S 3241 ISCommentsClose CommentsPermalink

To provide for a safe, accountable, fair, and efficient banking system, and for other purposes.CommentsClose CommentsPermalink

April 21, 2010CommentsClose CommentsPermalink

Mr. BROWN of Ohio (for himself, Mr. KAUFMAN, Mr. CASEY, Mr. MERKLEY, Mr. WHITEHOUSE, and Mr. HARKIN) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban AffairsCommentsClose CommentsPermalink

To provide for a safe, accountable, fair, and efficient banking system, 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.

This Act may be cited as the ‘Safe, Accountable, Fair, and Efficient Banking Act of 2010’ or the ‘SAFE Banking Act of 2010’.CommentsClose CommentsPermalink

SEC. 2. DEFINITIONS.

(a) In General- As used in this Act--CommentsClose CommentsPermalink





(1) the term ‘appropriate Federal regulator’ means--CommentsClose CommentsPermalink





(A) the Board of Governors of the Federal Reserve System (in this Act referred to as the ‘Board’);CommentsClose CommentsPermalink





(B) the Comptroller General of the United States (in this Act referred to as the ‘Comptroller’); orCommentsClose CommentsPermalink





(C) the Federal Deposit Insurance Corporation (in this Act referred to as the ‘Corporation’);CommentsClose CommentsPermalink





(2) the term ‘average total consolidated assets’ has the same meaning as in part 225 of title 12, Code of Federal Regulations, as in effect on the date of enactment of this Act, or any successor thereto;CommentsClose CommentsPermalink





(3) the term ‘FDIC-assessed deposits’ means the assessment base, as computed under part 327 of title 12, Code of Federal Regulations, as in effect on the date of enactment of this Act, or any successor thereto;CommentsClose CommentsPermalink





(4) the term ‘financial company’ means any nonbank financial company that is supervised by the Board;CommentsClose CommentsPermalink





(5) the term ‘liabilities’ equals a financial company’s total assets less tier 1 capital;CommentsClose CommentsPermalink





(6) the term ‘nondeposit liabilities’ means the total assets of a bank holding company, less tier 1 capital, less FDIC-assessed deposits; andCommentsClose CommentsPermalink





(7) the term ‘tier 1 capital’ has the same meaning as in part 225 of title 12, Code of Federal Regulations, as in effect on the date of enactment of this Act, or any successor thereto.CommentsClose CommentsPermalink





(b) Nonbank Financial Company Definitions-CommentsClose CommentsPermalink





(1) 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





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





(B) 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





(2) 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) that is--CommentsClose CommentsPermalink





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





(B) 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





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

SEC. 3. DEPOSIT CONCENTRATION LIMIT.

Section 3(d) of the Bank Holding Company Act of 1956 (12 U.S.C. 1842(d)) is amended--CommentsClose CommentsPermalink





(1) in paragraph (2), by striking subparagraph (A) and inserting the following:CommentsClose CommentsPermalink





‘(A) NATIONWIDE CONCENTRATION LIMITS- No bank holding company may hold more than 10 percent of the total amount of deposits of insured depository institutions in the United States.’; andCommentsClose CommentsPermalink





(2) by striking paragraph (5) and inserting the following:CommentsClose CommentsPermalink





‘(5) ENFORCED COMPLIANCE- The Board shall require any bank holding company having a deposit concentration in violation of this subsection to sell or otherwise transfer assets to unaffiliated firms to bring the company into compliance with this subsection.’.CommentsClose CommentsPermalink

SEC. 4. LEVERAGE RATIO AND SIZE REQUIREMENTS FOR BANK HOLDING COMPANIES.

The Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) is amended by inserting after section 5 the following:CommentsClose CommentsPermalink

‘SEC. 5A. LIMITS ON LEVERAGE AND SIZE.

‘(a) Leverage Ratio Requirements for Bank Holding Companies and Financial Companies-CommentsClose CommentsPermalink





‘(1) LEVERAGE RATIO- No bank holding company or financial company may maintain tier 1 capital in an amount equal to less than 6 percent of average total consolidated assets.CommentsClose CommentsPermalink





‘(2) BALANCE SHEET LEVERAGE RATIO- No bank holding company or financial company may maintain less than 6 percent of tier 1 capital for all outstanding balance sheet liabilities, as determined under section 13(m) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(m)).CommentsClose CommentsPermalink





‘(3) EXEMPTIONS-CommentsClose CommentsPermalink





‘(A) IN GENERAL- The Board may adjust the leverage ratio requirements provided in paragraph (1) or (2), for any class of institutions, based upon the size or activity of such class of institutions. No adjustment made under this subparagraph may allow an institution to carry less capital than provided in paragraph (1) or (2).CommentsClose CommentsPermalink





