Dodd-Frank Act Text
1 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
2 (a) SHORT TITLE.—This Act may be cited as the
3 ‘‘Dodd-Frank Wall Street Reform and Consumer Protec4
tion Act’’.
5 (b) TABLE OF CONTENTS.—The table of contents for
6 this Act is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
Sec. 3. Severability.
Sec. 4. Effective date.
Sec. 5. Budgetary effects.
Sec. 6. Antitrust savings clause.
TITLE I—FINANCIAL STABILITY
Sec. 101. Short title.
Sec. 102. Definitions.
Subtitle A—Financial Stability Oversight Council
Sec. 111. Financial Stability Oversight Council established.
Sec. 112. Council authority.
Sec. 113. Authority to require supervision and regulation of certain nonbank financial
companies.
Sec. 114. Registration of nonbank financial companies supervised by the Board
of Governors.
Sec. 115. Enhanced supervision and prudential standards for nonbank financial
companies supervised by the Board of Governors and certain
bank holding companies.
Sec. 116. Reports.
Sec. 117. Treatment of certain companies that cease to be bank holding companies.
Sec. 118. Council funding.
Sec. 119. Resolution of supervisory jurisdictional disputes among member agencies.
Sec. 120. Additional standards applicable to activities or practices for financial
stability purposes.
Sec. 121. Mitigation of risks to financial stability.
Sec. 122. GAO Audit of Council.
Sec. 123. Study of the effects of size and complexity of financial institutions
on capital market efficiency and economic growth.
Subtitle B—Office of Financial Research
Sec. 151. Definitions.
Sec. 152. Office of Financial Research established.
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Sec. 153. Purpose and duties of the Office.
Sec. 154. Organizational structure; responsibilities of primary programmatic
units.
Sec. 155. Funding.
Sec. 156. Transition oversight.
Subtitle C—Additional Board of Governors Authority for Certain Nonbank
Financial Companies and Bank Holding Companies
Sec. 161. Reports by and examinations of nonbank financial companies by the
Board of Governors.
Sec. 162. Enforcement.
Sec. 163. Acquisitions.
Sec. 164. Prohibition against management interlocks between certain financial
companies.
Sec. 165. Enhanced supervision and prudential standards for nonbank financial
companies supervised by the Board of Governors and certain
bank holding companies.
Sec. 166. Early remediation requirements.
Sec. 167. Affiliations.
Sec. 168. Regulations.
Sec. 169. Avoiding duplication.
Sec. 170. Safe harbor.
Sec. 171. Leverage and risk-based capital requirements.
Sec. 172. Examination and enforcement actions for insurance and orderly liquidation
purposes.
Sec. 173. Access to United States financial market by foreign institutions.
Sec. 174. Studies and reports on holding company capital requirements.
Sec. 175. International policy coordination.
Sec. 176. Rule of construction.
TITLE II—ORDERLY LIQUIDATION AUTHORITY
Sec. 201. Definitions.
Sec. 202. Judicial review.
Sec. 203. Systemic risk determination.
Sec. 204. Orderly liquidation of covered financial companies.
Sec. 205. Orderly liquidation of covered brokers and dealers.
Sec. 206. Mandatory terms and conditions for all orderly liquidation actions.
Sec. 207. Directors not liable for acquiescing in appointment of receiver.
Sec. 208. Dismissal and exclusion of other actions.
Sec. 209. Rulemaking; non-conflicting law.
Sec. 210. Powers and duties of the Corporation.
Sec. 211. Miscellaneous provisions.
Sec. 212. Prohibition of circumvention and prevention of conflicts of interest.
Sec. 213. Ban on certain activities by senior executives and directors.
Sec. 214. Prohibition on taxpayer funding.
Sec. 215. Study on secured creditor haircuts.
Sec. 216. Study on bankruptcy process for financial and nonbank financial institutions
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Sec. 217. Study on international coordination relating to bankruptcy process
for nonbank financial institutions
TITLE III—TRANSFER OF POWERS TO THE COMPTROLLER OF
THE CURRENCY, THE CORPORATION, AND THE BOARD OF GOVERNORS
Sec. 300. Short title.
Sec. 301. Purposes.
Sec. 302. Definition.
Subtitle A—Transfer of Powers and Duties
Sec. 311. Transfer date.
Sec. 312. Powers and duties transferred.
Sec. 313. Abolishment.
Sec. 314. Amendments to the Revised Statutes.
Sec. 315. Federal information policy.
Sec. 316. Savings provisions.
Sec. 317. References in Federal law to Federal banking agencies.
Sec. 318. Funding.
Sec. 319. Contracting and leasing authority.
Subtitle B—Transitional Provisions
Sec. 321. Interim use of funds, personnel, and property of the Office of Thrift
Supervision.
Sec. 322. Transfer of employees.
Sec. 323. Property transferred.
Sec. 324. Funds transferred.
Sec. 325. Disposition of affairs.
Sec. 326. Continuation of services.
Sec. 327. Implementation plan and reports.
Subtitle C—Federal Deposit Insurance Corporation
Sec. 331. Deposit insurance reforms.
Sec. 332. Elimination of procyclical assessments.
Sec. 333. Enhanced access to information for deposit insurance purposes.
Sec. 334. Transition reserve ratio requirements to reflect new assessment base.
Sec. 335. Permanent increase in deposit and share insurance.
Sec. 336. Management of the Federal Deposit Insurance Corporation.
Subtitle D—Other Matters
Sec. 341. Branching.
Sec. 342. Office of Minority and Women Inclusion.
Sec. 343. Insurance of transaction accounts.
Subtitle E—Technical and Conforming Amendments
Sec. 351. Effective date.
Sec. 352. Balanced Budget and Emergency Deficit Control Act of 1985.
Sec. 353. Bank Enterprise Act of 1991.
Sec. 354. Bank Holding Company Act of 1956.
Sec. 355. Bank Holding Company Act Amendments of 1970.
Sec. 356. Bank Protection Act of 1968.
Sec. 357. Bank Service Company Act.
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Sec. 358. Community Reinvestment Act of 1977.
Sec. 359. Crime Control Act of 1990.
Sec. 360. Depository Institution Management Interlocks Act.
Sec. 361. Emergency Homeowners’ Relief Act.
Sec. 362. Federal Credit Union Act.
Sec. 363. Federal Deposit Insurance Act.
Sec. 364. Federal Home Loan Bank Act.
Sec. 365. Federal Housing Enterprises Financial Safety and Soundness Act of
1992.
Sec. 366. Federal Reserve Act.
Sec. 367. Financial Institutions Reform, Recovery, and Enforcement Act of
1989.
Sec. 368. Flood Disaster Protection Act of 1973.
Sec. 369. Home Owners’ Loan Act.
Sec. 370. Housing Act of 1948.
Sec. 371. Housing and Community Development Act of 1992.
Sec. 372. Housing and Urban-Rural Recovery Act of 1983.
Sec. 373. National Housing Act.
Sec. 374. Neighborhood Reinvestment Corporation Act.
Sec. 375. Public Law 93–100.
Sec. 376. Securities Exchange Act of 1934.
Sec. 377. Title 18, United States Code.
Sec. 378. Title 31, United States Code.
TITLE IV—REGULATION OF ADVISERS TO HEDGE FUNDS AND
OTHERS
Sec. 401. Short title.
Sec. 402. Definitions.
Sec. 403. Elimination of private adviser exemption; limited exemption for foreign
private advisers; limited intrastate exemption.
Sec. 404. Collection of systemic risk data; reports; examinations; disclosures.
Sec. 405. Disclosure provision amendment.
Sec. 406. Clarification of rulemaking authority.
Sec. 407. Exemption of venture capital fund advisers.
Sec. 408. Exemption of and record keeping by private equity fund advisers.
Sec. 409. Family offices.
Sec. 410. State and Federal responsibilities; asset threshold for Federal registration
of investment advisers.
Sec. 411. Custody of client assets.
Sec. 412. Adjusting the accredited investor standard.
Sec. 413. GAO study and report on accredited investors.
Sec. 414. GAO study on self-regulatory organization for private funds.
Sec. 415. Commission study and report on short selling.
Sec. 416. Transition period.
TITLE V—INSURANCE
Subtitle A—Office of National Insurance
Sec. 501. Short title.
Sec. 502. Federal Insurance Office.
Subtitle B—State-Based Insurance Reform
Sec. 511. Short title.
Sec. 512. Effective date.
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PART I—NONADMITTED INSURANCE
Sec. 521. Reporting, payment, and allocation of premium taxes.
Sec. 522. Regulation of nonadmitted insurance by insured’s home State.
Sec. 523. Participation in national producer database.
Sec. 524. Uniform standards for surplus lines eligibility.
Sec. 525. Streamlined application for commercial purchasers.
Sec. 526. GAO study of nonadmitted insurance market.
Sec. 527. Definitions.
PART II—REINSURANCE
Sec. 531. Regulation of credit for reinsurance and reinsurance agreements.
Sec. 532. Regulation of reinsurer solvency.
Sec. 533. Definitions.
PART III—RULE OF CONSTRUCTION
Sec. 541. Rule of construction.
Sec. 542. Severability.
TITLE VI—IMPROVEMENTS TO REGULATION OF BANK AND SAVINGS
ASSOCIATION HOLDING COMPANIES AND DEPOSITORY INSTITUTIONS
Sec. 601. Short title.
Sec. 602. Definition.
Sec. 603. Moratorium and study on treatment of credit card banks, industrial
loan companies, and certain other companies under the Bank
Holding Company Act of 1956.
Sec. 604. Reports and examinations of holding companies; regulation of functionally
regulated subsidiaries.
Sec. 605. Assuring consistent oversight of permissible activities of depository
institution subsidiaries of holding companies.
Sec. 606. Requirements for financial holding companies to remain well capitalized
and well managed.
Sec. 607. Standards for interstate acquisitions.
Sec. 608. Enhancing existing restrictions on bank transactions with affiliates.
Sec. 609. Eliminating exceptions for transactions with financial subsidiaries.
Sec. 610. Lending limits applicable to credit exposure on derivative transactions,
repurchase agreements, reverse repurchase agreements,
and securities lending and borrowing transactions.
Sec. 611. Consistent treatment of derivative transactions in lending limits.
Sec. 612. Restriction on conversions of troubled banks.
Sec. 613. De novo branching into States.
Sec. 614. Lending limits to insiders.
Sec. 615. Limitations on purchases of assets from insiders.
Sec. 616. Regulations regarding capital levels.
Sec. 617. Elimination of elective investment bank holding company framework.
Sec. 618. Securities holding companies.
Sec. 619. Prohibitions on proprietary trading and certain relationships with
hedge funds and private equity funds.
Sec. 620. Study of bank investment activities.
Sec. 621. Conflicts of interest.
Sec. 622. Concentration limits on large financial firms.
Sec. 623. Interstate merger transactions.
Sec. 624. Qualified thrift lenders.
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Sec. 625. Treatment of dividends by certain mutual holding companies.
Sec. 626. Intermediate holding companies.
Sec. 627. Interest-bearing transaction accounts authorized.
Sec. 628. Credit card bank small business lending.
TITLE VII—WALL STREET TRANSPARENCY AND
ACCOUNTABILITY
Sec. 701. Short title.
Subtitle A—Regulation of Over-the-Counter Swaps Markets
PART I—REGULATORY AUTHORITY
Sec. 711. Definitions.
Sec. 712. Review of regulatory authority.
Sec. 713. Portfolio margining conforming changes.
Sec. 714. Abusive swaps.
Sec. 715. Authority to prohibit participation in swap activities.
Sec. 716. Prohibition against Federal Government bailouts of swaps entities.
Sec. 717. New product approval CFTC—SEC process.
Sec. 718. Determining status of novel derivative products.
Sec. 719. Studies.
Sec. 720. Memorandum.
PART II—REGULATION OF SWAP MARKETS
Sec. 721. Definitions.
Sec. 722. Jurisdiction.
Sec. 723. Clearing.
Sec. 724. Swaps; segregation and bankruptcy treatment.
Sec. 725. Derivatives clearing organizations.
Sec. 726. Rulemaking on conflict of interest.
Sec. 727. Public reporting of swap transaction data.
Sec. 728. Swap data repositories.
Sec. 729. Reporting and recordkeeping.
Sec. 730. Large swap trader reporting.
Sec. 731. Registration and regulation of swap dealers and major swap participants.
Sec. 732. Conflicts of interest.
Sec. 733. Swap execution facilities.
Sec. 734. Derivatives transaction execution facilities and exempt boards of
trade.
Sec. 735. Designated contract markets.
Sec. 736. Margin.
Sec. 737. Position limits.
Sec. 738. Foreign boards of trade.
Sec. 739. Legal certainty for swaps.
Sec. 740. Multilateral clearing organizations.
Sec. 741. Enforcement.
Sec. 742. Retail commodity transactions.
Sec. 743. Other authority.
Sec. 744. Restitution remedies.
Sec. 745. Enhanced compliance by registered entities.
Sec. 746. Insider trading.
Sec. 747. Antidisruptive practices authority.
Sec. 748. Commodity whistleblower incentives and protection.
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Sec. 749. Conforming amendments.
Sec. 750. Study on oversight of carbon markets.
Sec. 751. Energy and environmental markets advisory committee.
Sec. 752. International harmonization.
Sec. 753. Anti-manipulation authority.
Sec. 754. Effective date.
Subtitle B—Regulation of Security-Based Swap Markets
Sec. 761. Definitions under the Securities Exchange Act of 1934.
Sec. 762. Repeal of prohibition on regulation of security-based swap agreements.
Sec. 763. Amendments to the Securities Exchange Act of 1934.
Sec. 764. Registration and regulation of security-based swap dealers and major
security-based swap participants.
Sec. 765. Rulemaking on conflict of interest.
Sec. 766. Reporting and recordkeeping.
Sec. 767. State gaming and bucket shop laws.
Sec. 768. Amendments to the Securities Act of 1933; treatment of securitybased
swaps.
Sec. 769. Definitions under the Investment Company Act of 1940.
Sec. 770. Definitions under the Investment Advisers Act of 1940.
Sec. 771. Other authority.
Sec. 772. Jurisdiction.
Sec. 773. Civil penalties.
Sec. 774. Effective date.
TITLE VIII—PAYMENT, CLEARING, AND SETTLEMENT
SUPERVISION
Sec. 801. Short title.
Sec. 802. Findings and purposes.
Sec. 803. Definitions.
Sec. 804. Designation of systemic importance.
Sec. 805. Standards for systemically important financial market utilities and
payment, clearing, or settlement activities.
Sec. 806. Operations of designated financial market utilities.
Sec. 807. Examination of and enforcement actions against designated financial
market utilities.
Sec. 808. Examination of and enforcement actions against financial institutions
subject to standards for designated activities.
Sec. 809. Requests for information, reports, or records.
Sec. 810. Rulemaking.
Sec. 811. Other authority.
Sec. 812. Consultation.
Sec. 813. Common framework for designated clearing entity risk management.
Sec. 814. Effective date.
TITLE IX—INVESTOR PROTECTIONS AND IMPROVEMENTS TO
THE REGULATION OF SECURITIES
Sec. 901. Short title.
Subtitle A—Increasing Investor Protection
Sec. 911. Investor Advisory Committee established.
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Sec. 912. Clarification of authority of the Commission to engage in investor
testing.
Sec. 913. Study and rulemaking regarding obligations of brokers, dealers, and
investment advisers.
Sec. 914. Study on enhancing investment adviser examinations.
Sec. 915. Office of the Investor Advocate.
Sec. 916. Streamlining of filing procedures for self-regulatory organizations.
Sec. 917. Study regarding financial literacy among investors.
Sec. 918. Study regarding mutual fund advertising.
Sec. 919. Clarification of Commission authority to require investor disclosures
before purchase of investment products and services.
Sec. 919A. Study on conflicts of interest.
Sec. 919B. Study on improved investor access to information on investment advisers
and broker-dealers.
Sec. 919C. Study on financial planners and the use of financial designations.
Sec. 919D. Ombudsman.
Subtitle B—Increasing Regulatory Enforcement and Remedies
Sec. 921. Authority to restrict mandatory pre-dispute arbitration.
Sec. 922. Whistleblower protection.
Sec. 923. Conforming amendments for whistleblower protection.
Sec. 924. Implementation and transition provisions for whistleblower protection.
Sec. 925. Collateral bars.
Sec. 926. Disqualifying felons and other ‘‘bad actors’’ from Regulation D offerings.
Sec. 927. Equal treatment of self-regulatory organization rules.
Sec. 928. Clarification that section 205 of the Investment Advisers Act of 1940
does not apply to State-registered advisers.
Sec. 929. Unlawful margin lending.
Sec. 929A. Protection for employees of subsidiaries and affiliates of publicly
traded companies.
Sec. 929B. Fair Fund amendments.
Sec. 929C. Increasing the borrowing limit on Treasury loans.
Sec. 929D. Lost and stolen securities.
Sec. 929E. Nationwide service of subpoenas.
Sec. 929F. Formerly associated persons.
Sec. 929G. Streamlined hiring authority for market specialists.
Sec. 929H. SIPC Reforms.
Sec. 929I. Protecting confidentiality of materials submitted to the Commission.
Sec. 929J. Expansion of audit information to be produced and exchanged.
Sec. 929K. Sharing privileged information with other authorities.
Sec. 929L. Enhanced application of antifraud provisions.
Sec. 929M. Aiding and abetting authority under the Securities Act and the Investment
Company Act.
Sec. 929N. Authority to impose penalties for aiding and abetting violations of
the Investment Advisers Act.
Sec. 929O. Aiding and abetting standard of knowledge satisfied by recklessness.
Sec. 929P. Strengthening enforcement by the Commission.
Sec. 929Q. Revision to recordkeeping rule.
Sec. 929R. Beneficial ownership and short-swing profit reporting.
Sec. 929S. Fingerprinting.
Sec. 929T. Equal treatment of self-regulatory organization rules.
Sec. 929U. Deadline for completing examinations, inspections and enforcement
actions.
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Sec. 929V. Security Investor Protection Act amendments.
Sec. 929W. Notice to missing security holders.
Sec. 929X. Short sale reforms.
Sec. 929Y. Study on extraterritorial private rights of action.
Sec. 929Z. GAO study on securities litigation.
Subtitle C—Improvements to the Regulation of Credit Rating Agencies
Sec. 931. Findings.
Sec. 932. Enhanced regulation, accountability, and transparency of nationally
recognized statistical rating organizations.
Sec. 933. State of mind in private actions.
Sec. 934. Referring tips to law enforcement or regulatory authorities.
Sec. 935. Consideration of information from sources other than the issuer in
rating decisions.
Sec. 936. Qualification standards for credit rating analysts.
Sec. 937. Timing of regulations.
Sec. 938. Universal ratings symbols.
Sec. 939. Removal of statutory references to credit ratings.
Sec. 939A. Review of reliance on ratings.
Sec. 939B. Elimination of exemption from fair disclosure rule.
Sec. 939C. Securities and Exchange Commission study on strengthening credit
rating agency independence.
Sec. 939D. Government Accountability Office study on alternative business
models.
Sec. 939E. Government Accountability Office study on the creation of an independent
professional analyst organization.
Sec. 939F. Study and rulemaking on assigned credit ratings.
Sec. 939G. Effect of Rule 436(g).
Sec. 939H. Sense of Congress.
Subtitle D—Improvements to the Asset-Backed Securitization Process
Sec. 941. Regulation of credit risk retention.
Sec. 942. Disclosures and reporting for asset-backed securities.
Sec. 943. Representations and warranties in asset-backed offerings.
Sec. 944. Exempted transactions under the Securities Act of 1933.
Sec. 945. Due diligence analysis and disclosure in asset-backed securities
issues.
Sec. 946. Study on the macroeconomic effects of risk retention requirements.
Subtitle E—Accountability and Executive Compensation
Sec. 951. Shareholder vote on executive compensation disclosures.
Sec. 952. Compensation committee independence.
Sec. 953. Executive compensation disclosures.
Sec. 954. Recovery of erroneously awarded compensation.
Sec. 955. Disclosure regarding employee and director hedging.
Sec. 956. Enhanced compensation structure reporting.
Sec. 957. Voting by brokers.
Subtitle F—Improvements to the Management of the Securities and
Exchange Commission
Sec. 961. Report and certification of internal supervisory controls.
Sec. 962. Triennial report on personnel management.
Sec. 963. Annual financial controls audit.
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Sec. 964. Report on oversight of national securities associations.
Sec. 965. Compliance examiners.
Sec. 966. Suggestion program for employees of the Commission.
Sec. 967. Commission organizational study and reform.
Sec. 968. Study on SEC revolving door.
Subtitle G—Strengthening Corporate Governance
Sec. 971. Proxy access.
Sec. 972. Disclosures regarding chairman and CEO structures.
Subtitle H—Municipal Securities
Sec. 975. Regulation of municipal securities and changes to the board of the
MSRB.
Sec. 976. Government Accountability Office study of increased disclosure to investors.
Sec. 977. Government Accountability Office study on the municipal securities
markets.
Sec. 978. Funding for Governmental Accounting Standards Board.
Sec. 979. Commission Office of Municipal Securities.
Subtitle I—Public Company Accounting Oversight Board, Portfolio Margining,
and Other Matters
Sec. 981. Authority to share certain information with foreign authorities.
Sec. 982. Oversight of brokers and dealers.
Sec. 983. Portfolio margining.
Sec. 984. Loan or borrowing of securities.
Sec. 985. Technical corrections to Federal securities laws.
Sec. 986. Conforming amendments relating to repeal of the Public Utility Holding
Company Act of 1935.
Sec. 987. Amendment to definition of material loss and nonmaterial losses to
the Deposit Insurance Fund for purposes of Inspector General
reviews.
Sec. 988. Amendment to definition of material loss and nonmaterial losses to
the National Credit Union Share Insurance Fund for purposes
of Inspector General reviews.
Sec. 989. Government Accountability Office study on proprietary trading.
Sec. 989A. Senior investor protections.
Sec. 989B. Designated Federal entity inspectors general independence.
Sec. 989C. Strengthening Inspector General accountability.
Sec. 989D. Removal of Inspectors General of designated Federal entities.
Sec. 989E. Additional oversight of financial regulatory system.
Sec. 989F. GAO study of person to person lending.
Sec. 989G. Exemption for nonaccelerated filers.
Sec. 989H. Corrective responses by heads of certain establishments to deficiencies
identified by Inspectors General.
Sec. 989I. GAO study regarding exemption for smaller issuers.
Sec. 989J. Further promoting the adoption of the NAIC Model Regulations
that enhance protection of seniors and other consumers.
Subtitle J—Securities and Exchange Commission Match Funding
Sec. 991. Securities and Exchange Commission match funding.
TITLE X—BUREAU OF CONSUMER FINANCIAL PROTECTION
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Sec. 1001. Short title.
Sec. 1002. Definitions.
Subtitle A—Bureau of Consumer Financial Protection
Sec. 1011. Establishment of the Bureau of Consumer Financial Protection.
Sec. 1012. Executive and administrative powers.
Sec. 1013. Administration.
Sec. 1014. Consumer Advisory Board.
Sec. 1015. Coordination.
Sec. 1016. Appearances before and reports to Congress.
Sec. 1017. Funding; penalties and fines.
Sec. 1018. Effective date.
Subtitle B—General Powers of the Bureau
Sec. 1021. Purpose, objectives, and functions.
Sec. 1022. Rulemaking authority.
Sec. 1023. Review of Bureau regulations.
Sec. 1024. Supervision of nondepository covered persons.
Sec. 1025. Supervision of very large banks, savings associations, and credit
unions.
Sec. 1026. Other banks, savings associations, and credit unions.
Sec. 1027. Limitations on authorities of the Bureau; preservation of authorities.
Sec. 1028. Authority to restrict mandatory pre-dispute arbitration.
Sec. 1029. Exclusion for auto dealers.
Sec. 1029A. Effective date.
Subtitle C—Specific Bureau Authorities
Sec. 1031. Prohibiting unfair, deceptive, or abusive acts or practices.
Sec. 1032. Disclosures.
Sec. 1033. Consumer rights to access information.
Sec. 1034. Response to consumer complaints and inquiries.
Sec. 1035. Private education loan ombudsman.
Sec. 1036. Prohibited acts.
Sec. 1037. Effective date.
Subtitle D—Preservation of State Law
Sec. 1041. Relation to State law.
Sec. 1042. Preservation of enforcement powers of States.
Sec. 1043. Preservation of existing contracts.
Sec. 1044. State law preemption standards for national banks and subsidiaries
clarified.
Sec. 1045. Clarification of law applicable to nondepository institution subsidiaries.
Sec. 1046. State law preemption standards for Federal savings associations and
subsidiaries clarified.
Sec. 1047. Visitorial standards for national banks and savings associations.
Sec. 1048. Effective date.
Subtitle E—Enforcement Powers
Sec. 1051. Definitions.
Sec. 1052. Investigations and administrative discovery.
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Sec. 1053. Hearings and adjudication proceedings.
Sec. 1054. Litigation authority.
Sec. 1055. Relief available.
Sec. 1056. Referrals for criminal proceedings.
Sec. 1057. Employee protection.
Sec. 1058. Effective date.
Subtitle F—Transfer of Functions and Personnel; Transitional Provisions
Sec. 1061. Transfer of consumer financial protection functions.
Sec. 1062. Designated transfer date.
Sec. 1063. Savings provisions.
Sec. 1064. Transfer of certain personnel.
Sec. 1065. Incidental transfers.
Sec. 1066. Interim authority of the Secretary.
Sec. 1067. Transition oversight.
Subtitle G—Regulatory Improvements
Sec. 1071. Small business data collection.
Sec. 1072. Assistance for economically vulnerable individuals and families.
Sec. 1073. Remittance transfers.
Sec. 1074. Department of the Treasury study on ending the conservatorship of
Fannie Mae, Freddie Mac, and reforming the housing finance
system.
Sec. 1075. Reasonable fees and rules for payment card transactions.
Sec. 1076. Reverse mortgage study and regulations.
Sec. 1077. Report on private education loans and private educational lenders.
Sec. 1078. Study and report on credit scores.
Sec. 1079. Review, report, and program with respect to exchange facilitators.
Sec. 1079A. Financial fraud provisions.
Subtitle H—Conforming Amendments
Sec. 1081. Amendments to the Inspector General Act.
Sec. 1082. Amendments to the Privacy Act of 1974.
Sec. 1083. Amendments to the Alternative Mortgage Transaction Parity Act of
1982.
Sec. 1084. Amendments to the Electronic Fund Transfer Act.
Sec. 1085. Amendments to the Equal Credit Opportunity Act.
Sec. 1086. Amendments to the Expedited Funds Availability Act.
Sec. 1087. Amendments to the Fair Credit Billing Act.
Sec. 1088. Amendments to the Fair Credit Reporting Act and the Fair and Accurate
Credit Transactions Act of 2003.
Sec. 1089. Amendments to the Fair Debt Collection Practices Act.
Sec. 1090. Amendments to the Federal Deposit Insurance Act.
Sec. 1091. Amendment to Federal Financial Institutions Examination Council
Act of 1978.
Sec. 1092. Amendments to the Federal Trade Commission Act.
Sec. 1093. Amendments to the Gramm-Leach-Bliley Act.
Sec. 1094. Amendments to the Home Mortgage Disclosure Act of 1975.
Sec. 1095. Amendments to the Homeowners Protection Act of 1998.
Sec. 1096. Amendments to the Home Ownership and Equity Protection Act of
1994.
Sec. 1097. Amendments to the Omnibus Appropriations Act, 2009.
Sec. 1098. Amendments to the Real Estate Settlement Procedures Act of 1974.
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Sec. 1098A. Amendments to the Interstate Land Sales Full Disclosure Act.
Sec. 1099. Amendments to the Right to Financial Privacy Act of 1978.
Sec. 1100. Amendments to the Secure and Fair Enforcement for Mortgage Licensing
Act of 2008.
Sec. 1100A. Amendments to the Truth in Lending Act.
Sec. 1100B. Amendments to the Truth in Savings Act.
Sec. 1100C. Amendments to the Telemarketing and Consumer Fraud and
Abuse Prevention Act.
Sec. 1100D. Amendments to the Paperwork Reduction Act.
Sec. 1100E. Adjustments for inflation in the Truth in Lending Act.
Sec. 1100F. Use of consumer reports.
Sec. 1100G. Small business fairness and regulatory transparency.
Sec. 1100H. Effective date.
TITLE XI—FEDERAL RESERVE SYSTEM PROVISIONS
Sec. 1101. Federal Reserve Act amendments on emergency lending authority.
Sec. 1102. Reviews of special Federal reserve credit facilities.
Sec. 1103. Public access to information.
Sec. 1104. Liquidity event determination.
Sec. 1105. Emergency financial stabilization.
Sec. 1106. Additional related amendments.
Sec. 1107. Federal Reserve Act amendments on Federal reserve bank governance.
Sec. 1108. Federal Reserve Act amendments on supervision and regulation policy.
Sec. 1109. GAO audit of the Federal Reserve facilities; publication of Board actions.
TITLE XII—IMPROVING ACCESS TO MAINSTREAM FINANCIAL
INSTITUTIONS
Sec. 1201. Short title.
Sec. 1202. Purpose.
Sec. 1203. Definitions.
Sec. 1204. Expanded access to mainstream financial institutions.
Sec. 1205. Low-cost alternatives to payday loans.
Sec. 1206. Grants to establish loan-loss reserve funds.
Sec. 1207. Procedural provisions.
Sec. 1208. Authorization of appropriations.
Sec. 1209. Regulations.
Sec. 1210. Evaluation and reports to Congress.
TITLE XIII—PAY IT BACK ACT
Sec. 1301. Short title.
Sec. 1302. Amendment to reduce TARP authorization.
Sec. 1303. Report.
Sec. 1304. Amendments to Housing and Economic Recovery Act of 2008.
Sec. 1305. Federal Housing Finance Agency report.
Sec. 1306. Repayment of unobligated ARRA funds.
TITLE XIV—MORTGAGE REFORM AND ANTI-PREDATORY
LENDING ACT
Sec. 1400. Short title; designation as enumerated consumer law.
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Subtitle A—Residential Mortgage Loan Origination Standards
Sec. 1401. Definitions.
Sec. 1402. Residential mortgage loan origination.
Sec. 1403. Prohibition on steering incentives.
Sec. 1404. Liability.
Sec. 1405. Regulations.
Sec. 1406. Study of shared appreciation mortgages.
Subtitle B—Minimum Standards For Mortgages
Sec. 1411. Ability to repay.
Sec. 1412. Safe harbor and rebuttable presumption.
Sec. 1413. Defense to foreclosure.
Sec. 1414. Additional standards and requirements.
Sec. 1415. Rule of construction.
Sec. 1416. Amendments to civil liability provisions.
Sec. 1417. Lender rights in the context of borrower deception.
Sec. 1418. Six-month notice required before reset of hybrid adjustable rate
mortgages.
Sec. 1419. Required disclosures.
Sec. 1420. Disclosures required in monthly statements for residential mortgage
loans.
Sec. 1421. Report by the GAO.
Sec. 1422. State attorney general enforcement authority.
Subtitle C—High-Cost Mortgages
Sec. 1431. Definitions relating to high-cost mortgages.
Sec. 1432. Amendments to existing requirements for certain mortgages.
Sec. 1433. Additional requirements for certain mortgages.
Subtitle D—Office of Housing Counseling
Sec. 1441. Short title.
Sec. 1442. Establishment of Office of Housing Counseling.
Sec. 1443. Counseling procedures.
Sec. 1444. Grants for housing counseling assistance.
Sec. 1445. Requirements to use HUD-certified counselors under HUD programs.
Sec. 1446. Study of defaults and foreclosures.
Sec. 1447. Default and foreclosure database.
Sec. 1448. Definitions for counseling-related programs.
Sec. 1449. Accountability and transparency for grant recipients.
Sec. 1450. Updating and simplification of mortgage information booklet.
Sec. 1451. Home inspection counseling.
Sec. 1452. Warnings to homeowners of foreclosure rescue scams.
Subtitle E—Mortgage Servicing
Sec. 1461. Escrow and impound accounts relating to certain consumer credit
transactions.
Sec. 1462. Disclosure notice required for consumers who waive escrow services.
Sec. 1463. Real Estate Settlement Procedures Act of 1974 amendments.
Sec. 1464. Truth in Lending Act amendments.
Sec. 1465. Escrows included in repayment analysis.
15
Subtitle F—Appraisal Activities
Sec. 1471. Property appraisal requirements.
Sec. 1472. Appraisal independence requirements.
Sec. 1473. Amendments relating to Appraisal Subcommittee of FFIEC, Appraiser
Independence Monitoring, Approved Appraiser Education,
Appraisal Management Companies, Appraiser Complaint
Hotline, Automated Valuation Models, and Broker Price
Opinions.
Sec. 1474. Equal Credit Opportunity Act amendment.
Sec. 1475. Real Estate Settlement Procedures Act of 1974 amendment relating
to certain appraisal fees.
Sec. 1476. GAO study on the effectiveness and impact of various appraisal
methods, valuation models and distributions channels, and on
the Home Valuation Code of conduct and the Appraisal Subcommittee.
Subtitle G—Mortgage Resolution and Modification
Sec. 1481. Multifamily mortgage resolution program.
Sec. 1482. Home Affordable Modification Program guidelines.
Sec. 1483. Public availability of information of Making Home Affordable Program.
Sec. 1484. Protecting tenants at foreclosure extension and clarification.
Subtitle H—Miscellaneous Provisions
Sec. 1491. Sense of Congress regarding the importance of government-sponsored
enterprises reform to enhance the protection, limitation,
and regulation of the terms of residential mortgage credit.
Sec. 1492. GAO study report on government efforts to combat mortgage foreclosure
rescue scams and loan modification fraud.
Sec. 1493. Reporting of mortgage data by State.
Sec. 1494. Study of effect of drywall presence on foreclosures.
Sec. 1495. Definition.
Sec. 1496. Emergency mortgage relief.
Sec. 1497. Additional assistance for Neighborhood Stabilization Program.
Sec. 1498. Legal assistance for foreclosure-related issues.
TITLE XV—MISCELLANEOUS PROVISIONS
Sec. 1501. Restrictions on use of United States funds for foreign governments;
protection of American taxpayers.
Sec. 1502. Conflict minerals.
Sec. 1503. Reporting requirements regarding coal or other mine safety.
Sec. 1504. Disclosure of payments by resource extraction issuers.
Sec. 1505. Study by the Comptroller General.
Sec. 1506. Study on core deposits and brokered deposits.
TITLE XVI—FINANCIAL CRISIS ASSESSMENT AND FUND
Sec. 1601. Financial crisis special assessment.
Sec. 1602. Financial Crisis Special Assessment Fund.
Sec. 1603. Certain swaps, etc., not treated as section 1256 contracts.
16
1 SEC. 2. DEFINITIONS.
2 As used in this Act, the following definitions shall
3 apply, except as the context otherwise requires or as other4
wise specifically provided in this Act:
5 (1) AFFILIATE.—The term ‘‘affiliate’’ has the
6 same meaning as in section 3 of the Federal Deposit
7 Insurance Act (12 U.S.C. 1813).
8 (2) APPROPRIATE FEDERAL BANKING AGEN9
CY.—On and after the transfer date, the term ‘‘ap10
propriate Federal banking agency’’ has the same
11 meaning as in section 3(q) of the Federal Deposit
12 Insurance Act (12 U.S.C. 1813(q)), as amended by
13 title III.
14 (3) BOARD OF GOVERNORS.—The term ‘‘Board
15 of Governors’’ means the Board of Governors of the
16 Federal Reserve System.
17 (4) BUREAU.—The term ‘‘Bureau’’ means the
18 Bureau of Consumer Financial Protection estab19
lished under title X.
20 (5) COMMISSION.—The term ‘‘Commission’’
21 means the Securities and Exchange Commission, ex22
cept in the context of the Commodity Futures Trad23
ing Commission.
24 (6) COMMODITY FUTURES TERMS.—The terms
25 ‘‘futures commission merchant’’, ‘‘swap’’, ‘‘swap
26 dealer’’, ‘‘swap execution facility’’, ‘‘derivatives clear17
1 ing organization’’, ‘‘board of trade’’, ‘‘commodity
2 trading advisor’’, ‘‘commodity pool’’, and ‘‘com3
modity pool operator’’ have the same meanings as
4 given the terms in section 1a of the Commodity Ex5
change Act (7 U.S.C. 1 et seq.).
6 (7) CORPORATION.—The term ‘‘Corporation’’
7 means the Federal Deposit Insurance Corporation.
8 (8) COUNCIL.—The term ‘‘Council’’ means the
9 Financial Stability Oversight Council established
10 under title I.
11 (9) CREDIT UNION.—The term ‘‘credit union’’
12 means a Federal credit union, State credit union, or
13 State-chartered credit union, as those terms are de14
fined in section 101 of the Federal Credit Union Act
15 (12 U.S.C. 1752).
16 (10) FEDERAL BANKING AGENCY.—The term—
17 (A) ‘‘Federal banking agency’’ means, indi18
vidually, the Board of Governors, the Office of
19 the Comptroller of the Currency, and the Cor20
poration; and
21 (B) ‘‘Federal banking agencies’’ means all
22 of the agencies referred to in subparagraph (A),
23 collectively.
24 (11) FUNCTIONALLY REGULATED SUB25
SIDIARY.—The term ‘‘functionally regulated sub18
1 sidiary’’ has the same meaning as in section 5(c)(5)
2 of the Bank Holding Company Act of 1956 (12
3 U.S.C. 1844(c)(5)).
4 (12) PRIMARY FINANCIAL REGULATORY AGEN5
CY.—The term ‘‘primary financial regulatory agen6
cy’’ means—
7 (A) the appropriate Federal banking agen8
cy, with respect to institutions described in sec9
tion 3(q) of the Federal Deposit Insurance Act,
10 except to the extent that an institution is or the
11 activities of an institution are otherwise de12
scribed in subparagraph (B), (C), (D), or (E);
13 (B) the Securities and Exchange Commis14
sion, with respect to—
15 (i) any broker or dealer that is reg16
istered with the Commission under the Se17
curities Exchange Act of 1934, with re18
spect to the activities of the broker or deal19
er that require the broker or dealer to be
20 registered under that Act;
21 (ii) any investment company that is
22 registered with the Commission under the
23 Investment Company Act of 1940, with re24
spect to the activities of the investment
19
1 company that require the investment com2
pany to be registered under that Act;
3 (iii) any investment adviser that is
4 registered with the Commission under the
5 Investment Advisers Act of 1940, with re6
spect to the investment advisory activities
7 of such company and activities that are in8
cidental to such advisory activities;
9 (iv) any clearing agency registered
10 with the Commission under the Securities
11 Exchange Act of 1934, with respect to the
12 activities of the clearing agency that re13
quire the agency to be registered under
14 such Act;
15 (v) any nationally recognized statis16
tical rating organization registered with
17 the Commission under the Securities Ex18
change Act of 1934;
19 (vi) any transfer agent registered with
20 the Commission under the Securities Ex21
change Act of 1934;
22 (vii) any exchange registered as a na23
tional securities exchange with the Com24
mission under the Securities Exchange Act
25 of 1934;
20
1 (viii) any national securities associa2
tion registered with the Commission under
3 the Securities Exchange Act of 1934;
4 (ix) any securities information proc5
essor registered with the Commission
6 under the Securities Exchange Act of
7 1934;
8 (x) the Municipal Securities Rule9
making Board established under the Secu10
rities Exchange Act of 1934;
11 (xi) the Public Company Accounting
12 Oversight Board established under the
13 Sarbanes-Oxley Act of 2002 (15 U.S.C.
14 7211 et seq.);
15 (xii) the Securities Investor Protection
16 Corporation established under the Securi17
ties Investor Protection Act of 1970 (15
18 U.S.C. 78aaa et seq.); and
19 (xiii) any security-based swap execu20
tion facility, security-based swap data re21
pository, security-based swap dealer or
22 major security-based swap participant reg23
istered with the Commission under the Se24
curities Exchange Act of 1934, with re25
spect to the security-based swap activities
21
1 of the person that require such person to
2 be registered under such Act;
3 (C) the Commodity Futures Trading Com4
mission, with respect to—
5 (i) any futures commission merchant
6 registered with the Commodity Futures
7 Trading Commission under the Commodity
8 Exchange Act (7 U.S.C. 1 et seq.), with
9 respect to the activities of the futures com10
mission merchant that require the futures
11 commission merchant to be registered
12 under that Act;
13 (ii) any commodity pool operator reg14
istered with the Commodity Futures Trad15
ing Commission under the Commodity Ex16
change Act (7 U.S.C. 1 et seq.), with re17
spect to the activities of the commodity
18 pool operator that require the commodity
19 pool operator to be registered under that
20 Act, or a commodity pool, as defined in
21 that Act;
22 (iii) any commodity trading advisor or
23 introducing broker registered with the
24 Commodity Futures Trading Commission
25 under the Commodity Exchange Act (7
22
1 U.S.C. 1 et seq.), with respect to the ac2
tivities of the commodity trading advisor or
3 introducing broker that require the com4
modity trading adviser or introducing
5 broker to be registered under that Act;
6 (iv) any derivatives clearing organiza7
tion registered with the Commodity Fu8
tures Trading Commission under the Com9
modity Exchange Act (7 U.S.C. 1 et seq.),
10 with respect to the activities of the deriva11
tives clearing organization that require the
12 derivatives clearing organization to be reg13
istered under that Act;
14 (v) any board of trade designated as
15 a contract market by the Commodity Fu16
tures Trading Commission under the Com17
modity Exchange Act (7 U.S.C. 1 et seq.);
18 (vi) any futures association registered
19 with the Commodity Futures Trading
20 Commission under the Commodity Ex21
change Act (7 U.S.C. 1 et seq.);
22 (vii) any retail foreign exchange dealer
23 registered with the Commodity Futures
24 Trading Commission under the Commodity
25 Exchange Act (7 U.S.C. 1 et seq.), with
23
1 respect to the activities of the retail foreign
2 exchange dealer that require the retail for3
eign exchange dealer to be registered under
4 that Act;
5 (viii) any swap execution facility, swap
6 data repository, swap dealer, or major
7 swap participant registered with the Com8
modity Futures Trading Commission
9 under the Commodity Exchange Act (7
10 U.S.C. 1 et seq.) with respect to the swap
11 activities of the person that require such
12 person to be registered under that Act; and
13 (ix) any registered entity under the
14 Commodity Exchange Act (7 U.S.C. 1 et
15 seq.), with respect to the activities of the
16 registered entity that require the registered
17 entity to be registered under that Act;
18 (D) the State insurance authority of the
19 State in which an insurance company is domi20
ciled, with respect to the insurance activities
21 and activities that are incidental to such insur22
ance activities of an insurance company that is
23 subject to supervision by the State insurance
24 authority under State insurance law; and
24
1 (E) the Federal Housing Finance Agency,
2 with respect to Federal Home Loan Banks or
3 the Federal Home Loan Bank System, and
4 with respect to the Federal National Mortgage
5 Association or the Federal Home Loan Mort6
gage Corporation.
7 (13) PRUDENTIAL STANDARDS.—The term
8 ‘‘prudential standards’’ means enhanced supervision
9 and regulatory standards developed by the Board of
10 Governors under section 165.
11 (14) SECRETARY.—The term ‘‘Secretary’’
12 means the Secretary of the Treasury.
13 (15) SECURITIES TERMS.—The—
14 (A) terms ‘‘broker’’, ‘‘dealer’’, ‘‘issuer’’,
15 ‘‘nationally recognized statistical rating organi16
zation’’, ‘‘security’’, and ‘‘securities laws’’ have
17 the same meanings as in section 3 of the Secu18
rities Exchange Act of 1934 (15 U.S.C. 78c);
19 (B) term ‘‘investment adviser’’ has the
20 same meaning as in section 202 of the Invest21
ment Advisers Act of 1940 (15 U.S.C. 80b–2);
22 and
23 (C) term ‘‘investment company’’ has the
24 same meaning as in section 3 of the Investment
25 Company Act of 1940 (15 U.S.C. 80a–3).
25
1 (16) STATE.—The term ‘‘State’’ means any
2 State, commonwealth, territory, or possession of the
3 United States, the District of Columbia, the Com4
monwealth of Puerto Rico, the Commonwealth of the
5 Northern Mariana Islands, American Samoa, Guam,
6 or the United States Virgin Islands.
7 (17) TRANSFER DATE.—The term ‘‘transfer
8 date’’ means the date established under section 311.
9 (18) OTHER INCORPORATED DEFINITIONS.—
10 (A) FEDERAL DEPOSIT INSURANCE ACT.—
11 The terms ‘‘bank’’, ‘‘bank holding company’’,
12 ‘‘control’’, ‘‘deposit’’, ‘‘depository institution’’,
13 ‘‘Federal depository institution’’, ‘‘Federal sav14
ings association’’, ‘‘foreign bank’’, ‘‘including’’,
15 ‘‘insured branch’’, ‘‘insured depository institu16
tion’’, ‘‘national member bank’’, ‘‘national non17
member bank’’, ‘‘savings association’’, ‘‘State
18 bank’’, ‘‘State depository institution’’, ‘‘State
19 member bank’’, ‘‘State nonmember bank’’,
20 ‘‘State savings association’’, and ‘‘subsidiary’’
21 have the same meanings as in section 3 of the
22 Federal Deposit Insurance Act (12 U.S.C.
23 1813).
24 (B) HOLDING COMPANIES.—The term—
26
1 (i) ‘‘bank holding company’’ has the
2 same meaning as in section 2 of the Bank
3 Holding Company Act of 1956 (12 U.S.C.
4 1841);
5 (ii) ‘‘financial holding company’’ has
6 the same meaning as in section 2(p) of the
7 Bank Holding Company Act of 1956 (12
8 U.S.C. 1841(p)); and
9 (iii) ‘‘savings and loan holding com10
pany’’ has the same meaning as in section
11 10 of the Home Owners’ Loan Act (12
12 U.S.C. 1467a(a)).
13 SEC. 3. SEVERABILITY.
14 If any provision of this Act, an amendment made by
15 this Act, or the application of such provision or amend16
ment to any person or circumstance is held to be unconsti17
tutional, the remainder of this Act, the amendments made
18 by this Act, and the application of the provisions of such
19 to any person or circumstance shall not be affected there20
by.
21 SEC. 4. EFFECTIVE DATE.
22 Except as otherwise specifically provided in this Act
23 or the amendments made by this Act, this Act and such
24 amendments shall take effect 1 day after the date of en25
actment of this Act.
27
1 SEC. 5. BUDGETARY EFFECTS.
2 The budgetary effects of this Act, for the purpose of
3 complying with the Statutory Pay-As-You-Go-Act of 2010,
4 shall be determined by reference to the latest statement
5 titled ‘‘Budgetary Effects of PAYGO Legislation’’ for this
6 Act, jointly submitted for printing in the Congressional
7 Record by the Chairmen of the House and Senate Budget
8 Committees, provided that such statement has been sub9
mitted prior to the vote on passage in the House acting
10 first on this conference report or amendment between the
11 Houses.
12 SEC. 6. ANTITRUST SAVINGS CLAUSE.
13 Nothing in this Act, or any amendment made by this
14 Act, shall be construed to modify, impair, or supersede
15 the operation of any of the antitrust laws, unless otherwise
16 specified. For purposes of this section, the term ‘‘antitrust
17 laws’’ has the same meaning as in subsection (a) of the
18 first section of the Clayton Act, except that such term in19
cludes section 5 of the Federal Trade Commission Act,
20 to the extent that such section 5 applies to unfair methods
21 of competition.
22 TITLE I—FINANCIAL STABILITY
23 SEC. 101. SHORT TITLE.
24 This title may be cited as the ‘‘Financial Stability Act
25 of 2010’’.
28
1 SEC. 102. DEFINITIONS.
2 (a) IN GENERAL.—For purposes of this title, unless
3 the context otherwise requires, the following definitions
4 shall apply:
5 (1) BANK HOLDING COMPANY.—The term
6 ‘‘bank holding company’’ has the same meaning as
7 in section 2 of the Bank Holding Company Act of
8 1956 (12 U.S.C. 1841). A foreign bank or company
9 that is treated as a bank holding company for pur10
poses of the Bank Holding Company Act of 1956,
11 pursuant to section 8(a) of the International Bank12
ing Act of 1978 (12 U.S.C. 3106(a)), shall be treat13
ed as a bank holding company for purposes of this
14 title.
15 (2) CHAIRPERSON.—The term ‘‘Chairperson’’
16 means the Chairperson of the Council.
17 (3) MEMBER AGENCY.—The term ‘‘member
18 agency’’ means an agency represented by a voting
19 member of the Council.
20 (4) NONBANK FINANCIAL COMPANY DEFINI21
TIONS.—
22 (A) FOREIGN NONBANK FINANCIAL COM23
PANY.—The term ‘‘foreign nonbank financial
24 company’’ means a company (other than a com25
pany that is, or is treated in the United States
26 as, a bank holding company) that is—
29
1 (i) incorporated or organized in a
2 country other than the United States; and
3 (ii) predominantly engaged in, includ4
ing through a branch in the United States,
5 financial activities, as defined in paragraph
6 (6).
7 (B) U.S. NONBANK FINANCIAL COM8
PANY.—The term ‘‘U.S. nonbank financial com9
pany’’ means a company (other than a bank
10 holding company, a Farm Credit System insti11
tution chartered and subject to the provisions of
12 the Farm Credit Act of 1971 (12 U.S.C. 2001
13 et seq.), or a national securities exchange (or
14 parent thereof), clearing agency (or parent
15 thereof, unless the parent is a bank holding
16 company), security-based swap execution facil17
ity, or security-based swap data repository reg18
istered with the Commission, or a board of
19 trade designated as a contract market (or par20
ent thereof), or a derivatives clearing organiza21
tion (or parent thereof, unless the parent is a
22 bank holding company), swap execution facility
23 or a swap data repository registered with the
24 Commodity Futures Trading Commission), that
25 is—
30
1 (i) incorporated or organized under
2 the laws of the United States or any State;
3 and
4 (ii) predominantly engaged in finan5
cial activities, as defined in paragraph (6).
6 (C) NONBANK FINANCIAL COMPANY.—The
7 term ‘‘nonbank financial company’’ means a
8 U.S. nonbank financial company and a foreign
9 nonbank financial company.
10 (D) NONBANK FINANCIAL COMPANY SU11
PERVISED BY THE BOARD OF GOVERNORS.—
12 The term ‘‘nonbank financial company super13
vised by the Board of Governors’’ means a
14 nonbank financial company that the Council
15 has determined under section 113 shall be su16
pervised by the Board of Governors.
17 (5) OFFICE OF FINANCIAL RESEARCH.—The
18 term ‘‘Office of Financial Research’’ means the of19
fice established under section 152.
20 (6) PREDOMINANTLY ENGAGED.—A company is
21 ‘‘predominantly engaged in financial activities’’ if—
22 (A) the annual gross revenues derived by
23 the company and all of its subsidiaries from ac24
tivities that are financial in nature (as defined
25 in section 4(k) of the Bank Holding Company
31
1 Act of 1956) and, if applicable, from the owner2
ship or control of one or more insured deposi3
tory institutions, represents 85 percent or more
4 of the consolidated annual gross revenues of the
5 company; or
6 (B) the consolidated assets of the company
7 and all of its subsidiaries related to activities
8 that are financial in nature (as defined in sec9
tion 4(k) of the Bank Holding Company Act of
10 1956) and, if applicable, related to the owner11
ship or control of one or more insured deposi12
tory institutions, represents 85 percent or more
13 of the consolidated assets of the company.
14 (7) SIGNIFICANT INSTITUTIONS.—The terms
15 ‘‘significant nonbank financial company’’ and ‘‘sig16
nificant bank holding company’’ have the meanings
17 given those terms by rule of the Board of Governors,
18 but in no instance shall the term ‘‘significant
19 nonbank financial company’’ include those entities
20 that are excluded under paragraph (4)(B).
21 (b) DEFINITIONAL CRITERIA.—The Board of Gov22
ernors shall establish, by regulation, the requirements for
23 determining if a company is predominantly engaged in fi24
nancial activities, as defined in subsection (a)(6).
32
1 (c) FOREIGN NONBANK FINANCIAL COMPANIES.—
2 For purposes of the application of subtitles A and C (other
3 than section 113(b)) with respect to a foreign nonbank
4 financial company, references in this title to ‘‘company’’
5 or ‘‘subsidiary’’ include only the United States activities
6 and subsidiaries of such foreign company, except as other7
wise provided.
8 Subtitle A—Financial Stability
9 Oversight Council
10 SEC. 111. FINANCIAL STABILITY OVERSIGHT COUNCIL ES11
TABLISHED.
12 (a) ESTABLISHMENT.—Effective on the date of en13
actment of this Act, there is established the Financial Sta14
bility Oversight Council.
15 (b) MEMBERSHIP.—The Council shall consist of the
16 following members:
17 (1) VOTING MEMBERS.—The voting members,
18 who shall each have 1 vote on the Council shall be—
19 (A) the Secretary of the Treasury, who
20 shall serve as Chairperson of the Council;
21 (B) the Chairman of the Board of Gov22
ernors;
23 (C) the Comptroller of the Currency;
24 (D) the Director of the Bureau;
25 (E) the Chairman of the Commission;
33
1 (F) the Chairperson of the Corporation;
2 (G) the Chairperson of the Commodity Fu3
tures Trading Commission;
4 (H) the Director of the Federal Housing
5 Finance Agency;
6 (I) the Chairman of the National Credit
7 Union Administration Board; and
8 (J) an independent member appointed by
9 the President, by and with the advice and con10
sent of the Senate, having insurance expertise.
11 (2) NONVOTING MEMBERS.—The nonvoting
12 members, who shall serve in an advisory capacity as
13 a nonvoting member of the Council, shall be—
14 (A) the Director of the Office of Financial
15 Research;
16 (B) the Director of the Federal Insurance
17 Office;
18 (C) a State insurance commissioner, to be
19 designated by a selection process determined by
20 the State insurance commissioners;
21 (D) a State banking supervisor, to be des22
ignated by a selection process determined by
23 the State banking supervisors; and
24 (E) a State securities commissioner (or an
25 officer performing like functions), to be des34
1 ignated by a selection process determined by
2 such State securities commissioners.
3 (3) NONVOTING MEMBER PARTICIPATION.—The
4 nonvoting members of the Council shall not be ex5
cluded from any of the proceedings, meetings, dis6
cussions, or deliberations of the Council, except that
7 the Chairperson may, upon an affirmative vote of
8 the member agencies, exclude the nonvoting mem9
bers from any of the proceedings, meetings, discus10
sions, or deliberations of the Council when necessary
11 to safeguard and promote the free exchange of con12
fidential supervisory information.
13 (c) TERMS; VACANCY.—
14 (1) TERMS.—The independent member of the
15 Council shall serve for a term of 6 years, and each
16 nonvoting member described in subparagraphs (C),
17 (D), and (E) of subsection (b)(2) shall serve for a
18 term of 2 years.
19 (2) VACANCY.—Any vacancy on the Council
20 shall be filled in the manner in which the original
21 appointment was made.
22 (3) ACTING OFFICIALS MAY SERVE.—In the
23 event of a vacancy in the office of the head of a
24 member agency or department, and pending the ap25
pointment of a successor, or during the absence or
35
1 disability of the head of a member agency or depart2
ment, the acting head of the member agency or de3
partment shall serve as a member of the Council in
4 the place of that agency or department head.
5 (d) TECHNICAL AND PROFESSIONAL ADVISORY COM6
MITTEES.—The Council may appoint such special advi7
sory, technical, or professional committees as may be use8
ful in carrying out the functions of the Council, including
9 an advisory committee consisting of State regulators, and
10 the members of such committees may be members of the
11 Council, or other persons, or both.
12 (e) MEETINGS.—
13 (1) TIMING.—The Council shall meet at the call
14 of the Chairperson or a majority of the members
15 then serving, but not less frequently than quarterly.
16 (2) RULES FOR CONDUCTING BUSINESS.—The
17 Council shall adopt such rules as may be necessary
18 for the conduct of the business of the Council. Such
19 rules shall be rules of agency organization, proce20
dure, or practice for purposes of section 553 of title
21 5, United States Code.
22 (f) VOTING.—Unless otherwise specified, the Council
23 shall make all decisions that it is authorized or required
24 to make by a majority vote of the voting members then
25 serving.
36
1 (g) NONAPPLICABILITY OF FACA.—The Federal Ad2
visory Committee Act (5 U.S.C. App.) shall not apply to
3 the Council, or to any special advisory, technical, or pro4
fessional committee appointed by the Council, except that,
5 if an advisory, technical, or professional committee has
6 one or more members who are not employees of or affili7
ated with the United States Government, the Council shall
8 publish a list of the names of the members of such com9
mittee.
10 (h) ASSISTANCE FROM FEDERAL AGENCIES.—Any
11 department or agency of the United States may provide
12 to the Council and any special advisory, technical, or pro13
fessional committee appointed by the Council, such serv14
ices, funds, facilities, staff, and other support services as
15 the Council may determine advisable.
16 (i) COMPENSATION OF MEMBERS.—
17 (1) FEDERAL EMPLOYEE MEMBERS.—All mem18
bers of the Council who are officers or employees of
19 the United States shall serve without compensation
20 in addition to that received for their services as offi21
cers or employees of the United States.
22 (2) COMPENSATION FOR NON-FEDERAL MEM23
BER.—Section 5314 of title 5, United States Code,
24 is amended by adding at the end the following:
37
1 ‘‘Independent Member of the Financial Stability
2 Oversight Council (1).’’.
3 (j) DETAIL OF GOVERNMENT EMPLOYEES.—Any em4
ployee of the Federal Government may be detailed to the
5 Council without reimbursement, and such detail shall be
6 without interruption or loss of civil service status or privi7
lege. An employee of the Federal Government detailed to
8 the Council shall report to and be subject to oversight by
9 the Council during the assignment to the Council, and
10 shall be compensated by the department or agency from
11 which the employee was detailed.
12 SEC. 112. COUNCIL AUTHORITY.
13 (a) PURPOSES AND DUTIES OF THE COUNCIL.—
14 (1) IN GENERAL.—The purposes of the Council
15 are—
16 (A) to identify risks to the financial sta17
bility of the United States that could arise from
18 the material financial distress or failure, or on19
going activities, of large, interconnected bank
20 holding companies or nonbank financial compa21
nies, or that could arise outside the financial
22 services marketplace;
23 (B) to promote market discipline, by elimi24
nating expectations on the part of shareholders,
25 creditors, and counterparties of such companies
38
1 that the Government will shield them from
2 losses in the event of failure; and
3 (C) to respond to emerging threats to the
4 stability of the United States financial system.
5 (2) DUTIES.—The Council shall, in accordance
6 with this title—
7 (A) collect information from member agen8
cies, other Federal and State financial regu9
latory agencies, the Federal Insurance Office
10 and, if necessary to assess risks to the United
11 States financial system, direct the Office of Fi12
nancial Research to collect information from
13 bank holding companies and nonbank financial
14 companies;
15 (B) provide direction to, and request data
16 and analyses from, the Office of Financial Re17
search to support the work of the Council;
18 (C) monitor the financial services market19
place in order to identify potential threats to
20 the financial stability of the United States;
21 (D) to monitor domestic and international
22 financial regulatory proposals and develop23
ments, including insurance and accounting
24 issues, and to advise Congress and make rec25
ommendations in such areas that will enhance
39
1 the integrity, efficiency, competitiveness, and
2 stability of the U.S. financial markets;
3 (E) facilitate information sharing and co4
ordination among the member agencies and
5 other Federal and State agencies regarding do6
mestic financial services policy development,
7 rulemaking, examinations, reporting require8
ments, and enforcement actions;
9 (F) recommend to the member agencies
10 general supervisory priorities and principles re11
flecting the outcome of discussions among the
12 member agencies;
13 (G) identify gaps in regulation that could
14 pose risks to the financial stability of the
15 United States;
16 (H) require supervision by the Board of
17 Governors for nonbank financial companies that
18 may pose risks to the financial stability of the
19 United States in the event of their material fi20
nancial distress or failure, or because of their
21 activities pursuant to section 113;
22 (I) make recommendations to the Board of
23 Governors concerning the establishment of
24 heightened prudential standards for risk-based
25 capital, leverage, liquidity, contingent capital,
40
1 resolution plans and credit exposure reports,
2 concentration limits, enhanced public disclo3
sures, and overall risk management for
4 nonbank financial companies and large, inter5
connected bank holding companies supervised
6 by the Board of Governors;
7 (J) identify systemically important finan8
cial market utilities and payment, clearing, and
9 settlement activities (as that term is defined in
10 title VIII);
11 (K) make recommendations to primary fi12
nancial regulatory agencies to apply new or
13 heightened standards and safeguards for finan14
cial activities or practices that could create or
15 increase risks of significant liquidity, credit, or
16 other problems spreading among bank holding
17 companies, nonbank financial companies, and
18 United States financial markets;
19 (L) review and, as appropriate, may sub20
mit comments to the Commission and any
21 standard-setting body with respect to an exist22
ing or proposed accounting principle, standard,
23 or procedure;
24 (M) provide a forum for—
41
1 (i) discussion and analysis of emerg2
ing market developments and financial reg3
ulatory issues; and
4 (ii) resolution of jurisdictional dis5
putes among the members of the Council;
6 and
7 (N) annually report to and testify before
8 Congress on—
9 (i) the activities of the Council;
10 (ii) significant financial market and
11 regulatory developments, including insur12
ance and accounting regulations and
13 standards, along with an assessment of
14 those developments on the stability of the
15 financial system;
16 (iii) potential emerging threats to the
17 financial stability of the United States;
18 (iv) all determinations made under
19 section 113 or title VIII, and the basis for
20 such determinations;
21 (v) all recommendations made under
22 section 119 and the result of such rec23
ommendations; and
24 (vi) recommendations—
42
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1 (I) to enhance the integrity, effi2
ciency, competitiveness, and stability
3 of United States financial markets;
4 (II) to promote market discipline;
5 and
6 (III) to maintain investor con7
fidence.
8 (b) STATEMENTS BY VOTING MEMBERS OF THE
9 COUNCIL.—At the time at which each report is submitted
10 under subsection (a), each voting member of the Council
11 shall—
12 (1) if such member believes that the Council,
13 the Government, and the private sector are taking
14 all reasonable steps to ensure financial stability and
15 to mitigate systemic risk that would negatively affect
16 the economy, submit a signed statement to Congress
17 stating such belief; or
18 (2) if such member does not believe that all rea19
sonable steps described under paragraph (1) are
20 being taken, submit a signed statement to Congress
21 stating what actions such member believes need to
22 be taken in order to ensure that all reasonable steps
23 described under paragraph (1) are taken.
24 (c) TESTIMONY BY THE CHAIRPERSON.—The Chair25
person shall appear before the Committee on Financial
43
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1 Services of the House of Representatives and the Com2
mittee on Banking, Housing, and Urban Affairs of the
3 Senate at an annual hearing, after the report is submitted
4 under subsection (a)—
5 (1) to discuss the efforts, activities, objectives,
6 and plans of the Council; and
7 (2) to discuss and answer questions concerning
8 such report.
9 (d) AUTHORITY TO OBTAIN INFORMATION.—
10 (1) IN GENERAL.—The Council may receive,
11 and may request the submission of, any data or in12
formation from the Office of Financial Research,
13 member agencies, and the Federal Insurance Office,
14 as necessary—
15 (A) to monitor the financial services mar16
ketplace to identify potential risks to the finan17
cial stability of the United States; or
18 (B) to otherwise carry out any of the pro19
visions of this title.
20 (2) SUBMISSIONS BY THE OFFICE AND MEMBER
21 AGENCIES.—Notwithstanding any other provision of
22 law, the Office of Financial Research, any member
23 agency, and the Federal Insurance Office, are au24
thorized to submit information to the Council.
25 (3) FINANCIAL DATA COLLECTION.—
44
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1 (A) IN GENERAL.—The Council, acting
2 through the Office of Financial Research, may
3 require the submission of periodic and other re4
ports from any nonbank financial company or
5 bank holding company for the purpose of as6
sessing the extent to which a financial activity
7 or financial market in which the nonbank finan8
cial company or bank holding company partici9
pates, or the nonbank financial company or
10 bank holding company itself, poses a threat to
11 the financial stability of the United States.
12 (B) MITIGATION OF REPORT BURDEN.—
13 Before requiring the submission of reports from
14 any nonbank financial company or bank holding
15 company that is regulated by a member agency
16 or any primary financial regulatory agency, the
17 Council, acting through the Office of Financial
18 Research, shall coordinate with such agencies
19 and shall, whenever possible, rely on informa20
tion available from the Office of Financial Re21
search or such agencies.
22 (C) MITIGATION IN CASE OF FOREIGN FI23
NANCIAL COMPANIES.—Before requiring the
24 submission of reports from a company that is
25 a foreign nonbank financial company or foreign45
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1 based bank holding company, the Council shall,
2 acting through the Office of Financial Re3
search, to the extent appropriate, consult with
4 the appropriate foreign regulator of such com5
pany and, whenever possible, rely on informa6
tion already being collected by such foreign reg7
ulator, with English translation.
8 (4) BACK-UP EXAMINATION BY THE BOARD OF
9 GOVERNORS.—If the Council is unable to determine
10 whether the financial activities of a U.S. nonbank fi11
nancial company pose a threat to the financial sta12
bility of the United States, based on information or
13 reports obtained under paragraphs (1) and (3), dis14
cussions with management, and publicly available in15
formation, the Council may request the Board of
16 Governors, and the Board of Governors is author17
ized, to conduct an examination of the U.S. nonbank
18 financial company for the sole purpose of deter19
mining whether the nonbank financial company
20 should be supervised by the Board of Governors for
21 purposes of this title.
22 (5) CONFIDENTIALITY.—
23 (A) IN GENERAL.—The Council, the Office
24 of Financial Research, and the other member
25 agencies shall maintain the confidentiality of
46
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1 any data, information, and reports submitted
2 under this title.
3 (B) RETENTION OF PRIVILEGE.—The sub4
mission of any nonpublicly available data or in5
formation under this subsection and subtitle B
6 shall not constitute a waiver of, or otherwise af7
fect, any privilege arising under Federal or
8 State law (including the rules of any Federal or
9 State court) to which the data or information is
10 otherwise subject.
11 (C) FREEDOM OF INFORMATION ACT.—
12 Section 552 of title 5, United States Code, in13
cluding the exceptions thereunder, shall apply
14 to any data or information submitted under this
15 subsection and subtitle B.
16 SEC. 113. AUTHORITY TO REQUIRE SUPERVISION AND REG17
ULATION OF CERTAIN NONBANK FINANCIAL
18 COMPANIES.
19 (a) U.S. NONBANK FINANCIAL COMPANIES SUPER20
VISED BY THE BOARD OF GOVERNORS.—
21 (1) DETERMINATION.—The Council, on a non22
delegable basis and by a vote of not fewer than 2⁄3
23 of the voting members then serving, including an af24
firmative vote by the Chairperson, may determine
25 that a U.S. nonbank financial company shall be su47
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1 pervised by the Board of Governors and shall be
2 subject to prudential standards, in accordance with
3 this title, if the Council determines that material fi4
nancial distress at the U.S. nonbank financial com5
pany, or the nature, scope, size, scale, concentration,
6 interconnectedness, or mix of the activities of the
7 U.S. nonbank financial company, could pose a threat
8 to the financial stability of the United States.
9 (2) CONSIDERATIONS.—In making a determina10
tion under paragraph (1), the Council shall con11
sider—
12 (A) the extent of the leverage of the com13
pany;
14 (B) the extent and nature of the off-bal15
ance-sheet exposures of the company;
16 (C) the extent and nature of the trans17
actions and relationships of the company with
18 other significant nonbank financial companies
19 and significant bank holding companies;
20 (D) the importance of the company as a
21 source of credit for households, businesses, and
22 State and local governments and as a source of
23 liquidity for the United States financial system;
24 (E) the importance of the company as a
25 source of credit for low-income, minority, or un48
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1 derserved communities, and the impact that the
2 failure of such company would have on the
3 availability of credit in such communities;
4 (F) the extent to which assets are man5
aged rather than owned by the company, and
6 the extent to which ownership of assets under
7 management is diffuse;
8 (G) the nature, scope, size, scale, con9
centration, interconnectedness, and mix of the
10 activities of the company;
11 (H) the degree to which the company is al12
ready regulated by 1 or more primary financial
13 regulatory agencies;
14 (I) the amount and nature of the financial
15 assets of the company;
16 (J) the amount and types of the liabilities
17 of the company, including the degree of reliance
18 on short-term funding; and
19 (K) any other risk-related factors that the
20 Council deems appropriate.
21 (b) FOREIGN NONBANK FINANCIAL COMPANIES SU22
PERVISED BY THE BOARD OF GOVERNORS.—
23 (1) DETERMINATION.—The Council, on a non24
delegable basis and by a vote of not fewer than 2⁄3
25 of the voting members then serving, including an af49
O:AYOAYO10H30.xml [file 1 of 17] S.L.C
1 firmative vote by the Chairperson, may determine
2 that a foreign nonbank financial company shall be
3 supervised by the Board of Governors and shall be
4 subject to prudential standards, in accordance with
5 this title, if the Council determines that material fi6
nancial distress at the foreign nonbank financial
7 company, or the nature, scope, size, scale, concentra8
tion, interconnectedness, or mix of the activities of
9 the foreign nonbank financial company, could pose a
10 threat to the financial stability of the United States.
11 (2) CONSIDERATIONS.—In making a determina12
tion under paragraph (1), the Council shall con13
sider—
14 (A) the extent of the leverage of the com15
pany;
16 (B) the extent and nature of the United
17 States related off-balance-sheet exposures of the
18 company;
19 (C) the extent and nature of the trans20
actions and relationships of the company with
21 other significant nonbank financial companies
22 and significant bank holding companies;
23 (D) the importance of the company as a
24 source of credit for United States households,
25 businesses, and State and local governments
50
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1 and as a source of liquidity for the United
2 States financial system;
3 (E) the importance of the company as a
4 source of credit for low-income, minority, or un5
derserved communities in the United States,
6 and the impact that the failure of such com7
pany would have on the availability of credit in
8 such communities;
9 (F) the extent to which assets are man10
aged rather than owned by the company and
11 the extent to which ownership of assets under
12 management is diffuse;
13 (G) the nature, scope, size, scale, con14
centration, interconnectedness, and mix of the
15 activities of the company;
16 (H) the extent to which the company is
17 subject to prudential standards on a consoli18
dated basis in its home country that are admin19
istered and enforced by a comparable foreign
20 supervisory authority;
21 (I) the amount and nature of the United
22 States financial assets of the company;
23 (J) the amount and nature of the liabilities
24 of the company used to fund activities and op51
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1 erations in the United States, including the de2
gree of reliance on short-term funding; and
3 (K) any other risk-related factors that the
4 Council deems appropriate.
5 (c) ANTIEVASION.—
6 (1) DETERMINATIONS.—In order to avoid eva7
sion of this title, the Council, on its own initiative
8 or at the request of the Board of Governors, may de9
termine, on a nondelegable basis and by a vote of
10 not fewer than 2⁄3 of the voting members then serv11
ing, including an affirmative vote by the Chair12
person, that—
13 (A) material financial distress related to,
14 or the nature, scope, size, scale, concentration,
15 interconnectedness, or mix of, the financial ac16
tivities conducted directly or indirectly by a
17 company incorporated or organized under the
18 laws of the United States or any State or the
19 financial activities in the United States of a
20 company incorporated or organized in a country
21 other than the United States would pose a
22 threat to the financial stability of the United
23 States, based on consideration of the factors in
24 subsection (a)(2) or (b)(2), as applicable;
52
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1 (B) the company is organized or operates
2 in such a manner as to evade the application of
3 this title; and
4 (C) such financial activities of the company
5 shall be supervised by the Board of Governors
6 and subject to prudential standards in accord7
ance with this title, consistent with paragraph
8 (3).
9 (2) REPORT.—Upon making a determination
10 under paragraph (1), the Council shall submit a re11
port to the appropriate committees of Congress de12
tailing the reasons for making such determination.
13 (3) CONSOLIDATED SUPERVISION OF ONLY FI14
NANCIAL ACTIVITIES; ESTABLISHMENT OF AN IN15
TERMEDIATE HOLDING COMPANY.—
16 (A) ESTABLISHMENT OF AN INTER17
MEDIATE HOLDING COMPANY.—Upon a deter18
mination under paragraph (1), the company
19 that is the subject of the determination may es20
tablish an intermediate holding company in
21 which the financial activities of such company
22 and its subsidiaries shall be conducted (other
23 than the activities described in section
24 167(b)(2)) in compliance with any regulations
25 or guidance provided by the Board of Gov53
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1 ernors. Such intermediate holding company
2 shall be subject to the supervision of the Board
3 of Governors and to prudential standards under
4 this title as if the intermediate holding company
5 were a nonbank financial company supervised
6 by the Board of Governors.
7 (B) ACTION OF THE BOARD OF GOV8
ERNORS.—To facilitate the supervision of the
9 financial activities subject to the determination
10 in paragraph (1), the Board of Governors may
11 require a company to establish an intermediate
12 holding company, as provided for in section
13 167, which would be subject to the supervision
14 of the Board of Governors and to prudential
15 standards under this title, as if the intermediate
16 holding company were a nonbank financial com17
pany supervised by the Board of Governors.
18 (4) NOTICE AND OPPORTUNITY FOR HEARING
19 AND FINAL DETERMINATION; JUDICIAL REVIEW.—
20 Subsections (d) through (h) shall apply to deter21
minations made by the Council pursuant to para22
graph (1) in the same manner as such subsections
23 apply to nonbank financial companies.
54
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1 (5) COVERED FINANCIAL ACTIVITIES.—For
2 purposes of this subsection, the term ‘‘financial ac3
tivities’’—
4 (A) means activities that are financial in
5 nature (as defined in section 4(k) of the Bank
6 Holding Company Act of 1956);
7 (B) includes the ownership or control of
8 one or more insured depository institutions; and
9 (C) does not include internal financial ac10
tivities conducted for the company or any affil11
iate thereof, including internal treasury, invest12
ment, and employee benefit functions.
13 (6) ONLY FINANCIAL ACTIVITIES SUBJECT TO
14 PRUDENTIAL SUPERVISION.—Nonfinancial activities
15 of the company shall not be subject to supervision
16 by the Board of Governors and prudential standards
17 of the Board. For purposes of this Act, the financial
18 activities that are the subject of the determination in
19 paragraph (1) shall be subject to the same require20
ments as a nonbank financial company supervised by
21 the Board of Governors. Nothing in this paragraph
22 shall prohibit or limit the authority of the Board of
23 Governors to apply prudential standards under this
24 title to the financial activities that are subject to the
25 determination in paragraph (1).
55
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1 (d) REEVALUATION AND RESCISSION.—The Council
2 shall—
3 (1) not less frequently than annually, reevaluate
4 each determination made under subsections (a) and
5 (b) with respect to such nonbank financial company
6 supervised by the Board of Governors; and
7 (2) rescind any such determination, if the
8 Council, by a vote of not fewer than 2⁄3 of the voting
9 members then serving, including an affirmative vote
10 by the Chairperson, determines that the nonbank fi11
nancial company no longer meets the standards
12 under subsection (a) or (b), as applicable.
13 (e) NOTICE AND OPPORTUNITY FOR HEARING AND
14 FINAL DETERMINATION.—
15 (1) IN GENERAL.—The Council shall provide to
16 a nonbank financial company written notice of a
17 proposed determination of the Council, including an
18 explanation of the basis of the proposed determina19
tion of the Council, that a nonbank financial com20
pany shall be supervised by the Board of Governors
21 and shall be subject to prudential standards in ac22
cordance with this title.
23 (2) HEARING.—Not later than 30 days after
24 the date of receipt of any notice of a proposed deter25
mination under paragraph (1), the nonbank finan56
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1 cial company may request, in writing, an oppor2
tunity for a written or oral hearing before the Coun3
cil to contest the proposed determination. Upon re4
ceipt of a timely request, the Council shall fix a time
5 (not later than 30 days after the date of receipt of
6 the request) and place at which such company may
7 appear, personally or through counsel, to submit
8 written materials (or, at the sole discretion of the
9 Council, oral testimony and oral argument).
10 (3) FINAL DETERMINATION.—Not later than 60
11 days after the date of a hearing under paragraph
12 (2), the Council shall notify the nonbank financial
13 company of the final determination of the Council,
14 which shall contain a statement of the basis for the
15 decision of the Council.
16 (4) NO HEARING REQUESTED.—If a nonbank
17 financial company does not make a timely request
18 for a hearing, the Council shall notify the nonbank
19 financial company, in writing, of the final determina20
tion of the Council under subsection (a) or (b), as
21 applicable, not later than 10 days after the date by
22 which the company may request a hearing under
23 paragraph (2).
24 (f) EMERGENCY EXCEPTION.—
57
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1 (1) IN GENERAL.—The Council may waive or
2 modify the requirements of subsection (e) with re3
spect to a nonbank financial company, if the Council
4 determines, by a vote of not fewer than 2⁄3 of the
5 voting members then serving, including an affirma6
tive vote by the Chairperson, that such waiver or
7 modification is necessary or appropriate to prevent
8 or mitigate threats posed by the nonbank financial
9 company to the financial stability of the United
10 States.
11 (2) NOTICE.—The Council shall provide notice
12 of a waiver or modification under this subsection to
13 the nonbank financial company concerned as soon as
14 practicable, but not later than 24 hours after the
15 waiver or modification is granted.
16 (3) INTERNATIONAL COORDINATION.—In mak17
ing a determination under paragraph (1), the Coun18
cil shall consult with the appropriate home country
19 supervisor, if any, of the foreign nonbank financial
20 company that is being considered for such a deter21
mination.
22 (4) OPPORTUNITY FOR HEARING.—The Council
23 shall allow a nonbank financial company to request,
24 in writing, an opportunity for a written or oral hear25
ing before the Council to contest a waiver or modi58
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1 fication under this subsection, not later than 10
2 days after the date of receipt of notice of the waiver
3 or modification by the company. Upon receipt of a
4 timely request, the Council shall fix a time (not later
5 than 15 days after the date of receipt of the request)
6 and place at which the nonbank financial company
7 may appear, personally or through counsel, to sub8
mit written materials (or, at the sole discretion of
9 the Council, oral testimony and oral argument).
10 (5) NOTICE OF FINAL DETERMINATION.—Not
11 later than 30 days after the date of any hearing
12 under paragraph (4), the Council shall notify the
13 subject nonbank financial company of the final de14
termination of the Council under this subsection,
15 which shall contain a statement of the basis for the
16 decision of the Council.
17 (g) CONSULTATION.—The Council shall consult with
18 the primary financial regulatory agency, if any, for each
19 nonbank financial company or subsidiary of a nonbank fi20
nancial company that is being considered for supervision
21 by the Board of Governors under this section before the
22 Council makes any final determination with respect to
23 such nonbank financial company under subsection (a), (b),
24 or (c).
59
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1 (h) JUDICIAL REVIEW.—If the Council makes a final
2 determination under this section with respect to a
3 nonbank financial company, such nonbank financial com4
pany may, not later than 30 days after the date of receipt
5 of the notice of final determination under subsection
6 (d)(2), (e)(3), or (f)(5), bring an action in the United
7 States district court for the judicial district in which the
8 home office of such nonbank financial company is located,
9 or in the United States District Court for the District of
10 Columbia, for an order requiring that the final determina11
tion be rescinded, and the court shall, upon review, dismiss
12 such action or direct the final determination to be re13
scinded. Review of such an action shall be limited to
14 whether the final determination made under this section
15 was arbitrary and capricious.
16 (i) INTERNATIONAL COORDINATION.—In exercising
17 its duties under this title with respect to foreign nonbank
18 financial companies, foreign-based bank holding compa19
nies, and cross-border activities and markets, the Council
20 shall consult with appropriate foreign regulatory authori21
ties, to the extent appropriate.
60
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1 SEC. 114. REGISTRATION OF NONBANK FINANCIAL COMPA2
NIES SUPERVISED BY THE BOARD OF GOV3
ERNORS.
4 Not later than 180 days after the date of a final
5 Council determination under section 113 that a nonbank
6 financial company is to be supervised by the Board of Gov7
ernors, such company shall register with the Board of
8 Governors, on forms prescribed by the Board of Gov9
ernors, which shall include such information as the Board
10 of Governors, in consultation with the Council, may deem
11 necessary or appropriate to carry out this title.
12 SEC. 115. ENHANCED SUPERVISION AND PRUDENTIAL
13 STANDARDS FOR NONBANK FINANCIAL COM14
PANIES SUPERVISED BY THE BOARD OF GOV15
ERNORS AND CERTAIN BANK HOLDING COM16
PANIES.
17 (a) IN GENERAL.—
18 (1) PURPOSE.—In order to prevent or mitigate
19 risks to the financial stability of the United States
20 that could arise from the material financial distress,
21 failure, or ongoing activities of large, interconnected
22 financial institutions, the Council may make rec23
ommendations to the Board of Governors concerning
24 the establishment and refinement of prudential
25 standards and reporting and disclosure requirements
26 applicable to nonbank financial companies super61
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1 vised by the Board of Governors and large, inter2
connected bank holding companies, that—
3 (A) are more stringent than those applica4
ble to other nonbank financial companies and
5 bank holding companies that do not present
6 similar risks to the financial stability of the
7 United States; and
8 (B) increase in stringency, based on the
9 considerations identified in subsection (b)(3).
10 (2) RECOMMENDED APPLICATION OF REQUIRED
11 STANDARDS.—In making recommendations under
12 this section, the Council may—
13 (A) differentiate among companies that are
14 subject to heightened standards on an indi15
vidual basis or by category, taking into consid16
eration their capital structure, riskiness, com17
plexity, financial activities (including the finan18
cial activities of their subsidiaries), size, and
19 any other risk-related factors that the Council
20 deems appropriate; or
21 (B) recommend an asset threshold that is
22 higher than $50,000,000,000 for the applica23
tion of any standard described in subsections
24 (c) through (g).
25 (b) DEVELOPMENT OF PRUDENTIAL STANDARDS.—
62
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1 (1) IN GENERAL.—The recommendations of the
2 Council under subsection (a) may include—
3 (A) risk-based capital requirements;
4 (B) leverage limits;
5 (C) liquidity requirements;
6 (D) resolution plan and credit exposure re7
port requirements;
8 (E) concentration limits;
9 (F) a contingent capital requirement;
10 (G) enhanced public disclosures;
11 (H) short-term debt limits; and
12 (I) overall risk management requirements.
13 (2) PRUDENTIAL STANDARDS FOR FOREIGN FI14
NANCIAL COMPANIES.—In making recommendations
15 concerning the standards set forth in paragraph (1)
16 that would apply to foreign nonbank financial com17
panies supervised by the Board of Governors or for18
eign-based bank holding companies, the Council
19 shall—
20 (A) give due regard to the principle of na21
tional treatment and equality of competitive op22
portunity; and
23 (B) take into account the extent to which
24 the foreign nonbank financial company or for25
eign-based bank holding company is subject on
63
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1 a consolidated basis to home country standards
2 that are comparable to those applied to finan3
cial companies in the United States.
4 (3) CONSIDERATIONS.—In making rec5
ommendations concerning prudential standards
6 under paragraph (1), the Council shall—
7 (A) take into account differences among
8 nonbank financial companies supervised by the
9 Board of Governors and bank holding compa10
nies described in subsection (a), based on—
11 (i) the factors described in subsections
12 (a) and (b) of section 113;
13 (ii) whether the company owns an in14
sured depository institution;
15 (iii) nonfinancial activities and affili16
ations of the company; and
17 (iv) any other factors that the Council
18 determines appropriate;
19 (B) to the extent possible, ensure that
20 small changes in the factors listed in sub21
sections (a) and (b) of section 113 would not
22 result in sharp, discontinuous changes in the
23 prudential standards established under section
24 165; and
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1 (C) adapt its recommendations as appro2
priate in light of any predominant line of busi3
ness of such company, including assets under
4 management or other activities for which par5
ticular standards may not be appropriate.
6 (c) CONTINGENT CAPITAL.—
7 (1) STUDY REQUIRED.—The Council shall con8
duct a study of the feasibility, benefits, costs, and
9 structure of a contingent capital requirement for
10 nonbank financial companies supervised by the
11 Board of Governors and bank holding companies de12
scribed in subsection (a), which study shall in13
clude—
14 (A) an evaluation of the degree to which
15 such requirement would enhance the safety and
16 soundness of companies subject to the require17
ment, promote the financial stability of the
18 United States, and reduce risks to United
19 States taxpayers;
20 (B) an evaluation of the characteristics
21 and amounts of contingent capital that should
22 be required;
23 (C) an analysis of potential prudential
24 standards that should be used to determine
25 whether the contingent capital of a company
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1 would be converted to equity in times of finan2
cial stress;
3 (D) an evaluation of the costs to compa4
nies, the effects on the structure and operation
5 of credit and other financial markets, and other
6 economic effects of requiring contingent capital;
7 (E) an evaluation of the effects of such re8
quirement on the international competitiveness
9 of companies subject to the requirement and
10 the prospects for international coordination in
11 establishing such requirement; and
12 (F) recommendations for implementing
13 regulations.
14 (2) REPORT.—The Council shall submit a re15
port to Congress regarding the study required by
16 paragraph (1) not later than 2 years after the date
17 of enactment of this Act.
18 (3) RECOMMENDATIONS.—
19 (A) IN GENERAL.—Subsequent to submit20
ting a report to Congress under paragraph (2),
21 the Council may make recommendations to the
22 Board of Governors to require any nonbank fi23
nancial company supervised by the Board of
24 Governors and any bank holding company de25
scribed in subsection (a) to maintain a min66
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1 imum amount of contingent capital that is con2
vertible to equity in times of financial stress.
