[House Report 115-423]
[From the U.S. Government Publishing Office]


115th Congress    }                                     {      Report
                        HOUSE OF REPRESENTATIVES
 1st Session      }                                     {     115-423

======================================================================



 
           SYSTEMIC RISK DESIGNATION IMPROVEMENT ACT OF 2017

                                _______
                                

 November 28, 2017.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

Mr. Hensarling, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 3312]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 3312) to amend the Dodd-Frank Wall Street Reform 
and Consumer Protection Act to specify when bank holding 
companies may be subject to certain enhanced supervision, and 
for other purposes, having considered the same, report 
favorably thereon with an amendment and recommend that the bill 
as amended do pass.
    The amendment (stated in terms of the page and line numbers 
of the introduced bill) is as follows:
  Page 11, line 3, strike ``1-year'' and insert ``18-month''.

                          Purpose and Summary

    Introduced by Representative Luetkemeyer on October 12, 
2017, H.R. 3312, the ``Systemic Risk Designation Improvement 
Act of 2017,'' amends Title I of the Dodd-Frank Wall Street 
Reform and Consumer Protection Act to remove the $50 billion 
asset threshold used to automatically designate certain 
financial institutions as ``systemically important financial 
institutions'' and instead subjects these financial 
institutions to enhanced regulatory standards based on the 
institutions activities.
    The bill also authorizes the Financial Stability Oversight 
Council (FSOC) to subject a bank holding company to enhanced 
supervision and prudential standards by the Board of Governors 
of the Federal Reserve System (the Federal Reserve), if an 
institution has been identified as global systemically 
important bank (G-SIB) under the indicator-based measurement 
approach established under section 217.402 of title 12, Code of 
Federal Regulations. This measurement is based on a particular 
institution's ``systemic indicator scores,'' that reflects 
size, interconnectedness, cross-jurisdictional activity, 
substitutability, and complexity relative to the other U.S. and 
foreign banking organizations identified by the Basel Committee 
on Banking Supervision and any other banking organization 
included in the Basel Committee's sample for a given year.
    This bill also substitutes G-SIB status in place of the 
current monetary threshold as the determinant for the Federal 
Reserve's authority over bank holding company acquisition 
restrictions, prohibitions on interlocks between management of 
different financial companies, and enhanced supervision and 
prudential standards.
    The changes made by H.R. 3312 take effect after the end of 
an 18 month period following the date of the enactment.

                  Background and Need for Legislation

    Title I of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act (P.L. 111-203) contains two central elements 
purportedly designed to address systemic risk. The first is the 
establishment of the Financial Stability Oversight Council 
(FSOC), which is charged with monitoring systemic risk in the 
U.S. financial sector and coordinating regulatory responses by 
its member agencies. The second element is the automatic 
designation of banks with more than $50 billion in assets as 
``systemically important financial institutions'' and then 
subjects these institutions to enhanced regulatory standards.

FSOC

    Title I, Subtitle A, of the Dodd-Frank Act created the FSOC 
and authorizes the body ``to identify risks to the financial 
stability of the United States that could arise from the 
material financial distress or failure, or ongoing activities, 
of large, interconnected bank holding companies (BHCs) or 
nonbank financial companies, or that could arise outside the 
financial services marketplace; [and] to respond to emerging 
threats to the stability of the United States financial 
system.''\1\ This broad authority also allows the FSOC to 
designate non-bank institutions as systemically important 
financial institutions (SIFIs) and subject to increased 
supervision and regulation by the Federal Reserve Board.
---------------------------------------------------------------------------
    \1\12 U.S.C. 5322.
---------------------------------------------------------------------------
    In making its decision on whether to designate, the FSOC 
may consider several factors, including the firm's leverage, 
its off-balance sheet exposures, its relationship with other 
financial institutions, the firm's size and 
``interconnectedness,'' the firm's reliance on short-term 
funding, and ``any other factors the [FSOC] deems 
appropriate.'' Yet these determinative factors fundamentally 
lacked specificity. While the Dodd-Frank Act mentions many 
factors as being part of the evaluation process, no determinant 
is weighted more heavily, so as to signal or require 
designation, making the process appear highly subjective. In 
addition to the undifferentiated criteria upon which FSOC 
structures its evaluations, FSOC is further authorized to 
consider ``any other risk-related factors the Council deems 
appropriate,'' which broadens that authority. Therefore, the 
current process makes it difficult for companies to assess 
whether they risk SIFI designation and allows for broad changes 
in the direction of regulation when administrations change.

Section 165

    Section 165 of the Dodd-Frank Act requires the Federal 
Reserve Board to apply enhanced prudential standards to bank 
holding companies (BHCs) with total consolidated assets of $50 
billion or more. These standards are designed to ``mitigate 
risks to the financial stability of the United States from the 
material financial distress or failure, or ongoing activates, 
of large, interconnected financial institutions.'' The enhanced 
prudential standards established by the Federal Reserve Board 
under Section 165 (including rules related to capital, 
leverage, liquidity, concentration limits, short-term debt 
limits, enhanced disclosures, risk management, and resolution 
plans) must be more stringent than those standards applicable 
to other bank holding companies.\2\ The standards also increase 
in stringency based on several factors, including the size and 
risk characteristics of a company subject to the rule, and the 
Federal Reserve Board must take into account the difference 
among bank holding companies and nonbank financial companies 
based on the same factors.\3\ In practice, the application of 
enhanced prudential standards to BHCs with assets of $50 
billion or more has created a de facto designation of these 
institutions as ``systemically important financial 
institutions'' (SIFIs).
---------------------------------------------------------------------------
    \2\12 U.S.C. 5365(a)(1)(A).
    \3\See 12 U.S.C. 5365(a)(1)(B). Under section 165(a)(1)(B) of the 
Dodd-Frank Act, the enhanced prudential standards must increase in 
stringency based on the considerations listed in section 165(b)(3).
---------------------------------------------------------------------------
    However, since the passage of the Dodd-Frank Act, the 
discussion has focused on the appropriate measurement of 
systemic importance and the regulatory burden imposed by 
enhanced prudential standards once there has been the 
designation of an institution. Numerous commentators, including 
former Congressman Barney Frank, have expressed concerns 
regarding the arbitrary threshold used by the Dodd-Frank Act to 
designate bank holding companies as systemically important.
    H.R. 3312 repeals the automatic SIFI designation for banks 
with consolidated assets exceeding $50 billion. Before a 
determination is made to require enhanced supervision, the 
legislation requires the regulators to undertake a review of an 
institution's size, interconnectedness, substitutability, 
global cross-jurisdictional activity, and complexity. Through 
this process, regulators will be able to better tailor 
regulations to the risk posed by different kinds of banking 
organizations. As a result, financial institutions will be able 
to allocate more resources to provide credit for small 
businesses and consumers, enhance consumer choice, encourage 
economic growth, expand a banking organization's current 
activities, enter markets or asset classes, and increase 
competition in the marketplace for the delivery of financial 
products and services.
    In a letter of support for H.R. 3312 dated October 10, 
2017, the American Bankers Association wrote:

          Under the Dodd Frank Act (DFA), an institution with 
        $50 billion or more in consolidated assets is 
        automatically deemed to be a ``systemically important 
        financial institution'' or a ``SIFI'', and subject to 
        higher levels of regulation regardless of the real 
        ``risk'' it might pose to the financial system. This 
        arbitrary size threshold--and the significant 
        regulatory requirements that come with it--has 
        unnecessarily ensnared many banks without cause, 
        limiting their abilities to provide needed credit and 
        other services to consumers, businesses and their 
        communities.
          This legislation would replace the DFA's automatic 
        SIFI designation with a process for the Federal Reserve 
        Board (Fed) to make a determination that an individual 
        financial institution, or group of institutions, is 
        systemically important and subject to enhanced 
        supervision and prudential regulation. The Fed would 
        make its determination by analyzing a variety of 
        relevant measures of risk outlined in the bill, rather 
        than being bound by the sole criterion of asset size--
        which taken alone is a poor measure of risk--and allow 
        the regulators to ``tailor'' their supervision and 
        reduce regulatory burdens as appropriate.
          Size-only regulation is a simple shortcut means of 
        supervising financial institutions and it is 
        inappropriate and needlessly burdensome for many 
        financial institutions with noncomplex operations and 
        business models. It increases costs and reduces 
        products and services to bank customers.

    In a letter of support for H.R. 3312 dated October 11, 
2017, the Financial Services RoundTable wrote:

          H.R. 3312 is bipartisan legislation that changes the 
        current designation method for enhanced supervision of 
        banks by replacing the $50 billion asset threshold with 
        business activity standards to determine an 
        institution's systemic risk. Assessing business 
        activities and the associated risks is a better 
        measurement of the need for enhanced supervision versus 
        a single, arbitrary measure. An approach based on 
        business activities is in line with the Federal 
        Reserve's method for evaluating globally systemic 
        institutions.
          The use of a single measure for determining the need 
        for enhanced supervision automatically subjects certain 
        financial institutions to enhanced supervision, even 
        though many of those institutions do not impose 
        systemic risk to the financial system. Such an 
        incomplete and inefficient approach to determine 
        systemic risk imposes undue costs, and inhibits growth 
        opportunities for consumers, businesses and communities 
        that come with access to responsible lending.
          Assessing an institution through various factors as 
        opposed to asset size only will allow for a 
        comprehensive assessment of risk to the overall 
        financial system. H.R. 3312 advances that goal and will 
        lead to more effective tailored regulations. Reviewing 
        the impact of financial regulations on banks of all 
        sizes to ensure they are appropriately calibrated and 
        not unnecessarily holding back lending, will allow 
        financial institutions to better serve consumers and 
        businesses while helping to grow the economy.

                                Hearings

    The Committee on Financial Services' Subcommittee on 
Financial Institutions and Consumer Credit held a hearing 
examining matters relating to H.R. 3312 on September 7, 2017.

                        Committee Consideration

    The Committee on Financial Services met in open session on 
October 11, 2017 and October 12, 2017 and ordered H.R. 3312 to 
be reported favorably to the House as amended by a recorded 
vote of 47 yeas to 12 nays (Record vote no. FC-81), a quorum 
being present. Before the motion to report was offered, the 
Committee adopted an amendment offered by Mr. Foster by voice 
vote.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. The 
sole recorded vote was on a motion by Chairman Hensarling to 
report the bill favorably to the House as amended. The motion 
was agreed to by a recorded vote of 47 yeas to 12 nays (Record 
vote no. FC-81), a quorum being present.


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the findings and recommendations of 
the Committee based on oversight activities under clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
are incorporated in the descriptive portions of this report.

                    Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee states that H.R. 3312 
will reduce excessive regulatory burdens by repealing 
provisions of the Dodd-Frank Act whereby bank holding companies 
with $50 billion or more in assets are automatically subject to 
enhanced prudential supervision by the Federal Reserve Board of 
Governors and providing authority to designate BHCs for 
supervision on a case-by-case basis.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of new budget authority, entitlement 
authority, or tax expenditures or revenues contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Act of 1974.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                 Congressional Budget Office Estimates

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                 Washington, DC, November 13, 2017.
Hon. Jeb Hensarling,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3312, the Systemic 
Risk Designation Improvement Act of 2017.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Kathleen 
Gramp and Sarah Puro (for federal costs), and Nathaniel Frentz 
(for revenues).
            Sincerely,
                                                Keith Hall,
                                                          Director.
    Enclosure.

H.R. 3312--Systemic Risk Designation Improvement Act of 2017

    Summary: H.R. 3312 would amend current law to change the 
process and procedures for determining which bank holding 
companies should be designated as systemically important 
financial institutions (SIFIs). Under current law, all banks 
with consolidated assets exceeding $50 billion are 
automatically designated as SIFIs and are subject to additional 
requirements imposed by the financial regulators. H.R. 3312 
would repeal the automatic designation for most banks and 
assign the responsibility for making such designations to the 
Federal Reserve.
    Based on information from the federal financial regulators, 
CBO estimates that enacting the legislation would increase net 
direct spending by $53 million and increase revenues by $10 
million over the next 10 years, leading to a net increase in 
the deficit of $43 million over the 2018-2027 period. Some of 
that cost would be recovered from financial institutions in 
years after 2027. Pay-as-you-go procedures apply because 
enacting the bill would affect direct spending and revenues.
    CBO estimates that enacting H.R. 3312 would not increase 
net direct spending or on-budget deficits by more than $2.5 
billion in any of the four consecutive 10-year periods 
beginning in 2028.
    H.R. 3312 contains no intergovernmental mandates as defined 
in the Unfunded Mandates Reform Act (UMRA). The bill would 
increase the cost of an existing private-sector mandate on 
entities that pay fees to the Federal Reserve and the Financial 
Stability Oversight Council (FSOC), but CBO estimates that the 
incremental cost of the mandate would be well below the annual 
threshold for private-sector mandates established in UMRA ($156 
million in 2017, adjusted annually for inflation).
    Estimated cost to the Federal Government: The estimated 
budgetary effect of H.R. 3312 is shown in the following table. 
The costs of this legislation fall within budget function 370 
(advancement of commerce).

