[House Report 111-517]
[From the U.S. Government Publishing Office]
111th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 111-517
_______________________________________________________________________
DODD-FRANK WALL STREET REFORM AND CONSUMER PROTECTION ACT
----------
CONFERENCE REPORT
to accompany
H.R. 4173
June 29, 2010.--Ordered to be printed
DODD-FRANK WALL STREET REFORM
AND CONSUMER PROTECTION ACT
111th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 111-517
_______________________________________________________________________
DODD-FRANK WALL STREET REFORM AND CONSUMER PROTECTION ACT
__________
CONFERENCE REPORT
to accompany
H.R. 4173
June 29, 2010.--Ordered to be printed
111th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 111-517
======================================================================
DODD-FRANK WALL STREET REFORM AND CONSUMER PROTECTION ACT
_______
June 29, 2010.--Ordered to be printed
_______
Mr. Frank, from the Committee of Conference, submitted the following
CONFERENCE REPORT
[To accompany H.R. 4173]
The committee of conference on the disagreeing votes of
the two Houses on the amendments of the Senate to the bill
(H.R. 4173), to provide for financial regulatory reform, to
protect consumers and investors, to enhance Federal
understanding of insurance issues, to regulate the over-the-
counter derivatives markets, and for other purposes, having
met, after full and free conference, have agreed to recommend
and do recommend to their respective Houses as follows:
That the House recede from its disagreement to the
amendment of the Senate to the text of the bill and agree to
the same with an amendment as follows:
In lieu of the matter proposed to be inserted by the
Senate amendment, insert the following:
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Dodd-Frank
Wall Street Reform and Consumer Protection Act''.
(b) Table of Contents.--The table of contents for this Act
is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
Sec. 3. Severability.
Sec. 4. Effective date.
Sec. 5. Budgetary effects.
Sec. 6. Antitrust savings clause.
TITLE I--FINANCIAL STABILITY
Sec. 101. Short title.
Sec. 102. Definitions.
Subtitle A--Financial Stability Oversight Council
Sec. 111. Financial Stability Oversight Council established.
Sec. 112. Council authority.
Sec. 113. Authority to require supervision and regulation of certain
nonbank financial companies.
Sec. 114. Registration of nonbank financial companies supervised by the
Board of Governors.
Sec. 115. Enhanced supervision and prudential standards for nonbank
financial companies supervised by the Board of Governors and
certain bank holding companies.
Sec. 116. Reports.
Sec. 117. Treatment of certain companies that cease to be bank holding
companies.
Sec. 118. Council funding.
Sec. 119. Resolution of supervisory jurisdictional disputes among member
agencies.
Sec. 120. Additional standards applicable to activities or practices for
financial stability purposes.
Sec. 121. Mitigation of risks to financial stability.
Sec. 122. GAO Audit of Council.
Sec. 123. Study of the effects of size and complexity of financial
institutions on capital market efficiency and economic growth.
Subtitle B--Office of Financial Research
Sec. 151. Definitions.
Sec. 152. Office of Financial Research established.
Sec. 153. Purpose and duties of the Office.
Sec. 154. Organizational structure; responsibilities of primary
programmatic units.
Sec. 155. Funding.
Sec. 156. Transition oversight.
Subtitle C--Additional Board of Governors Authority for Certain Nonbank
Financial Companies and Bank Holding Companies
Sec. 161. Reports by and examinations of nonbank financial companies by
the Board of Governors.
Sec. 162. Enforcement.
Sec. 163. Acquisitions.
Sec. 164. Prohibition against management interlocks between certain
financial companies.
Sec. 165. Enhanced supervision and prudential standards for nonbank
financial companies supervised by the Board of Governors and
certain bank holding companies.
Sec. 166. Early remediation requirements.
Sec. 167. Affiliations.
Sec. 168. Regulations.
Sec. 169. Avoiding duplication.
Sec. 170. Safe harbor.
Sec. 171. Leverage and risk-based capital requirements.
Sec. 172. Examination and enforcement actions for insurance and orderly
liquidation purposes.
Sec. 173. Access to United States financial market by foreign
institutions.
Sec. 174. Studies and reports on holding company capital requirements.
Sec. 175. International policy coordination.
Sec. 176. Rule of construction.
TITLE II--ORDERLY LIQUIDATION AUTHORITY
Sec. 201. Definitions.
Sec. 202. Judicial review.
Sec. 203. Systemic risk determination.
Sec. 204. Orderly liquidation of covered financial companies.
Sec. 205. Orderly liquidation of covered brokers and dealers.
Sec. 206. Mandatory terms and conditions for all orderly liquidation
actions.
Sec. 207. Directors not liable for acquiescing in appointment of
receiver.
Sec. 208. Dismissal and exclusion of other actions.
Sec. 209. Rulemaking; non-conflicting law.
Sec. 210. Powers and duties of the Corporation.
Sec. 211. Miscellaneous provisions.
Sec. 212. Prohibition of circumvention and prevention of conflicts of
interest.
Sec. 213. Ban on certain activities by senior executives and directors.
Sec. 214. Prohibition on taxpayer funding.
Sec. 215. Study on secured creditor haircuts.
Sec. 216. Study on bankruptcy process for financial and nonbank
financial institutions.
Sec. 217. Study on international coordination relating to bankruptcy
process for nonbank financial institutions.
TITLE III--TRANSFER OF POWERS TO THE COMPTROLLER OF THE CURRENCY, THE
CORPORATION, AND THE BOARD OF GOVERNORS
Sec. 300. Short title.
Sec. 301. Purposes.
Sec. 302. Definition.
Subtitle A--Transfer of Powers and Duties
Sec. 311. Transfer date.
Sec. 312. Powers and duties transferred.
Sec. 313. Abolishment.
Sec. 314. Amendments to the Revised Statutes.
Sec. 315. Federal information policy.
Sec. 316. Savings provisions.
Sec. 317. References in Federal law to Federal banking agencies.
Sec. 318. Funding.
Sec. 319. Contracting and leasing authority.
Subtitle B--Transitional Provisions
Sec. 321. Interim use of funds, personnel, and property of the Office of
Thrift Supervision.
Sec. 322. Transfer of employees.
Sec. 323. Property transferred.
Sec. 324. Funds transferred.
Sec. 325. Disposition of affairs.
Sec. 326. Continuation of services.
Sec. 327. Implementation plan and reports.
Subtitle C--Federal Deposit Insurance Corporation
Sec. 331. Deposit insurance reforms.
Sec. 332. Elimination of procyclical assessments.
Sec. 333. Enhanced access to information for deposit insurance purposes.
Sec. 334. Transition reserve ratio requirements to reflect new
assessment base.
Sec. 335. Permanent increase in deposit and share insurance.
Sec. 336. Management of the Federal Deposit Insurance Corporation.
Subtitle D--Other Matters
Sec. 341. Branching.
Sec. 342. Office of Minority and Women Inclusion.
Sec. 343. Insurance of transaction accounts.
Subtitle E--Technical and Conforming Amendments
Sec. 351. Effective date.
Sec. 352. Balanced Budget and Emergency Deficit Control Act of 1985.
Sec. 353. Bank Enterprise Act of 1991.
Sec. 354. Bank Holding Company Act of 1956.
Sec. 355. Bank Holding Company Act Amendments of 1970.
Sec. 356. Bank Protection Act of 1968.
Sec. 357. Bank Service Company Act.
Sec. 358. Community Reinvestment Act of 1977.
Sec. 359. Crime Control Act of 1990.
Sec. 360. Depository Institution Management Interlocks Act.
Sec. 361. Emergency Homeowners' Relief Act.
Sec. 362. Federal Credit Union Act.
Sec. 363. Federal Deposit Insurance Act.
Sec. 364. Federal Home Loan Bank Act.
Sec. 365. Federal Housing Enterprises Financial Safety and Soundness Act
of 1992.
Sec. 366. Federal Reserve Act.
Sec. 367. Financial Institutions Reform, Recovery, and Enforcement Act
of 1989.
Sec. 368. Flood Disaster Protection Act of 1973.
Sec. 369. Home Owners' Loan Act.
Sec. 370. Housing Act of 1948.
Sec. 371. Housing and Community Development Act of 1992.
Sec. 372. Housing and Urban-Rural Recovery Act of 1983.
Sec. 373. National Housing Act.
Sec. 374. Neighborhood Reinvestment Corporation Act.
Sec. 375. Public Law 93-100.
Sec. 376. Securities Exchange Act of 1934.
Sec. 377. Title 18, United States Code.
Sec. 378. Title 31, United States Code.
TITLE IV--REGULATION OF ADVISERS TO HEDGE FUNDS AND OTHERS
Sec. 401. Short title.
Sec. 402. Definitions.
Sec. 403. Elimination of private adviser exemption; limited exemption
for foreign private advisers; limited intrastate exemption.
Sec. 404. Collection of systemic risk data; reports; examinations;
disclosures.
Sec. 405. Disclosure provision amendment.
Sec. 406. Clarification of rulemaking authority.
Sec. 407. Exemption of venture capital fund advisers.
Sec. 408. Exemption of and record keeping by private equity fund
advisers.
Sec. 409. Family offices.
Sec. 410. State and Federal responsibilities; asset threshold for
Federal registration of investment advisers.
Sec. 411. Custody of client assets.
Sec. 412. Adjusting the accredited investor standard.
Sec. 413. GAO study and report on accredited investors.
Sec. 414. GAO study on self-regulatory organization for private funds.
Sec. 415. Commission study and report on short selling.
Sec. 416. Transition period.
TITLE V--INSURANCE
Subtitle A--Office of National Insurance
Sec. 501. Short title.
Sec. 502. Federal Insurance Office.
Subtitle B--State-Based Insurance Reform
Sec. 511. Short title.
Sec. 512. Effective date.
PART I--Nonadmitted Insurance
Sec. 521. Reporting, payment, and allocation of premium taxes.
Sec. 522. Regulation of nonadmitted insurance by insured's home State.
Sec. 523. Participation in national producer database.
Sec. 524. Uniform standards for surplus lines eligibility.
Sec. 525. Streamlined application for commercial purchasers.
Sec. 526. GAO study of nonadmitted insurance market.
Sec. 527. Definitions.
PART II--Reinsurance
Sec. 531. Regulation of credit for reinsurance and reinsurance
agreements.
Sec. 532. Regulation of reinsurer solvency.
Sec. 533. Definitions.
PART III--Rule of Construction
Sec. 541. Rule of construction.
Sec. 542. Severability.
TITLE VI--IMPROVEMENTS TO REGULATION OF BANK AND SAVINGS ASSOCIATION
HOLDING COMPANIES AND DEPOSITORY INSTITUTIONS
Sec. 601. Short title.
Sec. 602. Definition.
Sec. 603. Moratorium and study on treatment of credit card banks,
industrial loan companies, and certain other companies under
the Bank Holding Company Act of 1956.
Sec. 604. Reports and examinations of holding companies; regulation of
functionally regulated subsidiaries.
Sec. 605. Assuring consistent oversight of permissible activities of
depository institution subsidiaries of holding companies.
Sec. 606. Requirements for financial holding companies to remain well
capitalized and well managed.
Sec. 607. Standards for interstate acquisitions.
Sec. 608. Enhancing existing restrictions on bank transactions with
affiliates.
Sec. 609. Eliminating exceptions for transactions with financial
subsidiaries.
Sec. 610. Lending limits applicable to credit exposure on derivative
transactions, repurchase agreements, reverse repurchase
agreements, and securities lending and borrowing transactions.
Sec. 611. Consistent treatment of derivative transactions in lending
limits.
Sec. 612. Restriction on conversions of troubled banks.
Sec. 613. De novo branching into States.
Sec. 614. Lending limits to insiders.
Sec. 615. Limitations on purchases of assets from insiders.
Sec. 616. Regulations regarding capital levels.
Sec. 617. Elimination of elective investment bank holding company
framework.
Sec. 618. Securities holding companies.
Sec. 619. Prohibitions on proprietary trading and certain relationships
with hedge funds and private equity funds.
Sec. 620. Study of bank investment activities.
Sec. 621. Conflicts of interest.
Sec. 622. Concentration limits on large financial firms.
Sec. 623. Interstate merger transactions.
Sec. 624. Qualified thrift lenders.
Sec. 625. Treatment of dividends by certain mutual holding companies.
Sec. 626. Intermediate holding companies.
Sec. 627. Interest-bearing transaction accounts authorized.
Sec. 628. Credit card bank small business lending.
TITLE VII--WALL STREET TRANSPARENCY AND ACCOUNTABILITY
Sec. 701. Short title.
Subtitle A--Regulation of Over-the-Counter Swaps Markets
PART I--Regulatory Authority
Sec. 711. Definitions.
Sec. 712. Review of regulatory authority.
Sec. 713. Portfolio margining conforming changes.
Sec. 714. Abusive swaps.
Sec. 715. Authority to prohibit participation in swap activities.
Sec. 716. Prohibition against Federal Government bailouts of swaps
entities.
Sec. 717. New product approval CFTC--SEC process.
Sec. 718. Determining status of novel derivative products.
Sec. 719. Studies.
Sec. 720. Memorandum.
PART II--Regulation of Swap Markets
Sec. 721. Definitions.
Sec. 722. Jurisdiction.
Sec. 723. Clearing.
Sec. 724. Swaps; segregation and bankruptcy treatment.
Sec. 725. Derivatives clearing organizations.
Sec. 726. Rulemaking on conflict of interest.
Sec. 727. Public reporting of swap transaction data.
Sec. 728. Swap data repositories.
Sec. 729. Reporting and recordkeeping.
Sec. 730. Large swap trader reporting.
Sec. 731. Registration and regulation of swap dealers and major swap
participants.
Sec. 732. Conflicts of interest.
Sec. 733. Swap execution facilities.
Sec. 734. Derivatives transaction execution facilities and exempt boards
of trade.
Sec. 735. Designated contract markets.
Sec. 736. Margin.
Sec. 737. Position limits.
Sec. 738. Foreign boards of trade.
Sec. 739. Legal certainty for swaps.
Sec. 740. Multilateral clearing organizations.
Sec. 741. Enforcement.
Sec. 742. Retail commodity transactions.
Sec. 743. Other authority.
Sec. 744. Restitution remedies.
Sec. 745. Enhanced compliance by registered entities.
Sec. 746. Insider trading.
Sec. 747. Antidisruptive practices authority.
Sec. 748. Commodity whistleblower incentives and protection.
Sec. 749. Conforming amendments.
Sec. 750. Study on oversight of carbon markets.
Sec. 751. Energy and environmental markets advisory committee.
Sec. 752. International harmonization.
Sec. 753. Anti-manipulation authority.
Sec. 754. Effective date.
Subtitle B--Regulation of Security-Based Swap Markets
Sec. 761. Definitions under the Securities Exchange Act of 1934.
Sec. 762. Repeal of prohibition on regulation of security-based swap
agreements.
Sec. 763. Amendments to the Securities Exchange Act of 1934.
Sec. 764. Registration and regulation of security-based swap dealers and
major security-based swap participants.
Sec. 765. Rulemaking on conflict of interest.
Sec. 766. Reporting and recordkeeping.
Sec. 767. State gaming and bucket shop laws.
Sec. 768. Amendments to the Securities Act of 1933; treatment of
security-based swaps.
Sec. 769. Definitions under the Investment Company Act of 1940.
Sec. 770. Definitions under the Investment Advisers Act of 1940.
Sec. 771. Other authority.
Sec. 772. Jurisdiction.
Sec. 773. Civil penalties.
Sec. 774. Effective date.
TITLE VIII--PAYMENT, CLEARING, AND SETTLEMENT SUPERVISION
Sec. 801. Short title.
Sec. 802. Findings and purposes.
Sec. 803. Definitions.
Sec. 804. Designation of systemic importance.
Sec. 805. Standards for systemically important financial market
utilities and payment, clearing, or settlement activities.
Sec. 806. Operations of designated financial market utilities.
Sec. 807. Examination of and enforcement actions against designated
financial market utilities.
Sec. 808. Examination of and enforcement actions against financial
institutions subject to standards for designated activities.
Sec. 809. Requests for information, reports, or records.
Sec. 810. Rulemaking.
Sec. 811. Other authority.
Sec. 812. Consultation.
Sec. 813. Common framework for designated clearing entity risk
management.
Sec. 814. Effective date.
TITLE IX--INVESTOR PROTECTIONS AND IMPROVEMENTS TO THE REGULATION OF
SECURITIES
Sec. 901. Short title.
Subtitle A--Increasing Investor Protection
Sec. 911. Investor Advisory Committee established.
Sec. 912. Clarification of authority of the Commission to engage in
investor testing.
Sec. 913. Study and rulemaking regarding obligations of brokers,
dealers, and investment advisers.
Sec. 914. Study on enhancing investment adviser examinations.
Sec. 915. Office of the Investor Advocate.
Sec. 916. Streamlining of filing procedures for self-regulatory
organizations.
Sec. 917. Study regarding financial literacy among investors.
Sec. 918. Study regarding mutual fund advertising.
Sec. 919. Clarification of Commission authority to require investor
disclosures before purchase of investment products and
services.
Sec. 919A. Study on conflicts of interest.
Sec. 919B. Study on improved investor access to information on
investment advisers and broker-dealers.
Sec. 919C. Study on financial planners and the use of financial
designations.
Sec. 919D. Ombudsman.
Subtitle B--Increasing Regulatory Enforcement and Remedies
Sec. 921. Authority to restrict mandatory pre-dispute arbitration.
Sec. 922. Whistleblower protection.
Sec. 923. Conforming amendments for whistleblower protection.
Sec. 924. Implementation and transition provisions for whistleblower
protection.
Sec. 925. Collateral bars.
Sec. 926. Disqualifying felons and other ``bad actors'' from Regulation
D offerings.
Sec. 927. Equal treatment of self-regulatory organization rules.
Sec. 928. Clarification that section 205 of the Investment Advisers Act
of 1940 does not apply to State-registered advisers.
Sec. 929. Unlawful margin lending.
Sec. 929A. Protection for employees of subsidiaries and affiliates of
publicly traded companies.
Sec. 929B. Fair Fund amendments.
Sec. 929C. Increasing the borrowing limit on Treasury loans.
Sec. 929D. Lost and stolen securities.
Sec. 929E. Nationwide service of subpoenas.
Sec. 929F. Formerly associated persons.
Sec. 929G. Streamlined hiring authority for market specialists.
Sec. 929H. SIPC Reforms.
Sec. 929I. Protecting confidentiality of materials submitted to the
Commission.
Sec. 929J. Expansion of audit information to be produced and exchanged.
Sec. 929K. Sharing privileged information with other authorities.
Sec. 929L. Enhanced application of antifraud provisions.
Sec. 929M. Aiding and abetting authority under the Securities Act and
the Investment Company Act.
Sec. 929N. Authority to impose penalties for aiding and abetting
violations of the Investment Advisers Act.
Sec. 929O. Aiding and abetting standard of knowledge satisfied by
recklessness.
Sec. 929P. Strengthening enforcement by the Commission.
Sec. 929Q. Revision to recordkeeping rule.
Sec. 929R. Beneficial ownership and short-swing profit reporting.
Sec. 929S. Fingerprinting.
Sec. 929T. Equal treatment of self-regulatory organization rules.
Sec. 929U. Deadline for completing examinations, inspections and
enforcement actions.
Sec. 929V. Security Investor Protection Act amendments.
Sec. 929W. Notice to missing security holders.
Sec. 929X. Short sale reforms.
Sec. 929Y. Study on extraterritorial private rights of action.
Sec. 929Z. GAO study on securities litigation.
Subtitle C--Improvements to the Regulation of Credit Rating Agencies
Sec. 931. Findings.
Sec. 932. Enhanced regulation, accountability, and transparency of
nationally recognized statistical rating organizations.
Sec. 933. State of mind in private actions.
Sec. 934. Referring tips to law enforcement or regulatory authorities.
Sec. 935. Consideration of information from sources other than the
issuer in rating decisions.
Sec. 936. Qualification standards for credit rating analysts.
Sec. 937. Timing of regulations.
Sec. 938. Universal ratings symbols.
Sec. 939. Removal of statutory references to credit ratings.
Sec. 939A. Review of reliance on ratings.
Sec. 939B. Elimination of exemption from fair disclosure rule.
Sec. 939C. Securities and Exchange Commission study on strengthening
credit rating agency independence.
Sec. 939D. Government Accountability Office study on alternative
business models.
Sec. 939E. Government Accountability Office study on the creation of an
independent professional analyst organization.
Sec. 939F. Study and rulemaking on assigned credit ratings.
Sec. 939G. Effect of Rule 436(g).
Sec. 939H. Sense of Congress.
Subtitle D--Improvements to the Asset-Backed Securitization Process
Sec. 941. Regulation of credit risk retention.
Sec. 942. Disclosures and reporting for asset-backed securities.
Sec. 943. Representations and warranties in asset-backed offerings.
Sec. 944. Exempted transactions under the Securities Act of 1933.
Sec. 945. Due diligence analysis and disclosure in asset-backed
securities issues.
Sec. 946. Study on the macroeconomic effects of risk retention
requirements.
Subtitle E--Accountability and Executive Compensation
Sec. 951. Shareholder vote on executive compensation disclosures.
Sec. 952. Compensation committee independence.
Sec. 953. Executive compensation disclosures.
Sec. 954. Recovery of erroneously awarded compensation.
Sec. 955. Disclosure regarding employee and director hedging.
Sec. 956. Enhanced compensation structure reporting.
Sec. 957. Voting by brokers.
Subtitle F--Improvements to the Management of the Securities and
Exchange Commission
Sec. 961. Report and certification of internal supervisory controls.
Sec. 962. Triennial report on personnel management.
Sec. 963. Annual financial controls audit.
Sec. 964. Report on oversight of national securities associations.
Sec. 965. Compliance examiners.
Sec. 966. Suggestion program for employees of the Commission.
Sec. 967. Commission organizational study and reform.
Sec. 968. Study on SEC revolving door.
Subtitle G--Strengthening Corporate Governance
Sec. 971. Proxy access.
Sec. 972. Disclosures regarding chairman and CEO structures.
Subtitle H--Municipal Securities
Sec. 975. Regulation of municipal securities and changes to the board of
the MSRB.
Sec. 976. Government Accountability Office study of increased disclosure
to investors.
Sec. 977. Government Accountability Office study on the municipal
securities markets.
Sec. 978. Funding for Governmental Accounting Standards Board.
Sec. 979. Commission Office of Municipal Securities.
Subtitle I--Public Company Accounting Oversight Board, Portfolio
Margining, and Other Matters
Sec. 981. Authority to share certain information with foreign
authorities.
Sec. 982. Oversight of brokers and dealers.
Sec. 983. Portfolio margining.
Sec. 984. Loan or borrowing of securities.
Sec. 985. Technical corrections to Federal securities laws.
Sec. 986. Conforming amendments relating to repeal of the Public Utility
Holding Company Act of 1935.
Sec. 987. Amendment to definition of material loss and nonmaterial
losses to the Deposit Insurance Fund for purposes of Inspector
General reviews.
Sec. 988. Amendment to definition of material loss and nonmaterial
losses to the National Credit Union Share Insurance Fund for
purposes of Inspector General reviews.
Sec. 989. Government Accountability Office study on proprietary trading.
Sec. 989A. Senior investor protections.
Sec. 989B. Designated Federal entity inspectors general independence.
Sec. 989C. Strengthening Inspector General accountability.
Sec. 989D. Removal of Inspectors General of designated Federal entities.
Sec. 989E. Additional oversight of financial regulatory system.
Sec. 989F. GAO study of person to person lending.
Sec. 989G. Exemption for nonaccelerated filers.
Sec. 989H. Corrective responses by heads of certain establishments to
deficiencies identified by Inspectors General.
Sec. 989I. GAO study regarding exemption for smaller issuers.
Sec. 989J. Further promoting the adoption of the NAIC Model Regulations
that enhance protection of seniors and other consumers.
Subtitle J--Securities and Exchange Commission Match Funding
Sec. 991. Securities and Exchange Commission match funding.
TITLE X--BUREAU OF CONSUMER FINANCIAL PROTECTION
Sec. 1001. Short title.
Sec. 1002. Definitions.
Subtitle A--Bureau of Consumer Financial Protection
Sec. 1011. Establishment of the Bureau of Consumer Financial Protection.
Sec. 1012. Executive and administrative powers.
Sec. 1013. Administration.
Sec. 1014. Consumer Advisory Board.
Sec. 1015. Coordination.
Sec. 1016. Appearances before and reports to Congress.
Sec. 1017. Funding; penalties and fines.
Sec. 1018. Effective date.
Subtitle B--General Powers of the Bureau
Sec. 1021. Purpose, objectives, and functions.
Sec. 1022. Rulemaking authority.
Sec. 1023. Review of Bureau regulations.
Sec. 1024. Supervision of nondepository covered persons.
Sec. 1025. Supervision of very large banks, savings associations, and
credit unions.
Sec. 1026. Other banks, savings associations, and credit unions.
Sec. 1027. Limitations on authorities of the Bureau; preservation of
authorities.
Sec. 1028. Authority to restrict mandatory pre-dispute arbitration.
Sec. 1029. Exclusion for auto dealers.
Sec. 1029A. Effective date.
Subtitle C--Specific Bureau Authorities
Sec. 1031. Prohibiting unfair, deceptive, or abusive acts or practices.
Sec. 1032. Disclosures.
Sec. 1033. Consumer rights to access information.
Sec. 1034. Response to consumer complaints and inquiries.
Sec. 1035. Private education loan ombudsman.
Sec. 1036. Prohibited acts.
Sec. 1037. Effective date.
Subtitle D--Preservation of State Law
Sec. 1041. Relation to State law.
Sec. 1042. Preservation of enforcement powers of States.
Sec. 1043. Preservation of existing contracts.
Sec. 1044. State law preemption standards for national banks and
subsidiaries clarified.
Sec. 1045. Clarification of law applicable to nondepository institution
subsidiaries.
Sec. 1046. State law preemption standards for Federal savings
associations and subsidiaries clarified.
Sec. 1047. Visitorial standards for national banks and savings
associations.
Sec. 1048. Effective date.
Subtitle E--Enforcement Powers
Sec. 1051. Definitions.
Sec. 1052. Investigations and administrative discovery.
Sec. 1053. Hearings and adjudication proceedings.
Sec. 1054. Litigation authority.
Sec. 1055. Relief available.
Sec. 1056. Referrals for criminal proceedings.
Sec. 1057. Employee protection.
Sec. 1058. Effective date.
Subtitle F--Transfer of Functions and Personnel; Transitional Provisions
Sec. 1061. Transfer of consumer financial protection functions.
Sec. 1062. Designated transfer date.
Sec. 1063. Savings provisions.
Sec. 1064. Transfer of certain personnel.
Sec. 1065. Incidental transfers.
Sec. 1066. Interim authority of the Secretary.
Sec. 1067. Transition oversight.
Subtitle G--Regulatory Improvements
Sec. 1071. Small business data collection.
Sec. 1072. Assistance for economically vulnerable individuals and
families.
Sec. 1073. Remittance transfers.
Sec. 1074. Department of the Treasury study on ending the
conservatorship of Fannie Mae, Freddie Mac, and reforming the
housing finance system.
Sec. 1075. Reasonable fees and rules for payment card transactions.
Sec. 1076. Reverse mortgage study and regulations.
Sec. 1077. Report on private education loans and private educational
lenders.
Sec. 1078. Study and report on credit scores.
Sec. 1079. Review, report, and program with respect to exchange
facilitators.
Sec. 1079A. Financial fraud provisions.
Subtitle H--Conforming Amendments
Sec. 1081. Amendments to the Inspector General Act.
Sec. 1082. Amendments to the Privacy Act of 1974.
Sec. 1083. Amendments to the Alternative Mortgage Transaction Parity Act
of 1982.
Sec. 1084. Amendments to the Electronic Fund Transfer Act.
Sec. 1085. Amendments to the Equal Credit Opportunity Act.
Sec. 1086. Amendments to the Expedited Funds Availability Act.
Sec. 1087. Amendments to the Fair Credit Billing Act.
Sec. 1088. Amendments to the Fair Credit Reporting Act and the Fair and
Accurate Credit Transactions Act of 2003.
Sec. 1089. Amendments to the Fair Debt Collection Practices Act.
Sec. 1090. Amendments to the Federal Deposit Insurance Act.
Sec. 1091. Amendment to Federal Financial Institutions Examination
Council Act of 1978.
Sec. 1092. Amendments to the Federal Trade Commission Act.
Sec. 1093. Amendments to the Gramm-Leach-Bliley Act.
Sec. 1094. Amendments to the Home Mortgage Disclosure Act of 1975.
Sec. 1095. Amendments to the Homeowners Protection Act of 1998.
Sec. 1096. Amendments to the Home Ownership and Equity Protection Act of
1994.
Sec. 1097. Amendments to the Omnibus Appropriations Act, 2009.
Sec. 1098. Amendments to the Real Estate Settlement Procedures Act of
1974.
Sec. 1098A. Amendments to the Interstate Land Sales Full Disclosure Act.
Sec. 1099. Amendments to the Right to Financial Privacy Act of 1978.
Sec. 1100. Amendments to the Secure and Fair Enforcement for Mortgage
Licensing Act of 2008.
Sec. 1100A. Amendments to the Truth in Lending Act.
Sec. 1100B. Amendments to the Truth in Savings Act.
Sec. 1100C. Amendments to the Telemarketing and Consumer Fraud and Abuse
Prevention Act.
Sec. 1100D. Amendments to the Paperwork Reduction Act.
Sec. 1100E. Adjustments for inflation in the Truth in Lending Act.
Sec. 1100F. Use of consumer reports.
Sec. 1100G. Small business fairness and regulatory transparency.
Sec. 1100H. Effective date.
TITLE XI--FEDERAL RESERVE SYSTEM PROVISIONS
Sec. 1101. Federal Reserve Act amendments on emergency lending
authority.
Sec. 1102. Reviews of special Federal reserve credit facilities.
Sec. 1103. Public access to information.
Sec. 1104. Liquidity event determination.
Sec. 1105. Emergency financial stabilization.
Sec. 1106. Additional related amendments.
Sec. 1107. Federal Reserve Act amendments on Federal reserve bank
governance.
Sec. 1108. Federal Reserve Act amendments on supervision and regulation
policy.
Sec. 1109. GAO audit of the Federal Reserve facilities; publication of
Board actions.
TITLE XII--IMPROVING ACCESS TO MAINSTREAM FINANCIAL INSTITUTIONS
Sec. 1201. Short title.
Sec. 1202. Purpose.
Sec. 1203. Definitions.
Sec. 1204. Expanded access to mainstream financial institutions.
Sec. 1205. Low-cost alternatives to payday loans.
Sec. 1206. Grants to establish loan-loss reserve funds.
Sec. 1207. Procedural provisions.
Sec. 1208. Authorization of appropriations.
Sec. 1209. Regulations.
Sec. 1210. Evaluation and reports to Congress.
TITLE XIII--PAY IT BACK ACT
Sec. 1301. Short title.
Sec. 1302. Amendment to reduce TARP authorization.
Sec. 1303. Report.
Sec. 1304. Amendments to Housing and Economic Recovery Act of 2008.
Sec. 1305. Federal Housing Finance Agency report.
Sec. 1306. Repayment of unobligated ARRA funds.
TITLE XIV--MORTGAGE REFORM AND ANTI-PREDATORY LENDING ACT
Sec. 1400. Short title; designation as enumerated consumer law.
Subtitle A--Residential Mortgage Loan Origination Standards
Sec. 1401. Definitions.
Sec. 1402. Residential mortgage loan origination.
Sec. 1403. Prohibition on steering incentives.
Sec. 1404. Liability.
Sec. 1405. Regulations.
Sec. 1406. Study of shared appreciation mortgages.
Subtitle B--Minimum Standards For Mortgages
Sec. 1411. Ability to repay.
Sec. 1412. Safe harbor and rebuttable presumption.
Sec. 1413. Defense to foreclosure.
Sec. 1414. Additional standards and requirements.
Sec. 1415. Rule of construction.
Sec. 1416. Amendments to civil liability provisions.
Sec. 1417. Lender rights in the context of borrower deception.
Sec. 1418. Six-month notice required before reset of hybrid adjustable
rate mortgages.
Sec. 1419. Required disclosures.
Sec. 1420. Disclosures required in monthly statements for residential
mortgage loans.
Sec. 1421. Report by the GAO.
Sec. 1422. State attorney general enforcement authority.
Subtitle C--High-Cost Mortgages
Sec. 1431. Definitions relating to high-cost mortgages.
Sec. 1432. Amendments to existing requirements for certain mortgages.
Sec. 1433. Additional requirements for certain mortgages.
Subtitle D--Office of Housing Counseling
Sec. 1441. Short title.
Sec. 1442. Establishment of Office of Housing Counseling.
Sec. 1443. Counseling procedures.
Sec. 1444. Grants for housing counseling assistance.
Sec. 1445. Requirements to use HUD-certified counselors under HUD
programs.
Sec. 1446. Study of defaults and foreclosures.
Sec. 1447. Default and foreclosure database.
Sec. 1448. Definitions for counseling-related programs.
Sec. 1449. Accountability and transparency for grant recipients.
Sec. 1450. Updating and simplification of mortgage information booklet.
Sec. 1451. Home inspection counseling.
Sec. 1452. Warnings to homeowners of foreclosure rescue scams.
Subtitle E--Mortgage Servicing
Sec. 1461. Escrow and impound accounts relating to certain consumer
credit transactions.
Sec. 1462. Disclosure notice required for consumers who waive escrow
services.
Sec. 1463. Real Estate Settlement Procedures Act of 1974 amendments.
Sec. 1464. Truth in Lending Act amendments.
Sec. 1465. Escrows included in repayment analysis.
Subtitle F--Appraisal Activities
Sec. 1471. Property appraisal requirements.
Sec. 1472. Appraisal independence requirements.
Sec. 1473. Amendments relating to Appraisal Subcommittee of FFIEC,
Appraiser Independence Monitoring, Approved Appraiser
Education, Appraisal Management Companies, Appraiser Complaint
Hotline, Automated Valuation Models, and Broker Price
Opinions.
Sec. 1474. Equal Credit Opportunity Act amendment.
Sec. 1475. Real Estate Settlement Procedures Act of 1974 amendment
relating to certain appraisal fees.
Sec. 1476. GAO study on the effectiveness and impact of various
appraisal methods, valuation models and distributions
channels, and on the Home Valuation Code of conduct and the
Appraisal Subcommittee.
Subtitle G--Mortgage Resolution and Modification
Sec. 1481. Multifamily mortgage resolution program.
Sec. 1482. Home Affordable Modification Program guidelines.
Sec. 1483. Public availability of information of Making Home Affordable
Program.
Sec. 1484. Protecting tenants at foreclosure extension and
clarification.
Subtitle H--Miscellaneous Provisions
Sec. 1491. Sense of Congress regarding the importance of government-
sponsored enterprises reform to enhance the protection,
limitation, and regulation of the terms of residential
mortgage credit.
Sec. 1492. GAO study report on government efforts to combat mortgage
foreclosure rescue scams and loan modification fraud.
Sec. 1493. Reporting of mortgage data by State.
Sec. 1494. Study of effect of drywall presence on foreclosures.
Sec. 1495. Definition.
Sec. 1496. Emergency mortgage relief.
Sec. 1497. Additional assistance for Neighborhood Stabilization Program.
Sec. 1498. Legal assistance for foreclosure-related issues.
TITLE XV--MISCELLANEOUS PROVISIONS
Sec. 1501. Restrictions on use of United States funds for foreign
governments; protection of American taxpayers.
Sec. 1502. Conflict minerals.
Sec. 1503. Reporting requirements regarding coal or other mine safety.
Sec. 1504. Disclosure of payments by resource extraction issuers.
Sec. 1505. Study by the Comptroller General.
Sec. 1506. Study on core deposits and brokered deposits.
TITLE XVI--SECTION 1256 CONTRACTS
Sec. 1601. Certain swaps, etc., not treated as section 1256 contracts.
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:
(1) Affiliate.--The term ``affiliate'' has the same
meaning as in section 3 of the Federal Deposit
Insurance Act (12 U.S.C. 1813).
(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.
(3) Board of governors.--The term ``Board of
Governors'' means the Board of Governors of the Federal
Reserve System.
(4) Bureau.--The term ``Bureau'' means the Bureau
of Consumer Financial Protection established under
title X.
(5) Commission.--The term ``Commission'' means the
Securities and Exchange Commission, except in the
context of the Commodity Futures Trading Commission.
(6) Commodity futures terms.--The terms ``futures
commission merchant'', ``swap'', ``swap dealer'',
``swap execution facility'', ``derivatives clearing
organization'', ``board of trade'', ``commodity trading
advisor'', ``commodity pool'', and ``commodity pool
operator'' have the same meanings as given the terms in
section 1a of the Commodity Exchange Act (7 U.S.C. 1 et
seq.).
(7) Corporation.--The term ``Corporation'' means
the Federal Deposit Insurance Corporation.
(8) Council.--The term ``Council'' means the
Financial Stability Oversight Council established under
title I.
(9) 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).
(10) Federal banking agency.--The term--
(A) ``Federal banking agency'' means,
individually, the Board of Governors, the
Office of the Comptroller of the Currency, and
the Corporation; and
(B) ``Federal banking agencies'' means all
of the agencies referred to in subparagraph
(A), collectively.
(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)).
(12) Primary financial regulatory agency.--The term
``primary financial regulatory agency'' means--
(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 described in subparagraph (B), (C),
(D), or (E);
(B) the Securities and Exchange Commission,
with respect to--
(i) any broker or dealer that is
registered with the Commission under
the Securities Exchange Act of 1934,
with respect to the activities of the
broker or dealer that require the
broker or dealer to be registered under
that Act;
(ii) any investment company that is
registered with the Commission under
the Investment Company Act of 1940,
with respect to the activities of the
investment company that require the
investment company to be registered
under that Act;
(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;
(iv) any clearing agency registered
with the Commission under the
Securities Exchange Act of 1934, with
respect to the activities of the
clearing agency that require the agency
to be registered under such Act;
(v) any nationally recognized
statistical rating organization
registered with the Commission under
the Securities Exchange Act of 1934;
(vi) any transfer agent registered
with the Commission under the
Securities Exchange Act of 1934;
(vii) any exchange registered as a
national securities exchange with the
Commission under the Securities
Exchange Act of 1934;
(viii) any national securities
association registered with the
Commission under the Securities
Exchange Act of 1934;
(ix) any securities information
processor registered with the
Commission under the Securities
Exchange Act of 1934;
(x) the Municipal Securities
Rulemaking Board established under the
Securities Exchange Act of 1934;
(xi) the Public Company Accounting
Oversight Board established under the
Sarbanes-Oxley Act of 2002 (15 U.S.C.
7211 et seq.);
(xii) the Securities Investor
Protection Corporation established
under the Securities Investor
Protection Act of 1970 (15 U.S.C. 78aaa
et seq.); and
(xiii) any security-based swap
execution facility, security-based swap
data repository, security-based swap
dealer or major security-based swap
participant registered with the
Commission under the Securities
Exchange Act of 1934, with respect to
the security-based swap activities of
the person that require such person to
be registered under such Act;
(C) the Commodity Futures Trading
Commission, with respect to--
(i) any futures commission merchant
registered with the Commodity Futures
Trading Commission under the Commodity
Exchange Act (7 U.S.C. 1 et seq.), with
respect to the activities of the
futures commission merchant that
require the futures commission merchant
to be registered under that Act;
(ii) any commodity pool operator
registered with the Commodity Futures
Trading Commission under the Commodity
Exchange Act (7 U.S.C. 1 et seq.), with
respect to the activities of the
commodity pool operator that require
the commodity pool operator to be
registered under that Act, or a
commodity pool, as defined in that Act;
(iii) any commodity trading advisor
or introducing broker registered with
the Commodity Futures Trading
Commission under the Commodity Exchange
Act (7 U.S.C. 1 et seq.), with respect
to the activities of the commodity
trading advisor or introducing broker
that require the commodity trading
adviser or introducing broker to be
registered under that Act;
(iv) any derivatives clearing
organization registered with the
Commodity Futures Trading Commission
under the Commodity Exchange Act (7
U.S.C. 1 et seq.), with respect to the
activities of the derivatives clearing
organization that require the
derivatives clearing organization to be
registered under that Act;
(v) any board of trade designated
as a contract market by the Commodity
Futures Trading Commission under the
Commodity Exchange Act (7 U.S.C. 1 et
seq.);
(vi) any futures association
registered with the Commodity Futures
Trading Commission under the Commodity
Exchange Act (7 U.S.C. 1 et seq.);
(vii) any retail foreign exchange
dealer registered with the Commodity
Futures Trading Commission under the
Commodity Exchange Act (7 U.S.C. 1 et
seq.), with respect to the activities
of the retail foreign exchange dealer
that require the retail foreign
exchange dealer to be registered under
that Act;
(viii) any swap execution facility,
swap data repository, swap dealer, or
major swap participant registered with
the Commodity Futures Trading
Commission under the Commodity Exchange
Act (7 U.S.C. 1 et seq.) with respect
to the swap activities of the person
that require such person to be
registered under that Act; and
(ix) any registered entity under
the Commodity Exchange Act (7 U.S.C. 1
et seq.), with respect to the
activities of the registered entity
that require the registered entity to
be registered under that Act;
(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; and
(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.
(13) Prudential standards.--The term ``prudential
standards'' means enhanced supervision and regulatory
standards developed by the Board of Governors under
section 165.
(14) Secretary.--The term ``Secretary'' means the
Secretary of the Treasury.
(15) Securities terms.--The--
(A) terms ``broker'', ``dealer'',
``issuer'', ``nationally recognized statistical
rating 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);
(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); and
(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).
(16) 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.
(17) Transfer date.--The term ``transfer date''
means the date established under section 311.
(18) Other incorporated definitions.--
(A) Federal deposit insurance act.--The
terms ``bank'', ``bank holding company'',
``control'', ``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).
(B) Holding companies.--The term--
(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);
(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)); and
(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)).
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.
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.
SEC. 5. BUDGETARY EFFECTS.
The budgetary effects of this Act, for the purpose of
complying with the Statutory Pay-As-You-Go-Act of 2010, shall
be determined by reference to the latest statement titled
``Budgetary Effects of PAYGO Legislation'' for this Act,
jointly submitted for printing in the Congressional Record by
the Chairmen of the House and Senate Budget Committees,
provided that such statement has been submitted prior to the
vote on passage in the House acting first on this conference
report or amendment between the Houses.
SEC. 6. ANTITRUST SAVINGS CLAUSE.
Nothing in this Act, or any amendment made by this Act,
shall be construed to modify, impair, or supersede the
operation of any of the antitrust laws, unless otherwise
specified. For purposes of this section, the term ``antitrust
laws'' has the same meaning as 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.
TITLE I--FINANCIAL STABILITY
SEC. 101. SHORT TITLE.
This title may be cited as the ``Financial Stability Act of
2010''.
SEC. 102. DEFINITIONS.
(a) In General.--For purposes of this title, unless the
context otherwise requires, the following definitions shall
apply:
(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.
(2) Chairperson.--The term ``Chairperson'' means
the Chairperson of the Council.
(3) Member agency.--The term ``member agency''
means an agency represented by a voting member of the
Council.
(4) Nonbank financial company definitions.--
(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) that is--
(i) incorporated or organized in a
country other than the United States;
and
(ii) predominantly engaged in,
including through a branch in the
United States, financial activities, as
defined in paragraph (6).
(B) U.S. nonbank financial company.--The
term ``U.S. nonbank financial company'' means a
company (other than a bank holding company, 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.), or a
national securities exchange (or parent
thereof), clearing agency (or parent thereof,
unless the parent is a bank holding company),
security-based swap execution facility, or
security-based swap data repository registered
with the Commission, or a board of trade
designated as a contract market (or parent
thereof), or a derivatives clearing
organization (or parent thereof, unless the
parent is a bank holding company), swap
execution facility or a swap data repository
registered with the Commodity Futures Trading
Commission), that is--
(i) incorporated or organized under
the laws of the United States or any
State; and
(ii) predominantly engaged in
financial activities, as defined in
paragraph (6).
(C) Nonbank financial company.--The term
``nonbank financial company'' means a U.S.
nonbank financial company and a foreign nonbank
financial company.
(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.
(5) Office of financial research.--The term
``Office of Financial Research'' means the office
established under section 152.
(6) Predominantly engaged.--A company is
``predominantly engaged in financial activities'' if--
(A) the annual gross revenues derived by
the company and all of its subsidiaries from
activities that are financial in nature (as
defined in section 4(k) of the Bank Holding
Company Act of 1956) and, if applicable, from
the ownership or control of one or more insured
depository institutions, represents 85 percent
or more of the consolidated annual gross
revenues of the company; or
(B) the consolidated assets of the company
and all of its subsidiaries related to
activities that are financial in nature (as
defined in section 4(k) of the Bank Holding
Company Act of 1956) and, if applicable,
related to the ownership or control of one or
more insured depository institutions,
represents 85 percent or more of the
consolidated assets of the company.
(7) 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,
but in no instance shall the term ``significant nonbank
financial company'' include those entities that are
excluded under paragraph (4)(B).
(b) Definitional Criteria.--The Board of Governors shall
establish, by regulation, the requirements for determining if a
company is predominantly engaged in financial activities, as
defined in subsection (a)(6).
(c) Foreign Nonbank Financial Companies.--For purposes of
the application of subtitles A and C (other than section
113(b)) with respect to a foreign nonbank financial company,
references in this title to ``company'' or ``subsidiary''
include only the United States activities and subsidiaries of
such foreign company, except as otherwise provided.
Subtitle A--Financial Stability Oversight Council
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.
(b) Membership.--The Council shall consist of the following
members:
(1) Voting members.--The voting members, who shall
each have 1 vote on the Council shall be--
(A) the Secretary of the Treasury, who
shall serve as Chairperson of the Council;
(B) the Chairman of the Board of Governors;
(C) the Comptroller of the Currency;
(D) the Director of the Bureau;
(E) the Chairman of the Commission;
(F) the Chairperson of the Corporation;
(G) the Chairperson of the Commodity
Futures Trading Commission;
(H) the Director of the Federal Housing
Finance Agency;
(I) the Chairman of the National Credit
Union Administration Board; and
(J) an independent member appointed by the
President, by and with the advice and consent
of the Senate, having insurance expertise.
(2) Nonvoting members.--The nonvoting members, who
shall serve in an advisory capacity as a nonvoting
member of the Council, shall be--
(A) the Director of the Office of Financial
Research;
(B) the Director of the Federal Insurance
Office;
(C) a State insurance commissioner, to be
designated by a selection process determined by
the State insurance commissioners;
(D) a State banking supervisor, to be
designated by a selection process determined by
the State banking supervisors; and
(E) a State securities commissioner (or an
officer performing like functions), to be
designated by a selection process determined by
such State securities commissioners.
(3) Nonvoting member participation.--The nonvoting
members of the Council shall not be excluded from any
of the proceedings, meetings, discussions, or
deliberations of the Council, except that the
Chairperson may, upon an affirmative vote of the member
agencies, exclude the nonvoting members from any of the
proceedings, meetings, discussions, or deliberations of
the Council when necessary to safeguard and promote the
free exchange of confidential supervisory information.
(c) Terms; Vacancy.--
(1) Terms.--The independent member of the Council
shall serve for a term of 6 years, and each nonvoting
member described in subparagraphs (C), (D), and (E) of
subsection (b)(2) shall serve for a term of 2 years.
(2) Vacancy.--Any vacancy on the Council shall be
filled in the manner in which the original appointment
was made.
(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.
(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.
(e) Meetings.--
(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.
(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.
(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 voting members then serving.
(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.
(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.
(i) Compensation of Members.--
(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.
(2) Compensation for non-federal member.--Section
5314 of title 5, United States Code, is amended by
adding at the end the following:
``Independent Member of the Financial Stability
Oversight Council (1).''.
(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.
SEC. 112. COUNCIL AUTHORITY.
(a) Purposes and Duties of the Council.--
(1) In general.--The purposes of the Council are--
(A) to identify risks to the financial
stability of the United States that could arise
from the material financial distress or
failure, or ongoing activities, of large,
interconnected bank holding companies or
nonbank financial companies, or that could
arise outside the financial services
marketplace;
(B) to promote market discipline, by
eliminating expectations on the part of
shareholders, creditors, and counterparties of
such companies that the Government will shield
them from losses in the event of failure; and
(C) to respond to emerging threats to the
stability of the United States financial
system.