3 (B) FACTORS TO CONSIDER.—In making
4 recommendations under this subsection, the
5 Council shall consider—
6 (i) an appropriate transition period
7 for implementation of a conversion under
8 this subsection;
9 (ii) the factors described in subsection
10 (b)(3);
11 (iii) capital requirements applicable to
12 a nonbank financial company supervised by
13 the Board of Governors or a bank holding
14 company described in subsection (a), and
15 subsidiaries thereof;
16 (iv) results of the study required by
17 paragraph (1); and
18 (v) any other factor that the Council
19 deems appropriate.
20 (d) RESOLUTION PLAN AND CREDIT EXPOSURE RE21
PORTS.—
22 (1) RESOLUTION PLAN.—The Council may
23 make recommendations to the Board of Governors
24 concerning the requirement that each nonbank fi25
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1 ernors and each bank holding company described in
2 subsection (a) report periodically to the Council, the
3 Board of Governors, and the Corporation, the plan
4 of such company for rapid and orderly resolution in
5 the event of material financial distress or failure.
6 (2) CREDIT EXPOSURE REPORT.—The Council
7 may make recommendations to the Board of Gov8
ernors concerning the advisability of requiring each
9 nonbank financial company supervised by the Board
10 of Governors and bank holding company described in
11 subsection (a) to report periodically to the Council,
12 the Board of Governors, and the Corporation on—
13 (A) the nature and extent to which the
14 company has credit exposure to other signifi15
cant nonbank financial companies and signifi16
cant bank holding companies; and
17 (B) the nature and extent to which other
18 such significant nonbank financial companies
19 and significant bank holding companies have
20 credit exposure to that company.
21 (e) CONCENTRATION LIMITS.—In order to limit the
22 risks that the failure of any individual company could pose
23 to nonbank financial companies supervised by the Board
24 of Governors or bank holding companies described in sub25
section (a), the Council may make recommendations to the
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1 Board of Governors to prescribe standards to limit such
2 risks, as set forth in section 165.
3 (f) ENHANCED PUBLIC DISCLOSURES.—The Council
4 may make recommendations to the Board of Governors
5 to require periodic public disclosures by bank holding com6
panies described in subsection (a) and by nonbank finan7
cial companies supervised by the Board of Governors, in
8 order to support market evaluation of the risk profile, cap9
ital adequacy, and risk management capabilities thereof.
10 (g) SHORT-TERM DEBT LIMITS.—The Council may
11 make recommendations to the Board of Governors to re12
quire short-term debt limits to mitigate the risks that an
13 over-accumulation of such debt could pose to bank holding
14 companies described in subsection (a), nonbank financial
15 companies supervised by the Board of Governors, or the
16 financial system.
17 SEC. 116. REPORTS.
18 (a) IN GENERAL.—Subject to subsection (b), the
19 Council, acting through the Office of Financial Research,
20 may require a bank holding company with total consoli21
dated assets of $50,000,000,000 or greater or a nonbank
22 financial company supervised by the Board of Governors,
23 and any subsidiary thereof, to submit certified reports to
24 keep the Council informed as to—
25 (1) the financial condition of the company;
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1 (2) systems for monitoring and controlling fi2
nancial, operating, and other risks;
3 (3) transactions with any subsidiary that is a
4 depository institution; and
5 (4) the extent to which the activities and oper6
ations of the company and any subsidiary thereof,
7 could, under adverse circumstances, have the poten8
tial to disrupt financial markets or affect the overall
9 financial stability of the United States.
10 (b) USE OF EXISTING REPORTS.—
11 (1) IN GENERAL.—For purposes of compliance
12 with subsection (a), the Council, acting through the
13 Office of Financial Research, shall, to the fullest ex14
tent possible, use—
15 (A) reports that a bank holding company,
16 nonbank financial company supervised by the
17 Board of Governors, or any functionally regu18
lated subsidiary of such company has been re19
quired to provide to other Federal or State reg20
ulatory agencies or to a relevant foreign super21
visory authority;
22 (B) information that is otherwise required
23 to be reported publicly; and
24 (C) externally audited financial statements.
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1 (2) AVAILABILITY.—Each bank holding com2
pany described in subsection (a) and nonbank finan3
cial company supervised by the Board of Governors,
4 and any subsidiary thereof, shall provide to the
5 Council, at the request of the Council, copies of all
6 reports referred to in paragraph (1).
7 (3) CONFIDENTIALITY.—The Council shall
8 maintain the confidentiality of the reports obtained
9 under subsection (a) and paragraph (1)(A) of this
10 subsection.
11 SEC. 117. TREATMENT OF CERTAIN COMPANIES THAT
12 CEASE TO BE BANK HOLDING COMPANIES.
13 (a) APPLICABILITY.—This section shall apply to—
14 (1) any entity that—
15 (A) was a bank holding company having
16 total consolidated assets equal to or greater
17 than $50,000,000,000 as of January 1, 2010;
18 and
19 (B) received financial assistance under or
20 participated in the Capital Purchase Program
21 established under the Troubled Asset Relief
22 Program authorized by the Emergency Eco23
nomic Stabilization Act of 2008; and
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1 (2) any successor entity (as defined by the
2 Board of Governors, in consultation with the Coun3
cil) to an entity described in paragraph (1).
4 (b) TREATMENT.—If an entity described in sub5
section (a) ceases to be a bank holding company at any
6 time after January 1, 2010, then such entity shall be
7 treated as a nonbank financial company supervised by the
8 Board of Governors, as if the Council had made a deter9
mination under section 113 with respect to that entity.
10 (c) APPEAL.—
11 (1) REQUEST FOR HEARING.—An entity may
12 request, in writing, an opportunity for a written or
13 oral hearing before the Council to appeal its treat14
ment as a nonbank financial company supervised by
15 the Board of Governors in accordance with this sec16
tion. Upon receipt of the request, the Council shall
17 fix a time (not later than 30 days after the date of
18 receipt of the request) and place at which such enti19
ty may appear, personally or through counsel, to
20 submit written materials (or, at the sole discretion
21 of the Council, oral testimony and oral argument).
22 (2) DECISION.—
23 (A) PROPOSED DECISION.—A Council deci24
sion to grant an appeal under this subsection
25 shall be made by a vote of not fewer than 2⁄3
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1 of the voting members then serving, including
2 an affirmative vote by the Chairperson. Not
3 later than 60 days after the date of a hearing
4 under paragraph (1), the Council shall submit
5 a report to, and may testify before, the Com6
mittee on Banking, Housing, and Urban Affairs
7 of the Senate and the Committee on Financial
8 Services of the House of Representatives on the
9 proposed decision of the Council regarding an
10 appeal under paragraph (1), which report shall
11 include a statement of the basis for the pro12
posed decision of the Council.
13 (B) NOTICE OF FINAL DECISION.—The
14 Council shall notify the subject entity of the
15 final decision of the Council regarding an ap16
peal under paragraph (1), which notice shall
17 contain a statement of the basis for the final
18 decision of the Council, not later than 60 days
19 after the later of—
20 (i) the date of the submission of the
21 report under subparagraph (A); or
22 (ii) if, not later than 1 year after the
23 date of submission of the report under sub24
paragraph (A), the Committee on Banking,
25 Housing, and Urban Affairs of the Senate
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1 or the Committee on Financial Services of
2 the House of Representatives holds one or
3 more hearings regarding such report, the
4 date of the last such hearing.
5 (C) CONSIDERATIONS.—In making a deci6
sion regarding an appeal under paragraph (1),
7 the Council shall consider whether the company
8 meets the standards under section 113(a) or
9 113(b), as applicable, and the definition of the
10 term ‘‘nonbank financial company’’ under sec11
tion 102. The decision of the Council shall be
12 final, subject to the review under paragraph
13 (3).
14 (3) REVIEW.—If the Council denies an appeal
15 under this subsection, the Council shall, not less fre16
quently than annually, review and reevaluate the de17
cision.
18 SEC. 118. COUNCIL FUNDING.
19 Any expenses of the Council shall be treated as ex20
penses of, and paid by, the Office of Financial Research.
21 SEC. 119. RESOLUTION OF SUPERVISORY JURISDICTIONAL
22 DISPUTES AMONG MEMBER AGENCIES.
23 (a) REQUEST FOR COUNCIL RECOMMENDATION.—
24 The Council shall seek to resolve a dispute among 2 or
25 more member agencies, if—
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1 (1) a member agency has a dispute with an2
other member agency about the respective jurisdic3
tion over a particular bank holding company,
4 nonbank financial company, or financial activity or
5 product (excluding matters for which another dis6
pute mechanism specifically has been provided under
7 title X);
8 (2) the Council determines that the disputing
9 agencies cannot, after a demonstrated good faith ef10
fort, resolve the dispute without the intervention of
11 the Council; and
12 (3) any of the member agencies involved in the
13 dispute—
14 (A) provides all other disputants prior no15
tice of the intent to request dispute resolution
16 by the Council; and
17 (B) requests in writing, not earlier than 14
18 days after providing the notice described in sub19
paragraph (A), that the Council seek to resolve
20 the dispute.
21 (b) COUNCIL RECOMMENDATION.—The Council shall
22 seek to resolve each dispute described in subsection (a)—
23 (1) within a reasonable time after receiving the
24 dispute resolution request;
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1 (2) after consideration of relevant information
2 provided by each agency party to the dispute; and
3 (3) by agreeing with 1 of the disputants regard4
ing the entirety of the matter, or by determining a
5 compromise position.
6 (c) FORM OF RECOMMENDATION.—Any Council rec7
ommendation under this section shall—
8 (1) be in writing;
9 (2) include an explanation of the reasons there10
for; and
11 (3) be approved by the affirmative vote of 2⁄3 of
12 the voting members of the Council then serving.
13 (d) NONBINDING EFFECT.—Any recommendation
14 made by the Council under subsection (c) shall not be
15 binding on the Federal agencies that are parties to the
16 dispute.
17 SEC. 120. ADDITIONAL STANDARDS APPLICABLE TO ACTIVI18
TIES OR PRACTICES FOR FINANCIAL STA19
BILITY PURPOSES.
20 (a) IN GENERAL.—The Council may provide for more
21 stringent regulation of a financial activity by issuing rec22
ommendations to the primary financial regulatory agen23
cies to apply new or heightened standards and safeguards,
24 including standards enumerated in section 115, for a fi25
nancial activity or practice conducted by bank holding
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1 companies or nonbank financial companies under their re2
spective jurisdictions, if the Council determines that the
3 conduct, scope, nature, size, scale, concentration, or inter4
connectedness of such activity or practice could create or
5 increase the risk of significant liquidity, credit, or other
6 problems spreading among bank holding companies and
7 nonbank financial companies, financial markets of the
8 United States, or low-income, minority, or underserved
9 communities.
10 (b) PROCEDURE FOR RECOMMENDATIONS TO REGU11
LATORS.—
12 (1) NOTICE AND OPPORTUNITY FOR COM13
MENT.—The Council shall consult with the primary
14 financial regulatory agencies and provide notice to
15 the public and opportunity for comment for any pro16
posed recommendation that the primary financial
17 regulatory agencies apply new or heightened stand18
ards and safeguards for a financial activity or prac19
tice.
20 (2) CRITERIA.—The new or heightened stand21
ards and safeguards for a financial activity or prac22
tice recommended under paragraph (1)—
23 (A) shall take costs to long-term economic
24 growth into account; and
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1 (B) may include prescribing the conduct of
2 the activity or practice in specific ways (such as
3 by limiting its scope, or applying particular cap4
ital or risk management requirements to the
5 conduct of the activity) or prohibiting the activ6
ity or practice.
7 (c) IMPLEMENTATION OF RECOMMENDED STAND8
ARDS.—
9 (1) ROLE OF PRIMARY FINANCIAL REGULATORY
10 AGENCY.—
11 (A) IN GENERAL.—Each primary financial
12 regulatory agency may impose, require reports
13 regarding, examine for compliance with, and en14
force standards in accordance with this section
15 with respect to those entities for which it is the
16 primary financial regulatory agency.
17 (B) RULE OF CONSTRUCTION.—The au18
thority under this paragraph is in addition to,
19 and does not limit, any other authority of a pri20
mary financial regulatory agency. Compliance
21 by an entity with actions taken by a primary fi22
nancial regulatory agency under this section
23 shall be enforceable in accordance with the stat24
utes governing the respective jurisdiction of the
25 primary financial regulatory agency over the en78
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1 tity, as if the agency action were taken under
2 those statutes.
3 (2) IMPOSITION OF STANDARDS.—The primary
4 financial regulatory agency shall impose the stand5
ards recommended by the Council in accordance
6 with subsection (a), or similar standards that the
7 Council deems acceptable, or shall explain in writing
8 to the Council, not later than 90 days after the date
9 on which the Council issues the recommendation,
10 why the agency has determined not to follow the rec11
ommendation of the Council.
12 (d) REPORT TO CONGRESS.—The Council shall re13
port to Congress on—
14 (1) any recommendations issued by the Council
15 under this section;
16 (2) the implementation of, or failure to imple17
ment, such recommendation on the part of a pri18
mary financial regulatory agency; and
19 (3) in any case in which no primary financial
20 regulatory agency exists for the nonbank financial
21 company conducting financial activities or practices
22 referred to in subsection (a), recommendations for
23 legislation that would prevent such activities or prac24
tices from threatening the stability of the financial
25 system of the United States.
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1 (e) EFFECT OF RESCISSION OF IDENTIFICATION.—
2 (1) NOTICE.—The Council may recommend to
3 the relevant primary financial regulatory agency that
4 a financial activity or practice no longer requires any
5 standards or safeguards implemented under this sec6
tion.
7 (2) DETERMINATION OF PRIMARY FINANCIAL
8 REGULATORY AGENCY TO CONTINUE.—
9 (A) IN GENERAL.—Upon receipt of a rec10
ommendation under paragraph (1), a primary
11 financial regulatory agency that has imposed
12 standards under this section shall determine
13 whether such standards should remain in effect.
14 (B) APPEAL PROCESS.—Each primary fi15
nancial regulatory agency that has imposed
16 standards under this section shall promulgate
17 regulations to establish a procedure under
18 which entities under its jurisdiction may appeal
19 a determination by such agency under this
20 paragraph that standards imposed under this
21 section should remain in effect.
22 SEC. 121. MITIGATION OF RISKS TO FINANCIAL STABILITY.
23 (a) MITIGATORY ACTIONS.—If the Board of Gov24
ernors determines that a bank holding company with total
25 consolidated assets of $50,000,000,000 or more, or a
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1 nonbank financial company supervised by the Board of
2 Governors, poses a grave threat to the financial stability
3 of the United States, the Board of Governors, upon an
4 affirmative vote of not fewer than 2⁄3 of the voting mem5
bers of the Council then serving, shall—
6 (1) limit the ability of the company to merge
7 with, acquire, consolidate with, or otherwise become
8 affiliated with another company;
9 (2) restrict the ability of the company to offer
10 a financial product or products;
11 (3) require the company to terminate one or
12 more activities;
13 (4) impose conditions on the manner in which
14 the company conducts 1 or more activities; or
15 (5) if the Board of Governors determines that
16 the actions described in paragraphs (1) through (4)
17 are inadequate to mitigate a threat to the financial
18 stability of the United States in its recommendation,
19 require the company to sell or otherwise transfer as20
sets or off-balance-sheet items to unaffiliated enti21
ties.
22 (b) NOTICE AND HEARING.—
23 (1) IN GENERAL.—The Board of Governors, in
24 consultation with the Council, shall provide to a
25 company described in subsection (a) written notice
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1 that such company is being considered for mitiga2
tory action pursuant to this section, including an ex3
planation of the basis for, and description of, the
4 proposed mitigatory action.
5 (2) HEARING.—Not later than 30 days after
6 the date of receipt of notice under paragraph (1),
7 the company may request, in writing, an opportunity
8 for a written or oral hearing before the Board of
9 Governors to contest the proposed mitigatory action.
10 Upon receipt of a timely request, the Board of Gov11
ernors shall fix a time (not later than 30 days after
12 the date of receipt of the request) and place at
13 which such company may appear, personally or
14 through counsel, to submit written materials (or, at
15 the discretion of the Board of Governors, in con16
sultation with the Council, oral testimony and oral
17 argument).
18 (3) DECISION.—Not later than 60 days after
19 the date of a hearing under paragraph (2), or not
20 later than 60 days after the provision of a notice
21 under paragraph (1) if no hearing was held, the
22 Board of Governors shall notify the company of the
23 final decision of the Board of Governors, including
24 the results of the vote of the Council, as described
25 in subsection (a).
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1 (c) FACTORS FOR CONSIDERATION.—The Board of
2 Governors and the Council shall take into consideration
3 the factors set forth in subsection (a) or (b) of section
4 113, as applicable, in making any determination under
5 subsection (a).
6 (d) APPLICATION TO FOREIGN FINANCIAL COMPA7
NIES.—The Board of Governors may prescribe regulations
8 regarding the application of this section to foreign
9 nonbank financial companies supervised by the Board of
10 Governors and foreign-based bank holding companies—
11 (1) giving due regard to the principle of na12
tional treatment and equality of competitive oppor13
tunity; and
14 (2) taking into account the extent to which the
15 foreign nonbank financial company or foreign-based
16 bank holding company is subject on a consolidated
17 basis to home country standards that are com18
parable to those applied to financial companies in
19 the United States.
20 SEC. 122. GAO AUDIT OF COUNCIL.
21 (a) AUTHORITY TO AUDIT.—The Comptroller Gen22
eral of the United States may audit the activities of—
23 (1) the Council; and
24 (2) any person or entity acting on behalf of or
25 under the authority of the Council, to the extent
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1 that such activities relate to work for the Council by
2 such person or entity.
3 (b) ACCESS TO INFORMATION.—
4 (1) IN GENERAL.—Notwithstanding any other
5 provision of law, the Comptroller General shall, upon
6 request and at such reasonable time and in such rea7
sonable form as the Comptroller General may re8
quest, have access to—
9 (A) any records or other information under
10 the control of or used by the Council;
11 (B) any records or other information under
12 the control of a person or entity acting on be13
half of or under the authority of the Council, to
14 the extent that such records or other informa15
tion is relevant to an audit under subsection
16 (a); and
17 (C) the officers, directors, employees, fi18
nancial advisors, staff, working groups, and
19 agents and representatives of the Council (as
20 related to the activities on behalf of the Council
21 of such agent or representative), at such rea22
sonable times as the Comptroller General may
23 request.
24 (2) COPIES.—The Comptroller General may
25 make and retain copies of such books, accounts, and
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1 other records, access to which is granted under this
2 section, as the Comptroller General considers appro3
priate.
4 SEC. 123. STUDY OF THE EFFECTS OF SIZE AND COM5
PLEXITY OF FINANCIAL INSTITUTIONS ON
6 CAPITAL MARKET EFFICIENCY AND ECO7
NOMIC GROWTH.
8 (a) STUDY REQUIRED.—
9 (1) IN GENERAL.—The Chairperson of the
10 Council shall carry out a study of the economic im11
pact of possible financial services regulatory limita12
tions intended to reduce systemic risk. Such study
13 shall estimate the benefits and costs on the effi14
ciency of capital markets, on the financial sector,
15 and on national economic growth, of—
16 (A) explicit or implicit limits on the max17
imum size of banks, bank holding companies,
18 and other large financial institutions;
19 (B) limits on the organizational complexity
20 and diversification of large financial institu21
tions;
22 (C) requirements for operational separa23
tion between business units of large financial
24 institutions in order to expedite resolution in
25 case of failure;
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1 (D) limits on risk transfer between busi2
ness units of large financial institutions;
3 (E) requirements to carry contingent cap4
ital or similar mechanisms;
5 (F) limits on commingling of commercial
6 and financial activities by large financial insti7
tutions;
8 (G) segregation requirements between tra9
ditional financial activities and trading or other
10 high-risk operations in large financial institu11
tions; and
12 (H) other limitations on the activities or
13 structure of large financial institutions that
14 may be useful to limit systemic risk.
15 (2) RECOMMENDATIONS.—The study required
16 by this section shall include recommendations for the
17 optimal structure of any limits considered in sub18
paragraphs (A) through (E), in order to maximize
19 their effectiveness and minimize their economic im20
pact.
21 (b) REPORT.—Not later than the end of the 180-day
22 period beginning on the date of enactment of this title,
23 and not later than every 5 years thereafter, the Chair24
person shall issue a report to the Congress containing any
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1 findings and determinations made in carrying out the
2 study required under subsection (a).
3 Subtitle B—Office of Financial
4 Research
5 SEC. 151. DEFINITIONS.
6 For purposes of this subtitle—
7 (1) the terms ‘‘Office’’ and ‘‘Director’’ mean
8 the Office of Financial Research established under
9 this subtitle and the Director thereof, respectively;
10 (2) the term ‘‘financial company’’ has the same
11 meaning as in title II, and includes an insured de12
pository institution and an insurance company;
13 (3) the term ‘‘Data Center’’ means the data
14 center established under section 154;
15 (4) the term ‘‘Research and Analysis Center’’
16 means the research and analysis center established
17 under section 154;
18 (5) the term ‘‘financial transaction data’’ means
19 the structure and legal description of a financial
20 contract, with sufficient detail to describe the rights
21 and obligations between counterparties and make
22 possible an independent valuation;
23 (6) the term ‘‘position data’’—
24 (A) means data on financial assets or li25
abilities held on the balance sheet of a financial
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1 company, where positions are created or
2 changed by the execution of a financial trans3
action; and
4 (B) includes information that identifies
5 counterparties, the valuation by the financial
6 company of the position, and information that
7 makes possible an independent valuation of the
8 position;
9 (7) the term ‘‘financial contract’’ means a le10
gally binding agreement between 2 or more counter11
parties, describing rights and obligations relating to
12 the future delivery of items of intrinsic or extrinsic
13 value among the counterparties; and
14 (8) the term ‘‘financial instrument’’ means a fi15
nancial contract in which the terms and conditions
16 are publicly available, and the roles of one or more
17 of the counterparties are assignable without the con18
sent of any of the other counterparties (including
19 common stock of a publicly traded company, govern20
ment bonds, or exchange traded futures and options
21 contracts).
22 SEC. 152. OFFICE OF FINANCIAL RESEARCH ESTABLISHED.
23 (a) ESTABLISHMENT.—There is established within
24 the Department of the Treasury the Office of Financial
25 Research.
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1 (b) DIRECTOR.—
2 (1) IN GENERAL.—The Office shall be headed
3 by a Director, who shall be appointed by the Presi4
dent, by and with the advice and consent of the Sen5
ate.
6 (2) TERM OF SERVICE.—The Director shall
7 serve for a term of 6 years, except that, in the event
8 that a successor is not nominated and confirmed by
9 the end of the term of service of a Director, the Di10
rector may continue to serve until such time as the
11 next Director is appointed and confirmed.
12 (3) EXECUTIVE LEVEL.—The Director shall be
13 compensated at Level III of the Executive Schedule.
14 (4) PROHIBITION ON DUAL SERVICE.—The in15
dividual serving in the position of Director may not,
16 during such service, also serve as the head of any fi17
nancial regulatory agency.
18 (5) RESPONSIBILITIES, DUTIES, AND AUTHOR19
ITY.—The Director shall have sole discretion in the
20 manner in which the Director fulfills the responsibil21
ities and duties and exercises the authorities de22
scribed in this subtitle.
23 (c) BUDGET.—The Director, in consultation with the
24 Chairperson, shall establish the annual budget of the Of25
fice.
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1 (d) OFFICE PERSONNEL.—
2 (1) IN GENERAL.—The Director, in consulta3
tion with the Chairperson, may fix the number of,
4 and appoint and direct, all employees of the Office.
5 (2) COMPENSATION.—The Director, in con6
sultation with the Chairperson, shall fix, adjust, and
7 administer the pay for all employees of the Office,
8 without regard to chapter 51 or subchapter III of
9 chapter 53 of title 5, United States Code, relating
10 to classification of positions and General Schedule
11 pay rates.
12 (3) COMPARABILITY.—Section 1206(a) of the
13 Financial Institutions Reform, Recovery, and En14
forcement Act of 1989 (12 U.S.C. 1833b(a)) is
15 amended—
16 (A) by striking ‘‘Finance Board,’’ and in17
serting ‘‘Finance Board, the Office of Financial
18 Research, and the Bureau of Consumer Finan19
cial Protection’’; and
20 (B) by striking ‘‘and the Office of Thrift
21 Supervision,’’.
22 (4) SENIOR EXECUTIVES.—Section
23 3132(a)(1)(D) of title 5, United States Code, is
24 amended by striking ‘‘and the National Credit Union
25 Administration;’’ and inserting ‘‘the National Credit
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1 Union Administration, the Bureau of Consumer Fi2
nancial Protection, and the Office of Financial Re3
search;’’.
4 (e) ASSISTANCE FROM FEDERAL AGENCIES.—Any
5 department or agency of the United States may provide
6 to the Office and any special advisory, technical, or profes7
sional committees appointed by the Office, such services,
8 funds, facilities, staff, and other support services as the
9 Office may determine advisable. Any Federal Government
10 employee may be detailed to the Office without reimburse11
ment, and such detail shall be without interruption or loss
12 of civil service status or privilege.
13 (f) PROCUREMENT OF TEMPORARY AND INTERMIT14
TENT SERVICES.—The Director may procure temporary
15 and intermittent services under section 3109(b) of title 5,
16 United States Code, at rates for individuals which do not
17 exceed the daily equivalent of the annual rate of basic pay
18 prescribed for Level V of the Executive Schedule under
19 section 5316 of such title.
20 (g) POST-EMPLOYMENT PROHIBITIONS.—The Sec21
retary, with the concurrence of the Director of the Office
22 of Government Ethics, shall issue regulations prohibiting
23 the Director and any employee of the Office who has had
24 access to the transaction or position data maintained by
25 the Data Center or other business confidential information
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1 about financial entities required to report to the Office
2 from being employed by or providing advice or consulting
3 services to a financial company, for a period of 1 year
4 after last having had access in the course of official duties
5 to such transaction or position data or business confiden6
tial information, regardless of whether that entity is re7
quired to report to the Office. For employees whose access
8 to business confidential information was limited, the regu9
lations may provide, on a case-by-case basis, for a shorter
10 period of post-employment prohibition, provided that the
11 shorter period does not compromise business confidential
12 information.
13 (h) TECHNICAL AND PROFESSIONAL ADVISORY COM14
MITTEES.—The Office, in consultation with the Chair15
person, may appoint such special advisory, technical, or
16 professional committees as may be useful in carrying out
17 the functions of the Office, and the members of such com18
mittees may be staff of the Office, or other persons, or
19 both.
20 (i) FELLOWSHIP PROGRAM.—The Office, in consulta21
tion with the Chairperson, may establish and maintain an
22 academic and professional fellowship program, under
23 which qualified academics and professionals shall be in24
vited to spend not longer than 2 years at the Office, to
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1 perform research and to provide advanced training for Of2
fice personnel.
3 (j) EXECUTIVE SCHEDULE COMPENSATION.—Sec4
tion 5314 of title 5, United States Code, is amended by
5 adding at the end the following new item:
6 ‘‘Director of the Office of Financial Research.’’.
7 SEC. 153. PURPOSE AND DUTIES OF THE OFFICE.
8 (a) PURPOSE AND DUTIES.—The purpose of the Of9
fice is to support the Council in fulfilling the purposes and
10 duties of the Council, as set forth in subtitle A, and to
11 support member agencies, by—
12 (1) collecting data on behalf of the Council, and
13 providing such data to the Council and member
14 agencies;
15 (2) standardizing the types and formats of data
16 reported and collected;
17 (3) performing applied research and essential
18 long-term research;
19 (4) developing tools for risk measurement and
20 monitoring;
21 (5) performing other related services;
22 (6) making the results of the activities of the
23 Office available to financial regulatory agencies; and
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1 (7) assisting such member agencies in deter2
mining the types and formats of data authorized by
3 this Act to be collected by such member agencies.
4 (b) ADMINISTRATIVE AUTHORITY.—The Office
5 may—
6 (1) share data and information, including soft7
ware developed by the Office, with the Council,
8 member agencies, and the Bureau of Economic
9 Analysis, which shared data, information, and soft10
ware—
11 (A) shall be maintained with at least the
12 same level of security as is used by the Office;
13 and
14 (B) may not be shared with any individual
15 or entity without the permission of the Council;
16 (2) sponsor and conduct research projects; and
17 (3) assist, on a reimbursable basis, with finan18
cial analyses undertaken at the request of other
19 Federal agencies that are not member agencies.
20 (c) RULEMAKING AUTHORITY.—
21 (1) SCOPE.—The Office, in consultation with
22 the Chairperson, shall issue rules, regulations, and
23 orders only to the extent necessary to carry out the
24 purposes and duties described in paragraphs (1),
25 (2), and (7) of subsection (a).
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1 (2) STANDARDIZATION.—Member agencies, in
2 consultation with the Office, shall implement regula3
tions promulgated by the Office under paragraph (1)
4 to standardize the types and formats of data re5
ported and collected on behalf of the Council, as de6
scribed in subsection (a)(2). If a member agency
7 fails to implement such regulations prior to the expi8
ration of the 3-year period following the date of pub9
lication of final regulations, the Office, in consulta10
tion with the Chairperson, may implement such reg11
ulations with respect to the financial entities under
12 the jurisdiction of the member agency. This para13
graph shall not supersede or interfere with the inde14
pendent authority of a member agency under other
15 law to collect data, in such format and manner as
16 the member agency requires.
17 (d) TESTIMONY.—
18 (1) IN GENERAL.—The Director of the Office
19 shall report to and testify before the Committee on
20 Banking, Housing, and Urban Affairs of the Senate
21 and the Committee on Financial Services of the
22 House of Representatives annually on the activities
23 of the Office, including the work of the Data Center
24 and the Research and Analysis Center, and the as25
sessment of the Office of significant financial market
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1 developments and potential emerging threats to the
2 financial stability of the United States.
3 (2) NO PRIOR REVIEW.—No officer or agency of
4 the United States shall have any authority to require
5 the Director to submit the testimony required under
6 paragraph (1) or other congressional testimony to
7 any officer or agency of the United States for ap8
proval, comment, or review prior to the submission
9 of such testimony. Any such testimony to Congress
10 shall include a statement that the views expressed
11 therein are those of the Director and do not nec12
essarily represent the views of the President.
13 (e) ADDITIONAL REPORTS.—The Director may pro14
vide additional reports to Congress concerning the finan15
cial stability of the United States. The Director shall no16
tify the Council of any such additional reports provided
17 to Congress.
18 (f) SUBPOENA.—
19 (1) IN GENERAL.—The Director may require
20 from a financial company, by subpoena, the produc21
tion of the data requested under subsection (a)(1)
22 and section 154(b)(1), but only upon a written find23
ing by the Director that—
24 (A) such data is required to carry out the
25 functions described under this subtitle; and
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1 (B) the Office has coordinated with the
2 relevant primary financial regulatory agency, as
3 required under section 154(b)(1)(B)(ii).
4 (2) FORMAT.—Subpoenas under paragraph (1)
5 shall bear the signature of the Director, and shall be
6 served by any person or class of persons designated
7 by the Director for that purpose.
8 (3) ENFORCEMENT.—In the case of contumacy
9 or failure to obey a subpoena, the subpoena shall be
10 enforceable by order of any appropriate district
11 court of the United States. Any failure to obey the
12 order of the court may be punished by the court as
13 a contempt of court.
14 SEC. 154. ORGANIZATIONAL STRUCTURE; RESPONSIBIL15
ITIES OF PRIMARY PROGRAMMATIC UNITS.
16 (a) IN GENERAL.—There are established within the
17 Office, to carry out the programmatic responsibilities of
18 the Office—
19 (1) the Data Center; and
20 (2) the Research and Analysis Center.
21 (b) DATA CENTER.—
22 (1) GENERAL DUTIES.—
23 (A) DATA COLLECTION.—The Data Cen24
ter, on behalf of the Council, shall collect, vali25
date, and maintain all data necessary to carry
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1 out the duties of the Data Center, as described
2 in this subtitle. The data assembled shall be ob3
tained from member agencies, commercial data
4 providers, publicly available data sources, and
5 financial entities under subparagraph (B).
6 (B) AUTHORITY.—
7 (i) IN GENERAL.—The Office may, as
8 determined by the Council or by the Direc9
tor in consultation with the Council, re10
quire the submission of periodic and other
11 reports from any financial company for the
12 purpose of assessing the extent to which a
13 financial activity or financial market in
14 which the financial company participates,
15 or the financial company itself, poses a
16 threat to the financial stability of the
17 United States.
18 (ii) MITIGATION OF REPORT BUR19
DEN.—Before requiring the submission of
20 a report from any financial company that
21 is regulated by a member agency, any pri22
mary financial regulatory agency, a foreign
23 supervisory authority, or the Office shall
24 coordinate with such agencies or authority,
25 and shall, whenever possible, rely on infor98
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1 mation available from such agencies or au2
thority.
3 (iii) COLLECTION OF FINANCIAL
4 TRANSACTION AND POSITION DATA.—The
5 Office shall collect, on a schedule deter6
mined by the Director, in consultation with
7 the Council, financial transaction data and
8 position data from financial companies.
9 (C) RULEMAKING.—The Office shall pro10
mulgate regulations pursuant to subsections
11 (a)(1), (a)(2), (a)(7), and (c)(1) of section 153
12 regarding the type and scope of the data to be
13 collected by the Data Center under this para14
graph.
15 (2) RESPONSIBILITIES.—
16 (A) PUBLICATION.—The Data Center shall
17 prepare and publish, in a manner that is easily
18 accessible to the public—
19 (i) a financial company reference
20 database;
21 (ii) a financial instrument reference
22 database; and
23 (iii) formats and standards for Office
24 data, including standards for reporting fi99
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1 nancial transaction and position data to
2 the Office.
3 (B) CONFIDENTIALITY.—The Data Center
4 shall not publish any confidential data under
5 subparagraph (A).
6 (3) INFORMATION SECURITY.—The Director
7 shall ensure that data collected and maintained by
8 the Data Center are kept secure and protected
9 against unauthorized disclosure.
10 (4) CATALOG OF FINANCIAL ENTITIES AND IN11
STRUMENTS.—The Data Center shall maintain a
12 catalog of the financial entities and instruments re13
ported to the Office.
14 (5) AVAILABILITY TO THE COUNCIL AND MEM15
BER AGENCIES.—The Data Center shall make data
16 collected and maintained by the Data Center avail17
able to the Council and member agencies, as nec18
essary to support their regulatory responsibilities.
19 (6) OTHER AUTHORITY.—The Office shall,
20 after consultation with the member agencies, provide
21 certain data to financial industry participants and to
22 the general public to increase market transparency
23 and facilitate research on the financial system, to
24 the extent that intellectual property rights are not
25 violated, business confidential information is prop100
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1 erly protected, and the sharing of such information
2 poses no significant threats to the financial system
3 of the United States.
4 (c) RESEARCH AND ANALYSIS CENTER.—
5 (1) GENERAL DUTIES.—The Research and
6 Analysis Center, on behalf of the Council, shall de7
velop and maintain independent analytical capabili8
ties and computing resources—
9 (A) to develop and maintain metrics and
10 reporting systems for risks to the financial sta11
bility of the United States;
12 (B) to monitor, investigate, and report on
13 changes in systemwide risk levels and patterns
14 to the Council and Congress;
15 (C) to conduct, coordinate, and sponsor re16
search to support and improve regulation of fi17
nancial entities and markets;
18 (D) to evaluate and report on stress tests
19 or other stability-related evaluations of financial
20 entities overseen by the member agencies;
21 (E) to maintain expertise in such areas as
22 may be necessary to support specific requests
23 for advice and assistance from financial regu24
lators;
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1 (F) to investigate disruptions and failures
2 in the financial markets, report findings, and
3 make recommendations to the Council based on
4 those findings;
5 (G) to conduct studies and provide advice
6 on the impact of policies related to systemic
7 risk; and
8 (H) to promote best practices for financial
9 risk management.
10 (d) REPORTING RESPONSIBILITIES.—
11 (1) REQUIRED REPORTS.—Not later than 2
12 years after the date of enactment of this Act, and
13 not later than 120 days after the end of each fiscal
14 year thereafter, the Office shall prepare and submit
15 a report to Congress.
16 (2) CONTENT.—Each report required by this
17 subsection shall assess the state of the United States
18 financial system, including—
19 (A) an analysis of any threats to the finan20
cial stability of the United States;
21 (B) the status of the efforts of the Office
22 in meeting the mission of the Office; and
23 (C) key findings from the research and
24 analysis of the financial system by the Office.
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1 SEC. 155. FUNDING.
2 (a) FINANCIAL RESEARCH FUND.—
3 (1) FUND ESTABLISHED.—There is established
4 in the Treasury of the United States a separate fund
5 to be known as the ‘‘Financial Research Fund’’.
6 (2) FUND RECEIPTS.—All amounts provided to
7 the Office under subsection (c), and all assessments
8 that the Office receives under subsection (d) shall be
9 deposited into the Financial Research Fund.
10 (3) INVESTMENTS AUTHORIZED.—
11 (A) AMOUNTS IN FUND MAY BE IN12
VESTED.—The Director may request the Sec13
retary to invest the portion of the Financial Re14
search Fund that is not, in the judgment of the
15 Director, required to meet the needs of the Of16
fice.
17 (B) ELIGIBLE INVESTMENTS.—Invest18
ments shall be made by the Secretary in obliga19
tions of the United States or obligations that
20 are guaranteed as to principal and interest by
21 the United States, with maturities suitable to
22 the needs of the Financial Research Fund, as
23 determined by the Director.
24 (4) INTEREST AND PROCEEDS CREDITED.—The
25 interest on, and the proceeds from the sale or re26
demption of, any obligations held in the Financial
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1 Research Fund shall be credited to and form a part
2 of the Financial Research Fund.
3 (b) USE OF FUNDS.—
4 (1) IN GENERAL.—Funds obtained by, trans5
ferred to, or credited to the Financial Research
6 Fund shall be immediately available to the Office,
7 and shall remain available until expended, to pay the
8 expenses of the Office in carrying out the duties and
9 responsibilities of the Office.
10 (2) FEES, ASSESSMENTS, AND OTHER FUNDS
11 NOT GOVERNMENT FUNDS.—Funds obtained by,
12 transferred to, or credited to the Financial Research
13 Fund shall not be construed to be Government funds
14 or appropriated moneys.
15 (3) AMOUNTS NOT SUBJECT TO APPORTION16
MENT.—Notwithstanding any other provision of law,
17 amounts in the Financial Research Fund shall not
18 be subject to apportionment for purposes of chapter
19 15 of title 31, United States Code, or under any
20 other authority, or for any other purpose.
21 (c) INTERIM FUNDING.—During the 2-year period
22 following the date of enactment of this Act, the Board of
23 Governors shall provide to the Office an amount sufficient
24 to cover the expenses of the Office.
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1 (d) PERMANENT SELF-FUNDING.—Beginning 2 years
2 after the date of enactment of this Act, the Secretary shall
3 establish, by regulation, and with the approval of the
4 Council, an assessment schedule, including the assessment
5 base and rates, applicable to bank holding companies with
6 total consolidated assets of $50,000,000,000 or greater
7 and nonbank financial companies supervised by the Board
8 of Governors, that takes into account differences among
9 such companies, based on the considerations for estab10
lishing the prudential standards under section 115, to col11
lect assessments equal to the total expenses of the Office.
12 SEC. 156. TRANSITION OVERSIGHT.
13 (a) PURPOSE.—The purpose of this section is to en14
sure that the Office—
15 (1) has an orderly and organized startup;
16 (2) attracts and retains a qualified workforce;
17 and
18 (3) establishes comprehensive employee training
19 and benefits programs.
20 (b) REPORTING REQUIREMENT.—
21 (1) IN GENERAL.—The Office shall submit an
22 annual report to the Committee on Banking, Hous23
ing, and Urban Affairs of the Senate and the Com24
mittee on Financial Services of the House of Rep105
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1 resentatives that includes the plans described in
2 paragraph (2).
3 (2) PLANS.—The plans described in this para4
graph are as follows:
5 (A) TRAINING AND WORKFORCE DEVELOP6
MENT PLAN.—The Office shall submit a train7
ing and workforce development plan that in8
cludes, to the extent practicable—
9 (i) identification of skill and technical
10 expertise needs and actions taken to meet
11 those requirements;
12 (ii) steps taken to foster innovation
13 and creativity;
14 (iii) leadership development and suc15
cession planning; and
16 (iv) effective use of technology by em17
ployees.
18 (B) WORKPLACE FLEXIBILITY PLAN.—The
19 Office shall submit a workforce flexibility plan
20 that includes, to the extent practicable—
21 (i) telework;
22 (ii) flexible work schedules;
23 (iii) phased retirement;
24 (iv) reemployed annuitants;
25 (v) part-time work;
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1 (vi) job sharing;
2 (vii) parental leave benefits and
3 childcare assistance;
4 (viii) domestic partner benefits;
5 (ix) other workplace flexibilities; or
6 (x) any combination of the items de7
scribed in clauses (i) through (ix).
8 (C) RECRUITMENT AND RETENTION
9 PLAN.—The Office shall submit a recruitment
10 and retention plan that includes, to the extent
11 practicable, provisions relating to—
12 (i) the steps necessary to target highly
13 qualified applicant pools with diverse back14
grounds;
15 (ii) streamlined employment applica16
tion processes;
17 (iii) the provision of timely notifica18
tion of the status of employment applica19
tions to applicants; and
20 (iv) the collection of information to
21 measure indicators of hiring effectiveness.
22 (c) EXPIRATION.—The reporting requirement under
23 subsection (b) shall terminate 5 years after the date of
24 enactment of this Act.
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1 (d) RULE OF CONSTRUCTION.—Nothing in this sec2
tion may be construed to affect—
3 (1) a collective bargaining agreement, as that
4 term is defined in section 7103(a)(8) of title 5,
5 United States Code, that is in effect on the date of
6 enactment of this Act; or
7 (2) the rights of employees under chapter 71 of
8 title 5, United States Code.
9 Subtitle C—Additional Board of
10 Governors Authority for Certain
11 Nonbank Financial Companies
12 and Bank Holding Companies
13 SEC. 161. REPORTS BY AND EXAMINATIONS OF NONBANK
14 FINANCIAL COMPANIES BY THE BOARD OF
15 GOVERNORS.
16 (a) REPORTS.—
17 (1) IN GENERAL.—The Board of Governors
18 may require each nonbank financial company super19
vised by the Board of Governors, and any subsidiary
20 thereof, to submit reports under oath, to keep the
21 Board of Governors informed as to—
22 (A) the financial condition of the company
23 or subsidiary, systems of the company or sub24
sidiary for monitoring and controlling financial,
25 operating, and other risks, and the extent to
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1 which the activities and operations of the com2
pany or subsidiary pose a threat to the financial
3 stability of the United States; and
4 (B) compliance by the company or sub5
sidiary with the requirements of this title.
6 (2) USE OF EXISTING REPORTS AND INFORMA7
TION.—In carrying out subsection (a), the Board of
8 Governors shall, to the fullest extent possible, use—
9 (A) reports and supervisory information
10 that a nonbank financial company or subsidiary
11 thereof has been required to provide to other
12 Federal or State regulatory agencies;
13 (B) information otherwise obtainable from
14 Federal or State regulatory agencies;
15 (C) information that is otherwise required
16 to be reported publicly; and
17 (D) externally audited financial statements
18 of such company or subsidiary.
19 (3) AVAILABILITY.—Upon the request of the
20 Board of Governors, a nonbank financial company
21 supervised by the Board of Governors, or a sub22
sidiary thereof, shall promptly provide to the Board
23 of Governors any information described in para24
graph (2).
25 (b) EXAMINATIONS.—
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1 (1) IN GENERAL.—Subject to paragraph (2),
2 the Board of Governors may examine any nonbank
3 financial company supervised by the Board of Gov4
ernors and any subsidiary of such company, to in5
form the Board of Governors of—
6 (A) the nature of the operations and finan7
cial condition of the company and such sub8
sidiary;
9 (B) the financial, operational, and other
10 risks of the company or such subsidiary that
11 may pose a threat to the safety and soundness
12 of such company or subsidiary or to the finan13
cial stability of the United States;
14 (C) the systems for monitoring and con15
trolling such risks; and
16 (D) compliance by the company or such
17 subsidiary with the requirements of this title.
18 (2) USE OF EXAMINATION REPORTS AND IN19
FORMATION.—For purposes of this subsection, the
20 Board of Governors shall, to the fullest extent pos21
sible, rely on reports of examination of any sub22
sidiary depository institution or functionally regu23
lated subsidiary made by the primary financial regu24
latory agency for that subsidiary, and on informa25
tion described in subsection (a)(2).
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1 (c) COORDINATION WITH PRIMARY FINANCIAL REG2
ULATORY AGENCY.—The Board of Governors shall—
3 (1) provide reasonable notice to, and consult
4 with, the primary financial regulatory agency for
5 any subsidiary before requiring a report or com6
mencing an examination of such subsidiary under
7 this section; and
8 (2) avoid duplication of examination activities,
9 reporting requirements, and requests for informa10
tion, to the fullest extent possible.
11 SEC. 162. ENFORCEMENT.
12 (a) IN GENERAL.—Except as provided in subsection
13 (b), a nonbank financial company supervised by the Board
14 of Governors and any subsidiaries of such company (other
15 than any depository institution subsidiary) shall be subject
16 to the provisions of subsections (b) through (n) of section
17 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818),
18 in the same manner and to the same extent as if the com19
pany were a bank holding company, as provided in section
20 8(b)(3) of the Federal Deposit Insurance Act (12 U.S.C.
21 1818(b)(3)).
22 (b) ENFORCEMENT AUTHORITY FOR FUNCTIONALLY
23 REGULATED SUBSIDIARIES.—
24 (1) REFERRAL.—If the Board of Governors de25
termines that a condition, practice, or activity of a
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1 depository institution subsidiary or functionally reg2
ulated subsidiary of a nonbank financial company
3 supervised by the Board of Governors does not com4
ply with the regulations or orders prescribed by the
5 Board of Governors under this Act, or otherwise
6 poses a threat to the financial stability of the United
7 States, the Board of Governors may recommend, in
8 writing, to the primary financial regulatory agency
9 for the subsidiary that such agency initiate a super10
visory action or enforcement proceeding. The rec11
ommendation shall be accompanied by a written ex12
planation of the concerns giving rise to the rec13
ommendation.
14 (2) BACK-UP AUTHORITY OF THE BOARD OF
15 GOVERNORS.—If, during the 60-day period begin16
ning on the date on which the primary financial reg17
ulatory agency receives a recommendation under
18 paragraph (1), the primary financial regulatory
19 agency does not take supervisory or enforcement ac20
tion against a subsidiary that is acceptable to the
21 Board of Governors, the Board of Governors (upon
22 a vote of its members) may take the recommended
23 supervisory or enforcement action, as if the sub24
sidiary were a bank holding company subject to su25
pervision by the Board of Governors.
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1 SEC. 163. ACQUISITIONS.
2 (a) ACQUISITIONS OF BANKS; TREATMENT AS A
3 BANK HOLDING COMPANY.—For purposes of section 3 of
4 the Bank Holding Company Act of 1956 (12 U.S.C.
5 1842), a nonbank financial company supervised by the
6 Board of Governors shall be deemed to be, and shall be
7 treated as, a bank holding company.
8 (b) ACQUISITION OF NONBANK COMPANIES.—
9 (1) PRIOR NOTICE FOR LARGE ACQUISITIONS.—
10 Notwithstanding section 4(k)(6)(B) of the Bank
11 Holding Company Act of 1956 (12 U.S.C.
12 1843(k)(6)(B)), a bank holding company with total
13 consolidated assets equal to or greater than
14 $50,000,000,000 or a nonbank financial company
15 supervised by the Board of Governors shall not ac16
quire direct or indirect ownership or control of any
17 voting shares of any company (other than an insured
18 depository institution) that is engaged in activities
19 described in section 4(k) of the Bank Holding Com20
pany Act of 1956 having total consolidated assets of
21 $10,000,000,000 or more, without providing written
22 notice to the Board of Governors in advance of the
23 transaction.
24 (2) EXEMPTIONS.—The prior notice require25
ment in paragraph (1) shall not apply with regard
26 to the acquisition of shares that would qualify for
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1 the exemptions in section 4(c) or section 4(k)(4)(E)
2 of the Bank Holding Company Act of 1956 (12
3 U.S.C. 1843(c) and (k)(4)(E)).
4 (3) NOTICE PROCEDURES.—The notice proce5
dures set forth in section 4(j)(1) of the Bank Hold6
ing Company Act of 1956 (12 U.S.C. 1843(j)(1)),
7 without regard to section 4(j)(3) of that Act, shall
8 apply to an acquisition of any company (other than
9 an insured depository institution) by a bank holding
10 company with total consolidated assets equal to or
11 greater than $50,000,000,000 or a nonbank finan12
cial company supervised by the Board of Governors,
13 as described in paragraph (1), including any such
14 company engaged in activities described in section
15 4(k) of that Act.
16 (4) STANDARDS FOR REVIEW.—In addition to
17 the standards provided in section 4(j)(2) of the
18 Bank Holding Company Act of 1956 (12 U.S.C.
19 1843(j)(2)), the Board of Governors shall consider
20 the extent to which the proposed acquisition would
21 result in greater or more concentrated risks to global
22 or United States financial stability or the United
23 States economy.
24 (5) HART-SCOTT-RODINO FILING REQUIRE25
MENT.—Solely for purposes of section 7A(c)(8) of
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1 the Clayton Act (15 U.S.C. 18a(c)(8)), the trans2
actions subject to the requirements of paragraph (1)
3 shall be treated as if Board of Governors approval
4 is not required.
5 SEC. 164. PROHIBITION AGAINST MANAGEMENT INTER6
LOCKS BETWEEN CERTAIN FINANCIAL COM7
PANIES.
8 A nonbank financial company supervised by the
9 Board of Governors shall be treated as a bank holding
10 company for purposes of the Depository Institutions Man11
agement Interlocks Act (12 U.S.C. 3201 et seq.), except
12 that the Board of Governors shall not exercise the author13
ity provided in section 7 of that Act (12 U.S.C. 3207)
14 to permit service by a management official of a nonbank
15 financial company supervised by the Board of Governors
16 as a management official of any bank holding company
17 with total consolidated assets equal to or greater than
18 $50,000,000,000, or other nonaffiliated nonbank financial
19 company supervised by the Board of Governors (other
20 than to provide a temporary exemption for interlocks re21
sulting from a merger, acquisition, or consolidation).
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1 SEC. 165. ENHANCED SUPERVISION AND PRUDENTIAL
2 STANDARDS FOR NONBANK FINANCIAL COM3
PANIES SUPERVISED BY THE BOARD OF GOV4
ERNORS AND CERTAIN BANK HOLDING COM5
PANIES.
6 (a) IN GENERAL.—
7 (1) PURPOSE.—In order to prevent or mitigate
8 risks to the financial stability of the United States
9 that could arise from the material financial distress
10 or failure, or ongoing activities, of large, inter11
connected financial institutions, the Board of Gov12
ernors shall, on its own or pursuant to recommenda13
tions by the Council under section 115, establish
14 prudential standards for nonbank financial compa15
nies supervised by the Board of Governors and bank
16 holding companies with total consolidated assets
17 equal to or greater than $50,000,000,000 that—
18 (A) are more stringent than the standards
19 and requirements applicable to nonbank finan20
cial companies and bank holding companies
21 that do not present similar risks to the financial
22 stability of the United States; and
23 (B) increase in stringency, based on the
24 considerations identified in subsection (b)(3).
25 (2) TAILORED APPLICATION.—
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1 (A) IN GENERAL.—In prescribing more
2 stringent prudential standards under this sec3
tion, the Board of Governors may, on its own
4 or pursuant to a recommendation by the Coun5
cil in accordance with section 115, differentiate
6 among companies on an individual basis or by
7 category, taking into consideration their capital
8 structure, riskiness, complexity, financial activi9
ties (including the financial activities of their
10 subsidiaries), size, and any other risk-related
11 factors that the Board of Governors deems ap12
propriate.
13 (B) ADJUSTMENT OF THRESHOLD FOR AP14
PLICATION OF CERTAIN STANDARDS.—The
15 Board of Governors may, pursuant to a rec16
ommendation by the Council in accordance with
17 section 115, establish an asset threshold above
18 $50,000,000,000 for the application of any
19 standard established under subsections (c)
20 through (g).
21 (b) DEVELOPMENT OF PRUDENTIAL STANDARDS.—
22 (1) IN GENERAL.—
23 (A) REQUIRED STANDARDS.—The Board
24 of Governors shall establish prudential stand25
ards for nonbank financial companies super117
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1 vised by the Board of Governors and bank hold2
ing companies described in subsection (a), that
3 shall include—
4 (i) risk-based capital requirements
5 and leverage limits, unless the Board of
6 Governors, in consultation with the Coun7
cil, determines that such requirements are
8 not appropriate for a company subject to
9 more stringent prudential standards be10
cause of the activities of such company
11 (such as investment company activities or
12 assets under management) or structure, in
13 which case, the Board of Governors shall
14 apply other standards that result in simi15
larly stringent risk controls;
16 (ii) liquidity requirements;
17 (iii) overall risk management require18
ments;
19 (iv) resolution plan and credit expo20
sure report requirements; and
21 (v) concentration limits.
22 (B) ADDITIONAL STANDARDS AUTHOR23
IZED.—The Board of Governors may establish
24 additional prudential standards for nonbank fi25
nancial companies supervised by the Board of
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1 Governors and bank holding companies de2
scribed in subsection (a), that include—
3 (i) a contingent capital requirement;
4 (ii) enhanced public disclosures;
5 (iii) short-term debt limits; and
6 (iv) such other prudential standards
7 as the Board or Governors, on its own or
8 pursuant to a recommendation made by
9 the Council in accordance with section 115,
10 determines are appropriate.
11 (2) STANDARDS FOR FOREIGN FINANCIAL COM12
PANIES.—In applying the standards set forth in
13 paragraph (1) to any foreign nonbank financial com14
pany supervised by the Board of Governors or for15
eign-based bank holding company, the Board of Gov16
ernors shall—
17 (A) give due regard to the principle of na18
tional treatment and equality of competitive op19
portunity; and
20 (B) take into account the extent to which
21 the foreign financial company is subject on a
22 consolidated basis to home country standards
23 that are comparable to those applied to finan24
cial companies in the United States.
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1 (3) CONSIDERATIONS.—In prescribing pruden2
tial standards under paragraph (1), the Board of
3 Governors shall—
4 (A) take into account differences among
5 nonbank financial companies supervised by the
6 Board of Governors and bank holding compa7
nies described in subsection (a), based on—
8 (i) the factors described in subsections
9 (a) and (b) of section 113;
10 (ii) whether the company owns an in11
sured depository institution;
12 (iii) nonfinancial activities and affili13
ations of the company; and
14 (iv) any other risk-related factors that
15 the Board of Governors determines appro16
priate;
17 (B) to the extent possible, ensure that
18 small changes in the factors listed in sub19
sections (a) and (b) of section 113 would not
20 result in sharp, discontinuous changes in the
21 prudential standards established under para22
graph (1) of this subsection;
23 (C) take into account any recommenda24
tions of the Council under section 115; and
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1 (D) adapt the required standards as appro2
priate in light of any predominant line of busi3
ness of such company, including assets under
4 management or other activities for which par5
ticular standards may not be appropriate.
6 (4) CONSULTATION.—Before imposing pruden7
tial standards or any other requirements pursuant to
8 this section, including notices of deficiencies in reso9
lution plans and more stringent requirements or di10
vestiture orders resulting from such notices, that are
11 likely to have a significant impact on a functionally
12 regulated subsidiary or depository institution sub13
sidiary of a nonbank financial company supervised
14 by the Board of Governors or a bank holding com15
pany described in subsection (a), the Board of Gov16
ernors shall consult with each Council member that
17 primarily supervises any such subsidiary with re18
spect to any such standard or requirement.
19 (5) REPORT.—The Board of Governors shall
20 submit an annual report to Congress regarding the
21 implementation of the prudential standards required
22 pursuant to paragraph (1), including the use of such
23 standards to mitigate risks to the financial stability
24 of the United States.
25 (c) CONTINGENT CAPITAL.—
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1 (1) IN GENERAL.—Subsequent to submission by
2 the Council of a report to Congress under section
3 115(c), the Board of Governors may issue regula4
tions that require each nonbank financial company
5 supervised by the Board of Governors and bank
6 holding companies described in subsection (a) to
7 maintain a minimum amount of contingent capital
8 that is convertible to equity in times of financial
9 stress.
10 (2) FACTORS TO CONSIDER.—In issuing regula11
tions under this subsection, the Board of Governors
12 shall consider—
13 (A) the results of the study undertaken by
14 the Council, and any recommendations of the
15 Council, under section 115(c);
16 (B) an appropriate transition period for
17 implementation of contingent capital under this
18 subsection;
19 (C) the factors described in subsection
20 (b)(3)(A);
21 (D) capital requirements applicable to the
22 nonbank financial company supervised by the
23 Board of Governors or a bank holding company
24 described in subsection (a), and subsidiaries
25 thereof; and
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1 (E) any other factor that the Board of
2 Governors deems appropriate.
3 (d) RESOLUTION PLAN AND CREDIT EXPOSURE RE4
PORTS.—
5 (1) RESOLUTION PLAN.—The Board of Gov6
ernors shall require each nonbank financial company
7 supervised by the Board of Governors and bank
8 holding companies described in subsection (a) to re9
port periodically to the Board of Governors, the
10 Council, and the Corporation the plan of such com11
pany for rapid and orderly resolution in the event of
12 material financial distress or failure, which shall in13
clude—
14 (A) information regarding the manner and
15 extent to which any insured depository institu16
tion affiliated with the company is adequately
17 protected from risks arising from the activities
18 of any nonbank subsidiaries of the company;
19 (B) full descriptions of the ownership
20 structure, assets, liabilities, and contractual ob21
ligations of the company;
22 (C) identification of the cross-guarantees
23 tied to different securities, identification of
24 major counterparties, and a process for deter123
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1 mining to whom the collateral of the company
2 is pledged; and
3 (D) any other information that the Board
4 of Governors and the Corporation jointly re5
quire by rule or order.
6 (2) CREDIT EXPOSURE REPORT.—The Board of
7 Governors shall require each nonbank financial com8
pany supervised by the Board of Governors and
9 bank holding companies described in subsection (a)
10 to report periodically to the Board of Governors, the
11 Council, and the Corporation on—
12 (A) the nature and extent to which the
13 company has credit exposure to other signifi14
cant nonbank financial companies and signifi15
cant bank holding companies; and
16 (B) the nature and extent to which other
17 significant nonbank financial companies and
18 significant bank holding companies have credit
19 exposure to that company.
20 (3) REVIEW.—The Board of Governors and the
21 Corporation shall review the information provided in
22 accordance with this subsection by each nonbank fi23
nancial company supervised by the Board of Gov24
ernors and bank holding company described in sub25
section (a).
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1 (4) NOTICE OF DEFICIENCIES.—If the Board of
2 Governors and the Corporation jointly determine,
3 based on their review under paragraph (3), that the
4 resolution plan of a nonbank financial company su5
pervised by the Board of Governors or a bank hold6
ing company described in subsection (a) is not cred7
ible or would not facilitate an orderly resolution of
8 the company under title 11, United States Code—
9 (A) the Board of Governors and the Cor10
poration shall notify the company of the defi11
ciencies in the resolution plan; and
12 (B) the company shall resubmit the resolu13
tion plan within a timeframe determined by the
14 Board of Governors and the Corporation, with
15 revisions demonstrating that the plan is credible
16 and would result in an orderly resolution under
17 title 11, United States Code, including any pro18
posed changes in business operations and cor19
porate structure to facilitate implementation of
20 the plan.
21 (5) FAILURE TO RESUBMIT CREDIBLE PLAN.—
22 (A) IN GENERAL.—If a nonbank financial
23 company supervised by the Board of Governors
24 or a bank holding company described in sub25
section (a) fails to timely resubmit the resolu125
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1 tion plan as required under paragraph (4), with
2 such revisions as are required under subpara3
graph (B), the Board of Governors and the
4 Corporation may jointly impose more stringent
5 capital, leverage, or liquidity requirements, or
6 restrictions on the growth, activities, or oper7
ations of the company, or any subsidiary there8
of, until such time as the company resubmits a
9 plan that remedies the deficiencies.
10 (B) DIVESTITURE.—The Board of Gov11
ernors and the Corporation, in consultation
12 with the Council, may jointly direct a nonbank
13 financial company supervised by the Board of
14 Governors or a bank holding company described
15 in subsection (a), by order, to divest certain as16
sets or operations identified by the Board of
17 Governors and the Corporation, to facilitate an
18 orderly resolution of such company under title
19 11, United States Code, in the event of the fail20
ure of such company, in any case in which—
21 (i) the Board of Governors and the
22 Corporation have jointly imposed more
23 stringent requirements on the company
24 pursuant to subparagraph (A); and
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1 (ii) the company has failed, within the
2 2-year period beginning on the date of the
3 imposition of such requirements under sub4
paragraph (A), to resubmit the resolution
5 plan with such revisions as were required
6 under paragraph (4)(B).
7 (6) NO LIMITING EFFECT.—A resolution plan
8 submitted in accordance with this subsection shall
9 not be binding on a bankruptcy court, a receiver ap10
pointed under title II, or any other authority that is
11 authorized or required to resolve the nonbank finan12
cial company supervised by the Board, any bank
13 holding company, or any subsidiary or affiliate of
14 the foregoing.
15 (7) NO PRIVATE RIGHT OF ACTION.—No pri16
vate right of action may be based on any resolution
17 plan submitted in accordance with this subsection.
18 (8) RULES.—Not later than 18 months after
19 the date of enactment of this Act, the Board of Gov20
ernors and the Corporation shall jointly issue final
21 rules implementing this subsection.
22 (e) CONCENTRATION LIMITS.—
23 (1) STANDARDS.—In order to limit the risks
24 that the failure of any individual company could
25 pose to a nonbank financial company supervised by
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1 the Board of Governors or a bank holding company
2 described in subsection (a), the Board of Governors,
3 by regulation, shall prescribe standards that limit
4 such risks.
5 (2) LIMITATION ON CREDIT EXPOSURE.—The
6 regulations prescribed by the Board of Governors
7 under paragraph (1) shall prohibit each nonbank fi8
nancial company supervised by the Board of Gov9
ernors and bank holding company described in sub10
section (a) from having credit exposure to any unaf11
filiated company that exceeds 25 percent of the cap12
ital stock and surplus (or such lower amount as the
13 Board of Governors may determine by regulation to
14 be necessary to mitigate risks to the financial sta15
bility of the United States) of the company.
16 (3) CREDIT EXPOSURE.—For purposes of para17
graph (2), ‘‘credit exposure’’ to a company means—
18 (A) all extensions of credit to the company,
19 including loans, deposits, and lines of credit;
20 (B) all repurchase agreements and reverse
21 repurchase agreements with the company, and
22 all securities borrowing and lending trans23
actions with the company, to the extent that
24 such transactions create credit exposure for the
25 nonbank financial company supervised by the
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1 Board of Governors or a bank holding company
2 described in subsection (a);
3 (C) all guarantees, acceptances, or letters
4 of credit (including endorsement or standby let5
ters of credit) issued on behalf of the company;
6 (D) all purchases of or investment in secu7
rities issued by the company;
8 (E) counterparty credit exposure to the
9 company in connection with a derivative trans10
action between the nonbank financial company
11 supervised by the Board of Governors or a bank
12 holding company described in subsection (a)
13 and the company; and
14 (F) any other similar transactions that the
15 Board of Governors, by regulation, determines
16 to be a credit exposure for purposes of this sec17
tion.
18 (4) ATTRIBUTION RULE.—For purposes of this
19 subsection, any transaction by a nonbank financial
20 company supervised by the Board of Governors or a
21 bank holding company described in subsection (a)
22 with any person is a transaction with a company, to
23 the extent that the proceeds of the transaction are
24 used for the benefit of, or transferred to, that com25
pany.
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1 (5) RULEMAKING.—The Board of Governors
2 may issue such regulations and orders, including
3 definitions consistent with this section, as may be
4 necessary to administer and carry out this sub5
section.
6 (6) EXEMPTIONS.—This subsection shall not
7 apply to any Federal home loan bank. The Board of
8 Governors may, by regulation or order, exempt
9 transactions, in whole or in part, from the definition
10 of the term ‘‘credit exposure’’ for purposes of this
11 subsection, if the Board of Governors finds that the
12 exemption is in the public interest and is consistent
13 with the purpose of this subsection.
14 (7) TRANSITION PERIOD.—
15 (A) IN GENERAL.—This subsection and
16 any regulations and orders of the Board of Gov17
ernors under this subsection shall not be effec18
tive until 3 years after the date of enactment
19 of this Act.
20 (B) EXTENSION AUTHORIZED.—The
21 Board of Governors may extend the period
22 specified in subparagraph (A) for not longer
23 than an additional 2 years.
24 (f) ENHANCED PUBLIC DISCLOSURES.—The Board
25 of Governors may prescribe, by regulation, periodic public
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1 disclosures by nonbank financial companies supervised by
2 the Board of Governors and bank holding companies de3
scribed in subsection (a) in order to support market eval4
uation of the risk profile, capital adequacy, and risk man5
agement capabilities thereof.
6 (g) SHORT-TERM DEBT LIMITS.—
7 (1) IN GENERAL.—In order to mitigate the
8 risks that an over-accumulation of short-term debt
9 could pose to financial companies and to the stability
10 of the United States financial system, the Board of
11 Governors may, by regulation, prescribe a limit on
12 the amount of short-term debt, including off-balance
13 sheet exposures, that may be accumulated by any
14 bank holding company described in subsection (a)
15 and any nonbank financial company supervised by
16 the Board of Governors.
17 (2) BASIS OF LIMIT.—Any limit prescribed
18 under paragraph (1) shall be based on the short19
term debt of the company described in paragraph
20 (1) as a percentage of capital stock and surplus of
21 the company or on such other measure as the Board
22 of Governors considers appropriate.
23 (3) SHORT-TERM DEBT DEFINED.—For pur24
poses of this subsection, the term ‘‘short-term debt’’
25 means such liabilities with short-dated maturity that
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1 the Board of Governors identifies, by regulation, ex2
cept that such term does not include insured depos3
its.
4 (4) RULEMAKING AUTHORITY.—In addition to
5 prescribing regulations under paragraphs (1) and
6 (3), the Board of Governors may prescribe such reg7
ulations, including definitions consistent with this
8 subsection, and issue such orders, as may be nec9
essary to carry out this subsection.
10 (5) AUTHORITY TO ISSUE EXEMPTIONS AND
11 ADJUSTMENTS.—Notwithstanding the Bank Holding
12 Company Act of 1956 (12 U.S.C. 1841 et seq.), the
13 Board of Governors may, if it determines such ac14
tion is necessary to ensure appropriate heightened
15 prudential supervision, with respect to a company
16 described in paragraph (1) that does not control an
17 insured depository institution, issue to such company
18 an exemption from or adjustment to the limit pre19
scribed under paragraph (1).
20 (h) RISK COMMITTEE.—
21 (1) NONBANK FINANCIAL COMPANIES SUPER22
VISED BY THE BOARD OF GOVERNORS.—The Board
23 of Governors shall require each nonbank financial
24 company supervised by the Board of Governors that
25 is a publicly traded company to establish a risk com132
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1 mittee, as set forth in paragraph (3), not later than
2 1 year after the date of receipt of a notice of final
3 determination under section 113(e)(3) with respect
4 to such nonbank financial company supervised by
5 the Board of Governors.
6 (2) CERTAIN BANK HOLDING COMPANIES.—
7 (A) MANDATORY REGULATIONS.—The
8 Board of Governors shall issue regulations re9
quiring each bank holding company that is a
10 publicly traded company and that has total con11
solidated assets of not less than
12 $10,000,000,000 to establish a risk committee,
13 as set forth in paragraph (3).
14 (B) PERMISSIVE REGULATIONS.—The
15 Board of Governors may require each bank
16 holding company that is a publicly traded com17
pany and that has total consolidated assets of
18 less than $10,000,000,000 to establish a risk
19 committee, as set forth in paragraph (3), as de20
termined necessary or appropriate by the Board
21 of Governors to promote sound risk manage22
ment practices.
23 (3) RISK COMMITTEE.—A risk committee re24
quired by this subsection shall—
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1 (A) be responsible for the oversight of the
2 enterprise-wide risk management practices of
3 the nonbank financial company supervised by
4 the Board of Governors or bank holding com5
pany described in subsection (a), as applicable;
6 (B) include such number of independent
7 directors as the Board of Governors may deter8
mine appropriate, based on the nature of oper9
ations, size of assets, and other appropriate cri10
teria related to the nonbank financial company
11 supervised by the Board of Governors or a bank
12 holding company described in subsection (a), as
13 applicable; and
14 (C) include at least 1 risk management ex15
pert having experience in identifying, assessing,
16 and managing risk exposures of large, complex
17 firms.
18 (4) RULEMAKING.—The Board of Governors
19 shall issue final rules to carry out this subsection,
20 not later than 1 year after the transfer date, to take
21 effect not later than 15 months after the transfer
22 date.
23 (i) STRESS TESTS.—
24 (1) BY THE BOARD OF GOVERNORS.—
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1 (A) ANNUAL TESTS REQUIRED.—The
2 Board of Governors, in coordination with the
3 appropriate primary financial regulatory agen4
cies and the Federal Insurance Office, shall
5 conduct annual analyses in which nonbank fi6
nancial companies supervised by the Board of
7 Governors and bank holding companies de8
scribed in subsection (a) are subject to evalua9
tion of whether such companies have the cap10
ital, on a total consolidated basis, necessary to
11 absorb losses as a result of adverse economic
12 conditions.
13 (B) TEST PARAMETERS AND CON14
SEQUENCES.—The Board of Governors—
15 (i) shall provide for at least 3 dif16
ferent sets of conditions under which the
17 evaluation required by this subsection shall
18 be conducted, including baseline, adverse,
19 and severely adverse;
20 (ii) may require the tests described in
21 subparagraph (A) at bank holding compa22
nies and nonbank financial companies, in
23 addition to those for which annual tests
24 are required under subparagraph (A);
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1 (iii) may develop and apply such other
2 analytic techniques as are necessary to
3 identify, measure, and monitor risks to the
4 financial stability of the United States;
5 (iv) shall require the companies de6
scribed in subparagraph (A) to update
7 their resolution plans required under sub8
section (d)(1), as the Board of Governors
9 determines appropriate, based on the re10
sults of the analyses; and
11 (v) shall publish a summary of the re12
sults of the tests required under subpara13
graph (A) or clause (ii) of this subpara14
graph.
15 (2) BY THE COMPANY.—
16 (A) REQUIREMENT.—A nonbank financial
17 company supervised by the Board of Governors
18 and a bank holding company described in sub19
section (a) shall conduct semiannual stress
20 tests. All other financial companies that have
21 total consolidated assets of more than
22 $10,000,000,000 and are regulated by a pri23
mary Federal financial regulatory agency shall
24 conduct annual stress tests. The tests required
25 under this subparagraph shall be conducted in
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1 accordance with the regulations prescribed
2 under subparagraph (C).
3 (B) REPORT.—A company required to con4
duct stress tests under subparagraph (A) shall
5 submit a report to the Board of Governors and
6 to its primary financial regulatory agency at
7 such time, in such form, and containing such
8 information as the primary financial regulatory
9 agency shall require.
10 (C) REGULATIONS.—Each Federal pri11
mary financial regulatory agency, in coordina12
tion with the Board of Governors and the Fed13
eral Insurance Office, shall issue consistent and
14 comparable regulations to implement this para15
graph that shall—
16 (i) define the term ‘‘stress test’’ for
17 purposes of this paragraph;
18 (ii) establish methodologies for the
19 conduct of stress tests required by this
20 paragraph that shall provide for at least 3
21 different sets of conditions, including base22
line, adverse, and severely adverse;
23 (iii) establish the form and content of
24 the report required by subparagraph (B);
25 and
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1 (iv) require companies subject to this
2 paragraph to publish a summary of the re3
sults of the required stress tests.
4 (j) LEVERAGE LIMITATION.—
5 (1) REQUIREMENT.—The Board of Governors
6 shall require a bank holding company with total con7
solidated assets equal to or greater than
8 $50,000,000,000 or a nonbank financial company
9 supervised by the Board of Governors to maintain a
10 debt to equity ratio of no more than 15 to 1, upon
11 a determination by the Council that such company
12 poses a grave threat to the financial stability of the
13 United States and that the imposition of such re14
quirement is necessary to mitigate the risk that such
15 company poses to the financial stability of the
16 United States. Nothing in this paragraph shall apply
17 to a Federal home loan bank.
18 (2) CONSIDERATIONS.—In making a determina19
tion under this subsection, the Council shall consider
20 the factors described in subsections (a) and (b) of
21 section 113 and any other risk-related factors that
22 the Council deems appropriate.
23 (3) REGULATIONS.—The Board of Governors
24 shall promulgate regulations to establish procedures
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1 and timelines for complying with the requirements of
2 this subsection.
3 (k) INCLUSION OF OFF-BALANCE-SHEET ACTIVITIES
4 IN COMPUTING CAPITAL REQUIREMENTS.—
5 (1) IN GENERAL.—In the case of any bank
6 holding company described in subsection (a) or
7 nonbank financial company supervised by the Board
8 of Governors, the computation of capital for pur9
poses of meeting capital requirements shall take into
10 account any off-balance-sheet activities of the com11
pany.
12 (2) EXEMPTIONS.—If the Board of Governors
13 determines that an exemption from the requirement
14 under paragraph (1) is appropriate, the Board of
15 Governors may exempt a company, or any trans16
action or transactions engaged in by such company,
17 from the requirements of paragraph (1).
18 (3) OFF-BALANCE-SHEET ACTIVITIES DE19
FINED.—For purposes of this subsection, the term
20 ‘‘off-balance-sheet activities’’ means an existing li21
ability of a company that is not currently a balance
22 sheet liability, but may become one upon the hap23
pening of some future event, including the following
24 transactions, to the extent that they may create a li25
ability:
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1 (A) Direct credit substitutes in which a
2 bank substitutes its own credit for a third
3 party, including standby letters of credit.
4 (B) Irrevocable letters of credit that guar5
antee repayment of commercial paper or tax-ex6
empt securities.
7 (C) Risk participations in bankers’ accept8
ances.
9 (D) Sale and repurchase agreements.
10 (E) Asset sales with recourse against the
11 seller.
12 (F) Interest rate swaps.
13 (G) Credit swaps.
14 (H) Commodities contracts.
15 (I) Forward contracts.
16 (J) Securities contracts.
17 (K) Such other activities or transactions as
18 the Board of Governors may, by rule, define.
19 SEC. 166. EARLY REMEDIATION REQUIREMENTS.
20 (a) IN GENERAL.—The Board of Governors, in con21
sultation with the Council and the Corporation, shall pre22
scribe regulations establishing requirements to provide for
23 the early remediation of financial distress of a nonbank
24 financial company supervised by the Board of Governors
25 or a bank holding company described in section 165(a),
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1 except that nothing in this subsection authorizes the provi2
sion of financial assistance from the Federal Government.
3 (b) PURPOSE OF THE EARLY REMEDIATION RE4
QUIREMENTS.—The purpose of the early remediation re5
quirements under subsection (a) shall be to establish a se6
ries of specific remedial actions to be taken by a nonbank
7 financial company supervised by the Board of Governors
8 or a bank holding company described in section 165(a)
9 that is experiencing increasing financial distress, in order
10 to minimize the probability that the company will become
11 insolvent and the potential harm of such insolvency to the
12 financial stability of the United States.
13 (c) REMEDIATION REQUIREMENTS.—The regulations
14 prescribed by the Board of Governors under subsection (a)
15 shall—
16 (1) define measures of the financial condition of
17 the company, including regulatory capital, liquidity
18 measures, and other forward-looking indicators; and
19 (2) establish requirements that increase in
20 stringency as the financial condition of the company
21 declines, including—
22 (A) requirements in the initial stages of fi23
nancial decline, including limits on capital dis24
tributions, acquisitions, and asset growth; and
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1 (B) requirements at later stages of finan2
cial decline, including a capital restoration plan
3 and capital-raising requirements, limits on
4 transactions with affiliates, management
5 changes, and asset sales.
6 SEC. 167. AFFILIATIONS.
7 (a) AFFILIATIONS.—Nothing in this subtitle shall be
8 construed to require a nonbank financial company super9
vised by the Board of Governors, or a company that con10
trols a nonbank financial company supervised by the
11 Board of Governors, to conform the activities thereof to
12 the requirements of section 4 of the Bank Holding Com13
pany Act of 1956 (12 U.S.C. 1843).
14 (b) REQUIREMENT.—
15 (1) IN GENERAL.—
16 (A) BOARD AUTHORITY.—If a nonbank fi17
nancial company supervised by the Board of
18 Governors conducts activities other than those
19 that are determined to be financial in nature or
20 incidental thereto under section 4(k) of the
21 Bank Holding Company Act of 1956, the Board
22 of Governors may require such company to es23
tablish and conduct all or a portion of such ac24
tivities that are determined to be financial in
25 nature or incidental thereto in or through an
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1 intermediate holding company established pur2
suant to regulation of the Board of Governors,
3 not later than 90 days (or such longer period
4 as the Board of Governors may deem appro5
priate) after the date on which the nonbank fi6
nancial company supervised by the Board of
7 Governors is notified of the determination of
8 the Board of Governors under this section.
9 (B) NECESSARY ACTIONS.—Notwith10
standing subparagraph (A), the Board of Gov11
ernors shall require a nonbank financial com12
pany supervised by the Board of Governors to
13 establish an intermediate holding company if
14 the Board of Governors makes a determination
15 that the establishment of such intermediate
16 holding company is necessary to—
17 (i) appropriately supervise activities
18 that are determined to be financial in na19
ture or incidental thereto; or
20 (ii) to ensure that supervision by the
21 Board of Governors does not extend to the
22 commercial activities of such nonbank fi23
nancial company.
24 (2) INTERNAL FINANCIAL ACTIVITIES.—For
25 purposes of this subsection, activities that are deter143
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1 mined to be financial in nature or incidental thereto
2 under section 4(k) of the Bank Holding Company
3 Act of 1956, as described in paragraph (1), shall not
4 include internal financial activities, including inter5
nal treasury, investment, and employee benefit func6
tions. With respect to any internal financial activity
7 engaged in for the company or an affiliate and a
8 non-affiliate of such company during the year prior
9 to the date of enactment of this Act, such company
10 (or an affiliate that is not an intermediate holding
11 company or subsidiary of an intermediate holding
12 company) may continue to engage in such activity,
13 as long as not less than 2/3 of the assets or 2/3 of
14 the revenues generated from the activity are from or
15 attributable to such company or an affiliate, subject
16 to review by the Board of Governors, to determine
17 whether engaging in such activity presents undue
18 risk to such company or to the financial stability of
19 the United States.
20 (3) SOURCE OF STRENGTH.—A company that
21 directly or indirectly controls an intermediate hold22
ing company established under this section shall
23 serve as a source of strength to its subsidiary inter24
mediate holding company.
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1 (4) PARENT COMPANY REPORTS.—The Board
2 of Governors may, from time to time, require reports
3 under oath from a company that controls an inter4
mediate holding company, and from the appropriate
5 officers or directors of such company, solely for pur6
poses of ensuring compliance with the provisions of
7 this section, including assessing the ability of the
8 company to serve as a source of strength to its sub9
sidiary intermediate holding company pursuant to
10 paragraph (3) and enforcing such compliance.
11 (5) LIMITED PARENT COMPANY ENFORCE12
MENT.—
13 (A) IN GENERAL.—In addition to any
14 other authority of the Board of Governors, the
15 Board of Governors may enforce compliance
16 with the provisions of this subsection that are
17 applicable to any company described in para18
graph (1) that controls an intermediate holding
19 company under section 8 of the Federal Deposit
20 Insurance Act, and such company shall be sub21
ject to such section (solely for such purposes) in
22 the same manner and to the same extent as if
23 such company were a bank holding company.
24 (B) APPLICATION OF OTHER ACT.—Any
25 violation of this subsection by any company
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1 that controls an intermediate holding company
2 may also be treated as a violation of the Fed3
eral Deposit Insurance Act for purposes of sub4
paragraph (A).
5 (C) NO EFFECT ON OTHER AUTHORITY.—
6 No provision of this paragraph shall be con7
strued as limiting any authority of the Board of
8 Governors or any other Federal agency under
9 any other provision of law.
10 (c) REGULATIONS.—The Board of Governors—
11 (1) shall promulgate regulations to establish the
12 criteria for determining whether to require a
13 nonbank financial company supervised by the Board
14 of Governors to establish an intermediate holding
15 company under subsection (b); and
16 (2) may promulgate regulations to establish any
17 restrictions or limitations on transactions between
18 an intermediate holding company or a nonbank fi19
nancial company supervised by the Board of Gov20
ernors and its affiliates, as necessary to prevent un21
safe and unsound practices in connection with trans22
actions between such company, or any subsidiary
23 thereof, and its parent company or affiliates that are
24 not subsidiaries of such company, except that such
25 regulations shall not restrict or limit any transaction
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1 in connection with the bona fide acquisition or lease
2 by an unaffiliated person of assets, goods, or serv3
ices.
4 SEC. 168. REGULATIONS.
5 The Board of Governors shall have authority to issue
6 regulations to implement subtitles A and C and the
7 amendments made thereunder. Except as otherwise speci8
fied in subtitle A or C, not later than 18 months after
9 the effective date of this Act, the Board of Governors shall
10 issue final regulations to implement subtitles A and C, and
11 the amendments made thereunder.
12 SEC. 169. AVOIDING DUPLICATION.
13 The Board of Governors shall take any action that
14 the Board of Governors deems appropriate to avoid impos15
ing requirements under this subtitle that are duplicative
16 of requirements applicable to bank holding companies and
17 nonbank financial companies under other provisions of
18 law.
19 SEC. 170. SAFE HARBOR.
20 (a) REGULATIONS.—The Board of Governors shall
21 promulgate regulations on behalf of, and in consultation
22 with, the Council setting forth the criteria for exempting
23 certain types or classes of U.S. nonbank financial compa24
nies or foreign nonbank financial companies from super25
vision by the Board of Governors.
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1 (b) CONSIDERATIONS.—In developing the criteria
2 under subsection (a), the Board of Governors shall take
3 into account the factors for consideration described in sub4
sections (a) and (b) of section 113 in determining whether
5 a U.S. nonbank financial company or foreign nonbank fi6
nancial company shall be supervised by the Board of Gov7
ernors.
8 (c) RULE OF CONSTRUCTION.—Nothing in this sec9
tion shall be construed to require supervision by the Board
10 of Governors of a U.S. nonbank financial company or for11
eign nonbank financial company, if such company does not
12 meet the criteria for exemption established under sub13
section (a).
14 (d) REVISIONS.—
15 (1) IN GENERAL.—The Board of Governors
16 shall, in consultation with the Council, review the
17 regulations promulgated under subsection (a), not
18 less frequently than every 5 years, and based upon
19 the review, the Board of Governors may revise such
20 regulations on behalf of, and in consultation with,
21 the Council to update as necessary the criteria set
22 forth in such regulations.
23 (2) TRANSITION PERIOD.—No revisions under
24 paragraph (1) shall take effect before the end of the
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1 2-year period after the date of publication of such
2 revisions in final form.
3 (e) REPORT.—The Chairman of the Board of Gov4
ernors and the Chairperson of the Council shall submit
5 a joint report to the Committee on Banking, Housing, and
6 Urban Affairs of the Senate and the Committee on Finan7
cial Services of the House of Representatives not later
8 than 30 days after the date of the issuance in final form
9 of regulations under subsection (a), or any subsequent re10
vision to such regulations under subsection (d), as applica11
ble. Such report shall include, at a minimum, the rationale
12 for exemption and empirical evidence to support the cri13
teria for exemption.
14 SEC. 171. LEVERAGE AND RISK-BASED CAPITAL REQUIRE15
MENTS.
16 (a) DEFINITIONS.—For purposes of this section, the
17 following definitions shall apply:
18 (1) GENERALLY APPLICABLE LEVERAGE CAP19
ITAL REQUIREMENTS.—The term ‘‘generally applica20
ble leverage capital requirements’’ means—
21 (A) the minimum ratios of tier 1 capital to
22 average total assets, as established by the ap23
propriate Federal banking agencies to apply to
24 insured depository institutions under the
25 prompt corrective action regulations imple149
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1 menting section 38 of the Federal Deposit In2
surance Act, regardless of total consolidated
3 asset size or foreign financial exposure; and
4 (B) includes the regulatory capital compo5
nents in the numerator of that capital require6
ment, average total assets in the denominator
7 of that capital requirement, and the required
8 ratio of the numerator to the denominator.
9 (2) GENERALLY APPLICABLE RISK-BASED CAP10
ITAL REQUIREMENTS.—The term ‘‘generally applica11
ble risk-based capital requirements’’ means—
12 (A) the risk-based capital requirements, as
13 established by the appropriate Federal banking
14 agencies to apply to insured depository institu15
tions under the prompt corrective action regula16
tions implementing section 38 of the Federal
17 Deposit Insurance Act, regardless of total con18
solidated asset size or foreign financial expo19
sure; and
20 (B) includes the regulatory capital compo21
nents in the numerator of those capital require22
ments, the risk-weighted assets in the denomi23
nator of those capital requirements, and the re24
quired ratio of the numerator to the denomi25
nator.
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1 (3) DEFINITION OF DEPOSITORY INSTITUTION
2 HOLDING COMPANY.—The term ‘‘depository institu3
tion holding company’’ means a bank holding com4
pany or a savings and loan holding company (as
5 those terms are defined in section 3 of the Federal
6 Deposit Insurance Act) that is organized in the
7 United States, including any bank or savings and
8 loan holding company that is owned or controlled by
9 a foreign organization, but does not include the for10
eign organization.
