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S 3217 PCSCommentsClose CommentsPermalink

Calendar No. 349CommentsClose CommentsPermalink

111th CONGRESSCommentsClose CommentsPermalink

2d SessionCommentsClose CommentsPermalink

S. 3217CommentsClose CommentsPermalink

To promote the financial stability of the United States by improving accountability and transparency in the financial system, to end ‘too big to fail’, to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes.CommentsClose CommentsPermalink

IN THE SENATE OF THE UNITED STATESCommentsClose CommentsPermalink

April 15, 2010CommentsClose CommentsPermalink

Mr. DODD, from the Committee on Banking, Housing, and Urban Affairs, reported the following original bill; which was read twice and placed on the calendarCommentsClose CommentsPermalink

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A BILLCommentsClose CommentsPermalink

To promote the financial stability of the United States by improving accountability and transparency in the financial system, to end ‘too big to fail’, to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes.CommentsClose CommentsPermalink

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) Short Title- This Act may be cited as the ‘Restoring American Financial Stability Act of 2010’.CommentsClose CommentsPermalink





(b) Table of Contents- The table of contents for this Act is as follows:CommentsClose CommentsPermalink





Sec. 1. Short title; table of contents.CommentsClose CommentsPermalink





Sec. 2. Definitions.CommentsClose CommentsPermalink





Sec. 3. Severability.CommentsClose CommentsPermalink





Sec. 4. Effective date.CommentsClose CommentsPermalink

TITLE I--FINANCIAL STABILITY

Sec. 101. Short title.CommentsClose CommentsPermalink





Sec. 102. Definitions.CommentsClose CommentsPermalink

Subtitle A--Financial Stability Oversight Council

Sec. 111. Financial Stability Oversight Council established.CommentsClose CommentsPermalink





Sec. 112. Council authority.CommentsClose CommentsPermalink





Sec. 113. Authority to require supervision and regulation of certain nonbank financial companies.CommentsClose CommentsPermalink





Sec. 114. Registration of nonbank financial companies supervised by the Board of Governors.CommentsClose CommentsPermalink





Sec. 115. Enhanced supervision and prudential standards for nonbank financial companies supervised by the Board of Governors and certain bank holding companies.CommentsClose CommentsPermalink





Sec. 116. Reports.CommentsClose CommentsPermalink





Sec. 117. Treatment of certain companies that cease to be bank holding companies.CommentsClose CommentsPermalink





Sec. 118. Council funding.CommentsClose CommentsPermalink





Sec. 119. Resolution of supervisory jurisdictional disputes among member agencies.CommentsClose CommentsPermalink





Sec. 120. Additional standards applicable to activities or practices for financial stability purposes.CommentsClose CommentsPermalink





Sec. 121. Mitigation of risks to financial stability.CommentsClose CommentsPermalink

Subtitle B--Office of Financial Research

Sec. 151. Definitions.CommentsClose CommentsPermalink





Sec. 152. Office of Financial Research established.CommentsClose CommentsPermalink





Sec. 153. Purpose and duties of the Office.CommentsClose CommentsPermalink





Sec. 154. Organizational structure; responsibilities of primary programmatic units.CommentsClose CommentsPermalink





Sec. 155. Funding.CommentsClose CommentsPermalink





Sec. 156. Transition oversight.CommentsClose CommentsPermalink

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

Sec. 161. Reports by and examinations of nonbank financial companies supervised by the Board of Governors.CommentsClose CommentsPermalink





Sec. 162. Enforcement.CommentsClose CommentsPermalink





Sec. 163. Acquisitions.CommentsClose CommentsPermalink





Sec. 164. Prohibition against management interlocks between certain financial companies.CommentsClose CommentsPermalink





Sec. 165. Enhanced supervision and prudential standards for nonbank financial companies supervised by the Board of Governors and certain bank holding companies.CommentsClose CommentsPermalink





Sec. 166. Early remediation requirements.CommentsClose CommentsPermalink





Sec. 167. Affiliations.CommentsClose CommentsPermalink





Sec. 168. Regulations.CommentsClose CommentsPermalink





Sec. 169. Avoiding duplication.CommentsClose CommentsPermalink





Sec. 170. Safe harbor.CommentsClose CommentsPermalink

TITLE II--ORDERLY LIQUIDATION AUTHORITY

Sec. 201. Definitions.CommentsClose CommentsPermalink





Sec. 202. Orderly Liquidation Authority Panel.CommentsClose CommentsPermalink





Sec. 203. Systemic risk determination.CommentsClose CommentsPermalink





Sec. 204. Orderly liquidation.CommentsClose CommentsPermalink





Sec. 205. Orderly liquidation of covered brokers and dealers.CommentsClose CommentsPermalink





Sec. 206. Mandatory terms and conditions for all orderly liquidation actions.CommentsClose CommentsPermalink





Sec. 207. Directors not liable for acquiescing in appointment of receiver.CommentsClose CommentsPermalink





Sec. 208. Dismissal and exclusion of other actions.CommentsClose CommentsPermalink





Sec. 209. Rulemaking; non-conflicting law.CommentsClose CommentsPermalink





Sec. 210. Powers and duties of the corporation.CommentsClose CommentsPermalink





Sec. 211. Miscellaneous provisions.CommentsClose CommentsPermalink

TITLE III--TRANSFER OF POWERS TO THE COMPTROLLER OF THE CURRENCY, THE CORPORATION, AND THE BOARD OF GOVERNORS

Sec. 300. Short title.CommentsClose CommentsPermalink





Sec. 301. Purposes.CommentsClose CommentsPermalink





Sec. 302. Definition.CommentsClose CommentsPermalink

Subtitle A--Transfer of Powers and Duties

Sec. 311. Transfer date.CommentsClose CommentsPermalink





Sec. 312. Powers and duties transferred.CommentsClose CommentsPermalink





Sec. 313. Abolishment.CommentsClose CommentsPermalink





Sec. 314. Amendments to the Revised Statutes.CommentsClose CommentsPermalink





Sec. 315. Federal information policy.CommentsClose CommentsPermalink





Sec. 316. Savings provisions.CommentsClose CommentsPermalink





Sec. 317. References in Federal law to Federal banking agencies.CommentsClose CommentsPermalink





Sec. 318. Funding.CommentsClose CommentsPermalink





Sec. 319. Contracting and leasing authority.CommentsClose CommentsPermalink

Subtitle B--Transitional Provisions

Sec. 321. Interim use of funds, personnel, and property.CommentsClose CommentsPermalink





Sec. 322. Transfer of employees.CommentsClose CommentsPermalink





Sec. 323. Property transferred.CommentsClose CommentsPermalink





Sec. 324. Funds transferred.CommentsClose CommentsPermalink





Sec. 325. Disposition of affairs.CommentsClose CommentsPermalink





Sec. 326. Continuation of services.CommentsClose CommentsPermalink

Subtitle C--Federal Deposit Insurance Corporation

Sec. 331. Deposit insurance reforms.CommentsClose CommentsPermalink





Sec. 332. Management of the Federal Deposit Insurance Corporation.CommentsClose CommentsPermalink

Subtitle D--Termination of Federal Thrift Charter

Sec. 341. Termination of Federal savings associations.CommentsClose CommentsPermalink





Sec. 342. Branching.CommentsClose CommentsPermalink

TITLE IV--REGULATION OF ADVISERS TO HEDGE FUNDS AND OTHERS

Sec. 401. Short title.CommentsClose CommentsPermalink





Sec. 402. Definitions.CommentsClose CommentsPermalink





Sec. 403. Elimination of private adviser exemption; limited exemption for foreign private advisers; limited intrastate exemption.CommentsClose CommentsPermalink





Sec. 404. Collection of systemic risk data; reports; examinations; disclosures.CommentsClose CommentsPermalink





Sec. 405. Disclosure provision eliminated.CommentsClose CommentsPermalink





Sec. 406. Clarification of rulemaking authority.CommentsClose CommentsPermalink





Sec. 407. Exemption of venture capital fund advisers.CommentsClose CommentsPermalink





Sec. 408. Exemption of and record keeping by private equity fund advisers.CommentsClose CommentsPermalink





Sec. 409. Family offices.CommentsClose CommentsPermalink





Sec. 410. State and Federal responsibilities; asset threshold for Federal registration of investment advisers.CommentsClose CommentsPermalink





Sec. 411. Custody of client assets.CommentsClose CommentsPermalink





Sec. 412. Adjusting the accredited investor standard for inflation.CommentsClose CommentsPermalink





Sec. 413. GAO study and report on accredited investors.CommentsClose CommentsPermalink





Sec. 414. GAO study on self-regulatory organization for private funds.CommentsClose CommentsPermalink





Sec. 415. Commission study and report on short selling.CommentsClose CommentsPermalink





Sec. 416. Transition period.CommentsClose CommentsPermalink

TITLE V--INSURANCE

Subtitle A--Office of National Insurance

Sec. 501. Short title.CommentsClose CommentsPermalink





Sec. 502. Establishment of Office of National Insurance.CommentsClose CommentsPermalink

Subtitle B--State-based Insurance Reform

Sec. 511. Short title.CommentsClose CommentsPermalink





Sec. 512. Effective date.CommentsClose CommentsPermalink

PART I--Nonadmitted Insurance

Sec. 521. Reporting, payment, and allocation of premium taxes.CommentsClose CommentsPermalink





Sec. 522. Regulation of nonadmitted insurance by insured’s home State.CommentsClose CommentsPermalink





Sec. 523. Participation in national producer database.CommentsClose CommentsPermalink





Sec. 524. Uniform standards for surplus lines eligibility.CommentsClose CommentsPermalink





Sec. 525. Streamlined application for commercial purchasers.CommentsClose CommentsPermalink





Sec. 526. GAO study of nonadmitted insurance market.CommentsClose CommentsPermalink





Sec. 527. Definitions.CommentsClose CommentsPermalink

PART II--Reinsurance

Sec. 531. Regulation of credit for reinsurance and reinsurance agreements.CommentsClose CommentsPermalink





Sec. 532. Regulation of reinsurer solvency.CommentsClose CommentsPermalink





Sec. 533. Definitions.CommentsClose CommentsPermalink

PART III--Rule of Construction

Sec. 541. Rule of construction.CommentsClose CommentsPermalink





Sec. 542. Severability.CommentsClose CommentsPermalink

TITLE VI--IMPROVEMENTS TO REGULATION OF BANK AND SAVINGS ASSOCIATION HOLDING COMPANIES AND DEPOSITORY INSTITUTIONS

Sec. 601. Short title.CommentsClose CommentsPermalink





Sec. 602. Definition.CommentsClose CommentsPermalink





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.CommentsClose CommentsPermalink





Sec. 604. Reports and examinations of holding companies; regulation of functionally regulated subsidiaries.CommentsClose CommentsPermalink





Sec. 605. Assuring consistent oversight of permissible activities of depository institution subsidiaries of holding companies.CommentsClose CommentsPermalink





Sec. 606. Requirements for financial holding companies to remain well capitalized and well managed.CommentsClose CommentsPermalink





Sec. 607. Standards for interstate acquisitions.CommentsClose CommentsPermalink





Sec. 608. Enhancing existing restrictions on bank transactions with affiliates.CommentsClose CommentsPermalink





Sec. 609. Eliminating exceptions for transactions with financial subsidiaries.CommentsClose CommentsPermalink





Sec. 610. Lending limits applicable to credit exposure on derivative transactions, repurchase agreements, reverse repurchase agreements, and securities lending and borrowing transactions.CommentsClose CommentsPermalink





Sec. 611. Application of national bank lending limits to insured State banks.CommentsClose CommentsPermalink





Sec. 612. Restriction on conversions of troubled banks.CommentsClose CommentsPermalink





Sec. 613. De novo branching into States.CommentsClose CommentsPermalink





Sec. 614. Lending limits to insiders.CommentsClose CommentsPermalink





Sec. 615. Limitations on purchases of assets from insiders.CommentsClose CommentsPermalink





Sec. 616. Regulations regarding capital levels of holding companies.CommentsClose CommentsPermalink





Sec. 617. Elimination of elective investment bank holding company framework.CommentsClose CommentsPermalink





Sec. 618. Securities holding companies.CommentsClose CommentsPermalink





Sec. 619. Restrictions on capital market activity by banks and bank holding companies.CommentsClose CommentsPermalink





Sec. 620. Concentration limits on large financial firms.CommentsClose CommentsPermalink

TITLE VII--IMPROVEMENTS TO REGULATION OF OVER-THE-COUNTER DERIVATIVES MARKETS

Sec. 701. Short title.CommentsClose CommentsPermalink





Sec. 702. Findings and purposes.CommentsClose CommentsPermalink

Subtitle A--Regulation of Swap Markets

Sec. 711. Definitions.CommentsClose CommentsPermalink





Sec. 712. Jurisdiction.CommentsClose CommentsPermalink





Sec. 713. Clearing.CommentsClose CommentsPermalink





Sec. 714. Public reporting of aggregate swap data.CommentsClose CommentsPermalink





Sec. 715. Swap repositories.CommentsClose CommentsPermalink





Sec. 716. Reporting and recordkeeping.CommentsClose CommentsPermalink





Sec. 717. Registration and regulation of swap dealers and major swap participants.CommentsClose CommentsPermalink





Sec. 718. Segregation of assets held as collateral in swap transactions.CommentsClose CommentsPermalink





Sec. 719. Conflicts of interest.CommentsClose CommentsPermalink





Sec. 720. Alternative swap execution facilities.CommentsClose CommentsPermalink





Sec. 721. Derivatives transaction execution facilities and exempt boards of trade.CommentsClose CommentsPermalink





Sec. 722. Designated contract markets.CommentsClose CommentsPermalink





Sec. 723. Margin.CommentsClose CommentsPermalink





Sec. 724. Position limits.CommentsClose CommentsPermalink





Sec. 725. Enhanced authority over registered entities.CommentsClose CommentsPermalink





Sec. 726. Foreign boards of trade.CommentsClose CommentsPermalink





Sec. 727. Legal certainty for swaps.CommentsClose CommentsPermalink





Sec. 728. FDICIA amendments.CommentsClose CommentsPermalink





Sec. 729. Primary enforcement authority.CommentsClose CommentsPermalink





Sec. 730. Enforcement.CommentsClose CommentsPermalink





Sec. 731. Retail commodity transactions.CommentsClose CommentsPermalink





Sec. 732. Large swap trader reporting.CommentsClose CommentsPermalink





Sec. 733. Other authority.CommentsClose CommentsPermalink





Sec. 734. Antitrust.CommentsClose CommentsPermalink

Subtitle B--Regulation of Security-Based Swap Markets

Sec. 751. Definitions under the Securities Exchange Act of 1934.CommentsClose CommentsPermalink





Sec. 752. Repeal of prohibition on regulation of security-based swaps.CommentsClose CommentsPermalink





Sec. 753. Amendments to the Securities Exchange Act of 1934.CommentsClose CommentsPermalink





Sec. 754. Segregation of assets held as collateral in security-based swap transactions.CommentsClose CommentsPermalink





Sec. 755. Reporting and recordkeeping.CommentsClose CommentsPermalink





Sec. 756. State gaming and bucket shop laws.CommentsClose CommentsPermalink





Sec. 757. Amendments to the Securities Act of 1933; treatment of security-based swaps.CommentsClose CommentsPermalink





Sec. 758. Other authority.CommentsClose CommentsPermalink





Sec. 759. Jurisdiction.CommentsClose CommentsPermalink

Subtitle C--Other Provisions

Sec. 761. International harmonization.CommentsClose CommentsPermalink





Sec. 762. Interagency cooperation.CommentsClose CommentsPermalink





Sec. 763. Study and report on implementation.CommentsClose CommentsPermalink





Sec. 764. Recommendations for changes to insolvency laws.CommentsClose CommentsPermalink





Sec. 765. Effective date.CommentsClose CommentsPermalink

TITLE VIII--PAYMENT, CLEARING, AND SETTLEMENT SUPERVISION

Sec. 801. Short title.CommentsClose CommentsPermalink





Sec. 802. Findings and purposes.CommentsClose CommentsPermalink





Sec. 803. Definitions.CommentsClose CommentsPermalink





Sec. 804. Designation of systemic importance.CommentsClose CommentsPermalink





Sec. 805. Standards for systemically important financial market utilities and payment, clearing, or settlement activities.CommentsClose CommentsPermalink





Sec. 806. Operations of designated financial market utilities.CommentsClose CommentsPermalink





Sec. 807. Examination of and enforcement actions against designated financial market utilities.CommentsClose CommentsPermalink





Sec. 808. Examination of and enforcement actions against financial institutions subject to standards for designated activities.CommentsClose CommentsPermalink





Sec. 809. Requests for information, reports, or records.CommentsClose CommentsPermalink





Sec. 810. Rulemaking.CommentsClose CommentsPermalink





Sec. 811. Other authority.CommentsClose CommentsPermalink





Sec. 812. Effective date.CommentsClose CommentsPermalink

TITLE IX--INVESTOR PROTECTIONS AND IMPROVEMENTS TO THE REGULATION OF SECURITIES

Subtitle A--Increasing Investor Protection

Sec. 911. Investor Advisory Committee established.CommentsClose CommentsPermalink





Sec. 912. Clarification of authority of the Commission to engage in investor testing.CommentsClose CommentsPermalink





Sec. 913. Study and rulemaking regarding obligations of brokers, dealers, and investment advisers.CommentsClose CommentsPermalink





Sec. 914. Office of the Investor Advocate.CommentsClose CommentsPermalink





Sec. 915. Streamlining of filing procedures for self-regulatory organizations.CommentsClose CommentsPermalink





Sec. 916. Study regarding financial literacy among investors.CommentsClose CommentsPermalink





Sec. 917. Study regarding mutual fund advertising.CommentsClose CommentsPermalink





Sec. 918. Clarification of Commission authority to require investor disclosures before purchase of investment products and services.CommentsClose CommentsPermalink





Sec. 919. Study on conflicts of interest.CommentsClose CommentsPermalink





Sec. 919A. Study on improved investor access to information on investment advisers and broker-dealers.CommentsClose CommentsPermalink





Sec. 919B. Study on financial planners and the use of financial designations.CommentsClose CommentsPermalink

Subtitle B--Increasing Regulatory Enforcement and Remedies

Sec. 921. Authority to issue rules related to mandatory predispute arbitration.CommentsClose CommentsPermalink





Sec. 922. Whistleblower protection.CommentsClose CommentsPermalink





Sec. 923. Conforming amendments for whistleblower protection.CommentsClose CommentsPermalink





Sec. 924. Implementation and transition provisions for whistleblower protection.CommentsClose CommentsPermalink





Sec. 925. Collateral bars.CommentsClose CommentsPermalink





Sec. 926. Authority of State regulators over Regulation D offerings.CommentsClose CommentsPermalink





Sec. 927. Equal treatment of self-regulatory organization rules.CommentsClose CommentsPermalink





Sec. 928. Clarification that Section 205 of the Investment Advisers Act of 1940 does not apply to State-registered advisers.CommentsClose CommentsPermalink





Sec. 929. Unlawful margin lending.CommentsClose CommentsPermalink





Sec. 929A. Protection for employees of subsidiaries and affiliates of publicly traded companies.CommentsClose CommentsPermalink





Sec. 929B. FAIR Fund amendments.CommentsClose CommentsPermalink





Sec. 929C. Increasing the borrowing limit on Treasury loans.CommentsClose CommentsPermalink

Subtitle C--Improvements to the Regulation of Credit Rating Agencies

Sec. 931. Findings.CommentsClose CommentsPermalink





Sec. 932. Enhanced regulation, accountability, and transparency of nationally recognized statistical rating organizations.CommentsClose CommentsPermalink





Sec. 933. State of mind in private actions.CommentsClose CommentsPermalink





Sec. 934. Referring tips to law enforcement or regulatory authorities.CommentsClose CommentsPermalink





Sec. 935. Consideration of information from sources other than the issuer in rating decisions.CommentsClose CommentsPermalink





Sec. 936. Qualification standards for credit rating analysts.CommentsClose CommentsPermalink





Sec. 937. Timing of regulations.CommentsClose CommentsPermalink





Sec. 938. Universal ratings symbols.CommentsClose CommentsPermalink





Sec. 939. Government Accountability Office study and Federal agency review of required uses of nationally recognized statistical rating organization ratings.CommentsClose CommentsPermalink





Sec. 939A. Securities and Exchange Commission study on strengthening credit rating agency independence.CommentsClose CommentsPermalink





Sec. 939B. Government Accountability Office study on alternative business models.CommentsClose CommentsPermalink





Sec. 939C. Government Accountability Office study on the creation of an independent professional analyst organization.CommentsClose CommentsPermalink

Subtitle D--Improvements to the Asset-Backed Securitization Process

Sec. 941. Regulation of credit risk retention.CommentsClose CommentsPermalink





Sec. 942. Disclosures and reporting for asset-backed securities.CommentsClose CommentsPermalink





Sec. 943. Representations and warranties in asset-backed offerings.CommentsClose CommentsPermalink





Sec. 944. Exempted transactions under the Securities Act of 1933.CommentsClose CommentsPermalink





Sec. 945. Due diligence analysis and disclosure in asset-backed securities issues.CommentsClose CommentsPermalink

Subtitle E--Accountability and Executive Compensation

Sec. 951. Shareholder vote on executive compensation disclosures.CommentsClose CommentsPermalink





Sec. 952. Compensation committee independence.CommentsClose CommentsPermalink





Sec. 953. Executive compensation disclosures.CommentsClose CommentsPermalink





Sec. 954. Recovery of erroneously awarded compensation.CommentsClose CommentsPermalink





Sec. 955. Disclosure regarding employee and director hedging.CommentsClose CommentsPermalink





Sec. 956. Excessive compensation by holding companies of depository institutions.CommentsClose CommentsPermalink





Sec. 957. Voting by brokers.CommentsClose CommentsPermalink

Subtitle F--Improvements to the Management of the Securities and Exchange Commission

Sec. 961. Report and certification of internal supervisory controls.CommentsClose CommentsPermalink





Sec. 962. Triennial report on personnel management.CommentsClose CommentsPermalink





Sec. 963. Annual financial controls audit.CommentsClose CommentsPermalink





Sec. 964. Report on oversight of national securities associations.CommentsClose CommentsPermalink





Sec. 965. Compliance examiners.CommentsClose CommentsPermalink





Sec. 966. Suggestion program for employees of the Commission.CommentsClose CommentsPermalink

Subtitle G--Strengthening Corporate Governance

Sec. 971. Election of directors by majority vote in uncontested elections.CommentsClose CommentsPermalink





Sec. 972. Proxy access.CommentsClose CommentsPermalink





Sec. 973. Disclosures regarding chairman and CEO structures.CommentsClose CommentsPermalink

Subtitle H--Municipal Securities

Sec. 975. Regulation of municipal securities and changes to the board of the MSRB.CommentsClose CommentsPermalink





Sec. 976. Government Accountability Office study of increased disclosure to investors.CommentsClose CommentsPermalink





Sec. 977. Government Accountability Office study on the municipal securities markets.CommentsClose CommentsPermalink





Sec. 978. Study of funding for Government Accounting Standards Board.CommentsClose CommentsPermalink





Sec. 979. Commission Office of Municipal Securities.CommentsClose CommentsPermalink

Subtitle I--Public Company Accounting Oversight Board, Portfolio Margining, and Other Matters

Sec. 981. Authority to share certain information with foreign authorities.CommentsClose CommentsPermalink





Sec. 982. Oversight of brokers and dealers.CommentsClose CommentsPermalink





Sec. 983. Portfolio margining.CommentsClose CommentsPermalink





Sec. 984. Loan or borrowing of securities.CommentsClose CommentsPermalink





Sec. 985. Technical corrections to Federal securities laws.CommentsClose CommentsPermalink





Sec. 986. Conforming amendments relating to repeal of the Public Utility Holding Company Act of 1935.CommentsClose CommentsPermalink





Sec. 987. Amendment to definition of material loss and nonmaterial losses to the Deposit Insurance Fund for purposes of Inspector General reviews.CommentsClose CommentsPermalink





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.CommentsClose CommentsPermalink





Sec. 989. Government Accountability Office study on proprietary trading.CommentsClose CommentsPermalink





Sec. 989A. Senior investor protections.CommentsClose CommentsPermalink





Sec. 989B. Changes in appointment of certain Inspectors General.CommentsClose CommentsPermalink

Subtitle J--Self-funding of the Securities and Exchange Commission

Sec. 991. Securities and Exchange Commission self-funding.CommentsClose CommentsPermalink

TITLE X--BUREAU OF CONSUMER FINANCIAL PROTECTION

Sec. 1001. Short title.CommentsClose CommentsPermalink





Sec. 1002. Definitions.CommentsClose CommentsPermalink

Subtitle A--Bureau of Consumer Financial Protection

Sec. 1011. Establishment of the Bureau.CommentsClose CommentsPermalink





Sec. 1012. Executive and administrative powers.CommentsClose CommentsPermalink





Sec. 1013. Administration.CommentsClose CommentsPermalink





Sec. 1014. Consumer Advisory Board.CommentsClose CommentsPermalink





Sec. 1015. Coordination.CommentsClose CommentsPermalink





Sec. 1016. Appearances before and reports to Congress.CommentsClose CommentsPermalink





Sec. 1017. Funding; penalties and fines.CommentsClose CommentsPermalink





Sec. 1018. Effective date.CommentsClose CommentsPermalink

Subtitle B--General Powers of the Bureau

Sec. 1021. Purpose, objectives, and functions.CommentsClose CommentsPermalink





Sec. 1022. Rulemaking authority.CommentsClose CommentsPermalink





Sec. 1023. Review of Bureau regulations.CommentsClose CommentsPermalink





Sec. 1024. Supervision of nondepository covered persons.CommentsClose CommentsPermalink





Sec. 1025. Supervision of very large banks, savings associations, and credit unions.CommentsClose CommentsPermalink





Sec. 1026. Other banks, savings associations, and credit unions.CommentsClose CommentsPermalink





Sec. 1027. Limitations on authorities of the Bureau; preservation of authorities.CommentsClose CommentsPermalink





Sec. 1028. Authority to restrict mandatory pre-dispute arbitration.CommentsClose CommentsPermalink





Sec. 1029. Effective date.CommentsClose CommentsPermalink

Subtitle C--Specific Bureau Authorities

Sec. 1031. Prohibiting unfair, deceptive, or abusive acts or practices.CommentsClose CommentsPermalink





Sec. 1032. Disclosures.CommentsClose CommentsPermalink





Sec. 1033. Consumer rights to access information.CommentsClose CommentsPermalink





Sec. 1034. Response to consumer complaints and inquiries.CommentsClose CommentsPermalink





Sec. 1035. Private education loan ombudsman.CommentsClose CommentsPermalink





Sec. 1036. Prohibited acts.CommentsClose CommentsPermalink





Sec. 1037. Effective date.CommentsClose CommentsPermalink

Subtitle D--Preservation of State Law

Sec. 1041. Relation to State law.CommentsClose CommentsPermalink





Sec. 1042. Preservation of enforcement powers of States.CommentsClose CommentsPermalink





Sec. 1043. Preservation of existing contracts.CommentsClose CommentsPermalink





Sec. 1044. State law preemption standards for national banks and subsidiaries clarified.CommentsClose CommentsPermalink





Sec. 1045. Clarification of law applicable to nondepository institution subsidiaries.CommentsClose CommentsPermalink





Sec. 1046. State law preemption standards for Federal savings associations and subsidiaries clarified.CommentsClose CommentsPermalink





Sec. 1047. Visitorial standards for national banks and savings associations.CommentsClose CommentsPermalink





Sec. 1048. Effective date.CommentsClose CommentsPermalink

Subtitle E--Enforcement Powers

Sec. 1051. Definitions.CommentsClose CommentsPermalink





Sec. 1052. Investigations and administrative discovery.CommentsClose CommentsPermalink





Sec. 1053. Hearings and adjudication proceedings.CommentsClose CommentsPermalink





Sec. 1054. Litigation authority.CommentsClose CommentsPermalink





Sec. 1055. Relief available.CommentsClose CommentsPermalink





Sec. 1056. Referrals for criminal proceedings.CommentsClose CommentsPermalink





Sec. 1057. Employee protection.CommentsClose CommentsPermalink





Sec. 1058. Effective date.CommentsClose CommentsPermalink

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

Sec. 1061. Transfer of consumer financial protection functions.CommentsClose CommentsPermalink





Sec. 1062. Designated transfer date.CommentsClose CommentsPermalink





Sec. 1063. Savings provisions.CommentsClose CommentsPermalink





Sec. 1064. Transfer of certain personnel.CommentsClose CommentsPermalink





Sec. 1065. Incidental transfers.CommentsClose CommentsPermalink





Sec. 1066. Interim authority of the Secretary.CommentsClose CommentsPermalink





Sec. 1067. Transition oversight.CommentsClose CommentsPermalink

Subtitle G--Regulatory Improvements

Sec. 1071. Collection of deposit account data.CommentsClose CommentsPermalink





Sec. 1072. Small business data collection.CommentsClose CommentsPermalink





Sec. 1073. GAO study on the effectiveness and impact of various appraisal methods.CommentsClose CommentsPermalink





Sec. 1074. Prohibition on certain prepayment penalties.CommentsClose CommentsPermalink





Sec. 1075. Assistance for economically vulnerable individuals and families.CommentsClose CommentsPermalink





Sec. 1076. Remittance transfers.CommentsClose CommentsPermalink

Subtitle H--Conforming Amendments

Sec. 1081. Amendments to the Inspector General Act.CommentsClose CommentsPermalink





Sec. 1082. Amendments to the Privacy Act of 1974.CommentsClose CommentsPermalink





Sec. 1083. Amendments to the Alternative Mortgage Transaction Parity Act of 1982.CommentsClose CommentsPermalink





Sec. 1084. Amendments to the Electronic Fund Transfer Act.CommentsClose CommentsPermalink





Sec. 1085. Amendments to the Equal Credit Opportunity Act.CommentsClose CommentsPermalink





Sec. 1086. Amendments to the Expedited Funds Availability Act.CommentsClose CommentsPermalink





Sec. 1087. Amendments to the Fair Credit Billing Act.CommentsClose CommentsPermalink





Sec. 1088. Amendments to the Fair Credit Reporting Act and the Fair and Accurate Credit Transactions Act.CommentsClose CommentsPermalink





Sec. 1089. Amendments to the Fair Debt Collection Practices Act.CommentsClose CommentsPermalink





Sec. 1090. Amendments to the Federal Deposit Insurance Act.CommentsClose CommentsPermalink





Sec. 1091. Amendments to the Gramm-Leach-Bliley Act.CommentsClose CommentsPermalink





Sec. 1092. Amendments to the Home Mortgage Disclosure Act.CommentsClose CommentsPermalink





Sec. 1093. Amendments to the Homeowners Protection Act of 1998.CommentsClose CommentsPermalink





Sec. 1094. Amendments to the Home Ownership and Equity Protection Act of 1994.CommentsClose CommentsPermalink





Sec. 1095. Amendments to the Omnibus Appropriations Act, 2009.CommentsClose CommentsPermalink





Sec. 1096. Amendments to the Real Estate Settlement Procedures Act.CommentsClose CommentsPermalink





Sec. 1097. Amendments to the Right to Financial Privacy Act of 1978.CommentsClose CommentsPermalink





Sec. 1098. Amendments to the Secure and Fair Enforcement for Mortgage Licensing Act of 2008.CommentsClose CommentsPermalink





Sec. 1099. Amendments to the Truth in Lending Act.CommentsClose CommentsPermalink





Sec. 1100. Amendments to the Truth in Savings Act.CommentsClose CommentsPermalink





Sec. 1101. Amendments to the Telemarketing and Consumer Fraud and Abuse Prevention Act.CommentsClose CommentsPermalink





Sec. 1102. Amendments to the Paperwork Reduction Act.CommentsClose CommentsPermalink





Sec. 1103. Adjustments for inflation in the Truth in Lending Act.CommentsClose CommentsPermalink





Sec. 1104. Effective date.CommentsClose CommentsPermalink

TITLE XI--FEDERAL RESERVE SYSTEM PROVISIONS

Sec. 1151. Federal Reserve Act amendments on emergency lending authority.CommentsClose CommentsPermalink





Sec. 1152. Reviews of special Federal Reserve credit facilities.CommentsClose CommentsPermalink





Sec. 1153. Public access to information.CommentsClose CommentsPermalink





Sec. 1154. Liquidity event determination.CommentsClose CommentsPermalink





Sec. 1155. Emergency financial stabilization.CommentsClose CommentsPermalink





Sec. 1156. Additional related amendments.CommentsClose CommentsPermalink





Sec. 1157. Federal Reserve Act amendments on Federal reserve bank governance.CommentsClose CommentsPermalink





Sec. 1158. Amendments to the Federal Reserve Act relating to supervision and regulation policy.CommentsClose CommentsPermalink

TITLE XII--IMPROVING ACCESS TO MAINSTREAM FINANCIAL INSTITUTIONS

Sec. 1201. Short title.CommentsClose CommentsPermalink





Sec. 1202. Purpose.CommentsClose CommentsPermalink





Sec. 1203. Definitions.CommentsClose CommentsPermalink





Sec. 1204. Expanded access to mainstream financial institutions.CommentsClose CommentsPermalink





Sec. 1205. Low-cost alternatives to payday loans.CommentsClose CommentsPermalink





Sec. 1206. Grants to establish loan-loss reserve funds.CommentsClose CommentsPermalink





Sec. 1207. Procedural provisions.CommentsClose CommentsPermalink





Sec. 1208. Authorization of appropriations.CommentsClose CommentsPermalink





Sec. 1209. Regulations.CommentsClose CommentsPermalink





Sec. 1210. Evaluation and reports to Congress.CommentsClose CommentsPermalink

SEC. 2. DEFINITIONS.

As used in this Act, the following definitions shall apply, except as the context otherwise requires or as otherwise specifically provided in this Act:CommentsClose CommentsPermalink





(1) AFFILIATE- The term ‘affiliate’ means any company that controls, is controlled by, or is under common control with another company.CommentsClose CommentsPermalink





(2) APPROPRIATE FEDERAL BANKING AGENCY- On and after the transfer date, the term ‘appropriate Federal banking agency’ has the same meaning as in section 3(q) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)), as amended by title III.CommentsClose CommentsPermalink





(3) BOARD OF GOVERNORS- The term ‘Board of Governors’ means the Board of Governors of the Federal Reserve System.CommentsClose CommentsPermalink





(4) BUREAU- The term ‘Bureau’ means the Bureau of Consumer Financial Protection established under title X.CommentsClose CommentsPermalink





(5) COMMISSION- The term ‘Commission’ means the Securities and Exchange Commission, except in the context of the Commodity Futures Trading Commission.CommentsClose CommentsPermalink





(6) CORPORATION- The term ‘Corporation’ means the Federal Deposit Insurance Corporation.CommentsClose CommentsPermalink





(7) COUNCIL- The term ‘Council’ means the Financial Stability Oversight Council established under title I.CommentsClose CommentsPermalink





(8) CREDIT UNION- The term ‘credit union’ means a Federal credit union, State credit union, or State-chartered credit union, as those terms are defined in section 101 of the Federal Credit Union Act (12 U.S.C. 1752).CommentsClose CommentsPermalink





(9) FEDERAL BANKING AGENCY- The term--CommentsClose CommentsPermalink





(A) ‘Federal banking agency’ means, individually, the Board of Governors, the Office of the Comptroller of the Currency, and the Corporation; andCommentsClose CommentsPermalink





(B) ‘Federal banking agencies’ means all of the agencies referred to in subparagraph (A), collectively.CommentsClose CommentsPermalink





(10) FUNCTIONALLY REGULATED SUBSIDIARY- The term ‘functionally regulated subsidiary’ has the same meaning as in section 5(c)(5) of the Bank Holding Company Act of 1956 (12 U.S.C. 1844(c)(5)).CommentsClose CommentsPermalink





(11) PRIMARY FINANCIAL REGULATORY AGENCY- The term ‘primary financial regulatory agency’ means--CommentsClose CommentsPermalink





(A) the appropriate Federal banking agency, with respect to institutions described in section 3(q) of the Federal Deposit Insurance Act, except to the extent that an institution is or the activities of an institution are otherwise subject to the jurisdiction of an agency listed in subparagraph (B), (C), (D), or (E);CommentsClose CommentsPermalink





(B) the Securities and Exchange Commission, with respect to--CommentsClose CommentsPermalink





(i) any broker or dealer that is registered with the Commission under the Securities Exchange Act of 1934;CommentsClose CommentsPermalink





(ii) any investment company that is registered with the Commission under the Investment Company Act of 1940;CommentsClose CommentsPermalink





(iii) any investment adviser that is registered with the Commission under the Investment Advisers Act of 1940, with respect to the investment advisory activities of such company and activities that are incidental to such advisory activities; andCommentsClose CommentsPermalink





(iv) any clearing agency registered with the Commission under the Securities Exchange Act of 1934;CommentsClose CommentsPermalink





(C) the Commodity Futures Trading Commission, with respect to any futures commission merchant, any commodity trading adviser, and any commodity pool operator registered with the Commodity Futures Trading Commission under the Commodity Exchange Act, with respect to the commodities activities of such entity and activities that are incidental to such commodities activities;CommentsClose CommentsPermalink





(D) the State insurance authority of the State in which an insurance company is domiciled, with respect to the insurance activities and activities that are incidental to such insurance activities of an insurance company that is subject to supervision by the State insurance authority under State insurance law; andCommentsClose CommentsPermalink





(E) the Federal Housing Finance Agency, with respect to Federal Home Loan Banks or the Federal Home Loan Bank System, and with respect to the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation.CommentsClose CommentsPermalink





(12) PRUDENTIAL STANDARDS- The term ‘prudential standards’ means enhanced supervision and regulatory standards developed by the Board of Governors under section 115 or 165.CommentsClose CommentsPermalink





(13) SECRETARY- The term ‘Secretary’ means the Secretary of the Treasury.CommentsClose CommentsPermalink





(14) SECURITIES TERMS- The--CommentsClose CommentsPermalink





(A) terms ‘broker’, ‘dealer’, ‘issuer’, ‘nationally recognized statistical ratings organization’, ‘security’, and ‘securities laws’ have the same meanings as in section 3 of the Securities Exchange Act of 1934 (15 U.S.C. 78c);CommentsClose CommentsPermalink





(B) term ‘investment adviser’ has the same meaning as in section 202 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-2); andCommentsClose CommentsPermalink





(C) term ‘investment company’ has the same meaning as in section 3 of the Investment Company Act of 1940 (15 U.S.C. 80a-3).CommentsClose CommentsPermalink





(15) STATE- The term ‘State’ means any State, commonwealth, territory, or possession of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, American Samoa, Guam, or the United States Virgin Islands.CommentsClose CommentsPermalink





(16) TRANSFER DATE- The term ‘transfer date’ means the date established under section 311.CommentsClose CommentsPermalink





(17) OTHER INCORPORATED DEFINITIONS-CommentsClose CommentsPermalink





(A) FEDERAL DEPOSIT INSURANCE ACT- The terms ‘affiliate’, ‘bank’, ‘bank holding company’, ‘control’ (when used with respect to a depository institution), ‘deposit’, ‘depository institution’, ‘Federal depository institution’, ‘Federal savings association’, ‘foreign bank’, ‘including’, ‘insured branch’, ‘insured depository institution’, ‘national member bank’, ‘national nonmember bank’, ‘savings association’, ‘State bank’, ‘State depository institution’, ‘State member bank’, ‘State nonmember bank’, ‘State savings association’, and ‘subsidiary’ have the same meanings as in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813).CommentsClose CommentsPermalink





(B) HOLDING COMPANIES- The term--CommentsClose CommentsPermalink





(i) ‘bank holding company’ has the same meaning as in section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841);CommentsClose CommentsPermalink





(ii) ‘financial holding company’ has the same meaning as in section 2(p) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(p)); andCommentsClose CommentsPermalink





(iii) ‘savings and loan holding company’ has the same meaning as in section 10 of the Home Owners’ Loan Act (12 U.S.C. 1467a(a)).CommentsClose CommentsPermalink

SEC. 3. SEVERABILITY.

If any provision of this Act, an amendment made by this Act, or the application of such provision or amendment to any person or circumstance is held to be unconstitutional, the remainder of this Act, the amendments made by this Act, and the application of the provisions of such to any person or circumstance shall not be affected thereby.CommentsClose CommentsPermalink

SEC. 4. EFFECTIVE DATE.

Except as otherwise specifically provided in this Act or the amendments made by this Act, this Act and such amendments shall take effect 1 day after the date of enactment of this Act.CommentsClose CommentsPermalink

TITLE I--FINANCIAL STABILITYCommentsClose CommentsPermalink

SEC. 101. SHORT TITLE.

This title may be cited as the ‘Financial Stability Act of 2010’.CommentsClose CommentsPermalink

SEC. 102. DEFINITIONS.

(a) In General- For purposes of this title, unless the context otherwise requires, the following definitions shall apply:CommentsClose CommentsPermalink





(1) BANK HOLDING COMPANY- The term ‘bank holding company’ has the same meaning as in section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841). A foreign bank or company that is treated as a bank holding company for purposes of the Bank Holding Company Act of 1956, pursuant to section 8(a) of the International Banking Act of 1978 (12 U.S.C. 3106(a)), shall be treated as a bank holding company for purposes of this title.CommentsClose CommentsPermalink





(2) CHAIRPERSON- The term ‘Chairperson’ means the Chairperson of the Council.CommentsClose CommentsPermalink





(3) MEMBER AGENCY- The term ‘member agency’ means an agency represented by a voting member of the Council.CommentsClose CommentsPermalink





(4) NONBANK FINANCIAL COMPANY DEFINITIONS-CommentsClose CommentsPermalink





(A) FOREIGN NONBANK FINANCIAL COMPANY- The term ‘foreign nonbank financial company’ means a company (other than a company that is, or is treated in the United States as, a bank holding company or a subsidiary thereof) that is--CommentsClose CommentsPermalink





(i) incorporated or organized in a country other than the United States; andCommentsClose CommentsPermalink





(ii) substantially engaged in, including through a branch in the United States, activities in the United States that are financial in nature (as defined in section 4(k) of the Bank Holding Company Act of 1956).CommentsClose CommentsPermalink





(B) U.S. NONBANK FINANCIAL COMPANY- The term ‘U.S. nonbank financial company’ means a company (other than a bank holding company or a subsidiary thereof, or a Farm Credit System institution chartered and subject to the provisions of the Farm Credit Act of 1971 (12 U.S.C. 2001 et. seq.)) that is--CommentsClose CommentsPermalink





(i) incorporated or organized under the laws of the United States or any State; andCommentsClose CommentsPermalink





(ii) substantially engaged in activities in the United States that are financial in nature (as defined in section 4(k) of the Bank Holding Company Act of 1956).CommentsClose CommentsPermalink





(C) NONBANK FINANCIAL COMPANY- The term ‘nonbank financial company’ means a U.S. nonbank financial company and a foreign nonbank financial company.CommentsClose CommentsPermalink





(D) NONBANK FINANCIAL COMPANY SUPERVISED BY THE BOARD OF GOVERNORS- The term ‘nonbank financial company supervised by the Board of Governors’ means a nonbank financial company that the Council has determined under section 113 shall be supervised by the Board of Governors.CommentsClose CommentsPermalink





(5) OFFICE OF FINANCIAL RESEARCH- The term ‘Office of Financial Research’ means the office established under section 152.CommentsClose CommentsPermalink





(6) SIGNIFICANT INSTITUTIONS- The terms ‘significant nonbank financial company’ and ‘significant bank holding company’ have the meanings given those terms by rule of the Board of Governors.CommentsClose CommentsPermalink





(b) Definitional Criteria- The Board of Governors shall establish, by regulation, the criteria to determine whether a company is substantially engaged in activities in the United States that are financial in nature (as defined in section 4(k) of the Bank Holding Company Act of 1956) for purposes of the definitions of the terms ‘U.S. nonbank financial company’ and ‘foreign nonbank financial company’ under subsection (a)(4).CommentsClose CommentsPermalink





(c) Foreign Nonbank Financial Companies- For purposes of the authority of the Board of Governors under this title with respect to foreign nonbank financial companies, references in this title to ‘company’ or ‘subsidiary’ include only the United States activities and subsidiaries of such foreign company.CommentsClose CommentsPermalink

Subtitle A--Financial Stability Oversight CouncilCommentsClose CommentsPermalink

SEC. 111. FINANCIAL STABILITY OVERSIGHT COUNCIL ESTABLISHED.

(a) Establishment- Effective on the date of enactment of this Act, there is established the Financial Stability Oversight Council.CommentsClose CommentsPermalink





(b) Membership- The Council shall consist of the following members:CommentsClose CommentsPermalink





(1) VOTING MEMBERS- The voting members, who shall each have 1 vote on the Council shall be--CommentsClose CommentsPermalink





(A) the Secretary of the Treasury, who shall serve as Chairperson of the Council;CommentsClose CommentsPermalink





(B) the Chairman of the Board of Governors;CommentsClose CommentsPermalink





(C) the Comptroller of the Currency;CommentsClose CommentsPermalink





(D) the Director of the Bureau;CommentsClose CommentsPermalink





(E) the Chairman of the Commission;CommentsClose CommentsPermalink





(F) the Chairperson of the Corporation;CommentsClose CommentsPermalink





(G) the Chairperson of the Commodity Futures Trading Commission;CommentsClose CommentsPermalink





(H) the Director of the Federal Housing Finance Agency; andCommentsClose CommentsPermalink





(I) an independent member appointed by the President, by and with the advice and consent of the Senate, having insurance expertise.CommentsClose CommentsPermalink





(2) NONVOTING MEMBERS- The Director of the Office of Financial Research--CommentsClose CommentsPermalink





(A) shall serve in an advisory capacity as a nonvoting member of the Council; andCommentsClose CommentsPermalink





(B) may not be excluded from any of the proceedings, meetings, discussions, or deliberations of the Council.CommentsClose CommentsPermalink





(c) Terms; Vacancy-CommentsClose CommentsPermalink





(1) TERMS- The independent member of the Council shall serve for a term of 6 years.CommentsClose CommentsPermalink





(2) VACANCY- Any vacancy on the Council shall be filled in the manner in which the original appointment was made.CommentsClose CommentsPermalink





(3) ACTING OFFICIALS MAY SERVE- In the event of a vacancy in the office of the head of a member agency or department, and pending the appointment of a successor, or during the absence or disability of the head of a member agency or department, the acting head of the member agency or department shall serve as a member of the Council in the place of that agency or department head.CommentsClose CommentsPermalink





(d) Technical and Professional Advisory Committees- The Council may appoint such special advisory, technical, or professional committees as may be useful in carrying out the functions of the Council, including an advisory committee consisting of State regulators, and the members of such committees may be members of the Council, or other persons, or both.CommentsClose CommentsPermalink





(e) Meetings-CommentsClose CommentsPermalink





(1) TIMING- The Council shall meet at the call of the Chairperson or a majority of the members then serving, but not less frequently than quarterly.CommentsClose CommentsPermalink





(2) RULES FOR CONDUCTING BUSINESS- The Council shall adopt such rules as may be necessary for the conduct of the business of the Council. Such rules shall be rules of agency organization, procedure, or practice for purposes of section 553 of title 5, United States Code.CommentsClose CommentsPermalink





(f) Voting- Unless otherwise specified, the Council shall make all decisions that it is authorized or required to make by a majority vote of the members then serving.CommentsClose CommentsPermalink





(g) Nonapplicability of FACA- The Federal Advisory Committee Act (5 U.S.C. App.) shall not apply to the Council, or to any special advisory, technical, or professional committee appointed by the Council, except that, if an advisory, technical, or professional committee has one or more members who are not employees of or affiliated with the United States Government, the Council shall publish a list of the names of the members of such committee.CommentsClose CommentsPermalink





(h) Assistance From Federal Agencies- Any department or agency of the United States may provide to the Council and any special advisory, technical, or professional committee appointed by the Council, such services, funds, facilities, staff, and other support services as the Council may determine advisable.CommentsClose CommentsPermalink





(i) Compensation of Members-CommentsClose CommentsPermalink





(1) FEDERAL EMPLOYEE MEMBERS- All members of the Council who are officers or employees of the United States shall serve without compensation in addition to that received for their services as officers or employees of the United States.CommentsClose CommentsPermalink





(2) COMPENSATION FOR NON-FEDERAL MEMBER- Section 5314 of title 5, United States Code, is amended by adding at the end the following:CommentsClose CommentsPermalink





‘Independent Member of the Financial Stability Oversight Council (1).’.CommentsClose CommentsPermalink





(j) Detail of Government Employees- Any employee of the Federal Government may be detailed to the Council without reimbursement, and such detail shall be without interruption or loss of civil service status or privilege. An employee of the Federal Government detailed to the Council shall report to and be subject to oversight by the Council during the assignment to the Council, and shall be compensated by the department or agency from which the employee was detailed.CommentsClose CommentsPermalink

SEC. 112. COUNCIL AUTHORITY.

(a) Purposes and Duties of the Council-CommentsClose CommentsPermalink





(1) IN GENERAL- The purposes of the Council are--CommentsClose CommentsPermalink





(A) to identify risks to the financial stability of the United States that could arise from the material financial distress or failure of large, interconnected bank holding companies or nonbank financial companies;CommentsClose CommentsPermalink





(B) to promote market discipline, by eliminating expectations on the part of shareholders, creditors, and counterparties of such companies that the Government will shield them from losses in the event of failure; andCommentsClose CommentsPermalink





(C) to respond to emerging threats to the stability of the United States financial markets.CommentsClose CommentsPermalink





(2) DUTIES- The Council shall, in accordance with this title--CommentsClose CommentsPermalink





(A) collect information from member agencies and other Federal and State financial regulatory agencies and, if necessary to assess risks to the United States financial system, direct the Office of Financial Research to collect information from bank holding companies and nonbank financial companies;CommentsClose CommentsPermalink





(B) provide direction to, and request data and analyses from, the Office of Financial Research to support the work of the Council;CommentsClose CommentsPermalink





(C) monitor the financial services marketplace in order to identify potential threats to the financial stability of the United States;CommentsClose CommentsPermalink





(D) facilitate information sharing and coordination among the member agencies and other Federal and State agencies regarding domestic financial services policy development, rulemaking, examinations, reporting requirements, and enforcement actions;CommentsClose CommentsPermalink





(E) recommend to the member agencies general supervisory priorities and principles reflecting the outcome of discussions among the member agencies;CommentsClose CommentsPermalink





(F) identify gaps in regulation that could pose risks to the financial stability of the United States;CommentsClose CommentsPermalink





(G) require supervision by the Board of Governors for nonbank financial companies that may pose risks to the financial stability of the United States in the event of their material financial distress or failure, pursuant to section 113;CommentsClose CommentsPermalink





(H) make recommendations to the Board of Governors concerning the establishment of heightened prudential standards for risk-based capital, leverage, liquidity, contingent capital, resolution plans and credit exposure reports, concentration limits, enhanced public disclosures, and overall risk management for nonbank financial companies and large, interconnected bank holding companies supervised by the Board of Governors;CommentsClose CommentsPermalink





(I) identify systemically important financial market utilities and payment, clearing, and settlement activities (as that term is defined in title VIII), and require such utilities and activities to be subject to standards established by the Board of Governors;CommentsClose CommentsPermalink





(J) make recommendations to primary financial regulatory agencies to apply new or heightened standards and safeguards for financial activities or practices that could create or increase risks of significant liquidity, credit, or other problems spreading among bank holding companies, nonbank financial companies, and United States financial markets;CommentsClose CommentsPermalink





(K) make determinations regarding exemptions in title VII, where necessary;CommentsClose CommentsPermalink





(L) provide a forum for--CommentsClose CommentsPermalink





(i) discussion and analysis of emerging market developments and financial regulatory issues; andCommentsClose CommentsPermalink





(ii) resolution of jurisdictional disputes among the members of the Council; andCommentsClose CommentsPermalink





(M) annually report to and testify before Congress on--CommentsClose CommentsPermalink





(i) the activities of the Council;CommentsClose CommentsPermalink





(ii) significant financial market developments and potential emerging threats to the financial stability of the United States;CommentsClose CommentsPermalink





(iii) all determinations made under section 113 or title VIII, and the basis for such determinations; andCommentsClose CommentsPermalink





(iv) recommendations--CommentsClose CommentsPermalink





(I) to enhance the integrity, efficiency, competitiveness, and stability of United States financial markets;CommentsClose CommentsPermalink





(II) to promote market discipline; andCommentsClose CommentsPermalink





(III) to maintain investor confidence.CommentsClose CommentsPermalink





(b) Authority To Obtain Information-CommentsClose CommentsPermalink





(1) IN GENERAL- The Council may receive, and may request the submission of, any data or information from the Office of Financial Research and member agencies, as necessary--CommentsClose CommentsPermalink





(A) to monitor the financial services marketplace to identify potential risks to the financial stability of the United States; orCommentsClose CommentsPermalink





(B) to otherwise carry out any of the provisions of this title.CommentsClose CommentsPermalink





(2) SUBMISSIONS BY THE OFFICE AND MEMBER AGENCIES- Notwithstanding any other provision of law, the Office of Financial Research and any member agency are authorized to submit information to the Council.CommentsClose CommentsPermalink





(3) FINANCIAL DATA COLLECTION-CommentsClose CommentsPermalink





(A) IN GENERAL- The Council, acting through the Office of Financial Research, may require the submission of periodic and other reports from any nonbank financial company or bank holding company for the purpose of assessing the extent to which a financial activity or financial market in which the nonbank financial company or bank holding company participates, or the nonbank financial company or bank holding company itself, poses a threat to the financial stability of the United States.CommentsClose CommentsPermalink





(B) MITIGATION OF REPORT BURDEN- Before requiring the submission of reports from any nonbank financial company or bank holding company that is regulated by a member agency or any primary financial regulatory agency, the Council, acting through the Office of Financial Research, shall coordinate with such agencies and shall, whenever possible, rely on information available from the Office of Financial Research or such agencies.CommentsClose CommentsPermalink





(4) BACK-UP EXAMINATION BY THE BOARD OF GOVERNORS- If the Council is unable to determine whether the financial activities of a nonbank financial company pose a threat to the financial stability of the United States, based on information or reports obtained under paragraph (3), discussions with management, and publicly available information, the Council may request the Board of Governors, and the Board of Governors is authorized, to conduct an examination of the nonbank financial company for the sole purpose of determining whether the nonbank financial company should be supervised by the Board of Governors for purposes of this title.CommentsClose CommentsPermalink





(5) CONFIDENTIALITY-CommentsClose CommentsPermalink





(A) IN GENERAL- The Council, the Office of Financial Research, and the other member agencies shall maintain the confidentiality of any data, information, and reports submitted under this subsection and subtitle B.CommentsClose CommentsPermalink





(B) RETENTION OF PRIVILEGE- The submission of any nonpublicly available data or information under this subsection and subtitle B shall not constitute a waiver of, or otherwise affect, any privilege arising under Federal or State law (including the rules of any Federal or State court) to which the data or information is otherwise subject.CommentsClose CommentsPermalink





(C) FREEDOM OF INFORMATION ACT- Section 552 of title 5, United States Code, including the exceptions thereunder, shall apply to any data or information submitted under this subsection and subtitle B.CommentsClose CommentsPermalink

SEC. 113. AUTHORITY TO REQUIRE SUPERVISION AND REGULATION OF CERTAIN NONBANK FINANCIAL COMPANIES.

(a) U.S. Nonbank Financial Companies Supervised by the Board of Governors-CommentsClose CommentsPermalink





(1) DETERMINATION- The Council, on a nondelegable basis and by a vote of not fewer than 2/3 of the members then serving, including an affirmative vote by the Chairperson, may determine that a U.S. nonbank financial company shall be supervised by the Board of Governors and shall be subject to prudential standards, in accordance with this title, if the Council determines that material financial distress at the U.S. nonbank financial company would pose a threat to the financial stability of the United States.CommentsClose CommentsPermalink





(2) CONSIDERATIONS- Each determination under paragraph (1) shall be based on a consideration by the Council of--CommentsClose CommentsPermalink





(A) the degree of leverage of the company;CommentsClose CommentsPermalink





(B) the amount and nature of the financial assets of the company;CommentsClose CommentsPermalink





(C) the amount and types of the liabilities of the company, including the degree of reliance on short-term funding;CommentsClose CommentsPermalink





(D) the extent and types of the off-balance-sheet exposures of the company;CommentsClose CommentsPermalink





(E) the extent and types of the transactions and relationships of the company with other significant nonbank financial companies and significant bank holding companies;CommentsClose CommentsPermalink





(F) the importance of the company as a source of credit for households, businesses, and State and local governments and as a source of liquidity for the United States financial system;CommentsClose CommentsPermalink





(G) the recommendation, if any, of a member of the Council;CommentsClose CommentsPermalink





(H) the operation of, or ownership interest in, any clearing, settlement, or payment business of the company;CommentsClose CommentsPermalink





(I) the extent to which--CommentsClose CommentsPermalink





(i) assets are managed rather than owned by the company; andCommentsClose CommentsPermalink





(ii) ownership of assets under management is diffuse; andCommentsClose CommentsPermalink





(J) any other factors that the Council deems appropriate.CommentsClose CommentsPermalink





(b) Foreign Nonbank Financial Companies Supervised by the Board of Governors-CommentsClose CommentsPermalink





(1) DETERMINATION- The Council, on a nondelegable basis and by a vote of not fewer than 2/3 of the members then serving, including an affirmative vote by the Chairperson, may determine that a foreign nonbank financial company that has substantial assets or operations in the United States shall be supervised by the Board of Governors and shall be subject to prudential standards in accordance with this title, if the Council determines that material financial distress at the foreign nonbank financial company would pose a threat to the financial stability of the United States.CommentsClose CommentsPermalink





(2) CONSIDERATIONS- Each determination under paragraph (1) shall be based on a consideration by the Council of--CommentsClose CommentsPermalink





(A) the degree of leverage of the company;CommentsClose CommentsPermalink





(B) the amount and nature of the United States financial assets of the company;CommentsClose CommentsPermalink





(C) the amount and types of the liabilities of the company used to fund activities and operations in the United States, including the degree of reliance on short-term funding;CommentsClose CommentsPermalink





(D) the extent of the United States-related off-balance-sheet exposure of the company;CommentsClose CommentsPermalink





(E) the extent and type of the transactions and relationships of the company with other significant nonbank financial companies and bank holding companies;CommentsClose CommentsPermalink





(F) the importance of the company as a source of credit for United States households, businesses, and State and local governments, and as a source of liquidity for the United States financial system;CommentsClose CommentsPermalink





(G) the recommendation, if any, of a member of the Council;CommentsClose CommentsPermalink





(H) the extent to which--CommentsClose CommentsPermalink





(i) assets are managed rather than owned by the company; andCommentsClose CommentsPermalink





(ii) ownership of assets under management is diffuse; andCommentsClose CommentsPermalink





(I) any other factors that the Council deems appropriate.CommentsClose CommentsPermalink





(c) Reevaluation and Rescission- The Council shall--CommentsClose CommentsPermalink





(1) not less frequently than annually, reevaluate each determination made under subsections (a) and (b) with respect to each nonbank financial company supervised by the Board of Governors; andCommentsClose CommentsPermalink





(2) rescind any such determination, if the Council, by a vote of not fewer than 2/3 of the members then serving, including an affirmative vote by the Chairperson, determines that the nonbank financial company no longer meets the standards under subsection (a) or (b), as applicable.CommentsClose CommentsPermalink





(d) Notice and Opportunity for Hearing and Final Determination-CommentsClose CommentsPermalink





(1) IN GENERAL- The Council shall provide to a nonbank financial company written notice of a proposed determination of the Council, including an explanation of the basis of the proposed determination of the Council, that such nonbank financial company shall be supervised by the Board of Governors and shall be subject to prudential standards in accordance with this title.CommentsClose CommentsPermalink





(2) HEARING- Not later than 30 days after the date of receipt of any notice of a proposed determination under paragraph (1), the nonbank financial company may request, in writing, an opportunity for a written or oral hearing before the Council to contest the proposed determination. Upon receipt of a timely request, the Council shall fix a time (not later than 30 days after the date of receipt of the request) and place at which such company may appear, personally or through counsel, to submit written materials (or, at the sole discretion of the Council, oral testimony and oral argument).CommentsClose CommentsPermalink





(3) FINAL DETERMINATION- Not later than 60 days after the date of a hearing under paragraph (2), the Council shall notify the nonbank financial company of the final determination of the Council, which shall contain a statement of the basis for the decision of the Council.CommentsClose CommentsPermalink





(4) NO HEARING REQUESTED- If a nonbank financial company does not make a timely request for a hearing, the Council shall notify the nonbank financial company, in writing, of the final determination of the Council under subsection (a) or (b), as applicable, not later than 10 days after the date by which the company may request a hearing under paragraph (2).CommentsClose CommentsPermalink





(e) Emergency Exception-CommentsClose CommentsPermalink





(1) IN GENERAL- The Council may waive or modify the requirements of subsection (d) with respect to a nonbank financial company, if the Council determines, by a vote of not fewer than 2/3 of the members then serving, including an affirmative vote by the Chairperson, that such waiver or modification is necessary or appropriate to prevent or mitigate threats posed by the nonbank financial company to the financial stability of the United States.CommentsClose CommentsPermalink





(2) NOTICE- The Council shall provide notice of a waiver or modification under this paragraph to the nonbank financial company concerned as soon as practicable, but not later than 24 hours after the waiver or modification is granted.CommentsClose CommentsPermalink





(3) OPPORTUNITY FOR HEARING- The Council shall allow a nonbank financial company to request, in writing, an opportunity for a written or oral hearing before the Council to contest a waiver or modification under this paragraph, not later than 10 days after the date of receipt of notice of the waiver or modification by the company. Upon receipt of a timely request, the Council shall fix a time (not later than 15 days after the date of receipt of the request) and place at which the nonbank financial company may appear, personally or through counsel, to submit written materials (or, at the sole discretion of the Council, oral testimony and oral argument).CommentsClose CommentsPermalink





(4) NOTICE OF FINAL DETERMINATION- Not later than 30 days after the date of any hearing under paragraph (3), the Council shall notify the subject nonbank financial company of the final determination of the Council under this paragraph, which shall contain a statement of the basis for the decision of the Council.CommentsClose CommentsPermalink





(f) Consultation- The Council shall consult with the primary financial regulatory agency, if any, for each nonbank financial company or subsidiary of a nonbank financial company that is being considered for supervision by the Board of Governors under this section before the Council makes any final determination with respect to such nonbank financial company under subsection (a), (b), or (c).CommentsClose CommentsPermalink





(g) Judicial Review- If the Council makes a final determination under this section with respect to a nonbank financial company, such nonbank financial company may, not later than 30 days after the date of receipt of the notice of final determination under subsection (d)(3) or (e)(4), bring an action in the United States district court for the judicial district in which the home office of such nonbank financial company is located, or in the United States District Court for the District of Columbia, for an order requiring that the final determination be rescinded, and the court shall, upon review, dismiss such action or direct the final determination to be rescinded. Review of such an action shall be limited to whether the final determination made under this section was arbitrary and capricious.CommentsClose CommentsPermalink

SEC. 114. REGISTRATION OF NONBANK FINANCIAL COMPANIES SUPERVISED BY THE BOARD OF GOVERNORS.

Not later than 180 days after the date of a final Council determination under section 113 that a nonbank financial company is to be supervised by the Board of Governors, such company shall register with the Board of Governors, on forms prescribed by the Board of Governors, which shall include such information as the Board of Governors, in consultation with the Council, may deem necessary or appropriate to carry out this title.CommentsClose CommentsPermalink

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

(a) In General-CommentsClose CommentsPermalink





(1) PURPOSE- In order to prevent or mitigate risks to the financial stability of the United States that could arise from the material financial distress or failure of large, interconnected financial institutions, the Council may make recommendations to the Board of Governors concerning the establishment and refinement of prudential standards and reporting and disclosure requirements applicable to nonbank financial companies supervised by the Board of Governors and large, interconnected bank holding companies, that--CommentsClose CommentsPermalink





(A) are more stringent than those applicable to other nonbank financial companies and bank holding companies that do not present similar risks to the financial stability of the United States; andCommentsClose CommentsPermalink





(B) increase in stringency, based on the considerations identified in subsection (b)(3).CommentsClose CommentsPermalink





(2) LIMITATION ON BANK HOLDING COMPANIES- Any standards recommended under subsections (b) through (f) shall not apply to any bank holding company with total consolidated assets of less than $50,000,000,000. The Council may recommend an asset threshold greater than $50,000,000,000 for the applicability of any particular standard under those subsections.CommentsClose CommentsPermalink





(b) Development of Prudential Standards-CommentsClose CommentsPermalink





(1) IN GENERAL- The recommendations of the Council under subsection (a) may include--CommentsClose CommentsPermalink





(A) risk-based capital requirements;CommentsClose CommentsPermalink





(B) leverage limits;CommentsClose CommentsPermalink





(C) liquidity requirements;CommentsClose CommentsPermalink





(D) resolution plan and credit exposure report requirements;CommentsClose CommentsPermalink





(E) concentration limits;CommentsClose CommentsPermalink





(F) a contingent capital requirement;CommentsClose CommentsPermalink





(G) enhanced public disclosures; andCommentsClose CommentsPermalink





(H) overall risk management requirements.CommentsClose CommentsPermalink





(2) PRUDENTIAL STANDARDS FOR FOREIGN FINANCIAL COMPANIES- In making recommendations concerning the standards set forth in paragraph (1) that would apply to foreign nonbank financial companies supervised by the Board of Governors or foreign-based bank holding companies, the Council shall give due regard to the principle of national treatment and competitive equity.CommentsClose CommentsPermalink





(3) CONSIDERATIONS- In making recommendations concerning prudential standards under paragraph (1), the Council shall--CommentsClose CommentsPermalink





(A) take into account differences among nonbank financial companies supervised by the Board of Governors and bank holding companies described in subsection (a), based on--CommentsClose CommentsPermalink





(i) the factors described in subsections (a) and (b) of section 113;CommentsClose CommentsPermalink





(ii) whether the company owns an insured depository institution;CommentsClose CommentsPermalink





(iii) nonfinancial activities and affiliations of the company; andCommentsClose CommentsPermalink





(iv) any other factors that the Council determines appropriate; andCommentsClose CommentsPermalink





(B) to the extent possible, ensure that small changes in the factors listed in subsections (a) and (b) of section 113 would not result in sharp, discontinuous changes in the prudential standards established under paragraph (1).CommentsClose CommentsPermalink





(c) Contingent Capital-CommentsClose CommentsPermalink





(1) STUDY REQUIRED- The Council shall conduct a study of the feasibility, benefits, costs, and structure of a contingent capital requirement for nonbank financial companies supervised by the Board of Governors and bank holding companies described in subsection (a), which study shall include--CommentsClose CommentsPermalink





(A) an evaluation of the degree to which such requirement would enhance the safety and soundness of companies subject to the requirement, promote the financial stability of the United States, and reduce risks to United States taxpayers;CommentsClose CommentsPermalink





(B) an evaluation of the characteristics and amounts of convertible debt that should be required;CommentsClose CommentsPermalink





(C) an analysis of potential prudential standards that should be used to determine whether the contingent capital of a company would be converted to equity in times of financial stress;CommentsClose CommentsPermalink





(D) an evaluation of the costs to companies, the effects on the structure and operation of credit and other financial markets, and other economic effects of requiring contingent capital;CommentsClose CommentsPermalink





(E) an evaluation of the effects of such requirement on the international competitiveness of companies subject to the requirement and the prospects for international coordination in establishing such requirement; andCommentsClose CommentsPermalink





(F) recommendations for implementing regulations.CommentsClose CommentsPermalink





(2) REPORT- The Council shall submit a report to Congress regarding the study required by paragraph (1) not later than 2 years after the date of enactment of this Act.CommentsClose CommentsPermalink





(3) RECOMMENDATIONS-CommentsClose CommentsPermalink





(A) IN GENERAL- Subsequent to submitting a report to Congress under paragraph (2), the Council may make recommendations to the Board of Governors to require any nonbank financial company supervised by the Board of Governors and any bank holding company described in subsection (a) to maintain a minimum amount of long-term hybrid debt that is convertible to equity in times of financial stress.CommentsClose CommentsPermalink





(B) FACTORS TO CONSIDER- In making recommendations under this subsection, the Council shall consider--CommentsClose CommentsPermalink





(i) an appropriate transition period for implementation of a conversion under this subsection;CommentsClose CommentsPermalink





(ii) the factors described in subsection (b)(3);CommentsClose CommentsPermalink





(iii) capital requirements applicable to a nonbank financial company supervised by the Board of Governors or a bank holding company described in subsection (a), and subsidiaries thereof;CommentsClose CommentsPermalink





(iv) results of the study required by paragraph (1); andCommentsClose CommentsPermalink





(v) any other factor that the Council deems appropriate.CommentsClose CommentsPermalink





(d) Resolution Plan and Credit Exposure Reports-CommentsClose CommentsPermalink





(1) RESOLUTION PLAN- The Council may make recommendations to the Board of Governors concerning the requirement that each nonbank financial company supervised by the Board of Governors and each bank holding company described in subsection (a) report periodically to the Council, the Board of Governors, and the Corporation, the plan of such company for rapid and orderly resolution in the event of material financial distress or failure.CommentsClose CommentsPermalink





(2) CREDIT EXPOSURE REPORT- The Council may make recommendations to the Board of Governors concerning the advisability of requiring each nonbank financial company supervised by the Board of Governors and bank holding company described in subsection (a) to report periodically to the Council, the Board of Governors, and the Corporation on--CommentsClose CommentsPermalink





(A) the nature and extent to which the company has credit exposure to other significant nonbank financial companies and significant bank holding companies; andCommentsClose CommentsPermalink





(B) the nature and extent to which other such significant nonbank financial companies and significant bank holding companies have credit exposure to that company.CommentsClose CommentsPermalink





(e) Concentration Limits- In order to limit the risks that the failure of any individual company could pose to nonbank financial companies supervised by the Board of Governors or bank holding companies described in subsection (a), the Council may make recommendations to the Board of Governors to prescribe standards to limit such risks, as set forth in section 165.CommentsClose CommentsPermalink





(f) Enhanced Public Disclosures- The Council may make recommendations to the Board of Governors to require periodic public disclosures by bank holding companies described in subsection (a) and by nonbank financial companies supervised by the Board of Governors, in order to support market evaluation of the risk profile, capital adequacy, and risk management capabilities thereof.CommentsClose CommentsPermalink

SEC. 116. REPORTS.

(a) In General- Subject to subsection (b), the Council, acting through the Office of Financial Research, may require a bank holding company with total consolidated assets of $50,000,000,000 or greater or a nonbank financial company supervised by the Board of Governors, and any subsidiary thereof, to submit certified reports to keep the Council informed as to--CommentsClose CommentsPermalink





(1) the financial condition of the company;CommentsClose CommentsPermalink





(2) systems for monitoring and controlling financial, operating, and other risks;CommentsClose CommentsPermalink





(3) transactions with any subsidiary that is a depository institution; andCommentsClose CommentsPermalink





(4) the extent to which the activities and operations of the company and any subsidiary thereof, could, under adverse circumstances, have the potential to disrupt financial markets or affect the overall financial stability of the United States.CommentsClose CommentsPermalink





(b) Use of Existing Reports-CommentsClose CommentsPermalink





(1) IN GENERAL- For purposes of compliance with subsection (a), the Council, acting through the Office of Financial Research, shall, to the fullest extent possible, use--CommentsClose CommentsPermalink





(A) reports that a bank holding company, nonbank financial company supervised by the Board of Governors, or any functionally regulated subsidiary of such company has been required to provide to other Federal or State regulatory agencies;CommentsClose CommentsPermalink





(B) information that is otherwise required to be reported publicly; andCommentsClose CommentsPermalink





(C) externally audited financial statements.CommentsClose CommentsPermalink





(2) AVAILABILITY- Each bank holding company described in subsection (a) and nonbank financial company supervised by the Board of Governors, and any subsidiary thereof, shall provide to the Council, at the request of the Council, copies of all reports referred to in paragraph (1).CommentsClose CommentsPermalink





(3) CONFIDENTIALITY- The Council shall maintain the confidentiality of the reports obtained under subsection (a) and paragraph (1)(A) of this subsection.CommentsClose CommentsPermalink

SEC. 117. TREATMENT OF CERTAIN COMPANIES THAT CEASE TO BE BANK HOLDING COMPANIES.

(a) Applicability- This section shall apply to any entity or a successor entity that--CommentsClose CommentsPermalink





(1) was a bank holding company having total consolidated assets equal to or greater than $50,000,000,000 as of January 1, 2010; andCommentsClose CommentsPermalink





(2) received financial assistance under or participated in the Capital Purchase Program established under the Troubled Asset Relief Program authorized by the Emergency Economic Stabilization Act of 2008.CommentsClose CommentsPermalink





(b) Treatment- If an entity described in subsection (a) ceases to be a bank holding company at any time after January 1, 2010, then such entity shall be treated as a nonbank financial company supervised by the Board of Governors, as if the Council had made a determination under section 113 with respect to that entity.CommentsClose CommentsPermalink





(c) Appeal-CommentsClose CommentsPermalink





(1) REQUEST FOR HEARING- An entity may request, in writing, an opportunity for a written or oral hearing before the Council to appeal its treatment as a nonbank financial company supervised by the Board of Governors in accordance with this section. Upon receipt of the request, the Council shall fix a time (not later than 30 days after the date of receipt of the request) and place at which such entity may appear, personally or through counsel, to submit written materials (or, at the sole discretion of the Council, oral testimony and oral argument).CommentsClose CommentsPermalink





(2) DECISION-CommentsClose CommentsPermalink





(A) PROPOSED DECISION- Not later than 60 days after the date of a hearing under paragraph (1), the Council shall submit a report to, and may testify before, the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives on the proposed decision of the Council regarding an appeal under paragraph (1), which report shall include a statement of the basis for the proposed decision of the Council.CommentsClose CommentsPermalink





(B) NOTICE OF FINAL DECISION- The Council shall notify the subject entity of the final decision of the Council regarding an appeal under paragraph (1), which notice shall contain a statement of the basis for the final decision of the Council, not later than 60 days after the later of--CommentsClose CommentsPermalink





(i) the date of the submission of the report under subparagraph (A); orCommentsClose CommentsPermalink





(ii) if the Committee on Banking, Housing, and Urban Affairs of the Senate or the Committee on Financial Services of the House of Representatives holds one or more hearings regarding such report, the date of the last such hearing.CommentsClose CommentsPermalink





(C) CONSIDERATIONS- In making a decision regarding an appeal under paragraph (1), the Council shall consider whether the company meets the standards under section 113(a) or 113(b), as applicable, and the definition of the term ‘nonbank financial company’ under section 102. The decision of the Council shall be final, subject to the review under paragraph (3).CommentsClose CommentsPermalink





(3) REVIEW- If the Council denies an appeal under this subsection, the Council shall, not less frequently than annually, review and reevaluate the decision.CommentsClose CommentsPermalink

SEC. 118. COUNCIL FUNDING.

Any expenses of the Council shall be treated as expenses of, and paid by, the Office of Financial Research.CommentsClose CommentsPermalink

SEC. 119. RESOLUTION OF SUPERVISORY JURISDICTIONAL DISPUTES AMONG MEMBER AGENCIES.

(a) Request for Dispute Resolution- The Council shall resolve a dispute among 2 or more member agencies, if--CommentsClose CommentsPermalink





(1) a member agency has a dispute with another member agency about the respective jurisdiction over a particular bank holding company, nonbank financial company, or financial activity or product (excluding matters for which another dispute mechanism specifically has been provided under Federal law);CommentsClose CommentsPermalink





(2) the Council determines that the disputing agencies cannot, after a demonstrated good faith effort, resolve the dispute without the intervention of the Council; andCommentsClose CommentsPermalink





(3) any of the member agencies involved in the dispute--CommentsClose CommentsPermalink





(A) provides all other disputants prior notice of the intent to request dispute resolution by the Council; andCommentsClose CommentsPermalink





(B) requests in writing, not earlier than 14 days after providing the notice described in subparagraph (A), that the Council resolve the dispute.CommentsClose CommentsPermalink





(b) Council Decision- The Council shall resolve each dispute described in subsection (a)--CommentsClose CommentsPermalink





(1) within a reasonable time after receiving the dispute resolution request;CommentsClose CommentsPermalink





(2) after consideration of relevant information provided by each agency party to the dispute; andCommentsClose CommentsPermalink





(3) by agreeing with 1 of the disputants regarding the entirety of the matter, or by determining a compromise position.CommentsClose CommentsPermalink





(c) Form and Binding Effect- A Council decision under this section shall--CommentsClose CommentsPermalink





(1) be in writing;CommentsClose CommentsPermalink





(2) include an explanation of the reasons therefor; andCommentsClose CommentsPermalink





(3) be binding on all Federal agencies that are parties to the dispute.CommentsClose CommentsPermalink

SEC. 120. ADDITIONAL STANDARDS APPLICABLE TO ACTIVITIES OR PRACTICES FOR FINANCIAL STABILITY PURPOSES.

(a) In General- The Council may issue recommendations to the primary financial regulatory agencies to apply new or heightened standards and safeguards, including standards enumerated in section 115, for a financial activity or practice conducted by bank holding companies or nonbank financial companies under their respective jurisdictions, if the Council determines that the conduct of such activity or practice could create or increase the risk of significant liquidity, credit, or other problems spreading among bank holding companies and nonbank financial companies or the financial markets of the United States.CommentsClose CommentsPermalink





(b) Procedure for Recommendations to Regulators-CommentsClose CommentsPermalink





(1) NOTICE AND OPPORTUNITY FOR COMMENT- The Council shall consult with the primary financial regulatory agencies and provide notice to the public and opportunity for comment for any proposed recommendation that the primary financial regulatory agencies apply new or heightened standards and safeguards for a financial activity or practice.CommentsClose CommentsPermalink





(2) CRITERIA- The new or heightened standards and safeguards for a financial activity or practice recommended under paragraph (1)--CommentsClose CommentsPermalink





(A) shall take costs to long-term economic growth into account; andCommentsClose CommentsPermalink





(B) may include prescribing the conduct of the activity or practice in specific ways (such as by limiting its scope, or applying particular capital or risk management requirements to the conduct of the activity) or prohibiting the activity or practice.CommentsClose CommentsPermalink





(c) Implementation of Recommended Standards-CommentsClose CommentsPermalink





(1) ROLE OF PRIMARY FINANCIAL REGULATORY AGENCY-CommentsClose CommentsPermalink





(A) IN GENERAL- Each primary financial regulatory agency may impose, require reports regarding, examine for compliance with, and enforce standards in accordance with this section with respect to those entities for which it is the primary financial regulatory agency.CommentsClose CommentsPermalink





(B) RULE OF CONSTRUCTION- The authority under this paragraph is in addition to, and does not limit, any other authority of a primary financial regulatory agency. Compliance by an entity with actions taken by a primary financial regulatory agency under this section shall be enforceable in accordance with the statutes governing the respective jurisdiction of the primary financial regulatory agency over the entity, as if the agency action were taken under those statutes.CommentsClose CommentsPermalink





(2) IMPOSITION OF STANDARDS- The primary financial regulatory agency shall impose the standards recommended by the Council in accordance with subsection (a), or similar standards that the Council deems acceptable, or shall explain in writing to the Council, not later than 90 days after the date on which the Council issues the recommendation, why the agency has determined not to follow the recommendation of the Council.CommentsClose CommentsPermalink





(d) Report to Congress- The Council shall report to Congress on--CommentsClose CommentsPermalink





(1) any recommendations issued by the Council under this section;CommentsClose CommentsPermalink





(2) the implementation of, or failure to implement such recommendation on the part of a primary financial regulatory agency; andCommentsClose CommentsPermalink





(3) in any case in which no primary financial regulatory agency exists for the nonbank financial company conducting financial activities or practices referred to in subsection (a), recommendations for legislation that would prevent such activities or practices from threatening the stability of the financial system of the United States.CommentsClose CommentsPermalink





(e) Effect of Rescission of Identification-CommentsClose CommentsPermalink





(1) NOTICE- The Council may recommend to the relevant primary financial regulatory agency that a financial activity or practice no longer requires any standards or safeguards implemented under this section.CommentsClose CommentsPermalink





(2) DETERMINATION OF PRIMARY FINANCIAL REGULATORY AGENCY TO CONTINUE-CommentsClose CommentsPermalink





(A) IN GENERAL- Upon receipt of a recommendation under paragraph (1), a primary financial regulatory agency that has imposed standards under this section shall determine whether standards that it has imposed under this section should remain in effect.CommentsClose CommentsPermalink





(B) APPEAL PROCESS- Each primary financial regulatory agency that has imposed standards under this section shall promulgate regulations to establish a procedure under which entities under its jurisdiction may appeal a determination by such agency under this paragraph that standards imposed under this section should remain in effect.CommentsClose CommentsPermalink

SEC. 121. MITIGATION OF RISKS TO FINANCIAL STABILITY.

(a) Mitigatory Actions- If the Board of Governors determines that a bank holding company with total consolidated assets of $50,000,000,000 or more, or a nonbank financial company supervised by the Board of Governors, poses a grave threat to the financial stability of the United States, the Board of Governors, upon an affirmative vote of not fewer than 2/3 of the Council members then serving, shall require the subject company--CommentsClose CommentsPermalink





(1) to terminate one or more activities;CommentsClose CommentsPermalink





(2) to impose conditions on the manner in which the company conducts one or more activities; orCommentsClose CommentsPermalink





(3) if the Board of Governors determines that such action is inadequate to mitigate a threat to the financial stability of the United States in its recommendation, to sell or otherwise transfer assets or off-balance-sheet items to unaffiliated entities.CommentsClose CommentsPermalink





(b) Notice and Hearing-CommentsClose CommentsPermalink





(1) IN GENERAL- The Board of Governors, in consultation with the Council, shall provide to a company described in subsection (a) written notice that such company is being considered for mitigatory action pursuant to this section, including an explanation of the basis for, and description of, the proposed mitigatory action.CommentsClose CommentsPermalink





(2) HEARING- Not later than 30 days after the date of receipt of notice under paragraph (1), the company may request, in writing, an opportunity for a written or oral hearing before the Board of Governors to contest the proposed mitigatory action. Upon receipt of a timely request, the Board of Governors shall fix a time (not later than 30 days after the date of receipt of the request) and place at which such company may appear, personally or through counsel, to submit written materials (or, at the discretion of the Board of Governors, in consultation with the Council, oral testimony and oral argument).CommentsClose CommentsPermalink





(3) DECISION- Not later than 60 days after the date of a hearing under paragraph (2), or not later than 60 days after the provision of a notice under paragraph (1) if no hearing was held, the Board of Governors shall notify the company of the final decision of the Board of Governors, including the results of the vote of the Council, as described in subsection (a).CommentsClose CommentsPermalink





(c) Factors for Consideration- The Board of Governors and the Council shall take into consideration the factors set forth in subsection (a) or (b) of section 113, as applicable, in a determination described in subsection (a) and in a decision described in subsection (b).CommentsClose CommentsPermalink





(d) Application to Foreign Financial Companies- The Board of Governors may prescribe regulations regarding the application of this section to foreign nonbank financial companies supervised by the Board of Governors and foreign-based bank holding companies, giving due regard to the principle of national treatment and competitive equity.CommentsClose CommentsPermalink

Subtitle B--Office of Financial ResearchCommentsClose CommentsPermalink

SEC. 151. DEFINITIONS.

For purposes of this subtitle--CommentsClose CommentsPermalink





(1) the terms ‘Office’ and ‘Director’ mean the Office of Financial Research established under this subtitle and the Director thereof, respectively;CommentsClose CommentsPermalink





(2) the term ‘financial company’ has the same meaning as in title II, and includes an insured depository institution and an insurance company;CommentsClose CommentsPermalink





(3) the term ‘Data Center’ means the data center established under section 154;CommentsClose CommentsPermalink





(4) the term ‘Research and Analysis Center’ means the research and analysis center established under section 154;CommentsClose CommentsPermalink





(5) the term ‘financial transaction data’ means the structure and legal description of a financial contract, with sufficient detail to describe the rights and obligations between counterparties and make possible an independent valuation;CommentsClose CommentsPermalink





(6) the term ‘position data’--CommentsClose CommentsPermalink





(A) means data on financial assets or liabilities held on the balance sheet of a financial company, where positions are created or changed by the execution of a financial transaction; andCommentsClose CommentsPermalink





(B) includes information that identifies counterparties, the valuation by the financial company of the position, and information that makes possible an independent valuation of the position;CommentsClose CommentsPermalink





(7) the term ‘financial contract’ means a legally binding agreement between 2 or more counterparties, describing rights and obligations relating to the future delivery of items of intrinsic or extrinsic value among the counterparties; andCommentsClose CommentsPermalink





(8) the term ‘financial instrument’ means a financial contract in which the terms and conditions are publicly available, and the roles of one or more of the counterparties are assignable without the consent of any of the other counterparties (including common stock of a publicly traded company, government bonds, or exchange traded futures and options contracts).CommentsClose CommentsPermalink

SEC. 152. OFFICE OF FINANCIAL RESEARCH ESTABLISHED.

(a) Establishment- There is established within the Department of the Treasury the Office of Financial Research.CommentsClose CommentsPermalink





(b) Director-CommentsClose CommentsPermalink





(1) IN GENERAL- The Office shall be headed by a Director, who shall be appointed by the President, by and with the advice and consent of the Senate.CommentsClose CommentsPermalink





(2) TERM OF SERVICE- The Director shall serve for a term of 6 years, except that, in the event that a successor is not nominated and confirmed by the end of the term of service of a Director, the Director may continue to serve until such time as the next Director is appointed and confirmed.CommentsClose CommentsPermalink





(3) EXECUTIVE LEVEL- The Director shall be compensated at level III of the Executive Schedule.CommentsClose CommentsPermalink





(4) PROHIBITION ON DUAL SERVICE- The individual serving in the position of Director may not, during such service, also serve as the head of any financial regulatory agency.CommentsClose CommentsPermalink





(5) RESPONSIBILITIES, DUTIES, AND AUTHORITY- The Director shall have sole discretion in the manner in which the Director fulfills the responsibilities and duties and exercises the authorities described in this subtitle.CommentsClose CommentsPermalink





(c) Budget- The Director, in consultation with the Chairperson, shall establish the annual budget of the Office.CommentsClose CommentsPermalink





(d) Office Personnel-CommentsClose CommentsPermalink





(1) IN GENERAL- The Director, in consultation with the Chairperson, may fix the number of, and appoint and direct, all employees of the Office.CommentsClose CommentsPermalink





(2) COMPENSATION- The Director, in consultation with the Chairperson, shall fix, adjust, and administer the pay for all employees of the Office, without regard to chapter 51 or subchapter III of chapter 53 of title 5, United States Code, relating to classification of positions and General Schedule pay rates.CommentsClose CommentsPermalink





(3) COMPARABILITY- Section 1206(a) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1833b(a)) is amended--CommentsClose CommentsPermalink





(A) by striking ‘Finance Board,’ and inserting ‘Finance Board, the Office of Financial Research, and the Bureau of Consumer Financial Protection’; andCommentsClose CommentsPermalink





(B) by striking ‘and the Office of Thrift Supervision,’.CommentsClose CommentsPermalink





(e) Assistance From Federal Agencies- Any department or agency of the United States may provide to the Office and any special advisory, technical, or professional committees appointed by the Office, such services, funds, facilities, staff, and other support services as the Office may determine advisable. Any Federal Government employee may be detailed to the Office without reimbursement, and such detail shall be without interruption or loss of civil service status or privilege.CommentsClose CommentsPermalink





(f) Procurement of Temporary and Intermittent Services- The Director may procure temporary and intermittent services under section 3109(b) of title 5, United States Code, at rates for individuals which do not exceed the daily equivalent of the annual rate of basic pay prescribed for level V of the Executive Schedule under section 5316 of such title.CommentsClose CommentsPermalink





(g) Contracting and Leasing Authority- Notwithstanding the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 251 et seq.) or any other provision of law, the Director may--CommentsClose CommentsPermalink





(1) enter into and perform contracts, execute instruments, and acquire, in any lawful manner, such goods and services, or personal or real property (or property interest), as the Director deems necessary to carry out the duties and responsibilities of the Office; andCommentsClose CommentsPermalink





(2) hold, maintain, sell, lease, or otherwise dispose of the property (or property interest) acquired under paragraph (1).CommentsClose CommentsPermalink





(h) Non-compete- The Director and any staff of the Office who has had access to the transaction or position data maintained by the Data Center or other business confidential information about financial entities required to report to the Office, may not, for a period of 1 year after last having access to such transaction or position data or business confidential information, be employed by or provide advice or consulting services to a financial company, regardless of whether that entity is required to report to the Office. For staff whose access to business confidential information was limited, the Director may provide, on a case-by-case basis, for a shorter period of post-employment prohibition, provided that the shorter period does not compromise business confidential information.CommentsClose CommentsPermalink





(i) Technical and Professional Advisory Committees- The Office, in consultation with the Chairperson, may appoint such special advisory, technical, or professional committees as may be useful in carrying out the functions of the Office, and the members of such committees may be staff of the Office, or other persons, or both.CommentsClose CommentsPermalink





(j) Fellowship Program- The Office, in consultation with the Chairperson, may establish and maintain an academic and professional fellowship program, under which qualified academics and professionals shall be invited to spend not longer than 2 years at the Office, to perform research and to provide advanced training for Office personnel.CommentsClose CommentsPermalink





(k) Executive Schedule Compensation- Section 5314 of title 5, United States Code, is amended by adding at the end the following new item:CommentsClose CommentsPermalink





‘Director of the Office of Financial Research.’.CommentsClose CommentsPermalink

SEC. 153. PURPOSE AND DUTIES OF THE OFFICE.

(a) Purpose and Duties- The purpose of the Office is to support the Council in fulfilling the purposes and duties of the Council, as set forth in subtitle A, and to support member agencies, by--CommentsClose CommentsPermalink





(1) collecting data on behalf of the Council, and providing such data to the Council and member agencies;CommentsClose CommentsPermalink





(2) standardizing the types and formats of data reported and collected;CommentsClose CommentsPermalink





(3) performing applied research and essential long-term research;CommentsClose CommentsPermalink





(4) developing tools for risk measurement and monitoring;CommentsClose CommentsPermalink





(5) performing other related services;CommentsClose CommentsPermalink





(6) making the results of the activities of the Office available to financial regulatory agencies; andCommentsClose CommentsPermalink





(7) assisting such member agencies in determining the types and formats of data authorized by this Act to be collected by such member agencies.CommentsClose CommentsPermalink





(b) Administrative Authority- The Office may--CommentsClose CommentsPermalink





(1) share data and information, including software developed by the Office, with the Council and member agencies, which shared data, information, and software--CommentsClose CommentsPermalink





(A) shall be maintained with at least the same level of security as is used by the Office; andCommentsClose CommentsPermalink





(B) may not be shared with any individual or entity without the permission of the Council;CommentsClose CommentsPermalink





(2) sponsor and conduct research projects; andCommentsClose CommentsPermalink





(3) assist, on a reimbursable basis, with financial analyses undertaken at the request of other Federal agencies that are not member agencies.CommentsClose CommentsPermalink





(c) Rulemaking Authority-CommentsClose CommentsPermalink





(1) SCOPE- The Office, in consultation with the Chairperson, shall issue rules, regulations, and orders only to the extent necessary to carry out the purposes and duties described in paragraphs (1), (2), and (7) of subsection (a).CommentsClose CommentsPermalink





(2) STANDARDIZATION- Member agencies, in consultation with the Office, shall implement regulations promulgated by the Office under paragraph (1) to standardize the types and formats of data reported and collected on behalf of the Council, as described in subsection (a)(2). If a member agency fails to implement such regulations prior to the expiration of the 3-year period following the date of publication of final regulations, the Office, in consultation with the Chairperson, may implement such regulations with respect to the financial entities under the jurisdiction of the member agency.CommentsClose CommentsPermalink





(d) Testimony-CommentsClose CommentsPermalink





(1) IN GENERAL- The Director of the Office shall report to and testify before the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives annually on the activities of the Office, including the work of the Data Center and the Research and Analysis Center, and the assessment of the Office of significant financial market developments and potential emerging threats to the financial stability of the United States.CommentsClose CommentsPermalink





(2) NO PRIOR REVIEW- No officer or agency of the United States shall have any authority to require the Director to submit the testimony required under paragraph (1) or other Congressional testimony to any officer or agency of the United States for approval, comment, or review prior to the submission of such testimony. Any such testimony to Congress shall include a statement that the views expressed therein are those of the Director and do not necessarily represent the views of the President.CommentsClose CommentsPermalink





(e) Additional Reports- The Director may provide additional reports to Congress concerning the financial stability of the United States. The Director shall notify the Council of any such additional reports provided to Congress.CommentsClose CommentsPermalink





(f) Subpoena-CommentsClose CommentsPermalink





(1) IN GENERAL- The Director may require, by subpoena, the production of the data requested under subsection (a)(1) and section 154(b)(1), but only upon a written finding by the Director that--CommentsClose CommentsPermalink





(A) such data is required to carry out the functions described under this subtitle; andCommentsClose CommentsPermalink





(B) the Office has coordinated with such agency, as required under section 154(b)(1)(B)(ii).CommentsClose CommentsPermalink





(2) FORMAT- Subpoenas under paragraph (1) shall bear the signature of the Director, and shall be served by any person or class of persons designated by the Director for that purpose.CommentsClose CommentsPermalink





(3) ENFORCEMENT- In the case of contumacy or failure to obey a subpoena, the subpoena shall be enforceable by order of any appropriate district court of the United States. Any failure to obey the order of the court may be punished by the court as a contempt of court.CommentsClose CommentsPermalink

SEC. 154. ORGANIZATIONAL STRUCTURE; RESPONSIBILITIES OF PRIMARY PROGRAMMATIC UNITS.

(a) In General- There are established within the Office, to carry out the programmatic responsibilities of the Office--CommentsClose CommentsPermalink





(1) the Data Center; andCommentsClose CommentsPermalink





(2) the Research and Analysis Center.CommentsClose CommentsPermalink





(b) Data Center-CommentsClose CommentsPermalink





(1) GENERAL DUTIES-CommentsClose CommentsPermalink





(A) DATA COLLECTION- The Data Center, on behalf of the Council, shall collect, validate, and maintain all data necessary to carry out the duties of the Data Center, as described in this subtitle. The data assembled shall be obtained from member agencies, commercial data providers, publicly available data sources, and financial entities under subparagraph (B).CommentsClose CommentsPermalink





(B) AUTHORITY-CommentsClose CommentsPermalink





(i) IN GENERAL- The Office may, as determined by the Council or by the Director in consultation with the Council, require the submission of periodic and other reports from any financial company for the purpose of assessing the extent to which a financial activity or financial market in which the financial company participates, or the financial company itself, poses a threat to the financial stability of the United States.CommentsClose CommentsPermalink





(ii) MITIGATION OF REPORT BURDEN- Before requiring the submission of a report from any financial company that is regulated by a member agency or any primary financial regulatory agency, the Office shall coordinate with such agencies and shall, whenever possible, rely on information available from such agencies.CommentsClose CommentsPermalink





(C) RULEMAKING- The Office shall promulgate regulations pursuant to subsections (a)(1), (a)(2), (a)(7), and (c)(1) of section 153 regarding the type and scope of the data to be collected by the Data Center under this paragraph.CommentsClose CommentsPermalink





(2) RESPONSIBILITIES-CommentsClose CommentsPermalink





(A) PUBLICATION- The Data Center shall prepare and publish, in a manner that is easily accessible to the public--CommentsClose CommentsPermalink





(i) a financial company reference database;CommentsClose CommentsPermalink





(ii) a financial instrument reference database; andCommentsClose CommentsPermalink





(iii) formats and standards for Office data, including standards for reporting financial transaction and position data to the Office.CommentsClose CommentsPermalink





(B) CONFIDENTIALITY- The Data Center shall not publish any confidential data under subparagraph (A).CommentsClose CommentsPermalink





(3) INFORMATION SECURITY- The Director shall ensure that data collected and maintained by the Data Center are kept secure and protected against unauthorized disclosure.CommentsClose CommentsPermalink





(4) CATALOG OF FINANCIAL ENTITIES AND INSTRUMENTS- The Data Center shall maintain a catalog of the financial entities and instruments reported to the Office.CommentsClose CommentsPermalink





(5) AVAILABILITY TO THE COUNCIL AND MEMBER AGENCIES- The Data Center shall make data collected and maintained by the Data Center available to the Council and member agencies, as necessary to support their regulatory responsibilities.CommentsClose CommentsPermalink





(6) OTHER AUTHORITY- The Office shall, after consultation with the member agencies, provide certain data to financial industry participants and to the general public to increase market transparency and facilitate research on the financial system, to the extent that intellectual property rights are not violated, business confidential information is properly protected, and the sharing of such information poses no significant threats to the financial system of the United States.CommentsClose CommentsPermalink





(c) Research and Analysis Center-CommentsClose CommentsPermalink





(1) GENERAL DUTIES- The Research and Analysis Center, on behalf of the Council, shall develop and maintain independent analytical capabilities and computing resources--CommentsClose CommentsPermalink





(A) to develop and maintain metrics and reporting systems for risks to the financial stability of the United States;CommentsClose CommentsPermalink





(B) to monitor, investigate, and report on changes in system-wide risk levels and patterns to the Council and Congress;CommentsClose CommentsPermalink





(C) to conduct, coordinate, and sponsor research to support and improve regulation of financial entities and markets;CommentsClose CommentsPermalink





(D) to evaluate and report on stress tests or other stability-related evaluations of financial entities overseen by the member agencies;CommentsClose CommentsPermalink





(E) to maintain expertise in such areas as may be necessary to support specific requests for advice and assistance from financial regulators;CommentsClose CommentsPermalink





(F) to investigate disruptions and failures in the financial markets, report findings, and make recommendations to the Council based on those findings;CommentsClose CommentsPermalink





(G) to conduct studies and provide advice on the impact of policies related to systemic risk; andCommentsClose CommentsPermalink





(H) to promote best practices for financial risk management.CommentsClose CommentsPermalink





(d) Reporting Responsibilities-CommentsClose CommentsPermalink





(1) REQUIRED REPORTS- Not later than 2 years after the date of enactment of this Act, and not later than 120 days after the end of each fiscal year thereafter, the Office shall prepare and submit a report to Congress.CommentsClose CommentsPermalink





(2) CONTENT- Each report required by this subsection shall assess the state of the United States financial system, including--CommentsClose CommentsPermalink





(A) an analysis of any threats to the financial stability of the United States;CommentsClose CommentsPermalink





(B) the status of the efforts of the Office in meeting the mission of the Office; andCommentsClose CommentsPermalink





(C) key findings from the research and analysis of the financial system by the Office.CommentsClose CommentsPermalink

SEC. 155. FUNDING.

(a) Financial Research Fund-CommentsClose CommentsPermalink





(1) FUND ESTABLISHED- There is established in the Treasury of the United States a separate fund to be known as the ‘Financial Research Fund’.CommentsClose CommentsPermalink





(2) FUND RECEIPTS- All amounts provided to the Office under subsection (c), and all assessments that the Office receives under subsection (d) shall be deposited into the Financial Research Fund.CommentsClose CommentsPermalink





(3) INVESTMENTS AUTHORIZED-CommentsClose CommentsPermalink





(A) AMOUNTS IN FUND MAY BE INVESTED- The Director may request the Secretary to invest the portion of the Financial Research Fund that is not, in the judgment of the Director, required to meet the needs of the Office.CommentsClose CommentsPermalink





(B) ELIGIBLE INVESTMENTS- Investments shall be made by the Secretary in obligations of the United States or obligations that are guaranteed as to principal and interest by the United States, with maturities suitable to the needs of the Financial Research Fund, as determined by the Director.CommentsClose CommentsPermalink





(4) INTEREST AND PROCEEDS CREDITED- The interest on, and the proceeds from the sale or redemption of, any obligations held in the Financial Research Fund shall be credited to and form a part of the Financial Research Fund.CommentsClose CommentsPermalink





(b) Use of Funds-CommentsClose CommentsPermalink





(1) IN GENERAL- Funds obtained by, transferred to, or credited to the Financial Research Fund shall be immediately available to the Office, and shall remain available until expended, to pay the expenses of the Office in carrying out the duties and responsibilities of the Office.CommentsClose CommentsPermalink





(2) FEES, ASSESSMENTS, AND OTHER FUNDS NOT GOVERNMENT FUNDS- Funds obtained by, transferred to, or credited to the Financial Research Fund shall not be construed to be Government funds or appropriated monies.CommentsClose CommentsPermalink





(3) AMOUNTS NOT SUBJECT TO APPORTIONMENT- Notwithstanding any other provision of law, amounts in the Financial Research Fund shall not be subject to apportionment for purposes of chapter 15 of title 31, United States Code, or under any other authority, or for any other purpose.CommentsClose CommentsPermalink





(c) Interim Funding- During the 2-year period following the date of enactment of this Act, the Board of Governors shall provide to the Office an amount sufficient to cover the expenses of the Office.CommentsClose CommentsPermalink





(d) Permanent Self-funding-CommentsClose CommentsPermalink





(1) IN GENERAL- Beginning 2 years after the date of enactment of this Act, the Secretary shall establish, by regulation, and with the approval of the Council, an assessment schedule, including the assessment base and rates, applicable to bank holding companies with total consolidated assets of $50,000,000,000 or greater and nonbank financial companies supervised by the Board of Governors, that takes into account differences among such companies, based on the considerations for establishing the prudential standards under section 115, to collect assessments equal to the estimated total expenses of the Office.CommentsClose CommentsPermalink





(2) SHORTFALL- To the extent that the assessments under paragraph (1) do not fully cover the total expenses of the Office, the Board of Governors shall provide to the Office an amount sufficient to cover the difference.CommentsClose CommentsPermalink

SEC. 156. TRANSITION OVERSIGHT.

(a) Purpose- The purpose of this section is to ensure that the Office--CommentsClose CommentsPermalink





(1) has an orderly and organized startup;CommentsClose CommentsPermalink





(2) attracts and retains a qualified workforce; andCommentsClose CommentsPermalink





(3) establishes comprehensive employee training and benefits programs.CommentsClose CommentsPermalink





(b) Reporting Requirement-CommentsClose CommentsPermalink





(1) IN GENERAL- The Office shall submit an annual report to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives that includes the plans described in paragraph (2).CommentsClose CommentsPermalink





(2) PLANS- The plans described in this paragraph are as follows:CommentsClose CommentsPermalink





(A) TRAINING AND WORKFORCE DEVELOPMENT PLAN- The Office shall submit a training and workforce development plan that includes, to the extent practicable--CommentsClose CommentsPermalink





(i) identification of skill and technical expertise needs and actions taken to meet those requirements;CommentsClose CommentsPermalink





(ii) steps taken to foster innovation and creativity;CommentsClose CommentsPermalink





(iii) leadership development and succession planning; andCommentsClose CommentsPermalink





(iv) effective use of technology by employees.CommentsClose CommentsPermalink





(B) WORKPLACE FLEXIBILITY PLAN- The Office shall submit a workforce flexibility plan that includes, to the extent practicable--CommentsClose CommentsPermalink





(i) telework;CommentsClose CommentsPermalink





(ii) flexible work schedules;CommentsClose CommentsPermalink





(iii) phased retirement;CommentsClose CommentsPermalink





(iv) reemployed annuitants;CommentsClose CommentsPermalink





(v) part-time work;CommentsClose CommentsPermalink





(vi) job sharing;CommentsClose CommentsPermalink





(vii) parental leave benefits and childcare assistance;CommentsClose CommentsPermalink





(viii) domestic partner benefits;CommentsClose CommentsPermalink





(ix) other workplace flexibilities; orCommentsClose CommentsPermalink





(x) any combination of the items described in clauses (i) through (ix).CommentsClose CommentsPermalink





(C) RECRUITMENT AND RETENTION PLAN- The Office shall submit a recruitment and retention plan that includes, to the extent practicable, provisions relating to--CommentsClose CommentsPermalink





(i) the steps necessary to target highly qualified applicant pools with diverse backgrounds;CommentsClose CommentsPermalink





(ii) streamlined employment application processes;CommentsClose CommentsPermalink





(iii) the provision of timely notification of the status of employment applications to applicants; andCommentsClose CommentsPermalink





(iv) the collection of information to measure indicators of hiring effectiveness.CommentsClose CommentsPermalink





(c) Expiration- The reporting requirement under subsection (b) shall terminate 5 years after the date of enactment of this Act.CommentsClose CommentsPermalink





(d) Rule of Construction- Nothing in this section may be construed to affect--CommentsClose CommentsPermalink





(1) a collective bargaining agreement, as that term is defined in section 7103(a)(8) of title 5, United States Code, that is in effect on the date of enactment of this Act; orCommentsClose CommentsPermalink





(2) the rights of employees under chapter 71 of title 5, United States Code.CommentsClose CommentsPermalink

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

SEC. 161. REPORTS BY AND EXAMINATIONS OF NONBANK FINANCIAL COMPANIES BY THE BOARD OF GOVERNORS.

(a) Reports-CommentsClose CommentsPermalink





(1) IN GENERAL- The Board of Governors may require each nonbank financial company supervised by the Board of Governors, and any subsidiary thereof, to submit reports under oath, to keep the Board of Governors informed as to--CommentsClose CommentsPermalink





(A) the financial condition of the company or subsidiary, systems of the company or subsidiary for monitoring and controlling financial, operating, and other risks, and the extent to which the activities and operations of the company or subsidiary pose a threat to the financial stability of the United States; andCommentsClose CommentsPermalink





(B) compliance by the company or subsidiary with the requirements of this subtitle.CommentsClose CommentsPermalink





(2) USE OF EXISTING REPORTS AND INFORMATION- In carrying out subsection (a), the Board of Governors shall, to the fullest extent possible, use--CommentsClose CommentsPermalink





(A) reports and supervisory information that a nonbank financial company or subsidiary thereof has been required to provide to other Federal or State regulatory agencies;CommentsClose CommentsPermalink





(B) information otherwise obtainable from Federal or State regulatory agencies;CommentsClose CommentsPermalink





(C) information that is otherwise required to be reported publicly; andCommentsClose CommentsPermalink





(D) externally audited financial statements of such company or subsidiary.CommentsClose CommentsPermalink





(3) AVAILABILITY- Upon the request of the Board of Governors, a nonbank financial company supervised by the Board of Governors, or a subsidiary thereof, shall promptly provide to the Board of Governors any information described in paragraph (2).CommentsClose CommentsPermalink





(b) Examinations-CommentsClose CommentsPermalink





(1) IN GENERAL- Subject to paragraph (2), the Board of Governors may examine any nonbank financial company supervised by the Board of Governors and any subsidiary of such company, to determine--CommentsClose CommentsPermalink





(A) the nature of the operations and financial condition of the company and such subsidiary;CommentsClose CommentsPermalink





(B) the financial, operational, and other risks within the company that may pose a threat to the safety and soundness of such company or to the financial stability of the United States;CommentsClose CommentsPermalink





(C) the systems for monitoring and controlling such risks; andCommentsClose CommentsPermalink





(D) compliance by the company with the requirements of this subtitle.CommentsClose CommentsPermalink





(2) USE OF EXAMINATION REPORTS AND INFORMATION- For purposes of this subsection, the Board of Governors shall, to the fullest extent possible, rely on reports of examination of any depository institution subsidiary or functionally regulated subsidiary made by the primary financial regulatory agency for that subsidiary, and on information described in subsection (a)(2).CommentsClose CommentsPermalink





(c) Coordination With Primary Financial Regulatory Agency- The Board of Governors shall--CommentsClose CommentsPermalink





(1) provide to the primary financial regulatory agency for any company or subsidiary, reasonable notice before requiring a report, requesting information, or commencing an examination of such subsidiary under this section; andCommentsClose CommentsPermalink





(2) avoid duplication of examination activities, reporting requirements, and requests for information, to the extent possible.CommentsClose CommentsPermalink

SEC. 162. ENFORCEMENT.

(a) In General- Except as provided in subsection (b), a nonbank financial company supervised by the Board of Governors and any subsidiaries of such company (other than any depository institution subsidiary) shall be subject to the provisions of subsections (b) through (n) of section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818), in the same manner and to the same extent as if the company were a bank holding company, as provided in section 8(b)(3) of the Federal Deposit Insurance Act (12 U.S.C. 1818(b)(3)).CommentsClose CommentsPermalink





(b) Enforcement Authority for Functionally Regulated Subsidiaries-CommentsClose CommentsPermalink





(1) REFERRAL- If the Board of Governors determines that a condition, practice, or activity of a depository institution subsidiary or functionally regulated subsidiary of a nonbank financial company supervised by the Board of Governors does not comply with the regulations or orders prescribed by the Board of Governors under this Act, or otherwise poses a threat to the financial stability of the United States, the Board of Governors may recommend, in writing, to the primary financial regulatory agency for the subsidiary that such agency initiate a supervisory action or enforcement proceeding. The recommendation shall be accompanied by a written explanation of the concerns giving rise to the recommendation.CommentsClose CommentsPermalink





(2) BACK-UP AUTHORITY OF THE BOARD OF GOVERNORS- If, during the 60-day period beginning on the date on which the primary financial regulatory agency receives a recommendation under paragraph (1), the primary financial regulatory agency does not take supervisory or enforcement action against a subsidiary that is acceptable to the Board of Governors, the Board of Governors (upon a vote of its members) may take the recommended supervisory or enforcement action, as if the subsidiary were a bank holding company subject to supervision by the Board of Governors.CommentsClose CommentsPermalink

SEC. 163. ACQUISITIONS.