(2) Duties.--The Council shall, in accordance with
this title--
(A) collect information from member
agencies, other Federal and State financial
regulatory agencies, the Federal Insurance
Office and, if necessary to assess risks to the
United States financial system, direct the
Office of Financial Research to collect
information from bank holding companies and
nonbank financial companies;
(B) provide direction to, and request data
and analyses from, the Office of Financial
Research to support the work of the Council;
(C) monitor the financial services
marketplace in order to identify potential
threats to the financial stability of the
United States;
(D) monitor domestic and international
financial regulatory proposals and
developments, including insurance and
accounting issues, and to advise Congress and
make recommendations in such areas that will
enhance the integrity, efficiency,
competitiveness, and stability of the U.S.
financial markets;
(E) facilitate information sharing and
coordination among the member agencies and
other Federal and State agencies regarding
domestic financial services policy development,
rulemaking, examinations, reporting
requirements, and enforcement actions;
(F) recommend to the member agencies
general supervisory priorities and principles
reflecting the outcome of discussions among the
member agencies;
(G) identify gaps in regulation that could
pose risks to the financial stability of the
United States;
(H) require supervision by the Board of
Governors for nonbank financial companies that
may pose risks to the financial stability of
the United States in the event of their
material financial distress or failure, or
because of their activities pursuant to section
113;
(I) make recommendations to the Board of
Governors concerning the establishment of
heightened prudential standards for risk-based
capital, leverage, liquidity, contingent
capital, resolution plans and credit exposure
reports, concentration limits, enhanced public
disclosures, and overall risk management for
nonbank financial companies and large,
interconnected bank holding companies
supervised by the Board of Governors;
(J) identify systemically important
financial market utilities and payment,
clearing, and settlement activities (as that
term is defined in title VIII);
(K) make recommendations to primary
financial regulatory agencies to apply new or
heightened standards and safeguards for
financial activities or practices that could
create or increase risks of significant
liquidity, credit, or other problems spreading
among bank holding companies, nonbank financial
companies, and United States financial markets;
(L) review and, as appropriate, may submit
comments to the Commission and any standard-
setting body with respect to an existing or
proposed accounting principle, standard, or
procedure;
(M) provide a forum for--
(i) discussion and analysis of
emerging market developments and
financial regulatory issues; and
(ii) resolution of jurisdictional
disputes among the members of the
Council; and
(N) annually report to and testify before
Congress on--
(i) the activities of the Council;
(ii) significant financial market
and regulatory developments, including
insurance and accounting regulations
and standards, along with an assessment
of those developments on the stability
of the financial system;
(iii) potential emerging threats to
the financial stability of the United
States;
(iv) all determinations made under
section 113 or title VIII, and the
basis for such determinations;
(v) all recommendations made under
section 119 and the result of such
recommendations; and
(vi) recommendations--
(I) to enhance the
integrity, efficiency,
competitiveness, and stability
of United States financial
markets;
(II) to promote market
discipline; and
(III) to maintain investor
confidence.
(b) Statements by Voting Members of the Council.--At the
time at which each report is submitted under subsection (a),
each voting member of the Council shall--
(1) if such member believes that the Council, the
Government, and the private sector are taking all
reasonable steps to ensure financial stability and to
mitigate systemic risk that would negatively affect the
economy, submit a signed statement to Congress stating
such belief; or
(2) if such member does not believe that all
reasonable steps described under paragraph (1) are
being taken, submit a signed statement to Congress
stating what actions such member believes need to be
taken in order to ensure that all reasonable steps
described under paragraph (1) are taken.
(c) Testimony by the Chairperson.--The Chairperson shall
appear before the Committee on Financial Services of the House
of Representatives and the Committee on Banking, Housing, and
Urban Affairs of the Senate at an annual hearing, after the
report is submitted under subsection (a)--
(1) to discuss the efforts, activities, objectives,
and plans of the Council; and
(2) to discuss and answer questions concerning such
report.
(d) Authority To Obtain Information.--
(1) In general.--The Council may receive, and may
request the submission of, any data or information from
the Office of Financial Research, member agencies, and
the Federal Insurance Office, as necessary--
(A) to monitor the financial services
marketplace to identify potential risks to the
financial stability of the United States; or
(B) to otherwise carry out any of the
provisions of this title.
(2) Submissions by the office and member
agencies.--Notwithstanding any other provision of law,
the Office of Financial Research, any member agency,
and the Federal Insurance Office, are authorized to
submit information to the Council.
(3) Financial data collection.--
(A) In general.--The Council, acting
through the Office of Financial Research, may
require the submission of periodic and other
reports from any nonbank financial company or
bank holding company for the purpose of
assessing the extent to which a financial
activity or financial market in which the
nonbank financial company or bank holding
company participates, or the nonbank financial
company or bank holding company itself, poses a
threat to the financial stability of the United
States.
(B) Mitigation of report burden.--Before
requiring the submission of reports from any
nonbank financial company or bank holding
company that is regulated by a member agency or
any primary financial regulatory agency, the
Council, acting through the Office of Financial
Research, shall coordinate with such agencies
and shall, whenever possible, rely on
information available from the Office of
Financial Research or such agencies.
(C) Mitigation in case of foreign financial
companies.--Before requiring the submission of
reports from a company that is a foreign
nonbank financial company or foreign-based bank
holding company, the Council shall, acting
through the Office of Financial Research, to
the extent appropriate, consult with the
appropriate foreign regulator of such company
and, whenever possible, rely on information
already being collected by such foreign
regulator, with English translation.
(4) Back-up examination by the board of
governors.--If the Council is unable to determine
whether the financial activities of a U.S. nonbank
financial company pose a threat to the financial
stability of the United States, based on information or
reports obtained under paragraphs (1) and (3),
discussions with management, and publicly available
information, the Council may request the Board of
Governors, and the Board of Governors is authorized, to
conduct an examination of the U.S. nonbank financial
company for the sole purpose of determining whether the
nonbank financial company should be supervised by the
Board of Governors for purposes of this title.
(5) Confidentiality.--
(A) In general.--The Council, the Office of
Financial Research, and the other member
agencies shall maintain the confidentiality of
any data, information, and reports submitted
under this title.
(B) Retention of privilege.--The submission
of any nonpublicly available data or
information under this subsection and subtitle
B shall not constitute a waiver of, or
otherwise affect, any privilege arising under
Federal or State law (including the rules of
any Federal or State court) to which the data
or information is otherwise subject.
(C) Freedom of information act.--Section
552 of title 5, United States Code, including
the exceptions thereunder, shall apply to any
data or information submitted under this
subsection and subtitle B.
SEC. 113. AUTHORITY TO REQUIRE SUPERVISION AND REGULATION OF CERTAIN
NONBANK FINANCIAL COMPANIES.
(a) U.S. Nonbank Financial Companies Supervised by the
Board of Governors.--
(1) Determination.--The Council, on a nondelegable
basis and by a vote of not fewer than \2/3\ of the
voting 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, or the nature,
scope, size, scale, concentration, interconnectedness,
or mix of the activities of the U.S. nonbank financial
company, could pose a threat to the financial stability
of the United States.
(2) Considerations.--In making a determination
under paragraph (1), the Council shall consider--
(A) the extent of the leverage of the
company;
(B) the extent and nature of the off-
balance-sheet exposures of the company;
(C) the extent and nature of the
transactions and relationships of the company
with other significant nonbank financial
companies and significant bank holding
companies;
(D) 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;
(E) the importance of the company as a
source of credit for low-income, minority, or
underserved communities, and the impact that
the failure of such company would have on the
availability of credit in such communities;
(F) the extent to which assets are managed
rather than owned by the company, and the
extent to which ownership of assets under
management is diffuse;
(G) the nature, scope, size, scale,
concentration, interconnectedness, and mix of
the activities of the company;
(H) the degree to which the company is
already regulated by 1 or more primary
financial regulatory agencies;
(I) the amount and nature of the financial
assets of the company;
(J) the amount and types of the liabilities
of the company, including the degree of
reliance on short-term funding; and
(K) any other risk-related factors that the
Council deems appropriate.
(b) Foreign Nonbank Financial Companies Supervised by the
Board of Governors.--
(1) Determination.--The Council, on a nondelegable
basis and by a vote of not fewer than \2/3\ of the
voting members then serving, including an affirmative
vote by the Chairperson, may determine that a foreign
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 foreign nonbank financial company, or the nature,
scope, size, scale, concentration, interconnectedness,
or mix of the activities of the foreign nonbank
financial company, could pose a threat to the financial
stability of the United States.
(2) Considerations.--In making a determination
under paragraph (1), the Council shall consider--
(A) the extent of the leverage of the
company;
(B) the extent and nature of the United
States related off-balance-sheet exposures of
the company;
(C) the extent and nature of the
transactions and relationships of the company
with other significant nonbank financial
companies and significant bank holding
companies;
(D) 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;
(E) the importance of the company as a
source of credit for low-income, minority, or
underserved communities in the United States,
and the impact that the failure of such company
would have on the availability of credit in
such communities;
(F) the extent to which assets are managed
rather than owned by the company and the extent
to which ownership of assets under management
is diffuse;
(G) the nature, scope, size, scale,
concentration, interconnectedness, and mix of
the activities of the company;
(H) the extent to which the company is
subject to prudential standards on a
consolidated basis in its home country that are
administered and enforced by a comparable
foreign supervisory authority;
(I) the amount and nature of the United
States financial assets of the company;
(J) the amount and nature 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; and
(K) any other risk-related factors that the
Council deems appropriate.
(c) Antievasion.--
(1) Determinations.--In order to avoid evasion of
this title, the Council, on its own initiative or at
the request of the Board of Governors, may determine,
on a nondelegable basis and by a vote of not fewer than
\2/3\ of the voting members then serving, including an
affirmative vote by the Chairperson, that--
(A) material financial distress related to,
or the nature, scope, size, scale,
concentration, interconnectedness, or mix of,
the financial activities conducted directly or
indirectly by a company incorporated or
organized under the laws of the United States
or any State or the financial activities in the
United States of a company incorporated or
organized in a country other than the United
States would pose a threat to the financial
stability of the United States, based on
consideration of the factors in subsection
(a)(2) or (b)(2), as applicable;
(B) the company is organized or operates in
such a manner as to evade the application of
this title; and
(C) such financial activities of the
company shall be supervised by the Board of
Governors and subject to prudential standards
in accordance with this title, consistent with
paragraph (3).
(2) Report.--Upon making a determination under
paragraph (1), the Council shall submit a report to the
appropriate committees of Congress detailing the
reasons for making such determination.
(3) Consolidated supervision of only financial
activities; establishment of an intermediate holding
company.--
(A) Establishment of an intermediate
holding company.--Upon a determination under
paragraph (1), the company that is the subject
of the determination may establish an
intermediate holding company in which the
financial activities of such company and its
subsidiaries shall be conducted (other than the
activities described in section 167(b)(2)) in
compliance with any regulations or guidance
provided by the Board of Governors. Such
intermediate holding company shall be subject
to the supervision of the Board of Governors
and to prudential standards under this title as
if the intermediate holding company were a
nonbank financial company supervised by the
Board of Governors.
(B) Action of the board of governors.--To
facilitate the supervision of the financial
activities subject to the determination in
paragraph (1), the Board of Governors may
require a company to establish an intermediate
holding company, as provided for in section
167, which would be subject to the supervision
of the Board of Governors and to prudential
standards under this title, as if the
intermediate holding company were a nonbank
financial company supervised by the Board of
Governors.
(4) Notice and opportunity for hearing and final
determination; judicial review.--Subsections (d)
through (h) shall apply to determinations made by the
Council pursuant to paragraph (1) in the same manner as
such subsections apply to nonbank financial companies.
(5) Covered financial activities.--For purposes of
this subsection, the term ``financial activities''--
(A) means activities that are financial in
nature (as defined in section 4(k) of the Bank
Holding Company Act of 1956);
(B) includes the ownership or control of
one or more insured depository institutions;
and
(C) does not include internal financial
activities conducted for the company or any
affiliate thereof, including internal treasury,
investment, and employee benefit functions.
(6) Only financial activities subject to prudential
supervision.--Nonfinancial activities of the company
shall not be subject to supervision by the Board of
Governors and prudential standards of the Board. For
purposes of this Act, the financial activities that are
the subject of the determination in paragraph (1) shall
be subject to the same requirements as a nonbank
financial company supervised by the Board of Governors.
Nothing in this paragraph shall prohibit or limit the
authority of the Board of Governors to apply prudential
standards under this title to the financial activities
that are subject to the determination in paragraph (1).
(d) Reevaluation and Rescission.--The Council shall--
(1) not less frequently than annually, reevaluate
each determination made under subsections (a) and (b)
with respect to such nonbank financial company
supervised by the Board of Governors; and
(2) rescind any such determination, if the Council,
by a vote of not fewer than \2/3\ of the voting 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.
(e) Notice and Opportunity for Hearing and Final
Determination.--
(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 a nonbank financial company shall be
supervised by the Board of Governors and shall be
subject to prudential standards in accordance with this
title.
(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).
(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.
(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).
(f) Emergency Exception.--
(1) In general.--The Council may waive or modify
the requirements of subsection (e) with respect to a
nonbank financial company, if the Council determines,
by a vote of not fewer than \2/3\ of the voting 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.
(2) Notice.--The Council shall provide notice of a
waiver or modification under this subsection to the
nonbank financial company concerned as soon as
practicable, but not later than 24 hours after the
waiver or modification is granted.
(3) International coordination.--In making a
determination under paragraph (1), the Council shall
consult with the appropriate home country supervisor,
if any, of the foreign nonbank financial company that
is being considered for such a determination.
(4) 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 subsection, 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).
(5) Notice of final determination.--Not later than
30 days after the date of any hearing under paragraph
(4), the Council shall notify the subject nonbank
financial company of the final determination of the
Council under this subsection, which shall contain a
statement of the basis for the decision of the Council.
(g) 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).
(h) 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)(2), (e)(3), or (f)(5),
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.
(i) International Coordination.--In exercising its duties
under this title with respect to foreign nonbank financial
companies, foreign-based bank holding companies, and cross-
border activities and markets, the Council shall consult with
appropriate foreign regulatory authorities, to the extent
appropriate.
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.
SEC. 115. ENHANCED SUPERVISION AND PRUDENTIAL STANDARDS FOR NONBANK
FINANCIAL COMPANIES SUPERVISED BY THE BOARD OF
GOVERNORS AND CERTAIN BANK HOLDING COMPANIES.
(a) In General.--
(1) Purpose.--In order to prevent or mitigate risks
to the financial stability of the United States that
could arise from the material financial distress,
failure, or ongoing activities of large, interconnected
financial institutions, the Council may make
recommendations to the Board of Governors concerning
the establishment and refinement of prudential
standards and reporting and disclosure requirements
applicable to nonbank financial companies supervised by
the Board of Governors and large, interconnected bank
holding companies, that--
(A) are more stringent than those
applicable to other nonbank financial companies
and bank holding companies that do not present
similar risks to the financial stability of the
United States; and
(B) increase in stringency, based on the
considerations identified in subsection (b)(3).
(2) Recommended application of required
standards.--In making recommendations under this
section, the Council may--
(A) differentiate among companies that are
subject to heightened standards on an
individual basis or by category, taking into
consideration their capital structure,
riskiness, complexity, financial activities
(including the financial activities of their
subsidiaries), size, and any other risk-related
factors that the Council deems appropriate; or
(B) recommend an asset threshold that is
higher than $50,000,000,000 for the application
of any standard described in subsections (c)
through (g).
(b) Development of Prudential Standards.--
(1) In general.--The recommendations of the Council
under subsection (a) may include--
(A) risk-based capital requirements;
(B) leverage limits;
(C) liquidity requirements;
(D) resolution plan and credit exposure
report requirements;
(E) concentration limits;
(F) a contingent capital requirement;
(G) enhanced public disclosures;
(H) short-term debt limits; and
(I) overall risk management requirements.
(2) Prudential standards for foreign financial
companies.--In making recommendations concerning the
standards set forth in paragraph (1) that would apply
to foreign nonbank financial companies supervised by
the Board of Governors or foreign-based bank holding
companies, the Council shall--
(A) give due regard to the principle of
national treatment and equality of competitive
opportunity; and
(B) take into account the extent to which
the foreign nonbank financial company or
foreign-based bank holding company is subject
on a consolidated basis to home country
standards that are comparable to those applied
to financial companies in the United States.
(3) Considerations.--In making recommendations
concerning prudential standards under paragraph (1),
the Council shall--
(A) take into account differences among
nonbank financial companies supervised by the
Board of Governors and bank holding companies
described in subsection (a), based on--
(i) the factors described in
subsections (a) and (b) of section 113;
(ii) whether the company owns an
insured depository institution;
(iii) nonfinancial activities and
affiliations of the company; and
(iv) any other factors that the
Council determines appropriate;
(B) to the extent possible, ensure that
small changes in the factors listed in
subsections (a) and (b) of section 113 would
not result in sharp, discontinuous changes in
the prudential standards established under
section 165; and
(C) adapt its recommendations as
appropriate in light of any predominant line of
business of such company, including assets
under management or other activities for which
particular standards may not be appropriate.
(c) Contingent Capital.--
(1) Study required.--The Council shall conduct a
study of the feasibility, benefits, costs, and
structure of a contingent capital requirement for
nonbank financial companies supervised by the Board of
Governors and bank holding companies described in
subsection (a), which study shall include--
(A) an evaluation of the degree to which
such requirement would enhance the safety and
soundness of companies subject to the
requirement, promote the financial stability of
the United States, and reduce risks to United
States taxpayers;
(B) an evaluation of the characteristics
and amounts of contingent capital that should
be required;
(C) an analysis of potential prudential
standards that should be used to determine
whether the contingent capital of a company
would be converted to equity in times of
financial stress;
(D) an evaluation of the costs to
companies, the effects on the structure and
operation of credit and other financial
markets, and other economic effects of
requiring contingent capital;
(E) an evaluation of the effects of such
requirement on the international
competitiveness of companies subject to the
requirement and the prospects for international
coordination in establishing such requirement;
and
(F) recommendations for implementing
regulations.
(2) Report.--The Council shall submit a report to
Congress regarding the study required by paragraph (1)
not later than 2 years after the date of enactment of
this Act.
(3) Recommendations.--
(A) In general.--Subsequent to submitting a
report to Congress under paragraph (2), the
Council may make recommendations to the Board
of Governors to require any nonbank financial
company supervised by the Board of Governors
and any bank holding company described in
subsection (a) to maintain a minimum amount of
contingent capital that is convertible to
equity in times of financial stress.
(B) Factors to consider.--In making
recommendations under this subsection, the
Council shall consider--
(i) an appropriate transition
period for implementation of a
conversion under this subsection;
(ii) the factors described in
subsection (b)(3);
(iii) capital requirements
applicable to a nonbank financial
company supervised by the Board of
Governors or a bank holding company
described in subsection (a), and
subsidiaries thereof;
(iv) results of the study required
by paragraph (1); and
(v) any other factor that the
Council deems appropriate.
(d) Resolution Plan and Credit Exposure Reports.--
(1) Resolution plan.--The Council may make
recommendations to the Board of Governors concerning
the requirement that each nonbank financial company
supervised by the Board of Governors and each bank
holding company described in subsection (a) report
periodically to the Council, the Board of Governors,
and the Corporation, the plan of such company for rapid
and orderly resolution in the event of material
financial distress or failure.
(2) Credit exposure report.--The Council may make
recommendations to the Board of Governors concerning
the advisability of requiring each nonbank financial
company supervised by the Board of Governors and bank
holding company described in subsection (a) to report
periodically to the Council, the Board of Governors,
and the Corporation on--
(A) the nature and extent to which the
company has credit exposure to other
significant nonbank financial companies and
significant bank holding companies; and
(B) the nature and extent to which other
such significant nonbank financial companies
and significant bank holding companies have
credit exposure to that company.
(e) Concentration Limits.--In order to limit the risks that
the failure of any individual company could pose to nonbank
financial companies supervised by the Board of Governors or
bank holding companies described in subsection (a), the Council
may make recommendations to the Board of Governors to prescribe
standards to limit such risks, as set forth in section 165.
(f) Enhanced Public Disclosures.--The Council may make
recommendations to the Board of Governors to require periodic
public disclosures by bank holding companies described in
subsection (a) and by nonbank financial companies supervised by
the Board of Governors, in order to support market evaluation
of the risk profile, capital adequacy, and risk management
capabilities thereof.
(g) Short-term Debt Limits.--The Council may make
recommendations to the Board of Governors to require short-term
debt limits to mitigate the risks that an over-accumulation of
such debt could pose to bank holding companies described in
subsection (a), nonbank financial companies supervised by the
Board of Governors, or the financial system.
SEC. 116. REPORTS.
(a) In General.--Subject to subsection (b), the Council,
acting through the Office of Financial Research, may require a
bank holding company with total consolidated assets of
$50,000,000,000 or greater or a nonbank financial company
supervised by the Board of Governors, and any subsidiary
thereof, to submit certified reports to keep the Council
informed as to--
(1) the financial condition of the company;
(2) systems for monitoring and controlling
financial, operating, and other risks;
(3) transactions with any subsidiary that is a
depository institution; and
(4) the extent to which the activities and
operations of the company and any subsidiary thereof,
could, under adverse circumstances, have the potential
to disrupt financial markets or affect the overall
financial stability of the United States.
(b) Use of Existing Reports.--
(1) In general.--For purposes of compliance with
subsection (a), the Council, acting through the Office
of Financial Research, shall, to the fullest extent
possible, use--
(A) reports that a bank holding company,
nonbank financial company supervised by the
Board of Governors, or any functionally
regulated subsidiary of such company has been
required to provide to other Federal or State
regulatory agencies or to a relevant foreign
supervisory authority;
(B) information that is otherwise required
to be reported publicly; and
(C) externally audited financial
statements.
(2) Availability.--Each bank holding company
described in subsection (a) and nonbank financial
company supervised by the Board of Governors, and any
subsidiary thereof, shall provide to the Council, at
the request of the Council, copies of all reports
referred to in paragraph (1).
(3) Confidentiality.--The Council shall maintain
the confidentiality of the reports obtained under
subsection (a) and paragraph (1)(A) of this subsection.
SEC. 117. TREATMENT OF CERTAIN COMPANIES THAT CEASE TO BE BANK HOLDING
COMPANIES.
(a) Applicability.--This section shall apply to--
(1) any entity that--
(A) was a bank holding company having total
consolidated assets equal to or greater than
$50,000,000,000 as of January 1, 2010; and
(B) 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; and
(2) any successor entity (as defined by the Board
of Governors, in consultation with the Council) to an
entity described in paragraph (1).
(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.
(c) Appeal.--
(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).
(2) Decision.--
(A) Proposed decision.--A Council decision
to grant an appeal under this subsection shall
be made by a vote of not fewer than \2/3\ of
the voting members then serving, including an
affirmative vote by the Chairperson. 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.
(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--
(i) the date of the submission of
the report under subparagraph (A); or
(ii) if, not later than 1 year
after the date of submission of the
report under subparagraph (A), 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.
(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).
(3) Review.--If the Council denies an appeal under
this subsection, the Council shall, not less frequently
than annually, review and reevaluate the decision.
SEC. 118. COUNCIL FUNDING.
Any expenses of the Council shall be treated as expenses
of, and paid by, the Office of Financial Research.
SEC. 119. RESOLUTION OF SUPERVISORY JURISDICTIONAL DISPUTES AMONG
MEMBER AGENCIES.
(a) Request for Council Recommendation.--The Council shall
seek to resolve a dispute among 2 or more member agencies, if--
(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 title X);
(2) the Council determines that the disputing
agencies cannot, after a demonstrated good faith
effort, resolve the dispute without the intervention of
the Council; and
(3) any of the member agencies involved in the
dispute--
(A) provides all other disputants prior
notice of the intent to request dispute
resolution by the Council; and
(B) requests in writing, not earlier than
14 days after providing the notice described in
subparagraph (A), that the Council seek to
resolve the dispute.
(b) Council Recommendation.--The Council shall seek to
resolve each dispute described in subsection (a)--
(1) within a reasonable time after receiving the
dispute resolution request;
(2) after consideration of relevant information
provided by each agency party to the dispute; and
(3) by agreeing with 1 of the disputants regarding
the entirety of the matter, or by determining a
compromise position.
(c) Form of Recommendation.--Any Council recommendation
under this section shall--
(1) be in writing;
(2) include an explanation of the reasons therefor;
and
(3) be approved by the affirmative vote of \2/3\ of
the voting members of the Council then serving.
(d) Nonbinding Effect.--Any recommendation made by the
Council under subsection (c) shall not be binding on the
Federal agencies that are parties to the dispute.
SEC. 120. ADDITIONAL STANDARDS APPLICABLE TO ACTIVITIES OR PRACTICES
FOR FINANCIAL STABILITY PURPOSES.
(a) In General.--The Council may provide for more stringent
regulation of a financial activity by issuing 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, scope, nature, size, scale,
concentration, or interconnectedness 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, financial
markets of the United States, or low-income, minority, or
underserved communities.
(b) Procedure for Recommendations to Regulators.--
(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.
(2) Criteria.--The new or heightened standards and
safeguards for a financial activity or practice
recommended under paragraph (1)--
(A) shall take costs to long-term economic
growth into account; and
(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.
(c) Implementation of Recommended Standards.--
(1) Role of primary financial regulatory agency.--
(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.
(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.
(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.
(d) Report to Congress.--The Council shall report to
Congress on--
(1) any recommendations issued by the Council under
this section;
(2) the implementation of, or failure to implement,
such recommendation on the part of a primary financial
regulatory agency; and
(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.
(e) Effect of Rescission of Identification.--
(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.
(2) Determination of primary financial regulatory
agency to continue.--
(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 such standards should remain in effect.
(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.
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 voting members of the Council then serving,
shall--
(1) limit the ability of the company to merge with,
acquire, consolidate with, or otherwise become
affiliated with another company;
(2) restrict the ability of the company to offer a
financial product or products;
(3) require the company to terminate one or more
activities;
(4) impose conditions on the manner in which the
company conducts 1 or more activities; or
(5) if the Board of Governors determines that the
actions described in paragraphs (1) through (4) are
inadequate to mitigate a threat to the financial
stability of the United States in its recommendation,
require the company to sell or otherwise transfer
assets or off-balance-sheet items to unaffiliated
entities.
(b) Notice and Hearing.--
(1) In general.--The Board of Governors, in
consultation with the Council, shall provide to a
company described in subsection (a) written notice that
such company is being considered for mitigatory action
pursuant to this section, including an explanation of
the basis for, and description of, the proposed
mitigatory action.
(2) Hearing.--Not later than 30 days after the date
of receipt of notice under paragraph (1), the company
may request, in writing, an opportunity for a written
or oral hearing before the Board of Governors to
contest the proposed mitigatory action. Upon receipt of
a timely request, the Board of Governors shall fix a
time (not later than 30 days after the date of receipt
of the request) and place at which such company may
appear, personally or through counsel, to submit
written materials (or, at the discretion of the Board
of Governors, in consultation with the Council, oral
testimony and oral argument).
(3) Decision.--Not later than 60 days after the
date of a hearing under paragraph (2), or not later
than 60 days after the provision of a notice under
paragraph (1) if no hearing was held, the Board of
Governors shall notify the company of the final
decision of the Board of Governors, including the
results of the vote of the Council, as described in
subsection (a).
(c) Factors for Consideration.--The Board of Governors and
the Council shall take into consideration the factors set forth
in subsection (a) or (b) of section 113, as applicable, in
making any determination under subsection (a).
(d) Application to Foreign Financial Companies.--The Board
of Governors may prescribe regulations regarding the
application of this section to foreign nonbank financial
companies supervised by the Board of Governors and foreign-
based bank holding companies--
(1) giving due regard to the principle of national
treatment and equality of competitive opportunity; and
(2) taking into account the extent to which the
foreign nonbank financial company or foreign-based bank
holding company is subject on a consolidated basis to
home country standards that are comparable to those
applied to financial companies in the United States.
SEC. 122. GAO AUDIT OF COUNCIL.
(a) Authority To Audit.--The Comptroller General of the
United States may audit the activities of--
(1) the Council; and
(2) any person or entity acting on behalf of or
under the authority of the Council, to the extent that
such activities relate to work for the Council by such
person or entity.
(b) Access to Information.--
(1) In general.--Notwithstanding any other
provision of law, the Comptroller General shall, upon
request and at such reasonable time and in such
reasonable form as the Comptroller General may request,
have access to--
(A) any records or other information under
the control of or used by the Council;
(B) any records or other information under
the control of a person or entity acting on
behalf of or under the authority of the
Council, to the extent that such records or
other information is relevant to an audit under
subsection (a); and
(C) the officers, directors, employees,
financial advisors, staff, working groups, and
agents and representatives of the Council (as
related to the activities on behalf of the
Council of such agent or representative), at
such reasonable times as the Comptroller
General may request.
(2) Copies.--The Comptroller General may make and
retain copies of such books, accounts, and other
records, access to which is granted under this section,
as the Comptroller General considers appropriate.
SEC. 123. STUDY OF THE EFFECTS OF SIZE AND COMPLEXITY OF FINANCIAL
INSTITUTIONS ON CAPITAL MARKET EFFICIENCY AND
ECONOMIC GROWTH.
(a) Study Required.--
(1) In general.--The Chairperson of the Council
shall carry out a study of the economic impact of
possible financial services regulatory limitations
intended to reduce systemic risk. Such study shall
estimate the benefits and costs on the efficiency of
capital markets, on the financial sector, and on
national economic growth, of--
(A) explicit or implicit limits on the
maximum size of banks, bank holding companies,
and other large financial institutions;
(B) limits on the organizational complexity
and diversification of large financial
institutions;
(C) requirements for operational separation
between business units of large financial
institutions in order to expedite resolution in
case of failure;
(D) limits on risk transfer between
business units of large financial institutions;
(E) requirements to carry contingent
capital or similar mechanisms;
(F) limits on commingling of commercial and
financial activities by large financial
institutions;
(G) segregation requirements between
traditional financial activities and trading or
other high-risk operations in large financial
institutions; and
(H) other limitations on the activities or
structure of large financial institutions that
may be useful to limit systemic risk.
(2) Recommendations.--The study required by this
section shall include recommendations for the optimal
structure of any limits considered in subparagraphs (A)
through (E), in order to maximize their effectiveness
and minimize their economic impact.
(b) Report.--Not later than the end of the 180-day period
beginning on the date of enactment of this title, and not later
than every 5 years thereafter, the Chairperson shall issue a
report to the Congress containing any findings and
determinations made in carrying out the study required under
subsection (a).
Subtitle B--Office of Financial Research
SEC. 151. DEFINITIONS.
For purposes of this subtitle--
(1) the terms ``Office'' and ``Director'' mean the
Office of Financial Research established under this
subtitle and the Director thereof, respectively;
(2) the term ``financial company'' has the same
meaning as in title II, and includes an insured
depository institution and an insurance company;
(3) the term ``Data Center'' means the data center
established under section 154;
(4) the term ``Research and Analysis Center'' means
the research and analysis center established under
section 154;
(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;
(6) the term ``position data''--
(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; and
(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;
(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; and
(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).
SEC. 152. OFFICE OF FINANCIAL RESEARCH ESTABLISHED.
(a) Establishment.--There is established within the
Department of the Treasury the Office of Financial Research.
(b) Director.--
(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.
(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.
(3) Executive level.--The Director shall be
compensated at Level III of the Executive Schedule.
(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.
(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.
(c) Budget.--The Director, in consultation with the
Chairperson, shall establish the annual budget of the Office.
(d) Office Personnel.--
(1) In general.--The Director, in consultation with
the Chairperson, may fix the number of, and appoint and
direct, all employees of the Office.
(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.
(3) Comparability.--Section 1206(a) of the
Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 (12 U.S.C. 1833b(a)) is
amended--
(A) by striking ``Finance Board,'' and
inserting ``Finance Board, the Office of
Financial Research, and the Bureau of Consumer
Financial Protection''; and
(B) by striking ``and the Office of Thrift
Supervision,''.
(4) Senior executives.--Section 3132(a)(1)(D) of
title 5, United States Code, is amended by striking
``and the National Credit Union Administration;'' and
inserting ``the National Credit Union Administration,
the Bureau of Consumer Financial Protection, and the
Office of Financial Research;''.
(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.
(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.
(g) Post-employment Prohibitions.--The Secretary, with the
concurrence of the Director of the Office of Government Ethics,
shall issue regulations prohibiting the Director and any
employee 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 from being employed by or providing advice
or consulting services to a financial company, for a period of
1 year after last having had access in the course of official
duties to such transaction or position data or business
confidential information, regardless of whether that entity is
required to report to the Office. For employees whose access to
business confidential information was limited, the regulations
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.
(h) 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.
(i) 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.
(j) Executive Schedule Compensation.--Section 5314 of title
5, United States Code, is amended by adding at the end the
following new item:
``Director of the Office of Financial Research.''.
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--
(1) collecting data on behalf of the Council, and
providing such data to the Council and member agencies;
(2) standardizing the types and formats of data
reported and collected;
(3) performing applied research and essential long-
term research;
(4) developing tools for risk measurement and
monitoring;
(5) performing other related services;
(6) making the results of the activities of the
Office available to financial regulatory agencies; and
(7) assisting such member agencies in determining
the types and formats of data authorized by this Act to
be collected by such member agencies.
(b) Administrative Authority.--The Office may--
(1) share data and information, including software
developed by the Office, with the Council, member
agencies, and the Bureau of Economic Analysis, which
shared data, information, and software--
(A) shall be maintained with at least the
same level of security as is used by the
Office; and
(B) may not be shared with any individual
or entity without the permission of the
Council;
(2) sponsor and conduct research projects; and
(3) assist, on a reimbursable basis, with financial
analyses undertaken at the request of other Federal
agencies that are not member agencies.
(c) Rulemaking Authority.--
(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).
(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. This
paragraph shall not supersede or interfere with the
independent authority of a member agency under other
law to collect data, in such format and manner as the
member agency requires.
(d) Testimony.--
(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.
(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.
(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.
(f) Subpoena.--
(1) In general.--The Director may require from a
financial company, 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--
(A) such data is required to carry out the
functions described under this subtitle; and
(B) the Office has coordinated with the
relevant primary financial regulatory agency,
as required under section 154(b)(1)(B)(ii).
(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.
(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.
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--
(1) the Data Center; and
(2) the Research and Analysis Center.
(b) Data Center.--
(1) General duties.--
(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).
(B) Authority.--
(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.
(ii) Mitigation of report burden.--
Before requiring the submission of a
report from any financial company that
is regulated by a member agency, any
primary financial regulatory agency, a
foreign supervisory authority, or the
Office shall coordinate with such
agencies or authority, and shall,
whenever possible, rely on information
available from such agencies or
authority.
(iii) Collection of financial
transaction and position data.--The
Office shall collect, on a schedule
determined by the Director, in
consultation with the Council,
financial transaction data and position
data from financial companies.
(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.
(2) Responsibilities.--
(A) Publication.--The Data Center shall
prepare and publish, in a manner that is easily
accessible to the public--
(i) a financial company reference
database;
(ii) a financial instrument
reference database; and
(iii) formats and standards for
Office data, including standards for
reporting financial transaction and
position data to the Office.
(B) Confidentiality.--The Data Center shall
not publish any confidential data under
subparagraph (A).
(3) Information security.--The Director shall
ensure that data collected and maintained by the Data
Center are kept secure and protected against
unauthorized disclosure.
(4) Catalog of financial entities and
instruments.--The Data Center shall maintain a catalog
of the financial entities and instruments reported to
the Office.
(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.
(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.
(c) Research and Analysis Center.--
(1) General duties.--The Research and Analysis
Center, on behalf of the Council, shall develop and
maintain independent analytical capabilities and
computing resources--
(A) to develop and maintain metrics and
reporting systems for risks to the financial
stability of the United States;
(B) to monitor, investigate, and report on
changes in systemwide risk levels and patterns
to the Council and Congress;
(C) to conduct, coordinate, and sponsor
research to support and improve regulation of
financial entities and markets;
(D) to evaluate and report on stress tests
or other stability-related evaluations of
financial entities overseen by the member
agencies;
(E) to maintain expertise in such areas as
may be necessary to support specific requests
for advice and assistance from financial
regulators;
(F) to investigate disruptions and failures
in the financial markets, report findings, and
make recommendations to the Council based on
those findings;
(G) to conduct studies and provide advice
on the impact of policies related to systemic
risk; and
(H) to promote best practices for financial
risk management.
(d) Reporting Responsibilities.--
(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.
(2) Content.--Each report required by this
subsection shall assess the state of the United States
financial system, including--
(A) an analysis of any threats to the
financial stability of the United States;
(B) the status of the efforts of the Office
in meeting the mission of the Office; and
(C) key findings from the research and
analysis of the financial system by the Office.
SEC. 155. FUNDING.
(a) Financial Research Fund.--
(1) Fund established.--There is established in the
Treasury of the United States a separate fund to be
known as the ``Financial Research Fund''.
(2) Fund receipts.--All amounts provided to the
Office under subsection (c), and all assessments that
the Office receives under subsection (d) shall be
deposited into the Financial Research Fund.
(3) Investments authorized.--
(A) Amounts in fund may be invested.--The
Director may request the Secretary to invest
the portion of the Financial Research Fund that
is not, in the judgment of the Director,
required to meet the needs of the Office.
(B) Eligible investments.--Investments
shall be made by the Secretary in obligations
of the United States or obligations that are
guaranteed as to principal and interest by the
United States, with maturities suitable to the
needs of the Financial Research Fund, as
determined by the Director.
(4) Interest and proceeds credited.--The interest
on, and the proceeds from the sale or redemption of,
any obligations held in the Financial Research Fund
shall be credited to and form a part of the Financial
Research Fund.
(b) Use of Funds.--
(1) In general.--Funds obtained by, transferred to,
or credited to the Financial Research Fund shall be
immediately available to the Office, and shall remain
available until expended, to pay the expenses of the
Office in carrying out the duties and responsibilities
of the Office.
(2) Fees, assessments, and other funds not
government funds.--Funds obtained by, transferred to,
or credited to the Financial Research Fund shall not be
construed to be Government funds or appropriated
moneys.
(3) Amounts not subject to apportionment.--
Notwithstanding any other provision of law, amounts in
the Financial Research Fund shall not be subject to
apportionment for purposes of chapter 15 of title 31,
United States Code, or under any other authority, or
for any other purpose.
(c) Interim Funding.--During the 2-year period following
the date of enactment of this Act, the Board of Governors shall
provide to the Office an amount sufficient to cover the
expenses of the Office.
(d) Permanent Self-funding.--Beginning 2 years after the
date of enactment of this Act, the Secretary shall establish,
by regulation, and with the approval of the Council, an
assessment schedule, including the assessment base and rates,
applicable to bank holding companies with total consolidated
assets of $50,000,000,000 or greater and nonbank financial
companies supervised by the Board of Governors, that takes into
account differences among such companies, based on the
considerations for establishing the prudential standards under
section 115, to collect assessments equal to the total expenses
of the Office.
SEC. 156. TRANSITION OVERSIGHT.
(a) Purpose.--The purpose of this section is to ensure that
the Office--
(1) has an orderly and organized startup;
(2) attracts and retains a qualified workforce; and
(3) establishes comprehensive employee training and
benefits programs.
(b) Reporting Requirement.--
(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).
(2) Plans.--The plans described in this paragraph
are as follows:
(A) Training and workforce development
plan.--The Office shall submit a training and
workforce development plan that includes, to
the extent practicable--
(i) identification of skill and
technical expertise needs and actions
taken to meet those requirements;
(ii) steps taken to foster
innovation and creativity;
(iii) leadership development and
succession planning; and
(iv) effective use of technology by
employees.
(B) Workplace flexibility plan.--The Office
shall submit a workforce flexibility plan that
includes, to the extent practicable--
(i) telework;
(ii) flexible work schedules;
(iii) phased retirement;
(iv) reemployed annuitants;
(v) part-time work;
(vi) job sharing;
(vii) parental leave benefits and
childcare assistance;
(viii) domestic partner benefits;
(ix) other workplace flexibilities;
or
(x) any combination of the items
described in clauses (i) through (ix).
(C) Recruitment and retention plan.--The
Office shall submit a recruitment and retention
plan that includes, to the extent practicable,
provisions relating to--
(i) the steps necessary to target
highly qualified applicant pools with
diverse backgrounds;
(ii) streamlined employment
application processes;
(iii) the provision of timely
notification of the status of
employment applications to applicants;
and
(iv) the collection of information
to measure indicators of hiring
effectiveness.
(c) Expiration.--The reporting requirement under subsection
(b) shall terminate 5 years after the date of enactment of this
Act.
(d) Rule of Construction.--Nothing in this section may be
construed to affect--
(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; or
(2) the rights of employees under chapter 71 of
title 5, United States Code.
Subtitle C--Additional Board of Governors Authority for Certain Nonbank
Financial Companies and Bank Holding Companies
SEC. 161. REPORTS BY AND EXAMINATIONS OF NONBANK FINANCIAL COMPANIES BY
THE BOARD OF GOVERNORS.
(a) Reports.--
(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--
(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;
and
(B) compliance by the company or subsidiary
with the requirements of this title.
(2) Use of existing reports and information.--In
carrying out subsection (a), the Board of Governors
shall, to the fullest extent possible, use--
(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;
(B) information otherwise obtainable from
Federal or State regulatory agencies;
(C) information that is otherwise required
to be reported publicly; and
(D) externally audited financial statements
of such company or subsidiary.
(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).
(b) Examinations.--
(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 inform the Board of
Governors of--
(A) the nature of the operations and
financial condition of the company and such
subsidiary;
(B) the financial, operational, and other
risks of the company or such subsidiary that
may pose a threat to the safety and soundness
of such company or subsidiary or to the
financial stability of the United States;
(C) the systems for monitoring and
controlling such risks; and
(D) compliance by the company or such
subsidiary with the requirements of this title.
(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 subsidiary depository institution
or functionally regulated subsidiary made by the
primary financial regulatory agency for that
subsidiary, and on information described in subsection
(a)(2).
(c) Coordination With Primary Financial Regulatory
Agency.--The Board of Governors shall--
(1) provide reasonable notice to, and consult with,
the primary financial regulatory agency for any
subsidiary before requiring a report or commencing an
examination of such subsidiary under this section; and
(2) avoid duplication of examination activities,
reporting requirements, and requests for information,
to the fullest extent possible.
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)).
(b) Enforcement Authority for Functionally Regulated
Subsidiaries.--
(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.
(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.
SEC. 163. ACQUISITIONS.
(a) Acquisitions of Banks; Treatment as a Bank Holding
Company.--For purposes of section 3 of the Bank Holding Company
Act of 1956 (12 U.S.C. 1842), a nonbank financial company
supervised by the Board of Governors shall be deemed to be, and
shall be treated as, a bank holding company.
(b) Acquisition of Nonbank Companies.--
(1) Prior notice for large acquisitions.--
Notwithstanding section 4(k)(6)(B) of the Bank Holding
Company Act of 1956 (12 U.S.C. 1843(k)(6)(B)), a bank
holding company with total consolidated assets equal to
or greater than $50,000,000,000 or a nonbank financial
company supervised by the Board of Governors shall not
acquire direct or indirect ownership or control of any
voting shares of any company (other than an insured
depository institution) that is engaged in activities
described in section 4(k) of the Bank Holding Company
Act of 1956 having total consolidated assets of
$10,000,000,000 or more, without providing written
notice to the Board of Governors in advance of the
transaction.
(2) Exemptions.--The prior notice requirement in
paragraph (1) shall not apply with regard to the
acquisition of shares that would qualify for the
exemptions in section 4(c) or section 4(k)(4)(E) of the
Bank Holding Company Act of 1956 (12 U.S.C. 1843(c) and
(k)(4)(E)).
(3) Notice procedures.--The notice procedures set
forth in section 4(j)(1) of the Bank Holding Company
Act of 1956 (12 U.S.C. 1843(j)(1)), without regard to
section 4(j)(3) of that Act, shall apply to an
acquisition of any company (other than an insured
depository institution) by a bank holding company with
total consolidated assets equal to or greater than
$50,000,000,000 or a nonbank financial company
supervised by the Board of Governors, as described in
paragraph (1), including any such company engaged in
activities described in section 4(k) of that Act.
(4) Standards for review.--In addition to the
standards provided in section 4(j)(2) of the Bank
Holding Company Act of 1956 (12 U.S.C. 1843(j)(2)), the
Board of Governors shall consider the extent to which
the proposed acquisition would result in greater or
more concentrated risks to global or United States
financial stability or the United States economy.
(5) Hart-Scott-Rodino filing requirement.--Solely
for purposes of section 7A(c)(8) of the Clayton Act (15
U.S.C. 18a(c)(8)), the transactions subject to the
requirements of paragraph (1) shall be treated as if
Board of Governors approval is not required.
SEC. 164. PROHIBITION AGAINST MANAGEMENT INTERLOCKS BETWEEN CERTAIN
FINANCIAL COMPANIES.
A nonbank financial company supervised by the Board of
Governors shall be treated as a bank holding company for
purposes of the Depository Institutions Management Interlocks
Act (12 U.S.C. 3201 et seq.), except that the Board of
Governors shall not exercise the authority provided in section
7 of that Act (12 U.S.C. 3207) to permit service by a
management official of a nonbank financial company supervised
by the Board of Governors as a management official of any bank
holding company with total consolidated assets equal to or
greater than $50,000,000,000, or other nonaffiliated nonbank
financial company supervised by the Board of Governors (other
than to provide a temporary exemption for interlocks resulting
from a merger, acquisition, or consolidation).
SEC. 165. ENHANCED SUPERVISION AND PRUDENTIAL STANDARDS FOR NONBANK
FINANCIAL COMPANIES SUPERVISED BY THE BOARD OF
GOVERNORS AND CERTAIN BANK HOLDING COMPANIES.
(a) In General.--
(1) Purpose.--In order to prevent or mitigate risks
to the financial stability of the United States that
could arise from the material financial distress or
failure, or ongoing activities, of large,
interconnected financial institutions, the Board of
Governors shall, on its own or pursuant to
recommendations by the Council under section 115,
establish prudential standards for nonbank financial
companies supervised by the Board of Governors and bank
holding companies with total consolidated assets equal
to or greater than $50,000,000,000 that--
(A) are more stringent than the standards
and requirements applicable to nonbank
financial companies and bank holding companies
that do not present similar risks to the
financial stability of the United States; and
(B) increase in stringency, based on the
considerations identified in subsection (b)(3).
(2) Tailored application.--
(A) In general.--In prescribing more
stringent prudential standards under this
section, the Board of Governors may, on its own
or pursuant to a recommendation by the Council
in accordance with section 115, differentiate
among companies on an individual basis or by
category, taking into consideration their
capital structure, riskiness, complexity,
financial activities (including the financial
activities of their subsidiaries), size, and
any other risk-related factors that the Board
of Governors deems appropriate.
(B) Adjustment of threshold for application
of certain standards.--The Board of Governors
may, pursuant to a recommendation by the
Council in accordance with section 115,
establish an asset threshold above
$50,000,000,000 for the application of any
standard established under subsections (c)
through (g).
(b) Development of Prudential Standards.--
(1) In general.--
(A) Required standards.--The Board of
Governors shall establish prudential standards
for nonbank financial companies supervised by
the Board of Governors and bank holding
companies described in subsection (a), that
shall include--
(i) risk-based capital requirements
and leverage limits, unless the Board
of Governors, in consultation with the
Council, determines that such
requirements are not appropriate for a
company subject to more stringent
prudential standards because of the
activities of such company (such as
investment company activities or assets
under management) or structure, in
which case, the Board of Governors
shall apply other standards that result
in similarly stringent risk controls;
(ii) liquidity requirements;
(iii) overall risk management
requirements;
(iv) resolution plan and credit
exposure report requirements; and
(v) concentration limits.
(B) Additional standards authorized.--The
Board of Governors may establish additional
prudential standards for nonbank financial
companies supervised by the Board of Governors
and bank holding companies described in
subsection (a), that include--
(i) a contingent capital
requirement;
(ii) enhanced public disclosures;
(iii) short-term debt limits; and
(iv) such other prudential
standards as the Board or Governors, on
its own or pursuant to a recommendation
made by the Council in accordance with
section 115, determines are
appropriate.
(2) Standards for foreign financial companies.--In
applying the standards set forth in paragraph (1) to
any foreign nonbank financial company supervised by the
Board of Governors or foreign-based bank holding
company, the Board of Governors shall--
(A) give due regard to the principle of
national treatment and equality of competitive
opportunity; and
(B) take into account the extent to which
the foreign financial company is subject on a
consolidated basis to home country standards
that are comparable to those applied to
financial companies in the United States.
