[House Report 115-465]
[From the U.S. Government Publishing Office]


115th Congress   }                                     {       Report
                        HOUSE OF REPRESENTATIVES
 1st Session     }                                     {      115-465

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



 
       FINANCIAL INSTITUTION LIVING WILL IMPROVEMENT ACT OF 2017

                                _______
                                

 December 14, 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

                        [To accompany H.R. 4292]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 4292) to reform the living will process under 
the Dodd-Frank Wall Street Reform and Consumer Protection Act, 
having considered the same, report favorably thereon with an 
amendment and recommend that the bill as amended do pass.
    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Financial Institution Living Will 
Improvement Act of 2017''.

SEC. 2. LIVING WILL REFORMS.

  (a) In General.--Section 165(d) of the Dodd-Frank Wall Street Reform 
and Consumer Protection Act (12 U.S.C. 5365(d)) is amended--
          (1) in paragraph (1), by striking ``periodically'' and 
        inserting ``every 2 years''; and
          (2) in paragraph (3)--
                  (A) by striking ``The Board'' and inserting the 
                following:
                  ``(A) In general.--The Board'';
                  (B) by striking ``shall review'' and inserting the 
                following: ``shall--
                          ``(i) review'';
                  (C) by striking the period and inserting ``; and''; 
                and
                  (D) by adding at the end the following:
                          ``(ii) not later than the end of the 6-month 
                        period beginning on the date the company 
                        submits the resolution plan, provide feedback 
                        to the company on such plan.
                  ``(B) Disclosure of assessment framework.--The Board 
                of Governors and the Corporation shall publicly 
                disclose the assessment framework that is used to 
                review information under this paragraph.''.
  (b) Treatment of Other Resolution Plan Requirements.--
          (1) In general.--With respect to an appropriate Federal 
        banking agency that requires a banking organization to submit 
        to the agency a resolution plan not described under section 
        165(d) of the Dodd-Frank Wall Street Reform and Consumer 
        Protection Act--
                  (A) the respective agency shall ensure that the 
                review of such resolution plan is consistent with the 
                requirements contained in the amendments made by this 
                Act;
                  (B) the agency may not require the submission of such 
                a resolution plan more often than every 2 years; and
                  (C) paragraphs (6) and (7) of such section 165(d) 
                shall apply to such a resolution plan.
          (2) Definitions.--For purposes of this subsection:
                  (A) Appropriate federal banking agency.--The term 
                ``appropriate Federal banking agency''--
                          (i) has the meaning given such term under 
                        section 3 of the Federal Deposit Insurance Act; 
                        and
                          (ii) means the National Credit Union 
                        Administration, in the case of an insured 
                        credit union.
                  (B) Banking organization.--The term ``banking 
                organization'' means--
                          (i) an insured depository institution;
                          (ii) an insured credit union;
                          (iii) a depository institution holding 
                        company;
                          (iv) a company that is treated as a bank 
                        holding company for purposes of section 8 of 
                        the International Banking Act; and
                          (v) a U.S. intermediate holding company 
                        established by a foreign banking organization 
                        pursuant to section 252.153 of title 12, Code 
                        of Federal Regulations.
                  (C) Insured credit union.--The term ``insured credit 
                union'' has the meaning given that term under section 
                101 of the Federal Credit Union Act.
                  (D) Other banking terms.--The terms ``depository 
                institution holding company'' and ``insured depository 
                institution'' have the meaning given those terms, 
                respectively, under section 3 of the Federal Deposit 
                Insurance Act.
  (c) Rule of Construction.--Nothing in this Act, or any amendment made 
by this Act, shall be construed as limiting the authority of an 
appropriate Federal banking agency (as defined under subsection (b)(2)) 
to obtain information from an institution in connection with such 
agency's authority to examine or require reports from the institution.

                          Purpose and Summary

    Introduced by Representative Lee Zeldin on November 7, 
2017, H.R. 4292, the ``Financial Institution Living Will 
Improvement Act of 2017'' amends Title I of the Dodd-Frank Wall 
Street Reform and Consumer Protection Act (``Dodd-Frank Act'') 
to reform the ``living will'' process and require bank holding 
companies to submit to the Board of Governors of the Federal 
Reserve System (Federal Reserve) and the Federal Deposit 
Insurance Corporation (FDIC) resolution plans every two years.
    This bill also requires the Federal Reserve and FDIC to 
provide feedback to a bank holding company regarding a 
submitted resolution plan within six months after its 
submission. This bill also requires the Federal Reserve and 
FDIC to publicly disclose the assessment framework used to 
review the adequacy of resolution plans.

