforming amendments for whistleblower protection.
Sec. 7205. Implementation and transition provisions for whistleblower 
              protections.
Sec. 7206. Collateral bars.
Sec. 7207. Aiding and abetting authority under the Securities Act and 
              the Investment Company Act.
Sec. 7208. Authority to impose penalties for aiding and abetting 
              violations of the Investment Advisers Act.
Sec. 7209. Deadline for completing examinations, inspections and 
              enforcement actions.
Sec. 7210. Nationwide service of subpoenas.
Sec. 7211. Authority to impose civil penalties in cease and desist 
              proceedings.
Sec. 7212. Formerly associated persons.
Sec. 7213. Sharing privileged information with other authorities.
Sec. 7214. Expanded access to grand jury material.
Sec. 7215. Aiding and abetting standard of knowledge satisfied by 
              recklessness.
Sec. 7216. Extraterritorial jurisdiction of the antifraud provisions of 
              the Federal securities laws.
Sec. 7217. Fidelity bonding.
Sec. 7218. Enhanced SEC authority to conduct surveillance and risk 
              assessment.
Sec. 7219. Investment company examinations.
Sec. 7220. Control person liability under the Securities Exchange Act.
Sec. 7221. Enhanced application of anti-fraud provisions.
Sec. 7222. SEC authority to issue rules on proxy access.

              Part 3--Commission Funding and Organization

Sec. 7301. Authorization of appropriations.
Sec. 7302. Investment adviser regulation funding.
Sec. 7303. Amendments to section 31 of the Securities Exchange Act of 
              1934.
Sec. 7304. Commission organizational study and reform.
Sec. 7305. Capital Markets Safety Board.
Sec. 7306. Report on implementation of ``post-Madoff reforms''.
Sec. 7307. Joint Advisory Committee.

                 Part 4--Additional Commission Reforms

Sec. 7401. Regulation of securities lending.
Sec. 7402. Lost and stolen securities.
Sec. 7403. Fingerprinting.
Sec. 7404. Equal treatment of self-regulatory organization rules.
Sec. 7405. Clarification that section 205 of the Investment Advisers 
              Act of 1940 does not apply to State-registered advisers.
Sec. 7406. Conforming amendments for the repeal of the Public Utility 
              Holding Company Act of 1935.

[[Page 31062]]

Sec. 7407. Promoting transparency in financial reporting.
Sec. 7408. Unlawful margin lending.
Sec. 7409. Protecting confidentiality of materials submitted to the 
              Commission.
Sec. 7410. Technical corrections.
Sec. 7411. Municipal securities.
Sec. 7412. Interested person definition.
Sec. 7413. Rulemaking authority to protect redeeming investors.
Sec. 7414. Study on SEC revolving door.
Sec. 7415. Study on internal control evaluation and reporting cost 
              burdens on smaller issuers.
Sec. 7416. Analysis of rule regarding smaller reporting companies.
Sec. 7417. Financial Reporting Forum.
Sec. 7418. Investment advisers subject to State authorities.
Sec. 7419. Custodial requirements.
Sec. 7420. Ombudsman.

         Part 5--Securities Investor Protection Act Amendments

Sec. 7501. Increasing the minimum assessment paid by SIPC members.
Sec. 7502. Increasing the borrowing limit on treasury loans.
Sec. 7503. Increasing the cash limit of protection.
Sec. 7504. SIPC as trustee in SIPA liquidation proceedings.
Sec. 7505. Insiders ineligible for SIPC advances.
Sec. 7506. Eligibility for direct payment procedure.
Sec. 7507. Increasing the fine for prohibited acts under SIPA.
Sec. 7508. Penalty for misrepresentation of SIPC membership or 
              protection.
Sec. 7509. Futures held in a portfolio margin securities account 
              protection.
Sec. 7510. Study and report on the feasibility of risk-based 
              assessments for SIPC members.
Sec. 7511. Budgetary treatment of Commission loans to SIPC.

                 Part 6--Sarbanes-Oxley Act Amendments

Sec. 7601. Public Company Accounting Oversight Board oversight of 
              auditors of brokers and dealers.
Sec. 7602. Foreign regulatory information sharing.
Sec. 7603. Expansion of audit information to be produced and exchanged 
              with foreign counterparts.
Sec. 7604. Conforming amendment related to registration.
Sec. 7605. Fair fund amendments.
Sec. 7606. Exemption for nonaccelerated filers.
Sec. 7607. Whistleblower protection against retaliation by a subsidiary 
              of an issuer.
Sec. 7608. Congressional access to information.
Sec. 7609. Creation of ombudsman for the PCAOB.
Sec. 7610. Auditing Oversight Board.

                  Part 7--Senior Investment Protection

Sec. 7701. Findings.
Sec. 7702. Definitions.
Sec. 7703. Grants to States for enhanced protection of seniors from 
              being mislead by false designations.
Sec. 7704. Applications.
Sec. 7705. Length of participation.
Sec. 7706. Authorization of appropriations.

          Part 8--Registration of Municipal Financial Advisors

Sec. 7801. Municipal financial adviser registration requirement.
Sec. 7802. Conforming amendments.
Sec. 7803. Effective dates.

                   TITLE VI--FEDERAL INSURANCE OFFICE

Sec. 8001. Short title.
Sec. 8002. Federal Insurance Office established.
Sec. 8003. Report on global reinsurance market.
Sec. 8004. Study on modernization and improvement of insurance 
              regulation in the United States.

       TITLE VII--MORTGAGE REFORM AND ANTI-PREDATORY LENDING ACT

Sec. 9000. Short title; designation as enumerated consumer law.

      Subtitle A--Residential Mortgage Loan Origination Standards

Sec. 9001. Definitions.
Sec. 9002. Residential mortgage loan origination.
Sec. 9003. Prohibition on steering incentives.
Sec. 9004. Liability.
Sec. 9005. Regulations.
Sec. 9006. Study of shared appreciation mortgages.

              Subtitle B--Minimum Standards For Mortgages


Sec. 9101. Ability to repay.
Sec. 9102. Net tangible benefit for refinancing of residential mortgage 
              loans.
Sec. 9103. Safe harbor and rebuttable presumption.
Sec. 9104. Liability.
Sec. 9105. Defense to foreclosure.
Sec. 9106. Additional standards and requirements.
Sec. 9107. Rule of construction.
Sec. 9108. Effect on State laws.
Sec. 9109. Regulations.
Sec. 9110. Amendments to civil liability provisions.
Sec. 9111. Lender rights in the context of borrower deception.
Sec. 9112. Six-month notice required before reset of hybrid adjustable 
              rate mortgages.
Sec. 9113. Required disclosures.
Sec. 9114. Disclosures required in monthly statements for residential 
              mortgage loans.
Sec. 9115. Legal assistance for foreclosure-related issues.
Sec. 9116. Effective date.
Sec. 9117. Report by the GAO.
Sec. 9118. State Attorney General enforcement authority.

                    Subtitle C--High-Cost Mortgages

Sec. 9201. Definitions relating to high-cost mortgages.
Sec. 9202. Amendments to existing requirements for certain mortgages.
Sec. 9203. Additional requirements for certain mortgages.
Sec. 9204. Regulations.
Sec. 9205. Effective date.

                Subtitle D--Office of Housing Counseling

Sec. 9301. Short title.
Sec. 9302. Establishment of Office of Housing Counseling.
Sec. 9303. Counseling procedures.
Sec. 9304. Grants for housing counseling assistance.
Sec. 9305. Requirements to use HUD-certified counselors under HUD 
              programs
Sec. 9306. Study of defaults and foreclosures.
Sec. 9307. Default and foreclosure database.
Sec. 9308. Definitions for counseling-related programs.
Sec. 9309. Accountability and transparency for grant recipients.
Sec. 9310. Updating and simplification of mortgage information booklet.
Sec. 9311. Home inspection counseling.
Sec. 9312. Warnings to homeowners of foreclosure rescue scams.

                     Subtitle E--Mortgage Servicing

Sec. 9401. Escrow and impound accounts relating to certain consumer 
              credit transactions.
Sec. 9402. Disclosure notice required for consumers who waive escrow 
              services.
Sec. 9403. Real Estate Settlement Procedures Act of 1974 amendments.
Sec. 9404. Truth in Lending Act amendments.
Sec. 9405. Escrows included in repayment analysis.

                    Subtitle F--Appraisal Activities

Sec. 9501. Property appraisal requirements.
Sec. 9502. Unfair and deceptive practices and acts relating to certain 
              consumer credit transactions.
Sec. 9503. Amendments relating to Appraisal Subcommittee of FIEC, 
              Appraiser Independence Monitoring, Approved Appraiser 
              Education, Appraisal Management Companies, Appraiser 
              Complaint Hotline, Automated Valuation Models, and Broker 
              Price Opinions.
Sec. 9504. Study required on improvements in appraisal process and 
              compliance programs.
Sec. 9505. Equal Opportunity Act amendment.
Sec. 9506. Real Estate Settlement Procedures Act of 1974 amendment 
              relating to certain appraisal fees.

 Subtitle G--Sense of Congress Regarding the Importance of Government 
                      Sponsored Enterprises Reform

Sec. 9601. Sense of Congress regarding the importance of Government-
              sponsored enterprises reform to enhance the protection, 
              limitation, and regulation of the terms of residential 
              mortgage credit.

                          Subtitle H--Reports

Sec. 9701. GAO study report on government efforts to combat mortgage 
              foreclosure rescue scams and loan modification fraud.

              Subtitle I--Multifamily Mortgage Resolution

Sec. 9801. Multifamily mortgage resolution program.

    Subtitle J--Study of Effect of Drywall Presence on Foreclosures

Sec. 9901. Study of effect of drywall presence on foreclosures.

              TITLE I--FINANCIAL STABILITY IMPROVEMENT ACT

     SEC. 1000. SHORT TITLE; DEFINITIONS.

       (a) Short Title.--This title may be cited as the 
     ``Financial Stability Improvement Act of 2009''.
       (b) Definitions.--For purposes of this title, the following 
     definitions shall apply:
       (1) The term ``Board'' means the Board of Governors of the 
     Federal Reserve System.
       (2) The term ``Council'' means the Financial Services 
     Oversight Council established under section 1001.
       (3) The term ``Federal financial regulatory agency'' means 
     any agency that has a voting

[[Page 31063]]

     member of the Council as set forth in section 1001(b)(1).
       (4) The term ``financial company'' means a company or other 
     entity--
       (A) that is--
       (i) incorporated or organized under the laws of the United 
     States or any State, territory, or possession of the United 
     States, the District of Columbia, Commonwealth of Puerto 
     Rico, Commonwealth of Northern Mariana Islands, Guam, 
     American Samoa, or the United States Virgin Islands; or
       (ii) a company incorporated in or organized in a country 
     other than the United States that has significant operations 
     in the United States through--

       (I) a Federal or State branch or agency of a foreign bank 
     as such terms are defined in the International Banking Act of 
     1978 (12 U.S.C. 3101 et seq.); or
       (II) a United States affiliate or other United States 
     operating entity of a company that is incorporated or 
     organized in a country other than the United States;

       (B) that is, in whole or in part, directly or indirectly, 
     engaged in financial activities; and
       (C) that 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.).
       (5) Financial holding company subject to stricter 
     standards.--The term ``financial holding company subject to 
     stricter standards'' means--
       (A) a financial company that has been subjected to stricter 
     prudential standards under subtitle B; or
       (B) in the case of a financial company described in 
     subparagraph (A) that is required to establish an 
     intermediate holding company under section 6 of the Bank 
     Holding Company Act, the section 6 holding company through 
     which the financial company is required to conduct its 
     financial activities.
       (6) The term ``primary financial regulatory agency'' means 
     the following:
       (A) The Comptroller of the Currency, with respect to any 
     national bank, any Federal branch or Federal agency of a 
     foreign bank, and, after the date on which the functions of 
     the Office of Thrift Supervision and the Director of the 
     Office of Thrift Supervision are transferred under subtitle 
     C, a Federal savings association.
       (B) The Board, with respect to--
       (i) any State member bank;
       (ii) any bank holding company and any subsidiary of such 
     company (as such terms are defined in the Bank Holding 
     Company Act), other than a subsidiary that is described in 
     any other subparagraph of this paragraph to the extent that 
     the subsidiary is engaged in an activity described in such 
     subparagraph;
       (iii) any financial holding company subject to stricter 
     standards and any subsidiary (as such term is defined in the 
     Bank Holding Company Act) of such company, other than a 
     subsidiary that is described in any other subparagraph of 
     this paragraph to the extent that the subsidiary is engaged 
     in an activity described in such subparagraph;
       (iv) any organization organized and operated under section 
     25 or 25A of the Federal Reserve Act (12 U.S.C. 601 et seq. 
     or 611 et seq.); and
       (v) any foreign bank or company that is treated as a bank 
     holding company under subsection (a) of section 8 of the 
     International Banking Act of 1978 and any subsidiary (other 
     than a bank or other subsidiary that is described in any 
     other subparagraph of this paragraph) of any such foreign 
     bank or company.
       (C) The Federal Deposit Insurance Corporation, with respect 
     to a State nonmember bank, any insured State branch of a 
     foreign bank (as such terms are defined in section 3 of the 
     Federal Deposit Insurance Act), and, after the date on which 
     the functions of the Office of Thrift Supervision are 
     transferred under subtitle C, any State savings association.
       (D) 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.).
       (E) The Securities and Exchange Commission, with respect 
     to--
       (i) any broker or dealer registered with the Securities and 
     Exchange Commission under the Securities Exchange Act of 1934 
     (15 U.S.C. 78a et seq.);
       (ii) any investment company registered with the Securities 
     and Exchange Commission under the Investment Company Act of 
     1940 (15 U.S.C. 80a-1 et seq.);
       (iii) any investment adviser registered with the Securities 
     and Exchange Commission under the Investment Advisers Act of 
     1940 (15 U.S.C. 80b-1 et seq.) with respect to the investment 
     advisory activities of such company and activities incidental 
     to such advisory activities;
       (iv) any clearing agency (as defined in section 3(a)(23) of 
     the Securities Exchange Act of 1934;
       (v) any exchange registered as a national securities 
     exchange with the Securities and Exchange Commission under 
     the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.);
       (vi) any credit rating agency registered with the 
     Securities and Exchange Commission under the Securities 
     Exchange Act of 1934 (15 U.S.C. 78a et seq.);
       (vii) any securities information processor registered with 
     the Securities and Exchange Commission under the Securities 
     Exchange Act of 1934 (15 U.S.C. 78a et seq.); and
       (viii) any transfer agent registered with the Securities 
     and Exchange Commission under the Securities Exchange Act of 
     1934 (15 U.S.C. 78a et seq.).
       (F) The Commodity Futures Trading Commission, with respect 
     to--
       (i) any futures commission merchant, any commodity trading 
     adviser, any retail foreign exchange dealer and any commodity 
     pool operator registered with the Commodity Futures Trading 
     Commission under the Commodity Exchange Act (7 U.S.C. 1 et 
     seq.) with respect to the commodities activities of such 
     entity and activities incidental to such commodities 
     activities; and
       (ii) any derivatives clearing organization, designated 
     contract market, or swap execution facility (as defined in 
     the Commodity Exchange Act).
       (G) The Federal Housing Finance Agency with respect to the 
     Federal National Mortgage Association, the Federal Home Loan 
     Mortgage Corporation, and the Federal home loan banks.
       (H) The State insurance authority of the State in which an 
     insurance company is domiciled, with respect to the insurance 
     activities and activities incidental to such insurance 
     activities of an insurance company that is subject to 
     supervision by the State insurance authority under State 
     insurance law.
       (I) The Office of Thrift Supervision, with respect to any 
     Federal savings association, State savings association, or 
     savings and loan holding company, until the date on which the 
     functions of the Office of Thrift Supervision are transferred 
     under subtitle C.
       (7) Terms defined in other laws.--
       (A) Affiliate.--The term ``affiliate'' has the meaning 
     given such term in section 2(k) of the Bank Holding Company 
     Act of 1956.
       (B) State member bank, state nonmember bank.--The terms 
     ``State member bank'' and ``State nonmember bank'' have the 
     same meanings as in subsections (d)(2) and (e)(2), 
     respectively, of section 3 of the Federal Deposit Insurance 
     Act.

     SEC. 1000A. RESTRICTIONS ON THE FEDERAL RESERVE SYSTEM 
                   PENDING AUDIT REPORT.

       (a) In General.--Notwithstanding any other provision of 
     law, the Comptroller General of the United States shall 
     perform an audit of all actions taken by the Board of 
     Governors of the Federal Reserve System and the Federal 
     reserve banks during the current economic crisis pursuant to 
     the authority granted under section 13(c) of the Federal 
     Reserve Act. Such audit shall be completed as expeditiously 
     as possible after the date of the enactment of the Financial 
     Stability Improvement Act of 2009.
       (b) Report.--
       (1) Required.--Not later than the end of the 90-day period 
     beginning on the date the audit referred to in subsection (a) 
     is completed, the Comptroller General of the United States 
     shall submit a report to the Congress, and make such report 
     available to the public.
       (2) Contents.--The report under paragraph (1) shall include 
     a detailed description of the findings and conclusion of the 
     Comptroller General with respect to the audit that is the 
     subject of the report, together with such recommendations for 
     legislative or administrative action as the Comptroller 
     General may determine to be appropriate.

          Subtitle A--The Financial Services Oversight Council

     SEC. 1001. FINANCIAL SERVICES OVERSIGHT COUNCIL ESTABLISHED.

       (a) Establishment.--Immediately upon enactment of this 
     title, there is established a Financial Services Oversight 
     Council.
       (b) Membership.--The Council shall consist of the 
     following:
       (1) Voting members.--Voting members, who shall each have 
     one vote on the Council, as follows:
       (A) The Secretary of the Treasury, who shall serve as the 
     Chairman of the Council.
       (B) The Chairman of the Board of Governors of the Federal 
     Reserve System.
       (C) The Comptroller of the Currency.
       (D) The Director of the Office of Thrift Supervision, until 
     the functions of the Director of the Office of Thrift 
     Supervision are transferred to pursuant to subtitle C.
       (E) The Chairman of the Securities and Exchange Commission.
       (F) The Chairman of the Commodity Futures Trading 
     Commission.
       (G) The Chairperson of the Federal Deposit Insurance 
     Corporation.
       (H) The Director of the Federal Housing Finance Agency.
       (I) The Chairman of the National Credit Union 
     Administration.
       (2) Nonvoting members.--Nonvoting members, who shall serve 
     in an advisory capacity:
       (A) A State insurance commissioner, to be designated by a 
     selection process determined by the State insurance 
     commissioners, provided that the term for which a State 
     insurance commissioner may serve shall last no more than the 
     2-year period beginning on the date that the commissioner is 
     selected.
       (B) A State banking supervisor, to be designated by a 
     selection process determined by the State bank supervisors, 
     provided that the term for which a State banking supervisor 
     may serve shall last no more than the

[[Page 31064]]

      2-year period beginning on the date that the supervisor is 
     selected.
       (c) Duties.--The Council shall have the following duties:
       (1) To advise the Congress on financial domestic and 
     international regulatory developments, including insurance 
     and accounting developments, and make recommendations that 
     will enhance the integrity, efficiency, orderliness, 
     competitiveness, and stability of the United States financial 
     markets.
       (2) To monitor the financial services marketplace to 
     identify potential threats to the stability of the United 
     States financial system.
       (3) To identify potential threats to the stability of the 
     United States financial system that do not arise out of the 
     financial services marketplace.
       (4) To develop plans (and conduct exercises in furtherance 
     of those plans) to prepare for potential threats identified 
     under paragraphs (2) and (3).
       (5) To subject financial companies and financial activities 
     to stricter prudential standards in order to promote 
     financial stability and mitigate systemic risk in accordance 
     with subtitle B.
       (6) To issue formal recommendations that a Council member 
     agency adopt stricter prudential standards for firms it 
     regulates to mitigate systemic risk in accordance with 
     subtitle B of this title.
       (7) To monitor international regulatory developments, 
     including both insurance and accounting developments, and to 
     identify those developments that may conflict with the 
     policies of the United States or place United States 
     financial services firms or United States financial markets 
     at a competitive disadvantage.
       (8) To facilitate information sharing and coordination 
     among the members of the Council regarding financial services 
     policy development, rulemakings, examinations, reporting 
     requirements, and enforcement actions.
       (9) To provide a forum for discussion and analysis of 
     emerging market developments and financial regulatory issues 
     among its members.
       (10) At the request of an agency that is a Council member, 
     to resolve a jurisdictional dispute between that agency and 
     another agency that is a Council member in accordance with 
     section 1002.
       (11) To review and submit comments to the Securities and 
     Exchange Commission and any standards setting body with 
     respect to an existing or proposed accounting principle, 
     standard, or procedure.

     SEC. 1002. RESOLUTION OF DISPUTES AMONG FEDERAL FINANCIAL 
                   REGULATORY AGENCIES.

       (a) Request for Dispute Resolution.--The Council shall 
     resolve a dispute among 2 or more Federal financial 
     regulatory agencies if--
       (1) a Federal financial regulatory agency has a dispute 
     with another Federal financial regulatory agency about the 
     agencies' respective jurisdiction over a particular financial 
     company or financial activity or product (excluding matters 
     for which another dispute mechanism specifically has been 
     provided under Federal law);
       (2) the disputing agencies cannot, after a demonstrated 
     good faith effort, resolve the dispute among themselves; and
       (3) any of the Federal financial regulatory agencies 
     involved in the dispute--
       (A) provides all other disputants prior notice of its 
     intent to request dispute resolution by the Council; and
       (B) requests in writing, no earlier than 14 days after 
     providing the notice described in paragraph (A), that the 
     Council resolve the dispute.
       (b) Council Decision.--The Council shall decide the 
     dispute--
       (1) within a reasonable time after receiving the dispute 
     resolution request;
       (2) after consideration of relevant information provided by 
     each 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 be in writing and include an explanation and 
     shall be binding on all Federal financial regulatory agencies 
     that are parties to the dispute.

     SEC. 1003. TECHNICAL AND PROFESSIONAL ADVISORY COMMITTEES.

       The Council is authorized to appoint--
       (1) subsidiary working groups composed of Council members 
     and their staff, Council staff, or a combination; and
       (2) such temporary special advisory, technical, or 
     professional committees as may be useful in carrying out its 
     functions, which may be composed of Council members and their 
     staff, other persons, or a combination.

     SEC. 1004. FINANCIAL SERVICES OVERSIGHT COUNCIL MEETINGS AND 
                   COUNCIL GOVERNANCE.

       (a) Meetings.--The Council shall meet as frequently as the 
     Chairman deems necessary, but not less than quarterly.
       (b) Voting.--Unless otherwise provided, the Council shall 
     make all decisions the Council is required or authorized to 
     make by a majority of the total voting membership of the 
     Council under section 1001(b)(1).

     SEC. 1005. COUNCIL STAFF AND FUNDING.

       (a) Department of the Treasury.--The Secretary of the 
     Treasury shall--
       (1) detail permanent staff from the Department of the 
     Treasury to provide the Council (and any temporary special 
     advisory, technical, or professional committees appointed by 
     the Council) with professional and expert support; and
       (2) provide such other services and facilities necessary 
     for the performance of the Council's functions and 
     fulfillment of the duties and mission of the Council.
       (b) Other Departments and Agencies.--In addition to the 
     assistance prescribed in subsection (a), departments and 
     agencies of the United States may, with the approval of the 
     Secretary of the Treasury--
       (1) detail department or agency staff on a temporary basis 
     to provide additional support to the Council (and any special 
     advisory, technical, or professional committees appointed by 
     the Council); and
       (2) provide such services, and facilities as the other 
     departments or agencies may determine advisable.
       (c) Staff Status; Council Funding.--
       (1) Status.--Staff detailed to the Council by the Secretary 
     of the Treasury and other United States departments or 
     agencies shall--
       (A) report to and be subject to oversight by the Council 
     during their assignment to the Council; and
       (B) be compensated by the department of agency from which 
     the staff was detailed.
       (2) Funding.--The administrative expense of the Council 
     shall be paid by the departments and agencies represented by 
     voting members of the Council on an equal basis.

     SEC. 1006. REPORTS TO THE CONGRESS.

       (a) In General.--Semiannually the Council shall submit a 
     report to the Committee on Ways and Means, the Committee on 
     Agriculture, and the Committee on Financial Services of the 
     House of Representativesand the Committee on Finance, the 
     Committee on Agriculture, and the Committee on Banking, 
     Housing, and Urban Affairs of the Senate, and the Comptroller 
     General of the United States that--
       (1) describes significant financial and regulatory 
     developments, including insurance and accounting regulations 
     and standards, and assesses the impact of those developments 
     on the stability of the financial system;
       (2) recommends actions that will improve financial 
     stability;
       (3) details the size, scale, scope, concentration, 
     activities, and interconnectedness of the 50 largest 
     financial institutions, by total assets, in the United 
     States;
       (4) describes plans developed by the Council to respond to 
     potential threats to the stability of the United States 
     financial system and the outcome of exercises conducted in 
     furtherance of those plans;
       (5) describes the nature and scope of any company or 
     activities identified under subtitle B and steps taken to 
     address them; and
       (6) describes any dispute resolutions undertaken under 
     section 1002 and the result of such resolutions.
       (b) Evaluation of Annual Report by GAO.--Not later than 120 
     days after receiving the report required by subsection (a), 
     the Comptroller General of the United States shall submit an 
     evaluation of such report to the Committee on Ways and Means, 
     the Committee on Agriculture, and the Committee on Financial 
     Services of the House of Representatives and the Committee on 
     Finance, the Committee on Agriculture, and the Committee on 
     Banking, Housing, and Urban Affairs of the Senate.
       (c) Statements by Voting Members of the Council.--At the 
     time each report is submitted under subsection (a), each 
     voting member of the Council shall--
       (1) if such member believes that the Council, the 
     Government, and the private sector are taking all reasonable 
     steps to ensure financial stability and to prevent systemic 
     risk that would negatively affect the economy, submit a 
     signed statement to the Committee on Ways and Means, the 
     Committee on Agriculture, and the Committee on Financial 
     Services of the House of Representatives and the Committee on 
     Finance, the Committee on Agriculture, and the Committee on 
     Banking, Housing, and Urban Affairs of the Senate stating 
     such belief; or
       (2) if such member does not believe that all reasonable 
     steps described under paragraph (1) are being taken, submit a 
     signed statement to the Committee on Ways and Means, the 
     Committee on Agriculture, and the Committee on Financial 
     Services of the House of Representatives and the Committee on 
     Finance, the Committee on Agriculture, and the Committee on 
     Banking, Housing, and Urban Affairs of the Senate stating 
     what actions such member believes need to be taken in order 
     to ensure that all reasonable steps described under paragraph 
     (1) are taken.
       (d) Testimony by the Chairman.--The Chairman of the Council 
     shall appear before the Committee on Financial Services of 
     the House of Representatives and the Committee on Banking, 
     Housing, and Urban Affairs of the Senate at a semi-annual 
     hearing, after the report is submitted under subsection (a)--
       (1) to discuss the efforts, activities, objectives, and 
     plans of the Council; and
       (2) to discuss and answer questions concerning such report.

[[Page 31065]]



     SEC. 1007. APPLICABILITY OF CERTAIN FEDERAL LAWS.

       (a) The Federal Advisory Committee Act shall not apply to 
     the Financial Services Oversight Council, or any special 
     advisory, technical, or professional committees 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).
       (b) The Council shall not be deemed an ``agency'' for 
     purposes of any State or Federal law.

     SEC. 1008. OVERSIGHT BY GAO.

       (a) Authority to Audit.--The Comptroller General of the 
     United States may audit the activities and financial 
     transactions of--
       (1) the Council; and
       (2) any person or entity acting on behalf of or under the 
     authority of the Council, to the extent such activities and 
     financial transactions relate to such person's or entity's 
     work for the Council.
       (b) Access to Information.--
       (1) In general.--Notwithstanding any other provision of 
     law, the Comptroller General of the United States shall have 
     access, upon request and at such reasonable time and in such 
     reasonable form as the Comptroller General may request, to--
       (A) any records or other information under the control of 
     the Council; and
       (B) any records or other information under the control of a 
     person or entity acting on behalf of or under the authority 
     of the Council, to the extent such records or other 
     information is relevant to an audit under subsection (a).
       (2) Certain information specified.--Access under paragraph 
     (1) includes access to--
       (A) information provided to the Council by its voting and 
     nonvoting members under section 1101; and
       (B) the identity of each financial holding company subject 
     to stricter standards.
       (c) Periodic Evaluations.--The Comptroller General of the 
     United States shall periodically evaluate the processes and 
     activities of the Council and the extent to which the Council 
     is fulfilling its duties under this title. The Comptroller 
     General shall submit to the Committee on Financial Services 
     of the House of Representatives and the Committee on Banking, 
     Housing, and Urban Affairs of the Senate a report on the 
     results of each such evaluation.
       (d) Confidentiality.--Any committees or Members of Congress 
     receiving reports or other information from the Comptroller 
     General of the United States shall maintain the 
     confidentiality of any such information relating to--
       (1) dispute resolutions undertaken under section 1002, 
     including the result of such dispute resolutions; and
       (2) financial holding companies subject to stricter 
     standards.

   Subtitle B--Prudential Regulation of Companies and Activities for 
                      Financial Stability Purposes

     SEC. 1101. COUNCIL AND BOARD AUTHORITY TO OBTAIN INFORMATION.

       (a) In General.--The Council and the Board are authorized 
     to receive, and may request the production of, any data or 
     information from members of the Council, as necessary--
       (1) to monitor the financial services marketplace to 
     identify potential threats to the stability of the United 
     States financial system;
       (2) to identify global trends and developments that could 
     pose systemic risks to the stability of the economy of the 
     United States or other economies; or
       (3) to otherwise carry out any of the provisions of this 
     title, including to ascertain a primary financial regulatory 
     agency's implementation of recommended prudential standards 
     under this subtitle.
       (b) Submission by Council Members.--Notwithstanding any 
     provision of law, any voting or nonvoting member of the 
     Council is authorized to provide information to the Council, 
     and the members of the Council shall maintain the 
     confidentiality of such information.
       (c) Financial Company Data Collection.--
       (1) In general.--The Council or the Board may require the 
     submission of periodic and other reports from any financial 
     company solely for the purpose of assessing the extent to 
     which a financial activity or financial market in which the 
     financial company participates, or the company itself, poses 
     a threat to financial stability.
       (2) Mitigation of report burden.--Before requiring the 
     submission of reports from financial companies that are 
     regulated by the primary financial regulatory agencies, the 
     Council or the Board shall coordinate with such agencies and 
     shall, whenever possible, rely on information already being 
     collected by such agencies.
       (d) Consultation With Agencies and Entities.--The Council 
     or the Board, as appropriate, may consult with Federal and 
     State agencies and other entities to carry out any of the 
     provisions of this subtitle.
       (e) Additional Provisions.--
       (1) Data and information sharing.--The Chairman of the 
     Council, in consultation with the other members of the 
     Council may--
       (A) establish procedures to share data and information 
     collected by the Council under this section with the members 
     of the Council;
       (B) develop an electronic process for sharing all 
     information collected by the Council with the Chairman of the 
     Board on a real-time basis; and
       (C) issue any regulations necessary to carry out this 
     subsection; and
       (D) designate the format in which requested data and 
     information must be submitted to the Council, including any 
     electronic, digital, or other format that facilitates the use 
     of such data by the Council in its analysis.
       (2) Applicable privileges not waived.--A Federal financial 
     regulator, State financial regulator, United States financial 
     company, foreign financial company operating in the United 
     States, financial market utility, or other person shall not 
     be deemed to have waived any privilege otherwise applicable 
     to any data or information by transferring the data or 
     information to, or permitting that data or information to be 
     used by--
       (A) the Council;
       (B) any Federal financial regulator or State financial 
     regulator, in any capacity; or
       (C) any other agency of the Federal Government (as defined 
     in section 6 of title 18, United States Code).
       (3) Disclosure exemption.--Any information obtained by the 
     Council under this section shall be exempt from the 
     disclosure requirements under section 552 of title 5, United 
     States Code.
       (4) Consultation with foreign governments.--Under the 
     supervision of the President, and in a manner consistent with 
     section 207 of the Foreign Service Act of 1980 (22 U.S.C. 
     3927), the Chairman of the Council, in consultation with the 
     other members of the Council, shall regularly consult with 
     the financial regulatory entities and other appropriate 
     organizations of foreign governments or international 
     organizations on matters relating to systemic risk to the 
     international financial system.
       (5) Report.--Not later than 6 months after the date of the 
     enactment of this title, the Chairman of the Council shall 
     report to the Financial Services Committee of the House of 
     Representatives and the Banking, Housing, and Urban Affairs 
     Committee of the Senate the opinion of the Council as to 
     whether setting up an electronic database as described in 
     paragraph (1)(B) would aid the Council in carrying out this 
     section.

     SEC. 1102. COUNCIL PRUDENTIAL REGULATION RECOMMENDATIONS TO 
                   FEDERAL FINANCIAL REGULATORY AGENCIES.

       (a) In General.--The Council is authorized to issue formal 
     recommendations, publicly or privately, that a Federal 
     financial regulatory agency adopt stricter prudential 
     standards for firms it regulates to mitigate systemic risk.
       (b) Agency Authority to Implement Standards.--A Federal 
     financial regulatory agency specifically is authorized to 
     impose, require reports regarding, examine for compliance 
     with, and enforce stricter prudential standards and 
     safeguards for the firms it regulates to mitigate systemic 
     risk. This authority is in addition to and does not limit any 
     other authority of the Federal financial regulatory agencies. 
     Compliance by an entity with actions taken by a Federal 
     financial regulatory agency under this section shall be 
     enforceable in accordance with the statutes governing the 
     respective Federal financial regulatory agency's jurisdiction 
     over the entity as if the agency action were taken under 
     those statutes.
       (c) Agency Notice to Council.--A Federal financial 
     regulatory agency shall, within 60 days of receiving a 
     Council recommendation under this section, notify the Council 
     in writing regarding--
       (1) the actions the Federal financial regulatory agency has 
     taken in response to the Council's recommendation, additional 
     actions contemplated, and timetables therefore; or
       (2) the reason the Federal financial regulatory agency has 
     failed to respond to the Council's request.

     SEC. 1103. SUBJECTING FINANCIAL COMPANIES TO STRICTER 
                   PRUDENTIAL STANDARDS FOR FINANCIAL STABILITY 
                   PURPOSES.

       (a) In General.--The Council shall, in consultation with 
     the Board and any other primary financial regulatory agency 
     that regulates the financial company or a subsidiary of such 
     company, subject a financial company to stricter prudential 
     standards under this subtitle if the Council determines 
     that--
       (1) material financial distress at the company could pose a 
     threat to financial stability or the economy; or
       (2) the nature, scope, size, scale, concentration, and 
     interconnectedness, or mix of the company's activities could 
     pose a threat to financial stability or the economy.
       (b) Criteria.--In making a determination under subsection 
     (a), the Council shall consider the following criteria:
       (1) The amount and nature of the company's financial 
     assets.
       (2) The amount and nature of the company's liabilities, 
     including the degree of reliance on short-term funding.
       (3) The extent of the company's leverage.

[[Page 31066]]

       (4) The extent and nature of the company's off-balance 
     sheet exposures.
       (5) The extent and nature of the company's transactions and 
     relationships with other financial companies.
       (6) The company's importance as a source of credit for 
     households, businesses, and State and local governments and 
     as a source of liquidity for the financial system.
       (7) The nature, scope, and mix of the company's activities.
       (8) The degree to which the company is already regulated by 
     one or more Federal financial regulatory agencies.
       (9) Any other factors that the Council deems appropriate.
       (c) Notification of Decision.--The Board, in an executive 
     capacity on behalf of the Council, shall immediately upon the 
     Council's decision notify the financial company by order, 
     which shall be public, that the financial company is subject 
     to stricter prudential standards, as prescribed by the Board 
     in accordance with section 1104.
       (d) Periodic Review and Rescission of Findings.--
       (1) Submission of assessment.--The Board shall periodically 
     submit a report to the Council containing an assessment of 
     whether each company subjected to stricter prudential 
     standards should continue to be subject to such standards.
       (2) Review and rescission.--The Council shall--
       (A) review the assessment submitted pursuant to paragraph 
     (1) and any information or recommendation submitted by 
     members of the Council regarding whether a financial holding 
     company subject to stricter standards continues to merit 
     stricter prudential standards; and
       (B) rescind the action subjecting a company to stricter 
     prudential standards if the Council determines that the 
     company no longer meets the conditions for being subjected to 
     stricter prudential standards in subsections (a) and (b).
       (e) Emergency Exception to Majority Vote of Council 
     Requirement.--If each of the Secretary of the Treasury, the 
     Board, and the Federal Deposit Insurance Corporation 
     determines that a financial company must be subjected to 
     stricter prudential standards in accordance with this section 
     immediately to prevent destabilization of the financial 
     system or economy, the Secretary, the Board, and the 
     Corporation may, upon approval by the President, subject such 
     company to stricter prudential standards under this section.
       (f) Appeal.--
       (1) Administrative.--The Council and the Board, in an 
     executive capacity on behalf of the Council, shall establish 
     a procedure through which a financial company that has been 
     subjected to stricter prudential standards in accordance with 
     this section may appeal being subjected to stricter 
     prudential standards.
       (2) Judicial review.--Any financial company which has been 
     subjected to stricter prudential standards may seek judicial 
     review by filing a petition for such review in the United 
     States Court of Appeals for the District of Columbia.
       (g) Effect of Council Decision.--
       (1) Application of the bank holding company act.--A 
     financial company that is not a bank holding company as 
     defined in the Bank Holding Company Act at the time the 
     financial company is subjected to stricter prudential 
     standards in accordance with this section, shall--
       (A) if such company conducts at the time such company is 
     subjected to stricter prudential standards in accordance with 
     this section only activities that are determined to be 
     financial in nature or incidental thereto under section 4(k) 
     of the Bank Holding Company Act of 1956, be treated as a bank 
     holding company that has elected to be a financial holding 
     company for purposes of the Bank Holding Company Act of 1956, 
     the Federal Deposit Insurance Act, and all other Federal laws 
     and regulations governing bank holding companies and 
     financial holding companies and be the financial holding 
     company subject to stricter standards for purposes of this 
     subtitle; or
       (B) if such company conducts at the time that such company 
     is subjected to stricter prudential standards in accordance 
     with this section 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, be 
     required to establish and conduct all its activities that are 
     determined to be financial in nature or incidental thereto 
     under section 4(k) of the Bank Holding Company Act of 1956 in 
     an intermediate holding company established under section 6 
     of the Bank Holding Company Act of 1956, which intermediate 
     holding company shall be treated as a bank holding company 
     that has elected to be a financial holding company for 
     purposes of the Bank Holding Company Act of 1956, the Federal 
     Deposit Insurance Act, and all other Federal laws and 
     regulations governing bank holding companies and financial 
     holding companies, and such section 6 holding company shall 
     be a financial holding company subject to stricter standards 
     for purposes of this title.
       (2) Exemptive authority.--Notwithstanding any provision of 
     the Bank Holding Company Act of 1956, the Board may, if it 
     determines such action is necessary to ensure appropriate 
     stricter prudential supervision, issue such exemptions from 
     that Act as may be necessary with regard to financial holding 
     companies subject to stricter standards that do not control 
     an insured depository institution.
       (3) Leverage limitation.--The Board shall require each 
     financial holding company subject to stricter standards to 
     maintain a debt to equity ratio of no more than 15 to 1, and 
     the Board shall issue regulations containing procedures and 
     timelines for how a financial holding company subject to 
     stricter standards with a debt to equity ratio of more than 
     15 to 1 at the time such company becomes a financial holding 
     company subject to stricter standards shall reduce such 
     ratio.

     SEC. 1104. STRICTER PRUDENTIAL STANDARDS FOR CERTAIN 
                   FINANCIAL HOLDING COMPANIES FOR FINANCIAL 
                   STABILITY PURPOSES.

       (a) Stricter Prudential Standards.--
       (1) In general.--To mitigate risks to financial stability 
     and the economy posed by a financial holding company that has 
     been subjected to stricter prudential standards in accordance 
     with section 1103, the Board shall impose stricter prudential 
     standards on such company. Such standards shall be designed 
     to maximize financial stability taking costs to long-term 
     financial and economic growth into account, be heightened 
     when compared to the standards that otherwise would apply to 
     financial holding companies that are not subjected to 
     stricter prudential standards pursuant to this subtitle 
     (including by addressing additional or different types of 
     risks than otherwise applicable standards), and reflect the 
     potential risk posed to financial stability by the financial 
     holding company subject to stricter standards.
       (2) Standards.--
       (A) Required standards.--The heightened standards imposed 
     by the Board under this section shall include--
       (i) risk-based capital requirements;
       (ii) leverage limits;
       (iii) liquidity requirements;
       (iv) concentration requirements (as specified in subsection 
     (c));
       (v) prompt corrective action requirements (as specified in 
     subsection (e));
       (vi) resolution plan requirements (as specified in 
     subsection (f));
       (vii) overall risk management requirements; and
       (viii) and may establish short-term debt limits in 
     accordance with subsection (d).
       (B) Additional standards.--The heightened standards imposed 
     by the Board under this section also may include any other 
     prudential standards that the Board deems advisable, 
     including taking actions to mitigate systemic risk.
       (C) Consultation with federal financial regulatory 
     agencies.--The Board, in developing stricter prudential 
     standards under this subsection, shall consult with other 
     Federal financial regulatory agencies with respect to any 
     standard that is likely to have a significant impact on a 
     functionally regulated subsidiary, or a subsidiary depository 
     institution, of a financial holding company that is subject 
     to stricter prudential standards under this title.
       (3) Application of required standards.--In imposing 
     prudential standards under this subsection, the Board may 
     differentiate among financial holding companies subject to 
     stricter standards on an individual basis or by category, 
     taking into consideration their capital structure, risk, 
     complexity, financial activities, the financial activities of 
     their subsidiaries, and any other factors that the Board 
     deems appropriate.
       (4) Well capitalized and well managed.--A financial holding 
     company subject to stricter standards shall at all times 
     after it is subject to such standards be well capitalized and 
     well managed as defined by the Board.
       (5) Application to foreign financial companies.--The Board 
     shall prescribe regulations regarding the application of 
     stricter prudential standards to financial companies that are 
     organized or incorporated in a country other than the United 
     States, and that own or control a Federal or State branch, 
     subsidiary, or operating entity that is a financial holding 
     company subject to stricter standards, giving due regard to 
     the principle of national treatment and equality of 
     competitive opportunity and taking into account the extent to 
     which such companies are subject to home country standards 
     comparable to those applied to financial holding companies in 
     the United States.
       (6) Inclusion of off balance sheet activities in computing 
     capital requirements.--
       (A) In general.--In the case of any financial holding 
     company subject to stricter standards, the computation of 
     capital requirements shall take into account off balance 
     sheet activities for such a company.
       (B) Exemption.--If the Board determines that an exemption 
     from the requirements under subparagraph (A) is appropriate, 
     the Board may exempt a financial holding company subject to 
     stricter standards from the requirements under subparagraph 
     (A) or any transaction or transactions engaged in by such a 
     company.
       (C) Off balance sheet activities defined.--For purposes of 
     this paragraph, the term ``off balance sheet activities'' 
     means a liability that is not currently a balance

[[Page 31067]]

     sheet liability but may become one upon the happening of some 
     future event, including the following transactions, to the 
     extent they may create a liability:
       (i) Direct credit substitutes in which a bank substitutes 
     its own credit for a third party, including standby letters 
     of credit.
       (ii) Irrevocable letters of credit that guarantee repayment 
     of commercial paper or tax-exempt securities.
       (iii) Risk participation in bankers' acceptances.
       (iv) Sale and repurchase agreements.
       (v) Asset sales with recourse against the seller.
       (vi) Interest rate swaps.
       (vii) Credit swaps.
       (viii) Commodity contracts.
       (ix) Forward contracts.
       (x) Securities contracts.
       (xi) Such other activities or transactions as the Board 
     may, by rule, define.
       (b) Prudential Standards at Functionally Regulated 
     Subsidiaries and Subsidiary Depository Institutions.--
       (1) Board authority to recommend standards.--With respect 
     to a functionally regulated subsidiary (as such term is 
     defined in section 5 of the Bank Holding Company Act) or a 
     subsidiary depository institution of a financial holding 
     company subject to stricter standards, the Board may 
     recommend that the relevant Federal financial regulatory 
     agency for such functionally regulated subsidiary or 
     subsidiary depository institution prescribe stricter 
     prudential standards on such functionally regulated 
     subsidiary or subsidiary depository institution. Any 
     standards recommended by the Board under this section shall 
     be of the same type as those described in subsection (a)(2) 
     that the Board is required or authorized to impose directly 
     on the financial holding company subject to stricter 
     standards.
       (2) Agency authority to implement heightened standards and 
     safeguards.--Each Federal financial regulatory agency that 
     receives a Board recommendation under paragraph (1) is 
     authorized to impose, require reports regarding, examine for 
     compliance with, and enforce standards under this subsection 
     with respect to the entities such agency regulates, as such 
     entities are described in section 1006(b)(6). This authority 
     is in addition to and does not limit any other authority of 
     the Federal financial regulatory agencies. Compliance by an 
     entity with actions taken by a Federal financial regulatory 
     agency under this section shall be enforceable in accordance 
     with the statutes governing the respective agency's 
     jurisdiction over the entity as if the agency action were 
     taken under those statutes.
       (3) Imposition of standards.--Standards imposed by a 
     Federal financial regulatory agency under this subsection 
     shall be the standards recommended by the Board in accordance 
     with paragraph (1) or any other similar standards that the 
     Board deems acceptable after consultation between the Board 
     and the primary financial regulatory agency.
       (4) Federal financial regulatory agency response; notice to 
     council and board.--A Federal financial regulatory agency 
     shall notify the Council and the Board in writing on whether 
     and to what extent the agency has imposed the stricter 
     prudential standards described in paragraph (3) within 60 
     days of the Board's recommendation under paragraph (1). A 
     Federal financial regulatory agency that fails to impose such 
     standards shall provide specific justification for such 
     failure to act in the written notice from the agency to the 
     Council and Board.
       (c) Concentration Limits for Financial Holding Companies 
     Subject to Stricter Standards.--
       (1) Standards.--In order to limit the risks that the 
     failure of any company could pose to a financial holding 
     company subject to stricter standards and to the stability of 
     the United States financial system, the Board, by regulation, 
     shall prescribe standards that limit the risks posed by the 
     exposure of a financial holding company subject to stricter 
     standards to any other company.
       (2) Limitation on credit exposure.--The regulations 
     prescribed by the Board shall prohibit each financial holding 
     company subject to stricter standards from having credit 
     exposure to any unaffiliated company that exceeds 25 percent 
     of capital stock and surplus of the financial holding company 
     subject to stricter standards, or such lower amount as the 
     Board may determine by regulation to be necessary to mitigate 
     risks to financial stability.
       (3) Credit exposure.--For purposes of this subsection and 
     with respect to a financial holding company subject to 
     stricter standards, the term ``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 
     agreement with the company;
       (C) all securities borrowing and lending transactions with 
     the company to the extent that such transactions create 
     credit exposure of the financial holding company subject to 
     stricter standards to the company;
       (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 
     financial holding company subject to stricter standards and 
     the company; and
       (G) any other similar transactions that the Board 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 financial holding company subject to 
     stricter standards with any person is deemed 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 may issue such regulations and 
     orders, including definitions consistent with this 
     subsection, as may be necessary to administer and carry out 
     the purpose of this subsection.
       (6) Exemptions.--
       (A) In general.--
       (i) Federal home loan banks.--This subsection shall not 
     apply to any Federal home loan bank, but Federal home loan 
     banks are not exempt from any other provision of this title.
       (ii) Applicability to other entities.--The Federal National 
     Mortgage Association and the Federal Home Loan Mortgage 
     Corporation are not exempt from any provision of this title.
       (B) Regulations.--The Board may, by regulation or order, 
     exempt transactions, in whole or in part, from the definition 
     of credit exposure if it finds that the exemption is in the 
     public interest and consistent with the purpose of this 
     subsection.
       (7) Transition period.--This subsection and any regulations 
     and orders of the Board under the authority of this 
     subsection shall not take effect until the date that is 3 
     years from the date of the enactment of this subsection. The 
     Board may extend the effective date for up to 2 additional 
     years to promote financial stability.
       (d) Short-term Debt Limits for Certain Financial Holding 
     Companies.--
       (1) In general.--In order to limit the risks that an 
     overaccumulation of short-term debt could pose to financial 
     holding companies and to the stability of the United States 
     financial system, the Board shall by regulation prescribe a 
     limit on the amount of short-term debt, including off-balance 
     sheet exposures, that may be accumulated by any financial 
     holding company subject to stricter standards for purposes of 
     this title.
       (2) Basis of limit.--The limit prescribed under paragraph 
     (1) shall be based on a financial holding company's short-
     term debt as a percentage of its capital stock and surplus or 
     on such other measure as the Board considers appropriate.
       (3) Short-term debt defined.--For purposes of this 
     subsection, the term ``short-term debt'' means such 
     liabilities with short-dated maturity that the Board 
     identifies by regulation, except that such term does not 
     include insured deposits.
       (4) Rulemaking authority.--In addition to prescribing 
     regulations under paragraphs (1) and (3), the Board may 
     prescribe such regulations, including definitions consistent 
     with this subsection, and issue such orders as may be 
     necessary to carry out this subsection.
       (5) Authority to issue exemptions and adjustments.--
     Notwithstanding the Bank Holding Company Act of 1956 (12 
     U.S.C. 1841 et seq.), the Board may, if it determines such 
     action is necessary to ensure appropriate heightened 
     prudential supervision, with respect to a financial holding 
     company that does not control an insured depository 
     institution, issue to such company an exemption from or 
     adjustment to the limit prescribed under paragraph (1).
       (6) Transition period.--This subsection and any regulation 
     or order of the Board under this subsection shall take effect 
     3 years after the date of the enactment of this title. The 
     Board may postpone the date when this subsection takes effect 
     by not more than 2 years in order to promote financial 
     stability.
       (e) Prompt Corrective Action for Financial Holding 
     Companies Subject to Stricter Standards.--
       (1) Prompt corrective action required.--The Board shall 
     take prompt corrective action to resolve the problems of 
     financial holding companies subject to stricter standards. 
     Except as specifically provided otherwise, this subsection 
     shall apply only to financial holding companies that are 
     incorporated or organized under United States laws.
       (2) Definitions.--For purposes of this section--
       (A) Capital categories.--
       (i) Well capitalized.--A financial holding company subject 
     to stricter standards is ``well capitalized'' if it exceeds 
     the required minimum level for each relevant capital measure.
       (ii) Undercapitalized.--A financial holding company subject 
     to stricter standards is ``undercapitalized'' if it fails to 
     meet the required minimum level for any relevant capital 
     measure.
       (iii) Significantly undercapitalized.--A financial holding 
     company subject to stricter standards is ``significantly 
     undercapitalized'' if it is significantly below the required 
     minimum level for any relevant capital measure.

[[Page 31068]]

       (iv) Critically undercapitalized.--A financial holding 
     company subject to stricter standards is ``critically 
     undercapitalized'' if it fails to meet any level specified in 
     paragraph (4)(C)(i).
       (3) Other definitions.--
       (A) Average.--The ``average'' of an accounting item (such 
     as total assets or tangible equity) during a given period 
     means the sum of that item at the close of business on each 
     business day during that period divided by the total number 
     of business days in that period.
       (B) Capital distribution.--The term ``capital 
     distribution'' means--
       (i) a distribution of cash or other property by a financial 
     holding company subject to stricter standards to its owners 
     made on account of that ownership, but not including any 
     dividend consisting only of shares of the financial holding 
     company subject to stricter standards or rights to purchase 
     such shares;
       (ii) a payment by a financial holding company subject to 
     stricter standards to repurchase, redeem, retire, or 
     otherwise acquire any of its shares or other ownership 
     interests, including any extension of credit to finance any 
     person's acquisition of those shares or interests; and
       (iii) a transaction that the Board determines, by order or 
     regulation, to be in substance a distribution of capital to 
     the owners of the financial holding company subject to 
     stricter standards.
       (C) Capital restoration plan.--The term ``capital 
     restoration plan'' means a plan submitted under paragraph 
     (6)(B).
       (D) Compensation.--The term ``compensation'' includes any 
     payment of money or provision of any other thing of value in 
     consideration of employment.
       (E) Relevant capital measure.--The term ``relevant capital 
     measure'' means the measures described in paragraph (4).
       (F) Required minimum level.--The term ``required minimum 
     level'' means, with respect to each relevant capital measure, 
     the minimum acceptable capital level specified by the Board 
     by regulation.
       (G) Senior executive officer.--The term ``senior executive 
     officer'' has the same meaning as the term ``executive 
     officer'' in section 22(h) of the Federal Reserve Act (12 
     U.S.C. 375b).
       (4) Capital standards.--
       (A) Relevant capital measures.--
       (i) In general.--Except as provided in clause (ii)(II), the 
     capital standards prescribed by the Board under section 
     1104(a)(2) shall include--

       (I) a leverage limit; and
       (II) a risk-based capital requirement.

       (ii) Other capital measures.--The Board may by regulation--

       (I) establish any additional relevant capital measures to 
     carry out this section; or
       (II) rescind any relevant capital measure required under 
     clause (i) upon determining that the measure is no longer an 
     appropriate means for carrying out this section.

       (B) Capital categories generally.--The Board shall, by 
     regulation, specify for each relevant capital measure the 
     levels at which a financial holding company subject to 
     stricter standards is well capitalized, undercapitalized, and 
     significantly undercapitalized.
       (C) Critical capital.--
       (i) Board to specify level.--

       (I) Leverage limit.--The Board shall, by regulation, 
     specify the ratio of tangible equity to total assets at which 
     a financial holding company subject to stricter standards is 
     critically undercapitalized.
       (II) Other relevant capital measures.--The Board may, by 
     regulation, specify for 1 or more other relevant capital 
     measures, the level at which a financial holding company 
     subject to stricter standards is critically undercapitalized.

       (ii) Leverage limit range.--The level specified under 
     clause (i)(I) shall require tangible equity in an amount--

       (I) not less than 2 percent of total assets; and
       (II) except as provided in subclause (I), not more than 65 
     percent of the required minimum level of capital under the 
     leverage limit.

       (5) Capital distributions restricted.--
       (A) In general.--A financial holding company subject to 
     stricter standards shall make no capital distribution if, 
     after making the distribution, the financial holding company 
     subject to stricter standards would be undercapitalized.
       (B) Exception.--Notwithstanding subparagraph (A), the Board 
     may permit a financial holding company subject to stricter 
     standards to repurchase, redeem, retire, or otherwise acquire 
     shares or ownership interests if the repurchase, redemption, 
     retirement, or other acquisition--
       (i) is made in connection with the issuance of additional 
     shares or obligations of the financial holding company 
     subject to stricter standards in at least an equivalent 
     amount; and
       (ii) will reduce the financial obligations of the financial 
     holding company subject to stricter standards or otherwise 
     improve the financial condition of the financial holding 
     company subject to stricter standards.
       (6) Provisions applicable to undercapitalized financial 
     holding company subject to stricter standards.--
       (A) Monitoring required.--The Board shall--
       (i) closely monitor the condition of any undercapitalized 
     financial holding company subject to stricter standards;
       (ii) closely monitor compliance by any undercapitalized 
     financial holding company subject to stricter standards with 
     capital restoration plans, restrictions, and requirements 
     imposed under this section; and
       (iii) periodically review the plan, restrictions, and 
     requirements applicable to any undercapitalized financial 
     holding company subject to stricter standards to determine 
     whether the plan, restrictions, and requirements are 
     effective.
       (B) Capital restoration plan required.--
       (i) In general.--Any undercapitalized financial holding 
     company subject to stricter standards shall submit an 
     acceptable capital restoration plan to the Board within the 
     time allowed by the Board under clause (iv).
       (ii) Contents of plan.--The capital restoration plan 
     shall--

       (I) specify--

       (aa) the steps the financial holding company subject to 
     stricter standards will take to become well capitalized;
       (bb) the levels of capital to be attained by the financial 
     holding company subject to stricter standards during each 
     year in which the plan will be in effect;
       (cc) how the financial holding company subject to stricter 
     standards will comply with the restrictions or requirements 
     then in effect under this section; and
       (dd) the types and levels of activities in which the 
     financial holding company subject to stricter standards will 
     engage; and

       (II) contain such other information that the Board may 
     require.

       (iii) Criteria for accepting plan.--The Board shall not 
     accept a capital restoration plan unless it determines that 
     the plan--

       (I) complies with clause (ii);
       (II) is based on realistic assumptions, and is likely to 
     succeed in restoring the capital of the financial holding 
     company subject to stricter standards; and
       (III) would not appreciably increase the risk (including 
     credit risk, interest-rate risk, and other types of risk) to 
     which the financial holding company subject to stricter 
     standards is exposed.

       (iv) Deadlines for submission and review of plans.--The 
     Board shall, by regulation, establish deadlines that--

       (I) provide financial holding companies subject to stricter 
     standards with reasonable time to submit capital restoration 
     plans, and generally require a financial holding company 
     subject to stricter standards to submit a plan not later than 
     45 days after it becomes undercapitalized; and
       (II) require the Board to act on capital restoration plans 
     expeditiously, and generally not later than 60 days after the 
     plan is submitted.

       (C) Asset growth restricted.--An undercapitalized financial 
     holding company subject to stricter standards shall not 
     permit its average total assets during any calendar quarter 
     to exceed its average total assets during the preceding 
     calendar quarter unless--
       (i) the Board has accepted the capital restoration plan of 
     the financial holding company subject to stricter standards;
       (ii) any increase in total assets is consistent with the 
     plan; and
       (iii) the ratio of tangible equity to total assets of the 
     financial holding company subject to stricter standards 
     increases during the calendar quarter at a rate sufficient to 
     enable it to become well capitalized within a reasonable 
     time.
       (D) Prior approval required for acquisitions and new lines 
     of business.--An undercapitalized financial holding company 
     subject to stricter standards shall not, directly or 
     indirectly, acquire any interest in any company or insured 
     depository institution, or engage in any new line of 
     business, unless--
       (i) the Board has accepted the capital restoration plan of 
     the financial holding company subject to stricter standards, 
     the financial holding company subject to stricter standards 
     is implementing the plan, and the Board determines that the 
     proposed action is consistent with and will further the 
     achievement of the plan;
       (ii) the Board determines that the specific proposed action 
     is appropriate; or
       (iii) the Board has exempted the financial holding company 
     subject to stricter standards from the requirements of this 
     paragraph with respect to the class of acquisitions that 
     includes the proposed action.
       (E) Discretionary safeguards.--The Board may, with respect 
     to any undercapitalized financial holding company subject to 
     stricter standards, take actions described in any clause of 
     paragraph (7)(B) if the Board determines that those actions 
     are necessary.
       (7) Provisions applicable to significantly undercapitalized 
     financial holding companies subject to stricter standards and 
     undercapitalized financial holding companies subject to 
     stricter standards that fail to submit and implement capital 
     restoration plans.--
       (A) In general.--This paragraph shall apply with respect to 
     any financial holding company subject to stricter standards 
     that--

[[Page 31069]]

       (i) is significantly undercapitalized; or
       (ii) is undercapitalized and--

       (I) fails to submit an acceptable capital restoration plan 
     within the time allowed by the Board under paragraph 
     (6)(B)(iv); or
       (II) fails in any material respect to implement a capital 
     restoration plan accepted by the Board.

       (B) Specific actions authorized.--The Board shall carry out 
     this paragraph by taking 1 or more of the following actions--
       (i) Requiring recapitalization.--Doing one or more of the 
     following:

       (I) Requiring the financial holding company subject to 
     stricter standards to sell enough shares or obligations of 
     the financial holding company subject to stricter standards 
     so that the financial holding company subject to stricter 
     standards will be well capitalized after the sale.
       (II) Further requiring that instruments sold under 
     subclause (I) be voting shares.
       (III) Requiring the financial holding company subject to 
     stricter standards to be acquired by or combine with another 
     company.

       (ii) Restricting transactions with affiliates.--

       (I) Requiring the financial holding company subject to 
     stricter standards to comply with section 23A of the Federal 
     Reserve Act (12 U.S.C. 371c), as if it were a member bank.
       (II) Further restricting the transactions of the financial 
     holding company subject to stricter standards with affiliates 
     and insiders.

       (iii) Restricting asset growth.--Restricting the asset 
     growth of the financial holding company subject to stricter 
     standards more stringently than paragraph (6)(C), or 
     requiring the financial holding company subject to stricter 
     standards to reduce its total assets.
       (iv) Restricting activities.--Requiring the financial 
     holding company subject to stricter standards or any of its 
     subsidiaries to alter, reduce, or terminate any activity that 
     the Board determines poses excessive risk to the financial 
     holding company subject to stricter standards.
       (v) Improving management.--Doing one or more of the 
     following:

       (I) New election of directors.--Ordering a new election for 
     the board of directors of the financial holding company 
     subject to stricter standards.
       (II) Dismissing directors or senior executive officers.--
     Requiring the financial holding company subject to stricter 
     standards to dismiss from office any director or senior 
     executive officer who had held office for more than 180 days 
     immediately before the financial holding company subject to 
     stricter standards became undercapitalized. Dismissal under 
     this clause shall not be construed to be a removal under 
     section 8 of the Federal Deposit Insurance Act (12 U.S.C. 
     1818).
       (III) Employing qualified senior executive officers.--
     Requiring the financial holding company subject to stricter 
     standards to employ qualified senior executive officers (who, 
     if the Board so specifies, shall be subject to approval by 
     the Board).

       (vi) Requiring divestiture.--Requiring the financial 
     holding company subject to stricter standards to divest 
     itself of or liquidate any subsidiary if the Board determines 
     that the subsidiary is in danger of becoming insolvent, poses 
     a significant risk to the financial holding company subject 
     to stricter standards, or is likely to cause a significant 
     dissipation of the assets or earnings of the financial 
     holding company subject to stricter standards.
       (vii) Requiring other action.--Requiring the financial 
     holding company subject to stricter standards to take any 
     other action that the Board determines will better carry out 
     the purpose of this section than any of the actions described 
     in this subparagraph.
       (C) Presumption in favor of certain actions.--In complying 
     with subparagraph (B), the Board shall take the following 
     actions, unless the Board determines that the actions would 
     not be appropriate--
       (i) The action described in subclause (I) or (III) of 
     subparagraph (B)(i) (relating to requiring the sale of shares 
     or obligations, or requiring the financial holding company 
     subject to stricter standards to be acquired by or combine 
     with another company).
       (ii) The action described in subparagraph (B)(ii) (relating 
     to restricting transactions with affiliates).
       (D) Senior executive officers' compensation restricted.--
       (i) In general.--The financial holding company subject to 
     stricter standards shall not do any of the following without 
     the prior written approval of the Board:

       (I) Pay any bonus to any senior executive officer.
       (II) Provide compensation to any senior executive officer 
     at a rate exceeding that officer's average rate of 
     compensation (excluding bonuses, stock options, and profit-
     sharing) during the 12 calendar months preceding the calendar 
     month in which the financial holding company subject to 
     stricter standards became undercapitalized.

       (ii) Failing to submit plan.--The Board shall not grant any 
     approval under clause (i) with respect to a financial holding 
     company subject to stricter standards that has failed to 
     submit an acceptable capital restoration plan.
       (E) Consultation with other regulators.--Before the Board 
     makes a determination under subparagraph (B)(vi) with respect 
     to a subsidiary that is a broker, dealer, government 
     securities broker, government securities dealer, investment 
     company, or investment adviser, the Board shall consult with 
     the Securities and Exchange Commission and, in the case of 
     any other subsidiary which is subject to any financial 
     responsibility or capital requirement, any other appropriate 
     regulator of such subsidiary with respect to the proposed 
     determination of the Board and actions pursuant to such 
     determination.
       (8) More stringent treatment based on other supervisory 
     criteria.--
       (A) In general.--If the Board determines (after notice and 
     an opportunity for hearing) that a financial holding company 
     subject to stricter standards is in an unsafe or unsound 
     condition or, pursuant to section 8(b)(8) of the Federal 
     Deposit Insurance Act (12 U.S.C. 1818(b)(8)), deems the 
     financial holding company subject to stricter standards to be 
     engaging in an unsafe or unsound practice, the Board may--
       (i) if the financial holding company subject to stricter 
     standards is well capitalized, require the financial holding 
     company subject to stricter standards to comply with one or 
     more provisions of paragraphs (6) and (7), as if the 
     institution were undercapitalized; or
       (ii) if the financial holding company subject to stricter 
     standards is undercapitalized, take any one or more actions 
     authorized under paragraph (7)(B) as if the financial holding 
     company subject to stricter standards were significantly 
     undercapitalized.
       (B) Contents of plan.--A plan that may be required pursuant 
     to subparagraph (A)(i) shall specify the steps that the 
     financial holding company subject to stricter standards will 
     take to correct the unsafe or unsound condition or practice.
       (9) Implementation.--The Board shall prescribe such 
     regulations, issue such orders, and take such other actions 
     the Board determines to be necessary to carry out this 
     subsection.
       (10) Other authority not affected.--This section does not 
     limit any authority of the Board, any other Federal 
     regulatory agency, or a State to take action in addition to 
     (but not in derogation of) that required under this section.
       (11) Consultation.--The Board and the Secretary of the 
     Treasury shall consult with their foreign counterparts and 
     through appropriate multilateral organizations to reach 
     agreement to extend comprehensive and robust prudential 
     supervision and regulation to all highly leveraged and 
     substantially interconnected financial companies.
       (12) Administrative review of dismissal orders.--
       (A) Timely petition required.--A director or senior 
     executive officer dismissed pursuant to an order under 
     paragraph (7)(B)(v)(II) may obtain review of that order by 
     filing a written petition for reinstatement with the Board 
     not later than 10 days after receiving notice of the 
     dismissal.
       (B) Procedure.--
       (i) Hearing required.--The Board shall give the petitioner 
     an opportunity to--

       (I) submit written materials in support of the petition; 
     and
       (II) appear, personally or through counsel, before 1 or 
     more members of the Board or designated employees of the 
     Board.

       (ii) Deadline for hearing.--The Board shall--

       (I) schedule the hearing referred to in clause (i)(II) 
     promptly after the petition is filed; and
       (II) hold the hearing not later than 30 days after the 
     petition is filed, unless the petitioner requests that the 
     hearing be held at a later time.

       (iii) Deadline for decision.--Not later than 60 days after 
     the date of the hearing, the Board shall--

       (I) by order, grant or deny the petition;
       (II) if the order is adverse to the petitioner, set forth 
     the basis for the order; and
       (III) notify the petitioner of the order.

       (C) Standard for review of dismissal orders.--The 
     petitioner shall bear the burden of proving that the 
     petitioner's continued employment would materially strengthen 
     the ability of the financial holding company subject to 
     stricter standards--
       (i) to become well capitalized, to the extent that the 
     order is based on the capital level of the financial holding 
     company subject to stricter standards or such company's 
     failure to submit or implement a capital restoration plan; 
     and
       (ii) to correct the unsafe or unsound condition or unsafe 
     or unsound practice, to the extent that the order is based on 
     paragraph (8)(A).
       (13) Enforcement authority for foreign financial holding 
     company subject to stricter standards.--
       (A) Termination authority.--If the Board believes that a 
     condition, practice, or activity of a foreign financial 
     holding company subject to stricter standards does not comply 
     with this title or the rules or orders prescribed by the 
     Board under this title or otherwise poses a threat to 
     financial stability, the Board may, after notice and 
     opportunity for a hearing, take such actions as necessary to 
     mitigate such risk, including ordering a foreign financial 
     holding company subject to stricter standards in the United 
     States to terminate the activities of such branch, agency, or 
     subsidiary.

[[Page 31070]]

       (B) Discretion to deny hearing.--The Board may issue an 
     order under paragraph (1) without providing for an 
     opportunity for a hearing if the Board determines that 
     expeditious action is necessary in order to protect the 
     public interest.
       (f) Reports Regarding Rapid and Orderly Resolution and 
     Credit Exposure.--
       (1) In general.--The Board shall require each financial 
     holding company subject to stricter standards incorporated or 
     organized in the United States to report periodically to the 
     Board on--
       (A) its plan for rapid and orderly resolution in the event 
     of severe financial distress;
       (B) the nature and extent to which the financial holding 
     company subject to stricter standards has credit exposure to 
     other significant financial companies; and
       (C) the nature and extent to which other significant 
     financial companies have credit exposure to the financial 
     holding company subject to stricter standards.
       (2) No limiting effect.--A rapid resolution plan submitted 
     in accordance with this subsection shall not be binding on a 
     receiver appointed under subtitle G, a bankruptcy court, or 
     any other authority that is authorized or required to resolve 
     the financial holding company subject to stricter standards 
     or any of its subsidiaries or affiliates.
       (3) Reporting triggered by stress test results.--
       (A) Financial holding companies subject to stricter 
     standards.--Each time the results of a quarterly stress test 
     under baseline or adverse conditions conducted by a financial 
     holding company subject to stricter standards under section 
     1114(a) or the results of a stress test of that financial 
     holding company subject to stricter standards conducted by 
     the Board under subsection (g) indicate that the financial 
     holding company subject to stricter standards is, in the 
     determination of the Board, significantly or critically 
     undercapitalized, that financial holding company subject to 
     stricter standards shall submit a rapid resolution plan in 
     accordance with this subsection that has been revised to 
     address the causes of those results.
       (B) Financial companies that are not financial holding 
     companies subject to stricter standards.--Each time the 
     results of a semiannual stress test under baseline or adverse 
     conditions conducted by a financial company under section 
     1114(b) indicate that the financial company is, in the 
     determination of the Board, significantly or critically 
     undercapitalized, that financial company shall be required to 
     report under this subsection. The Board shall prescribe 
     regulations establishing expedited procedures for such 
     reporting.
       (C) Transparency.--Any rapid resolution plan submitted 
     pursuant to this paragraph shall be subject to any 
     restrictions regarding the disclosure of any other rapid 
     resolution plan submitted pursuant to this subsection.
       (g) Stress Tests.--
       (1) The Board, in coordination with the appropriate primary 
     financial regulatory agency, shall conduct annual stress 
     tests of each financial holding company subject to stricter 
     standards. The Board may, as the Board determines 
     appropriate, conduct stress tests of financial companies that 
     are not financial holding companies subject to stricter 
     standards. The Board shall publish a summary of the results 
     of such stress tests.
       (2) The Board shall issue regulations to define the term 
     ``stress test'' for purposes of this subsection. Such a 
     definition shall provide for not less than 3 different sets 
     of conditions under which a stress test should be conducted: 
     baseline, adverse, and severely adverse scenarios.
       (h) Avoiding Duplication.--The Board shall take any action 
     the Board deems appropriate to avoid imposing duplicative 
     requirements under this subtitle for financial holding 
     companies subject to stricter standards that are also bank 
     holding companies.
       (i) Resolution Plans Required.--
       (1) In general.--The Corporation and the Board, after 
     consultation with the Council, shall jointly issue 
     regulations requiring financial holding companies subject to 
     stricter standards to develop plans designed to assist in the 
     rapid and orderly resolution of the company.
       (2) Standards for resolution plans.--The regulations 
     required by paragraph (1) shall--
       (A) define the scope of financial holding companies subject 
     to stricter standards covered by these requirements and may 
     exempt financial holding companies subject to stricter 
     standards from the requirements of this subsection if the 
     Corporation and the Board jointly determine that exemption is 
     consistent with the purposes of this title;
       (B) require each plan to demonstrate that any insured 
     depository institution affiliated with a financial holding 
     company subject to stricter standards is adequately insulated 
     from the activities of any non-bank subsidiary of the 
     institution or financial holding companies subject to 
     stricter standards;
       (C) require that each plan include information detailing--
       (i) the nature and extent to which the financial holding 
     company subject to stricter standards has credit exposure to 
     other significant financial companies;
       (ii) the nature and extent to which other significant 
     financial companies have credit exposure to the financial 
     holding company subject to stricter standards;
       (iii) full descriptions of the financial holding company 
     subject to stricter standards' ownership structure, assets, 
     liabilities, and contractual obligations; and
       (iv) the cross-guarantees tied to different securities, a 
     list of major counterparties, and a process for determining 
     where the financial holding company subject to stricter 
     standards' collateral is pledged; and
       (D) establish such other standards as the Corporation and 
     the Board may jointly deem necessary to carry out this 
     subsection.
       (3) Review of plans.--
       (A) Submission of plans.--Each financial holding company 
     subject to stricter standards that is subject to the 
     requirement under paragraph (1) shall submit its plan to the 
     Corporation and the Board.
       (B) Review.--Upon the submission of a plan pursuant to 
     subparagraph (A), and not less often than annually 
     thereafter, the Corporation and the Board, after consultation 
     with any Federal financial regulatory agencies with 
     jurisdiction over the financial holding company subject to 
     stricter standards, shall jointly review such plan and may 
     require a financial holding company subject to stricter 
     standards to revise its plan consistent with the standards 
     established pursuant to paragraph (2).
       (4) Enforcement.--
       (A) In general.--The Corporation, after consultation with 
     the Board, shall have the authority to take any enforcement 
     action in section 8 of the Federal Deposit Insurance Act (12 
     U.S.C. 1818) against any financial holding company subject to 
     stricter standards that fails to comply with the requirements 
     of this section or any regulations issued pursuant to this 
     section.
       (B) No limitation on board authority.--Nothing under this 
     subsection shall be construed as limiting any enforcement 
     authority available to the Board under any other provision of 
     law.
       (5) No limiting effect on receiver.--A rapid resolution 
     plan submitted under this section shall not be binding on a 
     receiver appointed under subtitle G, a bankruptcy court, or 
     any other authority that is authorized or required to resolve 
     the financial holding company subject to stricter standards 
     or any of its subsidiaries or affiliates.
       (6) No private right of action.--No private right of action 
     may be based on any resolution plan submitted under this 
     section.

     SEC. 1105. MITIGATION OF SYSTEMIC RISK.

       (a) Council Authority to Restrict Operations and 
     Activities.--If the Council determines, after notice and an 
     opportunity for hearing, that despite the higher prudential 
     standards imposed pursuant to section 1104(a)(2), the size of 
     a financial holding company subject to stricter standards or 
     the scope, nature, scale, concentration, interconnectedness, 
     or mix of activities directly or indirectly conducted by a 
     financial holding company subject to stricter standards poses 
     a grave threat to the financial stability or economy of the 
     United States, the Council shall require the company to 
     undertake 1 or more mitigatory actions described in 
     subsection (d).
       (b) Consultation With Federal Financial Regulatory 
     Agencies.--The Council, in determining whether to impose any 
     requirement under this section that is likely to have a 
     significant impact on a functionally regulated subsidiary, or 
     a subsidiary depository institution, of a financial company 
     subjected to stricter prudential standards under this title, 
     shall consult with the Federal financial regulatory agency 
     for any such subsidiary.
       (c) Factors for Consideration.--In reaching a determination 
     described in subsection (a), the Council shall take into 
     consideration the following factors, as appropriate--
       (1) the amount and nature of the company's financial 
     assets;
       (2) the amount and nature of the company's liabilities, 
     including the degree of reliance on short-term funding;
       (3) the extent and nature of the company's off-balance 
     sheet exposures;
       (4) the company's reliance on leverage;
       (5) the extent and nature of the company's transactions, 
     relationships, and interconnectedness with other financial 
     and non-financial companies;
       (6) the company's importance as a source of credit for 
     households, businesses, and State and local governments and 
     as a source of liquidity for the financial system;
       (7) the scope, nature, size, scale, concentration, 
     interconnectedness and mix of the company's activities;
       (8) the extent to which prudential regulations mitigate the 
     risk posed; and
       (9) any other factors identified that the Council 
     determines appropriate.
       (d) Mitigatory Actions.--
       (1) In general.--Mitigatory action may include--
       (A) modifying the prudential standards imposed pursuant to 
     section 1104(a);
       (B) terminating 1 or more activities;
       (C) imposing conditions on the manner in which a financial 
     holding company subject to stricter standards conducts 1 or 
     more activities;
       (D) limiting the ability to merge with, acquire, 
     consolidate with, or otherwise become affiliated with another 
     company;

[[Page 31071]]

       (E) restricting the ability to offer a financial product or 
     products; and
       (F) in the event the Council deems subparagraphs (A) 
     through (E) inadequate as a means to address the identified 
     risks, selling, divesting, or otherwise transferring business 
     units, branches, assets, or off-balance sheet items to 
     unaffiliated companies.
       (2) International competitiveness considerations.--In 
     making any decision pursuant to paragraph (1), the Council 
     shall consider--
       (A) the need to maintain the international competitiveness 
     of the United States financial services industry; and
       (B) the extent to which other countries with a significant 
     financial services industry have established corresponding 
     regimes to mitigate threats to financial stability or the 
     economy posed by financial companies.
       (e) Due Process.--
       (1) Notice and hearing.--The Council shall give notice to a 
     financial company subject to stricter prudential standards, 
     and opportunity for hearing if requested, that the financial 
     company is being considered for mitigatory action pursuant to 
     subsection (a). The hearing shall occur no later than 30 days 
     after the financial company receives notice of the proposed 
     action from the Council.
       (2) Notice.--The Council shall notify the financial company 
     subject to stricter prudential standards of the Council's 
     determination, and, if the Council determines that mitigatory 
     action is appropriate, require the company to submit a plan 
     to the Council to implement the required mitigatory action.
       (3) Submission of plan.--The financial holding company 
     subject to stricter standards shall submit its proposed plan 
     to implement the required mitigatory action or actions to the 
     Council within 60 days from the date it receives notice under 
     paragraph (2) or such shorter timeframe as the Council may 
     require, if the Council determines an emergency situation 
     merits expeditious implementation.
       (4) Approval or amendment of the plan.--The Council shall 
     review the plan submitted pursuant to paragraph (3) and 
     determine whether the plan achieves the goal of mitigating a 
     grave threat to the financial stability or the economy of the 
     United States. The Council may approve or disapprove the plan 
     with or without amendment.
       (5) Effect of plan approval.--The Council shall--
       (A) notify a financial holding company subject to stricter 
     standards by order, which shall be public, that the Council 
     has approved the plan with or without amendment; and
       (B) direct the Board to require a financial holding company 
     subject to stricter standards to comply with the plan to 
     implement mitigatory action or actions within a reasonable 
     timeframe after the Council's approval and in accordance with 
     such deadlines established in the plan.
       (f) Treasury Secretary Concurrence.--Mitigatory action 
     imposed by the Council involving the sale, divestiture, or 
     transfer of more than $10,000,000,000 in total assets by a 
     financial holding company subject to stricter standards shall 
     require the Secretary of the Treasury's concurrence before 
     the issuance of the notice in subsection (e)(5)(A). If the 
     sale, divestiture, or transfer of total assets by a financial 
     holding company subject to stricter standards exceeds 
     $100,000,000,000, the Secretary of the Treasury shall consult 
     with the President before concurrence.
       (g) Failure To Implement the Plan.--If a financial holding 
     company subject to stricter standards fails to implement a 
     plan for mitigatory action imposed pursuant to subsection 
     (e)(5) within a reasonable timeframe, the Council shall 
     direct the Board to take such actions as necessary to ensure 
     compliance with the plan.
       (h) Judicial Review.--For any plan required under this 
     section, a financial holding company subject to stricter 
     standards may, not later than 30 days after receipt of the 
     Council's notice under subsection (e)(5), bring an action in 
     the United States district court for the judicial district in 
     which the home office of such company is located, or in the 
     United States District Court for the District of Columbia, 
     for an order requiring that the requirement for a mitigatory 
     action be rescinded. Judicial review under this section shall 
     be limited to the imposition of a mitigatory action. In 
     reviewing the Council's imposition of a mitigatory action, 
     the court shall rescind or dismiss only those mitigatory 
     actions it finds to be imposed in an arbitrary and capricious 
     manner.

     SEC. 1106. SUBJECTING ACTIVITIES OR PRACTICES TO STRICTER 
                   PRUDENTIAL STANDARDS FOR FINANCIAL STABILITY 
                   PURPOSES.

       (a) In General.--The Council may subject a financial 
     activity or practice to stricter prudential standards under 
     this subtitle if the Council determines that the conduct, 
     scope, nature, size, scale, concentration, or 
     interconnectedness of such activity or practice could create 
     or increase the risk of significant liquidity, credit, or 
     other problems spreading among financial institutions or 
     markets and local, minority, or underserved communities, and 
     thereby threaten the stability of the financial system or 
     economy.
       (b) Periodic Review of Activity Identifications.--
       (1) Submission of assessment.--The Board shall periodically 
     submit a report to the Council containing an assessment of 
     whether each activity or practice subjected to stricter 
     prudential standards should continue to be subject to such 
     standards.
       (2) Review and recision.--The Council shall--
       (A) review the assessment submitted pursuant to paragraph 
     (1) and any information or recommendation submitted by 
     members of the Council regarding whether a financial activity 
     subjected to stricter prudential standards continues to merit 
     stricter prudential standards; and
       (B) rescind the action subjecting an activity to heightened 
     prudential supervision if the Council determines that the 
     activity no longer meets the criteria in subsection (a).
       (c) Procedure For Subjecting or Ceasing To Subject an 
     Activity or Practice to Stricter Prudential Standards.--
       (1) Council and board coordination.--The Council shall 
     inform the Board if the Council is considering whether to 
     subject or cease to subject an activity to stricter 
     prudential standards in accordance with this section.
       (2) Notice and opportunity for consideration of written 
     materials.--
       (A) In general.--The Board shall, in an executive capacity 
     on behalf of the Council, provide notice to financial 
     companies that the Council is considering whether to subject 
     an activity or practice to heightened prudential regulation, 
     and shall provide a financial company engaged in such 
     activity or practice 30 days to submit written materials to 
     inform the Council's decision. The Council shall decide, and 
     the Board shall provide notice of the Council's decision, 
     within 60 days of the due date for such written materials.
       (B) Emergency exception.--The Council may waive or modify 
     the requirements of subparagraph (A) if the Council 
     determines that such waiver or modification is necessary or 
     appropriate to prevent or mitigate threats posed by an 
     activity to financial stability. The Board shall, in an 
     executive capacity on behalf of the Council, provide notice 
     of such waiver or modification to financial companies as soon 
     as practicable, which shall be no later than 24 hours after 
     the waiver or modification.
       (3) Form of decision.--The Board shall provide all notices 
     required under this subsection by posting a notice on the 
     Board's web site and publishing a notice in the Federal 
     Register.

     SEC. 1107. STRICTER REGULATION OF ACTIVITIES AND PRACTICES 
                   FOR FINANCIAL STABILITY PURPOSES.

       (a) Prudential Standards.--
       (1) Board authority to recommend.--
       (A) In general.--To mitigate the risks to United States 
     financial stability and the United States economy posed by 
     financial activities and practices that the Council 
     identifies for stricter prudential standards under section 
     1106 the Board shall recommend prudential standards to the 
     appropriate primary financial regulatory agencies to apply to 
     such identified activities and practices.
       (B) Consultation with primary financial regulatory 
     agencies.--The Board, in developing recommendations under 
     this subsection, shall consult with the relevant primary 
     financial regulatory agencies with respect to any standard 
     that is likely to have a significant effect on entities 
     described in section 1000(b)(6).
       (2) Criteria.--The actions recommended under paragraph 
     (1)--
       (A) shall be designed to maximize financial stability, 
     taking costs to long-term financial and 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, 
     nature, size, scale, concentration, or interconnectedness, or 
     applying particular capital or risk-management requirements 
     to the conduct of the activity) or prohibiting the activity 
     or practice altogether.
       (b) Implementation of Recommended Standards.--
       (1) Role of primary financial regulatory agency.--Each 
     primary financial regulatory agency is authorized to impose, 
     require reports regarding, examine for compliance with, and 
     enforce standards in accordance with this section with 
     respect to those entities described in section 1000(b)(6) for 
     which it is the primary financial regulatory agency. This 
     authority is in addition to and does not limit any other 
     authority of the primary financial regulatory agencies. 
     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 primary financial regulatory agency's jurisdiction 
     over the entity as if the agency action were taken under 
     those statutes.
       (2) Imposition of standards.--Standards imposed under this 
     subsection shall be the standards recommended by the Board in 
     accordance with subsection (a) or any other similar standards 
     that the Board deems acceptable after consultation between 
     the Board and the primary financial regulatory agency.
       (3) Primary financial regulatory agency response.--A 
     primary financial regulatory

[[Page 31072]]

     agency shall notify the Council and the Board in writing on 
     whether and to what extent the agency has imposed the 
     stricter prudential standards described in paragraph (2) 
     within 60 days of the Board's recommendation. A primary 
     financial regulatory agency that fails to impose such 
     standards shall provide specific justification for such 
     failure to act in the written notice from the agency to the 
     Council and Board.

     SEC. 1108. EFFECT OF RESCISSION OF IDENTIFICATION.

       (a) Notice.--When the Council determines that a company or 
     activity or practice no longer is subject to heightened 
     prudential scrutiny, the Board shall inform the relevant 
     primary financial regulatory agency or agencies (if different 
     from the Board) of that finding.
       (b) Determination of Primary Financial Regulatory Agency To 
     Continue.--A primary financial regulatory agency that has 
     imposed stricter prudential standards for financial stability 
     purposes under this subtitle shall determine whether 
     standards that it has imposed under this subtitle should 
     remain in effect.

     SEC. 1109. EMERGENCY FINANCIAL STABILIZATION.

       (a) In General.--Upon the written determination of the 
     Council that a liquidity event exists that could destabilize 
     the financial system (which determination shall be made upon 
     a vote of not less than two-thirds of the members of the 
     Council then serving) and with the written consent of the 
     Secretary of the Treasury (after certification by the 
     President that an emergency exists), the Corporation may 
     create a widely-available program designed to avoid or 
     mitigate adverse effects on systemic economic conditions or 
     financial stability by guaranteeing obligations of solvent 
     insured depository institutions or other solvent companies 
     that are predominantly engaged in activities that are 
     financial in nature or are incidental thereto pursuant to 
     section 4(k) of the Bank Holding Company Act, if necessary to 
     prevent systemic financial instability during times of severe 
     economic distress, except that a guarantee of obligations 
     under this section may not include provision of equity in any 
     form.
       (b) Policies and Procedures.--Prior to exercising any 
     authority under this section, the Corporation shall establish 
     policies and procedures governing the issuance of guarantees. 
     The terms and conditions of any guarantees issued shall be 
     established by the Corporation with the approval of the 
     Secretary of the Treasury and the Financial Stability 
     Oversight Council.
       (c) Funding.--
       (1) Administrative expenses and cost of guarantees.--A 
     program established pursuant to this section shall require 
     funding only for the purposes of paying administrative 
     expenses and for paying a guarantee in the event that a 
     guaranteed loan defaults.
       (2) Fees and other charges.--The Corporation shall charge 
     fees or other charges to all participants in such program 
     established pursuant to this section. To the extent that a 
     program established pursuant to this section has expenses or 
     losses, the program will be funded entirely through fees or 
     other charges assessed on participants in such program.
       (3) Excess funds.--If at the conclusion of such program 
     there are any excess funds collected from the fees associated 
     with such program, the funds will be deposited into the 
     Systemic Resolution Fund established pursuant to section 
     1609(n).
       (4) Authority of corporation.--For purposes of conducting a 
     program established pursuant to this section, the 
     Corporation--
       (A) may borrow funds from the Secretary of the Treasury, 
     which shall be repaid in full with interest through fees and 
     charges paid by participants in accordance with paragraph 
     (2), and, to the extent such additional amounts are 
     necessary, assessments on large financial companies under 
     paragraph (5), and there shall be available to the 
     Corporation amounts in the Treasury not otherwise 
     appropriated, including for the payment of reasonable 
     administrative expenses;
       (B) may not borrow funds from the Deposit Insurance Fund 
     established pursuant to section 11(a)(4) of the Federal 
     Deposit Insurance Act; and
       (C) may not borrow funds from the Systemic Resolution Fund 
     established pursuant to section 1609(n).
       (5) Back-up special assessment.--To the extent that the 
     funds collected pursuant to paragraph (2) are insufficient to 
     cover any losses or expenses (including monies borrowed 
     pursuant to paragraph (4)) arising from a program established 
     pursuant to this section, the Corporation shall impose a 
     special assessment on--
       (A) large financial companies subject to assessments under 
     section 1609(n) (whether or not such company participated in 
     such program) in the manner provided in such section 1609(n); 
     and
       (B) participants in the program that are not large 
     financial companies paying assessments pursuant to section 
     1609(n).
       (d) Plan for Maintenance or Increase of Lending.--In 
     connection with any application or request to participate in 
     such program authorized pursuant to this section, a solvent 
     company seeking to participate in such program shall be 
     required to submit to the Corporation a plan detailing how 
     the use of such guaranteed funds will facilitate the increase 
     or maintenance of such solvent company's level of lending to 
     consumers or small businesses.
       (e) Definitions.--For purposes of this section, the 
     following definitions apply:
       (1) Activities that are financial in nature.--The term 
     ``activities that are financial in nature'' means activities 
     that are determined to be financial in nature, or incidental 
     to such activities, under section 4(k) of the Bank Holding 
     Company Act of 1956 (12 U.S.C. 1843(k)) and activities that 
     are identified for stricter prudential standards under 
     section 1106.
       (2) 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.
       (3) Corporation.--The term ``Corporation'' means the 
     Federal Deposit Insurance Corporation.
       (4) Insured depository institution.--The term ``insured 
     depository institution'' shall have the same meaning as in 
     section 3 of the Federal Deposit Insurance Act (12 U.S.C. 
     1813).
       (5) Solvent.--The term ``solvent'' means assets are more 
     than the obligations to creditors.
       (f) Sunset of Corporation's Authority.--The Corporation's 
     authority under subsections (a) and (c) and the authority to 
     borrow or obligate funds under section 1609(n) shall expire 
     on December 31, 2013.

     SEC. 1110. CORPORATION MUST RECEIVE WARRANTS WHEN PAYING OR 
                   RISKING TAXPAYER FUNDS.

       (a) In General.--The Federal Deposit Insurance Corporation 
     (hereinafter in this section referred to as the 
     ``Corporation'') may not provide any payment, credit 
     extension, or guarantee, or make any such commitment under 
     the authority of section 1109 or 1604, unless the Corporation 
     receives from the financial company for which the credit 
     extension or guarantee is intended, as fair market value 
     consideration for such payment, credit extension or 
     guarantee--
       (1) in the case of a financial company, the securities of 
     which are traded on a national securities exchange, a warrant 
     giving the right to the Corporation to receive nonvoting 
     common stock or preferred stock in such financial 
     institution, or voting stock with respect to which, the 
     Corporation agrees not to exercise voting power, as the 
     Corporation determines appropriate; or
       (2) in the case of any financial company other than one 
     described in paragraph (1), a warrant for common or preferred 
     stock, or a senior debt instrument from such financial 
     institution, as described in subsection (b)(3).
       (b) Terms and Conditions.--The terms and conditions of any 
     warrant or senior debt instrument required under subsection 
     (a) shall meet the following requirements:
       (1) Purposes.--Such terms and conditions shall, at a 
     minimum, be designed--
       (A) to provide for reasonable participation by the 
     Corporation, for the benefit of taxpayers, in equity 
     appreciation in the case of a warrant or other equity 
     security, or a reasonable interest rate premium, in the case 
     of a debt instrument; and
       (B) to provide additional protection for the taxpayer 
     against losses from such payment, extension of credit, or 
     guarantee by the Corporation under this title.
       (2) Authority to sell, exercise, or surrender.--The 
     Corporation may sell, exercise, or surrender a warrant or any 
     senior debt instrument received under this subsection, based 
     on the conditions established under paragraph (1).
       (3) Conversion.--The warrant shall provide that if, after 
     the warrant is received by the Corporation under this 
     subsection, the financial company that issued the warrant is 
     no longer listed or traded on a national securities exchange 
     or securities association, as described in subsection (a)(1), 
     such warrants shall convert to senior debt, or contain 
     appropriate protections for the Corporation to ensure that 
     the Corporation is appropriately compensated for the value of 
     the warrant, in an amount determined by the Corporation.
       (4) Protections.--Any warrant representing securities to be 
     received by the Corporation under this subsection shall 
     contain anti-dilution provisions of the type employed in 
     capital market transactions, as determined by the 
     Corporation. Such provisions shall protect the value of the 
     securities from market transactions such as stock splits, 
     stock distributions, dividends, and other distributions, 
     mergers, and other forms of reorganization or 
     recapitalization.
       (5) Exercise price.--The exercise price for any warrant 
     issued pursuant to this subsection shall be set by the 
     Corporation, in the interest of the taxpayers.
       (6) Sufficiency.--The financial company shall guarantee to 
     the Corporation that it has authorized shares of nonvoting 
     stock available to fulfill its obligations under this 
     subsection. Should the financial company not have sufficient 
     authorized shares, including preferred shares that may carry 
     dividend rights equal to a multiple number of common shares, 
     the Corporation may, to the extent necessary, accept a senior 
     debt note in an amount, and on such terms as will compensate 
     the Corporation with equivalent

[[Page 31073]]

     value, in the event that a sufficient shareholder vote to 
     authorize the necessary additional shares cannot be obtained.
       (c) Exceptions.--
       (1) The Corporation shall establish an exception to the 
     requirements of this section and appropriate alternative 
     requirements for any participating financial company that is 
     legally prohibited from issuing securities and debt 
     instruments, so as not to allow circumvention of the 
     requirements of this section.
       (2) If the Corporation is providing a payment, extension of 
     credit, or guarantee with regard to its authority under 
     section 1604 and the Corporate determines that it is certain 
     that at the conclusion of the Resolution Process the 
     shareholders of all classes shall lose their entire 
     investment and receive nothing therefor, then the 
     requirements of this section shall not apply.

     SEC. 1111. EXAMINATIONS AND ENFORCEMENT ACTIONS FOR INSURANCE 
                   AND RESOLUTIONS PURPOSES.

       (a) Examinations for Insurance and Resolutions Purposes.--
     Section 10(b)(3) of the Federal Deposit Insurance Act (12 
     U.S.C. 1820(b)(3)) is amended by striking ``whenever the 
     Board of Directors determines'' and all that follows through 
     the period and inserting ``or financial holding company 
     subject to stricter standards (as defined in section 
     1000(b)(5) of the Financial Stability Improvement Act of 
     2009) whenever the Board of Directors determines a special 
     examination of any such depository institution is necessary 
     to determine the condition of such depository institution for 
     insurance or such financial holding company subject to 
     stricter standards for resolution purposes.''.
       (b) Enforcement Authority.--Section 8(t) of the Federal 
     Deposit Insurance Act (12 U.S.C. 1818(t)) is amended--
       (1) in paragraph (2)--
       (A) at the end of subparagraph (B), by striking ``or'';
       (B) at the end of subparagraph (C), by striking the period 
     and inserting ``; or''; and
       (C) by inserting at the end the following new subparagraph:
       ``(D) the conduct or threatened conduct (including any acts 
     or omissions) of the depository institution holding company 
     poses a risk to the Deposit Insurance Fund.''; and
       (2) by adding at the end the following new paragraph:
       ``(6) For purposes of this subsection:
       ``(A) The Corporation shall have the same powers with 
     respect to a depository institution holding company and its 
     affiliates as the appropriate Federal banking agency has with 
     respect to the holding company and its affiliates; and
       ``(B) the holding company and its affiliates shall have the 
     same duties and obligations with respect to the Corporation 
     as the holding company and its affiliates have with respect 
     to the appropriate Federal banking agency.''.

     SEC. 1112. STUDY OF THE EFFECTS OF SIZE AND COMPLEXITY OF 
                   FINANCIAL INSTITUTIONS ON CAPITAL MARKET 
                   EFFICIENCY AND ECONOMIC GROWTH.

       (a) Study Required.--The Chairman of the Council shall 
     carry out a study of the economic impact of possible 
     financial services regulatory limitations intended to reduce 
     systemic risk. Such study shall estimate the effect on the 
     efficiency of capital markets, costs imposed on the financial 
     sector, and on national economic growth, of--
       (1) explicit or implicit limits on the maximum size of 
     banks, bank holding companies, and other large financial 
     institutions;
       (2) limits on the organizational complexity and 
     diversification of large financial institutions;
       (3) requirements for operational separation between 
     business units of large financial institutions in order to 
     expedite resolution in case of failure;
       (4) limits on risk transfer between business units of large 
     financial institutions;
       (5) requirements to carry contingent capital or similar 
     mechanisms;
       (6) limits on commingling of commercial and financial 
     activities by large financial institutions;
       (7) segregation requirements between traditional financial 
     activities and trading or other high-risk operations in large 
     financial institutions; and
       (8) other limitations on the activities or structure of 
     large financial institutions that may be useful to limit 
     systemic risk.

     The study shall include recommendations for the optimal 
     structure of any limits considered in paragraphs (1) through 
     (5) in order to maximize their effectiveness and minimize 
     their economic impact.
       (b) Report.--Not later than the end of the 180-day period 
     beginning on the date of the enactment of this title, the 
     Chairman shall issue a report to the Congress containing any 
     findings and determinations made in carrying out the study 
     required under subsection (a).

     SEC. 1113. EXERCISE OF FEDERAL RESERVE AUTHORITY.

       (a) No Decisions by Federal Reserve Bank Presidents.--No 
     provision of this title relating to the authority of the 
     Board shall be construed as conferring any decision-making 
     authority on presidents of Federal reserve banks.
       (b) Voting Decisions by Board.--The Board of Governors of 
     the Federal Reserve System shall not delegate the authority 
     to make any voting decision that the Board is authorized or 
     required to make under this title in contravention of section 
     11(k) of the Federal Reserve Act.

     SEC. 1114. STRESS TESTS.

       (a) A financial holding company subject to stricter 
     standards shall--
       (1) conduct quarterly stress tests; and
       (2) submit a report on its quarterly stress test to the 
     head of the primary financial regulatory agency and to the 
     Board at such time, in such form, and containing such 
     information as the head of the primary financial regulatory 
     agency may require.
       (b) A financial company that has more than $10,000,000,000 
     in total assets and is not a financial holding company 
     subject to stricter standards shall--
       (1) conduct semiannual stress tests; and
       (2) submit a report on its semiannual stress test to the 
     head of the primary financial regulatory agency and to the 
     Board at such time, in such form, and containing such 
     information as the head of the primary financial regulatory 
     agency may require.
       (c) A stress test under this section shall provide for 
     testing under each of the following sets of conditions:
       (1) Baseline.
       (2) Adverse.
       (3) Severely adverse.
       (d) The head of each primary financial regulatory agency, 
     in coordination with the Board, shall issue regulations to 
     define the term ``stress test'' for purposes of this section.

     SEC. 1115. CONTINGENT CAPITAL.

       (a) In General.--The Board, in coordination with the 
     appropriate primary financial regulatory agency, may 
     promulgate regulations that require a financial holding 
     company subject to stricter standards to maintain a minimum 
     amount of long-term hybrid debt that is convertible to equity 
     when--
       (1) a specified financial company fails to meet prudential 
     standards established by the agency; and
       (2) the agency has determined that threats to United States 
     financial system stability make such a conversion necessary.
       (b) Factors To Consider.--In establishing regulations under 
     this section, the Board shall consider--
       (1) an appropriate transition period for implementation of 
     a conversion under this section;
       (2) capital requirements applicable to the specified 
     financial company and its subsidiaries; and
       (3) any other factor that the Board deems appropriate.
       (c) Study Required.--The Chairman of the Council shall 
     carry out a study to determine an optimal implementation of 
     contingent capital requirements to maximize financial 
     stability, minimize the probability of drawing on the 
     Systemic Resolution Fund established under section 1609(n) in 
     a financial crisis, and minimize costs for financial holding 
     companies subject to stricter standards. To the extent 
     practicable, the study shall take place with input from 
     industry participants and international financial regulators. 
     Such study shall include--
       (1) an evaluation of the characteristics and amounts of 
     convertible debt that should be required, including possible 
     tranche structure;
       (2) an analysis of possible trigger mechanisms for debt 
     conversion, including violation of regulatory capital 
     requirements, failure of stress tests, declaration of 
     systemic emergency by regulators, market-based triggers and 
     other trigger mechanisms;
       (3) an estimate of the costs of carrying contingent 
     capital;
       (4) an estimate of the effectiveness of contingent capital 
     requirements in reducing losses to the systemic resolution 
     fund in cases of single-firm or systemic failure; and
       (5) recommendations for implementing legislation.
       (d) Report.--Not later than the end of the 180-day period 
     beginning on the date of the enactment of this title, the 
     Chairman of Council shall issue a report to the Congress 
     containing any findings and determinations made in carrying 
     out the study required under subsection (c).

     SEC. 1116. RESTRICTION ON PROPRIETARY TRADING BY DESIGNATED 
                   FINANCIAL HOLDING COMPANIES.

       (a) In General.--If the Board determines that propriety 
     trading by a financial holding company subject to stricter 
     standards poses an existing or foreseeable threat to the 
     safety and soundness of such company or to the financial 
     stability of the United States, the Board may prohibit such 
     company from engaging in propriety trading.
       (b) Exceptions Permitted.--The Board may exempt from the 
     prohibition of subsection (a) proprietary trading that the 
     Board determines to be ancillary to other operations of such 
     company and not to pose a threat to the safety and soundness 
     of such company or to the financial stability of the United 
     States, including--
       (1) making a market in securities issued by such company;
       (2) hedging or managing risk;
       (3) determining the market value of assets of such company; 
     and
       (4) propriety trading for such other purposes allowed by 
     the Board by rule.

[[Page 31074]]

       (c) Rulemaking Authority.--The primary financial regulatory 
     agencies of banks and bank holding companies shall jointly 
     issue regulations to carry out this section.
       (d) Effective Date.--The provisions of this section shall 
     take effect after the end of the 180-day period beginning on 
     the date of the enactment of this title.
       (e) Proprietary Trading Defined.--For purposes of this 
     section and with respect to a company, the term ``proprietary 
     trading'' means the trading of stocks, bonds, options, 
     commodities, derivatives, or other financial instruments with 
     the company's own money and for the company's own account.

     SEC. 1117. RULE OF CONSTRUCTION.

       The authorities granted to agencies under this subtitle are 
     in addition to any rulemaking, report-related, examination, 
     enforcement, or other authority that such agencies may have 
     under other law and in no way shall be construed to limit 
     such other authority, except that any standards imposed for 
     financial stability purposes under this subtitle shall 
     supersede any conflicting less stringent requirements of the 
     primary financial regulatory agency but only the extent of 
     the conflict.

     SEC. 1118. ANTITRUST SAVINGS CLAUSE.

       Nothing in this subtitle shall be construed to modify, 
     impair, or supercede the operation of any of the antitrust 
     laws. For purposes of the preceding sentence, the term 
     ``antitrust laws'' has the meaning given such term in 
     subsection (a) of the first section of the Clayton Act, 
     except that such term includes section 5 of the Federal Trade 
     Commission Act to the extent that such section related to 
     unfair methods of competition.

   Subtitle C--Improvements to Supervision and Regulation of Federal 
                        Depository Institutions

     SEC. 1201. DEFINITIONS.

       For purposes of this subtitle, the following definitions 
     shall apply:
       (1) Board of governors.--The term ``Board of Governors'' 
     means the Board of Governors of the Federal Reserve System.
       (2) Corporation.--The term ``Corporation'' means the 
     Federal Deposit Insurance Corporation.
       (3) Office of the comptroller of the currency.--The term 
     ``Office of the Comptroller of the Currency'' means the 
     office established by section 324 of the Revised Statutes (12 
     U.S.C. 1).
       (4) Office of thrift supervision.--The term ``Office of 
     Thrift Supervision'' means the office established by section 
     3 of the Home Owners' Loan Act (12 U.S.C. 1462a).
       (5) Secretary.--The term ``Secretary'' means the Secretary 
     of the Treasury.
       (6) Transfer date.--The term ``transfer date'' has the 
     meaning provided in section 1205.
       (7) Certain other terms.--The terms ``affiliate'', ``bank 
     holding company'', ``control'' (when used with respect to a 
     depository institution), ``depository institution'', 
     ``Federal banking agency'', ``Federal savings association'', 
     ``including'', ``insured branch'', ``insured depository 
     institution'', ``savings association'', ``State savings 
     association'', and ``subsidiary'' have the same meanings as 
     in section 3 of the Federal Deposit Insurance Act.

     SEC. 1202. AMENDMENTS TO THE HOME OWNERS' LOAN ACT RELATING 
                   TO TRANSFER OF FUNCTIONS.

       (a) Amendments to Section 2.--Section 2 of the Home Owners' 
     Loan Act (12 U.S.C. 1462) is amended--
       (1) by striking paragraph (1) and inserting the following 
     new paragraph:
       ``(1) Board of governors.--The term `Board of Governors' 
     means the Board of Governors of the Federal Reserve 
     System.''; and
       (2) by striking paragraph (3) and inserting the following 
     new paragraph:
       ``(3) [repealed]''.
       (b) Amendments to Section 3.--Section 3 of the Home Owners' 
     Loan Act (12 U.S.C. 1462a) is amended--
       (1) by striking subsection (a) and inserting the following 
     new subsection:
       ``(a) Establishment of Division of Thrift Supervision.--To 
     carry out the purposes of this Act, there is hereby 
     established the Division of Thrift Supervision, which shall 
     be a division within the Office of the Comptroller of the 
     Currency.'';
       (2) in subsection (b)--
       (A) by striking paragraph (1) and inserting the following 
     new paragraph:
       ``(1) In general.--The Division of Thrift Supervision shall 
     be headed by a Senior Deputy Comptroller of the Currency who 
     shall be subject to the general oversight of the Comptroller 
     of the Currency.'';
       (B) in paragraph (2), by striking ``Director'' and 
     inserting ``Comptroller of the Currency''; and
       (C) by striking paragraphs (3) and (4);
       (3) by striking subsections (c), (d), and (e) and inserting 
     the following new subsection:
       ``(c) Powers of the Comptroller of the Currency.--The 
     Comptroller of the Currency shall have all the powers, 
     duties, and functions transferred by the Financial Stability 
     Improvement Act of 2009 to the Comptroller of the Currency to 
     carry out this Act.'';
       (4) by redesignating subsections (f) and (i) as subsections 
     (d) and (e), respectively;
       (5) in subsection (d) (as so redesignated), by striking 
     ``Director'' each place such term appears and inserting 
     ``Comptroller of the Currency'';
       (6) by striking subsections (g), (h), and (j); and
       (7) in subsection (e) (as so redesignated), by striking 
     ``compensation of the Director and other employees of the 
     Office and all other expenses thereof'' and inserting 
     ``expenses incurred by the Comptroller of the Currency in 
     carrying out this Act''.
       (c) Amendments to Section 4.--Section 4 of the Home Owners' 
     Loan Act (12 U.S.C. 1463) is amended by striking ``Director'' 
     each time it appears and inserting ``Comptroller of the 
     Currency''.
       (d) Amendments to Section 5.--
       (1) Universal.--Section 5 of the Home Owners' Loan Act (12 
     U.S.C. 1464) is amended--
       (A) by striking ``Director'' and ``Director of the Office 
     of Thrift Supervision'' each place such terms appear and 
     inserting ``Comptroller of the Currency''; and
       (B) by striking ``Director's'' each place such term appears 
     and inserting ``Comptroller of the Currency's''.
       (2) Specific provisions.--
       (A) Section 5(d)(2)(E) of the Home Owners' Loan Act is 
     amended by striking ``or the Resolution Trust Corporation, as 
     appropriate,'' each place such term appears.
       (B) Section 5(d)(3)(B) of the Home Owners' Loan Act is 
     amended by striking ``or the Resolution Trust Corporation''.
       (e) Amendments to Sections 8 and 9.--Sections 8 and 9 of 
     the Home Owners' Loan Act (12 U.S.C. 1466a and 1467) are each 
     amended by striking ``Director'' each place such term appears 
     and inserting ``Comptroller of the Currency''.
       (f) Technical and Conforming Amendments.--
       (1) Section 3.--The heading for section 3 of the Home 
     Owners' Loan Act is amended by striking ``DIRECTOR OF THE 
     OFFICE OF THRIFT SUPERVISION'' and inserting ``DIVISION OF 
     THRIFT SUPERVISION''.
       (2) Section 5.--The heading for paragraph (2)(E)(ii) of 
     section 5(d) of the Home Owners' Loan Act and the heading for 
     paragraph (3)(B) of such section are each amended by striking 
     ``OR RTC''.
       (g) Clerical Amendment.--The table of contents section for 
     the Home Owners' Loan Act is amended by striking the item 
     relating to section 3 and inserting the following new item:

``Sec. 3. Division of Thrift Supervision.''.

     SEC. 1203. 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.

       ``There shall be in the Department of the Treasury a 
     bureau, the chief officer of which bureau shall be called the 
     Comptroller of the Currency, and shall perform the duties of 
     the Comptroller of the Currency under the general direction 
     of the Secretary of the Treasury. The Comptroller of the 
     Currency shall have the same authority over matters as were 
     vested in the Director of the Office of Thrift Supervision or 
     the Office of Thrift Supervision on the day before the date 
     of enactment of the Financial Stability Improvement Act of 
     2009 other than those authorities with respect to savings and 
     loan holding companies and any affiliate of any such company 
     (other than a savings association) as were vested in the 
     Director of the Office of Thrift Supervision on such date. 
     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.''.
       (b) Amendments to Section 327.--Section 327 of the Revised 
     Statutes of the United States (12 U.S.C. 4) is amended to 
     read as follows:

     ``SEC. 327 DEPUTY COMPTROLLERS.

       ``(a) Appointment.--The Secretary of the Treasury shall 
     appoint no more than 5 Deputy Comptrollers of the Currency--
       ``(1) 1 of whom shall be designated the Senior Deputy 
     Comptroller for National Banks, who shall oversee the 
     regulation and supervision of national banks; and
       ``(2) 1 of whom shall be designated the Senior Deputy 
     Comptroller for Thrift Supervision, who shall oversee the 
     regulation and supervision of Federal savings associations.
       ``(b) Pay.--The Secretary of the Treasury shall fix the 
     compensation of the Deputy Comptrollers of the Currency and 
     provide such other benefits as the Secretary may determine to 
     be appropriate.
       ``(c) Oath of Office; Duties.--Each Deputy Comptroller 
     shall take the oath of office and shall perform such duties 
     as the Comptroller of the Currency shall direct.
       ``(d) Service as Acting Comptroller.--During a vacancy in 
     the office or during the absence or disability of the 
     Comptroller, each Deputy Comptroller shall possess the power 
     and perform the duties attached by law to the Office of the 
     Comptroller under such order of succession as the Comptroller 
     shall direct.''.
       (c) Amendment to Section 329.--Section 329 of the Revised 
     Statutes of the United

[[Page 31075]]

     States (12 U.S.C. 11) is amended by inserting ``or any 
     Federal savings association'' before the period at the end.
       (d) Amendment to Section 5240.--The fourth sentence of the 
     second undesignated paragraph of Section 5240 of the Revised 
     Statutes of the United States (12 U.S.C. 481) is amended by 
     striking ``Secretary of the Treasury;'' and all that follows 
     through the end of the sentence, and inserting ``Secretary of 
     the Treasury; the employment and compensation of examiners, 
     chief examiners, reviewing examiners, assistant examiners, 
     and of the other employees of the office of the Comptroller 
     of the Currency whose compensation is and shall be paid from 
     assessments on banks or affiliates thereof or from other fees 
     or charges imposed pursuant to this subchapter shall be set 
     and adjusted pursuant to chapter 71 of title 5, United States 
     Code and without regard to the provisions of other laws 
     applicable to officers or employees of the United States.''
       (e) Amendment to Section 5240.--The first sentence in the 
     first undesignated paragraph of Section 5240 of the Revised 
     Statutes of the United States (12 U.S.C. 482) is amended by 
     inserting ``pursuant to chapter 71 of title 5, United States 
     Code,'' after ``shall,''.

     SEC. 1204. POWER AND DUTIES TRANSFERRED.

       (a) Director of the Office of Thrift Supervision.--
       (1) Transfer of functions.--Except as otherwise provided in 
     this subtitle, all functions of the Director of the Office of 
     Thrift Supervision are transferred to the Office of the 
     Comptroller of the Currency.
       (2) Comptroller's authority.--Except as otherwise provided 
     in this subtitle, the Comptroller of the Currency shall 
     succeed to all powers, authorities, rights, and duties that 
     were vested in the Director of the Office of Thrift 
     Supervision under Federal law, including the Home Owners' 
     Loan Act, on the day before the transfer date other than 
     those powers, authorities, rights, and duties with respect to 
     savings and loan holding companies and any affiliate of any 
     such company (other than a savings association) as were 
     vested in the Director of the Office of Thrift Supervision on 
     such date.
       (3) Functions relating to supervision of state savings 
     associations.--
       (A) Transfer of functions.--All functions of the Director 
     of the Office of Thrift Supervision relating to the 
     supervision and regulation of State savings associations are 
     transferred to the Corporation.
       (B) Corporation's authority.--The Corporation shall succeed 
     to all powers, authorities, rights, and duties that were 
     vested in the Director of the Office of Thrift Supervision 
     under Federal law, including the Home Owners' Loan Act, on 
     the day before the transfer date, relating to the supervision 
     and regulation of State savings associations.
       (b) Appropriate Federal Banking Agency.--Section 3 of the 
     Federal Deposit Insurance Act (12 U.S.C. 1813) is amended in 
     subsection (q)--
       (1) by amending paragraph (1) to read as follows:
       ``(1) the Comptroller of the Currency in the case of any 
     national bank, Federal savings association or any Federal 
     branch or agency of a foreign bank;'';
       (2) in paragraph (2)(F), by adding ``and'' at the end after 
     the semicolon;
       (3) by amending paragraph (3) to read as follows:
       ``(3) the Federal Deposit Insurance Corporation in the case 
     of a State nonmember insured bank, a State savings 
     association or a foreign bank having an insured branch.''; 
     and
       (4) by striking paragraph (4).
       (c) Transfer of Consumer Financial Protection Functions.--
     Nothing in subsection (a) or (b) shall affect any transfer of 
     consumer financial protection functions of the Comptroller of 
     the Currency and the Director of the Office of Thrift 
     Supervision to the Consumer Financial Protection Agency as 
     provided in the Consumer Financial Protection Agency Act of 
     2009.
       (d) Effective Date.--Subsections (a) and (b) shall become 
     effective on the transfer date.

     SEC. 1205. TRANSFER DATE.

       (a) In General.--Except as provided in subsection (b), the 
     date for the transfer of functions to the Office of the 
     Comptroller of the Currency and the Corporation under section 
     1204 shall be 1 year after the date of enactment of this 
     title.
       (b) Extension Permitted.--
       (1) Notice required.--The Secretary, in consultation with 
     the Comptroller of the Currency and the Director of the 
     Office of Thrift Supervision, may designate a calendar date 
     for the transfer of functions of the Office of Thrift 
     Supervision to the Office of the Comptroller of the Currency, 
     and the Corporation under section 1204 that is later than 1 
     year after the date of enactment of this title if the 
     Secretary--
       (A) transmits to the Committee on Banking, Housing, and 
     Urban Affairs of the Senate and the Committee on Financial 
     Services of the House of Representatives--
       (i) a written determination that orderly implementation of 
     this subtitle is not feasible on the date that is 1 year 
     after the date of enactment of this subtitle;
       (ii) an explanation of why an extension is necessary for 
     the orderly implementation of this subtitle; and
       (iii) a description of the steps that will be taken to 
     effect an orderly and timely implementation of this subtitle 
     within the extended time period; and
       (B) publishes notice of that designated later date in the 
     Federal Register.
       (2) Extension limited.--In no case shall any date 
     designated under paragraph (1) be later than 18 months after 
     the date of enactment of this subtitle.
       (3) Effect on references to ``transfer date''.--If the 
     Secretary takes the actions provided in paragraph (1) for 
     designating a date for the transfer of functions to the 
     Office of the Comptroller of the Currency, and the 
     Corporation under section 1204, references in this title to 
     ``transfer date'' shall mean the date designated by the 
     Secretary.

     SEC. 1206. EXPIRATION OF TERM OF COMPTROLLER.

       (a) In General.--Notwithstanding section 325 of the Revised 
     Statutes of the United States, the term of the person serving 
     as Comptroller on the date of the enactment of this title 
     shall terminate as of such date.
       (b) Acting Comptroller.--Subject to sections 3345, 3346, 
     and 3347 of title 5, United States Code, the President may 
     designate a person to serve as acting Comptroller and perform 
     the functions and duties of the Comptroller until a 
     Comptroller has been appointed and qualified in the manner 
     established in section 325 of the Revised Statutes of the 
     United States.

     SEC. 1207. OFFICE OF THRIFT SUPERVISION ABOLISHED.

       Effective 90 days after the transfer date, the position of 
     Director of the Office of Thrift Supervision and the Office 
     of Thrift Supervision are abolished.

     SEC. 1208. SAVINGS PROVISIONS.

       (a) Office of Thrift Supervision.--
       (1) Existing rights, duties, and obligations not 
     affected.--Sections 1204(a) and 1207 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 subtitle 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--
       (A) for any action or proceeding arising out of a function 
     of the Director of the Office of Thrift Supervision 
     transferred to the Comptroller of the Currency by this title, 
     the Comptroller of the Currency or the Office of the 
     Comptroller of the Currency shall be substituted for the 
     Director of the Office of Thrift Supervision or the Office of 
     Thrift Supervision, as the case may be, as a party to the 
     action or proceeding as of the transfer date; and
       (B) for any action or proceeding arising out of a function 
     of the Director of the Office of Thrift Supervision 
     transferred to the Corporation by this title, the Chairman of 
     the Corporation shall be substituted for the Director of the 
     Office of Thrift Supervision as a party to the action or 
     proceeding as of the transfer date.
       (b) Continuation of Existing OTS Orders, Resolutions, 
     Determinations, Agreements, Regulations, etc.--All orders, 
     resolutions, determinations, agreements, and 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 that are 
     transferred by this title and that are in effect on the day 
     before the transfer date, shall continue in effect according 
     to the terms of those orders, resolutions, determinations, 
     agreements, and regulations, interpretative rules, other 
     interpretations, guidelines, procedures, and other advisory 
     materials, and shall be enforceable by or against--
       (1) the Office of the Comptroller of the Currency, in the 
     case of a function of the Director of the Office of Thrift 
     Supervision transferred to the Comptroller of the Currency, 
     until modified, terminated, set aside, or superseded in 
     accordance with applicable law by the Office of the 
     Comptroller of the Currency, by any court of competent 
     jurisdiction, or by operation of law; and
       (2) the Corporation, in the case of a function of the 
     Director of the Office of Thrift Supervision transferred to 
     the Corporation, until modified, terminated, set aside, or 
     superseded in accordance with applicable law by the 
     Corporation, by any court of competent jurisdiction, or by 
     operation of law.
       (c) Continuation of Existing OTS Enforcement Actions.--Any 
     formal or informal enforcement action taken by the Director 
     of the Office of Thrift Supervision with respect to a savings 
     and loan holding company, a subsidiary of a savings and loan 
     holding company (other than a savings association) or an 
     institution-affiliated party of a savings and loan holding 
     company or such a subsidiary, that is in effect on the day 
     before the date of the enactment of this title shall continue 
     to be effective and enforceable against such company, 
     subsidiary, or institution-affiliated party after such date 
     as if--

[[Page 31076]]

       (1) such savings and loan holding company, or the savings 
     and loan holding company related to such subsidiary or 
     institution-affiliated party, had been a bank holding company 
     on the effective date of the final enforcement action; and
       (2) the action had been taken by the Board, unless 
     otherwise terminated or modified by the Board.
       (d) Identification of Regulations Continued.--
       (1) By office of the comptroller of the currency.--Not 
     later than the transfer date, the Comptroller of the Currency 
     shall--
       (A) after consultation with the Chairperson of 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) after 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.
       (e) Status of Regulations Proposed or Not Yet Effective.--
       (1) Proposed regulations.--Any proposed regulation of the 
     Office of Thrift Supervision, which that agency, in 
     performing functions transferred by this title, 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 Corporation, as appropriate, according to its terms.
       (2) Regulations not yet effective.--Any interim or final 
     regulation of the Office of Thrift Supervision, which that 
     agency, in performing functions transferred by this title, 
     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 Corporation, as appropriate, according to 
     its terms.

     SEC. 1209. REGULATIONS AND ORDERS.

       In addition to any powers transferred to the Comptroller of 
     the Currency by this title, the Comptroller of the Currency 
     may prescribe such regulations and issue such orders as the 
     Comptroller of the Currency determines to be appropriate to 
     carry out this title and the powers and duties transferred to 
     the Comptroller of the Currency by this title.

     SEC. 1210. COORDINATION OF TRANSITION ACTIVITIES.

       Before the transfer date, the Comptroller of the Currency 
     shall--
       (1) consult and cooperate with the Office of Thrift 
     Supervision to facilitate the orderly transfer of functions 
     to the Comptroller of the Currency;
       (2) determine and redetermine, 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 title 
     and ending on the transfer date;
       (B) what 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 
     during the period beginning on the date of enactment of this 
     title and ending on the transfer date; and
       (3) take such actions as may be necessary to provide for 
     the orderly implementation of this title.

     SEC. 1211. INTERIM RESPONSIBILITIES OF OFFICE OF THE 
                   COMPTROLLER OF THE CURRENCY AND OFFICE OF 
                   THRIFT SUPERVISION.

       (a) In General.--When requested by the Comptroller of the 
     Currency to do so before the transfer date, the Office of 
     Thrift Supervision shall--
       (1) pay to the Comptroller of the Currency, 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 that 
     the Comptroller of the Currency determines to be necessary 
     under section 1210(2)(A);
       (2) detail to the Office of the Comptroller of the Currency 
     such personnel as the Comptroller of the Currency determines 
     to be appropriate under section 1210(2)(B); and
       (3) make available to the Office of the Comptroller of the 
     Currency such property and provide the Office of the 
     Comptroller of the Currency such administrative services as 
     the Comptroller of the Currency determines to be necessary 
     under section 1210(2)(C).
       (b) Notice Required.--The Comptroller of the Currency shall 
     give the Office of Thrift Supervision reasonable prior notice 
     of any request that the Office of the Comptroller of the 
     Currency intends to make under subsection (a).

     SEC. 1212. EMPLOYEES TRANSFERRED.

       (a) In General.--
       (1) OTS employees.--
       (A) In general.--All employees of the Office of Thrift 
     Supervision shall be transferred to either the Comptroller of 
     the Currency or the Corporation for employment.
       (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--

       (I) the functions of the Office of Thrift Supervision that 
     are transferred to the Office of the Comptroller of the 
     Currency by this title; and
       (II) the functions of the Office of Thrift Supervision that 
     are transferred to the Corporation by this title;

       (ii) consistent with the numbers determined under clause 
     (ii), jointly identify employees of the Office of Thrift 
     Supervision for transfer to the Office of the Comptroller of 
     the Currency or the Corporation in a manner that the Director 
     of the Office of Thrift Supervision, the Comptroller of the 
     Currency, and the Chairperson of the Corporation, in their 
     discretion, deem equitable.
       (2) Transfer of employees performing consumer financial 
     protection functions.--Nothing in paragraph (1) shall affect 
     the transfer of employees performing or supporting consumer 
     financial protection functions of the Comptroller of the 
     Currency and the Director of the Office of Thrift Supervision 
     to the Consumer Financial Protection Agency as provided in 
     the Consumer Financial Protection Agency Act of 2009.
       (3) Appointment authority for excepted service 
     transferred.--
       (A) In general.--In the case of employees occupying 
     positions in the excepted 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.--The Office of the 
     Comptroller of the Currency and the Corporation may decline 
     to accept 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.
       (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 
     transfer date; and
       (2) receive notice of his or her 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 subtitle.--If any provision of this 
     subtitle conflicts with any protection provided to 
     transferred employees under section 3503 of title 5, United 
     States Code, the provisions of this subtitle shall control.
       (d) Employees' Status and Eligibility.--The transfer of 
     functions and employees under this title, and the abolition 
     of the Office of Thrift Supervision, 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.--Each employee 
     transferred from the Office of Thrift Supervision shall be 
     placed in a position at either the Office of the Comptroller 
     of the Currency or the Corporation with the same status and 
     tenure as he or she held on the day before the transfer date.
       (f) No Additional Certification Requirements.--Examiners 
     transferred to the Office of the Comptroller of the Currency 
     or the Corporation shall not be subject to any additional 
     certification requirements before being placed in a 
     comparable examiner's position at the Office of the 
     Comptroller of the Currency or the Corporation examining the 
     same types of institutions as they examined before they were 
     transferred.
       (g) Personnel Actions Limited.--
       (1) 3-year protection.--
       (A) In general.--Except as provided in paragraph (2), each 
     affected employee shall not, during the 3-year period 
     beginning on the transfer date, be involuntarily separated, 
     or involuntarily reassigned outside his or her locality pay 
     area as defined by the Office of Personnel Management.
       (B) Affected employees.--For purposes of this paragraph, 
     the term ``affected employee'' means--
       (i) an employee transferred from the Office of Thrift 
     Supervision holding a permanent position on the day before 
     the transfer date;
       (ii) an employee of the Office of the Comptroller of the 
     Currency holding a permanent position on the day before the 
     transfer date; and
       (iii) an employee of the Corporation holding a permanent 
     position on the day before the transfer date.
       (2) Exceptions.--Paragraph (1) does not limit the right of 
     the Office of the Comptroller of the Currency or the 
     Corporation to--

[[Page 31077]]

       (A) separate an employee for cause or 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) 1-year protection.--Except as provided in paragraph 
     (2), each employee transferred from the Office of Thrift 
     Supervision shall, during the 1-year period beginning on the 
     transfer date, receive pay at a rate not less than the basic 
     rate of pay (including any geographic differential) that the 
     employee received during the 1-year period immediately before 
     the transfer.
       (2) Exceptions.--Paragraph (1) does not limit the right of 
     the Office of the Comptroller of the Currency or the 
     Corporation to reduce a transferred employee's rate of basic 
     pay--
       (A) for cause;
       (B) for unacceptable performance; or
       (C) with the employee's consent.
       (3) Protection only while employed.--Paragraph (1) applies 
     to a transferred employee only while that employee remains 
     employed by the Office of the Comptroller of the Currency or 
     the Corporation.
       (4) Pay increases permitted.--Paragraph (1) does not limit 
     the authority of the Office of the Comptroller of the 
     Currency or the Corporation to increase a transferred 
     employee's pay.
       (i) Benefits.--
       (1) Retirement benefits for transferred employees.--
       (A) In general.--
       (i) Continuation of existing retirement plan.--Each 
     employee transferred from the Office of Thrift Supervision 
     may remain enrolled in his or her existing retirement plan or 
     plans as long as he or she remains employed by the Office of 
     the Comptroller of the Currency or the Corporation.
       (ii) Employer's contribution.--The Office of the 
     Comptroller of the Currency or the Corporation shall pay any 
     employer contributions to the existing retirement plan of 
     each employee transferred from the Office of Thrift 
     Supervision as required under that plan.
       (B) Definition.--For purposes of this paragraph, 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 from which the employee was transferred, which the 
     employee was enrolled in on the day before the transfer date.
       (2) Benefits other than retirement benefits.--
       (A) During 1st year.--
       (i) Existing plans continue.--Each transferred employee 
     may, for 1 year after the transfer date, retain membership in 
     any other employee benefit program of the Office of Thrift 
     Supervision, including a 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 shall pay any 
     employer cost 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 transfer date, the 
     Office of the Comptroller of the Currency or the Corporation 
     decides not to continue participation in any dental, vision, 
     or life insurance program of the Office of Thrift 
     Supervision, an employee transferred from the Office of 
     Thrift Supervision pursuant to this title who is a member of 
     such a program may, before the decision of the Office of the 
     Comptroller of the Currency or the Corporation takes effect, 
     elect to enroll, without regard to any regularly scheduled 
     open season, in--
       (i) the enhanced dental benefits program 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; and
       (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 transfer date, the Office of 
     the Comptroller of the Currency or the Corporation decides 
     not to continue participation in any long term care insurance 
     program of the Office of Thrift Supervision, an employee 
     transferred from the Office of Thrift Supervision pursuant to 
     this title who is a member of such a program may, before the 
     decision of the Office of the Comptroller of the Currency or 
     the Corporation 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's contribution.--
       (i) In general.--Subject to clause (ii), an individual 
     enrolled in the Federal Employees Health Benefits program 
     under this subparagraph shall pay any employee contribution 
     required by the plan.
       (ii) Cost differential.--The difference in costs between 
     the benefits that the Office of Thrift Supervision is 
     providing on the date of enactment of this title and the 
     benefits provided by this section shall be paid by the 
     Comptroller of the Currency or the Corporation.
       (iii) Funds transfer.--The Office of the Comptroller of the 
     Currency or the Corporation 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 Office of the Comptroller of the 
     Currency or the Corporation 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 (i).
       (E) 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 the Office of Thrift 
     Supervision on the day before the 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 Office 
     of the Comptroller of the Currency or the Corporation, 
     without regard to any regularly scheduled open season and 
     requirement of insurability.
       (ii) Employee's contribution.--

       (I) In general.--Subject to subclause (II), an individual 
     enrolled in a life insurance plan under this clause shall pay 
     any employee contribution required by the plan.
       (II) Cost differential.--The difference in costs between 
     the benefits that the Office of Thrift Supervision is 
     providing on the date of enactment of this title and the 
     benefits provided by this section shall be paid by the 
     Comptroller of the Currency or the Corporation.
       (III) Funds transfer.--The Office of the Comptroller of the 
     Currency or the Corporation 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 Office of the Comptroller of the Currency or the 
     Corporation 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 subclause (I).
       (IV) Credit for time enrolled in other plans.--For 
     employees transferred under this section, enrollment in a 
     life insurance plan administered by the Office of the 
     Comptroller of the Currency, the Office of Thrift 
     Supervision, or the Corporation 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) Equitable Treatment.--In administering the provisions 
     of this section, the Office of the Comptroller of the 
     Currency and the Corporation--
       (1) shall take no action that would unfairly disadvantage 
     transferred employees relative to other employees of the 
     Office of the Comptroller of the Currency or the Corporation 
     based on their prior employment by the Office of Thrift 
     Supervision;
       (2) may take such action as is appropriate in individual 
     cases so that employees transferred under this section 
     receive equitable treatment, with respect to those employees' 
     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;
       (3) shall, jointly with the Director of the Office of 
     Thrift Supervision, develop and adopt procedures and 
     safeguards designed to ensure that the requirements of this 
     subsection are met; and
       (4) shall conduct a study detailing the position 
     assignments of all employees transferred pursuant to 
     subsection (a), describing the procedures and safeguards 
     adopted pursuant to paragraph (3), and demonstrating that the 
     requirements of this subsection have been met; and shall, not 
     later than 365 days after the transfer date, submit a copy of 
     such study to Congress.

     SEC. 1213. PROPERTY TRANSFERRED.

       (a) In General.--Not later than 90 days after the transfer 
     date, all property of the Office of Thrift Supervision shall 
     be transferred to the Office of the Comptroller of the 
     Currency or the Corporation, allocated in a manner consistent 
     with section 1212(a).
       (b) Contracts Related to Property Transferred.--All 
     contracts, agreements, leases, licenses, permits, and similar 
     arrangements 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 together with that 
     property.

[[Page 31078]]

       (c) Preservation of Property.--Property identified for 
     transfer under this section shall not be altered, destroyed, 
     or deleted before transfer under this section.
       (d) 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).

     SEC. 1214. FUNDS TRANSFERRED.

       Except to the extent needed to dispose of affairs under 
     section 1215, all funds that, on the day before the transfer 
     date, are available to the Director of the Office of Thrift 
     Supervision to pay the expenses of the Office of Thrift 
     Supervision shall be transferred to the Office of the 
     Comptroller of the Currency or the Corporation, allocated in 
     a manner consistent with section 1212(a), on the transfer 
     date.

     SEC. 1215. DISPOSITION OF AFFAIRS.

       (a) In General.--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 agency related to any function transferred to the 
     Office of the Comptroller of the Currency or the Corporation 
     by this subtitle--
       (A) manage any employees of the Office of Thrift 
     Supervision and provide for the payment of the compensation 
     and benefits of any such employees that accrue before the 
     transfer date; and
       (B) manage any property of the Office of Thrift Supervision 
     until the property is transferred under section 1213; and
       (2) may take any other action necessary to wind up the 
     affairs of the Office of Thrift Supervision relating to the 
     transferred functions.
       (b) Authority and Status of Director.--
       (1) In general.--Notwithstanding the transfers of functions 
     under this subtitle, the Director of the Office of Thrift 
     Supervision shall, during the 90-day period beginning on the 
     transfer date, retain and may exercise any authority vested 
     in the Director on the day before the transfer date that is 
     necessary to carry out the requirements of this subtitle 
     during that 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 he or she was receiving on the day 
     before the transfer date.

     SEC. 1216. 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 to be transferred to 
     the Office of the Comptroller of the Currency or the 
     Corporation, shall--
       (1) continue to provide those services, subject to 
     reimbursement, until the transfer of those functions is 
     complete; and
       (2) consult with any such agency to coordinate and 
     facilitate a prompt and orderly transition.

     SEC. 1217. CONTRACTING AND LEASING AUTHORITY.

       In addition to any powers transferred to the Comptroller of 
     the Currency by this subtitle, 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 
     real or personal property, or interest in property, as the 
     Comptroller of the Currency determines to be necessary or 
     convenient to carry out the duties and responsibilities of 
     the Comptroller of the Currency; and
       (2) hold, maintain, sell, lease, or otherwise dispose of 
     any real or personal property or interest in property without 
     regard to title 40, United States Code, title III of the 
     Federal Properties and Administrative Services Act of 1949 
     (41 U.S.C. 251 et seq.), and other Federal laws of a similar 
     type governing the procurement of goods and services or the 
     acquisition or disposition of any property or interest in 
     property by Federal agencies.

     SEC. 1218. TREATMENT OF SAVINGS AND LOAN HOLDING COMPANIES.

       Section 10 of the Home Owners' Loan Act (12 U.S.C. 1467a) 
     is amended as follows:
       (1) In subsection (m)--
       (A) in paragraph (2), by striking ``Director'' and 
     inserting ``Comptroller'';
       (B) in paragraph (2), by striking ``Director may grant'' 
     and inserting ``Comptroller of the Currency may grant'';
       (C) in paragraph (2), by striking ``the Director deems'' 
     and inserting ``the Comptroller deems'';
       (D) in paragraph (2)(A), by striking ``Director'' and 
     inserting ``Comptroller'';
       (E) in paragraph (2)(B), by striking ``Director'' and 
     inserting ``Comptroller'';
       (F) in paragraph (2)(B)(iii), by striking ``Director'' and 
     inserting ``Comptroller'';
       (G) by striking subparagraph (A) of paragraph (3) and 
     inserting the following new subparagraph:
       ``(A) In general.--A savings association that fails to 
     become or remain a qualified thrift lender shall--
       ``(i) immediately be subject to the restrictions in 
     subparagraph (B); and
       ``(ii) become one or more banks (other than a savings bank) 
     within one year after the date on which the savings 
     association should have become or ceases to be a qualified 
     thrift lender, except as provided in subparagraph (C)(i).'';
       (H) by striking subclause (III) of paragraph (3)(B)(i) and 
     inserting the following new subclause:

       ``(III) Dividends.--The savings association shall be 
     prohibited from paying dividends except for such dividends--

       ``(aa) as would be permissible for a national bank;
       ``(bb) that are necessary to meet obligations of a company 
     that controls such savings association; and
       ``(cc) that are specifically approved by the Comptroller 
     and the Board of Governors after prior written request of at 
     least 30 days to the Comptroller and the Board of 
     Governors.'';
       (I) by striking clause (ii) of paragraph (3)(B);
       (J) by striking subparagraphs (C) and (D) of paragraph (3) 
     and inserting the following new subparagraphs:
       ``(C) Regulatory authority.--A savings association that 
     fails to become or remain a qualified thrift lender shall be 
     deemed to have violated section 5 of the Home Owners' Loan 
     Act and subject to actions authorized by section 5(d) of the 
     Home Owners' Loan Act.
       ``(D) Requalifications.--
       ``(i) A savings association that should have become or 
     ceases to be a qualified thrift lender shall not be subject 
     to subparagraph (A)(ii) if the savings association becomes a 
     qualified thrift lender by meeting the qualified thrift 
     lender requirement in paragraph (1) on a monthly average 
     basis in 9 out of the preceding 12 months and remains a 
     qualified thrift lender.
       ``(ii) If the savings association referred to in clause (i) 
     (or any savings association that acquired all or 
     substantially all of its assets from that savings 
     association) at any time thereafter ceases to be a qualified 
     thrift lender it shall immediately be subject to subparagraph 
     (A)(ii) as if the one-year time period provided for in 
     subparagraph (A)(ii) already has expired, and as if the 
     exception in clause (i) was not applicable or available to 
     such savings association.'';
       (K) in paragraph (4)(D) by striking ``Director'' and 
     inserting ``Comptroller'';
       (L) in paragraph (4)(E) by striking ``Director'' and 
     inserting ``Comptroller''; and
       (M) in paragraph (7)(B) by striking ``Director'' and 
     inserting ``Comptroller''.
       (2) In subsection (o)--
       (A) in paragraph (3) in the heading by striking 
     ``Director'' and inserting ``Board'';
       (B) in paragraph (3)(A) by striking ``Director'' and 
     inserting ``Board'';
       (C) in paragraph (3)(B) by striking ``Director'' and 
     inserting ``Board'';
       (D) in paragraph (3)(C) by striking ``Director'' and 
     inserting ``Board'';
       (E) in paragraph (3)(D) by striking ``Director'' and 
     inserting ``Comptroller'';
       (F) in paragraph (5)(E), by striking ``activities described 
     in subsection (c)(2) or (c)(9)(A)(ii)'' and inserting 
     ``activities otherwise permissible for the company pursuant 
     to, and in accordance with, section 4 of the Bank Holding 
     Company Act of 1956'';
       (G) in paragraph (7) by striking ``chartered by the 
     Director'' and inserting ``chartered by the Comptroller''; 
     and
       (H) in paragraph (7) by striking ``regulations as the 
     Director may'' and inserting ``regulations as the Board 
     may''.

     SEC. 1219. PRACTICES OF CERTAIN MUTUAL THRIFT HOLDING 
                   COMPANIES PRESERVED.

       (a) Treatment of Dividends by Certain Mutual Holding 
     Companies.--Section 3(g) of the Bank Holding Company Act of 
     1956 (12 U.S. C. 1842(g)) is amended by adding at the end the 
     following new paragraphs:
       ``(3) Declaration of dividends.--Every subsidiary savings 
     association of a mutual holding company shall give the Board 
     not less than 30 days advance notice of the proposed 
     declaration by its directors of any dividend on its guaranty, 
     permanent, or other nonwithdrawable stock. Such notice period 
     shall commence to run from the date of receipt of such notice 
     by the Board. Any such dividend declared within such period, 
     or without the giving of such notice to the Board, shall be 
     invalid and shall confer no rights or benefits upon the 
     holder of any such stock.
       ``(4) Waiver of dividends.--Any mutual thrift holding 
     company organized under section 10(b) of the Home Owners' 
     Loan Act shall be permitted to waive such company's right to 
     receive any dividend declared by a subsidiary, if--
       ``(A) no insider of the mutual holding company, associate 
     of an insider, or tax-qualified or non-tax-qualified employee 
     stock benefit plan of the mutual holding company holds any 
     share of the stock in the class of stock to which the waiver 
     would apply; or

[[Page 31079]]

       ``(B) the mutual holding company provides the Board with 
     written notice of its intent to waive its right to receive 
     dividends 30 days prior to the proposed date of payment of 
     the dividend and the Board does not object.
       ``(5) Standards for waiver of dividend.--The Board shall 
     not object to a notice of intent to waive dividends under 
     paragraph (4) if--
       ``(A) the waiver would not be detrimental to the safe and 
     sound operation of the savings association; and
       ``(B) the board of directors of the mutual holding company 
     expressly determines that a waiver of the dividend by the 
     mutual holding company is consistent with the directors' 
     fiduciary duties to the mutual members of such company.
       ``(6) Resolution included in waiver notice.--A dividend 
     waiver notice shall include a copy of the resolution of the 
     board of directors of the mutual holding company, in form and 
     substance satisfactory to the Board, together with any 
     supporting materials relied upon by the board of directors, 
     concluding that the proposed dividend waiver is consistent 
     with the board of director's fiduciary duties to the mutual 
     members of the mutual holding company.
       ``(7) Valuation.--The Board will not consider waived 
     dividends in determining an appropriate exchange ratio in the 
     event of a full conversion to stock form.''.

     SEC. 1220. IMPLEMENTATION PLAN AND REPORTS.

       (a) Plan Submission.--Within 90 days of the enactment of 
     the Financial Stability Improvement Act of 2009, the 
     Secretary and the Corporation, in consultation with the 
     Office of the Comptroller of the Currency and the Office of 
     Thrift Supervision, shall jointly submit a plan to the 
     Congress and the Inspectors General of the Department of the 
     Treasury and of the Corporation detailing the steps the 
     Secretary, the Corporation, the Office of the Comptroller of 
     the Currency, and the Office of Thrift Supervision will take 
     to implement the provisions of sections 1201 through 1216, 
     and the provisions of the amendments made by such sections.
       (b) Inspectors General Review of the Plan.--Within 60 days 
     of the date on which the Congress receives the plan required 
     under subsection (a), the Inspectors General of the 
     Department of the Treasury and of the Corporation shall 
     jointly provide a written report to the Secretary and the 
     Corporation and shall submit a copy to the Congress detailing 
     whether the plan conforms with the intent of the provisions 
     of sections 1201 through 1216, and the provisions of the 
     amendments made by such sections, including--
       (1) whether the plan sufficiently takes into consideration 
     the orderly transfer of personnel;
       (2) whether the plan describes procedures and safeguards to 
     ensure that the Office of Thrift Supervision employees are 
     not unfairly disadvantaged relative to employees of the 
     Office of the Comptroller of the Currency and the 
     Corporation;
       (3) whether the plan sufficiently takes into consideration 
     the orderly transfer of authority and responsibilities;
       (4) whether the plan sufficiently takes into consideration 
     the effective transfer of funds;
       (5) whether the plan sufficiently takes in consideration 
     the orderly transfer of property; and
       (6) any additional recommendations for an orderly and 
     effective process.
       (c) Implementation Reports.--Not later than 6 months after 
     the date on which the Congress receives the report required 
     under subsection (b), and every 6 months thereafter until all 
     aspects of the plan have been implemented, the Inspectors 
     General of the Department of the Treasury and the Corporation 
     shall jointly provide a written report on the status of the 
     implementation of the plan to the Secretary and the 
     Corporation and shall submit a copy to the Congress.

     SEC. 1221. COMPOSITION OF BOARD OF DIRECTORS OF THE FEDERAL 
                   DEPOSIT INSURANCE CORPORATION.

       Section 2 of the Federal Deposit Insurance Act (12 U.S.C. 
     1812) is amended--
       (1) in subsection (a)(1)--
       (A) in subparagraph (B), by striking ``Director of the 
     Office of Thrift Supervision'' and inserting ``Chairman of 
     the Board of Governors of the Federal Reserve System, or such 
     other member of the Board of Governors as the Chairman of the 
     Board of Governors shall designate'';
       (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''.

     SEC. 1222. AMENDMENTS TO SECTION 3.

       Section 3 of the Federal Deposit Insurance Act (12 U.S.C. 
     1813) is amended--
       (1) in subsection (b)(1)(C) (relating to the definition of 
     the term ``savings association''), by striking ``Director of 
     the Office of Thrift Supervision'' and inserting 
     ``Comptroller of the Currency'';
       (2) in subsection (l)(5) (relating to the definition of the 
     term ``deposit''), in the introductory text, by striking 
     ``Director of the Office of Thrift Supervision,''; and
       (3) in subsection (z) (relating to the definition of the 
     term ``Federal banking agency''), by striking ``the Director 
     of the Office of Thrift Supervision,''.

     SEC. 1223. AMENDMENTS TO SECTION 7.

       Section 7(a) of the Federal Deposit Insurance Act (12 
     U.S.C. 1817) is amended--
       (1) in paragraph (2)(A)--
       (A) in the first sentence, by striking ``the Director of 
     the Office of Thrift Supervision'';
       (B) in the second sentence, by striking ``the Director of 
     the Office of Thrift Supervision,'';
       (2) in paragraph (3), in the first sentence, by striking 
     ``, the Comptroller of the Currency, the Chairman of the 
     Board of Governors of the Federal Reserve System, and the 
     Director of the Office of Thrift Supervision'' and inserting 
     ``Comptroller of the Currency and the Chairman of the Board 
     of Governors of the Federal Reserve System''; and
       (3) in paragraph (7), by striking ``, the Director of the 
     Office of Thrift Supervision,''.

     SEC. 1224. AMENDMENTS TO SECTION 8.

       Section 8 of the Federal Deposit Insurance Act (12 U.S.C. 
     1818) is amended--
       (1) in subsection (a)(8)(B)(ii), in the last sentence--
       (A) by striking ``Director of the Office of Thrift 
     Supervision'' each place it appears and inserting 
     ``Comptroller of the Currency''; and
       (B) by inserting ``the Office of Thrift Supervision, as a 
     successor to'' after ``as a successor to'';
       (2) in subsection (o), by striking ``Director of the Office 
     of Thrift Supervision'' and inserting ``Comptroller of the 
     Currency''; and
       (3) in subsection (w)(3)(A), by striking ``Office of Thrift 
     Supervision'' and inserting ``Office of the Comptroller of 
     the Currency''.

     SEC. 1225. AMENDMENTS TO SECTION 11.

       Section 11 of the Federal Deposit Insurance Act (12 U.S.C. 
     1821) is amended--
       (1) in subsection (c)(6)--
       (A) in the heading, by striking ``director of the office of 
     thrift supervision'' and inserting ``Comptroller of the 
     currency'';
       (B) in subparagraph (A), by striking ``Director of the 
     Office of Thrift Supervision'' and inserting ``Comptroller of 
     the Currency'';
       (C) in subparagraph (B), by striking ``Director of the 
     Office of Thrift Supervision'' and inserting ``Comptroller of 
     the Currency'';
       (2) in subsection (d)--
       (A) in paragraph (17)(A)--
       (i) by striking ``, or the Director of the Office of Thrift 
     Supervision''; and
       (ii) by striking ``appropriate''; and
       (B) in paragraph (18)(B), by striking ``or the Director of 
     the Office of Thrift Supervision''; and
       (3) in subsection (n)--
       (A) in paragraph (1)(A), by striking ``the Director of the 
     Office of Thrift Supervision, with respect to 1 or more 
     insured''
       (B) in paragraph (2)(A), by striking ``the Director of the 
     Office of Thrift Supervision'';
       (C) in paragraph (4)(D), by striking ``and the Director of 
     the Office of Thrift Supervision, as appropriate,'';
       (D) in paragraph (4)(G), by striking ``and the Director of 
     the Office of Thrift Supervision, as appropriate,''; and
       (E) in paragraph (12)(B), by striking ``or the Director of 
     the Office of Thrift Supervision, as appropriate,''.

     SEC. 1226. AMENDMENTS TO SECTION 13.

       Section 13(k)(1)(A)(iv) of the Federal Deposit Insurance 
     Act (12 U.S.C. 1823(k)(1)(A)(iv)) is amended by striking 
     ``Director of the Office of Thrift Supervision'' and 
     inserting ``Comptroller of the Currency''.

     SEC. 1227. AMENDMENTS TO SECTION 18.

       Section 18 of the Federal Deposit Insurance Act (12 U.S.C. 
     1828) is amended--
       (1) in subsection (c)(2)--
       (A) in subparagraph (A), by striking ``bank;'' and 
     inserting ``bank or a savings association; and'';
       (B) in subparagraph (B), by inserting ``and'' at the end 
     after the semicolon;
       (C) in subparagraph (C), by striking ``bank (except a 
     savings bank supervised by the Director of the Office of 
     Thrift Supervision); and'' and inserting ``bank or State 
     savings association.''; and
       (D) by striking subparagraph (D); and
       (2) in subsection (g)(1), by striking ``Director of the 
     Office of Thrift Supervision'' and inserting ``Comptroller of 
     the Currency'';
       (3) in subsection (i)(2)--
       (A) by striking subparagraph (B) and inserting the 
     following new subparagraph:
       ``(B) the Corporation, if the resulting institution is to 
     be a State nonmember insured bank or insured State savings 
     association.''; and
       (B) by striking subparagraph (C);
       (4) in subsection (m)--
       (A) in paragraph (1)--
       (i) in subparagraph (A), by striking ``Director of the 
     Office of Thrift Supervision'' and inserting ``Comptroller of 
     the Currency''; and

[[Page 31080]]

       (ii) in subparagraph (B), by striking ``Director of the 
     Office of Thrift Supervision'' and inserting ``Comptroller of 
     the Currency'';
       (B) in paragraph (2)--
       (i) in subparagraph (A), by striking ``Director of the 
     Office of Thrift Supervision'' and inserting ``Comptroller of 
     the Currency''; and
       (ii) in subparagraph (B)--

       (I) by striking ``Director of the Office of Thrift 
     Supervision'' each place it appears and inserting 
     ``Comptroller of the Currency''; and
       (II) by striking ``Director may deem appropriate'' and 
     inserting ``Comptroller may deem appropriate''; and

       (C) in paragraph (3)--
       (i) in subparagraph (A), by striking ``Director of the 
     Office of Thrift Supervision'' and inserting ``Comptroller of 
     the Currency''; and
       (ii) in subparagraph (B), by striking ``Office of Thrift 
     Supervision'' and inserting ``Comptroller of the Currency''.

     SEC. 1228. AMENDMENTS TO SECTION 28.

       Section 28 of the Federal Deposit Insurance Act (12 U.S.C. 
     1831e) is amended--
       (1) in subsection (e)--
       (A) in paragraph (2)--
       (i) in subparagraph (A)(ii), by striking ``Director of the 
     Office of Thrift Supervision'' and inserting ``Comptroller of 
     the Currency'';
       (ii) in subparagraph (C), by striking ``Director of the 
     Office of Thrift Supervision'' and inserting ``Comptroller of 
     the Currency''; and
       (iii) in subparagraph (F), by striking ``Director of the 
     Office of Thrift Supervision'' and inserting ``Comptroller of 
     the Currency''; and
       (B) in paragraph (3)--
       (i) in subparagraph (A), by striking ``Director of the 
     Office of Thrift Supervision'' and inserting ``Comptroller of 
     the Currency''; and
       (ii) in subparagraph (B), by striking ``Director of the 
     Office of Thrift Supervision'' and inserting ``Comptroller of 
     the Currency''; and
       (2) in subsection (h)(2), by striking ``Director of the 
     Office of Thrift Supervision'' and inserting ``Comptroller of 
     the Currency''.

     SEC. 1229. AMENDMENTS TO THE ALTERNATIVE MORTGAGE TRANSACTION 
                   PARITY ACT OF 1982.

       (a) Amendments to Section 802.--Section 802(a)(3) of the 
     Alternative Mortgage Transaction Parity Act of 1982 (12 
     U.S.C. 3801(a)(3)) is amended--
       (1) by striking ``Comptroller of the Currency,'' and 
     inserting ``Comptroller of the Currency and''; and
       (2) by striking ``, and the Director of the Office of 
     Thrift Supervision''.
       (b) Amendments to Section 804.--Section 804(a) of the 
     Alternative Mortgage Transaction Parity Act of 1982 (12 
     U.S.C. 3803(a)) is amended--
       (1) by amending paragraph (1) to read as follows:
       ``(1) with respect to banks, savings associations, mutual 
     savings banks, and savings banks, only to transactions made 
     in accordance with regulations governing alternative mortgage 
     transactions as prescribed by the Comptroller of the Currency 
     to the extent that such regulations are authorized by 
     rulemaking authority granted to the Comptroller of the 
     Currency under laws other than this section; and'';
       (2) in paragraph (2), by striking ``; and'' and inserting a 
     period; and
       (3) by striking paragraph (3).

     SEC. 1230. AMENDMENTS TO THE BANK HOLDING COMPANY ACT OF 
                   1956.

       Section 4(f)(12)(A) of the Bank Holding Company Act of 1956 
     (12 U.S.C. 1843(f)(12)(A)) is amended striking ``the 
     Resolution Trust Corporation, the Federal Deposit Insurance 
     Corporation, or'' and inserting ``the Federal Deposit 
     Insurance Corporation or''.

     SEC. 1231. AMENDMENTS TO THE BANK PROTECTION ACT OF 1968.

       Section 2 of the Bank Protection Act of 1968 (12 U.S.C. 
     1881) is amended--
       (1) in paragraph (1), by striking ``national banks,'' and 
     inserting ``national banks and federal savings 
     associations,'';
       (2) in paragraph (2), by inserting ``and'' at the end;
       (3) in paragraph (3), by striking ``, and'' and inserting a 
     period; and
       (4) by striking paragraph (4).

     SEC. 1232. AMENDMENTS TO THE BANK SERVICE COMPANY ACT.

       Section 1(b) of the Bank Service Company Act (12 U.S.C. 
     1861(b)) is amended--
       (1) in paragraph (4), by striking ``insured bank,'' and 
     inserting ``insured bank or'';
       (2) by striking ``Director of the Office of Thrift 
     Supervision'' and inserting ``Comptroller of the Currency''; 
     and
       (3) by striking ``, the Federal Savings and Loan Insurance 
     Corporation,''.

     SEC. 1233. AMENDMENTS TO THE COMMUNITY REINVESTMENT ACT OF 
                   1977.

       Section 803 of the Community Reinvestment Act of 1977 (12 
     U.S.C. 2902) is amended--
       (1) in paragraph (1)--
       (A) in subparagraph (A), by striking ``national banks'' and 
     inserting ``national banks or savings associations (the 
     deposits of which are insured by the Federal Deposit 
     Insurance Corporation)''; and
       (B) in subparagraph (B), by striking ``and bank holding 
     companies;'' and inserting ``, bank holding companies and 
     savings and loan holding companies;''; and
       (2) by striking the first paragraph (2) (relating to 
     section 8 of the Federal Deposit Insurance Act).

     SEC. 1234. AMENDMENTS TO THE DEPOSITORY INSTITUTION 
                   MANAGEMENT INTERLOCKS ACT.

       (a) Amendment to Section 207.--Section 207 of the 
     Depository Institution Management Interlocks Act (12 U.S.C. 
     3206) is amended--
       (1) in paragraph (1), by striking ``national banks,'' and 
     inserting ``national banks and Federal savings associations 
     (the deposits of which are insured by the Federal Deposit 
     Insurance Corporation),'';
       (2) in paragraph (2), by striking ``and bank holding 
     companies,'' and inserting ``, bank holding companies, and 
     savings and loan holding companies,''
       (3) by striking paragraph (4); and
       (4) by redesignating paragraphs (5) and (6) as paragraphs 
     (4) and (5), respectively.
       (b) Amendment to Section 209.--Section 209 of the 
     Depository Institution Management Interlocks Act (12 U.S.C. 
     3207) is amended--
       (1) in paragraph (1), by striking ``national banks,'' and 
     inserting ``national banks and Federal savings associations 
     (the deposits of which are insured by the Federal Deposit 
     Insurance Corporation),'';
       (2) in paragraph (2), by striking ``and bank holding 
     companies,'' and inserting ``, bank holding companies, and 
     savings and loan holding companies,'';
       (3) at the end of paragraph (3), by inserting ``and'' after 
     the comma;
       (4) by striking paragraph (4); and
       (5) by redesignating paragraph (5) as paragraph (4).
       (c) Amendment to Section 210.--Subsection 210(a) of the 
     Depository Institution Management Interlocks Act (12 U.S.C. 
     3208(a)) is amended--
       (1) by striking ``his'' and inserting ``the''; and
       (2) by inserting ``of the Attorney General'' after 
     ``enforcement functions''.

     SEC. 1235. AMENDMENTS TO THE EMERGENCY HOMEOWNERS' RELIEF 
                   ACT.

       Section 110 of the Emergency Homeowners' Relief Act (12 
     U.S.C. 2709) is amended--
       (1) by striking the ``Federal Home Loan Bank Board'' and 
     inserting ``Federal Housing Finance Agency''; and
       (2) by striking ``the Federal Savings and Loan Insurance 
     Corporation,''.

     SEC. 1236. AMENDMENTS TO THE EQUAL CREDIT OPPORTUNITY ACT.

       Section 704(a) of the Equal Credit Opportunity Act (15 
     U.S.C. 1691c(a)) is amended--
       (1) in paragraph (1)(A), by striking ``and Federal branches 
     and Federal agencies of foreign banks,'' and inserting 
     ``Federal branches and Federal agencies of foreign banks, or 
     a savings association the deposits of which are insured by 
     the Federal Deposit Insurance Corporation,'';
       (2) by striking paragraph (2); and
       (3) by redesignating paragraphs (3) through (9) as 
     paragraphs (2) through (8).

     SEC. 1237. AMENDMENTS TO THE FEDERAL CREDIT UNION ACT.

       (a) Amendments to Section 206.--Section 206(g)(7) of the 
     Federal Credit Union Act (12 U.S.C. 1786(g)(7)) is amended--
       (1) in subparagraph (A)--
       (A) in clause (v), by inserting ``and'' after the 
     semicolon;
       (B) in clause (vi)--
       (i) by striking ``Federal Housing Finance Board'' and 
     inserting ``Federal Housing Finance Agency''; and
       (ii) by striking ``; and'' and inserting a period; and
       (C) by striking clause (vii); and
       (2) in subparagraph (D)--
       (A) in clause (iii), by inserting ``and'' after the 
     semicolon;
       (B) in clause (iv), by striking ``; and'' and inserting a 
     period; and
       (C) by striking clause (v).

     SEC. 1238. AMENDMENTS TO THE FEDERAL FINANCIAL INSTITUTIONS 
                   EXAMINATION COUNCIL ACT OF 1978.

       (a) Amendment to Section 1002.--Section 1002 of the Federal 
     Financial Institutions Examination Council Act of 1978 (12 
     U.S.C. 3301) is amended by striking ``Federal Home Loan Bank 
     Board'' and inserting ``Federal Housing Finance Agency''.
       (b) Amendment to Section 1003.--Section 1003(1) of the 
     Federal Financial Institutions Examination Council Act of 
     1978 (12 U.S.C. 3302(1)) is amended by striking ``the Office 
     of Thrift Supervision,''.
       (c) Amendments to Section 1004.--Section 1004(a) of the 
     Federal Financial Institutions Examination Council Act of 
     1978 (12 U.S.C. 3303(a)) is amended--
       (1) by striking paragraph (4); and
       (2) by redesignating paragraphs (5) and (6) as paragraphs 
     (4) and (5), respectively.

     SEC. 1239. AMENDMENTS TO THE FEDERAL HOME LOAN BANK ACT.

       (a) Amendments to Section 18.--Section 18(c) of the Federal 
     Home Loan Bank Act (12 U.S.C. 1438(c)) is amended--
       (1) by striking ``Director of the Office of Thrift 
     Supervision'' each place it appears and inserting 
     ``Comptroller of the Currency'';

[[Page 31081]]

       (2) in paragraph (1)(B), by striking ``and the agencies 
     under its administration or supervision''; and
       (3) in paragraph (5), by striking ``and such agencies''.
       (b) Repeal of Section 21A.--Section 21A of the Federal Home 
     Loan Bank Act (12 U.S.C. 1441a) is hereby repealed.

     SEC. 1240. AMENDMENTS TO THE FEDERAL RESERVE ACT.

       Section 19(b) of the Federal Reserve Act (12 U.S.C. 461) is 
     amended--
       (1) in paragraph (1)(F), by striking ``the Director of the 
     Office of Thrift Supervision'' and inserting ``the 
     Comptroller of the Currency''; and
       (2) in paragraph (4)(B), by striking ``the Director of the 
     Office of Thrift Supervision'' and inserting ``the 
     Comptroller of the Currency''.

     SEC. 1241. AMENDMENTS TO THE FINANCIAL INSTITUTIONS REFORM, 
                   RECOVERY, AND ENFORCEMENT ACT OF 1989.

       (a) Amendments to Section 302.--Section 302(1) of the 
     Financial Institutions Reform, Recovery, and Enforcement Act 
     of 1989 is amended by striking ``Director of the Office of 
     Thrift Supervision'' and inserting ``Comptroller of the 
     Currency''.
       (b) Amendment to Section 305.--Section 305(b)(1) of the 
     Financial Institutions Reform, Recovery, and Enforcement Act 
     of 1989 is amended by striking ``Director of the Office of 
     Thrift Supervision'' and inserting ``Comptroller of the 
     Currency''.
       (c) Amendment to Section 308.--Section 308(a) of the 
     Financial Institutions Reform, Recovery, and Enforcement Act 
     of 1989 (12 U.S.C. 1463 note) is amended by striking 
     ``Director of the Office of Supervision'' and inserting 
     ``Comptroller of the Currency''.
       (d) Amendments to Section 402.--Section 402 of the 
     Financial Institutions Reform, Recovery, and Enforcement Act 
     of 1989 (12 U.S.C. 1437 note) is amended--
       (1) in subsection (a), by striking ``Director of the Office 
     of Thrift Supervision'' and inserting ``Comptroller of the 
     Currency'';
       (2) in subsection (b), by striking ``Director of the Office 
     of Thrift Supervision'' and inserting ``Comptroller of the 
     Currency''; and
       (3) in subsection (e)--
       (A) in paragraph (1), by striking ``Office of Thrift 
     Supervision'' and inserting ``Office of the Comptroller of 
     the Currency'';
       (B) in paragraph (2), by striking ``Director of the Office 
     of Thrift Supervision'' each place it appears and inserting 
     ``Comptroller of the Currency'';
       (C) in paragraph (3), by striking ``Director of the Office 
     of Thrift Supervision'' and inserting ``Comptroller of the 
     Currency''; and
       (D) in paragraph (4), by striking ``Director of the Office 
     of Thrift Supervision'' and inserting ``Comptroller of the 
     Currency''.
       (e) Amendment to Section 1103.--Section 1103(a)(2) of the 
     Financial Institutions Reform, Recovery, and Enforcement Act 
     of 1989 (12 U.S.C. 3332(a)(2)) is amended by striking ``and 
     the Resolution Trust Corporation''.
       (f) Amendments to Section 1205.--Subsection 1205(b) of the 
     Financial Institutions Reform, Recovery, and Enforcement Act 
     of 1989 (12 U.S.C. 1818 note) is amended--
       (1) in paragraph (1)--
       (A) in subparagraph (B), by striking ``Director of the 
     Office of Thrift Supervision, or the Director's designee'' 
     and inserting ``Comptroller of the Currency, or the 
     Comptroller's designee'';
       (B) by striking subparagraph (D); and
       (C) by redesignating subparagraphs (E) and (F) as 
     subparagraphs (D) and (E), respectively;
       (2) in paragraph (2), by striking ``paragraph (1)(F)'' and 
     inserting ``paragraph (1)(E)'';
       (3) in paragraph (3), by striking ``paragraph (1)(F)'' and 
     inserting ``paragraph (1)(E)''; and
       (4) in paragraph (5), by striking ``through (E)'' and 
     inserting ``through (D)''.
       (g) Amendments to Section 1206.--Section 1206(a) of the 
     Financial Institutions Reform, Recovery, and Enforcement Act 
     of 1989 (12 U.S.C. 1833b(a)) is amended--
       (1) by striking ``the Oversight Board of the Resolution 
     Trust Corporation'' and inserting ``and''; and
       (2) by striking ``, and the Office of Thrift 
     Supervision,''.
       (h) Amendments to Section 1216.--Section 1216 of the 
     Financial Institutions Reform, Recovery, and Enforcement Act 
     of 1989 (12 U.S.C. 1833e) is amended--
       (1) in subsection (a)--
       (A) by striking paragraphs (2), (5), and (6);
       (B) by redesignating paragraphs (3) and (4) as paragraphs 
     (2) and (3), respectively; and
       (C) in paragraph (2) (as redesignated), by adding ``and'' 
     at the end;
       (2) in subsection (c)--
       (A) by striking ``the Director of the Office of Thrift 
     Supervision,'' and inserting ``and''; and
       (B) by striking ``, the Oversight Board of the Resolution 
     Trust Corporation, and the Resolution Trust Corporation''; 
     and
       (3) in subsection (d)--
       (A) by striking paragraphs (3), (5) and (6); and
       (B) by redesignating paragraphs (4), (7), and (8) as 
     paragraphs (3), (4), and (5), respectively.

     SEC. 1242. AMENDMENTS TO THE HOUSING ACT OF 1948.

       Section 502(c) of the Housing Act of 1948 (12 U.S.C. 
     1701c(c)) is amended in the introductory text by striking 
     ``Director of the Office of Thrift Supervision'' and 
     inserting ``Comptroller of the Currency''.

     SEC. 1243. AMENDMENTS TO THE HOUSING AND COMMUNITY 
                   DEVELOPMENT ACT OF 1992 AND THE FEDERAL HOUSING 
                   ENTERPRISES FINANCIAL SAFETY AND SOUNDNESS ACT 
                   OF 1992.

       (a) Amendments to Section 543 of the Housing and Community 
     Development Act of 1992.--Section 543 of the Housing and 
     Community Development Act of 1992 (12 U.S.C. 1707 note) is 
     amended--
       (1) in subsection (c)(1)--
       (A) by striking subparagraphs (D) through (F); and
       (B) by redesignating subparagraphs (G) and (H) as 
     subparagraphs (D) and (E), respectively; and
       (2) in subsection (f)--
       (A) in paragraph (2)--
       (i) by striking ``the Office of Thrift Supervision,''; and
       (ii) in subparagraph (D), by striking ``the Office of 
     Thrift Supervision,''; and
       (B) in paragraph (3)--
       (i) by striking ``the Office of Thrift Supervision,''; and
       (ii) in subparagraph (D), by striking ``Office of Thrift 
     Supervision,'' and inserting ``Comptroller of the 
     Currency,''.
       (b) Amendment to Section 1315 of the Federal Housing 
     Enterprises Financial Safety and Soundness Act of 1992.--
     Section 1315(b) of the Federal Housing Enterprises Financial 
     Safety and Soundness Act of 1992 (12 U.S.C. 4515(b)) is 
     amended by striking ``the Federal Deposit Insurance 
     Corporation, and the Office of Thrift Supervision.'' and 
     inserting ``and the Federal Deposit Insurance Corporation.''.
       (c) Amendment to Section 1317 of the Federal Housing 
     Enterprises Financial Safety and Soundness Act of 1992.--
     Section 1317(c) of the of the Federal Housing Enterprises 
     Financial Safety and Soundness Act of 1992 (12 U.S.C. 
     4517(c)) is amended by striking ``the Federal Deposit 
     Insurance Corporation, or the Director of the Office of 
     Thrift Supervision'' and inserting ``or the Federal Deposit 
     Insurance Corporation''.

     SEC. 1244. AMENDMENT TO THE HOUSING AND URBAN-RURAL RECOVERY 
                   ACT OF 1983.

       Section 469 of the Housing and Urban-Rural Recovery Act of 
     1983 (12 U.S.C. 1701p-1) is amended in the first sentence by 
     striking ``Federal Home Loan Bank Board'' and inserting 
     ``Federal Housing Finance Agency''.

     SEC. 1245. AMENDMENTS TO THE NATIONAL HOUSING ACT.

       Section 202(f) of the National Housing Act is amended--
       (1) by amending paragraph (5) to read as follows:
       ``(5) if the mortgagee is a national bank, a subsidiary or 
     affiliate of such a bank, a Federal savings association or a 
     subsidiary or affiliate of a savings association, the 
     Comptroller of the Currency;'';
       (2) in paragraph (6), by adding ``and'' at the end;
       (3) in paragraph (7)--
       (A) by inserting ``or State savings association'' after 
     ``State bank''; and
       (B) by striking ``; and'' and inserting a period; and
       (4) by striking paragraph (8).

     SEC. 1246. AMENDMENTS TO THE RIGHT TO FINANCIAL PRIVACY ACT 
                   OF 1978.

       Section 1101(7) of the Right to Financial Privacy Act of 
     1978 (12 U.S.C. 3401(7)) is amended by striking subparagraph 
     (B).

     SEC. 1247. AMENDMENTS TO THE BALANCED BUDGET AND EMERGENCY 
                   DEFICIT CONTROL ACT OF 1985.

       (a) Amendments to Section 255.--Section 255(g)(1)(A) of the 
     Balanced Budget and Emergency Deficit Control Act of 1985 (2 
     U.S.C. 905(g)(1)(A)) is amended by striking ``Office of 
     Thrift Supervision (20-4108-0-3-373);''.
       (b) Amendments to Section 256.--Section 256(h)(4) of the 
     Balanced Budget and Emergency Deficit Control Act of 1985 (2 
     U.S.C. 906(h)(4)) is amended--
       (1) by striking subparagraphs (C) and (G); and
       (2) by redesignating subparagraphs (D), (E), (F), and (H) 
     as subparagraphs (C) through (G), respectively.

     SEC. 1248. AMENDMENTS TO THE CRIME CONTROL ACT OF 1990.

       (a) Amendments to Section 2539.--Section 2539(c)(2) of the 
     Crime Control Act of 1990 (Public Law 101-647) is amended by 
     striking subparagraph (F) and redesignating subparagraphs (G) 
     and (H) as subparagraphs (F) through (G), respectively.
       (b) Amendment to Section 2554.--Section 2554(b)(2) of the 
     Crime Control Act of 1990 (Public Law 101-647) is amended by 
     striking ``Director of the Office of Thrift Supervision'' and 
     inserting ``Comptroller of the Currency''.

     SEC. 1249. AMENDMENT TO THE FLOOD DISASTER PROTECTION ACT OF 
                   1973.

       Section 3(a)(5) of the Flood Disaster Protection Act of 
     1973 (42 U.S.C. 4003(a)(5)) is amended by striking ``the 
     Office of Thrift Supervision,''.

     SEC. 1250. AMENDMENT TO THE INVESTMENT COMPANY ACT OF 1940.

       Section 6(a)(3) of the Investment Company Act of 1940 (15 
     U.S.C. 80a-6(a)(3)) is amended by striking ``Federal Savings 
     and Loan Insurance Corporation'' and inserting ``Comptroller 
     of the Currency''.

[[Page 31082]]



     SEC. 1251. AMENDMENT TO THE NEIGHBORHOOD REINVESTMENT 
                   CORPORATION ACT.

       Section 606(c)(3) of the Neighborhood Reinvestment 
     Corporation Act is amended by striking ``Federal Home Loan 
     Bank Board'' and inserting ``Federal Housing Finance 
     Agency''.

     SEC. 1252. AMENDMENTS TO THE SECURITIES EXCHANGE ACT OF 1934.

       (a) Amendments to Section 3.--Section 3(a)(34) of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(34)) is 
     amended--
       (1) in subparagraph (A)--
       (A) in clause (i), by striking ``bank;'' and inserting 
     ``bank, or a savings association (as defined in section 3(b) 
     of the Federal Deposit Insurance Act (12 U.S.C. 1813(b))), 
     the deposits of which are insured by the Federal Deposit 
     Insurance Corporation, a subsidiary or a department or 
     division of any such savings association, or a savings and 
     loan holding;'';
       (B) in clause (iii), by adding ``and'' at the end;
       (C) by striking clause (iv); and
       (D) by redesignating clause (v) as clause (iv);
       (2) in subparagraph (B)--
       (A) in clause (i), by striking ``bank;'' and inserting 
     ``bank, or a savings association (as defined in section 3(b) 
     of the Federal Deposit Insurance Act (12 U.S.C. 1813 (b))), 
     the deposits of which are insured by the Federal Deposit 
     Insurance Corporation, a subsidiary or a department or 
     division of any such savings association, or a savings and 
     loan holding;'';
       (B) in clause (iii), by adding ``and'' and the end;
       (C) by striking clause (iv); and
       (D) by redesignating clause (v) as clause (iv);
       (3) in subparagraph (C)--
       (A) in clause (i), by striking ``bank;'' and inserting 
     ``bank, or a savings association (as defined in section 3(b) 
     of the Federal Deposit Insurance Act (12 U.S.C. 1813 (b))), 
     the deposits of which are insured by the Federal Deposit 
     Insurance Corporation, a subsidiary or a department or 
     division of any such savings association, or a savings and 
     loan holding;'';
       (B) in clause (iii), by adding ``and'' at the end;
       (C) by striking clause (iv); and
       (D) by redesignating clause (v) as clause (iv); and
       (4) in subparagraph (F)--
       (A) in clause (i), by striking ``bank;'' and inserting ``or 
     a savings association (as defined in section 3(b) of the 
     Federal Deposit Insurance Act (12 U.S.C. 1813 (b))), the 
     deposits of which are insured by the Federal Deposit 
     Insurance Corporation;'';
       (B) by striking clause (ii); and
       (C) redesignating clauses (iii), (iv), and (v) as clauses 
     (ii), (iii) and (iv), respectively.
       (b) Amendments to Section 15c.--Section 15C of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78o-5) is amended 
     in subsection (g)(1) by striking ``the Director of the Office 
     of Thrift Supervision, the Federal Savings and Loan Insurance 
     Corporation,''.

     SEC. 1253. AMENDMENTS TO TITLE 18, UNITED STATES CODE.

       (a) Amendment to Section 212.--Section 212(c)(2) of title 
     18, United States Code, is amended--
       (1) by striking subparagraph (C); and
       (2) by redesignating subparagraphs (D) through (H) as 
     subparagraphs (C) through (G), respectively.
       (b) Amendment to Section 657.--Section 657 of title 18, 
     United States Code, is amended by striking ``Office of Thrift 
     Supervision, the Resolution Trust Corporation,''.
       (c) Amendment to Section 981.--Section 981(a)(1)(D) of 
     title 18, United States Code, is amended--
       (1) by striking ``the Resolution Trust Corporation,''; and
       (2) by striking ``or the Office of Thrift Supervision''.
       (d) Amendment to Section 982.--Section 982(a)(3) of title 
     18, United States Code, is amended--
       (1) by striking ``the Resolution Trust Corporation,'';and
       (2) by striking ``or the Office of Thrift Supervision''.
       (e) Amendment to Section 1006.--Section 1006 of title 18, 
     United States Code, is amended--
       (1) by striking ``Office of Thrift Supervision,''; and
       (2) by striking ``the Resolution Trust Corporation,''.
       (f) Amendment to Section 1014.--Section 1014 of title 18, 
     United States Code, is amended--
       (1) by striking ``the Office of Thrift Supervision,''; and
       (2) by striking ``the Resolution Trust Corporation,''.
       (g) Amendment to Section 1032.--Section 1032(1) of title 
     18, United States Code, is amended--
       (1) by striking ``the Resolution Trust Corporation,''; and
       (2) by striking ``or the Director of the Office of Thrift 
     Supervision''.

     SEC. 1254. AMENDMENTS TO TITLE 31, UNITED STATES CODE.

       (a) Amendment to Section 309.--Section 309 of title 31, 
     United States Code, is amended to read as follows:

     ``Sec. 309. Division of Thrift Supervision

       ``The Division of Thrift Supervision established under 
     section 3(a) of the Home Owners' Loan Act shall be a division 
     in the Office of the Comptroller of the Currency.''.
       (b) Amendments to Section 321.--Section 321 of title 31, 
     United States Code, is amended--
       (1) in subsection (c)--
       (A) in paragraph (1), by adding ``and'' at the end;
       (B) in paragraph (2), by striking ``; and'' and inserting a 
     period; and
       (C) by striking paragraph (3); and
       (2) by striking subsection (e).
       (c) Amendments to Section 714.--Section 714 of title 31, 
     United States Code, is amended--
       (1) in subsection (a), by striking ``the Office of the 
     Comptroller of the Currency, and the Office of Thrift 
     Supervision.'' and inserting ``and the Office of the 
     Comptroller of the Currency.'';
       (2) in subsection (b), by striking all after ``has 
     consented in writing.'' and inserting the following: ``Audits 
     of the Federal Reserve Board and Federal reserve banks shall 
     not include unreleased transcripts or minutes of meetings of 
     the Board of Governors or of the Federal Open Market 
     Committee. To the extent that an audit deals with individual 
     market actions, records related to such actions shall only be 
     released by the Comptroller General after 180 days have 
     elapsed following the effective date of such actions.'';
       (3) in subsection (c)(1), in the first sentence, by 
     striking ``subsection,'' and inserting ``subsection or in the 
     audits or audit reports referring or relating to the Federal 
     Reserve Board or Reserve Banks,''; and
       (4) by adding at the end the following:
       ``(f) Audit and Report of the Federal Reserve System.--
       ``(1) In general.--An audit of the Board of Governors of 
     the Federal Reserve System and the Federal reserve banks 
     under subsection (b) shall be completed within 12 months of 
     the enactment of the Financial Stability Improvement Act of 
     2009.
       ``(2) Report.--
       ``(A) Required.--A report on the audit referred to in 
     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 made 
     available to--
       ``(i) the Speaker of the House of Representatives;
       ``(ii) the majority and minority leaders of the House of 
     Representatives;
       ``(iii) the majority and minority leaders of the Senate;
       ``(iv) the Chairman and Ranking Member of the committee and 
     each subcommittee of jurisdiction in the House of 
     Representatives and the Senate; and
       ``(v) any other Member of Congress who requests it.
       ``(B) Contents.--The report under subparagraph (A) shall 
     include a detailed description of the findings and conclusion 
     of the Comptroller General with respect to the audit that is 
     the subject of the report.
       ``(3) Construction.--Nothing in this subsection shall be 
     construed--
       ``(A) as interference in or dictation of monetary policy to 
     the Federal Reserve System by the Congress or the Government 
     Accountability Office; or
       ``(B) to limit the ability of the Government Accountability 
     Office to perform additional audits of the Board of Governors 
     of the Federal Reserve System or of the Federal reserve 
     banks.''.

     SEC. 1255. REQUIREMENT FOR COUNTERCYCLICAL CAPITAL 
                   REQUIREMENTS.

       Section 908(a) of the International Lending Supervision Act 
     of 1983 (12 U.S.C. 3907(a)) is amended by adding at the end 
     the following new paragraph:
       ``(3) Each appropriate Federal banking agency shall, in 
     establishing capital requirements under this Act or other 
     provisions of Federal law for banking institutions, seek to 
     make such requirements countercyclical so that the amount of 
     capital required to be maintained by a banking institution 
     increases in times of economic expansion and may decrease in 
     times of economic contraction, consistent with the safety and 
     soundness of the institution.''.

     SEC. 1256. TRANSFER OF AUTHORITY TO THE BOARD WITH RESPECT TO 
                   SAVINGS AND LOAN HOLDING COMPANIES.

       (a) Transfer of Functions.--Notwithstanding any other 
     provision of this subtitle, all functions of the Director of 
     the Office of Thrift Supervision with respect to savings and 
     loan holding companies that are, on a consolidated basis, 
     predominantly engaged in the business of insurance are 
     transferred to the Board.
       (b) Board's Authority.--Notwithstanding any other provision 
     of this subtitle, the Board shall succeed to all powers, 
     authorities, rights, and duties with respect to savings and 
     loan holding companies that are, on a consolidated basis, 
     predominantly engaged in the business of insurance that were 
     vested in the Director of the Office of Thrift Supervision 
     under Federal law, including the Home Owners' Loan Act, on 
     the day before the transfer date.
       (c) Savings and Loan Holding Company Defined.--The term 
     ``savings and loan holding company'' shall have the meaning 
     given such term under section 10 of the Home Owners' Loan 
     Act.

[[Page 31083]]



  Subtitle D--Further Improvements to the Regulation of Bank Holding 
                 Companies and Depository Institutions

     SEC. 1301. TREATMENT OF INDUSTRIAL LOAN COMPANIES, SAVINGS 
                   ASSOCIATIONS, AND CERTAIN OTHER COMPANIES UNDER 
                   THE BANK HOLDING COMPANY ACT.

       (a) Definitions.--Section 2 of the Bank Holding Company Act 
     of 1956 (12 U.S.C. 1841) is amended--
       (1) by striking subsection (a)(1) and inserting the 
     following:
       ``(a) Bank Holding Company.--
       ``(1) In general.--Except as provided in paragraph (5), the 
     term `bank holding company' means--
       ``(A) any company, other than a company described in 
     section 4(p), which has control over any bank or over any 
     company that is or becomes a bank holding company by virtue 
     of this Act; and
       ``(B) any section 6 holding company established by a 
     company described in section 6(a)(1)(C).''.
       (2) in subsection (a)(5), by adding at the end the 
     following new subparagraph:
       ``(G) No company is a bank holding company by virtue of its 
     ownership or control of a section 6 holding company or any 
     subsidiary of a section 6 holding company, so long as the 
     requirements of sections 4(p) and 6 of this Act are met, as 
     applicable, by the section 6 holding company;'';
       (3) in subsection (c)(1)(A), by striking ``insured bank'' 
     and inserting ``insured depository institution'', and by 
     striking ``section 3(h) of the Federal Deposit Insurance 
     Act'' and inserting ``section 3(c)(2) of the Federal Deposit 
     Insurance Act'';
       (4) in subsection (c)(2)--
       (A) in subparagraph (B), by inserting before the period the 
     following: ``that is controlled by a company that is, on a 
     consolidated basis, predominantly engaged in the business of 
     insurance''; and
       (B) by striking subparagraph (H); and
       (5) by adding at the end the following new subsection:
       ``(r) Section 6 Holding Companies.--The term `section 6 
     holding company' means a company that is required to be 
     established as an intermediate holding company under section 
     6 of this Act.''.
       (b) Nonbanking Activities Exceptions.--Section 4 of the 
     Bank Holding Company Act of 1956 (12 U.S.C. 1843) is 
     amended--
       (1) in subsection (f)(1)(B) by striking ``for purposes of 
     this Act'' and inserting ``for purposes of section 4(a)''; 
     and
       (2) in subsection (f)(2)--
       (A) in subparagraph (B)(ii), by striking ``; or'' and 
     inserting a semicolon;
       (B) in subparagraph (C), by striking the period and 
     inserting ``; or''; and
       (C) by adding at the end the following new subparagraph:
       ``(D) such company fails to--
       ``(i) establish and register a section 6 holding company 
     pursuant to section 6 of this Act within 180 days after the 
     adoption of rules required by this section; and
       ``(ii) conduct such activities which are permissible for a 
     financial holding company, as determined under section 4(k), 
     through such section 6 holding company, other than internal 
     financial activities conducted for such company or any 
     affiliate, including, but not limited to internal treasury, 
     investment, and employee benefit functions, provided that 
     with respect to any internal financial activity engaged in 
     for the company or an affiliate and a nonaffiliate during the 
     year prior to date of enactment, the company (or an affiliate 
     not a subsidiary of the section 6 company) may continue to 
     engage in that activity so long as at least two-thirds of the 
     assets or two-thirds of the revenues generated from the 
     activity are from or attributable to the company or an 
     affiliate, subject to review by the Board to determine 
     whether engaging in such activity presents undue risk to the 
     section 6 company or undue systemic risk.''; and
       (3) by inserting at the end the following new subsections:
       ``(p) Certain Companies Not Subject to This Act.--
       ``(1) In general.--Except as provided in paragraphs (6) and 
     (7), any company which--
       ``(A) was--
       ``(i) a unitary savings and loan holding company on May 4, 
     1999, or became a unitary savings and loan holding company 
     pursuant to an application pending before the Director of the 
     Office of Thrift Supervision on of before that date, and 
     that--

       ``(I) on June 30, 2009, continued to control not fewer than 
     1 savings association that it controlled on May 4, 1999, or 
     that such company acquired pursuant to an application pending 
     before the Director of the Office of Thrift Supervision on or 
     before such date, which became a bank for purposes of the 
     Bank Holding Company Act as a result of the enactment of 
     section 1301(a)(4)(A); and
       ``(II) on June 30, 2009, and the date of enactment of the 
     Financial Stability Improvement Act of 2009, such savings 
     association subsidiary was and remains a qualified thrift 
     lender (as determined by section 10 of the Home Owners' Loan 
     Act); or

       ``(ii) on November 23, 2009--

       ``(I) controlled an institution which became a bank as a 
     result of the enactment of section 1301(a)(3)(B) of the 
     Financial Stability Improvement Act of 2009;
       ``(II) had an application pending, or approved but not 
     executed, before the Federal Deposit Insurance Corporation, 
     that, if approved, would permit the applicant to control an 
     industrial loan company, industrial bank, or other similar 
     institution--

       ``(aa) that is a federally insured, State-chartered 
     depository institution;
       ``(bb) that is organized under the laws of a State that on 
     March 5, 1987, had in effect, or had under consideration in 
     the legislature of such State, a statute that required such 
     institution to obtain insurance under the Federal Deposit 
     Insurance Act; and
       ``(cc) that--
       ``(AA) does not accept demand deposits that the depositor 
     may withdraw by check or similar means for payment to third 
     parties; or
       ``(BB) maintains total assets of less than $100,000,000; or

       ``(III) controlled an institution it has continuously 
     controlled since March 5, 1987, which became a bank as a 
     result of the enactment of the Competitive Equality Banking 
     Act of 1987, pursuant to subsection (f);

       ``(B) was not on June 30, 2009--
       ``(i) a bank holding company; or
       ``(ii) subject to the Bank Holding Company Act of 1956 by 
     reason of section 8(a) of the International Banking Act of 
     1978 (12 U.S.C. 3106(a)); and
       ``(C) on June 30, 2009, directly or indirectly controlled 
     shares or engaged in activities that did not, on the day 
     before the date of enactment of the Financial Stability Act 
     of 2009, comply with the activity or investment restrictions 
     on financial holding companies in section 4 in accordance 
     with regulations prescribed by the Board,

     shall not be treated as a bank holding company for purposes 
     of this Act solely by virtue of such company's control of 
     such institution and control of a section 6 holding company 
     established pursuant to section 6.
       ``(2) Loss of exemption.--A company described in paragraph 
     (1) shall no longer qualify for the exemption provided under 
     that paragraph if--
       ``(A) such company fails to--
       ``(i) establish and register a section 6 holding company 
     pursuant to section 6 of this Act within 180 days after 
     adoption of rules required by this section, unless the Board 
     grants an extension of such period for compliance which shall 
     not exceed 180 additional days; and
       ``(ii) maintain a section 6 holding company in compliance 
     with all the requirements for a section 6 holding company 
     under section 6 of this Act.
       ``(B) such company directly or indirectly (including 
     through the section 6 holding company it must form pursuant 
     to this subsection and section 6 of this Act) acquires 
     control of an additional bank or insured depository 
     institution after June 30, 2009, provided that such company 
     directly or indirectly (including through the section 6 
     holding company) may acquire--
       ``(i) shares held as a bona fide fiduciary (whether with or 
     without the sole discretion to vote such shares);
       ``(ii) shares held by any person as a bona fide fiduciary 
     solely for the benefit of employees of either the company 
     described in paragraph (1) or any subsidiary of that company 
     and the beneficiaries of those employees;
       ``(iii) shares held temporarily pursuant to an underwriting 
     commitment in the normal course of an underwriting business;
       ``(iv) shares held in an account solely for trading 
     purposes;
       ``(v) shares over which no control is held other than 
     control of voting rights acquired in the normal course of a 
     proxy solicitation;
       ``(vi) loans or other accounts receivable acquired from an 
     insured depository institution in the normal course of 
     business;
       ``(vii) shares or assets acquired in securing or collecting 
     a debt previously contracted in good faith, during the 2-year 
     period beginning on the date of such acquisition or for such 
     additional time (not exceeding 3 years) as the Board may 
     permit if the Board determines that such an extension will 
     not be detrimental to the public interest;
       ``(viii) shares or assets acquired directly or indirectly 
     by a depository institution controlled by such company in a 
     transaction involving an insured depository institution for 
     which the Federal Deposit Insurance Corporation has been 
     appointed as receiver or which has been found to be in danger 
     of default (as defined in section 3 of the Federal Deposit 
     Insurance Act) by the appropriate Federal or State authority;
       ``(ix) shares or assets of another industrial loan company 
     meeting the requirements of this Act if such company 
     continuously controlled an industrial loan company since the 
     date of enactment of the Financial Stability Improvement Act 
     of 2009; and
       ``(x) shares or assets of a savings association acquired 
     directly or indirectly by the savings association controlled 
     by such company if such company continuously controlled a 
     savings association since the date of enactment of the 
     Financial Stability Improvement Act of 2009;
       ``(C)(i) the section 6 holding company required to be 
     established by such company, or any subsidiary bank of such 
     company undergoes a change in control after the date of 
     enactment of the Financial Stability Improvement Act of 2009, 
     other than--

[[Page 31084]]

       ``(I) the merger or whole acquisition of such parent 
     company in a bona fide merger or acquisition (as shall be 
     determined by the Board, which is authorized to find that a 
     transaction is not a bona fide merger or acquisition and thus 
     results in the loss of exemption), with a company that is 
     predominantly engaged in activities not permissible for a 
     financial holding company pursuant to section 4(k), or
       ``(II) the acquisition of additional shares by a company 
     that owned or controlled 7.5 percent or more of any class of 
     such parent company's outstanding voting stock on or before 
     June 30, 2009, and continuously owned or controlled at least 
     such 7.5 percent since June 30, 2009.
       ``(ii) Nothing in this subparagraph shall be construed as 
     preventing the Board from requiring compliance with this 
     subsection, section 6 or the requirements of the Change in 
     Bank Control Act, as applicable to a company that is 
     permitted to acquire control without loss of the exemption in 
     this subsection 4(p)(2); or
       ``(D) any subsidiary bank of such company engages in any 
     activity after the date of enactment of the Financial 
     Stability Improvement Act of 2009 which would have caused 
     such institution to be a bank (as defined in section 2(c) of 
     this Act, as in effect before such date) if such activities 
     had been engaged in before such date.
       ``(3) Divestiture in case of loss of exemption.--If any 
     company described in paragraph (1) fails to qualify for the 
     exemption provided under paragraph (1) by operation of 
     paragraph (2), such exemption shall cease to apply to such 
     company and such company shall divest control of each bank it 
     controls before the end of the 180-day period beginning on 
     the date on which the company receives notice from the Board 
     that the company has failed to continue to qualify for such 
     exemption, unless, before the end of such 180-day period, the 
     company has--
       ``(A) either--
       ``(i) corrected the condition or ceased the activity that 
     caused the company to fail to continue to qualify for the 
     exemption; or
       ``(ii) submitted a plan to the Board for approval to cease 
     the activity or correct the condition in a timely manner 
     (which shall not exceed 1 year); and
       ``(B) implemented procedures that are reasonably adapted to 
     avoid the reoccurrence of such condition or activity.
       ``(4) Subsection ceases to apply under certain 
     circumstances.--This subsection shall cease to apply to any 
     company described in paragraph (1) if such company--
       ``(A) registers as a bank holding company under section 
     2(a) of this Act;
       ``(B) immediately upon such registration, complies with all 
     of the requirements of this chapter, and regulations 
     prescribed by the Board pursuant to this chapter, including 
     the nonbanking restrictions of this section; and
       ``(C) does not, at the time of such registration, control 
     banks in more than one State, the acquisition of which would 
     be prohibited by section 3(d) of this Act if an application 
     for such acquisition by such company were filed under section 
     3(a) of this Act.
       ``(5) Information requirement.--Each company described in 
     paragraph (1) shall, within 60 days after the date of 
     enactment of the Financial Stability Improvement Act of 2009, 
     provide the Board with the name and address of such company, 
     the name and address of each bank such company controls, and 
     a description of each such bank's activities.
       ``(6) Examinations and reports.--The Board may, from time 
     to time, examine a company described in paragraph (1) or a 
     bank controlled by such a company, and may require reports 
     under oath from a company described in paragraph (1), and 
     appropriate officers or directors of such company, in each 
     case solely for purposes of assuring compliance with the 
     provisions of this subsection and enforcing such compliance.
       ``(7) Limited enforcement.--
       ``(A) In general.--In addition to any other power of the 
     Board, the Board may enforce compliance with the provisions 
     of this subsection which are applicable to any company 
     described in paragraph (1), and any bank controlled by such 
     company, under section 8 of the Federal Deposit Insurance 
     Act, and such company or bank shall be subject to such 
     section (for such purposes) in the same manner and to the 
     same extent as if such company were a bank holding company.
       ``(B) Application of other act.--Any violation of this 
     subsection by any company described in paragraph (1) or any 
     bank controlled by such a company, may also be treated as a 
     violation of the Federal Deposit Insurance Act for purposes 
     of subparagraph (A).
       ``(C) No effect on other authority.--No provision of this 
     paragraph shall be construed as limiting any authority of the 
     Board or any other Federal agency under any other provision 
     of law.
       ``(q) Preservation of Certain Savings and Loan Holding 
     Company Authorities.--Notwithstanding subsection (a), a 
     company that was a savings and loan holding company on June 
     30, 2009, that became a bank holding company by operation of 
     section 1301 of the Financial Stability Improvement Act of 
     2009 may continue to engage in the following activities in 
     which such company was continuously engaged on June 30, 2009 
     through the day of enactment of the Financial Stability 
     Improvement Act of 2009:
       ``(1) Furnishing or performing management services for a 
     savings association subsidiary of such company.
       ``(2) Conducting an insurance agency or escrow business.
       ``(3) Holding, managing, or liquidating assets owned or 
     acquired from a savings association subsidiary of such 
     company.
       ``(4) Holding or managing properties used or occupied by a 
     savings association subsidiary of such company.
       ``(5) Acting as trustee under deed of trust.
       ``(6) Any other activity in which multiple savings and loan 
     holding companies were authorized (by regulation) to directly 
     engage on March 5, 1987.''.
       (c) Section 6 Holding Companies.--The Bank Holding Company 
     Act of 1956 (12 U.S.C. 1841 et seq.) is amended by inserting 
     after section 5 the following new section:

     ``SEC. 6. SPECIAL-PURPOSE HOLDING COMPANIES.

       ``(a) Establishment, Purpose and Requirements of Special 
     Purpose Holding Companies.--
       ``(1) Requirement.--A special purpose holding company 
     (hereafter in this section referred to as a `section 6 
     holding company') shall be established and maintained by a 
     company--
       ``(A) described in section 4(f)(1) as required by section 
     4(f)(2)(D) of this Act;
       ``(B) described in section 4(p)(1) as required by section 
     4(p)(2)(A) of this Act; or
       ``(C) that--
       ``(i) is subject to stricter prudential standards under 
     subtitle B of the Financial Stability Improvement Act of 
     2009;
       ``(ii) is not--

       ``(I) a bank holding company, or
       ``(II) subject to the Bank Holding Company Act by reason of 
     section 8(a) of the International Banking Act of 1978 (12 
     U.S.C. 3106(a)); and

       ``(iii) directly or indirectly controlled shares or engaged 
     in activities that did not, on the date the company is first 
     subject to stricter prudential standards pursuant to subtitle 
     B of the Financial Stability Improvement Act of 2009, comply 
     with the activity or investment restrictions on financial 
     holding companies in section 4 in accordance with regulations 
     prescribed by the Board.
       ``(2) Purpose.--
       ``(A) The purpose of this section is to provide for 
     consolidated supervision of certain financial companies by 
     the Board.
       ``(B) A company that is required to form a section 6 
     holding company shall conduct such activities which are 
     permissible for a financial holding company, as determined 
     under section 4(k), through such section 6 holding company, 
     other than internal financial activities conducted for such 
     company or any affiliate, including, but not limited to 
     internal treasury, investment, and employee benefit 
     functions, provided that with respect to any internal 
     financial activity engaged in for the company or an affiliate 
     and a nonaffiliate during the year prior to date of 
     enactment, the company (or an affiliate not a subsidiary of 
     the section 6 company) may continue to engage in that 
     activity so long as at least two-thirds of the assets or two-
     thirds of the revenues of generated from the activity are 
     from or attributable to the company or an affiliate, subject 
     to review by the Board to determine whether engaging in such 
     activity presents undue risk to the section 6 company or 
     undue systemic risk.
       ``(C) A section 6 holding company shall be prohibited from 
     conducting any nonbanking activities or investing in any 
     nonbank companies other than those permissible for a 
     financial holding company under sections 3 and 4, unless the 
     Board specifically determines otherwise in accordance with 
     paragraph (6), and provided that, for purposes of this 
     paragraph, a company designated as a section 6 holding 
     company and described under paragraph (4) (or any permitted 
     successor) is not prohibited from continuing to engage in any 
     impermissible activity in which it was engaged continuously 
     during the 6 months prior to the date of enactment, from 
     owning any shares or types of assets related to such 
     activity, or continuing to own such other shares or assets 
     that it owned on the date of enactment.
       ``(3) Registration.--
       ``(A) A section 6 holding company required to be 
     established by a company described in paragraph (1)(A) shall 
     be established, and such company shall register with the 
     Board as a bank holding company, pursuant to the requirements 
     in section 4(f).
       ``(B) A section 6 holding company required to be 
     established by a company described in paragraph (1)(B) shall 
     be established, and such company shall register with the 
     Board as a bank holding company, pursuant to the requirements 
     in section 4(p).
       ``(C) A section 6 holding company required to be 
     established by a company described in paragraph (1)(C) shall 
     be--
       ``(i) established, and such company shall register with the 
     Board, as a bank holding company within 90 days after such 
     company or such company's parent holding company has been 
     notified by the Board that such company is subject to 
     stricter prudential standards under subtitle B of the 
     Financial

[[Page 31085]]

     Stability Improvement Act of 2009, unless the Board grants an 
     extension of such period for compliance which shall not 
     exceed 180 additional days;
       ``(ii) treated as a financial holding company under this 
     Act; and
       ``(iii) subject to the authority of the Board to enforce 
     compliance with the provisions of this section under section 
     8 of the Federal Deposit Insurance Act in the same manner and 
     to the same extent as if such company were a bank holding 
     company.
       ``(4) Rule of construction.--For purposes of this section, 
     designation of an already established intermediate holding 
     company that will serve as the section 6 holding company 
     shall satisfy the requirement to establish a section 6 
     holding company, provided that such existing intermediate 
     holding company complies with all other provisions applicable 
     to a section 6 holding company.
       ``(5) Limitations on authority of commercial parent.--A 
     company that is not a bank holding company or treated as a 
     bank holding company pursuant to section 8(a) of the 
     International Bank Act of 1978 that has been notified that it 
     is a financial holding company subject to stricter standards, 
     pursuant to subtitle A of the Financial Stability Improvement 
     Act of 2009, shall--
       ``(A) not be deemed to be, or treated as, a bank holding 
     company, solely because of its ownership or control of a 
     section 6 holding company; and
       ``(B) not be subject to this Act, except for such 
     provisions as are explicitly made applicable in this section.
       ``(6) Board authority.--
       ``(A) Rules and exemptions.--In addition to any other 
     authority of the Board, the Board shall prescribe rules and 
     regulations or issue orders providing for the establishment 
     and registration of section 6 holding companies and shall 
     provide exemptions from the requirements of this Act 
     (including an order in response to a request from an affected 
     company), including, but not limited to, exemptions--
       ``(i) with respect to the requirement to conduct such 
     activities which are financial in nature, as determined under 
     section 4(k), other than financial activities conducted for 
     such company or any affiliate, including any financial 
     activity engaged in for both the company or an affiliate and 
     a nonaffiliate as permitted under section 4(f)(2)(D) or 
     section 6(a)(2)(B), through such section 6 holding company, 
     if the Board makes a finding that such exemption--

       ``(I)(aa) would facilitate the extension of credit to 
     individuals, households, and businesses; or
       ``(bb) would allow for greater efficiency, improved 
     customer service, or other public benefits in the conduct of 
     financial activities by affected companies;
       ``(II) would not threaten the safety and soundness of the 
     section 6 holding company, or of any insured depository 
     institution or other subsidiary of the section 6 holding 
     company;
       ``(III) would not increase systemic risk or threaten the 
     stability of the overall financial system;
       ``(IV) would not, as applied to the activities that are the 
     subject of the rule, order or request, result in 
     substantially lessening competition, or to tend to create a 
     monopoly, or which in any other manner would be in restraint 
     of trade, unless the Board finds that the anticompetitive 
     effects are outweighed in the public interest by the probable 
     effect of the exemption in meeting the convenience and needs 
     of the community to be served; and
       ``(V) would meet the financial and managerial standards for 
     financial holding companies described in subparagraphs (A) 
     and (B) of section 4(j)(4); and

       ``(ii) from the affiliate transaction requirements of 
     subsection (b), including but not limited to exemptions that 
     would facilitate extensions of credit to unaffiliated persons 
     for the personal, household, or business purposes of such 
     unaffiliated persons, unless the Board makes a finding that 
     such exemption--

       ``(I) is not consistent with the purposes of section 23A 
     and section 23B of the Federal Reserve Act;
       ``(II) would threaten the safety and soundness of the 
     section 6 holding company, or any insured depository 
     institution or other subsidiary of the section 6 holding 
     company;
       ``(III) would increase systemic risk or threaten the 
     stability of the overall financial system;
       ``(IV) would not, as applied to the activities that are the 
     subject of the rule, order or request result in substantially 
     lessening competition, or to tend to create a monopoly, or 
     which in any other manner would be in restraint of trade, 
     unless the Board finds that the anticompetitive effects are 
     outweighed in the public interest by the probable effect of 
     the exemption in meeting the convenience and needs of the 
     community to be served; or
       ``(V) would permit an unfair, deceptive, abusive, or 
     unsafe-and-unsound act or practice.

       ``(B) Parent company reports.--The Board may, from time to 
     time, require reports under oath from a company that controls 
     a section 6 holding company, and appropriate officers or 
     directors of such company, solely for purposes of ensuring 
     compliance with the provisions of this section (including 
     assessing the company's ability to serve as a source of 
     financial strength pursuant to subsection (g)) and enforcing 
     such compliance.
       ``(C) Limited parent company enforcement.--
       ``(i) In general.--In addition to any other power of the 
     Board, the Board may enforce compliance with the provisions 
     of this subsection which are applicable to any company 
     described in paragraph (1), and any bank controlled by such 
     company, under section 8 of the Federal Deposit Insurance Act 
     and such company or bank shall be subject to such section 
     (for such purposes) in the same manner and to the same extent 
     as if such company were a bank holding company.
       ``(ii) Application of other act.--Any violation of this 
     subsection by any company that controls a section 6 holding 
     company or any bank controlled by such a company, may also be 
     treated as a violation of the Federal Deposit Insurance Act 
     for purposes of clause (i).
       ``(iii) No effect on other authority.--No provision of this 
     subparagraph shall be construed as limiting any authority of 
     the Board or any other Federal agency under any other 
     provision of law.
       ``(b) Restrictions on Affiliate Transactions.--
       ``(1) Section 23a and 23b applicability.--
       ``(A) In general.--Transactions between a section 6 holding 
     company (or any nonbank subsidiary thereof) and any affiliate 
     not controlled by the section 6 holding company shall be 
     subject to the restrictions and limitations contained in 
     section 23A and section 23B of the Federal Reserve Act as if 
     the section 6 holding company were a member bank, provided, 
     that a transaction that otherwise would be a covered 
     transaction shall not be a covered transaction if the 
     transaction is in connection with the bona fide acquisition 
     or lease by an unaffiliated person of assets, goods or 
     services but shall be subject to review under section 
     23A(f)(1) of such Act.
       ``(B) Covered transactions.--A depository institution 
     controlled by a section 6 holding company may not engage in a 
     covered transaction (as defined in section 23A(b)(7) of the 
     Federal Reserve Act) with any affiliate that is not the 
     section 6 holding company or a subsidiary of the section 6 
     holding company; provided that, for purposes of the 
     prohibition, a transaction that otherwise would be a covered 
     transaction shall not be a covered transaction if the 
     transaction is in connection with the bona fide acquisition 
     or lease by an unaffiliated person of assets, goods or 
     services, but shall be subject to review under section 
     23A(f)(1) of the Federal Reserve Act.
       ``(2) Rule of construction.--No provision of this 
     subsection shall be construed as exempting any subsidiary 
     insured depository institution of a section 6 holding company 
     from compliance with section 23A or 23B of the Federal 
     Reserve Act with respect to each affiliate of such 
     institution (as defined in section 23A or 23B of the Federal 
     Reserve Act), including any affiliate that is the section 6 
     holding company or subsidiary of the section 6 holding 
     company.
       ``(c) Tying Provisions.--A company that directly or 
     indirectly controls a section 6 holding company shall be--
       ``(1) treated as a bank holding company for purposes of 
     section 106 of the Bank Holding Company Act Amendments of 
     1970 and section 22(h) of the Federal Reserve Act and any 
     regulation prescribed under any such section; and
       ``(2) subject to the restrictions of section 106 of the 
     Bank Holding Company Act Amendments of 1970, in connection 
     with any transaction involving the products or services of 
     such company or affiliate and those of a bank affiliate, as 
     if such company or affiliate were a bank and such bank were a 
     subsidiary of a bank holding company.
       ``(d) Financial Holding Company Requirements.--A section 6 
     holding company shall be subject to--
       ``(1) the conditions for engaging in expanded financial 
     activities in section 4(l); and
       ``(2) the provisions applicable to financial holding 
     companies that fail to meet certain requirements in section 
     4(m).
       ``(e) Independence of Section 6 Holding Company.--
       ``(1) No less than 25 percent of the members of the board 
     of directors of a section 6 holding company, and each 
     subsidiary of a section 6 holding company, shall be 
     independent of the parent company of the section 6 holding 
     company and any subsidiary of such parent company. For 
     purposes of this subsection, a director shall be independent 
     of the parent company if such person is not currently 
     serving, and has not within the previous two-year period 
     served, as a director, officer, or employee of any affiliate 
     of the section 6 holding company that is not a subsidiary of 
     the section 6 holding company.
       ``(2) No executive officer of a section 6 holding company 
     or any subsidiary of a section 6 holding company may serve as 
     a director, officer, or employee of an affiliate of the 
     section 6 holding company that is not a subsidiary of the 
     section 6 holding company.
       ``(3) The Board shall issue regulations that require 
     effective legal and operational separation of the functions 
     of a section 6 holding company from its affiliates that are 
     not subsidiaries of such section 6 holding company,

[[Page 31086]]

     provided, however that such rules shall not require 
     operational separation of internal functions including, but 
     not limited to, human resources management, employee benefit 
     plans, and information technology.
       ``(f) Source of Strength.--A company that directly or 
     indirectly controls a section 6 holding company shall serve 
     as a source of financial strength to its subsidiary section 6 
     holding company.''.
       (d) Conforming Changes.--Section 4(h) of the Bank Holding 
     Company Act of 1956 (12 U.S.C. 1843(h)), is amended--
       (1) in paragraph (1), by striking ``subparagraph (D), (F), 
     (G), or (H)'' and inserting ``subparagraph (C) or (D)''; and
       (2) in paragraph (2), by striking ``subparagraph (D), (F), 
     (G), or (H)'' and inserting ``subparagraph (C) or (D)''.

     SEC. 1302. REGISTRATION OF CERTAIN COMPANIES AS BANK HOLDING 
                   COMPANIES.

       Section 5 of the Bank Holding Company Act of 1956 (12 
     U.S.C. 1844) is amended by inserting at the end the following 
     new subsection:
       ``(h) Conversion to Bank Holding Company by Operation of 
     Law.--
       ``(1) Conversion by operation of law.--A company that, on 
     the day before the date of enactment of the Financial 
     Stability Improvement Act of 2009, was not a bank holding 
     company but which, by reason of sections 4(p) and 6 becomes a 
     bank holding company by operation of law, shall register as a 
     bank holding company with the Board in accordance with 
     section 5(a) within 90 days of the date of enactment of that 
     Act.
       ``(2) Compliance with bank holding company act.--With 
     respect to any company described in paragraph (1), the Board 
     may grant temporary exemptions or provide other appropriate 
     temporary relief to permit such company to implement measures 
     necessary to comply with the requirements under the Bank 
     Holding Company Act.''.

     SEC. 1303. REPORTS AND EXAMINATIONS OF BANK HOLDING 
                   COMPANIES; REGULATION OF FUNCTIONALLY REGULATED 
                   SUBSIDIARIES.

       (a) Reports of Bank Holding Companies.--Sections 5(c)(1)(A) 
     and (B) of the Bank Holding Company Act of 1956 (12 U.S.C. 
     1844(c)(1)(A) and (B)) are amended to read as follows:
       ``(A) In general.--The Board, from time to time, may 
     require a bank holding company and any subsidiary of such 
     company to submit reports under oath that the Board 
     determines are necessary or appropriate for the Board to 
     carry out the purposes of this chapter, prevent evasions 
     thereof, and monitor compliance by the company or subsidiary 
     with the applicable provisions of law.
       ``(B) Use of existing reports.--
       ``(i) In general.--The Board shall, to the fullest extent 
     possible, use:

       ``(I) reports that a bank holding company or any subsidiary 
     of such company has been required to provide to other Federal 
     or State regulatory agencies;
       ``(II) information that is otherwise required to be 
     reported publicly; and
       ``(III) externally audited financial statements.

       ``(ii) Availability.--A bank holding company or a 
     subsidiary of such company shall promptly provide to the 
     Board, at the request of the Board, a report referred to in 
     clause (i)(I).''.
       (b) Functionally Regulated Subsidiary.--Section 5(c)(1) of 
     the Bank Holding Company Act of 1956 (12 U.S.C. 1844(c)(1)) 
     is amended by inserting at the end the following new 
     subparagraph:
       ``(C) Definition.--For purposes of this subsection and 
     section 6, the term `functionally regulated subsidiary' means 
     any subsidiary (other than a depository institution) of a 
     bank holding company that is--
       ``(i) a broker or dealer registered with the Securities and 
     Exchange Commission under the Securities Exchange Act of 
     1934, for which the Securities and Exchange Commission is the 
     Federal regulatory agency;
       ``(ii) an investment company registered with the Securities 
     and Exchange Commission under the Investment Company Act of 
     1940, for which the Securities and Exchange Commission is the 
     Federal regulatory agency;
       ``(iii) an investment adviser registered with the 
     Securities and Exchange Commission under the Investment 
     Advisers Act of 1940, for which the Securities and Exchange 
     Commission is the Federal regulatory agency, with respect to 
     the investment advisory activities of such investment adviser 
     and activities incidental to such investment advisory 
     activities; and
       ``(iv) a futures commission merchant, commodity trading 
     advisor, and commodity pool operator registered with the 
     Commodity Futures Trading Commission under the Commodity 
     Exchange Act, for which the Commodity Futures Trading 
     Commission is the Federal regulatory agency, with respect to 
     the commodities activities of such entity and activities 
     incidental to such commodities activities.''.
       (c) Examinations of Bank Holding Companies.--Sections 
     5(c)(2)(A) and (B) of the Bank Holding Company Act of 1956 
     (12 U.S.C. 1844(c)(2)(A) and (B)) are amended to read as 
     follows:
       ``(A) In general.--The Board may make examinations of a 
     bank holding company and any subsidiary of such a company to 
     carry out the purposes of this chapter, prevent evasions 
     thereof, and monitor compliance by the company or subsidiary 
     with applicable provisions of law.
       ``(B) Functionally regulated and depository institution 
     subsidiaries.--The Board shall, to the fullest extent 
     possible, use reports of examination of functionally 
     regulated subsidiaries and subsidiary depository institutions 
     made by other Federal or State regulatory authorities.''.
       (d) Regulation of Financial Holding Companies.--Section 
     5(c)(2) of the Bank Holding Company Act of 1956 (12 U.S.C. 
     1844(c)) is amended by striking subparagraphs (C), (D), and 
     (E).
       (e) 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 by 
     striking section 10A (12 U.S.C. 1848a).

     SEC. 1304. REQUIREMENTS FOR FINANCIAL HOLDING COMPANIES TO 
                   REMAIN WELL CAPITALIZED AND WELL MANAGED.

       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'';
       (2) by redesignating subparagraph (C) as subparagraph (D);
       (3) by inserting after subparagraph (B) the following new 
     subparagraph:
       ``(C) the bank holding company is well capitalized and well 
     managed; and''; and
       (4) in subparagraph (D) (as so redesignated) by amending 
     clause (ii) to read as follows:
       ``(ii) a certification that the company meets the 
     requirements of subparagraphs (A) through (C).''.

     SEC. 1305. STANDARDS FOR INTERSTATE ACQUISITIONS.

       (a) Bank Holding Company Act of 1956 Amendment.--Section 
     3(d)(1)(A) of the Bank Holding Company Act of 1956 (12 U.S.C. 
     1842(d)(1)(A)) is amended--
       (1) by striking ``adequately capitalized'' and inserting 
     ``well capitalized''; and
       (2) by striking ``adequately managed'' and inserting ``well 
     managed''.
       (b) Federal Deposit Insurance Act Amendment.--Section 
     44(b)(4)(B) of the Federal Deposit Insurance Act (12 U.S.C. 
     1831u(b)(4)(B)) is amended to read as follows:
       ``(B) the responsible agency determines that the resulting 
     bank will be well capitalized and well managed upon the 
     consummation of the transaction.''.

     SEC. 1306. ENHANCING EXISTING RESTRICTIONS ON BANK 
                   TRANSACTIONS WITH AFFILIATES.

       (a) Section 23A of the Federal Reserve Act (12 U.S.C. 371c) 
     is amended--
       (1) in subsection (b)(1), by striking subparagraph (D) and 
     inserting the following new subparagraph:
       ``(D) any investment fund with respect to which a member 
     bank or affiliate thereof is an investment adviser; and''
       (2) in subsection (b)(7)(A), by inserting ``(including a 
     purchase of assets subject to an agreement to repurchase)'' 
     after ``affiliate'';
       (3) in subsection (b)(7)(C), by striking ``, including 
     assets subject to an agreement to repurchase,'';
       (4) in subsection (b)(7)(D)--
       (A) by inserting ``or other debt obligations'' after 
     ``acceptance of securities'', and
       (B) by striking ``or'' after the semicolon;
       (5) in subsection (b)(7), by inserting at the end the 
     following new subparagraphs:
       ``(F) any securities borrowing and lending transactions 
     with an affiliate to the extent that the transactions create 
     credit exposure of the member bank to the affiliate; or
       ``(G) current and potential future credit exposure to the 
     affiliate on derivative transactions with the affiliate;'';
       (6) in subsection (c)(1), by striking ``at the time of the 
     transaction,'' and inserting ``at all times'';
       (7) in subsection (c)--
       (A) by striking paragraph (2);
       (B) by redesignating paragraphs (3), (4), and (5) as 
     paragraphs (2), (3), and (4), respectively;
       (8) in subsection (c)(3) (as so redesignated by paragraph 
     (7)), by inserting ``or other debt obligations'' after 
     ``securities'';
       (9) in subsection (f)(2), by inserting at the end the 
     following: ``The Board may not, by regulation or order, grant 
     an exemption under this section unless the Board obtains the 
     concurrence of the Chairman of the Federal Deposit Insurance 
     Corporation.''; and
       (10) in subsection (f)--
       (A) by redesignating paragraph (3) as paragraph (4);
       (B) and inserting after paragraph (2) the following new 
     paragraph:
       ``(3) Concurrence of the comptroller of the currency.--With 
     respect to a transaction or relationship involving a national 
     bank or Federal savings association, the Board may not grant 
     an exemption under this section unless the Board obtains the 
     concurrence of the Comptroller of the Currency (in addition 
     to obtaining the concurrence of the Chairman of the Federal 
     Deposit Insurance Corporation under paragraph (2)).''.
       (b) Technical and Conforming Amendment.--Section 23B(e) of 
     the Federal Reserve

[[Page 31087]]

     Act (12 U.S.C. 371-1(e)), is amended by inserting at the end 
     the following new paragraph:
       ``(3) The Board may not grant an exemption or exclusion 
     under this section unless the Board obtains the concurrence 
     of the Chairman of the Federal Deposit Insurance 
     Corporation.''.

     SEC. 1307. ELIMINATING EXCEPTIONS FOR TRANSACTIONS WITH 
                   FINANCIAL SUBSIDIARIES.

       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).

     SEC. 1308. LENDING LIMITS APPLICABLE TO CREDIT EXPOSURE ON 
                   DERIVATIVE TRANSACTIONS, REPURCHASE AGREEMENTS, 
                   REVERSE REPURCHASE AGREEMENTS, AND SECURITIES 
                   LENDING AND BORROWING TRANSACTIONS.

       Section 5200 of the Revised Statutes of the United States 
     (12 U.S.C. 84) is amended--
       (1) in subsection (b)(1), by striking ``shall include all 
     direct or indirect'' and all that follows through 
     ``commitment;'' and inserting: ``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, such term shall also include any liability of a 
     national banking association to advance funds to or on behalf 
     of a person pursuant to a contractual commitment; and
       ``(C) 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 subsection (b)(2) by striking the period at the end 
     and inserting ``; and'';
       (3) in subsection (b), by inserting after paragraph (2) the 
     following new paragraph:
       ``(3) the term `derivative transaction' means 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.''; and
       (4) in subsection (d), by inserting after paragraph (2) the 
     following new paragraph:
       ``(3) The Comptroller of the Currency shall prescribe rules 
     to administer and carry out the purposes of this section with 
     respect to credit exposures arising from any derivative 
     transaction, repurchase agreement, reverse repurchase 
     agreement, securities lending transaction, or securities 
     borrowing transaction. Rules required to be prescribed under 
     this paragraph (3) shall take effect, in final form, not 
     later than 180 days after the date of enactment of the 
     Financial Stability Improvement Act of 2009.''.

     SEC. 1309. RESTRICTION ON CONVERSIONS OF TROUBLED BANKS AND 
                   THRIFTS.

       (a) Conversion of a National Banking Association to a State 
     Bank.--The National Bank Consolidation and Merger Act (12 
     U.S.C. 215 et seq.) is amended by redesignating section 7 as 
     section 8 and by inserting after section 6 the following:

     ``SEC. 7. PROHIBITION ON CERTAIN CONVERSIONS.

       ``A national bank may not convert to a State bank during 
     any period of time in which it is subject to a cease and 
     desist order, memorandum of understanding, or other 
     enforcement action entered into with or issued by the 
     Comptroller of the Currency.''
       (b) Conversion of a State Bank to a National Bank.--Section 
     5154 of the Revised Statutes (12 U.S.C. 35) is amended by 
     adding at the end the following new sentence: ``The 
     Comptroller of the Currency shall not approve the conversion 
     of a State bank to a national bank during any period of time 
     in which the State bank is subject to a cease and desist 
     order, memorandum of understanding, or other enforcement 
     action entered into or issued by a State bank supervisor, the 
     Federal Deposit Insurance Corporation, the Board of Governors 
     of the Federal Reserve System or a Federal Reserve Bank.''.
       (c) Conversion Between a Federal Savings Association and a 
     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 new paragraph:
       ``(6) Prohibition on certain conversions.--A Federal 
     savings association may not convert to a State savings 
     association, and a State savings association may not convert 
     to a Federal savings association, during any period of time 
     in which such savings association is subject to a cease and 
     desist order, memorandum of understanding, or other 
     enforcement action entered into with or issued by the 
     Director of the Office of Thrift Supervision or a State 
     savings association supervisor.''.

     SEC. 1310. LENDING LIMITS TO INSIDERS.

       Section 22(h)(9)(D)(ii) of the Federal Reserve Act (12 
     U.S.C. 375b(h)(9)(D)(ii)) is amended by inserting ``, except 
     that a member bank shall be deemed to have extended credit to 
     a person if the member bank has credit exposure to the person 
     arising from a derivative transaction, repurchase agreement, 
     reverse repurchase agreement, securities lending transaction, 
     or securities borrowing transaction between the member bank 
     and the person'' before the period at the end.

     SEC. 1311. LIMITATIONS ON PURCHASES OF ASSETS FROM INSIDERS.

       (a) Section 18 of the Federal Deposit Insurance Act (12 
     U.S.C. 1828) is amended by inserting after subsection (y) (as 
     added by section 1408) the following new subsection:
       ``(z) General Prohibition.--An insured depository 
     institution shall not purchase an asset from, or sell an 
     asset to, one of its executive officers, directors, or 
     principal shareholders or any related interest of such person 
     (as such terms are defined in section 22(h) of Federal 
     Reserve Act) unless the transaction is on market terms and, 
     if the transaction represents more than 10 percent of the 
     institution's capital stock and surplus, the transaction has 
     been approved in advance by a majority of the institution's 
     board of directors (with interested directors of the insured 
     depository institution not participating in the approval of 
     the transaction).''.
       (b) FDIC Rulemaking Authority.--The Federal Deposit 
     Insurance Corporation may prescribe rules to implement the 
     requirements of subsection (a) and the amendments made by 
     subsection (a).
       (c) Amendments to the Federal Reserve Act.--Section 22 of 
     the Federal Reserve Act (12 U.S.C. 375) is amended by 
     striking subsection (d).

     SEC. 1312. RULES REGARDING 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 ``, including 
     regulations relating to the capital levels of bank holding 
     companies'' before the period at the end.

     SEC. 1313. ENHANCEMENTS TO FACTORS TO BE CONSIDERED IN 
                   CERTAIN ACQUISITIONS.