11 (b) MINIMUM CAPITAL REQUIREMENTS.—
12 (1) MINIMUM LEVERAGE CAPITAL REQUIRE13
MENTS.—The appropriate Federal banking agencies
14 shall establish minimum leverage capital require15
ments on a consolidated basis for insured depository
16 institutions, depository institution holding compa17
nies, and nonbank financial companies supervised by
18 the Board of Governors. The minimum leverage cap19
ital requirements established under this paragraph
20 shall not be less than the generally applicable lever21
age capital requirements, which shall serve as a floor
22 for any capital requirements that the agency may re23
quire, nor quantitatively lower than the generally ap24
plicable leverage capital requirements that were in
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1 effect for insured depository institutions as of the
2 date of enactment of this Act.
3 (2) MINIMUM RISK-BASED CAPITAL REQUIRE4
MENTS.—The appropriate Federal banking agencies
5 shall establish minimum risk-based capital require6
ments on a consolidated basis for insured depository
7 institutions, depository institution holding compa8
nies, and nonbank financial companies supervised by
9 the Board of Governors. The minimum risk-based
10 capital requirements established under this para11
graph shall not be less than the generally applicable
12 risk-based capital requirements, which shall serve as
13 a floor for any capital requirements that the agency
14 may require, nor quantitatively lower than the gen15
erally applicable risk-based capital requirements that
16 were in effect for insured depository institutions as
17 of the date of enactment of this Act.
18 (3) INVESTMENTS IN FINANCIAL SUBSIDI19
ARIES.—For purposes of this section, investments in
20 financial subsidiaries that insured depository institu21
tions are required to deduct from regulatory capital
22 under section 5136A of the Revised Statutes of the
23 United States or section 46(a)(2) of the Federal De24
posit Insurance Act need not be deducted from regu25
latory capital by depository institution holding com152
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1 panies or nonbank financial companies supervised by
2 the Board of Governors, unless such capital deduc3
tion is required by the Board of Governors or the
4 primary financial regulatory agency in the case of
5 nonbank financial companies supervised by the
6 Board of Governors.
7 (4) EFFECTIVE DATES AND PHASE-IN PERI8
ODS.—
9 (A) DEBT OR EQUITY INSTRUMENTS ON
10 OR AFTER MAY 19, 2010.—For debt or equity in11
struments issued on or after May 19, 2010, by
12 depository institution holding companies or by
13 nonbank financial companies supervised by the
14 Board of Governors, this section shall be
15 deemed to have become effective as of May 19,
16 2010.
17 (B) DEBT OR EQUITY INSTRUMENTS
18 ISSUED BEFORE MAY 19, 2010.—For debt or eq19
uity instruments issued before May 19, 2010,
20 by depository institution holding companies or
21 by nonbank financial companies supervised by
22 the Board of Governors, any regulatory capital
23 deductions required under this section shall be
24 phased in incrementally over a period of 3
25 years, with the phase-in period to begin on Jan153
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1 uary 1, 2013, except as set forth in subpara2
graph (C).
3 (C) DEBT OR EQUITY INSTRUMENTS OF
4 SMALLER INSTITUTIONS.—For debt or equity
5 instruments issued before May 19, 2010, by de6
pository institution holding companies with
7 total consolidated assets of less than
8 $15,000,000,000 as of December 31, 2009, and
9 by organizations that were mutual holding com10
panies on May 19, 2010, the capital deductions
11 that would be required for other institutions
12 under this section are not required as a result
13 of this section.
14 (D) DEPOSITORY INSTITUTION HOLDING
15 COMPANIES NOT PREVIOUSLY SUPERVISED BY
16 THE BOARD OF GOVERNORS.—For any deposi17
tory institution holding company that was not
18 supervised by the Board of Governors as of
19 May 19, 2010, the requirements of this section,
20 except as set forth in subparagraphs (A) and
21 (B), shall be effective 5 years after the date of
22 enactment of this Act
23 (E) CERTAIN BANK HOLDING COMPANY
24 SUBSIDIARIES OF FOREIGN BANKING ORGANIZA25
TIONS.—For bank holding company subsidiaries
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1 of foreign banking organizations that have re2
lied on Supervision and Regulation Letter SR-
3 01-1 issued by the Board of Governors (as in
4 effect on May 19, 2010), the requirements of
5 this section, except as set forth in subparagraph
6 (A), shall be effective 5 years after the date of
7 enactment of this Act.
8 (5) EXCEPTIONS.—This section shall not apply
9 to—
10 (A) debt or equity instruments issued to
11 the United States or any agency or instrumen12
tality thereof pursuant to the Emergency Eco13
nomic Stabilization Act of 2008, and prior to
14 October 4, 2010;
15 (B) any Federal home loan bank; or
16 (C) any small bank holding company that
17 is subject to the Small Bank Holding Company
18 Policy Statement of the Board of Governors, as
19 in effect on May 19, 2010.
20 (6) STUDY AND REPORT ON SMALL INSTITU21
TION ACCESS TO CAPITAL.—
22 (A) STUDY REQUIRED.—The Comptroller
23 General of the United States, after consultation
24 with the Federal banking agencies, shall con155
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1 duct a study of access to capital by smaller in2
sured depository institutions.
3 (B) SCOPE.—For purposes of this study
4 required by subparagraph (A), the term ‘‘small5
er insured depository institution’’ means an in6
sured depository institution with total consoli7
dated assets of $5,000,000,000 or less.
8 (C) REPORT TO CONGRESS.—Not later
9 than 18 months after the date of enactment of
10 this Act, the Comptroller General of the United
11 States shall submit to the Committee on Bank12
ing, Housing, and Urban Affairs of the Senate
13 and the Committee on Financial Services of the
14 House of Representatives a report summarizing
15 the results of the study conducted under sub16
paragraph (A), together with any recommenda17
tions for legislative or regulatory action that
18 would enhance the access to capital of smaller
19 insured depository institutions, in a manner
20 that is consistent with safe and sound banking
21 operations.
22 (7) CAPITAL REQUIREMENTS TO ADDRESS AC23
TIVITIES THAT POSE RISKS TO THE FINANCIAL SYS24
TEM.—
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1 (A) IN GENERAL.—Subject to the rec2
ommendations of the Council, in accordance
3 with section 120, the Federal banking agencies
4 shall develop capital requirements applicable to
5 insured depository institutions, depository insti6
tution holding companies, and nonbank finan7
cial companies supervised by the Board of Gov8
ernors that address the risks that the activities
9 of such institutions pose, not only to the insti10
tution engaging in the activity, but to other
11 public and private stakeholders in the event of
12 adverse performance, disruption, or failure of
13 the institution or the activity.
14 (B) CONTENT.—Such rules shall address,
15 at a minimum, the risks arising from—
16 (i) significant volumes of activity in
17 derivatives, securitized products purchased
18 and sold, financial guarantees purchased
19 and sold, securities borrowing and lending,
20 and repurchase agreements and reverse re21
purchase agreements;
22 (ii) concentrations in assets for which
23 the values presented in financial reports
24 are based on models rather than historical
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1 cost or prices deriving from deep and liq2
uid 2-way markets; and
3 (iii) concentrations in market share
4 for any activity that would substantially
5 disrupt financial markets if the institution
6 is forced to unexpectedly cease the activity.
7 SEC. 172. EXAMINATION AND ENFORCEMENT ACTIONS FOR
8 INSURANCE AND ORDERLY LIQUIDATION
9 PURPOSES.
10 (a) EXAMINATIONS FOR INSURANCE AND RESOLU11
TION PURPOSES.—Section 10(b)(3) of the Federal De12
posit Insurance Act (12 U.S.C. 1820(b)(3)) is amended—
13 (1) by striking ‘‘In addition’’ and inserting the
14 following:
15 ‘‘(A) IN GENERAL.—In addition’’; and
16 (2) by striking ‘‘whenever the board of directors
17 determines’’ and all that follows through the period
18 and inserting the following: ‘‘or nonbank financial
19 company supervised by the Board of Governors or a
20 bank holding company described in section 165(a) of
21 the Financial Stability Act of 2010, whenever the
22 Board of Directors determines that a special exam23
ination of any such depository institution is nec24
essary to determine the condition of such depository
25 institution for insurance purposes, or of such
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1 nonbank financial company supervised by the Board
2 of Governors or bank holding company described in
3 section 165(a) of the Financial Stability Act of
4 2010, for the purpose of implementing its authority
5 to provide for orderly liquidation of any such com6
pany under title II of that Act, provided that such
7 authority may not be used with respect to any such
8 company that is in a generally sound condition.
9 ‘‘(B) LIMITATION.—Before conducting a
10 special examination of a nonbank financial com11
pany supervised by the Board of Governors or
12 a bank holding company described in section
13 165(a) of the Financial Stability Act of 2010,
14 the Corporation shall review any available and
15 acceptable resolution plan that the company has
16 submitted in accordance with section 165(d) of
17 that Act, consistent with the nonbinding effect
18 of such plan, and available reports of examina19
tion, and shall coordinate to the maximum ex20
tent practicable with the Board of Governors, in
21 order to minimize duplicative or conflicting ex22
aminations.’’.
23 (b) ENFORCEMENT AUTHORITY.—Section 8(t) of the
24 Federal Deposit Insurance Act (12 U.S.C. 1818(t)) is
25 amended—
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1 (1) in paragraph (1), by inserting ‘‘, any depos2
itory institution holding company,’’ before ‘‘or any
3 institution-affiliated party’’;
4 (2) in paragraph (2)—
5 (A) by striking ‘‘or’’ at the end of subpara6
graph (B);
7 (B) at the end of subparagraph (C), by
8 striking the period and inserting ‘‘or’’; and
9 (C) by inserting at the end the following
10 new subparagraph:
11 ‘‘(D) the conduct or threatened conduct
12 (including any acts or omissions) of the deposi13
tory institution holding company poses a risk to
14 the Deposit Insurance Fund, provided that such
15 authority may not be used with respect to a de16
pository institution holding company that is in
17 generally sound condition and whose conduct
18 does not pose a foreseeable and material risk of
19 loss to the Deposit Insurance Fund;’’; and
20 (3) by adding at the end the following:
21 ‘‘(6) POWERS AND DUTIES WITH RESPECT TO
22 DEPOSITORY INSTITUTION HOLDING COMPANIES.—
23 For purposes of exercising the backup authority pro24
vided in this subsection—
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1 ‘‘(A) the Corporation shall have the same
2 powers with respect to a depository institution
3 holding company and its affiliates as the appro4
priate Federal banking agency has with respect
5 to the holding company and its affiliates; and
6 ‘‘(B) the holding company and its affiliates
7 shall have the same duties and obligations with
8 respect to the Corporation as the holding com9
pany and its affiliates have with respect to the
10 appropriate Federal banking agency.’’.
11 (c) RULE OF CONSTRUCTION.—Nothing in this Act
12 shall be construed to limit or curtail the Corporation’s cur13
rent authority to examine or bring enforcement actions
14 with respect to any insured depository institution or insti15
tution-affiliated party.
16 SEC. 173. ACCESS TO UNITED STATES FINANCIAL MARKET
17 BY FOREIGN INSTITUTIONS.
18 (a) ESTABLISHMENT OF FOREIGN BANK OFFICES IN
19 THE UNITED STATES.—Section 7(d)(3) of the Inter20
national Banking Act of 1978 (12 U.S.C. 3105(d)(3)) is
21 amended—
22 (1) in subparagraph (C), by striking ‘‘and’’ at
23 the end;
24 (2) in subparagraph (D), by striking the period
25 at the end of and inserting ‘‘; and’’; and
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1 (3) by adding at the end the following new sub2
paragraph:
3 ‘‘(E) for a foreign bank that presents a
4 risk to the stability of United States financial
5 system, whether the home country of the for6
eign bank has adopted, or is making demon7
strable progress toward adopting, an appro8
priate system of financial regulation for the fi9
nancial system of such home country to miti10
gate such risk.’’.
11 (b) TERMINATION OF FOREIGN BANK OFFICES IN
12 THE UNITED STATES.—Section 7(e)(1) of the Inter13
national Banking Act of 1978 (12 U.S.C. 3105(e)(1)) is
14 amended—
15 (1) in subparagraph (A), by striking ‘‘or’’ at
16 the end;
17 (2) in subparagraph (B), by striking the period
18 at the end of and inserting ‘‘; or’’; and
19 (3) by inserting after subparagraph (B), the
20 following new subparagraph:
21 ‘‘(C) for a foreign bank that presents a
22 risk to the stability of the United States finan23
cial system, the home country of the foreign
24 bank has not adopted, or made demonstrable
25 progress toward adopting, an appropriate sys162
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1 tem of financial regulation to mitigate such
2 risk.’’.
3 (c) REGISTRATION OR SUCCESSION TO A UNITED
4 STATES BROKER OR DEALER AND TERMINATION OF
5 SUCH REGISTRATION.—Section 15 of the Securities Ex6
change Act of 1934 (15 U.S.C. 78o) is amended by adding
7 at the end the following new subsections:
8 ‘‘(k) REGISTRATION OR SUCCESSION TO A UNITED
9 STATES BROKER OR DEALER.—In determining whether
10 to permit a foreign person or an affiliate of a foreign per11
son to register as a United States broker or dealer, or
12 succeed to the registration of a United States broker or
13 dealer, the Commission may consider whether, for a for14
eign person, or an affiliate of a foreign person that pre15
sents a risk to the stability of the United States financial
16 system, the home country of the foreign person has adopt17
ed, or made demonstrable progress toward adopting, an
18 appropriate system of financial regulation to mitigate such
19 risk.
20 ‘‘(l) TERMINATION OF A UNITED STATES BROKER
21 OR DEALER.—For a foreign person or an affiliate of a
22 foreign person that presents such a risk to the stability
23 of the United States financial system, the Commission
24 may determine to terminate the registration of such for25
eign person or an affiliate of such foreign person as a
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1 broker or dealer in the United States, if the Commission
2 determines that the home country of the foreign person
3 has not adopted, or made demonstrable progress toward
4 adopting, an appropriate system of financial regulation to
5 mitigate such risk.’’.
6 SEC. 174. STUDIES AND REPORTS ON HOLDING COMPANY
7 CAPITAL REQUIREMENTS.
8 (a) STUDY OF HYBRID CAPITAL INSTRUMENTS.—
9 The Comptroller General of the United States, in con10
sultation with the Board of Governors, the Comptroller of
11 the Currency, and the Corporation, shall conduct a study
12 of the use of hybrid capital instruments as a component
13 of Tier 1 capital for banking institutions and bank holding
14 companies. The study shall consider—
15 (1) the current use of hybrid capital instru16
ments, such as trust preferred shares, as a compo17
nent of Tier 1 capital;
18 (2) the differences between the components of
19 capital permitted for insured depository institutions
20 and those permitted for companies that control in21
sured depository institutions;
22 (3) the benefits and risks of allowing such in23
struments to be used to comply with Tier 1 capital
24 requirements;
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1 (4) the economic impact of prohibiting the use
2 of such capital instruments for Tier 1;
3 (5) a review of the consequences of disquali4
fying trust preferred instruments, and whether it
5 could lead to the failure or undercapitalization of ex6
isting banking organizations;
7 (6) the international competitive implications
8 prohibiting hybrid capital instruments for Tier 1;
9 (7) the impact on the cost and availability of
10 credit in the United States from such a prohibition;
11 (8) the availability of capital for financial insti12
tutions with less than $10,000,000,000 in total as13
sets; and
14 (9) any other relevant factors relating to the
15 safety and soundness of our financial system and po16
tential economic impact of such a prohibition.
17 (b) STUDY OF FOREIGN BANK INTERMEDIATE
18 HOLDING COMPANY CAPITAL REQUIREMENTS.—The
19 Comptroller General of the United States, in consultation
20 with the Secretary, the Board of Governors, the Comp21
troller of the Currency, and the Corporation, shall conduct
22 a study of capital requirements applicable to United
23 States intermediate holding companies of foreign banks
24 that are bank holding companies or savings and loan hold25
ing companies. The study shall consider—
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1 (1) current Board of Governors policy regarding
2 the treatment of intermediate holding companies;
3 (2) the principle of national treatment and
4 equality of competitive opportunity for foreign banks
5 operating in the United States;
6 (3) the extent to which foreign banks are sub7
ject on a consolidated basis to home country capital
8 standards comparable to United States capital
9 standards;
10 (4) potential effects on United States banking
11 organizations operating abroad of changes to United
12 States policy regarding intermediate holding compa13
nies;
14 (5) the impact on the cost and availability of
15 credit in the United States from a change in United
16 States policy regarding intermediate holding compa17
nies; and
18 (6) any other relevant factors relating to the
19 safety and soundness of our financial system and po20
tential economic impact of such a prohibition.
21 (c) REPORT.—Not later than 18 months after the
22 date of enactment of this Act, the Comptroller General
23 of the United States shall submit reports to the Com24
mittee on Banking, Housing, and Urban Affairs of the
25 Senate and the Committee on Financial Services of the
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1 House of Representatives summarizing the results of the
2 studies required under subsection (a). The reports shall
3 include specific recommendations for legislative or regu4
latory action regarding the treatment of hybrid capital in5
struments, including trust preferred shares, and shall ex6
plain the basis for such recommendations.
7 SEC. 175. INTERNATIONAL POLICY COORDINATION.
8 (a) BY THE PRESIDENT.—The President, or a des9
ignee of the President, may coordinate through all avail10
able international policy channels, similar policies as those
11 found in United States law relating to limiting the scope,
12 nature, size, scale, concentration, and interconnectedness
13 of financial companies, in order to protect financial sta14
bility and the global economy.
15 (b) BY THE COUNCIL.—The Chairperson of the
16 Council, in consultation with the other members of the
17 Council, shall regularly consult with the financial regu18
latory entities and other appropriate organizations of for19
eign governments or international organizations on mat20
ters relating to systemic risk to the international financial
21 system.
22 (c) BY THE BOARD OF GOVERNORS AND THE SEC23
RETARY.—The Board of Governors and the Secretary
24 shall consult with their foreign counterparts and through
25 appropriate multilateral organizations to encourage com167
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1 prehensive and robust prudential supervision and regula2
tion for all highly leveraged and interconnected financial
3 companies.
4 SEC. 176. RULE OF CONSTRUCTION.
5 No regulation or standard imposed under this title
6 may be construed in a manner that would lessen the strin7
gency of the requirements of any applicable primary finan8
cial regulatory agency or any other Federal or State agen9
cy that are otherwise applicable. This title, and the rules
10 and regulations or orders prescribed pursuant to this title,
11 do not divest any such agency of any authority derived
12 from any other applicable law.
13 TITLE II—ORDERLY
14 LIQUIDATION AUTHORITY
15 SEC. 201. DEFINITIONS.
16 (a) IN GENERAL.—In this title, the following defini17
tions shall apply:
18 (1) ADMINISTRATIVE EXPENSES OF THE RE19
CEIVER.—The term ‘‘administrative expenses of the
20 receiver’’ includes—
21 (A) the actual, necessary costs and ex22
penses incurred by the Corporation as receiver
23 for a covered financial company in liquidating a
24 covered financial company; and
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1 (B) any obligations that the Corporation
2 as receiver for a covered financial company de3
termines are necessary and appropriate to fa4
cilitate the smooth and orderly liquidation of
5 the covered financial company.
6 (2) BANKRUPTCY CODE.—The term ‘‘Bank7
ruptcy Code’’ means title 11, United States Code.
8 (3) BRIDGE FINANCIAL COMPANY.—The term
9 ‘‘bridge financial company’’ means a new financial
10 company organized by the Corporation in accordance
11 with section 210(h) for the purpose of resolving a
12 covered financial company.
13 (4) CLAIM.—The term ‘‘claim’’ means any right
14 to payment, whether or not such right is reduced to
15 judgment, liquidated, unliquidated, fixed, contingent,
16 matured, unmatured, disputed, undisputed, legal, eq17
uitable, secured, or unsecured.
18 (5) COMPANY.—The term ‘‘company’’ has the
19 same meaning as in section 2(b) of the Bank Hold20
ing Company Act of 1956 (12 U.S.C. 1841(b)), ex21
cept that such term includes any company described
22 in paragraph (11), the majority of the securities of
23 which are owned by the United States or any State.
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1 (6) COURT.—The term ‘‘Court’’ means the
2 United States District Court for the District of Co3
lumbia, unless the context otherwise requires.
4 (7) COVERED BROKER OR DEALER.—The term
5 ‘‘covered broker or dealer’’ means a covered financial
6 company that is a broker or dealer that—
7 (A) is registered with the Commission
8 under section 15(b) of the Securities Exchange
9 Act of 1934 (15 U.S.C. 78o(b)); and
10 (B) is a member of SIPC.
11 (8) COVERED FINANCIAL COMPANY.—The term
12 ‘‘covered financial company’’—
13 (A) means a financial company for which
14 a determination has been made under section
15 203(b); and
16 (B) does not include an insured depository
17 institution.
18 (9) COVERED SUBSIDIARY.—The term ‘‘covered
19 subsidiary’’ means a subsidiary of a covered finan20
cial company, other than—
21 (A) an insured depository institution;
22 (B) an insurance company; or
23 (C) a covered broker or dealer.
24 (10) DEFINITIONS RELATING TO COVERED BRO25
KERS AND DEALERS.—The terms ‘‘customer’’, ‘‘cus170
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1 tomer name securities’’, ‘‘customer property’’, and
2 ‘‘net equity’’ in the context of a covered broker or
3 dealer, have the same meanings as in section 16 of
4 the Securities Investor Protection Act of 1970 (15
5 U.S.C. 78lll).
6 (11) FINANCIAL COMPANY.—The term ‘‘finan7
cial company’’ means any company that—
8 (A) is incorporated or organized under any
9 provision of Federal law or the laws of any
10 State;
11 (B) is—
12 (i) a bank holding company, as de13
fined in section 2(a) of the Bank Holding
14 Company Act of 1956 (12 U.S.C.
15 1841(a));
16 (ii) a nonbank financial company su17
pervised by the Board of Governors;
18 (iii) any company that is predomi19
nantly engaged in activities that the Board
20 of Governors has determined are financial
21 in nature or incidental thereto for purposes
22 of section 4(k) of the Bank Holding Com23
pany Act of 1956 (12 U.S.C. 1843(k))
24 other than a company described in clause
25 (i) or (ii); or
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1 (iv) any subsidiary of any company
2 described in any of clauses (i) through (iii)
3 that is predominantly engaged in activities
4 that the Board of Governors has deter5
mined are financial in nature or incidental
6 thereto for purposes of section 4(k) of the
7 Bank Holding Company Act of 1956 (12
8 U.S.C. 1843(k)) (other than a subsidiary
9 that is an insured depository institution or
10 an insurance company); and
11 (C) is not a Farm Credit System institu12
tion chartered under and subject to the provi13
sions of the Farm Credit Act of 1971, as
14 amended (12 U.S.C. 2001 et seq.), a govern15
mental entity, or a regulated entity, as defined
16 under section 1303(20) of the Federal Housing
17 Enterprises Financial Safety and Soundness
18 Act of 1992 (12 U.S.C. 4502(20)).
19 (12) FUND.—The term ‘‘Fund’’ means the Or20
derly Liquidation Fund established under section
21 210(n).
22 (13) INSURANCE COMPANY.—The term ‘‘insur23
ance company’’ means any entity that is—
24 (A) engaged in the business of insurance;
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1 (B) subject to regulation by a State insur2
ance regulator; and
3 (C) covered by a State law that is designed
4 to specifically deal with the rehabilitation, liq5
uidation, or insolvency of an insurance com6
pany.
7 (14) NONBANK FINANCIAL COMPANY.—The
8 term ‘‘nonbank financial company’’ has the same
9 meaning as in section 102(a)(4)(C).
10 (15) NONBANK FINANCIAL COMPANY SUPER11
VISED BY THE BOARD OF GOVERNORS.—The term
12 ‘‘nonbank financial company supervised by the
13 Board of Governors’’ has the same meaning as in
14 section 102(a)(4)(D).
15 (16) SIPC.—The term ‘‘SIPC’’ means the Se16
curities Investor Protection Corporation.
17 (b) DEFINITIONAL CRITERIA.—For purpose of the
18 definition of the term ‘‘financial company’’ under sub19
section (a)(11), no company shall be deemed to be pre20
dominantly engaged in activities that the Board of Gov21
ernors has determined are financial in nature or incidental
22 thereto for purposes of section 4(k) of the Bank Holding
23 Company Act of 1956 (12 U.S.C. 1843(k)), if the consoli24
dated revenues of such company from such activities con25
stitute less than 85 percent of the total consolidated reve173
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1 nues of such company, as the Corporation, in consultation
2 with the Secretary, shall establish by regulation. In deter3
mining whether a company is a financial company under
4 this title, the consolidated revenues derived from the own5
ership or control of a depository institution shall be in6
cluded.
7 SEC. 202. JUDICIAL REVIEW.
8 (a) COMMENCEMENT OF ORDERLY LIQUIDATION.—
9 (1) PETITION TO DISTRICT COURT.—
10 (A) DISTRICT COURT REVIEW.—
11 (i) PETITION TO DISTRICT COURT.—
12 Subsequent to a determination by the Sec13
retary under section 203 that a financial
14 company satisfies the criteria in section
15 203(b), the Secretary shall notify the Cor16
poration and the covered financial com17
pany. If the board of directors (or body
18 performing similar functions) of the cov19
ered financial company acquiesces or con20
sents to the appointment of the Corpora21
tion as receiver, the Secretary shall ap22
point the Corporation as receiver. If the
23 board of directors (or body performing
24 similar functions) of the covered financial
25 company does not acquiesce or consent to
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1 the appointment of the Corporation as re2
ceiver, the Secretary shall petition the
3 United States District Court for the Dis4
trict of Columbia for an order authorizing
5 the Secretary to appoint the Corporation
6 as receiver.
7 (ii) FORM AND CONTENT OF
8 ORDER.—The Secretary shall present all
9 relevant findings and the recommendation
10 made pursuant to section 203(a) to the
11 Court. The petition shall be filed under
12 seal.
13 (iii) DETERMINATION.—On a strictly
14 confidential basis, and without any prior
15 public disclosure, the Court, after notice to
16 the covered financial company and a hear17
ing in which the covered financial company
18 may oppose the petition, shall determine
19 whether the determination of the Secretary
20 that the covered financial company is in
21 default or in danger of default and satis22
fies the definition of a financial company
23 under section 201(a)(11) is arbitrary and
24 capricious.
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1 (iv) ISSUANCE OF ORDER.—If the
2 Court determines that the determination of
3 the Secretary that the covered financial
4 company is in default or in danger of de5
fault and satisfies the definition of a finan6
cial company under section 201(a)(11)—
7 (I) is not arbitrary and capri8
cious, the Court shall issue an order
9 immediately authorizing the Secretary
10 to appoint the Corporation as receiver
11 of the covered financial company; or
12 (II) is arbitrary and capricious,
13 the Court shall immediately provide to
14 the Secretary a written statement of
15 each reason supporting its determina16
tion, and afford the Secretary an im17
mediate opportunity to amend and
18 refile the petition under clause (i).
19 (v) PETITION GRANTED BY OPER20
ATION OF LAW.—If the Court does not
21 make a determination within 24 hours of
22 receipt of the petition—
23 (I) the petition shall be granted
24 by operation of law;
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1 (II) the Secretary shall appoint
2 the Corporation as receiver; and
3 (III) liquidation under this title
4 shall automatically and without fur5
ther notice or action be commenced
6 and the Corporation may immediately
7 take all actions authorized under this
8 title.
9 (B) EFFECT OF DETERMINATION.—The
10 determination of the Court under subparagraph
11 (A) shall be final, and shall be subject to appeal
12 only in accordance with paragraph (2). The de13
cision shall not be subject to any stay or injunc14
tion pending appeal. Upon conclusion of its pro15
ceedings under subparagraph (A), the Court
16 shall provide immediately for the record a writ17
ten statement of each reason supporting the de18
cision of the Court, and shall provide copies
19 thereof to the Secretary and the covered finan20
cial company.
21 (C) CRIMINAL PENALTIES.—A person who
22 recklessly discloses a determination of the Sec23
retary under section 203(b) or a petition of the
24 Secretary under subparagraph (A), or the pend25
ency of court proceedings as provided for under
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1 subparagraph (A), shall be fined not more than
2 $250,000, or imprisoned for not more than 5
3 years, or both.
4 (2) APPEAL OF DECISIONS OF THE DISTRICT
5 COURT.—
6 (A) APPEAL TO COURT OF APPEALS.—
7 (i) IN GENERAL.—Subject to clause
8 (ii), the United States Court of Appeals for
9 the District of Columbia Circuit shall have
10 jurisdiction of an appeal of a final decision
11 of the Court filed by the Secretary or a
12 covered financial company, through its
13 board of directors, notwithstanding section
14 210(a)(1)(A)(i), not later than 30 days
15 after the date on which the decision of the
16 Court is rendered or deemed rendered
17 under this subsection.
18 (ii) CONDITION OF JURISDICTION.—
19 The Court of Appeals shall have jurisdic20
tion of an appeal by a covered financial
21 company only if the covered financial com22
pany did not acquiesce or consent to the
23 appointment of a receiver by the Secretary
24 under paragraph (1)(A).
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1 (iii) EXPEDITION.—The Court of Ap2
peals shall consider any appeal under this
3 subparagraph on an expedited basis.
4 (iv) SCOPE OF REVIEW.—For an ap5
peal taken under this subparagraph, review
6 shall be limited to whether the determina7
tion of the Secretary that a covered finan8
cial company is in default or in danger of
9 default and satisfies the definition of a fi10
nancial company under section 201(a)(11)
11 is arbitrary and capricious.
12 (B) APPEAL TO THE SUPREME COURT.—
13 (i) IN GENERAL.—A petition for a
14 writ of certiorari to review a decision of
15 the Court of Appeals under subparagraph
16 (A) may be filed by the Secretary or the
17 covered financial company, through its
18 board of directors, notwithstanding section
19 210(a)(1)(A)(i), with the Supreme Court
20 of the United States, not later than 30
21 days after the date of the final decision of
22 the Court of Appeals, and the Supreme
23 Court shall have discretionary jurisdiction
24 to review such decision.
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1 (ii) WRITTEN STATEMENT.—In the
2 event of a petition under clause (i), the
3 Court of Appeals shall immediately provide
4 for the record a written statement of each
5 reason for its decision.
6 (iii) EXPEDITION.—The Supreme
7 Court shall consider any petition under
8 this subparagraph on an expedited basis.
9 (iv) SCOPE OF REVIEW.—Review by
10 the Supreme Court under this subpara11
graph shall be limited to whether the de12
termination of the Secretary that the cov13
ered financial company is in default or in
14 danger of default and satisfies the defini15
tion of a financial company under section
16 201(a)(11) is arbitrary and capricious.
17 (b) ESTABLISHMENT AND TRANSMITTAL OF RULES
18 AND PROCEDURES.—
19 (1) IN GENERAL.—Not later than 6 months
20 after the date of enactment of this Act, the Court
21 shall establish such rules and procedures as may be
22 necessary to ensure the orderly conduct of pro23
ceedings, including rules and procedures to ensure
24 that the 24-hour deadline is met and that the Sec180
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1 retary shall have an ongoing opportunity to amend
2 and refile petitions under subsection (a)(1).
3 (2) PUBLICATION OF RULES.—The rules and
4 procedures established under paragraph (1), and any
5 modifications of such rules and procedures, shall be
6 recorded and shall be transmitted to—
7 (A) the Committee on the Judiciary of the
8 Senate;
9 (B) the Committee on Banking, Housing,
10 and Urban Affairs of the Senate;
11 (C) the Committee on the Judiciary of the
12 House of Representatives; and
13 (D) the Committee on Financial Services
14 of the House of Representatives.
15 (c) PROVISIONS APPLICABLE TO FINANCIAL COMPA16
NIES.—
17 (1) BANKRUPTCY CODE.—Except as provided in
18 this subsection, the provisions of the Bankruptcy
19 Code and rules issued thereunder or otherwise appli20
cable insolvency law, and not the provisions of this
21 title, shall apply to financial companies that are not
22 covered financial companies for which the Corpora23
tion has been appointed as receiver.
24 (2) THIS TITLE.—The provisions of this title
25 shall exclusively apply to and govern all matters re181
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1 lating to covered financial companies for which the
2 Corporation is appointed as receiver, and no provi3
sions of the Bankruptcy Code or the rules issued
4 thereunder shall apply in such cases, except as ex5
pressly provided in this title.
6 (d) TIME LIMIT ON RECEIVERSHIP AUTHORITY.—
7 (1) BASELINE PERIOD.—Any appointment of
8 the Corporation as receiver under this section shall
9 terminate at the end of the 3-year period beginning
10 on the date on which such appointment is made.
11 (2) EXTENSION OF TIME LIMIT.—The time
12 limit established in paragraph (1) may be extended
13 by the Corporation for up to 1 additional year, if the
14 Chairperson of the Corporation determines and cer15
tifies in writing to the Committee on Banking,
16 Housing, and Urban Affairs of the Senate and the
17 Committee on Financial Services of the House of
18 Representatives that continuation of the receivership
19 is necessary—
20 (A) to—
21 (i) maximize the net present value re22
turn from the sale or other disposition of
23 the assets of the covered financial com24
pany; or
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1 (ii) minimize the amount of loss real2
ized upon the sale or other disposition of
3 the assets of the covered financial com4
pany; and
5 (B) to protect the stability of the financial
6 system of the United States.
7 (3) SECOND EXTENSION OF TIME LIMIT.—
8 (A) IN GENERAL.—The time limit under
9 this subsection, as extended under paragraph
10 (2), may be extended for up to 1 additional
11 year, if the Chairperson of the Corporation,
12 with the concurrence of the Secretary, submits
13 the certifications described in paragraph (2).
14 (B) ADDITIONAL REPORT REQUIRED.—Not
15 later than 30 days after the date of commence16
ment of the extension under subparagraph (A),
17 the Corporation shall submit a report to the
18 Committee on Banking, Housing, and Urban
19 Affairs of the Senate and the Committee on Fi20
nancial Services of the House of Representa21
tives describing the need for the extension and
22 the specific plan of the Corporation to conclude
23 the receivership before the end of the second ex24
tension.
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1 (4) ONGOING LITIGATION.—The time limit
2 under this subsection, as extended under paragraph
3 (3), may be further extended solely for the purpose
4 of completing ongoing litigation in which the Cor5
poration as receiver is a party, provided that the ap6
pointment of the Corporation as receiver shall termi7
nate not later than 90 days after the date of comple8
tion of such litigation, if—
9 (A) the Council determines that the Cor10
poration used its best efforts to conclude the re11
ceivership in accordance with its plan before the
12 end of the time limit described in paragraph
13 (3);
14 (B) the Council determines that the com15
pletion of longer-term responsibilities in the
16 form of ongoing litigation justifies the need for
17 an extension; and
18 (C) the Corporation submits a report ap19
proved by the Council not later than 30 days
20 after the date of the determinations by the
21 Council under subparagraphs (A) and (B) to
22 the Committee on Banking, Housing, and
23 Urban Affairs of the Senate and the Committee
24 on Financial Services of the House of Rep25
resentatives, describing—
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1 (i) the ongoing litigation justifying the
2 need for an extension; and
3 (ii) the specific plan of the Corpora4
tion to complete the litigation and conclude
5 the receivership.
6 (5) REGULATIONS.—The Corporation may issue
7 regulations governing the termination of receiver8
ships under this title.
9 (6) NO LIABILITY.—The Corporation and the
10 Deposit Insurance Fund shall not be liable for unre11
solved claims arising from the receivership after the
12 termination of the receivership.
13 (e) STUDY OF BANKRUPTCY AND ORDERLY LIQUIDA14
TION PROCESS FOR FINANCIAL COMPANIES.—
15 (1) STUDY.—
16 (A) IN GENERAL.—The Administrative Of17
fice of the United States Courts and the Comp18
troller General of the United States shall each
19 monitor the activities of the Court, and each
20 such Office shall conduct separate studies re21
garding the bankruptcy and orderly liquidation
22 process for financial companies under the
23 Bankruptcy Code.
24 (B) ISSUES TO BE STUDIED.—In con25
ducting the study under subparagraph (A), the
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1 Administrative Office of the United States
2 Courts and the Comptroller General of the
3 United States each shall evaluate—
4 (i) the effectiveness of chapter 7 or
5 chapter 11 of the Bankruptcy Code in fa6
cilitating the orderly liquidation or reorga7
nization of financial companies;
8 (ii) ways to maximize the efficiency
9 and effectiveness of the Court; and
10 (iii) ways to make the orderly liquida11
tion process under the Bankruptcy Code
12 for financial companies more effective.
13 (2) REPORTS.—Not later than 1 year after the
14 date of enactment of this Act, in each successive
15 year until the third year, and every fifth year after
16 that date of enactment, the Administrative Office of
17 the United States Courts and the Comptroller Gen18
eral of the United States shall submit to the Com19
mittee on Banking, Housing, and Urban Affairs and
20 the Committee on the Judiciary of the Senate and
21 the Committee on Financial Services and the Com22
mittee on the Judiciary of the House of Representa23
tives separate reports summarizing the results of the
24 studies conducted under paragraph (1).
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1 (f) STUDY OF INTERNATIONAL COORDINATION RE2
LATING TO BANKRUPTCY PROCESS FOR FINANCIAL COM3
PANIES.—
4 (1) STUDY.—
5 (A) IN GENERAL.—The Comptroller Gen6
eral of the United States shall conduct a study
7 regarding international coordination relating to
8 the orderly liquidation of financial companies
9 under the Bankruptcy Code.
10 (B) ISSUES TO BE STUDIED.—In con11
ducting the study under subparagraph (A), the
12 Comptroller General of the United States shall
13 evaluate, with respect to the bankruptcy process
14 for financial companies—
15 (i) the extent to which international
16 coordination currently exists;
17 (ii) current mechanisms and struc18
tures for facilitating international coopera19
tion;
20 (iii) barriers to effective international
21 coordination; and
22 (iv) ways to increase and make more
23 effective international coordination.
24 (2) REPORT.—Not later than 1 year after the
25 date of enactment of this Act, the Comptroller Gen187
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1 eral of the United States shall submit to the Com2
mittee on Banking, Housing, and Urban Affairs and
3 the Committee on the Judiciary of the Senate and
4 the Committee on Financial Services and the Com5
mittee on the Judiciary of the House of Representa6
tives and the Secretary a report summarizing the re7
sults of the study conducted under paragraph (1).
8 (g) STUDY OF PROMPT CORRECTIVE ACTION IMPLE9
MENTATION BY THE APPROPRIATE FEDERAL AGEN10
CIES.—
11 (1) STUDY.—The Comptroller General of the
12 United States shall conduct a study regarding the
13 implementation of prompt corrective action by the
14 appropriate Federal banking agencies.
15 (2) ISSUES TO BE STUDIED.—In conducting the
16 study under paragraph (1), the Comptroller General
17 shall evaluate—
18 (A) the effectiveness of implementation of
19 prompt corrective action by the appropriate
20 Federal banking agencies and the resolution of
21 insured depository institutions by the Corpora22
tion; and
23 (B) ways to make prompt corrective action
24 a more effective tool to resolve the insured de188
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1 pository institutions at the least possible long2
term cost to the Deposit Insurance Fund.
3 (3) REPORT TO COUNCIL.—Not later than 1
4 year after the date of enactment of this Act, the
5 Comptroller General shall submit a report to the
6 Council on the results of the study conducted under
7 this subsection.
8 (4) COUNCIL REPORT OF ACTION.—Not later
9 than 6 months after the date of receipt of the report
10 from the Comptroller General under paragraph (3),
11 the Council shall submit a report to the Committee
12 on Banking, Housing, and Urban Affairs of the Sen13
ate and the Committee on Financial Services of the
14 House of Representatives on actions taken in re15
sponse to the report, including any recommendations
16 made to the Federal primary financial regulatory
17 agencies under section 120.
18 SEC. 203. SYSTEMIC RISK DETERMINATION.
19 (a) WRITTEN RECOMMENDATION AND DETERMINA20
TION.—
21 (1) VOTE REQUIRED.—
22 (A) IN GENERAL.—On their own initiative,
23 or at the request of the Secretary, the Corpora24
tion and the Board of Governors shall consider
25 whether to make a written recommendation de189
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1 scribed in paragraph (2) with respect to wheth2
er the Secretary should appoint the Corporation
3 as receiver for a financial company. Such rec4
ommendation shall be made upon a vote of not
5 fewer than 2⁄3 of the members of the Board of
6 Governors then serving and 2⁄3 of the members
7 of the board of directors of the Corporation
8 then serving.
9 (B) CASES INVOLVING BROKERS OR DEAL10
ERS.—In the case of a broker or dealer, or in
11 which the largest United States subsidiary (as
12 measured by total assets as of the end of the
13 previous calendar quarter) of a financial com14
pany is a broker or dealer, the Commission and
15 the Board of Governors, at the request of the
16 Secretary, or on their own initiative, shall con17
sider whether to make the written recommenda18
tion described in paragraph (2) with respect to
19 the financial company. Subject to the require20
ments in paragraph (2), such recommendation
21 shall be made upon a vote of not fewer than 2⁄3
22 of the members of the Board of Governors then
23 serving and 2⁄3 of the members of the Commis24
sion then serving, and in consultation with the
25 Corporation.
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1 (C) CASES INVOLVING INSURANCE COMPA2
NIES.—In the case of an insurance company, or
3 in which the largest United States subsidiary
4 (as measured by total assets as of the end of
5 the previous calendar quarter) of a financial
6 company is an insurance company, the Director
7 of the Federal Insurance Office and the Board
8 of Governors, at the request of the Secretary or
9 on their own initiative, shall consider whether
10 to make the written recommendation described
11 in paragraph (2) with respect to the financial
12 company. Subject to the requirements in para13
graph (2), such recommendation shall be made
14 upon a vote of not fewer than 2⁄3 of the Board
15 of Governors then serving and the affirmative
16 approval of the Director of the Federal Insur17
ance Office, and in consultation with the Cor18
poration.
19 (2) RECOMMENDATION REQUIRED.—Any writ20
ten recommendation pursuant to paragraph (1) shall
21 contain—
22 (A) an evaluation of whether the financial
23 company is in default or in danger of default;
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1 (B) a description of the effect that the de2
fault of the financial company would have on fi3
nancial stability in the United States;
4 (C) a description of the effect that the de5
fault of the financial company would have on
6 economic conditions or financial stability for
7 low income, minority, or underserved commu8
nities;
9 (D) a recommendation regarding the na10
ture and the extent of actions to be taken under
11 this title regarding the financial company;
12 (E) an evaluation of the likelihood of a pri13
vate sector alternative to prevent the default of
14 the financial company;
15 (F) an evaluation of why a case under the
16 Bankruptcy Code is not appropriate for the fi17
nancial company;
18 (G) an evaluation of the effects on credi19
tors, counterparties, and shareholders of the fi20
nancial company and other market participants;
21 and
22 (H) an evaluation of whether the company
23 satisfies the definition of a financial company
24 under section 201.
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1 (b) DETERMINATION BY THE SECRETARY.—Notwith2
standing any other provision of Federal or State law, the
3 Secretary shall take action in accordance with section
4 202(a)(1)(A), if, upon the written recommendation under
5 subsection (a), the Secretary (in consultation with the
6 President) determines that—
7 (1) the financial company is in default or in
8 danger of default;
9 (2) the failure of the financial company and its
10 resolution under otherwise applicable Federal or
11 State law would have serious adverse effects on fi12
nancial stability in the United States;
13 (3) no viable private sector alternative is avail14
able to prevent the default of the financial company;
15 (4) any effect on the claims or interests of
16 creditors, counterparties, and shareholders of the fi17
nancial company and other market participants as a
18 result of actions to be taken under this title is ap19
propriate, given the impact that any action taken
20 under this title would have on financial stability in
21 the United States;
22 (5) any action under section 204 would avoid or
23 mitigate such adverse effects, taking into consider24
ation the effectiveness of the action in mitigating po25
tential adverse effects on the financial system, the
193
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1 cost to the general fund of the Treasury, and the po2
tential to increase excessive risk taking on the part
3 of creditors, counterparties, and shareholders in the
4 financial company;
5 (6) a Federal regulatory agency has ordered the
6 financial company to convert all of its convertible
7 debt instruments that are subject to the regulatory
8 order; and
9 (7) the company satisfies the definition of a fi10
nancial company under section 201.
11 (c) DOCUMENTATION AND REVIEW.—
12 (1) IN GENERAL.—The Secretary shall—
13 (A) document any determination under
14 subsection (b);
15 (B) retain the documentation for review
16 under paragraph (2); and
17 (C) notify the covered financial company
18 and the Corporation of such determination.
19 (2) REPORT TO CONGRESS.—Not later than 24
20 hours after the date of appointment of the Corpora21
tion as receiver for a covered financial company, the
22 Secretary shall provide written notice of the rec23
ommendations and determinations reached in ac24
cordance with subsections (a) and (b) to the Major25
ity Leader and the Minority Leader of the Senate
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1 and the Speaker and the Minority Leader of the
2 House of Representatives, the Committee on Bank3
ing, Housing, and Urban Affairs of the Senate, and
4 the Committee on Financial Services of the House of
5 Representatives, which shall consist of a summary of
6 the basis for the determination, including, to the ex7
tent available at the time of the determination—
8 (A) the size and financial condition of the
9 covered financial company;
10 (B) the sources of capital and credit sup11
port that were available to the covered financial
12 company;
13 (C) the operations of the covered financial
14 company that could have had a significant im15
pact on financial stability, markets, or both;
16 (D) identification of the banks and finan17
cial companies which may be able to provide the
18 services offered by the covered financial com19
pany;
20 (E) any potential international ramifica21
tions of resolution of the covered financial com22
pany under other applicable insolvency law;
23 (F) an estimate of the potential effect of
24 the resolution of the covered financial company
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1 under other applicable insolvency law on the fi2
nancial stability of the United States;
3 (G) the potential effect of the appointment
4 of a receiver by the Secretary on consumers;
5 (H) the potential effect of the appointment
6 of a receiver by the Secretary on the financial
7 system, financial markets, and banks and other
8 financial companies; and
9 (I) whether resolution of the covered finan10
cial company under other applicable insolvency
11 law would cause banks or other financial com12
panies to experience severe liquidity distress.
13 (3) REPORTS TO CONGRESS AND THE PUB14
LIC.—
15 (A) IN GENERAL.—Not later than 60 days
16 after the date of appointment of the Corpora17
tion as receiver for a covered financial company,
18 the Corporation shall file a report with the
19 Committee on Banking, Housing, and Urban
20 Affairs of the Senate and the Committee on Fi21
nancial Services of the House of Representa22
tives—
23 (i) setting forth information on the fi24
nancial condition of the covered financial
25 company as of the date of the appoint196
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1 ment, including a description of its assets
2 and liabilities;
3 (ii) describing the plan of, and actions
4 taken by, the Corporation to wind down
5 the covered financial company;
6 (iii) explaining each instance in which
7 the Corporation waived any applicable re8
quirements of part 366 of title 12, Code of
9 Federal Regulations (or any successor
10 thereto) with respect to conflicts of interest
11 by any person in the private sector who
12 was retained to provide services to the Cor13
poration in connection with such receiver14
ship;
15 (iv) describing the reasons for the
16 provision of any funding to the receivership
17 out of the Fund;
18 (v) setting forth the expected costs of
19 the orderly liquidation of the covered fi20
nancial company;
21 (vi) setting forth the identity of any
22 claimant that is treated in a manner dif23
ferent from other similarly situated claim24
ants under subsection (b)(4), (d)(4), or
25 (h)(5)(E), the amount of any additional
197
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1 payment to such claimant under subsection
2 (d)(4), and the reason for any such action;
3 and
4 (vii) which report the Corporation
5 shall publish on an online website main6
tained by the Corporation, subject to main7
taining appropriate confidentiality.
8 (B) AMENDMENTS.—The Corporation
9 shall, on a timely basis, not less frequently than
10 quarterly, amend or revise and resubmit the re11
ports prepared under this paragraph, as nec12
essary.
13 (C) CONGRESSIONAL TESTIMONY.—The
14 Corporation and the primary financial regu15
latory agency, if any, of the financial company
16 for which the Corporation was appointed re17
ceiver under this title shall appear before Con18
gress, if requested, not later than 30 days after
19 the date on which the Corporation first files the
20 reports required under subparagraph (A).
21 (4) DEFAULT OR IN DANGER OF DEFAULT.—
22 For purposes of this title, a financial company shall
23 be considered to be in default or in danger of default
24 if, as determined in accordance with subsection
25 (b)—
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1 (A) a case has been, or likely will promptly
2 be, commenced with respect to the financial
3 company under the Bankruptcy Code;
4 (B) the financial company has incurred, or
5 is likely to incur, losses that will deplete all or
6 substantially all of its capital, and there is no
7 reasonable prospect for the company to avoid
8 such depletion;
9 (C) the assets of the financial company
10 are, or are likely to be, less than its obligations
11 to creditors and others; or
12 (D) the financial company is, or is likely to
13 be, unable to pay its obligations (other than
14 those subject to a bona fide dispute) in the nor15
mal course of business.
16 (5) GAO REVIEW.—The Comptroller General of
17 the United States shall review and report to Con18
gress on any determination under subsection (b),
19 that results in the appointment of the Corporation
20 as receiver, including—
21 (A) the basis for the determination;
22 (B) the purpose for which any action was
23 taken pursuant thereto;
24 (C) the likely effect of the determination
25 and such action on the incentives and conduct
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1 of financial companies and their creditors,
2 counterparties, and shareholders; and
3 (D) the likely disruptive effect of the deter4
mination and such action on the reasonable ex5
pectations of creditors, counterparties, and
6 shareholders, taking into account the impact
7 any action under this title would have on finan8
cial stability in the United States, including
9 whether the rights of such parties will be dis10
rupted.
11 (d) CORPORATION POLICIES AND PROCEDURES.—As
12 soon as is practicable after the date of enactment of this
13 Act, the Corporation shall establish policies and proce14
dures that are acceptable to the Secretary governing the
15 use of funds available to the Corporation to carry out this
16 title, including the terms and conditions for the provision
17 and use of funds under sections 204(d), 210(h)(2)(G)(iv),
18 and 210(h)(9).
19 (e) TREATMENT OF INSURANCE COMPANIES AND IN20
SURANCE COMPANY SUBSIDIARIES.—
21 (1) IN GENERAL.—Notwithstanding subsection
22 (b), if an insurance company is a covered financial
23 company or a subsidiary or affiliate of a covered fi24
nancial company, the liquidation or rehabilitation of
25 such insurance company, and any subsidiary or affil200
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1 iate of such company that is not excepted under
2 paragraph (2), shall be conducted as provided under
3 applicable State law.
4 (2) EXCEPTION FOR SUBSIDIARIES AND AFFILI5
ATES.—The requirement of paragraph (1) shall not
6 apply with respect to any subsidiary or affiliate of
7 an insurance company that is not itself an insurance
8 company.
9 (3) BACKUP AUTHORITY.—Notwithstanding
10 paragraph (1), with respect to a covered financial
11 company described in paragraph (1), if, after the
12 end of the 60-day period beginning on the date on
13 which a determination is made under section 202(a)
14 with respect to such company, the appropriate regu15
latory agency has not filed the appropriate judicial
16 action in the appropriate State court to place such
17 company into orderly liquidation under the laws and
18 requirements of the State, the Corporation shall
19 have the authority to stand in the place of the ap20
propriate regulatory agency and file the appropriate
21 judicial action in the appropriate State court to
22 place such company into orderly liquidation under
23 the laws and requirements of the State.
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1 SEC. 204. ORDERLY LIQUIDATION OF COVERED FINANCIAL
2 COMPANIES.
3 (a) PURPOSE OF ORDERLY LIQUIDATION AUTHOR4
ITY.—It is the purpose of this title to provide the nec5
essary authority to liquidate failing financial companies
6 that pose a significant risk to the financial stability of the
7 United States in a manner that mitigates such risk and
8 minimizes moral hazard. The authority provided in this
9 title shall be exercised in the manner that best fulfills such
10 purpose, so that—
11 (1) creditors and shareholders will bear the
12 losses of the financial company;
13 (2) management responsible for the condition of
14 the financial company will not be retained; and
15 (3) the Corporation and other appropriate
16 agencies will take all steps necessary and appro17
priate to assure that all parties, including manage18
ment, directors, and third parties, having responsi19
bility for the condition of the financial company bear
20 losses consistent with their responsibility, including
21 actions for damages, restitution, and recoupment of
22 compensation and other gains not compatible with
23 such responsibility.
24 (b) CORPORATION AS RECEIVER.—Upon the appoint25
ment of the Corporation under section 202, the Corpora26
tion shall act as the receiver for the covered financial com202
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1 pany, with all of the rights and obligations set forth in
2 this title.
3 (c) CONSULTATION.—The Corporation, as receiver—
4 (1) shall consult with the primary financial reg5
ulatory agency or agencies of the covered financial
6 company and its covered subsidiaries for purposes of
7 ensuring an orderly liquidation of the covered finan8
cial company;
9 (2) may consult with, or under subsection
10 (a)(1)(B)(v) or (a)(1)(L) of section 210, acquire the
11 services of, any outside experts, as appropriate to in12
form and aid the Corporation in the orderly liquida13
tion process;
14 (3) shall consult with the primary financial reg15
ulatory agency or agencies of any subsidiaries of the
16 covered financial company that are not covered sub17
sidiaries, and coordinate with such regulators re18
garding the treatment of such solvent subsidiaries
19 and the separate resolution of any such insolvent
20 subsidiaries under other governmental authority, as
21 appropriate; and
22 (4) shall consult with the Commission and the
23 Securities Investor Protection Corporation in the
24 case of any covered financial company for which the
25 Corporation has been appointed as receiver that is a
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1 broker or dealer registered with the Commission
2 under section 15(b) of the Securities Exchange Act
3 of 1934 (15 U.S.C. 78o(b)) and is a member of the
4 Securities Investor Protection Corporation, for the
5 purpose of determining whether to transfer to a
6 bridge financial company organized by the Corpora7
tion as receiver, without consent of any customer,
8 customer accounts of the covered financial company.
9 (d) FUNDING FOR ORDERLY LIQUIDATION.—Upon
10 its appointment as receiver for a covered financial com11
pany, and thereafter as the Corporation may, in its discre12
tion, determine to be necessary or appropriate, the Cor13
poration may make available to the receivership, subject
14 to the conditions set forth in section 206 and subject to
15 the plan described in section 210(n)(9), funds for the or16
derly liquidation of the covered financial company. All
17 funds provided by the Corporation under this subsection
18 shall have a priority of claims under subparagraph (A) or
19 (B) of section 210(b)(1), as applicable, including funds
20 used for—
21 (1) making loans to, or purchasing any debt ob22
ligation of, the covered financial company or any
23 covered subsidiary;
24 (2) purchasing or guaranteeing against loss the
25 assets of the covered financial company or any cov204
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1 ered subsidiary, directly or through an entity estab2
lished by the Corporation for such purpose;
3 (3) assuming or guaranteeing the obligations of
4 the covered financial company or any covered sub5
sidiary to 1 or more third parties;
6 (4) taking a lien on any or all assets of the cov7
ered financial company or any covered subsidiary,
8 including a first priority lien on all unencumbered
9 assets of the covered financial company or any cov10
ered subsidiary to secure repayment of any trans11
actions conducted under this subsection;
12 (5) selling or transferring all, or any part, of
13 such acquired assets, liabilities, or obligations of the
14 covered financial company or any covered subsidiary;
15 and
16 (6) making payments pursuant to subsections
17 (b)(4), (d)(4), and (h)(5)(E) of section 210.
18 SEC. 205. ORDERLY LIQUIDATION OF COVERED BROKERS
19 AND DEALERS.
20 (a) APPOINTMENT OF SIPC AS TRUSTEE.—
21 (1) APPOINTMENT.—Upon the appointment of
22 the Corporation as receiver for any covered broker
23 or dealer, the Corporation shall appoint, without any
24 need for court approval, the Securities Investor Pro25
tection Corporation to act as trustee for the liquida205
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1 tion under the Securities Investor Protection Act of
2 1970 (15 U.S.C. 78aaa et seq.) of the covered
3 broker or dealer.
4 (2) ACTIONS BY SIPC.—
5 (A) FILING.—Upon appointment of SIPC
6 under paragraph (1), SIPC shall promptly file
7 with any Federal district court of competent ju8
risdiction specified in section 21 or 27 of the
9 Securities Exchange Act of 1934 (15 U.S.C.
10 78u, 78aa), an application for a protective de11
cree under the Securities Investor Protection
12 Act of 1970 (15 U.S.C. 78aaa et seq.) as to the
13 covered broker or dealer. The Federal district
14 court shall accept and approve the filing, in15
cluding outside of normal business hours, and
16 shall immediately issue the protective decree as
17 to the covered broker or dealer.
18 (B) ADMINISTRATION BY SIPC.—Following
19 entry of the protective decree, and except as
20 otherwise provided in this section, the deter21
mination of claims and the liquidation of assets
22 retained in the receivership of the covered
23 broker or dealer and not transferred to the
24 bridge financial company shall be administered
25 under the Securities Investor Protection Act of
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1 1970 (15 U.S.C. 78aaa et seq.) by SIPC, as
2 trustee for the covered broker or dealer.
3 (C) DEFINITION OF FILING DATE.—For
4 purposes of the liquidation proceeding, the term
5 ‘‘filing date’’ means the date on which the Cor6
poration is appointed as receiver of the covered
7 broker or dealer.
8 (D) DETERMINATION OF CLAIMS.—As
9 trustee for the covered broker or dealer, SIPC
10 shall determine and satisfy, consistent with this
11 title and with the Securities Investor Protection
12 Act of 1970 (15 U.S.C. 78aaa et seq.), all
13 claims against the covered broker or dealer aris14
ing on or before the filing date.
15 (b) POWERS AND DUTIES OF SIPC.—
16 (1) IN GENERAL.—Except as provided in this
17 section, upon its appointment as trustee for the liq18
uidation of a covered broker or dealer, SIPC shall
19 have all of the powers and duties provided by the Se20
curities Investor Protection Act of 1970 (15 U.S.C.
21 78aaa et seq.), including, without limitation, all
22 rights of action against third parties, and shall con23
duct such liquidation in accordance with the terms
24 of the Securities Investor Protection Act of 1970 (15
25 U.S.C. 78aaa et seq.), except that SIPC shall have
207
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1 no powers or duties with respect to assets and liabil2
ities transferred by the Corporation from the covered
3 broker or dealer to any bridge financial company es4
tablished in accordance with this title.
5 (2) LIMITATION OF POWERS.—The exercise by
6 SIPC of powers and functions as trustee under sub7
section (a) shall not impair or impede the exercise
8 of the powers and duties of the Corporation with re9
gard to—
10 (A) any action, except as otherwise pro11
vided in this title—
12 (i) to make funds available under sec13
tion 204(d);
14 (ii) to organize, establish, operate, or
15 terminate any bridge financial company;
16 (iii) to transfer assets and liabilities;
17 (iv) to enforce or repudiate contracts;
18 or
19 (v) to take any other action relating
20 to such bridge financial company under
21 section 210; or
22 (B) determining claims under subsection
23 (e).
24 (3) PROTECTIVE DECREE.—SIPC and the Cor25
poration, in consultation with the Commission, shall
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1 jointly determine the terms of the protective decree
2 to be filed by SIPC with any court of competent ju3
risdiction under section 21 or 27 of the Securities
4 Exchange Act of 1934 (15 U.S.C. 78u, 78aa), as re5
quired by subsection (a).
6 (4) QUALIFIED FINANCIAL CONTRACTS.—Not7
withstanding any provision of the Securities Investor
8 Protection Act of 1970 (15 U.S.C. 78aaa et seq.) to
9 the contrary (including section 5(b)(2)(C) of that
10 Act (15 U.S.C. 78eee(b)(2)(C))), the rights and obli11
gations of any party to a qualified financial contract
12 (as that term is defined in section 210(c)(8)) to
13 which a covered broker or dealer for which the Cor14
poration has been appointed receiver is a party shall
15 be governed exclusively by section 210, including the
16 limitations and restrictions contained in section
17 210(c)(10)(B).
18 (c) LIMITATION ON COURT ACTION.—Except as oth19
erwise provided in this title, no court may take any action,
20 including any action pursuant to the Securities Investor
21 Protection Act of 1970 (15 U.S.C. 78aaa et seq.) or the
22 Bankruptcy Code, to restrain or affect the exercise of pow23
ers or functions of the Corporation as receiver for a cov24
ered broker or dealer and any claims against the Corpora25
tion as such receiver shall be determined in accordance
209
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1 with subsection (e) and such claims shall be limited to
2 money damages.
3 (d) ACTIONS BY CORPORATION AS RECEIVER.—
4 (1) IN GENERAL.—Notwithstanding any other
5 provision of this title, no action taken by the Cor6
poration as receiver with respect to a covered broker
7 or dealer shall—
8 (A) adversely affect the rights of a cus9
tomer to customer property or customer name
10 securities;
11 (B) diminish the amount or timely pay12
ment of net equity claims of customers; or
13 (C) otherwise impair the recoveries pro14
vided to a customer under the Securities Inves15
tor Protection Act of 1970 (15 U.S.C. 78aaa et
16 seq.).
17 (2) NET PROCEEDS.—The net proceeds from
18 any transfer, sale, or disposition of assets of the cov19
ered broker or dealer, or proceeds thereof by the
20 Corporation as receiver for the covered broker or
21 dealer shall be for the benefit of the estate of the
22 covered broker or dealer, as provided in this title.
23 (e) CLAIMS AGAINST THE CORPORATION AS RE24
CEIVER.—Any claim against the Corporation as receiver
25 for a covered broker or dealer for assets transferred to
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1 a bridge financial company established with respect to
2 such covered broker or dealer—
3 (1) shall be determined in accordance with sec4
tion 210(a)(2); and
5 (2) may be reviewed by the appropriate district
6 or territorial court of the United States in accord7
ance with section 210(a)(5).
8 (f) SATISFACTION OF CUSTOMER CLAIMS.—
9 (1) OBLIGATIONS TO CUSTOMERS.—Notwith10
standing any other provision of this title, all obliga11
tions of a covered broker or dealer or of any bridge
12 financial company established with respect to such
13 covered broker or dealer to a customer relating to,
14 or net equity claims based upon, customer property
15 or customer name securities shall be promptly dis16
charged by SIPC, the Corporation, or the bridge fi17
nancial company, as applicable, by the delivery of se18
curities or the making of payments to or for the ac19
count of such customer, in a manner and in an
20 amount at least as beneficial to the customer as
21 would have been the case had the actual proceeds re22
alized from the liquidation of the covered broker or
23 dealer under this title been distributed in a pro24
ceeding under the Securities Investor Protection Act
25 of 1970 (15 U.S.C. 78aaa et seq.) without the ap211
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1 pointment of the Corporation as receiver and with2
out any transfer of assets or liabilities to a bridge
3 financial company, and with a filing date as of the
4 date on which the Corporation is appointed as re5
ceiver.
6 (2) SATISFACTION OF CLAIMS BY SIPC.—SIPC,
7 as trustee for a covered broker or dealer, shall sat8
isfy customer claims in the manner and amount pro9
vided under the Securities Investor Protection Act of
10 1970 (15 U.S.C. 78aaa et seq.), as if the appoint11
ment of the Corporation as receiver had not oc12
curred, and with a filing date as of the date on
13 which the Corporation is appointed as receiver. The
14 Corporation shall satisfy customer claims, to the ex15
tent that a customer would have received more secu16
rities or cash with respect to the allocation of cus17
tomer property had the covered financial company
18 been subject to a proceeding under the Securities In19
vestor Protection Act (15 U.S.C. 78aaa et seq.)
20 without the appointment of the Corporation as re21
ceiver, and with a filing date as of the date on which
22 the Corporation is appointed as receiver.
23 (g) PRIORITIES.—
24 (1) CUSTOMER PROPERTY.—As trustee for a
25 covered broker or dealer, SIPC shall allocate cus212
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1 tomer property and deliver customer name securities
2 in accordance with section 8(c) of the Securities In3
vestor Protection Act of 1970 (15 U.S.C. 78fff–
4 2(c)).
5 (2) OTHER CLAIMS.—All claims other than
6 those described in paragraph (1) (including any un7
paid claim by a customer for the allowed net equity
8 claim of such customer from customer property)
9 shall be paid in accordance with the priorities in sec10
tion 210(b).
11 (h) RULEMAKING.—The Commission and the Cor12
poration, after consultation with SIPC, shall jointly issue
13 rules to implement this section.
14 SEC. 206. MANDATORY TERMS AND CONDITIONS FOR ALL
15 ORDERLY LIQUIDATION ACTIONS.
16 In taking action under this title, the Corporation
17 shall—
18 (1) determine that such action is necessary for
19 purposes of the financial stability of the United
20 States, and not for the purpose of preserving the
21 covered financial company;
22 (2) ensure that the shareholders of a covered fi23
nancial company do not receive payment until after
24 all other claims and the Fund are fully paid;
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1 (3) ensure that unsecured creditors bear losses
2 in accordance with the priority of claim provisions in
3 section 210;
4 (4) ensure that management responsible for the
5 failed condition of the covered financial company is
6 removed (if such management has not already been
7 removed at the time at which the Corporation is ap8
pointed receiver);
9 (5) ensure that the members of the board of di10
rectors (or body performing similar functions) re11
sponsible for the failed condition of the covered fi12
nancial company are removed, if such members have
13 not already been removed at the time the Corpora14
tion is appointed as receiver; and
15 (6) not take an equity interest in or become a
16 shareholder of any covered financial company or any
17 covered subsidiary.
18 SEC. 207. DIRECTORS NOT LIABLE FOR ACQUIESCING IN
19 APPOINTMENT OF RECEIVER.
20 The members of the board of directors (or body per21
forming similar functions) of a covered financial company
22 shall not be liable to the shareholders or creditors thereof
23 for acquiescing in or consenting in good faith to the ap24
pointment of the Corporation as receiver for the covered
25 financial company under section 203.
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1 SEC. 208. DISMISSAL AND EXCLUSION OF OTHER ACTIONS.
2 (a) IN GENERAL.—Effective as of the date of the ap3
pointment of the Corporation as receiver for the covered
4 financial company under section 202 or the appointment
5 of SIPC as trustee for a covered broker or dealer under
6 section 205, as applicable, any case or proceeding com7
menced with respect to the covered financial company
8 under the Bankruptcy Code or the Securities Investor
9 Protection Act of 1970 (15 U.S.C. 78aaa et seq.) shall
10 be dismissed, upon notice to the bankruptcy court (with
11 respect to a case commenced under the Bankruptcy Code),
12 and upon notice to SIPC (with respect to a covered broker
13 or dealer) and no such case or proceeding may be com14
menced with respect to a covered financial company at any
15 time while the orderly liquidation is pending.
16 (b) REVESTING OF ASSETS.—Effective as of the date
17 of appointment of the Corporation as receiver, the assets
18 of a covered financial company shall, to the extent they
19 have vested in any entity other than the covered financial
20 company as a result of any case or proceeding commenced
21 with respect to the covered financial company under the
22 Bankruptcy Code, the Securities Investor Protection Act
23 of 1970 (15 U.S.C. 78aaa et seq.), or any similar provision
24 of State liquidation or insolvency law applicable to the cov25
ered financial company, revest in the covered financial
26 company.
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1 (c) LIMITATION.—Notwithstanding subsections (a)
2 and (b), any order entered or other relief granted by a
3 bankruptcy court prior to the date of appointment of the
4 Corporation as receiver shall continue with the same valid5
ity as if an orderly liquidation had not been commenced.
6 SEC. 209. RULEMAKING; NON-CONFLICTING LAW.
7 The Corporation shall, in consultation with the Coun8
cil, prescribe such rules or regulations as the Corporation
9 considers necessary or appropriate to implement this title,
10 including rules and regulations with respect to the rights,
11 interests, and priorities of creditors, counterparties, secu12
rity entitlement holders, or other persons with respect to
13 any covered financial company or any assets or other prop14
erty of or held by such covered financial company, and
15 address the potential for conflicts of interest between or
16 among individual receiverships established under this title
17 or under the Federal Deposit Insurance Act. To the extent
18 possible, the Corporation shall seek to harmonize applica19
ble rules and regulations promulgated under this section
20 with the insolvency laws that would otherwise apply to a
21 covered financial company.
22 SEC. 210. POWERS AND DUTIES OF THE CORPORATION.
23 (a) POWERS AND AUTHORITIES.—
24 (1) GENERAL POWERS.—
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1 (A) SUCCESSOR TO COVERED FINANCIAL
2 COMPANY.—The Corporation shall, upon ap3
pointment as receiver for a covered financial
4 company under this title, succeed to—
5 (i) all rights, titles, powers, and privi6
leges of the covered financial company and
7 its assets, and of any stockholder, member,
8 officer, or director of such company; and
9 (ii) title to the books, records, and as10
sets of any previous receiver or other legal
11 custodian of such covered financial com12
pany.
13 (B) OPERATION OF THE COVERED FINAN14
CIAL COMPANY DURING THE PERIOD OF OR15
DERLY LIQUIDATION.—The Corporation, as re16
ceiver for a covered financial company, may—
17 (i) take over the assets of and operate
18 the covered financial company with all of
19 the powers of the members or share20
holders, the directors, and the officers of
21 the covered financial company, and con22
duct all business of the covered financial
23 company;
24 (ii) collect all obligations and money
25 owed to the covered financial company;
217
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1 (iii) perform all functions of the cov2
ered financial company, in the name of the
3 covered financial company;
4 (iv) manage the assets and property
5 of the covered financial company, con6
sistent with maximization of the value of
7 the assets in the context of the orderly liq8
uidation; and
9 (v) provide by contract for assistance
10 in fulfilling any function, activity, action,
11 or duty of the Corporation as receiver.
12 (C) FUNCTIONS OF COVERED FINANCIAL
13 COMPANY OFFICERS, DIRECTORS, AND SHARE14
HOLDERS.—The Corporation may provide for
15 the exercise of any function by any member or
16 stockholder, director, or officer of any covered
17 financial company for which the Corporation
18 has been appointed as receiver under this title.
19 (D) ADDITIONAL POWERS AS RECEIVER.—
20 The Corporation shall, as receiver for a covered
21 financial company, and subject to all legally en22
forceable and perfected security interests and
23 all legally enforceable security entitlements in
24 respect of assets held by the covered financial
25 company, liquidate, and wind-up the affairs of
218
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1 a covered financial company, including taking
2 steps to realize upon the assets of the covered
3 financial company, in such manner as the Cor4
poration deems appropriate, including through
5 the sale of assets, the transfer of assets to a
6 bridge financial company established under sub7
section (h), or the exercise of any other rights
8 or privileges granted to the receiver under this
9 section.
10 (E) ADDITIONAL POWERS WITH RESPECT
11 TO FAILING SUBSIDIARIES OF A COVERED FI12
NANCIAL COMPANY.—
13 (i) IN GENERAL.—In any case in
14 which a receiver is appointed for a covered
15 financial company under section 202, the
16 Corporation may appoint itself as receiver
17 of any covered subsidiary of the covered fi18
nancial company that is organized under
19 Federal law or the laws of any State, if the
20 Corporation and the Secretary jointly de21
termine that—
22 (I) the covered subsidiary is in
23 default or in danger of default;
24 (II) such action would avoid or
25 mitigate serious adverse effects on the
219
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1 financial stability or economic condi2
tions of the United States; and
3 (III) such action would facilitate
4 the orderly liquidation of the covered
5 financial company.
6 (ii) TREATMENT AS COVERED FINAN7
CIAL COMPANY.—If the Corporation is ap8
pointed as receiver of a covered subsidiary
9 of a covered financial company under
10 clause (i), the covered subsidiary shall
11 thereafter be considered a covered financial
12 company under this title, and the Corpora13
tion shall thereafter have all the powers
14 and rights with respect to that covered
15 subsidiary as it has with respect to a cov16
ered financial company under this title.
17 (F) ORGANIZATION OF BRIDGE COMPA18
NIES.—The Corporation, as receiver for a cov19
ered financial company, may organize a bridge
20 financial company under subsection (h).
21 (G) MERGER; TRANSFER OF ASSETS AND
22 LIABILITIES.—
23 (i) IN GENERAL.—Subject to clauses
24 (ii) and (iii), the Corporation, as receiver
25 for a covered financial company, may—
220
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1 (I) merge the covered financial
2 company with another company; or
3 (II) transfer any asset or liability
4 of the covered financial company (in5
cluding any assets and liabilities held
6 by the covered financial company for
7 security entitlement holders, any cus8
tomer property, or any assets and li9
abilities associated with any trust or
10 custody business) without obtaining
11 any approval, assignment, or consent
12 with respect to such transfer.
13 (ii) FEDERAL AGENCY APPROVAL;
14 ANTITRUST REVIEW.—With respect to a
15 transaction described in clause (i)(I) that
16 requires approval by a Federal agency—
17 (I) the transaction may not be
18 consummated before the 5th calendar
19 day after the date of approval by the
20 Federal agency responsible for such
21 approval;
22 (II) if, in connection with any
23 such approval, a report on competitive
24 factors is required, the Federal agency
25 responsible for such approval shall
221
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1 promptly notify the Attorney General
2 of the United States of the proposed
3 transaction, and the Attorney General
4 shall provide the required report not
5 later than 10 days after the date of
6 the request; and
7 (III) if notification under section
8 7A of the Clayton Act is required with
9 respect to such transaction, then the
10 required waiting period shall end on
11 the 15th day after the date on which
12 the Attorney General and the Federal
13 Trade Commission receive such notifi14
cation, unless the waiting period is
15 terminated earlier under subsection
16 (b)(2) of such section 7A, or is ex17
tended pursuant to subsection (e)(2)
18 of such section 7A.
19 (iii) SETOFF.—Subject to the other
20 provisions of this title, any transferee of
21 assets from a receiver, including a bridge
22 financial company, shall be subject to such
23 claims or rights as would prevail over the
24 rights of such transferee in such assets
25 under applicable noninsolvency law.
222
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1 (H) PAYMENT OF VALID OBLIGATIONS.—
2 The Corporation, as receiver for a covered fi3
nancial company, shall, to the extent that funds
4 are available, pay all valid obligations of the
5 covered financial company that are due and
6 payable at the time of the appointment of the
7 Corporation as receiver, in accordance with the
8 prescriptions and limitations of this title.
9 (I) APPLICABLE NONINSOLVENCY LAW.—
10 Except as may otherwise be provided in this
11 title, the applicable noninsolvency law shall be
12 determined by the noninsolvency choice of law
13 rules otherwise applicable to the claims, rights,
14 titles, persons, or entities at issue.
15 (J) SUBPOENA AUTHORITY.—
16 (i) IN GENERAL.—The Corporation,
17 as receiver for a covered financial com18
pany, may, for purposes of carrying out
19 any power, authority, or duty with respect
20 to the covered financial company (includ21
ing determining any claim against the cov22
ered financial company and determining
23 and realizing upon any asset of any person
24 in the course of collecting money due the
25 covered financial company), exercise any
223
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1 power established under section 8(n) of the
2 Federal Deposit Insurance Act, as if the
3 Corporation were the appropriate Federal
4 banking agency for the covered financial
5 company, and the covered financial com6
pany were an insured depository institu7
tion.
8 (ii) RULE OF CONSTRUCTION.—This
9 subparagraph may not be construed as
10 limiting any rights that the Corporation, in
11 any capacity, might otherwise have to exer12
cise any powers described in clause (i) or
13 under any other provision of law.
14 (K) INCIDENTAL POWERS.—The Corpora15
tion, as receiver for a covered financial com16
pany, may exercise all powers and authorities
17 specifically granted to receivers under this title,
18 and such incidental powers as shall be nec19
essary to carry out such powers under this title.
20 (L) UTILIZATION OF PRIVATE SECTOR.—
21 In carrying out its responsibilities in the man22
agement and disposition of assets from the cov23
ered financial company, the Corporation, as re24
ceiver for a covered financial company, may uti25
lize the services of private persons, including
224
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1 real estate and loan portfolio asset manage2
ment, property management, auction mar3
keting, legal, and brokerage services, if such
4 services are available in the private sector, and
5 the Corporation determines that utilization of
6 such services is practicable, efficient, and cost
7 effective.
8 (M) SHAREHOLDERS AND CREDITORS OF
9 COVERED FINANCIAL COMPANY.—Notwith10
standing any other provision of law, the Cor11
poration, as receiver for a covered financial
12 company, shall succeed by operation of law to
13 the rights, titles, powers, and privileges de14
scribed in subparagraph (A), and shall termi15
nate all rights and claims that the stockholders
16 and creditors of the covered financial company
17 may have against the assets of the covered fi18
nancial company or the Corporation arising out
19 of their status as stockholders or creditors, ex20
cept for their right to payment, resolution, or
21 other satisfaction of their claims, as permitted
22 under this section. The Corporation shall en23
sure that shareholders and unsecured creditors
24 bear losses, consistent with the priority of
25 claims provisions under this section.
225
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1 (N) COORDINATION WITH FOREIGN FINAN2
CIAL AUTHORITIES.—The Corporation, as re3
ceiver for a covered financial company, shall co4
ordinate, to the maximum extent possible, with
5 the appropriate foreign financial authorities re6
garding the orderly liquidation of any covered
7 financial company that has assets or operations
8 in a country other than the United States.
9 (O) RESTRICTION ON TRANSFERS.—
10 (i) SELECTION OF ACCOUNTS FOR
11 TRANSFER.—If the Corporation establishes
12 one or more bridge financial companies
13 with respect to a covered broker or dealer,
14 the Corporation shall transfer to one of
15 such bridge financial companies, all cus16
tomer accounts of the covered broker or
17 dealer, and all associated customer name
18 securities and customer property, unless
19 the Corporation, after consulting with the
20 Commission and SIPC, determines that—
21 (I) the customer accounts, cus22
tomer name securities, and customer
23 property are likely to be promptly
24 transferred to another broker or deal25
er that is registered with the Commis226
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1 sion under section 15(b) of the Secu2
rities Exchange Act of 1934 (15
3 U.S.C. 73o(b)) and is a member of
4 SIPC; or
5 (II) the transfer of the accounts
6 to a bridge financial company would
7 materially interfere with the ability of
8 the Corporation to avoid or mitigate
9 serious adverse effects on financial
10 stability or economic conditions in the
11 United States.
12 (ii) TRANSFER OF PROPERTY.—SIPC,
13 as trustee for the liquidation of the covered
14 broker or dealer, and the Commission shall
15 provide any and all reasonable assistance
16 necessary to complete such transfers by
17 the Corporation.
18 (iii) CUSTOMER CONSENT AND COURT
19 APPROVAL NOT REQUIRED.—Neither cus20
tomer consent nor court approval shall be
21 required to transfer any customer accounts
22 or associated customer name securities or
23 customer property to a bridge financial
24 company in accordance with this section.
227
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1 (iv) NOTIFICATION OF SIPC AND
2 SHARING OF INFORMATION.—The Corpora3
tion shall identify to SIPC the customer
4 accounts and associated customer name se5
curities and customer property transferred
6 to the bridge financial company. The Cor7
poration and SIPC shall cooperate in the
8 sharing of any information necessary for
9 each entity to discharge its obligations
10 under this title and under the Securities
11 Investor Protection Act of 1970 (15 U.S.C.
12 78aaa et seq.) including by providing ac13
cess to the books and records of the cov14
ered financial company and any bridge fi15
nancial company established in accordance
16 with this title.
17 (2) DETERMINATION OF CLAIMS.—
18 (A) IN GENERAL.—The Corporation, as re19
ceiver for a covered financial company, shall re20
port on claims, as set forth in section 203(c)(3).
21 Subject to paragraph (4) of this subsection, the
22 Corporation, as receiver for a covered financial
23 company, shall determine claims in accordance
24 with the requirements of this subsection and
25 regulations prescribed under section 209.
228
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1 (B) NOTICE REQUIREMENTS.—The Cor2
poration, as receiver for a covered financial
3 company, in any case involving the liquidation
4 or winding up of the affairs of a covered finan5
cial company, shall—
6 (i) promptly publish a notice to the
7 creditors of the covered financial company
8 to present their claims, together with
9 proof, to the receiver by a date specified in
10 the notice, which shall be not earlier than
11 90 days after the date of publication of
12 such notice; and
13 (ii) republish such notice 1 month and
14 2 months, respectively, after the date of
15 publication under clause (i).
16 (C) MAILING REQUIRED.—The Corpora17
tion as receiver shall mail a notice similar to
18 the notice published under clause (i) or (ii) of
19 subparagraph (B), at the time of such publica20
tion, to any creditor shown on the books and
21 records of the covered financial company—
22 (i) at the last address of the creditor
23 appearing in such books;
24 (ii) in any claim filed by the claimant;
25 or
229
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1 (iii) upon discovery of the name and
2 address of a claimant not appearing on the
3 books and records of the covered financial
4 company, not later than 30 days after the
5 date of the discovery of such name and ad6
dress.
7 (3) PROCEDURES FOR RESOLUTION OF
8 CLAIMS.—
9 (A) DECISION PERIOD.—
10 (i) IN GENERAL.—Prior to the 180th
11 day after the date on which a claim
12 against a covered financial company is
13 filed with the Corporation as receiver, or
14 such later date as may be agreed as pro15
vided in clause (ii), the Corporation shall
16 notify the claimant whether it allows or
17 disallows the claim, in accordance with
18 subparagraphs (B), (C), and (D).
19 (ii) EXTENSION OF TIME.—By written
20 agreement executed not later than 180
21 days after the date on which a claim
22 against a covered financial company is
23 filed with the Corporation, the period de24
scribed in clause (i) may be extended by
25 written agreement between the claimant
230
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1 and the Corporation. Failure to notify the
2 claimant of any disallowance within the
3 time period set forth in clause (i), as it
4 may be extended by agreement under this
5 clause, shall be deemed to be a disallow6
ance of such claim, and the claimant may
7 file or continue an action in court, as pro8
vided in paragraph (4).
9 (iii) MAILING OF NOTICE SUFFI10
CIENT.—The requirements of clause (i)
11 shall be deemed to be satisfied if the notice
12 of any decision with respect to any claim
13 is mailed to the last address of the claim14
ant which appears—
15 (I) on the books, records, or both
16 of the covered financial company;
17 (II) in the claim filed by the
18 claimant; or
19 (III) in documents submitted in
20 proof of the claim.
21 (iv) CONTENTS OF NOTICE OF DIS22
ALLOWANCE.—If the Corporation as re23
ceiver disallows any claim filed under
24 clause (i), the notice to the claimant shall
25 contain—
231
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1 (I) a statement of each reason
2 for the disallowance; and
3 (II) the procedures required to
4 file or continue an action in court, as
5 provided in paragraph (4).
6 (B) ALLOWANCE OF PROVEN CLAIM.—The
7 receiver shall allow any claim received by the
8 receiver on or before the date specified in the
9 notice under paragraph (2)(B)(i), which is
10 proved to the satisfaction of the receiver.
11 (C) DISALLOWANCE OF CLAIMS FILED
12 AFTER END OF FILING PERIOD.—
13 (i) IN GENERAL.—Except as provided
14 in clause (ii), claims filed after the date
15 specified in the notice published under
16 paragraph (2)(B)(i) shall be disallowed,
17 and such disallowance shall be final.
18 (ii) CERTAIN EXCEPTIONS.—Clause
19 (i) shall not apply with respect to any
20 claim filed by a claimant after the date
21 specified in the notice published under
22 paragraph (2)(B)(i), and such claim may
23 be considered by the receiver under sub24
paragraph (B), if—
232
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1 (I) the claimant did not receive
2 notice of the appointment of the re3
ceiver in time to file such claim before
4 such date; and
5 (II) such claim is filed in time to
6 permit payment of such claim.
7 (D) AUTHORITY TO DISALLOW CLAIMS.—
8 (i) IN GENERAL.—The Corporation
9 may disallow any portion of any claim by
10 a creditor or claim of a security, pref11
erence, setoff, or priority which is not
12 proved to the satisfaction of the Corpora13
tion.
14 (ii) PAYMENTS TO UNDERSECURED
15 CREDITORS.—In the case of a claim
16 against a covered financial company that is
17 secured by any property or other asset of
18 such covered financial company, the re19
ceiver—
20 (I) may treat the portion of such
21 claim which exceeds an amount equal
22 to the fair market value of such prop23
erty or other asset as an unsecured
24 claim; and
233
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1 (II) may not make any payment
2 with respect to such unsecured por3
tion of the claim, other than in con4
nection with the disposition of all
5 claims of unsecured creditors of the
6 covered financial company.
7 (iii) EXCEPTIONS.—No provision of
8 this paragraph shall apply with respect
9 to—
10 (I) any extension of credit from
11 any Federal reserve bank, or the Cor12
poration, to any covered financial
13 company; or
14 (II) subject to clause (ii), any le15
gally enforceable and perfected secu16
rity interest in the assets of the cov17
ered financial company securing any
18 such extension of credit.
19 (E) LEGAL EFFECT OF FILING.—
20 (i) STATUTE OF LIMITATIONS
21 TOLLED.—For purposes of any applicable
22 statute of limitations, the filing of a claim
23 with the receiver shall constitute a com24
mencement of an action.
234
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1 (ii) NO PREJUDICE TO OTHER AC2
TIONS.—Subject to paragraph (8), the fil3
ing of a claim with the receiver shall not
4 prejudice any right of the claimant to con5
tinue any action which was filed before the
6 date of appointment of the receiver for the
7 covered financial company.
8 (4) JUDICIAL DETERMINATION OF CLAIMS.—
9 (A) IN GENERAL.—Subject to subpara10
graph (B), a claimant may file suit on a claim
11 (or continue an action commenced before the
12 date of appointment of the Corporation as re13
ceiver) in the district or territorial court of the
14 United States for the district within which the
15 principal place of business of the covered finan16
cial company is located (and such court shall
17 have jurisdiction to hear such claim).
18 (B) TIMING.—A claim under subparagraph
19 (A) may be filed before the end of the 60-day
20 period beginning on the earlier of—
21 (i) the end of the period described in
22 paragraph (3)(A)(i) (or, if extended by
23 agreement of the Corporation and the
24 claimant, the period described in para25
graph (3)(A)(ii)) with respect to any claim
235
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1 against a covered financial company for
2 which the Corporation is receiver; or
3 (ii) the date of any notice of disallow4
ance of such claim pursuant to paragraph
5 (3)(A)(i).