(a) Acquisitions of Banks; Treatment as a Bank Holding Company- For purposes of section 3 of the Bank Holding Company Act of 1956 (12 U.S.C. 1842), a nonbank financial company supervised by the Board of Governors shall be deemed to be, and shall be treated as, a bank holding company.CommentsClose CommentsPermalink





(b) Acquisition of Nonbank Companies-CommentsClose CommentsPermalink





(1) PRIOR NOTICE FOR LARGE ACQUISITIONS- Notwithstanding section 4(k)(6)(B) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(k)(6)(B)), a bank holding company with total consolidated assets equal to or greater than $50,000,000,000 or a nonbank financial company supervised by the Board of Governors shall not acquire direct or indirect ownership or control of any voting shares of any company (other than an insured depository institution) that is engaged in activities described in section 4(k) of the Bank Holding Company Act of 1956 having total consolidated assets of $10,000,000,000 or more, without providing written notice to the Board of Governors in advance of the transaction.CommentsClose CommentsPermalink





(2) EXEMPTIONS- The prior notice requirement in paragraph (1) shall not apply with regard to the acquisition of shares that would qualify for the exemptions in section 4(c) or section 4(k)(4)(E) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(c) and (k)(4)(E)).CommentsClose CommentsPermalink





(3) NOTICE PROCEDURES- The notice procedures set forth in section 4(j)(1) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(j)(1)), without regard to section 4(j)(3) of that Act, shall apply to an acquisition of any company (other than an insured depository institution) by a bank holding company with total consolidated assets equal to or greater than $50,000,000,000 or a nonbank financial company supervised by the Board of Governors, as described in paragraph (1), including any such company engaged in activities described in section 4(k) of that Act.CommentsClose CommentsPermalink





(4) STANDARDS FOR REVIEW- In addition to the standards provided in section 4(j)(2) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(j)(2)), the Board of Governors shall consider the extent to which the proposed acquisition would result in greater or more concentrated risks to global or United States financial stability or the United States economy.CommentsClose CommentsPermalink

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

A nonbank financial company supervised by the Board of Governors shall be treated as a bank holding company for purposes of the Depository Institutions Management Interlocks Act (12 U.S.C. 3201 et seq.), except that the Board of Governors shall not exercise the authority provided in section 7 of that Act (12 U.S.C. 3207) to permit service by a management official of a nonbank financial company supervised by the Board of Governors as a management official of any bank holding company with total consolidated assets equal to or greater than $50,000,000,000, or other nonaffiliated nonbank financial company supervised by the Board of Governors (other than to provide a temporary exemption for interlocks resulting from a merger, acquisition, or consolidation).CommentsClose CommentsPermalink

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

(a) In General-CommentsClose CommentsPermalink





(1) PURPOSE- In order to prevent or mitigate risks to the financial stability of the United States that could arise from the material financial distress or failure of large, interconnected financial institutions, the Board of Governors shall, on its own or pursuant to recommendations by the Council under section 115, establish prudential standards and reporting and disclosure requirements applicable to nonbank financial companies supervised by the Board of Governors and large, interconnected bank holding companies that--CommentsClose CommentsPermalink





(A) are more stringent than the standards and requirements applicable to nonbank financial companies and bank holding companies that do not present similar risks to the financial stability of the United States; andCommentsClose CommentsPermalink





(B) increase in stringency, based on the considerations identified in subsection (b)(3).CommentsClose CommentsPermalink





(2) LIMITATION ON BANK HOLDING COMPANIES- Any standards established under subsections (b) through (f) shall not apply to any bank holding company with total consolidated assets of less than $50,000,000,000, but the Board of Governors may establish an asset threshold greater than $50,000,000,000 for the applicability of any particular standard under subsections (b) through (f).CommentsClose CommentsPermalink





(b) Development of Prudential Standards-CommentsClose CommentsPermalink





(1) IN GENERAL-CommentsClose CommentsPermalink





(A) REQUIRED STANDARDS- The Board of Governors shall, by regulation or order, establish prudential standards for nonbank financial companies supervised by the Board of Governors and bank holding companies described in subsection (a), that shall include--CommentsClose CommentsPermalink





(i) risk-based capital requirements;CommentsClose CommentsPermalink





(ii) leverage limits;CommentsClose CommentsPermalink





(iii) liquidity requirements;CommentsClose CommentsPermalink





(iv) resolution plan and credit exposure report requirements; andCommentsClose CommentsPermalink





(v) concentration limits.CommentsClose CommentsPermalink





(B) ADDITIONAL STANDARDS AUTHORIZED- The Board of Governors may, by regulation or order, establish prudential standards for nonbank financial companies supervised by the Board of Governors and bank holding companies described in subsection (a), that include--CommentsClose CommentsPermalink





(i) a contingent capital requirement;CommentsClose CommentsPermalink





(ii) enhanced public disclosures; andCommentsClose CommentsPermalink





(iii) overall risk management requirements.CommentsClose CommentsPermalink





(2) PRUDENTIAL STANDARDS FOR FOREIGN FINANCIAL COMPANIES- In applying the standards set forth in paragraph (1) to foreign nonbank financial companies supervised by the Board of Governors and to foreign-based bank holding companies, the Board of Governors shall give due regard to the principle of national treatment and competitive equity.CommentsClose CommentsPermalink





(3) CONSIDERATIONS- In prescribing prudential standards under paragraph (1), the Board of Governors shall--CommentsClose CommentsPermalink





(A) take into account differences among nonbank financial companies supervised by the Board of Governors and bank holding companies described in subsection (a), based on--CommentsClose CommentsPermalink





(i) the factors described in subsections (a) and (b) of section 113;CommentsClose CommentsPermalink





(ii) whether the company owns an insured depository institution;CommentsClose CommentsPermalink





(iii) nonfinancial activities and affiliations of the company; andCommentsClose CommentsPermalink





(iv) any other factors that the Board of Governors determines appropriate;CommentsClose CommentsPermalink





(B) to the extent possible, ensure that small changes in the factors listed in subsections (a) and (b) of section 113 would not result in sharp, discontinuous changes in the prudential standards established under paragraph (1) of this subsection; andCommentsClose CommentsPermalink





(C) take into account any recommendations of the Council under section 115.CommentsClose CommentsPermalink





(4) REPORT- The Board of Governors shall submit an annual report to Congress regarding the implementation of the prudential standards required pursuant to paragraph (1), including the use of such standards to mitigate risks to the financial stability of the United States.CommentsClose CommentsPermalink





(c) Contingent Capital-CommentsClose CommentsPermalink





(1) IN GENERAL- Subsequent to submission by the Council of a report to Congress under section 115(c), the Board of Governors may promulgate regulations that require each nonbank financial company supervised by the Board of Governors and bank holding companies described in subsection (a) to maintain a minimum amount of long-term hybrid debt that is convertible to equity in times of financial stress.CommentsClose CommentsPermalink





(2) FACTORS TO CONSIDER- In establishing regulations under this subsection, the Board of Governors shall consider--CommentsClose CommentsPermalink





(A) the results of the study undertaken by the Council, and any recommendations of the Council, under section 115(c);CommentsClose CommentsPermalink





(B) an appropriate transition period for implementation of a conversion under this subsection;CommentsClose CommentsPermalink





(C) the factors described in subsection (b)(3)(A);CommentsClose CommentsPermalink





(D) capital requirements applicable to the nonbank financial company supervised by the Board of Governors or a bank holding company described in subsection (a), and subsidiaries thereof; andCommentsClose CommentsPermalink





(E) any other factor that the Board of Governors deems appropriate.CommentsClose CommentsPermalink





(d) Resolution Plan and Credit Exposure Reports-CommentsClose CommentsPermalink





(1) RESOLUTION PLAN- The Board of Governors shall require each nonbank financial company supervised by the Board of Governors and bank holding companies described in subsection (a) to report periodically to the Board of Governors, the Council, and the Corporation the plan of such company for rapid and orderly resolution in the event of material financial distress or failure.CommentsClose CommentsPermalink





(2) CREDIT EXPOSURE REPORT- The Board of Governors shall require each nonbank financial company supervised by the Board of Governors and bank holding companies described in subsection (a) to report periodically to the Board of Governors, the Council, and the Corporation on--CommentsClose CommentsPermalink





(A) the nature and extent to which the company has credit exposure to other significant nonbank financial companies and significant bank holding companies; andCommentsClose CommentsPermalink





(B) the nature and extent to which other significant nonbank financial companies and significant bank holding companies have credit exposure to that company.CommentsClose CommentsPermalink





(3) REVIEW- The Board of Governors and the Corporation shall review the information provided in accordance with this section by each nonbank financial company supervised by the Board of Governors and bank holding company described in subsection (a).CommentsClose CommentsPermalink





(4) NOTICE OF DEFICIENCIES- If the Board of Governors and the Corporation jointly determine, based on their review under paragraph (3), that the resolution plan of a nonbank financial company supervised by the Board of Governors or a bank holding company described in subsection (a) is not credible or would not facilitate an orderly resolution of the company under title 11, United States Code--CommentsClose CommentsPermalink





(A) the Board of Governors and the Corporation shall notify the company, as applicable, of the deficiencies in the resolution plan; andCommentsClose CommentsPermalink





(B) the company shall resubmit the resolution plan within a time frame determined by the Board of Governors and the Corporation, with revisions demonstrating that the plan is credible and would result in an orderly resolution under title 11, United States Code, including any proposed changes in business operations and corporate structure to facilitate implementation of the plan.CommentsClose CommentsPermalink





(5) FAILURE TO RESUBMIT CREDIBLE PLAN-CommentsClose CommentsPermalink





(A) IN GENERAL- If a nonbank financial company supervised by the Board of Governors or a bank holding company described in subsection (a) fails to timely resubmit the resolution plan as required under paragraph (4), with such revisions as are required under subparagraph (B), the Board of Governors and the Corporation may jointly impose more stringent capital, leverage, or liquidity requirements, or restrictions on the growth, activities, or operations of the company, or any subsidiary thereof, until such time as the company resubmits a plan that remedies the deficiencies.CommentsClose CommentsPermalink





(B) DIVESTITURE- The Board of Governors and the Corporation, in consultation with the Council, may direct a nonbank financial company supervised by the Board of Governors or a bank holding company described in subsection (a), by order, to divest certain assets or operations identified by the Board of Governors and the Corporation, to facilitate an orderly resolution of such company under title 11, United States Code, in the event of the failure of such company, in any case in which--CommentsClose CommentsPermalink





(i) the Board of Governors and the Corporation have jointly imposed more stringent requirements on the company pursuant to subparagraph (A); andCommentsClose CommentsPermalink





(ii) the company has failed, within the 2-year period beginning on the date of the imposition of such requirements under subparagraph (A), to resubmit the resolution plan with such revisions as were required under paragraph (4)(B).CommentsClose CommentsPermalink





(6) RULES- Not later than 18 months after the date of enactment of this Act, the Board of Governors and the Corporation shall jointly issue final rules implementing this subsection.CommentsClose CommentsPermalink





(e) Concentration Limits-CommentsClose CommentsPermalink





(1) STANDARDS- In order to limit the risks that the failure of any individual company could pose to a nonbank financial company supervised by the Board of Governors or a bank holding company described in subsection (a), the Board of Governors, by regulation, shall prescribe standards that limit such risks.CommentsClose CommentsPermalink





(2) LIMITATION ON CREDIT EXPOSURE- The regulations prescribed by the Board of Governors under paragraph (1) shall prohibit each nonbank financial company supervised by the Board of Governors and bank holding company described in subsection (a) from having credit exposure to any unaffiliated company that exceeds 25 percent of the capital stock and surplus (or such lower amount as the Board of Governors may determine by regulation to be necessary to mitigate risks to the financial stability of the United States) of the company.CommentsClose CommentsPermalink





(3) CREDIT EXPOSURE- For purposes of paragraph (2), ‘credit exposure’ to a company means--CommentsClose CommentsPermalink





(A) all extensions of credit to the company, including loans, deposits, and lines of credit;CommentsClose CommentsPermalink





(B) all repurchase agreements and reverse repurchase agreements with the company;CommentsClose CommentsPermalink





(C) all securities borrowing and lending transactions with the company, to the extent that such transactions create credit exposure for the nonbank financial company supervised by the Board of Governors or a bank holding company described in subsection (a);CommentsClose CommentsPermalink





(D) all guarantees, acceptances, or letters of credit (including endorsement or standby letters of credit) issued on behalf of the company;CommentsClose CommentsPermalink





(E) all purchases of or investment in securities issued by the company;CommentsClose CommentsPermalink





(F) counterparty credit exposure to the company in connection with a derivative transaction between the nonbank financial company supervised by the Board of Governors or a bank holding company described in subsection (a) and the company; andCommentsClose CommentsPermalink





(G) any other similar transactions that the Board of Governors, by regulation, determines to be a credit exposure for purposes of this section.CommentsClose CommentsPermalink





(4) ATTRIBUTION RULE- For purposes of this subsection, any transaction by a nonbank financial company supervised by the Board of Governors or a bank holding company described in subsection (a) with any person is a transaction with a company, to the extent that the proceeds of the transaction are used for the benefit of, or transferred to, that company.CommentsClose CommentsPermalink





(5) RULEMAKING- The Board of Governors may issue such regulations and orders, including definitions consistent with this section, as may be necessary to administer and carry out this subsection.CommentsClose CommentsPermalink





(6) EXEMPTIONS- The Board of Governors may, by regulation or order, exempt transactions, in whole or in part, from the definition of ‘credit exposure’ for purposes of this subsection, if the Board of Governors finds that the exemption is in the public interest and is consistent with the purpose of this subsection.CommentsClose CommentsPermalink





(7) TRANSITION PERIOD-CommentsClose CommentsPermalink





(A) IN GENERAL- This subsection and any regulations and orders of the Board of Governors under this subsection shall not be effective until 3 years after the date of enactment of this Act.CommentsClose CommentsPermalink





(B) EXTENSION AUTHORIZED- The Board of Governors may extend the period specified in subparagraph (A) for not longer than an additional 2 years.CommentsClose CommentsPermalink





(f) Enhanced Public Disclosures- The Board of Governors may prescribe, by regulation, periodic public disclosures by nonbank financial companies supervised by the Board of Governors and bank holding companies described in subsection (a) in order to support market evaluation of the risk profile, capital adequacy, and risk management capabilities thereof.CommentsClose CommentsPermalink





(g) Risk Committee-CommentsClose CommentsPermalink





(1) NONBANK FINANCIAL COMPANIES SUPERVISED BY THE BOARD OF GOVERNORS- The Board of Governors shall require each nonbank financial company supervised by the Board of Governors that is a publicly traded company to establish a risk committee, as set forth in paragraph (3), not later than 1 year after the date of receipt of a notice of final determination under section 113(d)(3) with respect to such nonbank financial company supervised by the Board of Governors.CommentsClose CommentsPermalink





(2) CERTAIN BANK HOLDING COMPANIES-CommentsClose CommentsPermalink





(A) MANDATORY REGULATIONS- The Board of Governors shall issue regulations requiring each bank holding company that is a publicly traded company and that has total consolidated assets of not less than $10,000,000,000 to establish a risk committee, as set forth in paragraph (3).CommentsClose CommentsPermalink





(B) PERMISSIVE REGULATIONS- The Board of Governors may require each bank holding company that is a publicly traded company and that has total consolidated assets of less than $10,000,000,000 to establish a risk committee, as set forth in paragraph (3), as determined necessary or appropriate by the Board of Governors to promote sound risk management practices.CommentsClose CommentsPermalink





(3) RISK COMMITTEE- A risk committee required by this subsection shall--CommentsClose CommentsPermalink





(A) be responsible for the oversight of the enterprise-wide risk management practices of the nonbank financial company supervised by the Board of Governors or bank holding company described in subsection (a), as applicable;CommentsClose CommentsPermalink





(B) include such number of independent directors as the Board of Governors may determine appropriate, based on the nature of operations, size of assets, and other appropriate criteria related to the nonbank financial company supervised by the Board of Governors or a bank holding company described in subsection (a), as applicable; andCommentsClose CommentsPermalink





(C) include at least 1 risk management expert having experience in identifying, assessing, and managing risk exposures of large, complex firms.CommentsClose CommentsPermalink





(4) RULEMAKING- The Board of Governors shall issue final rules to carry out this subsection, not later than 1 year after the transfer date, to take effect not later than 15 months after the transfer date.CommentsClose CommentsPermalink





(h) Stress Tests- The Board of Governors shall conduct analyses in which nonbank financial companies supervised by the Board of Governors and bank holding companies described in subsection (a) are subject to evaluation of whether the companies have the capital, on a total consolidated basis, necessary to absorb losses as a result of adverse economic conditions. The Board of Governors may develop and apply such other analytic techniques as are necessary to identify, measure, and monitor risks to the financial stability of the United States.CommentsClose CommentsPermalink

SEC. 166. EARLY REMEDIATION REQUIREMENTS.

(a) In General- The Board of Governors, in consultation with the Council and the Corporation, shall prescribe regulations establishing requirements to provide for the early remediation of financial distress of a nonbank financial company supervised by the Board of Governors or a bank holding company described in section 165(a), except that nothing in this subsection authorizes the provision of financial assistance from the Federal Government.CommentsClose CommentsPermalink





(b) Purpose of the Early Remediation Requirements- The purpose of the early remediation requirements under subsection (a) shall be to establish a series of specific remedial actions to be taken by a nonbank financial company supervised by the Board of Governors or a bank holding company described in section 165(a) that is experiencing increasing financial distress, in order to minimize the probability that the company will become insolvent and the potential harm of such insolvency to the financial stability of the United States.CommentsClose CommentsPermalink





(c) Remediation Requirements- The regulations prescribed by the Board of Governors under subsection (a) shall--CommentsClose CommentsPermalink





(1) define measures of the financial condition of the company, including regulatory capital, liquidity measures, and other forward-looking indicators; andCommentsClose CommentsPermalink





(2) establish requirements that increase in stringency as the financial condition of the company declines, including--CommentsClose CommentsPermalink





(A) requirements in the initial stages of financial decline, including limits on capital distributions, acquisitions, and asset growth; andCommentsClose CommentsPermalink





(B) requirements at later stages of financial decline, including a capital restoration plan and capital-raising requirements, limits on transactions with affiliates, management changes, and asset sales.CommentsClose CommentsPermalink

SEC. 167. AFFILIATIONS.

(a) Affiliations- Nothing in this subtitle shall be construed to require a nonbank financial company supervised by the Board of Governors, or a company that controls a nonbank financial company supervised by the Board of Governors, to conform the activities thereof to the requirements of section 4 of the Bank Holding Company Act of 1956 (12 U.S.C. 1843).CommentsClose CommentsPermalink





(b) Requirement-CommentsClose CommentsPermalink





(1) IN GENERAL- If a nonbank financial company supervised by the Board of Governors conducts activities other than those that are determined to be financial in nature or incidental thereto under section 4(k) of the Bank Holding Company Act of 1956, the Board of Governors may require such company to establish and conduct such activities that are determined to be financial in nature or incidental thereto in an intermediate holding company established pursuant to regulation of the Board of Governors, not later than 90 days after the date on which the nonbank financial company supervised by the Board of Governors was notified of the determination under section 113(a).CommentsClose CommentsPermalink





(2) INTERNAL FINANCIAL ACTIVITIES- For purposes of this subsection, activities that are determined to be financial in nature or incidental thereto under section 4(k) of the Bank Holding Company Act of 1956, as described in paragraph (1), shall not include internal financial activities conducted for a nonbank financial company supervised by the Board of Governors or any affiliate, including internal treasury, investment, and employee benefit functions. With respect to any internal financial activity of such company during the year prior to the date of enactment of this Act, such company may continue to engage in such activity as long as at least 2/3 of the assets or 2/3 of the revenues generated from the activity are from or attributable to such company, subject to review by the Board of Governors, to determine whether engaging in such activity presents undue risk to such company or to the financial stability of the United States.CommentsClose CommentsPermalink





(c) Regulations- The Board of Governors--CommentsClose CommentsPermalink





(1) shall promulgate regulations to establish the criteria for determining whether to require a nonbank financial company supervised by the Board of Governors to establish an intermediate holding company under subsection (a); andCommentsClose CommentsPermalink





(2) may promulgate regulations to establish any restrictions or limitations on transactions between an intermediate holding company or a nonbank financial company supervised by the Board of Governors and its affiliates, as necessary to prevent unsafe and unsound practices in connection with transactions between such company, or any subsidiary thereof, and its parent company or affiliates that are not subsidiaries of such company, except that such regulations shall not restrict or limit any transaction in connection with the bona fide acquisition or lease by an unaffiliated person of assets, goods, or services.CommentsClose CommentsPermalink

SEC. 168. REGULATIONS.

Except as otherwise specified in this subtitle, not later than 18 months after the transfer date, the Board of Governors shall issue final regulations to implement this subtitle and the amendments made by this subtitle.CommentsClose CommentsPermalink

SEC. 169. AVOIDING DUPLICATION.

The Board of Governors shall take any action that the Board of Governors deems appropriate to avoid imposing requirements under this subtitle that are duplicative of requirements applicable to bank holding companies and nonbank financial companies under other provisions of law.CommentsClose CommentsPermalink

SEC. 170. SAFE HARBOR.

(a) Regulations- The Board of Governors shall promulgate regulations on behalf of, and in consultation with, the Council setting forth the criteria for exempting certain types or classes of U.S. nonbank financial companies or foreign nonbank financial companies from supervision by the Board of Governors.CommentsClose CommentsPermalink





(b) Considerations- In developing the criteria under subsection (a), the Board of Governors shall take into account the factors for consideration described in subsections (a) and (b) of section 113 in determining whether a U.S. nonbank financial company or foreign nonbank financial company shall be supervised by the Board of Governors.CommentsClose CommentsPermalink





(c) Rule of Construction- Nothing in this section shall be construed to require supervision by the Board of Governors of a U.S. nonbank financial company or foreign nonbank financial company, if such company does not meet the criteria for exemption established under subsection (a).CommentsClose CommentsPermalink





(d) Update- The Board of Governors shall, in consultation with the Council, review the regulations promulgated under subsection (a), not less frequently than every 5 years, and based upon the review, the Board of Governors may revise such regulations on behalf of, and in consultation with, the Council to update as necessary the criteria set forth in such regulations.CommentsClose CommentsPermalink





(e) Transition Period- No revisions under subsection (d) shall take effect before the end of the 2-year period after the date of publication of such revisions in final form.CommentsClose CommentsPermalink





(f) Report- The Chairperson of the Board of Governors and the Chairperson of the Council shall submit a joint report to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives not later than 30 days after the date of the issuance in final form of the regulations under subsection (a), or any subsequent revision to such regulations under subsection (d), as applicable. Such report shall include, at a minimum, the rationale for exemption and empirical evidence to support the criteria for exemption.CommentsClose CommentsPermalink

TITLE II--ORDERLY LIQUIDATION AUTHORITYCommentsClose CommentsPermalink

SEC. 201. DEFINITIONS.

In this title, the following definitions shall apply:CommentsClose CommentsPermalink





(1) ADMINISTRATIVE EXPENSES OF THE RECEIVER- The term ‘administrative expenses of the receiver’ includes--CommentsClose CommentsPermalink





(A) the actual, necessary costs and expenses incurred by the Corporation as receiver for a covered financial company in liquidating a covered financial company; andCommentsClose CommentsPermalink





(B) any obligations that the Corporation as receiver for a covered financial company determines are necessary and appropriate to facilitate the smooth and orderly liquidation of the covered financial company.CommentsClose CommentsPermalink





(2) BANKRUPTCY CODE- The term ‘Bankruptcy Code’ means title 11, United States Code.CommentsClose CommentsPermalink





(3) BRIDGE FINANCIAL COMPANY- The term ‘bridge financial company’ means a new financial company organized by the Corporation in accordance with section 210(h) for the purpose of resolving a covered financial company.CommentsClose CommentsPermalink





(4) CLAIM- The term ‘claim’ means any right of payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured.CommentsClose CommentsPermalink





(5) COMPANY- The term ‘company’ has the same meaning as in section 2(b) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(b)), except that such term includes any company described in paragraph (11), the majority of the securities of which are owned by the United States or any State.CommentsClose CommentsPermalink





(6) COVERED BROKER OR DEALER- The term ‘covered broker or dealer’ means a covered financial company that is a broker or dealer that--CommentsClose CommentsPermalink





(A) is registered with the Commission under section 15(b) of the Securities Exchange Act of 1934 (15 U.S.C. 78o(b)); andCommentsClose CommentsPermalink





(B) is a member of SIPC.CommentsClose CommentsPermalink





(7) COVERED FINANCIAL COMPANY- The term ‘covered financial company’--CommentsClose CommentsPermalink





(A) means a financial company for which a determination has been made under section 203(b); andCommentsClose CommentsPermalink





(B) does not include an insured depository institution.CommentsClose CommentsPermalink





(8) COVERED SUBSIDIARY- The term ‘covered subsidiary’ means a subsidiary of a covered financial company, other than--CommentsClose CommentsPermalink





(A) an insured depository institution;CommentsClose CommentsPermalink





(B) an insurance company; orCommentsClose CommentsPermalink





(C) a covered broker or dealer.CommentsClose CommentsPermalink





(9) DEFINITIONS RELATING TO COVERED BROKERS AND DEALERS- The terms ‘customer’, ‘customer name securities’, ‘customer property’, and ‘net equity’ in the context of a covered broker or dealer, have the same meanings as in section 16 of the Securities Investor Protection Act of 1970 (15 U.S.C. 78lll).CommentsClose CommentsPermalink





(10) FINANCIAL COMPANY- The term ‘financial company’ means any company that--CommentsClose CommentsPermalink





(A) is incorporated or organized under any provision of Federal law or the laws of any State;CommentsClose CommentsPermalink





(B) is--CommentsClose CommentsPermalink





(i) a bank holding company, as defined in section 2(a) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(a)), and including any company described in paragraph (5);CommentsClose CommentsPermalink





(ii) a nonbank financial company supervised by the Board of Governors;CommentsClose CommentsPermalink





(iii) any company that is predominantly engaged in activities that the Board of Governors has determined are financial in nature or incidental thereto for purposes of section 4(k) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(k)) other than a company described in clause (i) or (ii); orCommentsClose CommentsPermalink





(iv) any subsidiary of any company described in any of clauses (i) through (iii) (other than a subsidiary that is an insured depository institution or an insurance company); andCommentsClose CommentsPermalink





(C) is not a Farm Credit System institution chartered under and subject to the provisions of the Farm Credit Act of 1971, as amended (12 U.S.C. 2001 et seq.).CommentsClose CommentsPermalink





(11) FUND- The term ‘Fund’ means the Orderly Liquidation Fund established under section 210(n).CommentsClose CommentsPermalink





(12) INSURANCE COMPANY- The term ‘insurance company’ means any entity that is--CommentsClose CommentsPermalink





(A) engaged in the business of insurance;CommentsClose CommentsPermalink





(B) subject to regulation by a State insurance regulator; andCommentsClose CommentsPermalink





(C) covered by a State law that is designed to specifically deal with the rehabilitation, liquidation, or insolvency of an insurance company.CommentsClose CommentsPermalink





(13) NONBANK FINANCIAL COMPANY- The term ‘nonbank financial company’ has the same meaning as in section 102(a)(4)(C).CommentsClose CommentsPermalink





(14) NONBANK FINANCIAL COMPANY SUPERVISED BY THE BOARD OF GOVERNORS- The term ‘nonbank financial company supervised by the Board of Governors’ has the same meaning as in section 102(a)(3)(D).CommentsClose CommentsPermalink





(15) PANEL- The term ‘Panel’ means the Orderly Liquidation Authority Panel established under section 202.CommentsClose CommentsPermalink





(16) SIPC- The term ‘SIPC’ means the Securities Investor Protection Corporation.CommentsClose CommentsPermalink

SEC. 202. ORDERLY LIQUIDATION AUTHORITY PANEL.

(a) Orderly Liquidation Authority Panel-CommentsClose CommentsPermalink





(1) ESTABLISHMENT- There is established in the United States Bankruptcy Court for the District of Delaware, an Orderly Liquidation Authority Panel. The Chief Judge of the United States Bankruptcy Court for the District of Delaware shall appoint judges to the Panel, consistent with paragraph (2). In making such appointments, the Chief Judge shall consider the expertise in financial matters of each judge.CommentsClose CommentsPermalink





(2) COMPOSITION- The Panel shall be composed of 3 judges from the United States Bankruptcy Court for the District of Delaware.CommentsClose CommentsPermalink





(3) JURISDICTION- The Panel shall have original and exclusive jurisdiction of proceedings to consider petitions by the Secretary under subsection (b)(1).CommentsClose CommentsPermalink





(b) Commencement of Orderly Liquidation-CommentsClose CommentsPermalink





(1) PETITION TO PANEL-CommentsClose CommentsPermalink





(A) ORDERLY LIQUIDATION AUTHORITY PANEL-CommentsClose CommentsPermalink





(i) PETITION TO PANEL- Subsequent to a determination by the Secretary under section 203 that a financial company meets the criteria in section 203(b), the Secretary, upon notice to the Corporation and the covered financial company, shall petition the Panel for an order authorizing the Secretary to appoint the Corporation as receiver.CommentsClose CommentsPermalink





(ii) FORM AND CONTENT OF ORDER- The Secretary shall present all relevant findings and the recommendation made pursuant to section 203(a) to the Panel. The petition shall be filed under seal.CommentsClose CommentsPermalink





(iii) DETERMINATION- On a strictly confidential basis, and without any prior public disclosure, the Panel, after notice to the covered financial company and a hearing in which the covered financial company may oppose the petition, shall determine, within 24 hours of receipt of the petition filed by the Secretary, whether the determination of the Secretary that the covered financial company is in default or in danger of default is supported by substantial evidence.CommentsClose CommentsPermalink





(iv) ISSUANCE OF ORDER- If the Panel determines that the determination of the Secretary that the covered financial company is in default or in danger of default--CommentsClose CommentsPermalink





(I) is supported by substantial evidence, the Panel shall issue an order immediately authorizing the Secretary to appoint the Corporation as receiver of the covered financial company; orCommentsClose CommentsPermalink





(II) is not supported by substantial evidence, the Panel shall immediately provide to the Secretary a written statement of each reason supporting its determination, and afford the Secretary an immediate opportunity to amend and refile the petition under clause (i).CommentsClose CommentsPermalink





(B) EFFECT OF DETERMINATION- The determination of the Panel under subparagraph (A) shall be final, and shall be subject to appeal only in accordance with paragraph (2). The decision shall not be subject to any stay or injunction pending appeal. Upon conclusion of its proceedings under subparagraph (A), the Panel shall provide immediately for the record a written statement of each reason supporting the decision of the Panel, and shall provide copies thereof to the Secretary and the covered financial company.CommentsClose CommentsPermalink





(C) CRIMINAL PENALTIES- A person who recklessly discloses a determination of the Secretary under section 203(b) or a petition of the Secretary under subparagraph (A), or the pendency of court proceedings as provided for under subparagraph (A), shall be fined not more than $250,000, or imprisoned for not more than 5 years, or both.CommentsClose CommentsPermalink





(2) APPEAL OF DECISIONS OF THE PANEL-CommentsClose CommentsPermalink





(A) APPEAL TO COURT OF APPEALS-CommentsClose CommentsPermalink





(i) IN GENERAL- Subject to clause (ii), the United States Court of Appeals for the Third Circuit shall have jurisdiction of an appeal of a final decision of the Panel filed by the Secretary or a covered financial company, through its board of directors, notwithstanding section 210(a)(1)(A)(i), not later than 30 days after the date on which the decision of the Panel is rendered or deemed rendered under this subsection.CommentsClose CommentsPermalink





(ii) CONDITION OF JURISDICTION- The Court of Appeals shall have jurisdiction of an appeal by a covered financial company only if the covered financial company did not acquiesce or consent to the appointment of a receiver by the Secretary under paragraph (1)(A).CommentsClose CommentsPermalink





(iii) EXPEDITION- The Court of Appeals shall consider any appeal under this subparagraph on an expedited basis.CommentsClose CommentsPermalink





(iv) SCOPE OF REVIEW- For an appeal taken under this subparagraph, review shall be limited to whether the determination of the Secretary that a covered financial company is in default or in danger of default is supported by substantial evidence.CommentsClose CommentsPermalink





(B) APPEAL TO THE SUPREME COURT-CommentsClose CommentsPermalink





(i) IN GENERAL- A petition for a writ of certiorari to review a decision of the Court of Appeals under subparagraph (A) may be filed by the Secretary or the covered financial company, through its board of directors, notwithstanding section 210(a)(1)(A)(i), with the Supreme Court of the United States, not later than 30 days after the date of the final decision of the Court of Appeals, and the Supreme Court shall have discretionary jurisdiction to review such decision.CommentsClose CommentsPermalink





(ii) WRITTEN STATEMENT- In the event of a petition under clause (i), the Court of Appeals shall immediately provide for the record a written statement of each reason for its decision.CommentsClose CommentsPermalink





(iii) EXPEDITION- The Supreme Court shall consider any petition under this subparagraph on an expedited basis.CommentsClose CommentsPermalink





(iv) SCOPE OF REVIEW- Review by the Supreme Court under this subparagraph shall be limited to whether the determination of the Secretary that the covered financial company is in default or in danger of default is supported by substantial evidence.CommentsClose CommentsPermalink





(c) Establishment and Transmittal of Rules and Procedures-CommentsClose CommentsPermalink





(1) IN GENERAL- Not later than 6 months after the date of enactment of this Act, the Panel shall establish such rules and procedures as may be necessary to ensure the orderly conduct of proceedings, including rules and procedures to ensure that the 24-hour deadline is met and that the Secretary shall have an ongoing opportunity to amend and refile petitions under subsection (b)(1). The rules and procedures shall include provisions for the appointment of judges to the Panel, such that the composition of the Panel is established in advance of the filing of a petition under subsection (b).CommentsClose CommentsPermalink





(2) PUBLICATION OF RULES- The rules and procedures established under paragraph (1), and any modifications of such rules and procedures, shall be recorded and shall be transmitted to--CommentsClose CommentsPermalink





(A) each judge of the Panel;CommentsClose CommentsPermalink





(B) the Chief Judge of the United States Bankruptcy Court for the District of Delaware;CommentsClose CommentsPermalink





(C) the Committee on the Judiciary of the Senate;CommentsClose CommentsPermalink





(D) the Committee on Banking, Housing, and Urban Affairs of the Senate;CommentsClose CommentsPermalink





(E) the Committee on the Judiciary of the House of Representatives; andCommentsClose CommentsPermalink





(F) the Committee on Financial Services of the House of Representatives.CommentsClose CommentsPermalink





(d) Provisions Applicable to Financial Companies-CommentsClose CommentsPermalink





(1) BANKRUPTCY CODE- Except as provided in this subsection, the provisions of the Bankruptcy Code and rules issued thereunder, and not the provisions of this title, shall apply to financial companies that are not covered financial companies for which the Corporation has been appointed as receiver.CommentsClose CommentsPermalink





(2) THIS TITLE- The provisions of this title shall exclusively apply to and govern all matters relating to covered financial companies for which the Corporation is appointed as receiver, and no provisions of the Bankruptcy Code or the rules issued thereunder shall apply in such cases.CommentsClose CommentsPermalink





(e) Study of Bankruptcy and Orderly Liquidation Process for Financial Companies-CommentsClose CommentsPermalink





(1) STUDY-CommentsClose CommentsPermalink





(A) IN GENERAL- The Administrative Office of the United States Courts and the Comptroller General of the United States shall each monitor the activities of the Panel, and each such Office shall conduct separate studies regarding the bankruptcy and orderly liquidation process for financial companies under the Bankruptcy Code.CommentsClose CommentsPermalink





(B) ISSUES TO BE STUDIED- In conducting the study under subparagraph (A), the Administrative Office of the United States Courts and the Comptroller General of the United States each shall evaluate--CommentsClose CommentsPermalink





(i) the effectiveness of chapter 7 or chapter 11 of the Bankruptcy Code in facilitating the orderly liquidation or reorganization of financial companies;CommentsClose CommentsPermalink





(ii) ways to maximize the efficiency and effectiveness of the Panel; andCommentsClose CommentsPermalink





(iii) ways to make the orderly liquidation process under the Bankruptcy Code for financial companies more effective.CommentsClose CommentsPermalink





(2) REPORTS- Not later than 1 year after the date of enactment of this Act, in each successive year until the third year, and every fifth year after that date of enactment, the Administrative Office of the United States Courts and the Comptroller General of the United States shall submit to the Committee on Banking, Housing, and Urban Affairs and the Committee on the Judiciary of the Senate and the Committee on Financial Services and the Committee on the Judiciary of the House of Representatives separate reports summarizing the results of the studies conducted under paragraph (1).CommentsClose CommentsPermalink





(f) Study of International Coordination Relating to Bankruptcy Process for Financial Companies-CommentsClose CommentsPermalink





(1) STUDY-CommentsClose CommentsPermalink





(A) IN GENERAL- The Comptroller General of the United States shall conduct a study regarding international coordination relating to the orderly liquidation of financial companies under the Bankruptcy Code.CommentsClose CommentsPermalink





(B) ISSUES TO BE STUDIED- In conducting the study under subparagraph (A), the Comptroller General of the United States shall evaluate, with respect to the bankruptcy process for financial companies--CommentsClose CommentsPermalink





(i) the extent to which international coordination currently exists;CommentsClose CommentsPermalink





(ii) current mechanisms and structures for facilitating international cooperation;CommentsClose CommentsPermalink





(iii) barriers to effective international coordination; andCommentsClose CommentsPermalink





(iv) ways to increase and make more effective international coordination.CommentsClose CommentsPermalink





(2) REPORT- Not later than 1 year after the date of enactment of this Act, the Comptroller General of the United States shall submit to the Committee on Banking, Housing, and Urban Affairs and the Committee on the Judiciary of the Senate and the Committee on Financial Services and the Committee on the Judiciary of the House of Representatives and the Secretary a report summarizing the results of the study conducted under paragraph (1).CommentsClose CommentsPermalink

SEC. 203. SYSTEMIC RISK DETERMINATION.

(a) Written Recommendation and Determination-CommentsClose CommentsPermalink





(1) VOTE REQUIRED-CommentsClose CommentsPermalink





(A) IN GENERAL- On their own initiative, or at the request of the Secretary, the Corporation and the Board of Governors shall consider whether to make a written recommendation described in paragraph (2) with respect to whether the Secretary should appoint the Corporation as receiver for a financial company. Such recommendation shall be made upon a vote of not fewer than 2/3 of the members of the Board of Governors then serving and 2/3 of the members of the board of directors of the Corporation then serving.CommentsClose CommentsPermalink





(B) CASES INVOLVING COVERED BROKERS OR DEALERS- In the case of a covered broker or dealer, or in which the largest United States subsidiary (as measured by total assets as of the end of the previous calendar quarter) of a financial company is a covered broker or dealer, the Commission and the Board of Governors, at the request of the Secretary, or on their own initiative, shall consider whether to make the written recommendation described in paragraph (2) with respect to the financial company. Subject to the requirements in paragraph (2), such recommendation shall be made upon a vote of not fewer than 2/3 of the members of the Board of Governors then serving and the members of the Commission then serving, and in consultation with the Corporation.CommentsClose CommentsPermalink





(2) RECOMMENDATION REQUIRED- Any written recommendation pursuant to paragraph (1) shall contain--CommentsClose CommentsPermalink





(A) an evaluation of whether the financial company is in default or in danger of default;CommentsClose CommentsPermalink





(B) a description of the effect that the default of the financial company would have on financial stability in the United States;CommentsClose CommentsPermalink





(C) a recommendation regarding the nature and the extent of actions to be taken under this title regarding the financial company;CommentsClose CommentsPermalink





(D) an evaluation of the likelihood of a private sector alternative to prevent the default of the financial company;CommentsClose CommentsPermalink





(E) an evaluation of why a case under the Bankruptcy Code is not appropriate for the financial company; andCommentsClose CommentsPermalink





(F) an evaluation of the effects on creditors, counterparties, and shareholders of the financial company and other market participants.CommentsClose CommentsPermalink





(b) Determination by the Secretary- Notwithstanding any other provision of Federal or State law, the Secretary shall take action in accordance with section 202(b)(1)(A), if, upon the written recommendation under subsection (a), the Secretary (in consultation with the President) determines that--CommentsClose CommentsPermalink





(1) the financial company is in default or in danger of default;CommentsClose CommentsPermalink





(2) the failure of the financial company and its resolution under otherwise applicable Federal or State law would have serious adverse effects on financial stability in the United States;CommentsClose CommentsPermalink





(3) no viable private sector alternative is available to prevent the default of the financial company;CommentsClose CommentsPermalink





(4) any effect on the claims or interests of creditors, counterparties, and shareholders of the financial company and other market participants as a result of actions to be taken under this title is appropriate, given the impact that any action taken under this title would have on financial stability in the United States;CommentsClose CommentsPermalink





(5) any action under section 204 would avoid or mitigate such adverse effects, taking into consideration the effectiveness of the action in mitigating potential adverse effects on the financial system, the cost to the general fund of the Treasury, and the potential to increase excessive risk taking on the part of creditors, counterparties, and shareholders in the financial company; andCommentsClose CommentsPermalink





(6) a Federal regulatory agency has ordered the financial company to convert all of its convertible debt instruments that are subject to the regulatory order.CommentsClose CommentsPermalink





(c) Documentation and Review-CommentsClose CommentsPermalink





(1) IN GENERAL- The Secretary shall--CommentsClose CommentsPermalink





(A) document any determination under subsection (b);CommentsClose CommentsPermalink





(B) retain the documentation for review under paragraph (2); andCommentsClose CommentsPermalink





(C) notify the covered financial company and the Corporation of such determination.CommentsClose CommentsPermalink





(2) REPORT TO CONGRESS- Not later than 24 hours after the date of appointment of the Corporation as receiver for a covered financial company, the Secretary shall provide written notice of the recommendations and determinations reached in accordance with subsections (a) and (b) to the Majority Leader and the Minority Leader of the Senate and the Speaker and the Minority Leader of the House of Representatives, the Committee on Banking, Housing, and Urban Affairs of the Senate, and the Committee on Financial Services of the House of Representatives, which shall consist of a summary of the basis for the determination, including, to the extent available at the time of the determination--CommentsClose CommentsPermalink





(A) the size and financial condition of the covered financial company;CommentsClose CommentsPermalink





(B) the sources of capital and credit support that were available to the covered financial company;CommentsClose CommentsPermalink





(C) the operations of the covered financial company that could have had a significant impact on financial stability, markets, or both;CommentsClose CommentsPermalink





(D) identification of the banks and financial companies which may be able to provide the services offered by the covered financial company;CommentsClose CommentsPermalink





(E) any potential international ramifications of resolution of the covered financial company under other applicable insolvency law;CommentsClose CommentsPermalink





(F) an estimate of the potential effect of the resolution of the covered financial company under other applicable insolvency law on the financial stability of the United States;CommentsClose CommentsPermalink





(G) the potential effect of the appointment of a receiver by the Secretary on consumers;CommentsClose CommentsPermalink





(H) the potential effect of the appointment of a receiver by the Secretary on the financial system, financial markets, and banks and other financial companies; andCommentsClose CommentsPermalink





(I) whether resolution of the covered financial company under other applicable insolvency law would cause banks or other financial companies to experience severe liquidity distress.CommentsClose CommentsPermalink





(3) REPORTS TO CONGRESS AND THE PUBLIC-CommentsClose CommentsPermalink





(A) IN GENERAL- Not later than 60 days after the date of appointment of the Corporation as receiver for a covered financial company, the Corporation, as receiver, shall--CommentsClose CommentsPermalink





(i) prepare reports setting forth information on the assets and liabilities of the covered financial company as of the date of the appointment;CommentsClose CommentsPermalink





(ii) file such reports with the Committee on Banking, Housing, and Urban Affairs of the Senate, and the Committee on Financial Services of the House of Representatives; andCommentsClose CommentsPermalink





(iii) publish such reports on an online website maintained by the Corporation.CommentsClose CommentsPermalink





(B) AMENDMENTS- The Corporation shall, on a timely basis, not less frequently than quarterly, amend or revise and resubmit the reports prepared under this paragraph, as necessary.CommentsClose CommentsPermalink





(4) DEFAULT OR IN DANGER OF DEFAULT- For purposes of this title, a financial company shall be considered to be in default or in danger of default if, as determined in accordance with subsection (b)--CommentsClose CommentsPermalink





(A) a case has been, or likely will promptly be, commenced with respect to the financial company under the Bankruptcy Code;CommentsClose CommentsPermalink





(B) the financial company has incurred, or is likely to incur, losses that will deplete all or substantially all of its capital, and there is no reasonable prospect for the company to avoid such depletion;CommentsClose CommentsPermalink





(C) the assets of the financial company are, or are likely to be, less than its obligations to creditors and others; orCommentsClose CommentsPermalink





(D) the financial company is, or is likely to be, unable to pay its obligations (other than those subject to a bona fide dispute) in the normal course of business.CommentsClose CommentsPermalink





(5) GAO REVIEW- The Comptroller General of the United States shall review and report to Congress on any determination under subsection (b), that results in the appointment of the Corporation as receiver, including--CommentsClose CommentsPermalink





(A) the basis for the determination;CommentsClose CommentsPermalink





(B) the purpose for which any action was taken pursuant thereto;CommentsClose CommentsPermalink





(C) the likely effect of the determination and such action on the incentives and conduct of financial companies and their creditors, counterparties, and shareholders; andCommentsClose CommentsPermalink





(D) the likely disruptive effect of the determination and such action on the reasonable expectations of creditors, counterparties, and shareholders, taking into account the impact any action under this title would have on financial stability in the United States, including whether the rights of such parties will be disrupted.CommentsClose CommentsPermalink





(d) Corporation Policies and Procedures- As soon as is practicable after the date of enactment of this Act, the Corporation shall establish policies and procedures that are acceptable to the Secretary governing the use of funds available to the Corporation to carry out this title, including the terms and conditions for the provision and use of funds under sections 204(d), 210(h)(2)(G)(iv), and 210(h)(9).CommentsClose CommentsPermalink





(e) Treatment of Insurance Companies and Insurance Company Subsidiaries-CommentsClose CommentsPermalink





(1) IN GENERAL- Notwithstanding subsection (b), if an insurance company is a covered financial company or a subsidiary or affiliate of a covered financial company, the liquidation or rehabilitation of such insurance company, and any subsidiary or affiliate of such company that is not excepted under paragraph (2), shall be conducted as provided under such State law.CommentsClose CommentsPermalink





(2) EXCEPTION FOR SUBSIDIARIES AND AFFILIATES- The requirement of paragraph (1) shall not apply with respect to any subsidiary or affiliate of an insurance company that is not itself an insurance company.CommentsClose CommentsPermalink





(3) BACKUP AUTHORITY- Notwithstanding paragraph (1), with respect to a covered financial company described in paragraph (1), if, after the end of the 60-day period beginning on the date on which a determination is made under section 202(b) with respect to such company, the appropriate regulatory agency has not filed the appropriate judicial action in the appropriate State court to place such company into orderly liquidation under the laws and requirements of the State, the Corporation shall have the authority to stand in the place of the appropriate regulatory agency and file the appropriate judicial action in the appropriate State court to place such company into orderly liquidation under the laws and requirements of the State.CommentsClose CommentsPermalink

SEC. 204. ORDERLY LIQUIDATION.

(a) Purpose of Orderly Liquidation Authority- It is the purpose of this title to provide the necessary authority to liquidate failing financial companies that pose a significant risk to the financial stability of the United States in a manner that mitigates such risk and minimizes moral hazard. The authority provided in this title shall be exercised in the manner that best fulfills such purpose, with the strong presumption that--CommentsClose CommentsPermalink





(1) creditors and shareholders will bear the losses of the financial company;CommentsClose CommentsPermalink





(2) management responsible for the condition of the financial company will not be retained; andCommentsClose CommentsPermalink





(3) the Corporation and other appropriate agencies will take all steps necessary and appropriate to assure that all parties, including management and third parties, having responsibility for the condition of the financial company bear losses consistent with their responsibility, including actions for damages, restitution, and recoupment of compensation and other gains not compatible with such responsibility.CommentsClose CommentsPermalink





(b) Corporation as Receiver- Upon the appointment of the Corporation under section 202, the Corporation shall act as the receiver for the covered financial company, with all of the rights and obligations set forth in this title.CommentsClose CommentsPermalink





(c) Consultation- The Corporation, as receiver--CommentsClose CommentsPermalink





(1) shall consult with the primary financial regulatory agency or agencies of the covered financial company and its covered subsidiaries for purposes of ensuring an orderly liquidation of the covered financial company;CommentsClose CommentsPermalink





(2) may consult with, or under subsection (a)(1)(B)(v) or (a)(1)(L) of section 210, acquire the services of, any outside experts, as appropriate to inform and aid the Corporation in the orderly liquidation process;CommentsClose CommentsPermalink





(3) shall consult with the primary financial regulatory agency or agencies of any subsidiaries of the covered financial company that are not covered subsidiaries, and coordinate with such regulators regarding the treatment of such solvent subsidiaries and the separate resolution of any such insolvent subsidiaries under other governmental authority, as appropriate; andCommentsClose CommentsPermalink





(4) shall consult with the Commission and the Securities Investor Protection Corporation in the case of any covered financial company for which the Corporation has been appointed as receiver that is a broker or dealer registered with the Commission under section 15(b) of the Securities Exchange Act of 1934 (15 U.S.C. 78o(b)) and is a member of the Securities Investor Protection Corporation, for the purpose of determining whether to transfer to a bridge financial company organized by the Corporation as receiver, without consent of any customer, customer accounts of the covered financial company.CommentsClose CommentsPermalink





(d) Funding for Orderly Liquidation- Upon its appointment as receiver for a covered financial company, and thereafter as the Corporation may, in its discretion, determine to be necessary or appropriate, the Corporation may make available to the receivership, subject to the conditions set forth in section 206 and subject to the plan described in section 210(n)(13), funds for the orderly liquidation of the covered financial company.CommentsClose CommentsPermalink

SEC. 205. ORDERLY LIQUIDATION OF COVERED BROKERS AND DEALERS.

(a) Appointment of SIPC as Trustee for Protection of Customer Securities and Property- Upon the appointment of the Corporation as receiver for any covered broker or dealer, the Corporation shall appoint, without any need for court approval, the Securities Investor Protection Corporation to act as trustee for liquidation under the Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.) of the covered broker or dealer.CommentsClose CommentsPermalink





(b) Powers and Duties of SIPC-CommentsClose CommentsPermalink





(1) IN GENERAL- Except as provided in this section, upon its appointment as trustee for the liquidation of a covered broker or dealer, SIPC shall have all of the powers and duties provided by the Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.), including, without limitation, all rights of action against third parties, but shall have no powers or duties with respect to assets and liabilities transferred by the Corporation from the covered broker or dealer to any bridge financial company established in accordance with this title.CommentsClose CommentsPermalink





(2) LIMITATION OF POWERS- The exercise by SIPC of powers and functions as trustee under subsection (a) shall not impair or impede the exercise of the powers and duties of the Corporation with regard to--CommentsClose CommentsPermalink





(A) any action, except as otherwise provided in this title--CommentsClose CommentsPermalink





(i) to make funds available under section 204(d);CommentsClose CommentsPermalink





(ii) to organize, establish, operate, or terminate any bridge financial company;CommentsClose CommentsPermalink





(iii) to transfer assets and liabilities;CommentsClose CommentsPermalink





(iv) to enforce or repudiate contracts; orCommentsClose CommentsPermalink





(v) to take any other action relating to such bridge financial company under section 210; orCommentsClose CommentsPermalink





(B) determining claims under subsection (d).CommentsClose CommentsPermalink





(3) QUALIFIED FINANCIAL CONTRACTS- Notwithstanding any provision of the Securities Investor Protection Act of 1970 to the contrary (including section 5(b)(2)(C) of that Act (15 U.S.C. 78eee(b)(2)(C))), the rights and obligations of any party to a qualified financial contract (as that term is defined in section 210(c)(8)) to which a covered broker or dealer described in subsection (a) is a party shall be governed exclusively by section 210, including the limitations and restrictions contained in section 210(c)(10)(B).CommentsClose CommentsPermalink





(c) Limitation on Court Action- Except as otherwise provided in this title, no court may take any action, including any action pursuant to the Securities Investor Protection Act of 1970 or the Bankruptcy Code, to restrain or affect the exercise of powers or functions of the Corporation as receiver for a covered broker or dealer and any claims against the Corporation as such receiver shall be determined in accordance with subsection (e) and such claims shall be limited to money damages.CommentsClose CommentsPermalink





(d) Actions by Corporation as Receiver-CommentsClose CommentsPermalink





(1) IN GENERAL- Notwithstanding any other provision of this title, no action taken by the Corporation, as receiver with respect to a covered broker or dealer, shall--CommentsClose CommentsPermalink





(A) adversely affect the rights of a customer to customer property or customer name securities;CommentsClose CommentsPermalink





(B) diminish the amount or timely payment of net equity claims of customers; orCommentsClose CommentsPermalink





(C) otherwise impair the recoveries provided to a customer under the Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.).CommentsClose CommentsPermalink





(2) NET PROCEEDS- The net proceeds from any transfer, sale, or disposition of assets by the Corporation as receiver for the covered broker or dealer shall be for the benefit of the estate of the covered broker or dealer, as provided in this title.CommentsClose CommentsPermalink





(e) Claims Against the Corporation as Receiver- Any claim against the Corporation as receiver for a covered broker or dealer for assets transferred to a bridge financial company established with respect to such covered broker or dealer--CommentsClose CommentsPermalink





(1) shall be determined in accordance with section 210(a)(2); andCommentsClose CommentsPermalink





(2) may be reviewed by the appropriate district or territorial court of the United States in accordance with section 210(a)(5).CommentsClose CommentsPermalink





(f) Satisfaction of Customer Claims-CommentsClose CommentsPermalink





(1) OBLIGATIONS TO CUSTOMERS- Notwithstanding any other provision of this title, all obligations of a covered broker or dealer or of any bridge financial company established with respect to such covered broker or dealer to a customer relating to, or net equity claims based upon, customer property shall be promptly discharged by the delivery of securities or the making of payments to or for the account of such customer, in a manner and in an amount at least as beneficial to the customer as would have been the case had the covered broker or dealer been subject to a proceeding under the Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.) without the appointment of the Corporation as receiver, and with a filing date as of the date on which the Corporation is appointed as receiver.CommentsClose CommentsPermalink





(2) SATISFACTION OF CLAIMS BY SIPC- SIPC, as trustee for a covered broker or dealer, shall satisfy customer claims in the manner and amount provided under the Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.), as if the appointment of the Corporation as receiver had not occurred, and with a filing date as of the date on which the Corporation is appointed as receiver. The Corporation shall satisfy customer claims, to the extent that a customer would have received more securities or cash with respect to the allocation of customer property had the covered financial company been subject to a proceeding under the Securities Investor Protection Act (15 U.S.C. 78aaa et seq.) without the appointment of the Corporation as receiver, and with a filing date as of the date on which the Corporation is appointed as receiver.CommentsClose CommentsPermalink





(g) Priorities-CommentsClose CommentsPermalink





(1) CUSTOMER PROPERTY- As trustee for a covered broker or dealer, SIPC shall allocate customer property and deliver customer name securities in accordance with section 8(c) of the Securities Investor Protection Act of 1970 (15 U.S.C. 78fff-2(c)).CommentsClose CommentsPermalink





(2) OTHER CLAIMS- All claims other than those described in paragraph (1) (including any unpaid claim by a customer for the allowed net equity claim of such customer from customer property) shall be paid in accordance with the priorities in section 210(b).CommentsClose CommentsPermalink





(h) Rulemaking- The Commission and the Corporation, after consultation with SIPC, shall jointly issue rules to implement this section.CommentsClose CommentsPermalink

SEC. 206. MANDATORY TERMS AND CONDITIONS FOR ALL ORDERLY LIQUIDATION ACTIONS.

In taking action under this title, the Corporation shall--CommentsClose CommentsPermalink





(1) determine that such action is necessary for purposes of the financial stability of the United States, and not for the purpose of preserving the covered financial company;CommentsClose CommentsPermalink





(2) ensure that the shareholders of a covered financial company do not receive payment until after all other claims and the Fund are fully paid;CommentsClose CommentsPermalink





(3) ensure that unsecured creditors bear losses in accordance with the priority of claim provisions in section 210;CommentsClose CommentsPermalink





(4) ensure that management responsible for the failed condition of the covered financial company is removed (if such management has not already been removed at the time at which the Corporation is appointed receiver); andCommentsClose CommentsPermalink





(5) not take an equity interest in or become a shareholder of any covered financial company or any covered subsidiary.CommentsClose CommentsPermalink

SEC. 207. DIRECTORS NOT LIABLE FOR ACQUIESCING IN APPOINTMENT OF RECEIVER.

The members of the board of directors (or body performing similar functions) of a covered financial company shall not be liable to the shareholders or creditors thereof for acquiescing in or consenting in good faith to the appointment of the Corporation as receiver for the covered financial company under section 203.CommentsClose CommentsPermalink

SEC. 208. DISMISSAL AND EXCLUSION OF OTHER ACTIONS.

(a) In General- Effective as of the date of the appointment of the Corporation as receiver for the covered financial company under section 202 or the appointment of SIPC as trustee for a covered broker or dealer under section 205, as applicable, any case or proceeding commenced with respect to the covered financial company under the Bankruptcy Code or the Securities Investor Protection Act of 1970 shall be dismissed, upon notice to the Bankruptcy Court (with respect to a case commenced under the Bankruptcy Code), and upon notice to SIPC (with respect to a covered broker or dealer) and no such case or proceeding may be commenced with respect to a covered financial company at any time while the orderly liquidation is pending.CommentsClose CommentsPermalink





(b) Revesting of Assets- Effective as of the date of appointment of the Corporation as receiver, the assets of a covered financial company shall, to the extent they have vested in any entity other than the covered financial company as a result of any case or proceeding commenced with respect to the covered financial company under the Bankruptcy Code, the Securities Investor Protection Act of 1970, or any similar provision of State liquidation or insolvency law applicable to the covered financial company, revest in the covered financial company.CommentsClose CommentsPermalink





(c) Limitation- Notwithstanding subsections (a) and (b), any order entered or other relief granted by a bankruptcy court prior to the date of appointment of the Corporation as receiver shall continue with the same validity as if an orderly liquidation had not been commenced.CommentsClose CommentsPermalink

SEC. 209. RULEMAKING; NON-CONFLICTING LAW.

The Corporation shall, in consultation with the Council, prescribe such rules or regulations as the Corporation considers necessary or appropriate to implement this title, including rules and regulations with respect to the rights, interests, and priorities of creditors, counterparties, security entitlement holders, or other persons with respect to any covered financial company or any assets or other property of or held by such covered financial company. To the extent possible, the Corporation shall seek to harmonize applicable rules and regulations promulgated under this section with the insolvency laws that would otherwise apply to a covered financial company.CommentsClose CommentsPermalink

SEC. 210. POWERS AND DUTIES OF THE CORPORATION.

(a) Powers and Authorities-CommentsClose CommentsPermalink





(1) GENERAL POWERS-CommentsClose CommentsPermalink





(A) SUCCESSOR TO COVERED FINANCIAL COMPANY- The Corporation shall, upon appointment as receiver for a covered financial company under this title, succeed to--CommentsClose CommentsPermalink





(i) all rights, titles, powers, and privileges of the covered financial company and its assets, and of any stockholder, member, officer, or director of such company; andCommentsClose CommentsPermalink





(ii) title to the books, records, and assets of any previous receiver or other legal custodian of such covered financial company.CommentsClose CommentsPermalink





(B) OPERATION OF THE COVERED FINANCIAL COMPANY DURING THE PERIOD OF ORDERLY LIQUIDATION- The Corporation, as receiver for a covered financial company, may--CommentsClose CommentsPermalink





(i) take over the assets of and operate the covered financial company with all of the powers of the members or shareholders, the directors, and the officers of the covered financial company, and conduct all business of the covered financial company;CommentsClose CommentsPermalink





(ii) collect all obligations and money owed to the covered financial company;CommentsClose CommentsPermalink





(iii) perform all functions of the covered financial company, in the name of the covered financial company;CommentsClose CommentsPermalink





(iv) manage the assets and property of the covered financial company, consistent with maximization of the value of the assets in the context of the orderly liquidation; andCommentsClose CommentsPermalink





(v) provide by contract for assistance in fulfilling any function, activity, action, or duty of the Corporation as receiver.CommentsClose CommentsPermalink





(C) FUNCTIONS OF COVERED FINANCIAL COMPANY OFFICERS, DIRECTORS, AND SHAREHOLDERS-CommentsClose CommentsPermalink





(i) IN GENERAL- The Corporation may provide for the exercise of any function by any member or stockholder, director, or officer of any covered financial company for which the Corporation has been appointed as receiver under this title.CommentsClose CommentsPermalink





(ii) PRESUMPTION- There shall be a strong presumption that the Corporation, as receiver for a covered financial company, will remove management responsible for the failed condition of the covered financial company.CommentsClose CommentsPermalink





(D) ADDITIONAL POWERS AS RECEIVER- The Corporation shall, as receiver for a covered financial company, and subject to all legally enforceable and perfected security interests and all legally enforceable security entitlements in respect of assets held by the covered financial company, liquidate, and wind-up the affairs of a covered financial company, including taking steps to realize upon the assets of the covered financial company, in such manner as the Corporation deems appropriate, including through the sale of assets, the transfer of assets to a bridge financial company established under subsection (h), or the exercise of any other rights or privileges granted to the receiver under this section.CommentsClose CommentsPermalink





(E) ADDITIONAL POWERS WITH RESPECT TO FAILING SUBSIDIARIES OF A COVERED FINANCIAL COMPANY-CommentsClose CommentsPermalink





(i) IN GENERAL- In any case in which a receiver is appointed for a covered financial company under section 202, the Corporation may appoint itself as receiver of any subsidiary (other than an insured depository institution, any covered broker or dealer, or an insurance company) of the covered financial company that is organized under Federal law or the laws of any State, if the Corporation and the Secretary jointly determine that--CommentsClose CommentsPermalink





(I) the subsidiary is in default or in danger of default;CommentsClose CommentsPermalink





(II) such action would avoid or mitigate serious adverse effects on the financial stability or economic conditions of the United States; andCommentsClose CommentsPermalink





(III) such action would facilitate the orderly liquidation of the covered financial company.CommentsClose CommentsPermalink





(ii) TREATMENT AS COVERED FINANCIAL COMPANY- If the Corporation is appointed as receiver of a subsidiary of a covered financial company under clause (i), the subsidiary shall thereafter be considered a covered financial company under this title, and the Corporation shall thereafter have all the powers and rights with respect to that subsidiary as it has with respect to a covered financial company under this title.CommentsClose CommentsPermalink





(F) ORGANIZATION OF BRIDGE COMPANIES- The Corporation, as receiver for a covered financial company, may organize a bridge financial company under subsection (h).CommentsClose CommentsPermalink





(G) MERGER; TRANSFER OF ASSETS AND LIABILITIES-CommentsClose CommentsPermalink





(i) IN GENERAL- Subject to clauses (ii) and (iii), the Corporation, as receiver for a covered financial company, may--CommentsClose CommentsPermalink





(I) merge the covered financial company with another company; orCommentsClose CommentsPermalink





(II) transfer any asset or liability of the covered financial company (including any assets and liabilities held by the covered financial company for security entitlement holders, any customer property, or any assets and liabilities associated with any trust or custody business) without obtaining any approval, assignment, or consent with respect to such transfer.CommentsClose CommentsPermalink





(ii) FEDERAL AGENCY APPROVAL; ANTITRUST REVIEW- With respect to a transaction described in clause (i)(I) that requires approval by a Federal agency--CommentsClose CommentsPermalink





(I) the transaction may not be consummated before the 5th calendar day after the date of approval by the Federal agency responsible for such approval;CommentsClose CommentsPermalink





(II) if, in connection with any such approval, a report on competitive factors is required, the Federal agency responsible for such approval shall promptly notify the Attorney General of the United States of the proposed transaction, and the Attorney General shall provide the required report not later than 10 days after the date of the request; andCommentsClose CommentsPermalink





(III) if notification under section 7A of the Clayton Act is required with respect to such transaction, then the required waiting period shall end on the 15th day after the date on which the Attorney General and the Federal Trade Commission receive such notification, unless the waiting period is terminated earlier under subsection (b)(2) of such section 7A, or is extended pursuant to subsection (e)(2) of such section 7A.CommentsClose CommentsPermalink





(iii) SETOFF- Subject to the other provisions of this title, any transferee of assets from a receiver, including a bridge financial company, shall be subject to such claims or rights as would prevail over the rights of such transferee in such assets under applicable noninsolvency law.CommentsClose CommentsPermalink





(H) PAYMENT OF VALID OBLIGATIONS- The Corporation, as receiver for a covered financial company, shall, to the extent that funds are available, pay all valid obligations of the covered financial company that are due and payable at the time of the appointment of the Corporation as receiver, in accordance with the prescriptions and limitations of this title.CommentsClose CommentsPermalink





(I) APPLICABLE NONINSOLVENCY LAW- Except as may otherwise be provided in this title, the applicable noninsolvency law shall be determined by the noninsolvency choice of law rules otherwise applicable to the claims, rights, titles, persons, or entities at issue.CommentsClose CommentsPermalink





(J) SUBPOENA AUTHORITY-CommentsClose CommentsPermalink





(i) IN GENERAL- The Corporation, as receiver for a covered financial company, may, for purposes of carrying out any power, authority, or duty with respect to the covered financial company (including determining any claim against the covered financial company and determining and realizing upon any asset of any person in the course of collecting money due the covered financial company), exercise any power established under section 8(n) of the Federal Deposit Insurance Act, as if the Corporation were the appropriate Federal banking agency for the covered financial company, and the covered financial company were an insured depository institution.CommentsClose CommentsPermalink





(ii) RULE OF CONSTRUCTION- This subparagraph may not be construed as limiting any rights that the Corporation, in any capacity, might otherwise have to exercise any powers described in clause (i) or under any other provision of law.CommentsClose CommentsPermalink





(K) INCIDENTAL POWERS- The Corporation, as receiver for a covered financial company, may exercise all powers and authorities specifically granted to receivers under this title, and such incidental powers as shall be necessary to carry out such powers under this title.CommentsClose CommentsPermalink





(L) UTILIZATION OF PRIVATE SECTOR- In carrying out its responsibilities in the management and disposition of assets from the covered financial company, the Corporation, as receiver for a covered financial company, may utilize the services of private persons, including real estate and loan portfolio asset management, property management, auction marketing, legal, and brokerage services, if such services are available in the private sector, and the Corporation determines that utilization of such services is practicable, efficient, and cost effective.CommentsClose CommentsPermalink





(M) SHAREHOLDERS AND CREDITORS OF COVERED FINANCIAL COMPANY- Notwithstanding any other provision of law, the Corporation, as receiver for a covered financial company, shall succeed by operation of law to the rights, titles, powers, and privileges described in subparagraph (A), and shall terminate all rights and claims that the stockholders and creditors of the covered financial company may have against the assets of the covered financial company or the Corporation arising out of their status as stockholders or creditors, except for their right to payment, resolution, or other satisfaction of their claims, as permitted under this section. The Corporation shall ensure that shareholders and unsecured creditors bear losses, consistent with the priority of claims provisions under this section.CommentsClose CommentsPermalink





(N) COORDINATION WITH FOREIGN FINANCIAL AUTHORITIES- The Corporation, as receiver for a covered financial company, shall coordinate, to the maximum extent possible, with the appropriate foreign financial authorities regarding the orderly liquidation of any covered financial company that has assets or operations in a country other than the United States.CommentsClose CommentsPermalink





(O) RESTRICTION ON TRANSFERS TO BRIDGE FINANCIAL COMPANY-CommentsClose CommentsPermalink





(i) SECTION OF ACCOUNTS FOR TRANSFER- If the Corporation establishes one or more bridge financial companies with respect to a covered broker or dealer, the Corporation shall transfer to a bridge financial company, all customer accounts of the covered financial company, unless the Corporation, after consulting with the Commission and SIPC, determines that--CommentsClose CommentsPermalink





(I) the customer accounts are likely to be promptly transferred to another covered broker or dealer; orCommentsClose CommentsPermalink





(II) the transfer of the accounts to a bridge financial company would materially interfere with the ability of the Corporation to avoid or mitigate serious adverse effects on financial stability or economic conditions in the United States.CommentsClose CommentsPermalink





(ii) TRANSFER OF PROPERTY- SIPC, as trustee for the liquidation of the covered broker or dealer, and the Commission, shall provide any and all reasonable assistance necessary to complete such transfers by the Corporation.CommentsClose CommentsPermalink





(iii) CUSTOMER CONSENT AND COURT APPROVAL NOT REQUIRED- Neither customer consent nor court approval shall be required to transfer any customer accounts and associated customer property to a bridge financial company in accordance with this section.CommentsClose CommentsPermalink





(iv) NOTIFICATION OF SIPC AND SHARING OF INFORMATION- The Corporation shall identify to SIPC the customer accounts and associated customer property transferred to the bridge financial company. The Corporation and SIPC shall cooperate in the sharing of any information necessary for each entity to discharge its obligations under this title and under the Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.) including by providing access to the books and records of the covered financial company and any bridge financial company established in accordance with this title.CommentsClose CommentsPermalink





(2) DETERMINATION OF CLAIMS-CommentsClose CommentsPermalink





(A) IN GENERAL- The Corporation, as receiver for a covered financial company, shall report on claims, as set forth in section 203(c)(3). Subject to paragraph (4) of this subsection, the Corporation, as receiver for a covered financial company, shall determine claims in accordance with the requirements of this subsection and regulations prescribed under section 209.CommentsClose CommentsPermalink





(B) NOTICE REQUIREMENTS- The Corporation, as receiver for a covered financial company, in any case involving the liquidation or winding up of the affairs of a covered financial company, shall--CommentsClose CommentsPermalink





(i) promptly publish a notice to the creditors of the covered financial company to present their claims, together with proof, to the receiver by a date specified in the notice, which shall be not earlier than 90 days after the date of publication of such notice; andCommentsClose CommentsPermalink





(ii) republish such notice 1 month and 2 months, respectively, after the date of publication under clause (i).CommentsClose CommentsPermalink





(C) MAILING REQUIRED- The Corporation as receiver shall mail a notice similar to the notice published under clause (i) or (ii) of subparagraph (B), at the time of such publication, to any creditor shown on the books and records of the covered financial company--CommentsClose CommentsPermalink





(i) at the last address of the creditor appearing in such books;CommentsClose CommentsPermalink





(ii) in any claim filed by the claimant; orCommentsClose CommentsPermalink





(iii) upon discovery of the name and address of a claimant not appearing on the books and records of the covered financial company, not later than 30 days after the date of the discovery of such name and address.CommentsClose CommentsPermalink





(3) PROCEDURES FOR RESOLUTION OF CLAIMS-CommentsClose CommentsPermalink





(A) DECISION PERIOD-CommentsClose CommentsPermalink





(i) IN GENERAL- Prior to the 180th day after the date on which a claim against a covered financial company is filed with the Corporation as receiver, or such later date as may be agreed as provided in clause (ii), the Corporation shall notify the claimant whether it accepts or objects to the claim, in accordance with subparagraphs (B), (C), and (D).CommentsClose CommentsPermalink





(ii) EXTENSION OF TIME- By written agreement executed not later than 180 days after the date on which a claim against a covered financial company is filed with the Corporation, the period described in clause (i) may be extended by written agreement between the claimant and the Corporation. Failure to notify the claimant of any disallowance within the time period set forth in clause (i), as it may be extended by agreement under this clause, shall be deemed to be a disallowance of such claim, and the claimant may file or continue an action in court, as provided in paragraph (4).CommentsClose CommentsPermalink





(iii) MAILING OF NOTICE SUFFICIENT- The requirements of clause (i) shall be deemed to be satisfied if the notice of any decision with respect to any claim is mailed to the last address of the claimant which appears--CommentsClose CommentsPermalink





(I) on the books, records, or both of the covered financial company;CommentsClose CommentsPermalink





(II) in the claim filed by the claimant; orCommentsClose CommentsPermalink





(III) in documents submitted in proof of the claim.CommentsClose CommentsPermalink





(iv) CONTENTS OF NOTICE OF DISALLOWANCE- If the Corporation as receiver objects to any claim filed under clause (i), the notice to the claimant shall contain--CommentsClose CommentsPermalink





(I) a statement of each reason for the disallowance; andCommentsClose CommentsPermalink





(II) the procedures required to file or continue an action in court, as provided in paragraph (4).CommentsClose CommentsPermalink





(B) ALLOWANCE OF PROVEN CLAIM- The receiver shall allow any claim received by the receiver on or before the date specified in the notice under paragraph (2)(B)(i), which is proved to the satisfaction of the receiver.CommentsClose CommentsPermalink





(C) DISALLOWANCE OF CLAIMS FILED AFTER END OF FILING PERIOD-CommentsClose CommentsPermalink





(i) IN GENERAL- Except as provided in clause (ii), claims filed after the date specified in the notice published under paragraph (2)(B)(i) shall be disallowed, and such disallowance shall be final.CommentsClose CommentsPermalink





(ii) CERTAIN EXCEPTIONS- Clause (i) shall not apply with respect to any claim filed by a claimant after the date specified in the notice published under paragraph (2)(B)(i), and such claim may be considered by the receiver under subparagraph (B), if--CommentsClose CommentsPermalink





(I) the claimant did not receive notice of the appointment of the receiver in time to file such claim before such date; andCommentsClose CommentsPermalink





(II) such claim is filed in time to permit payment of such claim.CommentsClose CommentsPermalink





(D) AUTHORITY TO DISALLOW CLAIMS-CommentsClose CommentsPermalink





(i) IN GENERAL- The Corporation may object to any portion of any claim by a creditor or claim of a security, preference, setoff, or priority which is not proved to the satisfaction of the Corporation.CommentsClose CommentsPermalink





(ii) PAYMENTS TO UNDERSECURED CREDITORS- In the case of a claim against a covered financial company that is secured by any property or other asset of such covered financial company, the receiver--CommentsClose CommentsPermalink





(I) may treat the portion of such claim which exceeds an amount equal to the fair market value of such property or other asset as an unsecured claim; andCommentsClose CommentsPermalink





(II) may not make any payment with respect to such unsecured portion of the claim, other than in connection with the disposition of all claims of unsecured creditors of the covered financial company.CommentsClose CommentsPermalink





(iii) EXCEPTIONS- No provision of this paragraph shall apply with respect to--CommentsClose CommentsPermalink





(I) any extension of credit from any Federal reserve bank, or the Corporation, to any covered financial company; orCommentsClose CommentsPermalink





(II) subject to clause (ii), any legally enforceable and perfected security interest in the assets of the covered financial company securing any such extension of credit.CommentsClose CommentsPermalink





(E) LEGAL EFFECT OF FILING-CommentsClose CommentsPermalink





(i) STATUTE OF LIMITATIONS TOLLED- For purposes of any applicable statute of limitations, the filing of a claim with the receiver shall constitute a commencement of an action.CommentsClose CommentsPermalink





(ii) NO PREJUDICE TO OTHER ACTIONS- Subject to paragraph (8), the filing of a claim with the receiver shall not prejudice any right of the claimant to continue any action which was filed before the date of appointment of the receiver for the covered financial company.CommentsClose CommentsPermalink





(4) JUDICIAL DETERMINATION OF CLAIMS-CommentsClose CommentsPermalink





(A) IN GENERAL- Subject to subparagraph (B), a claimant may file suit on a claim (or continue an action commenced before the date of appointment of the Corporation as receiver) in the district or territorial court of the United States for the district within which the principal place of business of the covered financial company is located (and such court shall have jurisdiction to hear such claim).CommentsClose CommentsPermalink





(B) TIMING- A claim under subparagraph (A) may be filed before the end of the 60-day period beginning on the earlier of--CommentsClose CommentsPermalink





(i) the end of the period described in paragraph (3)(A)(i) (or, if extended by agreement of the Corporation and the claimant, the period described in paragraph (3)(A)(ii)) with respect to any claim against a covered financial company for which the Corporation is receiver; orCommentsClose CommentsPermalink





(ii) the date of any notice of disallowance of such claim pursuant to paragraph (3)(A)(i).CommentsClose CommentsPermalink





(C) STATUTE OF LIMITATIONS- If any claimant fails to file suit on such claim (or to continue an action on such claim commenced before the date of appointment of the Corporation as receiver) prior to the end of the 60-day period described in subparagraph (B), the claim shall be deemed to be disallowed (other than any portion of such claim which was allowed by the receiver) as of the end of such period, such disallowance shall be final, and the claimant shall have no further rights or remedies with respect to such claim.CommentsClose CommentsPermalink





(5) EXPEDITED DETERMINATION OF CLAIMS-CommentsClose CommentsPermalink





(A) PROCEDURE REQUIRED- The Corporation shall establish a procedure for expedited relief outside of the claims process established under paragraph (3), for any claimant that alleges--CommentsClose CommentsPermalink





(i) the existence of a legally valid and enforceable or perfected security interest in property of a covered financial company, or is an entitlement holder that has obtained control of any legally valid and enforceable security entitlement in respect of any asset held by the covered financial company for which the Corporation has been appointed receiver; andCommentsClose CommentsPermalink





(ii) that irreparable injury will occur if the claims procedure established under paragraph (3) is followed.CommentsClose CommentsPermalink





(B) DETERMINATION PERIOD- Prior to the end of the 90-day period beginning on the date on which a claim is filed in accordance with the procedures established pursuant to subparagraph (A), the Corporation shall--CommentsClose CommentsPermalink





(i) determine--CommentsClose CommentsPermalink





(I) whether to allow or disallow such claim, or any portion thereof; orCommentsClose CommentsPermalink





(II) whether such claim should be determined pursuant to the procedures established pursuant to paragraph (3);CommentsClose CommentsPermalink





(ii) notify the claimant of the determination; andCommentsClose CommentsPermalink





(iii) if the claim is disallowed, provide a statement of each reason for the disallowance and the procedure for obtaining a judicial determination.CommentsClose CommentsPermalink





(C) PERIOD FOR FILING OR RENEWING SUIT- Any claimant who files a request for expedited relief shall be permitted to file suit (or continue a suit filed before the date of appointment of the Corporation as receiver seeking a determination of the rights of the claimant with respect to such security interest (or such security entitlement) after the earlier of--CommentsClose CommentsPermalink





(i) the end of the 90-day period beginning on the date of the filing of a request for expedited relief; orCommentsClose CommentsPermalink





(ii) the date on which the Corporation denies the claim or a portion thereof.CommentsClose CommentsPermalink





(D) STATUTE OF LIMITATIONS- If an action described in subparagraph (C) is not filed, or the motion to renew a previously filed suit is not made, before the end of the 30-day period beginning on the date on which such action or motion may be filed in accordance with subparagraph (C), the claim shall be deemed to be disallowed as of the end of such period (other than any portion of such claim which was allowed by the receiver), such disallowance shall be final, and the claimant shall have no further rights or remedies with respect to such claim.CommentsClose CommentsPermalink





(E) LEGAL EFFECT OF FILING-CommentsClose CommentsPermalink





(i) STATUTE OF LIMITATIONS TOLLED- For purposes of any applicable statute of limitations, the filing of a claim with the receiver shall constitute a commencement of an action.CommentsClose CommentsPermalink





(ii) NO PREJUDICE TO OTHER ACTIONS- Subject to paragraph (8), the filing of a claim with the receiver shall not prejudice any right of the claimant to continue any action which was filed before the appointment of the Corporation as receiver for the covered financial company.CommentsClose CommentsPermalink





(6) AGREEMENTS AGAINST INTEREST OF THE RECEIVER- No agreement that tends to diminish or defeat the interest of the Corporation as receiver in any asset acquired by the receiver under this section shall be valid against the receiver, unless such agreement--CommentsClose CommentsPermalink





(A) is in writing;CommentsClose CommentsPermalink





(B) was executed by an authorized officer or representative of the covered financial company, or confirmed in the ordinary course of business by the covered financial company; andCommentsClose CommentsPermalink





(C) has been, since the time of its execution, an official record of the company or the party claiming under the agreement provides documentation, acceptable to the receiver, of such agreement and its authorized execution or confirmation by the covered financial company.CommentsClose CommentsPermalink





(7) PAYMENT OF CLAIMS-CommentsClose CommentsPermalink





(A) IN GENERAL- Subject to subparagraph (B), the Corporation as receiver may, in its discretion and to the extent that funds are available, pay creditor claims, in such manner and amounts as are authorized under this section, which are--CommentsClose CommentsPermalink





(i) allowed by the receiver;CommentsClose CommentsPermalink





(ii) approved by the receiver pursuant to a final determination pursuant to paragraph (3) or (5), as applicable; orCommentsClose CommentsPermalink





(iii) determined by the final judgment of a court of competent jurisdiction.CommentsClose CommentsPermalink





(B) LIMITATION- A creditor shall, in no event, receive less than the amount that the creditor is entitled to receive under paragraphs (2) and (3) of subsection (d), as applicable.CommentsClose CommentsPermalink





(C) PAYMENT OF DIVIDENDS ON CLAIMS- The Corporation as receiver may, in its sole discretion, and to the extent otherwise permitted by this section, pay dividends on proven claims at any time, and no liability shall attach to the Corporation as receiver, by reason of any such payment or for failure to pay dividends to a claimant whose claim is not proved at the time of any such payment.CommentsClose CommentsPermalink





(D) RULEMAKING BY THE CORPORATION- The Corporation may prescribe such rules, including definitions of terms, as the Corporation deems appropriate to establish an interest rate for or to make payments of post-insolvency interest to creditors holding proven claims against the receivership estate of a covered financial company, except that no such interest shall be paid until the Corporation as receiver has satisfied the principal amount of all creditor claims.CommentsClose CommentsPermalink





(8) SUSPENSION OF LEGAL ACTIONS-CommentsClose CommentsPermalink





(A) IN GENERAL- After the appointment of the Corporation as receiver for a covered financial company, the Corporation may request a stay in any judicial action or proceeding in which such covered financial company is or becomes a party, for a period of not to exceed 90 days.CommentsClose CommentsPermalink





(B) GRANT OF STAY BY ALL COURTS REQUIRED- Upon receipt of a request by the Corporation pursuant to subparagraph (A), the court shall grant such stay as to all parties.CommentsClose CommentsPermalink





(9) ADDITIONAL RIGHTS AND DUTIES-CommentsClose CommentsPermalink





(A) PRIOR FINAL ADJUDICATION- The Corporation shall abide by any final, non-appealable judgment of any court of competent jurisdiction that was rendered before the appointment of the Corporation as receiver.CommentsClose CommentsPermalink





(B) RIGHTS AND REMEDIES OF RECEIVER- In the event of any appealable judgment, the Corporation as receiver shall--CommentsClose CommentsPermalink





(i) have all the rights and remedies available to the covered financial company (before the date of appointment of the Corporation as receiver under section 202) and the Corporation, including removal to Federal court and all appellate rights; andCommentsClose CommentsPermalink





(ii) not be required to post any bond in order to pursue such remedies.CommentsClose CommentsPermalink





(C) NO ATTACHMENT OR EXECUTION- No attachment or execution may be issued by any court upon assets in the possession of the Corporation as receiver for a covered financial company.CommentsClose CommentsPermalink





(D) LIMITATION ON JUDICIAL REVIEW- Except as otherwise provided in this title, no court shall have jurisdiction over--CommentsClose CommentsPermalink





(i) any claim or action for payment from, or any action seeking a determination of rights with respect to, the assets of any covered financial company for which the Corporation has been appointed receiver, including any assets which the Corporation may acquire from itself as such receiver; orCommentsClose CommentsPermalink





(ii) any claim relating to any act or omission of such covered financial company or the Corporation as receiver.CommentsClose CommentsPermalink





(E) DISPOSITION OF ASSETS- In exercising any right, power, privilege, or authority as receiver in connection with any covered financial company for which the Corporation is acting as receiver under this section, the Corporation shall, to the greatest extent practicable, conduct its operations in a manner that--CommentsClose CommentsPermalink





(i) maximizes the net present value return from the sale or disposition of such assets;CommentsClose CommentsPermalink





(ii) minimizes the amount of any loss realized in the resolution of cases;CommentsClose CommentsPermalink





(iii) mitigates the potential for serious adverse effects to the financial system;CommentsClose CommentsPermalink





(iv) ensures timely and adequate competition and fair and consistent treatment of offerors; andCommentsClose CommentsPermalink





(v) prohibits discrimination on the basis of race, sex, or ethnic group in the solicitation and consideration of offers.CommentsClose CommentsPermalink





(10) STATUTE OF LIMITATIONS FOR ACTIONS BROUGHT BY RECEIVER-CommentsClose CommentsPermalink





(A) IN GENERAL- Notwithstanding any provision of any contract, the applicable statute of limitations with regard to any action brought by the Corporation as receiver for a covered financial company shall be--CommentsClose CommentsPermalink





(i) in the case of any contract claim, the longer of--CommentsClose CommentsPermalink





(I) the 6-year period beginning on the date on which the claim accrues; orCommentsClose CommentsPermalink





(II) the period applicable under State law; andCommentsClose CommentsPermalink





(ii) in the case of any tort claim, the longer of--CommentsClose CommentsPermalink





(I) the 3-year period beginning on the date on which the claim accrues; orCommentsClose CommentsPermalink





(II) the period applicable under State law.CommentsClose CommentsPermalink





(B) DATE ON WHICH A CLAIM ACCRUES- For purposes of subparagraph (A), the date on which the statute of limitations begins to run on any claim described in subparagraph (A) shall be the later of--CommentsClose CommentsPermalink





(i) the date of the appointment of the Corporation as receiver under this title; orCommentsClose CommentsPermalink





(ii) the date on which the cause of action accrues.CommentsClose CommentsPermalink





(C) REVIVAL OF EXPIRED STATE CAUSES OF ACTION-CommentsClose CommentsPermalink





(i) IN GENERAL- In the case of any tort claim described in clause (ii) for which the applicable statute of limitations under State law has expired not more than 5 years before the date of appointment of the Corporation as receiver for a covered financial company, the Corporation may bring an action as receiver on such claim without regard to the expiration of the statute of limitations.CommentsClose CommentsPermalink





(ii) CLAIMS DESCRIBED- A tort claim referred to in clause (i) is a claim arising from fraud, intentional misconduct resulting in unjust enrichment, or intentional misconduct resulting in substantial loss to the covered financial company.CommentsClose CommentsPermalink





(11) AVOIDABLE TRANSFERS-CommentsClose CommentsPermalink





(A) FRAUDULENT TRANSFERS- The Corporation, as receiver for any covered financial company, may avoid a transfer of any interest of the covered financial company in property, or any obligation incurred by the covered financial company, that was made or incurred at or within 2 years before the time of commencement, if--CommentsClose CommentsPermalink





(i) the covered financial company voluntarily or involuntarily--CommentsClose CommentsPermalink





(I) made such transfer or incurred such obligation with actual intent to hinder, delay, or defraud any entity to which the covered financial company was or became, on or after the date on which such transfer was made or such obligation was incurred, indebted; orCommentsClose CommentsPermalink





(II) received less than a reasonably equivalent value in exchange for such transferor obligation; andCommentsClose CommentsPermalink





(ii) the covered financial company voluntarily or involuntarily--CommentsClose CommentsPermalink





(I) was insolvent on the date that such transfer was made or such obligation was incurred, or became insolvent as a result of such transfer or obligation;CommentsClose CommentsPermalink





(II) was engaged in business or a transaction, or was about to engage in business or a transaction, for which any property remaining with the covered financial company was an unreasonably small capital;CommentsClose CommentsPermalink





(III) intended to incur, or believed that the covered financial company would incur, debts that would be beyond the ability of the covered financial company to pay as such debts matured; orCommentsClose CommentsPermalink





(IV) made such transfer to or for the benefit of an insider, or incurred such obligation to or for the benefit of an insider, under an employment contract and not in the ordinary course of business.CommentsClose CommentsPermalink





(B) PREFERENTIAL TRANSFERS- The Corporation as receiver for any covered financial company may avoid a transfer of an interest of the covered financial company in property--CommentsClose CommentsPermalink





(i) to or for the benefit of a creditor;CommentsClose CommentsPermalink





(ii) for or on account of an antecedent debt that was owed by the covered financial company before the transfer was made;CommentsClose CommentsPermalink





(iii) that was made while the covered financial company was insolvent;CommentsClose CommentsPermalink





(iv) that was made--CommentsClose CommentsPermalink





(I) 90 days or less before the date on which the Corporation was appointed receiver; orCommentsClose CommentsPermalink





(II) more than 90 days, but less than 1 year before the date on which the Corporation was appointed receiver, if such creditor at the time of the transfer was an insider; andCommentsClose CommentsPermalink





(v) that enables the creditor to receive more than the creditor would receive if--CommentsClose CommentsPermalink





(I) the covered financial company had been liquidated under chapter 7 of the Bankruptcy Code;CommentsClose CommentsPermalink





(II) the transfer had not been made; andCommentsClose CommentsPermalink





(III) the creditor received payment of such debt to the extent provided by the provisions of chapter 7 of the Bankruptcy Code.CommentsClose CommentsPermalink





(C) POST-RECEIVERSHIP TRANSACTIONS- The Corporation as receiver for any covered financial company may avoid a transfer of property of the receivership that occurred after the Corporation was appointed receiver that was not authorized under this title by the Corporation as receiver.CommentsClose CommentsPermalink





(D) RIGHT OF RECOVERY- To the extent that a transfer is avoided under subparagraph (A), (B), or (C), the Corporation may recover, for the benefit of the covered financial company, the property transferred or, if a court so orders, the value of such property (at the time of such transfer) from--CommentsClose CommentsPermalink





(i) the initial transferee of such transfer or the person for whose benefit such transfer was made; orCommentsClose CommentsPermalink





(ii) any immediate or mediate transferee of any such initial transferee.CommentsClose CommentsPermalink





(E) RIGHTS OF TRANSFEREE OR OBLIGEE- The Corporation may not recover under subparagraph (D)(ii) from--CommentsClose CommentsPermalink





(i) any transferee that takes for value, including in satisfaction of or to secure a present or antecedent debt, in good faith, and without knowledge of the voidability of the transfer avoided; orCommentsClose CommentsPermalink





(ii) any immediate or mediate good faith transferee of such transferee.CommentsClose CommentsPermalink





(F) DEFENSES- Subject to the other provisions of this title--CommentsClose CommentsPermalink





(i) a transferee or obligee from which the Corporation seeks to recover a transfer or to avoid an obligation under subparagraph (A), (B), (C), or (D) shall have the same defenses available to a transferee or obligee from which a trustee seeks to recover a transfer or avoid an obligation under; andCommentsClose CommentsPermalink





(ii) the authority of the Corporation to recover a transfer or avoid an obligation shall be subject to subsections (b) and (c) of section 546, section 547(c), and section 548(c) of the Bankruptcy Code.CommentsClose CommentsPermalink





(G) RIGHTS UNDER THIS SECTION- The rights of the Corporation as receiver under this section shall be superior to any rights of a trustee or any other party (other than a Federal agency) under the Bankruptcy Code.CommentsClose CommentsPermalink





(H) RULES OF CONSTRUCTION; DEFINITIONS- For purposes of--CommentsClose CommentsPermalink





(i) subparagraphs (A) and (B)--CommentsClose CommentsPermalink





(I) the term ‘insider’ has the same meaning as in section 101(31) of the Bankruptcy Code;CommentsClose CommentsPermalink





(II) a transfer is made when such transfer is so perfected that a bona fide purchaser from the covered financial company against whom applicable law permits such transfer to be perfected cannot acquire an interest in the property transferred that is superior to the interest in such property of the transferee, but if such transfer is not so perfected before the date on which the Corporation is appointed as receiver for the covered financial company, such transfer is made immediately before the date of such appointment; andCommentsClose CommentsPermalink





(III) the term ‘value’ means property, or satisfaction or securing of a present or antecedent debt of the covered financial company, but does not include an unperformed promise to furnish support to the covered financial company; andCommentsClose CommentsPermalink





(ii) subparagraph (B)--CommentsClose CommentsPermalink





(I) the covered financial company is presumed to have been insolvent on and during the 90-day period immediately preceding the date of appointment of the Corporation as receiver; andCommentsClose CommentsPermalink





(II) the term ‘insolvent’ has the same meaning as in section 101(32) of the Bankruptcy Code.CommentsClose CommentsPermalink





(12) SETOFF-CommentsClose CommentsPermalink





(A) GENERALLY- Except as otherwise provided in this title, any right of a creditor to offset a mutual debt owed by the creditor to any covered financial company that arose before the Corporation was appointed as receiver for the covered financial company against a claim of such creditor may be asserted if enforceable under applicable noninsolvency law, except to the extent that--CommentsClose CommentsPermalink





(i) the claim of the creditor against the covered financial company is disallowed;CommentsClose CommentsPermalink





(ii) the claim was transferred, by an entity other than the covered financial company, to the creditor--CommentsClose CommentsPermalink





(I) after the Corporation was appointed as receiver of the covered financial company; orCommentsClose CommentsPermalink





(II)(aa) after the 90-day period preceding the date on which the Corporation was appointed as receiver for the covered financial company; andCommentsClose CommentsPermalink





(bb) while the covered financial company was insolvent (except for a setoff in connection with a qualified financial contract); orCommentsClose CommentsPermalink





(iii) the debt owed to the covered financial company was incurred by the covered financial company--CommentsClose CommentsPermalink





(I) after the 90-day period preceding the date on which the Corporation was appointed as receiver for the covered financial company;CommentsClose CommentsPermalink





(II) while the covered financial company was insolvent; andCommentsClose CommentsPermalink





(III) for the purpose of obtaining a right of setoff against the covered financial company (except for a setoff in connection with a qualified financial contract).CommentsClose CommentsPermalink





(B) INSUFFICIENCY-CommentsClose CommentsPermalink





(i) IN GENERAL- Except with respect to a setoff in connection with a qualified financial contract, if a creditor offsets a mutual debt owed to the covered financial company against a claim of the covered financial company on or within the 90-day period preceding the date on which the Corporation is appointed as receiver for the covered financial company, the Corporation may recover from the creditor the amount so offset, to the extent that any insufficiency on the date of such setoff is less than the insufficiency on the later of--CommentsClose CommentsPermalink





(I) the date that is 90 days before the date on which the Corporation is appointed as receiver for the covered financial company; orCommentsClose CommentsPermalink





(II) the first day on which there is an insufficiency during the 90-day period preceding the date on which the Corporation is appointed as receiver for the covered financial company.CommentsClose CommentsPermalink





(ii) DEFINITION OF INSUFFICIENCY- In this subparagraph, the term ‘insufficiency’ means the amount, if any, by which a claim against the covered financial company exceeds a mutual debt owed to the covered financial company by the holder of such claim.CommentsClose CommentsPermalink





(C) INSOLVENCY- The term ‘insolvent’ has the same meaning as in section 101(32) of the Bankruptcy Code.CommentsClose CommentsPermalink





(D) PRESUMPTION OF INSOLVENCY- For purposes of this paragraph, the covered financial company is presumed to have been insolvent on and during the 90-day period preceding the date of appointment of the Corporation as receiver.CommentsClose CommentsPermalink





(E) LIMITATION- Nothing in this paragraph (12) shall be the basis for any right of setoff where no such right exists under applicable noninsolvency law.CommentsClose CommentsPermalink





(F) PRIORITY CLAIM- Except as otherwise provided in this title, the Corporation as receiver for the covered financial company may sell or transfer any assets free and clear of the setoff rights of any party, except that such party shall be entitled to a claim, subordinate to the claims payable under subparagraphs (A), (B), and (C) of subsection (b)(1), but senior to all other unsecured liabilities defined in subsection (b)(1)(D), in an amount equal to the value of such setoff rights.CommentsClose CommentsPermalink





(13) ATTACHMENT OF ASSETS AND OTHER INJUNCTIVE RELIEF- Subject to paragraph (14), any court of competent jurisdiction may, at the request of the Corporation as receiver for a covered financial company, issue an order in accordance with Rule 65 of the Federal Rules of Civil Procedure, including an order placing the assets of any person designated by the Corporation under the control of the court and appointing a trustee to hold such assets.CommentsClose CommentsPermalink





(14) STANDARDS-CommentsClose CommentsPermalink





(A) SHOWING- Rule 65 of the Federal Rules of Civil Procedure shall apply with respect to any proceeding under paragraph (13), without regard to the requirement that the applicant show that the injury, loss, or damage is irreparable and immediate.CommentsClose CommentsPermalink





(B) STATE PROCEEDING- If, in the case of any proceeding in a State court, the court determines that rules of civil procedure available under the laws of the State provide substantially similar protections of the right of the parties to due process as provided under Rule 65 (as modified with respect to such proceeding by subparagraph (A)), the relief sought by the Corporation pursuant to paragraph (14) may be requested under the laws of such State.CommentsClose CommentsPermalink





(15) TREATMENT OF CLAIMS ARISING FROM BREACH OF CONTRACTS EXECUTED BY THE CORPORATION AS RECEIVER- Notwithstanding any other provision of this title, any final and non-appealable judgment for monetary damages entered against the Corporation as receiver for a covered financial company for the breach of an agreement executed or approved by the Corporation after the date of its appointment shall be paid as an administrative expense of the receiver. Nothing in this paragraph shall be construed to limit the power of a receiver to exercise any rights under contract or law, including to terminate, breach, cancel, or otherwise discontinue such agreement.CommentsClose CommentsPermalink





(16) ACCOUNTING AND RECORDKEEPING REQUIREMENTS-CommentsClose CommentsPermalink





(A) IN GENERAL- The Corporation as receiver for a covered financial company shall, consistent with the accounting and reporting practices and procedures established by the Corporation, maintain a full accounting of each receivership or other disposition of any covered financial company.CommentsClose CommentsPermalink





(B) ANNUAL ACCOUNTING OR REPORT- With respect to each receivership to which the Corporation is appointed, the Corporation shall make an annual accounting or report, as appropriate, available to the Secretary and the Comptroller General of the United States.CommentsClose CommentsPermalink





(C) AVAILABILITY OF REPORTS- Any report prepared pursuant to subparagraph (B) and section 203(c)(3) shall be made available to the public by the Corporation.CommentsClose CommentsPermalink





(D) RECORDKEEPING REQUIREMENT-CommentsClose CommentsPermalink





(i) IN GENERAL- The Corporation shall prescribe such regulations and establish such retention schedules as are necessary to maintain the documents and records of the Corporation generated in exercising the authorities of this title and the records of a covered financial company for which the Corporation is appointed receiver, with due regard for--CommentsClose CommentsPermalink





(I) the avoidance of duplicative record retention; andCommentsClose CommentsPermalink





(II) the expected evidentiary needs of the Corporation as receiver for a covered financial company and the public regarding the records of covered financial companies.CommentsClose CommentsPermalink





(ii) RETENTION OF RECORDS- Unless otherwise required by applicable Federal law or court order, the Corporation may not, at any time, destroy any records that are subject to clause (i).CommentsClose CommentsPermalink





(iii) RECORDS DEFINED- As used in this subparagraph, the terms ‘records’ and ‘records of a covered financial company’ mean any document, book, paper, map, photograph, microfiche, microfilm, computer or electronically-created record generated or maintained by the covered financial company in the course of and necessary to its transaction of business.CommentsClose CommentsPermalink





(b) Priority of Expenses and Unsecured Claims-CommentsClose CommentsPermalink





(1) IN GENERAL- Unsecured claims against a covered financial company, or the Corporation as receiver for such covered financial company under this section, that are proven to the satisfaction of the receiver shall have priority in the following order:CommentsClose CommentsPermalink





(A) Administrative expenses of the receiver.CommentsClose CommentsPermalink





(B) Any amounts owed to the United States, unless the United States agrees or consents otherwise.CommentsClose CommentsPermalink





(C) Any other general or senior liability of the covered financial company (which is not a liability described under subparagraph (D) or (E)).CommentsClose CommentsPermalink





(D) Any obligation subordinated to general creditors (which is not an obligation described under subparagraph (E)).CommentsClose CommentsPermalink





(E) Any obligation to shareholders, members, general partners, limited partners, or other persons, with interests in the equity of the covered financial company arising as a result of their status as shareholders, members, general partners, limited partners, or other persons with interests in the equity of the covered financial company.CommentsClose CommentsPermalink





(2) POST-RECEIVERSHIP FINANCING PRIORITY- In the event that the Corporation, as receiver for a covered financial company, is unable to obtain unsecured credit for the covered financial company from commercial sources, the Corporation as receiver may obtain credit or incur debt on the part of the covered financial company, which shall have priority over any or all administrative expenses of the receiver under paragraph (1)(A).CommentsClose CommentsPermalink





(3) CLAIMS OF THE UNITED STATES- Unsecured claims of the United States shall, at a minimum, have a higher priority than liabilities of the covered financial company that count as regulatory capital.CommentsClose CommentsPermalink





(4) CREDITORS SIMILARLY SITUATED- All claimants of a covered financial company that are similarly situated under paragraph (1) shall be treated in a similar manner, except that the Corporation as receiver may take any action (including making payments, subject to subsection (o)(1)(E)(ii)) that does not comply with this subsection, if--CommentsClose CommentsPermalink





(A) the Corporation determines that such action is necessary--CommentsClose CommentsPermalink





(i) to maximize the value of the assets of the covered financial company;CommentsClose CommentsPermalink





(ii) to maximize the present value return from the sale or other disposition of the assets of the covered financial company; orCommentsClose CommentsPermalink





(iii) to minimize the amount of any loss realized upon the sale or other disposition of the assets of the covered financial company; andCommentsClose CommentsPermalink





(B) all claimants that are similarly situated under paragraph (1) receive not less than the amount provided in paragraphs (2) and (3) of subsection (d).CommentsClose CommentsPermalink





(5) SECURED CLAIMS UNAFFECTED- This section shall not affect secured claims or security entitlements in respect of assets or property held by the covered financial company, except to the extent that the security is insufficient to satisfy the claim, and then only with regard to the difference between the claim and the amount realized from the security.CommentsClose CommentsPermalink





(6) PRIORITY OF EXPENSES AND UNSECURED CLAIMS IN THE ORDERLY LIQUIDATION OF SIPC MEMBER- Where the Corporation is appointed as receiver for a covered broker or dealer, unsecured claims against such covered broker or dealer, or the Corporation as receiver for such covered broker or dealer under this section, that are proven to the satisfaction of the receiver under section 205(e), shall have the priority prescribed in paragraph (1), except that--CommentsClose CommentsPermalink





(A) SIPC shall be entitled to recover administrative expenses incurred in performing its responsibilities under section 205 on an equal basis with the Corporation, in accordance with paragraph (1)(A);CommentsClose CommentsPermalink





(B) the Corporation shall be entitled to recover any amounts paid to customers or to SIPC pursuant to section 205(f), in accordance with paragraph (1)(B);CommentsClose CommentsPermalink





(C) SIPC shall be entitled to recover any amounts paid out of the SIPC Fund to meet its obligations under section 205 and under the Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.), which claim shall be subordinate to the claims payable under subparagraphs (A) and (B) of paragraph (1), but senior to all other claims; andCommentsClose CommentsPermalink





(D) the Corporation may, after paying any proven claims to customers under section 205 and the Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.), and as provided above, pay dividends on other proven claims, in its discretion, and to the extent that funds are available, in accordance with the priorities set forth in paragraph (1).CommentsClose CommentsPermalink





(c) Provisions Relating to Contracts Entered Into Before Appointment of Receiver-CommentsClose CommentsPermalink





(1) AUTHORITY TO REPUDIATE CONTRACTS- In addition to any other rights that a receiver may have, the Corporation as receiver for any covered financial company may disaffirm or repudiate any contract or lease--CommentsClose CommentsPermalink





(A) to which the covered financial company is a party;CommentsClose CommentsPermalink





(B) the performance of which the Corporation as receiver, in the discretion of the Corporation, determines to be burdensome; andCommentsClose CommentsPermalink





(C) the disaffirmance or repudiation of which the Corporation as receiver determines, in the discretion of the Corporation, will promote the orderly administration of the affairs of the covered financial company.CommentsClose CommentsPermalink





(2) TIMING OF REPUDIATION- The Corporation, as receiver for any covered financial company, shall determine whether or not to exercise the rights of repudiation under this section within a reasonable period of time.CommentsClose CommentsPermalink





(3) CLAIMS FOR DAMAGES FOR REPUDIATION-CommentsClose CommentsPermalink





(A) IN GENERAL- Except as provided in paragraphs (4), (5), and (6) and in subparagraphs (C), (D), and (E) of this paragraph, the liability of the Corporation as receiver for a covered financial company for the disaffirmance or repudiation of any contract pursuant to paragraph (1) shall be--CommentsClose CommentsPermalink





(i) limited to actual direct compensatory damages; andCommentsClose CommentsPermalink





(ii) determined as of--CommentsClose CommentsPermalink





(I) the date of the appointment of the Corporation as receiver; orCommentsClose CommentsPermalink





(II) in the case of any contract or agreement referred to in paragraph (8), the date of the disaffirmance or repudiation of such contract or agreement.CommentsClose CommentsPermalink





(B) NO LIABILITY FOR OTHER DAMAGES- For purposes of subparagraph (A), the term ‘actual direct compensatory damages’ does not include--CommentsClose CommentsPermalink





(i) punitive or exemplary damages;CommentsClose CommentsPermalink





(ii) damages for lost profits or opportunity; orCommentsClose CommentsPermalink





(iii) damages for pain and suffering.CommentsClose CommentsPermalink





(C) MEASURE OF DAMAGES FOR REPUDIATION OF QUALIFIED FINANCIAL CONTRACTS- In the case of any qualified financial contract or agreement to which paragraph (8) applies, compensatory damages shall be--CommentsClose CommentsPermalink





(i) deemed to include normal and reasonable costs of cover or other reasonable measures of damages utilized in the industries for such contract and agreement claims; andCommentsClose CommentsPermalink





(ii) paid in accordance with this paragraph and subsection (d), except as otherwise specifically provided in this subsection.CommentsClose CommentsPermalink





(D) MEASURE OF DAMAGES FOR REPUDIATION OR DISAFFIRMANCE OF DEBT OBLIGATION- In the case of any debt for borrowed money or evidenced by a security, actual direct compensatory damages shall be no less than the amount lent plus accrued interest plus any accreted original issue discount as of the date the Corporation was appointed receiver of the covered financial company and, to the extent that an allowed secured claim is secured by property the value of which is greater than the amount of such claim and any accrued interest through the date of repudiation or disaffirmance, such accrued interest pursuant to paragraph (1).CommentsClose CommentsPermalink





(E) MEASURE OF DAMAGES FOR REPUDIATION OR DISAFFIRMANCE OF CONTINGENT OBLIGATION- In the case of any contingent obligation of a covered financial company consisting of any obligation under a guarantee, letter of credit, loan commitment, or similar credit obligation, the Corporation may, by rule or regulation, prescribe that actual direct compensatory damages shall be no less than the estimated value of the claim as of the date the Corporation was appointed receiver of the covered financial company, as such value is measured based on the likelihood that such contingent claim would become fixed and the probable magnitude thereof.CommentsClose CommentsPermalink





(4) LEASES UNDER WHICH THE COVERED FINANCIAL COMPANY IS THE LESSEE-CommentsClose CommentsPermalink





(A) IN GENERAL- If the Corporation as receiver disaffirms or repudiates a lease under which the covered financial company is the lessee, the receiver shall not be liable for any damages (other than damages determined pursuant to subparagraph (B)) for the disaffirmance or repudiation of such lease.CommentsClose CommentsPermalink





(B) PAYMENTS OF RENT- Notwithstanding subparagraph (A), the lessor under a lease to which subparagraph (A) would otherwise apply shall--CommentsClose CommentsPermalink





(i) be entitled to the contractual rent accruing before the later of the date on which--CommentsClose CommentsPermalink





(I) the notice of disaffirmance or repudiation is mailed; orCommentsClose CommentsPermalink





(II) the disaffirmance or repudiation becomes effective, unless the lessor is in default or breach of the terms of the lease;CommentsClose CommentsPermalink





(ii) have no claim for damages under any acceleration clause or other penalty provision in the lease; andCommentsClose CommentsPermalink





(iii) have a claim for any unpaid rent, subject to all appropriate offsets and defenses, due as of the date of the appointment which shall be paid in accordance with this paragraph and subsection (d).CommentsClose CommentsPermalink





(5) LEASES UNDER WHICH THE COVERED FINANCIAL COMPANY IS THE LESSOR-CommentsClose CommentsPermalink





(A) IN GENERAL- If the Corporation as receiver for a covered financial company repudiates an unexpired written lease of real property of the covered financial company under which the covered financial company is the lessor and the lessee is not, as of the date of such repudiation, in default, the lessee under such lease may either--CommentsClose CommentsPermalink





(i) treat the lease as terminated by such repudiation; orCommentsClose CommentsPermalink





(ii) remain in possession of the leasehold interest for the balance of the term of the lease, unless the lessee defaults under the terms of the lease after the date of such repudiation.CommentsClose CommentsPermalink





(B) PROVISIONS APPLICABLE TO LESSEE REMAINING IN POSSESSION- If any lessee under a lease described in subparagraph (A) remains in possession of a leasehold interest pursuant to clause (ii) of subparagraph (A)--CommentsClose CommentsPermalink





(i) the lessee--CommentsClose CommentsPermalink





(I) shall continue to pay the contractual rent pursuant to the terms of the lease after the date of the repudiation of such lease; andCommentsClose CommentsPermalink





(II) may offset against any rent payment which accrues after the date of the repudiation of the lease, any damages which accrue after such date due to the nonperformance of any obligation of the covered financial company under the lease after such date; andCommentsClose CommentsPermalink





(ii) the Corporation as receiver shall not be liable to the lessee for any damages arising after such date as a result of the repudiation, other than the amount of any offset allowed under clause (i)(II).CommentsClose CommentsPermalink





(6) CONTRACTS FOR THE SALE OF REAL PROPERTY-CommentsClose CommentsPermalink





(A) IN GENERAL- If the receiver repudiates any contract (which meets the requirements of subsection (a)(6)) for the sale of real property, and the purchaser of such real property under such contract is in possession and is not, as of the date of such repudiation, in default, such purchaser may either--CommentsClose CommentsPermalink





(i) treat the contract as terminated by such repudiation; orCommentsClose CommentsPermalink





(ii) remain in possession of such real property.CommentsClose CommentsPermalink





(B) PROVISIONS APPLICABLE TO PURCHASER REMAINING IN POSSESSION- If any purchaser of real property under any contract described in subparagraph (A) remains in possession of such property pursuant to clause (ii) of subparagraph (A)--CommentsClose CommentsPermalink





(i) the purchaser--CommentsClose CommentsPermalink





(I) shall continue to make all payments due under the contract after the date of the repudiation of the contract; andCommentsClose CommentsPermalink





(II) may offset against any such payments any damages which accrue after such date due to the nonperformance (after such date) of any obligation of the covered financial company under the contract; andCommentsClose CommentsPermalink





(ii) the Corporation as receiver shall--CommentsClose CommentsPermalink





(I) not be liable to the purchaser for any damages arising after such date as a result of the repudiation, other than the amount of any offset allowed under clause (i)(II);CommentsClose CommentsPermalink





(II) deliver title to the purchaser in accordance with the provisions of the contract; andCommentsClose CommentsPermalink





(III) have no obligation under the contract other than the performance required under subclause (II).CommentsClose CommentsPermalink





(C) ASSIGNMENT AND SALE ALLOWED-CommentsClose CommentsPermalink





(i) IN GENERAL- No provision of this paragraph shall be construed as limiting the right of the Corporation as receiver to assign the contract described in subparagraph (A) and sell the property, subject to the contract and the provisions of this paragraph.CommentsClose CommentsPermalink





(ii) NO LIABILITY AFTER ASSIGNMENT AND SALE- If an assignment and sale described in clause (i) is consummated, the Corporation as receiver shall have no further liability under the contract described in subparagraph (A) or with respect to the real property which was the subject of such contract.CommentsClose CommentsPermalink





(7) PROVISIONS APPLICABLE TO SERVICE CONTRACTS-CommentsClose CommentsPermalink





(A) SERVICES PERFORMED BEFORE APPOINTMENT- In the case of any contract for services between any person and any covered financial company for which the Corporation has been appointed receiver, any claim of such person for services performed before the date of appointment shall be--CommentsClose CommentsPermalink





(i) a claim to be paid in accordance with subsections (a), (b), and (d); andCommentsClose CommentsPermalink





(ii) deemed to have arisen as of the date on which the receiver was appointed.CommentsClose CommentsPermalink





(B) SERVICES PERFORMED AFTER APPOINTMENT AND PRIOR TO REPUDIATION- If, in the case of any contract for services described in subparagraph (A), the Corporation as receiver accepts performance by the other person before making any determination to exercise the right of repudiation of such contract under this section--CommentsClose CommentsPermalink