       (a) Bank Acquisitions.--Section 3(c) of the Bank Holding 
     Company Act of 1956 (12 U.S.C. 1842(c)) is amended by 
     inserting at the end the following new paragraph:
       ``(7) Financial stability.--
       ``(A) In general.--In every case, the Board shall take into 
     consideration the extent to which the proposed acquisition, 
     merger, or consolidation may pose risk to the stability of 
     the United States financial system or the economy of the 
     United States , including the resulting scope, nature, size, 
     scale, concentration, or interconnectedness of activities 
     that are financial in nature.
       ``(B) Standards for approval.--The Board may in its sole 
     discretion disapprove any acquisition, merger, or 
     consolidation of, or by, a financial company subject to 
     stricter prudential standards if the Board determines that 
     the resulting concentration of liabilities on a consolidated 
     basis is likely to pose a greater threat to financial 
     stability during times of severe economic distress.''.
       (b) Nonbank Acquisitions.--
       (1) Section 4(j)(2)(A) of the Bank Holding Company is 
     amended by--
       (A) striking ``or'' before ``unsound banking practices''; 
     and
       (B) inserting before the period at the end the following: 
     ``, or risk to the stability of the United States financial 
     system or the economy of the United States''.
       (2) Section 4(k)(6) of the Bank Holding Company Act of 1956 
     is amended by striking subparagraph (B) and inserting the 
     following new subparagraph:
       ``(B) 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 Board, except--
       ``(i) for a transaction in which the total assets to be 
     acquired by the financial holding company exceed $25 billion; 
     and
       ``(ii) as provided in subsection (j) with regard to the 
     acquisition of a savings association.''.
       (c) Bank Merger Act Transactions.--Section 8(c) of the 
     Federal Deposit Insurance Act (12 U.S.C. 1828(c)) is amended 
     by--
       (1) in paragraph (5), by striking ``and'' before ``the 
     convenience and needs of the community to be served'';
       (2) in paragraph (5), by inserting before the period at the 
     end the following: ``, and the risk to the stability of the 
     United States financial system and the economy of the United 
     States based on, among other things, the scope, nature, size, 
     scale, concentration, or interconnectedness of activities 
     that are financial in nature''; and
       (3) in paragraph (7)(B), by inserting ``subparagraphs (A) 
     and (B) of'' before ``paragraph''.

     SEC. 1314. ELIMINATION OF ELECTIVE INVESTMENT BANK HOLDING 
                   COMPANY FRAMEWORK.

       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.

     SEC. 1315. EXAMINATION FEES FOR LARGE BANK HOLDING COMPANIES.

       The Bank Holding Company Act of 1956 is amended by 
     inserting after section 5 the following new section:

[[Page 31088]]



     ``SEC. 5A. EXAMINATION FEES.

       ``The Board of Governors of the Federal Reserve System or 
     the Federal Reserve Banks shall assess fees on bank holding 
     companies with total consolidated assets of $10 billion or 
     more. Such fees shall be sufficient to defray the cost of the 
     examination of such bank holding companies.''.

     Subtitle E--Improvements to the Federal Deposit Insurance Fund

     SEC. 1401. ACCOUNTING FOR ACTUAL RISK TO THE DEPOSIT 
                   INSURANCE FUND.

       (a) Section 7(b)(1)(C) of the Federal Deposit Insurance Act 
     is amended to read as follows:
       ``(C) `Risk-based assessment system' defined.--For purposes 
     of this paragraph, the term `risk-based assessment system' 
     means a system for calculating a depository institution's 
     assessment based on--
       ``(i) the probability that the Deposit Insurance Fund will 
     incur a loss with respect to the institution;
       ``(ii) the likely amount of any such loss;
       ``(iii) the risks to the Deposit Insurance Fund 
     attributable to such depository institution, including risks 
     posed by its affiliates to the extent the Corporation 
     determines appropriate, taking into account--

       ``(I) the amount, different categories, and concentrations 
     of assets of the insured depository institution and its 
     affiliates, including both on-balance sheet and off-balance 
     sheet assets;
       ``(II) the amount, different categories, and concentrations 
     of liabilities, both insured and uninsured, contingent and 
     noncontingent, including both on-balance sheet and off-
     balance sheet liabilities, of the insured depository 
     institution and its affiliates; and
       ``(III) any other factors the Corporation determines are 
     relevant to assessing the risks; and

       ``(iv) the revenue needs of the Deposit Insurance Fund.''.
       (b) Section 7(b)(2) of the Federal Deposit Insurance Act is 
     amended by striking subparagraph (D) and by redesignating 
     subparagraph (E) as subparagraph (D).

     SEC. 1402. CREATING A RISK-FOCUSED ASSESSMENT BASE.

       Section 7(b)(2) of such Act, as amended, is further amended 
     by amending subparagraph (C) to read as follows:
       ``(C) Assessment.--The assessment of any insured depository 
     institution imposed under this subsection shall be an amount 
     equal to the product of--
       ``(i) an assessment rate established by the Corporation; 
     and
       ``(ii) the amount of the insured depository institution's 
     average total assets during the assessment period minus the 
     amount of the insured depository institution's average 
     tangible equity during the assessment period.''.

     SEC. 1403. ELIMINATION OF PROCYCLICAL ASSESSMENTS.

       Section 7(e) of the Federal Deposit Insurance Act is 
     amended--
       (1) in paragraph (2)--
       (A) by amending subparagraph (B) to read as follows:
       ``(B) Limitation.--The Board of Directors may, in its sole 
     discretion, suspend or limit the declaration of payment of 
     dividends under subparagraph (A).'';
       (B) by amending subparagraph (C) to read as follows:
       ``(C) Notice and opportunity for comment.--The Corporation 
     shall prescribe, by regulation, after notice and opportunity 
     for comment, the method for the declaration, calculation, 
     distribution, and payment of dividends under this 
     paragraph''; and
       (C) by striking subparagraphs (D) through (G); and
       (2) in paragraph (4)(A) by striking ``paragraphs (2)(D) 
     and'' and inserting ``paragraphs (2) and''.

     SEC. 1404. ENHANCED ACCESS TO INFORMATION FOR DEPOSIT 
                   INSURANCE PURPOSES.

       (a) Section 7(a)(2)(B) of the Federal Deposit Insurance Act 
     is amended by striking ``, after agreement with the 
     Comptroller of the Currency, the Board of Governors of the 
     Federal Reserve System, and the Director of the Office of 
     Thrift Supervision, as appropriate,''.
       (b) Section 7(b)(1)(E) of the Federal Deposit Insurance Act 
     is amended--
       (1) in clause (i), by striking ``such as'' and inserting 
     ``including''; and
       (2) by striking clause (iii).

     SEC. 1405. TRANSITION RESERVE RATIO REQUIREMENTS TO REFLECT 
                   NEW ASSESSMENT BASE.

       (a) Section 7(b)(3)(B) of the Federal Deposit Insurance Act 
     is amended to read as follows:
       ``(B) Minimum reserve ratio.--The reserve ratio designated 
     by the Board of Directors for any year may not be less than 
     1.15 percent of estimated insured deposits, or the comparable 
     percentage of the assessment base set forth in paragraph 
     (2)(C).''.
       (b) Section 3(y)(3) of the Federal Deposit Insurance Act is 
     amended by inserting ``, or such comparable percentage of the 
     assessment base set forth in section 7(b)(2)(C)'' before the 
     period.
       (c) For a period of not less than 5 years after the date of 
     the enactment of this title, the Federal Deposit Insurance 
     Corporation shall make available to the public the reserve 
     ratio and the designated reserve ratio using both estimated 
     insured deposits and the assessment base under section 
     7(b)(2)(C) of the Federal Deposit Insurance Act.

  Subtitle F--Improvements to the Asset-backed Securitization Process

     SEC. 1501. SHORT TITLE.

       This subtitle may be cited as the ``Credit Risk Retention 
     Act of 2009''.

     SEC. 1502. CREDIT RISK RETENTION.

       (a) Amendment.--The Securities Act of 1933 (15 U.S.C. 77a 
     et seq.) is amended by inserting after section 28 the 
     following new section:

     ``SEC. 29. CREDIT RISK RETENTION.

       ``(a) In General.--
       ``(1) Interest in loans made by creditors.--Within 180 days 
     of the date of the enactment of this section, the appropriate 
     agencies shall prescribe regulations to require any creditor 
     that makes a loan to retain an economic interest in a 
     material portion of the credit risk of any such loan that the 
     creditor transfers, sells, or conveys to a third party, 
     including for the purpose of including such loan in a pool of 
     loans backing an issuance of asset-backed securities.
       ``(2) Interest in assets backing asset-backed securities.--
     The appropriate agencies shall prescribe regulations to 
     require any securitizer of asset-backed securities that are 
     backed by assets not described in paragraph (1) to retain an 
     economic interest in a material portion of any such asset 
     used to back an issuance of securities.
       ``(b) Alternative Risk Retention for Credit Securitizers.--
     The appropriate agencies may apply the risk retention 
     requirements of this section to securitizers of loans or 
     particular types of loans in addition to or in substitution 
     for any or all of the requirements that apply to creditors 
     that make such loans or types of loans, if the agencies 
     determine that applying the requirements to such securitizers 
     would--
       ``(1) be consistent with helping to ensure high quality 
     underwriting standards for creditors, taking into account 
     other applicable laws, regulations, and standards; and
       ``(2) facilitate appropriate risk management practices by 
     such creditors, improve access of consumers to credit on 
     reasonable terms, or otherwise serve the public interest.
       ``(c) Standards for Regulation.--Regulations prescribed 
     under subsections (a) and (b) shall--
       ``(1) prohibit a creditor or securitizer from directly or 
     indirectly hedging or otherwise transferring the credit risk 
     such creditor or securitizer is required to retain under the 
     regulations;
       ``(2) require a creditor or securitizer to retain 5 percent 
     of the credit risk on any loan that is transferred, sold, or 
     conveyed by such creditor or securitized by such securitizer 
     except--
       ``(A) an appropriate agency may specify that the percentage 
     of risk may be less than 5 percent of the credit risk, or 
     exempt such creditor or securitizer from the risk retention 
     requirement, if--
       ``(i) the credit underwriting by the creditor or the due 
     diligence by the securitizer meets such standards as an 
     appropriate agency prescribes; and
       ``(ii) the loan that is transferred, sold, or conveyed by 
     such creditor or securitized by such securitizer meets terms, 
     conditions, and characteristics that are determined by an 
     appropriate agency to reflect loans with reduced credit risk, 
     such as loans that meet certain interest rate thresholds, 
     loans that are fully amortizing, and loans that are included 
     in a securitization in which a third-party purchaser 
     specifically negotiates for the purchase of the first-loss 
     position and provides due diligence on all individual loans 
     in the pool prior to the issuance of the asset-backed 
     securities, and retains a first-loss position; and
       ``(B) an appropriate agency may specify that the percentage 
     of risk may be more than 5 percent of the credit risk if the 
     underwriting by the creditor or due diligence by the 
     securitizer is insufficient;
       ``(3) specify that the credit risk retained must be no less 
     at risk for loss than the average of the credit risk not so 
     retained; and
       ``(4) set the minimum duration of the required risk 
     retention.
       ``(d) Exemptions and Adjustments.--
       ``(1) In general.--The appropriate agencies shall have 
     authority to provide exemptions or adjustments to the 
     requirements of this section, including exemptions or 
     adjustments relating to the percentage of risk retention 
     required to be held and the hedging prohibition.
       ``(2) Applicable standards.--Any exemptions or adjustments 
     provided under paragraph (1) shall--
       ``(A) be consistent with the purpose of ensuring high 
     quality underwriting standards for creditors, taking into 
     account other applicable laws, regulations, or standards; and
       ``(B) facilitate appropriate risk management practices by 
     such creditors, improve access for consumers to credit on 
     reasonable terms, or otherwise serve the public interest.
       ``(e) Appropriate Agency Defined.--For purposes of this 
     section, the term `appropriate agency' means any of the 
     following agencies with regard to the respective loans and 
     asset-backed securities:
       ``(1) Banking agencies.--The Federal banking agencies, the 
     National Credit Union Administration Board, and the 
     Commission, with respect to any loan or asset-backed security 
     for which there is no appropriate agency under paragraph (2).

[[Page 31089]]

       ``(2) Other agencies.--
       ``(A) With regard to any mortgage insured under title II of 
     the National Housing Act, the Secretary of Housing and Urban 
     Development.
       ``(B) With regard to any loan meeting the conforming loan 
     standards of the Federal National Mortgage Corporation or the 
     Federal Home Loan Mortgage Corporation or any asset-backed 
     security issued by either such corporation, the Federal 
     Housing Finance Agency.
       ``(C) With regard to any loan insured by the Rural Housing 
     Service, the Rural Housing Service.
       ``(f) Joint Appropriate Agency Regulations.--All 
     regulations prescribed by the agencies identified in 
     subsection (e)(1) shall be prescribed jointly by such 
     agencies.
       ``(g) Enforcement.--
       ``(1) Compliance with the requirements imposed under this 
     section shall be enforced under--
       ``(A) section 8 of the Federal Deposit Insurance Act (12 
     U.S.C. 1818), in the case of--
       ``(i) national banks, and Federal branches and Federal 
     agencies of foreign banks, by the Office of the Comptroller 
     of the Currency;
       ``(ii) member banks of the Federal Reserve System (other 
     than national banks), branches and agencies of foreign banks 
     (other than Federal branches, Federal agencies, and insured 
     State branches of foreign banks), commercial lending 
     companies owned or controlled by foreign banks, and 
     organizations operating under section 25 or 25A of the 
     Federal Reserve Act, bank holding companies, and subsidiaries 
     of bank holding companies (other than insured depository 
     institutions), by the Board; and
       ``(iii) banks insured by the Federal Deposit Insurance 
     Corporation (other than members of the Federal Reserve 
     System) and insured State branches of foreign banks, by the 
     Board of Directors of the Federal Deposit Insurance 
     Corporation;
       ``(B) section 8 of the Federal Deposit Insurance Act (12 
     U.S.C. 1818), by the Director of the Office of Thrift 
     Supervision, in the case of a savings association the 
     deposits of which are insured by the Federal Deposit 
     Insurance Corporation and a savings and loan holding company 
     and to any subsidiary (other than a bank or subsidiary of 
     that bank); and
       ``(C) the Federal Credit Union Act (12 U.S.C. 1751 et 
     seq.), by the National Credit Union Administration Board with 
     respect to any Federal credit union.
       ``(2) Except to the extent that enforcement of the 
     requirements imposed under this section is specifically 
     committed to some other Federal agency under paragraph (1), 
     the Commission shall enforce such requirements.
       ``(3) The authority of the Commission under this section 
     shall be in addition to its existing authority to enforce the 
     securities laws.
       ``(h) Exclusions.--Notwithstanding any other provision of 
     this section, the requirements of this section shall not 
     apply to any loan--
       ``(1) insured, guaranteed, or administered by the Secretary 
     of Education, the Secretary of Agriculture, the Secretary of 
     Veterans Affairs, or the Small Business Administration; or
       ``(2) made, insured, guaranteed, or purchased by any person 
     that is subject to the supervision of the Farm Credit 
     Administration, including the Federal Agricultural Mortgage 
     Corporation.
       ``(i) Definitions.--For purposes of this section:
       ``(1) The term `asset-backed security' has the meaning 
     given such term in section 229.1101(c) of title 17, Code of 
     Federal Regulations, or any successor thereto.
       ``(2) The term `Federal banking agencies' means the Board 
     of Governors of the Federal Reserve System, the Office of the 
     Comptroller of the Currency, the Office of Thrift 
     Supervision, and the Federal Deposit Insurance Corporation.
       ``(3) The term `insured depository institution' has the 
     meaning given such term in section 3(c) of the Federal 
     Deposit Insurance Act (12 U.S.C. 1813(c)).
       ``(4) The term `securitization vehicle' means a trust, 
     corporation, partnership, limited liability entity, special 
     purpose entity, or other structure that--
       ``(A) is the issuer, or is created by the issuer, of pass-
     through certificates, participation certificates, asset-
     backed securities, or other similar securities backed by a 
     pool of assets that includes loans; and
       ``(B) holds such loans.
       ``(5) The term `securitizer' means the person that 
     transfers, conveys, or assigns, or causes the transfer, 
     conveyance, or assignment of, loans, including through a 
     special purpose vehicle, to any securitization vehicle, 
     excluding any trustee that holds such loans for the benefit 
     of the securitization vehicle.''.
       (b) Study on Risk Retention.--
       (1) Study.--The Board, in coordination and consultation 
     with the Comptroller of the Currency, the Office of Thrift 
     Supervision, the Federal Deposit Insurance Corporation, and 
     the Securities and Exchange Commission, shall conduct a study 
     of the combined impact by each individual class of asset-
     backed security of--
       (A) the new credit risk retention requirements contained in 
     the amendment made by subsection (a); and
       (B) the Financial Accounting Statements 166 and 167 issued 
     by the Financial Accounting Standards Board.
       (2) Report.--Not later than 90 days after the date of 
     enactment of this title, the Board shall submit to Congress a 
     report on the study conducted under paragraph (1). Such 
     report shall include statutory and regulatory recommendations 
     for eliminating any negative impacts on the continued 
     viability of the asset-backed securitization markets and on 
     the availability of credit for new lending identified by the 
     study conducted under paragraph (1).

     SEC. 1503. PERIODIC AND OTHER REPORTING UNDER THE SECURITIES 
                   EXCHANGE ACT OF 1934 FOR ASSET-BACKED 
                   SECURITIES.

       Section 15(d) of Securities Exchange Act of 1934 (15 U.S.C. 
     78o(d)) is amended--
       (1) by inserting ``, other than securities of any class of 
     asset-backed security (as defined in section 229.1101(c) of 
     title 17, Code of Federal Regulations, or any successor 
     thereto),'' after ``securities of each class'';
       (2) by inserting at the end the following: ``The Commission 
     may by rules and regulations provide for the suspension or 
     termination of the duty to file under this subsection for any 
     class of issuer of asset-backed security upon such terms and 
     conditions and for such period or periods as it deems 
     necessary or appropriate in the public interest or for the 
     protection of investors. The Commission may, for the purposes 
     of this subsection, classify issuers and prescribe 
     requirements appropriate for each class of issuer of asset-
     backed security.''; and
       (3) by inserting after the fifth sentence the following: 
     ``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. In 
     adopting regulations under this subsection, the Commission 
     shall 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. The Commission 
     shall 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. Asset-level 
     or loan-level data shall include data with unique identifiers 
     relating to loan brokers or originators, the nature and 
     extent of the compensation of the broker or originator of the 
     assets backing the security, and the amount of risk retention 
     of the originator or the securitizer of such assets.''.

     SEC. 1504. REPRESENTATIONS AND WARRANTIES IN ASSET-BACKED 
                   OFFERINGS.

       The Commission shall prescribe regulations on the use of 
     representations and warranties in the asset-backed securities 
     market that--
       (1) require credit rating agencies to include in reports 
     accompanying credit ratings a description of the 
     representations, warranties, and enforcement mechanisms 
     available to investors and how they differ from 
     representations, warranties, and enforcement mechanisms in 
     similar issuances; and
       (2) require disclosure on fulfilled repurchase requests 
     across all trusts aggregated by originator, so that investors 
     may identify asset originators with clear underwriting 
     deficiencies.

     SEC. 1505. EXEMPTED TRANSACTIONS UNDER THE SECURITIES ACT OF 
                   1933.

       (a) In General.--Section 4 of the Securities Act of 1933 
     (15 U.S.C. 77d) is amended--
       (1) by striking paragraph (5); and
       (2) by redesignating paragraph (6) as paragraph (5).
       (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. 1506. STUDY ON THE MACROECONOMIC EFFECTS OF RISK 
                   RETENTION REQUIREMENTS.

       (a) Study Required.--The Chairman of the Financial Services 
     Oversight Council shall carry out a study on the 
     macroeconomic effects of the risk retention requirements 
     under this subtitle, and the amendments made by this 
     subtitle, with emphasis placed on potential beneficial 
     effects with respect to stabilizing the real estate market. 
     Such study shall include--
       (1) an analysis of the effects of risk retention on real 
     estate asset price bubbles, including a retrospective 
     estimate of what fraction of real estate losses may have been 
     averted had such requirements been in force in recent years;
       (2) an analysis of the feasibility of minimizing real 
     estate price bubbles by proactively adjusting the percentage 
     of risk retention that must be borne by creditors and 
     securitizers of real estate debt, as a function of regional 
     or national market conditions;
       (3) a comparable analysis for proactively adjusting 
     mortgage origination requirements;
       (4) an assessment of whether such proactive adjustments 
     should be made by an independent regulator, or in a formulaic 
     and transparent manner;
       (5) an assessment of whether such adjustments should take 
     place independently or in concert with monetary policy; and

[[Page 31090]]

       (6) recommendations for implementation and enabling 
     legislation.
       (b) Report.--Not later than the end of the 180-day period 
     beginning on the date of the enactment of this title, the 
     Chairman of the Financial Services Oversight Council shall 
     issue a report to the Congress containing any findings and 
     determinations made in carrying out the study required under 
     subsection (a).

               Subtitle G--Enhanced Dissolution Authority

     SEC. 1601. SHORT TITLE; PURPOSE.

       (a) Short Title.--This subtitle may be cited as the 
     ``Dissolution Authority for Large, Interconnected Financial 
     Companies Act of 2009''.
       (b) Purpose.--The purpose of this subtitle is to protect 
     the financial system of the United States in times of severe 
     crisis by providing for the orderly resolution of large, 
     interconnected financial companies whose failure could 
     create, or increase, the risk of significant liquidity, 
     credit, or other financial problems spreading among financial 
     institutions or markets and thereby threaten the stability of 
     the overall financial system of the United States. There 
     shall be a strong presumption that resolution under the 
     bankruptcy laws will remain the primary method of resolving 
     financial companies, and the authorities contained in this 
     subtitle will only be used in the most exigent circumstances.

     SEC. 1602. DEFINITIONS.

       For purposes of this subtitle, the following definitions 
     shall apply:
       (1) Appropriate regulatory agency.--
       (A) Corporation and commission.--The term ``appropriate 
     regulatory agency'' means--
       (i) the Corporation;
       (ii) the Commission, if the financial company, or an 
     affiliate thereof, 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) (other than an insured depository 
     institution)); and
       (iii) if the financial company or an affiliate of the 
     financial company is an insurance company (other than an 
     insured depository institution), the applicable State 
     insurance authority of the State in which the insurance 
     company is domiciled.
       (B) Rules of construction.--More than 1 agency may be an 
     appropriate regulatory agency with respect to any given 
     financial company. In such instances, the Commission shall be 
     the appropriate regulatory agency for purposes of section 
     1603 if the largest subsidiary of the financial company is a 
     broker or dealer as measured by total assets as of the end of 
     the previous calendar quarter, the applicable State insurance 
     authority of the State in which the insurance company is 
     domiciled shall be the appropriate regulatory agency for 
     purposes of section 1603 if the largest subsidiary of the 
     financial company is an insurance company as measured by 
     total assets as of the end of the previous calendar quarter, 
     and otherwise the Corporation shall be the appropriate 
     regulatory agency for purposes of section 1603.
       (2) Bridge financial company.--The term ``bridge financial 
     company'' means a new financial company organized in 
     accordance with section 1609(h) by the Corporation.
       (3) Commission.--The term ``Commission'' means the 
     Securities and Exchange Commission.
       (4) Corporation.--The term ``Corporation'' means the 
     Federal Deposit Insurance Corporation.
       (5) Covered financial company.--The term ``covered 
     financial company'' means a financial company for which a 
     determination has been made pursuant to and in accordance 
     with section 1603(b).
       (6) Covered subsidiary.--The term ``covered subsidiary'' 
     means a subsidiary covered in paragraph (9)(B)(v).
       (7) Customer property.--The term ``customer property'' has 
     the meaning ascribed to it in the Securities Investor 
     Protection Act of 1970.
       (8) Federal reserve board.--The term ``Federal Reserve 
     Board'' means the Board of Governors of the Federal Reserve 
     System.
       (9) Financial company.--The term ``financial company'' 
     means any company that--
       (A) is incorporated or organized under Federal law or the 
     laws of any State;
       (B) is--
       (i) any bank holding company as defined in section 2(a) of 
     the Bank Holding Company Act of 1956 (12 U.S.C. 1841(a));
       (ii) any company that has been subjected to stricter 
     prudential regulation under section 1103;
       (iii) any insurance company;
       (iv) any company predominantly engaged in activities that 
     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)) or that have been identified for stricter 
     prudential standards under section 1103 of this title; or
       (v) any subsidiary of companies described in clauses (i) 
     through (iv) (other than an insured depository institution or 
     any broker or dealer registered with the Commission under 
     section 15(b) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78o(b)) that is a member of the Securities Investor 
     Protection Corporation); and
       (C) that 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.).
       (10) Fund.--The term ``Fund'' means the Systemic 
     Dissolution Fund established in accordance with section 
     1609(n).
       (11) Insurance company.--The term ``insurance company'' 
     includes any person engaged in the business of insurance to 
     the extent of such activities.
       (12) Secretary.--The term ``Secretary'' shall mean the 
     Secretary of the Treasury.
       (13) 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, and the United States Virgin Islands.
       (14) Certain other terms.--The terms ``affiliate,'' 
     ``company,'' ``control,'' ``deposit,'' ``depository 
     institution,'' ``foreign bank,'' ``insured depository 
     institution,'' and ``subsidiary'' have the same meanings as 
     in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 
     1813).

     SEC. 1603. SYSTEMIC RISK DETERMINATION.

       (a) Written Recommendation of the Federal Reserve Board and 
     the Appropriate Regulatory Agency.--
       (1) Vote required.--At the request of the Secretary or the 
     Chairman of the Federal Reserve Board or, in cases where an 
     financial company has a broker or dealer as its largest 
     subsidiary as measured by total assets as of the end of the 
     previous calendar quarter, the Commission, the Federal 
     Reserve Board and the appropriate regulatory agency shall; or 
     on their own initiative, the Federal Reserve Board and the 
     appropriate regulatory agency may; consider whether to make 
     the written recommendation provided for in paragraph (2) with 
     respect to a financial company, which recommendation shall be 
     made upon a vote of not less than two-thirds of the members 
     of the Federal Reserve Board then serving and two-thirds of 
     the members of the board or of the commission then serving of 
     the appropriate regulatory agency, as applicable.
       (2) Recommendation required.--Any written recommendations 
     made by the Federal Reserve Board and the appropriate 
     regulatory agency under paragraph (1) shall contain the 
     following:
       (A) A description of the effect that the default of the 
     financial company would have on economic conditions or 
     financial stability in the United States.
       (B) A description of the effect that the default of the 
     financial company would have on economic conditions or 
     financial stability for low-income, minority, or underserved 
     communities.
       (C) A recommendation regarding the nature and the extent of 
     actions that the Board and the appropriate regulatory agency 
     recommend be taken under section 1604 regarding the financial 
     holding company subject to stricter standards.
       (b) Determination by the Secretary.--Notwithstanding any 
     other provision of Federal law or the law of any State, if, 
     upon the written recommendation of the Federal Reserve Board 
     and the board of directors or commission of the appropriate 
     regulatory agency as provided for in subsection (a)(1), the 
     Secretary (in consultation with the President) determines 
     that--
       (1) the financial company is in default or is 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 or economic 
     conditions in the United States; and
       (3) any action under section 1604 would avoid or mitigate 
     such adverse effects, taking into consideration the 
     effectiveness of the action in mitigating potential adverse 
     effects on the financial system or economic conditions, the 
     cost to the general fund of the Treasury, and the potential 
     to increase moral hazard on the part of creditors, 
     counterparties, and shareholders in the financial company,
     then the Secretary must take action under section 1604(a), 
     the Corporation must act in accordance with section 1604(b), 
     and the Corporation may take 1 or more actions specified in 
     section 1604(c) in accordance with the requirements of that 
     subsection, except that, prior to the Secretary or 
     Corporation taking any action under section 1604, the Federal 
     Reserve Board or the appropriate Federal regulatory agency 
     shall take action to avoid or mitigate potential adverse 
     effects on low-income, minority, or underserved communities 
     affected by the failure of such financial company.
       (c) Documentation and Review.--
       (1) In general.--The Secretary shall--
       (A) document any determination under subsection (b); and,
       (B) retain the documentation for review under paragraph 
     (2).
       (2) GAO review.--The Comptroller General of the United 
     States shall review and report to the Congress on any 
     determination under subsection (b), including--
       (A) the basis for the determination;
       (B) the purpose for which any action was taken pursuant 
     thereto; and
       (C) the likely effect of the determination and such action 
     on the incentives and conduct of financial holding companies 
     subject to stricter standards and their creditors, 
     counterparties, and shareholders.

[[Page 31091]]

       (3) Report to congress.--Within 48 hours after a 
     determination is made under subsection (b), the Secretary 
     shall provide written notice of the determination 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. The notice shall include a 
     description of the basis for the determination.
       (d) Default or in Danger of Default.--For purposes of 
     subsection (b), a financial holding company subject to 
     stricter standards shall be considered to be in default or in 
     danger of default if any of the following conditions exist, 
     as determined in accordance with that subsection:
       (1) A case has been, or likely will promptly be, commenced 
     with respect to the financial holding company subject to 
     stricter standards under title 11, United States Code.
       (2) The financial holding company subject to stricter 
     standards is critically undercapitalized, as such term has 
     been or may be defined by the Federal Reserve Board.
       (3) The financial holding company subject to stricter 
     standards 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 without assistance under section 1604.
       (4) The assets of the financial holding company subject to 
     stricter standards are, or are likely to be, less than its 
     obligations to creditors and others.
       (5) The financial holding company subject to stricter 
     standards 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.

     SEC. 1604. RESOLUTION; STABILIZATION.

       (a) Appointment of Receiver.--
       (1) In general.--Upon the Secretary making a determination 
     in accordance with section 1603(b), the Secretary shall 
     appoint the Corporation as receiver for the covered financial 
     company.
       (2) Time limit on receivership authority.--Any appointment 
     of the Corporation as receiver under paragraph (1) shall 
     terminate on the date that is the end of the 1-year period 
     beginning on the date such appointment is made.
       (b) Resolution Limitations.--
       (1) In general.--An insolvent financial company may be 
     resolved under this subtitle only if the failure and 
     resolution of such company under title 11, United States 
     Code, would be systemically destabilizing, as determined by 
     the appropriate Federal regulatory agencies and the Secretary 
     of the Treasury (in consultation with the President) in 
     accordance with section 1603(b).
       (2) Liquidation.--A financial company that comes within 
     coverage of this subtitle for resolution shall be placed in 
     liquidation, and the associated liquidation costs shall be 
     paid from the company's assets and borne by the shareholders 
     and unsecured creditors of such company.
       (3) Assessment for excess liquidation costs.--Any 
     liquidation costs that exceed the amount of liquidated assets 
     of the company shall be paid through assessments on large 
     financial companies.
       (c) Consultation.--The Corporation, as receiver--
       (1) shall consult with the regulators of the covered 
     financial company and its covered subsidiaries for purposes 
     of ensuring an orderly resolution of the covered financial 
     company;
       (2) may consult with, or under section 1609(a)(1)(B)(v) or 
     section 1609(a)(1)(K) acquire services of, any outside 
     experts as appropriate to inform and aid the Corporation in 
     the resolution process; and
       (3) shall consult with the primary regulators of any 
     subsidiaries of the covered financial company that are not 
     covered subsidiaries as described in section 1602(9)(B)(iv) 
     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.
       (d) Emergency Stabilization After Appointment of 
     Receiver.--Upon the Secretary appointing the Corporation as 
     receiver under subsection (a), the Corporation may, in its 
     corporate capacity and as an agency of the United States, 
     with the approval of the Secretary and subject to the 
     conditions in subsections (f) through (g), take the following 
     actions under such terms and conditions that the Corporation 
     and the Secretary jointly deem appropriate:
       (1) Making loans to, or purchasing any debt obligation of, 
     the covered financial company or any covered subsidiary.
       (2) Purchasing 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 one 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 unencumbered assets of the company 
     or any covered subsidiary to secure repayment of any 
     transactions conducted under this subsection.
       (5) Selling or transferring all, or any part thereof, of 
     such acquired assets, liabilities, or obligations of the 
     covered financial company or any covered subsidiary.
       (e) Treatment of Certain Insurance Subsidiaries.--
       (1) In general.--Notwithstanding subsection (a), if a 
     covered financial company is an insurance company covered by 
     a State law designed specifically to deal with the insolvency 
     of an insurance company, resolution of such company, and any 
     subsidiary of such company, will be conducted as provided 
     under such State law.
       (2) Exception for covered subsidiaries.--The requirement of 
     paragraph (1) shall not apply with respect to any covered 
     subsidiary of such an insurance company.
       (3) Backup authority.--Notwithstanding paragraph (1), with 
     respect to a covered financial company described under 
     paragraph (1), if, after the end of the 60-day period 
     beginning on the date a determination is made under section 
     1603(b) 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 resolution under the State's laws and requirements, 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 resolution under the State's laws and 
     requirements.
       (f) Mandatory Terms and Conditions for All Stabilization 
     Actions.--The Corporation as receiver is authorized to take 
     the stabilization actions listed in subsection (d) only if--
       (1) the Secretary and the Corporation determine that such 
     action is necessary for the purpose of financial stability 
     and not for the purpose of preserving the covered financial 
     company;
       (2) the Corporation ensures that the shareholders of a 
     covered financial company do not receive payment until after 
     all other claims are fully paid;
       (3) the Corporation ensures that any funds from taxpayers 
     shall be repaid as part of the resolution process before 
     payments are made to creditors;
       (4) the Corporation ensures that unsecured creditors bear 
     losses;
       (5) the Corporation ensures 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 the Corporation is appointed as receiver); and
       (6) the Corporation ensures that the members of the board 
     of directors (or body performing similar functions) 
     responsible for the failed condition of the covered financial 
     company are removed (if such members have not already been 
     removed at the time the Corporation is appointed as 
     receiver).
       (g) Recoupment of Funds Expended for Systemic Stabilization 
     Purposes.--Amounts expended from the Fund by the Corporation 
     under this section shall be repaid in full to the Fund from 
     the following sources:
       (1) Resolution process.--Amounts attributable to the 
     proceeds of the sale of, or income from, the assets of the 
     covered financial company.
       (2) Industry assessments.--If the sources described in 
     paragraph (1) are insufficient to repay the amount of the 
     stabilization action in full, the difference shall be 
     recouped through assessments on financial companies in 
     accordance with section 1609(o).

     SEC. 1605. JUDICIAL REVIEW.

       If a receiver is appointed, the covered financial company 
     may, not later than 30 days thereafter, bring an action in 
     the United States district court for the judicial district in 
     which the home office of such covered financial company is 
     located, or in the United States District Court for the 
     District of Columbia, for an order requiring that the 
     receiver be removed, and the court shall, upon the merits, 
     dismiss such action or direct the receiver to be removed. 
     Review of such an action shall be limited to the appointment 
     of a receiver under section 1604.

     SEC. 1606. 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 covered financial company's shareholders or 
     creditors for acquiescing in or consenting in good faith to--
       (1) the Secretary's appointment of the Corporation as 
     receiver for the covered financial company under section 
     1604; or
       (2) an acquisition, combination, or transfer of assets or 
     liabilities under section 1609.

     SEC. 1607. TERMINATION AND EXCLUSION OF OTHER ACTIONS.

       (a) Termination and Exclusion of Bankruptcy.--The 
     Corporation's acting as receiver for a covered financial 
     company under this subtitle shall immediately, and by 
     operation of law, terminate any case commenced with respect 
     to the covered financial company under title 11, United 
     States Code, or any proceeding under any State insolvency law 
     with respect to the covered financial company, and no such 
     case or proceeding may be commenced with respect to the 
     covered financial company at any time while

[[Page 31092]]

     the Corporation acts as receiver for the covered financial 
     company.
       (b) Conversion to Bankruptcy.--
       (1) Conversion.--The Corporation may at any time, with the 
     approval of the Secretary and after consulting with the 
     Council, convert the receivership of a covered financial 
     company to a proceeding under chapter 7 or 11 of title 11, 
     United States Code, by filing a petition against the covered 
     financial company under section 303(m) of such title. The 
     Corporation may serve as the trustee for the covered 
     financial company in bankruptcy.
       (2) Bridge financial company.--The Corporation's exercise 
     of authority under paragraph (1) shall not affect any powers 
     or duties of the Corporation with regard to any bridge 
     financial company established under section 1609(h).
       (c) Reporting to the Congress.--
       (1) In general.--
       (A) Initial report.--Upon the appointment of the 
     Corporation as receiver under section 1604(a), the 
     Corporation shall issue a report on the issue described under 
     paragraph (3)(A).
       (B) Continuing reports.--At the end of each 180-day period 
     after the appointment of the Corporation as receiver under 
     section 1604(a), and continuing while the Corporation is 
     acting as receiver, the Corporation shall issue a report on 
     the issues described under subparagraph (A) through (C) of 
     paragraph (3).
       (2) Committees to receive reports.--Reports issued under 
     this subsection shall be issued 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.
       (3) Reporting issues.--
       (A) Why the receivership should continue instead of 
     converting the receivership into a proceeding under chapter 7 
     or 11 of title 11, United States Code.
       (B) The extent to which unsecured creditors are likely to 
     receive at least as much as they would receive if the 
     receivership of the covered financial company was converted 
     to a case under chapter 7 of title 11, United States Code.
       (C) An explanation of each instance where the Corporation 
     as receiver of a covered financial company waived the 
     requirement of 12 CFR Part 366 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.

     SEC. 1608. RULEMAKING.

       The Corporation may, after following the notice and comment 
     rulemaking requirements under the Administrative Procedures 
     Act, prescribe such regulations as the Corporation considers 
     necessary or appropriate to implement the provisions of this 
     title.

     SEC. 1609. POWERS AND DUTIES OF 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 section 1604, and by operation of 
     law, succeed to--
       (i) all rights, titles, powers, and privileges of the 
     covered financial company, and of any stockholder, member, 
     officer, or director of such institution with respect to the 
     covered financial company and the assets of the covered 
     financial company; and
       (ii) title to the books, records, and assets of any 
     previous receiver or other legal custodian of such covered 
     financial company.
       (B) Operate the covered financial company.--The Corporation 
     as receiver for a covered financial company may--
       (i) take over the assets of and operate the covered 
     financial company with all 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 due the covered 
     financial company;
       (iii) perform all functions of the covered financial 
     company in the name of the covered financial company;
       (iv) preserve and conserve the assets and property of the 
     covered financial company; 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's 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 section.
       (ii) Presumption.--There shall be a strong presumption that 
     the Corporation, as receiver, will remove management 
     responsible for the failed condition of the covered financial 
     company (if such management has not already been removed at 
     the time the Corporation is appointed as receiver).
       (D) Additional powers as receiver.--The Corporation may, as 
     receiver, and subject to all legally enforceable and 
     perfected security interests, place the covered financial 
     company in liquidation and proceed 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) Organization of new companies.--The Corporation as 
     receiver may organize a bridge financial company under 
     subsection (h).
       (F) Merger; transfer of assets and liabilities.--
       (i) In general.--Subject to clause (ii), the Corporation as 
     receiver may--

       (I) merge the covered financial company with another 
     company; or
       (II) transfer any asset or liability of the covered 
     financial company (including 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.--

       (I) In general.--If a transaction described in clause (i) 
     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 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 
     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, or is 
     extended pursuant to subsection (e)(2) of such section.
       (II) Emergency.--If the Secretary in consultation with the 
     Chairman of the Federal Reserve Board has found that the 
     Corporation must act immediately to prevent the probable 
     failure of the covered financial company involved, the 
     approval and prior notification referred to in subclause (I) 
     shall not be required and the transaction may be consummated 
     immediately by the Corporation. The preceding sentence shall 
     not otherwise modify, impair, or supercede the operation of 
     any of the antitrust laws (as defined in subsection (a) of 
     the first section of the Clayton Act, except that such term 
     includes section 5 of the Federal Trade Commission Act to the 
     extent that such section 5 relates to unfair methods of 
     competition).

       (G) Payment of valid obligations.--The Corporation, as 
     receiver, shall, to the extent 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.
       (H) Subpoena authority.--
       (i) In general.--The Corporation may, for purposes of 
     carrying out any power, authority, or duty with respect to a 
     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 covered financial company 
     were an insured depository institution.
       (ii) Rule of construction.--This section shall not be 
     construed as limiting any rights that the Corporation, in any 
     capacity, might otherwise have to exercise any powers 
     described in clause (i) under any other provision of law.
       (I) Incidental powers.--The Corporation, as receiver, may--
       (i) exercise all powers and authorities specifically 
     granted to receivers under this section and such incidental 
     powers as shall be necessary to carry out such powers; and
       (ii) take any action authorized by this section, which the 
     Corporation determines is in the best interests of the 
     covered financial company, its customers, its creditors, its 
     counterparties, or the stability of the financial system.
       (J) Utilization of private sector.--In carrying out its 
     responsibilities in the management and disposition of assets 
     from a covered financial company, the Corporation, as 
     receiver, 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 utilization of such 
     services is practicable, efficient, and cost effective.
       (K) Shareholders and creditors of covered financial 
     company.--Notwithstanding any other provision of law, the 
     Corporation as receiver for a covered financial company 
     pursuant to this section and its succession, by operation of 
     law, to the rights, titles, powers, and privileges described 
     in subparagraph (A) shall terminate all rights and claims 
     that the stockholders and creditors of the covered financial 
     company may have

[[Page 31093]]

     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 in section 1609(b).
       (L) Coordination with foreign financial authorities.--The 
     Corporation as receiver for a covered financial company shall 
     coordinate with the appropriate foreign financial authorities 
     regarding the resolution of subsidiaries of the covered 
     financial company that are established in a country other 
     than the United States.
       (M) Appointment of consumer privacy advisor.--
       (i) Appointment.--Upon the appointment of the Corporation 
     as receiver under section 1604(a), the Corporation shall 
     appoint a Consumer Privacy Advisor.
       (ii) Duties.--The Consumer Privacy Advisor appointed under 
     clause (i) shall advise the Corporation with respect to--
       (I) the covered financial company's consumer privacy 
     policies;
       (II) the potential losses or gains of privacy to consumers 
     upon any sale, lease, or other transfer of material assets of 
     the covered financial company;
       (III) the potential costs or benefits to consumers upon any 
     sale, lease, or other transfer of material assets of the 
     covered financial company; and
       (IV) the potential alternatives that would mitigate 
     potential privacy losses or potential costs to consumers.
       (2) Authority of corporation to determine claims.--
       (A) In general.--The Corporation may, as receiver, 
     determine claims in accordance with the requirements of this 
     subsection and regulations prescribed under paragraph (3).
       (B) Notice requirements.--The receiver, 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 covered financial 
     company's creditors to present their claims, together with 
     proof, to the receiver by a date specified in the notice 
     which shall be not less than 90 days after the publication of 
     such notice; and
       (ii) republish such notice approximately 1 month and 2 
     months, respectively, after the publication under clause (i).
       (C) Mailing required.--The receiver shall mail a notice 
     similar to the notice published under subparagraph (B)(i) at 
     the time of such publication to any creditor shown on the 
     covered financial company's books--
       (i) at the creditor's last address appearing in such books; 
     or
       (ii) upon discovery of the name and address of a claimant 
     not appearing on the covered financial company's books, 
     within 30 days after the discovery of such name and address.
       (3) Rulemaking authority relating to determination of 
     claims.--
       (A) In general.--Subject to subsection (b), the Corporation 
     shall, after following the notice and comment rulemaking 
     requirements under the Administrative Procedures Act, 
     prescribe rules and regulations regarding the allowance or 
     disallowance of claims by the Corporation and providing for 
     administrative determination of claims and review of such 
     determination.
       (B) Existing rules.--The Corporation may elect to use the 
     regulations adopted pursuant to the provisions of section 11 
     of the Federal Deposit Insurance Act with respect to the 
     determination of claims for a covered financial company as if 
     the covered financial company were an insured depository 
     institution.
       (4) Procedures for determination of claims.--
       (A) Determination period.--
       (i) In general.--Before the end of the 180-day period 
     beginning on the date any claim against a covered financial 
     company is filed with the Corporation as receiver, the 
     Corporation shall determine whether to allow or disallow the 
     claim and shall notify the claimant of any determination with 
     respect to such claim.
       (ii) Extension of time.--The period described in clause (i) 
     may be extended by a written agreement between the claimant 
     and the Corporation.
       (iii) Mailing of notice sufficient.--The requirements of 
     clause (i) shall be deemed to be satisfied if the notice of 
     any determination with respect to any claim is mailed to the 
     last address of the claimant which appears--

       (I) on the covered financial company's books;
       (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 any claim 
     filed under clause (i) is disallowed, the notice to the 
     claimant shall contain--

       (I) a statement of each reason for the disallowance; and
       (II) the procedures available for obtaining agency review 
     of the determination to disallow the claim or judicial 
     determination of the claim.

       (B) Allowance of proven claim.--The Corporation shall allow 
     any claim received on or before the date specified in the 
     notice published under paragraph (2)(B)(i) by the Corporation 
     from any claimant which is proved to the satisfaction of the 
     Corporation.
       (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 any claimant after the date 
     specified in the notice published under paragraph (2)(B)(i) 
     and such claim may be considered by the receiver 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 disallow any portion 
     of any claim by a creditor or claim of security, preference, 
     or priority which is not proved to the satisfaction of the 
     Corporation.
       (ii) Payments to less than fully secured creditors.--In the 
     case of a claim of a creditor against a covered financial 
     company which 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 against the covered 
     financial company; 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 or 
     perfected security interest in the assets of the covered 
     financial company securing any such extension of credit.

       (iv) Payments to fully secured creditors.--Notwithstanding 
     any other provision of law, in any receivership of a covered 
     financial company in which amounts realized from the 
     resolution are insufficient to satisfy completely any amounts 
     owed to the United States or to the Fund, as determined in 
     the receiver's sole discretion, an allowed claim under a 
     legally enforceable or perfected security interest (that 
     became a legally enforceable or perfected security interest 
     after the date of the enactment of this clause), other than a 
     legally enforceable or perfected security interest of the 
     Federal Government, in any of the assets of the covered 
     financial company in receivership may be treated as an 
     unsecured claim in the amount of up to 20 percent as 
     necessary to satisfy any amounts owed to the United States or 
     to the Fund. Any balance of such claim that is treated as an 
     unsecured claim under this subparagraph shall be paid as a 
     general liability of the covered financial company.
       (E) No judicial review of determination pursuant to 
     subparagraph (d).--No court may review the Corporation 
     determination pursuant to subparagraph (D) to disallow a 
     claim.
       (F) Legal effect of filing.--
       (i) Statute of limitation tolled.--For purposes of any 
     applicable statute of limitations, the filing of a claim with 
     the Corporation shall constitute a commencement of an action.
       (ii) No prejudice to other actions.--Subject to paragraph 
     (9), the filing of a claim with the Corporation 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.
       (5) Provision for judicial determination of claims.--
       (A) In general.--Before the end of the 60-day period 
     beginning on the earlier of--
       (i) the end of the period described in paragraph (4)(A)(i) 
     (or, if extended by agreement of the Corporation and the 
     claimant, the period described in paragraph (4)(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 (4)(A)(i),

     the claimant may file suit on a claim (or continue an action 
     commenced before the appointment of the receiver) in the 
     district or territorial court of the United States for the 
     district within which the covered financial company's 
     principal place of business is located or the United States 
     District Court for the District of Columbia (and such court 
     shall have jurisdiction to hear such claim).
       (B) Statute of limitations.--If any claimant fails to file 
     suit on such claim (or continue an action commenced before 
     the appointment of the receiver) before the end of the 60-day 
     period described in subparagraph (A), the claim shall be 
     deemed to be disallowed (other than any portion of such claim 
     which was allowed by the receiver) as

[[Page 31094]]

     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.
       (6) Expedited determination of claims.--
       (A) Establishment required.--The Corporation shall 
     establish a procedure for expedited relief outside of the 
     routine claims process established under paragraph (4) for 
     claimants who--
       (i) allege the existence of legally valid and enforceable 
     or perfected security interests in assets of any covered 
     financial company for which the Corporation has been 
     appointed as receiver; and
       (ii) allege that irreparable injury will occur if the 
     routine claims procedure is followed.
       (B) Determination period.--Before the end of the 90-day 
     period beginning on the date any 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
       (II) whether such claim should be determined pursuant to 
     the procedures established pursuant to paragraph (4); and

       (ii) notify the claimant of the determination, and if the 
     claim is disallowed, provide a statement of each reason for 
     the disallowance and the procedure for obtaining judicial 
     determination.
       (C) Period for filing or renewing suit.--Any claimant who 
     files a request for expedited relief shall be permitted to 
     file a suit, or to continue such a suit filed before the 
     appointment of the Corporation as receiver, seeking a 
     determination of the claimant's rights with respect to such 
     security interest 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 the Corporation denies the claim.
       (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 (B), 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 limitation 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 
     (9), 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.
       (7) 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 is in writing and executed by 
     an authorized officer or representative of the covered 
     financial company.
       (8) Payment of claims.--
       (A) In general.--The Corporation as receiver may, in its 
     discretion and to the extent 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 Corporation pursuant to a final 
     determination pursuant to paragraph (6); or
       (ii) determined by the final judgment of any court of 
     competent jurisdiction.
       (B) Payment of dividends on claims.--The receiver may, in 
     the receiver's 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 
     (in the Corporation's capacity as receiver), by reason of any 
     such payment, for failure to pay dividends to a claimant 
     whose claim is not proved at the time of any such payment.
       (C) Rulemaking authority of corporation.--The Corporation 
     may prescribe such rules, including definitions of terms, as 
     it deems appropriate to establish a single uniform interest 
     rate for, or to make payments of post insolvency interest to 
     creditors holding proven claims against the receivership 
     estates of a covered financial company following satisfaction 
     by the receiver of the principal amount of all creditor 
     claims.
       (9) 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 for a period not to exceed 90 days in any 
     noncriminal judicial action or proceeding to which such 
     covered financial company is or becomes a party.
       (B) Grant of stay by all courts required.--Upon receipt of 
     a request by the Corporation pursuant to subparagraph (A) for 
     a stay of any non-criminal judicial action or proceeding in 
     any court with jurisdiction of such action or proceeding, the 
     court shall grant such stay as to all parties.
       (10) Additional rights and duties.--
       (A) Prior final adjudication.--The Corporation shall abide 
     by any final unappealable judgment of any court of competent 
     jurisdiction which 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 appointment of the 
     receiver under section 1604) and the Corporation, including 
     but not limited to 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 issue by any court upon assets in the possession of the 
     receiver.
       (D) Limitation on judicial review.--Except as otherwise 
     provided in this subsection, 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 which--
       (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) minimizes the cost to the general fund of the 
     Treasury;
       (iv) mitigates the potential for serious adverse effects to 
     the financial system and the U.S. economy;
       (v) ensures timely and adequate competition and fair and 
     consistent treatment of offerors; and
       (vi) prohibits discrimination on the basis of race, sex, or 
     ethnic groups in the solicitation and consideration of 
     offers.
       (11) 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 shall 
     be--
       (i) in the case of any contract claim, the longer of--

       (I) the 6-year period beginning on the date 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 the claim 
     accrues; or
       (II) the period applicable under State law.

       (B) Determination of the 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 such subparagraph 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 statute of limitation applicable 
     under State law with respect to such claim has expired not 
     more than 5 years before the appointment of the Corporation 
     as receiver, the Corporation may bring an action as receiver 
     on such claim without regard to the expiration of the statute 
     of limitation applicable under State law.
       (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.
       (12) Fraudulent transfers.--
       (A) In general.--The Corporation, as receiver for any 
     covered financial company, may avoid a transfer of any 
     interest of an institution affiliated party, or any person 
     who the Corporation determines is a debtor of the covered 
     financial company, in property, or any obligation incurred by 
     such party or person, that was made within 5 years of the 
     date on which the Corporation was appointed receiver if such 
     party or person voluntarily or involuntarily made such 
     transfer or incurred such liability with the intent to 
     hinder, delay, or defraud the covered financial company or 
     the Corporation.
       (B) Right of recovery.--To the extent a transfer is avoided 
     under subparagraph (A), the Corporation may recover, for the 
     benefit of the covered financial company, the property 
     transferred or, if a court so orders, the

[[Page 31095]]

     value of such property (at the time of such transfer) from--
       (i) the initial transferee of such transfer or the 
     institution-affiliated party or person for whose benefit such 
     transfer was made; or
       (ii) any immediate or mediate transferee of any such 
     initial transferee.
       (C) Rights of transferee or obligee.--The Corporation may 
     not recover under subparagraph (B)--
       (i) any transfer that takes for value, including 
     satisfaction or securing of a present or antecedent debt, in 
     good faith, or
       (ii) any immediate or mediate good faith transferee of such 
     transferee.
       (D) Rights under this subsection.--The rights of the 
     Corporation as receiver of a covered financial company under 
     this subsection shall be superior to any rights of a trustee 
     or any other party (other than any party which is a Federal 
     agency) under title 11, United States Code.
       (E) Definition.--For purposes of this subsection, the term 
     ``institution affiliated party'' means--
       (i) any director, officer, employee, or controlling 
     stockholder of, or agent for, a covered financial company;
       (ii) any shareholder, consultant, joint venture partner, 
     and any other person as determined by the Corporation (by 
     regulation or otherwise) who participates in the conduct of 
     the affairs of a covered financial company; and
       (iii) any independent contractor (including any attorney, 
     appraiser, or accountant) who knowingly or recklessly 
     participates in--

       (I) any violation of any law or regulation;
       (II) any breach of fiduciary duty; or
       (III) any unsafe or unsound practice,

     which caused or is likely to cause more than a minimal 
     financial loss to, or a significant adverse effect on, the 
     covered financial company.
       (13) Attachment of assets and other injunctive relief.--
     Subject to paragraph (14), any court of competent 
     jurisdiction may, at the request of the Corporation, 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 of such rule 
     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 such State provide 
     substantially similar protections to such party's right to 
     due process as 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 subsection, any final and 
     unappealable 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 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 was 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) shall be made available by the 
     Corporation upon request to any member of the public.
       (D) Recordkeeping requirement.--
       (i) In general.--Except as provided in clause (ii), after 
     the end of the 6-year period beginning on the date the 
     Corporation is appointed as receiver of a covered financial 
     company the Corporation may destroy any records of such 
     covered financial company which the Corporation, in the 
     Corporation's discretion, determines to be unnecessary unless 
     directed not to do so by a court of competent jurisdiction or 
     governmental agency, or prohibited by law.
       (ii) Old records.--Notwithstanding clause (i), the 
     Corporation may destroy records of a covered financial 
     company which are at least 10 years old as of the date on 
     which the Corporation is appointed as the receiver of such 
     company in accordance with clause (i) at any time after such 
     appointment is final, without regard to the 6-year period of 
     limitation contained in clause (i).
       (b) Priority of Expenses and Unsecured Claims.--
       (1) In general.--Unsecured claims against a covered 
     financial company, or the 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 management responsible for the failed condition of the 
     covered financial company who have been removed), subject to 
     the limitations for such payments contained in title 11, 
     United States Code, including the amount (11 U.S.C. 
     507(a)(4)) and restrictions on severance payments to insiders 
     (11 U.S.C. 503(c)).
       (D) Contributions to employee benefit plans, subject to the 
     limitations in title 11, United States Code (11 U.S.C. 
     507(a)(5)).
       (E) Any other general or senior liability of the covered 
     financial company (which is not a liability described under 
     subparagraph (F) or (E)).
       (F) Any obligation subordinated to general creditors (which 
     is not an obligation described under subparagraph (G)).
       (G) 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 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.--Subject to the 
     priorities established under paragraphs (2) and (3), all 
     claimants of a covered financial company that are similarly 
     situated under paragraph (1) shall be treated in a similar 
     manner, except that the receiver may take any action 
     (including making payments) that does not comply with this 
     subsection, if--
       (A) the Corporation determines that such action is 
     necessary to maximize the value of the assets of the covered 
     financial company, to maximize the present value return from 
     the sale or other disposition of the assets of the covered 
     financial company, to minimize the amount of any loss 
     realized upon the sale or other disposition of the assets of 
     the covered financial company, or to contain or address 
     serious adverse effects on financial stability or the U.S. 
     economy; and
       (B) all claimants that are similarly situated under 
     paragraph (1) receive not less than the amount provided in 
     subsection (d)(2).
       (3) Secured claims unaffected.--This subsection shall not 
     affect secured claims, 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.
       (4) Definitions.--As used in this subsection, the term 
     ``administrative expenses of the receiver'' includes--
       (A) the actual, necessary costs and expenses incurred by 
     the receiver in preserving the assets of a covered financial 
     company or liquidating or otherwise resolving the affairs of 
     a covered financial company for which the Corporation has 
     been appointed as receiver; and
       (B) any obligations that the receiver determines are 
     necessary and appropriate to facilitate the smooth and 
     orderly liquidation or other resolution of the covered 
     financial company.
       (5) Rulemaking.--The Corporation shall, after following the 
     notice and comment rulemaking requirements under the 
     Administrative Procedures Act, prescribe rules to carry out 
     this section.
       (c) Provisions Relating to Contracts Entered Into Before 
     Appointment of Receiver.--
       (1) Authority to repudiate contracts.--In addition to any 
     other rights 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 receiver, in the 
     receiver's discretion, determines to be burdensome; and
       (C) the disaffirmance or repudiation of which the receiver 
     determines, in the receiver's discretion, will promote the 
     orderly administration of the covered financial company's 
     affairs.

[[Page 31096]]

       (2) Timing of repudiation.--The receiver appointed for any 
     covered financial company under section 1604 shall determine 
     whether or not to exercise the rights of repudiation under 
     this subsection within a reasonable period following such 
     appointment.
       (3) Claims for damages for repudiation.--
       (A) In general.--Except as otherwise provided in 
     subparagraph (C) and paragraphs (4), (5), and (6), the 
     liability of the receiver 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 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 subsection and subsection 
     (d) except as otherwise specifically provided in this 
     subsection.
       (4) Leases under which the covered financial company is the 
     lessee.--
       (A) In general.--If the receiver disaffirms or repudiates a 
     lease under which the covered financial company was 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 such subparagraph applies 
     shall--
       (i) be entitled to the contractual rent accruing before the 
     later of the date--

       (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 
     subsection and subsection (d).
       (5) Leases under which the covered financial company is the 
     lessor.--
       (A) In general.--If the receiver 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 such subparagraph--
       (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;
       (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 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)(7)) 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 such 
     subparagraph--
       (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 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 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 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 appointment of the receiver shall be--
       (i) a claim to be paid in accordance with subsections (a), 
     (b) and (d); and
       (ii) deemed to have arisen as of the date 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 receiver accepts 
     performance by the other person before the receiver makes 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 any receiver of services 
     referred to in subparagraph (B) in connection with a contract 
     described in such subparagraph shall not affect the right of 
     the 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 paragraphs 
     (9) and (10) of this subsection and notwithstanding any other 
     provision of this section (other than subsection (a)(7)), any 
     other Federal law, or the law of any State, no person shall 
     be stayed or prohibited from exercising--
       (i) any right such person has to cause the termination, 
     liquidation, or acceleration of any qualified financial 
     contract with a covered financial company which arises upon 
     the 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).
       (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 and agreements 
     described in clause (i), including any master agreement for 
     such contracts or agreements.
       (B) Applicability of other provisions.--Subsection (a)(9) 
     shall apply in the case of any judicial action or proceeding 
     brought against any receiver referred to in subparagraph (A), 
     or the covered financial company for which such receiver was 
     appointed, by any party to a contract or agreement described 
     in subparagraph (A)(i) with such company.
       (C) Certain transfers not avoidable.--
       (i) In general.--Notwithstanding paragraph (11), 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 such or as receiver of 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 Corporation determines that 
     the transferee had actual intent to hinder, delay, or defraud 
     such company, the creditors of such company, or any receiver 
     appointed for such company.
       (D) Certain contacts and agreements defined.--For purposes 
     of this subsection, the following definitions shall apply:
       (i) Qualified financial contract.--The term ``qualified 
     financial contract'' means

[[Page 31097]]

     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 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 subclause (I), (III), 
     (IV), (V), (VI), (VII), (VIII), (IX), or (X), 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 subclause (I), (III), (IV), 
     (V), (VI), (VII), (VIII), (IX), or (X); 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 subclause (I), (II), (III), (IV), 
     (V), (VI), (VII), or (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 subclause (I), (II), (III), (IV), (V), 
     (VI), (VII), or (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 more than 2 days after the date 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 subclauses (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 the Securities Exchange Act of 1934), mortgage loans, 
     interests in mortgage-related securities or mortgage loans, 
     eligible bankers' acceptances, qualified foreign government 
     securities (which for purposes of this clause shall mean 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 Federal 
     Reserve Board) 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

[[Page 31098]]

     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 agreements or transactions 
     referred to in subclause (I), (II), (III), (IV), or (V), 
     including any guarantee or reimbursement obligation in 
     connection with any agreement or transaction referred to in 
     any such subclause.

       (vii) Definitions relating to default.--When used in this 
     paragraph and paragraph (10)--

       (I) The term ``default'' shall mean, with respect to a 
     covered financial company, any adjudication or other official 
     determination by any court of competent jurisdiction, or 
     other public authority pursuant to which a conservator, 
     receiver, or other legal custodian is appointed; and
       (II) The term ``in danger of default'' shall mean 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
       (CC) in the opinion of the Corporation or such authority--
       (bb) the covered financial company has incurred or is 
     likely to incur losses that will deplete all or substantially 
     all of its capital; and
       (cc) 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 preceding clause of this subparagraph (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 covered financial 
     company's equity of redemption.
       (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) of 
     this section.
       (F) Walkaway clauses not effective.--
       (i) In general.--Notwithstanding the provisions of 
     subparagraph (A) 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 the receiver is appointed until the 
     earlier of--

       (I) the time 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 business day following 
     the date of the appointment of the 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 such 
     party's status 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 a receiver of such covered financial 
     company, and not as a result of a party's exercise of any 
     right to offset, setoff, or net obligations that exist under 
     the contract, any other contract between those parties, or 
     applicable law.
       (G) Recordkeeping.--The Corporation, in consultation with 
     the Federal Reserve Board, may prescribe regulations 
     requiring that the covered financial company maintain such 
     records with respect to qualified financial contracts 
     (including market valuations) as the Corporation determines 
     to be necessary or appropriate in order to assist the 
     receiver of the covered financial company in being able to 
     exercise its rights and fulfill its obligations under this 
     paragraph or paragraph (9) or (10).
       (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 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 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.

[[Page 31099]]

       (C) Transfer of contracts subject to the rules of a 
     clearing organization.--In the event that a receiver 
     transfers any qualified financial contract and related 
     claims, property, and credit enhancements 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, 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 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.--If--
       (i) the receiver for a covered financial company in default 
     or in danger of default transfers any assets and liabilities 
     of the covered financial company; and
       (ii) the transfer includes any qualified financial 
     contract,

     the receiver shall notify any person who is a party to any 
     such contract of such transfer by 5:00 p.m. (eastern time) on 
     the business day following the date of the appointment of the 
     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) of 
     this subsection solely by reason of or incidental to the 
     appointment under this section of a receiver for the covered 
     financial company (or the insolvency or financial condition 
     of the covered financial company for which the receiver has 
     been appointed)--

       (I) until 5:00 p.m. (eastern time) on the business day 
     following the date of the appointment of the receiver; 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 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 receiver 
     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 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.
       (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 a receiver with respect to any qualified 
     financial contract to which a covered financial company is a 
     party, the receiver for such covered financial 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 
     where such an interest is taken in contemplation of the 
     company's insolvency or with the intent to hinder, delay, or 
     defraud the company or the creditors of such company; or
       (B) legally enforceable interest in customer property.
       (13) Authority to enforce contracts.--
       (A) In general.--The receiver may enforce any contract, 
     other than a director's or officer's liability insurance 
     contract or 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 or the appointment of or the exercise of 
     rights or powers by a receiver.
       (B) Certain rights not affected.--No provision of this 
     paragraph may be construed as impairing or affecting any 
     right of the receiver to enforce or recover under a 
     director's or officer's liability insurance contract or 
     financial institution bond under other applicable law.
       (C) Consent requirement.--
       (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, 
     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 receiver, as appropriate, of the covered 
     financial company during the 90-day period beginning on the 
     date of the appointment of the receiver, as applicable.
       (ii) Certain 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 
     receiver to fail to comply with otherwise enforceable 
     provisions of such contract.
       (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, but not limited, to 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) Authority regarding collective bargaining 
     agreements.--The Corporation as receiver for any covered 
     financial company shall not disaffirm or repudiate any 
     collective bargaining agreement to which the covered 
     financial company is a party unless the Corporation 
     determines that repudiation is necessary for the orderly 
     resolution of the covered financial company after taking into 
     consideration the cost to taxpayers and the financial 
     stability of the United States.
       (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 which the Corporation determines to utilize with 
     respect to a covered financial company, including 
     transactions authorized under subsection (h), this subsection 
     shall govern the rights of the creditors of such covered 
     financial company.
       (2) Maximum liability.--The maximum liability of the 
     Corporation, acting as receiver or in any other capacity, to 
     any person having a claim against the receiver or the covered 
     financial company for which such receiver is appointed shall 
     equal the amount such claimant would have received if--
       (A) a determination had not been made under section 1603(b) 
     with respect to the covered financial company; and
       (B) the covered financial company had been liquidated under 
     title 11, United States Code, or any case related to title 
     11, United States Code (including a case initiated by the 
     Securities Investor Protection Corporation with respect to a 
     financial company subject to the Securities Investor 
     Protection Act of 1970), or any State insolvency law.
       (3) Additional payments authorized.--
       (A) In general.--The Corporation may, as receiver and with 
     the approval of the Secretary, make additional payments or 
     credit additional amounts to or with respect to or for the 
     account of any claimant or category of claimants of a covered 
     financial company if the Corporation determines that such 
     payments or credits are necessary or appropriate to--
       (i) minimize losses to the receiver from the resolution of 
     the covered financial company under this section; or
       (ii) prevent or mitigate serious adverse effects to 
     financial stability or the United States economy.
       (B) 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 
     section or at the request of the receiver appointed for a 
     covered financial company, no court may take any action to 
     restrain or affect the exercise of powers or functions of the 
     receiver hereunder.
       (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

[[Page 31100]]

     the Corporation, which action is prosecuted wholly or 
     partially for the benefit of the Corporation--
       (A) acting as receiver of such covered financial company;
       (B) acting based upon a suit, claim, or cause of action 
     purchased from, assigned by, or otherwise conveyed by such 
     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 section 1604.
       (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 covered financial company's director, officer, 
     employee, agent, attorney, accountant, appraiser, 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 covered financial company's assets shall include 
     principal losses and appropriate interest.
       (h) Bridge Financial Companies.--
       (1) Organization.--
       (A) Purpose.--The Corporation, as receiver of 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.--If the Corporation is appointed as 
     receiver for a covered financial company, the Corporation 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 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, but not limited to, 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 law or the law of any State, 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 as 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.
       (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.
       (3) Interests in and assets and obligations of covered 
     financial company.--Notwithstanding paragraphs (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 a receiver has been appointed 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) Transfer of assets and liabilities.--The Corporation, 
     as receiver, 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).
       (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)(B).
       (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 actions (including making payments) 
     that do not comply with this subparagraph, if--
       (i) the Corporation determines that such actions are 
     necessary to maximize the value of the assets of the covered 
     financial company, to maximize the present value return from 
     the sale or other disposition of the assets of the covered 
     financial company, to minimize the amount of any loss 
     realized upon the sale or other disposition of the assets of 
     the covered financial company, or to contain or address 
     serious adverse effects to financial stability or the U.S. 
     economy; and
       (ii) all creditors that are similarly situated under 
     subsection (b)(1) receive not less than the amount provided 
     in subsection (d)(2).
       (F) Limitation on transfer of liabilities.--Notwithstanding 
     any other provision

[[Page 31101]]

     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 up to 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 is in writing and executed by an 
     authorized officer or representative of the covered financial 
     company.
       (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) Exempt tax status.--
       (A) Exemption from federal income tax.--Subsection (l) of 
     section 501 of the Internal Revenue Code of 1986 is amended 
     by adding at the end the following new paragraph: ``(4) Any 
     bridge financial company organized under section 1609(h) of 
     the Financial Stability Improvement Act of 2009.''.
       (B) Exemption from certain other taxes.--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 any 
     territory, dependency, or possession of the United States, or 
     by any State, county, municipality, or local taxing 
     authority.
       (10) Federal agency approval; antitrust review.--
       (A) In general.--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 
     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, or is 
     extended pursuant to subsection (e)(2) of such section.
       (B) Emergency.--If the Secretary, in consultation with the 
     Chairman of the Federal Reserve Board, has found that the 
     Corporation must act immediately to prevent the probable 
     failure of the covered financial company involved, the 
     approval and prior notification referred to in subparagraph 
     (A) shall not be required and the transaction may be 
     consummated immediately by the Corporation. The preceding 
     sentence shall not otherwise modify, impair, or supercede the 
     operation of any of the antitrust laws (as defined in 
     subsection (a) of the first section of the Clayton Act, 
     except that such term includes section 5 of the Federal Trade 
     Commission Act to the extent that such section 5 relates to 
     unfair methods of competition).
       (11) Duration of bridge financial company.--Subject to 
     paragraphs (12), (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 it was granted a charter. 
     The Corporation may, in its discretion, extend the status of 
     the bridge financial company as such for 3 additional 1-year 
     periods.
       (12) Termination of bridge financial company status.--The 
     status of any bridge financial company as such shall 
     terminate upon the earliest of--
       (A) 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 
     (11), or the earlier dissolution of the bridge financial 
     company as provided in paragraph (14).
       (13) Effect of termination events.--
       (A) Merger or consolidation.--A merger or consolidation as 
     provided 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 (12)(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 State or Federal 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 State or Federal 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 (12)(C), the company shall have all of 
     the rights, powers, and privileges under its constituent 
     documents and applicable State or Federal 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 State or Federal 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 (12)(D), at the 
     election of the Corporation the bridge financial company may 
     retain its status as such for the period provided in 
     paragraph (11) 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 (12), the charter of the resulting company shall 
     be amended to reflect the termination of bridge financial 
     company status, if appropriate.
       (14) Dissolution of bridge financial company.--
       (A) In general.--Notwithstanding any other provision of 
     State or Federal law, if a bridge financial company's status 
     as such has not previously been terminated by the occurrence 
     of an event specified in subparagraph (A), (B), (C), or (D) 
     of paragraph (12)--
       (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 the bridge 
     financial company was chartered, or any extension thereof, as 
     provided in paragraph (11).

[[Page 31102]]

       (B) Procedures.--The Corporation shall remain the receiver 
     of a bridge financial company for the purpose of dissolving 
     the bridge financial company. The Corporation as such 
     receiver 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. 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 a receiver of 
     a covered financial company 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.
       (15) 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.

       (D) Burden of proof.--In any hearing under this subsection, 
     the Corporation has the burden of proof on the issue of 
     adequate protection.
       (16) 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.--Whenever the Corporation has been 
     appointed as receiver for a covered financial company, the 
     Federal Reserve Board and the company's primary appropriate 
     regulatory agency, if any, shall each make all records 
     relating to the company available to the receiver which may 
     be used by the receiver in any manner the receiver 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 covered financial 
     company's director, officer, employee, agent, attorney, 
     accountant, or appraiser 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.--A court of the United States shall 
     expedite the consideration of any case brought by the 
     Corporation against a covered financial company's director, 
     officer, employee, agent, attorney, accountant, or appraiser 
     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 
     of 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 
     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.--Notwithstanding any other 
     provision of law (other than a conflicting provision of this 
     section), 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--
       (1) in the case of any covered financial company or bridge 
     financial company that is or has a subsidiary that is a 
     stockbroker (as that term is defined in section 101 of title 
     11 of the United States Code) but is not a member of the 
     Securities Investor Protection Corporation, apply the 
     provisions of subchapter III of chapter 7 of title 11 of the 
     United States Code in respect of the distribution to any 
     ``customer'' of all ``customer name securities'' and 
     ``customer property'' (as such terms are defined in section 
     741 of such title 11) as if such covered financial company or 
     bridge financial company were a debtor for purposes of such 
     subchapter; or
       (2) in the case of any covered financial company or bridge 
     financial company that is a commodity broker (as that term is 
     defined in section 101 of title 11 of the United States 
     Code), apply the provisions of subchapter IV of chapter 7 of 
     title 11 of the United States Code in respect of the 
     distribution to any ``customer'' of all ``customer property'' 
     (as such terms are defined in section 761 of such title 11) 
     as if such covered financial company or bridge financial 
     company were a debtor for purposes of such subchapter.
       (n) Systemic Dissolution Fund.--
       (1) Establishment and purpose.--
       (A) In general.--There is established in the Treasury a 
     separate fund to be known as the ``Systemic Dissolution 
     Fund''--
       (i) to facilitate and provide for the orderly and complete 
     dissolution of any failed financial company or companies that 
     pose a systemic threat to the financial markets or economy, 
     as determined under 1603(b); and
       (ii) to ensure that any taxpayer funds utilized to 
     facilitate such liquidations are fully repaid from 
     assessments levied on financial companies that have assets of 
     $50,000,000,000, adjusted for inflation, or more.
       (B) Adjustment of threshold.--The threshold referred to in 
     subparagraph (A)(ii) shall be adjusted on an annual basis, 
     based on the growth of assets owned or managed by financial 
     companies (as defined in section 1602(9)).
       (2) Authority.--The Systemic Dissolution Fund shall be 
     administered by the Corporation, which shall have exclusive 
     authority to--
       (A) impose assessments on covered financial companies in 
     accordance with paragraphs (6) through (8);
       (B) maintain and administer the Fund in a manner so as to 
     make clear to the general public that such Fund is unrelated 
     to any other Fund maintained and administered by the 
     Corporation, including the Deposit Insurance Fund;
       (C) utilize the Fund to facilitate the dissolution of a 
     covered financial company (as defined by section 1602(5)) as 
     provided in paragraph (3), or take such other actions as are 
     authorized by this subtitle;
       (D) invest the Fund in accordance with section 13(a) of the 
     Federal Deposit Insurance Act; and
       (E) exercise borrowing authority as prescribed in 
     subsection (o).
       (3) Uses.--
       (A) The Fund shall be available to the Corporation for use 
     with respect to the dissolution of a covered financial 
     company to--
       (i) cover the costs incurred by the Corporation, including 
     as receiver, in exercising its rights, authorities, and 
     powers and fulfilling its obligations and responsibilities 
     under this section;
       (ii) repay such funds in accordance with subsection (o)(6); 
     and
       (iii) cover the costs of systemic stabilization actions, 
     pursuant to subsections (d) and (f) of section 1604.
       (B) The Fund shall not be used in any manner to benefit any 
     officer or director of such company removed pursuant to 
     section 1604(f)(6).
       (4) Deposits to fund.--All amounts assessed against a 
     financial company under this section shall be deposited into 
     the Fund.
       (5) Size of fund.--The Corporation shall, by rule, 
     establish the minimum size of the Fund consistent with 
     subparagraphs (C) and (D) of paragraph (6).
       (6) Assessments.--
       (A) Assessments to maintain fund.--The Corporation shall 
     impose risk-based assessments on financial companies in such 
     amount and manner and subject to such terms and conditions 
     that the Corporation

[[Page 31103]]

     determines, by regulation and in consultation with the 
     Council, are necessary for the amount in the Fund to at least 
     equal the minimum size established pursuant to paragraph (5).
       (B) Assessments to replenish the fund.--If the Fund falls 
     below the minimum size established pursuant to paragraph (5), 
     the Corporation shall impose assessments on financial 
     companies in such amounts and manner and subject to such 
     terms and conditions as the Corporation determines, by 
     regulation and in consultation with the Council, are 
     necessary to replenish the fund subject to the limitations in 
     subparagraph (D).
       (C) Minimum assessment threshold.--
       (i) In general.--The Corporation shall not assess financial 
     companies with less than $50,000,000,000, adjusted for 
     inflation, of assets on a consolidated basis, subject to any 
     differentiation as permitted in paragraph (8) and shall 
     assess financial companies with $10,000,000,000, adjusted for 
     inflation or more in assets in accordance with paragraphs (7) 
     and (8).
       (ii) Hedge funds.--The Corporation shall not assess 
     financial companies that manage hedge funds (as defined by 
     the Corporation for the purpose of this section, in 
     consultation with the Securities and Exchange Commission) 
     with less than $10,000,000,000, adjusted for inflation, of 
     assets, under management on a consolidated basis, subject to 
     any differentiation as permitted in paragraph (8) and shall 
     assess any financial companies that manage hedge funds with 
     $10,000,000,000 or more of assets under management in 
     accordance with paragraphs (7) and (8).
       (D) Maximum size of fund via assessments.--
       (i) In general.--The Corporation shall suspend assessments 
     on financial companies on the day after the date on which the 
     total of the assessments, excluding interest or other 
     earnings from investments made pursuant to paragraph (2)(D), 
     equals $150,000,000,000.
       (ii) Exceptions.--Any suspension of assessments under 
     clause (i)--

       (I) may be set aside if the Fund falls below 
     $150,000,000,000; and
       (II) shall be set aside if the Fund falls below the minimum 
     level established in subparagraph (C).

       (7) Factors.--The Corporation, in consultation with the 
     Council shall establish a risk matrix to be used in 
     establishing assessments that takes into account--
       (A) the actual or expected risk of losses to the Fund;
       (B) economic conditions generally affecting financial 
     companies so as to allow assessments and the Fund to increase 
     during more favorable economic conditions and to decrease 
     during less favorable economic conditions;
       (C) any assessments imposed on a financial company or an 
     affiliate of a financial company that--
       (i) is an insured depository institution, assessed pursuant 
     to section 7 or 13(c)(4)(G) of the Federal Deposit Insurance 
     Act;
       (ii) is a member of the Securities Investor Protection 
     Corporation, assessed pursuant to section 4 of the Securities 
     Investor Protection Act of 1970 (15 U.S.C. 78ddd);
       (iii) is an insured credit union, assessed pursuant to 
     section 202(c)(1)(A)(i) of the Federal Credit Union Act (12 
     U.S.C. 1782(c)(1)(A)(i)); or
       (iv) is an insurance company, assessed pursuant to 
     applicable State law to cover (or reimburse payments made to 
     cover) the costs of the rehabilitation, liquidation or other 
     State insolvency proceeding with respect to 1 or more 
     insurance companies;
       (D) the risks presented by the financial company to the 
     financial system and the extent to which the financial 
     company has benefitted, or likely would benefit, from the 
     dissolution of a financial company under this title, 
     including--
       (i) the amount, different categories, and concentrations of 
     assets of the financial company and its affiliates, including 
     both on-balance sheet and off-balance sheet assets;
       (ii) the activities of the financial company and its 
     affiliates;
       (iii) the relevant market share of the financial company 
     and its affiliates;
       (iv) the extent to which the financial company is 
     leveraged;
       (v) the potential exposure to sudden calls on liquidity 
     precipitated by economic distress;
       (vi) the amount, maturity, volatility, and stability of the 
     company's financial obligations to, and relationship with, 
     other financial companies;
       (vii) the amount, maturity, volatility, and stability of 
     the company's liabilities, including the degree of reliance 
     on short-term funding, taking into consideration existing 
     systems for measuring a company's risk-based capital;
       (viii) the stability and variety of the company's sources 
     of funding;
       (ix) the company's importance as a source of credit for 
     households, businesses, and State and local governments and 
     as a source of liquidity for the financial system;
       (x) the extent to which assets are simply managed and not 
     owned by the financial company and the extent to which 
     ownership of assets under management is diffuse; and
       (xi) the amount, different categories, and concentrations 
     of liabilities, both insured and uninsured, contingent and 
     noncontingent, including both on-balance sheet and off-
     balance sheet liabilities, of the financial company and its 
     affiliates; and
       (E) such other factors as the Corporation, in consultation 
     with the Council, may determine to be appropriate.
       (8) Requirement for equitable treatment in assessments.--In 
     establishing the assessment system for the Fund, the 
     Corporation, by regulation and in consultation with the 
     Council, shall differentiate among financial companies based 
     on complexity of operations or organization, 
     interconnectedness, size, direct or indirect activities, and 
     any other factors the Corporation or the Council may deem 
     appropriate to ensure that the assessments charged equitably 
     reflect the risk posed to the Fund by particular classes of 
     financial companies.
       (9) Minimum comment period.--In order to ensure sufficient 
     opportunity for public and congressional review and 
     evaluation of any assessment system, any proposed regulations 
     regarding the implementation of the assessment system under 
     this subtitle shall provide an opportunity for public comment 
     during a period of not less than 60 days.
       (o) Borrowing Authority.--
       (1) Borrowing from treasury.--
       (A) In general.--Subject to paragraphs (3), (4), and (5), 
     the Corporation may borrow from the Treasury, and the 
     Secretary of the Treasury is authorized to lend to the 
     Corporation on such terms as may be fixed by the Corporation 
     and the Secretary, such funds as in the judgment of the Board 
     of Directors of the Corporation are required, in addition to 
     the funds available in the Systemic Dissolution Fund, to 
     permit the orderly dissolution of 1 or more covered 
     systemically significant financial companies, covered 
     affiliates, or covered subsidiaries under this title.
       (B) Rate of interest.--The rate of interest to be charged 
     in connection with any loan made pursuant to this subsection 
     shall not be less than an amount determined by the Secretary 
     of the Treasury, taking into consideration current market 
     yields on outstanding marketable obligations of the United 
     States of comparable maturities.
       (2) Public debt issuances.--For the purposes described in 
     subsection (1), the Secretary of the Treasury may use as a 
     public-debt transaction the proceeds of the sale of any 
     securities hereafter issued under chapter 31 of title 31, and 
     the purposes for which securities may be issued under chapter 
     31 of title 31 are extended to include such loans. All loans 
     and repayments under this subsection shall be treated as 
     public-debt transactions of the United States.
       (3) Borrowing authority when fund assets are less than 
     $150,000,000,000.--
       (A) Subject to paragraph (B), the borrowing authority 
     granted in paragraph (1) shall be available to the 
     Corporation where--
       (i) the value of the Fund is less than $150,000,000,000;
       (ii) the Corporation determines that the immediate 
     dissolution of a financial company or financial companies 
     requires more funds than are available in the Fund; and
       (iii) the Corporation has provided a specific plan for 
     repayment under paragraph (7)(A).
       (B) The Corporation may borrow, and the Secretary may lend, 
     any amount of funds that, when added to the amount available 
     in the Fund on the date the Corporation makes a request to 
     borrow funds, would not exceed $150,000,000,000.
       (C) For purposes of paragraph (1), the Corporation's total 
     debt may not exceed $150,000,000,000 (not including any funds 
     borrowed pursuant to subsection (s)).
       (4) Additional borrowing authority.--
       (A) If at any time the Corporation anticipates that the 
     dissolution of any financial company or financial companies 
     will require funds in excess of $150,000,000,000--
       (i) the Corporation shall submit to the Secretary and the 
     President a written request for additional borrowing 
     authority subject to the limitation in subparagraph (5), 
     which shall be accompanied by a certification indicating the 
     anticipated amount needed, the basis on which such amount was 
     determined, and any such information as the Secretary may 
     deem necessary; and
       (ii) the President shall transmit a request to the House of 
     Representatives and the Senate requesting the additional 
     borrowing authority, which shall include the certification 
     referred to in clause (i) and which includes a repayment 
     schedule as outlined in paragraph (7).
       (B) Any request for borrowing authority under paragraph (A) 
     shall be effective only if approved by affirmative vote of 
     the House of Representatives and the Senate in accordance 
     with subsection (s).
       (5) Limitations on additional borrowing authority.--
       (A) No request for borrowing authority is permitted under 
     paragraph (4) unless the President, in consultation with the 
     Council, certifies to the House of Representatives and the 
     Senate that the borrowing authority is necessary to avoid or 
     mitigate an imminent financial emergency.
       (B) The amount of borrowing authority requested under 
     subparagraph (A)(i) may not exceed $50,000,000,000.
       (6) Proceeds from liquidation, repayment of funds.--

[[Page 31104]]

       (A) In general.--The Corporation shall take such measures 
     as may be appropriate to maximize the amount of funds from 
     any dissolution that may be available for repayment under 
     subparagraph (B) consistent with systemic concerns.
       (B) Repayment priority.--Amounts realized from the 
     dissolution of any financial company under this subtitle that 
     are not otherwise utilized by the Corporation to dissolve a 
     financial company under subsection (n)(3)(A) shall be paid--
       (i) first, to repay any costs incurred in exercising the 
     borrowing authority granted in paragraph (1); and
       (ii) second, to recapitalize the Fund to such level as the 
     Corporation deems necessary, but not to exceed 
     $150,000,000,000.
       (7) Repayment plan and schedules required for any 
     borrowing.--
       (A) In general.--No amount may be provided by the Secretary 
     of the Treasury to the Corporation under paragraph (1) unless 
     an agreement is in effect between the Secretary and the 
     Corporation which--
       (i) provides a specific plan and schedule for assessments 
     under (n)(6) to achieve the repayment of the outstanding 
     amount of any borrowing under such subsection; and
       (ii) demonstrates that income to the Corporation from 
     assessments under this section will be sufficient to amortize 
     the outstanding balance within the period established in the 
     repayment schedule and pay the interest accruing on such 
     balance.
       (B) Consultation with and report to congress.--The 
     Secretary of the Treasury and the Corporation shall--
       (i) consult with the Committee on Financial Services of the 
     House of Representatives and the Committee on Banking, 
     Housing, and Urban Affairs of the Senate on the terms of any 
     repayment schedule agreement; and
       (ii) submit a copy of each repayment schedule agreement to 
     the Committee on Financial Services of the House of 
     Representatives and the Committee on Banking, Housing, and 
     Urban Affairs of the Senate before the end of the 30-day 
     period beginning on the date any amount is provided by the 
     Secretary of the Treasury to the Corporation under paragraph 
     (1).
       (p) Information Gathering and Verification; Payments .--
       (1) In general.--The Corporation may require each financial 
     company to make available such information as the Corporation 
     may require--
       (A) for purposes of--
       (i) determining the financial company's assessment under 
     this section;
       (ii) verifying the accuracy of information; and
       (iii) preparing for resolution, including a resolution plan 
     as required by this section; and
       (B) for such other purposes as may be appropriate and 
     necessary to promote the orderly dissolution of the financial 
     company.
       (2) Use of existing reports.--The Corporation shall, to the 
     fullest extent possible, accept--
       (A) reports that a financial company has provided or been 
     required to provide to other Federal or State supervisors or 
     to appropriate self-regulatory organizations;
       (B) information that is otherwise required to be reported 
     publicly; and
       (C) externally audited financial statements.
       (3) Authority for on-site inspection.--The Corporation may 
     make on-site inspections of a financial company's books and 
     records as necessary to carry out the purposes of this 
     subsection.
       (4) Rulemaking.--The Corporation may promulgate such rules 
     or regulations as are necessary or appropriate to implement 
     this subsection.
       (5) Payments of assessments required .--
       (A) In general.--Any financial company subject to an 
     assessment under this section shall pay to the Corporation 
     such assessment.
       (B) Form of payment.--The payments required under this 
     section shall be made in such manner and at such time or 
     times as the Corporation, in consultation with the Council, 
     shall prescribe by regulation.
       (6) Penalty for failure to timely pay assessments.--Any 
     financial company that fails or refuses to pay any assessment 
     under this section shall be subject to a penalty under 
     section 18(h) of the Federal Deposit Insurance Act, as if 
     that financial company were an insured depository 
     institution.
       (q) Assessment Actions.--
       (1) In general.--The Corporation, in any court of competent 
     jurisdiction, shall be entitled to recover from any financial 
     company the amount of any unpaid assessment lawfully payable 
     by such company.
       (2) Statute of limitations.--Notwithstanding any other 
     provision in Federal law, or the law of any State--
       (A) any action by a financial company to recover from the 
     Corporation the overpaid amount of any assessment shall be 
     brought within 3 years after the date the assessment payment 
     was due, subject to subparagraph (C);
       (B) any action by the Corporation to recover from a 
     financial company the underpaid amount of any assessment 
     shall be brought within 3 years after the date the assessment 
     payment was due, subject to subparagraph (C); and
       (C) if a financial company has made a false or fraudulent 
     statement with intent to evade any or all of its assessment, 
     the Corporation shall have until 3 years after the date of 
     discovery of the false or fraudulent statement in which to 
     bring an action to recover the underpaid amount.
       (r) Requirement to Maintain Systemic Dissolution Fund as 
     Separate Fund.--The Systemic Dissolution Fund shall at all 
     times be administered in a manner that is separate and 
     distinct from the Deposit Insurance Fund, and the Corporation 
     shall take such actions as may be necessary to ensure that 
     such distinction is made with respect to internal processes 
     and procedures as well as with regard to any public 
     information, discussion or other communications involving 
     either Fund.
       (s) Congressional Approval of Additional Borrowing 
     Authority.--
       (1) Introduction.--On the day on which the request of the 
     President is received by the House of Representatives and the 
     Senate under subsection (o)(4)(A)(ii), a joint resolution 
     specified in paragraph (5) shall be introduced in the House 
     by the majority leader of the House and in the Senate by the 
     majority leader of the Senate. If either House is not in 
     session on the day on which such a request is received, the 
     joint resolution with respect to such request shall be 
     introduced in that House, as provided in the preceding 
     sentence, on the first day thereafter on which that House is 
     in session.
       (2) Consideration in the house of representatives.--
       (A) Reporting and discharge.--Any committee of the House of 
     Representatives to which a joint resolution introduced under 
     paragraph (1) is referred shall report such joint resolution 
     to the House not later than 5 calendar days after the 
     applicable date of introduction of the joint resolution. If a 
     committee fails to report such joint resolution within that 
     period, the committee shall be discharged from further 
     consideration of the joint resolution and the joint 
     resolution shall be referred to the appropriate calendar.
       (B) Proceeding to consideration.--After all committees 
     authorized to consider a joint resolution have reported such 
     joint resolution to the House or have been discharged from 
     its consideration, it shall be in order, not later than the 
     sixth day after the applicable date of introduction of the 
     joint resolution for the majority leader, to move to proceed 
     to consider the joint resolution in the House. Such a motion 
     shall not be in order after the House has disposed of a 
     motion to proceed on the joint resolution and shall not be in 
     order if the House has received a message from the Senate 
     under paragraph (4)(C). The previous question shall be 
     considered as ordered on the motion to its adoption without 
     intervening motion. A motion to reconsider the vote by which 
     the motion is disposed of shall not be in order.
       (C) Consideration.--The joint resolution shall be 
     considered in the House and shall be considered as read. All 
     points of order against a joint resolution and against its 
     consideration are waived. The previous question shall be 
     considered as ordered on the joint resolution to its passage 
     without intervening motion except two hours of debate equally 
     divided and controlled by the proponent and an opponent. A 
     motion to reconsider the vote on passage of a joint 
     resolution shall not be in order.
       (3) Consideration in the senate.--
       (A) Placement on calendar.--Upon introduction in the 
     Senate, the joint resolution shall be placed immediately on 
     the calendar.
       (B) 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 applicable date of 
     introduction in the Senate and ending on the 6th day after 
     the applicable date of introduction in the Senate (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 a 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

[[Page 31105]]

     Senate, as the case may be, to the procedure relating to a 
     joint resolution shall be decided without debate.
       (4) Rules relating to senate and house of 
     representatives.--
       (A) Coordination with action by other house.--If, before 
     the passage by one House of a joint resolution of that House, 
     that House receives from the other House a joint resolution, 
     then the following procedures shall apply:
       (i) The joint resolution of the other House shall not be 
     referred to a committee.
       (ii) With respect to the joint resolution of the House 
     receiving the resolution, the procedure in that House shall 
     be the same as if no such joint resolution had been received 
     from the other House; but the vote on passage shall be on the 
     joint resolution of the other House.
       (B) Treatment of companion measures.--If, following passage 
     of a joint resolution in the Senate, the Senate then receives 
     the companion measure from the House of Representatives, the 
     companion measure shall not be debatable.
       (C) Failure of joint resolution in the senate.--
       (i) If, in the Senate, the motion to proceed to the 
     consideration of the joint resolution fails on adoption, the 
     Secretary of the Senate shall transmit a message to that 
     effect to the House of Representatives.
       (ii) If, in the Senate, the joint resolution fails on 
     passage, the Secretary of the Senate shall transmit a message 
     to that effect to the House of Representatives.
       (D) Rules of house of representatives and senate.--This 
     paragraph and the preceding paragraphs are enacted by 
     Congress--
       (i) as an exercise of the rulemaking power of the Senate 
     and House of Representatives, respectively, and as such it is 
     deemed a part of the rules of each House, respectively, but 
     applicable only with respect to the procedure to be followed 
     in that House 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 
     either House to change the rules (so far as relating to the 
     procedure of that House) at any time, in the same manner, and 
     to the same extent as in the case of any other rule of that 
     House.
       (5) Definition.--In this section, the term ``joint 
     resolution'' means only a joint resolution--
       (A) which does not have a preamble;
       (B) the title of which is as follows: ``Joint resolution 
     relating to the approval of request for borrowing authority 
     under the Financial Stability Improvement Act of 2009.''; and
       (C) the sole matter after the resolving clause of which is 
     as follows: ``That the Congress approves the request for 
     additional borrowing authority transmitted to the Congress on 
     ___ by the President under section 1609(o)(4)(A)(ii) of the 
     Financial Stability Improvement Act of 2009.'', the blank 
     space being filled with the appropriate date.
       (t) No Federal Status.--
       (1) Agency status.--A covered financial company (or any 
     covered subsidiary thereof) that is placed into receivership 
     is not a department, agency, or instrumentality of the United 
     States for purposes of statutes that confer powers on or 
     impose obligations on government entities.
       (2) Employee status.--Interim directors, directors, 
     officers, employees, or agents of a covered financial company 
     that is placed into receivership are not, solely by virtue of 
     service in any such capacity, officers or employees of the 
     United States. Any employee of the Corporation, acting as 
     receiver or of any Federal agency who serves at the request 
     of the receiver as an interim director, director, officer, 
     employee, or agent of a covered financial company that is 
     placed into receivership shall not--
       (A) 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;
       (B) receive any salary or benefits for service in any such 
     capacity with respect to a covered financial company that is 
     placed into receivership in addition to such salary or 
     benefits as are obtained through employment with the 
     Corporation or other Federal agency.
       (u) Study of Payment of Consumer Claims.--Not later than 6 
     months following the dissolution of a covered financial 
     company under section 1603(b), the Comptroller General of the 
     United States shall carry out a study, and report on such 
     study 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, regarding the 
     satisfaction of claims arising from violations of the 
     provisions of the Truth in Lending Act, if any, in instances 
     where any assets were transferred from such covered financial 
     company.

     SEC. 1610. CLARIFICATION OF PROHIBITION REGARDING CONCEALMENT 
                   OF ASSETS FROM RECEIVER OR LIQUIDATING AGENT.

       (a) In General.--Section 1032 of title 18, United States 
     Code, is amended in paragraph (1) by deleting ``or'' before 
     ``the National Credit Union Administration Board,'' and by 
     inserting immediately thereafter ``or the Corporation, as 
     defined in section 1602 of the Resolution Authority for 
     Large, Interconnected Financial Companies Act of 2009,''.
       (b) Conforming Change.--The heading of section 1032 of 
     title 18, United States Code, is amended by striking ``of 
     financial institution''.

     SEC. 1611. OFFICE OF RESOLUTION.

       (a) Trigger of and Plan for Establishment.--
       (1) Trigger.--If the Secretary appoints the Corporation as 
     receiver for a financial company under section 1604, the 
     Inspector General of the Corporation shall, as soon as 
     possible after such appointment, establish in accordance with 
     this section the Office of Resolution as an office within the 
     Office of the Inspector General of the Corporation.
       (2) Plan.--The Inspector General of the Corporation shall, 
     in consultation with the Council of Inspectors General on 
     Financial Oversight established under section 1702, formulate 
     and maintain a plan to allow for the timely establishment of 
     an Office of Resolution in accordance with paragraph (1). The 
     Inspector General of the Corporation shall make such plan 
     available to the Financial Services Oversight Council 
     established under section 1001.
       (b) Special Deputy Inspector General.--The head of the 
     Office of Resolution is the Special Deputy Inspector General 
     for Resolution (in this section referred to as the ``Special 
     Deputy Inspector General''), who shall be appointed by and 
     report to the Inspector General of the Corporation.
       (c) Duties.--
       (1) Audits and investigations.--It shall be the duty of the 
     Special Deputy Inspector General, in consultation with and 
     subject to the approval of the Inspector General of the 
     Corporation, to conduct, supervise, and coordinate audits and 
     investigations of the activities of the Corporation in its 
     capacity as receiver for a financial company under section 
     1604, including by collecting the following information:
       (A) A description of each financial company for which the 
     Corporation has been appointed as receiver under section 
     1604.
       (B) A description of the activities and future plans of the 
     Corporation with respect to each financial company for which 
     it has been appointed as receiver, and an analysis of whether 
     such activities and plans conform to the requirements of this 
     subtitle and other applicable law and are in the best 
     interest of the overall stability of the financial system.
       (C) Such other information as the Special Deputy Inspector 
     General considers appropriate, in consultation with and 
     subject to the approval of the Inspector General of the 
     Corporation.
       (2) Additional duties.--
       (A) Systems, procedures, and controls.--The Special Deputy 
     Inspector General shall establish, maintain, and oversee such 
     systems, procedures, and controls as the Special Deputy 
     Inspector General considers appropriate, in consultation with 
     and subject to the approval of the Inspector General of the 
     Corporation, to discharge the duties under paragraph (1).
       (B) Reporting of criminal violations to attorney general.--
     If the Special Deputy Inspector General, in carrying out this 
     section, discovers facts that give the Special Deputy 
     Inspector General reasonable grounds to believe there has 
     been a violation of Federal criminal law, the Special Deputy 
     Inspector General shall expeditiously report such facts to 
     the Attorney General.
       (C) Minimizing duplication of effort.--The Inspector 
     General of the Corporation and the Special Deputy Inspector 
     General shall coordinate to minimize duplication of effort in 
     the oversight of the Corporation's activities as receiver for 
     financial companies under section 1604.
       (3) Duties under the inspector general act of 1978.--In 
     addition to the duties specified in paragraphs (1) and (2), 
     the Special Deputy Inspector General shall assist the 
     Inspector General of the Corporation in carrying out such 
     duties and responsibilities of inspectors general under the 
     Inspector General Act of 1978 as the Inspector General of the 
     Corporation considers appropriate.
       (d) Authorities Under the Inspector General Act of 1978.--
     The Inspector General of the Corporation may confer on the 
     Special Deputy Inspector General such authorities provided to 
     the Inspector General of the Corporation in section 6 of the 
     Inspector General Act of 1978 as the Inspector General of the 
     Corporation considers necessary to enable the Special Deputy 
     Inspector General to carry out the duties specified in 
     subsection (c).
       (e) Personnel, Facilities, and Other Resources.--
       (1) In general.--The Special Deputy Inspector General may, 
     in consultation with and subject to the approval of the 
     Inspector General of the Corporation, expend such amounts 
     from the fund established under section 1609(n) as are 
     necessary to carry out the duties described in subsection (c) 
     and to submit the reports required by subsection (h).
       (2) Additional funds.--If the fund established under 
     section 1609(n) is insufficient to enable the Special Deputy 
     Inspector General to begin carrying out the duties of the 
     Special Deputy Inspector General in a timely

[[Page 31106]]

     fashion or later becomes insufficient to enable the Special 
     Deputy Inspector General to carry out such duties, the 
     Inspector General of the Corporation shall detail the 
     necessary personnel, facilities, or other resources to the 
     Special Deputy Inspector General.
       (f) Corrective Responses to Audit Problems.--The Chairman 
     of the Corporation shall--
       (1) take action to address deficiencies identified by a 
     report or investigation of the Special Deputy Inspector 
     General; or
       (2) certify to the appropriate committees of Congress that 
     no action is necessary or appropriate.
       (g) Cooperation and Coordination With Other Entities.--In 
     carrying out the duties, responsibilities, and authorities of 
     the Special Deputy Inspector General under this section, the 
     Special Deputy Inspector General shall work with each of the 
     inspectors general who is a member of the Council of 
     Inspectors General on Financial Oversight established under 
     section 1703(a)(1), in order to avoid duplication of effort 
     and ensure comprehensive oversight of the Corporation's 
     activities as a receiver appointed under section 1604.
       (h) Reports.--
       (1) In general.--In lieu of the semiannual reports required 
     by section 5(a) of the Inspector General Act of 1978, the 
     Special Deputy Inspector General shall submit to the 
     appropriate committees of Congress at the following times a 
     report prepared in consultation with and approved by the 
     Inspector General of the Corporation:
       (A) Not later than 30 days after the appointment of the 
     Special Deputy Inspector General.
       (B) During the first 3 years after such appointment, not 
     later than 30 days after the end of each fiscal quarter 
     during which the Corporation acts as receiver for a financial 
     company under section 1604.
       (C) During the 4th year after such appointment and each 
     year thereafter, not later than 30 days after the end of the 
     2nd and the 4th fiscal quarters, if the Corporation acts as 
     receiver for a financial company under section 1604 during 
     such semiannual period.
       (2) Content of reports.--Each report required by paragraph 
     (1) shall include a summary, for the period since the last 
     required report (or, in the case of the first report, for the 
     period since the Corporation was first appointed as a 
     receiver under section 1604) of--
       (A) the activities of the Special Deputy Inspector General; 
     and
       (B) the activities and future plans of the Corporation with 
     respect to each financial company for which it served as 
     receiver.
       (i) Termination.--The Office of Resolution shall terminate 
     6 months after the Corporation ceases to serve as a receiver 
     for any financial company under section 1604, subject to 
     reestablishment pursuant to subsection (a)(1).

     SEC. 1612. MISCELLANEOUS PROVISIONS.

       (a) Bankruptcy Code Amendments.--(1) Section 109(b)(2) of 
     title 11 of the United States Code is amended by inserting 
     ``covered financial company (as that term is defined in 
     section 1602(5) of the Dissolution Authority for Large, 
     Interconnected Financial Companies Act of 2009),'' after ``a 
     domestic insurance company,''.
       (2) Section 303 of title 11, United States Code, is 
     amended--
       (A) in subsection (h)--
       (i) by striking `` or'' at the end of paragraph (1);
       (ii) by striking the period at the end of paragraph (2) and 
     inserting ``; or''; and
       (iii) by adding at the end the following new paragraph:
       ``(3) an involuntary case is filed against a covered 
     financial company, as defined in section 1602(5) of the 
     Dissolution Authority for Large, Interconnected Financial 
     Companies Act of 2009, by the Federal Deposit Insurance 
     Corporation under section 1607 of that Act.''; and
       (B) by adding at the end the following new subsection:
       ``(m) Notwithstanding subsections (a) and (b) of this 
     section and section 109(b)(2), an involuntary case may be 
     commenced by the Federal Deposit Insurance Corporation 
     against a covered financial company (as defined in section 
     1602(5) of the Dissolution Authority for Large, 
     Interconnected Financial Companies Act of 2009). Such 
     involuntary case may be commenced by the Federal Deposit 
     Insurance Corporation in accordance with section 1607 of that 
     Act.''.
       (3) Title 11, United Stades Code, is amended by inserting 
     after section 303 the following new section:

     ``SEC. 304. CASES INVOLVING FDIC DISSOLUTION AUTHORITY.

       ``(a) Appointment.--In any case commenced by the Federal 
     Deposit Insurance Corporation under section 303(m), on the 
     request of the Federal Deposit Insurance Corporation, such 
     Corporation shall be appointed to serve as trustee in such 
     case, notwithstanding any other provision of this title.
       ``(b) Qualification.--Sections 321, 322, 324, and 326 shall 
     not apply with respect to the appointment or service of such 
     Corporation as trustee in any case so commenced.''.
       (b) Federal Deposit Insurance Act and Federal Deposit 
     Insurance Corporation Improvement Act of 1991.--
       (1) Section 18(c)(4)(G)(i) of the Federal Deposit Insurance 
     Act (12 U.S.C. 1823(c)(4)(G)(i)) is amended by inserting at 
     the end the following new sentence: ``The determination with 
     regard to the Corporation's exercise of authority under this 
     subparagraph shall apply to only an insured depository 
     institution except when severe financial conditions exist 
     which threaten the stability of a significant number of 
     insured depository institutions.''.
       (2) Section 403(a) of the Federal Deposit Insurance 
     Corporation Improvement Act of 1991 (12 U.S.C. 4403(a)) is 
     amended by inserting ``section 1609(c) of the Resolution 
     Authority for Large, Interconnected Financial Companies Act 
     of 2009, 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,''.

     SEC. 1613. AMENDMENT TO FEDERAL DEPOSIT INSURANCE ACT.

       The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) 
     is amended by inserting after section 11A the following new 
     section:

     ``SEC. 11B. SYSTEMIC DISSOLUTION AUTHORITY AND FUND.

       ``(a) Systemic Dissolution Authority.--The Corporation 
     shall establish a Systemic Dissolution Authority, which shall 
     function as a subsidiary of the Corporation.
       ``(b) Systemic Dissolution Fund.--Any fund established for 
     the purpose of facilitating the dissolution of a financial 
     company under subtitle G of the Financial Stability 
     Improvement Act shall be called the Systemic Dissolution 
     Fund, which shall be managed by the Corporation, through the 
     Systemic Dissolution Authority.
       ``(c) Management of Fund.--
       ``(1) Separate maintenance.--The Systemic Dissolution Fund 
     shall be separately maintained and not commingled with any 
     other fund of the Corporation.
       ``(2) Treatment of and accounting for assets.--The assets 
     and liabilities of the Systemic Dissolution Fund--
       ``(A) shall be the assets and liabilities of the Fund and 
     not of the Corporation; and
       ``(B) shall not be consolidated with the assets and 
     liabilities of the Deposit Insurance Fund or the Corporation 
     for accounting, reporting, or any other purpose.
       ``(d) Rights, Powers, and Duties.--
       ``(1) In general.--The Corporation, in addition to any 
     rights, powers, and duties under this Act or any other law, 
     shall, through the Systemic Dissolution Authority, have all 
     rights, powers, and duties necessary to implement and 
     maintain the Systemic Dissolution Fund in accordance with 
     subtitle G of the Financial Stability Improvement Act of 
     2009.
       ``(2) Powers as receiver for covered financial company.--
     When acting as receiver with respect to any covered financial 
     company, as defined in subtitle G of the Financial Stability 
     Improvement Act of 2009, the Corporation, through the 
     Systemic Dissolution Authority, shall have all rights, 
     powers, and duties that the Corporation has as receiver under 
     such subtitle.
       ``(3) Specific and incidental powers.--The Corporation, 
     through the Systemic Dissolution Authority, or any duly 
     authorized officer or agent of the Authority, may exercise 
     all powers specifically granted by the provisions of this Act 
     and subtitle G of the Financial Stability Improvement Act and 
     such incidental powers as shall be necessary to carry out the 
     powers so granted and accomplish the purposes of subtitle G 
     of the Financial Stability Improvement Act.
       ``(e) Staff and Resources.--
       ``(1) In general.--The Corporation shall assign such staff, 
     and provide such administrative and other support services to 
     the Systemic Dissolution Authority as is necessary to fulfill 
     the statutory responsibilities of the Authority.
       ``(2) Administrative expenses.-- The cost of all personnel, 
     services, and resources provided on behalf of the Systemic 
     Dissolution Authority shall be paid from the Systemic 
     Dissolution Fund.''.

     SEC. 1614. APPLICATION OF EXECUTIVE COMPENSATION LIMITATIONS.

       The provisions of section 111 of the Emergency Economic 
     Stabilization Act of 2008 shall apply to a covered financial 
     institution for which a receiver has been appointed pursuant 
     to section 1604. Such covered financial institution shall be 
     considered a TARP recipient for purposes of such section 111 
     for so long as such institution is in receivership.

     SEC. 1615. STUDY ON THE EFFECT OF SAFE HARBOR PROVISIONS IN 
                   INSOLVENCY CASES.

       (a) Study.--The Comptroller General of the United States 
     shall conduct a study of the safe harbor provisions under 
     Federal law for derivatives, swaps, and securities 
     transactions addressing--
       (1) how the safe harbor provisions have been applied in 
     insolvency cases;
       (2) how such provisions impact the rights of parties in 
     interest in insolvency cases;
       (3) whether these provisions impede or interfere with 
     allowing a debtor a reasonable period of time to pursue 
     rehabilitation and reorganization; and
       (4) whether these provisions had an adverse impact on the 
     financial marketplace.
       (b) Report to the Congress.--Not later than 180 days after 
     the date of the enactment of this title, the Comptroller 
     General shall

[[Page 31107]]

     submit to the President pro tempore of the Senate and the 
     Speaker of the House of Representatives a report on the 
     results of the study conducted under subsection (a), together 
     with any recommendations for legislation to address any 
     adverse impacts presented by the Federal safe harbor 
     provisions.

  Subtitle H--Additional Improvements for Financial Crisis Management

     SEC. 1701. ADDITIONAL IMPROVEMENTS FOR FINANCIAL CRISIS 
                   MANAGEMENT.

       Section 13 of the Federal Reserve Act (12 U.S.C. 343) is 
     amended by striking the 3rd undesignated paragraph and 
     inserting the following new subsection:
       ``(c) Financial Crisis Management.--
       ``(1) In general.--In unusual and exigent circumstances, 
     the Board of Governors of the Federal Reserve System, upon 
     the written determination, pursuant to section 1109 of the 
     Financial Stability Improvement Act of 2009, of the Financial 
     Stability Oversight Council, that a liquidity event exists 
     that could destabilize the financial system (which 
     determination shall be made upon a vote of not less than two-
     thirds of the members of such Council then serving), and with 
     the written consent of the Secretary of the Treasury (after 
     certification by the President that an emergency exists), may 
     authorize any Federal reserve bank, during such periods as 
     the Board may determine and at rates established in 
     accordance with the provision designated as (d) of section 
     14, to discount for an individual, partnership, or 
     corporation, notes, drafts, and bills of exchange when such 
     notes, drafts, and bills of exchange are indorsed or 
     otherwise secured to the satisfaction of the Federal reserve 
     bank and in conformance with regulations or guidelines issued 
     by the Board of Governors regarding the quality of notes, 
     drafts, and bills of exchange available for discount and of 
     the security for those notes, drafts and bills of exchange, 
     unless a joint resolution (as defined in paragraph (5)) is 
     adopted. Upon making any determination under this paragraph, 
     with the consent of the Secretary of the Treasury, the 
     Financial Stability Oversight Council shall promptly submit a 
     notice of such determination to the House of Representatives 
     and the Senate. The amounts made available under this 
     subsection shall not exceed $4,000,000,000,000.
       ``(2) Clarification of `secured to the satisfaction of the 
     federal reserve bank'.--No member of the Board of Governors 
     of the Federal Reserve System shall vote to authorize any 
     action permitted under paragraph (1) and the Secretary of the 
     Treasury shall not provide the written consent required by 
     paragraph (1) unless that member believes and the Secretary 
     of the Treasury believes:
       ``(A) that there is at least a 99 percent likelihood that 
     all funds disbursed or put at risk by such action will be 
     repaid to the Federal Reserve System; and
       ``(B) that there is at least a 99 percent likelihood that 
     all interest due on any funds disbursed will also be paid to 
     the Federal Reserve System.
       ``(3) Low quality assets excluded.--The notes, drafts, and 
     bills of exchange available for discount for purposes of 
     paragraph (1), and the security for those notes, drafts and 
     bills of exchange may only include any of the following 
     assets if such asset is used to further enhance the security 
     for those notes, drafts and bills of exchange which shall be 
     fully secured with assets that are not any of the following 
     assets:
       ``(A) An asset (including a security) that would be 
     classified as ``substandard,'' ``doubtful,'' or ``loss,'' or 
     treated as ``special mention'' or ``other transfer risk 
     problems,'' in a report of examination or inspection of bank 
     or an affiliate of a bank prepared by either a Federal or 
     State supervisory agency or in any internal classification 
     system used by such individual, partnership or corporation.
       ``(B) An asset in a nonaccrual status.
       ``(C) An asset on which principal or interest payments are 
     more than 30 days past due.
       ``(D) An asset whose terms have been renegotiated or 
     compromised due to the deteriorating financial condition of 
     the obligor unless such asset has been performing for at 
     least 6 months since the renegotiation.
       ``(4) No single or specific beneficiaries.--The Board of 
     Governors of the Federal Reserve System may authorize a 
     Federal reserve bank to discount notes, drafts, or bills of 
     exchange under this section only as part of a broadly 
     available credit or other facility and may not authorize a 
     Federal Reserve bank to discount notes, drafts, or bills of 
     exchange for only a single and specific individual, 
     partnership, or corporation.
       ``(5) Evidence of unavailability of credit.--Before 
     discounting any note, draft, or bill of exchange under this 
     subsection for an individual, a partnership or corporation as 
     part of a broadly available credit or other facility the 
     Federal reserve bank shall obtain evidence that such 
     individual, partnership, or corporation is unable to secure 
     adequate credit accommodations from other banking 
     institutions. All discounts under this subsection for 
     individuals, partnerships, or corporations shall be subject 
     to such limitations, restrictions, and regulations as the 
     Board of Governors of the Federal Reserve System may 
     prescribe.
       ``(6) Congressional disapproval of additional borrowing 
     authority.--
       ``(A) Introduction.--Within 90 days of the day on which 
     notice from the Financial Stability Oversight Council is 
     received by the House of Representatives and the Senate under 
     paragraph (1), a joint resolution specified in subparagraph 
     (E) may be introduced in the House by the majority leader and 
     in the Senate by the majority leader.
       ``(B) Consideration in the house of representatives.--
       ``(i) Reporting and discharge.--Any committee of the House 
     of Representatives to which a joint resolution introduced 
     under subparagraph (A) is referred shall report such joint 
     resolution to the House not later than 5 calendar days after 
     the applicable date of introduction of the joint resolution. 
     If a committee fails to report such joint resolution within 
     that period, the committee shall be discharged from further 
     consideration of the joint resolution and the joint 
     resolution shall be referred to the appropriate calendar.
       ``(ii) Proceeding to consideration.--After all committees 
     authorized to consider a joint resolution have reported such 
     joint resolution to the House or have been discharged from 
     its consideration, it shall be in order, not later than the 
     sixth day after the applicable date of introduction of the 
     joint resolution, for the majority leader to move to proceed 
     to consider the joint resolution in the House. Such a motion 
     shall not be in order after the House has disposed of a 
     motion to proceed on the joint resolution and shall not be in 
     order if the House has received a message from the Senate 
     under subparagraph (D)(iii)(I). The previous question shall 
     be considered as ordered on the motion to its adoption 
     without intervening motion. A motion to reconsider the vote 
     by which the motion is disposed of shall not be in order.
       ``(iii) Consideration.--The joint resolution shall be 
     considered in the House and shall be considered as read. All 
     points of order against a joint resolution and against its 
     consideration are waived. The previous question shall be 
     considered as ordered on the joint resolution to its passage 
     without intervening motion except two hours of debate equally 
     divided and controlled by the proponent and an opponent. A 
     motion to reconsider the vote on passage of a joint 
     resolution shall not be in order.
       ``(C) Consideration in the senate.--
       ``(i) Placement on calendar.--Upon introduction in the 
     Senate, the joint resolution shall be placed immediately on 
     the calendar.
       ``(ii) 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 
     applicable date of introduction of the joint resolution in 
     the Senate and ending on the 6th day after the applicable 
     date of introduction in the Senate (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 a 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.

       ``(D) Rules relating to senate and house of 
     representatives.--
       ``(i) Coordination with action by other house.--If, before 
     the passage by one House of a joint resolution of that House, 
     that House receives from the other House a joint resolution, 
     then the following procedures shall apply:

       ``(I) The joint resolution of the other House shall not be 
     referred to a committee.
       ``(II) With respect to the joint resolution of the House 
     receiving the resolution, the procedure in that House shall 
     be the same as if no such joint resolution had been received 
     from the other House; but the vote on passage shall be on the 
     joint resolution of the other House.

       ``(ii) Treatment of companion measures.--If, following 
     passage of a joint resolution in the Senate, the Senate then 
     receives the companion measure from the House of

[[Page 31108]]

     Representatives, the companion measure shall not be 
     debatable.
       ``(iii) Failure of joint resolution in the senate.--

       ``(I) If, in the Senate, the motion to proceed to the 
     consideration of the joint resolution fails on adoption, the 
     Secretary of the Senate shall transmit a message to that 
     effect to the House of Representatives.
       ``(II) If, in the Senate, the joint resolution fails on 
     passage, the Secretary of the Senate shall transmit a message 
     to that effect to the House of Representatives.

       ``(iv) Rules of house of representatives and senate.--This 
     paragraph and the preceding paragraphs are enacted by 
     Congress--

       ``(I) as an exercise of the rulemaking power of the Senate 
     and House of Representatives, respectively, and as such it is 
     deemed a part of the rules of each House, respectively, but 
     applicable only with respect to the procedure to be followed 
     in that House 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 
     either House to change the rules (so far as relating to the 
     procedure of that House) at any time, in the same manner, and 
     to the same extent as in the case of any other rule of that 
     House.

       ``(E) Definition.--In this paragraph, the term `joint 
     resolution' means only a joint resolution--
       ``(i) which does not have a preamble;
       ``(ii) the title of which is as follows: `Joint resolution 
     relating to the use of authority relevant to section 13(c) of 
     the Federal Reserve Act under the Financial Stability 
     Improvement Act of 2009.'; and
       ``(iii) the sole matter after the resolving clause of which 
     is as follows: `That the Congress disapproves the use of 
     authority pursuant to section 13(c) of the Federal Reserve 
     Act transmitted to the Congress on ___ by the Board of 
     Governors of the Federal Reserve System', the blank space 
     being filled with the appropriate date.
       ``(F) Nonscoring of joint resolutions of disapproval.--A 
     joint resolution of disapproval shall be treated as having no 
     budgetary effect by the Congressional Budget Office and the 
     Office of Management and Budget for any purpose under the 
     Rules of the House of Representatives, the Standing Rules of 
     the Senate, the Congressional Budget Act of 1974, or any 
     statutory pay-as-you-go requirement.''.

     SEC. 1702. CERTAIN RESTRICTIONS RELATED TO FOREIGN CURRENCY 
                   SWAP AUTHORITY.

       Section 14 of the Federal Reserve Act is amended by adding 
     at the end the following new subsection:
       ``(h) Certain Restrictions Related to Foreign Currency Swap 
     Authority.--A Federal reserve bank may not take any action 
     pursuant to the authority provided under this section with 
     respect to foreign currency swaps unless--
       ``(1) such action is approved in advance by the affirmative 
     vote of not less than five members of the Board of Governors 
     of the Federal Reserve System; and
       ``(2) such action is taken with the written concurrence of 
     the Secretary of the Treasury.''.

     SEC. 1703. 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(h) of the Emergency 
     Economic Stabilization Act of 2008 (12 U.S.C. 5231(h))).
       (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.--The Council of Inspectors General 
     shall, each year within a timeframe that permits 
     consideration by the Financial Services Oversight Council (in 
     this section referred to as the ``Oversight Council'') prior 
     to the submission of its report for such year under section 
     1006, submit to the Oversight 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) Council of inspectors general working groups.--
       (A) Working groups to evaluate oversight council.--
       (i) 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 Oversight 
     Council.
       (ii) 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 subparagraph to enable 
     it to carry out its duties.
       (iii) Reports.--A Council of Inspectors General Working 
     Group established under this subparagraph shall submit 
     regular reports to the Oversight Council and to Congress on 
     its evaluations pursuant to this subparagraph.
       (B) Working groups for financial companies undergoing 
     resolution.--
       (i) Convening a working group.--The Council of Inspectors 
     General shall convene a Council of Inspectors General Working 
     Group for each financial company for which the Secretary of 
     the Treasury appoints the Federal Deposit Insurance 
     Corporation as receiver under section 1604.
       (ii) 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 subparagraph to enable 
     it to carry out its duties.
       (iii) Reports.--Not later than 270 days after the 
     appointment of the Federal Deposit Insurance Corporation as 
     receiver for the financial company for which a Council of 
     Inspectors General Working Group is convened under clause 
     (i), such Working Group shall submit to the primary financial 
     regulatory agency and to Congress a report that includes--

       (I) the reasons for such financial company's failure;
       (II) the reasons for the Secretary of the Treasury's 
     appointment of the Federal Deposit Insurance Corporation as 
     receiver for such financial company; and
       (III) recommendations for preventing future failures of 
     financial companies.

       (b) Response to Report by Oversight Council.--The Oversight 
     Council shall include in its annual report under section 1006 
     responses to the concerns raised in the report of the Council 
     of Inspectors General under subsection (a)(2)(B) for such 
     year.

                       Subtitle I--Miscellaneous

     SEC. 1801. INCLUSION OF MINORITIES AND WOMEN; DIVERSITY IN 
                   AGENCY WORKFORCE.

       (a) Office of Minority and Women Inclusion.--
       (1) Establishment.--Not later than 180 days following the 
     enactment of this title, each agency shall establish an 
     Office of Minority and Women Inclusion (hereinafter in this 
     section referred to as the ``Office'') that shall advise the 
     agency administrator of the impact of policies and 
     regulations of the agency on minority-owned and women-owned 
     businesses, and shall be responsible for all matters of the 
     agency relating to diversity in management, employment, and 
     business activities, including the coordination of technical 
     assistance, in accordance with such standards and 
     requirements as the Director of the Office shall establish.
       (2) Consolidation.--Each agency that has assigned these or 
     comparable responsibilities to existing offices shall ensure 
     that such responsibilities are consolidated within the 
     Office.
       (b) Director.--
       (1) In general.--For each Office, the President shall 
     appoint, by and with the advice and consent of the Senate, a 
     Director of Minority and Women Inclusion (hereinafter in this 
     section referred to as the ``Director''), who shall also hold 
     a title within such agency comparable to that of other senior 
     level staff who are, as applicable, either appointed by the 
     President, by and with the advice and consent of the Senate, 
     or act in a managerial capacity that requires reporting 
     directly to the agency administrator.
       (2) Duties.--Each Director shall--
       (A) ensure equal employment opportunity and the racial, 
     ethnic and gender diversity of the agency's workforce and 
     senior management;

[[Page 31109]]

       (B) increase the participation of minority-owned and women-
     owned businesses in the programs and contracts of the agency;
       (C) provide guidance to the agency administrator to ensure 
     that the policies and regulations of the agency strengthen 
     minority-owned and women-owned businesses; and
       (D) conduct an assessment, as part of the examination 
     process for the entities regulated or monitored by the agency 
     of the diversity and inclusion efforts by such entities.
       (c) Inclusion in All Levels of Business Activities.--
       (1) In general.--Each Director shall develop and implement 
     standards and procedures to ensure, to the maximum extent 
     possible, the inclusion and utilization of minorities (as 
     such term is defined in section 1204(c) of the Financial 
     Institutions Reform, Recovery, and Enforcement Act of 1989 
     (12 U.S.C. 1811 note)), women, and minority-owned and women-
     owned businesses (as such terms are defined in section 
     21A(r)(4) of the Federal Home Loan Bank Act (12 U.S.C. 
     1441a(r)(4)) (including financial institutions, investment 
     banking firms, mortgage banking firms, asset management 
     firms, broker-dealers, financial services firms, 
     underwriters, accountants, brokers, investment consultants, 
     and providers of legal services) in all business and 
     activities of the agency at all levels, including in 
     procurement, insurance, and all types of contracts 
     (including, as applicable, contracts for the issuance or 
     guarantee of any debt, equity, or security, the sale of 
     assets, the management of its assets, the making of its 
     equity investments, and the implementation of programs to 
     address economic recovery).
       (2) Contracts.--The processes established by each agency 
     for review and evaluation for contract proposals and to hire 
     service providers shall include a component that gives 
     consideration to the diversity of the applicant.
       (3) Written assurance.--All such contract proposals, 
     provided such proposals are of an amount greater than $50,000 
     and the contractor employs more than 50 employees, shall 
     include a written assurance, in a form and substance that the 
     Director shall prescribe, that the contractor shall ensure, 
     to the maximum extent possible, the inclusion of minorities 
     and women in its workforce and, as applicable, by its 
     subcontractors.
       (4) Termination.--A Director may terminate any contract 
     upon a finding that the contractor has failed to make a good 
     faith effort to comply with paragraph (3), except that a 
     contractor may appeal such finding and termination to the 
     agency administrator within a reasonable amount of time as 
     determined by the Director.
       (d) Applicability.--This section shall apply to all 
     contracts of an agency for services of any kind, including 
     services that require the services of investment banking, 
     asset management entities, broker-dealers, financial services 
     entities, underwriters, accountants, investment consultants, 
     and providers of legal services.
       (e) Reports.--Not later than 90 days before the end of each 
     Federal fiscal year, each Director shall report to the 
     Congress detailed information describing the actions taken by 
     the agency and the Director pursuant to this section, which 
     shall--
       (1) to the extent contracts exceed the contract amount and 
     employment levels established in subsection (c)(3), include a 
     statement of the total amounts paid by the agency to third 
     party contractors since the last such report;
       (2) the percentage of such amounts paid to businesses 
     described in subsection (c)(1);
       (3) the successes achieved and challenges faced by the 
     agency in operating minority and women outreach programs;
       (4) the challenges the agency may face in hiring qualified 
     minority and women employees and contracting with qualified 
     minority-owned and women-owned businesses; and
       (5) such other information, findings, conclusions, and 
     recommendations for legislative or agency action, as the 
     Director may determine to be appropriate to include in such 
     report.
       (f) Diversity in Agency Workforce.--Each agency shall take 
     affirmative steps to seek diversity in its workforce at all 
     levels of the agency consistent with the demographic 
     diversity of the United States and the Federal government, 
     which shall include--
       (1) heavily recruiting at historically black colleges and 
     universities, Hispanic-serving institutions, women's 
     colleges, and colleges that typically serve majority minority 
     populations;
       (2) sponsoring and recruiting at job fairs in urban 
     communities, and placing employment advertisements in 
     newspapers and magazines oriented toward women and people of 
     color;
       (3) partnering with organizations that are focused on 
     developing opportunities for minorities and women to place 
     talented young minorities and women in industry internships, 
     summer employment, and full-time positions;
       (4) where feasible, partnering with inner-city high 
     schools, girls' high schools, and high schools with majority 
     minority populations to establish or enhance financial 
     literacy programs and provide mentoring; and
       (5) such other mass media communications that the Director 
     determines are necessary.
       (g) Definitions.--For purposes of this section:
       (1) Agency.--The term ``agency'' means--
       (A) the Department of the Treasury,
       (B) the Federal Deposit Insurance Corporation,
       (C) the Federal Housing Finance Agency,
       (D) each of the Federal reserve banks,
       (E) the Board,
       (F) the National Credit Union Administration,
       (G) the Office of the Comptroller of the Currency,
       (H) the Office of Thrift Supervision,
       (I) the Securities and Exchange Commission,
       (J) the Federal department or agency that the President has 
     identified as the main department or agency responsible for 
     consumer financial protection,
       (K) the Federal department or agency that the President has 
     identified as the main department or agency responsible for 
     insurance information,

     and any successors to such entities.
       (2) Agency administrator.--The term ``agency 
     administrator'' means the head of an agency.

             Subtitle J--International Policy Coordination

     SEC. 1901. INTERNATIONAL POLICY COORDINATION.

       The President of the United States, or a designee of the 
     President, shall coordinate through all available 
     international policy channels similar policies as found in 
     United States law related to limiting the scope, nature, 
     size, scale, concentration, and interconnectedness of 
     financial companies in order to protect financial stability 
     and the global economy.

             Subtitle K--International Financial Provisions

     SEC. 1951. ACCESS TO UNITED STATES FINANCIAL MARKET BY 
                   FOREIGN INSTITUTIONS.

       (a) Establishment of Foreign Bank Offices in the United 
     States.--Subsection 7(d)(3) of the International Banking Act 
     of 1978 ( U.S.C. 3105(d)(3)) is amended--
       (1) by striking ``and'' at the end of subparagraph (C);
       (2) by striking the period at the end of subparagraph (D) 
     and inserting ``; and''; and
       (3) by adding at the end the following new subparagraph:
       ``(E) for a foreign bank that presents a systemic risk to 
     the United States (as determined in accordance with section 
     1603 of the Financial Stability Improvement Act of 2009), 
     whether the home country of the foreign bank has adopted, or 
     is making demonstrable progress toward adopting, an 
     appropriate system of financial regulation for the financial 
     system of such home country to mitigate such systemic 
     risk.''.
       (b) Termination of Foreign Bank Offices in the United 
     States.--Subsection 7(e)(1) of the International Banking Act 
     of 1978 ( U.S.C. 3105(e)(1)) is amended--
       (1) by striking ``or'' at the end of subparagraph (A);
       (2) by striking the period at the end of subparagraph (B) 
     and inserting ``; or''; and
       (3) by inserting after subparagraph (B), the following new 
     subparagraph:
       ``(C) for a foreign bank that presents a systemic risk to 
     the United States (as determined in accordance with section 
     1603 of the Financial Stability Improvement Act of 2009), the 
     home country of the foreign bank has not adopted or made 
     demonstrable progress toward adopting an appropriate system 
     of financial regulation to mitigate such systemic risk.''.
       (c) Registration or Succession to United States Brokerage 
     or Dealer and Termination of Such Registration.--Section 15 
     of the Securities Exchange Act of 1934 (15 U.S.C. 78o) is 
     amended by adding at the end the following new subsections:
       ``(k) Registration or Succession to a United States Broker 
     or Dealer.--In determining whether to permit a foreign person 
     or an affiliate of a foreign person to register as a United 
     States broker or dealer, or succeed to the registration of a 
     United States broker or dealer, the Securities and Exchange 
     Commission may consider whether, for a foreign person, or an 
     affiliate of a foreign person that presents a systemic risk 
     to the United States (as determined in accordance with 
     section 1603 of the Financial Stability Improvement Act of 
     2009), the home country of the foreign person has adopted or 
     made demonstrable progress toward adopting an appropriate 
     system of financial regulation to mitigate such systemic 
     risk.
       ``(l) Termination of a United States Broker or Dealer.--For 
     a foreign person or an affiliate of a foreign person that 
     presents such a systemic risk to the United States, the 
     Securities and Exchange Commission may determine to terminate 
     the registration of such foreign person or an affiliate of 
     such foreign person as a broker or dealer in the United 
     States if the Commission determines that the home country of 
     the foreign person has not adopted, or made demonstrable 
     progress toward adopting, an appropriate system of financial 
     regulation to mitigate such systemic risk.''.

     SEC.__. REDUCING TARP FUNDS TO OFFSET COSTS.

       Section 115(a)(3) of the Emergency Economic Stabilization 
     Act of 2008 (12 U.S.C.

[[Page 31110]]

     5525(a)(3)) is amended 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, outstanding at any one time'' and 
     inserting ``$700,000,000,000, as such amount is reduced by 
     $22,059,000,000, outstanding at any one time''.

TITLE II--CORPORATE AND FINANCIAL INSTITUTION COMPENSATION FAIRNESS ACT

     SEC. 2001. SHORT TITLE.

       This title may be cited as the ``Corporate and Financial 
     Institution Compensation Fairness Act of 2009''.

     SEC. 2002. SHAREHOLDER VOTE ON EXECUTIVE COMPENSATION 
                   DISCLOSURES.

       Section 14 of the Securities Exchange Act of 1934 (15 
     U.S.C. 78n) is amended by adding at the end the following new 
     subsection:
       ``(i) Annual Shareholder Approval of Executive 
     Compensation.--
       ``(1) Annual vote.--Any proxy or consent or authorization 
     (the solicitation of which is subject to the rules of the 
     Commission pursuant to subsection (a)) for an annual meeting 
     of the shareholders to elect directors (or a special meeting 
     in lieu of such meeting) where proxies are solicited in 
     respect of any security registered under section 12 occurring 
     on or after the date that is 6 months after the date on which 
     final rules are issued under paragraph (4), shall provide for 
     a separate shareholder vote to approve the compensation of 
     executives as disclosed pursuant to the Commission's 
     compensation disclosure rules for named executive officers 
     (which disclosure shall include the compensation committee 
     report, the compensation discussion and analysis, the 
     compensation tables, and any related materials, to the extent 
     required by such rules). The shareholder vote shall not be 
     binding on the issuer or the board of directors and shall not 
     be construed as overruling a decision by such board, nor to 
     create or imply any additional fiduciary duty by such board, 
     nor shall such vote be construed to restrict or limit the 
     ability of shareholders to make proposals for inclusion in 
     such proxy materials related to executive compensation.
       ``(2) Shareholder approval of golden parachute 
     compensation.--
       ``(A) Disclosure.--In any proxy or consent solicitation 
     material (the solicitation of which is subject to the rules 
     of the Commission pursuant to subsection (a)) for a meeting 
     of the shareholders occurring on or after the date that is 6 
     months after the date on which final rules are issued under 
     paragraph (4), at which shareholders are asked to approve an 
     acquisition, merger, consolidation, or proposed sale or other 
     disposition of all or substantially all the assets of an 
     issuer, the person making such solicitation shall disclose in 
     the proxy or consent solicitation material, in a clear and 
     simple form in accordance with regulations to be promulgated 
     by the Commission, any agreements or understandings that such 
     person has with any named executive officers of such issuer 
     (or of the acquiring issuer, if such issuer is not the 
     acquiring issuer) concerning any type of compensation 
     (whether present, deferred, or contingent) that is based on 
     or otherwise relates to the acquisition, merger, 
     consolidation, sale, or other disposition of all or 
     substantially all of the assets of the issuer and the 
     aggregate total of all such compensation that may (and the 
     conditions upon which it may) be paid or become payable to or 
     on behalf of such executive officer.
       ``(B) Shareholder approval.--Any proxy or consent or 
     authorization relating to the proxy or consent solicitation 
     material containing the disclosure required by subparagraph 
     (A) shall provide for a separate shareholder vote to approve 
     such agreements or understandings and compensation as 
     disclosed, unless such agreements or understandings have been 
     subject to a shareholder vote under paragraph (1). A vote by 
     the shareholders shall not be binding on the issuer or the 
     board of directors of the issuer or the person making the 
     solicitation and shall not be construed as overruling a 
     decision by any such person or issuer, nor to create or imply 
     any additional fiduciary duty by any such person or issuer.
       ``(3) Disclosure of votes.--Every institutional investment 
     manager subject to section 13(f) shall report at least 
     annually how it voted on any shareholder vote pursuant to 
     paragraphs (1) or (2) of this section, unless such vote is 
     otherwise required to be reported publicly by rule or 
     regulation of the Commission.
       ``(4) Rulemaking.--Not later than 6 months after the date 
     of the enactment of the Corporate and Financial Institution 
     Compensation Fairness Act of 2009, the Commission shall issue 
     final rules to implement this subsection.
       ``(5) Exemption authority.--The Commission may exempt 
     certain categories of issuers from the requirements of this 
     subsection, where appropriate in view of the purpose of this 
     subsection. In determining appropriate exemptions, the 
     Commission shall take into account, among other 
     considerations, the potential impact on smaller reporting 
     issuers.''.

     SEC. 2003. COMPENSATION COMMITTEE INDEPENDENCE.

       (a) Standards Relating to Compensation Committees.--The 
     Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is 
     amended by inserting after section 10A the following new 
     section:

     ``SEC. 10B. STANDARDS RELATING TO COMPENSATION COMMITTEES.

       ``(a) Commission Rules.--
       ``(1) In general.--Effective not later than 9 months after 
     the date of enactment of the Corporate and Financial 
     Institution Compensation Fairness Act of 2009, the Commission 
     shall, by rule, direct the national securities exchanges and 
     national securities associations to prohibit the listing of 
     any class of equity security of an issuer that is not in 
     compliance with the requirements of any portion of 
     subsections (b) through (f).
       ``(2) Opportunity to cure defects.--The rules of the 
     Commission under paragraph (1) shall provide for appropriate 
     procedures for an issuer to have an opportunity to cure any 
     defects that would be the basis for a prohibition under 
     paragraph (1) before the imposition of such prohibition.
       ``(3) Exemption authority.--The Commission may exempt 
     certain categories of issuers from the requirements of 
     subsections (b) through (f), where appropriate in view of the 
     purpose of this section. In determining appropriate 
     exemptions, the Commission shall take into account, among 
     other considerations, the potential impact on smaller 
     reporting issuers.
       ``(b) Independence of Compensation Committees.--
       ``(1) In general.--Each member of the compensation 
     committee of the board of directors of the issuer shall be 
     independent.
       ``(2) Criteria.--In order to be considered to be 
     independent for purposes of this subsection, a member of a 
     compensation committee of an issuer may not, other than in 
     his or her capacity as a member of the compensation 
     committee, the board of directors, or any other board 
     committee accept any consulting, advisory, or other 
     compensatory fee from the issuer.
       ``(3) Exemption authority.--The Commission may exempt from 
     the requirements of paragraph (2) a particular relationship 
     with respect to compensation committee members, where 
     appropriate in view of the purpose of this section.
       ``(4) Definition.--As used in this section, the term 
     `compensation committee' means--
       ``(A) a committee (or equivalent body) established by and 
     amongst the board of directors of an issuer for the purpose 
     of determining and approving the compensation arrangements 
     for the executive officers of the issuer; and
       ``(B) if no such committee exists with respect to an 
     issuer, the independent members of the entire board of 
     directors.
       ``(c) Independence Standards for Compensation Consultants 
     and Other Committee Advisors.--Any compensation consultant or 
     other similar adviser to the compensation committee of any 
     issuer shall meet standards for independence established by 
     the Commission by regulation.
       ``(d) Compensation Committee Authority Relating to 
     Compensation Consultants.--
       ``(1) In general.--The compensation committee of each 
     issuer, in its capacity as a committee of the board of 
     directors, shall have the authority, in its sole discretion, 
     to retain and obtain the advice of a compensation consultant 
     meeting the standards for independence promulgated pursuant 
     to subsection (c), and the compensation committee shall be 
     directly responsible for the appointment, compensation, and 
     oversight of the work of such independent compensation 
     consultant. This provision shall not be construed to require 
     the compensation committee to implement or act consistently 
     with the advice or recommendations of the compensation 
     consultant, and shall not otherwise affect the compensation 
     committee's ability or obligation to exercise its own 
     judgment in fulfillment of its duties.
       ``(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 the Corporate and Financial Institution Compensation 
     Fairness Act of 2009, each issuer shall disclose in the proxy 
     or consent material, in accordance with regulations to be 
     promulgated by the Commission whether the compensation 
     committee of the issuer retained and obtained the advice of a 
     compensation consultant meeting the standards for 
     independence promulgated pursuant to subsection (c).
       ``(3) Regulations.--In promulgating regulations under this 
     subsection or any other provision of law with respect to 
     compensation consultants, the Commission shall ensure that 
     such regulations are competitively neutral among categories 
     of consultants and preserve the ability of compensation 
     committees to retain the services of members of any such 
     category.
       ``(e) Authority To Engage Independent Counsel and Other 
     Advisors.--The compensation committee of each issuer, in its 
     capacity as a committee of the board of directors, shall have 
     the authority, in its sole discretion, to retain and obtain 
     the advice of independent counsel and other advisers meeting 
     the standards for independence promulgated pursuant to 
     subsection (c), and the compensation committee shall be 
     directly

[[Page 31111]]

     responsible for the appointment, compensation, and oversight 
     of the work of such independent counsel and other advisers. 
     This provision shall not be construed to require the 
     compensation committee to implement or act consistently with 
     the advice or recommendations of such independent counsel and 
     other advisers, and shall not otherwise affect the 
     compensation committee's ability or obligation to exercise 
     its own judgment in fulfillment of its duties.
       ``(f) Funding.--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 compensation--
       ``(1) to any compensation consultant to the compensation 
     committee that meets the standards for independence 
     promulgated pursuant to subsection (c), and
       ``(2) to any independent counsel or other adviser to the 
     compensation committee.''.
       (b) Study and Review Required.--
       (1) In general.--The Securities and Exchange Commission 
     shall conduct a study and review of the use of compensation 
     consultants meeting the standards for independence 
     promulgated pursuant to section 10B(c) of the Securities 
     Exchange Act of 1934 (as added by subsection (a)), and the 
     effects of such use.
       (2) Report to congress.--Not later than 2 years after the 
     rules required by the amendment made by this section take 
     effect, the Commission shall submit a report to the Congress 
     on the results of the study and review required by this 
     paragraph.

     SEC. 2004. ENHANCED COMPENSATION STRUCTURE REPORTING TO 
                   REDUCE PERVERSE INCENTIVES.

       (a) Enhanced Disclosure and Reporting of Compensation 
     Arrangements.--
       (1) In general.--Not later than 9 months after the date of 
     enactment of this title, the appropriate Federal regulators 
     jointly shall prescribe regulations to require each covered 
     financial institution to disclose to the appropriate Federal 
     regulator the structures of all incentive-based compensation 
     arrangements offered by such covered financial institutions 
     sufficient to determine whether the compensation structure--
       (A) is aligned with sound risk management;
       (B) is structured to account for the time horizon of risks; 
     and
       (C) meets such other criteria as the appropriate Federal 
     regulators jointly may determine to be appropriate to reduce 
     unreasonable incentives offered by such institutions for 
     employees to take undue risks that--
       (i) could threaten the safety and soundness of covered 
     financial institutions; or
       (ii) could have serious adverse effects on economic 
     conditions or financial stability.
       (2) Rules of construction.--Nothing in this subsection 
     shall be construed as requiring the reporting of the actual 
     compensation of particular individuals. Nothing in this 
     subsection shall be construed to require a covered financial 
     institution that does not have an incentive-based payment 
     arrangement to make the disclosures required under this 
     subsection.
       (b) Prohibition on Certain Compensation Arrangements.--Not 
     later than 9 months after the date of enactment of this 
     title, and taking into account the factors described in 
     subparagraphs (A), (B), and (C) of subsection (a)(1), the 
     appropriate Federal regulators shall jointly prescribe 
     regulations that prohibit any incentive-based payment 
     arrangement, or any feature of any such arrangement, that the 
     regulators determine encourages inappropriate risks by 
     covered financial institutions that--
       (1) could threaten the safety and soundness of covered 
     financial institutions; or
       (2) could have serious adverse effects on economic 
     conditions or financial stability.
       (c) Enforcement.--The provisions of this section shall be 
     enforced under section 505 of the Gramm-Leach-Bliley Act and, 
     for purposes of such section, a violation of this section 
     shall be treated as a violation of subtitle A of title V of 
     such Act.
       (d) Definitions.--As used in this section--
       (1) the term ``appropriate Federal regulator'' means--
       (A) the Board of Governors of the Federal Reserve System;
       (B) the Office of the Comptroller of the Currency;
       (C) the Board of Directors of the Federal Deposit Insurance 
     Corporation;
       (D) the Director of the Office of Thrift Supervision;
       (E) the National Credit Union Administration Board;
       (F) the Securities and Exchange Commission; and
       (G) the Federal Housing Finance Agency; and
       (2) the term ``covered financial institution'' means--
       (A) a depository institution or depository institution 
     holding company, as such terms are defined in section 3 of 
     the Federal Deposit Insurance Act (12 U.S.C. 1813);
       (B) a broker-dealer registered under section 15 of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78o);
       (C) a credit union, as described in section 19(b)(1)(A)(iv) 
     of the Federal Reserve Act;
       (D) an investment advisor, as such term is defined in 
     section 202(a)(11) of the Investment Advisers Act of 1940 (15 
     U.S.C. 80b-2(a)(11));
       (E) the Federal National Mortgage Association;
       (F) the Federal Home Loan Mortgage Corporation; and
       (G) any other financial institution that the appropriate 
     Federal regulators, jointly, by rule, determine should be 
     treated as a covered financial institution for purposes of 
     this section.
       (e) Exemption for Certain Financial Institutions.--The 
     requirements of this section shall not apply to covered 
     financial institutions with assets of less than 
     $1,000,000,000.
       (f) Limitation.--No regulation promulgated pursuant to this 
     section shall be allowed to require the recovery of 
     incentive-based compensation under compensation arrangements 
     in effect on the date of enactment of this title, provided 
     such compensation agreements are for a period of no more than 
     24 months. Nothing in this title shall prevent or limit the 
     recovery of incentive-based compensation under any other 
     applicable law.
       (g) GAO Study.--
       (1) Study required.--
       (A) In general.--The Comptroller General of the United 
     States shall carry out a study to determine whether there is 
     a correlation between compensation structures and excessive 
     risk taking.
       (B) Factors to consider.--In carrying out the study 
     required under subparagraph (A), the Comptroller General 
     shall--
       (i) consider compensation structures used by companies from 
     2000 to 2008; and
       (ii) compare companies that failed, or nearly failed but 
     for government assistance, to companies that remained viable 
     throughout the housing and credit market crisis of 2007 and 
     2008, including the compensation practices of all such 
     companies.
       (C) Determining companies that failed or nearly failed.--In 
     determining whether a company failed, or nearly failed but 
     for government assistance, for purposes of subparagraph 
     (B)(ii), the Comptroller General shall focus on--
       (i) companies that received exceptional assistance under 
     the Troubled Asset Relief Program under title I of the 
     Emergency Economic Stabilization Act of 2009 (12 U.S.C. 5211 
     et seq.) or other forms of significant government assistance, 
     including under the Automotive Industry Financing Program, 
     the Targeted Investment Program, the Asset Guarantee Program, 
     and the Systemically Significant Failing Institutions 
     Program;
       (ii) the Federal National Mortgage Association;
       (iii) the Federal Home Loan Mortgage Corporation; and
       (iv) companies that participated in the Security and 
     Exchange Commission's Consolidated Supervised Entities 
     Program as of January 2008.
       (2) Report.--Not later than the end of the 1-year period 
     beginning on the date of the enactment of this title, the 
     Comptroller General shall issue a report to the Congress 
     containing the results of the study required under paragraph 
     (1).

          TITLE III--OVER-THE-COUNTER DERIVATIVES MARKETS ACT

     SEC. 3001. SHORT TITLE.

       This title may be cited as the ``Over-the-Counter 
     Derivatives Markets Act of 2009''.

                 Subtitle A--Regulation of Swap Markets

     SEC. 3101. DEFINITIONS.

       (a) Amendments to Definitions in the Commodity Exchange 
     Act.--Section 1a of the Commodity Exchange Act (7 U.S.C. 1a) 
     is amended--
       (1) by redesignating paragraphs (9) through (34) as 
     paragraphs (10) through (35), respectively;
       (2) by adding after paragraph (8) the following:
       ``(9) Derivative.--The term `derivative' means--
       ``(A) a contract of sale of a commodity for future 
     delivery; or
       ``(B) a swap.'';
       (3) by redesignating paragraph (35) (as redesignated by 
     paragraph (1)) as paragraph (36);
       (4) by adding after paragraph (34) (as redesignated by 
     paragraph (1)) the following:
       ``(35) Swap.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the term `swap' means any agreement, contract, or transaction 
     that--
       ``(i) is a put, call, cap, floor, collar, or similar option 
     of any kind for the purchase or sale of, or based on the 
     value of, one 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) provides for any purchase, sale, payment, or 
     delivery (other than a dividend on an equity security) that 
     is dependent on the occurrence, non-occurrence, or the extent 
     of the occurrence of an event or contingency associated with 
     a potential financial, economic, or commercial consequence;
       ``(iii) provides on an executory basis for the exchange, on 
     a fixed or contingent basis, of one or more payments based on 
     the value or level of one or more interest or other rates, 
     currencies, commodities, securities,

[[Page 31112]]

     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 an interest rate swap, a rate 
     floor, rate cap, rate collar, cross-currency rate swap, basis 
     swap, currency swap, total return swap, equity index swap, 
     equity swap, debt index swap, debt swap, credit spread, 
     credit default swap, credit swap, weather swap, energy swap, 
     metal swap, agricultural swap, emissions swap, or commodity 
     swap;
       ``(iv) is an agreement, contract, or transaction that is, 
     or in the future becomes, commonly known to the trade as a 
     swap; or
       ``(v) is any combination or permutation of, or option on, 
     any agreement, contract, or transaction described in any of 
     clauses (i) through (iv).
       ``(B) Exclusions.--The term `swap' does not include:
       ``(i) any contract of sale of a commodity for future 
     delivery or security futures product traded on or subject to 
     the rules of any board of trade designated as a contract 
     market under section 5 or 5f;
       ``(ii) any sale of a nonfinancial commodity for deferred 
     shipment or delivery, so long as such transaction is 
     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 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.);
       ``(iv) any put, call, straddle, option, or privilege 
     relating to 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 one or more securities on a fixed 
     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.);
       ``(vi) any agreement, contract, or transaction providing 
     for the purchase or sale of one 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 such agreement, 
     contract, or transaction predicates such 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)(1) of the Securities 
     Act of 1933 (15 U.S.C. 77b(a)(1));
       ``(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)(11) of the Securities Act of 1933) 
     (15 U.S.C. 77b(a)(11)) by the issuer of such security for the 
     purposes of raising capital, unless such agreement, contract, 
     or transaction is entered into to manage a risk associated 
     with capital raising;

       ``(ix) any foreign exchange swap;
       ``(x) any foreign exchange forward;
       ``(xi) any agreement, contract, or transaction a 
     counterparty of which is a Federal Reserve bank or the United 
     States Government, or an agency of the United States 
     Government that is expressly backed by the full faith and 
     credit of the United States; and
       ``(xii) any security-based swap, other than a security-
     based swap as described in paragraph (38)(C).
       ``(C) Rule of construction regarding master agreements.--
     The term `swap' shall be construed to include a master 
     agreement that provides for an agreement, contract, or 
     transaction that is a 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 swap 
     pursuant to subparagraph (A), except that the master 
     agreement shall be considered to be a swap only with respect 
     to each agreement, contract, or transaction under the master 
     agreement that is a swap pursuant to subparagraph (A).'';
       (5) in paragraph (13) (as redesignated by paragraph (1))--
       (A) in subparagraph (A)--
       (i) in clause (vii), by striking ``$25,000,000'' and 
     inserting ``$50,000,000''; and
       (ii) in clause (xi), by striking ``total assets in an 
     amount'' and inserting ``amounts invested on a discretionary 
     basis''; and
       (B) in subparagraph (C), by striking ``determines'' and 
     inserting ``and the Securities and Exchange Commission may 
     jointly determine'';
       (6) in paragraph (30) (as redesignated by paragraph (1)), 
     by--
       (A) redesignating subparagraph (E) as subparagraph (G);
       (B) in subparagraph (D), by striking ``and''; and
       (C) inserting after subparagraph (D) the following:
       ``(E) a swap execution facility registered under section 
     5h;
       ``(F) a swap repository; and'';
       (7) by adding after paragraph (36) (as redesignated by 
     paragraph (3)) the following:
       ``(37) Board.--The term `Board' means the Board of 
     Governors of the Federal Reserve System.'';
       (8) by adding after paragraph (37) the following:
       ``(38) Security-based swap.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the term `security-based swap' means any agreement, contract, 
     or transaction that would be a swap under paragraph (35) 
     (without regard to paragraph (35)(B)(xii)), and that--
       ``(i) is based on an index that is a narrow-based security 
     index, including any interest therein or based on the value 
     thereof;
       ``(ii) is based on a single security or loan, including any 
     interest therein or based on the value thereof; or
       ``(iii) is based on the occurrence, non-occurrence, 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 must 
     directly affect the financial statements, financial 
     condition, or financial obligations of the issuer.
       ``(B) Exclusion.--The term `security-based swap' does not 
     include any agreement, contract, or transaction that meets 
     the definition of security-based swap only because it 
     references or is based upon a government security.
       ``(C) 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 one 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)).
       ``(D) 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).'';
       (9) by adding after paragraph (38) the following:
       ``(39) Swap dealer.--
       ``(A) In general.--The term `swap dealer' means any person 
     engaged in the business of buying and selling swaps for such 
     person's own account, through a broker or otherwise.
       ``(B) 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.'';
       (10) by adding after paragraph (39) the following:
       ``(40) Major swap participant.--
       ``(A) In general.--The term `major swap participant' means 
     any person who is not a swap dealer and--
       ``(i) who maintains a substantial net position in 
     outstanding swaps, excluding positions held primarily for 
     hedging, reducing, or otherwise mitigating commercial risk; 
     or
       ``(ii) whose outstanding swaps create substantial net 
     counterparty exposure (current and potential future) that 
     would expose counterparties to significant credit losses that 
     could have a material adverse effect on capital of the 
     counterparties.
       ``(B) Definitions.--The Commission and the Securities and 
     Exchange Commission shall jointly define by rule or 
     regulation the term `substantial net position' and 
     `substantial net counterparty exposure' at a threshold that 
     the Commissions determine prudent for the effective 
     monitoring of, management and oversight of the financial 
     system. In the event the Commissions are unable to agree upon 
     a level within 60 days of the commencement of such 
     consultations, the Secretary of the Treasury shall make such 
     determination, which shall be binding on and adopted by such 
     Commissions.
       ``(41) Major security-based swap participant.--
       ``(A) In general.--The term `major security-based swap 
     participant' means any person who is not a swap dealer and--
       ``(i) who maintains a substantial net position in 
     outstanding security-based swaps, excluding positions held 
     primarily for hedging,

[[Page 31113]]

     reducing, or otherwise mitigating commercial risk; or
       ``(ii) whose outstanding security-based swaps create 
     substantial net counterparty exposure (current and potential 
     future) that would expose counterparties to significant 
     credit losses that could have a material adverse effect on 
     capital of the counterparties.
       ``(B) Definitions.--The Commission and the Securities and 
     Exchange Commission shall jointly define by rule or 
     regulation the term `substantial net position' and 
     `substantial net counterparty exposure' at a threshold that 
     the Commissions determine prudent for the effective 
     monitoring of, management and oversight of the financial 
     system. In the event the Commissions are unable to agree upon 
     a level within 60 days of the commencement of such 
     consultations, the Secretary of the Treasury shall make such 
     determination, which shall be binding on and adopted by such 
     Commissions.'';
       (11) by adding after paragraph (41) the following:
       ``(42) 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)).'';
       (12) by adding after paragraph (42) the following:
       ``(43) Prudential regulator.--The term `Prudential 
     Regulator' means--
       ``(A) the Board in the case of a swap dealer, major swap 
     participant, security-based swap dealer or major security-
     based swap participant that is--
       ``(i) a State-chartered bank that is a member of the 
     Federal Reserve System; or
       ``(ii) a State-chartered branch or agency of a foreign 
     bank;
       ``(B) the Office of the Comptroller of the Currency in the 
     case of a swap dealer, major swap participant, security-based 
     swap dealer or major security-based swap participant that 
     is--
       ``(i) a national bank; or
       ``(ii) a federally chartered branch or agency of a foreign 
     bank; and
       ``(C) the Federal Deposit Insurance Corporation in the case 
     of a swap dealer, major swap participant, security-based swap 
     dealer or major security-based swap participant that is a 
     State-chartered bank that is not a member of the Federal 
     Reserve System.'';
       (13) by adding after paragraph (43) the following:
       ``(44) Security-based swap dealer.--
       ``(A) In general.--The term `security-based swap dealer' 
     means any person engaged in the business of buying and 
     selling security-based swaps for such person's own account, 
     through a broker or otherwise.
       ``(B) Exception.--The term `security-based swap dealer' 
     does not include a person that buys or sells security-based 
     swaps for such person's own account, either individually or 
     in a fiduciary capacity, but not as a part of a regular 
     business.'';
       (14) by adding after paragraph (44) the following:
       ``(45) Government security.--The term `government security' 
     has the same meaning as in section 3(a)(42) of the Securities 
     Exchange Act of 1934 (15 U.S.C. 78c(a)(42)).'';
       (15) by adding after paragraph (45) the following:
       ``(46) 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 at the inception of the 
     contract.'';
       (16) by adding after paragraph (46) the following:
       ``(47) Foreign exchange swap.--The term `foreign exchange 
     swap' means a transaction that solely involves the exchange 
     of 2 different currencies on a specific date at a fixed rate 
     agreed at the inception of the contract, and a reverse 
     exchange of the same 2 currencies at a date further in the 
     future and at a fixed rate agreed at the inception of the 
     contract.'';
       (17) by adding after paragraph (47) the following:
       ``(48) Person associated with a security-based swap dealer 
     or major security-based swap participant.--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 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), 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 any employee of such 
     security-based swap dealer or major security-based swap 
     participant, except that any person associated with a 
     security-based swap dealer or major security-based swap 
     participant whose functions are solely clerical or 
     ministerial shall not be included in the meaning of such term 
     other than for purposes of section 15F(e)(2) of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78o-10).'';
       (18) by adding after paragraph (48) the following:
       ``(49) Person associated with a swap dealer or major swap 
     participant.--The term `person associated with a swap dealer 
     or major swap participant' or `associated person of a swap 
     dealer or major swap participant' means any partner, officer, 
     director, or branch manager of such swap dealer or major swap 
     participant (or any person occupying a similar status or 
     performing similar functions), any person directly or 
     indirectly controlling, controlled by, or under common 
     control with such swap dealer or major swap participant, or 
     any employee of such swap dealer or major swap participant, 
     except that any person associated with a swap dealer or major 
     swap participant whose functions are solely clerical or 
     ministerial shall not be included in the meaning of such term 
     other than for purposes of section 4s(b)(6).''; and
       (19) by adding after paragraph (49) the following:
       ``(50) Swap repository.--The term `swap repository' means 
     an entity that collects and maintains the records of the 
     terms and conditions of swaps or security-based swaps entered 
     into by third parties.
       ``(51) Restricted owner.--The term `restricted owner' means 
     any swap dealer, security-based swap dealer, major swap 
     participant, major security-based swap participant, person 
     associated with a swap dealer or major swap participant, or 
     person associated with a security-based swap dealer or major 
     security-based swap participant.''.
       (b) Joint Rulemaking on Further Definition of Terms.--
       (1) In general.--The Commodity Futures Trading Commission 
     and the Securities and Exchange Commission shall jointly 
     adopt a rule further defining the terms ``swap'', ``security-
     based swap'', ``swap dealer'', ``security-based swap 
     dealer'', ``major swap participant'',``major security-based 
     swap participant'', and ``eligible contract participant'' no 
     later than 180 days after the effective date of this title.
       (2) Prevention of evasions.--The Commodity Futures Trading 
     Commission and the Securities and Exchange Commission may 
     prescribe rules defining the term ``swap'' or ``security-
     based swap'' to include transactions that have been 
     structured to evade this title.
       (c) Joint Rulemaking Under This Title.--
       (1) Uniform rules.--Rules and regulations prescribed 
     jointly under this title by the Commodity Futures Trading 
     Commission and the Securities and Exchange Commission shall 
     be uniform.
       (2) Treasury department.--In the event that the Commodity 
     Futures Trading Commission and the Securities and Exchange 
     Commission fail to jointly prescribe uniform rules and 
     regulations under any provision of this title in a timely 
     manner, the Secretary of the Treasury, in consultation with 
     the Commodity Futures Trading Commission and the Securities 
     and Exchange Commission, shall prescribe rules and 
     regulations under such provision. A rule prescribed by the 
     Secretary of the Treasury shall be enforced as if prescribed 
     jointly by the Commodity Futures Trading Commission and the 
     Securities and Exchange Commission and shall remain in effect 
     until the Secretary rescinds the rule or until the effective 
     date of a corresponding rule prescribed jointly by the 
     Commodity Futures Trading Commission and the Securities and 
     Exchange Commission in accordance with this section, 
     whichever is later.
       (3) Deadline.--The Secretary of the Treasury shall adopt 
     rules and regulations under paragraph (2) within 180 days of 
     the time that the Commodity Futures Trading Commission and 
     the Securities and Exchange Commission failed to adopt 
     uniform rules and regulations.
       (4) Treatment of similar products.--In adopting joint rules 
     and regulations under this title, the Commodity Futures 
     Trading Commission and the Securities and Exchange Commission 
     shall prescribe requirements to treat functionally or 
     economically similar products similarly.
       (5) Treatment of dissimilar products.--Nothing in this 
     title shall be construed to require the Commodity Futures 
     Trading Commission and the Securities and Exchange Commission 
     to adopt joint rules that treat functionally or economically 
     different products identically.
       (6) Joint interpretation.--Any interpretation of, or 
     guidance regarding, a provision of this title, shall be 
     effective only if issued jointly by the Commodity Futures 
     Trading Commission and the Securities and Exchange Commission 
     if this title requires the Commodity Futures Trading 
     Commission and the Securities and Exchange Commission to 
     issue joint regulations to implement the provision.

     SEC. 3102. JURISDICTION.

       (a) Exclusive Jurisdiction.--The first sentence of section 
     2(a)(1)(A) of the Commodity Exchange Act (7 U.S.C. 
     2(a)(1)(A)) is amended--
       (1) by striking ``(C) and (D)'' and inserting ``(C), (D), 
     and (G)'';
       (2) by striking ``subsections (c) through (i)'' and 
     inserting ``subsections (c) and (f)''; and
       (3) by striking ``involving contracts of sale'' and 
     inserting ``involving swaps or contracts of sale''.
       (b) No Limitation.--Section 2(a)(1) of the Commodity 
     Exchange Act (7 U.S.C. 2(a)(1)) is amended by inserting after 
     subparagraph (F) the following:

[[Page 31114]]

       ``(G) Nothing contained in this paragraph shall supersede 
     or limit the jurisdiction conferred on the Securities and 
     Exchange Commission or other regulatory authority by, or 
     otherwise restrict the authority of the Securities and 
     Exchange Commission or other regulatory authority under, the 
     Over-the-Counter Derivatives Markets Act of 2009, including 
     with respect to a security-based swap as described in section 
     1a(38)(C) of this Act.''.
       (c) Additions.--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''.

     SEC. 3103. CLEARING.

       (a) Clearing Requirement.--
       (1) Sections 2(d), 2(e), 2(g), and 2(h) of the Commodity 
     Exchange Act (7 U.S.C. 2(d), 2(e), 2(g), and 2(h)) are 
     repealed.
       (2) Section 2 of the Commodity Exchange Act (7 U.S.C. 2) is 
     further amended by inserting after subsection (c) the 
     following:
       ``(d) Swaps.--Nothing in this Act (other than subsections 
     (a)(1)(A), (a)(1)(B), (f), and (j), sections 4a, 4b, 4b-1, 
     4c(a), 4c(b), 4o, 4r, 4s, 4t, 4u, 5b, 5c, 5h, 6(c), 6(d), 6c, 
     6d, 8, 8a, 9, 12(e)(2), 12(f), 13(a), 13(b), 21, and 22(a)(4) 
     and such other provisions of this Act as are applicable by 
     their terms 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) Section 2 of the Commodity Exchange Act (7 U.S.C. 2) is 
     further amended by inserting after subsection (i) the 
     following:
       ``(j) Clearing of Swaps.--
       ``(1) In general.--
       ``(A) Presumption of clearing.--A swap shall be submitted 
     for clearing if a derivatives clearing organization that is 
     registered under this Act will accept the swap for clearing.
       ``(B) Open access.--The rules of a derivatives clearing 
     organization described in subparagraph (A) shall--
       ``(i) prescribe that all swaps submitted to the derivatives 
     clearing organization with the same terms and conditions are 
     economically equivalent and may be offset with each other 
     within the derivatives clearing organization; and
       ``(ii) provide for non-discriminatory clearing of a swap 
     executed on or through the rules of an unaffiliated 
     designated contract market or swap execution facility.
       ``(2) Commission approval.--
       ``(A) In general.--A derivatives clearing organization 
     shall submit to the Commission for prior approval each swap, 
     or any group, category, type, or class of swaps, that it 
     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. A request on which the Commission 
     fails to take final action within the time limitation 
     established under this subparagraph is deemed approved.
       ``(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).
       ``(D) Rules.--Not later than 180 days after the date of the 
     enactment of the Over-the-Counter Derivatives Markets Act of 
     2009, the Commission shall adopt rules for a derivatives 
     clearing organization's submission for approval, pursuant to 
     this paragraph, of a swap, or a group, category, type or 
     class of swaps, that it 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 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), the Commission may--
       ``(i) determine, unconditionally or subject to such terms 
     and conditions as the Commission determines to be 
     appropriate, that the swap, or group, category, type, or 
     class of swaps, must be cleared pursuant to this subsection 
     if it finds that such clearing is consistent with section 
     5b(c)(2); or
       ``(ii) determine that the clearing requirement of paragraph 
     (1) shall not apply to the swap, or group, category, type, or 
     class of swaps.
       ``(D) Rules.--Not later than 180 days after the date of the 
     enactment of the Over-the-Counter Derivatives Markets Act of 
     2009, 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 it has accepted for clearing.
       ``(4) Prevention of evasion.--The Commission and the 
     Securities and Exchange Commission shall have authority to 
     prescribe rules under this subsection, or issue 
     interpretations of such rules, as necessary to prevent 
     evasions of this Act provided that any such rules or 
     interpretations must be issued jointly to be effective.
       ``(5) Required reporting.--
       ``(A) In general.--All swap transactions that are not 
     accepted for clearing by any derivatives clearing 
     organization shall be reported to either a swap repository 
     described in section 21 or, if there is no repository that 
     would accept the swap, to the Commission pursuant to section 
     4r within such time period as the Commission may by rule or 
     regulation prescribe.
       ``(B) Authority of swap dealer to report.--Counterparties 
     may agree which counterparty will report the swap 
     transaction. In transactions where only 1 counterparty is a 
     swap dealer, the swap dealer will report the transaction.
       ``(6) Transition rules.--Rules adopted by the Commission 
     under this section shall provide for the reporting of data, 
     as follows:
       ``(A) Swaps that were entered into before the date of 
     enactment of the Over-the-Counter Derivatives Markets Act of 
     2009 shall be reported to a registered swap repository or the 
     Commission no later than 180 days after the effective date of 
     the Over-the-Counter Derivatives Markets Act of 2009.
       ``(B) Swaps that were entered into on or after the date of 
     enactment of the Over-the-Counter Derivatives Markets Act of 
     2009 shall be reported to a registered swap repository or the 
     Commission no later than the later of--
       ``(i) 90 days after the effective date of the Over-the-
     Counter Derivatives Markets Act of 2009; or
       ``(ii) such other time after entering into the swap as the 
     Commission may prescribe by rule or regulation.
       ``(7) Trade execution.--
       ``(A) In general.--With respect to transactions involving 
     swaps subject to the clearing requirement of paragraph (1) 
     and where both counterparties are either swap dealers or 
     major swap participants, such 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 with the Commission.
       ``(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.
       ``(C) Required reporting.--If the exception of subparagraph 
     (B) applies and there is no facility that makes the swap 
     available to trade, the counterparties shall comply with any 
     recordkeeping and transaction reporting requirements as may 
     be prescribed by the Commission with respect to swaps subject 
     to the requirements of paragraph (1).
       ``(8) Exchange trading.--In adopting rules and regulations, 
     the Commission shall endeavor to eliminate unnecessary 
     impediments to the trading on boards of trade designated as 
     contract markets under section 5 of contracts, agreements or 
     transactions that would be security-based swaps but for the 
     trading of such contracts, agreements or transactions on such 
     a designated contract market.
       ``(9) Exceptions.--The requirements of paragraph (1) shall 
     not apply to a swap if--
       ``(A) no derivatives clearing organization registered under 
     this Act will accept the swap for clearing; or
       ``(B) one of the counterparties to the swap is not a swap 
     dealer or major swap participant.
       ``(10) Exclusion.--Paragraph (1) shall not apply to a swap 
     1 party to which is not a swap dealer or major swap 
     participant, and which is entered into before the end of the 
     90-day period that begins with the effective date of this 
     paragraph.''.
       (b) Derivatives Clearing Organizations.--
       (1) Subsections (a) and (b) of section 5b of the Commodity 
     Exchange Act (7 U.S.C. 7a-1) are amended to read as follows:
       ``(a) Registration Requirement.--It shall be unlawful for a 
     derivatives clearing organization, 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 derivatives clearing organization

[[Page 31115]]

     described in section 1a(10) of this Act with respect to--
       ``(1) a contract of sale of a commodity for future delivery 
     (or option on such a contract) or option on a commodity, in 
     each case unless the contract or option is--
       ``(A) excluded from this Act by section 2(a)(1)(C)(i), 
     2(c), or 2(f); or
       ``(B) 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
       ``(2) a swap.
       ``(b) Voluntary Registration.--
       ``(1) Derivatives clearing organizations.--A person that 
     clears agreements, contracts, or transactions that are not 
     required to be cleared under this Act may register with the 
     Commission as a derivatives clearing organization.
       ``(2) Clearing agencies.--A derivatives clearing 
     organization may clear security-based swaps that are required 
     to be cleared by a person who is registered as a clearing 
     agency under the Securities Exchange Act of 1934 (15 U.S.C. 
     78a et seq.).''.
       (2) 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 Banks 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 a bank 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) Harmonization of Rules.--Not later than 180 days 
     after the effective date of the Over-the-Counter Derivatives 
     Markets Act of 2009, the Commission and the Securities and 
     Exchange Commission shall jointly adopt uniform rules 
     governing persons that are registered as derivatives clearing 
     organizations for swaps under this subsection and persons 
     that are registered as clearing agencies for security-based 
     swaps under the Securities Exchange Act of 1934 (15 U.S.C. 
     78a et seq.).
       ``(i) Consultation.--The Commission and the Securities and 
     Exchange Commission shall consult with the appropriate 
     Federal banking agencies prior to adopting rules under this 
     section with respect to swaps.
       ``(j) 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 finds that such derivatives clearing 
     organization 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 
     organization's home country.
       ``(k) Designation of Compliance Officer.--
       ``(1) In general.--Each derivatives clearing organization 
     shall designate an individual to serve as a compliance 
     officer.
       ``(2) Duties.--The compliance officer--
       ``(A) shall report directly to the board or to the senior 
     officer of the derivatives clearing organization;
       ``(B) shall--
       ``(i) review compliance with the core principles in section 
     5b(c)(2);
       ``(ii) in consultation with the board of the derivatives 
     clearing organization, a body performing a function similar 
     to that of a board, or the senior officer of the derivatives 
     clearing organization, resolve any conflicts of interest that 
     may arise;
       ``(iii) be responsible for administering the policies and 
     procedures required to be established pursuant to this 
     section; and
       ``(iv) ensure compliance with commodity laws and the rules 
     and regulations issued thereunder, including rules prescribed 
     by the Commission pursuant to this section; and
       ``(C) shall establish procedures for remediation of 
     noncompliance issues found during compliance office reviews, 
     lookbacks, internal or external audit findings, self-reported 
     errors, or through validated complaints. Procedures will 
     establish the handling, management response, remediation, 
     retesting, and closing of noncompliant issues.
       ``(3) Annual reports required.--The compliance officer 
     shall annually prepare and sign a report on the compliance of 
     the derivatives clearing organization with the commodity laws 
     and its policies and procedures, including its code of ethics 
     and conflict of interest policies, in accordance with rules 
     prescribed by the Commission. Such compliance report shall 
     accompany the financial reports of the derivatives clearing 
     organization that are required to be furnished to the 
     Commission pursuant to this section and shall include a 
     certification that, under penalty of law, the report is 
     accurate and complete.''.
       (3) Section 5b(c)(2) of the Commodity Exchange Act (7 
     U.S.C. 7a-1(c)(2)) is amended to read as follows:
       ``(2) Core principles for derivatives clearing 
     organizations.--To be registered and to maintain registration 
     as a derivatives clearing organization, a derivatives 
     clearing organization shall comply with the core principles 
     specified in subparagraphs (B) through (N) this paragraph. 
     The Commission may conform the core principles to reflect 
     evolving United States and international standards.''.
       (4) Section 5b of the Commodity Exchange Act (7 U.S.C. 7a-
     1) is further amended by adding after subsection (k), as 
     added by paragraph (2), the following:
       ``(l) Reporting.--
       ``(1) In general.--A derivatives clearing organization that 
     clears swaps shall provide to the Commission and any 
     designated swap repository all information determined by the 
     Commission to be necessary to perform its responsibilities 
     under this Act. The Commission shall adopt data collection 
     and maintenance requirements for swaps cleared by derivatives 
     clearing organizations that are comparable to the 
     corresponding requirements for swaps accepted by swap 
     repositories and swaps traded on swap execution facilities. A 
     derivatives clearing organization that clears security-based 
     swap agreements (as defined in section 3(a)(76) of the 
     Securities Exchange Act of 1934) shall, upon request, make 
     available to the Securities and Exchange Commission all 
     information (including information on a real-time basis) 
     relating to such security-based swap agreements. Subject to 
     section 8, the Commission shall share such information, upon 
     request, with the Board, the Securities and Exchange 
     Commission (with respect to swaps other than security-based 
     swap agreements), the appropriate Federal banking agencies, 
     the Financial Services Oversight Council, and the Department 
     of Justice or to other persons the Commission deems 
     appropriate, including foreign financial supervisors 
     (including foreign futures authorities), foreign central 
     banks, and foreign ministries.
       ``(2) Public information.--A derivatives clearing 
     organization that clears swaps shall provide to the 
     Commission, or its designee, such information as is required 
     by, and in a form and at a frequency to be determined by, the 
     Commission, in order to comply with the public reporting 
     requirements contained in section 8(j).''.
       (5) Section 8(e) of the Commodity Exchange Act (7 U.S.C. 
     12(e)) is amended in the last sentence by adding ``central 
     bank and ministries'' after ``department'' each place it 
     appears.
       (c) Legal Certainty for Identified Banking Products.--
       (1) Repeal.--Sections 402(d), 404, 407, 408(b), and 
     408(c)(2) of the Legal Certainty for Bank Products Act of 
     2000 (7 U.S.C. 27(d), 27b, 27e, 27f(b), and 27f(c)(2)) are 
     repealed.
       (2) Legal certainty.--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), no provisions of the Commodity Exchange Act (7 U.S.C. 1 
     et seq.) shall apply to, and the Commodity Futures Trading 
     Commission and the Securities and Exchange Commission shall 
     not exercise regulatory authority under the Commodity 
     Exchange Act with respect to, an identified banking product.
       ``(b) Exception.--An appropriate Federal banking agency may 
     except an identified banking product or 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 swap in section 1a(35) 
     of the Commodity Exchange Act (7 U.S.C. 1a(35)) or security-
     based swap in section 1a(38) of the Commodity Exchange Act (7 
     U.S.C. 1a(38)); 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) Additional Exception.--The exclusion in subsection 
     (a) shall not apply to an identified banking 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(35) of the 
     Commodity Exchange Act or security-based swap in section 
     3(a)(68) of the Securities and Exchange Act of 1934; and
       ``(3) has become known to the trade as a swap or security-
     based swap, or 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. 3104. PUBLIC REPORTING OF AGGREGATE SWAP DATA.

       Section 8 of the Commodity Exchange Act (7 U.S.C. 12) is 
     amended by adding after subsection (i) the following:
       ``(j) Public Reporting of Aggregate Swap Data.--
       ``(1) In general.--The Commission, or a person designated 
     by the Commission pursuant to paragraph (2), 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

[[Page 31116]]

     swap trading volumes and positions from the sources set forth 
     in paragraph (3).
       ``(2) Designee of the commission.--The Commission may 
     designate a derivatives clearing organization or a swap 
     repository to carry out the public reporting described in 
     paragraph (1).
       ``(3) Sources of information.--The sources of the 
     information to be publicly reported as described in paragraph 
     (1) are--
       ``(A) derivatives clearing organizations pursuant to 
     section 5b(k)(2);
       ``(B) swap repositories pursuant to section 21(c)(3); and
       ``(C) reports received by the Commission pursuant to 
     section 4r.''.

     SEC. 3105. SWAP REPOSITORIES.

       The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended 
     by inserting after section 20 the following:

     ``SEC. 21. SWAP 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 
     repository.
       ``(2) Inspection and examination.--Registered swap 
     repositories shall be subject to inspection and examination 
     by any representative of the Commission.
       ``(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 
     repository.
       ``(2) Data collection and maintenance.--The Commission 
     shall prescribe data collection and data maintenance 
     standards for swap 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 that clear swaps.
       ``(c) Duties.--A swap repository shall--
       ``(1) accept data prescribed by the Commission for each 
     swap under subsection (b);
       ``(2) maintain such data in such form and manner and for 
     such period as may be required by the Commission;
       ``(3) provide to the Commission, or its designee, such 
     information as is required by, and in a form and at a 
     frequency to be determined by, the Commission, in order to 
     comply with the public reporting requirements contained in 
     section 8(j); and
       ``(4) make available, on a confidential basis pursuant to 
     section 8, all data obtained by the swap repository, 
     including individual counterparty trade and position data, to 
     the Commission, the appropriate Federal banking agencies, the 
     Financial Services Oversight Council, the Securities and 
     Exchange Commission, and the Department of Justice or to 
     other persons the Commission deems appropriate, including 
     foreign financial supervisors (including foreign futures 
     authorities), foreign central banks, and foreign ministries.
       ``(d) Required Registration for Security-based Swap 
     Repositories.--Any person that is required to be registered 
     as a swap repository under this section shall register with 
     the Commission regardless of whether that person also is 
     registered with the Securities and Exchange Commission as a 
     security-based swap repository.
       ``(e) Harmonization of Rules.--Not later than 180 days 
     after the effective date of the Over-the-Counter Derivatives 
     Markets Act of 2009, the Commission and the Securities and 
     Exchange Commission shall jointly adopt uniform rules 
     governing persons that are registered under this section and 
     persons that are registered as security-based swap 
     repositories under the Securities Exchange Act of 1934 (15 
     U.S.C. 78a et seq.), including uniform rules that specify the 
     data elements that shall be collected and maintained by each 
     repository.
       ``(f) Exemptions.--The Commission may exempt, conditionally 
     or unconditionally, a swap repository from the requirements 
     of this section if the Commission finds that such swap 
     repository 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 
     organization's home country.''.

     SEC. 3106. REPORTING AND RECORDKEEPING.

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

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

       ``(a) In General.--Any person who enters into a swap and--
       ``(1) did not clear the swap in accordance with section 
     2(j)(1); and
       ``(2) did not have data regarding the swap accepted by a 
     swap repository in accordance with rules (including time 
     frames) adopted by the Commission under section 21,

     shall meet the requirements in subsection (b).
       ``(b) Reports.--Any person described in subsection (a) 
     shall--
       ``(1) make such reports in such form and manner and for 
     such period as the Commission shall prescribe by rule or 
     regulation regarding the swaps held by the person; and
       ``(2) keep books and records pertaining to the swaps held 
     by the person in such form and manner and for such period as 
     may be required by the Commission, which books and records 
     shall be open to inspection by any representative of the 
     Commission, an appropriate Federal banking agency, the 
     Securities and Exchange Commission, the Financial Services 
     Oversight Council, and the Department of Justice.
       ``(c) Identical Data.--In adopting rules under this 
     section, the Commission shall require persons described in 
     subsection (a) to report the same or a more comprehensive set 
     of data than the Commission requires swap repositories to 
     collect under section 21.''.

     SEC. 3107. 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 3106) the 
     following:

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

       ``(a) Registration.--
       ``(1) It shall be unlawful for any person to act as a swap 
     dealer unless such person is registered as a swap dealer with 
     the Commission.
       ``(2) It shall be unlawful for any person to act as a major 
     swap participant unless such person shall have 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.--The application shall be made in such form 
     and manner as prescribed by the Commission, giving any 
     information and facts as the Commission may deem necessary 
     concerning the business in which the applicant is or will be 
     engaged. Such person, when registered as a swap dealer or 
     major swap participant, shall continue to report and furnish 
     to the Commission such information pertaining to such 
     person's business as the Commission may require.
       ``(3) Expiration.--Each registration shall expire at such 
     time as the Commission may by rule or regulation prescribe.
       ``(4) Rules.--Except as provided in subsections (c), (d) 
     and (e), the Commission may prescribe rules applicable to 
     swap dealers and major swap participants, including rules 
     that limit the activities of swap dealers and major swap 
     participants.
       ``(5) Transition.--Rules adopted under this section shall 
     provide for the registration of swap dealers and major swap 
     participants no later than one year after the effective date 
     of the Over-the-Counter Derivatives Markets Act of 2009.
       ``(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 such swap dealer or major swap 
     participant, if such swap dealer or major swap participant 
     knew, or in the exercise of reasonable care should have 
     known, of such 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 that person also is 
     a bank 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 that person also is a bank or is registered with the 
     Securities and Exchange Commission as a major security-based 
     swap participant.
       ``(d) Joint Rules.--
       ``(1) In general.--Not later than 180 days after the 
     effective date of the Over-the-Counter Derivatives Markets 
     Act of 2009, the Commission and the Securities and Exchange 
     Commission shall jointly adopt uniform rules for persons that 
     are registered as swap dealers or major swap participants 
     under this section and persons that are registered as 
     security-based swap dealers or major security-based swap 
     participants under the Securities Exchange Act of 1934 (15 
     U.S.C. 78a et seq.).
       ``(2) Exception for prudential requirements.--The 
     Commission and the Securities and Exchange Commission shall 
     not prescribe rules imposing prudential requirements 
     (including activity restrictions) on swap dealers, major swap 
     participants, security-based swap dealers, or major security-
     based swap participants for which there is a Prudential 
     Regulator. This provision shall not be construed as limiting 
     the authority of the Commission and the Securities and 
     Exchange Commission to prescribe appropriate business 
     conduct, reporting, and recordkeeping requirements to protect 
     investors.
       ``(e) Capital and Margin Requirements.--
       ``(1) In general.--
       ``(A) Bank swap dealers and major swap participants.--Each 
     registered swap dealer

[[Page 31117]]

     and major swap participant for which there is a Prudential 
     Regulator shall meet such minimum capital requirements and 
     minimum margin requirements as the Prudential Regulators 
     shall by rule or regulation jointly prescribe to help ensure 
     the safety and soundness of the swap dealer or major swap 
     participant.
       ``(B) Nonbank swap dealers and major swap participants.--
     Each registered swap dealer and major swap participant for 
     which there is not a Prudential Regulator shall meet such 
     minimum capital requirements and minimum margin requirements 
     as the Commission and the Securities and Exchange Commission 
     shall by rule or regulation jointly prescribe to help ensure 
     the safety and soundness of the swap dealer or major swap 
     participant.
       ``(2) Joint rules.--
       ``(A) Bank swap dealers and major swap participants.--
     Within 180 days of the enactment of the Over-the-Counter 
     Derivatives Markets Act of 2009, the Prudential Regulators, 
     in consultation with the Commission and the Securities and 
     Exchange Commission, shall jointly adopt rules imposing 
     capital and margin requirements under this subsection for 
     swap dealers and major swap participants.
       ``(B) Nonbank swap dealers and major swap participants.--
     Within 180 days of the enactment of the Over-the-Counter 
     Derivatives Markets Act of 2009, the Commission and the 
     Securities and Exchange Commission, in consultation with the 
     Prudential Regulators, shall jointly adopt rules imposing 
     capital and margin requirements under this subsection for 
     swap dealers and major swap participants for which there is 
     no Prudential Regulator.
       ``(3) Capital.--
       ``(A) Bank swap dealers and major swap participants.--In 
     setting capital requirements under this subsection, the 
     Prudential Regulators shall impose:
       ``(i) a capital requirement that is greater than zero for 
     swaps that are cleared by a derivatives clearing 
     organization; 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 centrally cleared, higher 
     capital requirements for swaps that are not cleared by a 
     registered derivatives clearing organization than for swaps 
     that are centrally cleared.
       ``(B) Exclusion.--Subparagraph (A) shall not apply to a 
     swap 1 party to which is not a swap dealer or major swap 
     participant, and which is entered into before the end of the 
     90-day period that begins with the effective date of this 
     subparagraph.
       ``(C) Nonbank swap dealers and major swap participants.--
     Capital requirements set by the Commission and the Securities 
     and Exchange Commission under this subsection shall be as 
     strict as or stricter than the capital requirements set by 
     the Prudential Regulators under this subsection.
       ``(D) Bank holding companies.--Capital requirements set by 
     the Board for swaps of bank holding companies on a 
     consolidated basis shall be as strict as or stricter than the 
     capital requirements set by the Prudential Regulators under 
     this subsection.
       ``(E) 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 it is subject.
       ``(4) Margin.--
       ``(A) Bank swap dealers and major swap participants.--The 
     Prudential Regulators shall impose margin requirements under 
     this subsection on all swaps that are not cleared by a 
     registered derivatives clearing organization.
       ``(B) Non-swap dealers or major swap participants.--The 
     Prudential Regulators may, but are not required to, impose 
     margin requirements with respect to swaps in which one of the 
     counterparties is neither a swap dealer, major swap 
     participant, security-based swap dealer nor a major security-
     based swap participant. Any such margin requirements for 
     swaps shall provide for the use of non-cash collateral.
       ``(C) Exclusion.--Subparagraph (B) shall not apply to a 
     swap 1 party to which is not a swap dealer or major swap 
     participant, and which is entered into before the end of the 
     90-day period that begins with the effective date of this 
     subparagraph.
       ``(D) Nonbank swap dealers and major swap participants.--
     Margin requirements for swaps set by the Commission and the 
     Securities and Exchange Commission under this subsection 
     shall be as strict as or stricter than margin requirements 
     for swaps set by the Prudential Regulators.
       ``(f) Reporting and Recordkeeping.--
       ``(1) In general.--Each registered swap dealer and major 
     swap participant--
       ``(A) shall make such reports as are prescribed by the 
     Commission by rule or regulation regarding the transactions 
     and positions and financial condition of such person;
       ``(B) for which--
       ``(i) there is a Prudential Regulator shall keep books and 
     records of all activities related to its 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;
       ``(ii) 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;
       ``(C) shall keep such books and records open to inspection 
     and examination by any representative of the Commission; and
       ``(D) shall keep any such books and records relating to 
     transactions in swaps based on one or more securities open to 
     inspection and examination by the Securities and Exchange 
     Commission.
       ``(2) Rules.--Within 365 days of the enactment of the Over-
     the-Counter Derivatives Markets Act of 2009, the Commission 
     and the Securities and Exchange Commission, in consultation 
     with the appropriate Federal banking agencies, shall jointly 
     adopt rules governing reporting and recordkeeping for swap 
     dealers, major swap participants, security-based swap 
     dealers, and major security-based swap participants.
       ``(g) Daily Trading Records.--
       ``(1) In general.--Each registered swap dealer and major 
     swap participant shall maintain daily trading records of its 
     swaps and all related records (including related cash or 
     forward transactions) and recorded communications including 
     but not limited to electronic mail, instant messages, and 
     recordings of telephone calls, for such period as may be 
     prescribed by the Commission by rule or regulation.
       ``(2) Information requirements.--The daily trading records 
     shall include such information as the Commission shall 
     prescribe by rule or regulation.
       ``(3) Customer records.--Each registered swap dealer and 
     major swap participant shall maintain daily trading records 
     for each customer or counterparty in such manner and form as 
     to be 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.
       ``(5) Rules.--Within 365 days of the enactment of the Over-
     the-Counter Derivatives Markets Act of 2009, the Commission 
     and the Securities and Exchange Commission, in consultation 
     with the appropriate Federal banking agencies, shall jointly 
     adopt rules governing daily trading records for swap dealers, 
     major swap participants, security-based swap dealers, and 
     major security-based swap participants.
       ``(h) Business Conduct Standards.--
       ``(1) In general.--Each registered swap dealer and major 
     swap participant shall conform with business conduct 
     standards as may be prescribed by the Commission by rule or 
     regulation addressing--
       ``(A) fraud, manipulation, and other abusive practices 
     involving swaps (including swaps that are offered but not 
     entered into);
       ``(B) diligent supervision of its business as a swap 
     dealer;
       ``(C) adherence to all applicable position limits;
       ``(D) the prevention of self-dealing, by limiting the 
     extent to which such a swap dealer or major swap participant 
     may conduct business with a derivatives clearing 
     organization, a board of trade, or an alternative swap 
     execution facility that clears or trades swaps and in which 
     such a swap dealer or major swap participant has a material 
     debt or equity investment; and
       ``(D) such other matters as the Commission shall determine 
     to be necessary or appropriate.
       ``(2) 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) for cleared swaps, upon the request of the 
     counterparty, the daily mark from the appropriate 
     clearinghouse and for non-cleared swaps, upon the request of 
     the counterparty, the daily mark of the swap dealer or major 
     swap participant; and
       ``(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
       ``(C) establish such other standards and requirements as 
     the Commission may determine are necessary or appropriate in 
     the public interest, for the protection of investors, or 
     otherwise in furtherance of the purposes of this Act.
       ``(3) Rules.--The Commission and the Securities and 
     Exchange Commission, in consultation with the appropriate 
     Federal banking agencies, shall jointly prescribe rules under 
     this subsection governing business conduct standards for swap 
     dealers, major swap participants, security-based swap 
     dealers, and major security-based swap participants within 
     365 days of the enactment of the Over-the-Counter Derivatives 
     Markets Act of 2009.

[[Page 31118]]

       ``(i) Documentation and Back Office Standards.--
       ``(1) In general.--Each registered swap dealer and major 
     swap participant shall conform with standards, as may be 
     prescribed by the Commission by rule or regulation, 
     addressing timely and accurate confirmation, processing, 
     netting, documentation, and valuation of all swaps.
       ``(2) Rules.--Within 365 days of the enactment of the Over-
     the-Counter Derivatives Markets Act of 2009, the Commission 
     and the Securities and Exchange Commission, in consultation 
     with the appropriate Federal banking agencies, shall adopt 
     rules governing documentation and back office standards for 
     swap dealers, major swap participants, security-based swap 
     dealers, and major security-based swap participants.
       ``(j) Dealer Responsibilities.--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) Disclosure of general information.--The swap dealer 
     or major swap participant shall disclose to the Commission 
     and to the Prudential Regulator for such 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.
       ``(3) 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 such swap dealer or major swap 
     participant, as applicable, upon request.
       ``(4) 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 
     assure 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 those whose involvement in trading or clearing 
     activities might potentially bias their judgment or 
     supervision; and
       ``(B) address such other issues as the Commission 
     determines appropriate.
       ``(5) Antitrust considerations.--Unless necessary or 
     appropriate to achieve the purposes of this Act, the swap 
     dealer or major swap participant shall avoid--
       ``(A) adopting any processes or taking any actions that 
     result in any unreasonable restraints of trade; or
       ``(B) imposing any material anticompetitive burden on 
     trading.
       ``(k) Rules.--The Commission, the Securities and Exchange 
     Commission, and the Prudential Regulators shall consult with 
     each other prior to adopting any rules under the Over-the-
     Counter Derivatives Markets Act of 2009.
       ``(l) Exemptions.--The Commission may exempt, conditionally 
     or unconditionally, a swap dealer or major swap participant 
     from the prudential requirements of the Over-the-Counter 
     Derivatives Markets Act of 2009 if the Commission finds that 
     such swap dealer or major swap participant 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 organization's home country.
       ``(m) Exemptive Authority.--
       ``(1) In general.--The Commission, by rule or regulation, 
     may conditionally or unconditionally exempt any person, 
     derivative, or transaction, or any class or classes of 
     persons, derivatives, or transactions, from any provision of 
     this Act that was added by an amendment in the Over-the-
     Counter Derivatives Markets Act of 2009, to the extent that 
     such exemption is necessary or appropriate in the public 
     interest, and is consistent with the purposes of such Act.
       ``(2) Procedures.--The Commission shall, by rule or 
     regulation, determine the procedures under which an exemptive 
     order under this subsection shall be granted and may, in its 
     sole discretion, decline to entertain any application for an 
     order of exemption under this subsection.''.

     SEC. 3108. SEGREGATION OF ASSETS HELD AS COLLATERAL IN SWAP 
                   TRANSACTIONS.

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

     ``SEC. 4T. SEGREGATION OF ASSETS HELD AS COLLATERAL IN OVER-
                   THE-COUNTER SWAP TRANSACTIONS.

       ``(a) Segregation.--At the request of a swap counterparty 
     who provides funds or other property to a swap dealer as 
     variation or initial margin or collateral to secure the 
     obligations of the counterparty under a swap between the 
     counterparty and the swap dealer that is not submitted for 
     clearing to a derivatives clearing organization, the swap 
     dealer shall segregate the funds or other property for the 
     benefit of the counterparty, and maintain the variation or 
     initial margin or collateral in an account which is carried 
     by an independent third-party custodian and designated as a 
     segregated account for the counterparty, in accordance with 
     such rules and regulations as the Commission or Prudential 
     Regulator may prescribe. If a swap counterparty is a swap 
     dealer or major swap participant who owns more than 20 
     percent of, or has more than 50 percent representation on the 
     board of directors of, a custodian, the custodian shall not 
     be considered independent from the swap counterparties for 
     purposes of the preceding sentence. This subsection shall not 
     be interpreted to preclude commercial arrangements regarding 
     the investment of the segregated funds or other property and 
     the related allocation of gains and losses resulting from any 
     such investment.
       ``(b) Back Office Audit Reporting.--If a swap dealer does 
     not segregate funds at the request of a swap counterparty in 
     accordance with subsection (a), the swap dealer shall report 
     to its counterparty on a quarterly basis that its back office 
     procedures relating to margin and collateral requirements are 
     in compliance with the agreement of the counterparties.''.

     SEC. 3109. CONFLICTS OF INTEREST.

       Section 4d of the Commodity Exchange Act (7 U.S.C. 6d) is 
     amended by--
       (1) redesignating subsection (c) as subsection (d); and
       (2) 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 
     assure 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 those whose involvement in trading or clearing 
     activities might potentially bias their judgment or 
     supervision; and
       ``(2) address such other issues as the Commission 
     determines appropriate.''.

     SEC. 3110. SWAP EXECUTION FACILITIES.

       The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended 
     by inserting after section 5g the following:

     ``SEC. 5H. SWAP EXECUTION FACILITIES.

       ``(a) Registration.--
       ``(1) In general.--
       ``(A) No person may operate a swap execution facility 
     unless the facility is registered under this section.
       ``(B) The term `swap execution facility' means an entity 
     that facilitates the execution of swaps between two persons 
     through any means of interstate commerce but which is not a 
     designated contract market.
       ``(2) Dual registration.--Any person that is required to be 
     registered as a swap execution facility under this section 
     shall register with the Commission regardless of whether that 
     person also is registered with the Securities and Exchange 
     Commission as a swap execution facility.
       ``(b) Requirements for Trading.--A swap execution facility 
     that is registered under subsection (a) may trade any swap.
       ``(c) Trading 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 trading 
     on the contract market and the swap execution facility, 
     identify whether the electronic trading is taking place on 
     the contract market or the swap execution facility.
       ``(d) Criteria for Registration.--
       ``(1) In general.--To be registered as a swap execution 
     facility, the facility shall be required to demonstrate to 
     the Commission that it meets the criteria specified herein.
       ``(2) Deterrence of abuses.--The swap execution facility 
     shall establish and enforce trading and participation rules 
     that will deter abuses and have the capacity to detect, 
     investigate, and enforce those rules, including means to--
       ``(A) obtain information necessary to perform the functions 
     required under this section; or
       ``(B) use means to--
       ``(i) provide market participants with impartial access to 
     the market; and
       ``(ii) capture information that may be used in establishing 
     whether rule violations have occurred.
       ``(3) Trading procedures.--The swap execution facility 
     shall establish and enforce rules or terms and conditions 
     defining, or specifications detailing, trading procedures to 
     be used in entering and executing orders traded on or through 
     its facilities.
       ``(4) 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 its facilities, including the clearance 
     and settlement of the swaps pursuant to section 2(j)(1).

[[Page 31119]]

       ``(e) Core Principles for Swap Execution Facilities.--
       ``(1) In general.--To maintain its registration as a swap 
     execution facility, the facility shall comply with the core 
     principles specified in this subsection and any requirement 
     that the Commission may impose by rule or regulation pursuant 
     to section 8a(5). Except where the Commission determines 
     otherwise by rule or regulation, the facility shall have 
     reasonable discretion in establishing the manner in which it 
     complies with these core principles.
       ``(2) Compliance with rules.--The swap execution facility 
     shall monitor and enforce compliance with any of the rules of 
     the facility, including the terms and conditions of the swaps 
     traded on or through the facility and any limitations on 
     access to the facility.
       ``(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.--The swap execution facility 
     shall 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 subsection;
       ``(B) provide the information to the Commission upon 
     request; and
       ``(C) have the capacity to carry out such international 
     information-sharing agreements as the Commission may require.
       ``(6) Emergency authority.--The swap execution facility 
     shall adopt rules to provide for the exercise of emergency 
     authority, in consultation or cooperation with the 
     Commission, where necessary and appropriate, including the 
     authority to liquidate or transfer open positions in any swap 
     or to suspend or curtail trading in a swap.
       ``(7) Timely publication of trading information.--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.
       ``(8) Recordkeeping and reporting.--The swap execution 
     facility shall maintain records of all activities related 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 report to the Commission all 
     information determined by the Commission to be necessary or 
     appropriate for the Commission to perform its 
     responsibilities under this Act in a form and manner 
     acceptable to the Commission. The swap execution facility 
     shall, upon request, make available to the Securities and 
     Exchange Commission all information (including information on 
     a real-time basis) relating to transactions in security-based 
     swap agreements (as defined in section 3(a)(76) of the 
     Securities Exchange Act of 1934). 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 repositories.
       ``(9) Antitrust considerations.--Unless necessary or 
     appropriate to achieve the purposes of this Act, the swap 
     execution facility shall avoid--
       ``(A) adopting any rules or taking any actions that result 
     in any unreasonable restraints of trade; or
       ``(B) imposing any material anticompetitive burden on 
     trading on the swap execution facility.
       ``(10) Conflicts of interest.--
       ``(A) The swap execution facility shall establish and 
     enforce rules to minimize conflicts of interest in its 
     decision-making process, and establish a process for 
     resolving any such conflicts of interest.
       ``(B) The rules of the swap execution facility shall 
     provide that a restricted owner shall not be permitted 
     directly or indirectly to acquire beneficial ownership of 
     interests in the facility or in persons with a controlling 
     interest in the facility, to the extent that such an 
     acquisition would result in restricted owners controlling 
     more than 20 percent of the votes entitled to be cast on any 
     matter by the holders of the ownership interests.
       ``(C) The rules of the swap execution facility shall 
     provide that a majority of the directors of the facility 
     shall not be associated with a restricted owner.
       ``(11) Designation of compliance officer.--
       ``(A) In general.--Each swap execution facility shall 
     designate an individual to serve as a compliance officer.
       ``(B) Duties.--The compliance officer shall--
       ``(i) report directly to the board or to the senior officer 
     of the facility;
       ``(ii) shall--

       ``(I) review compliance with the core principles in this 
     subsection;
       ``(II) 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;
       ``(III) be responsible for administering the policies and 
     procedures required to be established pursuant to this 
     section; and
       ``(IV) ensure compliance with commodity laws and the rules 
     and regulations issued thereunder, including rules prescribed 
     by the Commission pursuant to this section; and

       ``(iii) establish procedures for remediation of non-
     compliance issues found during compliance office reviews, 
     lookbacks, internal or external audit findings, self-reported 
     errors, or through validated complaints. Procedures will 
     establish the handling, management response, remediation, re-
     testing, and closing of non-compliant issues.
       ``(C) Annual reports required.--The compliance officer 
     shall annually prepare and sign a report on the compliance of 
     the facility with the commodity laws and its policies and 
     procedures, including its code of ethics and conflict of 
     interest policies, in accordance with rules prescribed by the 
     Commission. Such compliance report shall accompany the 
     financial reports of the facility that are required to be 
     furnished to the Commission pursuant to this section and 
     shall include a certification that, under penalty of law, the 
     report is accurate and complete.
       ``(f) Exemptions.--The Commission may exempt, conditionally 
     or unconditionally, a swap execution facility from 
     registration under this section if the Commission finds that 
     such 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 
     organization's home country.
       ``(g) Harmonization of Rules.--Within 180 days of the 
     enactment of the Over-the-Counter Derivatives Markets Act of 
     2009, the Commission and the Securities and Exchange 
     Commission shall jointly prescribe rules governing the 
     regulation of swap execution facilities under this section 
     and section 3B of the Securities Exchange Act of 1934 (15 
     U.S.C. 78c-2).''.

     SEC. 3111. DERIVATIVES TRANSACTION EXECUTION FACILITIES AND 
                   EXEMPT BOARDS OF TRADE.

       Sections 5a and 5d of the Commodity Exchange Act (7 U.S.C. 
     7 and 7a-3) are repealed.

     SEC. 3112. DESIGNATED CONTRACT MARKETS.

       (a) Section 5(d) of the Commodity Exchange Act (7 U.S.C. 
     7(d)) is amended by striking paragraph (9) and inserting the 
     following:
       ``(9) Execution of transactions.--
       ``(A) 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 
     board of trade's centralized market.
       ``(B) The rules 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.''.
       (b) Section 5(d) of the Commodity Exchange Act (7 U.S.C. 
     7(d)) is amended by striking paragraph (15) and inserting the 
     following:
       ``(15) Conflicts of interest.--
       ``(A) The board of trade shall establish and enforce rules 
     to minimize conflicts of interest in the decisionmaking 
     process of the contract market, and establish a process for 
     resolving any such conflicts of interest.
       ``(B) The rules of a board of trade that trades swaps shall 
     provide that a restricted owner shall not be permitted 
     directly or indirectly to acquire beneficial ownership of 
     interests in the board of trade or in persons with a 
     controlling interest in the board of trade, to the extent 
     that such an acquisition would result in restricted owners 
     controlling more than 20 percent of the votes entitled to be 
     cast on any matter by the holders of the ownership interests.
       ``(C) The rules of a board of trade that trades swaps shall 
     provide that a majority of the directors of the board of 
     trade shall not be associated with a restricted owner.''.
       (c) Section 5(d) of the Commodity Exchange Act (7 U.S.C. 
     7(d)) is amended by adding after paragraph (18) the 
     following:
       ``(19) Financial resources.--The board of trade shall 
     demonstrate that it has adequate financial, operational, and 
     managerial resources to discharge the responsibilities of a 
     contract market. For the board of trade's financial resources 
     to be considered adequate, their value shall exceed the total 
     amount that would enable the contract market to cover its 
     operating costs for a period of one year, calculated on a 
     rolling basis.
       ``(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

[[Page 31120]]

     procedures, and the development of automated systems, that 
     are reliable, secure, and give 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 board of trade's responsibilities and 
     obligations; and
       ``(C) periodically conduct tests to verify that back-up 
     resources are sufficient to ensure continued order processing 
     and trade matching, price reporting, market surveillance, and 
     maintenance of a comprehensive and accurate audit trail.''.

     SEC. 3113. POSITION LIMITS.

       (a) Section 4a(a) of the Commodity Exchange Act (7 U.S.C. 
     6a(a)) is amended by--
       (1) inserting ``(1)'' after ``(a)'';
       (2) striking ``on electronic trading facilities with 
     respect to a significant price discovery contract'' in the 
     first sentence and inserting ``swaps that perform or affect a 
     significant price discovery function with respect to 
     regulated markets'';
       (3) inserting ``, including any group or class of 
     traders,'' in the second sentence after ``held by any 
     person'';
       (4) striking ``on an electronic trading facility with 
     respect to a significant price discovery contract,'' in the 
     second sentence and inserting ``swaps that perform or affect 
     a significant price discovery function with respect to 
     regulated markets,''; and
       (5) inserting at the end the following:
       ``(2) Aggregate position limits.--The Commission may, by 
     rule or regulation, establish limits (including related hedge 
     exemption provisions) on the aggregate number or amount of 
     positions in contracts based upon 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) contracts traded on a foreign board of trade that 
     provides members or other participants located in the United 
     States with direct access to its electronic trading and order 
     matching system; and
       ``(C) swap contracts that perform or affect a significant 
     price discovery function with respect to regulated markets.
       ``(3) Significant price discovery function.--In making a 
     determination whether a swap performs or affects a 
     significant price discovery function with respect to 
     regulated markets, the Commission shall consider, as 
     appropriate:
       ``(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 
     regulated market based upon 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 regulated market based upon 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 regulated market 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 regulated 
     market.
       ``(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 
     it may establish under this section with respect to position 
     limits.''.
       (b) 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 electronic trading 
     facility'' and inserting ``or swap execution facility''.

     SEC. 3114. ENHANCED AUTHORITY OVER REGISTERED ENTITIES.

       (a) Section 5(d)(1) of the Commodity Exchange Act (7 U.S.C. 
     7(d)(1)) is amended by striking ``The board of trade shall 
     have'' and inserting ``Except where the Commission otherwise 
     determines by rule or regulation pursuant to section 8a(5), 
     the board of trade shall have''.
       (b) Section 5c(c) of the Commodity Exchange Act (7 U.S.C. 
     7a-2(c)) is amended to read as follows:
       ``(c) New Contracts, New Rules, and Rule Amendments.--
       ``(1) In general.--Subject to paragraph (2), 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) 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 under 
     subparagraph (A) 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 (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 for which there is 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.
       ``(3) Approval.--The Commission shall approve any such new 
     contract or instrument, new rule, or rule amendment unless 
     the Commission finds that the new contract or instrument, new 
     rule, or rule amendment would violate this Act.''.

     SEC. 3115. FOREIGN BOARDS OF TRADE.

       (a) Section 4(b) of the Commodity Exchange Act (7 U.S.C. 
     6(b)) is amended by striking ``No rule or regulation'' and 
     inserting ``Except as provided in paragraphs (1) and (2), no 
     rule or regulation''.
       (b) Section 4(b) of the Commodity Exchange Act (7 U.S.C. 
     6(b)) is further amended by inserting before ``The 
     Commission'' the following: ``(1) The Commission may adopt 
     rules and regulations requiring registration with the 
     Commission for a foreign board of trade that provides 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, including rules and regulations prescribing procedures 
     and requirements applicable to the registration of such 
     foreign boards of trade. For purposes of this paragraph, 
     `direct access' refers to an explicit grant of authority by a 
     foreign board of trade to an identified member or other 
     participant located in the United States to enter trades 
     directly into the trade matching system of the foreign board 
     of trade.
       ``(2) 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--
       ``(A) 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
       ``(B) 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--
       ``(I) the information that the foreign board of trade will 
     make publicly available;

[[Page 31121]]

       ``(II) the position limits that the foreign board of trade 
     or foreign futures authority will adopt and enforce;
       ``(III) 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
       ``(IV) 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 with information 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.
       ``(3) Paragraphs (1) and (2) shall not be effective with 
     respect to any foreign board of trade to which the Commission 
     has granted direct access permission before the date of the 
     enactment of this subsection until the date that is 180 days 
     after such date of enactment.
       ``(4)''.
       (c) Liability of Registered Persons Trading on a Foreign 
     Board of Trade.--
       (1) Section 4(a) of the Commodity Exchange Act (7. U.S.C. 
     6(a)) is amended by inserting ``or by subsection (f)'' after 
     ``Unless exempted by the Commission pursuant to subsection 
     (c)''; and
       (2) Section 4 of the Commodity Exchange Act (7 U.S.C. 6) is 
     further amended by adding at the end the following:
       ``(f) 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 subsections (b)(1) and (b)(2).''.
       (d) Contract Enforcement for Foreign Futures Contracts.--
     Section 22(a) of the Commodity Exchange Act (7 U.S.C. 25(a)) 
     is amended by adding at the end the following:
       ``(5) 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. 3116. LEGAL CERTAINTY FOR SWAPS.

       Section 22(a)(4) of the Commodity Exchange Act (7 U.S.C. 
     25(a)(4)) is amended to read as follows:
       ``(4) Contract enforcement between eligible 
     counterparties.--
       ``(A) No hybrid instrument sold to any investor shall be 
     void, voidable, or unenforceable, and no party to such hybrid 
     instrument shall be entitled to rescind, or recover any 
     payment made with respect to, such a 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) 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 thereto shall be entitled to 
     rescind, or recover any payment made with respect to, such 
     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 to meet 
     the definition of a swap set forth in section 1a or to be 
     cleared pursuant to section 2(j)(1).''.

     SEC. 3117. MULTILATERAL CLEARING ORGANIZATIONS.

       (a) Section 408(2)(C) of the Federal Deposit Insurance 
     Corporation Improvement Act of 1991 (12 U.S.C. 4421(2)(C)) is 
     amended by striking ``section 2(c), 2(d), 2(f), or 2(g) of 
     such Act, or exempted under section 2(h) or 4(c) of such 
     Act'' and inserting ``section 2(c) or 2(f) of such Act''.
       (b) Section 408 of the Federal Deposit Insurance 
     Corporation Improvement Act of 1991 (12 U.S.C. 4421) is 
     further amended by inserting at the end the following:
       ``(4) The term `over-the-counter derivative instrument' 
     does not include a swap or a security-based swap as defined 
     in sections 1a(35) and 1a(38) of the Commodity Exchange Act 
     (7 U.S.C. 1a(35) and 1a(38)).''.

     SEC. 3118. PRIMARY ENFORCEMENT AUTHORITY.

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

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

       ``(a) CFTC.--Except as provided in subsections (b), (c), 
     and (d), the Commission shall have primary authority to 
     enforce the provisions of Subtitle A of the Over-the-Counter 
     Derivatives Markets Act of 2009 with respect to any person.
       ``(b) Prudential Regulators.--The Prudential Regulators 
     shall have exclusive authority to enforce the provisions of 
     section 4s(e) and other prudential requirements of this Act 
     with respect to banks, and branches or agencies of foreign 
     banks that are swap dealers or major swap participants.
       ``(c) Referral.--If the Prudential Regulator for a swap 
     dealer or major swap participant has cause to believe that 
     such swap dealer or major swap participant may have engaged 
     in conduct that constitutes a violation of the nonprudential 
     requirements of section 4s or rules adopted by the Commission 
     thereunder, that Prudential Regulator may recommend in 
     writing to the Commission that the Commission initiate an 
     enforcement proceeding as authorized under this Act. The 
     recommendation shall be accompanied by a written explanation 
     of the concerns giving rise to the recommendation.
       ``(d) Backstop Enforcement Authority.--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 recommendation under subsection (c), 
     the Prudential Regulator may initiate an enforcement 
     proceeding as permitted under Federal law.''.

     SEC. 3119. ENFORCEMENT.

       (a) Section 4b(a)(2) of the Commodity Exchange Act (7 
     U.S.C. 6b(a)(2)) is amended by striking ``or other agreement, 
     contract, or transaction subject to paragraphs (1) and (2) of 
     section 5a(g),'' and inserting ``or swap,''.
       (b) Section 4b(b) of the Commodity Exchange Act (7 U.S.C. 
     6b(b)) is amended by striking ``or other agreement, contract 
     or transaction subject to paragraphs (1) and (2) of section 
     5a(g),'' and inserting ``or swap,''.
       (c) Section 4c(a) of the Commodity Exchange Act (7 U.S.C. 
     6c(a)) is amended by inserting ``or swap'' before ``if the 
     transaction is used or may be used''.
       (d) Section 9(a)(2) of the Commodity Exchange Act (7 U.S.C. 
     13(a)(2)) is amended by inserting ``or of any swap,'' before 
     ``or to corner''.
       (e) Section 9(a)(4) of the Commodity Exchange Act (7 U.S.C. 
     13(a)(4)) is amended by inserting ``swap repository,'' before 
     ``or futures association''.
       (f) Section 9(e)(1) of the Commodity Exchange Act (7 U.S.C. 
     13(e)(1)) is amended by inserting ``swap repository,'' before 
     ``or registered futures association'' and by inserting ``, or 
     swaps,'' before ``on the basis''.
       (g) Section 8(b) of the Federal Deposit Insurance Act (12 
     U.S.C. 1818(b)) is amended by redesignating paragraphs (6) 
     through (10) as paragraphs (7) through (11), respectively, 
     and by inserting after paragraph (5) the following:
       ``(6) This section shall apply to any swap dealer, major 
     swap participant, security-based swap dealer, major security-
     based swap participant, derivatives clearing organization, 
     swap repository or swap execution facility, whether or not it 
     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 Over-the-Counter 
     Derivatives Markets Act of 2009.''.

     SEC. 3120. RETAIL COMMODITY TRANSACTIONS.

       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))'';
       (2) in paragraph (2), by inserting after subparagraph (C) 
     the following:
       ``(D) Retail commodity transactions.--
       ``(i) 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) Clause (i) 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 their line 
     of business;

       ``(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

[[Page 31122]]

       ``(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) Sections 4(a), 4(b) and 4b shall apply to any 
     agreement, contract or transaction described in clause (i), 
     that is not excluded from clause (i) by clause (ii), as if 
     the agreement, contract, or transaction were a contract of 
     sale of a commodity for future delivery.
       ``(iv) This subparagraph shall not be construed to limit 
     any jurisdiction that the Commission may otherwise have under 
     any other provision of this Act over an agreement, contract, 
     or transaction that is a contract of sale of a commodity for 
     future delivery.
       ``(v) This subparagraph shall not be construed to limit any 
     jurisdiction that the Commission or the Securities and 
     Exchange Commission may otherwise have under any other 
     provisions of this Act with respect to security futures 
     products and persons effecting transactions in security 
     futures products.
       ``(vi) For the purposes of this subparagraph, an 
     agricultural producer, packer, or handler shall be considered 
     an eligible commercial entity for any agreement, contract, or 
     transaction for a commodity in connection with its line of 
     business.''.

     SEC. 3121. LARGE SWAP TRADER REPORTING.

       The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended 
     by adding after section 4t (as added by section 3108) the 
     following:

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

       ``(a) It shall be unlawful for any person to enter into any 
     swap that performs or affects a significant price discovery 
     function with respect to regulated markets if--
       ``(1) such person shall directly or indirectly enter into 
     such swaps during any one day in an amount equal to or in 
     excess of such amount as shall be fixed from time to time by 
     the Commission; and
       ``(2) such person shall directly or indirectly have or 
     obtain a position in such swaps equal to or in excess of such 
     amount as shall be fixed from time to time by the Commission,

     unless such person files or causes to be filed with the 
     properly designated officer of the Commission such reports 
     regarding any transactions or positions described in 
     paragraphs (1) and (2) as the Commission may by rule or 
     regulation require and unless, in accordance with the rules 
     and regulations of the Commission, such person shall keep 
     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) Such books and records shall show complete details 
     concerning all transactions and positions as the Commission 
     may by rule or regulation prescribe.
       ``(c) Such books and records shall be open at all times to 
     inspection and examination by any representative of the 
     Commission.
       ``(d) Any such books and records relating to transactions 
     in security-based swap agreements (as defined in section 
     3(a)(76) of the Securities Exchange Act of 1934) shall be 
     open at all times to inspection and examination by the 
     Securities and Exchange Commission.
       ``(e) For the purpose of this section, the swaps, futures 
     and cash or spot transactions and positions of any person 
     shall include such transactions and positions of any persons 
     directly or indirectly controlled by such person.
       ``(f) In making a determination whether a swap performs or 
     affects a significant price discovery function with respect 
     to regulated markets, the Commission shall consider the 
     factors set forth in section 4a(a)(3).''.

     SEC. 3122. AUTHORITY TO BAN ABUSIVE SWAPS.

       The Commodity Futures Trading Commission and the Securities 
     and Exchange Commission may, by rule or order, jointly 
     collect information as may be necessary concerning the 
     markets for any types of swap (as defined in section 1a(35) 
     of the Commodity Exchange Act) or security-based swap (as 
     defined in section 1a(38) of the such Act) and jointly issue 
     a report with respect to any types of swaps or security-based 
     swaps which the Commodity Futures Trading Commission and the 
     Securities and Exchange Commission find are detrimental to 
     the stability of a financial market or of participants in a 
     financial market.

     SEC. 3123. INTERNATIONAL HARMONIZATION.

       In order to promote effective and consistent global 
     regulation of swaps, the Securities and Exchange Commission, 
     the Commodity Futures Trading Commission, the Prudential 
     Regulators (as defined in section 1a(43) of the Commodity 
     Exchange Act), and the financial stability regulator, shall 
     consult and coordinate with foreign regulatory authorities on 
     the establishment of consistent international standards with 
     respect to the regulation of swaps, and may 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. 3124. AUTHORITY TO BAN ACCESS TO THE UNITED STATES 
                   FINANCIAL SYSTEM.

       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 U.S. 
     financial system, either Commission, in consultation with the 
     Secretary of the Treasury, may prohibit an entity domiciled 
     in that country from participating in the United States in 
     any swap or security-based swap activities.

     SEC. 3125. OTHER AUTHORITY.

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

     SEC. 3126. ANTITRUST.

       Nothing in the amendments made by this title shall be 
     construed to modify, impair, or supersede the operation of 
     any of the antitrust laws. For purposes of this subtitle, the 
     term ``antitrust laws'' has the same meaning given such term 
     in subsection (a) of the first section of the Clayton Act, 
     except that such term includes section 5 of the Federal Trade 
     Commission Act to the extent that such section 5 applies to 
     unfair methods of competition.

     SEC. 3127. EFFECTIVE DATE.

       This subtitle is effective 270 days after the date of 
     enactment.

         Subtitle B--Regulation of Security-Based Swap Markets

     SEC. 3201. DEFINITIONS UNDER THE SECURITIES EXCHANGE ACT OF 
                   1934.

       Section 3(a) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78c(a)) is amended--
       (1) in paragraph (5)(A) and (B), by inserting ``(but not 
     security-based swaps, other than security-based swaps with or 
     for persons that are not eligible contract participants)'' 
     after ``securities'' in each place it appears;
       (2) in paragraph (10) by inserting ``security-based swaps'' 
     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) by striking ``or government securities dealer'' and 
     inserting ``government securities dealer, security-based swap 
     dealer or major security-based swap participant'' in 
     subparagraph (B)(i)(I);
       (B) by inserting ``security-based swap dealer, major 
     security-based swap participant,'' after ``government 
     securities dealer,'' in subparagraph (B)(i)(II);
       (C) by striking ``or government securities dealer'' and 
     inserting ``government securities dealer, security-based swap 
     dealer or major security-based swap participant'' in 
     subparagraph (C); and
       (D) by inserting ``security-based swap dealer, major 
     security-based swap participant,'' after ``government 
     securities dealer,'' in subparagraph (D); 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(13) of the Commodity Exchange Act (7 U.S.C. 1a(13)).
       ``(66) Major swap participant.--The term `major swap 
     participant' has the same meaning as in section 1a(40) of the 
     Commodity Exchange Act (7 U.S.C. 1a(40)).
       ``(67) Major security-based swap participant.--The term 
     `major security-based swap participant' has the same meaning 
     as in section 1a(41) of the Commodity Exchange Act (7 U.S.C. 
     1a(41)).
       ``(68) Security-based swap.--The term `security-based swap' 
     has the same meaning as in section 1a(38) of the Commodity 
     Exchange Act (7 U.S.C. 1a(38)).
       ``(69) Swap.--The term `swap' has the same meaning as in 
     section 1a(35) of the Commodity Exchange Act (7 U.S.C. 
     1a(35)).
       ``(70) Person associated with a security-based swap dealer 
     or major security-based swap participant.--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' has the same meaning as in section 1a(48) of the 
     Commodity Exchange Act (7 U.S.C. 1a(48)).
       ``(71) Security-based swap dealer.--The term `security-
     based swap dealer' has the same meaning as in section 1a(44) 
     of the Commodity Exchange Act (7 U.S.C. 1a(44)).
       ``(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(43) of the 
     Commodity Exchange Act (7 U.S.C. 1a(43)).
       ``(75) Swap dealer.--The term `swap dealer' has the same 
     meaning as in section 1a(39)

[[Page 31123]]

     of the Commodity Exchange Act (7 U.S.C. 1a(39)).
       ``(76) Security-based swap agreement.--
       ``(A) In general.--For purposes of sections 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.
       ``(77) Restricted owner.--The term `restricted owner' has 
     the same meaning as in section 1a(51) of the Commodity 
     Exchange Act.''.

     SEC. 3202. REPEAL OF PROHIBITION ON REGULATION OF SECURITY-
                   BASED SWAPS.

       (a) Repeal of Law.--Section 206B of the Gramm-Leach-Bliley 
     Act (15 U.S.C. 78c note) is repealed.
       (b) Conforming Amendments to the Securities Act of 1933.--
       (1) Section 2A(b) of the Securities Act of 1933 (15 U.S.C. 
     77b-1) is amended by striking ``(as defined in section 206B 
     of the Gramm-Leach-Bliley Act)'' each place that such term 
     appears.
       (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 ``206B of the Gramm-Leach-Bliley Act'' and 
     inserting ``3(a)(76) of the Securities Exchange Act of 
     1934''; and
       (B) in subsection (d), by striking ``206B of the Gramm-
     Leach-Bliley Act'' and inserting ``3(a)(76) 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 as follows:
       (1) Section 3A (15 U.S.C. 78c-1) is amended by striking 
     ``(as defined in section 206B of the Gramm-Leach-Bliley 
     Act)'' each place that the term appears.
       (2) Section 9(a) (15 U.S.C. 78i(a)) is amended by striking 
     paragraphs (2) through (5) and inserting:
       ``(2) To effect, alone or with one or more other persons, a 
     series of transactions in any security registered on a 
     national securities exchange 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, or a security-based swap or security-based swap 
     agreement with respect to such security, to induce the 
     purchase or sale of any security registered on a national 
     securities exchange or any security-based swap or 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 one 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, or 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 or 
     any security-based swap or security-based swap agreement with 
     respect to such security, for the purpose of inducing the 
     purchase or sale of such security or such security-based swap 
     or 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 he knew or had reasonable ground to believe 
     was so false or misleading.
       ``(5) For a consideration, received directly or indirectly 
     from 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, or 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 or any security-based swap or 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 one or more persons conducted 
     for the purpose of raising or depressing the price of such 
     security.''.
       (3) Section 9(i) (15 U.S.C. 78i(i)) is amended by striking 
     ``(as defined in section 206B of the Gramm-Leach-Bliley 
     Act)'';
       (4) Section 10 (15 U.S.C. 78j) is amended by striking ``(as 
     defined in section 206B of the Gramm-Leach-Bliley Act)'' each 
     place that the term appears.
       (5) Section 15(c)(1) is amended--
       (A) in subparagraph (A), by striking ``, or any security-
     based swap agreement (as defined in section 206B of the 
     Gramm-Leach-Bliley Act),''; and
       (B) in subparagraphs (B) and (C), by striking ``agreement 
     (as defined in section 206B of the Gramm-Leach-Bliley Act)'' 
     in each place that the term appears.
       (6) Section 15(i) (15 U.S.C. 78o(i), as added by section 
     303(f) of the Commodity Futures Modernization Act of 2000 
     (Public Law 106-554; 114 Stat. 2763A-455) is amended by 
     striking ``(as defined in section 206B of the Gramm-Leach-
     Bliley Act)''.
       (7) Section 16 (15 U.S.C. 78p) is amended--
       (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 (b), by striking ``(as defined in section 
     206B of the Gramm-Leach-Bliley Act)'' in each place that the 
     term appears; and
       (C) in subsection (g), by striking ``(as defined in section 
     206B of the Gramm-Leach-Bliley Act)'';
       (8) Section 20 (15 U.S.C. 78t) is amended--
       (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)''; and
       (9) Section 21A (15 U.S.C. 78u-1) is amended--
       (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. 3203. 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 
     adding the following section after section 3A:

     ``SEC. 3B. CLEARING OF SECURITY-BASED SWAPS.