‘(B) ADJUSTMENTS- Consistent with this subsection, the Board may adjust, by rule, the definitions of the terms ‘leverage ratio’ and ‘balance sheet leverage ratio’ to harmonize such ratios with official international agreements regarding capital standards, only if the Board determines that the international capital standards are commensurate with the credit, market, operational, or other risks posed by the bank holding companies or financial companies to which the international agreements regarding capital standards apply.CommentsClose CommentsPermalink





‘(C) AUTHORITY OF OTHER REGULATORS-CommentsClose CommentsPermalink





‘(i) IN GENERAL- The appropriate Federal regulator may, in a manner consistent with this subsection, grant any bank holding company an emergency temporary exemption from the ratio requirements provided in paragraph (1) or (2), where necessary to prevent an imminent threat to the financial stability of the United States.CommentsClose CommentsPermalink





‘(ii) PUBLICATION REQUIRED- Any exemption granted under this subparagraph shall be published in the Federal Register within a reasonable period after the date on which such exemption is granted, not to exceed 90 days, and such publication shall provide--CommentsClose CommentsPermalink





‘(I) the name of the bank holding company or financial company being granted an exemption;CommentsClose CommentsPermalink





‘(II) the reason for the exemption; andCommentsClose CommentsPermalink





‘(III) the plan of the appropriate Federal regulator detailing the manner by which the bank holding company shall be brought into compliance with paragraphs (1) and (2).CommentsClose CommentsPermalink





‘(4) LEVERAGE RATIO REQUIREMENTS FOR OPERATING SUBSIDIARIES OF BANK HOLDING COMPANIES AND FINANCIAL COMPANIES- Notwithstanding any other provision of law applicable to insured depository institutions, the Board shall, within 1 year of the date of enactment of the SAFE Banking Act of 2010, promulgate regulations establishing a leverage ratio and a balance sheet leverage ratio, in a manner consistent with paragraphs (1) and (2), for all operating subsidiaries of bank holding companies and financial companies.CommentsClose CommentsPermalink





‘(5) PROMPT CORRECTIVE ACTION-CommentsClose CommentsPermalink





‘(A) AUTHORITIES- The Board shall require any bank holding company or financial company that is in violation of paragraph (1) or (2) to raise capital, sell or otherwise transfer assets or off-balance sheet items to unaffiliated firms, or impose conditions on the manner in which the bank holding company conducts 1 or more activities to bring the company into compliance with paragraphs (1) and (2).CommentsClose CommentsPermalink





‘(B) CORRECTIVE ACTION PLAN- The Board shall, not later than 60 days after determining that a bank holding company or financial company is in violation of paragraph (1) or (2), present to the members of the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives a plan detailing the manner by which the bank holding company or financial company shall be brought into compliance with the applicable provision of law.CommentsClose CommentsPermalink





‘(C) REPORTS TO CONGRESS-CommentsClose CommentsPermalink





‘(i) WRITTEN REPORTS- The Board shall provide to the members of the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives periodic reports for each 60-day period during which a corrective action plan required by subparagraph (B) has not been fulfilled.CommentsClose CommentsPermalink





‘(ii) TESTIMONY- The Board shall provide testimony to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives for each 90-day period that a corrective action plan required by subparagraph (B) has not been fulfilled.CommentsClose CommentsPermalink





‘(b) Limits on Nondeposit Liabilities for Bank Holding Companies and Financial Companies-CommentsClose CommentsPermalink





‘(1) BANK HOLDING COMPANIES-CommentsClose CommentsPermalink





‘(A) LIMIT ON NONDEPOSIT LIABILITIES FOR BANK HOLDING COMPANIES- No bank holding company may possess nondeposit liabilities exceeding 2 percent of the annual gross domestic product of the United States.CommentsClose CommentsPermalink





‘(B) DETERMINATION OF GROSS DOMESTIC PRODUCT- The annual gross domestic product of the United States shall be determined for purposes of subparagraph (A) using the average of such product over the 16 calendar quarters, as calculated by the Bureau of Economic Analysis of the Department of Commerce, most recently completed as of the time of the determination.CommentsClose CommentsPermalink





‘(C) OFF-BALANCE-SHEET LIABILITIES- The computation of the limit under this paragraph shall take into account off-balance-sheet liabilities.CommentsClose CommentsPermalink





‘(D) TREATMENT OF INSURANCE COMPANIES- Notwithstanding the liability limit established in this section, the Board may set a separate liability limit with respect to certain bank holding companies primarily engaged in the business of insurance, as the Board deems necessary in order to provide for consistent and equitable treatment of such institutions. In establishing such separate liability limits for insurance companies, for any insurance company with any subsidiary regulated by a State insurance regulator, the Board shall consult the appropriate State insurance regulator.CommentsClose CommentsPermalink