(i) the other party shall be paid under the terms of the contract for the services performed; andCommentsClose CommentsPermalink





(ii) the amount of such payment shall be treated as an administrative expense of the receivership.CommentsClose CommentsPermalink





(C) ACCEPTANCE OF PERFORMANCE NO BAR TO SUBSEQUENT REPUDIATION- The acceptance by the Corporation as receiver for services referred to in subparagraph (B) in connection with a contract described in subparagraph (B) shall not affect the right of the Corporation as receiver to repudiate such contract under this section at any time after such performance.CommentsClose CommentsPermalink





(8) CERTAIN QUALIFIED FINANCIAL CONTRACTS-CommentsClose CommentsPermalink





(A) RIGHTS OF PARTIES TO CONTRACTS- Subject to subsection (a)(8) and paragraphs (9) and (10) of this subsection, and notwithstanding any other provision of this section, any other provision of Federal law, or the law of any State, no person shall be stayed or prohibited from exercising--CommentsClose CommentsPermalink





(i) any right that such person has to cause the termination, liquidation, or acceleration of any qualified financial contract with a covered financial company which arises upon the date of appointment of the Corporation as receiver for such covered financial company at any time after such appointment;CommentsClose CommentsPermalink





(ii) any right under any security agreement or arrangement or other credit enhancement related to one or more qualified financial contracts described in clause (i); orCommentsClose CommentsPermalink





(iii) any right to offset or net out any termination value, payment amount, or other transfer obligation arising under or in connection with 1 or more contracts or agreements described in clause (i), including any master agreement for such contracts or agreements.CommentsClose CommentsPermalink





(B) APPLICABILITY OF OTHER PROVISIONS- Subsection (a)(8) shall apply in the case of any judicial action or proceeding brought against the Corporation as receiver referred to in subparagraph (A), or the subject covered financial company, by any party to a contract or agreement described in subparagraph (A)(i) with such covered financial company.CommentsClose CommentsPermalink





(C) CERTAIN TRANSFERS NOT AVOIDABLE-CommentsClose CommentsPermalink





(i) IN GENERAL- Notwithstanding subsection (a)(11), (a)(12), or (c)(12), section 5242 of the Revised Statutes of the United States, or any other provision of Federal or State law relating to the avoidance of preferential or fraudulent transfers, the Corporation, whether acting as the Corporation or as receiver for a covered financial company, may not avoid any transfer of money or other property in connection with any qualified financial contract with a covered financial company.CommentsClose CommentsPermalink





(ii) EXCEPTION FOR CERTAIN TRANSFERS- Clause (i) shall not apply to any transfer of money or other property in connection with any qualified financial contract with a covered financial company if the transferee had actual intent to hinder, delay, or defraud such company, the creditors of such company, or the Corporation as receiver appointed for such company.CommentsClose CommentsPermalink





(D) CERTAIN CONTRACTS AND AGREEMENTS DEFINED- For purposes of this subsection, the following definitions shall apply:CommentsClose CommentsPermalink





(i) QUALIFIED FINANCIAL CONTRACT- The term ‘qualified financial contract’ means any securities contract, commodity contract, forward contract, repurchase agreement, swap agreement, and any similar agreement that the Corporation determines by regulation, resolution, or order to be a qualified financial contract for purposes of this paragraph.CommentsClose CommentsPermalink





(ii) SECURITIES CONTRACT- The term ‘securities contract’--CommentsClose CommentsPermalink





(I) means a contract for the purchase, sale, or loan of a security, a certificate of deposit, a mortgage loan, any interest in a mortgage loan, a group or index of securities, certificates of deposit, or mortgage loans or interests therein (including any interest therein or based on the value thereof), or any option on any of the foregoing, including any option to purchase or sell any such security, certificate of deposit, mortgage loan, interest, group or index, or option, and including any repurchase or reverse repurchase transaction on any such security, certificate of deposit, mortgage loan, interest, group or index, or option (whether or not such repurchase or reverse repurchase transaction is a ‘repurchase agreement’, as defined in clause (v));CommentsClose CommentsPermalink





(II) does not include any purchase, sale, or repurchase obligation under a participation in a commercial mortgage loan unless the Corporation determines by regulation, resolution, or order to include any such agreement within the meaning of such term;CommentsClose CommentsPermalink





(III) means any option entered into on a national securities exchange relating to foreign currencies;CommentsClose CommentsPermalink





(IV) means the guarantee (including by novation) by or to any securities clearing agency of any settlement of cash, securities, certificates of deposit, mortgage loans or interests therein, group or index of securities, certificates of deposit or mortgage loans or interests therein (including any interest therein or based on the value thereof) or an option on any of the foregoing, including any option to purchase or sell any such security, certificate of deposit, mortgage loan, interest, group or index, or option (whether or not such settlement is in connection with any agreement or transaction referred to in subclauses (I) through (XII) (other than subclause (II)));CommentsClose CommentsPermalink





(V) means any margin loan;CommentsClose CommentsPermalink





(VI) means any extension of credit for the clearance or settlement of securities transactions;CommentsClose CommentsPermalink





(VII) means any loan transaction coupled with a securities collar transaction, any prepaid securities forward transaction, or any total return swap transaction coupled with a securities sale transaction;CommentsClose CommentsPermalink





(VIII) means any other agreement or transaction that is similar to any agreement or transaction referred to in this clause;CommentsClose CommentsPermalink





(IX) means any combination of the agreements or transactions referred to in this clause;CommentsClose CommentsPermalink





(X) means any option to enter into any agreement or transaction referred to in this clause;CommentsClose CommentsPermalink





(XI) means a master agreement that provides for an agreement or transaction referred to in any of subclauses (I) through (X), other than subclause (II), together with all supplements to any such master agreement, without regard to whether the master agreement provides for an agreement or transaction that is not a securities contract under this clause, except that the master agreement shall be considered to be a securities contract under this clause only with respect to each agreement or transaction under the master agreement that is referred to in any of subclauses (I) through (X), other than subclause (II); andCommentsClose CommentsPermalink





(XII) means any security agreement or arrangement or other credit enhancement related to any agreement or transaction referred to in this clause, including any guarantee or reimbursement obligation in connection with any agreement or transaction referred to in this clause.CommentsClose CommentsPermalink





(iii) COMMODITY CONTRACT- The term ‘commodity contract’ means--CommentsClose CommentsPermalink





(I) with respect to a futures commission merchant, a contract for the purchase or sale of a commodity for future delivery on, or subject to the rules of, a contract market or board of trade;CommentsClose CommentsPermalink





(II) with respect to a foreign futures commission merchant, a foreign future;CommentsClose CommentsPermalink





(III) with respect to a leverage transaction merchant, a leverage transaction;CommentsClose CommentsPermalink





(IV) with respect to a clearing organization, a contract for the purchase or sale of a commodity for future delivery on, or subject to the rules of, a contract market or board of trade that is cleared by such clearing organization, or commodity option traded on, or subject to the rules of, a contract market or board of trade that is cleared by such clearing organization;CommentsClose CommentsPermalink





(V) with respect to a commodity options dealer, a commodity option;CommentsClose CommentsPermalink





(VI) any other agreement or transaction that is similar to any agreement or transaction referred to in this clause;CommentsClose CommentsPermalink





(VII) any combination of the agreements or transactions referred to in this clause;CommentsClose CommentsPermalink





(VIII) any option to enter into any agreement or transaction referred to in this clause;CommentsClose CommentsPermalink





(IX) a master agreement that provides for an agreement or transaction referred to in any of subclauses (I) through (VIII), together with all supplements to any such master agreement, without regard to whether the master agreement provides for an agreement or transaction that is not a commodity contract under this clause, except that the master agreement shall be considered to be a commodity contract under this clause only with respect to each agreement or transaction under the master agreement that is referred to in any of subclauses (I) through (VIII); orCommentsClose CommentsPermalink





(X) any security agreement or arrangement or other credit enhancement related to any agreement or transaction referred to in this clause, including any guarantee or reimbursement obligation in connection with any agreement or transaction referred to in this clause.CommentsClose CommentsPermalink





(iv) FORWARD CONTRACT- The term ‘forward contract’ means--CommentsClose CommentsPermalink





(I) a contract (other than a commodity contract) for the purchase, sale, or transfer of a commodity or any similar good, article, service, right, or interest which is presently or in the future becomes the subject of dealing in the forward contract trade, or product or byproduct thereof, with a maturity date that is more than 10 days after the date on which the contract is entered into, including a repurchase or reverse repurchase transaction (whether or not such repurchase or reverse repurchase transaction is a ‘repurchase agreement’, as defined in clause (v)), consignment, lease, swap, hedge transaction, deposit, loan, option, allocated transaction, unallocated transaction, or any other similar agreement;CommentsClose CommentsPermalink





(II) any combination of agreements or transactions referred to in subclauses (I) and (III);CommentsClose CommentsPermalink





(III) any option to enter into any agreement or transaction referred to in subclause (I) or (II);CommentsClose CommentsPermalink





(IV) a master agreement that provides for an agreement or transaction referred to in subclause (I), (II), or (III), together with all supplements to any such master agreement, without regard to whether the master agreement provides for an agreement or transaction that is not a forward contract under this clause, except that the master agreement shall be considered to be a forward contract under this clause only with respect to each agreement or transaction under the master agreement that is referred to in subclause (I), (II), or (III); orCommentsClose CommentsPermalink





(V) any security agreement or arrangement or other credit enhancement related to any agreement or transaction referred to in subclause (I), (II), (III), or (IV), including any guarantee or reimbursement obligation in connection with any agreement or transaction referred to in any such subclause.CommentsClose CommentsPermalink





(v) REPURCHASE AGREEMENT- The term ‘repurchase agreement’ (which definition also applies to a reverse repurchase agreement)--CommentsClose CommentsPermalink





(I) means an agreement, including related terms, which provides for the transfer of one or more certificates of deposit, mortgage related securities (as such term is defined in section 3 of the Securities Exchange Act of 1934), mortgage loans, interests in mortgage-related securities or mortgage loans, eligible bankers’ acceptances, qualified foreign government securities (which, for purposes of this clause, means a security that is a direct obligation of, or that is fully guaranteed by, the central government of a member of the Organization for Economic Cooperation and Development, as determined by regulation or order adopted by the Board of Governors), or securities that are direct obligations of, or that are fully guaranteed by, the United States or any agency of the United States against the transfer of funds by the transferee of such certificates of deposit, eligible bankers’ acceptances, securities, mortgage loans, or interests with a simultaneous agreement by such transferee to transfer to the transferor thereof certificates of deposit, eligible bankers’ acceptances, securities, mortgage loans, or interests as described above, at a date certain not later than 1 year after such transfers or on demand, against the transfer of funds, or any other similar agreement;CommentsClose CommentsPermalink





(II) does not include any repurchase obligation under a participation in a commercial mortgage loan, unless the Corporation determines, by regulation, resolution, or order to include any such participation within the meaning of such term;CommentsClose CommentsPermalink





(III) means any combination of agreements or transactions referred to in subclauses (I) and (IV);CommentsClose CommentsPermalink





(IV) means any option to enter into any agreement or transaction referred to in subclause (I) or (III);CommentsClose CommentsPermalink





(V) means a master agreement that provides for an agreement or transaction referred to in subclause (I), (III), or (IV), together with all supplements to any such master agreement, without regard to whether the master agreement provides for an agreement or transaction that is not a repurchase agreement under this clause, except that the master agreement shall be considered to be a repurchase agreement under this subclause only with respect to each agreement or transaction under the master agreement that is referred to in subclause (I), (III), or (IV); andCommentsClose CommentsPermalink





(VI) means any security agreement or arrangement or other credit enhancement related to any agreement or transaction referred to in subclause (I), (III), (IV), or (V), including any guarantee or reimbursement obligation in connection with any agreement or transaction referred to in any such subclause.CommentsClose CommentsPermalink





(vi) SWAP AGREEMENT- The term ‘swap agreement’ means--CommentsClose CommentsPermalink





(I) any agreement, including the terms and conditions incorporated by reference in any such agreement, which is an interest rate swap, option, future, or forward agreement, including a rate floor, rate cap, rate collar, cross-currency rate swap, and basis swap; a spot, same day-tomorrow, tomorrow-next, forward, or other foreign exchange, precious metals, or other commodity agreement; a currency swap, option, future, or forward agreement; an equity index or equity swap, option, future, or forward agreement; a debt index or debt swap, option, future, or forward agreement; a total return, credit spread or credit swap, option, future, or forward agreement; a commodity index or commodity swap, option, future, or forward agreement; weather swap, option, future, or forward agreement; an emissions swap, option, future, or forward agreement; or an inflation swap, option, future, or forward agreement;CommentsClose CommentsPermalink





(II) any agreement or transaction that is similar to any other agreement or transaction referred to in this clause and that is of a type that has been, is presently, or in the future becomes, the subject of recurrent dealings in the swap or other derivatives markets (including terms and conditions incorporated by reference in such agreement) and that is a forward, swap, future, option, or spot transaction on one or more rates, currencies, commodities, equity securities or other equity instruments, debt securities or other debt instruments, quantitative measures associated with an occurrence, extent of an occurrence, or contingency associated with a financial, commercial, or economic consequence, or economic or financial indices or measures of economic or financial risk or value;CommentsClose CommentsPermalink





(III) any combination of agreements or transactions referred to in this clause;CommentsClose CommentsPermalink





(IV) any option to enter into any agreement or transaction referred to in this clause;CommentsClose CommentsPermalink





(V) a master agreement that provides for an agreement or transaction referred to in subclause (I), (II), (III), or (IV), together with all supplements to any such master agreement, without regard to whether the master agreement contains an agreement or transaction that is not a swap agreement under this clause, except that the master agreement shall be considered to be a swap agreement under this clause only with respect to each agreement or transaction under the master agreement that is referred to in subclause (I), (II), (III), or (IV); andCommentsClose CommentsPermalink





(VI) any security agreement or arrangement or other credit enhancement related to any agreement or transaction referred to in any of clauses (I) through (V), including any guarantee or reimbursement obligation in connection with any agreement or transaction referred to in any such clause.CommentsClose CommentsPermalink





(vii) DEFINITIONS RELATING TO DEFAULT- When used in this paragraph and paragraph (10)--CommentsClose CommentsPermalink





(I) the term ‘default’ means, with respect to a covered financial company, any adjudication or other official decision by any court of competent jurisdiction, or other public authority pursuant to which the Corporation has been appointed receiver; andCommentsClose CommentsPermalink





(II) the term ‘in danger of default’ means a covered financial company with respect to which the Corporation or appropriate State authority has determined that--CommentsClose CommentsPermalink

(aa) in the opinion of the Corporation or such authority--CommentsClose CommentsPermalink

(AA) the covered financial company is not likely to be able to pay its obligations in the normal course of business; andCommentsClose CommentsPermalink

(BB) there is no reasonable prospect that the covered financial company will be able to pay such obligations without Federal assistance; orCommentsClose CommentsPermalink

(bb) in the opinion of the Corporation or such authority--CommentsClose CommentsPermalink

(AA) the covered financial company has incurred or is likely to incur losses that will deplete all or substantially all of its capital; andCommentsClose CommentsPermalink

(BB) there is no reasonable prospect that the capital will be replenished without Federal assistance.CommentsClose CommentsPermalink

(viii) TREATMENT OF MASTER AGREEMENT AS ONE AGREEMENT- Any master agreement for any contract or agreement described in any of clauses (i) through (vi) (or any master agreement for such master agreement or agreements), together with all supplements to such master agreement, shall be treated as a single agreement and a single qualified financial contact. If a master agreement contains provisions relating to agreements or transactions that are not themselves qualified financial contracts, the master agreement shall be deemed to be a qualified financial contract only with respect to those transactions that are themselves qualified financial contracts.CommentsClose CommentsPermalink





(ix) TRANSFER- The term ‘transfer’ means every mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with property or with an interest in property, including retention of title as a security interest and foreclosure of the equity of redemption of the covered financial company.CommentsClose CommentsPermalink





(x) PERSON- The term ‘person’ includes any governmental entity in addition to any entity included in the definition of such term in section 1, title 1, United States Code.CommentsClose CommentsPermalink





(E) CLARIFICATION- No provision of law shall be construed as limiting the right or power of the Corporation, or authorizing any court or agency to limit or delay, in any manner, the right or power of the Corporation to transfer any qualified financial contract in accordance with paragraphs (9) and (10) of this subsection or to disaffirm or repudiate any such contract in accordance with subsection (c)(1).CommentsClose CommentsPermalink





(F) WALKAWAY CLAUSES NOT EFFECTIVE-CommentsClose CommentsPermalink





(i) IN GENERAL- Notwithstanding the provisions of subparagraph (A) of this paragraph and sections 403 and 404 of the Federal Deposit Insurance Corporation Improvement Act of 1991, no walkaway clause shall be enforceable in a qualified financial contract of a covered financial company in default.CommentsClose CommentsPermalink





(ii) LIMITED SUSPENSION OF CERTAIN OBLIGATIONS- In the case of a qualified financial contract referred to in clause (i), any payment or delivery obligations otherwise due from a party pursuant to the qualified financial contract shall be suspended from the time at which the Corporation is appointed as receiver until the earlier of--CommentsClose CommentsPermalink





(I) the time at which such party receives notice that such contract has been transferred pursuant to paragraph (10)(A); orCommentsClose CommentsPermalink





(II) 5:00 p.m. (eastern time) on the 5th business day following the date of the appointment of the Corporation as receiver.CommentsClose CommentsPermalink





(iii) WALKAWAY CLAUSE DEFINED- For purposes of this subparagraph, the term ‘walkaway clause’ means any provision in a qualified financial contract that suspends, conditions, or extinguishes a payment obligation of a party, in whole or in part, or does not create a payment obligation of a party that would otherwise exist, solely because of the status of such party as a nondefaulting party in connection with the insolvency of a covered financial company that is a party to the contract or the appointment of or the exercise of rights or powers by the Corporation as receiver for such covered financial company, and not as a result of the exercise by a party of any right to offset, setoff, or net obligations that exist under the contract, any other contract between those parties, or applicable law.CommentsClose CommentsPermalink





(iv) CERTAIN OBLIGATIONS TO CLEARING ORGANIZATIONS- In the event that the Corporation has been appointed as receiver for a covered financial company which is a party to any qualified financial contract cleared by or subject to the rules of a clearing organization (as defined in subsection (c)(9)(D)), the receiver shall use its best efforts to meet all margin, collateral, and settlement obligations of the covered financial company that arise under qualified financial contracts (other than any margin, collateral, or settlement obligation that is not enforceable against the receiver under paragraph (8)(F)(i) or paragraph (10)(B)), as required by the rules of the clearing organization when due, and such obligations shall not be suspended pursuant to paragraph (8)(F)(ii). Notwithstanding paragraph (8)(F)(ii) or (10)(B), if the receiver fails to satisfy any such margin, collateral, or settlement obligations under the rules of the clearing organization, the clearing organization shall have the immediate right to exercise, and shall not be stayed from exercising, all of its rights and remedies under its rules and applicable law with respect to any qualified financial contract of the covered financial company, including, without limitation, the right to liquidate all positions and collateral of such covered financial company under the company’s qualified financial contracts, and suspend or cease to act for such covered financial company, all in accordance with the rules of the clearing organization.CommentsClose CommentsPermalink





(G) RECORDKEEPING-CommentsClose CommentsPermalink





(i) JOINT RULEMAKING- The Federal primary financial regulatory agencies shall jointly prescribe regulations requiring that financial companies maintain such records with respect to qualified financial contracts (including market valuations) that the Federal primary financial regulatory agencies determine to be necessary or appropriate in order to assist the Corporation as receiver for a covered financial company in being able to exercise its rights and fulfill its obligations under this paragraph or paragraph (9) or (10).CommentsClose CommentsPermalink





(ii) TIMEFRAME- The Federal primary financial regulatory agencies shall prescribe joint final or interim final regulations not later than 24 months after the date of enactment of this Act.CommentsClose CommentsPermalink





(iii) BACK-UP RULEMAKING AUTHORITY- If the Federal primary financial regulatory agencies do not prescribe joint final or interim final regulations within the time frame in clause (ii), the Chairperson of the Council shall prescribe, in consultation with the Corporation, the regulations required by clause (i).CommentsClose CommentsPermalink





(iv) CATEGORIZATION AND TIERING- The joint regulations prescribed under clause (i) shall, as appropriate, differentiate among financial companies by taking into consideration their size, risk, complexity, leverage, frequency and dollar amount of qualified financial contracts, interconnectedness to the financial system, and any other factors deemed appropriate.CommentsClose CommentsPermalink





(9) TRANSFER OF QUALIFIED FINANCIAL CONTRACTS-CommentsClose CommentsPermalink





(A) IN GENERAL- In making any transfer of assets or liabilities of a covered financial company in default, which includes any qualified financial contract, the Corporation as receiver for such covered financial company shall either--CommentsClose CommentsPermalink





(i) transfer to one financial institution, other than a financial institution for which a conservator, receiver, trustee in bankruptcy, or other legal custodian has been appointed or which is otherwise the subject of a bankruptcy or insolvency proceeding--CommentsClose CommentsPermalink





(I) all qualified financial contracts between any person or any affiliate of such person and the covered financial company in default;CommentsClose CommentsPermalink





(II) all claims of such person or any affiliate of such person against such covered financial company under any such contract (other than any claim which, under the terms of any such contract, is subordinated to the claims of general unsecured creditors of such company);CommentsClose CommentsPermalink





(III) all claims of such covered financial company against such person or any affiliate of such person under any such contract; andCommentsClose CommentsPermalink





(IV) all property securing or any other credit enhancement for any contract described in subclause (I) or any claim described in subclause (II) or (III) under any such contract; orCommentsClose CommentsPermalink





(ii) transfer none of the qualified financial contracts, claims, property or other credit enhancement referred to in clause (i) (with respect to such person and any affiliate of such person).CommentsClose CommentsPermalink





(B) TRANSFER TO FOREIGN BANK, FINANCIAL INSTITUTION, OR BRANCH OR AGENCY THEREOF- In transferring any qualified financial contracts and related claims and property under subparagraph (A)(i), the Corporation as receiver for the covered financial company shall not make such transfer to a foreign bank, financial institution organized under the laws of a foreign country, or a branch or agency of a foreign bank or financial institution unless, under the law applicable to such bank, financial institution, branch or agency, to the qualified financial contracts, and to any netting contract, any security agreement or arrangement or other credit enhancement related to one or more qualified financial contracts, the contractual rights of the parties to such qualified financial contracts, netting contracts, security agreements or arrangements, or other credit enhancements are enforceable substantially to the same extent as permitted under this section.CommentsClose CommentsPermalink





(C) TRANSFER OF CONTRACTS SUBJECT TO THE RULES OF A CLEARING ORGANIZATION- In the event that the Corporation as receiver for a financial institution transfers any qualified financial contract and related claims, property, or credit enhancement pursuant to subparagraph (A)(i) and such contract is cleared by or subject to the rules of a clearing organization, the clearing organization shall not be required to accept the transferee as a member by virtue of the transfer.CommentsClose CommentsPermalink





(D) DEFINITIONS- For purposes of this paragraph--CommentsClose CommentsPermalink





(i) the term ‘financial institution’ means a broker or dealer, a depository institution, a futures commission merchant, a bridge financial company, or any other institution determined by the Corporation, by regulation, to be a financial institution; andCommentsClose CommentsPermalink





(ii) the term ‘clearing organization’ has the same meaning as in section 402 of the Federal Deposit Insurance Corporation Improvement Act of 1991.CommentsClose CommentsPermalink





(10) NOTIFICATION OF TRANSFER-CommentsClose CommentsPermalink





(A) IN GENERAL-CommentsClose CommentsPermalink





(i) NOTICE- The Corporation shall provide notice in accordance with clause (ii), if--CommentsClose CommentsPermalink





(I) the Corporation as receiver for a covered financial company in default or in danger of default transfers any assets or liabilities of the covered financial company; andCommentsClose CommentsPermalink





(II) the transfer includes any qualified financial contract.CommentsClose CommentsPermalink





(ii) TIMING- The Corporation as receiver for a covered financial company shall notify any person who is a party to any contract described in clause (i) of such transfer not later than 5:00 p.m. (eastern time) on the 5th business day following the date of the appointment of the Corporation as receiver.CommentsClose CommentsPermalink





(B) CERTAIN RIGHTS NOT ENFORCEABLE-CommentsClose CommentsPermalink





(i) RECEIVERSHIP- A person who is a party to a qualified financial contract with a covered financial company may not exercise any right that such person has to terminate, liquidate, or net such contract under paragraph (8)(A) solely by reason of or incidental to the appointment under this section of the Corporation as receiver for the covered financial company (or the insolvency or financial condition of the covered financial company for which the Corporation has been appointed as receiver)--CommentsClose CommentsPermalink





(I) until 5:00 p.m. (eastern time) on the 5th business day following the date of the appointment; orCommentsClose CommentsPermalink





(II) after the person has received notice that the contract has been transferred pursuant to paragraph (9)(A).CommentsClose CommentsPermalink





(ii) NOTICE- For purposes of this paragraph, the Corporation as receiver for a covered financial company shall be deemed to have notified a person who is a party to a qualified financial contract with such covered financial company, if the Corporation has taken steps reasonably calculated to provide notice to such person by the time specified in subparagraph (A).CommentsClose CommentsPermalink





(C) TREATMENT OF BRIDGE FINANCIAL COMPANY- For purposes of paragraph (9), a bridge financial company shall not be considered to be a covered financial company for which a conservator, receiver, trustee in bankruptcy, or other legal custodian has been appointed, or which is otherwise the subject of a bankruptcy or insolvency proceeding.CommentsClose CommentsPermalink





(D) BUSINESS DAY DEFINED- For purposes of this paragraph, the term ‘business day’ means any day other than any Saturday, Sunday, or any day on which either the New York Stock Exchange or the Federal Reserve Bank of New York is closed.CommentsClose CommentsPermalink





(11) DISAFFIRMANCE OR REPUDIATION OF QUALIFIED FINANCIAL CONTRACTS- In exercising the rights of disaffirmance or repudiation of the Corporation as receiver with respect to any qualified financial contract to which a covered financial company is a party, the Corporation shall either--CommentsClose CommentsPermalink





(A) disaffirm or repudiate all qualified financial contracts between--CommentsClose CommentsPermalink





(i) any person or any affiliate of such person; andCommentsClose CommentsPermalink





(ii) the covered financial company in default; orCommentsClose CommentsPermalink





(B) disaffirm or repudiate none of the qualified financial contracts referred to in subparagraph (A) (with respect to such person or any affiliate of such person).CommentsClose CommentsPermalink





(12) CERTAIN SECURITY AND CUSTOMER INTERESTS NOT AVOIDABLE- No provision of this subsection shall be construed as permitting the avoidance of any--CommentsClose CommentsPermalink





(A) legally enforceable or perfected security interest in any of the assets of any covered financial company, except in accordance with subsection (a)(11); orCommentsClose CommentsPermalink





(B) legally enforceable interest in customer property, security entitlements in respect of assets or property held by the covered financial company for any security entitlement holder.CommentsClose CommentsPermalink





(13) AUTHORITY TO ENFORCE CONTRACTS-CommentsClose CommentsPermalink





(A) IN GENERAL- The Corporation, as receiver for a covered financial company, may enforce any contract, other than a liability insurance contract of a director or officer, a financial institution bond entered into by the covered financial company, notwithstanding any provision of the contract providing for termination, default, acceleration, or exercise of rights upon, or solely by reason of, insolvency, the appointment of or the exercise of rights or powers by the Corporation as receiver, the filing of the petition pursuant to section 202(c)(1), or the issuance of the recommendations or determination, or any actions or events occurring in connection therewith or as a result thereof, pursuant to section 203.CommentsClose CommentsPermalink





(B) CERTAIN RIGHTS NOT AFFECTED- No provision of this paragraph may be construed as impairing or affecting any right of the Corporation as receiver to enforce or recover under a liability insurance contract of a director or officer or financial institution bond under other applicable law.CommentsClose CommentsPermalink





(C) CONSENT REQUIREMENT AND IPSO FACTO CLAUSES-CommentsClose CommentsPermalink





(i) IN GENERAL- Except as otherwise provided by this section, no person may exercise any right or power to terminate, accelerate, or declare a default under any contract to which the covered financial company is a party (and no provision in any such contract providing for such default, termination, or acceleration shall be enforceable), or to obtain possession of or exercise control over any property of the covered financial company or affect any contractual rights of the covered financial company, without the consent of the Corporation as receiver for the covered financial company during the 90 day period beginning from the appointment of the Corporation as receiver.CommentsClose CommentsPermalink





(ii) EXCEPTIONS- No provision of this subparagraph shall apply to a director or officer liability insurance contract or a financial institution bond, to the rights of parties to certain qualified financial contracts pursuant to paragraph (8), or to the rights of parties to netting contracts pursuant to subtitle A of title IV of the Federal Deposit Insurance Corporation Improvement Act of 1991 (12 U.S.C. 4401 et seq.), or shall be construed as permitting the Corporation as receiver to fail to comply with otherwise enforceable provisions of such contract.CommentsClose CommentsPermalink





(D) CONTRACTS TO EXTEND CREDIT- Notwithstanding any other provision in this title, if the Corporation as receiver enforces any contract to extend credit to the covered financial company or bridge financial company, any valid and enforceable obligation to repay such debt shall be paid by the Corporation as receiver, as an administrative expense of the receivership.CommentsClose CommentsPermalink





(14) EXCEPTION FOR FEDERAL RESERVE BANKS AND CORPORATION SECURITY INTEREST- No provision of this subsection shall apply with respect to--CommentsClose CommentsPermalink





(A) any extension of credit from any Federal reserve bank or the Corporation to any covered financial company; orCommentsClose CommentsPermalink





(B) any security interest in the assets of the covered financial company securing any such extension of credit.CommentsClose CommentsPermalink





(15) SAVINGS CLAUSE- The meanings of terms used in this subsection are applicable for purposes of this subsection only, and shall not be construed or applied so as to challenge or affect the characterization, definition, or treatment of any similar terms under any other statute, regulation, or rule, including the Gramm-Leach-Bliley Act, the Legal Certainty for Bank Products Act of 2000, the securities laws (as that term is defined in section 3(a)(47) of the Securities Exchange Act of 1934), and the Commodity Exchange Act.CommentsClose CommentsPermalink





(16) ENFORCEMENT OF CONTRACTS GUARANTEED BY THE COVERED FINANCIAL COMPANY-CommentsClose CommentsPermalink





(A) IN GENERAL- The Corporation, as receiver for a covered financial company or as receiver for a subsidiary of a covered financial company (including an insured depository institution) shall have the power to enforce contracts of subsidiaries or affiliates of the covered financial company, the obligations under which are guaranteed or otherwise supported by or linked to the covered financial company, notwithstanding any contractual right to cause the termination, liquidation, or acceleration of such contracts based solely on the insolvency, financial condition, or receivership of the covered financial company, if--CommentsClose CommentsPermalink





(i) such guaranty or other support and all related assets and liabilities are transferred to and assumed by a bridge financial company or a third party (other than a third party for which a conservator, receiver, trustee in bankruptcy, or other legal custodian has been appointed, or which is otherwise the subject of a bankruptcy or insolvency proceeding) within the same period of time as the Corporation is entitled to transfer the qualified financial contracts of such covered financial company; orCommentsClose CommentsPermalink





(ii) the Corporation, as receiver, otherwise provides adequate protection with respect to such obligations.CommentsClose CommentsPermalink





(B) RULE OF CONSTRUCTION- For purposes of this paragraph, a bridge financial company shall not be considered to be a third party for which a conservator, receiver, trustee in bankruptcy, or other legal custodian has been appointed, or which is otherwise the subject of a bankruptcy or insolvency proceeding.CommentsClose CommentsPermalink





(d) Valuation of Claims in Default-CommentsClose CommentsPermalink





(1) IN GENERAL- Notwithstanding any other provision of Federal law or the law of any State, and regardless of the method utilized by the Corporation for a covered financial company, including transactions authorized under subsection (h), this subsection shall govern the rights of the creditors of any such covered financial company.CommentsClose CommentsPermalink





(2) MAXIMUM LIABILITY- The maximum liability of the Corporation, acting as receiver for a covered financial company or in any other capacity, to any person having a claim against the Corporation as receiver or the covered financial company for which the Corporation is appointed shall equal the amount that such claimant would have received if--CommentsClose CommentsPermalink





(A) the Corporation had not been appointed receiver with respect to the covered financial company; andCommentsClose CommentsPermalink





(B) the covered financial company had been liquidated under chapter 7 of the Bankruptcy Code, or any similar provision of State insolvency law applicable to the covered financial company.CommentsClose CommentsPermalink





(3) SPECIAL PROVISION FOR ORDERLY LIQUIDATION BY SIPC- The maximum liability of the Corporation, acting as receiver or in its corporate capacity for any covered broker or dealer to any customer of such covered broker or dealer, with respect to customer property of such customer, shall be--CommentsClose CommentsPermalink





(A) equal to the amount that such customer would have received with respect to such customer property in a case initiated by SIPC under the Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.); andCommentsClose CommentsPermalink





(B) determined as of the close of business on the date on which the Corporation is appointed as receiver.CommentsClose CommentsPermalink





(4) ADDITIONAL PAYMENTS AUTHORIZED-CommentsClose CommentsPermalink





(A) IN GENERAL- Subject to subsection (o)(1)(E)(ii), the Corporation, with the approval of the Secretary, may make additional payments or credit additional amounts to or with respect to or for the account of any claimant or category of claimants of the covered financial company, if the Corporation determines that such payments or credits are necessary or appropriate to minimize losses to the Corporation as receiver from the orderly liquidation of the covered financial company under this section.CommentsClose CommentsPermalink





(B) LIMITATION- Notwithstanding any other provision of Federal or State law, or the constitution of any State, the Corporation shall not be obligated, as a result of having made any payment under subparagraph (A) or credited any amount described in subparagraph (A) to or with respect to or for the account of any claimant or category of claimants, to make payments to any other claimant or category of claimants.CommentsClose CommentsPermalink





(C) MANNER OF PAYMENT- The Corporation may make payments or credit amounts under subparagraph (A) directly to the claimants or may make such payments or credit such amounts to a company other than a covered financial company or a bridge financial company established with respect thereto in order to induce such other company to accept liability for such claims.CommentsClose CommentsPermalink





(e) Limitation on Court Action- Except as provided in this title, no court may take any action to restrain or affect the exercise of powers or functions of the receiver hereunder, and any remedy against the Corporation or receiver shall be limited to money damages determined in accordance with this title.CommentsClose CommentsPermalink





(f) Liability of Directors and Officers-CommentsClose CommentsPermalink





(1) IN GENERAL- A director or officer of a covered financial company may be held personally liable for monetary damages in any civil action described in paragraph (2) by, on behalf of, or at the request or direction of the Corporation, which action is prosecuted wholly or partially for the benefit of the Corporation--CommentsClose CommentsPermalink





(A) acting as receiver for such covered financial company;CommentsClose CommentsPermalink





(B) acting based upon a suit, claim, or cause of action purchased from, assigned by, or otherwise conveyed by the Corporation as receiver; orCommentsClose CommentsPermalink





(C) acting based upon a suit, claim, or cause of action purchased from, assigned by, or otherwise conveyed in whole or in part by a covered financial company or its affiliate in connection with assistance provided under this title.CommentsClose CommentsPermalink





(2) ACTIONS COVERED- Paragraph (1) shall apply with respect to actions for gross negligence, including any similar conduct or conduct that demonstrates a greater disregard of a duty of care (than gross negligence) including intentional tortious conduct, as such terms are defined and determined under applicable State law.CommentsClose CommentsPermalink





(3) SAVINGS CLAUSE- Nothing in this subsection shall impair or affect any right of the Corporation under other applicable law.CommentsClose CommentsPermalink





(g) Damages- In any proceeding related to any claim against a director, officer, employee, agent, attorney, accountant, or appraiser of a covered financial company, or any other party employed by or providing services to a covered financial company, recoverable damages determined to result from the improvident or otherwise improper use or investment of any assets of the covered financial company shall include principal losses and appropriate interest.CommentsClose CommentsPermalink





(h) Bridge Financial Companies-CommentsClose CommentsPermalink





(1) ORGANIZATION-CommentsClose CommentsPermalink





(A) PURPOSE- The Corporation, as receiver for one or more covered financial companies or in anticipation of being appointed receiver for one or more covered financial companies, may organize one or more bridge financial companies in accordance with this subsection.CommentsClose CommentsPermalink





(B) AUTHORITIES- Upon the creation of a bridge financial company under subparagraph (A) with respect to a covered financial company, such bridge financial company may--CommentsClose CommentsPermalink





(i) assume such liabilities (including liabilities associated with any trust or custody business, but excluding any liabilities that count as regulatory capital) of such covered financial company as the Corporation may, in its discretion, determine to be appropriate;CommentsClose CommentsPermalink





(ii) purchase such assets (including assets associated with any trust or custody business) of such covered financial company as the Corporation may, in its discretion, determine to be appropriate; andCommentsClose CommentsPermalink





(iii) perform any other temporary function which the Corporation may, in its discretion, prescribe in accordance with this section.CommentsClose CommentsPermalink





(2) CHARTER AND ESTABLISHMENT-CommentsClose CommentsPermalink





(A) ESTABLISHMENT- Except as provided in subparagraph (H), where the covered financial company is a covered broker or dealer, the Corporation, as receiver for a covered financial company, may grant a Federal charter to and approve articles of association for one or more bridge financial company or companies, with respect to such covered financial company which shall, by operation of law and immediately upon issuance of its charter and approval of its articles of association, be established and operate in accordance with, and subject to, such charter, articles, and this section.CommentsClose CommentsPermalink





(B) MANAGEMENT- Upon its establishment, a bridge financial company shall be under the management of a board of directors appointed by the Corporation.CommentsClose CommentsPermalink





(C) ARTICLES OF ASSOCIATION- The articles of association and organization certificate of a bridge financial company shall have such terms as the Corporation may provide, and shall be executed by such representatives as the Corporation may designate.CommentsClose CommentsPermalink





(D) TERMS OF CHARTER; RIGHTS AND PRIVILEGES- Subject to and in accordance with the provisions of this subsection, the Corporation shall--CommentsClose CommentsPermalink





(i) establish the terms of the charter of a bridge financial company and the rights, powers, authorities, and privileges of a bridge financial company granted by the charter or as an incident thereto; andCommentsClose CommentsPermalink





(ii) provide for, and establish the terms and conditions governing, the management (including the bylaws and the number of directors of the board of directors) and operations of the bridge financial company.CommentsClose CommentsPermalink





(E) TRANSFER OF RIGHTS AND PRIVILEGES OF COVERED FINANCIAL COMPANY-CommentsClose CommentsPermalink





(i) IN GENERAL- Notwithstanding any other provision of Federal or State law, the Corporation may provide for a bridge financial company to succeed to and assume any rights, powers, authorities, or privileges of the covered financial company with respect to which the bridge financial company was established and, upon such determination by the Corporation, the bridge financial company shall immediately and by operation of law succeed to and assume such rights, powers, authorities, and privileges.CommentsClose CommentsPermalink





(ii) EFFECTIVE WITHOUT APPROVAL- Any succession to or assumption by a bridge financial company of rights, powers, authorities, or privileges of a covered financial company under clause (i) or otherwise shall be effective without any further approval under Federal or State law, assignment, or consent with respect thereto.CommentsClose CommentsPermalink





(F) CORPORATE GOVERNANCE AND ELECTION AND DESIGNATION OF BODY OF LAW- To the extent permitted by the Corporation and consistent with this section and any rules, regulations, or directives issued by the Corporation under this section, a bridge financial company may elect to follow the corporate governance practices and procedures that are applicable to a corporation incorporated under the general corporation law of the State of Delaware, or the State of incorporation or organization of the covered financial company with respect to which the bridge financial company was established, as such law may be amended from time to time.CommentsClose CommentsPermalink





(G) CAPITAL-CommentsClose CommentsPermalink





(i) CAPITAL NOT REQUIRED- Notwithstanding any other provision of Federal or State law, a bridge financial company may, if permitted by the Corporation, operate without any capital or surplus, or with such capital or surplus as the Corporation may in its discretion determine to be appropriate.CommentsClose CommentsPermalink





(ii) NO CONTRIBUTION BY THE CORPORATION REQUIRED- The Corporation is not required to pay capital into a bridge financial company or to issue any capital stock on behalf of a bridge financial company established under this subsection.CommentsClose CommentsPermalink





(iii) AUTHORITY- If the Corporation determines that such action is advisable, the Corporation may cause capital stock or other securities of a bridge financial company established with respect to a covered financial company to be issued and offered for sale in such amounts and on such terms and conditions as the Corporation may, in its discretion, determine.CommentsClose CommentsPermalink





(iv) OPERATING FUNDS IN LIEU OF CAPITAL AND IMPLEMENTATION PLAN- Upon the organization of a bridge financial company, and thereafter as the Corporation may, in its discretion, determine to be necessary or advisable, the Corporation may make available to the bridge financial company, subject to the plan described in subsection (n)(13), funds for the operation of the bridge financial company in lieu of capital.CommentsClose CommentsPermalink





(H) BRIDGE BROKERS OR DEALERS-CommentsClose CommentsPermalink





(i) IN GENERAL- The Corporation, as receiver for a covered broker or dealer, may approve articles of association for one or more bridge financial companies with respect to such covered broker or dealer, which bridge financial company or companies shall, by operation of law and immediately upon approval of its articles of association--CommentsClose CommentsPermalink





(I) be established and deemed registered with the Commission under the Securities Exchange Act of 1934 and a member of SIPC;CommentsClose CommentsPermalink





(II) operate in accordance with such articles and this section; andCommentsClose CommentsPermalink





(III) succeed to any and all registrations and memberships of the covered financial company with or in any self-regulatory organizations.CommentsClose CommentsPermalink





(ii) OTHER REQUIREMENTS- Except as provided in clause (i), and notwithstanding any other provision of this section, the bridge financial company shall be subject to the Federal securities laws and all requirements with respect to being a member of a self-regulatory organization, unless exempted from any such requirements by the Commission, as is necessary or appropriate in the public interest or for the protection of investors.CommentsClose CommentsPermalink





(iii) TREATMENT OF CUSTOMERS- Except as otherwise provided by this title, any customer of the covered broker or dealer whose account is transferred to a bridge financial company shall have all the rights, privileges, and protections under section 205(f) and under the Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.), that such customer would have had if the account were not transferred from the covered financial company under this subparagraph.CommentsClose CommentsPermalink





(iv) OPERATION OF BRIDGE BROKERS OR DEALERS- Notwithstanding any other provision of this title, the Corporation shall not operate any bridge financial company created by the Corporation under this title with respect to a covered broker or dealer in such a manner as to adversely affect the ability of customers to promptly access their customer property in accordance with applicable law.CommentsClose CommentsPermalink





(3) INTERESTS IN AND ASSETS AND OBLIGATIONS OF COVERED FINANCIAL COMPANY- Notwithstanding paragraph (1) or (2) or any other provision of law--CommentsClose CommentsPermalink





(A) a bridge financial company shall assume, acquire, or succeed to the assets or liabilities of a covered financial company (including the assets or liabilities associated with any trust or custody business) only to the extent that such assets or liabilities are transferred by the Corporation to the bridge financial company in accordance with, and subject to the restrictions set forth in, paragraph (1)(B); andCommentsClose CommentsPermalink





(B) a bridge financial company shall not assume, acquire, or succeed to any obligation that a covered financial company for which the Corporation has been appointed receiver may have to any shareholder, member, general partner, limited partner, or other person with an interest in the equity of the covered financial company that arises as a result of the status of that person having an equity claim in the covered financial company.CommentsClose CommentsPermalink





(4) BRIDGE FINANCIAL COMPANY TREATED AS BEING IN DEFAULT FOR CERTAIN PURPOSES- A bridge financial company shall be treated as a covered financial company in default at such times and for such purposes as the Corporation may, in its discretion, determine.CommentsClose CommentsPermalink





(5) TRANSFER OF ASSETS AND LIABILITIES-CommentsClose CommentsPermalink





(A) AUTHORITY OF CORPORATION- The Corporation, as receiver for a covered financial company, may transfer any assets and liabilities of a covered financial company (including any assets or liabilities associated with any trust or custody business) to one or more bridge financial companies, in accordance with and subject to the restrictions of paragraph (1).CommentsClose CommentsPermalink





(B) SUBSEQUENT TRANSFERS- At any time after the establishment of a bridge financial company with respect to a covered financial company, the Corporation, as receiver, may transfer any assets and liabilities of such covered financial company as the Corporation may, in its discretion, determine to be appropriate in accordance with and subject to the restrictions of paragraph (1).CommentsClose CommentsPermalink





(C) TREATMENT OF TRUST OR CUSTODY BUSINESS- For purposes of this paragraph, the trust or custody business, including fiduciary appointments, held by any covered financial company is included among its assets and liabilities.CommentsClose CommentsPermalink





(D) EFFECTIVE WITHOUT APPROVAL- The transfer of any assets or liabilities, including those associated with any trust or custody business of a covered financial company, to a bridge financial company shall be effective without any further approval under Federal or State law, assignment, or consent with respect thereto.CommentsClose CommentsPermalink





(E) EQUITABLE TREATMENT OF SIMILARLY SITUATED CREDITORS- The Corporation shall treat all creditors of a covered financial company that are similarly situated under subsection (b)(1), in a similar manner in exercising the authority of the Corporation under this subsection to transfer any assets or liabilities of the covered financial company to one or more bridge financial companies established with respect to such covered financial company, except that the Corporation may take any action (including making payments, subject to subsection (o)(1)(E)(ii)) that does not comply with this subparagraph, if--CommentsClose CommentsPermalink





(i) the Corporation determines that such action is necessary--CommentsClose CommentsPermalink





(I) to maximize the value of the assets of the covered financial company;CommentsClose CommentsPermalink





(II) to maximize the present value return from the sale or other disposition of the assets of the covered financial company; orCommentsClose CommentsPermalink





(III) to minimize the amount of any loss realized upon the sale or other disposition of the assets of the covered financial company; andCommentsClose CommentsPermalink





(ii) all creditors that are similarly situated under subsection (b)(1) receive not less than the amount provided under paragraphs (2) and (3) of subsection (d).CommentsClose CommentsPermalink





(F) LIMITATION ON TRANSFER OF LIABILITIES- Notwithstanding any other provision of law, the aggregate amount of liabilities of a covered financial company that are transferred to, or assumed by, a bridge financial company from a covered financial company may not exceed the aggregate amount of the assets of the covered financial company that are transferred to, or purchased by, the bridge financial company from the covered financial company.CommentsClose CommentsPermalink





(6) STAY OF JUDICIAL ACTION- Any judicial action to which a bridge financial company becomes a party by virtue of its acquisition of any assets or assumption of any liabilities of a covered financial company shall be stayed from further proceedings for a period of not longer than 45 days (or such longer period as may be agreed to upon the consent of all parties) at the request of the bridge financial company.CommentsClose CommentsPermalink





(7) AGREEMENTS AGAINST INTEREST OF THE BRIDGE FINANCIAL COMPANY- No agreement that tends to diminish or defeat the interest of the bridge financial company in any asset of a covered financial company acquired by the bridge financial company shall be valid against the bridge financial company, unless such agreement--CommentsClose CommentsPermalink





(A) is in writing;CommentsClose CommentsPermalink





(B) was executed by an authorized officer or representative of the covered financial company or confirmed in the ordinary course of business by the covered financial company; andCommentsClose CommentsPermalink





(C) has been on the official record of the company, since the time of its execution, or with which, the party claiming under the agreement provides documentation of such agreement and its authorized execution or confirmation by the covered financial company that is acceptable to the receiver.CommentsClose CommentsPermalink





(8) NO FEDERAL STATUS-CommentsClose CommentsPermalink





(A) AGENCY STATUS- A bridge financial company is not an agency, establishment, or instrumentality of the United States.CommentsClose CommentsPermalink





(B) EMPLOYEE STATUS- Representatives for purposes of paragraph (1)(B), directors, officers, employees, or agents of a bridge financial company are not, solely by virtue of service in any such capacity, officers or employees of the United States. Any employee of the Corporation or of any Federal instrumentality who serves at the request of the Corporation as a representative for purposes of paragraph (1)(B), director, officer, employee, or agent of a bridge financial company shall not--CommentsClose CommentsPermalink





(i) solely by virtue of service in any such capacity lose any existing status as an officer or employee of the United States for purposes of title 5, United States Code, or any other provision of law; orCommentsClose CommentsPermalink





(ii) receive any salary or benefits for service in any such capacity with respect to a bridge financial company in addition to such salary or benefits as are obtained through employment with the Corporation or such Federal instrumentality.CommentsClose CommentsPermalink





(9) FUNDING AUTHORIZED- The Corporation may, subject to the plan described in subsection (n)(13), provide funding to facilitate any transaction described in subparagraph (A), (B), (C), or (D) of paragraph (13) with respect to any bridge financial company, or facilitate the acquisition by a bridge financial company of any assets, or the assumption of any liabilities, of a covered financial company for which the Corporation has been appointed receiver.CommentsClose CommentsPermalink





(10) EXEMPT TAX STATUS- Notwithstanding any other provision of Federal or State law, a bridge financial company, its franchise, property, and income shall be exempt from all taxation now or hereafter imposed by the United States, by any territory, dependency, or possession thereof, or by any State, county, municipality, or local taxing authority.CommentsClose CommentsPermalink





(11) FEDERAL AGENCY APPROVAL; ANTITRUST REVIEW- If a transaction involving the merger or sale of a bridge financial company requires approval by a Federal agency, the transaction may not be consummated before the 5th calendar day after the date of approval by the Federal agency responsible for such approval with respect thereto. If, in connection with any such approval a report on competitive factors from the Attorney General is required, the Federal agency responsible for such approval shall promptly notify the Attorney General of the proposed transaction and the Attorney General shall provide the required report within 10 days of the request. If a notification is required under section 7A of the Clayton Act with respect to such transaction, the required waiting period shall end on the 15th day after the date on which the Attorney General and the Federal Trade Commission receive such notification, unless the waiting period is terminated earlier under section 7A(b)(2) of the Clayton Act, or extended under section 7A(e)(2) of that Act.CommentsClose CommentsPermalink





(12) DURATION OF BRIDGE FINANCIAL COMPANY- Subject to paragraphs (13) and (14), the status of a bridge financial company as such shall terminate at the end of the 2-year period following the date on which it was granted a charter. The Corporation may, in its discretion, extend the status of the bridge financial company as such for no more than 3 additional 1-year periods.CommentsClose CommentsPermalink





(13) TERMINATION OF BRIDGE FINANCIAL COMPANY STATUS- The status of any bridge financial company as such shall terminate upon the earliest of--CommentsClose CommentsPermalink





(A) the date of the merger or consolidation of the bridge financial company with a company that is not a bridge financial company;CommentsClose CommentsPermalink





(B) at the election of the Corporation, the sale of a majority of the capital stock of the bridge financial company to a company other than the Corporation and other than another bridge financial company;CommentsClose CommentsPermalink





(C) the sale of 80 percent, or more, of the capital stock of the bridge financial company to a person other than the Corporation and other than another bridge financial company;CommentsClose CommentsPermalink





(D) at the election of the Corporation, either the assumption of all or substantially all of the liabilities of the bridge financial company by a company that is not a bridge financial company, or the acquisition of all or substantially all of the assets of the bridge financial company by a company that is not a bridge financial company, or other entity as permitted under applicable law; andCommentsClose CommentsPermalink





(E) the expiration of the period provided in paragraph (12), or the earlier dissolution of the bridge financial company, as provided in paragraph (15).CommentsClose CommentsPermalink





(14) EFFECT OF TERMINATION EVENTS-CommentsClose CommentsPermalink





(A) MERGER OR CONSOLIDATION- A merger or consolidation, described in paragraph (12)(A) shall be conducted in accordance with, and shall have the effect provided in, the provisions of applicable law. For the purpose of effecting such a merger or consolidation, the bridge financial company shall be treated as a corporation organized under the laws of the State of Delaware (unless the law of another State has been selected by the bridge financial company in accordance with paragraph (2)(F)), and the Corporation shall be treated as the sole shareholder thereof, notwithstanding any other provision of State or Federal law.CommentsClose CommentsPermalink





(B) CHARTER CONVERSION- Following the sale of a majority of the capital stock of the bridge financial company, as provided in paragraph (13)(B), the Corporation may amend the charter of the bridge financial company to reflect the termination of the status of the bridge financial company as such, whereupon the company shall have all of the rights, powers, and privileges under its constituent documents and applicable Federal or State law. In connection therewith, the Corporation may take such steps as may be necessary or convenient to reincorporate the bridge financial company under the laws of a State and, notwithstanding any provisions of Federal or State law, such State-chartered corporation shall be deemed to succeed by operation of law to such rights, titles, powers, and interests of the bridge financial company as the Corporation may provide, with the same effect as if the bridge financial company had merged with the State-chartered corporation under provisions of the corporate laws of such State.CommentsClose CommentsPermalink





(C) SALE OF STOCK- Following the sale of 80 percent or more of the capital stock of a bridge financial company, as provided in paragraph (13)(C), the company shall have all of the rights, powers, and privileges under its constituent documents and applicable Federal or State law. In connection therewith, the Corporation may take such steps as may be necessary or convenient to reincorporate the bridge financial company under the laws of a State and, notwithstanding any provisions of Federal or State law, the State-chartered corporation shall be deemed to succeed by operation of law to such rights, titles, powers and interests of the bridge financial company as the Corporation may provide, with the same effect as if the bridge financial company had merged with the State-chartered corporation under provisions of the corporate laws of such State.CommentsClose CommentsPermalink





(D) ASSUMPTION OF LIABILITIES AND SALE OF ASSETS- Following the assumption of all or substantially all of the liabilities of the bridge financial company, or the sale of all or substantially all of the assets of the bridge financial company, as provided in paragraph (13)(D), at the election of the Corporation, the bridge financial company may retain its status as such for the period provided in paragraph (12) or may be dissolved at the election of the Corporation.CommentsClose CommentsPermalink





(E) AMENDMENTS TO CHARTER- Following the consummation of a transaction described in subparagraph (A), (B), (C), or (D) of paragraph (13), the charter of the resulting company shall be amended to reflect the termination of bridge financial company status, if appropriate.CommentsClose CommentsPermalink





(15) DISSOLUTION OF BRIDGE FINANCIAL COMPANY-CommentsClose CommentsPermalink





(A) IN GENERAL- Notwithstanding any other provision of Federal or State law, if the status of a bridge financial company as such has not previously been terminated by the occurrence of an event specified in subparagraph (A), (B), (C), or (D) of paragraph (13)--CommentsClose CommentsPermalink





(i) the Corporation may, in its discretion, dissolve the bridge financial company in accordance with this paragraph at any time; andCommentsClose CommentsPermalink





(ii) the Corporation shall promptly commence dissolution proceedings in accordance with this paragraph upon the expiration of the 2-year period following the date on which the bridge financial company was chartered, or any extension thereof, as provided in paragraph (12).CommentsClose CommentsPermalink





(B) PROCEDURES- The Corporation shall remain the receiver for a bridge financial company for the purpose of dissolving the bridge financial company. The Corporation as receiver for a bridge financial company shall wind up the affairs of the bridge financial company in conformity with the provisions of law relating to the liquidation of covered financial companies under this title. With respect to any such bridge financial company, the Corporation as receiver shall have all the rights, powers, and privileges and shall perform the duties related to the exercise of such rights, powers, or privileges granted by law to the Corporation as receiver for a covered financial company under this title and, notwithstanding any other provision of law, in the exercise of such rights, powers, and privileges, the Corporation shall not be subject to the direction or supervision of any State agency or other Federal agency.CommentsClose CommentsPermalink





(16) AUTHORITY TO OBTAIN CREDIT-CommentsClose CommentsPermalink





(A) IN GENERAL- A bridge financial company may obtain unsecured credit and issue unsecured debt.CommentsClose CommentsPermalink





(B) INABILITY TO OBTAIN CREDIT- If a bridge financial company is unable to obtain unsecured credit or issue unsecured debt, the Corporation may authorize the obtaining of credit or the issuance of debt by the bridge financial company--CommentsClose CommentsPermalink





(i) with priority over any or all of the obligations of the bridge financial company;CommentsClose CommentsPermalink





(ii) secured by a lien on property of the bridge financial company that is not otherwise subject to a lien; orCommentsClose CommentsPermalink





(iii) secured by a junior lien on property of the bridge financial company that is subject to a lien.CommentsClose CommentsPermalink





(C) LIMITATIONS-CommentsClose CommentsPermalink





(i) IN GENERAL- The Corporation, after notice and a hearing, may authorize the obtaining of credit or the issuance of debt by a bridge financial company that is secured by a senior or equal lien on property of the bridge financial company that is subject to a lien, only if--CommentsClose CommentsPermalink





(I) the bridge financial company is unable to otherwise obtain such credit or issue such debt; andCommentsClose CommentsPermalink





(II) there is adequate protection of the interest of the holder of the lien on the property with respect to which such senior or equal lien is proposed to be granted.CommentsClose CommentsPermalink





(ii) HEARING- The hearing required pursuant to this subparagraph shall be before a court of the United States, which shall have jurisdiction to conduct such hearing.CommentsClose CommentsPermalink





(D) BURDEN OF PROOF- In any hearing under this paragraph, the Corporation has the burden of proof on the issue of adequate protection.CommentsClose CommentsPermalink





(E) QUALIFIED FINANCIAL CONTRACTS- No credit or debt obtained or issued by a bridge financial company may contain terms that impair the rights of a counterparty to a qualified financial contract upon a default by the bridge financial company, other than the priority of such counterparty’s unsecured claim (after the exercise of rights) relative to the priority of the bridge financial company’s obligations in respect of such credit or debt, unless such counterparty consents in writing to any such impairment.CommentsClose CommentsPermalink





(17) EFFECT ON DEBTS AND LIENS- The reversal or modification on appeal of an authorization under this subsection to obtain credit or issue debt, or of a grant under this section of a priority or a lien, does not affect the validity of any debt so issued, or any priority or lien so granted, to an entity that extended such credit in good faith, whether or not such entity knew of the pendency of the appeal, unless such authorization and the issuance of such debt, or the granting of such priority or lien, were stayed pending appeal.CommentsClose CommentsPermalink





(i) Sharing Records- If the Corporation has been appointed as receiver for a covered financial company, other Federal regulators shall make all records relating to the covered financial company available to the Corporation, which may be used by the Corporation in any manner that the Corporation determines to be appropriate.CommentsClose CommentsPermalink





(j) Expedited Procedures for Certain Claims-CommentsClose CommentsPermalink





(1) TIME FOR FILING NOTICE OF APPEAL- The notice of appeal of any order, whether interlocutory or final, entered in any case brought by the Corporation against a director, officer, employee, agent, attorney, accountant, or appraiser of the covered financial company, or any other person employed by or providing services to a covered financial company, shall be filed not later than 30 days after the date of entry of the order. The hearing of the appeal shall be held not later than 120 days after the date of the notice of appeal. The appeal shall be decided not later than 180 days after the date of the notice of appeal.CommentsClose CommentsPermalink





(2) SCHEDULING- The court shall expedite the consideration of any case brought by the Corporation against a director, officer, employee, agent, attorney, accountant, or appraiser of a covered financial company or any other person employed by or providing services to a covered financial company. As far as practicable, the court shall give such case priority on its docket.CommentsClose CommentsPermalink





(3) JUDICIAL DISCRETION- The court may modify the schedule and limitations stated in paragraphs (1) and (2) in a particular case, based on a specific finding that the ends of justice that would be served by making such a modification would outweigh the best interest of the public in having the case resolved expeditiously.CommentsClose CommentsPermalink





(k) Foreign Investigations- The Corporation, as receiver for any covered financial company, and for purposes of carrying out any power, authority, or duty with respect to a covered financial company--CommentsClose CommentsPermalink





(1) may request the assistance of any foreign financial authority and provide assistance to any foreign financial authority in accordance with section 8(v) of the Federal Deposit Insurance Act, as if the covered financial company were an insured depository institution, the Corporation were the appropriate Federal banking agency for the company, and any foreign financial authority were the foreign banking authority; andCommentsClose CommentsPermalink





(2) may maintain an office to coordinate foreign investigations or investigations on behalf of foreign financial authorities.CommentsClose CommentsPermalink





(l) Prohibition on Entering Secrecy Agreements and Protective Orders- The Corporation may not enter into any agreement or approve any protective order which prohibits the Corporation from disclosing the terms of any settlement of an administrative or other action for damages or restitution brought by the Corporation in its capacity as receiver for a covered financial company.CommentsClose CommentsPermalink





(m) Liquidation of Certain Covered Financial Companies or Bridge Financial Companies-CommentsClose CommentsPermalink





(1) IN GENERAL- Except as specifically provided in this section, and notwithstanding any other provision of law, the Corporation, in connection with the liquidation of any covered financial company or bridge financial company with respect to which the Corporation has been appointed as receiver, shall--CommentsClose CommentsPermalink





(A) in the case of any covered financial company or bridge financial company that is or has a subsidiary that is a stockbroker, but is not a member of the Securities Investor Protection Corporation, apply the provisions of subchapter III of chapter 7 of the Bankruptcy Code, in respect of the distribution to any customer of all customer name securities and customer property, as if such covered financial company or bridge financial company were a debtor for purposes of such subchapter; orCommentsClose CommentsPermalink





(B) in the case of any covered financial company or bridge financial company that is a commodity broker, apply the provisions of subchapter IV of chapter 7 the Bankruptcy Code, in respect of the distribution to any customer of all customer property, as if such covered financial company or bridge financial company were a debtor for purposes of such subchapter.CommentsClose CommentsPermalink





(2) DEFINITIONS- For purposes of this subsection--CommentsClose CommentsPermalink





(A) the terms ‘customer’, ‘customer name securities’, and ‘customer property’ have the same meanings as in section 741 of title 11, United States Code; andCommentsClose CommentsPermalink





(B) the terms ‘commodity broker’ and ‘stockbroker’ have the same meanings as in section 101 of the Bankruptcy Code.CommentsClose CommentsPermalink





(n) Orderly Liquidation Fund-CommentsClose CommentsPermalink





(1) ESTABLISHMENT- There is established in the Treasury of the United States a separate fund to be known as the ‘Orderly Liquidation Fund’, which shall be available to the Corporation to carry out the authorities contained in this title, for the cost of actions authorized by this title, including the orderly liquidation of covered financial companies, payment of administrative expenses, the payment of principal and interest by the Corporation on obligations issued under paragraph (9), and the exercise of the authorities of the Corporation under this title.CommentsClose CommentsPermalink





(2) PROCEEDS- Amounts received by the Corporation, including assessments received under subsection (o), proceeds of obligations issued under paragraph (9), interest and other earnings from investments, and repayments to the Corporation by covered financial companies, shall be deposited into the Fund.CommentsClose CommentsPermalink





(3) MANAGEMENT- The Corporation shall manage the Fund in accordance with this subsection and the policies and procedures established under section 203(d).CommentsClose CommentsPermalink





(4) INVESTMENTS- The Corporation shall invest amounts in the Fund in accordance with paragraph (8).CommentsClose CommentsPermalink





(5) TARGET SIZE OF THE FUND- The target size of the Fund (in this section referred to as ‘target size’) shall be $50,000,000,000, adjusted for inflation on a periodic basis by the Corporation.CommentsClose CommentsPermalink





(6) INITIAL CAPITALIZATION PERIOD- The Corporation shall impose risk-based assessments as provided under subsection (o), during the period beginning one year after the date of enactment of this Act and ending on the date on which the Fund reaches the target size (in this section referred to as the ‘initial capitalization period’), provided that the initial capitalization period shall be not shorter than 5 years, and not longer than 10 years, after the date of enactment of this Act. The Corporation, with the approval of the Secretary, may extend the initial capitalization period for a longer period, as determined necessary by the Corporation, if the Corporation is appointed receiver for a covered financial company under this title and the Fund incurs a loss before the expiration of such period.CommentsClose CommentsPermalink





(7) MAINTAINING THE FUND- Upon the expiration of the initial capitalization period, the Corporation shall suspend assessments, except as set forth in subsection (o)(1).CommentsClose CommentsPermalink





(8) INVESTMENTS- At the request of the Corporation, the Secretary may invest such portion of amounts held in the Fund that are not, in the judgment of the Corporation, required to meet the current needs of the Corporation, in obligations of the United States having suitable maturities, as determined by the Corporation. The interest on and the proceeds from the sale or redemption of such obligations shall be credited to the Fund.CommentsClose CommentsPermalink





(9) AUTHORITY TO ISSUE OBLIGATIONS-CommentsClose CommentsPermalink





(A) CORPORATION AUTHORIZED TO ISSUE OBLIGATIONS- Upon appointment by the Secretary of the Corporation as receiver for a covered financial company, the Corporation is authorized to issue obligations to the Secretary.CommentsClose CommentsPermalink





(B) SECRETARY AUTHORIZED TO PURCHASE OBLIGATIONS- The Secretary may, under such terms and conditions as the Secretary may require, purchase or agree to purchase any obligations issued under subparagraph (A), and for such purpose, the Secretary is authorized to use as a public debt transaction the proceeds of the sale of any securities issued under chapter 31 of title 31, United States Code, and the purposes for which securities may be issued under chapter 31 of title 31, United States Code, are extended to include such purchases.CommentsClose CommentsPermalink





(C) INTEREST RATE- Each purchase of obligations by the Secretary under this paragraph shall be upon such terms and conditions as to yield a return at a rate determined by the Secretary, taking into consideration the current average yield on outstanding marketable obligations of the United States of comparable maturity.CommentsClose CommentsPermalink





(D) SECRETARY AUTHORIZED TO SELL OBLIGATIONS- The Secretary may sell, upon such terms and conditions as the Secretary shall determine, any of the obligations acquired under this paragraph.CommentsClose CommentsPermalink





(E) PUBLIC DEBT TRANSACTIONS- All purchases and sales by the Secretary of such obligations under this paragraph shall be treated as public debt transactions of the United States, and the proceeds from the sale of any obligations acquired by the Secretary under this paragraph shall be deposited into the Treasury of the United States as miscellaneous receipts.CommentsClose CommentsPermalink





(10) MAXIMUM OBLIGATION LIMITATION- The Corporation may not, in connection with the orderly liquidation of a covered financial company, issue or incur any obligation, if, after issuing or incurring the obligation, the aggregate amount of such obligations outstanding under this subsection would exceed the sum of--CommentsClose CommentsPermalink





(A) the amount of cash or the cash equivalents held by the Fund; andCommentsClose CommentsPermalink





(B) the amount that is equal to 90 percent of the fair value of assets from each covered financial company that are available to repay the Corporation.CommentsClose CommentsPermalink





(11) RULEMAKING- The Corporation and the Secretary shall jointly, in consultation with the Council, prescribe regulations governing the calculation of the maximum obligation limitation defined in this paragraph.CommentsClose CommentsPermalink





(12) RELIANCE ON PRIVATE SECTOR FUNDING- The Corporation may exercise its authority under paragraph (9) only after the cash and cash equivalents held by the Fund have been drawn down to facilitate the orderly liquidation of a covered financial company.CommentsClose CommentsPermalink





(13) RULE OF CONSTRUCTION-CommentsClose CommentsPermalink





(A) IN GENERAL- Nothing in this section shall be construed to affect the authority of the Corporation under subsection (a) or (b) of section 14 or section 15(c)(5) of the Federal Deposit Insurance Act (12 U.S.C. 1824, 1825(c)(5)), the management of the Deposit Insurance Fund by the Corporation, or the resolution of insured depository institutions, provided that--CommentsClose CommentsPermalink





(i) none of the authorities contained in this title shall be used to assist the Deposit Insurance Fund with any of the other responsibilities of the Corporation under applicable law other than this title; andCommentsClose CommentsPermalink





(ii) the authorities of the Corporation relating to the Deposit Insurance Fund, or any other responsibilities of the Corporation, shall not be used to assist a covered financial company pursuant to this title.CommentsClose CommentsPermalink





(B) VALUATION- For purposes of determining the amount of obligations under this subsection--CommentsClose CommentsPermalink





(i) the Corporation shall include as an obligation any contingent liability of the Corporation pursuant to this title; andCommentsClose CommentsPermalink





(ii) the Corporation shall value any contingent liability at its expected cost to the Corporation.CommentsClose CommentsPermalink





(14) ORDERLY LIQUIDATION PLAN- Amounts in the Fund shall be available to the Corporation with regard to a covered financial company for which the Corporation is appointed receiver after the Corporation has developed an orderly liquidation plan that is acceptable to the Secretary with regard to such covered financial company, including the provision and use of funds under section 204(d) and subsection (h)(2)(G)(iv) and (h)(9) of this section. The Corporation may, at any time, amend any orderly liquidation plan approved by the Secretary with the concurrence of the Secretary.CommentsClose CommentsPermalink





(o) Assessments-CommentsClose CommentsPermalink





(1) RISK-BASED ASSESSMENTS-CommentsClose CommentsPermalink





(A) ASSESSMENTS TO CAPITALIZE THE FUND-CommentsClose CommentsPermalink





(i) IN GENERAL- Except as provided under subparagraph (C)(ii), the Corporation shall impose risk-based assessments on eligible financial companies to capitalize the Fund during the initial capitalization period, taking into account the considerations set forth in paragraph (4).CommentsClose CommentsPermalink





(ii) SUSPENSION OF ASSESSMENTS- The Corporation shall suspend the imposition of assessments under clause (i) following a determination by the Corporation that the Fund has reached the target size described in subsection (n).CommentsClose CommentsPermalink





(B) ELIGIBLE FINANCIAL COMPANIES DEFINED- For purposes of this subsection, the term ‘eligible financial company’ means any bank holding company with total consolidated assets equal to or greater than $50,000,000,000 and any nonbank financial company supervised by the Board of Governors.CommentsClose CommentsPermalink





(C) ADDITIONAL ASSESSMENTS- The Corporation shall charge one or more risk-based assessments in accordance with the provisions of subparagraph (E), if--CommentsClose CommentsPermalink





(i) the Fund falls below the target size after the initial capitalization period, in order to restore the Fund to the target size over a period of time determined by the Corporation;CommentsClose CommentsPermalink





(ii) the Corporation is appointed receiver for a covered financial company and the Fund incurs a loss during the initial capitalization period with respect to that covered financial company; orCommentsClose CommentsPermalink





(iii) such assessments are necessary to pay in full the obligations issued by the Corporation to the Secretary within 60 months of the date of issuance of such obligations.CommentsClose CommentsPermalink





(D) EXTENSIONS AUTHORIZED- The Corporation may, with the approval of the Secretary, extend the time period under subparagraph (C)(iii), if the Corporation determines that an extension is necessary to avoid a serious adverse effect on the financial system of the United States.CommentsClose CommentsPermalink





(E) APPLICATION OF ADDITIONAL ASSESSMENTS- To meet the requirements of subparagraph (C), the Corporation shall, taking into account the considerations set forth in paragraph (4), impose assessments--CommentsClose CommentsPermalink





(i) on--CommentsClose CommentsPermalink





(I) eligible financial companies; andCommentsClose CommentsPermalink





(II) financial companies with total consolidated assets over $50,000,000,000 that are not eligible financial companies; andCommentsClose CommentsPermalink





(ii) at a substantially higher rate than otherwise would be assessed on any financial company that received payments or credit pursuant to subsection (b)(4), (d)(4), or (h)(5)(E).CommentsClose CommentsPermalink





(F) NEW ELIGIBLE FINANCIAL COMPANIES- The Corporation shall impose an assessment, in an amount determined by the Corporation in consultation with the Secretary and taking into account the considerations set forth in paragraph (4), on any company that becomes an eligible financial company after the initial capitalization period.CommentsClose CommentsPermalink





(2) GRADUATED ASSESSMENT RATE- The Corporation shall impose assessments on a graduated basis, with financial companies having greater assets being assessed at a higher rate.CommentsClose CommentsPermalink





(3) NOTIFICATION AND PAYMENT- The Corporation shall notify each financial company of that company’s assessment under this subsection. Any financial company subject to assessment under this subsection shall pay such assessment in accordance with the regulations prescribed pursuant to paragraph (6).CommentsClose CommentsPermalink





(4) RISK-BASED ASSESSMENT CONSIDERATIONS- In imposing assessments under this subsection, the Corporation shall--CommentsClose CommentsPermalink





(A) take into account economic conditions generally affecting financial companies, so as to allow assessments to be lower during less favorable economic conditions;CommentsClose CommentsPermalink





(B) take into account any assessments imposed on--CommentsClose CommentsPermalink





(i) an insured depository institution subsidiary of a financial company pursuant to section 7 or section 13(c)(4)(G) of the Federal Deposit Insurance Act (12 U.S.C. 1817, 1823(c)(4)(G));CommentsClose CommentsPermalink





(ii) a financial company or subsidiary of such company that is a member of SIPC pursuant to section 4 of the Securities Investor Protection Act of 1970 (15 U.S.C. 78ddd); andCommentsClose CommentsPermalink





(iii) a financial company or subsidiary of such company that is an insurance company pursuant to applicable State law to cover (or reimburse payments made to cover) the costs of rehabilitation, liquidation, or other State insolvency proceeding with respect to one or more insurance companies;CommentsClose CommentsPermalink





(C) take into account the financial condition of the financial company, including the extent and type of off-balance-sheet exposures of the financial company;CommentsClose CommentsPermalink





(D) take into account the risks presented by the financial company to the financial stability of the United States economy;CommentsClose CommentsPermalink





(E) take into account the extent to which the financial company or group of financial companies has benefitted, or likely would benefit, from the orderly liquidation of a covered financial company and the use of the Fund under this title;CommentsClose CommentsPermalink





(F) distinguish among different classes of assets or different types of financial companies (including distinguishing among different types of financial companies, based on their levels of capital and leverage) in order to establish comparable assessment bases among financial companies subject to this subsection;CommentsClose CommentsPermalink





(G) establish the parameters for the graduated assessment requirement in paragraph (2); andCommentsClose CommentsPermalink





(H) take into account such other factors as the Corporation deems appropriate.CommentsClose CommentsPermalink





(5) COLLECTION OF INFORMATION- The Corporation may impose on covered financial companies such collection of information requirements as the Corporation deems necessary to carry out this subsection after the appointment of the Corporation as receiver under this title.CommentsClose CommentsPermalink





(6) RULEMAKING-CommentsClose CommentsPermalink





(A) IN GENERAL- The Corporation shall, in consultation with the Secretary and the Council, prescribe regulations to carry out this subsection.CommentsClose CommentsPermalink





(B) EQUITABLE TREATMENT- The regulations prescribed under subparagraph (A) shall take into account the differences in risks posed to the financial stability of the United States by financial companies, the differences in the liability structures of financial companies, and the different bases for other assessments that such financial companies may be required to pay, to ensure that assessed financial companies are treated equitably and that assessments under this subsection reflect such differences.CommentsClose CommentsPermalink





(p) Unenforceability of Certain Agreements-CommentsClose CommentsPermalink





(1) IN GENERAL- No provision described in paragraph (2) shall be enforceable against or impose any liability on any person, as such enforcement or liability shall be contrary to public policy.CommentsClose CommentsPermalink





(2) PROHIBITED PROVISIONS- A provision described in this paragraph is any term contained in any existing or future standstill, confidentiality, or other agreement that, directly or indirectly--CommentsClose CommentsPermalink





(A) affects, restricts, or limits the ability of any person to offer to acquire or acquire;CommentsClose CommentsPermalink





(B) prohibits any person from offering to acquire or acquiring; orCommentsClose CommentsPermalink





(C) prohibits any person from using any previously disclosed information in connection with any such offer to acquire or acquisition of,CommentsClose CommentsPermalink





all or part of any covered financial company, including any liabilities, assets, or interest therein, in connection with any transaction in which the Corporation exercises its authority under this title.CommentsClose CommentsPermalink





(q) Other Exemptions-CommentsClose CommentsPermalink





(1) IN GENERAL- When acting as a receiver under this title--CommentsClose CommentsPermalink





(A) the Corporation, including its franchise, its capital, reserves and surplus, and its income, shall be exempt from all taxation imposed by any State, county, municipality, or local taxing authority, except that any real property of the Corporation shall be subject to State, territorial, county, municipal, or local taxation to the same extent according to its value as other real property is taxed, except that, notwithstanding the failure of any person to challenge an assessment under State law of the value of such property, such value, and the tax thereon, shall be determined as of the period for which such tax is imposed;CommentsClose CommentsPermalink





(B) no property of the Corporation shall be subject to levy, attachment, garnishment, foreclosure, or sale without the consent of the Corporation, nor shall any involuntary lien attach to the property of the Corporation; andCommentsClose CommentsPermalink





(C) the Corporation shall not be liable for any amounts in the nature of penalties or fines, including those arising from the failure of any person to pay any real property, personal property, probate, or recording tax or any recording or filing fees when due; andCommentsClose CommentsPermalink





(D) the Corporation shall be exempt from all prosecution by the United States or any State, county, municipality, or local authority for any criminal offense arising under Federal, State, county, municipal, or local law, which was allegedly committed by the covered financial company, or persons acting on behalf of the covered financial company, prior to the appointment of the Corporation as receiver.CommentsClose CommentsPermalink





(2) LIMITATION- Paragraph (1) shall not apply with respect to any tax imposed (or other amount arising) under the Internal Revenue Code of 1986.CommentsClose CommentsPermalink





(r) Certain Sales of Assets Prohibited-CommentsClose CommentsPermalink





(1) PERSONS WHO ENGAGED IN IMPROPER CONDUCT WITH, OR CAUSED LOSSES TO, COVERED FINANCIAL COMPANIES- The Corporation shall prescribe regulations which, at a minimum, shall prohibit the sale of assets of a covered financial company by the Corporation to--CommentsClose CommentsPermalink





(A) any person who--CommentsClose CommentsPermalink





(i) has defaulted, or was a member of a partnership or an officer or director of a corporation that has defaulted, on 1 or more obligations, the aggregate amount of which exceeds $1,000,000, to such covered financial company;CommentsClose CommentsPermalink





(ii) has been found to have engaged in fraudulent activity in connection with any obligation referred to in clause (i); andCommentsClose CommentsPermalink





(iii) proposes to purchase any such asset in whole or in part through the use of the proceeds of a loan or advance of credit from the Corporation or from any covered financial company;CommentsClose CommentsPermalink





(B) any person who participated, as an officer or director of such covered financial company or of any affiliate of such company, in a material way in any transaction that resulted in a substantial loss to such covered financial company; orCommentsClose CommentsPermalink





(C) any person who has demonstrated a pattern or practice of defalcation regarding obligations to such covered financial company.CommentsClose CommentsPermalink





(2) CONVICTED DEBTORS- Except as provided in paragraph (3), a person may not purchase any asset of such institution from the receiver, if that person--CommentsClose CommentsPermalink





(A) has been convicted of an offense under section 215, 656, 657, 1005, 1006, 1007, 1008, 1014, 1032, 1341, 1343, or 1344 of title 18, United States Code, or of conspiring to commit such an offense, affecting any covered financial company; andCommentsClose CommentsPermalink





(B) is in default on any loan or other extension of credit from such covered financial company which, if not paid, will cause substantial loss to the Fund or the Corporation.CommentsClose CommentsPermalink





(3) SETTLEMENT OF CLAIMS- Paragraphs (1) and (2) shall not apply to the sale or transfer by the Corporation of any asset of any covered financial company to any person, if the sale or transfer of the asset resolves or settles, or is part of the resolution or settlement, of 1 or more claims that have been, or could have been, asserted by the Corporation against the person.CommentsClose CommentsPermalink





(4) DEFINITION OF DEFAULT- For purposes of this subsection, the term ‘default’ means a failure to comply with the terms of a loan or other obligation to such an extent that the property securing the obligation is foreclosed upon.CommentsClose CommentsPermalink

SEC. 211. MISCELLANEOUS PROVISIONS.

(a) Clarification of Prohibition Regarding Concealment of Assets From Receiver or Liquidating Agent- Section 1032(1) of title 18, United States Code, is amended by inserting ‘the Federal Deposit Insurance Corporation acting as receiver for a covered financial company, in accordance with title II of the Restoring American Financial Stability Act of 2010,’ before ‘or the National Credit’.CommentsClose CommentsPermalink





(b) Conforming Amendment- Section 1032 of title 18, United States Code, is amended in the section heading, by striking ‘of financial institution’.CommentsClose CommentsPermalink





(c) Federal Deposit Insurance Corporation Improvement Act of 1991- Section 403(a) of the Federal Deposit Insurance Corporation Improvement Act of 1991 (12 U.S.C. 4403(a)) is amended by inserting ‘section 210(c) of the Restoring American Financial Stability Act of 2010, section 1367 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4617(d)),’ after ‘section 11(e) of the Federal Deposit Insurance Act,’.CommentsClose CommentsPermalink

TITLE III--TRANSFER OF POWERS TO THE COMPTROLLER OF THE CURRENCY, THE CORPORATION, AND THE BOARD OF GOVERNORSCommentsClose CommentsPermalink

SEC. 300. SHORT TITLE.

This title may be cited as the ‘Enhancing Financial Institution Safety and Soundness Act of 2010’.CommentsClose CommentsPermalink

SEC. 301. PURPOSES.

The purposes of this title are--CommentsClose CommentsPermalink





(1) to provide for the safe and sound operation of the banking system of the United States;CommentsClose CommentsPermalink





(2) to preserve and protect the dual system of Federal and State-chartered depository institutions;CommentsClose CommentsPermalink





(3) to ensure the fair and appropriate supervision of each depository institution, regardless of the size or type of charter of the depository institution; andCommentsClose CommentsPermalink





(4) to streamline and rationalize the supervision of depository institutions and the holding companies of depository institutions.CommentsClose CommentsPermalink

SEC. 302. DEFINITION.

In this title, the term ‘transferred employee’ means, as the context requires, an employee transferred to the Office of the Comptroller of the Currency or the Corporation under section 322.CommentsClose CommentsPermalink

Subtitle A--Transfer of Powers and DutiesCommentsClose CommentsPermalink

SEC. 311. TRANSFER DATE.

(a) Transfer Date- Except as provided in subsection (b), the term ‘transfer date’ means the date that is 1 year after the date of enactment of this Act.CommentsClose CommentsPermalink





(b) Extension Permitted-CommentsClose CommentsPermalink





(1) NOTICE REQUIRED- The Secretary, in consultation with the Comptroller of the Currency, the Director of the Office of Thrift Supervision, the Chairman of the Board of Governors, and the Chairperson of the Corporation, may extend the period under subsection (a) and designate a transfer date that is not later than 18 months after the date of enactment of this Act, if the Secretary transmits to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives--CommentsClose CommentsPermalink





(A) a written determination that commencement of the orderly process to implement this title is not feasible by the date that is 1 year after the date of enactment of this Act;CommentsClose CommentsPermalink





(B) an explanation of why an extension is necessary to commence the process of orderly implementation of this title;CommentsClose CommentsPermalink





(C) the transfer date designated under this subsection; andCommentsClose CommentsPermalink





(D) a description of the steps that will be taken to initiate the process of an orderly and timely implementation of this title within the extended time period.CommentsClose CommentsPermalink





(2) PUBLICATION OF NOTICE- Not later than 270 days after the date of enactment of this Act, the Secretary shall publish in the Federal Register notice of any transfer date designated under paragraph (1).CommentsClose CommentsPermalink

SEC. 312. POWERS AND DUTIES TRANSFERRED.

(a) Effective Date- This section, and the amendments made by this section, shall take effect on the transfer date.CommentsClose CommentsPermalink





(b) Functions of the Office of Thrift Supervision-CommentsClose CommentsPermalink





(1) SAVINGS AND LOAN HOLDING COMPANY FUNCTIONS TRANSFERRED-CommentsClose CommentsPermalink





(A) BOARD OF GOVERNORS- There are transferred to the Board of Governors all functions of the Office of Thrift Supervision and the Director of the Office of Thrift Supervision (including the authority to issue orders) relating to--CommentsClose CommentsPermalink





(i) the supervision of--CommentsClose CommentsPermalink





(I) any savings and loan holding company--CommentsClose CommentsPermalink

(aa) having $50,000,000,000 or more in total consolidated assets; orCommentsClose CommentsPermalink

(bb) that is a foreign bank; andCommentsClose CommentsPermalink

(II) any subsidiary (other than a depository institution) of a savings and loan holding company described in subclause (I); andCommentsClose CommentsPermalink





(ii) all rulemaking authority of the Office of Thrift Supervision and the Director of the Office of Thrift Supervision relating to savings and loan holding companies.CommentsClose CommentsPermalink





(B) COMPTROLLER OF THE CURRENCY- Except as provided in subparagraph (A), there are transferred to the Office of the Comptroller of the Currency all functions of the Office of Thrift Supervision and the Director of the Office of Thrift Supervision (including the authority to issue orders) relating to the supervision of--CommentsClose CommentsPermalink





(i) any savings and loan holding company (other than a foreign bank)--CommentsClose CommentsPermalink





(I) having less than $50,000,000,000 in total consolidated assets; andCommentsClose CommentsPermalink





(II) having--CommentsClose CommentsPermalink

(aa) a subsidiary that is an insured depository institution, if all such insured depository institutions are Federal depository institutions; orCommentsClose CommentsPermalink

(bb) a subsidiary that is a Federal depository institution and a subsidiary that is a State depository institution, if the total consolidated assets of all subsidiaries that are Federal depository institutions exceed the total consolidated assets of all subsidiaries that are State depository institutions; andCommentsClose CommentsPermalink

(ii) any subsidiary (other than a depository institution) of a savings and loan holding company described in clause (i).CommentsClose CommentsPermalink





(C) CORPORATION- Except as provided in subparagraph (A), there are transferred to the Corporation all functions of the Office of Thrift Supervision and the Director of the Office of Thrift Supervision (including the authority to issue orders) relating to the supervision of--CommentsClose CommentsPermalink





(i) any savings and loan holding company (other than a foreign bank)--CommentsClose CommentsPermalink





(I) having less than $50,000,000,000 in total consolidated assets; andCommentsClose CommentsPermalink





(II) having--CommentsClose CommentsPermalink

(aa) a subsidiary that is an insured depository institution, if all such insured depository institutions are State depository institutions; orCommentsClose CommentsPermalink

(bb) a subsidiary that is a Federal depository institution and a subsidiary that is a State depository institution, if the total consolidated assets of all subsidiaries that are State depository institutions exceed the total consolidated assets of all subsidiaries that are Federal depository institutions; andCommentsClose CommentsPermalink

(ii) any subsidiary (other than a depository institution) of a savings and loan holding company described in clause (i).CommentsClose CommentsPermalink





(2) ALL OTHER FUNCTIONS TRANSFERRED-CommentsClose CommentsPermalink





(A) BOARD OF GOVERNORS- All rulemaking authority of the Office of Thrift Supervision and the Director of the Office of Thrift Supervision under section 11 of the Home Owners’ Loan Act (12 U.S.C. 1468) relating to transactions with affiliates and extensions of credit to executive officers, directors, and principal shareholders is transferred to the Board of Governors.CommentsClose CommentsPermalink





(B) COMPTROLLER OF THE CURRENCY- Except as provided in subparagraph (A), there are transferred to the Comptroller of the Currency all functions of the Office of Thrift Supervision and the Director of the Office of Thrift Supervision relating to Federal savings associations.CommentsClose CommentsPermalink





(C) CORPORATION- Except as provided in paragraph (1), all functions of the Office of Thrift Supervision and the Director of the Office of Thrift Supervision relating to State savings associations are transferred to the Corporation.CommentsClose CommentsPermalink





(D) COMPTROLLER OF THE CURRENCY AND THE CORPORATION- All rulemaking authority of the Office of Thrift Supervision and the Director of the Office of Thrift Supervision relating to savings associations is transferred to, and shall be exercised jointly by, the Comptroller of the Currency and the Corporation.CommentsClose CommentsPermalink





(c) Certain Functions of the Board of Governors-CommentsClose CommentsPermalink





(1) BANK HOLDING COMPANY FUNCTIONS TRANSFERRED-CommentsClose CommentsPermalink





(A) COMPTROLLER OF THE CURRENCY- Except as provided in subparagraph (C), there are transferred to the Office of the Comptroller of the Currency all functions of the Board of Governors (including any Federal reserve bank) relating to the supervision of--CommentsClose CommentsPermalink





(i) any bank holding company (other than a foreign bank)--CommentsClose CommentsPermalink





(I) having less than $50,000,000,000 in total consolidated assets; andCommentsClose CommentsPermalink





(II) having--CommentsClose CommentsPermalink

(aa) a subsidiary that is an insured depository institution, if all such insured depository institutions are Federal depository institutions; orCommentsClose CommentsPermalink

(bb) a subsidiary that is a Federal depository institution and a subsidiary that is a State depository institution, if the total consolidated assets of all subsidiaries that are Federal depository institutions exceed the total consolidated assets of all subsidiaries that are State depository institutions; andCommentsClose CommentsPermalink

(ii) any subsidiary (other than a depository institution) of a bank holding company that is described in clause (i).CommentsClose CommentsPermalink





(B) CORPORATION- Except as provided in subparagraph (C), there are transferred to the Corporation all functions of the Board of Governors (including any Federal reserve bank) relating to the supervision of--CommentsClose CommentsPermalink





(i) any bank holding company (other than a foreign bank)--CommentsClose CommentsPermalink





(I) having less than $50,000,000,000 in total consolidated assets; andCommentsClose CommentsPermalink





(II) having--CommentsClose CommentsPermalink

(aa) a subsidiary that is an insured depository institution, if all such insured depository institutions are State depository institutions; orCommentsClose CommentsPermalink

(bb) a subsidiary that is a Federal depository institution and a subsidiary that is a State depository institution, if the total consolidated assets of all subsidiaries that are State depository institutions exceed the total consolidated assets of all subsidiaries that are Federal depository institutions; andCommentsClose CommentsPermalink

(ii) any subsidiary (other than a depository institution) of a bank holding company that is described in clause (i).CommentsClose CommentsPermalink





(C) RULEMAKING AUTHORITY- No rulemaking authority of the Board of Governors is transferred to the Office of the Comptroller of the Currency or the Corporation under this paragraph.CommentsClose CommentsPermalink





(2) OTHER FUNCTIONS TRANSFERRED- There are transferred to the Corporation all functions (other than rulemaking authority under the Federal Reserve Act) of the Board of Governors (and any Federal reserve bank) relating to the supervision of insured State member banks.CommentsClose CommentsPermalink





(d) Conforming Amendments-CommentsClose CommentsPermalink





(1) FEDERAL DEPOSIT INSURANCE ACT- Section 3(q) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)) is amended by striking paragraphs (1) through (4) and inserting the following:CommentsClose CommentsPermalink





‘(1) the Office of the Comptroller of the Currency, in the case of--CommentsClose CommentsPermalink





‘(A) any national banking association;CommentsClose CommentsPermalink





‘(B) any Federal branch or agency of a foreign bank;CommentsClose CommentsPermalink





‘(C) any bank holding company (other than a foreign bank)--CommentsClose CommentsPermalink





‘(i) having less than $50,000,000,000 in total consolidated assets; andCommentsClose CommentsPermalink





‘(ii) having--CommentsClose CommentsPermalink





‘(I) a subsidiary that is an insured depository institution, if all such insured depository institutions are Federal depository institutions; orCommentsClose CommentsPermalink





‘(II) a subsidiary that is a Federal depository institution and a subsidiary that is a State depository institution, if the total consolidated assets of all subsidiaries that are Federal depository institutions exceed the total consolidated assets of all subsidiaries that are State depository institutions;CommentsClose CommentsPermalink





‘(D) any subsidiary (other than a depository institution) of a bank holding company that is described in subparagraph (C);CommentsClose CommentsPermalink





‘(E) any Federal savings association;CommentsClose CommentsPermalink





‘(F) any savings and loan holding company (other than a foreign bank)--CommentsClose CommentsPermalink





‘(i) having less than $50,000,000,000 in total consolidated assets; andCommentsClose CommentsPermalink





‘(ii) having--CommentsClose CommentsPermalink





‘(I) a subsidiary that is an insured depository institution, if all such insured depository institutions are Federal depository institutions; orCommentsClose CommentsPermalink





‘(II) a subsidiary that is a Federal depository institution and a subsidiary that is a State depository institution, if the total consolidated assets of all subsidiaries that are Federal depository institutions exceed the total consolidated assets of all subsidiaries that are State depository institutions; andCommentsClose CommentsPermalink





‘(G) any subsidiary (other than a depository institution) of a savings and loan holding company that is described in subparagraph (F);CommentsClose CommentsPermalink





‘(2) the Federal Deposit Insurance Corporation, in the case of--CommentsClose CommentsPermalink





‘(A) any insured State bank;CommentsClose CommentsPermalink





‘(B) any foreign bank having an insured branch;CommentsClose CommentsPermalink





‘(C) any State savings association;CommentsClose CommentsPermalink





‘(D) any bank holding company (other than a foreign bank)--CommentsClose CommentsPermalink





‘(i) having less than $50,000,000,000 in total consolidated assets; andCommentsClose CommentsPermalink





‘(ii) having--CommentsClose CommentsPermalink





‘(I) a subsidiary that is an insured depository institution, if all such insured depository institutions are State depository institutions; orCommentsClose CommentsPermalink





‘(II) a subsidiary that is a Federal depository institution and a subsidiary that is a State depository institution, if the total consolidated assets of all subsidiaries that are State depository institutions exceed the total consolidated assets of all subsidiaries that are Federal depository institutions;CommentsClose CommentsPermalink





‘(E) any subsidiary (other than a depository institution) of a bank holding company that is described in subparagraph (D);CommentsClose CommentsPermalink





‘(F) any savings and loan holding company (other than a foreign bank)--CommentsClose CommentsPermalink





‘(i) having less than $50,000,000,000 in total consolidated assets; andCommentsClose CommentsPermalink





‘(ii) having--CommentsClose CommentsPermalink





‘(I) a subsidiary that is an insured depository institution, if all such insured depository institutions are State depository institutions; orCommentsClose CommentsPermalink





‘(II) a subsidiary that is a Federal depository institution and a subsidiary that is a State depository institution, if the total consolidated assets of all subsidiaries that are State depository institutions exceed the total consolidated assets of all subsidiaries that are Federal depository institutions; andCommentsClose CommentsPermalink





‘(G) any subsidiary (other than a depository institution) of a savings and loan holding company that is described in subparagraph (F);CommentsClose CommentsPermalink





‘(3) the Board of Governors of the Federal Reserve System, in the case of--CommentsClose CommentsPermalink





‘(A) any noninsured State member bank;CommentsClose CommentsPermalink





‘(B) any branch or agency of a foreign bank with respect to any provision of the Federal Reserve Act which is made applicable under the International Banking Act of 1978;CommentsClose CommentsPermalink





‘(C) any foreign bank which does not operate an insured branch;CommentsClose CommentsPermalink





‘(D) any agency or commercial lending company other than a Federal agency;CommentsClose CommentsPermalink





‘(E) supervisory or regulatory proceedings arising from the authority given to the Board of Governors under section 7(c)(1) of the International Banking Act of 1978, including such proceedings under the Financial Institutions Supervisory Act of 1966;CommentsClose CommentsPermalink





‘(F) any bank holding company having total consolidated assets of $50,000,000,000 or more, any bank holding company that is a foreign bank, and any subsidiary (other than a depository institution) of such a bank holding company; andCommentsClose CommentsPermalink





‘(G) any savings and loan holding company having total consolidated assets of $50,000,000,000 or more, any savings and loan holding company that is a foreign bank, and any subsidiary (other than a depository institution) of such a savings and loan holding company.’.CommentsClose CommentsPermalink





(2) CERTAIN REFERENCES IN THE BANK HOLDING COMPANY ACT OF 1956-CommentsClose CommentsPermalink





(A) COMPTROLLER OF THE CURRENCY- On or after the transfer date, in the case of a bank holding company described in section 3(q)(1)(C) of the Federal Deposit Insurance Act, as amended by this Act, any reference in the Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) to the Board of Governors shall be deemed to be a reference to the Office of the Comptroller of the Currency.CommentsClose CommentsPermalink





(B) CORPORATION- On or after the transfer date, in the case of a bank holding company described in section 3(q)(2)(D) of the Federal Deposit Insurance Act, as amended by this Act, any reference in the Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) to the Board of Governors shall be deemed to be a reference to the Corporation.CommentsClose CommentsPermalink





(C) RULE OF CONSTRUCTION- Notwithstanding subparagraph (A) or (B), the Board of Governors shall retain all rulemaking authority under the Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.).CommentsClose CommentsPermalink





(3) CONSULTATION IN HOLDING COMPANY RULEMAKING-CommentsClose CommentsPermalink





(A) BANK HOLDING COMPANIES- Section 5 of the Bank Holding Company Act of 1956 (12 U.S.C. 1844) is amended by adding at the end the following:CommentsClose CommentsPermalink





‘(h) Consultation in Rulemaking- Before proposing or adopting regulations under this Act that apply to bank holding companies having less than $50,000,000,000 in total consolidated assets, the Board of Governors shall consult with the Comptroller of the Currency and the Federal Deposit Insurance Corporation as to the terms of such regulations.’.CommentsClose CommentsPermalink





(B) SAVINGS AND LOAN HOLDING COMPANIES-CommentsClose CommentsPermalink





(i) HOME OWNERS’ LOAN ACT- Section 10 of the Home Owners’ Loan Act (12 U.S.C. 1467a) is amended by adding at the end the following:CommentsClose CommentsPermalink





‘(u) Consultation in Rulemaking- Before proposing or adopting regulations under this section that apply to savings and loan holding companies having less than $50,000,000,000 in total consolidated assets, the Board of Governors shall consult with the Comptroller of the Currency and the Federal Deposit Insurance Corporation as to the terms of such regulations.’.CommentsClose CommentsPermalink





(ii) FEDERAL DEPOSIT INSURANCE ACT- Section 19 of the Federal Deposit Insurance Act (12 U.S.C. 1829) is amended--CommentsClose CommentsPermalink





(I) in subsection (d)(2), by inserting ‘, in consultation with the Corporation and the Comptroller of the Currency,’ after ‘System’; andCommentsClose CommentsPermalink





(II) in subsection (e)(2), by striking ‘Director of the Office of Thrift Supervision’ and inserting ‘Board of Governors of the Federal Reserve System, in consultation with the Corporation and the Comptroller of the Currency,’.CommentsClose CommentsPermalink





(4) FEDERAL DEPOSIT INSURANCE ACT-CommentsClose CommentsPermalink





(A) APPLICATION- Section 8(b)(3) of the Federal Deposit Insurance Act (12 U.S.C. 1818(b)(3)) is amended to read as follows:CommentsClose CommentsPermalink





‘(3) Application to Bank Holding Companies, Savings and Loan Holding Companies, and Edge and Agreement Corporations-CommentsClose CommentsPermalink





‘(A) APPLICATION- This subsection, subsections (c) through (s) and subsection (u) of this section, and section 50 shall apply to--CommentsClose CommentsPermalink





‘(i) any bank holding company, and any subsidiary (other than a bank) of a bank holding company, as those terms are defined in section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841), as if such company or subsidiary was an insured depository institution for which the appropriate Federal banking agency for the bank holding company was the appropriate Federal banking agency;CommentsClose CommentsPermalink





‘(ii) any savings and loan holding company, and any subsidiary (other than a depository institution) of a savings and loan holding company, as those terms are defined in section 10 of the Home Owners’ Loan Act (12 U.S.C. 1467a), as if such company or subsidiary was an insured depository institution for which the appropriate Federal banking agency for the savings and loan holding company was the appropriate Federal banking agency; andCommentsClose CommentsPermalink





‘(iii) any organization organized and operated under section 25A of the Federal Reserve Act (12 U.S.C. 611 et seq.) or operating under section 25 of the Federal Reserve Act (12 U.S.C. 601 et seq.) and any noninsured State member bank, as if such organization was a bank holding company for which the Board of Governors of the Federal Reserve System was the appropriate Federal banking agency.CommentsClose CommentsPermalink





‘(B) RULE OF CONSTRUCTION- Nothing in this paragraph may be construed to alter or affect the authority of an appropriate Federal banking agency to initiate enforcement proceedings, issue directives, or take other remedial action under any other provision of law.’.CommentsClose CommentsPermalink





(B) CONFORMING AMENDMENT- Section 8(b)(9) of the Federal Deposit Insurance Act (12 U.S.C. 1818(b)(9)) is amended to read as follows:CommentsClose CommentsPermalink





‘(9) [Reserved].’.CommentsClose CommentsPermalink





(e) Determination of Total Consolidated Assets-CommentsClose CommentsPermalink





(1) REGULATIONS-CommentsClose CommentsPermalink





(A) IN GENERAL- Not later than 180 days after the date of enactment of this Act, the Office of the Comptroller of the Currency, the Corporation, and the Board of Governors, in order to avoid disruptive transfers of regulatory responsibility, shall issue joint regulations that specify--CommentsClose CommentsPermalink





(i) the source of data for determining the total consolidated assets of a depository institution, bank holding company, or savings and loan holding company for purposes of this Act, and the amendments made by this Act, including the amendments to section 3(q) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)); andCommentsClose CommentsPermalink





(ii) the interval and frequency at which the total consolidated assets of a depository institution, bank holding company, or savings and loan holding company will be determined.CommentsClose CommentsPermalink





(B) CONTENT- The regulations issued under subparagraph (A)--CommentsClose CommentsPermalink





(i) shall use information contained in the reports described in paragraph (2), other regulatory reports, audited financial statements, or other comparable sources;CommentsClose CommentsPermalink





(ii) shall establish the frequency with which the total consolidated assets of depository institutions, bank holding companies, and savings and loan companies are determined, at an interval that--CommentsClose CommentsPermalink





(I) avoids undue disruption in regulatory oversight;CommentsClose CommentsPermalink





(II) facilitates nondisruptive transfers of regulatory responsibility; andCommentsClose CommentsPermalink





(III) is not shorter than 2 years; andCommentsClose CommentsPermalink





(iii) may provide for more frequent determinations of the total consolidated assets of a depository institution, bank holding company, or savings and loan holding company, to take into account a transaction outside the ordinary course of business, including a merger, acquisition, or other circumstance, as determined jointly by the Office of the Comptroller of the Currency, the Corporation, and the Board of Governors, by rule.CommentsClose CommentsPermalink





(2) INTERIM PROVISIONS- Until the date on which final regulations issued under paragraph (1) are effective, for purposes this Act, and the amendments made by this Act, including the amendments to section 3(q) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)), the total consolidated assets of--CommentsClose CommentsPermalink





(A) a depository institution shall be determined by reference to the total consolidated assets reported in the most recent Consolidated Report of Income and Condition or Thrift Financial Report (or any successor thereto) filed by the depository institution with the Corporation or the Office of Thrift Supervision before the transfer date;CommentsClose CommentsPermalink





(B) a bank holding company shall be determined by reference to the total consolidated assets reported in the most recent Consolidated Financial Statements for Bank Holding Companies (commonly referred to as the ‘FR Y-9C’, or any successor thereto) filed by the bank holding company with the Board of Governors before the transfer date; andCommentsClose CommentsPermalink





(C) a savings and loan holding company shall be determined by reference to the total consolidated assets reported in the applicable schedule of the most recent Thrift Financial Report (or any successor thereto) filed by the savings and loan holding company with the Office of Thrift Supervision before the transfer date.CommentsClose CommentsPermalink





(f) Consumer Protection- Nothing in this section may be construed to limit or otherwise affect the transfer of powers under title X.CommentsClose CommentsPermalink

SEC. 313. ABOLISHMENT.

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

SEC. 314. AMENDMENTS TO THE REVISED STATUTES.

(a) Amendment to Section 324- Section 324 of the Revised Statutes of the United States (12 U.S.C. 1) is amended to read as follows:CommentsClose CommentsPermalink

‘SEC. 324. COMPTROLLER OF THE CURRENCY.

‘(a) Office of the Comptroller of the Currency Established- There is established in the Department of the Treasury a bureau to be known as the ‘Office of the Comptroller of the Currency’ which is charged with assuring the safety and soundness of, and compliance with laws and regulations, fair access to financial services, and fair treatment of customers by, the institutions and other persons subject to its jurisdiction.CommentsClose CommentsPermalink





‘(b) Comptroller of the Currency-CommentsClose CommentsPermalink





‘(1) IN GENERAL- The chief officer of the Office of the Comptroller of the Currency shall be known as the Comptroller of the Currency. The Comptroller of the Currency shall perform the duties of the Comptroller of the Currency under the general direction of the Secretary of the Treasury. The Secretary of the Treasury may not delay or prevent the issuance of any rule or the promulgation of any regulation by the Comptroller of the Currency, and may not intervene in any matter or proceeding before the Comptroller of the Currency (including agency enforcement actions), unless otherwise specifically provided by law.CommentsClose CommentsPermalink





‘(2) ADDITIONAL AUTHORITY- The Comptroller of the Currency shall have the same authority with respect to functions transferred to the Comptroller of the Currency under the Enhancing Financial Institution Safety and Soundness Act of 2010 (including matters that were within the jurisdiction of the Director of the Office of Thrift Supervision or the Office of Thrift Supervision on the day before the transfer date under that Act) as was vested in the Director of the Office of Thrift Supervision on the transfer date under that Act.’.CommentsClose CommentsPermalink





(b) Amendment to Section 329- Section 329 of the Revised Statutes of the United States (12 U.S.C. 11) is amended by inserting before the period at the end the following: ‘or any Federal savings association’.CommentsClose CommentsPermalink





(c) Effective Date- This section, and the amendments made by this section, shall take effect on the transfer date.CommentsClose CommentsPermalink

SEC. 315. FEDERAL INFORMATION POLICY.

Section 3502(5) of title 44, United States Code, is amended by inserting ‘Office of the Comptroller of the Currency,’ after ‘the Securities and Exchange Commission,’.CommentsClose CommentsPermalink

SEC. 316. SAVINGS PROVISIONS.

(a) Office of Thrift Supervision-CommentsClose CommentsPermalink





(1) EXISTING RIGHTS, DUTIES, AND OBLIGATIONS NOT AFFECTED- Sections 312(b) and 313 shall not affect the validity of any right, duty, or obligation of the United States, the Director of the Office of Thrift Supervision, the Office of Thrift Supervision, or any other person, that existed on the day before the transfer date.CommentsClose CommentsPermalink





(2) CONTINUATION OF SUITS- This title shall not abate any action or proceeding commenced by or against the Director of the Office of Thrift Supervision or the Office of Thrift Supervision before the transfer date, except that, for any action or proceeding arising out of a function of the Director of the Office of Thrift Supervision or the Office of Thrift Supervision that is transferred to the Comptroller of the Currency, the Office of the Comptroller of the Currency, the Chairperson of the Corporation, the Corporation, the Chairman of the Board of Governors, or the Board of Governors by this subtitle, the Comptroller of the Currency, the Office of the Comptroller of the Currency, the Chairperson of the Corporation, the Corporation, the Chairman of the Board of Governors, or the Board of Governors shall be substituted for the Director of the Office of Thrift Supervision or the Office of Thrift Supervision, as appropriate, as a party to the action or proceeding as of the transfer date.CommentsClose CommentsPermalink





(b) Board of Governors-CommentsClose CommentsPermalink





(1) EXISTING RIGHTS, DUTIES, AND OBLIGATIONS NOT AFFECTED- Section 312(c) shall not affect the validity of any right, duty, or obligation of the United States, the Board of Governors, any Federal reserve bank, or any other person, that existed on the day before the transfer date.CommentsClose CommentsPermalink





(2) CONTINUATION OF SUITS- This title shall not abate any action or proceeding commenced by or against the Board of Governors or a Federal reserve bank before the transfer date, except that, for any action or proceeding arising out of a function of the Board of Governors or a Federal reserve bank transferred to the Comptroller of the Currency, the Office of the Comptroller of the Currency, the Chairperson of the Corporation, or the Corporation by this subtitle, the Comptroller of the Currency, the Office of the Comptroller of the Currency, the Chairperson of the Corporation, or the Corporation shall be substituted for the Board of Governors or the Federal reserve bank, as appropriate, as a party to the action or proceeding, as of the transfer date.CommentsClose CommentsPermalink





(c) Continuation of Existing Orders, Resolutions, Determinations, Agreements, Regulations, and Other Materials-CommentsClose CommentsPermalink





(1) OFFICE OF THRIFT SUPERVISION- All orders, resolutions, determinations, agreements, regulations, interpretative rules, other interpretations, guidelines, procedures, and other advisory materials that have been issued, made, prescribed, or allowed to become effective by the Office of Thrift Supervision, or by a court of competent jurisdiction, in the performance of functions of the Office of Thrift Supervision that are transferred by this subtitle and that are in effect on the day before the transfer date, shall continue in effect according to the terms of those materials, and shall be enforceable by or against the Office of the Comptroller of the Currency, the Corporation, or the Board of Governors, as appropriate, until modified, terminated, set aside, or superseded in accordance with applicable law by the Office of the Comptroller of the Currency, the Corporation, or the Board of Governors, as appropriate, by any court of competent jurisdiction, or by operation of law.CommentsClose CommentsPermalink





(2) BOARD OF GOVERNORS- All orders, resolutions, determinations, agreements, regulations, interpretative rules, other interpretations, guidelines, procedures, and other advisory materials, that have been issued, made, prescribed, or allowed to become effective by the Board of Governors, or by a court of competent jurisdiction, in the performance of functions of the Board of Governors that are transferred by this subtitle and that are in effect on the day before the transfer date, shall continue in effect according to the terms of those materials, and shall be enforceable by or against the Office of the Comptroller of the Currency or the Corporation, as appropriate, until modified, terminated, set aside, or superseded in accordance with applicable law by the Office of the Comptroller of the Currency or the Corporation, as appropriate, by any court of competent jurisdiction, or by operation of law.CommentsClose CommentsPermalink





(d) Identification of Regulations Continued-CommentsClose CommentsPermalink





(1) BY THE OFFICE OF THE COMPTROLLER OF THE CURRENCY- Not later than the transfer date, the Office of the Comptroller of the Currency shall--CommentsClose CommentsPermalink





(A) in consultation with the Corporation, identify the regulations continued under subsection (c) that will be enforced by the Office of the Comptroller of the Currency; andCommentsClose CommentsPermalink





(B) publish a list of such regulations in the Federal Register.CommentsClose CommentsPermalink





(2) BY THE CORPORATION- Not later than the transfer date, the Corporation shall--CommentsClose CommentsPermalink





(A) in consultation with the Office of the Comptroller of the Currency, identify the regulations continued under subsection (c) that will be enforced by the Corporation; andCommentsClose CommentsPermalink





(B) publish a list of such regulations in the Federal Register.CommentsClose CommentsPermalink





(3) BY THE BOARD OF GOVERNORS- Not later than the transfer date, the Board of Governors shall--CommentsClose CommentsPermalink





(A) in consultation with the Office of the Comptroller of the Currency and the Corporation, identify the regulations continued under subsection (c) that will be enforced by the Board of Governors; andCommentsClose CommentsPermalink





(B) publish a list of such regulations in the Federal Register.CommentsClose CommentsPermalink





(e) Status of Regulations Proposed or Not Yet Effective-CommentsClose CommentsPermalink





(1) PROPOSED REGULATIONS- Any proposed regulation of the Office of Thrift Supervision or the Board of Governors, which that agency, in performing functions transferred by this subtitle, has proposed before the transfer date, but has not published as a final regulation before that date, shall be deemed to be a proposed regulation of the Office of the Comptroller of the Currency, the Corporation, or the Board of Governors, as appropriate, according to its terms.CommentsClose CommentsPermalink





(2) REGULATIONS NOT YET EFFECTIVE- Any interim or final regulation of the Office of Thrift Supervision or the Board of Governors, which that agency, in performing functions transferred by this subtitle, has published before the transfer date, but which has not become effective before that date, shall become effective as a regulation of the Office of the Comptroller of the Currency, the Corporation, or the Board of Governors, as appropriate, according to its terms.CommentsClose CommentsPermalink

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

(a) Director of the Office of Thrift Supervision and the Office of Thrift Supervision- Except as provided in section 312(d)(2), on and after the transfer date, any reference in Federal law to the Director of the Office of Thrift Supervision or the Office of Thrift Supervision, in connection with any function of the Director of the Office of Thrift Supervision or the Office of Thrift Supervision transferred under section 312(b) or any other provision of this subtitle, shall be deemed to be a reference to the Comptroller of the Currency, the Office of the Comptroller of the Currency, the Chairperson of the Corporation, the Corporation, the Chairman of the Board of Governors, or the Board of Governors, as appropriate.CommentsClose CommentsPermalink





(b) Board of Governors- Except as provided in section 312(d)(2), on and after the transfer date, any reference in Federal law to the Board of Governors or any Federal reserve bank, in connection with any function of the Board of Governors or any Federal reserve bank transferred under section 312(c) or any other provision of this subtitle, shall be deemed to be a reference to the Comptroller of the Currency, the Office of the Comptroller of the Currency, the Chairperson of the Corporation, or the Corporation, as appropriate.CommentsClose CommentsPermalink

SEC. 318. FUNDING.