                  Background and Need for Legislation

    Section 165 of the Dodd-Frank Act requires bank holding 
companies with total consolidated assets of $50 billion or more 
(also known as systemically-important financial institutions 
(SIFIs), and nonbank financial companies designated by the 
Financial Stability Oversight Council (FSOC) for supervision to 
annually submit detailed plans to the Federal Reserve and the 
Federal Deposit Insurance Company (FDIC) that describes the 
company's strategy for rapid and orderly resolution under the 
Bankruptcy Code in the event of its material financial distress 
or failure. If the Federal Reserve and FDIC jointly conclude 
that a SIFI has failed to produce a ``credible'' plan for its 
orderly resolution, they can take a series of punitive 
measures, including the imposition of ``more stringent capital, 
leverage, or liquidity requirements, or restrictions on the 
growth, activities, or operations of the company, or any 
subsidiary thereof.''\1\ Failure to remedy the deficiencies 
identified by the prudential regulators can ultimately result 
in the Federal Reserve and FDIC ordering the firm ``to divest 
certain assets or operations.''\2\
---------------------------------------------------------------------------
    \1\Dodd-Frank Act Sec. 165(d)(5)(A).
    \2\Dodd-Frank Act Sec. 165(d)(5)(B).
---------------------------------------------------------------------------
    In an April 2016 report, entitled ``Regulators Have Refined 
Their Review Processes but Could Improve Transparency and 
Timeliness,'' the Government Accountability Office (GAO) 
examined the process used by regulators under Section 165 of 
the Dodd-Frank Act to review SIFI resolution plans.\3\ The GAO 
concluded that while the reviewing regulators have sought to 
reduce the burden of the resolution plan requirements, there 
were still weaknesses to be addressed.\4\ Specifically, the GAO 
determined that the Federal Reserve and FDIC should increase 
transparency by disclosing their assessment frameworks and 
criteria, noting that:
---------------------------------------------------------------------------
    \3\See ``RESOLUTION PLANS: Regulators Have Refined Their Review 
Processes but Could Improve Transparency and Timeliness'', GAO-16-341: 
Published: Apr 12, 2016. Publicly Released: Apr 12, 2016. available at 
https://www.gao.gov/products/GAO-16-341.
    \4\GAO, GAO-16-341, Resolution Plans: Regulators Have Refined Their 
Review Processes But Could Improve Transparency And Timeliness (April 
12, 2016), available at: http://www.gao.gov/products/GAO-16-341.

          . . . a better understanding of the regulators' 
        assessment frameworks could give the larger companies a 
        more complete understanding of the key factors that can 
        lead to plan deficiencies. Likewise, disclosure of the 
        regulators' criteria could help motivate smaller 
        companies to reduce their systemic risk and understand 
---------------------------------------------------------------------------
        how they might qualify to file reduced plans.

    In addition to assessment transparency, the GAO also found 
a need to increase timeliness of guidance and feedback. The GAO 
concluded that:

          FDIC and the Federal Reserve have taken about 9 
        months on average to review resolution plans and 
        jointly provide companies with guidance or feedback. 
        Because the resolution plan rule requires companies to 
        file plans annually, some companies may not have 
        sufficient time to fully incorporate such guidance or 
        feedback into their subsequent plans and obtain their 
        board of directors' approval of the plans by the 
        submission deadline.

    As such, the GAO recommended that regulators should: 
publicly disclose information about their respective frameworks 
for assessing and recommending to their boards whether a plan 
is not credible or would not facilitate an orderly resolution 
under the Code; publicly disclose aspects of their criteria 
used to decide which companies are allowed to file a reduced 
plan; and revise the resolution plan rule's annual filing 
requirement to provide sufficient time not only for the 
regulators to complete their plan reviews and provide feedback 
but also for companies to address and incorporate regulators' 
feedback in subsequent plan filings.
    The Federal Reserve and FDIC have also recognized the need 
to reform the living wills framework. During a June 22, 2017 
hearing before the Committee on Banking, Housing and Urban 
Affairs of the U.S. Senate, both FDIC Chairman Martin Gruenberg 
and Federal Reserve Chair Nominee, and current-Governor Jay 
Powell mutually testified that both regulators:

          . . . believe it is worthwhile to consider extending 
        the cycle for living will submissions from annual to 
        once every two years, and focusing every other of these 
        filings on key topics of interest and material changes 
        from the prior full plan submission. In addition, there 
        may be opportunities to greatly reduce the submission 
        requirements for a large number of firms due to their 
        relatively small, simple, and domestically focused 
        activities