6 (C) STATUTE OF LIMITATIONS.—If any
7 claimant fails to file suit on such claim (or to
8 continue an action on such claim commenced
9 before the date of appointment of the Corpora10
tion as receiver) prior to the end of the 60-day
11 period described in subparagraph (B), the claim
12 shall be deemed to be disallowed (other than
13 any portion of such claim which was allowed by
14 the receiver) as of the end of such period, such
15 disallowance shall be final, and the claimant
16 shall have no further rights or remedies with re17
spect to such claim.
18 (5) EXPEDITED DETERMINATION OF CLAIMS.—
19 (A) PROCEDURE REQUIRED.—The Cor20
poration shall establish a procedure for expe21
dited relief outside of the claims process estab22
lished under paragraph (3), for any claimant
23 that alleges—
24 (i) having a legally valid and enforce25
able or perfected security interest in prop236
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1 erty of a covered financial company or con2
trol of any legally valid and enforceable se3
curity entitlement in respect of any asset
4 held by the covered financial company for
5 which the Corporation has been appointed
6 receiver; and
7 (ii) that irreparable injury will occur
8 if the claims procedure established under
9 paragraph (3) is followed.
10 (B) DETERMINATION PERIOD.—Prior to
11 the end of the 90-day period beginning on the
12 date on which a claim is filed in accordance
13 with the procedures established pursuant to
14 subparagraph (A), the Corporation shall—
15 (i) determine—
16 (I) whether to allow or disallow
17 such claim, or any portion thereof; or
18 (II) whether such claim should be
19 determined pursuant to the proce20
dures established pursuant to para21
graph (3);
22 (ii) notify the claimant of the deter23
mination; and
24 (iii) if the claim is disallowed, provide
25 a statement of each reason for the dis237
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1 allowance and the procedure for obtaining
2 a judicial determination.
3 (C) PERIOD FOR FILING OR RENEWING
4 SUIT.—Any claimant who files a request for ex5
pedited relief shall be permitted to file suit (or
6 continue a suit filed before the date of appoint7
ment of the Corporation as receiver seeking a
8 determination of the rights of the claimant with
9 respect to such security interest (or such secu10
rity entitlement) after the earlier of—
11 (i) the end of the 90-day period begin12
ning on the date of the filing of a request
13 for expedited relief; or
14 (ii) the date on which the Corporation
15 denies the claim or a portion thereof.
16 (D) STATUTE OF LIMITATIONS.—If an ac17
tion described in subparagraph (C) is not filed,
18 or the motion to renew a previously filed suit is
19 not made, before the end of the 30-day period
20 beginning on the date on which such action or
21 motion may be filed in accordance with sub22
paragraph (C), the claim shall be deemed to be
23 disallowed as of the end of such period (other
24 than any portion of such claim which was al25
lowed by the receiver), such disallowance shall
238
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1 be final, and the claimant shall have no further
2 rights or remedies with respect to such claim.
3 (E) LEGAL EFFECT OF FILING.—
4 (i) STATUTE OF LIMITATIONS
5 TOLLED.—For purposes of any applicable
6 statute of limitations, the filing of a claim
7 with the receiver shall constitute a com8
mencement of an action.
9 (ii) NO PREJUDICE TO OTHER AC10
TIONS.—Subject to paragraph (8), the fil11
ing of a claim with the receiver shall not
12 prejudice any right of the claimant to con13
tinue any action which was filed before the
14 appointment of the Corporation as receiver
15 for the covered financial company.
16 (6) AGREEMENTS AGAINST INTEREST OF THE
17 RECEIVER.—No agreement that tends to diminish or
18 defeat the interest of the Corporation as receiver in
19 any asset acquired by the receiver under this section
20 shall be valid against the receiver, unless such agree21
ment—
22 (A) is in writing;
23 (B) was executed by an authorized officer
24 or representative of the covered financial com239
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1 pany, or confirmed in the ordinary course of
2 business by the covered financial company; and
3 (C) has been, since the time of its execu4
tion, an official record of the company or the
5 party claiming under the agreement provides
6 documentation, acceptable to the receiver, of
7 such agreement and its authorized execution or
8 confirmation by the covered financial company.
9 (7) PAYMENT OF CLAIMS.—
10 (A) IN GENERAL.—Subject to subpara11
graph (B), the Corporation as receiver may, in
12 its discretion and to the extent that funds are
13 available, pay creditor claims, in such manner
14 and amounts as are authorized under this sec15
tion, which are—
16 (i) allowed by the receiver;
17 (ii) approved by the receiver pursuant
18 to a final determination pursuant to para19
graph (3) or (5), as applicable; or
20 (iii) determined by the final judgment
21 of a court of competent jurisdiction.
22 (B) LIMITATION.—A creditor shall, in no
23 event, receive less than the amount that the
24 creditor is entitled to receive under paragraphs
25 (2) and (3) of subsection (d), as applicable.
240
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1 (C) PAYMENT OF DIVIDENDS ON
2 CLAIMS.—The Corporation as receiver may, in
3 its sole discretion, and to the extent otherwise
4 permitted by this section, pay dividends on
5 proven claims at any time, and no liability shall
6 attach to the Corporation as receiver, by reason
7 of any such payment or for failure to pay divi8
dends to a claimant whose claim is not proved
9 at the time of any such payment.
10 (D) RULEMAKING BY THE CORPORA11
TION.—The Corporation may prescribe such
12 rules, including definitions of terms, as the Cor13
poration deems appropriate to establish an in14
terest rate for or to make payments of post-in15
solvency interest to creditors holding proven
16 claims against the receivership estate of a cov17
ered financial company, except that no such in18
terest shall be paid until the Corporation as re19
ceiver has satisfied the principal amount of all
20 creditor claims.
21 (8) SUSPENSION OF LEGAL ACTIONS.—
22 (A) IN GENERAL.—After the appointment
23 of the Corporation as receiver for a covered fi24
nancial company, the Corporation may request
25 a stay in any judicial action or proceeding in
241
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1 which such covered financial company is or be2
comes a party, for a period of not to exceed 90
3 days.
4 (B) GRANT OF STAY BY ALL COURTS RE5
QUIRED.—Upon receipt of a request by the Cor6
poration pursuant to subparagraph (A), the
7 court shall grant such stay as to all parties.
8 (9) ADDITIONAL RIGHTS AND DUTIES.—
9 (A) PRIOR FINAL ADJUDICATION.—The
10 Corporation shall abide by any final, non-ap11
pealable judgment of any court of competent ju12
risdiction that was rendered before the appoint13
ment of the Corporation as receiver.
14 (B) RIGHTS AND REMEDIES OF RE15
CEIVER.—In the event of any appealable judg16
ment, the Corporation as receiver shall—
17 (i) have all the rights and remedies
18 available to the covered financial company
19 (before the date of appointment of the Cor20
poration as receiver under section 202)
21 and the Corporation, including removal to
22 Federal court and all appellate rights; and
23 (ii) not be required to post any bond
24 in order to pursue such remedies.
242
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1 (C) NO ATTACHMENT OR EXECUTION.—No
2 attachment or execution may be issued by any
3 court upon assets in the possession of the Cor4
poration as receiver for a covered financial com5
pany.
6 (D) LIMITATION ON JUDICIAL REVIEW.—
7 Except as otherwise provided in this title, no
8 court shall have jurisdiction over—
9 (i) any claim or action for payment
10 from, or any action seeking a determina11
tion of rights with respect to, the assets of
12 any covered financial company for which
13 the Corporation has been appointed re14
ceiver, including any assets which the Cor15
poration may acquire from itself as such
16 receiver; or
17 (ii) any claim relating to any act or
18 omission of such covered financial company
19 or the Corporation as receiver.
20 (E) DISPOSITION OF ASSETS.—In exer21
cising any right, power, privilege, or authority
22 as receiver in connection with any covered fi23
nancial company for which the Corporation is
24 acting as receiver under this section, the Cor25
poration shall, to the greatest extent prac243
O:AYOAYO10H27.xml [file 2 of 17] S.L.C
1 ticable, conduct its operations in a manner
2 that—
3 (i) maximizes the net present value
4 return from the sale or disposition of such
5 assets;
6 (ii) minimizes the amount of any loss
7 realized in the resolution of cases;
8 (iii) mitigates the potential for serious
9 adverse effects to the financial system;
10 (iv) ensures timely and adequate com11
petition and fair and consistent treatment
12 of offerors; and
13 (v) prohibits discrimination on the
14 basis of race, sex, or ethnic group in the
15 solicitation and consideration of offers.
16 (10) STATUTE OF LIMITATIONS FOR ACTIONS
17 BROUGHT BY RECEIVER.—
18 (A) IN GENERAL.—Notwithstanding any
19 provision of any contract, the applicable statute
20 of limitations with regard to any action brought
21 by the Corporation as receiver for a covered fi22
nancial company shall be—
23 (i) in the case of any contract claim,
24 the longer of—
244
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1 (I) the 6-year period beginning
2 on the date on which the claim ac3
crues; or
4 (II) the period applicable under
5 State law; and
6 (ii) in the case of any tort claim, the
7 longer of—
8 (I) the 3-year period beginning
9 on the date on which the claim ac10
crues; or
11 (II) the period applicable under
12 State law.
13 (B) DATE ON WHICH A CLAIM ACCRUES.—
14 For purposes of subparagraph (A), the date on
15 which the statute of limitations begins to run
16 on any claim described in subparagraph (A)
17 shall be the later of—
18 (i) the date of the appointment of the
19 Corporation as receiver under this title; or
20 (ii) the date on which the cause of ac21
tion accrues.
22 (C) REVIVAL OF EXPIRED STATE CAUSES
23 OF ACTION.—
24 (i) IN GENERAL.—In the case of any
25 tort claim described in clause (ii) for which
245
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1 the applicable statute of limitations under
2 State law has expired not more than 5
3 years before the date of appointment of the
4 Corporation as receiver for a covered fi5
nancial company, the Corporation may
6 bring an action as receiver on such claim
7 without regard to the expiration of the
8 statute of limitations.
9 (ii) CLAIMS DESCRIBED.—A tort
10 claim referred to in clause (i) is a claim
11 arising from fraud, intentional misconduct
12 resulting in unjust enrichment, or inten13
tional misconduct resulting in substantial
14 loss to the covered financial company.
15 (11) AVOIDABLE TRANSFERS.—
16 (A) FRAUDULENT TRANSFERS.—The Cor17
poration, as receiver for any covered financial
18 company, may avoid a transfer of any interest
19 of the covered financial company in property, or
20 any obligation incurred by the covered financial
21 company, that was made or incurred at or with22
in 2 years before the date on which the Cor23
poration was appointed receiver, if—
24 (i) the covered financial company vol25
untarily or involuntarily—
246
O:AYOAYO10H27.xml [file 2 of 17] S.L.C
1 (I) made such transfer or in2
curred such obligation with actual in3
tent to hinder, delay, or defraud any
4 entity to which the covered financial
5 company was or became, on or after
6 the date on which such transfer was
7 made or such obligation was incurred,
8 indebted; or
9 (II) received less than a reason10
ably equivalent value in exchange for
11 such transferor obligation; and
12 (ii) the covered financial company vol13
untarily or involuntarily—
14 (I) was insolvent on the date that
15 such transfer was made or such obli16
gation was incurred, or became insol17
vent as a result of such transfer or
18 obligation;
19 (II) was engaged in business or a
20 transaction, or was about to engage in
21 business or a transaction, for which
22 any property remaining with the cov23
ered financial company was an unrea24
sonably small capital;
247
O:AYOAYO10H27.xml [file 2 of 17] S.L.C
1 (III) intended to incur, or be2
lieved that the covered financial com3
pany would incur, debts that would be
4 beyond the ability of the covered fi5
nancial company to pay as such debts
6 matured; or
7 (IV) made such transfer to or for
8 the benefit of an insider, or incurred
9 such obligation to or for the benefit of
10 an insider, under an employment con11
tract and not in the ordinary course
12 of business.
13 (B) PREFERENTIAL TRANSFERS.—The
14 Corporation as receiver for any covered finan15
cial company may avoid a transfer of an inter16
est of the covered financial company in prop17
erty—
18 (i) to or for the benefit of a creditor;
19 (ii) for or on account of an antecedent
20 debt that was owed by the covered finan21
cial company before the transfer was made;
22 (iii) that was made while the covered
23 financial company was insolvent;
24 (iv) that was made—
248
O:AYOAYO10H27.xml [file 2 of 17] S.L.C
1 (I) 90 days or less before the
2 date on which the Corporation was
3 appointed receiver; or
4 (II) more than 90 days, but less
5 than 1 year before the date on which
6 the Corporation was appointed re7
ceiver, if such creditor at the time of
8 the transfer was an insider; and
9 (v) that enables the creditor to receive
10 more than the creditor would receive if—
11 (I) the covered financial company
12 had been liquidated under chapter 7
13 of the Bankruptcy Code;
14 (II) the transfer had not been
15 made; and
16 (III) the creditor received pay17
ment of such debt to the extent pro18
vided by the provisions of chapter 7 of
19 the Bankruptcy Code.
20 (C) POST-RECEIVERSHIP TRANSACTIONS.—
21 The Corporation as receiver for any covered fi22
nancial company may avoid a transfer of prop23
erty of the receivership that occurred after the
24 Corporation was appointed receiver that was
249
O:AYOAYO10H27.xml [file 2 of 17] S.L.C
1 not authorized under this title by the Corpora2
tion as receiver.
3 (D) RIGHT OF RECOVERY.—To the extent
4 that a transfer is avoided under subparagraph
5 (A), (B), or (C), the Corporation may recover,
6 for the benefit of the covered financial com7
pany, the property transferred or, if a court so
8 orders, the value of such property (at the time
9 of such transfer) from—
10 (i) the initial transferee of such trans11
fer or the person for whose benefit such
12 transfer was made; or
13 (ii) any immediate or mediate trans14
feree of any such initial transferee.
15 (E) RIGHTS OF TRANSFEREE OR OBLI16
GEE.—The Corporation may not recover under
17 subparagraph (D)(ii) from—
18 (i) any transferee that takes for value,
19 including in satisfaction of or to secure a
20 present or antecedent debt, in good faith,
21 and without knowledge of the voidability of
22 the transfer avoided; or
23 (ii) any immediate or mediate good
24 faith transferee of such transferee.
250
O:AYOAYO10H27.xml [file 2 of 17] S.L.C
1 (F) DEFENSES.—Subject to the other pro2
visions of this title—
3 (i) a transferee or obligee from which
4 the Corporation seeks to recover a transfer
5 or to avoid an obligation under subpara6
graph (A), (B), (C), or (D) shall have the
7 same defenses available to a transferee or
8 obligee from which a trustee seeks to re9
cover a transfer or avoid an obligation
10 under sections 547, 548, and 549 of the
11 Bankruptcy Code; and
12 (ii) the authority of the Corporation
13 to recover a transfer or avoid an obligation
14 shall be subject to subsections (b) and (c)
15 of section 546, section 547(c), and section
16 548(c) of the Bankruptcy Code.
17 (G) RIGHTS UNDER THIS SECTION.—The
18 rights of the Corporation as receiver under this
19 section shall be superior to any rights of a
20 trustee or any other party (other than a Fed21
eral agency) under the Bankruptcy Code.
22 (H) RULES OF CONSTRUCTION; DEFINI23
TIONS.—For purposes of—
24 (i) subparagraphs (A) and (B)—
251
O:AYOAYO10H27.xml [file 2 of 17] S.L.C
1 (I) the term ‘‘insider’’ has the
2 same meaning as in section 101(31)
3 of the Bankruptcy Code;
4 (II) a transfer is made when
5 such transfer is so perfected that a
6 bona fide purchaser from the covered
7 financial company against whom ap8
plicable law permits such transfer to
9 be perfected cannot acquire an inter10
est in the property transferred that is
11 superior to the interest in such prop12
erty of the transferee, but if such
13 transfer is not so perfected before the
14 date on which the Corporation is ap15
pointed as receiver for the covered fi16
nancial company, such transfer is
17 made immediately before the date of
18 such appointment; and
19 (III) the term ‘‘value’’ means
20 property, or satisfaction or securing of
21 a present or antecedent debt of the
22 covered financial company, but does
23 not include an unperformed promise
24 to furnish support to the covered fi25
nancial company; and
252
O:AYOAYO10H27.xml [file 2 of 17] S.L.C
1 (ii) subparagraph (B)—
2 (I) the covered financial company
3 is presumed to have been insolvent on
4 and during the 90-day period imme5
diately preceding the date of appoint6
ment of the Corporation as receiver;
7 and
8 (II) the term ‘‘insolvent’’ has the
9 same meaning as in section 101(32)
10 of the Bankruptcy Code.
11 (12) SETOFF.—
12 (A) GENERALLY.—Except as otherwise
13 provided in this title, any right of a creditor to
14 offset a mutual debt owed by the creditor to
15 any covered financial company that arose before
16 the Corporation was appointed as receiver for
17 the covered financial company against a claim
18 of such creditor may be asserted if enforceable
19 under applicable noninsolvency law, except to
20 the extent that—
21 (i) the claim of the creditor against
22 the covered financial company is dis23
allowed;
253
O:AYOAYO10H27.xml [file 2 of 17] S.L.C
1 (ii) the claim was transferred, by an
2 entity other than the covered financial
3 company, to the creditor—
4 (I) after the Corporation was ap5
pointed as receiver of the covered fi6
nancial company; or
7 (II)(aa) after the 90-day period
8 preceding the date on which the Cor9
poration was appointed as receiver for
10 the covered financial company; and
11 (bb) while the covered financial
12 company was insolvent (except for a
13 setoff in connection with a qualified
14 financial contract); or
15 (iii) the debt owed to the covered fi16
nancial company was incurred by the cov17
ered financial company—
18 (I) after the 90-day period pre19
ceding the date on which the Corpora20
tion was appointed as receiver for the
21 covered financial company;
22 (II) while the covered financial
23 company was insolvent; and
24 (III) for the purpose of obtaining
25 a right of setoff against the covered
254
O:AYOAYO10H27.xml [file 2 of 17] S.L.C
1 financial company (except for a setoff
2 in connection with a qualified finan3
cial contract).
4 (B) INSUFFICIENCY.—
5 (i) IN GENERAL.—Except with respect
6 to a setoff in connection with a qualified fi7
nancial contract, if a creditor offsets a mu8
tual debt owed to the covered financial
9 company against a claim of the covered fi10
nancial company on or within the 90-day
11 period preceding the date on which the
12 Corporation is appointed as receiver for
13 the covered financial company, the Cor14
poration may recover from the creditor the
15 amount so offset, to the extent that any in16
sufficiency on the date of such setoff is less
17 than the insufficiency on the later of—
18 (I) the date that is 90 days be19
fore the date on which the Corpora20
tion is appointed as receiver for the
21 covered financial company; or
22 (II) the first day on which there
23 is an insufficiency during the 90-day
24 period preceding the date on which
25 the Corporation is appointed as re255
O:AYOAYO10H27.xml [file 2 of 17] S.L.C
1 ceiver for the covered financial com2
pany.
3 (ii) DEFINITION OF INSUFFI4
CIENCY.—In this subparagraph, the term
5 ‘‘insufficiency’’ means the amount, if any,
6 by which a claim against the covered finan7
cial company exceeds a mutual debt owed
8 to the covered financial company by the
9 holder of such claim.
10 (C) INSOLVENCY.—The term ‘‘insolvent’’
11 has the same meaning as in section 101(32) of
12 the Bankruptcy Code.
13 (D) PRESUMPTION OF INSOLVENCY.—For
14 purposes of this paragraph, the covered finan15
cial company is presumed to have been insol16
vent on and during the 90-day period preceding
17 the date of appointment of the Corporation as
18 receiver.
19 (E) LIMITATION.—Nothing in this para20
graph (12) shall be the basis for any right of
21 setoff where no such right exists under applica22
ble noninsolvency law.
23 (F) PRIORITY CLAIM.—Except as other24
wise provided in this title, the Corporation as
25 receiver for the covered financial company may
256
O:AYOAYO10H27.xml [file 2 of 17] S.L.C
1 sell or transfer any assets free and clear of the
2 setoff rights of any party, except that such
3 party shall be entitled to a claim, subordinate
4 to the claims payable under subparagraphs (A),
5 (B), (C), and (D) of subsection (b)(1), but sen6
ior to all other unsecured liabilities defined in
7 subsection (b)(1)(E), in an amount equal to the
8 value of such setoff rights.
9 (13) ATTACHMENT OF ASSETS AND OTHER IN10
JUNCTIVE RELIEF.—Subject to paragraph (14), any
11 court of competent jurisdiction may, at the request
12 of the Corporation as receiver for a covered financial
13 company, issue an order in accordance with Rule 65
14 of the Federal Rules of Civil Procedure, including an
15 order placing the assets of any person designated by
16 the Corporation under the control of the court and
17 appointing a trustee to hold such assets.
18 (14) STANDARDS.—
19 (A) SHOWING.—Rule 65 of the Federal
20 Rules of Civil Procedure shall apply with re21
spect to any proceeding under paragraph (13),
22 without regard to the requirement that the ap23
plicant show that the injury, loss, or damage is
24 irreparable and immediate.
257
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1 (B) STATE PROCEEDING.—If, in the case
2 of any proceeding in a State court, the court
3 determines that rules of civil procedure avail4
able under the laws of the State provide sub5
stantially similar protections of the right of the
6 parties to due process as provided under Rule
7 65 (as modified with respect to such proceeding
8 by subparagraph (A)), the relief sought by the
9 Corporation pursuant to paragraph (14) may be
10 requested under the laws of such State.
11 (15) TREATMENT OF CLAIMS ARISING FROM
12 BREACH OF CONTRACTS EXECUTED BY THE COR13
PORATION AS RECEIVER.—Notwithstanding any
14 other provision of this title, any final and non-ap15
pealable judgment for monetary damages entered
16 against the Corporation as receiver for a covered fi17
nancial company for the breach of an agreement exe18
cuted or approved by the Corporation after the date
19 of its appointment shall be paid as an administrative
20 expense of the receiver. Nothing in this paragraph
21 shall be construed to limit the power of a receiver
22 to exercise any rights under contract or law, includ23
ing to terminate, breach, cancel, or otherwise dis24
continue such agreement.
258
O:AYOAYO10H27.xml [file 2 of 17] S.L.C
1 (16) ACCOUNTING AND RECORDKEEPING RE2
QUIREMENTS.—
3 (A) IN GENERAL.—The Corporation as re4
ceiver for a covered financial company shall,
5 consistent with the accounting and reporting
6 practices and procedures established by the
7 Corporation, maintain a full accounting of each
8 receivership or other disposition of any covered
9 financial company.
10 (B) ANNUAL ACCOUNTING OR REPORT.—
11 With respect to each receivership to which the
12 Corporation is appointed, the Corporation shall
13 make an annual accounting or report, as appro14
priate, available to the Secretary and the Comp15
troller General of the United States.
16 (C) AVAILABILITY OF REPORTS.—Any re17
port prepared pursuant to subparagraph (B)
18 and section 203(c)(3) shall be made available to
19 the public by the Corporation.
20 (D) RECORDKEEPING REQUIREMENT.—
21 (i) IN GENERAL.—The Corporation
22 shall prescribe such regulations and estab23
lish such retention schedules as are nec24
essary to maintain the documents and
25 records of the Corporation generated in ex259
O:AYOAYO10H27.xml [file 2 of 17] S.L.C
1 ercising the authorities of this title and the
2 records of a covered financial company for
3 which the Corporation is appointed re4
ceiver, with due regard for—
5 (I) the avoidance of duplicative
6 record retention; and
7 (II) the expected evidentiary
8 needs of the Corporation as receiver
9 for a covered financial company and
10 the public regarding the records of
11 covered financial companies.
12 (ii) RETENTION OF RECORDS.—Un13
less otherwise required by applicable Fed14
eral law or court order, the Corporation
15 may not, at any time, destroy any records
16 that are subject to clause (i).
17 (iii) RECORDS DEFINED.—As used in
18 this subparagraph, the terms ‘‘records’’
19 and ‘‘records of a covered financial com20
pany’’ mean any document, book, paper,
21 map, photograph, microfiche, microfilm,
22 computer or electronically-created record
23 generated or maintained by the covered fi24
nancial company in the course of and nec25
essary to its transaction of business.
260
O:AYOAYO10H27.xml [file 2 of 17] S.L.C
1 (b) PRIORITY OF EXPENSES AND UNSECURED
2 CLAIMS.—
3 (1) IN GENERAL.—Unsecured claims against a
4 covered financial company, or the Corporation as re5
ceiver for such covered financial company under this
6 section, that are proven to the satisfaction of the re7
ceiver shall have priority in the following order:
8 (A) Administrative expenses of the re9
ceiver.
10 (B) Any amounts owed to the United
11 States, unless the United States agrees or con12
sents otherwise.
13 (C) Wages, salaries, or commissions, in14
cluding vacation, severance, and sick leave pay
15 earned by an individual (other than an indi16
vidual described in subparagraph (G)), but only
17 to the extent of $11,725 for each individual (as
18 indexed for inflation, by regulation of the Cor19
poration) earned not later than 180 days before
20 the date of appointment of the Corporation as
21 receiver.
22 (D) Contributions owed to employee ben23
efit plans arising from services rendered not
24 later than 180 days before the date of appoint25
ment of the Corporation as receiver, to the ex261
O:AYOAYO10H27.xml [file 2 of 17] S.L.C
1 tent of the number of employees covered by
2 each such plan, multiplied by $11,725 (as in3
dexed for inflation, by regulation of the Cor4
poration), less the aggregate amount paid to
5 such employees under subparagraph (C), plus
6 the aggregate amount paid by the receivership
7 on behalf of such employees to any other em8
ployee benefit plan.
9 (E) Any other general or senior liability of
10 the covered financial company (which is not a
11 liability described under subparagraph (F), (G),
12 or (H)).
13 (F) Any obligation subordinated to general
14 creditors (which is not an obligation described
15 under subparagraph (G) or (H)).
16 (G) Any wages, salaries, or commissions,
17 including vacation, severance, and sick leave
18 pay earned, owed to senior executives and direc19
tors of the covered financial company.
20 (H) Any obligation to shareholders, mem21
bers, general partners, limited partners, or
22 other persons, with interests in the equity of
23 the covered financial company arising as a re24
sult of their status as shareholders, members,
25 general partners, limited partners, or other per262
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1 sons with interests in the equity of the covered
2 financial company.
3 (2) POST-RECEIVERSHIP FINANCING PRI4
ORITY.—In the event that the Corporation, as re5
ceiver for a covered financial company, is unable to
6 obtain unsecured credit for the covered financial
7 company from commercial sources, the Corporation
8 as receiver may obtain credit or incur debt on the
9 part of the covered financial company, which shall
10 have priority over any or all administrative expenses
11 of the receiver under paragraph (1)(A).
12 (3) CLAIMS OF THE UNITED STATES.—Unse13
cured claims of the United States shall, at a min14
imum, have a higher priority than liabilities of the
15 covered financial company that count as regulatory
16 capital.
17 (4) CREDITORS SIMILARLY SITUATED.—All
18 claimants of a covered financial company that are
19 similarly situated under paragraph (1) shall be
20 treated in a similar manner, except that the Cor21
poration may take any action (including making
22 payments, subject to subsection (o)(1)(D)(i)) that
23 does not comply with this subsection, if—
24 (A) the Corporation determines that such
25 action is necessary—
263
O:AYOAYO10H27.xml [file 2 of 17] S.L.C
1 (i) to maximize the value of the assets
2 of the covered financial company;
3 (ii) to initiate and continue operations
4 essential to implementation of the receiver5
ship or any bridge financial company;
6 (iii) to maximize the present value re7
turn from the sale or other disposition of
8 the assets of the covered financial com9
pany; or
10 (iv) to minimize the amount of any
11 loss realized upon the sale or other disposi12
tion of the assets of the covered financial
13 company; and
14 (B) all claimants that are similarly situ15
ated under paragraph (1) receive not less than
16 the amount provided in paragraphs (2) and (3)
17 of subsection (d).
18 (5) SECURED CLAIMS UNAFFECTED.—This sec19
tion shall not affect secured claims or security enti20
tlements in respect of assets or property held by the
21 covered financial company, except to the extent that
22 the security is insufficient to satisfy the claim, and
23 then only with regard to the difference between the
24 claim and the amount realized from the security.
264
O:AYOAYO10H27.xml [file 2 of 17] S.L.C
1 (6) PRIORITY OF EXPENSES AND UNSECURED
2 CLAIMS IN THE ORDERLY LIQUIDATION OF SIPC
3 MEMBER.—Where the Corporation is appointed as
4 receiver for a covered broker or dealer, unsecured
5 claims against such covered broker or dealer, or the
6 Corporation as receiver for such covered broker or
7 dealer under this section, that are proven to the sat8
isfaction of the receiver under section 205(e), shall
9 have the priority prescribed in paragraph (1), except
10 that—
11 (A) SIPC shall be entitled to recover ad12
ministrative expenses incurred in performing its
13 responsibilities under section 205 on an equal
14 basis with the Corporation, in accordance with
15 paragraph (1)(A);
16 (B) the Corporation shall be entitled to re17
cover any amounts paid to customers or to
18 SIPC pursuant to section 205(f), in accordance
19 with paragraph (1)(B);
20 (C) SIPC shall be entitled to recover any
21 amounts paid out of the SIPC Fund to meet its
22 obligations under section 205 and under the Se23
curities Investor Protection Act of 1970 (15
24 U.S.C. 78aaa et seq.), which claim shall be sub25
ordinate to the claims payable under subpara265
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1 graphs (A) and (B) of paragraph (1), but sen2
ior to all other claims; and
3 (D) the Corporation may, after paying any
4 proven claims to customers under section 205
5 and the Securities Investor Protection Act of
6 1970 (15 U.S.C. 78aaa et seq.), and as pro7
vided above, pay dividends on other proven
8 claims, in its discretion, and to the extent that
9 funds are available, in accordance with the pri10
orities set forth in paragraph (1).
11 (c) PROVISIONS RELATING TO CONTRACTS ENTERED
12 INTO BEFORE APPOINTMENT OF RECEIVER.—
13 (1) AUTHORITY TO REPUDIATE CONTRACTS.—
14 In addition to any other rights that a receiver may
15 have, the Corporation as receiver for any covered fi16
nancial company may disaffirm or repudiate any
17 contract or lease—
18 (A) to which the covered financial company
19 is a party;
20 (B) the performance of which the Corpora21
tion as receiver, in the discretion of the Cor22
poration, determines to be burdensome; and
23 (C) the disaffirmance or repudiation of
24 which the Corporation as receiver determines,
25 in the discretion of the Corporation, will pro266
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1 mote the orderly administration of the affairs of
2 the covered financial company.
3 (2) TIMING OF REPUDIATION.—The Corpora4
tion, as receiver for any covered financial company,
5 shall determine whether or not to exercise the rights
6 of repudiation under this section within a reasonable
7 period of time.
8 (3) CLAIMS FOR DAMAGES FOR REPUDI9
ATION.—
10 (A) IN GENERAL.—Except as provided in
11 paragraphs (4), (5), and (6) and in subpara12
graphs (C), (D), and (E) of this paragraph, the
13 liability of the Corporation as receiver for a cov14
ered financial company for the disaffirmance or
15 repudiation of any contract pursuant to para16
graph (1) shall be—
17 (i) limited to actual direct compen18
satory damages; and
19 (ii) determined as of—
20 (I) the date of the appointment
21 of the Corporation as receiver; or
22 (II) in the case of any contract
23 or agreement referred to in paragraph
24 (8), the date of the disaffirmance or
267
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1 repudiation of such contract or agree2
ment.
3 (B) NO LIABILITY FOR OTHER DAM4
AGES.—For purposes of subparagraph (A), the
5 term ‘‘actual direct compensatory damages’’
6 does not include—
7 (i) punitive or exemplary damages;
8 (ii) damages for lost profits or oppor9
tunity; or
10 (iii) damages for pain and suffering.
11 (C) MEASURE OF DAMAGES FOR REPUDI12
ATION OF QUALIFIED FINANCIAL CONTRACTS.—
13 In the case of any qualified financial contract
14 or agreement to which paragraph (8) applies,
15 compensatory damages shall be—
16 (i) deemed to include normal and rea17
sonable costs of cover or other reasonable
18 measures of damages utilized in the indus19
tries for such contract and agreement
20 claims; and
21 (ii) paid in accordance with this para22
graph and subsection (d), except as other23
wise specifically provided in this sub24
section.
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1 (D) MEASURE OF DAMAGES FOR REPUDI2
ATION OR DISAFFIRMANCE OF DEBT OBLIGA3
TION.—In the case of any debt for borrowed
4 money or evidenced by a security, actual direct
5 compensatory damages shall be no less than the
6 amount lent plus accrued interest plus any
7 accreted original issue discount as of the date
8 the Corporation was appointed receiver of the
9 covered financial company and, to the extent
10 that an allowed secured claim is secured by
11 property the value of which is greater than the
12 amount of such claim and any accrued interest
13 through the date of repudiation or
14 disaffirmance, such accrued interest pursuant
15 to paragraph (1).
16 (E) MEASURE OF DAMAGES FOR REPUDI17
ATION OR DISAFFIRMANCE OF CONTINGENT OB18
LIGATION.—In the case of any contingent obli19
gation of a covered financial company con20
sisting of any obligation under a guarantee, let21
ter of credit, loan commitment, or similar credit
22 obligation, the Corporation may, by rule or reg23
ulation, prescribe that actual direct compen24
satory damages shall be no less than the esti25
mated value of the claim as of the date the Cor269
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1 poration was appointed receiver of the covered
2 financial company, as such value is measured
3 based on the likelihood that such contingent
4 claim would become fixed and the probable
5 magnitude thereof.
6 (4) LEASES UNDER WHICH THE COVERED FI7
NANCIAL COMPANY IS THE LESSEE.—
8 (A) IN GENERAL.—If the Corporation as
9 receiver disaffirms or repudiates a lease under
10 which the covered financial company is the les11
see, the receiver shall not be liable for any dam12
ages (other than damages determined pursuant
13 to subparagraph (B)) for the disaffirmance or
14 repudiation of such lease.
15 (B) PAYMENTS OF RENT.—Notwith16
standing subparagraph (A), the lessor under a
17 lease to which subparagraph (A) would other18
wise apply shall—
19 (i) be entitled to the contractual rent
20 accruing before the later of the date on
21 which—
22 (I) the notice of disaffirmance or
23 repudiation is mailed; or
24 (II) the disaffirmance or repudi25
ation becomes effective, unless the les270
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1 sor is in default or breach of the
2 terms of the lease;
3 (ii) have no claim for damages under
4 any acceleration clause or other penalty
5 provision in the lease; and
6 (iii) have a claim for any unpaid rent,
7 subject to all appropriate offsets and de8
fenses, due as of the date of the appoint9
ment which shall be paid in accordance
10 with this paragraph and subsection (d).
11 (5) LEASES UNDER WHICH THE COVERED FI12
NANCIAL COMPANY IS THE LESSOR.—
13 (A) IN GENERAL.—If the Corporation as
14 receiver for a covered financial company repudi15
ates an unexpired written lease of real property
16 of the covered financial company under which
17 the covered financial company is the lessor and
18 the lessee is not, as of the date of such repudi19
ation, in default, the lessee under such lease
20 may either—
21 (i) treat the lease as terminated by
22 such repudiation; or
23 (ii) remain in possession of the lease24
hold interest for the balance of the term of
25 the lease, unless the lessee defaults under
271
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1 the terms of the lease after the date of
2 such repudiation.
3 (B) PROVISIONS APPLICABLE TO LESSEE
4 REMAINING IN POSSESSION.—If any lessee
5 under a lease described in subparagraph (A) re6
mains in possession of a leasehold interest pur7
suant to clause (ii) of subparagraph (A)—
8 (i) the lessee—
9 (I) shall continue to pay the con10
tractual rent pursuant to the terms of
11 the lease after the date of the repudi12
ation of such lease; and
13 (II) may offset against any rent
14 payment which accrues after the date
15 of the repudiation of the lease, any
16 damages which accrue after such date
17 due to the nonperformance of any ob18
ligation of the covered financial com19
pany under the lease after such date;
20 and
21 (ii) the Corporation as receiver shall
22 not be liable to the lessee for any damages
23 arising after such date as a result of the
24 repudiation, other than the amount of any
25 offset allowed under clause (i)(II).
272
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1 (6) CONTRACTS FOR THE SALE OF REAL PROP2
ERTY.—
3 (A) IN GENERAL.—If the receiver repudi4
ates any contract (which meets the require5
ments of subsection (a)(6)) for the sale of real
6 property, and the purchaser of such real prop7
erty under such contract is in possession and is
8 not, as of the date of such repudiation, in de9
fault, such purchaser may either—
10 (i) treat the contract as terminated by
11 such repudiation; or
12 (ii) remain in possession of such real
13 property.
14 (B) PROVISIONS APPLICABLE TO PUR15
CHASER REMAINING IN POSSESSION.—If any
16 purchaser of real property under any contract
17 described in subparagraph (A) remains in pos18
session of such property pursuant to clause (ii)
19 of subparagraph (A)—
20 (i) the purchaser—
21 (I) shall continue to make all
22 payments due under the contract after
23 the date of the repudiation of the con24
tract; and
273
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1 (II) may offset against any such
2 payments any damages which accrue
3 after such date due to the non4
performance (after such date) of any
5 obligation of the covered financial
6 company under the contract; and
7 (ii) the Corporation as receiver shall—
8 (I) not be liable to the purchaser
9 for any damages arising after such
10 date as a result of the repudiation,
11 other than the amount of any offset
12 allowed under clause (i)(II);
13 (II) deliver title to the purchaser
14 in accordance with the provisions of
15 the contract; and
16 (III) have no obligation under
17 the contract other than the perform18
ance required under subclause (II).
19 (C) ASSIGNMENT AND SALE ALLOWED.—
20 (i) IN GENERAL.—No provision of this
21 paragraph shall be construed as limiting
22 the right of the Corporation as receiver to
23 assign the contract described in subpara24
graph (A) and sell the property, subject to
274
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1 the contract and the provisions of this
2 paragraph.
3 (ii) NO LIABILITY AFTER ASSIGNMENT
4 AND SALE.—If an assignment and sale de5
scribed in clause (i) is consummated, the
6 Corporation as receiver shall have no fur7
ther liability under the contract described
8 in subparagraph (A) or with respect to the
9 real property which was the subject of such
10 contract.
11 (7) PROVISIONS APPLICABLE TO SERVICE CON12
TRACTS.—
13 (A) SERVICES PERFORMED BEFORE AP14
POINTMENT.—In the case of any contract for
15 services between any person and any covered fi16
nancial company for which the Corporation has
17 been appointed receiver, any claim of such per18
son for services performed before the date of
19 appointment shall be—
20 (i) a claim to be paid in accordance
21 with subsections (a), (b), and (d); and
22 (ii) deemed to have arisen as of the
23 date on which the receiver was appointed.
24 (B) SERVICES PERFORMED AFTER AP25
POINTMENT AND PRIOR TO REPUDIATION.—If,
275
O:AYOAYO10H27.xml [file 2 of 17] S.L.C
1 in the case of any contract for services de2
scribed in subparagraph (A), the Corporation as
3 receiver accepts performance by the other per4
son before making any determination to exer5
cise the right of repudiation of such contract
6 under this section—
7 (i) the other party shall be paid under
8 the terms of the contract for the services
9 performed; and
10 (ii) the amount of such payment shall
11 be treated as an administrative expense of
12 the receivership.
13 (C) ACCEPTANCE OF PERFORMANCE NO
14 BAR TO SUBSEQUENT REPUDIATION.—The ac15
ceptance by the Corporation as receiver for
16 services referred to in subparagraph (B) in con17
nection with a contract described in subpara18
graph (B) shall not affect the right of the Cor19
poration as receiver to repudiate such contract
20 under this section at any time after such per21
formance.
22 (8) CERTAIN QUALIFIED FINANCIAL CON23
TRACTS.—
24 (A) RIGHTS OF PARTIES TO CONTRACTS.—
25 Subject to subsection (a)(8) and paragraphs (9)
276
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1 and (10) of this subsection, and notwith2
standing any other provision of this section, any
3 other provision of Federal law, or the law of
4 any State, no person shall be stayed or prohib5
ited from exercising—
6 (i) any right that such person has to
7 cause the termination, liquidation, or accel8
eration of any qualified financial contract
9 with a covered financial company which
10 arises upon the date of appointment of the
11 Corporation as receiver for such covered fi12
nancial company or at any time after such
13 appointment;
14 (ii) any right under any security
15 agreement or arrangement or other credit
16 enhancement related to one or more quali17
fied financial contracts described in clause
18 (i); or
19 (iii) any right to offset or net out any
20 termination value, payment amount, or
21 other transfer obligation arising under or
22 in connection with 1 or more contracts or
23 agreements described in clause (i), includ24
ing any master agreement for such con25
tracts or agreements.
277
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1 (B) APPLICABILITY OF OTHER PROVI2
SIONS.—Subsection (a)(8) shall apply in the
3 case of any judicial action or proceeding
4 brought against the Corporation as receiver re5
ferred to in subparagraph (A), or the subject
6 covered financial company, by any party to a
7 contract or agreement described in subpara8
graph (A)(i) with such covered financial com9
pany.
10 (C) CERTAIN TRANSFERS NOT AVOID11
ABLE.—
12 (i) IN GENERAL.—Notwithstanding
13 subsection (a)(11), (a)(12), or (c)(12), sec14
tion 5242 of the Revised Statutes of the
15 United States, or any other provision of
16 Federal or State law relating to the avoid17
ance of preferential or fraudulent trans18
fers, the Corporation, whether acting as
19 the Corporation or as receiver for a cov20
ered financial company, may not avoid any
21 transfer of money or other property in con22
nection with any qualified financial con23
tract with a covered financial company.
24 (ii) EXCEPTION FOR CERTAIN TRANS25
FERS.—Clause (i) shall not apply to any
278
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1 transfer of money or other property in con2
nection with any qualified financial con3
tract with a covered financial company if
4 the transferee had actual intent to hinder,
5 delay, or defraud such company, the credi6
tors of such company, or the Corporation
7 as receiver appointed for such company.
8 (D) CERTAIN CONTRACTS AND AGREE9
MENTS DEFINED.—For purposes of this sub10
section, the following definitions shall apply:
11 (i) QUALIFIED FINANCIAL CON12
TRACT.—The term ‘‘qualified financial
13 contract’’ means any securities contract,
14 commodity contract, forward contract, re15
purchase agreement, swap agreement, and
16 any similar agreement that the Corpora17
tion determines by regulation, resolution,
18 or order to be a qualified financial contract
19 for purposes of this paragraph.
20 (ii) SECURITIES CONTRACT.—The
21 term ‘‘securities contract’’—
22 (I) means a contract for the pur23
chase, sale, or loan of a security, a
24 certificate of deposit, a mortgage loan,
25 any interest in a mortgage loan, a
279
O:AYOAYO10H27.xml [file 2 of 17] S.L.C
1 group or index of securities, certifi2
cates of deposit, or mortgage loans or
3 interests therein (including any inter4
est therein or based on the value
5 thereof), or any option on any of the
6 foregoing, including any option to
7 purchase or sell any such security,
8 certificate of deposit, mortgage loan,
9 interest, group or index, or option,
10 and including any repurchase or re11
verse repurchase transaction on any
12 such security, certificate of deposit,
13 mortgage loan, interest, group or
14 index, or option (whether or not such
15 repurchase or reverse repurchase
16 transaction is a ‘‘repurchase agree17
ment’’, as defined in clause (v));
18 (II) does not include any pur19
chase, sale, or repurchase obligation
20 under a participation in a commercial
21 mortgage loan unless the Corporation
22 determines by regulation, resolution,
23 or order to include any such agree24
ment within the meaning of such
25 term;
280
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1 (III) means any option entered
2 into on a national securities exchange
3 relating to foreign currencies;
4 (IV) means the guarantee (in5
cluding by novation) by or to any se6
curities clearing agency of any settle7
ment of cash, securities, certificates of
8 deposit, mortgage loans or interests
9 therein, group or index of securities,
10 certificates of deposit or mortgage
11 loans or interests therein (including
12 any interest therein or based on the
13 value thereof) or an option on any of
14 the foregoing, including any option to
15 purchase or sell any such security,
16 certificate of deposit, mortgage loan,
17 interest, group or index, or option
18 (whether or not such settlement is in
19 connection with any agreement or
20 transaction referred to in subclauses
21 (I) through (XII) (other than sub22
clause (II)));
23 (V) means any margin loan;
281
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1 (VI) means any extension of
2 credit for the clearance or settlement
3 of securities transactions;
4 (VII) means any loan transaction
5 coupled with a securities collar trans6
action, any prepaid securities forward
7 transaction, or any total return swap
8 transaction coupled with a securities
9 sale transaction;
10 (VIII) means any other agree11
ment or transaction that is similar to
12 any agreement or transaction referred
13 to in this clause;
14 (IX) means any combination of
15 the agreements or transactions re16
ferred to in this clause;
17 (X) means any option to enter
18 into any agreement or transaction re19
ferred to in this clause;
20 (XI) means a master agreement
21 that provides for an agreement or
22 transaction referred to in any of sub23
clauses (I) through (X), other than
24 subclause (II), together with all sup25
plements to any such master agree282
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1 ment, without regard to whether the
2 master agreement provides for an
3 agreement or transaction that is not a
4 securities contract under this clause,
5 except that the master agreement
6 shall be considered to be a securities
7 contract under this clause only with
8 respect to each agreement or trans9
action under the master agreement
10 that is referred to in any of sub11
clauses (I) through (X), other than
12 subclause (II); and
13 (XII) means any security agree14
ment or arrangement or other credit
15 enhancement related to any agree16
ment or transaction referred to in this
17 clause, including any guarantee or re18
imbursement obligation in connection
19 with any agreement or transaction re20
ferred to in this clause.
21 (iii) COMMODITY CONTRACT.—The
22 term ‘‘commodity contract’’ means—
23 (I) with respect to a futures com24
mission merchant, a contract for the
25 purchase or sale of a commodity for
283
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1 future delivery on, or subject to the
2 rules of, a contract market or board
3 of trade;
4 (II) with respect to a foreign fu5
tures commission merchant, a foreign
6 future;
7 (III) with respect to a leverage
8 transaction merchant, a leverage
9 transaction;
10 (IV) with respect to a clearing
11 organization, a contract for the pur12
chase or sale of a commodity for fu13
ture delivery on, or subject to the
14 rules of, a contract market or board
15 of trade that is cleared by such clear16
ing organization, or commodity option
17 traded on, or subject to the rules of,
18 a contract market or board of trade
19 that is cleared by such clearing orga20
nization;
21 (V) with respect to a commodity
22 options dealer, a commodity option;
23 (VI) any other agreement or
24 transaction that is similar to any
284
O:AYOAYO10H27.xml [file 2 of 17] S.L.C
1 agreement or transaction referred to
2 in this clause;
3 (VII) any combination of the
4 agreements or transactions referred to
5 in this clause;
6 (VIII) any option to enter into
7 any agreement or transaction referred
8 to in this clause;
9 (IX) a master agreement that
10 provides for an agreement or trans11
action referred to in any of subclauses
12 (I) through (VIII), together with all
13 supplements to any such master
14 agreement, without regard to whether
15 the master agreement provides for an
16 agreement or transaction that is not a
17 commodity contract under this clause,
18 except that the master agreement
19 shall be considered to be a commodity
20 contract under this clause only with
21 respect to each agreement or trans22
action under the master agreement
23 that is referred to in any of sub24
clauses (I) through (VIII); or
285
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1 (X) any security agreement or
2 arrangement or other credit enhance3
ment related to any agreement or
4 transaction referred to in this clause,
5 including any guarantee or reimburse6
ment obligation in connection with
7 any agreement or transaction referred
8 to in this clause.
9 (iv) FORWARD CONTRACT.—The term
10 ‘‘forward contract’’ means—
11 (I) a contract (other than a com12
modity contract) for the purchase,
13 sale, or transfer of a commodity or
14 any similar good, article, service,
15 right, or interest which is presently or
16 in the future becomes the subject of
17 dealing in the forward contract trade,
18 or product or byproduct thereof, with
19 a maturity date that is more than 2
20 days after the date on which the con21
tract is entered into, including a re22
purchase or reverse repurchase trans23
action (whether or not such repur24
chase or reverse repurchase trans25
action is a ‘‘repurchase agreement’’,
286
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1 as defined in clause (v)), consignment,
2 lease, swap, hedge transaction, de3
posit, loan, option, allocated trans4
action, unallocated transaction, or any
5 other similar agreement;
6 (II) any combination of agree7
ments or transactions referred to in
8 subclauses (I) and (III);
9 (III) any option to enter into any
10 agreement or transaction referred to
11 in subclause (I) or (II);
12 (IV) a master agreement that
13 provides for an agreement or trans14
action referred to in subclause (I),
15 (II), or (III), together with all supple16
ments to any such master agreement,
17 without regard to whether the master
18 agreement provides for an agreement
19 or transaction that is not a forward
20 contract under this clause, except that
21 the master agreement shall be consid22
ered to be a forward contract under
23 this clause only with respect to each
24 agreement or transaction under the
287
O:AYOAYO10H27.xml [file 2 of 17] S.L.C
1 master agreement that is referred to
2 in subclause (I), (II), or (III); or
3 (V) any security agreement or ar4
rangement or other credit enhance5
ment related to any agreement or
6 transaction referred to in subclause
7 (I), (II), (III), or (IV), including any
8 guarantee or reimbursement obliga9
tion in connection with any agreement
10 or transaction referred to in any such
11 subclause.
12 (v) REPURCHASE AGREEMENT.—The
13 term ‘‘repurchase agreement’’ (which defi14
nition also applies to a reverse repurchase
15 agreement)—
16 (I) means an agreement, includ17
ing related terms, which provides for
18 the transfer of one or more certifi19
cates of deposit, mortgage related se20
curities (as such term is defined in
21 section 3 of the Securities Exchange
22 Act of 1934), mortgage loans, inter23
ests in mortgage-related securities or
24 mortgage loans, eligible bankers’ ac25
ceptances, qualified foreign govern288
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1 ment securities (which, for purposes
2 of this clause, means a security that is
3 a direct obligation of, or that is fully
4 guaranteed by, the central government
5 of a member of the Organization for
6 Economic Cooperation and Develop7
ment, as determined by regulation or
8 order adopted by the Board of Gov9
ernors), or securities that are direct
10 obligations of, or that are fully guar11
anteed by, the United States or any
12 agency of the United States against
13 the transfer of funds by the transferee
14 of such certificates of deposit, eligible
15 bankers’ acceptances, securities, mort16
gage loans, or interests with a simul17
taneous agreement by such transferee
18 to transfer to the transferor thereof
19 certificates of deposit, eligible bank20
ers’ acceptances, securities, mortgage
21 loans, or interests as described above,
22 at a date certain not later than 1 year
23 after such transfers or on demand,
24 against the transfer of funds, or any
25 other similar agreement;
289
O:AYOAYO10H27.xml [file 2 of 17] S.L.C
1 (II) does not include any repur2
chase obligation under a participation
3 in a commercial mortgage loan, unless
4 the Corporation determines, by regu5
lation, resolution, or order to include
6 any such participation within the
7 meaning of such term;
8 (III) means any combination of
9 agreements or transactions referred to
10 in subclauses (I) and (IV);
11 (IV) means any option to enter
12 into any agreement or transaction re13
ferred to in subclause (I) or (III);
14 (V) means a master agreement
15 that provides for an agreement or
16 transaction referred to in subclause
17 (I), (III), or (IV), together with all
18 supplements to any such master
19 agreement, without regard to whether
20 the master agreement provides for an
21 agreement or transaction that is not a
22 repurchase agreement under this
23 clause, except that the master agree24
ment shall be considered to be a re25
purchase agreement under this sub290
O:AYOAYO10H27.xml [file 2 of 17] S.L.C
1 clause only with respect to each agree2
ment or transaction under the master
3 agreement that is referred to in sub4
clause (I), (III), or (IV); and
5 (VI) means any security agree6
ment or arrangement or other credit
7 enhancement related to any agree8
ment or transaction referred to in
9 subclause (I), (III), (IV), or (V), in10
cluding any guarantee or reimburse11
ment obligation in connection with
12 any agreement or transaction referred
13 to in any such subclause.
14 (vi) SWAP AGREEMENT.—The term
15 ‘‘swap agreement’’ means—
16 (I) any agreement, including the
17 terms and conditions incorporated by
18 reference in any such agreement,
19 which is an interest rate swap, option,
20 future, or forward agreement, includ21
ing a rate floor, rate cap, rate collar,
22 cross-currency rate swap, and basis
23 swap; a spot, same day-tomorrow, to24
morrow-next, forward, or other for25
eign exchange, precious metals, or
291
O:AYOAYO10H27.xml [file 2 of 17] S.L.C
1 other commodity agreement; a cur2
rency swap, option, future, or forward
3 agreement; an equity index or equity
4 swap, option, future, or forward
5 agreement; a debt index or debt swap,
6 option, future, or forward agreement;
7 a total return, credit spread or credit
8 swap, option, future, or forward
9 agreement; a commodity index or
10 commodity swap, option, future, or
11 forward agreement; weather swap, op12
tion, future, or forward agreement; an
13 emissions swap, option, future, or for14
ward agreement; or an inflation swap,
15 option, future, or forward agreement;
16 (II) any agreement or transaction
17 that is similar to any other agreement
18 or transaction referred to in this
19 clause and that is of a type that has
20 been, is presently, or in the future be21
comes, the subject of recurrent deal22
ings in the swap or other derivatives
23 markets (including terms and condi24
tions incorporated by reference in
25 such agreement) and that is a for292
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1 ward, swap, future, option, or spot
2 transaction on one or more rates, cur3
rencies, commodities, equity securities
4 or other equity instruments, debt se5
curities or other debt instruments,
6 quantitative measures associated with
7 an occurrence, extent of an occur8
rence, or contingency associated with
9 a financial, commercial, or economic
10 consequence, or economic or financial
11 indices or measures of economic or fi12
nancial risk or value;
13 (III) any combination of agree14
ments or transactions referred to in
15 this clause;
16 (IV) any option to enter into any
17 agreement or transaction referred to
18 in this clause;
19 (V) a master agreement that pro20
vides for an agreement or transaction
21 referred to in subclause (I), (II), (III),
22 or (IV), together with all supplements
23 to any such master agreement, with24
out regard to whether the master
25 agreement contains an agreement or
293
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1 transaction that is not a swap agree2
ment under this clause, except that
3 the master agreement shall be consid4
ered to be a swap agreement under
5 this clause only with respect to each
6 agreement or transaction under the
7 master agreement that is referred to
8 in subclause (I), (II), (III), or (IV);
9 and
10 (VI) any security agreement or
11 arrangement or other credit enhance12
ment related to any agreement or
13 transaction referred to in any of sub14
clauses (I) through (V), including any
15 guarantee or reimbursement obliga16
tion in connection with any agreement
17 or transaction referred to in any such
18 clause.
19 (vii) DEFINITIONS RELATING TO DE20
FAULT.—When used in this paragraph and
21 paragraphs (9) and (10)—
22 (I) the term ‘‘default’’ means,
23 with respect to a covered financial
24 company, any adjudication or other
25 official decision by any court of com294
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1 petent jurisdiction, or other public au2
thority pursuant to which the Cor3
poration has been appointed receiver;
4 and
5 (II) the term ‘‘in danger of de6
fault’’ means a covered financial com7
pany with respect to which the Cor8
poration or appropriate State author9
ity has determined that—
10 (aa) in the opinion of the
11 Corporation or such authority—
12 (AA) the covered finan13
cial company is not likely to
14 be able to pay its obligations
15 in the normal course of busi16
ness; and
17 (BB) there is no rea18
sonable prospect that the
19 covered financial company
20 will be able to pay such obli21
gations without Federal as22
sistance; or
23 (bb) in the opinion of the
24 Corporation or such authority—
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1 (AA) the covered finan2
cial company has incurred or
3 is likely to incur losses that
4 will deplete all or substan5
tially all of its capital; and
6 (BB) there is no rea7
sonable prospect that the
8 capital will be replenished
9 without Federal assistance.
10 (viii) TREATMENT OF MASTER AGREE11
MENT AS ONE AGREEMENT.—Any master
12 agreement for any contract or agreement
13 described in any of clauses (i) through (vi)
14 (or any master agreement for such master
15 agreement or agreements), together with
16 all supplements to such master agreement,
17 shall be treated as a single agreement and
18 a single qualified financial contact. If a
19 master agreement contains provisions re20
lating to agreements or transactions that
21 are not themselves qualified financial con22
tracts, the master agreement shall be
23 deemed to be a qualified financial contract
24 only with respect to those transactions that
296
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1 are themselves qualified financial con2
tracts.
3 (ix) TRANSFER.—The term ‘‘transfer’’
4 means every mode, direct or indirect, abso5
lute or conditional, voluntary or involun6
tary, of disposing of or parting with prop7
erty or with an interest in property, includ8
ing retention of title as a security interest
9 and foreclosure of the equity of redemption
10 of the covered financial company.
11 (x) PERSON.—The term ‘‘person’’ in12
cludes any governmental entity in addition
13 to any entity included in the definition of
14 such term in section 1, title 1, United
15 States Code.
16 (E) CLARIFICATION.—No provision of law
17 shall be construed as limiting the right or
18 power of the Corporation, or authorizing any
19 court or agency to limit or delay, in any man20
ner, the right or power of the Corporation to
21 transfer any qualified financial contract or to
22 disaffirm or repudiate any such contract in ac23
cordance with this subsection.
24 (F) WALKAWAY CLAUSES NOT EFFEC25
TIVE.—
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1 (i) IN GENERAL.—Notwithstanding
2 the provisions of subparagraph (A) of this
3 paragraph and sections 403 and 404 of the
4 Federal Deposit Insurance Corporation
5 Improvement Act of 1991, no walkaway
6 clause shall be enforceable in a qualified fi7
nancial contract of a covered financial
8 company in default.
9 (ii) LIMITED SUSPENSION OF CERTAIN
10 OBLIGATIONS.—In the case of a qualified
11 financial contract referred to in clause (i),
12 any payment or delivery obligations other13
wise due from a party pursuant to the
14 qualified financial contract shall be sus15
pended from the time at which the Cor16
poration is appointed as receiver until the
17 earlier of—
18 (I) the time at which such party
19 receives notice that such contract has
20 been transferred pursuant to para21
graph (10)(A); or
22 (II) 5:00 p.m. (eastern time) on
23 the business day following the date of
24 the appointment of the Corporation as
25 receiver.
298
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1 (iii) WALKAWAY CLAUSE DEFINED.—
2 For purposes of this subparagraph, the
3 term ‘‘walkaway clause’’ means any provi4
sion in a qualified financial contract that
5 suspends, conditions, or extinguishes a
6 payment obligation of a party, in whole or
7 in part, or does not create a payment obli8
gation of a party that would otherwise
9 exist, solely because of the status of such
10 party as a nondefaulting party in connec11
tion with the insolvency of a covered finan12
cial company that is a party to the con13
tract or the appointment of or the exercise
14 of rights or powers by the Corporation as
15 receiver for such covered financial com16
pany, and not as a result of the exercise by
17 a party of any right to offset, setoff, or net
18 obligations that exist under the contract,
19 any other contract between those parties,
20 or applicable law.
21 (G) CERTAIN OBLIGATIONS TO CLEARING
22 ORGANIZATIONS.—In the event that the Cor23
poration has been appointed as receiver for a
24 covered financial company which is a party to
25 any qualified financial contract cleared by or
299
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1 subject to the rules of a clearing organization
2 (as defined in paragraph (9)(D)), the receiver
3 shall use its best efforts to meet all margin, col4
lateral, and settlement obligations of the cov5
ered financial company that arise under quali6
fied financial contracts (other than any margin,
7 collateral, or settlement obligation that is not
8 enforceable against the receiver under para9
graph (8)(F)(i) or paragraph (10)(B)), as re10
quired by the rules of the clearing organization
11 when due. Notwithstanding any other provision
12 of this title, if the receiver fails to satisfy any
13 such margin, collateral, or settlement obliga14
tions under the rules of the clearing organiza15
tion, the clearing organization shall have the
16 immediate right to exercise, and shall not be
17 stayed from exercising, all of its rights and
18 remedies under its rules and applicable law with
19 respect to any qualified financial contract of the
20 covered financial company, including, without
21 limitation, the right to liquidate all positions
22 and collateral of such covered financial com23
pany under the company’s qualified financial
24 contracts, and suspend or cease to act for such
300
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1 covered financial company, all in accordance
2 with the rules of the clearing organization.
3 (H) RECORDKEEPING.—
4 (i) JOINT RULEMAKING.—The Federal
5 primary financial regulatory agencies shall
6 jointly prescribe regulations requiring that
7 financial companies maintain such records
8 with respect to qualified financial contracts
9 (including market valuations) that the
10 Federal primary financial regulatory agen11
cies determine to be necessary or appro12
priate in order to assist the Corporation as
13 receiver for a covered financial company in
14 being able to exercise its rights and fulfill
15 its obligations under this paragraph or
16 paragraph (9) or (10).
17 (ii) TIME FRAME.—The Federal pri18
mary financial regulatory agencies shall
19 prescribe joint final or interim final regula20
tions not later than 24 months after the
21 date of enactment of this Act.
22 (iii) BACK-UP RULEMAKING AUTHOR23
ITY.—If the Federal primary financial reg24
ulatory agencies do not prescribe joint final
25 or interim final regulations within the time
301
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1 frame in clause (ii), the Chairperson of the
2 Council shall prescribe, in consultation
3 with the Corporation, the regulations re4
quired by clause (i).
5 (iv) CATEGORIZATION AND
6 TIERING.—The joint regulations prescribed
7 under clause (i) shall, as appropriate, dif8
ferentiate among financial companies by
9 taking into consideration their size, risk,
10 complexity, leverage, frequency and dollar
11 amount of qualified financial contracts,
12 interconnectedness to the financial system,
13 and any other factors deemed appropriate.
14 (9) TRANSFER OF QUALIFIED FINANCIAL CON15
TRACTS.—
16 (A) IN GENERAL.—In making any transfer
17 of assets or liabilities of a covered financial
18 company in default, which includes any quali19
fied financial contract, the Corporation as re20
ceiver for such covered financial company shall
21 either—
22 (i) transfer to one financial institu23
tion, other than a financial institution for
24 which a conservator, receiver, trustee in
25 bankruptcy, or other legal custodian has
302
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1 been appointed or which is otherwise the
2 subject of a bankruptcy or insolvency pro3
ceeding—
4 (I) all qualified financial con5
tracts between any person or any af6
filiate of such person and the covered
7 financial company in default;
8 (II) all claims of such person or
9 any affiliate of such person against
10 such covered financial company under
11 any such contract (other than any
12 claim which, under the terms of any
13 such contract, is subordinated to the
14 claims of general unsecured creditors
15 of such company);
16 (III) all claims of such covered fi17
nancial company against such person
18 or any affiliate of such person under
19 any such contract; and
20 (IV) all property securing or any
21 other credit enhancement for any con22
tract described in subclause (I) or any
23 claim described in subclause (II) or
24 (III) under any such contract; or
303
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1 (ii) transfer none of the qualified fi2
nancial contracts, claims, property or other
3 credit enhancement referred to in clause (i)
4 (with respect to such person and any affil5
iate of such person).
6 (B) TRANSFER TO FOREIGN BANK, FINAN7
CIAL INSTITUTION, OR BRANCH OR AGENCY
8 THEREOF.—In transferring any qualified finan9
cial contracts and related claims and property
10 under subparagraph (A)(i), the Corporation as
11 receiver for the covered financial company shall
12 not make such transfer to a foreign bank, fi13
nancial institution organized under the laws of
14 a foreign country, or a branch or agency of a
15 foreign bank or financial institution unless,
16 under the law applicable to such bank, financial
17 institution, branch or agency, to the qualified
18 financial contracts, and to any netting contract,
19 any security agreement or arrangement or other
20 credit enhancement related to one or more
21 qualified financial contracts, the contractual
22 rights of the parties to such qualified financial
23 contracts, netting contracts, security agree24
ments or arrangements, or other credit en304
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1 hancements are enforceable substantially to the
2 same extent as permitted under this section.
3 (C) TRANSFER OF CONTRACTS SUBJECT
4 TO THE RULES OF A CLEARING ORGANIZA5
TION.—In the event that the Corporation as re6
ceiver for a financial institution transfers any
7 qualified financial contract and related claims,
8 property, or credit enhancement pursuant to
9 subparagraph (A)(i) and such contract is
10 cleared by or subject to the rules of a clearing
11 organization, the clearing organization shall not
12 be required to accept the transferee as a mem13
ber by virtue of the transfer.
14 (D) DEFINITIONS.—For purposes of this
15 paragraph—
16 (i) the term ‘‘financial institution’’
17 means a broker or dealer, a depository in18
stitution, a futures commission merchant,
19 a bridge financial company, or any other
20 institution determined by the Corporation,
21 by regulation, to be a financial institution;
22 and
23 (ii) the term ‘‘clearing organization’’
24 has the same meaning as in section 402 of
305
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1 the Federal Deposit Insurance Corporation
2 Improvement Act of 1991.
3 (10) NOTIFICATION OF TRANSFER.—
4 (A) IN GENERAL.—
5 (i) NOTICE.—The Corporation shall
6 provide notice in accordance with clause
7 (ii), if—
8 (I) the Corporation as receiver
9 for a covered financial company in de10
fault or in danger of default transfers
11 any assets or liabilities of the covered
12 financial company; and
13 (II) the transfer includes any
14 qualified financial contract.
15 (ii) TIMING.—The Corporation as re16
ceiver for a covered financial company
17 shall notify any person who is a party to
18 any contract described in clause (i) of such
19 transfer not later than 5:00 p.m. (eastern
20 time) on the business day following the
21 date of the appointment of the Corporation
22 as receiver.
23 (B) CERTAIN RIGHTS NOT ENFORCE24
ABLE.—
306
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1 (i) RECEIVERSHIP.—A person who is
2 a party to a qualified financial contract
3 with a covered financial company may not
4 exercise any right that such person has to
5 terminate, liquidate, or net such contract
6 under paragraph (8)(A) solely by reason of
7 or incidental to the appointment under this
8 section of the Corporation as receiver for
9 the covered financial company (or the in10
solvency or financial condition of the cov11
ered financial company for which the Cor12
poration has been appointed as receiver)—
13 (I) until 5:00 p.m. (eastern time)
14 on the business day following the date
15 of the appointment; or
16 (II) after the person has received
17 notice that the contract has been
18 transferred pursuant to paragraph
19 (9)(A).
20 (ii) NOTICE.—For purposes of this
21 paragraph, the Corporation as receiver for
22 a covered financial company shall be
23 deemed to have notified a person who is a
24 party to a qualified financial contract with
25 such covered financial company, if the Cor307
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1 poration has taken steps reasonably cal2
culated to provide notice to such person by
3 the time specified in subparagraph (A).
4 (C) TREATMENT OF BRIDGE FINANCIAL
5 COMPANY.—For purposes of paragraph (9), a
6 bridge financial company shall not be consid7
ered to be a financial institution for which a
8 conservator, receiver, trustee in bankruptcy, or
9 other legal custodian has been appointed, or
10 which is otherwise the subject of a bankruptcy
11 or insolvency proceeding.
12 (D) BUSINESS DAY DEFINED.—For pur13
poses of this paragraph, the term ‘‘business
14 day’’ means any day other than any Saturday,
15 Sunday, or any day on which either the New
16 York Stock Exchange or the Federal Reserve
17 Bank of New York is closed.
18 (11) DISAFFIRMANCE OR REPUDIATION OF
19 QUALIFIED FINANCIAL CONTRACTS.—In exercising
20 the rights of disaffirmance or repudiation of the
21 Corporation as receiver with respect to any qualified
22 financial contract to which a covered financial com23
pany is a party, the Corporation shall either—
24 (A) disaffirm or repudiate all qualified fi25
nancial contracts between—
308
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1 (i) any person or any affiliate of such
2 person; and
3 (ii) the covered financial company in
4 default; or
5 (B) disaffirm or repudiate none of the
6 qualified financial contracts referred to in sub7
paragraph (A) (with respect to such person or
8 any affiliate of such person).
9 (12) CERTAIN SECURITY AND CUSTOMER IN10
TERESTS NOT AVOIDABLE.—No provision of this
11 subsection shall be construed as permitting the
12 avoidance of any—
13 (A) legally enforceable or perfected secu14
rity interest in any of the assets of any covered
15 financial company, except in accordance with
16 subsection (a)(11); or
17 (B) legally enforceable interest in customer
18 property, security entitlements in respect of as19
sets or property held by the covered financial
20 company for any security entitlement holder.
21 (13) AUTHORITY TO ENFORCE CONTRACTS.—
22 (A) IN GENERAL.—The Corporation, as re23
ceiver for a covered financial company, may en24
force any contract, other than a liability insur25
ance contract of a director or officer, a financial
309
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1 institution bond entered into by the covered fi2
nancial company, notwithstanding any provision
3 of the contract providing for termination, de4
fault, acceleration, or exercise of rights upon, or
5 solely by reason of, insolvency, the appointment
6 of or the exercise of rights or powers by the
7 Corporation as receiver, the filing of the peti8
tion pursuant to section 202(a)(1), or the
9 issuance of the recommendations or determina10
tion, or any actions or events occurring in con11
nection therewith or as a result thereof, pursu12
ant to section 203.
13 (B) CERTAIN RIGHTS NOT AFFECTED.—
14 No provision of this paragraph may be con15
strued as impairing or affecting any right of the
16 Corporation as receiver to enforce or recover
17 under a liability insurance contract of a director
18 or officer or financial institution bond under
19 other applicable law.
20 (C) CONSENT REQUIREMENT AND IPSO
21 FACTO CLAUSES.—
22 (i) IN GENERAL.—Except as otherwise
23 provided by this section, no person may ex24
ercise any right or power to terminate, ac25
celerate, or declare a default under any
310
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1 contract to which the covered financial
2 company is a party (and no provision in
3 any such contract providing for such de4
fault, termination, or acceleration shall be
5 enforceable), or to obtain possession of or
6 exercise control over any property of the
7 covered financial company or affect any
8 contractual rights of the covered financial
9 company, without the consent of the Cor10
poration as receiver for the covered finan11
cial company during the 90 day period be12
ginning from the appointment of the Cor13
poration as receiver.
14 (ii) EXCEPTIONS.—No provision of
15 this subparagraph shall apply to a director
16 or officer liability insurance contract or a
17 financial institution bond, to the rights of
18 parties to certain qualified financial con19
tracts pursuant to paragraph (8), or to the
20 rights of parties to netting contracts pur21
suant to subtitle A of title IV of the Fed22
eral Deposit Insurance Corporation Im23
provement Act of 1991 (12 U.S.C. 4401 et
24 seq.), or shall be construed as permitting
25 the Corporation as receiver to fail to com311
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1 ply with otherwise enforceable provisions of
2 such contract.
3 (D) CONTRACTS TO EXTEND CREDIT.—
4 Notwithstanding any other provision in this
5 title, if the Corporation as receiver enforces any
6 contract to extend credit to the covered finan7
cial company or bridge financial company, any
8 valid and enforceable obligation to repay such
9 debt shall be paid by the Corporation as re10
ceiver, as an administrative expense of the re11
ceivership.
12 (14) EXCEPTION FOR FEDERAL RESERVE
13 BANKS AND CORPORATION SECURITY INTEREST.—
14 No provision of this subsection shall apply with re15
spect to—
16 (A) any extension of credit from any Fed17
eral reserve bank or the Corporation to any cov18
ered financial company; or
19 (B) any security interest in the assets of
20 the covered financial company securing any
21 such extension of credit.
22 (15) SAVINGS CLAUSE.—The meanings of terms
23 used in this subsection are applicable for purposes of
24 this subsection only, and shall not be construed or
25 applied so as to challenge or affect the characteriza312
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1 tion, definition, or treatment of any similar terms
2 under any other statute, regulation, or rule, includ3
ing the Gramm-Leach-Bliley Act, the Legal Cer4
tainty for Bank Products Act of 2000, the securities
5 laws (as that term is defined in section 3(a)(47) of
6 the Securities Exchange Act of 1934), and the Com7
modity Exchange Act.
8 (16) ENFORCEMENT OF CONTRACTS GUARAN9
TEED BY THE COVERED FINANCIAL COMPANY.—
10 (A) IN GENERAL.—The Corporation, as re11
ceiver for a covered financial company or as re12
ceiver for a subsidiary of a covered financial
13 company (including an insured depository insti14
tution) shall have the power to enforce con15
tracts of subsidiaries or affiliates of the covered
16 financial company, the obligations under which
17 are guaranteed or otherwise supported by or
18 linked to the covered financial company, not19
withstanding any contractual right to cause the
20 termination, liquidation, or acceleration of such
21 contracts based solely on the insolvency, finan22
cial condition, or receivership of the covered fi23
nancial company, if—
24 (i) such guaranty or other support
25 and all related assets and liabilities are
313
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1 transferred to and assumed by a bridge fi2
nancial company or a third party (other
3 than a third party for which a conservator,
4 receiver, trustee in bankruptcy, or other
5 legal custodian has been appointed, or
6 which is otherwise the subject of a bank7
ruptcy or insolvency proceeding) within the
8 same period of time as the Corporation is
9 entitled to transfer the qualified financial
10 contracts of such covered financial com11
pany; or
12 (ii) the Corporation, as receiver, oth13
erwise provides adequate protection with
14 respect to such obligations.
15 (B) RULE OF CONSTRUCTION.—For pur16
poses of this paragraph, a bridge financial com17
pany shall not be considered to be a third party
18 for which a conservator, receiver, trustee in
19 bankruptcy, or other legal custodian has been
20 appointed, or which is otherwise the subject of
21 a bankruptcy or insolvency proceeding.
22 (d) VALUATION OF CLAIMS IN DEFAULT.—
23 (1) IN GENERAL.—Notwithstanding any other
24 provision of Federal law or the law of any State, and
25 regardless of the method utilized by the Corporation
314
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1 for a covered financial company, including trans2
actions authorized under subsection (h), this sub3
section shall govern the rights of the creditors of any
4 such covered financial company.
5 (2) MAXIMUM LIABILITY.—The maximum li6
ability of the Corporation, acting as receiver for a
7 covered financial company or in any other capacity,
8 to any person having a claim against the Corpora9
tion as receiver or the covered financial company for
10 which the Corporation is appointed shall equal the
11 amount that such claimant would have received if—
12 (A) the Corporation had not been ap13
pointed receiver with respect to the covered fi14
nancial company; and
15 (B) the covered financial company had
16 been liquidated under chapter 7 of the Bank17
ruptcy Code, or any similar provision of State
18 insolvency law applicable to the covered finan19
cial company.
20 (3) SPECIAL PROVISION FOR ORDERLY LIQ21
UIDATION BY SIPC.—The maximum liability of the
22 Corporation, acting as receiver or in its corporate
23 capacity for any covered broker or dealer to any cus24
tomer of such covered broker or dealer, with respect
25 to customer property of such customer, shall be—
315
O:AYOAYO10H27.xml [file 2 of 17] S.L.C
1 (A) equal to the amount that such cus2
tomer would have received with respect to such
3 customer property in a case initiated by SIPC
4 under the Securities Investor Protection Act of
5 1970 (15 U.S.C. 78aaa et seq.); and
6 (B) determined as of the close of business
7 on the date on which the Corporation is ap8
pointed as receiver.
9 (4) ADDITIONAL PAYMENTS AUTHORIZED.—
10 (A) IN GENERAL.—Subject to subsection
11 (o)(1)(D)(i), the Corporation, with the approval
12 of the Secretary, may make additional pay13
ments or credit additional amounts to or with
14 respect to or for the account of any claimant or
15 category of claimants of the covered financial
16 company, if the Corporation determines that
17 such payments or credits are necessary or ap18
propriate to minimize losses to the Corporation
19 as receiver from the orderly liquidation of the
20 covered financial company under this section.
21 (B) LIMITATIONS.—
22 (i) PROHIBITION.—The Corporation
23 shall not make any payments or credit
24 amounts to any claimant or category of
25 claimants that would result in any claim316
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1 ant receiving more than the face value
2 amount of any claim that is proven to the
3 satisfaction of the Corporation.
4 (ii) NO OBLIGATION.—Notwith5
standing any other provision of Federal or
6 State law, or the Constitution of any State,
7 the Corporation shall not be obligated, as
8 a result of having made any payment
9 under subparagraph (A) or credited any
10 amount described in subparagraph (A) to
11 or with respect to, or for the account, of
12 any claimant or category of claimants, to
13 make payments to any other claimant or
14 category of claimants.
15 (C) MANNER OF PAYMENT.—The Corpora16
tion may make payments or credit amounts
17 under subparagraph (A) directly to the claim18
ants or may make such payments or credit such
19 amounts to a company other than a covered fi20
nancial company or a bridge financial company
21 established with respect thereto in order to in22
duce such other company to accept liability for
23 such claims.
24 (e) LIMITATION ON COURT ACTION.—Except as pro25
vided in this title, no court may take any action to restrain
317
O:AYOAYO10H27.xml [file 2 of 17] S.L.C
1 or affect the exercise of powers or functions of the receiver
2 hereunder, and any remedy against the Corporation or re3
ceiver shall be limited to money damages determined in
4 accordance with this title.
5 (f) LIABILITY OF DIRECTORS AND OFFICERS.—
6 (1) IN GENERAL.—A director or officer of a
7 covered financial company may be held personally
8 liable for monetary damages in any civil action de9
scribed in paragraph (2) by, on behalf of, or at the
10 request or direction of the Corporation, which action
11 is prosecuted wholly or partially for the benefit of
12 the Corporation—
13 (A) acting as receiver for such covered fi14
nancial company;
15 (B) acting based upon a suit, claim, or
16 cause of action purchased from, assigned by, or
17 otherwise conveyed by the Corporation as re18
ceiver; or
19 (C) acting based upon a suit, claim, or
20 cause of action purchased from, assigned by, or
21 otherwise conveyed in whole or in part by a cov22
ered financial company or its affiliate in con23
nection with assistance provided under this
24 title.
318
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1 (2) ACTIONS COVERED.—Paragraph (1) shall
2 apply with respect to actions for gross negligence,
3 including any similar conduct or conduct that dem4
onstrates a greater disregard of a duty of care (than
5 gross negligence) including intentional tortious con6
duct, as such terms are defined and determined
7 under applicable State law.
8 (3) SAVINGS CLAUSE.—Nothing in this sub9
section shall impair or affect any right of the Cor10
poration under other applicable law.
11 (g) DAMAGES.—In any proceeding related to any
12 claim against a director, officer, employee, agent, attorney,
13 accountant, or appraiser of a covered financial company,
14 or any other party employed by or providing services to
15 a covered financial company, recoverable damages deter16
mined to result from the improvident or otherwise im17
proper use or investment of any assets of the covered fi18
nancial company shall include principal losses and appro19
priate interest.
20 (h) BRIDGE FINANCIAL COMPANIES.—
21 (1) ORGANIZATION.—
22 (A) PURPOSE.—The Corporation, as re23
ceiver for one or more covered financial compa24
nies or in anticipation of being appointed re25
ceiver for one or more covered financial compa319
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1 nies, may organize one or more bridge financial
2 companies in accordance with this subsection.
3 (B) AUTHORITIES.—Upon the creation of
4 a bridge financial company under subparagraph
5 (A) with respect to a covered financial com6
pany, such bridge financial company may—
7 (i) assume such liabilities (including
8 liabilities associated with any trust or cus9
tody business, but excluding any liabilities
10 that count as regulatory capital) of such
11 covered financial company as the Corpora12
tion may, in its discretion, determine to be
13 appropriate;
14 (ii) purchase such assets (including
15 assets associated with any trust or custody
16 business) of such covered financial com17
pany as the Corporation may, in its discre18
tion, determine to be appropriate; and
19 (iii) perform any other temporary
20 function which the Corporation may, in its
21 discretion, prescribe in accordance with
22 this section.
23 (2) CHARTER AND ESTABLISHMENT.—
24 (A) ESTABLISHMENT.—Except as provided
25 in subparagraph (H), where the covered finan320
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1 cial company is a covered broker or dealer, the
2 Corporation, as receiver for a covered financial
3 company, may grant a Federal charter to and
4 approve articles of association for one or more
5 bridge financial company or companies, with re6
spect to such covered financial company which
7 shall, by operation of law and immediately upon
8 issuance of its charter and approval of its arti9
cles of association, be established and operate
10 in accordance with, and subject to, such char11
ter, articles, and this section.
12 (B) MANAGEMENT.—Upon its establish13
ment, a bridge financial company shall be under
14 the management of a board of directors ap15
pointed by the Corporation.
16 (C) ARTICLES OF ASSOCIATION.—The arti17
cles of association and organization certificate
18 of a bridge financial company shall have such
19 terms as the Corporation may provide, and
20 shall be executed by such representatives as the
21 Corporation may designate.
22 (D) TERMS OF CHARTER; RIGHTS AND
23 PRIVILEGES.—Subject to and in accordance
24 with the provisions of this subsection, the Cor25
poration shall—
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1 (i) establish the terms of the charter
2 of a bridge financial company and the
3 rights, powers, authorities, and privileges
4 of a bridge financial company granted by
5 the charter or as an incident thereto; and
6 (ii) provide for, and establish the
7 terms and conditions governing, the man8
agement (including the bylaws and the
9 number of directors of the board of direc10
tors) and operations of the bridge financial
11 company.
12 (E) TRANSFER OF RIGHTS AND PRIVI13
LEGES OF COVERED FINANCIAL COMPANY.—
14 (i) IN GENERAL.—Notwithstanding
15 any other provision of Federal or State
16 law, the Corporation may provide for a
17 bridge financial company to succeed to and
18 assume any rights, powers, authorities, or
19 privileges of the covered financial company
20 with respect to which the bridge financial
21 company was established and, upon such
22 determination by the Corporation, the
23 bridge financial company shall immediately
24 and by operation of law succeed to and as322
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1 sume such rights, powers, authorities, and
2 privileges.
3 (ii) EFFECTIVE WITHOUT AP4
PROVAL.—Any succession to or assumption
5 by a bridge financial company of rights,
6 powers, authorities, or privileges of a cov7
ered financial company under clause (i) or
8 otherwise shall be effective without any
9 further approval under Federal or State
10 law, assignment, or consent with respect
11 thereto.
12 (F) CORPORATE GOVERNANCE AND ELEC13
TION AND DESIGNATION OF BODY OF LAW.—To
14 the extent permitted by the Corporation and
15 consistent with this section and any rules, regu16
lations, or directives issued by the Corporation
17 under this section, a bridge financial company
18 may elect to follow the corporate governance
19 practices and procedures that are applicable to
20 a corporation incorporated under the general
21 corporation law of the State of Delaware, or the
22 State of incorporation or organization of the
23 covered financial company with respect to which
24 the bridge financial company was established,
25 as such law may be amended from time to time.
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1 (G) CAPITAL.—
2 (i) CAPITAL NOT REQUIRED.—Not3
withstanding any other provision of Fed4
eral or State law, a bridge financial com5
pany may, if permitted by the Corporation,
6 operate without any capital or surplus, or
7 with such capital or surplus as the Cor8
poration may in its discretion determine to
9 be appropriate.
10 (ii) NO CONTRIBUTION BY THE COR11
PORATION REQUIRED.—The Corporation is
12 not required to pay capital into a bridge fi13
nancial company or to issue any capital
14 stock on behalf of a bridge financial com15
pany established under this subsection.
16 (iii) AUTHORITY.—If the Corporation
17 determines that such action is advisable,
18 the Corporation may cause capital stock or
19 other securities of a bridge financial com20
pany established with respect to a covered
21 financial company to be issued and offered
22 for sale in such amounts and on such
23 terms and conditions as the Corporation
24 may, in its discretion, determine.
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1 (iv) OPERATING FUNDS IN LIEU OF
2 CAPITAL AND IMPLEMENTATION PLAN.—
3 Upon the organization of a bridge financial
4 company, and thereafter as the Corpora5
tion may, in its discretion, determine to be
6 necessary or advisable, the Corporation
7 may make available to the bridge financial
8 company, subject to the plan described in
9 subsection (n)(9), funds for the operation
10 of the bridge financial company in lieu of
11 capital.
12 (H) BRIDGE BROKERS OR DEALERS.—
13 (i) IN GENERAL.—The Corporation,
14 as receiver for a covered broker or dealer,
15 may approve articles of association for one
16 or more bridge financial companies with
17 respect to such covered broker or dealer,
18 which bridge financial company or compa19
nies shall, by operation of law and imme20
diately upon approval of its articles of as21
sociation—
22 (I) be established and deemed
23 registered with the Commission under
24 the Securities Exchange Act of 1934
25 and a member of SIPC;
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1 (II) operate in accordance with
2 such articles and this section; and
3 (III) succeed to any and all reg4
istrations and memberships of the
5 covered financial company with or in
6 any self-regulatory organizations.
7 (ii) OTHER REQUIREMENTS.—Except
8 as provided in clause (i), and notwith9
standing any other provision of this sec10
tion, the bridge financial company shall be
11 subject to the Federal securities laws and
12 all requirements with respect to being a
13 member of a self-regulatory organization,
14 unless exempted from any such require15
ments by the Commission, as is necessary
16 or appropriate in the public interest or for
17 the protection of investors.
18 (iii) TREATMENT OF CUSTOMERS.—
19 Except as otherwise provided by this title,
20 any customer of the covered broker or
21 dealer whose account is transferred to a
22 bridge financial company shall have all the
23 rights, privileges, and protections under
24 section 205(f) and under the Securities In25
vestor Protection Act of 1970 (15 U.S.C.
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1 78aaa et seq.), that such customer would
2 have had if the account were not trans3
ferred from the covered financial company
4 under this subparagraph.