‘(E) TREATMENT OF FOREIGN DEPOSITS- Notwithstanding the definition of the term ‘nondeposit liabilities’ established in this section, the Board may exclude from its calculation of nondeposit liabilities any foreign and other deposits not covered by the definition of the term ‘FDIC-assessed deposits’, if the Board deems such action necessary to ensure the consistent and equitable treatment of institutions with international operations.CommentsClose CommentsPermalink





‘(2) FINANCIAL COMPANIES-CommentsClose CommentsPermalink





‘(A) LIMIT ON NONDEPOSIT LIABILITIES FOR FINANCIAL COMPANIES- No financial company may possess nondeposit liabilities exceeding 3 percent of the annual gross domestic product of the United States.CommentsClose CommentsPermalink





‘(B) DETERMINATION OF GROSS DOMESTIC PRODUCT- The annual gross domestic product of the United States shall be determined for purposes of subparagraph (A) using the average of such product over the 16 calendar quarters, as calculated by the Bureau of Economic Analysis of the Department of Commerce, most recently completed as of the time of the determination.CommentsClose CommentsPermalink





‘(C) OFF-BALANCE-SHEET LIABILITIES- The computation of the limit under this paragraph shall take into account off-balance-sheet liabilities.CommentsClose CommentsPermalink





‘(D) TREATMENT OF INSURANCE COMPANIES- Notwithstanding the liability limit established by this paragraph, the Board may set a separate liability limit with respect to insurance companies or other financial companies, as the Board determines necessary in order to provide for consistent and equitable treatment of such institutions. In establishing such separate liability limits for insurance companies, for any insurance company with any subsidiary regulated by a State insurance regulator, the Board shall consult with the appropriate State insurance regulator.CommentsClose CommentsPermalink





‘(E) TREATMENT OF FOREIGN DEPOSITS- Notwithstanding the definition of the term ‘nondeposit liabilities’ established in this section, the Board may exclude from its calculation of nondeposit liabilities any foreign and other deposits not covered by the definition of the term ‘FDIC-assessed deposits’, if the Board deems such action necessary to ensure the consistent and equitable treatment of institutions with international operations.CommentsClose CommentsPermalink





‘(3) PROMPT CORRECTIVE ACTION-CommentsClose CommentsPermalink





‘(A) AUTHORITIES- The Board shall require any bank holding company or financial company that is in violation of a provision of paragraph (1) or (2), as applicable, to sell or otherwise transfer assets or off-balance-sheet items to unaffiliated firms, to terminate 1 or more activities, or to impose conditions on the manner in which the bank holding company or financial company conducts 1 or more activities to bring the company into compliance with paragraphs (1) or (2), as applicable.CommentsClose CommentsPermalink





‘(B) CORRECTIVE ACTION PLAN- The Board shall, not later than 60 days after determining that a bank holding company or financial company is in violation of paragraph (1) or (2), present to the members of the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives a plan detailing the manner by which the bank holding company or financial company shall be brought into compliance with the applicable provision.CommentsClose CommentsPermalink





‘(C) REPORTS TO CONGRESS-CommentsClose CommentsPermalink





‘(i) WRITTEN REPORTS- The Board shall provide to the members of the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives periodic reports for each 60-day period during which a corrective action plan required by subparagraph (B) has not been fulfilled.CommentsClose CommentsPermalink





‘(ii) TESTIMONY- The Board shall provide testimony to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives for each 120-day period during which a corrective action plan required by subparagraph (B) has not been fulfilled.CommentsClose CommentsPermalink





‘(c) Definitions- As used in this section--CommentsClose CommentsPermalink





‘(1) the term ‘appropriate Federal regulator’ means--CommentsClose CommentsPermalink





‘(A) the Board of Governors of the Federal Reserve System (in this Act referred to as the ‘Board’);CommentsClose CommentsPermalink





‘(B) the Comptroller General of the United States (in this Act referred to as the ‘Comptroller’); orCommentsClose CommentsPermalink





‘(C) the Federal Deposit Insurance Corporation (in this Act referred to as the ‘Corporation’);CommentsClose CommentsPermalink





‘(2) the term ‘average total consolidated assets’ has the same meaning as in part 225 of title 12, Code of Federal Regulations, as in effect on the date of enactment of this Act, or any successor thereto;CommentsClose CommentsPermalink





‘(3) the term ‘FDIC-assessed deposits’ means the assessment base, as computed under part 327 of title 12, Code of Federal Regulations, as in effect on the date of enactment of this Act, or any successor thereto;CommentsClose CommentsPermalink





‘(4) the term ‘financial company’ means any nonbank financial company that is supervised by the Board;CommentsClose CommentsPermalink