(3) Considerations.--In prescribing prudential
standards under paragraph (1), the Board of Governors
shall--
(A) take into account differences among
nonbank financial companies supervised by the
Board of Governors and bank holding companies
described in subsection (a), based on--
(i) the factors described in
subsections (a) and (b) of section 113;
(ii) whether the company owns an
insured depository institution;
(iii) nonfinancial activities and
affiliations of the company; and
(iv) any other risk-related factors
that the Board of Governors determines
appropriate;
(B) to the extent possible, ensure that
small changes in the factors listed in
subsections (a) and (b) of section 113 would
not result in sharp, discontinuous changes in
the prudential standards established under
paragraph (1) of this subsection;
(C) take into account any recommendations
of the Council under section 115; and
(D) adapt the required standards as
appropriate in light of any predominant line of
business of such company, including assets
under management or other activities for which
particular standards may not be appropriate.
(4) Consultation.--Before imposing prudential
standards or any other requirements pursuant to this
section, including notices of deficiencies in
resolution plans and more stringent requirements or
divestiture orders resulting from such notices, that
are likely to have a significant impact on a
functionally regulated subsidiary or depository
institution subsidiary of a nonbank financial company
supervised by the Board of Governors or a bank holding
company described in subsection (a), the Board of
Governors shall consult with each Council member that
primarily supervises any such subsidiary with respect
to any such standard or requirement.
(5) Report.--The Board of Governors shall submit an
annual report to Congress regarding the implementation
of the prudential standards required pursuant to
paragraph (1), including the use of such standards to
mitigate risks to the financial stability of the United
States.
(c) Contingent Capital.--
(1) In general.--Subsequent to submission by the
Council of a report to Congress under section 115(c),
the Board of Governors may issue regulations that
require each nonbank financial company supervised by
the Board of Governors and bank holding companies
described in subsection (a) to maintain a minimum
amount of contingent capital that is convertible to
equity in times of financial stress.
(2) Factors to consider.--In issuing regulations
under this subsection, the Board of Governors shall
consider--
(A) the results of the study undertaken by
the Council, and any recommendations of the
Council, under section 115(c);
(B) an appropriate transition period for
implementation of contingent capital under this
subsection;
(C) the factors described in subsection
(b)(3)(A);
(D) capital requirements applicable to the
nonbank financial company supervised by the
Board of Governors or a bank holding company
described in subsection (a), and subsidiaries
thereof; and
(E) any other factor that the Board of
Governors deems appropriate.
(d) Resolution Plan and Credit Exposure Reports.--
(1) Resolution plan.--The Board of Governors shall
require each nonbank financial company supervised by
the Board of Governors and bank holding companies
described in subsection (a) to report periodically to
the Board of Governors, the Council, and the
Corporation the plan of such company for rapid and
orderly resolution in the event of material financial
distress or failure, which shall include--
(A) information regarding the manner and
extent to which any insured depository
institution affiliated with the company is
adequately protected from risks arising from
the activities of any nonbank subsidiaries of
the company;
(B) full descriptions of the ownership
structure, assets, liabilities, and contractual
obligations of the company;
(C) identification of the cross-guarantees
tied to different securities, identification of
major counterparties, and a process for
determining to whom the collateral of the
company is pledged; and
(D) any other information that the Board of
Governors and the Corporation jointly require
by rule or order.
(2) Credit exposure report.--The Board of Governors
shall require each nonbank financial company supervised
by the Board of Governors and bank holding companies
described in subsection (a) to report periodically to
the Board of Governors, the Council, and the
Corporation on--
(A) the nature and extent to which the
company has credit exposure to other
significant nonbank financial companies and
significant bank holding companies; and
(B) the nature and extent to which other
significant nonbank financial companies and
significant bank holding companies have credit
exposure to that company.
(3) Review.--The Board of Governors and the
Corporation shall review the information provided in
accordance with this subsection by each nonbank
financial company supervised by the Board of Governors
and bank holding company described in subsection (a).
(4) Notice of deficiencies.--If the Board of
Governors and the Corporation jointly determine, based
on their review under paragraph (3), that the
resolution plan of a nonbank financial company
supervised by the Board of Governors or a bank holding
company described in subsection (a) is not credible or
would not facilitate an orderly resolution of the
company under title 11, United States Code--
(A) the Board of Governors and the
Corporation shall notify the company of the
deficiencies in the resolution plan; and
(B) the company shall resubmit the
resolution plan within a timeframe determined
by the Board of Governors and the Corporation,
with revisions demonstrating that the plan is
credible and would result in an orderly
resolution under title 11, United States Code,
including any proposed changes in business
operations and corporate structure to
facilitate implementation of the plan.
(5) Failure to resubmit credible plan.--
(A) In general.--If a nonbank financial
company supervised by the Board of Governors or
a bank holding company described in subsection
(a) fails to timely resubmit the resolution
plan as required under paragraph (4), with such
revisions as are required under subparagraph
(B), the Board of Governors and the Corporation
may jointly impose more stringent capital,
leverage, or liquidity requirements, or
restrictions on the growth, activities, or
operations of the company, or any subsidiary
thereof, until such time as the company
resubmits a plan that remedies the
deficiencies.
(B) Divestiture.--The Board of Governors
and the Corporation, in consultation with the
Council, may jointly direct a nonbank financial
company supervised by the Board of Governors or
a bank holding company described in subsection
(a), by order, to divest certain assets or
operations identified by the Board of Governors
and the Corporation, to facilitate an orderly
resolution of such company under title 11,
United States Code, in the event of the failure
of such company, in any case in which--
(i) the Board of Governors and the
Corporation have jointly imposed more
stringent requirements on the company
pursuant to subparagraph (A); and
(ii) the company has failed, within
the 2-year period beginning on the date
of the imposition of such requirements
under subparagraph (A), to resubmit the
resolution plan with such revisions as
were required under paragraph (4)(B).
(6) No limiting effect.--A resolution plan
submitted in accordance with this subsection shall not
be binding on a bankruptcy court, a receiver appointed
under title II, or any other authority that is
authorized or required to resolve the nonbank financial
company supervised by the Board, any bank holding
company, or any subsidiary or affiliate of the
foregoing.
(7) No private right of action.--No private right
of action may be based on any resolution plan submitted
in accordance with this subsection.
(8) Rules.--Not later than 18 months after the date
of enactment of this Act, the Board of Governors and
the Corporation shall jointly issue final rules
implementing this subsection.
(e) Concentration Limits.--
(1) Standards.--In order to limit the risks that
the failure of any individual company could pose to a
nonbank financial company supervised by the Board of
Governors or a bank holding company described in
subsection (a), the Board of Governors, by regulation,
shall prescribe standards that limit such risks.
(2) Limitation on credit exposure.--The regulations
prescribed by the Board of Governors under paragraph
(1) shall prohibit each nonbank financial company
supervised by the Board of Governors and bank holding
company described in subsection (a) from having credit
exposure to any unaffiliated company that exceeds 25
percent of the capital stock and surplus (or such lower
amount as the Board of Governors may determine by
regulation to be necessary to mitigate risks to the
financial stability of the United States) of the
company.
(3) Credit exposure.--For purposes of paragraph
(2), ``credit exposure'' to a company means--
(A) all extensions of credit to the
company, including loans, deposits, and lines
of credit;
(B) all repurchase agreements and reverse
repurchase agreements with the company, and all
securities borrowing and lending transactions
with the company, to the extent that such
transactions create credit exposure for the
nonbank financial company supervised by the
Board of Governors or a bank holding company
described in subsection (a);
(C) all guarantees, acceptances, or letters
of credit (including endorsement or standby
letters of credit) issued on behalf of the
company;
(D) all purchases of or investment in
securities issued by the company;
(E) counterparty credit exposure to the
company in connection with a derivative
transaction between the nonbank financial
company supervised by the Board of Governors or
a bank holding company described in subsection
(a) and the company; and
(F) any other similar transactions that the
Board of Governors, by regulation, determines
to be a credit exposure for purposes of this
section.
(4) Attribution rule.--For purposes of this
subsection, any transaction by a nonbank financial
company supervised by the Board of Governors or a bank
holding company described in subsection (a) with any
person is a transaction with a company, to the extent
that the proceeds of the transaction are used for the
benefit of, or transferred to, that company.
(5) Rulemaking.--The Board of Governors may issue
such regulations and orders, including definitions
consistent with this section, as may be necessary to
administer and carry out this subsection.
(6) Exemptions.--This subsection shall not apply to
any Federal home loan bank. The Board of Governors may,
by regulation or order, exempt transactions, in whole
or in part, from the definition of the term ``credit
exposure'' for purposes of this subsection, if the
Board of Governors finds that the exemption is in the
public interest and is consistent with the purpose of
this subsection.
(7) Transition period.--
(A) In general.--This subsection and any
regulations and orders of the Board of
Governors under this subsection shall not be
effective until 3 years after the date of
enactment of this Act.
(B) Extension authorized.--The Board of
Governors may extend the period specified in
subparagraph (A) for not longer than an
additional 2 years.
(f) Enhanced Public Disclosures.--The Board of Governors
may prescribe, by regulation, periodic public disclosures by
nonbank financial companies supervised by the Board of
Governors and bank holding companies described in subsection
(a) in order to support market evaluation of the risk profile,
capital adequacy, and risk management capabilities thereof.
(g) Short-term Debt Limits.--
(1) In general.--In order to mitigate the risks
that an over-accumulation of short-term debt could pose
to financial companies and to the stability of the
United States financial system, the Board of Governors
may, by regulation, prescribe a limit on the amount of
short-term debt, including off-balance sheet exposures,
that may be accumulated by any bank holding company
described in subsection (a) and any nonbank financial
company supervised by the Board of Governors.
(2) Basis of limit.--Any limit prescribed under
paragraph (1) shall be based on the short-term debt of
the company described in paragraph (1) as a percentage
of capital stock and surplus of the company or on such
other measure as the Board of Governors considers
appropriate.
(3) Short-term debt defined.--For purposes of this
subsection, the term ``short-term debt'' means such
liabilities with short-dated maturity that the Board of
Governors identifies, by regulation, except that such
term does not include insured deposits.
(4) Rulemaking authority.--In addition to
prescribing regulations under paragraphs (1) and (3),
the Board of Governors may prescribe such regulations,
including definitions consistent with this subsection,
and issue such orders, as may be necessary to carry out
this subsection.
(5) Authority to issue exemptions and
adjustments.--Notwithstanding the Bank Holding Company
Act of 1956 (12 U.S.C. 1841 et seq.), the Board of
Governors may, if it determines such action is
necessary to ensure appropriate heightened prudential
supervision, with respect to a company described in
paragraph (1) that does not control an insured
depository institution, issue to such company an
exemption from or adjustment to the limit prescribed
under paragraph (1).
(h) Risk Committee.--
(1) Nonbank financial companies supervised by the
board of governors.--The Board of Governors shall
require each nonbank financial company supervised by
the Board of Governors that is a publicly traded
company to establish a risk committee, as set forth in
paragraph (3), not later than 1 year after the date of
receipt of a notice of final determination under
section 113(e)(3) with respect to such nonbank
financial company supervised by the Board of Governors.
(2) Certain bank holding companies.--
(A) Mandatory regulations.--The Board of
Governors shall issue regulations requiring
each bank holding company that is a publicly
traded company and that has total consolidated
assets of not less than $10,000,000,000 to
establish a risk committee, as set forth in
paragraph (3).
(B) Permissive regulations.--The Board of
Governors may require each bank holding company
that is a publicly traded company and that has
total consolidated assets of less than
$10,000,000,000 to establish a risk committee,
as set forth in paragraph (3), as determined
necessary or appropriate by the Board of
Governors to promote sound risk management
practices.
(3) Risk committee.--A risk committee required by
this subsection shall--
(A) be responsible for the oversight of the
enterprise-wide risk management practices of
the nonbank financial company supervised by the
Board of Governors or bank holding company
described in subsection (a), as applicable;
(B) include such number of independent
directors as the Board of Governors may
determine appropriate, based on the nature of
operations, size of assets, and other
appropriate criteria related to the nonbank
financial company supervised by the Board of
Governors or a bank holding company described
in subsection (a), as applicable; and
(C) include at least 1 risk management
expert having experience in identifying,
assessing, and managing risk exposures of
large, complex firms.
(4) Rulemaking.--The Board of Governors shall issue
final rules to carry out this subsection, not later
than 1 year after the transfer date, to take effect not
later than 15 months after the transfer date.
(i) Stress Tests.--
(1) By the board of governors.--
(A) Annual tests required.--The Board of
Governors, in coordination with the appropriate
primary financial regulatory agencies and the
Federal Insurance Office, shall conduct annual
analyses in which nonbank financial companies
supervised by the Board of Governors and bank
holding companies described in subsection (a)
are subject to evaluation of whether such
companies have the capital, on a total
consolidated basis, necessary to absorb losses
as a result of adverse economic conditions.
(B) Test parameters and consequences.--The
Board of Governors--
(i) shall provide for at least 3
different sets of conditions under
which the evaluation required by this
subsection shall be conducted,
including baseline, adverse, and
severely adverse;
(ii) may require the tests
described in subparagraph (A) at bank
holding companies and nonbank financial
companies, in addition to those for
which annual tests are required under
subparagraph (A);
(iii) may develop and apply such
other analytic techniques as are
necessary to identify, measure, and
monitor risks to the financial
stability of the United States;
(iv) shall require the companies
described in subparagraph (A) to update
their resolution plans required under
subsection (d)(1), as the Board of
Governors determines appropriate, based
on the results of the analyses; and
(v) shall publish a summary of the
results of the tests required under
subparagraph (A) or clause (ii) of this
subparagraph.
(2) By the company.--
(A) Requirement.--A nonbank financial
company supervised by the Board of Governors
and a bank holding company described in
subsection (a) shall conduct semiannual stress
tests. All other financial companies that have
total consolidated assets of more than
$10,000,000,000 and are regulated by a primary
Federal financial regulatory agency shall
conduct annual stress tests. The tests required
under this subparagraph shall be conducted in
accordance with the regulations prescribed
under subparagraph (C).
(B) Report.--A company required to conduct
stress tests under subparagraph (A) shall
submit a report to the Board of Governors and
to its primary financial regulatory agency at
such time, in such form, and containing such
information as the primary financial regulatory
agency shall require.
(C) Regulations.--Each Federal primary
financial regulatory agency, in coordination
with the Board of Governors and the Federal
Insurance Office, shall issue consistent and
comparable regulations to implement this
paragraph that shall--
(i) define the term ``stress test''
for purposes of this paragraph;
(ii) establish methodologies for
the conduct of stress tests required by
this paragraph that shall provide for
at least 3 different sets of
conditions, including baseline,
adverse, and severely adverse;
(iii) establish the form and
content of the report required by
subparagraph (B); and
(iv) require companies subject to
this paragraph to publish a summary of
the results of the required stress
tests.
(j) Leverage Limitation.--
(1) Requirement.--The Board of Governors shall
require a bank holding company with total consolidated
assets equal to or greater than $50,000,000,000 or a
nonbank financial company supervised by the Board of
Governors to maintain a debt to equity ratio of no more
than 15 to 1, upon a determination by the Council that
such company poses a grave threat to the financial
stability of the United States and that the imposition
of such requirement is necessary to mitigate the risk
that such company poses to the financial stability of
the United States. Nothing in this paragraph shall
apply to a Federal home loan bank.
(2) Considerations.--In making a determination
under this subsection, the Council shall consider the
factors described in subsections (a) and (b) of section
113 and any other risk-related factors that the Council
deems appropriate.
(3) Regulations.--The Board of Governors shall
promulgate regulations to establish procedures and
timelines for complying with the requirements of this
subsection.
(k) Inclusion of Off-balance-sheet Activities in Computing
Capital Requirements.--
(1) In general.--In the case of any bank holding
company described in subsection (a) or nonbank
financial company supervised by the Board of Governors,
the computation of capital for purposes of meeting
capital requirements shall take into account any off-
balance-sheet activities of the company.
(2) Exemptions.--If the Board of Governors
determines that an exemption from the requirement under
paragraph (1) is appropriate, the Board of Governors
may exempt a company, or any transaction or
transactions engaged in by such company, from the
requirements of paragraph (1).
(3) Off-balance-sheet activities defined.--For
purposes of this subsection, the term ``off-balance-
sheet activities'' means an existing liability of a
company that is not currently a balance sheet
liability, but may become one upon the happening of
some future event, including the following
transactions, to the extent that they may create a
liability:
(A) Direct credit substitutes in which a
bank substitutes its own credit for a third
party, including standby letters of credit.
(B) Irrevocable letters of credit that
guarantee repayment of commercial paper or tax-
exempt securities.
(C) Risk participations in bankers'
acceptances.
(D) Sale and repurchase agreements.
(E) Asset sales with recourse against the
seller.
(F) Interest rate swaps.
(G) Credit swaps.
(H) Commodities contracts.
(I) Forward contracts.
(J) Securities contracts.
(K) Such other activities or transactions
as the Board of Governors may, by rule, define.
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.
(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.
(c) Remediation Requirements.--The regulations prescribed
by the Board of Governors under subsection (a) shall--
(1) define measures of the financial condition of
the company, including regulatory capital, liquidity
measures, and other forward-looking indicators; and
(2) establish requirements that increase in
stringency as the financial condition of the company
declines, including--
(A) requirements in the initial stages of
financial decline, including limits on capital
distributions, acquisitions, and asset growth;
and
(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.
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).
(b) Requirement.--
(1) In general.--
(A) Board authority.--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 all or a portion of such activities
that are determined to be financial in nature
or incidental thereto in or through an
intermediate holding company established
pursuant to regulation of the Board of
Governors, not later than 90 days (or such
longer period as the Board of Governors may
deem appropriate) after the date on which the
nonbank financial company supervised by the
Board of Governors is notified of the
determination of the Board of Governors under
this section.
(B) Necessary actions.--Notwithstanding
subparagraph (A), the Board of Governors shall
require a nonbank financial company supervised
by the Board of Governors to establish an
intermediate holding company if the Board of
Governors makes a determination that the
establishment of such intermediate holding
company is necessary to--
(i) appropriately supervise
activities that are determined to be
financial in nature or incidental
thereto; or
(ii) to ensure that supervision by
the Board of Governors does not extend
to the commercial activities of such
nonbank financial company.
(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, including internal treasury,
investment, and employee benefit functions. With
respect to any internal financial activity engaged in
for the company or an affiliate and a non-affiliate of
such company during the year prior to the date of
enactment of this Act, such company (or an affiliate
that is not an intermediate holding company or
subsidiary of an intermediate holding company) may
continue to engage in such activity, as long as not
less than 2/3 of the assets or 2/3 of the revenues
generated from the activity are from or attributable to
such company or an affiliate, 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.
(3) Source of strength.--A company that directly or
indirectly controls an intermediate holding company
established under this section shall serve as a source
of strength to its subsidiary intermediate holding
company.
(4) Parent company reports.--The Board of Governors
may, from time to time, require reports under oath from
a company that controls an intermediate holding
company, and from the appropriate officers or directors
of such company, solely for purposes of ensuring
compliance with the provisions of this section,
including assessing the ability of the company to serve
as a source of strength to its subsidiary intermediate
holding company pursuant to paragraph (3) and enforcing
such compliance.
(5) Limited parent company enforcement.--
(A) In general.--In addition to any other
authority of the Board of Governors, the Board
of Governors may enforce compliance with the
provisions of this subsection that are
applicable to any company described in
paragraph (1) that controls an intermediate
holding company under section 8 of the Federal
Deposit Insurance Act, and such company shall
be subject to such section (solely for such
purposes) in the same manner and to the same
extent as if such company were a bank holding
company.
(B) Application of other act.--Any
violation of this subsection by any company
that controls an intermediate holding company
may also be treated as a violation of the
Federal Deposit Insurance Act for purposes of
subparagraph (A).
(C) No effect on other authority.--No
provision of this paragraph shall be construed
as limiting any authority of the Board of
Governors or any other Federal agency under any
other provision of law.
(c) Regulations.--The Board of Governors--
(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 (b); and
(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.
SEC. 168. REGULATIONS.
The Board of Governors shall have authority to issue
regulations to implement subtitles A and C and the amendments
made thereunder. Except as otherwise specified in subtitle A or
C, not later than 18 months after the effective date of this
Act, the Board of Governors shall issue final regulations to
implement subtitles A and C, and the amendments made
thereunder.
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.
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.
(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.
(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).
(d) Revisions.--
(1) In general.--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.
(2) Transition period.--No revisions under
paragraph (1) shall take effect before the end of the
2-year period after the date of publication of such
revisions in final form.
(e) Report.--The Chairman 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 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.
SEC. 171. LEVERAGE AND RISK-BASED CAPITAL REQUIREMENTS.
(a) Definitions.--For purposes of this section, the
following definitions shall apply:
(1) Generally applicable leverage capital
requirements.--The term ``generally applicable leverage
capital requirements'' means--
(A) the minimum ratios of tier 1 capital to
average total assets, as established by the
appropriate Federal banking agencies to apply
to insured depository institutions under the
prompt corrective action regulations
implementing section 38 of the Federal Deposit
Insurance Act, regardless of total consolidated
asset size or foreign financial exposure; and
(B) includes the regulatory capital
components in the numerator of that capital
requirement, average total assets in the
denominator of that capital requirement, and
the required ratio of the numerator to the
denominator.
(2) Generally applicable risk-based capital
requirements.--The term ``generally applicable risk-
based capital requirements'' means--
(A) the risk-based capital requirements, as
established by the appropriate Federal banking
agencies to apply to insured depository
institutions under the prompt corrective action
regulations implementing section 38 of the
Federal Deposit Insurance Act, regardless of
total consolidated asset size or foreign
financial exposure; and
(B) includes the regulatory capital
components in the numerator of those capital
requirements, the risk-weighted assets in the
denominator of those capital requirements, and
the required ratio of the numerator to the
denominator.
(3) Definition of depository institution holding
company.--The term ``depository institution holding
company'' means a bank holding company or a savings and
loan holding company (as those terms are defined in
section 3 of the Federal Deposit Insurance Act) that is
organized in the United States, including any bank or
savings and loan holding company that is owned or
controlled by a foreign organization, but does not
include the foreign organization.
(b) Minimum Capital Requirements.--
(1) Minimum leverage capital requirements.--The
appropriate Federal banking agencies shall establish
minimum leverage capital requirements on a consolidated
basis for insured depository institutions, depository
institution holding companies, and nonbank financial
companies supervised by the Board of Governors. The
minimum leverage capital requirements established under
this paragraph shall not be less than the generally
applicable leverage capital requirements, which shall
serve as a floor for any capital requirements that the
agency may require, nor quantitatively lower than the
generally applicable leverage capital requirements that
were in
(2) Minimum risk-based capital requirements.--The
appropriate Federal banking agencies shall establish
minimum risk-based capital requirements on a
consolidated basis for insured depository institutions,
depository institution holding companies, and nonbank
financial companies supervised by the Board of
Governors. The minimum risk-based capital requirements
established under this paragraph shall not be less than
the generally applicable risk-based capital
requirements, which shall serve as a floor for any
capital requirements that the agency may require, nor
quantitatively lower than the generally applicable
risk-based capital requirements that were in effect for
insured depository institutions as of the date of
enactment of this Act.
(3) Investments in financial subsidiaries.--For
purposes of this section, investments in financial
subsidiaries that insured depository institutions are
required to deduct from regulatory capital under
section 5136A of the Revised Statutes of the United
States or section 46(a)(2) of the Federal Deposit
Insurance Act need not be deducted from regulatory
capital by depository institution holding companies or
nonbank financial companies supervised by the Board of
Governors, unless such capital deduction is required by
the Board of Governors or the primary financial
regulatory agency in the case of nonbank financial
companies supervised by the Board of Governors.
(4) Effective dates and phase-in periods.--
(A) Debt or equity instruments on or after
may 19, 2010.--For debt or equity instruments
issued on or after May 19, 2010, by depository
institution holding companies or by nonbank
financial companies supervised by the Board of
Governors, this section shall be deemed to have
become effective as of May 19, 2010.
(B) Debt or equity instruments issued
before may 19, 2010.--For debt or equity
instruments issued before May 19, 2010, by
depository institution holding companies or by
nonbank financial companies supervised by the
Board of Governors, any regulatory capital
deductions required under this section shall be
phased in incrementally over a period of 3
years, with the phase-in period to begin on
January 1, 2013, except as set forth in
subparagraph (C).
(C) Debt or equity instruments of smaller
institutions.--For debt or equity instruments
issued before May 19, 2010, by depository
institution holding companies with total
consolidated assets of less than
$15,000,000,000 as of December 31, 2009, and by
organizations that were mutual holding
companies on May 19, 2010, the capital
deductions that would be required for other
institutions under this section are not
required as a result of this section.
(D) Depository institution holding
companies not previously supervised by the
board of governors.--For any depository
institution holding company that was not
supervised by the Board of Governors as of May
19, 2010, the requirements of this section,
except as set forth in subparagraphs (A) and
(B), shall be effective 5 years after the date
of enactment of this Act.
(E) Certain bank holding company
subsidiaries of foreign banking
organizations.--For bank holding company
subsidiaries of foreign banking organizations
that have relied on Supervision and Regulation
Letter SR-01-1 issued by the Board of Governors
(as in effect on May 19, 2010), the
requirements of this section, except as set
forth in subparagraph (A), shall be effective 5
years after the date of enactment of this Act.
(5) Exceptions.--This section shall not apply to--
(A) debt or equity instruments issued to
the United States or any agency or
instrumentality thereof pursuant to the
Emergency Economic Stabilization Act of 2008,
and prior to October 4, 2010;
(B) any Federal home loan bank; or
(C) any small bank holding company that is
subject to the Small Bank Holding Company
Policy Statement of the Board of Governors, as
in effect on May 19, 2010.
(6) Study and report on small institution access to
capital.--
(A) Study required.--The Comptroller
General of the United States, after
consultation with the Federal banking agencies,
shall conduct a study of access to capital by
smaller insured depository institutions.
(B) Scope.--For purposes of this study
required by subparagraph (A), the term
``smaller insured depository institution''
means an insured depository institution with
total consolidated assets of $5,000,000,000 or
less.
(C) Report to congress.--Not later than 18
months 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 summarizing
the results of the study conducted under
subparagraph (A), together with any
recommendations for legislative or regulatory
action that would enhance the access to capital
of smaller insured depository institutions, in
a manner that is consistent with safe and sound
banking operations.
(7) Capital requirements to address activities that
pose risks to the financial system.--
(A) In general.--Subject to the
recommendations of the Council, in accordance
with section 120, the Federal banking agencies
shall develop capital requirements applicable
to insured depository institutions, depository
institution holding companies, and nonbank
financial companies supervised by the Board of
Governors that address the risks that the
activities of such institutions pose, not only
to the institution engaging in the activity,
but to other public and private stakeholders in
the event of adverse performance, disruption,
or failure of the institution or the activity.
(B) Content.--Such rules shall address, at
a minimum, the risks arising from--
(i) significant volumes of activity
in derivatives, securitized products
purchased and sold, financial
guarantees purchased and sold,
securities borrowing and lending, and
repurchase agreements and reverse
repurchase agreements;
(ii) concentrations in assets for
which the values presented in financial
reports are based on models rather than
historical cost or prices deriving from
deep and liquid 2-way markets; and
(iii) concentrations in market
share for any activity that would
substantially disrupt financial markets
if the institution is forced to
unexpectedly cease the activity.
SEC. 172. EXAMINATION AND ENFORCEMENT ACTIONS FOR INSURANCE AND ORDERLY
LIQUIDATION PURPOSES.
(a) Examinations for Insurance and Resolution Purposes.--
Section 10(b)(3) of the Federal Deposit Insurance Act (12
U.S.C. 1820(b)(3)) is amended--
(1) by striking ``In addition'' and inserting the
following:
``(A) In general.--In addition''; and
(2) by striking ``whenever the board of directors
determines'' and all that follows through the period
and inserting the following: ``or nonbank financial
company supervised by the Board of Governors or a bank
holding company described in section 165(a) of the
Financial Stability Act of 2010, whenever the Board of
Directors determines that a special examination of any
such depository institution is necessary to determine
the condition of such depository institution for
insurance purposes, or of such nonbank financial
company supervised by the Board of Governors or bank
holding company described in section 165(a) of the
Financial Stability Act of 2010, for the purpose of
implementing its authority to provide for orderly
liquidation of any such company under title II of that
Act, provided that such authority may not be used with
respect to any such company that is in a generally
sound condition.
``(B) Limitation.--Before conducting a
special examination of a nonbank financial
company supervised by the Board of Governors or
a bank holding company described in section
165(a) of the Financial Stability Act of 2010,
the Corporation shall review any available and
acceptable resolution plan that the company has
submitted in accordance with section 165(d) of
that Act, consistent with the nonbinding effect
of such plan, and available reports of
examination, and shall coordinate to the
maximum extent practicable with the Board of
Governors, in order to minimize duplicative or
conflicting examinations.''.
(b) Enforcement Authority.--Section 8(t) of the Federal
Deposit Insurance Act (12 U.S.C. 1818(t)) is amended--
(1) in paragraph (1), by inserting ``, any
depository institution holding company,'' before ``or
any institution-affiliated party'';
(2) in paragraph (2)--
(A) by striking ``or'' at the end of
subparagraph (B);
(B) at the end of subparagraph (C), by
striking the period and inserting ``or''; and
(C) by inserting at the end the following
new subparagraph:
``(D) the conduct or threatened conduct
(including any acts or omissions) of the
depository institution holding company poses a
risk to the Deposit Insurance Fund, provided
that such authority may not be used with
respect to a depository institution holding
company that is in generally sound condition
and whose conduct does not pose a foreseeable
and material risk of loss to the Deposit
Insurance Fund;''; and
(3) by adding at the end the following:
``(6) Powers and duties with respect to depository
institution holding companies.--For purposes of
exercising the backup authority provided in this
subsection--
``(A) the Corporation shall have the same
powers with respect to a depository institution
holding company and its affiliates as the
appropriate Federal banking agency has with
respect to the holding company and its
affiliates; and
``(B) the holding company and its
affiliates shall have the same duties and
obligations with respect to the Corporation as
the holding company and its affiliates have
with respect to the appropriate Federal banking
agency.''.
(c) Rule of Construction.--Nothing in this Act shall be
construed to limit or curtail the Corporation's current
authority to examine or bring enforcement actions with respect
to any insured depository institution or institution-affiliated
party.
SEC. 173. ACCESS TO UNITED STATES FINANCIAL MARKET BY FOREIGN
INSTITUTIONS.
(a) Establishment of Foreign Bank Offices in the United
States.--Section 7(d)(3) of the International Banking Act of
1978 (12 U.S.C. 3105(d)(3)) is amended--
(1) in subparagraph (C), by striking ``and'' at the
end;
(2) in subparagraph (D), by striking the period at
the end of and inserting ``; and''; and
(3) by adding at the end the following new
subparagraph:
``(E) for a foreign bank that presents a
risk to the stability of United States
financial system, whether the home country of
the foreign bank has adopted, or is making
demonstrable progress toward adopting, an
appropriate system of financial regulation for
the financial system of such home country to
mitigate such risk.''.
(b) Termination of Foreign Bank Offices in the United
States.--Section 7(e)(1) of the International Banking Act of
1978 (12 U.S.C. 3105(e)(1)) is amended--
(1) in subparagraph (A), by striking ``or'' at the
end;
(2) in subparagraph (B), by striking the period at
the end of and inserting ``; or''; and
(3) by inserting after subparagraph (B), the
following new subparagraph:
``(C) for a foreign bank that presents a
risk to the stability of the United States
financial system, the home country of the
foreign bank has not adopted, or made
demonstrable progress toward adopting, an
appropriate system of financial regulation to
mitigate such risk.''.
(c) Registration or Succession to a United States Broker or
Dealer and Termination of Such Registration.--Section 15 of the
Securities Exchange Act of 1934 (15 U.S.C. 78o) is amended by
adding at the end the following new subsections:
``(k) Registration or Succession to a United States Broker
or Dealer.--In determining whether to permit a foreign person
or an affiliate of a foreign person to register as a United
States broker or dealer, or succeed to the registration of a
United States broker or dealer, the Commission may consider
whether, for a foreign person, or an affiliate of a foreign
person that presents a risk to the stability of the United
States financial system, the home country of the foreign person
has adopted, or made demonstrable progress toward adopting, an
appropriate system of financial regulation to mitigate such
risk.
``(l) Termination of a United States Broker or Dealer.--For
a foreign person or an affiliate of a foreign person that
presents such a risk to the stability of the United States
financial system, the Commission may determine to terminate the
registration of such foreign person or an affiliate of such
foreign person as a broker or dealer in the United States, if
the Commission determines that the home country of the foreign
person has not adopted, or made demonstrable progress toward
adopting, an appropriate system of financial regulation to
mitigate such risk.''.
SEC. 174. STUDIES AND REPORTS ON HOLDING COMPANY CAPITAL REQUIREMENTS.
(a) Study of Hybrid Capital Instruments.--The Comptroller
General of the United States, in consultation with the Board of
Governors, the Comptroller of the Currency, and the
Corporation, shall conduct a study of the use of hybrid capital
instruments as a component of Tier 1 capital for banking
institutions and bank holding companies. The study shall
consider--
(1) the current use of hybrid capital instruments,
such as trust preferred shares, as a component of Tier
1 capital;
(2) the differences between the components of
capital permitted for insured depository institutions
and those permitted for companies that control insured
depository institutions;
(3) the benefits and risks of allowing such
instruments to be used to comply with Tier 1 capital
requirements;
(4) the economic impact of prohibiting the use of
such capital instruments for Tier 1;
(5) a review of the consequences of disqualifying
trust preferred instruments, and whether it could lead
to the failure or undercapitalization of existing
banking organizations;
(6) the international competitive implications
prohibiting hybrid capital instruments for Tier 1;
(7) the impact on the cost and availability of
credit in the United States from such a prohibition;
(8) the availability of capital for financial
institutions with less than $10,000,000,000 in total
assets; and
(9) any other relevant factors relating to the
safety and soundness of our financial system and
potential economic impact of such a prohibition.
(b) Study of Foreign Bank Intermediate Holding Company
Capital Requirements.--The Comptroller General of the United
States, in consultation with the Secretary, the Board of
Governors, the Comptroller of the Currency, and the
Corporation, shall conduct a study of capital requirements
applicable to United States intermediate holding companies of
foreign banks that are bank holding companies or savings and
loan holding companies. The study shall consider--
(1) current Board of Governors policy regarding the
treatment of intermediate holding companies;
(2) the principle of national treatment and
equality of competitive opportunity for foreign banks
operating in the United States;
(3) the extent to which foreign banks are subject
on a consolidated basis to home country capital
standards comparable to United States capital
standards;
(4) potential effects on United States banking
organizations operating abroad of changes to United
States policy regarding intermediate holding companies;
(5) the impact on the cost and availability of
credit in the United States from a change in United
States policy regarding intermediate holding companies;
and
(6) any other relevant factors relating to the
safety and soundness of our financial system and
potential economic impact of such a prohibition.
(c) Report.--Not later than 18 months after the date of
enactment of this Act, the Comptroller General of the United
States shall submit reports to the Committee on Banking,
Housing, and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives summarizing
the results of the studies required under subsection (a). The
reports shall include specific recommendations for legislative
or regulatory action regarding the treatment of hybrid capital
instruments, including trust preferred shares, and shall
explain the basis for such recommendations.
SEC. 175. INTERNATIONAL POLICY COORDINATION.
(a) By the President.--The President, or a designee of the
President, may coordinate through all available international
policy channels, similar policies as those found in United
States law relating to limiting the scope, nature, size, scale,
concentration, and interconnectedness of financial companies,
in order to protect financial stability and the global economy.
(b) By the Council.--The Chairperson of the Council, in
consultation with the other members of the Council, shall
regularly consult with the financial regulatory entities and
other appropriate organizations of foreign governments or
international organizations on matters relating to systemic
risk to the international financial system.
(c) By the Board of Governors and the Secretary.--The Board
of Governors and the Secretary shall consult with their foreign
counterparts and through appropriate multilateral organizations
to encourage comprehensive and robust prudential supervision
and regulation for all highly leveraged and interconnected
financial companies.
SEC. 176. RULE OF CONSTRUCTION.
No regulation or standard imposed under this title may be
construed in a manner that would lessen the stringency of the
requirements of any applicable primary financial regulatory
agency or any other Federal or State agency that are otherwise
applicable. This title, and the rules and regulations or orders
prescribed pursuant to this title, do not divest any such
agency of any authority derived from any other applicable law.
TITLE II--ORDERLY LIQUIDATION AUTHORITY
SEC. 201. DEFINITIONS.
(a) In General.--In this title, the following definitions
shall apply:
(1) Administrative expenses of the receiver.--The
term ``administrative expenses of the receiver''
includes--
(A) the actual, necessary costs and
expenses incurred by the Corporation as
receiver for a covered financial company in
liquidating a covered financial company; and
(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.
(2) Bankruptcy code.--The term ``Bankruptcy Code''
means title 11, United States Code.
(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.
(4) Claim.--The term ``claim'' means any right to
payment, whether or not such right is reduced to
judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal,
equitable, secured, or unsecured.
(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.
(6) Court.--The term ``Court'' means the United
States District Court for the District of Columbia,
unless the context otherwise requires.
(7) Covered broker or dealer.--The term ``covered
broker or dealer'' means a covered financial company
that is a broker or dealer that--
(A) is registered with the Commission under
section 15(b) of the Securities Exchange Act of
1934 (15 U.S.C. 78o(b)); and
(B) is a member of SIPC.
(8) Covered financial company.--The term ``covered
financial company''--
(A) means a financial company for which a
determination has been made under section
203(b); and
(B) does not include an insured depository
institution.
(9) Covered subsidiary.--The term ``covered
subsidiary'' means a subsidiary of a covered financial
company, other than--
(A) an insured depository institution;
(B) an insurance company; or
(C) a covered broker or dealer.
(10) 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).
(11) Financial company.--The term ``financial
company'' means any company that--
(A) is incorporated or organized under any
provision of Federal law or the laws of any
State;
(B) is--
(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));
(ii) a nonbank financial company
supervised by the Board of Governors;
(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); or
(iv) any subsidiary of any company
described in any of clauses (i) through
(iii) 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 subsidiary that is an
insured depository institution or an
insurance company); and
(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.), a governmental entity, or
a regulated entity, as defined under section
1303(20) of the Federal Housing Enterprises
Financial Safety and Soundness Act of 1992 (12
U.S.C. 4502(20)).
(12) Fund.--The term ``Fund'' means the Orderly
Liquidation Fund established under section 210(n).
(13) Insurance company.--The term ``insurance
company'' means any entity that is--
(A) engaged in the business of insurance;
(B) subject to regulation by a State
insurance regulator; and
(C) covered by a State law that is designed
to specifically deal with the rehabilitation,
liquidation, or insolvency of an insurance
company.
(14) Nonbank financial company.--The term ``nonbank
financial company'' has the same meaning as in section
102(a)(4)(C).
(15) 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)(4)(D).
(16) SIPC.--The term ``SIPC'' means the Securities
Investor Protection Corporation.
(b) Definitional Criteria.--For purpose of the definition
of the term ``financial company'' under subsection (a)(11), no
company shall be deemed to be 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)), if the consolidated revenues of such company from
such activities constitute less than 85 percent of the total
consolidated revenues of such company, as the Corporation, in
consultation with the Secretary, shall establish by regulation.
In determining whether a company is a financial company under
this title, the consolidated revenues derived from the
ownership or control of a depository institution shall be
included.
SEC. 202. JUDICIAL REVIEW.
(a) Commencement of Orderly Liquidation.--
(1) Petition to district court.--
(A) District court review.--
(i) Petition to district court.--
Subsequent to a determination by the
Secretary under section 203 that a
financial company satisfies the
criteria in section 203(b), the
Secretary shall notify the Corporation
and the covered financial company. If
the board of directors (or body
performing similar functions) of the
covered financial company acquiesces or
consents to the appointment of the
Corporation as receiver, the Secretary
shall appoint the Corporation as
receiver. If the board of directors (or
body performing similar functions) of
the covered financial company does not
acquiesce or consent to the appointment
of the Corporation as receiver, the
Secretary shall petition the United
States District Court for the District
of Columbia for an order authorizing
the Secretary to appoint the
Corporation as receiver.
(ii) Form and content of order.--
The Secretary shall present all
relevant findings and the
recommendation made pursuant to section
203(a) to the Court. The petition shall
be filed under seal.
(iii) Determination.--On a strictly
confidential basis, and without any
prior public disclosure, the Court,
after notice to the covered financial
company and a hearing in which the
covered financial company may oppose
the petition, shall determine whether
the determination of the Secretary that
the covered financial company is in
default or in danger of default and
satisfies the definition of a financial
company under section 201(a)(11) is
arbitrary and capricious.
(iv) Issuance of order.--If the
Court determines that the determination
of the Secretary that the covered
financial company is in default or in
danger of default and satisfies the
definition of a financial company under
section 201(a)(11)--
(I) is not arbitrary and
capricious, the Court shall
issue an order immediately
authorizing the Secretary to
appoint the Corporation as
receiver of the covered
financial company; or
(II) is arbitrary and
capricious, the Court 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).
(v) Petition granted by operation
of law.--If the Court does not make a
determination within 24 hours of
receipt of the petition--
(I) the petition shall be
granted by operation of law;
(II) the Secretary shall
appoint the Corporation as
receiver; and
(III) liquidation under
this title shall automatically
and without further notice or
action be commenced and the
Corporation may immediately
take all actions authorized
under this title.
(B) Effect of determination.--The
determination of the Court 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
Court shall provide immediately for the record
a written statement of each reason supporting
the decision of the Court, and shall provide
copies thereof to the Secretary and the covered
financial company.
(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.
(2) Appeal of decisions of the district court.--
(A) Appeal to court of appeals.--
(i) In general.--Subject to clause
(ii), the United States Court of
Appeals for the District of Columbia
Circuit shall have jurisdiction of an
appeal of a final decision of the Court
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 Court is rendered or deemed
rendered under this subsection.
(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).
(iii) Expedition.--The Court of
Appeals shall consider any appeal under
this subparagraph on an expedited
basis.
(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 and satisfies
the definition of a financial company
under section 201(a)(11) is arbitrary
and capricious.
(B) Appeal to the supreme court.--
(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.
(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.
(iii) Expedition.--The Supreme
Court shall consider any petition under
this subparagraph on an expedited
basis.
(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 and satisfies the definition of
a financial company under section
201(a)(11) is arbitrary and capricious.
(b) Establishment and Transmittal of Rules and
Procedures.--
(1) In general.--Not later than 6 months after the
date of enactment of this Act, the Court 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 (a)(1).
(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--
(A) the Committee on the Judiciary of the
Senate;
(B) the Committee on Banking, Housing, and
Urban Affairs of the Senate;
(C) the Committee on the Judiciary of the
House of Representatives; and
(D) the Committee on Financial Services of
the House of Representatives.
(c) Provisions Applicable to Financial Companies.--
(1) Bankruptcy code.--Except as provided in this
subsection, the provisions of the Bankruptcy Code and
rules issued thereunder or otherwise applicable
insolvency law, 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.
(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, except as expressly provided in
this title.
(d) Time Limit on Receivership Authority.--
(1) Baseline period.--Any appointment of the
Corporation as receiver under this section shall
terminate at the end of the 3-year period beginning on
the date on which such appointment is made.
(2) Extension of time limit.--The time limit
established in paragraph (1) may be extended by the
Corporation for up to 1 additional year, if the
Chairperson of the Corporation determines and certifies
in writing to the Committee on Banking, Housing, and
Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives that
continuation of the receivership is necessary--
(A) to--
(i) maximize the net present value
return from the sale or other
disposition of the assets of the
covered financial company; or
(ii) minimize the amount of loss
realized upon the sale or other
disposition of the assets of the
covered financial company; and
(B) to protect the stability of the
financial system of the United States.
(3) Second extension of time limit.--
(A) In general.--The time limit under this
subsection, as extended under paragraph (2),
may be extended for up to 1 additional year, if
the Chairperson of the Corporation, with the
concurrence of the Secretary, submits the
certifications described in paragraph (2).
(B) Additional report required.--Not later
than 30 days after the date of commencement of
the extension under subparagraph (A), the
Corporation 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 describing the need for the
extension and the specific plan of the
Corporation to conclude the receivership before
the end of the second extension.
(4) Ongoing litigation.--The time limit under this
subsection, as extended under paragraph (3), may be
further extended solely for the purpose of completing
ongoing litigation in which the Corporation as receiver
is a party, provided that the appointment of the
Corporation as receiver shall terminate not later than
90 days after the date of completion of such
litigation, if--
(A) the Council determines that the
Corporation used its best efforts to conclude
the receivership in accordance with its plan
before the end of the time limit described in
paragraph (3);
(B) the Council determines that the
completion of longer-term responsibilities in
the form of ongoing litigation justifies the
need for an extension; and
(C) the Corporation submits a report
approved by the Council not later than 30 days
after the date of the determinations by the
Council under subparagraphs (A) and (B) to the
Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on
Financial Services of the House of
Representatives, describing--
(i) the ongoing litigation
justifying the need for an extension;
and
(ii) the specific plan of the
Corporation to complete the litigation
and conclude the receivership.
(5) Regulations.--The Corporation may issue
regulations governing the termination of receiverships
under this title.
(6) No liability.--The Corporation and the Deposit
Insurance Fund shall not be liable for unresolved
claims arising from the receivership after the
termination of the receivership.
(e) Study of Bankruptcy and Orderly Liquidation Process for
Financial Companies.--
(1) Study.--
(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 Court, and each such
Office shall conduct separate studies regarding
the bankruptcy and orderly liquidation process
for financial companies under the Bankruptcy
Code.
(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--
(i) the effectiveness of chapter 7
or chapter 11 of the Bankruptcy Code in
facilitating the orderly liquidation or
reorganization of financial companies;
(ii) ways to maximize the
efficiency and effectiveness of the
Court; and
(iii) ways to make the orderly
liquidation process under the
Bankruptcy Code for financial companies
more effective.
(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).
(f) Study of International Coordination Relating to
Bankruptcy Process for Financial Companies.--
(1) Study.--
(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.
(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--
(i) the extent to which
international coordination currently
exists;
(ii) current mechanisms and
structures for facilitating
international cooperation;
(iii) barriers to effective
international coordination; and
(iv) ways to increase and make more
effective international coordination.
(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).
(g) Study of Prompt Corrective Action Implementation by the
Appropriate Federal Agencies.--
(1) Study.--The Comptroller General of the United
States shall conduct a study regarding the
implementation of prompt corrective action by the
appropriate Federal banking agencies.
(2) Issues to be studied.--In conducting the study
under paragraph (1), the Comptroller General shall
evaluate--
(A) the effectiveness of implementation of
prompt corrective action by the appropriate
Federal banking agencies and the resolution of
insured depository institutions by the
Corporation; and
(B) ways to make prompt corrective action a
more effective tool to resolve the insured
depository institutions at the least possible
long-term cost to the Deposit Insurance Fund.
(3) Report to council.--Not later than 1 year after
the date of enactment of this Act, the Comptroller
General shall submit a report to the Council on the
results of the study conducted under this subsection.
(4) Council report of action.--Not later than 6
months after the date of receipt of the report from the
Comptroller General under paragraph (3), the Council
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 actions taken in response to the
report, including any recommendations made to the
Federal primary financial regulatory agencies under
section 120.
SEC. 203. SYSTEMIC RISK DETERMINATION.
(a) Written Recommendation and Determination.--
(1) Vote required.--
(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.
(B) Cases involving brokers or dealers.--In
the case of a 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
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 \2/3\ of the members of the Commission then
serving, and in consultation with the
Corporation.
(C) Cases involving insurance companies.--
In the case of an insurance company, 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 an insurance company, the Director
of the Federal Insurance Office 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
Board of Governors then serving and the
affirmative approval of the Director of the
Federal Insurance Office, and in consultation
with the Corporation.
(2) Recommendation required.--Any written
recommendation pursuant to paragraph (1) shall
contain--
(A) an evaluation of whether the financial
company is in default or in danger of default;
(B) a description of the effect that the
default of the financial company would have on
financial stability in the United States;
(C) a description of the effect that the
default of the financial company would have on
economic conditions or financial stability for
low income, minority, or underserved
communities;
(D) a recommendation regarding the nature
and the extent of actions to be taken under
this title regarding the financial company;
(E) an evaluation of the likelihood of a
private sector alternative to prevent the
default of the financial company;
(F) an evaluation of why a case under the
Bankruptcy Code is not appropriate for the
financial company;
(G) an evaluation of the effects on
creditors, counterparties, and shareholders of
the financial company and other market
participants; and
(H) an evaluation of whether the company
satisfies the definition of a financial company
under section 201.