5 (iv) OPERATION OF BRIDGE BROKERS
6 OR DEALERS.—Notwithstanding any other
7 provision of this title, the Corporation shall
8 not operate any bridge financial company
9 created by the Corporation under this title
10 with respect to a covered broker or dealer
11 in such a manner as to adversely affect the
12 ability of customers to promptly access
13 their customer property in accordance with
14 applicable law.
15 (3) INTERESTS IN AND ASSETS AND OBLIGA16
TIONS OF COVERED FINANCIAL COMPANY.—Notwith17
standing paragraph (1) or (2) or any other provision
18 of law—
19 (A) a bridge financial company shall as20
sume, acquire, or succeed to the assets or liabil21
ities of a covered financial company (including
22 the assets or liabilities associated with any trust
23 or custody business) only to the extent that
24 such assets or liabilities are transferred by the
25 Corporation to the bridge financial company in
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1 accordance with, and subject to the restrictions
2 set forth in, paragraph (1)(B); and
3 (B) a bridge financial company shall not
4 assume, acquire, or succeed to any obligation
5 that a covered financial company for which the
6 Corporation has been appointed receiver may
7 have to any shareholder, member, general part8
ner, limited partner, or other person with an in9
terest in the equity of the covered financial
10 company that arises as a result of the status of
11 that person having an equity claim in the cov12
ered financial company.
13 (4) BRIDGE FINANCIAL COMPANY TREATED AS
14 BEING IN DEFAULT FOR CERTAIN PURPOSES.—A
15 bridge financial company shall be treated as a cov16
ered financial company in default at such times and
17 for such purposes as the Corporation may, in its dis18
cretion, determine.
19 (5) TRANSFER OF ASSETS AND LIABILITIES.—
20 (A) AUTHORITY OF CORPORATION.—The
21 Corporation, as receiver for a covered financial
22 company, may transfer any assets and liabilities
23 of a covered financial company (including any
24 assets or liabilities associated with any trust or
25 custody business) to one or more bridge finan328
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1 cial companies, in accordance with and subject
2 to the restrictions of paragraph (1).
3 (B) SUBSEQUENT TRANSFERS.—At any
4 time after the establishment of a bridge finan5
cial company with respect to a covered financial
6 company, the Corporation, as receiver, may
7 transfer any assets and liabilities of such cov8
ered financial company as the Corporation may,
9 in its discretion, determine to be appropriate in
10 accordance with and subject to the restrictions
11 of paragraph (1).
12 (C) TREATMENT OF TRUST OR CUSTODY
13 BUSINESS.—For purposes of this paragraph,
14 the trust or custody business, including fidu15
ciary appointments, held by any covered finan16
cial company is included among its assets and
17 liabilities.
18 (D) EFFECTIVE WITHOUT APPROVAL.—
19 The transfer of any assets or liabilities, includ20
ing those associated with any trust or custody
21 business of a covered financial company, to a
22 bridge financial company shall be effective with23
out any further approval under Federal or
24 State law, assignment, or consent with respect
25 thereto.
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1 (E) EQUITABLE TREATMENT OF SIMI2
LARLY SITUATED CREDITORS.—The Corpora3
tion shall treat all creditors of a covered finan4
cial company that are similarly situated under
5 subsection (b)(1), in a similar manner in exer6
cising the authority of the Corporation under
7 this subsection to transfer any assets or liabil8
ities of the covered financial company to one or
9 more bridge financial companies established
10 with respect to such covered financial company,
11 except that the Corporation may take any ac12
tion (including making payments, subject to
13 subsection (o)(1)(D)(i)) that does not comply
14 with this subparagraph, if—
15 (i) the Corporation determines that
16 such action is necessary—
17 (I) to maximize the value of the
18 assets of the covered financial com19
pany;
20 (II) to maximize the present
21 value return from the sale or other
22 disposition of the assets of the covered
23 financial company; or
24 (III) to minimize the amount of
25 any loss realized upon the sale or
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1 other disposition of the assets of the
2 covered financial company; and
3 (ii) all creditors that are similarly sit4
uated under subsection (b)(1) receive not
5 less than the amount provided under para6
graphs (2) and (3) of subsection (d).
7 (F) LIMITATION ON TRANSFER OF LIABIL8
ITIES.—Notwithstanding any other provision of
9 law, the aggregate amount of liabilities of a cov10
ered financial company that are transferred to,
11 or assumed by, a bridge financial company from
12 a covered financial company may not exceed the
13 aggregate amount of the assets of the covered
14 financial company that are transferred to, or
15 purchased by, the bridge financial company
16 from the covered financial company.
17 (6) STAY OF JUDICIAL ACTION.—Any judicial
18 action to which a bridge financial company becomes
19 a party by virtue of its acquisition of any assets or
20 assumption of any liabilities of a covered financial
21 company shall be stayed from further proceedings
22 for a period of not longer than 45 days (or such
23 longer period as may be agreed to upon the consent
24 of all parties) at the request of the bridge financial
25 company.
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1 (7) AGREEMENTS AGAINST INTEREST OF THE
2 BRIDGE FINANCIAL COMPANY.—No agreement that
3 tends to diminish or defeat the interest of the bridge
4 financial company in any asset of a covered financial
5 company acquired by the bridge financial company
6 shall be valid against the bridge financial company,
7 unless such agreement—
8 (A) is in writing;
9 (B) was executed by an authorized officer
10 or representative of the covered financial com11
pany or confirmed in the ordinary course of
12 business by the covered financial company; and
13 (C) has been on the official record of the
14 company, since the time of its execution, or
15 with which, the party claiming under the agree16
ment provides documentation of such agreement
17 and its authorized execution or confirmation by
18 the covered financial company that is acceptable
19 to the receiver.
20 (8) NO FEDERAL STATUS.—
21 (A) AGENCY STATUS.—A bridge financial
22 company is not an agency, establishment, or in23
strumentality of the United States.
24 (B) EMPLOYEE STATUS.—Representatives
25 for purposes of paragraph (1)(B), directors, of332
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1 ficers, employees, or agents of a bridge financial
2 company are not, solely by virtue of service in
3 any such capacity, officers or employees of the
4 United States. Any employee of the Corporation
5 or of any Federal instrumentality who serves at
6 the request of the Corporation as a representa7
tive for purposes of paragraph (1)(B), director,
8 officer, employee, or agent of a bridge financial
9 company shall not—
10 (i) solely by virtue of service in any
11 such capacity lose any existing status as
12 an officer or employee of the United States
13 for purposes of title 5, United States Code,
14 or any other provision of law; or
15 (ii) receive any salary or benefits for
16 service in any such capacity with respect to
17 a bridge financial company in addition to
18 such salary or benefits as are obtained
19 through employment with the Corporation
20 or such Federal instrumentality.
21 (9) FUNDING AUTHORIZED.—The Corporation
22 may, subject to the plan described in subsection
23 (n)(9), provide funding to facilitate any transaction
24 described in subparagraph (A), (B), (C), or (D) of
25 paragraph (13) with respect to any bridge financial
333
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1 company, or facilitate the acquisition by a bridge fi2
nancial company of any assets, or the assumption of
3 any liabilities, of a covered financial company for
4 which the Corporation has been appointed receiver.
5 (10) EXEMPT TAX STATUS.—Notwithstanding
6 any other provision of Federal or State law, a bridge
7 financial company, its franchise, property, and in8
come shall be exempt from all taxation now or here9
after imposed by the United States, by any territory,
10 dependency, or possession thereof, or by any State,
11 county, municipality, or local taxing authority.
12 (11) FEDERAL AGENCY APPROVAL; ANTITRUST
13 REVIEW.—If a transaction involving the merger or
14 sale of a bridge financial company requires approval
15 by a Federal agency, the transaction may not be
16 consummated before the 5th calendar day after the
17 date of approval by the Federal agency responsible
18 for such approval with respect thereto. If, in connec19
tion with any such approval a report on competitive
20 factors from the Attorney General is required, the
21 Federal agency responsible for such approval shall
22 promptly notify the Attorney General of the pro23
posed transaction and the Attorney General shall
24 provide the required report within 10 days of the re25
quest. If a notification is required under section 7A
334
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1 of the Clayton Act with respect to such transaction,
2 the required waiting period shall end on the 15th
3 day after the date on which the Attorney General
4 and the Federal Trade Commission receive such no5
tification, unless the waiting period is terminated
6 earlier under section 7A(b)(2) of the Clayton Act, or
7 extended under section 7A(e)(2) of that Act.
8 (12) DURATION OF BRIDGE FINANCIAL COM9
PANY.—Subject to paragraphs (13) and (14), the
10 status of a bridge financial company as such shall
11 terminate at the end of the 2-year period following
12 the date on which it was granted a charter. The
13 Corporation may, in its discretion, extend the status
14 of the bridge financial company as such for no more
15 than 3 additional 1-year periods.
16 (13) TERMINATION OF BRIDGE FINANCIAL COM17
PANY STATUS.—The status of any bridge financial
18 company as such shall terminate upon the earliest
19 of—
20 (A) the date of the merger or consolidation
21 of the bridge financial company with a company
22 that is not a bridge financial company;
23 (B) at the election of the Corporation, the
24 sale of a majority of the capital stock of the
25 bridge financial company to a company other
335
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1 than the Corporation and other than another
2 bridge financial company;
3 (C) the sale of 80 percent, or more, of the
4 capital stock of the bridge financial company to
5 a person other than the Corporation and other
6 than another bridge financial company;
7 (D) at the election of the Corporation, ei8
ther the assumption of all or substantially all of
9 the liabilities of the bridge financial company by
10 a company that is not a bridge financial com11
pany, or the acquisition of all or substantially
12 all of the assets of the bridge financial company
13 by a company that is not a bridge financial
14 company, or other entity as permitted under
15 applicable law; and
16 (E) the expiration of the period provided in
17 paragraph (12), or the earlier dissolution of the
18 bridge financial company, as provided in para19
graph (15).
20 (14) EFFECT OF TERMINATION EVENTS.—
21 (A) MERGER OR CONSOLIDATION.—A
22 merger or consolidation, described in paragraph
23 (13)(A) shall be conducted in accordance with,
24 and shall have the effect provided in, the provi25
sions of applicable law. For the purpose of ef336
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1 fecting such a merger or consolidation, the
2 bridge financial company shall be treated as a
3 corporation organized under the laws of the
4 State of Delaware (unless the law of another
5 State has been selected by the bridge financial
6 company in accordance with paragraph (2)(F)),
7 and the Corporation shall be treated as the sole
8 shareholder thereof, notwithstanding any other
9 provision of State or Federal law.
10 (B) CHARTER CONVERSION.—Following
11 the sale of a majority of the capital stock of the
12 bridge financial company, as provided in para13
graph (13)(B), the Corporation may amend the
14 charter of the bridge financial company to re15
flect the termination of the status of the bridge
16 financial company as such, whereupon the com17
pany shall have all of the rights, powers, and
18 privileges under its constituent documents and
19 applicable Federal or State law. In connection
20 therewith, the Corporation may take such steps
21 as may be necessary or convenient to reincor22
porate the bridge financial company under the
23 laws of a State and, notwithstanding any provi24
sions of Federal or State law, such State-char25
tered corporation shall be deemed to succeed by
337
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1 operation of law to such rights, titles, powers,
2 and interests of the bridge financial company as
3 the Corporation may provide, with the same ef4
fect as if the bridge financial company had
5 merged with the State-chartered corporation
6 under provisions of the corporate laws of such
7 State.
8 (C) SALE OF STOCK.—Following the sale
9 of 80 percent or more of the capital stock of a
10 bridge financial company, as provided in para11
graph (13)(C), the company shall have all of
12 the rights, powers, and privileges under its con13
stituent documents and applicable Federal or
14 State law. In connection therewith, the Cor15
poration may take such steps as may be nec16
essary or convenient to reincorporate the bridge
17 financial company under the laws of a State
18 and, notwithstanding any provisions of Federal
19 or State law, the State-chartered corporation
20 shall be deemed to succeed by operation of law
21 to such rights, titles, powers and interests of
22 the bridge financial company as the Corpora23
tion may provide, with the same effect as if the
24 bridge financial company had merged with the
338
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1 State-chartered corporation under provisions of
2 the corporate laws of such State.
3 (D) ASSUMPTION OF LIABILITIES AND
4 SALE OF ASSETS.—Following the assumption of
5 all or substantially all of the liabilities of the
6 bridge financial company, or the sale of all or
7 substantially all of the assets of the bridge fi8
nancial company, as provided in paragraph
9 (13)(D), at the election of the Corporation, the
10 bridge financial company may retain its status
11 as such for the period provided in paragraph
12 (12) or may be dissolved at the election of the
13 Corporation.
14 (E) AMENDMENTS TO CHARTER.—Fol15
lowing the consummation of a transaction de16
scribed in subparagraph (A), (B), (C), or (D)
17 of paragraph (13), the charter of the resulting
18 company shall be amended to reflect the termi19
nation of bridge financial company status, if ap20
propriate.
21 (15) DISSOLUTION OF BRIDGE FINANCIAL COM22
PANY.—
23 (A) IN GENERAL.—Notwithstanding any
24 other provision of Federal or State law, if the
25 status of a bridge financial company as such
339
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1 has not previously been terminated by the oc2
currence of an event specified in subparagraph
3 (A), (B), (C), or (D) of paragraph (13)—
4 (i) the Corporation may, in its discre5
tion, dissolve the bridge financial company
6 in accordance with this paragraph at any
7 time; and
8 (ii) the Corporation shall promptly
9 commence dissolution proceedings in ac10
cordance with this paragraph upon the ex11
piration of the 2-year period following the
12 date on which the bridge financial com13
pany was chartered, or any extension
14 thereof, as provided in paragraph (12).
15 (B) PROCEDURES.—The Corporation shall
16 remain the receiver for a bridge financial com17
pany for the purpose of dissolving the bridge fi18
nancial company. The Corporation as receiver
19 for a bridge financial company shall wind up
20 the affairs of the bridge financial company in
21 conformity with the provisions of law relating to
22 the liquidation of covered financial companies
23 under this title. With respect to any such bridge
24 financial company, the Corporation as receiver
25 shall have all the rights, powers, and privileges
340
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1 and shall perform the duties related to the exer2
cise of such rights, powers, or privileges granted
3 by law to the Corporation as receiver for a cov4
ered financial company under this title and,
5 notwithstanding any other provision of law, in
6 the exercise of such rights, powers, and privi7
leges, the Corporation shall not be subject to
8 the direction or supervision of any State agency
9 or other Federal agency.
10 (16) AUTHORITY TO OBTAIN CREDIT.—
11 (A) IN GENERAL.—A bridge financial com12
pany may obtain unsecured credit and issue un13
secured debt.
14 (B) INABILITY TO OBTAIN CREDIT.—If a
15 bridge financial company is unable to obtain
16 unsecured credit or issue unsecured debt, the
17 Corporation may authorize the obtaining of
18 credit or the issuance of debt by the bridge fi19
nancial company—
20 (i) with priority over any or all of the
21 obligations of the bridge financial com22
pany;
23 (ii) secured by a lien on property of
24 the bridge financial company that is not
25 otherwise subject to a lien; or
341
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1 (iii) secured by a junior lien on prop2
erty of the bridge financial company that
3 is subject to a lien.
4 (C) LIMITATIONS.—
5 (i) IN GENERAL.—The Corporation,
6 after notice and a hearing, may authorize
7 the obtaining of credit or the issuance of
8 debt by a bridge financial company that is
9 secured by a senior or equal lien on prop10
erty of the bridge financial company that
11 is subject to a lien, only if—
12 (I) the bridge financial company
13 is unable to otherwise obtain such
14 credit or issue such debt; and
15 (II) there is adequate protection
16 of the interest of the holder of the lien
17 on the property with respect to which
18 such senior or equal lien is proposed
19 to be granted.
20 (ii) HEARING.—The hearing required
21 pursuant to this subparagraph shall be be22
fore a court of the United States, which
23 shall have jurisdiction to conduct such
24 hearing and to authorize a bridge financial
342
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1 company to obtain secured credit under
2 clause (i).
3 (D) BURDEN OF PROOF.—In any hearing
4 under this paragraph, the Corporation has the
5 burden of proof on the issue of adequate protec6
tion.
7 (E) QUALIFIED FINANCIAL CONTRACTS.—
8 No credit or debt obtained or issued by a bridge
9 financial company may contain terms that im10
pair the rights of a counterparty to a qualified
11 financial contract upon a default by the bridge
12 financial company, other than the priority of
13 such counterparty’s unsecured claim (after the
14 exercise of rights) relative to the priority of the
15 bridge financial company’s obligations in re16
spect of such credit or debt, unless such
17 counterparty consents in writing to any such
18 impairment.
19 (17) EFFECT ON DEBTS AND LIENS.—The re20
versal or modification on appeal of an authorization
21 under this subsection to obtain credit or issue debt,
22 or of a grant under this section of a priority or a
23 lien, does not affect the validity of any debt so
24 issued, or any priority or lien so granted, to an enti25
ty that extended such credit in good faith, whether
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1 or not such entity knew of the pendency of the ap2
peal, unless such authorization and the issuance of
3 such debt, or the granting of such priority or lien,
4 were stayed pending appeal.
5 (i) SHARING RECORDS.—If the Corporation has been
6 appointed as receiver for a covered financial company,
7 other Federal regulators shall make all records relating
8 to the covered financial company available to the Corpora9
tion, which may be used by the Corporation in any manner
10 that the Corporation determines to be appropriate.
11 (j) EXPEDITED PROCEDURES FOR CERTAIN
12 CLAIMS.—
13 (1) TIME FOR FILING NOTICE OF APPEAL.—
14 The notice of appeal of any order, whether interlocu15
tory or final, entered in any case brought by the
16 Corporation against a director, officer, employee,
17 agent, attorney, accountant, or appraiser of the cov18
ered financial company, or any other person em19
ployed by or providing services to a covered financial
20 company, shall be filed not later than 30 days after
21 the date of entry of the order. The hearing of the
22 appeal shall be held not later than 120 days after
23 the date of the notice of appeal. The appeal shall be
24 decided not later than 180 days after the date of the
25 notice of appeal.
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1 (2) SCHEDULING.—The court shall expedite the
2 consideration of any case brought by the Corpora3
tion against a director, officer, employee, agent, at4
torney, accountant, or appraiser of a covered finan5
cial company or any other person employed by or
6 providing services to a covered financial company.
7 As far as practicable, the court shall give such case
8 priority on its docket.
9 (3) JUDICIAL DISCRETION.—The court may
10 modify the schedule and limitations stated in para11
graphs (1) and (2) in a particular case, based on a
12 specific finding that the ends of justice that would
13 be served by making such a modification would out14
weigh the best interest of the public in having the
15 case resolved expeditiously.
16 (k) FOREIGN INVESTIGATIONS.—The Corporation, as
17 receiver for any covered financial company, and for pur18
poses of carrying out any power, authority, or duty with
19 respect to a covered financial company—
20 (1) may request the assistance of any foreign fi21
nancial authority and provide assistance to any for22
eign financial authority in accordance with section
23 8(v) of the Federal Deposit Insurance Act, as if the
24 covered financial company were an insured deposi25
tory institution, the Corporation were the appro345
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1 priate Federal banking agency for the company, and
2 any foreign financial authority were the foreign
3 banking authority; and
4 (2) may maintain an office to coordinate for5
eign investigations or investigations on behalf of for6
eign financial authorities.
7 (l) PROHIBITION ON ENTERING SECRECY AGREE8
MENTS AND PROTECTIVE ORDERS.—The Corporation
9 may not enter into any agreement or approve any protec10
tive order which prohibits the Corporation from disclosing
11 the terms of any settlement of an administrative or other
12 action for damages or restitution brought by the Corpora13
tion in its capacity as receiver for a covered financial com14
pany.
15 (m) LIQUIDATION OF CERTAIN COVERED FINANCIAL
16 COMPANIES OR BRIDGE FINANCIAL COMPANIES.—
17 (1) IN GENERAL.—Except as specifically pro18
vided in this section, and notwithstanding any other
19 provision of law, the Corporation, in connection with
20 the liquidation of any covered financial company or
21 bridge financial company with respect to which the
22 Corporation has been appointed as receiver, shall—
23 (A) in the case of any covered financial
24 company or bridge financial company that is a
25 stockbroker, but is not a member of the Securi346
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1 ties Investor Protection Corporation, apply the
2 provisions of subchapter III of chapter 7 of the
3 Bankruptcy Code, in respect of the distribution
4 to any customer of all customer name security
5 and customer property and member property,
6 as if such covered financial company or bridge
7 financial company were a debtor for purposes of
8 such subchapter; or
9 (B) in the case of any covered financial
10 company or bridge financial company that is a
11 commodity broker, apply the provisions of sub12
chapter IV of chapter 7 the Bankruptcy Code,
13 in respect of the distribution to any customer of
14 all customer property and member property, as
15 if such covered financial company or bridge fi16
nancial company were a debtor for purposes of
17 such subchapter.
18 (2) DEFINITIONS.—For purposes of this sub19
section—
20 (A) the terms ‘‘customer’’, ‘‘customer
21 name security’’, and ‘‘customer property and
22 member property’’ have the same meanings as
23 in sections 741 and 761 of title 11, United
24 States Code; and
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1 (B) the terms ‘‘commodity broker’’ and
2 ‘‘stockbroker’’ have the same meanings as in
3 section 101 of the Bankruptcy Code.
4 (n) ORDERLY LIQUIDATION FUND.—
5 (1) ESTABLISHMENT.—There is established in
6 the Treasury of the United States a separate fund
7 to be known as the ‘‘Orderly Liquidation Fund’’,
8 which shall be available to the Corporation to carry
9 out the authorities contained in this title, for the
10 cost of actions authorized by this title, including the
11 orderly liquidation of covered financial companies,
12 payment of administrative expenses, the payment of
13 principal and interest by the Corporation on obliga14
tions issued under paragraph (5), and the exercise
15 of the authorities of the Corporation under this title.
16 (2) PROCEEDS.—Amounts received by the Cor17
poration, including assessments received under sub18
section (o), proceeds of obligations issued under
19 paragraph (5), interest and other earnings from in20
vestments, and repayments to the Corporation by
21 covered financial companies, shall be deposited into
22 the Fund.
23 (3) MANAGEMENT.—The Corporation shall
24 manage the Fund in accordance with this subsection
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1 and the policies and procedures established under
2 section 203(d).
3 (4) INVESTMENTS.—At the request of the Cor4
poration, the Secretary may invest such portion of
5 amounts held in the Fund that are not, in the judg6
ment of the Corporation, required to meet the cur7
rent needs of the Corporation, in obligations of the
8 United States having suitable maturities, as deter9
mined by the Corporation. The interest on and the
10 proceeds from the sale or redemption of such obliga11
tions shall be credited to the Fund.
12 (5) AUTHORITY TO ISSUE OBLIGATIONS.—
13 (A) CORPORATION AUTHORIZED TO ISSUE
14 OBLIGATIONS.—Upon appointment by the Sec15
retary of the Corporation as receiver for a cov16
ered financial company, the Corporation is au17
thorized to issue obligations to the Secretary.
18 (B) SECRETARY AUTHORIZED TO PUR19
CHASE OBLIGATIONS.—The Secretary may,
20 under such terms and conditions as the Sec21
retary may require, purchase or agree to pur22
chase any obligations issued under subpara23
graph (A), and for such purpose, the Secretary
24 is authorized to use as a public debt transaction
25 the proceeds of the sale of any securities issued
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1 under chapter 31 of title 31, United States
2 Code, and the purposes for which securities
3 may be issued under chapter 31 of title 31,
4 United States Code, are extended to include
5 such purchases.
6 (C) INTEREST RATE.—Each purchase of
7 obligations by the Secretary under this para8
graph shall be upon such terms and conditions
9 as to yield a return at a rate determined by the
10 Secretary, taking into consideration the current
11 average yield on outstanding marketable obliga12
tions of the United States of comparable matu13
rity, plus an interest rate surcharge to be deter14
mined by the Secretary, which shall be greater
15 than the difference between—
16 (i) the current average rate on an
17 index of corporate obligations of com18
parable maturity; and
19 (ii) the current average rate on out20
standing marketable obligations of the
21 United States of comparable maturity.
22 (D) SECRETARY AUTHORIZED TO SELL OB23
LIGATIONS.—The Secretary may sell, upon such
24 terms and conditions as the Secretary shall de350
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1 termine, any of the obligations acquired under
2 this paragraph.
3 (E) PUBLIC DEBT TRANSACTIONS.—All
4 purchases and sales by the Secretary of such
5 obligations under this paragraph shall be treat6
ed as public debt transactions of the United
7 States, and the proceeds from the sale of any
8 obligations acquired by the Secretary under this
9 paragraph shall be deposited into the Treasury
10 of the United States as miscellaneous receipts.
11 (6) MAXIMUM OBLIGATION LIMITATION.—The
12 Corporation may not, in connection with the orderly
13 liquidation of a covered financial company, issue or
14 incur any obligation, if, after issuing or incurring
15 the obligation, the aggregate amount of such obliga16
tions outstanding under this subsection for each cov17
ered financial company would exceed—
18 (A) an amount that is equal to 10 percent
19 of the total consolidated assets of the covered
20 financial company, based on the most recent fi21
nancial statement available, during the 30-day
22 period immediately following the date of ap23
pointment of the Corporation as receiver (or a
24 shorter time period if the Corporation has cal351
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1 culated the amount described under subpara2
graph (B)); and
3 (B) the amount that is equal to 90 percent
4 of the fair value of the total consolidated assets
5 of each covered financial company that are
6 available for repayment, after the time period
7 described in subparagraph (A).
8 (7) RULEMAKING.—The Corporation and the
9 Secretary shall jointly, in consultation with the
10 Council, prescribe regulations governing the calcula11
tion of the maximum obligation limitation defined in
12 this paragraph.
13 (8) RULE OF CONSTRUCTION.—
14 (A) IN GENERAL.—Nothing in this section
15 shall be construed to affect the authority of the
16 Corporation under subsection (a) or (b) of sec17
tion 14 or section 15(c)(5) of the Federal De18
posit Insurance Act (12 U.S.C. 1824,
19 1825(c)(5)), the management of the Deposit In20
surance Fund by the Corporation, or the resolu21
tion of insured depository institutions, provided
22 that—
23 (i) the authorities of the Corporation
24 contained in this title shall not be used to
25 assist the Deposit Insurance Fund or to
352
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1 assist any financial company under appli2
cable law other than this Act;
3 (ii) the authorities of the Corporation
4 relating to the Deposit Insurance Fund, or
5 any other responsibilities of the Corpora6
tion under applicable law other than this
7 title, shall not be used to assist a covered
8 financial company pursuant to this title;
9 and
10 (iii) the Deposit Insurance Fund may
11 not be used in any manner to otherwise
12 circumvent the purposes of this title.
13 (B) VALUATION.—For purposes of deter14
mining the amount of obligations under this
15 subsection—
16 (i) the Corporation shall include as an
17 obligation any contingent liability of the
18 Corporation pursuant to this title; and
19 (ii) the Corporation shall value any
20 contingent liability at its expected cost to
21 the Corporation.
22 (9) ORDERLY LIQUIDATION AND REPAYMENT
23 PLANS.—
24 (A) ORDERLY LIQUIDATION PLAN.—
25 Amounts in the Fund shall be available to the
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1 Corporation with regard to a covered financial
2 company for which the Corporation is appointed
3 receiver after the Corporation has developed an
4 orderly liquidation plan that is acceptable to the
5 Secretary with regard to such covered financial
6 company, including the provision and use of
7 funds, including taking any actions specified
8 under section 204(d) and subsection
9 (h)(2)(G)(iv) and (h)(9) of this section, and
10 payments to third parties. The orderly liquida11
tion plan shall take into account actions to
12 avoid or mitigate potential adverse effects on
13 low income, minority, or underserved commu14
nities affected by the failure of the covered fi15
nancial company, and shall provide for coordi16
nation with the primary financial regulatory
17 agencies, as appropriate, to ensure that such
18 actions are taken. The Corporation may, at any
19 time, amend any orderly liquidation plan ap20
proved by the Secretary with the concurrence of
21 the Secretary.
22 (B) MANDATORY REPAYMENT PLAN.—
23 (i) IN GENERAL.—No amount author24
ized under paragraph (6)(B) may be pro25
vided by the Secretary to the Corporation
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1 under paragraph (5), unless an agreement
2 is in effect between the Secretary and the
3 Corporation that—
4 (I) provides a specific plan and
5 schedule to achieve the repayment of
6 the outstanding amount of any bor7
rowing under paragraph (5); and
8 (II) demonstrates that income to
9 the Corporation from the liquidated
10 assets of the covered financial com11
pany and assessments under sub12
section (o) will be sufficient to amor13
tize the outstanding balance within
14 the period established in the repay15
ment schedule and pay the interest
16 accruing on such balance within the
17 time provided in subsection (o)(1)(B).
18 (ii) CONSULTATION WITH AND RE19
PORT TO CONGRESS.—The Secretary and
20 the Corporation shall—
21 (I) consult with the Committee
22 on Banking, Housing, and Urban Af23
fairs of the Senate and the Committee
24 on Financial Services of the House of
355
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1 Representatives on the terms of any
2 repayment schedule agreement; and
3 (II) submit a copy of the repay4
ment schedule agreement to the Com5
mittees described in subclause (I) be6
fore the end of the 30-day period be7
ginning on the date on which any
8 amount is provided by the Secretary
9 to the Corporation under paragraph
10 (5).
11 (10) IMPLEMENTATION EXPENSES.—
12 (A) IN GENERAL.—Reasonable implemen13
tation expenses of the Corporation incurred
14 after the date of enactment of this Act shall be
15 treated as expenses of the Council.
16 (B) REQUESTS FOR REIMBURSEMENT.—
17 The Corporation shall periodically submit a re18
quest for reimbursement for implementation ex19
penses to the Chairperson of the Council, who
20 shall arrange for prompt reimbursement to the
21 Corporation of reasonable implementation ex22
penses.
23 (C) DEFINITION.—As used in this para24
graph, the term ‘‘implementation expenses’’—
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1 (i) means costs incurred by the Cor2
poration beginning on the date of enact3
ment of this Act, as part of its efforts to
4 implement this title that do not relate to a
5 particular covered financial company; and
6 (ii) includes the costs incurred in con7
nection with the development of policies,
8 procedures, rules, and regulations and
9 other planning activities of the Corporation
10 consistent with carrying out this title.
11 (o) ASSESSMENTS.—
12 (1) RISK-BASED ASSESSMENTS.—
13 (A) ELIGIBLE FINANCIAL COMPANIES DE14
FINED.—For purposes of this subsection, the
15 term ‘‘eligible financial company’’ means any
16 bank holding company with total consolidated
17 assets equal to or greater than
18 $50,000,000,000 and any nonbank financial
19 company supervised by the Board of Governors.
20 (B) ASSESSMENTS.—The Corporation shall
21 charge one or more risk-based assessments in
22 accordance with the provisions of subparagraph
23 (D), if such assessments are necessary to pay
24 in full the obligations issued by the Corporation
25 to the Secretary under this title within 60
357
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1 months of the date of issuance of such obliga2
tions.
3 (C) EXTENSIONS AUTHORIZED.—The Cor4
poration may, with the approval of the Sec5
retary, extend the time period under subpara6
graph (B), if the Corporation determines that
7 an extension is necessary to avoid a serious ad8
verse effect on the financial system of the
9 United States.
10 (D) APPLICATION OF ASSESSMENTS.—To
11 meet the requirements of subparagraph (B), the
12 Corporation shall—
13 (i) impose assessments, as soon as
14 practicable, on any claimant that received
15 additional payments or amounts from the
16 Corporation pursuant to subsection (b)(4),
17 (d)(4), or (h)(5)(E), except for payments
18 or amounts necessary to initiate and con19
tinue operations essential to implementa20
tion of the receivership or any bridge fi21
nancial company, to recover on a cumu22
lative basis, the entire difference be23
tween—
24 (I) the aggregate value the claim25
ant received from the Corporation on
358
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1 a claim pursuant to this title (includ2
ing pursuant to subsection (b)(4),
3 (d)(4), and (h)(5)(E)), as of the date
4 on which such value was received; and
5 (II) the value the claimant was
6 entitled to receive from the Corpora7
tion on such claim solely from the
8 proceeds of the liquidation of the cov9
ered financial company under this
10 title; and
11 (ii) if the amounts to be recovered on
12 a cumulative basis under clause (i) are in13
sufficient to meet the requirements of sub14
paragraph (B), after taking into account
15 the considerations set forth in paragraph
16 (4), impose assessments on—
17 (I) eligible financial companies;
18 and
19 (II) financial companies with
20 total consolidated assets equal to or
21 greater than $50,000,000,000 that
22 are not eligible financial companies.
23 (E) PROVISION OF FINANCING.—Payments
24 or amounts necessary to initiate and continue
25 operations essential to implementation of the
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1 receivership or any bridge financial company
2 described in subparagraph (D)(i) shall not in3
clude the provision of financing, as defined by
4 rule of the Corporation, to third parties.
5 (2) GRADUATED ASSESSMENT RATE.—The Cor6
poration shall impose assessments on a graduated
7 basis, with financial companies having greater assets
8 and risk being assessed at a higher rate.
9 (3) NOTIFICATION AND PAYMENT.—The Cor10
poration shall notify each financial company of that
11 company’s assessment under this subsection. Any fi12
nancial company subject to assessment under this
13 subsection shall pay such assessment in accordance
14 with the regulations prescribed pursuant to para15
graph (6).
16 (4) RISK-BASED ASSESSMENT CONSIDER17
ATIONS.—In imposing assessments under paragraph
18 (1)(D)(ii), the Corporation shall use a risk matrix.
19 The Council shall make a recommendation to the
20 Corporation on the risk matrix to be used in impos21
ing such assessments, and the Corporation shall take
22 into account any such recommendation in the estab23
lishment of the risk matrix to be used to impose
24 such assessments. In recommending or establishing
360
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1 such risk matrix, the Council and the Corporation,
2 respectively, shall take into account—
3 (A) economic conditions generally affecting
4 financial companies so as to allow assessments
5 to increase during more favorable economic con6
ditions and to decrease during less favorable
7 economic conditions;
8 (B) any assessments imposed on a finan9
cial company or an affiliate of a financial com10
pany that—
11 (i) is an insured depository institu12
tion, assessed pursuant to section 7 or
13 13(c)(4)(G) of the Federal Deposit Insur14
ance Act;
15 (ii) is a member of the Securities In16
vestor Protection Corporation, assessed
17 pursuant to section 4 of the Securities In18
vestor Protection Act of 1970 (15 U.S.C.
19 78ddd);
20 (iii) is an insured credit union, as21
sessed pursuant to section 202(c)(1)(A)(i)
22 of the Federal Credit Union Act (12
23 U.S.C. 1782(c)(1)(A)(i)); or
24 (iv) is an insurance company, assessed
25 pursuant to applicable State law to cover
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1 (or reimburse payments made to cover) the
2 costs of the rehabilitation, liquidation, or
3 other State insolvency proceeding with re4
spect to 1 or more insurance companies;
5 (C) the risks presented by the financial
6 company to the financial system and the extent
7 to which the financial company has benefitted,
8 or likely would benefit, from the orderly liquida9
tion of a financial company under this title, in10
cluding—
11 (i) the amount, different categories,
12 and concentrations of assets of the finan13
cial company and its affiliates, including
14 both on-balance sheet and off-balance sheet
15 assets;
16 (ii) the activities of the financial com17
pany and its affiliates;
18 (iii) the relevant market share of the
19 financial company and its affiliates;
20 (iv) the extent to which the financial
21 company is leveraged;
22 (v) the potential exposure to sudden
23 calls on liquidity precipitated by economic
24 distress;
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1 (vi) the amount, maturity, volatility,
2 and stability of the company’s financial ob3
ligations to, and relationship with, other fi4
nancial companies;
5 (vii) the amount, maturity, volatility,
6 and stability of the liabilities of the com7
pany, including the degree of reliance on
8 short-term funding, taking into consider9
ation existing systems for measuring a
10 company’s risk-based capital;
11 (viii) the stability and variety of the
12 company’s sources of funding;
13 (ix) the company’s importance as a
14 source of credit for households, businesses,
15 and State and local governments and as a
16 source of liquidity for the financial system;
17 (x) the extent to which assets are sim18
ply managed and not owned by the finan19
cial company and the extent to which own20
ership of assets under management is dif21
fuse; and
22 (xi) the amount, different categories,
23 and concentrations of liabilities, both in24
sured and uninsured, contingent and non25
contingent, including both on-balance sheet
363
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1 and off-balance sheet liabilities, of the fi2
nancial company and its affiliates;
3 (D) any risks presented by the financial
4 company during the 10-year period immediately
5 prior to the appointment of the Corporation as
6 receiver for the covered financial company that
7 contributed to the failure of the covered finan8
cial company; and
9 (E) such other risk-related factors as the
10 Corporation, or the Council, as applicable, may
11 determine to be appropriate.
12 (5) COLLECTION OF INFORMATION.—The Cor13
poration may impose on covered financial companies
14 such collection of information requirements as the
15 Corporation deems necessary to carry out this sub16
section after the appointment of the Corporation as
17 receiver under this title.
18 (6) RULEMAKING.—
19 (A) IN GENERAL.—The Corporation shall
20 prescribe regulations to carry out this sub21
section. The Corporation shall consult with the
22 Secretary in the development and finalization of
23 such regulations.
24 (B) EQUITABLE TREATMENT.—The regu25
lations prescribed under subparagraph (A) shall
364
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1 take into account the differences in risks posed
2 to the financial stability of the United States by
3 financial companies, the differences in the li4
ability structures of financial companies, and
5 the different bases for other assessments that
6 such financial companies may be required to
7 pay, to ensure that assessed financial compa8
nies are treated equitably and that assessments
9 under this subsection reflect such differences.
10 (p) UNENFORCEABILITY OF CERTAIN AGREE11
MENTS.—
12 (1) IN GENERAL.—No provision described in
13 paragraph (2) shall be enforceable against or impose
14 any liability on any person, as such enforcement or
15 liability shall be contrary to public policy.
16 (2) PROHIBITED PROVISIONS.—A provision de17
scribed in this paragraph is any term contained in
18 any existing or future standstill, confidentiality, or
19 other agreement that, directly or indirectly—
20 (A) affects, restricts, or limits the ability
21 of any person to offer to acquire or acquire;
22 (B) prohibits any person from offering to
23 acquire or acquiring; or
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1 (C) prohibits any person from using any
2 previously disclosed information in connection
3 with any such offer to acquire or acquisition of,
4 all or part of any covered financial company, includ5
ing any liabilities, assets, or interest therein, in con6
nection with any transaction in which the Corpora7
tion exercises its authority under this title.
8 (q) OTHER EXEMPTIONS.—
9 (1) IN GENERAL.—When acting as a receiver
10 under this title—
11 (A) the Corporation, including its fran12
chise, its capital, reserves and surplus, and its
13 income, shall be exempt from all taxation im14
posed by any State, county, municipality, or
15 local taxing authority, except that any real
16 property of the Corporation shall be subject to
17 State, territorial, county, municipal, or local
18 taxation to the same extent according to its
19 value as other real property is taxed, except
20 that, notwithstanding the failure of any person
21 to challenge an assessment under State law of
22 the value of such property, such value, and the
23 tax thereon, shall be determined as of the pe24
riod for which such tax is imposed;
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1 (B) no property of the Corporation shall be
2 subject to levy, attachment, garnishment, fore3
closure, or sale without the consent of the Cor4
poration, nor shall any involuntary lien attach
5 to the property of the Corporation; and
6 (C) the Corporation shall not be liable for
7 any amounts in the nature of penalties or fines,
8 including those arising from the failure of any
9 person to pay any real property, personal prop10
erty, probate, or recording tax or any recording
11 or filing fees when due; and
12 (D) the Corporation shall be exempt from
13 all prosecution by the United States or any
14 State, county, municipality, or local authority
15 for any criminal offense arising under Federal,
16 State, county, municipal, or local law, which
17 was allegedly committed by the covered finan18
cial company, or persons acting on behalf of the
19 covered financial company, prior to the appoint20
ment of the Corporation as receiver.
21 (2) LIMITATION.—Paragraph (1) shall not
22 apply with respect to any tax imposed (or other
23 amount arising) under the Internal Revenue Code of
24 1986.
25 (r) CERTAIN SALES OF ASSETS PROHIBITED.—
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1 (1) PERSONS WHO ENGAGED IN IMPROPER CON2
DUCT WITH, OR CAUSED LOSSES TO, COVERED FI3
NANCIAL COMPANIES.—The Corporation shall pre4
scribe regulations which, at a minimum, shall pro5
hibit the sale of assets of a covered financial com6
pany by the Corporation to—
7 (A) any person who—
8 (i) has defaulted, or was a member of
9 a partnership or an officer or director of a
10 corporation that has defaulted, on 1 or
11 more obligations, the aggregate amount of
12 which exceeds $1,000,000, to such covered
13 financial company;
14 (ii) has been found to have engaged in
15 fraudulent activity in connection with any
16 obligation referred to in clause (i); and
17 (iii) proposes to purchase any such
18 asset in whole or in part through the use
19 of the proceeds of a loan or advance of
20 credit from the Corporation or from any
21 covered financial company;
22 (B) any person who participated, as an of23
ficer or director of such covered financial com24
pany or of any affiliate of such company, in a
25 material way in any transaction that resulted in
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1 a substantial loss to such covered financial com2
pany; or
3 (C) any person who has demonstrated a
4 pattern or practice of defalcation regarding ob5
ligations to such covered financial company.
6 (2) CONVICTED DEBTORS.—Except as provided
7 in paragraph (3), a person may not purchase any
8 asset of such institution from the receiver, if that
9 person—
10 (A) has been convicted of an offense under
11 section 215, 656, 657, 1005, 1006, 1007, 1008,
12 1014, 1032, 1341, 1343, or 1344 of title 18,
13 United States Code, or of conspiring to commit
14 such an offense, affecting any covered financial
15 company; and
16 (B) is in default on any loan or other ex17
tension of credit from such covered financial
18 company which, if not paid, will cause substan19
tial loss to the Fund or the Corporation.
20 (3) SETTLEMENT OF CLAIMS.—Paragraphs (1)
21 and (2) shall not apply to the sale or transfer by the
22 Corporation of any asset of any covered financial
23 company to any person, if the sale or transfer of the
24 asset resolves or settles, or is part of the resolution
25 or settlement, of 1 or more claims that have been,
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1 or could have been, asserted by the Corporation
2 against the person.
3 (4) DEFINITION OF DEFAULT.—For purposes
4 of this subsection, the term ‘‘default’’ means a fail5
ure to comply with the terms of a loan or other obli6
gation to such an extent that the property securing
7 the obligation is foreclosed upon.
8 (s) RECOUPMENT OF COMPENSATION FROM SENIOR
9 EXECUTIVES AND DIRECTORS.—
10 (1) IN GENERAL.—The Corporation, as receiver
11 of a covered financial company, may recover from
12 any current or former senior executive or director
13 substantially responsible for the failed condition of
14 the covered financial company any compensation re15
ceived during the 2-year period preceding the date
16 on which the Corporation was appointed as the re17
ceiver of the covered financial company, except that,
18 in the case of fraud, no time limit shall apply.
19 (2) COST CONSIDERATIONS.—In seeking to re20
cover any such compensation, the Corporation shall
21 weigh the financial and deterrent benefits of such re22
covery against the cost of executing the recovery.
23 (3) RULEMAKING.—The Corporation shall pro24
mulgate regulations to implement the requirements
25 of this subsection, including defining the term ‘‘com370
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1 pensation’’ to mean any financial remuneration, in2
cluding salary, bonuses, incentives, benefits, sever3
ance, deferred compensation, or golden parachute
4 benefits, and any profits realized from the sale of
5 the securities of the covered financial company.
6 SEC. 211. MISCELLANEOUS PROVISIONS.
7 (a) CLARIFICATION OF PROHIBITION REGARDING
8 CONCEALMENT OF ASSETS FROM RECEIVER OR LIQUI9
DATING AGENT.—Section 1032(1) of title 18, United
10 States Code, is amended by inserting ‘‘the Federal Deposit
11 Insurance Corporation acting as receiver for a covered fi12
nancial company, in accordance with title II of the Dodd-
13 Frank Wall Street Reform and Consumer Protection Act,’’
14 before ‘‘or the National Credit’’.
15 (b) CONFORMING AMENDMENT.—Section 1032 of
16 title 18, United States Code, is amended in the section
17 heading, by striking ‘‘of financial institution’’.
18 (c) FEDERAL DEPOSIT INSURANCE CORPORATION
19 IMPROVEMENT ACT OF 1991.—Section 403(a) of the Fed20
eral Deposit Insurance Corporation Improvement Act of
21 1991 (12 U.S.C. 4403(a)) is amended by inserting ‘‘sec22
tion 210(c) of the Dodd-Frank Wall Street Reform and
23 Consumer Protection Act, section 1367 of the Federal
24 Housing Enterprises Financial Safety and Soundness Act
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1 of 1992 (12 U.S.C. 4617(d)),’’ after ‘‘section 11(e) of the
2 Federal Deposit Insurance Act,’’.
3 (d) FDIC INSPECTOR GENERAL REVIEWS.—
4 (1) SCOPE.—The Inspector General of the Cor5
poration shall conduct, supervise, and coordinate au6
dits and investigations of the liquidation of any cov7
ered financial company by the Corporation as re8
ceiver under this title, including collecting and sum9
marizing—
10 (A) a description of actions taken by the
11 Corporation as receiver;
12 (B) a description of any material sales,
13 transfers, mergers, obligations, purchases, and
14 other material transactions entered into by the
15 Corporation;
16 (C) an evaluation of the adequacy of the
17 policies and procedures of the Corporation
18 under section 203(d) and orderly liquidation
19 plan under section 210(n)(14);
20 (D) an evaluation of the utilization by the
21 Corporation of the private sector in carrying
22 out its functions, including the adequacy of any
23 conflict-of-interest reviews; and
24 (E) an evaluation of the overall perform25
ance of the Corporation in liquidating the cov372
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1 ered financial company, including administra2
tive costs, timeliness of liquidation process, and
3 impact on the financial system.
4 (2) FREQUENCY.—Not later than 6 months
5 after the date of appointment of the Corporation as
6 receiver under this title and every 6 months there7
after, the Inspector General of the Corporation shall
8 conduct the audit and investigation described in
9 paragraph (1).
10 (3) REPORTS AND TESTIMONY.—The Inspector
11 General of the Corporation shall include in the semi12
annual reports required by section 5(a) of the In13
spector General Act of 1978 (5 U.S.C. App.), a sum14
mary of the findings and evaluations under para15
graph (1), and shall appear before the appropriate
16 committees of Congress, if requested, to present
17 each such report.
18 (4) FUNDING.—
19 (A) INITIAL FUNDING.—The expenses of
20 the Inspector General of the Corporation in car21
rying out this subsection shall be considered ad22
ministrative expenses of the receivership.
23 (B) ADDITIONAL FUNDING.—If the max24
imum amount available to the Corporation as
25 receiver under this title is insufficient to enable
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1 the Inspector General of the Corporation to
2 carry out the duties under this subsection, the
3 Corporation shall pay such additional amounts
4 from assessments imposed under section 210.
5 (5) TERMINATION OF RESPONSIBILITIES.—The
6 duties and responsibilities of the Inspector General
7 of the Corporation under this subsection shall termi8
nate 1 year after the date of termination of the re9
ceivership under this title.
10 (e) TREASURY INSPECTOR GENERAL REVIEWS.—
11 (1) SCOPE.—The Inspector General of the De12
partment of the Treasury shall conduct, supervise,
13 and coordinate audits and investigations of actions
14 taken by the Secretary related to the liquidation of
15 any covered financial company under this title, in16
cluding collecting and summarizing—
17 (A) a description of actions taken by the
18 Secretary under this title;
19 (B) an analysis of the approval by the Sec20
retary of the policies and procedures of the Cor21
poration under section 203 and acceptance of
22 the orderly liquidation plan of the Corporation
23 under section 210; and
24 (C) an assessment of the terms and condi25
tions underlying the purchase by the Secretary
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1 of obligations of the Corporation under section
2 210.
3 (2) FREQUENCY.—Not later than 6 months
4 after the date of appointment of the Corporation as
5 receiver under this title and every 6 months there6
after, the Inspector General of the Department of
7 the Treasury shall conduct the audit and investiga8
tion described in paragraph (1).
9 (3) REPORTS AND TESTIMONY.—The Inspector
10 General of the Department of the Treasury shall in11
clude in the semiannual reports required by section
12 5(a) of the Inspector General Act of 1978 (5 U.S.C.
13 App.), a summary of the findings and assessments
14 under paragraph (1), and shall appear before the
15 appropriate committees of Congress, if requested, to
16 present each such report.
17 (4) TERMINATION OF RESPONSIBILITIES.—The
18 duties and responsibilities of the Inspector General
19 of the Department of the Treasury under this sub20
section shall terminate 1 year after the date on
21 which the obligations purchased by the Secretary
22 from the Corporation under section 210 are fully re23
deemed.
24 (f) PRIMARY FINANCIAL REGULATORY AGENCY IN25
SPECTOR GENERAL REVIEWS.—
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1 (1) SCOPE.—Upon the appointment of the Cor2
poration as receiver for a covered financial company
3 supervised by a Federal primary financial regulatory
4 agency or the Board of Governors under section
5 165, the Inspector General of the agency or the
6 Board of Governors shall make a written report re7
viewing the supervision by the agency or the Board
8 of Governors of the covered financial company,
9 which shall—
10 (A) evaluate the effectiveness of the agency
11 or the Board of Governors in carrying out its
12 supervisory responsibilities with respect to the
13 covered financial company;
14 (B) identify any acts or omissions on the
15 part of agency or Board of Governors officials
16 that contributed to the covered financial com17
pany being in default or in danger of default;
18 (C) identify any actions that could have
19 been taken by the agency or the Board of Gov20
ernors that would have prevented the company
21 from being in default or in danger of default;
22 and
23 (D) recommend appropriate administrative
24 or legislative action.
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1 (2) REPORTS AND TESTIMONY.—Not later than
2 1 year after the date of appointment of the Corpora3
tion as receiver under this title, the Inspector Gen4
eral of the Federal primary financial regulatory
5 agency or the Board of Governors shall provide the
6 report required by paragraph (1) to such agency or
7 the Board of Governors, and along with such agency
8 or the Board of Governors, as applicable, shall ap9
pear before the appropriate committees of Congress,
10 if requested, to present the report required by para11
graph (1). Not later than 90 days after the date of
12 receipt of the report required by paragraph (1), such
13 agency or the Board of Governors, as applicable,
14 shall provide a written report to Congress describing
15 any actions taken in response to the recommenda16
tions in the report, and if no such actions were
17 taken, describing the reasons why no actions were
18 taken.
19 SEC. 212. PROHIBITION OF CIRCUMVENTION AND PREVEN20
TION OF CONFLICTS OF INTEREST.
21 (a) NO OTHER FUNDING.—Funds for the orderly liq22
uidation of any covered financial company under this title
23 shall only be provided as specified under this title.
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1 (b) LIMIT ON GOVERNMENTAL ACTIONS.—No gov2
ernmental entity may take any action to circumvent the
3 purposes of this title.
4 (c) CONFLICT OF INTEREST.—In the event that the
5 Corporation is appointed receiver for more than 1 covered
6 financial company or is appointed receiver for a covered
7 financial company and receiver for any insured depository
8 institution that is an affiliate of such covered financial
9 company, the Corporation shall take appropriate action,
10 as necessary to avoid any conflicts of interest that may
11 arise in connection with multiple receiverships.
12 SEC. 213. BAN ON CERTAIN ACTIVITIES BY SENIOR EXECU13
TIVES AND DIRECTORS.
14 (a) PROHIBITION AUTHORITY.—The Board of Gov15
ernors or, if the covered financial company was not super16
vised by the Board of Governors, the Corporation, may
17 exercise the authority provided by this section.
18 (b) AUTHORITY TO ISSUE ORDER.—The appropriate
19 agency described in subsection (a) may take any action
20 authorized by subsection (c), if the agency determines
21 that—
22 (1) a senior executive or a director of the cov23
ered financial company, prior to the appointment of
24 the Corporation as receiver, has, directly or indi25
rectly—
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1 (A) violated—
2 (i) any law or regulation;
3 (ii) any cease-and-desist order which
4 has become final;
5 (iii) any condition imposed in writing
6 by a Federal agency in connection with
7 any action on any application, notice, or
8 request by such company or senior execu9
tive; or
10 (iv) any written agreement between
11 such company and such agency;
12 (B) engaged or participated in any unsafe
13 or unsound practice in connection with any fi14
nancial company; or
15 (C) committed or engaged in any act,
16 omission, or practice which constitutes a breach
17 of the fiduciary duty of such senior executive or
18 director;
19 (2) by reason of the violation, practice, or
20 breach described in any subparagraph of paragraph
21 (1), such senior executive or director has received fi22
nancial gain or other benefit by reason of such viola23
tion, practice, or breach and such violation, practice,
24 or breach contributed to the failure of the company;
25 and
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1 (3) such violation, practice, or breach—
2 (A) involves personal dishonesty on the
3 part of such senior executive or director; or
4 (B) demonstrates willful or continuing dis5
regard by such senior executive or director for
6 the safety or soundness of such company.
7 (c) AUTHORIZED ACTIONS.—
8 (1) IN GENERAL.—The appropriate agency for
9 a financial company, as described in subsection (a),
10 may serve upon a senior executive or director de11
scribed in subsection (b) a written notice of the in12
tention of the agency to prohibit any further partici13
pation by such person, in any manner, in the con14
duct of the affairs of any financial company for a
15 period of time determined by the appropriate agency
16 to be commensurate with such violation, practice, or
17 breach, provided such period shall be not less than
18 2 years.
19 (2) PROCEDURES.—The due process require20
ments and other procedures under section 8(e) of
21 the Federal Deposit Insurance Act (12 U.S.C.
22 1818(e)) shall apply to actions under this section as
23 if the covered financial company were an insured de24
pository institution and the senior executive or direc380
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1 tor were an institution-affiliated party, as those
2 terms are defined in that Act.
3 (d) REGULATIONS.—The Corporation and the Board
4 of Governors, in consultation with the Council, shall joint5
ly prescribe rules or regulations to administer and carry
6 out this section, including rules, regulations, or guidelines
7 to further define the term senior executive for the pur8
poses of this section.
9 SEC. 214. PROHIBITION ON TAXPAYER FUNDING.
10 (a) LIQUIDATION REQUIRED.—All financial compa11
nies put into receivership under this title shall be liq12
uidated. No taxpayer funds shall be used to prevent the
13 liquidation of any financial company under this title.
14 (b) RECOVERY OF FUNDS.—All funds expended in
15 the liquidation of a financial company under this title shall
16 be recovered from the disposition of assets of such finan17
cial company, or shall be the responsibility of the financial
18 sector, through assessments.
19 (c) NO LOSSES TO TAXPAYERS.—Taxpayers shall
20 bear no losses from the exercise of any authority under
21 this title.
22 SEC. 215. STUDY ON SECURED CREDITOR HAIRCUTS.
23 (a) STUDY REQUIRED.—The Council shall conduct a
24 study evaluating the importance of maximizing United
25 States taxpayer protections and promoting market dis381
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1 cipline with respect to the treatment of fully secured credi2
tors in the utilization of the orderly liquidation authority
3 authorized by this Act. In carrying out such study, the
4 Council shall—
5 (1) not be prejudicial to current or past laws or
6 regulations with respect to secured creditor treat7
ment in a resolution process;
8 (2) study the similarities and differences be9
tween the resolution mechanisms authorized by the
10 Bankruptcy Code, the Federal Deposit Insurance
11 Corporation Improvement Act of 1991, and the or12
derly liquidation authority authorized by this Act;
13 (3) determine how various secured creditors are
14 treated in such resolution mechanisms and examine
15 how a haircut (of various degrees) on secured credi16
tors could improve market discipline and protect tax17
payers;
18 (4) compare the benefits and dynamics of pru19
dent lending practices by depository institutions in
20 secured loans for consumers and small businesses to
21 the lending practices of secured creditors to large,
22 interconnected financial firms;
23 (5) consider whether credit differs according to
24 different types of collateral and different terms and
25 timing of the extension of credit; amd
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1 (6) include an examination of stakeholders who
2 were unsecured or under-collateralized and seek col3
lateral when a firm is failing, and the impact that
4 such behavior has on financial stability and an or5
derly resolution that protects taxpayers if the firm
6 fails.
7 (b) REPORT.—Not later than the end of the 1-year
8 period beginning on the date of enactment of this Act, the
9 Council shall issue a report to the Congress containing all
10 findings and conclusions made by the Council in carrying
11 out the study required under subsection (a).
12 SEC. 216. STUDY ON BANKRUPTCY PROCESS FOR FINAN13
CIAL AND NONBANK FINANCIAL INSTITU14
TIONS.
15 (a) STUDY.—
16 (1) IN GENERAL.—Upon enactment of this Act,
17 the Board of Governors, in consultation with the Ad18
ministrative Office of the United States Courts, shall
19 conduct a study regarding the resolution of financial
20 companies under the Bankruptcy Code, under chap21
ter 7 or 11 thereof .
22 (2) ISSUES TO BE STUDIED.—Issues to be stud23
ied under this section include—
24 (A) the effectiveness of chapter 7 and
25 chapter 11 of the Bankruptcy Code in facili383
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1 tating the orderly resolution or reorganization
2 of systemic financial companies;
3 (B) whether a special financial resolution
4 court or panel of special masters or judges
5 should be established to oversee cases involving
6 financial companies to provide for the resolution
7 of such companies under the Bankruptcy Code,
8 in a manner that minimizes adverse impacts on
9 financial markets without creating moral haz10
ard;
11 (C) whether amendments to the Bank12
ruptcy Code should be adopted to enhance the
13 ability of the Code to resolve financial compa14
nies in a manner that minimizes adverse im15
pacts on financial markets without creating
16 moral hazard;
17 (D) whether amendments should be made
18 to the Bankruptcy Code, the Federal Deposit
19 Insurance Act, and other insolvency laws to ad20
dress the manner in which qualified financial
21 contracts of financial companies are treated;
22 and
23 (E) the implications, challenges, and bene24
fits to creating a new chapter or subchapter of
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1 the Bankruptcy Code to deal with financial
2 companies.
3 (b) REPORTS TO CONGRESS.—Not later than 1 year
4 after the date of enactment of this Act, and in each succes5
sive year until the fifth year after the date of enactment
6 of this Act, the Administrative Office of the United States
7 courts shall submit to the Committees on Banking, Hous8
ing, and Urban Affairs and the Judiciary of the Senate
9 and the Committees on Financial Services and the Judici10
ary of the House of Representatives a report summarizing
11 the results of the study conducted under subsection (a).
12 SEC. 217. STUDY ON INTERNATIONAL COORDINATION RE13
LATING TO BANKRUPTCY PROCESS FOR
14 NONBANK FINANCIAL INSTITUTIONS.
15 (a) STUDY.—
16 (1) IN GENERAL.—The Board of Governors, in
17 consultation with the Administrative Office of the
18 United States Courts, shall conduct a study regard19
ing international coordination relating to the resolu20
tion of systemic financial companies under the
21 United States Bankruptcy Code and applicable for22
eign law.
23 (2) ISSUES TO BE STUDIED.—With respect to
24 the bankruptcy process for financial companies,
25 issues to be studied under this section include—
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1 (A) the extent to which international co2
ordination currently exists;
3 (B) current mechanisms and structures for
4 facilitating international cooperation;
5 (C) barriers to effective international co6
ordination; and
7 (D) ways to increase and make more effec8
tive international coordination of the resolution
9 of financial companies, so as to minimize the
10 impact on the financial system without creating
11 moral hazard.
12 (b) REPORT TO CONGRESS.—Not later than 1 year
13 after the date of enactment of this Act, the Administrative
14 office of the United States Courts shall submit to the
15 Committees on Banking, Housing, and Urban Affairs and
16 the Judiciary of the Senate and the Committees on Finan17
cial Services and the Judiciary of the House of Represent18
atives a report summarizing the results of the study con19
ducted under subsection (a).
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1 TITLE III—TRANSFER OF POW2
ERS TO THE COMPTROLLER
3 OF THE CURRENCY, THE COR4
PORATION, AND THE BOARD
5 OF GOVERNORS
6 SEC. 300. SHORT TITLE.
7 This title may be cited as the ‘‘Enhancing Financial
8 Institution Safety and Soundness Act of 2010’’.
9 SEC. 301. PURPOSES.
10 The purposes of this title are—
11 (1) to provide for the safe and sound operation
12 of the banking system of the United States;
13 (2) to preserve and protect the dual system of
14 Federal and State-chartered depository institutions;
15 (3) to ensure the fair and appropriate super16
vision of each depository institution, regardless of
17 the size or type of charter of the depository institu18
tion; and
19 (4) to streamline and rationalize the supervision
20 of depository institutions and the holding companies
21 of depository institutions.
22 SEC. 302. DEFINITION.
23 In this title, the term ‘‘transferred employee’’ means,
24 as the context requires, an employee transferred to the
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1 Office of the Comptroller of the Currency or the Corpora2
tion under section 322.
3 Subtitle A—Transfer of Powers and
4 Duties
5 SEC. 311. TRANSFER DATE.
6 (a) TRANSFER DATE.—Except as provided in sub7
section (b), the term ‘‘transfer date’’ means the date that
8 is 1 year after the date of enactment of this Act.
9 (b) EXTENSION PERMITTED.—
10 (1) NOTICE REQUIRED.—The Secretary, in con11
sultation with the Comptroller of the Currency, the
12 Director of the Office of Thrift Supervision, the
13 Chairman of the Board of Governors, and the Chair14
person of the Corporation, may extend the period
15 under subsection (a) and designate a transfer date
16 that is not later than 18 months after the date of
17 enactment of this Act, if the Secretary transmits to
18 the Committee on Banking, Housing, and Urban Af19
fairs of the Senate and the Committee on Financial
20 Services of the House of Representatives—
21 (A) a written determination that com22
mencement of the orderly process to implement
23 this title is not feasible by the date that is 1
24 year after the date of enactment of this Act;
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1 (B) an explanation of why an extension is
2 necessary to commence the process of orderly
3 implementation of this title;
4 (C) the transfer date designated under this
5 subsection; and
6 (D) a description of the steps that will be
7 taken to initiate the process of an orderly and
8 timely implementation of this title within the
9 extended time period.
10 (2) PUBLICATION OF NOTICE.—Not later than
11 270 days after the date of enactment of this Act, the
12 Secretary shall publish in the Federal Register no13
tice of any transfer date designated under paragraph
14 (1).
15 SEC. 312. POWERS AND DUTIES TRANSFERRED.
16 (a) EFFECTIVE DATE.—This section, and the amend17
ments made by this section, shall take effect on the trans18
fer date.
19 (b) FUNCTIONS OF THE OFFICE OF THRIFT SUPER20
VISION.—
21 (1) SAVINGS AND LOAN HOLDING COMPANY
22 FUNCTIONS TRANSFERRED.—
23 (A) TRANSFER OF FUNCTIONS.—There are
24 transferred to the Board of Governors all func25
tions of the Office of Thrift Supervision and the
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1 Director of the Office of Thrift Supervision (in2
cluding the authority to issue orders) relating
3 to—
4 (i) the supervision of—
5 (I) any savings and loan holding
6 company; and
7 (II) any subsidiary (other than a
8 depository institution) of a savings
9 and loan holding company; and
10 (ii) all rulemaking authority of the Of11
fice of Thrift Supervision and the Director
12 of the Office of Thrift Supervision relating
13 to savings and loan holding companies.
14 (B) POWERS, AUTHORITIES, RIGHTS, AND
15 DUTIES.—The Board of Governors shall suc16
ceed to all powers, authorities, rights, and du17
ties that were vested in the Office of Thrift Su18
pervision and the Director of the Office of
19 Thrift Supervision on the day before the trans20
fer date relating to the functions and authority
21 transferred under subparagraph (A).
22 (2) ALL OTHER FUNCTIONS TRANSFERRED.—
23 (A) BOARD OF GOVERNORS.—All rule24
making authority of the Office of Thrift Super25
vision and the Director of the Office of Thrift
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1 Supervision under section 11 of the Home Own2
ers’ Loan Act (12 U.S.C. 1468) relating to
3 transactions with affiliates and extensions of
4 credit to executive officers, directors, and prin5
cipal shareholders and under section 5(q) of
6 such Act relating to tying arrangements is
7 transferred to the Board of Governors.
8 (B) COMPTROLLER OF THE CURRENCY.—
9 Except as provided in paragraph (1) and sub10
paragraph (A)—
11 (i) there are transferred to the Office
12 of the Comptroller of the Currency and the
13 Comptroller of the Currency—
14 (I) all functions of the Office of
15 Thrift Supervision and the Director of
16 the Office of Thrift Supervision, re17
spectively, relating to Federal savings
18 associations; and
19 (II) all rulemaking authority of
20 the Office of Thrift Supervision and
21 the Director of the Office of Thrift
22 Supervision, respectively, relating to
23 savings associations; and
24 (ii) the Office of the Comptroller of
25 the Currency and the Comptroller of the
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1 Currency shall succeed to all powers, au2
thorities, rights, and duties that were vest3
ed in the Office of Thrift Supervision and
4 the Director of the Office of Thrift Super5
vision, respectively, on the day before the
6 transfer date relating to the functions and
7 authority transferred under clause (i).
8 (C) CORPORATION.—Except as provided in
9 paragraph (1) and subparagraphs (A) and
10 (B)—
11 (i) all functions of the Office of Thrift
12 Supervision and the Director of the Office
13 of Thrift Supervision relating to State sav14
ings associations are transferred to the
15 Corporation; and
16 (ii) the Corporation shall succeed to
17 all powers, authorities, rights, and duties
18 that were vested in the Office of Thrift Su19
pervision and the Director of the Office of
20 Thrift Supervision on the day before the
21 transfer date relating to the functions
22 transferred under clause (i).
23 (c) CONFORMING AMENDMENTS.—Section 3 of the
24 Federal Deposit Insurance Act (12 U.S.C. 1813) is
25 amended—
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1 (1) in subsection (q), by striking paragraphs
2 (1) through (4) and inserting the following:
3 ‘‘(1) the Office of the Comptroller of the Cur4
rency, in the case of—
5 ‘‘(A) any national banking association;
6 ‘‘(B) any Federal branch or agency of a
7 foreign bank; and
8 ‘‘(C) any Federal savings association;
9 ‘‘(2) the Federal Deposit Insurance Corpora10
tion, in the case of—
11 ‘‘(A) any State nonmember insured bank;
12 ‘‘(B) any foreign bank having an insured
13 branch; and
14 ‘‘(C) any State savings association;
15 ‘‘(3) the Board of Governors of the Federal Re16
serve System, in the case of—
17 ‘‘(A) any State member bank;
18 ‘‘(B) any branch or agency of a foreign
19 bank with respect to any provision of the Fed20
eral Reserve Act which is made applicable
21 under the International Banking Act of 1978;
22 ‘‘(C) any foreign bank which does not op23
erate an insured branch;
24 ‘‘(D) any agency or commercial lending
25 company other than a Federal agency;
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1 ‘‘(E) supervisory or regulatory proceedings
2 arising from the authority given to the Board
3 of Governors under section 7(c)(1) of the Inter4
national Banking Act of 1978, including such
5 proceedings under the Financial Institutions
6 Supervisory Act of 1966;
7 ‘‘(F) any bank holding company and any
8 subsidiary (other than a depository institution)
9 of a bank holding company; and
10 ‘‘(G) any savings and loan holding com11
pany and any subsidiary (other than a deposi12
tory institution) of a savings and loan holding
13 company.’’; and
14 (2) in paragraphs (1) and (3) of subsection (u),
15 by striking ‘‘(other than a bank holding company’’
16 and inserting ‘‘(other than a bank holding company
17 or savings and loan holding company’’.
18 (d) CONSUMER PROTECTION.—Nothing in this sec19
tion may be construed to limit or otherwise affect the
20 transfer of powers under title X.
21 SEC. 313. ABOLISHMENT.
22 Effective 90 days after the transfer date, the Office
23 of Thrift Supervision and the position of Director of the
24 Office of Thrift Supervision are abolished.
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1 SEC. 314. AMENDMENTS TO THE REVISED STATUTES.
2 (a) AMENDMENT TO SECTION 324.—Section 324 of
3 the Revised Statutes of the United States (12 U.S.C. 1)
4 is amended to read as follows:
5 ‘‘SEC. 324. COMPTROLLER OF THE CURRENCY.
6 ‘‘(a) OFFICE OF THE COMPTROLLER OF THE CUR7
RENCY ESTABLISHED.—There is established in the De8
partment of the Treasury a bureau to be known as the
9 ‘Office of the Comptroller of the Currency’ which is
10 charged with assuring the safety and soundness of, and
11 compliance with laws and regulations, fair access to finan12
cial services, and fair treatment of customers by, the insti13
tutions and other persons subject to its jurisdiction.
14 ‘‘(b) COMPTROLLER OF THE CURRENCY.—
15 ‘‘(1) IN GENERAL.—The chief officer of the Of16
fice of the Comptroller of the Currency shall be
17 known as the Comptroller of the Currency. The
18 Comptroller of the Currency shall perform the duties
19 of the Comptroller of the Currency under the gen20
eral direction of the Secretary of the Treasury. The
21 Secretary of the Treasury may not delay or prevent
22 the issuance of any rule or the promulgation of any
23 regulation by the Comptroller of the Currency, and
24 may not intervene in any matter or proceeding be25
fore the Comptroller of the Currency (including
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1 agency enforcement actions), unless otherwise spe2
cifically provided by law.
3 ‘‘(2) ADDITIONAL AUTHORITY.—The Comp4
troller of the Currency shall have the same authority
5 with respect to functions transferred to the Comp6
troller of the Currency under the Enhancing Finan7
cial Institution Safety and Soundness Act of 2010
8 as was vested in the Director of the Office of Thrift
9 Supervision on the transfer date, as defined in sec10
tion 311 of that Act.’’.
11 (b) SUPERVISION OF FEDERAL SAVINGS ASSOCIA12
TIONS.—Chapter 9 of title VII of the Revised Statutes of
13 the United States (12 U.S.C. 1 et seq.) is amended by
14 inserting after section 327A (12 U.S.C. 4a) the following:
15 ‘‘SEC. 327B. DEPUTY COMPTROLLER FOR THE SUPER16
VISION AND EXAMINATION OF FEDERAL SAV17
INGS ASSOCIATIONS.
18 ‘‘The Comptroller of the Currency shall designate a
19 Deputy Comptroller, who shall be responsible for the su20
pervision and examination of Federal savings associa21
tions.’’.
22 (c) AMENDMENT TO SECTION 329.—Section 329 of
23 the Revised Statutes of the United States (12 U.S.C. 11)
24 is amended by inserting before the period at the end the
25 following: ‘‘or any Federal savings association’’.
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1 (d) EFFECTIVE DATE.—This section, and the amend2
ments made by this section, shall take effect on the trans3
fer date.
4 SEC. 315. FEDERAL INFORMATION POLICY.
5 Section 3502(5) of title 44, United States Code, is
6 amended by inserting ‘‘Office of the Comptroller of the
7 Currency,’’ after ‘‘the Securities and Exchange Commis8
sion,’’.
9 SEC. 316. SAVINGS PROVISIONS.
10 (a) OFFICE OF THRIFT SUPERVISION.—
11 (1) EXISTING RIGHTS, DUTIES, AND OBLIGA12
TIONS NOT AFFECTED.—Sections 312(b) and 313
13 shall not affect the validity of any right, duty, or ob14
ligation of the United States, the Director of the Of15
fice of Thrift Supervision, the Office of Thrift Su16
pervision, or any other person, that existed on the
17 day before the transfer date.
18 (2) CONTINUATION OF SUITS.—This title shall
19 not abate any action or proceeding commenced by or
20 against the Director of the Office of Thrift Super21
vision or the Office of Thrift Supervision before the
22 transfer date, except that—
23 (A) for any action or proceeding arising
24 out of a function of the Office of Thrift Super25
vision or the Director of the Office of Thrift
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1 Supervision transferred to the Board of Gov2
ernors by this title, the Board of Governors
3 shall be substituted for the Office of Thrift Su4
pervision or the Director of the Office of Thrift
5 Supervision as a party to the action or pro6
ceeding on and after the transfer date;
7 (B) for any action or proceeding arising
8 out of a function of the Office of Thrift Super9
vision or the Director of the Office of Thrift
10 Supervision transferred to the Office of the
11 Comptroller of the Currency or the Comptroller
12 of the Currency by this title, the Office of the
13 Comptroller of the Currency or the Comptroller
14 of the Currency shall be substituted for the Of15
fice of Thrift Supervision or the Director of the
16 Office of Thrift Supervision, as the case may
17 be, as a party to the action or proceeding on
18 and after the transfer date; and
19 (C) for any action or proceeding arising
20 out of a function of the Office of Thrift Super21
vision or the Director of the Office of Thrift
22 Supervision transferred to the Corporation by
23 this title, the Corporation shall be substituted
24 for the Office of Thrift Supervision or the Di25
rector of the Office of Thrift Supervision as a
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1 party to the action or proceeding on and after
2 the transfer date.
3 (b) CONTINUATION OF EXISTING OTS ORDERS, RES4
OLUTIONS, DETERMINATIONS, AGREEMENTS, REGULA5
TIONS, ETC.—All orders, resolutions, determinations,
6 agreements, and regulations, interpretative rules, other in7
terpretations, guidelines, procedures, and other advisory
8 materials, that have been issued, made, prescribed, or al9
lowed to become effective by the Office of Thrift Super10
vision or the Director of the Office of Thrift Supervision,
11 or by a court of competent jurisdiction, in the performance
12 of functions that are transferred by this title and that are
13 in effect on the day before the transfer date, shall continue
14 in effect according to the terms of such orders, resolutions,
15 determinations, agreements, and regulations, interpreta16
tive rules, other interpretations, guidelines, procedures,
17 and other advisory materials, and shall be enforceable by
18 or against—
19 (1) the Board of Governors, in the case of a
20 function of the Office of Thrift Supervision or the
21 Director of the Office of Thrift Supervision trans22
ferred to the Board of Governors, until modified,
23 terminated, set aside, or superseded in accordance
24 with applicable law by the Board of Governors, by
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1 any court of competent jurisdiction, or by operation
2 of law;
3 (2) the Office of the Comptroller of the Cur4
rency or the Comptroller of the Currency, in the
5 case of a function of the Office of Thrift Supervision
6 or the Director of the Office of Thrift Supervision
7 transferred to the Office of the Comptroller of the
8 Currency or the Comptroller of the Currency, re9
spectively, until modified, terminated, set aside, or
10 superseded in accordance with applicable law by the
11 Office of the Comptroller of the Currency or the
12 Comptroller of the Currency, by any court of com13
petent jurisdiction, or by operation of law; and
14 (3) the Corporation, in the case of a function
15 of the Office of Thrift Supervision or the Director
16 of the Office of Thrift Supervision transferred to the
17 Corporation, until modified, terminated, set aside, or
18 superseded in accordance with applicable law by the
19 Corporation, by any court of competent jurisdiction,
20 or by operation of law.
21 (c) IDENTIFICATION OF REGULATIONS CONTIN22
UED.—
23 (1) BY THE BOARD OF GOVERNORS.—Not later
24 than the transfer date, the Board of Governors
25 shall—
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1 (A) identify the regulations continued
2 under subsection (b) that will be enforced by
3 the Board of Governors; and
4 (B) publish a list of the regulations identi5
fied under subparagraph (A) in the Federal
6 Register.
7 (2) BY OFFICE OF THE COMPTROLLER OF THE
8 CURRENCY.—Not later than the transfer date, the
9 Office of the Comptroller of the Currency shall—
10 (A) after consultation with the Corpora11
tion, identify the regulations continued under
12 subsection (b) that will be enforced by the Of13
fice of the Comptroller of the Currency; and
14 (B) publish a list of the regulations identi15
fied under subparagraph (A) in the Federal
16 Register.
17 (3) BY THE CORPORATION.—Not later than the
18 transfer date, the Corporation shall—
19 (A) after consultation with the Office of
20 the Comptroller of the Currency, identify the
21 regulations continued under subsection (b) that
22 will be enforced by the Corporation; and
23 (B) publish a list of the regulations identi24
fied under subparagraph (A) in the Federal
25 Register.
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1 (d) STATUS OF REGULATIONS PROPOSED OR NOT
2 YET EFFECTIVE.—
3 (1) PROPOSED REGULATIONS.—Any proposed
4 regulation of the Office of Thrift Supervision, which
5 the Office of Thrift Supervision in performing func6
tions transferred by this title, has proposed before
7 the transfer date but has not published as a final
8 regulation before such date, shall be deemed to be
9 a proposed regulation of the Office of the Comp10
troller of the Currency or the Board of Governors,
11 as appropriate, according to the terms of the pro12
posed regulation.
13 (2) REGULATIONS NOT YET EFFECTIVE.—Any
14 interim or final regulation of the Office of Thrift Su15
pervision, which the Office of Thrift Supervision, in
16 performing functions transferred by this title, has
17 published before the transfer date but which has not
18 become effective before that date, shall become effec19
tive as a regulation of the Office of the Comptroller
20 of the Currency or the Board of Governors, as ap21
propriate, according to the terms of the interim or
22 final regulation, unless modified, terminated, set
23 aside, or superseded in accordance with applicable
24 law by the Office of the Comptroller of the Currency
25 or the Board of Governors, as appropriate, by any
402
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1 court of competent jurisdiction, or by operation of
2 law.
3 SEC. 317. REFERENCES IN FEDERAL LAW TO FEDERAL
4 BANKING AGENCIES.
5 On and after the transfer date, any reference in Fed6
eral law to the Director of the Office of Thrift Supervision
7 or the Office of Thrift Supervision, in connection with any
8 function of the Director of the Office of Thrift Supervision
9 or the Office of Thrift Supervision transferred under sec10
tion 312(b) or any other provision of this subtitle, shall
11 be deemed to be a reference to the Comptroller of the Cur12
rency, the Office of the Comptroller of the Currency, the
13 Chairperson of the Corporation, the Corporation, the
14 Chairman of the Board of Governors, or the Board of Gov15
ernors, as appropriate and consistent with the amend16
ments made in subtitle E.
17 SEC. 318. FUNDING.
18 (a) COMPENSATION OF EXAMINERS.—Section 5240
19 of the Revised Statutes of the United States (12 U.S.C.
20 481 et seq.) is amended—
21 (1) in the second undesignated paragraph (12
22 U.S.C. 481), in the fourth sentence, by striking
23 ‘‘without regard to the provisions of other laws ap24
plicable to officers or employees of the United
25 States’’ and inserting the following: ‘‘set and ad403
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1 justed subject to chapter 71 of title 5, United States
2 Code, and without regard to the provisions of other
3 laws applicable to officers or employees of the
4 United States’’; and
5 (2) in the third undesignated paragraph (12
6 U.S.C. 482), in the first sentence, by striking ‘‘shall
7 fix’’ and inserting ‘‘shall, subject to chapter 71 of
8 title 5, United States Code, fix’’.
9 (b) FUNDING OF OFFICE OF THE COMPTROLLER OF
10 THE CURRENCY.—Chapter 4 of title LXII of the Revised
11 Statutes is amended by inserting after section 5240 (12
12 U.S.C. 481, 482) the following:
13 ‘‘SEC. 5240A. The Comptroller of the Currency may
14 collect an assessment, fee, or other charge from any entity
15 described in section 3(q)(1) of the Federal Deposit Insur16
ance Act (12 U.S.C. 1813(q)(1)), as the Comptroller de17
termines is necessary or appropriate to carry out the re18
sponsibilities of the Office of the Comptroller of the Cur19
rency. In establishing the amount of an assessment, fee,
20 or charge collected from an entity under this section, the
21 Comptroller of the Currency may take into account the
22 nature and scope of the activities of the entity, the amount
23 and type of assets that the entity holds, the financial and
24 managerial condition of the entity, and any other factor,
25 as the Comptroller of the Currency determines is appro404
O:WRIWRI10949.xml [file 3 of 17] S.L.C
1 priate. Funds derived from any assessment, fee, or charge
2 collected or payment made pursuant to this section may
3 be deposited by the Comptroller of the Currency in accord4
ance with the provisions of section 5234. Such funds shall
5 not be construed to be Government funds or appropriated
6 monies, and shall not be subject to apportionment for pur7
poses of chapter 15 of title 31, United States Code, or
8 any other provision of law. The authority of the Comp9
troller of the Currency under this section shall be in addi10
tion to the authority under section 5240.
11 ‘‘The Comptroller of the Currency shall have sole au12
thority to determine the manner in which the obligations
13 of the Office of the Comptroller of the Currency shall be
14 incurred and its disbursements and expenses allowed and
15 paid, in accordance with this section, except as provided
16 in chapter 71 of title 5, United States Code (with respect
17 to compensation).’’.
18 (c) FUNDING OF BOARD OF GOVERNORS.—Section
19 11 of the Federal Reserve Act (12 U.S.C. 248) is amended
20 by adding at the end the following:
21 ‘‘(s) ASSESSMENTS, FEES, AND OTHER CHARGES
22 FOR CERTAIN COMPANIES.—
23 ‘‘(1) IN GENERAL.—The Board shall collect a
24 total amount of assessments, fees, or other charges
25 from the companies described in paragraph (2) that
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1 is equal to the total expenses the Board estimates
2 are necessary or appropriate to carry out the super3
visory and regulatory responsibilities of the Board
4 with respect to such companies.
5 ‘‘(2) COMPANIES.—The companies described in
6 this paragraph are—
7 ‘‘(A) all bank holding companies having
8 total consolidated assets of $50,000,000,000 or
9 more;
10 ‘‘(B) all savings and loan holding compa11
nies having total consolidated assets of
12 $50,000,000,000 or more; and
13 ‘‘(C) all nonbank financial companies su14
pervised by the Board under section 113 of the
15 Dodd-Frank Wall Street Reform and Consumer
16 Protection Act.’’.
17 (d) CORPORATION EXAMINATION FEES.—Section
18 10(e) of the Federal Deposit Insurance Act (12 U.S.C.
19 1820(e)) is amended by striking paragraph (1) and insert20
ing the following:
21 ‘‘(1) REGULAR AND SPECIAL EXAMINATIONS OF
22 DEPOSITORY INSTITUTIONS.—The cost of conducting
23 any regular examination or special examination of
24 any depository institution under subsection (b)(2),
25 (b)(3), or (d) or of any entity described in section
406
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1 3(q)(2) may be assessed by the Corporation against
2 the institution or entity to meet the expenses of the
3 Corporation in carrying out such examinations.’’.
4 (e) EFFECTIVE DATE.—This section, and the amend5
ments made by this section, shall take effect on the trans6
fer date.
7 SEC. 319. CONTRACTING AND LEASING AUTHORITY.
8 Notwithstanding the Federal Property and Adminis9
trative Services Act of 1949 (41 U.S.C. 251 et seq.) or
10 any other provision of law (except the full and open com11
petition requirements of the Competition in Contracting
12 Act), the Office of the Comptroller of the Currency may—
13 (1) enter into and perform contracts, execute
14 instruments, and acquire real property (or property
15 interest) as the Comptroller deems necessary to
16 carry out the duties and responsibilities of the Office
17 of the Comptroller of the Currency; and
18 (2) hold, maintain, sell, lease, or otherwise dis19
pose of the property (or property interest) acquired
20 under paragraph (1).
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1 Subtitle B—Transitional Provisions
2 SEC. 321. INTERIM USE OF FUNDS, PERSONNEL, AND PROP3
ERTY OF THE OFFICE OF THRIFT SUPER4
VISION.
5 (a) IN GENERAL.—Before the transfer date, the Of6
fice of the Comptroller of the Currency, the Corporation,
7 and the Board of Governors shall—
8 (1) consult and cooperate with the Office of
9 Thrift Supervision to facilitate the orderly transfer
10 of functions to the Office of the Comptroller of the
11 Currency, the Corporation, and the Board of Gov12
ernors in accordance with this title;
13 (2) determine jointly, from time to time—
14 (A) the amount of funds necessary to pay
15 any expenses associated with the transfer of
16 functions (including expenses for personnel,
17 property, and administrative services) during
18 the period beginning on the date of enactment
19 of this Act and ending on the transfer date;
20 (B) which personnel are appropriate to fa21
cilitate the orderly transfer of functions by this
22 title; and
23 (C) what property and administrative serv24
ices are necessary to support the Office of the
25 Comptroller of the Currency, the Corporation,
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1 and the Board of Governors during the period
2 beginning on the date of enactment of this Act
3 and ending on the transfer date; and
4 (3) take such actions as may be necessary to
5 provide for the orderly implementation of this title.
6 (b) AGENCY CONSULTATION.—When requested joint7
ly by the Office of the Comptroller of the Currency, the
8 Corporation, and the Board of Governors to do so before
9 the transfer date, the Office of Thrift Supervision shall—
10 (1) pay to the Office of the Comptroller of the
11 Currency, the Corporation, or the Board of Gov12
ernors, as applicable, from funds obtained by the Of13
fice of Thrift Supervision through assessments, fees,
14 or other charges that the Office of Thrift Super15
vision is authorized by law to impose, such amounts
16 as the Office of the Comptroller of the Currency, the
17 Corporation, and the Board of Governors jointly de18
termine to be necessary under subsection (a);
19 (2) detail to the Office of the Comptroller of the
20 Currency, the Corporation, or the Board of Gov21
ernors, as applicable, such personnel as the Office of
22 the Comptroller of the Currency, the Corporation,
23 and the Board of Governors jointly determine to be
24 appropriate under subsection (a); and
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1 (3) make available to the Office of the Comp2
troller of the Currency, the Corporation, or the
3 Board of Governors, as applicable, such property
4 and provide to the Office of the Comptroller of the
5 Currency, the Corporation, or the Board of Gov6
ernors, as applicable, such administrative services as
7 the Office of the Comptroller of the Currency, the
8 Corporation, and the Board of Governors jointly de9
termine to be necessary under subsection (a).