       ``(a) Clearing Requirement.--
       ``(1) In general.--
       ``(A) Presumption of clearing.--A security-based swap shall 
     be submitted for clearing if a clearing agency that is 
     registered under this Act will accept the security-based swap 
     for clearing;
       ``(B) Open access.--The rules of a clearing agency 
     described in subparagraph (A) shall--
       ``(i) prescribe that all security-based swaps submitted to 
     the clearing agency with the same terms and conditions are 
     fungible and may be offset with each other; and
       ``(ii) provide for non-discriminatory clearing of a 
     security-based swap executed on or through the rules of an 
     unaffiliated exchange or alternative swap execution facility.
       ``(2) Commission approval.--
       ``(A) In general.--A clearing agency shall submit to the 
     Commission for prior approval each security-based swap, or 
     any group, category, type or class of security-based swaps, 
     that it 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. A 
     request on which the Commission fails to take final action 
     within the time limitation established under this 
     subparagraph shall be deemed approved.
       ``(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 it finds that the 
     request is consistent with the core principles specified 
     under subsection (l).
       ``(D) Rules.--Not later than 180 days after the date of 
     enactment of the Over-the-Counter Derivatives Markets Act of 
     2009, the Commission shall adopt rules for a clearing 
     agency's submission for approval, pursuant to this paragraph, 
     of a security-based swap, or a group, category, type or class 
     of security-based swaps, that it 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 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), the Commission may--

[[Page 31124]]

       ``(i) determine, unconditionally or subject to such terms 
     and conditions as the Commission determines to be 
     appropriate, that the security-based swap, or group, 
     category, type or class of security-based swaps, must be 
     cleared pursuant to this subsection if it finds that such 
     clearing is consistent with the securities laws; or
       ``(ii) determine that the clearing requirement of paragraph 
     (1) shall not apply to the security-based swap, or group, 
     category, type or class of security-based swaps.
       ``(D) Rules.--Not later than 180 days after the date of 
     enactment of the Over-the-Counter Derivatives Markets Act of 
     2009, 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 it has accepted for clearing.
       ``(4) Prevention of evasion.--The Commission and the 
     Commodities Futures Trading Commission shall have authority 
     to prescribe rules under this section, or issue 
     interpretations of such rules, as necessary to prevent 
     evasions of this Act. Any such rules or interpretations of 
     rules shall be prescribed and issued jointly by both 
     Commissions.
       ``(5) Required reporting.--
       ``(A) In general.--Any security-based swap that is not 
     accepted for clearing by any clearing agency shall be 
     reported to either a 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 within such time period as the Commission may by 
     rule prescribe.
       ``(B) Reporting by security-based swap dealers and major 
     security-based swap participants.--In transactions where 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 transaction. In transactions where neither counterparty 
     is a security-based swap dealer or major security-based swap 
     participant, only 1 counterparty shall be required to report 
     the transaction and the counterparties shall determine the 
     reporting party by contract or otherwise.
       ``(6) Transition rules.--Rules adopted by the Commission 
     under this section shall provide for the reporting of data, 
     as follows:
       ``(A) Security-based swaps that were entered into before 
     the date of enactment of the Over-the-Counter Derivatives 
     Markets Act of 2009 shall be reported to a registered 
     security-based swap repository or the Commission no later 
     than 180 days after the effective date of such Act.
       ``(B) Security-based swaps that were entered into on or 
     after the date of enactment of the Over-the-Counter 
     Derivatives Markets Act of 2009 shall be reported to a 
     registered security-based swap repository or the Commission 
     no later than the later of--
       ``(i) 90 days after the effective date of such Act; or
       ``(ii) such other time after entering into the swap as the 
     Commission may prescribe by rule or regulation.
       ``(7) Exception.--The requirements of paragraph (1) shall 
     not apply to a security-based swap if--
       ``(A) no clearing agency registered under this Act will 
     accept the security-based swap for clearing; or
       ``(B) one of the counterparties to the security-based swap 
     is not a security-based swap dealer or major security-based 
     swap participant.
       ``(8) Exclusion.--Paragraph (1) shall not apply to a 
     security-based swap one party to which is not a security-
     based swap dealer or major security-based swap participant, 
     and which is entered into before the end of the 180-day 
     period that begins with the effective date of this paragraph.
       ``(b) Consultation.--The Commission and the Commodity 
     Futures Trading Commission shall consult with the appropriate 
     Federal banking agencies and each other prior to adopting 
     rules under this section.''.
       (b) Clearing Agency Requirements.--Section 17A of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78q) is amended by 
     adding at the end the following new subsections:
       ``(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 swap.
       ``(h) Voluntary Registration.--
       ``(1) Clearing agencies.--A person that clears agreements, 
     contracts, or transactions that are not required to be 
     cleared under this Act may register with the Commission as a 
     clearing agency.
       ``(2) Derivatives clearing organizations.--A clearing 
     agency may clear swaps that are required to be cleared by a 
     person who is registered as a derivatives clearing 
     organization under the Commodity Exchange Act (7 U.S.C. 1, et 
     seq.).
       ``(i) Required Registration for Banks and Clearing 
     Agencies.--A person that is required to be registered as a 
     clearing agency under this section shall register with the 
     Commission regardless of whether the person is also a bank or 
     a derivatives clearing organization registered with the 
     Commodity Futures Trading Commission under the Commodity 
     Exchange Act (7 U.S.C. 1, et seq.).
       ``(j) Reporting.--
       ``(1) In general.--A clearing agency that clears security-
     based swaps shall provide to the Commission and any 
     designated swap repository all information determined by the 
     Commission to be necessary to perform its responsibilities 
     under this Act. The Commission shall adopt data collection 
     and maintenance requirements for security-based swaps cleared 
     by clearing agencies that are comparable to the corresponding 
     requirements for security-based swaps accepted by security-
     based swap repositories and security-based swaps traded on 
     swap execution facilities. The Commission shall share such 
     information, upon request, with the Board, the Commodity 
     Futures Trading Commission, the appropriate Federal banking 
     agencies, the Financial Services Oversight Council, and the 
     Department of Justice or to other persons the Commission 
     deems appropriate, including foreign financial supervisors 
     (including foreign futures authorities), foreign central 
     banks, and foreign ministries.
       ``(2) Public information.--A clearing agency that clears 
     security-based swaps shall provide to the Commission, or its 
     designee, such information as is required by, and in a form 
     and at a frequency to be determined by, the Commission, in 
     order to comply with the public reporting requirements 
     contained in section 13.
       ``(k) Designation of Compliance Officer.--
       ``(1) In general.--Each clearing agency that clears 
     security-based swaps shall designate an individual to serve 
     as a compliance officer.
       ``(2) Duties.--The compliance officer shall--
       ``(A) report directly to the board or to the senior officer 
     of the clearing agency;
       ``(B) in consultation with the board of the clearing 
     agency, a body performing a function similar to that of a 
     board, or the senior officer of the clearing agency, resolve 
     any conflicts of interest that may arise;
       ``(C) be responsible for administering the policies and 
     procedures required to be established pursuant to this 
     section;
       ``(D) ensure compliance with securities laws and the rules 
     and regulations issued thereunder, including rules prescribed 
     by the Commission pursuant to this section; and
       ``(E) establish procedures for remediation of noncompliance 
     issues found during compliance office reviews, lookbacks, 
     internal or external audit findings, self-reported errors, or 
     through validated complaints which will establish the 
     handling, management response, remediation, retesting, and 
     closing of noncompliance issues.
       ``(3) Annual reports required.--The compliance officer 
     shall annually prepare and sign a report on the compliance of 
     the clearing agency with the securities laws and its policies 
     and procedures, including its code of ethics and conflict of 
     interest policies, in accordance with rules prescribed by the 
     Commission. Such compliance report shall accompany the 
     financial reports of the clearing agency that are required to 
     be furnished to the Commission pursuant to this section and 
     shall include a certification that, under penalty of law, the 
     report is accurate and complete.
       ``(l) Standards for Clearing Agencies Clearing Swap 
     Transactions.--To be registered and to maintain registration 
     as a clearing agency that clears 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.
       ``(m) Consultation.--The Commission and the Commodity 
     Futures Trading Commission shall consult with the appropriate 
     Federal banking agencies and each other prior to adopting 
     rules under this section.
       ``(n) Harmonization of Rules.--Not later than 180 days 
     after the effective date of the Over-the-Counter Derivatives 
     Markets Act of 2009, the Commission and the Commodity Futures 
     Trading Commission shall jointly adopt uniform rules 
     governing persons that are registered as derivatives clearing 
     organizations for swaps under the Commodity Exchange Act (7 
     U.S.C. 1, et seq.) and persons that are registered as 
     clearing agencies for security-based swaps under the 
     Securities Exchange Act of 1934 (15 U.S.C. 78a, et seq.).''.
       (c) Execution of Security-based Swaps.--The Securities 
     Exchange Act of 1934 (15 U.S.C. 78a, et seq.) is amended by 
     inserting after section 5 the following:

     ``SEC. 5A. EXECUTION OF SECURITY-BASED SWAPS.

       ``(a) Trade Execution.--
       ``(1) In general.--With respect to transactions involving 
     security-based swaps subject to the clearing requirement of 
     section 3B and where both counterparties are either security-
     based swap dealers or major security-based swap participants, 
     such counterparties shall--

[[Page 31125]]

       ``(A) execute the transaction on a national securities 
     exchange registered pursuant to section 6(a) (in which event 
     such transaction shall be subject to regulation under this 
     title as a transaction in a security); or
       ``(B) execute the transaction on a swap execution facility 
     registered with the Commission.
       ``(2) Exception.--The requirements of subparagraphs (A) or 
     (B) of paragraph (1) shall not apply if no board of trade or 
     swap execution facility makes the swap available to trade.
       ``(3) Required reporting.--If the exception of 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 as may 
     be prescribed by the Commission with respect to security-
     based swaps subject to the requirements of section 3B and 
     where both counterparties are either security-based swap 
     dealers or major security-based swap participants.
       ``(b) Exchange Trading.--In adopting rules and regulations, 
     the Commission shall endeavor to eliminate unnecessary 
     impediments to the trading on national securities exchanges 
     or swap execution facilities, agreements or transactions that 
     would be commodity swaps but for the trading of such 
     contracts, agreements or transactions on such a designated 
     contract market.''.
       (d) Swap Execution Facilities.--The Securities Exchange Act 
     of 1934 (15 U.S.C. 78a, et seq.) is further amended by adding 
     after section 3B (as added by subsection (a)) the following:

     ``SEC. 3C. SWAP EXECUTION FACILITIES.

       ``(a) Registration.--
       ``(1) In general.--
       ``(A) No person may operate a swap execution facility 
     unless such facility is registered under this section.
       ``(B) For purposes of this section, the term `swap 
     execution facility' means an entity that facilitates the 
     execution of swaps between 2 persons through any means of 
     interstate commerce but which is not a designated contract 
     market.
       ``(2) Dual registration.--Any person that is required to be 
     registered as a swap execution facility under this section 
     shall register with the Commission regardless of whether that 
     person also is registered with the Commodity Futures Trading 
     Commission as a swap execution facility.
       ``(b) Requirements for Trading.--A swap execution facility 
     that is registered under subsection (a) may trade any 
     security-based swap.
       ``(c) Trading by Exchanges.--An exchange shall, to the 
     extent that the exchange also operates a swap execution 
     facility and uses the same electronic trade execution system 
     for trading on the exchange and the swap execution facility, 
     identify whether the electronic trading is taking place on 
     the exchange or the swap execution facility.
       ``(d) Criteria for Registration.--
       ``(1) In general.--To be registered as a swap execution 
     facility, the facility shall be required to demonstrate to 
     the Commission that it meets the criteria specified herein.
       ``(2) Deterrence of abuses.--The swap execution facility 
     shall establish and enforce trading and participation rules 
     that will deter abuses and have the capacity to detect, 
     investigate, and enforce those rules, including means to--
       ``(A) obtain information necessary to perform the functions 
     required under this section; or
       ``(B) use means to--
       ``(i) provide market participants with impartial access to 
     the market; and
       ``(ii) capture information that may be used in establishing 
     whether rule violations have occurred.
       ``(3) Trading procedures.--The swap execution facility 
     shall establish and enforce rules or terms and conditions 
     defining, or specifications detailing, trading procedures to 
     be used in entering and executing orders traded on or through 
     its facilities.
       ``(4) Financial integrity of transactions.--The swap 
     execution facility shall establish and enforce rules and 
     procedures for ensuring the financial integrity of security-
     based swaps entered on or through its facilities, including 
     the clearance and settlement of the security-based swaps.
       ``(e) Core Principles for Swap Execution Facilities.--
       ``(1) In general.--To maintain its registration as a swap 
     execution facility, the facility shall comply with the core 
     principles specified in this subsection and any requirement 
     that the Commission may impose by rule or regulation. Except 
     where the Commission determines otherwise by rule or 
     regulation, the facility shall have reasonable discretion in 
     establishing the manner in which it complies with these core 
     principles.
       ``(2) Compliance with rules.--The swap execution facility 
     shall monitor and enforce compliance with any of the rules of 
     the facility, including the terms and conditions of the 
     security-based swaps traded on or through the facility and 
     any limitations on access to the facility.
       ``(3) Security-based swaps not readily susceptible to 
     manipulation.--The swap execution facility shall permit 
     trading only in security-based swaps that are not readily 
     susceptible to manipulation.
       ``(4) Monitoring of trading.--The swap execution facility 
     shall monitor trading in security-based swaps to prevent 
     manipulation and price distortion 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 subsection;
       ``(B) provide the information to the Commission upon 
     request; and
       ``(C) have the capacity to carry out such international 
     information-sharing agreements as the Commission may require.
       ``(6) Emergency authority.--The swap execution facility 
     shall adopt rules to provide for the exercise of emergency 
     authority, in consultation or cooperation with the 
     Commission, where necessary and appropriate, including the 
     authority to suspend or curtail trading in a security-based 
     swap.
       ``(7) Timely publication of trading information.--The swap 
     execution facility shall make public timely information on 
     price, trading volume, and other trading data to the extent 
     prescribed by the Commission.
       ``(8) Recordkeeping and reporting.--The swap execution 
     facility shall maintain records of all activities related 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 report to the Commission all 
     information determined by the Commission to be necessary or 
     appropriate for the Commission to perform its 
     responsibilities under this Act in a form and manner 
     acceptable to the Commission. The Commission shall adopt data 
     collection and reporting requirements for swap execution 
     facilities that are comparable to corresponding requirements 
     for clearing agencies and security-based swap repositories.
       ``(9) Antitrust considerations.--Unless necessary or 
     appropriate to achieve the purposes of this Act, the swap 
     execution facility shall avoid--
       ``(A) adopting any rules or taking any actions that result 
     in any unreasonable restraints of trade; or
       ``(B) imposing any material anticompetitive burden on 
     trading on the swap execution facility.
       ``(10) Conflicts of interest.--
       ``(A) In general.--The swap execution facility shall 
     establish and enforce rules to minimize conflicts of interest 
     in its decision-making process and establish a process for 
     resolving such conflicts of interest.
       ``(B) Beneficial ownership by a restricted owner.--The 
     rules of the swap execution facility shall provide that a 
     restricted owner shall not be permitted directly or 
     indirectly to acquire beneficial ownership of interests in 
     the facility or in persons with a controlling interest in the 
     facility, to the extent that such an acquisition would result 
     in restricted owners controlling more than 20 percent of the 
     votes entitled to be cast on any matter by the holders of the 
     ownership interests.
       ``(C) Association with a restricted owner.--The rules of 
     the swap execution facility shall provide that a majority of 
     the directors of the facility shall not be associated with a 
     restricted owner.
       ``(11) Designation of compliance officer.--
       ``(A) In general.--Each swap execution facility shall 
     designate an individual to serve as a compliance officer.
       ``(B) Duties.--The compliance officer--
       ``(i) shall report directly to the board or to the senior 
     officer of the facility;
       ``(ii) shall--

       ``(I) review compliance with the core principles in section 
     3B(e);
       ``(II) 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;
       ``(III) be responsible for administering the policies and 
     procedures required to be established pursuant to this 
     section; and
       ``(IV) ensure compliance with securities laws and the rules 
     and regulations issued thereunder, including rules prescribed 
     by the Commission pursuant to this section; and

       ``(iii) shall establish procedures for remediation of non-
     compliance issues found during compliance office reviews, 
     lookbacks, internal or external audit findings, self-reported 
     errors, or through validated complaints. Procedures will 
     establish the handling, management response, remediation, 
     retesting, and closing of noncompliant issues.
       ``(C) Annual reports required.--The compliance officer 
     shall annually prepare and sign a report on the compliance of 
     the facility with the securities laws and its policies and 
     procedures, including its code of ethics and conflict of 
     interest policies, in accordance with rules prescribed by the 
     Commission. Such compliance report shall accompany the 
     financial reports of the facility that are required to be 
     furnished to the Commission pursuant to this section and 
     shall include a certification that, under penalty of law, the 
     report is accurate and complete.

[[Page 31126]]

       ``(f) Exemptions.--The Commission may exempt, conditionally 
     or unconditionally, a swap execution facility from 
     registration under this section if the Commission finds that 
     such organization is subject to comparable, comprehensive 
     supervision and regulation on a consolidated basis by the 
     Commodity Futures Trading Commission, a Prudential Regulator 
     or the appropriate governmental authorities in the 
     organization's home country.
       ``(g) Harmonization of Rules.--Not later than 180 days 
     after the date of enactment of the Over-the-Counter 
     Derivatives Markets Act of 2009, the Commission and the 
     Commodity Futures Trading Commission shall jointly prescribe 
     rules governing the regulation of swap execution facilities 
     under this section and section 5h of the Commodity Exchange 
     Act (7 U.S.C. 7b-3).''.
       (e) Segregation of Assets Held as Collateral in Swap 
     Transactions.--The Securities Exchange Act of 1934 (15 U.S.C. 
     78a, et seq.) is further amended by adding after section 3C 
     (as added by subsection (b)) the following:

     ``SEC. 3D. SEGREGATION OF ASSETS HELD AS COLLATERAL IN OVER-
                   THE-COUNTER SWAP TRANSACTIONS.

       ``(a) Segregation.--At the request of a counterparty to a 
     security-based swap who provides funds or other property to a 
     swap dealer as variation or initial margin or collateral to 
     secure the obligations of the counterparty under a security-
     based swap between the counterparty and the swap dealer that 
     is not submitted for clearing to a derivatives clearing 
     agency, the swap dealer shall segregate the variation or 
     initial margin or collateral for the benefit of the 
     counterparty, and maintain the variation or initial margin or 
     collateral in an account which is carried by an independent 
     third-party custodian and designated as a segregated account 
     for the counterparty, in accordance with such rules and 
     regulations as the Commission or Prudential Regulator may 
     prescribe. If a securities-based swap counterparty is a swap 
     dealer or major securities-based swap participant who owns 
     more than 20 percent of, or has more than 50 percent 
     representation on the board of directors of, a custodian, the 
     custodian shall not be considered independent from the 
     securities-based swap counterparties for purposes of the 
     preceding sentence. This subsection shall not be interpreted 
     to preclude commercial arrangements regarding the investment 
     of the segregated funds or other property and the related 
     allocation of gains and losses resulting from any such 
     investment.
       ``(b) Back Office Audit Reporting.--If a security-based 
     swap dealer does not segregate funds at the request of a 
     security-based swap counterparty in accordance with 
     subsection (a), the security-based swap dealer shall report 
     to its counterparty on a quarterly basis that its back office 
     procedures relating to margin and collateral requirements are 
     in compliance with the agreement of the counterparties.''.
       (f) Trading in Security-based Swap Agreements.--Section 6 
     of the Securities Exchange Act of 1934 (15 U.S.C. 78f) is 
     amended by adding at the end the following:
       ``(l) 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).''.
       (g) Additions of Security-based Swaps to Certain 
     Enforcement Provisions.--Paragraphs (1) through (3) of 
     section 9(b) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78i(b)(1)-(3)) are amended to read as follows:
       ``(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 he 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 he has reason to believe has, and who actually 
     has, directly or indirectly, any interest in (A) any 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.''.
       (h) Rulemaking Authority To Prevent Fraud, Manipulation, 
     and Deceptive Conduct in Security-based Swaps and Security-
     based Swap Agreements.--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 or any security-based swap 
     agreement, 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.''.
       (i) Position Limits and Position Accountability for 
     Security-based Swaps.--The Securities Exchange Act of 1934 is 
     further amended by inserting after section 10B (15 U.S.C. 
     78j-1) (as added by section 2003(a)) the following new 
     section:

     ``SEC. 10C. 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 may, 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 or security-based swap 
     agreement 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 or 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 security-based swap 
     agreement 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 section 3(a)(76) and (B) any security-based swap 
     and any other instrument relating to the same security or 
     group or index of securities.
       ``(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 it 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 
     or other security-based swap agreement; and
       ``(B) to adopt rules reasonably designed to ensure 
     compliance with requirements prescribed by the Commission 
     under subparagraph (A).
       ``(2) Requirement to aggregate positions.--In establishing 
     such limits, 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 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 security-based swap 
     agreement and any other instrument relating to such security 
     or loan or group or index of securities or loans; or
       ``(B)(i) any security-based swap;
       ``(ii) 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 section 3(a)(76); and
       ``(iii) any security-based swap and any other instrument 
     relating to the same security or group or 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 security-based swap agreement and 
     any security or loan or group or index of securities or loans 
     as set forth in paragraphs (1) and (2) of subsection (a) to 
     report such information as the Commission may prescribe 
     regarding any position or positions in any security-based 
     swap or security-based swap agreement and any security or 
     loan or group or index of securities or loans and any other 
     instrument relating to such security or loan or group or 
     index of securities or loans as set forth in paragraphs (1) 
     and (2) of subsection (a).''.
       (j) Public Reporting and Repositories for Security-based 
     Swap Agreements.--Section 13 of the Securities Exchange Act 
     of 1934 (15 U.S.C. 78m) is amended by adding at the end the 
     following:

[[Page 31127]]

       ``(m) Public Reporting of Aggregate Security-based Swap 
     Data.--
       ``(1) In general.--The Commission, or a person designated 
     by the Commission pursuant to paragraph (2), 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 security-based swap trading volumes and 
     positions from the sources set forth in paragraph (3).
       ``(2) Designee of the commission.--The Commission may 
     designate a clearing agency or a security-based swap 
     repository to carry out the public reporting described in 
     paragraph (1).
       ``(3) Sources of information.--The sources of the 
     information to be publicly reported as described in paragraph 
     (1) are--
       ``(A) clearing agencies pursuant to section 3A;
       ``(B) security-based swap repositories pursuant to 
     subsection (n); and
       ``(C) reports received by the Commission pursuant to 
     section 13A.
       ``(n) Security-based Swap Repositories.--
       ``(1) Registration requirement.--
       ``(A) In general.--It shall be unlawful for a security-
     based swap repository, 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 repository.
       ``(B) Inspection and examination.--Registered security-
     based swap repositories shall be subject to inspection and 
     examination by any representatives of the Commission.
       ``(2) 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 
     security-based swap repository.
       ``(B) Data collection and maintenance.--The Commission 
     shall prescribe data collection and data maintenance 
     standards for security-based swap 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 
     that clear security-based swaps.
       ``(3) Duties.--A security-based swap repository shall--
       ``(A) accept data prescribed by the Commission for each 
     security-based swap under this paragraph (2);
       ``(B) maintain such data in such form and manner and for 
     such period as may be required by the Commission;
       ``(C) provide to the Commission, or its designee, such 
     information as is required by, and in a form and at a 
     frequency to be determined by, the Commission, in order to 
     comply with the public reporting requirements contained in 
     subsection (m); and
       ``(D) make available, on a confidential basis, all data 
     obtained by the security-based swap repository, including 
     individual counterparty trade and position data, to the 
     Commission, the appropriate Federal banking agencies, the 
     Commodity Futures Trading Commission, the Financial Services 
     Oversight Council, and the Department of Justice or to other 
     persons the Commission deems appropriate, including foreign 
     financial supervisors (including foreign futures 
     authorities), foreign central banks, and foreign ministries.
       ``(4) Required registration for security-based swap 
     repositories.--Any person that is required to be registered 
     as a securities-based swap repository under this subsection 
     shall register with the Commission, regardless of whether 
     that person also is registered with the Commodity Futures 
     Trading Commission as a swap repository.
       ``(5) Harmonization of rules.--Not later than 180 days 
     after the date of enactment of the Over-the-Counter 
     Derivatives Markets Act of 2009, the Commission and the 
     Commodity Futures Trading Commission shall jointly adopt 
     uniform rules governing persons that are registered under 
     this section and persons that are registered as swap 
     repositories under the Commodity Exchange Act (7 U.S.C. 1, et 
     seq.), including uniform rules that specify the data elements 
     that shall be collected and maintained by each repository.
       ``(6) Exemptions.--The Commission may exempt, conditionally 
     or unconditionally, a security-based swap repository from the 
     requirements of this section if the Commission finds that 
     such security-based swap repository is subject to comparable, 
     comprehensive supervision or regulation on a consolidated 
     basis by the Commodity Futures Trading Commission, a 
     Prudential Regulator or the appropriate governmental 
     authorities in the organization's home country.''.

     SEC. 3204. REGISTRATION AND REGULATION OF SWAP DEALERS AND 
                   MAJOR 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) It shall be unlawful for any person to act as a 
     security-based swap dealer unless such person is registered 
     as a security-based swap dealer with the Commission.
       ``(2) It shall be unlawful for any person to act as a major 
     security-based swap participant unless such 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.--The application shall be made in such form 
     and manner as prescribed by the Commission, giving any 
     information and facts as the Commission may deem necessary 
     concerning the business in which the applicant is or will be 
     engaged. Such person, when registered as a security-based 
     swap dealer or major security-based swap participant, shall 
     continue to report and furnish to the Commission such 
     information pertaining to such person's business as the 
     Commission may require.
       ``(3) Expiration.--Each registration shall expire at such 
     time as the Commission may by rule or regulation prescribe.
       ``(4) Rules.--Except as provided in subsections (c), (d) 
     and (e), the Commission may prescribe rules applicable to 
     security-based swap dealers and major security-based swap 
     participants, including rules that limit the activities of 
     security-based swap dealers and major security-based swap 
     participants. Except as provided in subsections (c) and (e), 
     the Commission may provide conditional or unconditional 
     exemptions from rules prescribed under this section for 
     security-based swap dealers and major security-based swap 
     participants that are subject to substantially similar 
     requirements as brokers or dealers.
       ``(5) Transition.--Rules adopted under this section shall 
     provide for the registration of security-based swap dealers 
     and major security-based swap participants no later than 1 
     year after the effective date of the Over-the-Counter 
     Derivatives Markets Act of 2009.
       ``(c) Dual Registration.--
       ``(1) Security-based swap dealers.--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 that person also is a bank or is 
     registered with the Commodity Futures Trading Commission as a 
     swap dealer.
       ``(2) Major security-based swap participants.--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 that person also is a bank 
     or is registered with the Commodity Futures Trading 
     Commission as a major swap participant.
       ``(d) Joint Rules.--
       ``(1) In general.--Not later than 180 days after the 
     effective date of the Over-the-Counter Derivatives Markets 
     Act of 2009, the Commission and the Commodity Futures Trading 
     Commission shall jointly adopt uniform rules for persons that 
     are registered as security-based swap dealers or major 
     security-based swap participants under this Act and persons 
     that are registered as swap dealers or major swap 
     participants under the Commodity Exchange Act (7 U.S.C. 1, et 
     seq.).
       ``(2) Exception for prudential requirements.--The 
     Commission and the Commodity Futures Trading Commission shall 
     not prescribe rules imposing prudential requirements 
     (including activity restrictions) on security-based swap 
     dealers or major security-based swap participants for which 
     there is a Prudential Regulator. This provision shall not be 
     construed as limiting the authority of the Commission and the 
     Commodity Futures Trading Commission to prescribe appropriate 
     business conduct, reporting, and recordkeeping requirements 
     to protect investors.
       ``(e) Capital and Margin Requirements.--
       ``(1) In general.--
       ``(A) Bank security-based swap dealers and major security-
     based swap participants.--Each registered security-based swap 
     dealer and major security-based swap participant for which 
     there is a Prudential Regulator shall meet such minimum 
     capital requirements and minimum margin requirements as the 
     Prudential Regulators shall by rule or regulation jointly 
     prescribe to help ensure the safety and soundness of the 
     security-based swap dealer or major security-based swap 
     participant.
       ``(B) Nonbank security-based swap dealers and major 
     security-based swap participants.--Each registered security-
     based swap dealer and major security-based swap participant 
     for which there is not a Prudential Regulator shall meet such 
     minimum capital requirements and minimum margin requirements 
     as the Commission and the Commodity Futures Trading 
     Commission shall by rule or regulation jointly prescribe to 
     help ensure the safety and soundness of the security-based 
     swap dealer or major security-based swap participant.
       ``(2) Joint rules.--
       ``(A) Bank security-based swap dealers and major security-
     based swap participants.--Within 180 days of the enactment of 
     the Over-the-Counter Derivatives Markets Act of 2009, the 
     Prudential Regulators, in

[[Page 31128]]

     consultation with the Commission and the Commodity Futures 
     Trading Commission, shall jointly adopt rules imposing 
     capital and margin requirements under this subsection for 
     security-based swap dealers and major security-based swap 
     participants.
       ``(B) Nonbank security-based swap dealers and major 
     security-based swap participants.--Within 180 days of the 
     enactment of the Over-the-Counter Derivatives Markets Act of 
     2009, the Commission and the Commodity Futures Trading 
     Commission, in consultation with the Prudential Regulators, 
     shall jointly adopt rules imposing capital and margin 
     requirements under this subsection for security-based swap 
     dealers and major security-based swap participants for which 
     there is no Prudential Regulator.
       ``(3) Capital.--
       ``(A) Bank security-based swap dealers and major security-
     based swap participants.--In setting capital requirements 
     under this subsection, the Prudential Regulators shall 
     impose--
       ``(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 centrally cleared, higher capital 
     requirements for security-based swaps that are not cleared by 
     a clearing agency than for security-based swaps that are 
     centrally cleared.
       ``(B) Exclusion.--Subparagraph (A) shall not apply to a 
     security-based swap one party to which is not a security-
     based swap dealer or major security-based swap participant, 
     and which is entered into before the end of the 90-day period 
     that begins with the effective date of this subparagraph.
       ``(C) Nonbank security-based swap dealers and major 
     security-based swap participants.--Capital requirements set 
     by the Commission and the Commodity Futures Trading 
     Commission under this subsection shall be as strict as or 
     stricter than the capital requirements set by the Prudential 
     Regulators under this subsection.
       ``(D) Bank holding companies.--Capital requirements set by 
     the Board for security-based swaps of bank holding companies 
     on a consolidated basis shall be as strict as or stricter 
     than the capital requirements set by the Prudential 
     Regulators under this subsection.
       ``(4) Margin.--
       ``(A) Bank security-based swap dealers and major security-
     based swap participants.--The Prudential Regulators shall 
     impose margin requirements under this subsection on all 
     security-based swaps that are not cleared by a registered 
     clearing agency.
       ``(B) Non-swap dealers and major market participants.--The 
     Prudential Regulators may, but are not required to, impose 
     margin requirements with respect to security-based swaps in 
     which one of the counterparties is not a swap dealer, major 
     swap participant, security-based swap dealer or major 
     security-based swap participant. Margin requirements for 
     swaps set by the Commission and the Commodity Futures Trading 
     Commission shall provide for the use of non-cash assets as 
     collateral.
       ``(C) Exclusion.--Subparagraph (B) shall not apply to a 
     security-based swap one party to which is not a security-
     based swap dealer or major security-based swap participant, 
     and which is entered into before the end of the 90-day period 
     that begins with the effective date of this subparagraph.
       ``(D) Nonbank security-based swap dealers and major 
     security-based swap participants.--Margin requirements for 
     security-based swaps set by the Commission and the Commodity 
     Futures Trading Commission under this subsection shall be as 
     strict as or stricter than margin requirements for security-
     based swaps set by the Prudential Regulators.
       ``(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 prescribed by the 
     Commission by rule or regulation regarding the transactions 
     and positions and financial condition of such person;
       ``(B) for which--
       ``(i) there is a Prudential Regulator, shall keep books and 
     records of all activities related to its 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; or
       ``(ii) 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;
       ``(C) shall keep such books and records open to inspection 
     and examination by any representative of the Commission; and
       ``(D) shall keep any such books and records relating to 
     transactions in swaps based on 1 or more securities open to 
     inspection and examination by the Commission.
       ``(2) Rules.--Not later than 1 year after the date of 
     enactment of the Over-the-Counter Derivatives Markets Act of 
     2009, the Commission and the Commodity Futures Trading 
     Commission, in consultation with the appropriate Federal 
     banking agencies, shall jointly adopt rules governing 
     reporting and recordkeeping for swap dealers, major swap 
     participants, 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 its security-based swaps 
     and all related records (including related transactions) and 
     recorded communications including but not limited to 
     electronic mail, instant messages, and recordings of 
     telephone calls, for such period as may be prescribed by the 
     Commission by rule or regulation.
       ``(2) Information requirements.--The daily trading records 
     shall include such information as the Commission shall 
     prescribe by rule or regulation.
       ``(3) Customer records.--Each registered security-based 
     swap dealer or major security-based swap participant shall 
     maintain daily trading records for each customer or 
     counterparty in such manner and form as to be identifiable 
     with each security-based swap transaction.
       ``(4) Audit trail.--Each registered security-based swap 
     dealer or major security-based swap participant shall 
     maintain a complete audit trail for conducting comprehensive 
     and accurate trade reconstructions.
       ``(5) Rules.--Not later than 1 year after the date of 
     enactment of the Over-the-Counter Derivatives Markets Act of 
     2009, the Commission and the Commodity Futures Trading 
     Commission, in consultation with the appropriate Federal 
     banking agencies, shall jointly adopt rules governing daily 
     trading records for swap dealers, major swap participants, 
     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 business conduct standards as may be prescribed 
     by the Commission by rule or regulation addressing--
       ``(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 its business as a security-
     based swap dealer;
       ``(C) adherence to all applicable position limits;
       ``(D) the prevention of self-dealing by limiting the extent 
     to which a security-based swap dealer or major security-based 
     swap participant may conduct business with a clearing agency, 
     an exchange, or an alternative swap execution facility that 
     clears or trades security-based swaps and in which such a 
     dealer or participant has a material debt or equity 
     investment; and
       ``(E) such other matters as the Commission shall determine 
     to be necessary or appropriate.
       ``(2) Business conduct requirements.--Business conduct 
     requirements adopted by the Commission shall--
       ``(A) establish the standard of care for a security-based 
     swap dealer or major security-based swap participant to 
     verify that any security-based swap 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 security-based swap (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 security-based swap;
       ``(ii) for cleared swaps, upon the request of the 
     counterparty, the daily mark from the appropriate 
     clearinghouse and for non-cleared swaps, upon the request of 
     the counterparty, the daily mark of the security-based swap 
     dealer or major security-based swap participant; and
       ``(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
       ``(C) establish such other standards and requirements as 
     the Commission may determine are necessary or appropriate in 
     the public interest, for the protection of investors, or 
     otherwise in furtherance of the purposes of this title.
       ``(3) Rules.--Not later than 1 year after the date of 
     enactment of the Over-the-Counter Derivatives Markets Act of 
     2009, the Commission and the Commodity Futures Trading 
     Commission, in consultation with the appropriate Federal 
     banking agencies, shall jointly prescribe rules under this 
     subsection governing business conduct standards for swap 
     dealers, major swap participants, 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 standards, as may be prescribed by the 
     Commission by rule or regulation, addressing timely

[[Page 31129]]

     and accurate confirmation, processing, netting, 
     documentation, and valuation of all security-based swaps.
       ``(2) Rules.--Not later than 1 year after the date of 
     enactment of the Over-the-Counter Derivatives Markets Act of 
     2009, the Commission and the Commodity Futures Trading 
     Commission, in consultation with the appropriate Federal 
     banking agencies, shall jointly adopt rules governing 
     documentation and back office standards for swap dealers, 
     major swap participants, security-based swap dealers, and 
     major security-based swap participants.
       ``(j) Dealer Responsibilities.--Each registered security-
     based swap dealer and major security-based swap participant 
     at all times shall 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) 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 such 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.
       ``(3) Ability to obtain information.--The security-based 
     swap dealer or major swap security-based 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 such security-based swap dealer or 
     major security-based swap participant, as applicable, upon 
     request.
       ``(4) 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 
     assure that the activities of any person within the firm 
     relating to research or analysis of the price or market for 
     any security are separated by appropriate informational 
     partitions within the firm from the review, pressure, or 
     oversight of those whose involvement in trading or clearing 
     activities might potentially bias their judgment or 
     supervision; and
       ``(B) address such other issues as the Commission 
     determines appropriate.
       ``(k) Rules.--The Commission, the Commodity Futures Trading 
     Commission, and the Prudential Regulators shall consult with 
     each other prior to adopting any rules under the Over-the-
     Counter Derivatives Markets Act of 2009.
       ``(l) 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 such 
     security-based swap dealer or major security-based swap 
     participant, 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 statutory 
     disqualification.
       ``(m) Enforcement and Administrative Proceeding 
     Authority.--
       ``(1) Primary enforcement authority.--
       ``(A) SEC.--Except as provided in subsection (b), the 
     Commission shall have primary authority to enforce the 
     provisions of the amendments made by subtitle B of the Over-
     the-Counter Derivatives Markets Act of 2009 with respect to 
     any person.
       ``(B) Prudential regulators.--The Prudential Regulators 
     shall have exclusive authority to enforce the provisions of 
     subsection (e) and other prudential requirements of this Act 
     with respect to banks, and branches or agencies of foreign 
     banks that are security-based swap dealers or major security-
     based swap participants.
       ``(C) Referral.--If the Prudential Regulator for a 
     security-based swap dealer or major security-based swap 
     participant has cause to believe that such security-based 
     swap dealer or major security-based swap participant may have 
     engaged in conduct that constitutes a violation of the 
     nonprudential requirements of section 15F or rules adopted by 
     the Commission thereunder, that Prudential Regulator may 
     recommend in writing to the Commission that the Commission 
     initiate an enforcement proceeding as authorized under this 
     Act. The recommendation shall be accompanied by a written 
     explanation of the concerns giving rise to the 
     recommendation.
       ``(D) Backstop enforcement authority.--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 recommendation under subparagraph (C), 
     the Prudential Regulator may initiate an enforcement 
     proceeding as permitted under Federal law.
       ``(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 it 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) 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) 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.
       ``(5) Exemptions.--The Commission may exempt, conditionally 
     or unconditionally, a security-based swap dealer or major 
     security-based swap participant from the prudential 
     requirements of the Over-the-Counter Derivatives Markets Act 
     of 2009 if the Commission finds that such security-based swap 
     dealer or major security-based swap participant is subject to 
     comparable, comprehensive supervision and regulation on a 
     consolidated basis by the Commodity Futures Trading 
     Commission, a Prudential Regulator or the appropriate 
     governmental authorities in the organization's home country.
       ``(n) Exemptive Authority.--
       ``(1) In general.--The Commission, by rule or regulation, 
     may conditionally or unconditionally exempt any person, 
     derivative, or transaction, or any class or classes of 
     persons, derivatives, or transactions, from any

[[Page 31130]]

     provision of this Act that was added by an amendment in the 
     Over-the-Counter Derivatives Markets Act of 2009, to the 
     extent that such exemption is necessary or appropriate in the 
     public interest, and is consistent with the purposes of such 
     Act.
       ``(2) Procedures.--The Commission shall, by rule or 
     regulation, determine the procedures under which an exemptive 
     order under this subsection shall be granted and may, in its 
     sole discretion, decline to entertain any application for an 
     order of exemption under this subsection.''.

     SEC. 3205. NATIONAL SECURITY EXCHANGE REGISTRATION 
                   REQUIREMENTS.

       Section 6(b) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78f(b)) is amended by adding at the end the following 
     new paragraphs:
       ``(10) The rules of the exchange minimize conflicts of 
     interest in its decision-making process and establish a 
     process for resolving such conflicts of interest.
       ``(11) The rules of an exchange that trades security-based 
     swaps provide that a majority of the directors of the 
     exchange shall not be associated with a restricted owner.
       ``(12) The rules of an exchange that trades security-based 
     swaps provide that a restricted owner shall not be permitted 
     directly or indirectly to acquire beneficial ownership of 
     interests in the exchange or in persons with a controlling 
     interest in the exchange, to the extent that such an 
     acquisition would result in restricted owners controlling 
     more than 20 percent of the votes entitled to be cast on any 
     matter by the holders of the ownership interests.''.

     SEC. 3206. 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 section:

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

       ``(a) In General.--Any person who enters into a security-
     based swap and--
       ``(1) did not clear the security-based swap in accordance 
     with section 3A; and
       ``(2) did not have data regarding the security-based swap 
     accepted by a security-based swap repository in accordance 
     with rules adopted by the Commission under section 13(n),

     shall meet the requirements in subsection (b).
       ``(b) Reports.--Any person described in subsection (a) 
     shall--
       ``(1) make such reports in such form and manner and for 
     such period as the Commission shall prescribe by rule or 
     regulation regarding the security-based swaps held by the 
     person; and
       ``(2) keep books and records pertaining to the security-
     based swaps held by the person in such form and manner and 
     for such period as may be required by the Commission, which 
     books and records shall be open to inspection by any 
     representative of the Commission, an appropriate Federal 
     banking agency, the Commodity Futures Trading Commission, the 
     Financial Services Oversight Council, and the Department of 
     Justice.
       ``(c) Identical Data.--In adopting rules under this 
     section, the Commission shall require persons described in 
     subsection (a) to report the same or more comprehensive data 
     than the Commission requires security-based swap repositories 
     to collect under subsection (n).''.
       (b) Beneficial Ownership Reporting.--
       (1) Section 13(d)(1) of the Securities Exchange Act of 1934 
     (15 U.S.C. 78m(d)(1)) is amended 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 or other derivative instrument as the Commission may 
     define by rule, and'' after ``Alaska Native Claims Settlement 
     Act,''.
       (2) Section 13(g)(1) of the Securities Exchange Act of 1934 
     (15 U.S.C. 78m(g)(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 or other derivative 
     instrument, as 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 striking ``section 13(d)(1) of this 
     title'' and inserting ``subsection (d)(1), 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 or other derivative 
     instrument, as the Commission may define by rule,''.
       (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 inserting ``, or security-based 
     swap dealer, or a major security-based swap participant'' 
     after ``or dealer''.
       (e) Derivatives 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 or other derivative 
     instrument 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 other derivative instrument, or 
     class of security-based swaps or other derivative 
     instruments, 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 instrument, 
     or class of security-based swap or instruments, be deemed the 
     acquisition of beneficial ownership of the equity 
     security.''.

     SEC. 3207. 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) 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; but no person permitted to maintain a suit for 
     damages under the provisions of this title shall recover, 
     through satisfaction of judgment in one or more actions, a 
     total amount in excess of his actual damages 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 
     thereunder. 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 (1) any put, call, straddle, 
     option, privilege, or other security subject to this title 
     (except a security-based swap agreement and 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, (2) 
     any security-based swap between eligible contract 
     participants, or (3) any security-based swap effected on a 
     national securities exchange registered pursuant to section 
     6(b). 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 sentence shall not be construed as limiting any 
     State antifraud law of general applicability.''.

     SEC. 3208. 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 provided in sections 1a(35) and (38) of the 
     Commodity Exchange Act (7 U.S.C. 1a(35) and (38)).
       ``(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) Exemption From Registration.--Section 3(a) of the 
     Securities Act of 1933 is amended by adding at the end the 
     following:
       ``(15) Any security-based swap, as defined in section 
     2(a)(17) that is not otherwise a security as defined in 
     section 2(a)(1) and that satisfies such conditions as 
     established by rule or regulation by the Commission 
     consistent with the provisions of the Over-the-Counter 
     Derivatives Markets Act of 2009. The Commission shall 
     promulgate rules implementing this exemption.''.
       (c) 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 
     section 4, unless a registration statement meeting the 
     requirements of subsection (a) of section 10 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

[[Page 31131]]

     to any person who is not an eligible contract participant as 
     defined in section 1a(13) of the Commodity Exchange Act (7 
     U.S.C. 1a(13)).''.

     SEC. 3209. OTHER AUTHORITY.

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

     SEC. 3210. JURISDICTION.

       Section 36 of the Securities Exchange Act of 1934 (15 
     U.S.C. 78mm) is amended by adding at the end the following 
     new subsection:
       ``(c) Exemptive Authority.--The Commission may use its 
     authority under subsection (a) to exempt any person, 
     security, or transaction, or any class of persons, 
     securities, or transactions from any provision or provisions 
     of this title or of any rule or regulation thereunder that 
     applies to such person, security, or transaction solely 
     because a security-based swap is a security, as such term is 
     defined in section 3(a) of this title.''.

     SEC. 3211. EFFECTIVE DATE.

       This subtitle is effective 270 days after the date of 
     enactment.

                       Subtitle C--Miscellaneous

     SEC. 3301. STUDY ON FEASIBILITY OF REQUIRING USE OF 
                   STANDARDIZED ALGORITHMIC DESCRIPTIONS FOR 
                   FINANCIAL DERIVATIVES.

       (a) In General.--The Securities and Exchange Commission and 
     the Commodity Futures Trading Commission shall conduct a 
     joint study of the feasibility of requiring the derivatives 
     industry to adopt standardized computer-readable algorithmic 
     descriptions which may be used to describe complex and 
     standardized financial derivatives.
       (b) Goals.--The algorithmic descriptions defined in the 
     study shall be designed to facilitate computerized analysis 
     of individual derivative contracts and to calculate net 
     exposures to complex derivatives. The algorithmic 
     descriptions shall be optimized for simultaneous use by:
       (1) commercial users and traders of derivatives;
       (2) derivative clearing houses, exchanges and electronic 
     trading platforms;
       (3) trade repositories and regulator investigations of 
     market activities; and
       (4) systemic risk regulators.
     The study will also examine the extent to which the 
     algorithmic description, together with standardized and 
     extensible legal definitions, may serve as the binding legal 
     definition of derivative contracts. The study will examine 
     the logistics of possible implementations of standardized 
     algorithmic descriptions for derivatives contracts. The study 
     shall be limited to electronic formats for exchange of 
     derivative contract descriptions and will not contemplate 
     disclosure of proprietary valuation models.
       (c) International Coordination.--In conducting the study, 
     the Securities and Exchange Commission and the Commodity 
     Futures Trading Commission shall coordinate the study with 
     international financial institutions and regulators as 
     appropriate and practical.
       (d) Report.--Within 8 months after the date of the 
     enactment of this title, the Securities and Exchange 
     Commission and the Commodity Futures Trading Commission shall 
     jointly submit to the Committees on Agriculture and on 
     Financial Services of the House of Representatives and the 
     Committees on Agriculture, Nutrition, and Forestry and on 
     Banking, Housing, and Urban Affairs of the Senate a written 
     report which contains the results of the study required by 
     subsections (a) through (c).

     SEC. 3302. STUDY OF DESIRABILITY AND FEASIBILITY OF 
                   ESTABLISHING SINGLE REGULATOR FOR ALL 
                   TRANSACTIONS INVOLVING FINANCIAL DERIVATIVES.

       (a) In General.--The Secretary of the Treasury, the 
     Commodity Futures Trading Commission, and the Securities and 
     Exchange Commission shall conduct a joint study of the 
     desirability and feasibility of establishing, by January 1, 
     2012, a single regulator for all transactions involving 
     financial derivatives.
       (b) Report to the Congress.--Not later than December 1, 
     2010, Secretary of the Treasury, the Commodity Futures 
     Trading Commission, and the Securities and Exchange 
     Commission shall jointly submit to the Committees on 
     Agriculture and on Financial Services of the House of 
     Representatives and the Committees on Agriculture, Nutrition, 
     and Forestry and on Banking, Housing, and Urban Affairs of 
     the Senate a written report that contains the results of the 
     study required by subsection (a).

     SEC. 3303. RECOMMENDATIONS FOR CHANGES TO INSOLVENCY LAWS.

       Not later than 180 days after the date of enactment of this 
     title, the Securities and Exchange Commission, the Commodity 
     Futures Trading Commission, and the Prudential Regulators (as 
     defined in section 1a of the Commodity Exchange Act, as 
     amended by section 3101 of this title) shall transmit to 
     Congress recommendations for legislative changes to the 
     Federal insolvency laws--
       (1) in order to enhance the legal certainty with respect to 
     swap participants clearing non-proprietary swap positions 
     with a swap clearinghouse, including--
       (A) customer rights to recover margin deposits or custodial 
     property held at or through an insolvent swap clearinghouse, 
     or clearing participant; and
       (B) the enforceability of clearing rules relating to the 
     portability of customer swap positions (and associated 
     margin) upon the insolvency of a clearing participant;
       (2) to clarify and harmonize the insolvency law framework 
     applicable to entities that are both commodity brokers (as 
     defined in section 101(6) of title 11, United States Code) 
     and registered brokers or dealers (as defined in section 3(a) 
     of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a))); 
     and
       (3) to facilitate the portfolio margining of securities and 
     commodity futures and options positions held through entities 
     that are both futures commission merchants (as defined in 
     section 1a of the Commodity Exchange Act) and registered 
     brokers or dealers (as defined in section 3 of the Securities 
     Exchange Act of 1934 (15 U.S.C. 78c(a))).

     SEC. 3304. PROHIBITION AGAINST GOVERNMENT ASSISTANCE.

       (a) In General.--No provision of this title shall be 
     construed to authorize Federal assistance to support the 
     clearing operations or liquidation of a derivatives clearing 
     organization described in the Commodity Exchange Act, except 
     where explicitly authorized by an Act of Congress.
       (b) Definition.--For the purposes of this section, the term 
     ``Federal assistance'' shall be defined as the use of public 
     funds for the purposes of--
       (1) making loans to, or purchasing any debt obligation of, 
     a derivatives clearing organization or a subsidiary;
       (2) purchasing assets of a derivatives clearing 
     organization or a subsidiary;
       (3) assuming or guaranteeing the obligations of a 
     derivatives clearing organization or a subsidiary; or
       (4) acquiring any type of equity interest or security of a 
     derivatives clearing organization or a subsidiary.

           TITLE IV--CONSUMER FINANCIAL PROTECTION AGENCY ACT

     SEC. 4001. SHORT TITLE.

       This title may be cited as the ``Consumer Financial 
     Protection Agency Act of 2009''.

     SEC. 4002. DEFINITIONS.

       For the purposes of subtitles A through F 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) Agency.--The term ``Agency'' means--
       (A) before the Agency conversion date, the Consumer 
     Financial Protection Agency; and
       (B) on and after the Agency conversion date, the commission 
     established under section 4103.
       (3) Bank holding company.--The term ``bank holding 
     company'' has the same meaning as in section 2(a) of the Bank 
     Holding Company Act of 1956.
       (4) Board.--Except when used in connection with the term 
     ``Board of Governors'', the term ``Board'' means the Consumer 
     Financial Protection Oversight Board.
       (5) Board of governors.--The term ``Board of Governors'' 
     means the Board of Governors of the Federal Reserve System.
       (6) 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.
       (7) Consumer.--The term ``consumer'' means an individual or 
     an agent, trustee, or representative acting on behalf of an 
     individual.
       (8) Consumer financial product or service.--The term 
     ``consumer financial product or service'' means any financial 
     product, other than a Federal tax return, or service to be 
     used by a consumer primarily for personal, family, or 
     household purposes.
       (9) Covered person.--
       (A) In general.--The term ``covered person'' means any 
     person who engages directly or indirectly in a financial 
     activity, in connection with the provision of a consumer 
     financial product or service.
       (B) Exclusion.--The term ``covered person'' shall not 
     include the Secretary, the Department of the Treasury, any 
     agency or bureau under the jurisdiction of the Secretary, or 
     any person collecting Federal taxes for the United States to 
     the extent such person is acting in such capacity.
       (10) 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.
       (11) Credit union.--The term ``credit union'' means a 
     Federal credit union or a State credit union as defined in 
     section 101 of the Federal Credit Union Act.
       (12) Deposit.--The term ``deposit''--
       (A) has the same meaning as in section 3(l) of the Federal 
     Deposit Insurance Act; and

[[Page 31132]]

       (B) includes a share in a member account (as defined in 
     section 101(5) of the Federal Credit Union Act) at a credit 
     union.
       (13) Deposit-taking activity.--The term ``deposit-taking 
     activity'' means--
       (A) the acceptance of deposits, the maintenance of deposit 
     accounts, or the provision of services related to the 
     acceptance of deposits;
       (B) the acceptance of money, the provision of other 
     services related to the acceptance of money, or the 
     maintenance of members' share accounts by a credit union; or
       (C) the receipt of money or its equivalent, as the Director 
     may determine by regulation or order, received or held by the 
     covered person (or an agent for the person) for the purpose 
     of facilitating a payment or transferring funds or value of 
     funds by a consumer to a third party.
       (14) Designated transfer date.--The term ``designated 
     transfer date'' has the meaning provided in section 4602.
       (15) Director.--The term ``Director'' means--
       (A) before the Agency conversion date, the Director of the 
     Agency; and
       (B) on and after the Agency conversion date, the commission 
     established under section 4103.
       (16) Enumerated consumer laws.--The term ``enumerated 
     consumer laws'' means each of the following:
       (A) The Alternative Mortgage Transaction Parity Act (12 
     U.S.C. 3801 et seq.).
       (B) The Electronic Funds Transfer Act (15 U.S.C. 1693 et 
     seq.)
       (C) The Equal Credit Opportunity Act (15 U.S.C. 1691 et 
     seq.).
       (D) The Fair Credit Reporting Act (15 U.S.C. 1681 et seq.), 
     except with respect to sections 615(e) and 628 of such Act.
       (E) The Fair Debt Collection Practices Act (15 U.S.C. 1692 
     et seq.).
       (F) Subsections (c), (d), (e), and (f) of section 43 of the 
     Federal Deposit Insurance Act (12 U.S.C. 1831t).
       (G) Sections 502, 503, 504, 505, 506, 507, 508, and 509 of 
     the Gramm-Leach-Bliley Act (15 U.S.C. 6802 et seq.).
       (H) The Homeowners Protection Act of 1998.
       (I) The Home Mortgage Disclosure Act (12 U.S.C. 2801 et 
     seq.).
       (J) The Real Estate Settlement Procedures Act (12 U.S.C. 
     2601 et seq.).
       (K) The Secure and Fair Enforcement for Mortgage Licensing 
     Act (12 U.S.C. 5101 et seq.).
       (L) The Truth in Lending Act (15 U.S.C. 1601 et seq.).
       (M) The Truth in Savings Act (12 U.S.C. 4301 et seq.).
       (17) Federal banking agency.--The term ``Federal banking 
     agency'' means the Board of Governors, the Comptroller of the 
     Currency, the Director of the Office of Thrift Supervision, 
     the Federal Deposit Insurance Corporation, or the National 
     Credit Union Administration and the term ``Federal banking 
     agencies'' means all of such agencies.
       (18) Fair lending.--The term ``fair lending'' means fair, 
     equitable, and nondiscriminatory access to credit for both 
     individuals and communities.
       (19) Financial activity.--
       (A) In general.--The term ``financial activity'' means any 
     of the following activities:
       (i) Deposit-taking activities.
       (ii) Extending credit and servicing loans, including--

       (I) acquiring, purchasing, selling, brokering, or servicing 
     loans or other extensions of credit;
       (II) engaging in any other activity usual in connection 
     with extensions of credit or servicing loans, including 
     performing appraisals of real estate and personal property.

       (iii) Check cashing and check-guaranty services, 
     including--

       (I) authorizing a subscribing merchant to accept personal 
     checks tendered by the merchant's customers in payment for 
     goods and services; and
       (II) purchasing from a subscribing merchant validly 
     authorized checks that are subsequently dishonored.

       (iv) Collecting, analyzing, maintaining, and providing 
     consumer report information or other account information by 
     covered persons, including information relating to the credit 
     history of consumers and providing the information to a 
     credit grantor who is considering a consumer application for 
     credit or who has extended credit to the borrower.
       (v) Collection of debt related to any consumer financial 
     product or service.
       (vi) Providing real estate settlement services.
       (vii) Leasing personal or real property or acting as agent, 
     broker, or adviser in leasing such property 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 leases 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 Director.

       (viii) Acting as an investment adviser to any person 
     (excluding an investment adviser that is a person regulated 
     by the Commodity Futures Trading Commission, the Securities 
     and Exchange Commission, or any securities commission (or any 
     agency or office performing like functions) of any State).
       (ix) Acting as financial adviser to any person (excluding 
     an investment adviser that is a person regulated by the 
     Commodity Futures Trading Commission, the Securities and 
     Exchange Commission, or any securities commission (or any 
     agency or office performing like functions) of any State), 
     including--

       (I) providing financial and other related advisory 
     services;
       (II) providing educational courses, and instructional 
     materials to consumers on individual financial management 
     matters;
       (III) providing credit counseling or tax planning services 
     to any person (excluding the preparation of returns, or 
     claims for refund, of tax imposed by the Internal Revenue 
     Code or advice with respect to positions taken therein, or 
     services regulated by the Secretary of the Treasury under 
     section 330 of title 31, United States Code); or
       (IV) providing services to assist a consumer with debt 
     management or debt settlement, with modifying the terms of 
     any extension of credit, or with avoiding foreclosure.

       (x) For purposes of this title, the following shall not be 
     considered acting as financial adviser:

       (I) 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.
       (II) Providing advice, analyses, or reports that do not 
     relate to any securities other than securities which are 
     direct obligations of or obligations guaranteed as to 
     principal or interest by the United States, or securities 
     issued or guaranteed by corporations in which the United 
     States has a direct or indirect interest which shall have 
     been designated by the Secretary of the Treasury, pursuant to 
     section 3(a)(12) of the Securities Exchange Act of 1934, as 
     exempted securities for the purposes of that Act.

       (xi) Financial data processing by any technological means, 
     including providing data processing, access to or use of 
     databases or facilities, or advice regarding processing or 
     archiving, if the data to be processed, furnished, stored, or 
     archived are financial, banking, or economic, except that it 
     shall not be considered a ``financial activity'' if with 
     respect to financial data processing the person--

       (I) unknowingly or incidentally transmits, processes, or 
     stores financial data in a manner that such data is 
     undifferentiated from other types of data that the person 
     transmits, processes, or stores;
       (II) does not provide to any consumer a consumer financial 
     product or service in connection with or relating to in any 
     manner financial data processing; and
       (III) does not provide a material service to any covered 
     person in connection with the provision of a consumer 
     financial product or service.

       (xii) Money transmitting.
       (xiii) Sale, provision or issuance of stored value, except 
     that, in the case of a sale, only if the seller influences 
     the terms or conditions of the stored value provided to the 
     consumer.
       (xiv) Acting as a money services business.
       (xv) Acting as a custodian of money or any financial 
     instrument.
       (xvi)(I) Any other activity that the Director defines, by 
     regulation, as a financial activity after finding that--
       (aa) the activity is financial in nature or is otherwise a 
     permissible activity for a bank or bank holding company, 
     including a financial holding company, under any provision of 
     Federal law or regulation applicable to a bank or bank 
     holding company, including a financial holding company;
       (bb) the activity is incidental or complementary to any 
     other financial activity regulated by the Agency; or
       (cc) the activity is entered into or conducted as a 
     subterfuge or with a purpose to evade any requirement under 
     this title, the enumerated consumer laws, and the authorities 
     transferred under subtitles F and H.
       (II) For purposes of subclause (I)(bb), the following 
     activities provided to a covered person shall not be 
     ``incidental or complementary'':

       (aa) Providing information products or services to a 
     covered person for identity authentication.
       (bb) Providing information products or services for fraud 
     or identify theft detection, prevention, or investigation.
       (cc) Providing document retrieval or delivery services.
       (dd) Providing public records information retrieval.
       (ee) Providing information products or services for anti-
     money laundering activities.

       (B) Exceptions.--The term ``financial activity'' shall not 
     include the business of insurance or the provision of 
     electronic data transmission, routing, intermediate or 
     transient storage, or connections to a system or network, 
     where the person providing such services does not select or 
     modify the content of the electronic data, is not the sender

[[Page 31133]]

     or the intended recipient of the data, and such person 
     transmits, routes, stores, or provides connections for 
     electronic data, including financial data, in a manner that 
     such data is undifferentiated from other types of data that 
     such person transmits, routes, stores, or provides 
     connections.
       (20) Financial product or service.--The term ``financial 
     product or service'' means any product or service that, 
     directly or indirectly, results from or is related to 
     engaging in 1 or more financial activities.
       (21) 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.
       (22) Insured credit union.--The term ``insured credit 
     union'' has the same meaning as in section 101 of the 
     National Credit Union Act.
       (23) Insured depository institution.--The term ``insured 
     depository institution'' has the same meaning as in section 3 
     of the Federal Deposit Insurance Act.
       (24) Money services business.--The term ``money services 
     business'' means a person that--
       (A) receives currency, monetary value, or payment 
     instruments 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 other businesses that facilitate third-
     party transfers within the United States or to or from the 
     United States; or
       (B) issues payment instruments or stored value.
       (25) Money transmitting.--The term ``money transmitting'' 
     means the receipt by a covered person of currency, monetary 
     value, or payment instruments for the purpose of transmitting 
     the same to any third-party by any means, including 
     transmission by wire, facsimile, electronic transfer, 
     courier, the Internet, or through bill payment services.
       (26) Payment instrument.--The term ``payment instrument'' 
     means a check, draft, warrant, money order, traveler's check, 
     electronic instrument, or other instrument, payment of money, 
     or monetary value (other than currency).
       (27) Person.--The term ``person'' means an individual, 
     partnership, company, corporation, association (incorporated 
     or unincorporated), trust, estate, cooperative organization, 
     or other entity.
       (28) Person regulated by a state insurance regulator.--The 
     term ``person regulated by a State insurance regulator'' 
     means any person who is--
       (A) engaged in the business of insurance, and
       (B) subject to regulation by any State insurance regulator,

     but only to the extent that such person acts in such 
     capacity.
       (29) Person regulated by the commodity futures trading 
     commission.--The term ``person regulated by the Commodity 
     Futures Trading Commission'' means any futures commission 
     merchant, commodity trading adviser, commodity pool operator, 
     introducing broker, boards of trade, derivatives clearing 
     organizations, multilateral clearing organizations, retail 
     foreign exchange dealer, or swap execution facility, to the 
     extent that such person's actions are subject to the 
     jurisdiction of the Commodity Futures Trading Commission 
     under the Commodity Exchange Act and any agent, employee, or 
     contractor acting on behalf of, registered with, or providing 
     services to such person but only to the extent the person, or 
     the employee, agent, or contractor of such person, acts in a 
     registered capacity.
       (30) Person regulated by the securities and exchange 
     commission.--The term ``person regulated by the Securities 
     and Exchange Commission'' means--
       (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;
       (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 municipal securities dealer that is registered with 
     the Securities and Exchange Commission;
       (H) any self-regulatory organization that is registered 
     with the Securities and Exchange Commission;
       (I) any national securities exchange or other entity that 
     is required to be registered under the Securities Exchange 
     Act of 1934; and
       (J) the Municipal Securities Rulemaking Board,

     and any employee, agent, or contractor acting on behalf of, 
     registered with, or providing services to, any such person, 
     but only to the extent that the person, or the employee 
     agent, or contractor of such person, acts in a registered 
     capacity.
       (31) Provision of a consumer financial product or 
     service.--The terms ``provision of a consumer financial 
     product or service'' and ``providing a consumer financial 
     product or service'' mean the advertisement, marketing, 
     solicitation, sale, disclosure, delivery, or account 
     maintenance or servicing of a consumer financial product or 
     service.
       (32) 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 of the Treasury 
     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.
       (33) Related person.--
       (A) In general.--The term ``related person'', when used in 
     connection with a covered person that is not a bank holding 
     company, credit union, depository institution, means--
       (i) any director, officer, employee charged with managerial 
     responsibility, or controlling stockholder of, or agent for, 
     such covered person;
       (ii) any shareholder, consultant, joint venture partner, 
     and any other person as determined by the Director (by 
     regulation 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), with respect to such covered 
     person, who knowingly or recklessly participates in any--

       (I) violation of any law or regulation; or
       (II) breach of fiduciary duty.

       (B) Treatment of a related person as a covered person.--Any 
     person who is a related person under subparagraph (A) shall 
     be deemed to be a covered person for all purposes of this 
     title, any enumerated consumer law, and any law for which 
     authorities were transferred by subtitles F and H.
       (34) Secretary.--The term ``Secretary'' means the Secretary 
     of the Treasury.
       (35) Service provider.--
       (A) In general.--The term ``service provider'' means any 
     person who provides a material service to a covered person in 
     the provision of a consumer financial product or service, 
     including a person who--
       (i) facilitates the design of, or operations relating to 
     the provision of, the consumer financial product or service;
       (ii) has direct interaction with a consumer (whether in 
     person or via telecommunication device or other similar 
     technology) regarding the consumer financial product or 
     service; or
       (iii) processes transactions relating to the consumer 
     financial product or service.
       (B) Exceptions.--The term ``service provider'' shall not 
     apply to a person solely by virtue of such person providing 
     or selling to a covered person--
       (i) a support service of a type provided to businesses 
     generally or a similar ministerial service;
       (ii) a service that does not materially affect the terms or 
     conditions of the consumer financial product or service, its 
     performance or operation, or the propensity of a consumer to 
     obtain or use such product or service; or
       (iii) time or space for an advertisement for a consumer 
     financial product or service through print, newspaper, or 
     electronic media.
       (36) State.--The term ``State'' means any State, territory, 
     or possession of the United States, the District of Columbia, 
     Commonwealth of Puerto Rico, Commonwealth of the Northern 
     Mariana Islands, Guam, American Samoa, or the United States 
     Virgin Islands.
       (37) Stored value.--The term ``stored value''--
       (A) 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
       (B) includes a prepaid debit card or product (other than a 
     card or product used solely for telephone services) or any 
     other similar product,

     regardless of whether the amount of the funds or monetary 
     value may be increased or reloaded.
       (38) Agency conversion date.--The term ``Agency conversion 
     date'' means the date that is two years after the designated 
     transfer date.

                Subtitle A--Establishment of the Agency

     SEC. 4101. ESTABLISHMENT OF THE CONSUMER FINANCIAL PROTECTION 
                   AGENCY.

       (a) Agency Established.--There is established the Consumer 
     Financial Protection Agency as an independent agency to 
     regulate the provision of consumer financial products or 
     services under this title, the enumerated

[[Page 31134]]

     consumer laws, and the authorities transferred under 
     subtitles F and H.
       (b) Agency Structure.--
       (1) Initial structure.--The Agency shall be led by a 
     Director or Acting Director, established pursuant to section 
     4102, until the day before the Agency conversion date.
       (2) Subsequent structure.--On and after the Agency 
     conversion date, the Agency shall consist of the commission 
     established under section 4103.
       (c) Principal Office.--The principal office of the Agency 
     shall be located in the city of Washington, District of 
     Columbia, at 1 or more sites.

     SEC. 4102. DIRECTOR.

       (a) Establishment of Position.--
       (1) In general.--There is hereby established the position 
     of the Director of the Agency who shall be the head of the 
     Agency.
       (2) Authority to prescribe regulations.--The Director may 
     prescribe such regulations and issue such orders in 
     accordance with this title as the Director may determine to 
     be necessary for carrying out this title and all other laws 
     within the Director's jurisdiction and shall exercise any 
     authorities granted under this title and all other laws 
     within the Director's jurisdiction.
       (b) Appointment; Term.--
       (1) Nomination.--Within 60 days after the date of enactment 
     of this title, the President shall nominate the Director, 
     from among individuals who--
       (A) are citizens of the United States; and
       (B) have strong competencies and experiences related to 
     consumer financial protection.
       (2) Appointment subject to confirmation.--The Director 
     nominated under paragraph (1) shall be appointed by and with 
     the advice and consent of the Senate.
       (3) Acting director before senate confirmation.--The 
     individual nominated pursuant to paragraph (1) shall serve as 
     Acting Director with full authorities granted to the Director 
     under this title until the Director is confirmed by the 
     Senate.
       (4) Term.--The Director shall be appointed for a term that 
     ends on the Agency conversion date.
       (5) Removal.--The Director may be removed before the end of 
     a term only for cause.
       (6) Vacancy.--
       (A)  In general.--A vacancy in the position of Director 
     which occurs before the expiration of the term for which a 
     Director was appointed shall be filled in the manner 
     established in paragraph (2) and the Director appointed to 
     fill such vacancy shall be appointed only for the remainder 
     of such term.
       (B) Acting director.--
       (i) In general.--In the event of a vacancy or during the 
     absence of the Director (who has been confirmed by the Senate 
     pursuant to paragraph (2)), an Acting Director shall be 
     appointed in the manner provided in section 3345, of title 5, 
     United States Code.
       (ii) Authority of acting director.--Any individual serving 
     as Acting Director under this subparagraph shall be vested 
     with all authority, duties, and privileges of the Director.
       (7) Service after end of term.--An individual may serve as 
     Director after the expiration of the term for which appointed 
     until a successor Director has been appointed and qualified.
       (c) Prohibition on Financial Interests.--The Director shall 
     not have a direct or indirect financial interest in any 
     covered person.
       (d) Compensation.--The Director shall receive compensation 
     at the rate prescribed for Level I of the Executive Schedule 
     under section 5313 of title 5, United States Code.

     SEC. 4103. ESTABLISHMENT AND COMPOSITION OF THE COMMISSION.

       (a) Establishment of the Commission.--
       (1) In General.--On the Agency conversion date, there shall 
     be established a commission (hereinafter in this section 
     referred to as the ``Commission'') that shall by operation of 
     law succeed to all of the authorities of the Director of the 
     Agency granted under this title and any other law.
       (2) Authority to prescribe regulations.--The Commission may 
     prescribe such regulations and issue such orders in 
     accordance with this title as the Commission may determine to 
     be necessary for carrying out this title and all other laws 
     within the Commission's jurisdiction and shall exercise any 
     authorities granted under this title and all other laws 
     within the Commission's jurisdiction.
       (b) Composition of the Commission.--
       (1) In general.--The Commission shall be composed of 5 
     members who shall be appointed by the President, by and with 
     the advice and consent of the Senate, from among individuals 
     who--
       (A) are citizens of the United States; and
       (B) have strong competencies and experiences related to 
     consumer financial protection.
       (2) Initial appointments.--
       (A) In general.--The initial members of the Commission, 
     other than the initial Chair, may be appointed by the 
     President, by and with the advice and consent of the Senate, 
     prior to the Agency conversion date, but may not serve in 
     their positions until such date.
       (B) Staggering.--Except as provided under subsection 
     (d)(1), the members of the Commission shall serve staggered 
     terms, which initially shall be established by the President 
     for terms of 1, 2, 4, and 5 years, respectively.
       (3) Terms.--
       (A) In general.--Except as provided in subsection (d)(1), 
     each member of the Commission, including the Chair, shall 
     serve for a term of 5 years.
       (B) Removal for cause.--The President may remove any member 
     of the Commission only for inefficiency, neglect of duty, or 
     malfeasance in office.
       (C) Vacancies.--Any member of the Commission appointed to 
     fill a vacancy occurring before the expiration of the term to 
     which that member's predecessor was appointed (including the 
     Chair) shall be appointed only for the remainder of the term.
       (D) Continuation of service.--Each member of the Commission 
     may continue to serve after the expiration of the term of 
     office to which that member was appointed until a successor 
     has been appointed by the President and confirmed by the 
     Senate, except that a member may not continue to serve more 
     than 1 year after the date on which that member's term would 
     otherwise expire.
       (E) Other employment prohibited.--No member of the 
     Commission shall engage in any other business, vocation, or 
     employment.
       (c) Affiliation.--With respect to members appointed 
     pursuant to subsection (b), not more than 3 shall be members 
     of any one political party.
       (d) Chair of the Commission.--
       (1) Appointment.--
       (A) Initial chair.--The first Chair of the Commission shall 
     be the Director or Acting Director serving on the day before 
     the Agency conversion date, and such individual shall serve 
     in the position of Chair for a period of 3 years.
       (B) Subsequent chairs.--Subsequent chairs shall be 
     appointed by the President from among the members of the 
     Commission to serve as the Chair.
       (2) Authority.--The Chair shall be the principal executive 
     officer of the Agency, and shall exercise all of the 
     executive and administrative functions of the Agency, 
     including with respect to--
       (A) the appointment and supervision of personnel employed 
     under the Agency (other than personnel employed regularly and 
     full time in the immediate offices of members of the 
     Commission other than the Chair);
       (B) the distribution of business among personnel appointed 
     and supervised by the Chair and among administrative units of 
     the Agency; and
       (C) the use and expenditure of funds.
       (3) Limitation.--In carrying out any of the Chair's 
     functions under the provisions of this subsection the Chair 
     shall be governed by general policies of the Commission and 
     by such regulatory decisions, findings, and determinations as 
     the Commission may by law be authorized to make.
       (4) Requests or estimates related to appropriations.--
     Requests or estimates for regular, supplemental, or 
     deficiency appropriations on behalf of the Commission may not 
     be submitted by the Chair without the prior approval of the 
     commission.
       (e) No Impairment by Reason of Vacancies.--No vacancy in 
     the members of the Commission shall impair the right of the 
     remaining members of the Commission to exercise all the 
     powers of the Commission. Three members of the Commission 
     shall constitute a quorum for the transaction of business, 
     except that if there are only 3 members serving on the 
     Commission because of vacancies in the Commission, 2 members 
     of the Commission shall constitute a quorum for the 
     transaction of business. If there are only 2 members serving 
     on the Commission because of vacancies in the Commission, 2 
     members shall constitute a quorum for the 6-month period 
     beginning on the date of the vacancy which caused the number 
     of Commission members to decline to 2.
       (f) Seal.--The Commission shall have an official seal.
       (g) Compensation.--
       (1) Chair.--The Chair shall receive compensation at the 
     rate prescribed for level I of the Executive Schedule under 
     section 5313 of title 5, United States Code.
       (E) Other members of the commission.--The 4 other members 
     of the Commission shall each receive compensation at the rate 
     prescribed for level II of the Executive Schedule under 
     section 5314 of title 5, United States Code.
       (h) Initial Quorum Established.--During any time period 
     prior to the confirmation of at least two members of the 
     Commission under subsection (b)(2), one member of the 
     Commission shall constitute a quorum for the transaction of 
     business. Following the confirmation of at least 2 additional 
     commissioners, the quorum requirements of subsection (e) 
     shall apply.
       (i) Definitions.--Notwithstanding section 4002, for 
     purposes of this section:
       (1) Agency.--The term ``Agency'' means the Consumer 
     Financial Protection Agency.
       (2) Director.--FThe term ``Director'' means the Director of 
     the Agency.

     SEC. 4104. CONSUMER FINANCIAL PROTECTION OVERSIGHT BOARD.

       (a) Established.--There is hereby established the Consumer 
     Financial Protection

[[Page 31135]]

     Oversight Board as an instrumentality of the United States.
       (b) Duties and Powers.--
       (1) Duty to advise director.--The Board shall advise the 
     Director on--
       (A) the consistency of a proposed regulation of the 
     Director with prudential, market, or systemic objectives 
     administered by the agencies that comprise the Board;
       (B) the overall strategies and policies in carrying out the 
     duties of the Director under this title; and
       (C) actions the Director can take to enhance and ensure 
     that all consumers are subject to robust financial 
     protection.
       (2) Limitation on powers.--The Board may not exercise any 
     executive authority, and the Director may not delegate to the 
     Board any of the functions, powers, or duties of the 
     Director.
       (c) Composition.--The Board shall be comprised of 7 members 
     as follows:
       (1) The Chairman of the Board of Governors.
       (2) The head of the agency responsible for chartering and 
     regulating national banks.
       (3) The Chairperson of the Federal Deposit Insurance 
     Corporation.
       (4) The Chairman of the National Credit Union 
     Administration.
       (5) The Chairman of the Federal Trade Commission.
       (6) The Secretary of Housing and Urban Development.
       (7) The Chairman of the liaison committee of 
     representatives of State agencies to the Financial 
     Institutions Examination Council.
       (d) Representative of Additional Interests.--
       (1) Composition.--Notwithstanding subsection (c), the 
     President, by and with the advice and consent of the Senate, 
     shall appoint 5 additional members of the Board from among 
     experts in the fields of consumer protection, fair lending 
     and civil rights, representatives of depository institutions 
     that primarily serve underserved communities, or 
     representatives of communities that have been significantly 
     impacted by higher-priced mortgage loans, as such communities 
     are identified by the Director through an analysis of data 
     received by reason of the provisions of the Home Mortgage 
     Disclosure Act of 1975 or other data on lending patterns.
       (2) Affiliation.--With respect to members appointed 
     pursuant to paragraph (1), not more than 3 shall be members 
     of any one political party.
       (e) Meetings.--
       (1) In general.--The Board shall meet upon notice by the 
     Director, but in no event shall the Board meet less 
     frequently than once every 3 months.
       (2) Special meetings.--Any member of the Board may, upon 
     giving written notice to the Director, require a special 
     meeting of the Board.
       (f) Prohibition on Additional Compensation.--Members of the 
     Board may not receive additional pay, allowances, or benefits 
     by reason of their service on the Board.
       (g) Complaints Related to Required Offering of Specific 
     Financial Products or Services.--The Board shall establish 
     procedures to receive and analyze complaints from any person 
     claiming that the Director is not in compliance with the 
     requirements under section 4311.

     SEC. 4105. EXECUTIVE AND ADMINISTRATIVE POWERS.

       The Director may exercise all executive and administrative 
     functions of the Agency, including to--
       (1) establish regulations for conducting the Agency's 
     general business in a manner not inconsistent with this 
     title;
       (2) bind the Agency and enter into contracts;
       (3) direct the establishment of and maintain divisions or 
     other offices within the Agency in order to fulfill the 
     responsibilities of this title, the enumerated consumer laws, 
     and the authorities transferred under subtitles F and H, and 
     to satisfy the requirements of other applicable law;
       (4) coordinate and oversee the operation of all 
     administrative, enforcement, and research activities of the 
     Agency;
       (5) adopt and use a seal;
       (6) determine the character of and the necessity for the 
     Agency's obligations and expenditures, and the manner in 
     which they shall be incurred, allowed, and paid;
       (7) delegate authority, at the Director's discretion, to 
     any officer or employee of the Agency to take action under 
     any provision of this title or under other applicable law;
       (8) to implement this title and the Agency's authorities 
     under the enumerated consumer laws and under subtitles F and 
     H through regulations, orders, guidance, interpretations, 
     statements of policy, examinations, and enforcement actions; 
     and
       (9) perform such other functions as may be authorized or 
     required by law.

     SEC. 4106. ADMINISTRATION.

       (a) Officers.--The Director shall appoint the following 
     officials:
       (1) A secretary, who shall be charged with maintaining the 
     records of the Agency and performing such other activities as 
     the Director directs.
       (2) A general counsel, who shall be charged with overseeing 
     the legal affairs of the Agency and performing such other 
     activities as the Director directs.
       (3) An inspector general, who shall have the authority and 
     functions of an inspector general of a designated Federal 
     entity under the Inspector General Act of 1978 (5 U.S.C. App. 
     3).
       (4) An Ombudsperson, who shall--
       (A) develop and maintain expertise in and understanding of 
     the law relating to consumer financial products;
       (B) at the request of a Federal agency or a State agency, 
     and with the prior approval of the Director, advise such 
     agency with respect to actions that may affect consumers;
       (C) advise consumers who may have a legitimate potential or 
     actual claim against a Federal agency involving the provision 
     of consumer financial products regarding their rights under 
     this title;
       (D) identify Federal agency actions that have potential 
     implications for consumers and, if appropriate, and with the 
     prior approval of the Director, advise the relevant Federal 
     agencies with respect to those implications;
       (E) provide information to private citizens, civic groups, 
     Federal agencies, State agencies, and other interested 
     parties regarding the rights of those parties under this 
     title;
       (F) develop, maintain, and provide expertise designed to 
     assist covered persons, especially smaller depository 
     institutions and other smaller entities to comply with 
     regulations and other requirements issued to implement the 
     provisions of this title, and where such assistance for 
     smaller depository institutions shall be provided jointly by 
     the Agency and the appropriate Federal banking agency;
       (G) develop procedures to assist covered persons, 
     especially smaller depository institutions and other smaller 
     entities, in responding to or challenging actions taken by 
     the Director or the Agency to implement the provisions of 
     this title and to ensure that safeguards exist to preserve 
     the confidentiality of covered persons using those 
     procedures; and
       (H) perform such other duties as the Director may delegate 
     to the Ombudsperson.
       (b) Personnel.--
       (1) Appointment.--
       (A) In general.--The Director may fix the number of, and 
     appoint and direct, all employees of the Agency.
       (B) Expedited hiring.--The Director may appoint, without 
     regard to the provisions of sections 3309 through 3318, of 
     title 5, United States Code, candidates directly to positions 
     for which public notice has been given.
       (C) Hiring veterans.--In hiring employees of the Agency, 
     the Director shall establish appropriate targets, including 
     timetables, to hire veterans (as defined in paragraphs (1) 
     and (2) of section 2108 of title 5, United States Code) as 
     employees of the Agency. In establishing appropriate targets 
     under this paragraph, the Director may consider, among other 
     relevant factors, the proportion of veterans hired by Federal 
     agencies with comparable functions or types of occupations 
     and their experiences in hiring veterans.
       (2) Compensation.--
       (A) Pay.--The Director shall fix, adjust, and administer 
     the pay for all employees of the Agency without regard to the 
     provisions of chapter 51 or subchapter III of chapter 53 of 
     title 5, United States Code.
       (B) Benefits.--The Director may provide additional benefits 
     to Agency employees if the same type of benefits are then 
     being provided by the Board of Governors or, if not then 
     being provided, could be provided by the Board of Governors 
     under applicable provisions of law or regulations.
       (C) Minimum standard.--The Director shall at all times 
     provide compensation and benefits to classes of employees 
     that, at a minimum, are equivalent to the compensation and 
     benefits provided by the Board of Governors for the 
     corresponding class of employees in any fiscal year.
       (c) Specific Functional Units.--
       (1) Research.--The Agency shall establish a unit whose 
     functions shall include--
       (A) conducting research on consumer financial counseling 
     and education, including--
       (i) on the topics of debt, credit, savings, financial 
     product usage, and financial planning;
       (ii) exploring effective methods, tools, and approaches; 
     and
       (iii) identifying ways to incorporate new technology for 
     the delivery and evaluation of financial counseling and 
     education efforts;
       (B) researching, analyzing, and reporting on--
       (i) current and prospective developments in markets for 
     consumer financial products or services, including market 
     areas of alternative consumer financial products or services 
     with high growth rates;
       (ii) consumer awareness, understanding, and use of 
     disclosures and communications regarding consumer financial 
     products or services;
       (iii) consumer awareness and understanding of costs, risks, 
     and benefits of consumer financial products or services;
       (iv) consumer behavior with respect to consumer financial 
     products or services, including performance on mortgage loan; 
     and
       (v) experiences of traditionally underserved consumers, 
     including un-banked and under-banked consumers, regarding 
     consumer financial products or services;

[[Page 31136]]

       (C) identifying priorities for consumer financial education 
     efforts, based on consumer complaints, research or analysis 
     conducted pursuant to subparagraph (A), or other information; 
     and
       (D) testing and identifying methods of educating consumers 
     to determine which methods are most effective.
       (2) Community affairs.--The Director shall establish a unit 
     whose functions shall include providing information, 
     guidance, and technical assistance regarding the provision of 
     consumer financial products or services to traditionally 
     underserved consumers and communities.
       (3) Consumer complaints.--
       (A) In general.--The Director shall establish a unit whose 
     functions shall include establishing a central database, or 
     utilizing an existing database, for collecting and tracking 
     information on consumer complaints about consumer financial 
     products or services and resolution of complaints.
       (B) Coordination.--In performing the functions described in 
     subparagraph (A), the Director shall coordinate with the 
     Federal banking agencies, the Federal Trade Commission, other 
     Federal agencies, and other regulatory agencies or 
     enforcement authorities.
       (C) Data sharing required.--To the extent permitted by law 
     and the regulations prescribed by the Director regarding the 
     confidential treatment of information, the Director shall 
     share data relating to consumer complaints with Federal 
     banking agencies, other Federal agencies, and State 
     regulators. To the extent permitted by law and the 
     regulations prescribed by the Federal banking agencies and 
     other Federal agencies regarding the confidential treatment 
     of information, the Federal banking agencies and other 
     Federal agencies, respectively, shall share data relating to 
     consumer complaints with the Director and the Agency.
       (4) Consumer financial education.--
       (A) In general.--The Agency shall establish a unit to be 
     named the Office of Financial Literacy, whose functions shall 
     include activities designed to facilitate the education of 
     consumers on consumer financial products and services, 
     including through the dissemination of materials to consumers 
     on such topics.
       (B) Director.--The Office of Financial Literacy shall be 
     headed by a director.
       (C) Duties.--Such unit shall--
       (i) develop goals for programs to be provided by persons 
     that provide consumer financial education and counseling, 
     including programs through which such persons--

       (I) provide one-on-one financial counseling;
       (II) help individuals understand basic banking and savings 
     tools;
       (III) help individuals understand their credit history and 
     credit score;
       (IV) assist individuals in efforts to plan for major 
     purchases, reduce their debt, and improve their financial 
     stability; and
       (V) work with individuals to design plans for long-term 
     savings;

       (ii) develop recommendations regarding effective 
     certification of persons providing programs, or performing 
     the activities, described in clause (i), including 
     recommendations regarding--

       (I) certification processes and standards for 
     certification;
       (II) appropriate certifying bodies; and
       (III) mechanisms for funding the certification processes;

       (iii) develop a technology tool to collect data on 
     financial education and counseling outcomes; and
       (iv) conduct research to identify effective methods, tools, 
     technoloy, and strategies to educate and counsel consumers 
     about personal finance management, including on the topics of 
     debt, credit, savings, financial product usage, and financial 
     planning.
       (D) Coordination.--Such unit shall coordinate with other 
     units within the Agency in carrying out its functions, 
     including--
       (i) working with the unit established under paragraph (2) 
     to--

       (I) provide information and resources to community 
     organizations, nonprofit organizations, and other entities to 
     assist in helping educate consumers about consumer financial 
     products and services; and
       (II) develop a marketing strategy to promote financial 
     education and one-on-one counseling; and

       (ii) working with the unit established under paragraph (1) 
     to conduct research related to consumer financial education 
     and counseling.
       (d) Single Toll-free Telephone Number for Consumer 
     Complaints and Inquiries.--
       (1) Call intake system.--The Consumer Financial Protection 
     Agency shall establish a single, toll-free telephone number 
     for consumer complaints and inquiries concerning institutions 
     regulated by such agencies and a system for collecting and 
     monitoring complaints and, as soon as practicable, a system 
     for routing such calls to the Federal financial institution 
     regulatory agency that primarily supervises the financial 
     institution, or that is otherwise the appropriate Federal 
     agency to address the subject of the complaint or inquiry.
       (2) Routing calls to states.--To the extent practicable, 
     State agencies may receive appropriate call transfers from 
     the system established under paragraph (1) if--
       (A) the State agency's system has the functional capacity 
     to receive calls routed by the system; and
       (B) the State agency has satisfied any conditions of 
     participation in the system that the Council, coordinating 
     with State agencies through the chairperson of the State 
     Liaison Committee, may establish.
       (e) Report to the Congress.--Before the end of the 6-month 
     period beginning on the date of the enactment of this title, 
     the Federal financial institution regulatory agencies shall 
     submit a report to the Committee on Financial Services of the 
     House of Representatives and the Committee on Banking, 
     Housing, and Urban Affairs of the Senate describing the 
     agencies' efforts to establish--
       (1) a public interagency Web site for directing and 
     referring Internet consumer complaints and inquiries 
     concerning any financial institution to the Consumer 
     Financial Protection Agency for purposes of collecting, 
     monitoring, and responding to such complaints and, where 
     appropriate, a system for referring complaints to the Federal 
     financial institution regulatory agency, other Federal 
     agency, or State agency that is otherwise the appropriate 
     agency to address the subject of the complaint or inquiry; 
     and
       (2) a system to expedite the prompt and effective rerouting 
     of any misdirected consumer complaint or inquiry documents 
     between or among the agencies, with prompt referral of any 
     complaint or inquiry to the appropriate Federal financial 
     institution regulatory agency, and to participating State 
     agencies.
       (f) Office of Fair Lending and Equal Opportunity.--
       (1) Establishment.--Before the end of the 180-day period 
     beginning on the date of the enactment of this title, the 
     Director shall establish within the Agency 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 the Office which shall include the following 
     functions:
       (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 Agency, including the Equal Credit 
     Opportunity Act and the Home Mortgage Disclosure Act.
       (B) Coordinating fair lending enforcement efforts of the 
     Agency 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.
       (D) Providing annual reports to the Congress on the 
     Agency's efforts to fulfill its fair lending mandate.
       (3) Administration of office.--There is hereby established 
     the position of Assistant Director of the Agency for Fair 
     Lending and Equal Opportunity who--
       (A) shall be appointed by the Director;
       (B) shall carry out such duties as the Director may 
     delegate to such Assistant Director; and
       (C) shall serve as the Director of the Office of Fair 
     Lending and Equal Opportunity.
       (4) Prohibitions on participation in programs with respect 
     to certain indicted organizations.--
       (A) Prohibition.--The Director of the Office of Fair 
     Lending and Equal Opportunity may not allow a covered 
     organization to participate in any program established by 
     such Director.
       (B) Covered organization.--In this paragraph, the term 
     ``covered organization'' means any of the following:
       (i) Any organization that has been indicted for a violation 
     under any Federal or State law governing the financing of a 
     campaign for election for public office or any law governing 
     the administration of an election for public office, 
     including a law relating to voter registration.
       (ii) Any organization that had its State corporate charter 
     terminated due to its failure to comply with Federal or State 
     lobbying disclosure requirements.
       (iii) Any organization that has filed a fraudulent form 
     with any Federal or State regulatory agency.
       (iv) Any organization that--

       (I) employs any applicable individual, in a permanent or 
     temporary capacity;
       (II) has under contract or retains any applicable 
     individual; or
       (III) has any applicable individual acting on the 
     organization's behalf or with the express or apparent 
     authority of the organization.

       (C) Additional definitions.--In this paragraph:
       (i) The term ``organization'' includes the Association of 
     Community Organizations for Reform Now (in this paragraph 
     referred to as ``ACORN'') and any ACORN-related affiliate.
       (ii) The term ``ACORN-related affiliate'' means any of the 
     following:

       (I) Any State chapter of ACORN registered with the 
     Secretary of State's office in that State.
       (II) Any organization that shares directors, employees, or 
     independent contractors with ACORN.

[[Page 31137]]

       (III) Any organization that has a financial stake in ACORN.
       (IV) Any organization whose finances, whether federally 
     funded, donor-funded, or raised through organizational goods 
     and services, are shared or controlled by ACORN.

       (iii) The term ``applicable individual'' means an 
     individual who has been indicted for a violation under 
     Federal or State law relating to an election for Federal or 
     State office.
       (D) Revision of federal acquisition regulation.--The 
     Federal Acquisition Regulation shall be revised to carry out 
     the provisions of this paragraph relating to contracts.
       (E) Severability.--If any provision of this section or any 
     application of such provision to any person or circumstance 
     is held to be unconstitutional, the remainder of this section 
     and the application of the provision to any other person or 
     circumstance shall not be affected.

     SEC. 4107. CONSUMER ADVISORY BOARD.

       (a) Establishment Required.--The Director shall establish a 
     Consumer Advisory Board to advise and consult with the 
     Director in the exercise of the functions of the Director and 
     the Agency under this title, the enumerated consumer laws, 
     and to provide information on emerging practices in the 
     consumer financial products or services industry.
       (b) Membership.--
       (1) In general.--In appointing the members of the Consumer 
     Advisory Board, the Director shall seek--
       (A) to assemble experts in financial services, community 
     development, fair lending and civil rights, consumer 
     protection, and consumer financial products or services; and
       (B) to represent the interests of covered persons and 
     consumers.
       (2) Prohibition on membership with respect to certain 
     indicted organizations.--The director may not appoint an 
     employee of a covered organization (as defined in section 
     4105(f)(4)(B)) to the Consumer Advisory Board.
       (c) Political Affiliation.--Not more than 1 more than half 
     of the members of the Consumer Advisory Board may be members 
     of the same political party.
       (d) 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.
       (e) 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. 4108. COORDINATION.

       (a) Coordination With Other Federal Agencies and State 
     Regulators.--The Director shall coordinate with the 
     Securities and Exchange Commission, the Commodity Futures 
     Trading Commission, the Secretary of the Treasury, the 
     Federal Trade Commission and other Federal agencies and State 
     regulators, as appropriate, to promote consistent regulatory 
     treatment of, and enforcement related to, consumer and 
     investment products, services, and laws.
       (b) Coordination of Consumer Education Initiatives.--
       (1) In general.--The Director shall coordinate with each 
     agency that is a member of the Financial Literacy and 
     Education Commission established by the Financial Literacy 
     and Education Improvement Act (20 U.S.C. 9701 et seq.) to 
     assist each agency in enhancing its existing financial 
     literacy and education initiatives to better achieve the 
     goals in paragraph (2) and to ensure the consistency of such 
     initiatives across Federal agencies.
       (2) Goals of coordination.--In coordinating with the 
     agencies described in paragraph (1), the Director shall seek 
     to improve efforts to educate consumers about financial 
     matters generally, the management of their own financial 
     affairs, and their judgments about the appropriateness of 
     certain financial products.
       (c) Coordination.--The Agency may coordinate 
     investigations, compliance examinations, information sharing, 
     and related activities in support of activities undertaken 
     pursuant to the Fair Housing Act by other Federal agencies.

     SEC. 4109. REPORTS TO THE CONGRESS.

       (a) Reports Required.--The Director shall prepare and 
     submit to the President and the appropriate committees of the 
     Congress a report at the beginning of each regular session of 
     the Congress, beginning with the session following the 
     designated transfer date.
       (b) Contents.--The reports required by subsection (a) shall 
     include--
       (1) a list of the significant regulations and orders 
     adopted by the Director, as well as other significant 
     initiatives conducted by the Director, during the preceding 
     year and the Director's plan for regulations, orders, or 
     other initiatives to be undertaken during the upcoming 
     period;
       (2) an analysis of complaints about consumer financial 
     products or services that the Agency has received and 
     collected during the preceding year;
       (3) a list, with a brief statement of the issues, of the 
     public supervisory and enforcement actions to which the 
     Agency is a party (including adjudication proceedings 
     conducted under subtitle E) during the preceding year;
       (4) the actions taken regarding regulations, orders, and 
     supervisory actions with respect to covered persons which are 
     not credit unions or depository institutions, including 
     descriptions of the types of such covered persons, financial 
     activities, and consumer financial products or services 
     affected by such regulations, orders, and supervisory 
     actions;
       (5) an appraisal of significant actions, including actions 
     under Federal or State law, by State attorneys general or 
     State regulators relating to this title, the authorities 
     transferred under subtitles F and H, and the enumerated 
     consumer laws;
       (6) an analysis of the Agency's efforts to fulfill the fair 
     lending mission of the Agency; and
       (7) an appraisal of the regulatory and legal difficulties 
     encountered by the Agency in carrying out the mission and 
     duties of the Agency with respect to consumer protection, 
     including a description of--
       (A) the difficulties and hardships encountered with respect 
     to coordinating with other Federal and State government 
     entities;
       (B) the regulatory and enforcement limitations placed on 
     the Agency by this title;
       (C) the practices of persons, covered and uncovered under 
     this title, that allow such persons to harm consumers and 
     escape regulation or enforcement, including any trends 
     identified; and
       (D) legislative and administrative recommendations with 
     respect to solving or alleviating identified difficulties.
       (c) Annual Appearance Before the Congress.--The Director 
     shall appear before the House Committee on Financial Services 
     and the House Committee on Energy and Commerce at an annual 
     hearing, after the report is submitted under subsection (a)--
       (1) to discuss the efforts, activities, objectives and 
     plans of the Agency; and
       (2) discuss and answer questions concerning such report.

     SEC. 4110. GAO SMALL BUSINESS STUDIES.

       (a) Studies Required.--Not later than the end of the 3-year 
     period beginning on the designated transfer date, and also 3 
     years thereafter, the Comptroller General of the United 
     States shall carry out a study to examine the effects that 
     regulations issued by the Agency have on small businesses.
       (b) Report.--At the conclusion of each study required under 
     subsection (a), the Comptroller General of the United States 
     shall issue a report to the Congress containing the finding 
     and determinations made by the Comptroller General in 
     carrying out such study.

     SEC. 4111. FUNDING; FEES AND ASSESSMENTS; PENALTIES AND 
                   FINES.

       (a) Transfer of Funds From the Board of Governors.--
       (1) Transfer required.--Each year, beginning on the 
     designated transfer date, the Board of Governors shall 
     transfer funds in an amount equaling 10 percent of the 
     Federal Reserve System's total system expenses (as reported 
     in the Budget Review of the Board of Governors most recent 
     Annual Report to Congress) to the Director for the purposes 
     of carrying out the authorities granted in this title, under 
     the enumerated consumer laws, and transferred under subtitles 
     F and H.
       (2) Procedures.--The Board of Governors, in consultation 
     with the Agency, shall make appropriate arrangements to 
     transfer funds to the Director in accordance with this 
     subsection.
       (b) Fees and Assessments.--
       (1) Assessment required.--
       (A) In general.--Taking into account such other sums 
     available to the Agency and subject to the provisions of this 
     subsection and subsection (d), the Director shall assess fees 
     on covered persons to meet the Agency's expenses for carrying 
     out the duties and responsibilities of the Agency, including 
     supervising such covered persons.
       (B) Basis for assessment.--The Agency shall assess fees on 
     covered persons pursuant to this subsection based on the size 
     and complexity of the covered person, and the compliance 
     record of the covered person under the enumerated consumer 
     laws, the laws and authorities transferred under subtitles F 
     and H, and this title.
       (2) Regulations.--
       (A) In general.--The Director shall prescribe regulations 
     to govern the imposition and collection of fees and 
     assessments.
       (B) Factors required to be addressed.--Regulations 
     prescribed by the Director under this subsection shall 
     specify and define--
       (i) the basis of fees or assessments (such as the 
     outstanding number of consumer credit accounts, off-balance 
     sheet receivables attributable to the covered person, total 
     consolidated assets, total assets under management, or volume 
     of consumer financial transactions or use of service 
     providers);
       (ii) the amount and frequency of fees or assessments; and
       (iii) such other factors that the Director determines are 
     appropriate, which shall include a covered person's 
     compliance record

[[Page 31138]]

     under the enumerated consumer laws, the authorities 
     transferred under subtitles F and H, and this title.
       (3) Assessments on depository institution covered 
     persons.--
       (A) Depository institution covered person defined.--For 
     purposes of this section, the term ``depository institution 
     covered person'' means a covered person that is an insured 
     depository institution or credit union.
       (B) Assessments.--
       (i) Fees required.--The Director shall assess fees for 
     supervision as are appropriate on depository institution 
     covered persons, taking into account the size and complexity 
     of the covered person, and the compliance record of the 
     covered person under the enumerated consumer laws, the laws 
     and authorities transferred under subtitles F and H, and this 
     title.
       (ii) Limitation on certain fees.--The Agency shall not 
     assess examination fees on an institution referred to in 
     section 4203(a), or an institution whose examination 
     responsibilities have been delegated to an appropriate 
     agency, pursuant to section 4202(c)(11).
       (iii) Basis for fee amounts.--Fees assessed by the Director 
     under this subparagraph may be established at levels 
     necessary to meet the Agency's expenses for carrying out the 
     duties and responsibilities of the Director and the Agency 
     under this title with regard to depository institution 
     covered persons.
       (C) Coordination during implementation period.--The 
     Director and the agencies responsible for chartering and or 
     supervising depository institution covered persons shall 
     coordinate on the levels of fees assessed on depository 
     institution covered persons under this paragraph, so that 
     levels of assessments under this subparagraph combined with 
     levels of assessments by agencies responsible for chartering 
     and or supervising depository institution covered persons 
     shall be no more than the assessments such depository 
     institution covered person was required to pay for the 12-
     month period ending on December 31, 2009.
       (D) Marginal assessment rate.--
       (i) In general.--In setting assessment rates for depository 
     institution covered persons, the Director shall not impose 
     assessments that result in higher marginal assessment rates 
     for depository institution covered persons with assets of 
     less than $25,000,000,000 than the marginal rates for 
     depository institutions covered persons with assets that 
     exceed that amount.
       (ii) Rule of construction.--Clause (i) shall not be 
     construed as limiting or impairing the authority of the 
     Director to set assessments that would result in higher 
     marginal assessment rates on the larger depository 
     institution covered persons.
       (E) Limitations on assessments.--
       (i) Assessments for administrative costs.--Notwithstanding 
     any provision in this title, no depository institution 
     covered person shall be charged an assessment to be used for 
     the supervision, examination, enforcement or regulation by 
     the Agency of nondepository covered persons.
       (ii) Amounts paid for consumer compliance supervision.--
     Notwithstanding any provision in this title, no depository 
     institution covered person shall pay more for consumer 
     compliance supervision than it paid before the date of 
     enactment of this title.
       (4) Assessments on nondepository covered persons.--
       (A) Nondepository covered person defined.--For purposes of 
     this section, the term ``nondepository covered person''--
       (i) means a covered person that is not a credit union or 
     insured depository institution; and
       (ii) includes any bank holding company.
       (B) Assessments.--
       (i) Fees required.--The Director shall assess fees for 
     registration, examination, and supervision of nondepository 
     covered persons.
       (ii) Basis for fee amounts.--Fees assessed by the Director 
     under this subparagraph may be established at levels 
     necessary to meet the Agency's expenses for carrying out the 
     duties and responsibilities of the Director and the Agency, 
     including supervising such covered persons, taking into 
     account such other sums available to the Agency.
       (iii) Registration fee minimums.--Registration fees imposed 
     on a nondepository covered person under this paragraph shall, 
     at a minimum, be imposed on such covered person at the time 
     the person registers (or periodically renews any such 
     registration) with the Agency, in accordance with regulations 
     prescribed by the Director.
       (C) Nondepository covered person assessment not less than 
     for depository covered persons.--Assessment rates levied by 
     the Director under this section on a nondepository 
     institution covered persons shall be no less than assessments 
     levied by the Agency under this section on a depository 
     institution covered person with similar characteristics.
       (D) Offsetting Collections.--Fees assessed under this 
     paragraph--
       (i) shall not be collected for any fiscal year except to 
     the extent provided in advance in appropriation Acts; and
       (ii) shall be deposited and credited as offsetting 
     collections to the account providing appropriations to the 
     Agency.
       (c) Authorization of Appropriations.--
       (1) In general.--For the purposes of carrying out the 
     authorities granted in this title, under the enumerated 
     consumer laws, and the laws and authorities transferred under 
     subtitles F and H, there are authorized to be appropriated to 
     the Director $200,000,000 for each of fiscal years 2010, 
     2011, 2012, 2013, and 2014.
       (2) Apportionment.--Notwithstanding any other provision of 
     law, such amounts shall be subject to apportionment under 
     section 1517 of title 31, United States Code, and 
     restrictions that generally apply to the use of appropriated 
     funds in title 31, United States Code, and other laws.
       (3) Other available funds taken into account.--Sums 
     appropriated under this subsection shall take into account 
     such other sums available to the Agency under this section.
       (d) Consumer Financial Protection Agency Depository 
     Institution Fund.--
       (1) Establishment.--
       (A) In general.--There is established in the Treasury a 
     separate fund to be known as the ``Consumer Financial 
     Protection Agency Depository Institution Fund'' (hereafter in 
     this section referred to as the ``CFPA Depository Fund'').
       (B) Amounts in fund not available for certain purposes.--
     Other than pursuant to subsection (f), amounts on deposit in 
     the CFPA Depository Fund shall not be used in the supervision 
     and examination of nondepository institution covered persons.
       (2) All transferred funds deposited.--All amounts 
     transferred to the Agency under subsection (a) shall be 
     deposited into the CFPA Depository Fund.
       (3) All applicable supervisory fees and assessments 
     deposited.--The Director shall deposit all amounts received 
     from assessments under subsection (b)(3) in the CFPA 
     Depository Fund.
       (e) Consumer Financial Protection Agency Nondepository 
     Institution Fund.--
       (1) Establishment.--
       (A) In general.--There is established in the Treasury a 
     separate fund called the Consumer Financial Protection Agency 
     Nondepository Institution Fund (hereafter in this section 
     referred to as the ``CFPA Nondepository Fund'').
       (B) Amounts in fund not available for certain purposes.--
     Other than pursuant to subsection (f), amounts on deposit in 
     the CFPA Nondepository Fund shall not be used for the 
     supervision and examination of depository institution covered 
     persons.
       (2) All applicable supervisory fees and assessments 
     deposited.--The Director shall deposit all amounts received 
     from assessments under subsection (b)(4) in the CFPA 
     Nondepository Fund.
       (f) General Provisions Relating to Funds.--
       (1) Maintenance of funds.--
       (A) Agency funds maintained by treasury.--The Consumer 
     Financial Protection Agency Depository Institution Fund 
     established under subsection (d) and the Consumer Financial 
     Protection Agency Nondepository Institution Fund established 
     under subsection (e) shall each be--
       (i) maintained and administered by the Secretary; and
       (ii) maintained separately and not commingled.
       (B) Agency's authority.--Any provision of this title 
     forbidding the commingling or use of the CFPA Depository Fund 
     and the CFPA Nondepository Fund shall not be construed as 
     limiting or impairing the authority of the Agency to use the 
     same facilities and resources in the course of conducting 
     supervisory and regulatory functions with respect to 
     depository institutions and nondepository institutions, or to 
     integrate such functions.
       (C) Accounting requirements.--
       (i) Accounting for use of facilities and resources.--The 
     Agency shall keep a full and complete accounting of all costs 
     and expenses associated with the use of any facility or 
     resource used in the course of any function specified in 
     subparagraph (B) and shall allocate, in the manner provided 
     in subparagraph (D), any such costs and expenses incurred by 
     the Agency--

       (I) with respect to depository institution covered persons, 
     to the CFPA Depository Fund; and
       (II) with respect to nondepository covered persons, to the 
     CFPA Nondepository fund.

       (D) Allocation of administrative expenses.--Any personnel, 
     administrative, or other overhead expense of the Agency shall 
     be allocated--
       (i) fully to the CFPA Depository Fund if the expense was 
     incurred directly as a result of the Agency's 
     responsibilities solely with respect to depository 
     institution covered persons;
       (ii) fully to the CFPA Nondepository Fund, if the expense 
     was incurred directly as a result of the Agency's 
     responsibilities solely with respect to nondepository covered 
     persons;
       (iii) between the CFPA Depository Fund and the CFPA 
     Nondepository Fund, in amounts reflecting the relative degree 
     to which the expense was incurred as a result of the 
     activities of depository institution covered persons, and 
     nondepository covered persons; and
       (iv) if the Director is unable to make a complete 
     allocation under clause (i), (ii), or

[[Page 31139]]

     (iii), between the CFPA Depository Fund and the CFPA 
     Nondepository Fund, in amounts reflecting the relative 
     proportion that, as of the end of the preceding year--

       (I) the aggregate assets of all depository institution 
     covered persons bears to the aggregate assets of all covered 
     persons; and
       (II) the aggregate assets of all nondepository covered 
     persons bears to the aggregate assets of all covered persons.

       (E) Agency fund.--The ``Agency fund'' means the Consumer 
     Financial Protection Agency Depository Institution Fund 
     established under subsection (d), and, the Consumer Financial 
     Protection Agency Nondepository Institution Fund established 
     under subsection (e), and the Consumer Financial Protection 
     Agency Civil Penalty Fund established under subsection (g).
       (2) Investment.--
       (A) Amounts in funds may be invested.--The Director may 
     request the Secretary to invest the portion of any Agency 
     fund that, in the Director's judgment, is not required to 
     meet the current needs of such fund.
       (B) Eligible investments.--Investments pursuant to 
     subparagraph (A) 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 Agency fund 
     involved, as determined by the Director.
       (C) Interest and proceeds credited.--The interest on, and 
     the proceeds from the sale or redemption of, any obligations 
     held in the respective Agency Fund shall be credited to and 
     form a part of the respective Agency Fund.
       (3) Use of Funds.--
       (A) Depository Institution Fund.--Funds obtained by, 
     transferred to, or credited to the Consumer Financial 
     Protection Agency Depository Institution Fund shall be 
     immediately available to the Agency, and remain available 
     until expended, to pay the expenses of the Agency in carrying 
     out the duties and responsibilities of the Director and the 
     Agency, including the payment of compensation of the Director 
     and officers and employees of the Agency.
       (B) Nondepository institution fund.--Funds obtained by, 
     transferred to, or credited to the Consumer Financial 
     Protection Agency Nondepository Institution Fund shall be 
     available to the Agency to the extent provided in advance in 
     appropriation Acts, and may remain available until expended, 
     to pay the expenses of the Agency in carrying out the duties 
     and responsibilities of the Director and the Agency, 
     including the payment of compensation of the Director and 
     officers and employees of the Agency.
       (g) Penalties and Fines.--
       (1) Establishment of victims relief fund.--There is 
     established in the Treasury of the United States a fund to be 
     known as the ``Consumer Financial Protection Agency Civil 
     Penalty Fund'' (hereafter in this section referred to as the 
     ``Civil Penalty Fund'').
       (2) Deposits.--If the Agency obtains a civil penalty 
     against any person in any judicial or administrative action 
     under this title, any law or authority transferred under 
     subtitles F and H, or any enumerated consumer law, the Agency 
     shall deposit into the Civil Penalty Fund the amount of the 
     penalty collected.
       (3) Payment to victims.--Amounts in the Civil Penalty Fund 
     shall be available to the Director, without fiscal year 
     limitation, for payments to the victims of activities for 
     which civil penalties have been imposed under this title, the 
     law and authorities transferred under subtitles F and H, or 
     any enumerated consumer law.

     SEC. 4112. AMENDMENTS RELATING TO OTHER ADMINISTRATIVE 
                   PROVISIONS.

       (a) Act of October 28, 1974.--Section 111 of Public Law 93-
     495 (12 U.S.C. 250) is amended by inserting ``the Consumer 
     Financial Protection Agency,'' after ``Federal Deposit 
     Insurance Corporation,''.
       (b) Paperwork Reduction Act.--Section 2(5) of the Paperwork 
     Reduction Act (44 U.S.C. 3502(5)) by inserting ``the Consumer 
     Financial Protection Agency,'' after ``the Securities and 
     Exchange Commission,''.

     SEC. 4113. EFFECTIVE DATE.

       This subtitle shall take effect on the date of the 
     enactment of this title.

         Subtitle B--General Powers of the Director and Agency

     SEC. 4201. MANDATE AND OBJECTIVES.

       (a) Mandate.--The Director shall seek to promote 
     transparency, simplicity, fairness, accountability, and equal 
     access in the market for consumer financial products or 
     services.
       (b) Objectives.--The Director may exercise the authorities 
     granted in this title, in the enumerated consumer laws, and 
     transferred under subtitles F and H for the purposes of 
     ensuring that, with respect to consumer financial products or 
     services--
       (1) consumers have and can use the information they need to 
     make responsible decisions about consumer financial products 
     or services;
       (2) consumers are protected from abuse, unfairness, 
     deception, and discrimination;
       (3) markets for consumer financial products or services 
     operate fairly and efficiently with ample room for 
     sustainable growth and innovation; and
       (4) traditionally underserved consumers and communities 
     have equal access to responsible financial services.

     SEC. 4202. AUTHORITIES.

       (a) In General.--The Director may exercise the authorities 
     granted in this title, in the enumerated consumer laws, and 
     transferred under subtitles F and H, to administer, enforce, 
     and otherwise implement the provisions of this title, the 
     authorities transferred in subtitles F and H, and the 
     enumerated consumer laws.
       (b) Rulemaking, Orders, and Guidance.--
       (1) In general.--The Director may prescribe regulations and 
     issue orders and guidance as may be necessary or appropriate 
     to enable it to administer and carry out the purposes and 
     objectives of this title, the authorities transferred under 
     subtitles F and H, and the enumerated consumer laws, and to 
     prevent evasions of this title, any such authority, and any 
     such law.
       (2) Standards for rulemaking.--In prescribing a regulation 
     under this title or pursuant to the authorities transferred 
     under subtitles F and H or the enumerated consumer laws, the 
     Director shall--
       (A) consider the potential benefits and costs to consumers 
     and covered persons, including the potential reduction of 
     consumers' access to consumer financial products or services, 
     resulting from such regulation; and
       (B) consult with the Federal banking agencies, State bank 
     supervisors, the Federal Trade Commission, or other Federal 
     agencies, as appropriate, regarding the consistency of a 
     proposed regulation with prudential, consumer protection, 
     civil rights, market, or systemic objectives administered by 
     such agencies or supervisors.
       (3) Exemptions.--
       (A) In general.--The Director, by regulation or order, may 
     conditionally or unconditionally exempt any covered person, 
     service provider, or any consumer financial product or 
     service or any class of covered persons, class of service 
     providers, or consumer financial products or services, from 
     any provision of this title, any enumerated consumer law, or 
     from any regulation under any such provision or law, as the 
     Director deems 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 by regulation or 
     order as permitted in subparagraph (A), the Director shall as 
     appropriate take into consideration the following:
       (i) The total assets of the covered person.
       (ii) The volume of transactions involving consumer 
     financial products or services in which the covered person 
     engages.
       (iii) The extent to which the covered person engages in 1 
     or more financial activities.
       (iv) Existing laws or regulations which are applicable to 
     the consumer financial product or service and the extent to 
     which such laws or regulations provide consumers with 
     adequate protections.
       (C) Rule of construction.--No provision of this section 
     shall be construed as altering, amending, or affecting any 
     authority under sections 304(a), 304(i), 305(a), and 306(b) 
     of the Home Mortgage Disclosure Act of 1975 and sections 
     703(a)(1), 703(a)(2), 703(a)(3), 705(f), and 705(g) of the 
     Equal Credit Opportunity Act for determining whether a 
     covered person should be provided an exemption.
       (c) Examinations and Reports.--
       (1) In general.--Except as provided under section 4203, the 
     Director may on a periodic basis examine a covered person or 
     service provider, with respect to any consumer financial 
     product or service, for purposes of ensuring compliance with 
     the requirements of this title, the enumerated consumer laws, 
     and any regulations prescribed by the Director under this 
     title or pursuant to the authorities transferred under 
     subtitles F and H, and enforcing compliance with such 
     requirements.
       (2) Examination program.--The Director shall exercise any 
     authority of the Director under paragraph (1) in a manner 
     designed to ensure that such authorities are exercised with 
     respect to covered persons or service providers, without 
     regard to charter or corporate form, based on the Director's 
     assessment of the risks posed to consumers in the relevant 
     product markets and geographic markets, and taking into 
     consideration, as applicable, the following factors:
       (A) The asset size of the covered persons.
       (B) The volume of transactions involving consumer financial 
     products or services in which the covered persons engage.
       (C) The risks to consumers created by the provision of such 
     consumer financial products or services.
       (D) In the case of State-chartered institutions, the extent 
     to which such institutions are subject to oversight by State 
     authorities for consumer protection.
       (3) Coordination.--The Director shall coordinate the 
     Agency's supervisory activities with the supervisory 
     activities conducted by the Federal banking agencies and the 
     State bank supervisors, including establishing their 
     respective schedules for examining covered persons and 
     requirements regarding reports to be submitted by covered 
     persons.
       (4) Reports.--The Director may require reports from a 
     covered person for purposes of ensuring compliance with the 
     requirements

[[Page 31140]]

     of this title, the enumerated consumers laws, and any 
     regulation prescribed by the Director under this title or 
     pursuant to the authorities transferred under subtitles F and 
     H, and enforcing compliance with such requirements.
       (5) Content of reports.--The reports authorized in 
     paragraph (4) may include such information as necessary to 
     keep the Agency informed as to--
       (A) the compliance systems or procedures of the covered 
     person or any affiliate thereof, with applicable provisions 
     of this title or any other law that the Agency has 
     jurisdiction to enforce; and
       (B) matters related to the provision of consumer financial 
     products or services including the servicing or maintenance 
     of accounts or extensions of credit.
       (6) Use of existing reports.--In general, the Agency shall, 
     to the fullest extent possible, use--
       (A) reports that a covered person, or any affiliate 
     thereof, or any service provider to such covered person or 
     affiliate, has provided or been required to provide to a 
     Federal or State agency; and
       (B) information that has been reported publicly.
       (7) Access by the agency to reports of other regulators.--
       (A) Examination and financial condition reports.--Upon 
     providing reasonable assurances of confidentiality, the 
     Agency shall have access to any report of examination or 
     financial condition, including a report containing data 
     regarding consumer complaints, made by a Federal banking 
     agency or other Federal agency having supervision of a 
     covered person, or a service provider, (other than returns 
     and return information described in section 6103 of the 
     Internal Revenue Code of 1986) and to all revisions made to 
     any such report.
       (B) Provision of other reports to agency.--In addition to 
     the reports described in subparagraph (A), a Federal banking 
     agency may, in its discretion, furnish to the Agency any 
     other report or other confidential supervisory information 
     concerning any insured depository institution, any credit 
     union, or other entity examined by such agency under 
     authority of any Federal law.
       (8) Access by other regulators to reports of the agency.--
       (A) Examination reports.--Upon providing reasonable 
     assurances of confidentiality, a Federal banking agency, a 
     State regulator, or any other Federal agency having 
     supervision of a covered person shall have access to any 
     report of examination made by the Agency with respect to the 
     covered person or service provider, and to all revisions made 
     to any such report.
       (B) Provision of other reports to other regulators.--In 
     addition to the reports described in paragraph (A), the 
     Agency may, in the discretion of the Agency, furnish to a 
     Federal banking agency any other report or other confidential 
     supervisory information concerning any insured depository 
     institution, any credit union, or other entity examined by 
     the Agency under authority of any Federal law.
       (9) Preservation of authority.--No provision in paragraph 
     (3) shall be construed as preventing the Agency from 
     conducting an examination authorized by this title or under 
     the authorities transferred under subtitles F and H or 
     pursuant to any enumerated consumer law. No provision of this 
     title shall be construed as limiting the authority of the 
     Director to require reports from a covered person, as 
     permitted under paragraph (4), regarding information owned or 
     under the control of the covered person, regardless of 
     whether such information is maintained, stored, or processed 
     by another person.
       (10) Reports of tax law noncompliance.--The Director shall 
     provide the Commissioner of Internal Revenue with any report 
     of examination or related information identifying possible 
     tax law noncompliance.
       (11) Delegation.--
       (A) In general.--The Director may delegate the examination 
     authorities of the Agency under this title to any appropriate 
     agency, as defined in section 4203, for any insured 
     depository institution or insured credit union that is not 
     subject to section 4203 upon a petition by an appropriate 
     agency.
       (B) Standard for delegation.--The Director shall provide 
     such delegation if, in the Director's sole discretion, the 
     Director determines that--
       (i) the delegation is consistent with the public interest;
       (ii) the appropriate agency is capable of enforcing 
     compliance with this title, and with any regulation 
     prescribed under this title; and
       (iii) such capability is comparable to or superior to the 
     capability of the Agency, in terms of expertise, demonstrated 
     commitment, and overall effectiveness, in enforcing such 
     compliance.
       (C) Effect of delegation.--The insured depository 
     institution or insured credit union shall be subject to the 
     examination process described in section 4203(b).
       (D) No effect on enforcement.--The Director's delegation 
     authority under this paragraph shall not apply to the 
     Director's enforcement responsibilities under subsection (e).
       (d) Exclusive Rulemaking and Examination Authority.--
     Notwithstanding any other provision of Federal law other than 
     section 4203 and subsections (f) and (h) of this section, to 
     the extent that a Federal law authorizes the Director and 
     another Federal agency to prescribe regulations, issue 
     guidance, conduct examinations, or require reports under that 
     law for purposes of assuring compliance with this title, any 
     enumerated consumer law, the laws for which authorities were 
     transferred under subtitles F and H, and any regulations 
     prescribed under this title or pursuant to any such 
     authority, the Director shall have the exclusive authority to 
     prescribe regulations, issue guidance, conduct examinations, 
     require reports, or issue exemptions with regard to any 
     person subject to that law and with respect to any activity 
     regulated under any enumerated consumer law.
       (e) Primary Enforcement Authority.--(1) The Agency to have 
     primary enforcement authority.--To the extent that a Federal 
     law authorizes the Agency and another Federal agency to 
     enforce a provision of a law, the Agency shall have primary 
     enforcement authority to enforce the provision of that 
     Federal law with respect to any person in accordance with 
     this subsection.
       (2) Coordination with the federal trade commission.--
       (A) Notice. If the Federal Trade Commission is authorized 
     to enforce any Federal law described in paragraph (1), or a 
     regulation prescribed under any such Federal law, either the 
     Agency or the Federal Trade Commission shall serve written 
     notice to the other of any enforcement action prior to 
     initiating such an enforcement action, except that if the 
     agency or commission filing the action determines that prior 
     notice is not feasible, that agency or commission may provide 
     notice immediately upon initiating such enforcement action.
       (B) Intervention by either entity.--Upon receiving any 
     notice under subparagraph (A) with respect to an enforcement 
     action, the Agency or Federal Trade Commission may intervene 
     in such enforcement action, and upon intervening--
       (i) be heard on all matters arising in such enforcement 
     action; and
       (ii) file petitions for appeal in such enforcement action.
       (C) Pendency of action.--Whenever a civil action has been 
     instituted by or on behalf of the Agency or the Federal Trade 
     Commission for any violation of any Federal law described in 
     paragraph (1), or a regulation prescribed under any such 
     Federal law, the other entity may not, during the pendency of 
     that action, institute a civil action unde such law or 
     regulation against any defendant named in the complaint in 
     such pending action for any violation alleged in the 
     complaint.
       (D) Agreements between entities.--
       (i) Negotiations authorized.--The Agency and the Federal 
     Trade Commission may negotiate an agreement to establish 
     procedures to ensure that the enforcement actions of the 2 
     agencies are appropriately coordinated.
       (ii) Score of negotiated agreement.--The terms of any 
     agreement negotiated pursuant to clause (i) may modify or 
     supersede the provisions of subparagraphs (A), (B), and (C).
       (3) Coordination with other federal agency.--
       (A) Referral.--Any Federal agency (other than the Federal 
     Trade Commission) that is authorized to enforce a Federal law 
     described in paragraph (1) may recommend in writing to the 
     Director that the Agency initiate an enforcement proceeding 
     to the extent the Agency is authorized by that Federal law or 
     by this title. The recommendation shall be accompanied by a 
     written explanation of the concerns giving rise to the 
     recommendation.
       (B) Backstop enforcement authority of other federal 
     agency.--If the Agency does not, before the end of the 120-
     day period beginning on the date on which the Director 
     receives a recommendation under subparagraph (A), initiate an 
     enforcement proceeding, the other agency referred to in 
     subparagraph (A) may initiate an enforcement proceeding as 
     permitted by that Federal law.
       (4) Institutions subject to special examination and 
     enforcement procedures.-- This subsection shall not apply to 
     institutions subject to section 4203.
       (f) Preservation of Other Authority.--
       (1) Attorney general.--No provision of this title shall be 
     construed as affecting any authority of the Attorney General.
       (2) Secretary of the treasury.--No provision of this title 
     shall be construed as affecting any authority of the 
     Secretary of the Treasury, including with respect to 
     prescribing regulations, initiating enforcement proceedings, 
     or taking other actions with respect to a person providing 
     tax planning or tax preparation services.
       (3) Fair housing act.--No provision of this title shall be 
     construed as affecting any authority arising under the Fair 
     Housing Act.
       (g) Effect on Other Authority.--No provision of this 
     section or section 4203 shall be construed as modifying or 
     limiting the authority of any appropriate Federal banking 
     agency or the Director or Agency to interpret, or take 
     enforcement action under, any law or regulation the 
     interpretation or enforcement of which is committed to the 
     banking agency or the Director or Agency,

[[Page 31141]]

     which shall include, in the case of the Director and the 
     Agency, this title, the enumerated consumer laws, and the 
     regulations prescribed under this title or such laws.
       (h) Preservation of Federal Trade Commission Authority.--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 
     other laws other than the enumerated consumer laws.
       (i) Preservation of Farm Credit Administration Authority.--
     No provision of this title shall be construed as modifying, 
     limiting, or otherwise affecting the authority of the Farm 
     Credit Administration.

     SEC. 4203. EXAMINATION AND ENFORCEMENT FOR SMALL BANKS, 
                   THRIFTS, AND CREDIT UNIONS.

        (a) Scope of Institutions Subject to This Section.--
       (1) Institutions covered.--This section shall apply to--
       (A) any insured depository institution with total assets of 
     $10,000,000,000 or less; or
       (B) any insured credit union with total assets of 
     $1,500,000,000 or less.
       (2) Appropriate agency.--For purposes of this title, the 
     term ``appropriate agency'' means--
       (A) in the case of an insured depository institution, the 
     appropriate Federal banking agency as such 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.
       (b) Examinations.--
       (1) In general.--The appropriate agency shall on a periodic 
     basis examine, or require reports from, an institution 
     referred to in subsection (a) for purposes of ensuring 
     compliance with the requirements of this title, the 
     enumerated consumer laws, and any regulation prescribed by 
     the Director under this title or pursuant to the authorities 
     transferred under subtitles F and H, and enforcing compliance 
     with such requirements.
       (2) Agency role in examinations.--
       (A) The appropriate agency shall provide all reports, 
     records, and documentation related to the examination process 
     to the Agency on a timely and ongoing basis.
       (B) The Director and Agency may, at its discretion, include 
     an examiner on any examination conducted under paragraph (1). 
     The appropriate agency shall involve such Agency examiner in 
     the entire examination process, including setting the scope 
     of an examination, participating in the examination, and 
     providing input on the examination report, matters requiring 
     attention and examination ratings.
       (c) Enforcement.--
       (1) In general.--Notwithstanding any other provision of 
     this title other than this subsection, the appropriate agency 
     shall have primary authority to enforce violations identified 
     at institutions referred to in subsection (a) of any of the 
     requirements of this title, the enumerated consumers laws, 
     and any regulation prescribed by the Director under this 
     title or pursuant to the authorities transferred under 
     subtitles F and H.
       (2) Coordination with appropriate agency.--
       (A) Referral.--
       (i) In general.--The Agency may recommend in writing to the 
     appropriate agency that the appropriate agency initiate an 
     enforcement proceeding to the extent the appropriate agency 
     is authorized by that Federal law or by this title.
       (ii) Explanation.--Any recommendation under clause (i) 
     shall be accompanied by a written explanation of the concerns 
     giving rise to the recommendation.
       (B) Backstop enforcement authority of agency.--If the 
     appropriate agency does not, before the end of the 120-day 
     period beginning on the date on which the appropriate agency 
     receives a recommendation under subparagraph (A), initiate an 
     enforcement proceeding, the Agency may initiate an 
     enforcement proceeding as permitted by Federal law.
       (d) Actions Arising Out of Consumer Complaint System.--
     Notwithstanding any provision of this section, if through the 
     consumer complaint system administered by the Agency under 
     section 4105(c)(3), the Director has reasonable cause to 
     believe that an institution referred to in subsection (a) 
     demonstrates noncompliance with any provision of this title, 
     the enumerated consumer laws, or any regulation prescribed by 
     the Director under this title or pursuant to the authorities 
     transferred under subtitles F and H, the Director may 
     directly investigate such institution for such noncompliance 
     and take any action permitted under subtitle E that the 
     Director deems appropriate.
       (e) Removal of Appropriate Agency for Particular 
     Institution.--
       (1) Heightened supervision.--The Director--
       (A) may provide notice to an appropriate agency that the 
     Director is considering issuing a removal order under 
     paragraph (2); and
       (B) shall have an Agency examiner participate in the 
     examination process under subsection (b) for at least 1 
     examination cycle.
       (2) Removal by order.--If, after the completion of at least 
     1 examination cycle following the provision of notice to an 
     appropriate agency under paragraph (1), the Director 
     determines in writing that the appropriate agency has failed 
     to adequately conduct consumer compliance examinations or 
     bring appropriate enforcement actions against an institution 
     referred to in subsection (a), the Director may order the 
     removal of the appropriate agency from its responsibilities 
     under this section for such institution.
       (3) Agency authority upon removal.--Upon removal pursuant 
     to paragraph (2), the Agency shall examine and enforce 
     against such institution as if the institution were subject 
     to section 4202.
       (4) Effective date.--An order under paragraph (2) shall 
     take effect 30 days after a determination by the Secretary of 
     the Treasury pursuant to paragraphs (5) and (6).
       (5) Automatic appeal.--An order issued by the Director 
     pursuant to paragraph (2) shall be automatically appealed to 
     the Secretary.
       (6) Decision by the secretary of the treasury.--
       (A) Determination.--The order issued pursuant to paragraph 
     (2) shall be deemed affirmed unless the Secretary of the 
     Treasury denies the determination of the Director within 120 
     days of the issuance of the order pursuant to paragraph (2).
       (B) Rule of construction.--Nothing in subparagraph (A) 
     shall be construed as prohibiting the Secretary of the 
     Treasury from making a determination to either affirm or deny 
     an order issued pursuant to paragraph (2) prior to the 
     passage of the time period in subparagraph (A).
       (7) Regulations.--By the transfer date, the Secretary shall 
     issue regulations that establish the standards the Director 
     shall apply in making a determination to remove an 
     appropriate agency and the process, procedures, and standards 
     for an appeal. Such standards shall require the Director to 
     consider at least the following in issuing an order removing 
     an appropriate agency for an institution referred to in 
     subsection (a)(1):
       (A) Reports of examination of such institution.
       (B) Any enforcement actions taken by an appropriate agency 
     against such institution and the results of those actions.
       (C) Consumer complaints issued against such institution.
       (D) Actions taken by State attorneys general and private 
     rights of action against such institution.
       (f) Policies and Procedures.--Within 180 days after the 
     designated transfer date, the Agency and the appropriate 
     agency shall develop policies and procedures for implementing 
     this section.
       (g) Assessments.--
       (1) Limitation on certain fees.--The Agency shall not 
     assess examination fees on an institution referred to in 
     subsection (a).
       (2) Rule of construction.--No provision of this section 
     shall be construed as preventing the appropriate agency from 
     assessing fees on an institution referred to in paragraph (1) 
     to meet the appropriate agency's expenses for carrying out 
     such examination and supervision responsibilities pursuant to 
     this section.

     SEC. 4204. SIMULTANEOUS AND COORDINATED SUPERVISORY ACTION.

       (a) Examinations.--A Federal banking agency and the Agency 
     shall, with respect to each insured depository institution, 
     credit union, or other covered person supervised by the 
     Federal banking agency and the Agency, respectively--
       (1) coordinate the scheduling of examinations of the 
     insured depository institution, and credit union, or other 
     covered person;
       (2) conduct simultaneous examinations of each insured 
     depository institution, credit union or other covered person, 
     unless such institution requests examinations to be conducted 
     separately;
       (3) 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
       (4) prior to issuing a final report of examination or 
     taking supervisory action, an agency shall take into 
     consideration concerns, if any, raised in the comments made 
     by the other agency.
       (b) Coordination With State Bank Supervisors.--The Agency 
     shall pursue arrangements and agreements with State bank 
     supervisors to coordinate examinations consistent with 
     subsection (a).
       (c) Resolution of Conflict in Supervision.--
       (1) Request of depository institution.--
       (A) In general.--If the proposed material supervisory 
     determinations of the Agency and a Federal banking agency are 
     conflicting, an insured depository institution, credit union, 
     or other covered person may request the agencies to 
     coordinate and present a joint statement of coordinated 
     supervisory action.
       (B) Limitation.--A request of an insured depository 
     institution, credit union, or other covered person shall not 
     be used to appeal a supervisory rating or determination by 
     the Agency or a Federal banking agency.
       (2) Joint statement.--The agencies receiving a request from 
     an insured depository institution, credit union, or covered 
     person under paragraph (1) shall provide a joint

[[Page 31142]]

     statement resolving the conflict under such subparagraph 
     before the end of the 30-day period beginning on the date the 
     agencies receive such request.
       (d) Appeals to Governing Panel.--
       (1) In general.--If the agencies receiving a request from 
     an insured depository institution, credit union, or covered 
     person under subsection (c)(1) do not issue a joint statement 
     under subsection (c)(2), or if either agency takes or 
     attempts to take any supervisory action relating to the 
     request for the joint statement without the consent of the 
     other agency, the insured depository institution, credit 
     union, or other covered person may institute an appeal to a 
     governing panel under this subsection.
       (2) Timetable.--Any appeal under paragraph (1) with regard 
     to a failure of agencies to issue a joint statement shall be 
     filed before the end of the 30-day period beginning at the 
     end of the 30-day period during which such joint statement 
     was due under subsection (c)(2).
       (e) Composition of Governing Panel.--The governing panel 
     for an appeal under this section shall be composed of--
       (1) 2 individuals--
       (A) 1 of whom is a representative from the Agency;
       (B) 1 of whom is a representative of the Federal banking 
     agency which received the request to which the appeal 
     relates; and
       (C) neither of whom--
       (i) have participated in the material supervisory 
     determinations under appeal; and
       (ii) report directly or indirectly to the individual who 
     made the supervisory determinations under appeal; and
       (2) 1 individual who is a representative from--
       (A) the Federal banking agency that heads the Financial 
     Institution Examination Council; or
       (B) if the Financial Institutions Examination Council is 
     headed by a Federal banking agency that is a party to the 
     appeal, the Federal banking agency that is next scheduled to 
     head the Financial Institutions Examination Council.
       (f) Conduct of Appeal.--
       (1) Content of filing appeal.--The insured depository 
     institution, credit union, or other covered person which 
     institutes an appeal under subsection (d)(1) shall include in 
     the filing of such appeal all the facts and legal arguments 
     pertaining to the matter appealed.
       (2) Appearance.--The insured depository institution, credit 
     union, or other covered person which institutes an appeal 
     under this section may appear before the governing panel in 
     person or by telephone, through counsel, employees, or 
     representatives of, or for, such institution, credit union, 
     or other covered person.
       (3) Requests for additional information.--Any governing 
     panel convened under this section may request the insured 
     depository institution, credit union, or other covered 
     person, the Agency, or the Federal banking agency to produce 
     additional information relevant to the appeal.
       (4) Final written determinations .--Any governing panel 
     convened under this section, by a majority vote of the 
     members of the panel, shall provide a final determination, in 
     writing, within 30 days of the filing of an informationally 
     complete appeal, or such longer period as the panel and the 
     insured depository institution, credit union, or other 
     covered person may jointly agree.
       (5) Public information.--A redacted copy of any 
     determination by a governing panel convened under this 
     section shall be made public upon the issuance of such 
     determination.
       (g) Prohibition Against Retaliation.--The Director and the 
     Federal banking agencies shall prescribe regulations to 
     provide safeguards from retaliation against any insured 
     depository institution, credit union, or other covered person 
     which institutes an appeal under this section, as well as 
     against any officer or and employee of any such institution, 
     credit union, or other person.
       (h) Material Supervisory Determination Defined.--For 
     purposes of this section, the term ``material supervisory 
     determination''--
       (1) includes any action relating to any supervision or 
     examinations; and
       (2) does not include--
       (A) a determination by any Federal banking agency 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 
     or section 212 of the Federal Credit Union Act, as the case 
     may be; or
       (B) any regulation or guidance, or order of general 
     applicability.

     SEC. 4205. LIMITATIONS ON AUTHORITY OF AGENCY AND DIRECTOR.

       (a)  Exclusion for Merchants, Retailers, and Sellers of 
     Nonfinancial Services.--
       (1) In general.--Notwithstanding any provision of this 
     title (other than paragraph (4)) and subject to paragraph 
     (2), the Director and the Agency may not exercise any 
     rulemaking, supervisory, enforcement or other authority, 
     including authority to order assessments, under this title 
     with respect to--
       (A) credit extended directly by a merchant, retailer, or 
     seller of nonfinancial services to a consumer, in a case in 
     which the good or service being provided is not itself a 
     consumer financial product or service, exclusively for the 
     purpose of enabling that consumer to purchase goods or 
     services directly from the merchant, retailer, or seller of 
     nonfinancial services; or
       (B) collection of debt, directly by the merchant, retailer, 
     or seller of nonfinancial services, arising from such credit 
     extended.
       (2) No exclusion for certain private education loans.--
     Paragraph (1) shall not apply to any private education loan 
     (as defined in section 140(a) of the Truth in Lending Act) 
     provided by a private educational lender (as defined in such 
     section), including a covered educational institution (as 
     defined in such section).
       (3) Exception for existing authority.--The Director may 
     exercise any rulemaking authority regarding an extension of 
     credit described in paragraph (1)(A) or the collection of 
     debt arising from such extension, as may be authorized by the 
     enumerated consumer laws or any law or authority transferred 
     under subtitle F or H.
       (4) Rule of construction.--No provision of this title shall 
     be construed as modifying, limiting, or superseding the 
     authority of the Federal Trade Commission or any other agency 
     with respect to credit extended, or the collection of debt 
     arising from such extension, directly by a merchant, 
     retailer, or seller of nonfinancial services to a consumer 
     exclusively for the purpose of enabling that consumer to 
     purchase goods or services directly from the merchant, 
     retailer, or seller of nonfinancial services.
       (5) Exclusion not applicable to certain credit 
     transactions.--Paragraph (1) shall not apply to--
       (A) any credit transaction, including the collection of the 
     debt arising from such extension, in which the merchant, 
     retailer, or seller of nonfinancial services assigns, sells, 
     or otherwise conveys such debt owed by the consumer to 
     another person; or
       (B) any credit transaction--
       (i) in which the credit provided significantly exceeds the 
     market value of the product or service provided, and
       (ii) with respect to which the Director finds that the sale 
     of the product or service is done as a subterfuge so as to 
     evade or circumvent the provisions of this title.
       (b) Exclusion for Persons Regulated by the Securities and 
     Exchange Commission.--
       (1) In general.--No provision of this title shall be 
     construed as altering, amending, or affecting the authority 
     of the Securities and Exchange Commission or 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 the Securities and Exchange Commission or 
     any securities commission (or any agency or office performing 
     like functions) of any State. The Director and Agency shall 
     have no authority to exercise any power to enforce this title 
     with respect to a person regulated by the Securities and 
     Exchange Commission or any securities commission (or any 
     agency or office performing like functions) of any State.
       (2) Consultation and coordination.--Notwithstanding 
     paragraph (1), the Securities and Exchange Commission shall 
     consult and coordinate with the Director 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 Agency under this title or under any 
     other law.
       (c) 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 Director and the Agency 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 Director 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 Agency under this title or under any 
     other law.
       (d) 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 any State insurance 
     regulator. Except as provided in paragraphs (2) and (3), the 
     Agency shall have no authority to exercise any power to 
     enforce this title with respect to a

[[Page 31143]]

     person regulated by any State insurance regulator.
       (2) Description of activities.--Paragraph (1) shall not 
     apply to any person described in such paragraph to the extent 
     such person is engaged in any financial activity described in 
     any subparagraph of section 4002(19) or is otherwise subject 
     to any of the enumerated consumer laws or the authorities 
     transferred under subtitle F or H.
       (3) Preservation of certain authorities.--Nothing in this 
     title shall be construed as limiting the authority of the 
     Director and the Agency from exercising powers under this 
     title with respect to the provision by a covered person of a 
     product or service, not otherwise subject to this title, for 
     or on behalf of a person regulated by a State insurance 
     regulator, in connection with a financial activity.
       (e) Exclusion for Persons Regulated by the Federal Housing 
     Finance Agency.--No provision of this title shall be 
     construed as altering, amending, or affecting the authority 
     of the Federal Housing Finance Agency to adopt rules, 
     initiate enforcement proceedings, or take any other action 
     with respect to a person regulated by the Federal Housing 
     Finance Agency. The Director and Agency shall have no 
     authority to exercise any power to enforce this title with 
     respect to a person regulated by the Federal Housing Agency. 
     For purposes of this subsection, the term ``person regulated 
     by the Federal Housing Finance Agency'' means any Federal 
     home loan bank, and any joint office of 1 or more Federal 
     home loan banks.
       (f) Exclusion for Persons Regulated by the Farm Credit 
     Administration.--No provision of this title shall be 
     constructed as altering, amending, or affecting the authority 
     of the Farm Credit Administration to adopt rules, institute 
     enforcement proceedings, or take any other action with 
     respect to a person regulated by the Farm Credit 
     Administration. The Director and Agency shall have no 
     authority to exercise any power to enforce this title, compel 
     registration, or to order assessments with respect to a 
     person regulated by the Farm Credit Administration. For 
     purposes of this subsection, the term ``person regulated by 
     the Farm Credit Administration'' means any Farm Credit System 
     Institution.
       (g) Employee Benefit and Compensation Plans and Certain 
     Other Arrangements Under the Internal Revenue Code of 1986.--
       (1) Authority retained by 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 financial activities.--For 
     the purposes of this title, a person shall not be treated as 
     having engaged in a financial activity, as defined in section 
     4002(19), 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) Regulatory coordination.--In the case of regulations 
     promulgated under this title that address any financial 
     activity specifically pertaining to the administration and 
     maintenance of a specified plan or arrangement, the Director 
     shall coordinate with the Secretary of Labor and the 
     Secretary of Treasury, as appropriate.
       (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) Exclusion for Accountants and Tax Preparers.--
       (1) In general.--Except as permitted in paragraph (2), the 
     Director and the Agency may not exercise any rulemaking, 
     supervisory, enforcement or other authority, including 
     authority to order assessments, 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 customary 
     and usual accounting activities, including the provision of 
     accounting, tax, advisory, other services that are subject to 
     the regulatory authority of a state board of accountancy or a 
     federal authority, or other services that are incidental to 
     such customary and usual accounting activities, to the extent 
     that such incidental services are not offered or provided by 
     the person separate and apart from such customary and usual 
     accounting activities and are not offered or provided 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.--Paragraph (1) shall not 
     apply to--
       (A) any person described in paragraph (1)(A) to the extent 
     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 a 
     financial activity described in any subparagraph of section 
     4002(19);
       (B) any person described in paragraph (1)(B) to the extent 
     such person is engaged in any activity which is a financial 
     activity described in any subparagraph of section 4002(19); 
     or
       (C) any person described in paragraph (1)(A) or (1)(B) that 
     is otherwise subject to any of the enumerated consumer laws 
     or the authorities transferred under subtitle F or H.
       (i) Exclusion for Real Estate Licensees.--
       (1) In general.--Except as permitted in paragraph (2), the 
     Director and the Agency may not exercise any rulemaking, 
     supervisory, enforcement or other authority, including 
     authority to order assessments, over a person that is 
     licensed or registered as a real estate broker, real estate 
     agent, in accordance with State law, but only 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 
     providing financing with respect to any such transaction);
       (D) engages in any activity for which a person engaged in 
     the activity is required to be registered or licensed as a 
     real estate agent or real estate broker under any applicable 
     law; or
       (E) offers to engage in any activity, or act in any 
     capacity, described in subparagraph (A), (B), (C), or (D).
       (2) Description of activities.--Paragraph (1) shall not 
     apply to any person described in such paragraph to the extent 
     such person is engaged in any financial activity described in 
     any subparagraph of section 4002(19) or is otherwise subject 
     to any of the enumerated consumer laws or the authorities 
     transferred under subtitle F or H.
       (j) Exclusion for Auto Dealers.--
       (1) In general.--The Director and the Agency may not 
     exercise any rulemaking, supervisory, enforcement or any 
     other authority, including authority to order assessments, 
     over--
       (A) a motor vehicle dealer that is primarily engaged in the 
     sale and servicing of motor vehicles, the leasing and 
     servicing of motor vehicles, or both; or
       (B) a person that--
       (i) is controlled by, or is under common control with, one 
     or more motor vehicle dealers; and
       (ii) primarily engages in the extension of, or arranging 
     for the extension of, retail credit or retail leases 
     involving motor vehicles, where 90 percent of such extension, 
     or arranging for such extension, is made with respect to 
     customers of one or more motor vehicle dealers that control 
     such person or with which such person is under common 
     control.
       (2) Certain functions excepted.--The provisions of 
     paragraph (1) shall not apply to any person to the extent 
     that person--
       (A) provides consumers with any services related to 
     residential mortgages; or
       (B) operates a line of business that involves the extension 
     of retail credit or retail leases involving motor vehicles, 
     and in which--
       (i) the extension of retail credit or retail leases is 
     routinely provided directly to consumers; and
       (ii) the contract governing such extension of retail credit 
     or retail leases is not routinely assigned to a third party 
     finance or leasing source.
       (3) No impact on prior authority.--Nothing in this 
     subsection shall be construed to modify, limit, or supersede 
     the rulemaking or enforcement authority over motor vehicle 
     dealers that could be exercised by any Federal department or 
     agency on the day prior to the enactment of this title.
       (4) No transfer of certain authority.--Notwithstanding 
     subtitle F or any other provision of law under this title, 
     the consumer financial protection functions of the Board of 
     Governors and the Federal Trade Commission shall not be 
     transferred to the Director or the Agency to the extent such 
     functions are with respect to a person described under 
     paragraph (1).
       (5) Definitions.--For purposes of this subsection:
       (A) Motor vehicle.--The term ``motor vehicle'' means any 
     self-propelled vehicle designed for transporting persons or 
     property on a street, highway, or other road.
       (B) Motor vehicle dealer.--The term ``motor vehicle 
     dealer'' means any person resident in the United States or 
     any territory of the United States, and licensed by a State, 
     a territory of the United States, or

[[Page 31144]]

     the District of Columbia to engage in the sale of motor 
     vehicles.
       (k) No Authority to Impose Usury Limit.--No provision of 
     this title shall be construed as conferring authority on the 
     Director or the Agency 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.
       (l) Exclusion for Manufactured Home Retailers and Modular 
     Home Retailers.--
       (1) In general.--The Director and the Agency may not 
     exercise any rulemaking, supervisory, enforcement or other 
     authority, including authority to order assessments, over a 
     person to the extent such person--
       (A) acts as an agent or broker for a buyer or seller of a 
     manufactured home or a modular home;
       (B) 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
       (C) offers to engage in any activity described in 
     subparagraphs (A) or (B).
       (2) Description of activities.--Paragraph (1) shall not 
     apply to any person described in such paragraph to the extent 
     such person is engaged in any financial activity described in 
     any subparagraph of section 4002(19) or is otherwise subject 
     to any of the enumerated consumer laws or the authorities 
     transferred under subtitle F or H.
       (3) Definitions.--For purposes of this subsection:
       (A) Manufactured home.--The term ``manufactured home'' has 
     the meaning given such term 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 two 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.
       (m) Exclusion for Practice of Law.--
       (1) In general.--Except as provided under paragraph (2), 
     nothing in this title shall apply with respect to an activity 
     engaged in by an attorney, or engaged in under the direction 
     of an attorney, as part of the practice of law under the laws 
     of a State in which the attorney is licensed to practice law.
       (2) Rule of construction.--
       (A) In general.--Paragraph (1) shall not be construed to 
     limit the exercise by the Director and the Agency of any 
     rulemaking, supervisory, enforcement, or other authority, 
     including authority to order assessments, regarding any 
     activity that is a financial activity described in any 
     subparagraph of section 4002(19) and is not engaged in as--
       (i) part of the practice of law; or
       (ii) incidental to the practice of law, to the extent that 
     such activity is provided exclusively within the scope of the 
     attorney-client relationship and is not otherwise provided by 
     or under the direction of the attorney to any consumer who is 
     not receiving legal advice or services from the attorney in 
     connection with such activity.
       (B) Construction.--Paragraph (1) shall not be construed to 
     limit the authority of the Director and the Agency with 
     respect to any activity to the extent that such activity is 
     otherwise subject to any of the enumerated consumer laws or 
     the authorities transferred under subtitles F or H.
       (3) Exception.--Notwithstanding paragraph (1), an 
     individual who provides legal advice or services related to 
     preventing a foreclosure shall be subject to this title 
     unless such individual provides foreclosure prevention 
     services in connection with--
       (A) the preparation and filing of a bankruptcy petition; or
       (B) court proceedings to avoid a foreclosure.

     SEC. 4206. COLLECTION OF INFORMATION; CONFIDENTIALITY 
                   REGULATIONS.

       (a) Collection of Information.--
       (1) In general.--In conducting research on the provision of 
     consumer financial products or services, the Director shall 
     have the power to gather information from time to time 
     regarding the organization, business conduct, and practices 
     of covered persons or service providers.
       (2) Specific authority.--In order to gather such 
     information, the Director shall have the power--
       (A) to gather and compile information;
       (B) to require persons to file with the Agency, in such 
     form and within such reasonable period of time as the 
     Director may prescribe, by regulation or order, annual or 
     special reports, or answers in writing to specific questions, 
     furnishing information the Director may require; and
       (C) to make public such information obtained by it under 
     this section as is in the public interest in reports or 
     otherwise in the manner best suited for public information 
     and use.
       (b) Confidentiality Regulations.--The Director shall 
     prescribe regulations regarding the confidential treatment of 
     information obtained from persons in connection with the 
     exercise of any authority of the Agency or Director under 
     this title and the enumerated consumer laws and the 
     authorities transferred under subtitles F and H.
       (c) Privacy Considerations.--In collecting information from 
     any person, publicly releasing information held by the 
     Agency, or requiring covered persons to publicly report 
     information, the Director and the Agency shall take steps to 
     ensure that proprietary, personal or confidential consumer 
     information that are protected from public disclosure under 
     section 552(b) or 552a of title 5, United States Code, or any 
     other provision of law are not made public under this title.

     SEC. 4207. MONITORING; ASSESSMENTS OF SIGNIFICANT 
                   REGULATIONS; REPORTS.

       (a) Monitoring.--
       (1) In general.--The Agency shall monitor for risks to 
     consumers in the provision of consumer financial products or 
     services, including developments in markets for such products 
     or services.
       (2) Means of monitoring.--Such monitoring may be conducted 
     by examinations of covered persons or service providers, 
     analysis of reports obtained from covered persons or service 
     providers, assessment of consumer complaints, surveys and 
     interviews of covered persons, service providers, and 
     consumers, and review of available databases.
       (3) Considerations.--In allocating the resources of the 
     Agency to perform the monitoring required by this section, 
     the Director 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) consumers' understanding of the risks of a type of 
     consumer financial product or service;
       (C) the state of the law that applies to the 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 provision of a consumer 
     financial product or service;
       (E) extent, if any, to which the risks of a consumer 
     financial product or service may disproportionately affect 
     traditionally underserved consumers, if any; or
       (F) types, number, and other pertinent characteristics of 
     covered persons that provide the product or service.
       (4) Reports.--The Agency shall publish at least 1 report of 
     significant findings of the monitoring required by paragraph 
     (1) in each calendar year, beginning in the calendar year 
     that is 1 year after the designated transfer date.
       (b) Assessment of Significant Regulations.--
       (1) In general.--The Agency shall conduct an assessment of 
     each significant regulation prescribed or order issued by the 
     Director under this title, under the authorities transferred 
     under subtitles F and H or pursuant to any enumerated 
     consumer law that addresses, among other relevant factors, 
     the effectiveness of the regulation in meeting the purposes 
     and objectives of this title and the specific goals stated by 
     the Director.
       (2) Basis for assessment.--The assessment shall reflect 
     available evidence and any data that the Agency reasonably 
     may collect.
       (3) Reports.--The Agency shall publish a report of an 
     assessment under this subsection not later than 3 years after 
     the effective date of the regulation or order, unless the 
     Director determines that 3 years is not sufficient time to 
     study or review the impact of the regulation, but in no event 
     shall the Agency publish a report of such assessment more 
     than 5 years after the effective date of the regulation or 
     order.
       (4) Public commented required.--Before publishing a report 
     of its assessment, the Agency shall invite, with sufficient 
     time allotted, public comment on, and may hold public 
     hearings on, recommendations for modifying, expanding, or 
     eliminating the newly adopted significant regulation or 
     order.
       (c) Information Gathering.--In conducting any monitoring or 
     assessment required by this section, the Agency may gather 
     information through a variety of methods, including by 
     conducting surveys or interviews of consumers.

     SEC. 4208. AUTHORITY TO RESTRICT MANDATORY PREDISPUTE 
                   ARBITRATION.

       (a) In General.--The Director, by regulation, may prohibit 
     or impose conditions or limitations on the use of any 
     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 
     Director finds that such a prohibition or imposition of 
     conditions or limitations are in the public interest and for 
     the protection of consumers.
       (b) Effective Date.--Notwithstanding any other provision of 
     law, any regulation prescribed by the Director 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 Director.

     SEC. 4209. REGISTRATION AND SUPERVISION OF NONDEPOSITORY 
                   COVERED PERSONS.

       (a) Risk-based Programs.--
       (1) In general.--The Agency shall develop risk-based 
     programs to supervise covered persons that are not credit 
     unions, depository institutions, or persons excluded under

[[Page 31145]]

     section 4205 by prescribing registration requirements, 
     reporting requirements, and examination standards and 
     procedures.
       (2) Basis for programs.--The risk-based supervisory 
     programs established pursuant to paragraph (1) shall be based 
     on--
       (A) relevant registration and reporting information about 
     such covered persons, as determined by the Agency; and
       (B) the Agency's assessment of risks posed to consumers in 
     the relevant geographic markets and markets for consumer 
     financial products and services.
       (b) Registration.--
       (1) In general.--The Director shall prescribe regulations 
     regarding registration requirements for covered persons that 
     are not credit unions or depository institutions.
       (2) Consultation with state agencies.--In developing and 
     implementing registration requirements under this subsection, 
     the Agency shall consult with State agencies regarding 
     requirements or systems for registration (including 
     coordinated or combined systems), where appropriate.
       (3) Exception for related persons.--The Agency shall not 
     impose requirements regarding the registration of a related 
     person.
       (4) Registration information.--Subject to regulations 
     prescribed by the Director, the Agency shall publicly 
     disclose the registration information about a covered person 
     which is not a bank holding company, credit union, or 
     depository institution for the purposes of facilitating the 
     ability of consumers to identify the covered person as 
     registered with the Agency.
       (c) Reporting Requirements.--
       (1) In general.--The Agency may require reports from 
     covered persons that are not credit unions or depository 
     institutions, or service providers thereto, for the purposes 
     of facilitating supervision of such covered persons or 
     service providers.
       (2) Consistency of reporting requirements and risk-based 
     standards.--The Agency shall impose reporting requirements 
     under this subsection that are consistent with the risk-based 
     standards developed and implemented under this section and 
     the registration information pertaining to the relevant types 
     or classes of covered persons.
       (3) Contents of reports.--Reporting requirements imposed 
     under this paragraph may include information regarding--
       (A) the nature of the covered person's business;
       (B) the covered person's name, legal form, ownership and 
     management structure, and related persons;
       (C) the covered person's locations of operation;
       (D) the covered person's types and number of consumer 
     financial products and services provided by the covered 
     person;
       (E) compliance with any requirement imposed or enforced by 
     the Agency, including any requirement relating to 
     registration, licensing, fees, or assessments; and
       (F) the financial condition of such covered person, 
     including a related person, for the purpose of assessing the 
     ability of such person to perform its obligation to 
     consumers.
       (4) Consultation with the federal trade commission.--In 
     developing and implementing report requirements under this 
     subsection, the Agency shall consult with the Federal Trade 
     Commission, where appropriate.
       (5)  Exception for related persons.--Other than reports 
     permitted under paragraph (3)(F) or in connection with a 
     supervisory action or examination or pursuant to the powers 
     granted in subtitle E, the Agency shall not impose 
     requirements regarding reports of any related person.
       (d) Examinations.--
       (1) Examinations required.--The Agency shall conduct 
     examinations of covered persons that are not credit unions or 
     depository institutions as part of the programs implemented 
     under paragraphs (2) and (3) of section 4202(c).
       (2) Examination standards and procedures.--The Director 
     shall establish risk-based standards and procedures for 
     conducting examinations of covered persons required to be 
     examined under paragraph (1), including the frequency and 
     scope of such examinations, except that the Agency shall 
     conduct examinations of such covered persons that are 
     determined to pose the highest risk to consumers based on 
     factors determined by the Director, such as the operations, 
     sales practices, or consumer financial products or services 
     provided by such covered persons.
       (e) Authority to Collect Information Regarding Fees or 
     Assessments.--To the extent permitted by Federal law, the 
     Agency may obtain from the Secretary of the Treasury 
     information relating to a covered person which is not a bank 
     holding company, credit union, or depository institution, 
     including information regarding compliance with a reporting 
     or registration requirement under the subchapter II of 
     chapter 53 of title 31, United States Code, for the purposes 
     of, and only to the extent necessary in, investigating, 
     determining, or enforcing compliance with a requirement 
     relating to any fee or assessment imposed by the Agency under 
     this title.

     SEC. 4210. EFFECTIVE DATE.

       This subtitle shall take effect on the designated transfer 
     date.

                    Subtitle C--Specific Authorities

     SEC. 4301. PROHIBITING UNFAIR, DECEPTIVE, OR ABUSIVE ACTS OR 
                   PRACTICES.

       (a) In General.--The Agency may take any action authorized 
     under subtitle E to prevent a person 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) Regulations.--
       (1) In general.--The Director may prescribe regulations 
     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.
       (2) Includes prevention measures.--Regulations prescribed 
     under this section may include requirements for the purpose 
     of preventing such acts or practices.
       (c) Unfairness.--
       (1) In general.--The Director and the Agency 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 Agency has a 
     reasonable basis to conclude that the act or practice causes 
     or is likely to cause substantial injury to consumers which 
     is not reasonably avoidable by consumers and such substantial 
     injury is not outweighed by countervailing benefits to 
     consumers or to competition.
       (2) Established public policy as factor.--In determining 
     whether an act or practice is unfair, the Agency may consider 
     established public policies as evidence to be considered with 
     all other evidence.
       (d) Consultation.--In prescribing any regulation under this 
     section, the Director shall consult with the Federal banking 
     agencies, State bank supervisors, the Federal Trade 
     Commission, or other Federal agencies, as appropriate, 
     regarding the consistency of a proposed regulation with 
     prudential, consumer protection, civil rights, market, or 
     systemic objectives administered by such agencies or 
     supervisors.

     SEC. 4302. DISCLOSURES.

       (a) In General.--The Director may prescribe regulations to 
     ensure the timely, appropriate and effective disclosure to 
     consumers of the costs, benefits, and risks associated with 
     any consumer financial product or service.
       (b) Coordination With Other Laws.--In prescribing 
     regulations under subsection (a), the Director shall take 
     into account disclosure requirements under other laws in 
     order to enhance consumer compliance and reduce regulatory 
     burden.
       (c) Compliance.--
       (1) Model disclosures.--The Agency may provide model 
     disclosures to facilitate compliance with the requirements of 
     regulations prescribed under this section.
       (2) Per se compliance.--Compliance by a covered person with 
     the model disclosures issued by the Agency under this 
     subsection shall per se constitute compliance with the 
     disclosure requirements of this section.
       (3) Additional guidance.--The Agency may issue exemptions, 
     no action letters, and other guidance to promote compliance 
     with disclosures requirements of regulations prescribed under 
     this section.
       (d) Combined Mortgage Loan Disclosure.--Within 1 year after 
     the designated transfer date, the Director shall propose for 
     public comment regulations and model disclosures that combine 
     the disclosures required under the Truth in Lending Act and 
     the Real Estate Settlement Procedures Act into a single, 
     integrated disclosure for mortgage loan transactions covered 
     by those laws, unless the Director determines that any 
     proposal issued by the Board of Governors and the Department 
     of Housing and Urban Development carries out the same 
     purpose.

     SEC. 4303. SALES PRACTICES.

       The Director may prescribe regulations and issue orders and 
     guidance regarding the manner, settings, and circumstances 
     for the provision of any consumer financial products or 
     services to ensure that the risks, costs, and benefits of the 
     products or services, both initially and over the term of the 
     products or services, are fully and accurately represented to 
     consumers.

     SEC. 4304. PILOT DISCLOSURES.

       (a) Pilot Disclosures.--The Agency shall establish 
     standards and procedures for approval of pilot disclosures to 
     be provided or made available by a covered person to 
     consumers in connection with the provision of a consumer 
     financial product or service, or the offering of a consumer 
     financial product or service.
       (b) Standards.--The procedures shall provide that a pilot 
     disclosure must be limited in time and scope and reasonably 
     designed to contribute materially to the understanding of 
     consumer awareness and understanding of, and responses to, 
     disclosures or communications about the risks, costs, and 
     benefits of consumer financial products or services.
       (c) Transparency.--The procedures shall provide for public 
     disclosure of pilots, but

[[Page 31146]]

     the Agency may limit disclosure to the extent necessary to 
     encourage covered persons to conduct effective pilots.

     SEC. 4305. ADOPTING OPERATIONAL STANDARDS TO DETER UNFAIR, 
                   DECEPTIVE, OR ABUSIVE PRACTICES.

       (a) Authority To Prescribe Standards.--The States are 
     encouraged to prescribe standards applicable to covered 
     persons who are not insured depository institutions or credit 
     unions, or service providers, to deter and detect unfair, 
     deceptive, abusive, fraudulent, or illegal transactions in 
     the provision of consumer financial products or services, 
     including standards for--
       (1) background checks for principals, officers, directors, 
     or key personnel;
       (2) registration, licensing, or certification;
       (3) bond or other appropriate financial requirements to 
     provide reasonable assurance of ability to perform its 
     obligations to consumers;
       (4) creating and maintaining records of transactions or 
     accounts; or
       (5) procedures and operations relating to the provision of, 
     or maintenance of accounts for, consumer financial products 
     or services.
       (b) Agency Authority to Prescribe Standards.--
       (1) In general.--The Director may prescribe regulations 
     establishing minimum standards under this section for any 
     class of covered persons other than covered persons which are 
     subject to the jurisdiction of a Federal banking agency or a 
     State bank supervisor , or for any service provider.
       (2) Registration and licensing standards.--In addition to 
     prescribing standards for the purposes described in 
     subsection (a), the Director may prescribe registration or 
     licensing standards applicable to covered persons for the 
     purposes of imposing fees or assessments in accordance with 
     this title.
       (3) Enforcement of standards.--The Director may enforce 
     under subtitle E compliance with standards adopted by the 
     Director or a State pursuant to this section for covered 
     persons or service providers operating in that State.
       (c) Consultation.--In prescribing minimum standards under 
     this section, the Director shall consult with the Federal 
     banking agencies, State bank supervisors, the Federal Trade 
     Commission, or other Federal agencies, as appropriate, 
     regarding the consistency of a proposed regulation with 
     prudential, consumer protection, civil rights, market, or 
     systemic objectives administered by such agencies or 
     supervisors.

     SEC. 4306. DUTIES.

       (a) In General.--
       (1) Regulations ensuring fair dealing with consumers.--The 
     Director shall prescribe regulations imposing duties on a 
     covered person, or an employee of a covered person, or an 
     agent or independent contractor for a covered person, who 
     deals or communicates directly with consumers in the 
     provision of a consumer financial product or service, as the 
     Director deems appropriate or necessary to ensure fair 
     dealing with consumers.
       (2) Considerations for duties.--In prescribing such 
     regulations, the Director shall consider whether--
       (A) the covered person, employee, agent, or independent 
     contractor represents implicitly or explicitly that the 
     person, employee, agent, or contractor is acting in the 
     interest of the consumer with respect to any aspect of the 
     transaction;
       (B) the covered person, employee, agent, or independent 
     contractor provides the consumer with advice with respect to 
     any aspect of the transaction;
       (C) the consumer's reliance on or use of any advice from 
     the covered person, employee, agent, or independent 
     contractor would be reasonable and justifiable under the 
     circumstances;
       (D) the benefits to consumers of imposing a particular duty 
     would outweigh the costs; and
       (E) any other factors as the Director considers 
     appropriate.
       (3) Duties relating to compensation practices.--
       (A) In general.--The Director may prescribe regulations 
     establishing duties regarding compensation practices 
     applicable to a covered person, employee, agent, or 
     independent contractor who deals or communicates directly 
     with a consumer in the provision of a consumer financial 
     product or service for the purpose of promoting fair dealing 
     with consumers.
       (B) No compensation caps.--The Director may not prescribe a 
     limit on the total dollar amount of compensation paid to any 
     person.
       (C) Disparity treatment prohibited.--The Director may not 
     prescribe regulations that directly or indirectly disparately 
     treat, or are interpreted to disparately treat, or 
     disparately impact any entity that employs covered persons.
       (4) Requirement to include disclaimer on public 
     statements.--The Director shall ensure that the Agency's 
     website, and any statement made by the Director or the Agency 
     to the public, includes a disclaimer stating that the Agency 
     does not endorse any particular financial product or service 
     and consumers are expected to exercise due diligence in 
     deciding what financial products and services are appropriate 
     for them.
       (b) Administrative Proceedings.--
       (1) In general.--Any regulation prescribed by the Director 
     under this section shall be enforceable only by the Agency 
     through an adjudication proceeding under subtitle E or by a 
     State regulator through an appropriate administrative 
     proceeding as permitted under State law.
       (2) Exclusivity of remedy.--No action may be commenced in 
     any court to enforce any requirement of a regulation 
     prescribed under this section, and no court may exercise 
     supplemental jurisdiction over a claim asserted under a 
     regulation prescribed under this section based on allegations 
     or evidence of conduct that otherwise may be subject to such 
     regulation.
       (3) Rule of construction.--The Agency, the Attorney 
     General, and any State attorney general or State regulator 
     shall not be precluded from enforcing any other Federal or 
     State law against a person with respect to conduct that may 
     be subject to a regulation prescribed by the Director under 
     this section.
       (c) Exclusions.--This section shall not be construed as 
     authorizing the Director to prescribe regulations applicable 
     to--
       (1) an attorney licensed to practice law and in compliance 
     with the applicable rules and standards of professional 
     conduct, but only to the extent that the consumer financial 
     product or service provided is within the attorney-client 
     relationship with the consumer; or
       (2) any trustee, custodian, or other person that holds a 
     fiduciary duty in connection with a trust, including a 
     fiduciary duty to a grantor or beneficiary of a trust, that 
     is subject to and in compliance with the applicable law 
     relating to such trust.

     SEC. 4307. CONSUMER RIGHTS TO ACCESS INFORMATION.

       (a) In General.--Subject to regulations prescribed by the 
     Director, a covered person shall make available to a 
     consumer, in an electronic form usable by the consumer, 
     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.
       (b) Exceptions.--A covered person shall 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 law (including section 6103 of the Internal Revenue 
     Code of 1986); 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.--No provision of this 
     section shall be construed as imposing any duty on a covered 
     person to maintain or keep any information about a consumer.
       (d) Standardized Formats for Data.--The Director, by 
     regulation, 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 Director shall, when prescribing any 
     regulation under this section, consult with the Federal 
     banking agencies, State bank supervisors, the Federal Trade 
     Commission, and the Commissioner of Internal Revenue to 
     ensure that the regulations--
       (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. 4308. PROHIBITED ACTS.

       It shall be unlawful for any person--
       (1) to advertise, market, offer, sell, enforce, or attempt 
     to enforce, any term, agreement, change in terms, fee, or 
     charge in connection with a consumer financial product or 
     service that is not in conformity with this title or 
     applicable regulation prescribed or order issued by the 
     Director or to engage in any unfair, deceptive, or abusive 
     act or practice, except that no person shall be held to have 
     violated this subsection solely by virtue of providing or 
     selling time or space to a person placing an advertisement;
       (2) to fail or refuse to pay any fee or assessment imposed 
     by the Agency under this title, to fail or refuse to permit 
     access to or copying of records, to fail or refuse to 
     establish or maintain records, or to fail or refuse to make 
     reports or provide information to the Agency, as required by 
     this title, an enumerated consumer law, or pursuant to the 
     authorities transferred by subtitles F and H, or any 
     regulation prescribed or order issued by the Director this 
     title or pursuant to any such authority; or

[[Page 31147]]

       (3) to knowingly or recklessly provide substantial 
     assistance to another person in violation of the provisions 
     of section 4301, or any regulation prescribed or order issued 
     under such section, and any such person shall be deemed to be 
     in violation of that section to the same extent as the person 
     to whom such assistance is provided. Nothing in this section 
     shall be construed as limiting or superseding the protection 
     provided to any provider or user qualifying for protection 
     under section 230(c)(1) of the Communications Act of 1934 (47 
     U.S.C. 230(c)(1)).

     SEC. 4309. TREATMENT OF REMITTANCE TRANSFERS.

       (a) Disclosures Required for Remittance Transfers.--
       (1) In general.--Each remittance transfer provider shall 
     make disclosures to consumers, as specified by this section 
     and by regulation prescribed by the Director.
       (2) Specific disclosures.--In addition to any other 
     disclosures applicable under this title, a remittance 
     transfer provider shall--
       (A) disclose clearly and conspicuously, in writing and in a 
     form that the consumer may keep, to each consumer who 
     requests information regarding the fees or exchange rate for 
     a remittance transfer, prior to the consumer making any 
     payment in connection with the transfer--
       (i) the total amount in United States dollars that will be 
     required to be paid by the consumer in connection with the 
     remittance transfer;
       (ii) the amount of currency that the designated recipient 
     of the remittance transfer will receive, using the values of 
     the currency into which the funds will be exchanged;
       (iii) the fee charged by the remittance transfer provider 
     for the remittance transfer;
       (iv) any exchange rate to be used by the remittance 
     transfer provider for the remittance transfer, unless the 
     exchange rate is not fixed on send;
       (v) the amount of time for which the information specified 
     in this subparagraph (A) will be in effect;
       (vi) the expected time interval within which the funds 
     being transferred will be made available to the recipient; 
     and
       (vii) the location where the funds being transferred will 
     be made available to the recipient if the funds are to be 
     made available only at one location, or if the remittance 
     transfer provider permits the recipient to choose from 
     multiple locations where the funds being transferred will be 
     made available to the recipient, the remittance transfer 
     provider shall make available to the consumer or the 
     recipient a resource that lists such locations;
       (B) at the time at which the consumer makes payment in 
     connection with the remittance transfer, a receipt in writing 
     disclosing clearly and conspicuously--
       (i) the information described in subparagraph (A);
       (ii) the expected time interval within which the funds 
     being transferred will be made available to the recipient, 
     which shall be not more than ten days after the date the 
     consumer makes payment in connection with the remittance 
     transfer unless otherwise prohibited by applicable State or 
     Federal law or the law of another country, or as may be 
     specified by the consumer so long as the consumer has the 
     choice to order that the funds be made available to the 
     recipient not more than ten days after the consumer makes 
     payment in connection with the remittance transfer;
       (iii) the location where the funds being transferred will 
     be made available to the recipient if the funds are to be 
     made available only at one location, or if the remittance 
     transfer provider permits the recipient to choose from 
     multiple locations where the funds being transferred will be 
     made available to the recipient, the remittance transfer 
     provider shall make available to the consumer or the 
     recipient a resource that lists such locations;
       (iv) the name and telephone number or address of the 
     designated recipient, if provided to the remittance transfer 
     provider by the consumer;
       (v) information about the rights of the consumer under this 
     section to cancel the remittance transfer, to resolve errors 
     and to receive refunds;
       (vi) appropriate contact information for the remittance 
     transfer provider;
       (vii) a transaction reference number unique to that 
     remittance transfer; and
       (viii) information as to when the exchange rate will be 
     calculated (for example, when the funds are received by the 
     recipient), if the customer has been notified that the 
     exchange rate is not fixed on send;
       (C) at the time at which the consumer initiates the 
     remittance transfer, offer to provide in writing, prior to 
     making any payment in connection with the transfer, the 
     information listed in subparagraph (A); and
       (D) in the case of an exchange rate not fixed on send, the 
     remittance provider shall also disclose, at the time at which 
     the consumer initiates the remittance transfer, the range, 
     using the high and low rates, for the prior 30 day period, 
     that the consumer would have received if a representative 
     amount had been exchanged by the remittance transfer 
     provider, as well as a clear and conspicuous notice that the 
     actual exchange rate may vary.

     If the actual rate used for the transfer is known to the 
     remittance provider, either because such rate was set by the 
     remittance provider itself or because the remittance provider 
     receives confirmation of the actual exchange rate used, the 
     remittance provider shall make available to consumers written 
     or electronic confirmation of the actual exchange rate used 
     and the amount of currency that the recipient or the 
     remittance transfer received, using the values of the 
     currency into which the funds were exchanged. The Director 
     shall within 2 years after the date of the enactment of the 
     Consumer Financial Protection Agency Act of 2009 prescribe 
     consumer disclosures for transfers with rates not fixed on 
     send that are functionally equivalent to those applicable to 
     remittances where the exchange rate is specified by the 
     remittance transfer provider at the time the consumer 
     initiates the remittance transfer. To the greatest extent 
     possible, the Director shall ensure that functional 
     equivalence will enable remittance transfer providers to 
     comply with all requirements in this title and provide 
     consumers with information sufficient to compare services 
     providers, to time their use of the product, to discover 
     errors in transmission and to seek remedies.
       (3) Exemption.--Notwithstanding requirements under 
     paragraph (2)(A)(ii), (2)(A)(iv), or (2)(B)(i), no such 
     disclosure is required--
       (A) because of the requirements of another law, including 
     the law of another country;
       (B) because the transfer is being routed through the 
     Director a Mexico offered by the Federal reserve banks; or
       (C) because of any other circumstance deemed permissible by 
     regulation of the Director; If the actual rate used for the 
     transfer is known to the remittance provider, the remittance 
     provider shall make available to consumers written or 
     electronic confirmation of the actual exchange rate used and 
     the amount of currency that the recipient of the remittance 
     transfer received, using the values of the currency into 
     which the funds were exchanged.
       (4) Provision of toll-free number and web access.--
       (A) In addition to providing the disclosures required by 
     this section to a consumer at a remittance transfer provider 
     location, a remittance transfer provider shall provide a 
     toll-free telephone number or local number, and an Internet 
     website that a consumer can access for which access no 
     remittance transfer provider may assess a charge, to obtain 
     the information required by paragraph (2)(A) for remittance 
     transfers offered by that remittance transfer provider or 
     information about the status of a remittance transfer for 
     which a consumer has made payment.
       (B) A remittance transfer provider that on an aggregate 
     basis originates 30,000 or fewer transfers on a calendar year 
     basis (or such other amount as may be prescribed by the 
     Director) is not required to offer the web access prescribed 
     in subparagraph (A), but is required to provide a toll-free 
     telephone number or local number as prescribed in 
     subparagraph (A).
       (5) Alternative methods of disclosure.--Subject to 
     subsection (e)(2), a remittance transfer provider may--
       (A) if the transaction is conducted entirely by telephone 
     (which shall include, but not be limited to, a mobile 
     telephone) satisfy the requirements of paragraph (2)(A) 
     orally or, at the option of the consumer, electronically 
     through a message sent to the consumer through any electronic 
     means (including, but not limited to, an electronic mail 
     address or a mobile telephone) as designated by the consumer;
       (B) satisfy the requirements of paragraph (2)(A) 
     electronically if the transfer is initiated by the consumer 
     electronically through the remittance transfer provider's 
     website or through any other electronic means; and
       (C) satisfy the requirements of paragraph (2)(B) by mailing 
     (or transmitting electronically if the transfer is initiated 
     electronically by the consumer through the remittance 
     transfer provider's website or the consumer otherwise 
     consents in accordance with the provisions of section 101 of 
     the Electronic Signatures in Global and National Commerce 
     Act) the information required under such paragraph to the 
     consumer not later than one business day after the date on 
     which the transaction is conducted, if the transaction is 
     conducted entirely by telephone (or electronically) and the 
     consumer requests a written receipt.
       (b) Written Foreign Language Disclosures.--
       (1) In general.--The disclosures required under subsections 
     (a)(2)(A) and (a)(2)(B)(i) shall be made in English and--
       (A) at each remittance transfer provider location, shall be 
     made in the same languages principally used by the remittance 
     transfer provider, or any of its agents, to advertise, 
     solicit, or market its remittance transfers business, either 
     orally or in writing, at that location, if other than 
     English, provided that such languages are those for which the 
     Director has issued model disclosures as provided in 
     subsection (g); or
       (B) on a remittance transfer provider's website, shall at a 
     minimum be made in any other language for which the Director 
     has

[[Page 31148]]

     issued model disclosures as provided in subsection (g) if the 
     remittance transfer provider, or any of its agents, 
     advertises, solicits, or markets its remittance transfers 
     business in such language.
       (2) Disputes concerning terms.--If a disclosure is required 
     by this section to be in English and another language, the 
     English version of the disclosure shall govern any dispute 
     concerning the terms of the receipt. However, any 
     discrepancies between the English version and any other 
     version due to the translation of the receipt from English to 
     another language including errors or ambiguities shall be 
     construed against the remittance transfer provider or its 
     agent and the remittance transfer provider or its agent shall 
     be liable for any damages caused by these discrepancies.
       (c) Remittance Transfer Cancellations, Refunds, and 
     Errors.--
       (1) Cancellations.--
       (A) After receiving the receipt required under subsection 
     (a)(2)(B), a consumer may cancel the currency transaction--
       (i) before leaving the premises of the remittance transfer 
     provider where the consumer received the receipt, and
       (ii) not later than 30 minutes after the time the consumer 
     initiated the remittance transfer with the remittance 
     transfer provider.
       (B) If a consumer cancels the transaction, the remittance 
     transfer provider shall immediately refund to the consumer 
     the fees paid and the currency to be transferred, and issue a 
     receipt indicating that the transaction has been cancelled.
       (C) A consumer may not cancel a remittance transfer after 
     the remittance transfer provider has sent the funds to the 
     recipient.
       (D) A remittance transfer provider shall not be required to 
     provide a refund if providing a refund would violate State or 
     Federal law.
       (2) Refunds.--
       (A) If a remittance transfer provider receives written 
     notice from the consumer within ten days of the promised date 
     of delivery of a remittance transfer that no amount of the 
     funds to be remitted was made available to the designated 
     recipient in the foreign country, the remittance transfer 
     provider shall--
       (i) refund to the consumer the total amount in U.S. dollars 
     that was paid by the consumer in connection with such 
     remittance transfer;
       (ii) promptly transmit the remittance transfer in 
     accordance with the terms in the written receipt provided to 
     the consumer pursuant to subsection (a)(2)(B);
       (iii) provide such other remedy, as determined appropriate 
     by rule of the Director for the protection of consumers; or
       (iv) demonstrate to the consumer that the proceeds of the 
     remittance transfer were made available to the recipient of 
     the remittance provider.
       (B) A remittance transfer provider shall not be required to 
     provide a refund if providing a refund would violate State or 
     Federal law.
       (3) Error resolution.--
       (A) In general.--If a remittance transfer provider receives 
     written notice from the consumer within 60 days of the 
     promised date of delivery that an error occurred with respect 
     to a remittance transfer, including that the full amount of 
     the funds to be remitted was not made available to the 
     designated recipient in the foreign country, the remittance 
     transfer provider shall resolve the error pursuant to this 
     paragraph.
       (B) Remedies.--Not later than 120 days after the date of 
     receipt of a notice from the consumer pursuant to 
     subparagraph (A), the remittance transfer provider shall--
       (i) as applicable to the error and as designated by the 
     consumer--

       (I) refund to the consumer the total amount in U.S. dollars 
     that was paid by the consumer in connection with the 
     remittance transfer that was not properly transmitted;
       (II) make available to the designated recipient, without 
     additional cost to the designated recipient or to the 
     consumer, the amount appropriate to resolve the error;
       (III) provide such other remedy, as determined appropriate 
     by regulation of the Director for the protection of 
     consumers; or

       (ii) demonstrate to the consumer that there was no error.
       (4) Regulations.--The Director, in order to protect 
     consumers, shall establish, by regulation, clear and 
     appropriate standards for remittance transfer providers with 
     respect to error resolution, cancellation and refunds.
       (d) Enforcement Authority.--The Director shall have the 
     sole authority to enforce the provisions of this section, and 
     any regulations established pursuant to this section.
       (e) Applicability of Other Provisions of Law.--
       (1) Applicability of title 18 and title 31 provisions.--A 
     remittance transfer provider that is a money transmitting 
     business as defined in section 5330 of title 31, United 
     States Code, may provide remittance transfers only if such 
     provider is in compliance with the requirements of section 
     5330 of title 31, United States Code, and section 1960 of 
     title 18, United States Code, as applicable.
       (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, 
     or chapter 2 of title I of Public Law 91-508, or any 
     regulations promulgated thereunder; or
       (B) to cause any fund transfer that would not otherwise be 
     treated as such under paragraph (2) 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 regulation prescribed under such 
     subparagraph.
       (f) Definitions.--For purposes of this section, the 
     following definitions shall apply:
       (1) Depository institution.--the term ``depository 
     institution'' has the same meaning as in section 3 of the 
     Federal Deposit Insurance Act and includes a credit union.
       (2) Not fixed on send.--The term ``not fixed on send'' when 
     referring to an exchange rate used in a remittance transfer 
     means an exchange rate that is not set by the remittance 
     transfer provider at the time the consumer initiates the 
     remittance transfer.
       (3) Remittance transfer.--The term ``remittance transfer'' 
     means the electronic (as defined in section 106(2) of the 
     Electronic Signatures in Global and National Commerce Act) 
     transfer of funds at the request of a consumer located in any 
     State to a person in another country that is initiated by a 
     remittance transfer provider, whether or not the consumer is 
     an account holder of the remittance transfer provider or 
     whether or not the remittance transfer is also an electronic 
     fund transfer, as defined in section 903 of the Electronic 
     Fund Transfer Act.
       (4) Remittance transfer provider.--The term ``remittance 
     transfer provider'' means any person or depository 
     institution, or agent thereof, that originates remittance 
     transfers on behalf of consumers in the normal course of its 
     business, whether or not the consumer is an account holder of 
     that person or depository institution.
       (g) Model Disclosures.--
       (1) Publication.--Notwithstanding any provisions of this 
     title, the Director shall establish and publish model 
     disclosure forms to facilitate compliance with the disclosure 
     requirements of this section and to aid the consumer in 
     understanding the transaction to which the subject disclosure 
     form relates.
       (2) Languages to be used in model disclosures.--The 
     Director shall make these disclosures available within 1 year 
     of the effective date of this title--
       (A) in English, and
       (B) the ten most frequently spoken languages in the United 
     States, other than English, used by consumers initiating 
     remittance transfers, as may be determined by the Director.
       (3) Use of automated equipment.--In establishing model 
     forms under this subsection, the Director shall consider the 
     use by lessors of data processing or similar automated 
     equipment.
       (4) Use optional.--A remittance transfer provider may 
     utilize a model disclosure form established by the Director 
     under this subsection for purposes of compliance with this 
     section, at the discretion of the remittance transfer 
     provider.
       (5) Effect of use.--Any remittance transfer provider that 
     properly uses the material aspects of any model disclosure 
     form established by the Director under this subsection shall 
     be deemed to be in compliance with the disclosure 
     requirements to which the form relates.
       (h) Regulation and Exemption Authority.--Notwithstanding 
     any other provisions of this title, the Director, in the sole 
     discretion of the Director, in consultation with relevant 
     Federal and State government agencies may by regulation 
     exempt from one or more requirements of this section, any 
     category of remittance transfer provider if the Director 
     determines that under applicable Federal or State law that 
     such category of remittance transfer provider is subject to 
     requirements substantially similar to those imposed under 
     this section or that such law gives greater protection and 
     benefit to the consumer, and that there is adequate provision 
     for enforcement.
       (i) Applicability of State Law.--
       (1) This section does not annul, alter, affect, or exempt 
     any person subject to the provisions of this section from 
     complying with other applicable Federal law and the laws of 
     any State relating to remittance transfers and remittance 
     transfer providers, except to the extent that those laws are 
     inconsistent with the provisions of this section, and then 
     only to the extent of the inconsistency.
       (2) Notwithstanding any other provisions of this title, the 
     Director may determine whether such inconsistencies exist. A 
     State law is not inconsistent with this section if the 
     protection such law affords any consumer is greater than the 
     protection afforded by this section. If the Director 
     determines that a State requirement is inconsistent, 
     remittance transfer providers shall incur no liability under 
     the law of that State for a good faith failure to comply with 
     that law, notwithstanding that such determination is 
     subsequently amended, rescinded, or determined by judicial or 
     other authority to be invalid for any reason. This section 
     does not extend the applicability of any such law to any 
     class

[[Page 31149]]

     of persons or transactions to which it would not otherwise 
     apply.
       (3) This section does not annul, alter, or affect the laws 
     of any State relating to the licensing or registration, 
     supervision or examination of remittance transfer providers.
       (4) Nothing in this section shall be construed as limiting 
     the authority of a State attorney general or State regulator 
     to bring an action or other regulatory proceeding arising 
     solely under the law of that State.
       (j) Federal Credit Union Act Amendment.--Paragraph (12)(A) 
     of section 107 of the Federal Credit Union Act (12 U.S.C. 
     1757(12)(A)) is amended by inserting ``and remittance 
     transfers, as defined in section 4309 of the Consumer 
     Financial Protection Agency Act of 2009'' after ``and 
     domestic electronic fund transfers''.
       (k) Automated Clearinghouse System.--
       (1) Expansion of system.--The Board of Governors of the 
     Federal Reserve System 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 volume and dollar amount of remittance transfers to 
     those countries;
       (B) the significance of the volume of such transfers, 
     relative to the external financial flows of the receiving 
     country; and
       (C) the feasibility of such an expansion.
       (2) Report to the congress.--Before the end of the 180-day 
     period beginning on the date of the enactment of this title, 
     and on April 30 biennially thereafter, the Board of Governors 
     of the Federal Reserve System shall submit a report to the 
     Director, 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 section.
       (l) Regulatory Guidance on Remittance Transfers.--
       (1) Provision of guidelines to institutions.--The Director 
     shall provide guidelines to all remittance transfer providers 
     regarding--
       (A) the offering of low-cost remittance transfers;
       (B) the availability of agency services to remittance 
     transfer providers;
       (C) compliance with the provisions of this title; and
       (D) specific options that allow remittance transfer 
     providers to take advantage of automated clearing systems, 
     including the FedACH International Services offered by the 
     Board of Governors of the Federal Reserve System and the 
     Federal reserve banks, to transmit remittances at low cost.
       (2) Content of guidelines.--Guidelines provided to 
     remittance transfer providers under this section shall 
     include--
       (A) information as to the methods of providing remittance 
     transfer services;
       (B) the potential economic opportunities in providing low-
     cost remittance transfers; and
       (C) the potential value to depository institutions of 
     broadening their financial bases to include persons that use 
     remittance transfers.
       (3) Assistance to financial literacy commission.--The 
     Secretary of the Treasury and each agency referred to in 
     subsection (a) shall, as part of their duties as members of 
     the Financial Literacy and Education Commission, assist that 
     Commission in improving the financial literacy and education 
     of consumers who send remittances.
       (m) Report on Feasibility of and Impediments to Use of 
     Remittance History in Calculation of Credit Score.--Before 
     the end of the 365-day period beginning on the date of the 
     enactment of this title, the Director shall submit a report 
     to the President, the Committee on Banking, Housing, and 
     Urban Affairs of the Senate, and the Committee on Financial 
     Services of the House of Representatives regarding--
       (1) the manner in which a consumer's remittance history 
     could be used to enhance a consumer's credit score;
       (2) the current legal and business model barriers and 
     impediments that impede the use of a consumer's remittance 
     history to enhance the consumer's credit score; and
       (3) recommendations on the manner in which maximum 
     transparency and disclosure to consumers of exchange rates 
     for remittance transfers subject to this title may be 
     accomplished, whether or not such exchange rates are known at 
     the time of origination or payment by the consumer for the 
     remittance transfer, including disclosure to the sender of 
     the actual exchange rate used and the amount of currency that 
     the recipient of the remittance transfer received, using the 
     values of the currency into which the funds were exchanged, 
     as contained in section s 919(a)(2)(D) and 919(a)(3) of the 
     Electronic Fund Transfer Act (as amended by subsection (a)).
       (n) Effective Date.--This section shall apply with respect 
     to remittance transfers made after the end of the 180-day 
     period beginning on the date of the enactment of this title.

     SEC. 4310. EFFECTIVE DATE.

       This subtitle shall take effect on the designated transfer 
     date.

     SEC. 4311. NO AUTHORITY TO REQUIRE THE OFFERING OF FINANCIAL 
                   PRODUCTS OR SERVICES.

       The Director may not prescribe any regulation, issue any 
     order or guidance, or take any other action, including any 
     enforcement action, the effect of which would be to require a 
     covered person to offer to any consumer a specific financial 
     product or service.

     SEC. 4312. APPRAISAL INDEPENDENCE REQUIREMENTS.

       (a) Promulgation of New Requirements.--The Director shall 
     lead a Negotiated Rulemaking Committee under the Federal 
     Advisory Committee Act and the Negotiated Rulemaking Act to 
     promulgate appraisal independence requirements for 
     residential loan purposes, and such Committee shall 
     promulgate such requirements not later than the end of the 
     60-day period beginning on the date of the enactment of this 
     title.
       (b) Certain Regulation Requirements.--Regulations 
     promulgated by the Negotiated Rulemaking Committee under this 
     section--
       (1) shall not prohibit lenders, the Federal National 
     Mortgage Association, or the Federal Home Loan Mortgage 
     Corporation from accepting any appraisal report completed by 
     an appraiser selected, retained, or compensated in any manner 
     by a mortgage loan originator--
       (A) licensed or registered in accordance with section 1501 
     et seq. of the SAFE Mortgage Licensing Act of 2008; and
       (B) subject to State or Federal laws that make it unlawful 
     for a mortgage loan originator to make any payment, threat, 
     or promise, directly or indirectly, to any appraiser of a 
     property, for the purposes of influencing the independent 
     judgment of the appraiser with respect to the value of the 
     property, except that nothing in this section shall prohibit 
     a person with an interest in a real estate transaction from 
     asking an appraiser to--
       (i) consider additional, appropriate property information;
       (ii) provide further detail, substantiation, or explanation 
     for the appraiser's value conclusion; or
       (iii) correct errors in the appraisal report; and
       (2) shall include a requirement that lenders and their 
     agents compensate appraisers at a rate that is customary and 
     reasonable for appraisal services performed in the market 
     area of the property being appraised.
       (c) Sunset.--Effective on the date the appraisal 
     independence requirements are promulgated pursuant to 
     subsection (a), the Home Valuation Code of Conduct announced 
     by the Federal Housing Finance Agency on December 23, 2008, 
     shall have no force or effect.

                 Subtitle D--Preservation of State Law

     SEC. 4401. RELATION TO STATE LAW.

       (a) In General.--
       (1) Rule of construction.--This title shall not be 
     construed as annulling, altering, or affecting, or exempting 
     any person subject to the provisions of this title from 
     complying with, the laws, regulations, orders, or 
     interpretations, in effect in any State, except to the extent 
     that such statute, regulation, order, or interpretation is 
     inconsistent with the provisions of this title and then only 
     to the extent of the inconsistency.
       (2) Greater protection under state law.--For the purposes 
     of this subsection, a statute, regulation, order, or 
     interpretation in effect in any State is not inconsistent 
     with the provisions of this title if the protection such 
     statute, regulation, order, or interpretation affords 
     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 Agency 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 4803, 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.

     SEC. 4402. PRESERVATION OF ENFORCEMENT POWERS OF STATES.

       (a) In General.--
       (1) Action by state.--Any State attorney general may bring 
     a civil action in the name of such State, as parens patriae 
     on behalf of natural persons residing in such State, in any 
     district court of the United States or State court having 
     jurisdiction of the defendant, to secure monetary or 
     equitable relief for violation of any provisions of this 
     title or regulations issued thereunder.
       (2) 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

[[Page 31150]]

     person to enforce any provision of this title, including any 
     regulation prescribed by the Director 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 
     Agency, or the Agency's designee.
       (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 Agency 
     immediately upon instituting the action or proceeding.
       (C) Contents of notice.--The notification required under 
     this section 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 Director 
     or Agency or another Federal agency.
       (2) Agency response.--In any action described in paragraph 
     (1), the Agency 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 Director 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 limiting the authority of a State attorney 
     general or State regulator to bring an action or other 
     regulatory proceeding arising solely under the law of 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. 4403. PRESERVATION OF EXISTING CONTRACTS.

       This title, and regulations, orders, guidance, and 
     interpretations prescribed, issued, and established by the 
     Agency, 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 the enactment of this title, 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. 4404. 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 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 
     meaning as in section 3 of the Federal Deposit Insurance Act.
       ``(b) Preemption Standard.--
       ``(1) In general.--National banks shall generally comply 
     with State laws. State laws are preempted only if--
       ``(A) application of a State 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 Comptroller of the Currency determines by 
     regulation or order on a case-by-case basis that a State law 
     prevents or significantly interferes with the ability of an 
     insured depository institution chartered as national bank to 
     engage in the business of banking; or
       ``(C) the State law is preempted by Federal law other than 
     this Act.
       ``(2) Savings clause.--This Act does not preempt or alter 
     the applicability of any State law to any national bank 
     subsidiary, affiliate, or other entity that is not an insured 
     depository institution chartered as a national bank.
       ``(3) Rule of construction.--This Act does not occupy the 
     field in any area of State law and a court shall review any 
     claim that a State law is preempted by this Act as a matter 
     of law and without deference to any agency claim that a State 
     law is preempted under this Act.
       ``(4) Review of preemption decisions.--A court shall review 
     any claim that a State law is preempted by this Act as a 
     matter of law and without deference to any agency claim that 
     a state law is preempted under this Act. Nothing in this 
     subsection shall affect the deference that a court affords to 
     the Comptroller of the Currency regarding the meaning or 
     interpretation of the National Bank Act or other Federal 
     laws.
       ``(c) Substantial Evidence.--No regulation 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 that the provision 
     prevents or significantly interferes with the national bank's 
     exercise of a power explicitly granted by the Congress.
       ``(d) Other Federal Laws.--Notwithstanding any other 
     provision of law, the Comptroller of the Currency may not 
     prescribe regulation pursuant to subsection (b)(1)(B) until 
     the Comptroller of the Currency, after consultation with the 
     Consumer Financial Protection Agency, makes a finding, in 
     writing, that a Federal law provides a substantive standard, 
     applicable to a national bank, which regulates the particular 
     conduct, activity, or authority that is subject to such 
     provision of the State consumer financial law.
       ``(e) Periodic Review of Preemption Determinations.--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 timely propose to continue, 
     amend or rescind it, as may be appropriate, in accordance 
     with the procedures set forth in subsections (a) and (b) of 
     section 5244 (12 U.S.C. 43(a)-(b)).
       ``(f) Application of State Consumer Financial Law to 
     Subsidiaries and Affiliates.--Notwithstanding any provision 
     of this title, a State consumer financial law shall apply to 
     a subsidiary or affiliate of 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.''.
       (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:

``5136C. State law preemption standards for national banks and 
              subsidiaries clarified.''.

     SEC. 4405. VISITORIAL STANDARDS.

       Section 5136C of the Revised Statutes of the United States 
     (as added by section 4404) is amended by adding at the end 
     the following new subsections:
       ``(g) Visitorial Powers.--
       ``(1) Rule of construction.--No provision of this title 
     which relates to visitorial powers or otherwise limits or 
     restricts the supervisory, examination, or regulatory 
     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 any action in any court of appropriate 
     jurisdiction--
       ``(A) to require a national bank to produce records 
     relative to the investigation of violations of State consumer 
     law, or Federal consumer laws;
       ``(B) to enforce any applicable Federal or State law, as 
     authorized by such law; or
       ``(C) on behalf of residents of such State, to enforce any 
     applicable provision of any Federal or State law against a 
     national bank, as authorized by such law, or to seek relief 
     and recover damages for such residents from any violation of 
     any such law by any national bank.
       ``(2) Consultation.--The attorney general (or other chief 
     law enforcement officer) of any State shall consult with the 
     head of the agency responsible for chartering and regulating 
     national banks before acting under paragraph (1).

[[Page 31151]]

       ``(h) Enforcement Actions.--The ability of the head of the 
     agency responsible for chartering and regulating national 
     banks to bring an enforcement action under this title or 
     section 5 of the Federal Trade Commission Act shall not be 
     construed as precluding private parties from enforcing rights 
     granted under Federal or State law in the courts.''.

     SEC. 4406. CLARIFICATION OF LAW APPLICABLE TO NONDEPOSITORY 
                   INSTITUTION SUBSIDIARIES.

       Section 5136C of the Revised Statutes of the United States 
     is amended by inserting after subsection (h) (as added by 
     section 4405) the following new subsection:
       ``(i) Clarification of Law Applicable to Nondepository 
     Institution Subsidiaries and Affiliates of National Banks.--
       ``(1) Definitions.--For purposes of this section, the 
     following definitions shall apply:
       ``(A) Depository institution, subsidiary, affiliate.--The 
     terms `depository institution', `subsidiary', and `affiliate' 
     have the same meanings as in section 3 of the Federal Deposit 
     Insurance Act.
       ``(B) Nondepository institution.--The term `nondepository 
     institution' means any entity that is not a depository 
     institution.
       ``(2) In general.--No provision of this title shall be 
     construed as annulling, altering, or affecting the 
     applicability of State law to any nondepository institution, 
     subsidiary, other affiliate, or agent of a national bank.''.

     SEC. 4407. 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) State Consumer Financial Law Defined.--For purposes 
     of this section, the term `State consumer financial law' 
     means a State law that does not directly or indirectly 
     discriminate against Federal savings associations and that 
     regulates the manner, content, or terms and conditions of any 
     financial transaction (as may be authorized for Federal 
     savings associations to engage in), or any account related 
     thereto, with respect to a consumer.
       ``(b) Preemption Standard.--
       ``(1) In general.--Federal savings associations shall 
     generally comply with State laws. State laws are preempted 
     only if--
       ``(A) application of a state law would have a 
     discriminatory effect on Federal savings associations in 
     comparison with the effect of the law on a bank chartered by 
     that State;
       ``(B) the Director of the Office of Thrift Supervision 
     determines by regulation or order on a case-by-case basis 
     that a State law prevents or significantly interferes with 
     the ability of an insured depository institution chartered as 
     a Federal savings associations to engage in the business of 
     banking; or
       ``(C) the State law is preempted by Federal law other than 
     this Act.
       ``(2) Savings clause.--This Act does not preempt or alter 
     the applicability of any State law to any Federal savings 
     associations subsidiary, affiliate, or other entity that is 
     not an insured depository institution chartered as a national 
     bank.
       ``(3) Rule of construction.--This Act does not occupy the 
     field in any area of State law and a court shall review any 
     claim that a State law is preempted by this Act as a matter 
     of law and without deference to any agency claim that a State 
     law is preempted under this Act.
       ``(4) Review of preemption decisions.--A court shall review 
     any claim that a State law is preempted by this Act as a 
     matter of law and without deference to any agency claim that 
     a state law is preempted under this Act. Nothing in this 
     subsection shall affect the deference that a court affords to 
     the Director of the Office of Thrift Supervision regarding 
     the meaning or interpretation of the National Bank Act or 
     other Federal laws.
       ``(c) Other Federal Law.--Notwithstanding any other 
     provision of law, the Director of the Office of Thrift 
     Supervision may not prescribe any regulation pursuant to 
     subsection (b)(1)(B) until such Director, after consultation 
     with the Consumer Financial Protection Agency, makes a 
     finding, in writing, that a Federal law provides a 
     substantive standard, applicable to a Federal savings 
     association, which regulates the particular conduct, 
     activity, or authority that is subject to such provision of 
     the State consumer financial law.
       ``(d) Substantial Evidence.--No regulation prescribed by 
     the Director of the Office of Thrift Supervision issued under 
     subsection (b)(1)(B) shall be interpreted or applied so as to 
     invalidate, or otherwise declare inapplicable to a Federal 
     savings association, the provision of the State consumer 
     financial law unless substantial evidence, made on the record 
     of the proceeding, supports the specific finding that the 
     provision prevents or significantly interferes with the 
     Federal savings association's exercise of a power explicitly 
     granted by the Congress.
       ``(e) Periodic Review of Preemption Determinations.--The 
     Director of the Office of Thrift Supervision 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 timely propose to 
     continue, amend or rescind it, as may be appropriate, in 
     accordance 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)).
       ``(f) Application of State Consumer Financial Law to 
     Subsidiaries and Affiliates.--Notwithstanding any provision 
     of this Act, a State consumer financial law shall apply to a 
     subsidiary or affiliate of a Federal savings association to 
     the same extent that the State consumer financial law applies 
     to any person, corporation, or other entity subject to such 
     State law and consistent with Federal 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 clarified.''.

     SEC. 4408. VISITORIAL STANDARDS.

       Section 6 of the Home Owners' Loan Act (as added by section 
     4407 of this title) is amended by adding at the end the 
     following new subsections:
       ``(g) Visitorial Powers.--
       ``(1) In general.--No provision of this Act shall be 
     construed as limiting or restricting the authority of any 
     attorney general (or other chief law enforcement officer) of 
     any State to bring any action in any court of appropriate 
     jurisdiction--
       ``(A) to require a Federal savings association to produce 
     records relative to the investigation of violations of State 
     consumer law, or Federal consumer laws;
       ``(B) to enforce any applicable Federal or State law, as 
     authorized by such law; or
       ``(C) on behalf of residents of such State, to enforce any 
     applicable provision of any Federal or State law against a 
     Federal savings association, as authorized by such law, or to 
     seek relief and recover damages for such residents from any 
     violation of any such law by any Federal savings association.
       ``(2) Consultation.--The attorney general (or other chief 
     law enforcement officer) of any State shall consult with the 
     Director or any successor agency before acting under 
     paragraph (1).
       ``(h) Enforcement Actions.--The ability of the Director or 
     any successor officer or agency to bring an enforcement 
     action under this Act or section 5 of the Federal Trade 
     Commission Act shall not be construed as precluding private 
     parties from enforcing rights granted under Federal or State 
     law in the courts.''.

     SEC. 4409. CLARIFICATION OF LAW APPLICABLE TO NONDEPOSITORY 
                   INSTITUTION SUBSIDIARIES.

       Section 6 of the Home Owners' Loan Act is amended by adding 
     after subsection (h) (as added by section 4408) the following 
     new subsection:
       ``(i) Clarification of Law Applicable to Nondepository 
     Institution Subsidiaries and Affiliates of Federal Savings 
     Associations.--
       ``(1) Definitions.--For purposes of this section, the 
     following definitions shall apply:
       ``(A) Depository institution, subsidiary, affiliate.--The 
     terms `depository institution', `subsidiary', and `affiliate' 
     have the same meanings as in section 3 of the Federal Deposit 
     Insurance Act.
       ``(B) Nondepository institution.--The term `nondepository 
     institution' means any entity that is not a depository 
     institution.
       ``(2) In general.--No provision of this title shall be 
     construed as preempting the applicability of State law to any 
     nondepository institution, subsidiary, other affiliate, or 
     agent of a Federal savings association.''.

     SEC. 4410. EFFECTIVE DATE.

       This subtitle shall take effect on the designated transfer 
     date.

                     Subtitle E--Enforcement Powers

     SEC. 4501. DEFINITIONS.

       For purposes of this subtitle, the following definitions 
     shall apply:
       (1) Agency investigation.--The term ``Agency 
     investigation'' means any inquiry conducted by an Agency 
     investigator for the purpose of ascertaining whether any 
     person is or has been engaged in any conduct that violates 
     this title, any enumerated consumer law, or any regulation 
     prescribed or order issued by the Director under this title 
     or under the authorities transferred under subtitles F and H.
       (2) Agency investigator.--The term ``Agency investigator'' 
     means any attorney or investigator employed by the Agency who 
     is charged with the duty of enforcing or carrying into effect 
     any provisions of this title, any enumerated consumer law, 
     the authorities transferred under subtitles F and H, or any 
     regulation prescribed or order issued under this title or 
     pursuant to any such authority by the Director.
       (3) Custodian.--The term ``custodian'' means the custodian 
     or any deputy custodian designated by the Agency.

[[Page 31152]]

       (4) Documentary material.--The term ``documentary 
     material'' includes the original or any copy of any book, 
     document, record, report, memorandum, paper, communication, 
     tabulation, chart, log, electronic file, or other data or 
     data compilations stored in any medium.
       (5) Violation.--The term ``violation'' means any act or 
     omission that, if proved, would constitute a violation of any 
     provision of this title, any enumerated consumer law, any law 
     for which authorities were transferred under subtitles F and 
     H, or of any regulation prescribed or order issued by the 
     Director under this title or pursuant to any such authority.

     SEC. 4502. INVESTIGATIONS AND ADMINISTRATIVE DISCOVERY.

       (a) Joint Investigations.--
       (1) In general.--The Agency or, where appropriate, an 
     Agency representative may engage in joint investigations and 
     requests for information.
       (2) Fair lending.--The authority under paragraph (1) 
     includes matters relating to fair lending, and where 
     appropriate, joint investigations and requests for 
     information with the Secretary of Housing and Urban 
     Development, the Attorney General, or both.''
       (b) Subpoenas.--
       (1) In general.--The Agency or an Agency 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 case of contumacy or refusal to 
     obey a subpoena issued pursuant to this paragraph and served 
     upon any person, an appropriate United States district court 
     may upon application by the Agency or an Agency investigator 
     and after notice to such person, issue an order requiring 
     such person to appear and give testimony or to appear and 
     produce documents or other material, or both.
       (c) Demands.--
       (1) In general.--Whenever the Agency 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 Agency may, before 
     the institution of any proceedings under this title or under 
     any enumerated consumer law or pursuant to the authorities 
     transferred under subtitles F and H, 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 Agency;
       (B) submit such tangible things;
       (C) file written reports or answers to questions;
       (D) give oral testimony concerning documentary material 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 Agency investigator who shall conduct the 
     investigation and the custodian to whom the transcript of 
     such investigation shall be submitted.
       (7) Service.--
       (A) Any civil investigative demand may be served by any 
     Agency investigator at any place within the territorial 
     jurisdiction of any court of the United States.
       (B) Any such demand or any enforcement petition filed under 
     this section may be served upon any person who is not 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 in a foreign nation.
       (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 its principal 
     office or place of business.
       (9) Proof of service.--
       (A) 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) 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) Procedure.--
       (i) Oath and recordation.--The examination of any person 
     pursuant to a demand for oral testimony served under this 
     subsection shall be taken before an officer authorized to 
     administer oaths and affirmations by the laws of the United 
     States or of the place where the examination is held. The 
     officer before whom oral testimony is to be taken shall put 
     the witness on oath or affirmation and shall personally, or 
     by any individual acting under the direction of and in the 
     presence of the officer, record the testimony of the witness.
       (ii) Transcriptions.--The testimony shall be taken 
     stenographically and transcribed.
       (iii) Copy to custodian.--After the testimony is fully 
     transcribed, the officer before whom the testimony is taken 
     shall promptly transmit a copy of the transcript of the 
     testimony to the custodian.
       (B) Parties present.--Any Agency 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 for such 
     person, the officer before whom the testimony is to be taken, 
     an investigator or representative of an agency with which the 
     Agency is engaged in a joint investigation, 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

[[Page 31153]]

     upon by the Agency 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) Confidential advice.--The attorney may advise the 
     person summoned, 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.--The person summoned or the attorney may 
     object on the record to any question, in whole or in part, 
     and shall briefly state for the record the reason for the 
     objection.
       (iv) Refusal to answer.--An objection may properly be made, 
     received, and entered upon the record when it is claimed that 
     the person summoned 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 shall not otherwise 
     interrupt the oral examination, directly or through such 
     person's attorney.
       (v) Petition for order.--If such person refuses to answer 
     any question, the Agency may petition the district court of 
     the United States pursuant to this section for an order 
     compelling such person to answer such question.
       (vi) Basis for compelling testimony.--If such person 
     refuses to answer any question 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.--
       (i) Right to examine.--After the testimony of any witness 
     is fully transcribed, the Agency investigator shall afford 
     the witness (who may be accompanied by an attorney) a 
     reasonable opportunity to examine the transcript.
       (ii) Reading the transcript.--The transcript shall be read 
     to or by the witness, unless such examination and reading are 
     waived by the witness.
       (iii) Request for changes.--Any changes in form or 
     substance which the witness desires to make shall be entered 
     and identified upon the transcript by the Agency investigator 
     with a statement of the reasons given by the witness for 
     making such changes.
       (iv) Signature.--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.
       (v) Agency action in lieu of signature.--If the transcript 
     is not signed by the witness during the 30-day period 
     following the date upon which the witness is first afforded a 
     reasonable opportunity to examine it, the officer or the 
     Agency 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 officer shall 
     certify on the transcript that the witness was duly sworn by 
     the investigator and that the transcript is a true record of 
     the testimony given by the witness, and the officer or the 
     Agency investigator shall promptly deliver the transcript or 
     send it by registered or certified mail to the custodian.
       (G) Copy of transcript.--The Agency investigator shall 
     furnish a copy of the transcript (upon payment of reasonable 
     charges for the transcript) to the witness only, except that 
     the Agency may for good cause limit such witness to 
     inspection of the official transcript of the testimony of 
     such witness.
       (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.--Materials received as a result of a civil 
     investigative demand shall be subject to requirements and 
     procedures regarding confidentiality, in accordance with 
     regulations established by the Director.
       (2) Disclosure to congress.--No regulation established by 
     the Director regarding the confidentiality of materials 
     submitted to, or otherwise obtained by, the Agency shall be 
     intended to prevent disclosure to either House of the 
     Congress or to an appropriate committee of the Congress, 
     except that the Director may prescribe regulations allowing 
     prior notice to any party that owns or otherwise provided the 
     material to the Agency and has 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 such person 
     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 Agency, through such officers or attorneys 
     as the Director 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 Agency investigator named in 
     the demand, such person may file with the Agency a petition 
     for an order by the Agency modifying or setting aside the 
     demand.
       (2) Compliance during pendency.--The time permitted for 
     compliance with the demand in whole or in part, as deemed 
     proper and ordered by the Agency, shall not run during the 
     pendency of such petition at the Agency, except that such 
     person shall comply with any portions of the demand not 
     sought to be modified or set aside.
       (3) Specific grounds.--Such petition shall specify each 
     ground upon which the petitioner relies in seeking such 
     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 such custodian by this 
     section or regulation prescribed by the Director.
       (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 into effect the provisions of this 
     section.
       (2) Appeal.--Any final order so entered shall be subject to 
     appeal pursuant to section 1291 of title 28, United States 
     Code.

     SEC. 4503. HEARINGS AND ADJUDICATION PROCEEDINGS.

       (a) In General.--The Agency may 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 regulations 
     prescribed by the Director under this title; and
       (2) any other Federal law that the Agency is authorized to 
     enforce, including an enumerated consumer law, and any 
     regulations or order prescribed thereunder, unless such 
     Federal law specifically limits the Agency from conducting a 
     hearing or adjudication proceeding and only to the extent of 
     such limitation.
       (b) Special Rules for Cease-and-desist Proceedings.--
       (1) Issuance.--
       (A) Notice of charges.--If, in the opinion of the Agency, 
     any covered person or service provider is engaging or has 
     engaged in an activity that violates a law, regulation, or 
     any condition imposed in writing on the person by the Agency, 
     the Agency may issue and serve upon the person a notice of 
     charges with respect to such violation.
       (B) Contents of notice.--The notice shall contain a 
     statement of the facts constituting any alleged violation and 
     shall fix a time and place at which a hearing will be held to 
     determine whether an order to cease-and-desist there from 
     should issue against the person.
       (C) Time of hearing.--A hearing under this subsection shall 
     be fixed for a date not earlier than 30 days nor later than 
     60 days after service of such notice unless an earlier or a 
     later date is set by the Agency at the request of any party 
     so served.
       (D) Nonappearance deemed to be consent to order.--Unless 
     the party or parties so served shall appear at the hearing 
     personally or by a duly authorized representative, they shall 
     be deemed to have consented to the issuance of the cease-and-
     desist order.
       (E) Issuance of order.--In the event of such consent, or if 
     upon the record made at any such hearing, the Agency shall 
     find that any violation specified in the notice of charges 
     has been established, the Agency may issue and serve upon the 
     person an order to cease-and-desist from any such violation 
     or practice.
       (F) Includes requirement for corrective action.--Such order 
     may, by provisions which may be mandatory or otherwise, 
     require the person to cease-and-desist from the

[[Page 31154]]

     same, and, further, to take affirmative action to correct the 
     conditions resulting from any such violation.
       (2) Effectiveness of order.--A cease-and-desist order shall 
     take effect at the end of the 30-day period beginning on the 
     date of the service of such order upon the covered person or 
     service provider concerned (except in the case of a cease-
     and-desist order issued upon consent, which shall take effect 
     at the time specified therein), and shall remain effective 
     and enforceable as provided therein, except to such extent as 
     it is stayed, modified, terminated, or set aside by action of 
     the Agency or a reviewing court.
       (3) Decision and appeal.--
       (A) Place of and procedures for hearing.--Any hearing 
     provided for in this subsection shall be held in the Federal 
     judicial district or in the territory in which the residence 
     or home office 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.
       (B) Time limit for decision.--After such hearing, and 
     within 90 days after the Agency has notified the parties that 
     the case has been submitted to it for final decision, the 
     Agency shall--
       (i) render its decision (which shall include findings of 
     fact upon which its decision is predicated) and shall issue; 
     and
       (ii) 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.
       (C) Modification of order generally.--Unless a petition for 
     review is timely filed in a court of appeals of the United 
     States, as hereinafter provided in paragraph (4), and 
     thereafter until the record in the proceeding has been filed 
     as so provided, the Agency may at any time, upon such notice 
     and in such manner as it shall deem proper, modify, 
     terminate, or set aside any such order.
       (D) Modification of order after filing record on appeal.--
     Upon such filing of the record, the Agency may modify, 
     terminate, or set aside any such order with permission of the 
     court.
       (4) Appeal to court of appeals.--
       (A) In general.--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 
     Agency be modified, terminated, or set aside.
       (B) Transmittal of copy to the agency.--A copy of such 
     petition shall be forthwith transmitted by the clerk of the 
     court to the Agency, and thereupon the Agency shall file in 
     the court the record in the proceeding, as provided in 
     section 2112 of title 28 of the United States Code.
       (C) Jurisdiction of court.--Upon the filing of a petition 
     under subparagraph (A), 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 Agency.
       (D) Scope of review.--Review of such proceedings shall be 
     had as provided in chapter 7 of title 5 of the United States 
     Code.
       (E) Finality.--The judgment and decree of the court shall 
     be final, except that the same shall be subject to review by 
     the Supreme Court 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 Agency.
       (c) Special Rules for Temporary Cease-and-desist 
     Proceedings.--
       (1) Issuance.--
       (A) In general.--Whenever the Agency 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 of such violation, 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 Agency 
     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.
       (B) Other requirements.--Any temporary order issued under 
     this paragraph may include any requirement authorized under 
     this subtitle.
       (C) Effect date of order.--Any temporary order issued under 
     this paragraph shall take effect upon service upon the person 
     and, unless set aside, limited, or suspended by a court in 
     proceedings authorized by paragraph (2) of this subsection, 
     shall remain effective and enforceable pending the completion 
     of the administrative proceedings pursuant to such notice and 
     until such time as the Agency 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.--Within 10 days after the person 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 home office 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 a person's books and records are so 
     incomplete or inaccurate that the Agency 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 Agency 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 take effect 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 Agency determines, by examination or 
     otherwise, that the person's books and records are accurate 
     and reflect the financial condition of the person.

       (d) Special Rules for Enforcement of Orders.--
       (1) In general.--The Agency may in its discretion apply to 
     the United States district court within the jurisdiction of 
     which the principal office 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) Regulations.--The Director shall prescribe regulations 
     establishing such procedures as may be necessary to carry out 
     this section.

     SEC. 4504. LITIGATION AUTHORITY.

       (a) In General.--If any person violates a provision of this 
     title, any enumerated consumer law, any law for which 
     authorities were transferred under subtitles F and H, or any 
     regulation prescribed or order issued by the Director under 
     this title or pursuant to any such authority, the Agency may 
     commence a civil action against such person to impose a civil 
     penalty and to seek all appropriate legal and equitable 
     relief including a permanent or temporary injunction as 
     permitted by law.
       (b) Representation.--The Agency may act in its own name and 
     through its own attorneys in enforcing any provision of this 
     title, regulations under this title, or any other law or 
     regulation, or in any action, suit, or proceeding to which 
     the Agency is a party.
       (c) Compromise of Actions.--The Agency 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 this title, any enumerated consumer law, 
     any law for which authorities were transferred under 
     subtitles F and H, or any regulation thereunder, the Agency 
     shall notify the Attorney General.
       (e) Appearance Before the Supreme Court.--The Agency may 
     represent itself in its own name before the Supreme Court of 
     the United States, if--
       (1) the Agency 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
       (2) the Attorney General concurs with such request or fails 
     to take action within 60 days of the Agency's request.
       (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 this title, any enumerated 
     consumer law, any law for which authorities were transferred 
     under subtitles F and H, or any regulation prescribed or 
     order issued by the Director under this title or pursuant to 
     any such authority.

[[Page 31155]]

       (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 the discovery of the violation to 
     which an action relates.
       (2) Limitations under other federal laws.--
       (A) For purposes of this section, an action arising under 
     this title shall not include claims arising solely under 
     enumerated consumer laws.
       (B) In any action arising solely under an enumerated 
     consumer law, the Agency may commence, defend, or intervene 
     in the action in accordance with the requirements of that 
     law, as applicable.
       (C) In any action arising solely under the laws for which 
     authorities were transferred by subtitles F and H, the Agency 
     may commence, defend, or intervene in the action in 
     accordance with the requirements of that law, as applicable.

     SEC. 4505. RELIEF AVAILABLE.

       (a) Administrative Proceedings or Court Actions.--
       (1) Jurisdiction.--The court (or Agency, as the case may 
     be) in an action or adjudication proceeding brought under 
     this title, any enumerated consumer law, or any law for which 
     authorities were transferred by subtitles F and H, shall have 
     jurisdiction to grant any appropriate legal or equitable 
     relief with respect to a violation of this title, any 
     enumerated consumer law, and any law for which authorities 
     were transferred by subtitles F and H, including a violation 
     of a regulation prescribed or order issued under this title, 
     any enumerated consumer law and any law for which authorities 
     were transferred by subtitles F and H.
       (2) Relief.--Such relief may include--
       (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;
       (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 under 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 
     Agency, a State attorney general, or a State bank supervisor 
     to enforce any provision of this title, any enumerated 
     consumer law, any law for which authorities were transferred 
     by subtitles F and H, or any regulation prescribed or order 
     issued by the Director under this title or pursuant to any 
     such authority, the Agency, State attorney general, or State 
     bank supervisor may recover the costs incurred by such 
     Agency, attorney general, or supervisor in connection with 
     prosecuting such action if the Agency, State attorney 
     general, or State bank supervisors (as the case may be) is 
     the prevailing party in the action.
       (c) Civil Money Penalty in Court and Administrative 
     Actions.--
       (1) Any person that violates, through any act or omission, 
     any provision of this title, any enumerated consumer law, or 
     any regulation prescribed or order issued by the Director 
     under this title shall forfeit and pay a civil penalty 
     pursuant to this subsection determined as follows:
       (A) First tier.--For any violation of any law, regulation, 
     final order or condition imposed in writing by the Agency, or 
     for any failure to pay any fee or assessment imposed by the 
     Agency (including any fee or assessment for which a related 
     person may be liable), a civil penalty shall not exceed 
     $5,000 for each day during which such violation continues.
       (B) Second tier.--Notwithstanding paragraph (A), for any 
     violation of a regulation prescribed under section 4306 or 
     for any person that recklessly engages in a violation of this 
     title, any enumerated consumer law, or any regulation 
     prescribed or order issued by the Director under this title, 
     relating to the provision of an alternative consumer 
     financial product or service, a civil penalty shall 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 this title, any 
     enumerated consumer law, or any regulation prescribed or 
     order issued by the Director under this title, a civil 
     penalty shall not exceed $1,000,000 for each day during which 
     such violation continues.
       (2) Mitigating factors.--In determining the amount of any 
     penalty assessed under paragraph (1), the Agency 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.
       (3) Authority to modify or remit penalty.--The Agency may 
     compromise, modify, or remit any penalty which may be 
     assessed or had already been assessed under paragraph (1). 
     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.
       (4) Notice and hearing.--No civil penalty may be assessed 
     with respect to a violation of this title, any enumerated 
     consumer law, or any regulation prescribed or order issued by 
     the Director, unless--
       (A) the Agency 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 Agency.