(b) Determination by the Secretary.--Notwithstanding any
other provision of Federal or State law, the Secretary shall
take action in accordance with section 202(a)(1)(A), if, upon
the written recommendation under subsection (a), the Secretary
(in consultation with the President) determines that--
(1) the financial company is in default or in
danger of default;
(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;
(3) no viable private sector alternative is
available to prevent the default of the financial
company;
(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;
(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;
(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; and
(7) the company satisfies the definition of a
financial company under section 201.
(c) Documentation and Review.--
(1) In general.--The Secretary shall--
(A) document any determination under
subsection (b);
(B) retain the documentation for review
under paragraph (2); and
(C) notify the covered financial company
and the Corporation of such determination.
(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--
(A) the size and financial condition of the
covered financial company;
(B) the sources of capital and credit
support that were available to the covered
financial company;
(C) the operations of the covered financial
company that could have had a significant
impact on financial stability, markets, or
both;
(D) identification of the banks and
financial companies which may be able to
provide the services offered by the covered
financial company;
(E) any potential international
ramifications of resolution of the covered
financial company under other applicable
insolvency law;
(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;
(G) the potential effect of the appointment
of a receiver by the Secretary on consumers;
(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; and
(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.
(3) Reports to congress and the public.--
(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 shall file a report
with the Committee on Banking, Housing, and
Urban Affairs of the Senate and the Committee
on Financial Services of the House of
Representatives--
(i) setting forth information on
the financial condition of the covered
financial company as of the date of the
appointment, including a description of
its assets and liabilities;
(ii) describing the plan of, and
actions taken by, the Corporation to
wind down the covered financial
company;
(iii) explaining each instance in
which the Corporation waived any
applicable requirements of part 366 of
title 12, Code of Federal Regulations
(or any successor thereto) with respect
to conflicts of interest by any person
in the private sector who was retained
to provide services to the Corporation
in connection with such receivership;
(iv) describing the reasons for the
provision of any funding to the
receivership out of the Fund;
(v) setting forth the expected
costs of the orderly liquidation of the
covered financial company;
(vi) setting forth the identity of
any claimant that is treated in a
manner different from other similarly
situated claimants under subsection
(b)(4), (d)(4), or (h)(5)(E), the
amount of any additional payment to
such claimant under subsection (d)(4),
and the reason for any such action; and
(vii) which report the Corporation
shall publish on an online website
maintained by the Corporation, subject
to maintaining appropriate
confidentiality.
(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.
(C) Congressional testimony.--The
Corporation and the primary financial
regulatory agency, if any, of the financial
company for which the Corporation was appointed
receiver under this title shall appear before
Congress, if requested, not later than 30 days
after the date on which the Corporation first
files the reports required under subparagraph
(A).
(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)--
(A) a case has been, or likely will
promptly be, commenced with respect to the
financial company under the Bankruptcy Code;
(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;
(C) the assets of the financial company
are, or are likely to be, less than its
obligations to creditors and others; or
(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.
(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--
(A) the basis for the determination;
(B) the purpose for which any action was
taken pursuant thereto;
(C) the likely effect of the determination
and such action on the incentives and conduct
of financial companies and their creditors,
counterparties, and shareholders; and
(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.
(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).
(e) Treatment of Insurance Companies and Insurance Company
Subsidiaries.--
(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 applicable State
law.
(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.
(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(a) 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.
SEC. 204. ORDERLY LIQUIDATION OF COVERED FINANCIAL COMPANIES.
(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, so that--
(1) creditors and shareholders will bear the losses
of the financial company;
(2) management responsible for the condition of the
financial company will not be retained; and
(3) the Corporation and other appropriate agencies
will take all steps necessary and appropriate to assure
that all parties, including management, directors, 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.
(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.
(c) Consultation.--The Corporation, as receiver--
(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;
(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;
(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; and
(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.
(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)(9), funds for the orderly liquidation of the covered
financial company. All funds provided by the Corporation under
this subsection shall have a priority of claims under
subparagraph (A) or (B) of section 210(b)(1), as applicable,
including funds used for--
(1) making loans to, or purchasing any debt
obligation of, the covered financial company or any
covered subsidiary;
(2) purchasing or guaranteeing against loss the
assets of the covered financial company or any covered
subsidiary, directly or through an entity established
by the Corporation for such purpose;
(3) assuming or guaranteeing the obligations of the
covered financial company or any covered subsidiary to
1 or more third parties;
(4) taking a lien on any or all assets of the
covered financial company or any covered subsidiary,
including a first priority lien on all unencumbered
assets of the covered financial company or any covered
subsidiary to secure repayment of any transactions
conducted under this subsection;
(5) selling or transferring all, or any part, of
such acquired assets, liabilities, or obligations of
the covered financial company or any covered
subsidiary; and
(6) making payments pursuant to subsections (b)(4),
(d)(4), and (h)(5)(E) of section 210.
SEC. 205. ORDERLY LIQUIDATION OF COVERED BROKERS AND DEALERS.
(a) Appointment of SIPC as Trustee.--
(1) Appointment.--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 the liquidation under
the Securities Investor Protection Act of 1970 (15
U.S.C. 78aaa et seq.) of the covered broker or dealer.
(2) Actions by sipc.--
(A) Filing.--Upon appointment of SIPC under
paragraph (1), SIPC shall promptly file with
any Federal district court of competent
jurisdiction specified in section 21 or 27 of
the Securities Exchange Act of 1934 (15 U.S.C.
78u, 78aa), an application for a protective
decree under the Securities Investor Protection
Act of 1970 (15 U.S.C. 78aaa et seq.) as to the
covered broker or dealer. The Federal district
court shall accept and approve the filing,
including outside of normal business hours, and
shall immediately issue the protective decree
as to the covered broker or dealer.
(B) Administration by sipc.--Following
entry of the protective decree, and except as
otherwise provided in this section, the
determination of claims and the liquidation of
assets retained in the receivership of the
covered broker or dealer and not transferred to
the bridge financial company shall be
administered under the Securities Investor
Protection Act of 1970 (15 U.S.C. 78aaa et
seq.) by SIPC, as trustee for the covered
broker or dealer.
(C) Definition of filing date.--For
purposes of the liquidation proceeding, the
term ``filing date'' means the date on which
the Corporation is appointed as receiver of the
covered broker or dealer.
(D) Determination of claims.--As trustee
for the covered broker or dealer, SIPC shall
determine and satisfy, consistent with this
title and with the Securities Investor
Protection Act of 1970 (15 U.S.C. 78aaa et
seq.), all claims against the covered broker or
dealer arising on or before the filing date.
(b) Powers and Duties of SIPC.--
(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, and shall
conduct such liquidation in accordance with the terms
of the Securities Investor Protection Act of 1970 (15
U.S.C. 78aaa et seq.), except that SIPC 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.
(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--
(A) any action, except as otherwise
provided in this title--
(i) to make funds available under
section 204(d);
(ii) to organize, establish,
operate, or terminate any bridge
financial company;
(iii) to transfer assets and
liabilities;
(iv) to enforce or repudiate
contracts; or
(v) to take any other action
relating to such bridge financial
company under section 210; or
(B) determining claims under subsection
(e).
(3) Protective decree.--SIPC and the Corporation,
in consultation with the Commission, shall jointly
determine the terms of the protective decree to be
filed by SIPC with any court of competent jurisdiction
under section 21 or 27 of the Securities Exchange Act
of 1934 (15 U.S.C. 78u, 78aa), as required by
subsection (a).
(4) Qualified financial contracts.--Notwithstanding
any provision of the Securities Investor Protection Act
of 1970 (15 U.S.C. 78aaa et seq.) 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 for which the Corporation has been
appointed receiver is a party shall be governed
exclusively by section 210, including the limitations
and restrictions contained in section 210(c)(10)(B).
(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 (15 U.S.C. 78aaa et seq.) 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.
(d) Actions by Corporation as Receiver.--
(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--
(A) adversely affect the rights of a
customer to customer property or customer name
securities;
(B) diminish the amount or timely payment
of net equity claims of customers; or
(C) otherwise impair the recoveries
provided to a customer under the Securities
Investor Protection Act of 1970 (15 U.S.C.
78aaa et seq.).
(2) Net proceeds.--The net proceeds from any
transfer, sale, or disposition of assets of the covered
broker or dealer, or proceeds thereof 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.
(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--
(1) shall be determined in accordance with section
210(a)(2); and
(2) may be reviewed by the appropriate district or
territorial court of the United States in accordance
with section 210(a)(5).
(f) Satisfaction of Customer Claims.--
(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 or customer name
securities shall be promptly discharged by SIPC, the
Corporation, or the bridge financial company, as
applicable, 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 actual
proceeds realized from the liquidation of the covered
broker or dealer under this title been distributed in 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 without
any transfer of assets or liabilities to a bridge
financial company, and with a filing date as of the
date on which the Corporation is appointed as receiver.
(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.
(g) Priorities.--
(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)).
(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).
(h) Rulemaking.--The Commission and the Corporation, after
consultation with SIPC, shall jointly issue rules to implement
this section.
SEC. 206. MANDATORY TERMS AND CONDITIONS FOR ALL ORDERLY LIQUIDATION
ACTIONS.
In taking action under this title, the Corporation shall--
(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;
(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;
(3) ensure that unsecured creditors bear losses in
accordance with the priority of claim provisions in
section 210;
(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);
(5) ensure that the members of the board of
directors (or body performing similar functions)
responsible for the failed condition of the covered
financial company are removed, if such members have not
already been removed at the time the Corporation is
appointed as receiver; and
(6) not take an equity interest in or become a
shareholder of any covered financial company or any
covered subsidiary.
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.
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 (15 U.S.C. 78aaa et
seq.) 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.
(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 (15 U.S.C. 78aaa et
seq.), or any similar provision of State liquidation or
insolvency law applicable to the covered financial company,
revest in the covered financial company.
(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.
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, and address the
potential for conflicts of interest between or among individual
receiverships established under this title or under the Federal
Deposit Insurance Act. 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.
SEC. 210. POWERS AND DUTIES OF THE CORPORATION.
(a) Powers and Authorities.--
(1) General powers.--
(A) Successor to covered financial
company.--The Corporation shall, upon
appointment as receiver for a covered financial
company under this title, succeed to--
(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; and
(ii) title to the books, records,
and assets of any previous receiver or
other legal custodian of such covered
financial company.
(B) Operation of the covered financial
company during the period of orderly
liquidation.--The Corporation, as receiver for
a covered financial company, may--
(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;
(ii) collect all obligations and
money owed to the covered financial
company;
(iii) perform all functions of the
covered financial company, in the name
of the covered financial company;
(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; and
(v) provide by contract for
assistance in fulfilling any function,
activity, action, or duty of the
Corporation as receiver.
(C) Functions of covered financial company
officers, directors, and shareholders.--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.
(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.
(E) Additional powers with respect to
failing subsidiaries of a covered financial
company.--
(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 covered subsidiary
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--
(I) the covered subsidiary
is in default or in danger of
default;
(II) such action would
avoid or mitigate serious
adverse effects on the
financial stability or economic
conditions of the United
States; and
(III) such action would
facilitate the orderly
liquidation of the covered
financial company.
(ii) Treatment as covered financial
company.--If the Corporation is
appointed as receiver of a covered
subsidiary of a covered financial
company under clause (i), the covered
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 covered
subsidiary as it has with respect to a
covered financial company under this
title.
(F) Organization of bridge companies.--The
Corporation, as receiver for a covered
financial company, may organize a bridge
financial company under subsection (h).
(G) Merger; transfer of assets and
liabilities.--
(i) In general.--Subject to clauses
(ii) and (iii), the Corporation, as
receiver for a covered financial
company, may--
(I) merge the covered
financial company with another
company; or
(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.
(ii) Federal agency approval;
antitrust review.--With respect to a
transaction described in clause (i)(I)
that requires approval by a Federal
agency--
(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;
(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; and
(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.
(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.
(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.
(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.
(J) Subpoena authority.--
(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.
(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.
(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.
(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.
(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.
(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.
(O) Restriction on transfers.--
(i) Selection 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 one of
such bridge financial companies, all
customer accounts of the covered broker
or dealer, and all associated customer
name securities and customer property,
unless the Corporation, after
consulting with the Commission and
SIPC, determines that--
(I) the customer accounts,
customer name securities, and
customer property are likely to
be promptly transferred to
another broker or dealer that
is registered with the
Commission under section 15(b)
of the Securities Exchange Act
of 1934 (15 U.S.C. 73o(b)) and
is a member of SIPC; or
(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.
(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.
(iii) Customer consent and court
approval not required.--Neither
customer consent nor court approval
shall be required to transfer any
customer accounts or associated
customer name securities or customer
property to a bridge financial company
in accordance with this section.
(iv) Notification of sipc and
sharing of information.--The
Corporation shall identify to SIPC the
customer accounts and associated
customer name securities and 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.
(2) Determination of claims.--
(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.
(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--
(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;
and
(ii) republish such notice 1 month
and 2 months, respectively, after the
date of publication under clause (i).
(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--
(i) at the last address of the
creditor appearing in such books;
(ii) in any claim filed by the
claimant; or
(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.
(3) Procedures for resolution of claims.--
(A) Decision period.--
(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 allows or disallows the
claim, in accordance with subparagraphs
(B), (C), and (D).
(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).
(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--
(I) on the books, records,
or both of the covered
financial company;
(II) in the claim filed by
the claimant; or
(III) in documents
submitted in proof of the
claim.
(iv) Contents of notice of
disallowance.--If the Corporation as
receiver disallows any claim filed
under clause (i), the notice to the
claimant shall contain--
(I) a statement of each
reason for the disallowance;
and
(II) the procedures
required to file or continue an
action in court, as provided in
paragraph (4).
(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.
(C) Disallowance of claims filed after end
of filing period.--
(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.
(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--
(I) the claimant did not
receive notice of the
appointment of the receiver in
time to file such claim before
such date; and
(II) such claim is filed in
time to permit payment of such
claim.
(D) Authority to disallow claims.--
(i) In general.--The Corporation
may disallow 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.
(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--
(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;
and
(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.
(iii) Exceptions.--No provision of
this paragraph shall apply with respect
to--
(I) any extension of credit
from any Federal reserve bank,
or the Corporation, to any
covered financial company; or
(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.
(E) Legal effect of filing.--
(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.
(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.
(4) Judicial determination of claims.--
(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).
(B) Timing.--A claim under subparagraph (A)
may be filed before the end of the 60-day
period beginning on the earlier of--
(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; or
(ii) the date of any notice of
disallowance of such claim pursuant to
paragraph (3)(A)(i).
(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.
(5) Expedited determination of claims.--
(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--
(i) having a legally valid and
enforceable or perfected security
interest in property of a covered
financial company or 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; and
(ii) that irreparable injury will
occur if the claims procedure
established under paragraph (3) is
followed.
(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--
(i) determine--
(I) whether to allow or
disallow such claim, or any
portion thereof; or
(II) whether such claim
should be determined pursuant
to the procedures established
pursuant to paragraph (3);
(ii) notify the claimant of the
determination; and
(iii) if the claim is disallowed,
provide a statement of each reason for
the disallowance and the procedure for
obtaining a judicial determination.
(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--
(i) the end of the 90-day period
beginning on the date of the filing of
a request for expedited relief; or
(ii) the date on which the
Corporation denies the claim or a
portion thereof.
(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.
(E) Legal effect of filing.--
(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.
(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.
(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--
(A) is in writing;
(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; and
(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.
(7) Payment of claims.--
(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--
(i) allowed by the receiver;
(ii) approved by the receiver
pursuant to a final determination
pursuant to paragraph (3) or (5), as
applicable; or
(iii) determined by the final
judgment of a court of competent
jurisdiction.
(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.
(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.
(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.
(8) Suspension of legal actions.--
(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.
(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.
(9) Additional rights and duties.--
(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.
(B) Rights and remedies of receiver.--In
the event of any appealable judgment, the
Corporation as receiver shall--
(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;
and
(ii) not be required to post any
bond in order to pursue such remedies.
(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.
(D) Limitation on judicial review.--Except
as otherwise provided in this title, no court
shall have jurisdiction over--
(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;
or
(ii) any claim relating to any act
or omission of such covered financial
company or the Corporation as receiver.
(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--
(i) maximizes the net present value
return from the sale or disposition of
such assets;
(ii) minimizes the amount of any
loss realized in the resolution of
cases;
(iii) mitigates the potential for
serious adverse effects to the
financial system;
(iv) ensures timely and adequate
competition and fair and consistent
treatment of offerors; and
(v) prohibits discrimination on the
basis of race, sex, or ethnic group in
the solicitation and consideration of
offers.
(10) Statute of limitations for actions brought by
receiver.--
(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--
(i) in the case of any contract
claim, the longer of--
(I) the 6-year period
beginning on the date on which
the claim accrues; or
(II) the period applicable
under State law; and
(ii) in the case of any tort claim,
the longer of--
(I) the 3-year period
beginning on the date on which
the claim accrues; or
(II) the period applicable
under State law.
(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--
(i) the date of the appointment of
the Corporation as receiver under this
title; or
(ii) the date on which the cause of
action accrues.
(C) Revival of expired state causes of
action.--
(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.
(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.
(11) Avoidable transfers.--
(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 date on which the
Corporation was appointed receiver, if--
(i) the covered financial company
voluntarily or involuntarily--
(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; or
(II) received less than a
reasonably equivalent value in
exchange for such transferor
obligation; and
(ii) the covered financial company
voluntarily or involuntarily--
(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;
(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;
(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; or
(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.
(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--
(i) to or for the benefit of a
creditor;
(ii) for or on account of an
antecedent debt that was owed by the
covered financial company before the
transfer was made;
(iii) that was made while the
covered financial company was
insolvent;
(iv) that was made--
(I) 90 days or less before
the date on which the
Corporation was appointed
receiver; or
(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; and
(v) that enables the creditor to
receive more than the creditor would
receive if--
(I) the covered financial
company had been liquidated
under chapter 7 of the
Bankruptcy Code;
(II) the transfer had not
been made; and
(III) the creditor received
payment of such debt to the
extent provided by the
provisions of chapter 7 of the
Bankruptcy Code.
(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.
(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--
(i) the initial transferee of such
transfer or the person for whose
benefit such transfer was made; or
(ii) any immediate or mediate
transferee of any such initial
transferee.
(E) Rights of transferee or obligee.--The
Corporation may not recover under subparagraph
(D)(ii) from--
(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; or
(ii) any immediate or mediate good
faith transferee of such transferee.
(F) Defenses.--Subject to the other
provisions of this title--
(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
sections 547, 548, and 549 of the
Bankruptcy Code; and
(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.
(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.
(H) Rules of construction; definitions.--
For purposes of--
(i) subparagraphs (A) and (B)--
(I) the term ``insider''
has the same meaning as in
section 101(31) of the
Bankruptcy Code;
(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; and
(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; and
(ii) subparagraph (B)--
(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; and
(II) the term ``insolvent''
has the same meaning as in
section 101(32) of the
Bankruptcy Code.
(12) Setoff.--
(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--
(i) the claim of the creditor
against the covered financial company
is disallowed;
(ii) the claim was transferred, by
an entity other than the covered
financial company, to the creditor--
(I) after the Corporation
was appointed as receiver of
the covered financial company;
or
(II)(aa) after the 90-day
period preceding the date on
which the Corporation was
appointed as receiver for the
covered financial company; and
(bb) while the covered
financial company was insolvent
(except for a setoff in
connection with a qualified
financial contract); or
(iii) the debt owed to the covered
financial company was incurred by the
covered financial company--
(I) after the 90-day period
preceding the date on which the
Corporation was appointed as
receiver for the covered
financial company;
(II) while the covered
financial company was
insolvent; and
(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).
(B) Insufficiency.--
(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--
(I) the date that is 90
days before the date on which
the Corporation is appointed as
receiver for the covered
financial company; or
(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.
(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.
(C) Insolvency.--The term ``insolvent'' has
the same meaning as in section 101(32) of the
Bankruptcy Code.
(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.
(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.
(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), (C), and (D) of
subsection (b)(1), but senior to all other
unsecured liabilities defined in subsection
(b)(1)(E), in an amount equal to the value of
such setoff rights.
(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.
(14) Standards.--
(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.
(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.
(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.
(16) Accounting and recordkeeping requirements.--
(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.
(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.
(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.
(D) Recordkeeping requirement.--
(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--
(I) the avoidance of
duplicative record retention;
and
(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.
(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).
(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.
(b) Priority of Expenses and Unsecured Claims.--
(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:
(A) Administrative expenses of the
receiver.
(B) Any amounts owed to the United States,
unless the United States agrees or consents
otherwise.
(C) Wages, salaries, or commissions,
including vacation, severance, and sick leave
pay earned by an individual (other than an
individual described in subparagraph (G)), but
only to the extent of $11,725 for each
individual (as indexed for inflation, by
regulation of the Corporation) earned not later
than 180 days before the date of appointment of
the Corporation as receiver.
(D) Contributions owed to employee benefit
plans arising from services rendered not later
than 180 days before the date of appointment of
the Corporation as receiver, to the extent of
the number of employees covered by each such
plan, multiplied by $11,725 (as indexed for
inflation, by regulation of the Corporation),
less the aggregate amount paid to such
employees under subparagraph (C), plus the
aggregate amount paid by the receivership on
behalf of such employees to any other employee
benefit plan.
(E) Any other general or senior liability
of the covered financial company (which is not
a liability described under subparagraph (F),
(G), or (H)).
(F) Any obligation subordinated to general
creditors (which is not an obligation described
under subparagraph (G) or (H)).
(G) Any wages, salaries, or commissions,
including vacation, severance, and sick leave
pay earned, owed to senior executives and
directors of the covered financial company.
(H) 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.
(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).
(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.
(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 may take any action
(including making payments, subject to subsection
(o)(1)(D)(i)) that does not comply with this
subsection, if--
(A) the Corporation determines that such
action is necessary--
(i) to maximize the value of the
assets of the covered financial
company;
(ii) to initiate and continue
operations essential to implementation
of the receivership or any bridge
financial company;
(iii) to maximize the present value
return from the sale or other
disposition of the assets of the
covered financial company; or
(iv) to minimize the amount of any
loss realized upon the sale or other
disposition of the assets of the
covered financial company; and
(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).
(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.
(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--
(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);
(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);
(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; and
(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).
(c) Provisions Relating to Contracts Entered Into Before
Appointment of Receiver.--
(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--
(A) to which the covered financial company
is a party;
(B) the performance of which the
Corporation as receiver, in the discretion of
the Corporation, determines to be burdensome;
and
(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.
(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.
(3) Claims for damages for repudiation.--
(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--
(i) limited to actual direct
compensatory damages; and
(ii) determined as of--
(I) the date of the
appointment of the Corporation
as receiver; or
(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.
(B) No liability for other damages.--For
purposes of subparagraph (A), the term ``actual
direct compensatory damages'' does not
include--
(i) punitive or exemplary damages;
(ii) damages for lost profits or
opportunity; or
(iii) damages for pain and
suffering.
(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--
(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; and
(ii) paid in accordance with this
paragraph and subsection (d), except as
otherwise specifically provided in this
subsection.
(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).
(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.
(4) Leases under which the covered financial
company is the lessee.--
(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.
(B) Payments of rent.--Notwithstanding
subparagraph (A), the lessor under a lease to
which subparagraph (A) would otherwise apply
shall--
(i) be entitled to the contractual
rent accruing before the later of the
date on which--
(I) the notice of
disaffirmance or repudiation is
mailed; or
(II) the disaffirmance or
repudiation becomes effective,
unless the lessor is in default
or breach of the terms of the
lease;
(ii) have no claim for damages
under any acceleration clause or other
penalty provision in the lease; and
(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).
(5) Leases under which the covered financial
company is the lessor.--
(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--
(i) treat the lease as terminated
by such repudiation; or
(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.
(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)--
(i) the lessee--
(I) shall continue to pay
the contractual rent pursuant
to the terms of the lease after
the date of the repudiation of
such lease; and
(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; and
(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).
(6) Contracts for the sale of real property.--
(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--
(i) treat the contract as
terminated by such repudiation; or
(ii) remain in possession of such
real property.
(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)--
(i) the purchaser--
(I) shall continue to make
all payments due under the
contract after the date of the
repudiation of the contract;
and
(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; and
(ii) the Corporation as receiver
shall--
(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);
(II) deliver title to the
purchaser in accordance with
the provisions of the contract;
and
(III) have no obligation
under the contract other than
the performance required under
subclause (II).
(C) Assignment and sale allowed.--
(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.
(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.
(7) Provisions applicable to service contracts.--
(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--
(i) a claim to be paid in
accordance with subsections (a), (b),
and (d); and
(ii) deemed to have arisen as of
the date on which the receiver was
appointed.
(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--
(i) the other party shall be paid
under the terms of the contract for the
services performed; and
(ii) the amount of such payment
shall be treated as an administrative
expense of the receivership.
(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.
(8) Certain qualified financial contracts.--
(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--
(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 or at any time after such
appointment;
(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); or
(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.
(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.
(C) Certain transfers not avoidable.--
(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.
(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.
(D) Certain contracts and agreements
defined.--For purposes of this subsection, the
following definitions shall apply:
(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.
(ii) Securities contract.--The term
``securities contract''--
(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));
(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;
(III) means any option
entered into on a national
securities exchange relating to
foreign currencies;
(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)));
(V) means any margin loan;
(VI) means any extension of
credit for the clearance or
settlement of securities
transactions;
(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;
(VIII) means any other
agreement or transaction that
is similar to any agreement or
transaction referred to in this
clause;
(IX) means any combination
of the agreements or
transactions referred to in
this clause;
(X) means any option to
enter into any agreement or
transaction referred to in this
clause;
(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); and
(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.
(iii) Commodity contract.--The term
``commodity contract'' means--
(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;
(II) with respect to a
foreign futures commission
merchant, a foreign future;
(III) with respect to a
leverage transaction merchant,
a leverage transaction;
(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;
(V) with respect to a
commodity options dealer, a
commodity option;
(VI) any other agreement or
transaction that is similar to
any agreement or transaction
referred to in this clause;
(VII) any combination of
the agreements or transactions
referred to in this clause;
(VIII) any option to enter
into any agreement or
transaction referred to in this
clause;
(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); or
(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.
(iv) Forward contract.--The term
``forward contract'' means--
(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 2 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;
(II) any combination of
agreements or transactions
referred to in subclauses (I)
and (III);
(III) any option to enter
into any agreement or
transaction referred to in
subclause (I) or (II);
(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); or
(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.
(v) Repurchase agreement.--The term
``repurchase agreement'' (which
definition also applies to a reverse
repurchase agreement)--
(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;
(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;
(III) means any combination
of agreements or transactions
referred to in subclauses (I)
and (IV);
(IV) means any option to
enter into any agreement or
transaction referred to in
subclause (I) or (III);
(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); and
(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.
(vi) Swap agreement.--The term
``swap agreement'' means--
(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;
(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;
(III) any combination of
agreements or transactions
referred to in this clause;
(IV) any option to enter
into any agreement or
transaction referred to in this
clause;
(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); and
(VI) any security agreement
or arrangement or other credit
enhancement related to any
agreement or transaction
referred to in any of
subclauses (I) through (V),
including any guarantee or
reimbursement obligation in
connection with any agreement
or transaction referred to in
any such clause.
(vii) Definitions relating to
default.--When used in this paragraph
and paragraphs (9) and (10)--
(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; and
(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--
(aa) in the opinion
of the Corporation or
such authority--
(AA) the
covered
financial
company is not
likely to be
able to pay its
obligations in
the normal
course of
business; and
(BB) there
is no
reasonable
prospect that
the covered
financial
company will be
able to pay
such
obligations
without Federal
assistance; or
(bb) in the opinion
of the Corporation or
such authority--
(AA) the
covered
financial
company has
incurred or is
likely to incur
losses that
will deplete
all or
substantially
all of its
capital; and
(BB) there
is no
reasonable
prospect that
the capital
will be
replenished
without Federal
assistance.
(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.
(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.
(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.
(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 or
to disaffirm or repudiate any such contract in
accordance with this subsection.
(F) Walkaway clauses not effective.--
(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.
(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--
(I) the time at which such
party receives notice that such
contract has been transferred
pursuant to paragraph (10)(A);
or
(II) 5:00 p.m. (eastern
time) on the business day
following the date of the
appointment of the Corporation
as receiver.
(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.
(G) 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 paragraph (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. Notwithstanding
any other provision of this title, 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.
(H) Recordkeeping.--
(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).
(ii) Time frame.--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.
(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).
(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.
(9) Transfer of qualified financial contracts.--
(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--
(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--
(I) all qualified financial
contracts between any person or
any affiliate of such person
and the covered financial
company in default;
(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);
(III) all claims of such
covered financial company
against such person or any
affiliate of such person under
any such contract; and
(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;
or
(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).
(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.
(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.
(D) Definitions.--For purposes of this
paragraph--
(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; and
(ii) the term ``clearing
organization'' has the same meaning as
in section 402 of the Federal Deposit
Insurance Corporation Improvement Act
of 1991.
(10) Notification of transfer.--
(A) In general.--
(i) Notice.--The Corporation shall
provide notice in accordance with
clause (ii), if--
(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;
and
(II) the transfer includes
any qualified financial
contract.
(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
business day following the date of the
appointment of the Corporation as
receiver.
(B) Certain rights not enforceable.--
(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)--
(I) until 5:00 p.m.
(eastern time) on the business
day following the date of the
appointment; or
(II) after the person has
received notice that the
contract has been transferred
pursuant to paragraph (9)(A).
(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).
(C) Treatment of bridge financial
company.--For purposes of paragraph (9), a
bridge financial company shall not be
considered to be 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.
(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.
(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--
(A) disaffirm or repudiate all qualified
financial contracts between--
(i) any person or any affiliate of
such person; and
(ii) the covered financial company
in default; or
(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).
(12) Certain security and customer interests not
avoidable.--No provision of this subsection shall be
construed as permitting the avoidance of any--
(A) legally enforceable or perfected
security interest in any of the assets of any
covered financial company, except in accordance
with subsection (a)(11); or
(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.
(13) Authority to enforce contracts.--
(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(a)(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.
(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.
(C) Consent requirement and ipso facto
clauses.--
(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.
(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.
(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.
(14) Exception for federal reserve banks and
corporation security interest.--No provision of this
subsection shall apply with respect to--
(A) any extension of credit from any
Federal reserve bank or the Corporation to any
covered financial company; or
(B) any security interest in the assets of
the covered financial company securing any such
extension of credit.
(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.
(16) Enforcement of contracts guaranteed by the
covered financial company.--
(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--
(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; or
(ii) the Corporation, as receiver,
otherwise provides adequate protection
with respect to such obligations.
(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.
(d) Valuation of Claims in Default.--
(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.
(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--
(A) the Corporation had not been appointed
receiver with respect to the covered financial
company; and
(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.
(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--
(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.); and
(B) determined as of the close of business
on the date on which the Corporation is
appointed as receiver.
(4) Additional payments authorized.--
(A) In general.--Subject to subsection
(o)(1)(D)(i), 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.
(B) Limitations.--
(i) Prohibition.--The Corporation
shall not make any payments or credit
amounts to any claimant or category of
claimants that would result in any
claimant receiving more than the face
value amount of any claim that is
proven to the satisfaction of the
Corporation.
(ii) No obligation.--
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.
(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.
(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.
(f) Liability of Directors and Officers.--
(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--
(A) acting as receiver for such covered
financial company;
(B) acting based upon a suit, claim, or
cause of action purchased from, assigned by, or
otherwise conveyed by the Corporation as
receiver; or
(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.
(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.
(3) Savings clause.--Nothing in this subsection
shall impair or affect any right of the Corporation
under other applicable law.
(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.
(h) Bridge Financial Companies.--
(1) Organization.--
(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.
(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--
(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;
(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; and
(iii) perform any other temporary
function which the Corporation may, in
its discretion, prescribe in accordance
with this section.
(2) Charter and establishment.--
(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.
(B) Management.--Upon its establishment, a
bridge financial company shall be under the
management of a board of directors appointed by
the Corporation.
(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.
(D) Terms of charter; rights and
privileges.--Subject to and in accordance with
the provisions of this subsection, the
Corporation shall--
(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; and
(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.
(E) Transfer of rights and privileges of
covered financial company.--
(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.
(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.
(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.
(G) Capital.--
(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.
(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.
(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.
(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)(9), funds for the operation of the
bridge financial company in lieu of
capital.
(H) Bridge brokers or dealers.--
(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--
(I) be established and
deemed registered with the
Commission under the Securities
Exchange Act of 1934 and a
member of SIPC;
(II) operate in accordance
with such articles and this
section; and
(III) succeed to any and
all registrations and
memberships of the covered
financial company with or in
any self-regulatory
organizations.
(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.
(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.
(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.
(3) Interests in and assets and obligations of
covered financial company.--Notwithstanding paragraph
(1) or (2) or any other provision of law--
(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); and
(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.
(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.
(5) Transfer of assets and liabilities.--
(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).
(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).
(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.
(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.
(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)(D)(i)) that does
not comply with this subparagraph, if--
(i) the Corporation determines that
such action is necessary--
(I) to maximize the value
of the assets of the covered
financial company;
(II) to maximize the
present value return from the
sale or other disposition of
the assets of the covered
financial company; or
(III) to minimize the
amount of any loss realized
upon the sale or other
disposition of the assets of
the covered financial company;
and
(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).
(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.
(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.
(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--
(A) is in writing;
(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; and
(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.
(8) No federal status.--
(A) Agency status.--A bridge financial
company is not an agency, establishment, or
instrumentality of the United States.
(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--
(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; or
(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.
(9) Funding authorized.--The Corporation may,
subject to the plan described in subsection (n)(9),
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.
(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.
(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.
(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.
(13) Termination of bridge financial company
status.--The status of any bridge financial company as
such shall terminate upon the earliest of--
(A) the date of the merger or consolidation
of the bridge financial company with a company
that is not a bridge financial company;
(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;
(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;
(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; and
(E) the expiration of the period provided
in paragraph (12), or the earlier dissolution
of the bridge financial company, as provided in
paragraph (15).
(14) Effect of termination events.--
(A) Merger or consolidation.--A merger or
consolidation, described in paragraph (13)(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.
(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.
(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.
(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.
(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.
(15) Dissolution of bridge financial company.--
(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)--
(i) the Corporation may, in its
discretion, dissolve the bridge
financial company in accordance with
this paragraph at any time; and
(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).
(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.
(16) Authority to obtain credit.--
(A) In general.--A bridge financial company
may obtain unsecured credit and issue unsecured
debt.
(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--
(i) with priority over any or all
of the obligations of the bridge
financial company;
(ii) secured by a lien on property
of the bridge financial company that is
not otherwise subject to a lien; or
(iii) secured by a junior lien on
property of the bridge financial
company that is subject to a lien.
(C) Limitations.--
(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--
(I) the bridge financial
company is unable to otherwise
obtain such credit or issue
such debt; and
(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.
(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 and to authorize a
bridge financial company to obtain
secured credit under clause (i).
(D) Burden of proof.--In any hearing under
this paragraph, the Corporation has the burden
of proof on the issue of adequate protection.
(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.
(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.
(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.
(j) Expedited Procedures for Certain Claims.--
(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.
(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.
(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.
(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--
(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;
and
(2) may maintain an office to coordinate foreign
investigations or investigations on behalf of foreign
financial authorities.
(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.
(m) Liquidation of Certain Covered Financial Companies or
Bridge Financial Companies.--
(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--
(A) in the case of any covered financial
company or bridge financial company 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 security and customer property
and member property, as if such covered
financial company or bridge financial company
were a debtor for purposes of such subchapter;
or
(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 and member property,
as if such covered financial company or bridge
financial company were a debtor for purposes of
such subchapter.
(2) Definitions.--For purposes of this subsection--
(A) the terms ``customer'', ``customer name
security'', and ``customer property and member
property'' have the same meanings as in
sections 741 and 761 of title 11, United States
Code; and
(B) the terms ``commodity broker'' and
``stockbroker'' have the same meanings as in
section 101 of the Bankruptcy Code.
(n) Orderly Liquidation Fund.--
(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 (5), and the exercise of the authorities of
the Corporation under this title.
(2) Proceeds.--Amounts received by the Corporation,
including assessments received under subsection (o),
proceeds of obligations issued under paragraph (5),
interest and other earnings from investments, and
repayments to the Corporation by covered financial
companies, shall be deposited into the Fund.
(3) Management.--The Corporation shall manage the
Fund in accordance with this subsection and the
policies and procedures established under section
203(d).
(4) 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.
(5) Authority to issue obligations.--
(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.
(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.
(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, plus an
interest rate surcharge to be determined by the
Secretary, which shall be greater than the
difference between--
(i) the current average rate on an
index of corporate obligations of
comparable maturity; and
(ii) the current average rate on
outstanding marketable obligations of
the United States of comparable
maturity.
(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.
(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.
(6) 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 for each covered
financial company would exceed--
(A) an amount that is equal to 10 percent
of the total consolidated assets of the covered
financial company, based on the most recent
financial statement available, during the 30-
day period immediately following the date of
appointment of the Corporation as receiver (or
a shorter time period if the Corporation has
calculated the amount described under
subparagraph (B)); and
(B) the amount that is equal to 90 percent
of the fair value of the total consolidated
assets of each covered financial company that
are available for repayment, after the time
period described in subparagraph (A).
(7) 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.
(8) Rule of construction.--
(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--
(i) the authorities of the
Corporation contained in this title
shall not be used to assist the Deposit
Insurance Fund or to assist any
financial company under applicable law
other than this Act;
(ii) the authorities of the
Corporation relating to the Deposit
Insurance Fund, or any other
responsibilities of the Corporation
under applicable law other than this
title, shall not be used to assist a
covered financial company pursuant to
this title; and
(iii) the Deposit Insurance Fund
may not be used in any manner to
otherwise circumvent the purposes of
this title.
(B) Valuation.--For purposes of determining
the amount of obligations under this
subsection--
(i) the Corporation shall include
as an obligation any contingent
liability of the Corporation pursuant
to this title; and
(ii) the Corporation shall value
any contingent liability at its
expected cost to the Corporation.
(9) Orderly liquidation and repayment plans.--
(A) 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, including taking any actions specified
under section 204(d) and subsection
(h)(2)(G)(iv) and (h)(9) of this section, and
payments to third parties. The orderly
liquidation plan shall take into account
actions to avoid or mitigate potential adverse
effects on low income, minority, or underserved
communities affected by the failure of the
covered financial company, and shall provide
for coordination with the primary financial
regulatory agencies, as appropriate, to ensure
that such actions are taken. The Corporation
may, at any time, amend any orderly liquidation
plan approved by the Secretary with the
concurrence of the Secretary.
(B) Mandatory repayment plan.--
(i) In general.--No amount
authorized under paragraph (6)(B) may
be provided by the Secretary to the
Corporation under paragraph (5), unless
an agreement is in effect between the
Secretary and the Corporation that--
(I) provides a specific
plan and schedule to achieve
the repayment of the
outstanding amount of any
borrowing under paragraph (5);
and
(II) demonstrates that
income to the Corporation from
the liquidated assets of the
covered financial company and
assessments under subsection
(o) will be sufficient to
amortize the outstanding
balance within the period
established in the repayment
schedule and pay the interest
accruing on such balance within
the time provided in subsection
(o)(1)(B).
(ii) Consultation with and report
to congress.--The Secretary and the
Corporation shall--
(I) consult with the
Committee on Banking, Housing,
and Urban Affairs of the Senate
and the Committee on Financial
Services of the House of
Representatives on the terms of
any repayment schedule
agreement; and
(II) submit a copy of the
repayment schedule agreement to
the Committees described in
subclause (I) before the end of
the 30-day period beginning on
the date on which any amount is
provided by the Secretary to
the Corporation under paragraph
(5).
(10) Implementation expenses.--
(A) In general.--Reasonable implementation
expenses of the Corporation incurred after the
date of enactment of this Act shall be treated
as expenses of the Council.
(B) Requests for reimbursement.--The
Corporation shall periodically submit a request
for reimbursement for implementation expenses
to the Chairperson of the Council, who shall
arrange for prompt reimbursement to the
Corporation of reasonable implementation
expenses.
(C) Definition.--As used in this paragraph,
the term ``implementation expenses''--
(i) means costs incurred by the
Corporation beginning on the date of
enactment of this Act, as part of its
efforts to implement this title that do
not relate to a particular covered
financial company; and
(ii) includes the costs incurred in
connection with the development of
policies, procedures, rules, and
regulations and other planning
activities of the Corporation
consistent with carrying out this
title.
(o) Assessments.--
(1) Risk-based assessments.--
(A) 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.
(B) Assessments.--The Corporation shall
charge one or more risk-based assessments in
accordance with the provisions of subparagraph
(D), if such assessments are necessary to pay
in full the obligations issued by the
Corporation to the Secretary under this title
within 60 months of the date of issuance of
such obligations.
(C) Extensions authorized.--The Corporation
may, with the approval of the Secretary, extend
the time period under subparagraph (B), if the
Corporation determines that an extension is
necessary to avoid a serious adverse effect on
the financial system of the United States.
(D) Application of assessments.--To meet
the requirements of subparagraph (B), the
Corporation shall--
(i) impose assessments, as soon as
practicable, on any claimant that
received additional payments or amounts
from the Corporation pursuant to
subsection (b)(4), (d)(4), or
(h)(5)(E), except for payments or
amounts necessary to initiate and
continue operations essential to
implementation of the receivership or
any bridge financial company, to
recover on a cumulative basis, the
entire difference between--
(I) the aggregate value the
claimant received from the
Corporation on a claim pursuant
to this title (including
pursuant to subsection (b)(4),
(d)(4), and (h)(5)(E)), as of
the date on which such value
was received; and
(II) the value the claimant
was entitled to receive from
the Corporation on such claim
solely from the proceeds of the
liquidation of the covered
financial company under this
title; and
(ii) if the amounts to be recovered
on a cumulative basis under clause (i)
are insufficient to meet the
requirements of subparagraph (B), after
taking into account the considerations
set forth in paragraph (4), impose
assessments on--
(I) eligible financial
companies; and
(II) financial companies
with total consolidated assets
equal to or greater than
$50,000,000,000 that are not
eligible financial companies.
(E) Provision of financing.--Payments or
amounts necessary to initiate and continue
operations essential to implementation of the
receivership or any bridge financial company
described in subparagraph (D)(i) shall not
include the provision of financing, as defined
by rule of the Corporation, to third parties.
(2) Graduated assessment rate.--The Corporation
shall impose assessments on a graduated basis, with
financial companies having greater assets and risk
being assessed at a higher rate.
(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).
(4) Risk-based assessment considerations.--In
imposing assessments under paragraph (1)(D)(ii), the
Corporation shall use a risk matrix. The Council shall
make a recommendation to the Corporation on the risk
matrix to be used in imposing such assessments, and the
Corporation shall take into account any such
recommendation in the establishment of the risk matrix
to be used to impose such assessments. In recommending
or establishing such risk matrix, the Council and the
Corporation, respectively, shall take into account--
(A) economic conditions generally affecting
financial companies so as to allow assessments
to increase during more favorable economic
conditions and to decrease during less
favorable economic conditions;
(B) any assessments imposed on a financial
company or an affiliate of a financial company
that--
(i) is an insured depository
institution, assessed pursuant to
section 7 or 13(c)(4)(G) of the Federal
Deposit Insurance Act;
(ii) is a member of the Securities
Investor Protection Corporation,
assessed pursuant to section 4 of the
Securities Investor Protection Act of
1970 (15 U.S.C. 78ddd);
(iii) is an insured credit union,
assessed pursuant to section
202(c)(1)(A)(i) of the Federal Credit
Union Act (12 U.S.C. 1782(c)(1)(A)(i));
or
(iv) is an insurance company,
assessed pursuant to applicable State
law to cover (or reimburse payments
made to cover) the costs of the
rehabilitation, liquidation, or other
State insolvency proceeding with
respect to 1 or more insurance
companies;
(C) the risks presented by the financial
company to the financial system and the extent
to which the financial company has benefitted,
or likely would benefit, from the orderly
liquidation of a financial company under this
title, including--
(i) the amount, different
categories, and concentrations of
assets of the financial company and its
affiliates, including both on-balance
sheet and off-balance sheet assets;
(ii) the activities of the
financial company and its affiliates;
(iii) the relevant market share of
the financial company and its
affiliates;
(iv) the extent to which the
financial company is leveraged;
(v) the potential exposure to
sudden calls on liquidity precipitated
by economic distress;
(vi) the amount, maturity,
volatility, and stability of the
company's financial obligations to, and
relationship with, other financial
companies;
(vii) the amount, maturity,
volatility, and stability of the
liabilities of the company, including
the degree of reliance on short-term
funding, taking into consideration
existing systems for measuring a
company's risk-based capital;
(viii) the stability and variety of
the company's sources of funding;
(ix) the company's importance as a
source of credit for households,
businesses, and State and local
governments and as a source of
liquidity for the financial system;
(x) the extent to which assets are
simply managed and not owned by the
financial company and the extent to
which ownership of assets under
management is diffuse; and
(xi) the amount, different
categories, and concentrations of
liabilities, both insured and
uninsured, contingent and
noncontingent, including both on-
balance sheet and off-balance sheet
liabilities, of the financial company
and its affiliates;
(D) any risks presented by the financial
company during the 10-year period immediately
prior to the appointment of the Corporation as
receiver for the covered financial company that
contributed to the failure of the covered
financial company; and
(E) such other risk-related factors as the
Corporation, or the Council, as applicable, may
determine to be appropriate.
(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.
(6) Rulemaking.--
(A) In general.--The Corporation shall
prescribe regulations to carry out this
subsection. The Corporation shall consult with
the Secretary in the development and
finalization of such regulations.
(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.
(p) Unenforceability of Certain Agreements.--
(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.
(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--
(A) affects, restricts, or limits the
ability of any person to offer to acquire or
acquire;
(B) prohibits any person from offering to
acquire or acquiring; or
(C) prohibits any person from using any
previously disclosed information in connection
with any such offer to acquire or acquisition
of,
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.
(q) Other Exemptions.--
(1) In general.--When acting as a receiver under
this title--
(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;
(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; and
(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; and
(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.
(2) Limitation.--Paragraph (1) shall not apply with
respect to any tax imposed (or other amount arising)
under the Internal Revenue Code of 1986.
(r) Certain Sales of Assets Prohibited.--
(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--
(A) any person who--
(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;
(ii) has been found to have engaged
in fraudulent activity in connection
with any obligation referred to in
clause (i); and
(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;
(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; or
(C) any person who has demonstrated a
pattern or practice of defalcation regarding
obligations to such covered financial company.
(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--
(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; and
(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.
(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.
(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.
(s) Recoupment of Compensation From Senior Executives and
Directors.--
(1) In general.--The Corporation, as receiver of a
covered financial company, may recover from any current
or former senior executive or director substantially
responsible for the failed condition of the covered
financial company any compensation received during the
2-year period preceding the date on which the
Corporation was appointed as the receiver of the
covered financial company, except that, in the case of
fraud, no time limit shall apply.
(2) Cost considerations.--In seeking to recover any
such compensation, the Corporation shall weigh the
financial and deterrent benefits of such recovery
against the cost of executing the recovery.
(3) Rulemaking.--The Corporation shall promulgate
regulations to implement the requirements of this
subsection, including defining the term
``compensation'' to mean any financial remuneration,
including salary, bonuses, incentives, benefits,
severance, deferred compensation, or golden parachute
benefits, and any profits realized from the sale of the
securities of the covered financial company.
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
Dodd-Frank Wall Street Reform and Consumer Protection Act,''
before ``or the National Credit''.
(b) Conforming Amendment.--Section 1032 of title 18, United
States Code, is amended in the section heading, by striking
``of financial institution''.
(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 Dodd-Frank Wall
Street Reform and Consumer Protection Act, 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,''.
(d) FDIC Inspector General Reviews.--
(1) Scope.--The Inspector General of the
Corporation shall conduct, supervise, and coordinate
audits and investigations of the liquidation of any
covered financial company by the Corporation as
receiver under this title, including collecting and
summarizing--
(A) a description of actions taken by the
Corporation as receiver;
(B) a description of any material sales,
transfers, mergers, obligations, purchases, and
other material transactions entered into by the
Corporation;
(C) an evaluation of the adequacy of the
policies and procedures of the Corporation
under section 203(d) and orderly liquidation
plan under section 210(n)(14);
(D) an evaluation of the utilization by the
Corporation of the private sector in carrying
out its functions, including the adequacy of
any conflict-of-interest reviews; and
(E) an evaluation of the overall
performance of the Corporation in liquidating
the covered financial company, including
administrative costs, timeliness of liquidation
process, and impact on the financial system.