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       By fiscal year, in millions of dollars--
                                                             -------------------------------------------------------------------------------------------
                                                               2018   2019   2020   2021   2022   2023   2024   2025   2026   2027  2018-2022  2018-2027
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                NET INCREASE OR DECREASE (-) IN THE DEFICIT FROM CHANGES IN DIRECT SPENDING AND REVENUES
 
Administrative Costs to the Federal Reserve, FSOC, and the        1      1      1      1      1     -2      *      *      *      *         5          3
 OFR........................................................
Additional Costs to the FDIC to Resolve Failed Financial          0      0      6     11      8      5      3      2      2      3        25         40
 Institutions\a\............................................
    Total Change in the Deficit.............................      1      1      7     12      9      3      3      2      2      3        30         43
 
Memorandum: Components of the Net Change in the Deficit
 
                                                              INCREASES IN DIRECT SPENDING
 
Estimated Budget Authority..................................      0      0      7     12      9      7      5      4      4      5        28         53
Estimated Outlays...........................................      0      0      7     12      9      7      5      4      4      5        28         53
 
                                                         INCREASES OR DECREASES (-) IN REVENUES
 
Revenues....................................................     -1     -1      *      *      0      4      2      2      2      2        -2         10
--------------------------------------------------------------------------------------------------------------------------------------------------------
Amounts may not sum to totals because of rounding; * = Between -$500,000 and $500,000; FSOC = Financial Stability Oversight Council; OFR = Office of
  Financial Research; FDIC = Federal Deposit Insurance Corporation.
\a\Costs to resolve financial institutions are eventually offset by assessments on federally insured depository institutions and other large financial
  firms.

    Basis of estimate: The budgetary effects of the legislation 
would stem from changes in administrative costs primarily at 
the Federal Reserve and from the small chance that the Federal 
Deposit Insurance Corporation (FDIC) would incur additional 
costs to resolve failed financial institutions. For this 
estimate, CBO assumes that the bill will be enacted during 
fiscal year 2018. Estimated spending is based on historical 
patterns.

Administrative costs to the Federal Reserve, the Financial Stability 
        Oversight Council, and the Office of Financial Research

    Enacting H.R. 3312 would change the framework under which 
financial institutions are designated as SIFIs. Under current 
law, all banks with consolidated assets exceeding $50 billion 
are automatically designated as SIFIs. Eighteen months after 
enactment, H.R. 3312 would repeal that automatic designation 
for most banks--those that are not designated as globally 
significant by the Basel Committee--and assign the 
responsibility for additional designations to the Federal 
Reserve. (The eight banks that are currently designated as 
globally significant would retain that designation.)
    The Federal Reserve Board of Governors spends about $700 
million a year on enhanced prudential regulation and 
supervision of SIFIs.\1\ Based on an analysis of information 
from the Federal Reserve, CBO expects that they would 
temporarily reassign a number of staff members whose 
responsibilities currently include supervision and regulation 
of SIFIs to complete the new rulemakings and evaluations of 
bank holding companies required by the bill. CBO expects that 
the initial evaluations would be made within the first several 
years, after which the total number of staff supervising and 
regulating SIFIs would be the same as under current law. 
However, the cost estimate reflects the probability that the 
Federal Reserve would have to hire additional legal staff to 
evaluate and defend SIFI designations. Administrative costs to 
the Federal Reserve are reflected in the federal budget as a 
reduction in remittances to the Treasury (which are recorded in 
the budget as revenues). The costs of any new legal staff would 
be offset over time by assessments on SIFIs. As a result, CBO 
estimates that administrative costs to the Federal Reserve, net 
of fees, would decrease revenues by $2 million over the 2018-
2027 period. The remainder would be recovered after 2027.
---------------------------------------------------------------------------
    \1\For a definition of enhanced prudential regulations see Enhanced 
Prudential Standards for Bank Holding Companies and Foreign Banking 
Organizations in the Federal Register, March 27, 2014.
---------------------------------------------------------------------------
    H.R. 3312 would require FSOC to consult with the Federal 
Reserve and review any rules the agency develops to designate 
additional bank holding companies as SIFIs. Under the bill, 
FSOC would be required to approve additional designations 
proposed by the Federal Reserve. CBO expects that the Federal 
Reserve also would consult with the Office of Financial 
Research (OFR) on any additional designations. Based on 
information from the agencies, CBO estimates that 
administrative costs for FSOC and the OFR to provide additional 
support to the Federal Reserve and to review any proposed 
designations would increase the deficit by $1 million over the 
2018-2027 period. That amount includes increases in direct 
spending of $4 million and increases in revenues of $3 million 
(net of effects on income and payroll taxes). Under current 
law, expenses of FSOC are considered to be expenses of the OFR, 
which is recorded in the budget as a change in direct spending. 
The OFR is authorized to levy assessments on certain financial 
institutions to offset its operating costs. These assessments 
are recorded in the budget as revenues.

Additional costs to the FDIC to resolve failed financial institutions

    Under current law, firms that are designated as SIFIs are 
subject to enhanced prudential regulation by financial 
regulators. Among other things, those regulations require SIFIs 
to undergo special stress tests, develop resolution plans, and 
maintain certain levels of liquidity and financial capacity to 
absorb losses. Based on an analysis of information from 
national credit rating agencies and academic, industry, and 
regulatory experts, CBO concludes that the added capital and 
transparency that results from enhanced prudential regulation 
improves the safety and soundness of the affected firms. CBO 
expects that the value of that enhanced prudential regulation 
will reduce losses incurred by regulated institutions by about 
$450 million over the 2018-2027 period. On balance, CBO 
estimates that such regulation lowers the FDIC's gross cost to 
resolve insolvent firms (whether through the Orderly 
Liquidation Fund or the Deposit Insurance Fund) because those 
measures should result in shareholders and other creditors 
absorbing a larger share of any losses in the event of 
insolvency.
    CBO expects that enacting H.R. 3312 would primarily affect 
the SIFI designation of banks with consolidated assets of less 
than $250 billion that are not designated as globally 
significant. Those banks account for roughly 25 percent of 
assets held at bank holding companies currently designated as 
SIFIs. Based on the most recent banking profile published on 
October 26, 2017, by the OFR, CBO anticipates that under the 
bill the Federal Reserve Board would designate banks with 
assets of more than $250 billion as SIFIs and would complete 
that designation process by 2020.\2\ Using that OFR profile, 
CBO also expects that the handful of institutions with 
consolidated assets of less than $100 billion would no longer 
be classified as SIFIs. Because of the uncertainty surrounding 
the Federal Reserve Board's designation of banks with 
consolidated assets between $100 billion and $250 billion, CBO 
assumes for this estimate that roughly one-half of the assets 
at those banks (excluding those continuing to be designated as 
globally significant) would no longer be subject to enhanced 
prudential regulation under H.R. 3312.
---------------------------------------------------------------------------
    \2\See www.financialresearch.gov/viewpont-papers/files/OFRvp_17-
04_Systemically-Important-Banks.pdf
---------------------------------------------------------------------------
    Assets at the institutions that CBO estimates would no 
longer be subject to enhanced prudential regulation under H.R. 
3312 account for roughly 10 percent to 15 percent of total 
assets currently subject to such regulation. CBO estimates that 
removing the SIFI designation from some financial institutions 
would increase gross losses to the FDIC by about $50 million. 
CBO expects that about $10 million of losses incurred by the 
FDIC would be recouped over the 2018-2027 period, but that most 
of those costs would be offset after 2027 by income to the FDIC 
from fees paid by insured depository institutions, which are 
recorded in the budget as offsets to direct spending, and by 
fees paid by certain large financial institutions which are 
recorded in the budget as revenues. As a result, CBO estimates 
that additional costs to the FDIC would result in net deficit 
increases of $40 million over the 2018-2027 period.
    Pay-As-You-Go considerations: The Statutory Pay-As-You-Go 
Act of 2010 establishes budget-reporting and enforcement 
procedures for legislation affecting direct spending or 
revenues. The net changes in outlays and revenues that are 
subject to those pay-as-you-go procedures are shown in the 
following table.

        CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 3312, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON FINANCIAL SERVICES ON OCTOBER 12, 2017
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       By fiscal year, in millions of dollars--
                                                             -------------------------------------------------------------------------------------------
                                                               2018   2019   2020   2021   2022   2023   2024   2025   2026   2027  2018-2022  2018-2027
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       NET INCREASE OR DECREASE (-) IN THE DEFICIT
 
Statutory Pay-As-You-Go Impact..............................      1      1      7     12      9      3      3      2      2      3        30         43
Memorandum:
    Changes in Outlays......................................      0      0      7     12      9      7      5      4      4      5        28         53
    Changes in Revenues.....................................     -1     -1      0      0      0      4      2      2      2      2        -2         10
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Increase in long-term direct spending and deficits: CBO 
estimates that enacting the legislation would not increase net 
direct spending or on-budget deficits by more than $2.5 billion 
in any of the four consecutive 10-year periods beginning in 
2028.
    Mandates: H.R. 3312 contains no intergovernmental mandates 
as defined UMRA. CBO expects the Federal Reserve and FSOC would 
increase assessments to offset the costs of implementing the 
additional regulatory activities required by H.R. 3312. Thus, 
the bill would increase the cost of an existing mandate on 
private entities required to pay those assessments. Based on 
information from FSOC and the Federal Reserve, CBO estimates 
that the incremental cost of the assessments would be below $3 
million annually and would be under the annual threshold for 
private-sector mandates established in UMRA ($156 million in 
2017, adjusted annually for inflation).
    Estimate prepared by: Federal costs: Kathleen Gramp and 
Sarah Puro; Federal revenues: Nathaniel Frentz; Mandates: 
Rachel Austin.
    Estimate approved by: H. Samuel Papenfuss, Deputy Assistant 
Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates reform 
Act.
    The Committee has determined that the bill does not contain 
Federal mandates on the private sector. The Committee has 
determined that the bill does not impose a Federal 
intergovernmental mandate on State, local, or tribal 
governments.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of the section 
102(b)(3) of the Congressional Accountability Act.

                         Earmark Identification

    With respect to clause 9 of rule XXI of the Rules of the 
House of Representatives, the Committee has carefully reviewed 
the provisions of the bill and states that the provisions of 
the bill do not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits within the meaning of the 
rule.

                    Duplication of Federal Programs

    In compliance with clause 3(c)(5) of rule XIII of the Rules 
of the House of Representatives, the Committee states that no 
provision of the bill establishes or reauthorizes: (1) a 
program of the Federal Government known to be duplicative of 
another Federal program; (2) a program included in any report 
from the Government Accountability Office to Congress pursuant 
to section 21 of Public Law 111-139; or (3) a program related 
to a program identified in the most recent Catalog of Federal 
Domestic Assistance, published pursuant to the Federal Program 
Information Act (Pub. L. No. 95-220, as amended by Pub. L. No. 
98-169).

                   Disclosure of Directed Rulemaking

    Pursuant to section 3(i) of H. Res. 5, (115th Congress), 
the following statement is made concerning directed 
rulemakings: The Committee estimates that the bill requires no 
directed rulemakings within the meaning of such section.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    This section cites H.R. 3312 as the `Systemic Risk 
Designation Improvement Act of 2017.'

Section 2: Revisions to Council authority

    This section makes certain technical and conforming changes 
to the authority of the FSOC under Sections 112, 115, 116, 121, 
and 155 of the Dodd-Frank Act.

Section 3. Revisions to Board authority

    This section replaces the $50 billion threshold, and 
provides that a bank holding company or category of bank 
holding companies, not identified as global systemically 
important banks (G-SIB), shall be subject to enhanced 
supervision and prudential regulation upon determination by the 
Federal Reserve that the material financial distress, or the 
nature, scope, size, scale, concentration, interconnectedness, 
or mix of the activities of the individual bank holding 
company, could pose a threat to the financial stability of the 
United States. In making a determination the Federal Reserve is 
required to consider an institution's ``systemic indicator 
scores,'' reflecting size, interconnectedness, cross-
jurisdictional activity, substitutability, and complexity 
relative to the other U.S. and foreign banking organizations 
identified by the Basel Committee on Banking Supervision and 
any other banking organization included in the Basel 
Committee's sample for a given year.
    The FSOC must approve, by a vote of no fewer than 2/3 of 
the voting members then serving, including an affirmative vote 
by the Chairperson, the metrics used in establishing any 
regulation developed by the Federal Reserve to designate 
additional bank holding companies.
    An institution that has been identified as a G-SIB under 
the indicator-based measurement approach established under 
section 217.402 of title 12, Code of Federal Regulations is 
automatically subject to enhanced prudential standards.
    This section also makes certain technical and conforming 
changes to the authority of the Federal Reserve Board of 
Governors under Sections 163, 164, and 165 of the Dodd-Frank 
Act.