10 (c) NOTICE REQUIRED.—The Office of the Comp11
troller of the Currency, the Corporation, and the Board
12 of Governors shall jointly give the Office of Thrift Super13
vision reasonable prior notice of any request that the Of14
fice of the Comptroller of the Currency, the Corporation,
15 and the Board of Governors jointly intend to make under
16 subsection (b).
17 SEC. 322. TRANSFER OF EMPLOYEES.
18 (a) IN GENERAL.—
19 (1) OFFICE OF THRIFT SUPERVISION EMPLOY20
EES.—
21 (A) IN GENERAL.—Except as provided in
22 section 1064, all employees of the Office of
23 Thrift Supervision shall be transferred to the
24 Office of the Comptroller of the Currency or the
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1 Corporation for employment in accordance with
2 this section.
3 (B) ALLOCATING EMPLOYEES FOR TRANS4
FER TO RECEIVING AGENCIES.—The Director of
5 the Office of Thrift Supervision, the Comp6
troller of the Currency, and the Chairperson of
7 the Corporation shall—
8 (i) jointly determine the number of
9 employees of the Office of Thrift Super10
vision necessary to perform or support the
11 functions that are transferred to the Office
12 of the Comptroller of the Currency or the
13 Corporation by this title; and
14 (ii) consistent with the determination
15 under clause (i), jointly identify employees
16 of the Office of Thrift Supervision for
17 transfer to the Office of the Comptroller of
18 the Currency or the Corporation.
19 (2) EMPLOYEES TRANSFERRED; SERVICE PERI20
ODS CREDITED.—For purposes of this section, peri21
ods of service with a Federal home loan bank, a
22 joint office of Federal home loan banks, or a Federal
23 reserve bank shall be credited as periods of service
24 with a Federal agency.
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1 (3) APPOINTMENT AUTHORITY FOR EXCEPTED
2 SERVICE TRANSFERRED.—
3 (A) IN GENERAL.—Except as provided in
4 subparagraph (B), any appointment authority
5 of the Office of Thrift Supervision under Fed6
eral law that relates to the functions trans7
ferred under section 312, including the regula8
tions of the Office of Personnel Management,
9 for filling the positions of employees in the ex10
cepted service shall be transferred to the Comp11
troller of the Currency or the Chairperson of
12 the Corporation, as appropriate.
13 (B) DECLINING TRANSFERS ALLOWED.—
14 The Comptroller of the Currency or the Chair15
person of the Corporation may decline to accept
16 a transfer of authority under subparagraph (A)
17 (and the employees appointed under that au18
thority) to the extent that such authority re19
lates to positions excepted from the competitive
20 service because of their confidential, policy-mak21
ing, policy-determining, or policy-advocating
22 character.
23 (4) ADDITIONAL APPOINTMENT AUTHORITY.—
24 Notwithstanding any other provision of law, the Of25
fice of the Comptroller of the Currency and the Cor412
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1 poration may appoint transferred employees to posi2
tions in the Office of the Comptroller of the Cur3
rency or the Corporation, respectively.
4 (b) TIMING OF TRANSFERS AND POSITION ASSIGN5
MENTS.—Each employee to be transferred under sub6
section (a)(1) shall—
7 (1) be transferred not later than 90 days after
8 the transfer date; and
9 (2) receive notice of the position assignment of
10 the employee not later than 120 days after the effec11
tive date of the transfer of the employee.
12 (c) TRANSFER OF FUNCTIONS.—
13 (1) IN GENERAL.—Notwithstanding any other
14 provision of law, the transfer of employees under
15 this subtitle shall be deemed a transfer of functions
16 for the purpose of section 3503 of title 5, United
17 States Code.
18 (2) PRIORITY.—If any provision of this subtitle
19 conflicts with any protection provided to a trans20
ferred employee under section 3503 of title 5,
21 United States Code, the provisions of this subtitle
22 shall control.
23 (d) EMPLOYEE STATUS AND ELIGIBILITY.—The
24 transfer of functions and employees under this subtitle,
25 and the abolishment of the Office of Thrift Supervision
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1 under section 313, shall not affect the status of the trans2
ferred employees as employees of an agency of the United
3 States under any provision of law.
4 (e) EQUAL STATUS AND TENURE POSITIONS.—
5 (1) STATUS AND TENURE.—Each transferred
6 employee from the Office of Thrift Supervision shall
7 be placed in a position at the Office of the Comp8
troller of the Currency or the Corporation with the
9 same status and tenure as the transferred employee
10 held on the day before the date on which the em11
ployee was transferred.
12 (2) FUNCTIONS.—To the extent practicable,
13 each transferred employee shall be placed in a posi14
tion at the Office of the Comptroller of the Currency
15 or the Corporation, as applicable, responsible for the
16 same functions and duties as the transferred em17
ployee had on the day before the date on which the
18 employee was transferred, in accordance with the ex19
pertise and preferences of the transferred employee.
20 (f) NO ADDITIONAL CERTIFICATION REQUIRE21
MENTS.—An examiner who is a transferred employee shall
22 not be subject to any additional certification requirements
23 before being placed in a comparable position at the Office
24 of the Comptroller of the Currency or the Corporation,
25 if the examiner carries out examinations of the same type
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1 of institutions as an employee of the Office of the Comp2
troller of the Currency or the Corporation as the employee
3 was responsible for carrying out before the date on which
4 the employee was transferred.
5 (g) PERSONNEL ACTIONS LIMITED.—
6 (1) PROTECTION.—
7 (A) IN GENERAL.—Except as provided in
8 paragraph (2), each affected employee shall not,
9 during the 30-month period beginning on the
10 transfer date, be involuntarily separated, or in11
voluntarily reassigned outside his or her locality
12 pay area.
13 (B) AFFECTED EMPLOYEES.—For pur14
poses of this paragraph, the term ‘‘affected em15
ployee’’ means—
16 (i) an employee transferred from the
17 Office of Thrift Supervision holding a per18
manent position on the day before the
19 transfer date; and
20 (ii) an employee of the Office of the
21 Comptroller of the Currency or the Cor22
poration holding a permanent position on
23 the day before the transfer date.
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1 (2) EXCEPTIONS.—Paragraph (1) does not
2 limit the right of the Office of the Comptroller of the
3 Currency or the Corporation to—
4 (A) separate an employee for cause or for
5 unacceptable performance;
6 (B) terminate an appointment to a position
7 excepted from the competitive service because of
8 its confidential policy-making, policy-deter9
mining, or policy-advocating character; or
10 (C) reassign an employee outside such em11
ployee’s locality pay area when the Office of the
12 Comptroller of the Currency or the Corporation
13 determines that the reassignment is necessary
14 for the efficient operation of the agency.
15 (h) PAY.—
16 (1) 30-MONTH PROTECTION.—Except as pro17
vided in paragraph (2), during the 30-month period
18 beginning on the date on which the employee was
19 transferred under this subtitle, a transferred em20
ployee shall be paid at a rate that is not less than
21 the basic rate of pay, including any geographic dif22
ferential, that the transferred employee received dur23
ing the pay period immediately preceding the date
24 on which the employee was transferred. Notwith25
standing the preceding sentence, if the employee was
416
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1 receiving a higher rate of basic pay on a temporary
2 basis (because of a temporary assignment, tem3
porary promotion, or other temporary action) imme4
diately before the transfer, the Agency may reduce
5 the rate of basic pay on the date the rate would have
6 been reduced but for the transfer, and the protected
7 rate for the remainder of the 30-month period will
8 be the reduced rate that would have applied but for
9 the transfer.
10 (2) EXCEPTIONS.—The Comptroller of the Cur11
rency or the Corporation may reduce the rate of
12 basic pay of a transferred employee—
13 (A) for cause, including for unacceptable
14 performance; or
15 (B) with the consent of the transferred
16 employee.
17 (3) PROTECTION ONLY WHILE EMPLOYED.—
18 This subsection shall apply to a transferred em19
ployee only during the period that the transferred
20 employee remains employed by Office of the Comp21
troller of the Currency or the Corporation.
22 (4) PAY INCREASES PERMITTED.—Nothing in
23 this subsection shall limit the authority of the Comp24
troller of the Currency or the Chairperson of the
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1 Corporation to increase the pay of a transferred em2
ployee.
3 (i) BENEFITS.—
4 (1) RETIREMENT BENEFITS FOR TRANSFERRED
5 EMPLOYEES.—
6 (A) IN GENERAL.—
7 (i) CONTINUATION OF EXISTING RE8
TIREMENT PLAN.—Each transferred em9
ployee shall remain enrolled in the retire10
ment plan of the transferred employee, for
11 as long as the transferred employee is em12
ployed by the Office of the Comptroller of
13 the Currency or the Corporation.
14 (ii) EMPLOYER’S CONTRIBUTION.—
15 The Comptroller of the Currency or the
16 Chairperson of the Corporation, as appro17
priate, shall pay any employer contribu18
tions to the existing retirement plan of
19 each transferred employee, as required
20 under each such existing retirement plan.
21 (B) DEFINITION.—In this paragraph, the
22 term ‘‘existing retirement plan’’ means, with re23
spect to a transferred employee, the retirement
24 plan (including the Financial Institutions Re25
tirement Fund), and any associated thrift sav418
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1 ings plan, of the agency from which the em2
ployee was transferred in which the employee
3 was enrolled on the day before the date on
4 which the employee was transferred.
5 (2) BENEFITS OTHER THAN RETIREMENT BEN6
EFITS.—
7 (A) DURING FIRST YEAR.—
8 (i) EXISTING PLANS CONTINUE.—
9 During the 1-year period following the
10 transfer date, each transferred employee
11 may retain membership in any employee
12 benefit program (other than a retirement
13 benefit program) of the agency from which
14 the employee was transferred under this
15 title, including any dental, vision, long
16 term care, or life insurance program to
17 which the employee belonged on the day
18 before the transfer date.
19 (ii) EMPLOYER’S CONTRIBUTION.—
20 The Office of the Comptroller of the Cur21
rency or the Corporation, as appropriate,
22 shall pay any employer cost required to ex23
tend coverage in the benefit program to
24 the transferred employee as required under
25 that program or negotiated agreements.
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1 (B) DENTAL, VISION, OR LIFE INSURANCE
2 AFTER FIRST YEAR.—If, after the 1-year period
3 beginning on the transfer date, the Office of the
4 Comptroller of the Currency or the Corporation
5 determines that the Office of the Comptroller of
6 the Currency or the Corporation, as the case
7 may be, will not continue to participate in any
8 dental, vision, or life insurance program of an
9 agency from which an employee was trans10
ferred, a transferred employee who is a member
11 of the program may, before the decision takes
12 effect and without regard to any regularly
13 scheduled open season, elect to enroll in—
14 (i) the enhanced dental benefits pro15
gram established under chapter 89A of
16 title 5, United States Code;
17 (ii) the enhanced vision benefits estab18
lished under chapter 89B of title 5, United
19 States Code; and
20 (iii) the Federal Employees’ Group
21 Life Insurance Program established under
22 chapter 87 of title 5, United States Code,
23 without regard to any requirement of in24
surability.
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1 (C) LONG TERM CARE INSURANCE AFTER
2 1ST YEAR.—If, after the 1-year period begin3
ning on the transfer date, the Office of the
4 Comptroller of the Currency or the Corporation
5 determines that the Office of the Comptroller of
6 the Currency or the Corporation, as appro7
priate, will not continue to participate in any
8 long term care insurance program of an agency
9 from which an employee transferred, a trans10
ferred employee who is a member of such a pro11
gram may, before the decision takes effect, elect
12 to apply for coverage under the Federal Long
13 Term Care Insurance Program established
14 under chapter 90 of title 5, United States Code,
15 under the underwriting requirements applicable
16 to a new active workforce member, as described
17 in part 875 of title 5, Code of Federal Regula18
tions (or any successor thereto).
19 (D) CONTRIBUTION OF TRANSFERRED EM20
PLOYEE.—
21 (i) IN GENERAL.—Subject to clause
22 (ii), a transferred employee who is enrolled
23 in a plan under the Federal Employees
24 Health Benefits Program shall pay any
421
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1 employee contribution required under the
2 plan.
3 (ii) COST DIFFERENTIAL.—The Office
4 of the Comptroller of the Currency or the
5 Corporation, as applicable, shall pay any
6 difference in cost between the employee
7 contribution required under the plan pro8
vided to transferred employees by the
9 agency from which the employee trans10
ferred on the date of enactment of this Act
11 and the plan provided by the Office of the
12 Comptroller of the Currency or the Cor13
poration, as the case may be, under this
14 section.
15 (iii) FUNDS TRANSFER.—The Office
16 of the Comptroller of the Currency or the
17 Corporation, as the case may be, shall
18 transfer to the Employees Health Benefits
19 Fund established under section 8909 of
20 title 5, United States Code, an amount de21
termined by the Director of the Office of
22 Personnel Management, after consultation
23 with the Comptroller of the Currency or
24 the Chairperson of the Corporation, as the
25 case may be, and the Office of Manage422
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1 ment and Budget, to be necessary to reim2
burse the Fund for the cost to the Fund
3 of providing any benefits under this sub4
paragraph that are not otherwise paid for
5 by a transferred employee under clause (i).
6 (E) SPECIAL PROVISIONS TO ENSURE CON7
TINUATION OF LIFE INSURANCE BENEFITS.—
8 (i) IN GENERAL.—An annuitant, as
9 defined in section 8901 of title 5, United
10 States Code, who is enrolled in a life insur11
ance plan administered by an agency from
12 which employees are transferred under this
13 title on the day before the transfer date
14 shall be eligible for coverage by a life in15
surance plan under sections 8706(b),
16 8714a, 8714b, or 8714c of title 5, United
17 States Code, or by a life insurance plan es18
tablished by the Office of the Comptroller
19 of the Currency or the Corporation, as ap20
plicable, without regard to any regularly
21 scheduled open season or any requirement
22 of insurability.
23 (ii) CONTRIBUTION OF TRANSFERRED
24 EMPLOYEE.—
423
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1 (I) IN GENERAL.—Subject to
2 subclause (II), a transferred employee
3 enrolled in a life insurance plan under
4 this subparagraph shall pay any em5
ployee contribution required by the
6 plan.
7 (II) COST DIFFERENTIAL.—The
8 Office of the Comptroller of the Cur9
rency or the Corporation, as the case
10 may be, shall pay any difference in
11 cost between the benefits provided by
12 the agency from which the employee
13 transferred on the date of enactment
14 of this Act and the benefits provided
15 under this section.
16 (III) FUNDS TRANSFER.—The
17 Office of the Comptroller of the Cur18
rency or the Corporation, as the case
19 may be, shall transfer to the Federal
20 Employees’ Group Life Insurance
21 Fund established under section 8714
22 of title 5, United States Code, an
23 amount determined by the Director of
24 the Office of Personnel Management,
25 after consultation with the Comp424
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1 troller of the Currency or the Chair2
person of the Corporation, as the case
3 may be, and the Office of Manage4
ment and Budget, to be necessary to
5 reimburse the Federal Employees’
6 Group Life Insurance Fund for the
7 cost to the Federal Employees’ Group
8 Life Insurance Fund of providing ben9
efits under this subparagraph not oth10
erwise paid for by a transferred em11
ployee under subclause (I).
12 (IV) CREDIT FOR TIME EN13
ROLLED IN OTHER PLANS.—For any
14 transferred employee, enrollment in a
15 life insurance plan administered by
16 the agency from which the employee
17 transferred, immediately before enroll18
ment in a life insurance plan under
19 chapter 87 of title 5, United States
20 Code, shall be considered as enroll21
ment in a life insurance plan under
22 that chapter for purposes of section
23 8706(b)(1)(A) of title 5, United
24 States Code.
425
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1 (j) INCORPORATION INTO AGENCY PAY SYSTEM.—
2 Not later than 30 months after the transfer date, the
3 Comptroller of the Currency and the Chairperson of the
4 Corporation shall place each transferred employee into the
5 established pay system and structure of the appropriate
6 employing agency.
7 (k) EQUITABLE TREATMENT.—In administering the
8 provisions of this section, the Comptroller of the Currency
9 and the Chairperson of the Corporation—
10 (1) may not take any action that would unfairly
11 disadvantage a transferred employee relative to any
12 other employee of the Office of the Comptroller of
13 the Currency or the Corporation on the basis of
14 prior employment by the Office of Thrift Super15
vision;
16 (2) may take such action as is appropriate in
17 an individual case to ensure that a transferred em18
ployee receives equitable treatment, with respect to
19 the status, tenure, pay, benefits (other than benefits
20 under programs administered by the Office of Per21
sonnel Management), and accrued leave or vacation
22 time for prior periods of service with any Federal
23 agency of the transferred employee;
24 (3) shall, jointly with the Director of the Office
25 of Thrift Supervision, develop and adopt procedures
426
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1 and safeguards designed to ensure that the require2
ments of this subsection are met; and
3 (4) shall conduct a study detailing the position
4 assignments of all employees transferred pursuant to
5 subsection (a), describing the procedures and safe6
guards adopted pursuant to paragraph (3), and
7 demonstrating that the requirements of this sub8
section have been met; and shall, not later than 365
9 days after the transfer date, submit a copy of such
10 study to Congress.
11 (l) REORGANIZATION.—
12 (1) IN GENERAL.—If the Comptroller of the
13 Currency or the Chairperson of the Corporation de14
termines, during the 2-year period beginning 1 year
15 after the transfer date, that a reorganization of the
16 staff of the Office of the Comptroller of the Cur17
rency or the Corporation, respectively, is required,
18 the reorganization shall be deemed a ‘‘major reorga19
nization’’ for purposes of affording affected employ20
ees retirement under section 8336(d)(2) or
21 8414(b)(1)(B) of title 5, United States Code.
22 (2) SERVICE CREDIT.—For purposes of this
23 subsection, periods of service with a Federal home
24 loan bank or a joint office of Federal home loan
427
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1 banks shall be credited as periods of service with a
2 Federal agency.
3 SEC. 323. PROPERTY TRANSFERRED.
4 (a) PROPERTY DEFINED.—For purposes of this sec5
tion, the term ‘‘property’’ includes all real property (in6
cluding leaseholds) and all personal property, including
7 computers, furniture, fixtures, equipment, books, ac8
counts, records, reports, files, memoranda, paper, reports
9 of examination, work papers, and correspondence related
10 to such reports, and any other information or materials.
11 (b) PROPERTY OF THE OFFICE OF THRIFT SUPER12
VISION.—
13 (1) IN GENERAL.—No later than 90 days after
14 the transfer date, all property of the Office of Thrift
15 Supervision (other than property described under
16 paragraph (b)(2)) that the Comptroller of the Cur17
rency and the Chairperson of the Corporation jointly
18 determine is used, on the day before the transfer
19 date, to perform or support the functions of the Of20
fice of Thrift Supervision transferred to the Office
21 of the Comptroller of the Currency or the Corpora22
tion under this title, shall be transferred to the Of23
fice of the Comptroller of the Currency or the Cor24
poration in a manner consistent with the transfer of
25 employees under this subtitle.
428
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1 (2) PERSONAL PROPERTY.—All books, ac2
counts, records, reports, files, memoranda, papers,
3 documents, reports of examination, work papers, and
4 correspondence of the Office of Thrift Supervision
5 that the Comptroller of the Currency, the Chair6
person of the Corporation, and the Chairman of the
7 Board of Governors jointly determine is used, on the
8 day before the transfer date, to perform or support
9 the functions of the Office of Thrift Supervision
10 transferred to the Board of Governors under this
11 title shall be transferred to the Board of Governors
12 in a manner consistent with the purposes of this
13 title.
14 (c) CONTRACTS RELATED TO PROPERTY TRANS15
FERRED.—Each contract, agreement, lease, license, per16
mit, and similar arrangement relating to property trans17
ferred to the Office of the Comptroller of the Currency
18 or the Corporation by this section shall be transferred to
19 the Office of the Comptroller of the Currency or the Cor20
poration, as appropriate, together with the property to
21 which it relates.
22 (d) PRESERVATION OF PROPERTY.—Property identi23
fied for transfer under this section shall not be altered,
24 destroyed, or deleted before transfer under this section.
429
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1 SEC. 324. FUNDS TRANSFERRED.
2 The funds that, on the day before the transfer date,
3 the Director of the Office of Thrift Supervision (in con4
sultation with the Comptroller of the Currency, the Chair5
person of the Corporation, and the Chairman of the Board
6 of Governors) determines are not necessary to dispose of
7 the affairs of the Office of Thrift Supervision under sec8
tion 325 and are available to the Office of Thrift Super9
vision to pay the expenses of the Office of Thrift Super10
vision—
11 (1) relating to the functions of the Office of
12 Thrift Supervision transferred under section
13 312(b)(2)(B), shall be transferred to the Office of
14 the Comptroller of the Currency on the transfer
15 date;
16 (2) relating to the functions of the Office of
17 Thrift Supervision transferred under section
18 312(b)(2)(C), shall be transferred to the Corporation
19 on the transfer date; and
20 (3) relating to the functions of the Office of
21 Thrift Supervision transferred under section
22 312(b)(1)(A), shall be transferred to the Board of
23 Governors on the transfer date.
430
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1 SEC. 325. DISPOSITION OF AFFAIRS.
2 (a) AUTHORITY OF DIRECTOR.—During the 90-day
3 period beginning on the transfer date, the Director of the
4 Office of Thrift Supervision—
5 (1) shall, solely for the purpose of winding up
6 the affairs of the Office of Thrift Supervision relat7
ing to any function transferred to the Office of the
8 Comptroller of the Currency, the Corporation, or the
9 Board of Governors under this title—
10 (A) manage the employees of the Office of
11 Thrift Supervision who have not yet been trans12
ferred and provide for the payment of the com13
pensation and benefits of the employees that ac14
crue before the date on which the employees are
15 transferred under this title; and
16 (B) manage any property of the Office of
17 Thrift Supervision, until the date on which the
18 property is transferred under section 323; and
19 (2) may take any other action necessary to
20 wind up the affairs of the Office of Thrift Super21
vision.
22 (b) STATUS OF DIRECTOR.—
23 (1) IN GENERAL.—Notwithstanding the trans24
fer of functions under this subtitle, during the 90-
25 day period beginning on the transfer date, the Direc26
tor of the Office of Thrift Supervision shall retain
431
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1 and may exercise any authority vested in the Direc2
tor of the Office of Thrift Supervision on the day be3
fore the transfer date, only to the extent necessary—
4 (A) to wind up the Office of Thrift Super5
vision; and
6 (B) to carry out the transfer under this
7 subtitle during such 90-day period.
8 (2) OTHER PROVISIONS.—For purposes of
9 paragraph (1), the Director of the Office of Thrift
10 Supervision shall, during the 90-day period begin11
ning on the transfer date, continue to be—
12 (A) treated as an officer of the United
13 States; and
14 (B) entitled to receive compensation at the
15 same annual rate of basic pay that the Director
16 of the Office of Thrift Supervision received on
17 the day before the transfer date.
18 SEC. 326. CONTINUATION OF SERVICES.
19 Any agency, department, or other instrumentality of
20 the United States, and any successor to any such agency,
21 department, or instrumentality, that was, before the trans22
fer date, providing support services to the Office of Thrift
23 Supervision in connection with functions transferred to
24 the Office of the Comptroller of the Currency, the Cor432
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1 poration or the Board of Governors under this title,
2 shall—
3 (1) continue to provide such services, subject to
4 reimbursement by the Office of the Comptroller of
5 the Currency, the Corporation, or the Board of Gov6
ernors, until the transfer of functions under this
7 title is complete; and
8 (2) consult with the Comptroller of the Cur9
rency, the Chairperson of the Corporation, or the
10 Chairman of the Board of Governors, as appro11
priate, to coordinate and facilitate a prompt and or12
derly transition.
13 SEC. 327. IMPLEMENTATION PLAN AND REPORTS.
14 (a) PLAN SUBMISSION.—Within 180 days of the en15
actment of the Dodd-Frank Wall Street Reform and Con16
sumer Protection Act, the Board of Governors, the Cor17
poration, the Office of the Comptroller of the Currency,
18 and the Office of Thrift Supervision, shall jointly submit
19 a plan to the Committee on Banking, Housing, and Urban
20 Affairs of the Senate, the Committee on Financial Services
21 of the House of Representatives, and the Inspectors Gen22
eral of the Department of the Treasury, the Corporation,
23 and the Board of Governors detailing the steps the Board
24 of Governors, the Corporation, the Office of the Comp25
troller of the Currency, and the Office of Thrift Super433
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1 vision will take to implement the provisions of sections 301
2 through 326, and the provisions of the amendments made
3 by such sections.
4 (b) INSPECTORS GENERAL REVIEW OF THE PLAN.—
5 Within 60 days of receiving the plan required under sub6
section (a), the Inspectors General of the Department of
7 the Treasury, the Corporation, and the Board of Gov8
ernors shall jointly provide a written report to the Board
9 of Governors, the Corporation, the Office of the Comp10
troller of the Currency, and the Office of Thrift Super11
vision and shall submit a copy to the Committee on Bank12
ing, Housing, and Urban Affairs of the Senate and the
13 Committee on Financial Services of the House of Rep14
resentatives detailing whether the plan conforms with the
15 provisions of sections 301 through 326, and the provisions
16 of the amendments made by such sections, including—
17 (1) whether the plan sufficiently takes into con18
sideration the orderly transfer of personnel;
19 (2) whether the plan describes procedures and
20 safeguards to ensure that the Office of Thrift Super21
vision employees are not unfairly disadvantaged rel22
ative to employees of the Office of the Comptroller
23 of the Currency and the Corporation;
434
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1 (3) whether the plan sufficiently takes into con2
sideration the orderly transfer of authority and re3
sponsibilities;
4 (4) whether the plan sufficiently takes into con5
sideration the effective transfer of funds;
6 (5) whether the plan sufficiently takes in con7
sideration the orderly transfer of property; and
8 (6) any additional recommendations for an or9
derly and effective process.
10 (c) IMPLEMENTATION REPORTS.—Not later than 6
11 months after the date on which the Committee on Bank12
ing, Housing, and Urban Affairs of the Senate and the
13 Committee on Financial Services of the House of Rep14
resentatives receives the report required under subsection
15 (b), and every 6 months thereafter until all aspects of the
16 plan have been implemented, the Inspectors General of the
17 Department of the Treasury, the Corporation, and the
18 Board of Governors shall jointly provide a written report
19 on the status of the implementation of the plan to the
20 Board of Governors, the Corporation, the Office of the
21 Comptroller of the Currency, and the Office of Thrift Su22
pervision and shall submit a copy to the Committee on
23 Banking, Housing, and Urban Affairs of the Senate and
24 the Committee on Financial Services of the House of Rep25
resentatives.
435
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1 Subtitle C—Federal Deposit
2 Insurance Corporation
3 SEC. 331. DEPOSIT INSURANCE REFORMS.
4 (a) SIZE DISTINCTIONS.—Section 7(b)(2) of the Fed5
eral Deposit Insurance Act (12 U.S.C. 1817(b)(2)) is
6 amended—
7 (1) by striking subparagraph (D); and
8 (2) by redesignating subparagraph (C) as sub9
paragraph (D).
10 (b) ASSESSMENT BASE.—The Corporation shall
11 amend the regulations issued by the Corporation under
12 section 7(b)(2) of the Federal Deposit Insurance Act (12
13 U.S.C. 1817(b)(2)) to define the term ‘‘assessment base’’
14 with respect to an insured depository institution for pur15
poses of that section 7(b)(2), as an amount equal to—
16 (1) the average consolidated total assets of the
17 insured depository institution during the assessment
18 period; minus
19 (2) the sum of—
20 (A) the average tangible equity of the in21
sured depository institution during the assess22
ment period; and
23 (B) in the case of an insured depository in24
stitution that is a custodial bank (as defined by
25 the Corporation, based on factors including the
436
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1 percentage of total revenues generated by custo2
dial businesses and the level of assets under
3 custody) or a banker’s bank (as that term is
4 used in section 5136 of the Revised Statutes
5 (12 U.S.C. 24)), an amount that the Corpora6
tion determines is necessary to establish assess7
ments consistent with the definition under sec8
tion 7(b)(1) of the Federal Deposit Insurance
9 Act (12 U.S.C. 1817(b)(1)) for a custodial
10 bank or a banker’s bank.
11 SEC. 332. ELIMINATION OF PROCYCLICAL ASSESSMENTS.
12 Section 7(e) of the Federal Deposit Insurance Act is
13 amended—
14 (1) in paragraph (2)—
15 (A) by amending subparagraph (B) to read
16 as follows:
17 ‘‘(B) LIMITATION.—The Board of Direc18
tors may, in its sole discretion, suspend or limit
19 the declaration of payment of dividends under
20 subparagraph (A).’’;
21 (B) by amending subparagraph (C) to read
22 as follows:
23 ‘‘(C) NOTICE AND OPPORTUNITY FOR COM24
MENT.—The Corporation shall prescribe, by
25 regulation, after notice and opportunity for
437
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1 comment, the method for the declaration, cal2
culation, distribution, and payment of dividends
3 under this paragraph’’; and
4 (C) by striking subparagraphs (D) through
5 (G); and
6 (2) in paragraph (4)(A) by striking ‘‘para7
graphs (2)(D) and’’ and inserting ‘‘paragraphs (2)
8 and’’.
9 SEC. 333. ENHANCED ACCESS TO INFORMATION FOR DE10
POSIT INSURANCE PURPOSES.
11 (a) Section 7(a)(2)(B) of the Federal Deposit Insur12
ance Act is amended by striking ‘‘agreement’’ and insert13
ing ‘‘consultation’’.
14 (b) Section 7(b)(1)(E) of the Federal Deposit Insur15
ance Act is amended—
16 (1) in clause (i), by striking ‘‘such as’’ and in17
serting ‘‘including’’; and
18 (2) in clause (iii), by striking ‘‘Corporation’’
19 and inserting ‘‘Corporation, except as provided in
20 section 7(a)(2)(B)’’.
21 SEC. 334. TRANSITION RESERVE RATIO REQUIREMENTS TO
22 REFLECT NEW ASSESSMENT BASE.
23 (a) Section 7(b)(3)(B) of the Federal Deposit Insur24
ance Act is amended to read as follows:
438
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1 ‘‘(B) MINIMUM RESERVE RATIO.—The re2
serve ratio designated by the Board of Direc3
tors for any year may not be less than 1.15 per4
cent of estimated insured deposits, or the com5
parable percentage of the assessment base set
6 forth in paragraph (2)(C).’’.
7 (b) Section 3(y)(3) of the Federal Deposit Insurance
8 Act is amended by inserting ‘‘, or such comparable per9
centage of the assessment base set forth in section
10 7(b)(2)(C)’’ before the period.
11 (c) For a period of not less than 5 years after the
12 date of the enactment of this title, the Federal Deposit
13 Insurance Corporation shall make available to the public
14 the reserve ratio and the designated reserve ratio using
15 both estimated insured deposits and the assessment base
16 under section 7(b)(2)(C) of the Federal Deposit Insurance
17 Act.
18 SEC. 335. PERMANENT INCREASE IN DEPOSIT AND SHARE
19 INSURANCE.
20 (a) PERMANENT INCREASE IN DEPOSIT INSUR21
ANCE.—Section 11(a)(1)(E) of the Federal Deposit Insur22
ance Act (12 U.S.C. 1821(a)(1)(E)) is amended—
23 (1) by striking ‘‘$100,000’’ and inserting
24 ‘‘$250,000’’; and
439
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1 (2) by adding at the end the following new sen2
tences: ‘‘Notwithstanding any other provision of law,
3 the increase in the standard maximum deposit insur4
ance amount to $250,000 shall apply to depositors
5 in any institution for which the Corporation was ap6
pointed as receiver or conservator on or after Janu7
ary 1, 2008, and before October 3, 2008. The Cor8
poration shall take such actions as are necessary to
9 carry out the requirements of this section with re10
spect to such depositors, without regard to any time
11 limitations under this Act. In implementing this and
12 the preceding 2 sentences, any payment on a deposit
13 claim made by the Corporation as receiver or conser14
vator to a depositor above the standard maximum
15 deposit insurance amount in effect at the time of the
16 appointment of the Corporation as receiver or con17
servator shall be deemed to be part of the net
18 amount due to the depositor under subparagraph
19 (B).’’
20 (b) PERMANENT INCREASE IN SHARE INSURANCE.—
21 Section 207(k)(5) of the Federal Credit Union Act (12
22 U.S.C. 1787(k)(5)) is amended by striking ‘‘$100,000’’
23 and inserting ‘‘$250,000’’.
440
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1 SEC. 336. MANAGEMENT OF THE FEDERAL DEPOSIT INSUR2
ANCE CORPORATION.
3 (a) IN GENERAL.—Section 2 of the Federal Deposit
4 Insurance Act (12 U.S.C. 1812) is amended—
5 (1) in subsection (a)(1)(B), by striking ‘‘Direc6
tor of the Office of Thrift Supervision’’ and insert7
ing ‘‘Director of the Consumer Financial Protection
8 Bureau’’;
9 (2) by amending subsection (d)(2) to read as
10 follows:
11 ‘‘(2) ACTING OFFICIALS MAY SERVE.—In the
12 event of a vacancy in the office of the Comptroller
13 of the Currency or the office of Director of the Con14
sumer Financial Protection Bureau and pending the
15 appointment of a successor, or during the absence or
16 disability of the Comptroller of the Currency or the
17 Director of the Consumer Financial Protection Bu18
reau, the acting Comptroller of the Currency or the
19 acting Director of the Consumer Financial Protec20
tion Bureau, as the case may be, shall be a member
21 of the Board of Directors in the place of the Comp22
troller or Director.’’; and
23 (3) in subsection (f)(2), by striking ‘‘Office of
24 Thrift Supervision’’ and inserting ‘‘Consumer Finan25
cial Protection Bureau’’.
441
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1 (b) EFFECTIVE DATE.—This section, and the amend2
ments made by this section, shall take effect on the trans3
fer date.
4 Subtitle D—Other Matters
5 SEC. 341. BRANCHING.
6 Notwithstanding the Federal Deposit Insurance Act
7 (12 U.S.C. 1811 et seq.), the Bank Holding Company Act
8 of 1956 (12 U.S.C. 1841 et seq.), or any other provision
9 of Federal or State law, a savings association that be10
comes a bank may—
11 (1) continue to operate any branch or agency
12 that the savings association operated immediately
13 before the savings association became a bank; and
14 (2) establish, acquire, and operate additional
15 branches and agencies at any location within any
16 State in which the savings association operated a
17 branch immediately before the savings association
18 became a bank, if the law of the State in which the
19 branch is located, or is to be located, would permit
20 establishment of the branch if the bank were a State
21 bank chartered by such State.
22 SEC. 342. OFFICE OF MINORITY AND WOMEN INCLUSION.
23 (a) OFFICE OF MINORITY AND WOMEN INCLU24
SION.—
25 (1) ESTABLISHMENT.—
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1 (A) IN GENERAL.—Except as provided in
2 subparagraph (B), not later than 6 months
3 after the date of enactment of this Act, each
4 agency shall establish an Office of Minority and
5 Women Inclusion that shall be responsible for
6 all matters of the agency relating to diversity in
7 management, employment, and business activi8
ties.
9 (B) BUREAU.—The Bureau shall establish
10 an Office of Minority and Women Inclusion not
11 later than 6 months after the designated trans12
fer date established under section 1062.
13 (2) TRANSFER OF RESPONSIBILITIES.—Each
14 agency that, on the day before the date of enactment
15 of this Act, assigned the responsibilities described in
16 paragraph (1) (or comparable responsibilities) to an17
other office of the agency shall ensure that such re18
sponsibilities are transferred to the Office.
19 (3) DUTIES WITH RESPECT TO CIVIL RIGHTS
20 LAWS.—The responsibilities described in paragraph
21 (1) do not include enforcement of statutes, regula22
tions, or executive orders pertaining to civil rights,
23 except each Director shall coordinate with the agen24
cy administrator, or the designee of the agency ad25
ministrator, regarding the design and implementa443
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1 tion of any remedies resulting from violations of
2 such statutes, regulations, or executive orders.
3 (b) DIRECTOR.—
4 (1) IN GENERAL.—The Director of each Office
5 shall be appointed by, and shall report to, the agen6
cy administrator. The position of Director shall be
7 a career reserved position in the Senior Executive
8 Service, as that position is defined in section 3132
9 of title 5, United States Code, or an equivalent des10
ignation.
11 (2) DUTIES.—Each Director shall develop
12 standards for—
13 (A) equal employment opportunity and the
14 racial, ethnic, and gender diversity of the work15
force and senior management of the agency;
16 (B) increased participation of minority17
owned and women-owned businesses in the pro18
grams and contracts of the agency, including
19 standards for coordinating technical assistance
20 to such businesses; and
21 (C) assessing the diversity policies and
22 practices of entities regulated by the agency.
23 (3) OTHER DUTIES.—Each Director shall ad24
vise the agency administrator on the impact of the
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1 policies and regulations of the agency on minority2
owned and women-owned businesses.
3 (4) RULE OF CONSTRUCTION.—Nothing in
4 paragraph (2)(C) may be construed to mandate any
5 requirement on or otherwise affect the lending poli6
cies and practices of any regulated entity, or to re7
quire any specific action based on the findings of the
8 assessment.
9 (c) INCLUSION IN ALL LEVELS OF BUSINESS ACTIVI10
TIES.—
11 (1) IN GENERAL.—The Director of each Office
12 shall develop and implement standards and proce13
dures to ensure, to the maximum extent possible, the
14 fair inclusion and utilization of minorities, women,
15 and minority-owned and women-owned businesses in
16 all business and activities of the agency at all levels,
17 including in procurement, insurance, and all types of
18 contracts.
19 (2) CONTRACTS.—The procedures established
20 by each agency for review and evaluation of contract
21 proposals and for hiring service providers shall in22
clude, to the extent consistent with applicable law, a
23 component that gives consideration to the diversity
24 of the applicant. Such procedure shall include a
25 written statement, in a form and with such content
445
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1 as the Director shall prescribe, that a contractor
2 shall ensure, to the maximum extent possible, the
3 fair inclusion of women and minorities in the work4
force of the contractor and, as applicable, sub5
contractors.
6 (3) TERMINATION.—
7 (A) DETERMINATION.—The standards and
8 procedures developed and implemented under
9 this subsection shall include a procedure for the
10 Director to make a determination whether an
11 agency contractor, and, as applicable, a subcon12
tractor has failed to make a good faith effort to
13 include minorities and women in their work14
force.
15 (B) EFFECT OF DETERMINATION.—
16 (i) RECOMMENDATION TO AGENCY AD17
MINISTRATOR.—Upon a determination de18
scribed in subparagraph (A), the Director
19 shall make a recommendation to the agen20
cy administrator that the contract be ter21
minated.
22 (ii) ACTION BY AGENCY ADMINIS23
TRATOR.—Upon receipt of a recommenda24
tion under clause (i), the agency adminis25
trator may—
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1 (I) terminate the contract;
2 (II) make a referral to the Office
3 of Federal Contract Compliance Pro4
grams of the Department of Labor; or
5 (III) take other appropriate ac6
tion.
7 (d) APPLICABILITY.—This section shall apply to all
8 contracts of an agency for services of any kind, including
9 the services of financial institutions, investment banking
10 firms, mortgage banking firms, asset management firms,
11 brokers, dealers, financial services entities, underwriters,
12 accountants, investment consultants, and providers of
13 legal services. The contracts referred to in this subsection
14 include all contracts for all business and activities of an
15 agency, at all levels, including contracts for the issuance
16 or guarantee of any debt, equity, or security, the sale of
17 assets, the management of the assets of the agency, the
18 making of equity investments by the agency, and the im19
plementation by the agency of programs to address eco20
nomic recovery.
21 (e) REPORTS.—Each Office shall submit to Congress
22 an annual report regarding the actions taken by the agen23
cy and the Office pursuant to this section, which shall in24
clude—
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1 (1) a statement of the total amounts paid by
2 the agency to contractors since the previous report;
3 (2) the percentage of the amounts described in
4 paragraph (1) that were paid to contractors de5
scribed in subsection (c)(1);
6 (3) the successes achieved and challenges faced
7 by the agency in operating minority and women out8
reach programs;
9 (4) the challenges the agency may face in hiring
10 qualified minority and women employees and con11
tracting with qualified minority-owned and women12
owned businesses; and
13 (5) any other information, findings, conclusions,
14 and recommendations for legislative or agency ac15
tion, as the Director determines appropriate.
16 (f) DIVERSITY IN AGENCY WORKFORCE.—Each
17 agency shall take affirmative steps to seek diversity in the
18 workforce of the agency at all levels of the agency in a
19 manner consistent with applicable law. Such steps shall
20 include—
21 (1) recruiting at historically black colleges and
22 universities, Hispanic-serving institutions, women’s
23 colleges, and colleges that typically serve majority
24 minority populations;
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1 (2) sponsoring and recruiting at job fairs in
2 urban communities;
3 (3) placing employment advertisements in news4
papers and magazines oriented toward minorities
5 and women;
6 (4) partnering with organizations that are fo7
cused on developing opportunities for minorities and
8 women to place talented young minorities and
9 women in industry internships, summer employment,
10 and full-time positions;
11 (5) where feasible, partnering with inner-city
12 high schools, girls’ high schools, and high schools
13 with majority minority populations to establish or
14 enhance financial literacy programs and provide
15 mentoring; and
16 (6) any other mass media communications that
17 the Office determines necessary.
18 (g) DEFINITIONS.—For purposes of this section, the
19 following definitions shall apply:
20 (1) AGENCY.—The term ‘‘agency’’ means—
21 (A) the Departmental Offices of the De22
partment of the Treasury;
23 (B) the Corporation;
24 (C) the Federal Housing Finance Agency;
25 (D) each of the Federal reserve banks;
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1 (E) the Board;
2 (F) the National Credit Union Administra3
tion;
4 (G) the Office of the Comptroller of the
5 Currency;
6 (H) the Commission; and
7 (I) the Bureau.
8 (2) AGENCY ADMINISTRATOR.—The term
9 ‘‘agency administrator’’ means the head of an agen10
cy.
11 (3) MINORITY.—The term ‘‘minority’’ has the
12 same meaning as in section 1204(c) of the Financial
13 Institutions Reform, Recovery, and Enforcement Act
14 of 1989 (12 U.S.C. 1811 note).
15 (4) MINORITY-OWNED BUSINESS.—The term
16 ‘‘minority-owned business’’ has the same meaning as
17 in section 21A(r)(4)(A) of the Federal Home Loan
18 Bank Act (12 U.S.C. 1441a(r)(4)(A)), as in effect
19 on the day before the transfer date.
20 (5) OFFICE.—The term ‘‘Office’’ means the Of21
fice of Minority and Women Inclusion established by
22 an agency under subsection (a).
23 (6) WOMEN-OWNED BUSINESS.—The term
24 ‘‘women-owned business’’ has the meaning given the
25 term ‘‘women’s business’’ in section 21A(r)(4)(B) of
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1 the Federal Home Loan Bank Act (12 U.S.C.
2 1441a(r)(4)(B)), as in effect on the day before the
3 transfer date.
4 SEC. 343. INSURANCE OF TRANSACTION ACCOUNTS.
5 (a) BANKS AND SAVINGS ASSOCIATIONS.—
6 (1) AMENDMENTS.—Section 11(a)(1) of the
7 Federal Deposit Insurance Act (12 U.S.C.
8 1821(a)(1)) is amended—
9 (A) in subparagraph (B)—
10 (i) by striking ‘‘The net amount’’ and
11 inserting the following:
12 ‘‘(i) IN GENERAL.—Subject to clause
13 (ii), the net amount’’; and
14 (ii) by adding at the end the following
15 new clauses:
16 ‘‘(ii) INSURANCE FOR NONINTEREST17
BEARING TRANSACTION ACCOUNTS.—Not18
withstanding clause (i), the Corporation
19 shall fully insure the net amount that any
20 depositor at an insured depository institu21
tion maintains in a noninterest-bearing
22 transaction account. Such amount shall
23 not be taken into account when computing
24 the net amount due to such depositor
25 under clause (i).
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1 ‘‘(iii) NONINTEREST-BEARING TRANS2
ACTION ACCOUNT DEFINED.—For purposes
3 of this subparagraph, the term ‘non4
interest-bearing transaction account’
5 means a deposit or account maintained at
6 an insured depository institution—
7 ‘‘(I) with respect to which inter8
est is neither accrued nor paid;
9 ‘‘(II) on which the depositor or
10 account holder is permitted to make
11 withdrawals by negotiable or transfer12
able instrument, payment orders of
13 withdrawal, telephone or other elec14
tronic media transfers, or other simi15
lar items for the purpose of making
16 payments or transfers to third parties
17 or others; and
18 ‘‘(III) on which the insured de19
pository institution does not reserve
20 the right to require advance notice of
21 an intended withdrawal.’’; and
22 (B) in subparagraph (C), by striking ‘‘sub23
paragraph (B)’’ and inserting ‘‘subparagraph
24 (B)(i)’’.
452
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1 (2) EFFECTIVE DATE.—The amendments made
2 by paragraph (1) shall take effect on December 31,
3 2010.
4 (3) PROSPECTIVE REPEAL.—Effective January
5 1, 2013, section 11(a)(1) of the Federal Deposit In6
surance Act (12 U.S.C. 1821(a)(1)), as amended by
7 paragraph (1), is amended—
8 (A) in subparagraph (B)—
9 (i) by striking ‘‘DEPOSIT.—’’ and all
10 that follows through ‘‘clause (ii), the net
11 amount’’ and insert ‘‘DEPOSIT.—The net
12 amount’’; and
13 (ii) by striking clauses (ii) and (iii);
14 and
15 (B) in subparagraph (C), by striking ‘‘sub16
paragraph (B)(i)’’ and inserting ‘‘subparagraph
17 (B)’’.
18 (b) CREDIT UNIONS.—
19 (1) AMENDMENTS.—Section 207(k)(1) of the
20 Federal Credit Union Act (12 U.S.C. 1787(k)(1)) is
21 amended—
22 (A) in subparagraph (A)—
23 (i) by striking ‘‘Subject to the provi24
sions of paragraph (2), the net amount’’
25 and inserting the following:
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1 ‘‘(i) NET AMOUNT OF INSURANCE
2 PAYABLE.—Subject to clause (ii) and the
3 provisions of paragraph (2), the net
4 amount’’; and
5 (ii) by adding at the end the following
6 new clauses: ‘‘(ii) .-- ‘‘(iii) .--’’.
7 ‘‘(ii) INSURANCE FOR NONINTEREST8
BEARING TRANSACTION ACCOUNTS.—Not9
withstanding clause (i), the Board shall
10 fully insure the net amount that any mem11
ber or depositor at an insured credit union
12 maintains in a noninterest-bearing trans13
action account. Such amount shall not be
14 taken into account when computing the net
15 amount due to such member or depositor
16 under clause (i).
17 ‘‘(iii) NONINTEREST-BEARING TRANS18
ACTION ACCOUNT DEFINED.—For purposes
19 of this subparagraph, the term ‘non20
interest-bearing transaction account’
21 means an account or deposit maintained at
22 an insured credit union—
23 ‘‘(I) with respect to which inter24
est is neither accrued nor paid;
454
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1 ‘‘(II) on which the account holder
2 or depositor is permitted to make
3 withdrawals by negotiable or transfer4
able instrument, payment orders of
5 withdrawal, telephone or other elec6
tronic media transfers, or other simi7
lar items for the purpose of making
8 payments or transfers to third parties
9 or others; and
10 ‘‘(III) on which the insured cred11
it union does not reserve the right to
12 require advance notice of an intended
13 withdrawal.’’; and
14 (B) in subparagraph (B), by striking ‘‘sub15
paragraph (A)’’ and inserting ‘‘subparagraph
16 (A)(i)’’.
17 (2) EFFECTIVE DATE.—The amendments made
18 by paragraph (1) shall take effect upon the date of
19 the enactment of this Act
20 (3) PROSPECTIVE REPEAL.—Effective January
21 1, 2013, section 207(k)(1) of the Federal Credit
22 Union Act (12 U.S.C. 1787(k)(1)), as amended by
23 paragraph (1), is amended—
24 (A) in subparagraph (A)—
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1 (i) by striking ‘‘(i) NET AMOUNT OF
2 INSURANCE PAYABLE.—’’ and all that fol3
lows through ‘‘paragraph (2), the net
4 amount’’ and inserting ‘‘Subject to the
5 provisions of paragraph (2), the net
6 amount’’; and
7 (ii) by striking clauses (ii) and (iii);
8 and
9 (B) in subparagraph (B), by striking ‘‘sub10
paragraph (A)(i)’’ and inserting ‘‘subparagraph
11 (A)’’.
12 Subtitle E—Technical and
13 Conforming Amendments
14 SEC. 351. EFFECTIVE DATE.
15 Except as provided in section 364(a), the amend16
ments made by this subtitle shall take effect on the trans17
fer date.
18 SEC. 352. BALANCED BUDGET AND EMERGENCY DEFICIT
19 CONTROL ACT OF 1985.
20 Section 256(h) of the Balanced Budget and Emer21
gency Deficit Control Act of 1985 (2 U.S.C. 906(h)) is
22 amended—
23 (1) in paragraph (4), by striking subparagraphs
24 (C) and (G); and
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1 (2) by redesignating subparagraphs (D), (E),
2 (F), and (H) as subparagraphs (C), (D), (E), and
3 (F), respectively.
4 SEC. 353. BANK ENTERPRISE ACT OF 1991.
5 Section 232(a) of the Bank Enterprise Act of 1991
6 (12 U.S.C. 1834(a)) is amended—
7 (1) in the subsection heading, by striking ‘‘BY
8 FEDERAL RESERVE BOARD’’;
9 (2) in paragraph (1)—
10 (A) by striking ‘‘The Board of Governors
11 of the Federal Reserve System,’’ and inserting
12 ‘‘The Comptroller of the Currency’’; and
13 (B) by striking ‘‘section 7(b)(2)(H)’’ and
14 inserting ‘‘section 7(b)(2)(E)’’;
15 (3) in paragraph (2)(A), by striking ‘‘Board’’
16 and inserting ‘‘Comptroller’’; and
17 (4) in paragraph (3)—
18 (A) by redesignating subparagraphs (A)
19 through (C) as subparagraphs (B) through (D),
20 respectively; and
21 (B) by inserting before subparagraph (B)
22 the following:
23 ‘‘(A) COMPTROLLER.—The term ‘Comp24
troller’ means the Comptroller of the Cur25
rency.’’.
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1 SEC. 354. BANK HOLDING COMPANY ACT OF 1956.
2 The Bank Holding Company Act of 1956 (12 U.S.C.
3 1841 et seq.) is amended—
4 (1) in section 2(j)(3) (12 U.S.C. 1841(j)(3)),
5 strike ‘‘Director of the Office of Thrift Supervision’’
6 and inserting ‘‘appropriate Federal banking agen7
cy’’;
8 (2) in section 4 (12 U.S.C. 1843)—
9 (A) in subsection (i)—
10 (i) in paragraph (4)—
11 (I) in subparagraph (A)—
12 (aa) in the subparagraph
13 heading, by striking ‘‘TO DIREC14
TOR’’; and
15 (bb) by striking ‘‘Board’’
16 and all that follows through the
17 end of the subparagraph and in18
serting ‘‘Board shall solicit com19
ments and recommendations
20 from—
21 ‘‘(i) the Comptroller of the Currency,
22 with respect to the acquisition of a Federal
23 savings association; and
24 ‘‘(ii) the Federal Deposit Insurance
25 Corporation, with respect to the acquisition
26 of a State savings association.’’.
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1 (II) in subparagraph (B), by
2 striking ‘‘Director’’ each place that
3 term appears and inserting ‘‘Comp4
troller of the Currency or the Federal
5 Deposit Insurance Corporation, as ap6
plicable,’’;
7 (ii) in paragraph (5)—
8 (I) in subparagraph (B), by
9 striking ‘‘Director with’’ and inserting
10 ‘‘Comptroller of the Currency or the
11 Federal Deposit Insurance Corpora12
tion, as applicable, with’’; and
13 (II) by striking ‘‘Director’’ each
14 place that term appears and inserting
15 ‘‘Comptroller of the Currency or the
16 Federal Deposit Insurance Corpora17
tion’’;
18 (iii) in paragraph (6), by striking ‘‘Di19
rector’’ and inserting ‘‘Comptroller of the
20 Currency or the Federal Deposit Insurance
21 Corporation, as applicable,’’; and
22 (iv) by striking paragraph (7); and
23 (3) in section 5(f) (12 U.S.C. 1844(f))—
24 (A) by striking ‘‘subpena’’ each place that
25 term appears and inserting ‘‘subpoena’’;
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1 (B) by striking ‘‘subpenas’’ each place that
2 term appears and inserting ‘‘subpoenas’’; and
3 (C) by striking ‘‘subpenaed’’ and inserting
4 ‘‘subpoenaed’’.
5 SEC. 355. BANK HOLDING COMPANY ACT AMENDMENTS OF
6 1970.
7 Section 106(b)(1) of the Bank Holding Company Act
8 Amendments of 1970 (12 U.S.C. 1972(1)) is amended in
9 the undesignated matter following subparagraph (E) by
10 inserting ‘‘issue such regulations as are necessary to carry
11 out this section, and, in consultation with the Comptroller
12 of the Currency and the Federal Deposit Insurance Com13
pany, may’’ after ‘‘The Board may’’.
14 SEC. 356. BANK PROTECTION ACT OF 1968.
15 The Bank Protection Act of 1968 (12 U.S.C. 1881
16 et seq.) is amended—
17 (1) in section 2 (12 U.S.C. 1881), by striking
18 ‘‘the term’’ and all that follows through the end of
19 the section and inserting ‘‘the term ‘Federal super20
visory agency’ means the appropriate Federal bank21
ing agency, as defined in section 3(q) of the Federal
22 Deposit Insurance Act (12 U.S.C. 1813(q)).’’;
23 (2) in section 3 (12 U.S.C. 1882), by striking
24 ‘‘and loan’’ each place that term appears; and
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O:WRIWRI10949.xml [file 3 of 17] S.L.C
1 (3) in section 5 (12 U.S.C. 1884), by striking
2 ‘‘and loan’’.
3 SEC. 357. BANK SERVICE COMPANY ACT.
4 The Bank Service Company Act (12 U.S.C. 1861 et
5 seq.) is amended—
6 (1) in section 1(b)(4) (12 U.S.C. 1861(b)(4))—
7 (A) by inserting after ‘‘an insured bank,’’
8 the following: ‘‘a savings association,’’;
9 (B) by striking ‘‘Director of the Office of
10 Thrift Supervision’’ and inserting ‘‘appropriate
11 Federal banking agency’’; and
12 (C) by striking ‘‘, the Federal Savings and
13 Loan Insurance Corporation,’’;
14 (2) in section 1(b)(5), by striking ‘‘term ‘in15
sured depository institution’ has the same meaning
16 as in section 3(c)’’ and inserting ‘‘terms ‘depository
17 institution’ and ‘savings association’ have the same
18 meanings as in section 3’’; and
19 (3) in section 7(c)(2) (12 U.S.C. 1867(c)(2)),
20 by inserting ‘‘each’’ after ‘‘notify’’.
21 SEC. 358. COMMUNITY REINVESTMENT ACT OF 1977.
22 The Community Reinvestment Act of 1977 (12
23 U.S.C. 2901 et seq.) is amended—
24 (1) in section 803 (12 U.S.C. 2902)—
25 (A) in paragraph (1)—
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1 (i) in subparagraph (A), by inserting
2 ‘‘and Federal savings associations (the de3
posits of which are insured by the Federal
4 Deposit Insurance Corporation)’’ after
5 ‘‘banks’’;
6 (ii) in subparagraph (B), by striking
7 ‘‘and bank holding companies’’ and insert8
ing ‘‘, bank holding companies, and sav9
ings and loan holding companies’’; and
10 (iii) in subparagraph (C), by striking
11 ‘‘; and’’ and inserting ‘‘, and State savings
12 associations (the deposits of which are in13
sured by the Federal Deposit Insurance
14 Corporation).’’; and
15 (B) by striking paragraph (2) (relating to
16 the Office of Thrift Supervision), as added by
17 section 744(q) of the Financial Institutions Re18
form, Recovery, and Enforcement Act of 1989
19 (Public Law 101–73; 103 Stat. 440); and
20 (2) in section 806 (12 U.S.C. 2905), by insert21
ing ‘‘, except that the Comptroller of the Currency
22 shall prescribe regulations applicable to savings asso23
ciations and the Board of Governors shall prescribe
24 regulations applicable to insured State member
462
O:WRIWRI10949.xml [file 3 of 17] S.L.C
1 banks, bank holding companies and savings and loan
2 holding companies,’’ after ‘‘supervisory agency’’.
3 SEC. 359. CRIME CONTROL ACT OF 1990.
4 The Crime Control Act of 1990 is amended—
5 (1) in section 2539(c)(2) (28 U.S.C. 509
6 note)—
7 (A) by striking subparagraphs (C) and
8 (D); and
9 (B) by redesignating subparagraphs (E)
10 through (H) as subparagraphs (C) through (G),
11 respectively; and
12 (2) in section 2554(b)(2) (Public Law 101–647;
13 104 Stat. 4890)—
14 (A) in subparagraph (A), by striking ‘‘, the
15 Director of the Office of Thrift Supervision,’’
16 and inserting ‘‘the Comptroller of the Cur17
rency’’; and
18 (B) in subparagraph (B), by striking ‘‘,
19 the Director’’ and all that follows through
20 ‘‘Trust Corporation’’ and inserting ‘‘or the Fed21
eral Deposit Insurance Corporation’’.
22 SEC. 360. DEPOSITORY INSTITUTION MANAGEMENT INTER23
LOCKS ACT.
24 The Depository Institution Management Interlocks
25 Act (12 U.S.C. 3201 et seq.) is amended—
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1 (1) in section 207 (12 U.S.C. 3206)—
2 (A) in paragraph (1), by inserting before
3 the comma at the end the following: ‘‘and Fed4
eral savings associations (the deposits of which
5 are insured by the Federal Deposit Insurance
6 Corporation)’’;
7 (B) in paragraph (2), by striking ‘‘, and
8 bank holding companies’’ and inserting ‘‘, bank
9 holding companies, and savings and loan hold10
ing companies’’;
11 (C) in paragraph (3), by striking ‘‘Cor12
poration,’’ and inserting ‘‘Corporation and
13 State savings associations (the deposits of
14 which are insured by the Federal Deposit In15
surance Corporation),’’;
16 (D) by striking paragraph (4);
17 (E) by redesignating paragraphs (5) and
18 (6) as paragraphs (4) and (5), respectively; and
19 (F) in paragraph (5), as so redesignated,
20 by striking ‘‘through (5)’’ and inserting
21 ‘‘through (4)’’;
22 (2) in section 209 (12 U.S.C. 3207)—
23 (A) in paragraph (1), by inserting before
24 the comma at the end the following: ‘‘and Fed25
eral savings associations (the deposits of which
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1 are insured by the Federal Deposit Insurance
2 Corporation)’’;
3 (B) in paragraph (2), by striking ‘‘, and
4 bank holding companies’’ and inserting ‘‘, bank
5 holding companies, and savings and loan hold6
ing companies’’;
7 (C) in paragraph (3), by striking ‘‘Cor8
poration,’’ and inserting ‘‘Corporation and
9 State savings associations (the deposits of
10 which are insured by the Federal Deposit In11
surance Corporation),’’;
12 (D) by striking paragraph (4); and
13 (E) by redesignating paragraph (5) as
14 paragraph (4); and
15 (3) in section 210(a) (12 U.S.C. 3208(a))—
16 (A) by striking ‘‘his’’ and inserting ‘‘the’’;
17 and
18 (B) by inserting ‘‘of the Attorney General’’
19 after ‘‘enforcement functions’’.
20 SEC. 361. EMERGENCY HOMEOWNERS’ RELIEF ACT.
21 Section 110 of the Emergency Homeowners’ Relief
22 Act (12 U.S.C. 2709) is amended in the second sentence,
23 by striking ‘‘Home Loan Bank Board, the Federal Savings
24 and Loan Insurance Corporation’’ and inserting ‘‘Housing
25 Finance Agency’’.
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1 SEC. 362. FEDERAL CREDIT UNION ACT.
2 The Federal Credit Union Act (12 U.S.C. 1751 et
3 seq.) is amended—
4 (1) in section 107(8) (12 U.S.C. 1757(8)), by
5 striking ‘‘or the Federal Savings and Loan Insur6
ance Corporation’’;
7 (2) in section 205 (12 U.S.C. 1785)—
8 (A) in subsection (b)(2)(G)(i), by striking
9 ‘‘the Office of Thrift Supervision and’’; and
10 (B) in subsection (i)(1), by striking ‘‘or the
11 Federal Savings and Loan Insurance Corpora12
tion’’; and
13 (3) in section 206(g)(7) (12 U.S.C.
14 1786(g)(7))—
15 (A) in subparagraph (A)—
16 (i) in clause (ii), by striking ‘‘(b)(8)’’
17 and inserting ‘‘(b)(9)’’;
18 (ii) in clause (v)—
19 (I) by striking ‘‘depository’’ and
20 inserting ‘‘financial’’; and
21 (II) by adding ‘‘and’’ at the end;
22 (iii) in clause (vi)—
23 (I) by striking ‘‘Board’’ and in24
serting ‘‘Agency’’; and
25 (II) by striking ‘‘; and’’ and in26
serting a period; and
466
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1 (iv) by striking clause (vii); and
2 (B) in subparagraph (D)—
3 (i) in clause (iii), by adding ‘‘and’’ at
4 the end;
5 (ii) in clause (iv)—
6 (I) by striking ‘‘Board’’ and in7
serting ‘‘Agency’’; and
8 (II) by striking ‘‘and’’ at the end;
9 and
10 (iii) by striking clause (v).
11 SEC. 363. FEDERAL DEPOSIT INSURANCE ACT.
12 The Federal Deposit Insurance Act (12 U.S.C. 1811
13 et seq.) is amended—
14 (1) in section 3 (12 U.S.C. 1813)—
15 (A) in subsection (b)(1)(C), by striking
16 ‘‘Director of the Office of Thrift Supervision’’
17 and inserting ‘‘Comptroller of the Currency’’;
18 (B) in subsection (l)(5), in the matter pre19
ceding subparagraph (A), by striking ‘‘Director
20 of the Office of Thrift Supervision,’’; and
21 (C) in subsection (z), by striking ‘‘the Di22
rector of the Office of Thrift Supervision,’’;
23 (2) in section 7 (12 U.S.C. 1817)—
24 (A) in subsection (a)—
25 (i) in paragraph (2)—
467
O:WRIWRI10949.xml [file 3 of 17] S.L.C
1 (I) in subparagraph (A)—
2 (aa) in the first sentence, by
3 striking ‘‘the Director of the Of4
fice of Thrift Supervision,’’;
5 (bb) in the second sen6
tence—
7 (AA) by striking ‘‘the
8 Director of the Office of
9 Thrift Supervision,’’ and in10
serting ‘‘to’’; and
11 (BB) by inserting ‘‘to’’
12 before ‘‘any Federal home’’;
13 and
14 (cc) by striking ‘‘Finance
15 Board’’ each place that term ap16
pears and inserting ‘‘Finance
17 Agency’’; and
18 (II) in subparagraph (B), by
19 striking ‘‘the Comptroller of the Cur20
rency, the Board of Governors of the
21 Federal Reserve System, and the Di22
rector of the Office of Thrift Super23
vision,’’ and inserting ‘‘the Comp24
troller of the Currency and the Board
468
O:WRIWRI10949.xml [file 3 of 17] S.L.C
1 of Governors of the Federal Reserve
2 System,’’;
3 (ii) in paragraph (3), in the first sen4
tence, by striking ‘‘Comptroller of the Cur5
rency, the Chairman of the Board of Gov6
ernors of the Federal Reserve System, and
7 the Director of the Office of Thrift Super8
vision.’’ and inserting ‘‘Comptroller of the
9 Currency, and the Chairman of the Board
10 of Governors of the Federal Reserve Sys11
tem.’’;
12 (iii) in paragraph (6), by striking
13 ‘‘section 232(a)(3)(C)’’ and inserting ‘‘sec14
tion 232(a)(3)(D)’’; and
15 (iv) in paragraph (7), by striking ‘‘,
16 the Director of the Office of Thrift Super17
vision,’’; and
18 (B) in subsection (n)—
19 (i) in the heading, by striking ‘‘DI20
RECTOR OF THE OFFICE OF THRIFT SU21
PERVISION’’ and inserting ‘‘COMPTROLLER
22 OF THE CURRENCY’’;
23 (ii) in the first sentence—
24 (I) by striking ‘‘the Director of
25 the Office of Thrift Supervision’’ and
469
O:WRIWRI10949.xml [file 3 of 17] S.L.C
1 inserting ‘‘the Comptroller of the Cur2
rency’’; and
3 (II) by inserting ‘‘Federal’’ be4
fore ‘‘savings associations’’;
5 (iii) in the third sentence, by striking
6 ‘‘, the Financing Corporation, and the Res7
olution Funding Corporation’’; and
8 (iv) by striking ‘‘the Director’’ each
9 place that term appears and inserting ‘‘the
10 Comptroller’’;
11 (3) in section 8 (12 U.S.C. 1818)—
12 (A) in subsection (a)(8)(B)(ii), in the last
13 sentence, by striking ‘‘Director of the Office of
14 Thrift Supervision’’ each place that term ap15
pears and inserting ‘‘Comptroller of the Cur16
rency’’;
17 (B) in subsection (b)(3)—
18 (i) by inserting ‘‘any savings and loan
19 holding company and any subsidiary (other
20 than a depository institution) of a savings
21 and loan holding company (as such terms
22 are defined in section 10 of Home Owners’
23 Loan Act)), any noninsured State member
24 bank’’ after ‘‘Bank Holding Company Act
25 of 1956,’’; and
470
O:WRIWRI10949.xml [file 3 of 17] S.L.C
1 (ii) by inserting ‘‘or against a savings
2 and loan holding company or any sub3
sidiary thereof (other than a depository in4
stitution or a subsidiary of such depository
5 institution)’’ before the period at the end;
6 (C) by striking paragraph (9) of subsection
7 (b) and inserting the following new paragraph:
8 ‘‘(9) [Repealed]’’.
9 (D) in subsection (e)(7)—
10 (i) in subparagraph (A)—
11 (I) in clause (v), by inserting
12 ‘‘and’’ after the semicolon;
13 (II) in clause (vi)—
14 (aa) by striking ‘‘Board’’
15 and inserting ‘‘Agency’’; and
16 (bb) by striking ‘‘; and’’ and
17 inserting a period; and
18 (III) by striking clause (vii); and
19 (ii) in subparagraph (D)—
20 (I) in clause (iii), by inserting
21 ‘‘and’’ after the semicolon;
22 (II) in clause (iv)—
23 (aa) by striking ‘‘Board’’
24 and inserting ‘‘Agency’’; and
471
O:WRIWRI10949.xml [file 3 of 17] S.L.C
1 (bb) by striking ‘‘; and’’ and
2 inserting a period; and
3 (III) by striking clause (v);
4 (E) in subsection (j)—
5 (i) in paragraph (2), by striking ‘‘, or
6 as a savings association under subsection
7 (b)(9) of this section’’;
8 (ii) in paragraph (3), by inserting
9 ‘‘or’’ after the semicolon;
10 (iii) in paragraph (4), by striking ‘‘;
11 or’’ and inserting a comma; and
12 (iv) by striking paragraph (5);
13 (F) in subsection (o), by striking ‘‘Director
14 of the Office of Thrift Supervision’’ and insert15
ing ‘‘Comptroller of the Currency’’; and
16 (G) in subsection (w)(3)(A), by striking
17 ‘‘and the Office of Thrift Supervision’’;
18 (4) in section 10 (12 U.S.C. 1820)—
19 (A) in subsection (d)(5), by striking ‘‘or
20 the Resolution Trust Corporation’’ each place
21 that term appears; and
22 (B) in subsection (k)(5)(B)—
23 (i) in clause (ii), by inserting ‘‘and’’
24 after the semicolon;
472
O:WRIWRI10949.xml [file 3 of 17] S.L.C
1 (ii) in clause (iii), by striking ‘‘; and’’
2 and inserting a period; and
3 (iii) by striking clause (iv);
4 (5) in section 11 (12 U.S.C. 1821)—
5 (A) in subsection (c)—
6 (i) in paragraph (2)(A)(ii), by striking
7 ‘‘(other than section 21A of the Federal
8 Home Loan Bank Act)’’;
9 (ii) in paragraph (4), by striking ‘‘Ex10
cept as otherwise provided in section 21A
11 of the Federal Home Loan Bank Act and
12 notwithstanding’’ and inserting ‘‘Notwith13
standing’’;
14 (iii) in paragraph (6)—
15 (I) in the heading, by striking
16 ‘‘DIRECTOR OF THE OFFICE OF
17 THRIFT SUPERVISION’’ and inserting
18 ‘‘COMPTROLLER OF THE CURRENCY’’;
19 (II) in subparagraph (A)—
20 (aa) by striking ‘‘or the Res21
olution Trust Corporation’’; and
22 (bb) by striking ‘‘Director of
23 the Office of Thrift Supervision’’
24 and inserting ‘‘Comptroller of the
25 Currency’’; and
473
O:WRIWRI10949.xml [file 3 of 17] S.L.C
1 (III) by amending subparagraph
2 (B) to read as follows:
3 ‘‘(B) RECEIVER.—The Corporation may,
4 at the discretion of the Comptroller of the Cur5
rency, be appointed receiver and the Corpora6
tion may accept any such appointment.’’;
7 (iv) in paragraph (12)(A), by striking
8 ‘‘or the Resolution Trust Corporation’’;
9 (B) in subsection (d)—
10 (i) in paragraph (17)(A), by striking
11 ‘‘or the Director of the Office of Thrift Su12
pervision’’; and
13 (ii) in paragraph (18)(B), by striking
14 ‘‘or the Director of the Office of Thrift Su15
pervision’’;
16 (C) in subsection (m)—
17 (i) in paragraph (9), by striking ‘‘or
18 the Director of the Office of Thrift Super19
vision, as appropriate’’;
20 (ii) in paragraph (16), by striking ‘‘or
21 the Director of the Office of Thrift Super22
vision, as appropriate’’ each place that
23 term appears; and
24 (iii) in paragraph (18), by striking
25 ‘‘or the Director of the Office of Thrift Su474
O:WRIWRI10949.xml [file 3 of 17] S.L.C
1 pervision, as appropriate’’ each place that
2 term appears;
3 (D) in subsection (n)—
4 (i) in paragraph (1)(A)—
5 (I) by striking ‘‘, or the Director
6 of the Office of Thrift Supervision,
7 with respect to’’ and inserting ‘‘or’’;
8 and
9 (II) by striking ‘‘applicable,,’’
10 and inserting ‘‘applicable,’’;
11 (ii) in paragraph (2)(A), by striking
12 ‘‘or the Director of the Office of Thrift Su13
pervision’’;
14 (iii) in paragraph (4)(D), by striking
15 ‘‘and the Director of the Office of Thrift
16 Supervision, as appropriate,’’;
17 (iv) in paragraph (4)(G), by striking
18 ‘‘and the Director of the Office of Thrift
19 Supervision, as appropriate,’’; and
20 (v) in paragraph (12)(B)—
21 (I) by inserting ‘‘as’’ after ‘‘shall
22 appoint the Corporation’’;
23 (II) by striking ‘‘or the Director
24 of the Office of Thrift Supervision, as
475
O:WRIWRI10949.xml [file 3 of 17] S.L.C
1 appropriate,’’ each place such term
2 appears;
3 (E) in subsection (p)—
4 (i) in paragraph (2)(B), by striking
5 ‘‘the Corporation, the FSLIC Resolution
6 Fund, or the Resolution Trust Corpora7
tion,’’ and inserting ‘‘or the Corporation,’’;
8 and
9 (ii) in paragraph (3)(B), by striking
10 ‘‘, the FSLIC Resolution Fund, the Reso11
lution Trust Corporation,’’; and
12 (F) in subsection (r), by striking ‘‘and the
13 Resolution Trust Corporation’’;
14 (6) in section 13(k)(1)(A)(iv) (12 U.S.C.
15 1823(k)(1)(A)(iv)), by striking ‘‘Director of the Of16
fice of Thrift Supervision’’ and inserting ‘‘Comp17
troller of the Currency’’;
18 (7) in section 18 (12 U.S.C. 1828)—
19 (A) in subsection (c)(2)—
20 (i) in subparagraph (A), by inserting
21 ‘‘or a Federal savings association’’ before
22 the semicolon;
23 (ii) in subparagraph (B), by adding
24 ‘‘and’’ at the end;
476
O:WRIWRI10949.xml [file 3 of 17] S.L.C
1 (iii) in subparagraph (C), by striking
2 ‘‘(except’’ and all that follows through ‘‘;
3 and’’ and inserting ‘‘or a State savings as4
sociation.’’; and
5 (iv) by striking subparagraph (D);
6 (B) in subsection (g)(1), by striking ‘‘the
7 Director of the Office of Thrift Supervision’’and
8 inserting ‘‘the Comptroller of the Currency’’;
9 (C) in subsection (i)(2)(C), by striking
10 ‘‘Director of the Office of Thrift Supervision’’
11 and inserting ‘‘Corporation’’; and
12 (D) in subsection (m)—
13 (i) in paragraph (1)—
14 (I) in subparagraph (A), by strik15
ing ‘‘and the Director of the Office of
16 Thrift Supervision’’ and inserting ‘‘or
17 the Comptroller of the Currency, as
18 appropriate,’’; and
19 (II) in subparagraph (B), by
20 striking ‘‘and orders of the Director
21 of the Office of Thrift Supervision’’
22 and inserting ‘‘of the Comptroller of
23 the Currency and orders of the Cor24
poration and the Comptroller of the
25 Currency’’;
477
O:WRIWRI10949.xml [file 3 of 17] S.L.C
1 (ii) in paragraph (2)—
2 (I) in subparagraph (A), by strik3
ing ‘‘Director of the Office of Thrift
4 Supervision’’ and inserting ‘‘Comp5
troller of the Currency, as appro6
priate,’’; and
7 (II) in subparagraph (B)—
8 (aa) in the matter before
9 clause (i), by striking ‘‘Director
10 of the Office of Thrift Super11
vision’’ and inserting ‘‘Corpora12
tion or the Comptroller of the
13 Currency, as appropriate,’’; and
14 (bb) in the matter following
15 clause (ii)—
16 (AA) in the first sen17
tence, by striking ‘‘Director
18 of the Office of Thrift Su19
pervision’’ and inserting
20 ‘‘Office of the Comptroller of
21 the Currency, as appro22
priate,’’; and
23 (BB) by striking the
24 second sentence and insert25
ing the following: ‘‘The Cor478
O:WRIWRI10949.xml [file 3 of 17] S.L.C
1 poration or the Comptroller
2 of the Currency, as appro3
priate, may take any other
4 corrective measures with re5
spect to the subsidiary, in6
cluding the authority to re7
quire the subsidiary to ter8
minate the activities or oper9
ations posing such risks, as
10 the Corporation or the
11 Comptroller of the Currency,
12 respectively, may deem ap13
propriate.’’; and
14 (iii) in paragraph (3)—
15 (I) in subparagraph (A), in the
16 second sentence—
17 (aa) by inserting ‘‘, in the
18 case of a Federal savings associa19
tion,’’ before ‘‘consult with’’; and
20 (bb) by striking ‘‘Director of
21 the Office of Thrift Supervision’’
22 and inserting ‘‘Comptroller of the
23 Currency’’; and
24 (II) in subparagraph (B)—
479
O:WRIWRI10949.xml [file 3 of 17] S.L.C
1 (aa) in the subparagraph
2 heading, by striking ‘‘DIRECTOR’’
3 and inserting ‘‘COMPTROLLER OF
4 THE CURRENCY’’;
5 (bb) by striking ‘‘Office of
6 Thrift Supervision’’ and inserting
7 ‘‘Comptroller of the Currency’’;
8 (cc) by inserting a comma
9 after ‘‘soundness’’; and
10 (dd) by inserting ‘‘as to
11 Federal savings associations’’
12 after ‘‘compliance’’;
13 (8) in section 19(e) (12 U.S.C. 1829(e))—
14 (A) in paragraph (1), by striking ‘‘Director
15 of the Office of Thrift Supervision’’ and insert16
ing ‘‘Board of Governors of the Federal Reserve
17 System’’; and
18 (B) in paragraph (2), by striking ‘‘Director
19 of the Office of Thrift Supervision’’ and insert20
ing ‘‘Board of Governors of the Federal Reserve
21 System’’;
22 (9) in section 28 (12 U.S.C. 1831e)—
23 (A) in subsection (e)—
24 (i) in paragraph (2)—
480
O:WRIWRI10949.xml [file 3 of 17] S.L.C
1 (I) in subparagraph (A)(ii), by
2 striking ‘‘Director of the Office of
3 Thrift Supervision’’ and inserting
4 ‘‘Comptroller of the Currency or the
5 Corporation, as appropriate’’;
6 (II) in subparagraph (C), by
7 striking ‘‘Director of the Office of
8 Thrift Supervision’’ and inserting
9 ‘‘Comptroller of the Currency or the
10 Corporation, as appropriate,’’; and
11 (III) in subparagraph (F), by
12 striking ‘‘Director of the Office of
13 Thrift Supervision’’ and inserting
14 ‘‘Comptroller of the Currency or the
15 Corporation, as appropriate’’; and
16 (ii) in paragraph (3)—
17 (I) in subparagraph (A), by strik18
ing ‘‘Director of the Office of Thrift
19 Supervision’’ and inserting ‘‘Comp20
troller of the Currency or the Cor21
poration, as appropriate’’; and
22 (II) in subparagraph (B), by
23 striking ‘‘Director of the Office of
24 Thrift Supervision’’ and inserting
481
O:WRIWRI10949.xml [file 3 of 17] S.L.C
1 ‘‘Comptroller of the Currency or the
2 Corporation, as appropriate,’’; and
3 (B) in subsection (h)(2), by striking ‘‘Di4
rector of the Office of Thrift Supervision’’ and
5 inserting ‘‘Comptroller of the Currency, of the
6 Corporation,’’; and
7 (10) in section 33(e) (12 U.S.C. 1831j(e)), by
8 striking ‘‘Federal Housing Finance Board, the
9 Comptroller of the Currency, and the Director of the
10 Office of Thrift Supervision’’ and inserting ‘‘Federal
11 Housing Finance Agency and the Comptroller of the
12 Currency’’.
13 SEC. 364. FEDERAL HOME LOAN BANK ACT.
14 (a) REPEAL OF SECTION 18(c).—Effective 90 days
15 after the transfer date, section 18(c) of the Federal Home
16 Loan Bank Act (12 U.S.C. 1438(c)) is repealed.
17 (b) REPEAL OF SECTION 21A.—Section 21A of the
18 Federal Home Loan Bank Act (12 U.S.C. 1441a) is re19
pealed.
20 SEC. 365. FEDERAL HOUSING ENTERPRISES FINANCIAL
21 SAFETY AND SOUNDNESS ACT OF 1992.
22 The Federal Housing Enterprises Financial Safety
23 and Soundness Act of 1992 (12 U.S.C. 4501 et seq.) is
24 amended—
482
O:WRIWRI10949.xml [file 3 of 17] S.L.C
1 (1) in section 1315(b) (12 U.S.C. 4515(b)), by
2 striking ‘‘the Federal Deposit Insurance Corpora3
tion, and the Office of Thrift Supervision.’’ and in4
serting ‘‘and the Federal Deposit Insurance Cor5
poration.’’; and
6 (2) in section 1317(c) (12 U.S.C. 4517(c)), by
7 striking ‘‘the Federal Deposit Insurance Corpora8
tion, or the Director of the Office of Thrift Super9
vision’’ and inserting ‘‘or the Federal Deposit Insur10
ance Corporation’’.
11 SEC. 366. FEDERAL RESERVE ACT.
12 The Federal Reserve Act (12 U.S.C. 221 et seq.) is
13 amended—
14 (1) in section 11(a)(2) (12 U.S.C. 248(a)(2))—
15 (A) by inserting ‘‘State savings associa16
tions that are insured depository institutions
17 (as defined in section 3 of the Federal Deposit
18 Insurance Act),’’ after ‘‘case of insured’’;
19 (B) by striking ‘‘Director of the Office of
20 Thrift Supervision’’ and inserting ‘‘Comptroller
21 of the Currency’’;
22 (C) by inserting ‘‘Federal’’ before ‘‘savings
23 association which’’; and
24 (D) by striking ‘‘savings and loan associa25
tion’’ and inserting ‘‘savings association’’; and
483
O:WRIWRI10949.xml [file 3 of 17] S.L.C
1 (2) in section 19(b) (12 U.S.C. 461(b))—
2 (A) in paragraph (1)(F), by striking ‘‘Di3
rector of the Office of Thrift Supervision’’ and
4 inserting ‘‘Comptroller of the Currency’’; and
5 (B) in paragraph (4)(B), by striking ‘‘Di6
rector of the Office of Thrift Supervision’’ and
7 inserting ‘‘Comptroller of the Currency’’.
8 SEC. 367. FINANCIAL INSTITUTIONS REFORM, RECOVERY,
9 AND ENFORCEMENT ACT OF 1989.
10 The Financial Institutions Reform, Recovery, and
11 Enforcement Act of 1989 is amended—
12 (1) in section 203 (12 U.S.C. 1812 note), by
13 striking subsection (b);
14 (2) in section 302(1) (12 U.S.C. 1467a note),
15 by striking ‘‘Director of the Office of Thrift Super16
vision’’ and inserting ‘‘Comptroller of the Currency’’;
17 (3) in section 305(12 U.S.C. 1464 note), by
18 striking subsection (b);
19 (4) in section 308 (12 U.S.C. 1463 note)—
20 (A) in subsection (a), by striking ‘‘Director
21 of the Office of Thrift Supervision’’ and insert22
ing ‘‘Chairman of the Board of Governors of
23 the Federal Reserve System, the Comptroller of
24 the Currency, the Chairman of the National
25 Credit Union Administration,’’; and
484
O:WRIWRI10949.xml [file 3 of 17] S.L.C
1 (B) by adding at the end the following new
2 subsection:
3 ‘‘(c) REPORTS.—The Secretary of the Treasury, the
4 Chairman of the Board of Governors of the Federal Re5
serve System, the Comptroller of the Currency, the Chair6
man of the National Credit Union Administration, and the
7 Chairperson of Board of Directors of the Federal Deposit
8 Insurance Corporation shall each submit an annual report
9 to the Congress containing a description of actions taken
10 to carry out this section.’’;
11 (5) in section 402 (12 U.S.C. 1437 note)—
12 (A) in subsection (a), by striking ‘‘Director
13 of the Office of Thrift Supervision’’ and insert14
ing ‘‘Comptroller of the Currency’’;
15 (B) by striking subsection (b);
16 (C) in subsection (e)—
17 (i) in paragraph (1), by striking ‘‘Of18
fice of Thrift Supervision’’ and inserting
19 ‘‘Comptroller of the Currency’’; and
20 (ii) in each of paragraphs (2), (3),
21 and (4), by striking ‘‘Director of the Office
22 of Thrift Supervision’’ each place that
23 term appears and inserting ‘‘Comptroller
24 of the Currency’’; and
485
O:WRIWRI10949.xml [file 3 of 17] S.L.C
1 (D) by striking ‘‘Federal Housing Finance
2 Board’’ each place that term appears and in3
serting ‘‘Federal Housing Finance Agency’’;
4 (6) in section 1103(a) (12 U.S.C. 3332(a)), by
5 striking ‘‘and the Resolution Trust Corporation’’;
6 (7) in section 1205(b) (12 U.S.C. 1818 note)—
7 (A) in paragraph (1)—
8 (i) by striking subparagraph (B); and
9 (ii) by redesignating subparagraphs
10 (C) through (F) as subparagraphs (B)
11 through (E), respectively; and
12 (B) in paragraph (2), by striking ‘‘para13
graph (1)(F)’’ and inserting ‘‘paragraph
14 (1)(E)’’;
15 (8) in section 1206 (12 U.S.C. 1833b)—
16 (A) by striking ‘‘Board, the Oversight
17 Board of the Resolution Trust Corporation’’
18 and inserting ‘‘Agency, and’’; and
19 (B) by striking ‘‘, and the Office of Thrift
20 Supervision’’;
21 (9) in section 1216 (12 U.S.C. 1833e)—
22 (A) in subsection (a)—
23 (i) in paragraph (3), by adding ‘‘and’’
24 at the end;
486
O:WRIWRI10949.xml [file 3 of 17] S.L.C
1 (ii) in paragraph (4), by striking the
2 semicolon at the end and inserting a pe3
riod;
4 (iii) by striking paragraphs (2), (5),
5 and (6); and
6 (iv) by redesignating paragraphs (3)
7 and (4), as paragraphs (2) and (3), respec8
tively;
9 (B) in subsection (c)—
10 (i) by striking ‘‘the Director of the
11 Office of Thrift Supervision,’’ and insert12
ing ‘‘and’’; and
13 (ii) by striking ‘‘the Thrift Depositor
14 Protection Oversight Board of the Resolu15
tion Trust Corporation, and the Resolution
16 Trust Corporation’’; and
17 (C) in subsection (d)—
18 (i) by striking paragraphs (3), (5),
19 and (6); and
20 (ii) by redesignating paragraphs (4),
21 (7), and (8) as paragraphs (3), (4), and
22 (5), respectively.
487
O:WRIWRI10949.xml [file 3 of 17] S.L.C
1 SEC. 368. FLOOD DISASTER PROTECTION ACT OF 1973.
2 Section 3(a)(5) of the Flood Disaster Protection Act
3 of 1973 (42 U.S.C. 4003(a)(5)) is amended by striking
4 ‘‘, the Office of Thrift Supervision’’.