     SEC. 4506. REFERRALS FOR CRIMINAL PROCEEDINGS.

       Whenever the Agency obtains evidence that any person, 
     either domestic or foreign, has engaged in conduct that may 
     constitute a violation of Federal criminal law, the Agency 
     shall transmit such evidence to the Attorney General, who may 
     institute criminal proceedings under appropriate law. No 
     provision of this section shall be construed as affecting any 
     other authority of the Agency to disclose information.

     SEC. 4507. 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 employee's initiative or in 
     the ordinary course of the employee's duties (or any person 
     acting pursuant to a request of the employee)--
       (1) has provided information to the Agency or to any other 
     State, local, or Federal Government authority or law 
     enforcement official information relating to any violation 
     of, or any act or omission the employee reasonably believes 
     to be a violation of any provision of this title or any other 
     law that is subject to the jurisdiction of the Agency, or any 
     regulation, order, standard, or prohibition prescribed by the 
     Director;
       (2) has testified or is about to testify in any proceeding 
     resulting from the administration or enforcement of any 
     provision of this title or any other law that is subject to 
     the jurisdiction of the Agency, or any regulation, order, 
     standard, or prohibition prescribed by the Director;
       (3) has filed or instituted, or has caused to be filed or 
     instituted, any proceeding under any enumerated consumer law 
     or any law for which authorities were transferred by 
     subtitles F and H; or
       (4) has 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, regulation, order, standard, or 
     prohibition, subject to the jurisdiction of, or enforceable 
     by, the Agency.
       (b) Covered Employee Defined.--For the purposes of this 
     section, the term ``covered employee'' means any individual 
     performing tasks related to the provision of a financial 
     product or service to a consumer.
       (c) Timetables.--
       (1) Filing complaint.--Any individual who believes that 
     such individual has been discharged or otherwise 
     discriminated against by any person in violation of 
     subsection (a) may, before the end of the 180-day period 
     beginning on the date on which such violation occurs, file 
     (or have any person file on behalf of such individual) a 
     complaint with the Secretary of Labor (hereafter in this 
     subsection referred to as the ``Secretary'', notwithstanding 
     section 4002(34)) alleging such discharge or discrimination 
     and identifying the person responsible for such act.
       (2) Secretary's action on receipt of complaint.--Upon 
     receipt of a complaint by any individual under paragraph (1), 
     the Secretary shall notify, in writing, the person named in 
     the complaint who is alleged to have committed the violation 
     of--
       (A) the filing of the complaint;
       (B) the allegations contained in the complaint;
       (C) the substance of the evidence supporting the complaint; 
     and
       (D) the opportunities that will be afforded to such person 
     under paragraph (3).
       (3) Investigation, hearing, and orders.--
       (A) Findings.--Not later than 60 days after the date of 
     receipt of a complaint filed under paragraph (1) and after 
     affording the individual filing the complaint and the person 
     named in the complaint who is alleged to have committed the 
     violation an opportunity to submit to the Secretary a written 
     response to the complaint and an opportunity to meet with a 
     representative of the Secretary to present statements from 
     witnesses, the Secretary shall initiate an investigation and 
     determine whether there is reasonable cause to believe that 
     the complaint has merit and notify, in writing, the 
     complainant and the person alleged to have committed a 
     violation of subsection (a) of the Secretary's findings.

[[Page 31156]]

       (B) Preliminary order.--If the Secretary concludes that 
     there is reasonable cause to believe that a violation of 
     subsection (a) has occurred, the Secretary shall accompany 
     the Secretary's findings with a preliminary order providing 
     the relief prescribed by paragraph (3)(B).
       (C) Objections to findings or preliminary order.--Not later 
     than 30 days after the date of notification of findings under 
     subparagraph (A), 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.
       (D) Objections do not constitute a stay.--The filing of 
     objections under subparagraph (C) shall not operate to stay 
     any reinstatement remedy contained in the preliminary order.
       (E) Expeditious hearing.--Any hearing requested under 
     subparagraph (C) shall be conducted expeditiously.
       (F) Finality of order.--If a hearing is not requested under 
     subparagraph (C) with respect to any findings of the 
     Secretary under subparagraph (A) within the 30-day period 
     described in subparagraph (C), the preliminary order shall be 
     deemed a final order that is not subject to judicial review.
       (4) Standards for determination.--
       (A) Prima facie evidence of contribution.--The Secretary 
     shall dismiss a complaint filed under paragraph (1) and shall 
     not conduct an investigation otherwise required under 
     paragraph (3)(A) unless the individual filing the complaint 
     makes a prima facie showing that any behavior described in 
     paragraph (1), (2), (3), or (4) of subsection (a) was a 
     contributing factor in the unfavorable personnel action 
     alleged in the complaint.
       (B) Prohibition on investigation in case of clear and 
     convincing evidence of independent basis.--Notwithstanding a 
     finding by the Secretary that the complainant has made the 
     showing required under subparagraph (A), no investigation 
     otherwise required under paragraph (3) 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) Contributing factor requirement.--The Secretary may 
     determine that a violation of subsection (a) has occurred 
     only if the complainant demonstrates that any behavior 
     described in paragraph (1), (2), (3), or (4) of subsection 
     (a) was a contributing factor in the unfavorable personnel 
     action alleged in the complaint.
       (D) Prohibition on final order in case of clear and 
     convincing evidence of independent basis.--Relief may not be 
     ordered under paragraph (3) 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.
       (5) Final order.--
       (A) In general.--Not later than 120 days after the date of 
     conclusion of any hearing under paragraph (3), the Secretary 
     shall issue a final order providing the relief prescribed by 
     this subsection or denying the complaint.
       (B) Settlement agreement.--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, the complainant, and the person 
     alleged to have committed the violation.
       (C) Contents of order.--If, in response to a complaint 
     filed under paragraph (1), the Secretary determines that a 
     violation of subsection (a) has occurred, the Secretary shall 
     order the person who committed such violation--
       (i) to take affirmative action to abate the violation;
       (ii) to reinstate the complainant to such individual's 
     former position together with compensation (including back 
     pay) and restore the terms, conditions, and privileges 
     associated with such individual's employment; and
       (iii) to provide compensatory damages to the complainant.
       (D) Costs and attorneys fees.--If an order is issued under 
     this paragraph, the Secretary, 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 attorneys' and expert witness 
     fees) reasonably incurred, as determined by the Secretary, by 
     the complainant for, or in connection with, the bringing of 
     the complaint upon which the order was issued.
       (E) Frivolous or bad faith complaints.--If the Secretary 
     finds that a complaint under paragraph (1) is frivolous or 
     has been brought in bad faith, the Secretary may award to the 
     prevailing employer a reasonable attorneys' fee, not 
     exceeding $1,000, to be paid by the complainant.
       (6) De novo action on claim.--
       (A) Action at law or equity.--If the Secretary has not 
     issued a final decision within 210 days after the filing of 
     the complaint, or within 90 days after receiving a written 
     determination, the complainant who filed such complaint may 
     bring an action at law or equity for de novo review in the 
     appropriate district court of the United States.
       (B) Jury trial.--At the request of either party to an 
     action brought under subparagraph (A), such action shall be 
     tried by the court with a jury.
       (C) Standards for determination.--The standards for 
     determination established under paragraph (4) shall apply in 
     any action under this paragraph.
       (D) Relief.--The court shall have jurisdiction to grant all 
     relief, including injunctive relief and compensatory damages 
     , that necessary to make the complainant who sought de novo 
     review whole, including--
       (i) reinstatement with the same seniority status that the 
     complainant 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's fees.
       (E) Not reviewable.--The decision of the court shall be 
     final without further review.
       (7) Judicial review of final order.--
       (A) In general.--Unless a complainant brings a de novo 
     action under paragraph (6), any person adversely affected or 
     aggrieved by a final order issued under paragraph (5) may 
     obtain review of the order in the United States Court of 
     Appeals for the circuit in which the violation, with respect 
     to which the order was issued, allegedly occurred or the 
     circuit in which the complainant resided on the date of such 
     violation.
       (B) Statute of limitation .--Any petition for review of a 
     final order under subsection shall be filed not later than 60 
     days after the date of the issuance of the final order by the 
     Secretary.
       (C) Standards for review.--The standards for review 
     established under chapter 7 of title 5, United States Code, 
     shall apply in any review of a final order under this 
     paragraph.
       (D) Effect of proceedings as stay.--The commencement of 
     proceedings under this paragraph shall not operate as a stay 
     of the final order of the Secretary under review, unless so 
     ordered by the court.
       (E) Limitation on effect of other proceedings.--Except as 
     provided in paragraph (6) and this paragraph, an order of the 
     Secretary with respect to which review could have been 
     obtained under subparagraph (A) shall not be subject to 
     judicial review in any criminal or other civil proceeding.
       (8) Enforcement of orders by secretary.--
       (A) In general.--Whenever any person has failed to comply 
     with an order issued under paragraph (5), the Secretary may 
     file a civil action in the United States district court for 
     the district in which the violation was found to occur, or in 
     the United States district court for the District of 
     Columbia, to enforce such order.
       (B) Relief.--In actions brought under this paragraph, the 
     district courts shall have jurisdiction to grant all 
     appropriate relief including injunctive relief and 
     compensatory damages.
       (9) Enforcement of order by aggrieved party .--
       (A) In general.--A person on whose behalf an order was 
     issued under paragraph (5) may commence a civil action 
     against the person to whom such order was issued to require 
     compliance with such order.
       (B) Relief.--The court, in issuing any final order under 
     this paragraph, may award costs of litigation (including 
     reasonable attorneys' and expert witness fees) to any party 
     whenever the court determines such award is appropriate.
       (d) Action in Nature of Mandamus.--Any nondiscretionary 
     duty imposed by this section shall be enforceable in a 
     mandamus proceeding brought under section 1361 of title 28, 
     United States Code.
       (e) Unenforceability of Certain Agreements.--
       (1) No waiver of rights and remedies.--Notwithstanding any 
     law and except as provided under paragraph (3), 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) Predispute arbitration agreements.--Notwithstanding any 
     law and except as provided under paragraph (3), no predispute 
     arbitration agreement shall be valid or enforceable and to 
     the extent the agreement 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)(2) unless the Director determines by regulation that such 
     provision is inconsistent with the purposes of this title.

     SEC. 4508. EFFECTIVE DATE.

       This subtitle shall take effect on the designated transfer 
     date.

     Subtitle F--Transfer of Functions and Personnel; Transitional 
                               Provisions

     SEC. 4601. TRANSFER OF CERTAIN FUNCTIONS.

       (a) In General.--Except as provided in subsection (b), 
     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 Director.

[[Page 31157]]

       (B) Board of governors' authority.--The Director 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 Director.
       (B) Comptroller's authority.--The Director 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 Director.
       (B) Director's authority.--The Director 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 Director.
       (B) Corporation's authority.--The Director 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.--Except as provided in 
     subparagraph (C), the consumer financial protection functions 
     of the Federal Trade Commission that are contained within the 
     enumerated consumer laws are transferred to the Agency, 
     except as provided in section 4202(e). This transfer shall 
     not be subject to the provisions of Section 3503 of title 5, 
     United States code.
       (B) Federal trade commission authority.--The Agency shall 
     have all powers and duties that were vested in the Fedeal 
     Trade Commission that were contained within the enumerated 
     statutes, except as provided in section 4202(e), on the day 
     before the designated transfer date.
       (6) National credit union administration.--
       (A) Transfer of functions.--All consumer financial 
     protection functions of the National Credit Union 
     Administration are transferred to the Director.
       (B) National credit union administration's authority.--The 
     Director 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) Secretary of housing and urban development.--
       (A) Transfer of functions.--All consumer protection 
     functions of the Secretary of Housing and Urban Development 
     relating to the Real Estate Settlement Procedures Act of 1974 
     and the Secure and Fair Enforcement for Mortgage Licensing 
     Act of 2008 are transferred to the Director.
       (B) Secretary of hud's authority.--The Director shall have 
     all powers and duties that were vested in the Secretary of 
     Housing and Urban Development relating to the Real Estate 
     Settlement Procedures Act of 1974 and the Secure and Fair 
     Enforcement for Mortgage Licensing Act of 2008, on the day 
     before the designated transfer date
       (b) Transfers of Functions Subject to Backstop Enforcement 
     Authority Remaining With Transferor Agencies.--The transfers 
     of functions in subsection (a) shall not affect the authority 
     of the agencies identified in subsection (a) from initiating 
     enforcement proceedings under the circumstances described in 
     section 4202(e)(3).
       (c) Termination of Authority of Transferor Agencies To 
     Collect Fees for Consumer Financial Protection Purposes.--
     Authorities of the agencies identified in subsection (a) to 
     assess and collect fees to cover the cost of conducting 
     consumer financial protection functions shall terminate on 
     the day before the designated transfer date.
       (d) Consumer Financial Protection Functions Defined.--For 
     purposes of this subtitle, 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 
     provision of consumer financial products or services, 
     including the authority to assess and collect fees for those 
     purposes, except that such term shall not include any such 
     function relating to an agency's responsibilities under the 
     Community Reinvestment Act of 1977.
       (e) Effective Date.--Subsections (a) and (b) shall take 
     effect on the designated transfer date.

     SEC. 4602. DESIGNATED TRANSFER DATE.

       The designated transfer date shall be 180 days after the 
     date of enactment of this title.

     SEC. 4603. SAVINGS PROVISIONS.

       (a) Board of Governors.--
       (1) Existing rights, duties, and obligations not 
     affected.--Section 4601(a)(1) shall 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 Director 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 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 Director by this title, except that the 
     Director 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 4601(a)(4) shall 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 Director 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 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 Director by 
     this title, except that the Director 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 4601(a)(5) shall not 
     affect the validity of any right, duty, or obligation of the 
     United States, the Federal Trade Commission, 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 Director by this 
     title; and
       (B) existed on the day before the designated transfer date.
       (d) National Credit Union Administration.--
       (1) Existing rights, duties, and obligations not 
     affected.--Section 4601(a)(5) shall not affect the validity 
     of any right, duty, or obligation of the United States, the 
     Federal Trade Commission, or any other person, that--
       (A) arises under any provision of law relating to any 
     consumer financial protection function of the Federal Trade 
     Commission transferred to the Director 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 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 Director 
     by this title before the designated transfer date, except 
     that the Director 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) Director of the Office of Thrift Supervision.--
       (1) Existing rights, duties, and obligations not 
     affected.--Section 4601(a)(3) 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--
       (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 Director by 
     this title; and
       (B) that 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 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 Director by this title before the designated transfer 
     date, except that the Director 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) Secretary of Housing and Urban Development.--
       (1) Existing rights, duties, and obligations not 
     affected.--Section 4601(a)(7) shall not affect the validity 
     of any right, duty, or

[[Page 31158]]

     obligation of the United States, the Secretary of Housing and 
     Urban Development, 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 Housing and Urban Development 
     under the Real Estate Settlement Procedures Act of 1974 and 
     the Secure and Fair Enforcement for Mortgage Licensing Act of 
     2008 transferred to the Director by this title; and
       (B) that 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 Housing 
     and Urban Development (or the Department of Housing and Urban 
     Development) with respect to any consumer financial 
     protection function of the Secretary of Housing and Urban 
     Development transferred to the Director by this title before 
     the designated transfer date, except that the Director shall 
     be substituted for the Secretary of Housing and Urban 
     Development (or such Department) as a party to any such 
     proceeding as of the designated transfer date.
       (h) Continuation of Existing Orders, Regulations, 
     Determinations, Agreements, and Resolutions.--All orders, 
     resolutions, determinations, agreements, and regulations that 
     have been issued, made, prescribed, or allowed to become 
     effective by the Board of Governors (or any Federal reserve 
     bank), the Federal Deposit Insurance Corporation, the Federal 
     Trade Commission, the National Credit Union Administration, 
     the Comptroller of the Currency, the Director of the Office 
     of Thrift Supervision, the Secretary of Housing and Urban 
     Development, 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 regulations, and shall be 
     enforceable by or against the Director until modified, 
     terminated, set aside, or superseded in accordance with 
     applicable law by the Director, by any court of competent 
     jurisdiction, or by operation of law.
       (i) Identification of Regulations Continued.--Not later 
     than the designated transfer date, the Director--
       (1) shall, after 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, and the 
     Secretary of Housing and Urban Development identify the 
     regulations continued under subsection (g) that will be 
     enforced by the Director; and
       (2) shall publish a list of such regulations in the Federal 
     Register.
       (j) Status of Regulations Proposed or Not Yet Effective.--
       (1) Proposed regulations.--Any proposed regulation of the 
     Board of Governors, the Federal Deposit Insurance 
     Corporation, the Federal Trade Commission, the National 
     Credit Union Administration, the Comptroller of the Currency, 
     the Director of the Office of Thrift Supervision, or the 
     Secretary of Housing and Urban Development which that agency, 
     in performing consumer financial protection functions 
     transferred by this title, has proposed before the designated 
     transfer date but has not published as a final regulation 
     before that date, shall be deemed to be a proposed regulation 
     of the Director.
       (2) Regulations not yet effective.--Any interim or final 
     regulation of Board of Governors, the Federal Deposit 
     Insurance Corporation, the Federal Trade Commission, the 
     National Credit Union Administration, the Comptroller of the 
     Currency, the Director of the Office of Thrift Supervision, 
     or the Secretary of Housing and Urban Development 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 take effect as a regulation of the 
     Director according to its terms.

     SEC. 4604. TRANSFER OF CERTAIN PERSONNEL.

       (a) In General.--
       (1) Certain federal reserve system employees transferred.--
       (A) Identifying employees for transfer.--The Director and 
     the Board of Governors shall--
       (i) jointly determine the number of employees of the Board 
     necessary to perform or support the consumer financial 
     protection functions of the Board of Governors that are 
     transferred to the Director 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 Agency in a manner that the Director and the 
     Board of Governors, in their sole discretion, deem equitable.
       (B) Identified employees transferred.--All employees of the 
     Board of Governors identified under subparagraph (A)(ii) 
     shall be transferred to the Agency 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 Director 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 Director by this title; and
       (ii) consistent with the number determined under clause 
     (i), jointly identify employees of the Corporation for 
     transfer to the Agency in a manner that the Director and the 
     Board of Directors of the Corporation, in their discretion, 
     deem equitable.
       (B) Identified employees transferred.--All employees of the 
     Corporation identified under subparagraph (A)(ii) shall be 
     transferred to the Agency for employment.
       (3) Certain ncua employees transferred.--
       (A) Identifying employees for transfer.--The Director 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 Director 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 Agency in a manner that 
     the Director and the National Credit Union Administration 
     Board, in their discretion, deem equitable.
       (B) Identified employees transferred.--All employees of the 
     National Credit Union Administration identified under 
     subparagraph (A)(ii) shall be transferred to the Agency for 
     employment.
       (4) Certain hud employees transferred.--
       (A) Identifying employees for transfer.--The Director and 
     the Secretary 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 financial protection 
     functions of the Secretary of Housing and Urban Development 
     that are transferred to the Director 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 Agency in a manner 
     that the Director and the Secretary of Housing and Urban 
     Development, in their 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 Agency for 
     employment.
       (5) Appointment authority for excepted service and senior 
     executive service transferred.--
       (A) In general.--In the case of employees occupying 
     positions in the excepted service or the Senior Executive 
     Service, any appointment authority established pursuant to 
     law or regulations of the Director 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 to such 
     subparagraph) 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 such employee's position assignment 
     not later than 120 days after the effective date of the 
     employee's 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, ftc, hud, ncua, occ, 
     and ots.--Each employee transferred from the Federal Deposit 
     Insurance Corporation, the Federal Trade Commission, the 
     Department of Housing and Urban Development, the National 
     Credit Union Administration, the Office of the Comptroller of 
     the Currency, or the Office of Thrift Supervision shall be 
     placed in a position at the Agency with the same status and

[[Page 31159]]

     tenure as he or she 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 employees transferring to the Agency 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 Agency shall not be subject to 
     any additional certification requirements before being placed 
     in a comparable examiner's position at the Agency examining 
     the same types of institutions as the transferred examiners 
     examined before such examiners were transferred.
       (f) Personnel Actions Limited.--
       (1) 5-year protection.--Except as provided in paragraph 
     (2), each transferred employee holding a permanent position 
     on the day before the designated transfer date shall not, 
     during the 5-year period beginning on the designated transfer 
     date, be involuntarily separated, or involuntarily reassigned 
     outside such transferred employee's local locality pay area 
     as defined by the Director of the Office of Personnel 
     Management.
       (2) Exceptions.--Paragraph (1) shall not be construed as 
     limiting the right of the Director to--
       (A) separate an employee for cause or for unacceptable 
     performance;
       (B) 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) reassign a supervisory employee outside such employee's 
     locality pay area as defined by the Director of the Office of 
     Personnel Management when the Director determines that the 
     reassignment is necessary for the efficient operation of the 
     Agency.
       (g) Pay.--
       (1) 1-year protection.--Except as provided in paragraph 
     (2), each transferred employee shall, during the 1-year 
     period beginning on the designated transfer date, receive pay 
     at a rate not less than the basic rate of pay (including any 
     geographic differential) that the employee received during 
     the 1-year period immediately before the transfer.
       (2) Exceptions.--Paragraph (1) shall not be construed as 
     limiting the right of the Agency to reduce the rate of basic 
     pay of a transferred employee--
       (A) for cause;
       (B) for unacceptable performance; or
       (C) with the employee's consent.
       (3) Protection only while employed.--Paragraph (1) applies 
     to a transferred employee only while that employee remains 
     employed by the Agency.
       (4) Pay increases permitted.--Paragraph (1) shall not be 
     construed as limiting the authority of the Agency to increase 
     a transferred employee's pay.
       (h) Reorganization.--
       (1) Between 1st and 3rd year.--
       (A) In general.--If the Agency determines, during the 
     period beginning 1 year after the designated transfer date 
     and ending 3 years after the designated transfer date, that a 
     reorganization of the staff of the Agency 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 Director of 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 Agency shall--

       (I) establish competitive areas (as that term is defined in 
     regulations issued by the Director of 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 Director of 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 Agency 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 Agency determines, at any time 
     after the 3-year period beginning on the designated transfer 
     date, that a reorganization of the staff of the Agency 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 Agency 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 such employee's existing retirement plan 
     as long as the employee remains employed by the Agency.
       (ii) Employer's contribution.--The Director 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 
     the date of the employee's transfer to the Agency may, during 
     the period beginning 6 months after the designated transfer 
     date and ending 1 year 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) Agency participation in federal reserve system 
     retirement plan.--
       (i) Separate account in federal reserve system retirement 
     plan established.--A separate account in the Federal Reserve 
     System retirement plan shall be established for Agency 
     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 Director shall 
     deposit into the account established under clause (i) the 
     employer contributions that the Agency makes on behalf of 
     employees who do not make the election under subparagraph 
     (B).
       (iv) Account administration.--The Director 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, the 
     following definitions shall apply:
       (i) Existing retirement plan.--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, 
     which the employee was enrolled in on the day before the 
     designated transfer date.
       (ii) Federal employee retirement plan.--The term ``Federal 
     employee retirement program'' means the retirement program 
     for Federal employees established by chapters 83 and 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's contribution.--The Director 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.

[[Page 31160]]

       (B) Dental, vision, or life insurance after 1st year.--If, 
     after the 1-year period beginning on the designated transfer 
     date, the Director decides not to continue participation in 
     any dental, vision, or life insurance program of an agency or 
     bank from which employees transferred, a transferred employee 
     who is a member of such a program may, before the Director's 
     decision 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; and
       (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 
     Director decides not to continue participation in any long-
     term care insurance program of an agency or bank from which 
     employees transferred, a transferred employee who is a member 
     of such a program may, before the Director's decision 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's contribution.--An individual enrolled in the 
     Federal Employees Health Benefits program shall pay any 
     employee contribution required by the plan.
       (E) Additional funding.--The Director 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 Director and the 
     Director of 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.
       (F) Credit for time enrolled in other plans.--For employees 
     transferred under this section, enrollment in a health 
     benefits plan administered by the Comptroller of the 
     Currency, the Director of the Office of Thrift Supervision, 
     the Federal Deposit Insurance Corporation, the National 
     Credit Union Administration, the Board of Governors, the 
     Secretary of Housing and Urban Development, or a Federal 
     reserve bank, 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 the Board of Governors of 
     the Federal Reserve System, the Federal Deposit Insurance 
     Corporation, the Federal Trade Commission, the Secretary of 
     Housing and Urban Development, the National Credit Union 
     Administration, the Comptroller of the Currency, or the 
     Director of the Office of Thrift Supervision 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 Agency, without 
     regard to any regularly scheduled open season and requirement 
     of insurability.
       (ii) Employee's contribution.--An individual enrolled in a 
     life insurance plan under this clause shall pay any employee 
     contribution required by the plan.
       (iii) Additional funding.--The Director 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 Director and the Director of 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 section, enrollment in a 
     life insurance plan administered by the Board of Governors, 
     the Federal Deposit Insurance Corporation, the Federal Trade 
     Commission, the Secretary of Housing and Urban Development, 
     the National Credit Union Administration, the Comptroller of 
     the Currency, the Director of the Office of Thrift 
     Supervision, or a Federal reserve bank 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) Implementation of Uniform Pay and Classification 
     System.--Not later than 2 years after the designated transfer 
     date, the Director shall implement a uniform pay and 
     classification system for all transferred employees.
       (k) Equitable Treatment.--In administering the provisions 
     of this section, the Director--
       (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 Secretary of Housing and Urban Development, 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 those employees' 
     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, including the Board of 
     Governors of the Federal Reserve System, the Federal Deposit 
     Insurance Corporation, the Federal Trade Commission, the 
     Department of Housing and Urban Development, 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 Director shall work with the Director of the 
     Office of Personnel Management and other entities with 
     expertise in matters related to employment to ensure a fair 
     and orderly transition for affected employees.

     SEC. 4605. 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 the enactment of this 
     title.

     SEC. 4606. INTERIM AUTHORITY OF THE SECRETARY.

       (a) In General.--The Secretary is authorized to perform the 
     functions of the Director under this subtitle until the 
     appointment of the Director in accordance with section 4102.
       (b) Interim Administrative Services by the Department of 
     the Treasury.--The Secretary of the Treasury may provide 
     administrative services necessary to support the Agency 
     before the designated transfer date.
       (c) Interim Funding for the Department of the Treasury.--
     For the purposes of carrying out the authorities granted in 
     this section, there are appropriated to the Secretary of the 
     Treasury such sums as are necessary. Notwithstanding any 
     other provision of law, such amounts shall be subject to 
     apportionment under section 1517 of title 31, United States 
     Code, and restrictions that generally apply to the use of 
     appropriated funds in title 31, United States Code, and other 
     laws.

                  Subtitle G--Regulatory Improvements

     SEC. 4701. COLLECTION OF DEPOSIT ACCOUNT DATA.

       (a) Purpose.--The purpose of this section is to promote 
     awareness and understanding of the access of individuals and 
     communities to financial services, and to identify business 
     and community development needs and opportunities.
       (b) In General.--
       (1) Records required.--For each branch, automated teller 
     machine at which deposits are accepted, and other deposit 
     taking service facility with respect to any financial 
     institution, the financial institution shall maintain records 
     of the number and dollar amounts of deposit accounts of 
     customers.
       (2) Geo-coded addresses of depositors.--The customers' 
     addresses maintained pursuant to paragraph (1) shall be geo-
     coded so that data shall be collected regarding the census 
     tracts of the residence or business location of the 
     customers.
       (3) Identification of depositor type.--In maintaining 
     records on any deposit account under this section, the 
     financial institution shall also record whether the deposit 
     account is for a residential or commercial customer.
       (4) Public availability.--
       (A) In general.--The following information shall be 
     publicly available on an annual basis--
       (i) the address and census tracts of each branch, automated 
     teller machine at which deposits are accepted, and other 
     deposit taking service facility with respect to any financial 
     institution;
       (ii) the type of deposit account including whether the 
     account was a checking or savings account; and
       (iii) data on the number and dollar amounts of the 
     accounts, presented by census tract location of the 
     residential and commercial customers.
       (iv) any other data deemed appropriate by the Director.
       (B) Protection of identity.--In the publicly available 
     data, any personally identifiable data element shall be 
     removed so as to

[[Page 31161]]

     protect the identities of the commercial and residential 
     customers.
       (c) Availability of Information.--
       (1) Submission to agencies.--The data required to be 
     compiled and maintained under this section by any financial 
     institution shall be submitted annually to the Agency, or to 
     a Federal banking agency, in accordance with regulations 
     prescribed by the Director.
       (2) Availability of information.--Information compiled and 
     maintained under this section shall be retained for not less 
     than 3 years after the date of preparation and shall be made 
     available to the public, upon request, in the form required 
     under regulations prescribed by the Director.
       (d) Agency Use.--The Director--
       (1) shall assess the distribution of residential and 
     commercial accounts at such financial institution across 
     income and minority level of census tracts; and
       (2) may use the data for any other purpose as permitted by 
     law.
       (e) Regulations and Guidance.--
       (1) In general.--The Director shall prescribe such 
     regulations and issue guidance as may be necessary to carry 
     out, enforce, and compile data pursuant to this section.
       (2) Data compilation regulations.--The Director shall 
     prescribe regulations regarding the provision of data 
     compiled under this section to the Federal banking agencies 
     to carry out the purposes of this section and shall issue 
     guidance to financial institutions regarding measures to 
     facilitate compliance with the this section and the 
     requirements of regulations prescribed under this section.
       (f) Definitions.--For purposes of this section, the 
     following definitions shall apply:
       (1) Agency.--The term ``Agency'' means the Consumer 
     Financial Protection Agency.
       (2) Credit union.--The term ``credit union'' means a 
     Federal credit union or a State-chartered credit union (as 
     such terms are defined in section 101 of the Federal Credit 
     Union Act).
       (3) Deposit account.--The term ``deposit account'' includes 
     any checking account, savings account, credit union share 
     account, and other type of account as defined by the 
     Director.
       (4) Director.--The term ``Director'' means the Director of 
     the Agency.
       (5) Federal banking agency.--The term ``Federal banking 
     agency'' means the Board of Governors of the Federal Reserve 
     System, the head of the agency responsible for chartering and 
     regulating national banks, the Director of the Office of 
     Thrift Supervision, the Federal Deposit Insurance 
     Corporation, and the National Credit Union Administration; 
     and the term ``Federal banking agencies'' means all of those 
     agencies.
       (6) Financial institution.--The term ``financial 
     institution''--
       (A) has the meaning given to the term ``insured depository 
     institution'' in section 3(c)(2) of the Federal Deposit 
     Insurance Act; and
       (B) includes any credit union.
       (g) Effective Date.--This section shall take effect on the 
     designated transfer date.

     SEC. 4702. 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 new section:

     ``Sec. 704B. 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- and minority-owned small businesses.
       ``(b) In General.--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 business is a women- or minority-
     owned 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) In general.--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) Exception.--If a financial institution determines 
     that 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 will provide 
     notice to the applicant of the access of the underwriter to 
     this information, along with notice that the financial 
     institution may not discriminate on this basis of this 
     information.
       ``(e) Form and Manner of Information.--
       ``(1) In general.--Each financial institution shall compile 
     and maintain, in accordance with regulations of the Agency, 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 also be itemized in order to 
     clearly and conspicuously disclose the following:
       ``(A) The number of the application and the date 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, sex, and ethnicity of the principal owners 
     of the business.
       ``(H) Any additional data the Agency determines would aid 
     in fulfilling the purposes of this section.
       ``(3) Inclusion of personally identifiable information 
     prohibited.--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, and 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 Agency may, in the discretion of the Agency, 
     delete or modify data collected under this section which is 
     or will be available to the public if the Agency determines 
     that the deletion or modification of the data would advance a 
     compelling privacy interest.
       ``(f) Availability of Information.--
       ``(1) Submission to agency.--The data required to be 
     compiled and maintained under this section by any financial 
     institution shall be submitted annually to the Agency.
       ``(2) Availability of information.--
       ``(A) In general.--Information compiled and maintained 
     under this section shall be retained for not less than 3 
     years after the date of preparation and shall be made 
     available to the public, upon request, in the form required 
     under regulations prescribed by the Agency.
       ``(B) Annual disclosure to the public.--In addition to the 
     availability by request under subparagraph (A) of data 
     compiled and maintained under this section, the Agency shall 
     annually provide such data to the public.
       ``(C) Procedures.--The procedures for disclosing data 
     compiled and maintained under this section to the public 
     shall be determined by the Agency by regulation.
       ``(3) Compilation of aggregate data.--
       ``(A) In general.--The Agency may, in the discretion of the 
     Agency, compile for the Agency's own use compilations of 
     aggregate data.
       ``(B) Public availability of aggregate data.--The Agency 
     may, in the discretion of the Agency, make public 
     compilations of aggregate data in such manner as the Agency 
     may determine to be appropriate.
       ``(g) 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-owned business.--The term `minority-owned 
     business' means a 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.
       ``(3) Women-owned business.--The term `women-owned 
     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.
       ``(4) Minority.--The term `minority' has the meaning given 
     to such term by section 1204(c)(3) of the Financial 
     Institutions Reform, Recovery, and Enforcement Act of 1989.
       ``(5) Small business loan.--The term `small business loan' 
     shall be defined by the Agency, which may take into account--
       ``(A) the gross revenues of the borrower;
       ``(B) the total number of employees of the borrower;

[[Page 31162]]

       ``(C) the industry in which the borrower has its primary 
     operations; and
       ``(D) the size of the loan.
       ``(h) Agency Action.--
       ``(1) In general.--The Agency shall prescribe such 
     regulations and issue such guidance as may be necessary to 
     carry out, enforce, and compile data pursuant to this 
     section.
       ``(2) Exceptions.--The Agency, by regulation or order, may 
     adopt exceptions to any requirement of this section and may, 
     conditionally or unconditionally, exempt any financial 
     institution or class of institutions from the requirements of 
     this section as the Agency determines to be necessary or 
     appropriate to carry out the purposes and objectives of this 
     section.
       ``(3) Guidance.--The Agency 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 the purposes of this 
     section.''.
       (b) Technical and Conforming Amendment.--Section 701(b) of 
     the Equal Credit Opportunity Act (15 U.S.C. 1691(b)) is 
     amended--
       (1) by striking ``or'' after the semicolon at the end of 
     paragraph (3);
       (2) by striking the period at the end of paragraph (4) and 
     inserting ``; or''; and
       (3) by inserting after paragraph (4), the following new 
     paragraph:
       ``(5) to make an inquiry under section 704B in accordance 
     with the requirements of such section.''.
       (c) Clerical Amendment.--The table of sections for the 
     Equal Credit Opportunity 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 take effect on the 
     designated transfer date.

     SEC. 4703. ANNUAL FINANCIAL AUTOPSY.

       (a) Study Required.--Not later than March 31 of each 
     calendar year, the Director shall--
       (1) conduct a scientific sampling of foreclosures and 
     bankruptcies during the previous calendar year in each State 
     or territory of the United States; and
       (2) identify any underlying causes of such bankruptcies or 
     foreclosures, including any specific financial products or 
     services that have been the cause of substantial numbers of 
     such bankruptcies or foreclosures.
       (b) Report.--After the completion of each study required 
     under subsection (a), the Director shall submit a report to 
     the Congress containing--
       (1) any conclusions made by the Director in carrying out 
     such study;
       (2) any specific financial products or services that the 
     Director has identified to have caused a substantial number 
     of bankruptcies or foreclosures, as well as which companies 
     or individuals provided such financial products or services; 
     and
       (3) any recommendations the Director has for legislation 
     that would reduce the underlying causes of bankruptcies and 
     foreclosures identified in such study.

                   Subtitle H--Conforming Amendments

     SEC. 4801. AMENDMENTS TO THE INSPECTOR GENERAL ACT OF 1978.

       (a) Establishment.--Section 8G(a)(2) of the Inspector 
     General Act of 1978 (5 U.S.C. App.) is amended by inserting 
     ``the Consumer Financial Protection Agency,'' before ``the 
     Consumer Product Safety Commission,''.
       (b) Effective Date.--This section shall take effect on the 
     date of the enactment of this title.

     SEC. 4802. AMENDMENTS TO THE PRIVACY ACT OF 1974.

       (a) Applicability.--Section 552a of title 5, United States 
     Code, is amended by adding at the end the following new 
     subsection:
       ``(w) Applicability to Consumer Financial Protection 
     Agency.--Except as provided in the Consumer Financial 
     Protection Agency Act of 2009, this section shall apply with 
     respect to the Consumer Financial Protection Agency.''.
       (b) Effective Date.--This section shall take effect on the 
     date of the enactment of this title.

     SEC. 4803. AMENDMENTS TO THE ALTERNATIVE MORTGAGE TRANSACTION 
                   PARITY ACT OF 1982.

       (a) Section 803(1).--Section 803(1) of the Alternative 
     Mortgage Transaction Parity Act of 1982 (12 U.S.C. 3802(1)) 
     is amended by striking paragraphs (B) and (C).
       (b) Section 804(a).--Section 804(a) of the Alternative 
     Mortgage Transaction Parity Act of l982 (12 U.S.C. 3803(a)) 
     is amended--
       (1) in paragraphs (1), (2), and (3), by inserting ``on or 
     before the designated transfer date, as determined in section 
     4602 of the Consumer Financial Protection Agency Act of 
     2009'' after ``transactions made'' each place such term 
     appears;
       (2) in paragraph (2), by striking ``and'' at the end;
       (3) in paragraph (3), by striking the period at the end and 
     inserting ``; and''; and
       (4) by adding at the end the following new paragraph:
       ``(4) with respect to transactions made after the 
     designated transfer date, as determined in section 4602 of 
     the Consumer Financial Protection Agency Act of 2009, only in 
     accordance with regulations governing alternative mortgage 
     transactions as issued by the Consumer Financial Protection 
     Agency for federally chartered housing creditors, in 
     accordance with the rulemaking authority granted to the 
     Consumer Financial Protection Agency with regard to federally 
     chartered housing creditors under laws other than this 
     section.''.
       (c) Section 804.--Section 804 of the Alternative Mortgage 
     Transaction Parity Act of l982 (12 U.S.C. 3803) is amended--
       (1) by striking subsection (c) and inserting the following 
     new subsection:
       ``(c) Effect of State Law.--
       ``(1) In general.--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.
       ``(2) Rule of construction.--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
       (2) by adding at the end the following new subsection:
       ``(d) Duties of Consumer Financial Protection Agency.--The 
     Consumer Financial Protection Agency shall--
       ``(1) review the regulations identified by the Comptroller 
     of the Currency, the National Credit Union Administration, 
     and the Director of the Office of Thrift Supervision (as 
     those regulations exist on the designated transfer date, as 
     determined in section 4602 of the Consumer Financial 
     Protection Agency Act of 2009) as applicable under paragraphs 
     (1), (2), and (3) of subsection (a);
       ``(2) determine whether such regulations are fair and not 
     deceptive and otherwise meet the objectives of section 4201 
     of the Consumer Financial Protection Agency Act of 2009; and
       ``(3) prescribe regulations under subsection (a)(4) after 
     the designated transfer date, as determined under such 
     Act.''.
       (d) Effective Date and Scope of Application.--
       (1) Effective date.--This section shall take effect on the 
     designated transfer date.
       (2) Scope of application.--The amendments made by 
     subsection (a) shall not affect any transaction covered by 
     the Alternative Mortgage Transaction Parity Act of l982 which 
     is entered into on or before the designated transfer date.

     SEC. 4804. AMENDMENTS TO THE CONSUMER CREDIT PROTECTION ACT.

       (a) Truth in Lending Act.--
       (1) Section 103.--Section 103 of the Truth in Lending Act 
     (15 U.S.C. 1602) is amended by striking subsection (b) and 
     inserting the following new subsection:
       ``(b) Agency Definitions.--
       ``(1) Board.--The term `Board' means the `Board of 
     Governors of the Federal Reserve System'.
       ``(2) Agency.--The term `Agency' means the Consumer 
     Financial Protection Agency.''.
       (2) Universal amendment relating to board of governors of 
     the federal reserve system.--
       (A) In general.--Except as provided in subparagraph (B), 
     the Truth in Lending Act (15 U.S.C. 1601 et seq.) is amended 
     by striking ``Board'' each place such term appears, including 
     in chapters 4 and 5 relating to credit billing and consumer 
     leases, and inserting ``Agency''.
       (B) Exceptions.--The amendment described in subparagraph 
     (A) shall not apply to sections 108(a) (as amended by 
     paragraph (4)) and 140(d).
       (3) Section 105.--Section 105(b) of the Truth in Lending 
     Act (15 U.S.C. 1604(b)) is amended by striking the first 
     sentence and inserting the following: ``The Agency shall 
     publish a single, integrated disclosure for mortgage loan 
     transactions, including real estate settlement cost 
     statements, which include the disclosure requirements of this 
     title, in conjunction with the disclosure requirements of the 
     Real Estate Settlement Procedures Act that, taken together, 
     may apply to transactions subject to both or either law. The 
     purpose of such model disclosure shall be to facilitate 
     compliance with the disclosure requirements of those titles, 
     and to aid the borrower or lessee in understanding the 
     transaction by utilizing readily understandable language to 
     simplify the technical nature of the disclosures.''.
       (4) Section 108.--Section 108 of the Truth in Lending Act 
     (15 U.S.C. 1607) is amended--
       (A) by striking subsection (a) and inserting the following 
     new subsection:
       ``(a) Enforcing Agencies.--Subject to section 4202 of the 
     Consumer Financial Protection Agency Act of 2009, compliance 
     with the requirements imposed under this title shall be 
     enforced as follows:
       ``(1) Under section 8 of the Federal Deposit Insurance Act, 
     in the case of--
       ``(A) national banks, and Federal branches and Federal 
     agencies of foreign banks, by the head of the agency 
     responsible for chartering and regulating national banks;
       ``(B) member banks of the Federal Reserve System (other 
     than national banks),

[[Page 31163]]

     branches and agencies of foreign banks (other than Federal 
     branches, Federal agencies, and insured State branches of 
     foreign banks), commercial lending companies owned or 
     controlled by foreign banks, and organizations operating 
     under section 25 or 25(a) of the Federal Reserve Act, by the 
     Board;
       ``(C) depository institution insured by the Federal Deposit 
     Insurance Corporation (other than members of the Federal 
     Reserve System, Federal savings associations, and savings and 
     loan holding companies) and insured State branches of foreign 
     banks, by the Board of Directors of the Federal Deposit 
     Insurance Corporation; and
       ``(D) Federal savings associations and savings and loan 
     holding companies, by the Director of the Office of Thrift 
     Supervision.
       ``(2) Under subtitle E of the Consumer Financial Protection 
     Agency Act of 2009, by the Agency.
       ``(3) Under the Federal Credit Union Act, by the head of 
     the agency responsible for chartering and regulating Federal 
     credit unions.
       ``(4) Under 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) Under 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.
       ``(6) Under 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 
     new subsection:
       ``(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 section 4202 of the Consumer Financial 
     Protection Agency Act of 2009, 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 
     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 in the Federal Trade Commission Act.''.
       (5) Universal amendment relating to the federal trade 
     commission.--
       (A) In general.--Except as provided in subparagraph (B), 
     the Truth in Lending Act (15 U.S.C. 1601 et seq.) is amended 
     by striking ``Federal Trade Commission'' each place such term 
     appears and inserting ``Agency''.
       (B) Exceptions.--The amendment described in subparagraph 
     (A) shall not apply to sections 108(c) (as amended by 
     paragraph (4)) and 129(m) (as amended by paragraph (7)).
       (6) Section 127.--Subparagraph (C) of section 127(b)(11) of 
     the Truth in Lending Act (15 U.S.C. 1637(b)(11)) is amended 
     to read as follows:
       ``(C) Notwithstanding subparagraphs (A) and (B), in the 
     case of a creditor with respect to which compliance with this 
     title is enforced by the Agency, the following statement, in 
     a prominent location on the front of the billing statement, 
     disclosed clearly and conspicuously: `Minimum Payment 
     Warning: Making only the required minimum payment will 
     increase the interest you pay and the time it takes to repay 
     your balance. For example, making only the typical 5 percent 
     minimum monthly payment on a balance of $300 at an interest 
     rate of 17 percent would take 24 months to repay the balance 
     in full. For an estimate of the time it would take to repay 
     your balance, making only minimum monthly payments, call the 
     Consumer Financial Protection Agency at this toll-free 
     number: _________ [the blank space to be filled in by the 
     creditor].' A creditor who is subject to this subparagraph 
     shall not be subject to subparagraph (A) or (B).''.
       (7) Section 129.--Section 129(m) of the Truth in Lending 
     Act (15 U.S.C. 1639(m)) is amended to read as follows:
       ``(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 Agency pursuant to subsection (l)(2) of this 
     section shall be treated as a violation of a regulation 
     promulgated under section 18 of the Federal Trade Commission 
     Act (15 U.S.C. 57a) regarding unfair or deceptive acts or 
     practices.''.
       (b) Fair Credit Reporting Act.--
       (1) Section 603.--Section 603 of the Fair Credit Reporting 
     Act (15 U.S.C. 1681a) is amended--
       (A) by redesignating subsections (w) and (x) as subsections 
     (x) and (y), respectively; and
       (B) by inserting after subsection (v) the following new 
     subsection:
       ``(w) Agency.--The term `Agency' means the Consumer 
     Financial Protection Agency.''.
       (2) Universal amendments relating to the federal trade 
     commission.--Other than in connection with the amendment made 
     by paragraph (7)(A), the Fair Credit Reporting Act (15 U.S.C. 
     1681a) is amended--
       (A) by striking ``Federal Trade Commission'' each place 
     such term appears and inserting ``Agency'';
       (B) by striking ``Commission'' each place such term appears 
     (other than in connection with the term amended in 
     subparagraph (A)) and inserting ``Agency''; and
       (C) by striking ``Federal banking agencies, the National 
     Credit Union Administration, and the Commission shall 
     jointly'' each place such term appears in sections 605(h)(2) 
     and 623(a)(8)(A) and inserting ``Agency shall''.
       (3) Section 603.--Section 603(k)(2) of the Fair Credit 
     Reporting Act (15 U.S.C. 1681a(k)(2)) is amended by striking 
     ``Board of Governors of the Federal Reserve System'' and 
     inserting ``Agency''.
       (4) Section 604.--Subsection 604(g) of the Fair Credit 
     Reporting Act (15 U.S.C. 1681b(g)) is amended--
       (A) by striking subparagraph (C) of paragraph (3) and 
     inserting the following new subparagraph:
       ``(C) as otherwise determined to be necessary and 
     appropriate, by regulation or order and subject to paragraph 
     (6), by the Agency (with respect to any covered person 
     subject to the jurisdiction of such agency under paragraph 
     (2) of section 621(b)), or the applicable State insurance 
     authority (with respect to any person engaged in providing 
     insurance or annuities).''; and
       (B) by striking paragraph (5) and inserting the following 
     new paragraph:
       ``(5) Regulations required.--The Agency may, after notice 
     and opportunity for comment, 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.''.
       (5) Section 611.--Section 611(e)(2) of the Fair Credit 
     Reporting Act (15 U.S.C.1681i(e)(2)) is amended to read as 
     follows:
       ``(2) Exclusion.--Complaints received or obtained by the 
     Agency pursuant to its investigative authority under the 
     Consumer Financial Protection Agency Act of 2009 shall not be 
     subject to paragraph (1).''.
       (6) Section 615.--Section 615(h)(6)(A) of the Fair Credit 
     Reporting Act (15 U.S.C. 1681m(h)(6)(A)) is amended to read 
     as follows:
       ``(A) Rules required.--The Agency shall prescribe rules.''.
       (7) Section 621.--Section 621 of the Fair Credit Reporting 
     Act (15 U.S.C. 1681s) is amended--
       (A) by striking subsection (a) and inserting the following 
     new subsection:
       ``(a) Enforcement by Federal Trade Commission.--
       ``(1) In general.--Subject to section 4202 of the Consumer 
     Financial Protection Agency Act of 2009, compliance with the 
     requirements imposed under this title shall be enforced under 
     the Federal Trade Commission Act 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) hereof. 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 and shall be subject to enforcement by the Federal Trade 
     Commission under section 5(b) of such Act with respect to any 
     consumer reporting agency or person 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 in the Federal Trade 
     Commission Act. The Federal Trade Commission shall have such 
     procedural, investigative, and enforcement powers (subject to 
     section 4202 of the Consumer Financial Protection Agency Act 
     of 2009), 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 thereof were part of this 
     title.
       ``(2) Civil money penalties.--

[[Page 31164]]

       ``(A) In general.--Subject to section 4202 of the Consumer 
     Financial Protection Agency Act of 2009, in the event of a 
     knowing violation, which constitutes a pattern or practice of 
     violations of this title, the 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) Factors in determining 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 prior such conduct, ability to pay, effect on 
     ability to continue to do business, and such other matters as 
     justice may require.
       ``(3) Exception.--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 or the Agency, as the case 
     may be, 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.'';
       (B) by striking subsection (b) and inserting the following 
     new subsection:
       ``(b) Enforcement by Other Agencies.--Subject to section 
     4202 of the Consumer Financial Protection Agency Act of 2009, 
     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 subsection (d) of section 615 shall be 
     enforced as follows:
       ``(1) Under section 8 of the Federal Deposit Insurance Act, 
     in the case of--
       ``(A) national banks, and Federal branches and Federal 
     agencies of foreign banks, by the head of the agency 
     responsible for chartering and regulating national banks;
       ``(B) member banks of the Federal Reserve System (other 
     than national banks), branches and agencies of foreign banks 
     (other than Federal branches, Federal agencies, and insured 
     State branches of foreign banks), commercial lending 
     companies owned or controlled by foreign banks, and 
     organizations operating under section 25 or 25A of the 
     Federal Reserve Act, by the Board of Governors of the Federal 
     Reserve System;
       ``(C) banks insured by the Federal Deposit Insurance 
     Corporation (other than members of the Federal Reserve 
     System, Federal savings associations, and savings and loan 
     holding companies) and insured State branches of foreign 
     banks, by the Board of Directors of the Federal Deposit 
     Insurance Corporation; and
       ``(D) Federal savings associations and savings and loan 
     holding companies, by the Director of the Office of Thrift 
     Supervision.
       ``(2) Under subtitle E of the Consumer Financial Protection 
     Agency Act of 2009, by the Agency in the case of a covered 
     person under that Act.
       ``(3) Under the Federal Credit Union Act, by the National 
     Credit Union Administration Board with respect to any Federal 
     credit union.
       ``(4) Under 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.
       ``(5) Under 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.
       ``(6) Under 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.
       ``(7) Under the Commodity Exchange Act, with respect to a 
     person subject to the jurisdiction of the Commodity Futures 
     Trading Commission.
       ``(8) Under the Federal securities law and any other laws 
     subject to the jurisdiction of the Securities and Exchange 
     Commission, with respect to a person subject to the 
     jurisdiction of the Securities and Exchange Commission.

     Any term used in paragraph (1) that is not defined in this 
     title or otherwise defined in section 3(s) of the Federal 
     Deposit Insurance Act shall have the meaning given to such 
     term in section 1(b) of the International Banking Act of 
     1978.'';
       (C) by striking subsection (e) and inserting the following 
     new subsection:
       ``(e) Regulatory Authority.--The Agency shall prescribe 
     such regulations as necessary to carry out the purposes of 
     this Act with respect to a covered person described in 
     subsection (b).''; and
       (D) in the heading of subsection (g) by striking ``FTC''.
       (8) Section 623.--Section 623 of the Fair Credit Reporting 
     Act (15 U.S.C. 1681s-2) is amended--
       (A) by amending subparagraph (a)(7)(D) to read as follows:
       ``(D) Model disclosure.--
       ``(i) Duty of agency to prepare.--The Agency shall 
     prescribe a brief model disclosure 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 shall be construed as requiring a financial 
     institution to use any such model form prescribed by the 
     Agency.
       ``(iii) Compliance using model.--A financial institution 
     shall be deemed to be in compliance with subparagraph (A) if 
     the financial institution uses any such model form prescribed 
     by the Agency, or the financial institution uses any such 
     model form and rearranges its format.''.
       (B) by amending subsection (e) to read as follows:
       ``(e) Accuracy Guidelines and Regulations Required.--
       ``(1) Guidelines.--The Agency shall, with respect to the 
     entities that are subject to its enforcement authority 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 or implementing 
     the guidelines established pursuant to subparagraph (A).
       ``(2) Criteria.--In developing the guidelines required by 
     paragraph (1)(A), the Agency 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.''
       (c) Equal Credit Opportunity Act.--
       (1) Section 701.--Section 701 of the Equal Credit 
     Opportunity Act (15 U.S.C. 1691) is amended by striking 
     ``Board'' each place such term appears and inserting 
     ``Agency''.
       (2) Section 702.--Section 702(c) of the Equal Credit 
     Opportunity Act (15 U.S.C. 1691a) is amended to read as 
     follows:
       ``(c) The term `Agency' means the Consumer Financial 
     Protection Agency.''.
       (3) Section 703.--Section 703 of the Equal Credit 
     Opportunity Act (15 U.S.C. 1691b) is amended--
       (A) by striking subsection (b);
       (B) in subsection (a)--
       (i) by striking ``(1)''; and
       (ii) by redesignating paragraphs (2), (3), (4), and (5) as 
     subsections (b), (c), (d), and (e), respectively;
       (C) in subsection (c) (as so redesignated)--
       (i) by striking ``paragraph (2)'' and inserting 
     ``subsection (b)''; and
       (ii) by striking ``such paragraph'' and inserting ``such 
     subsection'';
       (D) in subsection (d) (as so redesignated)--
       (i) by striking ``subsection'' and inserting ``section'''
       (ii) by striking ``Act'' and inserting ``title''; and
       (iii) by striking ``this paragraph'' and inserting ``this 
     subsection''; and
       (E) by striking ``Board'' each place such term appears in 
     such section and inserting ``Agency''.
       (4) Section 704.--Section 704 of the Equal Credit 
     Opportunity Act (15 U.S.C. 1691c) is amended--
       (A) in subsection (a)--
       (i) in the matter preceding paragraph (1), by striking 
     ``Compliance'' and inserting ``Subject to section 4202 of the 
     Consumer Financial Protection Agency Act of 2009, 
     compliance'';
       (ii) in paragraph (1)(A), by striking ``Office of the 
     Comptroller of the Currency'' and inserting ``head of the 
     agency responsible for chartering and regulating national 
     banks'';
       (iii) in paragraph (1)(B), by striking ``and'' after the 
     semicolon;
       (iv) in paragraph (1)(C), by inserting ``and'' after the 
     semicolon;
       (v) by inserting after subparagraph (C) of paragraph (1) 
     the following new subparagraph:
       ``(D) savings associations and savings and loan holding 
     companies by the Director of the Office of Thrift 
     Supervision;''; and
       (vi) by amending paragraph (2) to read as follows:
       ``(2) Subtitle E of the Consumer Financial Protection 
     Agency Act of 2009, by the Agency.'';
       (B) by striking subsection (c) and inserting the following 
     new subsection:
       ``(c) Overall Enforcement Authority of Federal Trade 
     Commission.--Except to the extent that enforcement of the 
     requirements

[[Page 31165]]

     imposed under this title is specifically committed to some 
     other Government agency under subsection (a) and subject to 
     section 4202 of the Consumer Financial Protection Agency Act 
     of 2009, 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 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 in the Federal Trade Commission Act, including the 
     power to enforce any regulation prescribed by the Director 
     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 
     ``Agency''.
       (5) Section 704a.--Section 704A(a)(1) of the Equal Credit 
     Opportunity Act (15 U.S.C. 1691c-1(a)(1)) is amended in by 
     striking ``Board'' and inserting ``Agency''.
       (6) Section 705.--Section 705 of the Equal Credit 
     Opportunity Act (15 U.S.C. 1691d) is amended--
       (A) in subsection (f), by striking ``Board'' each place 
     such term appears and inserting ``Agency''; and
       (B) in subsection (g), by striking ``Board'' and inserting 
     ``Agency''.
       (7) Section 706.--Section 706 of the Equal Credit 
     Opportunity Act (15 U.S.C. 1691e) is amended--
       (A) in subsection (e)--
       (i) by striking ``Board'' each place such term appears and 
     inserting ``Agency''; and
       (ii) by striking ``Federal Reserve System'' and inserting 
     ``Consumer Financial Protection Agency'';
       (B) in subsection (f), by striking ``two years'' each place 
     such term appears and inserting ``5 years'';
       (C) in subsection (g)--
       (i) by striking ``The agencies having'', in the 1st 
     sentence, and inserting ``The Agency and the agencies 
     having''
       (ii) by striking ``Each agency referred'', in the 2nd 
     sentence, and inserting ``The Agency and each agency 
     referred'';
       (iii) by striking ``Each such agency'', in the 3rd 
     sentence, and inserting ``The Agency and each such agency''; 
     and
       (iv) by striking ``whenever the agency'' in the 3rd 
     sentence, and inserting ``whenever the Agency or an agency 
     having responsibility for administrative enforcement under 
     section 704''; and
       (D) in subsection (k)--
       (i) by striking ``Whenever an agency'' and inserting 
     ``Whenever the Agency or an agency''; and
       (ii) by striking ``the agency shall notify'' and inserting 
     ``the Agency, or an agency referred to in any such paragraph, 
     as the case may be, shall notify''.
       (8) Section 707.--Section 707 of the Equal Credit 
     Opportunity Act (15 U.S.C. 1691f) is amended by striking 
     ``Board'' each place such term appears and inserting 
     ``Agency''.
       (d) Fair Debt Collection Practices Act.--
       (1) Section 803.--Section 803 of the Fair Debt Collection 
     Practices Act (15 U.S.C. 1692a) is amended--
       (A) by redesignating paragraphs (1), (2), (3), (4), (5), 
     (6), (7), and (8) as paragraphs (2), (3), (4), (5), (6), (7), 
     (8), and (9), respectively; and
       (B) by inserting before paragraph (2) (as so redesignated) 
     the following new paragraph:
       ``(1) The term `Agency' means the Consumer Financial 
     Protection Agency.''.
       (2) Section 813.--Section 813(e) of the Fair Debt 
     Collection Practices Act (15 U.S.C. 1692k(e)) is amended by 
     striking ``Commission'' and inserting ``Agency''.
       (3) Section 814.--Section 814 of the Fair Debt Collection 
     Practices Act (15 U.S.C. 1692l) is amended--
       (A) by striking subsection (a) and inserting the following 
     new subsection:
       ``(a) Federal Trade Commission.--Subject to section 4202 of 
     the Consumer Financial Protection Agency Act of 2009, 
     compliance with this title shall be enforced by the 
     Commission, except to the extent that enforcement of the 
     requirements imposed under this title is specifically 
     committed to another agency under subsection (b). For purpose 
     of the exercise by the Commission of its functions and powers 
     under the Federal Trade Commission Act, 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 Commission under the Federal Trade Commission Act are 
     available to the 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 in 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.'';
       (B) in subsection (b)--
       (i) in the matter preceding paragraph (1), by striking 
     ``Compliance'' and inserting ``Enforcement by Other Agency.--
     Subject to section 4202 of the Consumer Financial Protection 
     Agency Act of 2009, compliance''.
       (ii) in paragraph (1)(A), by striking ``Office of the 
     Comptroller of the Currency;'' and inserting ``head of the 
     agency responsible for chartering and regulating national 
     banks;'';
       (iii) in paragraph (1)(B), by striking ``and'' after the 
     semicolon;
       (iv) in paragraph (1)(C), by inserting ``and'' after the 
     semicolon;
       (v) by inserting after subparagraph (C) of paragraph (1) 
     the following new subparagraph:
       ``(D) savings associations and savings and loan holding 
     companies by the Director of the Office of Thrift 
     Supervision;''; and
       (vi) by striking paragraph (2) and inserting the following 
     new paragraph:
       ``(2) subtitle E of the Consumer Financial Protection 
     Agency Act of 2009, by the Agency;''; and
       (C) by striking subsection (d) and inserting the following 
     new subsection:.
       ``(d) Regulations.--The Agency may prescribe regulations 
     with respect to the collection of debts by any debt 
     collector.''.
       (4) Section 815.--Section 815 (15 U.S.C. 1692m) is 
     amended--
       (A) in the section heading, by striking ``Commission'' and 
     inserting ``Agency''; and
       (B) by striking ``Commission'' each place such term appears 
     and inserting ``Agency''.
       (5) Section 817.--Section 817 (15 U.S.C. 1692o) is amended 
     by striking ``Commission'' each place such term appears and 
     inserting ``Agency''.
       (e) Electronic Fund Transfer Act.--
       (1) Section 903.--Section 903 of the Electronic Fund 
     Transfer Act (15 U.S.C. 1693a) is amended--
       (A) by striking paragraph (3) and inserting the following 
     new paragraph:
       ``(3) the term `Agency' means the Consumer Financial 
     Protection Agency;''; and
       (B) in paragraph (6), by striking ``Board'' and inserting 
     ``Agency''.
       (2) Section 904.--Section 904 of the Electronic Fund 
     Transfer Act (15 U.S.C. 1693b) is amended by striking 
     ``Board'' each place such term appears and inserting 
     ``Agency''.
       (3) Section 905.--Section 905 of the Electronic Fund 
     Transfer Act (15 U.S.C. 1693c) is amended by striking 
     ``Board'' each place such term appears and inserting 
     ``Agency''.
       (4) Section 906.--Section 906(b) of the Electronic Fund 
     Transfer Act (15 U.S.C. 1693d(b)) is amended by striking 
     ``Board'' and inserting ``Agency''.
       (5) Section 907.--Section 907(b) of the Electronic Fund 
     Transfer Act (15 U.S.C. 1693e(b)) is amended by striking 
     ``Board'' and inserting ``Agency''.
       (6) Section 908.--Section 908(f)(7) of the Electronic Fund 
     Transfer Act (15 U.S.C. 1693f(f)(7)) is amended by striking 
     ``Board'' and inserting ``Agency''.
       (7) Section 910.--Section 910(a)(1)(E) of the Electronic 
     Fund Transfer Act (15 U.S.C. 1693h(a)(1)(E)) is amended by 
     striking ``Board'' and inserting ``Agency''.
       (8) Section 911.--Section 911(b)(3) of the Electronic Fund 
     Transfer Act (15 U.S.C. 1693i(b)(3) is amended by striking 
     ``Board'' and inserting ``Agency''.
       (9) Section 915.--Section 915(d) of the Electronic Fund 
     Transfer Act (15 U.S.C. 1693m(d)) is amended--
       (A) by striking ``Board'' each place such term appears and 
     inserting ``Agency''; and
       (B) by striking ``Federal Reserve System'' and inserting 
     ``Consumer Financial Protection Agency''.
       (10) Section 917.--Section 917 of the Electronic Fund 
     Transfer Act (15 U.S.C. 1693o) is amended--
       (A) in subsection (a)--
       (i) by striking ``Compliance'' and inserting ``Subject to 
     section 4202 of the Consumer Financial Protection Agency Act 
     of 2009, compliance'';
       (ii) in paragraph (1)(A), by striking ``Office of the 
     Comptroller of the Currency'' and inserting ``head of the 
     agency responsible for chartering and regulating national 
     banks''; and
       (iii) by striking paragraph (2) and inserting:
       ``(2) subtitle E of the Consumer Financial Protection 
     Agency Act of 2009, by the Agency;''; and
       (B) by striking subsection (c) and inserting the following 
     new subsection:
       ``(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 section 4202 of the Consumer Financial 
     Protection Agency Act of 2009, 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 
     Commission to enforce compliance by any person subject to the 
     jurisdiction of the Commission with the requirements imposed 
     under this title, irrespective of whether that person is

[[Page 31166]]

     engaged in commerce or meets any other jurisdictional tests 
     in the Federal Trade Commission Act.''.
       (11) Section 918.--Section 918 of the Electronic Fund 
     Transfer Act (15 U.S.C. 1693p) is amended by striking 
     ``Board'' each place such term appears and inserting 
     ``Agency''.
       (12) Section 919.--Section 919 of the Electronic Fund 
     Transfer Act (15 U.S.C. 1693q) is amended by striking 
     ``Board'' each place such term appears and inserting 
     ``Agency''.
       (13) Section 920.--Section 920 of the Electronic Fund 
     Transfer Act (15 U.S.C. 1693r) is amended by striking 
     ``Board'' each place such term appears and inserting 
     ``Agency''.
       (f) Amendments to HOEPA Relating to the Truth in Lending 
     Act.--Section 158 of the Home Ownership and Equity Protection 
     Act of 1994 (15 U.S.C. 1601 nt.) (relating to hearings on 
     home equity lending) is amended--
       (1) in subsection (a), by striking ``Board of Governors of 
     the Federal Reserve System, in consultation with the Consumer 
     Advisory Council of the Board,'' and inserting ``Consumer 
     Financial Protection Agency, in consultation with the 
     Advisory Board to the Agency''; and
       (2) in subsection (b), by striking ``Board of Governors of 
     the Federal Reserve System'' and inserting ``Consumer 
     Financial Protection Agency''.
       (g) Amendment to the Fair and Accurate Credit Transactions 
     Act of 2003 Relating to the Fair Credit Reporting Act.--
     Section 214(b)(1) of the Fair and Accurate Credit 
     Transactions Act of 2003 (15 U.S.C. 1681s-3 nt.) is amended 
     by striking ``The Federal banking agencies, the National 
     Credit Union Administration, and the Commission, with respect 
     to the entities that are subject to their respective 
     enforcement authority under section 621 of the Fair Credit 
     Reporting Act and'' and inserting ``The Consumer Financial 
     Protection Agency, with respect to a person subject to the 
     enforcement authority of the Agency, the Commodity Futures 
     Trading Commission, and''.

     SEC. 4805. AMENDMENTS TO THE EXPEDITED FUNDS AVAILABILITY 
                   ACT.

       (a) Section 605.--Section 605(f)(1) of the Expedited Funds 
     Availability Act (12 U.S.C. 4004(f)(1)) is amended by 
     inserting ``, in consultation with the Director of the 
     Consumer Financial Protection Agency,''after ``Board''.
       (b) Section 609.--Section 609(a) of the Expedited Funds 
     Availability Act (12 U.S.C. 4008(a)) is amended by inserting 
     ``, in consultation with the Director of the Consumer 
     Financial Protection Agency,''after ``Board''.

     SEC. 4806. AMENDMENTS TO THE FEDERAL DEPOSIT INSURANCE ACT.

       (a) Section 8.--Section 8(t) the Federal Deposit Insurance 
     Act (12 U.S.C. 1818(t)), as amended by section 1111(b)(2), is 
     further amended by adding at the end the following new 
     paragraph:
       ``(7) Referral to consumer financial protection 
     commission.--Each appropriate Federal banking agency shall 
     make a referral to the Consumer Financial Protection Agency 
     when the Federal banking agency has a reasonable belief that 
     a violation of an enumerated consumer law, as defined in 
     section 4202(e)(2) of the Consumer Financial Protection 
     Agency Act of 2009, by any insured depository institution or 
     institution-affiliated party within the jurisdiction of that 
     appropriate Federal banking agency.''.
       (b) Section 43.--Section 43 of the Federal Deposit 
     Insurance Act (12 U.S.C. 1831t) is amended--
       (1) in subsection (c), by striking ``Federal Trade 
     Commission'' and inserting ``Agency'';
       (2) in subsection (d), by striking ``Federal Trade 
     Commission'' and inserting ``Agency'';
       (3) in subsection (e)--
       (A) in paragraph (2)(B), by striking ``Federal Trade 
     Commission'' and inserting ``Agency''; and
       (B) by adding at the end the following new paragraph:
       ``(5) Agency.--The term `Agency' means the Consumer 
     Financial Protection Agency.''.
       (c) Section 43(f).--Section 43(f) of the Federal Deposit 
     Insurance Act (12 U.S.C. 1831t(f)) is amended--
       (1) by striking paragraph (1) and inserting the following 
     new paragraph:
       ``(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 
     Agency Act of 2009 by the Agency with respect to any person 
     (and without regard to the provision of a consumer financial 
     product or service).''; and
       (2) in paragraph (2), by striking subparagraph (C) and 
     inserting the following new subparagraph:
       ``(C) Limitation on state action while federal action 
     pending.--If the Agency has instituted an enforcement action 
     for a violation of this section, no appropriate State 
     supervisory may, during the pendency of such action, bring an 
     action under this section against any defendant named in the 
     complaint of the Agency for any violation of this section 
     that is alleged in that complaint.''.

     SEC. 4807. AMENDMENTS TO THE GRAMM-LEACH-BLILEY ACT.

       (a) Section 504.--Section 504(a)(1) of the Gramm-Leach-
     Bliley Act (15 U.S.C. 6804(a)(1)) is amended--
       (1) by striking ``The Federal banking agencies, the 
     National Credit Union Administration, the Secretary of the 
     Treasury,'' and inserting ``The Consumer Financial Protection 
     Agency and''; and
       (2) by striking ``, and the Federal Trade Commission''.
       (b) Section 505.--
       (1) Section 505(a) of the Gramm-Leach-Bliley Act (15 U.S.C. 
     6805(a)) is amended--
       (A) in the matter preceding paragraph (1), by striking 
     ``This subtitle and the regulations prescribed thereunder 
     shall be enforced by'' and inserting ``Subject to section 
     4202 of the Consumer Financial Protection Agency Act of 2009, 
     this subtitle and the regulations prescribed under this title 
     shall be enforced by the Consumer Financial Protection 
     Agency,''; and
       (B) by inserting after paragraph (7) the following new 
     paragraph:
       ``(8) Under the Consumer Financial Protection Agency Act of 
     2009, by the Consumer Financial Protection Agency in the case 
     of financial institutions and other covered persons and 
     service providers subject to the jurisdiction of the Agency 
     under that Act, but not with respect to the standards under 
     section 501.''.
       (2) Section 505(b)(1) of the Gramm-Leach-Bliley Act (15 
     U.S.C. 6805(b)(1)) is amended by inserting ``, other than the 
     Consumer Financial Protection Agency,'' after ``described in 
     subsection (a)''.

     SEC. 4808. AMENDMENTS TO THE HOME MORTGAGE DISCLOSURE ACT OF 
                   1975.

       (a) Section 303.--Section 303 of the Home Mortgage 
     Disclosure Act of 1975 (12 U.S.C. 2802) is amended--
       (1) by redesignating paragraphs (1), (2), (3), (4), (5), 
     and (6) as paragraphs (2), (3), (4), (5), (6), and (7), 
     respectively; and
       (2) by inserting before paragraph (2) (as so redesignated) 
     the following new paragraph:
       ``(1) The term `Agency' means the Consumer Financial 
     Protection Agency.''.
       (b) Universal Amendment Relating to Agency.--Except as 
     provided in subsections (c), (d), (e), and (f), the Home 
     Mortgage Disclosure Act of 1975 (12 U.S.C. 2801-11) is 
     amended by striking ``Board'' each place such term appears 
     and inserting ``Agency''.
       (c) Section 304.--Section 304 of the Home Mortgage 
     Disclosure Act of 1975 (12 U.S.C. 2803(h)) is amended--
       (1) in subsection (b)--
       (A) by striking ``and'' after the semicolon at the end of 
     paragraph (3);
       (B) by striking ``and gender'' in paragraph (4), and 
     inserting ``age, and gender'';
       (C) by striking the period at the end of paragraph (4) and 
     inserting a semicolon; and
       (D) by inserting after paragraph (4) the following new 
     paragraphs:
       ``(5) the number and dollar amount of mortgage loans 
     grouped according to the following measurements:
       ``(A) the total points and fees payable at origination in 
     connection with the mortgage as determined by the Agency, 
     taking into account section 103(aa)(4) of the Truth in 
     Lending Act (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 Agency may require; and
       ``(6) the number and dollar amount of mortgage loans and 
     completed applications grouped according to the following 
     measurements:
       ``(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 Agency may determine to be appropriate, a 
     unique identifier that identifies the loan originator as set 
     forth in section 1503 of the Secure and Fair Enforcement for 
     Mortgage Licensing Act of 2008;
       ``(G) as the Agency may determine to be appropriate, a 
     universal loan identifier;
       ``(H) as the Agency 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 Agency may prescribe, except 
     that the Agency 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 Agency may require.'';
       (2) by striking subsection (h) and inserting the following 
     new subsection:

[[Page 31167]]

       ``(h) Submission to Agencies.--
       ``(1) In general.--The data required to be disclosed under 
     subsection (b) shall be submitted to the Agency or to the 
     appropriate agency for any institution reporting under this 
     title, in accordance with regulations prescribed by the 
     Agency. Institutions will not be required to report new data 
     required under section 4808(c) before the first January 1 
     that occurs after the end of the 9-month period beginning on 
     the date that regulations prescribed by the Agency are 
     prescribed in final form.
       ``(2) Regulations.--Notwithstanding the requirement of 
     section 304(a)(2)(A) for disclosure by census tract, the 
     Agency, in cooperation with other appropriate regulators, 
     including--
       ``(A) the head of the agency responsible for chartering and 
     regulating national banks for national banks and Federal 
     branches, Federal agencies of foreign banks, and savings 
     associations;
       ``(B) the Federal Deposit Insurance Corporation for 
     depository institutions insured by the Federal Deposit 
     Insurance Corporation (other than members of the Federal 
     Reserve System, Federal savings associations, and savings and 
     loan holding companies) and insured State branches of foreign 
     banks;
       ``(C) the Director of the Office of Thrift Supervision for 
     Federal savings associations and savings and loan holding 
     companies;
       ``(D) the National Credit Union Administration Board for 
     credit unions; and
       ``(E) the Secretary of Housing and Urban Development for 
     other lending institutions not regulated by an agency 
     referred to in subparagraphs (A), (B), (C), or (D),
     shall develop regulations prescribing 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.
       ``(3) Required disclosures.--The regulations prescribed 
     under paragraph (2) shall require the collection of data 
     required to be disclosed under subsection (b) with respect to 
     loans sold by each institution reporting under this title, 
     and, in addition, shall require disclosure of the class of 
     the purchaser of such loans.
       ``(4) Additional data or explanations.--Any reporting 
     institution may submit in writing to the Agency or to the 
     appropriate agency such additional data or explanations as it 
     deems relevant to the decision to originate or purchase 
     mortgage loans.'';
       (3) in subsection (i), by striking ``subsection (b)(4)'' 
     and inserting ``paragraphs (4), (5), and (6) of subsection 
     (b)'';
       (4) in subsection (j)--
       (A) by striking ``(as'' where such term appears in 
     paragraph (1) and inserting ``(containing loan-level and 
     application-level information relating to disclosures 
     required under subsections (a) and (b) and as otherwise'';
       (B) by striking ``in the format in which such information 
     is maintained by the institution'' where such term appears in 
     paragraph (2)(A), and inserting ``in such formats as the 
     Agency may require''; and
       (C) by striking paragraph (3) and inserting the following 
     new paragraph:
       ``(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 Agency may require.''; 
     and
       (5) by striking paragraph (2) of subsection (m) and 
     inserting the following new paragraph:
       ``(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 Agency may require.''.
       (d) Section 305.--Section 305 of the Home Mortgage 
     Disclosure Act of 1975 (12 U.S.C. 2804) is amended--
       (1) by striking subsection (b) and inserting the following 
     new subsection:
       ``(b) Powers of Certain Other Agencies.--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) national banks, and Federal branches and Federal 
     agencies of foreign banks, by the head of the agency 
     responsible for chartering and regulating national banks;
       ``(B) member banks of the Federal Reserve System (other 
     than national banks), branches and agencies of foreign banks 
     (other than Federal branches, Federal agencies, and insured 
     State branches of foreign banks), commercial lending 
     companies owned or controlled by foreign banks, and 
     organizations operating under section 25 or 25(a) of the 
     Federal Reserve Act, by the Board;
       ``(C) depository institutions insured by the Federal 
     Deposit Insurance Corporation (other than members of the 
     Federal Reserve System, Federal savings associations, and 
     savings and loan holding companies) and insured State 
     branches of foreign banks, by the Board of Directors of the 
     Federal Deposit Insurance Corporation; and
       ``(D) Federal savings associations, and savings and loan 
     holding companies, by the Director of the Office of Thrift 
     Supervision;
       ``(2) subtitle E of the Consumer Financial Protection 
     Agency Act of 2009, by the Agency;
       ``(3) the Federal Credit Union Act, by the Administrator of 
     the National Credit Union Administration with respect to any 
     credit union; and
       ``(4) other lending institutions, by the Secretary of 
     Housing and Urban Development. 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 meaning given to them in 
     section 1(b) of the International Banking Act of 1978 (12 
     U.S.C. 3101).
     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 
     meaning given to them in section 1(b) of the International 
     Banking Act of 1978.''; and
       (2) by inserting at the end of section 305 the following 
     new subsection:
       ``(d) Overall Enforcement Authority of the Consumer 
     Financial Protection Agency.--Subject to section 4202 of the 
     Consumer Financial Protection Agency Act of 2009, enforcement 
     of the requirements imposed under this title is committed to 
     each of the agencies under subsection (b). The Agency may 
     exercise its authorities under the Consumer Financial 
     Protection Agency Act of 2009 to exercise principal authority 
     to examine and enforce compliance by any person with the 
     requirements under this title.''.
       (e) Section 306.--Subsection 306(b) of the Home Mortgage 
     Disclosure Act of 1975 (12 U.S.C. 2805(b)) is amended to read 
     as follows:
       ``(b) The Agency may, by regulation, exempt from the 
     requirements of this title any State chartered depository 
     institution within any State or subdivision of any state if 
     the Agency determines that, under the law of such State or 
     subdivision, that institution is subject to requirements 
     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 head of the agency 
     responsible for chartering and regulating national banks 
     under section 8 of the Federal Deposit Insurance Act in the 
     case of national banks and savings association the deposits 
     of which are insured by the Federal Deposit Insurance 
     Corporation.''.
       (f) Section 307.--Section 307 of the Home Mortgage 
     Disclosure Act of 1975 (12 U.S.C. 2806) is amended to read as 
     follows:

     ``SEC. 307. RESEARCH AND IMPROVED METHODS.

       ``(a) Enhanced Compliance in Economical Manner.--
       ``(1) In general.--The Director of the Consumer Financial 
     Protection Agency, 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 Consumer Financial 
     Protection Agency 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 appropriation.--There is authorized 
     to be appropriated such sums as may be necessary to carry out 
     this subsection.
       ``(3) Authority of agency.--The Director of the Consumer 
     Financial Protection Agency is authorized to utilize, 
     contract with, act through, or compensate any person or 
     agency in order to carry out this subsection.
       ``(b) Recommendations to the Congress.--The Director of the 
     Consumer Financial Protection Agency shall recommend to the 
     Committee on Financial Services of the House of 
     Representatives and the Committee on Banking, Housing, and 
     Urban Affairs of the Senate such additional legislation as 
     the Director of the Consumer Financial Protection Agency 
     deems appropriate to carry out the purpose of this title.''.

     SEC. 4809. AMENDMENTS TO DIVISION D OF THE OMNIBUS 
                   APPROPRIATIONS ACT, 2009.

       (a) Section 626(a) of title VI of division D of the Omnibus 
     Appropriations Act, 2009 (15 U.S.C. 1638 nt.) (as amended by 
     the Credit Card Accountability Responsibility and Disclosure 
     Act of 2009) is amended--
       (1) by striking by paragraph (1) and inserting the 
     following new paragraph: ``(1) The Director of the Consumer 
     Financial Protection Agency shall have authority to prescribe 
     regulations 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 regulation 
     prescribed under this subsection shall be treated as a 
     violation of a regulation prohibiting unfair, deceptive, or 
     abusive acts or practices under the Consumer Financial 
     Protection Agency Act of 2009.'';
       (2) by striking paragraph (2);
       (3) by striking paragraph (3); and
       (4) by striking paragraph (4) and inserting the following 
     new paragraph:

[[Page 31168]]

       ``(2) The Director of the Consumer Financial Protection 
     Agency shall enforce the regulations 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 
     Agency Act of 2009 were incorporated into and made part of 
     this section.''.
       (b) Section 626(b) of title VI of division D of the Omnibus 
     Appropriations Act, 2009 (15 U.S.C. 1638 nt.) (as amended by 
     the Credit Card Accountability Responsibility and Disclosure 
     Act of 2009) is amended by striking ``primary Federal 
     regulator'' each place it appears and inserting ``Consumer 
     Financial Protection Agency''.

     SEC. 4810. 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 the matter preceding paragraph (1) of subsection 
     (a), by striking ``Compliance'' and inserting ``Subject to 
     section 4202 of the Consumer Financial Protection Agency Act 
     of 2009, compliance'';
       (2) in subsection (a)(2), by striking ``and'' after the 
     semicolon at the end;
       (3) in subsection (a)(3), by striking the period at the end 
     and inserting ``; and'';
       (4) by inserting after subsection (a)(3), the following new 
     paragraph:
       ``(4) subtitle E of the Consumer Financial Protection 
     Agency Act of 2009, by the Consumer Financial Protection 
     Agency.''; and.
       (5) in subsection (b)(2), by inserting ``, subject to 
     section 4202 of the Consumer Financial Protection Agency Act 
     of 2009'' before the period at the end.

     SEC. 4811. AMENDMENTS TO THE REAL ESTATE SETTLEMENT 
                   PROCEDURES ACT OF 1974.

       (a) Section 3.--Section 3 of the Real Estate Settlement 
     Procedures Act of 1974 (12 U.S.C. 2602) is amended--
       (1) in paragraph (7), by striking ``and'' after the 
     semicolon at the end;
       (2) in paragraph (8), by striking the period at the end and 
     inserting ``; and''; and
       (3) by adding at the end the following new paragraph
       ``(9) the term `Agency' means the Consumer Financial 
     Protection Agency.''.
       (b) Section 4.--Section 4 of the Real Estate Settlement 
     Procedures Act of 1974 (12 U.S.C. 2603) is amended--
       (1) in subsection (a), by striking the first sentence and 
     inserting the following: ``The Agency shall publish a single, 
     integrated disclosure for mortgage loan transactions, 
     including real estate settlement cost statements, which 
     include the disclosure requirements of this title, in 
     conjunction with the disclosure requirements of the Truth in 
     Lending Act (15 U.S.C. 1601 note et seq.) that, taken 
     together, may apply to transactions subject to both or either 
     law. The purpose of such model disclosure shall be to 
     facilitate compliance with the disclosure requirements of 
     those titles, and to aid the borrower or lessee in 
     understanding the transaction by utilizing readily 
     understandable language to simplify the technical nature of 
     the disclosures.'';
       (2) by striking ``Secretary'' each place such term appears 
     and inserting ``Agency''; and
       (3) by striking ``form'' each place such term appears and 
     inserting ``forms''.
       (c) Section 5.--Section 5 of the Real Estate Settlement 
     Procedures Act of 1974 (12 U.S.C. 2604) is amended--
       (1) by striking ``Secretary'' each place such term appears, 
     and inserting ``Agency''; and
       (2) by striking the first sentence of subsection (a), and 
     inserting ``The Agency shall prepare and distribute booklets 
     jointly complying with the requirements of the Truth in 
     Lending Act (15 U.S.C. 1601 note et seq.) 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.''.
       (d) Section 6.--Section 6(j)(3) of the Real Estate 
     Settlement Procedures Act of 1974 (12 U.S.C. 2605(j)(3)) is 
     amended--
       (1) by striking ``Secretary'' and inserting ``Director of 
     the Agency''; and
       (2) by striking ``by regulations that shall take effect not 
     later than April 20, 1991,'' and inserting ``by 
     regulation,''.
       (e) Section 7.--Section 7 of the Real Estate Settlement 
     Procedures Act of 1974 (12 U.S.C. 2606) is amended by 
     striking ``Secretary'' and inserting ``the Director of the 
     Agency''.
       (f) Section 8.--Section 8 of the Real Estate Settlement 
     Procedures Act of 1974 (12 U.S.C. 2607) is amended--
       (1) in subsection (c)(5), by striking ``prescribed by the 
     Secretary'' and inserting ``prescribed by the Director of the 
     Agency''; and
       (2) in subsection (d)(4)--
       (A) by striking ``The Secretary,'' and inserting ``The 
     Agency, the Secretary,''; and
       (B) by adding at the end the following new sentence: 
     ``However, to the extent that a Federal law authorizes the 
     Agency and other Federal and State agencies to enforce or 
     administer the law, the Agency shall have primary authority 
     to enforce or administer that Federal law in accordance with 
     section 4202 of the Consumer Financial Protection Agency Act 
     of 2009.''.
       (g) Section 10.--Section 10(d) of the Real Estate 
     Settlement Procedures Act of 1974 (12 U.S.C. 2609(d)) is 
     amended by striking ``Secretary'' and inserting ``Agency''.
       (h) Section 16.--Section 16 of the Real Estate Settlement 
     Procedures Act of 1974 (12 U.S.C. 2614) is amended by 
     inserting ``the Agency,'' before ``the Secretary''.
       (i) Section 18.--Section 18 of the Real Estate Settlement 
     Procedures Act of 1974 (12 U.S.C. 2616) is amended by 
     striking ``Secretary'' each place such term appears and 
     inserting ``Agency''.
       (j) Section 19.--Section 19 of the Real Estate Settlement 
     Procedures Act of 1974 (12 U.S.C. 2617) is amended--
       (1) in the section heading, by striking ``secretary'' and 
     inserting ``agency''; and
       (2) by striking ``Secretary'' each place such term appears 
     and inserting ``Agency''.

     SEC. 4812. AMENDMENTS TO THE RIGHT TO FINANCIAL PRIVACY ACT 
                   OF 1978.

       (a) Amendments to Section 1101.--Section 1101 of the Right 
     to Financial Privacy Act of 1978 (12 U.S.C. 3401) is 
     amended--
       (1) by striking paragraph (1) and inserting the following 
     new paragraph:
       ``(1) `financial institution' means any bank, savings 
     association, card issuer as defined in section 103(n) of the 
     Truth in Lending Act, credit union, or consumer finance 
     institution located in any State or territory of the United 
     States, the District of Columbia, Puerto Rico, Guam, American 
     Samoa, or the Virgin Islands;''; and
       (2) in paragraph (7), by inserting after subparagraph (A) 
     the following new subparagraph:
       ``(B) the Consumer Financial Protection Agency;''.
       (b) Amendments to Section 1112.--Section 1112(e) of the 
     Right to Financial Privacy Act of 1978 (12 U.S.C. 3412) is 
     amended by striking ``and the Commodity Futures Trading 
     Commission is permitted'' and inserting ``the Commodity 
     Futures Trading Commission, and the Consumer Financial 
     Protection Agency is permitted''.
       (c) Amendments to Section 1113.--Section 1113 of the Right 
     to Financial Privacy Act of 1978 (12 U.S.C. 3413) is amended 
     by adding at the end the following new subsection--
       ``(r) Disclosure to the Consumer Financial Protection 
     Agency.--Nothing in this chapter shall apply to the 
     examination by or disclosure to the Consumer Financial 
     Protection Agency of financial records or information in the 
     exercise of its authority with respect to a financial 
     institution.''.

     SEC. 4813. AMENDMENTS TO THE SECURE AND FAIR ENFORCEMENT FOR 
                   MORTGAGE LICENSING ACT OF 2008.

       (a) Section 1503.--Section 1503 of the Secure and Fair 
     Enforcement for Mortgage Licensing Act of 2008 (12 U.S.C. 
     5102) is amended--
       (1) by striking paragraph (9);
       (2) by redesignating paragraph (1) as paragraph (4), and 
     transferring paragraph (4) (as so redesignated) and inserting 
     such paragraph after paragraph (3) (as added by paragraph 
     (5));
       (3) by redesignating paragraphs (3), (4), (5), (6), (7), 
     (8), (10), (11), and (12) as paragraphs (5), (6), (7), (8), 
     (9), (10), (11), (12), and (13), respectively;
       (4) by inserting before paragraph (2) the following new 
     paragraph:
       ``(1) Agency.--The term `Agency' means the Consumer 
     Financial Protection Agency.''; and
       (5) by inserting after paragraph (2) the following new 
     paragraph:
       ``(3) Director.--The term `Director' means the Director of 
     the Agency.''.
       (b) Universal Amendments Relating to Agency.--The Secure 
     and Fair Enforcement for Mortgage Licensing Act of 2008 (12 
     U.S.C. 5101 et seq.) is amended--
       (1) by striking ``Federal banking agencies'' each place 
     such term appears (other than in subsection (a)(4) (as so 
     redesignated by subsection (a), relating to the definition of 
     Federal banking agencies) or in connection with a reference 
     that is specifically amended by another provision of this 
     section) and inserting ``Agency''; and
       (2) by striking ``Secretary'' each place such term appears 
     (other than in connection with a reference that is 
     specifically amended by another provision of this section) 
     and inserting ``Director''.
       (c) Section 1507.--Section 1507 of the Secure and Fair 
     Enforcement for Mortgage Licensing Act of 2008 (12 U.S.C. 
     5106) is amended--
       (1) in subsection (a)--
       (A) by striking paragraph (1) and inserting the following 
     new paragraph:
       ``(1) In general.--The Agency shall develop and maintain a 
     system for registering employees of any 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 
     July 30, 2010.''; and
       (B) by striking ``appropriate Federal banking agency and 
     the Farm Credit Administration'' in paragraph (2) and 
     inserting ``Agency''; and
       (2) in subsection (b), by striking ``Federal banking 
     agencies, through the Financial Institutions Examination 
     Council, and the Farm Credit Administration'' each place such 
     term appears and inserting ``Agency''.

[[Page 31169]]

       (d) Section 1508.--
       (1) In general.--Section 1508 of the Secure and Fair 
     Enforcement for Mortgage Licensing Act of 2008 (12 U.S.C. 
     5107) is amended by adding at the end the following new 
     subsection--
       ``(f) Regulations.--
       ``(1) In general.--The Agency may prescribe 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) Factors taken into account.--Such regulations 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 consumers' access to affordable and 
     sustainable mortgage loans.''.
       (2) Clerical amendment.--The heading for section 1508 of 
     the Secure and Fair Enforcement for Mortgage Licensing Act of 
     2008 is amended by striking ``SECRETARY OF HOUSING AND URBAN 
     DEVELOPMENT'' and inserting ``CONSUMER FINANCIAL PROTECTION 
     AGENCY''.
       (e) Section 1510.--Section 1510 of the Secure and Fair 
     Enforcement for Mortgage Licensing Act of 2008 (12 U.S.C. 
     5109) is amended to read as follows:

     ``SEC. 1510. FEES.

       ``The Agency 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.''.
       (f) Section 1513.--Section 1513 of the Secure and Fair 
     Enforcement for Mortgage Licensing Act of 2008 (12 U.S.C. 
     5112) is amended to read as follows:

     ``SEC. 1513. LIABILITY PROVISIONS.

       ``The Agency, 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 by 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.''.
       (g) Section 1514.--The heading for section 1514 of the 
     Secure and Fair Enforcement for Mortgage Licensing Act of 
     2008 (12 U.S.C. 5113) is amended by striking ``UNDER HUD 
     BACKUP LICENSING SYSTEM'' and inserting ``BY THE AGENCY''.

     SEC. 4814. AMENDMENTS TO THE TRUTH IN SAVINGS ACT.

       (a) Section 263.--Section 263 of the Truth in Savings Act 
     (12 U.S.C. 4302) is amended in subsection (b) by striking 
     ``Board'' each place such term appears and inserting 
     ``Agency''.
       (b) Section 265.--Section 265 of the Truth in Savings Act 
     (12 U.S.C. 4304) is amended by striking ``Board'' each place 
     such term appears and inserting ``Agency''.
       (c) Section 266.--Section 266(e) of the Truth in Savings 
     Act is amended (12 U.S.C. 4305) by striking ``Board'' and 
     inserting ``Agency''.
       (d) Section 269.--Section 269 of the Truth in Savings Act 
     (12 U.S.C. 4308) is amended by striking ``Board'' each place 
     such term appears and inserting ``Agency''.
       (e) Section 270.--Section 270 of the Truth in Savings Act 
     (12 U.S.C. 4309) is amended--
       (1) in subsection (a)--
       (A) by striking ``Compliance'' and inserting ``Subject to 
     section 4202 of the Consumer Financial Protection Agency Act 
     of 2009, compliance'';
       (B) by striking subparagraph (A) of paragraph (1) and 
     inserting the following new subparagraph:
       ``(A) by the head of the agency responsible for chartering 
     and regulating national banks for national banks, and Federal 
     branches and Federal agencies of foreign banks;''; and
       (C) by adding at the end, the following new paragraph:
       ``(3) subtitle E of the Consumer Financial Protection 
     Agency Act of 2009, by the Agency.''; and
       (2) in subsection (c)--
       (A) in the subsection heading, by striking ``Board'' and 
     insert ``Agency''; and
       (B) by striking ``Board'' and inserting ``Agency''.
       (f) Section 272.--Section 272 of the Truth in Savings Act 
     (12 U.S.C. 4311) is amended--
       (1) in subsection (a), by striking ``Board'' and inserting 
     ``Agency''; and
       (2) in subsection (b), by striking ``regulation prescribed 
     by the Board'' each place such term appears and inserting 
     ``regulation prescribed by the Agency''.
       (g) Section 273.--Section 273 of the Truth in Savings Act 
     (12 U.S.C. 4312) is amended in the last sentence by striking 
     ``Board'' and inserting ``Agency''.
       (h) Section 274.--Section 274 of the Truth in Savings Act 
     (12 U.S.C. 4313) is amended--
       (1) in paragraph (2) by striking ``Board'' and inserting 
     ``Agency''; and
       (2) by striking paragraph (4) and inserting the following 
     new paragraph:
       ``(4) Agency.--The term `Agency' means the Consumer 
     Financial Protection Agency.''.

     SEC. 4815. AMENDMENTS TO THE TELEMARKETING AND CONSUMER FRAUD 
                   AND ABUSE PREVENTION ACT.

       (a) Section 3.--Section 3 of the Telemarketing and Consumer 
     Fraud and Abuse Prevention Act (15 U.S.C. 6102) is amended--
       (1) in subsection (b), by inserting after the 2nd sentence 
     ``In prescribing a regulation under this Act that relates to 
     the provision of a consumer financial product or service that 
     is subject to the Consumer Financial Protection Agency Act, 
     including any enumerated consumer law thereunder, the 
     Commission shall consult with the Consumer Financial 
     Protection Agency regarding the consistency of a proposed 
     regulation with standards, purposes, or objectives 
     administered by the Consumer Financial Protection Agency.''; 
     and
       (2) in subsection (c), by adding at the end ``Any violation 
     of any regulation prescribed under subsection (a) committed 
     by a person subject to the Consumer Financial Protection 
     Agency Act shall be treated as a violation of a regulation 
     under section 4301 of the Consumer Financial Protection 
     Agency 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--
       (1) in the subsection heading, by inserting after 
     ``Commission'' the following: ``or the Consumer Financial 
     Protection Agency''; and
       (2) by inserting after ``Commission'' each place such term 
     appears ``or the Consumer Financial Protection Agency''.
       (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 such term appears ``or the Consumer Financial 
     Protection Agency''.
       (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 new subsection:
       ``(d) Enforcement by Consumer Financial Protection 
     Agency.--Except as otherwise provided in sections 3(d), 3(e), 
     4, and 5, this Act shall be enforced by the Consumer 
     Financial Protection Agency under subtitle E of the Consumer 
     Financial Protection Agency Act.''.

     SEC. 4816. 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--
       (1) in subparagraph (B), by striking ``and'' at the end;
       (2) by redesignating subparagraph (C) as subparagraph (D); 
     and
       (3) by inserting after subparagraph (B) the following new 
     subparagraph:
       ``(C) the Director of the Consumer Financial Protection 
     Agency; and''.

     SEC. 4817. EFFECTIVE DATE.

       The amendments made by sections 4803 through 4815 shall 
     take effect on the designated transfer date.

      Subtitle I--Improvements to the Federal Trade Commission Act

     SEC. 4901. AMENDMENTS TO THE FEDERAL TRADE COMMISSION ACT.

       (a) Section 5(m)(1)(A) of the Federal Trade Commission Act 
     (15 U.S.C. 45(m)(1)(A)) is amended--
       (1) by inserting ``this Act or'' after ``violates'' the 
     first place such term appears; and
       (2) by inserting ``a violation of this Act or is'' before 
     ``prohibited''.
       (b) Section 5 of the Federal Trade Commission Act (15 
     U.S.C. 45) is amended by adding at the end thereof the 
     following new subsection:
       ``(o) Unlawful Assistance.--It is unlawful for any person, 
     knowingly or recklessly, to provide substantial assistance to 
     another in violating any provision of this Act or of any 
     other Act enforceable by the Commission that relates to 
     unfair or deceptive acts or practices. Any such violation 
     shall constitute an unfair or deceptive act or practice 
     described in section 5(a)(1) of this Act. Nothing in this 
     section shall be construed as limiting or superseding the 
     protection provided to any provider or user qualifying for 
     protection under section 230(c)(1) of the Communications Act 
     of 1934 (47 U.S.C. 230(c)(1)''.
       (c) Section 18 of the Federal Trade Commission Act (15 
     U.S.C. 57a(b)) is amended--
       (1) by amending subsection (b) to read as follows:
       ``(b) Procedure Applicable.--When prescribing a rule under 
     subsection (a)(1)(B) of this section, the Commission shall 
     proceed in accordance with section 553 of Title 5;
       (2)(A) in subsection (d), by striking all that precedes 
     paragraph (3);
       (B) by striking subsections (c), (f), (i), and (j); and
       (C) by redesignating subsections (e), (g) and (h) as 
     subsections (d), (e) and (f);
       (3) by redesignating paragraph (3) of subsection (d) as 
     subsection (c);
       (4) in subsection (c) (as redesignated), by inserting 
     ``prescribed'' after ``rule''; and

[[Page 31170]]

       (5) in subsection (d) (as redesignated)--
       (A) in paragraph (1)(A) by striking ``promulgated'' and 
     inserting ``prescribed'';
       (B) in paragraph (1)(B), by striking ``the transcript 
     required by subsection (c)(5),'';
       (C) in paragraph (3), by striking ``error)'' all that 
     follows and inserting ``error).''; and
       (D) in paragraph (5), by striking subparagraph (C).
       (d) Section 16(a)(2) of the Federal Trade Commission Act 
     (15 U.S.C. 56(a)(2)) is amended--
       (1) in subparagraph (D), by striking ``; or'' and inserting 
     a semicolon; and
       (2) by inserting after subparagraph (E) the following:
       ``(F) to obtain a civil penalty authorized under any 
     provision of law enforced by the Commission.''.
       (e) Section 5(l) of the Federal Trade Commission Act (15 
     U.S.C. 45(l) is amended in the first sentence by inserting 
     ``the Commission or'' after ``brought by''.

                        TITLE V--CAPITAL MARKETS

     Subtitle A--Private Fund Investment Advisers Registration Act

     SEC. 5001. SHORT TITLE.

       This subtitle may be cited as the ``Private Fund Investment 
     Advisers Registration Act of 2009''.

     SEC. 5002. 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 new paragraphs:
       ``(29) Private fund.--The term `private fund' means an 
     issuer that would be an investment company under section 3(a) 
     of the Investment Company Act of 1940 (15 U.S.C. 80a-3(a)) 
     but for the exception provided from that definition by either 
     section 3(c)(1) or section 3(c)(7) of such Act.
       ``(30) Foreign private fund adviser.--The term `foreign 
     private fund adviser' means an investment adviser who--
       ``(A) has no place of business in the United States;
       ``(B) during the preceding 12 months has had--
       ``(i) fewer than 15 clients in the United States; and
       ``(ii) assets under management attributable to clients in 
     the United States of less than $25,000,000, or such higher 
     amount as the Commission may, by rule, deem appropriate in 
     the public interest or for the protection of investors; and
       ``(C) neither holds itself out generally to the public in 
     the United States as an investment adviser, nor acts as an 
     investment adviser to any investment company registered under 
     the Investment Company Act of 1940, or a company which 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 such election.''.

     SEC. 5003. ELIMINATION OF PRIVATE ADVISER EXEMPTION; LIMITED 
                   EXEMPTION FOR FOREIGN PRIVATE FUND 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 ``, except an investment 
     adviser who acts as an investment adviser to any private 
     fund,'' after ``any investment adviser'';
       (2) by amending paragraph (3) to read as follows:
       ``(3) any investment adviser that is a foreign private fund 
     adviser;'';
       (3) in paragraph (5), by striking ``or'' at the end;
       (4) in paragraph (6)--
       (A) in subparagraph (A), by striking ``or'';
       (B) in subparagraph (B), by striking the period at the end 
     and adding ``; or''; and
       (C) by adding at the end the following new subparagraph:
       ``(C) a private fund; or''; and
       (5) by adding at the end the following:
       ``(7) any investment adviser who solely advises--
       ``(A) small business investment companies licensed 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, 
     which notice or license has not been revoked; or
       ``(C) applicants, related to one or more licensed small 
     business investment companies covered in subparagraph (A), 
     that have applied for another license, which application 
     remains pending.''.

     SEC. 5004. COLLECTION OF SYSTEMIC RISK DATA.

       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 new 
     subsection:
       ``(b) Records and Reports of Private Funds.--
       ``(1) In general.--The Commission is authorized to require 
     any investment adviser registered under this Act to maintain 
     such records of and file with the Commission such reports 
     regarding private funds advised by the investment adviser as 
     are necessary or appropriate in the public interest and for 
     the protection of investors or for the assessment of systemic 
     risk as the Commission determines in consultation with the 
     Board of Governors of the Federal Reserve System. The 
     Commission is authorized to provide or make available to the 
     Board of Governors of the Federal Reserve System, and to any 
     other entity that the Commission identifies as having 
     systemic risk responsibility, those reports or records or the 
     information contained therein. The records and reports of any 
     private fund, to which any such investment adviser provides 
     investment advice, maintained or filed by an investment 
     adviser registered under this Act, shall be deemed to be the 
     records and reports of the investment adviser.
       ``(2) Required information.--The records and reports 
     required to be maintained or filed with the Commission under 
     this subsection shall include, for each private fund advised 
     by the investment adviser--
       ``(A) the amount of assets under management;
       ``(B) the use of leverage (including off-balance sheet 
     leverage);
       ``(C) counterparty credit risk exposures;
       ``(D) trading and investment positions;
       ``(E) trading practices; and
       ``(F) such other information as the Commission, in 
     consultation with the Board of Governors of the Federal 
     Reserve System, determines necessary or appropriate in the 
     public interest and for the protection of investors or for 
     the assessment of systemic risk.
       ``(3) Optional information.--The Commission may require the 
     reporting of such additional information from private fund 
     advisers as the Commission determines necessary. In making 
     such determination, the Commission, taking into account the 
     public interest and potential to contribute to systemic risk, 
     may set different reporting requirements for different 
     classes of private fund advisers, based on the particular 
     types or sizes of private funds advised by such advisers.
       ``(4) Maintenance of records.--An investment adviser 
     registered under this Act is required to maintain and keep 
     such records of private funds advised by the investment 
     adviser for such period or periods as the Commission, by rule 
     or regulation, may prescribe as necessary or appropriate in 
     the public interest and for the protection of investors or 
     for the assessment of systemic risk.
       ``(5) Examination of records.--
       ``(A) Periodic and special examinations.--All records of a 
     private fund maintained by an investment adviser registered 
     under this Act shall be subject at any time and from time to 
     time to such periodic, special, and other examinations by the 
     Commission, or any member or representative thereof, as the 
     Commission may prescribe.
       ``(B) Availability of records.--An investment adviser 
     registered under this Act shall make available to the 
     Commission or its representatives 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.
       ``(6) Information sharing.--The Commission shall make 
     available to the Board of Governors of the Federal Reserve 
     System, and to any other entity that the Commission 
     identifies as having systemic risk responsibility, copies of 
     all reports, documents, records, and information filed with 
     or provided to the Commission by an investment adviser under 
     this subsection as the Board, or such other entity, may 
     consider necessary for the purpose of assessing the systemic 
     risk of a private fund. All such reports, documents, records, 
     and information obtained by the Board, or such other entity, 
     from the Commission under this subsection shall be kept 
     confidential in a manner consistent with confidentiality 
     established by the Commission pursuant to paragraph (8).
       ``(7) Disclosures of certain private fund information.--An 
     investment adviser registered under this Act shall provide 
     such reports, records, and other documents to investors, 
     prospective investors, counterparties, and creditors, of any 
     private fund advised by the investment adviser as the 
     Commission, by rule or regulation, may prescribe as necessary 
     or appropriate in the public interest and for the protection 
     of investors or for the assessment of systemic risk.
       ``(8) Confidentiality of reports.--Notwithstanding any 
     other provision of law, the Commission shall not be compelled 
     to disclose any report or information contained therein 
     required to be filed with the Commission under this 
     subsection. Nothing in this paragraph shall authorize the 
     Commission to withhold information from the Congress or 
     prevent the Commission from complying with 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 complying with an order of a court of the 
     United States in an action brought by the United States or 
     the Commission. 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.''.

     SEC. 5005. ELIMINATION OF DISCLOSURE PROVISION.

       Section 210 of the Investment Advisers Act of 1940 (15 
     U.S.C. 80b-10) is amended by striking subsection (c).

     SEC. 5006. EXEMPTION OF AND REPORTING BY 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 
     new subsection:

[[Page 31171]]

       ``(l) Exemption of and Reporting by Venture Capital Fund 
     Advisers.--The Commission shall identify and define the term 
     `venture capital fund' and shall provide an adviser to such a 
     fund an exemption from the registration requirements under 
     this section (excluding any such fund whose adviser is exempt 
     from registration pursuant to paragraph (7) of subsection 
     (b)). The Commission shall require such advisers to maintain 
     such records and provide to the Commission such annual or 
     other reports as the Commission determines necessary or 
     appropriate in the public interest or for the protection of 
     investors.''.

     SEC. 5007. EXEMPTION OF AND REPORTING BY CERTAIN PRIVATE FUND 
                   ADVISERS.

       Section 203 of the Investment Advisers Act of 1940 (15 
     U.S.C. 80b-3), as amended by section 5006, is further amended 
     by adding at the end the following new subsections:
       ``(m) Exemption of and Reporting by Certain Private Fund 
     Advisers.--
       ``(1) In general.--The Commission shall provide an 
     exemption from the registration requirements under this 
     section to any investment adviser of private funds, if each 
     of such private funds has assets under management in the 
     United States of less than $150,000,000.
       ``(2) Reporting.--The Commission shall require investment 
     advisers exempted by reason of this subsection to maintain 
     such records and provide to the Commission such annual or 
     other reports as the Commission determines necessary or 
     appropriate in the public interest or for the protection of 
     investors.
       ``(n) Registration and Examination of Mid-sized Private 
     Fund Advisers.--In prescribing regulations to carry out the 
     requirements of this section with respect to investment 
     advisers acting as investment advisers to mid-sized private 
     funds, the Commission shall take into account the size, 
     governance, and investment strategy of such funds to 
     determine whether they pose systemic risk, and shall provide 
     for registration and examination procedures with respect to 
     the investment advisers of such funds which reflect the level 
     of systemic risk posed by such funds.''.

     SEC. 5008. CLARIFICATION OF RULEMAKING AUTHORITY.

       Section 211 of the Investment Advisers Act of 1940 (15 
     U.S.C. 80b-11) is amended--
       (1) by amending subsection (a) to read as follows:
       ``(a) The Commission shall have authority from time to time 
     to make, issue, amend, and rescind such rules and regulations 
     and such orders as are necessary or appropriate to the 
     exercise of the functions and powers conferred upon the 
     Commission elsewhere in this title, including rules and 
     regulations defining technical, trade, and other terms used 
     in this title. For the purposes of its rules and regulations, 
     the Commission may--
       ``(1) classify persons and matters within its jurisdiction 
     based upon, but not limited to--
       ``(A) size;
       ``(B) scope;
       ``(C) business model;
       ``(D) compensation scheme; or
       ``(E) potential to create or increase systemic risk;
       ``(2) prescribe different requirements for different 
     classes of persons or matters; and
       ``(3) ascribe different meanings to terms (including the 
     term `client', except the Commission shall not ascribe a 
     meaning to the term `client' that would include an investor 
     in a private fund managed by an investment adviser, where 
     such private fund has entered into an advisory contract with 
     such adviser) used in different sections of this title as the 
     Commission determines necessary to effect the purposes of 
     this title.''; and
       (2) by adding at the end the following new subsection:
       ``(e) The Commission and the Commodity Futures Trading 
     Commission shall, after consultation with the Board of 
     Governors of the Federal Reserve System, within 12 months 
     after the date of enactment of the Private Fund Investment 
     Advisers Registration Act of 2009, jointly promulgate rules 
     to establish the form and content of the reports required to 
     be filed with the Commission under sections 203(l) and 204(b) 
     and with the Commodity Futures Trading Commission by 
     investment advisers that are registered both under the 
     Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) and 
     the Commodity Exchange Act (7 U.S.C. 1 et seq.).''.

     SEC. 5009. GAO STUDY.

       (a) Study Required.--The Comptroller General of the United 
     States shall carry out a study to assess the annual costs on 
     industry members and their investors due to the registration 
     requirements and ongoing reporting requirements under this 
     subtitle and the amendments made by this subtitle.
       (b) Report to the Congress.--Not later than the end of the 
     2-year period beginning on the date of the enactment of this 
     title, the Comptroller General of the United States shall 
     submit a report to the Congress containing the findings and 
     determinations made by the Comptroller General in carrying 
     out the study required under subsection (a).

     SEC. 5010. EFFECTIVE DATE; TRANSITION PERIOD.

       (a) Effective Date.--This subtitle, and the amendments made 
     by this subtitle, shall take effect with respect to 
     investment advisers after the end of the 1-year period 
     beginning on the date of the enactment of this title.
       (b) Transition Period.--The Securities and Exchange 
     Commission shall prescribe rules and regulations to permit an 
     investment adviser who will be required to register with the 
     Securities and Exchange Commission by reason of this subtitle 
     with the option of registering with the Securities and 
     Exchange Commission before the date described under 
     subsection (a).

     SEC. 5011. QUALIFIED CLIENT STANDARD.

       Section 205(e) of the Investment Advisers Act of 1940 (15 
     U.S.C. 80b-5(e)) is amended by adding at the end the 
     following: ``With respect to any factor used by the 
     Commission in making a determination under this subsection, 
     if the Commission uses a dollar amount test in connection 
     with such factor, such as a net asset threshold, the 
     Commission shall, not later than one year after the date of 
     the enactment of the Private Fund Investment Advisers 
     Registration Act of 2009, and every 5 years thereafter, 
     adjust for the effects of inflation on such test. Any such 
     adjustment that is not a multiple of $1,000 shall be rounded 
     to the nearest multiple of $1,000.''.

   Subtitle B--Accountability and Transparency in Rating Agencies Act

     SEC. 6001. SHORT TITLE.

       This subtitle may be cited as the ``Accountability and 
     Transparency in Rating Agencies Act of 2009''.

     SEC. 6002. ENHANCED REGULATION 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 (a)--
       (A) in paragraph (1)(A), by striking ``furnish to'' and 
     inserting ``file with'';
       (B) in paragraph (2)(A), by striking ``furnished to'' and 
     inserting ``filed with''; and
       (C) in paragraph (2)(B)(i)(II), by striking ``furnished 
     to'' and inserting ``filed with'';
       (2) in subsection (b)--
       (A) in paragraph (1)(A), by striking ``furnished'' and 
     inserting ``filed'' and by striking ``furnishing'' and 
     inserting ``filing'';
       (B) in paragraph (1)(B), by striking ``furnishing'' and 
     inserting ``filing''; and
       (C) in the first sentence of paragraph (2), by striking 
     ``furnish to'' and inserting ``file with'';
       (3) in subsection (c)--
       (A) paragraph (2)--
       (i) in the second sentence by inserting ``including the 
     requirements of this section,'' after ``Notwithstanding any 
     other provision of law,''; and
       (ii) by inserting before the period at the end of the last 
     sentence ``, provided that this paragraph does not afford a 
     defense against any action or proceeding brought by the 
     Commission to enforce the antifraud provision of the 
     securities laws'';
       (B) by adding at the end the following new paragraph:
       ``(3) Review of internal processes for determining credit 
     ratings.--
       ``(A) In general.--The Commission shall examine credit 
     ratings issued by, and the policies, procedures, and 
     methodologies employed by, each nationally recognized 
     statistical rating organization to review whether--
       ``(i) the nationally recognized statistical rating 
     organization has established and documented a system of 
     internal controls, due diligence and implementation of 
     methodologies for determining credit ratings, taking into 
     consideration such factors as the Commission may prescribe by 
     rule;
       ``(ii) the nationally recognized statistical rating 
     organization adheres to such system; and
       ``(iii) the public disclosures of the nationally recognized 
     statistical rating organization required under this section 
     about its credit ratings, methodologies, and procedures are 
     consistent with such system.
       ``(B) Manner and frequency.--The Commission shall conduct 
     reviews required by this paragraph no less frequently than 
     annually in a manner to be determined by the Commission.
       ``(4) Provision of information to the commission.--Each 
     nationally recognized statistical rating organization shall 
     make available and maintain such records and information, for 
     such a period of time, as the Commission may prescribe, by 
     rule, as necessary for the Commission to conduct the reviews 
     under paragraph (3).
       ``(5) Disclosures with respect to structured securities.--
       ``(A) Regulations required.--The rules and regulations 
     prescribed by the Commission pursuant to this section with 
     respect to nationally recognized statistical rating 
     organizations shall, with respect to the procedures and 
     methodologies by which any nationally recognized statistical 
     rating organization determines credit ratings for structured 
     securities--
       ``(i) specify the information required to be disclosed to 
     such rating organizations by the sponsor, issuers, and 
     underwriters of such structured securities on the collateral 
     underlying such structured securities; and
       ``(ii) establish and implement procedures to collect and 
     disclose information about the processes used by such 
     sponsor, issuers, and underwriters to assess the accuracy and 
     integrity of their data and fraud detection.

[[Page 31172]]

       ``(B) Definition.--For purposes of this paragraph, the 
     Commission shall, by rule or regulation, define the term 
     `structured securities' as appropriate in the public interest 
     and for the protection of investors.
       ``(6) Historical default rate disclosures.--The rules and 
     regulations prescribed by the Commission pursuant to this 
     section with respect to nationally recognized statistical 
     rating organizations shall require each nationally recognized 
     statistical rating organization to establish and maintain, on 
     a publicly accessible Internet site, a facility to disclose, 
     in a central database, the historical default rates of all 
     classes of financial products rated by such organization.''
       (4) in subsection (d)--
       (A) in the heading, by inserting ``Fine,'' after 
     ``Censure,'';
       (B) by striking ``shall censure'' and all that follows 
     through ``revocation'' and inserting the following: ``shall 
     censure, fine in accordance with section 21B(a), place 
     limitations on the activities, functions, or operations of, 
     suspend for a period not exceeding 12 months, or revoke the 
     registration of any nationally recognized statistical rating 
     organization (or 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 nationally recognized 
     statistical rating organization, the Commission, by order, 
     shall censure, fine in accordance with section 21B(a), place 
     limitations on the activities or functions of such person, 
     suspend for a period not exceeding 12 months, or bar such 
     person from being associated with a nationally recognized 
     statistical rating organization), if the Commission finds, on 
     the record after notice and opportunity for hearing, that 
     such censure, fine, placing of limitations, bar, suspension, 
     or revocation'';
       (C) in paragraph (2), by striking ``furnished to'' and 
     inserting ``filed with'';
       (D) in paragraph (4)--
       (i) by striking ``furnish'' and inserting ``file'';
       (ii) by striking ``or'' at the end;
       (E) in paragraph (5), by striking the period at the end and 
     inserting a semicolon; and
       (F) by adding at the end the following:
       ``(6) has failed reasonably to supervise another person who 
     commits a violation of the securities laws, the rules or 
     regulations thereunder, or any rules of the Municipal 
     Securities Rulemaking Board if such other person is subject 
     to his or her supervision, except that no person shall be 
     deemed to have failed reasonably to supervise any other 
     person under this paragraph, if--
       ``(A) there have been established procedures, and a system 
     for applying such procedures, which would reasonably be 
     expected to prevent and detect, insofar as practicable, any 
     such violation by such other person, and
       ``(B) such person has reasonably discharged the duties and 
     obligations incumbent upon him or her by reason of such 
     procedures and system without reasonable cause to believe 
     that such procedures and system were not being complied with; 
     or
       ``(7) fails to conduct sufficient surveillance to ensure 
     that credit ratings remain current and reliable, as 
     applicable.'';
       (5) in subsection (e)--
       (A) by striking paragraph (1); and
       (B) in paragraph (2), by striking ``(2) Commission 
     authority.--'' and moving the text of such paragraph to 
     follow the heading of subsection (e);
       (6) by amending subsection (h) to read as follows:
       ``(h) Corporate Governance, Organization, and Management of 
     Conflicts of Interest.--
       ``(1) Board of directors.--
       ``(A) In general.--Each nationally recognized statistical 
     rating organization or its ultimate holding company shall 
     have a board of directors.
       ``(B) Independent directors.--At least \1/3\ of such board, 
     but no less than 2 of the members of the board of directors, 
     shall be independent directors. In order to be considered 
     independent for purposes of this subsection, a director of a 
     nationally recognized statistical rating organization 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.
       ``(C) Compensation and term.--The compensation of the 
     independent directors 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 exceeding 5 years and shall not be renewable.
       ``(D) Duties.--In addition to the overall responsibility of 
     the board of directors, the board shall oversee--
       ``(i) the establishment, maintenance, and enforcement of 
     policies and procedures for determining credit ratings;
       ``(ii) the establishment, maintenance, and enforcement of 
     policies and procedures to address, manage, and disclose any 
     conflicts of interest;
       ``(iii) the effectiveness of the internal control system 
     with respect to policies and procedures for determining 
     credit ratings; and
       ``(iv) the compensation and promotion policies and 
     practices of the nationally recognized statistical rating 
     organization.
       ``(2) Organization policies and procedures.--Each 
     nationally recognized statistical rating organization shall 
     establish, maintain, and enforce written policies and 
     procedures reasonably designed, taking into consideration the 
     nature of the business of the nationally recognized 
     statistical rating organization and affiliated persons and 
     affiliated companies thereof, to address, manage, and 
     disclose any conflicts of interest that can arise from such 
     business.
       ``(3) Commission rules.--The Commission shall issue rules 
     to prohibit, or require the management and disclosure of, any 
     conflicts of interest relating to the issuance of credit 
     ratings by a nationally recognized statistical rating 
     organization, including rules regarding--
       ``(A) conflicts of interest relating to the manner in which 
     a nationally recognized statistical rating organization is 
     compensated by the obligor, or any affiliate of the obligor, 
     for issuing credit ratings or providing related services;
       ``(B) conflicts of interest relating to business 
     relationships, ownership interests, and affiliations of 
     nationally recognized statistical rating organization board 
     members with obligors, or any other financial or personal 
     interests between a nationally recognized statistical rating 
     organization, or any person associated with such nationally 
     recognized statistical rating organization, and the obligor, 
     or any affiliate of the obligor;
       ``(C) conflicts of interest relating to any affiliation of 
     a nationally recognized statistical rating organization, or 
     any person associated with such nationally recognized 
     statistical rating organization, with any person who 
     underwrites securities, money market instruments, or other 
     instruments that are the subject of a credit rating;
       ``(D) a requirement that each nationally recognized 
     statistical rating organization disclose on such 
     organization's website a consolidated report at the end of 
     each fiscal year that shows--
       ``(i) the percent of net revenue earned by the nationally 
     recognized statistical rating organization or an affiliate of 
     a nationally recognized statistical rating organization, or 
     any person associated with a nationally recognized 
     statistical rating organization, to the extent determined 
     appropriate by the Commission, for that fiscal year for 
     providing services and products other than credit rating 
     services to each person who paid for a credit rating; and
       ``(ii) the relative standing of each person who paid for a 
     credit rating that was outstanding as of the end of the 
     fiscal year in terms of the amount of net revenue earned by 
     the nationally recognized statistical rating organization 
     attributable to each such person and classified by the 
     highest 5, 10, 25, and 50 percentiles and lowest 50 and 25 
     percentiles;
       ``(E) the establishment of a system of payment for credit 
     ratings issued by each nationally recognized statistical 
     rating organization that requires that payments are 
     structured in a manner designed to ensure that the nationally 
     recognized statistical rating organization conducts accurate 
     and reliable surveillance of credit ratings over time, as 
     applicable, and that incentives for reliable credit ratings 
     are in place;
       ``(F) a requirement that a nationally recognized 
     statistical rating organization disclose with the publication 
     of a credit rating the type and number of credit ratings it 
     has provided to the person being rated or affiliates of such 
     person, the fees it has billed for the credit rating, and the 
     aggregate amount of net revenue earned by the nationally 
     recognized statistical rating organization in the preceding 2 
     fiscal years attributable to the person being rated and its 
     affiliates; and
       ``(G) any other potential conflict of interest, as the 
     Commission determines necessary or appropriate in the public 
     interest or for the protection of investors.
       ``(4) Look-back requirement.--
       ``(A) Review by the nationally recognized statistical 
     rating organization.--Each nationally recognized statistical 
     rating organization shall establish, maintain, and enforce 
     policies and procedures reasonably designed to ensure that, 
     in any case in which an employee of a person subject to a 
     credit rating of the nationally recognized statistical rating 
     organization or the issuer, underwriter, or sponsor of a 
     security or money market instrument subject to a credit 
     rating of the nationally recognized statistical rating 
     organization was employed by the nationally recognized 
     statistical rating organization and participated in any 
     capacity in determining credit ratings for the person or the 
     securities or money market instruments during the 1-year 
     period preceding the date an action was taken with respect to 
     the credit rating, the nationally recognized statistical 
     rating organization shall--
       ``(i) conduct a review to determine whether any conflicts 
     of interest of the employee influenced the credit rating; and

[[Page 31173]]

       ``(ii) take action to revise the rating if appropriate, in 
     accordance with such rules as the Commission shall prescribe.
       ``(B) Review by commission.--
       ``(i) In general.--The Commission shall conduct periodic 
     reviews of the policies described in subparagraph (A) and the 
     implementation of the policies at each nationally recognized 
     statistical rating organization to ensure they are reasonably 
     designed and implemented to most effectively eliminate 
     conflicts of interest.
       ``(ii) Timing of reviews.--The Commission shall review the 
     code of ethics and conflict of interest policy of each 
     nationally recognized statistical rating organization--

       ``(I) not less frequently than annually; and
       ``(II) whenever such policies are materially modified or 
     amended.

       ``(5) Report to commission on certain employment 
     transitions.--
       ``(A) Report required.--Each nationally recognized 
     statistical rating organization shall report to the 
     Commission any case such organization knows or can reasonably 
     be expected to know where a person associated with such 
     organization within the previous 5 years obtains employment 
     with any obligor, issuer, underwriter, or sponsor of a 
     security or money market instrument for which the 
     organization issued a credit rating during the 12-month 
     period prior to such employment, if such employee--
       ``(i) was a senior officer of such organization;
       ``(ii) participated in any capacity in determining credit 
     ratings for such obligor, issuer, underwriter, or sponsor; or
       ``(iii) supervised an employee described in clause (ii).
       ``(B) Public disclosure.--Upon receiving such a report, the 
     Commission shall make such information publicly available.'';
       (7) by amending subsection (j) to read as follows:
       ``(j) Designation of Compliance Officer.--
       ``(1) In general.--Each nationally recognized statistical 
     rating organization shall designate an individual to serve as 
     a compliance officer.
       ``(2) Duties.--The compliance officer shall--
       ``(A) report directly to the board of the nationally 
     recognized statistical rating organization;
       ``(B) review compliance with policies and procedures to 
     manage conflicts of interest and assess the risk that the 
     compliance (or lack of such compliance) may compromise the 
     integrity of the credit rating process;
       ``(C) review compliance with the internal control system 
     with respect to the procedures and methodologies for 
     determining credit ratings, including qualitative 
     methodologies and quantitative inputs used in the rating 
     process, and assess the risk that such internal control 
     system is reasonably designed to ensure the integrity and 
     quality of the credit rating process;
       ``(D) in consultation with the board of the nationally 
     recognized statistical rating organization, resolve any 
     conflicts of interest that may arise;
       ``(E) be responsible for administering the policies and 
     procedures required to be established pursuant to this 
     section;
       ``(F) ensure compliance with securities laws and the rules 
     and regulations issued thereunder, including rules prescribed 
     by the Commission pursuant to this section; and
       ``(G) establish procedures--
       ``(i) for the receipt, retention, and treatment of 
     complaints regarding credit ratings, models, methodologies, 
     and compliance with the securities laws and the policies and 
     procedures required under this section;
       ``(ii) for the receipt, retention, and treatment of 
     confidential, anonymous complaints by employees, obligors, 
     issuers, and investors;
       ``(iii) for the remediation of non-compliance issues found 
     during compliance office reviews, the reviews required under 
     paragraph (7), internal or external audit findings, self-
     reported errors, or through validated complaints; and
       ``(iv) designed so that ratings that the nationally 
     recognized statistical rating organization disseminates 
     reflect consideration of all information in a manner 
     generally consistent with the nationally recognized 
     statistical rating organization's published rating 
     methodology, including information which is provided, 
     received, or otherwise obtained from obligor, issuer and non-
     issuer sources, such as investors, the media, and other 
     interested or informed parties.
       ``(3) Limitations.--The compliance officer shall not, while 
     serving in that capacity--
       ``(A) determine credit ratings;
       ``(B) participate in the establishment of the procedures 
     and methodologies or the qualitative methodologies and 
     quantitative inputs used to determine credit ratings;
       ``(C) perform marketing or sales functions; or
       ``(D) participate in establishing compensation levels, 
     other than for employees working for the compliance officer.
       ``(4) Annual reports required.--The compliance officer 
     shall annually prepare and sign a report on the compliance of 
     the nationally recognized statistical rating organization 
     with the securities laws and such organization's internal 
     policies and procedures, including its code of ethics and 
     conflict of interest policies, in accordance with rules 
     prescribed by the Commission. Such compliance report shall 
     accompany the financial reports of the nationally recognized 
     statistical rating organization that are required to be filed 
     with the Commission pursuant to this section and shall 
     include a certification that, under penalty of law, the 
     report is accurate and complete.
       ``(5) Compensation.--The compensation of the compliance 
     officer 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 the 
     officer's judgment.'';
       (8) in subsection (k)--
       (A) by striking ``, on a confidential basis,'';
       (B) by striking ``furnish to'' and inserting ``file with'';
       (C) by striking ``Each nationally'' and inserting the 
     following:
       ``(1) In general.--Each nationally''; and
       (D) by adding at the end the following new paragraph:
       ``(2) Exception.--The Commission may treat as confidential 
     any information provided by a nationally recognized 
     statistical rating organization under this section consistent 
     with applicable Federal laws or Commission rules.'';
       (9) in subsection (l)(2)(A)(i), by striking ``furnished'' 
     and inserting ``filed'';
       (10) by amending subsection (p) to read as follows:
       ``(p) Establishment of SEC Office.--
       ``(1) In general.--The Commission shall establish an office 
     that administers the rules of the Commission with respect to 
     the practices of nationally recognized statistical rating 
     organizations.
       ``(2) Staffing.--The office of the Commission established 
     under this subsection shall be staffed sufficiently to carry 
     out fully the requirements of this section.
       ``(3) Rulemaking authority.--The Commission shall--
       ``(A) establish, by rule, fines and other penalties for any 
     nationally recognized statistical rating organization that 
     violates the applicable requirements of this title; and
       ``(B) issue such rules as may be necessary to carry out 
     this section with respect to nationally recognized 
     statistical rating organizations.''; and
       (11) by adding after subsection (p) the following new 
     subsections:
       ``(q) Transparency of Ratings Performance.--
       ``(1) Rulemaking required.--The Commission shall, by rule, 
     require each nationally recognized statistical rating 
     organization to publicly disclose information on initial 
     ratings and subsequent changes to such ratings for the 
     purpose of providing a gauge of the performance of ratings 
     and allowing investors to compare 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, so that investors can 
     compare rating performance across rating organizations;
       ``(B) are clear and informative for a wide range of 
     investor sophistication;
       ``(C) include performance information over a range of years 
     and for a variety of classes of credit ratings, as determined 
     by the Commission;
       ``(D) are published and made freely available by the 
     nationally recognized statistical rating organization, on an 
     easily accessible portion of its website and in written form 
     when requested by investors; and
       ``(E) each nationally recognized statistical rating 
     organization include an attestation with any credit rating it 
     issues affirming that no part of the rating was influenced by 
     any other business activities, that the rating was based 
     solely on the merits of the instruments being rated, and that 
     such rating was an independent evaluation of the risks and 
     merits of the instrument.
       ``(r) Credit Ratings Methodologies.--
       ``(1) In general.--The Commission shall prescribe rules, in 
     the public interest and for the protection of investors, that 
     require each nationally recognized statistical rating 
     organization to establish, maintain, and enforce written 
     procedures and methodologies and an internal control system 
     with respect to such procedures and methodologies that are 
     reasonably designed to--
       ``(A) ensure that credit ratings are determined using 
     procedures and methodologies, including qualitative 
     methodologies and quantitative inputs that are determined in 
     accordance with the policies and procedures of the nationally 
     recognized statistical rating organization for developing and 
     modifying credit rating procedures and methodologies;
       ``(B) ensure that when major changes to credit rating 
     procedures and methodologies, including to qualitative 
     methodologies and quantitative inputs, are made, that the 
     changes are applied consistently to all credit ratings to 
     which the changed procedures and methodologies apply and, to 
     the extent the changes are made to credit rating surveillance 
     procedures and methodologies, they are applied to current 
     credit ratings within a time period to be determined by the 
     Commission by rule, and that the reason for the change is 
     publicly disclosed;

[[Page 31174]]

       ``(C) notify persons who have access to the credit ratings 
     of the nationally recognized statistical rating organization, 
     regardless of whether they are made readily accessible for 
     free or a reasonable fee, of the procedure or methodology, 
     including qualitative methodologies and quantitative inputs, 
     used with respect to a particular credit rating;
       ``(D) notify persons who have access to the credit ratings 
     of the nationally recognized statistical rating organization, 
     regardless of whether they are made readily accessible for 
     free or a reasonable fee, when a change is made to a 
     procedure or methodology, including to qualitative 
     methodologies and quantitative inputs, or an error is 
     identified in a procedure or methodology that may result in 
     credit rating actions, and the likelihood of the change 
     resulting in current credit ratings being subject to rating 
     actions; and
       ``(E) use credit rating symbols that distinguish credit 
     ratings for structured products from credit ratings for other 
     products that the Commission determines appropriate or 
     necessary in the public interest and for the protection of 
     investors.
       ``(2) Rating clarity and consistency.--
       ``(A) Commission obligation.--Subject to subparagraphs (B) 
     and (C), the Commission shall require, by rule, each 
     nationally recognized statistical rating organization to 
     establish, maintain, and enforce written policies and 
     procedures reasonably designed--
       ``(i) with respect to credit ratings of securities and 
     money market instruments, to assess the risk that investors 
     in securities and money market instruments may not receive 
     payment in accordance with the terms of such securities and 
     instruments;
       ``(ii) to define clearly any credit rating symbol used by 
     that organization; and
       ``(iii) to apply such credit rating symbol in a consistent 
     manner for all types of securities and money market 
     instruments.
       ``(B) Additional credit factors.--Nothing in subparagraph 
     (A)--
       ``(i) prohibits a nationally recognized statistical rating 
     organization from using additional credit factors that are 
     documented and disclosed by the organization and that have a 
     demonstrated impact on the risk an investor in a security or 
     money market instrument will not receive repayment in 
     accordance with the terms of issuance;
       ``(ii) prohibits a nationally recognized statistical rating 
     organization from considering credit factors that are unique 
     to municipal securities; or
       ``(iii) prohibits a nationally recognized statistical 
     rating organization from using an additional symbol with 
     respect to the ratings described in subparagraph (A)(i) for 
     the purpose of distinguishing the ratings of a certain type 
     of security or money market instrument from ratings of any 
     other types of securities or money market instruments.
       ``(C) Complementary ratings.--The Commission shall not 
     impose any requirement under subparagraph (A) that prevents 
     nationally recognized statistical rating organizations from 
     establishing ratings that are complementary to the ratings 
     described in subparagraph (A)(i) and that are created to 
     measure a discrete aspect of the security's or instrument's 
     risk.
       ``(s) Transparency of Credit Rating Methodologies and 
     Information Reviewed.--
       ``(1) In general.--The Commission shall require, by rule, a 
     nationally recognized statistical rating organization to 
     include with the publication of each credit rating regardless 
     of whether the credit rating is made readily accessible for 
     free or a reasonable fee a form that discloses information 
     about the assumptions underlying the procedures and 
     methodologies used, and the data relied on, to determine the 
     credit rating in the format prescribed in paragraph (2) and 
     containing the information described in paragraph (3).
       ``(2) Format.--The Commission shall prescribe a form for 
     use under paragraph (1) that--
       ``(A) is designed in a user-friendly and helpful manner for 
     investors to understand the information contained in the 
     report;
       ``(B) requires the nationally recognized statistical rating 
     organization to provide the content, as required by paragraph 
     (3), in a manner that is directly comparable across 
     securities; and
       ``(C) the nationally recognized statistical rating 
     organization certifies the information on the form as true 
     and accurate.
       ``(3) Content.--The Commission shall prescribe a form that 
     requires a nationally recognized statistical rating 
     organization to disclose --
       ``(A) the main assumptions included in constructing 
     procedures and methodologies, including qualitative 
     methodologies and quantitative inputs and assumptions about 
     the correlation of defaults across underlying assets used in 
     rating certain structured products;
       ``(B) the potential shortcomings of the credit ratings, and 
     the types of risks not measured in the credit ratings that 
     the nationally recognized statistical rating organization is 
     not commenting on, such as liquidity, market, and other 
     risks;
       ``(C) information on the certainty of the rating, including 
     information on the reliability, accuracy, and quality of the 
     data relied on in determining the ultimate credit rating and 
     a statement on the extent to which key data inputs for the 
     credit rating were reliable or limited, including any limits 
     on the reach of historical data, limits in accessibility to 
     certain documents or other forms of information that would 
     have better informed the credit rating, and the completeness 
     of certain information considered;
       ``(D) whether and to what extent third party due diligence 
     services have been utilized, and a description of the 
     information that such third party reviewed in conducting due 
     diligence services;
       ``(E) a description of relevant data about any obligor, 
     issuer, security, or money market instrument that was used 
     and relied on for the purpose of determining the credit 
     rating;
       ``(F) a statement containing an overall assessment of the 
     quality of information available and considered in producing 
     a credit rating for a security in relation to the quality of 
     information available to the nationally recognized 
     statistical rating organization in rating similar obligors, 
     securities, or money market instruments;
       ``(G) an explanation or measure of the potential volatility 
     for the credit rating, including any factors that might lead 
     to a change in the credit rating, and the extent of the 
     change that might be anticipated under different conditions;
       ``(H) information on the content of the credit rating, 
     including--
       ``(i) the expected default probability; and
       ``(ii) the loss given default;
       ``(I) information on the sensitivity of the rating to 
     assumptions made by the nationally recognized statistical 
     rating organization, including--
       ``(i) 5 assumptions made in the ratings process that, 
     without accounting for any other factor, would have the 
     greatest impact on a rating if such assumptions were proven 
     false or inaccurate; and
       ``(ii) an analysis, using concrete examples, on how each of 
     the 5 assumptions identified under clause (i) impacts a 
     rating.
       ``(J) where 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
       ``(K) such additional information as may be required by the 
     Commission.
       ``(4) Due diligence services.--
       ``(A) Certification required.--In any case in which third-
     party due diligence services are employed by a nationally 
     recognized statistical rating organization or an issuer, 
     underwriter, or sponsor in connection with the issuance of a 
     credit rating, the firm providing the due diligence services 
     shall provide to the nationally recognized statistical rating 
     organization written certification of such due diligence, 
     which shall be subject to review by the Commission, and the 
     issuer, underwriter, or sponsor shall provide any reports 
     issued by the provider of such due diligence services to the 
     nationally recognized statistical rating organization.
       ``(B) Format and content.--The Commission shall establish 
     the appropriate format and content for written certifications 
     required under subparagraph (A) to ensure that providers of 
     due diligence services have conducted a thorough review of 
     data, documentation, and other relevant information necessary 
     for the nationally recognized statistical rating organization 
     to provide a reliable rating.
       ``(C) Disclosure of certification.--The Commission shall 
     adopt rules requiring a nationally recognized statistical 
     rating organization to disclose to persons who have access to 
     the credit ratings of the nationally recognized statistical 
     rating organization regardless of whether they are made 
     readily accessible for free or a reasonable fee the 
     certification described in subparagraph (A) with the 
     publication of the applicable credit rating in a manner that 
     may permit the persons to determine the adequacy and level of 
     due diligence services provided by the third party.
       ``(t) Prohibited Activities.--Beginning 180 days from the 
     date of enactment of the Accountability, Reliability, and 
     Transparency in Rating Agencies Act, it shall be unlawful for 
     a nationally recognized statistical rating organization, or 
     an affiliate of a nationally recognized statistical rating 
     organization, or any person associated with a nationally 
     recognized statistical rating organization, that provides a 
     credit rating for an issuer, underwriter, or placement agent 
     of a security to provide any non-rating service, including--
       ``(1) risk management advisory services;
       ``(2) advice or consultation relating to any merger, sales, 
     or disposition of assets of the issuer;
       ``(3) ancillary assistance, advice, or consulting services 
     unrelated to any specific credit rating issuance; and
       ``(4) such further activities or services as the Commission 
     may determine as necessary or appropriate in the public 
     interest or for the protection of investors.''.

     SEC. 6003. STANDARDS FOR PRIVATE ACTIONS.

       (a) In General.--Section 21D(b)(2) of the Securities 
     Exchange Act of 1934 (15 U.S.C. 78u-4(b)(2)) is amended by 
     inserting before the period at the end of the following: ``, 
     and in the case of an action brought under this title for 
     money damages against a nationally recognized statistical 
     rating organization, it shall be sufficient for purposes of 
     pleading

[[Page 31175]]

     any required state of mind for purposes of such action that 
     the complaint shall state with particularity facts giving 
     rise to a strong inference that the nationally recognized 
     statistical rating organization knowingly or recklessly 
     violated the securities laws''.
       (b) Pleading Standard.--Section 15E(m) of the Securities 
     Exchange Act of 1934 (15 U.S.C. 78o-7(m)) amended to read as 
     follows:
       ``(m) Application of Enforcement Provisions; Pleading 
     Standard in Private Rights of Action.--Statements made by 
     nationally recognized statistical rating organizations shall 
     not be deemed forward looking statements for purposes of 
     section 21E. In any private right of action commenced against 
     a nationally recognized statistical rating organization under 
     this title, the same pleading standards with respect to 
     knowledge and recklessness shall apply to the nationally 
     recognized statistical rating organization as would apply to 
     any other person in the same or a similar private right of 
     action against such person.''.

     SEC. 6004. ISSUER DISCLOSURE OF PRELIMINARY RATINGS.

       The Securities and Exchange Commission shall adopt rules 
     under authority of the Securities Act of 1933 (15 U.S.C. 77a, 
     et seq.) to require issuers to disclose preliminary credit 
     ratings received from nationally recognized statistical 
     rating agencies on structured products and all forms of 
     corporate debt.

     SEC. 6005. CHANGE TO DESIGNATION.

       The Securities Act of 1933 and the Securities Exchange Act 
     of 1934 are each amended by striking ``nationally recognized 
     statistical rating'' each place it appears and inserting 
     ``nationally registered statistical rating''.

     SEC. 6006. TIMELINE FOR REGULATIONS.

       Unless otherwise specified in this subtitle, the Securities 
     and Exchange Commission shall adopt rules and regulations, as 
     required by the amendments made by this subtitle, not later 
     than 365 days after the date of enactment.

     SEC. 6007. ELIMINATION OF EXEMPTION FROM FAIR DISCLOSURE 
                   RULE.

       Not later than 90 days after the date of enactment of this 
     subtitle, the Securities Exchange Commission shall revise 
     Regulation FD (17 C.F.R. 243.100) to remove from such 
     regulation the exemption for entities whose primary business 
     is the issuance of credit ratings (17 C.F.R. 
     243.100(b)(2)(iii)).

     SEC. 6008. ADVISORY BOARD.

       (a) Establishment.--Not later than 90 days after the date 
     of the enactment of this subtitle, the Securities and 
     Exchange Commission shall establish an advisory board to be 
     known as the Credit Ratings Agency Advisory Board (in this 
     section referred to as ``the Board'').
       (b) Appointment and Terms of Service.--The Board shall 
     consist of 7 members appointed by the Commission, no more 
     than 2 of whom may be former employees of a credit rating 
     agency. Members of the Board shall be prominent individuals 
     of integrity and reputation who have a demonstrated 
     commitment to the interests of investors and the public, and 
     an understanding of the role that credit ratings play to a 
     broad range of investors. Terms of service shall be staggered 
     as determined by the Commission.
       (c) Duties.--The Board shall--
       (1) advise the Commission concerning the rules and 
     regulations required by the amendments made by this subtitle;
       (2) ensure that the Commission properly and fully executes 
     its oversight functions and responsibilities with the respect 
     to nationally recognized statistical rating organizations and 
     individual participants; and
       (3) issue an annual report to Congress detailing its work 
     and recommending any additional Congressional actions 
     necessary to aid the Commission and such additional reports 
     from time to time as appropriate when it feels that the 
     Commission is not properly executing its oversight functions.

     SEC. 6009. 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--
       (1) 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) and redesignating paragraph 
     (4) as paragraph (3); and
       (E) in paragraph (3) (as so redesignated)--
       (i) by striking subparagraph (A) and redesignating 
     subparagraphs (B) and (C) as subparagraphs (A) and (B), 
     respectively; and
       (ii) 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'';
       (2) 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''; and
       (3) in section 7(b)(1)(E)(i), by striking ``credit rating 
     entities, and other private economic'' and insert ``private 
     economic, credit,''.
       (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--
       (1) in the section heading, by striking ``BY RATING 
     ORGANIZATION''; and
       (2) by striking ``that is a nationally recognized 
     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 recognized 
     statistical rating organization'' and inserting ``meets such 
     standards of credit-worthiness that 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 
     recognized statistical rating organization'' and inserting 
     ``meets standards of credit-worthiness as defined 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 
     recognized statistical rating organization'' and inserting 
     ``meets standards of credit-worthiness as defined 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 ``rating'' and inserting 
     ``worthiness''.
       (g) Effective Date.--The amendments made by this section 
     shall take effect after the end of the 6-month period 
     beginning on the date of the enactment of this subtitle.

     SEC. 6010. REVIEW OF RELIANCE ON RATINGS.

       (a) Agency Review.--
       (1) Review.--Not later than 1 year after the date of the 
     enactment of this subtitle, each Federal agency listed in 
     paragraph (4) shall, to the extent applicable, review--
       (A) any regulation issued by such agency that requires the 
     use of an assessment of the credit-worthiness of a security 
     or money market instrument, and
       (B) any references to or requirements in such regulations 
     regarding credit ratings.
       (2) Modifications required.--Each such agency shall modify 
     any such regulations identified by the review conducted under 
     paragraph (1) to remove any reference to or requirement of 
     reliance on credit ratings and to substitute in such 
     regulations such standard of credit-worthiness as each 
     respective agency shall determine as appropriate for such 
     regulations. In making such determination, such agencies 
     shall seek to establish, to the extent feasible, uniform 
     standards of credit-worthiness for use by each such agency, 
     taking into account the entities regulated by each such 
     agency and the purposes for which such entities would rely on 
     such standards of credit-worthiness.
       (3) Report.--Upon conclusion of the review required under 
     paragraph (1), each Federal agency listed in paragraph (4) 
     shall transmit a report to Congress containing a description 
     of any modification of any regulation such agency made 
     pursuant to paragraph (2).
       (4) Applicable agencies.--The agencies required to conduct 
     the review and report required by this subsection are--
       (A) the Securities and Exchange Commission;
       (B) the Federal Deposit Insurance Corporation;

[[Page 31176]]

       (C) the Office of Thrift Supervision;
       (D) the Office of the Comptroller of the Currency;
       (E) the Board of Governors of the Federal Reserve;
       (F) the National Credit Union Administration; and
       (G) the Federal Housing Finance Agency.
       (b) GAO Review of Other Agencies.--
       (1) Review.--The Comptroller General shall conduct a 
     comprehensive review of the use of credit ratings by Federal 
     agencies other than those listed in subsection (a)(3), 
     including an analysis of the provisions of law or regulation 
     applicable to each such agency that refer to and require the 
     use of credit ratings by the agency, and the policies and 
     practices of each agency with respect to credit ratings.
       (2) Report.--Not later than 1 year after the date of the 
     enactment of this subtitle, the Comptroller General shall 
     transmit to Congress a report on the findings of the study 
     conducted pursuant to paragraph (1), including 
     recommendations for any legislation or rulemaking necessary 
     or appropriate in order for such agencies to reduce their 
     reliance on credit ratings.

     SEC. 6011. PUBLICATION OF RATING HISTORIES ON THE EDGAR 
                   SYSTEM.

       Not later than 180 days after the date of the enactment of 
     this subtitle, the Securities and Exchange Commission shall 
     revise its rules in section 240.17g-2(a) and (d) of title 17, 
     Code of Federal Regulations, to require that the random 
     sample of ratings histories of credit ratings required under 
     such rules to be disclosed on the website of a nationally 
     recognized statistical rating organization also be provided 
     to the Commission in a format consistent with publication by 
     the Commission on the EDGAR system.

     SEC. 6012. EFFECT OF RULE 436(G).

       Rule 436(g), promulgated by the Securities and Exchange 
     Commission under the Securities Act of 1933, shall have no 
     force or effect.

     SEC. 6013. STUDIES.

       (a) GAO Study.--
       (1) In general.--The Comptroller General shall conduct a 
     study of--
       (A) the implementation of this subtitle and the amendments 
     made by this subtitle by the Securities and Exchange 
     Commission;
       (B) the appropriateness of relying on ratings for use in 
     Federal, State, and local securities and banking regulations, 
     including for determining capital requirements; and
       (C) the effect of liability in private actions arising 
     under the Securities Exchange Act of 1934;
       (D) alternative means for compensating credit rating 
     agencies that would create incentives for accurate credit 
     ratings and what, if any, statutory changes would be required 
     to permit or facilitate the use of such alternative means of 
     compensation; and
       (E) alternative methodologies to assess credit risk, 
     including market-based measures.
       (2) Report.--Not later than 30 months after the date of 
     enactment of this subtitle, the Comptroller General shall 
     submit to Congress and the Securities Exchange Commission, a 
     report containing the findings under the study required by 
     subsection (a).
       (b) SEC Study on Assigning Credit Rating Agencies on a 
     Rotating Basis.--The Securities and Exchange Commission shall 
     undertake a study on creating a system whereby nationally 
     recognized statistical rating organizations are assigned on a 
     rotating basis to issuers and obligors seeking a credit 
     rating. Not later than 1 year after the date of enactment of 
     this subtitle, the Securities and Exchange Commission shall 
     transmit to Congress a report containing the findings of the 
     study.
       (c) SEC Study on Effect of New Requirements on NRSRO 
     Registration.--The Securities and Exchange Commission shall 
     conduct a study on the effect of the amendments made by 
     section 2 on credit rating agencies seeking to register as 
     nationally recognized statistical rating organizations, 
     including whether the new requirements in such amendments 
     deter credit rating agencies from registering as nationally 
     recognized statistical rating organizations. Not later than 1 
     year after the date of enactment of this subtitle, the 
     Commission shall transmit to the Committee on Financial 
     Services of the House of Representatives and the Committee on 
     Banking, Housing, and Urban Affairs of the Senate a report on 
     the findings of such study.
       (d) Study of Credit Ratings of Different Classes of 
     Bonds.--
       (1) Study.--The Securities and Exchange Commission shall 
     conduct a study of the treatment of different classes of 
     bonds (municipal versus corporate) by the nationally 
     recognized statistical rating organizations. Such study shall 
     examine--
       (A) whether there are fundamental differences in the 
     treatment of different classes of bonds by such rating 
     organizations that cause some classes of bonds to suffer from 
     undue discrimination;
       (B) if there are such differences, what are the causes of 
     such differences and how can they be alleviated;
       (C) whether there are factors other than risk of loss that 
     are appropriate for the credit ratings agencies to consider 
     when rating bonds, and do those factors vary across different 
     sectors
       (D) the types of financing arrangement used by municipal 
     issuers
       (E) the differing legal and regulatory regimes governing 
     disclosures for corporate bonds and municipal bonds;
       (F) the extent to which retail investors could be 
     disadvantaged by a single ratings scale; and
       (G) practices, policies, and methodologies by the 
     nationally recognized statistical rating organizations with 
     respect to rating municipal bonds.
       (2) Report.--Within 6 months after the date of enactment of 
     this subtitle, the Securities and Exchange Commission shall 
     submit a report on the results of the study required by 
     paragraph (1) to the Committee on Financial Services of the 
     House of Representatives and the Committee on Banking, 
     Housing, and Urban Development of the Senate. Such report 
     shall include as assessment of each of the issues and 
     subjects described in subparagraphs (A) through (G) of 
     paragraph (1).
       (e) SEC Study on Meaningful Multi Digit Rating Symbols.--
       (1) Study.--The Securities and Exchange Commission shall 
     conduct a study on the feasibility and desirability of 
     implementing a standardized rating system whereby ratings 
     symbols contain multiple characters, each representing a 
     range of default probabilities and loss expectations under 
     standardized and increasingly severe levels of market stress. 
     The study shall optimize the definitions of the symbols to 
     maximize their overall usefulness for users of credit 
     ratings.
       (2) Initial example for guidance.--An example to provide 
     initial guidance for the study is a ratings symbol consisting 
     of three digits, each of which corresponds to default 
     probabilities under different levels of market stress as 
     follows:
       (A) The first digit represents the default probability 
     under ``normal'' market stress, characterized by normal 
     economic fluctuations in addition to a 5 percent decline in 
     asset value and 2 percent increase in unemployment.
       (B) The second digit represents the default probability 
     under more severe market stress, characterized a 20 percent 
     decline in asset value and 5 percent increase in 
     unemployment.
       (C) The third digit represents the default probability 
     under extreme market stress, characterized by a 50 percent 
     decline in asset value and 10 percent increase in 
     unemployment.
       (3) Report.--Not later than 1 year after the date of the 
     enactment of this subtitle, the Commission shall transmit to 
     Congress a report of the study conducted pursuant to 
     paragraph (1), including recommendations on whether the 
     system similar to that described in paragraph (2) should be 
     implemented and, if so, any necessary legislation required to 
     implement such a system.
       (f) SEC Study on Ratings Standardization.--
       (1) In general.--The Securities and Exchange 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 shall 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 subtitle, the Securities and Exchange 
     Commission shall transmit to Congress a report containing the 
     findings of the study and the recommendations of the 
     Commission.

                  Subtitle C--Investor Protection Act

     SEC. 7001. SHORT TITLE.

       This subtitle may be cited as the ``Investor Protection Act 
     of 2009''.

                           PART 1--DISCLOSURE

     SEC. 7101. INVESTOR ADVISORY COMMITTEE ESTABLISHED.

       The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) 
     is amended by adding after section 4C the following new 
     section:

     ``SEC. 4D. INVESTOR ADVISORY COMMITTEE.

       ``(a) Establishment and Purpose.--There is established an 
     Investor Advisory Committee (in this section referred to as 
     the `Committee') to advise and consult with the Commission 
     on--
       ``(1) regulatory priorities and issues regarding new 
     products, trading strategies, fee structures and the 
     effectiveness of disclosures;
       ``(2) initiatives to protect investor interest; and
       ``(3) initiatives to promote investor confidence in the 
     integrity of the marketplace.
       ``(b) Membership.--
       ``(1) Appointment.--The Chairman of the Commission shall 
     appoint the members of the Committee, which members shall--
       ``(A) represent the interests of individual investors;
       ``(B) represent the interests of institutional investors; 
     and

[[Page 31177]]

       ``(C) use a wide range of investment approaches.
       ``(2) Members not commission employees.--Members shall not 
     be considered employees or agents of the Commission solely 
     because of membership on the Committee.
       ``(c) Meetings.--The Committee shall meet from time to time 
     at the call of the Commission, but, at a minimum, shall meet 
     at least twice each year.
       ``(d) Compensation and Travel Expenses.--Members of the 
     Committee who are not full-time employees of the United 
     States shall--
       ``(1) be entitled to receive compensation at a rate fixed 
     by the Commission while attending meetings of the Committee, 
     including travel time; and
       ``(2) be allowed travel expenses, including transportation 
     and subsistence, while away from their homes or regular 
     places of business.
       ``(e) Committee Findings.--Nothing in this section requires 
     the Commission to accept, agree, or act upon the findings or 
     recommendations of the Committee.
       ``(f) Authorization of Appropriations.--There is authorized 
     to be appropriated to the Commission such sums as are 
     necessary for the activities of the Committee.''.

     SEC. 7102. CLARIFICATION OF THE COMMISSION'S AUTHORITY TO 
                   ENGAGE IN CONSUMER TESTING.

       (a) Amendment to Securities Act of 1933.--Section 19 of the 
     Securities Act of 1933 (15 U.S.C. 77s) is amended by adding 
     at the end the following new subsection:
       ``(e) For the purposes of evaluating its rules and programs 
     and for considering, proposing, adopting, or engaging in 
     rules or programs, the Commission is authorized to gather 
     information, communicate with investors or other members of 
     the public, and engage in such temporary or experimental 
     programs as the Commission in its discretion determines is in 
     the public interest or for the protection of investors. The 
     Commission may delegate to its staff some or all of the 
     authority conferred by this subsection.''.
       (b) Amendment to Securities Exchange Act of 1934.--Section 
     23 of the Securities Exchange Act of 1934 (15 U.S.C. 78w) is 
     amended by redesignating subsections (b), (c), and (d) as 
     subsections (c), (d), and (e), respectively, and inserting 
     after subsection (a) the following:
       ``(b) For the purposes of evaluating its rules and programs 
     and for considering proposing, adopting, or engaging in rules 
     or programs, the Commission is authorized to gather 
     information, communicate with investors or other members of 
     the public, and engage in such temporary or experimental 
     programs as the Commission in its discretion determines is in 
     the public interest or for the protection of investors. The 
     Commission may delegate to its staff some or all of the 
     authority conferred by this subsection.''.
       (c) Amendment to Investment Company Act of 1940.--Section 
     38 of the Investment Company Act of 1940 (15 U.S.C. 80a-38) 
     is amended by adding at the end the following new subsection:
       ``(d) Gathering Information.--For the purposes of 
     evaluating its rules and programs and for considering 
     proposing, adopting, or engaging in rules or programs, the 
     Commission is authorized to gather information, communicate 
     with investors or other members of the public, and engage in 
     such temporary or experimental programs as the Commission in 
     its discretion determines is in the public interest or for 
     the protection of investors. The Commission may delegate to 
     its staff some or all of the authority conferred by this 
     subsection.''.
       (d) Amendment to the Investment Advisers Act of 1940.--
     Section 211 of the Investment Advisers Act of 1940 (15 U.S.C. 
     80b-11) (as amended by section 5008(2)) is further amended by 
     adding at the end the following new subsection:
       ``(f) For the purposes of evaluating its rules and programs 
     and for considering proposing, adopting, or engaging in rules 
     or programs, the Commission is authorized to gather 
     information, communicate with investors or other members of 
     the public, and engage in such temporary or experimental 
     programs as the Commission in its discretion determines is in 
     the public interest or for the protection of investors. The 
     Commission may delegate to its staff some or all of the 
     authority conferred by this subsection.''.

     SEC. 7103. ESTABLISHMENT OF A FIDUCIARY DUTY FOR BROKERS, 
                   DEALERS, AND INVESTMENT ADVISERS, AND 
                   HARMONIZATION OF REGULATION.

       (a) In General.--
       (1) Securities exchange act of 1934.--Section 15 of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78o) (as amended 
     by section 1951(c)) is further amended by adding at the end 
     the following new subsections:
       ``(m) Standard of Conduct.--
       ``(1) In general.--Notwithstanding any other provision of 
     this Act or the Investment Advisers Act of 1940, the 
     Commission shall promulgate rules to provide that, with 
     respect to a broker or dealer, when providing personalized 
     investment advice about securities to a retail customer (and 
     such other customers as the Commission may by rule provide), 
     the standard of conduct for such broker or dealer with 
     respect to such customer shall be the same as the standard of 
     conduct applicable to an investment adviser under the 
     Investment Advisers Act of 1940. The receipt of compensation 
     based on commission or other standard compensation for the 
     sale of securities shall not, in and of itself, be considered 
     a violation of such standard applied to a broker or dealer.
       ``(2) Disclosure of range of products offered.--Where a 
     broker or dealer sells only proprietary or other limited 
     range of products, as determined by the Commission, the 
     Commission shall by rule require that such broker or dealer 
     provide notice to each retail customer and obtain the consent 
     or acknowledgment of the customer. The sale of only 
     proprietary or other limited range of products by a broker or 
     dealer shall not, in and of itself, be considered a violation 
     of the standard set forth in paragraph (1).
       ``(3) Retail customer defined.--For purposes of this 
     subsection, the term `retail customer' means a natural 
     person, or the legal representative of such natural person, 
     who--
       ``(A) receives personalized investment advice about 
     securities from a broker or dealer; and
       ``(B) uses such advice primarily for personal, family, or 
     household purposes.
       ``(n) Other Matters.--The Commission shall--
       ``(1) facilitate the provision of simple and clear 
     disclosures to investors regarding the terms of their 
     relationships with brokers, dealers, and investment advisers, 
     including any material conflicts of interest; and
       ``(2) examine and, where appropriate, promulgate rules 
     prohibiting or restricting certain sales practices, conflicts 
     of interest, and compensation schemes for brokers, dealers, 
     and investment advisers that the Commission deems contrary to 
     the public interest and the protection of investors.''.
       (3) Investment advisers act of 1940.--Section 211 of the 
     Investment Advisers Act of 1940, as amended by section 
     7102(d), is further amended by adding at the end the 
     following new subsections:
       ``(g) Standard of Conduct.--
       ``(1) In general.--The Commission shall promulgate rules to 
     provide that the standard of conduct for all brokers, 
     dealers, and investment advisers, when providing personalized 
     investment advice about securities to retail customers (and 
     such other customers as the Commission may by rule provide), 
     shall be to act in the best interest of the customer without 
     regard to the financial or other interest of the broker, 
     dealer, or investment adviser providing the advice. In 
     accordance with such rules, any material conflicts of 
     interest shall be disclosed and may be consented to by the 
     customer. Such rules shall provide that such standard of 
     conduct shall be no less stringent than the standard 
     applicable to investment advisers under section 206(1) and 
     (2) of this Act when providing personalized investment advice 
     about securities, except the Commission shall not ascribe a 
     meaning to the term `customer' that would include an investor 
     in a private fund managed by an investment adviser, where 
     such private fund has entered into an advisory contract with 
     such adviser. The receipt of compensation based on commission 
     or fees shall not, in and of itself, be considered a 
     violation of such standard applied to a broker, dealer, or 
     investment adviser.
       ``(2) Retail customer defined.--For purposes of this 
     subsection, the term `retail customer' means a natural 
     person, or the legal representative of such natural person, 
     who--
       ``(A) receives personalized investment advice about 
     securities from a broker, dealer, or investment adviser; and
       ``(B) uses such advice primarily for personal, family, or 
     household purposes.
       ``(h) Other Matters.--The Commission shall--
       ``(1) facilitate the provision of simple and clear 
     disclosures to investors regarding the terms of their 
     relationships with brokers, dealers, and investment advisers, 
     including any material conflicts of interest; and
       ``(2) examine and, where appropriate, promulgate rules 
     prohibiting or restricting certain sales practices, conflicts 
     of interest, and compensation schemes for brokers, dealers, 
     and investment advisers that the Commission deems contrary to 
     the public interest and the protection of investors.''.
       (b) Harmonization of Enforcement.--
       (1) Securities exchange act of 1934.--Section 15 of the 
     Securities Exchange Act of 1934, as amended by subsection 
     (a)(1), is further amended by adding at the end the following 
     new subsection:
       ``(o) Harmonization of Enforcement.--The enforcement 
     authority of the Commission with respect to violations of the 
     standard of conduct applicable to a broker or dealer 
     providing personalized investment advice about securities to 
     a retail customer shall include--
       ``(1) the enforcement authority of the Commission with 
     respect to such violations provided under this Act, and
       ``(2) the enforcement authority of the Commission with 
     respect to violations of the standard of conduct applicable 
     to an investment advisor under the Investment Advisers Act of 
     1940, including the authority to impose sanctions for such 
     violations, and

     the Commission shall seek to prosecute and sanction violators 
     of the standard of conduct applicable to a broker or dealer 
     providing personalized investment advice about securities to 
     a retail customer under this Act to

[[Page 31178]]

     same extent as the Commission prosecutes and sanctions 
     violators of the standard of conduct applicable to an 
     investment advisor under the Investment Advisers Act of 
     1940.''.
       (2) Investment advisers act of 1940.--Section 211 of the 
     Investment Advisers Act of 1940, as amended by subsection 
     (a)(2), is further amended by adding at the end the following 
     new subsection:
       ``(i) Harmonization of Enforcement.--The enforcement 
     authority of the Commission with respect to violations of the 
     standard of conduct applicable to an investment adviser shall 
     include--
       ``(1) the enforcement authority of the Commission with 
     respect to such violations provided under this Act, and
       ``(2) the enforcement authority of the Commission with 
     respect to violations of the standard of conduct applicable 
     to a broker or dealer providing personalized investment 
     advice about securities to a retail customer under the 
     Securities Exchange Act of 1934, including the authority to 
     impose sanctions for such violations, and

     the Commission shall seek to prosecute and sanction violators 
     of the standard of conduct applicable to an investment 
     advisor under this Act to same extent as the Commission 
     prosecutes and sanctions violators of the standard of conduct 
     applicable to a broker or dealer providing personalized 
     investment advice about securities to a retail customer under 
     the Securities Exchange Act of 1934.''.

     SEC. 7104. COMMISSION STUDY ON DISCLOSURE TO RETAIL CUSTOMERS 
                   BEFORE PURCHASE OF PRODUCTS OR SERVICES.

       (a) Study Required.--Prior to proposing any rules or 
     regulations pursuant to subsection (b)(1) regarding the 
     manner in which investment products or services are sold or 
     provided in the United States to retail customers or the 
     information that must be provided to retail customers prior 
     to the purchase of such products or services, and within 180 
     days after the date of the enactment of this subtitle, the 
     Securities and Exchange Commission shall publish a study that 
     examines--
       (1) the nature of a ``retail customer'', taking into 
     consideration the definition in section 15(k) of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78o), as amended 
     by section 7103 of this subtitle;
       (2) the range of products and services sold or provided to 
     retail customers, and the sellers or providers of such 
     products and services, that are within the Commission's 
     jurisdiction;
       (3) how such products and services are sold or provided to 
     retail customers, the fees charged for such products and 
     services, and the conflicts of interest that may arise during 
     the sales process or provision of services;
       (4) information that retail customers should receive prior 
     to purchasing each product or service, and the appropriate 
     person or entity to provide such information; and
       (5) ways to ensure that, where possible, reasonably similar 
     products and services are subject to similar regulatory 
     treatment, including with respect to information that must be 
     provided to retail customers prior to the purchase of such 
     products or services and how such information is provided.
       (b) Rulemaking.--
       (1) Notwithstanding any other provision of the Securities 
     Act of 1933 (15 U.S.C. 77a et seq.) or the Investment Company 
     Act of 1940 (15 U.S.C. 80a-1 et seq.), following completion 
     of the study required by subsection (a), the Commission is 
     authorized to promulgate rules to require that the 
     appropriate persons or entities provide designated documents 
     or information to retail customers prior to the purchase of 
     identified investment products or services. Any such rules 
     shall--
       (A) take into account the findings of the study conducted 
     pursuant to subsection (a);
       (B) take into consideration, to the extent possible, the 
     need for such documents and information to be consistent and 
     comparable across investment products or services sold or 
     provided to retail customers; and
       (C) reduce, to the extent possible, disruptions to the 
     purchase process for investment products and services sold or 
     provided to retail customers, by means such as permitting 
     required disclosures to be made via the Internet.
       (2) Notwithstanding paragraph (1), the Commission is 
     authorized to promulgate rules in connection with--
       (A) the implementation of section 7103; and
       (B) disclosure to retail customers other than in connection 
     with the purchase of investment products or services.

     SEC. 7105. BENEFICIAL OWNERSHIP AND SHORT-SWING PROFIT 
                   REPORTING.

       (a) Beneficial Ownership Reporting.--Section 13 of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78m) is amended--
       (1) in subsection (d)(1)--
       (A) by inserting after ``within ten days after such 
     acquisition'' the following: ``or within such shorter time as 
     the Commission may establish by rule''; and
       (B) by striking ``send to the issuer of the security at its 
     principal executive office, by registered or certified mail, 
     send to each exchange where the security is traded, and'';
       (2) in subsection (d)(2)--
       (A) by striking ``in the statements to the issuer and the 
     exchange, and''; and
       (B) by striking ``shall be transmitted to the issuer and 
     the exchange and'';
       (3) in subsection (g)(1), by striking ``shall send to the 
     issuer of the security and''; and
       (4) in subsection (g)(2)--
       (A) by striking ``sent to the issuer and''; and
       (B) by striking ``shall be transmitted to the issuer and''.
       (b) Short-swing Profit Reporting.--Section 16(a) of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78p(a)) is 
     amended--
       (1) in paragraph (1), by striking ``(and, if such security 
     is registered on a national securities exchange, also with 
     the exchange)''; and
       (2) in paragraph (2)(B), by inserting after ``officer'' the 
     following: ``, or within such shorter time as the Commission 
     may establish by rule''.

     SEC. 7106. REVISION TO RECORDKEEPING RULES.

       (a) Investment Company Act of 1940 Amendments.--Section 31 
     of the Investment Company Act of 1940 (15 U.S.C. 80a-30) is 
     amended--
       (1) in subsection (a)(1), by adding at the end the 
     following: ``Each person with custody or use of a registered 
     investment company's securities, deposits, or credits shall 
     maintain and preserve all records that relate to the person's 
     custody or use of the registered investment company's 
     securities, deposits, or credits for such period or periods 
     as the Commission, by rules and regulations, may prescribe as 
     necessary or appropriate in the public interest or for the 
     protection of investors.''; and
       (2) in subsection (b), by adding at the end the following 
     new paragraph:
       ``(4) Records of persons with custody or use.--
       ``(A) In general.--Notwithstanding paragraph (1), records 
     of persons with custody or use of a registered investment 
     company's securities, deposits, or credits, that relate to 
     such custody or use, are subject at any time, or from time to 
     time, to such reasonable periodic, special, or other 
     examinations and other information and document requests by 
     representatives of the Commission as the Commission deems 
     necessary or appropriate in the public interest or for the 
     protection of investors.
       ``(B) Certain persons subject to other regulation.--Persons 
     subject to regulation and examination by a Federal financial 
     institution regulatory agency (as such term is defined under 
     section 212(c)(2) of title 18, United States Code) may 
     satisfy any examination request, information request, or 
     document request described under subparagraph (A), by 
     providing the Commission with a detailed listing, in writing, 
     of the registered investment company's securities, deposits, 
     or credits within such person's custody or use.''.
       (b) Investment Advisers Act of 1940 Amendment.--Section 204 
     of the Investment Advisers Act of 1940 (15 U.S.C. 80b-4) is 
     amended by adding at the end the following new subsection:
       ``(d) Records of Persons With Custody or Use.--
       ``(1) In general.--Records of persons with custody or use 
     of a client's securities, deposits, or credits, that relate 
     to such custody or use, are subject at any time, or from time 
     to time, to such reasonable periodic, special, or other 
     examinations and other information and document requests by 
     representatives of the Commission as the Commission deems 
     necessary or appropriate in the public interest or for the 
     protection of investors.
       ``(2) Certain persons subject to other regulation.--Persons 
     subject to regulation and examination by a Federal financial 
     institution regulatory agency (as such term is defined under 
     section 212(c)(2) of title 18, United States Code) may 
     satisfy any examination request, information request, or 
     document request described under paragraph (1), by providing 
     the Commission with a detailed listing, in writing, of the 
     client's securities, deposits, or credits within such 
     person's custody or use.''.

     SEC. 7107. STUDY ON ENHANCING INVESTMENT ADVISOR 
                   EXAMINATIONS.

       (a) Study Required.--
       (1) In general.--The Commission shall review and analyze 
     the need for enhanced examination and enforcement resources 
     for investment advisers.
       (2) Areas of consideration.--The study required by this 
     subsection shall examine--
       (A) the number and frequency of examinations of investment 
     advisers by the Commission over the 5 years preceding the 
     date of the enactment of this subtitle;
       (B) the extent to which having Congress authorize the 
     Commission to designate one or more self-regulatory 
     organizations to augment the Commission's efforts in 
     overseeing investment advisers would improve the frequency of 
     examinations of investment advisers; and
       (C) current and potential approaches to examining the 
     investment advisory activities of dually registered broker-
     dealers and investment advisers or affiliated broker-dealers 
     and investment advisers.
       (b) Report Required.--The Commission shall report its 
     findings to the Committee on Financial Services of the House 
     of Representatives and the Committee on Banking, Housing, and 
     Urban Affairs of the Senate, not later than 180 days after 
     the date of enactment of this subtitle, and shall use such

[[Page 31179]]

     findings to revise its rules and regulations, as necessary. 
     The report shall include a discussion of regulatory or 
     legislative steps that are recommended or that may be 
     necessary to address concerns identified in the study.

     SEC. 7108. GAO STUDY OF FINANCIAL PLANNING.

       (a) Study Required.--The Comptroller General of the United 
     States shall conduct a study on the regulation and oversight 
     of financial planning.   The study shall consider--
       (1) the unique role of financial planners in providing 
     comprehensive advice in investment planning, income tax 
     planning, education planning, retirement planning, estate 
     planning, risk management, and other areas with respect to 
     the management of financial resources; and
       (2) any gaps in the regulation of financial planners given 
     existing State and Federal regulation of financial planning 
     activities and the need to provide related consumer 
     protections for such financial planning activities.
       (b) Report.--Not later than the end of the 180-day period 
     beginning on the date of the enactment of this subtitle, the 
     Comptroller General of the United States shall submit to the 
     Congress a report containing the findings and determinations 
     made by the Comptroller General in carrying out the study 
     required under subsection (a), including recommendations for 
     the appropriate regulation of, or standards for, financial 
     planners as a profession and how such regulations or 
     standards should be established.

                    PART 2--ENFORCEMENT AND REMEDIES

     SEC. 7201. AUTHORITY TO RESTRICT MANDATORY PRE-DISPUTE 
                   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 7103, is further amended by adding at the 
     end the following new subsection:
       ``(p) Authority to Restrict Mandatory Pre-dispute 
     Arbitration.--The Commission, by rule, may prohibit, or 
     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 future dispute 
     between them arising under the Federal securities laws, the 
     rules and regulations thereunder, or the rules of a self-
     regulatory organization if it finds that such prohibition, 
     imposition of conditions, or limitations are 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 new subsection:
       ``(f) Authority to Restrict Mandatory Pre-dispute 
     Arbitration.--The Commission, by rule, may prohibit, or 
     impose conditions or limitations on the use of, agreements 
     that require customers or clients of any investment adviser 
     to arbitrate any future dispute between them arising under 
     the Federal securities laws, the rules and regulations 
     thereunder, or the rules of a self-regulatory organization if 
     it finds that such prohibition, imposition of conditions, or 
     limitations are in the public interest and for the protection 
     of investors.''.

     SEC. 7202. COMPTROLLER GENERAL STUDY TO REVIEW SECURITIES 
                   ARBITRATION SYSTEM.

       (a) Study.--The Comptroller General of the United States 
     shall conduct a study to review--
       (1) the costs to parties of an arbitration proceeding using 
     the arbitration system operated by the Financial Industry 
     Regulatory Authority and overseen by the Securities and 
     Exchange Commission as compared to litigation;
       (2) the percentage of recovery of the total amount of a 
     claim in an arbitration proceeding using the arbitration 
     system operated by the Financial Industry Regulatory 
     Authority and overseen by the Securities and Exchange 
     Commission; and
       (3) other additional issues as may be raised during the 
     course of the study conducted under this subsection.
       (b) Report.--Not later than 1 year after the date of 
     enactment of this subtitle, the Comptroller General of the 
     United States shall submit to the Committee on Financial 
     Services of the House of Representatives and the Committee on 
     Banking, Housing, and Urban Affairs of the Senate a report on 
     the results of the study required by subsection (a), 
     including in such report recommendations for improvements to 
     the arbitration system referenced in such subsection.

     SEC. 7203. WHISTLEBLOWER PROTECTION.

       (a) In General.--The Securities Exchange Act of 1934 (15 
     U.S.C. 78a et seq.) is amended by adding after section 21E 
     the following new section:

     ``SEC. 21F. SECURITIES WHISTLEBLOWER INCENTIVES AND 
                   PROTECTION.

       ``(a) In General.--In any judicial or administrative action 
     brought by the Commission under the securities laws that 
     results in monetary sanctions exceeding $1,000,000, the 
     Commission, under regulations prescribed by the Commission 
     and subject to subsection (b), may pay an award or awards not 
     exceeding an amount equal to 30 percent, in total, of the 
     monetary sanctions imposed in the action or related actions 
     to one or more whistleblowers who voluntarily provided 
     original information to the Commission that led to the 
     successful enforcement of the action. Any amount payable 
     under the preceding sentence shall be paid from the fund 
     described in subsection (f).
       ``(b) Determination of Amount of Award; Denial of Award.--
       ``(1) Determination of amount of award.--The determination 
     of the amount of an award, within the limit specified in 
     subsection (a), shall be in the sole discretion of the 
     Commission. The Commission may take into account the 
     significance of the whistleblower's information to the 
     success of the judicial or administrative action described in 
     subsection (a), the degree of assistance provided by the 
     whistleblower and any legal representative of the 
     whistleblower in such action, the Commission's programmatic 
     interest in deterring violations of the securities laws by 
     making awards to whistleblowers who provide information that 
     leads to the successful enforcement of such laws, and such 
     additional factors as the Commission may establish by rules 
     or regulations.
       ``(2) Denial of award.--No award under subsection (a) shall 
     be made--
       ``(A) to any whistleblower who is, or was at the time he or 
     she acquired the original information submitted to the 
     Commission, a member, officer, or employee of any appropriate 
     regulatory agency, the Department of Justice, the Public 
     Company Accounting Oversight Board, or a self-regulatory 
     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; or
       ``(C) to any whistleblower who fails to submit information 
     to the Commission in such form as the Commission may, by 
     rule, require.
       ``(c) Representation.--
       ``(1) Permitted representation.--Any whistleblower who 
     makes a claim for an award under subsection (a) may be 
     represented by counsel.
       ``(2) Required representation.--Any whistleblower who makes 
     a claim for an award under subsection (a) must be represented 
     by counsel if the whistleblower submits the information upon 
     which the claim is based anonymously. Prior to the payment of 
     an award, the whistleblower must disclose his or her identity 
     and provide such other information as the Commission may 
     require.
       ``(d) No Contract Necessary.--No contract with the 
     Commission is necessary for any whistleblower to receive an 
     award under subsection (a), unless the Commission, by rule or 
     regulation, so requires.
       ``(e) Appeals.--Any determinations under this section, 
     including whether, to whom, or in what amounts to make 
     awards, shall be in the sole discretion of the Commission, 
     and any such determinations shall be final and not subject to 
     judicial review.
       ``(f) 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' 
     (referred to in this section as the `Fund').
       ``(2) Use of fund.--The Fund shall be available to the 
     Commission, without further appropriation or fiscal year 
     limitation, for the following purposes:
       ``(A) Paying awards to whistleblowers as provided in 
     subsection (a).
       ``(B) Funding investor education initiatives designed to 
     help investors protect themselves against securities fraud or 
     other violations of the securities laws, or the rules and 
     regulations thereunder.
       ``(3) Deposits and credits.--There shall be deposited into 
     or credited to the Fund--
       ``(A) any monetary sanction collected by the Commission in 
     any judicial or administrative action brought by the 
     Commission under the securities laws that is not added to a 
     disgorgement fund or other fund pursuant to section 308 of 
     the Sarbanes-Oxley Act of 2002 or otherwise distributed to 
     victims of a violation of the securities laws, or the rules 
     and regulations thereunder, underlying such action, unless 
     the balance of the Fund at the time the monetary sanction is 
     collected exceeds $100,000,000;
       ``(B) any monetary sanction added to a disgorgement fund or 
     other fund pursuant to section 308 of the Sarbanes-Oxley Act 
     of 2002 that is not distributed to the victims for whom the 
     disgorgement fund or other fund was established, unless the 
     balance of the 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 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

[[Page 31180]]

     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 
     Banking, Housing, and Urban Affairs of the Senate, and the 
     Committee on Financial Services 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 
     that were granted and the types of cases in which awards were 
     granted during the preceding fiscal year;
       ``(B) investor 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 (a);
       ``(G) the amount paid from the Fund during the preceding 
     fiscal year for investor education initiatives described in 
     paragraph (1)(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.
       ``(g) Protection of Whistleblowers.--
       ``(1) Prohibition against retaliation.--
       ``(A) In general.--No employer may discharge, demote, 
     suspend, threaten, harass, or in any other manner 
     discriminate against an employee, contractor, or agent in the 
     terms and conditions of employment because of any lawful act 
     done by the employee, contractor, or agent in providing 
     information to the Commission in accordance with subsection 
     (a), or 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.--An action under this 
     subsection may not be brought more than 6 years after the 
     date on which the violation of subparagraph (A) occurred, or 
     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), but in no event after 10 years after the date on which 
     the violation occurs.
       ``(C) Relief.--An employee, contractor, or agent prevailing 
     in any action brought under subparagraph (B) shall be 
     entitled to all relief necessary to make that employee, 
     contractor, or agent whole, including reinstatement with the 
     same seniority status that the employee, contractor, or agent 
     would have had, but for the discrimination, 2 times the 
     amount of back pay, with interest, and compensation for any 
     special damages sustained as a result of the discrimination, 
     including litigation costs, expert witness fees, and 
     reasonable attorneys' fees.
       ``(2) Confidentiality.--
       ``(A) 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 an agency or establishment of the Federal 
     Government, under the Freedom of Information Act (5 U.S.C. 
     552), or otherwise, 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 (B). 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. Nothing herein is intended to limit the Attorney 
     General's ability 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.--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 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) the Public Company Accounting Oversight Board,
       ``(v) State attorneys general in connection with any 
     criminal investigation, and
       ``(vi) any appropriate State regulatory authority,

     each of which shall maintain such information 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.
       ``(h) Provision of False Information.--Any whistleblower 
     who knowingly and willfully makes any false, fictitious, or 
     fraudulent statement or representation, or 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.
       ``(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.
       ``(j) Definitions.--For purposes of this section, the 
     following terms have the following meanings:
       ``(1) Original information.--The term `original 
     information' means information that--
       ``(A) is based on the direct and independent knowledge or 
     analysis of a whistleblower;
       ``(B) is not known to the Commission from any other source, 
     unless the whistleblower is the initial source of the 
     information; and
       ``(C) is not based on allegations in a judicial or 
     administrative hearing, in a governmental report, hearing, 
     audit, or investigation, or from the news media, unless the 
     whistleblower is the initial source of the information that 
     resulted in the judicial or administrative hearing, 
     governmental report, hearing, audit, or investigation, or the 
     news media's report on the allegations.
       ``(2) Monetary sanctions.--The term `monetary sanctions', 
     when used with respect to any judicial or administrative 
     action, means any monies, including but not limited to 
     penalties, disgorgement, and interest, ordered to be paid, 
     and 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.
       ``(3) 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 subsection (g)(2)(B) that is based upon the same 
     original information provided by a whistleblower pursuant to 
     subsection (a) that led to the successful enforcement of the 
     Commission action.
       ``(4) Whistleblower.--The term `whistleblower' means an 
     individual, or two or more individuals acting jointly, who 
     submit information to the Commission as provided in this 
     section.''.
       (b) Administration and Enforcement.--The Securities and 
     Exchange Commission shall establish a separate office within 
     the Commission to administer and enforce the provisions of 
     section 21F of the Securities Exchange Act of 1934, as added 
     by subsection (a). Such office shall report annually to 
     Congress on its activities, whistleblower complaints, and the 
     response of the Commission to such complaints.

     SEC. 7204. CONFORMING AMENDMENTS FOR WHISTLEBLOWER 
                   PROTECTION.

       (a) In General.--Each of the following provisions is 
     amended by inserting ``and section 21F of the Securities 
     Exchange Act of 1934'' after ``the Sarbanes-Oxley Act of 
     2002'':
       (1) Section 20(d)(3)(A) of the Securities Act of 1933 (15 
     U.S.C. 77t(d)(3)(A)).
       (2) Section 42(e)(3)(A) of the Investment Company Act of 
     1940 (15 U.S.C. 80a-41(e)(3)(A)).
       (3) Section 209(e)(3)(A) of the Investment Advisers Act of 
     1940 (15 U.S.C. 80b-9(e)(3)(A)).
       (b) Securities Exchange Act.--The Securities Exchange Act 
     of 1934 (15 U.S.C. 78a et seq.) is amended--
       (1) in section 21(d)(3)(C)(i) (15 U.S.C. 78u(d)(3)(C)(i)), 
     by inserting ``and section 21F of this title'' after ``the 
     Sarbanes-Oxley Act of 2002'';
       (2) in section 21A(d)(1) (15 U.S.C. 78u-1(d)(1))--
       (A) by striking ``(subject to subsection (e))''; and
       (B) by inserting ``and section 21F of this title'' after 
     ``the Sarbanes-Oxley Act of 2002''; and
       (3) in section 21A, by striking subsection (e) and 
     redesignating subsections (f) and (g) as subsection (e) and 
     (f), respectively.

     SEC. 7205. IMPLEMENTATION AND TRANSITION PROVISIONS FOR 
                   WHISTLEBLOWER PROTECTIONS.

       (a) Implementing Rules.--The Securities and Exchange 
     Commission shall issue final

[[Page 31181]]

     regulations implementing the provisions of section 21F of the 
     Securities Exchange Act of 1934, as added by this part, no 
     later than 270 days after the date of enactment of this 
     subtitle.
       (b) Original Information.--Information submitted to the 
     Commission by a whistleblower in accordance with regulations 
     implementing the provisions of section 21F of the Securities 
     Exchange Act of 1934, as added by this part, shall not lose 
     its status as original information, as defined in subsection 
     (i)(1) of such section, solely because the whistleblower 
     submitted such information prior to the effective date of 
     such regulations, provided such information was submitted 
     after the date of enactment of this subtitle, or related to 
     insider trading violations for which a bounty could have been 
     paid at the time such information was submitted.
       (c) Awards.--A whistleblower may receive an award pursuant 
     to section 21F of the Securities Exchange Act of 1934, as 
     added by this part, 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. 7206. COLLATERAL BARS.

       (a) Section 15 of the Securities Exchange Act of 1934.--
     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, transfer agent, or 
     nationally recognized statistical rating organization,''.
       (b) Section 15B of the Securities Exchange Act of 1934.--
     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, transfer 
     agent, or nationally recognized statistical rating 
     organization,''.
       (c) Section 17A of the Securities Exchange Act of 1934.--
     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, or 
     nationally recognized statistical rating organization,''.
       (d) Section 203 of the 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, transfer agent, or 
     nationally recognized statistical rating organization,''.

     SEC. 7207. AIDING AND ABETTING AUTHORITY UNDER THE SECURITIES 
                   ACT AND THE INVESTMENT COMPANY ACT.

       (a) Under the Securities Act of 1933.--Section 15 of the 
     Securities Act of 1933 (15 U.S.C. 77o) is amended--
       (1) by striking ``Every person who'' and inserting ``(a) 
     Controlling Persons.--Every person who''; and
       (2) by adding at the end the following:
       ``(b) Prosecution of Persons Who Aid and Abet Violations.--
     For purposes of any action brought by the Commission under 
     subparagraph (b) or (d) of section 20, any person that 
     knowingly or recklessly provides substantial assistance to 
     another person in violation of a provision of this Act, or of 
     any rule or regulation issued under this Act, shall be deemed 
     to be in violation of such provision to the same extent as 
     the person to whom such assistance is provided.''.
       (c) Under the Investment Company Act of 1940.--Section 48 
     of the Investment Company Act of 1940 (15 U.S.C. 80a-48) is 
     amended by redesignating subsection (b) as subsection (c) and 
     inserting after subsection (a) the following:
       ``(b) For purposes of any action brought by the Commission 
     under subsection (d) or (e) of section 42, any person that 
     knowingly or recklessly provides substantial assistance to 
     another person in violation of a provision of this Act, or of 
     any rule or regulation issued under this Act, shall be deemed 
     to be in violation of such provision to the same extent as 
     the person to whom such assistance is provided.''.

     SEC. 7208. AUTHORITY TO IMPOSE PENALTIES FOR AIDING AND 
                   ABETTING VIOLATIONS OF THE INVESTMENT ADVISERS 
                   ACT.

       Section 209 of the Investment Advisers Act of 1940 (15 
     U.S.C. 80b-9) is amended by inserting at the end the 
     following new subsections:
       ``(f) Aiding and Abetting.--For purposes of any action 
     brought by the Commission under subsection (e), any person 
     that knowingly or recklessly has aided, abetted, counseled, 
     commanded, induced, or procured a violation of any provision 
     of this Act, or of any rule, regulation, or order hereunder, 
     shall be deemed to be in violation of such provision, rule, 
     regulation, or order to the same extent as the person that 
     committed such violation.
       ``(g) Enforcement by National Securities Associations.--The 
     Commission may permit or require a national securities 
     association registered under the Securities Exchange Act of 
     1934 to enforce compliance by its members and persons 
     associated with its members with the provisions of this Act, 
     the rules and regulations thereunder, and to adopt such rules 
     (subject to any rule or order of the Commission pursuant to 
     the Securities Exchange Act of 1934) as the association may 
     deem necessary and in the public interest to further the 
     purposes of this Act.''.

     SEC. 7209. DEADLINE FOR COMPLETING EXAMINATIONS, INSPECTIONS 
                   AND ENFORCEMENT ACTIONS.

       The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) 
     is amended by inserting after section 4D (as added by section 
     7101) the following new section:

     ``SEC. 4E. DEADLINE FOR COMPLETING ENFORCEMENT INVESTIGATIONS 
                   AND COMPLIANCE EXAMINATIONS AND INSPECTIONS.

       ``(a) Enforcement Investigations.--
       ``(1) In general.--Not later than 180 days after the date 
     on which Commission staff provide a written Wells 
     notification to any person, the Commission staff shall either 
     file an action against such person or provide notice to the 
     Director of the Division of Enforcement of its intent to not 
     file an action.
       ``(2) Exceptions for certain complex actions.--
     Notwithstanding paragraph (1), if the head of any division or 
     office within the Commission or his designee determines that 
     a particular enforcement investigation is sufficiently 
     complex such that a determination regarding the filing of an 
     action against a person cannot be completed within the 
     deadline specified in paragraph (1), the head of any division 
     or office within the Commission or his designee may, after 
     providing notice to the Chairman of the Commission, extend 
     such deadline as needed for one additional 180-day period. If 
     after the additional 180-day period the head of any division 
     or office within the Commission or his designee determines 
     that a particular enforcement investigation is sufficiently 
     complex such that a determination regarding the filing of an 
     action against a person cannot be completed within the 
     additional 180-day period, the head of any division or office 
     within the Commission or his designee may, after providing 
     notice to and receiving approval of the Commission, extend 
     such deadline as needed for one or more additional successive 
     180-day periods.
       ``(b) Compliance Examinations and Inspections.--
       ``(1) In general.--Not later than 180 days after the date 
     on which Commission staff completes the on-site portion of 
     its compliance examination or inspection or receives all 
     records requested from the entity being examined or 
     inspected, whichever is later, Commission staff shall provide 
     the entity being examined or inspected with written 
     notification indicating either that the examination or 
     inspection has concluded without findings or that the staff 
     requests the entity undertake corrective action.
       ``(2) Exception for certain complex actions.--
     Notwithstanding paragraph (1), if the head of any division or 
     office within the Commission or his designee determines that 
     a particular compliance examination or inspection is 
     sufficiently complex such that a determination regarding 
     concluding the examination or inspection or regarding the 
     staff requests the entity undertake corrective action cannot 
     be completed within the deadline specified in paragraph (1), 
     the head of any division or office within the Commission or 
     his designee may, after providing notice to the Chairman of 
     the Commission, extend such deadline as needed for one 
     additional 180-day period.''.

     SEC. 7210. NATIONWIDE SERVICE OF SUBPOENAS.

       (a) Securities Act of 1933.--Section 22(a) of the 
     Securities Act of 1933 (15 U.S.C. 77v(a)) is amended by 
     inserting after the second sentence the following: ``In any 
     action or proceeding instituted by the Commission under this 
     title in a United States district court for any judicial 
     district, subpoenas issued to compel the attendance of 
     witnesses or the production of documents or tangible things 
     (or both) at a hearing or trial may be served at any place 
     within the United States.''.
       (b) Securities Exchange Act of 1934.--Section 27 of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78aa) is amended 
     by inserting after the third sentence the following: ``In any 
     action or proceeding instituted by the Commission under this 
     title in a United States district court for any judicial 
     district, subpoenas issued to compel the attendance of 
     witnesses or the production of documents or tangible things 
     (or both) at a hearing or trial may be served at any place 
     within the United States.''.
       (c) Investment Company Act of 1940.--Section 44 of the 
     Investment Company Act of 1940 (15 U.S.C. 80a-43) is amended 
     by inserting after the fourth sentence the following: ``In 
     any action or proceeding instituted by the Commission under 
     this title in a United States district court for any judicial 
     district, subpoenas issued to compel the attendance of 
     witnesses or the production of documents or tangible things 
     (or both) at a hearing or trial may be served at any place 
     within the United States.''.

[[Page 31182]]

       (d) Investment Advisers Act of 1940.--Section 214 of the 
     Investment Advisers Act of 1940 (15 U.S.C. 80b-14) is amended 
     by inserting after the third sentence the following: ``In any 
     action or proceeding instituted by the Commission under this 
     title in a United States district court for any judicial 
     district, subpoenas issued to compel the attendance of 
     witnesses or the production of documents or tangible things 
     (or both) at a hearing or trial may be served at any place 
     within the United States.''.

     SEC. 7211. AUTHORITY TO IMPOSE CIVIL PENALTIES IN CEASE AND 
                   DESIST PROCEEDINGS.

       (a) Under the Securities Act of 1933.--Section 8A of the 
     Securities Act of 1933 (15 U.S.C. 77h-1) is amended by adding 
     at the end the following new subsection:
       ``(g) Authority to Impose Money Penalties.--
       ``(1) Grounds for imposing.--In any cease-and-desist 
     proceeding under subsection (a), the Commission may impose a 
     civil penalty on a person if it finds, on the record after 
     notice and opportunity for hearing, that--
       ``(A) such person--
       ``(i) is violating or has violated any provision of this 
     title, or any rule or regulation thereunder; or
       ``(ii) is or was a cause of the violation of any provision 
     of this title, or any rule or regulation thereunder; and
       ``(B) such penalty is in the public interest.
       ``(2) Maximum amount of penalty.--
       ``(A) First tier.--The maximum amount of penalty for each 
     act or omission described in paragraph (1) shall be $7,500 
     for a natural person or $75,000 for any other person.
       ``(B) Second tier.--Notwithstanding paragraph (A), the 
     maximum amount of penalty for each such act or omission shall 
     be $75,000 for a natural person or $375,000 for any other 
     person if the act or omission described in paragraph (1) 
     involved fraud, deceit, manipulation, or deliberate or 
     reckless disregard of a regulatory requirement.
       ``(C) Third tier.--Notwithstanding paragraphs (A) and (B), 
     the maximum amount of penalty for each such act or omission 
     shall be $150,000 for a natural person or $725,000 for any 
     other person if--
       ``(i) the act or omission described in paragraph (1) 
     involved fraud, deceit, manipulation, or deliberate or 
     reckless disregard of a regulatory requirement; and
       ``(ii) such act or omission directly or indirectly resulted 
     in substantial losses or created a significant risk of 
     substantial losses to other persons or resulted in 
     substantial pecuniary gain to the person who committed the 
     act or omission.
       ``(3) Evidence concerning ability to pay.--In any 
     proceeding in which the Commission may impose a penalty under 
     this section, a respondent may present evidence of the 
     respondent's ability to pay such penalty. The Commission may, 
     in its discretion, consider such evidence in determining 
     whether such penalty is in the public interest. Such evidence 
     may relate to the extent of such person's ability to continue 
     in business and the collectability of a penalty, taking into 
     account any other claims of the United States or third 
     parties upon such person's assets and the amount of such 
     person's assets.''.
       (b) Under the Securities Exchange Act of 1934.--Subsection 
     (a) of section 21B of the Securities Exchange Act of 1934 (15 
     U.S.C. 78u-2(a)) is amended--
       (1) by striking ``(a) Commission Authority To Assess Money 
     Penalties.--In any proceeding'' and inserting the following:
       ``(a) Commission Authority To Assess Money Penalties.--
       ``(1) In general.--In any proceeding'';
       (2) by redesignating paragraphs (1) through (4) of such 
     subsection as subparagraphs (A) through (D), respectively, 
     and moving such redesignated subparagraphs and the matter 
     following such subparagraphs 2 ems to the right; and
       (3) by adding at the end of such subsection the following 
     new paragraph:
       ``(2) Cease-and-desist proceedings.--In any proceeding 
     instituted pursuant to section 21C of this title against any 
     person, the Commission may impose a civil penalty if it 
     finds, on the record after notice and opportunity for 
     hearing, that such person--
       ``(A) is violating or has violated any provision of this 
     title, or any rule or regulation thereunder; or
       ``(B) is or was a cause of the violation of any provision 
     of this title, or any rule or regulation thereunder.''.
       (c) Under the Investment Company Act of 1940.--Paragraph 
     (1) of section 9(d) of the Investment Company Act of 1940 (15 
     U.S.C. 80a-9(d)(1)) is amended--
       (1) by striking ``(1) Authority of commission.--In any 
     proceeding'' and inserting the following:
       ``(1) Authority of commission.--
       ``(A) In general.--In any proceeding'';
       (2) by redesignating subparagraphs (A) through (C) of such 
     paragraph as clauses (i) through (iii), respectively, and by 
     moving such redesignated clauses and the matter following 
     such subparagraphs 2 ems to the right; and
       (3) by adding at the end of such paragraph the following 
     new subparagraph:
       ``(B) Cease-and-desist proceedings.--In any proceeding 
     instituted pursuant to subsection (f) against any person, the 
     Commission may impose a civil penalty if it finds, on the 
     record after notice and opportunity for hearing, that such 
     person--
       ``(i) is violating or has violated any provision of this 
     title, or any rule or regulation thereunder; or
       ``(ii) is or was a cause of the violation of any provision 
     of this title, or any rule or regulation thereunder.''.
       (d) Under the Investment Advisers Act of 1940.--Paragraph 
     (1) of section 203(i) of the Investment Advisers Act of 1940 
     (15 U.S.C. 80b-3(i)(1)) is amended--
       (1) by striking ``(1) Authority of commission.--In any 
     proceeding'' and inserting the following:
       ``(1) Authority of commission.--
       ``(A) In general.--In any proceeding'';
       (2) by redesignating subparagraphs (A) through (D) of such 
     paragraph as clauses (i) through (iv), respectively, and 
     moving such redesignated clauses and the matter following 
     such subparagraphs 2 ems to the right; and
       (3) by adding at the end of such paragraph the following 
     new subparagraph:
       ``(B) Cease-and-desist proceedings.--In any proceeding 
     instituted pursuant to subsection (k) against any person, the 
     Commission may impose a civil penalty if it finds, on the 
     record after notice and opportunity for hearing, that such 
     person--
       ``(i) is violating or has violated any provision of this 
     title, or any rule or regulation thereunder; or
       ``(ii) is or was a cause of the violation of any provision 
     of this title, or any rule or regulation thereunder.''.

     SEC. 7212. FORMERLY ASSOCIATED PERSONS.

       (a) Member or Employee of the Municipal Securities 
     Rulemaking Board.--Section 15B(c)(8) of the Securities 
     Exchange Act of 1934 (15 U.S.C. 78o-4(c)(8)) is amended by 
     striking ``any member or employee'' and inserting ``any 
     person who is, or at the time of the alleged misconduct was, 
     a member or employee''.
       (b) Person Associated With a Government Securities Broker 
     or Dealer.--Section 15C of the Securities Exchange Act of 
     1934 (15 U.S.C. 78o-5) is amended--
       (1) in subsection (c)(1)(C), by striking ``or seeking to 
     become associated,'' and inserting ``seeking to become 
     associated, or, at the time of the alleged misconduct, 
     associated or seeking to become associated'';
       (2) in subsection (c)(2)(A), by inserting ``, seeking to 
     become associated, or, at the time of the alleged misconduct, 
     associated or seeking to become associated'' after ``any 
     person associated''; and
       (3) in subsection (c)(2)(B), by inserting ``, seeking to 
     become associated, or, at the time of the alleged misconduct, 
     associated or seeking to become associated'' after ``any 
     person associated''.
       (c) Person Associated With a Member of a National 
     Securities Exchange or Registered Securities Association.--
     Section 21(a)(1) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78u(a)(1)) is amended by inserting ``, or, as to any 
     act or practice, or omission to act, while associated with a 
     member, formerly associated'' after ``member or a person 
     associated''.
       (d) Participant of a Registered Clearing Agency.--Section 
     21(a)(1) of the Securities Exchange Act of 1934 (15 U.S.C. 
     78u(a)(1)) is amended by inserting ``or, as to any act or 
     practice, or omission to act, while a participant, was a 
     participant,'' after ``in which such person is a 
     participant,''.
       (e) Officer or Director of a Self-regulatory 
     Organization.--Section 19(h)(4) of the Securities Exchange 
     Act of 1934 (15 U.S.C. 78s(h)(4)) is amended--
       (1) by striking ``any officer or director'' and inserting 
     ``any person who is, or at the time of the alleged misconduct 
     was, an officer or director''; and
       (2) by striking ``such officer or director'' and inserting 
     ``such person''.
       (f) Officer or Director of an Investment Company.--Section 
     36(a) of the Investment Company Act of 1940 (15 U.S.C. 80a-
     35(a)) is amended--
       (1) by striking ``a person serving or acting'' and 
     inserting ``a person who is, or at the time of the alleged 
     misconduct was, serving or acting''; and
       (2) by striking ``such person so serves or acts'' and 
     inserting ``such person so serves or acts, or at the time of 
     the alleged misconduct, so served or acted''.
       (g) Person Associated With a Public Accounting Firm.--
       (1) Sarbanes-oxley act of 2002 amendment.--Section 2(a)(9) 
     of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7201(9)) is 
     amended by adding at the end the following new subparagraph:
       ``(C) Investigative and enforcement authority.--For 
     purposes of the provisions of sections 3(c), 101(c), 105, and 
     107(c) and Board or Commission rules thereunder, except to 
     the extent specifically excepted by such rules, the terms 
     defined in subparagraph (A) shall include any person 
     associated, seeking to become associated, or formerly 
     associated with a public accounting firm, except--
       ``(i) the authority to conduct an investigation of such 
     person under section 105(b) shall apply only with respect to 
     any act or practice, or omission to act, while such person

[[Page 31183]]

     was associated or seeking to become associated with a 
     registered public accounting firm; and
       ``(ii) the authority to commence a proceeding under section 
     105(c)(1), or impose disciplinary sanctions under section 
     105(c)(4), against such person shall apply only on--

       ``(I) the basis of conduct occurring while such person was 
     associated or seeking to become associated with a registered 
     public accounting firm; or
       ``(II) non-cooperation as described in section 105(b)(3) 
     with respect to a demand in a Board investigation for 
     testimony, documents, or other information relating to a 
     period when such person was associated or seeking to become 
     associated with a registered public accounting firm.''.

       (2) Securities exchange act of 1934 amendment.--Section 
     21(a)(1) of the Securities Exchange Act of 1934 (15 U.S.C. 
     78u(a)(1)) is amended by striking ``or a person associated 
     with such a firm'' and inserting ``, a person associated with 
     such a firm, or, as to any act, practice, or omission to act 
     while associated with such firm, a person formerly associated 
     with such a firm''.
       (h) Supervisory Personnel of an Audit Firm.--Section 
     105(c)(6) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 
     7215(c)(6)) is amended--
       (1) in subparagraph (A), by striking ``the supervisory 
     personnel'' and inserting ``any person who is, or at the time 
     of the alleged failure reasonably to supervise was, a 
     supervisory person''; and
       (2) in subparagraph (B)--
       (A) by striking ``No associated person'' and inserting ``No 
     current or former supervisory person''; and
       (B) by striking ``any other person'' and inserting ``any 
     associated person''.
       (i) Member of the Public Company Accounting Oversight 
     Board.--Section 107(d)(3) of the Sarbanes-Oxley Act of 2002 
     (15 U.S.C. 7217(d)(3)) is amended by striking ``any member'' 
     and inserting ``any person who is, or at the time of the 
     alleged misconduct was, a member''.

     SEC. 7213. SHARING PRIVILEGED INFORMATION WITH OTHER 
                   AUTHORITIES.

       Section 24 of the Securities Exchange Act of 1934 (15 
     U.S.C. 78x) is amended--
       (1) by redesignating subsections (d) and (e) as subsections 
     (e) and (f), respectively;
       (2) in subsection (e), as redesignated, by striking ``as 
     provided in subsection (e)'' and inserting ``as provided in 
     subsection (f)''; and
       (3) by inserting after subsection (c) the following new 
     subsection:
       ``(d) Sharing Privileged Information With Other 
     Authorities.--
       ``(1) Privileged information provided by the commission.--
     The Commission shall not be deemed to have waived any 
     privilege applicable to any information by transferring that 
     information to or permitting that information to be used by--
       ``(A) any agency (as defined in section 6 of title 18, 
     United States Code);
       ``(B) any foreign securities authority;
       ``(C) the Public Company Accounting Oversight Board;
       ``(D) any self-regulatory organization;
       ``(E) any foreign law enforcement authority; or
       ``(F) any State securities or law enforcement authority.
       ``(2) Non-disclosure of privileged information provided to 
     the commission.--Except as provided in subsection (f), the 
     Commission shall not be compelled to disclose privileged 
     information obtained from any foreign securities authority, 
     or foreign law enforcement authority, if the authority has in 
     good faith determined and represented to the Commission that 
     the information is privileged.
       ``(3) Non-waiver of privileged information provided to the 
     commission.--
       ``(A) In general.--Federal agencies, State securities and 
     law enforcement authorities, self-regulatory organizations, 
     and the Public Company Accounting Oversight Board shall not 
     be deemed to have waived any privilege applicable to any 
     information by transferring that information to or permitting 
     that information to be used by the Commission.
       ``(B) Exception with respect to certain actions.--The 
     provisions of subparagraph (A) shall not apply to a self-
     regulatory organization or the Public Company Accounting 
     Oversight Board with respect to information used by the 
     Commission in an action against such organization.
       ``(4) Definitions.--For purposes of this subsection:
       ``(A) The term `privilege' includes any work-product 
     privilege, attorney-client privilege, governmental privilege, 
     or other privilege recognized under Federal, foreign, or 
     State law.
       ``(B) The term `foreign law enforcement authority' means 
     any foreign authority that is empowered under foreign law to 
     detect, investigate or prosecute potential violations of law.
       ``(C) The term `State securities or law enforcement 
     authority' means the authority of any State or territory that 
     is empowered under State or territory law to detect, 
     investigate or prosecute potential violations of law.''.

     SEC. 7214. EXPANDED ACCESS TO GRAND JURY INFORMATION.

       Subsection (b) of section 3322 of title 18, United States 
     Code, is amended--
       (1) in paragraph (1), by striking ``matters occurring 
     before a grand jury'' and inserting ``grand jury information 
     obtained'';
       (2) by redesignating paragraph (2) as paragraph (3);
       (3) in paragraph (3) (as so redesignated), by inserting 
     ``or (2)'' after ``(1)''; and
       (4) by inserting after paragraph (1), the following new 
     paragraph:
       ``(2) Upon motion of an attorney for the government, a 
     court may direct disclosure of grand jury information 
     obtained during an investigation of a securities law 
     violation to identified personnel of the Securities and 
     Exchange Commission--
       ``(A) for use in relation to any matter within the 
     jurisdiction of the Commission; or
       ``(B) to assist an attorney for the government to whom 
     matters have been disclosed under subsection (a).''.

     SEC. 7215. AIDING AND ABETTING STANDARD OF KNOWLEDGE 
                   SATISFIED BY RECKLESSNESS.

       Section 20(e) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78t(e)) is amended by inserting ``or recklessly'' 
     after ``knowingly''.

     SEC. 7216. EXTRATERRITORIAL JURISDICTION OF THE ANTIFRAUD 
                   PROVISIONS OF THE FEDERAL SECURITIES LAWS.

       (a) Under the Securities Act of 1933.--Section 22 of the 
     Securities Act of 1933 (15 U.S.C. 77v(a)) is amended by 
     adding at the end the following new subsection:
       ``(c) Extraterritorial Jurisdiction.--The jurisdiction of 
     the district courts of the United States and the United 
     States courts of any Territory described under subsection (a) 
     includes violations of section 17(a), and all suits in equity 
     and actions at law under that section, involving--
       ``(1) conduct within the United States that constitutes 
     significant steps in furtherance of the violation, even if 
     the securities transaction occurs outside the United States 
     and involves only foreign investors; or
       ``(2) conduct occurring outside the United States that has 
     a foreseeable substantial effect within the United States.''.
       (b) Under the Securities Exchange Act of 1934.--Section 27 
     of the Securities Exchange Act of 1934 (15 U.S.C. 78aa) is 
     amended--
       (1) by striking ``The district'' and inserting the 
     following:
       ``(a) In General.--The district''; and
       (2) by inserting at the end the following new subsection:
       ``(b) Extraterritorial Jurisdiction.--The jurisdiction of 
     the district courts of the United States and the United 
     States courts of any Territory or other place subject to the 
     jurisdiction of the United States described under subsection 
     (a) includes violations of the antifraud provisions of this 
     title, and all suits in equity and actions at law under those 
     provisions, involving--
       ``(1) conduct within the United States that constitutes 
     significant steps in furtherance of the violation, even if 
     the securities transaction occurs outside the United States 
     and involves only foreign investors; or
       ``(2) conduct occurring outside the United States that has 
     a foreseeable substantial effect within the United States.''.
       (c) Under the Investment Advisers Act of 1940.--Section 214 
     of the Investment Advisers Act of 1940 (15 U.S.C. 80b-14) is 
     amended--
       (1) by striking ``The district'' and inserting the 
     following:
       ``(a) In General.--The district''; and
       (2) by inserting at the end the following new subsection:
       ``(b) Extraterritorial Jurisdiction.--The jurisdiction of 
     the district courts of the United States and the United 
     States courts of any Territory or other place subject to the 
     jurisdiction of the United States described under subsection 
     (a) includes violations of section 206, and all suits in 
     equity and actions at law under that section, involving--
       ``(1) conduct within the United States that constitutes 
     significant steps in furtherance of the violation, even if 
     the violation is committed by a foreign adviser and involves 
     only foreign investors; or
       ``(2) conduct occurring outside the United States that has 
     a foreseeable substantial effect within the United States.''.

     SEC. 7217. FIDELITY BONDING.

       Section 17(g) of the Investment Company Act of 1940 (15 
     U.S.C. 80a-17(g)) is amended to read as follows:
       ``(g) Fidelity Bonding.--
       ``(1) In general.--The Commission is authorized to require 
     that a registered management company provide and maintain a 
     fidelity bond against loss as to any officer or employee who 
     has access to securities or funds of the company, either 
     directly or through authority to draw upon such funds or to 
     direct generally the disposition of such securities (unless 
     the officer or employee has such access solely through his 
     position as an officer or employee of a bank), in such form 
     and amount as the Commission may prescribe by rule, 
     regulation, or order for the protection of investors.
       ``(2) Definitions.--For purposes of this subsection:
       ``(A) Management company.--The term `management company' 
     has the meaning given such term under section 4 of the 
     Investment Company Act of 1940.
       ``(B) Officer or employee.--The term `officer or employee' 
     means--

[[Page 31184]]

       ``(i) any officer or employee of the management company; 
     and;
       ``(ii) any officer or employee of any investment adviser to 
     the management company, or of any affiliated company of any 
     such investment adviser, as the Commission may prescribe by 
     rule, regulation, or order for the protection of investors.
       ``(C) Other definitions.--The terms `affiliated company' 
     and `investment adviser' shall have the meaning given such 
     terms under section 2 of the Investment Company Act of 
     1940.''.

     SEC. 7218. ENHANCED SEC AUTHORITY TO CONDUCT SURVEILLANCE AND 
                   RISK ASSESSMENT.

       (a) Securities Exchange Act of 1934 Amendments.--Section 
     17(b) of the Securities Exchange Act of 1934 (15 U.S.C. 
     78q(b)) is amended by adding at the end the following new 
     paragraph:
       ``(5) Surveillance and risk assessment.--All persons 
     described in subsection (a) of this section are subject at 
     any time, or from time to time, to such reasonable periodic, 
     special, or other information and document requests by 
     representatives of the Commission as the Commission by rule 
     or order deems necessary or appropriate to conduct 
     surveillance or risk assessments of the securities markets, 
     persons registered with the Commission under this title, or 
     otherwise in furtherance of the purposes of this title.''.
       (b) Investment Company Act of 1940 Amendments.--Section 
     31(b) of the Investment Company Act of 1940 (15 U.S.C. 80a-
     30(b)), as amended by section 7106(a)(2), is further amended 
     by adding at the end the following new paragraph:
       ``(5) Surveillance and risk assessment.--All persons 
     described in paragraph (1) are subject at any time, or from 
     time to time, to such reasonable periodic, special, or other 
     information and document requests by representatives of the 
     Commission as the Commission by rule or order deems necessary 
     or appropriate to conduct surveillance or risk assessments of 
     the securities markets, persons registered with the 
     Commission under this title, or otherwise in furtherance of 
     the purposes of this title.''.
       (c) Investment Advisers Act of 1940 Amendments.--Section 
     204 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-4), 
     as amended by section 7106(b), is further amended by adding 
     at the end the following new subsection:
       ``(e) Surveillance and Risk Assessment.--All persons 
     described in subsection (a) are subject at any time, or from 
     time to time, to such reasonable periodic, special, or other 
     information and document requests by representatives of the 
     Commission as the Commission by rule or order deems necessary 
     or appropriate to conduct surveillance or risk assessments of 
     the securities markets, persons registered with the 
     Commission under this title, or otherwise in furtherance of 
     the purposes of this title.''.

     SEC. 7219. INVESTMENT COMPANY EXAMINATIONS.

       Section 31(b)(1) of the Investment Company Act of 1940 (15 
     U.S.C. 80a-30) is amended to read as follows:
       ``(1) In general.--All records of each registered 
     investment company, and each underwriter, broker, dealer, or 
     investment adviser that is a majority-owned subsidiary of 
     such a company, shall be subject at any time, or from time to 
     time, to such reasonable periodic, special, or other 
     examinations by representatives of the Commission as the 
     Commission deems necessary or appropriate in the public 
     interest or for the protection of investors.''.

     SEC. 7220. CONTROL PERSON LIABILITY UNDER THE SECURITIES 
                   EXCHANGE ACT.

       Section 20(a) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78t(a)) is amended by inserting after ``controlled 
     person is liable,'' the following: ``including to the 
     Commission in any action brought under paragraph (1) or (3) 
     of section 21(d),''.

     SEC. 7221. ENHANCED APPLICATION OF ANTI-FRAUD PROVISIONS.

       The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) 
     is amended--
       (1) in section 9--
       (A) by striking ``registered on a national securities 
     exchange'' each place it appears and inserting ``other than a 
     government security'';
       (B) in subsection (b), by striking ``by use of any facility 
     of a national securities exchange,''; and
       (C) in subsection (c), by inserting after ``unlawful for 
     any'' the following: ``broker, dealer, or'';
       (2) in section 10(a)(1), by striking ``registered on a 
     national securities exchange'' and inserting ``other than a 
     government security''; and
       (3) in section 15(c)(1)(A), by striking ``otherwise than on 
     a national securities exchange of which it is a member''.

     SEC. 7222. SEC AUTHORITY TO ISSUE RULES ON 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 authority of the Commission to prescribe rules 
     and regulations under paragraph (1) includes rules and 
     regulations that require the inclusion and set procedures 
     relating to the inclusion, in a solicitation of a proxy or 
     consent or authorization by or on behalf of an issuer, of a 
     nominee or nominees submitted by shareholders to serve on the 
     issuer's board of directors.''.

              PART 3--COMMISSION FUNDING AND ORGANIZATION

     SEC. 7301. AUTHORIZATION OF APPROPRIATIONS.

       Section 35 of the Securities Exchange Act of 1934 (15 
     U.S.C. 78kk) is amended to read as follows:

     ``SEC. 35. AUTHORIZATION OF APPROPRIATIONS.

       ``In addition to any other funds authorized to be 
     appropriated to the Commission, there are authorized to be 
     appropriated to carry out the functions, powers, and duties 
     of the Commission--
       ``(1) for fiscal year 2010, $1,115,000,000;
       ``(2) for fiscal year 2011, $1,300,000,000;
       ``(3) for fiscal year 2012, $1,500,000,000;
       ``(4) for fiscal year 2013, $1,750,000,000;
       ``(5) for fiscal year 2014, $2,000,000,000; and
       ``(6) for fiscal year 2015, $2,250,000,000.''.

     SEC. 7302. INVESTMENT ADVISER REGULATION FUNDING.

       Section 203 of the Investment Advisers Act of 1940 (15 
     U.S.C. 80b-3) (as amended by sections 5006 and 5007) is 
     further amended by adding at the end the following new 
     subsection:
       ``(o) Annual Assessment.--
       ``(1) In general.--The Commission shall, in accordance with 
     this subsection, promulgate rules pursuant to which it may 
     collect from investment advisers required to register with 
     the Commission under this title, fees designed to help 
     recover the cost of inspections and examinations of 
     registered investment advisers conducted by the Commission 
     pursuant to this title.
       ``(2) Fee payment required.--An investment adviser shall, 
     at the time of registration with the Commission, and each 
     fiscal year thereafter during which such adviser is so 
     registered, pay to the Commission a fair and reasonable fee 
     determined by the Commission. In determining such fee, the 
     Commission shall consider objective factors such as--
       ``(A) the investment adviser's size;
       ``(B) the number of clients of the investment adviser;
       ``(C) the types of clients of the investment adviser; and
       ``(D) such other relevant factors as the Commission 
     determines to be appropriate.
       ``(3) Amount and use of fees.--
       ``(A) Minimum aggregate amount.--The aggregate amount of 
     fees determined by the Commission under this subsection for 
     any fiscal year shall be greater than the amount the 
     Commission spent on inspections and examinations of 
     registered investment advisers during the 2009 fiscal year.
       ``(B) Excess fees.--The Commission may retain any excess 
     fees collected under this subsection during a fiscal year for 
     application towards the costs of inspections and examinations 
     of investment advisers in future fiscal years.
       ``(4) Review and adjustment of fees.--The Commission may 
     review fee rates established pursuant to this section before 
     the end of any fiscal year and make any appropriate 
     adjustments prior to collecting any such fee in the following 
     fiscal year.
       ``(5) Penalty fee.--The Commission shall prescribe by rule 
     or regulation an additional fee to be assessed as a penalty 
     for late payment of fees required by this subsection.
       ``(6) Judicial review.--Increases or decreases in fees made 
     pursuant to this section shall not be subject to judicial 
     review.''.

     SEC. 7303. AMENDMENTS TO SECTION 31 OF THE SECURITIES 
                   EXCHANGE ACT OF 1934.

       Section 31 of the Securities Exchange Act of 1934 (15 
     U.S.C. 78ee) is amended--
       (1) in subsection (e)(2), by striking ``September 30'' and 
     inserting ``September 25'';
       (2) in subsection (g), by striking ``April 30'' and 
     inserting ``August 31''; and
       (3) in subsection (j)(2)--
       (A) by striking ``5 months'' and inserting ``4 months''; 
     and
       (B) by striking ``(including fees collected during such 5-
     month period and assessments collected under subsection 
     (d))'' and inserting ``(including fees estimated to be 
     collected under subsections (b) and (c) prior to the 
     effective date of the uniform adjusted rate and assessments 
     estimated to be collected under subsection (d))''.

     SEC. 7304. COMMISSION ORGANIZATIONAL STUDY AND REFORM.

       (a) Study Required.--
       (1) In general.--Not later than the end of the 90-day 
     period beginning on the date of the enactment of this 
     subtitle, the Securities and Exchange Commission (hereinafter 
     in this section referred to as the ``SEC'') shall hire an 
     independent consultant of high caliber and with expertise in 
     organizational restructuring and the operations of capital 
     markets to examine the internal operations, structure, 
     funding, and the need for comprehensive reform of the SEC, as 
     well as the SEC's relationship with the reliance on self-
     regulatory organizations and other entities relevant to the 
     regulation of securities and the protection of securities 
     investors that are under the SEC's oversight.
       (2) Specific areas for study.--The study required under 
     paragraph (1) shall, at a minimum, include the study of--
       (A) the possible elimination of unnecessary or redundant 
     units at the SEC;
       (B) improving communications between SEC offices and 
     divisions;

[[Page 31185]]

       (C) the need to put in place a clear chain-of-command 
     structure, particularly for enforcement examinations and 
     compliance inspections;
       (D) the effect of high-frequency trading and other 
     technological advances on the market and what the SEC 
     requires to monitor the effect of such trading and advances 
     on the market;
       (E) the SEC's hiring authorities, workplace policies, and 
     personal practices, including--
       (i) whether there is a need to further streamline hiring 
     authorities for those who are not lawyers, accountants, 
     compliance examiners, or economists;
       (ii) whether there is a need for further pay reforms;
       (iii) the diversity of skill sets of SEC employees and 
     whether the present skill set diversity efficiently and 
     effectively fosters the SEC's mission of investor protection; 
     and
       (iv) the application of civil service laws by the SEC;
       (F) whether the SEC's oversight and reliance on self-
     regulatory organizations promotes efficient and effective 
     governance for the securities markets; and
       (G) whether adjusting the SEC's reliance on self-regulatory 
     organizations is necessary to promote more efficient and 
     effective governance for the securities markets.
       (b) Consultant Report.--Not later than the end of the 150-
     day period after being retained, the independent consultant 
     hired pursuant to subsection (a)(1) shall issue a report to 
     the SEC and the Congress containing--
       (1) a detailed description of any findings and conclusions 
     made while carrying out the study required under subsection 
     (a)(1);
       (2) recommendations for legislative, regulatory, or 
     administrative action that the consultant determines 
     appropriate to enable the SEC and other entities on which it 
     reports to perform their statutorily or otherwise mandated 
     missions.
       (c) SEC Report.--Not later than the end of the 6-month 
     period beginning on the date the consultant issues the report 
     under subsection (b), and every 6-months thereafter during 
     the 2-year period following the date on which the consultant 
     issues such report, the SEC shall issue a report to the 
     Committee on Financial Services of the House of 
     Representatives and the Committee on Banking, Housing, and 
     Urban Affairs of the Senate describing the SEC's 
     implementation of the regulatory and administrative 
     recommendations contained in the consultant's report.

     SEC. 7305. CAPITAL MARKETS SAFETY BOARD.

       There is established within the Securities and Exchange 
     Commission an office to be known as the Capital Markets 
     Safety Board whose purpose shall be to conduct 
     investigations, at the direction of the Commission, of failed 
     institutions registered with the Commission, to determine 
     what caused such institutions to fail. Upon the conclusion of 
     an investigation, the Board shall make available on the 
     Commission's website a report of its findings, including 
     recommendations regarding how others can avoid similar 
     mistakes. No information that may compromise an ongoing 
     Federal investigation shall be made available in any such 
     report.

     SEC. 7306. REPORT ON IMPLEMENTATION OF ``POST-MADOFF 
                   REFORMS''.

       (a) In General.--Not later than 6 months after the date of 
     the enactment of this subtitle, the Securities and Exchange 
     Commission shall provide to the Committee on Financial 
     Services of the House of Representatives and the Committee on 
     Banking, Housing, and Urban Affairs of the Senate a report 
     describing the implementation of reforms outlined by the 
     Commission in the wake of the discovery of fraud by Bernie 
     Madoff.
       (b) Contents of Report.--The report required by subsection 
     (a) shall include an analysis of--
       (1) how many of the post-Madoff reforms have been 
     implemented and to what extent; and
       (2) whether there is overlap between any of the 
     Commission's reform proposals and those recommended by the 
     Inspector General of the Commission.
       (c) Publication of Report.--The Commission and the 
     Committees referred to in subsection (a) shall publish the 
     report required by such subsection on their Web sites.

     SEC. 7307. JOINT ADVISORY COMMITTEE.

       The Securities and Exchange Commission and the Commodities 
     Futures Trading Commission may jointly form and operate a 
     joint advisory committee composed of members of each 
     Commission and industry experts and participants. The 
     purposes of such an advisory committee include--
       (1) considering and developing solutions to emerging and 
     ongoing issues of common interest in the futures and 
     securities markets;
       (2) identifying emerging regulatory risks and assess and 
     quantify their implications for investors and other market 
     participants, and provide recommendations for solutions;
       (3) serving as a vehicle for discussion and communication 
     on regulatory issues of mutual concerns affecting each 
     Commission, the regulated markets, and the industry 
     generally; and
       (4) reporting regularly to each Commission and to Congress 
     on its activities.