Section 4. Rule of construction

    This section maintains the Board of Governors of the 
Federal Reserve System's authority to apply enhanced 
supervisory standards to bank holding companies based on 
217.402 of title 12, Code of Federal Regulations.

Section 5. Effective date

    This section effectuates amendments to the bill eighteen 
months following the date of enactment of H.R. 3312.

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, and existing law in which no 
change is proposed is shown in roman):

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, and existing law in which no 
change is proposed is shown in roman):

       DODD-FRANK WALL STREET REFORM AND CONSUMER PROTECTION ACT




           *       *       *       *       *       *       *
TITLE I--FINANCIAL STABILITY

           *       *       *       *       *       *       *


Subtitle A--Financial Stability Oversight Council

           *       *       *       *       *       *       *


SEC. 112. COUNCIL AUTHORITY.

  (a) Purposes and Duties of the Council.--
          (1) In general.--The purposes of the Council are--
                  (A) to identify risks to the financial 
                stability of the United States that could arise 
                from the material financial distress or 
                failure, or ongoing activities, of large, 
                interconnected bank holding companies or 
                nonbank financial companies, or that could 
                arise outside the financial services 
                marketplace;
                  (B) to promote market discipline, by 
                eliminating expectations on the part of 
                shareholders, creditors, and counterparties of 
                such companies that the Government will shield 
                them from losses in the event of failure; and
                  (C) to respond to emerging threats to the 
                stability of the United States financial 
                system.
          (2) Duties.--The Council shall, in accordance with 
        this title--
                  (A) collect information from member agencies, 
                other Federal and State financial regulatory 
                agencies, the Federal Insurance Office and, if 
                necessary to assess risks to the United States 
                financial system, direct the Office of 
                Financial Research to collect information from 
                bank holding companies and nonbank financial 
                companies;
                  (B) provide direction to, and request data 
                and analyses from, the Office of Financial 
                Research to support the work of the Council;
                  (C) monitor the financial services 
                marketplace in order to identify potential 
                threats to the financial stability of the 
                United States;
                  (D) to monitor domestic and international 
                financial regulatory proposals and 
                developments, including insurance and 
                accounting issues, and to advise Congress and 
                make recommendations in such areas that will 
                enhance the integrity, efficiency, 
                competitiveness, and stability of the U.S. 
                financial markets;
                  (E) facilitate information sharing and 
                coordination among the member agencies and 
                other Federal and State agencies regarding 
                domestic financial services policy development, 
                rulemaking, examinations, reporting 
                requirements, and enforcement actions;
                  (F) recommend to the member agencies general 
                supervisory priorities and principles 
                reflecting the outcome of discussions among the 
                member agencies;
                  (G) identify gaps in regulation that could 
                pose risks to the financial stability of the 
                United States;
                  (H) require supervision by the Board of 
                Governors for nonbank financial companies that 
                may pose risks to the financial stability of 
                the United States in the event of their 
                material financial distress or failure, or 
                because of their activities pursuant to section 
                113;
                  (I) make recommendations to the Board of 
                Governors concerning the establishment of 
                heightened prudential standards for risk-based 
                capital, leverage, liquidity, contingent 
                capital, resolution plans and credit exposure 
                reports, concentration limits, enhanced public 
                disclosures, and overall risk management for 
                nonbank financial companies and large, 
                interconnected bank holding companies 
                supervised by the Board of Governors, which 
                have been identified as global systemically 
                important bank holding companies pursuant to 
                section 217.402 of title 12, Code of Federal 
                Regulations, or subjected to a determination 
                under subsection (l) of section 165;
                  (J) identify systemically important financial 
                market utilities and payment, clearing, and 
                settlement activities (as that term is defined 
                in title VIII);
                  (K) make recommendations to primary financial 
                regulatory agencies to apply new or heightened 
                standards and safeguards for financial 
                activities or practices that could create or 
                increase risks of significant liquidity, 
                credit, or other problems spreading among bank 
                holding companies, nonbank financial companies, 
                and United States financial markets;
                  (L) review and, as appropriate, may submit 
                comments to the Commission and any standard-
                setting body with respect to an existing or 
                proposed accounting principle, standard, or 
                procedure;
                  (M) provide a forum for--
                          (i) discussion and analysis of 
                        emerging market developments and 
                        financial regulatory issues; and
                          (ii) resolution of jurisdictional 
                        disputes among the members of the 
                        Council; and
                  (N) annually report to and testify before 
                Congress on--
                          (i) the activities of the Council;
                          (ii) significant financial market and 
                        regulatory developments, including 
                        insurance and accounting regulations 
                        and standards, along with an assessment 
                        of those developments on the stability 
                        of the financial system;
                          (iii) potential emerging threats to 
                        the financial stability of the United 
                        States;
                          (iv) all determinations made under 
                        section 113 or title VIII, and the 
                        basis for such determinations;
                          (v) all recommendations made under 
                        section 119 and the result of such 
                        recommendations; and
                          (vi) recommendations--
                                  (I) to enhance the integrity, 
                                efficiency, competitiveness, 
                                and stability of United States 
                                financial markets;
                                  (II) to promote market 
                                discipline; and
                                  (III) to maintain investor 
                                confidence.
  (b) Statements by Voting Members of the Council.--At the time 
at which 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 
        mitigate systemic risk that would negatively affect the 
        economy, submit a signed statement to Congress 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 Congress 
        stating what actions such member believes need to be 
        taken in order to ensure that all reasonable steps 
        described under paragraph (1) are taken.
  (c) Testimony by the Chairperson.--The Chairperson 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 an 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.
  (d) Authority To Obtain Information.--
          (1) In general.--The Council may receive, and may 
        request the submission of, any data or information from 
        the Office of Financial Research, member agencies, and 
        the Federal Insurance Office, as necessary--
                  (A) to monitor the financial services 
                marketplace to identify potential risks to the 
                financial stability of the United States; or
                  (B) to otherwise carry out any of the 
                provisions of this title.
          (2) Submissions by the office and member agencies.--
        Notwithstanding any other provision of law, the Office 
        of Financial Research, any member agency, and the 
        Federal Insurance Office, are authorized to submit 
        information to the Council.
          (3) Financial data collection.--
                  (A) In general.--The Council, acting through 
                the Office of Financial Research, may require 
                the submission of periodic and other reports 
                from any nonbank financial company or bank 
                holding company for the purpose of assessing 
                the extent to which a financial activity or 
                financial market in which the nonbank financial 
                company or bank holding company participates, 
                or the nonbank financial company or bank 
                holding company itself, poses a threat to the 
                financial stability of the United States.
                  (B) Mitigation of report burden.--Before 
                requiring the submission of reports from any 
                nonbank financial company or bank holding 
                company that is regulated by a member agency or 
                any primary financial regulatory agency, the 
                Council, acting through the Office of Financial 
                Research, shall coordinate with such agencies 
                and shall, whenever possible, rely on 
                information available from the Office of 
                Financial Research or such agencies.
                  (C) Mitigation in case of foreign financial 
                companies.--Before requiring the submission of 
                reports from a company that is a foreign 
                nonbank financial company or foreign-based bank 
                holding company, the Council shall, acting 
                through the Office of Financial Research, to 
                the extent appropriate, consult with the 
                appropriate foreign regulator of such company 
                and, whenever possible, rely on information 
                already being collected by such foreign 
                regulator, with English translation.
          (4) Back-up examination by the board of governors.--
        If the Council is unable to determine whether the 
        financial activities of a U.S. nonbank financial 
        company pose a threat to the financial stability of the 
        United States, based on information or reports obtained 
        under paragraphs (1) and (3), discussions with 
        management, and publicly available information, the 
        Council may request the Board of Governors, and the 
        Board of Governors is authorized, to conduct an 
        examination of the U.S. nonbank financial company for 
        the sole purpose of determining whether the nonbank 
        financial company should be supervised by the Board of 
        Governors for purposes of this title.
          (5) Confidentiality.--
                  (A) In general.--The Council, the Office of 
                Financial Research, and the other member 
                agencies shall maintain the confidentiality of 
                any data, information, and reports submitted 
                under this title.
                  (B) Retention of privilege.--The submission 
                of any nonpublicly available data or 
                information under this subsection and subtitle 
                B shall not constitute a waiver of, or 
                otherwise affect, any privilege arising under 
                Federal or State law (including the rules of 
                any Federal or State court) to which the data 
                or information is otherwise subject.
                  (C) Freedom of information act.--Section 552 
                of title 5, United States Code, including the 
                exceptions thereunder, shall apply to any data 
                or information submitted under this subsection 
                and subtitle B.

           *       *       *       *       *       *       *


SEC. 115. ENHANCED SUPERVISION AND PRUDENTIAL STANDARDS FOR NONBANK 
                    FINANCIAL COMPANIES SUPERVISED BY THE BOARD OF 
                    GOVERNORS AND CERTAIN BANK HOLDING COMPANIES.