With Chairman Gruenberg adding that, ``[s]uch an approach could 
limit full plan filing requirements to firms that are large, 
complex, or have a systemically critical operation.''
    In June 2017, the Treasury Department issued the first in a 
series of reports to the President in response to Executive 
Order 13772 on Core Principles for Regulating the United States 
Financial System. The report, entitled, ``A Financial System 
That Creates Economic Opportunities: Banks and Credit Unions,'' 
focused on regulatory relief recommendations for those 
institutions. With regard to living wills guidance, the 
Treasury Report recommended that institutions be provided a two 
year submission cycle, and that the Federal Reserve complete 
reviews and provide feedback of living wills proposals within 
six months of submission.
    As implemented by federal regulators, the living will 
process has devolved into an opaque and hugely expensive 
exercise in command-and-control Washington, top-down 
regulation. H.R. 4292, as amended, is a measured and 
appropriate response to fix many of the challenges that 
financial institutions experience in their efforts to comply 
with the living will statutory regulatory mandates.

                                Hearings

    The Committee on Financial Services held a hearing 
examining matters relating to H.R. 4292 on April 26, 2017 and 
April 28, 2017.

                        Committee Consideration

    The Committee on Financial Services met in open session on 
November 14, 2017, and November 15, 2017, and ordered H.R. 4292 
to be reported favorably to the House as amended by a recorded 
vote of 60 yeas to 0 nays (recorded vote no. FC-106), a quorum 
being present. Before the motion to report was offered, the 
Committee adopted an amendment offered by Ms. Waters 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 with amendment. The 
motion was agreed to by a recorded vote of 60 yeas to 0 nays 
(Record vote no. FC-106), a quorum being present.


                      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. 4292 
will reform the living wills submission process to make it more 
transparent, responsive, and efficient for submitting bank 
holding companies.

   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.

                 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, December 8, 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. 4292, the 
Financial Institution Living Will Improvement Act of 2017.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Sarah Puro.
            Sincerely,
                                                Keith Hall,
                                                          Director.
    Enclosure.

H.R. 4292--Financial Institution Living Will Improvement Act of 2017

    H.R. 4292 would codify current regulatory practices by 
requiring certain financial institutions to submit resolution 
plans (known as living wills) to the Federal Deposit Insurance 
Corporation (FDIC) and the Federal Reserve once every two 
years. The bill also would require the FDIC and the Federal 
Reserve to provide additional feedback to those financial 
institutions about their living wills and to publicly disclose 
their assessment framework.
    H.R. 4292 would impose a small administrative cost on both 
agencies. Such costs to the FDIC are recorded in the budget as 
an increase in direct spending; costs incurred by the Federal 
Reserve are treated as reductions in remittances to the 
Treasury. Such reductions are recorded in the budget as 
reductions in revenues.
    Because enacting H.R. 4292 would affect direct spending and 
revenues, pay-as-you-go procedures apply. However, using 
information from those agencies, CBO estimates that the net 
budgetary effects would be insignificant for each year.
    CBO estimates that enacting H.R. 4292 would not 
significantly increase net direct spending or on-budget 
deficits in any of the four consecutive 10-year periods 
beginning in 2028.
    H.R. 4292 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act.
    The CBO staff contacts for this estimate are Sarah Puro 
(for the FDIC) and Nathaniel Frentz (for the Federal Reserve). 
The estimate was approved by H. Samuel Papenfuss, Deputy 
Assistant Director for Budget Analysis.

                       Federal Mandates Statement

    This information is provided in accordance with section 423 
of the Unfunded Mandates Reform Act of 1995.
    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. 4292 as the ``Financial Institution 
Living Will Improvement Act of 2017''.

Section 2. Living will reforms

    This section 165(d) of the Dodd-Frank Wall Street Reform 
and Consumer Protection Act to require bank holding companies 
submit to the Federal Reserve Board (Federal Reserve) and the 
Federal Deposit Insurance Corporation (FDIC) resolution plans 
every two years. This section also requires the Federal Reserve 
and FDIC to provide feedback within six months of the 
submission of a resolution plan by a company. This section also 
requires the Federal Reserve and FDIC to publicly disclose the 
assessment framework used to review the adequacy of resolution 
plans.
    This section also requires an appropriate Federal banking 
agency follow the above cited requirements for any resolution 
plan not described under section 165(d) of the Dodd-Frank Wall 
Street Reform and Consumer Protection Act.

         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):

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

           *       *       *       *       *       *       *


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 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, 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] 
        every 2 years 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]
                  (A) In general._The Board  of Governors and 
                the Corporation [shall review] shall--
                          (i) 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)[.]; and
                          (ii) not later than the end of the 6-
                        month period beginning on the date the 
                        company submits the resolution plan, 
                        provide feedback to the company on such 
                        plan.
                  (B) Disclosure of assessment framework.--The 
                Board of Governors and the Corporation shall 
                publicly disclose the assessment framework that 
                is used to review information under this 
                paragraph.
          (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 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.

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