(2) Frequency.--Not later than 6 months after the
date of appointment of the Corporation as receiver
under this title and every 6 months thereafter, the
Inspector General of the Corporation shall conduct the
audit and investigation described in paragraph (1).
(3) Reports and testimony.--The Inspector General
of the Corporation shall include in the semiannual
reports required by section 5(a) of the Inspector
General Act of 1978 (5 U.S.C. App.), a summary of the
findings and evaluations under paragraph (1), and shall
appear before the appropriate committees of Congress,
if requested, to present each such report.
(4) Funding.--
(A) Initial funding.--The expenses of the
Inspector General of the Corporation in
carrying out this subsection shall be
considered administrative expenses of the
receivership.
(B) Additional funding.--If the maximum
amount available to the Corporation as receiver
under this title is insufficient to enable the
Inspector General of the Corporation to carry
out the duties under this subsection, the
Corporation shall pay such additional amounts
from assessments imposed under section 210.
(5) Termination of responsibilities.--The duties
and responsibilities of the Inspector General of the
Corporation under this subsection shall terminate 1
year after the date of termination of the receivership
under this title.
(e) Treasury Inspector General Reviews.--
(1) Scope.--The Inspector General of the Department
of the Treasury shall conduct, supervise, and
coordinate audits and investigations of actions taken
by the Secretary related to the liquidation of any
covered financial company under this title, including
collecting and summarizing--
(A) a description of actions taken by the
Secretary under this title;
(B) an analysis of the approval by the
Secretary of the policies and procedures of the
Corporation under section 203 and acceptance of
the orderly liquidation plan of the Corporation
under section 210; and
(C) an assessment of the terms and
conditions underlying the purchase by the
Secretary of obligations of the Corporation
under section 210.
(2) Frequency.--Not later than 6 months after the
date of appointment of the Corporation as receiver
under this title and every 6 months thereafter, the
Inspector General of the Department of the Treasury
shall conduct the audit and investigation described in
paragraph (1).
(3) Reports and testimony.--The Inspector General
of the Department of the Treasury shall include in the
semiannual reports required by section 5(a) of the
Inspector General Act of 1978 (5 U.S.C. App.), a
summary of the findings and assessments under paragraph
(1), and shall appear before the appropriate committees
of Congress, if requested, to present each such report.
(4) Termination of responsibilities.--The duties
and responsibilities of the Inspector General of the
Department of the Treasury under this subsection shall
terminate 1 year after the date on which the
obligations purchased by the Secretary from the
Corporation under section 210 are fully redeemed.
(f) Primary Financial Regulatory Agency Inspector General
Reviews.--
(1) Scope.--Upon the appointment of the Corporation
as receiver for a covered financial company supervised
by a Federal primary financial regulatory agency or the
Board of Governors under section 165, the Inspector
General of the agency or the Board of Governors shall
make a written report reviewing the supervision by the
agency or the Board of Governors of the covered
financial company, which shall--
(A) evaluate the effectiveness of the
agency or the Board of Governors in carrying
out its supervisory responsibilities with
respect to the covered financial company;
(B) identify any acts or omissions on the
part of agency or Board of Governors officials
that contributed to the covered financial
company being in default or in danger of
default;
(C) identify any actions that could have
been taken by the agency or the Board of
Governors that would have prevented the company
from being in default or in danger of default;
and
(D) recommend appropriate administrative or
legislative action.
(2) Reports and testimony.--Not later than 1 year
after the date of appointment of the Corporation as
receiver under this title, the Inspector General of the
Federal primary financial regulatory agency or the
Board of Governors shall provide the report required by
paragraph (1) to such agency or the Board of Governors,
and along with such agency or the Board of Governors,
as applicable, shall appear before the appropriate
committees of Congress, if requested, to present the
report required by paragraph (1). Not later than 90
days after the date of receipt of the report required
by paragraph (1), such agency or the Board of
Governors, as applicable, shall provide a written
report to Congress describing any actions taken in
response to the recommendations in the report, and if
no such actions were taken, describing the reasons why
no actions were taken.
SEC. 212. PROHIBITION OF CIRCUMVENTION AND PREVENTION OF CONFLICTS OF
INTEREST.
(a) No Other Funding.--Funds for the orderly liquidation of
any covered financial company under this title shall only be
provided as specified under this title.
(b) Limit on Governmental Actions.--No governmental entity
may take any action to circumvent the purposes of this title.
(c) Conflict of Interest.--In the event that the
Corporation is appointed receiver for more than 1 covered
financial company or is appointed receiver for a covered
financial company and receiver for any insured depository
institution that is an affiliate of such covered financial
company, the Corporation shall take appropriate action, as
necessary to avoid any conflicts of interest that may arise in
connection with multiple receiverships.
SEC. 213. BAN ON CERTAIN ACTIVITIES BY SENIOR EXECUTIVES AND DIRECTORS.
(a) Prohibition Authority.--The Board of Governors or, if
the covered financial company was not supervised by the Board
of Governors, the Corporation, may exercise the authority
provided by this section.
(b) Authority To Issue Order.--The appropriate agency
described in subsection (a) may take any action authorized by
subsection (c), if the agency determines that--
(1) a senior executive or a director of the covered
financial company, prior to the appointment of the
Corporation as receiver, has, directly or indirectly--
(A) violated--
(i) any law or regulation;
(ii) any cease-and-desist order
which has become final;
(iii) any condition imposed in
writing by a Federal agency in
connection with any action on any
application, notice, or request by such
company or senior executive; or
(iv) any written agreement between
such company and such agency;
(B) engaged or participated in any unsafe
or unsound practice in connection with any
financial company; or
(C) committed or engaged in any act,
omission, or practice which constitutes a
breach of the fiduciary duty of such senior
executive or director;
(2) by reason of the violation, practice, or breach
described in any subparagraph of paragraph (1), such
senior executive or director has received financial
gain or other benefit by reason of such violation,
practice, or breach and such violation, practice, or
breach contributed to the failure of the company; and
(3) such violation, practice, or breach--
(A) involves personal dishonesty on the
part of such senior executive or director; or
(B) demonstrates willful or continuing
disregard by such senior executive or director
for the safety or soundness of such company.
(c) Authorized Actions.--
(1) In general.--The appropriate agency for a
financial company, as described in subsection (a), may
serve upon a senior executive or director described in
subsection (b) a written notice of the intention of the
agency to prohibit any further participation by such
person, in any manner, in the conduct of the affairs of
any financial company for a period of time determined
by the appropriate agency to be commensurate with such
violation, practice, or breach, provided such period
shall be not less than 2 years.
(2) Procedures.--The due process requirements and
other procedures under section 8(e) of the Federal
Deposit Insurance Act (12 U.S.C. 1818(e)) shall apply
to actions under this section as if the covered
financial company were an insured depository
institution and the senior executive or director were
an institution-affiliated party, as those terms are
defined in that Act.
(d) Regulations.--The Corporation and the Board of
Governors, in consultation with the Council, shall jointly
prescribe rules or regulations to administer and carry out this
section, including rules, regulations, or guidelines to further
define the term senior executive for the purposes of this
section.
SEC. 214. PROHIBITION ON TAXPAYER FUNDING.
(a) Liquidation Required.--All financial companies put into
receivership under this title shall be liquidated. No taxpayer
funds shall be used to prevent the liquidation of any financial
company under this title.
(b) Recovery of Funds.--All funds expended in the
liquidation of a financial company under this title shall be
recovered from the disposition of assets of such financial
company, or shall be the responsibility of the financial
sector, through assessments.
(c) No Losses to Taxpayers.--Taxpayers shall bear no losses
from the exercise of any authority under this title.
SEC. 215. STUDY ON SECURED CREDITOR HAIRCUTS.
(a) Study Required.--The Council shall conduct a study
evaluating the importance of maximizing United States taxpayer
protections and promoting market discipline with respect to the
treatment of fully secured creditors in the utilization of the
orderly liquidation authority authorized by this Act. In
carrying out such study, the Council shall--
(1) not be prejudicial to current or past laws or
regulations with respect to secured creditor treatment
in a resolution process;
(2) study the similarities and differences between
the resolution mechanisms authorized by the Bankruptcy
Code, the Federal Deposit Insurance Corporation
Improvement Act of 1991, and the orderly liquidation
authority authorized by this Act;
(3) determine how various secured creditors are
treated in such resolution mechanisms and examine how a
haircut (of various degrees) on secured creditors could
improve market discipline and protect taxpayers;
(4) compare the benefits and dynamics of prudent
lending practices by depository institutions in secured
loans for consumers and small businesses to the lending
practices of secured creditors to large, interconnected
financial firms;
(5) consider whether credit differs according to
different types of collateral and different terms and
timing of the extension of credit; and
(6) include an examination of stakeholders who were
unsecured or under-collateralized and seek collateral
when a firm is failing, and the impact that such
behavior has on financial stability and an orderly
resolution that protects taxpayers if the firm fails.
(b) Report.--Not later than the end of the 1-year period
beginning on the date of enactment of this Act, the Council
shall issue a report to the Congress containing all findings
and conclusions made by the Council in carrying out the study
required under subsection (a).
SEC. 216. STUDY ON BANKRUPTCY PROCESS FOR FINANCIAL AND NONBANK
FINANCIAL INSTITUTIONS.
(a) Study.--
(1) In general.--Upon enactment of this Act, the
Board of Governors, in consultation with the
Administrative Office of the United States Courts,
shall conduct a study regarding the resolution of
financial companies under the Bankruptcy Code, under
chapter 7 or 11 thereof.
(2) Issues to be studied.--Issues to be studied
under this section include--
(A) the effectiveness of chapter 7 and
chapter 11 of the Bankruptcy Code in
facilitating the orderly resolution or
reorganization of systemic financial companies;
(B) whether a special financial resolution
court or panel of special masters or judges
should be established to oversee cases
involving financial companies to provide for
the resolution of such companies under the
Bankruptcy Code, in a manner that minimizes
adverse impacts on financial markets without
creating moral hazard;
(C) whether amendments to the Bankruptcy
Code should be adopted to enhance the ability
of the Code to resolve financial companies in a
manner that minimizes adverse impacts on
financial markets without creating moral
hazard;
(D) whether amendments should be made to
the Bankruptcy Code, the Federal Deposit
Insurance Act, and other insolvency laws to
address the manner in which qualified financial
contracts of financial companies are treated;
and
(E) the implications, challenges, and
benefits to creating a new chapter or
subchapter of the Bankruptcy Code to deal with
financial companies.
(b) Reports to Congress.--Not later than 1 year after the
date of enactment of this Act, and in each successive year
until the fifth year after the date of enactment of this Act,
the Administrative Office of the United States courts shall
submit to the Committees on Banking, Housing, and Urban Affairs
and the Judiciary of the Senate and the Committees on Financial
Services and the Judiciary of the House of Representatives a
report summarizing the results of the study conducted under
subsection (a).
SEC. 217. STUDY ON INTERNATIONAL COORDINATION RELATING TO BANKRUPTCY
PROCESS FOR NONBANK FINANCIAL INSTITUTIONS.
(a) Study.--
(1) In general.--The Board of Governors, in
consultation with the Administrative Office of the
United States Courts, shall conduct a study regarding
international coordination relating to the resolution
of systemic financial companies under the United States
Bankruptcy Code and applicable foreign law.
(2) Issues to be studied.--With respect to the
bankruptcy process for financial companies, issues to
be studied under this section include--
(A) the extent to which international
coordination currently exists;
(B) current mechanisms and structures for
facilitating international cooperation;
(C) barriers to effective international
coordination; and
(D) ways to increase and make more
effective international coordination of the
resolution of financial companies, so as to
minimize the impact on the financial system
without creating moral hazard.
(b) Report to Congress.--Not later than 1 year after the
date of enactment of this Act, the Administrative office of the
United States Courts shall submit to the Committees on Banking,
Housing, and Urban Affairs and the Judiciary of the Senate and
the Committees on Financial Services and the Judiciary of the
House of Representatives a report summarizing the results of
the study conducted under subsection (a).
TITLE III--TRANSFER OF POWERS TO THE COMPTROLLER OF THE CURRENCY, THE
CORPORATION, AND THE BOARD OF GOVERNORS
SEC. 300. SHORT TITLE.
This title may be cited as the ``Enhancing Financial
Institution Safety and Soundness Act of 2010''.
SEC. 301. PURPOSES.
The purposes of this title are--
(1) to provide for the safe and sound operation of
the banking system of the United States;
(2) to preserve and protect the dual system of
Federal and State-chartered depository institutions;
(3) to ensure the fair and appropriate supervision
of each depository institution, regardless of the size
or type of charter of the depository institution; and
(4) to streamline and rationalize the supervision
of depository institutions and the holding companies of
depository institutions.
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.
Subtitle A--Transfer of Powers and Duties
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.
(b) Extension Permitted.--
(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--
(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;
(B) an explanation of why an extension is
necessary to commence the process of orderly
implementation of this title;
(C) the transfer date designated under this
subsection; and
(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.
(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).
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.
(b) Functions of the Office of Thrift Supervision.--
(1) Savings and loan holding company functions
transferred.--
(A) Transfer of functions.--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--
(i) the supervision of--
(I) any savings and loan
holding company; and
(II) any subsidiary (other
than a depository institution)
of a savings and loan holding
company; and
(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.
(B) Powers, authorities, rights, and
duties.--The Board of Governors shall succeed
to all powers, authorities, rights, and duties
that were vested in the Office of Thrift
Supervision and the Director of the Office of
Thrift Supervision on the day before the
transfer date relating to the functions and
authority transferred under subparagraph (A).
(2) All other functions transferred.--
(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 and under section 5(q)
of such Act relating to tying arrangements is
transferred to the Board of Governors.
(B) Comptroller of the currency.--Except as
provided in paragraph (1) and subparagraph
(A)--
(i) there are transferred to the
Office of the Comptroller of the
Currency and the Comptroller of the
Currency--
(I) all functions of the
Office of Thrift Supervision
and the Director of the Office
of Thrift Supervision,
respectively, relating to
Federal savings associations;
and
(II) all rulemaking
authority of the Office of
Thrift Supervision and the
Director of the Office of
Thrift Supervision,
respectively, relating to
savings associations; and
(ii) the Office of the Comptroller
of the Currency and the Comptroller of
the Currency shall succeed to all
powers, authorities, rights, and duties
that were vested in the Office of
Thrift Supervision and the Director of
the Office of Thrift Supervision,
respectively, on the day before the
transfer date relating to the functions
and authority transferred under clause
(i).
(C) Corporation.--Except as provided in
paragraph (1) and subparagraphs (A) and (B)--
(i) 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; and
(ii) the Corporation shall succeed
to all powers, authorities, rights, and
duties that were vested in the Office
of Thrift Supervision and the Director
of the Office of Thrift Supervision on
the day before the transfer date
relating to the functions transferred
under clause (i).
(c) Conforming Amendments.--Section 3 of the Federal
Deposit Insurance Act (12 U.S.C. 1813) is amended--
(1) in subsection (q), by striking paragraphs (1)
through (4) and inserting the following:
``(1) the Office of the Comptroller of the
Currency, in the case of--
``(A) any national banking association;
``(B) any Federal branch or agency of a
foreign bank; and
``(C) any Federal savings association;
``(2) the Federal Deposit Insurance Corporation, in
the case of--
``(A) any State nonmember insured bank;
``(B) any foreign bank having an insured
branch; and
``(C) any State savings association;
``(3) the Board of Governors of the Federal Reserve
System, in the case of--
``(A) any State member bank;
``(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;
``(C) any foreign bank which does not
operate an insured branch;
``(D) any agency or commercial lending
company other than a Federal agency;
``(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;
``(F) any bank holding company and any
subsidiary (other than a depository
institution) of a bank holding company; and
``(G) any savings and loan holding company
and any subsidiary (other than a depository
institution) of a savings and loan holding
company.''; and
(2) in paragraphs (1) and (3) of subsection (u), by
striking ``(other than a bank holding company'' and
inserting ``(other than a bank holding company or
savings and loan holding company''.
(d) Consumer Protection.--Nothing in this section may be
construed to limit or otherwise affect the transfer of powers
under title X.
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.
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:
``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.
``(b) Comptroller of the Currency.--
``(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.
``(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 as was vested in the
Director of the Office of Thrift Supervision on the
transfer date, as defined in section 311 of that
Act.''.
(b) Supervision of Federal Savings Associations.--Chapter 9
of title VII of the Revised Statutes of the United States (12
U.S.C. 1 et seq.) is amended by inserting after section 327A
(12 U.S.C. 4a) the following:
``SEC. 327B. DEPUTY COMPTROLLER FOR THE SUPERVISION AND EXAMINATION OF
FEDERAL SAVINGS ASSOCIATIONS.
``The Comptroller of the Currency shall designate a Deputy
Comptroller, who shall be responsible for the supervision and
examination of Federal savings associations.''.
(c) 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''.
(d) Effective Date.--This section, and the amendments made
by this section, shall take effect on the transfer date.
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,''.
SEC. 316. SAVINGS PROVISIONS.
(a) Office of Thrift Supervision.--
(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.
(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--
(A) for any action or proceeding arising
out of a function of the Office of Thrift
Supervision or the Director of the Office of
Thrift Supervision transferred to the Board of
Governors by this title, the Board of Governors
shall be substituted for the Office of Thrift
Supervision or the Director of the Office of
Thrift Supervision as a party to the action or
proceeding on and after the transfer date;
(B) for any action or proceeding arising
out of a function of the Office of Thrift
Supervision or the Director of the Office of
Thrift Supervision transferred to the Office of
the Comptroller of the Currency or the
Comptroller of the Currency by this title, the
Office of the Comptroller of the Currency or
the Comptroller of the Currency shall be
substituted for the Office of Thrift
Supervision or the Director of the Office of
Thrift Supervision, as the case may be, as a
party to the action or proceeding on and after
the transfer date; and
(C) for any action or proceeding arising
out of a function of the Office of Thrift
Supervision or the Director of the Office of
Thrift Supervision transferred to the
Corporation by this title, the Corporation
shall be substituted for the Office of Thrift
Supervision or the Director of the Office of
Thrift Supervision as a party to the action or
proceeding on and after the transfer date.
(b) Continuation of Existing OTS Orders, Resolutions,
Determinations, Agreements, Regulations, etc.--All orders,
resolutions, determinations, agreements, and 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 the Director of the Office of
Thrift Supervision, or by a court of competent jurisdiction, in
the performance of functions that are transferred by this title
and that are in effect on the day before the transfer date,
shall continue in effect according to the terms of such orders,
resolutions, determinations, agreements, and regulations,
interpretative rules, other interpretations, guidelines,
procedures, and other advisory materials, and shall be
enforceable by or against--
(1) the Board of Governors, in the case of a
function of the Office of Thrift Supervision or the
Director of the Office of Thrift Supervision
transferred to the Board of Governors, until modified,
terminated, set aside, or superseded in accordance with
applicable law by the Board of Governors, by any court
of competent jurisdiction, or by operation of law;
(2) the Office of the Comptroller of the Currency
or the Comptroller of the Currency, in the case of a
function of the Office of Thrift Supervision or the
Director of the Office of Thrift Supervision
transferred to the Office of the Comptroller of the
Currency or the Comptroller of the Currency,
respectively, until modified, terminated, set aside, or
superseded in accordance with applicable law by the
Office of the Comptroller of the Currency or the
Comptroller of the Currency, by any court of competent
jurisdiction, or by operation of law; and
(3) the Corporation, in the case of a function of
the Office of Thrift Supervision or the Director of the
Office of Thrift Supervision transferred to the
Corporation, until modified, terminated, set aside, or
superseded in accordance with applicable law by the
Corporation, by any court of competent jurisdiction, or
by operation of law.
(c) Identification of Regulations Continued.--
(1) By the board of governors.--Not later than the
transfer date, the Board of Governors shall--
(A) identify the regulations continued
under subsection (b) that will be enforced by
the Board of Governors; and
(B) publish a list of the regulations
identified under subparagraph (A) in the
Federal Register.
(2) By office of the comptroller of the currency.--
Not later than the transfer date, the Office of the
Comptroller of the Currency shall--
(A) after consultation with the
Corporation, identify the regulations continued
under subsection (b) that will be enforced by
the Office of the Comptroller of the Currency;
and
(B) publish a list of the regulations
identified under subparagraph (A) in the
Federal Register.
(3) By the corporation.--Not later than the
transfer date, the Corporation shall--
(A) after consultation with the Office of
the Comptroller of the Currency, identify the
regulations continued under subsection (b) that
will be enforced by the Corporation; and
(B) publish a list of the regulations
identified under subparagraph (A) in the
Federal Register.
(d) Status of Regulations Proposed or Not Yet Effective.--
(1) Proposed regulations.--Any proposed regulation
of the Office of Thrift Supervision, which the Office
of Thrift Supervision in performing functions
transferred by this title, has proposed before the
transfer date but has not published as a final
regulation before such date, shall be deemed to be a
proposed regulation of the Office of the Comptroller of
the Currency or the Board of Governors, as appropriate,
according to the terms of the proposed regulation.
(2) Regulations not yet effective.--Any interim or
final regulation of the Office of Thrift Supervision,
which the Office of Thrift Supervision, in performing
functions transferred by this title, 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 or the Board of Governors, as appropriate,
according to the terms of the interim or final
regulation, unless modified, terminated, set aside, or
superseded in accordance with applicable law by the
Office of the Comptroller of the Currency or the Board
of Governors, as appropriate, by any court of competent
jurisdiction, or by operation of law.
SEC. 317. REFERENCES IN FEDERAL LAW TO FEDERAL BANKING AGENCIES.
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 and
consistent with the amendments made in subtitle E.
SEC. 318. FUNDING.
(a) Compensation of Examiners.--Section 5240 of the Revised
Statutes of the United States (12 U.S.C. 481 et seq.) is
amended--
(1) in the second undesignated paragraph (12 U.S.C.
481), in the fourth sentence, by striking ``without
regard to the provisions of other laws applicable to
officers or employees of the United States'' and
inserting the following: ``set and adjusted subject to
chapter 71 of title 5, United States Code, and without
regard to the provisions of other laws applicable to
officers or employees of the United States''; and
(2) in the third undesignated paragraph (12 U.S.C.
482), in the first sentence, by striking ``shall fix''
and inserting ``shall, subject to chapter 71 of title
5, United States Code, fix''.
(b) Funding of Office of the Comptroller of the Currency.--
Chapter 4 of title LXII of the Revised Statutes is amended by
inserting after section 5240 (12 U.S.C. 481, 482) the
following:
``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. 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 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.
``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, except as provided in chapter 71 of title 5,
United States Code (with respect to compensation).''.
(c) 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:
``(s) Assessments, Fees, and Other Charges for Certain
Companies.--
``(1) In general.--The Board shall collect a total
amount of assessments, fees, or other charges from the
companies described in paragraph (2) that is equal to
the total expenses the Board estimates are necessary or
appropriate to carry out the supervisory and regulatory
responsibilities of the Board with respect to such
companies.
``(2) Companies.--The companies described in this
paragraph are--
``(A) all bank holding companies having
total consolidated assets of $50,000,000,000 or
more;
``(B) all savings and loan holding
companies having total consolidated assets of
$50,000,000,000 or more; and
``(C) all nonbank financial companies
supervised by the Board under section 113 of
the Dodd-Frank Wall Street Reform and Consumer
Protection Act.''.
(d) 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:
``(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.''.
(e) Effective Date.--This section, and the amendments made
by this section, shall take effect on the transfer date.
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 (except the full and open competition
requirements of the Competition in Contracting Act), the Office
of the Comptroller of the Currency may--
(1) enter into and perform contracts, execute
instruments, and acquire 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; and
(2) hold, maintain, sell, lease, or otherwise
dispose of the property (or property interest) acquired
under paragraph (1).
Subtitle B--Transitional Provisions
SEC. 321. INTERIM USE OF FUNDS, PERSONNEL, AND PROPERTY OF THE OFFICE
OF THRIFT SUPERVISION.
(a) In General.--Before the transfer date, the Office of
the Comptroller of the Currency, the Corporation, and the Board
of Governors shall--
(1) 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;
(2) determine jointly, from time to time--
(A) 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;
(B) which personnel are appropriate to
facilitate the orderly transfer of functions by
this title; and
(C) 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;
and
(3) take such actions as may be necessary to
provide for the orderly implementation of this title.
(b) 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--
(1) 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 subsection (a);
(2) 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 subsection (a); and
(3) 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 subsection (a).
(c) 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 subsection (b).
SEC. 322. TRANSFER OF EMPLOYEES.
(a) In General.--
(1) Office of thrift supervision employees.--
(A) In general.--Except as provided in
section 1064, 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.
(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--
(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; and
(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.
(2) 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.
(3) Appointment authority for excepted service
transferred.--
(A) In general.--Except as provided in
subparagraph (B), any appointment authority of
the Office of Thrift Supervision 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.
(B) Declining transfers allowed.--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.
(4) 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.
(b) Timing of Transfers and Position Assignments.--Each
employee to be transferred under subsection (a)(1) shall--
(1) be transferred not later than 90 days after the
transfer date; and
(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.
(c) Transfer of Functions.--
(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.
(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.
(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.
(e) Equal Status and Tenure Positions.--
(1) Status and tenure.--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.
(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.
(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.
(g) Personnel Actions Limited.--
(1) Protection.--
(A) In general.--Except as provided in
paragraph (2), each affected employee shall
not, during the 30-month period beginning on
the transfer date, be involuntarily separated,
or involuntarily reassigned outside his or her
locality pay area.
(B) Affected employees.--For purposes of
this paragraph, the term ``affected employee''
means--
(i) an employee transferred from
the Office of Thrift Supervision
holding a permanent position on the day
before the transfer date; and
(ii) an employee of the Office of
the Comptroller of the Currency or the
Corporation holding a permanent
position on the day before the transfer
date.
(2) Exceptions.--Paragraph (1) does not limit the
right of the Office of the Comptroller of the Currency
or the Corporation to--
(A) separate an employee for cause or for
unacceptable performance;
(B) terminate an appointment to a position
excepted from the competitive service because
of its confidential policy-making, policy-
determining, or policy-advocating character; or
(C) reassign an employee outside such
employee's locality pay area when the Office of
the Comptroller of the Currency or the
Corporation determines that the reassignment is
necessary for the efficient operation of the
agency.
(h) Pay.--
(1) 30-month protection.--Except as provided in
paragraph (2), during the 30-month 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. Notwithstanding the preceding
sentence, if the employee was receiving a higher rate
of basic pay on a temporary basis (because of a
temporary assignment, temporary promotion, or other
temporary action) immediately before the transfer, the
Agency may reduce the rate of basic pay on the date the
rate would have been reduced but for the transfer, and
the protected rate for the remainder of the 30-month
period will be the reduced rate that would have applied
but for the transfer.
(2) Exceptions.--The Comptroller of the Currency or
the Corporation may reduce the rate of basic pay of a
transferred employee--
(A) for cause, including for unacceptable
performance; or
(B) with the consent of the transferred
employee.
(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.
(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.
(i) Benefits.--
(1) Retirement benefits for transferred
employees.--
(A) In general.--
(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.
(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.
(B) 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.
(2) Benefits other than retirement benefits.--
(A) During first year.--
(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.
(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.
(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--
(i) the enhanced dental benefits
program established under chapter 89A
of title 5, United States Code;
(ii) the enhanced vision benefits
established under chapter 89B of title
5, United States Code; and
(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.
(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).
(D) Contribution of transferred employee.--
(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.
(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.
(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).
(E) Special provisions to ensure
continuation of life insurance benefits.--
(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.
(ii) Contribution of transferred
employee.--
(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.
(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.
(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).
(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.
(j) Incorporation Into Agency Pay System.--Not later than
30 months 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.
(k) Equitable Treatment.--In administering the provisions
of this section, the Comptroller of the Currency and the
Chairperson of the Corporation--
(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;
(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;
(3) shall, jointly with the Director of the Office
of Thrift Supervision, develop and adopt procedures and
safeguards designed to ensure that the requirements of
this subsection are met; and
(4) shall conduct a study detailing the position
assignments of all employees transferred pursuant to
subsection (a), describing the procedures and
safeguards adopted pursuant to paragraph (3), and
demonstrating that the requirements of this subsection
have been met; and shall, not later than 365 days after
the transfer date, submit a copy of such study to
Congress.
(l) Reorganization.--
(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.
(2) Service credit.--For purposes of this
subsection, periods of service with a Federal home loan
bank or a joint office of Federal home loan banks shall
be credited as periods of service with a Federal
agency.
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.
(b) Property of the Office of Thrift Supervision.--
(1) In general.--No later than 90 days after the
transfer date, all property of the Office of Thrift
Supervision (other than property described under
paragraph (b)(2)) 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.
(2) Personal property.--All books, accounts,
records, reports, files, memoranda, papers, documents,
reports of examination, work papers, and correspondence
of the Office of Thrift Supervision that the
Comptroller of the Currency, the Chairperson of the
Corporation, and the Chairman of the Board of Governors
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
Board of Governors under this title shall be
transferred to the Board of Governors in a manner
consistent with the purposes of this title.
(c) 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.
(d) Preservation of Property.--Property identified for
transfer under this section shall not be altered, destroyed, or
deleted before transfer under this section.
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--
(1) relating to the functions of the Office of
Thrift Supervision transferred under section
312(b)(2)(B), shall be transferred to the Office of the
Comptroller of the Currency on the transfer date;
(2) relating to the functions of the Office of
Thrift Supervision transferred under section
312(b)(2)(C), shall be transferred to the Corporation
on the transfer date; and
(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.
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--
(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--
(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; and
(B) manage any property of the Office of
Thrift Supervision, until the date on which the
property is transferred under section 323; and
(2) may take any other action necessary to wind up
the affairs of the Office of Thrift Supervision.
(b) Status of Director.--
(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--
(A) to wind up the Office of Thrift
Supervision; and
(B) to carry out the transfer under this
subtitle during such 90-day period.
(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--
(A) treated as an officer of the United
States; and
(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.
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 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--
(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; and
(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.
SEC. 327. IMPLEMENTATION PLAN AND REPORTS.
(a) Plan Submission.--Within 180 days of the enactment of
the Dodd-Frank Wall Street Reform and Consumer Protection Act,
the Board of Governors, the Corporation, the Office of the
Comptroller of the Currency, and the Office of Thrift
Supervision, shall jointly submit a plan to the Committee on
Banking, Housing, and Urban Affairs of the Senate, the
Committee on Financial Services of the House of
Representatives, and the Inspectors General of the Department
of the Treasury, the Corporation, and the Board of Governors
detailing the steps the Board of Governors, the Corporation,
the Office of the Comptroller of the Currency, and the Office
of Thrift Supervision will take to implement the provisions of
sections 301 through 326, and the provisions of the amendments
made by such sections.
(b) Inspectors General Review of the Plan.--Within 60 days
of receiving the plan required under subsection (a), the
Inspectors General of the Department of the Treasury, the
Corporation, and the Board of Governors shall jointly provide a
written report to the Board of Governors, the Corporation, the
Office of the Comptroller of the Currency, and the Office of
Thrift Supervision and shall submit a copy to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of Representatives
detailing whether the plan conforms with the provisions of
sections 301 through 326, and the provisions of the amendments
made by such sections, including--
(1) whether the plan sufficiently takes into
consideration the orderly transfer of personnel;
(2) whether the plan describes procedures and
safeguards to ensure that the Office of Thrift
Supervision employees are not unfairly disadvantaged
relative to employees of the Office of the Comptroller
of the Currency and the Corporation;
(3) whether the plan sufficiently takes into
consideration the orderly transfer of authority and
responsibilities;
(4) whether the plan sufficiently takes into
consideration the effective transfer of funds;
(5) whether the plan sufficiently takes in
consideration the orderly transfer of property; and
(6) any additional recommendations for an orderly
and effective process.
(c) Implementation Reports.--Not later than 6 months after
the date on which the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Financial Services
of the House of Representatives receives the report required
under subsection (b), and every 6 months thereafter until all
aspects of the plan have been implemented, the Inspectors
General of the Department of the Treasury, the Corporation, and
the Board of Governors shall jointly provide a written report
on the status of the implementation of the plan to the Board of
Governors, the Corporation, the Office of the Comptroller of
the Currency, and the Office of Thrift Supervision and shall
submit a copy to the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Financial Services
of the House of Representatives.
Subtitle C--Federal Deposit Insurance Corporation
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--
(1) by striking subparagraph (D); and
(2) by redesignating subparagraph (C) as
subparagraph (D).
(b) Assessment Base.--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--
(1) the average consolidated total assets of the
insured depository institution during the assessment
period; minus
(2) the sum of--
(A) the average tangible equity of the
insured depository institution during the
assessment period; and
(B) in the case of an insured depository
institution that is a custodial bank (as
defined by the Corporation, based on factors
including the percentage of total revenues
generated by custodial businesses and the level
of assets under custody) or a banker's bank (as
that term is used in section 5136 of the
Revised Statutes (12 U.S.C. 24)), an amount
that the Corporation determines is necessary to
establish assessments consistent with the
definition under section 7(b)(1) of the Federal
Deposit Insurance Act (12 U.S.C. 1817(b)(1))
for a custodial bank or a banker's bank.
SEC. 332. ELIMINATION OF PROCYCLICAL ASSESSMENTS.
Section 7(e) of the Federal Deposit Insurance Act is
amended--
(1) in paragraph (2)--
(A) by amending subparagraph (B) to read as
follows:
``(B) Limitation.--The Board of Directors
may, in its sole discretion, suspend or limit
the declaration of payment of dividends under
subparagraph (A).'';
(B) by amending subparagraph (C) to read as
follows:
``(C) Notice and opportunity for comment.--
The Corporation shall prescribe, by regulation,
after notice and opportunity for comment, the
method for the declaration, calculation,
distribution, and payment of dividends under
this paragraph''; and
(C) by striking subparagraphs (D) through
(G); and
(2) in paragraph (4)(A) by striking ``paragraphs
(2)(D) and'' and inserting ``paragraphs (2) and''.
SEC. 333. ENHANCED ACCESS TO INFORMATION FOR DEPOSIT INSURANCE
PURPOSES.
(a) Section 7(a)(2)(B) of the Federal Deposit Insurance Act
is amended by striking ``agreement'' and inserting
``consultation''.
(b) Section 7(b)(1)(E) of the Federal Deposit Insurance Act
is amended--
(1) in clause (i), by striking ``such as'' and
inserting ``including''; and
(2) in clause (iii), by striking ``Corporation''
and inserting ``Corporation, except as provided in
section 7(a)(2)(B)''.
SEC. 334. TRANSITION RESERVE RATIO REQUIREMENTS TO REFLECT NEW
ASSESSMENT BASE.
(a) Section 7(b)(3)(B) of the Federal Deposit Insurance Act
is amended to read as follows:
``(B) Minimum reserve ratio.--The reserve
ratio designated by the Board of Directors for
any year may not be less than 1.35 percent of
estimated insured deposits, or the comparable
percentage of the assessment base set forth in
paragraph (2)(C).''.
(b) Section 3(y)(3) of the Federal Deposit Insurance Act is
amended by inserting ``, or such comparable percentage of the
assessment base set forth in section 7(b)(2)(C)'' before the
period.
(c) For a period of not less than 5 years after the date of
the enactment of this title, the Federal Deposit Insurance
Corporation shall make available to the public the reserve
ratio and the designated reserve ratio using both estimated
insured deposits and the assessment base under section
7(b)(2)(C) of the Federal Deposit Insurance Act.
(d) Reserve ratio.--Notwithstanding the timing requirements
of section 7(b)(3)(E)(ii) of the Federal Deposit Insurance Act,
the Corporation shall take such steps as may be necessary for
the reserve ratio of the Deposit Insurance Fund to reach 1.35
percent of estimated insured deposits by September 30, 2020.
(e) Offset.--In setting the assessments necessary to meet
the requirements of subsection (d), the Corporation shall
offset the effect of subsection (d) on insured depository
institutions with total consolidated assets of less than
$10,000,000,000.
SEC. 335. PERMANENT INCREASE IN DEPOSIT AND SHARE INSURANCE.
(a) Permanent Increase in Deposit Insurance.--Section
11(a)(1)(E) of the Federal Deposit Insurance Act (12 U.S.C.
1821(a)(1)(E)) is amended--
(1) by striking ``$100,000'' and inserting
``$250,000''; and
(2) by adding at the end the following new
sentences: ``Notwithstanding any other provision of
law, the increase in the standard maximum deposit
insurance amount to $250,000 shall apply to depositors
in any institution for which the Corporation was
appointed as receiver or conservator on or after
January 1, 2008, and before October 3, 2008. The
Corporation shall take such actions as are necessary to
carry out the requirements of this section with respect
to such depositors, without regard to any time
limitations under this Act. In implementing this and
the preceding 2 sentences, any payment on a deposit
claim made by the Corporation as receiver or
conservator to a depositor above the standard maximum
deposit insurance amount in effect at the time of the
appointment of the Corporation as receiver or
conservator shall be deemed to be part of the net
amount due to the depositor under subparagraph (B).''
(b) Permanent Increase in Share Insurance.--Section
207(k)(5) of the Federal Credit Union Act (12 U.S.C.
1787(k)(5)) is amended by striking ``$100,000'' and inserting
``$250,000''.
SEC. 336. 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--
(1) in subsection (a)(1)(B), by striking ``Director
of the Office of Thrift Supervision'' and inserting
``Director of the Consumer Financial Protection
Bureau'';
(2) by amending subsection (d)(2) to read as
follows:
``(2) Acting officials may serve.--In the event of
a vacancy in the office of the Comptroller of the
Currency or the office of Director of the Consumer
Financial Protection Bureau and pending the appointment
of a successor, or during the absence or disability of
the Comptroller of the Currency or the Director of the
Consumer Financial Protection Bureau, the acting
Comptroller of the Currency or the acting Director of
the Consumer Financial Protection Bureau, as the case
may be, shall be a member of the Board of Directors in
the place of the Comptroller or Director.''; and
(3) in subsection (f)(2), by striking ``Office of
Thrift Supervision'' and inserting ``Consumer Financial
Protection Bureau''.
(b) Effective Date.--This section, and the amendments made
by this section, shall take effect on the transfer date.
Subtitle D--Other Matters
SEC. 341. 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--
(1) continue to operate any branch or agency that
the savings association operated immediately before the
savings association became a bank; and
(2) establish, acquire, and operate additional
branches and agencies at any location within any State
in which the savings association operated a branch
immediately before the savings association became a
bank, if 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.
SEC. 342. OFFICE OF MINORITY AND WOMEN INCLUSION.
(a) Office of Minority and Women Inclusion.--
(1) Establishment.--
(A) In general.--Except as provided in
subparagraph (B), not later than 6 months after
the date of enactment of this Act, each agency
shall establish an Office of Minority and Women
Inclusion that shall be responsible for all
matters of the agency relating to diversity in
management, employment, and business
activities.
(B) Bureau.--The Bureau shall establish an
Office of Minority and Women Inclusion not
later than 6 months after the designated
transfer date established under section 1062.
(2) Transfer of responsibilities.--Each agency
that, on the day before the date of enactment of this
Act, assigned the responsibilities described in
paragraph (1) (or comparable responsibilities) to
another office of the agency shall ensure that such
responsibilities are transferred to the Office.
(3) Duties with respect to civil rights laws.--The
responsibilities described in paragraph (1) do not
include enforcement of statutes, regulations, or
executive orders pertaining to civil rights, except
each Director shall coordinate with the agency
administrator, or the designee of the agency
administrator, regarding the design and implementation
of any remedies resulting from violations of such
statutes, regulations, or executive orders.
(b) Director.--
(1) In general.--The Director of each Office shall
be appointed by, and shall report to, the agency
administrator. The position of Director shall be a
career reserved position in the Senior Executive
Service, as that position is defined in section 3132 of
title 5, United States Code, or an equivalent
designation.
(2) Duties.--Each Director shall develop standards
for--
(A) equal employment opportunity and the
racial, ethnic, and gender diversity of the
workforce and senior management of the agency;
(B) increased participation of minority-
owned and women-owned businesses in the
programs and contracts of the agency, including
standards for coordinating technical assistance
to such businesses; and
(C) assessing the diversity policies and
practices of entities regulated by the agency.
(3) Other duties.--Each Director shall advise the
agency administrator on the impact of the policies and
regulations of the agency on minority-owned and women-
owned businesses.
(4) Rule of construction.--Nothing in paragraph
(2)(C) may be construed to mandate any requirement on
or otherwise affect the lending policies and practices
of any regulated entity, or to require any specific
action based on the findings of the assessment.
(c) Inclusion in All Levels of Business Activities.--
(1) In general.--The Director of each Office shall
develop and implement standards and procedures to
ensure, to the maximum extent possible, the fair
inclusion and utilization of minorities, women, and
minority-owned and women-owned businesses in all
business and activities of the agency at all levels,
including in procurement, insurance, and all types of
contracts.
(2) Contracts.--The procedures established by each
agency for review and evaluation of contract proposals
and for hiring service providers shall include, to the
extent consistent with applicable law, a component that
gives consideration to the diversity of the applicant.
Such procedure shall include a written statement, in a
form and with such content as the Director shall
prescribe, that a contractor shall ensure, to the
maximum extent possible, the fair inclusion of women
and minorities in the workforce of the contractor and,
as applicable, subcontractors.
(3) Termination.--
(A) Determination.--The standards and
procedures developed and implemented under this
subsection shall include a procedure for the
Director to make a determination whether an
agency contractor, and, as applicable, a
subcontractor has failed to make a good faith
effort to include minorities and women in their
workforce.
(B) Effect of determination.--
(i) Recommendation to agency
administrator.--Upon a determination
described in subparagraph (A), the
Director shall make a recommendation to
the agency administrator that the
contract be terminated.
(ii) Action by agency
administrator.--Upon receipt of a
recommendation under clause (i), the
agency administrator may--
(I) terminate the contract;
(II) make a referral to the
Office of Federal Contract
Compliance Programs of the
Department of Labor; or
(III) take other
appropriate action.
(d) Applicability.--This section shall apply to all
contracts of an agency for services of any kind, including the
services of financial institutions, investment banking firms,
mortgage banking firms, asset management firms, brokers,
dealers, financial services entities, underwriters,
accountants, investment consultants, and providers of legal
services. The contracts referred to in this subsection include
all contracts for all business and activities of an agency, at
all levels, including contracts for the issuance or guarantee
of any debt, equity, or security, the sale of assets, the
management of the assets of the agency, the making of equity
investments by the agency, and the implementation by the agency
of programs to address economic recovery.
(e) Reports.--Each Office shall submit to Congress an
annual report regarding the actions taken by the agency and the
Office pursuant to this section, which shall include--
(1) a statement of the total amounts paid by the
agency to contractors since the previous report;
(2) the percentage of the amounts described in
paragraph (1) that were paid to contractors described
in subsection (c)(1);
(3) the successes achieved and challenges faced by
the agency in operating minority and women outreach
programs;
(4) the challenges the agency may face in hiring
qualified minority and women employees and contracting
with qualified minority-owned and women-owned
businesses; and
(5) any other information, findings, conclusions,
and recommendations for legislative or agency action,
as the Director determines appropriate.
(f) Diversity in Agency Workforce.--Each agency shall take
affirmative steps to seek diversity in the workforce of the
agency at all levels of the agency in a manner consistent with
applicable law. Such steps shall include--
(1) recruiting at historically black colleges and
universities, Hispanic-serving institutions, women's
colleges, and colleges that typically serve majority
minority populations;
(2) sponsoring and recruiting at job fairs in urban
communities;
(3) placing employment advertisements in newspapers
and magazines oriented toward minorities and women;
(4) partnering with organizations that are focused
on developing opportunities for minorities and women to
place talented young minorities and women in industry
internships, summer employment, and full-time
positions;
(5) where feasible, partnering with inner-city high
schools, girls' high schools, and high schools with
majority minority populations to establish or enhance
financial literacy programs and provide mentoring; and
(6) any other mass media communications that the
Office determines necessary.
(g) Definitions.--For purposes of this section, the
following definitions shall apply:
(1) Agency.--The term ``agency'' means--
(A) the Departmental Offices of the
Department of the Treasury;
(B) the Corporation;
(C) the Federal Housing Finance Agency;
(D) each of the Federal reserve banks;
(E) the Board;
(F) the National Credit Union
Administration;
(G) the Office of the Comptroller of the
Currency;
(H) the Commission; and
(I) the Bureau.
(2) Agency administrator.--The term ``agency
administrator'' means the head of an agency.
(3) Minority.--The term ``minority'' has the same
meaning as in section 1204(c) of the Financial
Institutions Reform, Recovery, and Enforcement Act of
1989 (12 U.S.C. 1811 note).
(4) Minority-owned business.--The term ``minority-
owned business'' has the same meaning as in section
21A(r)(4)(A) of the Federal Home Loan Bank Act (12
U.S.C. 1441a(r)(4)(A)), as in effect on the day before
the transfer date.
(5) Office.--The term ``Office'' means the Office
of Minority and Women Inclusion established by an
agency under subsection (a).
(6) Women-owned business.--The term ``women-owned
business'' has the meaning given the term ``women's
business'' in section 21A(r)(4)(B) of the Federal Home
Loan Bank Act (12 U.S.C. 1441a(r)(4)(B)), as in effect
on the day before the transfer date.
SEC. 343. INSURANCE OF TRANSACTION ACCOUNTS.
(a) Banks and Savings Associations.--
(1) Amendments.--Section 11(a)(1) of the Federal
Deposit Insurance Act (12 U.S.C. 1821(a)(1)) is
amended--
(A) in subparagraph (B)--
(i) by striking ``The net amount''
and inserting the following:
``(i) In general.--Subject to
clause (ii), the net amount''; and
(ii) by adding at the end the
following new clauses:
``(ii) Insurance for noninterest-
bearing transaction accounts.--
Notwithstanding clause (i), the
Corporation shall fully insure the net
amount that any depositor at an insured
depository institution maintains in a
noninterest-bearing transaction
account. Such amount shall not be taken
into account when computing the net
amount due to such depositor under
clause (i).
``(iii) Noninterest-bearing
transaction account defined.--For
purposes of this subparagraph, the term
`noninterest-bearing transaction
account' means a deposit or account
maintained at an insured depository
institution--
``(I) with respect to which
interest is neither accrued nor
paid;
``(II) on which the
depositor or account holder is
permitted to make withdrawals
by negotiable or transferable
instrument, payment orders of
withdrawal, telephone or other
electronic media transfers, or
other similar items for the
purpose of making payments or
transfers to third parties or
others; and
``(III) on which the
insured depository institution
does not reserve the right to
require advance notice of an
intended withdrawal.''; and
(B) in subparagraph (C), by striking
``subparagraph (B)'' and inserting
``subparagraph (B)(i)''.
(2) Effective date.--The amendments made by
paragraph (1) shall take effect on December 31, 2010.
(3) Prospective repeal.--Effective January 1, 2013,
section 11(a)(1) of the Federal Deposit Insurance Act
(12 U.S.C. 1821(a)(1)), as amended by paragraph (1), is
amended--
(A) in subparagraph (B)--
(i) by striking ``deposit.--'' and
all that follows through ``clause (ii),
the net amount'' and insert
``deposit.--The net amount''; and
(ii) by striking clauses (ii) and
(iii); and
(B) in subparagraph (C), by striking
``subparagraph (B)(i)'' and inserting
``subparagraph (B)''.
(b) Credit Unions.--
(1) Amendments.--Section 207(k)(1) of the Federal
Credit Union Act (12 U.S.C. 1787(k)(1)) is amended--
(A) in subparagraph (A)--
(i) by striking ``Subject to the
provisions of paragraph (2), the net
amount'' and inserting the following:
``(i) Net amount of insurance
payable.--Subject to clause (ii) and
the provisions of paragraph (2), the
net amount''; and
(ii) by adding at the end the
following new clauses:
``(ii) Insurance for noninterest-
bearing transaction accounts.--
Notwithstanding clause (i), the Board
shall fully insure the net amount that
any member or depositor at an insured
credit union maintains in a
noninterest-bearing transaction
account. Such amount shall not be taken
into account when computing the net
amount due to such member or depositor
under clause (i).