  (a) In General.--
          (1) Purpose.--In order to prevent or mitigate risks 
        to the financial stability of the United States that 
        could arise from the material financial distress, 
        failure, or ongoing activities of large, interconnected 
        financial institutions, the Council may make 
        recommendations to the Board of Governors concerning 
        the establishment and refinement of prudential 
        standards and reporting and disclosure requirements 
        applicable to nonbank financial companies supervised by 
        the Board of Governors and [large, interconnected bank 
        holding companies] bank holding companies which have 
        been identified as global systemically important bank 
        holding companies pursuant to section 217.402 of title 
        12, Code of Federal Regulations, or subjected to a 
        determination under subsection (l) of section 165, 
        that--
                  (A) are more stringent than those applicable 
                to other nonbank financial companies and bank 
                holding companies that do not present similar 
                risks to the financial stability of the United 
                States; and
                  (B) increase in stringency, based on the 
                considerations identified in subsection (b)(3).
          (2) Recommended application of required standards.--
        In making recommendations under this section, [the 
        Council may--]
                  [(A) differentiate] the Council may 
                differentiate among companies that are subject 
                to heightened standards on an individual basis 
                or by category, taking into consideration their 
                capital structure, riskiness, complexity, 
                financial activities (including the financial 
                activities of their subsidiaries), size, and 
                any other risk-related factors that the Council 
                deems appropriate[; or].
                  [(B) recommend an asset threshold that is 
                higher than $50,000,000,000 for the application 
                of any standard described in subsections (c) 
                through (g).]
  (b) Development of Prudential Standards.--
          (1) In general.--The recommendations of the Council 
        under subsection (a) may include--
                  (A) risk-based capital requirements;
                  (B) leverage limits;
                  (C) liquidity requirements;
                  (D) resolution plan and credit exposure 
                report requirements;
                  (E) concentration limits;
                  (F) a contingent capital requirement;
                  (G) enhanced public disclosures;
                  (H) short-term debt limits; and
                  (I) overall risk management requirements.
          (2) Prudential standards for foreign financial 
        companies.--In making recommendations concerning the 
        standards set forth in paragraph (1) that would apply 
        to foreign nonbank financial companies supervised by 
        the Board of Governors or foreign-based bank holding 
        companies, the Council shall--
                  (A) give due regard to the principle of 
                national treatment and equality of competitive 
                opportunity; and
                  (B) take into account the extent to which the 
                foreign nonbank financial company or foreign-
                based bank holding company is subject on a 
                consolidated basis to home country standards 
                that are comparable to those applied to 
                financial companies in the United States.
          (3) Considerations.--In making recommendations 
        concerning prudential standards under paragraph (1), 
        the Council shall--
                  (A) take into account differences among 
                nonbank financial companies supervised by the 
                Board of Governors and bank holding companies 
                described in subsection (a), based on--
                          (i) the factors described in 
                        subsections (a) and (b) of section 113;
                          (ii) whether the company owns an 
                        insured depository institution;
                          (iii) nonfinancial activities and 
                        affiliations of the company; and
                          (iv) any other factors that the 
                        Council determines appropriate;
                  (B) to the extent possible, ensure that small 
                changes in the factors listed in subsections 
                (a) and (b) of section 113 would not result in 
                sharp, discontinuous changes in the prudential 
                standards established under section 165; and
                  (C) adapt its recommendations as appropriate 
                in light of any predominant line of business of 
                such company, including assets under management 
                or other activities for which particular 
                standards may not be appropriate.
  (c) Contingent Capital.--
          (1) Study required.--The Council shall conduct a 
        study of the feasibility, benefits, costs, and 
        structure of a contingent capital requirement for 
        nonbank financial companies supervised by the Board of 
        Governors and bank holding companies described in 
        subsection (a), which study shall include--
                  (A) an evaluation of the degree to which such 
                requirement would enhance the safety and 
                soundness of companies subject to the 
                requirement, promote the financial stability of 
                the United States, and reduce risks to United 
                States taxpayers;
                  (B) an evaluation of the characteristics and 
                amounts of contingent capital that should be 
                required;
                  (C) an analysis of potential prudential 
                standards that should be used to determine 
                whether the contingent capital of a company 
                would be converted to equity in times of 
                financial stress;
                  (D) an evaluation of the costs to companies, 
                the effects on the structure and operation of 
                credit and other financial markets, and other 
                economic effects of requiring contingent 
                capital;
                  (E) an evaluation of the effects of such 
                requirement on the international 
                competitiveness of companies subject to the 
                requirement and the prospects for international 
                coordination in establishing such requirement; 
                and
                  (F) recommendations for implementing 
                regulations.
          (2) Report.--The Council shall submit a report to 
        Congress regarding the study required by paragraph (1) 
        not later than 2 years after the date of enactment of 
        this Act.
          (3) Recommendations.--
                  (A) In general.--Subsequent to submitting a 
                report to Congress under paragraph (2), the 
                Council may make recommendations to the Board 
                of Governors to require any nonbank financial 
                company supervised by the Board of Governors 
                and any bank holding company described in 
                subsection (a) to maintain a minimum amount of 
                contingent capital that is convertible to 
                equity in times of financial stress.
                  (B) Factors to consider.--In making 
                recommendations under this subsection, the 
                Council shall consider--
                          (i) an appropriate transition period 
                        for implementation of a conversion 
                        under this subsection;
                          (ii) the factors described in 
                        subsection (b)(3);
                          (iii) capital requirements applicable 
                        to a nonbank financial company 
                        supervised by the Board of Governors or 
                        a bank holding company described in 
                        subsection (a), and subsidiaries 
                        thereof;
                          (iv) results of the study required by 
                        paragraph (1); and
                          (v) any other factor that the Council 
                        deems appropriate.
  (d) Resolution Plan and Credit Exposure Reports.--
          (1) Resolution plan.--The Council may make 
        recommendations to the Board of Governors concerning 
        the requirement that each nonbank financial company 
        supervised by the Board of Governors and each bank 
        holding company described in subsection (a) report 
        periodically to the Council, the Board of Governors, 
        and the Corporation, the plan of such company for rapid 
        and orderly resolution in the event of material 
        financial distress or failure.
          (2) Credit exposure report.--The Council may make 
        recommendations to the Board of Governors concerning 
        the advisability of requiring each nonbank financial 
        company supervised by the Board of Governors and bank 
        holding company described in subsection (a) to report 
        periodically to the Council, the Board of Governors, 
        and the Corporation on--
                  (A) the nature and extent to which the 
                company has credit exposure to other 
                significant nonbank financial companies and 
                significant bank holding companies; and
                  (B) the nature and extent to which other such 
                significant nonbank financial companies and 
                significant bank holding companies have credit 
                exposure to that company.
  (e) Concentration Limits.--In order to limit the risks that 
the failure of any individual company could pose to nonbank 
financial companies supervised by the Board of Governors or 
bank holding companies described in subsection (a), the Council 
may make recommendations to the Board of Governors to prescribe 
standards to limit such risks, as set forth in section 165.
  (f) Enhanced Public Disclosures.--The Council may make 
recommendations to the Board of Governors to require periodic 
public disclosures by bank holding companies described in 
subsection (a) and by nonbank financial companies supervised by 
the Board of Governors, in order to support market evaluation 
of the risk profile, capital adequacy, and risk management 
capabilities thereof.
  (g) Short-term Debt Limits.--The Council may make 
recommendations to the Board of Governors to require short-term 
debt limits to mitigate the risks that an over-accumulation of 
such debt could pose to bank holding companies described in 
subsection (a), nonbank financial companies supervised by the 
Board of Governors, or the financial system.

SEC. 116. REPORTS.

  (a) In General.--Subject to subsection (b), the Council, 
acting through the Office of Financial Research, may require a 
bank holding company [with total consolidated assets of 
$50,000,000,000 or greater] which has been identified as a 
global systemically important bank holding company pursuant to 
section 217.402 of title 12, Code of Federal Regulations, or 
subjected to a determination under subsection (l) of section 
165 or a nonbank financial company supervised by the Board of 
Governors, and any subsidiary thereof, to submit certified 
reports to keep the Council informed as to--
          (1) the financial condition of the company;
          (2) systems for monitoring and controlling financial, 
        operating, and other risks;
          (3) transactions with any subsidiary that is a 
        depository institution; and
          (4) the extent to which the activities and operations 
        of the company and any subsidiary thereof, could, under 
        adverse circumstances, have the potential to disrupt 
        financial markets or affect the overall financial 
        stability of the United States.
  (b) Use of Existing Reports.--
          (1) In general.--For purposes of compliance with 
        subsection (a), the Council, acting through the Office 
        of Financial Research, shall, to the fullest extent 
        possible, use--
                  (A) reports that a bank holding company, 
                nonbank financial company supervised by the 
                Board of Governors, or any functionally 
                regulated subsidiary of such company has been 
                required to provide to other Federal or State 
                regulatory agencies or to a relevant foreign 
                supervisory authority;
                  (B) information that is otherwise required to 
                be reported publicly; and
                  (C) externally audited financial statements.
          (2) Availability.--Each bank holding company 
        described in subsection (a) and nonbank financial 
        company supervised by the Board of Governors, and any 
        subsidiary thereof, shall provide to the Council, at 
        the request of the Council, copies of all reports 
        referred to in paragraph (1).
          (3) Confidentiality.--The Council shall maintain the 
        confidentiality of the reports obtained under 
        subsection (a) and paragraph (1)(A) of this subsection.

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SEC. 121. MITIGATION OF RISKS TO FINANCIAL STABILITY.

  (a) Mitigatory Actions.--If the Board of Governors determines 
that a bank holding company [with total consolidated assets of 
$50,000,000,000 or more] which has been identified as a global 
systemically important bank holding company pursuant to section 
217.402 of title 12, Code of Federal Regulations, or subjected 
to a determination under subsection (l) of section 165, or a 
nonbank financial company supervised by the Board of Governors, 
poses a grave threat to the financial stability of the United 
States, the Board of Governors, upon an affirmative vote of not 
fewer than \2/3\ of the voting members of the Council then 
serving, shall--
          (1) limit the ability of the company to merge with, 
        acquire, consolidate with, or otherwise become 
        affiliated with another company;
          (2) restrict the ability of the company to offer a 
        financial product or products;
          (3) require the company to terminate one or more 
        activities;
          (4) impose conditions on the manner in which the 
        company conducts 1 or more activities; or
          (5) if the Board of Governors determines that the 
        actions described in paragraphs (1) through (4) are 
        inadequate to mitigate a threat to the financial 
        stability of the United States in its recommendation, 
        require the company to sell or otherwise transfer 
        assets or off-balance-sheet items to unaffiliated 
        entities.
  (b) Notice and Hearing.--
          (1) In general.--The Board of Governors, in 
        consultation with the Council, shall provide to a 
        company described in subsection (a) written notice that 
        such company is being considered for mitigatory action 
        pursuant to this section, including an explanation of 
        the basis for, and description of, the proposed 
        mitigatory action.
          (2) Hearing.--Not later than 30 days after the date 
        of receipt of notice under paragraph (1), the company 
        may request, in writing, an opportunity for a written 
        or oral hearing before the Board of Governors to 
        contest the proposed mitigatory action. Upon receipt of 
        a timely request, the Board of Governors shall fix a 
        time (not later than 30 days after the date of receipt 
        of the request) and place at which such company may 
        appear, personally or through counsel, to submit 
        written materials (or, at the discretion of the Board 
        of Governors, in consultation with the Council, oral 
        testimony and oral argument).
          (3) Decision.--Not later than 60 days after the date 
        of a hearing under paragraph (2), or not later than 60 
        days after the provision of a notice under paragraph 
        (1) if no hearing was held, the Board of Governors 
        shall notify the company of the final decision of the 
        Board of Governors, including the results of the vote 
        of the Council, as described in subsection (a).
  (c) Factors for Consideration.--The Board of Governors and 
the Council shall take into consideration the factors set forth 
in subsection (a) or (b) of section 113, as applicable, in 
making any determination under subsection (a).
  (d) Application to Foreign Financial Companies.--The Board of 
Governors may prescribe regulations regarding the application 
of this section to foreign nonbank financial companies 
supervised by the Board of Governors and foreign-based bank 
holding companies--
          (1) giving due regard to the principle of national 
        treatment and equality of competitive opportunity; and
          (2) taking into account the extent to which the 
        foreign nonbank financial company or foreign-based bank 
        holding company is subject on a consolidated basis to 
        home country standards that are comparable to those 
        applied to financial companies in the United States.

           *       *       *       *       *       *       *


Subtitle B--Office of Financial Research

           *       *       *       *       *       *       *


SEC. 155. FUNDING.

  (a) Financial Research Fund.--
          (1) Fund established.--There is established in the 
        Treasury of the United States a separate fund to be 
        known as the ``Financial Research Fund''.
          (2) Fund receipts.--All amounts provided to the 
        Office under subsection (c), and all assessments that 
        the Office receives under subsection (d) shall be 
        deposited into the Financial Research Fund.
          (3) Investments authorized.--
                  (A) Amounts in fund may be invested.--The 
                Director may request the Secretary to invest 
                the portion of the Financial Research Fund that 
                is not, in the judgment of the Director, 
                required to meet the needs of the Office.
                  (B) Eligible investments.--Investments shall 
                be made by the Secretary in obligations of the 
                United States or obligations that are 
                guaranteed as to principal and interest by the 
                United States, with maturities suitable to the 
                needs of the Financial Research Fund, as 
                determined by the Director.
          (4) Interest and proceeds credited.--The interest on, 
        and the proceeds from the sale or redemption of, any 
        obligations held in the Financial Research Fund shall 
        be credited to and form a part of the Financial 
        Research Fund.
  (b) Use of Funds.--
          (1) In general.--Funds obtained by, transferred to, 
        or credited to the Financial Research Fund shall be 
        immediately available to the Office, and shall remain 
        available until expended, to pay the expenses of the 
        Office in carrying out the duties and responsibilities 
        of the Office.
          (2) Fees, assessments, and other funds not government 
        funds.--Funds obtained by, transferred to, or credited 
        to the Financial Research Fund shall not be construed 
        to be Government funds or appropriated moneys.
          (3) Amounts not subject to apportionment.--
        Notwithstanding any other provision of law, amounts in 
        the Financial Research Fund shall not be subject to 
        apportionment for purposes of chapter 15 of title 31, 
        United States Code, or under any other authority, or 
        for any other purpose.
  (c) Interim Funding.--During the 2-year period following the 
date of enactment of this Act, the Board of Governors shall 
provide to the Office an amount sufficient to cover the 
expenses of the Office.
  (d) Permanent Self-funding.--Beginning 2 years after the date 
of enactment of this Act, the Secretary shall establish, by 
regulation, and with the approval of the Council, an assessment 
schedule, including the assessment base and rates, applicable 
to bank holding companies [with total consolidated assets of 
50,000,000,000 or greater] which have been identified as global 
systemically important bank holding companies pursuant to 
section 217.402 of title 12, Code of Federal Regulations, or 
subjected to a determination under subsection (l) of section 
165 and nonbank financial companies supervised by the Board of 
Governors, that takes into account differences among such 
companies, based on the considerations for establishing the 
prudential standards under section 115, to collect assessments 
equal to the total expenses of the Office.

           *       *       *       *       *       *       *


Subtitle C--Additional Board of Governors Authority for Certain Nonbank 
Financial Companies and Bank Holding Companies

           *       *       *       *       *       *       *


SEC. 163. ACQUISITIONS.