                 PART 4--ADDITIONAL COMMISSION REFORMS

     SEC. 7401. REGULATION OF SECURITIES LENDING.

       Section 10 of the Securities Exchange Act of 1934 (15 
     U.S.C. 78j) is amended by adding at the end the following new 
     subsection:
       ``(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) shall be construed to limit 
     the authority of an appropriate Federal banking agency (as 
     defined in section 3 of the Federal Deposit Insurance Act (12 
     U.S.C. 1813(q))), the National Credit Union Administration, 
     or any other Federal department or agency identified under 
     law as having a systemic risk responsibility from prescribing 
     rules or regulations to impose restrictions on 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.''.

     SEC. 7402. LOST AND STOLEN SECURITIES.

       Section 17(f)(1) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78q(f)(1)) is amended--
       (1) in subparagraph (A), by striking ``missing, lost, 
     counterfeit, or stolen securities'' and inserting 
     ``securities that are missing, lost, counterfeit, stolen, 
     cancelled, or any other category of securities as the 
     Commission, by rule, may prescribe''; and
       (2) in subparagraph (B), by striking ``or stolen'' and 
     inserting ``stolen, cancelled, or reported in such other 
     manner as the Commission, by rule, may prescribe''.

     SEC. 7403. FINGERPRINTING.

       Section 17(f)(2) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78q(f)(2)) is amended--
       (1) by striking ``and registered clearing agency,'' and 
     inserting ``registered clearing agency, registered securities 
     information processor, national securities exchange, and 
     national securities association''; and
       (2) by striking ``or clearing agency,'' and inserting 
     ``clearing agency, securities information processor, national 
     securities exchange, or national securities association,''.

     SEC. 7404. 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. 7405. 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--
       (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. 7406. CONFORMING AMENDMENTS FOR THE 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.),''; and
       (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.''.
       (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 amending paragraph 
     (17) to read as follows:
       ``(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 it 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);

[[Page 31186]]

       (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 amending 
     paragraph (8) to read as follows:
       ``(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
       (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. 7407. PROMOTING TRANSPARENCY IN FINANCIAL REPORTING.

       (a) Findings.--Congress finds the following:
       (1) Transparent and clear financial reporting is integral 
     to the continued growth and strength of our capital markets 
     and the confidence of investors.
       (2) The increasing detail and volume of accounting, 
     auditing, and reporting guidance pose a major challenge.
       (3) The complexity of accounting and auditing standards in 
     the United States has added to the costs and effort involved 
     in financial reporting.
       (b) Testimony Required on Reducing Complexity in Financial 
     Reporting.--The Securities and Exchange Commission, the 
     Public Company Accounting Oversight Board, and the standard 
     setting body designated pursuant to section 19(b) of the 
     Securities Act of 1933 shall annually provide oral testimony 
     by their respective Chairpersons or a designee of the 
     Chairperson, beginning in 2010, and for 5 years thereafter, 
     to the Committee on Financial Services of the House of 
     Representatives on their efforts to reduce the complexity in 
     financial reporting to provide more accurate and clear 
     financial information to investors, including--
       (1) reassessing complex and outdated accounting standards;
       (2) improving the understandability, consistency, and 
     overall usability of the existing accounting and auditing 
     literature;
       (3) developing principles-based accounting standards;
       (4) encouraging the use and acceptance of interactive data; 
     and
       (5) promoting disclosures in ``plain English''.

     SEC. 7408. 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. 7409. PROTECTING CONFIDENTIALITY OF MATERIALS SUBMITTED 
                   TO THE COMMISSION.

       (a) Securities Exchange Act of 1934.--Section 17(i) of the 
     Securities Exchange Act of 1934 (as amended by section 
     1314(2)) is amended to read as follows:
       ``(i) Authority To Limit Disclosure of Information.--
       ``(1) In general.--Notwithstanding any other provision of 
     law, the Commission shall not be compelled to disclose any 
     information, documents, records, or reports that relate to an 
     examination, surveillance, or risk assessment of a person 
     subject to or described in this section, or the financial or 
     operational condition of such persons, or any information 
     supplied to the Commission by any domestic or foreign 
     regulatory agency or self-regulatory organization that 
     relates to the financial or operational condition of such 
     persons, of any associated person of such persons, or any 
     affiliate of an investment bank holding company.
       ``(2) Certain exceptions.--Nothing in this subsection shall 
     authorize the Commission to withhold information from the 
     Congress, prevent the Commission from complying with a 
     request for information from any other Federal department or 
     agency, the Public Company Accounting Oversight Board, or any 
     self-regulatory organization requesting the information for 
     purposes within the scope of its jurisdiction, or prevent the 
     Commission from complying with an order of a court of the 
     United States in an action brought by the United States or 
     the Commission against a person subject to or described in 
     this section to produce information, documents, records, or 
     reports relating directly to the examination, surveillance, 
     or risk assessment of that person or the financial or 
     operational condition of that person or an associated or 
     affiliated person of that person.
       ``(3) Treatment under section 552 of title 5, united states 
     code.--For purposes of section 552 of title 5, United States 
     Code, this subsection shall be considered a statute described 
     in subsection (b)(3)(B) of that section.
       ``(4) Certain information to be confidential.--In 
     prescribing regulations to carry out the requirements of this 
     subsection, the Commission shall designate information 
     described in or obtained pursuant to subparagraphs (A), (B), 
     and (C) of subsection (i)(3) as confidential information for 
     purposes of section 24(b)(2) of this title.''.
       (b) Investment Company Act of 1940.--Section 31(b) of the 
     Investment Company Act of 1940 (15 U.S.C. 80a-30(b)), as 
     amended by sections 7106(a)(2) and 7218(b)(4), is further 
     amended by adding at the end the following new paragraph:
       ``(6) Confidentiality.--
       ``(A) In general.--Notwithstanding any other provision of 
     law, the Commission shall not be compelled to disclose any 
     information, documents, records, or reports that relate to an 
     examination, surveillance, or risk assessment of a person 
     subject to or described in this section.
       ``(B) Certain exceptions.--Nothing in this subsection shall 
     authorize the Commission to withhold information from the 
     Congress, prevent the Commission from complying with a 
     request for information from any other Federal department or 
     agency, or the Public Company Accounting Oversight Board 
     requesting the information for purposes within the scope of 
     its jurisdiction, or prevent the Commission from complying 
     with an order of a court of the United States in an action 
     brought by the United States or the Commission against a 
     person subject to or described in this section to produce 
     information, documents, records, or reports relating directly 
     to the examination of that person or the financial or 
     operational condition of that person or an associated or 
     affiliated person of that person.
       ``(C) Treatment under section 552 of title 5, united states 
     code.--For purposes of section 552 of title 5, United States 
     Code, this subsection shall be considered a statute described 
     in subsection (b)(3)(B) of that section.''.
       (c) Investment Advisers Act of 1940.--Section 204 of the 
     Investment Advisers Act of 1940 (15 U.S.C. 80b-4), as amended 
     by sections 7106(b) and 7218(c), is further amended by adding 
     at the end the following new subsection:
       ``(f) Confidentiality.--
       ``(1) In general.--Notwithstanding any other provision of 
     law, the Commission shall not be compelled to disclose any 
     information, documents, records, or reports that relate to an 
     examination of a person subject to or described in this 
     section.
       ``(2) Certain exceptions.--Nothing in this subsection shall 
     authorize the Commission to withhold information from 
     Congress, prevent the Commission from complying with a 
     request for information from any other Federal department or 
     agency, the Public Company Accounting Oversight Board, or a 
     self-regulatory organization requesting the information for 
     purposes within the scope of its jurisdiction, or prevent the 
     Commission from complying with an order of a court of the 
     United States in an action brought by the United States or 
     the Commission against a person subject to or described in 
     this section to produce information, documents, records, or 
     reports relating directly to the examination of that person 
     or the financial or operational condition of that person or 
     an associated or affiliated person of that person.
       ``(3) Treatment under section 552 of title 5, united states 
     code.--For purposes of section 552 of title 5, United States 
     Code, this subsection shall be considered a statute described 
     in subsection (b)(3)(B) of that section.''.

     SEC. 7410. TECHNICAL CORRECTIONS.

       (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 the matter following paragraph (5) of section 11(a), 
     by striking ``earning statement'' and inserting ``earnings 
     statement''.
       (3) in section 18(b)(1)(C) (15 U.S.C. 77r(b)(1)(C)), by 
     striking ``is a security'' and inserting ``a security'';
       (4) in section 18(c)(2)(B)(i) (15 U.S.C. 77r(c)(2)(B)(i)), 
     by striking ``State, or'' and inserting ``State or'';
       (5) 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
       (6) 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. 78 et seq.) is amended--
       (1) in section 2(1)(a) (15 U.S.C. 78b(1)(a)), by striking 
     ``affected'' and inserting ``effected'';
       (2) in section 3(a)(55)(A) (15 U.S.C. 78c(a)(55)(A)), by 
     striking ``section 3(a)(12) of the Securities Exchange Act of 
     1934'' and inserting ``section 3(a)(12) of this Act'';
       (3) in section 3(g) (15 U.S.C. 78c(g)), by striking 
     ``company, account person, or entity'' and inserting 
     ``company, account, person, or entity'';
       (4) in section 10A(i)(1)(B)(i) (15 U.S.C. 78j-
     1(i)(1)(B)(i)), by striking ``nonaudit'' and inserting ``non-
     audit'';

[[Page 31187]]

       (5) in section 13(b)(1) (15 U.S.C. 78m(b)(1)), by striking 
     ``earning statement'' and inserting ``earnings statement'';
       (6) in section 15(b)(1) (15 U.S.C. 78o(b)(1))--
       (A) by striking the sentence beginning ``The order 
     granting'' and ending ``from such membership.'' in 
     subparagraph (B); and
       (B) by inserting such sentence in the matter following such 
     subparagraph after ``are satisfied.'';
       (7) 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;
       (B) by striking the sentence beginning ``The order 
     granting'' and ending ``from such membership.'' in such 
     subparagraph (B), as redesignated; and
       (C) by inserting such sentence in the matter following such 
     redesignated subparagraph after ``are satisfied.'';
       (8) 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
       (9) 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'';
       (2) in section 313(a)(4) (15 U.S.C. 77mmm(a)(4)) by 
     striking ``subsection (b) of section 311'' and inserting 
     ``section 311(b)''; and
       (3) in section 317(a)(1) (15 U.S.C. 77qqq(a)(1)), by 
     striking ``(1),'' and inserting ``(1)''.
       (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)(B) (15 U.S.C. 80a-2(a)(19)(B)) by 
     striking ``clause (vi)'' both places it appears in the last 
     two sentences and inserting ``clause (vii)'';
       (2) in section 9(b)(4)(B) (15 U.S.C. 80a-9(b)(4)(B)), by 
     inserting ``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 13(a)(3) (15 U.S.C. 80a-13(a)(3)), by 
     inserting ``or'' after the semicolon at the end;
       (5) in section 17(f)(4) (15 U.S.C. 80a-17(f)(4)), by 
     striking ``No such member'' and inserting ``No member of a 
     national securities exchange'';
       (6) in section 17(f)(6) (15 U.S.C. 80a-17(f)(6)), by 
     striking ``company may serve'' and inserting ``company, may 
     serve''; and
       (7) 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 ``section 205(b)(1) or (2)''.
       (e) Investment Advisers Act of 1940.--The Investment 
     Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) is amended--
       (1) in each of the following sections, by striking 
     ``principal business office'' or ``principal place of 
     business'' (whichever and wherever it appears) and inserting 
     ``principal office and place of business'': sections 
     203(c)(1)(A), 203(k)(4)(B), 213(a), 222(b), and 222(c) (15 
     U.S.C. 80b-3(c)(1)(A), 80b-3(k)(4)(B), 80b-13(a), 80b-18a(b), 
     and 80b-18a(c)); and
       (2) in section 206(3) (15 U.S.C. 80b-6(3)), by inserting 
     ``or'' after the semicolon at the end.

     SEC. 7411. MUNICIPAL SECURITIES.

       Section 15B(b) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78o-4(b)) is amended--
       (1) by amending paragraph (1) to read as follows:
       ``(1) Composition of the municipal securities rulemaking 
     board.--Not later than October 1, 2010, the Municipal 
     Securities Rulemaking Board (hereinafter in this section 
     referred to as the `Board'), shall be composed of members 
     which shall perform the duties set forth in this section and 
     shall consist of--
       ``(A) a majority of independent public representatives, at 
     least one of whom shall be representative of investors in 
     municipal securities and at least one of whom shall be 
     representative of issuers of municipal securities (which 
     members are hereinafter referred to as `public 
     representatives');
       ``(B) at least one individual who is representative of 
     municipal securities brokers and municipal securities dealers 
     which are not banks or subsidiaries or departments or 
     divisions of banks (which members are hereinafter referred to 
     as `broker-dealer representatives'); and
       ``(C) at least one individual who is 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
       (2) by amending paragraph (2)(B) to read as follows:
       ``(B) Establish fair procedures for the nomination and 
     election of members of the Board and assure fair 
     representation in such nominations and elections of municipal 
     securities brokers and municipal securities dealers. Such 
     rules--
       ``(i) shall establish requirements regarding the 
     independence of public representatives;
       ``(ii) shall provide that the number of public 
     representatives of the Board shall at all times exceed the 
     total number of broker-dealer representatives and bank 
     representatives;
       ``(iii) shall establish minimum knowledge, experience, and 
     other appropriate qualifications for individuals to serve as 
     public representatives, which may include, among other 
     things, prior work experience in the securities, municipal 
     finance, or municipal securities industries;
       ``(iv) shall specify the term members shall serve; and
       ``(v) may increase or decrease the number of members which 
     shall constitute the whole Board, but in no case may such 
     number be an even number.''.

     SEC. 7412. INTERESTED PERSON DEFINITION.

       Section 2(a)(19)(A) of the Investment Company Act of 1940 
     (15 U.S.C. 80a-2(a)(19)(A)) is amended--
       (1) by striking clauses (v) and (vi);
       (2) by inserting after clause (iv) the following new 
     clause:
       ``(v) any natural person who is a member of a class of 
     persons who the Commission, by rule or regulation, determines 
     are unlikely to exercise an appropriate degree of 
     independence as a result of--

       ``(I) a material business or professional relationship with 
     such company or any affiliated person of such company; or
       ``(II) a close familial relationship with any natural 
     person who is an affiliated person of such company;'';

       (3) by redesignating clause (vii) as clause (vi); and
       (4) in clause (vi), as redesignated, by striking ``two 
     completed fiscal years'' and inserting ``five completed 
     fiscal years''.

     SEC. 7413. RULEMAKING AUTHORITY TO PROTECT REDEEMING 
                   INVESTORS.

       Section 22(e) of the Investment Company Act of 1940 (15 
     U.S.C. 80a-22(e)) is amended by adding at the end the 
     following: ``The Commission may, by rules and regulations, 
     limit the extent to which a registered open-end investment 
     company may own, hold, or invest in illiquid securities or 
     other illiquid property.''.

     SEC. 7414. STUDY ON SEC REVOLVING DOOR.

       (a) Government Accountability Office Study.--The 
     Comptroller General of the United States shall conduct a 
     study that will--
       (1) review the number of employees who leave the Securities 
     and Exchange Commission to work for financial institutions 
     regulated by such Commission;
       (2) determine how many employees who leave the Securities 
     and Exchange Commission worked on cases that involved 
     financial institutions regulated by such Commission;
       (3) review the length of time employees work for the 
     Securities and Exchange Commission before leaving to be 
     employed by financial institutions regulated by such 
     Commission;
       (4) review existing internal controls and make 
     recommendations on strengthening such controls to ensure that 
     employees of the Securities and Exchange Commission who are 
     later employed by financial institutions did not assist such 
     institutions in violating any rules or regulations of the 
     Commission during the course of their employment with such 
     Commission;
       (5) determine if greater post-employment restrictions are 
     necessary to prevent employees of the Securities and Exchange 
     Commission from being employed by financial institutions 
     after employment with such Commission;
       (6) determine if the volume of employees of the Securities 
     and Exchange Commission who are later employed by financial 
     institutions has led to inefficiencies in enforcement;
       (7) determine if employees of the Securities and Exchange 
     Commission who are later employed by financial institutions 
     have engaged in information sharing or assisted such 
     institutions in circumventing Federal rules and regulations 
     while employed by such Commission;
       (8) review any information that may address the volume of 
     employees of the Securities and Exchange Commission who are 
     later employed by financial institutions, and make 
     recommendations to Congress; and
       (9) review other additional issues as may be raised during 
     the course of the study conducted under this subsection.
       (b) Report.--Not later than 1 year after the date of the 
     enactment of this subtitle, the Comptroller General of the 
     United States shall submit to the Committee on Financial 
     Services of the House of Representatives and the Committee on 
     Banking, Housing, and Urban Affairs of the Senate a report on 
     the results of the study required by subsection (a).

     SEC. 7415. STUDY ON INTERNAL CONTROL EVALUATION AND REPORTING 
                   COST BURDENS ON SMALLER ISSUERS.

       (a) Study Required.--The Government Accountability Office 
     and the Securities and Exchange Commission shall each conduct 
     a study evaluating the costs and benefits of complying with 
     section 404(b) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 
     Sec.  7262(b)) on issuers who are not accelerated or large 
     accelerated filers as defined by Commission Rule 12b-2. The 
     study shall--

[[Page 31188]]

       (1) include recommendations, administrative reforms, and 
     legislative proposals on implementation steps that could be 
     taken to reduce compliance burdens on these issuers; and
       (2) determine the efficacy of the Securities and Exchange 
     Commission's measures to limit the cost of compliance on 
     smaller issuers.
       (b) Reports Required.--On or before June 1, 2010, the 
     Government Accountability Office and the Securities and 
     Exchange Commission shall submit separate reports to Congress 
     containing the findings and conclusions of the studies 
     required under subsection (a), together with such 
     recommendations for regulatory, legislative, or 
     administrative action as may be appropriate.
       (c) Effective Date Contingent on Reports.--Requirements 
     under section 404(b) of the Sarbanes-Oxley Act of 2002 on 
     issuers described under subsection (a) shall not become 
     effective until the results of the report are delivered, but 
     in no case before June 1, 2011.

     SECTION 7416. ANALYSIS OF RULE REGARDING SMALLER REPORTING 
                   COMPANIES.

       (a) Findings.--Congress finds the following:
       (1) Many small businesses in cutting-edge technology 
     sectors require significant capital investment to develop new 
     technologies related to clean energy, drug treatments for 
     terminal diseases and food production in hunger-stricken 
     areas of the World.
       (2) Many technology companies conducting research do not 
     meet the definition of ``smaller reporting company'' under 
     the Securities and Exchange Commission's Rule 12b-2 due to 
     unusually high public floats despite low or zero revenue.
       (3) The Final Report of the Advisory Committee on Smaller 
     Public Companies to the Securities and Exchange Commission 
     recommended that a company with a market capitalization of 
     less than about $787,000,000 be considered a smallcap company 
     and that the Commission provide exemptions from section 
     404(b) of the Sarbanes-Oxley Act to companies with less than 
     $250,000,000 in annual revenues.
       (b) Study of Using Revenue as Criteria to Define Smaller 
     Reporting Company.--The Securities and Exchange Commission 
     shall conduct a study of the inclusion of revenue as a 
     criteria used in defining smaller reporting company as 
     defined under the Commission's Rule 12b-2 to account for 
     smaller public companies with public floats less than 
     $700,000,000 and revenues less than $250,000,000. Not later 
     than 180 days after the date of enactment of this subtitle, 
     the Commission shall provide the Committee on Financial 
     Services of the House of Representatives and the Committee on 
     Banking, Housing and Urban Affairs of the Senate a report of 
     the findings of the study.

     SEC. 7417. FINANCIAL REPORTING FORUM.

       (a) Establishment.--There is hereby established a Financial 
     Reporting Forum (hereinafter referred to as the ``Forum''), 
     which shall consist of--
       (1) the Chairman of the Securities Exchange Commission 
     (hereinafter referred to as the ``SEC'');
       (2) the head of the Financial Accounting Standards Board;
       (3) the Chairman of the Public Company Accounting Oversight 
     Board;
       (4) the head of each appropriate Federal banking agency, as 
     such term is defined under section 3(q) of the Federal 
     Deposit Insurance Act (12 U.S.C. 1813(q));
       (5) the Administrator of the National Credit Union 
     Administration;
       (6) the Secretary of the Treasury;
       (7) a representative of a non-financial institution, 
     appointed by the SEC;
       (8) a representative of a financial institution, appointed 
     by the SEC;
       (9) a representative of auditors, appointed by the SEC; and
       (10) a representative of investors, appointed by the SEC.
       (b) Meetings.--The Forum shall meet no less often than 
     quarterly.
       (c) Duties.--The Forum shall meet to discuss immediate and 
     long-term issues critical to financial reporting.
       (d) Reporting.--The Forum shall issue an annual report to 
     the Congress detailing any determinations or findings made by 
     the Forum during the previous year, including any legislative 
     recommendations the Forum may have related to financial 
     reporting matters.

     SEC. 7418. INVESTMENT ADVISERS SUBJECT TO STATE AUTHORITIES.

       Section 203A(a) of the Investment Advisers Act of 1940 (15 
     U.S.C. 80b-3a(a)) is amended--
       (1) by redesignating paragraph (2) as paragraph (3); and
       (2) by inserting after paragraph (1) the following new 
     paragraph:
       ``(2) Treatment of certain mid-sized investment advisers.--
     Notwithstanding paragraph (1), an investment adviser that--
       ``(A) is regulated and examined, or required to be 
     regulated and examined, by a State; and
       ``(B) has assets under management between--
       ``(i) the amount specified under subparagraph (A) of 
     paragraph (1), as such amount may have been adjusted by the 
     Commission pursuant to that subparagraph, and
       ``(ii) $100,000,000, or such higher amount as the 
     Commission may, by rule, deem appropriate in accordance with 
     the purposes of this title,

     shall register with, and be subject to examination by, such 
     State. The Commission shall publish a list of the States that 
     regulate and examine, or require regulation and examination 
     of, investment advisers to which the requirements of this 
     paragraph apply.''.

     SEC. 7419. CUSTODIAL REQUIREMENTS.

       Not later than 180 days after the date of the enactment of 
     this subtitle, the Securities and Exchange Commission shall 
     adopt a rule pursuant to its authority under section 211(a) 
     of the Investment Advisers Act of 1940 making it unlawful 
     under section 206(4) of such Act for an investment adviser 
     registered under the Act to have custody of funds or 
     securities of a client the value of which exceeds 
     $10,000,000, subject to such exception the Commission 
     determines in such rule are in the public interest and 
     consistent with the protection of investors, unless--
       (1) the funds and securities are maintained with a 
     qualified custodian either in a separate account for each 
     client under the client's name, or in accounts that contain 
     only client funds and securities under the name of the 
     investment adviser as agent or trustee for the client; and
       (2) the qualified custodian does not directly or indirectly 
     provide investment advice with respect to such funds or 
     securities.

     SEC. 7420. OMBUDSMAN.

       (a) Appointment.--Not later than 180 days after the date of 
     the enactment of this subtitle, the Chairman of the 
     Securities and Exchange Commission shall appoint an Ombudsman 
     who shall report directly to the Chairman.
       (b) Duties.--The Ombudsman appointed under subsection (a) 
     shall--
       (1) act as a liaison between the Commission and any 
     affected person with respect to any problem such person may 
     have in dealing with the Commission resulting from the 
     regulatory activities of the Commission;
       (2) review and make recommendations regarding Commission 
     policies and procedures to encourage persons to present 
     questions to the Commission regarding compliance with Federal 
     securities laws; and
       (3) maintain confidentiality of communications between such 
     persons and the Ombudsman.
       (c) Limitation.--In carrying out the duties under 
     subsection (b), the Ombudsman shall utilize personnel of the 
     Commission to the extent practicable. Nothing in this section 
     shall be construed as replacing, altering, or diminishing the 
     activities of any ombudsman or similar office in any other 
     agency.
       (d) Report.--Each year, the Ombudsman shall submit a report 
     to the Commission for inclusion in the annual report that 
     describes the activities and evaluates the effectiveness of 
     the Ombudsman during the preceding year. In that report, the 
     Ombudsman shall include solicited comments and evaluations 
     from registrants in regards to the effectiveness of the 
     Ombudsman.

         PART 5--SECURITIES INVESTOR PROTECTION ACT AMENDMENTS

     SEC. 7501. INCREASING THE MINIMUM ASSESSMENT PAID BY SIPC 
                   MEMBERS.

       Section 4(d)(1)(C) of the Securities Investor Protection 
     Act of 1970 (15 U.S.C. 78ddd(d)(1)(C)) is amended by striking 
     ``$150 per annum'' and inserting the following: ``0.02 
     percent of the gross revenues from the securities business of 
     such member of SIPC''.

     SEC. 7502. 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 by striking ``of not to 
     exceed $1,000,000,000'' and inserting ``the lesser of 
     $2,500,000,000 or the target amount of the SIPC Fund 
     specified in the bylaws of SIPC''.

     SEC. 7503. INCREASING THE CASH LIMIT OF PROTECTION.

       Section 9 of the Securities Investor Protection Act of 1970 
     (15 U.S.C. 78fff-3) is amended--
       (1) in subsection (a)(1), by striking ``$100,000 for each 
     such customer'' and inserting ``the standard maximum cash 
     advance amount for each such customer, as determined in 
     accordance with subsection (d)''; and
       (2) by adding the following new subsections:
       ``(d) Standard Maximum Cash Advance Amount Defined.--For 
     purposes of this section, the term `standard maximum cash 
     advance amount' means $250,000, as such amount may be 
     adjusted after March 31, 2010, as provided under subsection 
     (e).
       ``(e) Inflation Adjustment.--
       ``(1) In general.--No later than April 1, 2010, and every 5 
     years thereafter, and subject to the approval of the 
     Commission as provided under section 3(e)(2), the Board of 
     Directors of SIPC shall determine whether an inflation 
     adjustment to the standard maximum cash advance amount is 
     appropriate. If the Board of Directors of SIPC determines 
     such an adjustment is appropriate, then the standard maximum 
     cash advance amount shall be an amount equal to--
       ``(A) $250,000 multiplied by,
       ``(B) the ratio of the annual value of the Personal 
     Consumption Expenditures Chain-Type Price Index (or any 
     successor index thereto), published by the Department of 
     Commerce, for the calendar year preceding

[[Page 31189]]

     the year in which such determination is made, to the 
     published annual value of such index for the calendar year 
     preceding the year in which this subsection was enacted.
     The index values used in calculations under this paragraph 
     shall be, as of the date of the calculation, the values most 
     recently published by the Department of Commerce.
       ``(2) Rounding.--If the standard maximum cash advance 
     amount determined under paragraph (1) for any period is not a 
     multiple of $10,000, the amount so determined shall be 
     rounded down to the nearest $10,000.
       ``(3) Publication and report to the congress.--Not later 
     than April 5 of any calendar year in which a determination is 
     required to be made under paragraph (1)--
       ``(A) the Commission shall publish in the Federal Register 
     the standard maximum cash advance amount; and
       ``(B) the Board of Directors of SIPC shall submit a report 
     to the Congress containing stating the standard maximum cash 
     advance amount.
       ``(4) Implementation period.--Any adjustment to the 
     standard maximum cash advance amount shall take effect on 
     January 1 of the year immediately succeeding the calendar 
     year in which such adjustment is made.
       ``(5) Inflation adjustment considerations.--In making any 
     determination under paragraph (1) to increase the standard 
     maximum cash advance amount, the Board of Directors of SIPC 
     shall consider--
       ``(A) the overall state of the fund and the economic 
     conditions affecting members of SIPC;
       ``(B) the potential problems affecting members of SIPC; and
       ``(C) such other factors as the Board of Directors of SIPC 
     may determine appropriate.''.

     SEC. 7504. SIPC AS TRUSTEE IN SIPA LIQUIDATION PROCEEDINGS.

       Section 5(b)(3) of the Securities Investor Protection Act 
     of 1970 (15 U.S.C. 78eee(b)(3)) is amended--
       (1) by striking ``SIPC has determined that the liabilities 
     of the debtor to unsecured general creditors and to 
     subordinated lenders appear to aggregate less than $750,000 
     and that''; and
       (2) by striking ``five hundred'' and inserting ``five 
     thousand''.

     SEC. 7505. INSIDERS INELIGIBLE FOR SIPC ADVANCES.

       Section 9(a)(4) of the Securities Investor Protection Act 
     of 1970 (15 U.S.C. 78fff-3(a)(4)) is amended by inserting 
     ``an insider,'' after ``or net profits of the debtor,''.

     SEC. 7506. ELIGIBILITY FOR DIRECT PAYMENT PROCEDURE.

       Section 10(a)(4) of the Securities Investor Protection Act 
     of 1970 (15 U.S.C. 78fff-4(a)(4)) is amended by striking 
     ``$250,000'' and inserting ``$850,000''.

     SEC. 7507. INCREASING THE FINE FOR PROHIBITED ACTS UNDER 
                   SIPA.

       Section 14(c) of the Securities Investor Protection Act of 
     1970 (15 U.S.C. 78jjj(c)) is amended--
       (1) in paragraph (1), by striking ``$50,000'' and inserting 
     ``$250,000''; and
       (2) in paragraph (2), by striking ``$50,000'' and inserting 
     ``$250,000''.

     SEC. 7508. PENALTY FOR MISREPRESENTATION OF SIPC MEMBERSHIP 
                   OR PROTECTION.

       Section 14 of the Securities Investor Protection Act of 
     1970 (15 U.S.C. 78jjj) is amended by adding at the end the 
     following new subsection:
       ``(d) Misrepresentation of SIPC Membership or Protection.--
       ``(1) In general.--Any person who falsely represents by any 
     means (including, without limitation, through the Internet or 
     any other medium of mass communication), with actual 
     knowledge of the falsity of the representation and with an 
     intent to deceive or cause injury to another, that such 
     person, or another person, is a member of SIPC or that any 
     person or account is protected or is eligible for protection 
     under this Act or by SIPC, shall be liable for any damages 
     caused thereby and shall be fined not more than $250,000 or 
     imprisoned for not more than five years.
       ``(2) Internet service providers.--Any Internet service 
     provider that, on or through a system or network controlled 
     or operated by the Internet service provider, transmits, 
     routes, provides connections for, or stores any material 
     containing any misrepresentation of the kind prohibited in 
     paragraph (1) shall be liable for any damages caused thereby, 
     including damages suffered by SIPC, if the Internet service 
     provider--
       ``(A) has actual knowledge that the material contains a 
     misrepresentation of the kind prohibited in paragraph (1), or
       ``(B) in the absence of actual knowledge, is aware of facts 
     or circumstances from which it is apparent that the material 
     contains a misrepresentation of the kind prohibited in 
     paragraph (1), and
     upon obtaining such knowledge or awareness, fails to act 
     expeditiously to remove, or disable access to, the material.
       ``(3) Injunctions.--Any court having jurisdiction of a 
     civil action arising under this Act may grant temporary 
     injunctions and final injunctions on such terms as the court 
     deems reasonable to prevent or restrain any violation of 
     paragraph (1) or (2). Any such injunction may be served 
     anywhere in the United States on the person enjoined, shall 
     be operative throughout the United States, and shall be 
     enforceable, by proceedings in contempt or otherwise, by any 
     United States court having jurisdiction over that person. The 
     clerk of the court granting the injunction shall, when 
     requested by any other court in which enforcement of the 
     injunction is sought, transmit promptly to the other court a 
     certified copy of all papers in the case on file in such 
     clerk's office.''.

     SEC. 7509. FUTURES HELD IN A PORTFOLIO MARGIN SECURITIES 
                   ACCOUNT PROTECTION.

       (a) SIPC 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 futures contracts'' 
     after ``claim for securities''.
       (b) Definitions.--Section 16 of such Act (15 U.S.C. 78lll) 
     is amended--
       (1) by amending paragraph (2) to read as follows:
       ``(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. The term `customer' includes any person 
     who has a claim against the debtor arising out of sales or 
     conversions of such securities.
       ``(B) Included persons.--The term `customer' includes--
       ``(i) any person who has deposited cash with the debtor for 
     the purpose of purchasing securities; and
       ``(ii) any person who has a claim against the debtor for, 
     or a claim against the debtor arising out of sales or 
     conversions of, 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.
       ``(C) Excluded persons.--The term `customer' does not 
     include--
       ``(i) any person to the extent that the claim of such 
     person arises out of transactions with a foreign subsidiary 
     of a member of SIPC;
       ``(ii) any person to the extent that 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; or
       ``(iii) any person to the extent such person has a claim 
     relating to any open repurchase or open reverse repurchase 
     agreement.

     For purposes of this paragraph, the term `repurchase 
     agreement' means the sale of a security at a specified price 
     with a simultaneous agreement or obligation to repurchase the 
     security at a specified price on a specified future date.'';
       (2) in paragraph (4), by inserting after the first sentence 
     the following new sentence: ``In the case of portfolio 
     margining accounts of customers that are carried as 
     securities accounts pursuant to a portfolio margining program 
     approved by the Commission, such term shall also include 
     futures contracts and options on futures contracts received, 
     acquired, or held by or for the account of a debtor from or 
     for such accounts, and the proceeds thereof.'';
       (3) in paragraph (9), by inserting before ``Such term'' in 
     the matter following subparagraph (L) the following: ``The 
     term includes revenues earned by a broker or dealer in 
     connection with transactions in customers' portfolio 
     margining accounts carried as securities accounts pursuant to 
     a portfolio margining program approved by the Commission.''; 
     and
       (4) in paragraph (11)--
       (A) by amending subparagraph (A) to read as follows:
       ``(A) calculating the sum which would have been owed by the 
     debtor to such customer if the debtor had liquidated, by sale 
     or purchase on the 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; minus''; and
       (B) by inserting before ``In determining'' in the matter 
     following subparagraph (C) 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 for the mark-
     to-market (variation) payments due with respect to such 
     contract as of the filing date, and such claim shall be 
     treated as a claim for cash.''.

[[Page 31190]]



     SEC. 7510. STUDY AND REPORT ON THE FEASIBILITY OF RISK-BASED 
                   ASSESSMENTS FOR SIPC MEMBERS.

       (a) Study Required.--The Comptroller General of the United 
     States shall conduct a study on whether the Securities 
     Investor Protection Corporation (hereafter in this section 
     referred to as ``SIPC'') should be required to impose 
     assessments, on its member brokers and dealers, based on risk 
     for the purpose of adequately maintaining the SIPC Fund.
       (b) Content.--The Comptroller General in conducting this 
     study shall--
       (1) identify and examine available approaches, including 
     modeling, to measure broker and dealer operational risk;
       (2) analyze whether the available approaches to measure 
     broker and dealer operational risk can be used in managing 
     the aggregate risk to the SIPC Fund;
       (3) explore whether objective measures like the volume of 
     assets of the SIPC member, previous enforcement and 
     compliance actions taken by regulatory bodies against the 
     SIPC member, or the number of years the SIPC member has been 
     in operation, among other factors, can be used to assess the 
     probability the fund will incur a loss with respect to the 
     SIPC member;
       (4) examine the impact that risk-based assessments could 
     have on large and small brokers and dealers; and
       (5) examine the impact that risk-based assessments could 
     have on institutional and retail brokers and dealers.
       (c) Consultation.--The Comptroller General in planning and 
     conducting this study shall consult with the Securities and 
     Exchange Commission, the Federal Deposit Insurance 
     Corporation, SIPC, the Financial Industry Regulatory 
     Authority, and any other public or private sector 
     organization that the Comptroller General considers 
     appropriate.
       (d) Report Required.--Not later than one year after the 
     date of enactment of this subtitle, the Comptroller general 
     shall submit a report of 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.

                 PART 6--SARBANES-OXLEY ACT AMENDMENTS

     SEC. 7601. PUBLIC COMPANY ACCOUNTING OVERSIGHT BOARD 
                   OVERSIGHT OF AUDITORS OF BROKERS AND DEALERS.

       (a) Definitions.--(1) Title I of the Sarbanes-Oxley Act of 
     2002 is amended by adding at the end the following new 
     section:

     ``SEC. 110. DEFINITIONS.

       ``For the purposes of this title, and notwithstanding 
     section 2:
       ``(1) Audit.--The term `audit' means an examination of the 
     financial statements, reports, documents, procedures or 
     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 (or, for the period 
     preceding the adoption of applicable rules of the Board under 
     section 103, in accordance with then-applicable generally 
     accepted auditing and related standards for such purposes), 
     for the purpose of expressing an opinion on such financial 
     statements, reports, documents, procedures or controls, or 
     notices.
       ``(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, other document, 
     procedures, or controls; or
       ``(ii) asserts that no such opinion can be expressed.
       ``(3) 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 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.
       ``(4) 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.
       ``(5) 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.
       ``(6) Self-regulatory organization.--The term `self-
     regulatory organization' has the same meaning as in section 
     3(a)(26) of the Securities Exchange Act of 1934 (15 U.S.C. 
     78c(a)(26)).''.
       (2) The table of sections in section 1(b) of such Act is 
     amended, by inserting after the item relating to section 109 
     the following new item:

``Sec. 110. Definitions.''.

       (b) Establishment and Administration of the Public Company 
     Accounting Oversight Board.--Section 101 of such Act is 
     amended--
       (1) by striking ``issuers'' each place it appears and 
     inserting ``issuers, brokers, and dealers'';
       (2) in subsection (a), by striking ``public companies'' and 
     inserting ``companies''; and
       (3) in subsection (a), 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 such Act 
     is amended--
       (1) in subsection (a), by striking ``Beginning 180 days 
     after the date of the determination of the Commission under 
     section 101(d), it'' and inserting ``It'';
       (2) in subsections (a) and (b)(2)(G), by striking 
     ``issuer'' each place it appears and inserting ``issuer, 
     broker, or dealer''; and
       (3) in subsection (b)(2)(A), by striking ``issuers'' and 
     inserting ``issuers, brokers, and dealers''.
       (d) Auditing and Independence.--Section 103(a) of such Act 
     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 such Act is amended--
       (1) in subsection (a), by striking ``issuers'' and 
     inserting ``issuers, brokers, and dealers'';
       (2) in subsection (b)(1)(A)--
       (A) by striking ``audit reports'' and inserting ``audit 
     reports on annual financial statements''; and
       (B) by striking ``and'';
       (3) in subsection (b)(1)(B)--
       (A) by striking ``audit reports'' and inserting ``audit 
     reports on annual financial statements''; and
       (B) by striking the period at the end and inserting ``; 
     and''; and
       (4) by adding at the end of subsection (b)(1) the following 
     new subparagraph:
       ``(C) with respect to each registered public accounting 
     firm that regularly provides audit reports and is not 
     described under subparagraph (A) or (B), on a basis to be 
     determined by the Board, by rule, consistent with the public 
     interest and protection of investors.''.
       (f) Investigations and Disciplinary Proceedings.--Section 
     105(c)(7)(B) of such Act is amended--
       (1) in the subparagraph heading, by inserting ``, broker, 
     or dealer'' after ``issuer'';
       (2) by striking ``any issuer'' each place it 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 of such 
     Act is amended--
       (1) in subsection (a)(1), by striking ``issuer'' and 
     inserting ``issuer, broker, or dealer''; and
       (2) in subsection (a)(2), by striking ``issuers'' and 
     inserting ``issuers, brokers, or dealers''.
       (h) Funding.--Section 109 of such Act is amended--
       (1) in subsection (c)(2), by striking ``subsection (i)'' 
     and inserting ``subsection (j)'';
       (2) in subsection (d)(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 and brokers and dealers, as appropriate'';
       (3) in subsection (d), by inserting at the end the 
     following new paragraph:
       ``(3) Brokers and dealers.--The rules of the Board under 
     paragraph (1) shall provide that the allocation, assessment, 
     and collection by the Board (or an agent appointed by the 
     Board) of the fee established under paragraph (1) with 
     respect to brokers and dealers shall not begin until the 
     first day of the first full fiscal year beginning after the 
     date of the enactment of this paragraph.'';

[[Page 31191]]

       (4) by redesignating subsections (h), (i), and (j) as 
     subsections (i), (j), and (k), respectively; and
       (5) by inserting after subsection (g) the following new 
     subsection:
       ``(h) Allocation of Accounting Support Fees Among Brokers 
     and Dealers.--
       ``(1) In general.--Any amount due from brokers and dealers 
     (or a particular class of such brokers and dealers) under 
     this section to fund the budget of the Board shall be 
     allocated among and payable by such brokers and dealers (or 
     such brokers and dealers in a particular class, as 
     applicable). A broker or dealer's allocation shall be in 
     proportion to the broker or dealer's net capital compared to 
     the total net capital of all brokers and dealer, in 
     accordance with the rules of the Board.
       ``(2) Obligation to pay.--Every broker or dealer shall pay 
     the share of a reasonable annual accounting support fee or 
     fees allocated to such broker or dealer under this 
     section.''.
       (i) Referral of Investigations to a Self-regulatory 
     Organization.--Section 105(b)(4)(B) of the Sarbanes-Oxley Act 
     of 2002 is amended--
       (1) by redesignating clauses (ii) and (iii) as clauses 
     (iii) and (iv), respectively; and
       (2) by inserting after clause (i) the following new clause:
       ``(ii) to a self-regulatory organization, in the case of an 
     investigation that concerns an audit report for a broker or 
     dealer that is subject to the jurisdiction of such self-
     regulatory organization;''.
       (j) Use of Documents Related to an Inspection or 
     Investigation.--Section 105(b)(5)(B)(ii) of such Act is 
     amended--
       (1) in subclause (III), by striking ``and'';
       (2) in subclause (IV), by striking the comma and inserting 
     ``; and''; and
       (3) by inserting after subclause (IV) the following new 
     subclause:

       ``(V) a self-regulatory organization, with respect to an 
     audit report for a broker or dealer that is subject to the 
     jurisdiction of such self-regulatory organization,''.

     SEC. 7602. FOREIGN REGULATORY INFORMATION SHARING.

       (a) Definition.--Section 2(a) of the Sarbanes-Oxley Act of 
     2002 (15 U.S.C. 7201(a)) is amended by inserting after 
     paragraph (16) 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.--When 
     in the Board's discretion it is necessary to accomplish the 
     purposes of this Act or to protect investors, and 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 
     within the inspection authority, or other regulatory or law 
     enforcement jurisdiction, of a foreign auditor oversight 
     authority may be made available to the foreign auditor 
     oversight authority if the foreign auditor oversight 
     authority provides such assurances of confidentiality as the 
     Board determines appropriate.''.
       (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. 7603. EXPANSION OF AUDIT INFORMATION TO BE PRODUCED AND 
                   EXCHANGED WITH FOREIGN COUNTERPARTS.

       Section 106 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 
     7216) is amended--
       (1) by amending subsection (b) to read as follows:
       ``(b) Production of Documents.--
       ``(1) Production by foreign firms.--If a foreign public 
     accounting firm issues an audit report, performs audit work, 
     conducts interim reviews, or performs material services upon 
     which a registered public accounting firm relies in the 
     conduct of an audit or interim review, the foreign public 
     accounting firm shall produce its audit work papers and all 
     other documents related to any such audit work or interim 
     review to the Commission or the Board when requested by the 
     Commission or the Board and the foreign public accounting 
     firm shall be subject to the jurisdiction of the courts of 
     the United States for purposes of enforcement of any request 
     of such documents.
       ``(2) Other production.--Any registered public accounting 
     firm that relies, in whole or in part, on the work of a 
     foreign public accounting firm in issuing an audit report, 
     performing audit work, or conducting an interim review, 
     shall--
       ``(A) produce the foreign public accounting firm's audit 
     work papers and all other documents related to any such work 
     in response to a request for production by the Commission or 
     the Board; and
       ``(B) secure the agreement of any foreign public accounting 
     firm to such production, as a condition of its reliance on 
     the work of that foreign public accounting firm.'';
       (2) by redesignating subsection (d) as subsection (g); and
       (3) by inserting after subsection (c) the following new 
     subsections:
       ``(d) Service of Requests or Process.--Any foreign public 
     accounting firm that performs work for a domestic registered 
     public accounting firm shall furnish to the domestic firm a 
     written irrevocable consent and power of attorney that 
     designates the domestic firm as an agent upon whom may be 
     served any process, pleadings, or other papers in any action 
     brought to enforce this section. Any foreign public 
     accounting firm that issues an audit report, performs audit 
     work, performs interim reviews, or performs other material 
     services upon which a registered public accounting firm 
     relies in the conduct of an audit or interim review, shall 
     designate to the Commission or the Board an agent in the 
     United States upon whom may be served any process, pleading, 
     or other papers in any action brought to enforce this section 
     or any request by the Commission or the Board under this 
     section.
       ``(e) Sanctions.--A willful refusal to comply, in whole in 
     or in part, with any request by the Commission or the Board 
     under this section, shall be a violation of this Act.
       ``(f) Other Means of Satisfying Production Obligations.--
     Notwithstanding any other provision of this section, the 
     staff of the Commission or Board may allow foreign public 
     accounting firms subject to this section to meet production 
     obligations under this section though alternate means, such 
     as through foreign counterparts of the Commission or 
     Board.''.

     SEC. 7604. CONFORMING AMENDMENT RELATED TO REGISTRATION.

       Section 102(b)(3)(A) of the Sarbanes-Oxley Act of 2002 (15 
     U.S. Code 7212(b)(3)(A)) is amended by striking ``by the 
     Board'' and inserting ``by the Commission or the Board''.

     SEC. 7605. FAIR FUND AMENDMENTS.

       Section 308 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 
     7246(a)) is amended--
       (1) by amending subsection (a) to read as follows:
       ``(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 (as such term is 
     defined in section 3(a)(47) of the Securities Exchange Act of 
     1934 (15 U.S.C. 78c(a)(47)), the Commission obtains a civil 
     penalty against any person for a violation of such laws or 
     the rules and regulations thereunder, or such person agrees 
     in settlement of any such action to such civil penalty, the 
     amount of such civil penalty or settlement shall, on 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), by--
       (A) striking ``for a disgorgement fund described in 
     subsection (a)'' and inserting ``for a disgorgement fund or 
     other fund described in subsection (a)''; and
       (B) striking ``in the disgorgement fund'' and inserting 
     ``in such fund''; and
       (3) by striking subsection (e).

     SEC. 7606. EXEMPTION FOR NONACCELERATED FILERS.

       (a) Exemption.--Section 404 of the Sarbanes-Oxley Act of 
     2002 is amended by adding at the end the following:
       ``(c) Exemption for Smaller Issuers.--Subsection (b) shall 
     not apply with respect to any audit report prepared for an 
     issuer that is not an accelerated filer within the meaning 
     Rule 12b-2 of the Commission (17 C.F.R. 240.12b-2).''.
       (b) Study.--The Securities and Exchange Commission and the 
     Comptroller General shall jointly conduct a study to 
     determine how the Commission could reduce the burden of 
     complying with section 404(b) of the Sarbanes-Oxley Act of 
     2002 for companies whose market capitalization is between 
     $75,000,000 and $250,000,000 for the relevant reporting 
     period while maintaining investor protections for such 
     companies. The study shall also consider whether any such 
     methods of reducing the compliance burden or a complete 
     exemption for such companies from compliance with such 
     section would encourage companies to list on exchanges in the 
     United States in their initial public offerings. Not later 
     than 180 days after the date of the enactment of this 
     subtitle, the Commission and the Comptroller General shall 
     transmit a report of such study to Congress.

     SEC. 7607. WHISTLEBLOWER PROTECTION AGAINST RETALIATION BY A 
                   SUBSIDIARY OF AN ISSUER.

       Section 1514A(a) 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 ``(15 U.S.C. 
     78o(d)),''.

     SEC. 7608. CONGRESSIONAL ACCESS TO INFORMATION.

       Section 101 of the Sarbanes-Oxley Act of 2002 is amended by 
     adding at the end the following:
       ``(i) Congressional Access to Information.--Nothing in this 
     section shall--
       ``(1) affect the Boards obligations, if any, to provide 
     access to records under the Right to Financial Privacy Act; 
     or
       ``(2) authorize the Board to withhold information from 
     Congress or prevent the Board

[[Page 31192]]

     from complying with an order of a court of the United States 
     in an action commenced by the United States or the Board.''.

     SEC. 7609. CREATION OF OMBUDSMAN FOR THE PCAOB.

       (a) Ombudsman.--Title I of the Sarbanes-Oxley Act of 2002 
     (15 U.S.C. 7211 et seq.), as amended by section 7601(a)(1), 
     is further amended by adding at the end the following new 
     section:

     ``SEC. 111. OMBUDSMAN.

       ``(a) Establishment Required.--Not later than 180 days 
     after the date of enactment of the Investor Protection Act, 
     the Board shall appoint an ombudsman for the Board. The 
     Ombudsman shall report directly to the Chairman.
       ``(b) Duties of Ombudsman.--The ombudsman appointed in 
     accordance with subsection (a) for the Board shall--
       ``(1) act as a liaison between the Board and--
       ``(A) any registered public accounting firm or issuer with 
     respect to issues or disputes concerning the preparation or 
     issuance of any audit report with respect to that issuer; and
       ``(B) any affected registered public accounting firm or 
     issuer with respect to--
       ``(i) any problem such firm or issuer may have in dealing 
     with the Board resulting from the regulatory activities of 
     the Board, particularly with regard to the implementation of 
     section 404; and
       ``(ii) issues caused by the relationships of registered 
     public accounting firms and issuers generally; and
       ``(2) assure that safeguards exist to encourage 
     complainants to come forward and to preserve confidentiality; 
     and
       ``(3) carry out such activities, and any other activities 
     assigned by the Board, in accordance with guidelines 
     prescribed by the Board.''.
       (b) Conforming Amendment.--The table of sections in section 
     1(b) of such Act is amended, by inserting after the item 
     relating to section 110 (as added by section 601(a)(2)) the 
     following new item:

``Sec. 111. Ombudsman.''.

     SEC. 7610. AUDITING OVERSIGHT BOARD.

       The Sarbanes-Oxley Act of 2002 is amended--
       (1) in section 2(a)(5), by striking ``Public Company 
     Accounting Oversight Board'' and inserting ``Auditing 
     Oversight Board'';
       (2) in section 101(a), by striking ``Public Company 
     Accounting Oversight Board'' and inserting ``Auditing 
     Oversight Board''; and
       (3) in the heading of title I, by striking ``PUBLIC COMPANY 
     ACCOUNTING OVERSIGHT BOARD'' and inserting ``AUDITING 
     OVERSIGHT BOARD''.

                  PART 7--SENIOR INVESTMENT PROTECTION

     SEC. 7701. FINDINGS.

       Congress finds that--
       (1) many seniors are targeted by salespersons and advisers 
     using misleading certifications and professional 
     designations;
       (2) many certifications and professional designations used 
     by salespersons and advisers represent limited training or 
     expertise, and may in fact be of no value with respect to 
     advising seniors on financial and estate planning matters, 
     and far too often, such designations are obtained simply by 
     attending a weekend seminar and passing an open book, 
     multiple choice test;
       (3) many seniors have lost their life savings because 
     salespersons and advisers holding a misleading designation 
     have steered them toward products that were unsuitable for 
     them, given their retirement needs and life expectancies;
       (4) seniors have a right to clearly know whether they are 
     working with a qualified adviser who understands the products 
     and is working in their best interest or a self-interested 
     salesperson or adviser advocating particular products; and
       (5) many existing State laws and enforcement measures 
     addressing the use of certifications, professional 
     designations, and suitability standards in selling financial 
     products to seniors are inadequate to protect senior 
     investors from salespersons and advisers using such 
     designations.

     SEC. 7702. DEFINITIONS.

       For purposes of this part:
       (1) Misleading designation.--The term ``misleading 
     designation''--
       (A) means the use of a purported certification, 
     professional designation, or other 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 any legitimate certification, 
     professional designation, license, or other credential, if--
       (i) it has been offered by an academic institution having 
     regional accreditation; or
       (ii) it meets the standards for certifications, licenses, 
     and professional designations outlined by the North American 
     Securities Administrators Association (in this part referred 
     to as the ``NASAA'') Model Rule on the Use of Senior-Specific 
     Certifications and Professional Designations, as in effect on 
     the date of the enactment of this subtitle, or any successor 
     thereto, or it was issued by or obtained from any State.
       (2) Financial product.--The term ``financial product'' 
     means securities, insurance products (including insurance 
     products which pay a return, whether fixed or variable), and 
     bank and loan products.
       (3) Misleading or fraudulent marketing.--The term 
     ``misleading or fraudulent marketing'' means the use of a 
     misleading designation when selling to or advising a senior 
     about the sale of a financial product.
       (4) Senior.--The term ``senior'' means any individual who 
     has attained the age of 62 years or more.
       (5) State.--The term ``State'' means each of the 50 States, 
     the District of Columbia, and the unincorporated territories 
     of Puerto Rico and the U.S. Virgin Islands.

     SEC. 7703. GRANTS TO STATES FOR ENHANCED PROTECTION OF 
                   SENIORS FROM BEING MISLEAD BY FALSE 
                   DESIGNATIONS.

       (a) Grant Program.--The Securities and Exchange Commission 
     (in this part referred to as the ``Commission'')--
       (1) shall establish a program in accordance with this part 
     to provide grants to States--
       (A) to investigate and prosecute misleading and fraudulent 
     marketing practices; or
       (B) to develop educational materials and training aimed at 
     reducing misleading and fraudulent marketing of financial 
     products toward seniors; and
       (2) may establish such performance objectives, reporting 
     requirements, and application procedures for States and State 
     agencies receiving grants under this part as the Commission 
     determines are necessary to carry out and assess the 
     effectiveness of the program under this part.
       (b) Use of Grant Amounts.--A grant under this part may be 
     used (including through subgrants) by the State or the 
     appropriate State agency designated by the State--
       (1) to fund additional staff to identify, investigate, and 
     prosecute (through civil, administrative, or criminal 
     enforcement actions) cases involving misleading or fraudulent 
     marketing of financial products to seniors;
       (2) to fund technology, equipment, and training for 
     regulators, prosecutors, and law enforcement 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 those 
     targeting 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 of financial products;
       (5) to provide educational materials and training to 
     seniors to increase their awareness and understanding of 
     designations; and
       (6) to develop comprehensive plans to combat misleading or 
     fraudulent marketing of financial products to seniors.
       (c) Grant Requirements.--
       (1) Maximum.--The amount of a grant under this part may not 
     exceed $500,000 per fiscal year per State, if all 
     requirements of paragraphs (2), (3), (4), and (5) are met. 
     Such amount shall be limited to $100,000 per fiscal year per 
     State in any case in which the State meets the requirements 
     of--
       (A) paragraphs (2) and (3), but not each of paragraphs (4) 
     and (5); or
       (B) paragraphs (4) and (5), but not each of paragraphs (2) 
     and (3).
       (2) Standard designation rules for securities.--A State 
     shall have adopted rules on the appropriate use of 
     designations in the offer or sale of securities or investment 
     advice, which shall meet or exceed the minimum requirements 
     of the NASAA Model Rule on the Use of Senior-Specific 
     Certifications and Professional Designations, as in effect on 
     the date of the enactment of this subtitle, or any successor 
     thereto.
       (3) Suitability rules for securities.--A State shall have 
     adopted standard rules on the suitability requirements in the 
     sale of securities, which shall, to the extent practicable, 
     conform to the minimum requirements on suitability imposed by 
     self-regulatory organization rules under the securities laws 
     (as defined in section 3 of the Securities Exchange Act of 
     1934).
       (4) Standard designation rules for insurance products.--A 
     State shall have adopted standard rules on the appropriate 
     use of designations in the sale of insurance products, which 
     shall, 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, as in effect on the date of the 
     enactment of this subtitle, or any successor thereto.
       (5) Suitability and supervision rules for annuity 
     products.--
       (A) In general.--A State shall have adopted rules governing 
     insurer supervision of, suitability of, and insurer and 
     insurance producer conduct relating to, the sale of annuity 
     products, including fixed and index annuities.
       (B) Annuity products criteria.--The rules required by 
     subparagraph (A) shall, to the extent practicable, provide--
       (i) that insurers, and insurance producers are responsible 
     for, and liable for penalties for, the suitability of each 
     recommended annuity transaction;

[[Page 31193]]

       (ii) that insurers and insurance producers are required to 
     apply a standard for determining the suitability of each 
     recommended annuity transaction, including fixed and index 
     annuities, that is at least as protective of the interests of 
     the consumer as rule 2821(b) of the Financial Industry 
     Regulatory Authority (in this paragraph referred to as 
     ``FINRA''), as in effect on the date of the enactment of this 
     subtitle, or any successor to such rule;
       (iii) that insurers and insurance producers are required to 
     maintain a process for review of the suitability, and 
     approval or disapproval, of each recommended annuity 
     transaction that is at least as protective of the interests 
     of the consumer as the principal review required under rule 
     2821(c) of FINRA, as in effect on the date of the enactment 
     of this subtitle, or any successor to such rule;
       (iv) that insurers and insurance producers are required to 
     maintain processes for the supervision of direct annuity 
     sales and insurance producer-recommended annuity sales 
     (including procedures for the insurer to obtain and confirm 
     consumer suitability information and for the insurer to 
     confirm consumer understanding of the annuity transaction) 
     that are at least as protective of the interests of the 
     consumer as member broker and dealer supervision requirements 
     of FINRA, as in effect on the date of the enactment of this 
     subtitle, or any successor to such requirements;
       (v) that insurers are required to verify that each 
     insurance producer successfully completes, and each insurance 
     producer is required to receive, training designed to ensure 
     that the insurance producer is competent to recommend each 
     class of annuity;
       (vi) that insurers are required to verify that insurance 
     producers receive, and insurance producers are required to 
     receive, training regarding the features of each offered 
     annuity product, to an extent that is at least as protective 
     of the interests of the consumer as the FINRA firm element 
     training requirements, as in effect on the date of the 
     enactment of this subtitle, or any successor to such 
     requirements;
       (vii) for coordination of such rules with the rules of 
     FINRA governing member brokers, dealers, and security 
     representatives, to the extent appropriate, consistent with 
     protecting the interests of consumers, for State insurance 
     regulators to rely on, or to avoid duplication of FINRA 
     rules; and
       (viii) for exemption from such rules only if such exemption 
     is consistent with the protection of consumers.

     SEC. 7704. APPLICATIONS.

       To be eligible for a grant under this part, the State or 
     appropriate State agency shall submit to the Commission a 
     proposal to use the grant money to protect seniors from 
     misleading or fraudulent marketing techniques in the offer 
     and sale of financial products, which application shall--
       (1) identify the scope of the problem;
       (2) describe how the proposed program will help to protect 
     seniors from misleading or fraudulent marketing in the sale 
     of financial products, including, at a minimum--
       (A) by proactively identifying senior victims of misleading 
     and fraudulent marketing in the offer and sale of financial 
     products;
       (B) how the proposed program can assist in the 
     investigation and prosecution of those using misleading or 
     fraudulent marketing in the offer and sale of financial 
     products to seniors; and
       (C) how the proposed program can help discourage and reduce 
     future cases of misleading or fraudulent marketing in the 
     offer and sale of financial products to seniors; and
       (3) describe how the proposed program is to be integrated 
     with other existing State efforts.

     SEC. 7705. LENGTH OF PARTICIPATION.

       A State receiving a grant under this part shall be provided 
     assistance funds for a period of 3 years, after which the 
     State may reapply for additional funding.

     SEC. 7706. AUTHORIZATION OF APPROPRIATIONS.

       There are authorized to be appropriated to carry out this 
     part, $8,000,000 for each of the fiscal years 2011 through 
     2015.

          PART 8--REGISTRATION OF MUNICIPAL FINANCIAL ADVISORS

     SEC. 7801. MUNICIPAL FINANCIAL ADVISER REGISTRATION 
                   REQUIREMENT.

       (a) In General.--The Securities Exchange Act of 1934 (as 
     amended by section 3204) is amended by inserting after 
     section 15F (15 U.S.C. 78o-7) the following new section:

     ``SEC. 15G. MUNICIPAL FINANCIAL ADVISER REGISTRATION 
                   REQUIREMENT.

       ``(a)(1)(A) It shall be unlawful for any person to make use 
     of the mails or any means or instrumentality of interstate 
     commerce to act as a municipal financial adviser unless such 
     person is registered as a municipal financial adviser in 
     accordance with subsection (b).
       ``(B) Subparagraph (A) shall not apply to a natural person 
     associated with a municipal financial adviser, as long as 
     such adviser is registered in accordance with subsection (b) 
     and is not a natural person.
       ``(2) The Commission, by rule or order, as it deems 
     consistent with the public interest and the protection of 
     investors, may conditionally or unconditionally exempt from 
     paragraph (1) of this section any municipal financial adviser 
     or class of municipal financial advisers specified in such 
     rule or order.
       ``(b)(1) A municipal financial adviser may be registered by 
     filing with the Commission an application for registration in 
     such form and containing such information and documents 
     concerning such municipal financial adviser and any persons 
     associated with such municipal financial adviser as the 
     Commission, by rule, may prescribe as necessary or 
     appropriate in the public interest or for the protection of 
     investors. Within 45 days of the date of the filing of such 
     application (or within such longer period as to which the 
     applicant consents), the Commission shall--
       ``(A) by order grant registration, or
       ``(B) institute proceedings to determine whether 
     registration should be denied. Such proceedings shall include 
     notice of the grounds for denial under consideration and 
     opportunity for hearing and shall be concluded within 120 
     days of the date of the filing of the application for 
     registration. At the conclusion of such proceedings, the 
     Commission, by order, shall grant or deny such registration. 
     The Commission may extend the time for conclusion of such 
     proceedings for up to 90 days if it finds good cause for such 
     extension and publishes its reasons for so finding or for 
     such longer period as to which the applicant consents.

     The Commission shall grant such registration if the 
     Commission finds that the requirements of this section are 
     satisfied. The Commission shall deny such registration if it 
     does not make such a finding or if it finds that if the 
     applicant were so registered, its registration would be 
     subject to suspension or revocation under paragraph (4).
       ``(2) An application for registration of a municipal 
     financial adviser to be formed or organized may be made by a 
     municipal financial adviser to which the municipal financial 
     adviser to be formed or organized is to be the successor. 
     Such application, in such form as the Commission, by rule, 
     may prescribe, shall contain such information and documents 
     concerning the applicant, the successor, and any persons 
     associated with the applicant or the successor, as the 
     Commission, by rule, may prescribe as necessary or 
     appropriate in the public interest or for the protection of 
     investors. The grant or denial of registration to such an 
     applicant shall be in accordance with the procedures set 
     forth in paragraph (1) of this subsection. If the Commission 
     grants such registration, the registration shall terminate on 
     the 45th day after the effective date thereof, unless prior 
     thereto the successor shall, in accordance with such rules 
     and regulations as the Commission may prescribe, adopt the 
     application for registration as its own.
       ``(3) Any provision of this title (other than section 5 and 
     subsection (a) of this section) which prohibits any act, 
     practice, or course of business if the mails or any means or 
     instrumentality of interstate commerce is used in connection 
     therewith shall also prohibit any such act, practice, or 
     course of business by any registered municipal financial 
     adviser or any person acting on behalf of such a municipal 
     financial adviser, irrespective of any use of the mails or 
     any means or instrumentality of interstate commerce in 
     connection therewith.
       ``(4) The Commission, by order, shall censure, place 
     limitations on the activities, functions, or operations of, 
     suspend for a period not exceeding 12 months, or revoke the 
     registration of any municipal financial adviser if it finds, 
     on the record after notice and opportunity for hearing, that 
     such censure, placing of limitations, suspension, or 
     revocation is in the public interest and that such municipal 
     financial adviser, whether prior or subsequent to becoming 
     such, or any person associated with such municipal financial 
     adviser, whether prior or subsequent to becoming so 
     associated--
       ``(A) has willfully made or caused to be made in any 
     application for registration or report required to be filed 
     with the Commission or with any other appropriate regulatory 
     agency under this title, or in any proceeding before the 
     Commission with respect to registration, 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, or has omitted to state in any such 
     application or report any material fact which is required to 
     be stated therein;
       ``(B) has been convicted within 10 years preceding the 
     filing of any application for registration or at any time 
     thereafter of any felony or misdemeanor or of a substantially 
     equivalent crime by a foreign court of competent jurisdiction 
     which the Commission finds--
       ``(i) involves the purchase or sale of any security, the 
     taking of a false oath, the making of a false report, 
     bribery, perjury, burglary, any substantially equivalent 
     activity however denominated by the laws of the relevant 
     foreign government, or conspiracy to commit any such offense;
       ``(ii) arises out of the conduct of the business of a 
     municipal financial adviser, broker, dealer, municipal 
     securities dealer, government securities broker, government 
     securities dealer, investment adviser, bank, insurance 
     company, fiduciary, transfer agent, nationally recognized 
     statistical rating organization, foreign person performing a 
     function substantially equivalent to any of the above,

[[Page 31194]]

     or entity or person required to be registered under the 
     Commodity Exchange Act (7 U.S.C. 1 et seq.) or any 
     substantially equivalent foreign statute or regulation;
       ``(iii) involves the larceny, theft, robbery, extortion, 
     forgery, counterfeiting, fraudulent concealment, 
     embezzlement, fraudulent conversion, or misappropriation of 
     funds, or securities, or substantially equivalent activity 
     however denominated by the laws of the relevant foreign 
     government; or
       ``(iv) involves the violation of section 152, 1341, 1342, 
     or 1343 or chapter 25 or 47 of title 18, or a violation of a 
     substantially equivalent foreign statute;
       ``(C) is permanently or temporarily enjoined by order, 
     judgment, or decree of any court of competent jurisdiction 
     from acting as a municipal financial adviser, investment 
     adviser, underwriter, broker, dealer, municipal securities 
     dealer, government securities broker, government securities 
     dealer, transfer agent, nationally recognized statistical 
     rating organization, foreign person performing a function 
     substantially equivalent to any of the above, or entity or 
     person required to be registered under the Commodity Exchange 
     Act or any substantially equivalent foreign statute or 
     regulation, or as an affiliated person or employee of any 
     investment company, bank, insurance company, foreign entity 
     substantially equivalent to any of the above, or entity or 
     person required to be registered under the Commodity Exchange 
     Act or any substantially equivalent foreign statute or 
     regulation or from engaging in or continuing any conduct or 
     practice in connection with any such activity, or in 
     connection with the purchase or sale of any security;
       ``(D) has willfully violated any provision of the 
     Securities Act of 1933, the Investment Advisers Act of 1940, 
     the Investment Company Act of 1940, the Commodity Exchange 
     Act, this title, the rules or regulations under any of such 
     statutes, or is unable to comply with any such provision;
       ``(E) has willfully aided, abetted, counseled, commanded, 
     induced, or procured the violation by any other person of any 
     provision of the Securities Act of 1933, the Investment 
     Advisers Act of 1940, the Investment Company Act of 1940, the 
     Commodity Exchange Act, this title, the rules or regulations 
     under any of such statutes, or has failed reasonably to 
     supervise, with a view to preventing violations of the 
     provisions of such statutes, rules, and regulations, another 
     person who commits such a violation, if such other person is 
     subject to his supervision. For the purposes of this 
     subparagraph, no person shall be deemed to have failed 
     reasonably to supervise any other person, if--
       ``(i) there have been established procedures, and a system 
     for applying such procedures, which would reasonably be 
     expected to prevent and detect, insofar as practicable, any 
     such violation by such other person, and
       ``(ii) such person has reasonably discharged the duties and 
     obligations incumbent upon him by reason of such procedures 
     and system without reasonable cause to believe that such 
     procedures and system were not being complied with;
       ``(F) is subject to any order of the Commission barring or 
     suspending the right of the person to be associated with a 
     municipal financial adviser;
       ``(G) has been found by a foreign financial regulatory 
     authority to have--
       ``(i) made or caused to be made in any application for 
     registration or report required to be filed with a foreign 
     financial regulatory authority, or in any proceeding before a 
     foreign financial regulatory authority with respect to 
     registration, any statement that 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, or has omitted 
     to state in any application or report to the foreign 
     financial regulatory authority any material fact that is 
     required to be stated therein;
       ``(ii) violated any foreign statute or regulation regarding 
     transactions in securities, or contracts of sale of a 
     commodity for future delivery, traded on or subject to the 
     rules of a contract market or any board of trade; or
       ``(iii) aided, abetted, counseled, commanded, induced, or 
     procured the violation by any person of any provision of any 
     statutory provisions enacted by a foreign government, or 
     rules or regulations thereunder, empowering a foreign 
     financial regulatory authority regarding transactions in 
     securities, or contracts of sale of a commodity for future 
     delivery, traded on or subject to the rules of a contract 
     market or any board of trade, or has been found, by a foreign 
     financial regulatory authority, to have failed reasonably to 
     supervise, with a view to preventing violations of such 
     statutory provisions, rules, and regulations, another person 
     who commits such a violation, if such other person is subject 
     to his supervision; or
       ``(H) is subject to any final order of a State securities 
     commission (or any agency or officer performing like 
     functions), State authority that supervises or examines 
     banks, savings associations, or credit unions, State 
     insurance commission (or any agency or office performing like 
     functions), an appropriate Federal banking agency (as defined 
     in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 
     1813(q))), or the National Credit Union Administration, 
     that--
       ``(i) bars such person from association with an entity 
     regulated by such commission, authority, agency, or officer, 
     or from engaging in the business of securities, insurance, 
     banking, savings association activities, or credit union 
     activities; or
       ``(ii) constitutes a final order based on violations of any 
     laws or regulations that prohibit fraudulent, manipulative, 
     or deceptive conduct.
       ``(5) Pending final determination whether any registration 
     under this subsection shall be revoked, the Commission, by 
     order, may suspend such registration, if such suspension 
     appears to the Commission, after notice and opportunity for 
     hearing, to be necessary or appropriate in the public 
     interest or for the protection of investors. Any registered 
     municipal financial adviser may, upon such terms and 
     conditions as the Commission deems necessary or appropriate 
     in the public interest or for the protection of investors, 
     withdraw from registration by filing a written notice of 
     withdrawal with the Commission. If the Commission finds that 
     any registered municipal financial adviser is no longer in 
     existence or has ceased to do business as a municipal 
     financial adviser, the Commission, by order, shall cancel the 
     registration of such municipal financial adviser.
       ``(6)(A) 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 municipal financial adviser, 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 municipal financial adviser, 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--
       ``(i) 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 this subsection;
       ``(ii) 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 paragraph; or
       ``(iii) is enjoined from any action, conduct, or practice 
     specified in subparagraph (C) of such paragraph (4).
       ``(B) It shall be unlawful--
       ``(i) for any person as to whom an order under subparagraph 
     (A) is in effect, without the consent of the Commission, 
     willfully to become, or to be, associated with a municipal 
     financial adviser in contravention of such order; or
       ``(ii) for any municipal financial adviser to permit such a 
     person, without the consent of the Commission, to become or 
     remain, a person associated with the municipal financial 
     adviser in contravention of such order, if such municipal 
     financial adviser knew, or in the exercise of reasonable care 
     should have known, of such order.
       ``(7) No registered municipal financial adviser shall act 
     as such unless it meets such standards of operational 
     capability and such municipal financial adviser and all 
     natural persons associated with such municipal financial 
     adviser meet such standards of training, experience, 
     competence, and such other qualifications as the Commission 
     finds necessary or appropriate in the public interest or for 
     the protection of investors. The Commission shall establish 
     such standards by rules and regulations, which may--
       ``(A) specify that all or any portion of such standards 
     shall be applicable to any class of municipal financial 
     advisers and persons associated with municipal financial 
     advisers;
       ``(B) require persons in any such class to pass tests 
     prescribed in accordance with such rules and regulations, 
     which tests shall, with respect to any class of partners, 
     officers, or supervisory employees (which latter term may be 
     defined by the Commission's rules and regulations) engaged in 
     the management of the municipal financial adviser, include 
     questions relating to bookkeeping, accounting, supervision of 
     employees, maintenance of records, and other appropriate 
     matters; and
       ``(C) provide that persons in any such class other than 
     municipal financial advisers and partners, officers, and 
     supervisory employees of municipal financial advisers, may be 
     qualified solely on the basis of compliance with such 
     standards of training and such other qualifications as the 
     Commission finds appropriate.

     The Commission, by rule, may prescribe reasonable fees and 
     charges to defray its costs in carrying out this paragraph, 
     including, but not limited to, fees for any test administered 
     by it or under its direction.
       ``(c)(1)(A) No municipal financial adviser shall make use 
     of the mails or any means or instrumentality of interstate 
     commerce in connection with which such municipal financial 
     adviser engages in any fraudulent, deceptive, or manipulative 
     act or practice or violates such rules and regulations 
     regarding conflicts of interest or fair practices, including 
     but not limited to rules and regulations related to political 
     contributions, as the Commission shall prescribe in the 
     public interest or for the protection of investors or to 
     maintain fair and orderly markets.

[[Page 31195]]

       ``(B) The Commission shall, for the purposes of this 
     paragraph as the Commission finds necessary or appropriate in 
     the public interest or for the protection of investors, by 
     rules and regulations define, and prescribe means reasonably 
     designed to prevent, such acts and practices as are 
     fraudulent, deceptive, or manipulative.
       ``(2) If the Commission finds, after notice and opportunity 
     for a hearing, that any person subject to the provisions of 
     this section or any rule or regulation thereunder has failed 
     to comply with any such provision, rule, or regulation in any 
     material respect, the Commission may publish its findings and 
     issue an order requiring such person, and any person who was 
     a cause of the failure to comply due to an act or omission 
     the person knew or should have known would contribute to the 
     failure to comply, to comply, or to take steps to effect 
     compliance, with such provision or such rule or regulation 
     thereunder upon such terms and conditions and within such 
     time as the Commission may specify in such order.
       ``(d) Every registered municipal financial adviser shall 
     establish, maintain, and enforce written policies and 
     procedures reasonably designed, taking into consideration the 
     nature of such municipal financial adviser's business, to 
     prevent the misuse in violation of this title, or the rules 
     or regulations thereunder, of material, nonpublic information 
     by such municipal financial adviser or any person associated 
     with such municipal financial adviser. The Commission, as it 
     deems necessary or appropriate in the public interest or for 
     the protection of investors, shall adopt rules or regulations 
     to require specific policies or procedures reasonably 
     designed to prevent misuse in violation of this title (or the 
     rules or regulations thereunder) of material, nonpublic 
     information.
       ``(e) A municipal financial adviser and any person 
     associated with such municipal financial adviser shall be 
     deemed to have a fiduciary duty to any municipal securities 
     issuer for whom such municipal financial adviser acts as a 
     municipal financial adviser. A municipal financial adviser 
     may not engage in any act, practice, or course of business 
     which is not consistent with a municipal financial adviser's 
     fiduciary duty. The Commission shall, for the purposes of 
     this paragraph, by rules and regulations define, and 
     prescribe means reasonably designed to prevent, such acts, 
     practices, and courses of business as are not consistent with 
     a municipal financial adviser's fiduciary duty to its 
     clients.''.
       (b) Definition.--Section 3(a) of the Securities Exchange 
     Act of 1934 (15 U.S.C. 78c(a)) (as amended by section 
     3201(6)) is amended by adding at the end the following new 
     paragraphs:
       ``(78) Municipal financial adviser.--
       ``(A) The term `municipal financial adviser' means a person 
     who, for compensation, engages in the business of--
       ``(i) providing advice to a municipal securities issuer 
     with respect to--

       ``(I) the issuance or proposed issuance of securities, 
     including any remarketing of municipal securities directly or 
     indirectly by or on behalf of a municipal securities issuer;
       ``(II) the investment of proceeds from securities issued by 
     such municipal securities issuer;
       ``(III) the hedging of any risks associated with subclauses 
     (I) or (II), including advice as to swap agreements (as 
     defined in section 206A of the Gramm-Leach-Bliley Act 
     regardless of whether the counterparties constitute eligible 
     contract participants); or
       ``(IV) preparation of disclosure documents in connection 
     with the issuance, proposed issuance, or previous issuance of 
     securities issued by a municipal securities issuer, 
     including, without limitation, official statements and 
     documents prepared in connection with a written agreement or 
     contract for the benefit of holders of such securities 
     described in section 240.15c2-12 of title 17, Code of Federal 
     Regulations;

       ``(ii) assisting a municipal securities issuer in selecting 
     or negotiating guaranteed investment contracts or other 
     investment products; or
       ``(iii) assisting any municipal securities issuer in the 
     primary offering of securities not involving a public 
     offering.
       ``(B) Such term does not include--
       ``(i) an attorney, if the attorney is offering advice or 
     providing services that are of a traditional legal nature;
       ``(ii) a nationally recognized statistical rating 
     organization to the extent it is involved in the process of 
     developing credit ratings;
       ``(iii) a registered broker-dealer when acting as an 
     underwriter, as such term is defined in section 2(a)(11) of 
     the Securities Act of 1933 (15 U.S.C. section 77b(a)(11)); or
       ``(iv) a State or any political subdivision thereof.
       ``(79) Municipal securities issuer.--The term `municipal 
     securities issuer' means--
       ``(A) any entity that has the ability to issue a security 
     the interest on which is excludable from gross income under 
     section 103 of the Internal Revenue Code of 1986 and the 
     regulations thereunder; or
       ``(B) any person who receives the proceeds generated from 
     the issuance of municipal securities.
       ``(80) Person associated with a municipal financial 
     adviser; associated person of a municipal financial 
     adviser.--The term `person associated with a municipal 
     financial adviser' or `associated person of a municipal 
     financial adviser' means any partner, officer, director, or 
     branch manager of such municipal financial adviser (or any 
     person occupying a similar status or performing similar 
     functions), any person directly or indirectly controlling, 
     controlled by, or under common control with such municipal 
     financial adviser, or any employee of such municipal 
     financial adviser, except that any person associated with a 
     municipal financial adviser whose functions are solely 
     clerical or ministerial shall not be included in the meaning 
     of such term for purposes of section 15G(b) (other than 
     paragraph (6) thereof).''.

     SEC. 7802. CONFORMING AMENDMENTS.

       (a) Securities Exchange Act of 1934.--The Securities 
     Exchange Act of 1934 is amended--
       (1) in section 15(b)(4)(B)(ii) (15 U.S.C. 
     78o(b)(4)(B)(ii)), by inserting ``municipal finance 
     adviser,'' after ``nationally recognized statistical rating 
     organization,'';
       (2) in section 15(b)(4)(C) (15 U.S.C. 78o(b)(4)(C)), by 
     inserting ``municipal finance adviser,'' after ``nationally 
     recognized statistical rating organization,''; and
       (3) in section 17(a)(1) (15 U.S.C. 78q(a)(1)), by inserting 
     ``registered municipal financial adviser,'' after 
     ``nationally recognized statistical rating organization,''.
       (b) Investment Company Act of 1940.--The Investment Company 
     Act of 1940 is amended--
       (1) in section 2(a) (15 U.S.C. 80a-2(a)), by inserting at 
     the end the following new paragraph:
       ``(54) The term `municipal finance adviser' has the same 
     meaning as in section 3 of the Securities Exchange Act of 
     1934.'';
       (2) in section 9(a)(1) (15 U.S.C. 80a-9(a)(1)), by 
     inserting ``municipal finance adviser,'' after ``credit 
     rating agency,''; and
       (3) in section 9(a)(2) (15 U.S.C. 80a-9(a)(2)), by 
     inserting ``municipal finance adviser,'' after ``credit 
     rating agency,''.
       (c) Investment Advisers Act of 1940.--The Investment 
     Advisers Act of 1940 is amended--
       (1) in section 202(a) (15 U.S.C. 80b-2(a)), by inserting at 
     the end the following new paragraph:
       ``(31) The term `municipal finance adviser' has the same 
     meaning as in section 3 of the Securities Exchange Act of 
     1934.'';
       (2) in section 203(e)(2)(B) (15 U.S.C. 80b-3(e)(2)(B)), by 
     inserting ``municipal finance adviser,'' after ``credit 
     rating agency,''; and
       (3) in section 203(e)(4) (15 U.S.C. 80b-3(e)(4)) is amended 
     by inserting ``municipal finance adviser,'' after ``credit 
     rating agency,''.

     SEC. 7803. EFFECTIVE DATES.

       (a) In General.--The amendments made by this part shall 
     take effect 30 days after the date of the enactment of this 
     subtitle.
       (b) Effective Date and Requirements for Regulations.--
     Notwithstanding subsection (a), the Securities and Exchange 
     Commission shall, within 120 days after the date of the 
     enactment of this subtitle, publish for notice and public 
     comment such regulations as are initially required to 
     implement this part, and shall take final action with respect 
     to such regulations not later than 270 days after the date of 
     enactment of this subtitle.
       (c) Registration Date.--No person may continue to act as a 
     municipal financial adviser, as such term is defined in 
     section 3(a)(65) of the Securities Exchange Act of 1934 (as 
     added by this part), after 30 days after the date the 
     regulations described in subsection (b) become effective 
     unless such person has been registered as required by the 
     amendment made by section 7701 of this part.

                   TITLE VI--FEDERAL INSURANCE OFFICE

     SEC. 8001. SHORT TITLE.

       This title may be cited as the ``Federal Insurance Office 
     Act of 2009''.

     SEC. 8002. FEDERAL INSURANCE OFFICE ESTABLISHED.

       (a) Establishment of Office.--Subchapter I of chapter 3 of 
     title 31, United States Code, is amended--
       (1) by transferring and inserting section 312 after section 
     313;
       (2) by redesignating sections 313 and 312 (as so 
     transferred) as sections 312 and 315, respectively; and
       (3) by inserting after section 312 (as so redesignated) the 
     following new sections:

     ``SEC. 313. FEDERAL INSURANCE OFFICE.

       ``(a) Establishment of Office.--There is established the 
     Federal Insurance Office as an office in the Department of 
     the Treasury.
       ``(b) Leadership.--The Office shall be headed by a 
     Director, who shall be appointed by the Secretary of the 
     Treasury. The position of such Director shall be a career 
     reserved position in the Senior Executive Service.
       ``(c) Functions.--
       ``(1) Authority pursuant to direction of secretary.--The 
     Office shall have the authority, pursuant to the direction of 
     the Secretary, as follows:
       ``(A) To monitor the insurance industry to gain expertise.
       ``(B) To identify 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.
       ``(C) To recommend to the Financial Services Oversight 
     Council that it designate an insurer, including its 
     affiliates, as an entity subject to stricter standards.
       ``(D) To assist the Secretary in administering the 
     Terrorism Insurance Program

[[Page 31196]]

     established in the Department of the Treasury under the 
     Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note).
       ``(E) 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 any successor organization and assisting the 
     Secretary in negotiating covered agreements.
       ``(F) To determine, in accordance with subsection (f), 
     whether State insurance measures are preempted by covered 
     agreements.
       ``(G) To consult with the States regarding insurance 
     matters of national importance and prudential insurance 
     matters of international importance.
       ``(H) To perform such other related duties and authorities 
     as may be assigned to it 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 determined 
     by the Secretary based on section 2791 of the Public Health 
     Service Act (42 U.S.C. 300gg-91).
       ``(e) Gathering of Information.--
       ``(1) General.--In carrying out its functions under 
     subsection (c), the Office may request, receive, and collect 
     data and information on and from the insurance industry and 
     insurers, enter into information-sharing agreements, analyze 
     and disseminate data and information, and issue reports 
     regarding all lines of insurance except health insurance.
       ``(2) Collection of information from insurers and 
     affiliates.--Except as provided in paragraph (3) and subject 
     to paragraph (4), the Office may require an insurer, or 
     affiliate of an insurer, to submit such data or information 
     that the Office may reasonably require in carrying out its 
     functions under subsection (c). Notwithstanding subsection 
     (p) and for the purposes of this paragraph only, the term 
     `insurer' means any entity that is authorized to write 
     insurance or reinsure risks and issue contracts or policies 
     in one 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 may be established 
     by the Office by order or rule. Such threshold shall be 
     appropriate to the particular request and need for the data 
     or information.
       ``(4) Advance coordination.--Before collecting any data or 
     information under paragraph (2) from an insurer, or affiliate 
     of an insurer, the Office shall coordinate with each relevant 
     Federal agency and State insurance regulator (or other 
     relevant Federal or State regulatory agency, if any, in the 
     case of an affiliate of an insurer) and any publicly 
     available sources to determine if the information to be 
     collected is available from, or may be obtained in a timely 
     manner by, such Federal agency or State insurance regulator, 
     individually or collectively, other regulatory agency, or 
     publicly available sources. If the Director determines that 
     such data or information is available, or may be obtained in 
     a timely manner, from such an agency, regulator, regulatory 
     agency, or source, the Director shall obtain the data or 
     information from such agency, regulator, regulatory agency, 
     or source. If the Director determines that such data or 
     information is not so available, the Director may collect 
     such data or information from an insurer (or affiliate) only 
     if the Director complies with the requirements of subchapter 
     I of chapter 35 of title 44, United States Code (relating to 
     Federal information policy; commonly known as the Paperwork 
     Reduction Act) in collecting such data or information. 
     Notwithstanding any other provision of law, each such 
     relevant Federal agency and State insurance regulator or 
     other Federal or State regulatory agency is authorized to 
     provide to the Office such data or information.
       ``(5) Confidentiality.--
       ``(A) The submission of any non-publicly 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) 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 non-publicly 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) 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 
     shall comply with applicable Federal law and that 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) Section 552 of title 5, United States Code, shall 
     apply to any data or information submitted by an insurer or 
     affiliate of an insurer.
       ``(f) Preemption of State Insurance Measures.--
       ``(1) Standard.--A State insurance measure shall be 
     preempted pursuant to this section or section 314 if, and 
     only to the extent that the Director determines, in 
     accordance with this subsection, that the measure--
       ``(A) directly results in less favorable treatment of a 
     non-United States insurer domiciled in a foreign jurisdiction 
     that is subject to a covered agreement than a United States 
     insurer domiciled, licensed, admitted, or otherwise 
     authorized in that State; and
       ``(B) is inconsistent with a covered agreement that is 
     entered into on a date after the date of the enactment of 
     this Act.
       ``(2) Determination.--
       ``(A) Notice of potential inconsistency.--Before making any 
     determination of inconsistency, the Director shall--
       ``(i) notify and consult with the appropriate State 
     regarding any potential inconsistency or preemption;
       ``(ii) notify and consult with the United States Trade 
     Representative regarding any potential inconsistency or 
     preemption;
       ``(iii) 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 covered agreement;
       ``(iv) provide interested parties a reasonable opportunity 
     to submit written comments to the Office;
       ``(v) consider the effect of preemption on--

       ``(I) the protection of policyholders and policy claimants;
       ``(II) the maintenance of the safety, soundness, integrity, 
     and financial responsibility of any entity involved in the 
     business of insurance or insurance operations;
       ``(III) ensuring the integrity and stability of the United 
     States financial system; and
       ``(IV) the creation of a gap or void in financial or market 
     conduct regulation of any entity involved in the business of 
     insurance or insurance operations in the United States; and

       ``(vi) consider any comments received.

     The Director shall provide the notifications required under 
     clauses (i), (ii), and (iii) contemporaneously.
       ``(B) Scope of review.--For purposes of this section, the 
     Director's determination of State insurance measures shall be 
     limited to the subject matter of the prudential measures 
     applicable to the business of insurance contained within the 
     covered agreement involved.
       ``(C) Notice of determination of inconsistency.--Upon 
     making any determination of inconsistency, 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 shorter than 90 days, before the determination shall 
     become effective; and
       ``(iii) notify the Committee on Financial Services of the 
     House of Representatives and the Committee on Banking, 
     Housing, and Urban Affairs of the Senate of the 
     inconsistency.
       ``(3) Notice of effectiveness.--Upon the conclusion of the 
     period referred to in paragraph (2)(C)(ii), if the basis for 
     the determination of inconsistency still exists, the 
     determination shall become effective and the Director shall--
       ``(A) cause to be published 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 it has been preempted under this 
     subsection.
       ``(g) Applicability of Administrative Procedure Act.--
     Determinations of inconsistency 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), except that in any action for 
     judicial review of a determination of inconsistency, the 
     court shall determine the matter de novo.
       ``(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 and 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 any State insurance measure that governs any 
     insurer's rates, premiums, underwriting or sales practices, 
     or State coverage requirements for insurance, or to the 
     application of the antitrust laws of any State to the 
     business of insurance;
       ``(2) preempt any State insurance measure governing the 
     capital or solvency of an insurer, except to the extent that 
     such State

[[Page 31197]]

     insurance measure directly results in less favorable 
     treatment of a non-United States insurer than a United States 
     insurer;
       ``(3) be construed to alter, amend, or limit the 
     responsibility of the Consumer Financial Protection Agency;
       ``(4) preempt any State insurance measure because of 
     inconsistency with any agreement that is not a covered 
     agreement (as such term in defined in subsection (p)); or
       ``(5) 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 a general supervisory or regulatory authority of 
     the Office or the Department of the Treasury over the 
     business of insurance.
       ``(l) Retention of Authority of Federal Financial 
     Regulatory Agencies.--Nothing in this section or section 314 
     shall be construed to limit the authority of any Federal 
     financial regulatory agency, including the authority to 
     develop and coordinate policy, negotiate, and enter into 
     agreements with foreign governments, authorities, regulators, 
     and multi-national regulatory committees and to preempt State 
     measures to affect uniformity with international regulatory 
     agreements.
       ``(m) Retention of Authority of United States Trade 
     Representative.--Nothing in this section or section 314 shall 
     be construed to affect the authority of the Office of the 
     United States Trade Representative pursuant to section 141 of 
     the Trade Act of 1974 (19 U.S.C. 2171) or any other provision 
     of law, including authority over the development and 
     coordination of United States international trade policy and 
     the administration of the United States trade agreements 
     program.
       ``(n) Reports to Congress.--
       ``(1) Annual report.--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 Committees on 
     Financial Services and Ways and Means of the House of 
     Representatives and the Committees on Banking, Housing, and 
     Urban Affairs and Finance of the Senate on the insurance 
     industry, any actions taken by the office pursuant to 
     subsection (f) (regarding preemption of inconsistent State 
     insurance measures).
       ``(2) Other reports.--The Director shall submit to the 
     President and the Committees referred to in paragraph (1) any 
     other information or reports as deemed relevant by the 
     Director or as requested by the Chairman or Ranking Member of 
     any of such Committees.
       ``(o) Use of Existing Resources.--To carry out this 
     section, the Office may employ personnel, facilities, and 
     other Department of the Treasury resources available to the 
     Secretary and the Secretary shall dedicate specific personnel 
     to the Office.
       ``(p) Definitions.--For purposes of this section and 
     section 314, the following definitions shall apply:
       ``(1) Affiliate.--The term `affiliate' means, with respect 
     to an insurer, any person that controls, is controlled by, or 
     is under common control with the insurer.
       ``(2) Covered agreement.--The term `covered agreement' 
     means a written bilateral or multilateral recognition 
     agreement that--
       ``(A) is entered into between the United States and one or 
     more foreign governments, authorities, or regulatory 
     entities; and
       ``(B) provides for recognition of prudential measures with 
     respect to the business of insurance or reinsurance that 
     achieves a level of protection for insurance or reinsurance 
     consumers that is substantially equivalent to the level of 
     protection achieved under State insurance or reinsurance 
     regulation.
       ``(3) Determination of inconsistency.--The term 
     `determination of inconsistency' means a determination that a 
     State insurance measure is preempted under subsection (f).
       ``(4) Federal financial regulatory agency.--The term 
     `Federal financial regulatory agency' means the Department of 
     the Treasury, the Board of Governors of the Federal Reserve 
     System, the Office of the Comptroller of the Currency, the 
     Office of Thrift Supervision, the Securities and Exchange 
     Commission, the Commodity Futures Trading Commission, the 
     Federal Deposit Insurance Corporation, the Federal Housing 
     Finance Agency, or the National Credit Union Administration.
       ``(5) Insurer.--The term `insurer' means any person engaged 
     in the business of insurance, including reinsurance.
       ``(6) 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.
       ``(7) Office.--The term `Office' means the Federal 
     Insurance Office established by this section.
       ``(8) Secretary.--The term `Secretary' means the Secretary 
     of the Treasury.
       ``(9) 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.
       ``(10) 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.
       ``(11) State insurance regulator.--The term `State 
     insurance regulator' means any State regulatory authority 
     responsible for the supervision of insurers.
       ``(12) 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.
       ``(q) Authorization of Appropriations.--There are 
     authorized to be appropriated for the Office such sums as may 
     be necessary for each fiscal year.

     ``SEC. 314. COVERED AGREEMENTS.

       ``(a) Authority.--The Secretary and the United States Trade 
     Representative are authorized, jointly, to negotiate and 
     enter into covered agreements on behalf of the United States.
       ``(b) Requirements for Consultation With Congress.--
       ``(1) In general.--Before initiating negotiations to enter 
     into a covered agreement under subsection (a), during such 
     negotiations, and before entering into any such agreement, 
     the Secretary and the United States Trade Representative 
     shall jointly consult with the Committee on Financial 
     Services and the Committee on Ways and Means of the House of 
     Representatives and the Committee on Banking, Housing, and 
     Urban Affairs and the Committee on Finance of the Senate.
       ``(2) Scope.--The consultation described in paragraph (1) 
     shall include consultation with respect to--
       ``(A) the nature of the agreement;
       ``(B) how and to what extent the agreement will achieve the 
     applicable purposes, policies, priorities, and objectives of 
     section 313 and this section; and
       ``(C) the implementation of the agreement, including the 
     general effect of the agreement on existing State laws.
       ``(c) Submission and Layover Provisions.--A covered 
     agreement under subsection (a) may enter into force with 
     respect to the United States only if--
       ``(1) the Secretary and the United States Trade 
     Representative jointly submit to the congressional committees 
     specified in subsection (b)(1), on a day on which both Houses 
     of Congress are in session, a copy of the final legal text of 
     the agreement; and
       ``(2) a period of 90 calendar days beginning on the date on 
     which the copy of the final legal text of the agreement is 
     submitted to the congressional committees under paragraph (1) 
     has expired.''.
       (b) Duties of Secretary.--Section 321(a) of title 31, 
     United States Code, is amended--
       (1) in paragraph (7), by striking ``and'' at the end;
       (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. Federal Insurance Office.
``Sec. 314. Covered agreements.
``Sec. 315. Continuing in office.''.

     SEC. 8003. REPORT ON GLOBAL REINSURANCE MARKET.

       Not later than September 30, 2011, the Director of the 
     Federal Insurance Office appointed under section 313(b) of 
     title 31, United States Code (as amended by section 
     8002(a)(3) of this title) shall submit to the Committee on 
     Financial Services of the House of Representatives and the 
     Committee on Banking, Housing, and Urban Affairs of the 
     Senate a report describing the breadth and scope of the 
     global reinsurance market and the critical role such market 
     plays in supporting insurance in the United States.

     SEC. 8004. STUDY ON MODERNIZATION AND IMPROVEMENT OF 
                   INSURANCE REGULATION IN THE UNITED STATES.

       (a) Study.--The Director of the Federal Insurance Office 
     appointed under section 313(b) of title 31, United States 
     Code (as amended by section 8002(a)(3) of this title) shall 
     conduct a study on how to modernize and improve the system of 
     insurance regulation in the United States. Such study shall 
     include consideration of the following:
       (1) Effective systemic risk regulation with respect to 
     insurance.
       (2) Strong capital standards and an appropriate match 
     between capital allocation and liabilities for all risk.
       (3) Meaningful and consistent consumer protection for 
     insurance products and practices.
       (4) Increased national uniformity through either a Federal 
     charter or effective action by the States.
       (5) Improved and broadened regulation of insurance 
     companies and affiliates on a consolidated basis, including 
     affiliates outside of the traditional insurance business.

[[Page 31198]]

       (6) International coordination.
       (b) Report.--Not later than one year after the date of the 
     enactment of this Act, the Director shall submit to the 
     Committee on Financial Services of the House of 
     Representatives and the Committee on Banking, Housing, and 
     Urban Affairs of the Senate a report containing--
       (1) the results of the study conducted under subsection 
     (a); and
       (2) any legislative, administrative, or regulatory 
     recommendations that the Director considers appropriate to 
     modernize and improve the system of insurance regulation in 
     the United States.
       (c) Consultation.--In carrying out subsections (a) and (b), 
     the Director shall consult with State insurance 
     commissioners, consumer organizations, representatives of the 
     insurance industry, policyholders, and other persons, as the 
     Director considers appropriate.

       TITLE VII--MORTGAGE REFORM AND ANTI-PREDATORY LENDING ACT

     SEC. 9000. SHORT TITLE; DESIGNATION AS ENUMERATED CONSUMER 
                   LAW.

       (a) Short Title.--This title may be cited as the ``Mortgage 
     Reform and Anti-Predatory Lending Act''.
       (b) Designation as Enumerated Consumer Law Under the 
     Purview of the Consumer Financial Protection Agency.--
     Subtitles A, B, C, and E and sections 9501, 9502, and 9506, 
     and the amendments made by such subtitles and sections, shall 
     be enumerated consumer laws, as defined in section 4002(16), 
     and come under the purview of the Consumer Financial 
     Protection Agency for purposes of title IV, including the 
     transfer of functions and personnel under subtitle F of title 
     IV and the savings provisions of such subtitle.

      Subtitle A--Residential Mortgage Loan Origination Standards

     SEC. 9001. DEFINITIONS.

       Section 103 of the Truth in Lending Act (15 U.S.C. 1602) is 
     amended by adding at the end the following new subsection:
       ``(cc) Definitions Relating to Mortgage Origination and 
     Residential Mortgage Loans.--
       ``(1) Commission.--Unless otherwise specified, the term 
     `Commission' means the Federal Trade Commission.
       ``(2) Federal banking agencies.--The term `Federal banking 
     agencies' means the Board of Governors of the Federal Reserve 
     System, the Comptroller of the Currency, the Director of the 
     Office of Thrift Supervision, the Federal Deposit Insurance 
     Corporation, and the National Credit Union Administration 
     Board. All rule writing by the `Federal banking agencies' as 
     designated by the Mortgage Reform and Anti-Predatory Lending 
     Act will be coordinated through the Financial Institutions 
     Examination Council in consultation with the Chairman of the 
     State Liaison Committee.
       ``(3) Mortgage originator.--The term `mortgage 
     originator'--
       ``(A) means any person who, for direct or indirect 
     compensation or gain, or in the expectation of direct or 
     indirect compensation or gain--
       ``(i) takes a residential mortgage loan application;
       ``(ii) assists a consumer in obtaining or applying to 
     obtain a residential mortgage loan; or
       ``(iii) offers or negotiates terms of a residential 
     mortgage loan;
       ``(B) includes any person who represents to the public, 
     through advertising or other means of communicating or 
     providing information (including the use of business cards, 
     stationery, brochures, signs, rate lists, or other 
     promotional items), that such person can or will provide any 
     of the services or perform any of the activities described in 
     subparagraph (A);
       ``(C) does not include any person who is (i) not otherwise 
     described in subparagraph (A) or (B) and who performs purely 
     administrative or clerical tasks on behalf of a person who is 
     described in any such subparagraph, or (ii) an employee of a 
     retailer of manufactured homes who is not described in clause 
     (i) or (iii) of subparagraph (A) and who does not advise a 
     consumer on loan terms (including rates, fees, and other 
     costs);
       ``(D) does not include a person or entity that only 
     performs real estate brokerage activities and is licensed or 
     registered in accordance with applicable State law, unless 
     such person or entity is compensated for performing such 
     brokerage activities by a lender, a mortgage broker, or other 
     mortgage originator or by any agent of such lender, mortgage 
     broker, or other mortgage originator;
       ``(E) does not include, with respect to a residential 
     mortgage loan, a person, estate, or trust that provides 
     mortgage financing for the sale of 1 property in any 36-month 
     period, provided that such loan--
       ``(i) is fully amortizing;
       ``(ii) is with respect to a sale for which the seller 
     determines in good faith and documents that the buyer has a 
     reasonable ability to repay the loan;
       ``(iii) has a fixed rate or an adjustable rate that is 
     adjustable after 5 or more years, subject to reasonable 
     annual and lifetime limitations on interest rate increases; 
     and
       ``(iv) meets any other criteria the Federal banking 
     agencies may prescribe; and
       ``(F) does not include a servicer or servicer employees, 
     agents and contractors, including but not limited to those 
     who offer or negotiate terms of a residential mortgage loan 
     for purposes of renegotiating, modifying, replacing and 
     subordinating principal of existing mortgages where borrowers 
     are behind in their payments, in default or have a reasonable 
     likelihood of being in default or falling behind.
       ``(4) Nationwide mortgage licensing system and registry.--
     The term `Nationwide Mortgage Licensing System and Registry' 
     has the same meaning as in the Secure and Fair Enforcement 
     for Mortgage Licensing Act of 2008.
       ``(5) Other definitions relating to mortgage originator.--
     For purposes of this subsection, a person `assists a consumer 
     in obtaining or applying to obtain a residential mortgage 
     loan' by, among other things, advising on residential 
     mortgage loan terms (including rates, fees, and other costs), 
     preparing residential mortgage loan packages, or collecting 
     information on behalf of the consumer with regard to a 
     residential mortgage loan.
       ``(6) 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, for 
     purposes of sections 129B and 129C and section 128(a) (16), 
     (17), and (18), and 128(f) and any regulations promulgated 
     thereunder, an extension of credit relating to a plan 
     described in section 101(53D) of title 11, United States 
     Code.
       ``(7) Secretary.--The term `Secretary', when used in 
     connection with any transaction or person involved with a 
     residential mortgage loan, means the Secretary of Housing and 
     Urban Development.
       ``(8) Securitization vehicle.--The term `securitization 
     vehicle' means a trust, corporation, partnership, limited 
     liability entity, special purpose entity, or other structure 
     that--
       ``(A) is the issuer, or is created by the issuer, of 
     mortgage pass-through certificates, participation 
     certificates, mortgage-backed securities, or other similar 
     securities backed by a pool of assets that includes 
     residential mortgage loans; and
       ``(B) holds such loans.
       ``(9) Securitizer.--The term `securitizer' means the person 
     that transfers, conveys, or assigns, or causes the transfer, 
     conveyance, or assignment of, residential mortgage loans, 
     including through a special purpose vehicle, to any 
     securitization vehicle, excluding any trustee that holds such 
     loans solely for the benefit of the securitization vehicle.
       ``(10) Servicer.--The term `servicer' has the same meaning 
     as in section 6(i)(2) of the Real Estate Settlement 
     Procedures Act of 1974.''.

     SEC. 9002. RESIDENTIAL MORTGAGE LOAN ORIGINATION.

       (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 the following new section:

     ``Sec. 129B. Residential mortgage loan origination

       ``(a) Finding and Purpose.--
       ``(1) Finding.--The Congress finds that economic 
     stabilization would be enhanced by the protection, 
     limitation, and regulation of the terms of residential 
     mortgage credit and the practices related to such credit, 
     while ensuring that responsible, affordable mortgage credit 
     remains available to consumers.
       ``(2) Purpose.--It is the purpose of this section and 
     section 129C to assure that consumers are offered and receive 
     residential mortgage loans on terms that reasonably reflect 
     their ability to repay the loans and that are understandable 
     and not unfair, deceptive or abusive.
       ``(b) Duty of Care.--
       ``(1) Standard.--Subject to regulations prescribed under 
     this subsection, each mortgage originator shall, in addition 
     to the duties imposed by otherwise applicable provisions of 
     State or Federal law--
       ``(A) be qualified and, when required, registered and 
     licensed as a mortgage originator in accordance with 
     applicable State or Federal law, including the Secure and 
     Fair Enforcement for Mortgage Licensing Act of 2008;
       ``(B) with respect to each consumer seeking or inquiring 
     about a residential mortgage loan, diligently work to present 
     the consumer with a range of residential mortgage loan 
     products for which the consumer likely qualifies and which 
     are appropriate to the consumer's existing circumstances, 
     based on information known by, or obtained in good faith by, 
     the originator;
       ``(C) make full, complete, and timely disclosure to each 
     such consumer in writing, the receipt and understanding of 
     which shall be acknowledged by the signature of the mortgage 
     originator and the consumer, of--
       ``(i) the comparative costs and benefits of each 
     residential mortgage loan product offered, discussed, or 
     referred to by the originator (and such comparative costs and 
     benefits for each such product shall be presented side by 
     side and the disclosures for each such product shall have 
     equal prominence);

[[Page 31199]]

       ``(ii) the nature of the originator's relationship to the 
     consumer (including the cost of the services to be provided 
     by the originator and a statement that the mortgage 
     originator is or is not acting as an agent for the consumer, 
     as the case may be); and
       ``(iii) any relevant conflicts of interest between the 
     originator and the consumer;
       ``(D) certify to the creditor, with respect to any 
     transaction involving a residential mortgage loan, that the 
     mortgage originator has fulfilled all requirements applicable 
     to the originator under this section with respect to the 
     transaction; and
       ``(E) include on all loan documents any unique identifier 
     of the mortgage originator provided by the Nationwide 
     Mortgage Licensing System and Registry.
       ``(2) Clarification of extent of duty to present range of 
     products and appropriate products.--
       ``(A) No duty to offer products for which originator is not 
     authorized to take an application.--Paragraph (1)(B) shall 
     not be construed as requiring--
       ``(i) a mortgage originator to present to any consumer any 
     specific residential mortgage loan product that is offered by 
     a creditor which does not accept consumer referrals from, or 
     consumer applications submitted by or through, such 
     originator; or
       ``(ii) a creditor to offer products that the creditor does 
     not offer to the general public.
       ``(B) Appropriate loan product.--For purposes of paragraph 
     (1)(B), a residential mortgage loan shall be presumed to be 
     appropriate for a consumer if--
       ``(i) the mortgage originator determines in good faith, 
     based on then existing information and without undergoing a 
     full underwriting process, that the consumer has a reasonable 
     ability to repay and, in the case of a refinancing of an 
     existing residential mortgage loan, receives a net tangible 
     benefit, as determined in accordance with regulations 
     prescribed under subsections (a) and (b) of section 129C; and
       ``(ii) the loan does not have predatory characteristics or 
     effects (such as equity stripping and excessive fees and 
     abusive terms) as determined in accordance with regulations 
     prescribed under paragraph (4).
       ``(3) Rules of construction.--No provision of this 
     subsection shall be construed as--
       ``(A) creating an agency or fiduciary relationship between 
     a mortgage originator and a consumer if the originator does 
     not hold himself or herself out as such an agent or 
     fiduciary; or
       ``(B) restricting a mortgage originator from holding 
     himself or herself out as an agent or fiduciary of a consumer 
     subject to any additional duty, requirement, or limitation 
     applicable to agents or fiduciaries under any Federal or 
     State law.
       ``(4) Regulations.--
       ``(A) In general.--The Federal banking agencies, in 
     consultation with the Secretary, and the Commission, shall 
     jointly prescribe regulations to--
       ``(i) further define the duty established under paragraph 
     (1);
       ``(ii) implement the requirements of this subsection;
       ``(iii) establish the time period within which any 
     disclosure required under paragraph (1) shall be made to the 
     consumer; and
       ``(iv) establish such other requirements for any mortgage 
     originator as such regulatory agencies may determine to be 
     appropriate to meet the purposes of this subsection.
       ``(B) Complementary and nonduplicative disclosures.--The 
     agencies referred to in subparagraph (A) shall endeavor to 
     make the required disclosures to consumers under this 
     subsection complementary and nonduplicative with other 
     disclosures for mortgage consumers to the extent such 
     efforts--
       ``(i) are practicable; and
       ``(ii) do not reduce the value of any such disclosure to 
     recipients of such disclosures.
       ``(5) Compliance procedures required.--The Federal banking 
     agencies shall prescribe regulations requiring depository 
     institutions to establish and maintain procedures reasonably 
     designed to assure and monitor the compliance of such 
     depository institutions, the subsidiaries of such 
     institutions, and the employees of such institutions or 
     subsidiaries with the requirements of this section and the 
     registration procedures established under section 1507 of the 
     Secure and Fair Enforcement for Mortgage Licensing Act of 
     2008.''.
       (b) Clerical Amendment.--The table of sections for chapter 
     2 of the Truth in Lending Act is amended by inserting after 
     the item relating to section 129 the following new items:

``129A. Fiduciary duty of servicers of pooled residential mortgages.
``129B. Residential mortgage loan origination.''.

     SEC. 9003. PROHIBITION ON STEERING INCENTIVES.

       Section 129B of the Truth in Lending Act (as added by 
     section 102(a)) is amended by inserting after subsection (b) 
     the following new subsection:
       ``(c) Prohibition on Steering Incentives.--
       ``(1) In general.--For any mortgage loan, the total amount 
     of direct and indirect compensation from all sources 
     permitted to a mortgage originator may not vary 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 mortgage loan, a mortgage 
     originator may not arrange for a consumer to finance through 
     rate any origination fee or cost except bona fide third party 
     settlement charges not retained by the creditor or mortgage 
     originator.
       ``(B) Exception.--Notwithstanding paragraph subparagraph 
     (A), a mortgage originator may arrange for a consumer to 
     finance through rate an origination fee or cost if--
       ``(i) the mortgage originator does not receive any other 
     compensation from the consumer except the compensation that 
     is financed through rate; and
       ``(ii) the mortgage is a qualified mortgage.
       ``(3) Regulations.--The Federal banking agencies, in 
     consultation with the Secretary and the Commission, shall 
     jointly prescribe regulations to prohibit--
       ``(A) mortgage originators from steering any consumer to a 
     residential mortgage loan that--
       ``(i) the consumer lacks a reasonable ability to repay (in 
     accordance with regulations prescribed under section 
     129C(a));
       ``(ii) in the case of a refinancing of a residential 
     mortgage loan, does not provide the consumer with a net 
     tangible benefit (in accordance with regulations prescribed 
     under section 129C(b)); or
       ``(iii) has predatory characteristics or effects (such as 
     equity stripping, excessive fees, or abusive terms);
       ``(B) mortgage originators from steering any consumer from 
     a residential mortgage loan for which the consumer is 
     qualified that is a qualified mortgage (as defined in section 
     129C(c)(3)) to a residential mortgage loan that is not a 
     qualified mortgage;
       ``(C) abusive or unfair lending practices that promote 
     disparities among consumers of equal credit worthiness but of 
     different race, ethnicity, gender, or age;
       ``(D) mortgage originators from assessing excessive points 
     and fees (as such term is described under section 103(aa)(4) 
     of the Truth in Lending Act (15 U.S.C. 1602(aa)(4))) to a 
     consumer for the origination of a residential mortgage loan 
     based on such consumer's decision to finance all or part of 
     the payment through the rate for such points and fees; and
       ``(E) mortgage originators from--
       ``(i) mischaracterizing the credit history of a consumer or 
     the residential mortgage loans available to a consumer;
       ``(ii) mischaracterizing or suborning the 
     mischaracterization of the appraised value of the property 
     securing the extension of credit; or
       ``(iii) if unable to suggest, offer, or recommend to a 
     consumer a loan that is not more expensive than a loan for 
     which the consumer qualifies, discouraging a consumer from 
     seeking a home mortgage loan secured by a consumer's 
     principal dwelling from another mortgage originator.
       ``(4) Rules of construction.--No provision of this 
     subsection shall be construed as--
       ``(A) permitting yield spread premiums or other similar 
     incentive compensation;
       ``(B) affecting the mechanism for providing the total 
     amount of direct and indirect compensation permitted to a 
     mortgage originator;
       ``(C) limiting or affecting the amount of compensation 
     received by a creditor upon the sale of a consummated loan to 
     a subsequent purchaser;
       ``(D) restricting a consumer's ability to finance, 
     including through principal, any origination fees or costs 
     permitted under this subsection, or the mortgage originator's 
     ability to receive such fees or costs (including 
     compensation) from any person, so long as such fees or costs 
     were fully and clearly disclosed to the consumer earlier in 
     the application process as required by 129B(b)(1)(C)(i) and 
     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
       ``(E) prohibiting incentive payments to a mortgage 
     originator based on the number of residential mortgage loans 
     originated within a specified period of time.''.

     SEC. 9004. LIABILITY.

       Section 129B of the Truth in Lending Act is amended by 
     inserting after subsection (c) (as added by section 103) the 
     following new subsection:
       ``(d) Liability for Violations.--
       ``(1) In general.--For purposes of providing a cause of 
     action for any failure by a mortgage originator to comply 
     with any requirement imposed under this section and any 
     regulation prescribed under this section, subsections (a) and 
     (b) of section 130 shall be applied with respect to any such 
     failure by substituting `mortgage originator' for `creditor' 
     each place such term appears in each such subsection.
       ``(2) Maximum.--The maximum amount of any liability of a 
     mortgage originator under paragraph (1) to a consumer for any 
     violation of this section shall not exceed the greater of 
     actual damages or an amount equal to 3 times the total amount 
     of direct and indirect compensation or gain accruing to the 
     mortgage originator in connection with the residential 
     mortgage loan involved

[[Page 31200]]

     in the violation, plus the costs to the consumer of the 
     action, including a reasonable attorney's fee.''.

     SEC. 9005. REGULATIONS.

       (a) Discretionary Regulatory Authority.--Section 129B of 
     the Truth in Lending Act is amended by inserting after 
     subsection (d) (as added by section 104) the following new 
     subsection:
       ``(e) Discretionary Regulatory Authority.--
       ``(1) In general.--The Federal banking agencies shall, by 
     regulations issued jointly, prohibit or condition terms, acts 
     or practices relating to residential mortgage loans that the 
     agencies find to be abusive, unfair, deceptive, predatory, 
     inconsistent with reasonable underwriting standards, 
     necessary or proper to ensure that responsible, affordable 
     mortgage credit remains available to consumers in a manner 
     consistent with the purposes of this section and section 
     129B, necessary or proper to effectuate the purposes of this 
     section and section 129C, to prevent circumvention or evasion 
     thereof, or to facilitate compliance with such sections, or 
     are not in the interest of the borrower.
       ``(2) Application.--The regulations prescribed under 
     paragraph (1) shall be applicable to all residential mortgage 
     loans and shall be applied in the same manner as regulations 
     prescribed under section 105.
       ``(f) Section 129B and any regulations promulgated 
     thereunder do not apply to an extension of credit relating to 
     a plan described in section 101(53D) of title 11, United 
     States Code.''.
       (b) Effective Date.--The regulations required or authorized 
     to be prescribed under this subtitle or the amendments made 
     by this subtitle--
       (1) shall be prescribed in final form before the end of the 
     12-month period beginning on the date of the enactment of 
     this Act; and
       (2) shall take effect not later than 18 months after the 
     date of the enactment of this Act.
       (c) Technical and Conforming Amendments.--Section 129(l)(2) 
     of the Truth in Lending Act (15 U.S.C. 1639(l)(2)) is amended 
     by inserting ``referred to in section 103(aa)'' after 
     ``loans'' each place such term appears.

     SEC. 9006. STUDY OF SHARED APPRECIATION MORTGAGES.

       (a) Study.--The Secretary of Housing and Urban Development, 
     in consultation with the Secretary of the Treasury and other 
     relevant agencies, shall conduct a comprehensive study to 
     determine prudent statutory and regulatory requirements 
     sufficient to provide for the widespread use of shared 
     appreciation mortgages to strengthen local housing markets, 
     provide new opportunities for affordable homeownership, and 
     enable homeowners at-risk of foreclosure to refinance or 
     modify their mortgages.
       (b) Report.--Not later than the expiration of the 6-month 
     period beginning on the date of the enactment of this Act, 
     the Secretary of Housing and Urban Development shall submit a 
     report to the Congress on the results of the study, which 
     shall include recommendations for the regulatory and 
     legislative requirements referred to in subsection (a).

              Subtitle B--Minimum Standards For Mortgages

     SEC. 9101. ABILITY TO REPAY.

       (a) In General.--Chapter 2 of the Truth in Lending Act (15 
     U.S.C. 1631 et seq.) is amended by inserting after section 
     129B (as added by section 102(a)) the following new section:

     ``Sec. 129C. Minimum standards for residential mortgage loans

       ``(a) Ability To Repay.--
       ``(1) In general.--In accordance with regulations 
     prescribed jointly by the Federal banking agencies, in 
     consultation with the Commission, no creditor may make a 
     residential mortgage loan unless the creditor makes a 
     reasonable and good faith determination based on verified and 
     documented information 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 residential mortgage loans secured by 
     the same dwelling will be made to the same consumer, the 
     creditor shall make a reasonable and good faith 
     determination, based on verified and documented information, 
     that the consumer has a reasonable ability to repay the 
     combined payments of all loans on the same 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 residential 
     mortgage loan 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, 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.--In 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 
     provided by a third party; or
       ``(B) such other similar method that quickly and 
     effectively verifies income documentation by a third party as 
     the Federal banking agencies may jointly prescribe.
       ``(5) Nonstandard loans.--
       ``(A) Variable rate loans that defer repayment of any 
     principal or interest.--For purposes of determining, under 
     this subsection, a consumer's ability to repay a variable 
     rate residential mortgage loan that allows or requires the 
     consumer to defer the repayment of any principal or interest, 
     the creditor shall use a fully amortizing repayment schedule.
       ``(B) Interest-only loans.--For purposes of determining, 
     under this subsection, a consumer's ability to repay a 
     residential mortgage loan that permits or requires the 
     payment of interest only, the creditor shall use the payment 
     amount required to amortize the loan by its final maturity.
       ``(C) Calculation for negative amortization.--In making any 
     determination under this subsection, a creditor shall also 
     take into consideration any balance increase that may accrue 
     from any negative amortization provision.
       ``(D) Calculation process.--For purposes of making any 
     determination under this subsection, a creditor shall 
     calculate the monthly payment amount for principal and 
     interest on any residential mortgage loan by assuming--
       ``(i) the loan proceeds are fully disbursed on the date of 
     the consummation of the loan;
       ``(ii) the loan is to be repaid in substantially equal 
     monthly amortizing payments for principal and interest over 
     the entire term of the loan with no balloon payment, unless 
     the loan contract requires more rapid repayment (including 
     balloon payment), in which case the calculation shall be made 
     (I) in accordance with regulations prescribed by the Federal 
     banking agencies, with respect to any loan which has an 
     annual percentage rate that does not exceed the average prime 
     offer rate for a comparable transaction, as of the date the 
     interest rate is set, by 1.5 or more percentage points for a 
     first lien residential mortgage loan; and by 3.5 or more 
     percentage points for a subordinate lien residential mortgage 
     loan; or (II) using the contract's repayment schedule, with 
     respect to a loan which has an annual percentage rate, as of 
     the date the interest rate is set, that is at least 1.5 
     percentage points above the average prime offer rate for a 
     first lien residential mortgage loan; and 3.5 percentage 
     points above the average prime offer rate for a subordinate 
     lien residential mortgage loan; and
       ``(iii) the interest rate over the entire term of the loan 
     is a fixed rate equal to the fully indexed rate at the time 
     of the loan closing, without considering the introductory 
     rate.
       ``(E) Refinance of hybrid loans with current lender.--In 
     considering any application for refinancing an existing 
     hybrid loan by the creditor into a standard loan to be made 
     by the same creditor in any case in which the sole net-
     tangible benefit to the mortgagor would be a reduction in 
     monthly payment and the mortgagor has not been delinquent on 
     any payment on the existing hybrid loan, the creditor may--
       ``(i) consider the mortgagor's good standing on the 
     existing mortgage;
       ``(ii) consider if the extension of new credit would 
     prevent a likely default should the original mortgage reset 
     and give such concerns a higher priority as an acceptable 
     underwriting practice; and
       ``(iii) offer rate discounts and other favorable terms to 
     such mortgagor that would be available to new customers with 
     high credit ratings based on such underwriting practice.
       ``(6) Fully-indexed rate defined.--For purposes of this 
     subsection, the term `fully indexed rate' means the index 
     rate prevailing on a residential mortgage loan at the time 
     the loan is made plus the margin that will apply after the 
     expiration of any introductory interest rates.
       ``(7) Reverse mortgages.--This subsection shall not apply 
     with respect to any reverse mortgage''.
       (b) Clerical Amendment.--The table of sections for chapter 
     2 of the Truth in Lending Act is amended by inserting after 
     the item relating to section 129B (as added by section 
     102(b)) the following new item:

``129C. Minimum standards for residential mortgage loans.''.

     SEC. 9102. NET TANGIBLE BENEFIT FOR REFINANCING OF 
                   RESIDENTIAL MORTGAGE LOANS.

       Section 129C of the Truth in Lending Act (as added by 
     section 9101(a)) is amended by inserting after subsection (a) 
     the following new subsection:
       ``(b) Net Tangible Benefit for Refinancing of Residential 
     Mortgage Loans.--
       ``(1) In general.--In accordance with regulations 
     prescribed under paragraph (3), no creditor may extend credit 
     in connection with any residential mortgage loan that 
     involves a refinancing of a prior existing residential 
     mortgage loan unless the creditor reasonably and in good 
     faith determines, at the time the loan is consummated and on 
     the basis of information known by or obtained in good faith 
     by the creditor, that the refinanced loan will provide a net 
     tangible benefit to the consumer.
       ``(2) Certain loans providing no net tangible benefit.--A 
     residential mortgage loan

[[Page 31201]]

     that involves a refinancing of a prior existing residential 
     mortgage loan shall not be considered to provide a net 
     tangible benefit to the consumer if the costs of the 
     refinanced loan, including points, fees and other charges, 
     exceed the amount of any newly advanced principal without any 
     corresponding changes in the terms of the refinanced loan 
     that are advantageous to the consumer.
       ``(3) Net tangible benefit.--The Federal banking agencies 
     shall jointly prescribe regulations defining the term `net 
     tangible benefit' for purposes of this subsection.''.

     SEC. 9103. SAFE HARBOR AND REBUTTABLE PRESUMPTION.

       Section 129C of the Truth in Lending Act is amended by 
     inserting after subsection (b) (as added by section 9102) the 
     following new subsection:
       ``(c) Presumption of Ability To Repay and Net Tangible 
     Benefit.--
       ``(1) In general.--Any creditor with respect to any 
     residential mortgage loan, and any assignee or securitizer of 
     such loan, may presume that the loan has met the requirements 
     of subsections (a) and (b), if the loan is a qualified 
     mortgage.
       ``(2) Definitions.--For purposes of this subsection, the 
     following definitions shall apply:
       ``(A) Qualified mortgage.--The term `qualified mortgage' 
     means any residential mortgage loan--
       ``(i) 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 Federal Banking Agencies;
       ``(ii) that does not provide for a repayment schedule that 
     results in negative amortization at any time;
       ``(iii) 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;
       ``(iv) which has an annual percentage rate that does not 
     exceed the average prime offer rate for a comparable 
     transaction, as of the date the interest rate is set--

       ``(I) by 1.5 or more percentage points, in the case of a 
     first lien residential mortgage loan having a original 
     principal obligation amount that is equal to or less than the 
     amount of the maximum limitation on the original principal 
     obligation of mortgage in effect for a residence of the 
     applicable size, as of the date of such interest rate set, 
     pursuant to the sixth sentence of section 305(a)(2) the 
     Federal Home Loan Mortgage Corporation Act (12 U.S.C. 
     1454(a)(2));
       ``(II) by 2.5 or more percentage points, in the case of a 
     first lien residential mortgage loan having a original 
     principal obligation amount that is more than the amount of 
     the maximum limitation on the original principal obligation 
     of mortgage in effect for a residence of the applicable size, 
     as of the date of such interest rate set, pursuant to the 
     sixth sentence of section 305(a)(2) the Federal Home Loan 
     Mortgage Corporation Act (12 U.S.C. 1454(a)(2)); and
       ``(III) by 3.5 or more percentage points, in the case of a 
     subordinate lien residential mortgage loan;

       ``(v) for which the income and financial resources relied 
     upon to qualify the obligors on the loan are verified and 
     documented;
       ``(vi) in the case of a fixed rate loan, 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;
       ``(vii) in the case of an adjustable rate loan, for which 
     the underwriting is based on the maximum rate permitted under 
     the loan during the first seven years, and 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 consumer's total monthly 
     debts, including amounts under the loan, to exceed a 
     percentage established by regulation of the consumer's 
     monthly gross income or such other maximum percentage of such 
     income as may be prescribed by regulation under paragraph 
     (4), and such rules shall also take into consideration the 
     consumer's income 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 `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 paragraph 
     (4).
       ``(B) 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.
       ``(C) Reverse mortgages.--For purposes of this subsection, 
     the term `qualified mortgage' includes any reverse mortgage 
     that complies with the condition established in subparagraph 
     (A)(iv).
       ``(3) Publication of average prime offer rate and apr 
     thresholds.--The Board--
       ``(A) shall publish, and update at least weekly, average 
     prime offer rates;
       ``(B) may publish multiple rates based on varying types of 
     mortgage transactions; and
       ``(C) shall adjust the thresholds of 1.50 percentage points 
     in paragraph (2)(A)(iv)(I), 2.50 percentage points in 
     paragraph (2)(A)(iv)(II), and 3.50 percentage points in 
     paragraph (2)(A)(v)(III), as necessary to reflect significant 
     changes in market conditions and to effectuate the purposes 
     of the Mortgage Reform and Anti-Predatory Lending Act.
       ``(4) Regulations.--
       ``(A) In general.--The Federal banking agencies shall 
     jointly prescribe regulations to carry out the purposes of 
     this subsection.
       ``(B) Revision of safe harbor criteria.--
       ``(i) In general.--The Federal banking agencies may jointly 
     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 proper to ensure that 
     responsible, affordable mortgage credit remains available to 
     consumers in a manner consistent with the purposes of this 
     section, necessary and appropriate to effectuate the purposes 
     of this section and section 129B, to prevent circumvention or 
     evasion thereof, or to facilitate compliance with such 
     sections.
       ``(ii) Loan definition.--The following agencies shall, in 
     consultation with the Federal banking agencies, prescribe 
     rules defining the types of loans they insure, guarantee or 
     administer, as the case may be, that are Qualified Mortgages 
     for purposes of subsection (c)(1)(A) upon a finding that such 
     rules are consistent with the purposes of this section and 
     section 129B, to prevent circumvention or evasion thereof, or 
     to facilitate compliance with such sections--

       ``(I) 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 loans 
     guaranteed by the Secretary of Agriculture pursuant to 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 Corporation or the Federal Home Loan 
     Mortgage Corporation; and
       ``(V) The Rural Housing Service, with regard to loans 
     insured by the Rural Housing Service.''.

     SEC. 9104. LIABILITY.

       Section 129C of the Truth in Lending Act is amended by 
     inserting after subsection (c) (as added by section 9103) the 
     following new subsection:
       ``(d) Liability for Violations.--
       ``(1) In general.--
       ``(A) Rescission.--In addition to any other liability under 
     this title for a violation by a creditor of subsection (a) or 
     (b) (for example under section 130) and subject to the 
     statute of limitations in paragraph (9), a civil action may 
     be maintained against a creditor for a violation of 
     subsection (a) or (b) with respect to a residential mortgage 
     loan for the rescission of the loan, and such additional 
     costs as the obligor may have incurred as a result of the 
     violation and in connection with obtaining a rescission of 
     the loan, including a reasonable attorney's fee.
       ``(B) Cure.--A creditor shall not be liable for rescission 
     under subparagraph (A) with respect to a residential mortgage 
     loan if, no later than 90 days after the receipt of 
     notification from the consumer that the loan violates 
     subsection (a) or (b), the creditor, acting in good faith, a 
     cure.
       ``(2) Limited assignee and securitizer liability.--
     Notwithstanding sections 125(e) and 131 and except as 
     provided in paragraph (3), a civil action which may be 
     maintained against a creditor with respect to a residential 
     mortgage loan for a violation of subsection (a) or (b) may be 
     maintained against any assignee or securitizer of such 
     residential mortgage loan, who has acted in good faith, for 
     the following liabilities only:
       ``(A) Rescission of the loan.
       ``(B) Such additional costs as the obligor may have 
     incurred as a result of the violation and in connection with 
     obtaining a rescission of the loan, including a reasonable 
     attorney's fee.
       ``(3) Assignee and securitizer exemption.--No assignee or 
     securitizer of a residential mortgage loan that has exercised 
     reasonable due diligence in complying with the requirements 
     of subsections (a) and (b), consistent with reasonable due 
     diligence practices prescribed by the Federal banking 
     agencies, shall be liable under paragraph (2) with respect to 
     such loan if, no later than 90 days after the receipt of 
     notification from the consumer that the loan violates 
     subsection (a) or (b), the assignee or securitizer provides a 
     cure so that the loan satisfies the requirements of 
     subsections (a) and (b).
       ``(4) Absent parties.--
       ``(A) Absent creditor.--Notwithstanding the exemption 
     provided in paragraph (3), if the creditor with respect to a 
     residential mortgage loan made in violation of subsection (a) 
     or (b) has ceased to exist as a matter of law or has filed 
     for bankruptcy protection under title 11, United States Code, 
     or has had a receiver, conservator, or liquidating agent 
     appointed, a consumer may maintain a civil action against an 
     assignee

[[Page 31202]]

     to cure the residential mortgage loan, plus the costs and 
     reasonable attorney's fees incurred in obtaining such remedy.
       ``(B) Absent creditor and assignee.--Notwithstanding the 
     exemption provided in paragraph (3), if the creditor with 
     respect to a residential mortgage loan made in violation of 
     subsection (a) or (b) and each assignee of such loan have 
     ceased to exist as a matter of law or have filed for 
     bankruptcy protection under title 11, United States Code, or 
     have had receivers, conservators, or liquidating agents 
     appointed, the consumer may maintain the civil action 
     referred to in subparagraph (A) against the securitizer.
       ``(5) Cure defined.--For purposes of this subsection, the 
     term `cure' means, with respect to a residential mortgage 
     loan that violates subsection (a) or (b), the modification or 
     refinancing, at no cost to the consumer, of the loan to 
     provide terms that satisfy the requirements of subsections 
     (a) and (b) and the payment of such additional costs as the 
     obligor may have incurred in connection with obtaining a cure 
     of the loan, including a reasonable attorney's fee.
       ``(6) Disagreement over cure.--If any creditor, assignee, 
     or securitizer and a consumer fail to reach agreement on a 
     cure with respect to a residential mortgage loan that 
     violates subsection (a) or (b), or the consumer fails to 
     accept a cure proffered by a creditor, assignee, or 
     securitizer--
       ``(A) the creditor, assignee, or securitizer may provide 
     the cure; and
       ``(B) the consumer may challenge the adequacy of the cure 
     during the 6-month period beginning when the cure is 
     provided.

     If the consumer's challenge, under this paragraph, of a cure 
     is successful, the creditor, assignee, or securitizer shall 
     be liable to the consumer for rescission of the loan and such 
     additional costs under paragraph (2).
       ``(7) Inability to provide or obtain rescission.--If a 
     creditor, assignee, or securitizer cannot provide, or a 
     consumer cannot obtain, rescission under paragraph (1) or 
     (2), the liability of such creditor, assignee, or securitizer 
     shall be met by providing the financial equivalent of a 
     rescission, together with such additional costs as the 
     obligor may have incurred as a result of the violation and in 
     connection with obtaining a rescission of the loan, including 
     a reasonable attorney's fee.
       ``(8) No class actions against assignee or securitizer 
     under paragraph (2).--Only individual actions may be brought 
     against an assignee or securitizer of a residential mortgage 
     loan for a violation of subsection (a) or (b).
       ``(9) Statute of limitations.--The liability of a creditor, 
     assignee, or securitizer under this subsection shall apply in 
     any original action against a creditor under paragraph (1) or 
     an assignee or securitizer under paragraph (2) which is 
     brought before--
       ``(A) in the case of any residential mortgage loan other 
     than a loan to which subparagraph (B) applies, the end of the 
     3-year period beginning on the date the loan is consummated; 
     or
       ``(B) in the case of a residential mortgage loan that 
     provides for a fixed interest rate for an introductory period 
     and then resets or adjusts to a variable rate or that 
     provides for a nonamortizing payment schedule and then 
     converts to an amortizing payment schedule, the earlier of--
       ``(i) the end of the 1-year period beginning on the date of 
     such reset, adjustment, or conversion; or
       ``(ii) the end of the 6-year period beginning on the date 
     the loan is consummated.
       ``(10) Trustees, pools, and investors in pools excluded.--
     In the case of residential mortgage loans acquired or 
     aggregated for the purpose of including such loans in a pool 
     of assets held for the purpose of issuing or selling 
     instruments representing interests in such pools including 
     through a securitization vehicle, the terms `assignee' and 
     `securitizer', as used in this section, do not include the 
     securitization vehicle, any trustee that holds such loans 
     solely for the benefit of the securitization vehicle, the 
     pools of such loans or any original or subsequent purchaser 
     of any interest in the securitization vehicle or any 
     instrument representing a direct or indirect interest in such 
     pool.
       ``(e) Obligation of Securitizers, and Preservation of 
     Borrower Remedies.--
       ``(1) Obligation to retain access.--Any securitizer of a 
     residential mortgage loan sold or to be sold as part of a 
     securitization vehicle shall, in any document or contract 
     providing for the transfer, conveyance, or the establishment 
     of such securitization vehicle, reserve the right and 
     preserve the ability--
       ``(A) to identify and obtain access to any such loan;
       ``(B) to acquire any such loan in the event of a violation 
     of subsection (a) or (b) of this section; and
       ``(C) to provide to the consumer any and all remedies 
     provided for under this title for any violation of this 
     title.
       ``(2) Additional damages.--Any creditor, assignee, or 
     securitizer of a residential mortgage loan that is subject to 
     a remedy under subsection (d) and has failed to comply with 
     paragraph (1) shall be subject to additional exemplary or 
     punitive damages not to exceed the original principal balance 
     of such loan.
       ``(3) Contact information notice.--The servicer with 
     respect to a residential mortgage loan shall provide a 
     written notice to a consumer identifying the name and contact 
     information of the creditor or any assignee or securitizer 
     who should be contacted by the consumer for any reason 
     concerning the consumer's rights with respect to the loan. 
     Such notice shall be provided--
       ``(A) upon request of the consumer;
       ``(B) whenever there is a change in ownership of a 
     residential mortgage loan; or
       ``(C) on a regular basis, not less than annually.
       ``(f) Rules To Establish Process.--The Board shall 
     promulgate rules to govern the rescission process established 
     for violations of subsections (a) and (b) of this section. 
     Such rules shall provide that notice given to a servicer or 
     holder is sufficient notice regardless of the identity of the 
     party or the parties liable under this title.''.

     SEC. 9105. DEFENSE TO FORECLOSURE.

       Section 129C of the Truth in Lending Act is amended by 
     inserting after subsection (f) (as added by section 9104) the 
     following new subsections:
       ``(g) Defense to Foreclosure.--Notwithstanding any other 
     provision of law--
       ``(1) when the holder of a residential mortgage loan or 
     anyone acting for such holder initiates a judicial or 
     nonjudicial foreclosure--
       ``(A) a consumer who has the right to rescind under this 
     section with respect to such loan against the creditor or any 
     assignee or securitizer may assert such right as a defense to 
     foreclosure or counterclaim to such foreclosure against the 
     holder, or
       ``(B) if the foreclosure proceeding begins after the end of 
     the period during which a consumer may bring an action for 
     rescission under subsection (d) and the consumer would have 
     had a valid basis for such an action if it had been brought 
     before the end of such period, the consumer may seek actual 
     damages incurred by reason of the violation which gave rise 
     to the right of rescission, together with costs of the 
     action, including a reasonable attorney's fee against the 
     creditor or any assignee or securitizer; and
       ``(2) such holder or anyone acting for such holder or any 
     other applicable third party may sell, transfer, convey, or 
     assign a residential mortgage loan to a creditor, any 
     assignee, or any securitizer, or their designees, subject to 
     the rights of the consumer described in this subsection, to 
     effect a rescission or cure.''.

     SEC. 9106. ADDITIONAL STANDARDS AND REQUIREMENTS.

       (a) In General.--Section 129C of the Truth in Lending Act 
     is amended by inserting after subsection (g) (as added by 
     section 9105) the following new subsections:
       ``(h) Prohibition on Certain Prepayment Penalties.--
       ``(1) Prohibited on certain loans.--A residential mortgage 
     loan that is not a `qualified mortgage' may not contain terms 
     under which a consumer must pay a prepayment penalty for 
     paying all or part of the principal after the loan is 
     consummated. For purposes of this subsection, a `qualified 
     mortgage' may not include a residential mortgage loan that 
     has an adjustable rate.
       ``(2) Phased-out penalties on qualified mortgages.--A 
     qualified mortgage (as defined in subsection (c)) may not 
     contain terms under which a consumer must pay a prepayment 
     penalty for paying all or part of the principal after the 
     loan is consummated in excess of the following limitations:
       ``(A) During the 1-year period beginning on the date the 
     loan is consummated, the prepayment penalty shall not exceed 
     an amount equal to 3 percent of the outstanding balance on 
     the loan.
       ``(B) During the 1-year period beginning after the period 
     described in subparagraph (A), the prepayment penalty shall 
     not exceed an amount equal to 2 percent of the outstanding 
     balance on the loan.
       ``(C) During the 1-year period beginning after the 1-year 
     period described in subparagraph (B), the prepayment penalty 
     shall not exceed an amount equal to 1 percent of the 
     outstanding balance on the loan.
       ``(D) After the end of the 3-year period beginning on the 
     date the loan is consummated, no prepayment penalty may be 
     imposed on a qualified mortgage.
       ``(3) 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 the consumer a residential mortgage 
     loan product that does not have a prepayment penalty as a 
     term of the loan.
       ``(i) Single Premium Credit Insurance Prohibited.--No 
     creditor may finance, directly or indirectly, in connection 
     with any residential mortgage loan or with any extension of 
     credit under an open end consumer credit plan secured by the 
     principal dwelling of the consumer (other than a reverse 
     mortgage), any credit life, credit disability, credit 
     unemployment or credit property insurance, or any other 
     accident, loss-of-income, life or health insurance, or any 
     payments directly or indirectly for any debt cancellation or 
     suspension agreement or contract, except that--

[[Page 31203]]

       ``(1) insurance premiums or debt cancellation or suspension 
     fees calculated and paid in full on a monthly basis shall not 
     be considered financed by the creditor; and
       ``(2) this subsection shall not apply to credit 
     unemployment insurance for which the unemployment insurance 
     premiums are reasonable, the creditor receives no direct or 
     indirect compensation in connection with the unemployment 
     insurance premiums, and the unemployment insurance premiums 
     are paid pursuant to another insurance contract and not paid 
     to an affiliate of the creditor.
       ``(j) Arbitration.--
       ``(1) In general.--No residential mortgage loan and no 
     extension of credit under an open end consumer credit plan 
     secured by the principal dwelling of the consumer, other than 
     a reverse mortgage, may include terms which require 
     arbitration or any other nonjudicial procedure as the method 
     for resolving any controversy or settling any claims arising 
     out of the transaction.
       ``(2) Post-controversy agreements.--Subject to paragraph 
     (3), paragraph (1) shall not be construed as limiting the 
     right of the consumer and the creditor, any assignee, or any 
     securitizer to agree to arbitration or any other nonjudicial 
     procedure as the method for resolving any controversy at any 
     time after a dispute or claim under the transaction arises.
       ``(3) No waiver of statutory cause of action.--No provision 
     of any residential mortgage loan or of any extension of 
     credit under an open end consumer credit plan secured by the 
     principal dwelling of the consumer (other than a reverse 
     mortgage), and no other agreement between the consumer and 
     the creditor relating to the residential mortgage loan or 
     extension of credit referred to in paragraph (1), shall be 
     applied or interpreted so as to bar a consumer from bringing 
     an action in an appropriate district court of the United 
     States, or any other court of competent jurisdiction, 
     pursuant to section 130 or any other provision of law, for 
     damages or other relief in connection with any alleged 
     violation of this section, any other provision of this title, 
     or any other Federal law.
       ``(k) Mortgages With Negative Amortization.--No creditor 
     may extend credit to a borrower in connection with a consumer 
     credit transaction under an open or closed end consumer 
     credit plan secured by a dwelling or residential real 
     property that includes a dwelling, other than a reverse 
     mortgage, that provides or permits a payment plan that may, 
     at any time over the term of the extension of credit, result 
     in negative amortization unless, before such transaction is 
     consummated--
       ``(1) the creditor provides the consumer with a statement 
     that--
       ``(A) the pending transaction will or may, as the case may 
     be, result in negative amortization;
       ``(B) describes negative amortization in such manner as the 
     Federal banking agencies shall prescribe;
       ``(C) negative amortization increases the outstanding 
     principal balance of the account; and
       ``(D) negative amortization reduces the consumer's equity 
     in the dwelling or real property; and
       ``(2) in the case of a first-time borrower with respect to 
     a residential mortgage loan that is not a qualified mortgage, 
     the first- time borrower provides the creditor with 
     sufficient documentation to demonstrate that the consumer 
     received homeownership counseling from organizations or 
     counselors certified by the Secretary of Housing and Urban 
     Development as competent to provide such counseling.''.
       (b) Conforming Amendment Relating to Enforcement.--Section 
     108(a) of the Truth in Lending Act (15 U.S.C. 1607(a)) is 
     amended by inserting after paragraph (6) the following new 
     paragraph:
       ``(7) sections 21B and 21C of the Securities Exchange Act 
     of 1934, in the case of a broker or dealer, other than a 
     depository institution, by the Securities and Exchange 
     Commission.''.
       (c) Protection Against Loss of Anti-Deficiency 
     Protection.--Section 129C of the Truth in Lending Act is 
     amended by inserting after subsection (k) (as added by 
     subsection (a) of this section) the following new subsection 
     (and designated succeeding subsections accordingly):
       ``(l) Protection Against Loss of Anti-Deficiency 
     Protection.--
       ``(1) Definition.--For purposes of this subsection, the 
     term `anti-deficiency law' means the law of any State which 
     provides that, in the event of foreclosure on the residential 
     property of a consumer securing a mortgage, the consumer is 
     not liable, in accordance with the terms and limitations of 
     such State law, for any deficiency between the sale price 
     obtained on such property through foreclosure and the 
     outstanding balance of the mortgage.
       ``(2) Notice at time of consummation.--In the case of any 
     residential mortgage loan that is, or upon consummation will 
     be, subject to protection under an anti-deficiency law, the 
     creditor or mortgage originator shall provide a written 
     notice to the consumer describing the protection provided by 
     the anti-deficiency law and the significance for the consumer 
     of the loss of such protection before such loan is 
     consummated.
       ``(3) Notice before refinancing that would cause loss of 
     protection.--In the case of any residential mortgage loan 
     that is subject to protection under an anti-deficiency law, 
     if a creditor or mortgage originator provides an application 
     to a consumer, or receives an application from a consumer, 
     for any type of refinancing for such loan that would cause 
     the loan to lose the protection of such anti-deficiency law, 
     the creditor or mortgage originator shall provide a written 
     notice to the consumer describing the protection provided by 
     the anti-deficiency law and the significance for the consumer 
     of the loss of such protection before any agreement for any 
     such refinancing is consummated.''.
       (d) Policy Regarding Acceptance of Partial Payment.--
     Section 129C of the Truth in Lending Act is amended by 
     inserting after subsection (l) (as added by subsection (c)) 
     the following new subsection:
       ``(m) Policy Regarding Acceptance of Partial Payment.--In 
     the case of any residential mortgage loan, a creditor shall 
     disclose prior to settlement or, in the case of a person 
     becoming a creditor with respect to an existing residential 
     mortgage loan, at the time such person becomes a creditor--
       ``(1) the creditor's policy regarding the acceptance of 
     partial payments; and
       ``(2) if partial payments are accepted, how such payments 
     will be applied to such mortgage and if such payments will be 
     placed in escrow.''.

     SEC. 9107. RULE OF CONSTRUCTION.

       Except as otherwise expressly provided in section 129B or 
     129C of the Truth in Lending Act (as added by this subtitle), 
     no provision of such section 129B or 129C shall be construed 
     as superseding, repealing, or affecting any duty, right, 
     obligation, privilege, or remedy of any person under any 
     other provision of the Truth in Lending Act or any other 
     provision of Federal or State law.

     SEC. 9108. EFFECT ON STATE LAWS.

       (a) In General.--Except as provided in subsection (b), 
     section 129C(d) of the Truth in Lending Act (as added by 
     section 9104) shall supersede any State law to the extent 
     that it provides additional remedies against any assignee, 
     securitizer, or securitization vehicle for a violation of 
     subsection (a) or (b) of section 129C of such Act or any 
     other State law the terms of which address the specific 
     subject matter of subsection (a) (determination of ability to 
     repay) or (b) (requirement of a net tangible benefit) of 
     section 129C of such Act, and the remedies described in 
     section 129C(d) shall constitute the sole remedies against 
     any assignee, securitizer, or securitization vehicle for such 
     violations.
       (b) Rules of Construction.--No provision of this section 
     shall be construed as limiting--
       (1) the application of any State law, or the availability 
     of remedies under such law, against a creditor for a 
     particular residential mortgage loan regardless of whether 
     such creditor also acts as an assignee, securitizer, or 
     securitization vehicle for such loan;
       (2) the application of any State law, or the availability 
     of remedies under such law, against an assignee, securitizer, 
     or securitization vehicle under State law, other than a 
     provision of such law the terms of which address the specific 
     subject matter of subsection (a) (determination of ability to 
     repay) or (b) (requirement of a net tangible benefit) of 
     section 129C of such Act;
       (3)(A) the application of any State law, or the 
     availability of remedies under such law, against an assignee, 
     securitizer or securitization vehicle for its participation 
     in or direction of the credit or underwriting decisions of a 
     creditor relating to the making of a residential mortgage 
     loan; or
       (B) the ability of a consumer to assert any rights against 
     or obtain any remedies from an assignee, securitizer or 
     securitization vehicle with respect to a residential mortgage 
     loan as a defense to foreclosure under section 129C(g);
       (4) the availability of any equitable remedies, including 
     injunctive relief, under State law; or
       (5) notwithstanding paragraph (2), the availability of any 
     remedies under State law against any assignee, securitizer or 
     securitization vehicle that--
       (A) are in addition to those remedies provided for in 
     section 129C; and
       (B) were in effect on the date of enactment of this Act.

     SEC. 9109. REGULATIONS.

       Regulations required or authorized to be prescribed under 
     this subtitle or the amendments made by this subtitle--
       (1) shall be prescribed in final form before the end of the 
     12-month period beginning on the date of the enactment of 
     this Act; and
       (2) shall take effect not later than 18 months after the 
     date of the enactment of this Act.

     SEC. 9110. AMENDMENTS TO CIVIL LIABILITY PROVISIONS.

       (a) Increase in Amount of Civil Money Penalties for Certain 
     Violations.--Section 130(a)(2) of the Truth in Lending Act 
     (15 U.S.C. 1640(a)(2)) is amended--
       (1) by striking ``$100'' and inserting ``$200'';
       (2) by striking ``$1,000'' and inserting ``$2,000''; and
       (3) by striking ``$500,000'' and inserting ``$1,000,000''.
       (b) Statute of Limitations Extended for Section 129 
     Violations.--Section 130(e) of

[[Page 31204]]

     the Truth in Lending Act (15 U.S.C. 1640(e)) is amended--
       (1) in the first sentence, by striking ``Any action'' and 
     inserting ``Except as provided in the subsequent sentence, 
     any action''; and
       (2) by inserting after the first sentence the following new 
     sentence: ``Any action under this section with respect to any 
     violation of section 129 may be brought in any United States 
     district court, or in any other court of competent 
     jurisdiction, before the end of the 3-year period beginning 
     on the date of the occurrence of the violation.''.

     SEC. 9111. LENDER RIGHTS IN THE CONTEXT OF BORROWER 
                   DECEPTION.

       Section 130 of the Truth in Lending Act is amended by 
     adding at the end the following new subsection:
       ``(k) Exemption From Liability and Rescission in Case of 
     Borrower Fraud or Deception.--In addition to any other remedy 
     available by law or contract, no creditor, assignee, or 
     securitizer shall be liable to an obligor under this section, 
     nor shall it be subject to the right of rescission of any 
     obligor under 129B, if such obligor, or co-obligor, 
     knowingly, or willfully and with actual knowledge furnished 
     material information known to be false for the purpose of 
     obtaining such residential mortgage loan.''.

     SEC. 9112. SIX-MONTH NOTICE REQUIRED BEFORE RESET OF HYBRID 
                   ADJUSTABLE RATE MORTGAGES.

       (a) In General.--Chapter 2 of the Truth in Lending Act (15 
     U.S.C. 1631 et seq.) is amended by inserting after section 
     128 the following new section:

     ``Sec. 128A. Reset of hybrid adjustable rate mortgages

       ``(a) Hybrid Adjustable Rate Mortgages Defined.--For 
     purposes of this section, the term `hybrid adjustable rate 
     mortgage' means a consumer credit transaction secured by the 
     consumer's principal residence with a fixed interest rate for 
     an introductory period that adjusts or resets to a variable 
     interest rate after such period.
       ``(b) Notice of Reset and Alternatives.--During the 1-month 
     period that ends 6 months before the date on which the 
     interest rate in effect during the introductory period of a 
     hybrid adjustable rate mortgage adjusts or resets to a 
     variable interest rate or, in the case of such an adjustment 
     or resetting that occurs within the first 6 months after 
     consummation of such loan, at consummation, the creditor or 
     servicer of such loan shall provide a written notice, 
     separate and distinct from all other correspondence to the 
     consumer, that includes the following:
       ``(1) Any index or formula used in making adjustments to or 
     resetting the interest rate and a source of information about 
     the index or formula.
       ``(2) An explanation of how the new interest rate and 
     payment would be determined, including an explanation of how 
     the index was adjusted, such as by the addition of a margin.
       ``(3) A good faith estimate, based on accepted industry 
     standards, of the creditor or servicer of the amount of the 
     monthly payment that will apply after the date of the 
     adjustment or reset, and the assumptions on which this 
     estimate is based.
       ``(4) A list of alternatives consumers may pursue before 
     the date of adjustment or reset, and descriptions of the 
     actions consumers must take to pursue these alternatives, 
     including--
       ``(A) refinancing;
       ``(B) renegotiation of loan terms;
       ``(C) payment forbearances; and
       ``(D) pre-foreclosure sales.
       ``(5) The names, addresses, telephone numbers, and Internet 
     addresses of counseling agencies or programs reasonably 
     available to the consumer that have been certified or 
     approved and made publicly available by the Secretary of 
     Housing and Urban Development or a State housing finance 
     authority (as defined in section 1301 of the Financial 
     Institutions Reform, Recovery, and Enforcement Act of 1989).
       ``(6) The address, telephone number, and Internet address 
     for the State housing finance authority (as so defined) for 
     the State in which the consumer resides.''.
       (b) Clerical Amendment.--The table of sections for chapter 
     2 of the Truth in Lending Act is amended by inserting after 
     the item relating to section 128 the following new item:

``128A. Reset of hybrid adjustable rate mortgages.''.

     SEC. 9113. REQUIRED DISCLOSURES.

       Section 128(a) of Truth in Lending Act (15 U.S.C. 1638(a)) 
     is amended by adding at the end the following new paragraphs:
       ``(16) In the case of a variable rate residential mortgage 
     loan for which an escrow or impound account will be 
     established for the payment of all applicable taxes, 
     insurance, and assessments--
       ``(A) the amount of initial monthly payment due under the 
     loan for the payment of principal and interest, and the 
     amount of such initial monthly payment including the monthly 
     payment deposited in the account for the payment of all 
     applicable taxes, insurance, and assessments; and
       ``(B) the amount of the fully indexed monthly payment due 
     under the loan for the payment of principal and interest, and 
     the amount of such fully indexed monthly payment including 
     the monthly payment deposited in the account for the payment 
     of all applicable taxes, insurance, and assessments.
       ``(17) In the case of a residential mortgage loan, the 
     aggregate amount of settlement charges for all settlement 
     services provided in connection with the loan, the amount of 
     charges that are included in the loan and the amount of such 
     charges the borrower must pay at closing, the approximate 
     amount of the wholesale rate of funds in connection with the 
     loan, and the aggregate amount of other fees or required 
     payments in connection with the loan.
       ``(18) In the case of a residential mortgage loan, the 
     aggregate amount of fees paid to the mortgage originator in 
     connection with the loan, the amount of such fees paid 
     directly by the consumer, and any additional amount received 
     by the originator from the creditor.
       ``(19) In the case of a residential mortgage loan, the 
     total amount of interest that the consumer will pay over the 
     life of the loan as a percentage of the principal of the 
     loan. Such amount shall be computed assuming the consumer 
     makes each monthly payment in full and on-time, and does not 
     make any over-payments.''.

     SEC. 9114. DISCLOSURES REQUIRED IN MONTHLY STATEMENTS FOR 
                   RESIDENTIAL MORTGAGE LOANS.

       Section 128 of the Truth in Lending Act (15 U.S.C. 1638) is 
     amended by adding at the end the following new subsection:
       ``(f) Periodic Statements for Residential Mortgage Loans.--
       ``(1) In general.--The creditor, assignee, or servicer with 
     respect to any residential mortgage loan shall transmit to 
     the obligor, for each billing cycle, a statement setting 
     forth each of the following items, to the extent applicable, 
     in a conspicuous and prominent manner:
       ``(A) The amount of the principal obligation under the 
     mortgage.
       ``(B) The current interest rate in effect for the loan.
       ``(C) The date on which the interest rate may next reset or 
     adjust.
       ``(D) The amount of any prepayment fee to be charged, if 
     any.
       ``(E) A description of any late payment fees.
       ``(F) A telephone number and electronic mail address that 
     may be used by the obligor to obtain information regarding 
     the mortgage.
       ``(G) The names, addresses, telephone numbers, and Internet 
     addresses of counseling agencies or programs reasonably 
     available to the consumer that have been certified or 
     approved and made publicly available by the Secretary of 
     Housing and Urban Development or a State housing finance 
     authority (as defined in section 1301 of the Financial 
     Institutions Reform, Recovery, and Enforcement Act of 1989).
       ``(H) Such other information as the Board may prescribe in 
     regulations.
       ``(2) Development and use of standard form.--The Federal 
     banking agencies shall jointly develop and prescribe a 
     standard form for the disclosure required under this 
     subsection, taking into account that the statements required 
     may be transmitted in writing or electronically.''.

     SEC. 9115. LEGAL ASSISTANCE FOR FORECLOSURE-RELATED ISSUES.

       (a) Establishment.--The Secretary of Housing and Urban 
     Development (hereafter in this section referred to as the 
     ``Secretary'' shall establish a program for making grants for 
     providing a full range of foreclosure legal assistance to 
     low- and moderate-income homeowners and tenants related to 
     home ownership preservation, home foreclosure prevention, and 
     tenancy associated with home foreclosure.
       (b) Competitive Allocation.--The Secretary shall allocate 
     amounts made available for grants under this section to State 
     and local legal organizations on the basis of a competitive 
     process. For purposes of this subsection ``State and local 
     legal organizations'' are those State and local organizations 
     whose primary business or mission is to provide legal 
     assistance.
       (c) Priority to Certain Areas.--In allocating amounts in 
     accordance with subsection (b), the Secretary shall give 
     priority consideration to State and local legal organizations 
     that are operating in the 100 metropolitan statistical areas 
     (as that term is defined by the Director of the Office of 
     Management and Budget) with the highest home foreclosure 
     rates.
       (d) Legal Assistance.--
       (1) In general.--Any State or local legal organization that 
     receives financial assistance pursuant to this section may 
     use such amounts only to assist--
       (A) homeowners of owner-occupied homes with mortgages in 
     default, in danger of default, or subject to or at risk of 
     foreclosure; and
       (B) tenants at risk of or subject to eviction as a result 
     of foreclosure of the property in which such tenant resides.
       (2) Commence use within 90 days.--Any State or local legal 
     organization that receives financial assistance pursuant to 
     this section shall begin using any financial assistance 
     received under this section within 90 days after receipt of 
     the assistance.
       (3) Prohibition on class actions.--No funds provided to a 
     State or local legal organization under this section may be 
     used to support any class action litigation.

[[Page 31205]]

       (4) Limitation on legal assistance.--Legal assistance 
     funded with amounts provided under this section shall be 
     limited to mortgage-related default, eviction, or foreclosure 
     proceedings, without regard to whether such foreclosure is 
     judicial or nonjudicial.
       (5) Effective date.--Notwithstanding section 9116, this 
     subsection shall take effect on the date of the enactment of 
     this Act.
       (e) Limitation on Distribution of Assistance.--
       (1) In general.--None of the amounts made available under 
     this section shall be distributed to--
       (A) any organization which has been convicted for a 
     violation under Federal law relating to an election for 
     Federal office; or
       (B) any organization which employs applicable individuals.
       (2) Definition of applicable individuals.--In this 
     subsection, the term ``applicable individual'' means an 
     individual who--
       (A) is--
       (i) employed by the organization in a permanent or 
     temporary capacity;
       (ii) contracted or retained by the organization; or
       (iii) acting on behalf of, or with the express or apparent 
     authority of, the organization; and
       (B) has been convicted for a violation under Federal law 
     relating to an election for Federal office.
       (f) Authorization of Appropriations.--There are authorized 
     to be appropriated to the Secretary $35,000,000 for each of 
     fiscal years 2009 through 2012 for grants under this section.

     SEC. 9116. EFFECTIVE DATE.

       The amendments made by this subtitle shall apply to 
     transactions consummated on or after the effective date of 
     the regulations specified in section 9109.

     SEC. 9117. REPORT BY THE GAO.

       (a) Report Required.--The Comptroller General shall conduct 
     a study to determine the effects the enactment of this Act 
     will have on the availability and affordability of credit for 
     consumers, small businesses, homebuyers, and mortgage 
     lending, including the effect--
       (1) on the mortgage market for mortgages that are not 
     within the safe harbor provided in the amendments made by 
     this subtitle;
       (2) on the ability of prospective homebuyers to obtain 
     financing;
       (3) on the ability of homeowners facing resets or 
     adjustments to refinance--for example, do they have fewer 
     refinancing options due to the unavailability of certain loan 
     products that were available before the enactment of this 
     Act;
       (4) on minorities' ability to access affordable credit 
     compared with other prospective borrowers;
       (5) on home sales and construction;
       (6) of extending the rescission right, if any, on 
     adjustable rate loans and its impact on litigation;
       (7) of State foreclosure laws and, if any, an investor's 
     ability to transfer a property after foreclosure;
       (8) of expanding the existing provisions of the Home 
     Ownership and Equity Protection Act of 1994;
       (9) of prohibiting prepayment penalties on high-cost 
     mortgages; and
       (10) of establishing counseling services under the 
     Department of Housing and Urban Development and offered 
     through the Office of Housing Counseling.
       (b) Report.--Before the end of the 1-year period beginning 
     on the date of the enactment of this Act, the Comptroller 
     General shall submit a report to the Congress containing the 
     findings and conclusions of the Comptroller General with 
     respect to the study conducted pursuant to subsection (a).
       (c) Examination Related to Certain Credit Risk Retention 
     Provisions.--The report required by subsection (b) shall also 
     include an analysis by the Comptroller General of the effect 
     on the capital reserves and funding of lenders of credit risk 
     retention provisions for non-qualified mortgages, including 
     an analysis of the exceptions and adjustments authorized in 
     section 129C(l)(3)(A) of the Truth in Lending Act and a 
     recommendation on whether a uniform standard is needed.
       (d) Analysis of Credit Risk Retention Provisions.--The 
     report required by subsection (b) shall also include--
       (1) an analysis by the Comptroller General of whether the 
     credit risk retention provisions have significantly reduced 
     risks to the larger credit market of the repackaging and 
     selling of securitized loans on a secondary market; and
       (2) recommendations to the Congress on adjustments that 
     should be made, or additional measures that should be 
     undertaken.

     SEC. 9118. STATE ATTORNEY GENERAL ENFORCEMENT AUTHORITY.

       Section 130(e) of the Truth in Lending Act (15 U.S.C. 
     1640(e)) is amended by striking ``section 129 may also'' and 
     inserting ``section 129, 129B, or 129C of this Act may 
     also''.

                    Subtitle C--High-Cost Mortgages

     SEC. 9201. DEFINITIONS RELATING TO HIGH-COST MORTGAGES.

       (a) High-Cost Mortgage Defined.--Section 103(aa) of the 
     Truth in Lending Act (15 U.S.C. 1602(aa)) is amended by 
     striking all that precedes paragraph (2) and inserting the 
     following:
       ``(aa) High-Cost Mortgage.--
       ``(1) Definition.--
       ``(A) In general.--The term `high-cost mortgage', and a 
     mortgage referred to in this subsection, means a consumer 
     credit transaction that is secured by the consumer's 
     principal dwelling, other than a reverse mortgage 
     transaction, if--
       ``(i) in the case of a credit transaction secured--

       ``(I) by a first mortgage on the consumer's principal 
     dwelling, the annual percentage rate at consummation of the 
     transaction will exceed by more than 6.5 percentage points 
     (8.5 percentage points, if the dwelling is personal property 
     and the transaction is for less than $50,000) the average 
     prime offer rate, as defined in section 129C(c)(2)(B), for a 
     comparable transaction; or
       ``(II) by a subordinate or junior mortgage on the 
     consumer's principal dwelling, the annual percentage rate at 
     consummation of the transaction will exceed by more than 8.5 
     percentage points the average prime offer rate, as defined in 
     section 129C(c)(2)(B), for a comparable transaction;

       ``(ii) the total points and fees payable in connection with 
     the transaction exceed--

       ``(I) in the case of a transaction for $20,000 or more, 5 
     percent of the total transaction amount; or
       ``(II) in the case of a transaction for less than $20,000, 
     the lesser of 8 percent of the total transaction amount or 
     $1,000 (or such other dollar amount as the Board shall 
     prescribe by regulation); or

       ``(iii) the credit transaction documents permit the 
     creditor to charge or collect prepayment fees or penalties 
     more than 36 months after the transaction closing or such 
     fees or penalties exceed, in the aggregate, more than 2 
     percent of the amount prepaid.
       ``(B) Introductory rates taken into account.--For purposes 
     of subparagraph (A)(i), the annual percentage rate of 
     interest shall be determined based on the following interest 
     rate:
       ``(i) In the case of a fixed-rate transaction in which the 
     annual percentage rate will not vary during the term of the 
     loan, the interest rate in effect on the date of consummation 
     of the transaction.
       ``(ii) In the case of a transaction in which the rate of 
     interest varies solely in accordance with an index, the 
     interest rate determined by adding the index rate in effect 
     on the date of consummation of the transaction to the maximum 
     margin permitted at any time during the transaction 
     agreement.
       ``(iii) In the case of any other transaction in which the 
     rate may vary at any time during the term of the loan for any 
     reason, the interest charged on the transaction at the 
     maximum rate that may be charged during the term of the 
     transaction.''.
       (b) Adjustment of Percentage Points.--Section 103(aa)(2) of 
     the Truth in Lending Act (15 U.S.C. 1602(aa)(2)) is amended 
     by striking subparagraph (B) and inserting the following new 
     subparagraph:
       ``(B) An increase or decrease under subparagraph (A)--
       ``(i) may not result in the number of percentage points 
     referred to in paragraph (1)(A)(i)(I) being less than 6 
     percentage points or greater than 10 percentage points; and
       ``(ii) may not result in the number of percentage points 
     referred to in paragraph (1)(A)(i)(II) being less than 8 
     percentage points or greater than 12 percentage points.''.
       (c) Points and Fees Defined.--
       (1) In general.--Section 103(aa)(4) of the Truth in Lending 
     Act (15 U.S.C. 1602(aa)(4)) is amended--
       (A) by striking subparagraph (B) and inserting the 
     following:
       ``(B) all compensation paid directly or indirectly by a 
     consumer or creditor to a mortgage originator from any 
     source, including a mortgage originator that originates a 
     loan in the name of the creditor in a table-funded 
     transaction;'';
       (B) in subparagraph (C)(ii), by inserting ``except where 
     applied to the charges set forth in section 106(e)(1) where a 
     creditor may receive indirect compensation solely as a result 
     of obtaining distributions of profits from an affiliated 
     entity based on its ownership interest in compliance with 
     section 8(c)(4) of the Real Estate Settlement Procedures Act 
     of 1974'' before the semicolon at the end;
       (C) in subparagraph (C)(iii), by striking ``; and'' and 
     inserting ``, except as provided for in clause (ii);'';
       (D) by redesignating subparagraph (D) as subparagraph (G); 
     and
       (E) by inserting after subparagraph (C) the following new 
     subparagraphs:
       ``(D) premiums or other charges payable at or before 
     closing for any credit life, credit disability, credit 
     unemployment, or credit property insurance, or any other 
     accident, loss-of-income, life or health insurance, or any 
     payments directly or indirectly for any debt cancellation or 
     suspension agreement or contract, except that insurance 
     premiums or debt cancellation or suspension fees calculated 
     and paid in full on a monthly basis shall not be considered 
     financed by the creditor;
       ``(E) except as provided in subsection (cc), the maximum 
     prepayment fees and penalties which may be charged or 
     collected under the terms of the credit transaction;

[[Page 31206]]

       ``(F) all prepayment fees or penalties that are incurred by 
     the consumer if the loan refinances a previous loan made or 
     currently held by the same creditor or an affiliate of the 
     creditor; and''.
       (2) Calculation of points and fees for open-end consumer 
     credit plans.--Section 103(aa) of the Truth in Lending Act 
     (15 U.S.C. 1602(aa)) is amended--
       (A) by redesignating paragraph (5) as paragraph (6); and
       (B) by inserting after paragraph (4) the following new 
     paragraph:
       ``(5) Calculation of points and fees for open-end consumer 
     credit plans.--In the case of open-end consumer credit plans, 
     points and fees shall be calculated, for purposes of this 
     section and section 129, by adding the total points and fees 
     known at or before closing, including the maximum prepayment 
     penalties which may be charged or collected under the terms 
     of the credit transaction, plus the minimum additional fees 
     the consumer would be required to pay to draw down an amount 
     equal to the total credit line.''.
       (d) Bona Fide Discount Loan Discount Points.--Section 103 
     of the Truth in Lending Act (15 U.S.C. 1602) is amended by 
     inserting after subsection (cc) (as added by section 101) the 
     following new subsection:
       ``(dd) Bona Fide Discount Points and Prepayment 
     Penalties.--For the purposes of determining the amount of 
     points and fees for purposes of subsection (aa), either the 
     amounts described in paragraph (1) or (2) of the following 
     paragraphs, but not both, shall be excluded:
       ``(1) Up to and including 2 bona fide discount points 
     payable by the consumer in connection with the mortgage, but 
     only if the interest rate from which the mortgage's interest 
     rate will be discounted does not exceed by more than 1 
     percentage point--
       ``(A) the required net yield for a 90-day standard 
     mandatory delivery commitment for a reasonably comparable 
     loan from either the Federal National Mortgage Association or 
     the Federal Home Loan Mortgage Corporation, whichever is 
     greater; or
       ``(B) if secured by a personal property loan, the average 
     rate on a loan in connection with which insurance is provided 
     under title I of the National Housing Act (12 U.S.C. 1702 et 
     seq.).
       ``(2) Unless 2 bona fide discount points have been excluded 
     under paragraph (1), up to and including 1 bona fide discount 
     point payable by the consumer in connection with the 
     mortgage, but only if the interest rate from which the 
     mortgage's interest rate will be discounted does not exceed 
     by more than 2 percentage points--
       ``(A) the required net yield for a 90-day standard 
     mandatory delivery commitment for a reasonably comparable 
     loan from either the Federal National Mortgage Association or 
     the Federal Home Loan Mortgage Corporation, whichever is 
     greater; or
       ``(B) if secured by a personal property loan, the average 
     rate on a loan in connection with which insurance is provided 
     under title I of the National Housing Act (12 U.S.C. 1702 et 
     seq.).
       ``(3) For purposes of paragraph (1), the term `bona fide 
     discount points' means loan discount points which are 
     knowingly paid by the consumer for the purpose of reducing, 
     and which in fact result in a bona fide reduction of, the 
     interest rate or time-price differential applicable to the 
     mortgage.
       ``(4) Paragraphs (1) and (2) shall not apply to discount 
     points used to purchase an interest rate reduction unless the 
     amount of the interest rate reduction purchased is reasonably 
     consistent with established industry norms and practices for 
     secondary mortgage market transactions.''.

     SEC. 9202. AMENDMENTS TO EXISTING REQUIREMENTS FOR CERTAIN 
                   MORTGAGES.

       (a) Prepayment Penalty Provisions.--Section 129(c)(2) of 
     the Truth in Lending Act (15 U.S.C. 1639(c)(2)) is hereby 
     repealed.
       (b) No Balloon Payments.--Section 129(e) of the Truth in 
     Lending Act (15 U.S.C. 1639(e)) is amended to read as 
     follows:
       ``(e) No Balloon Payments.--No high-cost mortgage may 
     contain a scheduled payment that is more than twice as large 
     as the average of earlier scheduled payments. This subsection 
     shall not apply when the payment schedule is adjusted to the 
     seasonal or irregular income of the consumer or in the case 
     of a balance due under the customary terms of a reverse 
     mortgage.''.

     SEC. 9203. ADDITIONAL REQUIREMENTS FOR CERTAIN MORTGAGES.

       (a) Additional Requirements for Certain Mortgages.--Section 
     129 of the Truth in Lending Act (15 U.S.C. 1639) is amended--
       (1) by redesignating subsections (j), (k) and (l) as 
     subsections (n), (o) and (p) respectively; and
       (2) by inserting after subsection (i) the following new 
     subsections:
       ``(j) Recommended Default.--No creditor shall recommend or 
     encourage default on an existing loan or other debt prior to 
     and in connection with the closing or planned closing of a 
     high-cost mortgage that refinances all or any portion of such 
     existing loan or debt.
       ``(k) Late Fees.--
       ``(1) In general.--No creditor may impose a late payment 
     charge or fee in connection with a high-cost mortgage--
       ``(A) in an amount in excess of 4 percent of the amount of 
     the payment past due;
       ``(B) unless the loan documents specifically authorize the 
     charge or fee;
       ``(C) before the end of the 15-day period beginning on the 
     date the payment is due, or in the case of a loan on which 
     interest on each installment is paid in advance, before the 
     end of the 30-day period beginning on the date the payment is 
     due; or
       ``(D) more than once with respect to a single late payment.
       ``(2) Coordination with subsequent late fees.--If a payment 
     is otherwise a full payment for the applicable period and is 
     paid on its due date or within an applicable grace period, 
     and the only delinquency or insufficiency of payment is 
     attributable to any late fee or delinquency charge assessed 
     on any earlier payment, no late fee or delinquency charge may 
     be imposed on such payment.
       ``(3) Failure to make installment payment.--If, in the case 
     of a loan agreement the terms of which provide that any 
     payment shall first be applied to any past due principal 
     balance, the consumer fails to make an installment payment 
     and the consumer subsequently resumes making installment 
     payments but has not paid all past due installments, the 
     creditor may impose a separate late payment charge or fee for 
     any principal due (without deduction due to late fees or 
     related fees) until the default is cured.
       ``(l) Acceleration of Debt.--No high-cost mortgage may 
     contain a provision which permits the creditor to accelerate 
     the indebtedness, except when repayment of the loan has been 
     accelerated by default in payment, or pursuant to a due-on-
     sale provision, or pursuant to a material violation of some 
     other provision of the loan document unrelated to payment 
     schedule.
       ``(m) Restriction on Financing Points and Fees.--No 
     creditor may directly or indirectly finance, in connection 
     with any high-cost mortgage, any of the following:
       ``(1) Any prepayment fee or penalty payable by the consumer 
     in a refinancing transaction if the creditor or an affiliate 
     of the creditor is the noteholder of the note being 
     refinanced.
       ``(2) Any points or fees.''.
       (b) Prohibitions on Evasions.--Section 129 of the Truth in 
     Lending Act (15 U.S.C. 1639) is amended by inserting after 
     subsection (p) (as so redesignated by subsection (a)(1)) the 
     following new subsection:
       ``(q) Prohibitions on Evasions, Structuring of 
     Transactions, and Reciprocal Arrangements.--A creditor may 
     not take any action in connection with a high-cost mortgage--
       ``(1) to structure a loan transaction as an open-end credit 
     plan or another form of loan for the purpose and with the 
     intent of evading the provisions of this title; or
       ``(2) to divide any loan transaction into separate parts 
     for the purpose and with the intent of evading provisions of 
     this title.''.
       (c) Modification or Deferral Fees.--Section 129 of the 
     Truth in Lending Act (15 U.S.C. 1639) is amended by inserting 
     after subsection (q) (as added by subsection (b) of this 
     section) the following new subsection:
       ``(r) Modification and Deferral Fees Prohibited.--
       ``(1) Creditors.--A creditor may not charge a consumer any 
     fee to modify, renew, extend, or amend a high-cost mortgage, 
     or to defer any payment due under the terms of such mortgage, 
     unless the modification, renewal, extension or amendment 
     results in a lower annual percentage rate on the mortgage for 
     the consumer and then only if the amount of the fee is 
     comparable to fees imposed for similar transactions in 
     connection with consumer credit transactions that are secured 
     by a consumer's principal dwelling and are not high-cost 
     mortgages.
       ``(2) Third parties.--A third-party may not charge a 
     consumer any fee to--
       ``(A) modify, renew, extend, or amend a high-cost mortgage, 
     or defer any payment due under the terms of such mortgage;
       ``(B) negotiate with a creditor on behalf of a consumer, 
     the modification, renewal, extension, or amendment of a high-
     cost mortgage; or
       ``(C) negotiate with a creditor on behalf of a consumer, 
     the deferral of any payment due under the terms of such 
     mortgage,

     unless the modification renewal, extension or amendment 
     results in a significantly lower annual percentage rate on 
     the mortgage, or a significant reduction in the amount of the 
     outstanding principal on the mortgage, for the consumer and 
     then only if the amount of the fee is comparable to fees 
     imposed for similar transactions in connection with consumer 
     credit transactions that are secured by a consumer's 
     principal dwelling and are not high-cost mortgages.
       ``(3) Enforcement.--Section 130 shall be applied for 
     purposes of paragraph (2) by--
       ``(A) substituting `third party' for `creditor'each place 
     such term appears; and
       ``(B) substituting `any fee charged by a third party' for 
     `finance charge' each place such term appears.''.
       (d) Payoff Statement.--Section 129 of the Truth in Lending 
     Act (15 U.S.C. 1639) is amended by inserting after subsection 
     (r) (as added by subsection (c) of this section) the 
     following new subsection:
       ``(s) Payoff Statement.--
       ``(1) Fees.--

[[Page 31207]]

       ``(A) In general.--Except as provided in subparagraph (B), 
     no creditor or servicer may charge a fee for informing or 
     transmitting to any person the balance due to pay off the 
     outstanding balance on a high-cost mortgage.
       ``(B) Transaction fee.--When payoff information referred to 
     in subparagraph (A) is provided by facsimile transmission or 
     by a courier service, a creditor or servicer may charge a 
     processing fee to cover the cost of such transmission or 
     service in an amount not to exceed an amount that is 
     comparable to fees imposed for similar services provided in 
     connection with consumer credit transactions that are secured 
     by the consumer's principal dwelling and are not high-cost 
     mortgages.
       ``(C) Fee disclosure.--Prior to charging a transaction fee 
     as provided in subparagraph (B), a creditor or servicer shall 
     disclose that payoff balances are available for free pursuant 
     to subparagraph (A).
       ``(D) Multiple requests.--If a creditor or servicer has 
     provided payoff information referred to in subparagraph (A) 
     without charge, other than the transaction fee allowed by 
     subparagraph (B), on 4 occasions during a calendar year, the 
     creditor or servicer may thereafter charge a reasonable fee 
     for providing such information during the remainder of the 
     calendar year.
       ``(2) Prompt delivery.--Payoff balances shall be provided 
     within 5 business days after receiving a request by a 
     consumer or a person authorized by the consumer to obtain 
     such information.
       ``(3) Services considered assignee.--For the purposes of 
     this subsection, a servicer shall be considered an assignee 
     under the Truth in Lending Act.''.
       (e) Pre-Loan Counseling Required.--Section 129 of the Truth 
     in Lending Act (15 U.S.C. 1639) is amended by inserting after 
     subsection (s) (as added by subsection (d) of this section) 
     the following new subsection:
       ``(t) Pre-Loan Counseling.--
       ``(1) In general.--A creditor may not extend credit to a 
     consumer under a high-cost mortgage without first receiving 
     certification from a counselor that is approved by the 
     Secretary of Housing and Urban Development, or at the 
     discretion of the Secretary, a State housing finance 
     authority, that the consumer has received counseling on the 
     advisability of the mortgage. Such counselor shall not be 
     employed by the creditor or an affiliate of the creditor or 
     be affiliated with the creditor.
       ``(2) Disclosures required prior to counseling.--No 
     counselor may certify that a consumer has received counseling 
     on the advisability of the high-cost mortgage unless the 
     counselor can verify that the consumer has received each 
     statement required (in connection with such loan) by this 
     section or the Real Estate Settlement Procedures Act of 1974 
     with respect to the transaction.
       ``(3) Regulations.--The Board may prescribe such 
     regulations as the Board determines to be appropriate to 
     carry out the requirements of paragraph (1).''.
       (f) Flipping Prohibited.--Section 129 of the Truth in 
     Lending Act (15 U.S.C. 1639) is amended by inserting after 
     subsection (t) (as added by subsection (e)) the following new 
     subsection:
       ``(u) Flipping.--
       ``(1) In general.--No creditor may knowingly or 
     intentionally engage in the unfair act or practice of 
     flipping in connection with a high-cost mortgage.
       ``(2) Flipping defined.--For purposes of this subsection, 
     the term `flipping' means the making of a loan or extension 
     of credit in the form a high-cost mortgage to a consumer 
     which refinances an existing mortgage when the new loan or 
     extension of credit does not have reasonable, net tangible 
     benefit (as determined in accordance with regulations 
     prescribed under section 129C(b)) to the consumer considering 
     all of the circumstances, including the terms of both the new 
     and the refinanced loans or credit, the cost of the new loan 
     or credit, and the consumer's circumstances.
       ``(v) Corrections and Unintentional Violations.--A creditor 
     or assignee in a high cost loan who, when acting in good 
     faith, fails to comply with any requirement under this 
     section will not be deemed to have violated such requirement 
     if the creditor or assignee establishes that either--
       ``(1) within 30 days of the loan closing and prior to the 
     institution of any action, the consumer is notified of or 
     discovers the violation, appropriate restitution is made, and 
     whatever adjustments are necessary are made to the loan to 
     either, at the choice of the consumer--
       ``(A) make the loan satisfy the requirements of this 
     chapter; or
       ``(B) in the case of a high-cost mortgage, change the terms 
     of the loan in a manner beneficial to the consumer so that 
     the loan will no longer be a high-cost mortgage; or
       ``(2) within 60 days of the creditor's discovery or receipt 
     of notification of an unintentional violation or bona fide 
     error as described in subsection (c) and prior to the 
     institution of any action, the consumer is notified of the 
     compliance failure, appropriate restitution is made, and 
     whatever adjustments are necessary are made to the loan to 
     either, at the choice of the consumer--
       ``(A) make the loan satisfy the requirements of this 
     chapter; or
       ``(B) in the case of a high-cost mortgage, change the terms 
     of the loan in a manner beneficial so that the loan will no 
     longer be a high-cost mortgage.''.

     SEC. 9204. REGULATIONS.

       (a) In General.--The Board of Governors of the Federal 
     Reserve System shall publish regulations implementing this 
     subtitle and the amendments made by this subtitle in final 
     form before the end of the 6-month period beginning on the 
     date of the enactment of this Act.
       (b) Consumer Mortgage Education.--
       (1) Regulations.--The Board of Governors of the Federal 
     Reserve System may prescribe regulations requiring or 
     encouraging creditors to provide consumer mortgage education 
     to prospective customers or direct such customers to 
     qualified consumer mortgage education or counseling programs 
     in the vicinity of the residence of the consumer.
       (2) Coordination with state law.--No requirement 
     established by the Board of Governors of the Federal Reserve 
     System pursuant to paragraph (1) shall be construed as 
     affecting or superseding any requirement under the law of any 
     State with respect to consumer mortgage counseling or 
     education.

     SEC. 9205. EFFECTIVE DATE.

       The amendments made by this subtitle shall take effect at 
     the end of the 6-month period beginning on the date of the 
     enactment of this Act and shall apply to mortgages referred 
     to in section 103(aa) of the Truth in Lending Act (15 U.S.C. 
     1602(aa)) for which an application is received by the 
     creditor after the end of such period.

                Subtitle D--Office of Housing Counseling

     SEC. 9301. SHORT TITLE.

       This subtitle may be cited as the ``Expand and Preserve 
     Home Ownership Through Counseling Act''.

     SEC. 9302. ESTABLISHMENT OF OFFICE OF HOUSING COUNSELING.

       Section 4 of the Department of Housing and Urban 
     Development Act (42 U.S.C. 3533) is amended by adding at the 
     end the following new subsection:
       ``(g) Office of Housing Counseling.--
       ``(1) Establishment.--There is established, in the 
     Department, the Office of Housing Counseling.
       ``(2) Director.--There is established the position of 
     Director of Housing Counseling. The Director shall be the 
     head of the Office of Housing Counseling and shall be 
     appointed by, and shall report to, the Secretary. Such 
     position shall be a career-reserved position in the Senior 
     Executive Service.
       ``(3) Functions.--
       ``(A) In general.--The Director shall have primary 
     responsibility within the Department for all activities and 
     matters relating to homeownership counseling and rental 
     housing counseling, including--
       ``(i) research, grant administration, public outreach, and 
     policy development relating to such counseling; and
       ``(ii) establishment, coordination, and administration of 
     all regulations, requirements, standards, and performance 
     measures under programs and laws administered by the 
     Department that relate to housing counseling, homeownership 
     counseling (including maintenance of homes), mortgage-related 
     counseling (including home equity conversion mortgages and 
     credit protection options to avoid foreclosure), and rental 
     housing counseling, including the requirements, standards, 
     and performance measures relating to housing counseling.
       ``(B) Specific functions.--The Director shall carry out the 
     functions assigned to the Director and the Office under this 
     section and any other provisions of law. Such functions shall 
     include establishing rules necessary for--
       ``(i) the counseling procedures under section 106(g)(1) of 
     the Housing and Urban Development Act of 1968 (12 U.S.C. 
     1701x(h)(1));
       ``(ii) carrying out all other functions of the Secretary 
     under section 106(g) of the Housing and Urban Development Act 
     of 1968, including the establishment, operation, and 
     publication of the availability of the toll-free telephone 
     number under paragraph (2) of such section;
       ``(iii) contributing to the preparation and distribution of 
     home buying information booklets pursuant to section 5 of the 
     Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 
     2604);
       ``(iv) carrying out the certification program under section 
     106(e) of the Housing and Urban Development Act of 1968 (12 
     U.S.C. 1701x(e));
       ``(v) carrying out the assistance program under section 
     106(a)(4) of the Housing and Urban Development Act of 1968, 
     including criteria for selection of applications to receive 
     assistance;
       ``(vi) carrying out any functions regarding abusive, 
     deceptive, or unscrupulous lending practices relating to 
     residential mortgage loans that the Secretary considers 
     appropriate, which shall include conducting the study under 
     section 6 of the Expand and Preserve Home Ownership Through 
     Counseling Act;
       ``(vii) providing for operation of the advisory committee 
     established under paragraph (4) of this subsection;

[[Page 31208]]

       ``(viii) collaborating with community-based organizations 
     with expertise in the field of housing counseling; and
       ``(ix) providing for the building of capacity to provide 
     housing counseling services in areas that lack sufficient 
     services, including underdeveloped areas that lack basic 
     water and sewer systems, electricity services, and safe, 
     sanitary housing.
       ``(4) Advisory committee.--
       ``(A) In general.--The Secretary shall appoint an advisory 
     committee to provide advice regarding the carrying out of the 
     functions of the Director.
       ``(B) Members.--Such advisory committee shall consist of 
     not more than 12 individuals, and the membership of the 
     committee shall equally represent the mortgage and real 
     estate industry, including consumers and housing counseling 
     agencies certified by the Secretary.
       ``(C) Terms.--Except as provided in subparagraph (D), each 
     member of the advisory committee shall be appointed for a 
     term of 3 years. Members may be reappointed at the discretion 
     of the Secretary.
       ``(D) Terms of initial appointees.--As designated by the 
     Secretary at the time of appointment, of the members first 
     appointed to the advisory committee, 4 shall be appointed for 
     a term of 1 year and 4 shall be appointed for a term of 2 
     years.
       ``(E) Prohibition of pay; travel expenses.--Members of the 
     advisory committee shall serve without pay, but shall receive 
     travel expenses, including per diem in lieu of subsistence, 
     in accordance with applicable provisions under subchapter I 
     of chapter 57 of title 5, United States Code.
       ``(F) Advisory role only.--The advisory committee shall 
     have no role in reviewing or awarding housing counseling 
     grants.
       ``(5) Scope of homeownership counseling.--In carrying out 
     the responsibilities of the Director, the Director shall 
     ensure that homeownership counseling provided by, in 
     connection with, or pursuant to any function, activity, or 
     program of the Department addresses the entire process of 
     homeownership, including the decision to purchase a home, the 
     selection and purchase of a home, issues arising during or 
     affecting the period of ownership of a home (including 
     refinancing, default and foreclosure, and other financial 
     decisions), and the sale or other disposition of a home.''.

     SEC. 9303. COUNSELING PROCEDURES.

       (a) In General.--Section 106 of the Housing and Urban 
     Development Act of 1968 (12 U.S.C. 1701x) is amended by 
     adding at the end the following new subsection:
       ``(g) Procedures and Activities.--
       ``(1) Counseling procedures.--
       ``(A) In general.--The Secretary shall establish, 
     coordinate, and monitor the administration by the Department 
     of Housing and Urban Development of the counseling procedures 
     for homeownership counseling and rental housing counseling 
     provided in connection with any program of the Department, 
     including all requirements, standards, and performance 
     measures that relate to homeownership and rental housing 
     counseling.
       ``(B) Homeownership counseling.--For purposes of this 
     subsection and as used in the provisions referred to in this 
     subparagraph, the term `homeownership counseling' means 
     counseling related to homeownership and residential mortgage 
     loans. Such term includes counseling related to homeownership 
     and residential mortgage loans that is provided pursuant to--
       ``(i) section 105(a)(20) of the Housing and Community 
     Development Act of 1974 (42 U.S.C. 5305(a)(20));
       ``(ii) in the United States Housing Act of 1937--

       ``(I) section 9(e) (42 U.S.C. 1437g(e));
       ``(II) section 8(y)(1)(D) (42 U.S.C. 1437f(y)(1)(D));
       ``(III) section 18(a)(4)(D) (42 U.S.C. 1437p(a)(4)(D));
       ``(IV) section 23(c)(4) (42 U.S.C. 1437u(c)(4));
       ``(V) section 32(e)(4) (42 U.S.C. 1437z-4(e)(4));
       ``(VI) section 33(d)(2)(B) (42 U.S.C. 1437z-5(d)(2)(B));
       ``(VII) sections 302(b)(6) and 303(b)(7) (42 U.S.C. 
     1437aaa-1(b)(6), 1437aaa-2(b)(7)); and
       ``(VIII) section 304(c)(4) (42 U.S.C. 1437aaa-3(c)(4));

       ``(iii) section 302(a)(4) of the American Homeownership and 
     Economic Opportunity Act of 2000 (42 U.S.C. 1437f note);
       ``(iv) sections 233(b)(2) and 258(b) of the Cranston-
     Gonzalez National Affordable Housing Act (42 U.S.C. 
     12773(b)(2), 12808(b));
       ``(v) this section and section 101(e) of the Housing and 
     Urban Development Act of 1968 (12 U.S.C. 1701x, 1701w(e));
       ``(vi) section 220(d)(2)(G) of the Low-Income Housing 
     Preservation and Resident Homeownership Act of 1990 (12 
     U.S.C. 4110(d)(2)(G));
       ``(vii) sections 422(b)(6), 423(b)(7), 424(c)(4), 
     442(b)(6), and 443(b)(6) of the Cranston-Gonzalez National 
     Affordable Housing Act (42 U.S.C. 12872(b)(6), 12873(b)(7), 
     12874(c)(4), 12892(b)(6), and 12893(b)(6));
       ``(viii) section 491(b)(1)(F)(iii) of the McKinney-Vento 
     Homeless Assistance Act (42 U.S.C. 11408(b)(1)(F)(iii));
       ``(ix) sections 202(3) and 810(b)(2)(A) of the Native 
     American Housing and Self-Determination Act of 1996 (25 
     U.S.C. 4132(3), 4229(b)(2)(A));
       ``(x) in the National Housing Act--

       ``(I) in section 203 (12 U.S.C. 1709), the penultimate 
     undesignated paragraph of paragraph (2) of subsection (b), 
     subsection (c)(2)(A), and subsection (r)(4);
       ``(II) subsections (a) and (c)(3) of section 237 (12 U.S.C. 
     1715z-2); and
       ``(III) subsections (d)(2)(B) and (m)(1) of section 255 (12 
     U.S.C. 1715z-20);

       ``(xi) section 502(h)(4)(B) of the Housing Act of 1949 (42 
     U.S.C. 1472(h)(4)(B));
       ``(xii) section 508 of the Housing and Urban Development 
     Act of 1970 (12 U.S.C. 1701z-7); and
       ``(xiii) section 106 of the Energy Policy Act of 1992 (42 
     U.S.C. 12712 note).
       ``(C) Rental housing counseling.--For purposes of this 
     subsection, the term `rental housing counseling' means 
     counseling related to rental of residential property, which 
     may include counseling regarding future homeownership 
     opportunities and providing referrals for renters and 
     prospective renters to entities providing counseling and 
     shall include counseling related to such topics that is 
     provided pursuant to--
       ``(i) section 105(a)(20) of the Housing and Community 
     Development Act of 1974 (42 U.S.C. 5305(a)(20));
       ``(ii) in the United States Housing Act of 1937--

       ``(I) section 9(e) (42 U.S.C. 1437g(e));
       ``(II) section 18(a)(4)(D) (42 U.S.C. 1437p(a)(4)(D));
       ``(III) section 23(c)(4) (42 U.S.C. 1437u(c)(4));
       ``(IV) section 32(e)(4) (42 U.S.C. 1437z-4(e)(4));
       ``(V) section 33(d)(2)(B) (42 U.S.C. 1437z-5(d)(2)(B)); and
       ``(VI) section 302(b)(6) (42 U.S.C. 1437aaa-1(b)(6));

       ``(iii) section 233(b)(2) of the Cranston-Gonzalez National 
     Affordable Housing Act (42 U.S.C. 12773(b)(2));
       ``(iv) section 106 of the Housing and Urban Development Act 
     of 1968 (12 U.S.C. 1701x);
       ``(v) section 422(b)(6) of the Cranston-Gonzalez National 
     Affordable Housing Act (42 U.S.C. 12872(b)(6));
       ``(vi) section 491(b)(1)(F)(iii) of the McKinney-Vento 
     Homeless Assistance Act (42 U.S.C. 11408(b)(1)(F)(iii));
       ``(vii) sections 202(3) and 810(b)(2)(A) of the Native 
     American Housing and Self-Determination Act of 1996 (25 
     U.S.C. 4132(3), 4229(b)(2)(A)); and
       ``(viii) the rental assistance program under section 8 of 
     the United States Housing Act of 1937 (42 U.S.C. 1437f).
       ``(2) Standards for materials.--The Secretary, in 
     consultation with the advisory committee established under 
     subsection (g)(4) of the Department of Housing and Urban 
     Development Act, shall establish standards for materials and 
     forms to be used, as appropriate, by organizations providing 
     homeownership counseling services, including any recipients 
     of assistance pursuant to subsection (a)(4).
       ``(3) Mortgage software systems.--
       ``(A) Certification.--The Secretary shall provide for the 
     certification of various computer software programs for 
     consumers to use in evaluating different residential mortgage 
     loan proposals. The Secretary shall require, for such 
     certification, that the mortgage software systems take into 
     account--
       ``(i) the consumer's financial situation and the cost of 
     maintaining a home, including insurance, taxes, and 
     utilities;
       ``(ii) the amount of time the consumer expects to remain in 
     the home or expected time to maturity of the loan; and
       ``(iii) such other factors as the Secretary considers 
     appropriate to assist the consumer in evaluating whether to 
     pay points, to lock in an interest rate, to select an 
     adjustable or fixed rate loan, to select a conventional or 
     government-insured or guaranteed loan and to make other 
     choices during the loan application process.

     If the Secretary determines that available existing software 
     is inadequate to assist consumers during the residential 
     mortgage loan application process, the Secretary shall 
     arrange for the development by private sector software 
     companies of new mortgage software systems that meet the 
     Secretary's specifications.
       ``(B) Use and initial availability.--Such certified 
     computer software programs shall be used to supplement, not 
     replace, housing counseling. The Secretary shall provide that 
     such programs are initially used only in connection with the 
     assistance of housing counselors certified pursuant to 
     subsection (e).
       ``(C) Availability.--After a period of initial availability 
     under subparagraph (B) as the Secretary considers 
     appropriate, the Secretary shall take reasonable steps to 
     make mortgage software systems certified pursuant to this 
     paragraph widely available through the Internet and at public 
     locations, including public libraries, senior-citizen 
     centers, public housing sites, offices of public housing 
     agencies that administer rental housing assistance vouchers, 
     and housing counseling centers.
       ``(D) Budget compliance.--This paragraph shall be effective 
     only to the extent that amounts to carry out this paragraph 
     are made available in advance in appropriations Acts.

[[Page 31209]]

       ``(4) National public service multimedia campaigns to 
     promote housing counseling.--
       ``(A) In general.--The Director of Housing Counseling shall 
     develop, implement, and conduct national public service 
     multimedia campaigns designed to make persons facing mortgage 
     foreclosure, persons considering a subprime mortgage loan to 
     purchase a home, elderly persons, persons who face language 
     barriers, low-income persons, minorities, and other 
     potentially vulnerable consumers aware that it is advisable, 
     before seeking or maintaining a residential mortgage loan, to 
     obtain homeownership counseling from an unbiased and reliable 
     sources and that such homeownership counseling is available, 
     including through programs sponsored by the Secretary of 
     Housing and Urban Development.
       ``(B) Contact information.--Each segment of the multimedia 
     campaign under subparagraph (A) shall publicize the toll-free 
     telephone number and website of the Department of Housing and 
     Urban Development through which persons seeking housing 
     counseling can locate a housing counseling agency in their 
     State that is certified by the Secretary of Housing and Urban 
     Development and can provide advice on buying a home, renting, 
     defaults, foreclosures, credit issues, and reverse mortgages.
       ``(C) Authorization of appropriations.--There are 
     authorized to be appropriated to the Secretary, not to exceed 
     $3,000,000 for fiscal years 2009, 2010, and 2011, for the 
     development, implementation, and conduct of national public 
     service multimedia campaigns under this paragraph.
       ``(D) Foreclosure rescue education programs.--
       ``(i) In general.--Ten percent of any funds appropriated 
     pursuant to the authorization under subparagraph (C) shall be 
     used by the Director of Housing Counseling to conduct an 
     education program in areas that have a high density of 
     foreclosure. Such program shall involve direct mailings to 
     persons living in such areas describing--

       ``(I) tips on avoiding foreclosure rescue scams;
       ``(II) tips on avoiding predatory lending mortgage 
     agreements;
       ``(III) tips on avoiding for-profit foreclosure counseling 
     services; and
       ``(IV) local counseling resources that are approved by the 
     Department of Housing and Urban Development.

       ``(ii) Program emphasis.--In conducting the education 
     program described under clause (i), the Director of Housing 
     Counseling shall also place an emphasis on serving 
     communities that have a high percentage of retirement 
     communities or a high percentage of low-income minority 
     communities.
       ``(iii) Terms defined.--For purposes of this subparagraph:

       ``(I) High density of foreclosures.--An area has a `high 
     density of foreclosures' if such area is one of the 
     metropolitan statistical areas (as that term is defined by 
     the Director of the Office of Management and Budget) with the 
     highest home foreclosure rates.
       ``(II) High percentage of retirement communities.--An area 
     has a `high percentage of retirement communities' if such 
     area is one of the metropolitan statistical areas (as that 
     term is defined by the Director of the Office of Management 
     and Budget) with the highest percentage of residents aged 65 
     or older.
       ``(III) High percentage of low-income minority 
     communities.--An area has a `high percentage of low-income 
     minority communities' if such area contains a higher-than-
     normal percentage of residents who are both minorities and 
     low-income, as defined by the Director of Housing Counseling.

       ``(5) Education programs.--The Secretary shall provide 
     advice and technical assistance to States, units of general 
     local government, and nonprofit organizations regarding the 
     establishment and operation of, including assistance with the 
     development of content and materials for, educational 
     programs to inform and educate consumers, particularly those 
     most vulnerable with respect to residential mortgage loans 
     (such as elderly persons, persons facing language barriers, 
     low-income persons, minorities, and other potentially 
     vulnerable consumers), regarding home mortgages, mortgage 
     refinancing, home equity loans, home repair loans, and where 
     appropriate by region, any requirements and costs associated 
     with obtaining flood or other disaster-specific insurance 
     coverage.''.
       (b) Conforming Amendments to Grant Program for 
     Homeownership Counseling Organizations.--Section 
     106(c)(5)(A)(ii) of the Housing and Urban Development Act of 
     1968 (12 U.S.C. 1701x(c)(5)(A)(ii)) is amended--
       (1) in subclause (III), by striking ``and'' at the end;
       (2) in subclause (IV) by striking the period at the end and 
     inserting ``; and''; and
       (3) by inserting after subclause (IV) the following new 
     subclause:

       ``(V) notify the housing or mortgage applicant of the 
     availability of mortgage software systems provided pursuant 
     to subsection (g)(3).''.

     SEC. 9304. GRANTS FOR HOUSING COUNSELING ASSISTANCE.

       Section 106(a) of the Housing and Urban Development Act of 
     1968 (12 U.S.C. 1701x(a)(3)) is amended by adding at the end 
     the following new paragraph:
       ``(4) Homeownership and Rental Counseling Assistance.--
       ``(A) In general.--The Secretary shall make financial 
     assistance available under this paragraph to HUD-approved 
     housing counseling agencies and State housing finance 
     agencies.
       ``(B) Qualified entities.--The Secretary shall establish 
     standards and guidelines for eligibility of organizations 
     (including governmental and nonprofit organizations) to 
     receive assistance under this paragraph, in accordance with 
     subparagraph (D).
       ``(C) Distribution.--Assistance made available under this 
     paragraph shall be distributed in a manner that encourages 
     efficient and successful counseling programs and that ensures 
     adequate distribution of amounts for rural areas having 
     traditionally low levels of access to such counseling 
     services, including areas with insufficient access to the 
     Internet. In distributing such assistance, the Secretary may 
     give priority consideration to entities serving areas with 
     the highest home foreclosure rates.
       ``(D) Limitation on distribution of assistance.--
       ``(i) In general.--None of the amounts made available under 
     this paragraph shall be distributed to--
       ``(I) any organization which has been convicted for a 
     violation under Federal law relating to an election for 
     Federal office; or
       ``(II) any organization which employs applicable 
     individuals.
       ``(ii) Definition of applicable individuals.--In this 
     subparagraph, the term `applicable individual' means an 
     individual who--
       ``(I) is--

       ``(aa) employed by the organization in a permanent or 
     temporary capacity;
       ``(bb) contracted or retained by the organization; or
       ``(cc) acting on behalf of, or with the express or apparent 
     authority of, the organization; and

       ``(II) has been convicted for a violation under Federal law 
     relating to an election for Federal office.
       ``(E) Grantmaking process.--In making assistance available 
     under this paragraph, the Secretary shall consider 
     appropriate ways of streamlining and improving the processes 
     for grant application, review, approval, and award.
       ``(F) Authorization of appropriations.--There are 
     authorized to be appropriated $45,000,000 for each of fiscal 
     years 2009 through 2012 for--
       ``(i) the operations of the Office of Housing Counseling of 
     the Department of Housing and Urban Development;
       ``(ii) the responsibilities of the Director of Housing 
     Counseling under paragraphs (2) through (5) of subsection 
     (g); and
       ``(iii) assistance pursuant to this paragraph for entities 
     providing homeownership and rental counseling.''.

     SEC. 9305. REQUIREMENTS TO USE HUD-CERTIFIED COUNSELORS UNDER 
                   HUD PROGRAMS.

       Section 106(e) of the Housing and Urban Development Act of 
     1968 (12 U.S.C. 1701x(e)) is amended--
       (1) by striking paragraph (1) and inserting the following 
     new paragraph:
       ``(1) Requirement for assistance.--An organization may not 
     receive assistance for counseling activities under subsection 
     (a)(1)(iii), (a)(2), (a)(4), (c), or (d) of this section, or 
     under section 101(e), unless the organization, or the 
     individuals through which the organization provides such 
     counseling, has been certified by the Secretary under this 
     subsection as competent to provide such counseling.'';
       (2) in paragraph (2)--
       (A) by inserting ``and for certifying organizations'' 
     before the period at the end of the first sentence; and
       (B) in the second sentence by striking ``for 
     certification'' and inserting ``, for certification of an 
     organization, that each individual through which the 
     organization provides counseling shall demonstrate, and, for 
     certification of an individual,'';
       (3) in paragraph (3), by inserting ``organizations and'' 
     before ``individuals'';
       (4) by redesignating paragraph (3) as paragraph (5); and
       (5) by inserting after paragraph (2) the following new 
     paragraphs:
       ``(3) Requirement under hud programs.--Any homeownership 
     counseling or rental housing counseling (as such terms are 
     defined in subsection (g)(1)) required under, or provided in 
     connection with, any program administered by the Department 
     of Housing and Urban Development shall be provided only by 
     organizations or counselors certified by the Secretary under 
     this subsection as competent to provide such counseling.
       ``(4) Outreach.--The Secretary shall take such actions as 
     the Secretary considers appropriate to ensure that 
     individuals and organizations providing homeownership or 
     rental housing counseling are aware of the certification 
     requirements and standards of this subsection and of the 
     training and certification programs under subsection (f).''.

     SEC. 9306. STUDY OF DEFAULTS AND FORECLOSURES.

       The Secretary of Housing and Urban Development shall 
     conduct an extensive study of

[[Page 31210]]

     the root causes of default and foreclosure of home loans, 
     using as much empirical data as are available. The study 
     shall also examine the role of escrow accounts in helping 
     prime and nonprime borrowers to avoid defaults and 
     foreclosures, and the role of computer registries of 
     mortgages, including those used for trading mortgage loans. 
     Not later than 12 months after the date of the enactment of 
     this Act, the Secretary shall submit to the Congress a 
     preliminary report regarding the study. Not later than 24 
     months after such date of enactment, the Secretary shall 
     submit a final report regarding the results of the study, 
     which shall include any recommended legislation relating to 
     the study, and recommendations for best practices and for a 
     process to identify populations that need counseling the 
     most.

     SEC. 9307. DEFAULT AND FORECLOSURE DATABASE.

       (a) Establishment.--The Secretary of Housing and Urban 
     Development, in consultation with the Federal agencies 
     responsible for regulation of banking and financial 
     institutions involved in residential mortgage lending and 
     servicing, shall establish and maintain a database of 
     information on foreclosures and defaults on mortgage loans 
     for one- to four-unit residential properties and shall make 
     such information publicly available.
       (b) Census Tract Data.--Information in the database shall 
     be collected, aggregated, and made available on a census 
     tract basis.
       (c) Requirements.--Information collected and made available 
     through the database shall include--
       (1) the number and percentage of such mortgage loans that 
     are delinquent by more than 30 days;
       (2) the number and percentage of such mortgage loans that 
     are delinquent by more than 90 days;
       (3) the number and percentage of such properties that are 
     real estate-owned;
       (4) number and percentage of such mortgage loans that are 
     in the foreclosure process;
       (5) the number and percentage of such mortgage loans that 
     have an outstanding principal obligation amount that is 
     greater than the value of the property for which the loan was 
     made; and
       (6) such other information as the Secretary considers 
     appropriate.

     SEC. 9308. DEFINITIONS FOR COUNSELING-RELATED PROGRAMS.

       Section 106 of the Housing and Urban Development Act of 
     1968 (12 U.S.C. 1701x), as amended by the preceding 
     provisions of this subtitle, is further amended by adding at 
     the end the following new subsection:
       ``(h) Definitions.--For purposes of this section:
       ``(1) Nonprofit organization.--The term `nonprofit 
     organization' has the meaning given such term in section 
     104(5) of the Cranston-Gonzalez National Affordable Housing 
     Act (42 U.S.C. 12704(5)), except that subparagraph (D) of 
     such section shall not apply for purposes of this section.
       ``(2) State.--The term `State' means each of the several 
     States, the Commonwealth of Puerto Rico, the District of 
     Columbia, the Commonwealth of the Northern Mariana Islands, 
     Guam, the Virgin Islands, American Samoa, the Trust 
     Territories of the Pacific, or any other possession of the 
     United States.
       ``(3) Unit of general local government.--The term `unit of 
     general local government' means any city, county, parish, 
     town, township, borough, village, or other general purpose 
     political subdivision of a State.
       ``(4) HUD-approved counseling agency.--The term `HUD-
     approved counseling agency' means a private or public 
     nonprofit organization that is--
       ``(A) exempt from taxation under section 501(c) of the 
     Internal Revenue Code of 1986; and
       ``(B) certified by the Secretary to provide housing 
     counseling services.
       ``(5) State housing finance agency.--The term `State 
     housing finance agency' means any public body, agency, or 
     instrumentality specifically created under State statute that 
     is authorised to finance activities designed to provide 
     housing and related facilities throughout an entire State 
     through land acquisition, construction, or rehabilitation.''.

     SEC. 9309. ACCOUNTABILITY AND TRANSPARENCY FOR GRANT 
                   RECIPIENTS.

       Section 106 of the Housing and Urban Development Act of 
     1968 (12 U.S.C. 1701x), as amended by the preceding 
     provisions of this subtitle, is further amended by adding at 
     the end the following:
       ``(i) Accountability for Recipients of Covered 
     Assistance.--
       ``(1) Tracking of funds.--The Secretary shall--
       ``(A) develop and maintain a system to ensure that any 
     organization or entity that receives any covered assistance 
     uses all amounts of covered assistance in accordance with 
     this section or section 9115 of the Mortgage Reform and Anti-
     Predatory Lending Act, as applicable, the regulations issued 
     under this section or such section 9115, as applicable, and 
     any requirements or conditions under which such amounts were 
     provided; and
       ``(B) require any organization or entity, as a condition of 
     receipt of any covered assistance, to agree to comply with 
     such requirements regarding covered assistance as the 
     Secretary shall establish, which shall include--
       ``(i) appropriate periodic financial and grant activity 
     reporting, record retention, and audit requirements for the 
     duration of the covered assistance to the organization or 
     entity to ensure compliance with the limitations and 
     requirements of this section or section 9115 of the Mortgage 
     Reform and Anti-Predatory Lending Act, as applicable, the 
     regulations under this section or such section 9115, as 
     applicable, and any requirements or conditions under which 
     such amounts were provided; and
       ``(ii) any other requirements that the Secretary determines 
     are necessary to ensure appropriate administration and 
     compliance.
       ``(2) Misuse of funds.--If any organization or entity that 
     receives any covered assistance is determined by the 
     Secretary to have used any covered assistance in a manner 
     that is materially in violation of this section or section 
     9115 of the Mortgage Reform and Anti-Predatory Lending Act, 
     as applicable, the regulations issued under this section or 
     such section 9115, as applicable, or any requirements or 
     conditions under which such assistance was provided--
       ``(A) the Secretary shall require that, within 12 months 
     after the determination of such misuse, the organization or 
     entity shall reimburse the Secretary for such misused amounts 
     and return to the Secretary any such amounts that remain 
     unused or uncommitted for use; and
       ``(B) such organization or entity shall be ineligible, at 
     any time after such determination, to apply for or receive 
     any further covered assistance.
     The remedies under this paragraph are in addition to any 
     other remedies that may be available under law.
       ``(3) Covered assistance.--For purposes of this subsection, 
     the term `covered assistance' means any grant or other 
     financial assistance provided under--
       ``(A) this section; or
       ``(B) section 9115 of the Mortgage Reform and Anti-
     Predatory Lending Act.''.

     SEC. 9310. UPDATING AND SIMPLIFICATION OF MORTGAGE 
                   INFORMATION BOOKLET.

       Section 5 of the Real Estate Settlement Procedures Act of 
     1974 (12 U.S.C. 2604) is amended--
       (1) in the section heading, by striking ``special'' and 
     inserting ``home buying'';
       (2) by striking subsections (a) and (b) and inserting the 
     following new subsections:
       ``(a) Preparation and Distribution.--The Director of the 
     Consumer Financial Protection Agency (hereafter in this 
     section referred to as the `Director') shall prepare, at 
     least once every 5 years, a booklet to help consumers 
     applying for federally related mortgage loans to understand 
     the nature and costs of real estate settlement services. The 
     Director shall prepare the booklet in various languages and 
     cultural styles, as the Director determines to be 
     appropriate, so that the booklet is understandable and 
     accessible to homebuyers of different ethnic and cultural 
     backgrounds. The Director shall distribute such booklets to 
     all lenders that make federally related mortgage loans. The 
     Director shall also distribute to such lenders lists, 
     organized by location, of homeownership counselors certified 
     under section 106(e) of the Housing and Urban Development Act 
     of 1968 (12 U.S.C. 1701x(e)) for use in complying with the 
     requirement under subsection (c) of this section.
       ``(b) Contents.--Each booklet shall be in such form and 
     detail as the Director shall prescribe and, in addition to 
     such other information as the Director may provide, shall 
     include in plain and understandable language the following 
     information:
       ``(1) A description and explanation of the nature and 
     purpose of the costs incident to a real estate settlement or 
     a federally related mortgage loan. The description and 
     explanation shall provide general information about the 
     mortgage process as well as specific information concerning, 
     at a minimum--
       ``(A) balloon payments;
       ``(B) prepayment penalties;
       ``(C) the advantages of prepayment; and
       ``(D) the trade-off between closing costs and the interest 
     rate over the life of the loan.
       ``(2) An explanation and sample of the uniform settlement 
     statement required by section 4.
       ``(3) A list and explanation of lending practices, 
     including those prohibited by the Truth in Lending Act or 
     other applicable Federal law, and of other unfair practices 
     and unreasonable or unnecessary charges to be avoided by the 
     prospective buyer with respect to a real estate settlement.
       ``(4) A list and explanation of questions a consumer 
     obtaining a federally related mortgage loan should ask 
     regarding the loan, including whether the consumer will have 
     the ability to repay the loan, whether the consumer 
     sufficiently shopped for the loan, whether the loan terms 
     include prepayment penalties or balloon payments, and whether 
     the loan will benefit the borrower.
       ``(5) An explanation of the right of rescission as to 
     certain transactions provided by sections 125 and 129 of the 
     Truth in Lending Act.
       ``(6) A brief explanation of the nature of a variable rate 
     mortgage and a reference to

[[Page 31211]]

     the booklet entitled `Consumer Handbook on Adjustable Rate 
     Mortgages', published by the Director, or to any suitable 
     substitute of such booklet that the Director may subsequently 
     adopt pursuant to such section.
       ``(7) A brief explanation of the nature of a home equity 
     line of credit and a reference to the pamphlet required to be 
     provided under section 127A of the Truth in Lending Act.
       ``(8) Information about homeownership counseling services 
     made available pursuant to section 106(a)(4) of the Housing 
     and Urban Development Act of 1968 (12 U.S.C. 1701x(a)(4)), a 
     recommendation that the consumer use such services, and 
     notification that a list of certified providers of 
     homeownership counseling in the area, and their contact 
     information, is available.
       ``(9) An explanation of the nature and purpose of escrow 
     accounts when used in connection with loans secured by 
     residential real estate and the requirements under section 10 
     of this Act regarding such accounts.
       ``(10) An explanation of the choices available to buyers of 
     residential real estate in selecting persons to provide 
     necessary services incidental to a real estate settlement.
       ``(11) An explanation of a consumer's responsibilities, 
     liabilities, and obligations in a mortgage transaction.
       ``(12) An explanation of the nature and purpose of real 
     estate appraisals, including the difference between an 
     appraisal and a home inspection.
       ``(13) Notice that the Office of Housing of the Department 
     of Housing and Urban Development has made publicly available 
     a brochure regarding loan fraud and a World Wide Web address 
     and toll-free telephone number for obtaining the brochure.

     The booklet prepared pursuant to this section shall take into 
     consideration differences in real estate settlement 
     procedures that may exist among the several States and 
     territories of the United States and among separate political 
     subdivisions within the same State and territory.'';
       (3) in subsection (c), by inserting at the end the 
     following new sentence: ``Each lender shall also include with 
     the booklet a reasonably complete or updated list of 
     homeownership counselors who are certified pursuant to 
     section 106(e) of the Housing and Urban Development Act of 
     1968 (12 U.S.C. 1701x(e)) and located in the area of the 
     lender.''; and
       (4) in subsection (d), by inserting after the period at the 
     end of the first sentence the following: ``The lender shall 
     provide the HUD-issued booklet in the version that is most 
     appropriate for the person receiving it.''.

     SEC. 9311. HOME INSPECTION COUNSELING.

       (a) Public Outreach.--
       (1) In general.--The Secretary of Housing and Urban 
     Development (in this section referred to as the 
     ``Secretary'') shall take such actions as may be necessary to 
     inform potential homebuyers of the availability and 
     importance of obtaining an independent home inspection. Such 
     actions shall include--
       (A) publication of the HUD/FHA form HUD 92564-CN entitled 
     ``For Your Protection: Get a Home Inspection'', in both 
     English and Spanish languages;
       (B) publication of the HUD/FHA booklet entitled ``For Your 
     Protection: Get a Home Inspection'', in both English and 
     Spanish languages;
       (C) development and publication of a HUD booklet entitled 
     ``For Your Protection--Get a Home Inspection'' that does not 
     reference FHA-insured homes, in both English and Spanish 
     languages; and
       (D) publication of the HUD document entitled ``Ten 
     Important Questions To Ask Your Home Inspector'', in both 
     English and Spanish languages.
       (2) Availability.--The Secretary shall make the materials 
     specified in paragraph (1) available for electronic access 
     and, where appropriate, inform potential homebuyers of such 
     availability through home purchase counseling public service 
     announcements and toll-free telephone hotlines of the 
     Department of Housing and Urban Development. The Secretary 
     shall give special emphasis to reaching first-time and low-
     income homebuyers with these materials and efforts.
       (3) Updating.--The Secretary may periodically update and 
     revise such materials, as the Secretary determines to be 
     appropriate.
       (b) Requirement for FHA-Approved Lenders.--Each mortgagee 
     approved for participation in the mortgage insurance programs 
     under title II of the National Housing Act shall provide 
     prospective homebuyers, at first contact, whether upon pre-
     qualification, pre-approval, or initial application, the 
     materials specified in subparagraphs (A), (B), and (D) of 
     subsection (a)(1).
       (c) Requirements for HUD-Approved Counseling Agencies.--
     Each counseling agency certified pursuant by the Secretary to 
     provide housing counseling services shall provide each of 
     their clients, as part of the home purchase counseling 
     process, the materials specified in subparagraphs (C) and (D) 
     of subsection (a)(1).
       (d) Training.--Training provided the Department of Housing 
     and Urban Development for housing counseling agencies, 
     whether such training is provided directly by the Department 
     or otherwise, shall include--
       (1) providing information on counseling potential 
     homebuyers of the availability and importance of getting an 
     independent home inspection;
       (2) providing information about the home inspection 
     process, including the reasons for specific inspections such 
     as radon and lead-based paint testing;
       (3) providing information about advising potential 
     homebuyers on how to locate and select a qualified home 
     inspector; and
       (4) review of home inspection public outreach materials of 
     the Department.

     SEC. 9312. WARNINGS TO HOMEOWNERS OF FORECLOSURE RESCUE 
                   SCAMS.

       (a) Assistance to NRC.--Notwithstanding any other provision 
     of law, of any amounts made available for any fiscal year 
     pursuant to section 106(a)(4)(F) of the Housing and Urban 
     Development Act of 1968 (12 U.S.C. 1701x(a)(4)(F)) (as added 
     by section 9304 of this title), 10 percent shall be used only 
     for assistance to the Neighborhood Reinvestment Corporation 
     for activities, in consultation with servicers of residential 
     mortgage loans, to provide notice to borrowers under such 
     loans who are delinquent with respect to payments due under 
     such loans that makes such borrowers aware of the dangers of 
     fraudulent activities associated with foreclosure.
       (b) Notice.--The Neighborhood Reinvestment Corporation, in 
     consultation with servicers of residential mortgage loans, 
     shall use the amounts provided pursuant to subsection (a) to 
     carry out activities to inform borrowers under residential 
     mortgage loans--
       (1) that the foreclosure process is complex and can be 
     confusing;
       (2) that the borrower may be approached during the 
     foreclosure process by persons regarding saving their home 
     and they should use caution in any such dealings;
       (3) that there are Federal Government and nonprofit 
     agencies that may provide information about the foreclosure 
     process, including the Department of Housing and Urban 
     Development;
       (4) that they should contact their lender immediately, 
     contact the Department of Housing and Urban Development to 
     find a housing counseling agency certified by the Department 
     to assist in avoiding foreclosure, or visit the Department's 
     website regarding tips for avoiding foreclosure; and
       (5) of the telephone number of the loan servicer or 
     successor, the telephone number of the Department of Housing 
     and Urban Development housing counseling line, and the 
     Uniform Resource Locators (URLs) for the Department of 
     Housing and Urban Development websites for housing counseling 
     and for tips for avoiding foreclosure.

                     Subtitle E--Mortgage Servicing

     SEC. 9401. ESCROW AND IMPOUND ACCOUNTS RELATING TO CERTAIN 
                   CONSUMER CREDIT TRANSACTIONS.

       (a) In General.--Chapter 2 of the Truth in Lending Act (15 
     U.S.C. 1631 et seq.) is amended by inserting after section 
     129C (as added by section 9101) the following new section:

     ``SEC. 129D. ESCROW OR IMPOUND ACCOUNTS RELATING TO CERTAIN 
                   CONSUMER CREDIT TRANSACTIONS.