(a) Funding of Office of the Comptroller of the Currency-CommentsClose CommentsPermalink





(1) AUTHORITY TO COLLECT ASSESSMENTS, FEES, AND OTHER CHARGES, AND TO RECEIVE TRANSFERRED FUNDS- Chapter 4 of title LXII of the Revised Statutes is amended by inserting after section 5240 (12 U.S.C. 481, 482) the following:CommentsClose CommentsPermalink





‘Sec. 5240A. The Comptroller of the Currency may collect an assessment, fee, or other charge from any entity described in section 3(q)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)(1)), as the Comptroller determines is necessary or appropriate to carry out the responsibilities of the Office of the Comptroller of the Currency. The Comptroller of the Currency also may collect an assessment, fee, or other charge from any entity, the activities of which are supervised by the Comptroller of the Currency under section 6 of the Bank Holding Company Act of 1956, as the Comptroller determines is necessary or appropriate to carry out the responsibilities of the Office of the Comptroller of the Currency in connection with such activities. In establishing the amount of an assessment, fee, or charge collected from an entity under this section, the Comptroller of the Currency may take into account the funds transferred to the Office of the Comptroller of the Currency under this section, the nature and scope of the activities of the entity, the amount and type of assets that the entity holds, the financial and managerial condition of the entity, and any other factor, as the Comptroller of the Currency determines is appropriate. Funds derived from any assessment, fee, or charge collected or payment made pursuant to this section may be deposited by the Comptroller of the Currency in accordance with the provisions of section 5234. Such funds shall not be construed to be Government funds or appropriated monies, and shall not be subject to apportionment for purposes of chapter 15 of title 31, United States Code, or any other provision of law. The authority of the Comptroller of the Currency under this section shall be in addition to the authority under section 5240.CommentsClose CommentsPermalink





‘The Comptroller of the Currency shall have sole authority to determine the manner in which the obligations of the Office of the Comptroller of the Currency shall be incurred and its disbursements and expenses allowed and paid, in accordance with this section.’.CommentsClose CommentsPermalink





(2) PROMOTING PARITY IN SUPERVISION FEES-CommentsClose CommentsPermalink





(A) PROPOSAL REQUIRED-CommentsClose CommentsPermalink





(i) IN GENERAL- The Comptroller of the Currency shall submit to the Board of Directors of the Corporation a proposal to promote parity in the examination fees paid by State and Federal depository institutions having total consolidated assets of less than $50,000,000,000.CommentsClose CommentsPermalink





(ii) CONTENTS- The proposal submitted under clause (i) shall recommend a transfer from the Corporation to the Office of the Comptroller of the Currency of a percentage of the amount that the Office of the Comptroller of the Currency estimates is necessary or appropriate to carry out the responsibilities of the Office of the Comptroller of the Currency associated with the supervision of Federal depository institutions having total consolidated assets of less than $50,000,000,000.CommentsClose CommentsPermalink





(iii) DATA COLLECTION- The Corporation shall assist the Office of the Comptroller of the Currency in collecting data relative to the supervision of State depository institutions to develop the proposal submitted under clause (i).CommentsClose CommentsPermalink





(B) VOTE- Not later than 60 days after the date of receipt of the proposal under subparagraph (A), the Board of Directors of the Corporation shall--CommentsClose CommentsPermalink





(i) vote on the proposal; andCommentsClose CommentsPermalink





(ii) promptly implement a plan to periodically transfer to the Office of the Comptroller of the Currency a percentage of the amount that the Office of the Comptroller of the Currency estimates is necessary or appropriate to carry out the responsibilities of the Office of the Comptroller of the Currency associated with the supervision of Federal depository institutions having total consolidated assets of less than $50,000,000,000, as approved by the Board of Directors of the Corporation.CommentsClose CommentsPermalink





(C) REPORT TO CONGRESS- Not later than 30 days after date of the vote of the Board of Directors of the Corporation under subparagraph (B), the Corporation shall submit to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives a report describing--CommentsClose CommentsPermalink





(i) the proposal made to the Board of Directors of the Corporation by the Comptroller of the Currency; andCommentsClose CommentsPermalink





(ii) the decision resulting from the vote of the Board of Directors of the Corporation.CommentsClose CommentsPermalink





(D) FAILURE TO APPROVE PLAN- If, on the date that is 2 years after the date of enactment of this Act, the Board of Directors of the Corporation has failed to approve a plan under subparagraph (B), the Council shall approve a plan using the dispute resolution procedures under section 119.CommentsClose CommentsPermalink





(b) Funding of Board of Governors- Section 11 of the Federal Reserve Act (12 U.S.C. 248) is amended by adding at the end the following:CommentsClose CommentsPermalink





‘(s) Assessments, Fees, and Other Charges for Certain Companies-CommentsClose CommentsPermalink





‘(1) IN GENERAL- The Board shall collect a total amount of assessments, fees, or other charges from the companies described in paragraph (2) that is equal to the total expenses the Board estimates are necessary or appropriate to carry out the responsibilities of the Board with respect to such companies.CommentsClose CommentsPermalink





‘(2) COMPANIES- The companies described in this paragraph are--CommentsClose CommentsPermalink





‘(A) all bank holding companies having total consolidated assets of $50,000,000,000 or more;CommentsClose CommentsPermalink





‘(B) all savings and loan holding companies having total consolidated assets of $50,000,000,000 or more; andCommentsClose CommentsPermalink





‘(C) all nonbank financial companies supervised by the Board under section 113 of the Restoring American Financial Stability Act of 2010.’.CommentsClose CommentsPermalink





(c) Corporation Examination Fees- Section 10(e) of the Federal Deposit Insurance Act (12 U.S.C. 1820(e)) is amended by striking paragraph (1) and inserting the following:CommentsClose CommentsPermalink





‘(1) REGULAR AND SPECIAL EXAMINATIONS OF DEPOSITORY INSTITUTIONS- The cost of conducting any regular examination or special examination of any depository institution under subsection (b)(2), (b)(3), or (d) or of any entity described in section 3(q)(2) may be assessed by the Corporation against the institution or entity to meet the expenses of the Corporation in carrying out such examinations, or as the Corporation determines is necessary or appropriate to carry out the responsibilities of the Corporation. The Corporation may also collect an assessment, fee, or other charge from any entity, the activities of which are supervised by the Corporation under section 6 of the Bank Holding Company Act of 1956, as the Corporation determines is necessary or appropriate to carry out the responsibilities of the Corporation in connection with such activities.’.CommentsClose CommentsPermalink





(d) Effective Date- This section, and the amendments made by this section, shall take effect on the transfer date.CommentsClose CommentsPermalink

SEC. 319. CONTRACTING AND LEASING AUTHORITY.

Notwithstanding the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 251 et seq.) or any other provision of law, the Office of the Comptroller of the Currency may--CommentsClose CommentsPermalink





(1) enter into and perform contracts, execute instruments, and acquire, in any lawful manner, such goods and services, or personal or real property (or property interest) as the Comptroller deems necessary to carry out the duties and responsibilities of the Office of the Comptroller of the Currency; andCommentsClose CommentsPermalink





(2) hold, maintain, sell, lease, or otherwise dispose of the property (or property interest) acquired under paragraph (1).CommentsClose CommentsPermalink

Subtitle B--Transitional ProvisionsCommentsClose CommentsPermalink

SEC. 321. INTERIM USE OF FUNDS, PERSONNEL, AND PROPERTY.

(a) Office of Thrift Supervision-CommentsClose CommentsPermalink





(1) IN GENERAL- Before the transfer date, the Office of the Comptroller of the Currency, the Corporation, and the Board of Governors shall--CommentsClose CommentsPermalink





(A) consult and cooperate with the Office of Thrift Supervision to facilitate the orderly transfer of functions to the Office of the Comptroller of the Currency, the Corporation, and the Board of Governors in accordance with this title;CommentsClose CommentsPermalink





(B) determine jointly, from time to time--CommentsClose CommentsPermalink





(i) the amount of funds necessary to pay any expenses associated with the transfer of functions (including expenses for personnel, property, and administrative services) during the period beginning on the date of enactment of this Act and ending on the transfer date;CommentsClose CommentsPermalink





(ii) which personnel are appropriate to facilitate the orderly transfer of functions by this title; andCommentsClose CommentsPermalink





(iii) what property and administrative services are necessary to support the Office of the Comptroller of the Currency, the Corporation, and the Board of Governors during the period beginning on the date of enactment of this Act and ending on the transfer date; andCommentsClose CommentsPermalink





(C) take such actions as may be necessary to provide for the orderly implementation of this title.CommentsClose CommentsPermalink





(2) AGENCY CONSULTATION- When requested jointly by the Office of the Comptroller of the Currency, the Corporation, and the Board of Governors to do so before the transfer date, the Office of Thrift Supervision shall--CommentsClose CommentsPermalink





(A) pay to the Office of the Comptroller of the Currency, the Corporation, or the Board of Governors, as applicable, from funds obtained by the Office of Thrift Supervision through assessments, fees, or other charges that the Office of Thrift Supervision is authorized by law to impose, such amounts as the Office of the Comptroller of the Currency, the Corporation, and the Board of Governors jointly determine to be necessary under paragraph (1);CommentsClose CommentsPermalink





(B) detail to the Office of the Comptroller of the Currency, the Corporation, or the Board of Governors, as applicable, such personnel as the Office of the Comptroller of the Currency, the Corporation, and the Board of Governors jointly determine to be appropriate under paragraph (1); andCommentsClose CommentsPermalink





(C) make available to the Office of the Comptroller of the Currency, the Corporation, or the Board of Governors, as applicable, such property and provide to the Office of the Comptroller of the Currency, the Corporation, or the Board of Governors, as applicable, such administrative services as the Office of the Comptroller of the Currency, the Corporation, and the Board of Governors jointly determine to be necessary under paragraph (1).CommentsClose CommentsPermalink





(3) NOTICE REQUIRED- The Office of the Comptroller of the Currency, the Corporation, and the Board of Governors shall jointly give the Office of Thrift Supervision reasonable prior notice of any request that the Office of the Comptroller of the Currency, the Corporation, and the Board of Governors jointly intend to make under paragraph (2).CommentsClose CommentsPermalink





(b) Board of Governors-CommentsClose CommentsPermalink





(1) IN GENERAL- Before the transfer date, the Office of the Comptroller of the Currency and the Corporation shall--CommentsClose CommentsPermalink





(A) consult and cooperate with the Board of Governors to facilitate the orderly transfer of functions to the Office of the Comptroller of the Currency and the Corporation in accordance with this title;CommentsClose CommentsPermalink





(B) determine jointly, from time to time--CommentsClose CommentsPermalink





(i) the amount of funds necessary to pay any expenses associated with the transfer of functions (including expenses for personnel, property, and administrative services) during the period beginning on the date of enactment of this Act and ending on the transfer date;CommentsClose CommentsPermalink





(ii) which personnel are appropriate to facilitate the orderly transfer of functions by this title; andCommentsClose CommentsPermalink





(iii) what property and administrative services are necessary to support the Office of the Comptroller of the Currency and the Corporation during the period beginning on the date of enactment of this Act and ending on the transfer date; andCommentsClose CommentsPermalink





(C) take such actions as may be necessary to provide for the orderly implementation of this title.CommentsClose CommentsPermalink





(2) AGENCY CONSULTATION- When requested jointly by the Office of the Comptroller of the Currency and the Corporation to do so before the transfer date, the Board of Governors shall--CommentsClose CommentsPermalink





(A) pay to the Office of the Comptroller of the Currency or the Corporation, as applicable, from funds obtained by the Board of Governors through assessments, fees, or other charges that the Board of Governors is authorized by law to impose, such amounts as the Office of the Comptroller of the Currency and the Corporation jointly determine to be necessary under paragraph (1);CommentsClose CommentsPermalink





(B) detail to the Office of the Comptroller of the Currency or the Corporation, as applicable, such personnel as the Office of the Comptroller of the Currency and the Corporation jointly determine to be appropriate under paragraph (1); andCommentsClose CommentsPermalink





(C) make available to the Office of the Comptroller of the Currency or the Corporation, as applicable, such property and provide to the Office of the Comptroller of the Currency or the Corporation, as applicable, such administrative services as the Office of the Comptroller of the Currency and the Corporation jointly determine to be necessary under paragraph (1).CommentsClose CommentsPermalink





(3) NOTICE REQUIRED- The Office of the Comptroller of the Currency and the Corporation shall jointly give the Board of Governors reasonable prior notice of any request that the Office of the Comptroller of the Currency and the Corporation jointly intend to make under paragraph (2).CommentsClose CommentsPermalink

SEC. 322. TRANSFER OF EMPLOYEES.

(a) In General-CommentsClose CommentsPermalink





(1) OFFICE OF THRIFT SUPERVISION EMPLOYEES-CommentsClose CommentsPermalink





(A) IN GENERAL- All employees of the Office of Thrift Supervision shall be transferred to the Office of the Comptroller of the Currency or the Corporation for employment in accordance with this section.CommentsClose CommentsPermalink





(B) ALLOCATING EMPLOYEES FOR TRANSFER TO RECEIVING AGENCIES- The Director of the Office of Thrift Supervision, the Comptroller of the Currency, and the Chairperson of the Corporation shall--CommentsClose CommentsPermalink





(i) jointly determine the number of employees of the Office of Thrift Supervision necessary to perform or support the functions that are transferred to the Office of the Comptroller of the Currency or the Corporation by this title; andCommentsClose CommentsPermalink





(ii) consistent with the determination under clause (i), jointly identify employees of the Office of Thrift Supervision for transfer to the Office of the Comptroller of the Currency or the Corporation.CommentsClose CommentsPermalink





(2) BOARD OF GOVERNORS- The Comptroller of the Currency, the Chairperson of the Corporation, and the Chairman of the Board of Governors shall--CommentsClose CommentsPermalink





(A) jointly determine the number of employees of the Board of Governors (including employees of the Federal reserve banks who, on the day before the transfer date, are performing functions on behalf of the Board of Governors) necessary to perform or support the functions that are transferred to the Office of the Comptroller of the Currency or the Corporation under this title; andCommentsClose CommentsPermalink





(B) consistent with the determination under subparagraph (A), jointly identify employees of the Board of Governors (including employees of the Federal reserve banks who, on the day before the transfer date, are performing functions on behalf of the Board of Governors) for transfer to the Office of the Comptroller of the Currency or the Corporation.CommentsClose CommentsPermalink





(3) EMPLOYEES TRANSFERRED; SERVICE PERIODS CREDITED- For purposes of this section, periods of service with a Federal home loan bank, a joint office of Federal home loan banks, or a Federal reserve bank shall be credited as periods of service with a Federal agency.CommentsClose CommentsPermalink





(4) APPOINTMENT AUTHORITY FOR EXCEPTED SERVICE TRANSFERRED-CommentsClose CommentsPermalink





(A) IN GENERAL- Except as provided in subparagraph (B), any appointment authority of the Office of Thrift Supervision or the Board of Governors under Federal law that relates to the functions transferred under section 312, including the regulations of the Office of Personnel Management, for filling the positions of employees in the excepted service shall be transferred to the Comptroller of the Currency or the Chairperson of the Corporation, as appropriate.CommentsClose CommentsPermalink





(B) DECLINING TRANSFERS ALLOWED- The Office of the Comptroller of the Currency or the Chairperson of the Corporation may decline to accept a transfer of authority under subparagraph (A) (and the employees appointed under that authority) to the extent that such authority relates to positions excepted from the competitive service because of their confidential, policy-making, policy-determining, or policy-advocating character.CommentsClose CommentsPermalink





(5) ADDITIONAL APPOINTMENT AUTHORITY- Notwithstanding any other provision of law, the Office of the Comptroller of the Currency and the Corporation may appoint transferred employees to positions in the Office of the Comptroller of the Currency or the Corporation, respectively. For purposes of this paragraph, an employee transferred from any Federal reserve bank shall be treated as an employee of the Board of Governors.CommentsClose CommentsPermalink





(b) Timing of Transfers and Position Assignments- Each employee to be transferred under subsection (a)(1) shall--CommentsClose CommentsPermalink





(1) be transferred not later than 90 days after the transfer date; andCommentsClose CommentsPermalink





(2) receive notice of the position assignment of the employee not later than 120 days after the effective date of the transfer of the employee.CommentsClose CommentsPermalink





(c) Transfer of Functions-CommentsClose CommentsPermalink





(1) IN GENERAL- Notwithstanding any other provision of law, the transfer of employees under this subtitle shall be deemed a transfer of functions for the purpose of section 3503 of title 5, United States Code.CommentsClose CommentsPermalink





(2) PRIORITY- If any provision of this subtitle conflicts with any protection provided to a transferred employee under section 3503 of title 5, United States Code, the provisions of this subtitle shall control.CommentsClose CommentsPermalink





(d) Employee Status and Eligibility- The transfer of functions and employees under this subtitle, and the abolishment of the Office of Thrift Supervision under section 313, shall not affect the status of the transferred employees as employees of an agency of the United States under any provision of law.CommentsClose CommentsPermalink





(e) Equal Status and Tenure Positions-CommentsClose CommentsPermalink





(1) STATUS AND TENURE-CommentsClose CommentsPermalink





(A) OFFICE OF THRIFT SUPERVISION- Each transferred employee from the Office of Thrift Supervision shall be placed in a position at the Office of the Comptroller of the Currency or the Corporation with the same status and tenure as the transferred employee held on the day before the date on which the employee was transferred.CommentsClose CommentsPermalink





(B) BOARD OF GOVERNORS- Each transferred employee from the Board of Governors or from a Federal reserve bank shall be placed in a position with the same status and tenure as employees of the Office of the Comptroller of the Currency or the Corporation who perform similar functions and have similar periods of service.CommentsClose CommentsPermalink





(2) FUNCTIONS- To the extent practicable, each transferred employee shall be placed in a position at the Office of the Comptroller of the Currency or the Corporation, as applicable, responsible for the same functions and duties as the transferred employee had on the day before the date on which the employee was transferred, in accordance with the expertise and preferences of the transferred employee.CommentsClose CommentsPermalink





(f) No Additional Certification Requirements- An examiner who is a transferred employee shall not be subject to any additional certification requirements before being placed in a comparable position at the Office of the Comptroller of the Currency or the Corporation, if the examiner carries out examinations of the same type of institutions as an employee of the Office of the Comptroller of the Currency or the Corporation as the employee was responsible for carrying out before the date on which the employee was transferred.CommentsClose CommentsPermalink





(g) Personnel Actions Limited-CommentsClose CommentsPermalink





(1) 2-year PROTECTION- Except as provided in paragraph (2), during the 2-year period beginning on the transfer date, an employee holding a permanent position on the day before the date on which the employee was transferred shall not be involuntarily separated or involuntarily reassigned outside the locality pay area (as defined by the Office of Personnel Management) of the employee.CommentsClose CommentsPermalink





(2) EXCEPTIONS- The Comptroller of the Currency and the Chairperson of the Corporation, as applicable, may--CommentsClose CommentsPermalink





(A) separate a transferred employee for cause, including for unacceptable performance; orCommentsClose CommentsPermalink





(B) terminate an appointment to a position excepted from the competitive service because of its confidential policy-making, policy-determining, or policy-advocating character.CommentsClose CommentsPermalink





(h) Pay-CommentsClose CommentsPermalink





(1) 2-year PROTECTION- Except as provided in paragraph (2), during the 2-year period beginning on the date on which the employee was transferred under this subtitle, a transferred employee shall be paid at a rate that is not less than the basic rate of pay, including any geographic differential, that the transferred employee received during the pay period immediately preceding the date on which the employee was transferred.CommentsClose CommentsPermalink





(2) EXCEPTIONS- The Comptroller of the Currency, the Chairperson of the Corporation, or the Chairman of the Board of Governors may reduce the rate of basic pay of a transferred employee--CommentsClose CommentsPermalink





(A) for cause, including for unacceptable performance; orCommentsClose CommentsPermalink





(B) with the consent of the transferred employee.CommentsClose CommentsPermalink





(3) PROTECTION ONLY WHILE EMPLOYED- This subsection shall apply to a transferred employee only during the period that the transferred employee remains employed by Office of the Comptroller of the Currency or the Corporation.CommentsClose CommentsPermalink





(4) PAY INCREASES PERMITTED- Nothing in this subsection shall limit the authority of the Comptroller of the Currency or the Chairperson of the Corporation to increase the pay of a transferred employee.CommentsClose CommentsPermalink





(i) Benefits-CommentsClose CommentsPermalink





(1) RETIREMENT BENEFITS FOR TRANSFERRED EMPLOYEES-CommentsClose CommentsPermalink





(A) IN GENERAL-CommentsClose CommentsPermalink





(i) CONTINUATION OF EXISTING RETIREMENT PLAN- Each transferred employee shall remain enrolled in the retirement plan of the transferred employee, for as long as the transferred employee is employed by the Office of the Comptroller of the Currency or the Corporation.CommentsClose CommentsPermalink





(ii) Employer’S CONTRIBUTION- The Comptroller of the Currency or the Chairperson of the Corporation, as appropriate, shall pay any employer contributions to the existing retirement plan of each transferred employee, as required under each such existing retirement plan.CommentsClose CommentsPermalink





(B) OPTION FOR EMPLOYEES TRANSFERRED FROM FEDERAL RESERVE SYSTEM TO BE SUBJECT TO FEDERAL EMPLOYEE RETIREMENT PROGRAM-CommentsClose CommentsPermalink





(i) ELECTION- Any transferred employee who was enrolled in a Federal Reserve System retirement plan on the day before the date of the transfer of the employee to the Office of the Comptroller of the Currency or the Corporation may, during the period beginning 6 months after the transfer date and ending 1 year after the transfer date, elect to be subject to the Federal employee retirement program.CommentsClose CommentsPermalink





(ii) EFFECTIVE DATE OF COVERAGE- For any employee making an election under clause (i), coverage by the Federal employee retirement program shall begin 1 year after the transfer date.CommentsClose CommentsPermalink





(C) AGENCY PARTICIPATION IN FEDERAL RESERVE SYSTEM RETIREMENT PLAN-CommentsClose CommentsPermalink





(i) SEPARATE ACCOUNT IN FEDERAL RESERVE SYSTEM RETIREMENT PLAN ESTABLISHED- A separate account in the Federal Reserve System retirement plan shall be established for employees transferred to the Office of the Comptroller of the Currency or the Corporation under this title who do not make the election under subparagraph (B).CommentsClose CommentsPermalink





(ii) FUNDS ATTRIBUTABLE TO TRANSFERRED EMPLOYEES REMAINING IN FEDERAL RESERVE SYSTEM RETIREMENT PLAN TRANSFERRED- The proportionate share of funds in the Federal Reserve System retirement plan, including the proportionate share of any funding surplus in that plan, attributable to a transferred employee who does not make the election under subparagraph (B), shall be transferred to the account established under clause (i).CommentsClose CommentsPermalink





(iii) EMPLOYER CONTRIBUTIONS DEPOSITED- The Office of the Comptroller of the Currency or the Corporation, as appropriate, shall deposit into the account established under clause (i) the employer contributions that the Office of the Comptroller of the Currency or the Corporation, respectively, makes on behalf of transferred employees who do not make an election under subparagraph (B).CommentsClose CommentsPermalink





(iv) ACCOUNT ADMINISTRATION- The Office of the Comptroller of the Currency or the Corporation, as appropriate, shall administer the account established under clause (i) as a participation employer in the Federal Reserve System retirement plan.CommentsClose CommentsPermalink





(D) DEFINITION- In this paragraph, the term ‘existing retirement plan’ means, with respect to a transferred employee, the retirement plan (including the Financial Institutions Retirement Fund), and any associated thrift savings plan, of the agency from which the employee was transferred in which the employee was enrolled on the day before the date on which the employee was transferred.CommentsClose CommentsPermalink





(2) BENEFITS OTHER THAN RETIREMENT BENEFITS-CommentsClose CommentsPermalink





(A) DURING FIRST YEAR-CommentsClose CommentsPermalink





(i) EXISTING PLANS CONTINUE- During the 1-year period following the transfer date, each transferred employee may retain membership in any employee benefit program (other than a retirement benefit program) of the agency from which the employee was transferred under this title, including any dental, vision, long term care, or life insurance program to which the employee belonged on the day before the transfer date.CommentsClose CommentsPermalink





(ii) Employer’S CONTRIBUTION- The Office of the Comptroller of the Currency or the Corporation, as appropriate, shall pay any employer cost required to extend coverage in the benefit program to the transferred employee as required under that program or negotiated agreements.CommentsClose CommentsPermalink





(B) DENTAL, VISION, OR LIFE INSURANCE AFTER FIRST YEAR- If, after the 1-year period beginning on the transfer date, the Office of the Comptroller of the Currency or the Corporation determines that the Office of the Comptroller of the Currency or the Corporation, as the case may be, will not continue to participate in any dental, vision, or life insurance program of an agency from which an employee was transferred, a transferred employee who is a member of the program may, before the decision takes effect and without regard to any regularly scheduled open season, elect to enroll in--CommentsClose CommentsPermalink





(i) the enhanced dental benefits program established under chapter 89A of title 5, United States Code;CommentsClose CommentsPermalink





(ii) the enhanced vision benefits established under chapter 89B of title 5, United States Code; andCommentsClose CommentsPermalink





(iii) the Federal Employees’ Group Life Insurance Program established under chapter 87 of title 5, United States Code, without regard to any requirement of insurability.CommentsClose CommentsPermalink





(C) LONG TERM CARE INSURANCE AFTER 1ST YEAR- If, after the 1-year period beginning on the transfer date, the Office of the Comptroller of the Currency or the Corporation determines that the Office of the Comptroller of the Currency or the Corporation, as appropriate, will not continue to participate in any long term care insurance program of an agency from which an employee transferred, a transferred employee who is a member of such a program may, before the decision takes effect, elect to apply for coverage under the Federal Long Term Care Insurance Program established under chapter 90 of title 5, United States Code, under the underwriting requirements applicable to a new active workforce member, as described in part 875 of title 5, Code of Federal Regulations (or any successor thereto).CommentsClose CommentsPermalink





(D) CONTRIBUTION OF TRANSFERRED EMPLOYEE-CommentsClose CommentsPermalink





(i) IN GENERAL- Subject to clause (ii), a transferred employee who is enrolled in a plan under the Federal Employees Health Benefits Program shall pay any employee contribution required under the plan.CommentsClose CommentsPermalink





(ii) COST DIFFERENTIAL- The Office of the Comptroller of the Currency or the Corporation, as applicable, shall pay any difference in cost between the employee contribution required under the plan provided to transferred employees by the agency from which the employee transferred on the date of enactment of this Act and the plan provided by the Office of the Comptroller of the Currency or the Corporation, as the case may be, under this section.CommentsClose CommentsPermalink





(iii) FUNDS TRANSFER- The Office of the Comptroller of the Currency or the Corporation, as the case may be, shall transfer to the Employees Health Benefits Fund established under section 8909 of title 5, United States Code, an amount determined by the Director of the Office of Personnel Management, after consultation with the Comptroller of the Currency or the Chairperson of the Corporation, as the case may be, and the Office of Management and Budget, to be necessary to reimburse the Fund for the cost to the Fund of providing any benefits under this subparagraph that are not otherwise paid for by a transferred employee under clause (i).CommentsClose CommentsPermalink





(E) SPECIAL PROVISIONS TO ENSURE CONTINUATION OF LIFE INSURANCE BENEFITS-CommentsClose CommentsPermalink





(i) IN GENERAL- An annuitant, as defined in section 8901 of title 5, United States Code, who is enrolled in a life insurance plan administered by an agency from which employees are transferred under this title on the day before the transfer date shall be eligible for coverage by a life insurance plan under sections 8706(b), 8714a, 8714b, or 8714c of title 5, United States Code, or by a life insurance plan established by the Office of the Comptroller of the Currency or the Corporation, as applicable, without regard to any regularly scheduled open season or any requirement of insurability.CommentsClose CommentsPermalink





(ii) CONTRIBUTION OF TRANSFERRED EMPLOYEE-CommentsClose CommentsPermalink





(I) IN GENERAL- Subject to subclause (II), a transferred employee enrolled in a life insurance plan under this subparagraph shall pay any employee contribution required by the plan.CommentsClose CommentsPermalink





(II) COST DIFFERENTIAL- The Office of the Comptroller of the Currency or the Corporation, as the case may be, shall pay any difference in cost between the benefits provided by the agency from which the employee transferred on the date of enactment of this Act and the benefits provided under this section.CommentsClose CommentsPermalink





(III) FUNDS TRANSFER- The Office of the Comptroller of the Currency or the Corporation, as the case may be, shall transfer to the Federal Employees’ Group Life Insurance Fund established under section 8714 of title 5, United States Code, an amount determined by the Director of the Office of Personnel Management, after consultation with the Comptroller of the Currency or the Chairperson of the Corporation, as the case may be, and the Office of Management and Budget, to be necessary to reimburse the Federal Employees’ Group Life Insurance Fund for the cost to the Federal Employees’ Group Life Insurance Fund of providing benefits under this subparagraph not otherwise paid for by a transferred employee under subclause (I).CommentsClose CommentsPermalink





(IV) CREDIT FOR TIME ENROLLED IN OTHER PLANS- For any transferred employee, enrollment in a life insurance plan administered by the agency from which the employee transferred, immediately before enrollment in a life insurance plan under chapter 87 of title 5, United States Code, shall be considered as enrollment in a life insurance plan under that chapter for purposes of section 8706(b)(1)(A) of title 5, United States Code.CommentsClose CommentsPermalink





(j) Incorporation Into Agency Pay System- Not later than 2 years after the transfer date, the Comptroller of the Currency and the Chairperson of the Corporation shall place each transferred employee into the established pay system and structure of the appropriate employing agency.CommentsClose CommentsPermalink





(k) Equitable Treatment- In administering the provisions of this section, the Comptroller of the Currency and the Chairperson of the Corporation--CommentsClose CommentsPermalink





(1) may not take any action that would unfairly disadvantage a transferred employee relative to any other employee of the Office of the Comptroller of the Currency or the Corporation on the basis of prior employment by the Office of Thrift Supervision, the Board of Governors, or a Federal reserve bank; andCommentsClose CommentsPermalink





(2) may take such action as is appropriate in an individual case to ensure that a transferred employee receives equitable treatment, with respect to the status, tenure, pay, benefits (other than benefits under programs administered by the Office of Personnel Management), and accrued leave or vacation time for prior periods of service with any Federal agency of the transferred employee.CommentsClose CommentsPermalink





(l) Reorganization-CommentsClose CommentsPermalink





(1) IN GENERAL- If the Comptroller of the Currency or the Chairperson of the Corporation determines, during the 2-year period beginning 1 year after the transfer date, that a reorganization of the staff of the Office of the Comptroller of the Currency or the Corporation, respectively, is required, the reorganization shall be deemed a ‘major reorganization’ for purposes of affording affected employees retirement under section 8336(d)(2) or 8414(b)(1)(B) of title 5, United States Code.CommentsClose CommentsPermalink





(2) SERVICE CREDIT- For purposes of this subsection, periods of service with a Federal home loan bank, a joint office of Federal home loan banks or a Federal reserve bank shall be credited as periods of service with a Federal agency.CommentsClose CommentsPermalink

SEC. 323. PROPERTY TRANSFERRED.

(a) Property Defined- For purposes of this section, the term ‘property’ includes all real property (including leaseholds) and all personal property, including computers, furniture, fixtures, equipment, books, accounts, records, reports, files, memoranda, paper, reports of examination, work papers, and correspondence related to such reports, and any other information or materials.CommentsClose CommentsPermalink





(b) Property of the Office of Thrift Supervision- Not later than 90 days after the transfer date, all property of the Office of Thrift Supervision that the Comptroller of the Currency and the Chairperson of the Corporation jointly determine is used, on the day before the transfer date, to perform or support the functions of the Office of Thrift Supervision transferred to the Office of the Comptroller of the Currency or the Corporation under this title, shall be transferred to the Office of the Comptroller of the Currency or the Corporation in a manner consistent with the transfer of employees under this subtitle.CommentsClose CommentsPermalink





(c) Property of the Board of Governors-CommentsClose CommentsPermalink





(1) IN GENERAL- Not later than 90 days after the transfer date, all property of the Board of Governors that the Office of the Comptroller of the Currency, the Corporation, and the Board of Governors jointly determine is used, on the day before the transfer date, to perform or support the functions of the Board of Governor transferred to the Office of the Comptroller of the Currency or the Corporation under this title, shall be transferred to the Office of the Comptroller of the Currency or the Corporation in a manner consistent with the transfer of employees under this subtitle.CommentsClose CommentsPermalink





(2) PROPERTY OF FEDERAL RESERVE BANKS- Any property of any Federal reserve bank that, on the day before the transfer date, is used to perform or support the functions of the Board of Governors transferred to the Office of the Comptroller of the Currency or the Corporation by this title shall be treated as property of the Board of Governors for purposes of paragraph (1).CommentsClose CommentsPermalink





(d) Contracts Related to Property Transferred- Each contract, agreement, lease, license, permit, and similar arrangement relating to property transferred to the Office of the Comptroller of the Currency or the Corporation by this section shall be transferred to the Office of the Comptroller of the Currency or the Corporation, as appropriate, together with the property to which it relates.CommentsClose CommentsPermalink





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

SEC. 324. FUNDS TRANSFERRED.

The funds that, on the day before the transfer date, the Director of the Office of Thrift Supervision (in consultation with the Comptroller of the Currency, the Chairperson of the Corporation, and the Chairman of the Board of Governors) determines are not necessary to dispose of the affairs of the Office of Thrift Supervision under section 325 and are available to the Office of Thrift Supervision to pay the expenses of the Office of Thrift Supervision--CommentsClose CommentsPermalink





(1) relating to the functions of the Office of Thrift Supervision transferred under section 312(b)(1)(B), shall be transferred to the Office of the Comptroller of the Currency on the transfer date;CommentsClose CommentsPermalink





(2) relating to the functions of the Office of Thrift Supervision transferred under section 312(b)(1)(C), shall be transferred to the Corporation on the transfer date; andCommentsClose CommentsPermalink





(3) relating to the functions of the Office of Thrift Supervision transferred under section 312(b)(1)(A), shall be transferred to the Board of Governors on the transfer date.CommentsClose CommentsPermalink

SEC. 325. DISPOSITION OF AFFAIRS.

(a) Authority of Director- During the 90-day period beginning on the transfer date, the Director of the Office of Thrift Supervision--CommentsClose CommentsPermalink





(1) shall, solely for the purpose of winding up the affairs of the Office of Thrift Supervision relating to any function transferred to the Office of the Comptroller of the Currency, the Corporation, or the Board of Governors under this title--CommentsClose CommentsPermalink





(A) manage the employees of the Office of Thrift Supervision who have not yet been transferred and provide for the payment of the compensation and benefits of the employees that accrue before the date on which the employees are transferred under this title; andCommentsClose CommentsPermalink





(B) manage any property of the Office of Thrift Supervision, until the date on which the property is transferred under section 323; andCommentsClose CommentsPermalink





(2) may take any other action necessary to wind up the affairs of the Office of Thrift Supervision.CommentsClose CommentsPermalink





(b) Status of Director-CommentsClose CommentsPermalink





(1) IN GENERAL- Notwithstanding the transfer of functions under this subtitle, during the 90-day period beginning on the transfer date, the Director of the Office of Thrift Supervision shall retain and may exercise any authority vested in the Director of the Office of Thrift Supervision on the day before the transfer date, only to the extent necessary--CommentsClose CommentsPermalink





(A) to wind up the Office of Thrift Supervision; andCommentsClose CommentsPermalink





(B) to carry out the transfer under this subtitle during such 90-day period.CommentsClose CommentsPermalink





(2) OTHER PROVISIONS- For purposes of paragraph (1), the Director of the Office of Thrift Supervision shall, during the 90-day period beginning on the transfer date, continue to be--CommentsClose CommentsPermalink





(A) treated as an officer of the United States; andCommentsClose CommentsPermalink





(B) entitled to receive compensation at the same annual rate of basic pay that the Director of the Office of Thrift Supervision received on the day before the transfer date.CommentsClose CommentsPermalink





(c) Authority of Chairman of the Board of Governors- During the 90-day period beginning on the transfer date, the Chairman of the Board of Governors shall--CommentsClose CommentsPermalink





(1) manage the employees of the Board of Governors who have not yet been transferred under this title and provide for the payment of the compensation and benefits of the employees that accrue before the date on which the employees are transferred under this title; andCommentsClose CommentsPermalink





(2) manage any property of the Board of Governors that is transferred under this title, until the date on which the property is transferred under section 323.CommentsClose CommentsPermalink

SEC. 326. CONTINUATION OF SERVICES.

Any agency, department, or other instrumentality of the United States, and any successor to any such agency, department, or instrumentality, that was, before the transfer date, providing support services to the Office of Thrift Supervision or the Board of Governors in connection with functions transferred to the Office of the Comptroller of the Currency, the Corporation or the Board of Governors under this title, shall--CommentsClose CommentsPermalink





(1) continue to provide such services, subject to reimbursement by the Office of the Comptroller of the Currency, the Corporation, or the Board of Governors, until the transfer of functions under this title is complete; andCommentsClose CommentsPermalink





(2) consult with the Comptroller of the Currency, the Chairperson of the Corporation, or the Chairman of the Board of Governors, as appropriate, to coordinate and facilitate a prompt and orderly transition.CommentsClose CommentsPermalink

Subtitle C--Federal Deposit Insurance CorporationCommentsClose CommentsPermalink

SEC. 331. DEPOSIT INSURANCE REFORMS.

(a) Size Distinctions- Section 7(b)(2) of the Federal Deposit Insurance Act (12 U.S.C. 1817(b)(2)) is amended--CommentsClose CommentsPermalink





(1) by striking subparagraph (D); andCommentsClose CommentsPermalink





(2) by redesignating subparagraph (C) as subparagraph (D).CommentsClose CommentsPermalink





(b) Assessment Base-CommentsClose CommentsPermalink





(1) IN GENERAL- Except as provided in paragraph (2), the Corporation shall amend the regulations issued by the Corporation under section 7(b)(2) of the Federal Deposit Insurance Act (12 U.S.C. 1817(b)(2)) to define the term ‘assessment base’ with respect to an insured depository institution for purposes of that section 7(b)(2), as an amount equal to--CommentsClose CommentsPermalink





(A) the average total consolidated assets of the insured depository institution during the assessment period; minusCommentsClose CommentsPermalink





(B) the sum of--CommentsClose CommentsPermalink





(i) the average tangible equity of the insured depository institution during the assessment period; andCommentsClose CommentsPermalink





(ii) the average long-term unsecured debt of the insured depository institution during the assessment period.CommentsClose CommentsPermalink





(2) DETERMINATION- If, not later than 1 year after the date of enactment of this Act, the Corporation submits to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives, in writing, a finding that an amendment to the rules of the Corporation regarding the definition of the term ‘assessment base’, as provided in paragraph (1), would reduce the effectiveness of the risk-based assessment system of the Corporation or increase the risk of loss to the Deposit Insurance Fund, the Corporation may--CommentsClose CommentsPermalink





(A) continue in effect the definition of the term ‘assessment base’, as in effect on the day before the date of enactment of this Act; orCommentsClose CommentsPermalink





(B) establish, by rule, a definition of the term ‘assessment base’ that the Corporation deems appropriate.CommentsClose CommentsPermalink

SEC. 332. MANAGEMENT OF THE FEDERAL DEPOSIT INSURANCE CORPORATION.

(a) In General- Section 2 of the Federal Deposit Insurance Act (12 U.S.C. 1812) is amended--CommentsClose CommentsPermalink





(1) in subsection (a)(1)(B), by striking ‘Director of the Office of Thrift Supervision’ and inserting ‘Director of the Consumer Financial Protection Bureau’;CommentsClose CommentsPermalink





(2) by amending subsection (d)(2) to read as follows:CommentsClose CommentsPermalink





‘(2) ACTING OFFICIALS MAY SERVE- In the event of a vacancy in the Office of the Comptroller of the Currency and pending the appointment of a successor, or during the absence or disability of the Comptroller of the Currency, the acting Comptroller of the Currency shall be a member of the Board of Directors in the place of the Comptroller of the Currency.’; andCommentsClose CommentsPermalink





(3) in subsection (f)(2), by striking ‘or of the Office of Thrift Supervision’.CommentsClose CommentsPermalink





(b) Effective Date- This section, and the amendments made by this section, shall take effect on the transfer date.CommentsClose CommentsPermalink

Subtitle D--Termination of Federal Thrift CharterCommentsClose CommentsPermalink

SEC. 341. TERMINATION OF FEDERAL SAVINGS ASSOCIATIONS.

(a) In General- Beginning on the date of enactment of this Act, the Director of the Office of Thrift Supervision, or the Comptroller of the Currency, may not issue a charter for a Federal savings association under section 5 of the Home Owners’ Loan Act (12 U.S.C. 1464).CommentsClose CommentsPermalink





(b) Conforming Amendment- Section 5(a) of the Home Owner’s Loan Act (12 U.S.C. 1464(a)) is amended to read as follows:CommentsClose CommentsPermalink





‘(a) In General- In order to provide thrift institutions for the deposit of funds and for the extension of credit for homes and other goods and services, the Comptroller of the Currency is authorized, under such regulations as the Comptroller of the Currency may prescribe, to provide for the examination, operation, and regulation of associations to be known as ‘Federal savings associations’ (including Federal savings banks), giving primary consideration to the best practices of thrift institutions in the United States. The lending and investment powers conferred by this section are intended to encourage such institutions to provide credit for housing safely and soundly.’.CommentsClose CommentsPermalink





(c) Prospective Repeal- Effective on the date on which the Comptroller of the Currency determines that no Federal savings associations exist, section 5 of the Home Owner’s Loan Act (12 U.S.C. 1464) is repealed.CommentsClose CommentsPermalink

SEC. 342. BRANCHING.

Notwithstanding the Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.), the Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.), or any other provision of Federal or State law, a savings association that becomes a bank may continue to operate any branch or agency that the savings association operated immediately before the savings association became a bank.CommentsClose CommentsPermalink

TITLE IV--REGULATION OF ADVISERS TO HEDGE FUNDS AND OTHERSCommentsClose CommentsPermalink

SEC. 401. SHORT TITLE.

This title may be cited as the ‘Private Fund Investment Advisers Registration Act of 2010’.CommentsClose CommentsPermalink

SEC. 402. DEFINITIONS.

(a) Investment Advisers Act of 1940 Definitions- Section 202(a) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)) is amended by adding at the end the following:CommentsClose CommentsPermalink





‘(29) The term ‘private fund’ means an issuer that would be an investment company, as defined in section 3 of the Investment Company Act of 1940 (15 U.S.C. 80a-3), but for section 3(c)(1) or 3(c)(7) of that Act.CommentsClose CommentsPermalink





‘(30) The term ‘foreign private adviser’ means any investment adviser who--CommentsClose CommentsPermalink





‘(A) has no place of business in the United States;CommentsClose CommentsPermalink





‘(B) has, in total, fewer than 15 clients who are domiciled in or residents of the United States;CommentsClose CommentsPermalink





‘(C) has aggregate assets under management attributable to clients in the United States and investors in the United States in private funds advised by the investment adviser of less than $25,000,000, or such higher amount as the Commission may, by rule, deem appropriate in accordance with the purposes of this title; andCommentsClose CommentsPermalink





‘(D) neither--CommentsClose CommentsPermalink





‘(i) holds itself out generally to the public in the United States as an investment adviser; norCommentsClose CommentsPermalink





‘(ii) acts as--CommentsClose CommentsPermalink





‘(I) an investment adviser to any investment company registered under the Investment Company Act of 1940; orCommentsClose CommentsPermalink





‘(II) a company that has elected to be a business development company pursuant to section 54 of the Investment Company Act of 1940 (15 U.S.C. 80a-53), and has not withdrawn its election.’.CommentsClose CommentsPermalink





(b) Other Definitions- As used in this title, the terms ‘investment adviser’ and ‘private fund’ have the same meanings as in section 202 of the Investment Advisers Act of 1940, as amended by this title.CommentsClose CommentsPermalink

SEC. 403. ELIMINATION OF PRIVATE ADVISER EXEMPTION; LIMITED EXEMPTION FOR FOREIGN PRIVATE ADVISERS; LIMITED INTRASTATE EXEMPTION.

Section 203(b) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-3(b)) is amended--CommentsClose CommentsPermalink





(1) in paragraph (1), by inserting ‘, other than an investment adviser who acts as an investment adviser to any private fund,’ before ‘all of whose’;CommentsClose CommentsPermalink





(2) by striking paragraph (3) and inserting the following:CommentsClose CommentsPermalink





‘(3) any investment adviser that is a foreign private adviser;’; andCommentsClose CommentsPermalink





(3) in paragraph (5), by striking ‘or’ at the end;CommentsClose CommentsPermalink





(4) in paragraph (6), by striking the period at the end and inserting ‘; or’; andCommentsClose CommentsPermalink





(5) by adding at the end the following:CommentsClose CommentsPermalink





‘(7) any investment adviser, other than any entity that has elected to be regulated or is regulated as a business development company pursuant to section 54 of the Investment Company Act of 1940 (15 U.S.C. 80a-54), who solely advises--CommentsClose CommentsPermalink





‘(A) small business investment companies that are licensees under the Small Business Investment Act of 1958;CommentsClose CommentsPermalink





‘(B) entities that have received from the Small Business Administration notice to proceed to qualify for a license as a small business investment company under the Small Business Investment Act of 1958, which notice or license has not been revoked; orCommentsClose CommentsPermalink





‘(C) applicants that are affiliated with 1 or more licensed small business investment companies described in subparagraph (A) and that have applied for another license under the Small Business Investment Act of 1958, which application remains pending.’.CommentsClose CommentsPermalink

SEC. 404. COLLECTION OF SYSTEMIC RISK DATA; REPORTS; EXAMINATIONS; DISCLOSURES.

Section 204 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-4) is amended--CommentsClose CommentsPermalink





(1) by redesignating subsections (b) and (c) as subsections (c) and (d), respectively; andCommentsClose CommentsPermalink





(2) by inserting after subsection (a) the following:CommentsClose CommentsPermalink





‘(b) Records and Reports of Private Funds-CommentsClose CommentsPermalink





‘(1) IN GENERAL- The Commission may require any investment adviser registered under this title--CommentsClose CommentsPermalink





‘(A) to maintain such records of, and file with the Commission such reports regarding, private funds advised by the investment adviser, as necessary and appropriate in the public interest and for the protection of investors, or for the assessment of systemic risk by the Financial Stability Oversight Council (in this subsection referred to as the ‘Council’); andCommentsClose CommentsPermalink





‘(B) to provide or make available to the Council those reports or records or the information contained therein.CommentsClose CommentsPermalink





‘(2) TREATMENT OF RECORDS- The records and reports of any private fund to which an investment adviser registered under this title provides investment advice shall be deemed to be the records and reports of the investment adviser.CommentsClose CommentsPermalink





‘(3) REQUIRED INFORMATION- The records and reports required to be maintained by a private fund and subject to inspection by the Commission under this subsection shall include, for each private fund advised by the investment adviser, a description of--CommentsClose CommentsPermalink





‘(A) the amount of assets under management and use of leverage;CommentsClose CommentsPermalink





‘(B) counterparty credit risk exposure;CommentsClose CommentsPermalink





‘(C) trading and investment positions;CommentsClose CommentsPermalink





‘(D) valuation policies and practices of the fund;CommentsClose CommentsPermalink





‘(E) types of assets held;CommentsClose CommentsPermalink





‘(F) side arrangements or side letters, whereby certain investors in a fund obtain more favorable rights or entitlements than other investors;CommentsClose CommentsPermalink





‘(G) trading practices; andCommentsClose CommentsPermalink





‘(H) such other information as the Commission, in consultation with the Council, determines is necessary and appropriate in the public interest and for the protection of investors or for the assessment of systemic risk, which may include the establishment of different reporting requirements for different classes of fund advisers, based on the type or size of private fund being advised.CommentsClose CommentsPermalink





‘(4) MAINTENANCE OF RECORDS- An investment adviser registered under this title shall maintain such records of private funds advised by the investment adviser for such period or periods as the Commission, by rule, may prescribe as necessary and appropriate in the public interest and for the protection of investors, or for the assessment of systemic risk.CommentsClose CommentsPermalink





‘(5) FILING OF RECORDS- The Commission shall issue rules requiring each investment adviser to a private fund to file reports containing such information as the Commission deems necessary and appropriate in the public interest and for the protection of investors or for the assessment of systemic risk.CommentsClose CommentsPermalink





‘(6) EXAMINATION OF RECORDS-CommentsClose CommentsPermalink





‘(A) PERIODIC AND SPECIAL EXAMINATIONS- The Commission--CommentsClose CommentsPermalink





‘(i) shall conduct periodic inspections of all records of private funds maintained by an investment adviser registered under this title in accordance with a schedule established by the Commission; andCommentsClose CommentsPermalink





‘(ii) may conduct at any time and from time to time such additional, special, and other examinations as the Commission may prescribe as necessary and appropriate in the public interest and for the protection of investors, or for the assessment of systemic risk.CommentsClose CommentsPermalink





‘(B) AVAILABILITY OF RECORDS- An investment adviser registered under this title shall make available to the Commission any copies or extracts from such records as may be prepared without undue effort, expense, or delay, as the Commission or its representatives may reasonably request.CommentsClose CommentsPermalink





‘(7) INFORMATION SHARING-CommentsClose CommentsPermalink





‘(A) IN GENERAL- The Commission shall make available to the Council copies of all reports, documents, records, and information filed with or provided to the Commission by an investment adviser under this subsection as the Council may consider necessary for the purpose of assessing the systemic risk posed by a private fund.CommentsClose CommentsPermalink





‘(B) CONFIDENTIALITY- The Council shall maintain the confidentiality of information received under this paragraph in all such reports, documents, records, and information, in a manner consistent with the level of confidentiality established by the Commission pursuant to paragraph (8). The Council shall be exempt from section 552 of title 5, United States Code, with respect to any information in any report, document, record, or information made available, to the Council under this subsection.’.CommentsClose CommentsPermalink





‘(8) COMMISSION CONFIDENTIALITY OF REPORTS- Notwithstanding any other provision of law, the Commission may not be compelled to disclose any report or information contained therein required to be filed with the Commission under this subsection, except that nothing in this subsection authorizes the Commission--CommentsClose CommentsPermalink





‘(A) to withhold information from Congress, upon an agreement of confidentiality; orCommentsClose CommentsPermalink





‘(B) prevent the Commission from complying with--CommentsClose CommentsPermalink





‘(i) a request for information from any other Federal department or agency or any self-regulatory organization requesting the report or information for purposes within the scope of its jurisdiction; orCommentsClose CommentsPermalink





‘(ii) an order of a court of the United States in an action brought by the United States or the Commission.CommentsClose CommentsPermalink





‘(9) OTHER RECIPIENTS CONFIDENTIALITY- Any department, agency, or self-regulatory organization that receives reports or information from the Commission under this subsection shall maintain the confidentiality of such reports, documents, records, and information in a manner consistent with the level of confidentiality established for the Commission under paragraph (8).CommentsClose CommentsPermalink





‘(10) PUBLIC INFORMATION EXCEPTION-CommentsClose CommentsPermalink





‘(A) IN GENERAL- The Commission, the Council, and any other department, agency, or self-regulatory organization that receives information, reports, documents, records, or information from the Commission under this subsection, shall be exempt from the provisions of section 552 of title 5, United States Code, with respect to any such report, document, record, or information. Any proprietary information of an investment adviser ascertained by the Commission from any report required to be filed with the Commission pursuant to this subsection shall be subject to the same limitations on public disclosure as any facts ascertained during an examination, as provided by section 210(b) of this title.CommentsClose CommentsPermalink





‘(B) PROPRIETARY INFORMATION- For purposes of this paragraph, proprietary information includes--CommentsClose CommentsPermalink





‘(i) sensitive, non-public information regarding the investment or trading strategies of the investment adviser;CommentsClose CommentsPermalink





‘(ii) analytical or research methodologies;CommentsClose CommentsPermalink





‘(iii) trading data;CommentsClose CommentsPermalink





‘(iv) computer hardware or software containing intellectual property; andCommentsClose CommentsPermalink





‘(v) any additional information that the Commission determines to be proprietary.CommentsClose CommentsPermalink





‘(11) ANNUAL REPORT TO CONGRESS- The Commission shall report annually to Congress on how the Commission has used the data collected pursuant to this subsection to monitor the markets for the protection of investors and the integrity of the markets.’.CommentsClose CommentsPermalink

SEC. 405. DISCLOSURE PROVISION ELIMINATED.

Section 210(c) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-10(c)) is amended by inserting before the period at the end the following: ‘or for purposes of assessment of potential systemic risk’.CommentsClose CommentsPermalink

SEC. 406. CLARIFICATION OF RULEMAKING AUTHORITY.

Section 211 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-11) is amended--CommentsClose CommentsPermalink





(1) in subsection (a), by inserting before the period at the end of the first sentence the following: ‘, including rules and regulations defining technical, trade, and other terms used in this title, except that the Commission may not define the term ‘client’ for purposes of paragraphs (1) and (2) of section 206 to include an investor in a private fund managed by an investment adviser, if such private fund has entered into an advisory contract with such adviser’; andCommentsClose CommentsPermalink





(2) by adding at the end the following:CommentsClose CommentsPermalink





‘(e) Disclosure Rules on Private Funds- The Commission and the Commodity Futures Trading Commission shall, after consultation with the Council but not later than 12 months after the date of enactment of the Private Fund Investment Advisers Registration Act of 2010, jointly promulgate rules to establish the form and content of the reports required to be filed with the Commission under subsection 204(b) and with the Commodity Futures Trading Commission by investment advisers that are registered both under this title and the Commodity Exchange Act (7 U.S.C. 1a et seq.).’.CommentsClose CommentsPermalink

SEC. 407. EXEMPTION OF VENTURE CAPITAL FUND ADVISERS.

Section 203 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-3) is amended by adding at the end the following:CommentsClose CommentsPermalink





‘(l) Exemption of Venture Capital Fund Advisers- No investment adviser shall be subject to the registration requirements of this title with respect to the provision of investment advice relating to a venture capital fund. Not later than 6 months after the date of enactment of this subsection, the Commission shall issue final rules to define the term ‘venture capital fund’ for purposes of this subsection.’.CommentsClose CommentsPermalink

SEC. 408. EXEMPTION OF AND RECORD KEEPING BY PRIVATE EQUITY FUND ADVISERS.

Section 203 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-3) is amended by adding at the end the following:CommentsClose CommentsPermalink





‘(m) Exemption of and Reporting by Private Equity Fund Advisers-CommentsClose CommentsPermalink





‘(1) IN GENERAL- Except as provided in this subsection, no investment adviser shall be subject to the registration or reporting requirements of this title with respect to the provision of investment advice relating to a private equity fund or funds.CommentsClose CommentsPermalink





‘(2) MAINTENANCE OF RECORDS AND ACCESS BY COMMISSION- Not later than 6 months after the date of enactment of this subsection, the Commission shall issue final rules--CommentsClose CommentsPermalink





‘(A) to require investment advisers described in paragraph (1) to maintain such records and provide to the Commission such annual or other reports as the Commission taking into account fund size, governance, investment strategy, risk, and other factors, as the Commission determines necessary and appropriate in the public interest and for the protection of investors; andCommentsClose CommentsPermalink





‘(B) to define the term ‘private equity fund’ for purposes of this subsection.’.CommentsClose CommentsPermalink

SEC. 409. FAMILY OFFICES.

(a) In General- Section 202(a)(11) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)(11)) is amended by striking ‘or (G)’ and inserting the following: ‘; (G) any family office, as defined by rule, regulation, or order of the Commission, in accordance with the purposes of this title; or (H)’.CommentsClose CommentsPermalink





(b) Rulemaking- The rules, regulations, or orders issued by the Commission pursuant to section 202(a)(11)(G) of the Investment Advisers Act of 1940, as added by this section, regarding the definition of the term ‘family office’ shall provide for an exemption that--CommentsClose CommentsPermalink





(1) is consistent with the previous exemptive policy of the Commission, as reflected in exemptive orders for family offices in effect on the date of enactment of this Act; andCommentsClose CommentsPermalink





(2) recognizes the range of organizational, management, and employment structures and arrangements employed by family offices.CommentsClose CommentsPermalink

SEC. 410. STATE AND FEDERAL RESPONSIBILITIES; ASSET THRESHOLD FOR FEDERAL REGISTRATION OF INVESTMENT ADVISERS.

Section 203A(a)(1) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-3a(a)(1)) is amended --CommentsClose CommentsPermalink





(1) in subparagraph (A)--CommentsClose CommentsPermalink





(A) by striking ‘$25,000,000’ and inserting ‘$100,000,000’; andCommentsClose CommentsPermalink





(B) by striking ‘or’ at the end;CommentsClose CommentsPermalink





(2) in subparagraph (B), by striking the period at the end and inserting ‘; or’; andCommentsClose CommentsPermalink





(3) by adding at the end the following:CommentsClose CommentsPermalink





‘(C) is an adviser to a company that has elected to be a business development company pursuant to section 54 of the Investment Company Act of 1940, and has not withdrawn its election.’.CommentsClose CommentsPermalink

SEC. 411. CUSTODY OF CLIENT ASSETS.

The Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) is amended by adding at the end the following new section:CommentsClose CommentsPermalink

‘SEC. 223. CUSTODY OF CLIENT ACCOUNTS.

‘An investment adviser registered under this title shall take such steps to safeguard client assets over which such adviser has custody, including, without limitation, verification of such assets by an independent public accountant, as the Commission may, by rule, prescribe.’.CommentsClose CommentsPermalink

SEC. 412. ADJUSTING THE ACCREDITED INVESTOR STANDARD FOR INFLATION.

The Commission shall, by rule--CommentsClose CommentsPermalink





(1) increase the financial threshold for an accredited investor, as set forth in the rules of the Commission under the Securities Act of 1933, by calculating an amount that is greater than the amount in effect on the date of enactment of this Act of $200,000 income for a natural person (or $300,000 for a couple) and $1,000,000 in assets, as the Commission determines is appropriate and in the public interest, in light of price inflation since those figures were determined; andCommentsClose CommentsPermalink





(2) adjust that threshold not less frequently than once every 5 years, to reflect the percentage increase in the cost of living.CommentsClose CommentsPermalink

SEC. 413. GAO STUDY AND REPORT ON ACCREDITED INVESTORS.

The Comptroller General of the United States shall conduct a study on the appropriate criteria for determining the financial thresholds or other criteria needed to qualify for accredited investor status and eligibility to invest in private funds, and shall submit a report to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives on the results of such study not later than 1 year after the date of enactment of this Act.CommentsClose CommentsPermalink

SEC. 414. GAO STUDY ON SELF-REGULATORY ORGANIZATION FOR PRIVATE FUNDS.

The Comptroller General of the United States shall--CommentsClose CommentsPermalink





(1) conduct a study of the feasibility of forming a self-regulatory organization to oversee private funds; andCommentsClose CommentsPermalink





(2) submit a report to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives on the results of such study, not later than 1 year after the date of enactment of this Act.CommentsClose CommentsPermalink

SEC. 415. COMMISSION STUDY AND REPORT ON SHORT SELLING.

(a) Study- The Division of Risk, Strategy, and Financial Innovation of the Commission shall conduct a study, taking into account current scholarship, on the state of short selling on national securities exchanges and in the over-the-counter markets, with particular attention to the impact of recent rule changes and the incidence of--CommentsClose CommentsPermalink





(1) the failure to deliver shares sold short; orCommentsClose CommentsPermalink





(2) delivery of shares on the fourth day following the short sale transaction.CommentsClose CommentsPermalink





(b) Report- The Division of Risk, Strategy, and Financial Innovation shall submit a report, together with any recommendations for market improvements, including consideration of real time reporting of short sale positions, to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives on the results of the study conducted under subsection (a), not later than 2 years after the date of enactment of this Act.CommentsClose CommentsPermalink

SEC. 416. TRANSITION PERIOD.

Except as otherwise provided in this title, this title and the amendments made by this title shall become effective 1 year after the date of enactment of this Act, except that any investment adviser may, at the discretion of the investment adviser, register with the Commission under the Investment Advisers Act of 1940 during that 1-year period, subject to the rules of the Commission.CommentsClose CommentsPermalink

TITLE V--INSURANCECommentsClose CommentsPermalink

Subtitle A--Office of National InsuranceCommentsClose CommentsPermalink

SEC. 501. SHORT TITLE.

This subtitle may be cited as the ‘Office of National Insurance Act of 2010’.CommentsClose CommentsPermalink

SEC. 502. ESTABLISHMENT OF OFFICE OF NATIONAL INSURANCE.

(a) Establishment of Office- Subchapter I of chapter 3 of subtitle I of title 31, United States Code, is amended--CommentsClose CommentsPermalink





(1) by redesignating section 312 as section 315;CommentsClose CommentsPermalink





(2) by redesignating section 313 as section 312; andCommentsClose CommentsPermalink





(3) by inserting after section 312 (as so redesignated) the following new sections:CommentsClose CommentsPermalink

‘SEC. 313. OFFICE OF NATIONAL INSURANCE.

‘(a) Establishment- There is established within the Department of the Treasury the Office of National Insurance.CommentsClose CommentsPermalink





‘(b) Leadership- The Office shall be headed by a Director, who shall be appointed by the Secretary of the Treasury. The position of Director shall be a career reserved position in the Senior Executive Service, as that position is defined under section 3132 of title 5, United States Code.CommentsClose CommentsPermalink





‘(c) Functions-CommentsClose CommentsPermalink





‘(1) AUTHORITY PURSUANT TO DIRECTION OF SECRETARY- The Office, pursuant to the direction of the Secretary, shall have the authority--CommentsClose CommentsPermalink





‘(A) to monitor all aspects of the insurance industry, including identifying issues or gaps in the regulation of insurers that could contribute to a systemic crisis in the insurance industry or the United States financial system;CommentsClose CommentsPermalink





‘(B) to recommend to the Financial Stability Oversight Council that it designate an insurer, including the affiliates of such insurer, as an entity subject to regulation as a nonbank financial company supervised by the Board of Governors pursuant to title I of the Restoring American Financial Stability Act of 2010;CommentsClose CommentsPermalink





‘(C) to assist the Secretary in administering the Terrorism Insurance Program established in the Department of the Treasury under the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note);CommentsClose CommentsPermalink





‘(D) to coordinate Federal efforts and develop Federal policy on prudential aspects of international insurance matters, including representing the United States, as appropriate, in the International Association of Insurance Supervisors (or a successor entity) and assisting the Secretary in negotiating International Insurance Agreements on Prudential Measures;CommentsClose CommentsPermalink





‘(E) to determine, in accordance with subsection (f), whether State insurance measures are preempted by International Insurance Agreements on Prudential Measures;CommentsClose CommentsPermalink





‘(F) to consult with the States (including State insurance regulators) regarding insurance matters of national importance and prudential insurance matters of international importance; andCommentsClose CommentsPermalink





‘(G) to perform such other related duties and authorities as may be assigned to the Office by the Secretary.CommentsClose CommentsPermalink





‘(2) ADVISORY FUNCTIONS- The Office shall advise the Secretary on major domestic and prudential international insurance policy issues.CommentsClose CommentsPermalink





‘(d) Scope- The authority of the Office shall extend to all lines of insurance except health insurance, as such insurance is determined by the Secretary based on section 2791 of the Public Health Service Act (42 U.S.C. 300gg-91), and crop insurance, as established by the Federal Crop Insurance Act (7 U.S.C. 1501 et seq.).CommentsClose CommentsPermalink





‘(e) Gathering of Information-CommentsClose CommentsPermalink





‘(1) IN GENERAL- In carrying out the functions required under subsection (c), the Office may--CommentsClose CommentsPermalink





‘(A) receive and collect data and information on and from the insurance industry and insurers;CommentsClose CommentsPermalink





‘(B) enter into information-sharing agreements;CommentsClose CommentsPermalink





‘(C) analyze and disseminate data and information; andCommentsClose CommentsPermalink





‘(D) issue reports regarding all lines of insurance except health insurance.CommentsClose CommentsPermalink





‘(2) COLLECTION OF INFORMATION FROM INSURERS AND AFFILIATES-CommentsClose CommentsPermalink





‘(A) IN GENERAL- Except as provided in paragraph (3), the Office may require an insurer, or any affiliate of an insurer, to submit such data or information as the Office may reasonably require in carrying out the functions described under subsection (c).CommentsClose CommentsPermalink





‘(B) RULE OF CONSTRUCTION- Notwithstanding any other provision of this section, for purposes of subparagraph (A), the term ’insurer’ means any person that is authorized to write insurance or reinsure risks and issue contracts or policies in 1 or more States.CommentsClose CommentsPermalink





‘(3) EXCEPTION FOR SMALL INSURERS- Paragraph (2) shall not apply with respect to any insurer or affiliate thereof that meets a minimum size threshold that the Office may establish, whether by order or rule.CommentsClose CommentsPermalink





‘(4) ADVANCE COORDINATION- Before collecting any data or information under paragraph (2) from an insurer, or any affiliate of an insurer, the Office shall coordinate with each relevant State insurance regulator (or other relevant Federal or State regulatory agency, if any, in the case of an affiliate of an insurer) to determine if the information to be collected is available from, or may be obtained in a timely manner by, such State insurance regulator, individually or collectively, another regulatory agency, or publicly available sources. Notwithstanding any other provision of law, each such relevant State insurance regulator or other Federal or State regulatory agency is authorized to provide to the Office such data or information.CommentsClose CommentsPermalink





‘(5) CONFIDENTIALITY-CommentsClose CommentsPermalink





‘(A) RETENTION OF PRIVILEGE- The submission of any nonpublicly available data and information to the Office under this subsection shall not constitute a waiver of, or otherwise affect, any privilege arising under Federal or State law (including the rules of any Federal or State court) to which the data or information is otherwise subject.CommentsClose CommentsPermalink





‘(B) CONTINUED APPLICATION OF PRIOR CONFIDENTIALITY AGREEMENTS- Any requirement under Federal or State law to the extent otherwise applicable, or any requirement pursuant to a written agreement in effect between the original source of any nonpublicly available data or information and the source of such data or information to the Office, regarding the privacy or confidentiality of any data or information in the possession of the source to the Office, shall continue to apply to such data or information after the data or information has been provided pursuant to this subsection to the Office.CommentsClose CommentsPermalink





‘(C) INFORMATION SHARING AGREEMENT- Any data or information obtained by the Office may be made available to State insurance regulators, individually or collectively, through an information sharing agreement that--CommentsClose CommentsPermalink





‘(i) shall comply with applicable Federal law; andCommentsClose CommentsPermalink





‘(ii) shall not constitute a waiver of, or otherwise affect, any privilege under Federal or State law (including the rules of any Federal or State Court) to which the data or information is otherwise subject.CommentsClose CommentsPermalink





‘(D) AGENCY DISCLOSURE REQUIREMENTS- Section 552 of title 5, United States Code, shall apply to any data or information submitted to the Office by an insurer or an affiliate of an insurer.CommentsClose CommentsPermalink





‘(6) SUBPOENAS AND ENFORCEMENT- The Director shall have the power to require by subpoena the production of the data or information requested under paragraph (2), but only upon a written finding by the Director that such data or information is required to carry out the functions described under subsection (c) and that the Office has coordinated with such regulator or agency as required under paragraph (4). Subpoenas shall bear the signature of the Director and shall be served by any person or class of persons designated by the Director for that purpose. In the case of contumacy or failure to obey a subpoena, the subpoena shall be enforceable by order of any appropriate district court of the United States. Any failure to obey the order of the court may be punished by the court as a contempt of court.CommentsClose CommentsPermalink





‘(f) Preemption of State Insurance Measures-CommentsClose CommentsPermalink





‘(1) STANDARD- A State insurance measure shall be preempted if, and only to the extent that the Director determines, in accordance with this subsection, that the measure--CommentsClose CommentsPermalink





‘(A) results in less favorable treatment of a non-United States insurer domiciled in a foreign jurisdiction that is subject to an international insurance agreement on prudential measures than a United States insurer domiciled, licensed, or otherwise admitted in that State; andCommentsClose CommentsPermalink





‘(B) is inconsistent with an International Insurance Agreement on Prudential Measures.CommentsClose CommentsPermalink





‘(2) DETERMINATION-CommentsClose CommentsPermalink





‘(A) NOTICE OF POTENTIAL INCONSISTENCY- Before making any determination under paragraph (1), the Director shall--CommentsClose CommentsPermalink





‘(i) notify and consult with the appropriate State regarding any potential inconsistency or preemption;CommentsClose CommentsPermalink





‘(ii) cause to be published in the Federal Register notice of the issue regarding the potential inconsistency or preemption, including a description of each State insurance measure at issue and any applicable International Insurance Agreement on Prudential Measures;CommentsClose CommentsPermalink





‘(iii) provide interested parties a reasonable opportunity to submit written comments to the Office; andCommentsClose CommentsPermalink





‘(iv) consider any comments received.CommentsClose CommentsPermalink





‘(B) SCOPE OF REVIEW- For purposes of this subsection, the determination of the Director regarding State insurance measures shall be limited to the subject matter contained within the international insurance agreement on prudential measure involved.CommentsClose CommentsPermalink





‘(C) NOTICE OF DETERMINATION OF INCONSISTENCY- Upon making any determination under paragraph (1), the Director shall--CommentsClose CommentsPermalink





‘(i) notify the appropriate State of the determination and the extent of the inconsistency;CommentsClose CommentsPermalink





‘(ii) establish a reasonable period of time, which shall not be less than 30 days, before the determination shall become effective; andCommentsClose CommentsPermalink





‘(iii) notify the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives of the inconsistency.CommentsClose CommentsPermalink





‘(3) NOTICE OF EFFECTIVENESS- Upon the conclusion of the period referred to in paragraph (2)(C)(ii), if the basis for such determination still exists, the determination shall become effective and the Director shall--CommentsClose CommentsPermalink





‘(A) cause to be published a notice in the Federal Register that the preemption has become effective, as well as the effective date; andCommentsClose CommentsPermalink





‘(B) notify the appropriate State.CommentsClose CommentsPermalink





‘(4) LIMITATION- No State may enforce a State insurance measure to the extent that such measure has been preempted under this subsection.CommentsClose CommentsPermalink





‘(g) Applicability of Administrative Procedures Act- Determinations of inconsistency made pursuant to subsection (f)(2) shall be subject to the applicable provisions of subchapter II of chapter 5 of title 5, United States Code (relating to administrative procedure), and chapter 7 of such title (relating to judicial review).CommentsClose CommentsPermalink





‘(h) Regulations, Policies, and Procedures- The Secretary may issue orders, regulations, policies, and procedures to implement this section.CommentsClose CommentsPermalink





‘(i) Consultation- The Director shall consult with State insurance regulators, individually or collectively, to the extent the Director determines appropriate, in carrying out the functions of the Office.CommentsClose CommentsPermalink





‘(j) Savings Provisions- Nothing in this section shall--CommentsClose CommentsPermalink





‘(1) preempt--CommentsClose CommentsPermalink





‘(A) any State insurance measure that governs any insurer’s rates, premiums, underwriting, or sales practices;CommentsClose CommentsPermalink





‘(B) any State coverage requirements for insurance;CommentsClose CommentsPermalink





‘(C) the application of the antitrust laws of any State to the business of insurance; orCommentsClose CommentsPermalink





‘(D) any State insurance measure governing the capital or solvency of an insurer, except to the extent that such State insurance measure results in less favorable treatment of a non-United State insurer than a United States insurer;CommentsClose CommentsPermalink





‘(2) be construed to alter, amend, or limit any provision of the Consumer Financial Protection Agency Act of 2010; orCommentsClose CommentsPermalink





‘(3) affect the preemption of any State insurance measure otherwise inconsistent with and preempted by Federal law.CommentsClose CommentsPermalink





‘(k) Retention of Existing State Regulatory Authority- Nothing in this section or section 314 shall be construed to establish or provide the Office or the Department of the Treasury with general supervisory or regulatory authority over the business of insurance.CommentsClose CommentsPermalink





‘(l) Annual Report to Congress- Beginning September 30, 2011, the Director shall submit a report on or before September 30 of each calendar year to the President and to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives on the insurance industry, any actions taken by the Office pursuant to subsection (f) (regarding preemption of inconsistent State insurance measures), and any other information as deemed relevant by the Director or as requested by such Committees.CommentsClose CommentsPermalink





‘(m) Study and Report on Regulation of Insurance-CommentsClose CommentsPermalink





‘(1) IN GENERAL- Not later than 18 months after the date of enactment of this section, the Director shall conduct a study and submit a report to Congress on how to modernize and improve the system of insurance regulation in the United States.CommentsClose CommentsPermalink





‘(2) CONSIDERATIONS- The study and report required under paragraph (1) shall be based on and guided by the following considerations:CommentsClose CommentsPermalink





‘(A) Systemic risk regulation with respect to insurance.CommentsClose CommentsPermalink





‘(B) Capital standards and the relationship between capital allocation and liabilities, including standards relating to liquidity and duration risk.CommentsClose CommentsPermalink





‘(C) Consumer protection for insurance products and practices, including gaps in state regulation.CommentsClose CommentsPermalink





‘(D) The degree of national uniformity of state insurance regulation.CommentsClose CommentsPermalink





‘(E) The regulation of insurance companies and affiliates on a consolidated basis.CommentsClose CommentsPermalink





‘(F) International coordination of insurance regulation.CommentsClose CommentsPermalink





‘(3) ADDITIONAL FACTORS- The study and report required under paragraph (1) shall also examine the following factors:CommentsClose CommentsPermalink





‘(A) The costs and benefits of potential Federal regulation of insurance across various lines of insurance (except health insurance).CommentsClose CommentsPermalink





‘(B) The feasibility of regulating only certain lines of insurance at the Federal level, while leaving other lines of insurance to be regulated at the State level.CommentsClose CommentsPermalink





‘(C) The ability of any potential Federal regulation or Federal regulators to eliminate or minimize regulatory arbitrage.CommentsClose CommentsPermalink





‘(D) The impact that developments in the regulation of insurance in foreign jurisdictions might have on the potential Federal regulation of insurance.CommentsClose CommentsPermalink





‘(E) The ability of any potential Federal regulation or Federal regulator to provide robust consumer protection for policyholders.CommentsClose CommentsPermalink





‘(F) The potential consequences of subjecting insurance companies to a Federal resolution authority, including the effects of any Federal resolution authority--CommentsClose CommentsPermalink





‘(i) on the operation of State insurance guaranty fund systems, including the loss of guaranty fund coverage if an insurance company is subject to a Federal resolution authority;CommentsClose CommentsPermalink





‘(ii) on policyholder protection, including the loss of the priority status of policyholder claims over other unsecured general creditor claims;CommentsClose CommentsPermalink





‘(iii) in the case of life insurance companies, the loss of the special status of separate account assets and separate account liabilities; andCommentsClose CommentsPermalink





‘(iv) on the international competitiveness of insurance companies.CommentsClose CommentsPermalink





‘(G) Such other factors as the Director determines necessary or appropriate, consistent with the principles set forth in paragraph (2).CommentsClose CommentsPermalink





‘(4) REQUIRED RECOMMENDATIONS- The study and report required under paragraph (1) shall also contain any legislative, administrative, or regulatory recommendations, as the Director determines appropriate, to carry out or effectuate the findings set forth in such report.CommentsClose CommentsPermalink





‘(5) CONSULTATION- With respect to the study and report required under paragraph (1), the Director shall consult with the National Association of Insurance Commissioners, consumer organizations, representatives of the insurance industry and policyholders, and other organizations and experts, as appropriate.CommentsClose CommentsPermalink





‘(n) Use of Existing Resources- To carry out this section, the Office may employ personnel, facilities, and any other resource of the Department of the Treasury available to the Secretary.CommentsClose CommentsPermalink





‘(o) Definitions- In this section and section 314, the following definitions shall apply:CommentsClose CommentsPermalink





‘(1) AFFILIATE- The term ‘affiliate’ means, with respect to an insurer, any person who controls, is controlled by, or is under common control with the insurer.CommentsClose CommentsPermalink





‘(2) INSURER- The term ‘insurer’ means any person engaged in the business of insurance, including reinsurance.CommentsClose CommentsPermalink





‘(3) INTERNATIONAL INSURANCE AGREEMENT ON PRUDENTIAL MEASURES- The term ‘International Insurance Agreement on Prudential Measures’ means a written bilateral or multilateral agreement entered into between the United States and a foreign government, authority, or regulatory entity regarding prudential measures applicable to the business of insurance or reinsurance.CommentsClose CommentsPermalink





‘(4) NON-UNITED STATES INSURER- The term ‘non-United States insurer’ means an insurer that is organized under the laws of a jurisdiction other than a State, but does not include any United States branch of such an insurer.CommentsClose CommentsPermalink





‘(5) OFFICE- The term ‘Office’ means the Office of National Insurance established by this section.CommentsClose CommentsPermalink





‘(6) STATE INSURANCE MEASURE- The term ‘State insurance measure’ means any State law, regulation, administrative ruling, bulletin, guideline, or practice relating to or affecting prudential measures applicable to insurance or reinsurance.CommentsClose CommentsPermalink





‘(7) STATE INSURANCE REGULATOR- The term ‘State insurance regulator’ means any State regulatory authority responsible for the supervision of insurers.CommentsClose CommentsPermalink





‘(8) UNITED STATES INSURER- The term ‘United States insurer’ means--CommentsClose CommentsPermalink





‘(A) an insurer that is organized under the laws of a State; orCommentsClose CommentsPermalink





‘(B) a United States branch of a non-United States insurer.CommentsClose CommentsPermalink





‘(p) Authorization of Appropriations- There are authorized to be appropriated for the Office for each fiscal year such sums as may be necessary.CommentsClose CommentsPermalink

‘SEC. 314. INTERNATIONAL INSURANCE AGREEMENTS ON PRUDENTIAL MEASURES.

‘(a) In General- The Secretary of the Treasury is authorized to negotiate and enter into International Insurance Agreements on Prudential Measures on behalf of the United States.CommentsClose CommentsPermalink





‘(b) Savings Provision- Nothing in this section or section 313 shall be construed to affect the development and coordination of United States international trade policy or the administration of the United States trade agreements program. It is to be understood that the negotiation of International Insurance Agreements on Prudential Measures under such sections is consistent with the requirement of this subsection.CommentsClose CommentsPermalink





‘(c) Consultation- The Secretary shall consult with the United States Trade Representative on the negotiation of International Insurance Agreements on Prudential Measures, including prior to initiating and concluding any such agreements.’.CommentsClose CommentsPermalink





(b) Duties of Secretary- Section 321(a) of title 31, United States Code, is amended--CommentsClose CommentsPermalink





(1) in paragraph (7), by striking ‘; and’ and inserting a semicolon;CommentsClose CommentsPermalink





(2) in paragraph (8)(C), by striking the period at the end and inserting ‘; and’; andCommentsClose CommentsPermalink





(3) by adding at the end the following new paragraph:CommentsClose CommentsPermalink





‘(9) advise the President on major domestic and international prudential policy issues in connection with all lines of insurance except health insurance.’.CommentsClose CommentsPermalink





(c) Clerical Amendment- The table of sections for subchapter I of chapter 3 of title 31, United States Code, is amended by striking the item relating to section 312 and inserting the following new items:CommentsClose CommentsPermalink





‘Sec. 312. Terrorism and financial intelligence.CommentsClose CommentsPermalink





‘Sec. 313. Office of National Insurance.CommentsClose CommentsPermalink





‘Sec. 314. International insurance agreements on prudential measures.CommentsClose CommentsPermalink





‘Sec. 315. Continuing in office.’.CommentsClose CommentsPermalink

Subtitle B--State-based Insurance ReformCommentsClose CommentsPermalink

SEC. 511. SHORT TITLE.

This subtitle may be cited as the ‘Nonadmitted and Reinsurance Reform Act of 2010’.CommentsClose CommentsPermalink

SEC. 512. EFFECTIVE DATE.

Except as otherwise specifically provided in this subtitle, this subtitle shall take effect upon the expiration of the 12-month period beginning on the date of the enactment of this subtitle.CommentsClose CommentsPermalink

PART I--NONADMITTED INSURANCE

SEC. 521. REPORTING, PAYMENT, AND ALLOCATION OF PREMIUM TAXES.

(a) Home State’s Exclusive Authority- No State other than the home State of an insured may require any premium tax payment for nonadmitted insurance.CommentsClose CommentsPermalink





(b) Allocation of Nonadmitted Premium Taxes-CommentsClose CommentsPermalink





(1) IN GENERAL- The States may enter into a compact or otherwise establish procedures to allocate among the States the premium taxes paid to an insured’s home State described in subsection (a).CommentsClose CommentsPermalink





(2) EFFECTIVE DATE- Except as expressly otherwise provided in such compact or other procedures, any such compact or other procedures--CommentsClose CommentsPermalink





(A) if adopted on or before the expiration of the 330-day period that begins on the date of the enactment of this subtitle, shall apply to any premium taxes that, on or after such date of enactment, are required to be paid to any State that is subject to such compact or procedures; andCommentsClose CommentsPermalink





(B) if adopted after the expiration of such 330-day period, shall apply to any premium taxes that, on or after January 1 of the first calendar year that begins after the expiration of such 330-day period, are required to be paid to any State that is subject to such compact or procedures.CommentsClose CommentsPermalink





(3) REPORT- Upon the expiration of the 330-day period referred to in paragraph (2), the NAIC may submit a report to the Committee on Financial Services and Committee on the Judiciary of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate identifying and describing any compact or other procedures for allocation among the States of premium taxes that have been adopted during such period by any States.CommentsClose CommentsPermalink





(4) NATIONWIDE SYSTEM- The Congress intends that each State adopt nationwide uniform requirements, forms, and procedures, such as an interstate compact, that provides for the reporting, payment, collection, and allocation of premium taxes for nonadmitted insurance consistent with this section.CommentsClose CommentsPermalink





(c) Allocation Based on Tax Allocation Report- To facilitate the payment of premium taxes among the States, an insured’s home State may require surplus lines brokers and insureds who have independently procured insurance to annually file tax allocation reports with the insured’s home State detailing the portion of the nonadmitted insurance policy premium or premiums attributable to properties, risks, or exposures located in each State. The filing of a nonadmitted insurance tax allocation report and the payment of tax may be made by a person authorized by the insured to act as its agent.CommentsClose CommentsPermalink

SEC. 522. REGULATION OF NONADMITTED INSURANCE BY INSURED’S HOME STATE.

(a) Home State Authority- Except as otherwise provided in this section, the placement of nonadmitted insurance shall be subject to the statutory and regulatory requirements solely of the insured’s home State.CommentsClose CommentsPermalink





(b) Broker Licensing- No State other than an insured’s home State may require a surplus lines broker to be licensed in order to sell, solicit, or negotiate nonadmitted insurance with respect to such insured.CommentsClose CommentsPermalink





(c) Enforcement Provision- With respect to section 521 and subsections (a) and (b) of this section, any law, regulation, provision, or action of any State that applies or purports to apply to nonadmitted insurance sold to, solicited by, or negotiated with an insured whose home State is another State shall be preempted with respect to such application.CommentsClose CommentsPermalink





(d) Workers’ Compensation Exception- This section may not be construed to preempt any State law, rule, or regulation that restricts the placement of workers’ compensation insurance or excess insurance for self-funded workers’ compensation plans with a nonadmitted insurer.CommentsClose CommentsPermalink

SEC. 523. PARTICIPATION IN NATIONAL PRODUCER DATABASE.

After the expiration of the 2-year period beginning on the date of the enactment of this subtitle, a State may not collect any fees relating to licensing of an individual or entity as a surplus lines broker in the State unless the State has in effect at such time laws or regulations that provide for participation by the State in the national insurance producer database of the NAIC, or any other equivalent uniform national database, for the licensure of surplus lines brokers and the renewal of such licenses.CommentsClose CommentsPermalink

SEC. 524. UNIFORM STANDARDS FOR SURPLUS LINES ELIGIBILITY.

A State may not--CommentsClose CommentsPermalink





(1) impose eligibility requirements on, or otherwise establish eligibility criteria for, nonadmitted insurers domiciled in a United States jurisdiction, except in conformance with such requirements and criteria in sections 5A(2) and 5C(2)(a) of the Non-Admitted Insurance Model Act, unless the State has adopted nationwide uniform requirements, forms, and procedures developed in accordance with section 521(b) of this subtitle that include alternative nationwide uniform eligibility requirements; orCommentsClose CommentsPermalink





(2) prohibit a surplus lines broker from placing nonadmitted insurance with, or procuring nonadmitted insurance from, a nonadmitted insurer domiciled outside the United States that is listed on the Quarterly Listing of Alien Insurers maintained by the International Insurers Department of the NAIC.CommentsClose CommentsPermalink

SEC. 525. STREAMLINED APPLICATION FOR COMMERCIAL PURCHASERS.

A surplus lines broker seeking to procure or place nonadmitted insurance in a State for an exempt commercial purchaser shall not be required to satisfy any State requirement to make a due diligence search to determine whether the full amount or type of insurance sought by such exempt commercial purchaser can be obtained from admitted insurers if--CommentsClose CommentsPermalink





(1) the broker procuring or placing the surplus lines insurance has disclosed to the exempt commercial purchaser that such insurance may or may not be available from the admitted market that may provide greater protection with more regulatory oversight; andCommentsClose CommentsPermalink





(2) the exempt commercial purchaser has subsequently requested in writing the broker to procure or place such insurance from a nonadmitted insurer.CommentsClose CommentsPermalink

SEC. 526. GAO STUDY OF NONADMITTED INSURANCE MARKET.

(a) In General- The Comptroller General of the United States shall conduct a study of the nonadmitted insurance market to determine the effect of the enactment of this part on the size and market share of the nonadmitted insurance market for providing coverage typically provided by the admitted insurance market.CommentsClose CommentsPermalink





(b) Contents- The study shall determine and analyze--CommentsClose CommentsPermalink





(1) the change in the size and market share of the nonadmitted insurance market and in the number of insurance companies and insurance holding companies providing such business in the 18-month period that begins upon the effective date of this subtitle;CommentsClose CommentsPermalink





(2) the extent to which insurance coverage typically provided by the admitted insurance market has shifted to the nonadmitted insurance market;CommentsClose CommentsPermalink





(3) the consequences of any change in the size and market share of the nonadmitted insurance market, including differences in the price and availability of coverage available in both the admitted and nonadmitted insurance markets;CommentsClose CommentsPermalink





(4) the extent to which insurance companies and insurance holding companies that provide both admitted and nonadmitted insurance have experienced shifts in the volume of business between admitted and nonadmitted insurance; andCommentsClose CommentsPermalink





(5) the extent to which there has been a change in the number of individuals who have nonadmitted insurance policies, the type of coverage provided under such policies, and whether such coverage is available in the admitted insurance market.CommentsClose CommentsPermalink





(c) Consultation With NAIC- In conducting the study under this section, the Comptroller General shall consult with the NAIC.CommentsClose CommentsPermalink





(d) Report- The Comptroller General shall complete the study under this section and submit a report to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives regarding the findings of the study not later than 30 months after the effective date of this subtitle.CommentsClose CommentsPermalink

SEC. 527. DEFINITIONS.

For purposes of this part, the following definitions shall apply:CommentsClose CommentsPermalink





(1) ADMITTED INSURER- The term ‘admitted insurer’ means, with respect to a State, an insurer licensed to engage in the business of insurance in such State.CommentsClose CommentsPermalink





(2) AFFILIATE- The term ‘affiliate’ means, with respect to an insured, any entity that controls, is controlled by, or is under common control with the insured.CommentsClose CommentsPermalink





(3) AFFILIATED GROUP- The term ‘affiliated group’ means any group of entities that are all affiliated.CommentsClose CommentsPermalink





(4) CONTROL- An entity has ‘control’ over another entity if--CommentsClose CommentsPermalink





(A) the entity directly or indirectly or acting through 1 or more other persons owns, controls, or has the power to vote 25 percent or more of any class of voting securities of the other entity; orCommentsClose CommentsPermalink





(B) the entity controls in any manner the election of a majority of the directors or trustees of the other entity.CommentsClose CommentsPermalink





(5) EXEMPT COMMERCIAL PURCHASER- The term ‘exempt commercial purchaser’ means any person purchasing commercial insurance that, at the time of placement, meets the following requirements:CommentsClose CommentsPermalink





(A) The person employs or retains a qualified risk manager to negotiate insurance coverage.CommentsClose CommentsPermalink





(B) The person has paid aggregate nationwide commercial property and casualty insurance premiums in excess of $100,000 in the immediately preceding 12 months.CommentsClose CommentsPermalink





(C)(i) The person meets at least 1 of the following criteria:CommentsClose CommentsPermalink





(I) The person possesses a net worth in excess of $20,000,000, as such amount is adjusted pursuant to clause (ii).CommentsClose CommentsPermalink





(II) The person generates annual revenues in excess of $50,000,000, as such amount is adjusted pursuant to clause (ii).CommentsClose CommentsPermalink





(III) The person employs more than 500 full-time or full-time equivalent employees per individual insured or is a member of an affiliated group employing more than 1,000 employees in the aggregate.CommentsClose CommentsPermalink





(IV) The person is a not-for-profit organization or public entity generating annual budgeted expenditures of at least $30,000,000, as such amount is adjusted pursuant to clause (ii).CommentsClose CommentsPermalink





(V) The person is a municipality with a population in excess of 50,000 persons.CommentsClose CommentsPermalink





(ii) Effective on the fifth January 1 occurring after the date of the enactment of this subtitle and each fifth January 1 occurring thereafter, the amounts in subclauses (I), (II), and (IV) of clause (i) shall be adjusted to reflect the percentage change for such 5-year period in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics of the Department of Labor.CommentsClose CommentsPermalink





(6) HOME STATE-CommentsClose CommentsPermalink





(A) IN GENERAL- Except as provided in subparagraph (B), the term ‘home State’ means, with respect to an insured--CommentsClose CommentsPermalink





(i) the State in which an insured maintains its principal place of business or, in the case of an individual, the individual’s principal residence; orCommentsClose CommentsPermalink





(ii) if 100 percent of the insured risk is located out of the State referred to in subparagraph (A), the State to which the greatest percentage of the insured’s taxable premium for that insurance contract is allocated.CommentsClose CommentsPermalink





(B) AFFILIATED GROUPS- If more than 1 insured from an affiliated group are named insureds on a single nonadmitted insurance contract, the term ‘home State’ means the home State, as determined pursuant to subparagraph (A), of the member of the affiliated group that has the largest percentage of premium attributed to it under such insurance contract.CommentsClose CommentsPermalink





(7) INDEPENDENTLY PROCURED INSURANCE- The term ‘independently procured insurance’ means insurance procured directly by an insured from a nonadmitted insurer.CommentsClose CommentsPermalink





(8) NAIC- The term ‘NAIC’ means the National Association of Insurance Commissioners or any successor entity.CommentsClose CommentsPermalink





(9) NONADMITTED INSURANCE- The term ‘nonadmitted insurance’ means any property and casualty insurance permitted to be placed directly or through a surplus lines broker with a nonadmitted insurer eligible to accept such insurance.CommentsClose CommentsPermalink





(10) NON-ADMITTED INSURANCE MODEL ACT- The term ‘Non-Admitted Insurance Model Act’ means the provisions of the Non-Admitted Insurance Model Act, as adopted by the NAIC on August 3, 1994, and amended on September 30, 1996, December 6, 1997, October 2, 1999, and June 8, 2002.CommentsClose CommentsPermalink





(11) NONADMITTED INSURER- The term ‘nonadmitted insurer’--CommentsClose CommentsPermalink





(A) means, with respect to a State, an insurer not licensed to engage in the business of insurance in such State; butCommentsClose CommentsPermalink





(B) does not include a risk retention group, as that term is defined in section 2(a)(4) of the Liability Risk Retention Act of 1986 (15 U.S.C. 3901(a)(4)).CommentsClose CommentsPermalink





(12) QUALIFIED RISK MANAGER- The term ‘qualified risk manager’ means, with respect to a policyholder of commercial insurance, a person who meets all of the following requirements:CommentsClose CommentsPermalink





(A) The person is an employee of, or third party consultant retained by, the commercial policyholder.CommentsClose CommentsPermalink





(B) The person provides skilled services in loss prevention, loss reduction, or risk and insurance coverage analysis, and purchase of insurance.CommentsClose CommentsPermalink





(C) The person--CommentsClose CommentsPermalink





(i)(I) has a bachelor’s degree or higher from an accredited college or university in risk management, business administration, finance, economics, or any other field determined by a State insurance commissioner or other State regulatory official or entity to demonstrate minimum competence in risk management; andCommentsClose CommentsPermalink





(II)(aa) has 3 years of experience in risk financing, claims administration, loss prevention, risk and insurance analysis, or purchasing commercial lines of insurance; orCommentsClose CommentsPermalink





(bb) has 1 of the following designations:CommentsClose CommentsPermalink





(AA) a designation as a Chartered Property and Casualty Underwriter (in this subparagraph referred to as ‘CPCU’) issued by the American Institute for CPCU/Insurance Institute of America;CommentsClose CommentsPermalink





(BB) a designation as an Associate in Risk Management (ARM) issued by the American Institute for CPCU/Insurance Institute of America;CommentsClose CommentsPermalink





(CC) a designation as Certified Risk Manager (CRM) issued by the National Alliance for Insurance Education & Research;CommentsClose CommentsPermalink





(DD) a designation as a RIMS Fellow (RF) issued by the Global Risk Management Institute; orCommentsClose CommentsPermalink





(EE) any other designation, certification, or license determined by a State insurance commissioner or other State insurance regulatory official or entity to demonstrate minimum competency in risk management;CommentsClose CommentsPermalink





(ii)(I) has at least 7 years of experience in risk financing, claims administration, loss prevention, risk and insurance coverage analysis, or purchasing commercial lines of insurance; andCommentsClose CommentsPermalink





(II) has any 1 of the designations specified in subitems (AA) through (EE) of clause (i)(II)(bb);CommentsClose CommentsPermalink





(iii) has at least 10 years of experience in risk financing, claims administration, loss prevention, risk and insurance coverage analysis, or purchasing commercial lines of insurance; orCommentsClose CommentsPermalink





(iv) has a graduate degree from an accredited college or university in risk management, business administration, finance, economics, or any other field determined by a State insurance commissioner or other State regulatory official or entity to demonstrate minimum competence in risk management.CommentsClose CommentsPermalink





(13) PREMIUM TAX- The term ‘premium tax’ means, with respect to surplus lines or independently procured insurance coverage, any tax, fee, assessment, or other charge imposed by a government entity directly or indirectly based on any payment made as consideration for an insurance contract for such insurance, including premium deposits, assessments, registration fees, and any other compensation given in consideration for a contract of insurance.CommentsClose CommentsPermalink





(14) SURPLUS LINES BROKER- The term ‘surplus lines broker’ means an individual, firm, or corporation which is licensed in a State to sell, solicit, or negotiate insurance on properties, risks, or exposures located or to be performed in a State with nonadmitted insurers.CommentsClose CommentsPermalink

PART II--REINSURANCE

SEC. 531. REGULATION OF CREDIT FOR REINSURANCE AND REINSURANCE AGREEMENTS.

(a) Credit for Reinsurance- If the State of domicile of a ceding insurer is an NAIC-accredited State, or has financial solvency requirements substantially similar to the requirements necessary for NAIC accreditation, and recognizes credit for reinsurance for the insurer’s ceded risk, then no other State may deny such credit for reinsurance.CommentsClose CommentsPermalink





(b) Additional Preemption of Extraterritorial Application of State Law- In addition to the application of subsection (a), all laws, regulations, provisions, or other actions of a State that is not the domiciliary State of the ceding insurer, except those with respect to taxes and assessments on insurance companies or insurance income, are preempted to the extent that they--CommentsClose CommentsPermalink





(1) restrict or eliminate the rights of the ceding insurer or the assuming insurer to resolve disputes pursuant to contractual arbitration to the extent such contractual provision is not inconsistent with the provisions of title 9, United States Code;CommentsClose CommentsPermalink





(2) require that a certain State’s law shall govern the reinsurance contract, disputes arising from the reinsurance contract, or requirements of the reinsurance contract;CommentsClose CommentsPermalink





(3) attempt to enforce a reinsurance contract on terms different than those set forth in the reinsurance contract, to the extent that the terms are not inconsistent with this part; orCommentsClose CommentsPermalink





(4) otherwise apply the laws of the State to reinsurance agreements of ceding insurers not domiciled in that State.CommentsClose CommentsPermalink

SEC. 532. REGULATION OF REINSURER SOLVENCY.

(a) Domiciliary State Regulation- If the State of domicile of a reinsurer is an NAIC-accredited State or has financial solvency requirements substantially similar to the requirements necessary for NAIC accreditation, such State shall be solely responsible for regulating the financial solvency of the reinsurer.CommentsClose CommentsPermalink





(b) Nondomiciliary States-CommentsClose CommentsPermalink





(1) LIMITATION ON FINANCIAL INFORMATION REQUIREMENTS- If the State of domicile of a reinsurer is an NAIC-accredited State or has financial solvency requirements substantially similar to the requirements necessary for NAIC accreditation, no other State may require the reinsurer to provide any additional financial information other than the information the reinsurer is required to file with its domiciliary State.CommentsClose CommentsPermalink





(2) RECEIPT OF INFORMATION- No provision of this section shall be construed as preventing or prohibiting a State that is not the State of domicile of a reinsurer from receiving a copy of any financial statement filed with its domiciliary State.CommentsClose CommentsPermalink

SEC. 533. DEFINITIONS.

For purposes of this part, the following definitions shall apply:CommentsClose CommentsPermalink





(1) CEDING INSURER- The term ‘ceding insurer’ means an insurer that purchases reinsurance.CommentsClose CommentsPermalink





(2) DOMICILIARY STATE- The terms ‘State of domicile’ and ‘domiciliary State’ mean, with respect to an insurer or reinsurer, the State in which the insurer or reinsurer is incorporated or entered through, and licensed.CommentsClose CommentsPermalink





(3) REINSURANCE- The term ‘reinsurance’ means the assumption by an insurer of all or part of a risk undertaken originally by another insurer.CommentsClose CommentsPermalink





(4) REINSURER-CommentsClose CommentsPermalink





(A) IN GENERAL- The term ‘reinsurer’ means an insurer to the extent that the insurer--CommentsClose CommentsPermalink





(i) is principally engaged in the business of reinsurance;CommentsClose CommentsPermalink





(ii) does not conduct significant amounts of direct insurance as a percentage of its net premiums; andCommentsClose CommentsPermalink





(iii) is not engaged in an ongoing basis in the business of soliciting direct insurance.CommentsClose CommentsPermalink





(B) DETERMINATION- A determination of whether an insurer is a reinsurer shall be made under the laws of the State of domicile in accordance with this paragraph.CommentsClose CommentsPermalink

PART III--RULE OF CONSTRUCTION

SEC. 541. RULE OF CONSTRUCTION.

Nothing in this subtitle or the amendments made by this subtitle shall be construed to modify, impair, or supersede the application of the antitrust laws. Any implied or actual conflict between this subtitle and any amendments to this subtitle and the antitrust laws shall be resolved in favor of the operation of the antitrust laws.CommentsClose CommentsPermalink

SEC. 542. SEVERABILITY.

If any section or subsection of this subtitle, or any application of such provision to any person or circumstance, is held to be unconstitutional, the remainder of this subtitle, and the application of the provision to any other person or circumstance, shall not be affected.CommentsClose CommentsPermalink

TITLE VI--IMPROVEMENTS TO REGULATION OF BANK AND SAVINGS ASSOCIATION HOLDING COMPANIES AND DEPOSITORY INSTITUTIONSCommentsClose CommentsPermalink

SEC. 601. SHORT TITLE.

This title may be cited as the ‘Bank and Savings Association Holding Company and Depository Institution Regulatory Improvements Act of 2010’.CommentsClose CommentsPermalink

SEC. 602. DEFINITION.

In this title, the term ‘commercial firm’ means any entity that derives not less than 15 percent of the consolidated annual gross revenues of the entity, including all affiliates of the entity, from engaging in activities that are not financial in nature or incidental to activities that are financial in nature, as provided in section 4(k) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(k)).CommentsClose CommentsPermalink

SEC. 603. MORATORIUM AND STUDY ON TREATMENT OF CREDIT CARD BANKS, INDUSTRIAL LOAN COMPANIES, AND CERTAIN OTHER COMPANIES UNDER THE BANK HOLDING COMPANY ACT OF 1956.

(a) Moratorium-CommentsClose CommentsPermalink





(1) DEFINITIONS- In this subsection--CommentsClose CommentsPermalink





(A) the term ‘credit card bank’ means an institution described in section 2(c)(2)(F) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(c)(2)(F));CommentsClose CommentsPermalink





(B) the term ‘industrial bank’ means an institution described in section 2(c)(2)(H) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(c)(2)(H)); andCommentsClose CommentsPermalink





(C) the term ‘trust bank’ means an institution described in section 2(c)(2)(D) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(c)(2)(D)).CommentsClose CommentsPermalink





(2) MORATORIUM ON PROVISION OF DEPOSIT INSURANCE- The Corporation may not approve an application for deposit insurance under section 5 of the Federal Deposit Insurance Act (12 U.S.C. 1815) that is received after November 10, 2009, for an industrial bank, a credit card bank, or a trust bank that is directly or indirectly owned or controlled by a commercial firm.CommentsClose CommentsPermalink





(3) CHANGE IN CONTROL-CommentsClose CommentsPermalink





(A) IN GENERAL- Except as provided in subparagraph (B), the appropriate Federal banking agency shall disapprove a change in control, as provided in section 7(j) of the Federal Deposit Insurance Act (12 U.S.C. 1817(j)), of an industrial bank, a credit card bank, or a trust bank if the change in control would result in direct or indirect control of the industrial bank, credit card bank, or trust bank by a commercial firm.CommentsClose CommentsPermalink





(B) EXCEPTIONS- Subparagraph (A) shall not apply to a change in control of an industrial bank, credit card bank, or trust bank that--CommentsClose CommentsPermalink





(i) is in danger of default, as determined by the appropriate Federal banking agency; orCommentsClose CommentsPermalink





(ii) results from the merger or whole acquisition of a commercial firm that directly or indirectly controls the industrial bank, credit card bank, or trust bank in a bona fide merger with or acquisition by another commercial firm, as determined by the appropriate Federal banking agency.CommentsClose CommentsPermalink





(4) SUNSET- This subsection shall cease to have effect 3 years after the date of enactment of this Act.CommentsClose CommentsPermalink





(b) Government Accountability Office Study of Exceptions Under the Bank Holding Company Act of 1956-CommentsClose CommentsPermalink





(1) STUDY REQUIRED- The Comptroller General of the United States shall carry out a study to determine whether it is necessary, in order to strengthen the safety and soundness of institutions or the stability of the financial system, to eliminate the exceptions under section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841) for institutions described in--CommentsClose CommentsPermalink





(A) section 2(a)(5)(E) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(a)(5)(E));CommentsClose CommentsPermalink





(B) section 2(a)(5)(F) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(a)(5)(F));CommentsClose CommentsPermalink





(C) section 2(c)(2)(D) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(c)(2)(D));CommentsClose CommentsPermalink





(D) section 2(c)(2)(F) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(c)(2)(F));CommentsClose CommentsPermalink





(E) section 2(c)(2)(H) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(c)(2)(H)); andCommentsClose CommentsPermalink





(F) section 2(c)(2)(B) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(c)(2)(B)).CommentsClose CommentsPermalink





(2) CONTENT OF STUDY-CommentsClose CommentsPermalink





(A) IN GENERAL- The study required under paragraph (1), with respect to the institutions referenced in each of subparagraphs (A) through (E) of paragraph (1), shall, to the extent feasible be based on information provided to the Comptroller General by the appropriate Federal or State regulator, and shall--CommentsClose CommentsPermalink





(i) identify the types and number of institutions excepted from section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841) under each of the subparagraphs described in subparagraphs (A) through (E) of paragraph (1);CommentsClose CommentsPermalink





(ii) generally describe the size and geographic locations of the institutions described in clause (i);CommentsClose CommentsPermalink





(iii) determine the extent to which the institutions described in clause (i) are held by holding companies that are commercial firms;CommentsClose CommentsPermalink





(iv) determine whether the institutions described in clause (i) have any affiliates that are commercial firms;CommentsClose CommentsPermalink





(v) identify the Federal banking agency responsible for the supervision of the institutions described in clause (i) on and after the transfer date;CommentsClose CommentsPermalink





(vi) determine the adequacy of the Federal bank regulatory framework applicable to each category of institution described in clause (i), including any restrictions (including limitations on affiliate transactions or cross-marketing) that apply to transactions between an institution, the holding company of the institution, and any other affiliate of the institution; andCommentsClose CommentsPermalink





(vii) evaluate the potential consequences of subjecting the institutions described in clause (i) to the requirements of the Bank Holding Company Act of 1956, including with respect to the availability and allocation of credit, the stability of the financial system and the economy, the safe and sound operation of each category of institution, and the impact on the types of activities in which such institutions, and the holding companies of such institutions, may engage.CommentsClose CommentsPermalink





(B) SAVINGS ASSOCIATIONS- With respect to institutions described in paragraph (1)(F), the study required under paragraph (1) shall--CommentsClose CommentsPermalink





(i) determine the adequacy of the Federal bank regulatory framework applicable to such institutions, including any restrictions (including limitations on affiliate transactions or cross-marketing) that apply to transactions between an institution, the holding company of the institution, and any other affiliate of the institution; andCommentsClose CommentsPermalink





(ii) evaluate the potential consequences of subjecting the institutions described in paragraph (1)(F) to the requirements of the Bank Holding Company Act of 1956, including with respect to the availability and allocation of credit, the stability of the financial system and the economy, the safe and sound operation of such institutions, and the impact on the types of activities in which such institutions, and the holding companies of such institutions, may engage.CommentsClose CommentsPermalink





(3) REPORT- Not later than 18 months after the date of enactment of this Act, the Comptroller General shall submit to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives a report on the study required under paragraph (1).CommentsClose CommentsPermalink

SEC. 604. REPORTS AND EXAMINATIONS OF HOLDING COMPANIES; REGULATION OF FUNCTIONALLY REGULATED SUBSIDIARIES.