  (a) Acquisitions of Banks; Treatment as a Bank Holding 
Company.--For purposes of section 3 of the Bank Holding Company 
Act of 1956 (12 U.S.C. 1842), a nonbank financial company 
supervised by the Board of Governors shall be deemed to be, and 
shall be treated as, a bank holding company.
  (b) Acquisition of Nonbank Companies.--
          (1) Prior notice for large acquisitions.--
        Notwithstanding section 4(k)(6)(B) of the Bank Holding 
        Company Act of 1956 (12 U.S.C. 1843(k)(6)(B)), a bank 
        holding company [with total consolidated assets equal 
        to or greater than $50,000,000,000] which has been 
        identified as a global systemically important bank 
        holding company pursuant to section 217.402 of title 
        12, Code of Federal Regulations, or subjected to a 
        determination under subsection (l) of section 165 or a 
        nonbank financial company supervised by the Board of 
        Governors shall not acquire direct or indirect 
        ownership or control of any voting shares of any 
        company (other than an insured depository institution) 
        that is engaged in activities described in section 4(k) 
        of the Bank Holding Company Act of 1956 having total 
        consolidated assets of $10,000,000,000 or more, without 
        providing written notice to the Board of Governors in 
        advance of the transaction.
          (2) Exemptions.--The prior notice requirement in 
        paragraph (1) shall not apply with regard to the 
        acquisition of shares that would qualify for the 
        exemptions in section 4(c) or section 4(k)(4)(E) of the 
        Bank Holding Company Act of 1956 (12 U.S.C. 1843(c) and 
        (k)(4)(E)).
          (3) Notice procedures.--The notice procedures set 
        forth in section 4(j)(1) of the Bank Holding Company 
        Act of 1956 (12 U.S.C. 1843(j)(1)), without regard to 
        section 4(j)(3) of that Act, shall apply to an 
        acquisition of any company (other than an insured 
        depository institution) by a bank holding company [with 
        total consolidated assets equal to or greater than 
        $50,000,000,000] which has been identified as a global 
        systemically important bank holding company pursuant to 
        section 217.402 of title 12, Code of Federal 
        Regulations, or subjected to a determination under 
        subsection (l) of section 165 or a nonbank financial 
        company supervised by the Board of Governors, as 
        described in paragraph (1), including any such company 
        engaged in activities described in section 4(k) of that 
        Act.
          (4) Standards for review.--In addition to the 
        standards provided in section 4(j)(2) of the Bank 
        Holding Company Act of 1956 (12 U.S.C. 1843(j)(2)), the 
        Board of Governors shall consider the extent to which 
        the proposed acquisition would result in greater or 
        more concentrated risks to global or United States 
        financial stability or the United States economy.
          (5) Hart-Scott-Rodino filing requirement.--Solely for 
        purposes of section 7A(c)(8) of the Clayton Act (15 
        U.S.C. 18a(c)(8)), the transactions subject to the 
        requirements of paragraph (1) shall be treated as if 
        Board of Governors approval is not required.

SEC. 164. PROHIBITION AGAINST MANAGEMENT INTERLOCKS BETWEEN CERTAIN 
                    FINANCIAL COMPANIES.

  A nonbank financial company supervised by the Board of 
Governors shall be treated as a bank holding company for 
purposes of the Depository Institutions Management Interlocks 
Act (12 U.S.C. 3201 et seq.), except that the Board of 
Governors shall not exercise the authority provided in section 
7 of that Act (12 U.S.C. 3207) to permit service by a 
management official of a nonbank financial company supervised 
by the Board of Governors as a management official of any bank 
holding company [with total consolidated assets equal to or 
greater than $50,000,000,000] which has been identified as a 
global systemically important bank holding company pursuant to 
section 217.402 of title 12, Code of Federal Regulations, or 
subjected to a determination under subsection (l) of section 
165, or other nonaffiliated nonbank financial company 
supervised by the Board of Governors (other than to provide a 
temporary exemption for interlocks resulting from a merger, 
acquisition, or consolidation).

SEC. 165. ENHANCED SUPERVISION AND PRUDENTIAL STANDARDS FOR NONBANK 
                    FINANCIAL COMPANIES SUPERVISED BY THE BOARD OF 
                    GOVERNORS AND CERTAIN BANK HOLDING COMPANIES.