       ``(a) In General.--Except as provided in subsection (b), 
     (c), or (d) , a creditor, in connection with the formation or 
     consummation of a consumer credit transaction secured by a 
     first lien on the principal dwelling of the consumer, other 
     than a consumer credit transaction under an open end credit 
     plan or a reverse mortgage, shall establish, before the 
     consummation of such transaction, an escrow or impound 
     account for the payment of taxes and hazard insurance, and, 
     if applicable, flood insurance, mortgage insurance, ground 
     rents, and any other required periodic payments or premiums 
     with respect to the property or the loan terms, as provided 
     in, and in accordance with, this section.
       ``(b) When Required.--No impound, trust, or other type of 
     account for the payment of property taxes, insurance 
     premiums, or other purposes relating to the property may be 
     required as a condition of a real property sale contract or a 
     loan secured by a first deed of trust or mortgage on the 
     principal dwelling of the consumer, other than a consumer 
     credit transaction under an open end credit plan or a reverse 
     mortgage, except when--
       ``(1) any such impound, trust, or other type of escrow or 
     impound account for such purposes is required by Federal or 
     State law;
       ``(2) a loan is made, guaranteed, or insured by a State or 
     Federal governmental lending or insuring agency;
       ``(3) the transaction is secured by a first mortgage or 
     lien on the consumer's principal dwelling having an original 
     principal obligation amount that--
       ``(A) does not exceed the amount of the maximum limitation 
     on the original principal obligation of mortgage in effect 
     for a residence of the applicable size, as of the date such 
     interest rate set, pursuant to the sixth sentence of section 
     305(a)(2) the Federal Home Loan Mortgage Corporation Act (12 
     U.S.C. 1454(a)(2)), and the annual percentage rate will 
     exceed the average prime offer rate for a comparable 
     transaction by 1.5 or more percentage points; or
       ``(B) exceeds the amount of the maximum limitation on the 
     original principal obligation of mortgage in effect for a 
     residence of the applicable size, as of the date such 
     interest rate set, pursuant to the sixth sentence

[[Page 31212]]

     of section 305(a)(2) the Federal Home Loan Mortgage 
     Corporation Act (12 U.S.C. 1454(a)(2)), and the annual 
     percentage rate will exceed the average prime offer rate for 
     a comparable transaction by 2.5 or more percentage points; or
       ``(4) so required pursuant to regulation.
       ``(c) Duration of Mandatory Escrow or Impound Account.--An 
     escrow or impound account established pursuant to subsection 
     (b), shall remain in existence for a minimum period of 5 
     years, beginning with the date of the consummation of the 
     loan, and until such borrower has sufficient equity in the 
     dwelling securing the consumer credit transaction so as to no 
     longer be required to maintain private mortgage insurance, or 
     such other period as may be provided in regulations to 
     address situations such as borrower delinquency, unless the 
     underlying mortgage establishing the account is terminated.
       ``(d) Limited Exemptions for Loans Secured by Shares in a 
     Cooperative and for Certain Condominium Units.--Escrow 
     accounts need not be established for loans secured by shares 
     in a cooperative. Insurance premiums need not be included in 
     escrow accounts for loans secured by condominium units, where 
     the condominium association has an obligation to the 
     condominium unit owners to maintain a master policy insuring 
     condominium units.
       ``(e) Clarification on Escrow Accounts for Loans Not 
     Meeting Statutory Test.--For mortgages not covered by the 
     requirements of subsection (b), no provision of this section 
     shall be construed as precluding the establishment of an 
     impound, trust, or other type of account for the payment of 
     property taxes, insurance premiums, or other purposes 
     relating to the property--
       ``(1) on terms mutually agreeable to the parties to the 
     loan;
       ``(2) at the discretion of the lender or servicer, as 
     provided by the contract between the lender or servicer and 
     the borrower; or
       ``(3) pursuant to the requirements for the escrowing of 
     flood insurance payments for regulated lending institutions 
     in section 102(d) of the Flood Disaster Protection Act of 
     1973.
       ``(f) Administration of Mandatory Escrow or Impound 
     Accounts.--
       ``(1) In general.--Except as may otherwise be provided for 
     in this title or in regulations prescribed by the Board, 
     escrow or impound accounts established pursuant to subsection 
     (b) shall be established in a federally insured depository 
     institution.
       ``(2) Administration.--Except as provided in this section 
     or regulations prescribed under this section, an escrow or 
     impound account subject to this section shall be administered 
     in accordance with--
       ``(A) the Real Estate Settlement Procedures Act of 1974 and 
     regulations prescribed under such Act;
       ``(B) the Flood Disaster Protection Act of 1973 and 
     regulations prescribed under such Act; and
       ``(C) the law of the State, if applicable, where the real 
     property securing the consumer credit transaction is located.
       ``(3) Applicability of payment of interest.--If prescribed 
     by applicable State or Federal law, each creditor shall pay 
     interest to the consumer on the amount held in any impound, 
     trust, or escrow account that is subject to this section in 
     the manner as prescribed by that applicable State or Federal 
     law.
       ``(4) Penalty coordination with respa.--Any action or 
     omission on the part of any person which constitutes a 
     violation of the Real Estate Settlement Procedures Act of 
     1974 or any regulation prescribed under such Act for which 
     the person has paid any fine, civil money penalty, or other 
     damages shall not give rise to any additional fine, civil 
     money penalty, or other damages under this section, unless 
     the action or omission also constitutes a direct violation of 
     this section.
       ``(g) Disclosures Relating to Mandatory Escrow or Impound 
     Account.--In the case of any impound, trust, or escrow 
     account that is subject to this section, the creditor shall 
     disclose by written notice to the consumer at least 3 
     business days before the consummation of the consumer credit 
     transaction giving rise to such account or in accordance with 
     timeframes established in prescribed regulations the 
     following information:
       ``(1) The fact that an escrow or impound account will be 
     established at consummation of the transaction.
       ``(2) The amount required at closing to initially fund the 
     escrow or impound account.
       ``(3) The amount, in the initial year after the 
     consummation of the transaction, of the estimated taxes and 
     hazard insurance, including flood insurance, if applicable, 
     and any other required periodic payments or premiums that 
     reflects, as appropriate, either the taxable assessed value 
     of the real property securing the transaction, including the 
     value of any improvements on the property or to be 
     constructed on the property (whether or not such construction 
     will be financed from the proceeds of the transaction) or the 
     replacement costs of the property.
       ``(4) The estimated monthly amount payable to be escrowed 
     for taxes, hazard insurance (including flood insurance, if 
     applicable) and any other required periodic payments or 
     premiums.
       ``(5) The fact that, if the consumer chooses to terminate 
     the account at the appropriate time in the future, the 
     consumer will become responsible for the payment of all 
     taxes, hazard insurance, and flood insurance, if applicable, 
     as well as any other required periodic payments or premiums 
     on the property unless a new escrow or impound account is 
     established.
       ``(6) Such other information as the Federal banking 
     agencies jointly determine necessary for the protection of 
     the consumer.
       ``(h) Definitions.--For purposes of this section, the 
     following definitions shall apply:
       ``(1) Flood insurance.--The term `flood insurance' means 
     flood insurance coverage provided under the national flood 
     insurance program pursuant to the National Flood Insurance 
     Act of 1968.
       ``(2) Hazard insurance.--The term `hazard insurance' shall 
     have the same meaning as provided for `hazard insurance', 
     `casualty insurance', `homeowner's insurance', or other 
     similar term under the law of the State where the real 
     property securing the consumer credit transaction is 
     located.''.
       (b) Implementation.--
       (1) Regulations.--The Board of Governors of the Federal 
     Reserve System, the Comptroller of the Currency, the Director 
     of the Office of Thrift Supervision, the Federal Deposit 
     Insurance Corporation, the National Credit Union 
     Administration Board, (hereafter in this title referred to as 
     the ``Federal banking agencies'') and the Federal Trade 
     Commission shall prescribe, in final form, such regulations 
     as determined to be necessary to implement the amendments 
     made by subsection (a) before the end of the 180-day period 
     beginning on the date of the enactment of this Act.
       (2) Effective date.--The amendments made by subsection (a) 
     shall only apply to covered mortgage loans consummated after 
     the end of the 1-year period beginning on the date of the 
     publication of final regulations in the Federal Register.
       (c) Clerical Amendment.--The table of sections for chapter 
     2 of the Truth in Lending Act is amended by inserting after 
     the item relating to section 129C (as added by section 9101) 
     the following new item:

``129D. Escrow or impound accounts relating to certain consumer credit 
              transactions.''.

     SEC. 9402. DISCLOSURE NOTICE REQUIRED FOR CONSUMERS WHO WAIVE 
                   ESCROW SERVICES.

       (a) In General.--Section 129D of the Truth in Lending Act 
     (as added by section 9401) is amended by adding at the end 
     the following new subsection:
       ``(i) Disclosure Notice Required for Consumers Who Waive 
     Escrow Services.--
       ``(1) In general.--If--
       ``(A) an impound, trust, or other type of account for the 
     payment of property taxes, insurance premiums, or other 
     purposes relating to real property securing a consumer credit 
     transaction is not established in connection with the 
     transaction; or
       ``(B) a consumer chooses, and provides written notice to 
     the creditor or servicer of such choice, at any time after 
     such an account is established in connection with any such 
     transaction and in accordance with any statute, regulation, 
     or contractual agreement, to close such account,

     the creditor or servicer shall provide a timely and clearly 
     written disclosure to the consumer that advises the consumer 
     of the responsibilities of the consumer and implications for 
     the consumer in the absence of any such account.
       ``(2) Disclosure requirements.--Any disclosure provided to 
     a consumer under paragraph (1) shall include the following:
       ``(A) Information concerning any applicable fees or costs 
     associated with either the non-establishment of any such 
     account at the time of the transaction, or any subsequent 
     closure of any such account.
       ``(B) A clear and prominent notice that the consumer is 
     responsible for personally and directly paying the non-
     escrowed items, in addition to paying the mortgage loan 
     payment, in the absence of any such account, and the fact 
     that the costs for taxes, insurance, and related fees can be 
     substantial.
       ``(C) A clear explanation of the consequences of any 
     failure to pay non-escrowed items, including the possible 
     requirement for the forced placement of insurance by the 
     creditor or servicer and the potentially higher cost 
     (including any potential commission payments to the servicer) 
     or reduced coverage for the consumer in the event of any such 
     creditor-placed insurance.
       ``(D) Such other information as the Federal banking 
     agencies jointly determine necessary for the protection of 
     the consumer.''.
       (b) Implementation.--
       (1) Regulations.--The Federal banking agencies and the 
     Federal Trade Commission shall prescribe, in final form, such 
     regulations as such agencies determine to be necessary to 
     implement the amendments made by subsection (a) before the 
     end of the 180-day period beginning on the date of the 
     enactment of this Act.
       (2) Effective date.--The amendments made by subsection (a) 
     shall only apply in accordance with the regulations 
     established in paragraph (1) and beginning on the date

[[Page 31213]]

     occurring 180-days after the date of the publication of final 
     regulations in the Federal Register.

     SEC. 9403. REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974 
                   AMENDMENTS.

       (a) Servicer Prohibitions.--Section 6 of the Real Estate 
     Settlement Procedures Act of 1974 (12 U.S.C. 2605) is amended 
     by adding at the end the following new subsections:
       ``(k) Servicer Prohibitions.--
       ``(1) In general.--A servicer of a federally related 
     mortgage shall not--
       ``(A) obtain force-placed hazard insurance unless there is 
     a reasonable basis to believe the borrower has failed to 
     comply with the loan contract's requirements to maintain 
     property insurance;
       ``(B) charge fees for responding to valid qualified written 
     requests (as defined in regulations which the Secretary shall 
     prescribe) under this section;
       ``(C) fail to take timely action to respond to a borrower's 
     requests to correct errors relating to allocation of 
     payments, final balances for purposes of paying off the loan, 
     or avoiding foreclosure, or other standard servicer's duties;
       ``(D) fail to respond within 10 business days to a request 
     from a borrower to provide the identity, address, and other 
     relevant contact information about the owner assignee of the 
     loan; or
       ``(E) fail to comply with any other obligation found by the 
     Secretary, by regulation, to be appropriate to carry out the 
     consumer protection purposes of this Act.
       ``(2) Force-placed insurance defined.--For purposes of this 
     subsection and subsections (l) and (m), the term `force-
     placed insurance' means hazard insurance coverage obtained by 
     a servicer of a federally related mortgage when the borrower 
     has failed to maintain or renew hazard insurance on such 
     property as required of the borrower under the terms of the 
     mortgage.
       ``(l) Requirements for Force-Placed Insurance.--A servicer 
     of a federally related mortgage shall not be construed as 
     having a reasonable basis for obtaining force-placed 
     insurance unless the requirements of this subsection have 
     been met.
       ``(1) Written notices to borrower.--A servicer may not 
     impose any charge on any borrower for force-placed insurance 
     with respect to any property securing a federally related 
     mortgage unless--
       ``(A) the servicer has sent, by first-class mail, a written 
     notice to the borrower containing--
       ``(i) a reminder of the borrower's obligation to maintain 
     hazard insurance on the property securing the federally 
     related mortgage;
       ``(ii) a statement that the servicer does not have evidence 
     of insurance coverage of such property;
       ``(iii) a clear and conspicuous statement of the procedures 
     by which the borrower may demonstrate that the borrower 
     already has insurance coverage; and
       ``(iv) a statement that the servicer may obtain such 
     coverage at the borrower's expense if the borrower does not 
     provide such demonstration of the borrower's existing 
     coverage in a timely manner;
       ``(B) the servicer has sent, by first-class mail, a second 
     written notice, at least 30 days after the mailing of the 
     notice under subparagraph (A) that contains all the 
     information described in each clause of such subparagraph; 
     and
       ``(C) the servicer has not received from the borrower any 
     demonstration of hazard insurance coverage for the property 
     securing the mortgage by the end of the 15-day period 
     beginning on the date the notice under subparagraph (B) was 
     sent by the servicer.
       ``(2) Sufficiency of demonstration.--A servicer of a 
     federally related mortgage shall accept any reasonable form 
     of written confirmation from a borrower of existing insurance 
     coverage, which shall include the existing insurance policy 
     number along with the identity of, and contact information 
     for, the insurance company or agent.
       ``(3) Termination of force-placed insurance.--Within 15 
     days of the receipt by a servicer of confirmation of a 
     borrower's existing insurance coverage, the servicer shall--
       ``(A) terminate the force-placed insurance; and
       ``(B) refund to the consumer all force-placed insurance 
     premiums paid by the borrower during any period during which 
     the borrower's insurance coverage and the force-placed 
     insurance coverage were each in effect, and any related fees 
     charged to the consumer's account with respect to the force-
     placed insurance during such period.
       ``(4) Clarification with respect to flood disaster 
     protection act.--No provision of this section shall be 
     construed as prohibiting a servicer from providing 
     simultaneous or concurrent notice of a lack of flood 
     insurance pursuant to section 102(e) of the Flood Disaster 
     Protection Act of 1973.
       ``(m) Limitations on Force-Placed Insurance Charges.--All 
     charges for force-placed insurance premiums shall be bona 
     fide and reasonable in amount.''.
       (b) Increase in Penalty Amounts.--Section 6(f) of the Real 
     Estate Settlement Procedures Act of 1974 (12 U.S.C. 2605(f)) 
     is amended--
       (1) in paragraphs (1)(B) and (2)(B), by striking ``$1,000'' 
     each place such term appears and inserting ``$2,000''; and
       (2) in paragraph (2)(B)(i), by striking ``$500,000'' and 
     inserting ``$1,000,000''.
       (c) Decrease in Response Times.--Section 6(e) of the Real 
     Estate Settlement Procedures Act of 1974 (12 U.S.C. 2605(e)) 
     is amended--
       (1) in paragraph (1)(A), by striking ``20 days'' and 
     inserting ``5 days'';
       (2) in paragraph (2), by striking ``60 days'' and inserting 
     ``30 days''; and
       (3) by adding at the end the following new paragraph:
       ``(4) Limited extension of response time.--The 30-day 
     period described in paragraph (2) may be extended for not 
     more than 15 days if, before the end of such 30-day period, 
     the servicer notifies the borrower of the extension and the 
     reasons for the delay in responding.''.
       (d) Prompt Refund of Escrow Accounts Upon Payoff.--Section 
     6(g) of the Real Estate Settlement Procedures Act of 1974 (12 
     U.S.C. 2605(g)) is amended by adding at the end the following 
     new sentence: ``Any balance in any such account that is 
     within the servicer's control at the time the loan is paid 
     off shall be promptly returned to the borrower within 20 
     business days or credited to a similar account for a new 
     mortgage loan to the borrower with the same lender.''.

     SEC. 9404. TRUTH IN LENDING ACT AMENDMENTS.

       (a) Requirements for Prompt Crediting of Home Loan 
     Payments.--Chapter 2 of the Truth in Lending Act (15 U.S.C. 
     1631 et seq.) is amended by inserting after section 129E (as 
     added by section 9502) the following new section (and by 
     amending the table of contents accordingly):

     ``SEC. 129F. REQUIREMENTS FOR PROMPT CREDITING OF HOME LOAN 
                   PAYMENTS.

       ``(a) In General.--In connection with a consumer credit 
     transaction secured by a consumer's principal dwelling, no 
     servicer shall fail to credit a payment to the consumer's 
     loan account as of the date of receipt, except when a delay 
     in crediting does not result in any charge to the consumer or 
     in the reporting of negative information to a consumer 
     reporting agency, except as required in subsection (b).
       ``(b) Exception.--If a servicer specifies in writing 
     requirements for the consumer to follow in making payments, 
     but accepts a payment that does not conform to the 
     requirements, the servicer shall credit the payment as of 5 
     days after receipt.''.
       (b) Requests for Payoff Amounts.--Chapter 2 of such Act is 
     further amended by inserting after section 129F (as added by 
     subsection (a)) the following new section (and by amending 
     the table of contents accordingly):

     ``SEC. 129G. REQUESTS FOR PAYOFF AMOUNTS OF HOME LOAN.

       ``A creditor or servicer of a home loan shall send an 
     accurate payoff balance within a reasonable time, but in no 
     case more than 7 business days, after the receipt of a 
     written request for such balance from or on behalf of the 
     borrower.''.

     SEC. 9405. ESCROWS INCLUDED IN REPAYMENT ANALYSIS.

       Section 128(b) of the Truth in Lending Act (15 U.S.C. 
     1638(b)) is amended by adding at the end the following new 
     paragraph:
       ``(4) Repayment analysis required to include escrow 
     payments.--
       ``(A) In general.--In the case of any consumer credit 
     transaction secured by a first mortgage or lien on the 
     principal dwelling of the consumer, other than a consumer 
     credit transaction under an open end credit plan or a reverse 
     mortgage, for which an impound, trust, or other type of 
     account has been or will be established in connection with 
     the transaction for the payment of property taxes, hazard and 
     flood (if any) insurance premiums, or other periodic payments 
     or premiums with respect to the property, the information 
     required to be provided under subsection (a) with respect to 
     the number, amount, and due dates or period of payments 
     scheduled to repay the total of payments shall take into 
     account the amount of any monthly payment to such account for 
     each such repayment in accordance with section 10(a)(2) of 
     the Real Estate Settlement Procedures Act of 1974.
       ``(B) Assessment value.--The amount taken into account 
     under subparagraph (A) for the payment of property taxes, 
     hazard and flood (if any) insurance premiums, or other 
     periodic payments or premiums with respect to the property 
     shall reflect the taxable assessed value of the real property 
     securing the transaction after the consummation of the 
     transaction, including the value of any improvements on the 
     property or to be constructed on the property (whether or not 
     such construction will be financed from the proceeds of the 
     transaction), if known, and the replacement costs of the 
     property for hazard insurance, in the initial year after the 
     transaction.''.

                    Subtitle F--Appraisal Activities

     SEC. 9501. PROPERTY APPRAISAL REQUIREMENTS.

       Chapter 2 of the Truth in Lending Act (15 U.S.C. 1631 et 
     seq.) is amended by inserting after 129G (as added by section 
     9404(b)) the following new section:

[[Page 31214]]



     ``SEC. 129H PROPERTY APPRAISAL REQUIREMENTS.

       ``(a) In General.--A creditor may not extend credit in the 
     form of a subprime mortgage to any consumer without first 
     obtaining a written appraisal of the property to be mortgaged 
     prepared in accordance with the requirements of this section.
       ``(b) Appraisal Requirements.--
       ``(1) Physical property visit.--An appraisal of property to 
     be secured by a subprime mortgage does not meet the 
     requirement of this section unless it is performed by a 
     qualified appraiser who conducts a physical property visit of 
     the interior of the mortgaged property.
       ``(2) Second appraisal under certain circumstances.--
       ``(A) In general.--If the purpose of a subprime mortgage is 
     to finance the purchase or acquisition of the mortgaged 
     property from a person within 180 days of the purchase or 
     acquisition of such property by that person at a price that 
     was lower than the current sale price of the property, the 
     creditor shall obtain a second appraisal from a different 
     qualified appraiser. The second appraisal shall include an 
     analysis of the difference in sale prices, changes in market 
     conditions, and any improvements made to the property between 
     the date of the previous sale and the current sale.
       ``(B) No cost to applicant.--The cost of any second 
     appraisal required under subparagraph (A) may not be charged 
     to the applicant.
       ``(3) Qualified appraiser defined.--For purposes of this 
     section, the term `qualified appraiser' means a person who--
       ``(A) is, at a minimum, certified or licensed by the State 
     in which the property to be appraised is located; and
       ``(B) performs each appraisal in conformity with the 
     Uniform Standards of Professional Appraisal Practice and 
     title XI of the Financial Institutions Reform, Recovery, and 
     Enforcement Act of 1989, and the regulations prescribed under 
     such title, as in effect on the date of the appraisal.
       ``(c) Free Copy of Appraisal.--A creditor shall provide 1 
     copy of each appraisal conducted in accordance with this 
     section in connection with a subprime mortgage to the 
     applicant without charge, and at least 3 days prior to the 
     transaction closing date.
       ``(d) Consumer Notification.--At the time of the initial 
     mortgage application, the applicant shall be provided with a 
     statement by the creditor that any appraisal prepared for the 
     mortgage is for the sole use of the creditor, and that the 
     applicant may choose to have a separate appraisal conducted 
     at their own expense.
       ``(e) Violations.--In addition to any other liability to 
     any person under this title, a creditor found to have 
     willfully failed to obtain an appraisal as required in this 
     section shall be liable to the applicant or borrower for the 
     sum of $2,000.
       ``(f) Subprime Mortgage Defined.--For purposes of this 
     section, the term `subprime mortgage' means a residential 
     mortgage loan secured by a principal dwelling with an annual 
     percentage rate that exceeds the average prime offer rate for 
     a comparable transaction, as of the date the interest rate is 
     set--
       ``(1) by 1.5 or more percentage points, in the case of a 
     first lien residential mortgage loan having an original 
     principal obligation amount that does not exceed the amount 
     of the maximum limitation on the original principal 
     obligation of mortgage in effect for a residence of the 
     applicable size, as of the date of such interest rate set, 
     pursuant to the sixth sentence of section 305(a)(2) the 
     Federal Home Loan Mortgage Corporation Act (12 U.S.C. 
     1454(a)(2));
       ``(2) by 2.5 or more percentage points, in the case of a 
     first lien residential mortgage loan having an original 
     principal obligation amount that exceeds the amount of the 
     maximum limitation on the original principal obligation of 
     mortgage in effect for a residence of the applicable size, as 
     of the date of such interest rate set, pursuant to the sixth 
     sentence of section 305(a)(2) the Federal Home Loan Mortgage 
     Corporation Act (12 U.S.C. 1454(a)(2)); and
       ``(3) by 3.5 or more percentage points for a subordinate 
     lien residential mortgage loan.''.

     SEC. 9502. UNFAIR AND DECEPTIVE PRACTICES AND ACTS RELATING 
                   TO CERTAIN CONSUMER CREDIT TRANSACTIONS.

       (a) In General.--Chapter 2 of the Truth in Lending Act (15 
     U.S.C. 1631 et seq.) is amended by inserting after section 
     129D (as added by section 9401(a)) the following new section:

     ``SEC. 129E. UNFAIR AND DECEPTIVE PRACTICES AND ACTS RELATING 
                   TO CERTAIN CONSUMER CREDIT TRANSACTIONS.

       ``(a) In General.--It shall be unlawful, in extending 
     credit or in providing any services for a consumer credit 
     transaction secured by the principal dwelling of the 
     consumer, to engage in any unfair or deceptive act or 
     practice as described in or pursuant to regulations 
     prescribed under this section.
       ``(b) Appraisal Independence.--For purposes of subsection 
     (a), unfair and deceptive practices shall include--
       ``(1) any appraisal of a property offered as security for 
     repayment of the consumer credit transaction that is 
     conducted in connection with such transaction in which a 
     person with an interest in the underlying transaction 
     compensates, coerces, extorts, colludes, instructs, induces, 
     bribes, or intimidates a person conducting or involved in an 
     appraisal, or attempts, to compensate, coerce, extort, 
     collude, instruct, induce, bribe, or intimidate such a 
     person, for the purpose of causing the appraised value 
     assigned, under the appraisal, to the property to be based on 
     any factor other than the independent judgment of the 
     appraiser;
       ``(2) mischaracterizing, or suborning any 
     mischaracterization of, the appraised value of the property 
     securing the extension of the credit;
       ``(3) seeking to influence an appraiser or otherwise to 
     encourage a targeted value in order to facilitate the making 
     or pricing of the transaction; and
       ``(4) withholding or threatening to withhold timely payment 
     for an appraisal report or for appraisal services rendered.
       ``(c) Exceptions.--The requirements of subsection (b) shall 
     not be construed as prohibiting a mortgage lender, mortgage 
     broker, mortgage banker, real estate broker, appraisal 
     management company, employee of an appraisal management 
     company, consumer, or any other person with an interest in a 
     real estate transaction from asking an appraiser to provide 1 
     or more of the following services:
       ``(1) Consider additional, appropriate property 
     information, including the consideration of additional 
     comparable properties to make or support an appraisal.
       ``(2) Provide further detail, substantiation, or 
     explanation for the appraiser's value conclusion.
       ``(3) Correct errors in the appraisal report.
       ``(d) Prohibitions on Conflicts of Interest.--No certified 
     or licensed appraiser conducting, and no appraisal management 
     company procuring or facilitating, an appraisal in connection 
     with a consumer credit transaction secured by the principal 
     dwelling of a consumer may have a direct or indirect 
     interest, financial or otherwise, in the property or 
     transaction involving the appraisal.
       ``(e) Mandatory Reporting.--Any mortgage lender, mortgage 
     broker, mortgage banker, real estate broker, appraisal 
     management company, employee of an appraisal management 
     company, or any other person involved in a real estate 
     transaction involving an appraisal in connection with a 
     consumer credit transaction secured by the principal dwelling 
     of a consumer who has a reasonable basis to believe an 
     appraiser is failing to comply with the Uniform Standards of 
     Professional Appraisal Practice, is violating applicable 
     laws, or is otherwise engaging in unethical or unprofessional 
     conduct, shall refer the matter to the applicable State 
     appraiser certifying and licensing agency.
       ``(f) No Extension of Credit.--In connection with a 
     consumer credit transaction secured by a consumer's principal 
     dwelling, a creditor who knows, at or before loan 
     consummation, of a violation of the appraisal independence 
     standards established in subsections (b) or (d) shall not 
     extend credit based on such appraisal unless the creditor 
     documents that the creditor has acted with reasonable 
     diligence to determine that the appraisal does not materially 
     misstate or misrepresent the value of such dwelling.
       ``(g) Rulemaking Proceedings.--The Board, the Comptroller 
     of the Currency, the Director of the Office of Thrift 
     Supervision, the Federal Deposit Insurance Corporation, the 
     National Credit Union Administration Board, and the Federal 
     Trade Commission--
       ``(1) shall, for purposes of this section, jointly 
     prescribe regulations no later than 180 days after the date 
     of the enactment of this section, and where such regulations 
     have an effective date of no later than 1 year after the date 
     of the enactment of this section, defining with specificity 
     acts or practices which are unfair or deceptive in the 
     provision of mortgage lending services for a consumer credit 
     transaction secured by the principal dwelling of the consumer 
     or mortgage brokerage services for such a transaction and 
     defining any terms in this section or such regulations; and
       ``(2) may jointly issue interpretive guidelines and general 
     statements of policy with respect to unfair or deceptive acts 
     or practices in the provision of mortgage lending services 
     for a consumer credit transaction secured by the principal 
     dwelling of the consumer and mortgage brokerage services for 
     such a transaction, within the meaning of subsections (a), 
     (b), (c), (d), (e), and (f).
       ``(h) Penalties.--
       ``(1) First violation.--In addition to the enforcement 
     provisions referred to in section 130, each person who 
     violates this section shall forfeit and pay a civil penalty 
     of not more than $10,000 for each day any such violation 
     continues.
       ``(2) Subsequent violations.--In the case of any person on 
     whom a civil penalty has been imposed under paragraph (1), 
     paragraph (1) shall be applied by substituting `$20,000' for 
     `$10,000' with respect to all subsequent violations.
       ``(3) Assessment.--The agency referred to in subsection (a) 
     or (c) of section 108 with respect to any person described in 
     paragraph (1) shall assess any penalty under this subsection 
     to which such person is subject.''.
       (b) Clerical Amendment.--The table of sections for chapter 
     2 of the Truth in Lending Act is amended by inserting after 
     the

[[Page 31215]]

     item relating to section 129D (as added by section 9401(c)) 
     the following new item:

``129E. Unfair and deceptive practices and acts relating to certain 
              consumer credit transactions.''.

     SEC. 9503. AMENDMENTS RELATING TO APPRAISAL SUBCOMMITTEE OF 
                   FIEC, APPRAISER INDEPENDENCE MONITORING, 
                   APPROVED APPRAISER EDUCATION, APPRAISAL 
                   MANAGEMENT COMPANIES, APPRAISER COMPLAINT 
                   HOTLINE, AUTOMATED VALUATION MODELS, AND BROKER 
                   PRICE OPINIONS.

       (a) Consumer Protection Mission.--
       (1) Purposes.--Section 1101 of the Financial Institutions 
     Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 
     3331) is amended by inserting ``and to provide the Appraisal 
     Subcommittee with a consumer protection mandate'' before the 
     period at the end.
       (2) Functions of appraisal subcommittee.--Section 1103(a) 
     of the Financial Institutions Reform, Recovery, and 
     Enforcement Act of 1989 (12 U.S.C. 3332(a)) is amended--
       (A) by striking ``and'' at the end of paragraph (3); and
       (B) by amending paragraph (4) to read as follows:
       ``(4) monitor the efforts of, and requirements established 
     by, States and the Federal financial institutions regulatory 
     agencies to protect consumers from improper appraisal 
     practices and the predations of unlicensed appraisers in 
     consumer credit transactions that are secured by a consumer's 
     principal dwelling; and''.
       (3) Threshold levels.--Section 1112(b) of the Financial 
     Institutions Reform, Recovery, and Enforcement Act of 1989 
     (12 U.S.C. 3341(b)) is amended by inserting before the period 
     the following: ``, and that such threshold level provides 
     reasonable protection for consumers who purchase 1-4 unit 
     single-family residences. In determining whether a threshold 
     level provides reasonable protection for consumers, each 
     Federal financial institutions regulatory agency shall 
     consult with consumer groups and convene a public hearing''.
       (b) Annual Report of Appraisal Subcommittee.--Section 
     1103(a) of the Financial Institutions Reform, Recovery, and 
     Enforcement Act of 1989 (12 U.S.C. 3332(a)) is amended at the 
     end by inserting the following new paragraph:
       ``(5) transmit an annual report to the Congress not later 
     than January 31 of each year that describes the manner in 
     which each function assigned to the Appraisal Subcommittee 
     has been carried out during the preceding year. The report 
     shall also detail the activities of the Appraisal 
     Subcommittee, including the results of all audits of State 
     appraiser regulatory agencies, and provide an accounting of 
     disapproved actions and warnings taken in the previous year, 
     including a description of the conditions causing the 
     disapproval and actions taken to achieve compliance.''.
       (c) Open Meetings.--Section 1104(b) of the Financial 
     Institutions Reform, Recovery, and Enforcement Act of 1989 
     (12 U.S.C. 3333(b)) is amended by inserting ``in public 
     session after notice in the Federal Register'' after ``shall 
     meet''.
       (d) Regulations.--Section 1106 of the Financial 
     Institutions Reform, Recovery, and Enforcement Act of 1989 
     (12 U.S.C. 3335) is amended--
       (1) by inserting ``prescribe regulations after notice and 
     opportunity for comment,'' after ``hold hearings''; and
       (2) at the end by inserting ``Any regulations prescribed by 
     the Appraisal Subcommittee shall (unless otherwise provided 
     in this title) be limited to the following functions: 
     temporary practice, national registry, information sharing, 
     and enforcement. For purposes of prescribing regulations, the 
     Appraisal Subcommittee shall establish an advisory committee 
     of industry participants, including appraisers, lenders, 
     consumer advocates, and government agencies, and hold 
     meetings as necessary to support the development of 
     regulations.''.
       (e) Appraisals and Appraisal Reviews.--Section 1113 of the 
     Financial Institutions Reform, Recovery, and Enforcement Act 
     of 1989 (12 U.S.C. 3342) is amended--
       (1) by striking ``In determining'' and inserting ``(a) In 
     General.--In determining'';
       (2) in subsection (a) (as designated by paragraph (1)), by 
     inserting before the period the following: ``, where a 
     complex 1-to-4 unit single family residential appraisal means 
     an appraisal for which the property to be appraised, the form 
     of ownership, the property characteristics, or the market 
     conditions are atypical''; and
       (3) by adding at the end the following new subsection:
       ``(b) Appraisals and Appraisal Reviews.--All appraisals 
     performed at a property within a State shall be prepared by 
     appraisers licensed or certified in the State where the 
     property is located. All appraisal reviews, including 
     appraisal reviews by a lender, appraisal management company, 
     or other third party organization, shall be performed by an 
     appraiser who is duly licensed or certified by a State 
     appraisal board.''.
       (f) Appraisal Management Services.--
       (1) Supervision of third party providers of appraisal 
     management services.--Section 1103(a) of the Financial 
     Institutions Reform, Recovery, and Enforcement Act of 1989 
     (12 U.S.C. 3332(a)) (as previously amended by this section) 
     is further amended--
       (A) by amending paragraph (1) to read as follows:
       ``(1) monitor the requirements established by States--
       ``(A) for the certification and licensing of individuals 
     who are qualified to perform appraisals in connection with 
     federally related transactions, including a code of 
     professional responsibility; and
       ``(B) for the registration and supervision of the 
     operations and activities of an appraisal management 
     company;''; and
       (B) by adding at the end the following new paragraph:
       ``(7) maintain a national registry of appraisal management 
     companies that either are registered with and subject to 
     supervision of a State appraiser certifying and licensing 
     agency or are operating subsidiaries of a Federally regulated 
     financial institution.''.
       (2) Appraisal management company minimum qualifications.--
     Title XI of the Financial Institutions Reform, Recovery, and 
     Enforcement Act of 1989 (12 U.S.C. 3331 et seq.) is amended 
     by adding at the end the following new section (and amending 
     the table of contents accordingly):

     ``SEC. 1124. APPRAISAL MANAGEMENT COMPANY MINIMUM 
                   QUALIFICATIONS.

       ``(a) In General.--The Appraiser Qualifications Board of 
     the Appraisal Foundation shall establish minimum 
     qualifications to be applied by a State in the registration 
     of appraisal management companies. Such qualifications shall 
     include a requirement that such companies--
       ``(1) register with and be subject to supervision by a 
     State appraiser certifying and licensing agency in each State 
     in which such company operates;
       ``(2) verify that only licensed or certified appraisers are 
     used for federally related transactions;
       ``(3) require that appraisals coordinated by an appraisal 
     management company comply with the Uniform Standards of 
     Professional Appraisal Practice; and
       ``(4) require that appraisals are conducted independently 
     and free from inappropriate influence and coercion pursuant 
     to the appraisal independence standards established under 
     section 129E of the Truth in Lending Act.
       ``(b) Exception for Federally Regulated Financial 
     Institutions.--The requirements of subsection (a) shall not 
     apply to an appraisal management company that is a subsidiary 
     owned and controlled by a financial institution and regulated 
     by a federal financial institution regulatory agency. In such 
     case, the appropriate federal financial institutions 
     regulatory agency shall, at a minimum, develop regulations 
     affecting the operations of the appraisal management company 
     to--
       ``(1) verify that only licensed or certified appraisers are 
     used for federally related transactions;
       ``(2) require that appraisals coordinated by an institution 
     or subsidiary providing appraisal management services comply 
     with the Uniform Standards of Professional Appraisal 
     Practice; and
       ``(3) require that appraisals are conducted independently 
     and free from inappropriate influence and coercion pursuant 
     to the appraisal independence standards established under 
     section 129E of the Truth in Lending Act.
       ``(c) Registration Limitations.--An appraisal management 
     company shall not be registered by a State if such company, 
     in whole or in part, directly or indirectly, is owned by any 
     person who has had an appraiser license or certificate 
     refused, denied, cancelled, surrendered in lieu of 
     revocation, or revoked in any State. Additionally, each 
     person that owns more than 10 percent of an appraisal 
     management company shall be of good moral character, as 
     determined by the State appraiser certifying and licensing 
     agency, and shall submit to a background investigation 
     carried out by the State appraiser certifying and licensing 
     agency.
       ``(d) Regulations.--The Appraisal Subcommittee shall 
     promulgate regulations to implement the minimum 
     qualifications developed by the Appraiser Qualifications 
     Board under this section, as such qualifications relate to 
     the State appraiser certifying and licensing agencies. The 
     Appraisal Subcommittee shall also promulgate regulations for 
     the reporting of the activities of appraisal management 
     companies in determining the payment of the annual registry 
     fee.
       ``(e) Effective Date.--
       ``(1) In general.--No appraisal management company may 
     perform services related to a federally related transaction 
     in a State after the date that is 36 months after the date of 
     the enactment of this section unless such company is 
     registered with such State or subject to oversight by a 
     federal financial institutions regulatory agency.
       ``(2) Extension of effective date.--Subject to the approval 
     of the Council, the Appraisal Subcommittee may extend by an 
     additional 12 months the requirements for the registration 
     and supervision of appraisal

[[Page 31216]]

     management companies if it makes a written finding that a 
     State has made substantial progress in establishing a State 
     appraisal management company registration and supervision 
     system that appears to conform with the provisions of this 
     title.''.
       (3) State appraiser certifying and licensing agency 
     authority.--Section 1117 of the Financial Institutions 
     Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 
     3346) is amended by adding at the end the following: ``The 
     duties of such agency may additionally include the 
     registration and supervision of appraisal management 
     companies.''.
       (4) Appraisal management company definition.--Section 1121 
     of the Financial Institutions Reform, Recovery, and 
     Enforcement Act of 1989 (12 U.S.C. 3350) is amended by adding 
     at the end the following:
       ``(11) Appraisal management company.--The term `appraisal 
     management company' means, in connection with valuing 
     properties collateralizing mortgage loans or mortgages 
     incorporated into a securitization, any external third party 
     authorized either by a creditor of a consumer credit 
     transaction secured by a consumer's principal dwelling or by 
     an underwriter of or other principal in the secondary 
     mortgage markets, that oversees a network or panel of more 
     than 15 certified or licensed appraisers in a State or 25 or 
     more nationally within a given year--
       ``(A) to recruit, select, and retain appraisers;
       ``(B) to contract with licensed and certified appraisers to 
     perform appraisal assignments;
       ``(C) to manage the process of having an appraisal 
     performed, including providing administrative duties such as 
     receiving appraisal orders and appraisal reports, submitting 
     completed appraisal reports to creditors and underwriters, 
     collecting fees from creditors and underwriters for services 
     provided, and reimbursing appraisers for services performed; 
     or
       ``(D) to review and verify the work of appraisers.''.
       (g) State Agency Reporting Requirement.--Section 1109(a) of 
     the Financial Institutions Reform, Recovery, and Enforcement 
     Act of 1989 (12 U.S.C. 3338(a)) is amended--
       (1) by striking ``and'' after the semicolon in paragraph 
     (1);
       (2) by redesignating paragraph (2) as paragraph (4); and
       (3) by inserting after paragraph (1) the following new 
     paragraphs:
       ``(2) transmit reports on sanctions, disciplinary actions, 
     license and certification revocations, and license and 
     certification suspensions on a timely basis to the national 
     registry of the Appraisal Subcommittee;
       ``(3) transmit reports on a timely basis of supervisory 
     activities involving appraisal management companies or other 
     third-party providers of appraisals and appraisal management 
     services, including investigations initiated and disciplinary 
     actions taken; and''.
       (h) Registry Fees Modified.--
       (1) In general.--Section 1109(a) of the Financial 
     Institutions Reform, Recovery, and Enforcement Act of 1989 
     (12 U.S.C. 3338(a)) is amended--
       (A) by amending paragraph (4) (as modified by section 
     9503(g)) to read as follows:
       ``(4) collect--
       ``(A) from such individuals who perform or seek to perform 
     appraisals in federally related transactions, an annual 
     registry fee of not more than $40, such fees to be 
     transmitted by the State agencies to the Council on an annual 
     basis; and
       ``(B) from an appraisal management company that either has 
     registered with a State appraiser certifying and licensing 
     agency in accordance with this title or operates as a 
     subsidiary of a federally regulated financial institution, an 
     annual registry fee of--
       ``(i) in the case of such a company that has been in 
     existence for more than a year, $25 multiplied by the number 
     of appraisers working for or contracting with such company in 
     such State during the previous year, but where such $25 
     amount may be adjusted, up to a maximum of $50, at the 
     discretion of the Appraisal Subcommittee, if necessary to 
     carry out the Subcommittee's functions under this title; and
       ``(ii) in the case of such a company that has not been in 
     existence for more than a year, $25 multiplied by an 
     appropriate number to be determined by the Appraisal 
     Subcommittee, and where such number will be used for 
     determining the fee of all such companies that were not in 
     existence for more than a year, but where such $25 amount may 
     be adjusted, up to a maximum of $50, at the discretion of the 
     Appraisal Subcommittee, if necessary to carry out the 
     Subcommittee's functions under this title.''; and
       (B) by amending the matter following paragraph (4), as 
     redesignated, to read as follows:
     ``Subject to the approval of the Council, the Appraisal 
     Subcommittee may adjust the dollar amount of registry fees 
     under paragraph (4)(A), up to a maximum of $80 per annum, as 
     necessary to carry out its functions under this title. The 
     Appraisal Subcommittee shall consider at least once every 5 
     years whether to adjust the dollar amount of the registry 
     fees to account for inflation. In implementing any change in 
     registry fees, the Appraisal Subcommittee shall provide 
     flexibility to the States for multi-year certifications and 
     licenses already in place, as well as a transition period to 
     implement the changes in registry fees. In establishing the 
     amount of the annual registry fee for an appraisal management 
     company, the Appraisal Subcommittee shall have the discretion 
     to impose a minimum annual registry fee for an appraisal 
     management company to protect against the under reporting of 
     the number of appraisers working for or contracted by the 
     appraisal management company.''.
       (2) Incremental revenues.--Incremental revenues collected 
     pursuant to the increases required by this subsection shall 
     be placed in a separate account at the United States 
     Treasury, entitled the ``Appraisal Subcommittee Account''.
       (i) Grants and Reports.--Section 1109(b) of the Financial 
     Institutions Reform, Recovery, and Enforcement Act of 1989 
     (12 U.S.C. 3348(b)) is amended--
       (1) by striking ``and'' after the semicolon in paragraph 
     (3);
       (2) by striking the period at the end of paragraph (4) and 
     inserting a semicolon;
       (3) by adding at the end the following new paragraphs:
       ``(5) to make grants to State appraiser certifying and 
     licensing agencies to support the efforts of such agencies to 
     comply with this title, including--
       ``(A) the complaint process, complaint investigations, and 
     appraiser enforcement activities of such agencies; and
       ``(B) the submission of data on State licensed and 
     certified appraisers and appraisal management companies to 
     the National appraisal registry, including information 
     affirming that the appraiser or appraisal management company 
     meets the required qualification criteria and formal and 
     informal disciplinary actions; and
       ``(6) to report to all State appraiser certifying and 
     licensing agencies when a license or certification is 
     surrendered, revoked, or suspended.''.

     Obligations authorized under this subsection may not exceed 
     75 percent of the fiscal year total of incremental increase 
     in fees collected and deposited in the ``Appraisal 
     Subcommittee Account'' pursuant to subsection (h).
       (j) Criteria.--Section 1116 of the Financial Institutions 
     Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 
     3345) is amended--
       (1) in subsection (c), by inserting ``whose criteria for 
     the licensing of a real estate appraiser currently meet or 
     exceed the minimum criteria issued by the Appraisal 
     Qualifications Board of The Appraisal Foundation for the 
     licensing of real estate appraisers'' before the period at 
     the end; and
       (2) by striking subsection (e) and inserting the following 
     new subsection:
       ``(e) Minimum Qualification Requirements.--Any requirements 
     established for individuals in the position of `Trainee 
     Appraiser' and `Supervisory Appraiser' shall meet or exceed 
     the minimum qualification requirements of the Appraiser 
     Qualifications Board of The Appraisal Foundation. The 
     Appraisal Subcommittee shall have the authority to enforce 
     these requirements.''.
       (k) Monitoring of State Appraiser Certifying and Licensing 
     Agencies.--Section 1118 of the Financial Institutions Reform, 
     Recovery, and Enforcement Act of 1989 (12 U.S.C. 3347) is 
     amended--
       (1) by amending subsection (a) to read as follows:
       ``(a) In General.--The Appraisal Subcommittee shall monitor 
     each State appraiser certifying and licensing agency for the 
     purposes of determining whether such agency--
       ``(1) has policies, practices, funding, staffing, and 
     procedures that are consistent with this title;
       ``(2) processes complaints and completes investigations in 
     a reasonable time period;
       ``(3) appropriately disciplines sanctioned appraisers and 
     appraisal management companies;
       ``(4) maintains an effective regulatory program; and
       ``(5) reports complaints and disciplinary actions on a 
     timely basis to the national registries on appraisers and 
     appraisal management companies maintained by the Appraisal 
     Subcommittee.

     The Appraisal Subcommittee shall have the authority to remove 
     a State licensed or certified appraiser or a registered 
     appraisal management company from a national registry on an 
     interim basis pending State agency action on licensing, 
     certification, registration, and disciplinary proceedings. 
     The Appraisal Subcommittee and all agencies, 
     instrumentalities, and Federally recognized entities under 
     this title shall not recognize appraiser certifications and 
     licenses from States whose appraisal policies, practices, 
     funding, staffing, or procedures are found to be inconsistent 
     with this title. The Appraisal Subcommittee shall have the 
     authority to impose sanctions, as described in this section, 
     against a State agency that fails to have an effective 
     appraiser regulatory program. In determining whether such a 
     program is effective, the Appraisal Subcommittee shall 
     include an analyses of the licensing and certification of 
     appraisers, the registration of appraisal management 
     companies, the issuance of temporary licenses and 
     certifications for appraisers, the receiving and tracking of 
     submitted complaints

[[Page 31217]]

     against appraisers and appraisal management companies, the 
     investigation of complaints, and enforcement actions against 
     appraisers and appraisal management companies. The Appraisal 
     Subcommittee shall have the authority to impose interim 
     actions and suspensions against a State agency as an 
     alternative to, or in advance of, the derecognition of a 
     State agency.''.
       (2) in subsection (b)(2), by inserting after ``authority'' 
     the following: ``or sufficient funding''.
       (l) Reciprocity.--Subsection (b) of section 1122 of the 
     Financial Institutions Reform, Recovery, and Enforcement Act 
     of 1989 (12 U.S.C. 3351(b)) is amended to read as follows:
       ``(b) Reciprocity.--A State appraiser certifying or 
     licensing agency shall issue a reciprocal certification or 
     license for an individual from another State when--
       ``(1) the appraiser licensing and certification program of 
     such other State is in compliance with the provisions of this 
     title; and
       ``(2) the appraiser holds a valid certification from a 
     State whose requirements for certification or licensing meet 
     or exceed the licensure standards established by the State 
     where an individual seeks appraisal licensure.''.
       (m) Consideration of Professional Appraisal Designations.--
     Section 1122(d) of the Financial Institutions Reform, 
     Recovery, and Enforcement Act of 1989 (12 U.S.C. 3351(d)) is 
     amended by striking ``shall not exclude'' and all that 
     follows through the end of the subsection and inserting the 
     following: ``may include education achieved, experience, 
     sample appraisals, and references from prior clients. 
     Membership in a nationally recognized professional appraisal 
     organization may be a criteria considered, though lack of 
     membership therein shall not be the sole bar against 
     consideration for an assignment under these criteria.''.
       (n) Appraiser Independence.--Section 1122 of the Financial 
     Institutions Reform, Recovery, and Enforcement Act of 1989 
     (12 U.S.C. 3351) is amended by adding at the end the 
     following new subsection:
       ``(g) Appraiser Independence Monitoring.--The Appraisal 
     Subcommittee shall monitor each State appraiser certifying 
     and licensing agency for the purpose of determining whether 
     such agency's policies, practices, and procedures are 
     consistent with the purposes of maintaining appraiser 
     independence and whether such State has adopted and maintains 
     effective laws, regulations, and policies aimed at 
     maintaining appraiser independence.''.
       (o) Appraiser Education.--Section 1122 of the Financial 
     Institutions Reform, Recovery, and Enforcement Act of 1989 
     (12 U.S.C. 3351) is amended by inserting after subsection (g) 
     (as added by subsection (l) of this section) the following 
     new subsection:
       ``(h) Approved Education.--The Appraisal Subcommittee shall 
     encourage the States to accept courses approved by the 
     Appraiser Qualification Board's Course Approval Program.''.
       (p) Appraisal Complaint Hotline.--Section 1122 of the 
     Financial Institutions Reform, Recovery, and Enforcement Act 
     of 1989 (12 U.S.C. 3351), as amended by this section, is 
     further amended by adding at the end the following new 
     subsection:
       ``(i) Appraisal Complaint National Hotline.--If, 1 year 
     after the date of the enactment of this subsection, the 
     Appraisal Subcommittee determines that no national hotline 
     exists to receive complaints of non-compliance with appraisal 
     independence standards and Uniform Standards of Professional 
     Appraisal Practice, including complaints from appraisers, 
     individuals, or other entities concerning the improper 
     influencing or attempted improper influencing of appraisers 
     or the appraisal process, the Appraisal Subcommittee shall 
     establish and operate such a national hotline, which shall 
     include a toll-free telephone number and an email address. If 
     the Appraisal Subcommittee operates such a national hotline, 
     the Appraisal Subcommittee shall refer complaints for further 
     action to appropriate governmental bodies, including a State 
     appraiser certifying and licensing agency, a financial 
     institution regulator, or other appropriate legal 
     authorities. For complaints referred to State appraiser 
     certifying and licensing agencies or to Federal regulators, 
     the Appraisal Subcommittee shall have the authority to follow 
     up such complaint referrals in order to determine the status 
     of the resolution of the complaint.''.
       (q) Automated Valuation Models.--Title XI of the Financial 
     Institutions Reform, Recovery, and Enforcement Act of 1989 
     (12 U.S.C. 3331 et seq.), as amended by this section, is 
     further amended by adding at the end the following new 
     section (and amending the table of contents accordingly):

     ``SEC. 1125. AUTOMATED VALUATION MODELS USED TO VALUE CERTAIN 
                   MORTGAGES.

       ``(a) In General.--Automated valuation models shall adhere 
     to quality control standards designed to--
       ``(1) ensure a high level of confidence in the estimates 
     produced by automated valuation models;
       ``(2) protect against the manipulation of data;
       ``(3) seek to avoid conflicts of interest; and
       ``(4) require random sample testing and reviews, where such 
     testing and reviews are performed by an appraiser who is 
     licensed or certified in the State where the testing and 
     reviews take place.
       ``(b) Adoption of Regulations.--The Appraisal Subcommittee 
     and its member agencies, in consultation with the Appraisal 
     Standards Board of the Appraisal Foundation and other 
     interested parties, shall promulgate regulations to implement 
     the quality control standards required under this section.
       ``(c) Enforcement.--Compliance with regulations issued 
     under this subsection shall be enforced by--
       ``(1) with respect to a financial institution, or 
     subsidiary owned and controlled by a financial institution 
     and regulated by a Federal financial institution regulatory 
     agency, the Federal financial institution regulatory agency 
     that acts as the primary Federal supervisor of such financial 
     institution or subsidiary; and
       ``(2) with respect to other persons, the Appraisal 
     Subcommittee.
       ``(d) Automated Valuation Model Defined.--For purposes of 
     this section, the term `automated valuation model' means any 
     computerized model used by mortgage originators and secondary 
     market issuers to determine the collateral worth of a 
     mortgage secured by a consumer's principal dwelling.''.
       (r) Broker Price Opinions.--Title XI of the Financial 
     Institutions Reform, Recovery, and Enforcement Act of 1989 
     (12 U.S.C. 3331 et seq.), as amended by this section, is 
     further amended by adding at the end the following new 
     section (and amending the table of contents accordingly):

     ``SEC. 1126. BROKER PRICE OPINIONS.

       ``(a) General Prohibition.--In conjunction with the 
     purchase of a consumer's principal dwelling, broker price 
     opinions may not be used as the primary basis to determine 
     the value of a piece of property for the purpose of a loan 
     origination of a residential mortgage loan secured by such 
     piece of property.
       ``(b) Broker Price Opinion Defined.--For purposes of this 
     section, the term `broker price opinion' means an estimate 
     prepared by a real estate broker, agent, or sales person that 
     details the probable selling price of a particular piece of 
     real estate property and provides a varying level of detail 
     about the property's condition, market, and neighborhood, and 
     information on comparable sales, but does not include an 
     automated valuation model, as defined in section 1125(c).''.
       (s) Amendments to Appraisal Subcommittee.--Section 1011 of 
     the Federal Financial Institutions Examination Council Act of 
     1978 (12 U.S.C. 3310) is amended--
       (1) in the first sentence, by adding before the period the 
     following: ``and the Federal Housing Finance Agency''; and
       (2) by inserting at the end the following: ``At all times 
     at least one member of the Appraisal Subcommittee shall have 
     demonstrated knowledge and competence through licensure, 
     certification, or professional designation within the 
     appraisal profession.''.
       (t) Technical Corrections.--
       (1) Section 1119(a)(2) of the Financial Institutions 
     Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 
     3348(a)(2)) is amended by striking ``council,'' and inserting 
     ``Council,''.
       (2) Section 1121(6) of the Financial Institutions Reform, 
     Recovery, and Enforcement Act of 1989 (12 U.S.C. 3350(6)) is 
     amended by striking ``Corporations,'' and inserting 
     ``Corporation,''.
       (3) Section 1121(8) of the Financial Institutions Reform, 
     Recovery, and Enforcement Act of 1989 (12 U.S.C. 3350(8)) is 
     amended by striking ``council'' and inserting ``Council''.
       (4) Section 1122 of the Financial Institutions Reform, 
     Recovery, and Enforcement Act of 1989 (12 U.S.C. 3351) is 
     amended--
       (A) in subsection (a)(1) by moving the left margin of 
     subparagraphs (A), (B), and (C) 2 ems to the right; and
       (B) in subsection (c)--
       (i) by striking ``Federal Financial Institutions 
     Examination Council'' and inserting ``Financial Institutions 
     Examination Council''; and
       (ii) by striking ``the council's functions'' and inserting 
     ``the Council's functions''.

     SEC. 9504. STUDY REQUIRED ON IMPROVEMENTS IN APPRAISAL 
                   PROCESS AND COMPLIANCE PROGRAMS.

       (a) Study.--The Comptroller General shall conduct a 
     comprehensive study on possible improvements in the appraisal 
     process generally, and specifically on the consistency in and 
     the effectiveness of, and possible improvements in, State 
     compliance efforts and programs in accordance with title XI 
     of the Financial Institutions Reform, Recovery, and 
     Enforcement Act of 1989. In addition, this study shall 
     examine the existing exemptions to the use of certified 
     appraisers issued by Federal financial institutions 
     regulatory agencies. The study shall also review the 
     threshold level established by Federal regulators for 
     compliance under title XI and whether there is a need to 
     revise them to reflect the addition of consumer protection to 
     the purposes and functions of the Appraisal Subcommittee. The 
     study shall additionally examine the quality of different 
     types of mortgage collateral valuations produced by broker 
     price opinions, automated valuation models, licensed 
     appraisals, and certified appraisals, among others, and the 
     quality of

[[Page 31218]]

     appraisals provided through different distribution channels, 
     including appraisal management companies, independent 
     appraisal operations within a mortgage originator, and fee-
     for-service appraisals. The study shall also include an 
     analysis and statistical breakdown of enforcement actions 
     taken during the last 10 years against different types of 
     appraisers, including certified, licensed, supervisory, and 
     trainee appraisers. Furthermore, the study shall examine the 
     benefits and costs, as well as the advantages and 
     disadvantages, of establishing a national repository to 
     collect data related to real estate property collateral 
     valuations performed in the United States.
       (b) Report.--Before the end of the 18-month period 
     beginning on the date of the enactment of this Act, the 
     Comptroller General shall submit a report on the study under 
     subsection (a) to the Committee on Financial Services of the 
     House of Representatives and the Committee on Banking, 
     Housing, and Urban Affairs of the Senate, together with such 
     recommendations for administrative or legislative action, at 
     the Federal or State level, as the Comptroller General may 
     determine to be appropriate.
       (c) Additional Study Required.--The Comptroller General 
     shall conduct an additional study to determine the effects 
     that the changes to the seller-guide appraisal requirements 
     of Fannie Mae and Freddie Mac contained in the Home Valuation 
     Code of Conduct have on small business, like mortgage brokers 
     and independent appraisers, and consumers, including the 
     effect on the--
       (1) quality and costs of appraisals;
       (2) length of time for obtaining appraisals;
       (3) impact on consumer protection, especially regarding 
     maintaining appraisal independence, abating appraisal 
     inflation, and mitigating acts of appraisal fraud;
       (4) structure of the appraisal industry, especially 
     regarding appraisal management companies, fee-for-service 
     appraisers, and the regulation of appraisal management 
     companies by the states; and
       (5) impact on mortgage brokers and other small business 
     professionals in the financial services industry.
       (d) Additional Report.--Before the end of the 6-month 
     period beginning on the date of the enactment of this Act, 
     the Comptroller General shall submit an additional report to 
     the Committee on Financial Services of the House of 
     Representatives and the Committee on Banking, Housing, and 
     Urban Affairs of the Senate containing the findings and 
     conclusions of the Comptroller General with respect to the 
     study conducted pursuant to subsection (c). Such additional 
     report shall take into consideration the Small Business 
     Administration's views on how small businesses are affected 
     by the Home Valuation Code of Conduct.

     SEC. 9505. EQUAL CREDIT OPPORTUNITY ACT AMENDMENT.

       Subsection (e) of section 701 of the Equal Credit 
     Opportunity Act ( U.S.C. 1691) is amended to read as follows:
       ``(e) Copies Furnished to Applicants.--
       ``(1) In general.--Each creditor shall furnish to an 
     applicant a copy of any and all written appraisals and 
     valuations developed in connection with the applicant's 
     application for a loan that is secured or would have been 
     secured by a first lien on a dwelling promptly upon 
     completion, but in no case later than 3 days prior to the 
     closing of the loan, whether the creditor grants or denies 
     the applicant's request for credit or the application is 
     incomplete or withdrawn.
       ``(2) Waiver.--The applicant may waive the 3 day 
     requirement provided for in paragraph (1), except where 
     otherwise required in law.
       ``(3) Reimbursement.--The applicant may be required to pay 
     a reasonable fee to reimburse the creditor for the cost of 
     the appraisal, except where otherwise required in law.
       ``(4) Free copy.--Notwithstanding paragraph (3), the 
     creditor shall provide a copy of each written appraisal or 
     valuation at no additional cost to the applicant.
       ``(5) Notification to applicants.--At the time of 
     application, the creditor shall notify an applicant in 
     writing of the right to receive a copy of each written 
     appraisal and valuation under this subsection.
       ``(6) Regulations.--The Board shall prescribe regulations 
     to implement this subsection within 1 year of the date of the 
     enactment of this subsection.
       ``(7) Valuation defined.--For purposes of this subsection, 
     the term `valuation' shall include any estimate of the value 
     of a dwelling developed in connection with a creditor's 
     decision to provide credit, including those values developed 
     pursuant to a policy of a government sponsored enterprise or 
     by an automated valuation model, a broker price opinion, or 
     other methodology or mechanism.''.

     SEC. 9506. REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974 
                   AMENDMENT RELATING TO CERTAIN APPRAISAL FEES.

       Section 4 of the Real Estate Settlement Procedures Act of 
     1974 is amended by adding at the end the following new 
     subsection:
       ``(c) The standard form described in subsection (a) shall 
     include, in the case of an appraisal coordinated by an 
     appraisal management company (as such term is defined in 
     section 1121(11) of the Financial Institutions Reform, 
     Recovery, and Enforcement Act of 1989 (12 U.S.C. 3350(11))), 
     a clear disclosure of--
       ``(1) the fee paid directly to the appraiser by such 
     company; and
       ``(2) the administration fee charged by such company.''.

 Subtitle G--Sense of Congress Regarding the Importance of Government 
                      Sponsored Enterprises Reform

     SEC. 9601. SENSE OF CONGRESS REGARDING THE IMPORTANCE OF 
                   GOVERNMENT-SPONSORED ENTERPRISES REFORM TO 
                   ENHANCE THE PROTECTION, LIMITATION, AND 
                   REGULATION OF THE TERMS OF RESIDENTIAL MORTGAGE 
                   CREDIT.

       (a) Findings.--The Congress finds as follows:
       (1) The Government-sponsored enterprises, Federal National 
     Mortgage Association (Fannie Mae) and the Federal Home Loan 
     Mortgage Corporation (Freddie Mac), were chartered by 
     Congress to ensure a reliable and affordable supply of 
     mortgage funding, but enjoy a dual legal status as privately 
     owned corporations with Government mandated affordable 
     housing goals.
       (2) In 1996, the Department of Housing and Urban 
     Development required that 42 percent of Fannie Mae's and 
     Freddie Mac's mortgage financing should go to borrowers with 
     income levels below the median for a given area.
       (3) In 2004, the Department of Housing and Urban 
     Development revised those goals, increasing them to 56 
     percent of their overall mortgage purchases by 2008, and 
     additionally mandated that 12 percent of all mortgage 
     purchases by Fannie Mae and Freddie Mac be ``special 
     affordable'' loans made to borrowers with incomes less than 
     60 percent of an area's median income, a target that 
     ultimately increased to 28 percent for 2008.
       (4) To help fulfill those mandated affordable housing 
     goals, in 1995 the Department of Housing and Urban 
     Development authorized Fannie Mae and Freddie Mac to purchase 
     subprime securities that included loans made to low-income 
     borrowers.
       (5) After this authorization to purchase subprime 
     securities, subprime and near-prime loans increased from 9 
     percent of securitized mortgages in 2001 to 40 percent in 
     2006, while the market share of conventional mortgages 
     dropped from 78.8 percent in 2003 to 50.1 percent by 2007 
     with a corresponding increase in subprime and Alt-A loans 
     from 10.1 percent to 32.7 percent over the same period.
       (6) In 2004 alone, Fannie Mae and Freddie Mac purchased 
     $175,000,000,000 in subprime mortgage securities, which 
     accounted for 44 percent of the market that year, and from 
     2005 through 2007, Fannie Mae and Freddie Mac purchased 
     approximately $1,000,000,000,000 in subprime and Alt-A loans, 
     while Fannie Mae's acquisitions of mortgages with less than 
     10 percent down payments almost tripled.
       (7) According to data from the Federal Housing Finance 
     Agency (FHFA) for the fourth quarter of 2008, Fannie Mae and 
     Freddie Mac own or guarantee 75 percent of all newly 
     originated mortgages, and Fannie Mae and Freddie Mac 
     currently own 13.3 percent of outstanding mortgage debt in 
     the United States and have issued mortgage-backed securities 
     for 31.0 percent of the residential debt market, a combined 
     total of 44.3 percent of outstanding mortgage debt in the 
     United States.
       (8) On September 7, 2008, the FHFA placed Fannie Mae and 
     Freddie Mac into conservatorship, with the Treasury 
     Department subsequently agreeing to purchase at least 
     $200,000,000,000 of preferred stock from each enterprise in 
     exchange for warrants for the purchase of 79.9 percent of 
     each enterprise's common stock.
       (9) The conservatorship for Fannie Mae and Freddie Mac has 
     potentially exposed taxpayers to upwards of 
     $5,300,000,000,000 worth of risk.
       (10) The hybrid public-private status of Fannie Mae and 
     Freddie Mac is untenable and must be resolved to assure that 
     consumers are offered and receive residential mortgage loans 
     on terms that reasonably reflect their ability to repay the 
     loans and that are understandable and not unfair, deceptive, 
     or abusive.
       (b) Sense of the Congress.--It is the sense of the Congress 
     that efforts to enhance by the protection, limitation, and 
     regulation of the terms of residential mortgage credit and 
     the practices related to such credit would be incomplete 
     without enactment of meaningful structural reforms of Fannie 
     Mae and Freddie Mac.

                          Subtitle H--Reports

     SEC. 9701. GAO STUDY REPORT ON GOVERNMENT EFFORTS TO COMBAT 
                   MORTGAGE FORECLOSURE RESCUE SCAMS AND LOAN 
                   MODIFICATION FRAUD.

       (a) Study.--The Comptroller General of the United States 
     shall conduct a study of the current inter-agency efforts of 
     the Secretary of the Treasury, the Secretary of Housing and 
     Urban Development, the Attorney General, and the Federal 
     Trade Commission to crackdown on mortgage foreclosure rescue 
     scams and loan modification fraud in order to advise the 
     Congress to the risks and vulnerabilities of emerging schemes 
     in the loan modification arena.
       (b) Report.--
       (1) In general.--The Comptroller General shall submit a 
     report to the Congress on the

[[Page 31219]]

     study conducted under subsection (a) containing such 
     recommendations for legislative and administrative actions as 
     the Comptroller General may determine to be appropriate in 
     addition to the recommendations required under paragraph (2).
       (2) Specific topics.--The report made under paragraph (1) 
     shall include--
       (A) an evaluation of the effectiveness of the inter-agency 
     task force current efforts to combat mortgage foreclosure 
     rescue scams and loan modification fraud scams;
       (B) specific recommendations on agency or legislative 
     action that are essential to properly protect homeowners from 
     mortgage foreclosure rescue scams and loan modification fraud 
     scams; and
       (C) the adequacy of financial resources that the Federal 
     Government is allocating to--
       (i) crackdown on loan modification and foreclosure rescue 
     scams; and
       (ii) the education of homeowners about fraudulent scams 
     relating to loan modification and foreclosure rescues.

              Subtitle I--Multifamily Mortgage Resolution

     SEC. 9801. MULTIFAMILY MORTGAGE RESOLUTION PROGRAM.

       (a) Establishment.--The Secretary of Housing and Urban 
     Development shall develop a program under this subsection to 
     ensure the protection of current and future tenants and at-
     risk multifamily properties, where feasible, based on 
     criteria that may include--
       (1) creating sustainable financing of such properties, that 
     may take into consideration such factors as--
       (A) the rental income generated by such properties; and
       (B) the preservation of adequate operating reserves;
       (2) maintaining the level of Federal, State, and city 
     subsidies in effect as of the date of the enactment of this 
     Act;
       (3) providing funds for rehabilitation; and
       (4) facilitating the transfer of such properties, when 
     appropriate and with the agreement of owners, to responsible 
     new owners and ensuring affordability of such properties.
       (b) Coordination.--The Secretary of Housing and Urban 
     Development may, in carrying out the program developed under 
     this section, coordinate with the Secretary of the Treasury, 
     the Federal Deposit Insurance Corporation, the Board of 
     Governors of the Federal Reserve System, the Federal Housing 
     Finance Agency, and any other Federal Government agency that 
     the Secretary considers appropriate.
       (c) Definition.--For purposes of this section, the term 
     ``multifamily properties'' means a residential structure that 
     consists of 5 or more dwelling units.

    Subtitle J--Study of Effect of Drywall Presence on Foreclosures

     SEC. 9901. STUDY OF EFFECT OF DRYWALL PRESENCE ON 
                   FORECLOSURES.

       (a) Study.--The Secretary of Housing and Urban Development, 
     in consultation with the Secretary of the Treasury, shall 
     conduct a study of the effect on residential mortgage loan 
     foreclosures of--
       (1) the presence in residential structures subject to such 
     mortgage loans of drywall that was imported from China during 
     the period beginning with 2004 and ending at the end of 2007; 
     and
       (2) the availability of property insurance for residential 
     structures in which such drywall is present.
       (b) Report.--Not later than the expiration of the 120-day 
     period beginning on the date of the enactment of this Act, 
     the Secretary of Housing and Urban Development shall submit 
     to the Congress a report on the study conducted under 
     subsection (a) containing its findings, conclusions, and 
     recommendations.

  The Acting CHAIR. No further amendment to the bill, as amended, shall 
be in order except those printed in House Report 111-370 and amendments 
en bloc described in section 3 of House Resolution 964. Each amendment 
printed in the report shall be considered only in the order printed in 
the report, except as specified in section 4 of that resolution, may be 
offered only by a Member designated in the report, shall be considered 
as read, shall be debatable for the time specified in the report 
equally divided and controlled by the proponent and an opponent, shall 
not be subject to amendment, and shall not be subject to a demand for 
division of the question.
  It shall be in order at any time for the Chair of the Committee on 
Financial Services or his designee to offer amendments en bloc 
consisting of amendments printed in the report not earlier disposed of. 
Amendments en bloc pursuant to this section shall be considered as 
read, shall be debatable for 20 minutes equally divided and controlled 
by the Chair and ranking minority member of the Committee on Financial 
Services or their designees, shall not be subject to amendment, and 
shall not be subject to demand for division of the question. The 
original proponent of an amendment included in such amendments en bloc 
may insert a statement in the Congressional Record immediately before 
the disposition of the amendments en bloc.
  The Chair of the Committee of the Whole may recognize for 
consideration of any amendment printed in the report out of the order 
printed, but no sooner than 30 minutes after the Chair of the Committee 
on Financial Services or his designee announces from the floor a 
request to that effect.


         Amendment No. 1 Offered by Mr. Frank of Massachusetts

  The Acting CHAIR. It is now in order to consider amendment No. 1 
printed in House Report 111-370.
  Mr. FRANK of Massachusetts. Madam Chair, I rise to offer amendment 
No. 1.
  The Acting CHAIR. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Amendment No. 1 offered by Mr. Frank of Massachusetts:
       Page 1, line 4, strike ``The'' before ``Wall Street''.
       Page 13, line 6, insert ``(hereafter in this title referred 
     to as a `foreign financial parent') after'' after ``United 
     States''.
       Page 13, beginning on line 14, strike ``of a company'' and 
     all that follows through ``United States'' on line 16.
       Page 15, after line 11, insert the following new clause 
     (and redesignate subsequent clauses appropriately):
       (iv) after the date on which the functions of the Office of 
     Thrift Supervision are transferred under subtitle C, any 
     savings and loan holding company (as defined in section 
     10(a)(1)(D) of the Home Owners' Loan Act) and any subsidiary 
     (as such term is defined in the Bank Holding Company Act of 
     1956) of such company, other than a subsidiary that is 
     described in any other subparagraph of this paragraph, to the 
     extent that the subsidiary is engaged in an activity 
     described in such subparagraph;
       Page 15, line 25, strike ``a'' and insert ``any''.
       Page 17, after line 6, insert the following new clause (and 
     redesignate subsequent clauses appropriately):
       (v) a securities-based swap execution facility that is 
     registered with the Securities and Exchange Commission under 
     the Securities Exchange Act of 1934 (15 U.S.C. 78a et 
     seq.);''
       Page 21, line 11, strike ``to pursuant'' and insert 
     ``pursuant''.
       Page 21, after line 21, insert the following new 
     subparagraph:
       (J) The head of the Consumer Financial Protection Agency.
       Page 21, after line 23, insert the following (and 
     redesignate succeeding paragraphs accordingly):
       (A) The Director of the Federal Insurance Office.
       Page 23, line 4, strike ``plans'' and insert 
     ``strategies''.
       Page 23, line 5, strike ``plans'' and insert 
     ``strategies''.
       Page 23, line 6, insert after the period the following new 
     sentence: ``In doing so, the Council shall collaborate with 
     participants in the financial sector, financial sector 
     coordinating councils, and any other parties the Council 
     determines to be appropriate.''.
       Page 24, beginning on line 23, strike ``another dispute 
     mechanism specifically has been provided under Federal law'' 
     and insert ``a dispute mechanism specifically has been 
     provided under section 4204 or title III''.
       Page 28, line 24, strike ``plans'' and insert 
     ``strategies''.
       Page 29, line 2, strike ``plans'' and insert 
     ``strategies''.
       Page 32, strike line 22 and all that follows through page 
     33, line 7.
       Page 34, after line 22, insert the following new paragraph:
       (3) Mitigation requirements in case of foreign financial 
     parents.--Before requiring the submission of reports from a 
     company that is a foreign financial parent, the Council or 
     the Board shall, to the extent appropriate, coordinate with 
     any appropriate foreign regulator of such company and any 
     appropriate multilateral organization and, whenever possible, 
     rely on information already being collected by such foreign 
     regulator or multilateral organizational with English 
     translation.
       Page 35, line 1, insert after ``entities'' the following: 
     ``(including the Federal Insurance Office)''.
       Page 37, line 12, insert ``; AGENCY AUTHORITY'' before the 
     period.
       Page 37, strike lines 17 and 18, and insert the following:
       (b) Agency Authority to Implement Standards.--
       (1) In general.--A Federal financial regulatory agency 
     specifically
       Page 37, line 19, strike ``is authorized to'' and insert 
     ``may, in response to a Council recommendation under this 
     section or otherwise,''.
       Page 38, after line 4, insert the following new paragraph:

[[Page 31220]]

       (2) Applying standards to foreign financial parents.--In 
     applying standards under paragraph (1) to any foreign 
     financial parent, or to any branch of, subsidiary of, or 
     other operating entity related to such foreign financial 
     parent that operates within the United States, the Federal 
     financial regulatory agency shall--
       (A) give due regard to the principles of national treatment 
     and equality of competitive opportunity; and
       (B) take into account the extent to which the foreign 
     financial parent is subject to comparable standards on a 
     consolidated basis in the home country of such foreign 
     financial parent that are administered by a comparable 
     foreign supervisory authority.
       Page 38, line 22, after ``such company,'' insert the 
     following: ``and, in the case of a financial holding company 
     subject to stricter standards that is an insurance company, 
     the Federal Insurance Office,''.
       Page 39, strike line 11 and all that follows through line 
     15 (and redesignate subsequent paragraphs accordingly).
       Page 39, after line 25, insert the following new paragraphs 
     (and redesignate subsequent paragraphs accordingly):
       (5) The company's importance as a source of credit for low-
     income, minority, or underserved communities and the impact 
     the failure of such company would have on the availability of 
     credit in such communities.
       (6) The extent to which assets are simply managed and not 
     owned by the financial company and the extent to which 
     ownership of assets under management is diffuse.
       Page 40, line 5, insert before the period the following: 
     ``or, in the case of a foreign financial parent, the extent 
     to which such foreign parent is subject to prudential 
     standards on a consolidated basis in the home country of such 
     financial parent that are administered and enforced by a 
     comparable foreign supervisory authority''.
       Page 40, after line 5, insert the following new paragraphs 
     (and redesignate the subsequent paragraph accordingly):
       (8) The amount and nature of the company's financial 
     assets.
       (9) The amount and nature of the company's liabilities, 
     including the degree of reliance on short-term funding.
       Page 41, strike line 10 and all that follows through line 
     19 (and redesignate subsequent subsections accordingly).
       Page 42, strike line 9 and all that follows through page 
     44, line 10, and insert the following new paragraphs:
       (1) Application of federal laws.--
       (A) Application of bank holding company act and federal 
     deposit insurance act.--A financial company subject to 
     stricter standards that does not own a bank (as defined in 
     section 2 of the Bank Holding Company Act of 1956) and that 
     is not a foreign bank or company that is treated as a bank 
     holding company under section 8 of the International Banking 
     Act of 1978 shall be subject to section 4, subsections (b), 
     (c), (d), (e), (f), and (g) of section 5, and section 8 of 
     the Bank Holding Company Act of 1956, and section 8 of the 
     Federal Deposit Insurance Act in the same manner and to the 
     same extent as if such financial holding company subject to 
     stricter standards were a bank holding company that has 
     elected to be a financial holding company (as such terms are 
     defined in the Bank Holding Company Act of 1956), its 
     subsidiaries were subsidiaries of a bank holding company, and 
     the Board was its appropriate Federal banking agency (as such 
     term is defined under the Federal Deposit Insurance Act).
       (B) Board authority.--For purposes of administering and 
     enforcing the provisions of this title, the Board may take 
     any action with respect to a financial holding company 
     subject to stricter standards described in subparagraph (A) 
     or its subsidiaries under the authorities described in 
     subparagraph (A) as if such financial holding company subject 
     to stricter standards were a bank holding company that has 
     elected to be a financial holding company (as such terms are 
     defined in the Bank Holding Company Act of 1956), its 
     subsidiaries were subsidiaries of a bank holding company, and 
     the Board was its appropriate Federal banking agency (as such 
     term is defined under the Federal Deposit Insurance Act).
       (2) Application of activity restrictions and section 6 
     holding company requirements.--
       (A) In general.--Except as provided in subparagraphs (B) 
     and (C)--
       (i) a financial holding company subject to stricter 
     standards that conducts activities that do not comply with 
     section 4 of the Bank Holding Company Act shall be required 
     to establish or designate a section 6 holding company in 
     accordance with section 6 of the Bank Holding Company Act of 
     1956 through which it conducts activities of the company that 
     are determined to be financial in nature or incidental 
     thereto under section 4(k) of the such Act; and
       (ii) such section 6 holding company shall be the financial 
     holding company subject to stricter standards for purposes of 
     this title.
       (B) Exceptions from section 6 holding company 
     requirements.--
       (i) General requirement for board to consider exceptions.--
     Before such time as a financial holding company subject to 
     stricter standards is required to establish or designate a 
     section 6 holding company under section 6 of the Bank Holding 
     Company Act, and in consultation with the financial holding 
     company subject to stricter standards and any appropriate 
     Federal or State financial regulators (and, in the case of a 
     financial holding company subject to stricter standards that 
     is an insurance company, the Federal Insurance Office)--

       (I) the Board shall consider whether to grant any of the 
     exemptions from the requirements applicable to section 6 
     holding companies under section 6(a)(6)(A) of the Bank 
     Holding Company Act of 1956, in accordance with that 
     provision; and
       (II) the Board, at the request of a financial holding 
     company subject to stricter standards that is predominantly 
     engaged in activities that are determined to be financial in 
     nature or incidental thereto under section 4(k) of the Bank 
     Holding Company Act, shall consider whether to exempt the 
     financial holding company subject to stricter standards from 
     the requirement to establish a section 6 holding company, 
     taking into consideration paragraph (2)(D), and the extent to 
     which the exemption would: facilitate the extension of credit 
     to individuals, households and businesses; improve efficiency 
     or customer service or result in other public benefits; 
     potentially threaten the safety and soundness of the 
     financial holding company or any of its subsidiaries; 
     potentially increase systemic risk or threaten the stability 
     of the overall financial system; potentially result in unfair 
     competition; and potentially have anticompetitive effects 
     that would not be outweighed by public benefits.

       (ii) Board determination not to exempt.--

       (I) In general.--If the Board determines not to exempt the 
     financial holding company subject to stricter standards from 
     the requirement to establish a section 6 holding company, the 
     financial holding company subject to stricter standards shall 
     establish a section 6 holding company within 90 days after 
     the Board's determination.
       (II) Extension of period.--The Board may extend the time by 
     which the financial holding company subject to stricter 
     standards is required to establish a section 6 holding 
     company for an additional reasonable period of time, not to 
     exceed 180 days.

       (iii) Board determination to exempt.--

       (I) In general.--If the Board grants the requested 
     exemption from the requirement to establish a section 6 
     holding company, the financial holding company subject to 
     stricter standards shall at all times remain predominantly 
     engaged in activities that are determined to be financial in 
     nature or incidental thereto under section 4(k) of the Bank 
     Holding Company Act of 1956, and shall be the financial 
     holding company subject to stricter standards for purposes of 
     this title.
       (II) Subsequent loss of exemption.--Upon a determination by 
     the Board, in consultation with any relevant Federal or State 
     regulators of the financial holding company subject to 
     stricter standards, and, in the case of a financial holding 
     company subject to stricter standards that is an insurance 
     company, the Federal Insurance Office, that the financial 
     holding company subject to stricter standards fails to comply 
     with this subsection, the financial holding company subject 
     to stricter standards shall lose the exemption from the 
     section 6 holding company requirement and shall establish a 
     section 6 holding company within the time periods described 
     in clause (ii)(I).

       (C) Activities conducted abroad.--Section 4 of the Bank 
     Holding Company Act of 1956 shall not apply to any activities 
     that a foreign financial holding company subject to stricter 
     standards conducts solely outside the United States if such 
     activities are conducted solely by a company or other entity 
     that is located outside the United States.
       (D) Flexible application.--In applying the activity 
     restrictions and ownership limitations of section 4 of the 
     Bank Holding Company Act of 1956 to financial holding 
     companies subject to stricter standards described in 
     paragraph (1)(A), the Board shall flexibly adapt such 
     requirements taking into account the usual and customary 
     practices in the business sector of the financial company 
     subject to stricter standards so as to avoid unnecessary 
     burden and expense.
       Page 45, line 5, insert ``, as agent of the Council,'' 
     after ``Board''.
       Page 45, beginning on line 18, strike ``heightened'' and 
     insert ``stricter''.
       Page 45, strike lines 21 and 22 and insert the following 
     new clause (and redesignate subsequent clauses accordingly):
       (i) risk-based capital requirements and leverage limits, 
     unless the Board determines that such requirements are not 
     appropriate for a financial holding company subject to 
     stricter standards because of such company's activities (such 
     as investment company activities or assets under management) 
     or structure, in which case the Board shall apply other 
     standards that result in appropriately stringent controls.
       Page 46, line 4, insert ``and'' after the semicolon.
       Page 46, line 6, strike ``; and'' and insert a period.
       Page 46, strike line 7 and all that follows through line 9.
       Page 46, line 12, insert ``short-term debt limits 
     prescribed in accordance with subsection (d) and'' after 
     ``include''.

[[Page 31221]]

       Page 46, line 17, after ``agencies'' insert the following: 
     ``and the federal insurance office''.
       Page 47, line 2, after the period insert the following: 
     ``With respect to a financial holding company subject to 
     stricter standards that is an insurance company or any 
     insurance company subsidiary of such a financial holding 
     company subject to stricter standards, the Board shall also 
     consult with the Federal Insurance Office.''.
       Page 47, strike line 3 and all that follows through line 5 
     and insert the following:
       (3) Application of required standards.--In imposing 
     prudential standards under this section, the Board--
       (A) may differentiate among financial
       Page 47, line 11, strike the period and insert ``; and''.
       Page 47, after line 11, insert the following new 
     subparagraph:
       (B) shall take into consideration whether and to what 
     extent a financial holding company subject to stricter 
     standards that is not a bank holding company or treated as a 
     bank holding company owns or controls a depository 
     institution and shall adapt the prudential standards applied 
     to such company as appropriate in light of any predominant 
     line of business of such company, including assets under 
     management or other activities for which capital requirements 
     are not appropriate.
       Page 47, beginning on line 20, strike ``financial 
     companies'' and all that follows through ``own or control'' 
     on line 22, and insert ``a foreign financial parent and to''.
       Page 47, beginning on line 23, strike ``that is a'' and all 
     that follows through ``principle'' on line 25 and insert 
     ``that is owned or controlled by a foreign financial parent, 
     giving due regard to principles''.
       Page 48, beginning on line 2, strike ``such companies are 
     subject'' and insert ``the foreign financial parent is 
     subject on a consolidated basis''.
       Page 50, line 22, strike ``, as such entities are'' and 
     insert ``as''.
       Page 51, line 13, before the period insert the following: 
     ``and, with respect to an insurance company, the Federal 
     Insurance Office''.
       Page 54, line 14, insert before the period the following: 
     ``except as specifically provided in this title''.
       Page 54, line 19, insert before the period the following: 
     ``except as specifically provided in this title''.
       Page 55, line 14, strike ``shall'' and insert ``may.''
       Page 55, line 19, strike ``The'' and insert ``Any''.
       Page 56, strike line 20 and all that follows through line 
     25.
       Page 68, line 17, insert ``The Board, in determining 
     whether to impose any requirement under this subparagraph 
     that is likely to have a significant effect on a functionally 
     regulated subsidiary, subsidiary depository institution, or 
     insurance company subsidiary of a financial holding company 
     subject to stricter standards, shall consult with the primary 
     financial regulatory agency for such subsidiary. In the case 
     of an insurance company subsidiary of a financial holding 
     company subject to stricter standards, the Board shall 
     consult with the Federal Insurance Office.'' after the 
     period.
       Page 76, line 9, insert ``, after consultation with the 
     primary financial regulatory agency for any functionally 
     regulated subsidiary, subsidiary depository institution, or 
     insurance company subsidiary that is likely to be 
     significantly affected by such actions. In the case of an 
     insurance company subsidiary of a financial holding company 
     subject to stricter standards, the Board shall consult with 
     the Federal Insurance Office'' before the period.
       Page 86, line 1, after ``standards'' insert the following: 
     ``(and, if the financial holding company subject to stricter 
     standards is an insurance company, the Federal Insurance 
     Office)''.
       Page 87, after line 5, insert the following new 
     subsections:
       (j) Rule of Construction Regarding Consumer Protection 
     Standards.--The prudential standards imposed or recommended 
     by the Board or the Council under this section shall not be 
     construed as superseding--
       (1) any consumer protection standards promulgated under a 
     State or Federal consumer protection law, including the 
     Consumer Financial Protection Agency Act and the Federal 
     Trade Commission Act; or
       (2) any investor protection standard that protects 
     consumers (including public reporting requirements) imposed 
     under State or Federal securities laws, including the 
     Securities Act of 1933, the Securities Exchange Act of 1934, 
     the Investment Company Act of 1944, and the Investment 
     Advisors Act of 1944.
       (k) Rulemaking Authority.--The Board may prescribe such 
     regulations and issue such orders as the Board, in 
     consultation with the Council, determines to be necessary to 
     carry out the provisions of this subtitle.
       Page 87, line 24, strike ``financial company subjected to 
     stricter prudential'' and insert ``financial holding company 
     subject to stricter''.
       Page 88, line 2, insert after the period the following: 
     ``With respect to any requirements under this section that is 
     likely to have a significant effect on an insurance company, 
     the Council shall consult with the Federal Insurance 
     Office.''.
       Page 89, line 8, insert ``stricter'' after ``modifying 
     the''.
       Page 90, line 14, insert ``holding'' after ``financial''.
       Page 90, line 15, strike ``prudential''.
       Page 90 line 16, strike ``financial company'' and insert 
     ``financial holding company subject to stricter standards''.
       Page 90, line 22, strike ``company subject to stricter 
     prudential'' and insert ``holding company subject to 
     stricter''.
       Page 92, line 20, strike ``subsection (e)(5)'' and insert 
     ``this section''.
       Page 93, line 1, strike ``(e)(5)'' and insert ``(e)(2)''.
       Page 96, line 18, insert ``, as agent of the Council,'' 
     after ``Board''.
       Page 97, line 4, insert after the period the following: 
     ``With respect to any standard that is likely to have a 
     significant effect on insurance companies, the Board also 
     shall consult with the Federal Insurance Office.''.
       Page 97, after line 16, insert the following new paragraph:
       (3) Exception.--The standards recommended by the Board and 
     adopted by a primary financial regulatory agency pursuant to 
     this section shall not apply to activities that a foreign 
     financial parent conducts solely outside the United States if 
     such activities are conducted solely by a company or other 
     operating entity that is located outside the United States.
       Page 119, line 7, insert ``, after notice and opportunity 
     for comment,'' after ``may''.
       Page 119, line 13, strike ``agency'' and insert ``Board''.
       Page 119, line 14, strike ``agency'' and insert ``Board''.
       Page 122, line 18, strike ``The authorities'' and insert 
     the following:
       (a) Construction.--The authorities
       Page 123, after line 2, insert the following new 
     subsection:
       (b) Agent Responsibilities.--For purposes of this subtitle, 
     the term ``agent'' means the Board acting under section 
     1103(c) and coordinating with the Council in exercising 
     authority under sections 1104 and 1107.
       Page 129, line 17, insert ``, and who shall coordinate with 
     the Office of Thrift Supervision pursuant to section 1211'' 
     before the period at the end.
       Page 131, after line 5, insert the following new 
     subsection:
       (f) Effective Date.--Subsection (b) shall take effect on 
     the date of the enactment of this Act .
       Page 132, after line 15, insert the following new 
     paragraph:
       (4) Functions relating to supervision of savings and loan 
     holding companies.--
       (A) Transfer of functions.--All functions of the Director 
     of the Office of Thrift Supervision relating to the 
     supervision and regulation of Savings and Loan Holding 
     Companies are transferred to the Board.
       (B) Board authority.--The Board shall succeed to all 
     powers, authorities, rights, and duties that were vested in 
     the Director of the Office of Thrift Supervision under 
     Federal law, including the Home Owners' Loan Act, on the day 
     before the transfer date, relating to the supervision and 
     regulation of Savings and Loan Holding Companies.
       Page 132, after line 24, insert the following new paragraph 
     (and redesignate succeeding paragraphs accordingly):
       (2) in paragraph (2)(E), by striking ``and'' at the end;
       Page 133, after line 2, insert the following new paragraph 
     (and redesignate succeeding paragraphs accordingly):
       (4) after paragraph (2)(F), by inserting the following new 
     subparagraph:
       ``(G) any savings and loan holding company and any 
     subsidiary of a savings and loan holding company (other than 
     a savings association); and'';
       Page 147, line 21, insert ``and'' after the semicolon.
       Page 147, line 25, strike ``; and'' and insert a period.
       Page 148, strike line 1 and all that follows through line 
     3.
       Page 162, after line 6, insert the following new paragraphs 
     (and redesignate succeeding paragraphs accordingly):
       (1) In subsection (a)--
       (A) in paragraph (1)(A), by striking ``Director'' and 
     inserting ``Board'';
       (B) in paragraph (1)(D), by striking clause (i) and 
     inserting: ``(i) In general.--.
       ``(i) In general.--Except as provided in clause (ii), the 
     term `savings and loan holding company' means any company 
     that directly or indirectly controls a savings association or 
     that controls any company that is a savings and loan holding 
     company, and that is either--

       ``(I) a fraternal beneficiary society, as defined in 
     section 501(c)(8) of the Internal Revenue Code of 1986; or
       ``(II) a company that is, together with all of its 
     affiliates on a consolidated basis, predominantly engaged in 
     the business of insurance.'';

       (C) in paragraph (1)(F), by striking ``Director'' and 
     inserting ``Board'';
       (D) in paragraph (1), by inserting at the end the following 
     new subparagraph:
       ``(K) Board.--The term `Board' means the Board of Governors 
     of the Federal Reserve System.''.

[[Page 31222]]

       (E) in paragraph (2)(D), by striking ``Director'' and 
     inserting ``Board'';
       (F) in paragraph (3)(A), by striking ``Director'' and 
     inserting ``Board''; and
       (G) in paragraph (4), by striking ``Director'' and 
     inserting ``Board''.
       (2) In subsection (b), by striking ``Director'' each place 
     it appears and inserting ``Board''.
       (3) In subsection (c)--
       (A) in paragraph, (2)(F)(i)--
       (i) by striking ``of Governors of the Federal Reserve 
     System''; and
       (ii) by striking ``Director'' and inserting ``Board'';
       (B) in paragraph (2)(G), by striking ``Director'' and 
     inserting ``Board'';
       (C) in paragraph (4)(A), by striking ``Director'' and 
     inserting ``Board'';
       (D) in paragraph (4)(B)--
       (i) in the heading, by striking ``director'' and inserting 
     ``Board''; and
       (ii) by striking ``the Director shall'' and inserting ``the 
     Board shall'';
       (E) in paragraph (4)(C)--
       (i) in the heading, by striking ``director'' and inserting 
     ``Board''; and
       (ii) by striking ``the Director may'' and inserting ``the 
     Board may'';
       (F) in paragraph (5), by striking ``Director'' and 
     inserting ``Board'';
       (G) in paragraph (6)(D)--
       (i) in the heading, by striking ``director'' and inserting 
     ``Board''; and
       (ii) by striking ``Director'' each place it appears and 
     inserting ``Board'';
       (H) in paragraph (9)(A)(ii), by inserting ``, but only if 
     the conditions for engaging in expanded financial activities 
     set forth in section 4(l) of the Bank Holding Company Act of 
     1956 have been met'' after ``1956''; and
       (I) in paragraph (9)(E), by striking ``Director'' each 
     place it appears and inserting ``Board''.
       (4) In subsection (e)--
       (A) in paragraph (1)(A)--
       (i) in clause (i), by striking ``Director'' and inserting 
     ``Board'';
       (ii) in clause (ii), by striking ``Director'' and inserting 
     ``Board'';
       (iii) in clause (iii), by striking ``Director'' each place 
     it appears and inserting ``Board''; and
       (iv) in clause (iv), by striking ``Director'' each place it 
     appears and inserting ``Board'';
       (B) in paragraph (1)(B), by striking ``Director'' each 
     place it appears and inserting ``Board'';
       (C) in paragraph (2), by striking ``Director'' each place 
     it appears and inserting ``Board'';
       (D) in paragraph (3), by striking ``Director'' and 
     inserting ``Board'';
       (E) in paragraph (4)(A), by striking ``Director'' and 
     inserting ``Board''; and
       (F) in paragraph (5), by striking ``Director'' each place 
     it appears and inserting ``Board''.
       (5) In subsection (f), by striking ``Director'' each place 
     it appears and inserting ``Board''.
       (6) In subsection (g), by striking ``Director'' each place 
     it appears and inserting ``Board''.
       (7) In subsection (h)--
       (A) in paragraph (2), by striking ``Director'' and 
     inserting ``Board''; and
       (B) in paragraph (3), by striking ``Director'' and 
     inserting ``Board''.
       (8) In subsection (i)--
       (A) in paragraph (1)(A), by striking ``Director'' and 
     inserting ``Board'';
       (B) in paragraph (2)(B), by striking ``Director'' and 
     inserting ``Board'';
       (C) in paragraph (2)(F), by striking ``Director'' and 
     inserting ``Board'';
       (D) in paragraph (3)(B), by striking ``Director'' and 
     inserting ``Board'';
       (E) in paragraph (3)(F), by striking ``Director'' and 
     inserting ``Board'';
       (F) in paragraph (4), by striking ``Director'' and 
     inserting ``Board''; and
       (G) in paragraph (5), by striking ``Director'' and 
     inserting ``Board''.
       (9) In subsection (j), by striking ``Director'' each place 
     it appears and inserting ``Board''.
       (10) In subsection (l)--
       (A) in paragraph (1), by striking ``Director'' and 
     inserting ``Board, in consultation with the Comptroller of 
     the Currency,''; and
       (B) in paragraph (2), by striking ``Director'' and 
     inserting ``Board, in consultation with the Comptroller of 
     the Currency,''.
       Page 166, after line 18 insert the following:
       (13) In subsections (p), (q), (r), and (s), by striking 
     ``Director'' each place it appears and inserting ``Board''.
       Page 169, strike lines 1 through 4 and insert the 
     following:
       ``(7) Valuation.--
       ``(A) In general.--The Board shall consider waived 
     dividends in determining an appropriate exchange ratio in the 
     event of a full conversion to stock form.
       ``(B) Exception.--In the case of a savings association 
     which has reorganized into a mutual thrift holding company 
     under section 10(b) of the Home Owners' Loan Act and has 
     issued minority stock either from its mid-tier stock holding 
     company or its subsidiary stock savings association prior to 
     December 1, 2009, the Board shall not consider waived 
     dividends in determining an appropriate exchange ratio in the 
     event of a full conversion to stock form.''.
       Page 204, line 14, strike ``may decrease'' and insert 
     ``decreases''.
       Page 204, beginning on line 23, strike ``, on a 
     consolidated basis,'' and insert ``a fraternal beneficiary 
     society, as defined in section 501(c)(8) of the Internal 
     Revenue Code of 1986, or a company that is, together with all 
     of its affiliates on a consolidated basis,''.
       Page 205, beginning on line 4, strike ``, on a consolidated 
     basis,'' and insert ``a fraternal beneficiary society, as 
     defined in section 501(c)(8) of the Internal Revenue Code of 
     1986, or a company that is, together with all of its 
     affiliates on a consolidated basis,''.
       Page 205, after line 13, insert the following new section:

     SEC. 1257. EFFECTIVE DATE.

       Except as otherwise provided in this subtitle, the 
     amendments made by sections 1221 through section 1253 and 
     1256 and subsections (a), (b), and (c)(1) of section 1254 
     shall take effect on the transfer date.
       Page 207, line 6, strike ``, on a consolidated basis,'' and 
     insert ``a fraternal beneficiary society, as defined in 
     section 501(c)(8) of the Internal Revenue Code of 1986, or a 
     company that is, together with all of its affiliates on a 
     consolidated basis,''.
       Page 207, strike line 9, and insert the following:
       (B) in subparagraph (F)(i), by inserting before the 
     semicolon the following: ``, including issuing credit cards 
     and other credit devices (including virtual or intangible 
     devices) that function as credit cards'';
       (C) in subparagraph (F)(v), by inserting before the 
     semicolon the following: ``, other than loans that otherwise 
     meet the requirements of this subparagraph and are made to 
     businesses that meet the criteria for a small business 
     concern to be eligible for business loans under regulations 
     established by the Small Business Administration under part 
     121 of title 13, Code of Federal Regulations''; and
       (D) by striking subparagraph (H) and inserting the 
     following:
       ``(H) An industrial loan company, industrial bank, or other 
     similar institution which--
       ``(i) is an institution organized under the laws of a State 
     which, on March 5, 1987, had in effect or had under 
     consideration in such State's legislature a statute which 
     required or would require such institution to obtain 
     insurance under the Federal Deposit Insurance Act;
       ``(ii) either--

       ``(I) does not accept demand deposits that the depositor 
     may withdraw by check or similar means for payment to third 
     parties;
       ``(II) has total assets of less than $100,000,000; or
       ``(III) the control of which is not acquired by any company 
     after August 10, 1987;

       ``(iii) predominantly provides financial products and 
     services to current and former members of the military and 
     their families; and
       ``(iv) is controlled by a savings and loan holding company, 
     as defined in section 10(a) of the Home Owners' Loan Act.
     This subparagraph shall cease to apply to any institution 
     which permits any overdraft (including any intraday 
     overdraft), or which incurs any such overdraft in such 
     institution's account at a Federal Reserve bank, on behalf of 
     an affiliate, if such overdraft is not the result of an 
     inadvertent computer or accounting error that is beyond the 
     control of both the institution and the affiliate, or that is 
     otherwise permissible for a bank controlled by a company 
     described in section 1843(f)(1) of this title.''; and
       Page 208, strike line 10 and all that follows through page 
     209, line 7, and insert the following:
       ``(ii) conduct all such activities which are permissible 
     for a financial holding company, as determined under section 
     4(k), through such section 6 holding company, other than--

       ``(I) internal financial activities conducted for such 
     company or any affiliate, including, but not limited to 
     internal treasury, investment, and employee benefit 
     functions, provided that with respect to any internal 
     financial activity engaged in for the company or an affiliate 
     and a nonaffiliate during the year prior to date of 
     enactment, the company (or an affiliate not a subsidiary of 
     the section 6 company) may continue to engage in that 
     activity so long as the at least two-thirds of the assets or 
     two-thirds of the revenues generated from the activity are 
     from or attributable to the company or an affiliate, subject 
     to review by the Board to determine whether engaging in such 
     activity presents undue risk to the section 6 company or 
     undue systemic risk; and
       ``(II) financial activities involving the provision of 
     credit for the purchase or lease of products or services from 
     an affiliate or for the purchase or lease of products 
     produced by an affiliate of such section 6 holding company 
     that is not a subsidiary of such section six holding company, 
     in accordance with regulations prescribed by or orders issued 
     by the Board, pursuant to section 6 of this Act.''; and

       Page 209, strike line 15 and all that follows through page 
     210, line 14 and insert the following:
       ``(i) on the date of enactment of the Financial Stability 
     Improvement Act of 2009, a unitary savings and loan holding 
     company that continues to control not fewer than one savings 
     association that it controlled on May 4, 1999, or that it 
     acquired pursuant to an application pending before the Office 
     of Thrift Supervision on or before that date,

[[Page 31223]]

     and that became a bank for purposes of the Bank Holding 
     Company Act as a result of the enactment of section 
     1301(a)(3) of the Financial Stability Improvement Act 2009; 
     or''.
       Page 210, line 19, strike ``1301(a)(3)(B)'' and insert 
     ``1301(a)(4)(B)''.
       Page 220, after line 25, insert the following:
       ``(8) Unitary savings and loan holding company defined.--
     For purposes of this subsection, the term `unitary savings 
     and loan holding company' means a company that was a savings 
     and loan holding company on May 4, 1999 (as then defined), or 
     that became a savings and loan holding company pursuant to an 
     application pending before the Office of Thrift Supervision 
     on or before that date, and--
       ``(A) that controls--
       ``(i) only 1 savings association; or
       ``(ii) more than 1 savings association, if all, or all but 
     1, of the savings association subsidiaries of such company 
     were initially acquired by the company pursuant to a 
     supervisory transaction under section 1823(c), 1823(i), or 
     1823(k) of this title, or section 408(m) of the National 
     Housing Act (12 U.S.C. 1730a(m));
       ``(B) all of the savings association subsidiaries of such 
     company are qualified thrift lenders (as determined under 
     section 10 of the Home Owners' Loan Act); and
       ``(C) that continues to control not fewer than 1 savings 
     association that it controlled on May 4, 1999, or that it 
     acquired pursuant to an application pending before the Office 
     of Thrift Supervision on or before that date.''.
       Page 220, after line 25, insert the following:
       (8) Unitary savings and loan holding company defined.--
     Solely for purposes of this subsection, the term ``unitary 
     savings and loan holding company'' means a company that was a 
     savings and loan holding company on May 4, 1999 (as then 
     defined), or that became a savings and loan holding company 
     pursuant to an application pending before the Office of 
     Thrift Supervision on or before that date, and--
       (A) that controls --
       (i) only 1 savings association; or
       (ii) more than 1 savings association, if all, or all but 1, 
     of the savings association subsidiaries of such company were 
     initially acquired by the company pursuant to a supervisory 
     transaction under section 1823(c), 1823(i), or 1823(k) of 
     this title, or section 408(m) of the National Housing Act (12 
     U.S.C. 1730a(m));
       (B) all of the savings association subsidiaries of such 
     company are qualified thrift lenders (as determined under 
     section 10 of the Home Owners' Loan Act); and
       (C) that continues to control not fewer than 1 savings 
     association that it controlled on May 4, 1999, or that it 
     acquired pursuant to an application pending before the Office 
     of Thrift Supervision on or before that date.
       Page 222, line 18, strike ``subtitle B'' and insert 
     ``section 1103''.
       Page 223, strike line 15 and all that follows through page 
     224, line 11 and insert the following:
       (B) A company that is required to form a section a section 
     6 holding company shall conduct all such activities which are 
     permissible for a financial holding company, as determined 
     under section 4(k), through such section 6 holding company, 
     other than--
       (i) internal financial activities conducted for such 
     company or any affiliate, including, but not limited to 
     internal treasury, investment, and employee benefit 
     functions, provided that with respect to any internal 
     financial activity engaged in for the company or an affiliate 
     and a nonaffiliate during the year prior to date of 
     enactment, the company (or an affiliate not a subsidiary of 
     the section 6 company) may continue to engage in that 
     activity so long as the at least \2/3\ of the assets or \2/3\ 
     of the revenues generated from the activity are from or 
     attributable to the company or an affiliate, subject to 
     review by the Board to determine whether engaging in such 
     activity presents undue risk to the section 6 company or 
     undue systemic risk; and
       (ii) financial activities involving the provision of credit 
     for the purchase or lease of products or services from an 
     affiliate or for the purchase or lease of products produced 
     by an affiliate of such section 6 holding company that is not 
     a subsidiary of such section 6 holding company, in accordance 
     with regulations prescribed by or orders issued by the Board, 
     pursuant to section 6 of this Act.
       Page 225, beginning on line 22, strike ``, as a bank 
     holding company''.
       Page 226, line 2, strike ``subtitle B'' and insert 
     ``section 1103''.
       Page 226, strike lines 7 and 8 and insert the following:
       ``(ii) subject to the provisions of this Act and other 
     Federal law as provided in section 1103(g) of the Financial 
     Stability Improvement Act of 2009; and''.
       Page 227, line 5, strike ``subtitle A'' and insert 
     ``section 1103''.
       Page 228, line 6, after ``section 6(a)(2)(B)'' insert the 
     following: ``and financial activities involving the provision 
     of credit for the purchase or lease of products or services 
     from an affiliate or for the purchase or lease of products 
     produced by an affiliate of such section 6 holding company 
     that is not a subsidiary of such section six holding 
     company''.
       Page 236, strike lines 17-25.
       Page 237, line 12, strike ``sections 4(p) and 6'' and 
     insert ``section 1301 of the Financial Stability Improvement 
     Act of 2009''.
       Page 237, line 13, insert ``, other than a section 6 
     holding company,'' after ``company''.
       Page 250, beginning on line 19, strike ``after subsection 
     (y) (as added by section 1408)'' and insert ``at the end''.
       Page 250, line 21, strike ``(z)'' and insert ``(y)''.
       Page 252, line 16, insert ``holding'' after ``financial''.
       Page 252, beginning on line 16, strike ``prudential''.
       Page 252, line 19, strike ``greater'' and insert ``great''.
       Page 253, line 23, strike ``8(c)(5)'' and insert 
     ``18(c)(5)''.
       Page 255, after line 2, insert the following new section 
     (and conform the table of contents accordingly):

     SEC. 1316. NATIONWIDE DEPOSIT CAP FOR INTERSTATE 
                   ACQUISITIONS.

       (a) Amendments to Bank Holding Company Act of 1956.--
       (1) Concentration limit for bank holding companies.--
     Section 3(d)(2)(A) of the Bank Holding Company Act (12 U.S.C. 
     1842(d)(2)(A)) is amended by striking ``paragraph (1)(A)'' 
     and inserting ``subsection (a)''.
       (2) Technical correction relating to certain savings 
     banks.--Section 4 of the Bank Holding Company Act is amended 
     by striking subsection (i) and inserting the following new 
     subsection:
       ``(i) [Repealed]''.
       (b) Amendments to Federal Deposit Insurance Act.--
       (1) In general.--Section 18(c) of the Federal Deposit 
     Insurance Act (12 U.S.C. 1828(c)) is amended--
       (A) by redesignating paragraph (12) as paragraph (13); and
       (B) by inserting after paragraph (11) the following new 
     paragraph:
       ``(12) Nationwide deposit cap.--The responsible agency may 
     not approve an application for an interstate merger 
     transaction if the resulting insured depository institution 
     (including all insured depository institutions which are 
     affiliates of the resulting insured depository institution), 
     upon consummation of the transaction, would control more than 
     10 percent of the total amount of deposits of insured 
     depository institutions in the United States.''.
       (2) Parallel requirement.--Subparagraph (A) of section 
     44(b)(2) of the Federal Deposit Insurance Act 1831u(b)(2)(A)) 
     is amended to read as follows:
       ``(A) Nationwide concentration limits.--The responsible 
     agency may not approve an application for an interstate 
     merger transaction involving 2 or more insured depository 
     institutions if the resulting insured depository institution 
     (including all insured depository institutions which are 
     affiliates of such institution), upon consummation of the 
     transaction would control more than 10 percent of the total 
     amount of deposits of insured depository institutions in the 
     United States''.
       (c) Amendments to Home Owners' Loan Act.--Section 10(e)(2) 
     of the Home Owners' Loan Act 1467a(e)(2)) is amended--
       (1) by striking ``or at the end of subparagraph (C)'';
       (2) by striking the period at the end of subparagraph (D) 
     and inserting ``; or''; and
       (3) by inserting after subparagraph (D), the following new 
     subparagraph:
       ``(E) in the case of an application involving an interstate 
     acquisition, if the applicant (including all insured 
     depository institutions which are affiliates of the 
     applicant) controls, or upon consummation of the acquisition 
     for which such application is filed would control, more than 
     10 percent of the total amount of deposits of insured 
     depository institutions in the United States.''.
       Page 257, line 10, strike ``assessment period'' and insert 
     ``assessment period, minus additional deductions or 
     adjustments necessary to establish assessments consistent 
     with the definition under section 7(b)(1)(C) of the Federal 
     Deposit Insurance Act for custodial banks (as defined by the 
     Corporation based on factors including percentage of total 
     revenues generated by custodial businesses and the level of 
     assets under custody) or a bankers' bank (as referred to in 
     section 5136 of the Revised Statutes of the United States)''.
       Page 275, line 15, insert ``if the financial company is an 
     insurance company or'' after ``section 1603''.
       Page 277, line 11, insert ``activities'' after ``or''.
       Page 277, line 22, strike the period and insert ``; and''.
       Page 277, after line 22, insert the following new 
     subparagraph:
       (C) that is not a Federal home loan bank, the Federal 
     National Mortgage Association, or the Federal Home Loan 
     Mortgage Corporation.
       Page 278, beginning on line 2, strike ``includes'' and all 
     that follows through line 3 and insert ``means any entity 
     covered by a State law designed specifically to deal with the 
     rehabilitation, liquidation, or insolvency of an insurance 
     company.''.
       Page 278, strike line 22 and all that follows through page 
     279, line 13, and insert the following new paragraph:
       (1) Vote required.--
       (A) In general.--At the request of the Secretary, the 
     Chairman of the Federal Reserve

[[Page 31224]]

     Board, or the appropriate regulatory agency, the Board and 
     the appropriate regulatory agency shall, or on their own 
     initiative the Board and the appropriate regulatory agency 
     may, consider whether to make the written recommendation 
     provided for in paragraph (2) with respect to a financial 
     company.
       (B) 2/3 agreement.--Any recommendation under subparagraph 
     (A) shall be made upon a vote of not less than two-thirds of 
     the members of the Federal Reserve Board then serving and not 
     less than two thirds of any members of the board or 
     commission then serving of the appropriate regulatory agency, 
     as applicable.
       Page 280, beginning on line 7, strike ``financial holding 
     company subject to stricter standards'' and insert 
     ``financial company''.
       Page 280, beginning on line 12, strike ``the board of 
     directors or commission of''.
       Page 280, line 19, strike ``resolution'' and insert 
     ``dissolution''.
       Page 282, beginning on line 8, strike ``financial holding 
     company subject to stricter standards'' and insert 
     ``financial company''.
       Page 282, beginning on line 20, strike ``financial holding 
     company subject to stricter standards'' and insert 
     ``financial company''.
       Page 283, beginning on line 2, strike ``financial holding 
     company subject to stricter standards'' and insert 
     ``financial company''.
       Page 283, beginning on line 5, strike ``financial holding 
     company subject to stricter standards'' and insert 
     ``financial company''.
       Page 283, beginning on line 9, strike ``financial holding 
     company subject to stricter standards'' and insert 
     ``financial company''.
       Page 283, beginning on line 15, strike ``financial holding 
     company subject to stricter standards'' and insert 
     ``financial company''.
       Page 283 beginning on line 18, strike ``financial holding 
     company subject to stricter standards'' and insert 
     ``financial company''.
       Page 283, line 22, strike ``RESOLUTION'' and insert 
     ``DISSOLUTION'' (and conform the table of contents 
     accordingly).
       Page 284, after line 7, insert the following new 
     paragraphs:
       (3) Extension of time limit.--The time limit established in 
     paragraph (2) may be extended by the Secretary for up to 1 
     additional year if--
       (A) the Corporation has not completed the dissolution of 
     the company within the time provided in paragraph (2); and
       (B) the Secretary certifies in writing that continuation of 
     the receivership is necessary--
       (i) to protect the best interests of the taxpayers of the 
     United States; and
       (ii) to protect the stability of the financial system and 
     the economy of the United States.
       (4) Further extension.--The time limit, as extended in 
     paragraph (3), may be extended for up to 1 additional year 
     if--
       (A) the conditions of paragraph (3) are met; and
       (B) the Corporation submits a report to the Congress, no 
     later than 60 days before the receivership will expire under 
     the extended limit under paragraph (3), that describes in 
     detail--
       (i) the basis for the determination by the Corporation that 
     a second extension is necessary; and
       (ii) the specific plan of the Corporation for concluding 
     the receivership before the end of the proposed additional 
     year.
       Page 284, line 8, strike ``Resolution'' and insert 
     ``Dissolution''.
       Page 284, line 10, strike ``resolved'' and insert 
     ``dissolved''.
       Page 284, line 11, strike ``resolution'' and insert 
     ``dissolution''.
       Page 284, line 18, strike ``resolution'' and insert 
     ``dissolution''.
       Page 285, line 6, strike ``resolution'' and insert 
     ``dissolution''.
       Page 285, line 11, strike ``resolution'' and insert 
     ``dissolution''.
       Page 285, line 16, strike ``1602(9)(B)(iv)'' and insert 
     ``1602(9)(B)(v)''.
       Page 285, line 18, strike ``resolution'' and insert 
     ``dissolution''.
       Page 287, beginning on line 1, strike ``Certain Insurance 
     Subsidiaries'' and insert ``Insurance Companies and Insurance 
     Company Subsidiaries''.
       Page 287, strike line 4 and all that follows through line 
     9, and insert ``(a), if an insurance company covered by a 
     State law designed specifically to deal with the 
     rehabilitation, liquidation or insolvency of an insurance 
     company is a covered financial company or a subsidiary of a 
     covered financial company, resolution of such insurance 
     company, and any subsidiary of such company, will be 
     conducted as provided under such State law.''.
       Page 287, line 13, insert before the period the following: 
     ``, that is not itself an insurance company''.
       Page 287, line 22, strike ``resolution'' and insert 
     ``dissolution''.
       Page 288, line 2, strike ``resolution'' and insert 
     ``dissolution''.
       Page 289, line 11, strike ``Resolution'' and insert 
     ``Dissolution''.
       Page 289, line 21, insert ``in accordance with section 
     1604'' before the comma after ``is appointed''.
       Page 299, line 11, strike ``resolution'' and insert 
     ``dissolution''.
       Page 305, line 19, strike ``resolution'' and insert 
     ``dissolution''.
       Page 327, line 2, strike ``resolving'' and insert 
     ``dissolving''.
       Page 327, line 8, strike ``resolution'' and insert 
     ``dissolution''.
       Page 370, line 15, strike ``resolution'' and insert 
     ``dissolution''.
       Page 401, line 10, strike ``$10,000,000,000'' and insert 
     ``$50,000,000,000''.
       Page 401, line 11, insert a comma after ``inflation''.
       Page 411, line 10, insert ``,subject to the requirements of 
     section 1604(g),'' after ``Fund''.
       Page 413, line 11, strike ``resolution'' and insert 
     ``dissolution''.
       Page 413, line 12, strike ``resolution'' and insert 
     ``dissolution''.
       Page 425, line 8, strike ``Resolution'' and insert 
     ``Dissolution''.
       Page 425, line 14, strike ``RESOLUTION'' and insert 
     ``DISSOLUTION'' (and conform the table of contents 
     accordingly).
       Page 425, line 21, strike ``Resolution'' and insert 
     ``Dissolution''.
       Page 426, line 2, strike ``Resolution'' and insert 
     ``Dissolution''.
       Page 426, line 7, strike ``Resolution'' and insert 
     ``Dissolution''.
       Page 426, line 8, strike ``Resolution'' and insert 
     ``Dissolution''.
       Page 432, line 1, strike ``Resolution'' and insert 
     ``Dissolution''.
       Page 433, line 4, strike ``Resolution'' and insert 
     ``Dissolution''.
       Page 455, line 5, before the comma insert ``(as such terms 
     are defined in subsection (c) (1))''.
       Page 461, strike lines 8 through 15 and insert the 
     following:
       (J) the Consumer Financial Protection Agency,
       (K) the Federal Insurance Office,
       Page 461, after line 19, insert the following new section:

     SEC. 1802. FEDERAL HOUSING FINANCE AGENCY ADVISORY ROLE IN 
                   FIEC.

       After section 1007 of the Federal Financial Institutions 
     Examination Council Act of 1987 (12 U.S.C. 3306) insert the 
     following new section:

     ``SEC. 1007A. FEDERAL HOUSING FINANCE AGENCY ADVISORY ROLE.

       ``Whenever the Council takes any actions with respect to 
     issues that relate to the Federal National Mortgage 
     Association, the Federal Home Loan Mortgage Corporation, or 
     the Federal home loan banks, the Federal Housing Finance 
     Agency shall participate in the Council's proceedings in an 
     advisory role.''.
       Page 462, beginning on line 20, strike ``(as'' and all that 
     follows through line 22 and insert a comma.
       Page 463, beginning on line 15, strike ``(as'' and all that 
     follows through line 17 and insert a comma.
       Page 464, strike lines 11 and 12 and insert ``States, 
     the''.
       Page 465, after line 2, insert the following new subtitle:

                Subtitle L--Securities Holding Companies

     SEC. 1961. SECURITIES HOLDING COMPANIES.

       (a) 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 foreign law to be subject 
     to comprehensive consolidated supervision and that is not--
       (A) a financial holding company subject to stricter 
     standards,
       (B) an affiliate of an insured bank (other than an 
     institution described in subparagraphs (D) or (G) of section 
     2(c)(2) of the Bank Holding Company Act of 1956) or a savings 
     association,
       (C) a foreign bank, foreign company, or company that is 
     described in section 8(a) of the International Banking Act of 
     1978,
       (D) 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
       (E) subject to comprehensive consolidated supervision by a 
     foreign regulator,

     may register with the Board to become supervised, pursuant to 
     paragraph (2). Any securities holding company filing such a 
     registration shall be supervised in accordance with this 
     section and comply with the rules and orders prescribed by 
     the Board applicable to supervised securities holding 
     companies.
       (2) Registration as a supervised securities holding 
     company.--A securities holding company described in paragraph 
     (1) shall register by filing with the Board such information 
     and documents concerning such securities holding company as 
     the Board, by regulation, may prescribe as necessary or 
     appropriate in furtherance of the purposes of this section. 
     Such supervision shall become effective 45 days after the 
     date of receipt of such registration by the Board or within 
     such shorter time period as the Board, by rule or order, may 
     determine.
       (b) Supervision of Securities Holding Companies.--
       (1) Recordkeeping and reporting.--
       (A) In general.--Every supervised securities holding 
     company and each affiliate of such company shall make and 
     keep for prescribed periods such records, furnish copies of 
     records, and make such reports, as the Board determines to be 
     necessary or appropriate for the Board to carry out the 
     purposes of this section, prevent evasions, and

[[Page 31225]]

     monitor compliance by the company or affiliate with 
     applicable provisions of law.
       (B) Form and contents.--Such records and reports shall be 
     prepared in such form and according to such specifications 
     (including certification by a registered public accounting 
     firm), as the Board may require and shall be provided 
     promptly at any time upon request by the Board. Such records 
     and reports may include--
       (i) a balance sheet and income statement;
       (ii) an assessment of the consolidated capital of the 
     supervised securities holding company;
       (iii) an independent auditor's report attesting to the 
     supervised securities holding company's compliance with its 
     internal risk management and internal control objectives; and
       (iv) reports concerning the extent to which the 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 shall, to the fullest extent 
     possible, accept reports in fulfillment of the requirements 
     under this paragraph that the supervised securities holding 
     company or its affiliates have been required to provide to 
     another appropriate regulatory agency or self-regulatory 
     organization.
       (B) Availability.--A supervised securities holding company 
     or an affiliate of such company shall provide to the Board, 
     at the request of the Board, any report referred to in 
     subparagraph (A), as permitted by law.
       (3) Examination authority.--
       (A) Focus of examination authority.--The Board may make 
     examinations of any supervised securities holding company and 
     any affiliate of such company to carry out the purposes of 
     this subsection, prevent evasions thereof, and monitor 
     compliance by the company or affiliate with applicable 
     provisions of law.
       (B) Deference to other examinations.--For purposes of this 
     subparagraph, the Board 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, as defined 
     under section 5(c)(1) of the Bank Holding Company Act of 1956 
     (12 U.S.C. 1844(c)(1)), or an institution described in 
     subparagraphs (D) or (G) of section 1841(c)(2).
       (c) Capital and Risk Management.--
       (1) The Board shall, by regulation or order, prescribe 
     capital adequacy and other risk management standards for a 
     supervised securities holding company appropriate to protect 
     the safety and soundness of the company and address the risks 
     posed to financial stability by a supervised securities 
     holding company. Standards imposed under this subparagraph 
     shall take account of differences among types of business 
     activities and--
       (A) the amount and nature of the company's financial 
     assets;
       (B) the amount and nature of the company's liabilities, 
     including the degree of reliance on short-term funding;
       (C) the extent and nature of the company's off-balance 
     sheet exposures;
       (D) the extent and nature of the company's transactions and 
     relationships with other financial companies;
       (E) the company's importance as a source of credit for 
     households, businesses, and State and local governments and 
     as a source of liquidity for the financial system; and
       (F) the nature, scope, and mix of the company's activities.
       (2) In imposing standards under this subsection, the Board 
     may differentiate among supervised securities holding 
     companies on an individual basis or by category, taking into 
     consideration the criteria specified above.
       (3) Any capital requirements imposed under this subsection 
     shall not take effect until the expiration of 180 days after 
     a supervised securities holding company is provided notice of 
     such requirement.
       (d) Other Provisions.--
       (1) Subsections (b), (c) through (s), and (u) of section 8 
     of the Federal Deposit Insurance Act shall apply to any 
     supervised securities holding company, and to any subsidiary 
     (other than a bank) of a supervised securities holding 
     company, in the same manner as they apply to a bank holding 
     company. For purposes of applying such subsections to a 
     supervised securities holding company or a subsidiary (other 
     than a bank) of a supervised securities holding company, the 
     Board shall be considered the appropriate Federal banking 
     agency for the supervised securities holding company or 
     subsidiary.
       (2) Except as the Board 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 that bank holding companies are subject to such 
     provisions, except that any such supervised securities 
     holding company shall not by reason of this subparagraph be 
     deemed a bank holding company for purposes of section 4 of 
     the Bank Holding Company Act of 1956.
       (e) Definitions.--For purposes of this section, the 
     following definitions shall apply:
       (1) Securities holding company.--The term ``securities 
     holding company'' means--
       (A) any person other than a natural person that owns or 
     controls one or more brokers or dealers as defined in section 
     3 of the Securities Exchange Act; and
       (B) the associated persons of the securities holding 
     company.
       (2) Supervised securities holding company.--The term 
     ``supervised securities holding company'' means any 
     securities holding company that is supervised by the Board 
     pursuant to this section.
       (3) Other banking terms.--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.
       (4) Insured bank.--The term ``insured bank'' has the same 
     meaning as in section 13 of the Federal Deposit Insurance 
     Act.
       (5) Foreign bank.--The term ``foreign bank'' has the same 
     meaning as in section 1(b)(7) of the International Banking 
     Act of 1978.
       (6) Associated persons.--The terms ``person associated with 
     a securities holding company'' and ``associated person of a 
     securities holding company'' mean any person directly or 
     indirectly controlling, controlled by, or under common 
     control with, a securities holding company.
       Page 480, line 12, strike ``2009'' and insert ``2008''.
       Page 668, strike lines 4 and 5 and insert the following:
       (13) Deposit-taking, money acceptance, or money movement 
     activity.--The term ``deposit-taking, money acceptance, or 
     money movement activities'' means--
       Page 669, line 15, insert ``(b),'' after ``Subsections''.
       Page 669, line 20, insert ``except for section 505 as it 
     applies to section 501(b)'' before the period.
       Page 670, after line 9, insert the following:
       (N) Section 626 of the Omnibus Appropriations Act, 2009 
     (Public Law 111-8).
       (O) The Unlawful Internet Gambling Enforcement Act of 2006.
       Page 670, line 23, after ``taking'' insert ``, money 
     acceptance, or money movement''.
       Page 672, line 3, insert ``, except that furnishing a 
     consumer report to another person that it has reason to 
     believe intends to use the information for employment 
     purposes, including for security investigations, government 
     licensing and evaluating a consumer's residential or tenant 
     history shall not be considered a financial activity'' before 
     the period at the end.
       Page 673, line 2, insert ``a person regulated as an 
     investment adviser by'' after ``or'' the 1st place such term 
     appears.
       Page 675, strike line 10 and all that follows through page 
     676, line 9, and insert the following:
       (ix) Financial data processing by any technological means, 
     including providing data processing, access to or use of 
     databases or facilities, or advice regarding processing or 
     archiving, if the data to be processed, furnished, stored, or 
     archived are financial, banking, or economic, except that it 
     shall not be considered a ``financial activity'' with respect 
     to financial data processing--

       (I) to the extent the person is providing interactive 
     computer service, as defined in section 230 of the 
     Communications Act of 1934 (47 U.S.C. 230); or
       (II) if the person--

       (aa) unknowingly or incidentally transmits, processes, or 
     stores financial data in a manner that such data is 
     undifferentiated from other types of data that the person 
     transmits, processes, or stores;
       (bb) does not provide to any consumer a consumer financial 
     product or service in connection with or relating to in any 
     manner financial data processing; and
       (cc) does not provide a material service to any covered 
     person in connection with the provision of a consumer 
     financial product or service.
       Page 678, line 10, as modified by the amendment MWB_05, 
     before ``data is undifferentiated'' insert ``financial''.
       Page 679, line 2, insert ``and shall include any uninsured 
     branch or agency of a foreign bank or a commercial lending 
     company owned or controlled by a foreign bank'' before the 
     period at the end.
       Page 679, beginning on line 17, strike ``covered''.
       Page 681, strike line 18 and all that follows through line 
     20 and insert the following new subparagraph:
       (C) an investment company that--
       (i) is required to be registered under the Investment 
     Company Act of 1940; or
       (ii) is excepted from the definition of investment company 
     under section 3(c) of such Act, or any successor provision.
       Page 682, line 21, strike ``the person'' and insert ``any 
     person described in any subparagraph of this paragraph''.
       Page 682, line 23, insert ``, or, with respect to a person 
     described in subparagraph (C)(ii), any employee, agent, or 
     contractor acting on behalf of, or providing services to any 
     such person, but only to the extent that such person, or the 
     employee, agent, or contractor of such person acts in such 
     exempt capacity'' before the period at the end.
       Page 686, line 19, insert `` or any federally recognized 
     Indian tribe as defined by the

[[Page 31226]]

     Secretary of Interior under section 104(a) of the Federally 
     Recognized Indian Tribe List Act of 1994 (25 U.S.C. 479a-
     1(a))'' before the period.
       Page 693, line 13, before the semicolon insert the 
     following: ``, except that the Director shall not exercise 
     any authorities that are granted to State insurance 
     authorities under section 505(a)(6) of the Gramm-Leach-Bliley 
     Act''.
       Page 693, line 14, insert ``, except that Director shall 
     not exercise any authorities that are granted to State 
     insurance authorities under Section 505(a)(6) of the Gramm-
     Leach-Bliley Act'' before the semicolon.
       Page 696, strike line 14 and all that follows through page 
     697, line 9, and insert the following:
       (1) Appointment.--The Director may fix the number of, and 
     appoint and direct, all employees of the Agency.
       Page 701, line 1, insert ``the Federal Trade Commission,'' 
     after ``banking agencies,''.
       Page 714, strike lines 11 through 14, and insert the 
     following:
       (2) an analysis of the major problems consumers of 
     financial products and services were confronted with during 
     the preceding year, including a description of the nature of 
     such problems, and recommendations for such administrative 
     and legislative action as may be appropriate to resolve such 
     problems;
       Page 715, after line 7, insert the following new paragraph 
     (and redesignate succeeding paragraphs accordingly):
       (6) an analysis of the Agency's efforts to increase 
     workforce and contracting diversity consistent with subtitle 
     I of title I of this Act;
       Page 717, beginning on line 17, strike ``and complexity of 
     the covered person,'' and insert ``, complexity of, risk 
     posed by,''.
       Page 719, beginning on line 10, strike ``and complexity of 
     the covered person,'' and insert ``, complexity of, risk 
     posed by,''.
       Page 720, line 16, insert ``in the each of the first 3 
     years following the date of enactment of this Act'' after 
     ``persons''.
       Page 720, beginning on line 18, strike ``the 12-month 
     period ending on December 31, 2009'' and insert ``the 
     calendar year immediately preceding the designated transfer 
     date''.
       Page 720, line 24, insert ``, on a risk-adjusted basis,'' 
     after ``that''.
       Page 721, line 11, insert ``or to set assessments that 
     would result in higher marginal assessments on the depository 
     institution covered persons with assets of less than 
     $25,000,000,000 if based on the compliance record of or 
     higher risks posed by such covered persons'' before the 
     period.
       Page 721, line 18, strike ``enforcement or regulation'' and 
     insert ``or enforcement activities''.
       Page 722, line 1, insert ``so that levels of assessments 
     under this subparagraph combined with levels of assessments 
     by an agency responsible for chartering and or supervising 
     the depository institution covered person shall be no more'' 
     before ``than it paid''.
       Page 725, line 6, insert ``or the CFPA Nondepository Fund, 
     at the discretion of the Agency'' before the period at the 
     end.
       Page 728, beginning on line 12, strike ``as a result of 
     the'' and insert ``that are reasonably related as a general 
     matter to''.
       Page 743, line 3, insert ``a provision of'' after ``reports 
     under''.
       Page 743, line 4, insert ``a provision of'' after 
     ``title,''.
       Page 743, line 5, insert ``any provision of'' after 
     ``law,''.
       Page 743, line 8, insert ``under that provision of law'' 
     after ``exclusive authority''.
       Page 748, line 6, strike ``$1,500,000,000'' and insert 
     ``$10,000,000,000''.
       Page 760, strike line 19 and all that follows through page 
     762, line 22, and insert the following:
       (a) Exclusion for Merchants, Retailers, and Sellers of 
     Nonfinancial Services.--
       (1) In general.--Notwithstanding any provision of this 
     title (other than paragraph (4)) and subject to paragraph 
     (2), the Director and the Agency may not exercise any 
     rulemaking, supervisory, enforcement or other authority, 
     including authority to order assessments, under this title 
     with respect to--
       (A) credit extended directly by a merchant, retailer, or 
     seller of nonfinancial goods or services to a consumer, in a 
     case in which the good or service being provided is not 
     itself a consumer financial product or service, exclusively 
     for the purpose of enabling that consumer to purchase such 
     goods or services directly from the merchant, retailer, or 
     seller of nonfinancial services; or
       (B) collection of debt, directly by the merchant, retailer, 
     or seller of nonfinancial services, arising from such credit 
     extended.

     In the application of this paragraph, the extension of credit 
     and the collection of debt described in subparagraphs (A) and 
     (B), respectively, shall not be considered a consumer 
     financial product or service.
       (2) Exception for existing authority.--The Director may 
     exercise any rulemaking authority regarding an extension of 
     credit described in paragraph (1)(A) or the collection of 
     debt arising from such extension, as may be authorized by the 
     enumerated consumer laws or any law or authority transferred 
     under subtitle F or H.
       (3) Rule of construction.--No provision of this title shall 
     be construed as modifying, limiting, or superseding the 
     authority of the Federal Trade Commission or any agency other 
     than the Agency 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 goods or 
     services directly from the merchant or retailer.
       (4) Exclusion not applicable to certain credit 
     transactions.--Paragraph (1) shall not apply to--
       (A) any credit transaction, including the collection of the 
     debt arising from such extension, in which the merchant, 
     retailer, or seller of nonfinancial services assigns, sells, 
     or otherwise conveys such debt owed by the consumer to 
     another person; or
       (B) any credit transaction--
       (i) in which the credit provided significantly exceeds the 
     market value of the product or service provided; and
       (ii) with respect to which the Director finds that the sale 
     of the product or service is done as a subterfuge so as to 
     evade or circumvent the provisions of this title.
       Page 762, line 14, strike ``or''.
       Page 762, line 22, strike the period and insert ``; or''.
       Page 762, after line 22, insert the following new 
     subparagraph:
       (C) any credit transaction involving a person who operates 
     a line of business that involves the extension of retail 
     credit or retail leases involving motor vehicles, if--
       (i) the extension of retail credit or retail leases is 
     provided directly to consumers; and
       (ii) the contracts governing such extension of retail 
     credit or retail leases are not assigned to a third party 
     finance or leasing source, except on a de minimis basis.
       Page 764, after line 24, insert the following new 
     subsection and redesignate subsequent subsections 
     accordingly):
       (d) 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 (m), the Director and the Agency 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 
     any financial activity described in any subparagraph of 
     section 101(19) or is otherwise subject to any enumerated 
     consumer law or any law or authority transferred under 
     subtitle F or H.
       Page 765, strike line 20 and all that follows through page 
     766, line 3, and insert the following new paragraph:
       (3) Preservation of certain authorities.--No provision of 
     this title shall be construed as limiting the authority of 
     the Director and the Agency from exercising powers under this 
     Act with respect to a person, other than a person regulated 
     by a State insurance regulator, who provides a product or 
     service for or on behalf of a person regulated by a State 
     insurance regulator in connection with a financial activity.
       Page 766, line 13, insert ``Finance'' after ``Housing''.
       Page 770, after line 4, insert the following new paragraph 
     (and redesignate succeeding paragraphs accordingly):
       (3) Certain activities not excluded.--
       (A) In general.--In no event shall paragraph (1) apply to 
     any activity which involves the sale of securities or 
     extension of credit which is provided by a person described 
     in paragraph (1)(A).
       (B) Definition.--For purposes of subparagraph (A), the term 
     ``extension of credit'' shall not include an ordinary account 
     receivable.
       Page 772, beginning on line 15, strike ``order assessments, 
     over'' and all that follows through page 773, line 7, and 
     insert ``order assessments, over a motor vehicle dealer that 
     is primarily engaged in the sale and servicing of motor 
     vehicles, the leasing and servicing of motor vehicles, or 
     both.''.
       Page 776, after line 19, insert the following new 
     subsections:
       (l) Exclusion for Pawnbrokers.--
       (1) In general.--The Director and the Agency may not 
     exercise any rulemaking, supervisory, enforcement, or other 
     authority, including authority to order assessments, under 
     this title with respect to any pawnbroker licensed by a State 
     or political subdivision thereof, a territory of the United 
     States, or the District of Columbia, but only to the extent 
     that such person acts in such capacity and provides either--
       (A) non-recourse credit secured by a possessory security 
     interest in tangible goods physically delivered by the 
     consumer to the pawnbroker for which the consumer does not 
     provide a written or electronic promise, order or 
     authorization to pay, or in any other manner authorize a 
     debit of a deposit account, prior to or contemporaneously 
     with the disbursement of the original proceeds; or

[[Page 31227]]

       (B) credit or any other financial activity issued directly 
     by a pawnbroker to a consumer, in a case in which the good or 
     service being provided is not itself a consumer financial 
     product or service, exclusively for the purpose of enabling 
     that consumer to purchase goods or services directly from the 
     pawnbroker.
       (2) Rule of construction.--
       (A) FTC authority preserved.--Except as provided in 
     subparagraph (B), no provision of this title shall be 
     construed as modifying, limiting, or superseding the 
     authority of the Federal Trade Commission with respect to the 
     activities described under paragraph (1).
       (B) Exercise of rulemaking authority.--The Director may 
     exercise any rulemaking authority regarding the activities 
     described in paragraph (1) only as may be authorized by the 
     enumerated consumer laws or any law or authority transferred 
     under subtitle F or H.
       (m) Exclusion for Certain Consumer Reporting Agencies.--
       (1) In general.--Except as permitted in paragraph (2), the 
     Director and the Agency may not exercise any rulemaking, 
     supervisory, enforcement or other authority, including 
     authority to order assessments, over a person that is a 
     consumer reporting agency, as such term is defined in section 
     603(f) of the Fair Credit Reporting Act (15 U.S.C. 1681a(f)), 
     but only to the extent that such consumer reporting agency 
     furnishes a consumer report to another person that it has 
     reason to believe intends to use the information for 
     employment purposes, including for security investigations, 
     government licensing and evaluating a consumer's residential 
     or tenant history.
       (2) Description of activities.--Paragraph (1) shall not 
     apply to any person described in such paragraph to the extent 
     such person is engaged in any financial activity described in 
     any subparagraph of section 4002(19) or is otherwise subject 
     to any of the enumerated consumer laws or the authorities 
     transferred under subtitle F or H.
       (n) Limited Authority of the Agency to Obtain 
     Information.--Notwithstanding subsections (a), (f), (g), (h), 
     (i), and (k), the Director may request or require information 
     from any person subject to or described in any such 
     subsection in order to carry out the responsibilities and 
     functions of the Agency and in accordance with section 4206, 
     4501, or 4502.
       Page 781, line 22, after the period insert the following: 
     ``This authority shall not prohibit or restrict a consumer 
     from entering into a voluntary arbitration agreement with a 
     covered person after a dispute has arisen.''.
       Page 787, strike line 17 and all that follows through page 
     788, line 10, and insert the following new subsection:
       (c) Unfair, Deceptive, or Abusive Acts or Practices 
     Defined.--
       (1) Unfair acts or practices.--Any determination by the 
     Director and the Agency that an act or practice is unfair 
     shall be consistent with the standard set forth under section 
     5 of the Federal Trade Commission Act and with the policy 
     statement adopted by the Federal Trade Commission pursuant to 
     section 5 of the Federal Trade Commission Act and dated 
     December 17, 1980.
       (2) Deceptive acts or practices.--Any determination by the 
     Director and the Agency that an act or practice is deceptive 
     shall be consistent with the policy statement adopted by the 
     Federal Trade Commission pursuant to section 5 of the Federal 
     Trade Commission Act and dated October 14, 1983.
       (3) Abusive acts or practices.--The Director and the Agency 
     may determine that an act or practice is abusive only if the 
     Director finds that--
       (A) the act or practice is reasonably likely to result in a 
     consumer's inability to understand the terms and conditions 
     of a financial product or service or to protect their own 
     interests in selecting or using a financial product or 
     service; and
       (B) the widespread use of the act or practice is reasonably 
     likely to contribute to instability and greater risk in the 
     financial system.
       Page 795, line 23, insert ``(other than by the Agency, or 
     by a State regulator, as may be necessary to enforce an 
     administrative order under this section)'' before the comma 
     at the end.
       Page 799, line 24, after ``and'' insert ``, notwithstanding 
     any other provision of this title,''.
       Page 815, line 11, insert ``to be effected or used 
     primarily for personal, family, or household purposes'' after 
     ``funds''.
       Page 845, after line 13, insert the following new paragraph 
     (and redesignate succeeding paragraphs accordingly):
       (4) Covered employee.--The term ``covered employee'' means 
     any individual performing tasks related to the provision of a 
     financial product or service to a consumer.
       Page 878, beginning on line 5, strike ``for any violation 
     of a regulation prescribed under section 4306 or''.
       Page 880, strike line 16 through page 893, line 8 and 
     insert the following:

     SEC. 4507. EMPLOYEE PROTECTION.

       (a) No covered person 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 
     employee's initiative or in the ordinary course of the 
     employee's duties (or any person acting pursuant to a request 
     of the employee) has--
       (1) provided information to the Agency or to any other 
     state, local, federal, or tribal government entity, filed, 
     instituted or caused to be filed or instituted any proceeding 
     under this title, any enumerated consumer law, any law for 
     which authorities were transferred by subtitles F and H, or 
     has testified or is about to testify in any proceeding 
     resulting from the administration or enforcement of the 
     provisions of this title; or
       (2) 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, or regulation, or to be unfair, 
     deceptive, or abusive and likely to cause specific and 
     substantial injury to one or more consumers.
       (b)(1) 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 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. Upon 
     receipt of such a complaint, the Secretary shall notify, in 
     writing, the person named in the complaint of the filing of 
     the complaint, of the allegations contained in the complaint, 
     of the substance of evidence supporting the complaint, and of 
     the opportunities that will be afforded to such person under 
     paragraph (2).
       (2)(A) 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 an 
     opportunity to submit to the Secretary a written response to 
     the complaint and an opportunity to meet with a 
     representative of the Secretary to present statements from 
     witnesses, the Secretary shall initiate an investigation and 
     determine whether there is reasonable cause to believe that 
     the complaint has merit and notify, in writing, the 
     complainant and the person alleged to have committed a 
     violation of subsection (a) of the Secretary's findings. If 
     the Secretary concludes that there is reasonable cause to 
     believe that a violation of subsection (a) has occurred, the 
     Secretary shall accompany the Secretary's findings with a 
     preliminary order providing the relief prescribed by 
     paragraph (3)(B). Not later than 30 days after the date of 
     notification of findings 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. 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.
       (B)(i) The Secretary shall dismiss a complaint filed under 
     this subsection and shall not conduct an investigation 
     otherwise required under subparagraph (A) 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.
       (ii) Notwithstanding a finding by the Secretary that the 
     complainant has made the showing required under clause (i), 
     no investigation otherwise required under subparagraph (A) 
     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.
       (iii) The Secretary 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.
       (iv) 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.
       (3)(A) Not later than 120 days after the date of conclusion 
     of any hearing under paragraph (2), the Secretary 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, the complainant, and the 
     person alleged to have committed the violation.
       (B) If, in response to a complaint filed under paragraph 
     (1), the Secretary determines that a violation of subsection 
     (a) has occurred, the Secretary 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

[[Page 31228]]

       (iii) to provide compensatory damages to the complainant. 
     If such an order is issued under this paragraph, the 
     Secretary, 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 attorneys' and expert witness fees) reasonably 
     incurred, as determined by the Secretary, by the complainant 
     for, or in connection with, the bringing of the complaint 
     upon which the order was issued.
       (C) If the Secretary finds that a complaint under paragraph 
     (1) is frivolous or has been brought in bad faith, the 
     Secretary may award to the prevailing employer a reasonable 
     attorneys' fee, not exceeding $ 1,000, to be paid by the 
     complainant.
       (4) If the Secretary has not issued a final decision within 
     210 days after the filing of the complaint, or within 90 days 
     after receiving 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 with 
     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. The proceedings shall be 
     governed by the same legal burdens of proof specified in 
     paragraph (2)(B). The court shall have jurisdiction to grant 
     all relief necessary to make the employee whole, including 
     injunctive relief and compensatory damages, including--
       (A) reinstatement with the same seniority status that the 
     employee would have had, but for the discharge or 
     discrimination;
       (B) the amount of back pay, with interest; and
       (C) 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.
       (5)(A) Unless the complainant brings an action under 
     paragraph (4), any person adversely affected or aggrieved by 
     a final order issued under paragraph (3) may obtain review of 
     the order in the United States Court of Appeals for the 
     circuit in which the violation, with respect to which the 
     order was issued, allegedly occurred or the circuit in which 
     the complainant resided on the date of such violation. The 
     petition for review must be filed not later than 60 days 
     after the date of the issuance of the final order of the 
     Secretary. 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.
       (B) An order of the Secretary with respect to which review 
     could have been obtained under subparagraph (A) shall not be 
     subject to judicial review in any criminal or other civil 
     proceeding.
       (6) Whenever any person has failed to comply with an order 
     issued under paragraph (3), the Secretary may file a civil 
     action in the United States district court for the district 
     in which the violation was found to occur, 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, but not limited to, injunctive 
     relief and compensatory damages.
       (7)(A) A person on whose behalf an order was issued under 
     paragraph (3) 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.
       (B) The court, in issuing any final order under this 
     paragraph, may award costs of litigation (including 
     reasonable attorneys' and expert witness fees) to any party 
     whenever the court determines such award is appropriate.
       (c) 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)(1) Except as provided under paragraph (3), 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) Except as provided under paragraph (3), no predispute 
     arbitration agreement shall be valid or enforceable if it 
     requires arbitration of a dispute arising under this section.
       (e) Notwithstanding paragraphs (1) and (2), an arbitration 
     provision in a collective bargaining agreement shall be 
     enforceable as to disputes arising under paragraph (a)(2) of 
     this section unless the Agency determines by rule that such 
     provision is inconsistent with the purposes of this Act.
       (f) Any employer receiving covered funds shall post notice 
     of the rights and remedies provided under this section.
       Page 881, line 1, strike ``provided information to'' and 
     insert ``provided, caused to be provided, or is about to 
     provide or cause to be provided information to the 
     employer,''.
       Page 893, line 6, strike ``(a)(2)'' and insert ``(a)(4)''.
       Page 893, after line 8 insert the following new section 
     (and redesignate succeeding sections accordingly):

     SEC. 4508. NO PRIVATE RIGHT OF ACTION.

       Nothing in this title shall be construed to create a 
     private right of action, but this section shall not be 
     construed or interpreted to deny any private right of action 
     arising under the enumerated consumer laws or the authorities 
     transferred under subtitle F or H.
       Page 897, beginning on line 21, strike ``Backstop''.
       Page 898, line 2, strike ``4202(e)(3)'' and insert 
     ``paragraph (2) or (3) of section 4202(e)''.
       Page 898, line 8, insert ``transferred under subsection 
     (a)'' after ``functions''.
       Page 922, beginning on line 1, strike ``a Federal home loan 
     bank, a joint office of the Federal home loan banks,''.
       Page 922, line 5, strike ``or''.
       Page 922, line 6, insert ``, or the Federal Home Loan Bank 
     Board or any successor to such Board'' before ``shall be''.
       Page 922, beginning on line 23, strike ``a Federal home 
     loan bank, a joint office of the Federal home loan banks,''.
       Page 923, line 2, strike ``or''.
       Page 923, line 3, insert ``, or the Federal Home Loan Bank 
     Board or any successor to such Board'' before ``shall be''.
       Page 933, line 4, insert ``the Federal Home Loan Bank Board 
     or any successor to such Board,'' after ``Federal reserve 
     bank''.
       Page 933, line 21, insert ``the Federal Home Loan Bank 
     Board or any successor to such Board,'' after ``reserve 
     bank''.
       Page 934, line 24, strike ``before the designated transfer 
     date'' and insert ``during the 24-month period beginning on 
     the date of the enactment of this title''.
       Page 954, line 2, insert ``and shall not apply to the term 
     `Board' when used in reference to the Federal Deposit 
     Insurance Corporation or the National Credit Union 
     Administration'' before the period.
       Page 955, line 16, strike ``25(a)'' and insert ``25A''.
       Page 957, line 3, insert ``(other than the Consumer 
     Financial Protection Agency)'' after ``agency''.
       Page 957, line 20, insert ``(and except for any insertion 
     of `Federal Trade Commission' made by this subtitle)'' after 
     ``subparagraph (B)''.
       Page 958, line 2, strike ``and 129(m) (as amended by 
     paragraph (7))'' and insert ``129(m) (as amended by paragraph 
     (7)), 140A, or 149 (as amended by paragraph (8)).''.
       Page 959, after line 13, insert the following:
       (8) Section 149.--Section 149(b) of the Truth in Lending 
     Act (15 U.S.C. 1665d(b)) is amended by inserting ``the 
     Federal Trade Commission,'' after ``in consultation with''.
       Page 960, beginning on line 1, strike ``paragraph (7)(A)'' 
     and insert `` paragraphs (7)(B), (8)(A), (8)(C), and (8)(D) 
     of this subsection (and except for any insertion of `Federal 
     Trade Commission' made by this subtitle)''.
       Page 961, after line 21, insert the following:
       (5) Section 609.--Section 609(d)(1) of the Fair Credit 
     Reporting Act (15 U.S.C. 1681g(d)(1)) is amended by inserting 
     ``the Federal Trade Commission,'' after ``in consultation 
     with''.
       Page 961, line 22, strike ``(5)'' and insert ``(6)''.
       Page 961, line 22, strike ``611(e)(2)'' and insert 
     ``611(e)''.
       Page 961, line 23, strike ``15 U.S.C.1681i(e)(2)'' and 
     insert ``15 U.S.C. 1681i(e)''.
       Page 961, line 24, strike ``amended to read as follows:'' 
     and insert ``amended--'', and after such line insert the 
     following:
       (A) by amending paragraph (2) to read as follows:
       Page 962, line 5, strike the period following the quotation 
     marks and insert ``; and'' and after such line insert the 
     following:
       (B) in the heading of paragraph (3) by inserting ``Consumer 
     reporting'' before ``agency''.
       Page 962, strike lines 6 through 8 and insert the 
     following:
       (8) Section 615.--Section 615 of the Fair Credit Reporting 
     Act (15 U.S.C. 1681m) is amended--
       (A) in subsection (d)(2)(B), by inserting ``the Federal 
     Trade Commission,'' after ``in consultation with'';
       (B) in subsection (e)(1), by striking ``and the 
     Commission'' and inserting ``the Federal Trade Commission, 
     the Securities and Exchange Commission, and the Commodities 
     Futures Trading Commission''; and
       (C) by striking subparagraph (A) of subsection (h)(6) and 
     inserting the following:
       Page 962, line 11, strike ``(7)'' and insert ``(8)''.
       Page 963, line 2, insert ``(other than the Consumer 
     Financial Protection Agency)'' after ``agency''.
       Page 968, after line 7, insert the following (and 
     redesignate succeeding subparagraphs accordingly):
       (C) in paragraph (2) of subsection (c)--
       (i) by inserting ``the Agency and'' before ``the Federal 
     Trade Commission'' in the first sentence;
       (ii) by inserting ``Agency and the Federal Trade'' after 
     ``provide the''; and
       (iii) by inserting ``Agency,'' before ``Federal Trade 
     Commission'' in the second sentence;
       (D) in paragraph (4) of subsection (c)--
       (i) by inserting ``Agency'', before ``the Federal Trade 
     Commission''; and

[[Page 31229]]

       (ii) inserting ``Agency, the Federal Trade'' after 
     ``complaint of the'';
       (E) in paragraph (2) of subsection (f), by inserting ``the 
     Federal Trade Commission'' after ``in consultation with'';
       Page 968, beginning on line 12, strike ``with respect to a 
     covered person described in subsection (b)'' and insert ``, 
     except that, with respect to sections 615(e) and 628 of this 
     title, the agencies identified in subsections (a) and (b) of 
     this section shall prescribe such regulations as necessary to 
     carry out the purposes of such sections with respect to 
     entities within their enforcement authority under such 
     subsections''.
       Page 968, line 14, strike ``(D)'' and insert ``(G)''.
       Page 973, strike lines 8 and 9 and insert the following:
       (iii) in paragraph (1)(B)--

       (I) by inserting ``of Governors of the Federal Reserve 
     System'' after ``Board''; and
       (II) by striking ``and'' after the semicolon;

       Page 974, line 2, insert ``(other than the Consumer 
     Financial Protection Agency)'' after ``agency''.
       Page 978, line 4, insert ``(other than the Consumer 
     Financial Protection Agency)'' after ``agency''.
       Page 982, line 21, strike ``and'' and after such line 
     insert the following:
       (iii) in paragraph (l)(B), by inserting ``of Governors of 
     the Federal Reserve System'' after ``Board'';
       Page 982, line 22, strike ``(iii)'' and insert ``(iv)''.
       Page 983, line 7, insert ``(other than the Consumer 
     Financial Protection Agency)'' after ``agency''.
       Page 988, after line 7, insert the following (and 
     redesignate succeeding subsections accordingly):
       (a) Section 501.--Section 501(b) of the Gramm-Leach-Bliley 
     Act (15 U.S.C. 6801(b)) is amended by inserting ``(other than 
     the Consumer Financial Protection Agency)'' after ``title''.
       (b) Section 502.--Section 502(e)(5) of the Gramm-Leach-
     Bliley Act (15 U.S.C. 6802(e)(5)) is amended by inserting 
     ``the Consumer Financial Protection Agency,'' after 
     ``(including''.
       (c) Section 503.--Section 503(e)(1) of the Gramm-Leach-
     Bliley Act (15 U.S.C. 6803(e)(1)) is amended--
       (1) by inserting ``Consumer Financial Protection Agency in 
     consultation with the other'' before ``agencies''; and
       (2) by striking ``jointly''.
       Page 988, line 13, strike ``and'' at the end.
       Page 988, line 15, strike the period and insert ``; and'' 
     and after such line insert the following:
       (3) by inserting ``the Federal banking agencies, the 
     National Credit Union Administration, the Secretary of the 
     Treasury, the Federal Trade Commission, and'' before 
     ``representatives of State insurance authorities''.
       Page 989, after line 15, insert the following:
       (f) Section 507.--Subsection 507(b) of the Gramm-Leach-
     Bliley Act (15 U.S.C. 6807(b)) is amended by striking 
     ``Federal Trade Commission'' and inserting ``Consumer 
     Financial Protection Agency, or in the case of a rule under 
     section 501(b), the Federal Trade Commission or the 
     Securities and Exchange Commission''.
       Page 997, line 6, strike ``25(a)'' and insert ``25A''.
       Page 1016, strike line 7 through page 1018, line 5, and 
     insert the following:

     SEC. 4815. AMENDMENTS TO THE TELEMARKETING AND CONSUMER FRAUD 
                   ABUSE AND PREVENTION ACT.

       (a) Section 4 of the Telemarketing and Consumer Fraud Abuse 
     and Prevention Act (15 U.S.C. 6102) is amended--
       (1) in subsection (b)--
       (A) by inserting ``and the Consumer Financial Protection 
     Agency with respect to a person subject to the authority of 
     that Agency under the Consumer Financial Protection Agency 
     Act'' after ``Commission'' each of the first 2 places it 
     appears; and
       (B) by inserting ``or the Consumer Financial Protection 
     Agency'' after ``Commission'' the last place it appears; and
       (2) in subsection (d), by inserting ``or the Consumer 
     Financial Protection Agency'' after ``Commission'' each place 
     such term appears.
       (b) Section 5 of the Telemarketing and Consumer Fraud Abuse 
     and Prevention Act (15 U.S.C. 6102) is amended--
       (1) in subsection (b)--
       (A) by inserting ``and the Consumer Financial Protection 
     Agency with respect to a person subject to the authority of 
     that Agency under the Consumer Financial Protection Agency 
     Act'' after ``Commission'' each of the first 2 places it 
     appears; and
       (B) by inserting ``or the Consumer Financial Protection 
     Agency'' after ``Commission'' the last place it appears; and
       (2) in subsection (c), by inserting ``or the Consumer 
     Financial Protection Agency'' after ``Commission'' each place 
     such term appears.
       (c) Section 6 of the Telemarketing and Consumer Fraud Abuse 
     and Prevention Act (15 U.S.C. 6102) is amended by 
     redesignating subsection (c) as subsection (d) and inserting 
     after subsection (b) the following:
       ``(c) Enforcement by the Consumer Financial Protection 
     Agency.--Subject to section 4202 of the Consumer Financial 
     Protection Agency Act of 2009, this Act shall be enforced by 
     the Consumer Financial Protection Agency, under subtitle E of 
     that Act, with respect to a person subject to the authority 
     of that Agency under that Act. For the purpose of the 
     exercise by the Consumer Financial Protection Agency of its 
     powers under subtitle E, a violation of any requirement 
     imposed under this Act shall be deemed to be a violation of a 
     requirement imposed under the Consumer Financial Protection 
     Agency Act. In addition to its powers under subtitle E of 
     that Act, the Agency may exercise, for the purpose of 
     enforcing compliance with any requirement imposed under this 
     Act, any other authority conferred on it by law.''.
       Page 1019, line 8, strike ``and'' and after such line 
     insert the following:
       (2) by inserting a comma after ``under this Act'';
       (3) by inserting a comma after ``subsection (a)(1))''; and
       Page 1019, line 9, strike ``(2)'' and insert ``(4)''.
       Page 1019, line 15, insert ``partnership, or corporation'' 
     after ``person,''.
       Page 1020, after line 20, insert the following new 
     subtitle:

                       Subtitle J--Miscellaneous

     SEC. 4951. REQUIREMENTS FOR STATE-LICENSED LOAN ORIGINATORS.

       Paragraph (2) of section 1505 (b) of the S.A.F.E. Mortgage 
     Licensing Act of 2008 (12 U.S.C. 5104(b)(2)) is amended by 
     inserting after and below subparagraph (B), the following:

     ``Notwithstanding the preceding sentence, a State loan 
     originator supervisory authority may provide for review of 
     applicants and for granting exceptions, on a case-by-case 
     basis, to the minimum standard under subparagraph (B), but 
     only to the extent that any such exception otherwise complies 
     with the purposes of this title.''.
       Page 1021, strike lines 24 and 25 and insert the following:
       ``(i) in total, fewer than 15 clients and investors in the 
     United States in private funds advised by the investment 
     adviser; and''.
       Page 1022, strike lines 1 and 2 and insert the following:
       ``(ii) aggregate assets under management attributable to 
     clients and investors in the United States in private funds 
     advised by the investment adviser of''.
       Page 1022, line 20, strike ``Section'' and insert the 
     following:
       (a) Exemption.--Section
       Page 1024, after line 3, insert the following:
       (b) Consideration of Risk.--Section 203(c) of the 
     Investment Advisers Act of 1940 (15 U.S.C. 80b--3(c)) is 
     amended by adding at the end the following:
       ``(3) The Commission shall take into account the relative 
     risk profile of different classes of private funds as it 
     establishes, by rule or regulation, the registration 
     requirements for private funds.''.
       Page 1024, line 4, strike ``SYSTEMIC RISK''.
       Page 1024, beginning on line 23, strike ``, and to any 
     other entity that the Commission identifies as having 
     systemic risk responsibility'' and insert ``and to the 
     Financial Services Oversight Council''.
       Page 1027, beginning on line 12, strike ``, and to any 
     other entity that the Commission identifies as having 
     systemic risk responsibility'' and insert ``and to the 
     Financial Services Oversight Council''.
       Page 1027, line 17, strike ``such other entity'' and insert 
     ``the Financial Services Oversight Council''.
       Page 1028, strike line 11 and all that follows through page 
     1029, line 2, and insert the following:
       ``(8) Non-disclosure of certain proprietary information and 
     confidentiality of reports.--Any proprietary information of 
     an investment adviser ascertained by the Commission from any 
     report required to be filed with the Commission pursuant to 
     this section 204(b) 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. The 
     Commission may not compel the private fund to disclose such 
     proprietary information to counterparties and creditors. For 
     purposes of this section, proprietary information shall 
     include sensitive, non-public information regarding the 
     investment adviser's investment or trading strategies, 
     analytical or research methodologies, trading data, computer 
     hardware or software containing intellectual property, and 
     any additional information that the Commission determines to 
     be proprietary. Notwithstanding any other provision of law, 
     the Commission shall not be compelled to disclose any report 
     or information contained therein required to be filed with 
     the Commission under this subsection. Nothing in this 
     paragraph shall authorize the Commission to withhold 
     information from the Congress or to prevent the Commission 
     from complying with 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 complying 
     with an order of a court of the United States in an action 
     brought by the United States or the Commission. 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.''.

[[Page 31230]]

       Page 1030, line 12, strike ``private funds'' the second 
     place it appears and insert ``investment adviser acts solely 
     as an adviser to private funds and''.
       Page 1032, line 23, insert ``, 203(m),'' after ``203(l)''.
       Page 1033, line 23, insert ``to the extent necessary'' 
     after ``regulations''.
       Page 1034, line 7, insert ``in any rule or regulation'' 
     after ``any factor used''.
       Page 1034, line 11, insert ``by order,'' after ``Commission 
     shall,''.
       Page 1034, line 15, strike ``$1,000'' and insert 
     ``$100,000''.
       Page 1034, line 16, strike ``$1,000'' and insert 
     ``$100,000''.
       Page 1038, line 2, insert ``disclosure of'' after ``with 
     respect to''.
       Page 1041, beginning on line 13, strike ``and reliable''.
       Page 1042, beginning on line 2, strike ``or its ultimate 
     holding company''.
       Page 1059, line 2, strike ``; and'' and insert a period.
       Page 1059, strike lines 3 through 8 and insert the 
     following:
       (2) Symbols.-- The Commission may prescribe rules that 
     require nationally recognized statistical rating 
     organizations to establish credit rating symbols that 
     distinguish credit ratings for structured products from 
     credit ratings for other products that the Commission 
     determines appropriate or necessary in the public interest 
     and for the protection of investors, provided such rules do 
     not prevent public pension funds or other State regulated 
     entities from investing in rated products.
       Page 1059, line 9, strike ``(2)'' and insert ``(3)''.
       Page 1066, line 7, insert ``certify that they'' after 
     ``diligence services''.
       Page 1067, line 10, strike ``service,'' and insert 
     ``service to that issuer, underwriter, or placement agent in 
     determining a credit rating,''.
       Page 1068, line 17, strike ``this title'' and insert ``the 
     securities laws''.
       Page 1068, line 21, strike ``or a similar''.
       Page 1090, line 14, insert ``section 211 of'' after 
     ``under''.
       Page 1090, line 18, insert after the period the following: 
     ``Nothing in this section shall require a broker or dealer or 
     registered representative to have a continuing duty of care 
     or loyalty to the customer after providing personalized 
     investment advice about securities.''.
       Page 1092, line 1, strike ``(3)'' and insert ``(2)''.
       Page 1096, line 4, insert ``AND RULEMAKING'' after 
     ``STUDY''.
       Page 1096, beginning on line 9, strike ``manner in which'' 
     and all that follows through ``products or services'' on line 
     12 and insert ``provision of documents or information to 
     retail customers prior to the purchase of investment products 
     or services''.
       Page 1098, line 19, strike ``in connection with'' and 
     insert ``rules that require the provision of documents or 
     information to retail customers prior to''.
       Page 1103, strike ``ADVISOR'' and insert ``ADVISER''.
       Page 1109, line 11, insert ``law enforcement agency,'' 
     after the comma.
       Page 1109, line 17, strike ``or'' and after such line 
     insert the following:
       (C) to any whistleblower who gains the information through 
     the performance of an audit of financial statements required 
     under the securities laws; or
       Page 1109, line 18 strike ``(C)'' and insert ``(D)''.
       Page 1116, strike lines 11 through page 1118, line 13, and 
     insert the following:
       ``(2) Confidentiality.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the Commission and any officer or employee of the Commission 
     shall not disclose any information, including information 
     provided by a whistleblower to the Commission, which could 
     reasonably be expected to reveal the identity of a 
     whistleblower, except in accordance with the provisions of 
     section 552a of title 5, United States Code, 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). 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.
       ``(B) Availability to government agencies.--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 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) State attorneys general in connection with any 
     criminal investigation, and
       ``(v) any appropriate State regulatory authority,
     ``each of which shall not disclose such information in 
     accordance with subparagraph (A).''.
       Page 1123, line 13, insert ``municipal financial adviser,'' 
     after ``transfer agent,''.
       Page 1123, line 22, insert ``municipal financial adviser,'' 
     after ``transfer agent,''.
       Page 1124, line 6, insert ``municipal financial adviser,'' 
     after ``municipal securities dealer,''.
       Page 1124, line 15, insert ``municipal financial adviser,'' 
     after ``transfer agent,''.
       Page 1127, beginning on line 18, strike ``head of any 
     division or office within the Commission or his designee'' 
     and insert ``Director of the Division of Enforcement of the 
     Commission or the Director's designee''.
       Page 1127, beginning on line 24, strike ``head of any 
     division or office within the Commission or his designee'' 
     and insert ``Director of the Division of Enforcement of the 
     Commission or the Director's designee''.
       Page 1128, beginning on line 3, strike ``head of any 
     division or office within the Commission or his designee'' 
     and insert ``Director of the Division of Enforcement of the 
     Commission or the Director's designee''.
       Page 1128, beginning on line 9, strike ``head of any 
     division or office within the Commission or his designee'' 
     and insert ``Director of the Division of Enforcement of the 
     Commission or the Director's designee''.
       Page 1128, line 24, strike ``without findings'' and insert 
     ``, has concluded without findings,''.
       Page 1129, line 3, insert ``responsible for compliance 
     examinations and inspections'' after ``Commission''.
       Page 1129, line 7, insert a comma after ``inspection''.
       Page 1129, line 8, insert a comma after ``action''.
       Page 1129, line 11, insert ``responsible for compliance 
     examinations and inspections'' after ``Commission''.
       Page 1129, strike line 16 through page 1131, line 2, and 
     insert the following:
       (a) Securities Act of 1933.--Section 22(a) of the 
     Securities Act of 1933 (15 U.S.C. 77v(a)) is amended by 
     inserting after the second sentence the following: ``In any 
     civil action instituted by the Commission under this title in 
     a United States district court for any judicial district, 
     subpoenas issued to compel the attendance of witnesses or the 
     production of documents or tangible things (or both) at any 
     hearing or trial may be served at any place within the United 
     States. Rule 45(c)(3)(A)(ii) of the Federal Rules of Civil 
     Procedure does not apply to a subpoena so issued.''.
       (b) Securities Exchange Act of 1934.--Section 27 of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78aa) is amended 
     by inserting after the third sentence the following: ``In any 
     civil action instituted by the Commission under this title in 
     a United States district court for any judicial district, 
     subpoenas issued to compel the attendance of witnesses or the 
     production of documents or tangible things (or both) at any 
     hearing or trial may be served at any place within the United 
     States. Rule 45(c)(3)(A)(ii) of the Federal Rules of Civil 
     Procedure does not apply to a subpoena so issued.''.
       (c) Investment Company Act of 1940.--Section 44 of the 
     Investment Company Act of 1940 (15 U.S.C. 80a-43) is amended 
     by inserting after the fourth sentence the following: ``In 
     any civil action instituted by the Commission under this 
     title in a United States district court for any judicial 
     district, subpoenas issued to compel the attendance of 
     witnesses or the production of documents or tangible things 
     (or both) at any hearing or trial may be served at any place 
     within the United States. Rule 45(c)(3)(A)(ii) of the Federal 
     Rules of Civil Procedure does not apply to a subpoena so 
     issued.''.
       (d) Investment Advisers Act of 1940.--Section 214 of the 
     Investment Advisers Act of 1940 (15 U.S.C. 80b-14) is amended 
     by inserting after the third sentence the following: ``In any 
     civil action instituted by the Commission under this title in 
     a United States district court for any judicial district, 
     subpoenas issued to compel the attendance of witnesses or the 
     production of documents or tangible things (or both) at any 
     hearing or trial may be served at any place within the United 
     States. Rule 45(c)(3)(A)(ii) of the Federal Rules of Civil 
     Procedure does not apply to a subpoena so issued.''.
       Page 1131, line 9, strike ``Money'' and insert 
     ``Monetary''.
       Page 1133, line 21, strike ``To Assess Money'' and insert 
     ``to Assess Monetary''.
       Page 1143, beginning on line 2, strike ``Except as provided 
     in subsection (f), the'' and insert ``The''.
       Page 1146, beginning on line 8, strike ``The jurisdiction'' 
     and all that follows through line 11 and insert ``With 
     respect to any actions or proceedings brought or instituted 
     by the Commission or the United States, this jurisdiction 
     includes violations of section 17(a) of this title, and 
     all''.
       Page 1147, beginning on line 4, strike ``The jurisdiction'' 
     and all that follows through ``subsection (a)'' and insert 
     ``With respect to any actions or proceedings brought or 
     instituted by the Commission or the United States, this 
     jurisdiction''.
       Page 1148, beginning on line 3, strike ``The jurisdiction'' 
     and all that follows through ``subsection (a)'' and insert 
     ``With respect to any actions or proceedings brought or 
     instituted by the Commission or the United States, this 
     jurisdiction''.
       Page 1149, line 18, strike the semicolon at the end.

[[Page 31231]]

       Page 1158, line 7, insert ``and'' after ``with''.
       Page 1190, line 13, strike ``that--'' and insert the 
     following: ``that is not exempt from registration under 
     section 203 and--''.
       Page 1190, beginning on line 15, strike ``by a State'' and 
     insert ``in the State where it maintains its principal office 
     and place of business''.
       Page 1191, line 8, insert after the first period the 
     following: ``If no State in which an investment adviser 
     described in subparagraph (B) is registered conducts such an 
     examination, the investment adviser must register with the 
     Commission. If, pursuant to this paragraph, an investment 
     adviser would be required to register with 5 or more States, 
     then the adviser may maintain its registration with the 
     Commission.''.
       Page 1191, strike line 10 and all that follows through page 
     1192, line 3, and insert the following:
       (a) In General.--Not later than 180 days after the date of 
     the enactment of this title, the Securities and Exchange 
     Commission shall adopt a rule pursuant to its authority under 
     section 211(a) of the Investment Advisers Act of 1940 making 
     it unlawful under section 206(4) of that Act for an 
     investment adviser registered under such Act to have custody 
     of funds or securities of a client the value of which exceeds 
     $10,000,000, unless--
       (1) the funds and securities are maintained with a 
     qualified custodian either in a separate account for each 
     client under the client's name, or in accounts that contain 
     only client funds and securities under the name of the 
     investment adviser as agent or trustee for the client; and
       (2) the qualified custodian does not directly or indirectly 
     provide investment advice with respect to such funds or 
     securities.
       (b) Exceptions.--The rule adopted under subsection (a) 
     shall include such exceptions as the Commission determines in 
     the public interest and consistent with the protection of 
     investors. Any exemption granted under this subsection shall 
     ensure that at least once per year, a client described in 
     subsection (a) shall receive a report from an independent 
     entity with a fiduciary responsibility to the client to 
     verify that the assets in the client's account are in accord 
     with those stated on the client's account statement.
       (c) No Limits on Other Actions.--Nothing in this section 
     shall be construed to limit other actions the Securities and 
     Exchange Commission may take under this Act to require the 
     protection of client assets.
       Page 1192, line 21, strike ``maintain'' and insert ``assure 
     that safeguards exist to maintain''.
       Page 1193, line 9, strike ``regards'' and insert 
     ``regard''.
       Page 1193, after line 10, insert the following new 
     sections:

     SEC. 7421. NOTICE TO MISSING SECURITY HOLDERS.

       Section 17A of the Securities Exchange Act of 1934 (15 
     U.S.C. 78q-1) is amended by adding at the end the following 
     new subsection:
       ``(g) Due Diligence for the Delivery of Dividends, 
     Interest, and Other Valuable Property Rights.--
       ``(1) Revision of rules required.--The Commission shall 
     revise its regulations in section 240.17Ad-17 of title 17, 
     Code of Federal Regulations, as in effect on December 8, 
     1997, to extend the application of such section to brokers 
     and dealers and to provide for the following:
       ``(A) A requirement that the paying agent provide a single 
     written notification to each missing security holder that the 
     missing security holder has been sent a check that has not 
     yet been negotiated. The written notification may be sent 
     along with a check or other mailing subsequently sent to the 
     missing security holder but must be provided no later than 7 
     months after the sending of the not yet negotiated check.
       ``(B) An exclusion for paying agents from the notification 
     requirements when the value of the not yet negotiated check 
     is less than $25.
       ``(C) A provision clarifying that the requirements 
     described in subparagraph (A) shall have no effect on State 
     escheatment laws.
       ``(D) For purposes of such revised regulations--
       ``(i) a security holder shall be considered a `missing 
     security holder' if a check is sent to the security holder 
     and the check is not negotiated before the earlier of the 
     paying agent sending the next regularly scheduled check or 
     the elapsing of 6 months after the sending of the not yet 
     negotiated check; and
       ``(ii) the term `paying agent' includes any issuer, 
     transfer agent, broker, dealer, investment adviser, indenture 
     trustee, custodian, or any other person that accepts payments 
     from the issuer of a security and distributes the payments to 
     the holders of the security.
       ``(2) Rulemaking.--The Commission shall adopt such rules, 
     regulations, and orders necessary to implement this 
     subsection no later than 1 year after the date of enactment 
     of this subsection. In proposing such rules, the Commission 
     shall seek to minimize disruptions to current systems used by 
     or on behalf of paying agents to process payment to account 
     holders and avoid requiring multiple paying agents to send 
     written notification to a missing security holder regarding 
     the same not yet negotiated check.''.

     SEC. 7422. SHORT SALE REFORMS.

       (a) Short Sale Disclosure.--Section 13(f) of the Securities 
     Exchange Act of 1934 (15 U.S.C. 78m(f)) is amended by 
     redesignating paragraphs (2), (3), (4), and (5) as paragraphs 
     (3), (4), (5), and (6), respectively, and inserting after 
     paragraph (1) the following:
       ``(2)(A) Every institutional investment manager that 
     effects a short sale of an equity security shall also file a 
     report on a daily basis with the Commission in such form as 
     the Commission, by rule, may prescribe. Such report shall 
     include, as applicable, the name of the institution, the name 
     of the institutional investment manager and the title, class, 
     CUSIP number, number of shares or principal amount, aggregate 
     fair market value of each security, and any additional 
     information requested by the Commission. For purposes of 
     section 552 of title 5, United States Code, this subparagraph 
     shall be considered a statute described in subsection 
     (b)(3)(B) of such section. The information contained in 
     reports of an institutional investment manager filed with the 
     Commission pursuant to this section, shall be subject to the 
     same non-disclosure and confidentiality protection provided 
     under section 204(b)(8) of the Investment Advisers Act of 
     1940.
       ``(B) The Commission shall prescribe rules providing for 
     the public disclosure of the name of the issuer and the 
     title, class, CUSIP number, aggregate amount of the number of 
     short sales of each security, and any additional information 
     determined by the Commission following the end of the 
     reporting period. At a minimum, such public disclosure shall 
     occur every month.''.
       (b) Short Selling Enforcement.--Section 9 of the Securities 
     Exchange Act of 1934 (15 U.S.C. 78i) is amended--
       (1) by redesignating subsections (d), (e), (f), (g), (h), 
     and (i) as subsections (e), (f), (g), (h), (i), and (j), 
     respectively; and
       (2) inserting after subsection (c), the following new 
     subsection:
       ``(d) Transactions Relating to Short Sales of Securities.--
     It shall be unlawful for any person, directly or indirectly, 
     by the use of the mails or any means or instrumentality of 
     interstate commerce, or of any facility of any national 
     securities exchange, or for any member of a national 
     securities exchange to effect, alone or with one or more 
     other persons, a manipulative short sale of any security. The 
     Commission shall issue such other rules as are necessary or 
     appropriate to ensure that the appropriate enforcement 
     options and remedies are available for violations of this 
     subsection in the public interest or for the protection of 
     investors.''.
       (c) Investor Notification.--Section 15 of the Securities 
     Exchange Act of 1934 (15 U.S.C. 78o) is amended--
       (1) by redesignating subsections (e), (f), (g), (h), and 
     (i) as subsections (f), (g), (h), (i), and (j), respectively; 
     and
       (2) inserting after subsection (d) the following new 
     subsection:
       ``(e) Notices to Customers Regarding Securities Lending.--
     Every registered broker or dealer shall provide notice to its 
     customers that they may elect not to allow their fully paid 
     securities to be used in connection with short sales. If a 
     broker or dealer uses a customer's securities in connection 
     with short sales, the broker or dealer shall provide notice 
     to its customer that the broker or dealer may receive 
     compensation in connection with lending the customer's 
     securities. The Commission, by rule, as it deems necessary or 
     appropriate in the public interest and for the protection of 
     investors, may prescribe the form, content, time, and manner 
     of delivery of any notice required under this paragraph.''.

     SEC. 7423. STREAMLINING OF SEC FILING PROCEDURES.

       (a) Approval Process.--Section 19(b)(2) of the Securities 
     Exchange Act of 1934 (15 U.S.C. 78s(b)(2)) is amended to read 
     as follows:
       ``(2) Filing procedures.--
       ``(A) In general.--Within thirty-five days of the date of 
     publication of notice of the filing of a proposed rule change 
     in accordance with paragraph (1) of this subsection, or 
     within such longer period as the Commission may designate up 
     to ninety days of such date if it finds such longer period to 
     be appropriate and publishes its reasons for so finding or as 
     to which the self-regulatory organization consents, the 
     Commission shall--
       ``(i) by order approve such proposed rule change; or
       ``(ii) institute proceedings under subparagraph (B) to 
     determine whether the proposed rule change should be 
     disapproved.
       ``(B) Proceedings.--Proceedings to determine whether the 
     proposed rule change should be disapproved shall include 
     notice of the grounds for disapproval under consideration and 
     opportunity for hearing and be concluded within 200 days from 
     the date of receipt of a proper filing. At the conclusion of 
     such proceedings the Commission, by order, shall approve or 
     disapprove such proposed rule change. The Commission may 
     extend the time for conclusion of such proceedings for up to 
     60 days if it finds good cause for such extension and 
     publishes its reasons for so finding or for such longer 
     period as to which the self-regulatory organization consents. 
     The Commission shall approve

[[Page 31232]]

     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 
     thereunder applicable to such organization. The Commission 
     shall disapprove a proposed rule change of a self-regulatory 
     organization if it does not make such finding. The Commission 
     shall not approve any proposed rule change prior to the 
     thirtieth day after the date of publication of notice of the 
     filing thereof, unless the Commission finds good cause for so 
     doing and publishes its reasons for so finding.''.
       (b) Rules.--Not later than 12 months after the date of 
     enactment of this Act, the Commission shall issue rules 
     implementing a disapproval process for filings submitted on 
     or after the effective date of such rules.
       Page 1196, line 5, strike ``containing''.
       Page 1198, strike line 22 through page 1199, line 16.
       Page 1199, line 17, strike ``(3)'' and insert ``(2)''.
       Page 1199, line 21, strike ``or (2)''.
       Page 1206, strike lines 15, through 23.
       Page 1211 strike line 24 through page 1212, line 21, and 
     insert the following:
       (e) Inspections by Registered Accounting Firms.--Subsection 
     (a) of Section 104 of such Act is amended--
       (1) by striking ``(a) In General.--The Board shall'' and 
     inserting the following:
       ``(a) In General.--
       ``(1) The Board shall''; and
       (2) by adding at the end of such subsection the following:
       ``(2) Inspections of audit report for brokers and 
     dealers.--
       ``(A) The Board may, by rule, conduct and require a program 
     of inspection in accordance with paragraph (a)(1), on a basis 
     to be determined by the Board, of registered public 
     accounting firms that provide one or more audit reports for a 
     broker or dealer. The Board, in establishing such a program, 
     may allow for differentiation among classes of brokers and 
     dealers, as appropriate.
       ``(B) If the Board determines to establish a program of 
     inspection pursuant to subparagraph (A), the Board shall 
     consider in establishing any inspection schedules whether 
     differing schedules would be appropriate with respect to 
     registered public accounting firms that issue audit reports 
     only for one or more brokers or dealers that do not receive, 
     handle, or hold customer securities or cash or are not a 
     member of the Securities Investor Protection Corporation.
       ``(C) Any rules of the Board pursuant to this paragraph 
     shall be subject to prior approval by the Commission pursuant 
     to section 107(b) before the rules become effective, 
     including an opportunity for public notice and comment.
       ``(D) Notwithstanding anything to the contrary in section 
     102 of this Act, a public accounting firm shall not be 
     required to register with the Board if the public accounting 
     firm is exempt from the inspection program which may be 
     established by the Board under subparagraph (a)(2)(A) of this 
     section.
       ``(3) Conforming amendment.--Section 17 (e)(1)(A) of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78q(e) (1) (A)) is 
     amended by striking `registered public accounting firm' and 
     inserting `independent public accounting firm or by a 
     registered public accounting firm if registration is required 
     under the Sarbanes-Oxley Act of 2002 as amended.'.''.
       Page 1215, line 1, strike ``dealer'' and insert 
     ``dealers''.
       Page 1219, beginning on line 10, strike ``domestic'' and 
     insert ``domestically''.
       Page 1223, lines 5, strike ``shall--'' and all that follows 
     through line 13 and insert ``shall prevent the Board from 
     responding to requests for reports from the Committees 
     specified under subsection (h) about the activities or 
     programs of the Board, provided that any confidential 
     information contained therein shall be subject to the 
     provisions of section 105(b)(5).''.
       Page 1228, line 14, strike ``MISLEAD'' and insert 
     ``MISLED''.
       Page 1231, after line 15, insert the following:
       (4) Application of fiduciary duty for personalized 
     investment advice about securities.--Nothing in this section 
     shall diminish in any manner nor supersede the standard of 
     conduct applicable to all brokers, dealers and investment 
     advisers providing personalized investment advice about 
     securities as set forth in section 7103 of this Act.
       Page 1231, line 16, strike ``(4)'' and insert ``(5)''.
       Page 1231, beginning on line 19, strike ``, to the extent 
     practicable, conform to the'' and insert ``meet or exceed''.
       Page 1232, strike lines 3 through page 1235, line 5, and 
     insert the following:
       (6) Suitability and supervision rules for annuity 
     products.--A State shall have adopted rules that govern 
     suitability requirements in the sale of annuities which shall 
     meet or exceed the minimum requirements established by the 
     National Association of Insurance Commissioners Suitability 
     in Annuity Transactions Model Regulation in effect on the 
     date of the enactment of this Act, or any successor thereto.
       Page 1235, line 18, strike ``senior'' and insert ``seniors 
     who are''.
       Page 1238, line 13, insert a comma after ``finding''.
       Page 1242, line 7, insert ``United States Code,'' after 
     ``title 18,''.
       Page 1243, line 9, insert ``or the rules of the Municipal 
     Securities Rulemaking Board,'' after ``statutes,''.
       Page 1243, line 17, insert ``or the rules of the Municipal 
     Securities Rulemaking Board,'' after ``statutes,''.
       Page 1247, line 18, insert ``broker, dealer, investment 
     adviser, municipal securities dealer, transfer agent, 
     nationally recognized statistical rating organization, or''.
       Page 1248, line 1, strike ``or (E)'' and insert ``(E), (G), 
     or (H)''.
       Page 1254, line 22, strike ``or''.
       Page 1254, line 24, strike the period at the end and insert 
     ``; or'' and after such line insert the following:
       (v) the independent accountant that audits the financial 
     statements of the municipal securities issuer.
       Page 1259, after line 24, insert the following new 
     subparagraph and redesignate subsequent subparagraphs 
     accordingly):
       ``(C) To monitor the extent to which traditionally 
     underserved communities and consumers, minorities (as such 
     term is defined in 24 section 1204(c) of the Financial 
     Institutions Reform, Recovery, and Enforcement Act of 1989 
     (12 U.S.C. 1811 note)), and low- and moderate-income persons 
     have access to affordable insurance products regarding all 
     lines of insurance, except health insurance.''.
       Page 1261, after line 6, insert the following new 
     paragraph:
       ``(3) Advisory capacity on council.--The Director shall 
     serve in an advisory capacity on the Financial Services 
     Oversight Council established under the Financial Stability 
     Improvement Act of 2009.''.
       Page 1261, line 9, after ``Secretary'' insert ``in 
     coordination with the Secretary of the Department of Health 
     and Human Services''.
       Page 1261, line 14, after ``data'' insert ``, including 
     financial data,''.
       Page 1262, beginning on line 2, strike ``is authorized to 
     write'' and insert ``writes''.
       Page 1262, line 3, strike ``reinsure'' and insert 
     ``reinsures''.
       Page 1262, line 4, strike ``issue'' and insert ``issues''.
       Page 1278, line 13, strike ``and broadened''.
       Page 1279, line 1, insert ``Federal or State'' after 
     ``any''.
       Page 1279, line 3, insert ``with respect to such study'' 
     before ``to modernize''.
       Page 17 of title VII of the bill, as added by the amendment 
     TITLE7_02, strike lines 14 and 15 and insert the following:
       ``(A) permitting any yield spread premium or other similar 
     compensation that would, for any mortgage loan, permit the 
     total amount of direct and indirect compensation from all 
     sources permitted to a mortgage originator to vary based on 
     the terms of the loan (other than the amount of the 
     principal);''.
       Page 17 of title VII of the bill, as added by the amendment 
     TITLE7_02, line 25, strike ``including through principal'' 
     and insert ``at the option of the consumer, including through 
     principal or rate''.
       Page 18 of title VII of the bill, as added by the amendment 
     TITLE7_02, line 5, after ``costs were'' insert ``limited by 
     agreement with the consumer and were''.
       Page 33 of title VII of the bill, as added by the amendment 
     TITLE7_02, line 24, after ``that'' insert ``is insured by the 
     Federal Housing Administration or''.
       Page 153 of title VII of the bill, as added by the 
     amendment TITLE7_02, line 11, after ``loan'' insert ``, other 
     than a reverse mortgage loan insured by the Federal Housing 
     Administration,''.
       Add at the end of the bill the following:

        TITLE VIII--FORECLOSURE AVOIDANCE AND AFFORDABLE HOUSING

     SEC. 10001. EMERGENCY MORTGAGE RELIEF.

       (a) Use of TARP Funds.--Using the authority available under 
     sections 101(a) and 115(a) of division A of the Emergency 
     Economic Stabilization Act of 2008 (12 U.S.C. 5211(a), 
     5225(a)), the Secretary of the Treasury shall transfer to the 
     Secretary of Housing and Urban Development $3,000,000,000, 
     and the Secretary of Housing and Urban Development shall 
     credit such amount to the Emergency Homeowners' Relief Fund, 
     which such Secretary shall establish pursuant to section 107 
     of the Emergency Housing Act of 1975 (12 U.S.C. 2706), as 
     such Act is amended by this section, for use for emergency 
     mortgage assistance in accordance with title I of such Act.
       (b) Reauthorization of Emergency Mortgage Relief Program.--
     Title I of the Emergency Housing Act of 1975 is amended--
       (1) in section 103 (12 U.S.C. 2702)--
       (A) in paragraph (2)--
       (i) by striking ``have indicated'' and all that follows 
     through ``regulation of the holder'' and insert ``have 
     certified'';
       (ii) by striking ``(such as the volume of delinquent loans 
     in its portfolio)''; and
       (iii) by striking ``, except that such statement'' and all 
     that follows through ``purposes of this title''; and
       (B) in paragraph (4), by inserting ``or medical 
     conditions'' after ``adverse economic conditions'';
       (2) in section 104 (12 U.S.C. 2703)--
       (A) in subsection (b), by striking ``, but such 
     assistance'' and all that follows through the period at the 
     end and inserting the following: ``. The amount of assistance 
     provided to a homeowner under this title

[[Page 31233]]

     shall be an amount that the Secretary determines is 
     reasonably necessary to supplement such amount as the 
     homeowner is capable of contributing toward such mortgage 
     payment, except that the aggregate amount of such assistance 
     provided for any homeowner shall not exceed $50,000.'' ;
       (B) in subsection (d), by striking ``interest on a loan or 
     advance''and all that follows through the end of the 
     subsection and inserting the following: ``(1) the rate of 
     interest on any loan or advance of credit insured under this 
     title shall be fixed for the life of the loan or advance of 
     credit and shall not exceed the rate of interest that is 
     generally charged for mortgages on single-family housing 
     insured by the Secretary of Housing and Urban Development 
     under title II of the National Housing Act at the time such 
     loan or advance of credit is made, and (2) no interest shall 
     be charged on interest which is deferred on a loan or advance 
     of credit made under this title. In establishing rates, terms 
     and conditions for loans or advances of credit made under 
     this title, the Secretary shall take into account a 
     homeowner's ability to repay such loan or advance of 
     credit.''; and
       (C) in subsection (e), by inserting after the period at the 
     end of the first sentence the following: ``Any eligible 
     homeowner who receives a grant or an advance of credit under 
     this title may repay the loan in full, without penalty, by 
     lump sum or by installment payments at any time before the 
     loan becomes due and payable.'';
       (3) in section 105 (12 U.S.C. 2704)--
       (A) by striking subsection (b);
       (B) in subsection (e)--
       (i) by inserting ``and emergency mortgage relief payments 
     made under section 106'' after ``insured under this 
     section''; and
       (ii) by striking ``$1,500,000,000 at any one time'' and 
     inserting ``$3,000,000,000'';
       (C) by redesignating subsections (c), (d), and (e) as 
     subsections (b), (c), and (d), respectively; and
       (D) by adding at the end the following new subsection:
       ``(e) The Secretary shall establish underwriting guidelines 
     or procedures to allocate amounts made available for loans 
     and advances insured under this section and for emergency 
     relief payments made under section 106 based on the 
     likelihood that a mortgagor will be able to resume mortgage 
     payments, pursuant to the requirement under section 
     103(5).'';
       (4) in section 107--
       (A) by striking ``(a)''; and
       (B) by striking subsection (b);
       (5) in section 108 (12 U.S.C. 2707), by adding at the end 
     the following new subsection:
       ``(d) Coverage of Existing Programs.--The Secretary shall 
     allow funds to be administered by a State that has an 
     existing program that is determined by the Secretary to 
     provide substantially similar assistance to homeowners. After 
     such determination is made such State shall not be required 
     to modify such program to comply with the provisions of this 
     title.'';
       (6) in section 109 (12 U.S.C. 2708)--
       (A) in the section heading, by striking ``authorization 
     and'';
       (B) by striking subsection (a);
       (C) by striking ``(b)''; and
       (D) by striking ``1977'' and inserting ``2011'';
       (7) by striking sections 110, 111, and 113 (12 U.S.C. 2709, 
     2710, 2712); and
       (8) by redesignating section 112 (12 U.S.C. 2711) as 
     section 110.

     SEC. 10002. ADDITIONAL ASSISTANCE FOR NEIGHBORHOOD 
                   STABILIZATION PROGRAM.

       Using the authority made available under sections 101(a) 
     and 115(a) of division A of the Emergency Economic 
     Stabilization Act of 2008 (12 U.S.C. 5211(a), 5225(a)), the 
     Secretary of the Treasury shall transfer to the Secretary of 
     Housing and Urban Development $1,000,000,000, and the 
     Secretary of Housing and Urban Development shall use such 
     amounts for assistance to States and units of general local 
     government for the redevelopment of abandoned and foreclosed 
     homes, in accordance with the same provisions applicable 
     under the second undesignated paragraph under the heading 
     ``Community Planning and Development--Community Development 
     Fund'' in title XII of division A of the American Recovery 
     and Reinvestment Act of 2009 (Public Law 111-5; 123 Stat. 
     217) to amounts made available under such second undesignated 
     paragraph, except as follows:
       (1) Notwithstanding the matter of such second undesignated 
     paragraph that precedes the first proviso, amounts made 
     available by this section shall remain available until 
     expended.
       (2) The 3rd, 4th, 5th, 6th, 7th, and 15th provisos of such 
     second undesignated paragraph shall not apply to amounts made 
     available by this section.
       (3) Amounts made available by this section shall be 
     allocated based on a funding formula for such amounts 
     established by the Secretary in accordance with section 
     2301(b) of the Housing and Economic Recovery Act of 2008 (42 
     U.S.C. 5301 note), except that--
       (A) notwithstanding paragraph (2) of such section 2301(b), 
     the formula shall be established not later than 30 days after 
     the date of the enactment of this Act;
       (B) the Secretary may not establish any minimum grant 
     amount or size for grants to States;
       (C) the Secretary may establish a minimum grant amount for 
     direct allocations to units of general local government 
     located within a State, which shall not exceed $1,000,000; 
     and
       (D) each State and local government receiving grant amounts 
     shall establish procedures to create preferences for the 
     development of affordable rental housing for properties 
     assisted with amounts made available by this section.
       (4) Paragraph (1) of section 2301(c) of the Housing and 
     Economic Recovery Act of 2008 shall not apply to amounts made 
     available by this section.
       (5) Section 2302 of the Housing and Economic Recovery Act 
     of 2008 shall not apply to amounts made available by this 
     section.
       (6) The fourth proviso from the end of such second 
     undesignated paragraph shall be applied to amounts made 
     available by this section by substituting ``2013'' for 
     ``2012''.
       (7) Notwithstanding section 2301(a) of the Housing and 
     Economic Recovery Act of 2008, the term ``State'' means any 
     State of the United States, the District of Columbia, the 
     Commonwealth of Puerto Rico, the Commonwealth of the Northern 
     Mariana Islands, Guam, the Virgin Islands, American Samoa, 
     and other territory or possession of the United States for 
     purposes of this section and title III of division B of such 
     Act, as applied to amounts made available by this section.
       (8)(A) None of the amounts made available by this section 
     shall be distributed to--
       (i) any organization which has been convicted for a 
     violation under Federal law relating to an election for 
     Federal office; or
       (ii) any organization which employs applicable individuals.
       (B) In this paragraph, the term ``applicable individual'' 
     means an individual who--
       (i) is--
       (I) employed by the organization in a permanent or 
     temporary capacity;
       (II) contracted or retained by the organization; or
       (III) acting on behalf of, or with the express or apparent 
     authority of, the organization; and
       (ii) has been convicted for a violation under Federal law 
     relating to an election for Federal office.
       Page 204, line 14, strike ``may decrease'' and insert 
     ``decreases''.
       Page 826, after line 20, insert the following new 
     subsection:
       (c) Additional Consumer Protection Regulations in Response 
     to State Action.--
       (1) Notice of proposed rule required.--The Agency 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 Agency.
       (2) Agency considerations required for issuance of final 
     regulation.--Before prescribing a final regulation based upon 
     a notice issued pursuant to paragraph (1), the Agency 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 Agency--
       (A) shall include a discussion of the considerations 
     required in subsection (b) in the Federal Register notice of 
     a final regulation prescribed pursuant to this section; and
       (B) whenever the Agency 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 section 
     shall be construed as limiting or restricting the authority 
     of the Agency 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 section 
     shall be construed as exempt the Agency from complying with 
     subchapter II of chapter 5 of title 5, United States Code.
       (6) Definition.--For purposes of this section, the term 
     ``consumer protection regulation'' means a regulation that 
     the Agency is authorized to prescribe under this title, the 
     enumerated consumer laws, or any law or authority transferred 
     under subtitle F or H.
       Page 827, line 4, after ``defendant,'' strike the rest of 
     line 4 through line 6 and insert, ``to enforce and secure 
     remedies under provisions of this title or regulations issued 
     thereunder, or otherwise provided under other law.''.

[[Page 31234]]

       Page 831, line 23, after ``that'' insert ``directly and 
     specifically''.
       Page 832, beginning on line 8, strike ``National banks'' 
     and all that follows through ``State laws.'' on line 9.
       Page 832, line 9, strike ``State laws are'' and insert 
     ``State consumer financial laws are''.
       Page 832, line 11, strike ``state'' and insert ``State 
     consumer financial''.
       Page 832, strike lines 15 through 20, and insert the 
     following:
       ``(B) the State consumer financial law prevents, 
     significantly interferes with, or materially impairs the 
     ability of an institution chartered as a national bank to 
     engage in the business of banking. Any preemption 
     determination under this subparagraph may be made by a court 
     or by regulation or order of the Comptroller of the Currency 
     in accordance with applicable law, on a case-by-case basis. 
     Any such determination by a court shall comply with the 
     standards set forth in subsection (d) of this section, with 
     the court making the subsection (d) finding de novo; or
       Page 832, line 21, insert ``consumer financial'' after 
     ``State''
       Page 832, strike line 23 and all that follows through page 
     833, line 2 and insert the following:
       ``(2) Savings clause.--This Act does not preempt or alter 
     the applicability of any State law to any subsidiary or 
     affiliate of a national bank (other than an institution 
     chartered as a national bank) that is not a depository 
     institution.
       Page 833, strike lines 3 through 17 and insert the 
     following:
       ``(3) Case-by-case determination.--
       ``(A) Definition.--The term `case-by-case determination 
     pursuant to this section' means a determination 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 case-by-case determination 
     pursuant to this section that a State consumer financial law 
     of another State has a substantively equivalent terms as one 
     that the Comptroller is preempting, the Comptroller shall 
     first consult with the Consumer Financial Protection Agency 
     and shall take such Agency's views into account when making 
     the determination.
       ``(4) Rule of construction.--This Act 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 Act shall assess the validity of such determinations 
     depending upon the thoroughness evident in the agency's 
     consideration, the validity of the agency's reasoning, 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 subsection (b)(1)(B) shall be made by the 
     Comptroller and shall not be delegable to another officer or 
     employee of the Comptroller of the Currency.
       Page 833, line 18, after ``regulation'' insert ``or 
     order''.
       Page 833, strike line 25 and all that follows through page 
     834, line 2, and insert the following: ``prevents, 
     significantly interferes with, or materially impairs the 
     ability of a national bank to engage in the business of 
     banking.''.
       Page 834, line 5, after ``prescribe'' insert ``a'', after 
     ``regulation'' insert ``or order''.
       Page 835, after line 9, insert new subsections as follows:
       ``(g) 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.
       ``(h) 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.
       Page 835, on lines 21 and 22 strike ``supervisory, 
     examination, or regulatory'' and insert ``visitorial''.
       Page 836, strike lines 4 through 7 and renumber subsequent 
     sections accordingly.
       Page 836, line 12, after ``or'' delete the rest of line 12 
     through line 15 and insert, ``nonpreempted State law against 
     a national bank, as authorized by such law, or to seek relief 
     as authorized by such law.''.
       Page 838, line 13, after ``that'' and insert ``directly and 
     specifically''.
       Page 838, beginning line 19, strike ``Federal savings 
     association'' and all that follows through ``State laws.''
       Page 838, beginning on line 20, strike ``State laws are'' 
     and insert ``State consumer financial laws are''.
       Page 838, line 22, strike ``state'' and insert ``State 
     consumer financial''.
       Page 839, strike lines 1 through 7, and insert the 
     following:
       ``(B) the State consumer financial law prevents, 
     significantly interferes with, or materially impairs the 
     ability of an institution chartered as a Federal savings 
     association to engage in the business of banking. Any 
     preemption determination under this subparagraph may be made 
     by a court or by regulation or order of the Director of the 
     Office of Thrift Supervision in accordance with applicable 
     law, on a case-by-case basis. Any such determination by a 
     court shall comply with the standards set forth in subsection 
     (d) of this section, with the court making the subsection (d) 
     finding de novo; or
       Page 839, line 8, insert ``consumer financial'' after 
     ``State''.
       Page 839, strike lines 10 through 14 and insert the 
     following:
       ``(2) Savings clause.--This Act does not preempt or alter 
     the applicability of any State law to any subsidiary or 
     affiliate of a Federal savings association (other than an 
     institution chartered as a Federal savings association) that 
     is not a depository institution.
       Page 839, strike line 15 and all that follows through page 
     840, line 4 and insert the following:
       ``(3) Case-by-case determination.--
       ``(A) Definition.--The term `case-by-case determination 
     pursuant to this section' means a determination made by the 
     Director concerning the impact of a particular State consumer 
     financial law on any Federal savings association that is 
     subject to that law, or the law of any other State with 
     substantively equivalent terms.
       ``(B) Consultation.--When making case-by-case determination 
     pursuant to this section that a State consumer financial law 
     of another State has a substantively equivalent terms as one 
     that the Director of the Office of Thrift Supervision is 
     preempting, the Director shall first consult with the 
     Consumer Financial Protection Agency and shall take such 
     Agency's views into account when making the determination.
       ``(4) Rule of construction.--This Act 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 Director regarding preemption of a State law by 
     this Act shall assess the validity of such determinations 
     depending upon the thoroughness evident in the agency's 
     consideration, the validity of the agency's reasoning, 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 Director in making determinations 
     regarding the meaning or interpretation of the Home Owners' 
     Loan Act or other Federal laws.
       ``(6) Ots determination not delegable.--Any regulation, 
     order, or determination made by the Director of the Office of 
     Thrift Supervision under subsection (b)(1)(B) shall be made 
     by the Director and shall not be delegable to another officer 
     or employee of the Director of the Office of Thrift 
     Supervision.
       Page 840, line 7, after ``regulation'' insert ``or order''.
       Page 840, line 15, after ``regulation'' insert ``or 
     order''.
       Page 840, strike lines 22 through 24 and insert the 
     following: ``finding that the provision prevents, 
     significantly interferes with, or materially impairs the 
     ability of a Federal savings association to engage in the 
     business of banking.''.
       Page 841, after line 23, insert new subsections as follows 
     and renumber subsequent sections accordingly:
       ``(g) Preservation of Powers Related to Charging of 
     Interest.--No provision of this title shall be construed as 
     altering or otherwise affecting the authority conferred by 
     section 4(g) of the Home Owners' Loan Act (12 U.S.C. 1463(g)) 
     for the charging of interest by a Federal savings association 
     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.
       ``(h) Transparency of Ots Preemption Determinations.--The 
     Director of the Office of Thrift Supervision shall publish 
     and update no less frequently than quarterly, a list of 
     preemption determinations by such Director then in effect 
     that identifies the activities and practices covered by each 
     determination and the requirements and constraints determined 
     to be preempted.
       Page 842, strike lines 13 through 16 and renumber 
     subsequent sections accordingly.
       Page 842, line 22, after ``law,'' delete the rest of line 
     22 through page 843, line 2 and insert, ``or to seek relief 
     as authorized by such law''.

[[Page 31235]]

       Page 30, after line 21, insert the following new 
     subsection:
       (e) Study of Effects Consumer Financial Protection Agency 
     Regulations and Standards.--
       (1) Study required.--The Council shall conduct a study of 
     the effects that regulations and standards of the Consumer 
     Financial Protection Agency will have on all covered persons 
     (as such term is defined in section 4002(9)), including 
     nondepository institution covered persons. The Director of 
     the Consumer Financial Protection Agency shall take the 
     findings of the study into account when issuing regulations.
       (2) Value of nonbank products.--The study shall include an 
     evaluation and assessment of the appropriateness of using 
     ``APR'' as a true measure of the value of all nonbank 
     products.
       (3) Submission.--Not later than 240 days after the date of 
     the enactment of this Act, the Director of the Consumer 
     Financial Protection Agency shall submit the study to 
     Congress and include any recommendations the Director may 
     have for changes in law and regulations to improve consumer 
     protections and maintain access to credit.
       Page 734, strike lines 8 through 12, and insert the 
     following:
       (A) consider the potential benefits and costs to consumers, 
     covered persons, and the Federal Government, including the 
     potential reduction of consumers' access to consumer 
     financial products or services, resulting from such 
     regulation; and
       Page 734, line 20, insert before the period the following: 
     ``and whether such regulation will have an inconsistent 
     effect on nondepository institution covered persons and 
     depository institution covered persons''.
       Page 747, after line 21, add the following new subsections:
       (i) No One Size Fits All Regulation of Nonbank Products.--
     The Director shall be required to issue only product specific 
     rules and regulations for each of the non-bank products under 
     the jurisdiction of the Agency.
       (j) Nonbank Regulatory Appeal Rights.--
       (1) Administrative.--The Agency shall establish a procedure 
     through which a nonbank financial company that has been given 
     contradictory or conflicting supervisory determinations or 
     directives from the Agency and their prudential supervisors 
     will be able to appeal the decisions to a disinterested 
     governing panel.
       (2) Judicial review.--Any nonbank financial company which 
     has been subjected to contradictory or conflicting 
     supervisory determinations or directives may seek judicial 
     review by filing a petition for such review in the United 
     States Court of Appeals for the District of Columbia.
       Page 731, after line 24, insert the following new 
     subsection:
       (h) Assessments for Certain Nondepository Institution 
     Covered Persons.--
       (1) In general.--Notwithstanding any other provision of 
     this Act, a nondepository institution covered person shall 
     not be subject to assessments by the Agency if--
       (A) the assets that are financial activities of that 
     nondepository covered person represent less than a 
     substantial portion of its total assets; and
       (B) the gross revenues derived from financial activities of 
     that nondepository covered person are less than a substantial 
     portion of its gross revenues.
       (2) Extensive consumer financial products or services 
     operations.--Paragraph (1) shall not apply to nondepository 
     institution covered person that the Director determines has a 
     level of assets or revenues derived from financial 
     activities, a number of transactions in consumer financial 
     products or services, or a number of accounts relating to 
     consumer financial products or services that the Director 
     determines represents an extensive consumer financial 
     products or services operation.
       Page 1068, line 7, strike ``knowingly or recklessly 
     violated'' and insert ``was grossly negligent in violating''.
       Page 1068, beginning on line 18, strike ``knowledge and 
     recklessness'' and insert ``gross negligence''.
       Page 1019, line 22, strike ``57a(b)'' and insert ``57a''.
       Page 1019, after line 22, insert the following:
       (1) in subsection (a)(1), by striking ``(h)'' and inserting 
     ``(f)'';
       Page 1019, line 23, strike ``(1)'' and insert ``(2)''.
       Page 1020, strike lines 6 through 13 and insert the 
     following:
       (3) by striking subsection (c);
       (4) in subsection (d), by striking ``(d)(1) The 
     Commission's'' and all that follows through the end of 
     paragraph (2) and by redesignating paragraph (3) of such 
     subsection as subsection (c);
       (5) In such subsection (c) (as so redesignated), by 
     inserting ``prescribed'' after ``any rule'';
       (6) by striking subsections (f), (i), and (j) and 
     redesignating subsections (e), (g), and (h) as subsections 
     (d), (e), and (f), respectively;
       Page 1020, line 14, strike ``(4)'' and insert ``(7)''.
       Page 1020, after line 14, insert the following:
       (A) in paragraph (1)(A), by striking ``promulgated'' and 
     inserting ``prescribed'';
       Page 1020, line 15, strike ``(A)'' and insert ``(B)''.
       Page 1020, strike lines 17 through 20 and insert the 
     following:
       (C) in paragraph (3), by striking ``The court shall hold 
     unlawful'' and all that follows through the end of the 
     paragraph; and
       (D) by striking paragraphs (4) and (5) and inserting the 
     following:
       ``(4) The procedure set forth in this subsection for 
     judicial review of a rule prescribed under subsection 
     (a)(1)(B) is the exclusive means for such review, other than 
     in an enforcement proceeding.''; and
       (7) in subsection (e)(2) (as so redesignated), by striking 
     ``class or persons'' and inserting ``class of persons''.
       Page 754, after line 1, add the following new subsection at 
     the end of section 4203:
       (h) Assistive Division for Community Financial 
     Institutions.--
       (1) Establishment; purpose.--There is established in the 
     Agency an office to be known as the ``Assistive Division for 
     Community Financial Institutions'' to advise the Director on 
     the impact of Agency policies and regulations on community 
     financial institutions and to help ensure that the policies 
     and regulations of the Agency do not unduly burden community 
     financial institutions.
       (2) Additional duties.--The Assistive Division for 
     Community Financial Institutions shall also--
       (A) provide assistance to and respond to inquiries from 
     community financial institutions regarding policies of the 
     Agency and the effects of such policies on community 
     financial institutions;
       (B) provide educational materials, training aides, and 
     support to community financial institutions with respect to 
     any new regulatory obligations the Agency establishes during 
     the initial rule-making period;
       (C) establish and maintain a toll-free telephone number, to 
     be available at least 8 hours a day and 7 days a week, at 
     which community financial institution may make inquiries and 
     receive assistance under subparagraph (A); and
       (D) perform other duties and exercise such other powers set 
     by the Director.
       Page 949, after line 2, add the following new section (and 
     update the table of contents appropriately):

     SEC. 4704. REPORTING OF MORTGAGE DATA BY STATE.

       (a) In General.--Section 104(a) of the Helping Families 
     Save Their Homes Act of 2009 (division A of Public Law 111-
     22) is amended--
       (1) in paragraph (2), by striking ``resulting'' and 
     inserting ``in each State that result'';
       (2) in paragraph (3), by inserting ``each State for'' after 
     ``modifications in''; and
       (3) in paragraph (4), by inserting ``in each State'' after 
     ``total number of loans''.
       (b) Conforming Amendment.--Section 104(b)(1)(A) of such Act 
     is amended by adding at the end the following sentence: ``Not 
     later than 60 days after the date of the enactment of the 
     Wall Street Reform and Consumer Protection Act of 2009, the 
     Comptroller of the Currency and the Director of the Office of 
     Thrift Supervision shall update such requirements to reflect 
     amendments made to this section by such Act.''.
       In subtitle H of title VII (relating to mortgage reform) 
     insert ``and Data Collection'' after ``Reports''
       At the end of title VII (relating to mortgage reform), add 
     the following new section (and update the table of contents 
     appropriately):

     SEC. 9702. REPORTING OF MORTGAGE DATA BY STATE.

       (a) In General.--Section 104(a) of the Helping Families 
     Save Their Homes Act of 2009 (division A of Public Law 111-
     22) is amended--
       (1) in paragraph (2), by striking ``resulting'' and 
     inserting ``in each State that result'';
       (2) in paragraph (3), by inserting ``each State for'' after 
     ``modifications in''; and
       (3) in paragraph (4), by inserting ``in each State'' after 
     ``total number of loans''.
       (b) Conforming Amendment.--Section 104(b)(1)(A) of such Act 
     is amended by adding at the end the following sentence: ``Not 
     later than 60 days after the date of the enactment of the 
     Wall Street Reform and Consumer Protection Act of 2009, the 
     Comptroller of the Currency and the Director of the Office of 
     Thrift Supervision shall update such requirements to reflect 
     amendments made to this section by such Act.''.
       Page 119, strike lines 12 to 13 and insert the following 
     new paragraph:
       (1) the Board determines that a specified financial company 
     fails to meet prudential standards established by the Board; 
     or
       Page 1035, line 4, strike ``Section'' and insert ``(a) In 
     General.--Section''.
       Page 1035, strike lines 7 and 8 and insert the following:
       (A) by amending paragraph (1)(A) to read as follows:
       ``(A) In general.--Each credit rating agency shall register 
     as a nationally recognized statistical rating organization 
     for the purposes of this title (in this section referred to 
     as the `applicant'), and shall file with the Commission an 
     application for registration,

[[Page 31236]]

     in such form as the Commission shall require, by rule or 
     regulation issued in accordance with subsection (n), and 
     containing the information described in subparagraph (B).''.
       Page 1035, line 10, strike ``and''.
       Page 1035, line 12, insert ``and'' after the semicolon and 
     after such line insert the following:
       (D) by adding at the end of paragraph (1) the following:
       ``(F) Exemptions.--The registration requirement in 
     subparagraph (A) shall not apply to--
       ``(i) a credit rating agency if the credit rating agency--

       ``(I) does not engage in the provision of credit ratings to 
     issuers of securities for a fee; and
       ``(II) issues credit ratings only in any bona fide 
     newspaper, news magazine, or business or financial 
     publication of general and regular circulation; or

       ``(ii) such other persons as the Commission may designate 
     by rules and regulations or order when in the public interest 
     and for the protection of investors.''.
       Page 1067, after line 20, insert the following:
       (b) Conforming Amendment.--Section 3(a)(62) of the 
     Securities Exchange Act of 1934 is amended by striking 
     subparagraph (A) and redesignating subparagraphs (B) and (C) 
     as subparagraphs (A) and (B), respectively.
       Page 731, after line 24, insert the following:
       (4) Financial education and counseling program.--
       (A) In general.--To the extent such victims cannot be 
     located or such payments are otherwise not practicable, 5 
     percent of the Victims Relief Fund shall be transferred, up 
     to $10,000,000 on an annual basis, to the Secretary of the 
     Treasury so that the Secretary may carry out the Financial 
     Education and Counseling Grant Program established under 
     section 1132 of the Housing and Economic Recovery Act of 2008 
     (12 U.S.C. 1701).
       (B) Memorandum of understanding.--Not later than 12 months 
     after the date of enactment of this subtitle, the Director 
     shall enter into a memorandum of understanding with the 
     Secretary of the Treasury to coordinate the release of Civil 
     Penalty Fund amounts under subparagraph (A).
       (C) Assistance for individuals at financial risk.--Section 
     1132 of the Housing and Economic Recovery Act of 2008 (12 
     U.S.C. 1701) is amended--
       (i) in subsection (a), by striking ``prospective 
     homebuyers'' each place that term appears and inserting 
     ``individuals at financial risk'';
       (ii) in subsection (b)--

       (I) in paragraph (1), by striking ``prospective 
     homebuyers'' and inserting ``individuals at financial risk''; 
     and
       (II) by adding at the end the following:

       ``(3) Determination of financial risk.--For purposes of 
     this section, the Director of the Consumer Financial 
     Protection Agency shall establish the criteria used to 
     determine whether an individual is at financial risk, and the 
     Secretary shall use such criteria when selecting 
     organizations under paragraph (2).''; and
       (iii) in subsection (c)(1)--

       (I) in subparagraph (A), by striking ``or'';
       (II) in subparagraph (B), by striking the period and 
     inserting ``; or''; and
       (III) 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 
     individuals at financial risk.''.
       Page 1278, after line 17 insert the following:
       (7) Geographic disparities in access to and cost of 
     insurance products.
       Page 35, line 25, insert ``compelled to waive and shall not 
     be'' after ``be''.
       Page 26, line 22, strike ``Department of the Treasury'' and 
     insert ``Voting Members of the Council''.
       Page 26, line 23, insert ``and all other voting members of 
     the Council may, with the approval of the Council,'' after 
     ``shall''.
       Page 27, line 10, strike ``Secretary of the Treasury'' and 
     insert ``Council''.
       Page 33, after line 10, insert the following new section 
     (and conform the table of contents accordingly):

     SEC. 1100. FEDERAL RESERVE BOARD AUTHORITY THAT OF AGENT 
                   ACTING ON BEHALF OF COUNCIL.

       For purposes of this subtitle, the Board of Governors of 
     the Federal Reserve System shall act in the capacity of agent 
     for the Council, acting on behalf of the Council.
       Page 1028, after line 10, insert the following new 
     paragraph (and redesignate the subsequent paragraph):
       ``(8) Applicable privileges not waived.--An investment 
     advisor, and investment advisor to a private fund, a private 
     fund, foreign private fund advisor, a foreign private fund, 
     an advisor to a venture capital fund, a venture capital fund, 
     or other person shall not be compelled to waive and shall not 
     be deemed to have waived any privilege otherwise applicable 
     to any data or information by transferring the data or 
     information to, or permitting that data or information to be 
     used by--
       ``(A) the Financial Services Oversight Council;
       ``(B) the Commission;
       ``(C) any Federal financial regulator or State financial 
     regulator, in any capacity; or
       ``(D) any other agency of the Federal Government (as 
     defined in section 6 of title 18, United States Code).''.
       Page 701, after line 9, insert the following:
       (D) Consumer complaint website.--The Director shall 
     establish an Internet website for consumer complaints and 
     inquiries concerning institutions regulated by the Agency. 
     The website shall be interoperable with the database 
     established under subparagraph (A).
       Page 825, after line 12, insert the following:

     SEC. 4313. OVERDRAFT PROTECTION NOTICE REQUIREMENTS.

       Not later than 180 days after the date of the enactment of 
     this Act, the Director shall promulgate a new rule that 
     requires banks to prominently place in each consumer branch 
     office information regarding the fees and charges associated 
     with enrollment in the bank's overdraft protection program.
       Page 1230, line 15, strike ``$500,000'' and insert 
     ``1,000,000''.
       Page 1230, line 18, strike ``$100,000'' and insert 
     ``250,000''.
       Page 1236, line 13, strike ``$8,000,000'' and insert 
     ``16,000,000''.
       Page 93, line 8, insert ``pursuant to subsection (e)(5)'' 
     after ``action''.
       Page 93, beginning line 12, insert the following new 
     subsection:
       (i) Rule of Construction.--Nothing in subsection (h) shall 
     be construed as limiting the authority of a Federal financial 
     regulatory agency to take action with respect to a financial 
     company subject to the jurisdiction of such agency pursuant 
     to applicable law other than this section.
       Page 22, after line 12, insert the following new 
     subparagraph:
       (C) A State securities commissioner (or an officer 
     performing like functions), to be designated by a selection 
     process determined by such State securities commissioners, 
     provided that the term for which a State securities 
     commissioner may serve shall last no more than the 2-year 
     period beginning on the date that the commissioner is 
     selected.
       Page 253, after line 21, insert the following new 
     paragraph:
       (3) Section 4(j) of the Bank Holding Company Act of 1956 is 
     amended by inserting after paragraph (4) the following new 
     paragraph (and redesignating succeeding paragraphs 
     accordingly):
       ``(5) Financial stability.--
       ``(A) In general.--In every case, the Board shall take into 
     consideration the extent to which the proposed acquisition, 
     merger, or consolidation may pose risk to the stability of 
     the United States financial system or the economy of the 
     United States, including the resulting scope, nature, size, 
     scale, concentration, or interconnectedness of activities 
     that are financial in nature.
       ``(B) Standards for approval.--The Board may, in the sole 
     discretion of the Board, disapprove any acquisition, merger, 
     or consolidation of, or by, a financial holding company 
     subject to stricter standards if the Board determines that 
     the resulting concentration of liabilities on a consolidated 
     basis is likely to pose a great threat to financial stability 
     during times of severe economic distress.''.
       Page 255, after line 2, insert the following new section:

     SEC. 1316. MUTUAL NATIONAL BANKS AND FEDERAL MUTUAL BANK 
                   HOLDING COMPANIES AUTHORIZED.

       (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 5133 the following new 
     sections:

     ``SEC. 5133A. MUTUAL NATIONAL BANKS.

       ``(a) In General.--Notwithstanding the section designated 
     the `Third' of section 5134, in order to provide mutual 
     institutions for the deposit of funds, the extension of 
     credit, and provision of other services, the Comptroller of 
     the Currency may charter mutual national banks either de novo 
     or through a conversion of any insured depository institution 
     or any State mutual bank or credit union, subject to 
     regulations prescribed by the Comptroller of the Currency in 
     accordance with this section. The powers conferred by this 
     section are intended to provide for the creation and 
     maintenance of mutual national banks as bodies corporate 
     existing in perpetuity for the benefit of their depositors 
     and the communities in which they operate.
       ``(b) Regulations.--
       ``(1) Regulations of the comptroller.--The Comptroller of 
     the Currency is authorized to prescribe appropriate 
     regulations for the organization, incorporation, examination, 
     operation, and regulation of mutual national banks. Except to 
     the extent that such existing regulations conflict with 
     sections 5133A and 5133B, mutual national banks shall be 
     subject to the regulations of the Director of the Office of 
     Thrift Supervision governing corporate organization, 
     governance, and conversion of mutual institutions, as in 
     effect on the date of the enactment of the Wall Street Reform 
     and Consumer Protection Act of 2009, including parts 543, 
     544, 546, 563b, and 563c of chapter V of title 12, Code of 
     Federal Regulations (as in effect on that date), for up to 3 
     years beginning on the date of the enactment of the Wall 
     Street Reform and Consumer Protection Act of 2009.
       ``(2) Applicability of capital stock requirements.--The 
     Comptroller of the Currency shall prescribe regulations 
     regarding

[[Page 31237]]

     the manner in which requirements of this title with respect 
     to capital stock, and limitations imposed on national banks 
     under this title based on capital stock, shall apply to 
     mutual national banks.
       ``(c) Conversions.--
       ``(1) Conversion of a mutual depository to a mutual 
     national bank.--Subject to such regulations as the 
     Comptroller of the Currency may prescribe for the protection 
     of depositors' rights and for any other purpose the 
     Comptroller of the Currency may consider appropriate, any 
     mutual depository may convert to a mutual national bank by 
     filing with the Comptroller of the Currency a notice of its 
     election to convert on a specified date that is not earlier 
     than 30 days after the date on which the notice is filed, and 
     the mutual depository shall be converted to a mutual national 
     bank charter on the date specified in the notice.
       ``(2) Conversion to stock national bank.--Subject to such 
     regulations as the Comptroller of the Currency may prescribe 
     for the protection of depositors' rights and for any other 
     purpose the Comptroller of the Currency may consider 
     appropriate, any national bank that is organized in the 
     mutual form under subsection (a) may reorganize as a stock 
     national bank.
       ``(3) Conversion to state banks.--Any national mutual bank 
     may convert to a State bank charter in accordance with 
     regulations prescribed by the Comptroller of the Currency and 
     applicable State law.
       ``(d) Terminating Mutuality.--If a mutual national bank 
     elects to terminate mutuality, it must do so by--
       ``(1) liquidating; or
       ``(2) converting to a national banking association 
     operating in stock form.
       ``(e) Status and Rights of Members.--
       ``(1) In general, the status of a member is primarily that 
     of a depositor and secondarily that of a holder of a 
     contingent right to participate in the equity of a mutual 
     national bank upon a liquidation or conversion.
       ``(2) Each member of a mutual national bank shall have the 
     following rights:
       ``(A) Such rights as may be agreed upon, by contract, 
     between the member and the mutual national bank.
       ``(B) The right to vote for members of the board of 
     directors of the mutual national bank.
       ``(C) The right to attend any meeting of members properly 
     called by the board of directors of a mutual national bank.
       ``(D) In the event the board of directors, in its sole 
     discretion, determines a conversion of a mutual national bank 
     to a national banking association operating in stock form is 
     in the best interests of the community in which the bank 
     operates and the members approve the conversion through a 
     special proxy, then the members as of a record date set by 
     the board of directors shall have the first right to 
     subscribe for and purchase stock in the converted bank.
       ``(E) In the event the board of directors, in its sole 
     discretion, determines a liquidation of the mutual national 
     bank is in the best interests of the community in which the 
     bank operates and the members approve the liquidation, or if 
     for any other reason the bank is liquidated by operation of 
     law, then the members as of the date of liquidation shall 
     have the right to have credited to their accounts, on a pro 
     rata basis, any residual assets left after the liquidation of 
     the mutual national bank.
       ``(3) In the consideration of all questions requiring 
     action by the members of a national mutual bank, the bank may 
     provide in its charter that each member shall be permitted 
     (i) one vote per member, or (ii) to cast one vote for each 
     $100, or fraction thereof, of the withdrawal value of the 
     member's account, but not more than 1,000 votes per member.
       ``(f) Proxies.--
       ``(1) A member may give, in writing or electronically, a 
     perpetual proxy to a committee of the board of directors of a 
     mutual depository, provided that the member may revoke such a 
     proxy in writing or electronically, with such revocation to 
     take effect after six business days.
       ``(2) Such proxies may be used to vote on any issue 
     requiring approval of the members, including the conversion 
     of a mutual depository into a mutual national bank and the 
     reorganization of a mutual national bank into a Federal 
     mutual bank holding company, except that, without a prior 
     finding by the regulator of the mutual national bank that 
     such action is needed to avoid loss to the Federal Deposit 
     Insurance Corporation's deposit insurance fund or to protect 
     the stability of the United States financial system, such 
     proxies may not be used to vote in favor of--
       ``(A) terminating mutuality for a mutual national bank or a 
     Federal mutual bank holding company;
       ``(B) permitting the modification of a Federal mutual bank 
     holding company; or
       ``(C) issuing mutual capital certificates (except when used 
     to found a mutual national bank or a Federal mutual bank 
     holding company de novo).
       ``(3) Proxies given by a member, in writing or 
     electronically, to management of, or to a committee of the 
     board of directors of, a mutual depository shall not be 
     deemed to have been revoked solely because of, and shall 
     continue to exist following, a conversion to a mutual 
     national bank and any concurrent or subsequent reorganization 
     to a Federal mutual bank holding company.
       ``(g) Definitions.--For purposes of this section, the 
     following definitions shall apply:
       ``(1) Insured depository institution.--The term `insured 
     depository institution' has the same meaning as in section 3 
     of the Federal Deposit Insurance Act.
       ``(2) Mutual national bank.--The term `mutual national 
     bank' means a national banking association that operates in 
     mutual form and is chartered by the Comptroller of the 
     Currency under this section.
       ``(3) Mutual depository.--The term `mutual depository' 
     means a depository institution that is organized in non-stock 
     form, including a Federal non-stock depository and any form 
     of non-stock depository provided for under State law, the 
     deposits of which are insured by an instrumentality of the 
     Federal Government.
       ``(4) Mutuality.--The term `mutuality' means the quality of 
     being an insured depository institution organized under a 
     Federal or State law providing for the organization of non-
     stock depository institutions, or a holding company organized 
     under a Federal or State law providing for the organization 
     of non-stock entities that control one or more depository 
     institutions.
       ``(5) Member.--The term `member' means each tax-liable 
     depositor in a mutual depository's savings, demand, or other 
     authorized depository accounts and each tax-liable depositor 
     in such an account in a depository subsidiary of a Federal 
     mutual bank holding company.
       ``(6) Tax liable depositor.--The term `tax liable 
     depositor' means the single person responsible for paying any 
     Federal taxes due on any interest paid on any deposits held 
     within any savings, demand, or other authorized depository 
     account or accounts with any mutual depository.
       ``(7) Membership rights.--The term `membership rights' 
     means the rights of each member under this section.
       ``(h) Conforming References.--Unless otherwise provided by 
     the Comptroller of the Currency--
       ``(1) any reference in any Federal law to a national bank 
     operating in stock form, including a reference to the term 
     `national banking association', `member bank', `national 
     bank', `national association', `bank', `insured bank', 
     `insured depository institution', or `depository 
     institution', shall be deemed to refer also to a mutual 
     national bank;
       ``(2) any reference in any Federal law to the term `board 
     of directors', `director', or `directors' of a national bank 
     operating in stock form shall be deemed to refer also to the 
     board of a mutual national bank; and
       ``(3) any terms in Federal law that may apply only to a 
     national bank operating in stock form, including the terms 
     `stock', `shares', `shares of stock', `capital stock', 
     `common stock', `stock certificate', `stock certificates', 
     `certificates representing shares of stock', `stock 
     dividend', `transferable stock', `each class of stock', 
     `cumulate such shares', `par value', `preferred stock' shall 
     not apply to a mutual national bank, unless the Comptroller 
     of the Currency determines that the context requires 
     otherwise.