(a) Reports by Bank Holding Companies- Sections 5(c)(1) of the Bank Holding Company Act of 1956 (12 U.S.C. 1844(c)(1)) is amended--CommentsClose CommentsPermalink





(1) by striking subparagraph (B) and inserting the following:CommentsClose CommentsPermalink





‘(B) USE OF EXISTING REPORTS AND OTHER SUPERVISORY INFORMATION- The appropriate Federal banking agency for a bank holding company shall, to the fullest extent possible, use--CommentsClose CommentsPermalink





‘(i) reports and other supervisory information that the bank holding company or any subsidiary thereof has been required to provide to other Federal or State regulatory agencies;CommentsClose CommentsPermalink





‘(ii) externally audited financial statements of the bank holding company or subsidiary;CommentsClose CommentsPermalink





‘(iii) information otherwise available from Federal or State regulatory agencies; andCommentsClose CommentsPermalink





‘(iv) information that is otherwise required to be reported publicly.’; andCommentsClose CommentsPermalink





(2) by adding at the end the following:CommentsClose CommentsPermalink





‘(C) AVAILABILITY- Upon the request of the appropriate Federal banking agency for a bank holding company, the bank holding company or a subsidiary of the bank holding company shall promptly provide to the appropriate Federal banking agency any information described in clauses (i) through (iii) of subparagraph (B).’.CommentsClose CommentsPermalink





(b) Examinations of Bank Holding Companies- Section 5(c)(2) of the Bank Holding Company Act of 1956 (12 U.S.C. 1844(c)(2)) is amended to read as follows:CommentsClose CommentsPermalink





‘(2) EXAMINATIONS-CommentsClose CommentsPermalink





‘(A) IN GENERAL- The appropriate Federal banking agency for a bank holding company may make examinations of the bank holding company and each subsidiary of the bank holding company in order to--CommentsClose CommentsPermalink





‘(i) inform such appropriate Federal banking agency of--CommentsClose CommentsPermalink





‘(I) the nature of the operations and financial condition of the bank holding company and the subsidiary;CommentsClose CommentsPermalink





‘(II) the financial, operational, and other risks within the bank holding company system that may pose a threat to--CommentsClose CommentsPermalink

‘(aa) the safety and soundness of the bank holding company or of any depository institution subsidiary of the bank holding company; orCommentsClose CommentsPermalink

‘(bb) the stability of the financial system of the United States; andCommentsClose CommentsPermalink

‘(III) the systems of the bank holding company for monitoring and controlling the risks described in subclause (II); andCommentsClose CommentsPermalink





‘(ii) enforce the compliance of the bank holding company and the subsidiary with this Act and any other Federal law that such appropriate Federal banking agency has specific jurisdiction to enforce against the bank holding company or subsidiary.CommentsClose CommentsPermalink





‘(B) USE OF REPORTS TO REDUCE EXAMINATIONS- For purposes of this paragraph, the appropriate Federal banking agency for a bank holding company shall, to the fullest extent possible, rely on--CommentsClose CommentsPermalink





‘(i) examination reports made by other Federal or State regulatory agencies relating to the bank holding company and any subsidiary of the bank holding company; andCommentsClose CommentsPermalink





‘(ii) the reports and other information required under paragraph (1).CommentsClose CommentsPermalink





‘(C) COORDINATION WITH OTHER REGULATORS- The appropriate Federal banking agency for a bank holding company shall--CommentsClose CommentsPermalink





‘(i) provide reasonable notice to, and consult with, the appropriate Federal banking agency or State regulatory agency of a subsidiary that is a depository institution or a functionally regulated subsidiary before commencing an examination of the subsidiary under this section; andCommentsClose CommentsPermalink





‘(ii) to the fullest extent possible, avoid duplication of examination activities, reporting requirements, and requests for information.’.CommentsClose CommentsPermalink





(c) Authority to Regulate Functionally Regulated Subsidiaries of Bank Holding Companies- The Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) is amended--CommentsClose CommentsPermalink





(1) in section 5(c) (12 U.S.C. 1844(c)), by striking paragraphs (3) and (4) and inserting the following:CommentsClose CommentsPermalink





‘(3) [Reserved]CommentsClose CommentsPermalink





‘(4) [Reserved]’; andCommentsClose CommentsPermalink





(2) by striking section 10A (12 U.S.C. 1848a).CommentsClose CommentsPermalink





(d) Acquisitions of Banks- Section 3(c) of the Bank Holding Company Act of 1956 (12 U.S.C. 1842(c)) is amended by adding at the end the following:CommentsClose CommentsPermalink





‘(7) FINANCIAL STABILITY- In every case, the appropriate Federal banking agency of a bank holding company shall take into consideration the extent to which a proposed acquisition, merger, or consolidation would result in greater or more concentrated risks to the stability of the United States banking or financial system.’.CommentsClose CommentsPermalink





(e) Acquisitions of Nonbanks-CommentsClose CommentsPermalink





(1) NOTICE PROCEDURES- Section 4(j)(2)(A) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(j)(2)(A)) is amended by striking ‘or unsound banking practices’ and inserting ‘unsound banking practices, or risk to the stability of the United States banking or financial system’.CommentsClose CommentsPermalink





(2) ACTIVITIES THAT ARE FINANCIAL IN NATURE- Section 4(k)(6)(B) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(k)(6)(B)) is amended to read as follows:CommentsClose CommentsPermalink





‘(B) APPROVAL NOT REQUIRED FOR CERTAIN FINANCIAL ACTIVITIES-CommentsClose CommentsPermalink





‘(i) IN GENERAL- Except as provided in clause (ii), a financial holding company may commence any activity or acquire any company, pursuant to paragraph (4) or any regulation prescribed or order issued under paragraph (5), without prior approval of the appropriate Federal banking agency for the financial holding company.CommentsClose CommentsPermalink





‘(ii) EXCEPTION- A financial holding company may not acquire a company, without the prior approval of the appropriate Federal banking agency for the financial holding company, in a transaction in which the total consolidated assets to be acquired by the financial holding company exceed $25,000,000,000.’.CommentsClose CommentsPermalink





(f) Bank Merger Act Transactions- Section 18(c)(5) of the Federal Deposit Insurance Act (12 U.S.C. 1828(c)(5)) is amended, in the matter immediately following subparagraph (B), by striking ‘and the convenience and needs of the community to be served’ and inserting ‘the convenience and needs of the community to be served, and the risk to the stability of the United States banking or financial system’.CommentsClose CommentsPermalink





(g) Reports by Savings and Loan Holding Companies- Section 10(b)(2) of the Home Owners’ Loan Act (12 U.S.C. 1467a(b)(2) is amended--CommentsClose CommentsPermalink





(1) by striking ‘Each savings’ and inserting the following:CommentsClose CommentsPermalink





‘(A) IN GENERAL- Each savings’; andCommentsClose CommentsPermalink





(2) by adding at the end the following:CommentsClose CommentsPermalink





‘(B) USE OF EXISTING REPORTS AND OTHER SUPERVISORY INFORMATION- The appropriate Federal banking agency for a savings and loan holding company shall, to the fullest extent possible, use--CommentsClose CommentsPermalink





‘(i) reports and other supervisory information that the savings and loan holding company or any subsidiary thereof has been required to provide to other Federal or State regulatory agencies;CommentsClose CommentsPermalink





‘(ii) externally audited financial statements of the savings and loan holding company or subsidiary;CommentsClose CommentsPermalink





‘(iii) information that is otherwise available from Federal or State regulatory agencies; andCommentsClose CommentsPermalink





‘(iv) information that is otherwise required to be reported publicly.CommentsClose CommentsPermalink





‘(C) AVAILABILITY- Upon the request of the appropriate Federal banking agency for a savings and loan holding company, the savings and loan holding company or a subsidiary of the savings and loan holding company shall promptly provide to the appropriate Federal banking agency any information described in clauses (i) through (iii) of subparagraph (B).’.CommentsClose CommentsPermalink





(h) Examination of Savings and Loan Holding Companies-CommentsClose CommentsPermalink





(1) DEFINITIONS- Section 2 of the Home Owners’ Loan Act (12 U.S.C. 1462) is amended by adding at the end the following:CommentsClose CommentsPermalink





‘(10) APPROPRIATE FEDERAL BANKING AGENCY- The term ‘appropriate Federal banking agency’ has the same meaning as in section 3(q) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)).CommentsClose CommentsPermalink





‘(11) FUNCTIONALLY REGULATED SUBSIDIARY- The term ‘functionally regulated subsidiary’ has the same meaning as in section 5(c)(5) of the Bank Holding Company Act of 1956 (12 U.S.C. 1844(c)(5)).’.CommentsClose CommentsPermalink





(2) EXAMINATION- Section 10(b) of the Home Owners’ Loan Act (12 U.S.C. 1467a(b)) is amended by striking paragraph (4) and inserting the following:CommentsClose CommentsPermalink





‘(4) EXAMINATIONS-CommentsClose CommentsPermalink





‘(A) IN GENERAL- The appropriate Federal banking agency for a savings and loan holding company may make examinations of the savings and loan holding company and each subsidiary of the savings and loan holding company system, in order to--CommentsClose CommentsPermalink





‘(i) inform such appropriate Federal banking agency of--CommentsClose CommentsPermalink





‘(I) the nature of the operations and financial condition of the savings and loan holding company and the subsidiary;CommentsClose CommentsPermalink





‘(II) the financial, operational, and other risks within the savings and loan holding company that may pose a threat to--CommentsClose CommentsPermalink

‘(aa) the safety and soundness of the savings and loan holding company or of any depository institution subsidiary of the savings and loan holding company; orCommentsClose CommentsPermalink

‘(bb) the stability of the financial system of the United States; andCommentsClose CommentsPermalink

‘(III) the systems of the savings and loan holding company for monitoring and controlling the risks described in subclause (II); andCommentsClose CommentsPermalink





‘(ii) enforce the compliance of the savings and loan holding company and the subsidiary with this Act and any other Federal law that such appropriate Federal banking agency has specific jurisdiction to enforce against the savings and loan holding company or subsidiary.CommentsClose CommentsPermalink





‘(B) USE OF REPORTS TO REDUCE EXAMINATIONS- For purposes of this subsection, the appropriate Federal banking agency for a savings and loan holding company shall, to the fullest extent possible, rely on--CommentsClose CommentsPermalink





‘(i) the examination reports made by other Federal or State regulatory agencies relating to the savings and loan holding company and any subsidiary; andCommentsClose CommentsPermalink





‘(ii) the reports and other information required under paragraph (2).CommentsClose CommentsPermalink





‘(C) COORDINATION WITH OTHER REGULATORS- The appropriate Federal banking agency for a savings and loan holding company shall--CommentsClose CommentsPermalink





‘(i) provide reasonable notice to, and consult with, the appropriate Federal banking agency or State regulatory agency of a subsidiary that is a depository institution or a functionally regulated subsidiary before commencing an examination of the subsidiary under this section; andCommentsClose CommentsPermalink





‘(ii) to the fullest extent possible, avoid duplication of examination activities, reporting requirements, and requests for information.’.CommentsClose CommentsPermalink





(i) Effective Date- The amendments made by this section shall take effect on the transfer date.CommentsClose CommentsPermalink

SEC. 605. ASSURING CONSISTENT OVERSIGHT OF PERMISSIBLE ACTIVITIES OF DEPOSITORY INSTITUTION SUBSIDIARIES OF HOLDING COMPANIES.

Section 6 of the Bank Holding Company Act of 1956 (12 U.S.C. 1845) is amended to read as follows:CommentsClose CommentsPermalink

‘SEC. 6. ASSURING CONSISTENT OVERSIGHT OF PERMISSIBLE ACTIVITIES OF DEPOSITORY INSTITUTION SUBSIDIARIES OF HOLDING COMPANIES.

‘(a) Definitions-CommentsClose CommentsPermalink





‘(1) DEFINITIONS- In this section--CommentsClose CommentsPermalink





‘(A) the term ‘depository institution holding company’ has the same meaning as in section 3(w) of the Federal Deposit Insurance Act (12 U.S.C. 1813(w));CommentsClose CommentsPermalink





‘(B) the term ‘functionally regulated subsidiary’ has the same meaning as in section 5(c)(5); andCommentsClose CommentsPermalink





‘(C) the term ‘lead Federal banking agency’ means--CommentsClose CommentsPermalink





‘(i) the Office of the Comptroller of the Currency, in the case of any depository institution holding company having--CommentsClose CommentsPermalink





‘(I) a subsidiary that is an insured depository institution, if all such insured depository institutions are Federal depository institutions; orCommentsClose CommentsPermalink





‘(II) a subsidiary that is a Federal depository institution and a subsidiary that is a State depository institution, if the total consolidated assets of all subsidiaries that are Federal depository institutions exceed the total consolidated assets of all subsidiaries that are State depository institutions; andCommentsClose CommentsPermalink





‘(ii) the Federal Deposit Insurance Corporation, in the case of any depository institution holding company having--CommentsClose CommentsPermalink





‘(I) a subsidiary that is an insured depository institution, if all such insured depository institutions are State depository institutions; orCommentsClose CommentsPermalink





‘(II) a subsidiary that is a Federal depository institution and a subsidiary that is a State depository institution, if the total consolidated assets of all subsidiaries that are State depository institutions exceed the total consolidated assets of all subsidiaries that are Federal depository institutions.CommentsClose CommentsPermalink





‘(2) DETERMINATION OF TOTAL CONSOLIDATED ASSETS- For purposes of paragraph (1)(A), the total consolidated assets of a depository institution shall be determined in the same manner that total consolidated assets of depository institutions are determined for purposes of section 3(q) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)).CommentsClose CommentsPermalink





‘(b) Lead Agency Supervision-CommentsClose CommentsPermalink





‘(1) IN GENERAL- The lead Federal banking agency for each depository institution holding company shall make examinations of the activities of each nondepository institution subsidiary (other than a functionally regulated subsidiary) of the depository institution holding company that are permissible for depository institution subsidiaries of the depository institution holding company, to determine whether the activities--CommentsClose CommentsPermalink





‘(A) present safety and soundness risks to any depository institution subsidiary of the depository institution holding company;CommentsClose CommentsPermalink





‘(B) are conducted in accordance with applicable law; andCommentsClose CommentsPermalink





‘(C) are subject to appropriate systems for monitoring and controlling the financial, operating, and other risks of the activity and protecting the depository institution subsidiaries of the holding company.CommentsClose CommentsPermalink





‘(2) PROCESS FOR EXAMINATION- An examination under paragraph (1) shall be carried out under the authority of the lead Federal banking agency, as if the nondepository institution subsidiary were an insured depository institution for which the lead Federal banking agency is the appropriate Federal banking agency.CommentsClose CommentsPermalink





‘(c) Coordination- For each depository institution holding company for which the Board of Governors is the appropriate Federal banking agency, the lead Federal banking agency of the depository institution holding company shall coordinate the supervision of the activities of subsidiaries described in subsection (b) with the Board of Governors, in a manner that--CommentsClose CommentsPermalink





‘(1) avoids duplication;CommentsClose CommentsPermalink





‘(2) shares information relevant to the supervision of the depository institution holding company by each agency;CommentsClose CommentsPermalink





‘(3) achieves the objectives of subsection (b); andCommentsClose CommentsPermalink





‘(4) ensures that the depository institution holding company and the subsidiaries of the depository institution holding company are not subject to conflicting supervisory demands by the 2 agencies.CommentsClose CommentsPermalink





‘(d) Referrals for Enforcement-CommentsClose CommentsPermalink





‘(1) RECOMMENDATION OF ACTION BY BOARD OF GOVERNORS- The lead Federal banking agency for a depository institution holding company, based on information obtained pursuant to the responsibilities of the agency under subsection (b), may submit to the Board of Governors, in writing, a recommendation that the Board of Governors take enforcement action against a nondepository institution subsidiary (other than a functionally regulated subsidiary) of the depository institution holding company, together with an explanation of the concerns giving rise to the recommendation.CommentsClose CommentsPermalink





‘(2) BACK-UP AUTHORITY OF THE LEAD FEDERAL BANKING AGENCY- If, within the 60-day period beginning on the date on which the Board of Governors receives a recommendation under paragraph (1), the Board of Governors does not take enforcement action against a nondepository institution subsidiary or provide a plan for enforcement action that is acceptable to the lead Federal banking agency, the lead Federal banking agency (upon the authorization of the Comptroller, or the Federal Deposit Insurance Corporation, upon a vote of its members, as applicable) may take the recommended enforcement action, in the same manner as if the subsidiary were an insured depository institution for which the lead Federal banking agency is the appropriate Federal banking agency.’.CommentsClose CommentsPermalink

SEC. 606. REQUIREMENTS FOR FINANCIAL HOLDING COMPANIES TO REMAIN WELL CAPITALIZED AND WELL MANAGED.

(a) Amendment- Section 4(l)(1) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(l)(1)) is amended--CommentsClose CommentsPermalink





(1) in subparagraph (B), by striking ‘and’ at the end;CommentsClose CommentsPermalink





(2) by redesignating subparagraph (C) as subparagraph (D);CommentsClose CommentsPermalink





(3) by inserting after subparagraph (B) the following:CommentsClose CommentsPermalink





‘(C) the bank holding company is well capitalized and well managed; and’; andCommentsClose CommentsPermalink





(4) in subparagraph (D)(ii), as so redesignated, by striking ‘subparagraphs (A) and (B)’ and inserting ‘subparagraphs (A), (B), and (C)’.CommentsClose CommentsPermalink





(b) Effective Date- The amendments made by this section shall take effect on the transfer date.CommentsClose CommentsPermalink

SEC. 607. STANDARDS FOR INTERSTATE ACQUISITIONS.

(a) Acquisition of Banks- Section 3(d)(1)(A) of the Bank Holding Company Act of 1956 (12 U.S.C. 1842(d)(1)(A)) is amended by striking ‘adequately capitalized and adequately managed’ and inserting ‘well capitalized and well managed’.CommentsClose CommentsPermalink





(b) Interstate Bank Mergers- Section 44(b)(4)(B) of the Federal Deposit Insurance Act (12 U.S.C. 1831u(b)(4)(B)) is amended by striking ‘will continue to be adequately capitalized and adequately managed’ and inserting ‘will be well capitalized and well managed’.CommentsClose CommentsPermalink





(c) Effective Date- The amendments made by this section shall take effect on the transfer date.CommentsClose CommentsPermalink

SEC. 608. ENHANCING EXISTING RESTRICTIONS ON BANK TRANSACTIONS WITH AFFILIATES.

(a) Affiliate Transactions- Section 23A of the Federal Reserve Act (12 U.S.C. 371c) is amended--CommentsClose CommentsPermalink





(1) in subsection (b)--CommentsClose CommentsPermalink





(A) in paragraph (1), by striking subparagraph (D) and inserting the following:CommentsClose CommentsPermalink





‘(D) any investment fund with respect to which a member bank or affiliate thereof is an investment adviser; and’; andCommentsClose CommentsPermalink





(B) in paragraph (7)--CommentsClose CommentsPermalink





(i) in subparagraph (A), by inserting before the semicolon at the end the following: ‘, including a purchase of assets subject to an agreement to repurchase’;CommentsClose CommentsPermalink





(ii) in subparagraph (C), by striking ‘, including assets subject to an agreement to repurchase,’;CommentsClose CommentsPermalink





(iii) in subparagraph (D)--CommentsClose CommentsPermalink





(I) by inserting ‘or other debt obligations’ after ‘acceptance of securities’; andCommentsClose CommentsPermalink





(II) by striking ‘or’ at the end; andCommentsClose CommentsPermalink





(iv) by adding at the end the following:CommentsClose CommentsPermalink





‘(F) a transaction with an affiliate that involves the borrowing or lending of securities, to the extent that the transaction causes a member bank or a subsidiary to have credit exposure to the affiliate; orCommentsClose CommentsPermalink





‘(G) a derivative transaction, as defined in paragraph (3) of section 5200(b) of the Revised Statutes of the United States (12 U.S.C. 84(b)), with an affiliate, to the extent that the transaction causes a member bank or a subsidiary to have credit exposure to the affiliate;’;CommentsClose CommentsPermalink





(2) in subsection (c)--CommentsClose CommentsPermalink





(A) in paragraph (1)--CommentsClose CommentsPermalink





(i) in the matter preceding subparagraph (A), by striking ‘subsidiary’ and all that follows through ‘time of the transaction’ and inserting ‘subsidiary, and any credit exposure of a member bank or a subsidiary to an affiliate resulting from a securities borrowing or lending transaction, or a derivative transaction, shall be secured at all times’; andCommentsClose CommentsPermalink





(ii) in each of subparagraphs (A) through (D), by striking ‘or letter of credit’ and inserting ‘letter of credit, or credit exposure’;CommentsClose CommentsPermalink





(B) by striking paragraph (2);CommentsClose CommentsPermalink





(C) by redesignating paragraphs (3) through (5) as paragraphs (2) through (4), respectively;CommentsClose CommentsPermalink





(D) in paragraph (2), as so redesignated, by inserting before the period at the end ‘, or credit exposure to an affiliate resulting from a securities borrowing or lending transaction, or derivative transaction’; andCommentsClose CommentsPermalink





(E) in paragraph (3), as so redesignated--CommentsClose CommentsPermalink





(i) by inserting ‘or other debt obligations’ after ‘securities’; andCommentsClose CommentsPermalink





(ii) by striking ‘or guarantee’ and all that follows through ‘behalf of,’ and inserting ‘guarantee, acceptance, or letter of credit issued on behalf of, or credit exposure from a securities borrowing or lending transaction, or derivative transaction to,’;CommentsClose CommentsPermalink





(3) in subsection (d)(4), in the matter preceding subparagraph (A), by striking ‘or issuing’ and all that follows through ‘behalf of,’ and inserting ‘issuing a guarantee, acceptance, or letter of credit on behalf of, or having credit exposure resulting from a securities borrowing or lending transaction, or derivative transaction to,’; andCommentsClose CommentsPermalink





(4) in subsection (f)--CommentsClose CommentsPermalink





(A) in paragraph (2)--CommentsClose CommentsPermalink





(i) by striking ‘or order’;CommentsClose CommentsPermalink





(ii) by striking ‘if it finds’ and all that follows through the end of the paragraph and inserting the following: ‘if--CommentsClose CommentsPermalink





‘(i) the Board finds the exemption to be in the public interest and consistent with the purposes of this section, and notifies the Federal Deposit Insurance Corporation of such finding; andCommentsClose CommentsPermalink





‘(ii) before the end of the 60-day period beginning on the date on which the Federal Deposit Insurance Corporation receives notice of the finding under clause (i), the Federal Deposit Insurance Corporation does not object, in writing, to the finding, based on a determination that the exemption presents an unacceptable risk to the Deposit Insurance Fund.’;CommentsClose CommentsPermalink





(iii) by striking the Board and inserting the following:CommentsClose CommentsPermalink





‘(A) IN GENERAL- The Board’; andCommentsClose CommentsPermalink





(iv) by adding at the end the following:CommentsClose CommentsPermalink





‘(B) ADDITIONAL EXEMPTIONS-CommentsClose CommentsPermalink





‘(i) NATIONAL BANKS- The Comptroller of the Currency may, by order, exempt a transaction of a national bank from the requirements of this section if--CommentsClose CommentsPermalink





‘(I) the Board and the Office of the Comptroller of the Currency jointly find the exemption to be in the public interest and consistent with the purposes of this section and notify the Federal Deposit Insurance Corporation of such finding; andCommentsClose CommentsPermalink





‘(II) before the end of the 60-day period beginning on the date on which the Federal Deposit Insurance Corporation receives notice of the finding under subclause (I), the Federal Deposit Insurance Corporation does not object, in writing, to the finding, based on a determination that the exemption presents an unacceptable risk to the Deposit Insurance Fund.CommentsClose CommentsPermalink





‘(ii) STATE BANKS- The Federal Deposit Insurance Corporation may, by order, exempt a transaction of a State bank from the requirements of this section if--CommentsClose CommentsPermalink





‘(I) the Board and the Federal Deposit Insurance Corporation jointly find that the exemption is in the public interest and consistent with the purposes of this section; andCommentsClose CommentsPermalink





‘(II) the Federal Deposit Insurance Corporation finds that the exemption does not present an unacceptable risk to the Deposit Insurance Fund.’; andCommentsClose CommentsPermalink





(B) by adding at the end the following:CommentsClose CommentsPermalink





‘(4) AMOUNTS OF COVERED TRANSACTIONS- The Board may issue such regulations or interpretations as the Board determines are necessary or appropriate with respect to the manner in which a netting agreement may be taken into account in determining the amount of a covered transaction between a member bank or a subsidiary and an affiliate, including the extent to which netting agreements between a member bank or a subsidiary and an affiliate may be taken into account in determining whether a covered transaction is fully secured for purposes of subsection (d)(4). An interpretation under this paragraph with respect to a specific member bank, subsidiary, or affiliate shall be issued jointly with the appropriate Federal banking agency for such member bank, subsidiary, or affiliate.’.CommentsClose CommentsPermalink





(b) Transactions With Affiliates- Section 23B(e) of the Federal Reserve Act (12 U.S.C. 371c-1(e)) is amended--CommentsClose CommentsPermalink





(1) by striking the undesignated matter following subparagraph (B);CommentsClose CommentsPermalink





(2) by redesignating subparagraphs (A) and (B) as clauses (i) and (ii), respectively, and adjusting the clause margins accordingly;CommentsClose CommentsPermalink





(3) by redesignating paragraphs (1) and (2) as subparagraphs (A) and (B), respectively, and adjusting the subparagraph margins accordingly;CommentsClose CommentsPermalink





(4) by striking ‘The Board’ and inserting the following:CommentsClose CommentsPermalink





‘(1) IN GENERAL- The Board’;CommentsClose CommentsPermalink





(5) in paragraph (1)(B), as so redesignated--CommentsClose CommentsPermalink





(A) in the matter preceding clause (i), by inserting before ‘regulations’ the following: ‘subject to paragraph (2), if the Board finds that an exemption or exclusion is in the public interest and is consistent with the purposes of this section, and notifies the Federal Deposit Insurance Corporation of such finding,’; andCommentsClose CommentsPermalink





(B) in clause (ii), by striking the comma at the end and inserting a period; andCommentsClose CommentsPermalink





(6) by adding at the end the following:CommentsClose CommentsPermalink





‘(2) EXCEPTION- The Board may grant an exemption or exclusion under this subsection only if, during the 60-day period beginning on the date of receipt of notice of the finding from the Board under paragraph (1)(B), the Federal Deposit Insurance Corporation does not object, in writing, to such exemption or exclusion, based on a determination that the exemption presents an unacceptable risk to the Deposit Insurance Fund.’.CommentsClose CommentsPermalink





(c) Home Owners’ Loan Act- Section 11 of the Home Owners’ Loan Act (12 U.S.C. 1468) is amended by adding at the end the following:CommentsClose CommentsPermalink





‘(d) Exemptions-CommentsClose CommentsPermalink





‘(1) FEDERAL SAVINGS ASSOCIATIONS- The Comptroller of the Currency may, by order, exempt a transaction of a Federal savings association from the requirements of this section if--CommentsClose CommentsPermalink





‘(A) the Board and the Office of the Comptroller of the Currency jointly find the exemption to be in the public interest and consistent with the purposes of this section and notify the Federal Deposit Insurance Corporation of such finding; andCommentsClose CommentsPermalink





‘(B) before the end of the 60-day period beginning on the date on which the Federal Deposit Insurance Corporation receives notice of the finding under subparagraph (A), the Federal Deposit Insurance Corporation does not object, in writing, to the finding, based on a determination that the exemption presents an unacceptable risk to the Deposit Insurance Fund.CommentsClose CommentsPermalink





‘(2) STATE SAVINGS ASSOCIATION- The Federal Deposit Insurance Corporation may, by order, exempt a transaction of a State savings association from the requirements of this section if the Board and the Federal Deposit Insurance Corporation jointly find that--CommentsClose CommentsPermalink





‘(A) the exemption is in the public interest and consistent with the purposes of this section; andCommentsClose CommentsPermalink





‘(B) the exemption does not present an unacceptable risk to the Deposit Insurance Fund.’.CommentsClose CommentsPermalink





(d) Effective Date- The amendments made by this section shall take effect 1 year after the transfer date.CommentsClose CommentsPermalink

SEC. 609. ELIMINATING EXCEPTIONS FOR TRANSACTIONS WITH FINANCIAL SUBSIDIARIES.

(a) Amendment- Section 23A(e) of the Federal Reserve Act (12 U.S.C. 371c(e)) is amended--CommentsClose CommentsPermalink





(1) by striking paragraph (3); andCommentsClose CommentsPermalink





(2) by redesignating paragraph (4) as paragraph (3).CommentsClose CommentsPermalink





(b) Prospective Application of Amendment- The amendments made by this section shall apply with respect to any covered transaction between a bank and a subsidiary of the bank, as those terms are defined in section 23A of the Federal Reserve Act (12 U.S.C. 371c), that is entered into on or after the date of enactment of this Act.CommentsClose CommentsPermalink





(c) Effective Date- The amendments made by this section shall take effect 1 year after the transfer date.CommentsClose CommentsPermalink

SEC. 610. LENDING LIMITS APPLICABLE TO CREDIT EXPOSURE ON DERIVATIVE TRANSACTIONS, REPURCHASE AGREEMENTS, REVERSE REPURCHASE AGREEMENTS, AND SECURITIES LENDING AND BORROWING TRANSACTIONS.

(a) National Banks- Section 5200(b) of the Revised Statutes of the United States (12 U.S.C. 84(b)) is amended--CommentsClose CommentsPermalink





(1) in paragraph (1), by striking ‘shall include’ and all that follows through the end of the paragraph and inserting the following: ‘shall include--CommentsClose CommentsPermalink





‘(A) all direct or indirect advances of funds to a person made on the basis of any obligation of that person to repay the funds or repayable from specific property pledged by or on behalf of the person;CommentsClose CommentsPermalink





‘(B) to the extent specified by the Comptroller of the Currency, any liability of a national banking association to advance funds to or on behalf of a person pursuant to a contractual commitment; andCommentsClose CommentsPermalink





‘(C) any credit exposure to a person arising from a derivative transaction, repurchase agreement, reverse repurchase agreement, securities lending transaction, or securities borrowing transaction between the national banking association and the person;’;CommentsClose CommentsPermalink





(2) in paragraph (2), by striking the period at the end and inserting ‘; and’; andCommentsClose CommentsPermalink





(3) by adding at the end the following:CommentsClose CommentsPermalink





‘(3) the term ‘derivative transaction’ includes any transaction that is a contract, agreement, swap, warrant, note, or option that is based, in whole or in part, on the value of, any interest in, or any quantitative measure or the occurrence of any event relating to, one or more commodities, securities, currencies, interest or other rates, indices, or other assets.’.CommentsClose CommentsPermalink





(b) Savings Associations- Section 5(u)(3) of the Home Owners’ Loan Act (12 U.S.C. 1464(u)(3)) is amended by striking ‘Director’ each place that term appears and inserting ‘Comptroller of the Currency’.CommentsClose CommentsPermalink





(c) Effective Date- The amendments made by this section shall take effect 1 year after the transfer date.CommentsClose CommentsPermalink

SEC. 611. APPLICATION OF NATIONAL BANK LENDING LIMITS TO INSURED STATE BANKS.

(a) Amendment- Section 18 of the Federal Deposit Insurance Act (12 U.S.C. 1828) is amended by adding at the end the following:CommentsClose CommentsPermalink





‘(y) Application of Lending Limits to Insured State Banks- Section 5200 of the Revised Statutes of the United States (12 U.S.C. 84) shall apply to each insured State bank, in the same manner and to the same extent as if the insured State bank were a national banking association.’.CommentsClose CommentsPermalink





(b) Effective Date- The amendment made by this section shall take effect 1 year after the transfer date.CommentsClose CommentsPermalink

SEC. 612. RESTRICTION ON CONVERSIONS OF TROUBLED BANKS.

(a) Conversion of a National Banking Association to a State Bank- The Act entitled ‘An Act to provide for the conversion of national banking associations into and their merger or consolidation with State banks, and for other purposes.’ (12 U.S.C. 214 et seq.) is amended by adding at the end the following:CommentsClose CommentsPermalink

‘SEC. 10. PROHIBITION ON CONVERSION.

‘A national banking association may not convert to a State bank or State savings association during any period in which the national banking association is subject to a cease and desist order (or other formal enforcement order) issued by, or a memorandum of understanding entered into with, the Comptroller of the Currency with respect to a significant supervisory matter.’.CommentsClose CommentsPermalink





(b) Conversion of a State Bank to a National Bank- Section 5154 of the Revised Statutes of the United States (12 U.S.C. 35) is amended by adding at the end the following: ‘The Comptroller of the Currency may not approve the conversion of a State bank or State savings association to a national banking association during any period in which the State bank or State savings association is subject to a cease and desist order (or other formal enforcement order) issued by, or a memorandum of understanding entered into with, a State bank supervisor or the appropriate Federal banking agency with respect to a significant supervisory matter.’.CommentsClose CommentsPermalink





(c) Conversion of a Federal Savings Association to a National or State Bank or State Savings Association- Section 5(i) of the Home Owners’ Loan Act (12 U.S.C. 1464(i)) is amended by adding at the end the following:CommentsClose CommentsPermalink





‘(6) LIMITATION ON CERTAIN CONVERSIONS BY FEDERAL SAVINGS ASSOCIATIONS- A Federal savings association may not convert to a national bank or State bank or State savings association during any period in which the Federal savings association is subject to a cease and desist order (or other formal enforcement order) issued by, or a memorandum of understanding entered into with, the Office of Thrift Supervision or the Comptroller of the Currency with respect to a significant supervisory matter.’.CommentsClose CommentsPermalink

SEC. 613. DE NOVO BRANCHING INTO STATES.

(a) National Banks- Section 5155(g)(1)(A) of the Revised Statutes of the United States (12 U.S.C. 36(g)(1)(A)) is amended to read as follows:CommentsClose CommentsPermalink





‘(A) the law of the State in which the branch is located, or is to be located, would permit establishment of the branch, if the national bank were a State bank chartered by such State; and’.CommentsClose CommentsPermalink





(b) State Insured Banks- Section 18(d)(4)(A)(i) of the Federal Deposit Insurance Act (12 U.S.C. 1828(d)(4)(A)(i)) is amended to read as follows:CommentsClose CommentsPermalink





‘(i) the law of the State in which the branch is located, or is to be located, would permit establishment of the branch, if the bank were a State bank chartered by such State; and’.CommentsClose CommentsPermalink

SEC. 614. LENDING LIMITS TO INSIDERS.

(a) Extensions of Credit- Section 22(h)(9)(D)(i) of the Federal Reserve Act (12 U.S.C. 375b(9)(D)(i)) is amended--CommentsClose CommentsPermalink





(1) by striking the period at the end and inserting ‘; or’;CommentsClose CommentsPermalink





(2) by striking ‘a person’ and inserting ‘the person’;CommentsClose CommentsPermalink





(3) by striking ‘extends credit by making’ and inserting the following: ‘extends credit to a person by--CommentsClose CommentsPermalink





‘(I) making’; andCommentsClose CommentsPermalink





(4) by adding at the end the following:CommentsClose CommentsPermalink





‘(II) having credit exposure to the person arising from a derivative transaction (as defined in section 5200(b) of the Revised Statutes of the United States (12 U.S.C. 84(b))), repurchase agreement, reverse repurchase agreement, securities lending transaction, or securities borrowing transaction between the member bank and the person.’.CommentsClose CommentsPermalink





(b) Effective Date- The amendments made by this section shall take effect 1 year after the transfer date.CommentsClose CommentsPermalink

SEC. 615. LIMITATIONS ON PURCHASES OF ASSETS FROM INSIDERS.

(a) Amendment to the Federal Deposit Insurance Act- Section 18 of the Federal Deposit Insurance Act (12 U.S.C. 1828) is amended by adding at the end the following:CommentsClose CommentsPermalink





‘(z) General Prohibition on Sale of Assets-CommentsClose CommentsPermalink





‘(1) IN GENERAL- An insured depository institution may not purchase an asset from, or sell an asset to, an executive officer, director, or principal shareholder of the insured depository institution, or any related interest of such person (as such terms are defined in section 22(h) of Federal Reserve Act), unless--CommentsClose CommentsPermalink





‘(A) the transaction is on market terms; andCommentsClose CommentsPermalink





‘(B) if the transaction represents more than 10 percent of the capital stock and surplus of the insured depository institution, the transaction has been approved in advance by a majority of the members of the board of directors of the insured depository institution who do not have an interest in the transaction.CommentsClose CommentsPermalink





‘(2) RULEMAKING- The Board of Governors of the Federal Reserve System may issue such rules as may be necessary to define terms and to carry out the purposes this subsection. Before proposing or adopting a rule under this paragraph, the Board of Governors of the Federal Reserve System shall consult with the Comptroller of the Currency and the Corporation as to the terms of the rule.’.CommentsClose CommentsPermalink





(b) Amendments to the Federal Reserve Act- Section 22(d) of the Federal Reserve Act (12 U.S.C. 375) is amended to read as follows:CommentsClose CommentsPermalink





‘(d) [Reserved]’.CommentsClose CommentsPermalink





(c) Effective Date- The amendments made by this section shall take effect on the transfer date.CommentsClose CommentsPermalink

SEC. 616. REGULATIONS REGARDING CAPITAL LEVELS OF HOLDING COMPANIES.

(a) Capital Levels of Bank Holding Companies- Section 5(b) of the Bank Holding Company Act of 1956 (12 U.S.C. 1844(b)) is amended by inserting after ‘regulations’ the following: ‘(including regulations relating to the capital requirements of bank holding companies)’.CommentsClose CommentsPermalink





(b) Capital Levels of Savings and Loan Holding Companies- Section 10(g)(1) of the Home Owners’ Loan Act (12 U.S.C. 1467a(g)(1)) is amended by inserting after ‘orders’ the following: ‘(including regulations relating to capital requirements for savings and loan holding companies)’.CommentsClose CommentsPermalink





(c) Source of Strength- The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) is amended by inserting after section 38 (12 U.S.C. 1831o) the following:CommentsClose CommentsPermalink

‘SEC. 38A. SOURCE OF STRENGTH.

‘(a) Holding Companies- The appropriate Federal banking agency for a bank holding company or savings and loan holding company shall require the bank holding company or savings and loan holding company to serve as a source of financial strength for any subsidiary of the bank holding company or savings and loan holding company that is a depository institution.CommentsClose CommentsPermalink





‘(b) Other Companies- If an insured depository institution is not the subsidiary of a bank holding company or savings and loan holding company, the appropriate Federal banking agency for the insured depository institution shall require any company that directly or indirectly controls the insured depository institution to serve as a source of financial strength for such institution.CommentsClose CommentsPermalink





‘(c) Reports- The appropriate Federal banking agency for an insured depository institution described in subsection (b) may, from time to time, require the company, or a company that directly or indirectly controls the insured depository institution to submit a report, under oath, for the purposes of--CommentsClose CommentsPermalink





‘(1) assessing the ability of such company to comply with the requirement under subsection (b); andCommentsClose CommentsPermalink





‘(2) enforcing the compliance of such company with the requirement under subsection (b).CommentsClose CommentsPermalink





‘(d) Rules- Not later than 1 year after the transfer date, as defined in section 311 of the Enhancing Financial Institution Safety and Soundness Act of 2010, the appropriate Federal banking agencies shall jointly issue final rules to carry out this section.CommentsClose CommentsPermalink





‘(e) Definition- In this section, the term ‘source of financial strength’ means the ability of a company that directly or indirectly owns or controls an insured depository institution to provide financial assistance to such insured depository institution in the event of the financial distress of the insured depository institution.’.CommentsClose CommentsPermalink





(d) Effective Date- The amendments made by this section shall take effect on the transfer date.CommentsClose CommentsPermalink

SEC. 617. ELIMINATION OF ELECTIVE INVESTMENT BANK HOLDING COMPANY FRAMEWORK.

(a) Amendment- Section 17 of the Securities Exchange Act of 1934 (15 U.S.C. 78q) is amended--CommentsClose CommentsPermalink





(1) by striking subsection (i); andCommentsClose CommentsPermalink





(2) by redesignating subsections (j) and (k) as subsections (i) and (j), respectively.CommentsClose CommentsPermalink





(b) Effective Date- The amendments made by this section shall take effect on the transfer date.CommentsClose CommentsPermalink

SEC. 618. SECURITIES HOLDING COMPANIES.

(a) Definitions- In this section--CommentsClose CommentsPermalink





(1) the term ‘associated person of a securities holding company’ means a person directly or indirectly controlling, controlled by, or under common control with, a securities holding company;CommentsClose CommentsPermalink





(2) the term ‘foreign bank’ has the same meaning as in section 1(b)(7) of the International Banking Act of 1978 (12 U.S.C. 3101(b)(7));CommentsClose CommentsPermalink





(3) the term ‘insured bank’ has the same meaning as in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813);CommentsClose CommentsPermalink





(4) the term ‘securities holding company’--CommentsClose CommentsPermalink





(A) means--CommentsClose CommentsPermalink





(i) a person (other than a natural person) that owns or controls 1 or more brokers or dealers registered with the Commission; andCommentsClose CommentsPermalink





(ii) the associated persons of a person described in clause (i); andCommentsClose CommentsPermalink





(B) does not include a person that is--CommentsClose CommentsPermalink





(i) a nonbank financial company supervised by the Board under title I;CommentsClose CommentsPermalink





(ii) an affiliate of an insured bank (other than an institution described in subparagraphs (D), (F), or (H) of section 2(c)(2) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(c)(2)) or an affiliate of a savings association;CommentsClose CommentsPermalink





(iii) a foreign bank, foreign company, or company that is described in section 8(a) of the International Banking Act of 1978 (12 U.S.C. 3106(a));CommentsClose CommentsPermalink





(iv) a foreign bank that controls, directly or indirectly, a corporation chartered under section 25A of the Federal Reserve Act (12 U.S.C. 611 et seq.); orCommentsClose CommentsPermalink





(v) subject to comprehensive consolidated supervision by a foreign regulator;CommentsClose CommentsPermalink





(5) the term ‘supervised securities holding company’ means a securities holding company that is supervised by the Board of Governors under this section; andCommentsClose CommentsPermalink





(6) the terms ‘affiliate’, ‘bank’, ‘bank holding company’, ‘company’, ‘control’, ‘savings association’, and ‘subsidiary’ have the same meanings as in section 2 of the Bank Holding Company Act of 1956.CommentsClose CommentsPermalink





(b) Supervision of a Securities Holding Company Not Having a Bank or Savings Association Affiliate-CommentsClose CommentsPermalink





(1) IN GENERAL- A securities holding company that is required by a foreign regulator or provision of foreign law to be subject to comprehensive consolidated supervision may register with the Board of Governors under paragraph (2) to become a supervised securities holding company. Any securities holding company filing such a registration shall be supervised in accordance with this section, and shall comply with the rules and orders prescribed by the Board of Governors applicable to supervised securities holding companies.CommentsClose CommentsPermalink





(2) REGISTRATION AS A SUPERVISED SECURITIES HOLDING COMPANY-CommentsClose CommentsPermalink





(A) REGISTRATION- A securities holding company that elects to be subject to comprehensive consolidated supervision shall register by filing with the Board of Governors such information and documents as the Board of Governors, by regulation, may prescribe as necessary or appropriate in furtherance of the purposes of this section.CommentsClose CommentsPermalink





(B) EFFECTIVE DATE- A securities holding company that registers under subparagraph (A) shall be deemed to be a supervised securities holding company, effective on the date that is 45 days after the date of receipt of the registration information and documents under subparagraph (A) by the Board of Governors, or within such shorter period as the Board of Governors, by rule or order, may determine.CommentsClose CommentsPermalink





(c) Supervision of Securities Holding Companies-CommentsClose CommentsPermalink





(1) RECORDKEEPING AND REPORTING-CommentsClose CommentsPermalink





(A) RECORDKEEPING AND REPORTING REQUIRED- Each supervised securities holding company and each affiliate of a supervised securities holding company shall make and keep for periods determined by the Board of Governors such records, furnish copies of such records, and make such reports, as the Board of Governors determines to be necessary or appropriate to carry out this section, to prevent evasions thereof, and to monitor compliance by the supervised securities holding company or affiliate with applicable provisions of law.CommentsClose CommentsPermalink





(B) FORM AND CONTENTS-CommentsClose CommentsPermalink





(i) IN GENERAL- Any record or report required to be made, furnished, or kept under this paragraph shall--CommentsClose CommentsPermalink





(I) be prepared in such form and according to such specifications (including certification by a registered public accounting firm), as the Board of Governors may require; andCommentsClose CommentsPermalink





(II) be provided promptly to the Board of Governors at any time, upon request by the Board of Governors.CommentsClose CommentsPermalink





(ii) CONTENTS- Records and reports required to be made, furnished, or kept under this paragraph may include--CommentsClose CommentsPermalink





(I) a balance sheet or income statement of the supervised securities holding company or an affiliate of a supervised securities holding company;CommentsClose CommentsPermalink





(II) an assessment of the consolidated capital and liquidity of the supervised securities holding company;CommentsClose CommentsPermalink





(III) a report by an independent auditor attesting to the compliance of the supervised securities holding company with the internal risk management and internal control objectives of the supervised securities holding company; andCommentsClose CommentsPermalink





(IV) a report concerning the extent to which the supervised securities holding company or affiliate has complied with the provisions of this section and any regulations prescribed and orders issued under this section.CommentsClose CommentsPermalink





(2) USE OF EXISTING REPORTS-CommentsClose CommentsPermalink





(A) IN GENERAL- The Board of Governors shall, to the fullest extent possible, accept reports in fulfillment of the requirements of this paragraph that a supervised securities holding company or an affiliate of a supervised securities holding company has been required to provide to another regulatory agency or a self-regulatory organization.CommentsClose CommentsPermalink





(B) AVAILABILITY- A supervised securities holding company or an affiliate of a supervised securities holding company shall promptly provide to the Board of Governors, at the request of the Board of Governors, any report described in subparagraph (A), as permitted by law.CommentsClose CommentsPermalink





(3) EXAMINATION AUTHORITY-CommentsClose CommentsPermalink





(A) FOCUS OF EXAMINATION AUTHORITY- The Board of Governors may make examinations of any supervised securities holding company and any affiliate of a supervised securities holding company to carry out this subsection, to prevent evasions thereof, and to monitor compliance by the supervised securities holding company or affiliate with applicable provisions of law.CommentsClose CommentsPermalink





(B) DEFERENCE TO OTHER EXAMINATIONS- For purposes of this subparagraph, the Board of Governors shall, to the fullest extent possible, use the reports of examination made by other appropriate Federal or State regulatory authorities with respect to any functionally regulated subsidiary or any institution described in subparagraph (D), (F), or (H) of section 2(c)(2) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(c)(2)).CommentsClose CommentsPermalink





(d) Capital and Risk Management-CommentsClose CommentsPermalink





(1) IN GENERAL- The Board of Governors shall, by regulation or order, prescribe capital adequacy and other risk management standards for supervised securities holding companies that are appropriate to protect the safety and soundness of the supervised securities holding companies and address the risks posed to financial stability by supervised securities holding companies.CommentsClose CommentsPermalink





(2) DIFFERENTIATION- In imposing standards under this subsection, the Board of Governors may differentiate among supervised securities holding companies on an individual basis, or by category, taking into consideration the requirements under paragraph (3).CommentsClose CommentsPermalink





(3) CONTENT- Any standards imposed on a supervised securities holding company under this subsection shall take into account--CommentsClose CommentsPermalink





(A) the differences among types of business activities carried out by the supervised securities holding company;CommentsClose CommentsPermalink





(B) the amount and nature of the financial assets of the supervised securities holding company;CommentsClose CommentsPermalink





(C) the amount and nature of the liabilities of the supervised securities holding company, including the degree of reliance on short-term funding;CommentsClose CommentsPermalink





(D) the extent and nature of the off-balance sheet exposures of the supervised securities holding company;CommentsClose CommentsPermalink





(E) the extent and nature of the transactions and relationships of the supervised securities holding company with other financial companies;CommentsClose CommentsPermalink





(F) the importance of the supervised securities holding company as a source of credit for households, businesses, and State and local governments, and as a source of liquidity for the financial system; andCommentsClose CommentsPermalink





(G) the nature, scope, and mix of the activities of the supervised securities holding company.CommentsClose CommentsPermalink





(4) NOTICE- A capital requirement imposed under this subsection may not take effect earlier than 180 days after the date on which a supervised securities holding company is provided notice of the capital requirement.CommentsClose CommentsPermalink





(e) Exception for Banks- No bank shall be subject to any of the requirements set forth in subsections (c) and (d).CommentsClose CommentsPermalink





(f) Other Provisions of Law Applicable to Supervised Securities Holding Companies-CommentsClose CommentsPermalink





(1) FEDERAL DEPOSIT INSURANCE ACT- Subsections (b), (c) through (s), and (u) of section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818) shall apply to any supervised securities holding company, and to any subsidiary (other than a bank or an institution described in subparagraph (D), (F), or (H) of section 2(c)(2) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(c)(2))) of a supervised securities holding company, in the same manner as such subsections apply to a bank holding company for which the Board of Governors is the appropriate Federal banking agency. For purposes of applying such subsections to a supervised securities holding company or a subsidiary (other than a bank or an institution described in subparagraph (D), (F), or (H) of section 2(c)(2) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(c)(2))) of a supervised securities holding company, the Board of Governors shall be deemed the appropriate Federal banking agency for the supervised securities holding company or subsidiary.CommentsClose CommentsPermalink





(2) BANK HOLDING COMPANY ACT OF 1956- Except as the Board of Governors may otherwise provide by regulation or order, a supervised securities holding company shall be subject to the provisions of the Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) in the same manner and to the same extent a bank holding company is subject to such provisions, except that a supervised securities holding company may not, by reason of this paragraph, be deemed to be a bank holding company for purposes of section 4 of the Bank Holding Company Act of 1956 (12 U.S.C. 1843).CommentsClose CommentsPermalink

SEC. 619. RESTRICTIONS ON CAPITAL MARKET ACTIVITY BY BANKS AND BANK HOLDING COMPANIES.

(a) Definitions- In this section--CommentsClose CommentsPermalink





(1) the terms ‘hedge fund’ and ‘private equity fund’ mean a company or other entity that is exempt from registration as an investment company pursuant to section 3(c)(1) or 3(c)(7) of the Investment Company Act of 1940 (15 U.S.C. 80a-3(c)(1) or 80a-3(c)(7)), or a similar fund, as jointly determined by the appropriate Federal banking agencies;CommentsClose CommentsPermalink





(2) the term ‘proprietary trading’--CommentsClose CommentsPermalink





(A) means purchasing or selling, or otherwise acquiring or disposing of, stocks, bonds, options, commodities, derivatives, or other financial instruments by an insured depository institution, a company that controls, directly or indirectly, an insured depository institution or is treated as a bank holding company for purposes of the Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.), and any subsidiary of such institution or company, for the trading book (or such other portfolio as the Federal banking agencies may determine) of such institution, company, or subsidiary; andCommentsClose CommentsPermalink





(B) subject to such restrictions as the Federal banking agencies may determine, does not include purchasing or selling, or otherwise acquiring or disposing of, stocks, bonds, options, commodities, derivatives, or other financial instruments on behalf of a customer, as part of market making activities, or otherwise in connection with or in facilitation of customer relationships, including risk-mitigating hedging activities related to such a purchase, sale, acquisition, or disposal; andCommentsClose CommentsPermalink





(3) the term ‘sponsoring’, when used with respect to a hedge fund or private equity fund, means--CommentsClose CommentsPermalink





(A) serving as a general partner, managing member, or trustee of the fund;CommentsClose CommentsPermalink





(B) in any manner selecting or controlling (or having employees, officers, directors, or agents who constitute) a majority of the directors, trustees, or management of the fund; orCommentsClose CommentsPermalink





(C) sharing with the fund, for corporate, marketing, promotional, or other purposes, the same name or a variation of the same name.CommentsClose CommentsPermalink





(b) Prohibition on Proprietary Trading-CommentsClose CommentsPermalink





(1) IN GENERAL- Subject to the recommendations and modifications of the Council under subsection (g), and except as provided in paragraph (2) or (3), the appropriate Federal banking agencies shall, through a rulemaking under subsection (g), jointly prohibit proprietary trading by an insured depository institution, a company that controls, directly or indirectly, an insured depository institution or is treated as a bank holding company for purposes of the Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.), and any subsidiary of such institution or company.CommentsClose CommentsPermalink





(2) EXCEPTED OBLIGATIONS-CommentsClose CommentsPermalink





(A) IN GENERAL- The prohibition under this subsection shall not apply with respect to an investment that is otherwise authorized by Federal law in--CommentsClose CommentsPermalink





(i) obligations of the United States or any agency of the United States, including obligations fully guaranteed as to principal and interest by the United States or an agency of the United States;CommentsClose CommentsPermalink





(ii) obligations, participations, or other instruments of, or issued by, the Government National Mortgage Association, the Federal National Mortgage Association, or the Federal Home Loan Mortgage Corporation, including obligations fully guaranteed as to principal and interest by such entities; andCommentsClose CommentsPermalink





(iii) obligations of any State or any political subdivision of a State.CommentsClose CommentsPermalink





(B) CONDITIONS- The appropriate Federal banking agencies may impose conditions on the conduct of investments described in subparagraph (A).CommentsClose CommentsPermalink





(C) RULE OF CONSTRUCTION- Nothing in subparagraph (A) may be construed to grant any authority to any person that is not otherwise provided in Federal law.CommentsClose CommentsPermalink





(3) FOREIGN ACTIVITIES- An investment or activity conducted by a company pursuant to paragraph (9) or (13) of section 4(c) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(c)) solely outside of the United States shall not be subject to the prohibition under paragraph (1), provided that the company is not directly or indirectly controlled by a company that is organized under the laws of the United States or of a State.CommentsClose CommentsPermalink





(c) Prohibition on Sponsoring and Investing in Hedge Funds and Private Equity Funds-CommentsClose CommentsPermalink





(1) IN GENERAL- Except as provided in paragraph (2), and subject to the recommendations and modifications of the Council under subsection (g), the appropriate Federal banking agencies shall, through a rulemaking under subsection (g), jointly prohibit an insured depository institution, a company that controls, directly or indirectly, an insured depository institution or is treated as a bank holding company for purposes of the Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.), or any subsidiary of such institution or company, from sponsoring or investing in a hedge fund or a private equity fund.CommentsClose CommentsPermalink





(2) APPLICATION TO FOREIGN ACTIVITIES OF FOREIGN FIRMS- An investment or activity conducted by a company pursuant to paragraph (9) or (13) of section 4(c) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(c)) solely outside of the United States shall not be subject to the prohibitions and restrictions under paragraph (1), provided that the company is not directly or indirectly controlled by a company that is organized under the laws of the United States or of a State.CommentsClose CommentsPermalink





(d) Investments in Small Business Investment Companies and Investments Designed to Promote the Public Welfare-CommentsClose CommentsPermalink





(1) IN GENERAL- A prohibition imposed by the appropriate Federal banking agencies under subsection (c) shall not apply with respect an investment otherwise authorized under Federal law that is--CommentsClose CommentsPermalink





(A) an investment in a small business investment company, as that term is defined in section 103 of the Small Business Investment Act of 1958 (15 U.S.C. 662); orCommentsClose CommentsPermalink





(B) designed primarily to promote the public welfare, as provided in the 11th paragraph of section 5136 of the Revised Statutes (12 U.S.C. 24).CommentsClose CommentsPermalink





(2) RULE OF CONSTRUCTION- Nothing in paragraph (1) may be construed to grant any authority to any person that is not otherwise provided in Federal law.CommentsClose CommentsPermalink





(e) Limitations on Relationships With Hedge Funds and Private Equity Funds-CommentsClose CommentsPermalink





(1) COVERED TRANSACTIONS- An insured depository institution, a company that controls, directly or indirectly, an insured depository institution or is treated as a bank holding company for purposes of the Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.), and any subsidiary of such institution or company that serves, directly or indirectly, as the investment manager or investment adviser to a hedge fund or private equity fund may not enter into a covered transaction, as defined in section 23A of the Federal Reserve Act (12 U.S.C. 371c) with such hedge fund or private equity fund.CommentsClose CommentsPermalink





(2) AFFILIATION- An insured depository institution, a company that controls, directly or indirectly, an insured depository institution or is treated as a bank holding company for purposes of the Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.), and any subsidiary of such institution or company that serves, directly or indirectly, as the investment manager or investment adviser to a hedge fund or private equity fund shall be subject to section 23B of the Federal Reserve Act (12 U.S.C. 371c-1) as if such institution, company, or subsidiary were a member bank and such hedge fund or private equity fund were an affiliate.CommentsClose CommentsPermalink





(f) Capital and Quantitative Limitations for Certain Nonbank Financial Companies-CommentsClose CommentsPermalink





(1) IN GENERAL- Except as provided in paragraph (2), and subject to the recommendations and modifications of the Council under subsection (g), the Board of Governors shall adopt rules imposing additional capital requirements and specifying additional quantitative limits for nonbank financial companies supervised by the Board of Governors under section 113 that engage in proprietary trading or sponsoring and investing in hedge funds and private equity funds.CommentsClose CommentsPermalink





(2) EXCEPTIONS- The rules under this subsection shall not apply with respect to the trading of an investment that is otherwise authorized by Federal law--CommentsClose CommentsPermalink





(A) in obligations of the United States or any agency of the United States, including obligations fully guaranteed as to principal and interest by the United States or an agency of the United States;CommentsClose CommentsPermalink





(B) in obligations, participations, or other instruments of, or issued by, the Government National Mortgage Association, the Federal National Mortgage Association, or the Federal Home Loan Mortgage Corporation, including obligations fully guaranteed as to principal and interest by such entities;CommentsClose CommentsPermalink





(C) in obligations of any State or any political subdivision of a State;CommentsClose CommentsPermalink





(D) in a small business investment company, as that term is defined in section 103 of the Small Business Investment Act of 1958 (15 U.S.C. 662); orCommentsClose CommentsPermalink





(E) that is designed primarily to promote the public welfare, as provided in the 11th paragraph of section 5136 of the Revised Statutes (12 U.S.C. 24).CommentsClose CommentsPermalink





(g) Council Study and Rulemaking-CommentsClose CommentsPermalink





(1) STUDY AND RECOMMENDATIONS- Not later than 6 months after the date of enactment of this Act, the Council--CommentsClose CommentsPermalink





(A) shall complete a study of the definitions under subsection (a) and the other provisions under subsections (b) through (f), to assess the extent to which the definitions under subsection (a) and the implementation of subsections (a) through (f) would--CommentsClose CommentsPermalink





(i) promote and enhance the safety and soundness of depository institutions and the affiliates of depository institutions;CommentsClose CommentsPermalink





(ii) protect taxpayers and enhance financial stability by minimizing the risk that depository institutions and the affiliates of depository institutions will engage in unsafe and unsound activities;CommentsClose CommentsPermalink





(iii) limit the inappropriate transfer of Federal subsidies from institutions that benefit from deposit insurance and liquidity facilities of the Federal Government to unregulated entities;CommentsClose CommentsPermalink





(iv) reduce inappropriate conflicts of interest between the self-interest of depository institutions, affiliates of depository institutions, and financial companies supervised by the Board, and the interests of the customers of such institutions and companies;CommentsClose CommentsPermalink





(v) raise the cost of credit or other financial services, reduce the availability of credit or other financial services, or impose other costs on households and businesses in the United States;CommentsClose CommentsPermalink





(vi) limit activities that have caused undue risk or loss in depository institutions, affiliates of depository institutions, and financial companies supervised by the Board of Governors, or that might reasonably be expected to create undue risk or loss in such institutions, affiliates, and companies; andCommentsClose CommentsPermalink





(vii) appropriately accommodates the business of insurance within an insurance company subject to regulation in accordance with State insurance company investment laws;CommentsClose CommentsPermalink





(B) shall make recommendations regarding the definitions under subsection (a) and the implementation of other provisions under subsections (b) through (f), including any modifications to the definitions, prohibitions, requirements, and limitations contained therein that the Council determines would more effectively implement the purposes of this section; andCommentsClose CommentsPermalink





(C) may make recommendations for prohibiting the conduct of the activities described in subsections (b) and (c) above a specific threshold amount and imposing additional capital requirements on activities conducted below such threshold amount.CommentsClose CommentsPermalink





(2) RULEMAKING- Not earlier than the date of completion of the study required under paragraph (1), and not later than 9 months after the date of completion of such study--CommentsClose CommentsPermalink





(A) the appropriate Federal banking agencies shall jointly issue final regulations implementing subsections (b) through (e), which shall reflect any recommendations or modifications made by the Council pursuant to paragraph (1)(B); andCommentsClose CommentsPermalink





(B) the Board of Governors shall issue final regulations implementing subsection (f), which shall reflect any recommendations or modifications made by the Council pursuant to paragraph (1)(B).CommentsClose CommentsPermalink





(h) Transition-CommentsClose CommentsPermalink





(1) IN GENERAL- The final regulations issued by the appropriate Federal banking agencies and the Board of Governors under subsection (g)(2) shall provide that, effective 2 years after the date on which such final regulations are issued, no insured depository institution, company that controls, directly or indirectly, an insured depository institution, company that is treated as a bank holding company for purposes of the Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.), or subsidiary of such institution or company, may retain any investment or relationship prohibited under such regulations.CommentsClose CommentsPermalink





(2) EXTENSION-CommentsClose CommentsPermalink





(A) IN GENERAL- The appropriate Federal banking agency for an insured depository institution or a company described in paragraph (1) may, upon the application of any such company, extend the 2-year period under paragraph (1) with respect to such company, if the appropriate Federal banking agency determines that an extension would not be detrimental to the public interest.CommentsClose CommentsPermalink





(B) TIME PERIOD FOR EXTENSION- An extension granted under subparagraph (A) may not exceed--CommentsClose CommentsPermalink





(i) 1 year for each determination made by the appropriate Federal banking agency under subparagraph (A); andCommentsClose CommentsPermalink





(ii) a total of 3 years with respect to any 1 company.CommentsClose CommentsPermalink

SEC. 620. CONCENTRATION LIMITS ON LARGE FINANCIAL FIRMS.

The Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) is amended by adding at the end the following:CommentsClose CommentsPermalink

‘SEC. 13. CONCENTRATION LIMITS ON LARGE FINANCIAL FIRMS.

‘(a) Definitions- In this section--CommentsClose CommentsPermalink





‘(1) the term ‘Council’ means the Financial Stability Oversight Council;CommentsClose CommentsPermalink





‘(2) the term ‘financial company’ means--CommentsClose CommentsPermalink





‘(A) an insured depository institution;CommentsClose CommentsPermalink





‘(B) a bank holding company;CommentsClose CommentsPermalink





‘(C) a savings and loan holding company;CommentsClose CommentsPermalink





‘(D) a company that controls an insured depository institution;CommentsClose CommentsPermalink





‘(E) a nonbank financial company supervised by the Board under title I of the Restoring American Financial Stability Act of 2010; andCommentsClose CommentsPermalink





‘(F) a foreign bank or company that is treated as a bank holding company for purposes of this Act; andCommentsClose CommentsPermalink





‘(3) the term ‘liabilities’ means--CommentsClose CommentsPermalink





‘(A) with respect to a United States financial company--CommentsClose CommentsPermalink





‘(i) the total risk-weighted assets of the financial company, as determined under the risk-based capital rules applicable to bank holding companies, as adjusted to reflect exposures that are deducted from regulatory capital; lessCommentsClose CommentsPermalink





‘(ii) the total regulatory capital of the financial company under the risk-based capital rules applicable to bank holding companies;CommentsClose CommentsPermalink





‘(B) with respect to a foreign-based financial company--CommentsClose CommentsPermalink





‘(i) the total risk-weighted assets of the United States operations of the financial company, as determined under the applicable risk-based capital rules, as adjusted to reflect exposures that are deducted from regulatory capital; lessCommentsClose CommentsPermalink





‘(ii) the total regulatory capital of the United States operations of the financial company, as determined under the applicable risk-based capital rules; andCommentsClose CommentsPermalink





‘(C) with respect to an insurance company or other nonbank financial company supervised by the Board, such assets of the company as the Board shall specify by rule, in order to provide for consistent and equitable treatment of such companies.CommentsClose CommentsPermalink





‘(b) Concentration Limit- Subject to the recommendations by the Council under subsection (e), a financial company may not merge or consolidate with, acquire all or substantially all of the assets of, or otherwise acquire control of, another company, if the total consolidated liabilities of the acquiring financial company upon consummation of the transaction would exceed 10 percent of the aggregate consolidated liabilities of all financial companies at the end of the calendar year preceding the transaction.CommentsClose CommentsPermalink





‘(c) Exception to Concentration Limit- With the prior written consent of the Board, the concentration limit under subsection (b) shall not apply to an acquisition--CommentsClose CommentsPermalink





‘(1) of a bank in default or in danger of default;CommentsClose CommentsPermalink





‘(2) with respect to which assistance is provided by the Federal Deposit Insurance Corporation under section 13(c) of the Federal Deposit Insurance Act (12 U.S.C. 1823(c)); orCommentsClose CommentsPermalink





‘(3) that would result only in a de minimis increase in the liabilities of the financial company.CommentsClose CommentsPermalink





‘(d) Rulemaking and Guidance- The Board shall issue regulations implementing this section in accordance with the recommendations of the Council under subsection (e), including the definition of terms, as necessary. The Board may issue interpretations or guidance regarding the application of this section to an individual financial company or to financial companies in general.CommentsClose CommentsPermalink





‘(e) Council Study and Rulemaking-CommentsClose CommentsPermalink





‘(1) STUDY AND RECOMMENDATIONS- Not later than 6 months after the date of enactment of this section, the Council shall--CommentsClose CommentsPermalink





‘(A) complete a study of the extent to which the concentration limit under this section would affect financial stability, moral hazard in the financial system, the efficiency and competitiveness of United States financial firms and financial markets, and the cost and availability of credit and other financial services to households and businesses in the United States; andCommentsClose CommentsPermalink





‘(B) make recommendations regarding any modifications to the concentration limit that the Council determines would more effectively implement this section.CommentsClose CommentsPermalink





‘(2) RULEMAKING- Not later than 9 months after the date of completion of the study under paragraph (1), and notwithstanding subsections (b) and (d), the Board shall issue final regulations implementing this section, which shall reflect any recommendations by the Council under paragraph (1)(B).’.CommentsClose CommentsPermalink

TITLE VII--IMPROVEMENTS TO REGULATION OF OVER-THE-COUNTER DERIVATIVES MARKETSCommentsClose CommentsPermalink

SEC. 701. SHORT TITLE.

This title may be cited as the ‘Over-the-Counter Derivatives Markets Act of 2010’.CommentsClose CommentsPermalink

SEC. 702. FINDINGS AND PURPOSES.

(a) Findings- Congress finds that--CommentsClose CommentsPermalink





(1) in recent years, the global over-the-counter derivatives market in notional amounts outstanding has grown rapidly, from $91 trillion in 1998 to $592 trillion in 2008 according to the Bank for International Settlements;CommentsClose CommentsPermalink





(2) the interconnectedness of the country’s largest financial institutions through the unregulated derivatives market raised significant concerns about counterparty risk exposures during the recent financial crisis;CommentsClose CommentsPermalink





(3) a substantial amount of American taxpayer money was used to make counterparty payments because there was insufficient margin and capital held by large financial institutions;CommentsClose CommentsPermalink





(4) although derivatives can be used to manage risk, they can also increase leverage and allow excessive risk-taking because market participants can take large positions on a relatively small capital base;CommentsClose CommentsPermalink





(5) in the over-the-counter derivatives market, margin requirements are set bilaterally and do not take into account the risk that each trade imposes on the rest of the financial system, thereby allowing systemically important exposures to build up without sufficient capital to mitigate associated risks to American taxpayers and the financial system;CommentsClose CommentsPermalink





(6) in the recent crisis, fears about counterparty risk exposures caused credit markets to freeze, as market participants questioned the viability of counterparties and the safety of their own assets;CommentsClose CommentsPermalink





(7) lack of transparency about counterparty exposures and valuation of derivatives positions made it more difficult for regulators to respond to the crisis and made resolution of these positions more expensive for the taxpayer;CommentsClose CommentsPermalink





(8) bilaterally-executed derivatives contracts can provide key benefits to certain market participants and should be permitted under comprehensive regulation, but all derivatives activities should be accompanied by appropriate risk management and prudential standards;CommentsClose CommentsPermalink





(9) the derivatives market suffers from a lack of reliable and accurate transaction information that is available to the public, investors, market participants, and regulators, hampering surveillance and oversight of such markets;CommentsClose CommentsPermalink





(10) clearing more derivatives through well-regulated central counterparties will benefit the public by reducing costs and risks to American taxpayers, the financial system, and market participants;CommentsClose CommentsPermalink





(11) trading more derivatives on regulated exchanges should be encouraged because it will result in more price transparency, efficiency in execution, and liquidity; andCommentsClose CommentsPermalink





(12) the Group of 20 nations agreed that--CommentsClose CommentsPermalink





(A) all standardized over-the-counter derivative contracts should be traded on exchanges or electronic trading platforms, where appropriate, and cleared through central counterparties by the end of calendar year 2012 at the latest;CommentsClose CommentsPermalink





(B) over-the-counter derivative contracts should be reported to trade repositories; andCommentsClose CommentsPermalink





(C) non-centrally cleared contracts should be subject to higher capital requirements.CommentsClose CommentsPermalink





(b) Purposes- The purposes of this title are--CommentsClose CommentsPermalink





(1) to establish well-regulated markets for derivatives to increase transparency and reduce costs and risks to American taxpayers, the financial system, and market participants; andCommentsClose CommentsPermalink





(2) to promote the public interest, the protection of investors, the protection of market participants, and the maintenance of fair and orderly markets to assure--CommentsClose CommentsPermalink





(A) the prompt and accurate clearance and settlement of transactions in derivatives that can be cleared through a central counterparty;CommentsClose CommentsPermalink





(B) the prompt and accurate reporting of transactions to regulators and trade repositories;CommentsClose CommentsPermalink





(C) the availability to the public, investors, market participants, and regulators of reliable and accurate quotation and transaction information in derivatives;CommentsClose CommentsPermalink





(D) economically efficient execution of transactions in swaps and security-based swaps; andCommentsClose CommentsPermalink





(E) fair competition among markets in the trading of swaps and security-based swaps.CommentsClose CommentsPermalink

Subtitle A--Regulation of Swap MarketsCommentsClose CommentsPermalink

SEC. 711. DEFINITIONS.

(a) Amendments to Definitions in the Commodity Exchange Act- Section 1a of the Commodity Exchange Act (7 U.S.C. 1a) is amended--CommentsClose CommentsPermalink





(1) by redesignating paragraph (34) as paragraph (35);CommentsClose CommentsPermalink





(2) by adding after paragraph (33) the following:CommentsClose CommentsPermalink





‘(34) SWAP-CommentsClose CommentsPermalink





‘(A) IN GENERAL- Except as provided in subparagraph (B), the term ‘swap’ means any agreement, contract, or transaction that--CommentsClose CommentsPermalink





‘(i) is a put, call, cap, floor, collar, or similar option of any kind for the purchase or sale of, or based on the value of, 1 or more interest or other rates, currencies, commodities, securities, instruments of indebtedness, indices, quantitative measures, or other financial or economic interests or property of any kind;CommentsClose CommentsPermalink





‘(ii) provides for any purchase, sale, payment, or delivery (other than a dividend on an equity security) that is dependent on the occurrence, nonoccurrence, or the extent of the occurrence of an event or contingency associated with a potential financial, economic, or commercial consequence;CommentsClose CommentsPermalink





‘(iii) provides on an executory basis for the exchange, on a fixed or contingent basis, of 1 or more payments based on the value or level of 1 or more interest or other rates, currencies, commodities, securities, instruments of indebtedness, indices, quantitative measures, or other financial or economic interests or property of any kind, or any interest therein or based on the value thereof, and that transfers, as between the parties to the transaction, in whole or in part, the financial risk associated with a future change in any such value or level without also conveying a current or future direct or indirect ownership interest in an asset (including any enterprise or investment pool) or liability that incorporates the financial risk so transferred, including any agreement, contract, or transaction commonly known as an interest rate swap, a rate floor, rate cap, rate collar, cross-currency rate swap, basis swap, currency swap, total return swap, equity index swap, equity swap, debt index swap, debt swap, credit spread, credit default swap, credit swap, weather swap, energy swap, metal swap, agricultural swap, emissions swap, or commodity swap;CommentsClose CommentsPermalink





‘(iv) is an agreement, contract, or transaction that is, or in the future becomes, commonly known to the trade as a swap; orCommentsClose CommentsPermalink





‘(v) is any combination or permutation of, or option on, any agreement, contract, or transaction described in any of clauses (i) through (iv).CommentsClose CommentsPermalink





‘(B) EXCLUSIONS- The term ‘swap’ does not include--CommentsClose CommentsPermalink





‘(i) any contract of sale of a commodity for future delivery or security futures product traded on or subject to the rules of any board of trade designated as a contract market under section 5 or 5f;CommentsClose CommentsPermalink





‘(ii) any sale of a nonfinancial commodity or any security for deferred shipment or delivery, so long as such transaction is physically settled;CommentsClose CommentsPermalink





‘(iii) any put, call, straddle, option, or privilege on any security, certificate of deposit, or group or index of securities, including any interest therein or based on the value thereof;CommentsClose CommentsPermalink





‘(iv) any put, call, straddle, option, or privilege relating to foreign currency entered into on a national securities exchange registered pursuant to section 6(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78f(a));CommentsClose CommentsPermalink





‘(v) any agreement, contract, or transaction providing for the purchase or sale of 1 or more securities on a fixed basis;CommentsClose CommentsPermalink





‘(vi) any agreement, contract, or transaction providing for the purchase or sale of 1 or more securities on a contingent basis, unless such agreement, contract, or transaction predicates such purchase or sale on the occurrence of a bona fide contingency that might reasonably be expected to affect or be affected by the creditworthiness of a party other than a party to the agreement, contract, or transaction;CommentsClose CommentsPermalink





‘(vii) any note, bond, or evidence of indebtedness that is a security as defined in section 2(a)(1) of the Securities Act of 1933 (15 U.S.C. 77b(a)(1)); orCommentsClose CommentsPermalink





‘(viii) any agreement, contract, or transaction that is--CommentsClose CommentsPermalink





‘(I) based on a security; andCommentsClose CommentsPermalink





‘(II) entered into directly or through an underwriter, as that term is defined in section 2(a)(11) of the Securities Act of 1933 (15 U.S.C. 77b(a)(11)), by the issuer of such security for the purposes of raising capital, unless such agreement, contract, or transaction is entered into to manage a risk associated with capital raising;CommentsClose CommentsPermalink





‘(ix) any foreign exchange swap;CommentsClose CommentsPermalink





‘(x) any foreign exchange forward;CommentsClose CommentsPermalink





‘(xi) any agreement, contract, or transaction a counterparty of which is a Federal Reserve bank, the United States Government, or an agency of the United States Government that is expressly backed by the full faith and credit of the United States; andCommentsClose CommentsPermalink





‘(xii) any security-based swap, other than a security-based swap as described in section 3(a)(68)(C) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(68)(C)).CommentsClose CommentsPermalink





‘(C) RULE OF CONSTRUCTION REGARDING MASTER AGREEMENTS- The term ‘swap’ shall be construed to include a master agreement that provides for an agreement, contract, or transaction that is a swap pursuant to subparagraph (A), together with all supplements to any such master agreement, without regard to whether the master agreement contains an agreement, contract, or transaction that is not a swap pursuant to subparagraph (A), except that the master agreement shall be considered to be a swap only with respect to each agreement, contract, or transaction under the master agreement that is a swap pursuant to subparagraph (A).’;CommentsClose CommentsPermalink





(3) in paragraph (12)--CommentsClose CommentsPermalink





(A) in subparagraph (A)--CommentsClose CommentsPermalink





(i) in clause (ii), by striking ‘determined by the Commission’ and inserting ‘determined jointly by the Commission and the Securities and Exchange Commission’;CommentsClose CommentsPermalink





(ii) in clause (v)--CommentsClose CommentsPermalink





(I) in subclause (I)--CommentsClose CommentsPermalink

(aa) by inserting ‘net’ after ‘total’; andCommentsClose CommentsPermalink

(bb) by inserting ‘or’ after the semicolon;CommentsClose CommentsPermalink

(II) in subclause (II), by striking ‘the obligations’ and all that follows through ‘$1,000,000; and’ and inserting the following:CommentsClose CommentsPermalink





‘(II) that---CommentsClose CommentsPermalink

‘(aa) has total net assets exceeding $5,000,000; and’;CommentsClose CommentsPermalink

(iii) in clause (vii), by striking ‘except that’ and all that follows through ‘section 2(c)(2)(B)(ii);’ and inserting the following: ‘except that such term does not include a State or an entity, political subdivision, instrumentality, agency, or department referred to in subclause (I) or (III) of this clause unless the State, entity, political subdivision, instrumentality, agency, or department owns and invests on a discretionary basis $50,000,000 or more in investments, provided that, with respect to any State or entity, political subdivision, instrumentality, agency or department of a State, such amount is exclusive of any proceeds from any offering of municipal securities as defined in section 3(a)(29) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(29));’; andCommentsClose CommentsPermalink





(iv) in clause (xi), by striking ‘total assets in an amount’ and inserting ‘amounts invested on a discretionary basis’;CommentsClose CommentsPermalink





(v) in clause (xi), by striking ‘an individual’ and all that follows through ‘of--’ and inserting ‘a natural person who--’; andCommentsClose CommentsPermalink





(vi) in clause (xi)--CommentsClose CommentsPermalink





(I) in subclause (I), by inserting ‘owns and invests on a discretionary basis in excess of’ before ‘$10,000,000’; andCommentsClose CommentsPermalink





(II) in subclause (II), by inserting ‘owns and invests on a discretionary basis in excess of’ before ‘$5,000,000’; andCommentsClose CommentsPermalink





(B) in subparagraph (C), by striking ‘determines’ and inserting ‘and the Securities and Exchange Commission may further jointly determine’;CommentsClose CommentsPermalink





(4) in paragraph (29)--CommentsClose CommentsPermalink





(A) by striking subparagraph (B);CommentsClose CommentsPermalink





(B) by redesignating subparagraphs (C) and (D) as subparagraphs (B) and (C), respectively;CommentsClose CommentsPermalink





(C) by redesignating subparagraph (E) as subparagraph (F);CommentsClose CommentsPermalink





(D) in subparagraph (C) (as so redesignated), by striking ‘and’; andCommentsClose CommentsPermalink





(E) by inserting after subparagraph (C) (as so redesignated) the following:CommentsClose CommentsPermalink





‘(D) an alternative swap execution facility registered under section 5h;CommentsClose CommentsPermalink





‘(E) a swap repository; and’; andCommentsClose CommentsPermalink





(5) by adding after paragraph (35) (as so redesignated) the following:CommentsClose CommentsPermalink





‘(36) BOARD- The term ‘Board’ means the Board of Governors of the Federal Reserve System.CommentsClose CommentsPermalink





‘(37) SECURITY-BASED SWAP- The term ‘security-based swap’ has the same meaning as in section 3(a)(68) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(68)).CommentsClose CommentsPermalink





‘(38) SWAP DEALER-CommentsClose CommentsPermalink





‘(A) IN GENERAL- The term ‘swap dealer’ means any person engaged in the business of buying and selling swaps for such person’s own account, through a broker or otherwise.CommentsClose CommentsPermalink





‘(B) EXCEPTION- The term ‘swap dealer’ does not include a person that buys or sells swaps for such person’s own account, either individually or in a fiduciary capacity, but not as a part of a regular business.CommentsClose CommentsPermalink





‘(39) MAJOR SWAP PARTICIPANT-CommentsClose CommentsPermalink





‘(A) IN GENERAL- The term ‘major swap participant’ means any person who is not a swap dealer and--CommentsClose CommentsPermalink





‘(i) who maintains a substantial net position in outstanding swaps, excluding positions held primarily for hedging, reducing, or otherwise mitigating commercial risk; orCommentsClose CommentsPermalink





‘(ii) whose failure to perform under the terms of its swaps would cause significant credit losses to its swap counterparties.CommentsClose CommentsPermalink





‘(B) IMPLEMENTATION- The Commission shall implement the definition under this paragraph by rule or regulation in a manner that is prudent for the effective monitoring, management, and oversight of the financial system.CommentsClose CommentsPermalink





‘(40) MAJOR SECURITY-BASED SWAP PARTICIPANT- The term ‘major security-based swap participant’ has the same meaning as in section 3(a)(67) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(67)).CommentsClose CommentsPermalink





‘(41) APPROPRIATE FEDERAL BANKING AGENCY- The term ‘appropriate Federal banking agency’ has the same meaning as in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813).CommentsClose CommentsPermalink





‘(42) SECURITY-BASED SWAP DEALER- The term ‘security-based swap dealer’ has the same meaning as in section 3(a)(71) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(71)).CommentsClose CommentsPermalink





‘(43) GOVERNMENT SECURITY- The term ‘government security’ has the same meaning as in section 3(a)(42) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(42)).CommentsClose CommentsPermalink





‘(44) FOREIGN EXCHANGE FORWARD- The term ‘foreign exchange forward’ means a transaction that solely involves the exchange of 2 different currencies on a specific future date at a fixed rate agreed at the inception of the contract.CommentsClose CommentsPermalink





‘(45) FOREIGN EXCHANGE SWAP- The term ‘foreign exchange swap’ means a transaction that solely involves the exchange of 2 different currencies on a specific date at a fixed rate agreed at the inception of the contract, and a reverse exchange of the same 2 currencies at a date further in the future and at a fixed rate agreed at the inception of the contract.CommentsClose CommentsPermalink





‘(46) PERSON ASSOCIATED WITH A SECURITY-BASED SWAP DEALER OR MAJOR SECURITY-BASED SWAP PARTICIPANT- The term ‘person associated with a security-based swap dealer or major security-based swap participant’ has the same meaning as in section 3(a)(70) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(70)).CommentsClose CommentsPermalink





‘(47) PERSON ASSOCIATED WITH A SWAP DEALER OR MAJOR SWAP PARTICIPANT- The term ‘person associated with a swap dealer or major swap participant’ or ‘associated person of a swap dealer or major swap participant’ means--CommentsClose CommentsPermalink





‘(A) any partner, officer, director, or branch manager of such swap dealer or major swap participant (or any person occupying a similar status or performing similar functions);CommentsClose CommentsPermalink





‘(B) any person directly or indirectly controlling, controlled by, or under common control with such swap dealer or major swap participant; orCommentsClose CommentsPermalink





‘(C) any employee of such swap dealer or major swap participant, except that any person associated with a swap dealer or major swap participant whose functions are solely clerical or ministerial shall not be included in the meaning of such term other than for purposes of section 4s(b)(6) of this Act.CommentsClose CommentsPermalink





‘(48) SWAP REPOSITORY- The term ‘swap repository’ means any person that collects, calculates, processes, or prepares information with respect to transactions or positions in swaps or security-based swaps.CommentsClose CommentsPermalink





‘(49) PRIMARY FINANCIAL REGULATORY AGENCY- The term ‘primary financial regulatory agency’ has the same meaning as in section 2 of the Restoring American Financial Stability Act of 2010.’.CommentsClose CommentsPermalink





(b) Joint Rulemaking on Further Definition of Terms-CommentsClose CommentsPermalink





(1) IN GENERAL- The Commodity Futures Trading Commission and the Securities and Exchange Commission shall jointly adopt a rule or rules further defining the terms ‘swap’, ‘security-based swap’, ‘swap dealer’, ‘security-based swap dealer’, ‘major swap participant’, ‘major security-based swap participant’, and ‘eligible contract participant’ not later than 180 days after the effective date of this title.CommentsClose CommentsPermalink





(2) PREVENTION OF EVASIONS- The Commodity Futures Trading Commission and the Securities and Exchange Commission may jointly prescribe rules defining the term ‘swap’ or ‘security-based swap’ to include transactions that have been structured to evade this title.CommentsClose CommentsPermalink





(c) Joint Rulemaking Under This Title-CommentsClose CommentsPermalink





(1) UNIFORM RULES- Rules and regulations prescribed jointly under this title by the Commodity Futures Trading Commission and the Securities and Exchange Commission shall be uniform.CommentsClose CommentsPermalink





(2) FINANCIAL STABILITY OVERSIGHT COUNCIL- In the event that the Commodity Futures Trading Commission and the Securities and Exchange Commission fail to jointly prescribe rules pursuant to paragraph (1) in a timely manner, at the request of either Commission, the Financial Stability Oversight Council shall resolve the dispute--CommentsClose CommentsPermalink





(A) within a reasonable time after receiving the request;CommentsClose CommentsPermalink





(B) after consideration of relevant information provided by each Commission; andCommentsClose CommentsPermalink





(C) by agreeing with one of the Commissions regarding the entirety of the matter or by determining a compromise position.CommentsClose CommentsPermalink





(3) TREATMENT OF SIMILAR PRODUCTS- In adopting joint rules and regulations under this title, the Commodity Futures Trading Commission and the Securities and Exchange Commission shall treat functionally or economically similar products similarly.CommentsClose CommentsPermalink





(4) TREATMENT OF DISSIMILAR PRODUCTS- Nothing in this title shall be construed to require the Commodity Futures Trading Commission and the Securities and Exchange Commission to adopt joint rules that treat functionally or economically different products identically.CommentsClose CommentsPermalink





(5) JOINT INTERPRETATION- Any interpretation of, or guidance regarding, a provision of this title, shall be effective only if issued jointly by the Commodity Futures Trading Commission and the Securities and Exchange Commission if this title requires the Commodity Futures Trading Commission and the Securities and Exchange Commission to issue joint regulations to implement the provision.CommentsClose CommentsPermalink





(d) Exemptions- Section 4(c)(1) of the Commodity Exchange Act (7 U.S.C. 6(c)(1)) is amended by adding at the end the following: ‘The Commission shall not have the authority to grant exemptions from the swap-related provisions of the Over-the-Counter Derivatives Markets Act of 2010, except as expressly authorized under the provisions of that Act.’.CommentsClose CommentsPermalink

SEC. 712. JURISDICTION.

(a) Exclusive Jurisdiction- The first sentence of section 2(a)(1)(A) of the Commodity Exchange Act (7 U.S.C. 2(a)(1)(A)) is amended--CommentsClose CommentsPermalink





(1) by inserting ‘the Over-the-Counter Derivatives Markets Act of 2010 and’ after ‘otherwise provided in’;CommentsClose CommentsPermalink





(2) by striking ‘subsections (c) through (i)’ and inserting ‘subsections (c) and (f)’; andCommentsClose CommentsPermalink





(3) by striking ‘involving contracts of sale’ and inserting ‘involving swaps, or contracts of sale’.CommentsClose CommentsPermalink





(b) Additions- Section 2(c)(2)(A) of the Commodity Exchange Act (7 U.S.C. 2(c)(2)(A)) is amended--CommentsClose CommentsPermalink





(1) in clause (i), by striking ‘or’;CommentsClose CommentsPermalink





(2) by redesignating clause (ii) as clause (iii); andCommentsClose CommentsPermalink





(3) by inserting after clause (i) the following:CommentsClose CommentsPermalink





‘(ii) a swap; or’.CommentsClose CommentsPermalink





(c) Limitation- Section 2 of the Commodity Exchange Act (7 U.S.C. 2) is amended by amending subsection (g) to read as follows:CommentsClose CommentsPermalink





‘(g) Exclusion for Securities- Notwithstanding any other provision of law, the Over-the-Counter Derivatives Markets Act of 2010 shall not apply to, and the Commodity Futures Trading Commission shall have no jurisdiction under such Act (or any amendments to the Commodity Exchange Act made by such Act) with respect to, any security other than a security-based swap.’.CommentsClose CommentsPermalink

SEC. 713. CLEARING.

(a) Clearing Requirement-CommentsClose CommentsPermalink





(1) REPEALS- Subsections (d), (e), and (h) of section 2 of the Commodity Exchange Act (7 U.S.C. 2(d), 2(e), and 2(h)) are repealed.CommentsClose CommentsPermalink





(2) APPLICABILITY- Section 2 of the Commodity Exchange Act (7 U.S.C. 2) is further amended by inserting after subsection (c) the following:CommentsClose CommentsPermalink





‘(d) Swaps- Nothing in this Act, other than subsections (a)(1)(A), (a)(1)(B), (a)(1)(C), (a)(1)(G), (f), and (j), sections 4a, 4b, 4b-1, 4c(a), 4c(b), 4o, 4r, 4s, 4t, 4u, 5, 5b, 5c, 5h, 6(c), 6(d), 6c, 6d, 8, 8a, 9, 12(e)(2), 12(f), 13(a), 13(b), 21, and 22(a)(4) and such other provisions of this Act as are applicable by their terms to registered entities and Commission registrants, governs or applies to a swap.CommentsClose CommentsPermalink





‘(e) Limitation on Participation- It shall be unlawful for any person, other than an eligible contract participant, to enter into a swap unless the swap is entered into on or subject to the rules of a board of trade designated as a contract market under section 5.’.CommentsClose CommentsPermalink





(3) CLEARING REQUIREMENT- Section 2 of the Commodity Exchange Act (7 U.S.C. 2) is further amended by adding at the end the following:CommentsClose CommentsPermalink





‘(j) Clearing Requirement-CommentsClose CommentsPermalink





‘(1) SUBMISSION-CommentsClose CommentsPermalink





‘(A) IN GENERAL- Except as provided in paragraph (9), any person who is a party to a swap shall submit such swap for clearing to a derivatives clearing organization that is registered under this Act or a derivatives clearing organization that is exempt from registration under section 5b(j) of this Act.CommentsClose CommentsPermalink





‘(B) REQUIRED CONDITIONS- The rules of a derivatives clearing organization described in subparagraph (A) shall--CommentsClose CommentsPermalink





‘(i) prescribe that all swaps with the same terms and conditions accepted for clearing by the derivatives clearing organization are fungible and may be offset with each other; andCommentsClose CommentsPermalink





‘(ii) provide for nondiscriminatory clearing of a swap executed on or through the rules of an unaffiliated designated contract market or an alternative swap execution facility.CommentsClose CommentsPermalink





‘(2) COMMISSION APPROVAL-CommentsClose CommentsPermalink





‘(A) IN GENERAL- A derivatives clearing organization shall submit to the Commission for prior approval any group, category, type, or class of swaps that the derivatives clearing organization seeks to accept for clearing, which submission the Commission shall make available to the public.CommentsClose CommentsPermalink





‘(B) DEADLINE- The Commission shall take final action on a request submitted pursuant to subparagraph (A) not later than 90 days after submission of the request, unless the derivatives clearing organization submitting the request agrees to an extension of the time limitation established under this subparagraph.CommentsClose CommentsPermalink





‘(C) APPROVAL- The Commission shall approve, unconditionally or subject to such terms and conditions as the Commission determines to be appropriate, any request submitted pursuant to subparagraph (A) if the Commission finds that the request is consistent with section 5b(c)(2). The Commission shall not approve any such request if the Commission does not make such finding.CommentsClose CommentsPermalink





‘(D) RULES- Not later than 180 days after the date of the enactment of the Over-the-Counter Derivatives Markets Act of 2010, the Commission shall adopt rules for a derivatives clearing organization’s submission for approval, pursuant to this paragraph, of any group, category, type, or class of swaps that the derivative clearing organization seeks to accept for clearing.CommentsClose CommentsPermalink





‘(3) STAY OF CLEARING REQUIREMENT- At any time after issuance of an approval pursuant to paragraph (2):CommentsClose CommentsPermalink





‘(A) REVIEW PROCESS- The Commission, on application of a counterparty to a swap or on its own initiative, may stay the clearing requirement of paragraph (1) until the Commission completes a review of the terms of the swap, or the group, category, type, or class of swaps, and the clearing arrangement.CommentsClose CommentsPermalink





‘(B) DEADLINE- The Commission shall complete a review undertaken pursuant to subparagraph (A) not later than 90 days after issuance of the stay, unless the derivatives clearing organization that clears the swap, or the group, category, type or class of swaps, agrees to an extension of the time limitation established under this subparagraph.CommentsClose CommentsPermalink





‘(C) DETERMINATION- Upon completion of the review undertaken pursuant to subparagraph (A)--CommentsClose CommentsPermalink





‘(i) the Commission may determine, unconditionally or subject to such terms and conditions as the Commission determines to be appropriate, that the swap, or the group, category, type, or class of swaps, must be cleared pursuant to this subsection if the Commission finds that such clearing--CommentsClose CommentsPermalink





‘(I) is consistent with section 5b(c)(2); andCommentsClose CommentsPermalink





‘(II) is otherwise in the public interest, for the protection of investors, and consistent with the purposes of this title;CommentsClose CommentsPermalink





‘(ii) the Commission may determine that the clearing requirement of paragraph (1) shall not apply to the swap, or the group, category, type, or class of swaps; orCommentsClose CommentsPermalink





‘(iii) if a determination is made that the clearing requirement of paragraph (1) shall no longer apply, then it shall still be permissible to clear such swap, or the group, category, type, or class of swaps.CommentsClose CommentsPermalink





‘(D) RULES- Not later than 180 days after the date of the enactment of the Over-the-Counter Derivatives Markets Act of 2010, the Commission shall adopt rules for reviewing, pursuant to this paragraph, a derivatives clearing organization’s clearing of a swap, or a group, category, type, or class of swaps that the Commission has accepted for clearing.CommentsClose CommentsPermalink





‘(4) SWAPS REQUIRED TO BE ACCEPTED FOR CLEARING-CommentsClose CommentsPermalink





‘(A) RULEMAKING- Not later than 180 days of the date of enactment of the Over-the-Counter Derivatives Markets Act of 2010, the Commission and the Securities and Exchange Commission shall jointly adopt rules to further identify any group, category, type, or class of swaps not submitted for approval under paragraph (2) that the Commission and Securities and Exchange Commission deem should be accepted for clearing. In adopting such rules, the Commission and the Securities and Exchange Commission shall take into account the following factors:CommentsClose CommentsPermalink





‘(i) The extent to which any of the terms of the group, category, type, or class of swaps, including price, are disseminated to third parties or are referenced in other agreements, contracts, or transactions.CommentsClose CommentsPermalink





‘(ii) The volume of transactions in the group, category, type, or class of swaps.CommentsClose CommentsPermalink





‘(iii) The extent to which the terms of the group, category, type, or class of swaps are similar to the terms of other agreements, contracts, or transactions that are centrally cleared.CommentsClose CommentsPermalink





‘(iv) Whether any differences in the terms of the group, category, type, or class of swaps, compared to other agreements, contracts, or transactions that are centrally cleared, are of economic significance.CommentsClose CommentsPermalink





‘(v) Whether a derivatives clearing organization is prepared to clear the group, category, type, or class of swaps and such derivatives clearing organization has in place effective risk management systems.CommentsClose CommentsPermalink





‘(vi) Any other factors the Commission and the Securities and Exchange Commission determine to be appropriate.CommentsClose CommentsPermalink





‘(B) OTHER DESIGNATIONS- At any time after the adoption of the rules required under subparagraph (A), the Commission may separately designate a particular swap or class of swaps as subject to the clearing requirement in paragraph (1), taking into account the factors described in clauses (i) through (vi) of subparagraph (A) and the joint rules adopted under such subparagraph.CommentsClose CommentsPermalink





‘(5) PREVENTION OF EVASION- The Commission and the Securities and Exchange Commission shall have authority to prescribe rules under this subsection, or issue interpretations of such rules, as necessary to prevent evasions of this subsection provided that any such rules or interpretations shall be issued jointly to be effective.CommentsClose CommentsPermalink





‘(6) REQUIRED REPORTING-CommentsClose CommentsPermalink





‘(A) BOTH COUNTERPARTIES- Both counterparties to a swap that is not cleared by any derivatives clearing organization shall report such a swap either to a registered swap repository described in section 21 or, if there is no repository that would accept the swap, to the Commission pursuant to section 4r.CommentsClose CommentsPermalink





‘(B) TIMING- Counterparties to a swap shall submit the reports required under subparagraph (A) not later than such time period as the Commission may by rule or regulation prescribe.CommentsClose CommentsPermalink





‘(7) TRANSITION RULES-CommentsClose CommentsPermalink





‘(A) REPORTING TRANSITION RULES- Rules adopted by the Commission under this section shall provide for the reporting of data, as follows:CommentsClose CommentsPermalink





‘(i) Swaps entered into before the date of the enactment of this subsection shall be reported to a registered swap repository or the Commission not later than 180 days after the effective date of this subsection.CommentsClose CommentsPermalink





‘(ii) Swaps entered into on or after such date of enactment shall be reported to a registered swap repository or the Commission not later than the later of--CommentsClose CommentsPermalink





‘(I) 90 days after such effective date; orCommentsClose CommentsPermalink





‘(II) such other time after entering into the swap as the Commission may prescribe by rule or regulation.CommentsClose CommentsPermalink





‘(B) CLEARING TRANSITION RULES-CommentsClose CommentsPermalink





‘(i) Swaps entered into before the date of the enactment of this subsection are exempt from the clearing requirements of this subsection if reported pursuant to subparagraph (A)(i).CommentsClose CommentsPermalink





‘(ii) Swaps entered into before application of the clearing requirement pursuant to this subsection are exempt from the clearing requirements of this subsection if reported pursuant to subparagraph (A)(ii).CommentsClose CommentsPermalink





‘(8) TRADE EXECUTION-CommentsClose CommentsPermalink





‘(A) IN GENERAL- With respect to transactions involving swaps subject to the clearing requirement of paragraph (1), counterparties shall--CommentsClose CommentsPermalink





‘(i) execute the transaction on a board of trade designated as a contract market under section 5; orCommentsClose CommentsPermalink





‘(ii) execute the transaction on an alternative swap execution facility registered under section 5h or an alternative swap execution facility that is exempt from registration under section 5h(f) of this Act.CommentsClose CommentsPermalink





‘(B) EXCEPTION- The requirements of clauses (i) and (ii) of subparagraph (A) shall not apply if no board of trade or alternative swap execution facility makes the swap available to trade.CommentsClose CommentsPermalink





‘(9) EXEMPTIONS-CommentsClose CommentsPermalink





‘(A) REQUIRED EXEMPTION- Subject to paragraph (4), the Commission shall exempt a swap from the requirements of paragraphs (1) and (8) and any rules issued under this subsection, if no derivatives clearing organization registered under this Act or no derivatives clearing organization that is exempt from registration under section 5b(j) of this Act will accept the swap for clearing.CommentsClose CommentsPermalink





‘(B) PERMISSIVE EXEMPTION- Subject to paragraph (4), the Commission by rule or order, as the Commission deems consistent with the public interest, may conditionally or unconditionally exempt a swap from the requirements of paragraphs (1) and (8), and any rules issued under this subsection, if 1 of the counterparties to the swap--CommentsClose CommentsPermalink





‘(i) is not a swap dealer or major swap participant; andCommentsClose CommentsPermalink





‘(ii) does not meet the eligibility requirements of any derivatives clearing organization that clears the swap.CommentsClose CommentsPermalink





‘(C) DETERMINATION OF THE FINANCIAL STABILITY OVERSIGHT COUNCIL- The Commission may act by rule or order to exempt a swap from any requirement or rule under this subsection only if--CommentsClose CommentsPermalink





‘(i) the Commission has provided a written notice to the Financial Stability Oversight Council describing the proposed exemption; andCommentsClose CommentsPermalink





‘(ii) the Financial Stability Oversight Council has not made a determination and notified the Commission within 60 days of receipt of such notice that such exemption would pose a threat to the stability of the United States financial system.CommentsClose CommentsPermalink





‘(D) OPTION TO CLEAR- If a swap is exempt from the clearing requirements of paragraph (1)--CommentsClose CommentsPermalink





‘(i) the parties to the swap may submit the swap for clearing; andCommentsClose CommentsPermalink





‘(ii) the swap shall be submitted for clearing upon the request of a party to the swap.’.CommentsClose CommentsPermalink





(b) Derivatives Clearing Organizations-CommentsClose CommentsPermalink





(1) IN GENERAL- Subsections (a) and (b) of section 5b of the Commodity Exchange Act (7 U.S.C. 7a-1) are amended to read as follows:CommentsClose CommentsPermalink





‘(a) Registration Requirement- It shall be unlawful for a derivatives clearing organization, unless registered with the Commission, directly or indirectly to make use of the mails or any means or instrumentality of interstate commerce to perform the functions of a derivatives clearing organization described in section 1a(9) with respect to--CommentsClose CommentsPermalink





‘(1) a contract of sale of a commodity for future delivery (or option on such a contract) or option on a commodity, in each case unless the contract or option is--CommentsClose CommentsPermalink





‘(A) excluded from this Act by section 2(a)(1)(C)(i), 2(c), or 2(f); orCommentsClose CommentsPermalink





‘(B) a security futures product cleared by a clearing agency registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.); orCommentsClose CommentsPermalink





‘(2) a swap.CommentsClose CommentsPermalink





‘(b) Voluntary Registration-CommentsClose CommentsPermalink





‘(1) DERIVATIVES CLEARING ORGANIZATIONS- A person that clears agreements, contracts, or transactions that are not required to be cleared under this Act may register with the Commission as a derivatives clearing organization.CommentsClose CommentsPermalink





‘(2) CLEARING AGENCIES- A derivatives clearing organization may clear security-based swaps that are required to be cleared by a person who is registered as a clearing agency under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.).’.CommentsClose CommentsPermalink





(2) REQUIRED REGISTRATION- Section 5b of the Commodity Exchange Act (7 U.S.C. 7a-1) is amended by adding at the end the following:CommentsClose CommentsPermalink





‘(g) Required Registration for Depository Institutions and Clearing Agencies- Any person that is required to be registered as a derivatives clearing organization under this section shall register with the Commission regardless of whether that person is also a depository institution (as that term is defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813)) or a clearing agency registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.).CommentsClose CommentsPermalink





‘(h) Harmonization of Rules- Not later than 180 days after the effective date of the Over-the-Counter Derivatives Markets Act of 2010, the Commission and the Securities and Exchange Commission shall jointly adopt uniform rules governing--CommentsClose CommentsPermalink





‘(1) the clearing and settlement of swaps, as well as persons that are registered as derivatives clearing organizations for swaps under this section; andCommentsClose CommentsPermalink





‘(2) the clearing and settlement of security-based swaps, as well as persons that are registered as clearing agencies for security-based swaps under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.).CommentsClose CommentsPermalink





‘(i) Consultation- The Commission and the Securities and Exchange Commission shall consult with the appropriate Federal banking agencies and each other prior to adopting rules under this section with respect to swaps.CommentsClose CommentsPermalink





‘(j) Exemptions- The Commission may exempt, conditionally or unconditionally, a derivatives clearing organization from registration under this section for the clearing of swaps if the Commission finds that such derivatives clearing organization is subject to comparable, comprehensive supervision and regulation on a consolidated basis by the Securities and Exchange Commission, an appropriate Federal banking agency, or the appropriate governmental authorities in the organization’s home country.CommentsClose CommentsPermalink





‘(k) Designation of Compliance Officer-CommentsClose CommentsPermalink





‘(1) IN GENERAL- Each derivatives clearing organization shall designate an individual to serve as a compliance officer.CommentsClose CommentsPermalink





‘(2) DUTIES- The compliance officer shall perform the following duties:CommentsClose CommentsPermalink





‘(A) Reporting directly to the board or to the senior officer of the derivatives clearing organization.CommentsClose CommentsPermalink





‘(B) Reviewing the compliance of the derivatives clearing organization with the core principles established in section 5b(c)(2).CommentsClose CommentsPermalink





‘(C) Consulting with the board of the derivatives clearing organization, a body performing a function similar to that of a board, or the senior officer of the derivatives clearing organization, to resolve any conflicts of interest that may arise.CommentsClose CommentsPermalink





‘(D) Administering the policies and procedures of the derivatives clearing organization required to be established pursuant to this section.CommentsClose CommentsPermalink





‘(E) Ensuring compliance with this Act and the rules and regulations issued thereunder, including rules prescribed by the Commission pursuant to this section.CommentsClose CommentsPermalink





‘(F) Establishing procedures for remediation of noncompliance issues found during compliance office reviews, lookbacks, internal or external audit findings, self-reported errors, or through validated complaints. Procedures to be established under this subparagraph include procedures related to the handling, management response, remediation, retesting, and closing of noncompliance issues.CommentsClose CommentsPermalink





‘(3) ANNUAL REPORTS REQUIRED-CommentsClose CommentsPermalink





‘(A) IN GENERAL- The compliance officer shall annually prepare and sign a report on the compliance of the derivatives clearing organization with this Act and the policies and procedures of the organization, including the code of ethics and conflict of interest policies of the organization, in accordance with rules prescribed by the Commission.CommentsClose CommentsPermalink





‘(B) SUBMISSION- The compliance report required under subparagraph (A) shall accompany the financial reports of the derivatives clearing organization that are required to be furnished to the Commission pursuant to this section and shall include a certification that, under penalty of law, the report is accurate and complete.’.CommentsClose CommentsPermalink





(3) CORE PRINCIPLES- Section 5b(c)(2) of the Commodity Exchange Act (7 U.S.C. 7a-1(c)(2)) is amended to read as follows:CommentsClose CommentsPermalink





‘(2) CORE PRINCIPLES FOR DERIVATIVES CLEARING ORGANIZATIONS-CommentsClose CommentsPermalink





‘(A) COMPLIANCE-CommentsClose CommentsPermalink





‘(i) IN GENERAL- To be registered and to maintain registration as a derivatives clearing organization, a derivatives clearing organization shall comply with the core principles established in this paragraph and any requirement that the Commission may impose by rule or regulation pursuant to section 8a(5).CommentsClose CommentsPermalink





‘(ii) REASONABLE DISCRETION- Except where the Commission determines otherwise by rule or regulation, a derivatives clearing organization shall have reasonable discretion in establishing the manner in which it complies with the core principles established in this paragraph.CommentsClose CommentsPermalink





‘(B) FINANCIAL RESOURCES-CommentsClose CommentsPermalink





‘(i) IN GENERAL- Each derivatives clearing organization shall have adequate financial, operational, and managerial resources to discharge its responsibilities.CommentsClose CommentsPermalink





‘(ii) MINIMUM RESOURCES- The financial resources of each derivatives clearing organization shall, at a minimum, exceed the total amount that would--CommentsClose CommentsPermalink





‘(I) enable the organization to meet its financial obligations to its members and participants notwithstanding a default by the member or participant creating the largest financial exposure for that organization in extreme but plausible market conditions; andCommentsClose CommentsPermalink





‘(II) enable the organization to cover its operating costs for a period of 1 year, calculated on a rolling basis.CommentsClose CommentsPermalink





‘(C) PARTICIPANT AND PRODUCT ELIGIBILITY-CommentsClose CommentsPermalink





‘(i) STANDARDS- Each derivatives clearing organization shall establish--CommentsClose CommentsPermalink





‘(I) appropriate admission and continuing eligibility standards (including sufficient financial resources and operational capacity to meet obligations arising from participation in the derivatives clearing organization) for members of and participants in the organization; andCommentsClose CommentsPermalink





‘(II) appropriate standards for determining eligibility of agreements, contracts, or transactions submitted to the organization for clearing.CommentsClose CommentsPermalink





‘(ii) ONGOING VERIFICATION- Each derivatives clearing organization shall have procedures in place to verify that its participation and membership requirements are met on an ongoing basis.CommentsClose CommentsPermalink





‘(iii) FAIR STANDARDS- Each derivatives clearing organization’s participation and membership requirements shall be objective, publicly disclosed, and permit fair and open access.CommentsClose CommentsPermalink





‘(D) RISK MANAGEMENT-CommentsClose CommentsPermalink





‘(i) IN GENERAL- Each derivatives clearing organization shall have the ability to manage the risks associated with discharging the responsibilities of a derivatives clearing organization through the use of appropriate tools and procedures.CommentsClose CommentsPermalink





‘(ii) CREDIT EXPOSURE- Each derivatives clearing organization shall measure its credit exposures to its members and participants at least once each business day and shall monitor such exposures throughout the business day.CommentsClose CommentsPermalink





‘(iii) LIMITING EXPOSURE- Through margin requirements and other risk control mechanisms, a derivatives clearing organization shall limit its exposures to potential losses from defaults by its members and participants so that the operations of the organization would not be disrupted and nondefaulting members or participants would not be exposed to losses that such members or participants cannot anticipate or control.CommentsClose CommentsPermalink





‘(iv) MARGIN REQUIREMENTS- The margin required by a derivatives clearing organization from its members and participants shall be sufficient to cover potential exposures in normal market conditions.CommentsClose CommentsPermalink





‘(v) RISK-BASED MARGIN REQUIREMENTS- The models and parameters used by a derivatives clearing organization in setting the margin requirements under clause (iv) shall be risk-based and reviewed regularly.CommentsClose CommentsPermalink





‘(E) SETTLEMENT PROCEDURES- Each derivatives clearing organization shall--CommentsClose CommentsPermalink





‘(i) complete money settlements on a timely basis, and not less than once each business day;CommentsClose CommentsPermalink





‘(ii) employ money settlement arrangements that eliminate or strictly limit the exposure of the organization to settlement bank risks, such as credit and liquidity risks from the use of banks to effect money settlements;CommentsClose CommentsPermalink





‘(iii) ensure money settlements are final when effected;CommentsClose CommentsPermalink





‘(iv) maintain an accurate record of the flow of funds associated with each money settlement;CommentsClose CommentsPermalink





‘(v) have the ability to comply with the terms and conditions of any permitted netting or offset arrangements with other clearing organizations;CommentsClose CommentsPermalink





‘(vi) for physical settlements, establish rules that clearly state the obligations of the organization with respect to physical deliveries; andCommentsClose CommentsPermalink





‘(vii) identify and manage the risks from the obligations described under clause (vi).CommentsClose CommentsPermalink





‘(F) TREATMENT OF FUNDS-CommentsClose CommentsPermalink





‘(i) SAFETY OF FUNDS- Each derivatives clearing organization shall have standards and procedures designed to protect and ensure the safety of member and participant funds and assets.CommentsClose CommentsPermalink





‘(ii) HOLDING OF FUNDS- Each derivatives clearing organization shall hold member and participant funds and assets in a manner whereby risk of loss or of delay in the organization’s access to the assets and funds is minimized.CommentsClose CommentsPermalink





‘(iii) MINIMIZING RISKS- Assets and funds invested by a derivatives clearing organization shall be held in instruments with minimal credit, market, and liquidity risks.CommentsClose CommentsPermalink





‘(G) DEFAULT RULES AND PROCEDURES-CommentsClose CommentsPermalink





‘(i) INSOLVENCY ISSUES- Each derivatives clearing organization shall have rules and procedures designed to allow for the efficient, fair, and safe management of events when members or participants become insolvent or otherwise default on their obligations to the organization.CommentsClose CommentsPermalink





‘(ii) DEFAULT PROCEDURES- The default procedures of each derivatives clearing organization shall be clearly stated, and shall ensure that the organization can take timely action to contain losses and liquidity pressures and to continue meeting its obligations.CommentsClose CommentsPermalink





‘(iii) PUBLIC AVAILABILITY- The default procedures of each derivatives clearing organization shall be publicly available.CommentsClose CommentsPermalink





‘(H) ENFORCEMENT- Each derivatives clearing organization shall--CommentsClose CommentsPermalink





‘(i) maintain adequate arrangements and resources for the effective--CommentsClose CommentsPermalink





‘(I) monitoring and enforcement of compliance with the rules of the organization; andCommentsClose CommentsPermalink





‘(II) resolution of disputes; andCommentsClose CommentsPermalink





‘(ii) have the authority and ability to discipline, limit, suspend, or terminate the activities of a member or participant for violations of the rules of the organization.CommentsClose CommentsPermalink





‘(I) SYSTEM SAFEGUARDS- Each derivatives clearing organization shall--CommentsClose CommentsPermalink





‘(i) establish and maintain a program of risk analysis and oversight to identify and minimize sources of operational risk through the development of appropriate controls and procedures, and the development of automated systems, that are reliable, secure, and have adequate scalable capacity;CommentsClose CommentsPermalink





‘(ii) establish and maintain emergency procedures, backup facilities, and a plan for disaster recovery that allows for the timely recovery and resumption of operations and the fulfillment of the responsibilities and obligations of the organization; andCommentsClose CommentsPermalink





‘(iii) periodically conduct tests to verify that backup resources are sufficient to ensure daily processing, clearing, and settlement.CommentsClose CommentsPermalink





‘(J) REPORTING- Each derivatives clearing organization shall provide to the Commission all information necessary for the Commission to conduct oversight of the organization.CommentsClose CommentsPermalink





‘(K) RECORDKEEPING- Each derivatives clearing organization shall maintain for a period of 5 years records of all activities related to the business of the organization as a derivatives clearing organization in a form and manner acceptable to the Commission.CommentsClose CommentsPermalink





‘(L) PUBLIC INFORMATION-CommentsClose CommentsPermalink





‘(i) IN GENERAL- Each derivatives clearing organization shall provide market participants with sufficient information to identify and evaluate accurately the risks and costs associated with using the services of the organization.CommentsClose CommentsPermalink





‘(ii) AVAILABILITY OF RULES- Each derivatives clearing organization shall make information concerning the rules and operating procedures governing the clearing and settlement systems (including default procedures) of the organization available to market participants.CommentsClose CommentsPermalink





‘(iii) ADDITIONAL DISCLOSURES- Each derivatives clearing organization shall disclose publicly, and to the Commission, information concerning--CommentsClose CommentsPermalink





‘(I) the terms and conditions of contracts, agreements, and transactions cleared and settled by the organization;CommentsClose CommentsPermalink





‘(II) clearing and other fees that the organization charges its members and participants;CommentsClose CommentsPermalink





‘(III) the margin-setting methodology and the size and composition of the financial resource package of the organization;CommentsClose CommentsPermalink





‘(IV) other information relevant to participation in the settlement and clearing activities of the organization; andCommentsClose CommentsPermalink





‘(V) daily settlement prices, volume, and open interest for all contracts settled or cleared by the organization.CommentsClose CommentsPermalink





‘(M) INFORMATION-SHARING- Each derivatives clearing organization shall--CommentsClose CommentsPermalink





‘(i) enter into and abide by the terms of all appropriate and applicable domestic and international information-sharing agreements; andCommentsClose CommentsPermalink





‘(ii) use relevant information obtained from the agreements in carrying out the risk management program of the organization.CommentsClose CommentsPermalink





‘(N) ANTITRUST CONSIDERATIONS- Unless appropriate to achieve the purposes of this Act, a derivatives clearing organization shall avoid--CommentsClose CommentsPermalink





‘(i) adopting any rule or taking any action that results in any unreasonable restraint of trade; orCommentsClose CommentsPermalink





‘(ii) imposing any material anticompetitive burden.CommentsClose CommentsPermalink





‘(O) GOVERNANCE FITNESS STANDARDS-CommentsClose CommentsPermalink





‘(i) TRANSPARENCY- Each derivatives clearing organization shall establish governance arrangements that are transparent in order to fulfill public interest requirements and to support the objectives of owners and participants.CommentsClose CommentsPermalink





‘(ii) FITNESS STANDARDS- Each derivatives clearing organization shall establish and enforce appropriate fitness standards for directors, members of any disciplinary committee, members of the organization, and any other persons with direct access to the settlement or clearing activities of the organization, including any parties affiliated with any of the persons described in this clause.CommentsClose CommentsPermalink





‘(P) CONFLICTS OF INTEREST- Each derivatives clearing organization shall establish and enforce rules to minimize conflicts of interest in the decision-making process of the organization and establish a process for resolving such conflicts of interest.CommentsClose CommentsPermalink





‘(Q) COMPOSITION OF THE BOARDS- Each derivatives clearing organization shall ensure that the composition of the governing board or committee includes market participants.CommentsClose CommentsPermalink





‘(R) LEGAL RISK- Each derivatives clearing organization shall have a well-founded, transparent, and enforceable legal framework for each aspect of its activities.CommentsClose CommentsPermalink





‘(S) MODIFICATION OF CORE PRINCIPLES- The Commission may conform the core principles established in this paragraph to reflect evolving United States and international standards.’.CommentsClose CommentsPermalink





(4) REPORTING- Section 5b of the Commodity Exchange Act (7 U.S.C. 7a-1) is further amended by adding after subsection (k), as added by this section, the following:CommentsClose CommentsPermalink





‘(l) Reporting-CommentsClose CommentsPermalink





‘(1) TRANSPARENCY-CommentsClose CommentsPermalink





‘(A) IN GENERAL- A derivatives clearing organization that clears swaps shall provide to the Commission and any swap repository designated by the Commission all information determined by the Commission to be necessary to perform its responsibilities under this Act.CommentsClose CommentsPermalink





‘(B) DATA COLLECTION REQUIREMENTS- The Commission shall adopt data collection and maintenance requirements for swaps cleared by derivatives clearing organizations that are comparable to the corresponding requirements for swaps accepted by swap repositories and swaps traded on alternative swap execution facilities.CommentsClose CommentsPermalink





‘(C) REPORTS ON SECURITY-BASED SWAP AGREEMENTS TO BE SHARED WITH THE SECURITIES AND EXCHANGE COMMISSION- A derivatives clearing organization that clears security-based swap agreements (as defined in section 3(a)(75) of the Securities Exchange Act) shall, upon request for the protection of investors and in the public interest, make available to the Securities and Exchange Commission all information relating to such security-based swap agreements.CommentsClose CommentsPermalink





‘(D) SHARING OF INFORMATION- Subject to section 8, the Commission shall share such information, upon request, with the Board, the Securities and Exchange Commission, the appropriate Federal banking agencies, the Financial Stability Oversight Council, and the Department of Justice or to other persons the Commission deems appropriate, including foreign financial supervisors (including foreign futures authorities), foreign central banks, and foreign ministries.CommentsClose CommentsPermalink





‘(2) PUBLIC INFORMATION- A derivatives clearing organization that clears swaps shall provide to the Commission, or its designee, such information as is required by, and in a form and at a frequency to be determined by, the Commission, in order to comply with the public reporting requirements contained in section 8(j).’.CommentsClose CommentsPermalink





(5) EXISTING DEPOSITORY INSTITUTIONS AND CLEARING AGENCIES- Section 5b(c) of the Commodity Exchange Act (7 U.S.C. 7a-1(c)) is amended by adding at the end the following:CommentsClose CommentsPermalink





‘(4) EXISTING DEPOSITORY INSTITUTIONS AND CLEARING AGENCIES- A depository institution (as that term is defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813)) or a clearing agency registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934 required to be registered as a derivatives clearing organization under this section is deemed to be registered under this section to the extent that the depository institution cleared swaps, as defined in this Act, as a multilateral clearing organization or the clearing agency cleared swaps, as defined in this Act, before the date of the enactment of this paragraph. Such depository institution or clearing agency shall be subject to the requirements of this Act and the regulations thereunder that are applicable to registered derivatives clearing organizations. A depository institution to which this paragraph applies may, by the vote of the shareholders owning not less than 51 percent of the voting interests of the institution, be converted into a State corporation, partnership, limited liability company, or other similar legal form pursuant to a plan of conversion, if the conversion is not in contravention of applicable State law.’.CommentsClose CommentsPermalink





(6) TECHNICAL CHANGE- Section 8(e) of the Commodity Exchange Act (7 U.S.C. 12(e)) is amended in the last sentence--CommentsClose CommentsPermalink





(A) by inserting ‘, central bank and ministries,’ after ‘department’ each place that term appears; andCommentsClose CommentsPermalink





(B) by striking ‘futures authority.’ and inserting ‘futures authority,’.CommentsClose CommentsPermalink





(c) Legal Certainty for Identified Banking Products-CommentsClose CommentsPermalink





(1) REPEAL- Sections 402(d), 404, 407, 408(b), and 408(c)(2) of the Legal Certainty for Bank Products Act of 2000 (7 U.S.C. 27(d), 27b, 27e, 27f(b), and 27f(c)(2)) are repealed.CommentsClose CommentsPermalink





(2) LEGAL CERTAINTY- Section 403 of the Legal Certainty for Bank Products Act of 2000 (7 U.S.C. 27a) is amended to read as follows:CommentsClose CommentsPermalink

‘SEC. 403. EXCLUSION OF IDENTIFIED BANKING PRODUCT.