5 SEC. 369. HOME OWNERS’ LOAN ACT.
6 The Home Owners’ Loan Act (12 U.S.C. 1461 et
7 seq.) is amended—
8 (1) in section 1 (12 U.S.C. 1461), by striking
9 the table of contents;
10 (2) in section 2 (12 U.S.C. 1462), as amended
11 by this Act—
12 (A) by striking paragraphs (1) and (3);
13 (B) by redesignating paragraph (2) as
14 paragraph (1);
15 (C) by redesignating paragraphs (4)
16 through (9) as paragraphs (2) through (7), re17
spectively; and
18 (D) by adding at the end the following:
19 ‘‘(8) BOARD.—The term ‘Board’, other than in
20 the context of the Board of Directors of the Cor21
poration, means the Board of Governors of the Fed22
eral Reserve System.
23 ‘‘(9) COMPTROLLER.—The term ‘Comptroller’
24 means the Comptroller of the Currency.’’;
25 (3) in section 3 (12 U.S.C. 1462a)—
488
O:WRIWRI10949.xml [file 3 of 17] S.L.C
1 (A) by striking the section heading and in2
serting the following:
3 ‘‘SEC. 3. ADMINISTRATIVE PROVISIONS.’’;
4 (B) by striking subsections (a), (b), (c),
5 (d), (g), (h), (i), and (j);
6 (C) by redesignating subsections (e) and
7 (f) as subsections (a) and (b), respectively;
8 (D) in subsection (a), as so redesignated—
9 (i) in the heading by striking ‘‘OF
10 THE DIRECTOR’’; and
11 (ii) in the matter preceding paragraph
12 (1), by striking ‘‘The Director’’ and insert13
ing ‘‘In accordance with subtitle A of title
14 III of the Dodd-Frank Wall Street Reform
15 and Consumer Protection Act, the appro16
priate Federal banking agency’’; and
17 (E) in subsection (b), as so redesignated,
18 by striking ‘‘Director’’ and inserting ‘‘appro19
priate Federal banking agency’’;
20 (4) in section 4 (12 U.S.C. 1463)—
21 (A) in subsection (a)—
22 (i) in the subsection heading, by strik23
ing ‘‘FEDERAL’’;
24 (ii) by striking paragraphs (1) and (2)
25 and inserting the following:
489
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1 ‘‘(1) EXAMINATION AND SAFE AND SOUND OP2
ERATION.—
3 ‘‘(A) FEDERAL SAVINGS ASSOCIATIONS.—
4 The Comptroller shall provide for the examina5
tion and safe and sound operation of Federal
6 savings associations.
7 ‘‘(B) STATE SAVINGS ASSOCIATIONS.—The
8 Corporation shall provide for the examination
9 and safe and sound operation of State savings
10 associations.
11 ‘‘(2) REGULATIONS FOR SAVINGS ASSOCIA12
TIONS.—The Comptroller may prescribe regulations
13 with respect to savings associations, as the Comp14
troller determines to be appropriate to carry out the
15 purposes of this Act.’’; and
16 (iii) in paragraph (3), by striking ‘‘Di17
rector’’ each place that term appears and
18 inserting ‘‘Comptroller and the Corpora19
tion’’;
20 (B) in subsection (b)—
21 (i) in paragraph (2)—
22 (I) in subparagraph (A), by add23
ing ‘‘and’’ at the end;
490
O:WRIWRI10949.xml [file 3 of 17] S.L.C
1 (II) in subparagraph (B), by
2 striking ‘‘; and’’ and inserting a pe3
riod; and
4 (III) by striking subparagraph
5 (C); and
6 (ii) by striking ‘‘Director’’ each place
7 that term appears and inserting ‘‘Comp8
troller’’;
9 (C) in subsection (c)—
10 (i) by striking ‘‘All regulations and
11 policies of the Director’’ and inserting
12 ‘‘The regulations of the Comptroller and
13 the policies of the Comptroller and the
14 Corporation’’; and
15 (ii) by striking ‘‘of the Currency’’;
16 (D) in subsection (e)(5), by striking ‘‘Di17
rector’’ and inserting ‘‘Comptroller’’;
18 (E) in subsection (f), by striking ‘‘Direc19
tor’’ each place that term appears and inserting
20 ‘‘appropriate Federal banking agency’’; and
21 (F) in subsection (h), by striking ‘‘Direc22
tor’’ each place that term appears and inserting
23 ‘‘appropriate Federal banking agency’’;
24 (5) in section 5 (12 U.S.C. 1464)—
491
O:WRIWRI10949.xml [file 3 of 17] S.L.C
1 (A) in subsection (a), by striking ‘‘Direc2
tor’’, each place such term appears and insert3
ing ‘‘Comptroller of the Currency’’;
4 (B) in subsection (b), by striking ‘‘Direc5
tor’’, each place such term appears and insert6
ing ‘‘Comptroller of the Currency’’;
7 (C) in subsection (c)—
8 (i) in paragraph (5)—
9 (I) in subparagraph (A), by strik10
ing ‘‘Director’’ and inserting ‘‘appro11
priate Federal banking agency’’; and
12 (II) in subparagraph (B)—
13 (aa) by striking ‘‘The Direc14
tor’’ and inserting ‘‘The appro15
priate Federal banking agency’’;
16 and
17 (bb) by striking ‘‘the Direc18
tor’’ and inserting ‘‘the appro19
priate Federal banking agency’’;
20 (D) in subsection (d)—
21 (i) in paragraph (1)—
22 (I) in subparagraph (A)—
23 (aa) in the first sentence, by
24 striking ‘‘Director’’ and inserting
492
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1 ‘‘appropriate Federal banking
2 agency’’;
3 (bb) in the second sen4
tence—
5 (AA) by striking ‘‘Di6
rector’s own name and
7 through the Director’s own
8 attorneys’’ and inserting
9 ‘‘name of the appropriate
10 Federal banking agency and
11 through the attorneys of the
12 appropriate Federal banking
13 agency’’; and
14 (BB) by striking ‘‘Di15
rector’’ each place that term
16 appears and inserting ‘‘ap17
propriate Federal banking
18 agency’’; and
19 (cc) in the third sentence, by
20 striking ‘‘Director’’ each place
21 that term appears and inserting
22 ‘‘Comptroller’’;
23 (II) in subparagraph (B)—
24 (aa) in clauses (i) through
25 (iv), by striking ‘‘Director’’ each
493
O:WRIWRI10949.xml [file 3 of 17] S.L.C
1 place that term appears and in2
serting ‘‘appropriate Federal
3 banking agency’’;
4 (III) in clause (v)—
5 (aa) in the matter preceding
6 subclause (I), by striking ‘‘Direc7
tor’’ and inserting ‘‘appropriate
8 Federal banking agency’’;
9 (bb) in subclause (II), by
10 striking ‘‘subpenas’’ and insert11
ing ‘‘subpoenas’’; and
12 (cc) in the matter following
13 subclause (II), by striking ‘‘sub14
pena’’ and inserting ‘‘subpoena’’;
15 (IV) in clause (vi)—
16 (aa) in the first sentence, by
17 striking ‘‘Director’’ and inserting
18 ‘‘appropriate Federal banking
19 agency’’; and
20 (bb) in the second sentence,
21 by striking ‘‘Director’’ and in22
serting ‘‘Comptroller’’;
23 (V) in clause (vii)—
494
O:WRIWRI10949.xml [file 3 of 17] S.L.C
1 (aa) in the first sentence, by
2 striking ‘‘subpena’’ and inserting
3 ‘‘subpoena’’;
4 (bb) in the second sentence,
5 by striking ‘‘subpenaed’’ and in6
serting ‘‘subpoenaed’’; and
7 (cc) in the third sentence, by
8 striking ‘‘Director’’ and inserting
9 ‘‘appropriate Federal banking
10 agency’’;
11 (ii) in paragraph (2)—
12 (I) in subparagraph (A)—
13 (aa) by striking ‘‘Director of
14 the Office of Thrift Supervision’’
15 and inserting ‘‘appropriate Fed16
eral banking agency’’;
17 (bb) by striking ‘‘any in18
sured savings association’’ and
19 inserting ‘‘an insured savings as20
sociation’’; and
21 (cc) by striking ‘‘Director
22 determines, in the Director’s dis23
cretion’’ and inserting ‘‘appro24
priate Federal banking agency
25 determines, in the discretion of
495
O:WRIWRI10949.xml [file 3 of 17] S.L.C
1 the appropriate Federal banking
2 agency’’;
3 (II) in subparagraph (B), by
4 striking ‘‘Director’’ each place that
5 term appears and inserting ‘‘appro6
priate Federal banking agency’’;
7 (III) in subparagraphs (C) and
8 (D), by striking ‘‘Director’’ and in9
serting ‘‘appropriate Federal banking
10 agency’’;
11 (IV) in subparagraph (E)—
12 (aa) in clause (ii)—
13 (AA) in the clause
14 heading, by striking ‘‘OR
15 RTC’’; and
16 (BB) by striking ‘‘or
17 the Resolution Trust Cor18
poration, as appropriate,’’
19 each place that term ap20
pears; and
21 (bb) by striking ‘‘Director’’
22 each place that term appears and
23 inserting ‘‘appropriate Federal
24 banking agency’’; and
25 (iii) in paragraph (3)—
496
O:WRIWRI10949.xml [file 3 of 17] S.L.C
1 (I) in subparagraph (A), by strik2
ing ‘‘Director’’ each place that term
3 appears and inserting ‘‘Comptroller’’;
4 and
5 (II) in subparagraph (B)—
6 (aa) in the subparagraph
7 heading, by striking ‘‘OR RTC’’;
8 (bb) by striking ‘‘Corpora9
tion or the Resolution Trust’’;
10 and
11 (cc) by striking ‘‘Director’’
12 and inserting ‘‘Comptroller’’;
13 (iv) in paragraph (4), by striking ‘‘Di14
rector’’ and inserting ‘‘appropriate Federal
15 banking agency’’;
16 (v) in paragraph (6)—
17 (I) in subparagraph (A), by strik18
ing ‘‘Director’’ and inserting ‘‘Comp19
troller’’; and
20 (II) in subparagraphs (B) and
21 (C), by striking ‘‘Director’’ each place
22 that term appears and inserting ‘‘ap23
propriate Federal banking agency’’;
24 (vi) in paragraph (7)—
497
O:WRIWRI10949.xml [file 3 of 17] S.L.C
1 (I) in subparagraphs (A), (B),
2 and (D), by striking ‘‘Director’’ each
3 place that term appears and inserting
4 ‘‘appropriate Federal banking agen5
cy’’;
6 (II) in subparagraph (C), by
7 striking ‘‘Director’’ and inserting
8 ‘‘Federal Deposit Insurance Corpora9
tion or the Comptroller, as appro10
priate,’’; and
11 (III) by striking subparagraph
12 (E) and inserting the following:
13 ‘‘(E) ADMINISTRATION BY THE COMP14
TROLLER AND THE CORPORATION.—The Comp15
troller may issue such regulations, and the ap16
propriate Federal banking agency may issue
17 such orders, including those issued pursuant to
18 section 8 of the Federal Deposit Insurance Act,
19 as may be necessary to administer and carry
20 out this paragraph and to prevent evasion of
21 this paragraph.’’;
22 (E) in subsection (e)(2), strike ‘‘Director’’
23 and insert ‘‘Comptroller’’;
24 (F) in subsection (i)—
498
O:WRIWRI10949.xml [file 3 of 17] S.L.C
1 (i) by striking ‘‘Director’’, each place
2 such term appears, and inserting ‘‘Comp3
troller’’;
4 (ii) in paragraph (2), in the heading,
5 by striking ‘‘DIRECTOR’’ and inserting
6 ‘‘COMPTROLLER’’;
7 (iii) in paragraph (5)(A), by striking
8 ‘‘of the Currency’’; and
9 (iv) except as provided in clauses (i)
10 through (iii), by striking ‘‘Director’’ each
11 place such term appears and inserting
12 ‘‘Comptroller’’;
13 (G) in subsection (o)—
14 (i) in paragraph (1), by striking ‘‘Di15
rector’’ and inserting ‘‘Comptroller’’; and
16 (ii) in paragraph (2)(B), by striking
17 ‘‘Director’s determination’’ and inserting
18 ‘‘determination of the Comptroller’’;
19 (H) in subsections (m), (n), (o), and (p),
20 by striking ‘‘Director’’, each place such term
21 appears, and inserting ‘‘Comptroller’’;
22 (I) in subsection (q)—
23 (i) in paragraph (6), by striking ‘‘of
24 Governors of the Federal Reserve System’’;
499
O:WRIWRI10949.xml [file 3 of 17] S.L.C
1 (ii) by striking ‘‘Director’’ each place
2 that term appears and inserting ‘‘Board’’;
3 and
4 (iii) by inserting ‘‘in consultation with
5 the Comptroller and the Corporation,’’ be6
fore ‘‘considers’’;
7 (J) in subsection (r)(3), by striking ‘‘Di8
rector’’ and inserting ‘‘Comptroller of the Cur9
rency’’;
10 (K) in subsection (s)—
11 (i) in paragraph (1), strike ‘‘Director’’
12 and insert ‘‘Comptroller of the Currency’’;
13 (ii) in paragraph (2), strike ‘‘Direc14
tor’’ and insert ‘‘Comptroller of the Cur15
rency’’;
16 (iii) in paragraph (3), by striking ‘‘Di17
rector’s discretion, the Director’’ and in18
serting ‘‘discretion of the appropriate Fed19
eral banking agency, the appropriate Fed20
eral banking agency,’’;
21 (iv) in paragraph (4), by striking ‘‘Di22
rector’’ each place that term appears and
23 inserting ‘‘appropriate Federal banking
24 agency’’; and
25 (v) in paragraph (5)—
500
O:WRIWRI10949.xml [file 3 of 17] S.L.C
1 (I) by striking ‘‘Director’’, each
2 place such term appears, and insert3
ing ‘‘appropriate Federal banking
4 agency’’; and
5 (II) by striking ‘‘Director’s ap6
proval’’ and inserting ‘‘approval of the
7 appropriate Federal banking agency’’;
8 (L) in subsection (t)—
9 (i) in paragraph (1), by striking sub10
paragraph (D);
11 (ii) by striking paragraph (3) and in12
serting the following:
13 ‘‘(3) [Repealed].’’;
14 (iii) in paragraph (5)—
15 (I) in subparagraph (B), by
16 striking ‘‘Corporation, in its sole dis17
cretion’’ and inserting ‘‘appropriate
18 Federal banking agency, in the sole
19 discretion of the appropriate Federal
20 banking agency’’; and
21 (II) by striking subparagraph
22 (D);
23 (iv) in paragraph (6)—
24 (I) by striking subparagraph (A)
25 and inserting the following:
501
O:WRIWRI10949.xml [file 3 of 17] S.L.C
1 ‘‘(A) [Reserved].’’;
2 (II) in subparagraph (B), by
3 striking ‘‘Director’’ each place that
4 term appears and inserting ‘‘appro5
priate Federal banking agency’’;
6 (III) in subparagraph (C)—
7 (aa) in clause (i), by striking
8 ‘‘Director’s prior approval’’ and
9 inserting ‘‘prior approval of the
10 appropriate Federal banking
11 agency’’;
12 (bb) in clause (ii), by strik13
ing ‘‘Director’s discretion’’ and
14 inserting ‘‘discretion of the ap15
propriate Federal banking agen16
cy’’; and
17 (cc) by striking ‘‘Director’’
18 each place that term appears and
19 inserting ‘‘appropriate Federal
20 banking agency’’;
21 (IV) in subparagraph (E), by
22 striking ‘‘Director shall’’ and inserting
23 ‘‘appropriate Federal banking agency
24 may’’; and
502
O:WRIWRI10949.xml [file 3 of 17] S.L.C
1 (V) in subparagraph (F), by
2 striking ‘‘Director’’ and all that fol3
lows through the end of the subpara4
graph and inserting ‘‘appropriate Fed5
eral banking agency under this Act or
6 any other provision of law.’’;
7 (v) in paragraph (7), by striking ‘‘Di8
rector’’ each place that term appears and
9 inserting ‘‘appropriate Federal banking
10 agency’’;
11 (vi) by striking paragraph (8) and in12
serting the following:
13 ‘‘(8) [Repealed].’’;
14 (vii) in paragraph (9)—
15 (I) in subparagraph (A), by strik16
ing ‘‘Director’’ and inserting ‘‘Comp17
troller’’;
18 (II) in subparagraph (C), by
19 striking ‘‘of the Currency’’; and
20 (III) by striking subparagraph
21 (B) and redesignating subparagraphs
22 (C) and (D) as subparagraphs (B)
23 and (C), respectively; and
24 (viii) except as provided in clauses (i)
25 through (vii), by striking ‘‘Director’’ each
503
O:WRIWRI10949.xml [file 3 of 17] S.L.C
1 place that term appears and inserting ‘‘ap2
propriate Federal banking agency’’;
3 (M) in subsection (u), by striking ‘‘Direc4
tor’’ each place that term appears and inserting
5 ‘‘appropriate Federal banking agency’’;
6 (N) in subsection (v)—
7 (i) in paragraph (2), by striking ‘‘Di8
rector’s determinations’’ and inserting ‘‘de9
terminations of the appropriate Federal
10 banking agency’’; and
11 (ii) by striking ‘‘Director’’ each place
12 that term appears and inserting ‘‘appro13
priate Federal banking agency’’;
14 (O) in subsection (w)(1)—
15 (i) in subparagraph (A)(II), by strik16
ing ‘‘Director’s intention’’ and inserting
17 ‘‘intention of the Comptroller’’; and
18 (ii) in subparagraph (B), by striking
19 ‘‘Director’s intention’’ and inserting ‘‘in20
tention of the Comptroller’’; and
21 (P) except as provided in subparagraphs
22 (A) through (J), by striking ‘‘Director’’ each
23 place that term appears and inserting ‘‘Comp24
troller’’;
504
O:WRIWRI10949.xml [file 3 of 17] S.L.C
1 (6) in section 8 (12 U.S.C. 1466a), by striking
2 ‘‘Director’’ each place that term appears and insert3
ing ‘‘Comptroller’’;
4 (7) in section 9 (12 U.S.C. 1467)—
5 (A) in subsection (a), by striking ‘‘assessed
6 by the Director’’ and all that follows through
7 the end of the subsection and inserting the fol8
lowing: ‘‘assessed by—
9 ‘‘(1) the Comptroller, against each such Federal
10 savings association, as the Comptroller deems nec11
essary or appropriate; and
12 ‘‘(2) the Corporation, against each such State
13 savings association, as the Corporation deems nec14
essary or appropriate.’’;
15 (B) in subsection (b), by striking ‘‘Direc16
tor’’, each place such term appears, and insert17
ing ‘‘Comptroller or Corporation, as appro18
priate’’;
19 (C) in subsection (e)—
20 (i) by striking ‘‘Only the Director’’
21 and inserting ‘‘The Comptroller’’; and
22 (ii) by striking ‘‘Director’s designee’’
23 and inserting ‘‘designee of the Comp24
troller’’;
505
O:WRIWRI10949.xml [file 3 of 17] S.L.C
1 (D) by striking subsection (f) and inserting
2 the following:
3 ‘‘(f) [Reserved].’’;
4 (E) in subsection (g)—
5 (i) in paragraph (1), by striking ‘‘Di6
rector’’ and inserting ‘‘appropriate Federal
7 banking agency’’; and
8 (ii) in paragraph (2), by striking ‘‘Di9
rector, or the Corporation, as the case may
10 be,’’ and inserting ‘‘appropriate Federal
11 banking agency for the savings associa12
tion’’;
13 (F) in subsection (i), by striking ‘‘Direc14
tor’’ each place that term appears and inserting
15 ‘‘appropriate Federal banking agency’’;
16 (G) in subsection (j), by striking ‘‘Direc17
tor’s sole discretion’’ and inserting ‘‘sole discre18
tion of the appropriate Federal banking agen19
cy’’;
20 (H) in subsection (k), by striking ‘‘Direc21
tor may assess against institutions for which
22 the Director is the appropriate Federal banking
23 agency, as defined in section 3 of the Federal
24 Deposit Insurance Act,’’ and inserting ‘‘appro506
O:WRIWRI10949.xml [file 3 of 17] S.L.C
1 priate Federal banking agency may assess
2 against an institution’’; and
3 (I) except as provided in subparagraphs
4 (A) through (G), by striking ‘‘Director’’ each
5 place that term appears and inserting ‘‘appro6
priate Federal banking agency’’;
7 (8) in section 10 (12 U.S.C. 1467a)—
8 (A) in subsection (a)(1), by striking ‘‘Di9
rector’’ each place that term appears and in10
serting ‘‘appropriate Federal banking agency’’;
11 (B) in subsection (b)—
12 (i) in paragraph (2), by striking ‘‘and
13 the regional office of the Director of the
14 district in which its principal office is lo15
cated,’’; and
16 (ii) in paragraph (6), by striking ‘‘Di17
rector’s own motion or application’’ and in18
serting ‘‘motion or application of the
19 Board’’;
20 (C) in subsection (c)—
21 (i) in paragraph (2)(F), by striking
22 ‘‘of Governors of the Federal Reserve Sys23
tem’’;
507
O:WRIWRI10949.xml [file 3 of 17] S.L.C
1 (ii) in paragraph (4)(B), in the sub2
paragraph heading, by striking ‘‘BY DIREC3
TOR’’;
4 (iii) in paragraph (6)(D), in the sub5
paragraph heading, by striking ‘‘BY DIREC6
TOR’’; and
7 (iv) in paragraph (9)(E), by inserting
8 ‘‘(in consultation with the appropriate Fed9
eral banking agency)’’ after ‘‘including a
10 determination’’;
11 (D) in subsection (g)(5)(B), by striking
12 ‘‘the Director’s discretion’’ and inserting ‘‘the
13 discretion of the Board’’;
14 (E) in subsection (l), by striking ‘‘Direc15
tor’’ each place that term appears and inserting
16 ‘‘appropriate Federal banking agency’’;
17 (F) in subsection (m), by striking ‘‘Direc18
tor’’ and inserting ‘‘appropriate Federal bank19
ing agency’’;
20 (G) in subsection (p)—
21 (i) in paragraph (1)—
22 (I) by striking ‘‘Director deter23
mines’’ the 1st place such term ap24
pears and inserting ‘‘Board or the ap508
O:WRIWRI10949.xml [file 3 of 17] S.L.C
1 propriate Federal banking agency for
2 the savings association determines’’;
3 (II) by striking ‘‘Director may’’
4 and inserting ‘‘Board may’’; and
5 (III) by striking ‘‘Director deter6
mines’’ the 2nd place such term ap7
pears and inserting ‘‘Board, in con8
sultation with the appropriate Federal
9 banking agency for the savings asso10
ciation determines’’; and
11 (ii) in paragraph (2), by striking ‘‘Di12
rector’’, each place such term appears, and
13 inserting ‘‘Board’’;
14 (H) in subsection (q), by striking ‘‘Direc15
tor’’, each place such term appears, and insert16
ing ‘‘Board’’;
17 (I) in subsection (r), by striking ‘‘Direc18
tor’’, each place such term appears, and insert19
ing ‘‘Board or appropriate Federal banking
20 agency’’;
21 (J) in subsection (s)—
22 (i) in paragraph (2)—
23 (I) in subparagraph (B)(ii), by
24 striking ‘‘Director’s judgment’’ and
25 inserting ‘‘judgment of the appro509
O:WRIWRI10949.xml [file 3 of 17] S.L.C
1 priate Federal banking agency for the
2 savings association’’; and
3 (II) by striking ‘‘Director’’ each
4 place that term appears and inserting
5 ‘‘appropriate Federal banking agency
6 for the savings association’’; and
7 (ii) in paragraph (4), by striking ‘‘Di8
rector’’ and inserting ‘‘Comptroller’’; and
9 (K) except as provided in subparagraphs
10 (A) through (J), by striking ‘‘Director’’ each
11 place that term appears and inserting ‘‘Board’’;
12 (9) in section 11 (12 U.S.C. 1468), by striking
13 ‘‘Director’’ each place that term appears and insert14
ing ‘‘appropriate Federal banking agency’’;
15 (10) in section 12 (12 U.S.C. 1468a), by strik16
ing ‘‘the Director’’ and inserting ‘‘a Federal banking
17 agency’’; and
18 (11) in section 13 (12 U.S.C. 1468a) is amend19
ed by striking ‘‘Director’’ and inserting ‘‘a Federal
20 banking agency’’.
21 SEC. 370. HOUSING ACT OF 1948.
22 Section 502(c) of the Housing Act of 1948 (12
23 U.S.C. 1701c(c)) is amended—
24 (1) in the matter preceding paragraph (1), by
25 striking ‘‘and the Director of the Office of Thrift
510
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1 Supervision’’ and inserting ‘‘, the Comptroller of the
2 Currency, and the Federal Deposit Insurance Cor3
poration’’; and
4 (2) in paragraph (3), by striking ‘‘Board’’ and
5 inserting ‘‘Agency’’.
6 SEC. 371. HOUSING AND COMMUNITY DEVELOPMENT ACT
7 OF 1992.
8 Section 543 of the Housing and Community Develop9
ment Act of 1992 (Public Law 102–550; 106 Stat. 3798)
10 is amended—
11 (1) in subsection (c)(1)—
12 (A) by striking subparagraphs (D) through
13 (F); and
14 (B) by redesignating subparagraphs (G)
15 and (H) as subparagraphs (D) and (E), respec16
tively; and
17 (2) in subsection (f)—
18 (A) in paragraph (2), by striking ‘‘the Of19
fice of Thrift Supervision,’’ each place that
20 term appears; and
21 (B) in paragraph (3)—
22 (i) in the matter preceding subpara23
graph (A), by striking ‘‘the Office of Thrift
24 Supervision,’’; and
511
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1 (ii) in subparagraph (D), by striking
2 ‘‘Office of Thrift Supervision,’’.
3 SEC. 372. HOUSING AND URBAN-RURAL RECOVERY ACT OF
4 1983.
5 Section 469 of the Housing and Urban-Rural Recov6
ery Act of 1983 (12 U.S.C. 1701p–1) is amended in the
7 first sentence, by striking ‘‘Federal Home Loan Bank
8 Board’’ and inserting ‘‘Federal Housing Finance Agency’’.
9 SEC. 373. NATIONAL HOUSING ACT.
10 Section 202(f) of the National Housing Act (12
11 U.S.C. 1708(f)) is amended—
12 (1) by striking paragraph (5) and inserting the
13 following:
14 ‘‘(5) if the mortgagee is a national bank, a sub15
sidiary or affiliate of such bank, a Federal savings
16 association or a subsidiary or affiliate of a savings
17 association, the Comptroller of the Currency;’’;
18 (2) in paragraph (6), by adding ‘‘and’’ at the
19 end;
20 (3) in paragraph (7)—
21 (A) by inserting ‘‘or State savings associa22
tion’’ after ‘‘State bank’’; and
23 (B) by striking ‘‘; and’’ and inserting a pe24
riod; and
25 (4) by striking paragraph (8).
512
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1 SEC. 374. NEIGHBORHOOD REINVESTMENT CORPORATION
2 ACT.
3 Section 606(c)(3) of the Neighborhood Reinvestment
4 Corporation Act (42 U.S.C. 8105(c)(3)) is amended by
5 striking ‘‘Federal Home Loan Bank Board’’ and inserting
6 ‘‘Federal Housing Finance Agency’’.
7 SEC. 375. PUBLIC LAW 93–100.
8 Section 5(d) of Public Law 93–100 (12 U.S.C.
9 1470(a)) is amended—
10 (1) in paragraph (1), by striking ‘‘Federal Sav11
ings and Loan Insurance Corporation with respect
12 to insured institutions, the Board of Governors of
13 the Federal Reserve System with respect to State
14 member insured banks, and the Federal Deposit In15
surance Corporation with respect to State non16
member insured banks’’ and inserting ‘‘appropriate
17 Federal banking agency, with respect to the institu18
tions subject to the jurisdiction of each such agen19
cy,’’; and
20 (2) in paragraph (2), by striking ‘‘supervisory’’
21 and inserting ‘‘banking’’.
22 SEC. 376. SECURITIES EXCHANGE ACT OF 1934.
23 The Securities Exchange Act of 1934 (15 U.S.C. 78a
24 et seq.) is amended—
25 (1) in section 3(a)(34) (15 U.S.C.
26 78c(a)(34))—
513
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1 (A) in subparagraph (A)—
2 (i) in clause (i), by striking ‘‘or a sub3
sidiary or a department or division of any
4 such bank’’ and inserting ‘‘a subsidiary or
5 a department or division of any such bank,
6 a Federal savings association (as defined
7 in section 3(b)(2) of the Federal Deposit
8 Insurance Act (12 U.S.C. 1813(b)(2))),
9 the deposits of which are insured by the
10 Federal Deposit Insurance Corporation, or
11 a subsidiary or department or division of
12 any such Federal savings association’’;
13 (ii) in clause (ii), by striking ‘‘or a
14 subsidiary or a department or division of
15 such subsidiary’’ and inserting ‘‘a sub16
sidiary or a department or division of such
17 subsidiary, or a savings and loan holding
18 company’’;
19 (iii) in clause (iii), by striking ‘‘or a
20 subsidiary or department or division there21
of;’’ and inserting ‘‘a subsidiary or depart22
ment or division of any such bank, a State
23 savings association (as defined in section
24 3(b)(3) of the Federal Deposit Insurance
25 Act (12 U.S.C. 1813(b)(3))), the deposits
514
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1 of which are insured by the Federal De2
posit Insurance Corporation, or a sub3
sidiary or a department or division of any
4 such State savings association; and’’;
5 (iv) by striking clause (iv); and
6 (v) by redesignating clause (v) as
7 clause (iv);
8 (B) in subparagraph (B)—
9 (i) in clause (i), by striking ‘‘or a sub10
sidiary of any such bank’’ and inserting ‘‘a
11 subsidiary of any such bank, a Federal
12 savings association (as defined in section
13 3(b)(2) of the Federal Deposit Insurance
14 Act (12 U.S.C. 1813(b)(2))), the deposits
15 of which are insured by the Federal De16
posit Insurance Corporation, or a sub17
sidiary of any such Federal savings asso18
ciation’’;
19 (ii) in clause (ii), by striking ‘‘or a
20 subsidiary of a bank holding company
21 which is a bank other than a bank speci22
fied in clause (i), (iii), or (iv) of this sub23
paragraph’’ and inserting ‘‘a subsidiary of
24 a bank holding company that is a bank
25 other than a bank specified in clause (i) or
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1 (iii) of this subparagraph, or a savings and
2 loan holding company’’;
3 (iii) in clause (iii), by striking ‘‘or a
4 subsidiary thereof;’’ and inserting ‘‘a sub5
sidiary of any such bank, a State savings
6 association (as defined in section 3(b)(3) of
7 the Federal Deposit Insurance Act (12
8 U.S.C. 1813(b)(3))), the deposits of which
9 are insured by the Federal Deposit Insur10
ance Corporation, or a subsidiary of any
11 such State savings association; and’’;
12 (iv) by striking clause (iv); and
13 (v) by redesignating clause (v) as
14 clause (iv);
15 (C) in subparagraph (C)—
16 (i) in clause (i), by striking ‘‘bank’’
17 and inserting ‘‘bank or a Federal savings
18 association (as defined in section 3(b)(2) of
19 the Federal Deposit Insurance Act (12
20 U.S.C. 1813(b)(2))), the deposits of which
21 are insured by the Federal Deposit Insur22
ance Corporation’’;
23 (ii) in clause (ii), by striking ‘‘or a
24 subsidiary of a bank holding company
25 which is a bank other than a bank speci516
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1 fied in clause (i), (iii), or (iv) of this sub2
paragraph’’ and inserting ‘‘a subsidiary of
3 a bank holding company that is a bank
4 other than a bank specified in clause (i) or
5 (iii) of this subparagraph, or a savings and
6 loan holding company’’;
7 (iii) in clause (iii), by striking ‘‘Sys8
tem)’’ and inserting, ‘‘System) or a State
9 savings association (as defined in section
10 3(b)(3) of the Federal Deposit Insurance
11 Act (12 U.S.C. 1813(b)(3))), the deposits
12 of which are insured by the Federal De13
posit Insurance Corporation; and’’;
14 (iv) by striking clause (iv); and
15 (v) by redesignating clause (v) as
16 clause (iv);
17 (D) in subparagraph (D)—
18 (i) in clause (i), by inserting after
19 ‘‘bank’’ the following: ‘‘or a Federal sav20
ings association (as defined in section
21 3(b)(2) of the Federal Deposit Insurance
22 Act (12 U.S.C. 1813(b)(2))), the deposits
23 of which are insured by the Federal De24
posit Insurance Corporation’’;
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1 (ii) in clause (ii), by adding ‘‘and’’ at
2 the end;
3 (iii) by striking clause (iii);
4 (iv) by redesignating clause (iv) as
5 clause (iii); and
6 (v) in clause (iii), as so redesignated,
7 by inserting after ‘‘bank’’ the following:
8 ‘‘or a State savings association (as defined
9 in section 3(b)(3) of the Federal Deposit
10 Insurance Act (12 U.S.C. 1813(b)(3))),
11 the deposits of which are insured by the
12 Federal Deposit Insurance Corporation’’;
13 (E) in subparagraph (F)—
14 (i) in clause (i), by inserting after
15 ‘‘bank’’ the following: ‘‘or a Federal sav16
ings association (as defined in section
17 3(b)(2) of the Federal Deposit Insurance
18 Act (12 U.S.C. 1813(b)(2))), the deposits
19 of which are insured by the Federal De20
posit Insurance Corporation’’;
21 (ii) by striking clause (ii);
22 (iii) by redesignating clauses (iii), (iv),
23 and (v) as clauses (ii), (iii), and (iv), re24
spectively; and
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1 (iv) in clause (iii), as so redesignated,
2 by inserting before the semicolon the fol3
lowing: ‘‘or a State savings association (as
4 defined in section 3(b)(3) of the Federal
5 Deposit Insurance Act (12 U.S.C.
6 1813(b)(3))), the deposits of which are in7
sured by the Federal Deposit Insurance
8 Corporation’’;
9 (F) in subparagraph (G)—
10 (i) in clause (i), by inserting after
11 ‘‘national bank’’ the following: ‘‘, a Federal
12 savings association (as defined in section
13 3(b)(2) of the Federal Deposit Insurance
14 Act), the deposits of which are insured by
15 the Federal Deposit Insurance Corpora16
tion,’’;
17 (ii) in clause (iii)—
18 (I) by inserting after ‘‘bank)’’ the
19 following: ‘‘, a State savings associa20
tion (as defined in section 3(b)(3) of
21 the Federal Deposit Insurance Act),
22 the deposits of which are insured by
23 the Federal Deposit Insurance Cor24
poration,’’; and
25 (II) by adding ‘‘and’’ at the end;
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1 (iii) by striking clause (iv); and
2 (iv) by redesignating clause (v) as
3 clause (iv); and
4 (G) in the undesignated matter following
5 subparagraph (H), by striking ‘‘, and the term
6 ‘District of Columbia savings and loan associa7
tion’ means any association subject to examina8
tion and supervision by the Office of Thrift Su9
pervision under section 8 of the Home Owners’
10 Loan Act of 1933’’;
11 (2) in section 12(i) (15 U.S.C. 78l(i))—
12 (A) in paragraph (1), by inserting after
13 ‘‘national banks’’ the following: ‘‘and Federal
14 savings associations, the accounts of which are
15 insured by the Federal Deposit Insurance Cor16
poration’’;
17 (B) by striking ‘‘(3)’’ and all that follows
18 through ‘‘vested in the Office of Thrift Super19
vision’’ and inserting ‘‘and (3) with respect to
20 all other insured banks and State savings asso21
ciations, the accounts of which are insured by
22 the Federal Deposit Insurance Corporation, are
23 vested in the Federal Deposit Insurance Cor24
poration’’; and
520
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1 (C) in the second sentence, by striking
2 ‘‘the Federal Deposit Insurance Corporation,
3 and the Office of Thrift Supervision’’ and in4
serting ‘‘and the Federal Deposit Insurance
5 Corporation’’;
6 (3) in section 15C(g)(1) (15 U.S.C. 78o–
7 5(g)(1)), by striking ‘‘the Director of the Office of
8 Thrift Supervision, the Federal Savings and Loan
9 Insurance Corporation,’’; and
10 (4) in section 23(b)(1) (15 U.S.C. 78w(b)(1)),
11 by striking ‘‘, other than the Office of Thrift Super12
vision,’’.
13 SEC. 377. TITLE 18, UNITED STATES CODE.
14 Title 18, United States Code, is amended—
15 (1) in section 212(c)(2)—
16 (A) by striking subparagraph (C); and
17 (B) by redesignating subparagraphs (D)
18 through (H) as subparagraphs (C) through (G),
19 respectively;
20 (2) in section 657, by striking ‘‘Office of Thrift
21 Supervision, the Resolution Trust Corporation,’’;
22 (3) in section 981(a)(1)(D)—
23 (A) by striking ‘‘Resolution Trust Corpora24
tion,’’; and
521
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1 (B) by striking ‘‘or the Office of Thrift Su2
pervision’’;
3 (4) in section 982(a)(3)—
4 (A) by striking ‘‘Resolution Trust Corpora5
tion,’’; and
6 (B) by striking ‘‘or the Office of Thrift Su7
pervision’’;
8 (5) in section 1006—
9 (A) by striking ‘‘Office of Thrift Super10
vision,’’; and
11 (B) by striking ‘‘the Resolution Trust Cor12
poration,’’;
13 (6) in section 1014—
14 (A) by striking ‘‘the Office of Thrift Su15
pervision’’; and
16 (B) by striking ‘‘the Resolution Trust Cor17
poration,’’; and
18 (7) in section 1032(1)—
19 (A) by striking ‘‘the Resolution Trust Cor20
poration,’’; and
21 (B) by striking ‘‘or the Director of the Of22
fice of Thrift Supervision’’.
23 SEC. 378. TITLE 31, UNITED STATES CODE.
24 Title 31, United States Code, is amended—
25 (1) in section 321—
522
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1 (A) in subsection (c)—
2 (i) in paragraph (1), by adding ‘‘and’’
3 at the end;
4 (ii) in paragraph (2), by striking ‘‘;
5 and’’ and inserting a period; and
6 (iii) by striking paragraph (3); and
7 (B) by striking subsection (e); and
8 (2) in section 714(a), by striking ‘‘the Office of
9 the Comptroller of the Currency, and the Office of
10 Thrift Supervision.’’ and inserting ‘‘and the Office of
11 the Comptroller of the Currency.’’.
12 TITLE IV—REGULATION OF AD13
VISERS TO HEDGE FUNDS
14 AND OTHERS
15 SEC. 401. SHORT TITLE.
16 This title may be cited as the ‘‘Private Fund Invest17
ment Advisers Registration Act of 2010’’.
18 SEC. 402. DEFINITIONS.
19 (a) INVESTMENT ADVISERS ACT OF 1940 DEFINI20
TIONS.—Section 202(a) of the Investment Advisers Act of
21 1940 (15 U.S.C. 80b–2(a)) is amended by adding at the
22 end the following:
523
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1 ‘‘(29) The term ‘private fund’ means an issuer
2 that would be an investment company, as defined in
3 section 3 of the Investment Company Act of 1940
4 (15 U.S.C. 80a–3), but for section 3(c)(1) or 3(c)(7)
5 of that Act.
6 ‘‘(30) The term ‘foreign private adviser’ means
7 any investment adviser who—
8 ‘‘(A) has no place of business in the
9 United States;
10 ‘‘(B) has, in total, fewer than 15 clients
11 and investors in the United States in private
12 funds advised by the investment adviser;
13 ‘‘(C) has aggregate assets under manage14
ment attributable to clients in the United
15 States and investors in the United States in
16 private funds advised by the investment adviser
17 of less than $25,000,000, or such higher
18 amount as the Commission may, by rule, deem
19 appropriate in accordance with the purposes of
20 this title; and
21 ‘‘(D) neither—
22 ‘‘(i) holds itself out generally to the
23 public in the United States as an invest24
ment adviser; nor
25 ‘‘(ii) acts as—
524
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1 ‘‘(I) an investment adviser to any
2 investment company registered under
3 the Investment Company Act of 1940;
4 or
5 ‘‘(II) a company that has elected
6 to be a business development company
7 pursuant to section 54 of the Invest8
ment Company Act of 1940 (15
9 U.S.C. 80a–53), and has not with10
drawn its election.’’.
11 (b) OTHER DEFINITIONS.—As used in this title, the
12 terms ‘‘investment adviser’’ and ‘‘private fund’’ have the
13 same meanings as in section 202 of the Investment Advis14
ers Act of 1940, as amended by this title.
15 SEC. 403. ELIMINATION OF PRIVATE ADVISER EXEMPTION;
16 LIMITED EXEMPTION FOR FOREIGN PRIVATE
17 ADVISERS; LIMITED INTRASTATE EXEMP18
TION.
19 Section 203(b) of the Investment Advisers Act of
20 1940 (15 U.S.C. 80b–3(b)) is amended—
21 (1) in paragraph (1), by inserting ‘‘, other than
22 an investment adviser who acts as an investment ad23
viser to any private fund,’’ before ‘‘all of whose’’;
24 (2) by striking paragraph (3) and inserting the
25 following:
525
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1 ‘‘(3) any investment adviser that is a foreign
2 private adviser;’’; and
3 (3) in paragraph (5), by striking ‘‘or’’ at the
4 end;
5 (4) in paragraph (6)—
6 (A) by striking ‘‘any investment adviser’’
7 and inserting ‘‘(A) any investment adviser’’;
8 (B) by redesignating subparagraphs (A)
9 and (B) as clauses (i) and (ii), respectively; and
10 (C) in clause (ii) (as so redesignated), by
11 striking the period at the end and inserting ‘‘;
12 or’’; and
13 (D) by adding at the end the following:
14 ‘‘(B) any investment adviser that is registered with
15 the Commodity Futures Trading Commission as a com16
modity trading advisor and advises a private fund, pro17
vided that, if after the date of enactment of the Private
18 Fund Investment Advisers Registration Act of 2010, the
19 business of the advisor should become predominately the
20 provision of securities-related advice, then such adviser
21 shall register with the Commission.’’.
22 (5) by adding at the end the following:
23 ‘‘(7) any investment adviser, other than any en24
tity that has elected to be regulated or is regulated
25 as a business development company pursuant to sec526
O:AYOAYO10H34.xml [file 4 of 17] S.L.C
1 tion 54 of the Investment Company Act of 1940 (15
2 U.S.C. 80a–54), who solely advises—
3 ‘‘(A) small business investment companies
4 that are licensees under the Small Business In5
vestment Act of 1958;
6 ‘‘(B) entities that have received from the
7 Small Business Administration notice to pro8
ceed to qualify for a license as a small business
9 investment company under the Small Business
10 Investment Act of 1958, which notice or license
11 has not been revoked; or
12 ‘‘(C) applicants that are affiliated with 1
13 or more licensed small business investment
14 companies described in subparagraph (A) and
15 that have applied for another license under the
16 Small Business Investment Act of 1958, which
17 application remains pending.’’.
18 SEC. 404. COLLECTION OF SYSTEMIC RISK DATA; REPORTS;
19 EXAMINATIONS; DISCLOSURES.
20 Section 204 of the Investment Advisers Act of 1940
21 (15 U.S.C. 80b–4) is amended—
22 (1) by redesignating subsections (b) and (c) as
23 subsections (c) and (d), respectively; and
24 (2) by inserting after subsection (a) the fol25
lowing:
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1 ‘‘(b) RECORDS AND REPORTS OF PRIVATE FUNDS.—
2 ‘‘(1) IN GENERAL.—The Commission may re3
quire any investment adviser registered under this
4 title—
5 ‘‘(A) to maintain such records of, and file
6 with the Commission such reports regarding,
7 private funds advised by the investment adviser,
8 as necessary and appropriate in the public in9
terest and for the protection of investors, or for
10 the assessment of systemic risk by the Finan11
cial Stability Oversight Council (in this sub12
section referred to as the ‘Council’); and
13 ‘‘(B) to provide or make available to the
14 Council those reports or records or the informa15
tion contained therein.
16 ‘‘(2) TREATMENT OF RECORDS.—The records
17 and reports of any private fund to which an invest18
ment adviser registered under this title provides in19
vestment advice shall be deemed to be the records
20 and reports of the investment adviser.
21 ‘‘(3) REQUIRED INFORMATION.—The records
22 and reports required to be maintained by an invest23
ment adviser and subject to inspection by the Com24
mission under this subsection shall include, for each
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1 private fund advised by the investment adviser, a de2
scription of—
3 ‘‘(A) the amount of assets under manage4
ment and use of leverage, including off-balance5
sheet leverage;
6 ‘‘(B) counterparty credit risk exposure;
7 ‘‘(C) trading and investment positions;
8 ‘‘(D) valuation policies and practices of the
9 fund;
10 ‘‘(E) types of assets held;
11 ‘‘(F) side arrangements or side letters,
12 whereby certain investors in a fund obtain more
13 favorable rights or entitlements than other in14
vestors;
15 ‘‘(G) trading practices; and
16 ‘‘(H) such other information as the Com17
mission, in consultation with the Council, deter18
mines is necessary and appropriate in the pub19
lic interest and for the protection of investors
20 or for the assessment of systemic risk, which
21 may include the establishment of different re22
porting requirements for different classes of
23 fund advisers, based on the type or size of pri24
vate fund being advised.
529
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1 ‘‘(4) MAINTENANCE OF RECORDS.—An invest2
ment adviser registered under this title shall main3
tain such records of private funds advised by the in4
vestment adviser for such period or periods as the
5 Commission, by rule, may prescribe as necessary and
6 appropriate in the public interest and for the protec7
tion of investors, or for the assessment of systemic
8 risk.
9 ‘‘(5) FILING OF RECORDS.—The Commission
10 shall issue rules requiring each investment adviser to
11 a private fund to file reports containing such infor12
mation as the Commission deems necessary and ap13
propriate in the public interest and for the protec14
tion of investors or for the assessment of systemic
15 risk.
16 ‘‘(6) EXAMINATION OF RECORDS.—
17 ‘‘(A) PERIODIC AND SPECIAL EXAMINA18
TIONS.—The Commission—
19 ‘‘(i) shall conduct periodic inspections
20 of the records of private funds maintained
21 by an investment adviser registered under
22 this title in accordance with a schedule es23
tablished by the Commission; and
24 ‘‘(ii) may conduct at any time and
25 from time to time such additional, special,
530
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1 and other examinations as the Commission
2 may prescribe as necessary and appro3
priate in the public interest and for the
4 protection of investors, or for the assess5
ment of systemic risk.
6 ‘‘(B) AVAILABILITY OF RECORDS.—An in7
vestment adviser registered under this title shall
8 make available to the Commission any copies or
9 extracts from such records as may be prepared
10 without undue effort, expense, or delay, as the
11 Commission or its representatives may reason12
ably request.
13 ‘‘(7) INFORMATION SHARING.—
14 ‘‘(A) IN GENERAL.—The Commission shall
15 make available to the Council copies of all re16
ports, documents, records, and information filed
17 with or provided to the Commission by an in18
vestment adviser under this subsection as the
19 Council may consider necessary for the purpose
20 of assessing the systemic risk posed by a pri21
vate fund.
22 ‘‘(B) CONFIDENTIALITY.—The Council
23 shall maintain the confidentiality of information
24 received under this paragraph in all such re25
ports, documents, records, and information, in
531
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1 a manner consistent with the level of confiden2
tiality established for the Commission pursuant
3 to paragraph (8). The Council shall be exempt
4 from section 552 of title 5, United States Code,
5 with respect to any information in any report,
6 document, record, or information made avail7
able, to the Council under this subsection.’’.
8 ‘‘(8) COMMISSION CONFIDENTIALITY OF RE9
PORTS.—Notwithstanding any other provision of
10 law, the Commission may not be compelled to dis11
close any report or information contained therein re12
quired to be filed with the Commission under this
13 subsection, except that nothing in this subsection
14 authorizes the Commission—
15 ‘‘(A) to withhold information from Con16
gress, upon an agreement of confidentiality; or
17 ‘‘(B) prevent the Commission from com18
plying with—
19 ‘‘(i) a request for information from
20 any other Federal department or agency or
21 any self-regulatory organization requesting
22 the report or information for purposes
23 within the scope of its jurisdiction; or
532
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1 ‘‘(ii) an order of a court of the United
2 States in an action brought by the United
3 States or the Commission.
4 ‘‘(9) OTHER RECIPIENTS CONFIDENTIALITY.—
5 Any department, agency, or self-regulatory organiza6
tion that receives reports or information from the
7 Commission under this subsection shall maintain the
8 confidentiality of such reports, documents, records,
9 and information in a manner consistent with the
10 level of confidentiality established for the Commis11
sion under paragraph (8).
12 ‘‘(10) PUBLIC INFORMATION EXCEPTION.—
13 ‘‘(A) IN GENERAL.—The Commission, the
14 Council, and any other department, agency, or
15 self-regulatory organization that receives infor16
mation, reports, documents, records, or infor17
mation from the Commission under this sub18
section, shall be exempt from the provisions of
19 section 552 of title 5, United States Code, with
20 respect to any such report, document, record, or
21 information. Any proprietary information of an
22 investment adviser ascertained by the Commis23
sion from any report required to be filed with
24 the Commission pursuant to this subsection
25 shall be subject to the same limitations on pub533
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1 lic disclosure as any facts ascertained during an
2 examination, as provided by section 210(b) of
3 this title.
4 ‘‘(B) PROPRIETARY INFORMATION.—For
5 purposes of this paragraph, proprietary infor6
mation includes sensitive, non-public informa7
tion regarding—
8 ‘‘(i) the investment or trading strate9
gies of the investment adviser;
10 ‘‘(ii) analytical or research methodolo11
gies;
12 ‘‘(iii) trading data;
13 ‘‘(iv) computer hardware or software
14 containing intellectual property; and
15 ‘‘(v) any additional information that
16 the Commission determines to be propri17
etary.
18 ‘‘(11) ANNUAL REPORT TO CONGRESS.—The
19 Commission shall report annually to Congress on
20 how the Commission has used the data collected
21 pursuant to this subsection to monitor the markets
22 for the protection of investors and the integrity of
23 the markets.’’.
534
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1 SEC. 405. DISCLOSURE PROVISION AMENDMENT.
2 Section 210(c) of the Investment Advisers Act of
3 1940 (15 U.S.C. 80b–10(c)) is amended by inserting be4
fore the period at the end the following: ‘‘or for purposes
5 of assessment of potential systemic risk’’.
6 SEC. 406. CLARIFICATION OF RULEMAKING AUTHORITY.
7 Section 211 of the Investment Advisers Act of 1940
8 (15 U.S.C. 80b–11) is amended—
9 (1) in subsection (a), by inserting before the pe10
riod at the end of the first sentence the following:
11 ‘‘, including rules and regulations defining technical,
12 trade, and other terms used in this title, except that
13 the Commission may not define the term ‘client’ for
14 purposes of paragraphs (1) and (2) of section 206
15 to include an investor in a private fund managed by
16 an investment adviser, if such private fund has en17
tered into an advisory contract with such adviser’’;
18 and
19 (2) by adding at the end the following:
20 ‘‘(e) DISCLOSURE RULES ON PRIVATE FUNDS.—The
21 Commission and the Commodity Futures Trading Com22
mission shall, after consultation with the Council but not
23 later than 12 months after the date of enactment of the
24 Private Fund Investment Advisers Registration Act of
25 2010, jointly promulgate rules to establish the form and
26 content of the reports required to be filed with the Com535
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1 mission under subsection 204(b) and with the Commodity
2 Futures Trading Commission by investment advisers that
3 are registered both under this title and the Commodity
4 Exchange Act (7 U.S.C. 1a et seq.).’’.
5 SEC. 407. EXEMPTION OF AND REPORTING BY VENTURE
6 CAPITAL FUND ADVISERS.
7 Section 203 of the Investment Advisers Act of 1940
8 (15 U.S.C. 80b–3) is amended by adding at the end the
9 following:
10 ‘‘(l) EXEMPTION OF VENTURE CAPITAL FUND AD11
VISERS.—No investment adviser that acts as an invest12
ment adviser solely to 1 or more venture capital funds
13 shall be subject to the registration requirements of this
14 title with respect to the provision of investment advice re15
lating to a venture capital fund. Not later than 1 year
16 after the date of enactment of this subsection, the Com17
mission shall issue final rules to define the term ‘venture
18 capital fund’ for purposes of this subsection. The Commis19
sion shall require such advisers to maintain such records
20 and provide to the Commission such annual or other re21
ports as the Commission determines necessary or appro22
priate in the public interest or for the protection of inves23
tors.’’.
536
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1 SEC. 408. EXEMPTION OF AND REPORTING BY CERTAIN
2 PRIVATE FUND ADVISERS.
3 Section 203 of the Investment Advisers Act of 1940
4 (15 U.S.C. 80b–3) is amended by adding at the end the
5 following:
6 ‘‘(m) EXEMPTION OF AND REPORTING BY CERTAIN
7 PRIVATE FUND ADVISERS.—
8 ‘‘(1) IN GENERAL.—The Commission shall pro9
vide an exemption from the registration require10
ments under this section to any investment adviser
11 of private funds, if each of such investment adviser
12 acts solely as an adviser to private funds and has as13
sets under management in the United States of less
14 than $150,000,000.
15 ‘‘(2) REPORTING.—The Commission shall re16
quire investment advisers exempted by reason of this
17 subsection to maintain such records and provide to
18 the Commission such annual or other reports as the
19 Commission determines necessary or appropriate in
20 the public interest or for the protection of investors.
21 ‘‘(n) REGISTRATION AND EXAMINATION OF MID22
SIZED PRIVATE FUND ADVISERS.—In prescribing regula23
tions to carry out the requirements of this section with
24 respect to investment advisers acting as investment advis25
ers to mid-sized private funds, the Commission shall take
26 into account the size, governance, and investment strategy
537
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1 of such funds to determine whether they pose systemic
2 risk, and shall provide for registration and examination
3 procedures with respect to the investment advisers of such
4 funds which reflect the level of systemic risk posed by such
5 funds.’’.
6 SEC. 409. FAMILY OFFICES.
7 (a) IN GENERAL.—Section 202(a)(11) of the Invest8
ment Advisers Act of 1940 (15 U.S.C. 80b–2(a)(11)) is
9 amended by striking ‘‘or (G)’’ and inserting the following:
10 ‘‘; (G) any family office, as defined by rule, regulation,
11 or order of the Commission, in accordance with the pur12
poses of this title; or (H)’’.
13 (b) RULEMAKING.—The rules, regulations, or orders
14 issued by the Commission pursuant to section
15 202(a)(11)(G) of the Investment Advisers Act of 1940, as
16 added by this section, regarding the definition of the term
17 ‘‘family office’’ shall provide for an exemption that—
18 (1) is consistent with the previous exemptive
19 policy of the Commission, as reflected in exemptive
20 orders for family offices in effect on the date of en21
actment of this Act, and the grandfathering provi22
sions in paragraph (3);
23 (2) recognizes the range of organizational, man24
agement, and employment structures and arrange25
ments employed by family offices; and
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1 (3) does not exclude any person who was not
2 registered or required to be registered under the In3
vestment Advisers Act of 1940 on January 1, 2010
4 from the definition of the term ‘‘family office’’, sole5
ly because such person provides investment advice
6 to, and was engaged before January 1, 2010 in pro7
viding investment advice to—
8 (A) natural persons who, at the time of
9 their applicable investment, are officers, direc10
tors, or employees of the family office who—
11 (i) have invested with the family office
12 before January 1, 2010; and
13 (ii) are accredited investors, as de14
fined in Regulation D of the Commission
15 (or any successor thereto) under the Secu16
rities Act of 1933, or, as the Commission
17 may prescribe by rule, the successors-in-in18
terest thereto;
19 (B) any company owned exclusively and
20 controlled by members of the family of the fam21
ily office, or as the Commission may prescribe
22 by rule;
23 (C) any investment adviser registered
24 under the Investment Adviser Act of 1940 that
25 provides investment advice to the family office
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1 and who identifies investment opportunities to
2 the family office, and invests in such trans3
actions on substantially the same terms as the
4 family office invests, but does not invest in
5 other funds advised by the family office, and
6 whose assets as to which the family office di7
rectly or indirectly provides investment advice
8 represent, in the aggregate, not more than 5
9 percent of the value of the total assets as to
10 which the family office provides investment ad11
vice.
12 (c) ANTIFRAUD AUTHORITY.—A family office that
13 would not be a family office, but for subsection (b)(3),
14 shall be deemed to be an investment adviser for the pur15
poses of paragraphs (1), (2) and (4) of section 206 of the
16 Investment Advisers Act of 1940.
17 SEC. 410. STATE AND FEDERAL RESPONSIBILITIES; ASSET
18 THRESHOLD FOR FEDERAL REGISTRATION
19 OF INVESTMENT ADVISERS.
20 Section 203A(a) of the of the Investment Advisers
21 Act of 1940 (15 U.S.C. 80b–3a(a)) is amended—
22 (1) by redesignating paragraph (2) as para23
graph (3); and
24 (2) by inserting after paragraph (1) the fol25
lowing:
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1 ‘‘(2) TREATMENT OF MID-SIZED INVESTMENT
2 ADVISERS.—
3 ‘‘(A) IN GENERAL.—No investment adviser
4 described in subparagraph (B) shall register
5 under section 203, unless the investment ad6
viser is an adviser to an investment company
7 registered under the Investment Company Act
8 of 1940, or a company which has elected to be
9 a business development company pursuant to
10 section 54 of the Investment Company Act of
11 1940, and has not withdrawn the election, ex12
cept that, if by effect of this paragraph an in13
vestment adviser would be required to register
14 with 15 or more States, then the adviser may
15 register under section 203.
16 ‘‘(B) COVERED PERSONS.—An investment
17 adviser described in this subparagraph is an in18
vestment adviser that—
19 ‘‘(i) is required to be registered as an
20 investment adviser with the securities com21
missioner (or any agency or office per22
forming like functions) of the State in
23 which it maintains its principal office and
24 place of business and, if registered, would
25 be subject to examination as an investment
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1 adviser by any such commissioner, agency,
2 or office; and
3 ‘‘(ii) has assets under management
4 between—
5 ‘‘(I) the amount specified under
6 subparagraph (A) of paragraph (1),
7 as such amount may have been ad8
justed by the Commission pursuant to
9 that subparagraph; and
10 ‘‘(II) $100,000,000, or such
11 higher amount as the Commission
12 may, by rule, deem appropriate in ac13
cordance with the purposes of this
14 title.’’.
15 SEC. 411. CUSTODY OF CLIENT ASSETS.
16 The Investment Advisers Act of 1940 (15 U.S.C.
17 80b–1 et seq.) is amended by adding at the end the fol18
lowing new section:
19 ‘‘SEC. 223. CUSTODY OF CLIENT ACCOUNTS.
20 ‘‘An investment adviser registered under this title
21 shall take such steps to safeguard client assets over which
22 such adviser has custody, including, without limitation,
23 verification of such assets by an independent public ac24
countant, as the Commission may, by rule, prescribe.’’.
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1 SEC. 412. COMPTROLLER GENERAL STUDY ON CUSTODY
2 RULE COSTS.
3 The Comptroller General of the United States shall—
4 (1) conduct a study of—
5 (A) the compliance costs associated with
6 the current Securities and Exchange Commis7
sion rules 204–2 (17 C.F.R. Parts 275.204–2)
8 and rule 206(4)–2 (17 C.F.R. 275.206(4)–2)
9 under the Investment Advisers Act of 1940 re10
garding custody of funds or securities of clients
11 by investment advisers; and
12 (B) the additional costs if subsection
13 (b)(6) of rule 206(4)–2 (17 C.F.R. 275.206(4)–
14 2(b)(6)) relating to operational independence
15 were eliminated; and
16 (2) submit a report to the Committee on Bank17
ing, Housing, and Urban Affairs of the Senate and
18 the Committee on Financial Services of the House of
19 Representatives on the results of such study, not
20 later than 3 years after the date of enactment of
21 this Act.
22 SEC. 413. ADJUSTING THE ACCREDITED INVESTOR STAND23
ARD.
24 (a) IN GENERAL.—The Commission shall adjust any
25 net worth standard for an accredited investor, as set forth
26 in the rules of the Commission under the Securities Act
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1 of 1933, so that the individual net worth of any natural
2 person, or joint net worth with the spouse of that person,
3 at the time of purchase, is more than $1,000,000 (as such
4 amount is adjusted periodically by rule of the Commis5
sion), excluding the value of the primary residence of such
6 natural person, except that during the 4-year period that
7 begins on the date of enactment of this Act, any net worth
8 standard shall be $1,000,000, excluding the value of the
9 primary residence of such natural person.
10 (b) REVIEW AND ADJUSTMENT.—
11 (1) INITIAL REVIEW AND ADJUSTMENT.—
12 (A) INITIAL REVIEW.—The Commission
13 may undertake a review of the definition of the
14 term ‘‘accredited investor’’, as such term ap15
plies to natural persons, to determine whether
16 the requirements of the definition, excluding the
17 requirement relating to the net worth standard
18 described in subsection (a), should be adjusted
19 or modified for the protection of investors, in
20 the public interest, and in light of the economy.
21 (B) ADJUSTMENT OR MODIFICATION.—
22 Upon completion of a review under subpara23
graph (A), the Commission may, by notice and
24 comment rulemaking, make such adjustments
25 to the definition of the term ‘‘accredited inves544
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1 tor’’, excluding adjusting or modifying the re2
quirement relating to the net worth standard
3 described in subsection (a), as such term ap4
plies to natural persons, as the Commission
5 may deem appropriate for the protection of in6
vestors, in the public interest, and in light of
7 the economy.
8 (2) SUBSEQUENT REVIEWS AND ADJUST9
MENT.—
10 (A) SUBSEQUENT REVIEWS.—Not earlier
11 than 4 years after the date of enactment of this
12 Act, and not less frequently than once every 4
13 years thereafter, the Commission shall under14
take a review of the definition, in its entirety,
15 of the term ‘‘accredited investor’’, as defined in
16 section 230.215 of title 17, Code of Federal
17 Regulations, or any successor thereto, as such
18 term applies to natural persons, to determine
19 whether the requirements of the definition
20 should be adjusted or modified for the protec21
tion of investors, in the public interest, and in
22 light of the economy.
23 (B) ADJUSTMENT OR MODIFICATION.—
24 Upon completion of a review under subpara25
graph (A), the Commission may, by notice and
545
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1 comment rulemaking, make such adjustments
2 to the definition of the term ‘‘accredited inves3
tor’’, as defined in section 230.215 of title 17,
4 Code of Federal Regulations, or any successor
5 thereto, as such term applies to natural per6
sons, as the Commission may deem appropriate
7 for the protection of investors, in the public in8
terest, and in light of the economy.
9 SEC. 414. RULE OF CONSTRUCTION RELATING TO THE
10 COMMODITIES EXCHANGE ACT.
11 The Investment Advisers Act of 1940 (15 U.S.C.
12 80b–1 et seq.) is further amended by adding at the end
13 the following new section:
14 ‘‘SEC. 224. RULE OF CONSTRUCTION RELATING TO THE
15 COMMODITIES EXCHANGE ACT.
16 ‘‘Nothing in this title shall relieve any person of any
17 obligation or duty, or affect the availability of any right
18 or remedy available to the Commodity Futures Trading
19 Commission or any private party, arising under the Com20
modity Exchange Act (7 U.S.C. 1 et seq.) governing com21
modity pools, commodity pool operators, or commodity
22 trading advisors.’’.
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1 SEC. 415. GAO STUDY AND REPORT ON ACCREDITED INVES2
TORS.
3 The Comptroller General of the United States shall
4 conduct a study on the appropriate criteria for deter5
mining the financial thresholds or other criteria needed
6 to qualify for accredited investor status and eligibility to
7 invest in private funds, and shall submit a report to the
8 Committee on Banking, Housing, and Urban Affairs of
9 the Senate and the Committee on Financial Services of
10 the House of Representatives on the results of such study
11 not later than 3 years after the date of enactment of this
12 Act.
13 SEC. 416. GAO STUDY ON SELF-REGULATORY ORGANIZA14
TION FOR PRIVATE FUNDS.
15 The Comptroller General of the United States shall—
16 (1) conduct a study of the feasibility of forming
17 a self-regulatory organization to oversee private
18 funds; and
19 (2) submit a report to the Committee on Bank20
ing, Housing, and Urban Affairs of the Senate and
21 the Committee on Financial Services of the House of
22 Representatives on the results of such study, not
23 later than 1 year after the date of enactment of this
24 Act.
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1 SEC. 417. COMMISSION STUDY AND REPORT ON SHORT
2 SELLING.
3 (a) STUDIES.—The Division of Risk, Strategy, and
4 Financial Innovation of the Commission shall conduct—
5 (1) a study, taking into account current schol6
arship, on the state of short selling on national secu7
rities exchanges and in the over-the-counter markets,
8 with particular attention to the impact of recent rule
9 changes and the incidence of—
10 (A) the failure to deliver shares sold short;
11 or
12 (B) delivery of shares on the fourth day
13 following the short sale transaction; and
14 (2) a study of—
15 (A) the feasibility, benefits, and costs of
16 requiring reporting publicly, in real time short
17 sale positions of publicly listed securities, or, in
18 the alternative, reporting such short positions
19 in real time only to the Commission and the Fi20
nancial Industry Regulatory Authority; and
21 (B) the feasibility, benefits, and costs of
22 conducting a voluntary pilot program in which
23 public companies will agree to have all trades of
24 their shares marked ‘‘short’’, ‘‘market maker
25 short’’, ‘‘buy’’, ‘‘buy-to-cover’’, or ‘‘long’’, and
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1 reported in real time through the Consolidated
2 Tape.
3 (b) REPORTS.—The Commission shall submit a re4
port to the Committee on Banking, Housing, and Urban
5 Affairs of the Senate and the Committee on Financial
6 Services of the House of Representatives—
7 (1) on the results of the study required under
8 subsection (a)(1), including recommendations for
9 market improvements, not later than 2 years after
10 the date of enactment of this Act; and
11 (2) on the results of the study required under
12 subsection (a)(2), not later than 1 year after the
13 date of enactment of this Act.
14 SEC. 418. QUALIFIED CLIENT STANDARD.
15 Section 205(e) of the Investment Advisers Act of
16 1940 (15 U.S.C. 80b–5(e)) is amended by adding at the
17 end the following: ‘‘With respect to any factor used in any
18 rule or regulation by the Commission in making a deter19
mination under this subsection, if the Commission uses
20 a dollar amount test in connection with such factor, such
21 as a net asset threshold, the Commission shall, by order,
22 not later than 1 year after the date of enactment of the
23 Private Fund Investment Advisers Registration Act of
24 2010, and every 5 years thereafter, adjust for the effects
25 of inflation on such test. Any such adjustment that is not
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1 a multiple of $100,000 shall be rounded to the nearest
2 multiple of $100,000.’’.
3 SEC. 419. TRANSITION PERIOD.
4 Except as otherwise provided in this title, this title
5 and the amendments made by this title shall become effec6
tive 1 year after the date of enactment of this Act, except
7 that any investment adviser may, at the discretion of the
8 investment adviser, register with the Commission under
9 the Investment Advisers Act of 1940 during that 1-year
10 period, subject to the rules of the Commission.
11 TITLE V—INSURANCE
12 Subtitle A—Federal Insurance
13 Office
14 SEC. 501. SHORT TITLE.
15 This subtitle may be cited as the ‘‘Federal Insurance
16 Office Act of 2010’’.
17 SEC. 502. FEDERAL INSURANCE OFFICE.
18 (a) ESTABLISHMENT OF OFFICE.—Subchapter I of
19 chapter 3 of subtitle I of title 31, United States Code,
20 is amended—
21 (1) by redesignating section 312 as section 315;
22 (2) by redesignating section 313 as section 312;
23 and
24 (3) by inserting after section 312 (as so redes25
ignated) the following new sections:
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1 ‘‘SEC. 313. FEDERAL INSURANCE OFFICE.
2 ‘‘(a) ESTABLISHMENT.—There is established within
3 the Department of the Treasury the Federal Insurance
4 Office.
5 ‘‘(b) LEADERSHIP.—The Office shall be headed by a
6 Director, who shall be appointed by the Secretary of the
7 Treasury. The position of Director shall be a career re8
served position in the Senior Executive Service, as that
9 position is defined under section 3132 of title 5, United
10 States Code.
11 ‘‘(c) FUNCTIONS.—
12 ‘‘(1) AUTHORITY PURSUANT TO DIRECTION OF
13 SECRETARY.—The Office, pursuant to the direction
14 of the Secretary, shall have the authority—
15 ‘‘(A) to monitor all aspects of the insur16
ance industry, including identifying issues or
17 gaps in the regulation of insurers that could
18 contribute to a systemic crisis in the insurance
19 industry or the United States financial system;
20 ‘‘(B) to monitor the extent to which tradi21
tionally underserved communities and con22
sumers, minorities (as such term is defined in
23 section 1204(c) of the Financial Institutions
24 Reform, Recovery, and Enforcement Act of
25 1989 (12 U.S.C. 1811 note)), and low- and
26 moderate-income persons have access to afford551
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1 able insurance products regarding all lines of
2 insurance, except health insurance;
3 ‘‘(C) to recommend to the Financial Sta4
bility Oversight Council that it designate an in5
surer, including the affiliates of such insurer, as
6 an entity subject to regulation as a nonbank fi7
nancial company supervised by the Board of
8 Governors pursuant to title I of the Dodd-
9 Frank Wall Street Reform and Consumer Pro10
tection Act;
11 ‘‘(D) to assist the Secretary in admin12
istering the Terrorism Insurance Program es13
tablished in the Department of the Treasury
14 under the Terrorism Risk Insurance Act of
15 2002 (15 U.S.C. 6701 note);
16 ‘‘(E) to coordinate Federal efforts and de17
velop Federal policy on prudential aspects of
18 international insurance matters, including rep19
resenting the United States, as appropriate, in
20 the International Association of Insurance Su21
pervisors (or a successor entity) and assisting
22 the Secretary in negotiating covered agreements
23 (as such term is defined in subsection (r));
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1 ‘‘(F) to determine, in accordance with sub2
section (f), whether State insurance measures
3 are preempted by covered agreements;
4 ‘‘(G) to consult with the States (including
5 State insurance regulators) regarding insurance
6 matters of national importance and prudential
7 insurance matters of international importance;
8 and
9 ‘‘(H) to perform such other related duties
10 and authorities as may be assigned to the Of11
fice by the Secretary.
12 ‘‘(2) ADVISORY FUNCTIONS.—The Office shall
13 advise the Secretary on major domestic and pruden14
tial international insurance policy issues.
15 ‘‘(3) ADVISORY CAPACITY ON COUNCIL.—The
16 Director shall serve in an advisory capacity on the
17 Financial Stability Oversight Council established
18 under the Financial Stability Act of 2010.
19 ‘‘(d) SCOPE.—The authority of the Office shall ex20
tend to all lines of insurance except—
21 ‘‘(1) health insurance, as determined by the
22 Secretary in coordination with the Secretary of
23 Health and Human Services based on section 2791
24 of the Public Health Service Act (42 U.S.C. 300gg–
25 91);
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1 ‘‘(2) long-term care insurance, except long-term
2 care insurance that is included with life or annuity
3 insurance components, as determined by the Sec4
retary in coordination with the Secretary of Health
5 and Human Services, and in the case of long-term
6 care insurance that is included with such compo7
nents, the Secretary shall coordinate with the Sec8
retary of Health and Human Services in performing
9 the functions of the Office; and
10 ‘‘(3) crop insurance, as established by the Fed11
eral Crop Insurance Act (7 U.S.C. 1501 et seq.).
12 ‘‘(e) GATHERING OF INFORMATION.—
13 ‘‘(1) IN GENERAL.—In carrying out the func14
tions required under subsection (c), the Office
15 may—
16 ‘‘(A) receive and collect data and informa17
tion on and from the insurance industry and in18
surers;
19 ‘‘(B) enter into information-sharing agree20
ments;
21 ‘‘(C) analyze and disseminate data and in22
formation; and
23 ‘‘(D) issue reports regarding all lines of in24
surance except health insurance.
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1 ‘‘(2) COLLECTION OF INFORMATION FROM IN2
SURERS AND AFFILIATES.—
3 ‘‘(A) IN GENERAL.—Except as provided in
4 paragraph (3), the Office may require an in5
surer, or any affiliate of an insurer, to submit
6 such data or information as the Office may rea7
sonably require in carrying out the functions
8 described under subsection (c).
9 ‘‘(B) RULE OF CONSTRUCTION.—Notwith10
standing any other provision of this section, for
11 purposes of subparagraph (A), the term ‘in12
surer’ means any entity that writes insurance
13 or reinsures risks and issues contracts or poli14
cies in 1 or more States.
15 ‘‘(3) EXCEPTION FOR SMALL INSURERS.—Para16
graph (2) shall not apply with respect to any insurer
17 or affiliate thereof that meets a minimum size
18 threshold that the Office may establish, whether by
19 order or rule.
20 ‘‘(4) ADVANCE COORDINATION.—Before col21
lecting any data or information under paragraph (2)
22 from an insurer, or affiliate of an insurer, the Office
23 shall coordinate with each relevant Federal agency
24 and State insurance regulator (or other relevant
25 Federal or State regulatory agency, if any, in the
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1 case of an affiliate of an insurer) and any publicly
2 available sources to determine if the information to
3 be collected is available from, and may be obtained
4 in a timely manner by, such Federal agency or State
5 insurance regulator, individually or collectively, other
6 regulatory agency, or publicly available sources. If
7 the Director determines that such data or informa8
tion is available, and may be obtained in a timely
9 manner, from such an agency, regulator, regulatory
10 agency, or source, the Director shall obtain the data
11 or information from such agency, regulator, regu12
latory agency, or source. If the Director determines
13 that such data or information is not so available, the
14 Director may collect such data or information from
15 an insurer (or affiliate) only if the Director complies
16 with the requirements of subchapter I of chapter 35
17 of title 44, United States Code (relating to Federal
18 information policy; commonly known as the Paper19
work Reduction Act), in collecting such data or in20
formation. Notwithstanding any other provision of
21 law, each such relevant Federal agency and State in22
surance regulator or other Federal or State regu23
latory agency is authorized to provide to the Office
24 such data or information.
25 ‘‘(5) CONFIDENTIALITY.—
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1 ‘‘(A) RETENTION OF PRIVILEGE.—The
2 submission of any nonpublicly available data
3 and information to the Office under this sub4
section shall not constitute a waiver of, or oth5
erwise affect, any privilege arising under Fed6
eral or State law (including the rules of any
7 Federal or State court) to which the data or in8
formation is otherwise subject.
9 ‘‘(B) CONTINUED APPLICATION OF PRIOR
10 CONFIDENTIALITY AGREEMENTS.—Any require11
ment under Federal or State law to the extent
12 otherwise applicable, or any requirement pursu13
ant to a written agreement in effect between
14 the original source of any nonpublicly available
15 data or information and the source of such data
16 or information to the Office, regarding the pri17
vacy or confidentiality of any data or informa18
tion in the possession of the source to the Of19
fice, shall continue to apply to such data or in20
formation after the data or information has
21 been provided pursuant to this subsection to the
22 Office.
23 ‘‘(C) INFORMATION-SHARING AGREE24
MENT.—Any data or information obtained by
25 the Office may be made available to State in557
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1 surance regulators, individually or collectively,
2 through an information-sharing agreement
3 that—
4 ‘‘(i) shall comply with applicable Fed5
eral law; and
6 ‘‘(ii) shall not constitute a waiver of,
7 or otherwise affect, any privilege under
8 Federal or State law (including the rules
9 of any Federal or State court) to which the
10 data or information is otherwise subject.
11 ‘‘(D) AGENCY DISCLOSURE REQUIRE12
MENTS.—Section 552 of title 5, United States
13 Code, shall apply to any data or information
14 submitted to the Office by an insurer or an af15
filiate of an insurer.
16 ‘‘(6) SUBPOENAS AND ENFORCEMENT.—The
17 Director shall have the power to require by subpoena
18 the production of the data or information requested
19 under paragraph (2), but only upon a written find20
ing by the Director that such data or information is
21 required to carry out the functions described under
22 subsection (c) and that the Office has coordinated
23 with such regulator or agency as required under
24 paragraph (4). Subpoenas shall bear the signature of
25 the Director and shall be served by any person or
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1 class of persons designated by the Director for that
2 purpose. In the case of contumacy or failure to obey
3 a subpoena, the subpoena shall be enforceable by
4 order of any appropriate district court of the United
5 States. Any failure to obey the order of the court
6 may be punished by the court as a contempt of
7 court.
8 ‘‘(f) PREEMPTION OF STATE INSURANCE MEAS9
URES.—
10 ‘‘(1) STANDARD.—A State insurance measure
11 shall be preempted pursuant to this section or sec12
tion 314 if, and only to the extent that the Director
13 determines, in accordance with this subsection, that
14 the measure—
15 ‘‘(A) results in less favorable treatment of
16 a non-United States insurer domiciled in a for17
eign jurisdiction that is subject to a covered
18 agreement than a United States insurer domi19
ciled, licensed, or otherwise admitted in that
20 State; and
21 ‘‘(B) is inconsistent with a covered agree22
ment.
23 ‘‘(2) DETERMINATION.—
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1 ‘‘(A) NOTICE OF POTENTIAL INCONSIST2
ENCY.—Before making any determination
3 under paragraph (1), the Director shall—
4 ‘‘(i) notify and consult with the appro5
priate State regarding any potential incon6
sistency or preemption;
7 ‘‘(ii) notify and consult with the
8 United States Trade Representative re9
garding any potential inconsistency or pre10
emption;
11 ‘‘(iii) cause to be published in the
12 Federal Register notice of the issue re13
garding the potential inconsistency or pre14
emption, including a description of each
15 State insurance measure at issue and any
16 applicable covered agreement;
17 ‘‘(iv) provide interested parties a rea18
sonable opportunity to submit written com19
ments to the Office; and
20 ‘‘(v) consider any comments received.
21 ‘‘(B) SCOPE OF REVIEW.—For purposes of
22 this subsection, any determination of the Direc23
tor regarding State insurance measures, and
24 any preemption under paragraph (1) as a result
25 of such determination, shall be limited to the
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1 subject matter contained within the covered
2 agreement involved and shall achieve a level of
3 protection for insurance or reinsurance con4
sumers that is substantially equivalent to the
5 level of protection achieved under State insur6
ance or reinsurance regulation.
7 ‘‘(C) NOTICE OF DETERMINATION OF IN8
CONSISTENCY.—Upon making any determina9
tion under paragraph (1), the Director shall—
10 ‘‘(i) notify the appropriate State of
11 the determination and the extent of the in12
consistency;
13 ‘‘(ii) establish a reasonable period of
14 time, which shall not be less than 30 days,
15 before the determination shall become ef16
fective; and
17 ‘‘(iii) notify the Committees on Finan18
cial Services and Ways and Means of the
19 House of Representatives and the Commit20
tees on Banking, Housing, and Urban Af21
fairs and Finance of the Senate.
22 ‘‘(3) NOTICE OF EFFECTIVENESS.—Upon the
23 conclusion of the period referred to in paragraph
24 (2)(C)(ii), if the basis for such determination still
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1 exists, the determination shall become effective and
2 the Director shall—
3 ‘‘(A) cause to be published a notice in the
4 Federal Register that the preemption has be5
come effective, as well as the effective date; and
6 ‘‘(B) notify the appropriate State.
7 ‘‘(4) LIMITATION.—No State may enforce a
8 State insurance measure to the extent that such
9 measure has been preempted under this subsection.
10 ‘‘(g) APPLICABILITY OF ADMINISTRATIVE PROCE11
DURES ACT.—Determinations of inconsistency made pur12
suant to subsection (f)(2) shall be subject to the applicable
13 provisions of subchapter II of chapter 5 of title 5, United
14 States Code (relating to administrative procedure), and
15 chapter 7 of such title (relating to judicial review), except
16 that in any action for judicial review of a determination
17 of inconsistency, the court shall determine the matter de
18 novo.
19 ‘‘(h) REGULATIONS, POLICIES, AND PROCEDURES.—
20 The Secretary may issue orders, regulations, policies, and
21 procedures to implement this section.
22 ‘‘(i) CONSULTATION.—The Director shall consult
23 with State insurance regulators, individually or collec24
tively, to the extent the Director determines appropriate,
25 in carrying out the functions of the Office.
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1 ‘‘(j) SAVINGS PROVISIONS.—Nothing in this section
2 shall—
3 ‘‘(1) preempt—
4 ‘‘(A) any State insurance measure that
5 governs any insurer’s rates, premiums, under6
writing, or sales practices;
7 ‘‘(B) any State coverage requirements for
8 insurance;
9 ‘‘(C) the application of the antitrust laws
10 of any State to the business of insurance; or
11 ‘‘(D) any State insurance measure gov12
erning the capital or solvency of an insurer, ex13
cept to the extent that such State insurance
14 measure results in less favorable treatment of a
15 non-United State insurer than a United States
16 insurer;
17 ‘‘(2) be construed to alter, amend, or limit any
18 provision of the Consumer Financial Protection
19 Agency Act of 2010; or
20 ‘‘(3) affect the preemption of any State insur21
ance measure otherwise inconsistent with and pre22
empted by Federal law.
23 ‘‘(k) RETENTION OF EXISTING STATE REGULATORY
24 AUTHORITY.—Nothing in this section or section 314 shall
25 be construed to establish or provide the Office or the De563
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1 partment of the Treasury with general supervisory or reg2
ulatory authority over the business of insurance.
3 ‘‘(l) RETENTION OF AUTHORITY OF FEDERAL FI4
NANCIAL REGULATORY AGENCIES.—Nothing in this sec5
tion or section 314 shall be construed to limit the author6
ity of any Federal financial regulatory agency, including
7 the authority to develop and coordinate policy, negotiate,
8 and enter into agreements with foreign governments, au9
thorities, regulators, and multinational regulatory commit10
tees and to preempt State measures to affect uniformity
11 with international regulatory agreements.
12 ‘‘(m) RETENTION OF AUTHORITY OF UNITED
13 STATES TRADE REPRESENTATIVE.—Nothing in this sec14
tion or section 314 shall be construed to affect the author15
ity of the Office of the United States Trade Representative
16 pursuant to section 141 of the Trade Act of 1974 (19
17 U.S.C. 2171) or any other provision of law, including au18
thority over the development and coordination of United
19 States international trade policy and the administration
20 of the United States trade agreements program.
21 ‘‘(n) ANNUAL REPORTS TO CONGRESS.—
22 ‘‘(1) SECTION 313(f) REPORTS.—Beginning
23 September 30, 2011, the Director shall submit a re24
port on or before September 30 of each calendar
25 year to the President and to the Committees on Fi564
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1 nancial Services and Ways and Means of the House
2 of Representatives and the Committees on Banking,
3 Housing, and Urban Affairs and Finance of the
4 Senate on any actions taken by the Office pursuant
5 to subsection (f) (regarding preemption of incon6
sistent State insurance measures).
7 ‘‘(2) INSURANCE INDUSTRY.—Beginning Sep8
tember 30, 2011, the Director shall submit a report
9 on or before September 30 of each calendar year to
10 the President and to the Committee on Financial
11 Services of the House of Representatives and the
12 Committee on Banking, Housing, and Urban Affairs
13 of the Senate on the insurance industry and any
14 other information as deemed relevant by the Direc15
tor or requested by such Committees.
16 ‘‘(o) REPORTS ON U.S. AND GLOBAL REINSURANCE
17 MARKET.—The Director shall submit to the Committee
18 on Financial Services of the House of Representatives and
19 the Committee on Banking, Housing, and Urban Affairs
20 of the Senate—
21 ‘‘(1) a report received not later than September
22 30, 2012, describing the breadth and scope of the
23 global reinsurance market and the critical role such
24 market plays in supporting insurance in the United
25 States; and
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1 ‘‘(2) a report received not later than January 1,
2 2013, and updated not later than January 1, 2015,
3 describing the impact of part II of the Nonadmitted
4 and Reinsurance Reform Act of 2010 on the ability
5 of State regulators to access reinsurance information
6 for regulated companies in their jurisdictions.
7 ‘‘(p) STUDY AND REPORT ON REGULATION OF IN8
SURANCE.—
9 ‘‘(1) IN GENERAL.—Not later than 18 months
10 after the date of enactment of this section, the Di11
rector shall conduct a study and submit a report to
12 Congress on how to modernize and improve the sys13
tem of insurance regulation in the United States.
14 ‘‘(2) CONSIDERATIONS.—The study and report
15 required under paragraph (1) shall be based on and
16 guided by the following considerations:
17 ‘‘(A) Systemic risk regulation with respect
18 to insurance.
19 ‘‘(B) Capital standards and the relation20
ship between capital allocation and liabilities,
21 including standards relating to liquidity and du22
ration risk.
23 ‘‘(C) Consumer protection for insurance
24 products and practices, including gaps in State
25 regulation.
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1 ‘‘(D) The degree of national uniformity of
2 State insurance regulation.
3 ‘‘(E) The regulation of insurance compa4
nies and affiliates on a consolidated basis.
5 ‘‘(F) International coordination of insur6
ance regulation.
7 ‘‘(3) ADDITIONAL FACTORS.—The study and
8 report required under paragraph (1) shall also exam9
ine the following factors:
10 ‘‘(A) The costs and benefits of potential
11 Federal regulation of insurance across various
12 lines of insurance (except health insurance).
13 ‘‘(B) The feasibility of regulating only cer14
tain lines of insurance at the Federal level,
15 while leaving other lines of insurance to be reg16
ulated at the State level.
17 ‘‘(C) The ability of any potential Federal
18 regulation or Federal regulators to eliminate or
19 minimize regulatory arbitrage.
20 ‘‘(D) The impact that developments in the
21 regulation of insurance in foreign jurisdictions
22 might have on the potential Federal regulation
23 of insurance.
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1 ‘‘(E) The ability of any potential Federal
2 regulation or Federal regulator to provide ro3
bust consumer protection for policyholders.