``(iii) Noninterest-bearing
transaction account defined.--For
purposes of this subparagraph, the term
`noninterest-bearing transaction
account' means an account or deposit
maintained at an insured credit union--
``(I) with respect to which
interest is neither accrued nor
paid;
``(II) on which the account
holder or depositor is
permitted to make withdrawals
by negotiable or transferable
instrument, payment orders of
withdrawal, telephone or other
electronic media transfers, or
other similar items for the
purpose of making payments or
transfers to third parties or
others; and
``(III) on which the
insured credit union does not
reserve the right to require
advance notice of an intended
withdrawal.''; and
(B) in subparagraph (B), by striking
``subparagraph (A)'' and inserting
``subparagraph (A)(i)''.
(2) Effective date.--The amendments made by
paragraph (1) shall take effect upon the date of the
enactment of this Act.
(3) Prospective repeal.--Effective January 1, 2013,
section 207(k)(1) of the Federal Credit Union Act (12
U.S.C. 1787(k)(1)), as amended by paragraph (1), is
amended--
(A) in subparagraph (A)--
(i) by striking ``(i) net amount of
insurance payable.--'' and all that
follows through ``paragraph (2), the
net amount'' and inserting ``Subject to
the provisions of paragraph (2), the
net amount''; and
(ii) by striking clauses (ii) and
(iii); and
(B) in subparagraph (B), by striking
``subparagraph (A)(i)'' and inserting
``subparagraph (A)''.
Subtitle E--Technical and Conforming Amendments
SEC. 351. EFFECTIVE DATE.
Except as provided in section 364(a), the amendments made
by this subtitle shall take effect on the transfer date.
SEC. 352. BALANCED BUDGET AND EMERGENCY DEFICIT CONTROL ACT OF 1985.
Section 256(h) of the Balanced Budget and Emergency Deficit
Control Act of 1985 (2 U.S.C. 906(h)) is amended--
(1) in paragraph (4), by striking subparagraphs (C)
and (G); and
(2) by redesignating subparagraphs (D), (E), (F),
and (H) as subparagraphs (C), (D), (E), and (F),
respectively.
SEC. 353. BANK ENTERPRISE ACT OF 1991.
Section 232(a) of the Bank Enterprise Act of 1991 (12
U.S.C. 1834(a)) is amended--
(1) in the subsection heading, by striking ``by
Federal Reserve Board'';
(2) in paragraph (1)--
(A) by striking ``The Board of Governors of
the Federal Reserve System,'' and inserting
``The Comptroller of the Currency''; and
(B) by striking ``section 7(b)(2)(H)'' and
inserting ``section 7(b)(2)(E)'';
(3) in paragraph (2)(A), by striking ``Board'' and
inserting ``Comptroller''; and
(4) in paragraph (3)--
(A) by redesignating subparagraphs (A)
through (C) as subparagraphs (B) through (D),
respectively; and
(B) by inserting before subparagraph (B)
the following:
``(A) Comptroller.--The term `Comptroller'
means the Comptroller of the Currency.''.
SEC. 354. BANK HOLDING COMPANY ACT OF 1956.
The Bank Holding Company Act of 1956 (12 U.S.C. 1841 et
seq.) is amended--
(1) in section 2(j)(3) (12 U.S.C. 1841(j)(3)),
strike ``Director of the Office of Thrift Supervision''
and inserting ``appropriate Federal banking agency'';
(2) in section 4 (12 U.S.C. 1843)--
(A) in subsection (i)--
(i) in paragraph (4)--
(I) in subparagraph (A)--
(aa) in the
subparagraph heading,
by striking ``to
director''; and
(bb) by striking
``Board'' and all that
follows through the end
of the subparagraph and
inserting ``Board shall
solicit comments and
recommendations from--
``(i) the Comptroller of the
Currency, with respect to the
acquisition of a Federal savings
association; and
``(ii) the Federal Deposit
Insurance Corporation, with respect to
the acquisition of a State savings
association.''.
(II) in subparagraph (B),
by striking ``Director'' each
place that term appears and
inserting ``Comptroller of the
Currency or the Federal Deposit
Insurance Corporation, as
applicable,'';
(ii) in paragraph (5)--
(I) in subparagraph (B), by
striking ``Director with'' and
inserting ``Comptroller of the
Currency or the Federal Deposit
Insurance Corporation, as
applicable, with''; and
(II) by striking
``Director'' each place that
term appears and inserting
``Comptroller of the Currency
or the Federal Deposit
Insurance Corporation'';
(iii) in paragraph (6), by striking
``Director'' and inserting
``Comptroller of the Currency or the
Federal Deposit Insurance Corporation,
as applicable,''; and
(iv) by striking paragraph (7); and
(3) in section 5(f) (12 U.S.C. 1844(f))--
(A) by striking ``subpena'' each place that
term appears and inserting ``subpoena'';
(B) by striking ``subpenas'' each place
that term appears and inserting ``subpoenas'';
and
(C) by striking ``subpenaed'' and inserting
``subpoenaed''.
SEC. 355. BANK HOLDING COMPANY ACT AMENDMENTS OF 1970.
Section 106(b)(1) of the Bank Holding Company Act
Amendments of 1970 (12 U.S.C. 1972(1)) is amended in the
undesignated matter following subparagraph (E) by inserting
``issue such regulations as are necessary to carry out this
section, and, in consultation with the Comptroller of the
Currency and the Federal Deposit Insurance Company, may'' after
``The Board may''.
SEC. 356. BANK PROTECTION ACT OF 1968.
The Bank Protection Act of 1968 (12 U.S.C. 1881 et seq.) is
amended--
(1) in section 2 (12 U.S.C. 1881), by striking
``the term'' and all that follows through the end of
the section and inserting ``the term `Federal
supervisory agency' means the appropriate Federal
banking agency, as defined in section 3(q) of the
Federal Deposit Insurance Act (12 U.S.C. 1813(q)).'';
(2) in section 3 (12 U.S.C. 1882), by striking
``and loan'' each place that term appears; and
(3) in section 5 (12 U.S.C. 1884), by striking
``and loan''.
SEC. 357. BANK SERVICE COMPANY ACT.
The Bank Service Company Act (12 U.S.C. 1861 et seq.) is
amended--
(1) in section 1(b)(4) (12 U.S.C. 1861(b)(4))--
(A) by inserting after ``an insured bank,''
the following: ``a savings association,'';
(B) by striking ``Director of the Office of
Thrift Supervision'' and inserting
``appropriate Federal banking agency''; and
(C) by striking ``, the Federal Savings and
Loan Insurance Corporation,'';
(2) in section 1(b)(5), by striking ``term `insured
depository institution' has the same meaning as in
section 3(c)'' and inserting ``terms `depository
institution' and `savings association' have the same
meanings as in section 3''; and
(3) in section 7(c)(2) (12 U.S.C. 1867(c)(2)), by
inserting ``each'' after ``notify''.
SEC. 358. COMMUNITY REINVESTMENT ACT OF 1977.
The Community Reinvestment Act of 1977 (12 U.S.C. 2901 et
seq.) is amended--
(1) in section 803 (12 U.S.C. 2902)--
(A) in paragraph (1)--
(i) in subparagraph (A), by
inserting ``and Federal savings
associations (the deposits of which are
insured by the Federal Deposit
Insurance Corporation)'' after
``banks'';
(ii) in subparagraph (B), by
striking ``and bank holding companies''
and inserting ``, bank holding
companies, and savings and loan holding
companies''; and
(iii) in subparagraph (C), by
striking ``; and'' and inserting ``,
and State savings associations (the
deposits of which are insured by the
Federal Deposit Insurance
Corporation).''; and
(B) by striking paragraph (2) (relating to
the Office of Thrift Supervision), as added by
section 744(q) of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989
(Public Law 101-73; 103 Stat. 440); and
(2) in section 806 (12 U.S.C. 2905), by inserting
``, except that the Comptroller of the Currency shall
prescribe regulations applicable to savings
associations and the Board of Governors shall prescribe
regulations applicable to insured State member banks,
bank holding companies and savings and loan holding
companies,'' after ``supervisory agency''.
SEC. 359. CRIME CONTROL ACT OF 1990.
The Crime Control Act of 1990 is amended--
(1) in section 2539(c)(2) (28 U.S.C. 509 note)--
(A) by striking subparagraphs (C) and (D);
and
(B) by redesignating subparagraphs (E)
through (H) as subparagraphs (C) through (G),
respectively; and
(2) in section 2554(b)(2) (Public Law 101-647; 104
Stat. 4890)--
(A) in subparagraph (A), by striking ``,
the Director of the Office of Thrift
Supervision,'' and inserting ``the Comptroller
of the Currency''; and
(B) in subparagraph (B), by striking ``,
the Director'' and all that follows through
``Trust Corporation'' and inserting ``or the
Federal Deposit Insurance Corporation''.
SEC. 360. DEPOSITORY INSTITUTION MANAGEMENT INTERLOCKS ACT.
The Depository Institution Management Interlocks Act (12
U.S.C. 3201 et seq.) is amended--
(1) in section 207 (12 U.S.C. 3206)--
(A) in paragraph (1), by inserting before
the comma at the end the following: ``and
Federal savings associations (the deposits of
which are insured by the Federal Deposit
Insurance Corporation)'';
(B) in paragraph (2), by striking ``, and
bank holding companies'' and inserting ``, bank
holding companies, and savings and loan holding
companies'';
(C) in paragraph (3), by striking
``Corporation,'' and inserting ``Corporation
and State savings associations (the deposits of
which are insured by the Federal Deposit
Insurance Corporation),'';
(D) by striking paragraph (4);
(E) by redesignating paragraphs (5) and (6)
as paragraphs (4) and (5), respectively; and
(F) in paragraph (5), as so redesignated,
by striking ``through (5)'' and inserting
``through (4)'';
(2) in section 209 (12 U.S.C. 3207)--
(A) in paragraph (1), by inserting before
the comma at the end the following: ``and
Federal savings associations (the deposits of
which are insured by the Federal Deposit
Insurance Corporation)'';
(B) in paragraph (2), by striking ``, and
bank holding companies'' and inserting ``, bank
holding companies, and savings and loan holding
companies'';
(C) in paragraph (3), by striking
``Corporation,'' and inserting ``Corporation
and State savings associations (the deposits of
which are insured by the Federal Deposit
Insurance Corporation),'';
(D) by striking paragraph (4); and
(E) by redesignating paragraph (5) as
paragraph (4); and
(3) in section 210(a) (12 U.S.C. 3208(a))--
(A) by striking ``his'' and inserting
``the''; and
(B) by inserting ``of the Attorney
General'' after ``enforcement functions''.
SEC. 361. EMERGENCY HOMEOWNERS' RELIEF ACT.
Section 110 of the Emergency Homeowners' Relief Act (12
U.S.C. 2709) is amended in the second sentence, by striking
``Home Loan Bank Board, the Federal Savings and Loan Insurance
Corporation'' and inserting ``Housing Finance Agency''.
SEC. 362. FEDERAL CREDIT UNION ACT.
The Federal Credit Union Act (12 U.S.C. 1751 et seq.) is
amended--
(1) in section 107(8) (12 U.S.C. 1757(8)), by
striking ``or the Federal Savings and Loan Insurance
Corporation'';
(2) in section 205 (12 U.S.C. 1785)--
(A) in subsection (b)(2)(G)(i), by striking
``the Office of Thrift Supervision and''; and
(B) in subsection (i)(1), by striking ``or
the Federal Savings and Loan Insurance
Corporation''; and
(3) in section 206(g)(7) (12 U.S.C. 1786(g)(7))--
(A) in subparagraph (A)--
(i) in clause (ii), by striking
``(b)(8)'' and inserting ``(b)(9)'';
(ii) in clause (v)--
(I) by striking
``depository'' and inserting
``financial''; and
(II) by adding ``and'' at
the end;
(iii) in clause (vi)--
(I) by striking ``Board''
and inserting ``Agency''; and
(II) by striking ``; and''
and inserting a period; and
(iv) by striking clause (vii); and
(B) in subparagraph (D)--
(i) in clause (iii), by adding
``and'' at the end;
(ii) in clause (iv)--
(I) by striking ``Board''
and inserting ``Agency''; and
(II) by striking ``and'' at
the end; and
(iii) by striking clause (v).
SEC. 363. FEDERAL DEPOSIT INSURANCE ACT.
The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.)
is amended--
(1) in section 3 (12 U.S.C. 1813)--
(A) in subsection (b)(1)(C), by striking
``Director of the Office of Thrift
Supervision'' and inserting ``Comptroller of
the Currency'';
(B) in subsection (l)(5), in the matter
preceding subparagraph (A), by striking
``Director of the Office of Thrift
Supervision,''; and
(C) in subsection (z), by striking ``the
Director of the Office of Thrift
Supervision,'';
(2) in section 7 (12 U.S.C. 1817)--
(A) in subsection (a)--
(i) in paragraph (2)--
(I) in subparagraph (A)--
(aa) in the first
sentence, by striking
``the Director of the
Office of Thrift
Supervision,'';
(bb) in the second
sentence--
(AA) by striking
``the Director of the
Office of Thrift
Supervision,'' and
inserting ``to''; and
(BB) by inserting
``to'' before ``any
Federal home''; and
(cc) by striking
``Finance Board'' each
place that term appears
and inserting ``Finance
Agency''; and
(II) in subparagraph (B),
by striking ``the Comptroller
of the Currency, the Board of
Governors of the Federal
Reserve System, and the
Director of the Office of
Thrift Supervision,'' and
inserting ``the Comptroller of
the Currency and the Board of
Governors of the Federal
Reserve System,'';
(ii) in paragraph (3), in the first
sentence, by striking ``Comptroller of
the Currency, the Chairman of the Board
of Governors of the Federal Reserve
System, and the Director of the Office
of Thrift Supervision.'' and inserting
``Comptroller of the Currency, and the
Chairman of the Board of Governors of
the Federal Reserve System.'';
(iii) in paragraph (6), by striking
``section 232(a)(3)(C)'' and inserting
``section 232(a)(3)(D)''; and
(iv) in paragraph (7), by striking
``, the Director of the Office of
Thrift Supervision,''; and
(B) in subsection (n)--
(i) in the heading, by striking
``Director of the Office of Thrift
Supervision'' and inserting
``Comptroller of the Currency'';
(ii) in the first sentence--
(I) by striking ``the
Director of the Office of
Thrift Supervision'' and
inserting ``the Comptroller of
the Currency''; and
(II) by inserting
``Federal'' before ``savings
associations'';
(iii) in the third sentence, by
striking ``, the Financing Corporation,
and the Resolution Funding
Corporation''; and
(iv) by striking ``the Director''
each place that term appears and
inserting ``the Comptroller'';
(3) in section 8 (12 U.S.C. 1818)--
(A) in subsection (a)(8)(B)(ii), in the
last sentence, by striking ``Director of the
Office of Thrift Supervision'' each place that
term appears and inserting ``Comptroller of the
Currency'';
(B) in subsection (b)(3)--
(i) by inserting ``any savings and
loan holding company and any subsidiary
(other than a depository institution)
of a savings and loan holding company
(as such terms are defined in section
10 of Home Owners' Loan Act), any
noninsured State member bank'' after
``Bank Holding Company Act of 1956,'';
and
(ii) by inserting ``or against a
savings and loan holding company or any
subsidiary thereof (other than a
depository institution or a subsidiary
of such depository institution)''
before the period at the end;
(C) by striking paragraph (9) of subsection
(b) and inserting the following new paragraph:
``(9) [Repealed]''.
(D) in subsection (e)(7)--
(i) in subparagraph (A)--
(I) in clause (v), by
inserting ``and'' after the
semicolon;
(II) in clause (vi)--
(aa) by striking
``Board'' and inserting
``Agency''; and
(bb) by striking
``; and'' and inserting
a period; and
(III) by striking clause
(vii); and
(ii) in subparagraph (D)--
(I) in clause (iii), by
inserting ``and'' after the
semicolon;
(II) in clause (iv)--
(aa) by striking
``Board'' and inserting
``Agency''; and
(bb) by striking
``; and'' and inserting
a period; and
(III) by striking clause
(v);
(E) in subsection (j)--
(i) in paragraph (2), by striking
``, or as a savings association under
subsection (b)(9) of this section'';
(ii) in paragraph (3), by inserting
``or'' after the semicolon;
(iii) in paragraph (4), by striking
``; or'' and inserting a comma; and
(iv) by striking paragraph (5);
(F) in subsection (o), by striking
``Director of the Office of Thrift
Supervision'' and inserting ``Comptroller of
the Currency''; and
(G) in subsection (w)(3)(A), by striking
``and the Office of Thrift Supervision'';
(4) in section 10 (12 U.S.C. 1820)--
(A) in subsection (d)(5), by striking ``or
the Resolution Trust Corporation'' each place
that term appears; and
(B) in subsection (k)(5)(B)--
(i) in clause (ii), by inserting
``and'' after the semicolon;
(ii) in clause (iii), by striking
``; and'' and inserting a period; and
(iii) by striking clause (iv);
(5) in section 11 (12 U.S.C. 1821)--
(A) in subsection (c)--
(i) in paragraph (2)(A)(ii), by
striking ``(other than section 21A of
the Federal Home Loan Bank Act)'';
(ii) in paragraph (4), by striking
``Except as otherwise provided in
section 21A of the Federal Home Loan
Bank Act and notwithstanding'' and
inserting ``Notwithstanding'';
(iii) in paragraph (6)--
(I) in the heading, by
striking ``Director of the
office of thrift supervision''
and inserting ``Comptroller of
the currency'';
(II) in subparagraph (A)--
(aa) by striking
``or the Resolution
Trust Corporation'';
and
(bb) by striking
``Director of the
Office of Thrift
Supervision'' and
inserting ``Comptroller
of the Currency''; and
(III) by amending
subparagraph (B) to read as
follows:
``(B) Receiver.--The Corporation may, at
the discretion of the Comptroller of the
Currency, be appointed receiver and the
Corporation may accept any such appointment.'';
(iv) in paragraph (12)(A), by
striking ``or the Resolution Trust
Corporation'';
(B) in subsection (d)--
(i) in paragraph (17)(A), by
striking ``or the Director of the
Office of Thrift Supervision''; and
(ii) in paragraph (18)(B), by
striking ``or the Director of the
Office of Thrift Supervision'';
(C) in subsection (m)--
(i) in paragraph (9), by striking
``or the Director of the Office of
Thrift Supervision, as appropriate'';
(ii) in paragraph (16), by striking
``or the Director of the Office of
Thrift Supervision, as appropriate''
each place that term appears; and
(iii) in paragraph (18), by
striking ``or the Director of the
Office of Thrift Supervision, as
appropriate'' each place that term
appears;
(D) in subsection (n)--
(i) in paragraph (1)(A)--
(I) by striking ``, or the
Director of the Office of
Thrift Supervision, with
respect to'' and inserting
``or''; and
(II) by striking
``applicable,,'' and inserting
``applicable,'';
(ii) in paragraph (2)(A), by
striking ``or the Director of the
Office of Thrift Supervision'';
(iii) in paragraph (4)(D), by
striking ``and the Director of the
Office of Thrift Supervision, as
appropriate,'';
(iv) in paragraph (4)(G), by
striking ``and the Director of the
Office of Thrift Supervision, as
appropriate,''; and
(v) in paragraph (12)(B)--
(I) by inserting ``as''
after ``shall appoint the
Corporation'';
(II) by striking ``or the
Director of the Office of
Thrift Supervision, as
appropriate,'' each place such
term appears;
(E) in subsection (p)--
(i) in paragraph (2)(B), by
striking ``the Corporation, the FSLIC
Resolution Fund, or the Resolution
Trust Corporation,'' and inserting ``or
the Corporation,''; and
(ii) in paragraph (3)(B), by
striking ``, the FSLIC Resolution Fund,
the Resolution Trust Corporation,'';
and
(F) in subsection (r), by striking ``and
the Resolution Trust Corporation'';
(6) in section 13(k)(1)(A)(iv) (12 U.S.C.
1823(k)(1)(A)(iv)), by striking ``Director of the
Office of Thrift Supervision'' and inserting
``Comptroller of the Currency'';
(7) in section 18 (12 U.S.C. 1828)--
(A) in subsection (c)(2)--
(i) in subparagraph (A), by
inserting ``or a Federal savings
association'' before the semicolon;
(ii) in subparagraph (B), by adding
``and'' at the end;
(iii) in subparagraph (C), by
striking ``(except'' and all that
follows through ``; and'' and inserting
``or a State savings association.'';
and
(iv) by striking subparagraph (D);
(B) in subsection (g)(1), by striking ``the
Director of the Office of Thrift Supervision''
and inserting ``the Comptroller of the
Currency'';
(C) in subsection (i)(2)(C), by striking
``Director of the Office of Thrift
Supervision'' and inserting ``Corporation'';
and
(D) in subsection (m)--
(i) in paragraph (1)--
(I) in subparagraph (A), by
striking ``and the Director of
the Office of Thrift
Supervision'' and inserting
``or the Comptroller of the
Currency, as appropriate,'';
and
(II) in subparagraph (B),
by striking ``and orders of the
Director of the Office of
Thrift Supervision'' and
inserting ``of the Comptroller
of the Currency and orders of
the Corporation and the
Comptroller of the Currency'';
(ii) in paragraph (2)--
(I) in subparagraph (A), by
striking ``Director of the
Office of Thrift Supervision''
and inserting ``Comptroller of
the Currency, as
appropriate,''; and
(II) in subparagraph (B)--
(aa) in the matter
before clause (i), by
striking ``Director of
the Office of Thrift
Supervision'' and
inserting ``Corporation
or the Comptroller of
the Currency, as
appropriate,''; and
(bb) in the matter
following clause (ii)--
(AA) in the
first sentence,
by striking
``Director of
the Office of
Thrift
Supervision''
and inserting
``Office of the
Comptroller of
the Currency,
as
appropriate,'';
and
(BB) by
striking the
second sentence
and inserting
the following:
``The
Corporation or
the Comptroller
of the
Currency, as
appropriate,
may take any
other
corrective
measures with
respect to the
subsidiary,
including the
authority to
require the
subsidiary to
terminate the
activities or
operations
posing such
risks, as the
Corporation or
the Comptroller
of the
Currency,
respectively,
may deem
appropriate.'';
and
(iii) in paragraph (3)--
(I) in subparagraph (A), in
the second sentence--
(aa) by inserting
``, in the case of a
Federal savings
association,'' before
``consult with''; and
(bb) by striking
``Director of the
Office of Thrift
Supervision'' and
inserting ``Comptroller
of the Currency''; and
(II) in subparagraph (B)--
(aa) in the
subparagraph heading,
by striking
``Director'' and
inserting ``Comptroller
of the currency'';
(bb) by striking
``Office of Thrift
Supervision'' and
inserting ``Comptroller
of the Currency'';
(cc) by inserting a
comma after
``soundness''; and
(dd) by inserting
``as to Federal savings
associations'' after
``compliance'';
(8) in section 19(e) (12 U.S.C. 1829(e))--
(A) in paragraph (1), by striking
``Director of the Office of Thrift
Supervision'' and inserting ``Board of
Governors of the Federal Reserve System''; and
(B) in paragraph (2), by striking
``Director of the Office of Thrift
Supervision'' and inserting ``Board of
Governors of the Federal Reserve System'';
(9) in section 28 (12 U.S.C. 1831e)--
(A) in subsection (e)--
(i) in paragraph (2)--
(I) in subparagraph
(A)(ii), by striking ``Director
of the Office of Thrift
Supervision'' and inserting
``Comptroller of the Currency
or the Corporation, as
appropriate'';
(II) in subparagraph (C),
by striking ``Director of the
Office of Thrift Supervision''
and inserting ``Comptroller of
the Currency or the
Corporation, as appropriate,'';
and
(III) in subparagraph (F),
by striking ``Director of the
Office of Thrift Supervision''
and inserting ``Comptroller of
the Currency or the
Corporation, as appropriate'';
and
(ii) in paragraph (3)--
(I) in subparagraph (A), by
striking ``Director of the
Office of Thrift Supervision''
and inserting ``Comptroller of
the Currency or the
Corporation, as appropriate'';
and
(II) in subparagraph (B),
by striking ``Director of the
Office of Thrift Supervision''
and inserting ``Comptroller of
the Currency or the
Corporation, as appropriate,'';
and
(B) in subsection (h)(2), by striking
``Director of the Office of Thrift
Supervision'' and inserting ``Comptroller of
the Currency, of the Corporation,''; and
(10) in section 33(e) (12 U.S.C. 1831j(e)), by
striking ``Federal Housing Finance Board, the
Comptroller of the Currency, and the Director of the
Office of Thrift Supervision'' and inserting ``Federal
Housing Finance Agency and the Comptroller of the
Currency''.
SEC. 364. FEDERAL HOME LOAN BANK ACT.
(a) Repeal of Section 18(c).--Effective 90 days after the
transfer date, section 18(c) of the Federal Home Loan Bank Act
(12 U.S.C. 1438(c)) is repealed.
(b) Repeal of Section 21A.--Section 21A of the Federal Home
Loan Bank Act (12 U.S.C. 1441a) is repealed.
SEC. 365. FEDERAL HOUSING ENTERPRISES FINANCIAL SAFETY AND SOUNDNESS
ACT OF 1992.
The Federal Housing Enterprises Financial Safety and
Soundness Act of 1992 (12 U.S.C. 4501 et seq.) is amended--
(1) in section 1315(b) (12 U.S.C. 4515(b)), by
striking ``the Federal Deposit Insurance Corporation,
and the Office of Thrift Supervision.'' and inserting
``and the Federal Deposit Insurance Corporation.''; and
(2) in section 1317(c) (12 U.S.C. 4517(c)), by
striking ``the Federal Deposit Insurance Corporation,
or the Director of the Office of Thrift Supervision''
and inserting ``or the Federal Deposit Insurance
Corporation''.
SEC. 366. FEDERAL RESERVE ACT.
The Federal Reserve Act (12 U.S.C. 221 et seq.) is
amended--
(1) in section 11(a)(2) (12 U.S.C. 248(a)(2))--
(A) by inserting ``State savings
associations that are insured depository
institutions (as defined in section 3 of the
Federal Deposit Insurance Act),'' after ``case
of insured'';
(B) by striking ``Director of the Office of
Thrift Supervision'' and inserting
``Comptroller of the Currency'';
(C) by inserting ``Federal'' before
``savings association which''; and
(D) by striking ``savings and loan
association'' and inserting ``savings
association''; and
(2) in section 19(b) (12 U.S.C. 461(b))--
(A) in paragraph (1)(F), by striking
``Director of the Office of Thrift
Supervision'' and inserting ``Comptroller of
the Currency''; and
(B) in paragraph (4)(B), by striking
``Director of the Office of Thrift
Supervision'' and inserting ``Comptroller of
the Currency''.
SEC. 367. FINANCIAL INSTITUTIONS REFORM, RECOVERY, AND ENFORCEMENT ACT
OF 1989.
The Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 is amended--
(1) in section 203 (12 U.S.C. 1812 note), by
striking subsection (b);
(2) in section 302(1) (12 U.S.C. 1467a note), by
striking ``Director of the Office of Thrift
Supervision'' and inserting ``Comptroller of the
Currency'';
(3) in section 305 (12 U.S.C. 1464 note), by
striking subsection (b);
(4) in section 308 (12 U.S.C. 1463 note)--
(A) in subsection (a), by striking
``Director of the Office of Thrift
Supervision'' and inserting ``Chairman of the
Board of Governors of the Federal Reserve
System, the Comptroller of the Currency, the
Chairman of the National Credit Union
Administration,''; and
(B) by adding at the end the following new
subsection:
``(c) Reports.--The Secretary of the Treasury, the Chairman
of the Board of Governors of the Federal Reserve System, the
Comptroller of the Currency, the Chairman of the National
Credit Union Administration, and the Chairperson of Board of
Directors of the Federal Deposit Insurance Corporation shall
each submit an annual report to the Congress containing a
description of actions taken to carry out this section.'';
(5) in section 402 (12 U.S.C. 1437 note)--
(A) in subsection (a), by striking
``Director of the Office of Thrift
Supervision'' and inserting ``Comptroller of
the Currency'';
(B) by striking subsection (b);
(C) in subsection (e)--
(i) in paragraph (1), by striking
``Office of Thrift Supervision'' and
inserting ``Comptroller of the
Currency''; and
(ii) in each of paragraphs (2),
(3), and (4), by striking ``Director of
the Office of Thrift Supervision'' each
place that term appears and inserting
``Comptroller of the Currency''; and
(D) by striking ``Federal Housing Finance
Board'' each place that term appears and
inserting ``Federal Housing Finance Agency'';
(6) in section 1103(a) (12 U.S.C. 3332(a)), by
striking ``and the Resolution Trust Corporation'';
(7) in section 1205(b) (12 U.S.C. 1818 note)--
(A) in paragraph (1)--
(i) by striking subparagraph (B);
and
(ii) by redesignating subparagraphs
(C) through (F) as subparagraphs (B)
through (E), respectively; and
(B) in paragraph (2), by striking
``paragraph (1)(F)'' and inserting ``paragraph
(1)(E)'';
(8) in section 1206 (12 U.S.C. 1833b)--
(A) by striking ``Board, the Oversight
Board of the Resolution Trust Corporation'' and
inserting ``Agency, and''; and
(B) by striking ``, and the Office of
Thrift Supervision'';
(9) in section 1216 (12 U.S.C. 1833e)--
(A) in subsection (a)--
(i) in paragraph (3), by adding
``and'' at the end;
(ii) in paragraph (4), by striking
the semicolon at the end and inserting
a period;
(iii) by striking paragraphs (2),
(5), and (6); and
(iv) by redesignating paragraphs
(3) and (4), as paragraphs (2) and (3),
respectively;
(B) in subsection (c)--
(i) by striking ``the Director of
the Office of Thrift Supervision,'' and
inserting ``and''; and
(ii) by striking ``the Thrift
Depositor Protection Oversight Board of
the Resolution Trust Corporation, and
the Resolution Trust Corporation''; and
(C) in subsection (d)--
(i) by striking paragraphs (3),
(5), and (6); and
(ii) by redesignating paragraphs
(4), (7), and (8) as paragraphs (3),
(4), and (5), respectively.
SEC. 368. FLOOD DISASTER PROTECTION ACT OF 1973.
Section 3(a)(5) of the Flood Disaster Protection Act of
1973 (42 U.S.C. 4003(a)(5)) is amended by striking ``, the
Office of Thrift Supervision''.
SEC. 369. HOME OWNERS' LOAN ACT.
The Home Owners' Loan Act (12 U.S.C. 1461 et seq.) is
amended--
(1) in section 1 (12 U.S.C. 1461), by striking the
table of contents;
(2) in section 2 (12 U.S.C. 1462), as amended by
this Act--
(A) by striking paragraphs (1) and (3);
(B) by redesignating paragraph (2) as
paragraph (1);
(C) by redesignating paragraphs (4) through
(9) as paragraphs (2) through (7),
respectively; and
(D) by adding at the end the following:
``(8) Board.--The term `Board', other than in the
context of the Board of Directors of the Corporation,
means the Board of Governors of the Federal Reserve
System.
``(9) Comptroller.--The term `Comptroller' means
the Comptroller of the Currency.'';
(3) in section 3 (12 U.S.C. 1462a)--
(A) by striking the section heading and
inserting the following:
``SEC. 3. ADMINISTRATIVE PROVISIONS.'';
(B) by striking subsections (a), (b), (c),
(d), (g), (h), (i), and (j);
(C) by redesignating subsections (e) and
(f) as subsections (a) and (b), respectively;
(D) in subsection (a), as so redesignated--
(i) in the heading by striking ``of
the Director''; and
(ii) in the matter preceding
paragraph (1), by striking ``The
Director'' and inserting ``In
accordance with subtitle A of title III
of the Dodd-Frank Wall Street Reform
and Consumer Protection Act, the
appropriate Federal banking agency'';
and
(E) in subsection (b), as so redesignated,
by striking ``Director'' and inserting
``appropriate Federal banking agency'';
(4) in section 4 (12 U.S.C. 1463)--
(A) in subsection (a)--
(i) in the subsection heading, by
striking ``Federal'';
(ii) by striking paragraphs (1) and
(2) and inserting the following:
``(1) Examination and safe and sound operation.--
``(A) Federal savings associations.--The
Comptroller shall provide for the examination
and safe and sound operation of Federal savings
associations.
``(B) State savings associations.--The
Corporation shall provide for the examination
and safe and sound operation of State savings
associations.
``(2) Regulations for savings associations.--The
Comptroller may prescribe regulations with respect to
savings associations, as the Comptroller determines to
be appropriate to carry out the purposes of this
Act.''; and
(iii) in paragraph (3), by striking
``Director'' each place that term
appears and inserting ``Comptroller and
the Corporation'';
(B) in subsection (b)--
(i) in paragraph (2)--
(I) in subparagraph (A), by
adding ``and'' at the end;
(II) in subparagraph (B),
by striking ``; and'' and
inserting a period; and
(III) by striking
subparagraph (C); and
(ii) by striking ``Director'' each
place that term appears and inserting
``Comptroller'';
(C) in subsection (c)--
(i) by striking ``All regulations
and policies of the Director'' and
inserting ``The regulations of the
Comptroller and the policies of the
Comptroller and the Corporation''; and
(ii) by striking ``of the
Currency'';
(D) in subsection (e)(5), by striking
``Director'' and inserting ``Comptroller'';
(E) in subsection (f), by striking
``Director'' each place that term appears and
inserting ``appropriate Federal banking
agency''; and
(F) in subsection (h), by striking
``Director'' each place that term appears and
inserting ``appropriate Federal banking
agency'';
(5) in section 5 (12 U.S.C. 1464)--
(A) in subsection (a), by striking
``Director'', each place such term appears and
inserting ``Comptroller of the Currency'';
(B) in subsection (b), by striking
``Director'', each place such term appears and
inserting ``Comptroller of the Currency'';
(C) in subsection (c)--
(i) in paragraph (5)--
(I) in subparagraph (A), by
striking ``Director'' and
inserting ``appropriate Federal
banking agency''; and
(II) in subparagraph (B)--
(aa) by striking
``The Director'' and
inserting ``The
appropriate Federal
banking agency''; and
(bb) by striking
``the Director'' and
inserting ``the
appropriate Federal
banking agency'';
(D) in subsection (d)--
(i) in paragraph (1)--
(I) in subparagraph (A)--
(aa) in the first
sentence, by striking
``Director'' and
inserting ``appropriate
Federal banking
agency'';
(bb) in the second
sentence--
(AA) by
striking
``Director's
own name and
through the
Director's own
attorneys'' and
inserting
``name of the
appropriate
Federal banking
agency and
through the
attorneys of
the appropriate
Federal banking
agency''; and
(BB) by
striking
``Director''
each place that
term appears
and inserting
``appropriate
Federal banking
agency''; and
(cc) in the third
sentence, by striking
``Director'' each place
that term appears and
inserting
``Comptroller'';
(II) in subparagraph (B)--
(aa) in clauses (i)
through (iv), by
striking ``Director''
each place that term
appears and inserting
``appropriate Federal
banking agency'';
(III) in clause (v)--
(aa) in the matter
preceding subclause
(I), by striking
``Director'' and
inserting ``appropriate
Federal banking
agency'';
(bb) in subclause
(II), by striking
``subpenas'' and
inserting
``subpoenas''; and
(cc) in the matter
following subclause
(II), by striking
``subpena'' and
inserting ``subpoena'';
(IV) in clause (vi)--
(aa) in the first
sentence, by striking
``Director'' and
inserting ``appropriate
Federal banking
agency''; and
(bb) in the second
sentence, by striking
``Director'' and
inserting
``Comptroller'';
(V) in clause (vii)--
(aa) in the first
sentence, by striking
``subpena'' and
inserting ``subpoena'';
(bb) in the second
sentence, by striking
``subpenaed'' and
inserting
``subpoenaed''; and
(cc) in the third
sentence, by striking
``Director'' and
inserting ``appropriate
Federal banking
agency'';
(ii) in paragraph (2)--
(I) in subparagraph (A)--
(aa) by striking
``Director of the
Office of Thrift
Supervision'' and
inserting ``appropriate
Federal banking
agency'';
(bb) by striking
``any insured savings
association'' and
inserting ``an insured
savings association'';
and
(cc) by striking
``Director determines,
in the Director's
discretion'' and
inserting ``appropriate
Federal banking agency
determines, in the
discretion of the
appropriate Federal
banking agency'';
(II) in subparagraph (B),
by striking ``Director'' each
place that term appears and
inserting ``appropriate Federal
banking agency'';
(III) in subparagraphs (C)
and (D), by striking
``Director'' and inserting
``appropriate Federal banking
agency'';
(IV) in subparagraph (E)--
(aa) in clause
(ii)--
(AA) in the clause
heading, by striking
``or rtc''; and
(BB) by striking
``or the Resolution
Trust Corporation, as
appropriate,'' each
place that term
appears; and
(bb) by striking
``Director'' each place
that term appears and
inserting ``appropriate
Federal banking
agency''; and
(iii) in paragraph (3)--
(I) in subparagraph (A), by
striking ``Director'' each
place that term appears and
inserting ``Comptroller''; and
(II) in subparagraph (B)--
(aa) in the
subparagraph heading,
by striking ``or rtc'';
(bb) by striking
``Corporation or the
Resolution Trust''; and
(cc) by striking
``Director'' and
inserting
``Comptroller'';
(iv) in paragraph (4), by striking
``Director'' and inserting
``appropriate Federal banking agency'';
(v) in paragraph (6)--
(I) in subparagraph (A), by
striking ``Director'' and
inserting ``Comptroller''; and
(II) in subparagraphs (B)
and (C), by striking
``Director'' each place that
term appears and inserting
``appropriate Federal banking
agency'';
(vi) in paragraph (7)--
(I) in subparagraphs (A),
(B), and (D), by striking
``Director'' each place that
term appears and inserting
``appropriate Federal banking
agency'';
(II) in subparagraph (C),
by striking ``Director'' and
inserting ``Federal Deposit
Insurance Corporation or the
Comptroller, as appropriate,'';
and
(III) by striking
subparagraph (E) and inserting
the following:
``(E) Administration by the comptroller and
the corporation.--The Comptroller may issue
such regulations, and the appropriate Federal
banking agency may issue such orders, including
those issued pursuant to section 8 of the
Federal Deposit Insurance Act, as may be
necessary to administer and carry out this
paragraph and to prevent evasion of this
paragraph.'';
(E) in subsection (e)(2), strike
``Director'' and insert ``Comptroller'';
(F) in subsection (i)--
(i) by striking ``Director'', each
place such term appears, and inserting
``Comptroller'';
(ii) in paragraph (2), in the
heading, by striking ``director'' and
inserting ``Comptroller'';
(iii) in paragraph (5)(A), by
striking ``of the Currency''; and
(iv) except as provided in clauses
(i) through (iii), by striking
``Director'' each place such term
appears and inserting ``Comptroller'';
(G) in subsection (o)--
(i) in paragraph (1), by striking
``Director'' and inserting
``Comptroller''; and
(ii) in paragraph (2)(B), by
striking ``Director's determination''
and inserting ``determination of the
Comptroller'';
(H) in subsections (m), (n), (o), and (p),
by striking ``Director'', each place such term
appears, and inserting ``Comptroller'';
(I) in subsection (q)--
(i) in paragraph (6), by striking
``of Governors of the Federal Reserve
System'';
(ii) by striking ``Director'' each
place that term appears and inserting
``Board''; and
(iii) by inserting ``in
consultation with the Comptroller and
the Corporation,'' before
``considers'';
(J) in subsection (r)(3), by striking
``Director'' and inserting ``Comptroller of the
Currency'';
(K) in subsection (s)--
(i) in paragraph (1), strike
``Director'' and insert ``Comptroller
of the Currency'';
(ii) in paragraph (2), strike
``Director'' and insert ``Comptroller
of the Currency'';
(iii) in paragraph (3), by striking
``Director's discretion, the Director''
and inserting ``discretion of the
appropriate Federal banking agency, the
appropriate Federal banking agency,'';
(iv) in paragraph (4), by striking
``Director'' each place that term
appears and inserting ``appropriate
Federal banking agency''; and
(v) in paragraph (5)--
(I) by striking
``Director'', each place such
term appears, and inserting
``appropriate Federal banking
agency''; and
(II) by striking
``Director's approval'' and
inserting ``approval of the
appropriate Federal banking
agency'';
(L) in subsection (t)--
(i) in paragraph (1), by striking
subparagraph (D);
(ii) by striking paragraph (3) and
inserting the following:
``(3) [Repealed].'';
(iii) in paragraph (5)--
(I) in subparagraph (B), by
striking ``Corporation, in its
sole discretion'' and inserting
``appropriate Federal banking
agency, in the sole discretion
of the appropriate Federal
banking agency''; and
(II) by striking
subparagraph (D);
(iv) in paragraph (6)--
(I) by striking
subparagraph (A) and inserting
the following:
``(A) [Reserved].'';
(II) in subparagraph (B),
by striking ``Director'' each
place that term appears and
inserting ``appropriate Federal
banking agency'';
(III) in subparagraph (C)--
(aa) in clause (i),
by striking
``Director's prior
approval'' and
inserting ``prior
approval of the
appropriate Federal
banking agency'';
(bb) in clause
(ii), by striking
``Director's
discretion'' and
inserting ``discretion
of the appropriate
Federal banking
agency''; and
(cc) by striking
``Director'' each place
that term appears and
inserting ``appropriate
Federal banking
agency'';
(IV) in subparagraph (E),
by striking ``Director shall''
and inserting ``appropriate
Federal banking agency may'';
and
(V) in subparagraph (F), by
striking ``Director'' and all
that follows through the end of
the subparagraph and inserting
``appropriate Federal banking
agency under this Act or any
other provision of law.'';
(v) in paragraph (7), by striking
``Director'' each place that term
appears and inserting ``appropriate
Federal banking agency'';
(vi) by striking paragraph (8) and
inserting the following:
``(8) [Repealed].'';
(vii) in paragraph (9)--
(I) in subparagraph (A), by
striking ``Director'' and
inserting ``Comptroller'';
(II) in subparagraph (C),
by striking ``of the
Currency''; and
(III) by striking
subparagraph (B) and
redesignating subparagraphs (C)
and (D) as subparagraphs (B)
and (C), respectively; and
(viii) except as provided in
clauses (i) through (vii), by striking
``Director'' each place that term
appears and inserting ``appropriate
Federal banking agency'';
(M) in subsection (u), by striking
``Director'' each place that term appears and
inserting ``appropriate Federal banking
agency'';
(N) in subsection (v)--
(i) in paragraph (2), by striking
``Director's determinations'' and
inserting ``determinations of the
appropriate Federal banking agency'';
and
(ii) by striking ``Director'' each
place that term appears and inserting
``appropriate Federal banking agency'';
(O) in subsection (w)(1)--
(i) in subparagraph (A)(II), by
striking ``Director's intention'' and
inserting ``intention of the
Comptroller''; and
(ii) in subparagraph (B), by
striking ``Director's intention'' and
inserting ``intention of the
Comptroller''; and
(P) except as provided in subparagraphs (A)
through (J), by striking ``Director'' each
place that term appears and inserting
``Comptroller'';
(6) in section 8 (12 U.S.C. 1466a), by striking
``Director'' each place that term appears and inserting
``Comptroller'';
(7) in section 9 (12 U.S.C. 1467)--
(A) in subsection (a), by striking
``assessed by the Director'' and all that
follows through the end of the subsection and
inserting the following: ``assessed by--
``(1) the Comptroller, against each such Federal
savings association, as the Comptroller deems necessary
or appropriate; and
``(2) the Corporation, against each such State
savings association, as the Corporation deems necessary
or appropriate.'';
(B) in subsection (b), by striking
``Director'', each place such term appears, and
inserting ``Comptroller or Corporation, as
appropriate'';
(C) in subsection (e)--
(i) by striking ``Only the
Director'' and inserting ``The
Comptroller''; and
(ii) by striking ``Director's
designee'' and inserting ``designee of
the Comptroller'';
(D) by striking subsection (f) and
inserting the following:
``(f) [Reserved].'';
(E) in subsection (g)--
(i) in paragraph (1), by striking
``Director'' and inserting
``appropriate Federal banking agency'';
and
(ii) in paragraph (2), by striking
``Director, or the Corporation, as the
case may be,'' and inserting
``appropriate Federal banking agency
for the savings association'';
(F) in subsection (i), by striking
``Director'' each place that term appears and
inserting ``appropriate Federal banking
agency'';
(G) in subsection (j), by striking
``Director's sole discretion'' and inserting
``sole discretion of the appropriate Federal
banking agency'';
(H) in subsection (k), by striking
``Director may assess against institutions for
which the Director is the appropriate Federal
banking agency, as defined in section 3 of the
Federal Deposit Insurance Act,'' and inserting
``appropriate Federal banking agency may assess
against an institution''; and
(I) except as provided in subparagraphs (A)
through (G), by striking ``Director'' each
place that term appears and inserting
``appropriate Federal banking agency'';
(8) in section 10 (12 U.S.C. 1467a)--
(A) in subsection (a)(1), by striking
``Director'' each place that term appears and
inserting ``appropriate Federal banking
agency'';
(B) in subsection (b)--
(i) in paragraph (2), by striking
``and the regional office of the
Director of the district in which its
principal office is located,''; and
(ii) in paragraph (6), by striking
``Director's own motion or
application'' and inserting ``motion or
application of the Board'';
(C) in subsection (c)--
(i) in paragraph (2)(F), by
striking ``of Governors of the Federal
Reserve System'';
(ii) in paragraph (4)(B), in the
subparagraph heading, by striking ``by
director'';
(iii) in paragraph (6)(D), in the
subparagraph heading, by striking ``by
director''; and
(iv) in paragraph (9)(E), by
inserting ``(in consultation with the
appropriate Federal banking agency)''
after ``including a determination'';
(D) in subsection (g)(5)(B), by striking
``the Director's discretion'' and inserting
``the discretion of the Board'';
(E) in subsection (l), by striking
``Director'' each place that term appears and
inserting ``appropriate Federal banking
agency'';
(F) in subsection (m), by striking
``Director'' and inserting ``appropriate
Federal banking agency'';
(G) in subsection (p)--
(i) in paragraph (1)--
(I) by striking ``Director
determines'' the 1st place such
term appears and inserting
``Board or the appropriate
Federal banking agency for the
savings association
determines'';
(II) by striking ``Director
may'' and inserting ``Board
may''; and
(III) by striking
``Director determines'' the 2nd
place such term appears and
inserting ``Board, in
consultation with the
appropriate Federal banking
agency for the savings
association determines''; and
(ii) in paragraph (2), by striking
``Director'', each place such term
appears, and inserting ``Board'';
(H) in subsection (q), by striking
``Director'', each place such term appears, and
inserting ``Board'';
(I) in subsection (r), by striking
``Director'', each place such term appears, and
inserting ``Board or appropriate Federal
banking agency'';
(J) in subsection (s)--
(i) in paragraph (2)--
(I) in subparagraph
(B)(ii), by striking
``Director's judgment'' and
inserting ``judgment of the
appropriate Federal banking
agency for the savings
association''; and
(II) by striking
``Director'' each place that
term appears and inserting
``appropriate Federal banking
agency for the savings
association''; and
(ii) in paragraph (4), by striking
``Director'' and inserting
``Comptroller''; and
(K) except as provided in subparagraphs (A)
through (J), by striking ``Director'' each
place that term appears and inserting
``Board'';
(9) in section 11 (12 U.S.C. 1468), by striking
``Director'' each place that term appears and inserting
``appropriate Federal banking agency'';
(10) in section 12 (12 U.S.C. 1468a), by striking
``the Director'' and inserting ``a Federal banking
agency''; and
(11) in section 13 (12 U.S.C. 1468a) is amended by
striking ``Director'' and inserting ``a Federal banking
agency''.
SEC. 370. HOUSING ACT OF 1948.
Section 502(c) of the Housing Act of 1948 (12 U.S.C.
1701c(c)) is amended--
(1) in the matter preceding paragraph (1), by
striking ``and the Director of the Office of Thrift
Supervision'' and inserting ``, the Comptroller of the
Currency, and the Federal Deposit Insurance
Corporation''; and
(2) in paragraph (3), by striking ``Board'' and
inserting ``Agency''.
SEC. 371. HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1992.
Section 543 of the Housing and Community Development Act of
1992 (Public Law 102-550; 106 Stat. 3798) is amended--
(1) in subsection (c)(1)--
(A) by striking subparagraphs (D) through
(F); and
(B) by redesignating subparagraphs (G) and
(H) as subparagraphs (D) and (E), respectively;
and
(2) in subsection (f)--
(A) in paragraph (2), by striking ``the
Office of Thrift Supervision,'' each place that
term appears; and
(B) in paragraph (3)--
(i) in the matter preceding
subparagraph (A), by striking ``the
Office of Thrift Supervision,''; and
(ii) in subparagraph (D), by
striking ``Office of Thrift
Supervision,''.