‘(a) Exclusion- Except as provided in subsection (b) or (c)--CommentsClose CommentsPermalink





‘(1) the Commodity Exchange Act shall not apply to, and the Commodity Futures Trading Commission shall not exercise regulatory authority under such Act with respect to, an identified banking product; andCommentsClose CommentsPermalink





‘(2) the definitions of ‘security-based swap’ in section 3(a)(68) of the Securities Exchange Act of 1934 and ‘security-based swap agreement’ in section 3(a)(75) of the Securities Exchange Act of 1934 do not include any identified banking product.CommentsClose CommentsPermalink





‘(b) Exception- An appropriate Federal banking agency may except an identified banking product of a bank under its regulatory jurisdiction from the exclusions in subsection (a) if the agency determines, in consultation with the Commodity Futures Trading Commission and the Securities and Exchange Commission, that the product--CommentsClose CommentsPermalink





‘(1) would meet the definition of swap in section 1a(34) of the Commodity Exchange Act or security-based swap in section 3(a)(68) of the Securities Exchange Act of 1934; andCommentsClose CommentsPermalink





‘(2) has become known to the trade as a swap or security-based swap, or otherwise has been structured as an identified banking product for the purpose of evading the provisions of the Commodity Exchange Act (7 U.S.C. 1 et seq.), the Securities Act of 1933 (15 U.S.C. 77a et seq.), or the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.).CommentsClose CommentsPermalink





‘(c) Exception- The exclusions in subsection (a) shall not apply to an identified banking product that--CommentsClose CommentsPermalink





‘(1) is a product of a bank that is not under the regulatory jurisdiction of an appropriate Federal banking agency;CommentsClose CommentsPermalink





‘(2) meets the definition of swap in section 1a(34) of the Commodity Exchange Act or security-based swap in section 3(a)(68) of the Securities Exchange Act of 1934; andCommentsClose CommentsPermalink





‘(3) has become known to the trade as a swap or security-based swap, or otherwise has been structured as an identified banking product for the purpose of evading the provisions of the Commodity Exchange Act (7 U.S.C. 1 et seq.), the Securities Act of 1933 (15 U.S.C. 77a et seq.), or the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.).’.CommentsClose CommentsPermalink

SEC. 714. PUBLIC REPORTING OF AGGREGATE SWAP DATA.

Section 8 of the Commodity Exchange Act (7 U.S.C. 12) is amended by adding at the end the following:CommentsClose CommentsPermalink





‘(j) Public Reporting of Aggregate Swap Data-CommentsClose CommentsPermalink





‘(1) IN GENERAL- The Commission, or a person designated by the Commission pursuant to paragraph (2), shall make available to the public, in a manner that does not disclose the business transactions and market positions of any person, aggregate data on swap trading volumes and positions from the sources set forth in paragraph (3).CommentsClose CommentsPermalink





‘(2) DESIGNEE OF THE COMMISSION- The Commission may designate a derivatives clearing organization or a swap repository to carry out the public reporting described in paragraph (1).CommentsClose CommentsPermalink





‘(3) SOURCES OF INFORMATION- The sources of the information to be publicly reported as described in paragraph (1) are--CommentsClose CommentsPermalink





‘(A) derivatives clearing organizations pursuant to section 5b(k)(2);CommentsClose CommentsPermalink





‘(B) swap repositories pursuant to section 21(c)(3); andCommentsClose CommentsPermalink





‘(C) reports received by the Commission pursuant to section 4r.’.CommentsClose CommentsPermalink

SEC. 715. SWAP REPOSITORIES.

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

‘SEC. 21. SWAP REPOSITORIES.

‘(a) Registration Requirement-CommentsClose CommentsPermalink





‘(1) IN GENERAL- A person may register as a swap repository by filing with the Commission an application in such form as the Commission, by rule, may prescribe, containing the rules of the swap repository and such other information and documentation as the Commission, by rule, may prescribe as necessary or appropriate in the public interest, for the protection of investors, or in the furtherance of the purposes of this section.CommentsClose CommentsPermalink





‘(2) INSPECTION AND EXAMINATION- Registered swap repositories shall be subject to inspection and examination by any representative of the Commission.CommentsClose CommentsPermalink





‘(3) SHARING OF INFORMATION WITH SECURITIES AND EXCHANGE COMMISSION- Registered swap repositories shall make available to the Securities and Exchange Commission, upon request, all information relating to security-based swap agreements that are maintained by such swap repository.CommentsClose CommentsPermalink





‘(b) Standard Setting-CommentsClose CommentsPermalink





‘(1) DATA IDENTIFICATION- The Commission shall prescribe standards that specify the data elements for each swap that shall be collected and maintained by each registered swap repository.CommentsClose CommentsPermalink





‘(2) DATA COLLECTION AND MAINTENANCE- The Commission shall prescribe data collection and data maintenance standards for swap repositories.CommentsClose CommentsPermalink





‘(3) COMPARABILITY- The standards prescribed by the Commission under this subsection shall be comparable to the data standards imposed by the Commission on derivatives clearing organizations that clear swaps.CommentsClose CommentsPermalink





‘(c) Duties- A swap repository shall--CommentsClose CommentsPermalink





‘(1) accept data prescribed by the Commission for each swap under subsection (b);CommentsClose CommentsPermalink





‘(2) maintain such data in such form and manner and for such period as may be required by the Commission;CommentsClose CommentsPermalink





‘(3) provide to the Commission, or its designee, such information as is required by, and in a form and at a frequency to be determined by, the Commission, in order to comply with the public reporting requirements contained in section 8(j); andCommentsClose CommentsPermalink





‘(4) make available, on a confidential basis pursuant to section 8, all data obtained by the swap repository, including individual counterparty trade and position data, to the Commission, the appropriate Federal banking agencies, the Financial Stability Oversight Council, the Securities and Exchange Commission, and the Department of Justice or to other persons the Commission deems appropriate, including foreign financial supervisors (including foreign futures authorities), foreign central banks, and foreign ministries.CommentsClose CommentsPermalink





‘(d) Required Registration for Security-based Swap Repositories- Any person that is required to be registered as a swap repository under this section shall register with the Commission regardless of whether that person also is registered with the Securities and Exchange Commission as a security-based swap repository.CommentsClose CommentsPermalink





‘(e) Harmonization of Rules- Not later than 180 days after the effective date of the Over-the-Counter Derivatives Markets Act of 2010, the Commission and the Securities and Exchange Commission shall jointly adopt uniform rules governing persons that are registered under this section and persons that are registered as security-based swap repositories under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.), including uniform rules that specify the data elements that shall be collected and maintained by each repository.CommentsClose CommentsPermalink





‘(f) Exemptions- The Commission may exempt, conditionally or unconditionally, a swap repository from the requirements of this section if the Commission finds that such swap repository is subject to comparable, comprehensive supervision and regulation on a consolidated basis by the Securities and Exchange Commission, an appropriate Federal banking agency, or the appropriate governmental authorities in the organization’s home country.’.CommentsClose CommentsPermalink

SEC. 716. REPORTING AND RECORDKEEPING.

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

‘SEC. 4r. REPORTING AND RECORDKEEPING FOR CERTAIN SWAPS.

‘(a) In General- Any person who enters into a swap shall satisfy the reporting requirements of subsection (b), if such person--CommentsClose CommentsPermalink





‘(1) did not clear the swap in accordance with section 2(j)(1); andCommentsClose CommentsPermalink





‘(2) did not have data regarding the swap accepted by a swap repository in accordance with rules (including time frames) adopted by the Commission under section 21.CommentsClose CommentsPermalink





‘(b) Reports- Any person described in subsection (a) shall--CommentsClose CommentsPermalink





‘(1) make such reports in such form and manner and for such period as the Commission shall prescribe by rule or regulation regarding the swaps held by the person; andCommentsClose CommentsPermalink





‘(2) keep books and records pertaining to the swaps held by the person in such form and manner and for such period as may be required by the Commission, which books and records shall be open to inspection by any representative of the Commission, an appropriate Federal banking agency, the Securities and Exchange Commission, the Financial Stability Oversight Council, and the Department of Justice.CommentsClose CommentsPermalink





‘(c) Identical Data- In adopting rules under this section, the Commission shall require persons described in subsection (a) to report the same or a more comprehensive set of data than the Commission requires swap repositories to collect under section 21.’.CommentsClose CommentsPermalink

SEC. 717. REGISTRATION AND REGULATION OF SWAP DEALERS AND MAJOR SWAP PARTICIPANTS.

(a) In General- The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended by inserting after section 4r (as added by section 716) the following:CommentsClose CommentsPermalink

‘SEC. 4s. REGISTRATION AND REGULATION OF SWAP DEALERS AND MAJOR SWAP PARTICIPANTS.

‘(a) Registration- It shall be unlawful for any person--CommentsClose CommentsPermalink





‘(1) to act as a swap dealer unless such person is registered as a swap dealer with the Commission; andCommentsClose CommentsPermalink





‘(2) to act as a major swap participant unless such person shall have registered as a major swap participant with the Commission.CommentsClose CommentsPermalink





‘(b) Requirements-CommentsClose CommentsPermalink





‘(1) IN GENERAL- A person shall register as a swap dealer or major swap participant by filing a registration application with the Commission.CommentsClose CommentsPermalink





‘(2) CONTENTS- The application required under paragraph (1) shall be made in such form and manner as prescribed by the Commission, giving any information and facts as the Commission may deem necessary concerning the business in which the applicant is or will be engaged. Such person, when registered as a swap dealer or major swap participant, shall continue to report and furnish to the Commission such information pertaining to such person’s business as the Commission may require.CommentsClose CommentsPermalink





‘(3) EXPIRATION- Each registration shall expire at such time as the Commission may by rule or regulation prescribe.CommentsClose CommentsPermalink





‘(4) RULES- Except as provided in subsections (c), (d), and (e), the Commission may prescribe rules applicable to swap dealers and major swap participants, including rules that limit the activities of swap dealers and major swap participants.CommentsClose CommentsPermalink





‘(5) TRANSITION- Rules adopted under this section shall provide for the registration of swap dealers and major swap participants not later than 1 year after the effective date of the Over-the-Counter Derivatives Markets Act of 2010.CommentsClose CommentsPermalink





‘(6) STATUTORY DISQUALIFICATION- Except to the extent otherwise specifically provided by rule, regulation, or order, it shall be unlawful for a swap dealer or a major swap participant to permit any person associated with a swap dealer or a major swap participant who is subject to a statutory disqualification to effect or be involved in effecting swaps on behalf of such swap dealer or major swap participant, if such swap dealer or major swap participant knew, or in the exercise of reasonable care should have known, of such statutory disqualification.CommentsClose CommentsPermalink





‘(c) Dual Registration-CommentsClose CommentsPermalink





‘(1) SWAP DEALER- Any person that is required to be registered as a swap dealer under this section shall register with the Commission regardless of whether that person also is a depository institution or is registered with the Securities and Exchange Commission as a security-based swap dealer.CommentsClose CommentsPermalink





‘(2) MAJOR SWAP PARTICIPANT- Any person that is required to be registered as a major swap participant under this section shall register with the Commission regardless of whether that person also is a depository institution or is registered with the Securities and Exchange Commission as a major security-based swap participant.CommentsClose CommentsPermalink





‘(d) Joint Rules-CommentsClose CommentsPermalink





‘(1) IN GENERAL- Not later than 180 days after the effective date of the Over-the-Counter Derivatives Markets Act of 2010, the Commission and the Securities and Exchange Commission shall jointly adopt uniform rules for persons that are registered--CommentsClose CommentsPermalink





‘(A) as swap dealers or major swap participants under this section; andCommentsClose CommentsPermalink





‘(B) as security-based swap dealers or major security-based swap participants under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.).CommentsClose CommentsPermalink





‘(2) EXCEPTION FOR PRUDENTIAL REQUIREMENTS- The Commission and the Securities and Exchange Commission shall not prescribe rules imposing prudential requirements (including activity restrictions) on swap dealers, major swap participants, security-based swap dealers, or major security-based swap participants that are depository institutions, as that term is defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813). This provision shall not be construed as limiting the authority of the Commission and the Securities and Exchange Commission to prescribe appropriate business conduct, reporting, and recordkeeping requirements to protect investors.CommentsClose CommentsPermalink





‘(e) Capital and Margin Requirements-CommentsClose CommentsPermalink





‘(1) IN GENERAL-CommentsClose CommentsPermalink





‘(A) SWAP DEALERS AND MAJOR SWAP PARTICIPANTS THAT ARE DEPOSITORY INSTITUTIONS- Each registered swap dealer and major swap participant that is a depository institution, as that term is defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813), shall meet such minimum capital requirements and minimum initial and variation margin requirements as the appropriate Federal banking agency shall by rule or regulation prescribe under paragraph (2)(A) to help ensure the safety and soundness of the swap dealer or major swap participant.CommentsClose CommentsPermalink





‘(B) SWAP DEALERS AND MAJOR SWAP PARTICIPANTS THAT ARE NOT DEPOSITORY INSTITUTIONS- Each registered swap dealer and major swap participant that is not a depository institution, as that term is defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813), shall meet such minimum capital requirements and minimum initial and variation margin requirements as the Commission and the Securities and Exchange Commission shall by rule or regulation jointly prescribe under paragraph (2)(B) to help ensure the safety and soundness of the swap dealer or major swap participant.CommentsClose CommentsPermalink





‘(2) JOINT RULES-CommentsClose CommentsPermalink





‘(A) SWAP DEALERS AND MAJOR SWAP PARTICIPANTS THAT ARE DEPOSITORY INSTITUTIONS- Not later than 180 days after the date of the enactment of the Over-the-Counter Derivatives Markets Act of 2010, the appropriate Federal banking agencies, in consultation with the Commission and the Securities and Exchange Commission, shall jointly adopt rules imposing capital and margin requirements under this subsection for swap dealers and major swap participants that are depository institutions, as that term is defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813).CommentsClose CommentsPermalink





‘(B) SWAP DEALERS AND MAJOR SWAP PARTICIPANTS THAT ARE NOT DEPOSITORY INSTITUTIONS- Not later than 180 days after the date of the enactment of the Over-the-Counter Derivatives Markets Act of 2010, the Commission and the Securities and Exchange Commission shall jointly adopt rules imposing capital and margin requirements under this subsection for swap dealers and major swap participants that are not depository institutions, as that term is defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813).CommentsClose CommentsPermalink





‘(3) CAPITAL-CommentsClose CommentsPermalink





‘(A) SWAP DEALERS AND MAJOR SWAP PARTICIPANTS THAT ARE DEPOSITORY INSTITUTIONS- The capital requirements prescribed under paragraph (2)(A) for swap dealers and major swap participants that are depository institutions shall contain--CommentsClose CommentsPermalink





‘(i) a capital requirement that is greater than zero for swaps that are cleared by a registered derivatives clearing organization or a derivatives clearing organization that is exempt from registration under section 5b(j) of this Act; andCommentsClose CommentsPermalink





‘(ii) to offset the greater risk to the swap dealer or major swap participant and to the financial system arising from the use of swaps that are not centrally cleared, substantially higher capital requirements for swaps that are not cleared by a registered derivatives clearing organization or a derivatives clearing organization that is exempt from registration under section 5b(j) of this Act than for swaps that are centrally cleared.CommentsClose CommentsPermalink





‘(B) SWAP DEALERS AND MAJOR SWAP PARTICIPANTS THAT ARE NOT DEPOSITORY INSTITUTIONS- The capital requirements prescribed under paragraph (2)(B) for swap dealers and major swap participants that are not depository institutions shall be as strict as or stricter than the capital requirements prescribed for swap dealers and major swap participants that are depository institutions under paragraph (2)(A).CommentsClose CommentsPermalink





‘(C) RULE OF CONSTRUCTION-CommentsClose CommentsPermalink





‘(i) IN GENERAL- Nothing in this section shall limit, or be construed to limit, the authority--CommentsClose CommentsPermalink





‘(I) of the Commission to set financial responsibility rules for a futures commission merchant or introducing broker registered pursuant to section 4f(a) of this title (except for section 4f(a)(3) thereof) in accordance with section 4f(b) of this title; orCommentsClose CommentsPermalink





‘(II) of the Securities and Exchange Commission to set financial responsibility rules for a broker or dealer registered pursuant to section 15(b) of the Securities Exchange Act of 1934 (except for section 15(b)(11) thereof) in accordance with section 15(c)(3) of the Securities Exchange Act of 1934.CommentsClose CommentsPermalink





‘(ii) FUTURES COMMISSION MERCHANTS AND OTHER DEALERS- A futures commission merchant, introducing broker, broker, or dealer shall maintain sufficient capital to comply with the stricter of any applicable capital requirements to which such futures commission merchant, introducing broker, broker, or dealer is subject to under this title or the Securities Exchange Act of 1934.CommentsClose CommentsPermalink





‘(4) MARGIN-CommentsClose CommentsPermalink





‘(A) SWAP DEALERS AND MAJOR SWAP PARTICIPANTS THAT ARE DEPOSITORY INSTITUTIONS-CommentsClose CommentsPermalink





‘(i) IN GENERAL- The appropriate Federal banking agency for swap dealers and major swap participants that are depository institutions shall impose both initial and variation margin requirements in accordance with paragraph (2)(A) on all swaps that are not cleared by a registered derivatives clearing organization or a derivatives clearing organization that is exempt from registration under section 5b(j) of this Act.CommentsClose CommentsPermalink





‘(ii) EXEMPTION- The appropriate Federal banking agency for swap dealers and major swap participants that are depository institutions, by rule or order, as the agency deems consistent with the public interest, may conditionally or unconditionally exempt a swap dealer or a major swap participant that is a depository institution from the requirements of this subparagraph and the rules issued under this subparagraph with regard to any swap in which 1 of the counterparties is--CommentsClose CommentsPermalink





‘(I) not a swap dealer, major swap participant, security-based swap dealer, or a major security-based swap participant;CommentsClose CommentsPermalink





‘(II) using the swap as part of an effective hedge under generally accepted accounting principles; andCommentsClose CommentsPermalink





‘(III) predominantly engaged in activities that are not financial in nature, as defined in section 4(k) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(k)).CommentsClose CommentsPermalink





‘(iii) DETERMINATION OF THE FINANCIAL STABILITY OVERSIGHT COUNCIL- The appropriate Federal banking agency may act by rule or order to exempt a swap dealer or major swap participant for which it is the primary financial regulatory agency from any requirement or rule under this subsection only if--CommentsClose CommentsPermalink





‘(I) the appropriate Federal banking agency has provided a written notice to the Financial Stability Oversight Council describing the proposed exemption; andCommentsClose CommentsPermalink





‘(II) the Financial Stability Oversight Council has not made a determination and notified the appropriate Federal banking agency within 60 days of receipt of such notice that such exemption would pose a threat to the stability of the United States financial system.CommentsClose CommentsPermalink





‘(B) SWAP DEALERS AND MAJOR SWAP PARTICIPANTS THAT ARE NOT DEPOSITORY INSTITUTIONS-CommentsClose CommentsPermalink





‘(i) IN GENERAL- The Commission and the Securities and Exchange Commission shall impose both initial and variation margin requirements in accordance with paragraph (2)(B) for swap dealers and major swap participants that are not depository institutions on all swaps that are not cleared by a registered derivatives clearing organization or a derivatives clearing organization that is exempt from registration under section 5b(j) of this Act. Any such initial and variation margin requirements shall be as strict as or stricter than the margin requirements prescribed under paragraph (4)(A).CommentsClose CommentsPermalink





‘(ii) EXEMPTION- The Commission by rule or order, as the Commission deems consistent with the public interest, may conditionally or unconditionally exempt a swap dealer or a major swap participant that is not a depository institution from the requirements of this subparagraph and the rules issued under this subparagraph with regard to any swap in which 1 of the counterparties is--CommentsClose CommentsPermalink





‘(I) not a swap dealer, major swap participant, security-based swap dealer, or a major security-based swap participant;CommentsClose CommentsPermalink





‘(II) using the swap as part of an effective hedge under generally accepted accounting principles; andCommentsClose CommentsPermalink





‘(III) predominantly engaged in activities that are not financial in nature, as defined in section 4(k) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(k)).CommentsClose CommentsPermalink





‘(iii) DETERMINATION OF THE FINANCIAL STABILITY OVERSIGHT COUNCIL- The Commission may act by rule or order to exempt a swap dealer or major swap participant that is not a depository institution from any requirement or rule under this subsection only if--CommentsClose CommentsPermalink





‘(I) the Commission has provided a written notice to the Financial Stability Oversight Council describing the proposed exemption; andCommentsClose CommentsPermalink





‘(II) the Financial Stability Oversight Council has not made a determination and notified the Commission within 60 days of receipt of such notice that such exemption would pose a threat to the stability of the United States financial system.CommentsClose CommentsPermalink





‘(5) MARGIN REQUIREMENTS- In prescribing margin requirements under this subsection, the appropriate Federal banking agency with respect to swap dealers and major swap participants that are depository institutions and the Commission and the Securities and Exchange Commission with respect to swap dealers and major swap participants that are not depository institutions may permit the use of noncash collateral, as the agency or the Commission and the Securities and Exchange Commission determines to be consistent with--CommentsClose CommentsPermalink





‘(A) preserving the financial integrity of markets trading swaps; andCommentsClose CommentsPermalink





‘(B) preserving the stability of the United States financial system.CommentsClose CommentsPermalink





‘(6) REQUESTED MARGIN- If any party to a swap that is exempt from the margin requirements of paragraph (4)(A)(i) pursuant to the provisions of paragraph (4)(A)(ii) or from the margin requirements of paragraph (4)(B)(i) pursuant to the provisions of paragraph (4)(B)(ii) requests that such swap be margined, then--CommentsClose CommentsPermalink





‘(A) the exemption shall not apply; andCommentsClose CommentsPermalink





‘(B) the counterparty to such swap shall provide the requested margin.CommentsClose CommentsPermalink





‘(f) Reporting and Recordkeeping-CommentsClose CommentsPermalink





‘(1) IN GENERAL- Each registered swap dealer and major swap participant--CommentsClose CommentsPermalink





‘(A) shall make such reports as are prescribed by rule or regulation regarding the transactions and positions and financial condition of such dealer or participant;CommentsClose CommentsPermalink





‘(B) that is--CommentsClose CommentsPermalink





‘(i) a depository institution shall keep books and records of all activities related to its business as a swap dealer or major swap participant in such form and manner and for such period as may be prescribed by rule or regulation by the appropriate Federal banking agency; andCommentsClose CommentsPermalink





‘(ii) not a depository institution shall keep books and records in such form and manner and for such period as may be prescribed by rule or regulation pursuant to paragraph (2); andCommentsClose CommentsPermalink





‘(C) shall keep such books and records open to inspection and examination by any representative of the Commission.CommentsClose CommentsPermalink





‘(2) RULES- Not later than 1 year after the date of the enactment of the Over-the-Counter Derivatives Markets Act of 2010, the Commission and the Securities and Exchange Commission shall jointly adopt rules governing reporting and recordkeeping for swap dealers, major swap participants, security-based swap dealers, and major security-based swap participants that are not depository institutions.CommentsClose CommentsPermalink





‘(g) Daily Trading Records-CommentsClose CommentsPermalink





‘(1) IN GENERAL- Each registered swap dealer and major swap participant shall, for such period as may be prescribed by rule or regulation, maintain daily trading records of that dealer’s or participant’s--CommentsClose CommentsPermalink





‘(A) swaps and all related records (including related cash or forward transactions); andCommentsClose CommentsPermalink





‘(B) recorded communications, including the electronic mail, instant messages, and recordings of telephone calls.CommentsClose CommentsPermalink





‘(2) INFORMATION REQUIREMENTS- The daily trading records required to be maintained under paragraph (1) shall include such information as shall be prescribed by rule or regulation.CommentsClose CommentsPermalink





‘(3) CUSTOMER RECORDS- Each registered swap dealer and major swap participant shall maintain daily trading records for each customer or counterparty in such manner and form as to be identifiable with each swap transaction.CommentsClose CommentsPermalink





‘(4) AUDIT TRAIL-CommentsClose CommentsPermalink





‘(A) MAINTENANCE OF AUDIT TRAIL- Each registered swap dealer and major swap participant shall maintain a complete audit trail for conducting comprehensive and accurate trade reconstructions.CommentsClose CommentsPermalink





‘(B) PERMISSIBLE COMPLIANCE BY ENTITY OTHER THAN DEALER OR PARTICIPANT- A registered swap repository may, at the request of a registered swap dealer or major swap participant, satisfy the requirement of subparagraph (A) on behalf of such registered swap dealer or major swap participant.CommentsClose CommentsPermalink





‘(5) RULES- Not later than 1 year after the date of the enactment of the Over-the-Counter Derivatives Markets Act of 2010, the Commission and the Securities and Exchange Commission shall jointly adopt rules governing daily trading records for swap dealers, major swap participants, security-based swap dealers, and major security-based swap participants.CommentsClose CommentsPermalink





‘(h) Business Conduct Standards-CommentsClose CommentsPermalink





‘(1) IN GENERAL- Each registered swap dealer and major swap participant shall conform with such business conduct standards as may be prescribed by rule or regulation, including any standards addressing--CommentsClose CommentsPermalink





‘(A) fraud, manipulation, and other abusive practices involving swaps (including swaps that are offered but not entered into);CommentsClose CommentsPermalink





‘(B) diligent supervision of its business as a swap dealer;CommentsClose CommentsPermalink





‘(C) adherence to all applicable position limits; andCommentsClose CommentsPermalink





‘(D) such other matters as the Commission shall determine to be necessary or appropriate.CommentsClose CommentsPermalink





‘(2) BUSINESS CONDUCT REQUIREMENTS- Business conduct requirements adopted by the Commission pursuant to paragraph (1) shall--CommentsClose CommentsPermalink





‘(A) establish the standard of care for a swap dealer or major swap participant to verify that any counterparty meets the eligibility standards for an eligible contract participant;CommentsClose CommentsPermalink





‘(B) require disclosure by the swap dealer or major swap participant to any counterparty to the transaction (other than a swap dealer, major swap participant, security-based swap dealer, or major security-based swap participant) of--CommentsClose CommentsPermalink





‘(i) information about the material risks and characteristics of the swap;CommentsClose CommentsPermalink





‘(ii) the source and amount of any fees or other material remuneration that the swap dealer or major swap participant would directly or indirectly expect to receive in connection with the swap; andCommentsClose CommentsPermalink





‘(iii) any other material incentives or conflicts of interest that the swap dealer or major swap participant may have in connection with the swap;CommentsClose CommentsPermalink





‘(C) establish a standard of conduct for a swap dealer or major swap participant to communicate in a fair and balanced manner based on principles of fair dealing and good faith;CommentsClose CommentsPermalink





‘(D) establish a standard of conduct for a swap dealer or major swap participant, with respect to a counterparty that is an eligible contract participant within the meaning of subclause (I) or (II) of clause (vii) of section 1a(12) of this Act, to have a reasonable basis to believe that the counterparty has an independent representative that--CommentsClose CommentsPermalink





‘(i) has sufficient knowledge to evaluate the transaction and risks;CommentsClose CommentsPermalink





‘(ii) is not subject to a statutory disqualification;CommentsClose CommentsPermalink





‘(iii) is independent of the swap dealer or major swap participant;CommentsClose CommentsPermalink





‘(iv) undertakes a duty to act in the best interests of the counterparty it represents;CommentsClose CommentsPermalink





‘(v) makes appropriate disclosures; andCommentsClose CommentsPermalink





‘(vi) will provide written representations to the eligible contract participant regarding fair pricing and the appropriateness of the transaction; andCommentsClose CommentsPermalink





‘(E) establish such other standards and requirements as the Commission may determine are necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of this title.CommentsClose CommentsPermalink





‘(3) RULES- Not later than 1 year after the date of enactment of the Over-the-Counter Derivatives Markets Act of 2010, the Commission and the Securities and Exchange Commission shall jointly prescribe rules under this subsection governing business conduct standards for swap dealers, major swap participants, security-based swap dealers, and major security-based swap participants.CommentsClose CommentsPermalink





‘(i) Documentation and Back Office Standards-CommentsClose CommentsPermalink





‘(1) IN GENERAL- Each registered swap dealer and major swap participant shall conform with standards, as may be prescribed by rule or regulation, addressing timely and accurate confirmation, processing, netting, documentation, and valuation of all swaps.CommentsClose CommentsPermalink





‘(2) RULES- Not later than 1 year after the date of the enactment of the Over-the-Counter Derivatives Markets Act of 2010, the Commission and the Securities and Exchange Commission shall jointly adopt rules governing documentation and back office standards for swap dealers, major swap participants, security-based swap dealers, and major security-based swap participants.CommentsClose CommentsPermalink





‘(j) Dealer Responsibilities- Each registered swap dealer and major swap participant shall, at all times, comply with the following requirements:CommentsClose CommentsPermalink





‘(1) MONITORING OF TRADING- The swap dealer or major swap participant shall monitor its trading in swaps to prevent violations of applicable position limits.CommentsClose CommentsPermalink





‘(2) DISCLOSURE OF GENERAL INFORMATION- The swap dealer or major swap participant shall disclose to the Commission information concerning--CommentsClose CommentsPermalink





‘(A) terms and conditions of its swaps;CommentsClose CommentsPermalink





‘(B) swap trading operations, mechanisms, and practices;CommentsClose CommentsPermalink





‘(C) financial integrity protections relating to swaps; andCommentsClose CommentsPermalink





‘(D) other information relevant to its trading in swaps.CommentsClose CommentsPermalink





‘(3) ABILITY TO OBTAIN INFORMATION- The swap dealer or major swap participant shall--CommentsClose CommentsPermalink





‘(A) establish and enforce internal systems and procedures to obtain any necessary information to perform any of the functions described in this section; andCommentsClose CommentsPermalink





‘(B) provide the information to the Commission upon request.CommentsClose CommentsPermalink





‘(4) CONFLICTS OF INTEREST- The swap dealer and major swap participant shall implement conflict of interest systems and procedures that--CommentsClose CommentsPermalink





‘(A) establish structural and institutional safeguards to assure that the activities of any person within the firm relating to research or analysis of the price or market for any commodity are separated by appropriate informational partitions within the firm from the review, pressure, or oversight of those whose involvement in trading or clearing activities might potentially bias their judgment or supervision; andCommentsClose CommentsPermalink





‘(B) address such other issues as the Commission determines appropriate.CommentsClose CommentsPermalink





‘(5) ANTITRUST CONSIDERATIONS- Unless necessary or appropriate to achieve the purposes of this Act, a swap dealer or major swap participant shall avoid--CommentsClose CommentsPermalink





‘(A) adopting any processes or taking any actions that result in any unreasonable restraints of trade; orCommentsClose CommentsPermalink





‘(B) imposing any material anticompetitive burden on trading.CommentsClose CommentsPermalink





‘(k) Rules- The Commission and the Securities and Exchange Commission shall consult with each other prior to adopting any rules under the Over-the-Counter Derivatives Markets Act of 2010.’.CommentsClose CommentsPermalink





(b) Conflict of Interests- The Commodity Futures Trading Commission and the Securities and Exchange Commission shall jointly adopt rules mitigating conflicts of interest in connection with a swap dealer, security-based swap dealer, major swap participant, or major security-based swap participant’s conduct of business with a derivatives clearing organization, clearing agency, board of trade, or an alternative swap execution facility that clears or trades swaps in which such swap dealer, security-based swap dealer, major swap participant, or major security-based swap participant has a material debt or equity investment.CommentsClose CommentsPermalink

SEC. 718. SEGREGATION OF ASSETS HELD AS COLLATERAL IN SWAP TRANSACTIONS.

The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended by inserting after section 4s (as added by section 717) the following:CommentsClose CommentsPermalink

‘SEC. 4t. SEGREGATION OF ASSETS HELD AS COLLATERAL IN SWAP TRANSACTIONS.

‘(a) Cleared Swaps- A swap dealer, futures commission merchant, or derivatives clearing organization by or through which funds or other property provided as initial margin or collateral are held to margin, guarantee, or secure the obligations of a counterparty under a swap to be cleared by or through a derivatives clearing organization shall segregate, maintain, and use the funds or other property provided as initial margin or collateral for the benefit of the counterparty, in accordance with such rules and regulations as the Commission shall prescribe for swap dealers that are not depository institutions, as that term is defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813) or the appropriate Federal banking agency shall prescribe for swap dealers that are depository institutions. Any such funds or other property provided as initial margin or collateral shall be treated as customer property under this Act.CommentsClose CommentsPermalink





‘(b) Other Swaps- At the request of a swap counterparty who provides funds or other property as initial margin or collateral to a swap dealer to margin, guarantee, or secure the obligations of the counterparty under a swap between the counterparty and the swap dealer that is not submitted for clearing to a derivatives clearing organization, the swap dealer shall segregate the funds or other property provided as initial margin or collateral for the benefit of the counterparty, and maintain the funds or other property in an account that is carried by an independent third-party custodian and designated as a segregated account for the counterparty, in accordance with such rules and regulations as the Commission shall prescribe for swap dealers that are not depository institutions, as that term is defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813) or the appropriate Federal banking agency shall prescribe for swap dealers that are depository institutions. Any segregation requested under this subsection shall be made available by a swap dealer to a counterparty on fair and reasonable terms on a non-discriminatory basis. This subsection shall not be interpreted to preclude commercial arrangements regarding the investment of the segregated funds or other property and the related allocation of gains and losses resulting from any such investment, provided, however, that the segregated funds or other property under this subsection may be invested only in such investments as the Commission or the appropriate Federal banking agency, as applicable, permits by rule or regulation, and shall not be pledged, re-hypothecated, or otherwise encumbered by a swap dealer.’.CommentsClose CommentsPermalink

SEC. 719. CONFLICTS OF INTEREST.

Section 4d of the Commodity Exchange Act (7 U.S.C. 6d) is amended by--CommentsClose CommentsPermalink





(1) redesignating subsection (c) as subsection (d); andCommentsClose CommentsPermalink





(2) inserting after subsection (b) the following:CommentsClose CommentsPermalink





‘(c) Conflicts of Interest- The Commission shall require that futures commission merchants and introducing brokers implement conflict of interest systems and procedures that--CommentsClose CommentsPermalink





‘(1) establish structural and institutional safeguards to assure that the activities of any person within the firm relating to research or analysis of the price or market for any commodity are separated by appropriate informational partitions within the firm from the review, pressure, or oversight of those whose involvement in trading or clearing activities might potentially bias their judgment or supervision; andCommentsClose CommentsPermalink





‘(2) address such other issues as the Commission determines appropriate.’.CommentsClose CommentsPermalink

SEC. 720. ALTERNATIVE SWAP EXECUTION FACILITIES.

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

‘SEC. 5h. ALTERNATIVE SWAP EXECUTION FACILITIES.

‘(a) Definition- For purposes of this section, the term ‘alternative swap execution facility’ means an electronic trading system with pre-trade and post-trade transparency in which multiple participants have the ability to execute or trade swaps by accepting bids and offers made by other participants that are open to multiple participants in the system, but which is not an exchange.CommentsClose CommentsPermalink





‘(b) Registration-CommentsClose CommentsPermalink





‘(1) IN GENERAL- No person may operate a facility for the trading of swaps unless the facility is registered as an alternative swap execution facility under this section or as a designated contract market registered under this Act.CommentsClose CommentsPermalink





‘(2) REQUIRED REGISTRATION FOR ALTERNATIVE SWAP EXECUTION FACILITIES- Any person that is required to be registered as an alternative swap execution facility under this section shall register with the Commission regardless of whether that person also is registered with the Securities and Exchange Commission as an alternative swap execution facility.CommentsClose CommentsPermalink





‘(c) Requirements for Trading- An alternative swap execution facility that is registered under subsection (b) may trade any swap.CommentsClose CommentsPermalink





‘(d) Trading by Contract Markets- A board of trade that operates a contract market shall, to the extent that the board of trade also operates an alternative swap execution facility and uses the same electronic trade execution system for trading on the contract market and the alternative swap execution facility, identify whether electronic trading is taking place on the contract market or the alternative swap execution facility.CommentsClose CommentsPermalink





‘(e) Criteria for Registration-CommentsClose CommentsPermalink





‘(1) IN GENERAL- To be registered as an alternative swap execution facility, the facility shall be required to demonstrate to the Commission that such facility meets the criteria established under this section.CommentsClose CommentsPermalink





‘(2) DETERRENCE OF ABUSES- Each alternative swap execution facility shall establish and enforce trading and participation rules that will deter abuses and have the capacity to detect, investigate, and enforce those rules, including--CommentsClose CommentsPermalink





‘(A) means to obtain information necessary to perform the functions required under this section; orCommentsClose CommentsPermalink





‘(B) means to--CommentsClose CommentsPermalink





‘(i) provide market participants with impartial access to the market; andCommentsClose CommentsPermalink





‘(ii) capture information that may be used in establishing whether any violations of this section have occurred.CommentsClose CommentsPermalink





‘(3) TRADING PROCEDURES- Each alternative swap execution facility shall establish and enforce rules or terms and conditions defining, or specifications detailing, trading procedures to be used in entering and executing orders traded on or through its facilities.CommentsClose CommentsPermalink





‘(4) FINANCIAL INTEGRITY OF TRANSACTIONS- Each alternative swap execution facility shall establish and enforce rules and procedures for ensuring the financial integrity of swaps entered on or through its facilities, including the clearance and settlement of the swaps pursuant to section 2(j)(1).CommentsClose CommentsPermalink





‘(f) Core Principles for Alternative Swap Execution Facilities-CommentsClose CommentsPermalink





‘(1) COMPLIANCE-CommentsClose CommentsPermalink





‘(A) IN GENERAL- To maintain its registration as an alternative swap execution facility, the facility shall comply with the core principles established in this subsection and any requirement that the Commission may impose by rule or regulation pursuant to section 8a(5).CommentsClose CommentsPermalink





‘(B) REASONABLE DISCRETION- Except where the Commission determines otherwise by rule or regulation, the facility shall have reasonable discretion in establishing the manner in which it complies with the core principles established in this subsection.CommentsClose CommentsPermalink





‘(2) COMPLIANCE WITH RULES- Each alternative swap execution facility shall monitor and enforce compliance with any of the rules of the facility, including the terms and conditions of the swaps traded on or through the facility and any limitations on access to the facility.CommentsClose CommentsPermalink





‘(3) SWAPS NOT READILY SUSCEPTIBLE TO MANIPULATION- Each alternative swap execution facility shall permit trading only in swaps that are not readily susceptible to manipulation.CommentsClose CommentsPermalink





‘(4) MONITORING OF TRADING- Each alternative swap execution facility shall monitor trading in swaps to prevent manipulation, price distortion, and disruptions of the delivery or cash settlement process through surveillance, compliance, and disciplinary practices and procedures, including methods for conducting real-time monitoring of trading and comprehensive and accurate trade reconstructions.CommentsClose CommentsPermalink





‘(5) ABILITY TO OBTAIN INFORMATION- Each alternative swap execution facility shall--CommentsClose CommentsPermalink





‘(A) establish and enforce rules that will allow the facility to obtain any necessary information to perform any of the functions described in this subsection;CommentsClose CommentsPermalink





‘(B) provide the information to the Commission upon request; andCommentsClose CommentsPermalink





‘(C) have the capacity to carry out such international information-sharing agreements as the Commission may require.CommentsClose CommentsPermalink





‘(6) POSITION LIMITS OR ACCOUNTABILITY-CommentsClose CommentsPermalink





‘(A) IN GENERAL- To reduce the potential threat of market manipulation or congestion, especially during trading in the delivery month, and to eliminate or prevent excessive speculation as described in section 4a(a), an alternative swap execution facility shall adopt for each of its contracts, where necessary and appropriate, position limitations or position accountability for speculators.CommentsClose CommentsPermalink





‘(B) FOR CERTAIN CONTRACTS- For any contract that is subject to a position limitation established by the Commission pursuant to section 4a(a), an alternative swap execution facility shall set its position limitation at a level no higher than the Commission limitation.CommentsClose CommentsPermalink





‘(7) EMERGENCY AUTHORITY- Each alternative swap execution facility shall adopt rules to provide for the exercise of emergency authority, in consultation or cooperation with the Commission, where necessary and appropriate, including the authority--CommentsClose CommentsPermalink





‘(A) to liquidate or transfer open positions in any swap; orCommentsClose CommentsPermalink





‘(B) to suspend or curtail trading in a swap.CommentsClose CommentsPermalink





‘(8) TIMELY PUBLICATION OF TRADING INFORMATION- Each alternative swap execution facility shall make public timely information on price, trading volume, and other trading data on swaps to the extent prescribed by the Commission.CommentsClose CommentsPermalink





‘(9) RECORDKEEPING AND REPORTING-CommentsClose CommentsPermalink





‘(A) IN GENERAL- Each alternative swap execution facility shall--CommentsClose CommentsPermalink





‘(i) maintain records of all activities related to the business of the facility, including a complete audit trail, in a form and manner acceptable to the Commission for a period of 5 years;CommentsClose CommentsPermalink





‘(ii) report to the Commission all information determined by the Commission to be necessary or appropriate for the Commission to perform its responsibilities under this Act in a form and manner acceptable to the Commission; andCommentsClose CommentsPermalink





‘(iii) make available to the Securities and Exchange Commission, upon request, all information, including a complete audit trail, relating to transactions in security-based swap agreements (as such term is defined in section 3(a)(75) of the Securities Exchange Act of 1934).CommentsClose CommentsPermalink





‘(B) DATA COLLECTION REQUIREMENTS- The Commission shall adopt data collection and reporting requirements for alternative swap execution facilities that are comparable to corresponding requirements for derivatives clearing organizations and swap repositories.CommentsClose CommentsPermalink





‘(10) ANTITRUST CONSIDERATIONS- Unless necessary or appropriate to achieve the purposes of this Act, an alternative swap execution facility shall avoid--CommentsClose CommentsPermalink





‘(A) adopting any rules or taking any actions that result in any unreasonable restraints of trade; orCommentsClose CommentsPermalink





‘(B) imposing any material anticompetitive burden on trading on the swap execution facility.CommentsClose CommentsPermalink





‘(11) CONFLICTS OF INTEREST- Each alternative swap execution facility shall--CommentsClose CommentsPermalink





‘(A) establish and enforce rules to minimize conflicts of interest in its decision making process; andCommentsClose CommentsPermalink





‘(B) establish a process for resolving any conflicts of interest.CommentsClose CommentsPermalink





‘(12) DESIGNATION OF COMPLIANCE OFFICER-CommentsClose CommentsPermalink





‘(A) IN GENERAL- Each alternative swap execution facility shall designate an individual to serve as a compliance officer.CommentsClose CommentsPermalink





‘(B) DUTIES- The compliance officer shall perform the following duties:CommentsClose CommentsPermalink





‘(i) Reporting directly to the board or to the senior officer of the facility.CommentsClose CommentsPermalink





‘(ii) Reviewing the compliance of the facility with the core principles established in this subsection.CommentsClose CommentsPermalink





‘(iii) Consulting with the board of the facility, a body performing a function similar to that of a board, or the senior officer of the facility, to resolve any conflicts of interest that may arise.CommentsClose CommentsPermalink





‘(iv) Administering the policies and procedures of the facility required to be established pursuant to this section.CommentsClose CommentsPermalink





‘(v) Ensuring compliance with commodity laws and the rules and regulations issued thereunder, including any rules prescribed by the Commission pursuant to this section.CommentsClose CommentsPermalink





‘(vi) Establishing procedures for remediation of noncompliance issues found during compliance office reviews, lookbacks, internal or external audit findings, self-reported errors, or through validated complaints. Procedures to be established under this clause include procedures related to the handling, management response, remediation, retesting, and closing of noncompliance issues.CommentsClose CommentsPermalink





‘(C) ANNUAL REPORTS REQUIRED-CommentsClose CommentsPermalink





‘(i) IN GENERAL- The compliance officer shall annually prepare and sign a report on the compliance of the alternative swap execution facility with the commodity laws and the policies and procedures of the facility, including the code of ethics and conflict of interest policies of the facility, in accordance with rules prescribed by the Commission.CommentsClose CommentsPermalink





‘(ii) SUBMISSION- The compliance report required under clause (i) shall accompany the financial reports of the alternative swap execution facility that are required to be furnished to the Commission pursuant to this section and shall include a certification that, under penalty of law, the report is accurate and complete.CommentsClose CommentsPermalink





‘(g) Exemptions- The Commission may exempt, conditionally or unconditionally, an alternative swap execution facility from registration under this section if the Commission finds that such facility is subject to comparable, comprehensive supervision and regulation on a consolidated basis by the Securities and Exchange Commission, an appropriate Federal banking agency, or the appropriate governmental authorities in the organization’s home country.CommentsClose CommentsPermalink





‘(h) Harmonization of Rules- Not later than 180 days after the date of the enactment of the Over-the-Counter Derivatives Markets Act of 2010, the Commission and the Securities and Exchange Commission shall jointly prescribe rules governing the regulation of alternative swap execution facilities under this section and section 3C of the Securities Exchange Act of 1934.’.CommentsClose CommentsPermalink

SEC. 721. DERIVATIVES TRANSACTION EXECUTION FACILITIES AND EXEMPT BOARDS OF TRADE.

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





(b) Conforming Amendments-CommentsClose CommentsPermalink





(1) Section 2 of the Commodity Exchange Act (7 U.S.C. 2) is amended--CommentsClose CommentsPermalink





(A) in subsection (a)(1)(A), in the first sentence, by striking ‘or 5a’;CommentsClose CommentsPermalink





(B) in subsection (a)(1)(C)--CommentsClose CommentsPermalink





(i) in clause (ii)--CommentsClose CommentsPermalink





(I) by striking ‘, or register a derivatives transaction execution facility that trades or executes,’;CommentsClose CommentsPermalink





(II) by striking ‘, and no derivatives transaction execution facility shall trade or execute such contracts of sale (or options on such contracts) for future delivery,’; andCommentsClose CommentsPermalink





(III) by striking ‘or the derivatives transaction execution facility,’; andCommentsClose CommentsPermalink





(ii) in clause (v)--CommentsClose CommentsPermalink





(I) in subclause (II), by striking ‘or derivatives transaction execution facility’; andCommentsClose CommentsPermalink





(II) in subclause (V), by striking ‘or registered derivatives transaction execution facility,’;CommentsClose CommentsPermalink





(C) in subsection (a)(1)(D)--CommentsClose CommentsPermalink





(i) in clause (i)--CommentsClose CommentsPermalink





(I) in the matter preceding subclause (I)--CommentsClose CommentsPermalink

(aa) by striking ‘, or register a derivatives transaction execution facility that trades or executes,’; andCommentsClose CommentsPermalink

(bb) by striking ‘, or registered as a derivatives transaction execution facility for,’; andCommentsClose CommentsPermalink

(II) in subclause (IV), by striking ‘registered derivatives transaction execution facility,’ each place that term appears;CommentsClose CommentsPermalink





(ii) by amending clause (ii)(I) to read as follows:CommentsClose CommentsPermalink





‘(I) the transaction is conducted on or subject to the rules of a board of trade that has been designated by the Commission as a contract market in such security futures product;’;CommentsClose CommentsPermalink





(iii) in clause (ii)(II), by striking ‘or registered derivatives transaction execution facility’; andCommentsClose CommentsPermalink





(iv) in clause (ii)(III), by striking ‘or registered derivatives transaction execution facility’;CommentsClose CommentsPermalink





(D) in subsection (a)(9)(B)(ii), by striking ‘or derivatives transaction execution facility’, each place that term appears;CommentsClose CommentsPermalink





(E) in subsection (c)(1), by striking ‘section 5a of this Act’ and all that follows through ‘5d of this Act’ and inserting ‘section 5b of this Act’;CommentsClose CommentsPermalink





(F) in subsection (c)(2)(B)(iv)--CommentsClose CommentsPermalink





(i) in subclause (II)(cc), by striking ‘or a derivatives transaction execution facility’; andCommentsClose CommentsPermalink





(ii) in subclause (IV)(cc), by striking ‘or a derivatives transaction execution facility’;CommentsClose CommentsPermalink





(G) in subsection (c)(2)(C)(iii)--CommentsClose CommentsPermalink





(i) in subclause (II)(cc), by striking ‘or a derivatives transaction execution facility’; andCommentsClose CommentsPermalink





(ii) in subclause (IV)(cc), by striking ‘or a derivatives transaction execution facility’;CommentsClose CommentsPermalink





(H) in subsection (e)(2), by striking ‘or a derivatives transaction execution facility,’;CommentsClose CommentsPermalink





(I) in subsection (g), by striking ‘section 5a of this Act’ and all that follows through ‘5d of this Act’ and inserting ‘section 5b of this Act’;CommentsClose CommentsPermalink





(J) in subsection (h)(7)(B)--CommentsClose CommentsPermalink





(i) in clause (i), by striking ‘, or a derivatives transaction execution facility,’;CommentsClose CommentsPermalink





(ii) in clause (ii), by striking ‘, or a derivatives transaction execution facility,’; andCommentsClose CommentsPermalink





(iii) in clause (iv), ‘, a derivatives transaction execution facility,’; andCommentsClose CommentsPermalink





(K) in subsection (i)(2), by striking ‘section 5a of this Act’ and all that follows through ‘5d of this Act’ and inserting ‘section 5b of this Act’.CommentsClose CommentsPermalink





(2) The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended--CommentsClose CommentsPermalink





(A) by striking ‘or derivatives transaction execution facility’ each place that term appears;CommentsClose CommentsPermalink





(B) by striking ‘or derivatives transaction execution facility,’ each place that term appears;CommentsClose CommentsPermalink





(C) by striking ‘, derivatives transaction execution facility,’ each place that term appears;CommentsClose CommentsPermalink





(D) by striking ‘derivatives transaction execution facility’ each place that term appears;CommentsClose CommentsPermalink





(E) by striking ‘or derivatives transaction execution facilities,’ each place that term appears;CommentsClose CommentsPermalink





(F) by striking ‘or derivatives transaction execution facilities’ each place that term appears;CommentsClose CommentsPermalink





(G) by striking ‘or registered derivatives transaction execution facility’ each place that term appears;CommentsClose CommentsPermalink





(H) by striking ‘or registered derivatives transaction execution facility,’ each place that term appears; andCommentsClose CommentsPermalink





(I) by striking ‘and registered derivatives transaction execution facility’ each place that term appears.CommentsClose CommentsPermalink





(3) Section 4j of the Commodity Exchange Act (7 U.S.C. 6j) is amended in the heading by striking ‘and registered derivatives transaction execution facilities’.CommentsClose CommentsPermalink





(4) Section 5(e)(2) of the Commodity Exchange Act (7 U.S.C. 5(e)) is repealed.CommentsClose CommentsPermalink





(5) Sections 555, 556, 559, and 560 of title 11, United States Code, are each amended by striking ‘, a derivatives transaction execution facility registered under the Commodity Exchange Act,’ each place that term appears.CommentsClose CommentsPermalink





(6) Section 561 of title 11, United States Code, is amended by striking ‘or a derivatives transaction execution facility registered under the Commodity Exchange Act’.CommentsClose CommentsPermalink





(7) Section 3(55)(C)(iii)(I) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(55)(C)(iii)(I)) is amended by striking ‘or registered derivatives transaction execution facility’.CommentsClose CommentsPermalink





(8) Section 6(g)(1)(A) of the Securities Exchange Act of 1934 (15 U.S.C. 78f(g)(1)(A)) is amended--CommentsClose CommentsPermalink





(A) by striking ‘that--’ and all that follows through ‘(i) has been designated’ and inserting ‘that has been designated’;CommentsClose CommentsPermalink





(B) by striking ‘; or’ and inserting ‘; and’; andCommentsClose CommentsPermalink





(C) by striking clause (ii).CommentsClose CommentsPermalink





(9) Section 5(b)(2)(C)(iii) of the Securities Investor Protection Act of 1970 (15 U.S.C. 78eee(b)(2)(C)(iii)) is amended by striking ‘, a derivatives transaction execution facility registered under the Commodity Exchange Act,’.CommentsClose CommentsPermalink

SEC. 722. DESIGNATED CONTRACT MARKETS.

(a) Execution of Transactions- Section 5(d) of the Commodity Exchange Act (7 U.S.C. 7(d)) is amended by amending paragraph (9) to read as follows:CommentsClose CommentsPermalink





‘(9) EXECUTION OF TRANSACTIONS-CommentsClose CommentsPermalink





‘(A) OPEN MARKET- The board of trade shall provide a competitive, open, and efficient market and mechanism for executing transactions that protects the price discovery process of trading in the board of trade’s centralized market.CommentsClose CommentsPermalink





‘(B) PERMISSIBLE TRANSACTIONS- The rules may authorize, for bona fide business purposes--CommentsClose CommentsPermalink





‘(i) transfer trades or office trades;CommentsClose CommentsPermalink





‘(ii) an exchange of--CommentsClose CommentsPermalink





‘(I) futures in connection with a cash commodity transaction;CommentsClose CommentsPermalink





‘(II) futures for cash commodities; orCommentsClose CommentsPermalink





‘(III) futures for swaps; orCommentsClose CommentsPermalink





‘(iii) a futures commission merchant, acting as principal or agent, to enter into or confirm the execution of a contract for the purchase or sale of a commodity for future delivery if the contract is reported, recorded, or cleared in accordance with the rules of the contract market or a derivatives clearing organization.’.CommentsClose CommentsPermalink





(b) Additional Principles- Section 5(d) of the Commodity Exchange Act (7 U.S.C. 7(d)) is amended by adding at the end the following:CommentsClose CommentsPermalink





‘(19) FINANCIAL RESOURCES- The board of trade shall have adequate financial, operational, and managerial resources to discharge the responsibilities of a contract market. For the board of trade’s financial resources to be considered adequate, their value shall exceed the total amount that would enable the contract market to cover its operating costs for a period of 1 year, calculated on a rolling basis.CommentsClose CommentsPermalink





‘(20) SYSTEM SAFEGUARDS- The board of trade shall--CommentsClose CommentsPermalink





‘(A) establish and maintain a program of risk analysis and oversight to identify and minimize sources of operational risk through the development of appropriate controls and procedures, and the development of automated systems, that are reliable, secure, and give adequate scalable capacity;CommentsClose CommentsPermalink





‘(B) establish and maintain emergency procedures, backup facilities, and a plan for disaster recovery that allow for the timely recovery and resumption of operations and the fulfillment of the board of trade’s responsibilities and obligations; andCommentsClose CommentsPermalink





‘(C) periodically conduct tests to verify that backup resources are sufficient to ensure continued order processing and trade matching, price reporting, market surveillance, and maintenance of a comprehensive and accurate audit trail.’.CommentsClose CommentsPermalink

SEC. 723. MARGIN.

Section 8a of the Commodity Exchange Act (7 U.S.C. 12a) is amended in paragraph (7)(C) by striking ‘, excepting the setting of levels of margin’.CommentsClose CommentsPermalink

SEC. 724. POSITION LIMITS.

(a) Excessive Speculation- Section 4a(a) of the Commodity Exchange Act (7 U.S.C. 6a(a)) is amended--CommentsClose CommentsPermalink





(1) by inserting ‘(1)’ after ‘(a)’;CommentsClose CommentsPermalink





(2) in the first sentence, by striking ‘on electronic trading facilities with respect to a significant price discovery contract’ and inserting ‘swaps that perform or affect a significant price discovery function with respect to regulated markets’;CommentsClose CommentsPermalink





(3) in the second sentence, by--CommentsClose CommentsPermalink





(A) inserting ‘, including any group or class of traders,’ after ‘held by any person’; andCommentsClose CommentsPermalink





(B) striking ‘on an electronic trading facility with respect to a significant price discovery contract,’ and inserting ‘swaps that perform or affect a significant price discovery function with respect to regulated markets,’; andCommentsClose CommentsPermalink





(4) inserting at the end the following:CommentsClose CommentsPermalink





‘(2) AGGREGATE POSITION LIMITS- The Commission may, by rule or regulation, establish limits (including related hedge exemption provisions) on the aggregate number or amount of positions in contracts based upon the same underlying commodity (as defined by the Commission) that may be held by any person, including any group or class of traders, for each month across--CommentsClose CommentsPermalink





‘(A) contracts listed by designated contract markets;CommentsClose CommentsPermalink





‘(B) contracts traded on a foreign board of trade that provides members or other participants located in the United States with direct access to its electronic trading and order matching system; andCommentsClose CommentsPermalink





‘(C) swap contracts that perform or affect a significant price discovery function with respect to regulated markets.CommentsClose CommentsPermalink





‘(3) SIGNIFICANT PRICE DISCOVERY FUNCTION- In making a determination under paragraph (2) whether a swap performs or affects a significant price discovery function with respect to regulated markets, the Commission shall consider, as appropriate, the following:CommentsClose CommentsPermalink





‘(A) PRICE LINKAGE- The extent to which the swap uses or otherwise relies on a daily or final settlement price, or other major price parameter, of another contract traded on a regulated market based upon the same underlying commodity, to value a position, transfer or convert a position, financially settle a position, or close out a position.CommentsClose CommentsPermalink





‘(B) ARBITRAGE- The extent to which the price for the swap is sufficiently related to the price of another contract traded on a regulated market based upon the same underlying commodity so as to permit market participants to effectively arbitrage between the markets by simultaneously maintaining positions or executing trades in the swaps on a frequent and recurring basis.CommentsClose CommentsPermalink





‘(C) MATERIAL PRICE REFERENCE- The extent to which, on a frequent and recurring basis, bids, offers, or transactions in a contract traded on a regulated market are directly based on, or are determined by referencing, the price generated by the swap.CommentsClose CommentsPermalink





‘(D) MATERIAL LIQUIDITY- The extent to which the volume of swaps being traded in the commodity is sufficient to have a material effect on another contract traded on a regulated market.CommentsClose CommentsPermalink





‘(E) OTHER MATERIAL FACTORS- Such other material factors as the Commission specifies by rule or regulation as relevant to determine whether a swap serves a significant price discovery function with respect to a regulated market.CommentsClose CommentsPermalink





‘(4) EXEMPTIONS- The Commission, by rule, regulation, or order, may exempt, conditionally or unconditionally, any person or class of persons, any swap or class of swaps, or any transaction or class of transactions from any requirement the Commission may establish under this section with respect to position limits.’.CommentsClose CommentsPermalink





(b) Tracking Position Limits- Section 4a(b) of the Commodity Exchange Act (7 U.S.C. 6a(b)) is amended--CommentsClose CommentsPermalink





(1) in paragraph (1), by striking ‘or derivatives transaction execution facility or facilities or electronic trading facility’ and inserting ‘or alternative swap execution facility or facilities’; andCommentsClose CommentsPermalink





(2) in paragraph (2), by striking ‘or derivatives transaction execution facility or facilities or electronic trading facility’ and inserting ‘or alternative swap execution facility’.CommentsClose CommentsPermalink

SEC. 725. ENHANCED AUTHORITY OVER REGISTERED ENTITIES.

(a) Section 5(d)(1) of the Commodity Exchange Act (7 U.S.C. 7(d)(1)) is amended by striking ‘The board of trade shall have’ and inserting ‘Except where the Commission otherwise determines by rule or regulation pursuant to section 8a(5), the board of trade shall have’.CommentsClose CommentsPermalink





(b) Section 5b(c)(2)(A) of the Commodity Exchange Act (7 U.S.C. 7a-1(c)(2)(A)) is amended by striking ‘The applicant shall have’ and inserting ‘Except where the Commission otherwise determines by rule or regulation pursuant to section 8a(5), the applicant shall have’.CommentsClose CommentsPermalink





(c) Section 5c(a) of the Commodity Exchange Act (7 U.S.C. 7a-2(a)) is amended--CommentsClose CommentsPermalink





(1) in paragraph (1), by striking ‘5a(d) and 5b(c)(2)’ and inserting ‘5b(c)(2) and 5h(e)’; andCommentsClose CommentsPermalink





(2) in paragraph (2), by striking ‘shall not’ and inserting ‘may’.CommentsClose CommentsPermalink





(d) Section 5c(c)(1) of the Commodity Exchange Act (7 U.S.C. 7a-2(c)(1)) is amended--CommentsClose CommentsPermalink





(1) by striking ‘(1) IN GENERAL- Subject to’ and inserting the following:CommentsClose CommentsPermalink





‘(1) IN GENERAL-CommentsClose CommentsPermalink





‘(A) Subject to’; andCommentsClose CommentsPermalink





(2) by adding at the end the following:CommentsClose CommentsPermalink





‘(B) Unless section 805(e) of the Payment, Clearing, and Settlement Supervision Act of 2009 applies, the new contract or instrument or clearing of the new contract or instrument, new rule, or new amendment shall become effective, pursuant to the registered entity’s certification, 10 business days after the Commission’s receipt of the certification (or such shorter period as may be determined by the Commission by rule or regulation) unless the Commission notifies the registered entity within such time that the Commission is staying the certification because there exist novel or complex issues that require additional time to analyze, an inadequate explanation by the submitting registered entity, or a potential inconsistency with this Act (including regulations under this Act).CommentsClose CommentsPermalink





‘(C) A notification by the Commission pursuant to subparagraph (B) shall stay the certification of the new contract or instrument or clearing of the new contract or instrument, new rule, or new amendment for up to an additional 90 days from the date of such notification.’.CommentsClose CommentsPermalink





(e) Section 5c(d) of the Commodity Exchange Act (7 U.S.C. 7a-2(d)) is repealed.CommentsClose CommentsPermalink

SEC. 726. FOREIGN BOARDS OF TRADE.

(a) Technical Amendment- Section 4(b) of the Commodity Exchange Act (7 U.S.C. 6(b)) is amended in the third sentence by striking ‘No rule or regulation’ and inserting ‘Except as provided in paragraphs (1) and (2), no rule or regulation’.CommentsClose CommentsPermalink





(b) Registration- Section 4(b) of the Commodity Exchange Act (7 U.S.C. 6(b)) is further amended by inserting before ‘The Commission’ the following:CommentsClose CommentsPermalink





‘(1) REGISTRATION- The Commission may adopt rules and regulations requiring registration with the Commission for a foreign board of trade that provides the members of the foreign board of trade or other participants located in the United States direct access to the electronic trading and order matching system of the foreign board of trade, including rules and regulations prescribing procedures and requirements applicable to the registration of such foreign boards of trade. For purposes of this paragraph, ‘direct access’ refers to an explicit grant of authority by a foreign board of trade to an identified member or other participant located in the United States to enter trades directly into the electronic trading and order matching system of the foreign board of trade.CommentsClose CommentsPermalink





‘(2) LINKED CONTRACTS- It shall be unlawful for a foreign board of trade to provide to the members of the foreign board of trade or other participants located in the United States direct access to the electronic trading and order matching system of the foreign board of trade with respect to an agreement, contract, or transaction that settles against any price (including the daily or final settlement price) of 1 or more contracts listed for trading on a registered entity, unless the Commission determines that--CommentsClose CommentsPermalink





‘(A) the foreign board of trade makes public daily trading information regarding the agreement, contract, or transaction that is comparable to the daily trading information published by the registered entity for the 1 or more contracts against which the agreement, contract, or transaction traded on the foreign board of trade settles; andCommentsClose CommentsPermalink





‘(B) the foreign board of trade (or the foreign futures authority that oversees the foreign board of trade)--CommentsClose CommentsPermalink





‘(i) adopts position limits (including related hedge exemption provisions) for the agreement, contract, or transaction that are comparable to the position limits (including related hedge exemption provisions) adopted by the registered entity for the 1 or more contracts against which the agreement, contract, or transaction traded on the foreign board of trade settles;CommentsClose CommentsPermalink





‘(ii) has the authority to require or direct market participants to limit, reduce, or liquidate any position the foreign board of trade (or the foreign futures authority that oversees the foreign board of trade) determines to be necessary to prevent or reduce the threat of price manipulation, excessive speculation as described in section 4a, price distortion, or disruption of delivery or the cash settlement process;CommentsClose CommentsPermalink





‘(iii) agrees to promptly notify the Commission, with regard to the agreement, contract, or transaction that settles against any price (including the daily or final settlement price) of 1 or more contracts listed for trading on a registered entity, of any change regarding--CommentsClose CommentsPermalink





‘(I) the information that the foreign board of trade will make publicly available;CommentsClose CommentsPermalink





‘(II) the position limits that the foreign board of trade or foreign futures authority will adopt and enforce;CommentsClose CommentsPermalink





‘(III) the position reductions required to prevent manipulation, excessive speculation as described in section 4a, price distortion, or disruption of delivery or the cash settlement process; andCommentsClose CommentsPermalink





‘(IV) any other area of interest expressed by the Commission to the foreign board of trade or foreign futures authority;CommentsClose CommentsPermalink





‘(iv) provides information to the Commission regarding large trader positions in the agreement, contract, or transaction that is comparable to the large trader position information collected by the Commission for the 1 or more contracts against which the agreement, contract, or transaction traded on the foreign board of trade settles; andCommentsClose CommentsPermalink





‘(v) provides the Commission with information necessary to publish reports on aggregate trader positions for the agreement, contract, or transaction traded on the foreign board of trade that are comparable to such reports on aggregate trader positions for the 1 or more contracts against which the agreement, contract, or transaction traded on the foreign board of trade settles.CommentsClose CommentsPermalink





‘(3) EXISTING FOREIGN BOARDS OF TRADE- Paragraphs (1) and (2) shall not be effective with respect to any foreign board of trade to which the Commission has granted direct access permission before the date of the enactment of this subsection until the date that is 180 days after such date of enactment.CommentsClose CommentsPermalink





‘(4) PERSONS LOCATED IN THE UNITED STATES- ’.CommentsClose CommentsPermalink





(c) Liability of Registered Persons Trading on a Foreign Board of Trade-CommentsClose CommentsPermalink





(1) Section 4(a) of the Commodity Exchange Act (7 U.S.C. 6(a)) is amended by inserting ‘or by subsection (f)’ after ‘Unless exempted by the Commission pursuant to subsection (c)’.CommentsClose CommentsPermalink





(2) Section 4 of the Commodity Exchange Act (7 U.S.C. 6) is further amended by adding at the end the following:CommentsClose CommentsPermalink





‘(f) Additional Exemption- A person registered with the Commission, or exempt from registration by the Commission, under this Act may not be found to have violated subsection (a) with respect to a transaction in, or in connection with, a contract of sale of a commodity for future delivery if the person has reason to believe that the transaction and the contract is made on or subject to the rules of a foreign board of trade that has complied with paragraphs (1) and (2) of subsection (b).’.CommentsClose CommentsPermalink





(d) Contract Enforcement for Foreign Futures Contracts- Section 22(a) of the Commodity Exchange Act (7 U.S.C. 25(a)) is amended by adding at the end the following:CommentsClose CommentsPermalink





‘(5) CONTRACT ENFORCEMENT FOR FOREIGN FUTURES CONTRACTS- A contract of sale of a commodity for future delivery traded or executed on or through the facilities of a board of trade, exchange, or market located outside the United States for purposes of section 4(a) shall not be void, voidable, or unenforceable, and a party to such a contract shall not be entitled to rescind or recover any payment made with respect to the contract, based on the failure of the foreign board of trade to comply with any provision of this Act.’.CommentsClose CommentsPermalink

SEC. 727. LEGAL CERTAINTY FOR SWAPS.

Section 22(a)(4) of the Commodity Exchange Act (7 U.S.C. 25(a)(4)) is amended to read as follows:CommentsClose CommentsPermalink





‘(4) CONTRACT ENFORCEMENT BETWEEN ELIGIBLE COUNTERPARTIES-CommentsClose CommentsPermalink





‘(A) HYBRIDS- No hybrid instrument sold to any investor shall be void, voidable, or unenforceable, and no party to such hybrid instrument shall be entitled to rescind, or recover any payment made with respect to, such a hybrid instrument under this section or any other provision of Federal or State law, based solely on the failure of the hybrid instrument to comply with the terms or conditions of section 2(f) or regulations of the Commission.CommentsClose CommentsPermalink





‘(B) AGREEMENTS BETWEEN CONTRACT PARTICIPANTS- No agreement, contract, or transaction between eligible contract participants or persons reasonably believed to be eligible contract participants shall be void, voidable, or unenforceable, and no party thereto shall be entitled to rescind, or recover any payment made with respect to, such agreement, contract, or transaction under this section or any other provision of Federal or State law, based solely on the failure of the agreement, contract, or transaction to meet the definition of a swap set forth in section 1a or to be cleared pursuant to section 2(j)(1).’.CommentsClose CommentsPermalink

SEC. 728. FDICIA AMENDMENTS.

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

SEC. 729. PRIMARY ENFORCEMENT AUTHORITY.

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

‘SEC. 4b-1. PRIMARY ENFORCEMENT AUTHORITY.

‘(a) Commodity Futures Trading Commission- Except as provided in subsections (b), (c), and (d), the Commission shall have primary authority to enforce the provisions of subtitle A of the Over-the-Counter Derivatives Markets Act of 2010 with respect to any person.CommentsClose CommentsPermalink





‘(b) Appropriate Federal Banking Agency- The appropriate Federal banking agency shall have exclusive authority to enforce the provisions of section 4s(e) and other prudential requirements of this Act with respect to depository institutions (as that term is defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813) that are swap dealers or major swap participants.CommentsClose CommentsPermalink





‘(c) Referral- If the appropriate Federal banking agency has cause to believe that a swap dealer or major swap participant that is a depository institution may have engaged in conduct that constitutes a violation of the nonprudential requirements of section 4s or rules adopted by the Commission thereunder, the agency may recommend in writing to the Commission that the Commission initiate an enforcement proceeding as authorized under this Act. The recommendation shall be accompanied by a written explanation of the concerns giving rise to the recommendation.CommentsClose CommentsPermalink





‘(d) Backstop Enforcement Authority- If the Commission does not initiate an enforcement proceeding before the end of the 90-day period beginning on the date on which the Commission receives a recommendation under subsection (c), the appropriate Federal banking agency may initiate an enforcement proceeding as permitted under Federal law.’.CommentsClose CommentsPermalink

SEC. 730. ENFORCEMENT.

(a) Section 4b(a)(2) of the Commodity Exchange Act (7 U.S.C. 6b(a)(2)) is amended by striking ‘or other agreement, contract, or transaction subject to paragraphs (1) and (2) of section 5a(g),’ and inserting ‘or swap,’.CommentsClose CommentsPermalink





(b) Section 4b(b) of the Commodity Exchange Act (7 U.S.C. 6b(b)) is amended by striking ‘or other agreement, contract or transaction subject to paragraphs (1) and (2) of section 5a(g),’ and inserting ‘or swap,’.CommentsClose CommentsPermalink





(c) Section 4c(a) of the Commodity Exchange Act (7 U.S.C. 6c(a)) is amended by inserting ‘or swap’ before ‘if the transaction is used or may be used’.CommentsClose CommentsPermalink





(d) Section 6(c) of the Commodity Exchange Act (7 U.S.C. 9) is amended by inserting ‘or of any swap,’ before ‘or has willfully made’.CommentsClose CommentsPermalink





(e) Section 6(d) of the Commodity Exchange Act (7 U.S.C. 13b) is amended by inserting ‘or of any swap,’ before ‘or otherwise is violating’.CommentsClose CommentsPermalink





(f) Section 6c of the Commodity Exchange Act (7 U.S.C. 13a-1) is amended by inserting ‘or any swap’ after ‘commodity for future delivery’.CommentsClose CommentsPermalink





(g) Section 9(a)(2) of the Commodity Exchange Act (7 U.S.C. 13(a)(2)) is amended by inserting ‘or of any swap,’ before ‘or to corner’.CommentsClose CommentsPermalink





(h) Section 9(a)(4) of the Commodity Exchange Act (7 U.S.C. 13(a)(4)) is amended by inserting ‘swap repository,’ before ‘or futures association’.CommentsClose CommentsPermalink





(i) Section 9(e)(1) of the Commodity Exchange Act (7 U.S.C. 13(e)(1)) is amended--CommentsClose CommentsPermalink





(1) by inserting ‘swap repository,’ before ‘or registered futures association’; andCommentsClose CommentsPermalink





(2) by inserting ‘, or swaps,’ before ‘on the basis’.CommentsClose CommentsPermalink





(j) Section 8(b) of the Federal Deposit Insurance Act (12 U.S.C. 1818(b)) is amended--CommentsClose CommentsPermalink





(1) by redesignating paragraphs (6), (7), (8), (9), and (10) as paragraphs (7), (8), (9), (10), and (11), respectively; andCommentsClose CommentsPermalink





(2) by inserting after paragraph (5), the following:CommentsClose CommentsPermalink





‘(6) This section shall apply to any swap dealer, major swap participant, security-based swap dealer, major security-based swap participant, derivatives clearing organization, swap repository, or alternative swap execution facility, whether or not it is an insured depository institution, for which there is an appropriate Federal banking agency for purposes of the Over-the-Counter Derivatives Markets Act of 2010.’.CommentsClose CommentsPermalink

SEC. 731. RETAIL COMMODITY TRANSACTIONS.

Section 2(c) of the Commodity Exchange Act (7 U.S.C. 2(c)) is amended--CommentsClose CommentsPermalink





(1) in paragraph (1), by striking ‘(to the extent provided in section 5a(g), 5b, 5d, or 12(e)(2)(B))’ and inserting ‘5b, or 12(e)(2)(B))’; andCommentsClose CommentsPermalink





(2) in paragraph (2), by adding at the end the following:CommentsClose CommentsPermalink





‘(D) RETAIL COMMODITY TRANSACTIONS-CommentsClose CommentsPermalink





‘(i) This subparagraph shall apply to any agreement, contract, or transaction in any commodity that is--CommentsClose CommentsPermalink





‘(I) entered into with, or offered to (even if not entered into with), a person that is not an eligible contract participant or eligible commercial entity; andCommentsClose CommentsPermalink





‘(II) entered into, or offered (even if not entered into), on a leveraged or margined basis, or financed by the offeror, the counterparty, or a person acting in concert with the offeror or counterparty on a similar basis.CommentsClose CommentsPermalink





‘(ii) Clause (i) shall not apply to--CommentsClose CommentsPermalink





‘(I) an agreement, contract, or transaction described in paragraph (1) or subparagraph (A), (B), or (C), including any agreement, contract, or transaction specifically excluded from subparagraph (A), (B), or (C);CommentsClose CommentsPermalink





‘(II) any security;CommentsClose CommentsPermalink





‘(III) a contract of sale that--CommentsClose CommentsPermalink

‘(aa) results in actual delivery not later than 28 days or such other period as the Commission may determine by rule or regulation based upon the typical commercial practice in cash or spot markets for the commodity involved; orCommentsClose CommentsPermalink

‘(bb) creates an enforceable obligation to deliver between a seller and a buyer that have the ability to deliver and accept delivery, respectively, in connection with their line of business;CommentsClose CommentsPermalink

‘(IV) an agreement, contract, or transaction that is listed on a national securities exchange registered under section 6(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78f(a)); orCommentsClose CommentsPermalink





‘(V) an identified banking product, as defined in section 402(b) of the Legal Certainty for Bank Products Act of 2000 (7 U.S.C. 27(b)).CommentsClose CommentsPermalink





‘(iii) Sections 4(a), 4(b), and 4b shall apply to any agreement, contract or transaction described in clause (i), that is not excluded from clause (i) by clause (ii), as if the agreement, contract, or transaction were a contract of sale of a commodity for future delivery.CommentsClose CommentsPermalink





‘(iv) This subparagraph shall not be construed to limit any jurisdiction that the Commission may otherwise have under any other provision of this Act over an agreement, contract, or transaction that is a contract of sale of a commodity for future delivery.CommentsClose CommentsPermalink





‘(v) This subparagraph shall not be construed to limit any jurisdiction that the Commission or the Securities and Exchange Commission may otherwise have under any other provisions of this Act with respect to security futures products and persons effecting transactions in security futures products.CommentsClose CommentsPermalink





‘(vi) For the purposes of this subparagraph, an agricultural producer, packer, or handler shall be considered an eligible commercial entity for any agreement, contract, or transaction for a commodity in connection with its line of business.’.CommentsClose CommentsPermalink

SEC. 732. LARGE SWAP TRADER REPORTING.

The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended by adding after section 4t (as added by section 718) the following:CommentsClose CommentsPermalink

‘SEC. 4u. LARGE SWAP TRADER REPORTING.

‘(a) Mandatory Reporting of Certain Swaps-CommentsClose CommentsPermalink





‘(1) IN GENERAL- A person that enters into any swap shall file or cause to be filed with the properly designated officer of the Commission the reports described in paragraph (2).CommentsClose CommentsPermalink





‘(2) REPORTS-CommentsClose CommentsPermalink





‘(A) SWAP REPORTS- Each person described in paragraph (1) shall, in accordance with the rules and regulations of the Commission, keep books and records of any swaps or transactions and positions in any related commodity traded on or subject to the rules of any board of trade.CommentsClose CommentsPermalink





‘(B) CASH OR SPOT TRANSACTIONS- Each person described in paragraph (1) shall, in accordance with the rules and regulations of the Commission, keep books and records of any cash or spot transactions in, inventories of, and purchase and sale commitments of, any related commodity traded on or subject to the rules of any board of trade, if--CommentsClose CommentsPermalink





‘(i) such person directly or indirectly enters into such swaps during any 1 day in an amount equal to or in excess of such amount as shall be fixed from time to time by the Commission; andCommentsClose CommentsPermalink





‘(ii) such person directly or indirectly has or obtains a position in such swaps equal to or in excess of such amount as shall be fixed from time to time by the Commission.CommentsClose CommentsPermalink





‘(b) Recordkeeping- Any books and records required to be kept under subsection (a) shall--CommentsClose CommentsPermalink





‘(1) show complete details concerning all transactions and positions as the Commission may by rule or regulation prescribe;CommentsClose CommentsPermalink





‘(2) be open at all times to inspection and examination by any representative of the Commission; andCommentsClose CommentsPermalink





‘(3) be open at all times to inspection and examination by the Securities and Exchange Commission, to the extent such books and records relate to transactions in security-based swap agreements (as that term is defined in section 3(a)(75) of the Securities Exchange Act of 1934).CommentsClose CommentsPermalink





‘(c) Rule of Construction- For the purpose of this section, the swaps, futures, and cash or spot transactions and positions of any person shall include such transactions and positions of any persons directly or indirectly controlled by such person.CommentsClose CommentsPermalink





‘(d) Considerations- In making a determination under this section whether a swap performs or affects a significant price discovery function with respect to regulated markets, the Commission shall consider the factors set forth in section 4a(a)(3).’.CommentsClose CommentsPermalink

SEC. 733. OTHER AUTHORITY.

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

SEC. 734. ANTITRUST.

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

Subtitle B--Regulation of Security-Based Swap MarketsCommentsClose CommentsPermalink

SEC. 751. DEFINITIONS UNDER THE SECURITIES EXCHANGE ACT OF 1934.

Section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)) is amended--CommentsClose CommentsPermalink





(1) in subparagraphs (A) and (B) of paragraph (5), by inserting ‘(but not security-based swaps, other than security-based swaps with or for persons that are not eligible contract participants)’ after ‘securities’ each place that term appears;CommentsClose CommentsPermalink





(2) in paragraph (10), by inserting ‘security-based swap,’ after ‘security future,’;CommentsClose CommentsPermalink





(3) in paragraph (13), by adding at the end the following: ‘For security-based swaps, such terms include the execution, termination (prior to its scheduled maturity date), assignment, exchange, or similar transfer or conveyance of, or extinguishing of rights or obligations under, a security-based swap, as the context may require.’;CommentsClose CommentsPermalink





(4) in paragraph (14), by adding at the end the following: ‘For security-based swaps, such terms include the execution, termination (prior to its scheduled maturity date), assignment, exchange, or similar transfer or conveyance of, or extinguishing of rights or obligations under, a security-based swap, as the context may require.’;CommentsClose CommentsPermalink





(5) in paragraph (39)--CommentsClose CommentsPermalink





(A) by striking ‘or government securities dealer’ and inserting ‘government securities dealer, security-based swap dealer, or major security-based swap participant’ each place that term appears; andCommentsClose CommentsPermalink





(B) in subparagraph (B)(i)(II), by inserting ‘security-based swap dealer, major security-based swap participant,’ after ‘government securities dealer,’; andCommentsClose CommentsPermalink





(6) by adding at the end the following:CommentsClose CommentsPermalink





‘(65) ELIGIBLE CONTRACT PARTICIPANT- The term ‘eligible contract participant’ has the same meaning as in section 1a(12) of the Commodity Exchange Act (7 U.S.C. 1a(12)).CommentsClose CommentsPermalink





‘(66) MAJOR SWAP PARTICIPANT- The term ‘major swap participant’ has the same meaning as in section 1a(39) of the Commodity Exchange Act (7 U.S.C. 1a(39)).CommentsClose CommentsPermalink





‘(67) MAJOR SECURITY-BASED SWAP PARTICIPANT-CommentsClose CommentsPermalink





‘(A) IN GENERAL- The term ‘major security-based swap participant’ means any person who is not a security-based swap dealer--CommentsClose CommentsPermalink





‘(i) who maintains a substantial net position in outstanding security-based swaps, excluding positions held primarily for hedging, reducing, or otherwise mitigating commercial risk; orCommentsClose CommentsPermalink





‘(ii) whose failure to perform under the terms of its security-based swaps would cause significant credit losses to its security-based swap counterparties.CommentsClose CommentsPermalink





‘(B) IMPLEMENTATION- The Commission shall implement the definition under this paragraph by rule or regulation in a manner that is prudent for the effective monitoring, management, and oversight of the financial system.CommentsClose CommentsPermalink





‘(68) SECURITY-BASED SWAP-CommentsClose CommentsPermalink





‘(A) IN GENERAL- Except as provided in subparagraph (B), the term ‘security-based swap’ means any agreement, contract, or transaction that would be a swap under section 1a(34) of the Commodity Exchange Act (7 U.S.C. 1a(34)) (without regard to paragraph (34)(B)(xii) of such section), and that is based on--CommentsClose CommentsPermalink





‘(i) an index that is a narrow-based security index, including any interest therein or based on the value thereof;CommentsClose CommentsPermalink





‘(ii) a single security or loan, including any interest therein or based on the value thereof; orCommentsClose CommentsPermalink





‘(iii) the occurrence, nonoccurrence, or extent of the occurrence of an event relating to a single issuer of a security or the issuers of securities in a narrow-based security index, provided that such event directly affects the financial statements, financial condition, or financial obligations of the issuer.CommentsClose CommentsPermalink





‘(B) EXCLUSION- The term ‘security-based swap’ does not include any agreement, contract, or transaction that meets the definition of security-based swap only because such agreement, contract, or transaction references or is based upon a government security.CommentsClose CommentsPermalink





‘(C) MIXED SWAP-CommentsClose CommentsPermalink





‘(i) IN GENERAL- The term ‘security-based swap’ includes any agreement, contract, or transaction that is as described in subparagraph (A) and also is based on--CommentsClose CommentsPermalink





‘(I) the value of 1 or more interest or other rates, currencies, commodities, instruments of indebtedness, indices, quantitative measures, other financial or economic interest or property of any kind (other than securities or any other financial or economic interest or property described in subparagraph (A) or a narrow-based security index); orCommentsClose CommentsPermalink





‘(II) the occurrence, nonoccurrence, or the extent of the occurrence of an event or contingency associated with a potential financial, economic, or commercial consequence (other than an event or contingency described in subparagraph (A)(iii)).CommentsClose CommentsPermalink





‘(ii) RULE OF CONSTRUCTION- A security-based swap shall not constitute, nor shall be construed to constitute, a mixed swap solely because the obligations or rights of 1 party to the swap agreement are defined by reference to 1 or more interest rates or currencies.CommentsClose CommentsPermalink





‘(D) RULE OF CONSTRUCTION REGARDING MASTER AGREEMENTS- The term ‘security-based swap’ shall be construed to include a master agreement that provides for an agreement, contract, or transaction that is a security-based swap pursuant to subparagraph (A), together with all supplements to any such master agreement, without regard to whether the master agreement contains an agreement, contract, or transaction that is not a security-based swap pursuant to subparagraph (A), except that the master agreement shall be considered to be a security-based swap only with respect to each agreement, contract, or transaction under the master agreement that is a security-based swap pursuant to subparagraph (A).CommentsClose CommentsPermalink





‘(69) SWAP- The term ‘swap’ has the same meaning as in section 1a(34) of the Commodity Exchange Act (7 U.S.C. 1a(34)).CommentsClose CommentsPermalink





‘(70) PERSON ASSOCIATED WITH A SECURITY-BASED SWAP DEALER OR MAJOR SECURITY-BASED SWAP PARTICIPANT- The term ‘person associated with a security-based swap dealer or major security-based swap participant’ or ‘associated person of a security-based swap dealer or major security-based swap participant’ means--CommentsClose CommentsPermalink





‘(A) any partner, officer, director, or branch manager of such security-based swap dealer or major security-based swap participant (or any person occupying a similar status or performing similar functions);CommentsClose CommentsPermalink





‘(B) any person directly or indirectly controlling, controlled by, or under common control with such security-based swap dealer or major security-based swap participant; orCommentsClose CommentsPermalink





‘(C) any employee of such security-based swap dealer or major security-based swap participant, except that any person associated with a security-based swap dealer or major security-based swap participant whose functions are solely clerical or ministerial shall not be included in the meaning of such term other than for purposes of section 15F(l).CommentsClose CommentsPermalink





‘(71) SECURITY-BASED SWAP DEALER-CommentsClose CommentsPermalink





‘(A) IN GENERAL- The term ‘security-based swap dealer’ means any person engaged in the business of buying and selling security-based swaps for such person’s own account, through a broker or otherwise.CommentsClose CommentsPermalink





‘(B) EXCEPTION- The term ‘security-based swap dealer’ does not include a person that buys or sells security-based swaps for such person’s own account, either individually or in a fiduciary capacity, but not as a part of a regular business.CommentsClose CommentsPermalink





‘(72) APPROPRIATE FEDERAL BANKING AGENCY- The term ‘appropriate Federal banking agency’ has the same meaning as in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813).CommentsClose CommentsPermalink





‘(73) BOARD- The term ‘Board’ means the Board of Governors of the Federal Reserve System.CommentsClose CommentsPermalink





‘(74) SWAP DEALER- The term ‘swap dealer’ has the same meaning as in section 1a(38) of the Commodity Exchange Act (7 U.S.C. 1a(38)).CommentsClose CommentsPermalink





‘(75) SECURITY-BASED SWAP AGREEMENT-CommentsClose CommentsPermalink





‘(A) IN GENERAL- For purposes of sections 9, 10, 10B, 16, 20, and 21A of this Act, and section 17 of the Securities Act of 1933, the term ‘security-based swap agreement’ means a swap agreement as defined in section 206A of the Gramm-Leach-Bliley Act (15 U.S.C. 78c note) of which a material term is based on the price, yield, value, or volatility of any security or any group or index of securities, or any interest therein.CommentsClose CommentsPermalink





‘(B) EXCLUSIONS- The term ‘security-based swap agreement’ does not include any security-based swap.CommentsClose CommentsPermalink





‘(76) PRIMARY FINANCIAL REGULATORY AGENCY- The term ‘primary financial regulatory agency’ has the same meaning as in section 2 of the Restoring American Financial Stability Act of 2010.’.CommentsClose CommentsPermalink

SEC. 752. REPEAL OF PROHIBITION ON REGULATION OF SECURITY-BASED SWAPS.

(a) Repeal- Sections 206B and 206C of the Gramm-Leach-Bliley Act (15 U.S.C. 78c note) are hereby repealed.CommentsClose CommentsPermalink





(b) Conforming Amendments to Gramm-Leach-Bliley- Section 206A(a) of the Gramm-Leach-Bliley Act (15 U.S.C. 78c note) is amended in the material preceding paragraph (1), by striking ‘Except as’ and all that follows through ‘that--’ and inserting the following: ‘Except as provided in subsection (b), as used in this section, the term ‘swap agreement’ means any agreement, contract, or transaction that--’CommentsClose CommentsPermalink





(c) Conforming Amendments to the Securities Act of 1933-CommentsClose CommentsPermalink





(1) Section 2A(b) of the Securities Act of 1933 (15 U.S.C. 77b-1) is amended--CommentsClose CommentsPermalink





(A) by striking subsection (a) and reserving the subsection; andCommentsClose CommentsPermalink





(B) in subsection (b)--CommentsClose CommentsPermalink





(i) by striking ‘(as defined in section 206B of the Gramm-Leach-Bliley Act)’ each place that term appears;CommentsClose CommentsPermalink





(ii) by striking paragraph (1); andCommentsClose CommentsPermalink





(iii) by redesignating paragraphs (2), (3), and (4) as paragraphs (1), (2), and (3), respectively.CommentsClose CommentsPermalink





(2) Section 17 of the Securities Act of 1933 (15 U.S.C. 77q) is amended--CommentsClose CommentsPermalink





(A) in subsection (a), by striking ‘206B of the Gramm-Leach-Bliley Act’ and inserting ‘3(a)(75) of the Securities Exchange Act of 1934’; andCommentsClose CommentsPermalink





(B) in subsection (d), by striking ‘206B of the Gramm-Leach-Bliley Act’ and inserting ‘3(a)(75) of the Securities Exchange Act of 1934’.CommentsClose CommentsPermalink





(d) Conforming Amendments to the Securities Exchange Act of 1934- The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended--CommentsClose CommentsPermalink





(1) in section 3A (15 U.S.C. 78c-1)--CommentsClose CommentsPermalink





(A) by striking ‘(as defined in section 206B of the Gramm-Leach-Bliley Act)’ each place that term appears;CommentsClose CommentsPermalink





(B) by striking subsection (a) and reserving the subsection; andCommentsClose CommentsPermalink





(C) in subsection (b)--CommentsClose CommentsPermalink





(i) by striking paragraph (1);CommentsClose CommentsPermalink





(ii) by redesignating paragraphs (2), (3), and (4) as paragraphs (1), (2), and (3), respectively; andCommentsClose CommentsPermalink





(iii) in paragraph (2) (as so redesignated), by inserting ‘or section 9(j) with respect to rulemaking authority to prevent fraudulent, deceptive, or manipulative practices’ after ‘reporting requirements’;CommentsClose CommentsPermalink





(2) in section 9(a) (15 U.S.C. 78i(a)), by striking paragraphs (2) through (5) and inserting the following:CommentsClose CommentsPermalink





‘(2) To effect, alone or with 1 or more other persons, a series of transactions in any security registered on a national securities exchange or in connection with any security-based swap or security-based swap agreement with respect to such security creating actual or apparent active trading in such security, or raising or depressing the price of such security, for the purpose of inducing the purchase or sale of such security by others.CommentsClose CommentsPermalink





‘(3) If a dealer, broker, security-based swap dealer, major security-based swap participant, or other person selling or offering for sale or purchasing or offering to purchase the security or security-based swap or security based-swap agreement with respect to such security to induce the purchase or sale of any security registered on a national securities exchange or any security-based swap or security-based swap agreement with respect to such security by the circulation or dissemination in the ordinary course of business of information to the effect that the price of any such security will or is likely to rise or fall because of market operations of any 1 or more persons conducted for the purpose of raising or depressing the price of such security.CommentsClose CommentsPermalink





‘(4) If a dealer, broker, security-based swap dealer, major security-based swap participant, or other person selling or offering for sale or purchasing or offering to purchase the security or a security-based swap or security-based swap agreement with respect to such security, to make, regarding any security registered on a national securities exchange or any security-based swap or security-based swap agreement with respect to such security, for the purpose of inducing the purchase or sale of such security or such security-based swap or security-based swap agreement, any statement which was at the time and in the light of the circumstances under which it was made, false or misleading with respect to any material fact, and which he or she knew or had reasonable ground to believe was so false or misleading.CommentsClose CommentsPermalink





‘(5) For a consideration, received directly or indirectly from a dealer, broker, security-based swap dealer, major security-based swap participant, or other person selling or offering for sale or purchasing or offering to purchase the security or security-based swap or security-based swap agreement with respect to such security, to induce the purchase or sale of any security registered on a national securities exchange or any security-based swap or security-based swap agreement with respect to such security by the circulation or dissemination of information to the effect that the price of any such security will or is likely to rise or fall because of the market operations of any 1 or more persons conducted for the purpose of raising or depressing the price of such security.’;CommentsClose CommentsPermalink





(3) in section 9(i) (15 U.S.C. 78i(i)), by striking ‘(as defined in section 206B of the Gramm-Leach-Bliley Act)’;CommentsClose CommentsPermalink





(4) in section 10 (15 U.S.C. 78j), by striking ‘(as defined in section 206B of the Gramm-Leach-Bliley Act)’ each place that term appears;CommentsClose CommentsPermalink





(5) in section 15(c)(1) (15 U.S.C. 78o(c)(1))--CommentsClose CommentsPermalink





(A) in subparagraph (A), by striking ‘, or any security-based swap agreement (as defined in section 206B of the Gramm-Leach-Bliley Act),’; andCommentsClose CommentsPermalink





(B) in subparagraphs (B) and (C), by striking ‘agreement (as defined in section 206B of the Gramm-Leach-Bliley Act)’ each place that term appears;CommentsClose CommentsPermalink





(6) in section 15(i) (15 U.S.C. 78o(i)), as added by section 303(f) of the Commodity Futures Modernization Act of 2000 (Public Law 106-554; 114 Stat. 2763A-455)), by striking ‘(as defined in section 206B of the Gramm-Leach-Bliley Act)’;CommentsClose CommentsPermalink





(7) in section 16 (15 U.S.C. 78p)--CommentsClose CommentsPermalink





(A) in subsection (a)(2)(C), by striking ‘(as defined in section 206(b) of the Gramm-Leach-Bliley Act)’ and inserting ‘or a security-based swap’;CommentsClose CommentsPermalink





(B) in subsection (a)(3)(B), by inserting ‘or security-based swaps’ after ‘security-based swap agreements’;CommentsClose CommentsPermalink





(C) in subsection (b)--CommentsClose CommentsPermalink





(i) by striking ‘(as defined in section 206B of the Gramm-Leach-Bliley Act)’ each place that term appears; andCommentsClose CommentsPermalink





(ii) inserting ‘or a security-based swap’ after ‘security-based swap agreement’ each place that term appears; andCommentsClose CommentsPermalink





(D) in subsection (g), by striking ‘(as defined in section 206B of the Gramm-Leach-Bliley Act)’;CommentsClose CommentsPermalink





(8) in section 20 (15 U.S.C. 78t)--CommentsClose CommentsPermalink





(A) in subsection (d), by striking ‘(as defined in section 206B of the Gramm-Leach-Bliley Act)’; andCommentsClose CommentsPermalink





(B) in subsection (f), by striking ‘(as defined in section 206B of the Gramm-Leach-Bliley Act)’; andCommentsClose CommentsPermalink





(9) in section 21A (15 U.S.C. 78u-1)--CommentsClose CommentsPermalink





(A) in subsection (a)(1), by striking ‘(as defined in section 206B of the Gramm-Leach-Bliley Act)’; andCommentsClose CommentsPermalink





(B) in subsection (g), by striking ‘(as defined in section 206B of the Gramm-Leach-Bliley Act)’.CommentsClose CommentsPermalink

SEC. 753. AMENDMENTS TO THE SECURITIES EXCHANGE ACT OF 1934.

(a) Clearing for Security-based Swaps-CommentsClose CommentsPermalink





(1) IN GENERAL- The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended by adding the following section after section 3A:CommentsClose CommentsPermalink

‘SEC. 3B. CLEARING FOR SECURITY-BASED SWAPS.

‘(a) Clearing Requirement-CommentsClose CommentsPermalink





‘(1) SUBMISSION-CommentsClose CommentsPermalink





‘(A) IN GENERAL- Except as provided in paragraph (9), any person who is a party to a security-based swap shall submit such security-based swap for clearing to a clearing agency registered under section 17A of this Act.CommentsClose CommentsPermalink





‘(B) REQUIRED CONDITIONS- The rules of a clearing agency described in subparagraph (A) shall--CommentsClose CommentsPermalink





‘(i) prescribe that all security-based swaps with the same terms and conditions accepted for clearing by the clearing agency are fungible and may be offset with each other; andCommentsClose CommentsPermalink





‘(ii) provide for nondiscriminatory clearing of a security-based swap executed on or through the rules of an unaffiliated national securities exchange or an alternative swap execution facility.CommentsClose CommentsPermalink





‘(2) COMMISSION APPROVAL-CommentsClose CommentsPermalink





‘(A) IN GENERAL- A clearing agency shall submit to the Commission for prior approval any group, category, type, or class of security-based swaps that the clearing agency seeks to accept for clearing, which submission the Commission shall make available to the public.CommentsClose CommentsPermalink





‘(B) DEADLINE- The Commission shall take final action on a request submitted pursuant to subparagraph (A) not later than 90 days after submission of the request, unless the clearing agency submitting the request agrees to an extension of the time limitation established under this subparagraph.CommentsClose CommentsPermalink





‘(C) APPROVAL- The Commission shall approve, unconditionally or subject to such terms and conditions as the Commission determines to be appropriate, any request submitted pursuant to subparagraph (A) if the Commission finds that the request is consistent with the requirements of section 17A. The Commission shall not approve any such request if the Commission does not make such finding.CommentsClose CommentsPermalink





‘(D) RULES- Not later than 180 days after the date of the enactment of the Over-the-Counter Derivatives Markets Act of 2010, the Commission shall adopt rules for a clearing agency’s submission for approval, pursuant to this paragraph, of any group, category, type, or class of security-based swaps that the clearing agency seeks to accept for clearing.CommentsClose CommentsPermalink





‘(3) STAY OF CLEARING REQUIREMENT- At any time after issuance of an approval pursuant to paragraph (2):CommentsClose CommentsPermalink





‘(A) REVIEW PROCESS- The Commission, on application of a counterparty to a security-based swap or on its own initiative, may stay the clearing requirement of paragraph (1) until the Commission completes a review of the terms of the security-based swap, or the group, category, type, or class of security-based swaps, and the clearing arrangement.CommentsClose CommentsPermalink





‘(B) DEADLINE- The Commission shall complete a review undertaken pursuant to subparagraph (A) not later than 90 days after issuance of the stay, unless the clearing agency that clears the security-based swap, or the group, category, type or class of security-based swaps, agrees to an extension of the time limitation established under this subparagraph.CommentsClose CommentsPermalink





‘(C) DETERMINATION- Upon completion of the review undertaken pursuant to subparagraph (A)--CommentsClose CommentsPermalink





‘(i) the Commission may determine, unconditionally or subject to such terms and conditions as the Commission determines to be appropriate, that the security-based swap, or the group, category, type, or class of security-based swaps, must be cleared pursuant to this subsection if the Commission finds that such clearing--CommentsClose CommentsPermalink





‘(I) is consistent with the requirements of section 17A; andCommentsClose CommentsPermalink





‘(II) is otherwise in the public interest, for the protection of investors, and consistent with the purposes of this title;CommentsClose CommentsPermalink





‘(ii) the Commission may determine that the clearing requirement of paragraph (1) shall not apply to the security-based swap, or the group, category, type, or class of security-based swaps; orCommentsClose CommentsPermalink





‘(iii) if a determination is made that the clearing requirement of paragraph (1) shall no longer apply, then it shall still be permissible to clear such security-based swap, or the group, category, type, or class of security-based swaps.CommentsClose CommentsPermalink





‘(D) RULES- Not later than 180 days after the date of the enactment of the Over-the-Counter Derivatives Markets Act of 2010, the Commission shall adopt rules for reviewing, pursuant to this paragraph, a clearing agency’s clearing of a security-based swap, or a group, category, type, or class of security-based swaps that the Commission has accepted for clearing.CommentsClose CommentsPermalink





‘(4) SECURITY-BASED SWAPS REQUIRED TO BE ACCEPTED FOR CLEARING-CommentsClose CommentsPermalink





‘(A) RULEMAKING- Not later than 180 days of the date of enactment of the Over-the-Counter Derivatives Markets Act of 2010, the Commission and the Commodity Futures Trading Commission shall jointly adopt rules to further identify any group, category, type, or class of security-based swaps not submitted for approval under paragraph (2) that the Commission and the Commodity Futures Trading Commission deem should be accepted for clearing. In adopting such rules, the Commission and the Commodity Futures Trading Commission shall take into account the following factors:CommentsClose CommentsPermalink





‘(i) The extent to which any of the terms of the group, category, type, or class of security-based swaps, including price, are disseminated to third parties or are referenced in other agreements, contracts, or transactions.CommentsClose CommentsPermalink





‘(ii) The volume of transactions in the group, category, type, or class of security-based swaps.CommentsClose CommentsPermalink





‘(iii) The extent to which the terms of the group, category, type, or class of security-based swaps are similar to the terms of other agreements, contracts, or transactions that are centrally cleared.CommentsClose CommentsPermalink





‘(iv) Whether any differences in the terms of the group, category, type, or class of security-based swaps, compared to other agreements, contracts, or transactions that are centrally cleared, are of economic significance.CommentsClose CommentsPermalink





‘(v) Whether a clearing agency is prepared to clear the group, category, type, or class of security-based swaps and such clearing agency has in place effective risk management systems.CommentsClose CommentsPermalink





‘(vi) Any other factors the Commission and the Commodity Futures Trading Commission determine to be appropriate.CommentsClose CommentsPermalink





‘(B) OTHER DESIGNATIONS- At any time after the adoption of the rules required under subparagraph (A), the Commission may separately designate a particular security-based swap or class of security-based swaps as subject to the clearing requirement in paragraph (1), taking into account the factors established in clauses (i) through (vi) of subparagraph (A) and the joint rules adopted in such subparagraph.CommentsClose CommentsPermalink





‘(5) PREVENTION OF EVASION- The Commission shall have authority to prescribe rules under this section, or issue interpretations of such rules, as necessary to prevent evasions of this section.CommentsClose CommentsPermalink





‘(6) REQUIRED REPORTING-CommentsClose CommentsPermalink





‘(A) BOTH COUNTERPARTIES- Both counterparties to a security-based swap that is not cleared by any clearing agency shall report such a security-based swap either to a registered security-based swap repository described in section 13(n) or, if there is no repository that would accept the security-based swap, to the Commission pursuant to section 13A.CommentsClose CommentsPermalink





‘(B) TIMING- Counterparties to a security-based swap shall submit the reports required under subparagraph (A) not later than such time period as the Commission may by rule or regulation prescribe.CommentsClose CommentsPermalink





‘(7) TRANSITION RULES-CommentsClose CommentsPermalink





‘(A) REPORTING TRANSITION RULES- Rules adopted by the Commission under this section shall provide for the reporting of data, as follows:CommentsClose CommentsPermalink





‘(i) Security-based swaps entered into before the date of the enactment of this section shall be reported to a registered security-based swap repository or the Commission not later than 180 days after the effective date of this section.CommentsClose CommentsPermalink





‘(ii) Security-based swaps entered into on or after such date of enactment shall be reported to a registered security-based swap repository or the Commission not later than the later of--CommentsClose CommentsPermalink





‘(I) 90 days after such effective date; orCommentsClose CommentsPermalink





‘(II) such other time after entering into the security-based swap as the Commission may prescribe by rule or regulation.CommentsClose CommentsPermalink





‘(B) CLEARING TRANSITION RULES-CommentsClose CommentsPermalink





‘(i) Security-based swaps entered into before the date of the enactment of this section are exempt from the clearing requirements of this subsection if reported pursuant to subparagraph (A)(i).CommentsClose CommentsPermalink





‘(ii) Security-based swaps entered into before application of the clearing requirement pursuant to this section are exempt from the clearing requirements of this section if reported pursuant to subparagraph (A)(ii).CommentsClose CommentsPermalink





‘(8) TRADE EXECUTION-CommentsClose CommentsPermalink





‘(A) IN GENERAL- With respect to transactions involving security-based swaps subject to the clearing requirement of paragraph (1), counterparties shall--CommentsClose CommentsPermalink





‘(i) execute the transaction on an exchange; orCommentsClose CommentsPermalink





‘(ii) execute the transaction on an alternative swap execution facility registered under section 3C or an alternative swap execution facility that is exempt from registration under section 3C(f) of this Act.CommentsClose CommentsPermalink





‘(B) EXCEPTION- The requirements of clauses (i) and (ii) of subparagraph (A) shall not apply if no exchange or alternative swap execution facility makes the swap available to trade.CommentsClose CommentsPermalink





‘(9) EXEMPTIONS-CommentsClose CommentsPermalink





‘(A) REQUIRED EXEMPTION- Subject to paragraph (4), the Commission shall exempt a security-based swap from the requirements of paragraphs (1) and (8) and any rules issued under this subsection, if no clearing agency registered under this Act will accept the security-based swap for clearing.CommentsClose CommentsPermalink





‘(B) PERMISSIVE EXEMPTION- Subject to paragraph (4), the Commission by rule or order, as the Commission deems consistent with the public interest, may conditionally or unconditionally exempt a security-based swap from the requirements of paragraphs (1) and (8), and any rules issued under this subsection, if 1 of the counterparties to the security-based swap--CommentsClose CommentsPermalink





‘(i) is not a security-based swap dealer or major security-based swap participant; andCommentsClose CommentsPermalink





‘(ii) does not meet the eligibility requirements of any clearing agency that clears the security-based swap.CommentsClose CommentsPermalink





‘(C) DETERMINATION OF THE FINANCIAL STABILITY OVERSIGHT COUNCIL- The Commission may act by rule or order to exempt a security-based swap from any requirement or rule under this subsection only if--CommentsClose CommentsPermalink





‘(i) the Commission has provided a written notice to the Financial Stability Oversight Council describing the proposed exemption; andCommentsClose CommentsPermalink





‘(ii) the Financial Stability Oversight Council has not made a determination and notified the Commission within 60 days of receipt of such notice that such exemption would pose a threat to the stability of the United States financial system.CommentsClose CommentsPermalink





‘(D) OPTION TO CLEAR- If a security-based swap is exempt from the clearing requirements of paragraph (1)--CommentsClose CommentsPermalink





‘(i) the parties to the security-based swap may submit the security-based swap for clearing; andCommentsClose CommentsPermalink





‘(ii) the security-based swap shall be submitted for clearing upon the request of a party to the security-based swap.CommentsClose CommentsPermalink





‘(10) RELATIONSHIP TO DERIVATIVES CLEARING ORGANIZATIONS- A clearing agency may clear swaps that are required to be cleared by a person who is registered as a derivatives clearing organization under the Commodity Exchange Act (7 U.S.C. 1 et seq.).CommentsClose CommentsPermalink





‘(11) REQUIRED REGISTRATION FOR DEPOSITORY INSTITUTIONS AND CLEARING AGENCIES- Any person that is required to be registered as a clearing agency under this title shall register with the Commission regardless of whether that person is also a depository institution (as that term is defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813)) or a derivatives clearing organization registered with the Commodity Futures Trading Commission under the Commodity Exchange Act (7 U.S.C. 1 et seq.).CommentsClose CommentsPermalink





‘(b) Reporting-CommentsClose CommentsPermalink





‘(1) TRANSPARENCY-CommentsClose CommentsPermalink





‘(A) IN GENERAL- A clearing agency that clears security-based swaps shall provide to the Commission and any security-based swap repository designated by the Commission all information determined by the Commission to be necessary to perform its responsibilities under this Act.CommentsClose CommentsPermalink





‘(B) DATA COLLECTION REQUIREMENTS- The Commission shall adopt data collection and maintenance requirements for security-based swaps cleared by clearing agencies that are comparable to the corresponding requirements for security-based swaps accepted by security-based swap repositories and security-based swaps traded on alternative swap execution facilities.CommentsClose CommentsPermalink





‘(C) SHARING OF INFORMATION- The Commission shall share such information, upon request, with the Board, the Commodity Futures Trading Commission, the appropriate Federal banking agencies, the Financial Stability Oversight Council, and the Department of Justice or to other persons the Commission deems appropriate, including foreign financial supervisors (including foreign futures authorities), foreign central banks, and foreign ministries.CommentsClose CommentsPermalink





‘(2) PUBLIC INFORMATION- A clearing agency that clears security-based swaps shall provide to the Commission, or its designee, such information as is required by, and in a form and at a frequency to be determined by, the Commission, in order to comply with the public reporting requirements contained in section 13.CommentsClose CommentsPermalink





‘(c) Designation of Compliance Officer-CommentsClose CommentsPermalink





‘(1) IN GENERAL- Each clearing agency shall designate an individual to serve as a compliance officer.CommentsClose CommentsPermalink





‘(2) DUTIES- The compliance officer shall perform the following duties:CommentsClose CommentsPermalink





‘(A) Reporting directly to the board or to the senior officer of the clearing agency.CommentsClose CommentsPermalink





‘(B) Consulting with the board of the clearing agency, a body performing a function similar to that of a board, or the senior officer of the clearing agency, to resolve any conflicts of interest that may arise.CommentsClose CommentsPermalink





‘(C) Administering the policies and procedures of the clearing agency required to be established pursuant to this section.CommentsClose CommentsPermalink





‘(D) Ensuring compliance with securities laws and the rules and regulations issued thereunder, including rules prescribed by the Commission pursuant to this section.CommentsClose CommentsPermalink





‘(E) Establishing procedures for remediation of noncompliance issues found during compliance office reviews, lookbacks, internal or external audit findings, self-reported errors, or through validated complaints. Procedures to be established under this subparagraph include procedures related to the handling, management response, remediation, retesting, and closing of noncompliance issues.CommentsClose CommentsPermalink





‘(3) ANNUAL REPORTS REQUIRED-CommentsClose CommentsPermalink





‘(A) IN GENERAL- The compliance officer shall annually prepare and sign a report on the compliance of the clearing agency with the securities laws and the policies and procedures of the agency, including the code of ethics and conflict of interest policies of the agency, in accordance with rules prescribed by the Commission.CommentsClose CommentsPermalink





‘(B) SUBMISSION- The compliance report required under subparagraph (A) shall accompany the financial reports of the clearing agency that are required to be furnished to the Commission pursuant to this section and shall include a certification that, under penalty of law, the report is accurate and complete.CommentsClose CommentsPermalink





‘(d) Consultation- The Commission and the Commodity Futures Trading Commission shall consult with the appropriate Federal banking agencies and each other prior to adopting rules under this section with respect to security-based swaps.CommentsClose CommentsPermalink





‘(e) Harmonization of Rules- Not later than 180 days after the effective date of the Over-the-Counter Derivatives Markets Act of 2010, the Commission and the Commodity Futures Trading Commission shall jointly adopt uniform rules governing--CommentsClose CommentsPermalink





‘(1) the clearing and settlement of swaps, as well as persons that are registered as derivatives clearing organizations for swaps under the Commodity Exchange Act (7 U.S.C. 1 et seq.); andCommentsClose CommentsPermalink





‘(2) the clearing and settlement of security-based swaps, as well as persons that are registered as clearing agencies for security-based swaps under this Act.’.CommentsClose CommentsPermalink





(2) EXISTING DEPOSITORY INSTITUTIONS AND DERIVATIVES CLEARING ORGANIZATIONS- Section 17A(b) of the Securities Exchange Act of 1934 (15 U.S.C. 78q-1(b)) is amended by adding at the end the following:CommentsClose CommentsPermalink





‘(9) A depository institution (as that term is defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813)) or a derivatives clearing organization registered with the Commodity Futures Trading Commission under the Commodities Exchange Act required to be registered as a clearing agency under this section is deemed to be registered under this section to the extent that the depository institution cleared security-based swaps, as defined in this Act, as a multilateral clearing organization or the derivatives clearing organization cleared security-based swaps, as defined in this Act, before the date of the enactment of this paragraph. Such depository institution or derivatives clearing organization shall be subject to the requirements of this Act and the regulations thereunder that are applicable to registered clearing agencies. A depository institution to which this paragraph applies may, by the vote of the shareholders owning not less than 51 percent of the voting interests of the institution, be converted into a State corporation, partnership, limited liability company, or other similar legal form pursuant to a plan of conversion, if the conversion is not in contravention of applicable State law.’.CommentsClose CommentsPermalink





(b) Alternative Swap Execution Facilities- The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is further amended by adding after section 3B the following:CommentsClose CommentsPermalink

‘SEC. 3C. ALTERNATIVE SWAP EXECUTION FACILITIES.