4 ‘‘(F) The potential consequences of sub5
jecting insurance companies to a Federal reso6
lution authority, including the effects of any
7 Federal resolution authority—
8 ‘‘(i) on the operation of State insur9
ance guaranty fund systems, including the
10 loss of guaranty fund coverage if an insur11
ance company is subject to a Federal reso12
lution authority;
13 ‘‘(ii) on policyholder protection, in14
cluding the loss of the priority status of
15 policyholder claims over other unsecured
16 general creditor claims;
17 ‘‘(iii) in the case of life insurance
18 companies, on the loss of the special status
19 of separate account assets and separate ac20
count liabilities; and
21 ‘‘(iv) on the international competitive22
ness of insurance companies.
23 ‘‘(G) Such other factors as the Director
24 determines necessary or appropriate, consistent
25 with the principles set forth in paragraph (2).
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1 ‘‘(4) REQUIRED RECOMMENDATIONS.—The
2 study and report required under paragraph (1) shall
3 also contain any legislative, administrative, or regu4
latory recommendations, as the Director determines
5 appropriate, to carry out or effectuate the findings
6 set forth in such report.
7 ‘‘(5) CONSULTATION.—With respect to the
8 study and report required under paragraph (1), the
9 Director shall consult with the State insurance regu10
lators, consumer organizations, representatives of
11 the insurance industry and policyholders, and other
12 organizations and experts, as appropriate.
13 ‘‘(q) USE OF EXISTING RESOURCES.—To carry out
14 this section, the Office may employ personnel, facilities,
15 and any other resource of the Department of the Treasury
16 available to the Secretary and the Secretary shall dedicate
17 specific personnel to the Office.
18 ‘‘(r) DEFINITIONS.—In this section and section 314,
19 the following definitions shall apply:
20 ‘‘(1) AFFILIATE.—The term ‘affiliate’ means,
21 with respect to an insurer, any person who controls,
22 is controlled by, or is under common control with the
23 insurer.
24 ‘‘(2) COVERED AGREEMENT.—The term ‘cov25
ered agreement’ means a written bilateral or multi569
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1 lateral agreement regarding prudential measures
2 with respect to the business of insurance or reinsur3
ance that—
4 ‘‘(A) is entered into between the United
5 States and one or more foreign governments,
6 authorities, or regulatory entities; and
7 ‘‘(B) relates to the recognition of pruden8
tial measures with respect to the business of in9
surance or reinsurance that achieves a level of
10 protection for insurance or reinsurance con11
sumers that is substantially equivalent to the
12 level of protection achieved under State insur13
ance or reinsurance regulation.
14 ‘‘(3) INSURER.—The term ‘insurer’ means any
15 person engaged in the business of insurance, includ16
ing reinsurance.
17 ‘‘(4) FEDERAL FINANCIAL REGULATORY AGEN18
CY.—The term ‘Federal financial regulatory agency’
19 means the Department of the Treasury, the Board
20 of Governors of the Federal Reserve System, the Of21
fice of the Comptroller of the Currency, the Office
22 of Thrift Supervision, the Securities and Exchange
23 Commission, the Commodity Futures Trading Com24
mission, the Federal Deposit Insurance Corporation,
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1 the Federal Housing Finance Agency, or the Na2
tional Credit Union Administration.
3 ‘‘(5) NON-UNITED STATES INSURER.—The term
4 ‘non-United States insurer’ means an insurer that is
5 organized under the laws of a jurisdiction other than
6 a State, but does not include any United States
7 branch of such an insurer.
8 ‘‘(6) OFFICE.—The term ‘Office’ means the
9 Federal Insurance Office established by this section.
10 ‘‘(7) STATE INSURANCE MEASURE.—The term
11 ‘State insurance measure’ means any State law, reg12
ulation, administrative ruling, bulletin, guideline, or
13 practice relating to or affecting prudential measures
14 applicable to insurance or reinsurance.
15 ‘‘(8) STATE INSURANCE REGULATOR.—The
16 term ‘State insurance regulator’ means any State
17 regulatory authority responsible for the supervision
18 of insurers.
19 ‘‘(9) SUBSTANTIALLY EQUIVALENT TO THE
20 LEVEL OF PROTECTION ACHIEVED.—The term ‘sub21
stantially equivalent to the level of protection
22 achieved’ means the prudential measures of a for23
eign government, authority, or regulatory entity
24 achieve a similar outcome in consumer protection as
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1 the outcome achieved under State insurance or rein2
surance regulation.
3 ‘‘(10) UNITED STATES INSURER.—The term
4 ‘United States insurer’ means—
5 ‘‘(A) an insurer that is organized under
6 the laws of a State; or
7 ‘‘(B) a United States branch of a non-
8 United States insurer.
9 ‘‘(s) AUTHORIZATION OF APPROPRIATIONS.—There
10 are authorized to be appropriated for the Office for each
11 fiscal year such sums as may be necessary.
12 ‘‘SEC. 314. COVERED AGREEMENTS.
13 ‘‘(a) AUTHORITY.—The Secretary and the United
14 States Trade Representative are authorized, jointly, to ne15
gotiate and enter into covered agreements on behalf of the
16 United States.
17 ‘‘(b) REQUIREMENTS FOR CONSULTATION WITH
18 CONGRESS.—
19 ‘‘(1) IN GENERAL.—Before initiating negotia20
tions to enter into a covered agreement under sub21
section (a), during such negotiations, and before en22
tering into any such agreement, the Secretary and
23 the United States Trade Representative shall jointly
24 consult with the Committee on Financial Services
25 and the Committee on Ways and Means of the
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1 House of Representatives and the Committee on
2 Banking, Housing, and Urban Affairs and the Com3
mittee on Finance of the Senate.
4 ‘‘(2) SCOPE.—The consultation described in
5 paragraph (1) shall include consultation with respect
6 to—
7 ‘‘(A) the nature of the agreement;
8 ‘‘(B) how and to what extent the agree9
ment will achieve the applicable purposes, poli10
cies, priorities, and objectives of section 313
11 and this section; and
12 ‘‘(C) the implementation of the agreement,
13 including the general effect of the agreement on
14 existing State laws.
15 ‘‘(c) SUBMISSION AND LAYOVER PROVISIONS.—A
16 covered agreement under subsection (a) may enter into
17 force with respect to the United States only if—
18 ‘‘(1) the Secretary and the United States Trade
19 Representative jointly submit to the congressional
20 committees specified in subsection (b)(1), on a day
21 on which both Houses of Congress are in session, a
22 copy of the final legal text of the agreement; and
23 ‘‘(2) a period of 90 calendar days beginning on
24 the date on which the copy of the final legal text of
573
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1 the agreement is submitted to the congressional
2 committees under paragraph (1) has expired.’’.
3 (b) DUTIES OF SECRETARY.—Section 321(a) of title
4 31, United States Code, is amended—
5 (1) in paragraph (7), by striking ‘‘; and’’ and
6 inserting a semicolon;
7 (2) in paragraph (8)(C), by striking the period
8 at the end and inserting ‘‘; and’’; and
9 (3) by adding at the end the following new
10 paragraph:
11 ‘‘(9) advise the President on major domestic
12 and international prudential policy issues in connec13
tion with all lines of insurance except health insur14
ance.’’.
15 (c) CLERICAL AMENDMENT.—The table of sections
16 for subchapter I of chapter 3 of title 31, United States
17 Code, is amended by striking the item relating to section
18 312 and inserting the following new items:
‘‘Sec. 312. Terrorism and financial intelligence.
‘‘Sec. 313. Federal Insurance Office.
‘‘Sec. 314. Covered agreements.
‘‘Sec. 315. Continuing in office.’’.
19 Subtitle B—State-Based Insurance
20 Reform
21 SEC. 511. SHORT TITLE.
22 This subtitle may be cited as the ‘‘Nonadmitted and
23 Reinsurance Reform Act of 2010’’.
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1 SEC. 512. EFFECTIVE DATE.
2 Except as otherwise specifically provided in this sub3
title, this subtitle shall take effect upon the expiration of
4 the 12-month period beginning on the date of the enact5
ment of this subtitle.
6 PART I—NONADMITTED INSURANCE
7 SEC. 521. REPORTING, PAYMENT, AND ALLOCATION OF
8 PREMIUM TAXES.
9 (a) HOME STATE’S EXCLUSIVE AUTHORITY.—No
10 State other than the home State of an insured may require
11 any premium tax payment for nonadmitted insurance.
12 (b) ALLOCATION OF NONADMITTED PREMIUM
13 TAXES.—
14 (1) IN GENERAL.—The States may enter into a
15 compact or otherwise establish procedures to allocate
16 among the States the premium taxes paid to an in17
sured’s home State described in subsection (a).
18 (2) EFFECTIVE DATE.—Except as expressly
19 otherwise provided in such compact or other proce20
dures, any such compact or other procedures—
21 (A) if adopted on or before the expiration
22 of the 330-day period that begins on the date
23 of the enactment of this subtitle, shall apply to
24 any premium taxes that, on or after such date
25 of enactment, are required to be paid to any
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1 State that is subject to such compact or proce2
dures; and
3 (B) if adopted after the expiration of such
4 330-day period, shall apply to any premium
5 taxes that, on or after January 1 of the first
6 calendar year that begins after the expiration of
7 such 330-day period, are required to be paid to
8 any State that is subject to such compact or
9 procedures.
10 (3) REPORT.—Upon the expiration of the 330-
11 day period referred to in paragraph (2), the NAIC
12 may submit a report to the Committee on Financial
13 Services and the Committee on the Judiciary of the
14 House of Representatives and the Committee on
15 Banking, Housing, and Urban Affairs of the Senate
16 identifying and describing any compact or other pro17
cedures for allocation among the States of premium
18 taxes that have been adopted during such period by
19 any States.
20 (4) NATIONWIDE SYSTEM.—The Congress in21
tends that each State adopt nationwide uniform re22
quirements, forms, and procedures, such as an inter23
state compact, that provide for the reporting, pay24
ment, collection, and allocation of premium taxes for
25 nonadmitted insurance consistent with this section.
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1 (c) ALLOCATION BASED ON TAX ALLOCATION RE2
PORT.—To facilitate the payment of premium taxes
3 among the States, an insured’s home State may require
4 surplus lines brokers and insureds who have independently
5 procured insurance to annually file tax allocation reports
6 with the insured’s home State detailing the portion of the
7 nonadmitted insurance policy premium or premiums at8
tributable to properties, risks, or exposures located in each
9 State. The filing of a nonadmitted insurance tax allocation
10 report and the payment of tax may be made by a person
11 authorized by the insured to act as its agent.
12 SEC. 522. REGULATION OF NONADMITTED INSURANCE BY
13 INSURED’S HOME STATE.
14 (a) HOME STATE AUTHORITY.—Except as otherwise
15 provided in this section, the placement of nonadmitted in16
surance shall be subject to the statutory and regulatory
17 requirements solely of the insured’s home State.
18 (b) BROKER LICENSING.—No State other than an in19
sured’s home State may require a surplus lines broker to
20 be licensed in order to sell, solicit, or negotiate non21
admitted insurance with respect to such insured.
22 (c) ENFORCEMENT PROVISION.—With respect to sec23
tion 521 and subsections (a) and (b) of this section, any
24 law, regulation, provision, or action of any State that ap25
plies or purports to apply to nonadmitted insurance sold
577
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1 to, solicited by, or negotiated with an insured whose home
2 State is another State shall be preempted with respect to
3 such application.
4 (d) WORKERS’ COMPENSATION EXCEPTION.—This
5 section may not be construed to preempt any State law,
6 rule, or regulation that restricts the placement of workers’
7 compensation insurance or excess insurance for self-fund8
ed workers’ compensation plans with a nonadmitted in9
surer.
10 SEC. 523. PARTICIPATION IN NATIONAL PRODUCER DATA11
BASE.
12 After the expiration of the 2-year period beginning
13 on the date of the enactment of this subtitle, a State may
14 not collect any fees relating to licensing of an individual
15 or entity as a surplus lines broker in the State unless the
16 State has in effect at such time laws or regulations that
17 provide for participation by the State in the national in18
surance producer database of the NAIC, or any other
19 equivalent uniform national database, for the licensure of
20 surplus lines brokers and the renewal of such licenses.
21 SEC. 524. UNIFORM STANDARDS FOR SURPLUS LINES ELI22
GIBILITY.
23 A State may not—
24 (1) impose eligibility requirements on, or other25
wise establish eligibility criteria for, nonadmitted in578
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1 surers domiciled in a United States jurisdiction, ex2
cept in conformance with such requirements and cri3
teria in sections 5A(2) and 5C(2)(a) of the Non-Ad4
mitted Insurance Model Act, unless the State has
5 adopted nationwide uniform requirements, forms,
6 and procedures developed in accordance with section
7 521(b) of this subtitle that include alternative na8
tionwide uniform eligibility requirements; or
9 (2) prohibit a surplus lines broker from placing
10 nonadmitted insurance with, or procuring non11
admitted insurance from, a nonadmitted insurer
12 domiciled outside the United States that is listed on
13 the Quarterly Listing of Alien Insurers maintained
14 by the International Insurers Department of the
15 NAIC.
16 SEC. 525. STREAMLINED APPLICATION FOR COMMERCIAL
17 PURCHASERS.
18 A surplus lines broker seeking to procure or place
19 nonadmitted insurance in a State for an exempt commer20
cial purchaser shall not be required to satisfy any State
21 requirement to make a due diligence search to determine
22 whether the full amount or type of insurance sought by
23 such exempt commercial purchaser can be obtained from
24 admitted insurers if—
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1 (1) the broker procuring or placing the surplus
2 lines insurance has disclosed to the exempt commer3
cial purchaser that such insurance may or may not
4 be available from the admitted market that may pro5
vide greater protection with more regulatory over6
sight; and
7 (2) the exempt commercial purchaser has sub8
sequently requested in writing the broker to procure
9 or place such insurance from a nonadmitted insurer.
10 SEC. 526. GAO STUDY OF NONADMITTED INSURANCE MAR11
KET.
12 (a) IN GENERAL.—The Comptroller General of the
13 United States shall conduct a study of the nonadmitted
14 insurance market to determine the effect of the enactment
15 of this part on the size and market share of the non16
admitted insurance market for providing coverage typi17
cally provided by the admitted insurance market.
18 (b) CONTENTS.—The study shall determine and ana19
lyze—
20 (1) the change in the size and market share of
21 the nonadmitted insurance market and in the num22
ber of insurance companies and insurance holding
23 companies providing such business in the 18-month
24 period that begins upon the effective date of this
25 subtitle;
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1 (2) the extent to which insurance coverage typi2
cally provided by the admitted insurance market has
3 shifted to the nonadmitted insurance market;
4 (3) the consequences of any change in the size
5 and market share of the nonadmitted insurance
6 market, including differences in the price and avail7
ability of coverage available in both the admitted
8 and nonadmitted insurance markets;
9 (4) the extent to which insurance companies
10 and insurance holding companies that provide both
11 admitted and nonadmitted insurance have experi12
enced shifts in the volume of business between ad13
mitted and nonadmitted insurance; and
14 (5) the extent to which there has been a change
15 in the number of individuals who have nonadmitted
16 insurance policies, the type of coverage provided
17 under such policies, and whether such coverage is
18 available in the admitted insurance market.
19 (c) CONSULTATION WITH NAIC.—In conducting the
20 study under this section, the Comptroller General shall
21 consult with the NAIC.
22 (d) REPORT.—The Comptroller General shall com23
plete the study under this section and submit a report to
24 the Committee on Banking, Housing, and Urban Affairs
25 of the Senate and the Committee on Financial Services
581
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1 of the House of Representatives regarding the findings of
2 the study not later than 30 months after the effective date
3 of this subtitle.
4 SEC. 527. DEFINITIONS.
5 For purposes of this part, the following definitions
6 shall apply:
7 (1) ADMITTED INSURER.—The term ‘‘admitted
8 insurer’’ means, with respect to a State, an insurer
9 licensed to engage in the business of insurance in
10 such State.
11 (2) AFFILIATE.—The term ‘‘affiliate’’ means,
12 with respect to an insured, any entity that controls,
13 is controlled by, or is under common control with the
14 insured.
15 (3) AFFILIATED GROUP.—The term ‘‘affiliated
16 group’’ means any group of entities that are all af17
filiated.
18 (4) CONTROL.—An entity has ‘‘control’’ over
19 another entity if—
20 (A) the entity directly or indirectly or act21
ing through 1 or more other persons owns, con22
trols, or has the power to vote 25 percent or
23 more of any class of voting securities of the
24 other entity; or
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1 (B) the entity controls in any manner the
2 election of a majority of the directors or trust3
ees of the other entity.
4 (5) EXEMPT COMMERCIAL PURCHASER.—The
5 term ‘‘exempt commercial purchaser’’ means any
6 person purchasing commercial insurance that, at the
7 time of placement, meets the following requirements:
8 (A) The person employs or retains a quali9
fied risk manager to negotiate insurance cov10
erage.
11 (B) The person has paid aggregate nation12
wide commercial property and casualty insur13
ance premiums in excess of $100,000 in the im14
mediately preceding 12 months.
15 (C)(i) The person meets at least 1 of the
16 following criteria:
17 (I) The person possesses a net worth
18 in excess of $20,000,000, as such amount
19 is adjusted pursuant to clause (ii).
20 (II) The person generates annual rev21
enues in excess of $50,000,000, as such
22 amount is adjusted pursuant to clause (ii).
23 (III) The person employs more than
24 500 full-time or full-time equivalent em25
ployees per individual insured or is a mem583
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1 ber of an affiliated group employing more
2 than 1,000 employees in the aggregate.
3 (IV) The person is a not-for-profit or4
ganization or public entity generating an5
nual budgeted expenditures of at least
6 $30,000,000, as such amount is adjusted
7 pursuant to clause (ii).
8 (V) The person is a municipality with
9 a population in excess of 50,000 persons.
10 (ii) Effective on the fifth January 1 occur11
ring after the date of the enactment of this sub12
title and each fifth January 1 occurring there13
after, the amounts in subclauses (I), (II), and
14 (IV) of clause (i) shall be adjusted to reflect the
15 percentage change for such 5-year period in the
16 Consumer Price Index for All Urban Con17
sumers published by the Bureau of Labor Sta18
tistics of the Department of Labor.
19 (6) HOME STATE.—
20 (A) IN GENERAL.—Except as provided in
21 subparagraph (B), the term ‘‘home State’’
22 means, with respect to an insured—
23 (i) the State in which an insured
24 maintains its principal place of business or,
584
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1 in the case of an individual, the individ2
ual’s principal residence; or
3 (ii) if 100 percent of the insured risk
4 is located out of the State referred to in
5 clause (i), the State to which the greatest
6 percentage of the insured’s taxable pre7
mium for that insurance contract is allo8
cated.
9 (B) AFFILIATED GROUPS.—If more than 1
10 insured from an affiliated group are named in11
sureds on a single nonadmitted insurance con12
tract, the term ‘‘home State’’ means the home
13 State, as determined pursuant to subparagraph
14 (A), of the member of the affiliated group that
15 has the largest percentage of premium attrib16
uted to it under such insurance contract.
17 (7) INDEPENDENTLY PROCURED INSURANCE.—
18 The term ‘‘independently procured insurance’’
19 means insurance procured directly by an insured
20 from a nonadmitted insurer.
21 (8) NAIC.—The term ‘‘NAIC’’ means the Na22
tional Association of Insurance Commissioners or
23 any successor entity.
24 (9) NONADMITTED INSURANCE.—The term
25 ‘‘nonadmitted insurance’’ means any property and
585
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1 casualty insurance permitted to be placed directly or
2 through a surplus lines broker with a nonadmitted
3 insurer eligible to accept such insurance.
4 (10) NON-ADMITTED INSURANCE MODEL
5 ACT.—The term ‘‘Non-Admitted Insurance Model
6 Act’’ means the provisions of the Non-Admitted In7
surance Model Act, as adopted by the NAIC on Au8
gust 3, 1994, and amended on September 30, 1996,
9 December 6, 1997, October 2, 1999, and June 8,
10 2002.
11 (11) NONADMITTED INSURER.—The term
12 ‘‘nonadmitted insurer’’—
13 (A) means, with respect to a State, an in14
surer not licensed to engage in the business of
15 insurance in such State; but
16 (B) does not include a risk retention
17 group, as that term is defined in section 2(a)(4)
18 of the Liability Risk Retention Act of 1986 (15
19 U.S.C. 3901(a)(4)).
20 (12) PREMIUM TAX.—The term ‘‘premium tax’’
21 means, with respect to surplus lines or independently
22 procured insurance coverage, any tax, fee, assess23
ment, or other charge imposed by a government en24
tity directly or indirectly based on any payment
25 made as consideration for an insurance contract for
586
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1 such insurance, including premium deposits, assess2
ments, registration fees, and any other compensation
3 given in consideration for a contract of insurance.
4 (13) QUALIFIED RISK MANAGER.—The term
5 ‘‘qualified risk manager’’ means, with respect to a
6 policyholder of commercial insurance, a person who
7 meets all of the following requirements:
8 (A) The person is an employee of, or third9
party consultant retained by, the commercial
10 policyholder.
11 (B) The person provides skilled services in
12 loss prevention, loss reduction, or risk and in13
surance coverage analysis, and purchase of in14
surance.
15 (C) The person—
16 (i)(I) has a bachelor’s degree or high17
er from an accredited college or university
18 in risk management, business administra19
tion, finance, economics, or any other field
20 determined by a State insurance commis21
sioner or other State regulatory official or
22 entity to demonstrate minimum com23
petence in risk management; and
24 (II)(aa) has 3 years of experience in
25 risk financing, claims administration, loss
587
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1 prevention, risk and insurance analysis, or
2 purchasing commercial lines of insurance;
3 or
4 (bb) has—
5 (AA) a designation as a Char6
tered Property and Casualty Under7
writer (in this subparagraph referred
8 to as ‘‘CPCU’’) issued by the Amer9
ican Institute for CPCU/Insurance In10
stitute of America;
11 (BB) a designation as an Asso12
ciate in Risk Management (ARM)
13 issued by the American Institute for
14 CPCU/Insurance Institute of America;
15 (CC) a designation as Certified
16 Risk Manager (CRM) issued by the
17 National Alliance for Insurance Edu18
cation & Research;
19 (DD) a designation as a RIMS
20 Fellow (RF) issued by the Global Risk
21 Management Institute; or
22 (EE) any other designation, cer23
tification, or license determined by a
24 State insurance commissioner or other
25 State insurance regulatory official or
588
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1 entity to demonstrate minimum com2
petency in risk management;
3 (ii)(I) has at least 7 years of experi4
ence in risk financing, claims administra5
tion, loss prevention, risk and insurance
6 coverage analysis, or purchasing commer7
cial lines of insurance; and
8 (II) has any 1 of the designations
9 specified in subitems (AA) through (EE)
10 of clause (i)(II)(bb);
11 (iii) has at least 10 years of experi12
ence in risk financing, claims administra13
tion, loss prevention, risk and insurance
14 coverage analysis, or purchasing commer15
cial lines of insurance; or
16 (iv) has a graduate degree from an
17 accredited college or university in risk
18 management, business administration, fi19
nance, economics, or any other field deter20
mined by a State insurance commissioner
21 or other State regulatory official or entity
22 to demonstrate minimum competence in
23 risk management.
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1 (14) REINSURANCE.—The term ‘‘reinsurance’’
2 means the assumption by an insurer of all or part
3 of a risk undertaken originally by another insurer.
4 (15) SURPLUS LINES BROKER.—The term ‘‘sur5
plus lines broker’’ means an individual, firm, or cor6
poration which is licensed in a State to sell, solicit,
7 or negotiate insurance on properties, risks, or expo8
sures located or to be performed in a State with
9 nonadmitted insurers.
10 (16) STATE.—The term ‘‘State’’ includes any
11 State of the United States, the District of Columbia,
12 the Commonwealth of Puerto Rico, Guam, the
13 Northern Mariana Islands, the Virgin Islands, and
14 American Samoa.
15 PART II—REINSURANCE
16 SEC. 531. REGULATION OF CREDIT FOR REINSURANCE AND
17 REINSURANCE AGREEMENTS.
18 (a) CREDIT FOR REINSURANCE.—If the State of
19 domicile of a ceding insurer is an NAIC-accredited State,
20 or has financial solvency requirements substantially simi21
lar to the requirements necessary for NAIC accreditation,
22 and recognizes credit for reinsurance for the insurer’s
23 ceded risk, then no other State may deny such credit for
24 reinsurance.
590
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1 (b) ADDITIONAL PREEMPTION OF
2 EXTRATERRITORIAL APPLICATION OF STATE LAW.—In
3 addition to the application of subsection (a), all laws, regu4
lations, provisions, or other actions of a State that is not
5 the domiciliary State of the ceding insurer, except those
6 with respect to taxes and assessments on insurance com7
panies or insurance income, are preempted to the extent
8 that they—
9 (1) restrict or eliminate the rights of the ceding
10 insurer or the assuming insurer to resolve disputes
11 pursuant to contractual arbitration to the extent
12 such contractual provision is not inconsistent with
13 the provisions of title 9, United States Code;
14 (2) require that a certain State’s law shall gov15
ern the reinsurance contract, disputes arising from
16 the reinsurance contract, or requirements of the re17
insurance contract;
18 (3) attempt to enforce a reinsurance contract
19 on terms different than those set forth in the rein20
surance contract, to the extent that the terms are
21 not inconsistent with this part; or
22 (4) otherwise apply the laws of the State to re23
insurance agreements of ceding insurers not domi24
ciled in that State.
591
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1 SEC. 532. REGULATION OF REINSURER SOLVENCY.
2 (a) DOMICILIARY STATE REGULATION.—If the State
3 of domicile of a reinsurer is an NAIC-accredited State or
4 has financial solvency requirements substantially similar
5 to the requirements necessary for NAIC accreditation,
6 such State shall be solely responsible for regulating the
7 financial solvency of the reinsurer.
8 (b) NONDOMICILIARY STATES.—
9 (1) LIMITATION ON FINANCIAL INFORMATION
10 REQUIREMENTS.—If the State of domicile of a rein11
surer is an NAIC-accredited State or has financial
12 solvency requirements substantially similar to the re13
quirements necessary for NAIC accreditation, no
14 other State may require the reinsurer to provide any
15 additional financial information other than the infor16
mation the reinsurer is required to file with its
17 domiciliary State.
18 (2) RECEIPT OF INFORMATION.—No provision
19 of this section shall be construed as preventing or
20 prohibiting a State that is not the State of domicile
21 of a reinsurer from receiving a copy of any financial
22 statement filed with its domiciliary State.
23 SEC. 533. DEFINITIONS.
24 For purposes of this part, the following definitions
25 shall apply:
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1 (1) CEDING INSURER.—The term ‘‘ceding in2
surer’’ means an insurer that purchases reinsurance.
3 (2) DOMICILIARY STATE.—The terms ‘‘State of
4 domicile’’ and ‘‘domiciliary State’’ mean, with re5
spect to an insurer or reinsurer, the State in which
6 the insurer or reinsurer is incorporated or entered
7 through, and licensed.
8 (3) NAIC.—The term ‘‘NAIC’’ means the Na9
tional Association of Insurance Commissioners or
10 any successor entity.
11 (4) REINSURANCE.—The term ‘‘reinsurance’’
12 means the assumption by an insurer of all or part
13 of a risk undertaken originally by another insurer.
14 (5) REINSURER.—
15 (A) IN GENERAL.—The term ‘‘reinsurer’’
16 means an insurer to the extent that the in17
surer—
18 (i) is principally engaged in the busi19
ness of reinsurance;
20 (ii) does not conduct significant
21 amounts of direct insurance as a percent22
age of its net premiums; and
23 (iii) is not engaged in an ongoing
24 basis in the business of soliciting direct in25
surance.
593
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1 (B) DETERMINATION.—A determination of
2 whether an insurer is a reinsurer shall be made
3 under the laws of the State of domicile in ac4
cordance with this paragraph.
5 (6) STATE.—The term ‘‘State’’ includes any
6 State of the United States, the District of Columbia,
7 the Commonwealth of Puerto Rico, Guam, the
8 Northern Mariana Islands, the Virgin Islands, and
9 American Samoa.
10 PART III—RULE OF CONSTRUCTION
11 SEC. 541. RULE OF CONSTRUCTION.
12 Nothing in this subtitle or the amendments made by
13 this subtitle shall be construed to modify, impair, or super14
sede the application of the antitrust laws. Any implied or
15 actual conflict between this subtitle and any amendments
16 to this subtitle and the antitrust laws shall be resolved
17 in favor of the operation of the antitrust laws.
18 SEC. 542. SEVERABILITY.
19 If any section or subsection of this subtitle, or any
20 application of such provision to any person or cir21
cumstance, is held to be unconstitutional, the remainder
22 of this subtitle, and the application of the provision to any
23 other person or circumstance, shall not be affected.
594
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1 TITLE VI—IMPROVEMENTS TO
2 REGULATION OF BANK AND
3 SAVINGS ASSOCIATION HOLD4
ING COMPANIES AND DEPOSI5
TORY INSTITUTIONS
6 SEC. 601. SHORT TITLE.
7 This title may be cited as the ‘‘Bank and Savings
8 Association Holding Company and Depository Institution
9 Regulatory Improvements Act of 2010’’.
10 SEC. 602. DEFINITION.
11 For purposes of this title, a company is a ‘‘commer12
cial firm’’ if the annual gross revenues derived by the com13
pany and all of its affiliates from activities that are finan14
cial in nature (as defined in section 4(k) of the Bank
15 Holding Company Act of 1956 (12 U.S.C. 1843(k))) and,
16 if applicable, from the ownership or control of one or more
17 insured depository institutions, represent less than 15 per18
cent of the consolidated annual gross revenues of the com19
pany.
20 SEC. 603. MORATORIUM AND STUDY ON TREATMENT OF
21 CREDIT CARD BANKS, INDUSTRIAL LOAN
22 COMPANIES, AND CERTAIN OTHER COMPA23
NIES UNDER THE BANK HOLDING COMPANY
24 ACT OF 1956.
25 (a) MORATORIUM.—
595
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1 (1) DEFINITIONS.—In this subsection—
2 (A) the term ‘‘credit card bank’’ means an
3 institution described in section 2(c)(2)(F) of the
4 Bank Holding Company Act of 1956 (12
5 U.S.C. 1841(c)(2)(F));
6 (B) the term ‘‘industrial bank’’ means an
7 institution described in section 2(c)(2)(H) of
8 the Bank Holding Company Act of 1956 (12
9 U.S.C. 1841(c)(2)(H)); and
10 (C) the term ‘‘trust bank’’ means an insti11
tution described in section 2(c)(2)(D) of the
12 Bank Holding Company Act of 1956 (12
13 U.S.C. 1841(c)(2)(D)).
14 (2) MORATORIUM ON PROVISION OF DEPOSIT
15 INSURANCE.—The Corporation may not approve an
16 application for deposit insurance under section 5 of
17 the Federal Deposit Insurance Act (12 U.S.C. 1815)
18 that is received after November 23, 2009, for an in19
dustrial bank, a credit card bank, or a trust bank
20 that is directly or indirectly owned or controlled by
21 a commercial firm.
22 (3) CHANGE IN CONTROL.—
23 (A) IN GENERAL.—Except as provided in
24 subparagraph (B), the appropriate Federal
25 banking agency shall disapprove a change in
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1 control, as provided in section 7(j) of the Fed2
eral Deposit Insurance Act (12 U.S.C. 1817(j)),
3 of an industrial bank, a credit card bank, or a
4 trust bank if the change in control would result
5 in direct or indirect control of the industrial
6 bank, credit card bank, or trust bank by a com7
mercial firm.
8 (B) EXCEPTIONS.—Subparagraph (A)
9 shall not apply to a change in control of an in10
dustrial bank, credit card bank, or trust bank—
11 (i) that—
12 (I) is in danger of default, as de13
termined by the appropriate Federal
14 banking agency;
15 (II) results from the merger or
16 whole acquisition of a commercial firm
17 that directly or indirectly controls the
18 industrial bank, credit card bank, or
19 trust bank in a bona fide merger with
20 or acquisition by another commercial
21 firm, as determined by the appro22
priate Federal banking agency; or
23 (III) results from an acquisition
24 of voting shares of a publicly traded
25 company that controls an industrial
597
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1 bank, credit card bank, or trust bank,
2 if, after the acquisition, the acquiring
3 shareholder (or group of shareholders
4 acting in concert) holds less than 25
5 percent of any class of the voting
6 shares of the company; and
7 (ii) that has obtained all regulatory
8 approvals otherwise required for such
9 change of control under any applicable
10 Federal or State law, including section 7(j)
11 of the Federal Deposit Insurance Act (12
12 U.S.C. 1817(j)).
13 (4) SUNSET.—This subsection shall cease to
14 have effect 3 years after the date of enactment of
15 this Act.
16 (b) GOVERNMENT ACCOUNTABILITY OFFICE STUDY
17 OF EXCEPTIONS UNDER THE BANK HOLDING COMPANY
18 ACT OF 1956.—
19 (1) STUDY REQUIRED.—The Comptroller Gen20
eral of the United States shall carry out a study to
21 determine whether it is necessary, in order to
22 strengthen the safety and soundness of institutions
23 or the stability of the financial system, to eliminate
24 the exceptions under section 2 of the Bank Holding
598
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1 Company Act of 1956 (12 U.S.C. 1841) for institu2
tions described in—
3 (A) section 2(a)(5)(E) of the Bank Hold4
ing Company Act of 1956 (12 U.S.C.
5 1841(a)(5)(E));
6 (B) section 2(a)(5)(F) of the Bank Hold7
ing Company Act of 1956 (12 U.S.C.
8 1841(a)(5)(F));
9 (C) section 2(c)(2)(D) of the Bank Hold10
ing Company Act of 1956 (12 U.S.C.
11 1841(c)(2)(D));
12 (D) section 2(c)(2)(F) of the Bank Hold13
ing Company Act of 1956 (12 U.S.C.
14 1841(c)(2)(F));
15 (E) section 2(c)(2)(H) of the Bank Hold16
ing Company Act of 1956 (12 U.S.C.
17 1841(c)(2)(H)); and
18 (F) section 2(c)(2)(B) of the Bank Hold19
ing Company Act of 1956 (12 U.S.C.
20 1841(c)(2)(B)).
21 (2) CONTENT OF STUDY.—
22 (A) IN GENERAL.—The study required
23 under paragraph (1), with respect to the insti24
tutions referenced in each of subparagraphs (A)
25 through (E) of paragraph (1), shall, to the ex599
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1 tent feasible be based on information provided
2 to the Comptroller General by the appropriate
3 Federal or State regulator, and shall—
4 (i) identify the types and number of
5 institutions excepted from section 2 of the
6 Bank Holding Company Act of 1956 (12
7 U.S.C. 1841) under each of the subpara8
graphs described in subparagraphs (A)
9 through (E) of paragraph (1);
10 (ii) generally describe the size and ge11
ographic locations of the institutions de12
scribed in clause (i);
13 (iii) determine the extent to which the
14 institutions described in clause (i) are held
15 by holding companies that are commercial
16 firms;
17 (iv) determine whether the institutions
18 described in clause (i) have any affiliates
19 that are commercial firms;
20 (v) identify the Federal banking agen21
cy responsible for the supervision of the in22
stitutions described in clause (i) on and
23 after the transfer date;
24 (vi) determine the adequacy of the
25 Federal bank regulatory framework appli600
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1 cable to each category of institution de2
scribed in clause (i), including any restric3
tions (including limitations on affiliate
4 transactions or cross-marketing) that apply
5 to transactions between an institution, the
6 holding company of the institution, and
7 any other affiliate of the institution; and
8 (vii) evaluate the potential con9
sequences of subjecting the institutions de10
scribed in clause (i) to the requirements of
11 the Bank Holding Company Act of 1956,
12 including with respect to the availability
13 and allocation of credit, the stability of the
14 financial system and the economy, the safe
15 and sound operation of each category of
16 institution, and the impact on the types of
17 activities in which such institutions, and
18 the holding companies of such institutions,
19 may engage.
20 (B) SAVINGS ASSOCIATIONS.—With respect
21 to institutions described in paragraph (1)(F),
22 the study required under paragraph (1) shall—
23 (i) determine the adequacy of the
24 Federal bank regulatory framework appli25
cable to such institutions, including any re601
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1 strictions (including limitations on affiliate
2 transactions or cross-marketing) that apply
3 to transactions between an institution, the
4 holding company of the institution, and
5 any other affiliate of the institution; and
6 (ii) evaluate the potential con7
sequences of subjecting the institutions de8
scribed in paragraph (1)(F) to the require9
ments of the Bank Holding Company Act
10 of 1956, including with respect to the
11 availability and allocation of credit, the
12 stability of the financial system and the
13 economy, the safe and sound operation of
14 such institutions, and the impact on the
15 types of activities in which such institu16
tions, and the holding companies of such
17 institutions, may engage.
18 (3) REPORT.—Not later than 18 months after
19 the date of enactment of this Act, the Comptroller
20 General shall submit to the Committee on Banking,
21 Housing, and Urban Affairs of the Senate and the
22 Committee on Financial Services of the House of
23 Representatives a report on the study required
24 under paragraph (1).
602
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1 SEC. 604. REPORTS AND EXAMINATIONS OF HOLDING COM2
PANIES; REGULATION OF FUNCTIONALLY
3 REGULATED SUBSIDIARIES.
4 (a) REPORTS BY BANK HOLDING COMPANIES.—Sec5
tions 5(c)(1) of the Bank Holding Company Act of 1956
6 (12 U.S.C. 1844(c)(1)) is amended—
7 (1) by striking subclause (A)(ii) and inserting
8 the following:
9 ‘‘(ii) compliance by the bank holding
10 company or subsidiary with—
11 ‘‘(I) this Act;
12 ‘‘(II) Federal laws that the
13 Board has specific jurisdiction to en14
force against the company or sub15
sidiary; and
16 ‘‘(III) other than in the case of
17 an insured depository institution or
18 functionally regulated subsidiary, any
19 other applicable provision of Federal
20 law.’’;
21 (2) by striking subparagraph (B) and inserting
22 the following:
23 ‘‘(B) USE OF EXISTING REPORTS AND
24 OTHER SUPERVISORY INFORMATION.—The
25 Board shall, to the fullest extent possible, use—
603
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1 ‘‘(i) reports and other supervisory in2
formation that the bank holding company
3 or any subsidiary thereof has been required
4 to provide to other Federal or State regu5
latory agencies;
6 ‘‘(ii) externally audited financial state7
ments of the bank holding company or
8 subsidiary;
9 ‘‘(iii) information otherwise available
10 from Federal or State regulatory agencies;
11 and
12 ‘‘(iv) information that is otherwise re13
quired to be reported publicly.’’; and
14 (3) by adding at the end the following:
15 ‘‘(C) AVAILABILITY.—Upon the request of
16 the Board, the bank holding company or a sub17
sidiary of the bank holding company shall
18 promptly provide to the Board any information
19 described in clauses (i) through (iii) of subpara20
graph (B).’’.
21 (b) EXAMINATIONS OF BANK HOLDING COMPA22
NIES.—Section 5(c)(2) of the Bank Holding Company Act
23 of 1956 (12 U.S.C. 1844(c)(2)) is amended to read as
24 follows:
25 ‘‘(2) EXAMINATIONS.—
604
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1 ‘‘(A) IN GENERAL.—Subject to subtitle B
2 of the Consumer Financial Protection Act of
3 2010, the Board may make examinations of a
4 bank holding company and each subsidiary of a
5 bank holding company in order to—
6 ‘‘(i) inform the Board of—
7 ‘‘(I) the nature of the operations
8 and financial condition of the bank
9 holding company and the subsidiary;
10 ‘‘(II) the financial, operational,
11 and other risks within the bank hold12
ing company system that may pose a
13 threat to—
14 ‘‘(aa) the safety and sound15
ness of the bank holding com16
pany or of any depository institu17
tion subsidiary of the bank hold18
ing company; or
19 ‘‘(bb) the stability of the fi20
nancial system of the United
21 States; and
22 ‘‘(III) the systems of the bank
23 holding company for monitoring and
24 controlling the risks described in sub25
clause (II); and
605
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1 ‘‘(ii) monitor the compliance of the
2 bank holding company and the subsidiary
3 with—
4 ‘‘(I) this Act;
5 ‘‘(II) Federal laws that the
6 Board has specific jurisdiction to en7
force against the company or sub8
sidiary; and
9 ‘‘(III) other than in the case of
10 an insured depository institution or
11 functionally regulated subsidiary, any
12 other applicable provisions of Federal
13 law.
14 ‘‘(B) USE OF REPORTS TO REDUCE EXAMI15
NATIONS.—For purposes of this paragraph, the
16 Board shall, to the fullest extent possible, rely
17 on—
18 ‘‘(i) examination reports made by
19 other Federal or State regulatory agencies
20 relating to a bank holding company and
21 any subsidiary of a bank holding company;
22 and
23 ‘‘(ii) the reports and other informa24
tion required under paragraph (1).
606
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1 ‘‘(C) COORDINATION WITH OTHER REGU2
LATORS.—The Board shall—
3 ‘‘(i) provide reasonable notice to, and
4 consult with, the appropriate Federal
5 banking agency, the Securities and Ex6
change Commission, the Commodity Fu7
tures Trading Commission, or State regu8
latory agency, as appropriate, for a sub9
sidiary that is a depository institution or a
10 functionally regulated subsidiary of a bank
11 holding company before commencing an ex12
amination of the subsidiary under this sec13
tion; and
14 ‘‘(ii) to the fullest extent possible,
15 avoid duplication of examination activities,
16 reporting requirements, and requests for
17 information.’’.
18 (c) AUTHORITY TO REGULATE FUNCTIONALLY REG19
ULATED SUBSIDIARIES OF BANK HOLDING COMPA20
NIES.—The Bank Holding Company Act of 1956 (12
21 U.S.C. 1841 et seq.) is amended—
22 (1) in section 5(c)(5)(B) (12 U.S.C.
23 1844(c)(5)(B)), by striking clause (v) and inserting
24 the following:
607
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1 ‘‘(v) an entity that is subject to regu2
lation by, or registration with, the Com3
modity Futures Trading Commission, with
4 respect to activities conducted as a futures
5 commission merchant, commodity trading
6 adviser, commodity pool, commodity pool
7 operator, swap execution facility, swap
8 data repository, swap dealer, major swap
9 participant, and activities that are inci10
dental to such commodities and swaps ac11
tivities.’’; and
12 (2) by striking section 10A (12 U.S.C. 1848a).
13 (d) ACQUISITIONS OF BANKS.—Section 3(c) of the
14 Bank Holding Company Act of 1956 (12 U.S.C. 1842(c))
15 is amended by adding at the end the following:
16 ‘‘(7) FINANCIAL STABILITY.—In every case, the
17 Board shall take into consideration the extent to
18 which a proposed acquisition, merger, or consolida19
tion would result in greater or more concentrated
20 risks to the stability of the United States banking or
21 financial system.’’.
22 (e) ACQUISITIONS OF NONBANKS.—
23 (1) NOTICE PROCEDURES.—Section 4(j)(2)(A)
24 of the Bank Holding Company Act of 1956 (12
25 U.S.C. 1843(j)(2)(A)) is amended by striking ‘‘or
608
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1 unsound banking practices’’ and inserting ‘‘unsound
2 banking practices, or risk to the stability of the
3 United States banking or financial system’’.
4 (2) ACTIVITIES THAT ARE FINANCIAL IN NA5
TURE.—Section 4(k)(6)(B) of the Bank Holding
6 Company Act of 1956 (12 U.S.C. 1843(k)(6)(B)) is
7 amended to read as follows:
8 ‘‘(B) APPROVAL NOT REQUIRED FOR CER9
TAIN FINANCIAL ACTIVITIES.—
10 ‘‘(i) IN GENERAL.—Except as pro11
vided in subsection (j) with regard to the
12 acquisition of a savings association and
13 clause (ii), a financial holding company
14 may commence any activity, or acquire any
15 company, pursuant to paragraph (4) or
16 any regulation prescribed or order issued
17 under paragraph (5), without prior ap18
proval of the Board.
19 ‘‘(ii) EXCEPTION.—A financial hold20
ing company may not acquire a company,
21 without the prior approval of the Board, in
22 a transaction in which the total consoli23
dated assets to be acquired by the financial
24 holding company exceed $10,000,000,000.
609
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1 ‘‘(iii) HART-SCOTT-RODINO FILING
2 REQUIREMENT.—Solely for purposes of
3 section 7A(c)(8) of the Clayton Act (15
4 U.S.C. 18a(c)(8)), the transactions subject
5 to the requirements of this paragraph shall
6 be treated as if the approval of the Board
7 is not required.’’.
8 (f) BANK MERGER ACT TRANSACTIONS.—Section
9 18(c)(5) of the Federal Deposit Insurance Act (12 U.S.C.
10 1828(c)(5)) is amended, in the matter immediately fol11
lowing subparagraph (B), by striking ‘‘and the conven12
ience and needs of the community to be served’’ and in13
serting ‘‘the convenience and needs of the community to
14 be served, and the risk to the stability of the United States
15 banking or financial system’’.
16 (g) REPORTS BY SAVINGS AND LOAN HOLDING COM17
PANIES.—Section 10(b)(2) of the Home Owners’ Loan Act
18 (12 U.S.C. 1467a(b)(2) is amended—
19 (1) by striking ‘‘Each savings’’ and inserting
20 the following:
21 ‘‘(A) IN GENERAL.—Each savings’’; and
22 (2) by adding at the end the following:
23 ‘‘(B) USE OF EXISTING REPORTS AND
24 OTHER SUPERVISORY INFORMATION.—The
25 Board shall, to the fullest extent possible, use—
610
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1 ‘‘(i) reports and other supervisory in2
formation that the savings and loan hold3
ing company or any subsidiary thereof has
4 been required to provide to other Federal
5 or State regulatory agencies;
6 ‘‘(ii) externally audited financial state7
ments of the savings and loan holding com8
pany or subsidiary;
9 ‘‘(iii) information that is otherwise
10 available from Federal or State regulatory
11 agencies; and
12 ‘‘(iv) information that is otherwise re13
quired to be reported publicly.
14 ‘‘(C) AVAILABILITY.—Upon the request of
15 the Board, a savings and loan holding company
16 or a subsidiary of a savings and loan holding
17 company shall promptly provide to the Board
18 any information described in clauses (i) through
19 (iii) of subparagraph (B).’’.
20 (h) EXAMINATION OF SAVINGS AND LOAN HOLDING
21 COMPANIES.—
22 (1) DEFINITIONS.—Section 2 of the Home
23 Owners’ Loan Act (12 U.S.C. 1462) is amended by
24 adding at the end the following:
611
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1 ‘‘(10) APPROPRIATE FEDERAL BANKING AGEN2
CY.—The term ‘appropriate Federal banking agency’
3 has the same meaning as in section 3(q) of the Fed4
eral Deposit Insurance Act (12 U.S.C. 1813(q)).
5 ‘‘(11) FUNCTIONALLY REGULATED SUB6
SIDIARY.—The term ‘functionally regulated sub7
sidiary’ has the same meaning as in section 5(c)(5)
8 of the Bank Holding Company Act of 1956 (12
9 U.S.C. 1844(c)(5)).’’.
10 (2) EXAMINATION.—Section 10(b) of the Home
11 Owners’ Loan Act (12 U.S.C. 1467a(b)) is amended
12 by striking paragraph (4) and inserting the fol13
lowing:
14 ‘‘(4) EXAMINATIONS.—
15 ‘‘(A) IN GENERAL.—Subject to subtitle B
16 of the Consumer Financial Protection Act of
17 2010, the Board may make examinations of a
18 savings and loan holding company and each
19 subsidiary of a savings and loan holding com20
pany system, in order to—
21 ‘‘(i) inform the Board of—
22 ‘‘(I) the nature of the operations
23 and financial condition of the savings
24 and loan holding company and the
25 subsidiary;
612
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1 ‘‘(II) the financial, operational,
2 and other risks within the savings and
3 loan holding company system that
4 may pose a threat to—
5 ‘‘(aa) the safety and sound6
ness of the savings and loan
7 holding company or of any depos8
itory institution subsidiary of the
9 savings and loan holding com10
pany; or
11 ‘‘(bb) the stability of the fi12
nancial system of the United
13 States; and
14 ‘‘(III) the systems of the savings
15 and loan holding company for moni16
toring and controlling the risks de17
scribed in subclause (II); and
18 ‘‘(ii) monitor the compliance of the
19 savings and loan holding company and the
20 subsidiary with—
21 ‘‘(I) this Act;
22 ‘‘(II) Federal laws that the
23 Board has specific jurisdiction to en24
force against the company or sub25
sidiary; and
613
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1 ‘‘(III) other than in the case of
2 an insured depository institution or
3 functionally regulated subsidiary, any
4 other applicable provisions of Federal
5 law.
6 ‘‘(B) USE OF REPORTS TO REDUCE EXAMI7
NATIONS.—For purposes of this subsection, the
8 Board shall, to the fullest extent possible, rely
9 on—
10 ‘‘(i) the examination reports made by
11 other Federal or State regulatory agencies
12 relating to a savings and loan holding com13
pany and any subsidiary; and
14 ‘‘(ii) the reports and other informa15
tion required under paragraph (2).
16 ‘‘(C) COORDINATION WITH OTHER REGU17
LATORS.—The Board shall—
18 ‘‘(i) provide reasonable notice to, and
19 consult with, the appropriate Federal
20 banking agency, the Securities and Ex21
change Commission, the Commodity Fu22
tures Trading Commission, or State regu23
latory agency, as appropriate, for a sub24
sidiary that is a depository institution or a
25 functionally regulated subsidiary of a sav614
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1 ings and loan holding company before com2
mencing an examination of the subsidiary
3 under this section; and
4 ‘‘(ii) to the fullest extent possible,
5 avoid duplication of examination activities,
6 reporting requirements, and requests for
7 information.’’.
8 (i) DEFINITION OF THE TERM ‘‘SAVINGS AND LOAN
9 HOLDING COMPANY’’.—Section 10(a)(1)(D)(ii) of the
10 Home Owners’ Loan Act (12 U.S.C. 1467a(a)(1)(D)(ii))
11 is amended to read as follows:
12 ‘‘(ii) EXCLUSION.—The term ‘savings
13 and loan holding company’ does not in14
clude—
15 ‘‘(I) a bank holding company
16 that is registered under, and subject
17 to, the Bank Holding Company Act of
18 1956 (12 U.S.C. 1841 et seq.), or to
19 any company directly or indirectly
20 controlled by such company (other
21 than a savings association);
22 ‘‘(II) a company that controls a
23 savings association that functions
24 solely in a trust or fiduciary capacity
25 as described in section 2(c)(2)(D) of
615
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1 the Bank Holding Company Act of
2 1956 (12 U.S.C. 1841(c)(2)(D)); or
3 ‘‘(III) a company described in
4 subsection (c)(9)(C) solely by virtue of
5 such company’s control of an inter6
mediate holding company established
7 pursuant to section 10A.’’.
8 (j) EFFECTIVE DATE.—The amendments made by
9 this section shall take effect on the transfer date.
10 SEC. 605. ASSURING CONSISTENT OVERSIGHT OF PERMIS11
SIBLE ACTIVITIES OF DEPOSITORY INSTITU12
TION SUBSIDIARIES OF HOLDING COMPA13
NIES.
14 (a) IN GENERAL.—The Federal Deposit Insurance
15 Act (12 U.S.C. 1811 et seq.) is amended by inserting after
16 section 25 the following new section:
17 ‘‘SEC. 26. ASSURING CONSISTENT OVERSIGHT OF SUBSIDI18
ARIES OF HOLDING COMPANIES.
19 ‘‘(a) DEFINITIONS.—For purposes of this section:
20 ‘‘(1) BOARD.—The term ‘Board’ means the
21 Board of Governors of the Federal Reserve System.
22 ‘‘(2) FUNCTIONALLY REGULATED SUB23
SIDIARY.—The term ‘functionally regulated sub24
sidiary’ has the same meaning as in section 5(c)(5)
25 of the Bank Holding Company Act.
616
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1 ‘‘(3) LEAD INSURED DEPOSITORY INSTITU2
TION.—The term ‘lead insured depository institu3
tion’ has the same meaning as in section 2(o)(8) of
4 the Bank Holding Company Act.
5 ‘‘(b) EXAMINATION REQUIREMENTS.—Subject to
6 subtitle B of the Consumer Financial Protection Act of
7 2010, the Board shall examine the activities of a non8
depository institution subsidiary (other than a functionally
9 regulated subsidiary or a subsidiary of a depository insti10
tution) of a depository institution holding company that
11 are permissible for the insured depository institution sub12
sidiaries of the depository institution holding company in
13 the same manner, subject to the same standards, and with
14 the same frequency as would be required if such activities
15 were conducted in the lead insured depository institution
16 of the depository institution holding company.
17 ‘‘(c) STATE COORDINATION.—
18 ‘‘(1) CONSULTATION AND COORDINATION.—If a
19 nondepository institution subsidiary is supervised by
20 a State bank supervisor or other State regulatory
21 authority, the Board, in conducting the examinations
22 required in subsection (b), shall consult and coordi23
nate with such State regulator.
24 ‘‘(2) ALTERNATING EXAMINATIONS PER25
MITTED.—The examinations required under sub617
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1 section (b) may be conducted in joint or alternating
2 manner with a State regulator, if the Board deter3
mines that an examination of a nondepository insti4
tution subsidiary conducted by the State carries out
5 the purposes of this section.
6 ‘‘(d) APPROPRIATE FEDERAL BANKING AGENCY
7 BACKUP EXAMINATION AUTHORITY.—
8 ‘‘(1) IN GENERAL.—In the event that the
9 Board does not conduct examinations required under
10 subsection (b) in the same manner, subject to the
11 same standards, and with the same frequency as
12 would be required if such activities were conducted
13 by the lead insured depository institution subsidiary
14 of the depository institution holding company, the
15 appropriate Federal banking agency for the lead in16
sured depository institution may recommend in writ17
ing (which shall include a written explanation of the
18 concerns giving rise to the recommendation) that the
19 Board perform the examination required under sub20
section (b).
21 ‘‘(2) EXAMINATION BY AN APPROPRIATE FED22
ERAL BANKING AGENCY.—If the Board does not, be23
fore the end of the 60-day period beginning on the
24 date on which the Board receives a recommendation
25 under paragraph (1), begin an examination as re618
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1 quired under subsection (b) or provide a written ex2
planation or plan to the appropriate Federal banking
3 agency making such recommendation responding to
4 the concerns raised by the appropriate Federal
5 banking agency for the lead insured depository insti6
tution, the appropriate Federal banking agency for
7 the lead insured depository institution may, subject
8 to the Consumer Financial Protection Act of 2010,
9 examine the activities that are permissible for a de10
pository institution subsidiary conducted by such
11 nondepository institution subsidiary (other than a
12 functionally regulated subsidiary or a subsidiary of
13 a depository institution) of the depository institution
14 holding company as if the nondepository institution
15 subsidiary were an insured depository institution for
16 which the appropriate Federal banking agency of the
17 lead insured depository institution was the appro18
priate Federal banking agency, to determine whether
19 the activities—
20 ‘‘(A) pose a material threat to the safety
21 and soundness of any insured depository insti22
tution subsidiary of the depository institution
23 holding company;
24 ‘‘(B) are conducted in accordance with ap25
plicable Federal law; and
619
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1 ‘‘(C) are subject to appropriate systems for
2 monitoring and controlling the financial, oper3
ating, and other material risks of the activities
4 that may pose a material threat to the safety
5 and soundness of the insured depository institu6
tion subsidiaries of the holding company.
7 ‘‘(3) AGENCY COORDINATION WITH THE
8 BOARD.—An appropriate Federal banking agency
9 that conducts an examination pursuant to paragraph
10 (2) shall coordinate examination of the activities of
11 nondepository institution subsidiaries described in
12 subsection (b) with the Board in a manner that—
13 ‘‘(A) avoids duplication;
14 ‘‘(B) shares information relevant to the su15
pervision of the depository institution holding
16 company;
17 ‘‘(C) achieves the objectives of subsection
18 (b); and
19 ‘‘(D) ensures that the depository institu20
tion holding company and the subsidiaries of
21 the depository institution holding company are
22 not subject to conflicting supervisory demands
23 by such agency and the Board.
24 ‘‘(4) FEE PERMITTED FOR EXAMINATION
25 COSTS.—An appropriate Federal banking agency
620
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1 that conducts an examination or enforcement action
2 pursuant to this section may collect an assessment,
3 fee, or such other charge from the subsidiary as the
4 appropriate Federal banking agency determines nec5
essary or appropriate to carry out the responsibil6
ities of the appropriate Federal banking agency in
7 connection with such examination.
8 ‘‘(e) REFERRALS FOR ENFORCEMENT BY APPRO9
PRIATE FEDERAL BANKING AGENCY.—
10 ‘‘(1) RECOMMENDATION OF ENFORCEMENT AC11
TION.—The appropriate Federal banking agency for
12 the lead insured depository institution, based upon
13 its examination of a nondepository institution sub14
sidiary conducted pursuant to subsection (d), or
15 other relevant information, may submit to the
16 Board, in writing, a recommendation that the Board
17 take enforcement action against such nondepository
18 institution subsidiary, together with an explanation
19 of the concerns giving rise to the recommendation,
20 if the appropriate Federal banking agency deter21
mines (by a vote of its members, if applicable) that
22 the activities of the nondepository institution sub23
sidiary pose a material threat to the safety and
24 soundness of any insured depository institution sub621
O:WRIWRI10950.xml [file 6 of 17] S.L.C
1 sidiary of the depository institution holding com2
pany.
3 ‘‘(2) BACK-UP AUTHORITY OF THE APPRO4
PRIATE FEDERAL BANKING AGENCY.—If, within the
5 60-day period beginning on the date on which the
6 Board receives a recommendation under paragraph
7 (1), the Board does not take enforcement action
8 against the nondepository institution subsidiary or
9 provide a plan for supervisory or enforcement action
10 that is acceptable to the appropriate Federal bank11
ing agency that made the recommendation pursuant
12 to paragraph (1), such agency may take the rec13
ommended enforcement action against the non14
depository institution subsidiary, in the same man15
ner as if the nondepository institution subsidiary
16 were an insured depository institution for which the
17 agency was the appropriate Federal banking agency.
18 ‘‘(f) COORDINATION AMONG APPROPRIATE FEDERAL
19 BANKING AGENCIES.—Each Federal banking agency,
20 prior to or when exercising authority under subsection (d)
21 or (e) shall—
22 ‘‘(1) provide reasonable notice to, and consult
23 with, the appropriate Federal banking agency or
24 State bank supervisor (or other State regulatory
25 agency) of the nondepository institution subsidiary
622
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1 of a depository institution holding company that is
2 described in subsection (d) before commencing any
3 examination of the subsidiary;
4 ‘‘(2) to the fullest extent possible—
5 ‘‘(A) rely on the examinations, inspections,
6 and reports of the appropriate Federal banking
7 agency or the State bank supervisor (or other
8 State regulatory agency) of the subsidiary;
9 ‘‘(B) avoid duplication of examination ac10
tivities, reporting requirements, and requests
11 for information; and
12 ‘‘(C) ensure that the depository institution
13 holding company and the subsidiaries of the de14
pository institution holding company are not
15 subject to conflicting supervisory demands by
16 the appropriate Federal banking agencies.
17 ‘‘(g) RULE OF CONSTRUCTION.—No provision of this
18 section shall be construed as limiting any authority of the
19 Board, the Corporation, or the Comptroller of the Cur20
rency under any other provision of law.’’.
21 (b) EFFECTIVE DATE.—The amendment made by
22 subsection (a) shall take effect on the transfer date.
623
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1 SEC. 606. REQUIREMENTS FOR FINANCIAL HOLDING COM2
PANIES TO REMAIN WELL CAPITALIZED AND
3 WELL MANAGED.
4 (a) AMENDMENT.—Section 4(l)(1) of the Bank Hold5
ing Company Act of 1956 (12 U.S.C. 1843(l)(1)) is
6 amended—
7 (1) in subparagraph (B), by striking ‘‘and’’ at
8 the end;
9 (2) by redesignating subparagraph (C) as sub10
paragraph (D);
11 (3) by inserting after subparagraph (B) the fol12
lowing:
13 ‘‘(C) the bank holding company is well
14 capitalized and well managed; and’’; and
15 (4) in subparagraph (D)(ii), as so redesignated,
16 by striking ‘‘subparagraphs (A) and (B)’’ and insert17
ing ‘‘subparagraphs (A), (B), and (C)’’.
18 (b) HOME OWNERS’ LOAN ACT AMENDMENT.—Sec19
tion 10(c)(2) of the Home Owners’ Loan Act (12 U.S.C.
20 1467a(c)(2)) is amended by adding at the end the fol21
lowing new subparagraph:
22 ‘‘(H) Any activity that is permissible for a
23 financial holding company (as such term is de24
fined under section 2(p) of the Bank Holding
25 Company Act of 1956 (12 U.S.C. 1841(p)) to
624
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1 conduct under section 4(k) of the Bank Holding
2 Company Act of 1956 if—
3 ‘‘(i) the savings and loan holding com4
pany meets all of the criteria to qualify as
5 a financial holding company, and complies
6 with all of the requirements applicable to a
7 financial holding company, under sections
8 4(l) and 4(m) of the Bank Holding Com9
pany Act and section 804(c) of the Com10
munity Reinvestment Act of 1977 (12
11 U.S.C. 2903(c)) as if the savings and loan
12 holding company was a bank holding com13
pany; and
14 ‘‘(ii) the savings and loan holding
15 company conducts the activity in accord16
ance with the same terms, conditions, and
17 requirements that apply to the conduct of
18 such activity by a bank holding company
19 under the Bank Holding Company Act of
20 1956 and the Board’s regulations and in21
terpretations under such Act.’’.
22 (c) EFFECTIVE DATE.—The amendments made by
23 this section shall take effect on the transfer date.
625
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1 SEC. 607. STANDARDS FOR INTERSTATE ACQUISITIONS.
2 (a) ACQUISITION OF BANKS.—Section 3(d)(1)(A) of
3 the Bank Holding Company Act of 1956 (12 U.S.C.
4 1842(d)(1)(A)) is amended by striking ‘‘adequately cap5
italized and adequately managed’’ and inserting ‘‘well cap6
italized and well managed’’.
7 (b) INTERSTATE BANK MERGERS.—Section
8 44(b)(4)(B) of the Federal Deposit Insurance Act (12
9 U.S.C. 1831u(b)(4)(B)) is amended by striking ‘‘will con10
tinue to be adequately capitalized and adequately man11
aged’’ and inserting ‘‘will be well capitalized and well man12
aged’’.
13 (c) EFFECTIVE DATE.—The amendments made by
14 this section shall take effect on the transfer date.
15 SEC. 608. ENHANCING EXISTING RESTRICTIONS ON BANK
16 TRANSACTIONS WITH AFFILIATES.
17 (a) AFFILIATE TRANSACTIONS.—Section 23A of the
18 Federal Reserve Act (12 U.S.C. 371c) is amended—
19 (1) in subsection (b)—
20 (A) in paragraph (1), by striking subpara21
graph (D) and inserting the following:
22 ‘‘(D) any investment fund with respect to
23 which a member bank or affiliate thereof is an
24 investment adviser; and’’; and
25 (B) in paragraph (7)—
626
O:WRIWRI10950.xml [file 6 of 17] S.L.C
1 (i) in subparagraph (A), by inserting
2 before the semicolon at the end the fol3
lowing: ‘‘, including a purchase of assets
4 subject to an agreement to repurchase’’;
5 (ii) in subparagraph (C), by striking
6 ‘‘, including assets subject to an agreement
7 to repurchase,’’;
8 (iii) in subparagraph (D)—
9 (I) by inserting ‘‘or other debt
10 obligations’’ after ‘‘acceptance of secu11
rities’’; and
12 (II) by striking ‘‘or’’ at the end;
13 and
14 (iv) by adding at the end the fol15
lowing:
16 ‘‘(F) a transaction with an affiliate that
17 involves the borrowing or lending of securities,
18 to the extent that the transaction causes a
19 member bank or a subsidiary to have credit ex20
posure to the affiliate; or
21 ‘‘(G) a derivative transaction, as defined in
22 paragraph (3) of section 5200(b) of the Revised
23 Statutes of the United States (12 U.S.C.
24 84(b)), with an affiliate, to the extent that the
627
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1 transaction causes a member bank or a sub2
sidiary to have credit exposure to the affiliate;’’;
3 (2) in subsection (c)—
4 (A) in paragraph (1)—
5 (i) in the matter preceding subpara6
graph (A), by striking ‘‘subsidiary’’ and all
7 that follows through ‘‘time of the trans8
action’’ and inserting ‘‘subsidiary, and any
9 credit exposure of a member bank or a
10 subsidiary to an affiliate resulting from a
11 securities borrowing or lending transaction,
12 or a derivative transaction, shall be se13
cured at all times’’; and
14 (ii) in each of subparagraphs (A)
15 through (D), by striking ‘‘or letter of cred16
it’’ and inserting ‘‘letter of credit, or credit
17 exposure’’;
18 (B) by striking paragraph (2);
19 (C) by redesignating paragraphs (3)
20 through (5) as paragraphs (2) through (4), re21
spectively;
22 (D) in paragraph (2), as so redesignated,
23 by inserting before the period at the end ‘‘, or
24 credit exposure to an affiliate resulting from a
628
O:WRIWRI10950.xml [file 6 of 17] S.L.C
1 securities borrowing or lending transaction, or
2 derivative transaction’’; and
3 (E) in paragraph (3), as so redesignated—
4 (i) by inserting ‘‘or other debt obliga5
tions’’ after ‘‘securities’’; and
6 (ii) by striking ‘‘or guarantee’’ and all
7 that follows through ‘‘behalf of,’’ and in8
serting ‘‘guarantee, acceptance, or letter of
9 credit issued on behalf of, or credit expo10
sure from a securities borrowing or lending
11 transaction, or derivative transaction to,’’;
12 (3) in subsection (d)(4), in the matter pre13
ceding subparagraph (A), by striking ‘‘or issuing’’
14 and all that follows through ‘‘behalf of,’’ and insert15
ing ‘‘issuing a guarantee, acceptance, or letter of
16 credit on behalf of, or having credit exposure result17
ing from a securities borrowing or lending trans18
action, or derivative transaction to,’’; and
19 (4) in subsection (f)—
20 (A) in paragraph (2)—
21 (i) by striking ‘‘or order’’;
22 (ii) by striking ‘‘if it finds’’ and all
23 that follows through the end of the para24
graph and inserting the following: ‘‘if—
629
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1 ‘‘(i) the Board finds the exemption to
2 be in the public interest and consistent
3 with the purposes of this section, and noti4
fies the Federal Deposit Insurance Cor5
poration of such finding; and
6 ‘‘(ii) before the end of the 60-day pe7
riod beginning on the date on which the
8 Federal Deposit Insurance Corporation re9
ceives notice of the finding under clause
10 (i), the Federal Deposit Insurance Cor11
poration does not object, in writing, to the
12 finding, based on a determination that the
13 exemption presents an unacceptable risk to
14 the Deposit Insurance Fund.’’;
15 (iii) by striking the Board and insert16
ing the following:
17 ‘‘(A) IN GENERAL.—The Board’’; and
18 (iv) by adding at the end the fol19
lowing:
20 ‘‘(B) ADDITIONAL EXEMPTIONS.—
21 ‘‘(i) NATIONAL BANKS.—The Comp22
troller of the Currency may, by order, ex23
empt a transaction of a national bank from
24 the requirements of this section if—
630
O:WRIWRI10950.xml [file 6 of 17] S.L.C
1 ‘‘(I) the Board and the Office of
2 the Comptroller of the Currency joint3
ly find the exemption to be in the
4 public interest and consistent with the
5 purposes of this section and notify the
6 Federal Deposit Insurance Corpora7
tion of such finding; and
8 ‘‘(II) before the end of the 60-
9 day period beginning on the date on
10 which the Federal Deposit Insurance
11 Corporation receives notice of the
12 finding under subclause (I), the Fed13
eral Deposit Insurance Corporation
14 does not object, in writing, to the
15 finding, based on a determination that
16 the exemption presents an unaccept17
able risk to the Deposit Insurance
18 Fund.
19 ‘‘(ii) STATE BANKS.—The Federal
20 Deposit Insurance Corporation may, by
21 order, exempt a transaction of a State non22
member bank, and the Board may, by
23 order, exempt a transaction of a State
24 member bank, from the requirements of
25 this section if—
631
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1 ‘‘(I) the Board and the Federal
2 Deposit Insurance Corporation jointly
3 find that the exemption is in the pub4
lic interest and consistent with the
5 purposes of this section; and
6 ‘‘(II) the Federal Deposit Insur7
ance Corporation finds that the ex8
emption does not present an unaccept9
able risk to the Deposit Insurance
10 Fund.’’; and
11 (B) by adding at the end the following:
12 ‘‘(4) AMOUNTS OF COVERED TRANSACTIONS.—
13 The Board may issue such regulations or interpreta14
tions as the Board determines are necessary or ap15
propriate with respect to the manner in which a net16
ting agreement may be taken into account in deter17
mining the amount of a covered transaction between
18 a member bank or a subsidiary and an affiliate, in19
cluding the extent to which netting agreements be20
tween a member bank or a subsidiary and an affil21
iate may be taken into account in determining
22 whether a covered transaction is fully secured for
23 purposes of subsection (d)(4). An interpretation
24 under this paragraph with respect to a specific mem25
ber bank, subsidiary, or affiliate shall be issued
632
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1 jointly with the appropriate Federal banking agency
2 for such member bank, subsidiary, or affiliate.’’.
3 (b) TRANSACTIONS WITH AFFILIATES.—Section
4 23B(e) of the Federal Reserve Act (12 U.S.C. 371c–1(e))
5 is amended—
6 (1) by striking the undesignated matter fol7
lowing subparagraph (B);
8 (2) by redesignating subparagraphs (A) and
9 (B) as clauses (i) and (ii), respectively, and adjust10
ing the clause margins accordingly;
11 (3) by redesignating paragraphs (1) and (2) as
12 subparagraphs (A) and (B), respectively, and adjust13
ing the subparagraph margins accordingly;
14 (4) by striking ‘‘The Board’’ and inserting the
15 following:
16 ‘‘(1) IN GENERAL.—The Board’’;
17 (5) in paragraph (1)(B), as so redesignated—
18 (A) in the matter preceding clause (i), by
19 inserting before ‘‘regulations’’ the following:
20 ‘‘subject to paragraph (2), if the Board finds
21 that an exemption or exclusion is in the public
22 interest and is consistent with the purposes of
23 this section, and notifies the Federal Deposit
24 Insurance Corporation of such finding,’’; and
633
O:WRIWRI10950.xml [file 6 of 17] S.L.C
1 (B) in clause (ii), by striking the comma at
2 the end and inserting a period; and
3 (6) by adding at the end the following:
4 ‘‘(2) EXCEPTION.—The Board may grant an
5 exemption or exclusion under this subsection only if,
6 during the 60-day period beginning on the date of
7 receipt of notice of the finding from the Board
8 under paragraph (1)(B), the Federal Deposit Insur9
ance Corporation does not object, in writing, to such
10 exemption or exclusion, based on a determination
11 that the exemption presents an unacceptable risk to
12 the Deposit Insurance Fund.’’.
13 (c) HOME OWNERS’ LOAN ACT.—Section 11 of the
14 Home Owners’ Loan Act (12 U.S.C. 1468) is amended
15 by adding at the end the following:
16 ‘‘(d) EXEMPTIONS.—
17 ‘‘(1) FEDERAL SAVINGS ASSOCIATIONS.—The
18 Comptroller of the Currency may, by order, exempt
19 a transaction of a Federal savings association from
20 the requirements of this section if—
21 ‘‘(A) the Board and the Office of the
22 Comptroller of the Currency jointly find the ex23
emption to be in the public interest and con24
sistent with the purposes of this section and no634
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1 tify the Federal Deposit Insurance Corporation
2 of such finding; and
3 ‘‘(B) before the end of the 60-day period
4 beginning on the date on which the Federal De5
posit Insurance Corporation receives notice of
6 the finding under subparagraph (A), the Fed7
eral Deposit Insurance Corporation does not ob8
ject, in writing, to the finding, based on a de9
termination that the exemption presents an un10
acceptable risk to the Deposit Insurance Fund.
11 ‘‘(2) STATE SAVINGS ASSOCIATION.—The Fed12
eral Deposit Insurance Corporation may, by order,
13 exempt a transaction of a State savings association
14 from the requirements of this section if the Board
15 and the Federal Deposit Insurance Corporation
16 jointly find that—
17 ‘‘(A) the exemption is in the public interest
18 and consistent with the purposes of this section;
19 and
20 ‘‘(B) the exemption does not present an
21 unacceptable risk to the Deposit Insurance
22 Fund.’’.
23 (d) EFFECTIVE DATE.—The amendments made by
24 this section shall take effect 1 year after the transfer date.
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1 SEC. 609. ELIMINATING EXCEPTIONS FOR TRANSACTIONS
2 WITH FINANCIAL SUBSIDIARIES.
3 (a) AMENDMENT.—Section 23A(e) of the Federal Re4
serve Act (12 U.S.C. 371c(e)) is amended—
5 (1) by striking paragraph (3); and
6 (2) by redesignating paragraph (4) as para7
graph (3).
8 (b) PROSPECTIVE APPLICATION OF AMENDMENT.—
9 The amendments made by this section shall apply with
10 respect to any covered transaction between a bank and
11 a subsidiary of the bank, as those terms are defined in
12 section 23A of the Federal Reserve Act (12 U.S.C. 371c),
13 that is entered into on or after the date of enactment of
14 this Act.
15 (c) EFFECTIVE DATE.—The amendments made by
16 this section shall take effect 1 year after the transfer date.
17 SEC. 610. LENDING LIMITS APPLICABLE TO CREDIT EXPO18
SURE ON DERIVATIVE TRANSACTIONS, RE19
PURCHASE AGREEMENTS, REVERSE REPUR20
CHASE AGREEMENTS, AND SECURITIES
21 LENDING AND BORROWING TRANSACTIONS.
22 (a) NATIONAL BANKS.—Section 5200(b) of the Re23
vised Statutes of the United States (12 U.S.C. 84(b)) is
24 amended—
25 (1) in paragraph (1), by striking ‘‘shall in26
clude’’ and all that follows through the end of the
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1 paragraph and inserting the following: ‘‘shall in2
clude—
3 ‘‘(A) all direct or indirect advances of
4 funds to a person made on the basis of any ob5
ligation of that person to repay the funds or re6
payable from specific property pledged by or on
7 behalf of the person;
8 ‘‘(B) to the extent specified by the Comp9
troller of the Currency, any liability of a na10
tional banking association to advance funds to
11 or on behalf of a person pursuant to a contrac12
tual commitment; and
13 ‘‘(C) any credit exposure to a person aris14
ing from a derivative transaction, repurchase
15 agreement, reverse repurchase agreement, secu16
rities lending transaction, or securities bor17
rowing transaction between the national bank18
ing association and the person;’’;
19 (2) in paragraph (2), by striking the period at
20 the end and inserting ‘‘; and’’; and
21 (3) by adding at the end the following:
22 ‘‘(3) the term ‘derivative transaction’ includes
23 any transaction that is a contract, agreement, swap,
24 warrant, note, or option that is based, in whole or
25 in part, on the value of, any interest in, or any
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1 quantitative measure or the occurrence of any event
2 relating to, one or more commodities, securities, cur3
rencies, interest or other rates, indices, or other as4
sets.’’.
5 (b) SAVINGS ASSOCIATIONS.—Section 5(u)(3) of the
6 Home Owners’ Loan Act (12 U.S.C. 1464(u)(3)) is
7 amended by striking ‘‘Director’’ each place that term ap8
pears and inserting ‘‘Comptroller of the Currency’’.
9 (c) EFFECTIVE DATE.—The amendments made by
10 this section shall take effect 1 year after the transfer date.
11 SEC. 611. CONSISTENT TREATMENT OF DERIVATIVE TRANS12
ACTIONS IN LENDING LIMITS.
13 (a) AMENDMENT.—Section 18 of the Federal Deposit
14 Insurance Act (12 U.S.C. 1828) is amended by adding at
15 the end the following:
16 ‘‘(y) STATE LENDING LIMIT TREATMENT OF DE17
RIVATIVES TRANSACTIONS.—An insured State bank may
18 engage in a derivative transaction, as defined in section
19 5200(b)(3) of the Revised Statutes of the United States
20 (12 U.S.C. 84(b)(3)), only if the law with respect to lend21
ing limits of the State in which the insured State bank
22 is chartered takes into consideration credit exposure to de23
rivative transactions.’’.
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1 (b) EFFECTIVE DATE.—The amendment made by
2 this section shall take effect 18 months after the transfer
3 date.
4 SEC. 612. RESTRICTION ON CONVERSIONS OF TROUBLED
5 BANKS.
6 (a) CONVERSION OF A NATIONAL BANKING ASSOCIA7
TION.—The Act entitled ‘‘An Act to provide for the con8
version of national banking associations into and their
9 merger or consolidation with State banks, and for other
10 purposes.’’ (12 U.S.C. 214 et seq.) is amended by adding
11 at the end the following:
12 ‘‘SEC. 10. PROHIBITION ON CONVERSION.
13 ‘‘A national banking association may not convert to
14 a State bank or State savings association during any pe15
riod in which the national banking association is subject
16 to a cease and desist order (or other formal enforcement
17 order) issued by, or a memorandum of understanding en18
tered into with, the Comptroller of the Currency with re19
spect to a significant supervisory matter.’’.
20 (b) CONVERSION OF A STATE BANK OR SAVINGS AS21
SOCIATION.—Section 5154 of the Revised Statutes of the
22 United States (12 U.S.C. 35) is amended by adding at
23 the end the following: ‘‘The Comptroller of the Currency
24 may not approve the conversion of a State bank or State
25 savings association to a national banking association or
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1 Federal savings association during any period in which the
2 State bank or State savings association is subject to a
3 cease and desist order (or other formal enforcement order)
4 issued by, or a memorandum of understanding entered
5 into with, a State bank supervisor or the appropriate Fed6
eral banking agency with respect to a significant super7
visory matter or a final enforcement action by a State At8
torney General.’’.
9 (c) CONVERSION OF A FEDERAL SAVINGS ASSOCIA10
TION.—Section 5(i) of the Home Owners’ Loan Act (12
11 U.S.C. 1464(i)) is amended by adding at the end the fol12
lowing:
13 ‘‘(6) LIMITATION ON CERTAIN CONVERSIONS BY
14 FEDERAL SAVINGS ASSOCIATIONS.—A Federal sav15
ings association may not convert to a State bank or
16 State savings association during any period in which
17 the Federal savings association is subject to a cease
18 and desist order (or other formal enforcement order)
19 issued by, or a memorandum of understanding en20
tered into with, the Office of Thrift Supervision or
21 the Comptroller of the Currency with respect to a
22 significant supervisory matter.’’.
23 (d) EXCEPTION.—The prohibition on the approval of
24 conversions under the amendments made by subsections
25 (a), (b), and (c) shall not apply, if—
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1 (1) the Federal banking agency that would be
2 the appropriate Federal banking agency after the
3 proposed conversion gives the appropriate Federal
4 banking agency or State bank supervisor that issued
5 the cease and desist order (or other formal enforce6
ment order) or memorandum of understanding, as
7 appropriate, written notice of the proposed conver8
sion including a plan to address the significant su9
pervisory matter in a manner that is consistent with
10 the safe and sound operation of the institution;
11 (2) within 30 days of receipt of the written no12
tice required under paragraph (1), the appropriate
13 Federal banking agency or State bank supervisor
14 that issued the cease and desist order (or other for15
mal enforcement order) or memorandum of under16
standing, as appropriate, does not object to the con17
version or the plan to address the significant super18
visory matter;
19 (3) after conversion of the insured depository
20 institution, the appropriate Federal banking agency
21 after the conversion implements such plan; and
22 (4) in the case of a final enforcement action by
23 a State Attorney General, approval of the conversion
24 is conditioned on compliance by the insured deposi641
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1 tory institution with the terms of such final enforce2
ment action.
3 (e) NOTIFICATION OF PENDING ENFORCEMENT AC4
TIONS.—
5 (1) COPY OF CONVERSION APPLICATION.—At
6 the time an insured depository institution files a
7 conversion application, the insured depository insti8
tution shall transmit a copy of the conversion appli9
cation to—
10 (A) the appropriate Federal banking agen11
cy for the insured depository institution; and
12 (B) the Federal banking agency that would
13 be the appropriate Federal banking agency of
14 the insured depository institution after the pro15
posed conversion.
16 (2) NOTIFICATION AND ACCESS TO INFORMA17
TION.—Upon receipt of a copy of the application de18
scribed in paragraph (1), the appropriate Federal
19 banking agency for the insured depository institution
20 proposing the conversion shall—
21 (A) notify the Federal banking agency that
22 would be the appropriate Federal banking agen23
cy for the institution after the proposed conver24
sion in writing of any ongoing supervisory or
25 investigative proceedings that the appropriate
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1 Federal banking agency for the institution pro2
posing to convert believes is likely to result, in
3 the near term and absent the proposed conver4
sion, in a cease and desist order (or other for5
mal enforcement order) or memorandum of un6
derstanding with respect to a significant super7
visory matter; and
8 (B) provide the Federal banking agency
9 that would be the appropriate Federal banking
10 agency for the institution after the proposed
11 conversion access to all investigative and super12
visory information relating to the proceedings
13 described in subparagraph (A).
14 SEC. 613. DE NOVO BRANCHING INTO STATES.
15 (a) NATIONAL BANKS.—Section 5155(g)(1)(A) of the
16 Revised Statutes of the United States (12 U.S.C.
17 36(g)(1)(A)) is amended to read as follows:
18 ‘‘(A) the law of the State in which the
19 branch is located, or is to be located, would per20
mit establishment of the branch, if the national
21 bank were a State bank chartered by such
22 State; and’’.
23 (b) STATE INSURED BANKS.—Section 18(d)(4)(A)(i)
24 of the Federal Deposit Insurance Act (12 U.S.C.
25 1828(d)(4)(A)(i)) is amended to read as follows:
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1 ‘‘(i) the law of the State in which the
2 branch is located, or is to be located, would
3 permit establishment of the branch, if the
4 bank were a State bank chartered by such
5 State; and’’.
6 SEC. 614. LENDING LIMITS TO INSIDERS.
7 (a) EXTENSIONS OF CREDIT.—Section
8 22(h)(9)(D)(i) of the Federal Reserve Act (12 U.S.C.
9 375b(9)(D)(i)) is amended—
10 (1) by striking the period at the end and insert11
ing ‘‘; or’’;
12 (2) by striking ‘‘a person’’ and inserting ‘‘the
13 person’’;
14 (3) by striking ‘‘extends credit by making’’ and
15 inserting the following: ‘‘extends credit to a person
16 by—
17 ‘‘(I) making’’; and
18 (4) by adding at the end the following:
19 ‘‘(II) having credit exposure to
20 the person arising from a derivative
21 transaction (as defined in section
22 5200(b) of the Revised Statutes of the
23 United States (12 U.S.C. 84(b))), re24
purchase agreement, reverse repur25
chase agreement, securities lending
644
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1 transaction, or securities borrowing
2 transaction between the member bank
3 and the person.’’.
4 (b) EFFECTIVE DATE.—The amendments made by
5 this section shall take effect 1 year after the transfer date.
6 SEC. 615. LIMITATIONS ON PURCHASES OF ASSETS FROM
7 INSIDERS.
8 (a) AMENDMENT TO THE FEDERAL DEPOSIT INSUR9
ANCE ACT.—Section 18 of the Federal Deposit Insurance
10 Act (12 U.S.C. 1828) is amended by adding at the end
11 the following:
12 ‘‘(z) GENERAL PROHIBITION ON SALE OF ASSETS.—
13 ‘‘(1) IN GENERAL.—An insured depository in14
stitution may not purchase an asset from, or sell an
15 asset to, an executive officer, director, or principal
16 shareholder of the insured depository institution, or
17 any related interest of such person (as such terms
18 are defined in section 22(h) of Federal Reserve Act),
19 unless—
20 ‘‘(A) the transaction is on market terms;
21 and
22 ‘‘(B) if the transaction represents more
23 than 10 percent of the capital stock and surplus
24 of the insured depository institution, the trans25
action has been approved in advance by a ma645
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1 jority of the members of the board of directors
2 of the insured depository institution who do not
3 have an interest in the transaction.
4 ‘‘(2) RULEMAKING.—The Board of Governors
5 of the Federal Reserve System may issue such rules
6 as may be necessary to define terms and to carry
7 out the purposes this subsection. Before proposing
8 or adopting a rule under this paragraph, the Board
9 of Governors of the Federal Reserve System shall
10 consult with the Comptroller of the Currency and
11 the Corporation as to the terms of the rule.’’.
12 (b) AMENDMENTS TO THE FEDERAL RESERVE
13 ACT.—Section 22(d) of the Federal Reserve Act (12
14 U.S.C. 375) is amended to read as follows:
15 ‘‘(d) [Reserved]’’.
16 (c) EFFECTIVE DATE.—The amendments made by
17 this section shall take effect on the transfer date.
18 SEC. 616. REGULATIONS REGARDING CAPITAL LEVELS.
19 (a) CAPITAL LEVELS OF BANK HOLDING COMPA20
NIES.—Section 5(b) of the Bank Holding Company Act
21 of 1956 (12 U.S.C. 1844(b)) is amended—
22 (1) by inserting after ‘‘orders’’ the following: ‘‘,
23 including regulations and orders relating to the cap24
ital requirements for bank holding companies,’’; and
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1 (2) by adding at the end the following: ‘‘In es2
tablishing capital regulations pursuant to this sub3
section, the Board shall seek to make such require4
ments countercyclical, so that the amount of capital
5 required to be maintained by a company increases in
6 times of economic expansion and decreases in times
7