  (a) In General.--
          (1) Purpose.--In order to prevent or mitigate risks 
        to the financial stability of the United States that 
        could arise from the material financial distress or 
        failure, or ongoing activities, of large, 
        interconnected financial institutions, the Board of 
        Governors shall, on its own or pursuant to 
        recommendations by the Council under section 115, 
        establish prudential standards for nonbank financial 
        companies supervised by the Board of Governors and bank 
        holding companies [with total consolidated assets equal 
        to or greater than $50,000,000,000] which have been 
        identified as global systemically important bank 
        holding companies pursuant to section 217.402 of title 
        12, Code of Federal Regulations, or subjected to a 
        determination under subsection (l) that--
                  (A) are more stringent than the standards and 
                requirements applicable to nonbank financial 
                companies and bank holding companies that do 
                not present similar risks to the financial 
                stability of the United States; and
                  (B) increase in stringency, based on the 
                considerations identified in subsection (b)(3).
          (2) Tailored application.--
                  [(A) In general.--] In prescribing more 
                stringent prudential standards under this 
                section, the Board of Governors [may] shall, on 
                its own or pursuant to a recommendation by the 
                Council in accordance with section 115, 
                differentiate among companies on an individual 
                basis or by category, taking into consideration 
                their capital structure, riskiness, complexity, 
                financial activities (including the financial 
                activities of their subsidiaries), size, and 
                any other risk-related factors that the Board 
                of Governors deems appropriate.
                  [(B) Adjustment of threshold for application 
                of certain standards.--The Board of Governors 
                may, pursuant to a recommendation by the 
                Council in accordance with section 115, 
                establish an asset threshold above 
                $50,000,000,000 for the application of any 
                standard established under subsections (c) 
                through (g).]
  (b) Development of Prudential Standards.--
          (1) In general.--
                  (A) Required standards.--The Board of 
                Governors shall establish prudential standards 
                for nonbank financial companies supervised by 
                the Board of Governors and bank holding 
                companies described in subsection (a), that 
                shall include--
                          (i) risk-based capital requirements 
                        and leverage limits, unless the Board 
                        of Governors, in consultation with the 
                        Council, determines that such 
                        requirements are not appropriate for a 
                        company subject to more stringent 
                        prudential standards because of the 
                        activities of such company (such as 
                        investment company activities or assets 
                        under management) or structure, in 
                        which case, the Board of Governors 
                        shall apply other standards that result 
                        in similarly stringent risk controls;
                          (ii) liquidity requirements;
                          (iii) overall risk management 
                        requirements;
                          (iv) resolution plan and credit 
                        exposure report requirements; and
                          (v) concentration limits.
                  (B) Additional standards authorized.--The 
                Board of Governors may establish additional 
                prudential standards for nonbank financial 
                companies supervised by the Board of Governors 
                and bank holding companies described in 
                subsection (a), that include--
                          (i) a contingent capital requirement;
                          (ii) enhanced public disclosures;
                          (iii) short-term debt limits; and
                          (iv) such other prudential standards 
                        as the Board or Governors, on its own 
                        or pursuant to a recommendation made by 
                        the Council in accordance with section 
                        115, determines are appropriate.
          (2) Standards for foreign financial companies.--In 
        applying the standards set forth in paragraph (1) to 
        any foreign nonbank financial company supervised by the 
        Board of Governors or foreign-based bank holding 
        company, the Board of Governors shall--
                  (A) give due regard to the principle of 
                national treatment and equality of competitive 
                opportunity; and
                  (B) take into account the extent to which the 
                foreign financial company is subject on a 
                consolidated basis to home country standards 
                that are comparable to those applied to 
                financial companies in the United States.
          (3) Considerations.--In prescribing prudential 
        standards under paragraph (1), the Board of Governors 
        shall--
                  (A) take into account differences among 
                nonbank financial companies supervised by the 
                Board of Governors and bank holding companies 
                described in subsection (a), based on--
                          (i) the factors described in 
                        subsections (a) and (b) of section 113;
                          (ii) whether the company owns an 
                        insured depository institution;
                          (iii) nonfinancial activities and 
                        affiliations of the company; and
                          (iv) any other risk-related factors 
                        that the Board of Governors determines 
                        appropriate;
                  (B) to the extent possible, ensure that small 
                changes in the factors listed in subsections 
                (a) and (b) of section 113 would not result in 
                sharp, discontinuous changes in the prudential 
                standards established under paragraph (1) of 
                this subsection;
                  (C) take into account any recommendations of 
                the Council under section 115; and
                  (D) adapt the required standards as 
                appropriate in light of any predominant line of 
                business of such company, including assets 
                under management or other activities for which 
                particular standards may not be appropriate.
          (4) Consultation.--Before imposing prudential 
        standards or any other requirements pursuant to this 
        section, including notices of deficiencies in 
        resolution plans and more stringent requirements or 
        divestiture orders resulting from such notices, that 
        are likely to have a significant impact on a 
        functionally regulated subsidiary or depository 
        institution subsidiary of a nonbank financial company 
        supervised by the Board of Governors or a bank holding 
        company described in subsection (a), the Board of 
        Governors shall consult with each Council member that 
        primarily supervises any such subsidiary with respect 
        to any such standard or requirement.
          (5) Report.--The Board of Governors shall submit an 
        annual report to Congress regarding the implementation 
        of the prudential standards required pursuant to 
        paragraph (1), including the use of such standards to 
        mitigate risks to the financial stability of the United 
        States.
  (c) Contingent Capital.--
          (1) In general.--Subsequent to submission by the 
        Council of a report to Congress under section 115(c), 
        the Board of Governors may issue regulations that 
        require each nonbank financial company supervised by 
        the Board of Governors and bank holding companies 
        described in subsection (a) to maintain a minimum 
        amount of contingent capital that is convertible to 
        equity in times of financial stress.
          (2) Factors to consider.--In issuing regulations 
        under this subsection, the Board of Governors shall 
        consider--
                  (A) the results of the study undertaken by 
                the Council, and any recommendations of the 
                Council, under section 115(c);
                  (B) an appropriate transition period for 
                implementation of contingent capital under this 
                subsection;
                  (C) the factors described in subsection 
                (b)(3)(A);
                  (D) capital requirements applicable to the 
                nonbank financial company supervised by the 
                Board of Governors or a bank holding company 
                described in subsection (a), and subsidiaries 
                thereof; and
                  (E) any other factor that the Board of 
                Governors deems appropriate.
  (d) Resolution Plan and Credit Exposure Reports.--
          (1) Resolution plan.--The Board of Governors shall 
        require each nonbank financial company supervised by 
        the Board of Governors and bank holding companies 
        described in subsection (a) to report periodically to 
        the Board of Governors, the Council, and the 
        Corporation the plan of such company for rapid and 
        orderly resolution in the event of material financial 
        distress or failure, which shall include--
                  (A) information regarding the manner and 
                extent to which any insured depository 
                institution affiliated with the company is 
                adequately protected from risks arising from 
                the activities of any nonbank subsidiaries of 
                the company;
                  (B) full descriptions of the ownership 
                structure, assets, liabilities, and contractual 
                obligations of the company;
                  (C) identification of the cross-guarantees 
                tied to different securities, identification of 
                major counterparties, and a process for 
                determining to whom the collateral of the 
                company is pledged; and
                  (D) any other information that the Board of 
                Governors and the Corporation jointly require 
                by rule or order.
          (2) Credit exposure report.--The Board of Governors 
        shall require each nonbank financial company supervised 
        by the Board of Governors and bank holding companies 
        described in subsection (a) to report periodically to 
        the Board of Governors, the Council, and the 
        Corporation on--
                  (A) the nature and extent to which the 
                company has credit exposure to other 
                significant nonbank financial companies and 
                significant bank holding companies; and
                  (B) the nature and extent to which other 
                significant nonbank financial companies and 
                significant bank holding companies have credit 
                exposure to that company.
          (3) Review.--The Board of Governors and the 
        Corporation shall review the information provided in 
        accordance with this subsection by each nonbank 
        financial company supervised by the Board of Governors 
        and bank holding company described in subsection (a).
          (4) Notice of deficiencies.--If the Board of 
        Governors and the Corporation jointly determine, based 
        on their review under paragraph (3), that the 
        resolution plan of a nonbank financial company 
        supervised by the Board of Governors or a bank holding 
        company described in subsection (a) is not credible or 
        would not facilitate an orderly resolution of the 
        company under title 11, United States Code--
                  (A) the Board of Governors and the 
                Corporation shall notify the company of the 
                deficiencies in the resolution plan; and
                  (B) the company shall resubmit the resolution 
                plan within a timeframe determined by the Board 
                of Governors and the Corporation, with 
                revisions demonstrating that the plan is 
                credible and would result in an orderly 
                resolution under title 11, United States Code, 
                including any proposed changes in business 
                operations and corporate structure to 
                facilitate implementation of the plan.
          (5) Failure to resubmit credible plan.--
                  (A) In general.--If a nonbank financial 
                company supervised by the Board of Governors or 
                a bank holding company described in subsection 
                (a) fails to timely resubmit the resolution 
                plan as required under paragraph (4), with such 
                revisions as are required under subparagraph 
                (B), the Board of Governors and the Corporation 
                may jointly impose more stringent capital, 
                leverage, or liquidity requirements, or 
                restrictions on the growth, activities, or 
                operations of the company, or any subsidiary 
                thereof, until such time as the company 
                resubmits a plan that remedies the 
                deficiencies.
                  (B) Divestiture.--The Board of Governors and 
                the Corporation, in consultation with the 
                Council, may jointly direct a nonbank financial 
                company supervised by the Board of Governors or 
                a bank holding company described in subsection 
                (a), by order, to divest certain assets or 
                operations identified by the Board of Governors 
                and the Corporation, to facilitate an orderly 
                resolution of such company under title 11, 
                United States Code, in the event of the failure 
                of such company, in any case in which--
                          (i) the Board of Governors and the 
                        Corporation have jointly imposed more 
                        stringent requirements on the company 
                        pursuant to subparagraph (A); and
                          (ii) the company has failed, within 
                        the 2-year period beginning on the date 
                        of the imposition of such requirements 
                        under subparagraph (A), to resubmit the 
                        resolution plan with such revisions as 
                        were required under paragraph (4)(B).
          (6) No limiting effect.--A resolution plan submitted 
        in accordance with this subsection shall not be binding 
        on a bankruptcy court, a receiver appointed under title 
        II, or any other authority that is authorized or 
        required to resolve the nonbank financial company 
        supervised by the Board, any bank holding company, or 
        any subsidiary or affiliate of the foregoing.
          (7) No private right of action.--No private right of 
        action may be based on any resolution plan submitted in 
        accordance with this subsection.
          (8) Rules.--Not later than 18 months after the date 
        of enactment of this Act, the Board of Governors and 
        the Corporation shall jointly issue final rules 
        implementing this subsection.
  (e) Concentration Limits.--
          (1) Standards.--In order to limit the risks that the 
        failure of any individual company could pose to a 
        nonbank financial company supervised by the Board of 
        Governors or a bank holding company described in 
        subsection (a), the Board of Governors, by regulation, 
        shall prescribe standards that limit such risks.
          (2) Limitation on credit exposure.--The regulations 
        prescribed by the Board of Governors under paragraph 
        (1) shall prohibit each nonbank financial company 
        supervised by the Board of Governors and bank holding 
        company described in subsection (a) from having credit 
        exposure to any unaffiliated company that exceeds 25 
        percent of the capital stock and surplus (or such lower 
        amount as the Board of Governors may determine by 
        regulation to be necessary to mitigate risks to the 
        financial stability of the United States) of the 
        company.
          (3) Credit exposure.--For purposes of paragraph (2), 
        ``credit exposure'' to a company means--
                  (A) all extensions of credit to the company, 
                including loans, deposits, and lines of credit;
                  (B) all repurchase agreements and reverse 
                repurchase agreements with the company, and all 
                securities borrowing and lending transactions 
                with the company, to the extent that such 
                transactions create credit exposure for the 
                nonbank financial company supervised by the 
                Board of Governors or a bank holding company 
                described in subsection (a);
                  (C) all guarantees, acceptances, or letters 
                of credit (including endorsement or standby 
                letters of credit) issued on behalf of the 
                company;
                  (D) all purchases of or investment in 
                securities issued by the company;
                  (E) counterparty credit exposure to the 
                company in connection with a derivative 
                transaction between the nonbank financial 
                company supervised by the Board of Governors or 
                a bank holding company described in subsection 
                (a) and the company; and
                  (F) any other similar transactions that the 
                Board of Governors, by regulation, determines 
                to be a credit exposure for purposes of this 
                section.
          (4) Attribution rule.--For purposes of this 
        subsection, any transaction by a nonbank financial 
        company supervised by the Board of Governors or a bank 
        holding company described in subsection (a) with any 
        person is a transaction with a company, to the extent 
        that the proceeds of the transaction are used for the 
        benefit of, or transferred to, that company.
          (5) Rulemaking.--The Board of Governors may issue 
        such regulations and orders, including definitions 
        consistent with this section, as may be necessary to 
        administer and carry out this subsection.
          (6) Exemptions.--This subsection shall not apply to 
        any Federal home loan bank. The Board of Governors may, 
        by regulation or order, exempt transactions, in whole 
        or in part, from the definition of the term ``credit 
        exposure'' for purposes of this subsection, if the 
        Board of Governors finds that the exemption is in the 
        public interest and is consistent with the purpose of 
        this subsection.
          (7) Transition period.--
                  (A) In general.--This subsection and any 
                regulations and orders of the Board of 
                Governors under this subsection shall not be 
                effective until 3 years after the date of 
                enactment of this Act.
                  (B) Extension authorized.--The Board of 
                Governors may extend the period specified in 
                subparagraph (A) for not longer than an 
                additional 2 years.
  (f) Enhanced Public Disclosures.--The Board of Governors may 
prescribe, by regulation, periodic public disclosures by 
nonbank financial companies supervised by the Board of 
Governors and bank holding companies described in subsection 
(a) in order to support market evaluation of the risk profile, 
capital adequacy, and risk management capabilities thereof.
  (g) Short-term Debt Limits.--
          (1) In general.--In order to mitigate the risks that 
        an over-accumulation of short-term debt could pose to 
        financial companies and to the stability of the United 
        States financial system, the Board of Governors may, by 
        regulation, prescribe a limit on the amount of short-
        term debt, including off-balance sheet exposures, that 
        may be accumulated by any bank holding company 
        described in subsection (a) and any nonbank financial 
        company supervised by the Board of Governors.
          (2) Basis of limit.--Any limit prescribed under 
        paragraph (1) shall be based on the short-term debt of 
        the company described in paragraph (1) as a percentage 
        of capital stock and surplus of the company or on such 
        other measure as the Board of Governors 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 of 
        Governors 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 of 
        Governors 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 of Governors may, 
        if it determines such action is necessary to ensure 
        appropriate heightened prudential supervision, with 
        respect to a company described in paragraph (1) that 
        does not control an insured depository institution, 
        issue to such company an exemption from or adjustment 
        to the limit prescribed under paragraph (1).
  (h) Risk Committee.--
          (1) Nonbank financial companies supervised by the 
        board of governors.--The Board of Governors shall 
        require each nonbank financial company supervised by 
        the Board of Governors that is a publicly traded 
        company to establish a risk committee, as set forth in 
        paragraph (3), not later than 1 year after the date of 
        receipt of a notice of final determination under 
        section 113(e)(3) with respect to such nonbank 
        financial company supervised by the Board of Governors.
          (2) Certain bank holding companies.--
                  (A) Mandatory regulations.--The Board of 
                Governors shall issue regulations requiring 
                each bank holding company that is a publicly 
                traded company and that has total consolidated 
                assets of not less than $10,000,000,000 to 
                establish a risk committee, as set forth in 
                paragraph (3).
                  (B) Permissive regulations.--The Board of 
                Governors may require each bank holding company 
                that is a publicly traded company and that has 
                total consolidated assets of less than 
                $10,000,000,000 to establish a risk committee, 
                as set forth in paragraph (3), as determined 
                necessary or appropriate by the Board of 
                Governors to promote sound risk management 
                practices.
          (3) Risk committee.--A risk committee required by 
        this subsection shall--
                  (A) be responsible for the oversight of the 
                enterprise-wide risk management practices of 
                the nonbank financial company supervised by the 
                Board of Governors or bank holding company 
                described in subsection (a), as applicable;
                  (B) include such number of independent 
                directors as the Board of Governors may 
                determine appropriate, based on the nature of 
                operations, size of assets, and other 
                appropriate criteria related to the nonbank 
                financial company supervised by the Board of 
                Governors or a bank holding company described 
                in subsection (a), as applicable; and
                  (C) include at least 1 risk management expert 
                having experience in identifying, assessing, 
                and managing risk exposures of large, complex 
                firms.
          (4) Rulemaking.--The Board of Governors shall issue 
        final rules to carry out this subsection, not later 
        than 1 year after the transfer date, to take effect not 
        later than 15 months after the transfer date.
  (i) Stress Tests.--
          (1) By the board of governors.--
                  (A) Annual tests required.--The Board of 
                Governors, in coordination with the appropriate 
                primary financial regulatory agencies and the 
                Federal Insurance Office, shall conduct annual 
                analyses in which nonbank financial companies 
                supervised by the Board of Governors and bank 
                holding companies described in subsection (a) 
                are subject to evaluation of whether such 
                companies have the capital, on a total 
                consolidated basis, necessary to absorb losses 
                as a result of adverse economic conditions.
                  (B) Test parameters and consequences.--The 
                Board of Governors--
                          (i) shall provide for at least 3 
                        different sets of conditions under 
                        which the evaluation required by this 
                        subsection shall be conducted, 
                        including baseline, adverse, and 
                        severely adverse;
                          (ii) may require the tests described 
                        in subparagraph (A) at bank holding 
                        companies and nonbank financial 
                        companies, in addition to those for 
                        which annual tests are required under 
                        subparagraph (A);
                          (iii) may develop and apply such 
                        other analytic techniques as are 
                        necessary to identify, measure, and 
                        monitor risks to the financial 
                        stability of the United States;
                          (iv) shall require the companies 
                        described in subparagraph (A) to update 
                        their resolution plans required under 
                        subsection (d)(1), as the Board of 
                        Governors determines appropriate, based 
                        on the results of the analyses; and
                          (v) shall publish a summary of the 
                        results of the tests required under 
                        subparagraph (A) or clause (ii) of this 
                        subparagraph.
          (2) By the company.--
                  (A) Requirement.--A nonbank financial company 
                supervised by the Board of Governors and a bank 
                holding company described in subsection (a) 
                shall conduct semiannual stress tests. All 
                other financial companies that have total 
                consolidated assets of more than 
                $10,000,000,000 and are regulated by a primary 
                Federal financial regulatory agency shall 
                conduct annual stress tests. The tests required 
                under this subparagraph shall be conducted in 
                accordance with the regulations prescribed 
                under subparagraph (C).
                  (B) Report.--A company required to conduct 
                stress tests under subparagraph (A) shall 
                submit a report to the Board of Governors and 
                to its primary financial regulatory agency at 
                such time, in such form, and containing such 
                information as the primary financial regulatory 
                agency shall require.
                  (C) Regulations.--Each Federal primary 
                financial regulatory agency, in coordination 
                with the Board of Governors and the Federal 
                Insurance Office, shall issue consistent and 
                comparable regulations to implement this 
                paragraph that shall--
                          (i) define the term ``stress test'' 
                        for purposes of this paragraph;
                          (ii) establish methodologies for the 
                        conduct of stress tests required by 
                        this paragraph that shall provide for 
                        at least 3 different sets of 
                        conditions, including baseline, 
                        adverse, and severely adverse;
                          (iii) establish the form and content 
                        of the report required by subparagraph 
                        (B); and
                          (iv) require companies subject to 
                        this paragraph to publish a summary of 
                        the results of the required stress 
                        tests.
  (j) Leverage Limitation.--
          (1) Requirement.--The Board of Governors shall 
        require a bank holding company [with total consolidated 
        assets equal to or greater than $50,000,000,000] which 
        has been identified as a global systemically important 
        bank holding company pursuant to section 217.402 of 
        title 12, Code of Federal Regulations, or subjected to 
        a determination under subsection (l) or a nonbank 
        financial company supervised by the Board of Governors 
        to maintain a debt to equity ratio of no more than 15 
        to 1, upon a determination by the Council that such 
        company poses a grave threat to the financial stability 
        of the United States and that the imposition of such 
        requirement is necessary to mitigate the risk that such 
        company poses to the financial stability of the United 
        States. Nothing in this paragraph shall apply to a 
        Federal home loan bank.
          (2) Considerations.--In making a determination under 
        this subsection, the Council shall consider the factors 
        described in subsections (a) and (b) of section 113 and 
        any other risk-related factors that the Council deems 
        appropriate.
          (3) Regulations.--The Board of Governors shall 
        promulgate regulations to establish procedures and 
        timelines for complying with the requirements of this 
        subsection.
  (k) Inclusion of Off-balance-sheet Activities in Computing 
Capital Requirements.--
          (1) In general.--In the case of any bank holding 
        company described in subsection (a) or nonbank 
        financial company supervised by the Board of Governors, 
        the computation of capital for purposes of meeting 
        capital requirements shall take into account any off-
        balance-sheet activities of the company.
          (2) Exemptions.--If the Board of Governors determines 
        that an exemption from the requirement under paragraph 
        (1) is appropriate, the Board of Governors may exempt a 
        company, or any transaction or transactions engaged in 
        by such company, from the requirements of paragraph 
        (1).
          (3) Off-balance-sheet activities defined.--For 
        purposes of this subsection, the term ``off-balance-
        sheet activities'' means an existing liability of a 
        company that is not currently a balance sheet 
        liability, but may become one upon the happening of 
        some future event, including the following 
        transactions, to the extent that they may create a 
        liability:
                  (A) Direct credit substitutes in which a bank 
                substitutes its own credit for a third party, 
                including standby letters of credit.
                  (B) Irrevocable letters of credit that 
                guarantee repayment of commercial paper or tax-
                exempt securities.
                  (C) Risk participations in bankers' 
                acceptances.
                  (D) Sale and repurchase agreements.
                  (E) Asset sales with recourse against the 
                seller.
                  (F) Interest rate swaps.
                  (G) Credit swaps.
                  (H) Commodities contracts.
                  (I) Forward contracts.
                  (J) Securities contracts.
                  (K) Such other activities or transactions as 
                the Board of Governors may, by rule, define.
  (l) Additional Bank Holding Companies Subject to Enhanced 
Supervision and Prudential Standards by Tailored Regulation.--
          (1) Determination.--The Board of Governors may, 
        within the limits of its existing resources--
                  (A) determine that a bank holding company 
                that has not been identified as a global 
                systemically important bank holding company 
                pursuant to section 217.402 of title 12, Code 
                of Federal Regulations, shall be subject to 
                certain enhanced supervision or prudential 
                standards under this section, tailored to the 
                risks presented, based on the considerations in 
                paragraph (3), where material financial 
                distress at the bank holding company, or the 
                nature, scope, size, scale, concentration, 
                interconnectedness, or mix of the activities of 
                the individual bank holding company, could pose 
                a threat to the financial stability of the 
                United States; or
                  (B) by regulation determine that a category 
                of bank holding companies that have not been 
                identified as global systemically important 
                bank holding companies pursuant to section 
                217.402 of title 12, Code of Federal 
                Regulations, shall be subject to certain 
                enhanced supervision or prudential standards 
                under this section, tailored to the risk 
                presented by the category of bank holding 
                companies, based on the considerations in 
                paragraph (3), where material financial 
                distress at the category of bank holding 
                companies, or the nature, scope, size, scale, 
                concentration, interconnectedness, or mix of 
                the activities of the category of bank holding 
                companies, could pose a threat to the financial 
                stability of the United States.
          (2) Council approval of regulations with respect to 
        categories.--Notwithstanding paragraph (1)(B), a 
        regulation issued by the Board of Governors to make a 
        determination under such paragraph (1)(B) shall not 
        take effect unless the Council, by a vote of not fewer 
        than \2/3\ of the voting members then serving, 
        including an affirmative vote by the Chairperson, 
        approves the metrics used by the Board of Governors in 
        establishing such regulation.
          (3) Considerations.--In making any determination 
        under paragraph (1), the Board of Governors shall 
        consider the following factors:
                  (A) The size of the bank holding company.
                  (B) The interconnectedness of the bank 
                holding company.
                  (C) The extent of readily available 
                substitutes or financial institution 
                infrastructure for the services of the bank 
                holding company.
                  (D) The global cross-jurisdictional activity 
                of the bank holding company.
                  (E) The complexity of the bank holding 
                company.
          (4) Consistent application of considerations.--In 
        making a determination under paragraph (1), the Board 
        of Governors shall ensure that bank holding companies 
        that are similarly situated with respect to the factors 
        described under paragraph (3), are treated similarly 
        for purposes of any enhanced supervision or prudential 
        standards applied under this section.
          (5) Use of currently reported data to avoid 
        unnecessary burden.--For purposes of making a 
        determination under paragraph (1), the Board of 
        Governors shall make use of data already being reported 
        to the Board of Governors, including from calculating a 
        bank holding company's systemic indicator score, in 
        order to avoid placing an unnecessary burden on bank 
        holding companies.
  (m) Systemic Identification.--With respect to the 
identification of bank holding companies as global systemically 
important bank holding companies pursuant to section 217.402 of 
title 12, Code of Federal Regulations, or subjected to a 
determination under subsection (l), the Board of Governors 
shall--
          (1) publish, including on the Board of Governors's 
        website, a list of all bank holding companies that have 
        been so identified, and keep such list current; and
          (2) solicit feedback from the Council on the 
        identification process and on the application of such 
        process to specific bank holding companies.