‘(a) Definition- For purposes of this section, the term ‘alternative swap execution facility’ means an electronic trading system with pre-trade and post-trade transparency in which multiple participants have the ability to execute or trade swaps by accepting bids and offers made by other participants that are open to multiple participants in the system, but which is not a designated contract market.CommentsClose CommentsPermalink





‘(b) Registration-CommentsClose CommentsPermalink





‘(1) IN GENERAL- No person may operate a facility for the trading of security-based swaps unless the facility is registered as an alternative swap execution facility under this section or as a securities exchange registered under this Act.CommentsClose CommentsPermalink





‘(2) DUAL REGISTRATION- Any person that is required to be registered as an alternative swap execution facility under this section shall register with the Commission regardless of whether that person also is registered with the Commodity Futures Trading Commission as an alternative swap execution facility.CommentsClose CommentsPermalink





‘(c) Requirements for Trading- An alternative swap execution facility that is registered under subsection (b) may trade any security-based swap.CommentsClose CommentsPermalink





‘(d) Trading by Exchanges- An exchange shall, to the extent that the exchange also operates an alternative swap execution facility and uses the same electronic trade execution system for trading on the exchange and the alternative swap execution facility, identify whether the electronic trading is taking place on the exchange or the alternative swap execution facility.CommentsClose CommentsPermalink





‘(e) Criteria for Registration-CommentsClose CommentsPermalink





‘(1) IN GENERAL- To be registered as an alternative swap execution facility, the facility shall be required to demonstrate to the Commission such facility meets the criteria established by this section.CommentsClose CommentsPermalink





‘(2) DETERRENCE OF ABUSES- Each alternative swap execution facility shall establish and enforce trading and participation rules that will deter abuses and have the capacity to detect, investigate, and enforce those rules, including--CommentsClose CommentsPermalink





‘(A) means to obtain information necessary to perform the functions required under this section; orCommentsClose CommentsPermalink





‘(B) means to--CommentsClose CommentsPermalink





‘(i) provide market participants with impartial access to the market; andCommentsClose CommentsPermalink





‘(ii) capture information that may be used in establishing whether any violations of this section have occurred.CommentsClose CommentsPermalink





‘(3) TRADING PROCEDURES- Each alternative swap execution facility shall establish and enforce rules or terms and conditions defining, or specifications detailing, trading procedures to be used in entering and executing orders traded on or through its facilities.CommentsClose CommentsPermalink





‘(4) FINANCIAL INTEGRITY OF TRANSACTIONS- Each alternative swap execution facility shall establish and enforce rules and procedures for ensuring the financial integrity of security-based swaps entered on or through its facilities, including the clearance and settlement of the security-based swaps.CommentsClose CommentsPermalink





‘(f) Core Principles for Alternative Swap Execution Facilities-CommentsClose CommentsPermalink





‘(1) COMPLIANCE-CommentsClose CommentsPermalink





‘(A) IN GENERAL- To maintain its registration as an alternative swap execution facility, the facility shall comply with the core principles established in this subsection and any requirement that the Commission may impose by rule or regulation.CommentsClose CommentsPermalink





‘(B) REASONABLE DISCRETION- Except where the Commission determines otherwise by rule or regulation, the facility shall have reasonable discretion in establishing the manner in which it complies with the core principles established in this subsection.CommentsClose CommentsPermalink





‘(2) COMPLIANCE WITH RULES- Each alternative swap execution facility shall monitor and enforce compliance with any of the rules of the facility, including the terms and conditions of the security-based swaps traded on or through the facility and any limitations on access to the facility.CommentsClose CommentsPermalink





‘(3) SECURITY-BASED SWAPS NOT READILY SUSCEPTIBLE TO MANIPULATION- Each alternative swap execution facility shall permit trading only in security-based swaps that are not readily susceptible to manipulation.CommentsClose CommentsPermalink





‘(4) MONITORING OF TRADING- Each alternative swap execution facility shall monitor trading in security-based swaps to prevent manipulation and price distortion through surveillance, compliance, and disciplinary practices and procedures, including methods for conducting real-time monitoring of trading and comprehensive and accurate trade reconstructions.CommentsClose CommentsPermalink





‘(5) ABILITY TO OBTAIN INFORMATION- Each alternative swap execution facility shall--CommentsClose CommentsPermalink





‘(A) establish and enforce rules that will allow the facility to obtain any necessary information to perform any of the functions described in this subsection;CommentsClose CommentsPermalink





‘(B) provide the information to the Commission upon request; andCommentsClose CommentsPermalink





‘(C) have the capacity to carry out such international information-sharing agreements as the Commission may require.CommentsClose CommentsPermalink





‘(6) POSITION LIMITS OR ACCOUNTABILITY-CommentsClose CommentsPermalink





‘(A) IN GENERAL- To reduce the potential threat of market manipulation or congestion, an alternative swap execution facility shall adopt for each of its contracts, where necessary and appropriate, position limitations or position accountability.CommentsClose CommentsPermalink





‘(B) FOR CERTAIN CONTRACTS- For any contract that is subject to a position limitation established by the Commission pursuant to section 10B, an alternative swap execution facility shall set its position limitation at a level no higher than the Commission limitation.CommentsClose CommentsPermalink





‘(7) EMERGENCY AUTHORITY- Each alternative swap execution facility shall adopt rules to provide for the exercise of emergency authority, in consultation or cooperation with the Commission, where necessary and appropriate, including the authority to suspend or curtail trading in a security-based swap.CommentsClose CommentsPermalink





‘(8) TIMELY PUBLICATION OF TRADING INFORMATION- Each alternative swap execution facility shall make public timely information on price, trading volume, and other trading data to the extent prescribed by the Commission.CommentsClose CommentsPermalink





‘(9) RECORDKEEPING AND REPORTING-CommentsClose CommentsPermalink





‘(A) IN GENERAL- Each alternative swap execution facility shall--CommentsClose CommentsPermalink





‘(i) maintain records of all activities related to the business of the facility, including a complete audit trail, in a form and manner acceptable to the Commission for a period of 5 years; andCommentsClose CommentsPermalink





‘(ii) report to the Commission all information determined by the Commission to be necessary or appropriate for the Commission to perform its responsibilities under this Act in a form and manner acceptable to the Commission.CommentsClose CommentsPermalink





‘(B) DATA COLLECTION REQUIREMENTS- The Commission shall adopt data collection and reporting requirements for alternative swap execution facilities that are comparable to corresponding requirements for clearing agencies and security-based swap repositories.CommentsClose CommentsPermalink





‘(10) ANTITRUST CONSIDERATIONS- Unless necessary or appropriate to achieve the purposes of this Act, an alternative swap execution facility shall avoid--CommentsClose CommentsPermalink





‘(A) adopting any rules or taking any actions that result in any unreasonable restraints of trade; orCommentsClose CommentsPermalink





‘(B) imposing any material anticompetitive burden on trading on the swap execution facility.CommentsClose CommentsPermalink





‘(11) CONFLICTS OF INTEREST- Each alternative swap execution facility shall--CommentsClose CommentsPermalink





‘(A) establish and enforce rules to minimize conflicts of interest in its decision making process; andCommentsClose CommentsPermalink





‘(B) establish a process for resolving any conflicts of interest.CommentsClose CommentsPermalink





‘(12) DESIGNATION OF COMPLIANCE OFFICER-CommentsClose CommentsPermalink





‘(A) IN GENERAL- Each alternative swap execution facility shall designate an individual to serve as a compliance officer.CommentsClose CommentsPermalink





‘(B) DUTIES- The compliance officer shall perform the following duties:CommentsClose CommentsPermalink





‘(i) Reporting directly to the board or to the senior officer of the facility.CommentsClose CommentsPermalink





‘(ii) Reviewing the compliance of the facility with the core principles established in this subsection.CommentsClose CommentsPermalink





‘(iii) Consulting with the board of the facility, a body performing a function similar to that of a board, or the senior officer of the facility, to resolve any conflicts of interest that may arise.CommentsClose CommentsPermalink





‘(iv) Administering the policies and procedures of the facility required to be established pursuant to this section.CommentsClose CommentsPermalink





‘(v) Ensuring compliance with securities laws and the rules and regulations issued thereunder, including any rules prescribed by the Commission pursuant to this section.CommentsClose CommentsPermalink





‘(vi) Establishing procedures for remediation of noncompliance issues found during compliance office reviews, lookbacks, internal or external audit findings, self-reported errors, or through validated complaints. Procedures to be established under this clause include procedures related to the handling, management response, remediation, retesting, and closing of noncompliance issues.CommentsClose CommentsPermalink





‘(C) ANNUAL REPORTS REQUIRED-CommentsClose CommentsPermalink





‘(i) IN GENERAL- The compliance officer shall annually prepare and sign a report on the compliance of the alternative swap execution facility with the securities laws and the policies and procedures of the facility, including the code of ethics and conflict of interest policies of the facility, in accordance with rules prescribed by the Commission.CommentsClose CommentsPermalink





‘(ii) SUBMISSION- The compliance report required under clause (i) shall accompany the financial reports of the alternative swap execution facility that are required to be furnished to the Commission pursuant to this section and shall include a certification that, under penalty of law, the report is accurate and complete.CommentsClose CommentsPermalink





‘(g) Exemptions- The Commission may exempt, conditionally or unconditionally, an alternative swap execution facility from registration under this section if the Commission finds that such organization is subject to comparable, comprehensive supervision and regulation on a consolidated basis by the Commodity Futures Trading Commission, an appropriate Federal banking agency, or the appropriate governmental authorities in the organization’s home country.CommentsClose CommentsPermalink





‘(h) Harmonization of Rules- Not later than 180 days of the effective date of the Over-the-Counter Derivatives Markets Act of 2010, the Commission and the Commodity Futures Trading Commission shall jointly prescribe rules governing the regulation of alternative swap execution facilities under this section and section 5h of the Commodity Exchange Act.’.CommentsClose CommentsPermalink





(c) Trading in Security-based Swap Agreements- Section 6 of the Securities Exchange Act of 1934 (15 U.S.C. 78f) is amended by adding at the end the following:CommentsClose CommentsPermalink





‘(l) Prohibition- It shall be unlawful for any person to effect a transaction in a security-based swap with or for a person that is not an eligible contract participant unless such transaction is effected on a national securities exchange registered pursuant to subsection (b).’.CommentsClose CommentsPermalink





(d) Registration and Regulation of Security-based Swap Dealers and Major Security-based Swap Participants- The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended by inserting after section 15E (15 U.S.C. 78o-7) the following:CommentsClose CommentsPermalink

‘SEC. 15F. REGISTRATION AND REGULATION OF SECURITY-BASED SWAP DEALERS AND MAJOR SECURITY-BASED SWAP PARTICIPANTS.

‘(a) Registration- It shall be unlawful for any person--CommentsClose CommentsPermalink





‘(1) to act as a security-based swap dealer unless such person is registered as a security-based swap dealer with the Commission; andCommentsClose CommentsPermalink





‘(2) to act as a major security-based swap participant unless such person is registered as a major security-based swap participant with the Commission.CommentsClose CommentsPermalink





‘(b) Requirements-CommentsClose CommentsPermalink





‘(1) IN GENERAL- A person shall register as a security-based swap dealer or major security-based swap participant by filing a registration application with the Commission.CommentsClose CommentsPermalink





‘(2) CONTENTS- The application required under paragraph (1) shall be made in such form and manner as prescribed by the Commission, giving any information and facts as the Commission may deem necessary concerning the business in which the applicant is or will be engaged. Such person, when registered as a security-based swap dealer or major security-based swap participant, shall continue to report and furnish to the Commission such information pertaining to such person’s business as the Commission may require.CommentsClose CommentsPermalink





‘(3) EXPIRATION- Each registration shall expire at such time as the Commission may by rule or regulation prescribe.CommentsClose CommentsPermalink





‘(4) RULES- Except as provided in subsections (c), (d), and (e), the Commission may prescribe rules applicable to security-based swap dealers and major security-based swap participants, including rules that limit the activities of security-based swap dealers and major security-based swap participants. Except as provided in subsections (c) and (e), the Commission may provide conditional or unconditional exemptions from rules prescribed under this section for security-based swap dealers and major security-based swap participants that are subject to substantially similar requirements as brokers or dealers.CommentsClose CommentsPermalink





‘(5) TRANSITION- Rules adopted under this section shall provide for the registration of security-based swap dealers and major security-based swap participants not later than 1 year after the effective date of the Over-the-Counter Derivatives Markets Act of 2010.CommentsClose CommentsPermalink





‘(c) Dual Registration-CommentsClose CommentsPermalink





‘(1) SECURITY-BASED SWAP DEALER- Any person that is required to be registered as a security-based swap dealer under this section shall register with the Commission regardless of whether that person also is a depository institution or is registered with the Commodity Futures Trading Commission as a swap dealer.CommentsClose CommentsPermalink





‘(2) MAJOR SECURITY-BASED SWAP PARTICIPANT- Any person that is required to be registered as a major security-based swap participant under this section shall register with the Commission regardless of whether that person also is a depository institution or is registered with the Commodity Futures Trading Commission as a major swap participant.CommentsClose CommentsPermalink





‘(d) Joint Rules-CommentsClose CommentsPermalink





‘(1) IN GENERAL- Not later than 180 days after the effective date of the Over-the-Counter Derivatives Markets Act of 2010, the Commission and the Commodity Futures Trading Commission shall jointly adopt uniform rules for persons that are registered--CommentsClose CommentsPermalink





‘(A) as security-based swap dealers or major security-based swap participants under this section; andCommentsClose CommentsPermalink





‘(B) as swap dealers or major swap participants under the Commodity Exchange Act (7 U.S.C. 1 et seq.).CommentsClose CommentsPermalink





‘(2) EXCEPTION FOR PRUDENTIAL REQUIREMENTS- The Commission and the Commodity Futures Trading Commission shall not prescribe rules imposing prudential requirements (including activity restrictions) on security-based swap dealers, major security-based swap participants, swap dealers, or major swap participants that are depository institutions, as that term is defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813). This provision shall not be construed as limiting the authority of the Commission and the Commodity Futures Trading Commission to prescribe appropriate business conduct, reporting, and recordkeeping requirements to protect investors.CommentsClose CommentsPermalink





‘(e) Capital and Margin Requirements-CommentsClose CommentsPermalink





‘(1) IN GENERAL-CommentsClose CommentsPermalink





‘(A) SECURITY-BASED SWAP DEALERS AND MAJOR SECURITY-BASED SWAP PARTICIPANTS THAT ARE DEPOSITORY INSTITUTIONS- Each registered security-based swap dealer and major security-based swap participant that is a depository institution, as that term is defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813), shall meet such minimum capital requirements and minimum initial and variation margin requirements as the appropriate Federal banking agency shall by rule or regulation prescribe under paragraph (2)(A) to help ensure the safety and soundness of the security-based swap dealer or major security-based swap participant.CommentsClose CommentsPermalink





‘(B) SECURITY-BASED SWAP DEALERS AND MAJOR SECURITY-BASED SWAP PARTICIPANTS THAT ARE NOT DEPOSITORY INSTITUTIONS- Each registered security-based swap dealer and major security-based swap participant that is not a depository institution, as that term is defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813), shall meet such minimum capital requirements and minimum initial and variation margin requirements as the Commission and the Commodity Futures Trading Commission shall by rule or regulation jointly prescribe under paragraph (2)(B) to help ensure the safety and soundness of the security-based swap dealer or major security-based swap participant.CommentsClose CommentsPermalink





‘(2) JOINT RULES-CommentsClose CommentsPermalink





‘(A) SECURITY-BASED SWAP DEALERS AND MAJOR SECURITY-BASED SWAP PARTICIPANTS THAT ARE DEPOSITORY INSTITUTIONS- Not later than 180 days after the date of the enactment of the Over-the-Counter Derivatives Markets Act of 2010, the appropriate Federal banking agencies, in consultation with the Commission and the Commodity Futures Trading Commission, shall jointly adopt rules imposing capital and margin requirements under this subsection for security-based swap dealers and major security-based swap participants that are depository institutions, as that term is defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813).CommentsClose CommentsPermalink





‘(B) SECURITY-BASED SWAP DEALERS AND MAJOR SECURITY-BASED SWAP PARTICIPANTS THAT ARE NOT DEPOSITORY INSTITUTIONS- Not later than 180 days after the date of the enactment of the Over-the-Counter Derivatives Markets Act of 2010, the Commission and the Commodity Futures Trading Commission shall jointly adopt rules imposing capital and margin requirements under this subsection for security-based swap dealers and major security-based swap participants that are not depository institutions, as that term is defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813).CommentsClose CommentsPermalink





‘(3) CAPITAL-CommentsClose CommentsPermalink





‘(A) SECURITY-BASED SWAP DEALERS AND MAJOR SECURITY-BASED SWAP PARTICIPANTS THAT ARE DEPOSITORY INSTITUTIONS- The capital requirements prescribed under paragraph (2)(A) for security-based swap dealers and major security-based swap participants that are depository institutions shall contain--CommentsClose CommentsPermalink





‘(i) a capital requirement that is greater than zero for security-based swaps that are cleared by a clearing agency; andCommentsClose CommentsPermalink





‘(ii) to offset the greater risk to the security-based swap dealer or major security-based swap participant and to the financial system arising from the use of security-based swaps that are not centrally cleared, substantially higher capital requirements for security-based swaps that are not cleared by a clearing agency than for security-based swaps that are centrally cleared.CommentsClose CommentsPermalink





‘(B) SECURITY-BASED SWAP DEALERS AND MAJOR SECURITY-BASED SWAP PARTICIPANTS THAT ARE NOT DEPOSITORY INSTITUTIONS- The capital requirements prescribed under paragraph (2)(B) for security-based swap dealers and major security-based swap participants that are not depository institutions shall be as strict as or stricter than the capital requirements prescribed for security-based swap dealers and major security-based swap participants that are depository institutions under paragraph (2)(A).CommentsClose CommentsPermalink





‘(C) RULE OF CONSTRUCTION-CommentsClose CommentsPermalink





‘(i) IN GENERAL- Nothing in this section shall limit, or be construed to limit, the authority--CommentsClose CommentsPermalink





‘(I) of the Commission to set financial responsibility rules for a broker or dealer registered pursuant to section 15(b) (except for section 15(b)(11) thereof) in accordance with section 15(c)(3); orCommentsClose CommentsPermalink





‘(II) of the Commodity Futures Trading Commission to set financial responsibility rules for a futures commission merchant or introducing broker registered pursuant to section 4f(a) of the Commodity Exchange Act (except for section 4f(a)(3) thereof) in accordance with section 4f(b) of the Commodity Exchange Act.CommentsClose CommentsPermalink





‘(ii) FUTURES COMMISSION MERCHANTS AND OTHER DEALERS- A futures commission merchant, introducing broker, broker, or dealer shall maintain sufficient capital to comply with the stricter of any applicable capital requirements to which such futures commission merchant, introducing broker, broker, or dealer is subject to under this title or the Commodity Exchange Act.CommentsClose CommentsPermalink





‘(4) MARGIN-CommentsClose CommentsPermalink





‘(A) SECURITY-BASED SWAP DEALERS AND MAJOR SECURITY-BASED SWAP PARTICIPANTS THAT ARE DEPOSITORY INSTITUTIONS-CommentsClose CommentsPermalink





‘(i) IN GENERAL- The appropriate Federal banking agency for security-based swap dealers and major security-based swap participants that are depository institutions shall impose both initial and variation margin requirements in accordance with paragraph (2)(A) on all security-based swaps that are not cleared by a clearing agency.CommentsClose CommentsPermalink





‘(ii) EXEMPTION- The appropriate Federal banking agency for security-based swap dealers and major security-based swap participants that are depository institutions, by rule or order, as the agency deems consistent with the public interest, may conditionally or unconditionally exempt a security-based swap dealer or a major security-based swap participant that is a depository institution from the requirements of this subparagraph and the rules issued under this subparagraph with regard to any security-based swap in which 1 of the counterparties is--CommentsClose CommentsPermalink





‘(I) not a security-based swap dealer, major security-based swap participant, swap dealer, or a major swap participant;CommentsClose CommentsPermalink





‘(II) using the security-based swap as part of an effective hedge under generally accepted accounting principles; andCommentsClose CommentsPermalink





‘(III) predominantly engaged in activities that are not financial in nature, as defined in section 4(k) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(k)).CommentsClose CommentsPermalink





‘(iii) DETERMINATION OF THE FINANCIAL STABILITY OVERSIGHT COUNCIL- The appropriate Federal banking agency may act by rule or order to exempt a security-based swap dealer or major security-based swap participant for which it is the primary financial regulatory agency from any requirement or rule under this subsection only if--CommentsClose CommentsPermalink





‘(I) the appropriate Federal banking agency has provided a written notice to the Financial Stability Oversight Council describing the proposed exemption; andCommentsClose CommentsPermalink





‘(II) the Financial Stability Oversight Council has not made a determination and notified the appropriate Federal banking agency within 60 days of receipt of such notice that such exemption would pose a threat to the stability of the United States financial system.CommentsClose CommentsPermalink





‘(B) SECURITY-BASED SWAP DEALERS AND MAJOR SECURITY-BASED SWAP PARTICIPANTS THAT ARE NOT DEPOSITORY INSTITUTIONS-CommentsClose CommentsPermalink





‘(i) IN GENERAL- The Commission and the Commodity Futures Trading Commission shall impose both initial and variation margin requirements in accordance with paragraph (2)(B) for security-based swap dealers and major security-based swap participants that are not depository institutions on all security-based swaps that are not cleared by a clearing agency. Any such initial and variation margin requirements shall be as strict as or stricter than the margin requirements prescribed under paragraph (4)(A).CommentsClose CommentsPermalink





‘(ii) EXEMPTION- The Commission by rule or order, as the Commission deems consistent with the public interest, may conditionally or unconditionally exempt a security-based swap dealer or a major security-based swap participant that is not a depository institution from the requirements of this subparagraph and the rules issued under this subparagraph with regard to any security-based swap in which 1 of the counterparties is--CommentsClose CommentsPermalink





‘(I) not a security-based swap dealer, major security-based swap participant, swap dealer, or a major swap participant;CommentsClose CommentsPermalink





‘(II) using the security-based swap as part of an effective hedge under generally accepted accounting principles; andCommentsClose CommentsPermalink





‘(III) predominantly engaged in activities that are not financial in nature, as defined in section 4(k) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(k)).CommentsClose CommentsPermalink





‘(iii) DETERMINATION OF THE FINANCIAL STABILITY OVERSIGHT COUNCIL- The Commission may act by rule or order to exempt a security-based swap dealer or major security-based swap participant that is not a depository institution from any requirement or rule under this subsection only if--CommentsClose CommentsPermalink





‘(I) the Commission has provided a written notice to the Financial Stability Oversight Council describing the proposed exemption; andCommentsClose CommentsPermalink





‘(II) the Financial Stability Oversight Council has not made a determination and notified the Commission within 60 days of receipt of such notice that such exemption would pose a threat to the stability of the United States financial system.CommentsClose CommentsPermalink





‘(5) MARGIN REQUIREMENTS- In prescribing margin requirements under this subsection, the appropriate Federal banking agency with respect to security-based swap dealers and major security-based swap participants that are depository institutions and the Commission and the Commodity Futures Trading Commission with respect to security-based swap dealers and major security-based swap participants that are not depository institutions may permit the use of noncash collateral, as the agency or the Commission and the Commodity Futures Trading Commission determines to be consistent with--CommentsClose CommentsPermalink





‘(A) preserving the financial integrity of markets trading security-based swaps; andCommentsClose CommentsPermalink





‘(B) preserving the stability of the United States financial system.CommentsClose CommentsPermalink





‘(6) REQUESTED MARGIN- If any party to a security-based swap that is exempt from the margin requirements of paragraph (4)(A)(i) pursuant to the provisions of paragraph (4)(A)(ii) or from the margin requirements of paragraph (4)(B)(i) pursuant to the provisions of paragraph (4)(B)(ii) requests that such security-based swap be margined, then--CommentsClose CommentsPermalink





‘(A) the exemption shall not apply; andCommentsClose CommentsPermalink





‘(B) the counterparty to such security-based swap shall provide the requested margin.CommentsClose CommentsPermalink





‘(f) Reporting and Recordkeeping-CommentsClose CommentsPermalink





‘(1) IN GENERAL- Each registered security-based swap dealer and major security-based swap participant--CommentsClose CommentsPermalink





‘(A) shall make such reports as are prescribed by rule or regulation regarding the transactions and positions and financial condition of such dealer or participant;CommentsClose CommentsPermalink





‘(B) that is--CommentsClose CommentsPermalink





‘(i) a depository institution shall keep books and records of all activities related to its business as a security-based swap dealer or major security-based swap participant in such form and manner and for such period as may be prescribed by rule or regulation by the appropriate Federal banking agency; andCommentsClose CommentsPermalink





‘(ii) not a depository institution shall keep books and records in such form and manner and for such period as may be prescribed by rule or regulation pursuant to paragraph (2); andCommentsClose CommentsPermalink





‘(C) shall keep such books and records open to inspection and examination by any representative of the Commission.CommentsClose CommentsPermalink





‘(2) RULES- Not later than 1 year after the date of the enactment of the Over-the-Counter Derivatives Markets Act of 2010, the Commission and the Commodity Futures Trading Commission shall jointly adopt rules governing reporting and recordkeeping for security-based swap dealers, major security-based swap participants, swap dealers, and major swap participants that are not depository institutions.CommentsClose CommentsPermalink





‘(g) Daily Trading Records-CommentsClose CommentsPermalink





‘(1) IN GENERAL- Each registered security-based swap dealer and major security-based swap participant shall, for such period as may be prescribed by rule or regulation, maintain daily trading records of that dealer’s or participant’s--CommentsClose CommentsPermalink





‘(A) security-based swaps and all related records (including related transactions); andCommentsClose CommentsPermalink





‘(B) recorded communications, including electronic mail, instant messages, and recordings of telephone calls.CommentsClose CommentsPermalink





‘(2) INFORMATION REQUIREMENTS- The daily trading records required to be maintained under paragraph (1) shall include such information as shall be prescribed by rule or regulation.CommentsClose CommentsPermalink





‘(3) CUSTOMER RECORDS- Each registered security-based swap dealer or major security-based swap participant shall maintain daily trading records for each customer or counterparty in such manner and form as to be identifiable with each security-based swap transaction.CommentsClose CommentsPermalink





‘(4) AUDIT TRAIL-CommentsClose CommentsPermalink





‘(A) MAINTENANCE OF AUDIT TRAIL- Each registered security-based swap dealer or major security-based swap participant shall maintain a complete audit trail for conducting comprehensive and accurate trade reconstructions.CommentsClose CommentsPermalink





‘(B) PERMISSIBLE COMPLIANCE BY ENTITY OTHER THAN DEALER OR PARTICIPANT- A registered security-based swap repository may, at the request of a registered security-based swap dealer or major security-based swap participant, satisfy the requirement of subparagraph (A) on behalf of such registered security-based swap dealer or major security-based swap participant.CommentsClose CommentsPermalink





‘(5) RULES- Not later than 1 year after the date of the enactment of the Over-the-Counter Derivatives Markets Act of 2010, the Commission and the Commodity Futures Trading Commission shall jointly adopt rules governing daily trading records for swap dealers, major swap participants, security-based swap dealers, and major security-based swap participants.CommentsClose CommentsPermalink





‘(h) Business Conduct Standards-CommentsClose CommentsPermalink





‘(1) IN GENERAL- Each registered security-based swap dealer and major security-based swap participant shall conform with such business conduct standards as may be prescribed by rule or regulation, including any standards addressing--CommentsClose CommentsPermalink





‘(A) fraud, manipulation, and other abusive practices involving security-based swaps (including security-based swaps that are offered but not entered into);CommentsClose CommentsPermalink





‘(B) diligent supervision of its business as a security-based swap dealer;CommentsClose CommentsPermalink





‘(C) adherence to all applicable position limits; andCommentsClose CommentsPermalink





‘(D) such other matters as the Commission shall determine to be necessary or appropriate.CommentsClose CommentsPermalink





‘(2) BUSINESS CONDUCT REQUIREMENTS- Business conduct requirements adopted by the Commission pursuant to paragraph (1) shall--CommentsClose CommentsPermalink





‘(A) establish a standard of care for a security-based swap dealer or major security-based swap participant to verify that any security-based swap counterparty meets the eligibility standards for an eligible contract participant;CommentsClose CommentsPermalink





‘(B) require disclosure by the security-based swap dealer or major security-based swap participant to any counterparty to the security-based swap (other than a swap dealer, major swap participant, security-based swap dealer, or major security-based swap participant) of--CommentsClose CommentsPermalink





‘(i) information about the material risks and characteristics of the security-based swap;CommentsClose CommentsPermalink





‘(ii) the source and amount of any fees or other material remuneration that the security-based swap dealer or major security-based swap participant would directly or indirectly expect to receive in connection with the security-based swap; andCommentsClose CommentsPermalink





‘(iii) any other material incentives or conflicts of interest that the security-based swap dealer or major security-based swap participant may have in connection with the security-based swap;CommentsClose CommentsPermalink





‘(C) establish a standard of conduct for a security-based swap dealer or major security-based swap participant to communicate in a fair and balanced manner based on principles of fair dealing and good faith;CommentsClose CommentsPermalink





‘(D) establish a standard of conduct for a security-based swap dealer or major security-based swap participant, with respect to a counterparty that is an eligible contract participant within the meaning of subclause (I) or (II) of clause (vii) section 1a(12) of the Commodity Exchange Act (7 U.S.C. 1a(12)), to have a reasonable basis to believe that the counterparty has an independent representative that--CommentsClose CommentsPermalink





‘(i) has sufficient knowledge to evaluate the transaction and risks;CommentsClose CommentsPermalink





‘(ii) is not subject to a statutory disqualification;CommentsClose CommentsPermalink





‘(iii) is independent of the security-based swap dealer or major security-based swap participant;CommentsClose CommentsPermalink





‘(iv) undertakes a duty to act in the best interests of the counterparty it represents;CommentsClose CommentsPermalink





‘(v) makes appropriate disclosures; andCommentsClose CommentsPermalink





‘(vi) will provide written representations to the eligible contract participant regarding fair pricing and the appropriateness of the transaction; andCommentsClose CommentsPermalink





‘(E) establish such other standards and requirements as the Commission may determine are necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of this title.CommentsClose CommentsPermalink





‘(3) RULES- Not later than 1 year after the date of the enactment of the Over-the-Counter Derivatives Markets Act of 2010, the Commission and the Commodity Futures Trading Commission shall jointly prescribe rules under this subsection governing business conduct standards for swap dealers, major swap participants, security-based swap dealers, and major security-based swap participants.CommentsClose CommentsPermalink





‘(i) Documentation and Back Office Standards-CommentsClose CommentsPermalink





‘(1) IN GENERAL- Each registered security-based swap dealer and major security-based swap participant shall conform with standards, as may be prescribed by rule or regulation, addressing timely and accurate confirmation, processing, netting, documentation, and valuation of all security-based swaps.CommentsClose CommentsPermalink





‘(2) RULES- Not later than 1 year after the date of the enactment of the Over-the-Counter Derivatives Markets Act of 2010, the Commission and the Commodity Futures Trading Commission shall jointly adopt rules governing documentation and back office standards for swap dealers, major swap participants, security-based swap dealers, and major security-based swap participants.CommentsClose CommentsPermalink





‘(j) Dealer Responsibilities- Each registered security-based swap dealer and major security-based swap participant shall, at all times, comply with the following requirements:CommentsClose CommentsPermalink





‘(1) MONITORING OF TRADING- The security-based swap dealer or major security-based swap participant shall monitor its trading in security-based swaps to prevent violations of applicable position limits.CommentsClose CommentsPermalink





‘(2) DISCLOSURE OF GENERAL INFORMATION- The security-based swap dealer or major security-based swap participant shall disclose to the Commission information concerning--CommentsClose CommentsPermalink





‘(A) terms and conditions of its security-based swaps;CommentsClose CommentsPermalink





‘(B) security-based swap trading operations, mechanisms, and practices;CommentsClose CommentsPermalink





‘(C) financial integrity protections relating to security-based swaps; andCommentsClose CommentsPermalink





‘(D) other information relevant to its trading in security-based swaps.CommentsClose CommentsPermalink





‘(3) ABILITY TO OBTAIN INFORMATION- The security-based swap dealer or major security-based swap participant shall--CommentsClose CommentsPermalink





‘(A) establish and enforce internal systems and procedures to obtain any necessary information to perform any of the functions described in this section; andCommentsClose CommentsPermalink





‘(B) provide the information to the Commission upon request.CommentsClose CommentsPermalink





‘(4) CONFLICTS OF INTEREST- The security-based swap dealer and major security-based swap participant shall implement conflict of interest systems and procedures that--CommentsClose CommentsPermalink





‘(A) establish structural and institutional safeguards to assure that the activities of any person within the firm relating to research or analysis of the price or market for any security are separated by appropriate informational partitions within the firm from the review, pressure, or oversight of those whose involvement in trading or clearing activities might potentially bias their judgment or supervision; andCommentsClose CommentsPermalink





‘(B) address such other issues as the Commission determines appropriate.CommentsClose CommentsPermalink





‘(5) ANTITRUST CONSIDERATIONS- Unless necessary or appropriate to achieve the purposes of this Act, a security-based swap dealer or major security-based swap participant shall avoid--CommentsClose CommentsPermalink





‘(A) adopting any processes or taking any actions that result in any unreasonable restraints of trade; orCommentsClose CommentsPermalink





‘(B) imposing any material anticompetitive burden on trading.CommentsClose CommentsPermalink





‘(k) Rules- The Commission and the Commodity Futures Trading Commission shall consult with each other prior to adopting any rules under the Over-the-Counter Derivatives Markets Act of 2010.CommentsClose CommentsPermalink





‘(l) Statutory Disqualification- Except to the extent otherwise specifically provided by rule, regulation, or order of the Commission, it shall be unlawful for a security-based swap dealer or a major security-based swap participant to permit any person associated with a security-based swap dealer or a major security-based swap participant who is subject to a statutory disqualification to effect or be involved in effecting security-based swaps on behalf of such security-based swap dealer or major security-based swap participant, if such security-based swap dealer or major security-based swap participant knew, or in the exercise of reasonable care should have known, of such statutory disqualification.CommentsClose CommentsPermalink





‘(m) Enforcement and Administrative Proceeding Authority-CommentsClose CommentsPermalink





‘(1) PRIMARY ENFORCEMENT AUTHORITY-CommentsClose CommentsPermalink





‘(A) SECURITIES AND EXCHANGE COMMISSION- Except as provided in subsection (b), the Commission shall have primary authority to enforce the provisions of subtitle B of the Over-the-Counter Derivatives Markets Act of 2010 with respect to any person.CommentsClose CommentsPermalink





‘(B) APPROPRIATE FEDERAL BANKING AGENCY- The appropriate Federal banking agency for security-based swap dealers and major security-based swap participants that are depository institutions, as that term is defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813), shall have exclusive authority to enforce the provisions of subsection (e) and other prudential requirements of this Act with respect to depository institutions that are security-based swap dealers or major security-based swap participants.CommentsClose CommentsPermalink





‘(C) REFERRAL- If the appropriate Federal banking agency for security-based swap dealers and major security-based swap participants that are depository institutions has cause to believe that such security-based swap dealer or major security-based swap participant may have engaged in conduct that constitutes a violation of the nonprudential requirements of this section or rules adopted by the Commission thereunder, the agency may recommend in writing to the Commission that the Commission initiate an enforcement proceeding as authorized under this Act. The recommendation shall be accompanied by a written explanation of the concerns giving rise to the recommendation.CommentsClose CommentsPermalink





‘(D) BACKSTOP ENFORCEMENT AUTHORITY- If the Commission does not initiate an enforcement proceeding before the end of the 90-day period beginning on the date on which the Commission receives a recommendation under subparagraph (C), the appropriate Federal banking agency for security-based swap dealers and major security-based swap participants that are depository institutions may initiate an enforcement proceeding as permitted under Federal law.CommentsClose CommentsPermalink





‘(2) ENFORCEMENT ACTIONS- The Commission, by order, shall censure, place limitations on the activities, functions, or operations of, or reject the filing of any security-based swap dealer or major security-based swap participant that has registered with the Commission pursuant to subsection (b) if it finds, on the record after notice and opportunity for hearing, that such censure, placing of limitations, or rejection is in the public interest and that such security-based swap dealer or major security-based swap participant, or any person associated with such security-based swap dealer or major security-based swap participant effecting or involved in effecting transactions in security-based swaps on behalf of such security-based swap dealer or major security-based swap participant, whether prior or subsequent to becoming so associated--CommentsClose CommentsPermalink





‘(A) has committed or omitted any act, or is subject to an order or finding, described in subparagraph (A), (D), or (E) of paragraph (4) of section 15(b);CommentsClose CommentsPermalink





‘(B) has been convicted of any offense specified in subparagraph (B) of such paragraph (4) not later than 10 years of the commencement of the proceedings under this subsection;CommentsClose CommentsPermalink





‘(C) is enjoined from any action, conduct, or practice specified in subparagraph (C) of such paragraph (4);CommentsClose CommentsPermalink





‘(D) is subject to an order or a final order specified in subparagraph (F) or (H), respectively, of such paragraph (4); orCommentsClose CommentsPermalink





‘(E) has been found by a foreign financial regulatory authority to have committed or omitted any act, or violated any foreign statute or regulation, described in subparagraph (G) of such paragraph (4).CommentsClose CommentsPermalink





‘(3) PERSONNEL ENFORCEMENT ACTIONS- With respect to any person who is associated, who is seeking to become associated, or, at the time of the alleged misconduct, who was associated or was seeking to become associated with a security-based swap dealer or major security-based swap participant for the purpose of effecting or being involved in effecting security-based swaps on behalf of such security-based swap dealer or major security-based swap participant, the Commission, by order, shall censure, place limitations on the activities or functions of such person, or suspend for a period not exceeding 12 months, or bar such person from being associated with a security-based swap dealer or major security-based swap participant, if the Commission finds, on the record after notice and opportunity for a hearing, that such censure, placing of limitations, suspension, or bar is in the public interest and that such person--CommentsClose CommentsPermalink





‘(A) has committed or omitted any act, or is subject to an order or finding, described in subparagraph (A), (D), or (E) of paragraph (4) of section 15(b);CommentsClose CommentsPermalink





‘(B) has been convicted of any offense specified in subparagraph (B) of such paragraph (4) not later than 10 years of the commencement of the proceedings under this subsection;CommentsClose CommentsPermalink





‘(C) is enjoined from any action, conduct, or practice specified in subparagraph (C) of such paragraph (4);CommentsClose CommentsPermalink





‘(D) is subject to an order or a final order specified in subparagraph (F) or (H), respectively, of such paragraph (4); orCommentsClose CommentsPermalink





‘(E) has been found by a foreign financial regulatory authority to have committed or omitted any act, or violated any foreign statute or regulation, described in subparagraph (G) of such paragraph (4).CommentsClose CommentsPermalink





‘(4) NO VIOLATIONS OF ORDERS- It shall be unlawful--CommentsClose CommentsPermalink





‘(A) for any person as to whom an order under paragraph (3) is in effect, without the consent of the Commission, willfully to become, or to be, associated with a security-based swap dealer or major security-based swap participant in contravention of such order; orCommentsClose CommentsPermalink





‘(B) for any security-based swap dealer or major security-based swap participant to permit such a person, without the consent of the Commission, to become or remain a person associated with the security-based swap dealer or major security-based swap participant in contravention of such order, if such security-based swap dealer or major security-based swap participant knew, or in the exercise of reasonable care should have known, of such order.’.CommentsClose CommentsPermalink





(e) Additions of Security-based Swaps to Certain Enforcement Provisions- Paragraphs (1) through (3) of section 9(b) of the Securities Exchange Act of 1934 (15 U.S.C. 78i(b)(1)-(3)) are amended to read as follows:CommentsClose CommentsPermalink





‘(1) any transaction in connection with any security whereby any party to such transaction acquires--CommentsClose CommentsPermalink





‘(A) any put, call, straddle, or other option or privilege of buying the security from or selling the security to another without being bound to do so;CommentsClose CommentsPermalink





‘(B) any security futures product on the security; orCommentsClose CommentsPermalink





‘(C) any security-based swap involving the security or the issuer of the security;CommentsClose CommentsPermalink





‘(2) any transaction in connection with any security with relation to which he has, directly or indirectly, any interest in any--CommentsClose CommentsPermalink





‘(A) such put, call, straddle, option, or privilege;CommentsClose CommentsPermalink





‘(B) such security futures product; orCommentsClose CommentsPermalink





‘(C) such security-based swap; orCommentsClose CommentsPermalink





‘(3) any transaction in any security for the account of any person who he has reason to believe has, and who actually has, directly or indirectly, any interest in any--CommentsClose CommentsPermalink





‘(A) such put, call, straddle, option, or privilege;CommentsClose CommentsPermalink





‘(B) such security futures product with relation to such security; orCommentsClose CommentsPermalink





‘(C) any security-based swap involving such security or the issuer of such security.’.CommentsClose CommentsPermalink





(f) Rulemaking Authority to Prevent Fraud, Manipulation, and Deceptive Conduct in Security-based Swaps and Security-based Swap Agreements- Section 9 of the Securities Exchange Act of 1934 (15 U.S.C. 78i) is amended by adding at the end the following:CommentsClose CommentsPermalink





‘(j) Prohibition- It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce or of the mails, or of any facility of any national securities exchange, to effect any transaction in, or to induce or attempt to induce the purchase or sale of, any security-based swap or any security-based swap agreement, in connection with which such person engages in any fraudulent, deceptive, or manipulative act or practice, makes any fictitious quotation, or engages in any transaction, practice, or course of business which operates as a fraud or deceit upon any person. The Commission shall, for the purposes of this subsection, by rules and regulations define, and prescribe means reasonably designed to prevent, such transactions, acts, practices, and courses of business as are fraudulent, deceptive, or manipulative, and such quotations as are fictitious.’.CommentsClose CommentsPermalink





(g) Position Limits and Position Accountability for Security-based Swaps- The Securities Exchange Act of 1934 is amended by inserting after section 10A (15 U.S.C. 78j-1) the following new section:CommentsClose CommentsPermalink

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

‘(a) Aggregate Position Limits- As a means reasonably designed to prevent fraud and manipulation, the Commission may, by rule or regulation, as necessary or appropriate in the public interest or for the protection of investors, establish limits (including related hedge exemption provisions) on the aggregate number or amount of positions that may be held by any person or persons across security-based swaps that perform or affect a significant price discovery function with respect to regulated markets.CommentsClose CommentsPermalink





‘(b) Exemptions- The Commission, by rule, regulation, or order, may conditionally or unconditionally exempt any person or class of persons, any security-based swap or class of security-based swaps, or any transaction or class of transactions from any requirement it may establish under this section with respect to position limits.CommentsClose CommentsPermalink





‘(c) Self-regulatory Organization Rules- As a means reasonably designed to prevent fraud or manipulation, the Commission, by rule, regulation, or order, as necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of this title, may direct a self-regulatory organization--CommentsClose CommentsPermalink





‘(1) to adopt rules regarding the size of positions in any security-based swap and any security on which such security-based swap is based that may be held by--CommentsClose CommentsPermalink





‘(A) any member of such self-regulatory organization; orCommentsClose CommentsPermalink





‘(B) any person for whom a member of such self-regulatory organization effects transactions in such security-based swap or other security; andCommentsClose CommentsPermalink





‘(2) to adopt rules reasonably designed to ensure compliance with requirements prescribed by the Commission under subsection (a).CommentsClose CommentsPermalink





‘(d) Large Security-based Swap Trader Reporting-CommentsClose CommentsPermalink





‘(1) IN GENERAL- A person that enters into any security-based swap shall file or cause to be filed with the properly designated officer of the Commission the reports described in paragraph (2).CommentsClose CommentsPermalink





‘(2) REPORTS-CommentsClose CommentsPermalink





‘(A) SECURITY-BASED SWAP REPORTS- Each person described in paragraph (1) shall, in accordance with the rules and regulations of the Commission, keep books and records of any security-based swaps or transactions and positions in any related security traded on or subject to the rules of any national securities exchange.CommentsClose CommentsPermalink





‘(B) CASH OR SPOT TRANSACTIONS- Each person described in paragraph (1) shall, in accordance with the rules and regulations of the Commission, keep books and records of any cash or spot transactions in, inventories of, and purchase and sale commitments of, any related security traded on or subject to the rules of any national securities exchange, if--CommentsClose CommentsPermalink





‘(i) such person directly or indirectly enters into such security-based swaps during any 1 day in an amount equal to or in excess of such amount as shall be fixed from time to time by the Commission; andCommentsClose CommentsPermalink





‘(ii) such person directly or indirectly has or obtains a position in such security-based swaps equal to or in excess of such amount as shall be fixed from time to time by the Commission.CommentsClose CommentsPermalink





‘(3) RECORDKEEPING- The books and records required to be kept under paragraph (2) shall--CommentsClose CommentsPermalink





‘(A) show complete details concerning all transactions and positions as the Commission may by rule or regulation prescribe; andCommentsClose CommentsPermalink





‘(B) be open at all times to inspection and examination by any representative of the Commission.CommentsClose CommentsPermalink





‘(4) RULE OF CONSTRUCTION- For the purpose of this subsection, the security-based swaps, and securities transactions and positions of any person shall include such security-based swaps, transactions and positions of any persons directly or indirectly controlled by such person.’.CommentsClose CommentsPermalink





(h) Public Reporting and Repositories for Security-based Swap Agreements- Section 13 of the Securities Exchange Act of 1934 (15 U.S.C. 78m) is amended by adding at the end the following:CommentsClose CommentsPermalink





‘(m) Public Reporting of Aggregate Security-based Swap Data-CommentsClose CommentsPermalink





‘(1) IN GENERAL- The Commission, or a person designated by the Commission pursuant to paragraph (2), shall make available to the public, in a manner that does not disclose the business transactions and market positions of any person, aggregate data on security-based swap trading volumes and positions from the sources set forth in paragraph (3).CommentsClose CommentsPermalink





‘(2) DESIGNEE OF THE COMMISSION- The Commission may designate a clearing agency or a security-based swap repository to carry out the public reporting requirement described in paragraph (1).CommentsClose CommentsPermalink





‘(3) SOURCES OF INFORMATION- The sources of the information to be publicly reported as described in paragraph (1) are--CommentsClose CommentsPermalink





‘(A) clearing agencies pursuant to section 3B;CommentsClose CommentsPermalink





‘(B) security-based swap repositories pursuant to subsection (n); andCommentsClose CommentsPermalink





‘(C) reports received by the Commission pursuant to section 13A.CommentsClose CommentsPermalink





‘(n) Security-based Swap Repositories-CommentsClose CommentsPermalink





‘(1) REGISTRATION REQUIREMENT-CommentsClose CommentsPermalink





‘(A) IN GENERAL- A person may register as a security-based swap repository by filing with the Commission an application in such form as the Commission, by rule, may prescribe, containing the rules of the security-based swap repository and such other information and documentation as the Commission, by rule, may prescribe as necessary or appropriate in the public interest, for the protection of investors, or in the furtherance of the purposes of this section.CommentsClose CommentsPermalink





‘(B) INSPECTION AND EXAMINATION- Registered security-based swap repositories shall be subject to inspection and examination by any representatives of the Commission.CommentsClose CommentsPermalink





‘(2) STANDARD SETTING-CommentsClose CommentsPermalink





‘(A) DATA IDENTIFICATION- The Commission shall prescribe standards that specify the data elements for each security-based swap that shall be collected and maintained by each security-based swap repository.CommentsClose CommentsPermalink





‘(B) DATA COLLECTION AND MAINTENANCE- The Commission shall prescribe data collection and data maintenance standards for security-based swap repositories.CommentsClose CommentsPermalink





‘(C) COMPARABILITY- The standards prescribed by the Commission under this subsection shall be comparable to the data standards imposed by the Commission on clearing agencies that clear security-based swaps.CommentsClose CommentsPermalink





‘(3) DUTIES- A security-based swap repository shall--CommentsClose CommentsPermalink





‘(A) accept data prescribed by the Commission for each security-based swap under paragraph (2);CommentsClose CommentsPermalink





‘(B) maintain such data in such form and manner and for such period as may be required by the Commission;CommentsClose CommentsPermalink





‘(C) provide to the Commission, or its designee, such information as is required by, and in a form and at a frequency to be determined by, the Commission, in order to comply with the public reporting requirements contained in subsection (m); andCommentsClose CommentsPermalink





‘(D) make available, on a confidential basis, all data obtained by the security-based swap repository, including individual counterparty trade and position data, to the Commission, the appropriate Federal banking agencies, the Commodity Futures Trading Commission, the Financial Stability Oversight Council, and the Department of Justice or to other persons the Commission deems appropriate, including foreign financial supervisors (including foreign futures authorities), foreign central banks, and foreign ministries.CommentsClose CommentsPermalink





‘(4) REQUIRED REGISTRATION FOR SECURITY-BASED SWAP REPOSITORIES- Any person that is required to be registered as a securities-based swap repository under this subsection shall register with the Commission, regardless of whether that person also is registered with the Commodity Futures Trading Commission as a swap repository.CommentsClose CommentsPermalink





‘(5) HARMONIZATION OF RULES- Not later than 180 days after the effective date of the Over-the-Counter Derivatives Markets Act of 2010, the Commission and the Commodity Futures Trading Commission shall jointly adopt uniform rules governing persons that are registered under this section and persons that are registered as swap repositories under the Commodity Exchange Act (7 U.S.C. 1 et seq.), including uniform rules that specify the data elements that shall be collected and maintained by each repository.CommentsClose CommentsPermalink





‘(6) EXEMPTIONS- The Commission may exempt, conditionally or unconditionally, a security-based swap repository from the requirements of this section if the Commission finds that such security-based swap repository is subject to comparable, comprehensive supervision or regulation on a consolidated basis by the Commodity Futures Trading Commission, an appropriate Federal banking agency, or the appropriate governmental authorities in the organization’s home country.’.CommentsClose CommentsPermalink





(i) Recordkeeping by Security-based Swap Repositories- Section 17(a)(1) of the Securities Exchange Act of 1934 (15 U.S.C. 78m) is amended by inserting ‘registered security-based swap repository,’ after ‘registered securities information processor,’.CommentsClose CommentsPermalink

SEC. 754. SEGREGATION OF ASSETS HELD AS COLLATERAL IN SECURITY-BASED SWAP TRANSACTIONS.

The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is further amended by adding after section 3C (as added by section 753) the following:CommentsClose CommentsPermalink

‘SEC. 3D. SEGREGATION OF ASSETS HELD AS COLLATERAL IN SECURITY-BASED SWAP TRANSACTIONS.

‘(a) Cleared Security-based Swaps- A security-based swap dealer or clearing agency by or through which funds or other property provided as initial margin or collateral are held to margin, guarantee, or secure the obligations of a counterparty under a security-based swap to be cleared by or through a clearing agency shall segregate, maintain, and use the funds or other property provided as initial margin or collateral for the benefit of the counterparty, in accordance with such rules and regulations as the Commission shall prescribe for security-based swap dealers that are not depository institutions, as that term is defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813), or clearing agencies, or the appropriate Federal banking agency shall prescribe for security-based swap dealers that are depository institutions. Any such funds or other property provided as initial margin or collateral shall be treated as customer property under this Act.CommentsClose CommentsPermalink





‘(b) Other Security-based Swaps- At the request of a security-based swap counterparty who provides funds or other property as initial margin or collateral to a security-based swap dealer to margin, guarantee, or secure the obligations of the counterparty under a security-based swap between the counterparty and the security-based swap dealer that is not submitted for clearing to a clearing agency, the security-based swap dealer shall segregate the funds or other property provided as initial margin or collateral for the benefit of the counterparty, and maintain the funds or other property in an account which is carried by an independent third-party custodian and designated as a segregated account for the counterparty, in accordance with such rules and regulations as the Commission shall prescribe for security-based swap dealers that are not depository institutions, as that term is defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813), or clearing agencies, or the appropriate Federal banking agency shall prescribe for security-based swap dealers that are depository institutions. Any segregation requested under this subsection shall be made available by a security-based swap dealer to a counterparty on fair and reasonable terms on a non-discriminatory basis. This subsection shall not be interpreted to preclude commercial arrangements regarding the investment of the segregated funds or other property and the related allocation of gains and losses resulting from any such investment, provided, however, that the segregated funds or other property under this subsection may be invested only in such investments as the Commission or the appropriate Federal banking agency, as applicable, permits by rule or regulation, and shall not be pledged, re-hypothecated, or otherwise encumbered by a security-based swap dealer.’.CommentsClose CommentsPermalink

SEC. 755. REPORTING AND RECORDKEEPING.

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

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

‘(a) In General- Any person who enters into a security-based swap shall satisfy the reporting requirements under subsection (b), if such person--CommentsClose CommentsPermalink





‘(1) did not clear the security-based swap in accordance with section 3B; andCommentsClose CommentsPermalink





‘(2) did not have data regarding the security-based swap accepted by a security-based swap repository in accordance with rules adopted by the Commission under section 13(n).CommentsClose CommentsPermalink





‘(b) Reports- Any person described in subsection (a) shall--CommentsClose CommentsPermalink





‘(1) make such reports in such form and manner and for such period as the Commission shall prescribe by rule or regulation regarding the security-based swaps held by the person; andCommentsClose CommentsPermalink





‘(2) keep books and records pertaining to the security-based swaps held by the person in such form and manner and for such period as may be required by the Commission, which books and records shall be open to inspection by any representative of the Commission, an appropriate Federal banking agency, the Commodity Futures Trading Commission, the Financial Stability Oversight Council, and the Department of Justice.CommentsClose CommentsPermalink





‘(c) Identical Data- In adopting rules under this section, the Commission shall require persons described in subsection (a) to report the same or more comprehensive data than the Commission requires security-based swap repositories to collect under section 13(n).’.CommentsClose CommentsPermalink





(b) Beneficial Ownership Reporting-CommentsClose CommentsPermalink





(1) Section 13(d)(1) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(d)(1)) is amended by inserting ‘or otherwise becomes or is deemed to become a beneficial owner of any of the foregoing upon the purchase or sale of a security-based swap or other derivative instrument that the Commission may define by rule, and’ after ‘Alaska Native Claims Settlement Act,’.CommentsClose CommentsPermalink





(2) Section 13(g)(1) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(g)(1)) is amended by inserting ‘or otherwise becomes or is deemed to become a beneficial owner of any security of a class described in subsection (d)(1) upon the purchase or sale of a security-based swap or other derivative instrument that the Commission may define by rule’ after ‘subsection (d)(1) of this section’.CommentsClose CommentsPermalink





(c) Reports by Institutional Investment Managers- Section 13(f) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(f)(1)) is amended--CommentsClose CommentsPermalink





(1) in paragraph (1)--CommentsClose CommentsPermalink





(A) by inserting ‘(A)’ after ‘accounts holding’; andCommentsClose CommentsPermalink





(B) by inserting ‘or (B) security-based derivative instruments or other derivative securities that the Commission may determine by rule, having such values as the Commission, by rule, may determine’ after ‘less than $10,000,000) as the Commission, by rule, may determine.’; andCommentsClose CommentsPermalink





(2) in paragraph (3), by striking ‘section 13(d)(1) of this title’ and inserting ‘subsection (d)(1) of this section and of security-based swaps or other derivative instrument that the Commission may determine by rule,’.CommentsClose CommentsPermalink





(d) Administrative Proceeding Authority- Section 15(b)(4) of the Securities Exchange Act of 1934 (15 U.S.C. 78o(b)(4)) is amended--CommentsClose CommentsPermalink





(1) in subparagraph (C), by inserting ‘security-based swap dealer, major security-based swap participant,’ after ‘government securities dealer,’; andCommentsClose CommentsPermalink





(2) in subparagraph (F), by inserting ‘, or security-based swap dealer, or a major security-based swap participant’ after ‘or dealer’.CommentsClose CommentsPermalink





(e) Transactions by Corporate Insiders- Section 16(f) of the Securities Exchange Act of 1934 (15 U.S.C. 78p) is amended by inserting ‘or security-based swaps’ after ‘security futures products’.CommentsClose CommentsPermalink

SEC. 756. STATE GAMING AND BUCKET SHOP LAWS.

Section 28(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78bb(a)) is amended to read as follows:CommentsClose CommentsPermalink





‘(a) Additional Rights and Remedies; Recovery of Actual Damages; State Securities Commissions- Except as provided in subsection (f), the rights and remedies provided by this title shall be in addition to any and all other rights and remedies that may exist at law or in equity, but no person permitted to maintain a suit for damages under the provisions of this title shall recover, through satisfaction of judgment in 1 or more actions, a total amount in excess of his actual damages on account of the act complained of. Except as otherwise specifically provided in this title, nothing in this title shall affect the jurisdiction of the securities commission (or any agency or officer performing like functions) of any State over any security or any person insofar as it does not conflict with the provisions of this title or the rules and regulations thereunder. No State law that prohibits or regulates the making or promoting of wagering or gaming contracts, or the operation of ‘bucket shops’ or other similar or related activities, shall invalidate--CommentsClose CommentsPermalink





‘(1) any put, call, straddle, option, privilege, or other security subject to this title (except a security-based swap agreement and any security that has a pari-mutuel payout or otherwise is determined by the Commission, acting by rule, regulation, or order, to be appropriately subject to such laws), or apply to any activity which is incidental or related to the offer, purchase, sale, exercise, settlement, or closeout of any such security;CommentsClose CommentsPermalink





‘(2) any security-based swap between eligible contract participants; orCommentsClose CommentsPermalink





‘(3) any security-based swap effected on a national securities exchange registered pursuant to section 6(b).CommentsClose CommentsPermalink





No provision of State law regarding the offer, sale, or distribution of securities shall apply to any transaction in a security-based swap or a security futures product, except that this sentence shall not be construed as limiting any State antifraud law of general applicability.’.CommentsClose CommentsPermalink

SEC. 757. AMENDMENTS TO THE SECURITIES ACT OF 1933; TREATMENT OF SECURITY-BASED SWAPS.

(a) Definitions- Section 2(a) of the Securities Act of 1933 (15 U.S.C. 77b(a)) is amended--CommentsClose CommentsPermalink





(1) in paragraph (1), by inserting ‘security-based swap,’ after ‘security future,’;CommentsClose CommentsPermalink





(2) in paragraph (3), by adding at the end the following: ‘Any offer or sale of a security-based swap by or on behalf of the issuer of the securities upon which such security-based swap is based or is referenced, an affiliate of the issuer, or an underwriter, shall constitute a contract for sale of, sale of, offer for sale, or offer to sell such securities,’; andCommentsClose CommentsPermalink





(3) by adding at the end the following:CommentsClose CommentsPermalink





‘(17) The terms ‘swap’ and ‘security-based swap’ have the same meanings as provided in sections 1a(34) of the Commodity Exchange Act (7 U.S.C. 1a(34)) and section 3(a)(68) of the Securities Exchange Act of 1934 (15 U.S.C. 78(c)(a)(68)), respectively.CommentsClose CommentsPermalink





‘(18) The terms ‘purchase’ or ‘sale’ of a security-based swap shall be deemed to mean the execution, termination (prior to its scheduled maturity date), assignment, exchange, or similar transfer or conveyance of, or extinguishing of rights or obligations under, a security-based swap, as the context may require.’.CommentsClose CommentsPermalink





(b) Registration of Security-based Swaps- Section 5 of the Securities Act of 1933 (15 U.S.C. 77e) is amended by adding at the end the following:CommentsClose CommentsPermalink





‘(d) Mandatory Registration: Prohibition on Sale- Notwithstanding the provisions of section 3 or section 4, except as the Commission shall otherwise exempt by rule or regulation pursuant to this title, unless a registration statement meeting the requirements of subsection (a) of section 10 is in effect as to a security-based swap, it shall be unlawful for any person, directly or indirectly, to make use of any means or instruments of transportation or communication in interstate commerce or of the mails to offer to sell, offer to buy or purchase or sell a security-based swap to any person who is not an eligible contract participant as defined in section 1a(12) of the Commodity Exchange Act (7 U.S.C. 1a(12)).’.CommentsClose CommentsPermalink

SEC. 758. OTHER AUTHORITY.

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

SEC. 759. JURISDICTION.

Section 36 of the Securities Exchange Act of 1934 (15 U.S.C. 78mm) is amended--CommentsClose CommentsPermalink





(1) in subsection (a)(1), by inserting ‘and (c) and subject to subsection (d)’ after ‘Except as provided in subsection (b)’; andCommentsClose CommentsPermalink





(2) by adding at the end the following:CommentsClose CommentsPermalink





‘(c) Limitation on Authority- The Commission shall not have the authority to grant exemptions from the security-based swap provisions of this Act or the Over-the-Counter Derivatives Markets Act of 2010, except as expressly authorized under the provisions of that Act.CommentsClose CommentsPermalink





‘(d) Express Authority- The Commission is expressly authorized to use any authority granted to the Commission under subsection (a) to exempt any person, security, or transaction, or any class or classes of persons, securities, or transactions from any provision or provisions of this title, or of any rule or regulation thereunder, that applies to such person, security, or transaction solely because a ‘security-based swap’ is a ‘security’ under section 3(a).’.CommentsClose CommentsPermalink

Subtitle C--Other ProvisionsCommentsClose CommentsPermalink

SEC. 761. INTERNATIONAL HARMONIZATION.

In order to promote effective and consistent global regulation of swaps and security-based swaps, the Securities and Exchange Commission, the Commodity Futures Trading Commission, the Financial Stability Oversight Council, and the Treasury Department--CommentsClose CommentsPermalink





(1) shall, both individually and collectively, consult and coordinate with foreign regulatory authorities on the establishment of consistent international standards with respect to the regulation of such swaps; andCommentsClose CommentsPermalink





(2) may, both individually and collectively, agree to such information-sharing arrangements as may be deemed to be necessary or appropriate in the public interest or for the protection of investors and swap counterparties.CommentsClose CommentsPermalink

SEC. 762. INTERAGENCY COOPERATION.

(a) Joint Advisory Committee-CommentsClose CommentsPermalink





(1) ESTABLISHMENT- The Securities and Exchange Commission and the Commodity Futures Trading Commission, shall establish a joint advisory committee or work through an established joint advisory committee to consider and develop solutions to emerging and ongoing issues of common interest relating to the trading and regulation of products regulated by the Securities and Exchange Commission and the Commodity Futures Trading Commission, including securities, commodity futures, swaps and securities-based swaps.CommentsClose CommentsPermalink





(2) MEMBERSHIP- The joint advisory committee shall--CommentsClose CommentsPermalink





(A) be fairly balanced in terms of the points of view represented and the functions to be performed by the committee;CommentsClose CommentsPermalink





(B) include at least 1 representative from each of the Securities and Exchange Commission and the Commodity Futures Trading Commission; andCommentsClose CommentsPermalink





(C) include other individuals with expertise in commodities and securities trading, commodities and securities law, investor protection, consumer protection, or international markets.CommentsClose CommentsPermalink





(3) REPORTING- Not later than 6 months after the date of enactment of this title, and every 6 months thereafter, the joint advisory committee shall report its findings and recommendations to the--CommentsClose CommentsPermalink





(A) Committee on Banking, Housing, and Urban Affairs of the Senate;CommentsClose CommentsPermalink





(B) Committee on Financial Services of the House of Representatives;CommentsClose CommentsPermalink





(C) Committee on Agriculture, Nutrition, and Forestry of the Senate; andCommentsClose CommentsPermalink





(D) Committee on Agriculture of the House of Representatives.CommentsClose CommentsPermalink





(4) JOINT FUNDING- Notwithstanding any other provision of law, amounts made available to the Commodity Futures Trading Commission and the Securities and Exchange Commission for the current or subsequent fiscal years by a current or future appropriations Act may be used for the interagency funding of the joint advisory committee sponsored by such agencies pursuant to this section.CommentsClose CommentsPermalink





(b) Joint Enforcement Task Force- The Securities and Exchange Commission and the Commodity Futures Trading Commission shall jointly establish an inter-agency group to be known as the Joint Enforcement Task Force in order to improve market oversight, enhance enforcement, and relieve duplicative regulatory burdens. The Task Force shall consist of staff from each agency to coordinate and develop processes for conducting joint investigations in response to events that affect both the commodities and securities markets. The Task Force shall prepare and offer training programs for the staffs of both agencies, develop enforcement and examination standards and protocols, and coordinate information sharing.CommentsClose CommentsPermalink





(c) Trading and Markets Fellowship Program-CommentsClose CommentsPermalink





(1) IN GENERAL- The Securities and Exchange Commission, the Commodity Futures Trading Commission, and the Board of Governors of the Federal Reserve System shall jointly establish a Trading and Markets Fellowship Program in order to enhance staff understanding about the interactions between financial markets and the economy.CommentsClose CommentsPermalink





(2) SELECTION OF FELLOWS- On January 1 of each calendar year, the Chairmen of the Securities and Exchange Commission, the Commodity Futures Trading Commission, and the Board of Governors of the Federal Reserve System shall jointly announce the selection of 3 employees from their respective agencies to participate in the fellowship program established under paragraph (1), for a total annual class size of 9 fellows per calendar year.CommentsClose CommentsPermalink





(3) JOINT TRAINING CURRICULUM-CommentsClose CommentsPermalink





(A) DEVELOPMENT- The Securities and Exchange Commission, the Commodity Futures Trading Commission, and the Board of Governors of the Federal Reserve System shall jointly develop a 1-month long training curriculum that focuses on the mission and activities of each agency, enforcement matters, and economic and financial analysis.CommentsClose CommentsPermalink





(B) FACULTY- The training curriculum developed under subparagraph (A) shall be taught by senior officials from each agency, experienced academics, and professionals from commodities and securities trading.CommentsClose CommentsPermalink





(C) MANDATORY ATTENDANCE- Each of the 9 fellows selected under paragraph (2) shall complete the training curriculum developed under this paragraph.CommentsClose CommentsPermalink





(4) CROSS-AGENCY ROTATION-CommentsClose CommentsPermalink





(A) IN GENERAL- Following the completion of the 1-month training curriculum developed under paragraph (3), each fellow shall be assigned to serve at each participating agency for 3 months each.CommentsClose CommentsPermalink





(B) SUBMISSION OF PAPER- Upon completion of the Trading and Markets Fellowship Program, each fellow shall submit a written paper to the Chairmen of the Securities and Exchange Commission, the Commodity Futures Trading Commission, and the Board of Governors of the Federal Reserve System--CommentsClose CommentsPermalink





(i) summarizing his or her observations from participating in the program; andCommentsClose CommentsPermalink





(ii) providing recommendations for enhancing the contribution of each agency to the stable functioning of the financial markets and economy of the nation.CommentsClose CommentsPermalink





(d) Cross-agency Enforcement- The Securities and Exchange Commission and the Commodity Futures Trading Commission shall jointly establish a cross-agency training and education curriculum for enforcement personnel in order to improve the ability of employees at both agencies to understand and respond to matters where both agencies have enforcement jurisdiction and interest.CommentsClose CommentsPermalink





(e) Detailing of Staff- The Securities and Exchange Commission and the Commodity Futures Trading Commission shall jointly establish a program for the regular detailing of staff between such agencies.CommentsClose CommentsPermalink

SEC. 763. STUDY AND REPORT ON IMPLEMENTATION.

(a) Study Required- The Comptroller General of the United States shall conduct a study of--CommentsClose CommentsPermalink





(1) how the Commodity Futures Trading Commission and the Securities and Exchange Commission have implemented this title and the amendments made by this title;CommentsClose CommentsPermalink





(2) the extent to which jurisdictional disputes have created challenges in the process of implementing this title and the amendments made by this title;CommentsClose CommentsPermalink





(3) the benefits and drawbacks of harmonizing laws implemented by the Commodity Futures Trading Commission and the Securities and Exchange Commission, and merging those agencies;CommentsClose CommentsPermalink





(4) the benefits and feasibility of--CommentsClose CommentsPermalink





(A) holding of both futures and securities products in the same account to allow cross-netting; andCommentsClose CommentsPermalink





(B) creating the ability to cross-net across securities and futures accounts; andCommentsClose CommentsPermalink





(5) the benefits and feasibility of imposing a uniform fiduciary duty on financial intermediaries who provide similar investment advisory services.CommentsClose CommentsPermalink





(b) Report Required- Not later than 1 year after the date of enactment of this title, the Comptroller General shall submit a report on the results of the study required by this section to Congress, the Commodity Futures Trading Commission, and the Securities and Exchange Commission.CommentsClose CommentsPermalink

SEC. 764. RECOMMENDATIONS FOR CHANGES TO INSOLVENCY LAWS.

Not later than 180 days after the date of enactment of this Act, the Securities and Exchange Commission and the Commodity Futures Trading Commission shall transmit to Congress recommendations on legislative changes to the Federal insolvency laws--CommentsClose CommentsPermalink





(1) in order to enhance the legal certainty with respect to swap participants clearing swaps and security-based swaps through a derivatives clearing organization or clearing agency, including--CommentsClose CommentsPermalink





(A) customer rights to cover margin deposits or custodial property held at or through an insolvent swap clearinghouse or clearing participant; andCommentsClose CommentsPermalink





(B) the enforceability or clearing rules relating to the portability of customer swap positions (and associated margins) upon the insolvency of a clearing participant;CommentsClose CommentsPermalink





(2) to clarify and harmonize the insolvency law framework applicable to entities that are both commodity brokers (as defined in section 101(6) of title 11, United States Code) and registered brokers or dealers (as defined in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a))); andCommentsClose CommentsPermalink





(3) to facilitate the portfolio margining of securities and commodities futures and options positions held through entities that are both futures commission merchants (as defined in section 1a of the Commodity Exchange Act) and registered brokers or dealers (as defined in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a))).CommentsClose CommentsPermalink

SEC. 765. EFFECTIVE DATE.

Except as specifically provided in the amendments made by this title, this title, and the amendments made by this title, shall take effect 180 days after the date of enactment of this Act.CommentsClose CommentsPermalink

TITLE VIII--PAYMENT, CLEARING, AND SETTLEMENT SUPERVISIONCommentsClose CommentsPermalink

SEC. 801. SHORT TITLE.

This title may be cited as the ‘Payment, Clearing, and Settlement Supervision Act of 2010’.CommentsClose CommentsPermalink

SEC. 802. FINDINGS AND PURPOSES.

(a) Findings- Congress finds the following:CommentsClose CommentsPermalink





(1) The proper functioning of the financial markets is dependent upon safe and efficient arrangements for the clearing and settlement of payment, securities, and other financial transactions.CommentsClose CommentsPermalink





(2) Financial market utilities that conduct or support multilateral payment, clearing, or settlement activities may reduce risks for their participants and the broader financial system, but such utilities may also concentrate and create new risks and thus must be well designed and operated in a safe and sound manner.CommentsClose CommentsPermalink





(3) Payment, clearing, and settlement activities conducted by financial institutions also present important risks to the participating financial institutions and to the financial system.CommentsClose CommentsPermalink





(4) Enhancements to the regulation and supervision of systemically important financial market utilities and the conduct of systemically important payment, clearing, and settlement activities by financial institutions are necessary--CommentsClose CommentsPermalink





(A) to provide consistency;CommentsClose CommentsPermalink





(B) to promote robust risk management and safety and soundness;CommentsClose CommentsPermalink





(C) to reduce systemic risks; andCommentsClose CommentsPermalink





(D) to support the stability of the broader financial system.CommentsClose CommentsPermalink





(b) Purpose- The purpose of this title is to mitigate systemic risk in the financial system and promote financial stability by--CommentsClose CommentsPermalink





(1) authorizing the Board of Governors to prescribe uniform standards for the--CommentsClose CommentsPermalink





(A) management of risks by systemically important financial market utilities; andCommentsClose CommentsPermalink





(B) conduct of systemically important payment, clearing, and settlement activities by financial institutions;CommentsClose CommentsPermalink





(2) providing the Board of Governors an enhanced role in the supervision of risk management standards for systemically important financial market utilities;CommentsClose CommentsPermalink





(3) strengthening the liquidity of systemically important financial market utilities; andCommentsClose CommentsPermalink





(4) providing the Board of Governors an enhanced role in the supervision of risk management standards for systemically important payment, clearing, and settlement activities by financial institutions.CommentsClose CommentsPermalink

SEC. 803. DEFINITIONS.

In this title, the following definitions shall apply:CommentsClose CommentsPermalink





(1) APPROPRIATE FINANCIAL REGULATOR- The term ‘appropriate financial regulator’ means--CommentsClose CommentsPermalink





(A) the primary financial regulatory agency, as defined in section 2 of this Act;CommentsClose CommentsPermalink





(B) the National Credit Union Administration, with respect to any insured credit union under the Federal Credit Union Act (12 U.S.C. 1751 et seq.); andCommentsClose CommentsPermalink





(C) the Board of Governors, with respect to organizations operating under section 25A of the Federal Reserve Act (12 U.S.C. 611), and any other financial institution engaged in a designated activity.CommentsClose CommentsPermalink





(2) DESIGNATED ACTIVITY- The term ‘designated activity’ means a payment, clearing, or settlement activity that the Council has designated as systemically important under section 804.CommentsClose CommentsPermalink





(3) DESIGNATED FINANCIAL MARKET UTILITY- The term ‘designated financial market utility’ means a financial market utility that the Council has designated as systemically important under section 804.CommentsClose CommentsPermalink





(4) FINANCIAL INSTITUTION- The term ‘financial institution’ means--CommentsClose CommentsPermalink





(A) a depository institution, as defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813);CommentsClose CommentsPermalink





(B) a branch or agency of a foreign bank, as defined in section 1(b) of the International Banking Act of 1978 (12 U.S.C. 3101);CommentsClose CommentsPermalink





(C) an organization operating under section 25 or 25A of the Federal Reserve Act (12 U.S.C. 601-604a and 611 through 631);CommentsClose CommentsPermalink





(D) a credit union, as defined in section 101 of the Federal Credit Union Act (12 U.S.C. 1752);CommentsClose CommentsPermalink





(E) a broker or dealer, as defined in section 3 of the Securities Exchange Act of 1934 (15 U.S.C. 78c);CommentsClose CommentsPermalink





(F) an investment company, as defined in section 3 of the Investment Company Act of 1940 (15 U.S.C. 80a-3);CommentsClose CommentsPermalink





(G) an insurance company, as defined in section 2 of the Investment Company Act of 1940 (15 U.S.C. 80a-2);CommentsClose CommentsPermalink





(H) an investment adviser, as defined in section 202 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-2);CommentsClose CommentsPermalink





(I) a futures commission merchant, commodity trading advisor, or commodity pool operator, as defined in section 1a of the Commodity Exchange Act (7 U.S.C. 1a); andCommentsClose CommentsPermalink





(J) any company engaged in activities that are financial in nature or incidental to a financial activity, as described in section 4 of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(k)).CommentsClose CommentsPermalink





(5) FINANCIAL MARKET UTILITY- The term ‘financial market utility’ means any person that manages or operates a multilateral system for the purpose of transferring, clearing, or settling payments, securities, or other financial transactions among financial institutions or between financial institutions and the person.CommentsClose CommentsPermalink





(6) PAYMENT, CLEARING, OR SETTLEMENT ACTIVITY-CommentsClose CommentsPermalink





(A) IN GENERAL- The term ‘payment, clearing, or settlement activity’ means an activity carried out by 1 or more financial institutions to facilitate the completion of financial transactions.CommentsClose CommentsPermalink





(B) FINANCIAL TRANSACTION- For the purposes of subparagraph (A), the term ‘financial transaction’ includes--CommentsClose CommentsPermalink





(i) funds transfers;CommentsClose CommentsPermalink





(ii) securities contracts;CommentsClose CommentsPermalink





(iii) contracts of sale of a commodity for future delivery;CommentsClose CommentsPermalink





(iv) forward contracts;CommentsClose CommentsPermalink





(v) repurchase agreements;CommentsClose CommentsPermalink





(vi) swaps;CommentsClose CommentsPermalink





(vii) security-based swaps;CommentsClose CommentsPermalink





(viii) swap agreements;CommentsClose CommentsPermalink





(ix) security-based swap agreements;CommentsClose CommentsPermalink





(x) foreign exchange contracts;CommentsClose CommentsPermalink





(xi) financial derivatives contracts; andCommentsClose CommentsPermalink





(xii) any similar transaction that the Council determines to be a financial transaction for purposes of this title.CommentsClose CommentsPermalink





(C) INCLUDED ACTIVITIES- When conducted with respect to a financial transaction, payment, clearing, and settlement activities may include--CommentsClose CommentsPermalink





(i) the calculation and communication of unsettled financial transactions between counterparties;CommentsClose CommentsPermalink





(ii) the netting of transactions;CommentsClose CommentsPermalink





(iii) provision and maintenance of trade, contract, or instrument information;CommentsClose CommentsPermalink





(iv) the management of risks and activities associated with continuing financial transactions;CommentsClose CommentsPermalink





(v) transmittal and storage of payment instructions;CommentsClose CommentsPermalink





(vi) the movement of funds;CommentsClose CommentsPermalink





(vii) the final settlement of financial transactions; andCommentsClose CommentsPermalink





(viii) other similar functions that the Council may determine.CommentsClose CommentsPermalink





(7) SUPERVISORY AGENCY-CommentsClose CommentsPermalink





(A) IN GENERAL- The term ‘Supervisory Agency’ means the Federal agency that has primary jurisdiction over a designated financial market utility under Federal banking, securities, or commodity futures laws, as follows:CommentsClose CommentsPermalink





(i) The Securities and Exchange Commission, with respect to a designated financial market utility that is a clearing agency registered with the Securities and Exchange Commission.CommentsClose CommentsPermalink





(ii) The Commodity Futures Trading Commission, with respect to a designated financial market utility that is a derivatives clearing organization registered with the Commodity Futures Trading Commission.CommentsClose CommentsPermalink





(iii) The appropriate Federal banking agency, with respect to a designated financial market utility that is an institution described in section 3(q) of the Federal Deposit Insurance Act.CommentsClose CommentsPermalink





(iv) The Board of Governors, with respect to a designated financial market utility that is otherwise not subject to the jurisdiction of any agency listed in clauses (i), (ii), and (iii).CommentsClose CommentsPermalink





(B) MULTIPLE AGENCY JURISDICTION- If a designated financial market utility is subject to the jurisdictional supervision of more than 1 agency listed in subparagraph (A), then such agencies should agree on 1 agency to act as the Supervisory Agency, and if such agencies cannot agree on which agency has primary jurisdiction, the Council shall decide which agency is the Supervisory Agency for purposes of this title.CommentsClose CommentsPermalink





(8) SYSTEMICALLY IMPORTANT AND SYSTEMIC IMPORTANCE- The terms ‘systemically important’ and ‘systemic importance’ mean a situation where the failure of or a disruption to the functioning of a financial market utility or the conduct of a payment, clearing, or settlement activity could create, or increase, the risk of significant liquidity or credit problems spreading among financial institutions or markets and thereby threaten the stability of the financial system.CommentsClose CommentsPermalink

SEC. 804. DESIGNATION OF SYSTEMIC IMPORTANCE.

(a) Designation-CommentsClose CommentsPermalink





(1) FINANCIAL STABILITY OVERSIGHT COUNCIL- The Council, on a nondelegable basis and by a vote of not fewer than 2/3 of members then serving, including an affirmative vote by the Chairperson of the Council, shall designate those financial market utilities or payment, clearing, or settlement activities that the Council determines are, or are likely to become, systemically important.CommentsClose CommentsPermalink





(2) CONSIDERATIONS- In determining whether a financial market utility or payment, clearing, or settlement activity is, or is likely to become, systemically important, the Council shall take into consideration the following:CommentsClose CommentsPermalink





(A) The aggregate monetary value of transactions processed by the financial market utility or carried out through the payment, clearing, or settlement activity.CommentsClose CommentsPermalink





(B) The aggregate exposure of the financial market utility or a financial institution engaged in payment, clearing, or settlement activities to its counterparties.CommentsClose CommentsPermalink





(C) The relationship, interdependencies, or other interactions of the financial market utility or payment, clearing, or settlement activity with other financial market utilities or payment, clearing, or settlement activities.CommentsClose CommentsPermalink





(D) The effect that the failure of or a disruption to the financial market utility or payment, clearing, or settlement activity would have on critical markets, financial institutions, or the broader financial system.CommentsClose CommentsPermalink





(E) Any other factors that the Council deems appropriate.CommentsClose CommentsPermalink





(b) Rescission of Designation-CommentsClose CommentsPermalink





(1) IN GENERAL- The Council, on a nondelegable basis and by a vote of not fewer than 2/3 of members then serving, including an affirmative vote by the Chairperson of the Council, shall rescind a designation of systemic importance for a designated financial market utility or designated activity if the Council determines that the utility or activity no longer meets the standards for systemic importance.CommentsClose CommentsPermalink





(2) EFFECT OF RESCISSION- Upon rescission, the financial market utility or financial institutions conducting the activity will no longer be subject to the provisions of this title or any rules or orders prescribed by the Council under this title.CommentsClose CommentsPermalink





(c) Consultation and Notice and Opportunity for Hearing-CommentsClose CommentsPermalink





(1) CONSULTATION- Before making any determination under subsection (a) or (b), the Council shall consult with the relevant Supervisory Agency and the Board of Governors.CommentsClose CommentsPermalink





(2) ADVANCE NOTICE AND OPPORTUNITY FOR HEARING-CommentsClose CommentsPermalink





(A) IN GENERAL- Before making any determination under subsection (a) or (b), the Council shall provide the financial market utility or, in the case of a payment, clearing, or settlement activity, financial institutions with advance notice of the proposed determination of the Council.CommentsClose CommentsPermalink





(B) NOTICE IN FEDERAL REGISTER- The Council shall provide such advance notice to financial institutions by publishing a notice in the Federal Register.CommentsClose CommentsPermalink





(C) REQUESTS FOR HEARING- Within 30 days from the date of any notice of the proposed determination of the Council, the financial market utility or, in the case of a payment, clearing, or settlement activity, a financial institution engaged in the designated activity may request, in writing, an opportunity for a written or oral hearing before the Council to demonstrate that the proposed designation or rescission of designation is not supported by substantial evidence.CommentsClose CommentsPermalink





(D) WRITTEN SUBMISSIONS- Upon receipt of a timely request, the Council shall fix a time, not more than 30 days after receipt of the request, unless extended at the request of the financial market utility or financial institution, and place at which the financial market utility or financial institution may appear, personally or through counsel, to submit written materials, or, at the sole discretion of the Council, oral testimony or oral argument.CommentsClose CommentsPermalink





(3) EMERGENCY EXCEPTION-CommentsClose CommentsPermalink





(A) WAIVER OR MODIFICATION BY VOTE OF THE COUNCIL- The Council may waive or modify the requirements of paragraph (2) if the Council determines, by an affirmative vote of not less than 2/3 of all members then serving, including an affirmative vote by the Chairperson of the Council, that the waiver or modification is necessary to prevent or mitigate an immediate threat to the financial system posed by the financial market utility or the payment, clearing, or settlement activity.CommentsClose CommentsPermalink





(B) NOTICE OF WAIVER OR MODIFICATION- The Council shall provide notice of the waiver or modification to the financial market utility concerned or, in the case of a payment, clearing, or settlement activity, to financial institutions, as soon as practicable, which shall be no later than 24 hours after the waiver or modification in the case of a financial market utility and 3 business days in the case of financial institutions. The Council shall provide the notice to financial institutions by posting a notice on the website of the Council and by publishing a notice in the Federal Register.CommentsClose CommentsPermalink





(d) Notification of Final Determination-CommentsClose CommentsPermalink





(1) AFTER HEARING- Within 60 days of any hearing under subsection (c)(3), the Council shall notify the financial market utility or financial institutions of the final determination of the Council in writing, which shall include findings of fact upon which the determination of the Council is based.CommentsClose CommentsPermalink





(2) WHEN NO HEARING REQUESTED- If the Council does not receive a timely request for a hearing under subsection (c)(3), the Council shall notify the financial market utility or financial institutions of the final determination of the Council in writing not later than 30 days after the expiration of the date by which a financial market utility or a financial institution could have requested a hearing. All notices to financial institutions under this subsection shall be published in the Federal Register.CommentsClose CommentsPermalink





(e) Extension of Time Periods- The Council may extend the time periods established in subsections (c) and (d) as the Council determines to be necessary or appropriate.CommentsClose CommentsPermalink

SEC. 805. STANDARDS FOR SYSTEMICALLY IMPORTANT FINANCIAL MARKET UTILITIES AND PAYMENT, CLEARING, OR SETTLEMENT ACTIVITIES.

(a) Authority To Prescribe Standards- The Board, by rule or order, and in consultation with the Council and the Supervisory Agencies, shall prescribe risk management standards, taking into consideration relevant international standards and existing prudential requirements, governing--CommentsClose CommentsPermalink





(1) the operations related to the payment, clearing, and settlement activities of designated financial market utilities; andCommentsClose CommentsPermalink





(2) the conduct of designated activities by financial institutions.CommentsClose CommentsPermalink





(b) Objectives and Principles- The objectives and principles for the risk management standards prescribed under subsection (a) shall be to--CommentsClose CommentsPermalink





(1) promote robust risk management;CommentsClose CommentsPermalink





(2) promote safety and soundness;CommentsClose CommentsPermalink





(3) reduce systemic risks; andCommentsClose CommentsPermalink





(4) support the stability of the broader financial system.CommentsClose CommentsPermalink





(c) Scope- The standards prescribed under subsection (a) may address areas such as--CommentsClose CommentsPermalink





(1) risk management policies and procedures;CommentsClose CommentsPermalink





(2) margin and collateral requirements;CommentsClose CommentsPermalink





(3) participant or counterparty default policies and procedures;CommentsClose CommentsPermalink





(4) the ability to complete timely clearing and settlement of financial transactions;CommentsClose CommentsPermalink





(5) capital and financial resource requirements for designated financial market utilities; andCommentsClose CommentsPermalink





(6) other areas that the Board determines are necessary to achieve the objectives and principles in subsection (b).CommentsClose CommentsPermalink





(d) Threshold Level- The standards prescribed under subsection (a) governing the conduct of designated activities by financial institutions shall, where appropriate, establish a threshold as to the level or significance of engagement in the activity at which a financial institution will become subject to the standards with respect to that activity.CommentsClose CommentsPermalink





(e) Compliance Required- Designated financial market utilities and financial institutions subject to the standards prescribed by the Board of Governors for a designated activity shall conduct their operations in compliance with the applicable risk management standards prescribed by the Board of Governors.CommentsClose CommentsPermalink

SEC. 806. OPERATIONS OF DESIGNATED FINANCIAL MARKET UTILITIES.

(a) Federal Reserve Account and Services- The Board of Governors may authorize a Federal Reserve Bank to establish and maintain an account for a designated financial market utility and provide services to the designated financial market utility that the Federal Reserve Bank is authorized under the Federal Reserve Act to provide to a depository institution, subject to any applicable rules, orders, standards, or guidelines prescribed by the Board of Governors.CommentsClose CommentsPermalink





(b) Advances- The Board of Governors may authorize a Federal Reserve Bank to provide to a designated financial market utility the same discount and borrowing privileges as the Federal Reserve Bank may provide to a depository institution under the Federal Reserve Act, subject to any applicable rules, orders, standards, or guidelines prescribed by the Board of Governors.CommentsClose CommentsPermalink





(c) Earnings on Federal Reserve Balances- A Federal Reserve Bank may pay earnings on balances maintained by or on behalf of a designated financial market utility in the same manner and to the same extent as the Federal Reserve Bank may pay earnings to a depository institution under the Federal Reserve Act, subject to any applicable rules, orders, standards, or guidelines prescribed by the Board of Governors.CommentsClose CommentsPermalink





(d) Reserve Requirements- The Board of Governors may exempt a designated financial market utility from, or modify any, reserve requirements under section 19 of the Federal Reserve Act (12 U.S.C. 461) applicable to a designated financial market utility.CommentsClose CommentsPermalink





(e) Changes to Rules, Procedures, or Operations-CommentsClose CommentsPermalink





(1) ADVANCE NOTICE-CommentsClose CommentsPermalink





(A) ADVANCE NOTICE OF PROPOSED CHANGES REQUIRED- A designated financial market utility shall provide notice 60 days in advance advance notice to its Supervisory Agency and the Board of Governors of any proposed change to its rules, procedures, or operations that could, as defined in rules of the Board of Governors, materially affect, the nature or level of risks presented by the designated financial market utility.CommentsClose CommentsPermalink





(B) TERMS AND STANDARDS PRESCRIBED BY THE BOARD OF GOVERNORS- The Board of Governors shall prescribe regulations that define and describe the standards for determining when notice is required to be provided under subparagraph (A).CommentsClose CommentsPermalink





(C) CONTENTS OF NOTICE- The notice of a proposed change shall describe--CommentsClose CommentsPermalink





(i) the nature of the change and expected effects on risks to the designated financial market utility, its participants, or the market; andCommentsClose CommentsPermalink





(ii) how the designated financial market utility plans to manage any identified risks.CommentsClose CommentsPermalink





(D) ADDITIONAL INFORMATION- The Supervisory Agency or the Board of Governors may require a designated financial market utility to provide any information necessary to assess the effect the proposed change would have on the nature or level of risks associated with the designated financial market utility’s payment, clearing, or settlement activities and the sufficiency of any proposed risk management techniques.CommentsClose CommentsPermalink





(E) NOTICE OF OBJECTION- The Supervisory Agency or the Board of Governors shall notify the designated financial market utility of any objection regarding the proposed change within 60 days from the later of--CommentsClose CommentsPermalink





(i) the date that the notice of the proposed change is received; orCommentsClose CommentsPermalink





(ii) the date any further information requested for consideration of the notice is received.CommentsClose CommentsPermalink





(F) CHANGE NOT ALLOWED IF OBJECTION- A designated financial market utility shall not implement a change to which the Board of Governors or the Supervisory Agency has an objection.CommentsClose CommentsPermalink





(G) CHANGE ALLOWED IF NO OBJECTION WITHIN 60 DAYS- A designated financial market utility may implement a change if it has not received an objection to the proposed change within 60 days of the later of--CommentsClose CommentsPermalink





(i) the date that the Supervisory Agency or the Board of Governors receives the notice of proposed change; orCommentsClose CommentsPermalink





(ii) the date the Supervisory Agency or the Board of Governors receives any further information it requests for consideration of the notice.CommentsClose CommentsPermalink





(H) REVIEW EXTENSION FOR NOVEL OR COMPLEX ISSUES- The Supervisory Agency or the Board of Governors may, during the 60-day review period, extend the review period for an additional 60 days for proposed changes that raise novel or complex issues, subject to the Supervisory Agency or the Board of Governors providing the designated financial market utility with prompt written notice of the extension. Any extension under this subparagraph will extend the time periods under subparagraphs (D) and (F).CommentsClose CommentsPermalink





(I) CHANGE ALLOWED EARLIER IF NOTIFIED OF NO OBJECTION- A designated financial market utility may implement a change in less than 60 days from the date of receipt of the notice of proposed change by the Supervisory Agency or the Board of Governors, or the date the Supervisory Agency or the Board of Governors receives any further information it requested, if the Supervisory Agency or the Board of Governors notifies the designated financial market utility in writing that it does not object to the proposed change and authorizes the designated financial market utility to implement the change on an earlier date, subject to any conditions imposed by the Supervisory Agency or the Board of Governors.CommentsClose CommentsPermalink





(2) EMERGENCY CHANGES-CommentsClose CommentsPermalink





(A) IN GENERAL- A designated financial market utility may implement a change that would otherwise require advance notice under this subsection if it determines that--CommentsClose CommentsPermalink





(i) an emergency exists; andCommentsClose CommentsPermalink





(ii) immediate implementation of the change is necessary for the designated financial market utility to continue to provide its services in a safe and sound manner.CommentsClose CommentsPermalink





(B) NOTICE REQUIRED WITHIN 24 HOURS- The designated financial market utility shall provide notice of any such emergency change to its Supervisory Agency and the Board of Governors, as soon as practicable, which shall be no later than 24 hours after implementation of the change.CommentsClose CommentsPermalink





(C) CONTENTS OF EMERGENCY NOTICE- In addition to the information required for changes requiring advance notice, the notice of an emergency change shall describe--CommentsClose CommentsPermalink





(i) the nature of the emergency; andCommentsClose CommentsPermalink





(ii) the reason the change was necessary for the designated financial market utility to continue to provide its services in a safe and sound manner.CommentsClose CommentsPermalink





(D) MODIFICATION OR RESCISSION OF CHANGE MAY BE REQUIRED- The Supervisory Agency or the Board of Governors may require modification or rescission of the change if it finds that the change is not consistent with the purposes of this Act or any rules, orders, or standards prescribed by the Board of Governors hereunder.CommentsClose CommentsPermalink





(3) COPYING THE BOARD OF GOVERNORS- The Supervisory Agency shall provide the Board of Governors concurrently with a complete copy of any notice, request, or other information it issues, submits, or receives under this subsection.CommentsClose CommentsPermalink





(4) CONSULTATION WITH BOARD OF GOVERNORS- Before taking any action on, or completing its review of, a change proposed by a designated financial market utility, the Supervisory Agency shall consult with the Board of Governors.CommentsClose CommentsPermalink

SEC. 807. EXAMINATION OF AND ENFORCEMENT ACTIONS AGAINST DESIGNATED FINANCIAL MARKET UTILITIES.

(a) Examination- Notwithstanding any other provision of law and subject to subsection (d), the Supervisory Agency shall conduct examinations of a designated financial market utility at least once annually in order to determine the following:CommentsClose CommentsPermalink





(1) The nature of the operations of, and the risks borne by, the designated financial market utility.CommentsClose CommentsPermalink





(2) The financial and operational risks presented by the designated financial market utility to financial institutions, critical markets, or the broader financial system.CommentsClose CommentsPermalink





(3) The resources and capabilities of the designated financial market utility to monitor and control such risks.CommentsClose CommentsPermalink





(4) The safety and soundness of the designated financial market utility.CommentsClose CommentsPermalink





(5) The designated financial market utility’s compliance with--CommentsClose CommentsPermalink





(A) this title; andCommentsClose CommentsPermalink





(B) the rules and orders prescribed by the Board of Governors under this title.CommentsClose CommentsPermalink





(b) Service Providers- Whenever a service integral to the operation of a designated financial market utility is performed for the designated financial market utility by another entity, whether an affiliate or non-affiliate and whether on or off the premises of the designated financial market utility, the Supervisory Agency may examine whether the provision of that service is in compliance with applicable law, rules, orders, and standards to the same extent as if the designated financial market utility were performing the service on its own premises.CommentsClose CommentsPermalink





(c) Enforcement- For purposes of enforcing the provisions of this section, a designated financial market utility shall be subject to, and the appropriate Supervisory Agency shall have authority under the provisions of subsections (b) through (n) of section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818) in the same manner and to the same extent as if the designated financial market utility was an insured depository institution and the Supervisory Agency was the appropriate Federal banking agency for such insured depository institution.CommentsClose CommentsPermalink





(d) Board of Governors Involvement in Examinations-CommentsClose CommentsPermalink





(1) BOARD OF GOVERNORS CONSULTATION ON EXAMINATION PLANNING- The Supervisory Agency shall consult with the Board of Governors regarding the scope and methodology of any examination conducted under subsections (a) and (b).CommentsClose CommentsPermalink





(2) BOARD OF GOVERNORS PARTICIPATION IN EXAMINATION- The Board of Governors may, in its discretion, participate in any examination led by a Supervisory Agency and conducted under subsections (a) and (b).CommentsClose CommentsPermalink





(e) Board of Governors Enforcement Recommendations-CommentsClose CommentsPermalink





(1) RECOMMENDATION- The Board of Governors may at any time recommend to the Supervisory Agency that such agency take enforcement action against a designated financial market utility. Any such recommendation for enforcement action shall provide a detailed analysis supporting the recommendation of the Board of Governors.CommentsClose CommentsPermalink





(2) CONSIDERATION- The Supervisory Agency shall consider the recommendation of the Board of Governors and submit a response to the Board of Governors within 60 days.CommentsClose CommentsPermalink





(3) MEDIATION- If the Supervisory Agency rejects, in whole or in part, the recommendation of the Board of Governors, the Board of Governors may dispute the matter by referring the recommendation to the Council, which shall attempt to resolve the dispute.CommentsClose CommentsPermalink





(4) ENFORCEMENT ACTION- If the Council is unable to resolve the dispute under paragraph (3) within 30 days from the date of referral, the Board of Governors may, upon a vote of its members--CommentsClose CommentsPermalink





(A) exercise the enforcement authority referenced in subsection (c) as if it were the Supervisory Agency; andCommentsClose CommentsPermalink





(B) take enforcement action against the designated financial market utility.CommentsClose CommentsPermalink





(f) Emergency Enforcement Actions by the Board of Governors-CommentsClose CommentsPermalink





(1) IMMINENT RISK OF SUBSTANTIAL HARM- The Board of Governors may, after consulting with the Council and the Supervisory Agency, take enforcement action against a designated financial market utility if the Board of Governors has reasonable cause to believe that--CommentsClose CommentsPermalink





(A) either--CommentsClose CommentsPermalink





(i) an action engaged in, or contemplated by, a designated financial market utility (including any change proposed by the designated financial market utility to its rules, procedures, or operations that would otherwise be subject to section 806(e)) poses an imminent risk of substantial harm to financial institutions, critical markets, or the broader financial system; orCommentsClose CommentsPermalink





(ii) the condition of a designated financial market utility poses an imminent risk of substantial harm to financial institutions, critical markets, or the broader financial system; andCommentsClose CommentsPermalink





(B) the imminent risk of substantial harm precludes the Board of Governors’ use of the procedures in subsection (e).CommentsClose CommentsPermalink





(2) ENFORCEMENT AUTHORITY- For purposes of taking enforcement action under paragraph (1), a designated financial market utility shall be subject to, and the Board of Governors shall have authority under the provisions of subsections (b) through (n) of section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818) in the same manner and to the same extent as if the designated financial market utility was an insured depository institution and the Board of Governors was the appropriate Federal banking agency for such insured depository institution.CommentsClose CommentsPermalink





(3) PROMPT NOTICE TO SUPERVISORY AGENCY OF ENFORCEMENT ACTION- Within 24 hours of taking an enforcement action under this subsection, the Board of Governors shall provide written notice to the designated financial market utility’s Supervisory Agency containing a detailed analysis of the action of the Board of Governors, with supporting documentation included.CommentsClose CommentsPermalink

SEC. 808. EXAMINATION OF AND ENFORCEMENT ACTIONS AGAINST FINANCIAL INSTITUTIONS SUBJECT TO STANDARDS FOR DESIGNATED ACTIVITIES.

(a) Examination- The appropriate financial regulator is authorized to examine a financial institution subject to the standards prescribed by the Board of Governors for a designated activity in order to determine the following:CommentsClose CommentsPermalink





(1) The nature and scope of the designated activities engaged in by the financial institution.CommentsClose CommentsPermalink





(2) The financial and operational risks the designated activities engaged in by the financial institution may pose to the safety and soundness of the financial institution.CommentsClose CommentsPermalink





(3) The financial and operational risks the designated activities engaged in by the financial institution may pose to other financial institutions, critical markets, or the broader financial system.CommentsClose CommentsPermalink





(4) The resources available to and the capabilities of the financial institution to monitor and control the risks described in paragraphs (2) and (3).CommentsClose CommentsPermalink





(5) The financial institution’s compliance with this title and the rules and orders prescribed by the Board of Governors under this title.CommentsClose CommentsPermalink





(b) Enforcement- For purposes of enforcing the provisions of this section, and the rules and orders prescribed by the Board of Governors under this section, a financial institution subject to the standards prescribed by the Board of Governors for a designated activity shall be subject to, and the appropriate financial regulator shall have authority under the provisions of subsections (b) through (n) of section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818) in the same manner and to the same extent as if the financial institution was an insured depository institution and the appropriate financial regulator was the appropriate Federal banking agency for such insured depository institution.CommentsClose CommentsPermalink





(c) Technical Assistance- The Board of Governors shall consult with and provide such technical assistance as may be required by the appropriate financial regulators to ensure that the rules and orders prescribed by the Board of Governors under this title are interpreted and applied in as consistent and uniform a manner as practicable.CommentsClose CommentsPermalink





(d) Delegation-CommentsClose CommentsPermalink





(1) EXAMINATION-CommentsClose CommentsPermalink





(A) REQUEST TO BOARD OF GOVERNORS- The appropriate financial regulator may request the Board of Governors to conduct or participate in an examination of a financial institution subject to the standards prescribed by the Board of Governors for a designated activity in order to assess the compliance of such financial institution with--CommentsClose CommentsPermalink





(i) this title; orCommentsClose CommentsPermalink





(ii) the rules or orders prescribed by the Board of Governors under this title.CommentsClose CommentsPermalink





(B) EXAMINATION BY BOARD OF GOVERNORS- Upon receipt of an appropriate written request, the Board of Governors will conduct the examination under such terms and conditions to which the Board of Governors and the appropriate financial regulator mutually agree.CommentsClose CommentsPermalink





(2) ENFORCEMENT-CommentsClose CommentsPermalink





(A) REQUEST TO BOARD OF GOVERNORS- The appropriate financial regulator may request the Board of Governors to enforce this title or the rules or orders prescribed by the Board of Governors under this title against a financial institution that is subject to the standards prescribed by the Board of Governors for a designated activity.CommentsClose CommentsPermalink





(B) ENFORCEMENT BY BOARD OF GOVERNORS- Upon receipt of an appropriate written request, the Board of Governors shall determine whether an enforcement action is warranted, and, if so, it shall enforce compliance with this title or the rules or orders prescribed by the Board of Governors under this title and, if so, the financial institution shall be subject to, and the Board of Governors shall have authority under the provisions of subsections (b) through (n) of section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818) in the same manner and to the same extent as if the financial institution was an insured depository institution and the Board of Governors was the appropriate Federal banking agency for such insured depository institutionCommentsClose CommentsPermalink





(e) Back-up Authority of the Board of Governors-CommentsClose CommentsPermalink





(1) EXAMINATION AND ENFORCEMENT- Notwithstanding any other provision of law, the Board of Governors may--CommentsClose CommentsPermalink





(A) conduct an examination of the type described in subsection (a) of any financial institution that is subject to the standards prescribed by the Board of Governors for a designated activity; andCommentsClose CommentsPermalink





(B) enforce the provisions of this title or any rules or orders prescribed by the Board of Governors under this title against any financial institution that is subject to the standards prescribed by the Board of Governors for a designated activity.CommentsClose CommentsPermalink





(2) LIMITATIONS-CommentsClose CommentsPermalink





(A) EXAMINATION- The Board of Governors may exercise the authority described in paragraph (1)(A) only if the Board of Governors has--CommentsClose CommentsPermalink





(i) reasonable cause to believe that a financial institution is not in compliance with this title or the rules or orders prescribed by the Board of Governors under this title with respect to a designated activity;CommentsClose CommentsPermalink





(ii) notified, in writing, the appropriate financial regulator and the Council of its belief under clause (i) with supporting documentation included;CommentsClose CommentsPermalink





(iii) requested the appropriate financial regulator to conduct a prompt examination of the financial institution; andCommentsClose CommentsPermalink





(iv) either--CommentsClose CommentsPermalink





(I) not been afforded a reasonable opportunity to participate in an examination of the financial institution by the appropriate financial regulator within 30 days after the date of the Board’s notification under clause (ii); orCommentsClose CommentsPermalink





(II) reasonable cause to believe that the financial institution’s noncompliance with this title or the rules or orders prescribed by the Board of Governors under this title poses a substantial risk to other financial institutions, critical markets, or the broader financial system, subject to the Board of Governors affording the appropriate financial regulator a reasonable opportunity to participate in the examination.CommentsClose CommentsPermalink





(B) ENFORCEMENT- The Board of Governors may exercise the authority described in paragraph (1)(B) only if the Board of Governors has--CommentsClose CommentsPermalink





(i) reasonable cause to believe that a financial institution is not in compliance with this title or the rules or orders prescribed by the Board of Governors under this title with respect to a designated activity;CommentsClose CommentsPermalink





(ii) notified, in writing, the appropriate financial regulator and the Council of its belief under clause (i) with supporting documentation included and with a recommendation that the appropriate financial regulator take 1 or more specific enforcement actions against the financial institution; andCommentsClose CommentsPermalink





(iii) either--CommentsClose CommentsPermalink





(I) not been notified, in writing, by the appropriate financial regulator of the commencement of an enforcement action recommended by the Board of Governors against the financial institution within 60 days from the date of the notification under clause (ii); orCommentsClose CommentsPermalink





(II) reasonable cause to believe that the financial institution’s noncompliance with this title or the rules or orders prescribed by the Board of Governors under this title poses a substantial risk to other financial institutions, critical markets, or the broader financial system, subject to the Board of Governors notifying the appropriate financial regulator of the Board’s enforcement action.CommentsClose CommentsPermalink





(3) ENFORCEMENT PROVISIONS- For purposes of taking enforcement action under paragraph (1), the financial institution shall be subject to, and the Board of Governors shall have authority under the provisions of subsections (b) through (n) of section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818) in the same manner and to the same extent as if the financial institution was an insured depository institution and the Board of Governors was the appropriate Federal banking agency for such insured depository institution.CommentsClose CommentsPermalink

SEC. 809. REQUESTS FOR INFORMATION, REPORTS, OR RECORDS.