     ``SEC. 5133B. FEDERAL MUTUAL BANK HOLDING COMPANIES.

       ``(a) Reorganization of Mutual National Bank as a Holding 
     Company.--
       ``(1) In general.--Subject to approval under the Bank 
     Holding Company Act of 1956, a mutual national bank may 
     reorganize so as to become a Federal mutual bank holding 
     company by submitting a reorganization plan to the 
     appropriate bank holding company regulator.
       ``(2) Plan approval.--Upon the approval of the 
     reorganization plan by the appropriate bank holding company 
     regulator and the issuance of the appropriate charters--
       ``(A) the substantial part of the mutual national bank's 
     assets and liabilities, including all of the bank's insured 
     liabilities, shall be transferred to a national banking 
     association, a majority of the shares of voting stock of 
     which is owned, directly or indirectly, by the mutual 
     national bank that is to become a Federal mutual bank holding 
     company; and
       ``(B) the mutual national bank shall become a Federal 
     mutual bank holding company.
       ``(b) Directors and Certain Account Holders' Approval of 
     Plan Required.--This subsection does not authorize a 
     reorganization unless--
       ``(1) a majority of the mutual national bank's board of 
     directors has approved the plan providing for such 
     reorganization; and
       ``(2) a majority of members has approved the plan at a 
     meeting held at the call of the directors under the 
     procedures prescribed by the bank's charter and bylaws.
       ``(c) Ownership of Depository Subsidiaries.--To avoid 
     terminating mutuality, a Federal mutual bank holding company 
     must own, directly or indirectly, a majority of the shares of 
     voting stock of each of its depository subsidiaries.
       ``(d) No Termination of Mutuality.--Neither a 
     reorganization of a mutual depository nor a modification of a 
     Federal mutual bank holding company shall cause a termination 
     of mutuality.

[[Page 31238]]

       ``(e) Retention of Capital.--In connection with a 
     transaction described in subsection (a), a mutual national 
     bank may, subject to the approval of the appropriate bank 
     holding company regulator, retain capital at the holding 
     company level to the extent that the capital retained at the 
     holding company level exceeds the amount of capital required 
     for the national banking association chartered as a part of a 
     transaction described in subsection (a) to meet all relevant 
     capital standards established by the Comptroller of the 
     Currency for national banking associations.
       ``(f) Terminating Mutuality.--If a Federal mutual bank 
     holding company elects to terminate mutuality, it must do so 
     by either liquidating or converting to a bank holding company 
     operating in stock form.
       ``(g) Membership Rights.--Holders of savings, demand, or 
     other authorized depository accounts in a depository 
     subsidiary of a Federal mutual bank holding company shall 
     have the same membership rights with respect to the Federal 
     mutual bank holding company as those holders would have had 
     if the depository subsidiary of the Federal mutual bank 
     holding company had been a mutual national bank.
       ``(h) Regulation.--A Federal mutual bank holding company 
     shall be--
       ``(1) chartered by the appropriate bank holding company 
     regulator and shall be subject to such regulations as the 
     appropriate bank holding company regulator shall prescribe; 
     and
       ``(2) regulated under the Bank Holding Company Act of 1956 
     on the same terms and subject to the same limitations as any 
     other company that controls a bank.
       ``(i) Capital Improvement.--
       ``(1) Pledge of stock of national bank subsidiary.--This 
     section shall not prohibit a Federal mutual bank holding 
     company from pledging all or a portion of the stock of the 
     national banking association chartered as part of a 
     transaction described in subsection (a) to raise capital for 
     such national banking association.
       ``(2) Issuance of nonvoting shares.--This section shall not 
     prohibit a national banking association chartered as part of 
     a transaction described in subsection (a) from issuing any 
     nonvoting shares or less than 50 percent of the voting shares 
     of such bank to any person other than the Federal mutual bank 
     holding company.
       ``(j) Insolvency and Liquidation.--
       ``(1) In general.--Notwithstanding any other provision of 
     law, the appropriate bank holding company regulator may file 
     a petition under chapter 7 of title 11, United States Code, 
     with respect to a Federal mutual bank holding company upon--
       ``(A) the default of any national bank--
       ``(i) the stock of which is owned by the Federal mutual 
     bank holding company; and
       ``(ii) that was chartered in a transaction described in 
     subsection (a); or
       ``(B) a foreclosure on a pledge by the Federal mutual bank 
     holding company described in subsection (i)(1).
       ``(2) Distribution of net proceeds.--Except as provided in 
     paragraph (3), the net proceeds of any liquidation of any 
     Federal mutual bank holding company under paragraph (1) shall 
     be transferred to persons who hold membership interests in 
     such Federal mutual bank holding company.
       ``(3) Recovery by fdic.--If the Federal Deposit Insurance 
     Corporation incurs a loss as a result of the default of any 
     insured bank subsidiary of a Federal mutual bank holding 
     company that is liquidated under paragraph (1), the Federal 
     Deposit Insurance Corporation shall succeed to the interests 
     of the depositors of the bank as members in the Federal 
     mutual bank holding company, to the extent of the Federal 
     Deposit Insurance Corporation's loss.
       ``(k) Definitions.--
       ``(1) Federal mutual bank holding company.--The term 
     `Federal mutual bank holding company' means a holding company 
     that is organized in mutual form and owns, directly or 
     indirectly, a majority of the shares of voting stock of one 
     or more depository subsidiaries of a Federal mutual bank 
     holding company.
       ``(2) Depository subsidiary of a federal mutual bank 
     holding company.--The term `depository subsidiary of a 
     Federal mutual bank holding company' means a depository 
     institution organized in stock form that is insured by the 
     Federal Deposit Insurance Corporation, the majority of the 
     shares of voting stock of which are owned by the Federal 
     mutual bank holding company or its wholly owned subsidiaries 
     and none of the shares of stock of which are pledged or 
     otherwise subjected to lien except as permitted in subsection 
     (i).
       ``(3) Reorganization of a mutual depository.--The term 
     `reorganization of a mutual depository' means the conversion 
     of a mutual depository into a depository subsidiary of a 
     Federal mutual bank holding company.
       ``(4) Modification of a federal mutual bank holding 
     company.--The term `modification of a Federal mutual bank 
     holding company' means either (A) the sale of shares of 
     common or preferred stock in a depository subsidiary of a 
     Federal mutual bank holding company to any party other than 
     the subsidiary's parent Federal mutual bank holding company 
     or a wholly owned subsidiary of that parent, or (B) the 
     voluntary grant of a lien on shares of common or preferred 
     stock in a depository subsidiary of a Federal mutual bank 
     holding company.
       ``(5) Default.--With respect to a national bank, the term 
     `default' means an adjudication or other official 
     determination by any court of competent jurisdiction, the 
     Comptroller of the Currency, or other public authority 
     pursuant to which a conservator, receiver, or other legal 
     custodian is appointed for the national bank.
       ``(l) Conforming References.--Unless otherwise provided by 
     the appropriate bank holding company regulator--
       ``(1) any reference in any Federal law to a bank holding 
     company operating in stock form shall be deemed to refer also 
     to a Federal mutual bank holding company;
       ``(2) any reference in any Federal law to the term `board 
     of directors', `director', or `directors' of a national bank 
     operating in stock form shall be deemed to refer also to the 
     board of a Federal mutual bank holding company; and
       ``(3) any terms in Federal law that may apply only to a 
     national bank operating in stock form, including the terms 
     `stock', `shares', `shares of stock', `capital stock', 
     `common stock', `stock certificate', `stock certificates', 
     `certificates representing shares of stock', `stock 
     dividend', `transferable stock', `each class of stock', 
     `cumulate such shares', `par value', `preferred stock' shall 
     not apply to a Federal mutual bank holding company, unless 
     the appropriate bank holding company regulator determines 
     that the context requires otherwise.''.
       (b) Limitation on Federal Regulation of State Banks.--
     Except as otherwise provided in Federal law, the Comptroller 
     of the Currency, the Board of Governors of the Federal 
     Reserve System, and the Federal Deposit Insurance Corporation 
     may not adopt or enforce any regulation that contravenes the 
     corporate governance rules prescribed by State law or 
     regulation for State banks unless the Director, Board, or 
     Corporation finds that the Federal regulation is necessary to 
     assure the safety and soundness of the State banks.
       (c) Technical Amendment.--The table of sections for 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 
     the item relating to section 5133 the following new items:

``5133A. Mutual national banks
``5133B. Federal mutual bank holding companies''

       (d) Appropriate Federal Banking Agency for Federal Mutual 
     Bank Holding Companies.--Section 3(q)(1) of the Federal 
     Deposit Insurance Act (12 U.S.C. 1813(q)(2)) is amended by 
     inserting after subparagraph (F) the following new 
     subparagraph:
       ``(G) supervisory or regulatory proceedings arising from 
     the authority given to the appropriate bank holding company 
     regulator under section 5133B of the Revised Statutes of the 
     United States.''.
       (e) Mutual Holding Company Conversion.--
       (1) In general.--Any mutual holding company, including any 
     form of mutual depository holding company provided for under 
     State law, may convert to a Federal mutual bank holding 
     company by filing with the appropriate bank holding company 
     regulator a notice of its election to convert on a specified 
     date that is not earlier than 30 days after the date on which 
     the notice is filed, and the mutual holding company shall be 
     converted to a Federal mutual holding company charter on the 
     date specified in the notice.
       (2) Definitions.--For purposes of this subsection, the 
     following definitions shall apply:
       (A) Federal mutual bank holding company.--The term 
     ``Federal mutual bank holding company'' has the same meaning 
     as in section 5133B of the Revised Statutes of the United 
     States (as added by this section); and
       (B) Mutual holding company.--The term ``mutual holding 
     company'' has the same meaning as in section 10(o)(10)(A) of 
     the Home Owners Loan Act as in effect on the day before the 
     date of enactment of this Act.
       (f) Effective Date.--This section shall take effect on the 
     date of enactment of this Act.
       Page 255, after line 2, insert the following new section 
     (and conform the table of contents accordingly):

     SEC. 1316. NATIONWIDE DEPOSIT CAP FOR INTERSTATE 
                   ACQUISITIONS.

       (a) Amendments to the Bank Holding Company Act of 1956.--
       (1) Concentration limit for bank holding companies.--
     Section 3(d)(2)(A) of the Bank Holding Company Act (12 U.S.C. 
     1842(d)(2)(A)) is amended by striking ``paragraph (1)(A)'' 
     and inserting ``subsection (a) of this section''.
       (2) Removal of nonbank savings association provision in 
     light of being defined as a bank.--Section 4 of the Bank 
     Holding Company Act is amended by striking subsection (i) and 
     insert the following new subsection:
       ``(i) [Repealed.]''.
       (b) Amendments to the Federal Deposit Insurance Act.--
       (1) In general.--Section 18(e) of the Federal Deposit 
     Insurance Act (12 U.S.C. I 828(c)) is amended--

[[Page 31239]]

       (A) by redesignating paragraph (12) as paragraph (13); and
       (B) by inserting after paragraph (11), the following new 
     paragraph:
       ``(12) Nationwide deposit cap.--The responsible agency may 
     not approve an application for an interstate merger 
     transaction if the resulting insured depository institution 
     (including all insured depository institutions which are 
     affiliates of the resulting insured depository institution), 
     upon consummation of the transaction, would control more than 
     10 percent of, the total amount of deposits of insured 
     depository institutions in the United States.''.
       (2) Parallel requirement.--Section 44(b)(2) of the Federal 
     Deposit Insurance Act (12 U.S.C. 1831u(b)(2)(A) is amended to 
     read as follows:
       ``(A) Nationwide concentration limits.--The responsible 
     agency may not approve an application for an interstate 
     merger transaction involving two or more insured depository 
     institutions if the resulting insured depository institution 
     (including all insured depository institutions which are 
     affiliates of such institution), upon consummation of the 
     transaction would control more than 10 percent of the total 
     amount of deposits of insured depository institutions in the 
     United States.''.
       (c) Amendments to the Home Owners' Loan Act.--Section 
     10(e)(2) of the Home Owners' Loan Act (12 U.S.C. 467a(e)(2)) 
     is amended--
       (1) by striking ``or'' at the end of subparagraph (C); and
       (2) by striking the period at the end of subparagraph (D), 
     the following new subparagraph:
       ``(E) in the case of an application involving an interstate 
     acquisition, if the applicant (including all insured 
     depository institutions which are affiliates of the 
     applicant) controls, or upon consummation of the acquisition 
     for which such application is filed would control, more than 
     10 percent of the total amount of deposits of insured 
     depository institutions in the United States.''
       Page 763, beginning online 11, strike ``authority to 
     exercise'' and all that follows through ``this title'' and 
     insert ``rulemaking, supervisory, enforcement or other 
     authority, including the authority to order assessments, 
     under this title''.
       Page 436, after line 11, insert the following new section:

     SEC. 1615. TREASURY STUDY.

       (a) Study Required.--The Secretary shall carry out a study 
     analyzing how the resolution authority provided under this 
     subtitle should be funded. Such study shall consider the 
     following factors:
       (1) The consequences of any assessments on the overall 
     recovery of the economy of the United States.
       (2) Any immediate or continuing consequences of assessments 
     on other aspects of the economy of the United States, 
     including job creation, public and private investments, small 
     business loans, and general credit availability.
       (3) The consequences of any assessments on individual 
     sectors of the financial services industry.
       (4) The consequences of any assessments on the financial 
     integrity on individual firms within each sector of the 
     financial services industry.
       (5) The appropriateness and effect of assessments on firms 
     that are subject to separate assessments under existing State 
     or Federal depositor, policyholder, or investor protection 
     mechanisms and the consequences of any such assessments on 
     these mechanisms themselves.
       (6) The implications of assessments on all relevant 
     stakeholders, including taxpayers, depositors, insurance 
     policyholders, investors, counterparties, and creditors.
       (7) Evaluation of the appropriate assessment base, 
     including but not limited to factors such as assets and 
     liabilities, assets under management, policyholder reserves, 
     other reserves, statutory and regulatory capital 
     requirements, trusteed assets, and deposits and inflationary 
     factors.
       (b) Report.--Not later than the end of the 6-month period 
     beginning on the date of the enactment of this subtitle, the 
     Secretary shall issue a report to the Congress containing all 
     determinations and conclusions made by the Secretary in 
     carrying out the study required under subsection (a).
       Page 894, after line 4, add at the end of section 
     4601(a)(1) the following new subparagraph:
       (C) Retention of consumer advisory council.--
       (i) Retention and continuation.--Notwithstanding the 
     transfer of functions under subparagraph (A), the Consumer 
     Advisory Council established by the Board of Governors 
     pursuant to section 703(b) of Public Law 90-321 (15 U.S.C. 
     1691b(b)) shall continue as an entity within the Federal 
     Reserve System.
       (ii) Additional functions.--In addition to the functions 
     performed by the Consumer Advisory Council as of the 
     designated transfer date, the Consumer Advisory Council 
     shall--

       (I) submit to the Director (and make available to the 
     public) an annual set of recommendations for consumer 
     protection regulations and meet with the Director to discuss 
     the annual recommendations;
       (II) meet with the Board of Governors of the Federal 
     Reserve System at least once a year and provide oral or 
     written representations concerning matters within the 
     jurisdiction of the Board; and
       (III) call for information and make recommendations in 
     regard to consumer protection regulations.

       (iii) Response to recommendations.--When the Chair of the 
     Federal Reserve testifies before Congress, the Chair shall 
     also testify about the recommendations of the Consumer 
     Advisory Council under clause (ii)(II) and its 
     recommendations for consumer protection regulations.
       Page 216, line 21, strike ``or''.
       Page 216, after line 21, insert the following new 
     subparagraphs:

       ``(II) a change of control of an industrial bank, its 
     section 6 holding company, or any entity that directly or 
     indirectly controls the industrial bank, in a transaction 
     other than a merger described in subclause (I), by an 
     acquiring company that is predominately engaged in activities 
     not permissible for a financial holding company pursuant to 
     subsection (k), if--

       ``(aa) the transaction is approved by the appropriate 
     Federal banking agency and the Board; and
       ``(bb) the industrial bank does not thereafter establish a 
     domestic branch as defined in section 3(o) of the Federal 
     Deposit Insurance Act (12 U.S.C. 1813(o)),

       ``(III) an inadvertent acquisition of control, as 
     determined by the Board, if such inadvertent acquisition of 
     control is reversed or rectified within 180 days of its 
     discovery, or''.

       Page 216, line 22, strike ``(II)'' and insert ``(IV)''.
       Page 669, line 15, insert ``(b),'' after ``Subsections''.
       Page 669, line 20, insert ``except for section 505 as it 
     applies to section 501(b)'' before the period.
       Page 670, after line 9, insert the following:
       (N) Section 626 of the Omnibus Appropriations Act, 2009 
     (Public Law 111-8).
       (O) The Unlawful Internet Gambling Enforcement Act of 2006.
       Page 701, line 1, insert ``the Federal Trade Commission,'' 
     after ``banking agencies,''.
       Page 714, line 13, strike ``received and collected'' and 
     insert ``identified''.
       Page 743, line 3, insert ``a provision of'' after ``reports 
     under''.
       Page 743, line 4, insert ``a provision of'' after 
     ``title,''.
       Page 743, line 5, insert ``any provision of'' after 
     ``law,''.
       Page 743, line 8, insert ``under that provision of law'' 
     after ``exclusive authority''.
       Page 897, beginning on line 21, strike ``Backstop''.
       Page 898, line 2, strike ``4202(e)(3)'' and insert 
     ``paragraph (2) or (3) of section 4202(e)''.
       Page 898, line 8, insert ``transferred under subsection 
     (a)'' after ``functions''.
       Page 954, line 2, insert ``and shall not apply to the term 
     `Board' when used in reference to the Federal Deposit 
     Insurance Corporation or the National Credit Union 
     Administration'' before the period.
       Page 957, line 3, insert ``(other than the Consumer 
     Financial Protection Agency)'' after ``agency''.
       Page 957, line 20, insert ``(and except for any insertion 
     of `Federal Trade Commission' made by this subtitle)'' after 
     ``subparagraph (B)''.
       Page 958, line 2, strike ``and 129(m) (as amended by 
     paragraph (7))'' and insert ``129(m) (as amended by paragraph 
     (7)), 140A, or 149 (as amended by paragraph (8)).''.
       Page 959, after line 13, insert the following:
       (8) Section 149.--Section 149(b) of the Truth in Lending 
     Act (15 U.S.C. 1665d(b)) is amended by inserting ``the 
     Federal Trade Commission,'' after ``in consultation with''.
       Page 960, beginning on line 1, strike ``paragraph (7)(A)'' 
     and insert `` paragraphs (7)(B), (8)(A), (8)(C), and (8)(D) 
     of this subsection (and except for any insertion of `Federal 
     Trade Commission' made by this subtitle)''.
       Page 961, after line 21, insert the following:
       (5) Section 609.--Section 609(d)(1) of the Fair Credit 
     Reporting Act (15 U.S.C. 1681g(d)(1)) is amended by inserting 
     ``the Federal Trade Commission,'' after ``in consultation 
     with''.
       Page 961, line 22, strike ``(5)'' and insert ``(6)''.
       Page 961, line 22, strike ``611(e)(2)'' and insert 
     ``611(e)''.
       Page 961, line 23, strike ``15 U.S.C.1681i(e)(2)'' and 
     insert ``15 U.S.C. 1681i(e)''.
       Page 961, line 24, strike ``amended to read as follows:'' 
     and insert ``amended--'', and after such line insert the 
     following:
       (A) by amending paragraph (2) to read as follows:
       Page 962, line 5, strike the period following the quotation 
     marks and insert ``; and'' and after such line insert the 
     following:
       (B) in the heading of paragraph (3) by inserting ``Consumer 
     reporting'' before ``agency''.
       Page 962, strike lines 6 through 8 and insert the 
     following:
       (7) Section 615.--Section 615 of the Fair Credit Reporting 
     Act (15 U.S.C. 1681m) is amended--
       (A) in subsection (d)(2)(B), by inserting ``the Federal 
     Trade Commission,'' after ``in consultation with'';

[[Page 31240]]

       (B) in subsection (e)(1), by striking ``and the 
     Commission'' and inserting ``the Federal Trade Commission, 
     the Securities and Exchange Commission, and the Commodities 
     Futures Trading Commission''; and
       (C) by striking subparagraph (A) of subsection (h)(6) and 
     inserting the following:
       Page 962, line 11, strike ``(7)'' and insert ``(8)''.
       Page 963, line 2, insert ``(other than the Consumer 
     Financial Protection Agency)'' after ``agency''.
       Page 968, after line 7 insert the following:
       (C) in paragraph (2) of subsection (c)--
       (i) by inserting ``the Agency and'' before ``the Federal 
     Trade Commission'' in the first sentence;
       (ii) by inserting ``Agency and the Federal Trade'' after 
     ``provide the''; and
       (iii) by inserting ``Agency,'' before ``Federal Trade 
     Commission'' in the second sentence;
       (D) in paragraph (4) of subsection (c)--
       (i) by inserting ``Agency'', before ``the Federal Trade 
     Commission''; and
       (ii) inserting ``Agency, the Federal Trade'' after 
     ``complaint of the'';
       (E) in paragraph (2) of subsection (f), by inserting ``the 
     Federal Trade Commission'' after ``in consultation with'';
       Page 968, line 8, strike ``(C)'' and insert ``(F)''.
       Page 968, beginning on line 12, strike ``with respect to a 
     covered person described in subsection (b)'' and insert ``, 
     except that, with respect to sections 615(e) and 628 of this 
     title, the agencies identified in subsections (a) and (b) of 
     this section shall prescribe such regulations as necessary to 
     carry out the purposes of such sections with respect to 
     entities within their enforcement authority under such 
     subsections''.
       Page 968, line 14, strike ``(D)'' and insert ``(G)''.
       Page 973, strike lines 8 and 9 and insert the following:
       (iii) in paragraph (1)(B)--

       (I) by inserting ``of Governors of the Federal Reserve 
     System'' after ``Board''; and
       (II) by striking ``and'' after the semicolon;

       Page 974, line 2, insert ``(other than the Consumer 
     Financial Protection Agency)'' after ``agency''.
       Page 978, line 4, insert ``(other than the Consumer 
     Financial Protection Agency)'' after ``agency''.
       Page 982, line 21, strike ``and'' and after such line 
     insert the following:
       (iii) in paragraph (l)(B), by inserting ``of Governors of 
     the Federal Reserve System'' after ``Board'';
       Page 982, line 22, strike ``(iii)'' and insert ``(iv)''.
       Page 983, line 7, insert ``(other than the Consumer 
     Financial Protection Agency)'' after ``agency''.
       Page 988, after line 7, insert the following (and 
     redesignate succeeding subsections accordingly):
       (a) Section 501.--Section 501(b) of the Gramm-Leach-Bliley 
     Act (15 U.S.C. 6801(b)) is amended by inserting ``(other than 
     the Consumer Financial Protection Agency)'' after ``title''.
       (b) Section 502.--Section 502(e)(5) of the Gramm-Leach-
     Bliley Act (15 U.S.C. 6802(e)(5)) is amended by inserting 
     ``the Consumer Financial Protection Agency,'' after 
     ``(including''.
       (c) Section 503.--Section 503(e)(1) of the Gramm-Leach-
     Bliley Act (15 U.S.C. 6803(e)(1)) is amended--
       (1) by inserting ``Consumer Financial Protection Agency in 
     consultation with the other'' before ``agencies''; and
       (2) by striking ``jointly''.
       Page 988, line 13, strike ``and'' at the end.
       Page 988, line 15, strike the period and insert ``; and'' 
     and after such line insert the following:
       (3) by inserting ``the Federal banking agencies, the 
     National Credit Union Administration, the Secretary of the 
     Treasury, the Federal Trade Commission, and'' before 
     ``representatives of State insurance authorities''.
       Page 989, after line 15, insert the following:
       (f) Section 507.--Subsection 507(b) of the Gramm-Leach-
     Bliley Act (15 U.S.C. 6807(b)) is amended by striking 
     ``Federal Trade Commission'' and inserting ``Consumer 
     Financial Protection Agency, or in the case of a rule under 
     section 501(b), the Federal Trade Commission or the 
     Securities and Exchange Commission''.
       Page 1019, line 8, strike ``and'' and after such line 
     insert the following:
       (2) by inserting a comma after ``under this Act'';
       (3) by inserting a comma after ``subsection (a)(1))''; and
       Page 1019, line 9, strike ``(2)'' and insert ``(4)''.
       Page 1019, line 15, insert ``partnership, or corporation'' 
     after ``person,''.
       Page 825, after line 12, insert the following:

     SEC. 4313. REVIEW, REPORT, AND PROGRAM WITH RESPECT TO 
                   EXCHANGE FACILITATORS.

       (a) Review.--The Director shall review all Federal laws and 
     regulations relating to the protection of persons who utilize 
     exchange facilitators.
       (b) Report.--Not later than 180 days after the effective 
     date of this subtitle, the Director shall submit to Congress 
     a report describing--
       (1) recommendations for legislation to ensure the 
     appropriate protection of persons who utilize exchange 
     facilitators;
       (2) recommendations for updating the regulations of Federal 
     departments and agencies to ensure the appropriate protection 
     of such persons; and
       (3) recommendations for Agency regulations to ensure the 
     appropriate protection of such persons.
       (c) Program.--Not later than 180 days after the date of the 
     submission of the report under subsection (b), the Director 
     shall establish and carry out a program, utilizing the 
     authorities of the Agency, to protect persons who utilize 
     exchange facilitators.
       (d) Exchange Facilitator Defined.--In this section, the 
     term ``exchange facilitator'' means a person that--
       (1) facilitates, for a fee, an exchange of like-kind 
     property by entering into an agreement with a taxpayer by 
     which the exchange facilitator acquires from the taxpayer the 
     contractual rights to sell the taxpayer's relinquished 
     property and transfers a replacement property to the taxpayer 
     as a qualified intermediary (within the meaning of Treasury 
     Regulations section 1.1031(k)-1(g)(4)) or enters into an 
     agreement with the taxpayer to take title to a property as an 
     exchange accommodation titleholder (within the meaning of 
     Revenue Procedure 2000-37) or enters into an agreement with a 
     taxpayer to act as a qualified trustee or qualified escrow 
     holder (within the meaning of Treasury Regulations section 
     1.1031(k)-1(g)(3));
       (2) maintains an office for the purpose of soliciting 
     business as an exchange facilitator; or
       (3) purports to be an exchange facilitator by advertising 
     any of the services listed in paragraph (1) or soliciting 
     clients in printed publications, direct mail, television or 
     radio advertisements, telephone calls, facsimile 
     transmissions, or other electronic communications directed to 
     the general public for purposes of providing any such 
     services.
       Page 255, after line 2, insert the following new section:

     SEC. 1316. DE NOVO BRANCHING INTO STATES.

       (a) National Banks.--Section 5155(g)(1)(A) of the Revised 
     Statutes (12 U.S.C. 36(g)(1)(A)) is amended to read as 
     follows:
       ``(A) the law of the State where 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;''.
       (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 where 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;''.
       Page 277, line 22, strike the period and insert ``; and''.
       Page 277, after line 22, insert the following:
       (C) is not an insured depository institution (as defined in 
     section 3(c) of the Federal Deposit Insurance act), a Federal 
     credit union or a State-chartered credit union (as such terms 
     are defined in section 101 of the Federal Credit Union Act), 
     or a government-sponsored enterprise (as such term is defined 
     in section 1004(f) of the Financial Institutions Reform, 
     Recovery and Enforcement Act of 1989 (12 U.S.C. 1811 note)).
       Page 305, beginning on line 25, strike ``(that became a 
     legally enforceable or perfected security interest after the 
     date of the enactment of this clause) other than a legally 
     enforceable or perfected security interest of the Federal 
     Government,'' and insert ``in assets of the covered financial 
     company arising under a qualified financial contract (as 
     defined under subsection (c)(8)(D)(i)) with an original term 
     of 30 days or less (except that, for a contract for a term 
     linked to a calendar month, the original term must be less 
     than one calendar month), secured by collateral other than 
     securities issued by the United States Treasury, the Board of 
     Governors of the Federal Reserve System, any agency of the 
     United States, any Federal Reserve bank, or any Government 
     Sponsored Enterprise, that became a legally enforceable or 
     perfected security interest after the date of the enactment 
     of this clause, and that is not a security interest of the 
     Federal Government''.
       Page 306, beginning on line 7, strike ``the amount of up to 
     20 percent'' and insert ``in the amount specified under 
     clause (v)''.
       Page 306, line 13, insert after the period the following 
     sentence: ``This clause shall not apply with respect to debt 
     obligations secured by real property. This clause may only be 
     implemented with respect to secured creditors if, as a result 
     of the dissolution of the covered financial company, no funds 
     are available to satisfy, in whole or in part, any claims of 
     unsecured creditors or shareholders.''.
       Page 306, after line 13, insert the following:
       (v) Amount specified.--For purposes of clause (iv), the 
     amount specified under this clause, in the case of a secured 
     creditor, is the amount of up to 10 percent.
       Page 318, after line 11, insert the following subparagraphs 
     (and redesignate subparagraphs (B) through (E) as 
     subparagraphs (J) through (M), respectively):
       (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 that--

[[Page 31241]]

       (i) was made to or for the benefit of a creditor;
       (ii) was made for or on account of an antecedent debt that 
     was owed by the covered financial company before the transfer 
     was made;
       (iii) was made while the covered financial company was 
     insolvent;
       (iv) was made--

       (I) on or within 90 days before the date on which the 
     Corporation was appointed receiver; or
       (II) between 90 days and one year before the date that the 
     Corporation was appointed receiver, if such creditor at the 
     time of the transfer was an insider, as that term is defined 
     in section 101(31) of title 11, United States Code; and

       (v) enables such creditor to receive more than such 
     creditor would receive in the liquidation of the covered 
     financial company if--

       (I) the transfer had not been made; and
       (II) such creditor received payment of such debt to the 
     extent provided by the provisions of this subtitle.

       (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.
       (D) Right of recovery.--To the extent that a transfer is 
     avoided under subparagraphs (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 from--
       (i) the initial transferee of such transfer or the entity 
     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)--
       (i) from a transferee that takes for value, including 
     satisfaction or securing of a present or antecedent debt, in 
     good faith, and without knowledge of the violability of the 
     transfer avoided; or
       (ii) any immediate or mediate good faith transferee of such 
     transferee.
       (F) Defenses.--A transferee or obligee from whom the 
     Corporation seeks to recover a transfer or avoid an 
     obligation under subparagraphs (A), (B) or (C) shall have the 
     same affirmative defenses and rights to liens on the property 
     transferred to the extent they would be available to a 
     transferee or obligee from whom a trustee under title 11 
     seeks to recover a transfer under sections 547, 548, and 549 
     of title 11, United States Code.
       (G) Limitations on avoiding powers.--The rights of the 
     Corporation under subparagraphs (A), (B) or (C) are 
     restricted to the same extent as the rights of a trustee in 
     bankruptcy under section 546(b)(1) of the Bankruptcy Code.
       (H) Presumption of insolvency.--For purposes of 
     subparagraph (B), the covered financial company is presumed 
     to have been insolvent on and during the 90 days immediately 
     preceding the date on which the Corporation is appointed as 
     receiver.
       (I) Rights under this subsection.--The rights of the 
     Corporation as receiver for a covered financial company under 
     this subsection shall be superior to any rights of a trustee 
     or any other party (other than any party which is a Federal 
     agency of a Federal Home Loan Bank) under title 11, United 
     States Code.
       Page 31, line 24, strike ``control of the Council; and'' 
     and insert ``control of or used by the Council;''.
       Page 32, line 5, strike the period and insert ``; and'' and 
     after such line insert the following:
       (C) the officers, directors, employees, financial advisors, 
     staff, working groups, and agents and representatives of the 
     Council (as related to the agent's or representative's 
     activities on behalf of the Council) at such reasonable times 
     as the Comptroller General may request.
       Page 32, after line 12, insert the following:
       (3) Copies.--Comptroller General may make and retain copies 
     of such books, accounts, and other records access to which is 
     granted under this provision as the Comptroller General 
     considers appropriate.
       Page 732, after line 10, insert the following:

     SEC. 4111. OVERSIGHT BY GAO.

       (a) Authority.--The Comptroller General may audit the 
     programs, activities, receipts, expenditures, and financial 
     transactions of the Agency and of any agents and 
     representatives of the Agency as related to the agent's or 
     representative's activities on behalf of or under authority 
     of the Agency.
       (b) Access.--Notwithstanding any other provision of law, 
     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 the 
     Agency, or any vehicles established by the Agency under this 
     Act, and to the directors, officers, employees, independent 
     public accountants, financial advisors, staff, working 
     groups, and agents and representatives of the Agency (as 
     related to the agent's or representative's activities on 
     behalf of the Agency) or any vehicle established by the 
     Agency at such reasonable time as the Comptroller General may 
     request. The Comptroller General may make and retain copies 
     of such books, accounts, and other records as the Comptroller 
     General deems appropriate.
       Page 732, line 11, strike ``4111'' and insert ``4112''.
       Page 1077, line 23, strike ``1 year'' and insert ``18 
     months''.
       Page 1079, after line 24, insert the following:
       (3) Access.--
       (A) In general.--For purposes of conducting the study 
     described in paragraph (1), the Comptroller General shall 
     have access, upon request and with the consent of the 
     Securities and Exchange Commission, 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 each nationally recognized 
     statistical rating organization, and to the officers, 
     directors, employees, independent public accountants, 
     financial advisors, staff and agents and representatives of 
     the organization (as related to the agent's or 
     representative's activities on behalf of the organization) 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.
       (B) Confidentiality.--The Comptroller General may not 
     disclose reasonably designated proprietary, trade secret or 
     business confidential information obtained from the 
     organization except that such information shall be disclosed 
     by the Comptroller General--
       (i) to other Federal Government departments, agencies, and 
     officials for official use upon request;
       (ii) to committees of Congress upon request; and
       (iii) to a court in any judicial proceeding under court 
     order.

     Nothing in this provision shall be construed to limit the 
     requirements imposed by section 1905 of title 18, United 
     States Code.
       Page 1186, beginning on line 8, strike ``and the Securities 
     and Exchange Commission shall each'' and insert ``shall''.
       Page 1186, line 17, strike ``and''.
       Page 1186, line 20, strike the period and insert a 
     semicolon and after such line insert the following:
       (3) determine how to reduce the burden of complying with 
     section 404(b) of the Sarbanes-Oxley Act of 2002 for 
     companies whose market capitalization is less than 
     $250,000,000 for the relevant reporting period while 
     maintaining investor protections for such companies; and
       (4) determine whether various methods of reducing the 
     compliance burden or a complete exemption for such companies 
     (whose market capitalization is less than $250,000,000 for 
     the relevant reporting period) from such compliance would 
     encourage companies to list on exchanges in the United States 
     in their initial public offerings.
       Page 1186, beginning on line 21, strike ``On or before June 
     1, 2010'' and insert ``Not later than 9 months after the date 
     of the enactment of this subtitle''.
       Page 1186, beginning on line 22, strike ``and the 
     Securities and Exchange Commission shall submit separate 
     reports'' and insert ``shall submit a report''.
       Page 1222, line 4, strike ``and the Comptroller General 
     shall jointly'' and insert ``shall''.
       Page 1222, line 15, strike ``180 days'' and insert ``9 
     months''.
       Page 1222, beginning on line 16, strike ``and the 
     Comptroller General''.
       Page 706, after line 7, insert the following new paragraph:
       (3) Office of financial protection for older americans.--
       (A) Establishment.--Before the end of the 180-day period 
     beginning on the date of the enactment of this title, the 
     Director shall establish within the Agency the Office of 
     Financial Protection for Older Americans, whose functions 
     shall include activities designed to facilitate the financial 
     literacy of individuals who have attained the age of 62 years 
     or more (in this paragraph, referred to as ``seniors'') on 
     protection from unfair and deceptive practices and on current 
     and future financial choices, including through the 
     dissemination of materials to seniors on such topics.
       (B) Director.--The Office of Financial Protection for Older 
     Americans shall be headed by a director.
       (C) Duties.--Such unit shall perform the following duties:
       (i) Develop goals for programs that provide seniors 
     financial literacy and counseling, including programs that--

       (I) help seniors recognize warning signs of unfair and 
     deceptive practices, protect themselves from such practices;
       (II) provide one-on-one financial counseling on issues 
     including long-term savings and later-life economic security; 
     and
       (III) provide personal consumer credit advocacy to respond 
     to consumer problems caused by unfair and deceptive 
     practices.

       (ii) Monitor certifications or designations of financial 
     advisors who advise seniors and

[[Page 31242]]

     alert the Securities and Exchange Commission and State 
     regulators of certifications or designations that are 
     identified as unfair or deceptive.
       (iii) Not later than 18 months after the date of the 
     establishment of the Office of Financial Protection for Older 
     Americans, submit to Congress and the Securities and Exchange 
     Commission recommendations of the best practices for any 
     legislative and regulatory--

       (I) disseminating information regarding the legitimacy of 
     certifications of financial advisers who advise seniors;
       (II) methods in which a senior can identify the financial 
     advisor most appropriate for the senior's needs; and
       (III) methods in which a senior can verify a financial 
     advisor's credentials.

       (iv) Conduct research to identify best practices and 
     effective methods, tools, technology and strategies to 
     educate and counsel seniors about personal finance management 
     with a focus on--

       (I) protecting themselves from unfair and deceptive 
     practices;
       (II) long-term savings; and
       (III) planning for retirement and long-term care.

       (v) Coordinate consumer protection efforts of seniors with 
     other Federal agencies and State regulators, as appropriate, 
     to promote consistent, effective, and efficient enforcement.
       (vi) Work with community organizations, non-profit 
     organizations, and other entities that are involved with 
     educating or assisting seniors (including the National 
     Education and Resource Center on Women and Retirement 
     Planning).
       Page 760, strike line 19 and all that follows through page 
     762, line 22, and insert the following:
       (a) Exclusion for Merchants, Retailers, and Sellers of 
     Nonfinancial Services.--
       (1) In general.--Notwithstanding any provision of this 
     title (other than paragraph (4)) and subject to paragraph 
     (2), the Director and the Agency may not exercise any 
     rulemaking, supervisory, enforcement or other authority, 
     including authority to order assessments, under this title 
     with respect to--
       (A) credit extended directly by a merchant, retailer, or 
     seller of nonfinancial goods or services to a consumer, in a 
     case in which the good or service being provided is not 
     itself a consumer financial product or service, exclusively 
     for the purpose of enabling that consumer to purchase such 
     goods or services directly from the merchant, retailer, or 
     seller of financial services; or
       (B) collection of debt, directly by the merchant, retailer, 
     or seller of nonfinancial services, arising from such credit 
     extended. In the application of this paragraph, the extension 
     of credit and the collection of debt described in 
     subparagraphs (A) and (B), respectively, shall not be 
     considered a consumer financial product or service.
       (2) Exceptions for existing authority.--The Director may 
     exercise any rulemaking authority regarding an extension of 
     credit described in paragraph (1)(A) or the collection of 
     debt arising from such extension, as may be authorized by the 
     enumerated consumer laws or any law or authority transferred 
     under subtitle F or H.
       (3) Rule of construction.--No provision of this title shall 
     be construed as modifying, limiting, or superseding the 
     authority of the Federal Trade Commission or any agency other 
     than the Agency 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 goods or 
     services directly from the merchant or retailer.
       (4) Exclusion not applicable to certain credit 
     transactions.--Paragraph (1) shall not apply to--
       (A) any credit transaction, including the collection of the 
     debt arising from such extension, in which the merchant, 
     retailer, or seller of nonfinancial services assigns, sells, 
     or otherwise conveys such debt owed by the consumer to 
     another person; or
       (B) any credit transaction--
       (i) in which the credit provided significantly exceeds the 
     market value of the product or service provided, and
       (ii) with respect to which the Director finds that the sale 
     of the product or service is done as a subterfuge so as to 
     evade or circumvent the provisions of this title.
       Page 675, strike line 10 and all that follows through page 
     676, line 9, and insert the following:
       (xi) Financial data processing by any technological means, 
     including providing data processing, access to or use of 
     databases or facilities, or advice regarding processing or 
     archiving, if the data to be processed, furnished, stored, or 
     archived are financial, banking, or economic, except that it 
     shall not be considered a financial activity with respect to 
     financial data processing--

       (I) to the extent the person is providing interactive 
     computer service, as defined in section 230 of the 
     Communications Act of 1934 (47 U.S.C. 230); or
       (II) if the person--

       (aa) unknowingly or incidentally transmits, processes, or 
     stores financial data in a manner that such data is 
     undifferentiated from other types of data that the person 
     transmits, processes, or stores;
       (bb) does not provide to any consumer a consumer financial 
     product or service in connection with or relating to in any 
     manner financial data processing; and
       (cc) does not provide a material service to any covered 
     person in connection with the provision of a consumer 
     financial product or service.
       Page 1205, line 2, insert before the period at the end the 
     following: ``and to provide additional levels of coverage on 
     an optional basis''.
       Page 1205, line 22, strike ``and'' after the semicolon.
       Page 1205, line 25, strike the period at the end and insert 
     ``; and''.
       Page 1205, after line 25, insert the following:
       (6) examine the feasibility of SIPC providing additional 
     levels of coverage on an optional basis, what those 
     additional levels of coverage should be, and the appropriate 
     risked-based premium for providing additional coverage.
       Page 1018, after line 25, insert the following:

     SEC. 4818. AMENDMENTS TO TRUTH IN LENDING ACT.

       (a) In General.--Section 128(e) of the Truth in Lending Act 
     is amended--
       (1) by striking paragraph (3) and inserting the following 
     new paragraph (3):
       ``(3) Institutional certification required.--(A) Except as 
     provided in subparagraph (B), before a creditor may issue any 
     funds with respect to an extension of credit described in 
     paragraph (1), the creditor shall obtain from the relevant 
     institution of higher education such institution's 
     certification--
       ``(i) of the enrollment status of the borrower;
       ``(ii) of the borrower's cost of attendance at the 
     institution as determined by the institution under part F of 
     title IV of the Higher Education Act of 1965;
       ``(iii) of the difference between the borrower's cost of 
     attendance and the borrower's estimated financial assistance 
     received under title IV of the Higher Education Act of 1965 
     and other assistance known to the institution, as applicable; 
     and
       ``(iv) that the institution has--
       ``(I) informed the borrower--

       ``(aa) about the availability of, and the borrower's 
     potential eligibility for, Federal financial assistance under 
     this title, including disclosing the terms, conditions, and 
     interest rates of Federal student loans;
       ``(bb) of the borrower's ability to select a private 
     educational lender of the borrower's choice;
       ``(cc) about the impact of a proposed private education 
     loan on the borrowers' potential eligibility for other 
     financial assistance, including Federal financial assistance 
     under the Higher Education Act of 1965; and
       ``(dd) about a borrower's right to accept or reject a 
     private education loan within the 30-day period following a 
     private educational lender's approval of a borrower's 
     application and about a borrower's 3-day right to cancel 
     altogether;

       ``(II) determined whether the borrower has applied for and 
     exhausted the Federal financial assistance available to the 
     borrower under the Higher Education Act of 1965 and informed 
     the borrower accordingly; and
       ``(III) counseled the borrower on the borrower's financial 
     aid options.
       ``(B) A creditor may issue funds with respect to an 
     extension of credit described in paragraph (1) without 
     obtaining from the relevant institution of higher education 
     such institution's certification if such institution fails to 
     provide such certification within 21 calendar days or 15 
     business days, whichever comes first, of the creditor's 
     request for such certification.'';
       (2) by redesignating paragraphs (9), (10), and (11) as 
     paragraphs (10), (11), and (12), respectively; and
       (3) by inserting after paragraph (8) the following new 
     paragraph (9):
       ``(9) Provision of information.--On or before the date a 
     creditor issues any funds with respect to an extension of 
     credit described in paragraph (1), the creditor shall notify 
     the relevant institution of higher education, in writing, of 
     the amount of the extension of credit and the student on 
     whose behalf credit is extended. The form of such written 
     notification shall be subject to the regulations of the 
     Agency.''.
       (b) Regulations.--
       (1) Deadline for regulations.--Not later than 365 days 
     after the date of enactment of this Act, the Agency shall 
     issue regulations in final form to implement paragraphs (3) 
     and (9) of section 128(e) of the Truth in Lending Act, as 
     amended by subsection (a). Such regulations shall become 
     effective not later than 6 months after their date of 
     issuance.
       (2) Effective date.--The regulations in effect pursuant to 
     section 128(e) of the Truth in Lending Act as of the date of 
     the enactment of this Act shall remain in effect until the 
     effective date of the regulations issued under paragraph (1).
       (c) Study and Report on Private Education Loans and Private 
     Educational Lenders.--
       (1) Report.--Not later than 2 years after the date of 
     enactment of this Act, the Director and the Secretary of 
     Education, in consultation with the Commissioners of the

[[Page 31243]]

     Federal Trade Commission, and the Attorney General, shall 
     submit a report to the Committee on Financial Services and 
     the Committee on Education and Labor of the House of 
     Representatives and the Committee on Banking, Housing, and 
     Urban Affairs and the Committee on Health Education, Labor, 
     and Pensions of the Senate on private education loans (as 
     that term is defined in section 140 of the Truth in Lending 
     Act (15 U.S.C. 1650)) and private educational lenders (as 
     that term is defined in such section).
       (2) Content.--The report required by this subsection shall 
     examine, at a minimum, the following:
       (A) the growth and changes of the private education loan 
     market in the United States;
       (B) factors influencing such growth and changes;
       (C) the extent to which students and parents of students 
     rely on private education loans to finance postsecondary 
     education and the private education loan indebtedness of 
     borrowers,
       (D) the characteristics of private education loan 
     borrowers, including the types of institutions of higher 
     education they attend, socioeconomic characteristics 
     (including income and education levels, racial 
     characteristics, geographical background, age, and gender), 
     what other forms of financing borrowers use to pay for 
     education, whether they exhaust their federal loan options 
     before taking out a private loan, whether such borrowers are 
     dependent or independent students (as determined under part F 
     of title IV of the Higher Education Act of 1965) or parents 
     of such students, whether such borrowers are students 
     enrolled in a program leading to a certificate, license or 
     credential other than a degree, an associates degree, a 
     baccalaureate degree, or a graduate or professional degree 
     and, if practicable, employment and repayment behaviors;
       (E) the characteristics of private educational lenders, 
     including whether such creditors are for-profit, non-profit, 
     or institutions of higher education;
       (F) the underwriting criteria used by private educational 
     lenders, including the use of cohort default rate (as such 
     term is defined in section 435(m) of the Higher Education Act 
     of 1965);
       (G) the terms, conditions, and pricing of private education 
     loans;
       (H) the consumer protections available to private education 
     loan borrowers, including the effectiveness of existing 
     disclosures and requirements and borrowers' awareness and 
     understanding about terms and conditions of various financial 
     products;
       (I) whether federal regulators and the public have access 
     to information sufficient to provide them with assurances 
     that private education loans are provided in accord with the 
     Nation's fair lending laws and that allows public officials 
     to determine lenders' compliance with fair lending laws; and
       (J) any statutory or legislative recommendations necessary 
     to improve consumer protections for private education loan 
     borrowers and to better enable federal regulators and the 
     public to ascertain private educational lender compliance 
     with fair lending laws.
       (d) Report.--Not later than 18 months after the issuance of 
     regulations under subsection (b)(1), the Consumer Financial 
     Protection Agency and the Secretary of Education shall 
     jointly submit to Congress a report on the compliance of 
     institutions and private educational lenders with the 
     amendments made by this section. The report shall include the 
     degree to which specific institutions utilize certifications 
     in effectively encouraging the exhaustion of Federal student 
     loan eligibility and lowering student debt.
       Page 198, after line 15, insert the following new subtitle:

            Subtitle K--Home Affordable Modification Program

     SEC. 9911. HOME AFFORDABLE MODIFICATION PROGRAM GUIDELINES.

       (a) Net Present Value Input Data.--The Secretary of the 
     Treasury (in this section referred to as the ``Secretary'') 
     shall revise the supplemental directives and other guidelines 
     for the Home Affordable Modification Program of the Making 
     Home Affordable initiative of the Secretary of the Treasury, 
     authorized under the Emergency Economic Stabilization Act of 
     2008 (Public Law 110-343), to require each mortgage servicer 
     participating in such program to provide each borrower under 
     a mortgage whose request for a mortgage modification under 
     the Program is denied with all borrower-related and mortgage-
     related input data used in any net present value (NPV) 
     analyses performed in connection with the subject mortgage. 
     Such input data shall be provided to the borrower at the time 
     of such denial.
       (b) Web-Based Site for NPV Calculator and Application.--
       (1) NPV calculator.--In carrying out the Home Affordable 
     Modification Program, the Secretary shall establish and 
     maintain a site on the World Wide Web that provides a 
     calculator for net present value analyses of a mortgage, 
     based on the Secretary's methodology for calculating such 
     value, that mortgagors can use to enter information regarding 
     their own mortgages and that provides a determination after 
     entering such information regarding a mortgage of whether 
     such mortgage would be accepted or rejected for modification 
     under the Program, using such methodology.
       (2) Disclosure.--Such Web site shall also prominently 
     disclose that each mortgage servicer participating in such 
     Program may use a method for calculating net present value of 
     a mortgage that is different than the method used by such 
     calculator.
       (3) Application.--The Secretary shall make a reasonable 
     effort to include on such World Wide Web site a method for 
     homeowners to apply for a mortgage modification under the 
     Home Affordable Modification Program.
       (c) Public Availability of NPV Methodology, Computer Model, 
     and Variables.--The Secretary shall make publicly available, 
     including by posting on a World Wide Web site of the 
     Secretary--
       (1) the Secretary's methodology and computer model, 
     including all formulae used in such computer model, used for 
     calculating net present value of a mortgage that is used by 
     the calculator established pursuant to subsection (b); and
       (2) all variables used in such net present value analysis.
       Page 1068, after line 22, insert the following:
       (c) Requirements for Liability.--Section 21D of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78u-4) is 
     amended--
       (1) by redesignating subsections (c) through (f) as 
     subsections (d) through (g), respectively; and
       (2) by inserting after subsection (b) the following:
       ``(c) Requirements for Liability.--A purchaser of a 
     security given a rating by a nationally recognized 
     statistical rating organization shall have the right to 
     recover for damages if the process of determining the credit 
     rating was--
       ``(1) grossly negligent, based on the facts and 
     circumstances at the time the rating was issued; and
       ``(2) a substantial factor in the economic loss suffered by 
     the investor.

     No action shall be maintained to enforce any liability 
     created under this subsection unless brought within 2 years 
     after the discovery of the facts constituting the violation 
     and within 3 years after the initial issuance of the 
     rating.''.
       Strike section 1109 and insert the following new section:

     SEC. 1109. EMERGENCY FINANCIAL STABILIZATION.

       (a) In General.--Upon the written determination of the 
     Council that a liquidity event exists that could destabilize 
     the financial system (which determination shall be made upon 
     a vote of not less than two-thirds of the members of the 
     Council then serving) and with the written consent of the 
     Secretary of the Treasury (after certification by the 
     President that an emergency exists), the Corporation may 
     create a widely-available program designed to avoid or 
     mitigate adverse effects on systemic economic conditions or 
     financial stability by guaranteeing obligations of solvent 
     insured depository institutions or solvent depository 
     institution holding companies (including any affiliates 
     thereof), if necessary to prevent systemic financial 
     instability during times of severe economic distress, except 
     that a guarantee of obligations under this section may not 
     include provision of equity in any form.
       (b) Policies and Procedures.--Prior to exercising any 
     authority under this section, the Corporation shall establish 
     policies and procedures governing the issuance of guarantees. 
     The terms and conditions of any guarantees issued shall be 
     established by the Corporation with the approval of the 
     Secretary of the Treasury and the Financial Stability 
     Oversight Council. Such terms and conditions may include the 
     Corporation requiring collateral as a condition of any such 
     guarantee.
       (c) Cap for Guaranteed Amount.--
       (1) In general.--In connection with any program established 
     pursuant to subsection (a) and subject to paragraph (2), the 
     Corporation may not have guaranteed debt outstanding at any 
     time of more than $500,000,000,000 (as indexed to reflect 
     growth in assets of insured depository institutions and 
     depository institution holding companies as determined by the 
     Corporation).
       (2) Additional debt guarantee authority.--If the 
     Corporation, with the concurrence of the Council and the 
     Secretary (in consultation with the President), determines 
     that the Corporation must guarantee debt in excess of 
     $500,000,000,000 (as indexed pursuant to paragraph (1)) to 
     prevent systemic financial instability, the Corporation may 
     transmit to the Congress a request for authority to guarantee 
     debt in excess of $500,000,000,000 (as indexed pursuant to 
     paragraph (1)). Such request 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.
       (d) Funding.--
       (1) Administrative expenses and cost of guarantees.--A 
     program established pursuant to this section shall require 
     funding only for the purposes of paying administrative 
     expenses and for paying a guarantee in the event that a 
     guaranteed loan defaults.
       (2) Fees and other charges.--The Corporation shall charge 
     fees or other charges

[[Page 31244]]

     to all participants in such program established pursuant to 
     this section to offset projected losses and administrative 
     expenses. To the extent that a program established pursuant 
     to this section has expenses or losses, the program will be 
     funded entirely through fees or other charges assessed on 
     participants in such program.
       (3) Excess funds.--If at the conclusion of such program 
     there are any excess funds collected from the fees associated 
     with such program, the funds will be deposited into the 
     Systemic Dissolution Fund established pursuant to section 
     1609(n).
       (4) Authority of corporation.--For purposes of conducting a 
     program established pursuant to this section, the 
     Corporation--
       (A) may borrow funds from the Secretary of the Treasury, 
     which shall be repaid in full with interest through fees and 
     charges paid by participants in accordance with paragraph 
     (2), and there shall be available to the Corporation amounts 
     in the Treasury not otherwise appropriated, including for the 
     payment of reasonable administrative expenses;
       (B) may not borrow funds from the Deposit Insurance Fund 
     established pursuant to section 11(a)(4) of the Federal 
     Deposit Insurance Act; and
       (C) may not borrow funds from the Systemic Dissolution Fund 
     established pursuant to section 1609(n).
       (5) Back-up special assessment.--To the extent that the 
     funds collected pursuant to paragraph (2) are insufficient to 
     cover any losses or expenses (including monies borrowed 
     pursuant to paragraph (4)) arising from a program established 
     pursuant to this section, the Corporation shall impose a 
     special assessment solely on participants in the program.
       (e) Plan for Maintenance or Increase of Lending.--In 
     connection with any application or request to participate in 
     such program authorized pursuant to this section, a solvent 
     entity seeking to participate in such program shall be 
     required to submit to the Corporation a plan detailing how 
     the use of such guaranteed funds will facilitate the increase 
     or maintenance of such solvent company's level of lending to 
     consumers or small businesses.
       (f) Sunset of Corporation's Authority.--The Corporation's 
     authority under subsections (a) and (d) and the authority to 
     borrow funds from the Treasury under section 1609(o) shall 
     expire on December 31, 2013.
       (g) 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.
       (h) Definitions.--For purposes of this section, the 
     following definitions apply:
       (1) Corporation.--The term ``Corporation'' means the 
     Federal Deposit Insurance Corporation.
       (2) Depository institution holding company.--The term 
     ``depository institution holding company'' has the meaning 
     given the term in section 3 of the Federal Deposit Insurance 
     Act (12 U.S.C. 1813).
       (3) Insured depository institution.--The term ``insured 
     depository institution'' has the meaning given the term in 
     section 3 of the Federal Deposit Insurance Act (12 U.S.C. 
     1813).
       (4) Solvent.--The term ``solvent'' means assets are more 
     than the obligations to creditors.
       Page 110, after line 7, insert the following new section 
     (and redesignate the subsequent sections accordingly):

     SEC. 1110. ADDITIONAL RELATED AMENDMENTS.

       (a) Federal Deposit Insurance Act Related Amendments.--
       (1) Suspension of parallel federal deposit insurance act 
     authority.--Effective upon the date of the enactment of this 
     section through December 31, 2013, 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 1109 would provide authority.
       (2) Federal deposit insurance act authority preserved.--
     Effective December 31, 2013, the Corporation shall have the 
     same authority pursuant to section 13(c)(4)(G)(i) of the 
     Federal Deposit Insurance Act as the Corporation had prior to 
     the date of enactment of this Act.
       (b) Effect of Default on an Fdic Guarantee.--If an insured 
     depository institution or depository institution holding 
     company participating in a program under section 1109 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 
     may--
       (1) appoint itself as receiver for the insured depository 
     institution that defaults;
       (2) with respect to any other participating company that is 
     not an insured depository institution that defaults--
       (A) require consideration of whether a determination shall 
     be made as provided in section 1603 to resolve the company 
     under subtitle G; and
       (B) if the Corporation is not appointed receiver pursuant 
     to subtitle G within 30 days of the date of default, require 
     the company to file a petition for bankruptcy under section 
     301 of title 11, United States Code, or file a petition for 
     bankruptcy against the company under section 303 of title 11, 
     United States Code.
       (c) Authority to File Involuntary Petition for 
     Bankruptcy.--Section 303 of title 11, United States Code, is 
     amended by adding at the end the following:
       ``(m) Notwithstanding subsections (a) and (b), an 
     involuntary case may be commenced by the Federal Deposit 
     Insurance Corporation against a depository institution 
     holding company as defined in section 3 of the Federal 
     Deposit Insurance Act (12 U.S.C. 1813) or other company 
     participating in a guarantee program established by the 
     Corporation on the ground that the company has defaulted on a 
     debt or obligation guaranteed by the Corporation.''.
       (d) Bankruptcy Priority for Defaults on Debt Guaranteed 
     Pursuant to Section 1109.--Section 507(a)(9) of title 11, 
     United States Code, is amended by inserting before the period 
     at the end the following: ``and allowed unsecured claims 
     based upon any debt to the Federal Deposit Insurance 
     Corporation that arose prior to the commencement of the case 
     under this title, as a result of the debtor's default on a 
     guarantee provided by the Corporation pursuant to section 
     1109 of the Financial Stability Improvement Act of 2009 or 
     the Federal Deposit Insurance Act, under a program 
     established by the Corporation after the date of enactment of 
     the Financial Stability Improvement Act of 2009''.
       Page 110, line 8, strike ``MUST'' and insert ``MAY''.
       Page 110, strike line 10 and all that follows through line 
     18 and insert the following:
       (a) In General.--In connection with any payment, credit 
     extension, or guarantee or any commitment under section 1109 
     or 1604, the Corporation may obtain from the insured 
     depository institution, depository institution holding 
     company (including any affiliates thereof), or covered 
     financial company, as the case may be--
       Page 110, line 19, strike ``financial company'' and insert 
     ``insured depository institution, depository institution 
     holding company (including any affiliates thereof), or 
     covered financial company''.
       Page 111, line 3, strike ``financial company'' and insert 
     ``insured depository institution, depository institution 
     holding company (including any affiliates thereof), or 
     covered financial company''.
       Strike section 1614 and insert the following new section:

     SEC. 1614. APPLICATION OF EXECUTIVE COMPENSATION LIMITATIONS.

       At any time that the Corporation has borrowed from the 
     Treasury pursuant to section 1609(o) to resolve a covered 
     financial company, the Corporation shall apply the executive 
     compensation limits under section 111 of the Emergency 
     Economic Stabilization Act of 2008 to such company for so 
     long as such company is in receivership.
       Page 436, after line 11, insert the following new section:

     SEC. 1615. PRIORITY OF CLAIMS IN FEDERAL DEPOSIT INSURANCE 
                   ACT.

       Section 11(d)(11)(A) of the Federal Deposit Insurance Act 
     (12 U.S.C. 1821(d)(11)(A)) is amended--
       (1) by redesignating clauses (iii) through (v) as clauses 
     (iv) through (vi), respectively; and
       (2) by inserting after clause (ii) the following new clause 
     (iii):
       ``(iii) Any obligation of the institution owed to the 
     Corporation as a result of the institution's default on a 
     Corporation-guaranteed debt.''.
       Page 825, after line 12, insert the following new section:

     SEC. 4313. REGULATION OF PERSON-TO-PERSON LENDING.

       (a) Scope of Exemption From Federal Securities 
     Regulation.--Section 3(a) of the Securities Act of 1933 (15 
     U.S.C. 77c(a)) is amended by adding at the end the following 
     new paragraph:
       ``(15) Person-to-person lending.--
       ``(A) In general.--Any consumer loan, and any note 
     representing a whole or fractional interest in any such loan, 
     funded or sold through a person-to-person lending platform.
       ``(B) Definitions.-- For purposes of this paragraph:
       ``(i) Consumer loan.--The term `consumer loan' means a loan 
     made to a natural person, the proceeds of which are intended 
     primarily for personal, family, educational, household, or 
     business use.
       ``(ii) Person-to-person lending platform.--

       ``(I) In general.--The term `person-to-person lending 
     platform' means an Internet website, the primary purpose of 
     which is to provide a transaction platform for the funding or 
     sale of individual consumer loans, or the sale of notes 
     representing whole or fractional interests in individual 
     consumer loans, by matching natural persons who wish to 
     obtain such loans with persons who wish to fund them, or by 
     matching persons who wish to sell such loans or notes with 
     persons who wish to purchase them.
       ``(II) Prohibition on multiple loans in a single 
     transaction.--The term `person-to-person lending platform' 
     does not include any platform on which multiple loans may be 
     funded or sold in a single transaction, or

[[Page 31245]]

     on which a note representing an interest in multiple loans or 
     other debt obligations may be sold.''.

       (b) Regulation by the Agency.--
       (1) In general.--Primary jurisdiction for the regulation of 
     the lending activities of person-to-person lending and 
     person-to-person lending platforms is hereby vested in the 
     Agency.
       (2) Interim requirements.--Until the Director issues and 
     adopts disclosure requirements with respect to the sale of 
     consumer loans, or notes representing whole or fractional 
     interests therein, on person-to-person lending platforms, a 
     person-to-person lending platform that registers the offer 
     and sale of any such notes under the Securities Act of 1933 
     shall, with respect to such registered offer and sale, 
     provide the disclosure required under the Securities Act of 
     1933 to be contained in the registration statement and 
     prospectus and provide such disclosure required in any 
     periodic reports required to be filed by such person-to-
     person lender pursuant to section 13 or section 15(d) of the 
     Securities Exchange Act of 1934.
       (3) Definitions.--For purposes of this subsection, the 
     terms ``consumer loan'', ``person-to-person lending 
     platform'', ``prospectus'', and ``registration statement'' 
     shall have the meaning given such term under the Securities 
     Act of 1933.
       (c) Rulemaking.--The Director may prescribe such 
     regulations and issue such orders as the Director considers 
     necessary or appropriate to implement the provisions of this 
     section and to provide borrower protection, lender 
     protection, consumer choice, and expanded consumer access to 
     fair and reasonable credit choices.
       (d) Effective Date.--Notwithstanding section 4310, this 
     section shall take effect on the date of the enactment of 
     this title.
       Page 699, line 13, strike ``and''.
       Page 699, line 17, insert ``and'' after ``services;''.
       Page 699, after line 17, insert the following:
       (vi) the nature, range, and size of variations between the 
     credit scores sold to creditors and those sold to consumers 
     by consumer reporting agencies that compile and maintain 
     files on consumers on a nationwide basis (as defined in 
     section 603(p) of the Fair Credit Reporting Act; 15 U.S.C. 
     1681a(p)), and whether such variations disadvantage 
     consumers;
       Page 788, after line 10, insert the following:
       (3) Consider as unfair certain practices with regard to the 
     provision of credit scores.--Subject to regulations 
     prescribed by the Director, it shall be considered unfair for 
     any consumer reporting agency that compiles and maintains 
     files on consumers on a nationwide basis (as defined in 
     section 603(p) of the Fair Credit Reporting Act; 15 U.S.C. 
     1681a(p)) to make available for purchase by creditors any 
     credit score for a consumer that is not also available for 
     purchase by that consumer at the same price as other credit 
     scores sold to consumers by such agency.
       Page 699, line 17, insert ``, and the impact of Federal 
     policies, including resource limits in means-tested Federal 
     benefit programs (as defined in section 318 of the Higher 
     Education Act of 1965; 20 U.S.C. 1059e), on such consumers in 
     influencing banking behavior'' after ``financial products or 
     services''.
       In section 4109(f) (as modified pursuant to the rule 
     providing for the consideration of the bill and contained in 
     the amendment designated MWB_05), strike paragraph (3) and 
     insert the following:
       (3) Exception.--Notwithstanding paragraph (1), an 
     attorney's activities related to assisting another person in 
     preventing a foreclosure shall be subject to this title 
     except to the extent such activities constitute, or are 
     incidental to, the provision of legal services to a client of 
     the attorney.
       Page 776, after line 19, insert the following new 
     subsection:
       (l) Exclusion for Activities Relating to Charitable 
     Contributions.--
       (1) The Director and the Agency may not exercise any 
     rulemaking, supervisory, enforcement, or other authority, 
     including authority to order assessments or penalties, over 
     any activities related to the solicitation or making of 
     voluntary contributions to or through 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 
     donor(s) or potential donor(s) relating to a contribution to 
     or through the organization.
       (2) This exclusion shall not apply to other activities not 
     described in the paragraph above and are financial activities 
     as described in any subparagraph of section 4002(19), or 
     otherwise subject to any of the enumerated consumer laws, or 
     the authorities transferred under subtitle F or H.
       In the last section title I of the bill (as added pursuant 
     to the rule providing for the consideration of the bill and 
     contained in the amendment designated ``TARP--001''), strike 
     ``$22,059,000,000,'' and insert ``23,625,000,000''.

  The Acting CHAIR. Pursuant to House Resolution 964, the gentleman 
from Massachusetts (Mr. Frank) and a Member opposed each will control 
15 minutes.
  The Chair now recognizes the gentleman from Massachusetts.
  Mr. FRANK of Massachusetts. Madam Chair, I yield 30 seconds to my 
colleague from Massachusetts (Ms. Tsongas).
  Ms. TSONGAS. Madam Chair, I urge adoption of Mr. Frank's amendment, 
which includes my amendments to guarantee that consumers have the same 
access to their credit scores that lenders now have.
  I have heard from a number of my constituents, like Carla Welsh from 
Concord, Massachusetts, that ``it seems unthinkable to me that . . . 
consumers would be placed in the dark in regard to their 
creditworthiness.''
  I'm proud to say that the manager's amendment levels the playing 
field for consumers. I urge my colleagues to support the manager's 
amendment and the underlying bill.
  Mr. FRANK of Massachusetts. I will now yield 2\1/2\ minutes to the 
gentlewoman from New York (Mrs. McCarthy).

                              {time}  1730

  Mrs. McCARTHY of New York. I would like to ask the gentleman from 
Massachusetts, the distinguished chairman, to engage in a short 
colloquy.
  I would like to clarify how the analysis of systemic risk and 
assessment factors would be applied by the Financial Services Oversight 
Council and for dissolution fund assessments.
  Is it the chairman's intention that the factors used for identifying 
companies subject to stricter standards should be applied in light of 
the more detailed and balanced risk matrix set out in the dissolution 
fund section of the bill?
  Mr. FRANK of Massachusetts. If the gentlewoman will yield, as the 
gentlewoman knows, there was a clerical glitch at the last minute so 
that we missed by a very narrow margin a submission time for the Rules 
Committee. And what I am glad to have the chance to do now is to agree 
with the gentlewoman, who has been working diligently on this, that 
this language will go if we have anything to say about it, as we will, 
into the conference report.
  So the answer is yes.
  Mrs. McCARTHY of New York. I thank the chairman and look forward to 
working with him as the process moves forward.
  Mr. FRANK of Massachusetts. Madam Chair, I reserve the balance of my 
time.
  Mr. BACHUS. Madam Chair, I rise to claim the time in opposition to 
the amendment.
  The Acting CHAIR. The gentleman from Alabama is recognized for 15 
minutes.
  Mr. BACHUS. Madam Chair, I yield 1\1/2\ minutes to the gentleman from 
Maryland (Mr. Bartlett).
  Mr. BARTLETT. Madam Chair, it's not surprising that this legislation, 
like much of the legislation, might have an unintended consequence. And 
one of my constituents pointed out just such in this legislation.
  I took the problem to the chairman, and he very graciously has fixed 
it in his manager's amendment.
  I yield to him so that he can explain.
  Mr. FRANK of Massachusetts. I thank the gentleman for yielding.
  We are trying here to prevent fraud in the various programs. In the 
subprime mortgage bill, which we are reenacting here, which the House 
voted on, we put in some very strict restrictions against people who 
had a pattern or a history of fraud. But the gentleman from Maryland 
pointed out quite correctly that it was overly rigid, that it excluded, 
in the case of someone he knew, someone who many, many years ago had 
been involved in an unrelated situation where culpability was 
uncertain, there was a criminal conviction, and what this does is to 
provide some needed flexibility for minor offenses that were long ago.
  I thank the gentleman for calling it to our attention. We were 
pleased to be able to make this change.
  Mr. BARTLETT. I want to thank the chairman very much for helping to 
solve this problem.
  Mr. FRANK of Massachusetts. Madam Chair, I yield 2\1/2\ minutes to 
the gentleman from North Carolina (Mr. Miller), who is an important 
author of much of this bill.

[[Page 31246]]


  Mr. MILLER of North Carolina. I will include in my revised and 
extended remarks the verbatim colloquy on the point, but Mr. Frank had 
asked that I simply explain one committee amendment offered by Mr. 
Moore and by me and explain the revisions briefly here tonight on the 
floor.
  The committee amendment and the revised amendment in the manager's 
amendment was originally a suggestion of Sheila Bair of the FDIC to get 
at one of the most infuriating episodes in the entire financial crisis. 
And the best example was the collapse and the rescue of AIG, which was 
not really about AIG but the counterparties to AIG. We have now heard 
that the counterparties, Morgan Stanley, Goldman Sachs, Societe 
Generale, Deutsche Bank, refused to take anything less than 100 cents 
on the dollar on what AIG owed them. According to the Special Inspector 
General for the TARP program's report, they did that in part because 
they had grabbed collateral for their debts in the last days of AIG's 
collapse so that they knew they could get paid in full even if AIG went 
into bankruptcy.
  The FDIC believes it is better to take into resolution companies that 
are failing sooner rather than later so they don't arrive and find that 
every asset of the company has been pledged as collateral, which leads 
to a more expensive resolution, a less equitable resolution, and a 
resolution that inevitably is more disruptive of the economy.
  It gets at two problems: One, the collateral grabs by taking a 
concept from bankruptcy, avoidable preference, where the company was 
insolvent and pledged collateral for existing debts in the last 90 days 
before the resolution, the FDIC can disregard it altogether, disregard 
the security altogether.
  Then, second, the short-term collateralized lending without any 
market discipline, based entirely upon collateral, without any regard 
to the actual condition of the borrower of the company. The amendment 
gets at that by allowing some portion of that to be set aside, 10 
percent to be disregarded, and then in limited circumstances, only 
short-term credit, 1 month or less, where the security is not a 
Treasury or other government-secured debt. It will impose some market 
discipline.
  Mr. BACHUS. Madam Chairman, I yield 3 minutes to the gentlelady from 
West Virginia (Mrs. Capito).
  Mrs. CAPITO. Madam Chair, I would like to speak in opposition to the 
bill, but I would like to talk about the manager's amendment as well.
  But before I get into the manager's amendment, I would like to 
reinforce my opposition to the bill in its entirety because of the 
permanent bailout fund that is created, the continuation of bailouts, 
the implied government guarantee in the financial marketplace, and the 
way that taxpayers are placed on the hook potentially for billions, if 
not trillions, of dollars to bail out failed nonbanks.
  But specifically I would like to talk about the two parts of the 
manager's amendment that were added without specific discussion by the 
committee, to my knowledge, and it also goes to a larger point. We've 
labeled this bill TARP II. This goes back to TARP I and using TARP 
funds to fund things that the TARP money was not intended to go for. I 
voted against the TARP funding in the first place. And now in the 
manager's amendment we have another $4 billion in existing TARP funds 
going to unproven foreclosure relief programs; $3 billion to reinstate 
a 1975 program, the Emergency Homeowners' Relief Act, to provide 
emergency mortgage relief.
  We just had a hearing in our committee this week on the Making Homes 
Affordable plan, the administration's plan, that in our opinion, I 
think, across the board in a bipartisan way is a bust. It has not met 
with much success, and it has murky, if uncertain, guidelines attached 
to it. So I think in this case strapping an unemployed homeowner with 
more debt is not the answer. Congress needs to support policies that 
create jobs and do not perpetuate any more bailouts.
  The other part of this amendment adds another $1 billion for the 
Neighborhood Stabilization Program. This program is a costly bailout 
for lenders and speculators. This program also could have the 
unintended consequences of making foreclosure a more attractive option 
for lenders, thereby compounding the problem.
  We've already committed in two separate times $6 billion to the 
Neighborhood Stabilization Program, and this adds another billion. I 
think we also need to consider that this program of the $4 billion 
allocated to it in 2008, only 25 percent of the funds are even out the 
door. What is adding another billion dollars going to do and when can 
those funds actually get out the door? And of the $1.9 billion 
allocated in January of 2009, not one dollar has made it through HUD's 
cumbersome bureaucracy.
  I object to the fact that this was added onto the manager's amendment 
on a very complicated, thousand-page bill, but it also adds two 
additions on here that I believe were part of the reason that the bill 
has been held up through this week and part of the reason it was held 
up yesterday; it was to satisfy certain interests in this House, and I 
think we need to have them discussed in front of the whole committee 
and discussed in front of the whole House.

                              {time}  1740

  Mr. FRANK of Massachusetts. Madam Chair, I yield 2\1/2\ minutes to 
the gentleman from North Carolina (Mr. Watt), a major shaper of the 
best parts of this bill.
  Mr. WATT. It is an inconvenient fact that the Constitution reserves 
certain rights to the States and allows the Federal Government to have 
certain rights. And it sometimes gets inconvenient for those people who 
profess to believe in States' rights that we have to accommodate them.
  One of the most difficult parts of making the appropriate 
accommodation has been finding the right preemption of State law 
standards to put into this bill. I am deeply indebted to all of the 
members of the committee, particularly Ms. Bean, who has been very 
active on this issue.
  We worked out 10 different things on Federal preemption, some 
reserved to the States, some reserved to the Federal Government. And as 
I said at the very outset of the discussions about this, we knew we 
would find the right place to be on preemption if the consumer groups 
were unhappy and if the industry was unhappy. And we have succeeded in 
making both of them unhappy. And they are equally unhappy, so I think 
we have found the right balance on preemption.
  That is about all I can say because I don't have time to go through 
the 10 things that we were able to agree on. Nobody is jumping up and 
down and threatening to shoot any of us, but I can tell you that 
everybody is kind of equally unhappy.
  I appreciate the chairman giving me the opportunity to explain that. 
And I am sure nobody understands it, but that's okay.
  Mr. BACHUS. Madam Chair, I recognize the gentleman from Texas (Mr. 
Neugebauer) for 3 minutes.
  Mr. NEUGEBAUER. There are a number of provisions in the manager's 
amendment that make this bill less bad. And really, we've come a long 
way from the bill that was originally introduced to the one that's on 
the floor now. We went through a very lengthy markup process. In many 
cases, sometimes during those markups we were able to make the bill 
better. In this manager's amendment, there are some changes that in 
fact do make this bill a little less egregious to me.
  But the problem is, fundamentally, the bill still does what it 
originally started out to do, and that is to perpetuate bailouts in 
this country. One of the things that my colleagues and I have said from 
the very beginning is the American people are tired of bailouts. 
Unfortunately, this bill perpetuates bailouts in this country. We 
continue to reward bad behavior and punish good behavior, and this bill 
perpetuates that.
  One of the things that also concerns me about this bill is that even 
with some improvements, it still becomes a job killer. For example, one 
of the provisions in this bill would give secured

[[Page 31247]]

creditors a haircut. In other words, here is somebody that took 
collateral to make a loan, thought they were securitized, thought they 
were collateralized, and now at the end, arbitrarily they can be given 
a 20 percent haircut for their collateral. That is going to cause huge 
implications in the credit markets because these people, a small 
businessman, is going out to borrow money for his plant or equipment or 
other things, lenders making what they think are secured loans, and all 
of a sudden the lender finds himself at some point in time where their 
security is going to be shared with someone else.
  The other piece of this is that this bill does something that I feel 
very strongly about, and that is, it limits the choices for consumers. 
I still believe that the American people are pretty smart people. I 
think it's their money, it's their credit, and they ought to have a lot 
more to say about the types of credit, the types of loans that they 
take out. They don't need the Federal Government telling them that this 
is the kind of loan we think is appropriate for you, this is the kind 
of student loan you should use to send your child to college, or this 
is the kind of car loan you should use. Or small businessman--this is 
the loan that we give small businesses, take it or leave it.
  The other part of it is that this bill does something that I think is 
very egregious, and I think the American people ought to be outraged 
about. Here we are, Secretary Geithner gave the Democrats an early 
Christmas present. He said, you know what? That slush fund that we've 
got, we're going to keep it until next October. Man, a day doesn't go 
by and here we go, we're going to put our hand in the cookie jar here. 
In this bill, $4 billion out of the TARP money that was not represented 
to be used for these kinds of purposes, it was an emergency to 
stabilize the markets, but we're going to put our hand in the cookie 
jar and take $4 billion. By the way, it's $4 billion we didn't have to 
begin with; we had to go borrow that $4 billion.
  Instead of taking the TARP money, the Treasury Secretary recently 
told us, he said, I think the financial markets are basically 
stabilized.
  This is a bad bill, we should defeat it.
  Mr. FRANK of Massachusetts. Madam Chair, I now yield 2\1/2\ minutes 
to one of the strongest advocates of fairness and equity, and critics 
of lack of action to stop the foreclosure process, the gentlewoman from 
California, the Chair of the Housing Subcommittee, Ms. Waters.
  Ms. WATERS. Madam Chair, I rise in strong support of the manager's 
amendment to H.R. 4173, the Wall Street Reform and Consumer Protection 
Act of 2009, and the underlying bill.
  This bill will finally reform and rein in Wall Street and our 
financial system, triggered by greed and risk that caused this country 
to almost collapse. This bill addresses all of the elements of that 
collapse by allowing the government to wind down ``too big to fail'' 
institutions before their failure threatens the entire global economy, 
regulating risky over-the-counter derivatives, and requiring credit 
rating agencies to avoid the conflicts of interest that cause them to 
inflate the value of tax and assets.
  Perhaps the most important part of this bill is the creation of a new 
Consumer Financial Protection Agency. This new agency's role will be to 
spot the next subprime crisis before it starts and prevent the next 
predatory product from stripping consumers of their homes and their 
wealth.
  I would especially like to thank Financial Services Committee 
Chairman Barney Frank for including a provision at the request of the 
members of the Congressional Black Caucus to use $3 billion in Troubled 
Asset Relief, TARP, dollars to provide low-interest loans to unemployed 
homeowners that are having difficulty making their mortgage payments. 
We also thank Barney Frank for including another $1 billion to 
strengthen the Neighborhood Stabilization Program that will rehab 
foreclosed housing and also create jobs. This funding is needed because 
our current foreclosure prevention programs address the initial cause 
of our foreclosure crisis, subprime and predatory lending, and not the 
current cause, unemployment, which is at 10 percent nationally, and in 
minority communities 13 to 15 percent plus.
  We know that these kinds of loans can work. Since 1983, Pennsylvania 
has run a very successful loan program--just ask Mr. Chaka Fattah--that 
has saved 42,700 unemployed homeowners from foreclosure.
  Madam Chair, foreclosures and unemployment present a systemic risk to 
our economy. Therefore, I strongly urge my colleagues to vote ``yes'' 
on the manager's amendment and on H.R. 4173. This is a very important 
piece of legislation.
  Mr. BACHUS. Madam Chair, I yield myself such time as I may consume.
  I rise in strong opposition to the manager's amendment. I think the 
manager's amendment illustrates the contradictions between the 
statements we've heard from the other side and the actual substance of 
the legislation. I just want to point out three or four conflicts 
between what it says and what they say it says.
  The changes in the majority's $150 billion permanent bailout fund 
actually contradict the will of the majority of the Financial Services 
Committee by undermining the orderly and expedient resolution of failed 
firms. The body will recall, members of the Financial Services 
Committee, that we adopted an amendment in the committee that 
eliminated the conservatorship authority and limited the receivership 
to 1 year. Chairman Frank has basically said this is going to be a 
death panel; we're going to put these companies to death. And in 
committee, they were going to be given 1 year, but the manager's 
amendment comes back and extends the term limit for doing this to 3 
years, 3 years in which these failed companies or counterparties or 
creditors won't be put to death, as the chairman said, but they will be 
subsidized out of this, I guess, $150 billion fund, or what could 
actually turn into another $50 billion if the Treasury asks the 
Congress to fund it with taxpayer money and adds an additional $50 
billion.

                              {time}  1750

  This is another example of why we need the Republican substitute. 
Instead of picking which politically important firms we are going to 
let survive and which less connected firms we are going to let 
disappear and fail, in the Republican substitute, we utilize a fair, 
transparent, rules-based bankruptcy process to resolve and to liquidate 
these failed financial firms, not to keep them going at the expense of 
what could be billions of dollars. We think that the Republican 
alternative is the only real option for eliminating taxpayer bailouts.
  The chairman of the Financial Services Committee is also fond of 
saying that this legislation puts an end to the too-big-to-fail policy, 
which led to the bailout of our GSEs, of AIG and of other financial 
firms. Despite this claim, the reality is quite different.
  If you will look at page 45 of the manager's amendment, it 
specifically excludes Fannie Mae and Freddie Mac from the dissolution 
provisions of the underlying bill. In other words, if they fail, they 
are excluded. We don't wind them down. Why?
  Well, these two companies were at the center of the subprime lending 
problems that caused the financial market meltdown. Taxpayers have 
already pumped more than $100 billion into these failed GSEs, and they 
are likely to lose $300 billion more. It is unconscionable that we are 
going to exempt these two firms--our GSEs--from this dissolution 
authority.
  Finally, the last aspect I will mention--and this probably is as 
disturbing as anything--we are raiding this TARP program, rather than 
ending it, for another $4 billion. The manager's amendment diverts $4 
billion from TARP to a number of other programs that the law was never 
intended to support. TARP was intended to be a temporary plan to 
restore the health of the credit markets and to protect the economy 
from systemic risk caused by the collapse of firms that the government, 
really, allowed to become too big to fail.

[[Page 31248]]

  We heard promises all last fall that the money would go back to the 
taxpayers. Instead, now we are talking about surpluses. We are talking 
about money that hasn't been used. It is almost like this is a 
``walking around'' fund, and we're just going to take money out of it 
and use it on this pet project or on that pet project or on this good 
idea or on that good idea. Here is the first of those things, and it is 
$4 billion. Again, we are not giving it back to the taxpayers, and 
those promises made last September are now being broken.
  The President himself has said that he is extending TARP until 
October 10 of this year. What he is doing is turning it into a 
permanent bailout agency, into a kind of petty cash drawer for 
politically favored interests. Here we see the first one of those 
things--$4 billion. Part of it is $4 billion to help move this 
legislation across the finish line.
  Let me close by saying we need to end TARP. That's the solution. We 
need to end it now. We need to require all repayments to go directly 
towards paying down the debt. That's the bottom line. End TARP right 
now. Require that all payments be used to pay down the debt. There is 
no surplus. There are only deficits and debts.
  Madam Chair, I urge my colleagues to oppose this irresponsible breach 
of trust and this attack on our promises that we made last year.
  I reserve the balance of my time.
  Mr. FRANK of Massachusetts. What is the time remaining on both sides, 
please, Madam Chair?
  The Acting CHAIR. The gentleman from Massachusetts has 6\1/2\ minutes 
remaining. The gentleman from Alabama has 2\1/2\ minutes remaining. The 
gentleman from Alabama has the right to close.
  Mr. FRANK of Massachusetts. I yield 2 minutes to the gentleman from 
Colorado (Mr. Perlmutter), who hasn't had enough floor time this week.
  Mr. PERLMUTTER. Thank you, Mr. Chairman.
  The ranking member of the committee said that the Republican approach 
was to liquidate failed institutions. It is just the opposite, which is 
to let them linger and reorganize. That was the proposition made to us 
in Financial Services.
  Madam Chair, my point here is to enter into a colloquy with the 
chairman.
  Mr. Chairman, I had submitted an amount to exempt certain smaller 
banks and credit unions, which was not approved in the Rules Committee. 
It is my understanding that the legislation would give the new CFPA the 
authority to delegate the authority to conduct examinations and to 
enforce consumer protection provisions to the functional regulator for 
financial institutions that fall above the $10 billion asset threshold.
  Would it be fair to say that the intent here is not to increase 
burdens on those institutions that have been good actors?
  For example, if an institution has an onsite examination or audit 
team from their functional regulator, it would seem that adding a CFPA 
team to work with those already there would not be as big of a burden. 
However, if an institution's functional regulator has deemed that its 
consumer compliance record is strong and that the institution's 
regulator is doing an effective job, it would seem that subjecting them 
to CFPA examinations and enforcement would increase the regulatory 
burden on the institution.
  Is this a situation where the chairman would envision the CFPA's 
delegating that authority back to the functional regulator under the 
authorities given in this legislation?
  Mr. FRANK of Massachusetts. If the gentleman would yield, with regard 
to the permanent audit team, they may be the largest institutions, and 
that is a somewhat separate question, but for those who don't have a 
permanent audit team, not only would it be better for the regulated 
entity, it would be better for the CFPA. As any agency, they will have 
limited resources. If you have a bank that has $13-, $14-, $17 billion 
in assets and has had a good record, as most of those banks have had in 
consumer affairs, it would be a great waste of regulatory resources to 
be doing that when they would have the option, instead, of simply 
sending a CFPA member to join the other team.
  So, yes, I would hope that the CFPA would take full advantage of this 
authority with those banks.
  Mr. BACHUS. Madam Chair, I continue to reserve the balance of my 
time.
  Mr. FRANK of Massachusetts. Madam Chair, I yield myself just 10 
seconds to say that one of the Members whose business experience and 
general good judgment has been a very major asset for us is that of the 
gentlewoman from Illinois (Ms. Bean). She has had a very significant 
and positive impact on this bill.
  I will now yield her 2 minutes.
  Ms. BEAN. I thank Chairman Frank for yielding. I want to commend him 
and the committee for their hard work on this Financial Services 
regulatory reform bill we are considering today.
  Madam Chair, Chairman Frank's leadership and determination is the 
reason we are here on the verge of passing the most historic and 
comprehensive regulatory modernization of our financial system since 
the Great Depression.
  Mr. Chairman, I rise in support of the manager's amendment and in 
support for H.R. 4173, the Wall Street Reform and Consumer Protection 
Act.
  Included in the manager's amendment is compromise language I 
negotiated with the majority leader and with the administration to 
preserve the century-old precedent of national banks and Federal 
savings associations, which are chartered nationally, to operate, in 
some cases, under a uniform national set of rules.
  The manager's amendment addresses key concerns many of my colleagues 
and I had with the underlying text, which included changes to existing 
law in preemption standard and judicial deference. The compromise 
allows for the national bank regulator to make case-by-case preemption 
determinations on an individual State's consumer financial laws and 
then apply that determination to categories of State consumer financial 
laws that have equivalent terms.
  In addition, the amendment allows States to formally petition the 
CFPA to improve the Federal consumer protection standards. If a 
majority of States petition the CFPA by passing resolutions in their 
respective legislatures, they can require the CFPA to conduct 
rulemaking.

                              {time}  1800

  In regard to the underlying bill before us, I want to express my 
strong support. Reforming our financial system is vitally important to 
creating a functional and sustainable system that American families and 
businesses can count on.
  Last September when we were at the precipice of financial collapse, 
we promised the American people that we would enact just such 
comprehensive reforms. This bill lives up to that promise. Passing it 
will reduce the severity of future downturns or the likelihood of the 
type of crisis and subsequent bailout that we experienced last year 
from everything happening again.
  While there is much to be proud of, I want to emphasize the 
dissolution authority, which removes any implicit government guarantee 
or bailout.
  The Acting CHAIR. The time of the gentlewoman has expired.
  Mr. FRANK of Massachusetts. I yield the gentlewoman an additional 15 
seconds.
  Ms. BEAN. This is the antibailout. That means when your company 
fails, you are fired. There will be consequences for your executives 
and your shareholders.
  I urge my colleagues to support the manager's amendment and the 
underlying bill.
  Mr. FRANK of Massachusetts. I will yield myself my remaining time.
  How much is that?
  The Acting CHAIR. The gentleman from Massachusetts has 2 minutes 
remaining.
  Mr. FRANK of Massachusetts. I sympathize with the loss my Republican 
colleagues feel that we don't give a bailout for them, but this bill 
clearly repudiates it. First, they just today, as

[[Page 31249]]

they did yesterday, made an issue out of the fact that we do include 
some bankruptcy, but their whole issue was bankruptcy. As the gentleman 
from Colorado said, there is nothing in their bill that prevents this 
from being extended ad infinitum under bankruptcy. Technically, we do 
have some time limitations, but that's part of bankruptcy.
  Here is what we do say. If, in fact, the FDIC would decide with a 
failed institution to keep it going, it would do it without any funds. 
On page 397, there is established a separate fund to facilitate and 
provide for the orderly and complete dissolution of any failed 
financial company that poses a taxpayer threat.
  Page 399, the fund shall be available to cover the costs incurred by 
the corporation as a receiver, repay such funds, cover the cost of 
systematic stabilization actions, not for the entity.
  Then in 288, the corporation, such action--they shall only get 
involved if they think it's--they can only spend the money if it is 
necessary for the purpose of financial stability and not for the 
purpose of preserving the covered financial company. Yes, we are saying 
that in some cases, in a very complex institution, you may not be able 
to wipe it out in a year. That's what was pointed it to us. If you 
wiped it out prematurely, you may find yourself costing more money, not 
to the institution, in severance pay and other things for employees. 
This is very clear.
  By the way, as to the permanence of this, the authority to borrow 
here is sunsetted in 2013. Yes, there will be a fund of assessment from 
private financial institutions. I know the Republicans do not want us 
to discommode the major financial institutions for this.
  We levy on them for money that can be used. If a major institution 
fails, then the money can be used to manage that failure in a 
reasonable way. The biggest difference is that we try to stop the 
failure and they do nothing to try to stop it.
  Mr. BACHUS. I yield myself the balance of the time.
  The Acting CHAIR (Ms. Edwards of Maryland). The gentleman has 2\1/2\ 
minutes remaining.
  Mr. BACHUS. Let me say with AIG, the counterparties and creditors of 
the largest financial institutions were paid off dollar for dollar. I 
think we have all read that in the paper.
  What this legislation does, it allows, in, quote, resolving this, it 
allows once again the creditors and the counterparties to be paid off. 
That is a bailout.
  In AIG, it was a bailout of creditors and counterparties. That's what 
is provided for here.
  I yield the balance of my time to the gentleman from Texas (Mr. 
Hensarling).


                         Parliamentary Inquiry

  Mr. FRANK of Massachusetts. Parliamentary inquiry.
  The Acting CHAIR. Would the gentleman please state his inquiry.
  Mr. FRANK of Massachusetts. Well, when a Member says he is reserving 
his time to close, is it permissible to split it? I just, for the 
future of the bill, want to know that. I had assumed the gentleman was 
closing, and I thought only one Member closes.
  The Acting CHAIR. The gentleman still may yield.
  Mr. FRANK of Massachusetts. Thank you, Madam Chair.
  Mr. HENSARLING. Madam Chair, regardless of any particular inquiries, 
the inquiry the American people want to know is: Where are the jobs? 
Now, what we have seen from the Democrats, our friends on the other 
side of the aisle, is an attempt to spend our way into jobs, an attempt 
to borrow our way into jobs and now an attempt to bail out our way into 
jobs. And what is the result? The result is the highest unemployment 
rate in a generation, the first trillion dollar deficit in our Nation's 
history, and a tripling of the national debt in the next 10 years.
  Bailouts do not work. The Democratic bill enshrines us as a bailout 
Nation. It still allows people to privatize their profits and socialize 
their losses.
  Section 1609(n) of the underlying bill creates a permanent bailout 
fund. Now, maybe some aspect of it is sunset, but nowhere else do you 
find a permanent bailout fund is going to be sunset. I assume you 
create the bailout fund for bailouts. This is what will happen.
  If the American people believe that we can bail out our way into more 
jobs and that somehow we will have less systemic risk, they ought to 
support it. If they are tired of the bailouts, they need to support the 
Republican bill that ends the bailout. Ultimately, under their plan, 
you will have more taxpayer bailouts.
  Now, they told us, the Speaker told us, if we would pass TARP, that 
she would make sure the taxpayers were repaid. What do we have? We have 
another TARP grab here by the chairman of the committee for yet another 
taxpayer-funded foreclosure mitigation plan, when every single other 
taxpayer-funded foreclosure mitigation plan has failed. The only one 
that will work is a job. That's what we need--jobs, not bailouts.
  Mr. MILLER of North Carolina. Madam Chair, I offer this statement for 
the Record to clarify the intent of the portion of this amendment 
regarding haircuts for secured creditors to help establish a clear 
legislative record for its implementation, and to clarify Mr. Moore's 
and my intent regarding the extension of secured credit to systemically 
important financial institutions under the dissolution section of the 
legislation.
  It is our intent to bring a degree of responsibility to the extension 
of collateralized credit to covered entities that may fail and fall 
within the resolution process this legislation creates. However we 
understand the importance of secured credit to a vital financial system 
and want to be clear on exactly what is and what is not covered by this 
amendment.
  Only secured credit with terms of 30 days or shorter will be subject 
to the discretionary authority provided in the provisions of this 
section. FDIC's authority to apply up to a 10 percent haircut on 
secured credit positions is discretionary, but it may be applied only 
in the context of qualified financial contracts and then only if and 
when unsecured creditors and shareholders are wiped out. Further the 
authority does not apply to security interests in securities or debt 
issued, secured, or guaranteed by the Treasury, a federal agency, the 
Federal Reserve, or a Government Sponsored Enterprise.
  Further this amendment makes clear that insured depository 
institutions, credit unions, and GSEs are not within the definition of 
a ``financial company'' for purposes of Subtitle G of this legislation. 
These institutions have a resolution process that is already firmly 
established in law.
  Mr. FRANK of Massachusetts. Madam Chair, I offer this statement to 
indicate that I agree with the interpretation of the Gentleman from 
North Carolina regarding his interpretation of the secured creditor 
haircut portion of the Manager's Amendment. Apparently, there are some 
people who feel that, even with the improvements to this provision in 
the Manager's Amendment, there are some who might interpret this 
incorrectly, and I would agree with the Gentleman that very explicit 
language reaffirming this interpretation could usefully be added at 
conference time.
  Ms. FUDGE. Madam Chair, today this Congress and President Obama are 
taking critical steps in bringing our economy back from the brink of 
disaster. Reforming our financial system is one major part of restoring 
our economy's health.
  I rise in support of an amendment Chairman Barney Frank and I have 
offered requiring credit rating agencies to register with the 
Securities and Exchange Commission.
  Credit rating agencies provide a valuable service by issuing opinions 
on the creditworthiness of a company or debt. Investors and creditors 
rely on these ratings to determine if their investment and contractual 
decisions are sound. However, credit agencies' registration and 
oversight is entirely voluntary.
  Why should agencies as important as credit rating agencies be 
permitted to opt out of regulatory oversight? There is no valid reason. 
Large, established rating agencies should not be able to avoid 
regulation designed to protect the financial system, consumers, 
investors, and taxpayers. Under our provision, for the first time, the 
Securities and Exchange Commission will have an office dedicated to 
broad oversight of credit rating agencies.
  Registering these entities will provide greater accountability and 
transparency. This amendment will truly enhance oversight of credit 
rating agencies and protect investors, and I urge my colleagues to vote 
in favor of this amendment.
  I commend Chairman Frank for his tireless efforts to protect the 
American economy and taxpayers.

[[Page 31250]]


  Mr. WAXMAN. Madam Chair, I want to commend Chairman Frank for his 
diligent work on the issue of financial reform. He has listened to 
members, and the manager's amendment and the bill before us today 
contain several provisions that were drafted in negotiation and 
cooperation with the Energy and Commerce Committee. In particular, the 
Manager's amendment makes a number of technical changes that are 
essential to preserving the intent of the legislation with regard to 
Federal Trade Commission (FTC) enforcement of consumer laws.
  While I am pleased that these technical changes were included, I want 
to note my concerns with a few of its provisions.
  First, the amendment creates new definitions for ``unfair,'' 
``deceptive,'' and ``abusive'' that I believe could restrict the 
ability of the new Consumer Financial Products Agency (CFPA) to protect 
consumers. This new definition of both ``unfair'' and ``deceptive'' 
would require CFPA to abide by 30 year-old Federal Trade Commission 
policy statements that are not even legally binding on FTC. Perhaps the 
intent of this new language is to have CFPA use the same definitional 
terms used by FTC, but this language does not achieve that goal. 
Instead, it could slow rulemaking and limit the flexibility of the new 
agency.
  The new definition of ``abusive'' is similarly problematic. CFPA's 
authority to pursue abusive practices helps ensure that the agency can 
address payday lending and other practices that can result in 
pyramiding debt for low income families. Under the new definition of 
``abusive,'' however, CFPA would be required to prove that a practice 
has an impact on the entire country's financial system, a restriction 
that could prevent the new agency from issuing important and long 
overdue rules.
  Second, I am concerned about new language that exempts some 
activities of consumer reporting agencies, known as CRAs, from CFPA 
oversight. I believe that these changes could split enforcement of the 
Fair Credit Reporting Act in a problematic manner and may lead to holes 
in regulation, oversight, and enforcement.
  Third, the exclusion for auto dealers included in the bill and 
modified in this amendment is inappropriate. A key mission of CFPA is 
to protect consumers as they secure credit and finance purchases. For 
many Americans, the car is the second largest purchase they will ever 
make. In a hearing this March, the Subcommittee on Commerce, Trade, and 
Consumer Protection heard about numerous abuses in the used and 
subprime car market. Witnesses testified about excessive dealership 
mark-ups that are hidden from consumers, financing deals that consumers 
are forced to renegotiate days or even weeks after they drive off the 
car lot, and hidden fees that can be added to loan amounts.
  There is a clear federal government role in strengthening consumer 
protection in the car financing area. The CFPA should have full 
authority to prescribe rules and enforce against fraud in this area. In 
addition to my general concerns about the exclusion, I am further 
concerned that the exclusion is so broad that it would allow virtually 
any activities by auto dealers to be excluded from oversight and 
enforcement by CFPA. Under this provision, an auto dealer could open a 
payday loan operation, develop financial fraud scams, or form other 
businesses under the umbrella of the dealership and remain entirely 
outside of CFPA's reach. If this provision becomes law, I expect that 
the Energy and Commerce Committee will ask the Federal Trade Commission 
to take a close look at the practices of auto dealers and to issue 
rules and conduct enforcement as necessary.
  Fourth, I remain concerned about the number of exclusions in the 
legislation and am troubled to find more in the Manager's amendment. 
For example, I believe that the exclusion for non-profit fundraising, 
while well-intentioned, would be ripe for abuse. As Chairman of the 
Oversight Committee, I held two hearings on abuses by fundraisers for 
veterans' charities. We found questionable charities and telemarketers 
who abused the public trust and took money from unsuspecting people. We 
found for-profit mailers and fundraisers creating charities in order to 
create work for themselves. A broad exclusion from CFPA authority could 
allow these fraudulent organizations to proliferate.
  Fifth, language in the Manager's amendment would add additional 
burdens to CFPA's rulemaking. We want CFPA to be strong and nimble. 
Yet, under this provision, CFPA would not be allowed to issue a ``one-
size-fits-all regulation of nonbank products.'' Instead, it would be 
allowed only to issue ``product specific rules.'' This sounds innocuous 
and these terms are not defined but I anticipate that they could tie up 
any rulemaking proceedings. For example, if CFPA were to issue a rule 
governing disclosures for loans, some could argue that this provision 
would require the agency to issue separate, duplicative rules for each 
type of entity making loans. This provision could slow CFPA from 
prescribing important consumer protection rules that apply uniformly to 
all nondepository institutions.
  Mr. Chair, again, I want to thank Chairman Frank for working with me, 
and I look forward to continuing to work on this legislation. I am 
hopeful that, together, we can work through these issues as this bill 
moves through the legislative process.
  Ms. WATERS. Madam Chair, I rise in strong support of the Manager's 
Amendment to H.R. 4173, the ``Wall Street Reform and Consumer 
Protection Act of 2009'' and the underlying bill.
  This bill will reform Wall Street and our financial system by 
ensuring that another financial collapse never happens again. The bill 
addresses all of the elements of that collapse by allowing the 
government to wind down ``too big to fail'' institutions before their 
failure threatens the entire global economy, regulating risky over-the-
counter derivatives, and requiring credit rating agencies to avoid the 
conflicts of interest that caused them to inflate the value of toxic 
assets.
  Perhaps the most important part of this bill is the creation a new 
Consumer Financial Protection Agency. This new agency's role will be to 
spot the next subprime crisis before it starts, and prevent the next 
predatory product from stripping consumers of their homes and their 
wealth.
  I would especially like to thank Financial Services Committee 
Chairman Barney Frank for including a provision, at the request of the 
Congressional Black Caucus (CBC), to use $3 billion in Troubled Asset 
Relief Program (TARP) dollars to provide low-interest loans to 
unemployed homeowners that are having difficulty making their mortgage 
payments.
  This funding is needed because our current foreclosure prevention 
programs address the initial cause of our foreclosure crisis--subprime 
and predatory lending--and not the current cause, unemployment, which 
is at 10 percent nationally.
  We know that these kinds of loans can work. Since 1983, Pennsylvania 
has run a very successful loan program that has saved 42,700 unemployed 
homeowners from foreclosure.
  Madam Chair, foreclosures and unemployment present a systemic risk to 
our economy. Therefore, I strongly urge my colleagues to vote ``yes'' 
on the Manager's Amendment and on H.R. 4173.
  The Acting CHAIR. The question is on the amendment offered by the 
gentleman from Massachusetts (Mr. Frank).
  The question was taken; and the Acting Chair announced that the ayes 
appeared to have it.
  Mr. BACHUS. Madam Chairman, I demand a recorded vote.
  The Acting CHAIR. Pursuant to clause 6 of rule XVIII, further 
proceedings on the amendment offered by the gentleman from 
Massachusetts will be postponed.


                Amendment No. 2 Offered by Mr. Sessions

  The Acting CHAIR. It is now in order to consider amendment No. 2 
printed in House Report 111-370.
  Mr. SESSIONS. Madam Chair, I have an amendment at the desk, amendment 
No. 2.
  The Acting CHAIR. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Amendment No. 2 offered by Mr. Sessions:
       Page 1068, strike lines 8 through 22.

  The Acting CHAIR. Pursuant to House Resolution 964, the gentleman 
from Texas (Mr. Sessions) and a Member opposed each will control 5 
minutes.
  The Chair now recognizes the gentleman from Texas.
  Mr. SESSIONS. Madam Chair, since 2002, Congress has significantly 
built upon the budget, the payroll, and the authorities of the 
Securities and Exchange Commission to provide proper investor and 
consumer protections. Among the SEC's many responsibilities is handling 
regulatory disputes, which they were engaged in on a day-to-day basis.
  The bill we are considering today once again increases the Securities 
and Exchange Commission budget by doubling their multibillion dollar 
budget, by doubling their multibillion dollar budget. My Democratic 
colleagues claim that the additional monies will provide additional 
protection for consumers and investors. However, instead of allowing 
the Securities and Exchange Commission to use these new

[[Page 31251]]

resources assigned in this legislation to enhance enforcement, my 
friends on the other side of the aisle, in this bill, assign new 
private rights of actions to allow trial lawyers to run wild with 
enforcement capacities.
  Madam Chair, I know that my friends, the Democrats, want both bigger 
government and an open house for trial lawyers. If they double the 
SEC's budget to ensure the necessary protections, then why would they 
also open this up to trial lawyers as well?
  For these reasons, I have introduced amendment No. 2, which strikes 
the provisions creating a new private right of action against credit 
rating agencies. Despite the fact that the SEC is already handling 
regulatory disputes with no backlog, this new provision allows trial 
lawyers to take regulatory enforcement into their own hands in the form 
of frivolous, unnecessary lawsuits. When it comes to a case of fraud, 
investors already have the right to sue credit rating agencies.
  This provision is completely unnecessary, and I encourage all of my 
colleagues to support my amendment to allow the SEC to do their job.
  I yield the balance of my time to the gentleman, my friend from New 
Jersey (Mr. Garrett) to control.

                              {time}  1810

  Mr. GARRETT of New Jersey. I thank the Chair. How much time do we 
have?
  The Acting CHAIR. The gentleman has 3 minutes remaining.
  Mr. GARRETT of New Jersey. I'll yield myself 2 minutes.
  The American public has stated, and I said so on the floor the other 
night, that it's looking for Congress to do three things: first, make 
sure that we have no more bailouts; secondly, make sure that whatever 
legislation we do does not create anymore impediments to job creation; 
and thirdly, let's make sure that we don't lead to a bigger, more 
expensive, more expansive government.
  Well, we have seen over the past several days now that the 
legislation before us would do the wrong thing on each point. It'll 
create more bailouts. It will hurt job creation. And it will create 
larger government. Now, to the underlying portion of this bill here 
dealing with credit rating agencies, we all know that it was bipartisan 
action taken by this Congress back in 2006 when we passed the 
bipartisan Credit Rating Agency Reform Act. And what did that do? That 
formalized the registration process of credit rating agencies to become 
nationally recognized statistical rating organizations.
  What are we about to do here? Throw that out the window before it's 
fully implemented, before we fully have had the opportunity to see it 
roll out and be played out as Congress intended it to in a bipartisan 
manner. We're about to throw that out. To what end?
  Well, as the gentleman from Texas just pointed out, to the end that 
you will allow for less competition in the CRAs, credit rating 
agencies, with, furthermore, unintended consequences that will be 
detrimental to the market and investors. What does that mean to people 
back at home? That means that it will be harder for them to make the 
evaluations that are necessary for the industry. That means it will be 
harder for credit to be obtained in the marketplaces, and what that 
means for businesses, of course, harder for them to get the credit they 
need to expand and create jobs.
  This amendment here is necessary to counter all the aspects of this 
bill so that we can work hard to make sure that we create jobs in this 
country, make sure that businesses that need credit can get the credit 
they need, make sure that businesses that need to be able and want to 
expand are able to expand.
  This amendment is a positive amendment. I support this amendment.
  I reserve my time.
  Mr. SHERMAN. Madam Chair, I rise to claim the time in opposition.
  The Acting CHAIR. The gentleman from California is recognized for 5 
minutes.
  Mr. SHERMAN. I now yield to the gentleman from Pennsylvania (Mr. 
Kanjorski), the Chair of the relevant subcommittee, for 1 minute.
  Mr. KANJORSKI. Madam Chairman, I rise in opposition to this 
amendment.
  During the argument, my good friend, the ranking member of my 
subcommittee from New Jersey, made a point. Now I understand why we're 
at loggerheads here. His comment was that we were enacting this piece 
of legislation to prevent any further bailouts. I only want to call 
your attention to the promise I made to the American people that we 
have no more financial crises. The bailouts follow the crises. We won't 
have to have bailouts if we don't have crises.
  And if we had responsible activity by rating agencies we wouldn't 
have had the tremendous failure last year of so many securitized 
operations that our friends around the world and most of the American 
people felt they were outright cheated by the American government, 
because there were agencies out there that had gave them 3-plus ratings 
to securities that didn't deserve it.
  Now, what we're doing here is saying a simple thing. You want to make 
those bad ratings? You don't want to follow the decorum of your own 
plans? If you want to put at risk investors, you will suffer the 
consequences and pay for your gross negligence. This is an integral 
part of this amendment and absolutely essential.
  Mr. GARRETT of New Jersey. I still reserve.
  Mr. SHERMAN. Does the gentleman from New Jersey have only one more 
speaker? Then at this point I'll yield 2 minutes to the gentleman from 
Massachusetts (Mr. Capuano).
  Mr. CAPUANO. Ladies and gentlemen, this amendment is actually quite 
simple. As Mr. Kanjorski said, it's absolutely essential to this bill. 
Without this particular amendment, credit rating agencies will not be 
held accountable for anything they do. Simply put, the SEC has failed 
to do anything, and any limited action is limited by the First 
Amendment. They have got a decision in the courts of law that their 
provisions, that their expenditures have been protected by the First 
Amendment. You cannot sue them.
  All this does--and it's a very high standard--it holds them to the 
same standards--and we'll read it--the same standards with respect to 
knowledge and recklessness as everybody else. If they know what they're 
saying is bad, or they know it is wrong, they should be held 
accountable. If they are reckless by not looking at an accounting 
report, they should be held accountable. That's all this does. It's 
actually a pretty high standard. I would actually like it a little 
lower because I have a lot of trial attorneys that need the work.
  But more importantly, what Mr. Kanjorski said is 100 percent right. 
All this does is protect the American economy, a minor little thing. 
And we have to go back many, many years. Tell me the last time a credit 
rating agency was held accountable for giving a AAA rating to a piece 
of junk. Enron, junk bonds, credit default swaps, credit default 
options squared; they're never held accountable. All this says is they 
have to actually look at the books, they have to use anything they 
know, and they cannot be reckless about it. That's all it says.
  It doesn't say they're held accountable if they're wrong, nor should 
they be. A legitimate error is fine. All this says is they have to be 
held accountable to the American public when they basically don't do 
their job.
  Mr. SHERMAN. I reserve the right to close.
  Mr. GARRETT of New Jersey. I believe that it's our right to close. 
It's our amendment.
  The Acting CHAIR. The gentleman from California has the right to 
close.
  Mr. GARRETT of New Jersey. Then I will yield to the gentleman from 
Texas (Mr. Sessions) my remaining time.
  Mr. SESSIONS. Madam Chairman, my friends who are arguing on behalf of 
trial lawyers usually argue on behalf of government, and now we're 
hearing about how government's really not empowered and really not 
going to do their job. But, at the same time, we look at a lower 
standard in this bill where we take it from knowingly or recklessly or 
grossly negligent to just gross negligence, a lower standard. This 
lower standard is there to help the

[[Page 31252]]

trial lawyers. Trial lawyers do not build value in this country. They 
diminish the value.
  We need to give the SEC the authority, the responsibility. We're 
already giving them the money. The SEC will double in size of the 
amount of money that they get as a result of this bill. We're 
empowering the SEC to do their job. We should not lower the standard 
and then allow the trial bar to come after what should be an 
enforcement action. An enforcement action is what this statute should 
be all about with the credit rating agencies.
  I'll support my amendment.
  Mr. SHERMAN. First, let's set the record straight. Republicans are 
coming to this floor calling this a bailout bill. They're quoting my 
statement that the original draft of the bill was TARP on steroids. The 
fact is this bill now reins in executive branch bailout authority, and 
the Republican substitute is the thing to vote for if you want to be a 
bailout nation.
  Second, I want to thank the Chair of the committee for including my 
revisions of section 1109 in the manager's amendment. Now as to this 
amendment. The bill's language is designed to hold credit rating 
agencies accountable. These are the agencies that gave AAA to Alt-A; 
that is to say, they gave the highest ratings to bad mortgage bonds, 
and nothing did more to put us in this recession than the trillions of 
dollars that investors bet on these bad mortgages, only to see the 
whole thing unwind.
  Now we provide that they will be held accountable. The SEC has taken 
no enforcement action. All of the incentives in the present system push 
in the wrong direction. The way a credit rating agency gets business is 
to get a reputation for being a liberal grader, so that one issuer 
after another will hire them to give the high rating to their bad 
bonds. It's like the umpire being selected by the home team. Instead, 
we need to put pressure on the other side and say that if you are 
grossly negligent in assigning a high rating to bad bonds that hurt 
investors and also hurt the entire economy, you will be held 
accountable.
  Now is the time to change the system, to make sure that the economic 
pressures on credit rating agencies are not all on the side of a 
liberal rating. We need to make it clear to credit rating agencies if 
you give AAA to Alt-A, you'll pay.

                              {time}  1820

  The Acting CHAIR. The question is on the amendment offered by the 
gentleman from Texas (Mr. Sessions).
  The question was taken; and the Acting Chair announced that the noes 
appeared to have it.
  Mr. SESSIONS. Madam Chairman, I demand a recorded vote.
  The Acting CHAIR. Pursuant to clause 6 of rule XVIII, further 
proceedings on the amendment offered by the gentleman from Texas will 
be postponed.


                Amendment No. 3 Offered by Mr. Peterson

  The Acting CHAIR. It is now in order to consider amendment No. 3 
printed in House Report 111-370.
  Mr. PETERSON. Madam Chair, I have an amendment at the desk.
  The Acting CHAIR. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Amendment No. 3 offered by Mr. Peterson:
       Page 481, strike line 8 and all that follows through page 
     665, line 6, and insert the following:

   TITLE III--DERIVATIVE MARKETS TRANSPARENCY AND ACCOUNTABILITY ACT

     SEC. 3001. SHORT TITLE.

       This title may be cited as the ``Derivative Markets 
     Transparency and Accountability Act of 2009''.

     SEC. 3002. REVIEW OF REGULATORY AUTHORITY.

       (a) Consultation.--
       (1) CFTC.--Before commencing any rulemaking or issuing an 
     order regarding swaps, swap dealers, major swap participants, 
     swap repositories, persons associated with a swap dealer or 
     major swap participant, eligible contract participants, or 
     swap execution facilities pursuant to subtitle A, the 
     Commodity Futures Trading Commission shall consult with the 
     Securities and Exchange Commission and the Prudential 
     Regulators.
       (2) SEC.--Before commencing any rulemaking or issuing an 
     order regarding security-based swaps, security-based swap 
     dealers, major security-based swap participants, security-
     based swap repositories, persons associated with a security-
     based swap dealer or major security-based swap participant, 
     eligible contract participants with regard to security-based 
     swaps, or swap execution facilities pursuant to subtitle B, 
     the Securities and Exchange Commission shall consult with the 
     Commodity Futures Trading Commission and the Prudential 
     Regulators.
       (3) In developing and promulgating rules or orders pursuant 
     to this subsection, the Commodity Futures Trading Commission 
     and the Securities and Exchange Commission shall consider 
     each other's views and the views of the Prudential 
     Regulators.
       (4) In adopting a rule or order described in paragraph (1) 
     or (2), the Commodity Futures Trading Commission and the 
     Securities and Exchange Commission shall treat functionally 
     or economically similar products or entities similarly.
       (5) Paragraph (4) shall not be construed to require the 
     Commodity Futures Trading Commission or the Securities 
     Exchange Commission to adopt a rule or order that treats 
     functionally or economically similar products or entities 
     identically.
       (b) Limitation.--
       (1) CFTC.--Nothing in this title, unless specifically 
     provided, shall be construed to confer 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 their activities or functions concerning 
     security-based swaps--
       (i) security-based swap dealers;
       (ii) major security-based swap participants;
       (iii) security-based swap 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.
       (2) SEC.--Nothing in this title, unless specifically 
     provided, shall be construed to confer jurisdiction on the 
     Securities and Exchange Commission to issue a rule, 
     regulation, or order providing for oversight or regulation 
     of--
       (A) swaps; or
       (B) with regard to their activities or functions concerning 
     swaps--
       (i) swap dealers;
       (ii) major swap participants;
       (iii) swap 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.
       (c) Objection to Commission Regulation.--
       (1) Filing of petition for review.--If either Commission 
     referred to in this section believes that a final rule, 
     regulation, or order of the other such Commission conflicts 
     with subsection (a)(4) or (b), then the complaining 
     Commission may obtain review thereof 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. 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 Secretary of the responding Commission. On 
     receipt of the petition, the responding Commission shall file 
     with the court a copy of the rule, regulation, or order under 
     review and any documents referred to therein, and any other 
     materials prescribed by the court.
       (3) Standard of review.--The court, giving deference to the 
     views of neither Commission, shall 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 court is final 
     (including any appeal of the determination).
       (d) Definitions.--In this section, the terms ``Prudential 
     Regulators'', ``swap'', ``swap dealer'', ``major swap 
     participant'', ``swap repository'', ``person associated with 
     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 repository'', and ``person associated with a security-
     based swap dealer or major security-based swap participant'' 
     shall have the meanings provided, respectively, in the 
     Commodity Exchange Act, including any modification of the 
     meanings under section 3101(b) of this Act.
       (e)(1) Notwithstanding subsections (b) and (c), the 
     Commodity Futures Trading Commission and the Securities 
     Exchange Commission shall jointly adopt rules to--

[[Page 31253]]

       (A) define the terms ``security-based swap agreement'' in 
     section 3(a)(76) of the Securities Exchange Act of 1934 and 
     ``swap'' in section 1a(35)(A)(v) of the Commodity Exchange 
     Act;
       (B) require the maintenance of records of all activities 
     related to transactions defined in subparagraph (A) that are 
     not cleared; and
       (C) make available to the Securities and Exchange 
     Commission information relating to transactions defined in 
     subparagraph (A) that are uncleared.
       (2) In the event that the Commodity Futures Trading 
     Commission and the Securities Exchange Commission fail to 
     jointly prescribe rules pursuant to paragraph (1) in a timely 
     manner, at the request of either Commission, the Financial 
     Services Oversight Council shall resolve the dispute--
       (A) within a reasonable time after receiving the request;
       (B) after consideration of relevant information provided by 
     each Commission; and
       (C) by agreeing with one of the Commissions regarding the 
     entirety of the matter or by determining a compromise 
     position.

     SEC. 3003. INTERNATIONAL HARMONIZATION.

       (a) In order to promote effective and consistent global 
     regulation of contracts of sale of swaps and security-based 
     swaps, the Commodity Futures Trading Commission, the 
     Securities and Exchange Commission, and the Prudential 
     Regulators (as defined in section 1a(42) of the Commodity 
     Exchange Act), as appropriate, shall consult and coordinate 
     with foreign regulatory authorities on the establishment of 
     consistent international standards with respect to the 
     regulation of contracts of sale of swaps and security-based 
     swaps, and may 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, swap 
     counterparties, and security-based swap counterparties.
       (b) In order to promote effective and consistent global 
     regulation of contracts of sale of a commodity for future 
     delivery, the Commodity Futures Trading Commission shall 
     consult and coordinate with foreign regulatory authorities on 
     the establishment of consistent international standards with 
     respect to the regulation of contracts of sale of a commodity 
     for future delivery, and may agree to such information-
     sharing arrangements as may be deemed necessary or 
     appropriate in the public interest for the protection users 
     of contracts of sale of a commodity for future delivery.

     SEC. 3004. PROHIBITION AGAINST GOVERNMENT ASSISTANCE.

       (a) In General.--No provision of this title shall be 
     construed to authorize Federal assistance to support clearing 
     operations or liquidation of a derivatives clearing 
     organization described in the Commodity Exchange Act or a 
     clearing agency described in the Securities Exchange Act of 
     1934, except where explicitly authorized by an Act of 
     Congress.
       (b) Definition.--For the purposes of this section, the term 
     ``Federal assistance'' means the use of public funds for the 
     purposes of--
       (1) making loans to, or purchasing any debt obligation of, 
     a derivatives clearing organization, a clearing agency, or a 
     subsidiary of either;
       (2) purchasing assets of a derivatives clearing 
     organization, a clearing agency, or a subsidiary of either;
       (3) assuming or guaranteeing the obligations of a 
     derivatives clearing organization, a clearing agency, or a 
     subsidiary of either; or
       (4) acquiring any type of equity interest or security of a 
     derivatives clearing organization, a clearing agency, or a 
     subsidiary of either.

     SEC. 3005. STUDIES.

       (a) Study on Effects of Position Limits on Trading on 
     Exchanges in the United States.--
       (1) Study.--The Commodity Futures Trading Commission, in 
     consultation with each entity that is a designated contract 
     market under the Commodity Exchange Act, shall conduct a 
     study of the effects (if any) of the position limits imposed 
     pursuant to the other provisions of this titleon excessive 
     speculation and on the movement of transactions from 
     exchanges in the United States to trading venues outside the 
     United States.
       (2) Report to the congress.--Within 12 months after the 
     imposition of position limits pursuant to the other 
     provisions of this title, the Commodity Futures Trading 
     Commission, in consultation with each entity that is a 
     designated contract market under the Commodity Exchange Act, 
     shall submit to the Congress a report on the matters 
     described in paragraph (1).
       (3) Within 30 legislative days after the submission to the 
     Congress of the report described in paragraph (2), the 
     Committee on Agriculture of the House of Representatives 
     shall hold a hearing examining the findings of the report.
       (4) In addition to the study required in paragraph (1), the 
     Chairman of the Commodity Futures Trading Commission shall 
     prepare and submit to the Congress biennial reports on the 
     growth or decline of the derivatives markets in the United 
     States and abroad, which shall include assessments of the 
     causes of any such growth or decline, the effectiveness of 
     regulatory regimes in managing systemic risk, a comparison of 
     the costs of compliance at the time of the report for market 
     participants subject to regulation by the United States with 
     the costs of compliance in December 2008 for the market 
     participants, and the quality of the available data. In 
     preparing the report, the Chairman shall solicit the views 
     of, consult with, and address the concerns raised by, market 
     participants, regulators, legislators, and other interested 
     parties.
       (b) Study on Feasibility of Requiring Use of Standardized 
     Algorithmic Descriptions for Financial Derivatives.--
       (1) In general.--The Securities and Exchange Commission and 
     the Commodity Futures Trading Commission shall conduct a 
     joint study of the feasibility of requiring the derivatives 
     industry to adopt standardized computer-readable algorithmic 
     descriptions which may be used to describe complex and 
     standardized financial derivatives.
       (2) Goals.--The algorithmic descriptions defined in the 
     study shall be designed to facilitate computerized analysis 
     of individual derivative contracts and to calculate net 
     exposures to complex derivatives. The algorithmic 
     descriptions shall be optimized for simultaneous use by:
       (A) commercial users and traders of derivatives;
       (B) derivative clearing houses, exchanges and electronic 
     trading platforms;
       (C) trade repositories and regulator investigations of 
     market activities; and
       (D) systemic risk regulators.
     The study will also examine the extent to which the 
     algorithmic description, together with standardized and 
     extensible legal definitions, may serve as the binding legal 
     definition of derivative contracts. The study will examine 
     the logistics of possible implementations of standardized 
     algorithmic descriptions for derivatives contracts. The study 
     shall be limited to electronic formats for exchange of 
     derivative contract descriptions and will not contemplate 
     disclosure of proprietary valuation models.
       (3) International coordination.--In conducting the study, 
     the Securities and Exchange Commission and the Commodity 
     Futures Trading Commission shall coordinate the study with 
     international financial institutions and regulators as 
     appropriate and practical.
       (4) Report.--Within 8 months after the date of the 
     enactment of this Act, the Securities and Exchange Commission 
     and the Commodity Futures Trading Commission shall jointly 
     submit to the Committees on Agriculture and on Financial 
     Services of the House of Representatives and the Committees 
     on Agriculture, Nutrition, and Forestry and on Banking, 
     Housing, and Urban Affairs of the Senate a written report 
     which contains the results of the study required by 
     paragraphs (1) through (3).
       (c) Study of Desirability and Feasibility of Establishing 
     Single Regulator for All Transactions Involving Financial 
     Derivatives.--
       (1) In general.--The Secretary of the Treasury, the 
     Commodity Futures Trading Commission, and the Securities and 
     Exchange Commission shall conduct a joint study of the 
     desirability and feasibility of establishing, by January 1, 
     2012, a single regulator for all transactions involving 
     financial derivatives.
       (2) Report to the congress.--Not later than December 1, 
     2010, Secretary of the Treasury, the Commodity Futures 
     Trading Commission, and the Securities and Exchange 
     Commission shall jointly submit to the Committees on 
     Agriculture and on Financial Services of the House of 
     Representatives and the Committees on Agriculture, Nutrition, 
     and Forestry and on Banking, Housing, and Urban Affairs of 
     the Senate a written report that contains the results of the 
     study required by paragraph (1).

     SEC. 3006. RECOMMENDATIONS FOR CHANGES TO INSOLVENCY LAWS.

       Not later than 180 days after the date of the enactment of 
     this Act, the Securities and Exchange Commission, the 
     Commodity Futures Trading Commission, and the Prudential 
     Regulators (as defined in section 1a of the Commodity 
     Exchange Act, as amended by section 3111 of this Act) shall 
     transmit to Congress recommendations for legislative changes 
     to the Federal insolvency laws--
       (1) in order to enhance the legal certainty with respect to 
     swap participants clearing non-proprietary swap positions 
     with a swap clearinghouse, including--
       (A) customer rights to recover margin deposits or custodial 
     property held at or through an insolvent swap clearinghouse, 
     or clearing participant; and
       (B) the enforceability of clearing rules relating to the 
     portability of customer swap positions (and associated 
     margin) upon the insolvency of a clearing participant;
       (2) to clarify and harmonize the insolvency law framework 
     applicable to entities that are both commodity brokers (as 
     defined in section 101(6) of title 11, United States Code) 
     and registered brokers or dealers (as defined in section 3(a) 
     of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a))); 
     and
       (3) to facilitate the portfolio margining of securities and 
     commodity futures and options positions held through entities 
     that are

[[Page 31254]]

     both futures commission merchants (as defined in section 1a 
     of the Commodity Exchange Act) and registered brokers or 
     dealers (as defined in section 3 of the Securities Exchange 
     Act of 1934 (15 U.S.C. 78c(a))).

     SEC. 3007. ABUSIVE SWAPS.

       The Commodity Futures Trading Commission and the Securities 
     and Exchange Commission may, by rule or order, jointly 
     collect information as may be necessary concerning the 
     markets for any types of swap (as defined in section 1a(35) 
     of the Commodity Exchange Act) or security-based swap (as 
     defined in section 1a(38) of such Act) and jointly issue a 
     report with respect to any types of swaps or security-based 
     swaps which the Commodity Futures Trading Commission and the 
     Securities and Exchange Commission find are detrimental to 
     the stability of a financial market or of participants in a 
     financial market.

     SEC. 3008. AUTHORITY TO PROHIBIT PARTICIPATION IN SWAP 
                   ACTIVITIES.

       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 that country from participating in the United States in 
     any swap or security-based swap activities.

     SEC. 3009. MEMORANDUM.

       (a)(1) The Commodity Futures Trading Commission and the 
     Federal Energy Regulatory Commission shall, not later than 
     180 days after the date of the enactment of this section, 
     negotiate a memorandum of understanding to establish 
     procedures for--
       (A) applying their respective authorities in a manner so as 
     to ensure effective and efficient regulation in the public 
     interest,
       (B) resolving conflicts concerning overlapping jurisdiction 
     between the two agencies, and
       (C) avoiding, to the extent possible, conflicting or 
     duplicative regulation.
       (2) Such memorandum and any subsequent amendments to the 
     memorandum shall be promptly submitted to the appropriate 
     committees of Congress.
       (b) The Commodity Futures Trading Commission and the 
     Federal Energy Regulatory Commission shall, not later than 
     180 days after the date of the enactment of this section, 
     negotiate a memorandum of understanding to share information 
     that may be requested where either Commission is conducting 
     an investigation into potential manipulation, fraud, or 
     market power abuse in markets subject to such Commission's 
     regulation or oversight. Shared information shall remain 
     subject to the same restrictions on disclosure applicable to 
     the Commission initially holding the information.

                 Subtitle A--Regulation of Swap Markets

     SEC. 3101. DEFINITIONS.

       (a) Amendments to Definitions in the Commodity Exchange 
     Act.--Section 1a of the Commodity Exchange Act (7 U.S.C. 1a) 
     is amended--
       (1) in paragraph (12)(A)--
       (A) in clause (vii)(III), by striking ``$25,000,000'' and 
     inserting ``$50,000,000''; and
       (B) in clause (xi), by striking ``total assets in an 
     amount'' and inserting ``amounts invested on a discretionary 
     basis'';
       (2) in paragraph (29)--
       (A) in subparagraph (D), by striking ``and'';
       (B) by redesignating subparagraph (E) as subparagraph (G); 
     and
       (C) by inserting after subparagraph (D) the following:
       ``(E) a swap execution facility registered under section 
     5h;
       ``(F) a swap repository; and''; and
       (3) by adding at the end the following:
       ``(35) Swap.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the term `swap' means any agreement, contract, or transaction 
     that--
       ``(i) is a put, call, cap, floor, collar, or similar option 
     of any kind for the purchase or sale of, 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) provides for any purchase, sale, payment, or 
     delivery (other than a dividend on an equity security) that 
     is dependent on the occurrence, non-occurrence, or the extent 
     of the occurrence of an event or contingency associated with 
     a potential financial, economic, or commercial consequence;
       ``(iii) 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, and includes any agreement, contract, or 
     transaction commonly known as an interest rate swap, a rate 
     floor, rate cap, rate collar, cross-currency rate swap, basis 
     swap, currency swap, total return swap, equity index swap, 
     equity swap, debt index swap, debt swap, credit spread, 
     credit default swap, credit swap, weather swap, energy swap, 
     metal swap, agricultural swap, emissions swap, or commodity 
     swap;
       ``(iv) is, or in the future becomes, commonly known to the 
     trade as a swap;
       ``(v) meets the definition of `swap agreement' as defined 
     in section 206A of the Gramm-Leach-Bliley Act of which a 
     material term of which 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) 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 any option on such a contract) or security 
     futures product traded on or subject to the rules of any 
     board of trade designated as a contract market under section 
     5 or 5f;
       ``(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 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.);
       ``(iv) any put, call, straddle, option, or privilege 
     relating to 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 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);
       ``(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)(1) of the Securities 
     Act of 1933 (15 U.S.C. 77b(a)(1));
       ``(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)(11) of the Securities Act of 1933) 
     (15 U.S.C. 77b(a)(11)) by the issuer of the 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 foreign exchange forward;
       ``(x) any foreign exchange swap;
       ``(xi) any agreement, contract, or transaction a 
     counterparty of which is a Federal Reserve bank, the United 
     States government or an agency of the United States 
     government that is expressly backed by the full faith and 
     credit of the United States; and
       ``(xii) any security-based swap.
       ``(C) Rule of construction regarding master agreements.--
     The term `swap' shall be construed to include a master 
     agreement that provides for an agreement, contract, or 
     transaction that is a 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 swap 
     pursuant to subparagraph (A), except that the master 
     agreement shall be considered to be a swap only with respect 
     to each agreement, contract, or transaction under the master 
     agreement that is a swap pursuant to subparagraph (A).
       ``(D) Foreign exchange swaps and forwards exception.--
       ``(i) In general.--Notwithstanding clauses (ix) and (x) of 
     subparagraph (B), foreign exchange swaps and foreign exchange 
     forwards shall be considered swaps under this paragraph if 
     the Commission makes a determination that either foreign 
     exchange swaps or foreign exchange forwards or both should be 
     regulated as swaps under this Act and the Secretary concurs 
     with such determination.
       ``(ii) Scope of authority.--

       ``(I) The Commission and the Secretary shall jointly 
     determine which of the authorities under this Act regarding 
     swaps the Commission shall exercise over foreign exchange 
     swaps and foreign exchange forwards. Such authorities shall 
     subsequently be exercised solely by the Commission. The 
     Commission and the Secretary may jointly amend any

[[Page 31255]]

     previously made determination under this subclause.
       ``(II) Notwithstanding clause (i), the Commission and the 
     Secretary of the Treasury may determine that either foreign 
     exchange swaps or foreign exchange forwards or both should 
     not be regulated as swaps under this Act if such 
     determination is jointly made.

       ``(iii) Reporting.--Notwithstanding clauses (ix) and (x) of 
     subparagraph (B) and subparagraph (D)(ii), all foreign 
     exchange swaps and foreign exchange forwards shall be 
     reported to either a swap repository, or, if there is no swap 
     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) Secretary.--For purposes of this subparagraph only, 
     the term `Secretary' means the Secretary of the Treasury.
       ``(36) Board.--The term `Board' means the Board of 
     Governors of the Federal Reserve System.
       ``(37) Security-based swap.--The term `security-based swap' 
     has the same meaning as in section 3(a)(68) of the Securities 
     and Exchange Act of 1934.
       ``(38) 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 of swaps and 
     their resale to customers in the ordinary course of a 
     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) A person may be designated a swap dealer for a single 
     type or single class or category of swap and considered not a 
     swap dealer for other types, classes, or categories of swaps.
       ``(C) De minimus exception.--The Commission shall make a 
     determination to exempt from designation as a swap dealer an 
     entity that engages in a de minimus amount of swap dealing in 
     connection with transactions with or on the behalf of its 
     customers.
       ``(39) 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 net position in outstanding 
     swaps, excluding positions held primarily for hedging, 
     reducing or otherwise mitigating its commercial risk, 
     including operating and balance sheet risk; or
       ``(ii) whose outstanding swaps create substantial net 
     counterparty exposure among the aggregate of its 
     counterparties that could expose those counterparties to 
     significant credit losses.
       ``(B) Definition of substantial net postion.--The 
     Commission shall define by rule or regulation the terms 
     `substantial net position', `substantial net counterparty 
     exposure', and `significant credit losses' at thresholds that 
     the Commission determines prudent for the effective 
     monitoring, management and oversight of entities which are 
     systemically important or can significantly impact the 
     financial system through counterparty credit risk. In setting 
     the definitions, the Commission shall consider the person's 
     relative position in uncleared as opposed to cleared swaps.
       ``(C) A person may be designated a major swap participant 
     for 1 or more individual types of swaps without being 
     classified as a major swap participant for all classes of 
     swaps.
       ``(40) Major security-based swap participant.--The term 
     `major security-based swap participant' has the same meaning 
     as in section 3(a)(67) of the Securities Exchange Act of 
     1934.
       ``(41) 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)).
       ``(42) Prudential regulator.--The term `Prudential 
     Regulator' means--
       ``(A) the Board in the case of a swap dealer, major swap 
     participant, security-based swap dealer, or major security-
     based swap participant that is--
       ``(i) a State-chartered bank that is a member of the 
     Federal Reserve System; or
       ``(ii) a State-chartered branch or agency of a foreign 
     bank;
       ``(B) the Office of the Comptroller of the Currency in the 
     case of a swap dealer, major swap participant, security-based 
     swap dealer, or major security-based swap participant that 
     is--
       ``(i) a national bank; or
       ``(ii) a federally chartered branch or agency of a foreign 
     bank; and
       ``(C) the Federal Deposit Insurance Corporation in the case 
     of a swap dealer, major swap participant, security-based swap 
     dealer, or major security-based swap participant that is a 
     State-chartered bank that is not a member of the Federal 
     Reserve System.
       ``(43) Security-based swap dealer.--The term `security-
     based swap dealer' has the same meaning as in section 
     3(a)(71) of the Securities Exchange Act of 1934.
       ``(44) 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 at the inception of the contract.
       ``(45) Foreign exchange swap.--The term `foreign exchange 
     swap' means a transaction that solely involves the exchange 
     of 2 different currencies on a specific date at a fixed rate 
     agreed at the inception of the contract, and a reverse 
     exchange of the same 2 currencies at a date further in the 
     future and at a fixed rate agreed at the inception of the 
     contract.
       ``(46) Person associated with a security-based swap dealer 
     or major security-based swap participant.--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' has the same meaning as in section 3(a)(70) of 
     the Securities Exchange Act of 1934.
       ``(47) Person associated with a swap dealer or major swap 
     participant.--The term `person associated with a swap dealer 
     or major swap participant' or `associated person of a swap 
     dealer or major swap participant' means any partner, officer, 
     director, or branch manager of a swap dealer or major swap 
     participant (or any person occupying a similar status or 
     performing similar functions), any person directly or 
     indirectly controlling, controlled by, or under common 
     control with a swap dealer or major swap participant, or any 
     employee of a swap dealer or major swap participant, except 
     that any person associated with a swap dealer or major swap 
     participant whose functions are solely clerical or 
     ministerial shall not be included in the meaning of the term 
     other than for purposes of section 4s(b)(6).
       ``(48) Swap repository.--The term `swap 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 execution facility.--The term `swap execution 
     facility' means a person or entity that facilitates the 
     execution or trading of swaps between two persons through any 
     means of interstate commerce, but which is not a designated 
     contract market, including any electronic trade execution or 
     voice brokerage facility.
       ``(50) Derivative.--The term `derivative' means--
       ``(A) a contract of sale of a commodity for future 
     delivery; or
       ``(B) a swap.''.
       (b) Authority to Further Define Terms.--The Commodity 
     Futures Trading Commission shall adopt a rule further 
     defining the terms ``swap'', ``swap dealer'', ``major swap 
     participant'', and ``eligible contract participant'' for the 
     purpose of including transactions and entities that have been 
     structured to evade this title.
       (c) Exemptions.--Section 4(c) of the Commodity Exchange Act 
     (7 U.S.C. 4(c)) is amended by adding at the end the 
     following: ``The Commission shall not have the authority to 
     grant exemptions from the provisions of sections 3101(a), 
     3101(c), 3104, 3105, 3106, 3107, 3109, 3110, 3113, 3115, 
     3120, and 3121 of the Derivative Markets Transparency and 
     Accountability Act of 2009, except as expressly authorized 
     under the provisions of that Act. Notwithstanding the 
     preceding sentence, the Commodity Futures Trading Commission 
     may exempt from any provision of the Commodity Exchange Act, 
     pursuant to this subsection, an agreement, contract, or 
     transaction that is entered into pursuant to a tariff 
     approved by the Federal Energy Regulatory Commission, if the 
     Commodity Futures Trading Commission determines that the 
     exemption would be consistent with the public interest, and 
     shall consider and not unreasonably deny any request made by 
     the Federal Energy Regulatory Commission for such an 
     exemption.''.

     SEC. 3102. JURISDICTION.

       (a) Exclusive Jurisdiction.--Section 2(a)(1) of the 
     Commodity Exchange Act (7 U.S.C. 2(a)(1)) is amended--
       (1) in the 1st sentence of subparagraph (A)--
       (A) by striking ``(c) through (i)'' and inserting ``(c) and 
     (f)'';
       (B) by inserting ``swaps, or'' before ``contracts of 
     sale'';
       (C) by striking ``derivatives transaction execution 
     facility'' and inserting ``swap execution facility''; and
       (D) by striking ``5a'' and inserting ``5h''; and
       (2) by adding at the end the following:
       ``(G)(i) Nothing in this paragraph shall limit the 
     jurisdiction conferred on the Securities and Exchange 
     Commission by the Derivative Markets Transparency and 
     Accountability Act of 2009 with regard to security-based swap 
     agreements as defined pursuant to section 3002(e) of such 
     Act, and security-based swaps.
       ``(ii) In addition to the authority of the Securities 
     Exchange Commission described in clause (i), nothing in this 
     subparagraph shall limit or affect any statutory authority of 
     the Commission with respect to an agreement, contract, or 
     transaction described in clause (i).
       ``(H)(i) Nothing in this Act shall limit or affect any 
     statutory authority of the Federal Energy Regulatory 
     Commission with respect to an agreement, contract, or 
     transaction that is--
       ``(I) not executed, traded, or cleared on a registered 
     entity or trading facility; and

[[Page 31256]]

       ``(II) entered into pursuant to a tariff or rate schedule 
     approved by the Federal Energy Regulatory Commission.
       ``(ii) In addition to the authority of the Federal Energy 
     Regulatory Commission described in clause (i), nothing in 
     this subparagraph shall limit or affect any statutory 
     authority of the Commission with respect to an agreement, 
     contract, or transaction described in clause (i).''.
       (b) Additions.--Section 2(c)(2)(A) of such 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''.
       (c) Section 12(e) of such Act (7 U.S.C. 16(e)) is amended--
       (1) in paragraph (1)(B), by inserting ``or (3)'' after 
     ``paragraph (2)'';
       (2) in paragraph (2), by striking subparagraphs (A) and (B) 
     and inserting the following:
       ``(A) a swap; and
       ``(B) an agreement, contract, or transaction that is 
     excluded from this Act under section 2(c) or 2(f) of this Act 
     or title IV of the Commodity Futures Modernization Act of 
     2000 or exempted under section 4(c) of this Act (regardless 
     of whether any such agreement, contract, or transaction is 
     otherwise subject to this Act).''; and
       (3) by adding at the end the following:
       ``(3) A swap may not be regulated as an insurance contract 
     under State law.
       ``(4) The provisions of this Act relating to swaps that 
     were enacted by the Derivative Markets Transparency and 
     Accountability Act of 2009, including any rule or regulation 
     thereunder, shall not apply to activities outside the United 
     States unless those activities--
       ``(A) have a direct and significant connection with 
     activities in or effect on United States commerce; or
       ``(B) contravene such rules or regulations as the 
     Commission may prescribe as necessary or appropriate to 
     prevent the evasion of any provision of this Act that was 
     enacted by the Derivative Markets Transparency and 
     Accountability Act of 2009.''.
       (d) Nothing in the Derivative Markets Transparency and 
     Accountability Act of 2009 or the amendments to the Commodity 
     Exchange Act made by such Act shall limit or affect any 
     statutory enforcement authority of the Federal Energy 
     Regulatory Commission pursuant to Section 222 of the Federal 
     Power Act and Section 4A of the Natural Gas Act that existed 
     prior to the date of enactment of the Derivative Markets 
     Transparency and Accountability Act of 2009.

     SEC. 3103. CLEARING AND EXECUTION TRANSPARENCY.

       (a) Clearing and Execution Transparency Requirements.--
       (1) Section 2 of the Commodity Exchange Act (7 U.S.C. 2) is 
     amended by striking subsections (d), (e), (g), and (h).
       (2)(A) Prior to the final effective dates in this title, a 
     person may petition the Commodity Futures Trading Commission 
     to remain subject to paragraphs (3) through (7) of section 
     2(h) of the Commodity Exchange Act.
       (B) The Commodity Futures Trading Commission shall consider 
     any petition submitted under subparagraph (A) in a prompt 
     manner and may allow a person to continue operating subject 
     to paragraphs (3) through (7) of section 2(h) of the 
     Commodity Exchange Act for up to one year after the effective 
     date of this subtitle.
       (3) Section 2 of such Act (7 U.S.C. 2) is further amended 
     by inserting after subsection (c) the following:
       ``(d) Swaps.--Nothing in this Act (other than subsections 
     (a)(1)(A), (a)(1)(B), (c)(2)(A)(ii), (e), (f), (j), and (k), 
     sections 4a, 4b, 4b-1, 4c(a), 4c(b), 4o, 4r, 4s, 4t, 5, 5b, 
     5c, 5h, 6(c), 6(d), 6c, 6d, 8, 8a, 9, 12(e)(2), 12(f), 13(a), 
     13(b), 21, and 22(a)(4) and such other provisions of this Act 
     as are applicable by their terms 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.''.
       (4) Section 2 of such Act (7 U.S.C. 2) is further amended 
     by inserting after subsection (i) the following:
       ``(j) Clearing Requirement.--
       ``(1) In general.--
       ``(A) Standard for clearing.--A swap shall be submitted for 
     clearing if a derivatives clearing organization that is 
     registered under this Act will accept the swap for clearing, 
     and the Commission has determined under paragraph (2)(B)(ii) 
     that the swap is required to be cleared.
       ``(B) Open access.--The rules of a derivatives clearing 
     organization described in subparagraph (A) shall--
       ``(i) prescribe that all swaps submitted to the derivatives 
     clearing organization with the same terms and conditions are 
     economically equivalent within the derivatives clearing 
     organization and may be offset with each other within the 
     derivatives clearing organization; and
       ``(ii) provide for non-discriminatory clearing of a swap 
     executed bilaterally or on or through the rules of an 
     unaffiliated designated contract market or swap execution 
     facility.
       ``(2) Commission review.--
       ``(A) Commission-initiated review.--
       ``(i) The Commission shall review each swap, or any group, 
     category, type or class of swaps to make a determination as 
     to whether the swap or group, category, type, or class of 
     swaps should be required to be cleared.
       ``(ii) The Commission shall provide at least a 30-day 
     public comment period regarding any determination made under 
     clause (i).
       ``(B) Swap submissions.--
       ``(i) A derivatives clearing organization shall submit to 
     the Commission each swap, or any group, category, type or 
     class of swaps that it plans to accept for clearing, and 
     provide notice to its members (in a manner to be determined 
     by the Commission) of the submission.
       ``(ii) The Commission shall--

       ``(I) make available to the public any submission received 
     under clause (i);
       ``(II) review each submission made under clause (i), and 
     determine whether the swap, or group, category, type, or 
     class of swaps described in the submission is required to be 
     cleared; and
       ``(III) provide at least a 30-day public comment period 
     regarding its determination as to whether the clearing 
     requirement under paragraph (1)(A) shall apply to the 
     submission.

       ``(C) Deadline.--The Commission shall make its 
     determination under subparagraph (B)(ii) not later than 90 
     days after receiving a submission made under subparagraph 
     (B)(i), unless the submitting derivatives clearing 
     organization agrees to an extension for the time limitation 
     established under this subparagraph.
       ``(D) Determination.--
       ``(i) In reviewing a submission made under subparagraph 
     (B), the Commission shall review whether the submission is 
     consistent with section 5b(c)(2),
       ``(ii) In reviewing a swap, group of swaps, or class of 
     swaps pursuant to subparagraph (A) or a submission made under 
     subparagraph (B), the Commission shall take into account the 
     following factors:

       ``(I) The existence of significant outstanding notional 
     exposures, trading liquidity and adequate pricing data.
       ``(II) The availability of rule framework, capacity, 
     operational expertise and resources, and credit support 
     infrastructure to clear the contract on terms that are 
     consistent with the material terms and trading conventions on 
     which the contract is then traded.
       ``(III) The effect on the mitigation of systemic risk, 
     taking into account the size of the market for such contract 
     and the resources of the derivatives clearing organization 
     available to clear the contract.
       ``(IV) The effect on competition, including appropriate 
     fees and charges applied to clearing.
       ``(V) The existence of reasonable legal certainty in the 
     event of the insolvency of the relevant derivatives clearing 
     organization or 1 or more of its clearing members with regard 
     to the treatment of customer and swap counterparty positions, 
     funds, and property.

       ``(iii) In making a determination under subparagraph 
     (B)(ii) that the clearing requirement shall apply, the 
     Commission may require such terms and conditions to the 
     requirement as the Commission determines to be appropriate.
       ``(E) Rules.--Not later than 1 year after the date of the 
     enactment of the Derivative Markets Transparency and 
     Accountability Act of 2009, the Commission shall adopt rules 
     for a derivatives clearing organization's submission for 
     review, pursuant to this paragraph, of a swap, or a group, 
     category, type or class of swaps, that it seeks to accept for 
     clearing.
       ``(3) Stay of clearing requirement.--
       ``(A) After a determination pursuant to paragraph (2)(B), 
     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 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), the Commission may--
       ``(i) determine, unconditionally or subject to such terms 
     and conditions as the Commission determines to be 
     appropriate, that the swap, or group, category, type or class 
     of swaps, must be cleared pursuant to this subsection if it 
     finds that such clearing is consistent with paragraph (2)(D); 
     or
       ``(ii) determine that the clearing requirement of paragraph 
     (1) shall not apply to the swap, or group, category, type or 
     class of swaps.
       ``(D) Rules.--Not later than 1 year after the date of the 
     enactment of the Derivative Markets Transparency and 
     Accountability

[[Page 31257]]

     Act of 2009, 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 it has accepted for clearing.
       ``(4) Prevention of evasion.--The Commission may prescribe 
     rules under this subsection, or issue interpretations of the 
     rules, as necessary to prevent evasions of this subsection.
       ``(5) Required reporting.--
       ``(A) In general.--All swaps that are not accepted for 
     clearing by any derivatives clearing organization shall be 
     reported either to a swap repository described in section 21 
     or, if there is no repository that would accept the swap, to 
     the Commission pursuant to section 4r within such time period 
     as the Commission may by rule or regulation prescribe. 
     Counterparties to a swap may agree which counterparty will 
     report the swap as required by this paragraph.
       ``(B) Swap dealer designation.--With regard to swaps where 
     only 1 counterparty is a swap dealer, the swap dealer shall 
     report the swap as required by this paragraph.
       ``(6) Reporting transition rules.--Rules adopted by the 
     Commission under this section shall provide for the reporting 
     of data, as follows:
       ``(A) Swaps entered into before the date of the enactment 
     of this subsection shall be reported to a registered swap 
     repository or the Commission no later than 180 days after the 
     effective date of this subsection; and
       ``(B) Swaps entered into on or after such date of enactment 
     shall be reported to a registered swap repository or the 
     Commission no 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.
       ``(7) Clearing transition rules.--
       ``(A) 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 paragraph (6)(A).
       ``(B) 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 paragraph (6)(B).
       ``(8) Exceptions.--
       ``(A) In general.--The requirements of paragraph (1) shall 
     not apply to a swap if one of the counterparties to the 
     swap--
       ``(i) is not a swap dealer or major swap participant;
       ``(ii) is using swaps to hedge or mitigate commercial risk, 
     including operating or balance sheet risk; and
       ``(iii) notifies the Commission, in a manner set forth by 
     the Commission, how it generally meets its financial 
     obligations associated with entering into non-cleared swaps.
       ``(B) Abuse of exception.--The Commission may prescribe 
     rules under this subsection, or issue interpretations of the 
     rules, as necessary to prevent abuse of the exemption in 
     subparagraph (A) by swap dealers and major swap participants.
       ``(C) Option to clear.--The application of the clearing 
     exception in subparagraph (A) is solely at the discretion of 
     the counterparty to the swap that meets the conditions of 
     clauses (i) through (iii) of subparagraph (A).
       ``(k) Execution Transparency.--
       ``(1) Requirement.--A swap that is subject to the clearing 
     requirement of subsection (j) shall not be traded except on 
     or through a board of trade designated as a contract market 
     under section 5, or on or through a swap execution facility 
     registered under section 5h, that makes the swap available 
     for trading.
       ``(2) Exceptions.--The requirement of paragraph (1) shall 
     not apply to a swap if no designated contract market or swap 
     execution facility makes the swap available for trading.
       ``(3) Agricultural swaps.--No person shall offer to enter 
     into, enter into or confirm the execution of, any swap in an 
     agricultural commodity (as defined by the Commission) that is 
     subject to paragraphs (1) and (2) except pursuant to a rule 
     or regulation of the Commission allowing the swap under such 
     terms and conditions as the Commission shall prescribe.
       ``(4) Required reporting.--If the exception of 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).
       ``(5) Exchange trading.--In adopting rules and regulations, 
     the Commission shall endeavor to eliminate unnecessary 
     impediments to the trading on boards of trade designated as 
     contract markets under section 5 of contracts, agreements, or 
     transactions that would be security-based swaps but for the 
     trading of such contracts, agreements or transactions on such 
     a designated contract market.''.
       (b) Derivatives Clearing Organizations.--
       (1) Subsections (a) and (b) of section 5b of such Act (7 
     U.S.C. 7a-1) are amended to read as follows:
       ``(a) Registration Requirement.--
       ``(1) In general.--It shall be unlawful for any entity, 
     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 derivatives 
     clearing organization described in section 1a(10) of this Act 
     with respect to--
       ``(A) a contract of sale of a commodity for future delivery 
     (or option on such a contract) or option on a commodity, in 
     each case unless the contract or option is--
       ``(i) excluded from this Act by section 2(a)(1)(C)(i), 
     2(c), or 2(f); 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) Existing banks and clearing agencies.--A bank or a 
     clearing agency registered with the Securities and Exchange 
     Commission under the Securities Exchange Act of 1934 required 
     to be registered as a derivatives clearing organization under 
     this section is deemed to be registered under this section to 
     the extent that the bank cleared swaps, as defined in this 
     Act, as a multilateral clearing organization or the clearing 
     agency cleared swaps, as defined in this Act, before the 
     enactment of this subsection. A bank to which this paragraph 
     applies may, by the vote of the shareholders owning not less 
     than 51 percent of the voting interests of the bank, be 
     converted into a State corporation, partnership, limited 
     liability company, or other similar legal form pursuant to a 
     plan of conversion, if the conversion is not in contravention 
     of applicable State law.
       ``(b) Voluntary Registration.--A person that clears 
     agreements, contracts, or transactions that are not required 
     to be cleared under this Act may register with the Commission 
     as a derivatives clearing organization.''.
       (2) Section 5b of such Act (7 U.S.C. 7a-1) is amended by 
     adding at the end the following:
       ``(g) Rules.--Not later than 1 year after the date of the 
     enactment of the Derivative Markets Transparency and 
     Accountability Act of 2009, the Commission shall adopt rules 
     governing persons that are registered as derivatives clearing 
     organizations for swaps under this subsection.
       ``(h) Exemptions.--
       ``(1) In general.--The Commission may exempt, conditionally 
     or unconditionally, a derivatives clearing organization from 
     registration under this section for the clearing of swaps if 
     the Commission finds that the derivatives clearing 
     organization is subject to comparable, comprehensive 
     supervision and regulation on a consolidated basis by a 
     Prudential Regulator or the appropriate governmental 
     authorities in the organization's home country.
       ``(2) A person that is required to be registered as a 
     derivatives clearing organization under this section, whose 
     principal business is clearing securities and options on 
     securities and which is a clearing agency registered with the 
     Securities Exchange Commission under the Securities Exchange 
     Act of 1934 (15 U.S.C. 78a et seq.), shall be unconditionally 
     exempt from registration under this section solely for the 
     purpose of clearing swaps, unless the Commission finds that 
     the clearing agency is not subject to comparable, 
     comprehensive supervision and regulation by the Securities 
     and Exchange Commission.
       ``(i) Designation of Compliance Officer.--
       ``(1) In general.--Each derivatives clearing organization 
     shall designate an individual to serve as a compliance 
     officer.
       ``(2) Duties.--The compliance officer--
       ``(A) shall report directly to the board or to the senior 
     officer of the derivatives clearing organization; and
       ``(B) shall--
       ``(i) review compliance with the core principles in section 
     5b(c)(2).
       ``(ii) in consultation with the board of the derivatives 
     clearing organization, a body performing a function similar 
     to that of a board, or the senior officer of the derivatives 
     clearing organization, resolve any conflicts of interest that 
     may arise;
       ``(iii) be responsible for administering the policies and 
     procedures required to be established pursuant to this 
     section; and
       ``(iv) ensure compliance with this Act and the rules and 
     regulations issued under this Act; and
       ``(C) shall establish procedures for remediation of non-
     compliance issues found during compliance office reviews, 
     lookbacks, internal or external audit findings, self-reported 
     errors, or through validated complaints. The procedures shall 
     establish the handling, management response, remediation, re-
     testing, and closing of non-compliant issues.
       ``(3) Annual reports required.--The compliance officer 
     shall annually prepare and sign a report on the compliance of 
     the derivatives clearing organization with this Act and the 
     policies and procedures of the derivatives clearing 
     organization, including the code of ethics and conflict of 
     interest policies of the derivatives clearing organization, 
     in accordance with rules prescribed by the Commission. The 
     compliance report shall accompany the financial reports of 
     the derivatives clearing organization that are required to be 
     furnished to the Commission pursuant

[[Page 31258]]

     to this section and shall include a certification that, under 
     penalty of law, the report is accurate and complete.''.
       (3) Section 5b(c)(2) of such Act (7 U.S.C. 7a-1(c)(2)) is 
     amended to read as follows:
       ``(2) Core principles for derivatives clearing 
     organizations.--
       ``(A) In general.--To be registered and to maintain 
     registration as a derivatives clearing organization, a 
     derivatives clearing organization shall comply with the core 
     principles specified in this paragraph and any requirement 
     that the Commission may impose by rule or regulation pursuant 
     to section 8a(5). Except where the Commission determines 
     otherwise by rule or regulation, a derivatives clearing 
     organization shall have reasonable discretion in establishing 
     the manner in which the organization complies with the core 
     principles.
       ``(B) Financial resources.--
       ``(i) The derivatives clearing organization shall have 
     adequate financial, operational, and managerial resources to 
     discharge the responsibilities of the organization.
       ``(ii) The financial resources of the derivatives clearing 
     organization shall at a minimum exceed the total amount that 
     would--

       ``(I) enable the organization to meet the financial 
     obligations of the organization to the members of, and 
     participants in, the organization, notwithstanding a default 
     by the member or participant creating the largest financial 
     exposure for the organization in extreme but plausible market 
     conditions; and
       ``(II) enable the organization to cover the operating costs 
     of the organization for a period of 1 year, calculated on a 
     rolling basis.

       ``(C) Participant and product eligibility.--
       ``(i) The 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 organization) for members of and 
     participants in the organization; and
       ``(II) appropriate standards for determining eligibility of 
     agreements, contracts, or transactions submitted to the 
     organization for clearing.

       ``(ii) The derivatives clearing organization shall have 
     procedures in place to verify that participation and 
     membership requirements are met on an ongoing basis.
       ``(iii) The participation and membership requirements of 
     the derivatives clearing organization shall be objective, 
     publicly disclosed, and permit fair and open access.
       ``(D) Risk management.--
       ``(i) The derivatives clearing organization shall have the 
     ability to manage the risks associated with discharging the 
     responsibilities of a derivatives clearing organization 
     through the use of appropriate tools and procedures.
       ``(ii) The derivatives clearing organization shall measure 
     the credit exposures of the organization to the members of, 
     and participants in, the organization at least once each 
     business day and shall monitor the exposures throughout the 
     business day.
       ``(iii) Through margin requirements and other risk control 
     mechanisms, a derivatives clearing organization shall limit 
     the exposures of the organization to potential losses from 
     defaults by the members of, and participants in, the 
     organization so that the operations of the organization would 
     not be disrupted and non-defaulting members or participants 
     would not be exposed to losses that they cannot anticipate or 
     control.
       ``(iv) Margin required from all members and participants 
     shall be sufficient to cover potential exposures in normal 
     market conditions.
       ``(v) The models and parameters used in setting margin 
     requirements shall be risk-based and reviewed regularly.
       ``(E) Settlement procedures.--The derivatives clearing 
     organization shall--
       ``(i) complete money settlements on a timely basis, and not 
     less than once each business day;
       ``(ii) employ money settlement arrangements that eliminate 
     or strictly limit the exposure of the organization to 
     settlement bank risks, such as credit and liquidity risks 
     from the use of banks to effect money settlements;
       ``(iii) ensure money settlements are final when effected;
       ``(iv) maintain an accurate record of the flow of funds 
     associated with each money settlement;
       ``(v) have the ability to comply with the terms and 
     conditions of any permitted netting or offset arrangements 
     with other clearing organizations; and
       ``(vi) for physical settlements, establish rules that 
     clearly state the obligations of the organization with 
     respect to physical deliveries, including how risks from 
     these obligations shall be identified and managed.
       ``(F) Treatment of funds.--
       ``(i) The derivatives clearing organization shall have 
     standards and procedures designed to protect and ensure the 
     safety of member and participant funds and assets.
       ``(ii) The derivatives clearing organization shall hold 
     member and participant funds and assets in a manner whereby 
     risk of loss or of delay in the access of the organization to 
     the assets and funds is minimized.
       ``(iii) Assets and funds invested by the derivatives 
     clearing organization shall be held in instruments with 
     minimal credit, market, and liquidity risks.
       ``(G) Default rules and procedures.--
       ``(i) The derivatives clearing organization shall have 
     rules and procedures designed to allow for the efficient, 
     fair, and safe management of events when members or 
     participants become insolvent or otherwise default on their 
     obligations to the organization.
       ``(ii) The default procedures of the derivatives clearing 
     organization shall be clearly stated, and they shall ensure 
     that the organization can take timely action to contain 
     losses and liquidity pressures and to continue meeting the 
     obligations of the organization.
       ``(iii) The default procedures shall be publicly available.
       ``(H) Rule enforcement.--The derivatives clearing 
     organization shall--
       ``(i) maintain adequate arrangements and resources for the 
     effective monitoring and enforcement of compliance with rules 
     of the organization and for resolution of disputes; and
       ``(ii) have the authority and ability to discipline, limit, 
     suspend, or terminate the activities of a member or 
     participant for violations of rules of the organization.
       ``(I) System safeguards.--The 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 the development of 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 
     the timely recovery and resumption of operations and the 
     fulfillment of the responsibilities and obligations of the 
     organization; and
       ``(iii) 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.
       ``(J) Reporting.--The derivatives clearing organization 
     shall provide to the Commission all information necessary for 
     the Commission to conduct oversight of the organization.
       ``(K) Recordkeeping.--The derivatives clearing organization 
     shall maintain records of all activities related to the 
     business of the organization as a derivatives clearing 
     organization in a form and manner acceptable to the 
     Commission for a period of 5 years.
       ``(L) Public information.--
       ``(i) The derivatives clearing organization shall provide 
     market participants with sufficient information to identify 
     and evaluate accurately the risks and costs associated with 
     using the services of the organization.
       ``(ii) The derivatives clearing organization shall make 
     information concerning the rules and operating procedures 
     governing the clearing and settlement systems (including 
     default procedures) of the organization available to market 
     participants.
       ``(iii) The derivatives clearing organization shall 
     disclose publicly and to the Commission information 
     concerning--

       ``(I) the terms and conditions of contracts, agreements, 
     and transactions cleared and settled by the organization;
       ``(II) clearing and other fees that the organization 
     charges the members of, and participants in, the 
     organization;
       ``(III) the margin-setting methodology and the size and 
     composition of the financial resource package of the 
     organization;
       ``(IV) other information relevant to participation in the 
     settlement and clearing activities of the organization; and
       ``(V) daily settlement prices, volume, and open interest 
     for all contracts settled or cleared by the organization.

       ``(M) Information-sharing.--The derivatives clearing 
     organization shall--
       ``(i) enter into and abide by the terms of all appropriate 
     and applicable domestic and international information-sharing 
     agreements; and
       ``(ii) use relevant information obtained from the 
     agreements in carrying out the risk management program of the 
     organization.
       ``(N) Antitrust considerations.--The derivatives clearing 
     organization shall avoid--
       ``(i) adopting any rule or taking any action that results 
     in any unreasonable restraint of trade; or
       ``(ii) imposing any material anticompetitive burden.
       ``(O) Governance fitness standards.--
       ``(i) The derivatives clearing organization shall establish 
     governance arrangements that are transparent in order to 
     fulfill public interest requirements and to support the 
     objectives of the owners of, and participants in, the 
     organization.
       ``(ii) The derivatives clearing organization shall 
     establish and enforce appropriate fitness standards for the 
     directors, members of any disciplinary committee, and members 
     of the organization, and any other persons with direct access 
     to the settlement or clearing activities of the organization, 
     including any parties affiliated with any of the persons 
     described in this subparagraph.
       ``(P) Conflicts of interest.--The derivatives clearing 
     organization shall establish and enforce rules to minimize 
     conflicts of interest in the decision-making process of the

[[Page 31259]]

     organization and establish a process for resolving the 
     conflicts of interest.
       ``(Q) Composition of the boards.--The derivatives clearing 
     organization shall ensure that the composition of the 
     governing board or committee includes market participants.
       ``(R) Legal risk.--The derivatives clearing organization 
     shall have a well founded, transparent, and enforceable legal 
     framework for each aspect of its activities.''.
       (4) Section 5b of such Act (7 U.S.C. 7a-1) is further 
     amended by adding after subsection (i), as added by this 
     section, the following:
       ``(j) Reporting.--
       ``(1) In general.--A derivatives clearing organization that 
     clears swaps shall provide to the Commission all information 
     determined by the Commission to be necessary to perform the 
     responsibilities of the Commission under this Act. The 
     Commission shall adopt data collection and maintenance 
     requirements for swaps cleared by derivatives clearing 
     organizations that are comparable to the corresponding 
     requirements for swaps accepted by swap repositories and 
     swaps traded on swap execution facilities. The Commission 
     shall share the information, upon request, with the Board, 
     the Securities and Exchange Commission, the appropriate 
     Federal banking agencies, the Financial Services Oversight 
     Council, and the Department of Justice or other persons the 
     Commission deems appropriate, including foreign financial 
     supervisors (including foreign futures authorities), foreign 
     central banks, and foreign ministries that comply with the 
     provisions of section 8.
       ``(2) Public information.--A derivatives clearing 
     organization that clears swaps shall provide to the 
     Commission, or its designee, such information as is required 
     by, and in a form and at a frequency to be determined by, the 
     Commission, in order to comply with the public reporting 
     requirements contained in section 8(j).
       ``(3) A derivatives clearing organization shall keep any 
     such books and records relating to swaps defined in section 
     1a(35)(A)(v) open to inspection and examination by the 
     Securities and Exchange Commission.''.
       (5) Section 8(e) of such Act (7 U.S.C. 12(e)) is amended in 
     the last sentence by inserting ``central bank and 
     ministries'' after ``department'' each place it appears.
       (c) Legal Certainty for Identified Banking Products.--
       (1) Repeal.--Sections 402(d), 404, 407, 408(b), and 
     408(c)(2) of the Legal Certainty for Bank Products Act of 
     2000 (7 U.S.C. 27(d), 27b, 27e, 27f(b), and 27f(c)(2)) are 
     repealed.
       (2) Legal certainty.--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 shall not apply to, and 
     the Commodity Futures Trading Commission shall not exercise 
     regulatory authority under such Act 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)(76) of the 
     Securities Exchange Act of 1934 do not include any identified 
     banking product.
       ``(b) Exception.--An appropriate Federal banking agency may 
     except an identified banking product of a bank under its 
     regulatory jurisdiction from the exclusions 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 swap in section 1a(35) 
     of the Commodity Exchange Act (7 U.S.C. 1a(35)) or security-
     based swap in section 3(a)(68) of the Securities and 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 banking 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(35) of the 
     Commodity Exchange Act or security-based swap in section 
     3(a)(68) of the Securities and 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. 3104. PUBLIC REPORTING OF AGGREGATE SWAP DATA.

       Section 8 of the Commodity Exchange Act (7 U.S.C. 12) is 
     amended by adding at the end the following:
       ``(j) Public Reporting of Aggregate Swap Data.--
       ``(1) In general.--The Commission, or a person designated 
     by the Commission pursuant to paragraph (2), 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 swap trading volumes and positions from the 
     sources set forth in paragraph (3).
       ``(2) Designee of the commission.--The Commission may 
     designate a derivatives clearing organization or a swap 
     repository to carry out the public reporting described in 
     paragraph (1).
       ``(3) Sources of information.--The sources of the 
     information to be publicly reported as described in paragraph 
     (1) are--
       ``(A) derivatives clearing organizations pursuant to 
     section 5b(j)(2);
       ``(B) swap repositories pursuant to section 21(c)(3); and
       ``(C) reports received by the Commission pursuant to 
     section 4r.''.

     SEC. 3105. SWAP REPOSITORIES.

       The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended 
     by inserting after section 20 the following:

     ``SEC. 21. SWAP 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 
     repository.
       ``(2) Inspection and examination.--Registered swap 
     repositories shall be subject to inspection and examination 
     by any representative of the Commission.
       ``(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 
     repository.
       ``(2) Data collection and maintenance.--The Commission 
     shall prescribe data collection and data maintenance 
     standards for swap 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 that clear swaps.
       ``(c) Duties.--A swap repository shall--
       ``(1) accept data prescribed by the Commission for each 
     swap under subsection (b);
       ``(2) maintain the data in such form and manner and for 
     such period as may be required by the Commission;
       ``(3) provide to the Commission, or its designee, such 
     information as is required by, and in a form and at a 
     frequency to be determined by, the Commission, in order to 
     comply with the public reporting requirements contained in 
     section 8(j); and
       ``(4) make available, on a confidential basis pursuant to 
     section 8, all data obtained by the swap repository, 
     including individual counterparty trade and position data, to 
     the Commission, the appropriate Federal banking agencies, the 
     Financial Services Oversight Council, the Securities and 
     Exchange Commission, and the Department of Justice or to 
     other persons the Commission deems appropriate, including 
     foreign financial supervisors (including foreign futures 
     authorities), foreign central banks, and foreign ministries.
       ``(d) Rules.--Not later than 1 year after the date of the 
     enactment of the Derivative Markets Transparency and 
     Accountability Act of 2009, the Commission shall adopt rules 
     governing persons that are registered under this section, 
     including rules that specify the data elements that shall be 
     collected and maintained.
       ``(e) Exemptions.--The Commission may exempt, conditionally 
     or unconditionally, a swap repository from the requirements 
     of this section if the Commission finds that the swap 
     repository 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 
     organization's home country.''.

     SEC. 3106. REPORTING AND RECORDKEEPING.

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

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

       ``(a) In General.--Any person who enters into a swap and--
       ``(1) did not have the swap cleared in accordance with 
     section 2(j)(1); and
       ``(2) did not have data regarding the swap accepted by a 
     swap repository in accordance with rules (including 
     timeframes) adopted by the Commission under section 21,
     shall meet the requirements in subsection (b).
       ``(b) Reports.--Any person described in subsection (a) 
     shall--
       ``(1) make such reports in such form and manner and for 
     such period as the Commission shall prescribe by rule or 
     regulation regarding the swaps held by the person; and
       ``(2) keep books and records pertaining to the swaps held 
     by the person in such form and manner and for such period as 
     may be required by the Commission, which books and records 
     shall be open to inspection by

[[Page 31260]]

     any representative of the Commission, an appropriate Federal 
     banking agency, the Securities and Exchange Commission, the 
     Financial Services Oversight Council, and the Department of 
     Justice.
       ``(c) Identical Data.--In adopting rules under this 
     section, the Commission shall require persons described in 
     subsection (a) to report the same or a more comprehensive set 
     of data than the Commission requires swap repositories to 
     collect under section 21.''.

     SEC. 3107. 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 3106) the 
     following:

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

       ``(a) Registration.--
       ``(1) 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) 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.--The application shall be made in such form 
     and manner as prescribed by the Commission, giving any 
     information and facts as the Commission may deem necessary 
     concerning the business in which the applicant is or will be 
     engaged. The person, when registered as a swap dealer or 
     major swap participant, shall continue to report and furnish 
     to the Commission such information pertaining to the person's 
     business as the Commission may require.
       ``(3) Expiration.--Each registration shall expire at such 
     time as the Commission may by rule or regulation prescribe.
       ``(4) Rules.--Except as provided in subsections (c), (d) 
     and (e), the Commission may prescribe rules applicable to 
     swap dealers and major swap participants, including rules 
     that limit the activities of swap dealers and major swap 
     participants. Except with regard to subsection (d)(1)(A), the 
     Commission may provide conditional or unconditional 
     exemptions from some or all of the rules or requirements 
     prescribed under this section for swap dealers and major swap 
     participants.
       ``(5) Transition.--Rules adopted under this section shall 
     provide for the registration of swap dealers and major swap 
     participants no later than 1 year after the effective date of 
     the Derivative Markets Transparency and Accountability Act of 
     2009.
       ``(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 exercise of reasonable care should have 
     known, of the statutory disqualification.
       ``(c) Rules.--
       ``(1) In general.--Not later than 1 year after the date of 
     the enactment of this section, 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.--The 
     Commission shall not prescribe rules imposing prudential 
     requirements on swap dealers or major swap participants for 
     which there is a Prudential Regulator. This provision shall 
     not be construed as limiting the authority of the Commission 
     to prescribe appropriate business conduct, reporting, and 
     recordkeeping requirements to protect investors.
       ``(d) Capital and Margin Requirements.--
       ``(1) In general.--
       ``(A) Bank swap dealers and major swap participants.--Each 
     registered swap dealer and major swap participant for which 
     there is a Prudential Regulator shall meet such minimum 
     capital requirements and minimum initial and variation margin 
     requirements as the Prudential Regulators shall by rule or 
     regulation jointly prescribe that:
       ``(i) help ensure the safety and soundness of the swap 
     dealer or major swap participant; and
       ``(ii) are appropriate for the risk associated with the 
     non-cleared swaps held as a swap dealer or major swap 
     participant.
       ``(B) Non-bank swap dealers and major swap participants.--
     Each registered swap dealer and major swap participant for 
     which there is not a Prudential Regulator shall meet such 
     minimum capital requirements and minimum initial and 
     variation margin requirements as the Commission shall by rule 
     or regulation prescribe that--
       ``(i) help ensure the safety and soundness of the swap 
     dealer or major swap participant; and
       ``(ii) are appropriate for the risk associated with the 
     non-cleared swaps held as a swap dealer or major swap 
     participant.
       ``(2) Rules.--
       ``(A) Bank swap dealers and major swap participants.--No 
     later than 1 year after the date of the enactment of the 
     Derivative Markets Transparency and Accountability Act of 
     2009, the Prudential Regulators, in consultation with the 
     Commission, shall jointly adopt rules imposing capital and 
     margin requirements under this subsection for swap dealers 
     and major swap participants, with respect to their activities 
     as a swap dealer or major swap participant for which there is 
     a Prudential Regulator
       ``(B) Non-bank swap dealers and major swap participants.--
     No later than 1 year after the date of the enactment of the 
     Derivative Markets Transparency and Accountability Act of 
     2009, the Commission shall adopt rules imposing capital and 
     margin requirements under this subsection for swap dealers 
     and major swap participants for which there is no Prudential 
     Regulator.
       ``(3) Authority.--Nothing in this section shall limit the 
     authority of the Commission to set capital requirements for a 
     registered futures commission merchant or introducing broker 
     in accordance with section 4f.
       ``(e) Reporting and Recordkeeping.--
       ``(1) In general.--Each registered swap dealer and major 
     swap participant--
       ``(A) shall make such reports as are prescribed by the 
     Commission by rule or regulation regarding the transactions 
     and positions and financial condition of the person;
       ``(B) for which--
       ``(i) there is a Prudential Regulator, shall keep books and 
     records of all activities related to its 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;
       ``(ii) 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;
       ``(C) shall keep the books and records open to inspection 
     and examination by any representative of the Commissionl and
       ``(D) shall keep any such books and records relating to 
     swaps defined in section 1a(35)(A)(v) open to inspection and 
     examination by the Securities and Exchange Commission.
       ``(2) Rules.--No later than 1 year after the date of the 
     enactment of the Derivative Markets Transparency and 
     Accountability Act of 2009, the Commission shall adopt rules 
     governing reporting and recordkeeping for swap dealers and 
     major swap participants.
       ``(f) Daily Trading Records.--
       ``(1) In general.--Each registered swap dealer and major 
     swap participant shall maintain daily trading records of its 
     swaps and all related records (including related cash or 
     forward transactions) and recorded communications including 
     but not limited to electronic mail, instant messages, and 
     recordings of telephone calls, for such period as may be 
     prescribed by the Commission by rule or regulation.
       ``(2) Information requirements.--The daily trading records 
     shall include such information as the Commission shall 
     prescribe by rule or regulation.
       ``(3) Customer records.--Each registered swap dealer and 
     major swap participant shall maintain daily trading records 
     for each customer or counterparty in such manner and form as 
     to be 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.
       ``(5) Rules.--No later than 1 year after the date of the 
     enactment of the Derivative Markets Transparency and 
     Accountability Act of 2009, the Commission shall adopt rules 
     governing daily trading records for swap dealers and major 
     swap participants.
       ``(g) Business Conduct Standards.--
       ``(1) In general.--Each registered swap dealer and major 
     swap participant shall conform with business conduct 
     standards as may be prescribed by the Commission by rule or 
     regulation addressing--
       ``(A) fraud, manipulation, and other abusive practices 
     involving swaps (including swaps that are offered but not 
     entered into);
       ``(B) diligent supervision of its business as a swap 
     dealer;
       ``(C) adherence to all applicable position limits; and
       ``(D) such other matters as the Commission shall determine 
     to be necessary or appropriate.
       ``(2) 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 or major swap participant) of--
       ``(i) information about the material risks and 
     characteristics of the swap;
       ``(ii) for cleared swaps, upon the request of the 
     counterparty, the daily mark from the appropriate derivatives 
     clearing organization, and for non-cleared swaps, upon 
     request of the counterparty, the daily mark of the swap 
     dealer or major swap participant; and

[[Page 31261]]

       ``(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
       ``(C) establish such other standards and requirements as 
     the Commission may determine are necessary or appropriate in 
     the public interest, for the protection of investors, or 
     otherwise in furtherance of the purposes of this Act.
       ``(3) Rules.--The Commission shall prescribe rules under 
     this subsection governing business conduct standards for swap 
     dealers and major swap participants no later than 1 year 
     after the date of the enactment of the Derivative Markets 
     Transparency and Accountability Act of 2009.
       ``(h) Documentation Standards.--
       ``(1) In general.--Each registered swap dealer and major 
     swap participant shall conform with standards, as may be 
     prescribed by the Commission by rule or regulation, 
     addressing timely and accurate confirmation, processing, 
     netting, documentation, and valuation of all swaps.
       ``(2) Rules.--No later than 1 year after the date of the 
     enactment of the Derivative Markets Transparency and 
     Accountability Act of 2009, the Commission shall adopt rules 
     governing the standards described in paragraph (1) for swap 
     dealers and major swap participants.
       ``(i) Dealer Responsibilities.--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) Disclosure of general information.--The swap dealer 
     or major swap participant shall disclose to the Commission or 
     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.
       ``(3) 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 or to the 
     Prudential Regulator for the swap dealer or major swap 
     participant, as applicable, upon request.
       ``(4) 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 
     assure 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 those whose involvement in trading or clearing 
     activities might potentially bias their judgment or 
     supervision; and
       ``(B) address such other issues as the Commission 
     determines appropriate.
       ``(5) Antitrust considerations.--The swap dealer or major 
     swap participant shall avoid--
       ``(A) adopting any processes or taking any actions that 
     result in any unreasonable restraints of trade; or
       ``(B) imposing any material anticompetitive burden on 
     trading.''.

     SEC. 3108. CONFLICTS OF INTEREST.

       Section 4d of the Commodity Exchange Act (7 U.S.C. 6d) is 
     amended by--
       (1) redesignating subsection (c) as subsection (d); and
       (2) 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 
     assure 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 those whose involvement in trading or clearing 
     activities might potentially bias their judgment or 
     supervision; and
       ``(2) address such other issues as the Commission 
     determines appropriate.''.

     SEC. 3109. SWAP EXECUTION FACILITIES.

       The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended 
     by inserting after section 5g the following:

     ``SEC. 5H. SWAP EXECUTION FACILITIES.

       ``(a) Registration.--A person may not operate a swap 
     execution facility unless the facility is registered under 
     this section or is registered with the Commission as a 
     designated contract market under section 5 or a swap 
     execution facility under section 5.
       ``(b) Requirements for Trading.--
       ``(1) A swap execution facility that is registered under 
     subsection (a) may make available for trading any swap.
       ``(2) Rules for trading through the facility.--Not later 
     than 1 year after the date of the enactment of the Derivative 
     Markets Transparency and Accountability Act of 2009, the 
     Commission shall adopt rules to allow a swap to be traded 
     through the facilities of a designated contract market or a 
     swap execution facility. Such rules shall permit an 
     intermediary, acting as principal or agent, to enter into or 
     execute a swap, notwithstanding section 2(k), if the swap is 
     executed, reported, recorded, or confirmed in accordance with 
     the rules of the designated contract market or swap execution 
     facility.
       ``(3) Agricultural swaps.--A swap execution facility may 
     not list for trading or confirm the execution of any swap in 
     an agricultural commodity (as defined by the Commission) 
     except pursuant to a rule or regulation of the Commission 
     allowing the swap under such terms and conditions as the 
     Commission shall prescribe.
       ``(c) Trading 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 trading 
     on the contract market and the swap execution facility, 
     identify whether the electronic trading is taking place on 
     the contract market or the swap execution facility.
       ``(d) Core Principles for Swap Execution Facilities.--
       ``(1) In general.--To be registered as, and to maintain its 
     registration as, a swap execution facility, the facility 
     shall comply with the core principles specified in this 
     subsection and any requirement that the Commission may impose 
     by rule or regulation pursuant to section 8a(5). Except where 
     the Commission determines otherwise by rule or regulation, 
     the facility shall have reasonable discretion in establishing 
     the manner in which it complies with these core principles.
       ``(2) Compliance with rules.--The swap execution facility 
     shall--
       ``(A) monitor and enforce compliance with any of the rules 
     of the facility, including the terms and conditions of the 
     swaps traded on or through the facility and any limitations 
     on access to the facility; and
       ``(B) establish and enforce trading and participation rules 
     that will deter abuses and have the capacity to detect, 
     investigate, and enforce those rules, including means to--
       ``(i) provide market participants with impartial access to 
     the market; and
       ``(ii) capture information that may be used in establishing 
     whether rule violations have occurred.
       ``(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.--The swap execution facility 
     shall--
       ``(A) establish and enforce rules or terms and conditions 
     defining, or specifications detailing, trading procedures to 
     be used in entering and executing orders traded on or through 
     its facilities; 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 upon 
     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) 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 its contracts made available for 
     trading on the trading facility, where necessary and 
     appropriate, position limitations or position accountability 
     for speculators who establish positions in the contract.
       ``(B) For any contract of a swap execution facility that is 
     subject to a position limitation established by the 
     Commission pursuant to section 4a(a), the swap execution 
     facility--
       ``(i) may set a position limitation at a level that is 
     lower than the Commission limitation; and
       ``(ii) shall monitor positions established on or through 
     the swap execution facility for compliance with the limit set 
     by the Commission and the limit, if any, set by the swap 
     execution facility.
       ``(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 its facilities, including the clearance 
     and settlement of the swaps pursuant to section 2(j)(1).
       ``(8) Emergency authority.--The swap execution facility 
     shall adopt rules to provide

[[Page 31262]]

     for the exercise of emergency authority, in consultation or 
     cooperation with the Commission, where 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.--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. The Commission shall 
     evaluate the impact of public disclosure on market liquidity 
     in the relevant market, and shall seek to avoid public 
     disclosure of information in a manner that would 
     significantly reduce market liquidity. The Commission shall 
     not disclose information related to the internal business 
     decisions of particular market participants.
       ``(10) Recordkeeping and reporting.--The swap execution 
     facility shall maintain records of all activities related 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 report to the Commission all 
     information determined by the Commission to be necessary or 
     appropriate for the Commission to perform its 
     responsibilities under this Act in a form and manner 
     acceptable to the Commission. The swap execution facility 
     shall keep any such records relating to swaps defined in 
     section 1a(35)(A)(v) open to inspection and examination by 
     the Securities and Exchange Commission. 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 
     repositories.
       ``(11) Antitrust considerations.--The swap execution 
     facility shall avoid--
       ``(A) adopting any rules or taking any actions that result 
     in any unreasonable restraints of trade; or
       ``(B) imposing any material anticompetitive burden on 
     trading on the swap execution facility.
       ``(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
       ``(B) establish a process for resolving the conflicts of 
     interest.
       ``(13) Financial resources.--
       ``(A) The swap execution facility shall have adequate 
     financial, operational, and managerial resources to discharge 
     its responsibilities.
       ``(B) The financial resources of the swap execution 
     facility shall be considered adequate if their value exceeds 
     the total amount that would enable the facility to cover its 
     operating costs for a period of 1 year, 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 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 swap execution facility's responsibilities 
     and obligation; 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.
       ``(15) Designation of compliance officer.--
       ``(A) In general.--Each swap execution facility shall 
     designate an individual to serve as a compliance officer.
       ``(B) Duties.--The compliance officer--
       ``(i) shall report directly to the board or to the senior 
     officer of the facility;
       ``(ii) shall--

       ``(I) review compliance with the core principles in this 
     subsection;
       ``(II) 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;
       ``(III) be responsible for administering the policies and 
     procedures required to be established pursuant to this 
     section; and
       ``(IV) 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

       ``(iii) shall establish procedures for remediation of non-
     compliance issues found during compliance office reviews, 
     lookbacks, internal or external audit findings, self-reported 
     errors, or through validated complaints, and for the 
     handling, management response, remediation, re-testing, and 
     closing of non-compliant issues.
       ``(C) Annual reports required.--The compliance officer 
     shall annually prepare and sign a report on the compliance of 
     the facility with this Act and its policies and procedures, 
     including its code of ethics and conflict of interest 
     policies, in accordance with rules prescribed by the 
     Commission. The compliance report shall accompany the 
     financial reports of the facility that are required to be 
     furnished to the Commission pursuant to this section and 
     shall include 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 
     organization's home country.
       ``(f) Rules.--No later than 1 year after the date of the 
     enactment of the Derivative Markets Transparency and 
     Accountability Act of 2009, the Commission shall prescribe 
     rules governing the regulation of swap execution facilities 
     under this section.''.

     SEC. 3110. DERIVATIVES TRANSACTION EXECUTION FACILITIES AND 
                   EXEMPT BOARDS OF TRADE.

       (a) Sections 5a and 5d of the Commodity Exchange Act (7 
     U.S.C. 1 et seq.) are repealed.
       (b)(1) Prior to the final effective dates in this title, a 
     person may petition the Commodity Futures Trading Commission 
     to remain subject to the provisions of section 5d of the 
     Commodity Exchange Act, as such provisions existed prior to 
     the effective date of this subtitle.
       (2) The Commodity Futures Trading Commission shall consider 
     any petition submitted under paragraph (1) in a prompt manner 
     and may allow a person to continue operating subject to the 
     provisions of section 5d of the Commodity Exchange Act for up 
     to 1 year after the effective date of this subtitle.

     SEC. 3111. DESIGNATED CONTRACT MARKETS.

       (a) Section 5(d) of the Commodity Exchange Act (7 U.S.C. 
     7(d)) is amended by striking paragraphs (1) and (2) and 
     inserting the following:
       ``(1) 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 the core principles 
     specified in this subsection and any requirement that the 
     Commission may impose by rule or regulation pursuant to 
     section 8a(5). Except where the Commission determines 
     otherwise by rule or regulation, the board of trade shall 
     have reasonable discretion in establishing the manner in 
     which it complies with the core principles.
       ``(2) Compliance with rules.--
       ``(A) The board of trade shall monitor and enforce 
     compliance with the rules of the contract market, including 
     access requirements, the terms and conditions of any 
     contracts to be traded on the contract market and the 
     contract market's abusive trade practice prohibitions.
       ``(B) The board of trade shall have the capacity to detect, 
     investigate, and apply appropriate sanctions to, any person 
     or entity that violates the rules.
       ``(C) The rules shall provide the board of trade with the 
     ability and authority to obtain any necessary information to 
     perform any of the functions described in this subsection, 
     including the capacity to carry out such international 
     information-sharing agreements as the Commission may 
     require.''.
       (b) Section 5(d) of such Act (7 U.S.C. 7(d)) is amended by 
     striking paragraphs (4) and (5) and inserting the following:
       ``(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 methods for conducting real-time 
     monitoring of trading and comprehensive and accurate trade 
     reconstructions.
       ``(5) Position limitations or accountability.--
       ``(A) 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 of its 
     contracts, where necessary and appropriate, position 
     limitations or position accountability for speculators.
       ``(B) 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 its position limitation 
     at a level no higher than the Commission-established 
     limitation.''.
       (c) Section 5(d) of such Act (7 U.S.C. 7(d)) is amended by 
     striking paragraph (7) and inserting the following:
       ``(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) the rules, regulations and mechanisms for executing 
     transactions on or through the facilities of the contract 
     market, and the rules and specifications describing the 
     operation of the board of trade's electronic matching 
     platform or other trade execution facility.''.
       (d) Section 5(d) of such Act (7 U.S.C. 7(d)) is amended by 
     striking paragraph (9) and inserting the following:

[[Page 31263]]

       ``(9) Execution of transactions.--
       ``(A) 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 
     board of trade's centralized market.
       ``(B) The rules 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.''.
       (e) Section 5(d)(17) of such Act (7 U.S.C. 7(d)(17)) is 
     amended by adding at the end the following: ``The board of 
     trade shall keep any such records relating to swaps defined 
     in section 1a(35)(A)(v) open to inspection and examination by 
     the Securities and Exchange Commission.''.
       (f) Section 5(d) of such Act (7 U.S.C. 7(d)) is amended by 
     adding at the end the following:
       ``(19) Financial resources.--The board of trade shall have 
     adequate financial, operational, and managerial resources to 
     discharge the responsibilities of a contract market. For the 
     financial resources of a board of trade to be considered 
     adequate, their value shall exceed the total amount that 
     would enable the contract market to cover its operating costs 
     for a period of 1 year, calculated on a rolling basis.
       ``(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 give 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 board of trade's responsibilities and 
     obligations; and
       ``(C) periodically conduct tests to verify that back-up 
     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) Diversity of boards of directors.--The board of 
     trade, if a publicly traded company, shall endeavor to 
     recruit individuals to serve on the board of directors and 
     the other decision-making bodies (as determined by the 
     Commission) of the board of trade from among, and to have the 
     composition of the bodies reflect, a broad and culturally 
     diverse pool of qualified candidates.
       ``(22) 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.''.
       (g) Section 5 of such Act (7 U.S.C. 7) is amended by 
     striking subsection (b).

     SEC. 3112. MARGIN.

       (a) Section 8a(7)(C) of the Commodity Exchange Act (7 
     U.S.C. 12a(7)(C)) is amended by striking ``, excepting the 
     setting of levels of margin''.
       (b) Section 8a(7) of such Act (7 U.S.C. 12a(7)) is amended 
     by redesignating subparagraphs (D) through (F) as 
     subparagraphs (E) through (G), respectively, and inserting 
     after subparagraph (C) the following:
       ``(D) margin requirements, provided that such 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 in order to 
     protect the financial integrity of transactions; and
       ``(iii) not set specific margin amounts.''.

     SEC. 3113. POSITION LIMITS.

       (a) Section 4a(a) of the Commodity Exchange Act (7 U.S.C. 
     6a(a)) is amended by--
       (1) inserting ``(1)'' after ``(a)'';
       (2) striking ``on electronic trading facilities with 
     respect to a significant price discovery contract'' in the 
     first sentence and inserting ``swaps that perform or affect a 
     significant price discovery function with respect to 
     registered entities'';
       (3) inserting ``, including any group or class of 
     traders,'' in the second sentence after ``held by any 
     person'';
       (4) striking ``on an electronic trading facility with 
     respect to a significant price discovery contract,'' in the 
     second sentence and inserting ``swaps that perform or affect 
     a significant price discovery function with respect to 
     registered entities,''; and
       (5) inserting at the end the following:
       ``(2)(A) In accordance with the standards set forth in 
     paragraph (1) of this subsection and consistent with the good 
     faith exception cited in subsection (b)(2), with respect to 
     physical commodities other than excluded commodities as 
     defined by the Commission, the Commission shall by rule, 
     regulation, or order establish limits on the amount of 
     positions, as appropriate, other than bona fide hedge 
     positions, that may be held by any person with respect to 
     contracts of sale for future delivery or with respect to 
     options on the contracts or commodities traded on or subject 
     to the rules of a designated contract market.
       ``(B)(i) For exempt commodities, the limits shall be 
     established within 180 days after the date of the enactment 
     of this paragraph.
       ``(ii) For agricultural commodities, the limits shall be 
     established within 270 days after the date of the enactment 
     of this paragraph.
       ``(C) In establishing the limits, the Commission shall 
     strive to ensure that trading on foreign boards of trade in 
     the same commodity will be subject to comparable limits and 
     that any limits to be imposed by the Commission will not 
     cause price discovery in the commodity to shift to trading on 
     the foreign boards of trade.
       ``(3) In establishing the limits required in paragraph (2), 
     the Commission, as appropriate, shall set limits--
       ``(A) on the number of positions that may be held by any 
     person for the spot month, each other month, and the 
     aggregate number of positions that may be held by any person 
     for all months; and
       ``(B) to the maximum extent practicable, in its 
     discretion--
       ``(i) to diminish, eliminate, or prevent excessive 
     speculation as described under this section;
       ``(ii) to deter and prevent market manipulation, squeezes, 
     and corners;
       ``(iii) to ensure sufficient market liquidity for bona fide 
     hedgers; and
       ``(iv) to ensure that the price discovery function of the 
     underlying market is not disrupted.
       ``(4)(A) Not later than 150 days after the establishment of 
     position limits pursuant to paragraph (2), and biannually 
     thereafter, the Commission shall hold 2 public hearings, 1 
     for agriculture commodities and 1 for energy commodities as 
     such terms are defined by the Commission, in order to receive 
     recommendations regarding the position limits to be 
     established in paragraph (2).
       ``(B) Each public hearing held pursuant to subparagraph (A) 
     shall, at a minimum providing there is sufficient interest, 
     receive recommendations from--
       ``(i) 7 predominantly commercial short hedgers of the 
     actual physical commodity for future delivery;
       ``(ii) 7 predominantly commercial long hedgers of the 
     actual physical commodity for future delivery;
       ``(iii) 4 non-commercial participants in markets for 
     commodities for future delivery; and
       ``(iv) each designated contract market upon which a 
     contract in the commodity for future delivery is traded.
       ``(C) Within 60 days after each public hearing held 
     pursuant to subparagraph (A), the Commission shall publish in 
     the Federal Register its response to the recommendations 
     regarding position limits heard at the hearing.
       ``(5) Significant price discovery function.--In making a 
     determination whether a swap performs or affects a 
     significant price discovery function with respect to 
     regulated markets, the Commission shall consider, as 
     appropriate:
       ``(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 
     regulated market based upon 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 regulated market based upon 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 regulated market 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 regulated 
     market; and
       ``(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.
       ``(6) Economically equivalent contracts.--
       ``(A) Notwithstanding any other provision of this section, 
     the Commission shall establish limits on the amount of 
     positions, including aggregate position limits, as 
     appropriate, other than bona fide hedge positions, that may 
     be held by any person with respect

[[Page 31264]]

     to swaps that are economically equivalent to contracts of 
     sale for future delivery or to options on the contracts or 
     commodities traded on or subject to the rules of a designated 
     contract market subject to paragraph (2).
       ``(B) In establishing limits pursuant to subparagraph (A), 
     the Commission shall--
       ``(i) develop the limits concurrently with limits 
     established under paragraph (2), and the limits shall have 
     similar requirements as under paragraph (3)(B); and
       ``(ii) establish the limits simultaneously with limits 
     established under paragraph (2).
       ``(7) 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 upon 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 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 its electronic 
     trading and order matching system; and
       ``(C) swap contracts that perform or affect a significant 
     price discovery function with respect to regulated entities.
       ``(8) 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, any 
     contract of sale of a commodity for future delivery or class 
     of such contracts, any option or class of options, or any 
     transaction or class of transactions from any requirement it 
     may establish under this section with respect to position 
     limits.''.
       (b) Section 4a(b) of such 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''.
       (c) Section 4a(c) of such Act is amended--
       (1) by inserting ``(1)'' after ``(c)''; and
       (2) by adding after and below the end the following:
       ``(2) For the purposes of implementation of subsection 
     (a)(2) for contracts of sale for future delivery or options 
     on the contracts or commodities, the Commission shall define 
     what constitutes a bona fide hedging transaction or position 
     as a transaction or position that--
       ``(A)(i) represents a substitute for transactions made or 
     to be made or positions taken or to be taken at a later time 
     in a physical marketing channel;
       ``(ii) is economically appropriate to the reduction of 
     risks in the conduct and management of a commercial 
     enterprise; and
       ``(iii) arises from the potential change in the value of--
       ``(I) assets that a person owns, produces, manufactures, 
     processes, or merchandises or anticipates owning, producing, 
     manufacturing, processing, or merchandising;
       ``(II) liabilities that a person owns or anticipates 
     incurring; or
       ``(III) services that a person provides, purchases, or 
     anticipates providing or purchasing; or
       ``(B) reduces risks attendant to a position resulting from 
     a swap that--
       ``(i) was executed opposite a counterparty for which the 
     transaction would qualify as a bona fide hedging transaction 
     pursuant to subparagraph (A); or
       ``(ii) meets the requirements of subparagraph (A).''.
       (d) This section shall become effective on the date of its 
     enactment.

     SEC. 3114. ENHANCED AUTHORITY OVER REGISTERED ENTITIES.

       (a) Section 5c(a) of the Commodity Exchange Act (7 U.S.C. 
     7a-2(a)) is amended--
       (1) in paragraph (1), by striking ``5a(d) and 5b(c)(2)'' 
     and inserting ``5b(c)(2) and 5h(e)''; and
       (2) in paragraph (2), by striking ``shall not'' and 
     inserting ``may''.
       (b) Section 5c(b) of such Act (7 U.S.C. 7a-2(b)) is amended 
     in each of paragraphs (1), (2), and (3) by inserting ``or 
     swap execution facility'' after ``contract market'' each 
     place it appears.
       (c) Section 5c(c)(1) of such Act (7 U.S.C. 7a-2(c)(1)) is 
     amended--
       (1) by inserting ``(A)'' after ``In general.--''; and
       (2) by adding at the end the following:
       ``(B) The new rule or rule amendment shall become 
     effective, pursuant to the registered entity's certification 
     and notice of such certification to its members (in a manner 
     to be determined by the Commission), 10 business days after 
     the Commission's receipt of the certification (or such 
     shorter period 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).
       ``(C)(i) A notification by the Commission pursuant to 
     subparagraph (B) shall stay the certification of the new 
     contract or instrument or clearing of the new contract or 
     instrument, new rule or new amendment for up to an additional 
     90 days from the date of the notification.
       ``(ii) The Commission shall provide at least a 30-day 
     public comment period, within the 90-day period in which the 
     stay is in effect described in clause (i), whenever it 
     reviews a rule or rule amendment pursuant to a notification 
     by the Commission under this paragraph.''.
       (d) Section 5c(d) of such Act (7 U.S.C. 7a-2(d)) is 
     repealed.

     SEC. 3115. FOREIGN BOARDS OF TRADE.

       (a) In General.--Section 4 of the Commodity Exchange Act (7 
     U.S.C. 6) is amended by adding at the end the following:
       ``(e) Foreign Boards of Trade.--
       ``(1) In general.--The Commission may not permit 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--
       ``(A) 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
       ``(B) 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, taking into consideration 
     the relative sizes of the respective markets, 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--

       ``(I) the information that the foreign board of trade will 
     make publicly available;
       ``(II) the position limits that the foreign board of trade 
     or foreign futures authority will adopt and enforce;
       ``(III) 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
       ``(IV) 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 with information 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 the 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.
       ``(2) Existing foreign boards of trade.--Paragraph (1) 
     shall not be effective with respect to any foreign board of 
     trade to which the Commission has granted direct access 
     permission before the date of the enactment of this 
     subsection until the date that is 180 days after such date of 
     enactment.
       ``(3) Persons located in the united states.--''.
       (b) Liability of Registered Persons Trading on a Foreign 
     Board of Trade.--
       (1) Section 4(a) of such Act (7. U.S.C. 6(a)) is amended by 
     inserting ``or by subsection (f)'' after ``Unless exempted by 
     the Commission pursuant to subsection (c)''; and
       (2) Section 4 of such Act (7 U.S.C 6) is further amended by 
     adding at the end the following:

[[Page 31265]]

       ``(f)(1) 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--
       ``(A) 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 is--
       ``(i) legally organized under the laws of a foreign 
     country;
       ``(ii) authorized to act as a board of trade by a foreign 
     futures authority; and
       ``(iii) subject to regulation by the foreign futures 
     authority; and
       ``(B) has not been determined by the Commission to be 
     operating in violation of subsection (a).
       ``(2) Nothing in this subsection shall be construed as 
     implying or creating any presumption that a board of trade, 
     exchange, or market is located outside the United States, or 
     its territories or possessions, for purposes of subsection 
     (a).''.
       (c) Contract Enforcement for Foreign Futures Contracts.--
     Section 22(a) of such Act (7 U.S.C. 25(a)) is amended by 
     adding at the end the following:
       ``(5) 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. 3116. LEGAL CERTAINTY FOR SWAPS.

       Section 22(a)(4) of the Commodity Exchange Act (7 U.S.C. 
     25(a)(4)) is amended to read as follows:
       ``(4) Contract enforcement between eligible 
     counterparties.--
       ``(A) A hybrid instrument sold to any investor shall not be 
     void, voidable, or unenforceable, and a party to such a 
     hybrid instrument shall not be entitled to rescind, or 
     recover any payment made with respect to, such a 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; and
       ``(B) An agreement, contract, or transaction between 
     eligible contract participants or persons reasonably believed 
     to be eligible contract participants shall not be void, 
     voidable, or unenforceable, and a party thereto shall not be 
     entitled to rescind, or recover any payment made with respect 
     to, such an 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 to meet the definition of a swap set forth in 
     section 1a, be traded in the manner set forth in section 
     2(k)(1), or be cleared pursuant to 2(j)(1) or regulations of 
     the Commission pursuant thereto.''.

     SEC. 3117. FDICIA AMENDMENTS.

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

     SEC. 3118. ENFORCEMENT AUTHORITY.

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

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

       ``(a) CFTC.--Except as provided in subsection (b), the 
     Commission shall have exclusive authority to enforce the 
     provisions of subtitle A of the Derivative Markets 
     Transparency and Accountability Act of 2009 with respect to 
     any person.
       ``(b) Prudential Regulators.--The Prudential Regulators 
     shall have exclusive authority to enforce the provisions of 
     section 4s(d) and other prudential requirements of this Act 
     with respect to banks, and branches or agencies of foreign 
     banks that are swap dealers or major swap participants.
       ``(c) Referral.--(1) If the Prudential Regulator for a swap 
     dealer or major swap participant has cause to believe that 
     the swap dealer or major swap participant may have engaged in 
     conduct that constitutes a violation of the nonprudential 
     requirements of section 4s or rules adopted by the Commission 
     thereunder, that Prudential Regulator may recommend in 
     writing to the Commission that the Commission initiate an 
     enforcement proceeding as authorized under this Act. The 
     recommendation shall be accompanied by a written explanation 
     of the concerns giving rise to the recommendation.
       ``(2) 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 the prudential requirements of section 4s 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 Act. The recommendation shall be accompanied by a 
     written explanation of the concerns given rise to the 
     recommendation.''.
       (b)(1) Section 4c(a) of such Act (7 U.S.C. 6c(a)) is 
     amended by adding at the end the following:
       ``(3) Disruptive practices.--It shall be unlawful for any 
     person to engage in any trading or practice on or subject to 
     the rules of a registered entity that--
       ``(A) violates bids and offers (intentionally bidding at a 
     price higher than the lowest offer, or offering at a price 
     lower than the highest bid);
       ``(B) is, is of the character of, or is commonly known to 
     the trade as `marking the close' (bidding or offering during 
     or near the market's closing period with the intent to 
     influence the settlement price);
       ``(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); or
       ``(D) constitutes uneconomic trading (trading that has no 
     legitimate economic purpose but for the effect on price).
       ``(4) The Commission may make and promulgate such rules and 
     regulations as, in the judgment of the Commission, are 
     reasonably necessary to prohibit any other trading practice 
     that is disruptive of fair and equitable trading.''.
       (2) The amendment made by paragraph (1) shall become 
     effective upon enactment.

     SEC. 3119. ENFORCEMENT.

       (a) Section 4b(a)(2) of the Commodity Exchange Act (7 
     U.S.C. 6b(a)(2)) is amended by striking ``or other agreement, 
     contract, or transaction subject to paragraphs (1) and (2) of 
     section 5a(g),'' and inserting ``or swap,''.
       (b) Section 4b(b) of such Act (7 U.S.C. 6b(b)) is amended 
     by striking ``or other agreement, contract or transaction 
     subject to paragraphs (1) and (2) of section 5a(g),'' and 
     inserting ``or swap,''.
       (c) Section 4c(a) of such Act (7 U.S.C. 6c(a)) is amended 
     by inserting ``or swap'' before ``if the transaction is used 
     or may be used''.
       (d) Section 9(a)(2) of such Act (7 U.S.C. 13(a)(2)) is 
     amended by inserting ``or of any swap,'' before ``or to 
     corner''.
       (e) Section 9(a)(4) of such Act (7 U.S.C. 13(a)(4)) is 
     amended by inserting ``swap repository,'' before ``or futures 
     association''.
       (f) Section 9(e)(1) of such Act (7 U.S.C. 13(e)(1)) is 
     amended by inserting ``swap repository,'' before ``or 
     registered futures association'' and by inserting ``, or 
     swaps,'' before ``on the basis''.
       (g) Section 8(b) of the Federal Deposit Insurance Act (12 
     U.S.C. 1818(b)) is amended by redesignating paragraphs (6) 
     through (10) as paragraphs (7) through (11), respectively, 
     and inserting after paragraph (5) the following:
       ``(6) This section shall apply to any swap dealer, major 
     swap participant, security-based swap dealer, major security-
     based swap participant, derivatives clearing organization, 
     swap repository, security-based swap repository, or swap 
     execution facility, whether or not it 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 Derivative Markets Transparency and 
     Accountability Act of 2009.''.

     SEC. 3120. RETAIL COMMODITY TRANSACTIONS.

       (a) Section 2(c) of the Commodity Exchange Act (7 U.S.C. 
     2(c)) is amended--
       (1) in paragraph (1), by striking ``(other than section 5a 
     (to the extent provided in section 5a(g)), 5b, 5d, or 
     12(e)(2)(B))'' and inserting ``(other than section 5b or 
     12(e)(2)(B))''; and
       (2) in paragraph (2), by inserting after subparagraph (C) 
     the following:
       ``(D) Retail commodity transactions.--
       ``(i) This subparagraph shall apply to, and the Commission 
     shall have jurisdiction over, 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) Clause (i) 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 longer 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 their line 
     of business.

       ``(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) Sections 4(a), 4(b) and 4b shall apply to any 
     agreement, contract or transaction described in clause (i), 
     that is not excluded

[[Page 31266]]

     from clause (i) by clause (ii), as if the agreement, 
     contract, or transaction were a contract of sale of a 
     commodity for future delivery.
       ``(iv) This subparagraph shall not be construed to limit 
     any jurisdiction that the Commission may otherwise have under 
     any other provision of this Act over an agreement, contract, 
     or transaction that is a contract of sale of a commodity for 
     future delivery;
       ``(v) This subparagraph shall not be construed to limit any 
     jurisdiction that the Commission or the Securities and 
     Exchange Commission may otherwise have under any other 
     provisions of this Act with respect to security futures 
     products and persons effecting transactions in security 
     futures products;
       ``(vi) For the purposes of this subparagraph, an 
     agricultural producer, packer, or handler shall be considered 
     an eligible commercial entity for any agreement, contract, or 
     transaction for a commodity in connection with its line of 
     business.''.
       (b) The amendments made by subsection (a) shall become 
     effective on the date of the enactment of this section.

     SEC. 3121. LARGE SWAP TRADER REPORTING.

       The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended 
     by inserting after section 4s (as added by section 3107 of 
     this Act) the following:

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

       ``(a) It shall be unlawful for any person to enter into any 
     swap that performs or affects a significant price discovery 
     function with respect to registered entities if--
       ``(1) the person directly or indirectly enters into such 
     swaps during any 1 day in an amount equal to or in excess of 
     such amount as shall be fixed from time to time by the 
     Commission; and
       ``(2) such person directly or indirectly has or obtains a 
     position in such swaps equal to or in excess of such amount 
     as shall be fixed from time to time by the Commission,

     unless 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 
     paragraphs (1) and (2) as the Commission may by rule or 
     regulation require and unless, 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) The books and records shall show complete details 
     concerning all transactions and positions as the Commission 
     may by rule or regulation prescribe.
       ``(c) The books and records shall be open at all times to 
     inspection and examination by any representative of the 
     Commission.
       ``(d) For the purpose of this subsection, the swaps, 
     futures and cash or spot transactions and positions of any 
     person shall include the transactions and positions of any 
     persons directly or indirectly controlled by the person.
       ``(e) In making a determination whether a swap performs or 
     affects a significant price discovery function with respect 
     to regulated markets, the Commission shall consider the 
     factors set forth in section 4a(a)(3).''.

     SEC. 3122. SEGREGATION OF ASSETS HELD AS COLLATERAL IN SWAP 
                   TRANSACTIONS.

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

     ``SEC. 4U. SEGREGATION OF ASSETS HELD AS COLLATERAL IN OVER-
                   THE-COUNTER SWAP TRANSACTIONS.

       ``(a) Segregation.--At the request of a swap counterparty 
     who provides funds or other property to a swap dealer initial 
     margin or collateral to secure the obligations of the 
     counterparty under a swap between the counterparty and the 
     swap dealer that is not submitted for clearing to a 
     derivatives clearing organization, the swap dealer shall 
     segregate the funds or other property for the benefit of the 
     counterparty, and maintain the initial margin or collateral 
     in an account which is carried by an independent third-party 
     custodian and designated as a segregated account for the 
     counterparty, in accordance with such rules and regulations 
     as the Commission or Prudential Regulator may prescribe. If a 
     swap counterparty is a swap dealer or major swap participant 
     who owns more than 20 percent of, or has more than 50 percent 
     representation on the board of directors of a custodian, the 
     custodian shall not be considered independent from the swap 
     counterparties for purposes of the preceding sentence. This 
     subsection shall not be interpreted to preclude commercial 
     arrangements regarding the investment of the segregated funds 
     or other property and the related allocation of gains and 
     losses resulting from any such investment.
       ``(b) Further Audit Reporting.--If a swap dealer does not 
     segregate funds pursuant to the request of a swap 
     counterparty in accordance with subsection (a), the swap 
     dealer shall report to its counterparty on a quarterly basis 
     that its procedures relating to margin and collateral 
     requirements are in compliance with the agreement of the 
     counterparties.''.

     SEC. 3123. OTHER AUTHORITY.

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

     SEC. 3124. ANTITRUST.

       Nothing in the amendments made by this subtitle shall be 
     construed to modify, impair, or supersede the operation of 
     any of the antitrust laws. For purposes of this subtitle, the 
     term ``antitrust laws'' has the same meaning given the term 
     in subsection (a) of the first section of the Clayton Act, 
     except that the term includes section 5 of the Federal Trade 
     Commission Act to the extent that such section 5 applies to 
     unfair methods of competition.

     SEC. 3125. REVIEW OF PRIOR ACTIONS.

       Notwithstanding any other provision of the Commodity 
     Exchange Act, the Commodity Futures Trading Commission shall 
     review, as appropriate, all regulations, rules, exemptions, 
     exclusions, guidance, no action letters, orders, other 
     actions taken by or on behalf of the Commission, and any 
     action taken pursuant to the Commodity Exchange Act by an 
     exchange, self-regulatory organization, or any other 
     registered entity, that are currently in effect, to ensure 
     that such prior actions are in compliance with the provisions 
     of this title.

     SEC. 3126. EXPEDITED PROCESS.

       The Commodity Futures Trading Commission may use emergency 
     and expedited procedures (including any administrative or 
     other procedure as appropriate) to carry out this title if, 
     in its discretion, it deems it necessary to do so.

     SEC. 3127. EFFECTIVE DATE.

       (a) Unless otherwise provided, the provisions of this 
     subtitle shall become effective the later of 270 days after 
     the date of the enactment of this subtitle or, to the extent 
     a provision of this subtitle requires rulemaking, no less 
     than 60 days after publication of a final rule or regulation 
     implementing such provision of this subtitle.
       (b) Subsection (a) shall not preclude the Commodity Futures 
     Trading Commission from any rulemaking required or directed 
     under this subtitle to implement the provisions of this 
     subtitle.

         Subtitle B--Regulation of Security-Based Swap Markets

     SEC. 3201. 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 paragraph (5)(A) and (B), by inserting ``(but not 
     security-based swaps, other than security-based swaps with or 
     for persons that are not eligible contract participants)'' 
     after the word ``securities'' in each place it 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) by striking ``or government securities dealer'' and 
     adding ``government securities dealer, security-based swap 
     dealer or major security-based swap participant'' in its 
     place in subparagraph (B)(i)(I);
       (B) by adding ``security-based swap dealer, major security-
     based swap participant,'' after ``government securities 
     dealer,'' in subparagraph (B)(i)(II);
       (C) by striking ``or government securities dealer'' and 
     adding ``government securities dealer, security-based swap 
     dealer or major security-based swap participant'' in its 
     place in subparagraph (C); and
       (D) by adding ``security-based swap dealer, major security-
     based swap participant,'' after ``government securities 
     dealer,'' in subparagraph (D); 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(12) of the Commodity Exchange Act (7 U.S.C. 1a(12)).
       ``(66) Major swap participant.--The term `major swap 
     participant' has the same meaning as in section 1a(39) of the 
     Commodity Exchange Act (7 U.S.C. 1a(39)).
       ``(67) Major security-based swap participant.--
       ``(A) In general.--The term `major security-based swap 
     participant' means any person who is not a security-based 
     swap dealer, and--
       ``(i) maintains a substantial net position in outstanding 
     security-based swaps, excluding positions held primarily for 
     hedging, reducing or otherwise mitigating its commercial 
     risk, including operating and balance sheet risk; or
       ``(ii) whose outstanding security-based swaps create 
     substantial net counterparty

[[Page 31267]]

     exposure among the aggregate of its counterparties that could 
     expose those counterparties to significant credit losses.
       ``(B) Definition of `substantial net position'.--The 
     Commission shall define by rule or regulation the terms 
     `substantial net position', `substantial net counterparty 
     exposure', and `significant credit losses' at thresholds that 
     the Commission determines prudent for the effective 
     monitoring, management and oversight of entities which are 
     systemically important or can significantly impact the 
     financial system through counterparty credit risk. In setting 
     the definitions, the Commission shall consider the person's 
     relative position in uncleared as opposed to cleared swaps.
       ``(C) A person may be designated a major security-based 
     swap participant for 1 or more individual types of security-
     based swaps without being classified as a major security-
     based swap participant for all classes of security-based 
     swaps.
       ``(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 would be a swap under section 1a(35) of 
     the Commodity Exchange Act, and that--
       ``(i) is priumarily based on an index that is a narrow-
     based security index, including any interest therein or based 
     on the value thereof;
       ``(ii) is primarily based on a single security or loan, 
     including any interest therein or based on the value thereof; 
     or
       ``(iii) is primarily based on the occurrence, non-
     occurrence, 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 
     must directly affect 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) Exclusion.--The term `security-based swap' does not 
     include any agreement, contract, or transaction that meets 
     the definition of a security-based swap only because it 
     references, is based upon, or settles through the transfer, 
     delivery, or receipt of an exempted security under section 
     3(a)(12) of the Securities Exchange Act of 1934 as in effect 
     on the date of enactment of the Futures Trading Act of 1982 
     (other than any municipal security as defined in section 
     3(a)(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.
       ``(69) Swap.--The term `swap' has the same meaning as in 
     section 1a(35) of the Commodity Exchange Act (7 U.S.C. 
     1a(35)).
       ``(70) Person associated with a security-based swap dealer 
     or major security-based swap participant.--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 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), 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 any employee of such 
     security-based swap dealer or major security-based swap 
     participant, except that any person associated with a 
     security-based swap dealer or major security-based swap 
     participant whose functions are solely clerical or 
     ministerial shall not be included in the meaning of such term 
     other than for purposes of section 15F(e)(2).
       ``(71) Security-based swap dealer.--
       ``(A) In general.--The term `security-based swap dealer' 
     means any person that--
       ``(i) holds itself out as a dealer in security-based swaps;
       ``(ii) makes a market in security-based swaps;
       ``(iii) regularly engages in the purchase of security-based 
     swaps and their resale to customers 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 a security-based swap dealer for a single type or 
     single class or category of security-based swap and 
     considered not a security-based swap dealer for other types, 
     classes, or categories of security-based swaps.
       ``(C) De minimus exception.--The Commission shall make a 
     determination to exempt from designation as a security-based 
     swap dealer an entity that engages in a de minimus amount of 
     security-based swap dealing in connection with transactions 
     with or on the behalf of its customers.
       ``(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' means--
       ``(A) the Board in the case of a swap dealer, major swap 
     participant, security-based swap dealer or major security-
     based swap participant that is--
       ``(i) a State-chartered bank that is a member of the 
     Federal Reserve System; or
       ``(ii) a State-chartered branch or agency of a foreign 
     bank;
       ``(B) the Office of the Comptroller of the Currency in the 
     case of a swap dealer, major swap participant, security-based 
     swap dealer or major security-based swap participant that 
     is--
       ``(i) a national bank; or
       ``(ii) a federally chartered branch or agency of a foreign 
     bank; and
       ``(C) the Federal Deposit Insurance Corporation in the case 
     of a swap dealer, major swap participant, security-based swap 
     dealer or major security-based swap participant that is a 
     state-chartered bank that is not a member of the Federal 
     Reserve System.
       ``(75) Swap dealer.--The term `swap dealer' has the same 
     meaning as in section 1a(38) of the Commodity Exchange Act (7 
     U.S.C. 1a(38)).
       ``(76) Security-based swap agreement.--
       ``(A) In general.--For purposes of sections 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.
       ``(76) Security-based swap repository.--The term `security-
     based swap 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.
       ``(77) Swap execution facility.--The term `swap execution 
     facility' means a person or entity that facilitates the 
     execution or trading of security-based swaps between two 
     persons through any means of interstate commerce, but which 
     is not a national securities exchange, including any 
     electronic trade execution or voice brokerage 
     facility.''.''''.
       (b) Authority to Further Define Terms.--The Securities and 
     Exchange Commission may adopt a rule further defining 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 title.

     SEC. 3202. REPEAL OF PROHIBITION ON REGULATION OF SECURITY-
                   BASED SWAPS.