SEC. 372. HOUSING AND URBAN-RURAL RECOVERY ACT OF 1983.
Section 469 of the Housing and Urban-Rural Recovery Act of
1983 (12 U.S.C. 1701p-1) is amended in the first sentence, by
striking ``Federal Home Loan Bank Board'' and inserting
``Federal Housing Finance Agency''.
SEC. 373. NATIONAL HOUSING ACT.
Section 202(f) of the National Housing Act (12 U.S.C.
1708(f)) is amended--
(1) by striking paragraph (5) and inserting the
following:
``(5) if the mortgagee is a national bank, a
subsidiary or affiliate of such bank, a Federal savings
association or a subsidiary or affiliate of a savings
association, the Comptroller of the Currency;'';
(2) in paragraph (6), by adding ``and'' at the end;
(3) in paragraph (7)--
(A) by inserting ``or State savings
association'' after ``State bank''; and
(B) by striking ``; and'' and inserting a
period; and
(4) by striking paragraph (8).
SEC. 374. NEIGHBORHOOD REINVESTMENT CORPORATION ACT.
Section 606(c)(3) of the Neighborhood Reinvestment
Corporation Act (42 U.S.C. 8105(c)(3)) is amended by striking
``Federal Home Loan Bank Board'' and inserting ``Federal
Housing Finance Agency''.
SEC. 375. PUBLIC LAW 93-100.
Section 5(d) of Public Law 93-100 (12 U.S.C. 1470(a)) is
amended--
(1) in paragraph (1), by striking ``Federal Savings
and Loan Insurance Corporation with respect to insured
institutions, the Board of Governors of the Federal
Reserve System with respect to State member insured
banks, and the Federal Deposit Insurance Corporation
with respect to State nonmember insured banks'' and
inserting ``appropriate Federal banking agency, with
respect to the institutions subject to the jurisdiction
of each such agency,''; and
(2) in paragraph (2), by striking ``supervisory''
and inserting ``banking''.
SEC. 376. SECURITIES EXCHANGE ACT OF 1934.
The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.)
is amended--
(1) in section 3(a)(34) (15 U.S.C. 78c(a)(34))--
(A) in subparagraph (A)--
(i) in clause (i), by striking ``or
a subsidiary or a department or
division of any such bank'' and
inserting ``a subsidiary or a
department or division of any such
bank, a Federal savings association (as
defined in section 3(b)(2) of the
Federal Deposit Insurance Act (12
U.S.C. 1813(b)(2))), the deposits of
which are insured by the Federal
Deposit Insurance Corporation, or a
subsidiary or department or division of
any such Federal savings association'';
(ii) in clause (ii), by striking
``or a subsidiary or a department or
division of such subsidiary'' and
inserting ``a subsidiary or a
department or division of such
subsidiary, or a savings and loan
holding company'';
(iii) in clause (iii), by striking
``or a subsidiary or department or
division thereof;'' and inserting ``a
subsidiary or department or division of
any such bank, a State savings
association (as defined in section
3(b)(3) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(b)(3))),
the deposits of which are insured by
the Federal Deposit Insurance
Corporation, or a subsidiary or a
department or division of any such
State savings association; and'';
(iv) by striking clause (iv); and
(v) by redesignating clause (v) as
clause (iv);
(B) in subparagraph (B)--
(i) in clause (i), by striking ``or
a subsidiary of any such bank'' and
inserting ``a subsidiary of any such
bank, a Federal savings association (as
defined in section 3(b)(2) of the
Federal Deposit Insurance Act (12
U.S.C. 1813(b)(2))), the deposits of
which are insured by the Federal
Deposit Insurance Corporation, or a
subsidiary of any such Federal savings
association'';
(ii) in clause (ii), by striking
``or a subsidiary of a bank holding
company which is a bank other than a
bank specified in clause (i), (iii), or
(iv) of this subparagraph'' and
inserting ``a subsidiary of a bank
holding company that is a bank other
than a bank specified in clause (i) or
(iii) of this subparagraph, or a
savings and loan holding company'';
(iii) in clause (iii), by striking
``or a subsidiary thereof;'' and
inserting ``a subsidiary of any such
bank, a State savings association (as
defined in section 3(b)(3) of the
Federal Deposit Insurance Act (12
U.S.C. 1813(b)(3))), the deposits of
which are insured by the Federal
Deposit Insurance Corporation, or a
subsidiary of any such State savings
association; and'';
(iv) by striking clause (iv); and
(v) by redesignating clause (v) as
clause (iv);
(C) in subparagraph (C)--
(i) in clause (i), by striking
``bank'' and inserting ``bank or a
Federal savings association (as defined
in section 3(b)(2) of the Federal
Deposit Insurance Act (12 U.S.C.
1813(b)(2))), the deposits of which are
insured by the Federal Deposit
Insurance Corporation'';
(ii) in clause (ii), by striking
``or a subsidiary of a bank holding
company which is a bank other than a
bank specified in clause (i), (iii), or
(iv) of this subparagraph'' and
inserting ``a subsidiary of a bank
holding company that is a bank other
than a bank specified in clause (i) or
(iii) of this subparagraph, or a
savings and loan holding company'';
(iii) in clause (iii), by striking
``System)'' and inserting, ``System) or
a State savings association (as defined
in section 3(b)(3) of the Federal
Deposit Insurance Act (12 U.S.C.
1813(b)(3))), the deposits of which are
insured by the Federal Deposit
Insurance Corporation; and'';
(iv) by striking clause (iv); and
(v) by redesignating clause (v) as
clause (iv);
(D) in subparagraph (D)--
(i) in clause (i), by inserting
after ``bank'' the following: ``or a
Federal savings association (as defined
in section 3(b)(2) of the Federal
Deposit Insurance Act (12 U.S.C.
1813(b)(2))), the deposits of which are
insured by the Federal Deposit
Insurance Corporation'';
(ii) in clause (ii), by adding
``and'' at the end;
(iii) by striking clause (iii);
(iv) by redesignating clause (iv)
as clause (iii); and
(v) in clause (iii), as so
redesignated, by inserting after
``bank'' the following: ``or a State
savings association (as defined in
section 3(b)(3) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(b)(3))),
the deposits of which are insured by
the Federal Deposit Insurance
Corporation'';
(E) in subparagraph (F)--
(i) in clause (i), by inserting
after ``bank'' the following: ``or a
Federal savings association (as defined
in section 3(b)(2) of the Federal
Deposit Insurance Act (12 U.S.C.
1813(b)(2))), the deposits of which are
insured by the Federal Deposit
Insurance Corporation'';
(ii) by striking clause (ii);
(iii) by redesignating clauses
(iii), (iv), and (v) as clauses (ii),
(iii), and (iv), respectively; and
(iv) in clause (iii), as so
redesignated, by inserting before the
semicolon the following: ``or a State
savings association (as defined in
section 3(b)(3) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(b)(3))),
the deposits of which are insured by
the Federal Deposit Insurance
Corporation'';
(F) in subparagraph (G)--
(i) in clause (i), by inserting
after ``national bank'' the following:
``, a Federal savings association (as
defined in section 3(b)(2) of the
Federal Deposit Insurance Act), the
deposits of which are insured by the
Federal Deposit Insurance
Corporation,'';
(ii) in clause (iii)--
(I) by inserting after
``bank)'' the following: ``, a
State savings association (as
defined in section 3(b)(3) of
the Federal Deposit Insurance
Act), the deposits of which are
insured by the Federal Deposit
Insurance Corporation,''; and
(II) by adding ``and'' at
the end;
(iii) by striking clause (iv); and
(iv) by redesignating clause (v) as
clause (iv); and
(G) in the undesignated matter following
subparagraph (H), by striking ``, and the term
`District of Columbia savings and loan
association' means any association subject to
examination and supervision by the Office of
Thrift Supervision under section 8 of the Home
Owners' Loan Act of 1933'';
(2) in section 12(i) (15 U.S.C. 78l(i))--
(A) in paragraph (1), by inserting after
``national banks'' the following: ``and Federal
savings associations, the accounts of which are
insured by the Federal Deposit Insurance
Corporation'';
(B) by striking ``(3)'' and all that
follows through ``vested in the Office of
Thrift Supervision'' and inserting ``and (3)
with respect to all other insured banks and
State savings associations, the accounts of
which are insured by the Federal Deposit
Insurance Corporation, are vested in the
Federal Deposit Insurance Corporation''; and
(C) in the second sentence, by striking
``the Federal Deposit Insurance Corporation,
and the Office of Thrift Supervision'' and
inserting ``and the Federal Deposit Insurance
Corporation'';
(3) in section 15C(g)(1) (15 U.S.C. 78o-5(g)(1)),
by striking ``the Director of the Office of Thrift
Supervision, the Federal Savings and Loan Insurance
Corporation,''; and
(4) in section 23(b)(1) (15 U.S.C. 78w(b)(1)), by
striking ``, other than the Office of Thrift
Supervision,''.
SEC. 377. TITLE 18, UNITED STATES CODE.
Title 18, United States Code, is amended--
(1) in section 212(c)(2)--
(A) by striking subparagraph (C); and
(B) by redesignating subparagraphs (D)
through (H) as subparagraphs (C) through (G),
respectively;
(2) in section 657, by striking ``Office of Thrift
Supervision, the Resolution Trust Corporation,'';
(3) in section 981(a)(1)(D)--
(A) by striking ``Resolution Trust
Corporation,''; and
(B) by striking ``or the Office of Thrift
Supervision'';
(4) in section 982(a)(3)--
(A) by striking ``Resolution Trust
Corporation,''; and
(B) by striking ``or the Office of Thrift
Supervision'';
(5) in section 1006--
(A) by striking ``Office of Thrift
Supervision,''; and
(B) by striking ``the Resolution Trust
Corporation,'';
(6) in section 1014--
(A) by striking ``the Office of Thrift
Supervision''; and
(B) by striking ``the Resolution Trust
Corporation,''; and
(7) in section 1032(1)--
(A) by striking ``the Resolution Trust
Corporation,''; and
(B) by striking ``or the Director of the
Office of Thrift Supervision''.
SEC. 378. TITLE 31, UNITED STATES CODE.
Title 31, United States Code, is amended--
(1) in section 321--
(A) in subsection (c)--
(i) in paragraph (1), by adding
``and'' at the end;
(ii) in paragraph (2), by striking
``; and'' and inserting a period; and
(iii) by striking paragraph (3);
and
(B) by striking subsection (e); and
(2) in section 714(a), by striking ``the Office of
the Comptroller of the Currency, and the Office of
Thrift Supervision.'' and inserting ``and the Office of
the Comptroller of the Currency.''.
TITLE IV--REGULATION OF ADVISERS TO HEDGE FUNDS AND OTHERS
SEC. 401. SHORT TITLE.
This title may be cited as the ``Private Fund Investment
Advisers Registration Act of 2010''.
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:
``(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.
``(30) The term `foreign private adviser' means any
investment adviser who--
``(A) has no place of business in the
United States;
``(B) has, in total, fewer than 15 clients
and investors in the United States in private
funds advised by the investment adviser;
``(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; and
``(D) neither--
``(i) holds itself out generally to
the public in the United States as an
investment adviser; nor
``(ii) acts as--
``(I) an investment adviser
to any investment company
registered under the Investment
Company Act of 1940; or
``(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.''.
(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.
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--
(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'';
(2) by striking paragraph (3) and inserting the
following:
``(3) any investment adviser that is a foreign
private adviser;''; and
(3) in paragraph (5), by striking ``or'' at the
end;
(4) in paragraph (6)--
(A) by striking ``any investment adviser''
and inserting ``(A) any investment adviser'';
(B) by redesignating subparagraphs (A) and
(B) as clauses (i) and (ii), respectively; and
(C) in clause (ii) (as so redesignated), by
striking the period at the end and inserting
``; or''; and
(D) by adding at the end the following:
``(B) any investment adviser that is registered with the
Commodity Futures Trading Commission as a commodity trading
advisor and advises a private fund, provided that, if after the
date of enactment of the Private Fund Investment Advisers
Registration Act of 2010, the business of the advisor should
become predominately the provision of securities-related
advice, then such adviser shall register with the
Commission.''.
(5) by adding at the end the following:
``(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--
``(A) small business investment companies
that are licensees under the Small Business
Investment Act of 1958;
``(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; or
``(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.''.
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--
(1) by redesignating subsections (b) and (c) as
subsections (c) and (d), respectively; and
(2) by inserting after subsection (a) the
following:
``(b) Records and Reports of Private Funds.--
``(1) In general.--The Commission may require any
investment adviser registered under this title--
``(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'); and
``(B) to provide or make available to the
Council those reports or records or the
information contained therein.
``(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.
``(3) Required information.--The records and
reports required to be maintained by an investment
adviser and subject to inspection by the Commission
under this subsection shall include, for each private
fund advised by the investment adviser, a description
of--
``(A) the amount of assets under management
and use of leverage, including off-balance-
sheet leverage;
``(B) counterparty credit risk exposure;
``(C) trading and investment positions;
``(D) valuation policies and practices of
the fund;
``(E) types of assets held;
``(F) side arrangements or side letters,
whereby certain investors in a fund obtain more
favorable rights or entitlements than other
investors;
``(G) trading practices; and
``(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.
``(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.
``(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.
``(6) Examination of records.--
``(A) Periodic and special examinations.--
The Commission--
``(i) shall conduct periodic
inspections of the records of private
funds maintained by an investment
adviser registered under this title in
accordance with a schedule established
by the Commission; and
``(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.
``(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.
``(7) Information sharing.--
``(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.
``(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 for 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.''.
``(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--
``(A) to withhold information from
Congress, upon an agreement of confidentiality;
or
``(B) prevent the Commission from complying
with--
``(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; or
``(ii) an order of a court of the
United States in an action brought by
the United States or the Commission.
``(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).
``(10) Public information exception.--
``(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.
``(B) Proprietary information.--For
purposes of this paragraph, proprietary
information includes sensitive, non-public
information regarding--
``(i) the investment or trading
strategies of the investment adviser;
``(ii) analytical or research
methodologies;
``(iii) trading data;
``(iv) computer hardware or
software containing intellectual
property; and
``(v) any additional information
that the Commission determines to be
proprietary.
``(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.''.
SEC. 405. DISCLOSURE PROVISION AMENDMENT.
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''.
SEC. 406. CLARIFICATION OF RULEMAKING AUTHORITY.
Section 211 of the Investment Advisers Act of 1940 (15
U.S.C. 80b-11) is amended--
(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''; and
(2) by adding at the end the following:
``(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.).''.
SEC. 407. EXEMPTION OF AND REPORTING BY 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:
``(l) Exemption of Venture Capital Fund Advisers.--No
investment adviser that acts as an investment adviser solely to
1 or more venture capital funds 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 1 year 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. The Commission shall require such advisers to
maintain such records and provide to the Commission such annual
or other reports as the Commission determines necessary or
appropriate in the public interest or for the protection of
investors.''.
SEC. 408. EXEMPTION OF AND REPORTING BY CERTAIN PRIVATE 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:
``(m) Exemption of and Reporting by Certain Private Fund
Advisers.--
``(1) In general.--The Commission shall provide an
exemption from the registration requirements under this
section to any investment adviser of private funds, if
each of such investment adviser acts solely as an
adviser to private funds and has assets under
management in the United States of less than
$150,000,000.
``(2) Reporting.--The Commission shall require
investment advisers exempted by reason of this
subsection to maintain such records and provide to the
Commission such annual or other reports as the
Commission determines necessary or appropriate in the
public interest or for the protection of investors.
``(n) Registration and Examination of Mid-Sized Private
Fund Advisers.--In prescribing regulations to carry out the
requirements of this section with respect to investment
advisers acting as investment advisers to mid-sized private
funds, the Commission shall take into account the size,
governance, and investment strategy of such funds to determine
whether they pose systemic risk, and shall provide for
registration and examination procedures with respect to the
investment advisers of such funds which reflect the level of
systemic risk posed by such funds.''.
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)''.
(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--
(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, and the grandfathering
provisions in paragraph (3);
(2) recognizes the range of organizational,
management, and employment structures and arrangements
employed by family offices; and
(3) does not exclude any person who was not
registered or required to be registered under the
Investment Advisers Act of 1940 on January 1, 2010 from
the definition of the term ``family office'', solely
because such person provides investment advice to, and
was engaged before January 1, 2010 in providing
investment advice to--
(A) natural persons who, at the time of
their applicable investment, are officers,
directors, or employees of the family office
who--
(i) have invested with the family
office before January 1, 2010; and
(ii) are accredited investors, as
defined in Regulation D of the
Commission (or any successor thereto)
under the Securities Act of 1933, or,
as the Commission may prescribe by
rule, the successors-in-interest
thereto;
(B) any company owned exclusively and
controlled by members of the family of the
family office, or as the Commission may
prescribe by rule;
(C) any investment adviser registered under
the Investment Adviser Act of 1940 that
provides investment advice to the family office
and who identifies investment opportunities to
the family office, and invests in such
transactions on substantially the same terms as
the family office invests, but does not invest
in other funds advised by the family office,
and whose assets as to which the family office
directly or indirectly provides investment
advice represent, in the aggregate, not more
than 5 percent of the value of the total assets
as to which the family office provides
investment advice.
(c) Antifraud Authority.--A family office that would not be
a family office, but for subsection (b)(3), shall be deemed to
be an investment adviser for the purposes of paragraphs (1),
(2) and (4) of section 206 of the Investment Advisers Act of
1940.
SEC. 410. STATE AND FEDERAL RESPONSIBILITIES; ASSET THRESHOLD FOR
FEDERAL REGISTRATION OF INVESTMENT ADVISERS.
Section 203A(a) of the of the Investment Advisers Act of
1940 (15 U.S.C. 80b-3a(a)) is amended--
(1) by redesignating paragraph (2) as paragraph
(3); and
(2) by inserting after paragraph (1) the following:
``(2) Treatment of mid-sized investment advisers.--
``(A) In general.--No investment adviser
described in subparagraph (B) shall register
under section 203, unless the investment
adviser is an adviser to an investment company
registered under the Investment Company Act of
1940, or a company which has elected to be a
business development company pursuant to
section 54 of the Investment Company Act of
1940, and has not withdrawn the election,
except that, if by effect of this paragraph an
investment adviser would be required to
register with 15 or more States, then the
adviser may register under section 203.
``(B) Covered persons.--An investment
adviser described in this subparagraph is an
investment adviser that--
``(i) is required to be registered
as an investment adviser with the
securities commissioner (or any agency
or office performing like functions) of
the State in which it maintains its
principal office and place of business
and, if registered, would be subject to
examination as an investment adviser by
any such commissioner, agency, or
office; and
``(ii) has assets under management
between--
``(I) the amount specified
under subparagraph (A) of
paragraph (1), as such amount
may have been adjusted by the
Commission pursuant to that
subparagraph; and
``(II) $100,000,000, or
such higher amount as the
Commission may, by rule, deem
appropriate in accordance with
the purposes of this title.''.
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:
``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.''.
SEC. 412. COMPTROLLER GENERAL STUDY ON CUSTODY RULE COSTS.
The Comptroller General of the United States shall--
(1) conduct a study of--
(A) the compliance costs associated with
the current Securities and Exchange Commission
rules 204-2 (17 C.F.R. Parts 275.204-2) and
rule 206(4)-2 (17 C.F.R. 275.206(4)-2) under
the Investment Advisers Act of 1940 regarding
custody of funds or securities of clients by
investment advisers; and
(B) the additional costs if subsection
(b)(6) of rule 206(4)-2 (17 C.F.R. 275.206(4)-
2(b)(6)) relating to operational independence
were eliminated; and
(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 3 years after the date of enactment of this Act.
SEC. 413. ADJUSTING THE ACCREDITED INVESTOR STANDARD.
(a) In General.--The Commission shall adjust any net worth
standard for an accredited investor, as set forth in the rules
of the Commission under the Securities Act of 1933, so that the
individual net worth of any natural person, or joint net worth
with the spouse of that person, at the time of purchase, is
more than $1,000,000 (as such amount is adjusted periodically
by rule of the Commission), excluding the value of the primary
residence of such natural person, except that during the 4-year
period that begins on the date of enactment of this Act, any
net worth standard shall be $1,000,000, excluding the value of
the primary residence of such natural person.
(b) Review and Adjustment.--
(1) Initial review and adjustment.--
(A) Initial review.--The Commission may
undertake a review of the definition of the
term ``accredited investor'', as such term
applies to natural persons, to determine
whether the requirements of the definition,
excluding the requirement relating to the net
worth standard described in subsection (a),
should be adjusted or modified for the
protection of investors, in the public
interest, and in light of the economy.
(B) Adjustment or modification.--Upon
completion of a review under subparagraph (A),
the Commission may, by notice and comment
rulemaking, make such adjustments to the
definition of the term ``accredited investor'',
excluding adjusting or modifying the
requirement relating to the net worth standard
described in subsection (a), as such term
applies to natural persons, as the Commission
may deem appropriate for the protection of
investors, in the public interest, and in light
of the economy.
(2) Subsequent reviews and adjustment.--
(A) Subsequent reviews.--Not earlier than 4
years after the date of enactment of this Act,
and not less frequently than once every 4 years
thereafter, the Commission shall undertake a
review of the definition, in its entirety, of
the term ``accredited investor'', as defined in
section 230.215 of title 17, Code of Federal
Regulations, or any successor thereto, as such
term applies to natural persons, to determine
whether the requirements of the definition
should be adjusted or modified for the
protection of investors, in the public
interest, and in light of the economy.
(B) Adjustment or modification.--Upon
completion of a review under subparagraph (A),
the Commission may, by notice and comment
rulemaking, make such adjustments to the
definition of the term ``accredited investor'',
as defined in section 230.215 of title 17, Code
of Federal Regulations, or any successor
thereto, as such term applies to natural
persons, as the Commission may deem appropriate
for the protection of investors, in the public
interest, and in light of the economy.
SEC. 414. RULE OF CONSTRUCTION RELATING TO THE COMMODITIES EXCHANGE
ACT.
The Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et
seq.) is further amended by adding at the end the following new
section:
``SEC. 224. RULE OF CONSTRUCTION RELATING TO THE COMMODITIES EXCHANGE
ACT.
``Nothing in this title shall relieve any person of any
obligation or duty, or affect the availability of any right or
remedy available to the Commodity Futures Trading Commission or
any private party, arising under the Commodity Exchange Act (7
U.S.C. 1 et seq.) governing commodity pools, commodity pool
operators, or commodity trading advisors.''.
SEC. 415. 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 3 years after the date of
enactment of this Act.
SEC. 416. GAO STUDY ON SELF-REGULATORY ORGANIZATION FOR PRIVATE FUNDS.
The Comptroller General of the United States shall--
(1) conduct a study of the feasibility of forming a
self-regulatory organization to oversee private funds;
and
(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.
SEC. 417. COMMISSION STUDY AND REPORT ON SHORT SELLING.
(a) Studies.--The Division of Risk, Strategy, and Financial
Innovation of the Commission shall conduct--
(1) 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--
(A) the failure to deliver shares sold
short; or
(B) delivery of shares on the fourth day
following the short sale transaction; and
(2) a study of--
(A) the feasibility, benefits, and costs of
requiring reporting publicly, in real time
short sale positions of publicly listed
securities, or, in the alternative, reporting
such short positions in real time only to the
Commission and the Financial Industry
Regulatory Authority; and
(B) the feasibility, benefits, and costs of
conducting a voluntary pilot program in which
public companies will agree to have all trades
of their shares marked ``short'', ``market
maker short'', ``buy'', ``buy-to-cover'', or
``long'', and reported in real time through the
Consolidated Tape.
(b) Reports.--The Commission 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--
(1) on the results of the study required under
subsection (a)(1), including recommendations for market
improvements, not later than 2 years after the date of
enactment of this Act; and
(2) on the results of the study required under
subsection (a)(2), not later than 1 year after the date
of enactment of this Act.
SEC. 418. QUALIFIED CLIENT STANDARD.
Section 205(e) of the Investment Advisers Act of 1940 (15
U.S.C. 80b-5(e)) is amended by adding at the end the following:
``With respect to any factor used in any rule or regulation by
the Commission in making a determination under this subsection,
if the Commission uses a dollar amount test in connection with
such factor, such as a net asset threshold, the Commission
shall, by order, not later than 1 year after the date of
enactment of the Private Fund Investment Advisers Registration
Act of 2010, and every 5 years thereafter, adjust for the
effects of inflation on such test. Any such adjustment that is
not a multiple of $100,000 shall be rounded to the nearest
multiple of $100,000.''.
SEC. 419. 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.
TITLE V--INSURANCE
Subtitle A--Federal Insurance Office
SEC. 501. SHORT TITLE.
This subtitle may be cited as the ``Federal Insurance
Office Act of 2010''.
SEC. 502. FEDERAL INSURANCE OFFICE.
(a) Establishment of Office.--Subchapter I of chapter 3 of
subtitle I of title 31, United States Code, is amended--
(1) by redesignating section 312 as section 315;
(2) by redesignating section 313 as section 312;
and
(3) by inserting after section 312 (as so
redesignated) the following new sections:
``SEC. 313. FEDERAL INSURANCE OFFICE.
``(a) Establishment.--There is established within the
Department of the Treasury the Federal Insurance Office.
``(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.
``(c) Functions.--
``(1) Authority pursuant to direction of
secretary.--The Office, pursuant to the direction of
the Secretary, shall have the authority--
``(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;
``(B) to monitor the extent to which
traditionally underserved communities and
consumers, minorities (as such term is defined
in section 1204(c) of the Financial
Institutions Reform, Recovery, and Enforcement
Act of 1989 (12 U.S.C. 1811 note)), and low-
and moderate-income persons have access to
affordable insurance products regarding all
lines of insurance, except health insurance;
``(C) 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
Dodd-Frank Wall Street Reform and Consumer
Protection Act;
``(D) 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);
``(E) 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 covered
agreements (as such term is defined in
subsection (r));
``(F) to determine, in accordance with
subsection (f), whether State insurance
measures are preempted by covered agreements;
``(G) to consult with the States (including
State insurance regulators) regarding insurance
matters of national importance and prudential
insurance matters of international importance;
and
``(H) to perform such other related duties
and authorities as may be assigned to the
Office by the Secretary.
``(2) Advisory functions.--The Office shall advise
the Secretary on major domestic and prudential
international insurance policy issues.
``(3) Advisory capacity on council.--The Director
shall serve in an advisory capacity on the Financial
Stability Oversight Council established under the
Financial Stability Act of 2010.
``(d) Scope.--The authority of the Office shall extend to
all lines of insurance except--
``(1) health insurance, as determined by the
Secretary in coordination with the Secretary of Health
and Human Services based on section 2791 of the Public
Health Service Act (42 U.S.C. 300gg-91);
``(2) long-term care insurance, except long-term
care insurance that is included with life or annuity
insurance components, as determined by the Secretary in
coordination with the Secretary of Health and Human
Services, and in the case of long-term care insurance
that is included with such components, the Secretary
shall coordinate with the Secretary of Health and Human
Services in performing the functions of the Office; and
``(3) crop insurance, as established by the Federal
Crop Insurance Act (7 U.S.C. 1501 et seq.).
``(e) Gathering of Information.--
``(1) In general.--In carrying out the functions
required under subsection (c), the Office may--
``(A) receive and collect data and
information on and from the insurance industry
and insurers;
``(B) enter into information-sharing
agreements;
``(C) analyze and disseminate data and
information; and
``(D) issue reports regarding all lines of
insurance except health insurance.
``(2) Collection of information from insurers and
affiliates.--
``(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).
``(B) Rule of construction.--
Notwithstanding any other provision of this
section, for purposes of subparagraph (A), the
term `insurer' means any entity that writes
insurance or reinsures risks and issues
contracts or policies in 1 or more States.
``(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.
``(4) Advance coordination.--Before collecting any
data or information under paragraph (2) from an
insurer, or affiliate of an insurer, the Office shall
coordinate with each relevant Federal agency and State
insurance regulator (or other relevant Federal or State
regulatory agency, if any, in the case of an affiliate
of an insurer) and any publicly available sources to
determine if the information to be collected is
available from, and may be obtained in a timely manner
by, such Federal agency or State insurance regulator,
individually or collectively, other regulatory agency,
or publicly available sources. If the Director
determines that such data or information is available,
and may be obtained in a timely manner, from such an
agency, regulator, regulatory agency, or source, the
Director shall obtain the data or information from such
agency, regulator, regulatory agency, or source. If the
Director determines that such data or information is
not so available, the Director may collect such data or
information from an insurer (or affiliate) only if the
Director complies with the requirements of subchapter I
of chapter 35 of title 44, United States Code (relating
to Federal information policy; commonly known as the
Paperwork Reduction Act), in collecting such data or
information. Notwithstanding any other provision of
law, each such relevant Federal agency and State
insurance regulator or other Federal or State
regulatory agency is authorized to provide to the
Office such data or information.
``(5) Confidentiality.--
``(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.
``(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.
``(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--
``(i) shall comply with applicable
Federal law; and
``(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.
``(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.
``(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.
``(f) Preemption of State Insurance Measures.--
``(1) Standard.--A State insurance measure shall be
preempted pursuant to this section or section 314 if,
and only to the extent that the Director determines, in
accordance with this subsection, that the measure--
``(A) results in less favorable treatment
of a non-United States insurer domiciled in a
foreign jurisdiction that is subject to a
covered agreement than a United States insurer
domiciled, licensed, or otherwise admitted in
that State; and
``(B) is inconsistent with a covered
agreement.
``(2) Determination.--
``(A) Notice of potential inconsistency.--
Before making any determination under paragraph
(1), the Director shall--
``(i) notify and consult with the
appropriate State regarding any
potential inconsistency or preemption;
``(ii) notify and consult with the
United States Trade Representative
regarding any potential inconsistency
or preemption;
``(iii) 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
covered agreement;
``(iv) provide interested parties a
reasonable opportunity to submit
written comments to the Office; and
``(v) consider any comments
received.
``(B) Scope of review.--For purposes of
this subsection, any determination of the
Director regarding State insurance measures,
and any preemption under paragraph (1) as a
result of such determination, shall be limited
to the subject matter contained within the
covered agreement involved and shall achieve a
level of protection for insurance or
reinsurance consumers that is substantially
equivalent to the level of protection achieved
under State insurance or reinsurance
regulation.
``(C) Notice of determination of
inconsistency.--Upon making any determination
under paragraph (1), the Director shall--
``(i) notify the appropriate State
of the determination and the extent of
the inconsistency;
``(ii) establish a reasonable
period of time, which shall not be less
than 30 days, before the determination
shall become effective; and
``(iii) notify the Committees on
Financial Services and Ways and Means
of the House of Representatives and the
Committees on Banking, Housing, and
Urban Affairs and Finance of the
Senate.
``(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--
``(A) cause to be published a notice in the
Federal Register that the preemption has become
effective, as well as the effective date; and
``(B) notify the appropriate State.
``(4) Limitation.--No State may enforce a State
insurance measure to the extent that such measure has
been preempted under this subsection.
``(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), except that in any action
for judicial review of a determination of inconsistency, the
court shall determine the matter de novo.
``(h) Regulations, Policies, and Procedures.--The Secretary
may issue orders, regulations, policies, and procedures to
implement this section.
``(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.
``(j) Savings Provisions.--Nothing in this section shall--
``(1) preempt--
``(A) any State insurance measure that
governs any insurer's rates, premiums,
underwriting, or sales practices;
``(B) any State coverage requirements for
insurance;
``(C) the application of the antitrust laws
of any State to the business of insurance; or
``(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 States insurer than a United States
insurer;
``(2) be construed to alter, amend, or limit any
provision of the Consumer Financial Protection Agency
Act of 2010; or
``(3) affect the preemption of any States insurance
measure otherwise inconsistent with and preempted by
Federal law.
``(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.
``(l) Retention of Authority of Federal Financial
Regulatory Agencies.--Nothing in this section or section 314
shall be construed to limit the authority of any Federal
financial regulatory agency, including the authority to develop
and coordinate policy, negotiate, and enter into agreements
with foreign governments, authorities, regulators, and
multinational regulatory committees and to preempt State
measures to affect uniformity with international regulatory
agreements.
``(m) Retention of Authority of United States Trade
Representative.--Nothing in this section or section 314 shall
be construed to affect the authority of the Office of the
United States Trade Representative pursuant to section 141 of
the Trade Act of 1974 (19 U.S.C. 2171) or any other provision
of law, including authority over the development and
coordination of United States international trade policy and
the administration of the United States trade agreements
program.
``(n) Annual Reports to Congress.--
``(1) Section 313(f) reports.--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 Committees on Financial Services
and Ways and Means of the House of Representatives and
the Committees on Banking, Housing, and Urban Affairs
and Finance of the Senate on any actions taken by the
Office pursuant to subsection (f) (regarding preemption
of inconsistent State insurance measures).
``(2) Insurance industry.--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 Financial Services of the House of
Representatives and the Committee on Banking, Housing,
and Urban Affairs of the Senate on the insurance
industry and any other information as deemed relevant
by the Director or requested by such Committees.
``(o) Reports on U.S. and Global Reinsurance Market.--The
Director shall submit to the Committee on Financial Services of
the House of Representatives and the Committee on Banking,
Housing, and Urban Affairs of the Senate--
``(1) a report received not later than September
30, 2012, describing the breadth and scope of the
global reinsurance market and the critical role such
market plays in supporting insurance in the United
States; and
``(2) a report received not later than January 1,
2013, and updated not later than January 1, 2015,
describing the impact of part II of the Nonadmitted and
Reinsurance Reform Act of 2010 on the ability of State
regulators to access reinsurance information for
regulated companies in their jurisdictions.
``(p) Study and Report on Regulation of Insurance.--
``(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.
``(2) Considerations.--The study and report
required under paragraph (1) shall be based on and
guided by the following considerations:
``(A) Systemic risk regulation with respect
to insurance.
``(B) Capital standards and the
relationship between capital allocation and
liabilities, including standards relating to
liquidity and duration risk.
``(C) Consumer protection for insurance
products and practices, including gaps in State
regulation.
``(D) The degree of national uniformity of
State insurance regulation.
``(E) The regulation of insurance companies
and affiliates on a consolidated basis.
``(F) International coordination of
insurance regulation.
``(3) Additional factors.--The study and report
required under paragraph (1) shall also examine the
following factors:
``(A) The costs and benefits of potential
Federal regulation of insurance across various
lines of insurance (except health insurance).
``(B) The feasibility of regulating only
certain lines of insurance at the Federal
level, while leaving other lines8 of insurance
to be regulated at the State level.
``(C) The ability of any potential Federal
regulation or Federal regulators to eliminate
or minimize regulatory arbitrage.
``(D) The impact that developments in the
regulation of insurance in foreign
jurisdictions might have on the potential
Federal regulation of insurance.
``(E) The ability of any potential Federal
regulation or Federal regulator to provide
robust consumer protection for policyholders.
``(F) The potential consequences of
subjecting insurance companies to a Federal
resolution authority, including the effects of
any Federal resolution authority--
``(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;
``(ii) on policyholder protection,
including the loss of the priority
status of policyholder claims over
other unsecured general creditor
claims;
``(iii) in the case of life
insurance companies, on the loss of the
special status of separate account
assets and separate account
liabilities; and
``(iv) on the international
competitiveness of insurance companies.
``(G) Such other factors as the Director
determines necessary or appropriate, consistent
with the principles set forth in paragraph (2).
``(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.
``(5) Consultation.--With respect to the study and
report required under paragraph (1), the Director shall
consult with the State insurance regulators, consumer
organizations, representatives of the insurance
industry and policyholders, and other organizations and
experts, as appropriate.
``(q) 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 and the Secretary shall dedicate specific
personnel to the Office.
``(r) Definitions.--In this section and section 314, the
following definitions shall apply:
``(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.
``(2) Covered agreement.--The term `covered
agreement' means a written bilateral or multilateral
agreement regarding prudential measures with respect to
the business of insurance or reinsurance that--
``(A) is entered into between the United
States and one or more foreign governments,
authorities, or regulatory entities; and
``(B) relates to the recognition of
prudential measures with respect to the
business of insurance or reinsurance that
achieves a level of protection for insurance or
reinsurance consumers that is substantially
equivalent to the level of protection achieved
under State insurance or reinsurance
regulation.
``(3) Insurer.--The term `insurer' means any person
engaged in the business of insurance, including
reinsurance.
``(4) Federal financial regulatory agency.--The
term `Federal financial regulatory agency' means the
Department of the Treasury, the Board of Governors of
the Federal Reserve System, the Office of the
Comptroller of the Currency, the Office of Thrift
Supervision, the Securities and Exchange Commission,
the Commodity Futures Trading Commission, the Federal
Deposit Insurance Corporation, the Federal Housing
Finance Agency, or the National Credit Union
Administration.
``(5) 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.
``(6) Office.--The term `Office' means the Federal
Insurance Office established by this section.
``(7) 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.
``(8) State insurance regulator.--The term `State
insurance regulator' means any State regulatory
authority responsible for the supervision of insurers.
``(9) Substantially equivalent to the level of
protection achieved.--The term `substantially
equivalent to the level of protection achieved' means
the prudential measures of a foreign government,
authority, or regulatory entity achieve a similar
outcome in consumer protection as the outcome achieved
under State insurance or reinsurance regulation.
``(10) United states insurer.--The term `United
States insurer' means--
``(A) an insurer that is organized under
the laws of a State; or
``(B) a United States branch of a non-
United States insurer.
``(s) Authorization of Appropriations.--There are
authorized to be appropriated for the Office for each fiscal
year such sums as may be necessary.
``SEC. 314. COVERED AGREEMENTS.
``(a) Authority.--The Secretary and the United States Trade
Representative are authorized, jointly, to negotiate and enter
into covered agreements on behalf of the United States.
``(b) Requirements for Consultation With Congress.--
``(1) In general.--Before initiating negotiations
to enter into a covered agreement under subsection (a),
during such negotiations, and before entering into any
such agreement, the Secretary and the United States
Trade Representative shall jointly consult with the
Committee on Financial Services and the Committee on
Ways and Means of the House of Representatives and the
Committee on Banking, Housing, and Urban Affairs and
the Committee on Finance of the Senate.
``(2) Scope.--The consultation described in
paragraph (1) shall include consultation with respect
to--
``(A) the nature of the agreement;
``(B) how and to what extent the agreement
will achieve the applicable purposes, policies,
priorities, and objectives of section 313 and
this section; and
``(C) the implementation of the agreement,
including the general effect of the agreement
on existing State laws.
``(c) Submission and Layover Provisions.--A covered
agreement under subsection (a) may enter into force with
respect to the United States only if--
``(1) the Secretary and the United States Trade
Representative jointly submit to the congressional
committees specified in subsection (b)(1), on a day on
which both Houses of Congress are in session, a copy of
the final legal text of the agreement; and
``(2) a period of 90 calendar days beginning on the
date on which the copy of the final legal text of the
agreement is submitted to the congressional committees
under paragraph (1) has expired.''.
(b) Duties of Secretary.--Section 321(a) of title 31,
United States Code, is amended--
(1) in paragraph (7), by striking ``; and'' and
inserting a semicolon;
(2) in paragraph (8)(C), by striking the period at
the end and inserting ``; and''; and
(3) by adding at the end the following new
paragraph:
``(9) advise the President on major domestic and
international prudential policy issues in connection
with all lines of insurance except health insurance.''.
(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:
``Sec. 312. Terrorism and financial intelligence.
``Sec. 313. Federal Insurance Office.
``Sec. 314. Covered agreements.
``Sec. 315. Continuing in office.''.
Subtitle B--State-Based Insurance Reform
SEC. 511. SHORT TITLE.
This subtitle may be cited as the ``Nonadmitted and
Reinsurance Reform Act of 2010''.
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.
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.
(b) Allocation of Nonadmitted Premium Taxes.--
(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).
(2) Effective date.--Except as expressly otherwise
provided in such compact or other procedures, any such
compact or other procedures--
(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; and
(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.
(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 the 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.
(4) Nationwide system.--The Congress intends that
each State adopt nationwide uniform requirements,
forms, and procedures, such as an interstate compact,
that provide for the reporting, payment, collection,
and allocation of premium taxes for nonadmitted
insurance consistent with this section.
(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.
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.
(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.
(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.
(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.
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.
SEC. 524. UNIFORM STANDARDS FOR SURPLUS LINES ELIGIBILITY.
A State may not--
(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; or
(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.
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--
(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; and
(2) the exempt commercial purchaser has
subsequently requested in writing the broker to procure
or place such insurance from a nonadmitted insurer.
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.
(b) Contents.--The study shall determine and analyze--
(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;
(2) the extent to which insurance coverage
typically provided by the admitted insurance market has
shifted to the nonadmitted insurance market;
(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;
(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; and
(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.
(c) Consultation With NAIC.--In conducting the study under
this section, the Comptroller General shall consult with the
NAIC.
(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.
SEC. 527. DEFINITIONS.
For purposes of this part, the following definitions shall
apply:
(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.
(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.
(3) Affiliated group.--The term ``affiliated
group'' means any group of entities that are all
affiliated.
(4) Control.--An entity has ``control'' over
another entity if--
(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; or
(B) the entity controls in any manner the
election of a majority of the directors or
trustees of the other entity.
(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:
(A) The person employs or retains a
qualified risk manager to negotiate insurance
coverage.
(B) The person has paid aggregate
nationwide commercial property and casualty
insurance premiums in excess of $100,000 in the
immediately preceding 12 months.
(C)(i) The person meets at least 1 of the
following criteria:
(I) The person possesses a net
worth in excess of $20,000,000, as such
amount is adjusted pursuant to clause
(ii).
(II) The person generates annual
revenues in excess of $50,000,000, as
such amount is adjusted pursuant to
clause (ii).
(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.
(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).
(V) The person is a municipality
with a population in excess of 50,000
persons.
(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.
(6) Home state.--
(A) In general.--Except as provided in
subparagraph (B), the term ``home State''
means, with respect to an insured--
(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; or
(ii) if 100 percent of the insured
risk is located out of the State
referred to in clause (i), the State to
which the greatest percentage of the
insured's taxable premium for that
insurance contract is allocated.
(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.
(7) Independently procured insurance.--The term
``independently procured insurance'' means insurance
procured directly by an insured from a nonadmitted
insurer.
(8) NAIC.--The term ``NAIC'' means the National
Association of Insurance Commissioners or any successor
entity.
(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.
(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.
(11) Nonadmitted insurer.--The term ``nonadmitted
insurer''--
(A) means, with respect to a State, an
insurer not licensed to engage in the business
of insurance in such State; but
(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)).
(12) 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.
(13) 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:
(A) The person is an employee of, or third-
party consultant retained by, the commercial
policyholder.
(B) The person provides skilled services in
loss prevention, loss reduction, or risk and
insurance coverage analysis, and purchase of
insurance.
(C) The person--
(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; and
(II)(aa) has 3 years of experience
in risk financing, claims
administration, loss prevention, risk
and insurance analysis, or purchasing
commercial lines of insurance; or
(bb) has--
(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;
(BB) a designation as an
Associate in Risk Management
(ARM) issued by the American
Institute for CPCU/Insurance
Institute of America;
(CC) a designation as
Certified Risk Manager (CRM)
issued by the National Alliance
for Insurance Education &
Research;
(DD) a designation as a
RIMS Fellow (RF) issued by the
Global Risk Management
Institute; or
(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;
(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; and
(II) has any 1 of the designations
specified in subitems (AA) through (EE)
of clause (i)(II)(bb);
(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; or
(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.
(14) Reinsurance.--The term ``reinsurance'' means
the assumption by an insurer of all or part of a risk
undertaken originally by another insurer.
(15) 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.
(16) State.--The term ``State'' includes any State
of the United States, the District of Columbia, the
Commonwealth of Puerto Rico, Guam, the Northern Mariana
Islands, the Virgin Islands, and American Samoa.
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.
(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--
(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;
(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;
(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; or
(4) otherwise apply the laws of the State to
reinsurance agreements of ceding insurers not domiciled
in that State.
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.
(b) Nondomiciliary States.--
(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.
(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.
SEC. 533. DEFINITIONS.
For purposes of this part, the following definitions shall
apply:
(1) Ceding insurer.--The term ``ceding insurer''
means an insurer that purchases reinsurance.
(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.
(3) NAIC.--The term ``NAIC'' means the National
Association of Insurance Commissioners or any successor
entity.
(4) Reinsurance.--The term ``reinsurance'' means
the assumption by an insurer of all or part of a risk
undertaken originally by another insurer.
(5) Reinsurer.--
(A) In general.--The term ``reinsurer''
means an insurer to the extent that the
insurer--
(i) is principally engaged in the
business of reinsurance;
(ii) does not conduct significant
amounts of direct insurance as a
percentage of its net premiums; and
(iii) is not engaged in an ongoing
basis in the business of soliciting
direct insurance.
(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.
(6) State.--The term ``State'' includes any State
of the United States, the District of Columbia, the
Commonwealth of Puerto Rico, Guam, the Northern Mariana
Islands, the Virgin Islands, and American Samoa.
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.
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.
TITLE VI--IMPROVEMENTS TO REGULATION OF BANK AND SAVINGS ASSOCIATION
HOLDING COMPANIES AND DEPOSITORY INSTITUTIONS
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''.
SEC. 602. DEFINITION.
For purposes of this title, a company is a ``commercial
firm'' if the annual gross revenues derived by the company and
all of its affiliates from activities that are financial in
nature (as defined in section 4(k) of the Bank Holding Company
Act of 1956 (12 U.S.C. 1843(k))) and, if applicable, from the
ownership or control of one or more insured depository
institutions, represent less than 15 percent of the
consolidated annual gross revenues of the company.
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.--
(1) Definitions.--In this subsection--
(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));
(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)); and
(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)).
(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 23, 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.
(3) Change in control.--
(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.
(B) Exceptions.--Subparagraph (A) shall not
apply to a change in control of an industrial
bank, credit card bank, or trust bank--
(i) that--
(I) is in danger of
default, as determined by the
appropriate Federal banking
agency;
(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; or
(III) results from an
acquisition of voting shares of
a publicly traded company that
controls an industrial bank,
credit card bank, or trust
bank, if, after the
acquisition, the acquiring
shareholder (or group of
shareholders acting in concert)
holds less than 25 percent of
any class of the voting shares
of the company; and
(ii) that has obtained all
regulatory approvals otherwise required
for such change of control under any
applicable Federal or State law,
including section 7(j) of the Federal
Deposit Insurance Act (12 U.S.C.
1817(j)).
(4) Sunset.--This subsection shall cease to have
effect 3 years after the date of enactment of this Act.
(b) Government Accountability Office Study of Exceptions
Under the Bank Holding Company Act of 1956.--
(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--
(A) section 2(a)(5)(E) of the Bank Holding
Company Act of 1956 (12 U.S.C. 1841(a)(5)(E));
(B) section 2(a)(5)(F) of the Bank Holding
Company Act of 1956 (12 U.S.C. 1841(a)(5)(F));
(C) section 2(c)(2)(D) of the Bank Holding
Company Act of 1956 (12 U.S.C. 1841(c)(2)(D));
(D) section 2(c)(2)(F) of the Bank Holding
Company Act of 1956 (12 U.S.C. 1841(c)(2)(F));
(E) section 2(c)(2)(H) of the Bank Holding
Company Act of 1956 (12 U.S.C. 1841(c)(2)(H));
and
(F) section 2(c)(2)(B) of the Bank Holding
Company Act of 1956 (12 U.S.C. 1841(c)(2)(B)).
(2) Content of study.--
(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--
(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);
(ii) generally describe the size
and geographic locations of the
institutions described in clause (i);
(iii) determine the extent to which
the institutions described in clause
(i) are held by holding companies that
are commercial firms;
(iv) determine whether the
institutions described in clause (i)
have any affiliates that are commercial
firms;
(v) identify the Federal banking
agency responsible for the supervision
of the institutions described in clause
(i) on and after the transfer date;
(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; and
(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.
(B) Savings associations.--With respect to
institutions described in paragraph (1)(F), the
study required under paragraph (1) shall--
(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; and
(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.
(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).