           *       *       *       *       *       *       *

                              ----------                              


                          FEDERAL RESERVE ACT



           *       *       *       *       *       *       *
  Sec.  11. The Board of Governors of the Federal Reserve 
System shall be authorized and empowered:
  (a)(1) To examine at its discretion the accounts, books and 
affairs of each Federal reserve bank and of each member bank 
and to require such statements and reports as it may deem 
necessary. The said board shall publish once each week a 
statement showing the condition of each Federal reserve bank 
and a consolidated statement for all Federal reserve banks. 
Such statements shall show in detail the assets and liabilities 
of the Federal reserve banks, single and combined, and shall 
furnish full information regarding the character of the money 
held as reserve and the amount, nature and maturities of the 
paper and other investments owned or held by Federal reserve 
banks.
  (2) To require any depository institution specified in this 
paragraph to make, at such intervals as the Board may 
prescribe, such reports of its liabilities and assets as the 
Board may determine to be necessary or desirable to enable the 
Board to discharge its responsibility to monitor and control 
monetary and credit aggregates. Such reports shall be made (A) 
directly to the Board in the case of member banks and in the 
case of other depository institutions whose reserve 
requirements under section 19 of this Act exceed zero, and (B) 
for all other reports to the Board through the (i) Federal 
Deposit Insurance Corporation in the case of insured State 
savings associations that are insured depository institutions 
(as defined in section 3 of the Federal Deposit Insurance Act), 
State nonmember banks, savings banks, and mutual savings banks, 
(ii) National Credit Union Administration Board in the case of 
insured credit unions, (iii) the Comptroller of the Currency in 
the case of any Federal savings association which is an insured 
depository institution (as defined in section 3 of the Federal 
Deposit Insurance Act) or which is a member as defined in 
section 2 of the Federal Home Loan Bank Act, and (iv) such 
State officer or agency as the Board may designate in the case 
of any other type of bank, savings association, or credit 
union. The Board shall endeavor to avoid the imposition of 
unnecessary burdens on reporting institutions and the 
duplication of other reporting requirements. Except as 
otherwise required by law, any data provided to any department, 
agency, or instrumentality of the United States pursuant to 
other reporting requirements shall be made available to the 
Board. The Board may classify depository institutions for the 
purposes of this paragraph and may impose different 
requirements on each such class.
  (b) To permit, or, on the affirmative vote of at least five 
members of the Board of Governors of the Federal Reserve System 
to require Federal reserve banks to rediscount the discounted 
paper of other Federal reserve banks at rates of interest to be 
fixed by the Board of Governors of the Federal Reserve System.
  (c) To suspend for a period not exceeding thirty days, and 
from time to time to renew such suspension for periods not 
exceeding fifteen days, any reserve requirements specified in 
this Act.
  (d) To supervise and regulate through the Secretary of the 
Treasury the issue and retirement of Federal reserve notes, 
except for the cancellation and destruction, and accounting 
with respect to such cancellation and destruction, of notes 
unfit for circulation, and to prescribe rules and regulations 
under which such notes may be delivered by the Secretary of the 
Treasury to the Federal reserve agents applying therefor.
  (e) To add to the number of cities classified as Reserve 
cities under existing law in which national banking 
associations are subject to the Reserve requirements set forth 
in section twenty of this Act; or to reclassify existing 
Reserve cities or to terminate their designation as such.
  (f) To suspend or remove any officer or director of any 
Federal reserve bank, the cause of such removal to be forthwith 
communicated in writing by the Board of Governors of the 
Federal Reserve System to the removed officer or director and 
to said bank.
  (g) To require the writing off of doubtful or worthless 
assets upon the books and balance sheets of Federal reserve 
banks.
  (h) To suspend, for the violation of any of the provisions of 
this Act, the operations of any Federal reserve bank, to take 
possession thereof, administer the same during the period of 
suspension, and, when deemed advisable, to liquidate or 
reorganize such bank.
  (i) To require bonds of Federal reserve agents, to make 
regulations for the safeguarding of all collateral, bonds, 
Federal reserve notes, money or property of any kind deposited 
in the hands of such agents, and said board shall perform the 
duties, functions, or services specified in this Act, and make 
all rules and regulations necessary to enable said board 
effectively to perform the same.
  (j) To exercise general supervision over said Federal reserve 
banks.
  (k) To delegate, by published order or rule and subject to 
the Administrative Procedure Act, any of its functions, other 
than those relating to rulemaking or pertaining principally to 
monetary and credit policies, to one or more administrative law 
judges, members or employees of the Board, or Federal Reserve 
banks. The assignment of responsibility for the performance of 
any function that the Board determines to delegate shall be a 
function of the Chairman. The Board shall, upon the vote of one 
member, review action taken at a delegated level within such 
time and in such manner as the Board shall by rule prescribe. 
The Board of Governors may not delegate to a Federal reserve 
bank its functions for the establishment of policies for the 
supervision and regulation of depository institution holding 
companies and other financial firms supervised by the Board of 
Governors.
  (l) To employ such attorneys, experts, assistants, clerks, or 
other employees as may be deemed necessary to conduct the 
business of the board. All salaries and fees shall be fixed in 
advance by said board and shall be paid in the same manner as 
the salaries of the members of said board. All such attorneys, 
experts, assistants, clerks, and other employees shall be 
appointed without regard to the provisions of the Act of 
January sixteenth, eighteen hundred and eighty-three (volume 
twenty-two, United States Statutes at Large, page four hundred 
and three), and amendments thereto, or any rule or regulation 
made in pursuance thereof: Provided, That nothing herein shall 
prevent the President from placing said employees in the 
classified service.
  (n) To examine, at the Board's discretion, any depository 
institution, and any affiliate of such depository institution, 
in connection with any advance to, any discount of any 
instrument for, or any request for any such advance or discount 
by, such depository institution under this Act.
  (o) Authority To Appoint Conservator or Receiver.--The Board 
may appoint the Federal Deposit Insurance Corporation as 
conservator or receiver for a State member bank under section 
11(c)(9) of the Federal Deposit Insurance Act.
  (p) Authority.--The Board may act in its own name and through 
its own attorneys in enforcing any provision of this title, 
regulations promulgated hereunder, or any other law or 
regulation, or in any action, suit, or proceeding to which the 
Board is a party and which involves the Board's regulation or 
supervision of any bank, bank holding company (as defined in 
section 2 of the Bank Holding Company Act of 1956), or other 
entity, or the administration of its operations.
  (q) Uniform Protection Authority for Federal Reserve 
Facilities.--
          (1) Notwithstanding any other provision of law, to 
        authorize personnel to act as law enforcement officers 
        to protect and safeguard the premises, grounds, 
        property, personnel, including members of the Board, of 
        the Board, or any Federal reserve bank, and operations 
        conducted by or on behalf of the Board or a reserve 
        bank.
          (2) The Board may, subject to the regulations 
        prescribed under paragraph (5), delegate authority to a 
        Federal reserve bank to authorize personnel to act as 
        law enforcement officers to protect and safeguard the 
        bank's premises, grounds, property, personnel, and 
        operations conducted by or on behalf of the bank.
          (3) Law enforcement officers designated or authorized 
        by the Board or a reserve bank under paragraph (1) or 
        (2) are authorized while on duty to carry firearms and 
        make arrests without warrants for any offense against 
        the United States committed in their presence, or for 
        any felony cognizable under the laws of the United 
        States committed or being committed within the 
        buildings and grounds of the Board or a reserve bank if 
        they have reasonable grounds to believe that the person 
        to be arrested has committed or is committing such a 
        felony. Such officers shall have access to law 
        enforcement information that may be necessary for the 
        protection of the property or personnel of the Board or 
        a reserve bank.
          (4) For purposes of this subsection, the term ``law 
        enforcement officers'' means personnel who have 
        successfully completed law enforcement training and are 
        authorized to carry firearms and make arrests pursuant 
        to this subsection.
          (5) The law enforcement authorities provided for in 
        this subsection may be exercised only pursuant to 
        regulations prescribed by the Board and approved by the 
        Attorney General.
  (r)(1) Any action that this Act provides may be taken only 
upon the affirmative vote of 5 members of the Board may be 
taken upon the unanimous vote of all members then in office if 
there are fewer than 5 members in office at the time of the 
action.
  (2)(A) Any action that the Board is otherwise authorized to 
take under section 13(3) may be taken upon the unanimous vote 
of all available members then in office, if--
          (i) at least 2 members are available and all 
        available members participate in the action;
          (ii) the available members unanimously determine 
        that--
                  (I) unusual and exigent circumstances exist 
                and the borrower is unable to secure adequate 
                credit accommodations from other sources;
                  (II) action on the matter is necessary to 
                prevent, correct, or mitigate serious harm to 
                the economy or the stability of the financial 
                system of the United States;
                  (III) despite the use of all means available 
                (including all available telephonic, 
                telegraphic, and other electronic means), the 
                other members of the Board have not been able 
                to be contacted on the matter; and
                  (IV) action on the matter is required before 
                the number of Board members otherwise required 
                to vote on the matter can be contacted through 
                any available means (including all available 
                telephonic, telegraphic, and other electronic 
                means); and
          (iii) any credit extended by a Federal reserve bank 
        pursuant to such action is payable upon demand of the 
        Board.
  (B) The available members of the Board shall document in 
writing the determinations required by subparagraph (A)(ii), 
and such written findings shall be included in the record of 
the action and in the official minutes of the Board, and copies 
of such record shall be provided as soon as practicable to the 
members of the Board who were not available to participate in 
the action and to the Chairman of the Committee on Banking, 
Housing, and Urban Affairs of the Senate and to the Chairman of 
the Committee on Financial Services of the House of 
Representatives.
  (s) Federal Reserve Transparency and Release of 
Information.--
          (1) In general.--In order to ensure the disclosure in 
        a timely manner consistent with the purposes of this 
        Act of information concerning the borrowers and 
        counterparties participating in emergency credit 
        facilities, discount window lending programs, and open 
        market operations authorized or conducted by the Board 
        or a Federal reserve bank, the Board of Governors shall 
        disclose, as provided in paragraph (2)--
                  (A) the names and identifying details of each 
                borrower, participant, or counterparty in any 
                credit facility or covered transaction;
                  (B) the amount borrowed by or transferred by 
                or to a specific borrower, participant, or 
                counterparty in any credit facility or covered 
                transaction;
                  (C) the interest rate or discount paid by 
                each borrower, participant, or counterparty in 
                any credit facility or covered transaction; and
                  (D) information identifying the types and 
                amounts of collateral pledged or assets 
                transferred in connection with participation in 
                any credit facility or covered transaction.
          (2) Mandatory release date.--In the case of--
                  (A) a credit facility, the Board shall 
                disclose the information described in paragraph 
                (1) on the date that is 1 year after the 
                effective date of the termination by the Board 
                of the authorization of the credit facility; 
                and
                  (B) a covered transaction, the Board shall 
                disclose the information described in paragraph 
                (1) on the last day of the eighth calendar 
                quarter following the calendar quarter in which 
                the covered transaction was conducted.
          (3) Earlier release date authorized.--The Chairman of 
        the Board may publicly release the information 
        described in paragraph (1) before the relevant date 
        specified in paragraph (2), if the Chairman determines 
        that such disclosure would be in the public interest 
        and would not harm the effectiveness of the relevant 
        credit facility or the purpose or conduct of covered 
        transactions.
          (4) Definitions.--For purposes of this subsection, 
        the following definitions shall apply:
                  (A) Credit facility.--The term ``credit 
                facility'' has the same meaning as in section 
                714(f)(1)(A) of title 31, United States Code.
                  (B) Covered transaction.--The term ``covered 
                transaction'' means--
                          (i) any open market transaction with 
                        a nongovernmental third party conducted 
                        under the first undesignated paragraph 
                        of section 14 or subparagraph (a), (b), 
                        or (c) of the 2nd undesignated 
                        paragraph of such section, after the 
                        date of enactment of the Dodd-Frank 
                        Wall Street Reform and Consumer 
                        Protection Act; and
                          (ii) any advance made under section 
                        10B after the date of enactment of that 
                        Act.
          (5) Termination of credit facility by operation of 
        law.--A credit facility shall be deemed to have 
        terminated as of the end of the 24-month period 
        beginning on the date on which the credit facility 
        ceases to make extensions of credit and loans, unless 
        the credit facility is otherwise terminated by the 
        Board before such date.
          (6) Consistent treatment of information.--Except as 
        provided in this subsection or section 13(3)(D), or in 
        section 714(f)(3)(C) of title 31, United States Code, 
        the information described in paragraph (1) and 
        information concerning the transactions described in 
        section 714(f) of such title, shall be confidential, 
        including for purposes of section 552(b)(3) of title 5 
        of such Code, until the relevant mandatory release date 
        described in paragraph (2), unless the Chairman of the 
        Board determines that earlier disclosure of such 
        information would be in the public interest and would 
        not harm the effectiveness of the relevant credit 
        facility or the purpose of conduct of the relevant 
        transactions.
          (7) Protection of personal privacy.--This subsection 
        and section 13(3)(C), section 714(f)(3)(C) of title 31, 
        United States Code, and subsection (a) or (c) of 
        section 1109 of the Dodd-Frank Wall Street Reform and 
        Consumer Protection Act shall not be construed as 
        requiring any disclosure of nonpublic personal 
        information (as defined for purposes of section 502 of 
        the Gramm-Leach-Bliley Act (12 U.S.C. 6802)) concerning 
        any individual who is referenced in collateral pledged 
        or assets transferred in connection with a credit 
        facility or covered transaction, unless the person is a 
        borrower, participant, or counterparty under the credit 
        facility or covered transaction.
          (8) Study of foia exemption impact.--
                  (A) Study.--The Inspector General of the 
                Board of Governors of the Federal Reserve 
                System shall--
                          (i) conduct a study on the impact 
                        that the exemption from section 
                        552(b)(3) of title 5 (known as the 
                        Freedom of Information Act) established 
                        under paragraph (6) has had on the 
                        ability of the public to access 
                        information about the administration by 
                        the Board of Governors of emergency 
                        credit facilities, discount window 
                        lending programs, and open market 
                        operations; and
                          (ii) make any recommendations on 
                        whether the exemption described in 
                        clause (i) should remain in effect.
                  (B) Report.--Not later than 30 months after 
                the date of enactment of this section, the 
                Inspector General of the Board of Governors of 
                the Federal Reserve System shall submit a 
                report on the findings of the study required 
                under subparagraph (A) to the Committee on 
                Banking, Housing, and Urban Affairs of the 
                Senate and the Committee on Financial Services 
                of the House of Representatives, and publish 
                the report on the website of the Board.
          (9) Rule of construction.--Nothing in this section is 
        meant to affect any pending litigation or lawsuit filed 
        under section 552 of title 5, United States Code 
        (popularly known as the Freedom of Information Act), on 
        or before the date of enactment of the Dodd-Frank Wall 
        Street Reform and Consumer Protection Act.
  [(s)] (t) Assessments, Fees, and Other Charges for Certain 
Companies.--
          (1) In general.--The Board shall collect a total 
        amount of assessments, fees, or other charges from the 
        companies described in paragraph (2) that is equal to 
        the total expenses the Board estimates are necessary or 
        appropriate to carry out the supervisory and regulatory 
        responsibilities of the Board with respect to such 
        companies.
          (2) Companies.--The companies described in this 
        paragraph are--
                  (A) all bank holding companies [having total 
                consolidated assets of $50,000,000,000 or more] 
                which have been identified as global 
                systemically important bank holding companies 
                pursuant to section 217.402 of title 12, Code 
                of Federal Regulations, or subjected to a 
                determination under subsection (l) of section 
                165 of the Dodd-Frank Wall Street Reform and 
                Consumer Protection Act;
                  (B) all savings and loan holding companies 
                having total consolidated assets of 
                $50,000,000,000 or more; and
                  (C) all nonbank financial companies 
                supervised by the Board under section 113 of 
                the Dodd-Frank Wall Street Reform and Consumer 
                Protection Act.