       (a) Repeal of Law.--Section 206B of the Gramm-Leach-Bliley 
     Act (15 U.S.C. 78c note) is repealed.
       (b) Conforming Amendments to the Securities Act of 1933.--
       (1) Section 2A(b) of the Securities Act of 1933 (15 U.S.C. 
     77b-1) is amended by striking ``(as defined in section 206B 
     of the Gramm-Leach-Bliley Act)'' each place that such term 
     appears.
       (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 ``206B of the Gramm-Leach-Bliley Act'' and 
     inserting ``3(a)(76) of the Securities Exchange Act of 
     1934''; and
       (B) in subsection (d), by striking ``206B of the Gramm-
     Leach-Bliley Act'' and inserting ``3(a)(76) 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 as follows:
       (1) Section 3A (15 U.S.C. 78c-1) is amended by striking 
     ``(as defined in section 206B of the Gramm-Leach-Bliley 
     Act)'' each place that the term appears.
       (2) Section 9(a) (15 U.S.C. 78i(a)) is amended by striking 
     paragraphs (2) through (5) and inserting:
       ``(2) To effect, alone or with one or more other persons, a 
     series of transactions in any security registered on a 
     national securities exchange 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

[[Page 31268]]

     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, or a security-based swap or security-based swap 
     agreement with respect to such security, to induce the 
     purchase or sale of any security registered on a national 
     securities exchange or any security-based swap or 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 one 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, or 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 or 
     any security-based swap or security-based swap agreement with 
     respect to such security, for the purpose of inducing the 
     purchase or sale of such security or such security-based swap 
     or 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 he knew or had reasonable ground to believe 
     was so false or misleading.
       ``(5) For a consideration, received directly or indirectly 
     from 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, or 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 or any security-based swap or 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 one or more persons conducted 
     for the purpose of raising or depressing the price of such 
     security.''.
       (3) Section 9(i) (15 U.S.C. 78i(i)) is amended by striking 
     ``(as defined in section 206B of the Gramm-Leach-Bliley 
     Act)'';
       (4) Section 10 (15 U.S.C. 78j) is amended by striking ``(as 
     defined in section 206B of the Gramm-Leach-Bliley Act)'' each 
     place that the term appears.
       (5) Section 15(c)(1) is amended--
       (A) in subparagraph (A), by striking ``, or any security-
     based swap agreement (as defined in section 206B of the 
     Gramm-Leach-Bliley Act),''; and
       (B) in subparagraphs (B) and (C), by striking ``agreement 
     (as defined in section 206B of the Gramm-Leach-Bliley Act)'' 
     in each place that the term appears.
       (6) Section 15(i) (15 U.S.C. 78o(i), as added by section 
     303(f) of the Commodity Futures Modernization Act of 2000 
     (Public Law 106-554; 114 Stat. 2763A-455) is amended by 
     striking ``(as defined in section 206B of the Gramm-Leach-
     Bliley Act)''.
       (7) Section 16 (15 U.S.C. 78p) is amended--
       (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 (b), by striking ``(as defined in section 
     206B of the Gramm-Leach-Bliley Act)'' in each place that the 
     term appears; and
       (C) in subsection (g), by striking ``(as defined in section 
     206B of the Gramm-Leach-Bliley Act)'';
       (8) Section 20 (15 U.S.C. 78t) is amended--
       (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)''; and
       (9) Section 21A (15 U.S.C. 78u-1) is amended--
       (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. 3203. 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 
     adding the following section after section 3A:

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

       ``(a) In General.--
       ``(1) Standard for clearing.--A security-based swap shall 
     be submitted for clearing if a clearing agency that is 
     registered under this Act will accept the security-based swap 
     for clearing, and the Commission has determined under 
     paragraph (2)(B)(ii) of subsection (b) that the security-
     based swap is required to be cleared.
       ``(2) Open access.--The rules of a clearing agency 
     described in paragraph (1) shall--
       ``(A) prescribe that all security-based swaps submitted to 
     the clearing agency with the same terms and conditions are 
     economically equivalent within the clearing agency and may be 
     offset with each other within the clearing agency; and
       ``(B) provide for non-discriminatory clearing of a 
     security-based swap executed bilaterally or on or through the 
     rules of an unaffiliated national securities exchange or swap 
     execution facility.
       ``(b) Commission Review.--
       ``(1) Commission-initiated review.--
       ``(A) The Commission shall review each security-based swap, 
     or any group, category, type or class of security-based swaps 
     to make a determination that such security-based swap, or 
     group, category, type or class of security-based swaps should 
     be required to be cleared.
       ``(B) The Commission shall provide at least a 30-day public 
     comment period regarding any determination under subparagraph 
     (A).
       ``(2) Swap submissions.--
       ``(A) A clearing agency shall submit to the Commission each 
     security-based swap, or any group, category, type or class of 
     security-based swaps that it plans to accept for clearing and 
     provide notice to its members (in a manner to be determined 
     by the Commission) of such submission.
       ``(B) The Commission shall--
       ``(i) make available to the public any submission received 
     under subparagraph (A);
       ``(ii) review each submission made under subparagraph (A), 
     and determine whether the security-based swap, or group, 
     category, type, or class of security-based swaps, described 
     in the submission is required to be cleared; and
       ``(iii) provide at least a 30-day public comment period 
     regarding its determination whether the clearing requirement 
     under subsection (a)(1) shall apply to the submission.
       ``(3) Deadline.--The Commission shall make its 
     determination under paragraph (2)(B) not later than 90 days 
     after receiving a submission made under paragraph (2)(A), 
     unless the submitting clearing agency agrees to an extension 
     for the time limitation established under this paragraph.
       ``(4) Determination.--
       ``(A) In reviewing a submission made under paragraph (2), 
     the Commission shall review whether the submission is 
     consistent with section 5b(c)(2).
       ``(B) In reviewing a security-based swap, group of 
     security-based swaps or class of security-based swaps 
     pursuant to paragraph (1) or a submission made under 
     paragraph (2), the Commission shall take into account the 
     following factors:
       ``(i) The existence of significant outstanding notional 
     exposures, trading liquidity and adequate pricing data.
       ``(ii) The availability of rule framework, capacity, 
     operational expertise and resources, and credit support 
     infrastructure to clear the contract on terms that are 
     consistent with the material terms and trading conventions on 
     which the contract is then traded.
       ``(iii) The effect on the mitigation of systemic risk, 
     taking into account the size of the market for such contract 
     and the resources of the clearing agency available to clear 
     the contract.
       ``(iv) The effect on competition, including appropriate 
     fees and charges applied to clearing.
       ``(v) The existence of reasonable legal certainty in the 
     event of the insolvency of the relevant clearing agency or 1 
     or more of its clearing members with regard to the treatment 
     of customer and security-based swap counterparty positions, 
     funds, and property.
       ``(C) In making a determination under paragraph (2)(B) that 
     the clearing requirement shall apply, the Commission may 
     require such terms and conditions to the requirement as the 
     Commission determines to be appropriate.
       ``(5) Rules.--Not later than 1 year after the date of the 
     enactment of the Derivative Markets Transparency and 
     Accountability Act of 2009, the Commission shall adopt rules 
     for a clearing agency's submission for review, pursuant to 
     this subsection, of a security-based swap, or a group, 
     category, type or class of security-based swaps, that it 
     seeks to accept for clearing.
       ``(c) Stay of Clearing Requirement.--
       ``(1) After an determination pursuant to subsection (b)(2), 
     the Commission, on application of a counterparty to a 
     security-based swap or on its own initiative, may stay the 
     clearing requirement of subsection (a)(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.
       ``(2) Deadline.--The Commission shall complete a review 
     undertaken pursuant to paragraph (1) not later than 90 days 
     after issuance of the stay, unless the clearing agency that 
     clears the security-based swap, or group, category, type or 
     class of security-based swaps, agrees to an extension of the 
     time limitation established under this paragraph.
       ``(3) Determination.--Upon completion of the review 
     undertaken pursuant to paragraph (1), the Commission may--
       ``(A) determine, unconditionally or subject to such terms 
     and conditions as the Commission determines to be 
     appropriate, that the security-based swap, or group, 
     category, type or class of security-based swaps, must be

[[Page 31269]]

     cleared pursuant to this subsection if it finds that such 
     clearing is consistent with subsection (b)(4); or
       ``(B) determine that the clearing requirement of subsection 
     (a)(1) shall not apply to the security-based swap, or group, 
     category, type or class of security-based swaps.
       ``(4) Rules.--Not later than 1 year after the date of the 
     enactment of the Derivative Markets Transparency and 
     Accountability Act of 2009, the Commission shall adopt rules 
     for reviewing, pursuant to this subsection, a clearing 
     agency's clearing of a security-based swap, or a group, 
     category, type or class of security-based swaps, that it has 
     accepted for clearing.
       ``(d) Prevention of Evasion.--The Commission may prescribe 
     rules under this subsection, or issue interpretations of the 
     rules, as necessary to prevent evasions of this section.
       ``(e) Required Reporting.--
       ``(1) In general.--All security-based swaps that are not 
     accepted for clearing by any clearing agency shall be 
     reported either to a security-based swap repository described 
     in subsection 13(n) or, if there is no security-based swap 
     repository that would accept the security-based swap, to the 
     Commission pursuant to section 13A within such time period as 
     the Commission may by rule or regulation prescribe. 
     Counterparties to a security-based swap may agree which 
     counterparty will report the security-based swap as required 
     by this paragraph.
       ``(2) Swap dealer designation.--With regard to security-
     based swaps where only 1 counterparty is a security-based 
     swap dealer, the security-based swap dealer shall report the 
     security-based swap as required by this subsection.
       ``(f) Reporting Transition Rules.--Rules adopted by the 
     Commission under this section shall provide for the reporting 
     of data, as follows:
       ``(1) 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 
     no later than 180 days after the effective date of this 
     section; and
       ``(2) 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 no later than the 
     later of--
       ``(A) 90 days after such effective date; or
       ``(B) such other time after entering into the security-
     based swap as the Commission may prescribe by rule or 
     regulation.
       ``(g) Clearing Transition Rules.--
       ``(1) 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 
     subsection (f)(1).
       ``(2) 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 subsection (f)(2).
       ``(h) Exceptions.--
       ``(1) In general.--The requirements of subsection (a)(1) 
     shall not apply to a security-based swap if one of the 
     counterparties to the security-based swap--
       ``(A) is not a security-based swap dealer or major 
     security-based swap participant; and
       ``(B) is using security-based swaps to hedge or mitigate 
     commercial risk, including operating or balance sheet risk; 
     and
       ``(C) notifies the Commission, in a manner set forth by the 
     Commission, how it generally meets its financial obligations 
     associated with entering into non-cleared security-based 
     swaps.
       ``(2) Abuse of exception.--The Commission may prescribe 
     rules under this subsection, or issue interpretations of the 
     rules, as necessary to prevent abuse of the exemption in 
     paragraph (1) by security-based swap dealers and major 
     security-based swap participants.
       ``(3) Option to clear.--The application of the clearing 
     exception in paragraph (1) is solely at the discretion the 
     counterparty to the swap that meets the conditions of 
     subparagraphs (A) through (C) of paragraph (1).''.
       (b) Clearing Agency Requirements.--Section 17A of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78q) is amended by 
     adding at the end the following new subsections:
       ``(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 swap.
       ``(h) Voluntary Registration.--A person that clears 
     agreements, contracts, or transactions that are not required 
     to be cleared under this Act may register with the Commission 
     as a clearing agency.
       ``(i) Existing Banks and Derivatives Clearing 
     Organizations.--A bank or a derivatives clearing organization 
     registered with the Commodity Futures Trading Commission 
     under the Commodity Exchange Act required to be a registered 
     as a clearing agency under this title, solely because it 
     clears security-based swaps, is deemed to be a registered 
     clearing agency under this title solely for the purpose of 
     clearing security-based swaps to the extent that the bank 
     cleared security-based swaps, as defined in this Act, as a 
     multilateral clearing organization or the derivatives 
     clearing organization cleared security-based swaps, as 
     defined in this title pursuant to an exemption from 
     registration as a clearing agency, before the enactment of 
     this section. A bank or derivative clearing organization to 
     which this subsection applies shall continue to comply with 
     the requirements in section 17A(b)(3) of this title. A bank 
     to which this subsection applies may, by the vote of the 
     shareholders owning not less than 51 percent of the voting 
     interests of such bank, be converted into a State 
     corporation, partnership, limited liability company, or other 
     similar legal form pursuant to a plan of conversion, if the 
     conversion is not in contravention of applicable State law.
       ``(j) Reporting.--
       ``(1) In general.--A clearing agency that clears security-
     based swaps shall provide to the Commission all information 
     determined by the Commission to be necessary to perform its 
     responsibilities under this Act. The Commission shall adopt 
     data collection and maintenance requirements for security-
     based swaps cleared by clearing agencies that are comparable 
     to the corresponding requirements for security-based swaps 
     accepted by security-based swap repositories and security-
     based swaps traded on swap execution facilities. Subject to 
     section 24, the Commission shall share such information, upon 
     request, with the Board, the Commodity Futures Trading 
     Commission, the appropriate Federal banking agencies, the 
     Financial Services Oversight Council, and the Department of 
     Justice or to other persons the Commission deems appropriate, 
     including foreign financial supervisors (including foreign 
     futures authorities), foreign central banks, and foreign 
     ministries.
       ``(2) Public information.--A clearing agency that clears 
     security-based swaps shall provide to the Commission, or its 
     designee, such information as is required by, and in a form 
     and at a frequency to be determined by, the Commission, in 
     order to comply with the public reporting requirements 
     contained in section 13.
       ``(k) Designation of Compliance Officer.--
       ``(1) In general.--Each clearing agency that clears 
     security-based swaps shall designate an individual to serve 
     as a compliance officer.
       ``(2) Duties.--The compliance officer shall--
       ``(A) report directly to the board or to the senior officer 
     of the clearing agency;
       ``(B) in consultation with the board of the clearing 
     agency, a body performing a function similar to that of a 
     board, or the senior officer of the clearing agency, resolve 
     any conflicts of interest that may arise;
       ``(C) be responsible for administering the policies and 
     procedures required to be established pursuant to this 
     section;
       ``(D) ensure compliance with securities laws and the rules 
     and regulations issued thereunder, including rules prescribed 
     by the Commission pursuant to this section; and
       ``(E) establish procedures for remediation of non-
     compliance issues found during compliance office reviews, 
     lookbacks, internal or external audit findings, self-reported 
     errors, or through validated complaints. Procedures will 
     establish the handling, management response, remediation, re-
     testing, and closing of non-compliant issues.
       ``(3) Annual reports required.--The compliance officer 
     shall annually prepare and sign a report on the compliance of 
     the clearing agency with the securities laws and its policies 
     and procedures, including its code of ethics and conflict of 
     interest policies, in accordance with rules prescribed by the 
     Commission. Such compliance report shall accompany the 
     financial reports of the clearing agency that are required to 
     be furnished to the Commission pursuant to this section and 
     shall include a certification that, under penalty of law, the 
     report is accurate and complete.
       ``(l) Standards for Clearing Agencies Clearing Swap 
     Transactions.--To be registered and to maintain registration 
     as a clearing agency that clears 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.
       ``(m) Rules.--Not later than 1 year after the date of the 
     enactment of the Derivative Markets Transparency and 
     Accountability Act of 2009, the Commission shall adopt rules 
     governing persons that are registered as clearing agencies 
     for security-based swaps under this Act.
       ``(n) 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 finds that such clearing agency is subject to 
     comparable, comprehensive supervision and regulation on

[[Page 31270]]

     a consolidated basis by the Commodity Futures Trading 
     Commission, a Prudential Regulator, or the appropriate 
     governmental authorities in the organization's home country 
     or if necessary or appropriate in the public interest and 
     consistent with the purpose of this Act.
       ``(2) A person that is required to be registered as 
     clearing agency under this section, whose principal business 
     is clearing commodity futures and options on commodity 
     futures transactions 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.''.
       (c) Execution of Security-based Swaps.--The Securities 
     Exchange Act of 1934 (15 U.S.C. 78a, et seq.) is amended by 
     inserting after section 5 the following:

     ``SEC. 5A. EXECUTION OF SECURITY-BASED SWAPS.

       ``(a) Execution Transparency.--
       ``(1) Requirement.--A security-based swap that is subject 
     to the clearing requirement of section 3B shall not be traded 
     except on or through a national securities exchange or on or 
     through an swap execution facility registered under section 
     5h, that makes the security-based swap available for trading.
       ``(2) Exceptions.--The requirement of paragraph (1) shall 
     not apply to a security-based swap if no national securities 
     exchange or swap execution facility makes the security-based 
     swap available for trading.
       ``(3) Required reporting.--If the exception of paragraph 
     (2) applies and there is no national securities exchange or 
     swap execution facility that makes the security-based swap 
     available to trade, the counterparties shall comply with any 
     recordkeeping and transaction reporting requirements as may 
     be prescribed by the Commission with respect to security-
     based swaps subject to the requirements of paragraph (1).
       ``(b) Exchange Trading.--In adopting rules and regulations, 
     the Commission shall endeavor to eliminate unnecessary 
     impediments to the trading on national securities exchanges 
     of contracts, agreements, or transactions that would be swaps 
     but for the trading of such contracts, agreements or 
     transactions on such a national securities exchange.''.
       (d) Swap Execution Facilities.--The Securities Exchange Act 
     of 1934 (15 U.S.C. 78a, et seq.) is amended by adding after 
     section 3B (as added by subsection (a)) the following:

     ``SEC. 3C. SWAP EXECUTION FACILITIES.

       ``(a) Registration.--No person may operate a facility for 
     the trading of security-based swaps unless the facility is 
     registered as a swap execution facility under this section.
       ``(b) Requirements for Trading.--
       ``(1) In general.--A swap execution facility that is 
     registered under subsection (a) may list for trading any 
     security-based swap.
       ``(2) Rules for trading through the facility.--Not later 
     than 1 year after the date of the enactment of the Derivative 
     Markets Transparency and Accountability Act of 2009, the 
     Commission shall adopt rules to allow a security-based swap 
     to be traded through the facilities of an exchange or a swap 
     execution facility. Such rules shall permit an intermediary, 
     acting as principal or agent, to enter into or execute a 
     security-based swap, notwithstanding section 3B(b), if the 
     security-based swap is reported, recorded, or confirmed in 
     accordance with the rules of the exchange or swap execution 
     facility.
       ``(c) Trading by Exchanges.--An exchange shall, to the 
     extent that the exchange also operates a swap execution 
     facility and uses the same electronic trade execution system 
     for trading on the exchange and the swap execution facility, 
     identify whether the electronic trading is taking place on 
     the exchange or the swap execution facility.
       ``(d) Core Principles for Swap Execution Facilities.--
       ``(1) In general.--To be registered as, and to maintain its 
     registration as, a swap execution facility, the facility 
     shall comply with the core principles specified in this 
     subsection and any requirement that the Commission may impose 
     by rule or regulation pursuant to section 8a(5). Except where 
     the Commission determines otherwise by rule or regulation, 
     the facility shall have reasonable discretion in establishing 
     the manner in which it complies with these core principles.
       ``(2) Compliance with rules.--The swap execution facility 
     shall--
       ``(A) monitor and enforce compliance with any of the rules 
     of the facility, including the terms and conditions of the 
     swaps traded on or through the facility and any limitations 
     on access to the facility; and
       ``(B) establish and enforce trading and participation rules 
     that will deter abuses and have the capacity to detect, 
     investigate, and enforce those rules, including means to--
       ``(i) provide market participants with impartial access to 
     the market; and
       ``(ii) capture information that may be used in establishing 
     whether rule violations have occurred.
       ``(3) Security-based swaps not readily susceptible to 
     manipulation.--The swap execution facility shall permit 
     trading only in security-based swaps that are not readily 
     susceptible to manipulation.
       ``(4) Monitoring of trading.--The swap execution facility 
     shall--
       ``(A) establish and enforce rules or terms and conditions 
     defining, or specifications detailing, trading procedures to 
     be used in entering and executing orders traded on or through 
     its facilities; 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 upon 
     request; and
       ``(C) have the capacity to carry out such international 
     information-sharing agreements as the Commission may require.
       ``(6) Financial integrity of transactions.--The swap 
     execution facility shall establish and enforce rules and 
     procedures for ensuring the financial integrity of security-
     based swaps entered on or through its facilities, including 
     the clearance and settlement of the security-based swaps 
     pursuant to section 3B.
       ``(7) Emergency authority.--The swap execution facility 
     shall adopt rules to provide for the exercise of emergency 
     authority, in consultation or cooperation with the 
     Commission, where necessary and appropriate, including the 
     authority to suspend or curtail trading in a security-based 
     swap.
       ``(8) Timely publication of trading information.--The swap 
     execution facility shall make public timely information on 
     price, trading volume, and other trading data to the extent 
     prescribed by the Commission. The Commission shall evaluate 
     the impact of public disclosure on market liquidity in the 
     relevant market, and shall seek to avoid public disclosure of 
     information in a manner that would significantly reduce 
     market liquidity. The Commission shall not disclose 
     information related to the internal business decisions of 
     particular market participants.
       ``(9) Recordkeeping and reporting.--The swap execution 
     facility shall maintain records of all activities related 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 report to the Commission all 
     information determined by the Commission to be necessary or 
     appropriate for the Commission to perform its 
     responsibilities under this Act in a form and manner 
     acceptable to the Commission. The Commission shall adopt data 
     collection and reporting requirements for swap execution 
     facilities that are comparable to corresponding requirements 
     for clearing agencies and security-based swap repositories.
       ``(10) Conflicts of interest.--The 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.
       ``(11) Financial resources.--The swap execution facility 
     shall have adequate financial, operational, and managerial 
     resources to discharge its responsibilities. Such financial 
     resources shall be considered adequate if their value exceeds 
     the total amount that would enable the facility to cover its 
     operating costs for a period of one year, calculated on a 
     rolling basis.
       ``(12) 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 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 swap execution facility's responsibilities 
     and obligation; 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.
       ``(13) Designation of compliance officer.--
       ``(A) In general.--Each swap execution facility shall 
     designate an individual to serve as a compliance officer.
       ``(B) Duties.--The compliance officer--
       ``(i) shall report directly to the board or to the senior 
     officer of the facility; and
       ``(ii) shall--

       ``(I) review compliance with the core principles in section 
     3B(e).

[[Page 31271]]

       ``(II) 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;
       ``(III) be responsible for administering the policies and 
     procedures required to be established pursuant to this 
     section; and
       ``(IV) ensure compliance with securities laws and the rules 
     and regulations issued thereunder, including rules prescribed 
     by the Commission pursuant to this section; and

       ``(iii) shall establish procedures for remediation of non-
     compliance issues found during compliance office reviews, 
     lookbacks, internal or external audit findings, self-reported 
     errors, or through validated complaints and to establish the 
     handling, management response, remediation, re-testing, and 
     closing of non-compliant issues.
       ``(C) Annual reports required.--The compliance officer 
     shall annually prepare and sign a report on the compliance of 
     the facility with the securities laws and its policies and 
     procedures, including its code of ethics and conflict of 
     interest policies, in accordance with rules prescribed by the 
     Commission. Such compliance report shall accompany the 
     financial reports of the facility that are required to be 
     furnished to the Commission pursuant to this section and 
     shall include 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 
     such organization is subject to comparable, comprehensive 
     supervision and regulation on a consolidated basis by the 
     Commodity Futures Trading Commission, a Prudential Regulator 
     or the appropriate governmental authorities in the 
     organization's home country or if necessary or appropriate in 
     the public interest and consistent with the purpose of this 
     Act.
       ``(f) Rules.--Not later than 1 year after the date of the 
     enactment of the Derivative Markets Transparency and 
     Accountability Act of 2009, the Commission shall prescribe 
     rules governing the regulation of swap execution facilities 
     under this section.''.
       (e) Segregation of Assets Held as Collateral in Swap 
     Transactions.--The Securities Exchange Act of 1934 (15 U.S.C. 
     78a, et seq.) is further amended by adding after section 3C 
     (as added by subsection (b) the following:

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

       ``(a) Over-the-counter Swaps.--At the request of a 
     counterparty to a security-based swap who provides funds or 
     other property to a security-based swap dealer as initial 
     margin or collateral to secure the obligations of the 
     counterparty under a security-based swap between the 
     counterparty and the security-based swap dealer that is not 
     submitted for clearing to a derivatives clearing agency, the 
     security-based swap dealer shall segregate the funds or other 
     property for the benefit of the counterparty, and maintain 
     the funds or other property in an account which is carried by 
     a third-party custodian and designated as a segregated 
     account for the counterparty, in accordance with such rules 
     and regulations as the Commission or Prudential Regulator may 
     prescribe. If a security-based swap counterparty is a 
     security-based swap dealer or major security-based swap 
     participant who owns more than 20 percent of, or has more 
     than 50 percent representation on the board of directors of a 
     custodian, the custodian shall not be considered independent 
     from the security-based swap counterparties for purposes of 
     the preceding sentence. This subsection shall not be 
     interpreted to preclude commercial arrangements regarding the 
     investment of the segregated funds or other property and the 
     related allocation of gains and losses resulting from any 
     such investment.
       ``(b) Further Audit Reporting.--If a security-based swap 
     dealer does not segregate funds pursuant to the request of a 
     security-based swap counterparty in accordance with 
     subsection (a), the security-based swap dealer shall report 
     to its counterparty on a quarterly basis that its procedures 
     relating to margin and collateral requirements are in 
     compliance with the agreement of the counterparties.''.
       (f) 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) 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).''.
       (g) Additions of Security-based Swaps to Certain 
     Enforcement Provisions.--Paragraphs (1) through (3) of 
     section 9(b) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78i(b)(1)-(3)) are amended to read as follows:
       ``(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; or
       ``(2) any transaction in connection with any security with 
     relation to which he 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 he 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.''.
       (h) 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:
       ``(i) 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 paragraph, 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.''.
       (i) 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 new section:

     ``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 may, 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 or 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 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 section 3(a)(76) and (B) any security-based swap 
     and any other instrument relating to the same security or 
     group or index of securities.
       ``(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 it 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 subsection (c)(1)(A).
       ``(2) Requirement to aggregate positions.--In establishing 
     such limits, 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 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 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 index of 
     securities.

[[Page 31272]]

       ``(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 
     agreement and any security or loan or group or 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 agreement and any security or loan or group or 
     index of securities or loans and any other instrument 
     relating to such security or loan or group or index of 
     securities or loans as set forth in paragraphs (1) and (2) of 
     subsection (a) under this section.''.
       (j) 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 Reporting of Aggregate Security-based Swap 
     Data.--
       ``(1) In general.--The Commission, or a person designated 
     by the Commission pursuant to paragraph (2), 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 security-based swap trading volumes and 
     positions from the sources set forth in paragraph (3).
       ``(2) Designee of the commission.--The Commission may 
     designate a clearing agency or a security-based swap 
     repository to carry out the public reporting described in 
     paragraph (1).
       ``(3) Sources of information.--The sources of the 
     information to be publicly reported as described in paragraph 
     (1) are--
       ``(A) clearing agencies pursuant to section 3A;
       ``(B) security-based swap repositories pursuant to 
     subsection (n); and
       ``(C) reports received by the Commission pursuant to 
     section 13A.
       ``(n) Security-based Swap Repositories.--
       ``(1) Registration requirement.--
       ``(A) In general.--It shall be unlawful for a security-
     based swap repository, 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 repository.
       ``(B) Inspection and examination.--Registered security-
     based swap repositories shall be subject to inspection and 
     examination by any representatives of the Commission.
       ``(2) 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 
     security-based swap repository.
       ``(B) Data collection and maintenance.--The Commission 
     shall prescribe data collection and data maintenance 
     standards for security-based swap 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 
     that clear security-based swaps.
       ``(3) Duties.--A security-based swap repository shall--
       ``(A) accept data prescribed by the Commission for each 
     security-based swap under this paragraph (2);
       ``(B) maintain such data in such form and manner and for 
     such period as may be required by the Commission;
       ``(C) provide to the Commission, or its designee, such 
     information as is required by, and in a form and at a 
     frequency to be determined by, the Commission, in order to 
     comply with the public reporting requirements contained in 
     subsection (m); and
       ``(D) make available, on a confidential basis, all data 
     obtained by the security-based swap repository, including 
     individual counterparty trade and position data, to the 
     Commission, the appropriate Federal banking agencies, the 
     Commodity Futures Trading Commission, the Financial Services 
     Oversight Council, and the Department of Justice or to other 
     persons the Commission deems appropriate, including foreign 
     financial supervisors (including foreign futures 
     authorities), foreign central banks, and foreign ministries.
       ``(4) Rules.--Not later than 1 year after the date of the 
     enactment of the Derivative Markets Transparency and 
     Accountability Act of 2009, the Commission shall adopt rules 
     governing persons that are registered under this section, 
     including rules that specify the data elements that shall be 
     collected and maintained.
       ``(5) Exemptions.--The Commission may exempt, conditionally 
     or unconditionally, a security-based swap repository from the 
     requirements of this section if the Commission finds that 
     such security-based swap repository is subject to comparable, 
     comprehensive supervision or regulation on a consolidated 
     basis by the Commodity Futures Trading Commission, a 
     Prudential Regulator or the appropriate governmental 
     authorities in the organization's home country or if 
     necessary or appropriate in the public interest and 
     consistent with the purpose of this Act.''.

     SEC. 3204. REGISTRATION AND REGULATION OF SWAP DEALERS AND 
                   MAJOR 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) It shall be unlawful for any person to act as a 
     security-based swap dealer unless such person is registered 
     as a security-based swap dealer with the Commission.
       ``(2) It shall be unlawful for any person to act as a major 
     security-based swap participant unless such 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.--The application shall be made in such form 
     and manner as prescribed by the Commission, giving any 
     information and facts as the Commission may deem necessary 
     concerning the business in which the applicant is or will be 
     engaged. Such person, when registered as a security-based 
     swap dealer or major security-based swap participant, shall 
     continue to report and furnish to the Commission such 
     information pertaining to such person's business as the 
     Commission may require.
       ``(3) Expiration.--Each registration shall expire at such 
     time as the Commission may by rule or regulation prescribe.
       ``(4) Rules.--Except as provided in subsections (c) and 
     (d), the Commission may prescribe rules applicable to 
     security-based swap dealers and major security-based swap 
     participants, including rules that limit the activities of 
     security-based swap dealers and major security-based swap 
     participants. Except as provided in subsection (d)(1)(A), the 
     Commission may provide conditional or unconditional 
     exemptions from some or all of the rules or requirements 
     prescribed under this section for security-based swap dealers 
     and major security-based swap participants.
       ``(5) Transition.--Rules adopted under this section shall 
     provide for the registration of security-based swap dealers 
     and major security-based swap participants no later than 1 
     year after the effective date of the Derivative Markets 
     Transparency and Accountability Act of 2009.
       ``(c) Rules.--
       ``(1) In general.--Not later than 1 year after the date of 
     the enactment of the Derivative Markets Transparency and 
     Accountability Act of 2009, the Commission shall adopt rules 
     for persons that are registered as security-based swap 
     dealers or major security-based swap participants under this 
     Act.
       ``(2) Exception for prudential requirements.--The 
     Commission shall not prescribe rules imposing prudential 
     requirements on security-based swap dealers or major 
     security-based swap participants for which there is a 
     Prudential Regulator. This provision shall not be construed 
     as limiting the authority of the Commission to prescribe 
     appropriate business conduct, reporting, and recordkeeping 
     requirements to protect investors.
       ``(d) Capital and Margin Requirements.--
       ``(1) In general.--
       ``(A) Bank security-based swap dealers and major security-
     based swap participants.--Each registered security-based swap 
     dealer and major security-based swap participant for which 
     there is a Prudential Regulator shall meet such minimum 
     capital requirements and minimum initial and variation margin 
     requirements as the Prudential Regulators shall by rule or 
     regulation jointly prescribe that--
       ``(i) help ensure the safety and soundness of the security-
     based swap dealer or major security-based swap participant; 
     and
       ``(ii) are appropriate for the risk associated with the 
     non-cleared swaps held as a swap dealer or major swap 
     participant.
       ``(B) Non-bank security-based swap dealers and major 
     security-based swap participants.--Each registered security-
     based swap dealer and major security-based swap participant 
     for which there is not a Prudential Regulator shall meet such 
     minimum capital requirements and minimum initial and 
     variation margin requirements as the Commission shall by rule 
     or regulation prescribe that--
       ``(i) help ensure the safety and soundness of the security-
     based swap dealer or major security-based swap participant; 
     and
       ``(ii) are appropriate for the risk associated with the 
     non-cleared swaps held as the swap dealer or major swap 
     participant.
       ``(2) Rules.--
       ``(A) Bank security-based swap dealers and major security-
     based swap participants.--Not later than 1 year after the 
     date of the enactment of the Derivative Markets Transparency 
     and Accountability Act of 2009, the Prudential Regulators, in 
     consultation with the Commission, shall jointly adopt rules 
     imposing capital and margin requirements under this 
     subsection for security-based swap dealers and major 
     security-

[[Page 31273]]

     based swap participants, with respect to their activities as 
     a security-based swap dealer or major security-based swap 
     participant for which there is a Prudential Regulator.
       ``(B) Non-bank security-based swap dealers and major 
     security-based swap participants.--Not later than 1 year 
     after the date of the enactment of the Derivative Markets 
     Transparency and Accountability Act of 2009, the Commission 
     shall adopt rules imposing capital and margin requirements 
     under this subsection for security-based swap dealers and 
     major security-based swap participants for which there is no 
     Prudential Regulator.
       ``(3) Authority.--Nothing in this section shall limit the 
     authority of the Commission to set capital requirements for a 
     broker or dealer registered in accordance with section 15 of 
     this Act.
       ``(e) 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 prescribed by the 
     Commission by rule or regulation regarding the transactions 
     and positions and financial condition of such person;
       ``(B) for which--
       ``(i) there is a Prudential Regulator shall keep books and 
     records of all activities related to its 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;
       ``(ii) 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 such books and records open to inspection 
     and examination by any representative of the Commission.
       ``(2) Rules.--Not later than 1 year after the date of 
     enactment of the Derivative Markets Transparency and 
     Accountability Act of 2009, the Commission shall adopt rules 
     governing reporting and recordkeeping for security-based swap 
     dealers and major security-based swap participants.
       ``(f) Daily Trading Records.--
       ``(1) In general.--Each registered security-based swap 
     dealer and major security-based swap participant shall 
     maintain daily trading records of its security-based swaps 
     and all related records (including related transactions) and 
     recorded communications including but not limited to 
     electronic mail, instant messages, and recordings of 
     telephone calls, for such period as may be prescribed by the 
     Commission by rule or regulation.
       ``(2) Information requirements.--The daily trading records 
     shall include such information as the Commission shall 
     prescribe by rule or regulation.
       ``(3) Customer records.--Each registered security-based 
     swap dealer or major security-based swap participant shall 
     maintain daily trading records for each customer or 
     counterparty in such manner and form as to be identifiable 
     with each security-based swap transaction.
       ``(4) Audit trail.--Each registered security-based swap 
     dealer or major security-based swap participant shall 
     maintain a complete audit trail for conducting comprehensive 
     and accurate trade reconstructions.
       ``(5) Rules.--Not later than 1 year after the date of the 
     enactment of the Derivative Markets Transparency and 
     Accountability Act of 2009, the Commission shall adopt rules 
     governing daily trading records for security-based swap 
     dealers and major security-based swap participants.
       ``(g) Business Conduct Standards.--
       ``(1) In general.--Each registered security-based swap 
     dealer and major security-based swap participant shall 
     conform with business conduct standards as may be prescribed 
     by the Commission by rule or regulation addressing--
       ``(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 its business as a security-
     based swap dealer;
       ``(C) adherence to all applicable position limits; and
       ``(D) such other matters as the Commission shall determine 
     to be necessary or appropriate.
       ``(2) Business conduct requirements.--Business conduct 
     requirements adopted by the Commission shall--
       ``(A) establish the standard of care for a security-based 
     swap dealer or major security-based swap participant to 
     verify that any security-based swap 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 security-based swap (other than a security-based swap 
     dealer or major security-based swap participant) of:
       ``(i) information about the material risks and 
     characteristics of the security-based swap;
       ``(ii) for cleared security-based swaps, upon the request 
     of the counterparty, the daily mark from the appropriate 
     clearing agency, and for non-cleared security-based swaps, 
     upon request of the counterparty, the daily mark of the 
     security-based swap dealer or major security-based swap 
     participant; and
       ``(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
       ``(C) establish such other standards and requirements as 
     the Commission may determine are necessary or appropriate in 
     the public interest, for the protection of investors, or 
     otherwise in furtherance of the purposes of this title.
       ``(3) Rules.--The Commission shall prescribe rules under 
     this subsection governing business conduct standards for 
     security-based swap dealers and major security-based swap 
     participants not later than 1 year after the date of 
     enactment of the Derivative Markets Transparency and 
     Accountability Act of 2009.
       ``(h) Documentation Standards.--
       ``(1) In general.--Each registered security-based swap 
     dealer and major security-based swap participant shall 
     conform with standards, as may be prescribed by the 
     Commission by rule or regulation, addressing timely and 
     accurate confirmation, processing, netting, documentation, 
     and valuation of all security-based swaps.
       ``(2) Rules.--Not later than 1 year after the date of 
     enactment of the Derivative Markets Transparency and 
     Accountability Act of 2009, the Commission and the 
     appropriate Federal banking agencies, shall adopt rules 
     governing the standards described in paragraph (1) for 
     security-based swap dealers and major security-based swap 
     participants.
       ``(i) Dealer Responsibilities.--Each registered security-
     based swap dealer and major security-based swap participant 
     at all times shall 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) Disclosure of general information.--The security-
     based swap dealer or major security-based swap participant 
     shall disclose to the Commission or to the Prudential 
     Regulator for such 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.
       ``(3) Ability to obtain information.--The security-based 
     swap dealer or major swap security-based 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 or to the 
     Prudential Regulator for such security-based swap dealer or 
     major security-based swap participant, as applicable, upon 
     request.
       ``(4) 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 
     assure that the activities of any person within the firm 
     relating to research or analysis of the price or market for 
     any security are separated by appropriate informational 
     partitions within the firm from the review, pressure, or 
     oversight of those whose involvement in trading or clearing 
     activities might potentially bias their judgment or 
     supervision; and
       ``(B) address such other issues as the Commission 
     determines appropriate.
       ``(j) 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 such 
     security-based swap dealer or major security-based swap 
     participant, 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 statutory 
     disqualification.
       ``(k) Enforcement and Administrative Proceeding 
     Authority.--
       ``(1) Primary enforcement authority.--
       ``(A) SEC.--Except as provided in subparagraph (B), the 
     Commission shall have exclusive authority to enforce the 
     amendments made by subtitle B of the Derivative Markets 
     Transparency and Accountability Act of 2009 with respect to 
     any person.
       ``(B) Prudential regulators.--The Prudential Regulators 
     shall have exclusive authority to enforce the provisions of 
     section 15F(d) and other prudential requirements of this Act 
     with respect to banks, and branches

[[Page 31274]]

     or agencies of foreign banks that are security-based swap 
     dealers or major security-based swap participants.
       ``(C) Referral.--
       ``(i) Violations of nonprudential requirements.--If the 
     Prudential Regulator for a security-based swap dealer or 
     major security-based swap participant has cause to believe 
     that such security-based swap dealer or major security-based 
     swap participant may have engaged in conduct that constitutes 
     a violation of the nonprudential requirements of section 15F 
     or rules adopted by the Commission thereunder, that 
     Prudential Regulator may recommend in writing to the 
     Commission that the Commission initiate an enforcement 
     proceeding as authorized under this Act. 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 
     section 15F(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 Act. 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 it 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. 3205. REPORTING AND RECORDKEEPING.

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

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

       ``(a) In General.--Any person who enters into a security-
     based swap and--
       ``(1) did not clear the security-based swap in accordance 
     with section 3A; and
       ``(2) did not have data regarding the security-based swap 
     accepted by a security-based swap repository in accordance 
     with rules adopted by the Commission under section 13(n),
     shall meet the requirements in subsection (b).
       ``(b) Reports.--Any person described in subsection (a) 
     shall--
       ``(1) make such reports in such form and manner and for 
     such period as the Commission shall prescribe by rule or 
     regulation regarding the security-based swaps held by the 
     person; and
       ``(2) keep books and records pertaining to the security-
     based swaps held by the person in such form and manner and 
     for such period as may be required by the Commission, which 
     books and records shall be open to inspection by any 
     representative of the Commission, an appropriate Federal 
     banking agency, the Commodity Futures Trading Commission, the 
     Financial Services Oversight Council, and the Department of 
     Justice.
       ``(c) Identical Data.--In adopting rules under this 
     section, the Commission shall require persons described in 
     subsection (a) to report the same or more comprehensive data 
     than the Commission requires security-based swap repositories 
     to collect under subsection (n).''.
       (b) Beneficial Ownership Reporting.--
       (1) Section 13(d)(1) of the Securities Exchange Act of 1934 
     (15 U.S.C. 78m(d)(1)) is amended 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 or other derivative instrument that the Commission may 
     define by rule, and'' after ``Alaska Native Claims Settlement 
     Act,''; and
       (2) Section 13(g)(1) of the Securities Exchange Act of 1934 
     (15 U.S.C. 78m(g)(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 or other derivative 
     instrument 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 or other derivative instrument 
     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 adding ``security-based swap 
     dealer, major security-based swap participant,'' after 
     ``government securities dealer,''; and
       (2) in subparagraph (F), by adding ``, or security-based 
     swap dealer, or a major security-based swap participant'' 
     after ``or dealer''.
       (e) Derivatives 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 or other derivative 
     instrument 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 other derivative instrument, or 
     class of security-based swaps or other derivative 
     instruments, 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 instrument, 
     or class of security-based swap or instruments, be deemed the 
     acquisition of beneficial ownership of the equity 
     security.''.

     SEC. 3206. 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:

[[Page 31275]]

       ``(a) 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; but no person permitted to maintain a suit for 
     damages under the provisions of this title shall recover, 
     through satisfaction of judgment in one or more actions, a 
     total amount in excess of his actual damages 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 
     thereunder. 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 (1) 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, (2) any security-based swap 
     between eligible contract participants, or (3) any security-
     based swap effected on a national securities exchange 
     registered pursuant to section 6(b). 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 sentence shall 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 State law.''.

     SEC. 3207. 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 provided in sections 1a(35) of the Commodity 
     Exchange Act (7 U.S.C. 1a(35)) and section 3(a)(68) of the 
     Securities Exchange Act of 1934.
       ``(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) Exemption From Registration.--Section 3(a) of the 
     Securities Act of 1933 is amended by adding at the end the 
     following:
       ``(15) Any security-based swap, as defined in section 
     2(a)(17) that is not otherwise a security as defined in 
     section 2(a)(1) and that satisfies such conditions as 
     established by rule or regulation by the Commission 
     consistent with the provisions of the Derivative Markets 
     Transparency and Accountability Act of 2009. The Commission 
     shall promulgate rules implementing this exemption.''.
       (c) 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 
     section 4, unless a registration statement meeting the 
     requirements of subsection (a) of section 10 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(12) of the Commodity Exchange Act (7 U.S.C. 1a(12)).''.

     SEC. 3208. OTHER AUTHORITY.

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

     SEC. 3209. JURISDICTION.

       (a) Section 36 of the Securities Exchange Act of 1934 (15 
     U.S.C. 78mm) is amended by adding at the end the following 
     new subsection:
       ``(c) Derivatives.--The Commission shall not grant 
     exemptions from the security-based swap provisions of the 
     Derivative Markets Transparency and Accountability Act of 
     2009, except as expressly authorized under the provisions of 
     that Act.''.
       (b) Section 30 of the Securities Exchange Act of 1934 is 
     amended by adding at the end the following:
       ``(c) No provision of this Act that was added by the 
     Derivative Markets Transparency and Accountability Act of 
     2009 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 he 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 Act that was added by the Derivative 
     Markets Transparency and Accountability Act of 2009. This 
     subsection shall not be construed to limit the jurisdiction 
     of the Commission under any provision of this Act as in 
     effect prior to enactment of the Derivative Markets 
     Transparency and Accountability Act of 2009.''.

     SEC. 3210. EFFECTIVE DATE.

       (a) Unless otherwise provided, the provisions of this 
     subtitle shall become effective the later of 270 days after 
     the date of the enactment of this subtitle or, to the extent 
     a provision of this subtitle requires rulemaking, no less 
     than 60 days after publication of a final rule or regulation 
     implementing such provision of this subtitle.
       (b) Subsection (a) shall not preclude the Securities 
     Exchange Commission from any rulemaking required to implement 
     the provisions of this subtitle.

  Subtitle C--Improved Financial and Commodity Markets Oversight and 
                             Accountability

     SEC. 3301. ELEVATION OF CERTAIN INSPECTORS GENERAL TO 
                   APPOINTMENT PURSUANT TO SECTION 3 OF THE 
                   INSPECTOR GENERAL ACT OF 1978.

       (a) Inclusion in Certain Definitions.--Section 12 of the 
     Inspector General Act of 1978 (5 U.S.C. App.) is amended--
       (1) in paragraph (1), by striking ``or the Federal 
     Cochairpersons of the Commissions established under section 
     15301 of title 40, United States Code;'' and inserting ``the 
     Federal Cochairpersons of the Commissions established under 
     section 15301 of title 40, United States Code; the Chairman 
     of the Board of Governors of the Federal Reserve System; the 
     Chairman of the Commodity Futures Trading Commission; the 
     Chairman of the National Credit Union Administration; the 
     Director of the Pension Benefit Guaranty Corporation; the 
     Chairman of the Securities and Exchange Commission; or the 
     Director of the Consumer Financial Protection Agency;''; and
       (2) in paragraph (2), by striking ``or the Commissions 
     established under section 15301 of title 40, United States 
     Code,'' and inserting ``the Commissions established under 
     section 15301 of title 40, United States Code, the Board of 
     Governors of the Federal Reserve System, the Commodity 
     Futures Trading Commission, the National Credit Union 
     Administration, the Pension Benefit Guaranty Corporation, the 
     Securities and Exchange Commission, or the Director of the 
     Consumer Financial Protection Agency,''.
       (b) Exclusion From Definition of Designated Federal 
     Entity.--Section 8G(a)(2) of the Inspector General Act of 
     1978 (5 U.S.C. App.) is amended--
       (1) by striking ``the Board of Governors of the Federal 
     Reserve System,'';
       (2) by striking ``the Commodity Futures Trading 
     Commission,'';
       (3) by striking ``the National Credit Union 
     Administration,''; and
       (4) by striking ``the Pension Benefit Guaranty Corporation, 
     the Securities and Exchange Commission,''.

     SEC. 3302. CONTINUATION OF PROVISIONS RELATING TO PERSONNEL.

       (a) In General.--The Inspector General Act of 1978 (5 
     U.S.C. App.) is amended by inserting after section 8L the 
     following:

     ``SEC. 8M. SPECIAL PROVISIONS CONCERNING CERTAIN 
                   ESTABLISHMENTS.

       ``(a) Definition.--For purposes of this section, the term 
     `covered establishment' means the Board of Governors of the 
     Federal Reserve System, the Commodity Futures Trading 
     Commission, the National Credit Union Administration, the 
     Pension Benefit Guaranty Corporation, and the Securities and 
     Exchange Commission.
       ``(b) Provisions Relating to All Covered Establishments.--
       ``(1) Provisions relating to inspectors general.--In the 
     case of the Inspector General of a covered establishment, 
     subsections (b) and (c) of section 4 of the Inspector General 
     Reform Act of 2008 (Public Law 110-409) shall apply in the 
     same manner as if such covered establishment were a 
     designated Federal entity under section 8G. An Inspector 
     General who is subject to the preceding sentence shall not be 
     subject to section 3(e).
       ``(2) Provisions relating to other personnel.--
     Notwithstanding paragraphs (7) and (8) of section 6(a), the 
     Inspector General of a covered establishment may select, 
     appoint, and employ such officers and employees as may be 
     necessary for carrying out the functions, powers, and duties 
     of the Office of Inspector General of such establishment and 
     to obtain the temporary or intermittent services of experts 
     or consultants or an organization of experts or consultants, 
     subject to the applicable laws and regulations that govern 
     such selections, appointments, and employment, and the 
     obtaining of such services, within such establishment.

[[Page 31276]]

       ``(c) Provision Relating to the Board of Governors of the 
     Federal Reserve System.--The provisions of subsection (a) of 
     section 8D (other than the provisions of subparagraphs (A), 
     (B), (C), and (E) of paragraph (1) of such subsection (a)) 
     shall apply to the Inspector General of the Board of 
     Governors of the Federal Reserve System and the Chairman of 
     the Board of Governors of the Federal Reserve System in the 
     same manner as such provisions apply to the Inspector General 
     of the Department of the Treasury and the Secretary of the 
     Treasury, respectively.''.
       (b) Conforming Amendment.--Paragraph (3) of section 8G(g) 
     of the Inspector General Act of 1978 (5 U.S.C. App.) is 
     repealed.

     SEC. 3303. CORRECTIVE RESPONSES BY HEADS OF CERTAIN 
                   ESTABLISHMENTS TO DEFICIENCIES IDENTIFIED BY 
                   INSPECTORS GENERAL.

       The Chairman of the Board of Governors of the Federal 
     Reserve System, the Chairman of the Commodity Futures Trading 
     Commission, the Chairman of the National Credit Union 
     Administration, the Director of the Pension Benefit Guaranty 
     Corporation, and the Chairman of the Securities and Exchange 
     Commission shall each--
       (1) take action to address deficiencies identified by a 
     report or investigation of the Inspector General of the 
     establishment concerned; or
       (2) certify to both Houses of Congress that no action is 
     necessary or appropriate in connection with a deficiency 
     described in paragraph (1).

     SEC. 3304. EFFECTIVE DATE; TRANSITION RULE.

       (a) Effective Date.--This subtitle and the amendments made 
     by this subtitle shall take effect 30 days after the date of 
     the enactment of this subtitle.
       (b) Transition Rule.--An individual serving as Inspector 
     General of the Board of Governors of the Federal Reserve 
     System, the Commodity Futures Trading Commission, the 
     National Credit Union Administration, the Pension Benefit 
     Guaranty Corporation, or the Securities and Exchange 
     Commission on the effective date of this subtitle pursuant to 
     an appointment made under section 8G of the Inspector General 
     Act of 1978 (5 U.S.C. App.)--
       (1) may continue so serving until the President makes an 
     appointment under section 3(a) of such Act with respect to 
     the Board of Governors of the Federal Reserve System, the 
     Commodity Futures Trading Commission, the National Credit 
     Union Administration, the Pension Benefit Guaranty 
     Corporation, or the Securities and Exchange Commission, as 
     the case may be, consistent with the amendments made by 
     section 301; and
       (2) shall, while serving under paragraph (1), remain 
     subject to the provisions of section 8G of such Act which, 
     immediately before the effective date of this subtitle, 
     applied with respect to the Inspector General of the Board of 
     Governors of the Federal Reserve System, the Commodity 
     Futures Trading Commission, the National Credit Union 
     Administration, the Pension Benefit Guaranty Corporation, or 
     the Securities and Exchange Commission, as the case may be, 
     and suffer no reduction in pay.
       Page 694, beginning on line 19, strike ``a designated 
     Federal entity'' and insert ``an establishment''.
       In the table of contents, strike the items relating to 
     title III, subtitles A, B, and C of title III, and sections 
     3001 through 3304 and insert the following:

   TITLE III--DERIVATIVE MARKETS TRANSPARENCY AND ACCOUNTABILITY ACT

Sec. 3001. Short title.
Sec. 3002. Review of regulatory authority.
Sec. 3003. International harmonization.
Sec. 3004. Prohibition against government assistance.
Sec. 3005. Studies.
Sec. 3006. Recommendations for changes to insolvency laws.
Sec. 3007. Abusive swaps.
Sec. 3008. Authority to prohibit participation in swap activities.
Sec. 3009. Memorandum.

                 Subtitle A--Regulation of Swap Markets

Sec. 3101. Definitions.
Sec. 3102. Jurisdiction.
Sec. 3103. Clearing and execution transparency.
Sec. 3104. Public reporting of aggregate swap data.
Sec. 3105. Swap repositories.
Sec. 3106. Reporting and recordkeeping.
Sec. 3107. Registration and regulation of swap dealers and major swap 
              participants.
Sec. 3108. Conflicts of interest.
Sec. 3109. Swap execution facilities.
Sec. 3110. Derivatives transaction execution facilities and exempt 
              boards of trade.
Sec. 3111. Designated contract markets.
Sec. 3112. Margin.
Sec. 3113. Position limits.
Sec. 3114. Enhanced authority over registered entities.
Sec. 3115. Foreign boards of trade.
Sec. 3116. Legal certainty for swaps.
Sec. 3117. FDICIA amendments.
Sec. 3118. Enforcement authority.
Sec. 3119. Enforcement.
Sec. 3120. Retail commodity transactions.
Sec. 3121. Large swap trader reporting.
Sec. 3122. Segregation of assets held as collateral in swap 
              transactions.
Sec. 3123. Other authority.
Sec. 3124. Antitrust.
Sec. 3125. Review of prior actions.
Sec. 3126. Expedited process.
Sec. 3127. Effective date.

         Subtitle B--Regulation of Security-Based Swap Markets

Sec. 3201. Definitions under the Securities Exchange Act of 1934.
Sec. 3202. Repeal of prohibition on regulation of security-based swaps.
Sec. 3203. Amendments to the Securities Exchange Act of 1934.
Sec. 3204. Registration and regulation of swap dealers and major swap 
              participants.
Sec. 3205. Reporting and recordkeeping.
Sec. 3206. State gaming and bucket shop laws.
Sec. 3207. Amendments to the Securities Act of 1933; treatment of 
              security-based swaps.
Sec. 3208. Other authority.
Sec. 3209. Jurisdiction.
Sec. 3210. Effective date.

  Subtitle C--Improved Financial and Commodity Markets Oversight and 
                             Accountability

Sec. 3301. Elevation of certain Inspectors General to appointment 
              pursuant to section 3 of the Inspector General Act of 
              1978.
Sec. 3302. Continuation of provisions relating to personnel.
Sec. 3303. Corrective responses by heads of certain establishments to 
              deficiencies identified by Inspectors General.
Sec. 3304. Effective date; transition rule.

  The Acting CHAIR. Pursuant to House Resolution 964 the gentleman from 
Minnesota (Mr. Peterson) and a Member opposed each will control 15 
minutes.
  The Chair recognizes the gentleman from Minnesota.
  Mr. PETERSON. Madam Chair, I yield myself such time as I may consume.
  I rise today in support of the Peterson-Frank amendment to H.R. 4173, 
The Wall Street Reform and Consumer Protection Act of 2009.
  Madam Chair, while much of the attention of this financial reform 
package is focused on the mortgage and credit crisis of last year, this 
amendment is the product of years of public debate about the regulation 
of derivatives markets in the United States.
  It began with the price volatility we saw in energy futures markets, 
first with natural gas, then for crude oil. We examined in our 
committee the influx of new kinds of traders in these markets, like 
hedge funds and index funds. We looked at the relationship between what 
was occurring on the regulated markets and the even larger unregulated, 
over-the-counter market. More aptly, this probably should have been 
called the under-the-counter market because trillions of dollars in 
transactions affecting commodity prices were being conducted out of 
sight and out of reach of market regulators.
  Last year, the House of Representatives responded, approving 
bipartisan legislation to give the Commodity Futures Trading Commission 
greater authority over these ``dark markets'' in an attempt to restore 
the price discovery and hedging utility of unregulated markets. 
Unfortunately, it was only after the House passed this bill that we 
learned the real consequences of what can happen in unregulated markets 
with the near collapse of our financial system.
  As Warren Buffett correctly pointed out in his 2003 annual letter to 
shareholders, the large amount of credit risk concentrated in the hands 
of the relatively few meant that ``the troubles of one could quickly 
infect the others.'' Last year's collapse proved him right.
  Madam Chair, the House Agriculture Committee acted very early on this 
year to get a handle on these swaps and minimize the very real systemic 
risk to the economy that they posed. A key part of that legislation was 
a requirement that swap contracts be cleared.
  The clearing requirement has served the futures market well for 
decades. It increases transparency and effectively manages risk, not 
just for the public, but for all participants in the market.
  Equally important, Madam Chair, our committee said that exemptions to 
the clearing requirement should be available because not every swap is 
appropriate for clearing and not every market participant should have 
to bear the burdens of clearing.

[[Page 31277]]

  These two key principles of required clearing and exemptions are 
carried over from that previous work from our committee and are 
expanded upon in the Peterson-Frank amendment.
  Madam Chair, our target for greater regulation and oversight is not 
the end user but their swap dealer or major swap participant 
counterparty. End users did not get a bailout of billions of dollars. 
End users are not responsible for what happened in the markets last 
year.
  Under this amendment, swaps will be centrally cleared if a 
clearinghouse will accept the transaction and when regulators determine 
clearing is necessary. Cleared, listed swaps must be traded on an 
exchange or registered swap execution facility. And all swap trades 
must be reported, with counterparties adhering to recordkeeping and 
reporting requirements.
  This amendment will hold swap dealers like large financial 
institutions accountable to new standards for capital, margin, business 
conduct and other requirements to reduce their ability to again place 
our financial system in such dire straits.
  In addition, Madam Chair, this amendment contains many strong 
provisions regarding market transparency and makes progress solving 
some of the jurisdictional issues that have plagued financial 
regulation in the past. The amendment strengthens confidence in trader 
position limits on physically deliverable commodities as a way to 
prevent excessive speculation trading. And it will call for 
international harmonization by requiring foreign boards of trade to 
share trading data and adopt speculative position limits on contracts 
that trade U.S. commodities similar to U.S.-regulated exchanges.
  Madam Chair, we have come a long way to get here. The situation I 
described earlier with AIG might make you wonder if we could have ever 
allowed such a reckless trading environment to have existed and that 
those involved would have learned their lesson. But believe it or not, 
the big banks on Wall Street don't think that they did anything wrong. 
In fact, they'd like to keep doing what they've been doing. They 
already got their bailout, and they wouldn't mind topping it off by 
avoiding any new regulation or oversight. To me, that is an 
unacceptable outcome.
  I urge my colleagues to approve the Peterson-Frank amendment to 
finally bring real accountability and oversight to the over-the-counter 
derivatives market.
  Could I ask how much time I have remaining?
  The Acting CHAIR. The gentleman has 11\1/2\ minutes remaining.
  Mr. PETERSON. I reserve the balance of my time.
  Mr. GARRETT of New Jersey. I claim the time in opposition.
  The Acting CHAIR. The gentleman is recognized for 15 minutes.
  Mr. GARRETT of New Jersey. I yield myself 2 minutes.
  Madam Chair, if there is anything that the last few months have 
taught us, it is the American people telling us that we don't need more 
government to overreach in big government solutions when targeted 
reforms are more appropriate and effective.
  When thinking about how to draft a legislative response to the recent 
financial crisis in regards to this issue of derivatives, we must ask 
ourselves one seminal question: What are we actually trying to resolve 
here. The vast majority of the OTC derivative marketplace had 
absolutely nothing to do with the crisis. It provides critically 
important risk management tools for virtually all large companies and 
many small- and medium-sized companies as well.
  When you think about the AIG situation, even the problem there with 
the derivatives had much more to do with the extremely bad bets on the 
housing market along with failed prudential regulators who were 
supposed to be overseeing them than they had anything specifically to 
do with the derivatives themselves.
  So quite honestly, Madam Chair, we don't think it's appropriate to 
set up a truly cumbersome and Byzantine dual regulatory regime that 
would require the CFTC and the SEC, two entities that have not shown 
the ability to cooperate in the past, that they have two very different 
missions and reasons for being to approach very different marketplaces 
and derivatives and to do so now in the same manner.
  The Democrats' underlying bill sets these two entities up to perform 
as prudential regulators, setting capital requirements, margins, and 
other prudential requirements when they were never envisioned to play 
this role. When you think about this, also, the SEC has failed 
miserably as a prudential regulator when it tried to do the 
consolidated regulator for investment banks.
  The proposal contains in the underlying bill an overly broad 
definition, new capital and margin requirements and broad authority for 
regulators to determine which transactions are standardized and subject 
to mandatory clearing and exchange trading.
  These are unnecessary government burdens that could impair the 
usefulness of derivatives as an innovative risk management tool, 
thereby increasing the exposure to the marketplace and the participants 
in them, which all gets to the last point.
  The Acting CHAIR. The time of the gentleman has expired.
  Mr. GARRETT of New Jersey. I will yield myself 15 more seconds to 
make the final point.
  All of these points in the underlying bill will lead to one thing: a 
loss of credit and therefore a loss of jobs in America today and in the 
future as well. The American people have spoken loud and strong: Do not 
pass any legislation that is going to create hardships for the creation 
of jobs in this country, and this underlying legislation with its 
language on derivatives would do just that.
  With that, I yield such time as he may consume to the gentleman from 
Oklahoma (Mr. Lucas).

                              {time}  1830

  Mr. LUCAS. I thank the gentleman.
  Madam Chairwoman, I rise in support of the Peterson-Frank amendment. 
It represents a year-long attempt to balance the needs for stronger 
regulation and a need to manage legitimate financial risk.
  Under this amendment, end users will not be regulated as though they 
were a major financial house residing on Wall Street. They are not 
systematically risky, they did not cause the financial collapse, and 
they should not be regulated as if they did.
  Not all concerns, however, have been resolved. And I would have 
preferred language that would have made clear only those that can cause 
a significant, adverse impact on the U.S. financial system to be 
regulated as major swap participants.
  For that purpose, I am supporting Congressman Murphy's amendment that 
we will see shortly to cure that deficiency.
  Similarly, I don't understand why market makers that only deal in 
cleared products need to have additional capital and margin 
requirements imposed on them by the Federal Government.
  Instead, this amendment allows the appropriate financial regulator to 
more closely monitor the markets and those that may accumulate or 
generate too much risk for a healthy and robust financial system. It 
then gives the regulators the appropriate tools to reduce the risk 
before it can negatively affect our economy.
  I have other concerns about this amendment. I am sure we would all do 
things differently if we could. This amendment isn't perfect, but it is 
a marked improvement over other legislative efforts either proposed or 
considered. This amendment is worthy of our support.
  Now I will also admit, unfortunately, all of the hard work that went 
into the creation of this amendment may very well be overwhelmed by the 
massive overreach of the rest of the bill, but we should vote for and 
support this amendment.
  The Acting CHAIR. As a reminder from the Chair, the gentleman from 
Minnesota has 10\1/2\ minutes remaining.
  Mr. PETERSON. Madam Chair, I'm now pleased to recognize the gentleman 
from Iowa, the chairman of the

[[Page 31278]]

General Farm Commodities and Risk Management Subcommittee that deals 
with this issue and is a leader on this issue for us on the Agriculture 
Committee, Mr. Boswell, for 3 minutes.
  Mr. BOSWELL. I first have to say on opening to Mr. Garrett, my friend 
across the aisle, you often say that we don't need more government. 
Well, maybe so, if under the previous administration and our friends, 
that you would have done the job that we have to try to do cleanup on 
now.
  I would like to personally thank Chairman Peterson for his leadership 
in bringing oversight to the over-the-counter derivatives markets.
  For too long, regulators did not have the tools necessary to police 
these markets. As a consequence, large financial institutions like Bear 
Stearns, Lehman Brothers, and AIG got into trouble before anyone knew 
it. Had these provisions been in place, the government would not have 
had to spend billions to rescue AIG to prevent its collapse from 
sending shock waves throughout the financial system.
  The compromise which the Agriculture and Financial Services 
Committees reached will bring greater transparency and oversight to the 
over-the-counter derivatives markets. We must provide necessary 
oversight of these markets without hindering legitimate consumers from 
operating within them.
  This compromise strikes a careful balance that protects the use of 
derivatives by so-called ``end users'' who utilize these markets to 
hedge the cost of their operations. Whether dealing with grain, energy, 
steel, or financing, American companies use derivatives to lock in 
prices to effectively plan for the future.
  When the Agriculture Committee first considered the regulation of 
over-the-counter derivatives markets, I offered an amendment to require 
mandatory clearing. And I'm pleased to see that this compromise, which 
the chairman will be offering today, maintains this concept.
  Clearing exposes and mutualizes the counterparty credit risk which, 
up until now, has been hidden behind closed doors. While every 
derivative does not need to be cleared, the compromise will ensure that 
regulators look at all derivatives to identify what classes should 
require clearance.
  The notional value of the over-the-counter derivatives markets ranges 
from $400 to $600 trillion. To allow something this massive that 
impacts every American to continue to operate unregulated is simply not 
acceptable. This legislation will strike a good balance of consumer 
protection without obstructing individuals and companies from 
conducting their business and managing their risk.
  I urge support for this amendment.
  Mr. GARRETT of New Jersey. I yield myself 3 minutes.
  I appreciate the underlying amendment that we're discussing here 
right now. Let me just point out that the Republicans have submitted a 
substitute to address this overall issue. Republicans, however, have 
done so in a targeted approach addressing actual problems, and it's 
really the more sensible approach to the whole derivative reform issue.
  The centerpiece of the Republican alternative is something also found 
in the chairman's bill, which is a trade repository where all OTC 
trades would be required to be reported to. The repository then will 
provide valuable transparency, something we are all trying to achieve, 
to the entire OTC marketplace and will give the regulators the ability 
to analyze the appropriate data for their purposes as well as provide 
aggregated data to the broader marketplace.
  We don't set up a Byzantine regulatory regime over the many market 
participants. While we don't do that because we don't preassume, 
without any relevant supporting data, that these entities needed to be 
micromanaged in this manner, we do require that the regulators review 
the data and regularly report back to Congress if an entity who is not 
already regulated by a prudential regulator, whether they should be 
more heavily regulated due to its size or its scope or its activities 
in the OTC marketplace.
  So the Republican substitute does not have broad requirements for 
mandatory clearing, but it does codify the commitments that the private 
sector has already made. And they have done so working responsibly and 
cooperatively with the appropriate regulators, and they do so to engage 
in an ever more and greater amounts of central clearing now and into 
the future as well.
  But when you think about it, these changes all take time. And they 
need to be done in a responsible manner. If you were going to force 
central clearing through some sort of central counterparties and have 
adequate counterparties for risk they are unfamiliar with, it could 
exacerbate the systemic risk.
  So central clearing should be opened up over time to as many 
participants as possible, again, in a responsible manner so as not to 
do more harm than good, which is what we are all trying to achieve at 
the end of the day with the amendments and otherwise.
  We also require margin requirements between dealers and major market 
participants, and that would address a major issue with the AIG-related 
problems that I discussed earlier.
  In regards to the capital requirements, prudential regulators--look 
at them for a moment. Prudential regulators are really required by our 
substitute to take the swap activities of supervised entities into 
account when setting capital requirements for those entities. Let me 
step back for a minute and say that again.
  What you're basically saying here in the AIG situation is what we 
should have had occur there is prudential regulators should have been 
looking at those swap requirements when they set the capital 
requirements over at AIG or other like situations. But again, it is not 
appropriate to set these bank-like cap requirements on nonfinancial 
entities, so our Republican substitute would not do so.
  Finally, we generally agree with the overall chairman's regard to 
segregating----
  The Acting CHAIR. The time of the gentleman has expired.
  Mr. GARRETT of New Jersey. I yield myself 30 additional seconds.
  Finally, we agree with the chairman in regards to segregating margin 
for OTC swaps, although we exempt various margining for segregation 
requirements based on input from both the buy and the sell side.
  Margins should be treated as such, especially if a dealer's 
counterparty wishes it to be so, and should not be commingled with the 
dealer's funds. Many of the problems associated with the Lehman 
bankruptcy, I am told and I understand, are related to this very issue. 
And so requiring margin segregation, we believe, would be an 
appropriate response to that issue and that problem and would solve it 
for the future.
  I reserve the balance of my time.
  Mr. PETERSON. Madam Chair, I'm pleased to yield 2 minutes to the 
gentlewoman from Illinois (Ms. Bean).
  Ms. BEAN. I want to thank Chairmen Frank and Peterson of both 
committees and the committees for their diligent efforts on derivatives 
reform and appreciate the conciliatory and open nature in which we have 
worked on this piece of legislation.
  I have the honor to serve as the vice Chair of the New Dem Coalition 
and co-Chair of the New Dem Financial Services Task Force, and 
derivatives reform is an area where New Dems have worked diligently 
with both committees of jurisdiction.
  I want to specifically recognize the hard work of Mike McMahon, who 
drafted the New Dem derivatives bill in July, and recognize Jim Himes 
and Scott Murphy, whose private sector experience and perspective was 
so constructive. The New Dems, our caucus and our country, have 
benefited greatly from their thoughtful and knowledgeable insights.
  Lacking and lagging regulation of OTC derivatives was a major 
contributing factor to last year's crisis, including the highly 
leveraged credit default swaps at AIG that prompted government 
intervention. For the first time, we are going to regulate the over-
the-counter derivatives market, which is a multitrillion dollar 
unregulated market.

[[Page 31279]]

  This amendment brings necessary transparency by requiring that all 
derivatives will be exchanged, traded, cleared, or reported, and it 
gives regulators the tools they need to effectively oversee this 
industry.

                              {time}  1840

  This amendment and underlying bill attempts to strike the right 
balance that will bring transparency and accountability to the 
derivatives market while preserving the ability of end user businesses 
to legitimately hedge their risk in order to protect their businesses.
  We are taking an important step today in moving forward with strong 
regulatory reform legislation that will better protect our financial 
system, our economy, and the American taxpayers.
  To my colleague across the aisle who suggested that the underlying 
bill would create a loss of credit or jobs, I would question whether 
he's been paying attention to the loss of jobs and credit following the 
financial crisis last year.
  I urge my colleagues on both sides of the aisle to support this 
amendment and the underlying bill.
  Mr. PETERSON. Madam Chair, I yield 3 minutes to the gentleman from 
Connecticut (Mr. Himes).
  Mr. HIMES. I thank Chairman Peterson for his leadership on the bill 
and Chairman Frank for his good work on this terribly important work 
that we now do to try to restore a sense of faith and trust in the 
financial system, which American companies and families rely on for the 
credit that allows them to create jobs and offer employment.
  One of the least understood portions of this bill, Madam Chair, but 
one of the most important is the work that has been done on 
derivatives, instruments that allow our farmers to get rid of the risk 
of future soybean prices if they don't want to bear those risks, that 
allow our exporters to get rid of currency risk that they don't want to 
bear, but instruments that, despite the comments of my good friend from 
New Jersey, were very, very much at the core of the financial meltdown 
that we have seen and are now living through.
  My friend seems to forget three letters: AIG. He forgets that that 
great enemy of American capitalism, that wild-eyed critic of markets, 
Warren Buffett, called credit default swaps ``weapons of financial mass 
destruction.'' And in reviewing some of these, he said these must have 
been contracts that were devised by madmen. This is Warren Buffett.
  The Democratic amendment would do several market-friendly things. 
One, it would say that these contracts will trade in the light of day, 
that they will clear in clearinghouses. This is an idea that is 
thousands of years old, Economics 101. Markets are healthier if we know 
who is selling what to whom and for what price, if we can see who is 
taking on what risk, something that if the market had known in the AIG 
experience, we might have been saved the awful spectacle of taxpayer 
dollars being injected into private companies. The Democratic amendment 
says it will trade in the light of day. That is not a radical, heavy-
handed, Byzantine, or cumbersome idea; it's plain good market 
economics.
  The Democratic amendment would say that if you take big bets, we're 
going to make sure you've got the capital to make good on those bets. 
Again not a terribly radical idea. But if you are going to insure 
somebody, we will make sure you've got the capital to make good on the 
insurance that you have sold.
  Lastly and importantly, a derivative contract always involves 
somebody getting rid of risk, that farmer, that company. We protect 
those end users and say you will not be subject to regulation. But the 
people who buy that risk, the financial entities that brought us to 
this place, will be subject to oversight.
  So, my colleagues, this is a good, smart, market-friendly amendment, 
and I urge its passage and support.
  Mr. PETERSON. Madam Chair, our committee has spent a lot of time on 
this, and I want to thank all the Members for the many, many hours that 
they put in working on this, also the members of the banking committee. 
I also want to especially thank my ranking member, Mr. Lucas, and his 
staff, Kevin Kramp, Bill O'Conner, and Josh Mathis, for engaging with 
us in a cooperative process to bring this together.
  I want to thank Chairman Frank and his staff, Peter Roberson and 
Luranne Stewart, for working with us in a spirit of compromise that 
allowed us to reach an agreement in a relatively short amount of time. 
And I want to thank Ranking Member Bachus and his staff, Kevin Edgar 
and Jason Spence, who, despite their concerns with the legislation, 
were willing to thoughtfully contribute to our discussions. So we 
appreciate that.
  Finally, I want to thank my own staff, Andy Baker, Rebekah Solem, 
Matt Forbes, and Clark Ogilvie, for their hard work and long hours to 
bring this amendment to fruition.
  This is a good amendment and I encourage Members to adopt it.
  Madam Chair, I yield back the balance of my time.
  Mr. GARRETT of New Jersey. Madam Chair, I yield myself 30 seconds.
  I rise once again to point out that the underlying legislation was 
misdirected by setting up a Byzantine process and addressed a problem 
that really was not the underlying cause of the financial situation we 
have today.
  I will also point out before I yield to the ranking member that the 
amendment that's before us today, it does one thing that's better than 
the underlying bill, which is to say that there should not be a margin 
requirement on end users, which is better in the sense that they will 
not have to post those, which will maybe address the issue of overall 
job creation in the future.
  But I will close on this point: The underlying bill is still 
problematical to the larger issue of saying that if you create a system 
like this and address a problem of the OTC market in such a Byzantine 
manner and create additional burdens on it than are unnecessary, we 
will create fewer jobs in the future.
  Madam Chair, I yield the balance of my time to the gentleman from 
Alabama (Mr. Bachus), the ranking member.
  Mr. BACHUS. Madam Chair, although I'm not opposed to the amendment as 
such, I am opposed to what the underlying bill does.
  Chairman Peterson and I think most on our side have a disagreement 
with that underlying regulation. Unfortunately, the amendment is a step 
in the right direction, but we feel like even with the amendment 
substituting the original language that we still have our objections, 
and it's those objections I wish to speak on. Although we don't, or at 
least I don't personally, plan to oppose the amendment itself, as the 
gentleman from Oklahoma said, we do believe that it is some 
improvement.
  But the regulation of the derivatives market created in the 
underlying legislation we think creates unnecessarily burdensome 
requirements on thousands of American companies that have used 
derivatives to manage price fluctuations and hedge against business 
risk, and they've done that successfully and safely.
  The underlying legislation, even with this amendment in it, is going 
to empower our government regulators to institute what appears to be a 
fairly complex and sweeping new regulatory regime to govern, as I said, 
a sector of the marketplace that has functioned well and I think helped 
most American companies and has not contributed to the financial crisis 
but actually helped moderate it. And I think the derivatives market has 
allowed companies in many cases to insulate themselves from uncertain 
market conditions.
  Several in the majority have alluded to the failure of Lehman 
Brothers as a reason for the needed reform of the over-the-counter 
derivatives market. And we do propose some reform, and I'm going to 
discuss those in a minute. The gentleman from New Jersey also discussed 
them. So there are some points on which we do agree with Chairman 
Peterson and even Chairman Frank.

[[Page 31280]]



                              {time}  1850

  But Lehman, I don't believe, can be used as an excuse to inject the 
government into a derivatives market that is used primarily by 
thousands of small and medium size and even large companies to hedge 
against business risk, and as I've said, have done that safely.
  The reality is that Lehman's portfolio, including its derivatives 
positions, without any government assistance was unwound with relative 
ease. It was unwound. The real problem with Lehman's derivative 
business was the lack of segregation of collateral, a problem that is 
addressed by our Republican substitute.
  The comprehensive Republican substitute we plan to offer provides a 
commonsense approach to oversight of the over-the-counter derivatives 
marketplace without what we consider an excessive overreach by the 
Federal Government and its regulators into the capital market, a theme 
that, unfortunately, we think is being repeated many times in this 
legislation.
  The substitute promotes strong transparency of over-the-counter 
derivatives activities conducted by all market participants. It also 
addresses the two derivative problems identified by the majority and 
the administration, and that was AIG and Lehman. The isolated behavior 
of these two large corporations and a few others like them was, as I 
said, an isolated behavior, and that type of behavior would be detected 
under the Republican substitute, the trading activity and positions 
they took.
  The Republican substitute also holds dealers accountable to improve 
operational inefficiencies with the over-the-counter derivatives 
marketplace, provides vital transactional information to regulators on 
a real-time basis, and ensures the Treasury Department cannot become a 
de facto regulator. Additionally, our substitute does not punish those 
Main Street end users of derivatives.
  Finally, in conclusion, our substitute addresses another need in the 
derivative marketplace, which is to provide timely and accurate 
information to market participants and regulators in order to ensure 
market transparency.
  Madam Chair, we have to curb abuses of the past and promote 
responsible approaches to oversee the use of over-the-counter 
derivatives. We all agree on that. However, we believe the underlying 
bill, even with this amendment, is fundamentally the wrong approach and 
is a very expensive way to address the problem.
  So I urge my colleagues, even though we don't oppose this amendment, 
to oppose the underlying legislation. And this is just one more reason, 
and that is that we increase the cost of any end user of derivatives. 
As we said last night, John Deere said it would cost them about $1 
billion. Cargill said that they probably wouldn't complete a new 
facility in Kansas City if we impose these costs.
  The Acting CHAIR. The gentleman's time has expired.
  The question is on the amendment offered by the gentleman from 
Minnesota (Mr. Peterson).
  The amendment was agreed to.


                Amendment No. 4 Offered by Mr. Peterson

  The Acting CHAIR. It is now in order to consider amendment No. 4 
printed in House Report 111-370.
  Mr. PETERSON. Madam Chair, I have an amendment at the desk.
  The Acting CHAIR. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Amendment No. 4 offered by Mr. Peterson:
       At the end of title III, insert the following new section:

     SEC. ____. AUTHORITY OF THE COMMODITY FUTURES TRADING 
                   COMMISSION TO DEFINE ``COMMERCIAL RISK'', 
                   ``OPERATING RISK'', AND ``BALANCE SHEET RISK''.

       (a) In General.--Section 1a of the Commodity Exchange Act 
     (7 U.S.C. 1a), as amended by the preceding provisions of this 
     Act, is amended by adding at the end the following:
       ``(51) Commercial risk; operating risk; balance sheet 
     risk.--The terms `commercial risk', `operating risk', and 
     `balance sheet risk' shall have such meanings as the 
     Commission may prescribe.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect as if included in subtitle A.

  The Acting CHAIR. Pursuant to House Resolution 964, the gentleman 
from Minnesota (Mr. Peterson) and a Member opposed each will control 5 
minutes.
  The Chair recognizes the gentleman from Minnesota.
  Mr. PETERSON. Madam Chair, I yield myself such time as I may consume.
  This amendment puts forth a process where we can obtain some clarity 
regarding limited exception to clearing requirements. Specifically, it 
requires the CFTC to define the terms ``commercial risk,'' ``operating 
risk,'' and ``balance sheet risk,'' which are used in the statute to 
define what types of risk a company may hedge and remain eligible for 
limited exception to clearing.
  I understand how some could be concerned that balance sheet risk 
could be interpreted more broadly to encompass financial risk, but not 
commercial risk. That is why I introduced this amendment directing the 
regulator to define these terms.
  By providing for the agency to define these terms, the burden will be 
placed upon them to ensure the companies seeking the limited exception 
to the clearing requirement do not abuse that exception. And if we 
think the CFTC gets it wrong, between the Agriculture Committee and the 
Agriculture appropriations subcommittee, we have lots of opportunities 
to haul them up here and show them the error of their ways.
  This amendment is supported by the Commodity Markets Oversight 
Coalition and many other groups. I urge my colleagues to adopt the 
amendment.
  Madam Chair, I reserve the balance of my time.
  Mr. GARRETT of New Jersey. Madam Chair, I rise to claim time in 
opposition, although I am not opposed to the amendment.
  The Acting CHAIR. Without objection, the gentleman is recognized for 
5 minutes.
  There was no objection.
  Mr. GARRETT of New Jersey. I yield myself such time as I may consume.
  I appreciate the work of the chairman with regard to clarifying some 
of the definitions here. I think this goes to the overall issue of the 
complexity of the issues that are before the House tonight on this 
matter and on the broader matter of the derivative regulations that we 
are discussing with the previous amendment and this amendment as well. 
It goes to the point that I raised just a moment ago in my previous 
remarks, that if we are going to try to answer to the American public 
to the three most important questions that they are asking of 
Congress--no more bailouts, no more legislation that destroys jobs, and 
no more expansive, larger and spending government--we have to look to 
what we're doing in the derivative area as well.
  In the derivative area that we see in the underlying legislation, 
what we have done is create a Byzantine piece of regulation combining 
the two, working with two entities that have never worked together in 
the past before, setting in the underlying legislation margin 
requirements that potentially end users--although I recognize the 
previous amendment just addressed that point--margin requirements on 
them which basically, at the end of the day, if we think about it in 
basically simple terms, means it will be more costly in this country to 
do business. It will be more difficult for entities to hedge their 
risk. And if businesses can't hedge their risk, the other fundamental 
purpose of this legislation that we hear from the other side to end the 
idea of systemic risk will be thwarted as well.
  So think about that. We will be thwarting one of the basic functions 
that they say is the underlying legislation to end systemic risk 
because we cause hardship on companies to hedge their risk on the one 
end, and not addressing one of the major problems this country is faced 
with today, high unemployment. We must do a better job than that.
  As I stated before, Republicans have offered a better solution to all 
of those issues. We have offered a solution with regard to the 
bailouts, to end taxpayer-funded bailouts. We have offered a solution 
to end the prospects of less jobs

[[Page 31281]]

in this country. And we offered a solution respectively to the whole 
derivative market, as I set forth before. The centerpiece of that 
solution is something that was actually found in the chairman's bill, 
and that was the repository idea. We can get all the transparency that 
we need right now through a trade repository where the OTC trades are 
reported. We can get the accountability and the transparency that the 
American public looks for as well through the initiatives that are in 
the Republican substitute. But we can do so in a manner, therefore, 
that will not impose additional risk or cumbersomeness or a Byzantine 
structure, and therefore not affect the hedging abilities or the cost 
of doing business of companies in this country. We can do so in a 
manner that will not hurt the creation of jobs.
  When you think about it, we will have probably discussed three 
different areas, three different titles of this bill that actually will 
be hurting jobs. What are they? We haven't talked about the first one 
too much, CFPA, the Consumer Financial Products Agency. It has already 
been documented that that will cost literally a million jobs. The wind-
down authority, we have already talked about that previously, that will 
also cost jobs. And here, if you do not handle the derivative situation 
correctly, that potentially can cause job loss in this country as well. 
We suggest that the Republican substitute should be considered in this 
area as in other areas as well.
  With that, I reserve the balance of my time and commend the gentleman 
for his work on the underlying amendment that we have here before us 
today.

                              {time}  1900

  Mr. PETERSON. Madam Chair, I yield 1 minute to the distinguished 
chairman of the Financial Services Committee, the gentleman from 
Massachusetts (Mr. Frank).
  Mr. FRANK of Massachusetts. Madam Chair, working with the chairman of 
the Agriculture Committee has been very constructive, and we have 
enjoyed that working relationship, and I am very proud that our 
committees have avoided the kind of jurisdictional disputes that too 
often plague this place.
  We have a couple of issues here: One, should there be an end user 
exemption, et cetera? Two, whether you agree or not, it certainly 
shouldn't be one that could be manipulated. So this is to make sure 
that this is there.
  Finally, I do want to respond to the gentleman from New Jersey. 
Apparently, they discovered that jobs are being lost. In fact, the 
reason that jobs are being lost now and were being lost at an even 
greater rate last year is the economic disaster that came from a lack 
of regulation. So the argument that by putting in place regulations 
that will prevent the enormous economic disaster, which officially 
began with the recession in 2007, will somehow cause job loss is 
bizarre-o-world. Job loss was brought about by the lack of regulation, 
which we are trying to correct.
  It is true that the Republican position is: Leave business alone. Let 
them continue to do whatever they think is right. Don't have any 
regulation.
  That's how we got into this mess.
  Mr. PETERSON. Madam Chair, I have no further speakers, so I yield 
back the balance of my time.
  Mr. GARRETT of New Jersey. Madam Chair, I yield myself 1\1/2\ 
minutes, the balance of my time.
  The American public, quite honestly, if they watch what goes on 
tonight and have watched in the days before and after, really are not 
looking for anyone to be pointing fingers of blame at this 
administration or at the last administration. This should not be a 
partisan issue. The other side always wants to point back several years 
to the Bush administration.
  We could point back that it was the Democrat majority for 2007, 2008 
and now 2009 that has been running this House and that, during that 
time, we have seen the catastrophe in the financial markets, and that 
it was during their tenure that we saw the catastrophe of unemployment 
soaring through the roof. Yet pointing fingers at the Democrats and at 
the fact that they have done the job that they have done and that we 
have seen the results of their legislation over the last 3 years will 
not solve the problem.
  What we need to do, however, is pass legislation that will end the 
pattern of elimination of jobs, that will end the pattern of the 
bailout mentality, that will end the pattern of expansive government. 
That's why we come here tonight to offer Republican solutions to a lot 
of these things, and it's why we ask the majority party to consider 
some of those proposals as we go forward.
  I yield back the balance of my time.
  The Acting CHAIR. The question is on the amendment offered by the 
gentleman from Minnesota (Mr. Peterson).
  The amendment was agreed to.


                  Amendment No. 5 Offered by Mr. Lynch

  The Acting CHAIR. It is now in order to consider amendment No. 5 
printed in House Report 111-370.
  Mr. LYNCH. Good evening, Madam Chair. I believe I have an amendment 
at the desk.
  The Acting CHAIR. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Amendment No. 5 offered by Mr. Lynch:
       At the end of title III, insert the following new section:

     SEC. ___. CONFLICTS OF INTEREST IN CLEARING ORGANIZATIONS.

       (a) Commodity Exchange Act.--
       (1) Definition of restricted owner.--Section 1a of the 
     Commodity Exchange Act (7 U.S.C. 1a) (as amended by the 
     preceding provisions of this Act) is further amended by 
     adding at the end the following:
       ``(51) Restricted owner.--The term `restricted owner' means 
     any swap dealer, security-based swap dealer, major swap 
     participant, or major security-based swap participant, that 
     is an identified financial holding company as defined in 
     Section 1000(b)(5) of the Financial Stability Improvement Act 
     of 2009, or a person associated with a swap dealer or a major 
     swap participant that is an identified financial holding 
     company, or a person associated with a security-based swap 
     dealer or major security-based swap participant that is an 
     identified financial holding company.''.
       (2) Conflicts of interest.--
       (A) Subparagraph (P) of section 5b(c)(2) of the Commodity 
     Exchange Act (as added by the preceding provisions of this 
     Act) is amended by adding at the end of such subparagraph the 
     following: ``The rules of the derivatives clearing 
     organization that clears swaps shall provide that a 
     restricted owner shall not be permitted directly or 
     indirectly to acquire beneficial ownership of interests in 
     the organization or in persons with a controlling interest in 
     the organization, to the extent that such an acquisition 
     would result in restricted owners being entitled to vote, 
     cause the voting of, or cause the withholding of votes of, 
     more than 20 percent of the votes entitled to be cast on any 
     matter by the holders of the ownership interests. The rules 
     of the derivatives clearing organization shall provide that a 
     majority of the directors of the organization shall not be 
     associated with a restricted owner. This subparagraph shall 
     not be construed to require divestiture of any interest of a 
     restricted owner in an established and operational 
     derivatives clearing organization acquired prior to January 
     1, 2010, provided that acquisitions by such restricted owner 
     after such date shall be subject to this subparagraph. The 
     Commission may determine whether any acquisition by a 
     restricted owner during any interim period prior to the date 
     of the enactment of this Act has been made for the purpose of 
     avoiding the effect of this subparagraph.''.
       (B) Section 4s(g)(1) of the Commodity Exchange Act (as 
     added by the preceding provisions of this Act) is amended--
       (i) by striking ``and'' at the end of subparagraph (C); and
       (ii) by redesignating subparagraph (D) as subparagraph (E) 
     and insert after subparagraph (C) the following:
       ``(D) the prevention of self-dealing, by limiting the 
     extent to which such a swap dealer or major swap participant 
     may conduct business with a derivatives clearing 
     organization, a board of trade, or an alternative swap 
     execution facility that clears or trades swaps and in which 
     such a swap dealer or major swap participant has a material 
     debt or equity investment; and''.
       (C) Paragraph (12) of section 5h(d) of the Commodity 
     Exchange Act (as added by the preceding provisions of this 
     Act) is amended by adding at the end the following new 
     subparagraph:
       ``(C) The rules of the swap execution facility shall 
     provide that a restricted owner shall not be permitted 
     directly or indirectly to acquire beneficial ownership of 
     interests in the facility or in persons with a controlling 
     interest in the facility, to the extent that such an 
     acquisition would result in restricted owners being entitled 
     to vote, cause the voting of, or cause the withholding of

[[Page 31282]]

     votes of, more than 20 percent of the votes entitled to be 
     cast on any matter by the holders of the ownership interests. 
     This subparagraph shall not be construed to require 
     divestiture of any interest of a restricted owner in an 
     established and operational swap execution facility acquired 
     prior to January 1, 2010, provided that acquisitions by such 
     restricted owner after such date shall be subject to this 
     subparagraph. The Commission may determine whether any 
     acquisition by a restricted owner during any interim period 
     prior to the date of the enactment of this Act has been made 
     for the purpose of avoiding the effect of this subparagraph.
       ``(D) The rules of the swap execution facility shall 
     provide that a majority of the directors of the facility 
     shall not be associated with a restricted owner.''.
       (D) Section 5(d) of the Commodity Exchange Act (as amended 
     by the preceding provisions of this Act) is further amended 
     by striking paragraph (15) and inserting the following:
       ``(15) Conflicts of interest.--
       ``(A) The board of trade shall establish and enforce rules 
     to minimize conflicts of interest in the decisionmaking 
     process of the contract market, and establish a process for 
     resolving any such conflicts of interest.
       ``(B) The rules of a board of trade that trades swaps shall 
     provide that a restricted owner shall not be permitted 
     directly or indirectly to acquire beneficial ownership of 
     interests in the board of trade or in persons with a 
     controlling interest in the board of trade, to the extent 
     that such an acquisition would result in restricted owners 
     being entitled to vote, cause the voting of, or cause the 
     withholding of votes of, more than 20 percent of the votes 
     entitled to be cast on any matter by the holders of the 
     ownership interests. This paragraph shall not be construed to 
     require divestiture of any interest of a restricted owner in 
     an established and operational board of trade acquired prior 
     to January 1, 2010, provided that acquisitions by such 
     restricted owner after such date shall be subject to this 
     paragraph. The Commission may determine whether any 
     acquisition by a restricted owner during any interim period 
     prior to the date of the enactment of this Act has been made 
     for the purpose of avoiding the effect of this paragraph.
       ``(C) The rules of a board of trade that trades swaps shall 
     provide that a majority of the directors of the board of 
     trade shall not be associated with a restricted owner.''.
       (b) Securities Exchange Act of 1934.--
       (1) Definition of restricted owner.--Section 3(a) of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78c(a)) (as 
     amended by the preceding provisions of this Act) is further 
     amended by adding at the end the following:
       ``(78) Restricted owner.--The term `restricted owner' has 
     the same meaning as in section 1a(51) of the Commodity 
     Exchange Act.''.
       (2) Conflicts of interest.--
       (A) Paragraph (10) of section 3C(d) of the Securities 
     Exchange Act of 1934 (as added by the preceding provisions of 
     this Act) is amended by adding after subparagraph (B) the 
     following:

     ``The rules of the swap execution facility shall provide that 
     a restricted owner shall not be permitted directly or 
     indirectly to acquire beneficial ownership of interests in 
     the facility or in persons with a controlling interest in the 
     facility, to the extent that such an acquisition would result 
     in restricted owners being entitled to vote, cause the voting 
     of, or cause the withholding of votes of, more than 20 
     percent of the votes entitled to be cast on any matter by the 
     holders of the ownership interests. The rules of the swap 
     execution facility shall provide that a majority of the 
     directors of the facility shall not be associated with a 
     restricted owner. This paragraph shall not be construed to 
     require divestiture of any interest of a restricted owner in 
     an established and operational swap execution facility 
     acquired prior to January 1, 2010, provided that acquisitions 
     by such restricted owner after such date shall be subject to 
     this paragraph. The Commission may determine whether any 
     acquisition by a restricted owner during any interim period 
     prior to the date of the enactment of this Act has been made 
     for the purpose of avoiding the effect of this paragraph.''.
       (B) Section 15F(g)(1) of the Securities Exchange Act of 
     1934 (as added by the preceding provisions of this Act) is 
     amended--
       (i) in subparagraph (C), strike ``and''; and
       (ii) insert after subparagraph (C) the following (and 
     redesignate the succeeding subparagraph accordingly):
       ``(D) the prevention of self-dealing by limiting the extent 
     to which a security-based swap dealer or major security-based 
     swap participant may conduct business with a clearing agency, 
     an exchange, or an alternative swap execution facility that 
     clears or trades security-based swaps and in which such a 
     dealer or participant has a material debt or equity 
     investment; and''.
       (C) Section 6(b) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78f(b)) is amended by adding at the end the following 
     new paragraphs:
       ``(10) The rules of the exchange minimize conflicts of 
     interest in its decision-making process and establish a 
     process for resolving such conflicts of interest.
       ``(11) The rules of an exchange that trades security-based 
     swaps provide that a majority of the directors of the 
     exchange shall not be associated with a restricted owner.
       ``(12) The rules of an exchange that trades security-based 
     swaps provide that a restricted owner shall not be permitted 
     directly or indirectly to acquire beneficial ownership of 
     interests in the exchange or in persons with a controlling 
     interest in the exchange, to the extent that such an 
     acquisition would result in restricted owners being entitled 
     to vote, cause the voting of, or cause the withholding of 
     votes of, more than 20 percent of the votes entitled to be 
     cast on any matter by the holders of the ownership interests. 
     This paragraph shall not be construed to require divestiture 
     of any interest of a restricted owner in an established and 
     operational exchange acquired prior to January 1, 2010, 
     provided that acquisitions by such restricted owner after 
     such date shall be subject to this paragraph. The Commission 
     may determine whether any acquisition by a restricted owner 
     during any interim period prior to the date of the enactment 
     of this Act has been made for the purpose of avoiding the 
     effect of this paragraph.''.
       (D) Section 17A(b)(3) of the Securities Exchange Act of 
     1934 (15 U.S.C. 78f(b)) is amended by adding at the end the 
     following new subparagraphs:
       ``(J) The rules of a clearing agency that clears security-
     based swaps shall provide that a restricted owner shall not 
     be permitted directly or indirectly to acquire beneficial 
     ownership of interests in the agency or in persons with a 
     controlling interest in the agency, to the extent that such 
     an acquisition would result in restricted owners being 
     entitled to vote, cause the voting of, or cause the 
     withholding of votes of, more than 20 percent of the votes 
     entitled to be cast on any matter by the holders of the 
     ownership interests. This subparagraph shall not be construed 
     to require divestiture of any interest of a restricted owner 
     in an established and operational clearing agency acquired 
     prior to January 1, 2010, provided that acquisitions by such 
     restricted owner after such date shall be subject to this 
     subparagraph. The Commission may determine whether any 
     acquisition by a restricted owner during any interim period 
     prior to the date of the enactment of this Act has been made 
     for the purpose of avoiding the effect of this subparagraph.
       ``(K) The rules of the clearing agency shall provide that a 
     majority of the directors of the agency shall not be 
     associated with a restricted owner.''.

  The Acting CHAIR. Pursuant to House Resolution 964, the gentleman 
from Massachusetts (Mr. Lynch) and a Member opposed each will control 5 
minutes.
  The Chair now recognizes the gentleman from Massachusetts.
  Mr. LYNCH. I yield myself such time as I may consume.
  Madam Chair, firstly, I would like to thank Chairman Frank, Chairman 
Peterson and also Chairman Waxman for their great work on this bill, 
and I want to thank those three chairmen for supporting this amendment.
  My amendment addresses a fundamental problem in the derivatives 
industry, and it seeks to close a gap in the underlying legislation.
  Madam Chair, what many Members of Congress and the public don't 
realize is that the U.S. derivatives market is about $605 trillion, 
which is more than five times the value of the stocks traded on the New 
York Stock Exchange.
  More important than simply the scale of the derivatives industry is 
the fact that, according to the Comptroller of the Currency, a total of 
97 percent of the derivatives trading in this country is controlled by 
just five banks. So it's a near monopoly. Four of those five banks were 
top recipients. During their recent financial meltdown, these same 
banks engaged in very risky behavior involving complex derivatives, 
which endangered the entire financial system. They had to be bailed out 
by the taxpayers. As a result of all of these banks--Citigroup, Bank of 
America, Goldman Sachs, JPMorgan, and Morgan Stanley--as well as major 
swap participants, such as AIG, they received $200 billion in taxpayer 
money.
  The Wall Street Reform and Consumer Protection Act attempts to 
prevent that from happening again. The bill would require over-the-
counter trading to be conducted through clearinghouses, which are set 
up to police derivatives trading and to make sure there is sufficient 
protection from the reckless behavior that these ``too big to fail'' 
banks have engaged in. Clearinghouses are a good idea. Think of them as 
financial police stations. That's the function they are intended to 
serve. Some describe them as a blast wall that will prevent the failure 
of a

[[Page 31283]]

derivatives deal from impacting the real economy.
  However, the problem is--and in my view, this is a huge problem with 
the bill--the bill would allow these same big banks to purchase the 
clearinghouses that are being created to police the big banks in their 
derivatives trading. The big banks would be allowed to own and control 
the clearinghouses and to set the rules for how their own derivatives 
deals are handled.
  My amendment would prevent those big banks and major swap 
participants, like AIG, from taking over the police station--these new 
clearinghouses. It would do so by limiting to a 20 percent voting stake 
the ownership interest in those banks and the governance of the 
clearing and trading facilities. Essentially, by providing entry to the 
market, it would introduce competing commercial interests to bring 
competition and transparency to the derivatives industry and to keep 
those banks honest.
  At this time, I reserve the balance of my time.
  Mr. GARRETT of New Jersey. I rise and seek to claim the time in 
opposition.
  The Acting CHAIR. The gentleman is recognized for 5 minutes.
  Mr. GARRETT of New Jersey. Madam Chair, I yield 2 minutes to the 
gentleman from New York (Mr. McMahon).
  Mr. McMAHON. I thank the gentleman from New Jersey.
  Madam Chair, I rise in opposition to this amendment and in support of 
the underlying legislation. I commend the work of Chairman Frank, of 
Chairman Peterson, and of all involved, and I commend also the work of 
the gentleman from Massachusetts, who is a great friend and colleague, 
although I disagree with him on this amendment.
  This legislation is trying to minimize systemic risk, but the 
amendment will increase it, so I speak in opposition to it.
  By limiting to 20 percent the total combined, collective ownership of 
clearinghouses, exchanges and execution facilities, it will limit what 
facilities can ultimately clear trades. Less choice. Not more choice.
  The way to deal with concerns about conflicts of interest are through 
changes in governance, not through restricting ownership and 
investments. By concentrating the derivative trading market share in 
the hands of a very few inevitably large institutions, we are more 
likely to be creating systemic risk than we are to be mitigating it. 
Virtually all clearinghouses and exchanges are jointly owned, in which 
their vast majority of investors are swap participants.
  The underlying bill grants regulators the strongest authority to 
police the markets and to enforce capital standards. Support the strong 
standards in this bill. Support the regulations and transparency in 
this bill. Oppose this business grab through legislative fiat.
  The amendment is strongly opposed by the New York Stock Exchange, by 
the Depository Trust and Clearing Corporation, by LCH Clearnet, and by 
almost every single exchange and clearinghouse. It will cost jobs in 
New York in my district.
  This bill should be about improving transparency and enforcement, and 
about bringing fair and prudent regulation to the derivatives market 
while minimizing systemic risk. Instead, the proponents of this 
amendment are using the legislative process to promote one marketplace 
over the others, and it will cost jobs and capital formation from other 
exchanges.
  We are here today to reform American financial services and our 
regulatory structure, not to drive companies out of business, costing 
American exchanges jobs and money. The amendment will give an unfair 
advantage to one exchange, and it just isn't practical.
  I urge my colleagues to vote ``no'' on this amendment.
  Mr. LYNCH. Madam Chair, I yield 1 minute to the chairman of the 
Financial Services Committee, my friend, the gentleman from 
Massachusetts (Mr. Frank).
  Mr. FRANK of Massachusetts. Madam Chair, I disagree with the premise 
that the large financial investment houses and large financial 
institutions have earned the degree of trust that our voting against 
this amendment would require.
  We were fairly careful, and there were many who were critical because 
we were too willing to separate out end users, legitimate end users, 
and not sweep them all in; but for that to be justified, there has to 
be integrity in the administration of the process. That is what the 
last amendment by the gentleman of Minnesota did, and that is what this 
amendment does.
  If you let people who have a financial interest in there not being 
clearing be in charge of clearing, it would take an extraordinarily 
selfless group of people not to give in to temptation.

                              {time}  1910

  While people on Wall Street have been giving varying descriptions, 
some good and some bad, no one has yet compared any of them to Mother 
Teresa. The fact is that if you reject this amendment, you are giving 
people who have an incentive to make these things not work well control 
over them.
  Mr. GARRETT of New Jersey. At this time I would like to yield 1\1/2\ 
minutes to the gentleman from Georgia (Mr. Price).
  Mr. PRICE of Georgia. I thank my friend from New Jersey for his 
leadership on this issue and trying to bring focus to really the 
underlying nature of this bill, which is the underlying nature of this 
amendment as well, and that is that government knows best how to define 
what the market ought to look like and not the market. Madam Chair, as 
you well know, that's one of the things that got us into these 
significant problems in the first place.
  I know that there is one group that supports this. There are all 
sorts of folks who don't support this, the people who know about the 
issue of trading in this area. The ABA Securities Association, one of 
the largest securities associations, opposes this amendment because 
they believe that it would significantly limit competition and 
undermine the ultimate goal that all of us ought to have, and that is 
to make certain that the market is, in fact, able to work for more 
individuals across this land. More choices, not fewer choices.
  New York Stock Exchange, Euronext, Securities Industry and Financial 
Markets Association, on and on and on, folks who, in fact, oppose this 
amendment because they believe strongly that it will decrease the 
choices available to the American people.
  Over-the-counter trades, hundreds of trillions of dollars literally 
in trades, will be markedly limited again, decreasing the ability of 
the American people to have the choices available to them.
  What this amendment does, Madam Chair, is what really what the 
underlying bill does. It says government knows best, that we ought to 
limit the ability of creative thinking and jobs to be formed out there 
across this land, because government knows best. We are going to limit 
the choices available to the American people.
  Vote ``no'' on the Lynch amendment.
  Mr. LYNCH. The gentleman should perhaps read the amendment. This does 
not interpose government into the clearinghouses.
  Ironically, this is very light regulation. The people who are against 
this amendment are the five banks, the five big banks. They are the 
ones that are against this.
  What this does, instead of inserting the government in here, what we 
are doing is allowing competitive commercial interests to balance out, 
rather than allow these five banks. These five banks control 97 percent 
of the market here; 97 percent. And the gentleman is complaining that 
it might reduce competition? It's a monopoly now. We are trying to 
break it open and allow more companies in and lower the costs of 
operating.
  Look, this is a pretty simple issue. The ``too big to fail'' banks 
caused huge damage to the taxpayer, the way they operated this 
derivatives market.
  We are creating a clearinghouse. They are trying to buy the 
clearinghouse.

[[Page 31284]]

  The Acting CHAIR. The time of the gentleman has expired.
  The Chair recognizes the gentleman from New Jersey.
  Mr. GARRETT of New Jersey. I presume I am to close?
  The Acting CHAIR. The gentleman has the right to close. The gentleman 
has 1\1/2\ minutes remaining.
  Mr. GARRETT of New Jersey. I thank the Chair.
  The gentleman from Massachusetts says the government is not 
interposing or getting involved here. Of course they are, and that's 
what the whole fundamental purpose of the underlying bill is, is to set 
up this whole Byzantine arrangement of new regulations specifically in 
this area. Yes, I have read the amendment; and, yes, I recall it coming 
through committee and the problems that were raised there. When you 
centralize risk and clearing entities, as made mandatory by the 
underlying bill, it's important that we ensure that there is some 
independence in the clearinghouses from the dealers who play such a 
large role, like he says. But that's why in committee I offered an 
amendment that would have required that the majority of the directors 
of the derivatives of the clearing organization must not be associated 
with swap dealers. This goes much further than what's already on the 
books right now.
  The SEC has a current policy of limiting a position of 20 percent 
ownership of a single broker dealer in an existing exchange. This 
amendment goes way farther than that, saying that that 20 percent 
applies in the aggregate. Yes, I read the amendment.
  You have to remember that dealers are among the most likely sources 
of investment capital to establish these new clearinghouses. If you are 
going to come up tonight now with a really overly restrictive limit on 
ownership, as we have in this amendment, you are going to have 
potentially some negative consequences. Some of those will be in 
competition.
  At the end of the day, what will you have? The amendment could very 
well exacerbate risk by forcing more derivative transactions that are 
out there, and who knows how many will be out there after this 
legislation passes, to fewer and to fewer and to fewer clearinghouses, 
basically concentrating risk and doing the opposite of what the 
American public wants, to avoid risk burdens and additional bailouts.
  Ms. WATERS. Madam Chair, I rise in strong support of the amendment 
offered by the gentleman from Massachusetts. H.R. 4173 is designed to 
address the lack of regulation in the over-the-counter derivatives 
market that allowed AIG to write billions of dollars in risky credit 
default swaps. H.R. 4173 fixes this by subjecting over-the-counter 
derivatives to a comprehensive regulatory structure and requiring 
derivatives to be traded through clearinghouses.
  However, the derivatives market is currently dominated by a handful 
of large institutions. And these institutions will simply buy the 
clearinghouses to make sure that they once again control this market. 
If this happens, these institutions will be in the conflicted position 
of ``clearing'' their own derivative deals. The result will be more 
AIGs. Mr. Lynch's amendment would prevent this by preventing any 
institution from controlling more than 20 percent of a clearinghouse.
  If we don't close this loophole, the over-the-counter derivatives 
market will continue to be unregulated. Therefore, I strongly urge a 
``yes'' vote on this amendment.
  The Acting CHAIR. All time has expired.
  The question is on the amendment offered by the gentleman from 
Massachusetts (Mr. Lynch).
  The question was taken; and the Acting Chair announced that the ayes 
appeared to have it.
  Mr. McMAHON. Madam Chair, I demand a recorded vote.
  The Acting CHAIR. Pursuant to clause 6 of rule XVIII, further 
proceedings on the amendment offered by the gentleman from 
Massachusetts will be postponed.


           Amendment No. 6 Offered by Mr. Murphy of New York

  The Acting CHAIR. It is now in order to consider amendment No. 6 
printed in House Report 111-370.
  Mr. MURPHY of New York. Madam Chairman, I have an amendment at the 
desk.
  The Acting CHAIR. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Amendment No. 6 offered by Mr. Murphy of New York:
       At the end of title III, insert the following new section:

     SEC. ____. DEFINITIONS OF MAJOR SWAP PARTICIPANT AND MAJOR 
                   SECURITY-BASED SWAP PARTICIPANT.

       (a) Major Swap Participant.--Section 1a(39) of the 
     Commodity Exchange Act (7 U.S.C. 1a), as added by the 
     preceding provisions of this Act, is amended to read as 
     follows:
       ``(39) 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 net position in outstanding 
     swaps, excluding positions held primarily for hedging, 
     reducing or otherwise mitigating its commercial risk; or
       ``(ii) whose outstanding swaps create substantial net 
     counterparty exposure that could have serious adverse effects 
     on the financial stability of the United States banking 
     system or financial markets.
       ``(B) Definition of substantial net position.--The 
     Commission shall define by rule or regulation the term 
     `substantial net position' at a threshold that the Commission 
     determines prudent for the effective monitoring, management, 
     and oversight of entities which are systemically important or 
     can significantly impact the financial system. In setting the 
     definitions, the Commission shall consider the person's 
     relative position in uncleared as opposed to cleared swaps.
       ``(C) A person may be designated a major swap participant 
     for 1 or more individual types of swaps without being 
     classified as a major swap participant for all classes of 
     swaps.''.
       (b) Major Security-based Swap Participant.--Section 
     3(a)(67) of the Securities Exchange Act of 1934 (15 U.S.C. 
     78c(a)), as added by the preceding provisions of this Act, is 
     amended to read as follows:
       ``(67) Major security-based swap participant.--
       ``(A) In general.--The term `major security-based swap 
     participant' means any person who is not a security-based 
     swap dealer, and--
       ``(i) maintains a substantial net position in outstanding 
     security-based swaps, excluding positions held primarily for 
     hedging, reducing or otherwise mitigating its commercial 
     risk; or
       ``(ii) whose outstanding security-based swaps create 
     substantial net counterparty exposure that could have serious 
     adverse effects on the financial stability of the United 
     States banking system or financial markets.
       ``(B) Definition of substantial net position.--The 
     Commission shall define by rule or regulation the term 
     `substantial net position' at a threshold that the Commission 
     determines prudent for the effective monitoring, management, 
     and oversight of entities which are systemically important or 
     can significantly impact the financial system. In setting the 
     definitions, the Commission shall consider the person's 
     relative position in uncleared as opposed to cleared 
     security-based swaps.
       ``(C) A person may be designated a major security-based 
     swap participant for 1 or more individual types of security-
     based swaps without being classified as a major security-
     based swap participant for all classes of security-based 
     swaps.''.
       (c) Effective Dates.--
       (1) Major swap participant.--The amendment made by 
     subsection (a)(1) shall take effect as if included in 
     subtitle A.
       (2) Major security-based swap participant.--The amendment 
     made by subsection (a)(2) shall take effect as if included in 
     subtitle B.

  The Acting CHAIR. Pursuant to House Resolution 964, the gentleman 
from New York (Mr. Murphy) and a Member opposed each will control 5 
minutes.
  The Chair recognizes the gentleman from New York.
  Mr. MURPHY of New York. I yield myself 1 minute.
  This amendment would substitute the definition of a major swap 
participant that is in the current draft back to the language that was 
in the draft that came out of the Agriculture Committee.
  Chairman Peterson and Ranking Member Lucas worked with the whole 
committee to develop the definition that was used in the Ag Committee, 
and it's different from the version that is on the floor now in two 
ways: It's more restrictive in terms of allowing financial companies to 
be exempt from being classified as a major swap participant. So more 
companies would be held to a higher regulatory standard. And it is a 
little bit less restrictive with respect to manufacturing companies 
being classified as a major swap participant. I think that's very 
important because we want people who are

[[Page 31285]]

systemically risky to be held to a higher standard of accountability, 
but we don't want to capture our manufacturing companies, the kind that 
are represented by the National Association of Manufacturers, the kind 
that are supporting this amendment, to be captured in that regulation.
  We want them to be able to do their business and use derivatives to 
hedge their actual risk. That's why there was such broad bipartisan 
support for this when it was in the Agriculture Committee, and that's 
why we want to support it now.
  Mr. FRANK of Massachusetts. Madam Chair, I rise to take the time in 
opposition to the amendment.
  The Acting CHAIR. The gentleman is recognized for 5 minutes.
  Mr. FRANK of Massachusetts. The gentleman from New York has fairly 
laid this out. Here is the difference: We have agreed that end users 
should have an exemption from these requirements, but there is an 
exemption to the exemption.
  If an end user is engaged in an activity that can cause financial 
problems, then we want them not to be exempt from regulation, but here 
is the difference. The bill that is in there now, and it differs from 
the Agriculture bill, says if the end user is causing financial losses 
and problems at a particular counterparty, then you should not have the 
exemption.
  The alternative is to say no, let's not step in if this or that or 
many counterparties are in problems until it could become a systemic 
risk. We don't want to wait for systemic risk. I don't want to wait 
until people are at the edge of the cliff to start to pull them back.
  It is clear to many of us that a lack of regulation of derivatives 
was the problem. I support an end user exemption. But when an end user 
is employing that exemption in a way that puts counterparties at risk, 
I don't want to have to wait until a cataclysm impends. I would like 
there to be the ability to step in and stop it at that point.
  For the end user, it is very simple. They can avoid this regulation 
by being careful about what they do with the counterparties. This does 
not take it away; it simply says to the end user, please be careful and 
use some prudence before you engage in a transaction with a 
counterparty who will be at risk and could begin the kind of chain that 
we hope would not happen.
  I reserve the balance of my time.

                              {time}  1920

  Mr. MURPHY of New York. Madam Chairman, I'd like to yield 1 minute to 
the gentleman from New York (Mr. McMahon).
  Mr. McMAHON. Madam Chairwoman, I urge all of you to support the 
Murphy-McMahon-Kratovil amendment, which would protect end users and to 
be sure we better regulate the big investors as major swap 
participants.
  Although the regulation of derivatives is complex, the issue is 
extremely important to the proper functioning of our capital markets 
and to almost every business in America, and we need to get this right.
  Because derivatives are financial instruments that help all of us, 
they help keep our energy costs low and stable, if they're 
overregulated, it will cost my constituents back home more money for 
their electricity. They help insurance companies keep premiums low. 
They help companies complete construction projects on time and under 
budget. And despite the negative press and lack of understanding of the 
derivatives market, for the most part, the market works well. We cannot 
throw the baby out with the bathwater.
  We must work to protect the end users, good American businesses that 
are just trying to manage their cash flows and hedge against uncertain 
risks beyond their control in a cost-effective manner. To do otherwise 
would cripple American industries and jobs in this country.
  Mr. FRANK of Massachusetts. Madam Chairman, I have only one more 
speaker, and I have the right to close, so I reserve.
  Mr. MURPHY of New York. I yield 1 minute to the gentleman from 
Maryland (Mr. Kratovil).
  Mr. KRATOVIL. Madam Chairman, I rise in support of the Murphy-
McMahon-Kratovil amendment to H.R. 4173.
  As we improve stability and transparency in the derivatives market 
and attempt to address the true underlying issues causing the financial 
crisis, we must also ensure that we are not limiting the ability of 
responsible companies to access the over-the-counter derivatives they 
need to keep their businesses up and running.
  These derivatives are not just used by the larger broker and dealer 
banks who do, in fact, present a systemic threat to the market, but 
also by smaller companies who use them to manage the risk associated 
with running an effective business. The fact of the matter is the 
legislation needs to distinguish between the two.
  Without this amendment, H.R. 4173 could subject some end users to 
burdensome costs and penalties that were primarily aimed at companies 
whose activities do, in fact, present a real risk to the stability of 
the financial system. Our amendment clarifies that end users do not 
pose a systemic risk and should not be designated as ``major swap 
participants'' and incur the unintended costs.
  Mr. FRANK of Massachusetts. Madam Chairman, I apologize to the body. 
I do have an additional speaker, so I now yield 2 minutes to the 
gentleman from Minnesota (Mr. Peterson).
  Mr. PETERSON. Madam Chairman, I rise in opposition to this amendment, 
and I do so reluctantly because what the gentleman from New York is 
trying to accomplish is simply restore one piece of the bill to the way 
that it came out of the House Agriculture Committee.
  Defining the term ``major swap participant'' has been one of the most 
significant challenges since Treasury first coined the term in its own 
derivatives reform proposal last August. We were trying to define it in 
ways that would generally exempt end users while ensuring we are 
capturing the financial players to whom we believe the new rules and 
regulations should apply.
  We often heard from some in the end user community who wanted an 
absolute, guaranteed exemption that they never would be considered a 
major swap participant. We wouldn't do that because we don't know what 
the future will bring and because one of these end users could, one 
day, get so large with regard to their swap activity so as to have an 
impact on the financial system.
  So, through painstaking work, we crafted the definition that is now 
in the Peterson-Frank amendment. Now, most end users feel that 
definition is adequate because they are supporting that amendment, but 
they would be more comfortable with the definition we had in the Ag 
Committee reported bill. I believe the new definition we crafted 
accomplishes our goal of protecting end users.
  And so while I thank the gentleman for his appreciation for our work 
product in the Agriculture Committee, I most reluctantly oppose this 
amendment.
  Mr. MURPHY of New York. Madam Chairman, I'd like to yield 1 minute to 
the gentleman from Oklahoma (Mr. Lucas).
  Mr. LUCAS. Madam Chairman, I rise in support of the Murphy amendment 
which would, indeed, insert into the bill the House Agriculture 
Committee passed definition of ``major swap participant'' and ``major 
security-based swap participant.''
  Like the definition of the same term in the Frank-Peterson amendment, 
the definition in this amendment excludes those positions held 
primarily for hedging, reducing, or otherwise mitigating commercial 
risk. Unlike the Peterson-Frank amendment, this definition in this 
amendment focuses the regulation on swap positions that could have a 
serious adverse effect on the financial stability of the United States 
banking system or financial markets.
  In other words, Mr. Murphy's definition focuses on the big boys, the 
big guys, those market participants that the regulatory enhancements in 
this bill are aimed at. It excludes the commercial users that are using 
over-the-counter markets to risk management, not to try and create 
wealth.
  Once again, though, I have to note, the good effect of this amendment 
may

[[Page 31286]]

well be lost in the massive overreach of the entire bill.
  Mr. FRANK of Massachusetts. Now I am going to close. I reserve.
  Mr. MURPHY of New York. In closing, I just want to say that I think 
that what we have here is an amendment that will take us back to the 
commonsense solution that we found on a bipartisan basis in the Ag 
Committee. It's a solution that does get at the root of the problem.
  We've got large financial institutions who need to have additional 
accountability and regulation. That's what we're trying to do with our 
major swap participants. But it carves out our manufacturers and our 
energy companies that use derivatives to hedge their risk. That's why 
we've got support for this amendment from the American Wind Energy 
Association, the National Association of Manufacturers, the National 
Rural Electric Cooperatives.
  Our businesses that are using derivatives to hedge risks need not be 
subjected to the same rules and requirements as the large guys and the 
dealers. We need to make sure our end users are protected so they can 
use derivatives successfully to hedge their risk and stabilize their 
business. That's what's going to protect jobs. That's what we need to 
get our economy moving. That's why people need to support this 
amendment.
  I yield back my time.
  Mr. FRANK of Massachusetts. Madam Chairman, how much time have I 
remaining?
  The SPEAKER pro tempore. The gentleman has 2 minutes remaining.
  Mr. FRANK of Massachusetts. I'm afraid my friend from New York has 
greatly overstated the case. There is no debate here--there is 
elsewhere--about whether or not there should be an end user exemption.
  As he knows, our bill gives an end user exemption. The gentleman from 
Minnesota and I worked hard to do that, and we are not trying to take 
it away. In fact, both versions of this say that an end user exemption 
can be forfeited for certain economic circumstances.
  So the question is not whether there should be an end user exemption. 
Yes, there should be. It is what should trigger that not to be there. 
The amendment says a systemic risk. We say, given the volatility of 
this instrument, derivatives, given the uncertainty, that waits too 
long to say no. That allows caution to be absent for too long a time. 
We should not wait until the car's about to go over the cliff to test 
the brakes. We say let's stop a good ways back. And it's entirely 
within the control of the end user.
  What this says is, if you are an end user, do not impose on your 
counterparty the likelihood of significant loss, because a loss here 
and a loss there and a loss in another place cumulates to a problem. 
And if they say, well, it's too hard to tell, that's exactly our point. 
Don't make it hard to tell. Know who you're dealing with. Don't engage 
in transactions with counterparties when you aren't in a position to 
gauge their financial responsibility. Don't use the exemption you have 
from our regulation that applies to the financial speculators to engage 
in imprudent transactions, not just imprudent for you, but imprudent 
for the other guy, because what we've learned is it is important these 
are mutual events, and that's precisely the issue. Yes, there should be 
an end user exemption, but end users who disregard prudence and engage 
in transactions with people who don't have the money to back that up 
are potentially inflicting a harm on the system.
  Now, the proponents of the amendment agree that we should take away 
that exemption if the system is harmed, but they wait too late to avert 
disaster.

                              {time}  1930

  The Acting CHAIR. The gentleman's time has expired.
  The question is on the amendment offered by the gentleman from New 
York (Mr. Murphy).
  The question was taken; and the Acting Chair announced that the noes 
appeared to have it.
  Mr. MURPHY of New York. Madam Chairman, I demand a recorded vote.
  The Acting CHAIR. Pursuant to clause 6 of rule XVIII, further 
proceedings on the amendment offered by the gentleman from New York 
will be postponed.


         Amendment No. 7 Offered by Mr. Frank of Massachusetts

  The Acting CHAIR. It is now in order to consider amendment No. 7 
printed in House Report 111-370.
  Mr. FRANK of Massachusetts. I offer amendment No. 7.
  The Acting CHAIR. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Amendment No. 7 offered by Mr. Frank of Massachusetts:
       At the end of title III, add the following new section:

     SEC. ____. AUTHORITY TO SET MARGIN OR COLLATERAL REQUIREMENT 
                   FOR SWAPS AND SECURITY-BASED SWAPS INVOLVING 
                   END USERS.

       (a) In General.--Subject to subsection (b):
       (1) Prudential regulators.--A Prudential Regulator may 
     impose a margin or collateral requirement with respect to a 
     swap or security-based swap a counterparty to which is an end 
     user which is a bank or bank holding company subject to 
     regulation by the Prudential Regulator.
       (2) Commodity futures trading commission.--The Commodity 
     Futures Trading Commission may impose a margin or collateral 
     requirement with respect to a swap a counterparty to which is 
     an end user (other than an end user described in paragraph 
     (1)), and the other counterparty to which is a swap dealer or 
     major swap participant for which there is no Prudential 
     Regulator.
       (3) Securities and exchange commission.--The Securities and 
     Exchange Commission may impose a margin or collateral 
     requirement with respect to a security-based swap a 
     counterparty to which is an end user (other than an end user 
     described in paragraph (1)), and the other counterparty to 
     which is a security-based swap dealer or major security-based 
     swap participant for which there is no Prudential Regulator.
       (b) Requirements.--Any margin or collateral requirement 
     imposed under subsection (a) with respect to a transaction 
     shall be commensurate with the risk involved in the 
     transaction, and allow for the use of non-cash collateral.
       (c) Limitation on Applicability.--This section shall not 
     apply to a swap or security-based swap entered into before 
     the end of the 90-day period that begins with the effective 
     date of this section.
       (d) Definitions.--In this section:
       (1) End user.--The term ``end user'' means a person who is 
     not a swap dealer, security-based swap dealer, major swap 
     participant, or major security-based swap participant.
       (2) Other terms.--The other terms shall have the meanings 
     given the terms in section 1a of the Commodity Exchange Act.
       (e) Effective Date.--
       (1) Prudential regulators.--Subsection (a)(1) shall take 
     effect--
       (A) with respect to swaps, as if included in subtitle A; 
     and
       (B) with respect to security-based swaps, as if included in 
     subtitle B.
       (2) Commodity futures trading commission.--Subsection 
     (a)(2) shall take effect as if included in subtitle A.
       (3) Securities and exchange commission.--Subsection (a)(3) 
     shall take effect as if included in subtitle B.

  The Acting CLERK. Pursuant to House Resolution 964, the gentleman 
from Massachusetts (Mr. Frank) and a Member opposed each will control 5 
minutes.
  The Chair recognizes the gentleman from Massachusetts.
  Mr. FRANK of Massachusetts. Madam Chair, this amendment was something 
that was requested very much by the regulators who administer this 
approach, and it would allow them, but not mandate, that margin or 
collateral requirements be set.
  Once again, we have accepted here an exemption for end users over the 
objection of many who think we have gone too far. But we are dealing 
here with an inexact science, and we would have the regulators be 
able--under this amendment, not required, but able--to set margin 
requirements. It would allow them to be set, margin or collateral 
requirements, in noncash. That's very important. It would not require 
people who are using this to hedge commercial risks to sell things to 
come up with the cash. And if, in fact, they were doing this in a 
prudent way and they posted noncash collateral, there would be no great 
problem because this noncash collateral could be still used for its 
other purposes.
  So the question is should we say that the regulators, the CFTC and 
the SEC, should be denied what they have asked for, which is the right 
to impose the margin or collateral requirements in

[[Page 31287]]

those cases of lighter regulation where they think this is important to 
avoid the kind of imbalances we had before.
  The purpose is, of course, to prevent again the situation where one 
party or the other makes commitments it is unable to live up to. And 
this is a requirement--this is an empowerment of the regulators to act 
where they think there's a problem to prevent this from happening.
  I reserve the balance of my time.
  Mr. GARRETT of New Jersey. Madam Chair, I claim time in opposition.
  The Acting CHAIR. The gentleman is recognized for 5 minute.
  Mr. GARRETT of New Jersey. I yield myself 1 minute.
  This probably is the most critical amendment that we will consider 
today that addresses the derivative portion of the legislation to the 
chairman's question of whether we should say ``yes'' or ``no'' to the 
claim for more power to these entities.
  I would say we should tell them ``no,'' and the reason is because 
neither the administration nor the majority nor the chairman has 
provided any substantial evidence whatsoever of any specific OTC 
derivatives, how they cause a financial crisis.
  Derivatives are something that the companies use to try to hedge the 
risk. Clearly, we must make sure there's transparency and 
accountability--and I have already spoken about that--and we can do so 
in a way, however, that will not hamper their ability to control costs, 
not to manage risks, compete in the global marketplace. This would all 
hurt that.
  And when you talk about the end users in this and what they're doing, 
remember it was the end users, large and small, the public and private 
American businesses, they, they were the victims, not the cause, of the 
financial crisis.
  Derivative dealers and their customers, the end users, they're in the 
best position to determine what are the appropriate margin 
requirements, not giving more authority to the SEC or the CFTC or any 
other financial regulators.
  I reserve my time.
  Mr. FRANK of Massachusetts. I will yield myself 1 minute to say I'll 
accept the way the gentleman from New Jersey put it. Should we give the 
regulators more power? That is the constant theme dividing us.
  We look, many of us, at what happened over the past 15 years and say 
there was too little regulatory action, partly because some regulators 
who had the power wouldn't use it, like Mr. Greenspan at the Federal 
Reserve and some in the SEC, but partly because there was not 
sufficient regulatory powers. This is discretionary with the CFTC and 
SEC.
  Every trade has to be margined. It does say that to assume that no 
trade has to be margined is a mistake, and it is, therefore, a 
discretionary grant of authority to the regulators.
  And yes, if you think that what we should do is to continue a 
relatively wholly unregulated regime, and if you distrust the notion of 
regulation to the point where you would not give them discretionary 
authority--again, they have no authority under this to take away the 
end user exemption. We have decided that regulators, CFTC, the current 
incumbent, didn't like that. We have accepted the legitimacy of the end 
user exemption. But to say that never should there be a margin 
requirement we think is a grave error, and that's why I support this 
amendment.
  I reserve the balance of my time.
  Mr. GARRETT of New Jersey. I now yield 2 minutes to the gentleman who 
also distrusts regulations as we have seen and the SEC and their 
handling of the SEC situation and the OTS and the regulation of the AIG 
situation, the gentleman from Alabama (Mr. Bachus).
  Mr. BACHUS. Madam Chairman, the end users of derivatives are the ones 
that utilize these derivatives. And these weren't large, national 
companies. They were small businesses. They set the collateral 
requirements. They set the margin requirements, and they did so safely. 
They didn't cause the financial meltdown. They were the victims of that 
meltdown. And they established those collateral requirements and the 
margins. They did so in an appropriate way. In fact, you know, what the 
chairman said, the SEC and the CFTC ought to do this. You know, 
actually, they didn't act in a very responsible manner leading up to 
this meltdown last September.
  Let me simply say this: Requiring greater margin and capital 
requirements on companies that never got in trouble leads to fewer 
jobs. It's going to lead to greater volatility in food and energy 
prices, and a loss of capital investments.
  I'm just going to give you two pieces of testimony before our 
committee.
  Steve Holmes of Deere and Company said, ``We have a number of 
contracts that extend well into the future. If these existing contracts 
are not permitted an exemption from clearing and collateral 
requirements, we would have to terminate the transactions at a 
significant cost.'' That would cost John Deere workers their jobs.
  John Hixson of Cargill, Inc., said, ``For us, we've estimated it 
(collateral requirements) would cost approximately $1 billion depending 
on market conditions--an additional amount of money we'd have to 
borrow. We've built a brand new oil seed facility. Our largest in the 
U.S. is in Kansas City. So we have to choose: whether you put the money 
in margin, or do you continue and build that plant? That's the type of 
thing we'd have to decide,'' marginal requirements or jobs.
  Mr. FRANK of Massachusetts. Again, the question is whether we should 
decide now that there will never be such a requirement. As to it 
costing a lot of money, the amendment specifically says that they 
should be allowed to use noncash collateral. That means they could 
pledge certain of their own assets, which could mean no cost.
  It also says that the regulators shall impose the requirements 
commensurate with the risk involved in the transaction. Once again, we 
give incentives here for people to minimize risk, and I think that's 
the appropriate market approach.
  We are, as I said, mandating these to be imposed. We are allowing 
them to be a noncash collateral, and we said they should be 
commensurate with risk.
  The opposition argument is never. There will never be such a thing. 
There are no imprudent end users. There is no need ever to have them. 
The failure of trades in an individual case can be a problem for an 
individual company. They can cumulate. And that is the question: Do we 
say that we are willing to go forward with this issue with no power in 
any regulator to say that particular trades are being conducted in an 
imprudent fashion?

                              {time}  1940

  Because if they are conducted in an imprudent fashion, there is no 
power here because any margin requirement must be commensurate with 
risk. We have stricken the notion. The gentleman from Minnesota raised 
that point. There was at some point some language that we had that said 
it had to be greater than zero. We said, no, it does not have to be 
greater than zero, it is commensurate with risk.
  And that is the issue. We are being asked to say we have complete 
confidence that there will never be the kind of imprudent trades that 
could begin to cause trouble in the system, and therefore, we will deny 
the regulators the power even to consider this.
  I yield back the balance of my time.
  Mr. GARRETT of New Jersey. I yield the balance of my time to the 
gentleman from Minnesota (Mr. Peterson).
  The Acting CHAIR. The gentleman from Minnesota is recognized for 2 
minutes.
  Mr. PETERSON. I thank the gentleman.
  I rise in opposition to this amendment. This issue of authority for 
regulators to set margin requirements for end users was one issue that 
we could not agree upon during our negotiations, so I think it's 
appropriate that we resolve it here.
  First, I want to remind Members that in the underlying Peterson-Frank 
amendment that we've adopted with regard to swap dealers and major swap 
participants and their security-based swap counterparties, regulators 
will

[[Page 31288]]

have full authority to set margin requirements appropriate for the 
uncleared swaps that they hold. So that authority will be in place with 
regard to the banks.
  Because swap dealers and major swap participants are so heavily 
involved in the swap market and are interconnected with potentially 
hundreds of different counterparties, we believe it's important that we 
regulate their margins for the protection of their end-user customers 
and the financial system as a whole.
  However, I don't think that we need the regulators putting margin 
requirements on end users in order to protect the swap dealers and 
major swap participants. I think they can look out for themselves.
  The so-called end user community of energy companies, manufacturers 
and on and on, did not, as has been said, cause the problem. They are 
concerned about potential impact of this amendment, and so I urge my 
colleagues to oppose the amendment.
  The Acting CHAIR. The question is on the amendment offered by the 
gentleman from Massachusetts (Mr. Frank).
  The question was taken; and the Acting Chair announced that the ayes 
appeared to have it.
  Mr. GARRETT of New Jersey. Madam Chair, I demand a recorded vote.
  The Acting CHAIR. Pursuant to clause 6 of rule XVIII, further 
proceedings on the amendment offered by the gentleman from 
Massachusetts will be postponed.


                 Amendment No. 8 Offered by Mr. Stupak

  The Acting CHAIR. It is now in order to consider amendment No. 8 
printed in House Report 111-370.
  Mr. STUPAK. Madam Chair, I have an amendment at the desk.
  The Acting CHAIR. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Amendment No. 8 offered by Mr. Stupak:
       At the end of title III, insert the following new section:

     SEC. ____. ADDITIONAL RULES REGARDING EXECUTION AND CLEARING 
                   OF SWAPS AND SECURITY-BASED SWAPS.

       (a) Swaps.--Section 2(j)(7) of the Commodity Exchange Act 
     (7 U.S.C. 2), as added by the preceding provisions of this 
     Act, is amended--
       (1) in subparagraph (A), by striking ``and where both 
     counterparties are either swap dealers or major swap 
     participants, such counterparties'' and inserting ``, the 
     parties''; and
       (2) by redesignating subparagraph (C) as subparagraph (D) 
     and inserting after subparagraph (B) the following:
       ``(C) Certain swaps not required to be cleared.--
       ``(i) In general.--A swap that qualifies for the exception 
     of paragraph (8)(A)(i) shall not be executed, except on or 
     through a swap execution facility registered with the 
     Commission.
       ``(ii) Additional exceptions.--Clause (i) shall not apply 
     to a swap if no swap execution facility makes the swap 
     available to trade or execute.
       ``(iii) Rule of interpretation.--This subparagraph shall 
     not be interpreted to require any swap to be cleared.''.
       (b) Security-based Swaps.--Section 5A(a) of the Securities 
     Exchange Act of 1934, as added by the preceding provisions of 
     this Act, is amended--
       (1) in paragraph (1), by striking ``section 3B and where 
     both counterparties are either swap dealers or major swap 
     participants, such counterparties'' and inserting ``section 
     3B(a)(1), the parties''; and
       (2) by redesignating paragraph (3) as paragraph (4) and 
     inserting after paragraph (2) the following:
       ``(3) Certain security-based swaps not required to be 
     cleared.--
       ``(A) In general.--A security-based swap that qualifies for 
     the exception of section 3B(h)(1)(A) shall not be executed 
     except on a swap execution facility registered with the 
     Commission.
       ``(B) Additional exceptions.--Subparagraph (A) shall not 
     apply to a security-based swap if no swap execution facility 
     makes the security-based swap available to trade or execute.
       ``(C) Rule of interpretation.--This paragraph shall not be 
     interpreted to require any security-based swap to be 
     cleared.''.
       (c) Effective Date.--
       (1) Swaps.--The amendments made by subsection (a) shall 
     take effect as if included in subtitle A.
       (2) Security-based swaps.--The amendments made by 
     subsection (b) shall take effect as if included in subtitle 
     B.

  The Acting CHAIR. Pursuant to House Resolution 964, the gentleman 
from Michigan (Mr. Stupak) and a Member opposed each will control 5 
minutes.
  The Chair recognizes the gentleman from Michigan.
  Mr. STUPAK. Madam Chair, Chairman Frank and Chairman Peterson have 
provided the framework for regulation of the swaps markets in H.R. 
4173, but I believe Congress can improve this bill by requiring 
additional transparency. We could pass the most comprehensive and 
thorough regulation of the financial sector imaginable, but it would be 
meaningless if we continue to leave loopholes in place to evade 
regulation. As we saw in the oil markets of 2008, leaving loopholes in 
place for speculators costs consumers more of their hard-earned money.
  Swaps are financial contracts that allow a company to lock in prices 
on everything from currency to oil to pork bellies. In 2008, roughly 
$80 trillion was traded on regulated exchanges worldwide. And as 
astonishing as that figure is, it pales in comparison to the more than 
$600 trillion traded over-the-counter, or in unregulated dark markets. 
This is seven-and-a-half times what was traded on regulated markets. To 
put that into perspective, the total gross domestic product of the 
United States is $14.4 trillion or 41 times smaller than the 
unregulated swaps market. These unregulated markets create a systemic 
risk across the financial system and helped bring Lehman Brothers, Bear 
Stearns and AIG into bankruptcy and our economy to the verge of 
disaster.
  The best way to address this problem is to require Wall Street 
financial houses to post collateral and clear their swaps contracts on 
regulated exchanges. If we can't guarantee that Wall Street will post 
collateral, have some skin in the game, we should at least require that 
these trades be made in the open, transparent markets.
  My amendment establishes a simple requirement: Swaps by end dealers 
that could clear will remain exempt from clearing because one of the 
parties in that contract is a bona fide hedger. However, the swaps 
still should be reported on an exchange. Much of the concern over the 
dark swaps markets is the lack of information that ensure a 
competitive, transparent market. By adopting this amendment, the 
marketplace will become more open, and end users and other important 
swap users can accurately determine fair prices.
  Nothing, and let me repeat, nothing in this amendment requires a new 
clearing requirement. It's all about transparency and nothing more. Our 
amendment specifically includes a provision stating that the amendment 
``shall not be interpreted as requiring any swap to be cleared.''
  CFPC Chairman Gary Gensler originally proposed the concept for 
required reporting on specific swaps, and supports our amendment that 
requires transparency in swaps markets. I would like to submit his 
letter of support in the Record.
  As Chairman Gensler told the House Energy and Commerce Committee last 
week, ``Economists have for decades recognized transparency benefits 
the marketplace'' and that ``lack of regulation in these markets has 
created significant information deficits.''
  There are a number of groups who support this legislation and this 
amendment, including Americans for Financial Reform, which includes 
United Food and Commercial Workers, AFL-CIO, a number of groups.
  Without our amendment, a significant portion of the swaps market will 
remain in the dark, and unscrupulous traders will remain out of reach 
of regulators.
  I urge Members to adopt this amendment and bring these swap contracts 
out of the dark markets.

                                            U.S. Commodity Futures


                                           Trading Commission,

                                Washington, DC, December 10, 2009.
     Hon. Bart Stupak,
     House of Representatives,
     Washington, DC.
     Hon. Chris Van Hollen,
     House of Representatives,
     Washington, DC.
       Dear Congressmen Stupak and Van Hollen: I am writing in 
     support of your amendment to H.R. 4173, the Wall Street 
     Reform

[[Page 31289]]

     and Consumer Protection Act of 2009, which would require 
     transparency in swaps contracts by requiring all standardized 
     non-cleared swaps be executed on a registered swap execution 
     facility. This requirement would apply only to those 
     contracts listed for trading while still fully allowing 
     hedgers to enter into customized transactions off-exchange. 
     In addition, the amendment explicitly states that it ``shall 
     not be interpreted to require any swap to be cleared.'' Your 
     amendment would be an important addition to a very strong 
     bill.
       In the past few months, Congress has taken historic steps 
     to bring comprehensive regulation to the over-the-counter 
     derivatives markets. H.R. 4173 fully regulates swap dealers 
     and requires that all standardized trades between these Wall 
     Street swap dealers be brought into clearinghouses and 
     transparent trading facilities. Your amendment strengthens 
     the bill by broadening the transparency requirement to 
     include all standardized derivatives transactions. Under H.R. 
     4173, while big Wall Street banks would be subject to the 
     requirement when trading with each other, those same Wall 
     Street banks would be exempt when trading with many of their 
     customers. Your amendment would close this exemption and 
     increase the amount of information available to the public 
     and market participants.
       Economists have for decades recognized that market 
     transparency benefits the public by lowering costs. If 
     derivatives users knew what others were paying to enter into 
     similar contracts, they would receive better pricing on their 
     transactions. A municipality could better decide whether or 
     not to hedge an interest rate risk based upon the reported 
     pricing from the broader market. As a nation, we do not stand 
     for this lack of transparency in other markets. For example, 
     one would not purchase 100 shares of his or her favorite 
     stock without knowing the last price at which those shares 
     sold. Similarly, one would not buy an apple at the 
     supermarket if the price was kept private. Transparency in 
     the over-the-counter derivatives marketplace would shift the 
     information advantage from Wall Street to the businesses, 
     municipalities and nonprofit organizations that you represent 
     in Congress. This would lower the cost of hedging and thus 
     the costs to customers and promote economic growth in every 
     sector of the economy.
       Your amendment accomplishes the critical goal of promoting 
     transparency without imposing any additional costs on 
     business as it does not require these end-user trades to be 
     cleared by central counterparties. Your amendment separates 
     mandatory trading on transparent trading venues from a 
     central clearing requirement that would require businesses to 
     post margin. The two should not be confused. Transparency can 
     be required while leaving the clearing decision up to the 
     parties involved in particular transactions.
       I commend you for your efforts to bring greater 
     transparency to the currently opaque over-the-counter 
     derivatives marketplace.
           Sincerely,
                                                     Gary Gensler,
                                                         Chairman.

  I reserve the balance of my time.
  Mr. LUCAS. Madam Chairman, I rise to claim the time in opposition.
  The Acting CHAIR. The gentleman from Oklahoma is recognized for 5 
minutes.
  Mr. LUCAS. Madam Chairman, I yield myself 2 minutes.
  This amendment is just another solution in search of a problem. What 
risk is this amendment looking to eliminate? Both the House Agriculture 
Committee passed language and the Peterson-Frank amendment, which this 
seeks to amend, recognize that there are swaps that need not go through 
the cost and formality of the executed on an exchange or swap execution 
facility.
  As long as the regulator can see the swap and has the appropriate 
tools to mitigate risk to the U.S. financial system, what more does the 
exchange execution require add?
  This amendment requires unique agreements of no consequence to anyone 
but the parties involved to be regulated as if it were a credit default 
swap transacted between systemically risky counterparties. These swaps 
serve no price discovery function, they aren't conducted between 
systemically risky parties, and most are unique for an exchange or SEF 
to appropriately rate the risk.
  Forcing these swaps to be executed on an exchange or SEF will only 
artificially increase the cost of managing risk or discourage 
legitimate risk management activity altogether. Neither should be the 
purpose of this legislation.
  I urge the defeat of the amendment and reserve the balance of my 
time, Madam Chairman.
  Mr. STUPAK. Madam Chair, I yield 2 minutes to the co-author of this 
amendment, Mr. Van Hollen from Maryland, who is a champion on this 
issue.
  Mr. VAN HOLLEN. Madam Chair, I'm very pleased to join with my 
colleague, Mr. Stupak, in offering this amendment. I want to commend 
Chairman Frank and Chairman Peterson for bringing a strong bill to the 
floor.
  It's time to finally hold Wall Street and the big banks accountable 
and never allow them again to hold the American economy hostage and 
leave the American taxpayer holding the bag. We cannot ask the 
taxpayers to pay for bad bets made by Wall Street bankers.
  This amendment strengthens what is already a good bill. And as my 
colleague, Mr. Stupak, has said, what it calls for is simply greater 
transparency in transactions. Transparency in the over-the-counter 
derivatives market will shift the information advantage to a small 
group of Wall Street bankers to businesses, municipalities, nonprofit 
organizations and to the taxpayer. Why are we afraid of a little 
sunshine? That is what this amendment is about.
  I want to read to the Members a letter that we received, Mr. Stupak 
and I, from Gary Gensler, the chairman of the CFTC, and it was 
addressed to us. It says, ``Your amendment accomplishes the critical 
goal of promoting transparency without imposing any additional costs on 
business as it does not require these end-user trades to be cleared by 
central counterparties.''
  I want to emphasize that point because there are certain trades 
obviously in this legislation that do need to be cleared through 
central counterparties and clearinghouses. But this is for the 
remainder. We are saying what is left over should at least be 
transparent. We should know about it. The taxpayer should know about 
it. People who want to look at the market and make decisions should 
know about it.
  He goes on to say, ``Your amendment separates mandatory trading on 
transparent trading venues from a central clearing requirement that 
would require businesses to post margin. The two should not be 
confused.''

                              {time}  1950

  This does not require anyone to put up a margin. We're saying these 
transactions have to be transparent.
  Finally, he makes the point that ``transparency can be required while 
leaving the clearing decision up to the parties involved in particular 
transactions.''
  Let's vote for transparency. Let's vote for sunshine. Let's vote for 
this amendment.
  Mr. LUCAS. Madam Chair, I yield 2 minutes the gentleman from 
Minnesota (Mr. Peterson), the chairman of the Agriculture Committee.
  Mr. PETERSON. I thank the gentleman for yielding.
  Madam Chair, I rise in opposition to this amendment, and I do so 
reluctantly because I know the concept of what the gentleman is trying 
to accomplish has been endorsed by CFTC Chairman Gensler.
  First, let me explain what's already in the Peterson-Frank amendment. 
If clearing mandate applies to a swap or class of swaps, then the swap 
dealers and major swap participants not only have to clear such trades 
but also have to execute them on or through a futures or securities 
exchange or a swap execution facility. Now, banks hate this because it 
will expose their trades among themselves to the light of day. It will 
provide greater price transparency and will narrow their spreads and 
cost them money, all to the benefit of the end user. For the end users, 
we provide an exemption from the clearing mandate and, consequently, 
from the execution mandate.
  Mr. Stupak's amendment would preserve the clearing exemption but 
impose an execution mandate on end users, the idea being that the more 
swaps that can go through a swap execution facility, the greater price 
transparency you receive, the better deal an end user can make.
  In theory, this all makes sense; however, the end user community 
doesn't buy it. They question whether the price information that will 
come out of the swap execution facility will actually be beneficial to 
them, and they

[[Page 31290]]

also know that there will be costs to bear because the facilities won't 
perform this service for nothing. End users don't know whether the 
benefits will outweigh the costs. I have a real problem telling people 
that are in the business what's good for them when they don't believe 
it.
  So I have here a letter from various groups who like the Peterson-
Frank approach. Among them are the American Gas Association, the Public 
Gas Association, Public Power Association, Wind Energy, Edison 
Electric, Electric Power Supply Association, Independent Petroleum 
Association, Natural Gas Supply Association, NRECA, the Chamber of 
Commerce, 3M, Cargill, John Deere, Caterpillar, Medtronic, Zimmer, 
Ecolab, and others.
  So I ask my colleagues to oppose the amendment.
  The Acting CHAIR. The question is on the amendment offered by the 
gentleman from Michigan (Mr. Stupak).
  The question was taken; and the Acting Chair announced that the ayes 
appeared to have it.
  Mr. LUCAS. Madam Chairman, I demand a recorded vote.
  The Acting CHAIR. Pursuant to clause 6 of rule XVIII, further 
proceedings on the amendment offered by the gentleman from Michigan 
will be postponed.


                 Amendment No. 9 Offered by Mr. Stupak

  The Acting CHAIR. It is now in order to consider amendment No. 9 
printed in House Report 111-370.
  Mr. STUPAK. Madam Chair, I have an amendment at the desk.
  The Acting CHAIR. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Amendment No. 9 offered by Mr. Stupak:
       At the end of title III, insert the following new sections:

     SEC. ____. AUTHORITY TO BAN ABUSIVE SWAPS.

        The Commodity Futures Trading Commission and the 
     Securities and Exchange Commission may jointly, by rule or 
     order, prohibit transactions in any swap (as defined in 
     section 1a(35) of the Commodity Exchange Act) or security-
     based swap (as defined in section 1a(38) of such Act) which 
     the Commodity Futures Trading Commission and the Securities 
     Exchange Commission find would be detrimental to the 
     stability of a financial market or of participants in a 
     financial market.

     SEC. ____. ELIMINATION OF CONSIDERATION OF BALANCE SHEET RISK 
                   IN DETERMINING THE COMMERICAL RISK OF BONA FIDE 
                   HEDGING END USERS.

       (a) Section 1a(39)(A)(i) of the Commodity Exchange Act (7 
     U.S.C. 1a), as added by the preceding provisions of this Act, 
     is amended by striking ``and balance sheet''.
       (b) Section 2(j)(8)(A)(ii) of the Commodity Exchange Act (7 
     U.S.C. 2), as added by the preceding provisions of this Act, 
     is amended by striking ``or balance sheet''.
       (c) Section 3(a)(67)(A)(i) of the Securities Exchange Act 
     of 1934 (15 U.S.C. 78c(a)), as added by the preceding 
     provisions of this Act, is amended by striking ``and balance 
     sheet''.
       (d) Section 3B(h)(1)(B) of the Securities Exchange Act of 
     1934, as added by the preceding provisions of this Act, is 
     amended by striking ``and balance sheet''.
       (e)(1) The amendments made by subsections (a) and (b) shall 
     take effect as if included in subtitle A.
       (2) The amendments made by subsections (c) and (d) shall 
     take effect as if included in subtitle B.

     SEC. ____. LEGAL CERTAINTY OF CERTAIN SWAP CONTRACTS.

       (a) In General.--Section 22(a) of the Commodity Exchange 
     Act (7 U.S.C. 25(a)), as amended by the preceding provisions 
     of this Act, is amended--
       (1) in paragraph (4)(A), by inserting ``, and entered into 
     before the effective date of this paragraph,'' after 
     ``investor'';
       (2) in paragraph (4)(B), by inserting ``, and entered into 
     before the effective date of this paragraph,'' after 
     ``between eligible contract participants''; and
       (3) in paragraph (5), by inserting ``, and entered into 
     before the effective date of this paragraph,'' after ``United 
     States''.
       (b) Effective Date.--The amendments made by this section 
     shall take effect as if included in subtitle A.

  The Acting CHAIR. Pursuant to House Resolution 964, the gentleman 
from Michigan (Mr. Stupak) and a Member opposed each will control 5 
minutes.
  The Chair recognizes the gentleman from Michigan.
  Mr. STUPAK. Madam Chair, this amendment was crafted with the help of 
Representatives DeLauro, Larson, and Van Hollen. We worked and reached 
an agreement with Chairman Frank and Chairman Peterson to enhance 
regulation of the over-the-counter derivatives market. I want to thank 
my colleagues and both chairmen for their work.
  Our amendment provides additional assurances that the swaps market 
will be policed and prevents speculative financial companies from 
evading regulations or otherwise ignoring the law. Under this 
amendment, the CFTC and the SEC will be granted authority to prohibit 
swap transactions that pose a risk to the financial marketplace. 
Certain swaps, such as naked credit default swaps, are pure speculative 
bets that a company will fail and should be banned. As we learned in 
2008, credit default swaps and other swap transactions pose a systemic 
risk to our economy and accelerated the economic collapse.
  This amendment also narrows the definition of determining which 
companies are and are not bona fide hedging end users. Commercial 
companies that use commodities and securities to lock in prices and 
hedge the risk of their products, such as airlines, trucking companies, 
and electric utilities, did not create the current financial crisis. 
H.R. 4173 reflects this reality, but its exception for clearing swaps 
on an exchange is written so broadly that financial speculators and 
private pools of capital can be treated as bona fide hedgers.
  To maintain strong standards for financial companies, we must ensure 
illegal swap transactions do not remain a valid contract in a court of 
law. Our amendment prevents a company that enters into a swap contract 
to remain liable for payment under the swap contract if the 
counterparty has acted illegally in creating, executing, or reporting 
the swap.
  This amendment is the result of hard work between Chairman Frank, 
Chairman Peterson, and my colleagues and me to reach an agreement. This 
amendment will preserve the ability of bona fide end users to hedge 
commercial risk with strong standards for Wall Street financial 
companies.
  I urge adoption of this amendment.

                                                 December 8, 2009.
     Re support H.R. 4173, ``Wall Street Reform and Consumer 
         Protection Act of 2009''.

     House of Representatives,
     Washington, DC.
       Dear Representative: The undersigned organizations strongly 
     urge you to support H.R. 4173, the ``Wall Street Reform and 
     Consumer Protection Act of 2009,'' when it comes to the House 
     floor this week. We write individually and also on behalf of 
     Americans for Financial Reform, a coalition of more than 200 
     national, state and local consumer, labor, retiree, investor, 
     community, business and civil rights organizations who are 
     campaigning for real reform in our nation's financial system.
       The need for this legislation could not be more obvious. 
     Years of deregulation have produced a financial system that 
     is a threat to our economy. Rampant abuses in consumer 
     lending practices, combined with a casino mentality on Wall 
     Street and the willful blindness of federal regulators, have 
     plunged our economy into its worst economic crisis since the 
     Great Depression--and it is clear that Wall Street has not 
     learned its lessons. While H.R. 4173 needs to be 
     strengthened, it contains vital reforms for our country and 
     must be passed.
       A number of amendments will be offered which will 
     fundamentally affect the shape of this legislation. In order 
     to ensure meaningful financial reform, we strongly urge you 
     to:
       Oppose the Minnick amendment to eliminate a new Consumer 
     Financial Protection Agency (CFPA) from the bill. It would 
     leave enforcement of consumer protection and civil rights 
     laws in the hands of the same existing regulatory bodies that 
     resoundingly failed to use them.
       Support the Stupak/DeLauro/Larson/Van Hollen amendment on 
     derivatives. Regulators must have the authority to ban 
     abusive derivatives instruments rather than simply reporting 
     them to Congress, transactions which violate the law should 
     be considered invalid, and loopholes which leave too many 
     trades to continue in the shadows must be closed.
       At the same time, we believe that as the legislative 
     process moves forward, H.R. 4173 must be improved in 
     important respects including:
       The bill provides systemic regulatory authority to the 
     Board of Governors of the Federal Reserve without reforming 
     the Federal Reserve System to remove the banks themselves 
     from a role in overseeing the Federal Reserve's regulatory 
     staff. We need a fully public systemic risk regulator, either 
     in the form of a separate agency as detailed in Chairman 
     Dodd's proposal, or a reformed Federal Reserve.

[[Page 31291]]

       The proposed CFPA needs to have jurisdiction over the 
     Community Reinvestment Act (CRA), as it does in Chairman 
     Dodd's proposal. The CRA is vital to fighting discriminatory, 
     deceptive, and unsustainable lending practices in minority 
     communities. But as is the case with other consumer 
     protection and civil rights laws, CRA enforcement in recent 
     years has been extremely weak, allowing a wide range of 
     under-regulated, non-bank-- and often predatory--lenders to 
     fill the void.
       The legislation should also be changed to give the SEC 
     authority to make the exemption from registration under the 
     1940 Act for private investment funds contingent upon such 
     funds fulfilling requirements established by the SEC.
       Despite the need for these improvements, passage of H.R. 
     4173 would represent dramatic progress towards a financial 
     system that works for all Americans. By voting for it, you 
     will send an important message to the American public that 
     you intend to change the way that Wall Street works for the 
     better.
       Thank you for your consideration of our views. If you have 
     any questions, please contact Rob Randhava, Leadership 
     Conference on Civil Rights, and Lisa Donner, Americans for 
     Financial Reform.
           Sincerely,
                                   Americans for Financial Reform.
       Following are the partners of Americans for Financial 
     Reform. All the organizations support the overall principles 
     of AFR and are working for an accountable, fair and secure 
     financial system. Not all of these organizations work on all 
     of the issues covered by the coalition or have signed on to 
     every statement.
       A New Way Forward; AARP; ACORN; Adler and Colvin; AFL-CIO; 
     AFSCME; Alliance For Justice; Americans for Democratic 
     Action, Inc; American Income Life Insurance; Americans for 
     Fairness in Lending; Americans United for Change; Calvert 
     Asset Management Company, Inc.; Campaign for America's 
     Future; Campaign Money; Center for Digital Democracy; Center 
     for Economic and Policy Research; Center for Economic 
     Progress; Center for Responsible Lending; Center for Justice 
     and Democracy; Center of Concern; Change to Win; Clean Yield 
     Asset Management; Coastal Enterprises Inc.; Color of Change; 
     and Common Cause.
       Communications Workers of America; Community Development 
     Transportation Lending Services; Consumer Action; Consumer 
     Association Council; Consumers for Auto Safety and 
     Reliability; Consumer Federation of America; Consumer 
     Watchdog; Consumers Union; Corporation for Enterprise 
     Development; CREDO Mobile; CTW Investment Group; Demos; 
     Economic Policy Institute; Essential Action; Greenlining 
     Institute; Good Business International; HNMA Funding Company; 
     Home Actions; Housing Counseling Services; Information Press; 
     Institute for Global Communications; Institute for Policy 
     Studies: Global Economy Project; International Brotherhood of 
     Teamsters; Institute of Women's Policy Research; and Krull & 
     Company.
       Laborers' International Union of North America; Lake 
     Research Partners; Lawyers' Committee for Civil Rights Under 
     Law; Leadership Conference on Civil Rights; Move On; NASCAT; 
     National Association of Consumer Advocates; National 
     Association of Neighborhoods; National Coalition for Asian 
     Pacific American Community Development; National Community 
     Reinvestment Coalition; National Consumer Law Center (on 
     behalf of its low-income clients); National Consumers League; 
     National Council of La Raza; National Fair Housing Alliance; 
     National Federation of Community Development Credit Unions; 
     National Housing Institute; National Housing Trust; National 
     Housing Trust Community Development Fund; National 
     NeighborWorks Association; National Training and Information 
     Center/National People's Action; National Council of Women's 
     Organizations; Next Step; OMB Watch; Opportunity Finance 
     Network; and Partners for the Common Good.
       PICO; Progress Now Action; Progressive States Network; 
     Poverty and Race Research Action Council; Public Citizen; 
     Sargent Shriver Center on Poverty Law; SEIU; State Voices; 
     Taxpayer's for Common Sense; The Association for Housing and 
     Neighborhood Development; the Fuel Savers Club; The Seminal; 
     U.S. Public Interest Research Group; Union Plus; United Food 
     and Commercial Workers; United States Student Association; 
     USAction; Veris Wealth Partners; Veterans Chamber of 
     Commerce; Western States Center; We the People Now; Woodstock 
     Institute; World Privacy Forum; UNET; Union Plus; and 
     Unitarian Universalist for a Just Economic Community.


                Partial list of State and Local Signers

       Alaska PIRG; Arizona PIRG; Arizona Advocacy Network; 
     Arizonans For Responsible Lending; Association for 
     Neighborhood and Housing Development NY; Audubon Partnership 
     for Economic Development LDC, New York NY; BAC Funding 
     Consortium Inc., Miami FL; Beech Capital Venture Corporation, 
     Philadelphia PA; California PIRG; California Reinvestment 
     Coalition; Century Housing Corporation, Culver City CA; 
     Center of Concern; Center for Media and Democracy; CHANGER 
     NY; Chautauqua Home Rehabilitation and Improvement 
     Corporation (NY); Chicago Community Loan Fund, Chicago IL; 
     Chicago Community Ventures, Chicago IL; Chicago Consumer 
     Coalition; Citizen Potawatomi CDC, Shawnee OK; Colorado PIRG; 
     Coalition on Homeless Housing in Ohio; Community Capital 
     Fund, Bridgeport CT; Community Capital of Maryland, Baltimore 
     MD; Community Development Financial Institution of the Tohono 
     O'odham Nation, Sells AZ; and Community Redevelopment Loan 
     and Investment Fund, Atlanta GA.
       Community Reinvestment Association of North Carolina; 
     Community Resource Group, Fayetteville A; Connecticut PIRG; 
     Connecticut Association for Human Services; Consumer 
     Assistance Council; Cooper Square Committee (NYC); 
     Cooperative Fund of New England, Wilmington NC; Corporacion 
     de Desarrollo Economico de Ceiba, Ceiba PR; Delta Foundation, 
     Inc., Greenville MS; Economic Opportunity Fund (EOF), 
     Philadelphia PA; Empire Justice Center NY; Enterprises, Inc., 
     Berea KY; Fair Housing Contact Service OH; Federation of 
     Appalachian Housing; Fitness and Praise Youth Development, 
     Inc., Baton Rouge LA; Forward Community Investment (Madison, 
     WI); Florida Consumer Action Network; Florida PIRG; Funding 
     Partners for Housing Solutions, Ft. Collins CO; Georgia PIRG; 
     Green America; Grow Iowa Foundation, Greenfield IA; Homewise, 
     Inc., Santa Fe NM; Idaho Nevada CDFI, Pocatello ID; and Idaho 
     Chapter, National Association of Social Workers.
       Idaho Community Action Network; Illinois PIRG; Impact 
     Capital, Seattle WA; Information Press CA; Indiana PIRG; Iowa 
     PIRG; Iowa Citizens for Community Improvement; JobStart 
     Chautauqua, Inc., Mayville NY; Keystone Research Center; La 
     Casa Federal Credit Union, Newark NJ; Low Income Investment 
     Fund, San Francisco CA; Long Island Housing Services NY; 
     MaineStream Finance, Bangor ME; Maryland PIRG; Massachusetts 
     Consumers' Coalition; MASSPIRG; Massachusetts Fair Housing 
     Center; Michigan PIRG; Midland Community Development 
     Corporation, Midland TX; Midwest Minnesota Community 
     Development Corporation, Detroit Lakes MN; Mile High 
     Community Loan Fund, Denver CO; Missouri PIRG; Mortgage 
     Recovery Service Center of L.A.; Montana Community 
     Development Corporation, Missoula MT; and Montana PIRG.
       National Housing Institute; Neighborhood Economic 
     Development Advocacy Project; New Hampshire PIRG; New Jersey 
     Community Capital, Trenton NJ; New Jersey Citizen Action; New 
     Jersey PIRG; New Mexico PIRG; New York PIRG; New York City 
     Aids Housing Network; Next Step MN; NOAH Community 
     Development Fund, Inc., Boston MA; Nonprofit Finance Fund, 
     New York NY; Nonprofits Assistance Fund, Minneapolis MN; 
     Northern Community Investment Corporation (St. Johnsbury, 
     VT); North Carolina Association of Community Development 
     Corporations; North Carolina PIRG; Northside Community 
     Development Fund, Pittsburgh PA; Ohio Capital Corporation for 
     Housing, Columbus OH; Ohio PIRG; Oregon State PIRG; Our 
     Oregon; PennPIRG; Piedmont Housing Alliance, Charlottesville 
     VA; Rocky Mountain Peace and Justice Center, CO; Rhode Island 
     PIRG; Rural Community Assistance Corporation, West Sacramento 
     CA; and Rural Organizing Project OR.
       San Francisco Municipal Transportation Authority; Seattle 
     Economic Development Fund; Siouxland Economic Development 
     Corporation (Sioux City, IA); Southern Bancorp (Arkadelphia 
     AR); Community Capital Development; TexPIRG; The Association 
     for Housing and Neighborhood Development; The Fair Housing 
     Council of Central New York; The Help Network; The Loan Fund, 
     Albuquerque NM; Third Reconstruction Institute NC; Vermont 
     PIRG; Village Capital Corporation, Cleveland OH; Virginia 
     Citizens Consumer Council; Virginia Poverty Law Center; War 
     on Poverty--Florida; WashPIRG; Westchester Residential 
     Opportunities Inc.; Wigamig Owners Loan Fund, Inc., Lac du 
     Flambeau WI; and WISPIRG.
                                  ____

                                                December 10, 2009.
     House of Representatives,
     U.S. Capitol Building,
     Washington, DC.
       Dear Representative: The undersigned members of the 
     Commodity Markets Oversight Coalition would like to extend 
     its gratitude to Representative Collin Peterson of Minnesota, 
     Chairman of the House Agriculture Committee, and members of 
     his committee, for the hard work and efforts necessary to 
     bring the over-the-counter (OTC) derivatives legislation, 
     which is a part of H.R. 4173, the Wall Street Reform and 
     Consumer Protection Act of 2009, to the House floor this 
     week.
       Both Chairman Peterson and House Financial Services 
     Chairman Barney Frank and the members of their committees are 
     to be commended on their efforts towards meaningful reform of 
     the commodities futures/swaps markets. As members of Congress 
     are well aware, our coalition has since early 2007 advocated 
     for legislation to bring about greater transparency, 
     oversight and accountability in these markets and to empower 
     federal regulators with the authority and resources to 
     protect against fraud, manipulation and excessive 
     speculation.
       In light of this, we urge your support for the following 
     floor amendments to H.R. 4173 that will help to strengthen 
     this legislation:

[[Page 31292]]

       No. 47 (Rep. Stupak)--Would require transparency in swaps 
     contracts by requiring all non-cleared swaps be executed on a 
     registered swap execution facility.
       No. 48 (Reps. Stupak, DeLauro, Larson, Van Hollen)--Would 
     give the Commodity Futures Trading Commission and the 
     Securities and Exchange Commission the authority to ban 
     abusive swaps, amends any proposed commercial risk definition 
     to disregard balance sheet risk, and maintains any illegal 
     swap entered into after enactment of this Act will not be 
     valid.
       No. 114 (Rep. Peterson)--Would provide for the CFTC to 
     define the terms ``commercial risk,'' ``operating risk,'' and 
     ``balance sheet risk'' for purposes of the Commodity Exchange 
     Act.
       No. 115 (Reps. Peterson and Frank)--Would provide for 
     position limits for physical commodities, clearing of over-
     the counter transactions, increased transparency, reporting, 
     and recordkeeping, and transparency of offshore trading. It 
     also addresses jurisdictional issues in the context of swaps 
     by providing for CFTC jurisdiction over swaps and SEC 
     jurisdiction over swaps that are primarily based on 
     securities (or narrow-based security indexes). These two 
     agencies are required to consult with each other and with 
     banking regulators before regulating.
       No. 135 (Rep. Lynch)--Prohibits swaps dealers from 
     controlling more than 20% of an exchange. Provides rules 
     toward the equitable governance of clearing houses and swap 
     exchange facilities.
       We are hopeful you will send the Senate strong, pragmatic 
     legislation that will bring light to opaque, unregulated or 
     under-regulated markets and market activity, close the door 
     on potential fraud and manipulation, and give federal 
     regulators the tools they need to prevent financial 
     speculation from driving food and energy prices.
       Such action is essential to rebuilding confidence in these 
     markets as price discovery and risk management tools for 
     bona-fide physical hedgers, to reducing systemic risk and 
     market volatility, and helping to prevent further 
     destabilization of our nation's economic recovery.
           Sincerely,
         Agricultural Retailers Association; Air Transport 
           Association; American Feed Industry Association; 
           American Cotton Shippers Association; Arkansas Oil 
           Marketers Association; Colorado/Wyoming Petroleum 
           Marketers Association; Columban Center for Advocacy and 
           Outreach; California Independent Oil Marketers 
           Association; Florida Petroleum Marketers Association; 
           Food & Water Watch; Friends of the Earth; Fuel 
           Merchants Association of New Jersey; Gasoline and 
           Automotive Service Dealers of America; Independent 
           Connecticut Petroleum Association; Institute for 
           Agriculture and Trade Policy; Illinois Petroleum 
           Marketers Association; Illinois Association of 
           Convenience Stores; Louisiana Oil Marketers & 
           Convenience Store Association; Maine Energy Marketers 
           Association; Maryknoll Office for Global Concerns; 
           Massachusetts Oilheat Council; Mid-Atlantic Petroleum 
           Distributors' Association; Missionary Oblates--Justice, 
           Peace & Integrity of Creation; Montana Petroleum 
           Marketers & Convenience Store Association; National 
           Association of Oilheating Service Managers; National 
           Association of Truck Stop Operators; and National 
           Family Farm Coalition.
         National Farmers Union; National Grange; Nebraska 
           Petroleum Marketers & Convenience Store Association; 
           New England Fuel Institute; New Jersey Citizen Action 
           Oil Group; New Mexico Petroleum Marketers Association; 
           New York Oil Heating Association; North Dakota 
           Petroleum Marketers Association; Ohio Petroleum 
           Marketers & Convenience Store Association; Oil Heat 
           Council of New Hampshire; Oil Heat Institute of Long 
           Island; Oil Heat Institute of Rhode Island; 
           Organization for Competitive Markets; Petroleum 
           Marketers Association of America; Petroleum Marketers & 
           Convenience Stores of Iowa; Petroleum Marketers & 
           Convenience Store Association of Kansas; Propane Gas 
           Association of New England; Public Citizen; R-CALF USA; 
           South Dakota Petroleum & Propane Marketers Association; 
           Tennessee Oil Marketers Association; United Egg 
           Producers; Utah Petroleum Marketers & Retailers 
           Association; Vermont Fuel Dealers Association; Western 
           Peanut Growers; and West Virginia Oil Marketers & 
           Grocers Association.

  Madam Chair, I reserve the balance of my time.
  Mr. LUCAS. Madam Chair, I rise in opposition to the amendment.
  The Acting CHAIR. The gentleman from Oklahoma is recognized for 5 
minutes.
  Mr. LUCAS. Madam Chair, I yield myself 2\1/2\ minutes.
  This amendment strikes the term ``balance sheet'' risk from the 
definition of major swap participant, the result of which prevents 
corporations from hedging pension of funds costs.
  Pension funds are a liability on a corporation's balance sheet. That 
liability carries risk and that risk needs to be managed. If 
corporations can't manage pension fund risk, their employees will 
realize smaller benefits or fewer employees will enjoy pension benefits 
altogether. Some companies may be forced to join the ranks of employers 
who have terminated company-based retirement plans.
  Another part of the amendment allows a party to a swap to walk away 
from a swap for failure to comply with the clearing requirement or the 
execution transparency requirement created in this title. It sounds 
like a good idea, but let's take a closer look.
  The only time a party to a swap will want to walk away from a 
transaction is when they're losing money. This provision will encourage 
a swap participant to call his or her attorney when the deal goes sour 
to find a way to walk away from the liability created by the 
transaction. This contractual uncertainty will push companies away from 
risk mitigation, leading to higher operating costs and higher prices to 
consumers. In addition, this amendment is not needed to punish a 
counterparty for lack of compliance. If there's noncompliance with the 
clearing or execution transparency requirements, the CFTC can stop and 
catch the malefactors.
  I urge my colleagues to oppose this amendment.
  Madam Chair, I reserve the balance of my time.
  Mr. STUPAK. Madam Chair, I yield 2 minutes to the gentlewoman from 
Connecticut (Ms. DeLauro), the co-author of this amendment.
  Ms. DeLAURO. I am pleased to join Mr. Stupak, Mr. Van Hollen, and Mr. 
Larson in support of this amendment.
  The amendment does three things: It grants the CFTC and the SEC the 
authority to prohibit specific swaps, including the abuse of naked 
credit default swaps that distorted the derivatives market. It narrows 
the bona fide end user exemption in the bill to prevent loopholes that 
might allow major financial players to evade the requirements of this 
bill while ensuring that legitimate end users still have access to this 
financial tool. It ensures that no illegal swap transaction will remain 
a valid contract in a court of law. We should not countenance predatory 
behavior in any way, and we should make sure market players are not 
financially benefiting from the abusive and corrupt practices that 
helped to initiate this debilitating recession.
  With credit default swaps, companies took bets that others would fail 
without facing any risk themselves in the case of default. Other 
institutions took those bets even though they could not pay out if the 
unthinkable happened. It was a casino culture where traders played with 
taxpayers' dollars and made sure they won either way, always at the 
expense of regular people.

                              {time}  2000

  And when the defaults started to mount up, the whole house of cards 
came tumbling down.
  Why did the credit default swaps, once just a financial tool to hedge 
risk, become the province of rampant and reckless speculation? Because 
they remained unregulated. The bill before us is a good step toward 
repairing this oversight and regulating markets, but we need to do 
more. Taken together, the changes in this amendment will strengthen 
regulation over these once useful financial tools and will help ensure 
that the entire Nation does not get taken for another ride on account 
of bad behavior in the derivatives market.
  I urge my colleagues to support this amendment.
  Mr. LUCAS. Madam Speaker, I would note to my colleagues that I have 
one remaining speaker, and I would turn to him to close when the time 
is appropriate.
  Mr. STUPAK. I yield the balance of my time to the co-author of this 
amendment, Mr. Van Hollen.
  Mr. VAN HOLLEN. I want to thank my colleague, Mr. Stupak. I am 
pleased to join with him and Ms. DeLauro and Mr. Larson in offering 
this amendment.

[[Page 31293]]

  I think we should make one thing clear: We all know that, when used 
properly within an appropriate regulatory framework, derivatives can be 
valuable tools for hedging commercial risk and provide important 
consumer benefits. That being said, we have learned all too painfully 
over the last year that derivatives used improperly and outside of an 
appropriate regulatory framework can become what Warren Buffett has 
described as ``financial weapons of mass destruction.'' When that 
speculation is permitted to spin out of control on unregulated dark 
markets, it can create a magnitude of systemic risk sufficient to 
threaten the entire economy. That's what we saw with AIG and others.
  This amendment that we are offering today will provide important 
additional oversight to that market by giving regulators the explicit 
authority to ban abusive swaps, prevent abuse of the end user 
exemption, and ensure that victims of illegal transactions cannot be 
held liable for payment to their predatory counterparties in a court of 
law.
  I urge adoption of the amendment and thank Chairmen Frank and 
Peterson for their support of this amendment.
  Mr. LUCAS. Madam Chair, I yield my remaining time to close to my 
colleague and friend, the chairman of the Agriculture Committee, Mr. 
Peterson of Minnesota.
  Mr. PETERSON. I thank the gentleman.
  I rise in opposition to the amendment, and I do so reluctantly 
because I know the sponsors of this amendment are sincere in their 
attempt to address potential problems that they fear could arise with 
the underlying bill. But I have to say that we have looked at these 
issues in great depth in the committee, and it is not that we haven't 
considered them.
  In the first issue, banning of financial products, our concern there 
is that we believe that if we ban these products, they will simply move 
overseas and outside of our ability to regulate them. And if they are 
dangerous products and if they are something that shouldn't be done, I 
don't know if it makes any sense if we are just going to transfer that 
over to a foreign country. Our committee went to Europe. We recognize 
that most of the companies that do business in the United States also 
do business in Europe, and that is how we came down on that issue.
  Another provision strikes the term ``balance sheet risk.'' We had 
considerable discussion about this. We think we have got the right 
terminology to get at the issue that some of the end users had. They 
felt that without that term, they might limit some of their 
transactions. And for those of us in agriculture, these things are very 
important to us because we are actually hedging physical risk. That is 
why I introduced an amendment directing the regulators to define the 
terms in explicit terms so that we would be clear about this. But as I 
said during that debate, the Agriculture Committee will definitely haul 
them up and straighten them out if they don't get the right answer to 
that.
  Finally, the amendment limits the applicability of legal certainty of 
swaps. This amendment asks the question why illegal swaps should be 
enforceable. The answer is that otherwise you will encourage illegal 
behavior. If a swap dealer or an end user finds itself in a money-
losing swap, it would be easy to engage in some illegal behavior to 
negate the swap and escape its financial liability.
  The standard of illegality is not very high. You wouldn't have to 
commit fraud to invalidate a swap; you just don't have to follow the 
regulations. So do we really want businesses making the calculation 
between the costs associated with paying a fine to regulators for 
failing to dot the i's or cross the t's versus the costs associated 
with honoring their swap obligation? If the end user is harmed by the 
fraudulent action of its swap counterparty, the CFTC has the tools to 
seek restitution for the end user from the counterparty. Ending legal 
certainty causes more problems than it solves, in our opinion.
  I know the sponsors of this amendment have good intentions, but I 
think that the amendment goes a little too far to address problems that 
it seeks to correct, and I would urge my colleagues to oppose the 
amendment.
  The Acting CHAIR. The question is on the amendment offered by the 
gentleman from Michigan (Mr. Stupak).
  The question was taken; and the Acting Chair announced that the ayes 
appeared to have it.
  Mr. FRANK of Massachusetts. Madam Chair, I demand a recorded vote.
  The Acting CHAIR. Pursuant to clause 6 of rule XVIII, further 
proceedings on the amendment offered by the gentleman from Michigan 
will be postponed.


                 Amendment No. 10 Offered by Ms. Matsui

  The Acting CHAIR. It is now in order to consider amendment No. 10 
printed in House Report 111-370.
  Ms. MATSUI. Madam Chair, I have an amendment at the desk.
  The Acting CHAIR. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Amendment No. 10 offered by Ms. Matsui:
       Page 465, after line 2, insert the following new subtitle:

               Subtitle L--Making Home Affordable Program

     SEC. 9911. PUBLIC AVAILABILITY OF INFORMATION.

       (a) Revisions to Program Guidelines.--The Secretary of the 
     Treasury (in this section referred to as the ``Secretary'') 
     shall revise the guidelines for the Home Affordable 
     Modification Program of the Making Home Affordable initiative 
     of the Secretary of the Treasury, authorized under the 
     Emergency Economic Stabilization Act of 2008 (Public Law 110-
     343), to provide that the data being collected by the 
     Secretary from each mortgage servicer and lender 
     participating in the Program is made public in accordance 
     with subsection (b).
       (b) Public Availability.--Data shall be made available 
     according to the following guidelines:
       (1) Not more than 14 days after each monthly deadline for 
     submission of data by mortgage servicers and lenders 
     participating in the Program, reports shall be made publicly 
     available by means of a World Wide Web site of the Secretary, 
     and by submitting a report to the Congress, that shall 
     includes the following information:
       (A) The number of requests for mortgage modifications under 
     the Program that the servicer or lender has received.
       (B) The number of requests for mortgage modifications under 
     the Program that the servicer or lender has processed.
       (C) The number of requests for mortgage modifications under 
     the Program that the servicer or lender has approved.
       (D) The number of requests for mortgage modifications under 
     the Program that the servicer or lender has denied.
       (2) Not more than 60 days after each monthly deadline for 
     submission of data by mortgage servicers and lenders 
     participating in the Program, the Secretary shall make data 
     tables available to the public at the individual record 
     level. The Secretary shall issue regulations prescribing--
       (A) the procedures for disclosing such data to the public; 
     and
       (B) such deletions as the Secretary may determine to be 
     appropriate to protect any privacy interest of any mortgage 
     modification applicant, including the deletion or alteration 
     of the applicant's name and identification number.

  The Acting CHAIR. Pursuant to House Resolution 964, the gentlewoman 
from California (Ms. Matsui) and a Member opposed each will control 5 
minutes.
  The Chair recognizes the gentlewoman from California.
  Ms. MATSUI. Madam Chair, I yield myself such time as I may consume.
  Madam Chair, I rise today to offer an amendment, along with 
Representatives Kathy Castor and Betty Sutton, that calls on the 
mortgage industry to help place more responsible homeowners into more 
affordable terms under the Making Home Affordable program.
  Sadly, after more than 2 years since the beginning of the foreclosure 
crisis, much needs to be done to help Americans facing the threat of 
foreclosure. Leading economists expect another uptick in foreclosures, 
estimating nearly 5 million homeowners could face foreclosure over the 
next 2 years.
  Madam Chair, my home district of Sacramento has been devastated by 
this crisis. I have been to foreclosure workshops over and over again. 
I have seen the hardships and the looks of desperation. The Making Home 
Affordable

[[Page 31294]]

Housing program offers a host of financial incentives to the mortgage 
industry to help homeowners modify their loans to more affordable 
terms. It is expected to help nearly 4 million homeowners. 
Unfortunately, to date, the mortgage industry has yet to demonstrate 
its commitment to help homeowners. In fact, since the inception of the 
program nearly 1 year ago, the mortgage industry has placed only 31,000 
homeowners into a permanent, affordable loan modification.
  Madam Chair, no one here is looking for a bailout, but families need 
honest assistance. The amendment my colleagues and I are offering today 
requires mortgage industry participants in the Making Home Affordable 
program to report basic information on a monthly basis.
  Under the amendment, mortgage industry participants would have to 
report the number of loan modification requests received, the number 
being processed, the number that have been approved, and the number 
that have been denied. It would also make that information available to 
the public through the Treasury Department's Web site.
  Madam Chair, it is clear that greater transparency is needed to 
ensure that all parties are working toward the common goal of helping 
homeowners. I strongly urge my colleagues to join me in supporting this 
amendment.
  I reserve the balance of my time.
  Mr. FRANK of Massachusetts. Madam Chair, pursuant to section 4 of 
House Resolution 964, I request that amendment No. 11 be considered out 
of order. If I may elaborate, it is for the purpose of en blocing some 
amendments.
  Mrs. CAPITO. Madam Chair, I rise to claim time in opposition, 
although I am not entirely opposed to the gentlelady's amendment.
  The Acting CHAIR. Without objection, the gentlewoman from West 
Virginia is recognized for 5 minutes.
  There was no objection.
  Mrs. CAPITO. Madam Chair, the gentlelady's amendment deals with the 
Making Home Affordable program, which has been in effect for most of 
2009. I think it is important to note that the Department of the 
Treasury is already collecting some of this data. But I would like to 
take this opportunity to express my continued concern, as the 
gentlelady expressed hers, with the loan modification programs in 
general.
  Earlier this week, the House Financial Services Committee held a 
hearing in which there was bipartisan frustration with these programs. 
Rolled out under heralded proclamations that they would help 7 million 
to 9 million struggling homeowners, to date the loan modifications have 
helped only a fraction of that.

                              {time}  2010

  I have serious concerns that the administration has overpromised on 
these programs and has unfairly raised borrowers' expectations. 
Furthermore, we have learned that many of the trial modifications are 
not being processed with complete documentation. Lack of documentation 
was one of the main contributors to the foreclosure problem in the 
first place.
  JPMorgan Chase recently disclosed that in November close to 25 
percent of their trial modifications failed to make the first payment, 
and that nearly 50 percent of the borrowers failed to make all three of 
the first three payments. Furthermore, the Federal Reserve Bank of 
Boston cites that 30 to 45 percent of borrowers who receive 
modifications end up in default within 6 months.
  Clearly, we need more transparency in this program. We also need to 
find a way to make the goals of the program work to help those who are 
having difficulty--who are suffering from unemployment or from the real 
estate collapse in their areas or who are unable to meet their 
obligations. All of us hear from constituents every single day who are 
struggling, but this program, Making Home Affordable, obviously has 
great lapses and great challenges.
  With that, I reserve the balance of my time.
  Ms. MATSUI. Madam Chair, I yield 1 minute to my colleague on the 
Energy and Commerce Committee, the gentlewoman from Florida (Ms. 
Castor).
  Ms. CASTOR of Florida. I thank my colleague from California (Ms. 
Matsui).
  I rise in support of the Matsui amendment.
  Madam Chair, all across America, families are doing everything right. 
They are paying their mortgages. They want to stay in their homes, but 
loan servicers and the banks have been slow to respond to reasonable 
requests for modifications.
  Like many Democratic Members, I've held a number of foreclosure 
prevention workshops. What I hear from families is that these banks and 
the lenders and the servicers will not answer the phones to complete a 
modification and that, once they get the paperwork, they are not 
completing these modifications as they should.
  Now, while President Obama's Making Home Affordable program has been 
positive in Florida and while we have over 83,000 modifications 
underway, we do not have the information necessary to tell where it is 
working, who it is working for, and which banks and servicers are not 
helping. So this amendment gets tough on those lenders and servicers.
  It says that they have to demonstrate that they are following through 
with their responsibilities to modify mortgages for qualified families. 
It will keep the lenders honest by requiring up-to-date information 
about modifications, and that information will be made public. No more 
excuses for these lenders and servicers that have not been holding up 
their end of the bargain for America's families.
  Mrs. CAPITO. Madam Chair, I continue to reserve the balance of my 
time.
  Ms. MATSUI. Madam Chair, I yield 1 minute to my other colleague on 
the Energy and Commerce Committee, the gentlewoman from Ohio (Ms. 
Sutton).
  Ms. SUTTON. Madam Chair, I rise today, along with my colleagues 
Representative Matsui and Representative Castor, in support of the 
Matsui amendment.
  Before Wall Street collapsed, before anyone ever heard of ``credit 
default swaps'' and before AIG became a four letter word, homeowners 
across this country--and especially in Ohio--were already hurting. 
Responsible Americans were sold mortgages with indecipherable terms, 
with smoke-and-mirror provisions and with ``gotcha'' fees. Some lost 
their jobs and were unable to make payments, and some homeowners are 
still suffering. Last month, one in every 417 homes in this country 
received a foreclosure filing. The Making Home Affordable program has 
helped some homeowners but not enough, and it is time we saw some 
numbers.
  This amendment requires Treasury to post on their Web site important 
data on mortgage servicer and lender participation in the program so we 
can hold mortgage servicers and lenders accountable, and so we can ask 
them ``why.'' Why are you not helping homeowners out of this mess that 
you created?
  This is an important step toward helping Americans stay in their 
homes. I urge a ``yes'' vote.
  Mrs. CAPITO. Madam Chair, I yield 2 minutes to my colleague on the 
Financial Services Committee, the gentleman from Texas (Mr. 
Hensarling).
  Mr. HENSARLING. I thank the gentlewoman for yielding.
  Madam Chair, I could not agree more with the speakers whom I heard or 
with the intention of the gentlewoman who offered the amendment that we 
certainly need greater transparency in these taxpayer-funded housing 
programs.
  I would also like to see that we include, maybe, HOPE for Homeowners, 
for which $300 billion has been authorized, but on the last date that 
it's available, which is dating back to July, only 1,000 applications 
and 50 loans closed. Yet $300 billion was authorized.
  In the HAMP program, there was $75 billion of taxpayer money for 
650,000, apparently, temporary loan modifications on a program that was 
supposed to help 4 million homeowners.
  HARP, the Home Affordable Refinance Program, was supposedly going

[[Page 31295]]

to help 4 to 5 million, and instead, there were only 116,000 loans.
  Now let's look at what those who actually own the loans have done. 
There have been 4.7 million workouts that have happened in the 
competitive marketplace without any interference by government with no 
taxpayer money expended.
  I mean, Madam Chair, this is the kind of transparency that we need. 
All of these taxpayer-funded foreclosure mitigation programs of this 
administration and of this Congress have been absolute abject failures. 
The only loan modification program, foreclosure mitigation program, 
that is going to work is a job, and we know what the record of this 
administration and of this Congress is: the highest unemployment rate 
in a generation and a double-digit unemployment rate.
  Until you get rid of the looming storm clouds of Obamanomics, the 
debt, the spending, and the bailouts, you won't get the jobs. If you 
don't get the jobs, people can't keep their homes. So I am happy that 
we will shine a little bit more transparency into this.
  Ms. MATSUI. Madam Chair, how much time do I have remaining?
  The Acting CHAIR. Both sides have 1 minute remaining.
  Ms. MATSUI. Madam Chair, I yield the balance of my time to the 
chairman of the Financial Services Committee, the gentleman from 
Massachusetts (Mr. Frank).
  Mr. FRANK of Massachusetts. I support the amendment, but I do have to 
comment on this job issue.
  Once again, it is clear that January 21, 2009, saw a mass disease 
outbreak--prolonged, profound Republican amnesia. The gentleman from 
Texas says, under this administration, we've lost jobs. Yes. The Obama 
recovery from the Bush recession has been slower than we had hoped, but 
it has begun.
  According to the official National Bureau of Economic Research, the 
Bush recession began in 2007. Large job losses happened under the Bush 
administration and as a continuation of the Bush policies. We have 
finally begun to slow down the job loss.
  The notion that it is because our economic recovery plan was passed 
that job loss has continued is, of course, economic illiteracy of the 
highest sort. The problem is that you do not immediately turn things 
around. Most economic analysts agree that the economic recovery program 
has slowed down the rate of job loss, and we have begun to turn it 
around.
  When the gentleman from Texas and other Republicans blame Obama for 
the Bush mistakes, it's not going to be allowed to go unrebutted.
  Mrs. CAPITO. Madam Chair, I would like to say facts are facts. We 
are, unfortunately, suffering some of the highest unemployment in a 
generation. These are real people who are losing real jobs, and we want 
to help them in their housing issues. I support the gentlewoman's 
amendment.
  I would like to say that, in our hearing, we learned that the 
servicers and the banks were having some lapses, but we found also that 
the borrowers were having some lapses as well in terms of providing 
full documentation, in terms of responding to the lenders and to the 
servicers.
  So I would encourage the gentlewoman, as we move through this 
process, to maybe expand the transparency of the information so that we 
can see the full program not just from the servicer's side or from the 
bank's side but also from the borrower's side, too, and see where their 
lapses may be as well.
  With that, I yield back the balance of my time.
  The Acting CHAIR. The question is on the amendment offered by the 
gentlewoman from California (Ms. Matsui).
  The amendment was agreed to.

                              {time}  2020


               Amendment No. 12 Offered by Mr. Kanjorski

  The Acting CHAIR. It is now in order to consider amendment No. 12 
printed in House Report 111-370.
  Mr. KANJORSKI. Madam Chairman, I have an amendment at the desk.
  The Acting CHAIR. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Amendment No. 12 offered by Mr. Kanjorski:
       Page 11, in the item relating to section 7606, strike 
     ``Exemption for Nonaccelerated Filers'' and insert ``Study on 
     methods to reduce the burden of compliance on small 
     companies''.
       Page 1221, line 19, strike ``EXEMPTION FOR NONACCELERATED 
     FILERS'' and insert ``STUDY ON METHODS TO REDUCE THE BURDEN 
     OF COMPLIANCE ON SMALL COMPANIES''.
       Page 1221, strike lines 20 through 25.
       Page 1222, strike lines 1 through 2.
       Page 1222, on line 3, strike ``(b) Study.--'' and adjust 
     the indentation appropriately.
  The Acting CHAIR. Pursuant to House Resolution 964, the gentleman 
from Pennsylvania (Mr. Kanjorski) and a Member opposed each will 
control 5 minutes.
  The Chair recognizes the gentleman from Pennsylvania.
  Mr. KANJORSKI. Madam Chairman, I yield 1 minute to the son of one of 
the original authors of the Sarbanes-Oxley bill, Representative 
Sarbanes of Maryland.
  Mr. SARBANES. I thank the gentleman for yielding. I strongly support 
the Kanjorski-Frank-Sarbanes-Cohen amendment to the bill. This would 
restore critical investor protections for those who invest in publicly 
traded companies. And what are those? Number one, that the management 
establish internal controls with respect to the financial operations of 
the company; and, number two, that they get an outside audit to 
validate the soundness of those controls.
  Now, those who oppose this say that the smaller publicly traded 
companies can't handle the burden of compliance. The costs have come 
way down, particularly because the SEC has been careful to work with 
these smaller companies to make sure that that burden is not too heavy.
  The fact of the matter is that if you are an investor, it doesn't 
matter to you whether you are investing in a smaller company or a 
larger company. What you want to know is that that company is not 
cooking the books.
  If we don't pass this amendment, then almost half of the publicly 
traded companies in this country will be exempt from these basic 
transparency requirements. That's why I urge support of it.
  Mr. GARRETT of New Jersey. Madam Chair, I rise to claim the time in 
opposition.
  The Acting CHAIR. The gentleman is recognized for 5 minutes.
  Mr. GARRETT of New Jersey. Madam Chair, I yield myself 2 minutes.
  I would like to begin by commending my colleague from South Jersey, 
Congressman John Adler, for his hard work on this very important issue. 
As all of our colleagues know in New Jersey and around the country, our 
Nation is in tough economic times right now and these tough times are 
compounded if you are a small business. And the last thing we need to 
do is put more burdens on them by imposing costly regulations.
  I think we all agree that our Nation's small businesses are not the 
cause of our current financial situation, but they are the ones who are 
going to get us out of it. The language in the bill that would 
permanently exempt small businesses with a market capitalization of $75 
million or less from section 404(b) of Sarbanes-Oxley was added during 
committee consideration by myself and Mr. Adler and was adopted by a 
broad bipartisan vote, with the backing of the White House as well.
  Unlike some would like to have you believe, this exemption does not 
exempt institutions from all auditing requirements. As the Independent 
Community Bankers Association notes in a letter on this matter, they 
say, ``The regulatory burden will be in addition to their other annual 
auditing fees, their regular safety and soundness and compliance 
examinations conducted by the banking agencies, and complying with 
other numerous Federal and State banking laws and regulations. It will 
also be in addition to complying with Sarbanes-Oxley section 404(a) 
which requires management to render an opinion concerning an issuer's 
internal controls.''
  Basically all that means is there is a plethora of other regulations 
providing for transparency for these companies.

[[Page 31296]]

  Let me give you a quick example about one company in my district, and 
that is Dewey Electronics. They are located in Oakland, New Jersey, a 
small company, 35 employees, capitalized $3.6 million, hardly a company 
that's going to cause panic in this country if they fail. The CEO, the 
CFO and other management, they are all located in the same hallway, in 
the same building. There is constant communication between all the 
board of directors. They are a perfect example of a small business in 
which the government should not force new and now highly expensive 
regulatory requirements in order to have them check off some boxes on 
some form.
  Think about it. The hundreds of thousands of dollars that it will 
cost them to comply with section 404(b) would be much better spent in 
developing new and more efficient generators, which is what the company 
does to support our troops overseas to be used on the battlefield or to 
be used to hire new employees, which is what we talked about a number 
of times before on this floor, to make sure that we can provide more 
jobs as we see the joblessness rate rise.
  I reserve the balance of my time.
  Mr. KANJORSKI. Madam Chair, I yield 1 minute for the gentleman from 
Tennessee (Mr. Cohen).
  Mr. COHEN. Madam Chair, I want to thank the people I have worked with 
on this amendment, Mr. Kanjorski, Mr. Frank, Mr. Sarbanes.
  The fact is that Sarbanes-Oxley section 404 is one of the more 
important pieces that we have in our portfolio to protect consumers 
against corporate fraud and corporate corruption. When it was passed it 
was passed by an overwhelming majority, almost unanimous, in this 
House.
  Over the years it hasn't been implemented completely, but now it 
needs to be implemented, for small companies, $75 million or less, as 
well as the large companies where it has already been implemented. As 
Mr. Sarbanes said, the loss to investors from small companies is just 
as important and potent to them as the loss from large companies. We 
have so many investors that will be at risk if there are not proper 
accounting procedures and safeguards for the American public.
  As Arthur Levitt, the former chairman of the SEC said, Overturning 
the most pro-investor legislation in the past 25 years is deeply 
disturbing. Those who vote against investor protections in Sarbanes-
Oxley will bear the investors' mark of Cain. Take it if you choose it.
  I submit you should support the amendment.
  Mr. GARRETT of New Jersey. Madam Chair, I now yield 1\1/2\ minutes to 
my friend and colleague from South Jersey, Congressman Adler.
  Mr. ADLER of New Jersey. I thank the gentleman from New Jersey.
  Much of the legislation we are discussing the last couple of days and 
tomorrow when we vote is about the failure of this Congress to regulate 
sufficiently. I mean, it's one instance we have facts, we have data, we 
have clear evidence of our overregulation. Sarbanes-Oxley has done some 
very good things, and unfortunately the section 404(b) has chased 
companies out of the United States of America. We know companies that 
are doing IPOs, not in New York, but in London. They have said so. We 
know other companies that have been unable to aggregate capital to go 
from small to big, to create jobs, the sorts of jobs the President 
talked about at the Brookings Institution just a couple of days ago. 
Small companies sometimes become great companies and employ thousands 
and thousands of people.
  Most of this bill we are talking about today and tomorrow will do 
some very good things to add enough regulation. This one instance, we 
have to do what Mr. Garrett and I tried to do, what a bipartisan group 
in the Financial Services Committee did, which is restore the right 
balance so small companies aren't crushed from their aspiration of 
going public, of selling stock to the public, of growing and creating 
the next Microsoft, IBM, General Electric, the next great companies. We 
are missing a chance here if we pass this amendment.
  The committee did the right thing on a bipartisan basis to grow our 
economy. Let's not turn our backs on the many Americans who want to 
have good, decent jobs in this country now.
  Mr. KANJORSKI. Madam Chairman, I yield 1 minute to the chairman of 
the full committee, Mr. Frank.
  Mr. FRANK of Massachusetts. Madam Chair, the SEC has recognized the 
potential problems for people under $75 million. They are not now 
subjected to this. The question is not whether they should be 
immediately put under this, but whether they should be given a 
permanent exemption without giving us a chance to have the SEC continue 
its development of more appropriate rules. The notion that no such 
requirement should apply, there is an absolutism here that seems to me 
in error.
  Yes, the SEC should treat companies at $75 million and below 
differently than people that are at a billion dollars and above, et 
cetera. But they are in the process of doing this. This is an exemption 
that is unnecessary at this time. If and when the SEC decides that it 
is ready to cover them and Members here think that they haven't done an 
adequate job of providing for it, a motion like this might be in order.
  I understand the desire of people to help smaller businesses. But at 
this point it is a license for people who might want to be abusive by 
guaranteeing them that they will never be audited despite any effort to 
make an appropriate audit.
  Mr. GARRETT of New Jersey. We should be closing. Are there speakers 
on the other side?
  I will reserve the balance of my time.
  Mr. KANJORSKI. As I understand, we are down to our last speaker on 
the other side; is that correct?
  Mr. GARRETT of New Jersey. I am going to close, yes.
  Mr. KANJORSKI. I will take the remaining time on our side.
  The Acting CHAIR. The gentleman from Pennsylvania is recognized for 2 
minutes.

                              {time}  2030

  Mr. KANJORSKI. Madam Chairman, this was a very close vote in the 
committee and a highly contested issue, and I understand that there are 
hard and good feelings on both sides.
  I think the proponents of the amendment that carried in the 
committee, which now this amendment is trying to reverse here on the 
floor, were trying to say that government is hurting, in some way, 
small companies, about 5,000 of them, if we continue to impose 404(b). 
That's not correct.
  First and foremost, 404(b), to the companies that are less than $75 
million in capitalization are not presently compelled to follow any of 
the existing Sarbanes-Oxley proposals. As a matter of fact, in the 
underlying bill, it won't be until 2011 that there will be an 
imposition of that, and only after a study that has already been 
ordered is made, which, as the chairman of the full committee 
recognized in his presentation, is that we will have plenty of time, 
that if that study comes back and says we should make adjustments to 
404(b), we'll be able to do that.
  The problem of our friends like Mr. Levitt, Mr. Volcker, and many 
other leading economists in the country and people of high position in 
economics, they know that for 20 years there has been a fight in this 
country to try and protect investors from unscrupulous activity. We 
saw, 7 years ago, Enron and WorldCom, and that's the genesis of where 
this rule came from. To now summarily reverse this rule because it's 
not very nice to have companies spend money to protect their 
shareholders is very appealing. I haven't any doubt that it will 
appeal.
  But we're not talking about--when our adversaries on this particular 
proposition talk about small business, this isn't small business. These 
are companies that are registered public companies on the stock 
exchange and have up to $75 million in capitalization. That's a pretty 
large company in most places. It certainly doesn't classify itself, 
under governmentspeak, to be a small business.
  Mr. GARRETT of New Jersey. And now, I shall yield my remaining 1\1/2\ 
minutes to my friend and colleague from the State of Texas.
  Mr. HENSARLING. As I listen carefully to this debate, I'm struck by 
the

[[Page 31297]]

fact that this United States Congress doesn't seem to get it. The 
number one job of this Congress ought to be jobs. Again, I know some on 
the other side of the aisle take umbrage at the facts, and the facts 
are, we have double-digit unemployment, the highest unemployment in a 
generation. 3.6 million have lost their jobs since President Obama 
became President.
  Now, I was informed by the distinguished chairman of the Financial 
Services Committee that perhaps some, like myself, on this side of the 
aisle have amnesia because the problem really started in 2007, which 
conveniently coincides with the year that the Democrats took control of 
Congress. So apparently, amnesia does not know partisan bounds, Madam 
Chairman.
  So what we have here in front of us is an amendment to put even 
greater burdens on small business, the job engine of America. How many 
more regulations, how much more cost do you have to put on small 
businesses as they're struggling to meet their payrolls, as they're 
struggling to try to keep their businesses afloat? How many more jobs 
have to be lost, Madam Chairman? I hope no more. And we should reject 
this amendment.
  Mr. GARRETT of New Jersey. Madam Chair, I would enter into the Record 
at this time just the letters of support of the Adler-Garrett amendment 
from the New York Stock Exchange Euronext, Property Casualty Insurers, 
ICBA, Biotechnology, and the Center for Investors and Entrepreneurs.


                                                NYSE Euronext,

                                                 December 8, 2009.
     Hon. John Adler,
     House of Representatives,
     Washington, DC.
     Hon. Scott Garrett,
     House of Representatives,
     Washington, DC.
       Dear Representatives Adler and Garrett: NYSE Euronext 
     supports your provision in the Investor Protection Act that 
     would permanently exempt smaller public companies, with a 
     market capitalization of less than $75 million, from Section 
     404(b) of the Sarbanes Oxley Act of 2002.
       We urge Congress to retain this provision in H.R. 4173, The 
     Wall Street Reform and Consumer Protection Act of 2009.
       This provision will help promote the ability of smaller 
     companies to compete and create jobs without sacrificing the 
     important benefits of strong auditor oversight and robust 
     financial reporting requirements. The SEC's current exemption 
     for companies with less than $75 million in market value 
     represents a measured approach to balancing investor 
     protection and SME competitiveness, as these companies 
     continue to be audited and subject to SEC rules regarding 
     financial reporting and disclosure requirements.
       NYSE Euronext looks forward to continuing to work with the 
     Congress to strengthen the growth, competitiveness and job-
     creation of U.S. public companies.
           Sincerely,

                                             Clarke D. Camper,

                                    Senior Vice President, Head of
     Government Affairs and Public Advocacy.
                                  ____

                                        Property Casualty Insurers


                                       Association of America,

                                Washington, DC, December 10, 2009.
     Hon. John H. Adler,
     House of Representatives,
     Washington, DC.
     Hon. Scott Garrett,
     House of Representatives,
     Washington, DC.
       Dear Congressman Adler and Congressman Garrett: The 
     Property Casualty Insurers Association of America (PCI) 
     supports your provision in the Investor Protection Act that 
     would permanently exempt smaller public companies, with a 
     market capitalization of less than $75 million, from Section 
     404(b) of the Sarbanes Oxley Act of 2002. We strongly urge 
     the Congress to include this language in the final version of 
     H.R. 4173, The Wall Street Reform and Consumer Protection Act 
     of 2009.
       PCI supports strong corporate governance for all 
     corporations. However, since the Sarbanes-Oxley Act became 
     law, it has become clear that the implementation of Section 
     404(b) was too broad. It has been a competitive disadvantage 
     for many U.S. corporations. We believe that the costs of 
     compliance with Section 404(b) must continue to be reduced 
     for all publicly-traded insurance companies, in particular 
     for the small-to-medium sized insurers to which your 
     provision applies.
       PCI applauds you for your continued leadership on this 
     important issue, and we look forward to working with you to 
     lessen the burden of Section 404(b) compliance for smaller 
     public businesses.
       PCI represents the broadest cross-section of insurers of 
     any national property/casualty trade association, with over 
     1000 members writing over $180 billion in direct written 
     premium annually, over 37 percent of the nation's property/
     casualty insurance.
           Sincerely,

                                       Benjamin J. McKay, III,

                                            Senior Vice President,
     Federal Government Relations.
                                  ____

                                             Independent Community


                                           Bankers of America,

                                 Washington, DC, December 8, 2009.
     Hon. Louise McIntosh Slaughter,
     Chairwoman, Rules Committee, House of Representatives, 
         Washington, DC. 20515
     Hon. David Dreier,
     Ranking Member, Rules Committee, House of Representatives, 
         Washington, DC.
       Dear Chairwoman Slaughter and Ranking Member Dreier: The 
     Independent Community Bankers of America (ICBA) wishes to 
     commend members of the House Financial Services Committee for 
     including an amendment to the Investor Protection Act of 2009 
     sponsored by Representatives Scott Garrett and John Adler 
     (which is Section 606 of that Act) that would exclude small 
     publicly held companies including many community banks from 
     the costly regulatory burden of complying with Section 404(b) 
     of the Sarbanes-Oxley Act of 2002 (SOX). As the Rules 
     Committee considers amendments to the overall financial 
     reform package, H.R. 4173, the Wall Street Reform and 
     Consumer Protection Act of 2009, ICBA would like to voice our 
     opposition to an amendment being offered by Representative 
     Paul Kanjorski that would strip this provision from the 
     Investor Protection Act.
       Without the Garrett/Adler exclusion included in the 
     Investor Protection Act, beginning next year, many small, 
     publicly held companies including several hundred community 
     banks would be required to retain outside auditors to render 
     costly attestations of their internal controls. In the case 
     of community banks, this regulatory burden will be in 
     addition to their other annual auditing fees, their regular 
     safety and soundness and compliance examinations conducted by 
     the banking agencies, and complying with numerous other 
     federal and state banking laws and regulations. It also will 
     be in addition to complying with SOX Section 404(a) which 
     requires management to render an opinion concerning an 
     issuer's internal controls.
       For the hundreds of community banks that would be impacted 
     by SOX Section 404(b), this exclusion will allow them to 
     significantly reduce their regulatory expenses, conserve 
     their capital, allowing them to make needed loans in their 
     communities. This exclusion is particularly critical for 
     those publicly held community banks located in areas of the 
     country that have been hard hit by the economic downturn. 
     These banks will be able to use this additional revenue to 
     lend money to small businesses and consumers, encouraging job 
     creation and aiding in the economic recovery. Importantly, 
     this exclusion will also protect the FDIC's Deposit Insurance 
     Fund by helping these community banks weather the economic 
     crisis.
       As you consider amendments to the regulatory reform package 
     this week, ICBA urges you to retain the Garrett/Adler 
     language that would exclude many community banks from the 
     costly requirements of SOX Section 404(b) and oppose the 
     Kanjorski amendment that would strip the bill of these needed 
     provisions.
           Sincerely,

                                              Stephen Verdier,

                                         Executive Vice President,
     Director of Congressional Relations.
                                  ____

                                                     Biotechnology


                                        Industry Organization,

                                Washington, DC. December 10, 2009.
     Hon. Nancy Pelosi,
     Speaker of the House,
     House of Representatives.
     Hon. Steny Hoyer,
     Majority Leader,
     House of Representatives.
     Hon. James Clyburn,
     Majority Whip,
     House of Representatives.
     Hon. John Boehner,
     Republican Leader,
     House of Representatives.
     Hon. Eric Cantor,
     Republican Whip,
     House of Representatives.
       Dear Speaker Pelosi, Leaders Hoyer and Boehner, Whips 
     Clyburn and Cantor: On behalf of the Biotechnology Industry 
     Organization (BIO) and our more than 1,200 member companies 
     and research organizations, I am writing to express support 
     for a provision included in H.R. 4173, the Wall Street Reform 
     and Consumer Protection Act of 2009, that will provide a 
     permanent exemption from Section 404(b) of the Sarbanes-Oxley 
     Act for smaller reporting companies (those with less than $75 
     million in market capitalization), and to ask that you oppose 
     an amendment by Rep. Kanjorski to remove this provision from 
     the bill. The provision in the bill would provide much-needed 
     relief to smaller public biotechnology companies on the 
     cutting edge of research and development. Additionally, the 
     language in H.R. 4173 would require the SEC and GAO to 
     conduct a study within 180 days of enactment to determine how 
     the SEC could reduce the burdens of compliance with Section 
     404(b) for those companies whose

[[Page 31298]]

     market capitalization is between $75 million and $250 
     million.
       Over the past thirty years, the U.S. biotech industry has 
     helped America build an innovation-based economy and created 
     high-value, high-wage U.S. jobs. These jobs pay, on average, 
     68 percent more than private sector jobs in general. However, 
     small biotechnology companies face great difficulties raising 
     capital to finance the research and development of new and 
     promising therapies, especially in the wake of the financial 
     crisis. For example, in 2008 capital raised from initial 
     public offerings fell 97 percent compared to 2007, and 
     secondary offerings fell 56 percent. Total capital raised by 
     the biotechnology industry in 2008 fell by 55 percent 
     compared to 2007. There have only been 3 successful IPOs in 
     2009. I am concerned that adoption of Kanjorski Amendment #51 
     would contribute to the continuation of this troubling trend.
       Without a permanent exemption from Section 404(b), the 
     smallest biotech companies will be forced to absorb outsized 
     audit and compliance costs--diverting revenue that could 
     otherwise be reinvested in employees developing life-saving 
     therapies. Currently, 41% of active publicly traded biotech 
     companies fall under $75 million in market capitalization. 
     This provision would both provide relief to small biotech 
     companies as well as ensure that these companies can continue 
     to focus their cash resources on developing the next 
     generation of therapies to treat diseases affecting tens of 
     millions of Americans.
       Please support reasonable regulatory relief for small 
     businesses and oppose Kanjorski amendment #51. I appreciate 
     your leadership and look forward to working with you on this 
     important issue.
           Sincerely,

                                           James C. Greenwood,

                                                President and CEO,
     Biotechnology Industry Organization.
                                  ____

                                          The Center for Investors


                                            and Entrepreneurs,

                                                December 10, 2009.

  Support Small Entrepreneurs and Investors--Keep Obama-backed Adler-
        Garrett Sarbox Relief Provision in Financial Reform Bill


 Oppose Kanjorski-Sarbanes amendment to remove Adler-Garrett provision 
                               from bill

       Dear Defender of American Entrepreneurs and Investors:, As 
     early as today, the U.S. House of Representatives will debate 
     amendments to the Wall Street Reform and Consumer Protection 
     Act of 2009. As an advocate of small entrepreneurs and 
     informed retail investors, we urge you to oppose any 
     amendments to section 7606 of the bill that would remove a 
     measure vital for growing small businesses to raise capital.
       The Center for Investors and Entrepreneurs strongly 
     supports the bipartisan provision--added to the bill by John 
     Adler (D-N.J.) and Scott Garrett (R-N.J.) and backed by 
     President Barack Obama--to extend the exemption for small 
     public companies from the most onerous requirements of 
     Sarbanes-Oxley. This will free the resources of these 
     innovative firms for the creation of new products, new 
     technologies, and new jobs--rather than accounting minutiae.
       Expressing support for the Adler-Garrett provision, the 
     Obama administration has said, ``Our focus must be on 
     addressing the threats posed to investors and consumers by 
     large, interconnected companies, rather than placing an undue 
     burden on small businesses.'' (Wall Street Journal, http://
blogs.wsj.com/washwire/2009/11/03/sarbanes-oxley-critics-
declare-a-victory-at-least-for-now/)
       For several years, in fact, Democrats and Republicans have 
     noted that Sarbanes-Oxley's unexpectedly high costs to 
     entrepreneurs, and hence to shareholder return, exceed 
     whatever benefits it may have provided to investors. House 
     Speaker Nancy Pelosi told CNBC in 2006 that the law had 
     ``unintended consequences,.'' and while, ``You need the 
     transparency. . . . I don't think you need the whole 
     package.'' And Sen. John Kerry (D-Mass.) has called for a 
     ``task force'' to ``make it easier for small businesses to 
     comply with the Sarbanes-Oxley by reducing their regulatory 
     burden in the future.'' (Kerry press release, http://
kerry.senate.gov/v3/cfm/record.cfm?id=264068&)
       University of Minnesota economics professor Ivy Zhang has 
     calculated that Sarbanes-Oxley has cost the U.S. economy a 
     whopping $1.4 trillion and provided few if any quantifiable 
     benefits to investors (Zhang paper, http://w4.stern.nyu.edu/
accounting/docs/speaker_papers/spring2005/Zhang_Ivy 
     Economic--Consequences--of--S--O.pdf). Direct costs for the 
     average public company to comply with just one section of 
     Sarbanes-Oxley--the onerous section 404 that Adler-Garret 
     targets--exceed $2.3 million per year, more than 25 times the 
     original SEC estimate of $91,000 in annual costs. As a 
     result, there is a dearth of small and midsize companies 
     attracting capital by going public, leading the Wall Street 
     Journal to report that ``even though financial markets have 
     rebounded this year, initial public offerings in the United 
     States are on track to fall below even the levels of the dot-
     com bust of 2001-2003.'' (Wall Street Journal, http://
online.wsj.com/(article/SB1000 
     1424052748703558004574584241362784198.html) When companies 
     can't raise capital by issuing equity in shares to the 
     public, they are more dependent on debt markets. And when 
     both debt and equity markets are effectively closed off, 
     growth opportunities are limited, as are prospects for the 
     growth of new jobs.
       The Adler-Garrett provision does not exempt smaller 
     companies from numerous anti-fraud statutes or indeed from 
     most of Sarbanes-Oxley. It simply says that they need not 
     comply with the requirement of Section 404 (b) that 
     ``internal controls'' over financial statements be subject to 
     full-blown audits. In practice, accountants have interpreted 
     ``internal controls'' under the law to mean everything from 
     the possession of office keys to the number of letters in an 
     employee password, auditing items that have little relevance 
     to accurate statements for shareholders. And these internal 
     control rules were did no good against the mortgage 
     shenanigans of companies like Countrywide Financial, which 
     actually won an award from its internal control compliance in 
     2007 from the Institute of Internal Auditors.
       Ironically, The accounting firms intended to be reined in 
     by Sarbanes-Oxley have made a bundle due to the ballooning 
     audit costs that have resulted, leading some to call the law 
     ``The Accountants Full Employment Act.'' Thus, it should not 
     be surprising that some of the letters you may receive in 
     support of an amendment removing that small company exemption 
     come from accountant associations arguing the self-interests 
     of their members.
       One other important consideration is that major portions of 
     Sarbanes-Oxley may be declared unconstitutional in the next 
     few months by the Supreme Court. Reporting on a 
     constitutional challenge to the law that the Court heard this 
     Monday, the Bloomberg states that ``U.S. Supreme Court 
     justices questioned the constitutionality'' of much of the 
     law. (Bloomberg, http://www.bloomberg.com/apps/news?pid=
20601103&sid=acK3iq 5xklI4#) Yet, with the current exemption 
     for smaller public companies set to expire this spring, these 
     firms now face no choice but to set aside numerous resources 
     now to plan for expensive audits--resources that could be 
     used to make more products and hire more people--even if the 
     law is eventually declared unconstitutional. At the very 
     least, smaller firms should not be subject to the most 
     onerous rules from Sarbanes-Oxley while its constitutionality 
     is in doubt.
       But the floor amendment introduced by Reps. Frank, 
     Kanjorski, Cohen, and Sarbanes would remove the bill's 
     protection for smaller firms from onerous and possibly 
     unconstitutional Sarbanes-Oxley rules. We urge you to stand 
     with the Obama administration and the Democrats and 
     Republicans supporting the Adler-Garret provision by OPPOSING 
     this amendment and any other measure to remove this provision 
     that is so valuable for investors and entrepreneurs from the 
     bill.
       Please do not hesitate to contact me with any questions.
           Sincerely,

                                        John Berlau, Director,

                           Center for Investors and Entrepreneurs,
                                 Competitive Enterprise Institute.

  The Acting CHAIR. The question is on the amendment offered by the 
gentleman from Pennsylvania (Mr. Kanjorski).
  The question was taken; and the Acting Chair announced that the ayes 
appeared to have it.
  Mr. GARRETT of New Jersey. Madam Chairman, I demand a recorded vote.
  The Acting CHAIR. Pursuant to clause 6 of rule XVIII, further 
proceedings on the amendment offered by the gentleman from Pennsylvania 
will be postponed.
  It is now in order to consider amendment No. 13 printed in House 
Report 111-370.


                        Parliamentary Inquiries

  Mr. FRANK of Massachusetts. Parliamentary inquiry, Madam Chairman.
  Is it not in order for the gentleman from California to offer his 
amendment now?
  The Acting CHAIR. It is now in order to consider amendment No. 14 
printed in House Report 111-370.
  Mr. PRICE of Georgia. Madam Chairman, parliamentary inquiry.
  The Acting CHAIR. The gentleman will state his inquiry.
  Mr. PRICE of Georgia. I believe the Chair stated that amendment No. 
13 was in order. Is the majority party skipping number 13?
  The Acting CHAIR. Amendment No. 13 was not offered.
  Mr. FRANK of Massachusetts. If the gentleman would yield, that was 
also in the manager's amendment, so it will not be offered. It's in the 
manager's amendment.
  Mr. PRICE of Georgia. I thank the Chair.

[[Page 31299]]




         Amendment No. 14 Offered by Mr. McCarthy of California

  The Acting CHAIR. It is now in order to consider amendment No. 14 
printed in House Report 111-370.
  Mr. McCARTHY of California. Madam Chairman, I have an amendment at 
the desk.
  The Acting CHAIR. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Amendment No. 14 offered by Mr. McCarthy of California:
       Strike section 6012 (relating to ``Effect of Rule 
     436(G)'').

  The CHAIR. Pursuant to House Resolution 964, the gentleman from 
California (Mr. McCarthy) and a Member opposed each will control 5 
minutes.
  The Chair recognizes the gentleman from California.
  Mr. McCARTHY of California. Madam Chairman, I yield myself as much 
time as I may consume.
  Madam Chairman, this amendment would strike section 6012 from the 
bill, which changes the liability standards for credit rating agencies 
that are Nationally Recognized Statistical Rating Organizations, or 
NRSROs, when they include their ratings on the new securities 
offerings.
  First, I'm not here to defend credit rating agencies. I am supportive 
of other credit rating agency reforms that the committee passed, 
including removing references to credit rating from Federal statutes. I 
think the government and the private sector should use credit ratings 
for what they are--predictive opinions about inherently uncertain 
futures.
  To cut through the technical discussion about section 7 and section 
11 liability related to this issue, let me just make three points. 
Structure dictates behavior. Increased liability may lead to agencies 
being hesitant to even allow their ratings on security offerings, 
thereby providing potential investors with less information.
  This also reminds me of the health care debate and our discussion of 
defensive medicine. Costs go up when doctors must practice defensive 
medicine to protect themselves from reckless lawsuits. In the same way, 
if rating agencies must practice defensive ratings for fear of being 
sued, this would ultimately increase costs and restrict credit. Opening 
NRSROs to unlimited civil liability will not guarantee more accurate 
credit ratings. Litigating an industry to death does not solve any 
problems.
  Additionally, the SEC is currently seeking feedback on whether to 
rescind Rule 436(g), with comments due December 15. I am a critic of 
the SEC, and I do not always agree with their actions. However, I do 
think making this change, which will significantly affect security 
offerings, should be done thoughtfully and with an eye to the impact 
seemingly small changes will have on information investors receive as 
part of new securities offerings.
  The SEC has asked for comments on a variety of issues, including 
whether rescinding 436(g) will disrupt access to capital, make it more 
difficult for smaller companies to obtain a credit rating, or would 
have negative consequences for smaller NRSROs. These are good issues to 
examine at any time. They are vital issues to examine in our current 
economy. We should be very careful about seemingly small changes that 
have huge consequences.
  Madam Chairman, I reserve the balance of my time.
  Mr. FRANK of Massachusetts. Madam Chairman, I claim the time in 
opposition.
  The Acting CHAIR. The gentleman is recognized for 5 minutes.
  Mr. FRANK of Massachusetts. I yield 2 minutes to the gentlewoman from 
Ohio (Ms. Kilroy), a very diligent member of the committee.
  Ms. KILROY. Madam Chairman, NRSROs, the credit rating agencies, have 
played a huge role in the collapse of our markets a year ago. In fact, 
they bragged that they could rate anything, even a cow. And they 
continue to play a critical role in millions of financial transactions 
as pension funds, mutual fund managers, and others rely on the ratings 
from Moody's, Standard & Poor's, and Fitch as they make their 
investment decisions. The Wall Street Reform and Consumer Protection 
Act, H.R. 4173, will provide for greater scrutiny and more 
responsibility from the credit rating agencies protecting these 
investors.

                              {time}  2040

  But the amendment from the gentleman from California would weaken 
credit rating agency reforms. It would continue an exemption under SEC 
rule 436(g) that the agency should not retain.
  At the core of the Securities Act of 1933 is the idea that a company 
should provide investors with basic information about the securities it 
is issuing. It requires the issues to publicly disclose significant 
information about themselves and terms of the securities. Those who 
make material misstatements of fact or omissions in a registration 
statement can be held accountable under section 11 of the Act.
  This provision now covers many experts in the financial world, such 
as accountants, lawyers, investment bankers, directors, officers, and 
executives of the issuers. Rating agencies that are not NRSROs fall 
under it, and there are about a hundred of those. And formerly the 
NRSROs were held liable under previous rulings of the SEC.
  Amazingly enough, though, today, Moody's, Standard and Poor's, and 
other NRSROs are exempt from section 11 liability by SEC rule. It is a 
very uneven playing field. H.R. 4173 in its current form would correct 
that.
  This reform should remain in the bill, and the amendment should be 
rejected. The highest standard of accountability is the central 
recommendation of the July 2009 report.
  The Acting CHAIR. The time of the gentlewoman has expired.
  Mr. FRANK of Massachusetts. I yield the gentlewoman an additional 30 
seconds.
  Ms. KILROY. This is a central recommendation of the July 2009 report 
of the Investors Working Group, an independent task force chaired by 
former SEC Chair Arthur Levitt, who was appointed by President Clinton, 
and co-chaired by President Bush's appointee, William Donaldson. As 
they stated, this change would make rating agencies more diligent about 
the ratings process and ultimately more accountable for its sloppy 
performance.
  Unfortunately, Mr. McCarthy's amendment would remove this much-needed 
accountability for credit rating agencies, and I strongly urge its 
defeat.
  Mr. McCARTHY of California. Madam Chair, may I inquire of the time 
remaining?
  The Acting CHAIRMAN. Both sides have 2\1/2\ minutes remaining.
  Mr. McCARTHY of California. At this time, I'd like to yield 1 minute 
to my friend, the gentleman from New Jersey (Mr. Garrett).
  Mr. GARRETT of New Jersey. I thank the gentleman.
  What the gentleman from California is trying to do is trying to help 
investors and help the markets by providing this amendment. The SEC is 
currently examining this whole issue in studying this, and we should 
basically allow the SEC to continue with its evaluation and then come 
back to address the issue. Because what we're dealing with here is the 
fact that there's an exemption, and eliminating that exemption would be 
punishing not the CRAs, but punishing investors.
  What it will do is create an environment that will lead to more 
volatile and less accurate ratings. Something that none of us should be 
supporting.
  Right now there is an exemption for the NRSROs if they have the 
ratings included in the registration statements filed under the Act. 
This removes that. What would be the end consequence of that if this 
were to go through and this amendment were not to pass?
  Well, you would increase dramatically the time and cost involved with 
raising capital and thus make it more difficult for its issuers to do 
so. Moreover, some SROs may refuse to consent entirely, and what would 
that do? That would mean we would have even less information available 
to investors as they try to evaluate securities in the registration 
statement.
  At the end of the day without this amendment, this underlying bill 
will

[[Page 31300]]

see to it that we have a higher cost of credit, a higher cost to do 
business and less jobs in the country.
  Mr. FRANK of Massachusetts. I yield 1 minute to the gentleman from 
Pennsylvania (Mr. Kanjorski).
  Mr. KANJORSKI. Madam Chairman, I think I heard the gentleman from New 
Jersey on the other side indicate that we should leave this up to the 
Securities and Exchange Commission and let them proceed under normal 
order. That's a unique statement tonight. I don't think I heard that 
argument all night. Suddenly, the Securities and Exchange Commission 
can be relied upon to act promptly. I'm happy to hear the other side is 
willing to assume that.
  What we're trying to do with this amendment is to get uniformity. We 
should not have one standard of lawsuit and another standard not 
allowed. Everyone recognizes, including the Securities and Exchange 
Commission, that this needs reform. They have a role pending. There is 
no question about that. But we can fix this problem, and the great lady 
from Ohio took it upon herself to do so at the committee. And I urge my 
colleagues to support her thoughtful amendment--or the opposition to 
this amendment by supporting the underlying bill and making uniformity 
a call of the day.
  Mr. McCARTHY of California. At this time, I will yield the remaining 
time to my good friend from Texas, Mr. Jeb Hensarling.
  Mr. HENSARLING. I thank the gentleman for yielding the time.
  This, in some respects, may be one of the few areas of agreement on 
both sides of the aisle that the rating agencies played a critical role 
in the economic turmoil that has been foisted upon our economy. We may 
differ on the remedy, though.
  What is needed here is more competition, not more lawsuits. And what 
happens is when you lower the bar for a lawsuit, you raise the bar, 
barriers to entry, and make it more difficult. We know that for all 
intents and purposes that the government created a rating agency 
oligopoly that prevented the market from enjoying more competition, and 
we had all of this AAA-rated paper, and we know what has happened.
  In many respects, Madam Chair, what we have seen now is the Democrats 
have tried to spin their way into more jobs than we have--our Nation's 
first trillion-dollar deficit; they have tried to borrow their way into 
more jobs--we're now borrowing 43 cents on the dollar and sending the 
IOUs to our children and grandchildren.
  The bill that is brought to the floor today creates a permanent 
bailout authority for Wall Street. They have tried to bail out their 
way to more jobs, and this particular amendment says maybe we can sue 
our way into more jobs. That is not the way it is done, Madam Chair. We 
need more competition, not more lawsuits.
  I urge the adoption of the amendment from the gentleman from 
California.
  Mr. FRANK of Massachusetts. Madam Chair, I know the gentleman from 
Texas likes to blame everything bad that happened starting on January 
21; there was no Bush recession; there was no deterioration in the war 
in Afghanistan; there was no TARP under Bush, but he's particularly 
trying to do it now because here's what he's doing: He's trying to 
defend an amendment that would give legal immunity to the rating 
agencies. I cannot think of a more counterintuitive and 
counterproductive thing to do.
  The gentleman from California--I thought I heard him say--we don't 
want them practicing defensive ratings. Yeah, we do, because they have 
been practicing very offensive ratings. Here are the rating agencies 
that everybody agrees have been a major cause of the problems, and what 
do the Republicans want to do? Protect the poor dears from people suing 
them by a standard of gross negligence so that an investor who relies 
on their judgment has no remedy whatsoever.
  Yes, we want the rating agencies to be a lot more careful. We want 
the rating agencies to fear that if they overestimate--here's the 
problem: We have a business model where the rating agencies are paid by 
the people they rate. I wish we could encourage people on the buy side 
to do that. We've certainly encouraged them in any way we can.
  But as long as you have rating agencies paid by the people they 
rate--and the only people who would sue them now are the people who 
they rate. So they can only be sued if people thought they were too 
low. There's nobody who has the right to sue them if they thought they 
were too high--and of course we have done that in this bill.
  But here's what it comes down to. If you want to protect the rating 
agencies from being legally liable for their gross negligence to hurt 
investors, vote for this amendment.
  The Acting CHAIR. The question is on the amendment offered by the 
gentleman from California (Mr. McCarthy).
  The question was taken; and the Acting Chair announced that the noes 
appeared to have it.
  Mr. McCARTHY of California. Madam Chairman, I demand a recorded vote.
  The Acting CHAIR. Pursuant to clause 6 of rule XVIII, further 
proceedings on the amendment offered by the gentleman from California 
will be postponed.

                              {time}  2050

  Mr. FRANK of Massachusetts. Madam Chairman, I move that the Committee 
do now rise.
  The motion was agreed to.
  Accordingly, the Committee rose; and the Speaker pro tempore (Mr. 
Serrano) having assumed the chair, Ms. Edwards of Maryland, Acting 
Chair of the Committee of the Whole House on the state of the Union, 
reported that that Committee, having had under consideration the bill 
(H.R. 4173) 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, had come to no resolution thereon.

                          ____________________