‘(5) the term ‘liabilities’ equals a financial company’s total assets less tier 1 capital;CommentsClose CommentsPermalink





‘(6) the term ‘nondeposit liabilities’ means the total assets of a bank holding company, less tier 1 capital, less FDIC-assessed deposits;CommentsClose CommentsPermalink





‘(7) 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





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





‘(B) 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





‘(8) the term ‘U.S. nonbank financial company’ means a company (other than a bank holding company or a subsidiary thereof) that is--CommentsClose CommentsPermalink





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





‘(B) 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





‘(9) the term ‘nonbank financial company’ means a U.S. nonbank financial company and a foreign nonbank financial company; andCommentsClose CommentsPermalink





‘(10) the term ‘tier 1 capital’ has the same meaning as in part 225 of title 12, Code of Federal Regulations, as in effect on the date of enactment of this section, or any successor thereto.’.CommentsClose CommentsPermalink

SEC. 5. CAPITAL ASSESSMENT PROGRAM.

The Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) is amended by inserting after section 7 the following new section:CommentsClose CommentsPermalink

‘SEC. 7A. CAPITAL ASSESSMENT PROGRAM.

‘(a) Annual Assessments- Beginning 1 year after the date of enactment of the SAFE Banking Act of 2010, and annually thereafter, the Board shall conduct a capital assessment to estimate losses, revenues, and reserve needs for bank holding companies and financial companies.CommentsClose CommentsPermalink





‘(b) Reports- The Board shall provide a report on the results of the capital assessment program under this section to the Secretary, the members of the Committee on Banking, Housing, and Urban Affairs of the Senate, and the members of the Committee on Financial Services of the House of Representatives.’.CommentsClose CommentsPermalink

SEC. 6. AMENDMENT TO THE SECURITIES AND EXCHANGE ACT.

Section 13 of the Securities Exchange Act of 1934 (15 U.S.C. 78m) is amended by adding at the end the following new subsection:CommentsClose CommentsPermalink





‘(m) Standard Balance Sheet Calculation for Reports-CommentsClose CommentsPermalink





‘(1) ESTABLISHMENT OF STANDARD BALANCE SHEET REPORTING- Not later than 1 year after the date of enactment of the SAFE Banking Act of 2010, the Commission, or a standard setter designated by and under the oversight of the Commission, shall issue a rule requiring that each issuer of securities required to file reports under this section record all of its assets and liabilities on its balance sheets. The recorded amount of assets and liabilities shall reflect a reasonable assessment by the issuer of the most likely outcomes, given currently available information. Such issuers shall record all financings of assets for which the issuer has more than minimal economic risks or rewards.CommentsClose CommentsPermalink





‘(2) EXCLUSION FOR INDETERMINATE LIABILITIES- If an issuer required to file reports under this section cannot determine the amount of a particular liability, for purposes of paragraph (1), such issuer may exclude that liability from its balance sheet only if it discloses an explanation of--CommentsClose CommentsPermalink





‘(A) the nature of the liability and purpose for incurring it;CommentsClose CommentsPermalink





‘(B) the most likely and maximum loss that the issuer could incur from the liability;CommentsClose CommentsPermalink





‘(C) whether there is any recourse to the issuer by another party and, if so, under what conditions such recourse could occur; andCommentsClose CommentsPermalink





‘(D) whether the issuer has any continuing involvement with an asset financed by the liability or any beneficial interest therein.CommentsClose CommentsPermalink





‘(3) RULEMAKING- The Commission shall promulgate rules to ensure compliance with this subsection, including enforcement by the Commission and civil liability under the Securities Act of 1933 and this title.’.CommentsClose CommentsPermalink

SEC. 7. EFFECTIVE DATE.

(a) In General- This Act and the amendments made by this Act shall take effect upon the date of enactment of this Act.CommentsClose CommentsPermalink





(b) Allowance for Bank Holding Companies and Financial Companies Not in Compliance at Date of Enactment- Any institution that is in violation of--CommentsClose CommentsPermalink





(1) the deposit concentration limit in section 3(d)(2)(A) of the Bank Holding Act of 1956, as amended by this Act, as of the date of enactment of this Act, shall bring itself into compliance with that limit not later than 1 year after the date of enactment of this Act;CommentsClose CommentsPermalink





(2) the leverage ratios in section 5A of the Bank Holding Act of 1956, as amended by this Act, as of the date of enactment of this Act, shall bring itself into compliance with those ratios, not later than 1 year after the date of enactment of this Act; andCommentsClose CommentsPermalink





(3) the limits on nondeposit liabilities in section 7A of the Bank Holding Company Act of 1956, as added by this Act, as of the date of enactment of this Act, shall bring itself into compliance with those limits, not later than 3 years after the date of enactment of this Act.CommentsClose CommentsPermalink