           *       *       *       *       *       *       *


                             MINORITY VIEWS

    H.R. 3312 is another step back from the progress Congress 
has made to ensure that oversight of the top one percent of the 
nation's largest banks is appropriately robust to protect 
taxpayers and promote stable economic growth.
    Congress passed the Dodd-Frank Wall Street Reform and 
Consumer Protection Act (Dodd-Frank Act), which establishes a 
tiered and tailored regulatory framework for overseeing 
financial institutions. Instead of imposing a one-size-fits-all 
approach for regulating all firms, one of the hallmark features 
of the Dodd-Frank Act, is that the law appropriately applies 
the toughest rules on the largest and most complex financial 
firms, which as we saw in the 2007-2008 financial crisis, can 
destabilize the financial system and inflict long-lasting 
damage to the economy and the constituents we serve.
    As former Federal Reserve Board Governor Daniel Tarullo put 
it: ``A key regulatory innovation in Dodd-Frank was regulatory 
tiering--the creation of different classes of banking 
organizations, based dominantly though not exclusively on asset 
size, to which different regulations were to apply. Underlying 
this tiering was the principle that progressively more 
stringent regulation should apply to the different classes of 
banks based on their relative importance to the financial 
system, and thus the harm that could be expected to the system 
if they failed.''\1\
---------------------------------------------------------------------------
    \1\Remarks by Daniel K. Tarullo, Tailoring Community Bank 
Regulation and Supervision, at ICBA's 2015 Washington Policy Summit 
(Apr. 30, 2015).
---------------------------------------------------------------------------
    While the Dodd-Frank Act has strengthened consumer 
protections and the financial system is much safer, it is worth 
noting the banking industry has been making record profits, 
including the largest banks with more than $50 billion in 
assets. Lending to businesses has also increased 75 percent 
since the Dodd-Frank Act was signed into law.
    Congress has monitored the law's implementation progress 
carefully and, in situations where it has been warranted, has 
passed targeted legislation or encouraged regulators to further 
tailor rules to reduce unnecessary compliance requirements on 
community financial institutions while maintaining robust 
standards and appropriate protections that are in the public 
interest.
    H.R. 3312, however, would weaken some of the most important 
rules under the Dodd-Frank Act by eliminating the $50 billion 
minimum threshold to apply enhanced prudential standards to the 
top one percent of all banks by asset size in the country. 
These enhanced standards include capital, liquidity, leverage, 
living will, stress test, risk management and other critical 
prudential requirements that are at the core of promoting 
financial stability and a safe and sound banking system. The 
Dodd-Frank Act clearly requires these enhanced and important 
standards be implemented in a tiered and tailored way and, 
importantly, that regulators have exercised this mandate to do 
so. For example, the most stringent capital requirements only 
apply to global systemically important banks (G-SIBs), not the 
other bank holding companies with more than $50 billion in 
assets. Another tier of enhanced prudential standards only 
apply to bank holding companies with more than $250 billion in 
assets, and less stringent requirements are applied to smaller 
banks with more than $50 billion in assets.
    These tiered and tailored enhanced prudential standards 
could certainly be refined and tiered further. However, this 
sweeping bill goes well beyond modest improvements and would 
undermine the tiered regulatory framework under the Dodd-Frank 
Act in a manner that could make it harder for banks with less 
than $50 billion to compete with these very large banks.
    H.R. 3312 would also likely accelerate the consolidation 
trends where community banks are acquired by larger banks. 
Importantly, the only banks that would obtain relief under this 
bill are the largest banks in the country. Currently, 99 
percent of all banks are much smaller and have far less than 
$50 billion in assets. Large banks that are no longer subject 
to enhanced prudential standards because of H.R. 3312 will be 
regulated much more like their smaller peers instead of like 
the large enterprises they are.
    While G-SIBs would remain subject to heightened standards, 
the bill would make it much more difficult to apply enhanced 
standards to most other large banks. The bill would allow the 
Federal Reserve to either designate individual banks, or a 
group designation process through regulation that two-thirds of 
the Financial Stability Oversight Council (FSOC) would have to 
approve. Unfortunately, this means applying enhanced prudential 
standards, if the bill were enacted, would be much more 
difficult. For example, individual banks that are designated 
would likely challenge this designation in court. In addition, 
a minority of FSOC members could block the application of 
enhanced prudential standards to a group of the largest banks, 
even if a majority of FSOC members, including the Federal 
Reserve Board Chair and the Secretary of the Treasury, agree 
that they should be applied.
    Furthermore, the designation process under H.R. 3312 would 
be subject to a very proscriptive and detailed set of criteria. 
But the bill would only allow a short, 18 month time period 
before large banks, which are currently subject to more 
stringent prudential requirements, would become exempt without 
a designation. It is worth noting that it generally takes FSOC 
two years to designate a non-bank for enhanced supervision. It 
is unclear how many large banks the Federal Reserve 
realistically could designate in 18 months given that it must 
use existing resources to carry out this new task and meet 
specified criteria that could be challenged in a court of law 
by any designated bank.
    While we are open to examining how the enhanced prudential 
standards under the Dodd-Frank Act are currently being tiered 
and tailored for the nation's largest banks and targeted 
improvements to the existing framework, we strongly oppose this 
sweeping proposal that would put community banks at a 
competitive disadvantage to their much larger peers while 
undermining U.S. financial stability and eroding the safety and 
soundness of the banking system.
    For these reasons, we oppose H.R. 3312.

                                   Maxine Waters.
                                   Keith Ellison.
                                   Michael E. Capuano.
                                   Al Green.
                                   Nydia M. Velazquez.
                                   Wm. Lacy Clay.
                                   Daniel T. Kildee.
                                   Stephen F. Lynch.
                                   Ed Perlmutter.
                                   Carolyn B. Maloney.

                                  [all]