(a) Information to Assess Systemic Importance-CommentsClose CommentsPermalink





(1) FINANCIAL MARKET UTILITIES- The Council is authorized to require any financial market utility to submit such information as the Council may require for the sole purpose of assessing whether that financial market utility is systemically important, but only if the Council has reasonable cause to believe that the financial market utility meets the standards for systemic importance set forth in section 804.CommentsClose CommentsPermalink





(2) FINANCIAL INSTITUTIONS ENGAGED IN PAYMENT, CLEARING, OR SETTLEMENT ACTIVITIES- The Council is authorized to require any financial institution to submit such information as the Council may require for the sole purpose of assessing whether any payment, clearing, or settlement activity engaged in or supported by a financial institution is systemically important, but only if the Council has reasonable cause to believe that the activity meets the standards for systemic importance set forth in section 804.CommentsClose CommentsPermalink





(b) Reporting After Designation-CommentsClose CommentsPermalink





(1) DESIGNATED FINANCIAL MARKET UTILITIES- The Board of Governors and the Council may require a designated financial market utility to submit reports or data to the Board of Governors and the Council in such frequency and form as deemed necessary by the Board of Governors and the Council in order to assess the safety and soundness of the utility and the systemic risk that the utility’s operations pose to the financial system.CommentsClose CommentsPermalink





(2) FINANCIAL INSTITUTIONS SUBJECT TO STANDARDS FOR DESIGNATED ACTIVITIES- The Board of Governors and the Council may require 1 or more financial institutions subject to the standards prescribed by the Board of Governors for a designated activity to submit, in such frequency and form as deemed necessary by the Board of Governors and the Council, reports and data to the Board of Governors and the Council solely with respect to the conduct of the designated activity and solely to assess whether--CommentsClose CommentsPermalink





(A) the rules, orders, or standards prescribed by the Board of Governors with respect to the designated activity appropriately address the risks to the financial system presented by such activity; andCommentsClose CommentsPermalink





(B) the financial institutions are in compliance with this title and the rules and orders prescribed by the Board of Governors under this title with respect to the designated activity.CommentsClose CommentsPermalink





(c) Coordination With Appropriate Federal Supervisory Agency-CommentsClose CommentsPermalink





(1) ADVANCE COORDINATION- Before directly requesting any material information from, or imposing reporting or recordkeeping requirements on, any financial market utility or any financial institution engaged in a payment, clearing, or settlement activity, the Board of Governors and the Council shall coordinate with the Supervisory Agency for a financial market utility or the appropriate financial regulator for a financial institution to determine if the information is available from or may be obtained by the agency in the form, format, or detail required by the Board of Governors and the Council.CommentsClose CommentsPermalink





(2) SUPERVISORY REPORTS- Notwithstanding any other provision of law, the Supervisory Agency, the appropriate financial regulator, and the Board of Governors are authorized to disclose to each other and the Council copies of its examination reports or similar reports regarding any financial market utility or any financial institution engaged in payment, clearing, or settlement activities.CommentsClose CommentsPermalink





(d) Timing of Response From Appropriate Federal Supervisory Agency- If the information, report, records, or data requested by the Board of Governors or the Council under subsection (c)(1) are not provided in full by the Supervisory Agency or the appropriate financial regulator in less than 15 days after the date on which the material is requested, the Board of Governors or the Council may request the information or impose recordkeeping or reporting requirements directly on such persons as provided in subsections (a) and (b) with notice to the agency.CommentsClose CommentsPermalink





(e) Sharing of Information-CommentsClose CommentsPermalink





(1) MATERIAL CONCERNS- Notwithstanding any other provision of law, the Board of Governors, the Council, the appropriate financial regulator, and any Supervisory Agency are authorized to--CommentsClose CommentsPermalink





(A) promptly notify each other of material concerns about a designated financial market utility or any financial institution engaged in designated activities; andCommentsClose CommentsPermalink





(B) share appropriate reports, information, or data relating to such concerns.CommentsClose CommentsPermalink





(2) OTHER INFORMATION- Notwithstanding any other provision of law, the Board of Governors, the Council, the appropriate financial regulator, or any Supervisory Agency may, under such terms and conditions as it deems appropriate, provide confidential supervisory information and other information obtained under this title to other persons it deems appropriate, including the Secretary, State financial institution supervisory agencies, foreign financial supervisors, foreign central banks, and foreign finance ministries, subject to reasonable assurances of confidentiality.CommentsClose CommentsPermalink





(f) Privilege Maintained- The Board of Governors, the Council, the appropriate financial regulator, and any Supervisory Agency providing reports or data under this section shall not be deemed to have waived any privilege applicable to those reports or data, or any portion thereof, by providing the reports or data to the other party or by permitting the reports or data, or any copies thereof, to be used by the other party.CommentsClose CommentsPermalink





(g) Disclosure Exemption- Information obtained by the Board of Governors or the Council under this section and any materials prepared by the Board of Governors or the Council regarding its assessment of the systemic importance of financial market utilities or any payment, clearing, or settlement activities engaged in by financial institutions, and in connection with its supervision of designated financial market utilities and designated activities, shall be confidential supervisory information exempt from disclosure under section 552 of title 5, United States Code. For purposes of such section 552, this subsection shall be considered a statute described in subsection (b)(3) of such section 552.CommentsClose CommentsPermalink

SEC. 810. RULEMAKING.

The Board of Governors and the Council are authorized to prescribe such rules and issue such orders as may be necessary to administer and carry out the authorities and duties granted to the Board of Governors or the Council, respectively, and prevent evasions thereof.CommentsClose CommentsPermalink

SEC. 811. OTHER AUTHORITY.

Unless otherwise provided by its terms, this title does not divest any appropriate financial regulator, any Supervisory Agency, or any other Federal or State agency, of any authority derived from any other applicable law, except that any standards prescribed by the Board of Governors under section 805 shall supersede any less stringent requirements established under other authority to the extent of any conflict.CommentsClose CommentsPermalink

SEC. 812. EFFECTIVE DATE.

This title is effective as of the date of enactment of this Act.CommentsClose CommentsPermalink

TITLE IX--INVESTOR PROTECTIONS AND IMPROVEMENTS TO THE REGULATION OF SECURITIESCommentsClose CommentsPermalink

Subtitle A--Increasing Investor ProtectionCommentsClose CommentsPermalink

SEC. 911. INVESTOR ADVISORY COMMITTEE ESTABLISHED.

Title I of the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended by adding at the end the following:CommentsClose CommentsPermalink

‘SEC. 39. INVESTOR ADVISORY COMMITTEE.

‘(a) Establishment and Purpose-CommentsClose CommentsPermalink





‘(1) ESTABLISHMENT- There is established within the Commission the Investor Advisory Committee (referred to in this section as the ‘Committee’).CommentsClose CommentsPermalink





‘(2) PURPOSE- The Committee shall--CommentsClose CommentsPermalink





‘(A) advise and consult with the Commission on--CommentsClose CommentsPermalink





‘(i) regulatory priorities of the Commission;CommentsClose CommentsPermalink





‘(ii) issues relating to the regulation of securities products, trading strategies, and fee structures, and the effectiveness of disclosure;CommentsClose CommentsPermalink





‘(iii) initiatives to protect investor interest; andCommentsClose CommentsPermalink





‘(iv) initiatives to promote investor confidence and the integrity of the securities marketplace; andCommentsClose CommentsPermalink





‘(B) submit to the Commission such findings and recommendations as the Committee determines are appropriate, including recommendations for proposed legislative changes.CommentsClose CommentsPermalink





‘(b) Membership-CommentsClose CommentsPermalink





‘(1) IN GENERAL- The members of the Committee shall be--CommentsClose CommentsPermalink





‘(A) the Investor Advocate;CommentsClose CommentsPermalink





‘(B) a representative of State securities commissions;CommentsClose CommentsPermalink





‘(C) a representative of the interests of senior citizens; andCommentsClose CommentsPermalink





‘(D) not fewer than 10, and not more than 20, members appointed by the Commission, from among individuals who--CommentsClose CommentsPermalink





‘(i) represent the interests of individual equity and debt investors, including investors in mutual funds;CommentsClose CommentsPermalink





‘(ii) represent the interests of institutional investors, including the interests of pension funds and registered investment companies;CommentsClose CommentsPermalink





‘(iii) are knowledgeable about investment issues and decisions; andCommentsClose CommentsPermalink





‘(iv) have reputations of integrity.CommentsClose CommentsPermalink





‘(2) TERM- Each member of the Committee appointed under paragraph (1)(B) shall serve for a term of 4 years.CommentsClose CommentsPermalink





‘(3) MEMBERS NOT COMMISSION EMPLOYEES- Members appointed under paragraph (1)(B) shall not be deemed to be employees or agents of the Commission solely because of membership on the Committee.CommentsClose CommentsPermalink





‘(c) Chairman; Vice Chairman; Secretary; Assistant Secretary-CommentsClose CommentsPermalink





‘(1) IN GENERAL- The members of the Committee shall elect, from among the members of the Committee--CommentsClose CommentsPermalink





‘(A) a chairman, who may not be employed by an issuer;CommentsClose CommentsPermalink





‘(B) a vice chairman, who may not be employed by an issuer;CommentsClose CommentsPermalink





‘(C) a secretary; andCommentsClose CommentsPermalink





‘(D) an assistant secretary.CommentsClose CommentsPermalink





‘(2) TERM- Each member elected under paragraph (1) shall serve for a term of 3 years in the capacity for which the member was elected under paragraph (1).CommentsClose CommentsPermalink





‘(d) Meetings-CommentsClose CommentsPermalink





‘(1) FREQUENCY OF MEETINGS- The Committee shall meet--CommentsClose CommentsPermalink





‘(A) not less frequently than twice annually, at the call of the chairman of the Committee; andCommentsClose CommentsPermalink





‘(B) from time to time, at the call of the Commission.CommentsClose CommentsPermalink





‘(2) NOTICE- The chairman of the Committee shall give the members of the Committee written notice of each meeting, not later than 2 weeks before the date of the meeting.CommentsClose CommentsPermalink





‘(e) Compensation and Travel Expenses- Each member of the Committee who is not a full-time employee of the United States shall--CommentsClose CommentsPermalink





‘(1) be compensated at a rate not to exceed the daily equivalent of the annual rate of basic pay in effect for a position at level V of the Executive Schedule under section 5316 of title 5, United States Code, for each day during which the member is engaged in the actual performance of the duties of the Committee; andCommentsClose CommentsPermalink





‘(2) while away from the home or regular place of business of the member in the performance of services for the Committee, be allowed travel expenses, including per diem in lieu of subsistence, in the same manner as persons employed intermittently in the Government service are allowed expenses under section 5703(b) of title 5, United States Code.CommentsClose CommentsPermalink





‘(f) Staff- The Commission shall make available to the Committee such staff as the chairman of the Committee determines are necessary to carry out this section.CommentsClose CommentsPermalink





‘(g) Review by Commission- The Commission shall--CommentsClose CommentsPermalink





‘(1) review the findings and recommendations of the Committee; andCommentsClose CommentsPermalink





‘(2) each time the Committee submits a finding or recommendation to the Commission, issue a public statement--CommentsClose CommentsPermalink





‘(A) assessing the finding or recommendation of the Committee; andCommentsClose CommentsPermalink





‘(B) disclosing the action, if any, the Commission intends to take with respect to the finding or recommendation.CommentsClose CommentsPermalink





‘(h) Committee Findings- Nothing in this section shall require the Commission to agree to or act upon any finding or recommendation of the Committee.CommentsClose CommentsPermalink





‘(i) Federal Advisory Committee Act- The Federal Advisory Committee Act (5 U.S.C. App.) shall not apply with respect to the Committee and its activities.CommentsClose CommentsPermalink





‘(j) Authorization of Appropriations- There is authorized to be appropriated to the Commission such sums as are necessary to carry out this section.’.CommentsClose CommentsPermalink

SEC. 912. CLARIFICATION OF AUTHORITY OF THE COMMISSION TO ENGAGE IN INVESTOR TESTING.

Section 19 of the Securities Act of 1933 (15 U.S.C. 77s) is amended by adding at the end the following:CommentsClose CommentsPermalink





‘(e) Evaluation of Rules or Programs- For the purpose of evaluating any rule or program of the Commission issued or carried out under any provision of the securities laws, as defined in section 3 of the Securities Exchange Act of 1934 (15 U.S.C. 78c), and the purposes of considering, proposing, adopting, or engaging in any such rule or program or developing new rules or programs, the Commission may--CommentsClose CommentsPermalink





‘(1) gather information from and communicate with investors or other members of the public;CommentsClose CommentsPermalink





‘(2) engage in such temporary investor testing programs as the Commission determines are in the public interest or would protect investors; andCommentsClose CommentsPermalink





‘(3) consult with academics and consultants, as necessary to carry out this subsection.CommentsClose CommentsPermalink





‘(f) Rule of Construction- For purposes of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.), any action taken under subsection (e) shall not be construed to be a collection of information.’.CommentsClose CommentsPermalink

SEC. 913. STUDY AND RULEMAKING REGARDING OBLIGATIONS OF BROKERS, DEALERS, AND INVESTMENT ADVISERS.

(a) Definitions- In this section--CommentsClose CommentsPermalink





(1) the term ‘FINRA’ means the Financial Industry Regulatory Authority; andCommentsClose CommentsPermalink





(2) the term ‘retail customer’ means an individual customer of a broker, dealer, investment adviser, person associated with a broker or dealer, or a person associated with an investment adviser.CommentsClose CommentsPermalink





(b) In General- The Commission shall conduct a study to evaluate--CommentsClose CommentsPermalink





(1) the effectiveness of existing legal or regulatory standards of care for brokers, dealers, investment advisers, persons associated with brokers or dealers, and persons associated with investment advisers for providing personalized investment advice and recommendations about securities to retail customers imposed by the Commission and FINRA, and other Federal and State legal or regulatory standards; andCommentsClose CommentsPermalink





(2) whether there are legal or regulatory gaps or overlap in legal or regulatory standards in the protection of retail customers relating to the standards of care for brokers, dealers, investment advisers, persons associated with brokers or dealers, and persons associated with investment advisers for providing personalized investment advice about securities to retail customers that should be addressed by rule or statute.CommentsClose CommentsPermalink





(c) Considerations- In conducting the study required under subsection (b), the Commission shall consider--CommentsClose CommentsPermalink





(1) the regulatory, examination, and enforcement resources devoted to, and activities of, the Commission and FINRA to enforce the standards of care for brokers, dealers, investment advisers, persons associated with brokers or dealers, and persons associated with investment advisers when providing personalized investment advice and recommendations about securities to retail customers, including--CommentsClose CommentsPermalink





(A) the frequency of examinations of brokers, dealers, and investment advisers; andCommentsClose CommentsPermalink





(B) the length of time of the examinations;CommentsClose CommentsPermalink





(2) the substantive differences, compared and contrasted in detail, in the regulation of brokers, dealers, and investment advisers, when providing personalized investment advice and recommendations about securities to retail customers, including the differences in the amount of resources devoted to the regulation and examination of brokers, dealers, and investment advisers, by the Commission and FINRA;CommentsClose CommentsPermalink





(3) the specific instances in which--CommentsClose CommentsPermalink





(A) the regulation and oversight of investment advisers provide greater protection to retail customers than the regulation and oversight of brokers and dealers; andCommentsClose CommentsPermalink





(B) the regulation and oversight of brokers and dealers provide greater protection to retail customers than the regulation and oversight of investment advisers;CommentsClose CommentsPermalink





(4) the existing legal or regulatory standards of State securities regulators and other regulators intended to protect retail customers;CommentsClose CommentsPermalink





(5) the potential impact on retail customers, including the potential impact on access of retail customers to the range of products and services offered by brokers and dealers, of imposing upon brokers, dealers, and persons associated with brokers or dealers--CommentsClose CommentsPermalink





(A) the standard of care applied under the Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) for providing personalized investment advice about securities to retail customers of investment advisers; andCommentsClose CommentsPermalink





(B) other requirements of the Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.);CommentsClose CommentsPermalink





(6) the potential impact of--CommentsClose CommentsPermalink





(A) imposing on investment advisers the standard of care applied by the Commission and FINRA under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) for providing recommendations about securities to retail customers of brokers and dealers and other Commission and FINRA requirements applicable to brokers and dealers; andCommentsClose CommentsPermalink





(B) authorizing the Commission to designate 1 or more self-regulatory organizations to augment the efforts of the Commission to oversee investment advisers;CommentsClose CommentsPermalink





(7) the potential impact of eliminating the broker and dealer exclusion from the definition of ‘investment adviser’ under section 202(a)(11)(C) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)(11)(C)), in terms of--CommentsClose CommentsPermalink





(A) the potential benefits or harm to retail customers that could result from such a change, including any potential impact on access to personalized investment advice and recommendations about securities to retail customers or the availability of such advice and recommendations;CommentsClose CommentsPermalink





(B) the number of additional entities and individuals that would be required to register under, or become subject to, the Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.), and the additional requirements to which brokers, dealers, and persons associated with brokers and dealers would become subject, including--CommentsClose CommentsPermalink





(i) any potential additional associated person licensing, registration, and examination requirements; andCommentsClose CommentsPermalink





(ii) the additional costs, if any, to the additional entities and individuals; andCommentsClose CommentsPermalink





(C) the impact on Commission resources to--CommentsClose CommentsPermalink





(i) conduct examinations of registered investment advisers and the representatives of registered investment advisers, including the impact on the examination cycle; andCommentsClose CommentsPermalink





(ii) enforce the standard of care and other applicable requirements imposed under the Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.);CommentsClose CommentsPermalink





(8) the ability of investors to understand the differences in terms of regulatory oversight and examinations between brokers, dealers, and investment advisers;CommentsClose CommentsPermalink





(9) the varying level of services provided by brokers, dealers, investment advisers, persons associated with brokers or dealers, and persons associated with investment advisers to retail customers and the varying scope and terms of retail customer relationships of brokers, dealers, investment advisers, persons associated with brokers or dealers, and persons associated with investment advisers with such retail customers;CommentsClose CommentsPermalink





(10) any potential benefits or harm to retail customers that could result from any potential changes in the regulatory requirements or legal standards affecting brokers, dealers, investment advisers, persons associated with brokers or dealers, and persons associated with investment advisers relating to their obligations to retail customers, including any potential impact on--CommentsClose CommentsPermalink





(A) protection from fraud;CommentsClose CommentsPermalink





(B) access to personalized investment advice, and recommendations about securities to retail customers; orCommentsClose CommentsPermalink





(C) the availability of such advice and recommendations;CommentsClose CommentsPermalink





(11) the additional costs and expenses to retail customers and to brokers, dealers, and investment advisers resulting from potential changes in the regulatory requirements or legal standards affecting brokers, dealers, investment advisers, persons associated with brokers or dealers, and persons associated with investment advisers relating to their obligations to retail customers; andCommentsClose CommentsPermalink





(12) any other consideration that the Commission deems necessary and appropriate to effectively execute the study required under subsection (b).CommentsClose CommentsPermalink





(d) Report-CommentsClose CommentsPermalink





(1) IN GENERAL- Not later than 1 year after the date of enactment of this Act, the Commission shall submit a report on the study required under subsection (b) to--CommentsClose CommentsPermalink





(A) the Committee on Banking, Housing, and Urban Affairs of the Senate; andCommentsClose CommentsPermalink





(B) the Committee on Financial Services of the House of Representatives.CommentsClose CommentsPermalink





(2) CONTENT REQUIREMENTS- The report required under paragraph (1) shall describe the findings, conclusions, and recommendations of the Commission from the study required under subsection (b), including--CommentsClose CommentsPermalink





(A) a description of the considerations, analysis, and public and industry input that the Commission considered, as required under subsection (e), to make such findings, conclusions, and policy recommendations; andCommentsClose CommentsPermalink





(B) an analysis of--CommentsClose CommentsPermalink





(i) whether any identified legal or regulatory gaps or overlap in legal or regulatory standards in the protection of retail customers relating to the standards of care for brokers, dealers, investment advisers, persons associated with brokers or dealers, and persons associated with investment advisers for providing personalized investment advice about securities to retail customers can be addressed by rule; andCommentsClose CommentsPermalink





(ii) whether, and the extent to which, the Commission would require additional statutory authority to address such gaps or overlap.CommentsClose CommentsPermalink





(e) Public Comment- The Commission shall seek and consider public input, comments, and data in order to prepare the report required under subsection (d).CommentsClose CommentsPermalink





(f) Rulemaking-CommentsClose CommentsPermalink





(1) IN GENERAL- If the study required under subsection (b) identifies any gaps or overlap in the legal or regulatory standards in the protection of retail customers relating to the standards of care for brokers, dealers, investment advisers, persons associated with brokers or dealers, and persons associated with investment advisers for providing personalized investment advice about securities to such retail customers, the Commission, not later than 2 years after the date of enactment of this Act, shall--CommentsClose CommentsPermalink





(A) commence a rulemaking, as necessary or appropriate in the public interest and for the protection of retail customers, to address such regulatory gaps and overlap that can be addressed by rule, using its authority under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) and the Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.); andCommentsClose CommentsPermalink





(B) consider and take into account the findings, conclusions, and recommendations of the study required under this section.CommentsClose CommentsPermalink





(2) RULE OF CONSTRUCTION- Nothing in this section shall be construed to limit the rulemaking authority of the Commission under any other provision of Federal law.CommentsClose CommentsPermalink

SEC. 914. OFFICE OF THE INVESTOR ADVOCATE.

Section 4 of the Securities Exchange Act of 1934 (15 U.S.C. 78d) is amended by adding at the end the following:CommentsClose CommentsPermalink





‘(g) Office of the Investor Advocate-CommentsClose CommentsPermalink





‘(1) OFFICE ESTABLISHED- There is established within the Commission the Office of the Investor Advocate (in this subsection referred to as the ‘Office’).CommentsClose CommentsPermalink





‘(2) INVESTOR ADVOCATE-CommentsClose CommentsPermalink





‘(A) IN GENERAL- The head of the Office shall be the Investor Advocate, who shall--CommentsClose CommentsPermalink





‘(i) report directly to the Chairman; andCommentsClose CommentsPermalink





‘(ii) be appointed by the Chairman, in consultation with the Commission, from among individuals having experience in advocating for the interests of investors in securities and investor protection issues, from the perspective of investors.CommentsClose CommentsPermalink





‘(B) COMPENSATION- The annual rate of pay for the Investor Advocate shall be equal to the highest rate of annual pay for a Senior Executive Service position within the Commission.CommentsClose CommentsPermalink





‘(C) LIMITATION ON SERVICE- An individual who serves as the Investor Advocate may not be employed by the Commission--CommentsClose CommentsPermalink





‘(i) during the 2-year period ending on the date of appointment as Investor Advocate; orCommentsClose CommentsPermalink





‘(ii) during the 5-year period beginning on the date on which the person ceases to serve as the Investor Advocate.CommentsClose CommentsPermalink





‘(3) STAFF OF OFFICE- The Investor Advocate may retain or employ independent counsel, research staff, and service staff, as the Investor Advocate deems necessary to carry out the functions, powers, and duties of the Office.CommentsClose CommentsPermalink





‘(4) FUNCTIONS OF THE INVESTOR ADVOCATE- The Investor Advocate shall--CommentsClose CommentsPermalink





‘(A) assist retail investors in resolving significant problems such investors may have with the Commission or with self-regulatory organizations;CommentsClose CommentsPermalink





‘(B) identify areas in which investors would benefit from changes in the regulations of the Commission or the rules of self-regulatory organizations;CommentsClose CommentsPermalink





‘(C) identify problems that investors have with financial service providers and investment products;CommentsClose CommentsPermalink





‘(D) analyze the potential impact on investors of--CommentsClose CommentsPermalink





‘(i) proposed regulations of the Commission; andCommentsClose CommentsPermalink





‘(ii) proposed rules of self-regulatory organizations registered under this title; andCommentsClose CommentsPermalink





‘(E) to the extent practicable, propose to the Commission changes in the regulations or orders of the Commission and to Congress any legislative, administrative, or personnel changes that may be appropriate to mitigate problems identified under this paragraph and to promote the interests of investors.CommentsClose CommentsPermalink





‘(5) ACCESS TO DOCUMENTS- The Commission shall ensure that the Investor Advocate has full access to the documents of the Commission and any self-regulatory organization, as necessary to carry out the functions of the Office.CommentsClose CommentsPermalink





‘(6) ANNUAL REPORTS-CommentsClose CommentsPermalink





‘(A) REPORT ON OBJECTIVES-CommentsClose CommentsPermalink





‘(i) IN GENERAL- Not later than June 30 of each year after 2010, the Investor Advocate shall submit to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives a report on the objectives of the Investor Advocate for the following fiscal year.CommentsClose CommentsPermalink





‘(ii) CONTENTS- Each report required under clause (i) shall contain full and substantive analysis and explanation.CommentsClose CommentsPermalink





‘(B) REPORT ON ACTIVITIES-CommentsClose CommentsPermalink





‘(i) IN GENERAL- Not later than December 31 of each year after 2010, the Investor Advocate shall submit to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives a report on the activities of the Investor Advocate during the immediately preceding fiscal year.CommentsClose CommentsPermalink





‘(ii) CONTENTS- Each report required under clause (i) shall include--CommentsClose CommentsPermalink





‘(I) appropriate statistical information and full and substantive analysis;CommentsClose CommentsPermalink





‘(II) information on steps that the Investor Advocate has taken during the reporting period to improve investor services and the responsiveness of the Commission and self-regulatory organizations to investor concerns;CommentsClose CommentsPermalink





‘(III) a summary of the most serious problems encountered by investors during the reporting period;CommentsClose CommentsPermalink





‘(IV) an inventory of the items described in subclauses (III) that includes--CommentsClose CommentsPermalink

‘(aa) identification of any action taken by the Commission or the self-regulatory organization and the result of such action;CommentsClose CommentsPermalink

‘(bb) the length of time that each item has remained on such inventory; andCommentsClose CommentsPermalink

‘(cc) for items on which no action has been taken, the reasons for inaction, and an identification of any official who is responsible for such action;CommentsClose CommentsPermalink

‘(V) recommendations for such administrative and legislative actions as may be appropriate to resolve problems encountered by investors; andCommentsClose CommentsPermalink





‘(VI) any other information, as determined appropriate by the Investor Advocate.CommentsClose CommentsPermalink





‘(iii) INDEPENDENCE- Each report required under this paragraph shall be provided directly to the Committees listed in clause (i) without any prior review or comment from the Commission, any commissioner, any other officer or employee of the Commission, or the Office of Management and Budget.CommentsClose CommentsPermalink





‘(iv) CONFIDENTIALITY- No report required under clause (i) may contain confidential information.CommentsClose CommentsPermalink





‘(7) REGULATIONS- The Commission shall, by regulation, establish procedures requiring a formal response to all recommendations submitted to the Commission by the Investor Advocate, not later than 3 months after the date of such submission.’.CommentsClose CommentsPermalink

SEC. 915. STREAMLINING OF FILING PROCEDURES FOR SELF-REGULATORY ORGANIZATIONS.

(a) Filing Procedures- Section 19(b) of the Securities Exchange Act of 1934 (15 U.S.C. 78s(b)) is amended by striking paragraph (2) (including the undesignated matter immediately following subparagraph (B)) and inserting the following:CommentsClose CommentsPermalink





‘(2) APPROVAL PROCESS-CommentsClose CommentsPermalink





‘(A) APPROVAL PROCESS ESTABLISHED-CommentsClose CommentsPermalink





‘(i) IN GENERAL- Except as provided in clause (ii), not later than 45 days after the date of publication of a proposed rule change under paragraph (1), the Commission shall--CommentsClose CommentsPermalink





‘(I) by order, approve the proposed rule change; orCommentsClose CommentsPermalink





‘(II) institute proceedings under subparagraph (B) to determine whether the proposed rule change should be disapproved.CommentsClose CommentsPermalink





‘(ii) EXTENSION OF TIME PERIOD- The Commission may extend the period established under clause (i) by not more than an additional 45 days, if--CommentsClose CommentsPermalink





‘(I) the Commission determines that a longer period is appropriate and publishes the reasons for such determination; orCommentsClose CommentsPermalink





‘(II) the self-regulatory organization that filed the proposed rule change consents to the longer period.CommentsClose CommentsPermalink





‘(B) PROCEEDINGS-CommentsClose CommentsPermalink





‘(i) NOTICE AND HEARING- If the Commission does not approve a proposed rule change under subparagraph (A), the Commission shall provide to the self-regulatory organization that filed the proposed rule change--CommentsClose CommentsPermalink





‘(I) notice of the grounds for disapproval under consideration; andCommentsClose CommentsPermalink





‘(II) opportunity for hearing, to be concluded not later than 180 days after the date of publication of notice of the filing of the proposed rule change.CommentsClose CommentsPermalink





‘(ii) ORDER OF APPROVAL OR DISAPPROVAL-CommentsClose CommentsPermalink





‘(I) IN GENERAL- Except as provided in subclause (II), not later than 180 days after the date of publication under paragraph (1), the Commission shall issue an order approving or disapproving the proposed rule change.CommentsClose CommentsPermalink





‘(II) EXTENSION OF TIME PERIOD- The Commission may extend the period for issuance under clause (I) by not more than 60 days, if--CommentsClose CommentsPermalink

‘(aa) the Commission determines that a longer period is appropriate and publishes the reasons for such determination; orCommentsClose CommentsPermalink

‘(bb) the self-regulatory organization that filed the proposed rule change consents to the longer period.CommentsClose CommentsPermalink

‘(C) STANDARDS FOR APPROVAL AND DISAPPROVAL-CommentsClose CommentsPermalink





‘(i) APPROVAL- The Commission shall approve a proposed rule change of a self-regulatory organization if it finds that such proposed rule change is consistent with the requirements of this title and the rules and regulations issued under this title that are applicable to such organization.CommentsClose CommentsPermalink





‘(ii) DISAPPROVAL- The Commission shall disapprove a proposed rule change of a self-regulatory organization if it does not make a finding described in clause (i).CommentsClose CommentsPermalink





‘(iii) TIME FOR APPROVAL- The Commission may not approve a proposed rule change earlier than 30 days after the date of publication under paragraph (1), unless the Commission finds good cause for so doing and publishes the reason for the finding.CommentsClose CommentsPermalink





‘(D) RESULT OF FAILURE TO INSTITUTE OR CONCLUDE PROCEEDINGS- A proposed rule change shall be deemed to have been approved by the Commission, if--CommentsClose CommentsPermalink





‘(i) the Commission does not approve the proposed rule change or begin proceedings under subparagraph (B) within the period described in subparagraph (A); orCommentsClose CommentsPermalink





‘(ii) the Commission does not issue an order approving or disapproving the proposed rule change under subparagraph (B) within the period described in subparagraph (B)(ii).CommentsClose CommentsPermalink





‘(E) PUBLICATION DATE BASED ON FEDERAL REGISTER PUBLISHING- For purposes of this paragraph, if, after filing a proposed rule change with the Commission pursuant to paragraph (1), a self-regulatory organization publishes a notice of the filing of such proposed rule change, together with the substantive terms of such proposed rule change, on a publicly accessible website, the Commission shall thereafter send the notice to the Federal Register for publication thereof under paragraph (1) within 15 days of the date on which such website publication is made. If the Commission fails to send the notice for publication thereof within such 15 day period, then the date of publication shall be deemed to be the date on which such website publication was made.’.CommentsClose CommentsPermalink





(b) Clarification of Filing Date-CommentsClose CommentsPermalink





(1) RULE OF CONSTRUCTION- Section 19(b) of the Securities Exchange Act of 1934 (15 U.S.C. 78s(b)) is amended by adding at the end the following:CommentsClose CommentsPermalink





‘(10) RULE OF CONSTRUCTION RELATING TO FILING DATE OF PROPOSED RULE CHANGES-CommentsClose CommentsPermalink





‘(A) IN GENERAL- For purposes of this subsection, the date of filing of a proposed rule change shall be deemed to be the date on which the Commission receives the proposed rule change.CommentsClose CommentsPermalink





‘(B) EXCEPTION- A proposed rule change has not been received by the Commission for purposes of subparagraph (A) if, not later than 7 days after the date of receipt by the Commission, the Commission notifies the self-regulatory organization that such proposed rule change does not comply with the rules of the Commission relating to the required form of a proposed rule change.’.CommentsClose CommentsPermalink





(2) PUBLICATION- Section 19(b)(1) of the Securities Exchange Act of 1934 (15 U.S.C. 78s(b)(1)) is amended by striking ‘upon’ and inserting ‘as soon as practicable after the date of’.CommentsClose CommentsPermalink





(c) Effective Date of Proposed Rules- Section 19(b)(3) of the Securities Exchange Act of 1934 (15 U.S.C. 78s(b)(3)) is amended--CommentsClose CommentsPermalink





(1) in subparagraph (A)--CommentsClose CommentsPermalink





(A) by striking ‘may take effect’ and inserting ‘shall take effect’; andCommentsClose CommentsPermalink





(B) by inserting ‘on any person, whether or not the person is a member of the self-regulatory organization’ after ‘charge imposed by the self-regulatory organization’; andCommentsClose CommentsPermalink





(2) in subparagraph (C)--CommentsClose CommentsPermalink





(A) by amending the second sentence to read as follows: ‘At any time within the 60-day period beginning on the date of filing of such a proposed rule change in accordance with the provisions of paragraph (1), the Commission summarily may temporarily suspend the change in the rules of the self-regulatory organization made thereby, if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of this title.’;CommentsClose CommentsPermalink





(B) by inserting after the second sentence the following: ‘If the Commission takes such action, the Commission shall institute proceedings under paragraph (2)(B) to determine whether the proposed rule should be approved or disapproved.’; andCommentsClose CommentsPermalink





(C) in the third sentence, by striking ‘the preceding sentence’ and inserting ‘this subparagraph’.CommentsClose CommentsPermalink





(d) Conforming Change- Section 19(b)(4)(D) of the Securities Exchange Act of 1934 (15 U.S.C. 78s(b)(4)(D)) is amended to read as follows:CommentsClose CommentsPermalink





‘(D)(i) The Commission shall order the temporary suspension of any change in the rules of a clearing agency made by a proposed rule change that has taken effect under paragraph (3), if the appropriate regulatory agency for the clearing agency notifies the Commission not later than 30 days after the date on which the proposed rule change was filed of--CommentsClose CommentsPermalink





‘(I) the determination by the appropriate regulatory agency that the rules of such clearing agency, as so changed, may be inconsistent with the safeguarding of securities or funds in the custody or control of such clearing agency or for which it is responsible; andCommentsClose CommentsPermalink





‘(II) the reasons for the determination described in subclause (I).CommentsClose CommentsPermalink





‘(ii) If the Commission takes action under clause (i), the Commission shall institute proceedings under paragraph (2)(B) to determine if the proposed rule change should be approved or disapproved.’.CommentsClose CommentsPermalink

SEC. 916. STUDY REGARDING FINANCIAL LITERACY AMONG INVESTORS.

(a) In General- The Commission shall conduct a study to identify--CommentsClose CommentsPermalink





(1) the existing level of financial literacy among retail investors, including subgroups of investors identified by the Commission;CommentsClose CommentsPermalink





(2) methods to improve the timing, content, and format of disclosures to investors with respect to financial intermediaries, investment products, and investment services;CommentsClose CommentsPermalink





(3) the most useful and understandable relevant information that retail investors need to make informed financial decisions before engaging a financial intermediary or purchasing an investment product or service that is typically sold to retail investors, including shares of open-end companies, as that term is defined in section 5 of the Investment Company Act of 1940 (15 U.S.C. 80a-5) that are registered under section 8 of that Act;CommentsClose CommentsPermalink





(4) methods to increase the transparency of expenses and conflicts of interests in transactions involving investment services and products, including shares of open-end companies described in paragraph (3);CommentsClose CommentsPermalink





(5) the most effective existing private and public efforts to educate investors; andCommentsClose CommentsPermalink





(6) in consultation with the Financial Literacy and Education Commission, a strategy (including, to the extent practicable, measurable goals and objectives) to increase the financial literacy of investors in order to bring about a positive change in investor behavior.CommentsClose CommentsPermalink





(b) Report- Not later than 2 years after the date of enactment of this Act, the Commission shall submit a report on the study required under subsection (a) to--CommentsClose CommentsPermalink





(1) the Committee on Banking, Housing, and Urban Affairs of the Senate; andCommentsClose CommentsPermalink





(2) the Committee on Financial Services of the House of Representatives.CommentsClose CommentsPermalink

SEC. 917. STUDY REGARDING MUTUAL FUND ADVERTISING.

(a) In General- The Comptroller General of the United States shall conduct a study on mutual fund advertising to identify--CommentsClose CommentsPermalink





(1) existing and proposed regulatory requirements for open-end investment company advertisements;CommentsClose CommentsPermalink





(2) current marketing practices for the sale of open-end investment company shares, including the use of past performance data, funds that have merged, and incubator funds;CommentsClose CommentsPermalink





(3) the impact of such advertising on consumers; andCommentsClose CommentsPermalink





(4) recommendations to improve investor protections in mutual fund advertising and additional information necessary to ensure that investors can make informed financial decisions when purchasing shares.CommentsClose CommentsPermalink





(b) Report- Not later than 1 year after the date of enactment of this Act, the Comptroller General of the United States shall submit a report on the results of the study conducted under subsection (a) to--CommentsClose CommentsPermalink





(1) the Committee on Banking, Housing, and Urban Affairs of the United States Senate; andCommentsClose CommentsPermalink





(2) the Committee on Financial Services of the House of Representatives.CommentsClose CommentsPermalink

SEC. 918. CLARIFICATION OF COMMISSION AUTHORITY TO REQUIRE INVESTOR DISCLOSURES BEFORE PURCHASE OF INVESTMENT PRODUCTS AND SERVICES.

Section 15 of the Securities Exchange Act of 1934 (15 U.S.C. 78o) is amended by adding at the end the following:CommentsClose CommentsPermalink





‘(k) Disclosures to Retail Investors-CommentsClose CommentsPermalink





‘(1) IN GENERAL- Notwithstanding any other provision of the securities laws, the Commission may issue rules designating documents or information that shall be provided by a broker or dealer to a retail investor before the purchase of an investment product or service by the retail investor.CommentsClose CommentsPermalink





‘(2) CONSIDERATIONS- In developing any rules under paragraph (1), the Commission shall consider whether the rules will promote investor protection, efficiency, competition, and capital formation.CommentsClose CommentsPermalink





‘(3) FORM AND CONTENTS OF DOCUMENTS AND INFORMATION- Any documents or information designated under a rule promulgated under paragraph (1) shall--CommentsClose CommentsPermalink





‘(A) be in a summary format; andCommentsClose CommentsPermalink





‘(B) contain clear and concise information about--CommentsClose CommentsPermalink





‘(i) investment objectives, strategies, costs, and risks; andCommentsClose CommentsPermalink





‘(ii) any compensation or other financial incentive received by a broker, dealer, or other intermediary in connection with the purchase of retail investment products.’.CommentsClose CommentsPermalink

SEC. 919. STUDY ON CONFLICTS OF INTEREST.

(a) In General- The Comptroller General of the United States shall conduct a study--CommentsClose CommentsPermalink





(1) to identify and examine potential conflicts of interest that exist between the staffs of the investment banking and equity and fixed income securities analyst functions within the same firm; andCommentsClose CommentsPermalink





(2) to make recommendations to Congress designed to protect investors in light of such conflicts.CommentsClose CommentsPermalink





(b) Considerations- In conducting the study under subsection (a), the Comptroller General shall--CommentsClose CommentsPermalink





(1) consider--CommentsClose CommentsPermalink





(A) the potential for investor harm resulting from conflicts, including consideration of the forms of misconduct engaged in by the several securities firms and individuals that entered into the Global Analyst Research Settlements in 2003 (also known as the ‘Global Settlement’);CommentsClose CommentsPermalink





(B) the nature and benefits of the undertakings to which those firms agreed in enforcement proceedings, including firewalls between research and investment banking, separate reporting lines, dedicated legal and compliance staffs, allocation of budget, physical separation, compensation, employee performance evaluations, coverage decisions, limitations on soliciting investment banking business, disclosures, transparency, and other measures;CommentsClose CommentsPermalink





(C) whether any such undertakings should be codified and applied permanently to securities firms, or whether the Commission should adopt rules applying any such undertakings to securities firms; andCommentsClose CommentsPermalink





(D) whether to recommend regulatory or legislative measures designed to mitigate possible adverse consequences to investors arising from the conflicts of interest or to enhance investor protection or confidence in the integrity of the securities markets; andCommentsClose CommentsPermalink





(2) consult with State attorneys general, State securities officials, the Commission, the Financial Industry Regulatory Authority (‘FINRA’), NYSE Regulation, investor advocates, brokers, dealers, retail investors, institutional investors, and academics.CommentsClose CommentsPermalink





(c) Report- The Comptroller General shall submit a report on the results of the study required by this section to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives, not later than 18 months after the date of enactment of this Act.CommentsClose CommentsPermalink

SEC. 919A. STUDY ON IMPROVED INVESTOR ACCESS TO INFORMATION ON INVESTMENT ADVISERS AND BROKER-DEALERS.

(a) Study-CommentsClose CommentsPermalink





(1) IN GENERAL- Not later than 6 months after the date of enactment of this Act, the Commission shall complete a study, including recommendations, of ways to improve the access of investors to registration information (including disciplinary actions, regulatory, judicial, and arbitration proceedings, and other information) about registered and previously registered investment advisers, associated persons of investment advisers, brokers and dealers and their associated persons on the existing Central Registration Depository and Investment Adviser Registration Depository systems, as well as identify additional information that should be made publicly available.CommentsClose CommentsPermalink





(2) CONTENTS- The study required by subsection (a) shall include an analysis of the advantages and disadvantages of further centralizing access to the information contained in the 2 systems, including--CommentsClose CommentsPermalink





(A) identification of those data pertinent to investors; andCommentsClose CommentsPermalink





(B) the identification of the method and format for displaying and publishing such data to enhance accessibility by and utility to investors.CommentsClose CommentsPermalink





(b) Implementation- Not later than 18 months after the date of completion of the study required by subsection (a), the Commission shall implement any recommendations of the study.CommentsClose CommentsPermalink

SEC. 919B. STUDY ON FINANCIAL PLANNERS AND THE USE OF FINANCIAL DESIGNATIONS.

(a) In General- The Comptroller General of the United States shall conduct a study to evaluate--CommentsClose CommentsPermalink





(1) the effectiveness of State and Federal regulations to protect consumers from individuals who hold themselves out as financial planners through the use of misleading designations;CommentsClose CommentsPermalink





(2) current State and Federal oversight structure and regulations for financial planners; andCommentsClose CommentsPermalink





(3) legal or regulatory gaps in the regulation of financial planners and other individuals who provide or offer to provide financial planning services to consumers.CommentsClose CommentsPermalink





(b) Considerations- In conducting the study required under subsection (a), the Comptroller General shall consider--CommentsClose CommentsPermalink





(1) the role of financial planners in providing advice regarding the management of financial resources, including investment planning, income tax planning, education planning, retirement planning, estate planning, and risk management;CommentsClose CommentsPermalink





(2) whether current regulations at the State and Federal level provide adequate ethical and professional standards for financial planners;CommentsClose CommentsPermalink





(3) the use of the title ‘financial planner’ and misleading designations in connection with sale of financial products, including insurance and securities;CommentsClose CommentsPermalink





(4) the possible risk posed to consumers by individuals who hold themselves out as financial planners through the use of misleading designations, including ‘financial advisor’ and ‘financial consultant’;CommentsClose CommentsPermalink





(5) the ability of consumers to understand licensing requirements and standards of care that apply to individuals who provide financial advice;CommentsClose CommentsPermalink





(6) the possible benefits to consumers of regulation and professional oversight of financial planners; andCommentsClose CommentsPermalink





(7) any other consideration that the Comptroller General deems necessary or appropriate to effectively execute the study required under subsection (a).CommentsClose CommentsPermalink





(c) Recommendations- In providing recommendations for the appropriate regulation of financial planners and other individuals who provide or offer to provide financial planning services, in order to protect consumers of financial planning services, the Comptroller General shall consider--CommentsClose CommentsPermalink





(1) the appropriate structure for regulation of financial planners and individuals providing financial planning services; andCommentsClose CommentsPermalink





(2) the appropriate scope of the regulations needed to protect consumers, including but not limited to the need to establish competency standards, practice standards, ethical guidelines, disciplinary authority, and transparency to consumers.CommentsClose CommentsPermalink





(d) Report-CommentsClose CommentsPermalink





(1) IN GENERAL- Not later than 180 days after the date of enactment of this Act, the Comptroller General shall submit a report on the study required under subsection (a) to--CommentsClose CommentsPermalink





(A) the Committee on Banking, Housing, and Urban Affairs of the Senate;CommentsClose CommentsPermalink





(B) the Special Committee on Aging of the Senate; andCommentsClose CommentsPermalink





(C) the Committee on Financial Services of the House of Representatives.CommentsClose CommentsPermalink





(2) CONTENT REQUIREMENTS- The report required under paragraph (1) shall describe the findings and determinations made by the Comptroller General in carrying out the study required under subsection (a), including a description of the considerations, analysis, and government, public, industry, nonprofit and consumer input that the Comptroller General considered to make such findings, conclusions, and legislative, regulatory, or other recommendations.CommentsClose CommentsPermalink

Subtitle B--Increasing Regulatory Enforcement and RemediesCommentsClose CommentsPermalink

SEC. 921. AUTHORITY TO ISSUE RULES RELATED TO MANDATORY PREDISPUTE ARBITRATION.

(a) Amendment to Securities Exchange Act of 1934- Section 15 of the Securities Exchange Act of 1934 (15 U.S.C. 78o), as amended by section 918, is amended by adding at the end the following:CommentsClose CommentsPermalink





‘(l) Authority to Restrict Mandatory Predispute Arbitration- The Commission may conduct a rulemaking to reaffirm or prohibit, or impose or not impose conditions or limitations on the use of, agreements that require customers or clients of any broker, dealer, or municipal securities dealer to arbitrate any dispute between them and such broker, dealer, or municipal securities dealer that arises under the securities laws or the rules of a self-regulatory organization, if the Commission finds that such reaffirmation, prohibition, imposition of conditions or limitations, or other action is in the public interest and for the protection of investors.’.CommentsClose CommentsPermalink





(b) Amendment to Investment Advisers Act of 1940- Section 205 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-5) is amended by adding at the end the following:CommentsClose CommentsPermalink





‘(f) Authority to Issue Rules Related to Mandatory Predispute Arbitration- The Commission may conduct rulemaking to reaffirm or prohibit, or impose or not impose conditions or limitations on the use of, agreements that require customers or clients of any investment adviser to arbitrate any dispute between them and such investment adviser that arises under the securities laws, as defined in section 3 of the Securities Exchange Act of 1934 (15 U.S.C. 78c), or the rules of a self-regulatory organization, if the Commission finds that such reaffirmation, prohibition, imposition of conditions or limitations, or other action is in the public interest and for the protection of investors.’.CommentsClose CommentsPermalink

SEC. 922. WHISTLEBLOWER PROTECTION.

The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended by inserting after section 21E the following:CommentsClose CommentsPermalink

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

‘(a) Definitions- In this section the following definitions shall apply:CommentsClose CommentsPermalink





‘(1) COVERED JUDICIAL OR ADMINISTRATIVE ACTION- The term ‘covered judicial or administrative action’ means any judicial or administrative action brought by the Commission under the securities laws that results in monetary sanctions exceeding $1,000,000.CommentsClose CommentsPermalink





‘(2) FUND- The term ‘Fund’ means the Securities and Exchange Commission Investor Protection Fund.CommentsClose CommentsPermalink





‘(3) ORIGINAL INFORMATION- The term ‘original information’ means information that--CommentsClose CommentsPermalink





‘(A) is derived from the independent knowledge or analysis of a whistleblower;CommentsClose CommentsPermalink





‘(B) is not known to the Commission from any other source, unless the whistleblower is the original source of the information; andCommentsClose CommentsPermalink





‘(C) is not exclusively derived from an allegation made in a judicial or administrative hearing, in a governmental report, hearing, audit, or investigation, or from the news media, unless the whistleblower is a source of the information.CommentsClose CommentsPermalink





‘(4) MONETARY SANCTIONS- The term ‘monetary sanctions’, when used with respect to any judicial or administrative action, means--CommentsClose CommentsPermalink





‘(A) any monies, including penalties, disgorgement, and interest, ordered to be paid; andCommentsClose CommentsPermalink





‘(B) any monies deposited into a disgorgement fund or other fund pursuant to section 308(b) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7246(b)), as a result of such action or any settlement of such action.CommentsClose CommentsPermalink





‘(5) RELATED ACTION- The term ‘related action’, when used with respect to any judicial or administrative action brought by the Commission under the securities laws, means any judicial or administrative action brought by an entity described in subclauses (I) through (IV) of subsection (h)(2)(D)(i) that is based upon the original information provided by a whistleblower pursuant to subsection (a) that led to the successful enforcement of the Commission action.CommentsClose CommentsPermalink





‘(6) WHISTLEBLOWER- The term ‘whistleblower’ means any individual, or 2 or more individuals acting jointly, who provides information relating to a violation of the securities laws to the Commission, in a manner established, by rule or regulation, by the Commission.CommentsClose CommentsPermalink





‘(b) Awards-CommentsClose CommentsPermalink





‘(1) IN GENERAL- In any covered judicial or administrative action, or related action, the Commission, under regulations prescribed by the Commission and subject to subsection (c), shall pay an award or awards to 1 or more whistleblowers who voluntarily provided original information to the Commission that led to the successful enforcement of the covered judicial or administrative action, or related action, in an aggregate amount equal to--CommentsClose CommentsPermalink





‘(A) not less than 10 percent, in total, of what has been collected of the monetary sanctions imposed in the action or related actions; andCommentsClose CommentsPermalink





‘(B) not more than 30 percent, in total, of what has been collected of the monetary sanctions imposed in the action or related actions.CommentsClose CommentsPermalink





‘(2) PAYMENT OF AWARDS- Any amount paid under paragraph (1) shall be paid from the Fund.CommentsClose CommentsPermalink





‘(c) Determination of Amount of Award; Denial of Award-CommentsClose CommentsPermalink





‘(1) DETERMINATION OF AMOUNT OF AWARD-CommentsClose CommentsPermalink





‘(A) DISCRETION- The determination of the amount of an award made under subsection (b) shall be in the discretion of the Commission.CommentsClose CommentsPermalink





‘(B) CRITERIA- In determining the amount of an award made under subsection (b), the Commission shall take into account--CommentsClose CommentsPermalink





‘(i) the significance of the information provided by the whistleblower to the success of the covered judicial or administrative action;CommentsClose CommentsPermalink





‘(ii) the degree of assistance provided by the whistleblower and any legal representative of the whistleblower in a covered judicial or administrative action;CommentsClose CommentsPermalink





‘(iii) the programmatic interest of the Commission in deterring violations of the securities laws by making awards to whistleblowers who provide information that lead to the successful enforcement of such laws; andCommentsClose CommentsPermalink





‘(iv) such additional relevant factors as the Commission may establish by rule or regulation.CommentsClose CommentsPermalink





‘(2) DENIAL OF AWARD- No award under subsection (b) shall be made--CommentsClose CommentsPermalink





‘(A) to any whistleblower who is, or was at the time the whistleblower acquired the original information submitted to the Commission, a member, officer, or employee of--CommentsClose CommentsPermalink





‘(i) an appropriate regulatory agency;CommentsClose CommentsPermalink





‘(ii) the Department of Justice;CommentsClose CommentsPermalink





‘(iii) a self-regulatory organization;CommentsClose CommentsPermalink





‘(iv) the Public Company Accounting Oversight Board; orCommentsClose CommentsPermalink





‘(v) a law enforcement organization;CommentsClose CommentsPermalink





‘(B) to any whistleblower who is convicted of a criminal violation related to the judicial or administrative action for which the whistleblower otherwise could receive an award under this section;CommentsClose CommentsPermalink





‘(C) to any whistleblower who gains the information through the performance of an audit of financial statements required under the securities laws and for whom such submission would be contrary to the requirements of section 101A of the Securities Exchange Act of 1934 (15 U.S.C. 78j-1); orCommentsClose CommentsPermalink





‘(D) to any whistleblower who fails to submit information to the Commission in such form as the Commission may, by rule, require.CommentsClose CommentsPermalink





‘(d) Representation-CommentsClose CommentsPermalink





‘(1) PERMITTED REPRESENTATION- Any whistleblower who makes a claim for an award under subsection (b) may be represented by counsel.CommentsClose CommentsPermalink





‘(2) REQUIRED REPRESENTATION-CommentsClose CommentsPermalink





‘(A) IN GENERAL- Any whistleblower who anonymously makes a claim for an award under subsection (b) shall be represented by counsel if the whistleblower anonymously submits the information upon which the claim is based.CommentsClose CommentsPermalink





‘(B) DISCLOSURE OF IDENTITY- Prior to the payment of an award, a whistleblower shall disclose the identity of the whistleblower and provide such other information as the Commission may require, directly or through counsel for the whistleblower.CommentsClose CommentsPermalink





‘(e) No Contract Necessary- No contract with the Commission is necessary for any whistleblower to receive an award under subsection (b), unless otherwise required by the Commission by rule or regulation.CommentsClose CommentsPermalink





‘(f) Appeals- Any determination made under this section, including whether, to whom, or in what amount to make awards, shall be in the discretion of the Commission. Any such determination may be appealed to the appropriate court of appeals of the United States not more than 30 days after the determination is issued by the Commission. The court shall review the determination made by the Commission in accordance with section 706 of title 5, United States Code.CommentsClose CommentsPermalink





‘(g) Investor Protection Fund-CommentsClose CommentsPermalink





‘(1) FUND ESTABLISHED- There is established in the Treasury of the United States a fund to be known as the ‘Securities and Exchange Commission Investor Protection Fund’.CommentsClose CommentsPermalink





‘(2) USE OF FUND- The Fund shall be available to the Commission, without further appropriation or fiscal year limitation, for--CommentsClose CommentsPermalink





‘(A) paying awards to whistleblowers as provided in subsection (b); andCommentsClose CommentsPermalink





‘(B) funding the activities of the Inspector General of the Commission under section 4(i).CommentsClose CommentsPermalink





‘(3) DEPOSITS AND CREDITS- There shall be deposited into or credited to the Fund an amount equal to--CommentsClose CommentsPermalink





‘(A) the amount awarded under subsection (b) from any monetary sanction collected by the Commission in any judicial or administrative action brought by the Commission that is based on information provided by a whistleblower under the securities laws, unless, the balance of the Fund at the time the monetary sanction is collected exceeds $200,000,000;CommentsClose CommentsPermalink





‘(B) any monetary sanction added to a disgorgement fund or other fund pursuant to section 308 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7246) that is not distributed to the victims for whom the disgorgement fund was established, unless the balance of the disgorgement fund at the time the determination is made not to distribute the monetary sanction to such victims exceeds $100,000,000; andCommentsClose CommentsPermalink





‘(C) all income from investments made under paragraph (4).CommentsClose CommentsPermalink





‘(4) INVESTMENTS-CommentsClose CommentsPermalink





‘(A) AMOUNTS IN FUND MAY BE INVESTED- The Commission may request the Secretary of the Treasury to invest the portion of the Fund that is not, in the discretion of the Commission, required to meet the current needs of the Fund.CommentsClose CommentsPermalink





‘(B) ELIGIBLE INVESTMENTS- Investments shall be made by the Secretary of the Treasury in obligations of the United States or obligations that are guaranteed as to principal and interest by the United States, with maturities suitable to the needs of the Fund as determined by the Commission on the record.CommentsClose CommentsPermalink





‘(C) INTEREST AND PROCEEDS CREDITED- The interest on, and the proceeds from the sale or redemption of, any obligations held in the Fund shall be credited to the Fund.CommentsClose CommentsPermalink





‘(5) REPORTS TO CONGRESS- Not later than October 30 of each fiscal year beginning after the date of enactment of this subsection, the Commission shall submit to the Committee on Banking, Housing, and Urban Affairs of the Senate, and the Committee on Financial Services of the House of Representatives a report on--CommentsClose CommentsPermalink





‘(A) the whistleblower award program, established under this section, including--CommentsClose CommentsPermalink





‘(i) a description of the number of awards granted; andCommentsClose CommentsPermalink





‘(ii) the types of cases in which awards were granted during the preceding fiscal year;CommentsClose CommentsPermalink





‘(B) the balance of the Fund at the beginning of the preceding fiscal year;CommentsClose CommentsPermalink





‘(C) the amounts deposited into or credited to the Fund during the preceding fiscal year;CommentsClose CommentsPermalink





‘(D) the amount of earnings on investments made under paragraph (4) during the preceding fiscal year;CommentsClose CommentsPermalink





‘(E) the amount paid from the Fund during the preceding fiscal year to whistleblowers pursuant to subsection (b);CommentsClose CommentsPermalink





‘(F) the balance of the Fund at the end of the preceding fiscal year; andCommentsClose CommentsPermalink





‘(G) a complete set of audited financial statements, including--CommentsClose CommentsPermalink





‘(i) a balance sheet;CommentsClose CommentsPermalink





‘(ii) income statement; andCommentsClose CommentsPermalink





‘(iii) cash flow analysis.CommentsClose CommentsPermalink





‘(h) Protection of Whistleblowers-CommentsClose CommentsPermalink





‘(1) PROHIBITION AGAINST RETALIATION-CommentsClose CommentsPermalink





‘(A) IN GENERAL- No employer may discharge, demote, suspend, threaten, harass, directly or indirectly, or in any other manner discriminate against, a whistleblower in the terms and conditions of employment because of any lawful act done by the whistleblower--CommentsClose CommentsPermalink





‘(i) in providing information to the Commission in accordance with subsection (a); orCommentsClose CommentsPermalink





‘(ii) in assisting in any investigation or judicial or administrative action of the Commission based upon or related to such information.CommentsClose CommentsPermalink





‘(B) ENFORCEMENT-CommentsClose CommentsPermalink





‘(i) CAUSE OF ACTION- An individual who alleges discharge or other discrimination in violation of subparagraph (A) may bring an action under this subsection in the appropriate district court of the United States for the relief provided in subparagraph (C).CommentsClose CommentsPermalink





‘(ii) SUBPOENAS- A subpoena requiring the attendance of a witness at a trial or hearing conducted under this section may be served at any place in the United States.CommentsClose CommentsPermalink





‘(iii) STATUTE OF LIMITATIONS-CommentsClose CommentsPermalink





‘(I) IN GENERAL- An action under this subsection may not be brought--CommentsClose CommentsPermalink

‘(aa) more than 6 years after the date on which the violation of subparagraph (A) occurred; orCommentsClose CommentsPermalink

‘(bb) more than 3 years after the date when facts material to the right of action are known or reasonably should have been known by the employee alleging a violation of subparagraph (A).CommentsClose CommentsPermalink

‘(II) REQUIRED ACTION WITHIN 10 YEARS- Notwithstanding subclause (I), an action under this subsection may not in any circumstance be brought more than 10 years after the date on which the violation occurs.CommentsClose CommentsPermalink





‘(C) RELIEF- Relief for an individual prevailing in an action brought under subparagraph (B) shall include--CommentsClose CommentsPermalink





‘(i) reinstatement with the same seniority status that the individual would have had, but for the discrimination;CommentsClose CommentsPermalink





‘(ii) 2 times the amount of back pay otherwise owed to the individual, with interest; andCommentsClose CommentsPermalink





‘(iii) compensation for litigation costs, expert witness fees, and reasonable attorneys’ fees.CommentsClose CommentsPermalink





‘(2) CONFIDENTIALITY-CommentsClose CommentsPermalink





‘(A) IN GENERAL- Unless and until required to be disclosed to a defendant or respondent in connection with a proceeding instituted by the Commission or any entity described in subparagraph (D), all information provided to the Commission by a whistleblower--CommentsClose CommentsPermalink





‘(i) in any proceeding in any Federal or State court or administrative agency--CommentsClose CommentsPermalink





‘(I) shall be confidential and privileged as an evidentiary matter; andCommentsClose CommentsPermalink





‘(II) shall not be subject to civil discovery or other legal process; andCommentsClose CommentsPermalink





‘(ii) shall not be subject to disclosure under section 552 of title 5, United States Code (commonly referred to as the Freedom of Information Act) or under any proceeding under that section.CommentsClose CommentsPermalink





‘(B) EXEMPTED STATUTE- For purposes of section 552 of title 5, United States Code, this paragraph shall be considered a statute described in subsection (b)(3)(B) of such section 552.CommentsClose CommentsPermalink





‘(C) RULE OF CONSTRUCTION- Nothing in this section is intended to limit, or shall be construed to limit, the ability of the Attorney General to present such evidence to a grand jury or to share such evidence with potential witnesses or defendants in the course of an ongoing criminal investigation.CommentsClose CommentsPermalink





‘(D) AVAILABILITY TO GOVERNMENT AGENCIES-CommentsClose CommentsPermalink





‘(i) IN GENERAL- Without the loss of its status as confidential and privileged in the hands of the Commission, all information referred to in subparagraph (A) may, in the discretion of the Commission, when determined by the Commission to be necessary to accomplish the purposes of this Act and to protect investors, be made available to--CommentsClose CommentsPermalink





‘(I) the Attorney General of the United States;CommentsClose CommentsPermalink





‘(II) an appropriate regulatory authority;CommentsClose CommentsPermalink





‘(III) a self-regulatory organization;CommentsClose CommentsPermalink





‘(IV) a State attorney general in connection with any criminal investigation;CommentsClose CommentsPermalink





‘(V) any appropriate State regulatory authority;CommentsClose CommentsPermalink





‘(VI) the Public Company Accounting Oversight Board;CommentsClose CommentsPermalink





‘(VII) a foreign securities authority; andCommentsClose CommentsPermalink





‘(VIII) a foreign law enforcement authority.CommentsClose CommentsPermalink





‘(ii) CONFIDENTIALITY-CommentsClose CommentsPermalink





‘(I) IN GENERAL- Each of the entities described in subclauses (I) through (VI) of clause (i) shall maintain such information as confidential and privileged, in accordance with the requirements established under subparagraph (A).CommentsClose CommentsPermalink





‘(II) FOREIGN AUTHORITIES- Each of the entities described in subclauses (VII) and (VIII) of clause (i) shall maintain such information in accordance with such assurances of confidentiality as the Commission determines appropriate.CommentsClose CommentsPermalink





‘(3) RIGHTS RETAINED- Nothing in this section shall be deemed to diminish the rights, privileges, or remedies of any whistleblower under any Federal or State law, or under any collective bargaining agreement.CommentsClose CommentsPermalink





‘(i) Provision of False Information- A whistleblower shall not be entitled to an award under this section if the whistleblower--CommentsClose CommentsPermalink





‘(1) knowingly and willfully makes any false, fictitious, or fraudulent statement or representation; orCommentsClose CommentsPermalink





‘(2) uses any false writing or document knowing the writing or document contains any false, fictitious, or fraudulent statement or entry.CommentsClose CommentsPermalink





‘(j) Rulemaking Authority- The Commission shall have the authority to issue such rules and regulations as may be necessary or appropriate to implement the provisions of this section consistent with the purposes of this section.’.CommentsClose CommentsPermalink

SEC. 923. CONFORMING AMENDMENTS FOR WHISTLEBLOWER PROTECTION.

(a) In General-CommentsClose CommentsPermalink





(1) SECURITIES ACT OF 1933- Section 20(d)(3)(A) of the Securities Act of 1933 (15 U.S.C. 77t(d)(3)(A)) is amended by inserting ‘and section 21F of the Securities Exchange Act of 1934’ after ‘the Sarbanes-Oxley Act of 2002’.CommentsClose CommentsPermalink





(2) INVESTMENT COMPANY ACT OF 1940- Section 42(e)(3)(A) of the Investment Company Act of 1940 (15 U.S.C. 80a-41(e)(3)(A)) is amended by inserting ‘and section 21F of the Securities Exchange Act of 1934’ after ‘the Sarbanes-Oxley Act of 2002’.CommentsClose CommentsPermalink





(3) INVESTMENT ADVISERS ACT OF 1940- Section 209(e)(3)(A) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-9(e)(3)(A)) is amended by inserting ‘and section 21F of the Securities Exchange Act of 1934’ after ‘the Sarbanes-Oxley Act of 2002’.CommentsClose CommentsPermalink





(b) Securities Exchange Act-CommentsClose CommentsPermalink





(1) SECTION 21- Section 21(d)(3)(C)(i) of the Securities Exchange Act of 1934 (15 U.S.C. 78u(d)(3)(C)(i)) is amended by inserting ‘and section 21F of this title’ after ‘the Sarbanes-Oxley Act of 2002’.CommentsClose CommentsPermalink





(2) SECTION 21A- Section 21A of the Securities Exchange Act of 1934 (15 U.S.C. 78u-1) is amended--CommentsClose CommentsPermalink





(A) in subsection (d)(1) by--CommentsClose CommentsPermalink





(i) striking ‘(subject to subsection (e))’; andCommentsClose CommentsPermalink





(ii) inserting ‘and section 21F of this title’ after ‘the Sarbanes-Oxley Act of 2002’;CommentsClose CommentsPermalink





(B) by striking subsection (e); andCommentsClose CommentsPermalink





(C) by redesignating subsections (f) and (g) as subsections (e) and (f), respectively.CommentsClose CommentsPermalink

SEC. 924. IMPLEMENTATION AND TRANSITION PROVISIONS FOR WHISTLEBLOWER PROTECTION.

(a) Implementing Rules- The Commission shall issue final regulations implementing the provisions of section 21F of the Securities Exchange Act of 1934, as added by this subtitle, not later than 270 days after the date of enactment of this Act.CommentsClose CommentsPermalink





(b) Original Information- Information provided to the Commission by a whistleblower in accordance with the regulations referenced in subsection (a) shall not lose the status of original information (as defined in section 21F(i)(1) of the Securities Exchange Act of 1934, as added by this subtitle) solely because the whistleblower provided the information prior to the effective date of the regulations, provided that the information is--CommentsClose CommentsPermalink





(1) provided by the whistleblower after the date of enactment of this subtitle, or monetary sanctions are collected after the date of enactment of this subtitle; orCommentsClose CommentsPermalink





(2) related to a violation for which an award under section 21F of the Securities Exchange Act of 1934, as added by this subtitle, could have been paid at the time the information was provided by the whistleblower.CommentsClose CommentsPermalink





(c) Awards- A whistleblower may receive an award pursuant to section 21F of the Securities Exchange Act of 1934, as added by this subtitle, regardless of whether any violation of a provision of the securities laws, or a rule or regulation thereunder, underlying the judicial or administrative action upon which the award is based, occurred prior to the date of enactment of this subtitle.CommentsClose CommentsPermalink

SEC. 925. COLLATERAL BARS.

(a) Securities Exchange Act of 1934-CommentsClose CommentsPermalink





(1) SECTION 15- Section 15(b)(6)(A) of the Securities Exchange Act of 1934 (15 U.S.C. 78o(b)(6)(A)) is amended by striking ‘12 months, or bar such person from being associated with a broker or dealer,’ and inserting ‘12 months, or bar any such person from being associated with a broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization,’.CommentsClose CommentsPermalink





(2) SECTION 15B- Section 15B(c)(4) of the Securities Exchange Act of 1934 (15 U.S.C. 78o-4(c)(4)) is amended by striking ‘twelve months or bar any such person from being associated with a municipal securities dealer,’ and inserting ‘12 months or bar any such person from being associated with a broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization,’.CommentsClose CommentsPermalink





(3) SECTION 17A- Section 17A(c)(4)(C) of the Securities Exchange Act of 1934 (15 U.S.C. 78q-1(c)(4)(C)) is amended by striking ‘twelve months or bar any such person from being associated with the transfer agent,’ and inserting ‘12 months or bar any such person from being associated with any transfer agent, broker, dealer, investment adviser, municipal securities dealer, municipal advisor, or nationally recognized statistical rating organization,’.CommentsClose CommentsPermalink





(b) Investment Advisers Act of 1940- Section 203(f) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-3(f)) is amended by striking ‘twelve months or bar any such person from being associated with an investment adviser,’ and inserting ‘12 months or bar any such person from being associated with an investment adviser, broker, dealer, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization,’.CommentsClose CommentsPermalink

SEC. 926. AUTHORITY OF STATE REGULATORS OVER REGULATION D OFFERINGS.

Section 18(b)(4) of the Securities Act of 1933 (15 U.S.C. 77r(b)(4)) is amended--CommentsClose CommentsPermalink





(1) by striking ‘A security’ and inserting ‘(A) IN GENERAL--A security’;CommentsClose CommentsPermalink





(2) by redesignating subparagraphs (A) through (D) as clauses (i) through (iv), respectively, and adjusting the margins accordingly; andCommentsClose CommentsPermalink





(3) by striking clause (iv), as so redesignated, and inserting the following:CommentsClose CommentsPermalink





‘(iv) Commission rules or regulations issued under section 4(2), except that the Commission may designate, by rule, a class of securities that it deems not to be covered securities because the offering of such securities is not of sufficient size or scope.CommentsClose CommentsPermalink





‘(v) Not later than 360 days after the date of enactment of the Restoring American Financial Stability Act of 2010, the Commission shall conduct a rulemaking to determine whether to designate a class of securities because the offering of such securities is not of sufficient size or scope.CommentsClose CommentsPermalink





‘(B) DESIGNATION OF NON-COVERED SECURITIES- In making a designation under subparagraph (A)(iv), the Commission shall consider--CommentsClose CommentsPermalink





‘(i) the size of the offering;CommentsClose CommentsPermalink





‘(ii) the number of States in which the security is being offered; andCommentsClose CommentsPermalink





‘(iii) the nature of the persons to whom the security is being offered.CommentsClose CommentsPermalink





‘(C) REVIEW OF FILINGS-CommentsClose CommentsPermalink





‘(i) IN GENERAL- The Commission shall review any filings made relating to any security issued under Commission rules or regulations under section 4(2), other than one designated as a non-covered security under subparagraph (A)(iv), not later than 120 days of the filing with the Commission.CommentsClose CommentsPermalink





‘(ii) FAILURE TO REVIEW WITHIN 120 DAYS- If the Commission fails to review a filing required under clause (i), the security shall no longer be a covered security, except that--CommentsClose CommentsPermalink





‘(I) the failure of the Commission to review a filing shall not result in the loss of status as a covered security if the Commission, not later than 120 days of the filing with the Commission, has determined that there has been a good faith and reasonable attempt by the issuer to comply with all applicable terms, conditions, and requirements of the filing; andCommentsClose CommentsPermalink





‘(II) upon review of the filing, if the Commission, not later than 120 days of the filing with the Commission, determines that any failure to comply with the applicable filing terms, conditions, and requirements is insignificant to the offering as a whole.CommentsClose CommentsPermalink





‘(D) EFFECT ON STATE FILING REQUIREMENTS-CommentsClose CommentsPermalink





‘(i) IN GENERAL- Nothing in subparagraph (A)(iv), (B), or (C) shall be construed to prohibit a State from imposing notice filing requirements that are substantially similar to filing requirements required by rule or regulation under section 4(4) that were in effect on September 1, 1996.CommentsClose CommentsPermalink





‘(ii) NOTIFICATION- Not later than 180 days after the date of enactment of the Restoring American Financial Stability Act of 2010, the Commission shall implement procedures, after consultation with the States, to promptly notify States upon completion of review of securities offerings described in subparagraph (A)(iv) by the Commission.CommentsClose CommentsPermalink





‘(E) OFFERINGS AFFECTED- The requirements of this section shall apply to offerings filed on or after the date of enactment of the Restoring Financial Stability Act of 2010.’.CommentsClose CommentsPermalink

SEC. 927. EQUAL TREATMENT OF SELF-REGULATORY ORGANIZATION RULES.

Section 29(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78cc(a)) is amended by striking ‘an exchange required thereby’ and inserting ‘a self-regulatory organization,’.CommentsClose CommentsPermalink

SEC. 928. CLARIFICATION THAT SECTION 205 OF THE INVESTMENT ADVISERS ACT OF 1940 DOES NOT APPLY TO STATE-REGISTERED ADVISERS.

Section 205(a) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-5(a)) is amended, in the matter preceding paragraph (1)--CommentsClose CommentsPermalink





(1) by striking ‘, unless exempt from registration pursuant to section 203(b),’ and inserting ‘registered or required to be registered with the Commission’;CommentsClose CommentsPermalink





(2) by striking ‘make use of the mails or any means or instrumentality of interstate commerce, directly or indirectly, to’; andCommentsClose CommentsPermalink





(3) by striking ‘to’ after ‘in any way’.CommentsClose CommentsPermalink

SEC. 929. UNLAWFUL MARGIN LENDING.

Section 7(c)(1)(A) of the Securities Exchange Act of 1934 (15 U.S.C. 78g(c)(1)(A)) is amended by striking ‘; and’ and inserting ‘; or’.CommentsClose CommentsPermalink

SEC. 929A. PROTECTION FOR EMPLOYEES OF SUBSIDIARIES AND AFFILIATES OF PUBLICLY TRADED COMPANIES.

Section 1514A of title 18, United States Code, is amended by inserting ‘including any subsidiary or affiliate whose financial information is included in the consolidated financial statements of such company’ after ‘the Securities Exchange Act of 1934 (15 U.S.C. 78o(d))’.CommentsClose CommentsPermalink

SEC. 929B. FAIR FUND AMENDMENTS.

Section 308 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7246(a)) is amended--CommentsClose CommentsPermalink





(1) by striking subsection (a) and inserting the following:CommentsClose CommentsPermalink





‘(a) Civil Penalties To Be Used for the Relief of Victims- If, in any judicial or administrative action brought by the Commission under the securities laws, the Commission obtains a civil penalty against any person for a violation of such laws, or such person agrees, in settlement of any such action, to such civil penalty, the amount of such civil penalty shall, on the motion or at the direction of the Commission, be added to and become part of a disgorgement fund or other fund established for the benefit of the victims of such violation.’;CommentsClose CommentsPermalink





(2) in subsection (b)--CommentsClose CommentsPermalink





(A) by striking ‘for a disgorgement fund described in subsection (a)’ and inserting ‘for a disgorgement fund or other fund described in subsection (a)’; andCommentsClose CommentsPermalink





(B) by striking ‘in the disgorgement fund’ and inserting ‘in such fund’; andCommentsClose CommentsPermalink





(3) by striking subsection (e).CommentsClose CommentsPermalink

SEC. 929C. INCREASING THE BORROWING LIMIT ON TREASURY LOANS.

Section 4(h) of the Securities Investor Protection Act of 1970 (15 U.S.C. 78ddd(h)) is amended in the first sentence, by striking ‘$1,000,000,000’ and inserting ‘$2,500,000,000’.CommentsClose CommentsPermalink

Subtitle C--Improvements to the Regulation of Credit Rating AgenciesCommentsClose CommentsPermalink

SEC. 931. FINDINGS.

Congress finds the following:CommentsClose CommentsPermalink





(1) Because of the systemic importance of credit ratings and the reliance placed on credit ratings by individual and institutional investors and financial regulators, the activities and performances of credit rating agencies, including nationally recognized statistical rating organizations, are matters of national public interest, as credit rating agencies are central to capital formation, investor confidence, and the efficient performance of the United States economy.CommentsClose CommentsPermalink





(2) Credit rating agencies, including nationally recognized statistical rating organizations, play a critical ‘gatekeeper’ role in the debt market that is functionally similar to that of securities analysts, who evaluate the quality of securities in the equity market, and auditors, who review the financial statements of firms. Such role justifies a similar level of public oversight and accountability.CommentsClose CommentsPermalink





(3) Because credit rating agencies perform evaluative and analytical services on behalf of clients, much as other financial ‘gatekeepers’ do, the activities of credit rating agencies are fundamentally commercial in character and should be subject to the same standards of liability and oversight as apply to auditors, securities analysts, and investment bankers.CommentsClose CommentsPermalink





(4) In certain activities, particularly in advising arrangers of structured financial products on potential ratings of such products, credit rating agencies face conflicts of interest that need to be carefully monitored and that therefore should be addressed explicitly in legislation in order to give clearer authority to the Securities and Exchange Commission.CommentsClose CommentsPermalink





(5) In the recent financial crisis, the ratings on structured financial products have proven to be inaccurate. This inaccuracy contributed significantly to the mismanagement of risks by financial institutions and investors, which in turn adversely impacted the health of the economy in the United States and around the world. Such inaccuracy necessitates increased accountability on the part of credit rating agencies.CommentsClose CommentsPermalink

SEC. 932. ENHANCED REGULATION, ACCOUNTABILITY, AND TRANSPARENCY OF NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATIONS.

Section 15E of the Securities Exchange Act of 1934 (15 U.S.C. 78o-7) is amended--CommentsClose CommentsPermalink





(1) in subsection (c)--CommentsClose CommentsPermalink





(A) in paragraph (2)--CommentsClose CommentsPermalink





(i) in the second sentence, by inserting ‘any other provision of this section, or’ after ‘Notwithstanding’; andCommentsClose CommentsPermalink





(ii) by inserting after the period at the end the following: ‘Nothing in this paragraph may be construed to afford a defense against any action or proceeding brought by the Commission to enforce the antifraud provisions of the securities laws.’; andCommentsClose CommentsPermalink





(B) by adding at the end the following:CommentsClose CommentsPermalink





‘(3) INTERNAL CONTROLS OVER PROCESSES FOR DETERMINING CREDIT RATINGS-CommentsClose CommentsPermalink





‘(A) IN GENERAL- Each nationally recognized statistical rating organization shall establish, maintain, enforce, and document an effective internal control structure governing the implementation of and adherence to policies, procedures, and methodologies for determining credit ratings, taking into consideration such factors as the Commission may prescribe, by rule.CommentsClose CommentsPermalink





‘(B) ATTESTATION REQUIREMENT- The Commission shall prescribe rules requiring each nationally recognized statistical rating organization to submit to the Commission an annual internal controls report, which shall contain--CommentsClose CommentsPermalink





‘(i) a description of the responsibility of the management of the nationally recognized statistical rating organization in establishing and maintaining an effective internal control structure under subparagraph (A);CommentsClose CommentsPermalink





‘(ii) an assessment of the effectiveness of the internal control structure of the nationally recognized statistical rating organization; andCommentsClose CommentsPermalink





‘(iii) the attestation of the chief executive officer, or equivalent individual, of the nationally recognized statistical rating organization.’;CommentsClose CommentsPermalink





(2) in subsection (d)--CommentsClose CommentsPermalink





(A) in the subsection heading, by inserting ‘Fine,’ after ‘Censure,’;CommentsClose CommentsPermalink





(B) by inserting ‘fine,’ after ‘censure,’ each place that term appears;CommentsClose CommentsPermalink





(C) in paragraph (2), by redesignating subparagraphs (A) and (B) as clauses (i) and (ii), respectively, and adjusting the clause margins accordingly;CommentsClose CommentsPermalink





(D) by redesignating paragraphs (1) through (5) as subparagraphs (A) through (E), respectively, and adjusting the subparagraph margins accordingly;CommentsClose CommentsPermalink





(E) in the matter preceding subparagraph (A), as so redesignated, by striking ‘The Commission’ and inserting the following:CommentsClose CommentsPermalink





‘(1) IN GENERAL- The Commission’;CommentsClose CommentsPermalink





(F) in subparagraph (D), as so redesignated, by striking ‘or’ at the end;CommentsClose CommentsPermalink





(G) in subparagraph (E), as so redesignated, by striking the period at the end and inserting a semicolon; andCommentsClose CommentsPermalink





(H) by adding at the end the following:CommentsClose CommentsPermalink





‘(F) has failed reasonably to supervise, with a view to preventing a violation of the securities laws, an individual who commits such a violation, if the individual is subject to the supervision of that person.CommentsClose CommentsPermalink





‘(2) SUSPENSION OR REVOCATION FOR PARTICULAR CLASS OF SECURITIES-CommentsClose CommentsPermalink





‘(A) IN GENERAL- The Commission may temporarily suspend or permanently revoke the registration of a nationally recognized statistical rating organization with respect to a particular class or subclass of securities, if the Commission finds, on the record after notice and opportunity for hearing, that the nationally recognized statistical rating organization does not have adequate financial and managerial resources to consistently produce credit ratings with integrity.CommentsClose CommentsPermalink





‘(B) CONSIDERATIONS- In making any determination under subparagraph (A), the Commission shall consider--CommentsClose CommentsPermalink





‘(i) whether the nationally recognized statistical rating organization has failed over a sustained period of time, as determined by the Commission, to produce ratings that are accurate for that class or subclass of securities; andCommentsClose CommentsPermalink





‘(ii) such other factors as the Commission may determine.’;CommentsClose CommentsPermalink





(3) in subsection (h), by adding at the end the following:CommentsClose CommentsPermalink





‘(3) SEPARATION OF RATINGS FROM SALES AND MARKETING-CommentsClose CommentsPermalink





‘(A) RULES REQUIRED- The Commission shall issue rules to prevent the sales and marketing considerations of a nationally recognized statistical rating organization from influencing the production of ratings by the nationally recognized statistical rating organization.CommentsClose CommentsPermalink





‘(B) CONTENTS OF RULES- The rules issued under subparagraph (A) shall provide for--CommentsClose CommentsPermalink





‘(i) exceptions for small nationally recognized statistical rating organizations with respect to which the Commission determines that the separation of the production of ratings and sales and marketing activities is not appropriate; andCommentsClose CommentsPermalink





‘(ii) suspension or revocation of the registration of a nationally recognized statistical rating organization, if the Commission finds, on the record, after notice and opportunity for a hearing, that--CommentsClose CommentsPermalink





‘(I) the nationally recognized statistical rating organization has committed a violation of a rule issued under this subsection; andCommentsClose CommentsPermalink





‘(II) the violation of a rule issued under this subsection affected a rating.’;CommentsClose CommentsPermalink





(4) in subsection (j)--CommentsClose CommentsPermalink





(A) by striking ‘Each’ and inserting the following:CommentsClose CommentsPermalink





‘(1) IN GENERAL- Each’; andCommentsClose CommentsPermalink





(B) by adding at the end the following:CommentsClose CommentsPermalink





‘(2) LIMITATIONS-CommentsClose CommentsPermalink





‘(A) IN GENERAL- Except as provided in subparagraph (B), an individual designated under paragraph (1) may not, while serving in the designated capacity--CommentsClose CommentsPermalink





‘(i) perform credit ratings;CommentsClose CommentsPermalink





‘(ii) participate in the development of ratings methodologies or models;CommentsClose CommentsPermalink





‘(iii) perform marketing or sales functions; orCommentsClose CommentsPermalink





‘(iv) participate in establishing compensation levels, other than for employees working for that individual.CommentsClose CommentsPermalink





‘(B) EXCEPTION- The Commission may exempt a small nationally recognized statistical rating organization from the limitations under this paragraph, if the Commission finds that compliance with such limitations would impose an unreasonable burden on the nationally recognized statistical rating organization.CommentsClose CommentsPermalink





‘(3) OTHER DUTIES- Each individual designated under paragraph (1) shall establish procedures for the receipt, retention, and treatment of--CommentsClose CommentsPermalink





‘(A) complaints regarding credit ratings, models, methodologies, and compliance with the securities laws and the policies and procedures developed under this section; andCommentsClose CommentsPermalink





‘(B) confidential, anonymous complaints by employees or users of credit ratings.CommentsClose CommentsPermalink





‘(4) ANNUAL REPORTS REQUIRED-CommentsClose CommentsPermalink





‘(A) ANNUAL REPORTS REQUIRED- Each individual designated under paragraph (1) shall submit to the nationally recognized statistical rating organization an annual report on the compliance of the nationally recognized statistical rating organization with the securities laws and the policies and procedures of the nationally recognized statistical rating organization that includes--CommentsClose CommentsPermalink





‘(i) a description of any material changes to the code of ethics and conflict of interest policies of the nationally recognized statistical rating organization; andCommentsClose CommentsPermalink





‘(ii) a certification that the report is accurate and complete.CommentsClose CommentsPermalink





‘(B) SUBMISSION OF REPORTS TO THE COMMISSION- Each nationally recognized statistical rating organization shall file the reports required under subparagraph (A) together with the financial report that is required to be submitted to the Commission under this section.’; andCommentsClose CommentsPermalink





(5) by striking subsection (p) and inserting the following:CommentsClose CommentsPermalink





‘(p) Regulation of Nationally Recognized Statistical Rating Organizations-CommentsClose CommentsPermalink





‘(1) ESTABLISHMENT OF OFFICE OF CREDIT RATINGS-CommentsClose CommentsPermalink





‘(A) OFFICE ESTABLISHED- The Commission shall establish within the Commission an Office of Credit Ratings (referred to in this subsection as the ‘Office’) to administer the rules of the Commission--CommentsClose CommentsPermalink





‘(i) with respect to the practices of nationally recognized statistical rating organizations in determining ratings, for the protection of users of credit ratings and in the public interest;CommentsClose CommentsPermalink





‘(ii) to promote accuracy in credit ratings issued by nationally recognized statistical rating organizations; andCommentsClose CommentsPermalink





‘(iii) to ensure that such ratings are not unduly influenced by conflicts of interest.CommentsClose CommentsPermalink





‘(B) DIRECTOR OF THE OFFICE- The head of the Office shall be the Director, who shall report to the Chairman.CommentsClose CommentsPermalink





‘(2) STAFFING- The Office established under this subsection shall be staffed sufficiently to carry out fully the requirements of this section. The staff shall include persons with knowledge of and expertise in corporate, municipal, and structured debt finance.CommentsClose CommentsPermalink





‘(3) COMMISSION EXAMINATIONS-CommentsClose CommentsPermalink





‘(A) ANNUAL EXAMINATIONS REQUIRED- The Office shall conduct an examination of each nationally recognized statistical rating organization at least annually.CommentsClose CommentsPermalink





‘(B) CONDUCT OF EXAMINATIONS- Each examination under subparagraph (A) shall include a review of--CommentsClose CommentsPermalink





‘(i) whether the nationally recognized statistical rating organization conducts business in accordance with the policies, procedures, and rating methodologies of the nationally recognized statistical rating organization;CommentsClose CommentsPermalink





‘(ii) the management of conflicts of interest by the nationally recognized statistical rating organization;CommentsClose CommentsPermalink





‘(iii) implementation of ethics policies by the nationally recognized statistical rating organization;CommentsClose CommentsPermalink





‘(iv) the internal supervisory controls of the nationally recognized statistical rating organization;CommentsClose CommentsPermalink





‘(v) the governance of the nationally recognized statistical rating organization;CommentsClose CommentsPermalink





‘(vi) the activities of the individual designated by the nationally recognized statistical rating organization under subsection (j)(1);CommentsClose CommentsPermalink





‘(vii) the processing of complaints by the nationally recognized statistical rating organization; andCommentsClose CommentsPermalink





‘(viii) the policies of the nationally recognized statistical rating organization governing the post-employment activities of former staff of the nationally recognized statistical rating organization.CommentsClose CommentsPermalink





‘(C) INSPECTION REPORTS- The Commission shall make available to the public, in an easily understandable format, an annual report summarizing--CommentsClose CommentsPermalink





‘(i) the essential findings of all examinations conducted under subparagraph (A), as deemed appropriate by the Commission;CommentsClose CommentsPermalink





‘(ii) the responses by the nationally recognized statistical rating organizations to any material regulatory deficiencies identified by the Commission under clause (i); andCommentsClose CommentsPermalink





‘(iii) whether the nationally recognized statistical rating organizations have appropriately addressed the recommendations of the Commission contained in previous reports under this subparagraph.CommentsClose CommentsPermalink





‘(4) RULEMAKING AUTHORITY- The Commission shall--CommentsClose CommentsPermalink





‘(A) establish, by rule, fines, and other penalties applicable to any nationally recognized statistical rating organization that violates the requirements of this subsection and the rules thereunder; andCommentsClose CommentsPermalink





‘(B) issue such rules as may be necessary to carry out this subsection.CommentsClose CommentsPermalink





‘(q) Transparency of Ratings Performance-CommentsClose CommentsPermalink





‘(1) RULEMAKING REQUIRED- The Commission shall, by rule, require that each nationally recognized statistical rating organization publicly disclose information on the initial credit ratings determined by the nationally recognized statistical rating organization for each type of obligor, security, and money market instrument, and any subsequent changes to such credit ratings, for the purpose of allowing users of credit ratings to evaluate the accuracy of ratings and compare the performance of ratings by different nationally recognized statistical rating organizations.CommentsClose CommentsPermalink





‘(2) CONTENT- The rules of the Commission under this subsection shall require, at a minimum, disclosures that--CommentsClose CommentsPermalink





‘(A) are comparable among nationally recognized statistical rating organizations, to allow users of credit ratings to compare the performance of credit ratings across nationally recognized statistical rating organizations;CommentsClose CommentsPermalink





‘(B) are clear and informative for investors who use or might use credit ratings;CommentsClose CommentsPermalink





‘(C) include performance information over a range of years and for a variety of types of credit ratings, including for credit ratings withdrawn by the nationally recognized statistical rating organization;CommentsClose CommentsPermalink





‘(D) are published and made freely available by the nationally recognized statistical rating organization, on an easily accessible portion of its website, and in writing, when requested; andCommentsClose CommentsPermalink





‘(E) are appropriate to the business model of a nationally recognized statistical rating organization.CommentsClose CommentsPermalink





‘(r) Credit Ratings Methodologies- The Commission shall prescribe rules, for the protection of investors and in the public interest, with respect to the procedures and methodologies, including qualitative and quantitative data and models, used by nationally recognized statistical rating organizations that require each nationally recognized statistical rating organization--CommentsClose CommentsPermalink





‘(1) to ensure that credit ratings are determined using procedures and methodologies, including qualitative and quantitative data and models, that are--CommentsClose CommentsPermalink





‘(A) approved by the board of the nationally recognized statistical rating organization, a body performing a function similar to that of a board, or the senior credit officer of the nationally recognized statistical rating organization; andCommentsClose CommentsPermalink





‘(B) in accordance with the policies and procedures of the nationally recognized statistical rating organization for the development and modification of credit rating procedures and methodologies;CommentsClose CommentsPermalink





‘(2) to ensure that when material changes to credit rating procedures and methodologies (including changes to qualitative and quantitative data and models) are made, that--CommentsClose CommentsPermalink





‘(A) the changes are applied consistently to all credit ratings to which the changed procedures and methodologies apply;CommentsClose CommentsPermalink





‘(B) to the extent that changes are made to credit rating surveillance procedures and methodologies, the changes are applied to then-current credit ratings by the nationally recognized statistical rating organization within a reasonable time period determined by the Commission, by rule; andCommentsClose CommentsPermalink





‘(C) the nationally recognized statistical rating organization publicly discloses the reason for the change; andCommentsClose CommentsPermalink





‘(3) to notify users of credit ratings--CommentsClose CommentsPermalink





‘(A) of the version of a procedure or methodology, including the qualitative methodology or quantitative inputs, used with respect to a particular credit rating;CommentsClose CommentsPermalink





‘(B) when a material change is made to a procedure or methodology, including to a qualitative model or quantitative inputs;CommentsClose CommentsPermalink





‘(C) when a significant error is identified in a procedure or methodology, including a qualitative or quantitative model, that may result in credit rating actions; andCommentsClose CommentsPermalink





‘(D) of the likelihood of a material change described in subparagraph (B) resulting in a change in current credit ratings.CommentsClose CommentsPermalink





‘(s) Transparency of Credit Rating Methodologies and Information Reviewed-CommentsClose CommentsPermalink





‘(1) FORM FOR DISCLOSURES- The Commission shall require, by rule, each nationally recognized statistical rating organization to prescribe a form to accompany the publication of each credit rating that discloses--CommentsClose CommentsPermalink





‘(A) information relating to--CommentsClose CommentsPermalink





‘(i) the assumptions underlying the credit rating procedures and methodologies;CommentsClose CommentsPermalink





‘(ii) the data that was relied on to determine the credit rating; andCommentsClose CommentsPermalink





‘(iii) if applicable, how the nationally recognized statistical rating organization used servicer or remittance reports, and with what frequency, to conduct surveillance of the credit rating; andCommentsClose CommentsPermalink





‘(B) information that can be used by investors and other users of credit ratings to better understand credit ratings in each class of credit rating issued by the nationally recognized statistical rating organization.CommentsClose CommentsPermalink





‘(2) FORMAT- The form developed under paragraph (1) shall--CommentsClose CommentsPermalink





‘(A) be easy to use and helpful for users of credit ratings to understand the information contained in the report;CommentsClose CommentsPermalink





‘(B) require the nationally recognized statistical rating organization to provide the content described in paragraph (3)(B) in a manner that is directly comparable across types of securities; andCommentsClose CommentsPermalink





‘(C) be made readily available to users of credit ratings, in electronic or paper form, as the Commission may, by rule, determine.CommentsClose CommentsPermalink





‘(3) CONTENT OF FORM-CommentsClose CommentsPermalink





‘(A) QUALITATIVE CONTENT- Each nationally recognized statistical rating organization shall disclose on the form developed under paragraph (1)--CommentsClose CommentsPermalink





‘(i) the credit ratings produced by the nationally recognized statistical rating organization;CommentsClose CommentsPermalink





‘(ii) the main assumptions and principles used in constructing procedures and methodologies, including qualitative methodologies and quantitative inputs and assumptions about the correlation of defaults across obligors used in rating structured products;CommentsClose CommentsPermalink





‘(iii) the potential limitations of the credit ratings, and the types of risks excluded from the credit ratings that the nationally recognized statistical rating organization does not comment on, including liquidity, market, and other risks;CommentsClose CommentsPermalink





‘(iv) information on the uncertainty of the credit rating, including--CommentsClose CommentsPermalink





‘(I) information on the reliability, accuracy, and quality of the data relied on in determining the credit rating; andCommentsClose CommentsPermalink





‘(II) a statement relating to the extent to which data essential to the determination of the credit rating were reliable or limited, including--CommentsClose CommentsPermalink

‘(aa) any limits on the scope of historical data; andCommentsClose CommentsPermalink

‘(bb) any limits in accessibility to certain documents or other types of information that would have better informed the credit rating;CommentsClose CommentsPermalink

‘(v) whether and to what extent third party due diligence services have been used by the nationally recognized statistical rating organization, a description of the information that such third party reviewed in conducting due diligence services, and a description of the findings or conclusions of such third party;CommentsClose CommentsPermalink





‘(vi) a description of the data about any obligor, issuer, security, or money market instrument that were relied upon for the purpose of determining the credit rating;CommentsClose CommentsPermalink





‘(vii) a statement containing an overall assessment of the quality of information available and considered in producing a rating for an obligor, security, or money market instrument, in relation to the quality of information available to the nationally recognized statistical rating organization in rating similar issuances;CommentsClose CommentsPermalink





‘(viii) information relating to conflicts of interest of the nationally recognized statistical rating organization; andCommentsClose CommentsPermalink





‘(ix) such additional information as the Commission may require.CommentsClose CommentsPermalink





‘(B) QUANTITATIVE CONTENT- Each nationally recognized statistical rating organization shall disclose on the form developed under this subsection--CommentsClose CommentsPermalink





‘(i) an explanation or measure of the potential volatility of the credit rating, including--CommentsClose CommentsPermalink





‘(I) any factors that might lead to a change in the credit ratings; andCommentsClose CommentsPermalink





‘(II) the magnitude of the change that a user can expect under different market conditions;CommentsClose CommentsPermalink





‘(ii) information on the content of the rating, including--CommentsClose CommentsPermalink





‘(I) the historical performance of the rating; andCommentsClose CommentsPermalink





‘(II) the expected probability of default and the expected loss in the event of default;CommentsClose CommentsPermalink





‘(iii) information on the sensitivity of the rating to assumptions made by the nationally recognized statistical rating organization; andCommentsClose CommentsPermalink





‘(iv) such additional information as may be required by the Commission.CommentsClose CommentsPermalink





‘(4) DUE DILIGENCE SERVICES FOR ASSET-BACKED SECURITIES-CommentsClose CommentsPermalink





‘(A) FINDINGS- The issuer or underwriter of any asset-backed security shall make publicly available the findings and conclusions of any third-party due diligence report obtained by the issuer or underwriter.CommentsClose CommentsPermalink





‘(B) CERTIFICATION REQUIRED- In any case in which third-party due diligence services are employed by a nationally recognized statistical rating organization, an issuer, or an underwriter, the person providing the due diligence services shall provide to any nationally recognized statistical rating organization that produces a rating to which such services relate, written certification, as provided in subparagraph (C).CommentsClose CommentsPermalink





‘(C) FORMAT AND CONTENT- The Commission shall establish the appropriate format and content for the written certifications required under subparagraph (B), to ensure that providers of due diligence services have conducted a thorough review of data, documentation, and other relevant information necessary for a nationally recognized statistical rating organization to provide an accurate rating.CommentsClose CommentsPermalink





‘(D) DISCLOSURE OF CERTIFICATION- The Commission shall adopt rules requiring a nationally recognized statistical rating organization, at the time at which the nationally recognized statistical rating organization produces a rating, to disclose the certification described in subparagraph (B) to the public in a manner that allows the public to determine the adequacy and level of due diligence services provided by a third party.CommentsClose CommentsPermalink





‘(t) Corporate Governance, Organization, and Management of Conflicts of Interest-CommentsClose CommentsPermalink





‘(1) BOARD OF DIRECTORS- Each nationally recognized statistical rating organization shall have a board of directors.CommentsClose CommentsPermalink





‘(2) INDEPENDENT DIRECTORS-CommentsClose CommentsPermalink





‘(A) IN GENERAL- At least 1/2 of the board of directors, but not fewer than 2 of the members thereof, shall be independent of the nationally recognized statistical rating agency. A portion of the independent directors shall include users of ratings from a nationally recognized statistical rating organization.CommentsClose CommentsPermalink





‘(B) INDEPENDENCE DETERMINATION- In order to be considered independent for purposes of this subsection, a member of the board of directors of a nationally recognized statistical rating organization--CommentsClose CommentsPermalink





‘(i) may not, other than in his or her capacity as a member of the board of directors or any committee thereof--CommentsClose CommentsPermalink





‘(I) accept any consulting, advisory, or other compensatory fee from the nationally recognized statistical rating organization; orCommentsClose CommentsPermalink





‘(II) be a person associated with the nationally recognized statistical rating organization or with any affiliated company thereof; andCommentsClose CommentsPermalink





‘(ii) shall be disqualified from any deliberation involving a specific rating in which the independent board member has a financial interest in the outcome of the rating.CommentsClose CommentsPermalink





‘(C) COMPENSATION AND TERM- The compensation of the independent members of the board of directors of a nationally recognized statistical rating organization shall not be linked to the business performance of the nationally recognized statistical rating organization, and shall be arranged so as to ensure the independence of their judgment. The term of office of the independent directors shall be for a pre-agreed fixed period, not to exceed 5 years, and shall not be renewable.CommentsClose CommentsPermalink





‘(3) DUTIES OF BOARD OF DIRECTORS- In addition to the overall responsibilities of the board of directors, the board shall oversee--CommentsClose CommentsPermalink





‘(A) the establishment, maintenance, and enforcement of policies and procedures for determining credit ratings;CommentsClose CommentsPermalink





‘(B) the establishment, maintenance, and enforcement of policies and procedures to address, manage, and disclose any conflicts of interest;CommentsClose CommentsPermalink





‘(C) the effectiveness of the internal control system with respect to policies and procedures for determining credit ratings; andCommentsClose CommentsPermalink





‘(D) the compensation and promotion policies and practices of the nationally recognized statistical rating organization.CommentsClose CommentsPermalink





‘(4) TREATMENT OF NRSRO SUBSIDIARIES- If a nationally recognized statistical rating organization is a subsidiary of a parent entity, the board of the directors of the parent entity may satisfy the requirements of this subsection by assigning to a committee of such board of directors the duties under paragraph (3), if--CommentsClose CommentsPermalink





‘(A) at least 1/2 of the members of the committee (including the chairperson of the committee) are independent, as defined in this section; andCommentsClose CommentsPermalink





‘(B) at least 1 member of the committee is a user of ratings from a nationally recognized statistical rating organization.CommentsClose CommentsPermalink





‘(5) EXCEPTION AUTHORITY- If the Commission finds that compliance with the provisions of this subsection present an unreasonable burden on a small nationally recognized statistical rating organization, the Commission may permit the nationally recognized statistical rating organization to delegate such responsibilities to a committee that includes at least one individual who is a user of ratings of a nationally recognized statistical rating organization.’.CommentsClose CommentsPermalink

SEC. 933. STATE OF MIND IN PRIVATE ACTIONS.

(a) Accountability- Section 15E(m) of the Securities Exchange Act of 1934 (15 U.S.C. 78o-7(m)) is amended to read as follows:CommentsClose CommentsPermalink





‘(m) Accountability-CommentsClose CommentsPermalink





‘(1) IN GENERAL- The enforcement and penalty provisions of this title shall apply to statements made by a credit rating agency in the same manner and to the same extent as such provisions apply to statements made by a registered public accounting firm or a securities analyst under the securities laws, and such statements shall not be deemed forward-looking statements for the purposes of section 21E.CommentsClose CommentsPermalink





‘(2) RULEMAKING- The Commission shall issue such rules as may be necessary to carry out this subsection.’.CommentsClose CommentsPermalink





(b) State of Mind- Section 21D(b)(2) of the Securities Exchange Act of 1934 (15 U.S.C. 78u-4(b)(2)) is amended--CommentsClose CommentsPermalink





(1) by striking ‘In any’ and inserting the following:CommentsClose CommentsPermalink





‘(A) IN GENERAL- Except as provided in subparagraph (B), in any’; andCommentsClose CommentsPermalink





(2) by adding at the end the following:CommentsClose CommentsPermalink





‘(B) EXCEPTION- In the case of an action for money damages brought against a credit rating agency or a controlling person under this title, it shall be sufficient, for purposes of pleading any required state of mind in relation to such action, that the complaint state with particularity facts giving rise to a strong inference that the credit rating agency knowingly or recklessly failed--CommentsClose CommentsPermalink





‘(i) to conduct a reasonable investigation of the rated security with respect to the factual elements relied upon by its own methodology for evaluating credit risk; orCommentsClose CommentsPermalink





‘(ii) to obtain reasonable verification of such factual elements (which verification may be based on a sampling technique that does not amount to an audit) from other sources that the credit rating agency considered to be competent and that were independent of the issuer and underwriter.’.CommentsClose CommentsPermalink

SEC. 934. REFERRING TIPS TO LAW ENFORCEMENT OR REGULATORY AUTHORITIES.

Section 15E of the Securities Exchange Act of 1934 (15 U.S.C. 78o-7), as amended by this subtitle, is amended by adding at the end the following:CommentsClose CommentsPermalink





‘(u) Duty To Report Tips Alleging Material Violations of Law-CommentsClose CommentsPermalink





‘(1) DUTY TO REPORT- Each nationally recognized statistical rating organization shall refer to the appropriate law enforcement or regulatory authorities any information that the nationally recognized statistical rating organization receives from a third party and finds credible that alleges that an issuer of securities rated by the nationally recognized statistical rating organization has committed or is committing a material violation of law that has not been adjudicated by a Federal or State court.CommentsClose CommentsPermalink





‘(2) RULE OF CONSTRUCTION- Nothing in paragraph (1) may be construed to require a nationally recognized statistical rating organization to verify the accuracy of the information described in paragraph (1).’.CommentsClose CommentsPermalink

SEC. 935. CONSIDERATION OF INFORMATION FROM SOURCES OTHER THAN THE ISSUER IN RATING DECISIONS.

Section 15E of the Securities Exchange Act of 1934 (15 U.S.C. 78o-7), as amended by this subtitle, is amended by adding at the end the following:CommentsClose CommentsPermalink





‘(v) Information From Sources Other Than the Issuer- In producing a credit rating, a nationally recognized statistical rating organization shall consider information about an issuer that the nationally recognized statistical rating organization has, or receives from a source other than the issuer, that the nationally recognized statistical rating organization finds credible and potentially significant to a rating decision.’.CommentsClose CommentsPermalink

SEC. 936. QUALIFICATION STANDARDS FOR CREDIT RATING ANALYSTS.

Not later than 1 year after the date of enactment of this Act, the Commission shall issue rules that are reasonably designed to ensure that any person employed by a nationally recognized statistical rating organization to perform credit ratings--CommentsClose CommentsPermalink





(1) meets standards of training, experience, and competence necessary to produce accurate ratings for the categories of issuers whose securities the person rates; andCommentsClose CommentsPermalink





(2) is tested for knowledge of the credit rating process.CommentsClose CommentsPermalink

SEC. 937. TIMING OF REGULATIONS.

Unless otherwise specifically provided in this subtitle, the Commission shall issue final regulations, as required by this subtitle and the amendments made by this subtitle, not later than 1 year after the date of enactment of this Act.CommentsClose CommentsPermalink

SEC. 938. UNIVERSAL RATINGS SYMBOLS.

(a) Rulemaking- The Commission shall require, by rule, each nationally recognized statistical rating organization to establish, maintain, and enforce written policies and procedures that--CommentsClose CommentsPermalink





(1) assess the probability that an issuer of a security or money market instrument will default, fail to make timely payments, or otherwise not make payments to investors in accordance with the terms of the security or money market instrument;CommentsClose CommentsPermalink





(2) clearly define and disclose the meaning of any symbol used by the nationally recognized statistical rating organization to denote a credit rating; andCommentsClose CommentsPermalink





(3) apply any symbol described in paragraph (2) in a manner that is consistent for all types of securities and money market instruments for which the symbol is used.CommentsClose CommentsPermalink





(b) Rule of Construction- Nothing in this section shall prohibit a nationally recognized statistical rating organization from using distinct sets of symbols to denote credit ratings for different types of securities or money market instruments.CommentsClose CommentsPermalink

SEC. 939. GOVERNMENT ACCOUNTABILITY OFFICE STUDY AND FEDERAL AGENCY REVIEW OF REQUIRED USES OF NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATION RATINGS.

(a) Study- The Comptroller General of the United States shall conduct a study of the scope of provisions of Federal and State laws and regulations with respect to the regulation of securities markets, banking, insurance, and other areas that require the use of ratings issued by nationally recognized statistical rating organizations (in this section referred to as the ‘ratings requirements’).CommentsClose CommentsPermalink





(b) Subjects for Evaluation; Process of Evaluation-CommentsClose CommentsPermalink





(1) SUBJECTS FOR EVALUATION- In conducting the study under subsection (a), the Comptroller General of the United States shall evaluate--CommentsClose CommentsPermalink





(A) the necessity for and purpose of ratings requirements;CommentsClose CommentsPermalink





(B) which ratings requirements, if any, could be removed with minimal disruption to the financial markets;CommentsClose CommentsPermalink





(C) the potential impact on the financial markets and on investors if the ratings requirements identified under subparagraph (B) were rescinded; andCommentsClose CommentsPermalink





(D) whether the financial markets and investors would benefit from the rescission of such ratings requirements.CommentsClose CommentsPermalink





(2) PROCESS OF EVALUATION- In conducting the study under subsection (a), the Comptroller General of the United States shall research and take into consideration the views of--CommentsClose CommentsPermalink





(A) the Federal financial regulatory agencies;CommentsClose CommentsPermalink





(B) hedge funds;CommentsClose CommentsPermalink





(C) banks;CommentsClose CommentsPermalink





(D) brokerage firms;CommentsClose CommentsPermalink





(E) mutual funds;CommentsClose CommentsPermalink





(F) pension funds; andCommentsClose CommentsPermalink





(G) all other interested parties.CommentsClose CommentsPermalink





(c) Report and Recommendations- Not later than 2 years after the date of enactment of this Act, the Comptroller General of the United States shall submit to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives a report on the results of the study conducted under subsection (a), including recommendations, if any, on--CommentsClose CommentsPermalink





(1) which ratings requirements, if any, could be removed with minimal disruption to the markets; andCommentsClose CommentsPermalink





(2) whether the financial markets and investors would benefit from the rescission of the ratings requirements identified under paragraph (1).CommentsClose CommentsPermalink





(d) Federal Agency Review of Ratings Requirements-CommentsClose CommentsPermalink





(1) REVIEW- Each covered Federal agency shall review--CommentsClose CommentsPermalink





(A) any regulation of the covered Federal agency that requires the use of an assessment of the credit worthiness of a security or money market instrument;CommentsClose CommentsPermalink





(B) any other reference to credit ratings or requirement relating to credit ratings in a regulation of the covered Federal agency; andCommentsClose CommentsPermalink





(C) alternative standards of creditworthiness that are based on market-generated indicators, including yield spreads, bond prices, and credit default swap spreads.CommentsClose CommentsPermalink





(2) MODIFICATIONS REQUIRED- Except as provided in paragraph (3), each covered Federal agency shall modify any regulation identified under paragraph (1)--CommentsClose CommentsPermalink





(A) to remove any reference to credit ratings or a credit ratings requirement in the regulation; andCommentsClose CommentsPermalink





(B) to amend the regulation to require the use of a standard of credit worthiness that--CommentsClose CommentsPermalink





(i) is not related to credit ratings; andCommentsClose CommentsPermalink





(ii) the covered Federal agency determines appropriate.CommentsClose CommentsPermalink





(3) EXCEPTION- A covered Federal agency may elect not to amend a regulation identified under paragraph (1), if the covered Federal agency determines that--CommentsClose CommentsPermalink





(A) there is no reasonable alternative standard of credit worthiness that could replace a credit rating for purposes of the regulation; andCommentsClose CommentsPermalink





(B) an amendment to the regulation would be inconsistent with the purposes of the statute that authorized the regulation and not in the public interest.CommentsClose CommentsPermalink





(4) REPORT- Not later than 1 year after the date on which the Comptroller General submits the report required under subsection (c), each covered Federal agency shall submit to Congress a report that contains--CommentsClose CommentsPermalink





(A) a description of any amendment under paragraph (2); andCommentsClose CommentsPermalink





(B) an explanation of any determination under paragraph (3).CommentsClose CommentsPermalink





(5) DEFINITION- In this subsection, the term ‘covered Federal agency’ means--CommentsClose CommentsPermalink





(A) the Commission;CommentsClose CommentsPermalink





(B) the Corporation;CommentsClose CommentsPermalink





(C) the Office of the Comptroller of the Currency;CommentsClose CommentsPermalink





(D) the Board of Governors;CommentsClose CommentsPermalink





(E) the National Credit Union Administration; andCommentsClose CommentsPermalink





(F) the Federal Housing Finance Agency.CommentsClose CommentsPermalink

SEC. 939A. SECURITIES AND EXCHANGE COMMISSION STUDY ON STRENGTHENING CREDIT RATING AGENCY INDEPENDENCE.

(a) Study- The Commission shall conduct a study of--CommentsClose CommentsPermalink





(1) the independence of nationally recognized statistical rating organizations; andCommentsClose CommentsPermalink





(2) how the independence of nationally recognized statistical rating organizations affects the ratings issued by the