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--
(1) by striking subclause (A)(ii) and inserting the
following:
``(ii) compliance by the bank
holding company or subsidiary with--
``(I) this Act;
``(II) Federal laws that
the Board has specific
jurisdiction to enforce against
the company or subsidiary; and
``(III) other than in the
case of an insured depository
institution or functionally
regulated subsidiary, any other
applicable provision of Federal
law.'';
(2) by striking subparagraph (B) and inserting the
following:
``(B) Use of existing reports and other
supervisory information.--The Board shall, to
the fullest extent possible, use--
``(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;
``(ii) externally audited financial
statements of the bank holding company
or subsidiary;
``(iii) information otherwise
available from Federal or State
regulatory agencies; and
``(iv) information that is
otherwise required to be reported
publicly.''; and
(3) by adding at the end the following:
``(C) Availability.--Upon the request of
the Board, the bank holding company or a
subsidiary of the bank holding company shall
promptly provide to the Board any information
described in clauses (i) through (iii) of
subparagraph (B).''.
(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:
``(2) Examinations.--
``(A) In general.--Subject to subtitle B of
the Consumer Financial Protection Act of 2010,
the Board may make examinations of a bank
holding company and each subsidiary of a bank
holding company in order to--
``(i) inform the Board of--
``(I) the nature of the
operations and financial
condition of the bank holding
company and the subsidiary;
``(II) the financial,
operational, and other risks
within the bank holding company
system that may pose a threat
to--
``(aa) the safety
and soundness of the
bank holding company or
of any depository
institution subsidiary
of the bank holding
company; or
``(bb) the
stability of the
financial system of the
United States; and
``(III) the systems of the
bank holding company for
monitoring and controlling the
risks described in subclause
(II); and
``(ii) monitor the compliance of
the bank holding company and the
subsidiary with--
``(I) this Act;
``(II) Federal laws that
the Board has specific
jurisdiction to enforce against
the company or subsidiary; and
``(III) other than in the
case of an insured depository
institution or functionally
regulated subsidiary, any other
applicable provisions of
Federal law.
``(B) Use of reports to reduce
examinations.--For purposes of this paragraph,
the Board shall, to the fullest extent
possible, rely on--
``(i) examination reports made by
other Federal or State regulatory
agencies relating to a bank holding
company and any subsidiary of a bank
holding company; and
``(ii) the reports and other
information required under paragraph
(1).
``(C) Coordination with other regulators.--
The Board shall--
``(i) provide reasonable notice to,
and consult with, the appropriate
Federal banking agency, the Securities
and Exchange Commission, the Commodity
Futures Trading Commission, or State
regulatory agency, as appropriate, for
a subsidiary that is a depository
institution or a functionally regulated
subsidiary of a bank holding company
before commencing an examination of the
subsidiary under this section; and
``(ii) to the fullest extent
possible, avoid duplication of
examination activities, reporting
requirements, and requests for
information.''.
(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--
(1) in section 5(c)(5)(B) (12 U.S.C.
1844(c)(5)(B)), by striking clause (v) and inserting
the following:
``(v) an entity that is subject to
regulation by, or registration with,
the Commodity Futures Trading
Commission, with respect to activities
conducted as a futures commission
merchant, commodity trading adviser,
commodity pool, commodity pool
operator, swap execution facility, swap
data repository, swap dealer, major
swap participant, and activities that
are incidental to such commodities and
swaps activities.''; and
(2) by striking section 10A (12 U.S.C. 1848a).
(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:
``(7) Financial stability.--In every case, the
Board 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.''.
(e) Acquisitions of Nonbanks.--
(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''.
(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:
``(B) Approval not required for certain
financial activities.--
``(i) In general.--Except as
provided in subsection (j) with regard
to the acquisition of a savings
association and 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 Board.
``(ii) Exception.--A financial
holding company may not acquire a
company, without the prior approval of
the Board, in a transaction in which
the total consolidated assets to be
acquired by the financial holding
company exceed $10,000,000,000.
``(iii) Hart-scott-rodino filing
requirement.--Solely for purposes of
section 7A(c)(8) of the Clayton Act (15
U.S.C. 18a(c)(8)), the transactions
subject to the requirements of this
paragraph shall be treated as if the
approval of the Board is not
required.''.
(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''.
(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--
(1) by striking ``Each savings'' and inserting the
following:
``(A) In general.--Each savings''; and
(2) by adding at the end the following:
``(B) Use of existing reports and other
supervisory information.--The Board shall, to
the fullest extent possible, use--
``(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;
``(ii) externally audited financial
statements of the savings and loan
holding company or subsidiary;
``(iii) information that is
otherwise available from Federal or
State regulatory agencies; and
``(iv) information that is
otherwise required to be reported
publicly.
``(C) Availability.--Upon the request of
the Board, a savings and loan holding company
or a subsidiary of a savings and loan holding
company shall promptly provide to the Board any
information described in clauses (i) through
(iii) of subparagraph (B).''.
(h) Examination of Savings and Loan Holding Companies.--
(1) Definitions.--Section 2 of the Home Owners'
Loan Act (12 U.S.C. 1462) is amended by adding at the
end the following:
``(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)).
``(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)).''.
(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:
``(4) Examinations.--
``(A) In general.--Subject to subtitle B of
the Consumer Financial Protection Act of 2010,
the Board may make examinations of a savings
and loan holding company and each subsidiary of
a savings and loan holding company system, in
order to--
``(i) inform the Board of--
``(I) the nature of the
operations and financial
condition of the savings and
loan holding company and the
subsidiary;
``(II) the financial,
operational, and other risks
within the savings and loan
holding company system that may
pose a threat to--
``(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; or
``(bb) the
stability of the
financial system of the
United States; and
``(III) the systems of the
savings and loan holding
company for monitoring and
controlling the risks described
in subclause (II); and
``(ii) monitor the compliance of
the savings and loan holding company
and the subsidiary with--
``(I) this Act;
``(II) Federal laws that
the Board has specific
jurisdiction to enforce against
the company or subsidiary; and
``(III) other than in the
case of an insured depository
institution or functionally
regulated subsidiary, any other
applicable provisions of
Federal law.
``(B) Use of reports to reduce
examinations.--For purposes of this subsection,
the Board shall, to the fullest extent
possible, rely on--
``(i) the examination reports made
by other Federal or State regulatory
agencies relating to a savings and loan
holding company and any subsidiary; and
``(ii) the reports and other
information required under paragraph
(2).
``(C) Coordination with other regulators.--
The Board shall--
``(i) provide reasonable notice to,
and consult with, the appropriate
Federal banking agency, the Securities
and Exchange Commission, the Commodity
Futures Trading Commission, or State
regulatory agency, as appropriate, for
a subsidiary that is a depository
institution or a functionally regulated
subsidiary of a savings and loan
holding company before commencing an
examination of the subsidiary under
this section; and
``(ii) to the fullest extent
possible, avoid duplication of
examination activities, reporting
requirements, and requests for
information.''.
(i) Definition of the Term ``Savings and Loan Holding
Company''.--Section 10(a)(1)(D)(ii) of the Home Owners' Loan
Act (12 U.S.C. 1467a(a)(1)(D)(ii)) is amended to read as
follows:
``(ii) Exclusion.--The term
`savings and loan holding company' does
not include--
``(I) a bank holding
company that is registered
under, and subject to, the Bank
Holding Company Act of 1956 (12
U.S.C. 1841 et seq.), or to any
company directly or indirectly
controlled by such company
(other than a savings
association);
``(II) a company that
controls a savings association
that functions solely in a
trust or fiduciary capacity as
described in section 2(c)(2)(D)
of the Bank Holding Company Act
of 1956 (12 U.S.C.
1841(c)(2)(D)); or
``(III) a company described
in subsection (c)(9)(C) solely
by virtue of such company's
control of an intermediate
holding company established
pursuant to section 10A.''.
(j) Effective Date.--The amendments made by this section
shall take effect on the transfer date.
SEC. 605. ASSURING CONSISTENT OVERSIGHT OF PERMISSIBLE ACTIVITIES OF
DEPOSITORY INSTITUTION SUBSIDIARIES OF HOLDING
COMPANIES.
(a) In General.--The Federal Deposit Insurance Act (12
U.S.C. 1811 et seq.) is amended by inserting after section 25
the following new section:
``SEC. 26. ASSURING CONSISTENT OVERSIGHT OF SUBSIDIARIES OF HOLDING
COMPANIES.
``(a) Definitions.--For purposes of this section:
``(1) Board.--The term `Board' means the Board of
Governors of the Federal Reserve System.
``(2) Functionally regulated subsidiary.--The term
`functionally regulated subsidiary' has the same
meaning as in section 5(c)(5) of the Bank Holding
Company Act.
``(3) Lead insured depository institution.--The
term `lead insured depository institution' has the same
meaning as in section 2(o)(8) of the Bank Holding
Company Act.
``(b) Examination Requirements.--Subject to subtitle B of
the Consumer Financial Protection Act of 2010, the Board shall
examine the activities of a nondepository institution
subsidiary (other than a functionally regulated subsidiary or a
subsidiary of a depository institution) of a depository
institution holding company that are permissible for the
insured depository institution subsidiaries of the depository
institution holding company in the same manner, subject to the
same standards, and with the same frequency as would be
required if such activities were conducted in the lead insured
depository institution of the depository institution holding
company.
``(c) State Coordination.--
``(1) Consultation and coordination.--If a
nondepository institution subsidiary is supervised by a
State bank supervisor or other State regulatory
authority, the Board, in conducting the examinations
required in subsection (b), shall consult and
coordinate with such State regulator.
``(2) Alternating examinations permitted.--The
examinations required under subsection (b) may be
conducted in joint or alternating manner with a State
regulator, if the Board determines that an examination
of a nondepository institution subsidiary conducted by
the State carries out the purposes of this section.
``(d) Appropriate Federal Banking Agency Backup Examination
Authority.--
``(1) In general.--In the event that the Board does
not conduct examinations required under subsection (b)
in the same manner, subject to the same standards, and
with the same frequency as would be required if such
activities were conducted by the lead insured
depository institution subsidiary of the depository
institution holding company, the appropriate Federal
banking agency for the lead insured depository
institution may recommend in writing (which shall
include a written explanation of the concerns giving
rise to the recommendation) that the Board perform the
examination required under subsection (b).
``(2) Examination by an appropriate federal banking
agency.--If the Board does not, before the end of the
60-day period beginning on the date on which the Board
receives a recommendation under paragraph (1), begin an
examination as required under subsection (b) or provide
a written explanation or plan to the appropriate
Federal banking agency making such recommendation
responding to the concerns raised by the appropriate
Federal banking agency for the lead insured depository
institution, the appropriate Federal banking agency for
the lead insured depository institution may, subject to
the Consumer Financial Protection Act of 2010, examine
the activities that are permissible for a depository
institution subsidiary conducted by such nondepository
institution subsidiary (other than a functionally
regulated subsidiary or a subsidiary of a depository
institution) of the depository institution holding
company as if the nondepository institution subsidiary
were an insured depository institution for which the
appropriate Federal banking agency of the lead insured
depository institution was the appropriate Federal
banking agency, to determine whether the activities--
``(A) pose a material threat to the safety
and soundness of any insured depository
institution subsidiary of the depository
institution holding company;
``(B) are conducted in accordance with
applicable Federal law; and
``(C) are subject to appropriate systems
for monitoring and controlling the financial,
operating, and other material risks of the
activities that may pose a material threat to
the safety and soundness of the insured
depository institution subsidiaries of the
holding company.
``(3) Agency coordination with the board.--An
appropriate Federal banking agency that conducts an
examination pursuant to paragraph (2) shall coordinate
examination of the activities of nondepository
institution subsidiaries described in subsection (b)
with the Board in a manner that--
``(A) avoids duplication;
``(B) shares information relevant to the
supervision of the depository institution
holding company;
``(C) achieves the objectives of subsection
(b); and
``(D) ensures that the depository
institution holding company and the
subsidiaries of the depository institution
holding company are not subject to conflicting
supervisory demands by such agency and the
Board.
``(4) Fee permitted for examination costs.--An
appropriate Federal banking agency that conducts an
examination or enforcement action pursuant to this
section may collect an assessment, fee, or such other
charge from the subsidiary as the appropriate Federal
banking agency determines necessary or appropriate to
carry out the responsibilities of the appropriate
Federal banking agency in connection with such
examination.
``(e) Referrals for Enforcement by Appropriate Federal
Banking Agency.--
``(1) Recommendation of enforcement action.--The
appropriate Federal banking agency for the lead insured
depository institution, based upon its examination of a
nondepository institution subsidiary conducted pursuant
to subsection (d), or other relevant information, may
submit to the Board, in writing, a recommendation that
the Board take enforcement action against such
nondepository institution subsidiary, together with an
explanation of the concerns giving rise to the
recommendation, if the appropriate Federal banking
agency determines (by a vote of its members, if
applicable) that the activities of the nondepository
institution subsidiary pose a material threat to the
safety and soundness of any insured depository
institution subsidiary of the depository institution
holding company.
``(2) Back-up authority of the appropriate federal
banking agency.--If, within the 60-day period beginning
on the date on which the Board receives a
recommendation under paragraph (1), the Board does not
take enforcement action against the nondepository
institution subsidiary or provide a plan for
supervisory or enforcement action that is acceptable to
the appropriate Federal banking agency that made the
recommendation pursuant to paragraph (1), such agency
may take the recommended enforcement action against the
nondepository institution subsidiary, in the same
manner as if the nondepository institution subsidiary
were an insured depository institution for which the
agency was the appropriate Federal banking agency.
``(f) Coordination Among Appropriate Federal Banking
Agencies.--Each Federal banking agency, prior to or when
exercising authority under subsection (d) or (e) shall--
``(1) provide reasonable notice to, and consult
with, the appropriate Federal banking agency or State
bank supervisor (or other State regulatory agency) of
the nondepository institution subsidiary of a
depository institution holding company that is
described in subsection (d) before commencing any
examination of the subsidiary;
``(2) to the fullest extent possible--
``(A) rely on the examinations,
inspections, and reports of the appropriate
Federal banking agency or the State bank
supervisor (or other State regulatory agency)
of the subsidiary;
``(B) avoid duplication of examination
activities, reporting requirements, and
requests for information; and
``(C) ensure that the depository
institution holding company and the
subsidiaries of the depository institution
holding company are not subject to conflicting
supervisory demands by the appropriate Federal
banking agencies.
``(g) Rule of Construction.--No provision of this section
shall be construed as limiting any authority of the Board, the
Corporation, or the Comptroller of the Currency under any other
provision of law.''.
(b) Effective Date.--The amendment made by subsection (a)
shall take effect on the transfer date.
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--
(1) in subparagraph (B), by striking ``and'' at the
end;
(2) by redesignating subparagraph (C) as
subparagraph (D);
(3) by inserting after subparagraph (B) the
following:
``(C) the bank holding company is well
capitalized and well managed; and''; and
(4) in subparagraph (D)(ii), as so redesignated, by
striking ``subparagraphs (A) and (B)'' and inserting
``subparagraphs (A), (B), and (C)''.
(b) Home Owners' Loan Act Amendment.--Section 10(c)(2) of
the Home Owners' Loan Act (12 U.S.C. 1467a(c)(2)) is amended by
adding at the end the following new subparagraph:
``(H) Any activity that is permissible for
a financial holding company (as such term is
defined under section 2(p) of the Bank Holding
Company Act of 1956 (12 U.S.C. 1841(p)) to
conduct under section 4(k) of the Bank Holding
Company Act of 1956 if--
``(i) the savings and loan holding
company meets all of the criteria to
qualify as a financial holding company,
and complies with all of the
requirements applicable to a financial
holding company, under sections 4(l)
and 4(m) of the Bank Holding Company
Act and section 804(c) of the Community
Reinvestment Act of 1977 (12 U.S.C.
2903(c)) as if the savings and loan
holding company was a bank holding
company; and
``(ii) the savings and loan holding
company conducts the activity in
accordance with the same terms,
conditions, and requirements that apply
to the conduct of such activity by a
bank holding company under the Bank
Holding Company Act of 1956 and the
Board's regulations and interpretations
under such Act.''.
(c) Effective Date.--The amendments made by this section
shall take effect on the transfer date.
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''.
(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''.
(c) Effective Date.--The amendments made by this section
shall take effect on the transfer date.
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--
(1) in subsection (b)--
(A) in paragraph (1), by striking
subparagraph (D) and inserting the following:
``(D) any investment fund with respect to
which a member bank or affiliate thereof is an
investment adviser; and''; and
(B) in paragraph (7)--
(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'';
(ii) in subparagraph (C), by
striking ``, including assets subject
to an agreement to repurchase,'';
(iii) in subparagraph (D)--
(I) by inserting ``or other
debt obligations'' after
``acceptance of securities'';
and
(II) by striking ``or'' at
the end; and
(iv) by adding at the end the
following:
``(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; or
``(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;'';
(2) in subsection (c)--
(A) in paragraph (1)--
(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''; and
(ii) in each of subparagraphs (A)
through (D), by striking ``or letter of
credit'' and inserting ``letter of
credit, or credit exposure'';
(B) by striking paragraph (2);
(C) by redesignating paragraphs (3) through
(5) as paragraphs (2) through (4),
respectively;
(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''; and
(E) in paragraph (3), as so redesignated--
(i) by inserting ``or other debt
obligations'' after ``securities''; and
(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,'';
(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,''; and
(4) in subsection (f)--
(A) in paragraph (2)--
(i) by striking ``or order'';
(ii) by striking ``if it finds''
and all that follows through the end of
the paragraph and inserting the
following: ``if--
``(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; and
``(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.'';
(iii) by striking the Board and
inserting the following:
``(A) In general.--The Board''; and
(iv) by adding at the end the
following:
``(B) Additional exemptions.--
``(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--
``(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; and
``(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.
``(ii) State banks.--The Federal
Deposit Insurance Corporation may, by
order, exempt a transaction of a State
nonmember bank, and the Board may, by
order, exempt a transaction of a State
member bank, from the requirements of
this section if--
``(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;
and
``(II) the Federal Deposit
Insurance Corporation finds
that the exemption does not
present an unacceptable risk to
the Deposit Insurance Fund.'';
and
(B) by adding at the end the following:
``(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.''.
(b) Transactions With Affiliates.--Section 23B(e) of the
Federal Reserve Act (12 U.S.C. 371c-1(e)) is amended--
(1) by striking the undesignated matter following
subparagraph (B);
(2) by redesignating subparagraphs (A) and (B) as
clauses (i) and (ii), respectively, and adjusting the
clause margins accordingly;
(3) by redesignating paragraphs (1) and (2) as
subparagraphs (A) and (B), respectively, and adjusting
the subparagraph margins accordingly;
(4) by striking ``The Board'' and inserting the
following:
``(1) In general.--The Board'';
(5) in paragraph (1)(B), as so redesignated--
(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,''; and
(B) in clause (ii), by striking the comma
at the end and inserting a period; and
(6) by adding at the end the following:
``(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.''.
(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:
``(d) Exemptions.--
``(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--
``(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; and
``(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.
``(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--
``(A) the exemption is in the public
interest and consistent with the purposes of
this section; and
``(B) the exemption does not present an
unacceptable risk to the Deposit Insurance
Fund.''.
(d) Effective Date.--The amendments made by this section
shall take effect 1 year after the transfer date.
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--
(1) by striking paragraph (3); and
(2) by redesignating paragraph (4) as paragraph
(3).
(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.
(c) Effective Date.--The amendments made by this section
shall take effect 1 year after the transfer date.
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--
(1) in paragraph (1), by striking ``shall include''
and all that follows through the end of the paragraph
and inserting the following: ``shall include--
``(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;
``(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; and
``(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;'';
(2) in paragraph (2), by striking the period at the
end and inserting ``; and''; and
(3) by adding at the end the following:
``(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.''.
(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''.
(c) Effective Date.--The amendments made by this section
shall take effect 1 year after the transfer date.
SEC. 611. CONSISTENT TREATMENT OF DERIVATIVE TRANSACTIONS IN LENDING
LIMITS.
(a) Amendment.--Section 18 of the Federal Deposit Insurance
Act (12 U.S.C. 1828) is amended by adding at the end the
following:
``(y) State Lending Limit Treatment of Derivatives
Transactions.--An insured State bank may engage in a derivative
transaction, as defined in section 5200(b)(3) of the Revised
Statutes of the United States (12 U.S.C. 84(b)(3)), only if the
law with respect to lending limits of the State in which the
insured State bank is chartered takes into consideration credit
exposure to derivative transactions.''.
(b) Effective Date.--The amendment made by this section
shall take effect 18 months after the transfer date.
SEC. 612. RESTRICTION ON CONVERSIONS OF TROUBLED BANKS.
(a) Conversion of a National Banking Association.--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:
``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.''.
(b) Conversion of a State Bank or Savings Association.--
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 or Federal savings 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 or a
final enforcement action by a State Attorney General.''.
(c) Conversion of a Federal 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:
``(6) Limitation on certain conversions by federal
savings associations.--A Federal savings association
may not convert to a 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.''.
(d) Exception.--The prohibition on the approval of
conversions under the amendments made by subsections (a), (b),
and (c) shall not apply, if--
(1) the Federal banking agency that would be the
appropriate Federal banking agency after the proposed
conversion gives the appropriate Federal banking agency
or State bank supervisor that issued the cease and
desist order (or other formal enforcement order) or
memorandum of understanding, as appropriate, written
notice of the proposed conversion including a plan to
address the significant supervisory matter in a manner
that is consistent with the safe and sound operation of
the institution;
(2) within 30 days of receipt of the written notice
required under paragraph (1), the appropriate Federal
banking agency or State bank supervisor that issued the
cease and desist order (or other formal enforcement
order) or memorandum of understanding, as appropriate,
does not object to the conversion or the plan to
address the significant supervisory matter;
(3) after conversion of the insured depository
institution, the appropriate Federal banking agency
after the conversion implements such plan; and
(4) in the case of a final enforcement action by a
State Attorney General, approval of the conversion is
conditioned on compliance by the insured depository
institution with the terms of such final enforcement
action.
(e) Notification of Pending Enforcement Actions.--
(1) Copy of conversion application.--At the time an
insured depository institution files a conversion
application, the insured depository institution shall
transmit a copy of the conversion application to--
(A) the appropriate Federal banking agency
for the insured depository institution; and
(B) the Federal banking agency that would
be the appropriate Federal banking agency of
the insured depository institution after the
proposed conversion.
(2) Notification and access to information.--Upon
receipt of a copy of the application described in
paragraph (1), the appropriate Federal banking agency
for the insured depository institution proposing the
conversion shall--
(A) notify the Federal banking agency that
would be the appropriate Federal banking agency
for the institution after the proposed
conversion in writing of any ongoing
supervisory or investigative proceedings that
the appropriate Federal banking agency for the
institution proposing to convert believes is
likely to result, in the near term and absent
the proposed conversion, in a cease and desist
order (or other formal enforcement order) or
memorandum of understanding with respect to a
significant supervisory matter; and
(B) provide the Federal banking agency that
would be the appropriate Federal banking agency
for the institution after the proposed
conversion access to all investigative and
supervisory information relating to the
proceedings described in subparagraph (A).
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:
``(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''.
(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:
``(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''.
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--
(1) by striking the period at the end and inserting
``; or'';
(2) by striking ``a person'' and inserting ``the
person'';
(3) by striking ``extends credit by making'' and
inserting the following: ``extends credit to a person
by--
``(I) making''; and
(4) by adding at the end the following:
``(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.''.
(b) Effective Date.--The amendments made by this section
shall take effect 1 year after the transfer date.
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:
``(z) General Prohibition on Sale of Assets.--
``(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--
``(A) the transaction is on market terms;
and
``(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.
``(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
of 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.''.
(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:
``(d) [Reserved]''.
(c) Effective Date.--The amendments made by this section
shall take effect on the transfer date.
SEC. 616. REGULATIONS REGARDING CAPITAL LEVELS.
(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--
(1) by inserting after ``orders'' the following:
``, including regulations and orders relating to the
capital requirements for bank holding companies,''; and
(2) by adding at the end the following: ``In
establishing capital regulations pursuant to this
subsection, the Board shall seek to make such
requirements countercyclical, so that the amount of
capital required to be maintained by a company
increases in times of economic expansion and decreases
in times of economic contraction, consistent with the
safety and soundness of the company.''.
(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--
(1) by inserting after ``orders'' the following:
``, including regulations and orders relating to
capital requirements for savings and loan holding
companies,''; and
(2) by inserting at the end the following: ``In
establishing capital regulations pursuant to this
subsection, the appropriate Federal banking agency
shall seek to make such requirements countercyclical so
that the amount of capital required to be maintained by
a company increases in times of economic expansion and
decreases in times of economic contraction, consistent
with the safety and soundness of the company.''.
(c) Capital Levels of Insured Depository Institutions.--
Section 908(a)(1) of the International Lending Supervision Act
of 1983 (12 U.S.C. 3907(a)(1)) is amended by adding at the end
the following: ``Each appropriate Federal banking agency shall
seek to make the capital standards required under this section
or other provisions of Federal law for insured depository
institutions countercyclical so that the amount of capital
required to be maintained by an insured depository institution
increases in times of economic expansion and decreases in times
of economic contraction, consistent with the safety and
soundness of the insured depository institution.''
(d) 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:
``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.
``(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.
``(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--
``(1) assessing the ability of such company to
comply with the requirement under subsection (b); and
``(2) enforcing the compliance of such company with
the requirement under subsection (b).
``(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.
``(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.''.
(e) Effective Date.--The amendments made by this section
shall take effect on the transfer date.
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--
(1) by striking subsection (i); and
(2) by redesignating subsections (j) and (k) as
subsections (i) and (j), respectively.
(b) Effective Date.--The amendments made by this section
shall take effect on the transfer date.
SEC. 618. SECURITIES HOLDING COMPANIES.
(a) Definitions.--In this section--
(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;
(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(7));
(3) the term ``insured bank'' has the same meaning
as in section 3 of the Federal Deposit Insurance Act
(12 U.S.C. 1813);
(4) the term ``securities holding company''--
(A) means--
(i) a person (other than a natural
person) that owns or controls 1 or more
brokers or dealers registered with the
Commission; and
(ii) the associated persons of a
person described in clause (i); and
(B) does not include a person that is--
(i) a nonbank financial company
supervised by the Board under title I;
(ii) 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 a savings
association;
(iii) 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;
(iv) 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));
(v) 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.); or
(vi) subject to comprehensive
consolidated supervision by a foreign
regulator;
(5) the term ``supervised securities holding
company'' means a securities holding company that is
supervised by the Board of Governors under this
section; and
(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.
(b) Supervision of a Securities Holding Company Not Having
a Bank or Savings Association Affiliate.--
(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.
(2) Registration as a supervised securities holding
company.--
(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.
(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.
(c) Supervision of Securities Holding Companies.--
(1) Recordkeeping and reporting.--
(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.
(B) Form and contents.--
(i) In general.--Any record or
report required to be made, furnished,
or kept under this paragraph shall--
(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;
and
(II) be provided promptly
to the Board of Governors at
any time, upon request by the
Board of Governors.
(ii) Contents.--Records and reports
required to be made, furnished, or kept
under this paragraph may include--
(I) a balance sheet or
income statement of the
supervised securities holding
company or an affiliate of a
supervised securities holding
company;
(II) an assessment of the
consolidated capital and
liquidity of the supervised
securities holding company;
(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; and
(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.
(2) Use of existing reports.--
(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.
(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.
(3) Examination authority.--
(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.
(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)).
(d) Capital and Risk Management.--
(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.
(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).
(3) Content.--Any standards imposed on a supervised
securities holding company under this subsection shall
take into account--
(A) the differences among types of business
activities carried out by the supervised
securities holding company;
(B) the amount and nature of the financial
assets of the supervised securities holding
company;
(C) the amount and nature of the
liabilities of the supervised securities
holding company, including the degree of
reliance on short-term funding;
(D) the extent and nature of the off-
balance sheet exposures of the supervised
securities holding company;
(E) the extent and nature of the
transactions and relationships of the
supervised securities holding company with
other financial companies;
(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; and
(G) the nature, scope, and mix of the
activities of the supervised securities holding
company.
(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.
(e) Other Provisions of Law Applicable to Supervised
Securities Holding Companies.--
(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.
(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).
SEC. 619. PROHIBITIONS ON PROPRIETARY TRADING AND CERTAIN RELATIONSHIPS
WITH HEDGE FUNDS AND PRIVATE EQUITY FUNDS.
The Bank Holding Company Act of 1956 (12 U.S.C. 1841 et
seq.) is amended by adding at the end the following:
``SEC. 13. PROHIBITIONS ON PROPRIETARY TRADING AND CERTAIN
RELATIONSHIPS WITH HEDGE FUNDS AND PRIVATE EQUITY
FUNDS.
``(a) In General.--
``(1) Prohibition.--Unless otherwise provided in
this section, a banking entity shall not--
``(A) engage in proprietary trading; or
``(B) acquire or retain any equity,
partnership, or other ownership interest in or
sponsor a hedge fund or a private equity fund.
``(2) Nonbank financial companies supervised by the
board.--Any nonbank financial company supervised by the
Board that engages in proprietary trading or takes or
retains any equity, partnership, or other ownership
interest in or sponsors a hedge fund or a private
equity fund shall be subject, by rule, as provided in
subsection (b)(2), to additional capital requirements
for and additional quantitative limits with regards to
such proprietary trading and taking or retaining any
equity, partnership, or other ownership interest in or
sponsorship of a hedge fund or a private equity fund,
except that permitted activities as described in
subsection (d) shall not be subject to the additional
capital and additional quantitative limits except as
provided in subsection (d)(3), as if the nonbank
financial company supervised by the Board were a
banking entity.
``(b) Study and Rulemaking.--
``(1) Study.--Not later than 6 months after the
date of enactment of this section, the Financial
Stability Oversight Council shall study and make
recommendations on implementing the provisions of this
section so as to--
``(A) promote and enhance the safety and
soundness of banking entities;
``(B) protect taxpayers and consumers and
enhance financial stability by minimizing the
risk that insured depository institutions and
the affiliates of insured depository
institutions will engage in unsafe and unsound
activities;
``(C) limit the inappropriate transfer of
Federal subsidies from institutions that
benefit from deposit insurance and liquidity
facilities of the Federal Government to
unregulated entities;
``(D) reduce conflicts of interest between
the self-interest of banking entities and
nonbank financial companies supervised by the
Board, and the interests of the customers of
such entities and companies;
``(E) limit activities that have caused
undue risk or loss in banking entities and
nonbank financial companies supervised by the
Board, or that might reasonably be expected to
create undue risk or loss in such banking
entities and nonbank financial companies
supervised by the Board;
``(F) appropriately accommodate the
business of insurance within an insurance
company, subject to regulation in accordance
with the relevant insurance company investment
laws, while protecting the safety and soundness
of any banking entity with which such insurance
company is affiliated and of the United States
financial system; and
``(G) appropriately time the divestiture of
illiquid assets that are affected by the
implementation of the prohibitions under
subsection (a).
``(2) Rulemaking.--
``(A) In general.--Unless otherwise
provided in this section, not later than 9
months after the completion of the study under
paragraph (1), the appropriate Federal banking
agencies, the Securities and Exchange
Commission, and the Commodity Futures Trading
Commission, shall consider the findings of the
study under paragraph (1) and adopt rules to
carry out this section, as provided in
subparagraph (B).
``(B) Coordinated rulemaking.--
``(i) Regulatory authority.--The
regulations issued under this paragraph
shall be issued by--
``(I) the appropriate
Federal banking agencies,
jointly, with respect to
insured depository
institutions;
``(II) the Board, with
respect to any company that
controls an insured depository
institution, or that is treated
as a bank holding company for
purposes of section 8 of the
International Banking Act, any
nonbank financial company
supervised by the Board, and
any subsidiary of any of the
foregoing (other than a
subsidiary for which an agency
described in subclause (I),
(III), or (IV) is the primary
financial regulatory agency);
``(III) the Commodity
Futures Trading Commission,
with respect to any entity for
which the Commodity Futures
Trading Commission is the
primary financial regulatory
agency, as defined in section 2
of the Dodd-Frank Wall Street
Reform and Consumer Protection
Act; and
``(IV) the Securities and
Exchange Commission, with
respect to any entity for which
the Securities and Exchange
Commission is the primary
financial regulatory agency, as
defined in section 2 of the
Dodd-Frank Wall Street Reform
and Consumer Protection Act.
``(ii) Coordination, consistency,
and comparability.--In developing and
issuing regulations pursuant to this
section, the appropriate Federal
banking agencies, the Securities and
Exchange Commission, and the Commodity
Futures Trading Commission shall
consult and coordinate with each other,
as appropriate, for the purposes of
assuring, to the extent possible, that
such regulations are comparable and
provide for consistent application and
implementation of the applicable
provisions of this section to avoid
providing advantages or imposing
disadvantages to the companies affected
by this subsection and to protect the
safety and soundness of banking
entities and nonbank financial
companies supervised by the Board.
``(iii) Council role.--The
Chairperson of the Financial Stability
Oversight Council shall be responsible
for coordination of the regulations
issued under this section.
``(c) Effective Date.--
``(1) In general.--Except as provided in paragraphs
(2) and (3), this section shall take effect on the
earlier of--
``(A) 12 months after the date of the
issuance of final rules under subsection (b);
or
``(B) 2 years after the date of enactment
of this section.
``(2) Conformance period for divestiture.--A
banking entity or nonbank financial company supervised
by the Board shall bring its activities and investments
into compliance with the requirements of this section
not later than 2 years after the date on which the
requirements become effective pursuant to this section
or 2 years after the date on which the entity or
company becomes a nonbank financial company supervised
by the Board. The Board may, by rule or order, extend
this two-year period for not more than one year at a
time, if, in the judgment of the Board, such an
extension is consistent with the purposes of this
section and would not be detrimental to the public
interest. The extensions made by the Board under the
preceding sentence may not exceed an aggregate of 3
years.
``(3) Extended transition for illiquid funds.--
``(A) Application.--The Board may, upon the
application of a banking entity, extend the
period during which the banking entity, to the
extent necessary to fulfill a contractual
obligation that was in effect on May 1, 2010,
may take or retain its equity, partnership, or
other ownership interest in, or otherwise
provide additional capital to, an illiquid
fund.
``(B) Time limit on approval.--The Board
may grant 1 extension under subparagraph (A),
which may not exceed 5 years.
``(4) Divestiture required.--Except as otherwise
provided in subsection (d)(1)(G), a banking entity may
not engage in any activity prohibited under subsection
(a)(1)(B) after the earlier of--
``(A) the date on which the contractual
obligation to invest in the illiquid fund
terminates; and
``(B) the date on which any extensions
granted by the Board under paragraph (3)
expire.
``(5) Additional capital during transition
period.--Notwithstanding paragraph (2), on the date on
which the rules are issued under subsection (b)(2), the
appropriate Federal banking agencies, the Securities
and Exchange Commission, and the Commodity Futures
Trading Commission shall issue rules, as provided in
subsection (b)(2), to impose additional capital
requirements, and any other restrictions, as
appropriate, on any equity, partnership, or ownership
interest in or sponsorship of a hedge fund or private
equity fund by a banking entity.
``(6) Special rulemaking.--Not later than 6 months
after the date of enactment of this section, the Board
shall issue rules to implement paragraphs (2) and (3).
``(d) Permitted Activities.--
``(1) In general.--Notwithstanding the restrictions
under subsection (a), to the extent permitted by any
other provision of Federal or State law, and subject to
the limitations under paragraph (2) and any
restrictions or limitations that the appropriate
Federal banking agencies, the Securities and Exchange
Commission, and the Commodity Futures Trading
Commission, may determine, the following activities (in
this section referred to as `permitted activities') are
permitted:
``(A) The purchase, sale, acquisition, or
disposition of obligations of the United States
or any agency thereof, obligations,
participations, or other instruments of or
issued by the Government National Mortgage
Association, the Federal National Mortgage
Association, the Federal Home Loan Mortgage
Corporation, a Federal Home Loan Bank, the
Federal Agricultural Mortgage Corporation, or a
Farm Credit System institution chartered under
and subject to the provisions of the Farm
Credit Act of 1971 (12 U.S.C. 2001 et seq.),
and obligations of any State or of any
political subdivision thereof.
``(B) The purchase, sale, acquisition, or
disposition of securities and other instruments
described in subsection (h)(4) in connection
with underwriting or market-making-related
activities, to the extent that any such
activities permitted by this subparagraph are
designed not to exceed the reasonably expected
near term demands of clients, customers, or
counterparties.
``(C) Risk-mitigating hedging activities in
connection with and related to individual or
aggregated positions, contracts, or other
holdings of a banking entity that are designed
to reduce the specific risks to the banking
entity in connection with and related to such
positions, contracts, or other holdings.
``(D) The purchase, sale, acquisition, or
disposition of securities and other instruments
described in subsection (h)(4) on behalf of
customers.
``(E) Investments in one or more small
business investment companies, as defined in
section 102 of the Small Business Investment
Act of 1958 (15 U.S.C. 662), investments
designed primarily to promote the public
welfare, of the type permitted under paragraph
(11) of section 5136 of the Revised Statutes of
the United States (12 U.S.C. 24), or
investments that are qualified rehabilitation
expenditures with respect to a qualified
rehabilitated building or certified historic
structure, as such terms are defined in section
47 of the Internal Revenue Code of 1986 or a
similar State historic tax credit program.
``(F) The purchase, sale, acquisition, or
disposition of securities and other instruments
described in subsection (h)(4) by a regulated
insurance company directly engaged in the
business of insurance for the general account
of the company and by any affiliate of such
regulated insurance company, provided that such
activities by any affiliate are solely for the
general account of the regulated insurance
company, if--
``(i) the purchase, sale,
acquisition, or disposition is
conducted in compliance with, and
subject to, the insurance company
investment laws, regulations, and
written guidance of the State or
jurisdiction in which each such
insurance company is domiciled; and
``(ii) the appropriate Federal
banking agencies, after consultation
with the Financial Stability Oversight
Council and the relevant insurance
commissioners of the States and
territories of the United States, have
not jointly determined, after notice
and comment, that a particular law,
regulation, or written guidance
described in clause (i) is insufficient
to protect the safety and soundness of
the banking entity, or of the financial
stability of the United States.
``(G) Organizing and offering a private
equity or hedge fund, including serving as a
general partner, managing member, or trustee of
the fund and 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, including any necessary expenses for
the foregoing, only if--
``(i) the banking entity provides
bona fide trust, fiduciary, or
investment advisory services;
``(ii) the fund is organized and
offered only in connection with the
provision of bona fide trust,
fiduciary, or investment advisory
services and only to persons that are
customers of such services of the
banking entity;
``(iii) the banking entity does not
acquire or retain an equity interest,
partnership interest, or other
ownership interest in the funds except
for a de minimis investment subject to
and in compliance with paragraph (4);
``(iv) the banking entity complies
with the restrictions under paragraphs
(1) and (2) of subparagraph (f);
``(v) the banking entity does not,
directly or indirectly, guarantee,
assume, or otherwise insure the
obligations or performance of the hedge
fund or private equity fund or of any
hedge fund or private equity fund in
which such hedge fund or private equity
fund invests;
``(vi) the banking entity does not
share with the hedge fund or private
equity fund, for corporate, marketing,
promotional, or other purposes, the
same name or a variation of the same
name;
``(vii) no director or employee of
the banking entity takes or retains an
equity interest, partnership interest,
or other ownership interest in the
hedge fund or private equity fund,
except for any director or employee of
the banking entity who is directly
engaged in providing investment
advisory or other services to the hedge
fund or private equity fund; and
``(viii) the banking entity
discloses to prospective and actual
investors in the fund, in writing, that
any losses in such hedge fund or
private equity fund are borne solely by
investors in the fund and not by the
banking entity, and otherwise complies
with any additional rules of the
appropriate Federal banking agencies,
the Securities and Exchange Commission,
or the Commodity Futures Trading
Commission, as provided in subsection
(b)(2), designed to ensure that losses
in such hedge fund or private equity
fund are borne solely by investors in
the fund and not by the banking entity.
``(H) Proprietary trading conducted by a
banking entity pursuant to paragraph (9) or
(13) of section 4(c), provided that the trading
occurs solely outside of the United States and
that the banking entity is not directly or
indirectly controlled by a banking entity that
is organized under the laws of the United
States or of one or more States.
``(I) The acquisition or retention of any
equity, partnership, or other ownership
interest in, or the sponsorship of, a hedge
fund or a private equity fund by a banking
entity pursuant to paragraph (9) or (13) of
section 4(c) solely outside of the United
States, provided that no ownership interest in
such hedge fund or private equity fund is
offered for sale or sold to a resident of the
United States and that the banking entity is
not directly or indirectly controlled by a
banking entity that is organized under the laws
of the United States or of one or more States.
``(J) Such other activity as the
appropriate Federal banking agencies, the
Securities and Exchange Commission, and the
Commodity Futures Trading Commission determine,
by rule, as provided in subsection (b)(2),
would promote and protect the safety and
soundness of the banking entity and the
financial stability of the United States.
``(2) Limitation on permitted activities.--
``(A) In general.--No transaction, class of
transactions, or activity may be deemed a
permitted activity under paragraph (1) if the
transaction, class of transactions, or
activity--
``(i) would involve or result in a
material conflict of interest (as such
term shall be defined by rule as
provided in subsection (b)(2)) between
the banking entity and its clients,
customers, or counterparties;
``(ii) would result, directly or
indirectly, in a material exposure by
the banking entity to high-risk assets
or high-risk trading strategies (as
such terms shall be defined by rule as
provided in subsection (b)(2));
``(iii) would pose a threat to the
safety and soundness of such banking
entity; or
``(iv) would pose a threat to the
financial stability of the United
States.
``(B) Rulemaking.--The appropriate Federal
banking agencies, the Securities and Exchange
Commission, and the Commodity Futures Trading
Commission shall issue regulations to implement
subparagraph (A), as part of the regulations
issued under subsection (b)(2).
``(3) Capital and quantitative limitations.--The
appropriate Federal banking agencies, the Securities
and Exchange Commission, and the Commodity Futures
Trading Commission shall, as provided in subsection
(b)(2), adopt rules imposing additional capital
requirements and quantitative limitations, including
diversification requirements, regarding the activities
permitted under this section if the appropriate Federal
banking agencies, the Securities and Exchange
Commission, and the Commodity Futures Trading
Commission determine that additional capital and
quantitative limitations are appropriate to protect the
safety and soundness of banking entities engaged in
such activities.
``(4) De minimis investment.--
``(A) In general.--A banking entity may
make and retain an investment in a hedge fund
or private equity fund that the banking entity
organizes and offers, subject to the
limitations and restrictions in subparagraph
(B) for the purposes of--
``(i) establishing the fund and
providing the fund with sufficient
initial equity for investment to permit
the fund to attract unaffiliated
investors; or
``(ii) making a de minimis
investment.
``(B) Limitations and restrictions on
investments.--
``(i) Requirement to seek other
investors.--A banking entity shall
actively seek unaffiliated investors to
reduce or dilute the investment of the
banking entity to the amount permitted
under clause (ii).
``(ii) Limitations on size of
investments.--Notwithstanding any other
provision of law, investments by a
banking entity in a hedge fund or
private equity fund shall--
``(I) not later than 1 year
after the date of establishment
of the fund, be reduced through
redemption, sale, or dilution
to an amount that is not more
than 3 percent of the total
ownership interests of the
fund;
``(II) be immaterial to the
banking entity, as defined, by
rule, pursuant to subsection
(b)(2), but in no case may the
aggregate of all of the
interests of the banking entity
in all such funds exceed 3
percent of the Tier 1 capital
of the banking entity.
``(iii) Capital.--For purposes of
determining compliance with applicable
capital standards under paragraph (3),
the aggregate amount of the outstanding
investments by a banking entity under
this paragraph, including retained
earnings, shall be deducted from the
assets and tangible equity of the
banking entity, and the amount of the
deduction shall increase commensurate
with the leverage of the hedge fund or
private equity fund.
``(C) Extension.--Upon an application by a
banking entity, the Board may extend the period
of time to meet the requirements under
subparagraph (B)(ii)(I) for 2 additional years,
if the Board finds that an extension would be
consistent with safety and soundness and in the
public interest.
``(e) Anti-evasion.--
``(1) Rulemaking.--The appropriate Federal banking
agencies, the Securities and Exchange Commission, and
the Commodity Futures Trading Commission shall issue
regulations, as part of the rulemaking provided for in
subsection (b)(2), regarding internal controls and
recordkeeping, in order to insure compliance with this
section.
``(2) Termination of activities or investment.--
Notwithstanding any other provision of law, whenever an
appropriate Federal banking agency, the Securities and
Exchange Commission, or the Commodity Futures Trading
Commission, as appropriate, has reasonable cause to
believe that a banking entity or nonbank financial
company supervised by the Board under the respective
agency's jurisdiction has made an investment or engaged
in an activity in a manner that functions as an evasion
of the requirements of this section (including through
an abuse of any permitted activity) or otherwise
violates the restrictions under this section, the
appropriate Federal banking agency, the Securities and
Exchange Commission, or the Commodity Futures Trading
Commission, as appropriate, shall order, after due
notice and opportunity for hearing, the banking entity
or nonbank financial company supervised by the Board to
terminate the activity and, as relevant, dispose of the
investment. Nothing in this paragraph shall be
construed to limit the inherent authority of any
Federal agency or State regulatory authority to further
restrict any investments or activities under otherwise
applicable provisions of law.
``(f) Limitations on Relationships With Hedge Funds and
Private Equity Funds.--
``(1) In general.--No banking entity that serves,
directly or indirectly, as the investment manager,
investment adviser, or sponsor to a hedge fund or
private equity fund, or that organizes and offers a
hedge fund or private equity fund pursuant to paragraph
(d)(1)(G), and no affiliate of such entity, may enter
into a transaction with the fund, or with any other
hedge fund or private equity fund that is controlled by
such fund, that would be a covered transaction, as
defined in section 23A of the Federal Reserve Act (12
U.S.C. 371c), with the hedge fund or private equity
fund, as if such banking entity and the affiliate
thereof were a member bank and the hedge fund or
private equity fund were an affiliate thereof.
``(2) Treatment as member bank.--A banking entity
that serves, directly or indirectly, as the investment
manager, investment adviser, or sponsor to a hedge fund
or private equity fund, or that organizes and offers a
hedge fund or private equity fund pursuant to paragraph
(d)(1)(G), shall be subject to section 23B of the
Federal Reserve Act (12 U.S.C. 371c-1), as if such
banking entity were a member bank and such hedge fund
or private equity fund were an affiliate thereof.
``(3) Permitted services.--
``(A) In general.--Notwithstanding
paragraph (1), the Board may permit a banking
entity to enter into any prime brokerage
transaction with any hedge fund or private
equity fund in which a hedge fund or private
equity fund managed, sponsored, or advised by
such banking entity has taken an equity,
partnership, or other ownership interest, if--
``(i) the banking entity is in
compliance with each of the limitations
set forth in subsection (d)(1)(G) with
regard to a hedge fund or private
equity fund organized and offered by
such banking entity;
``(ii) the chief executive officer
(or equivalent officer) of the banking
entity certifies in writing annually
(with a duty to update the
certification if the information in the
certification materially changes) that
the conditions specified in subsection
(d)(1)(g)(v) are satisfied; and
``(iii) the Board has determined
that such transaction is consistent
with the safe and sound operation and
condition of the banking entity.
``(B) Treatment of prime brokerage
transactions.--For purposes of subparagraph
(A), a prime brokerage transaction described in
subparagraph (A) shall be subject to section
23B of the Federal Reserve Act (12 U.S.C. 371c-
1) as if the counterparty were an affiliate of
the banking entity.
``(4) Application to nonbank financial companies
supervised by the board.--The appropriate Federal
banking agencies, the Securities and Exchange
Commission, and the Commodity Futures Trading
Commission shall adopt rules, as provided in subsection
(b)(2), imposing additional capital charges or other
restrictions for nonbank financial companies supervised
by the Board to address the risks to and conflicts of
interest of banking entities described in paragraphs
(1), (2), and (3) of this subsection.
``(g) Rules of Construction.--
``(1) Limitation on contrary authority.--Except as
provided in this section, notwithstanding any other
provision of law, the prohibitions and restrictions
under this section shall apply to activities of a
banking entity or nonbank financial company supervised
by the Board, even if such activities are authorized
for a banking entity or nonbank financial company
supervised by the Board.
``(2) Sale or securitization of loans.--Nothing in
this section shall be construed to limit or restrict
the ability of a banking entity or nonbank financial
company supervised by the Board to sell or securitize
loans in a manner otherwise permitted by law.
``(3) Authority of federal agencies and state
regulatory authorities.--Nothing in this section shall
be construed to limit the inherent authority of any
Federal agency or State regulatory authority under
otherwise applicable provisions of law.
``(h) Definitions.--In this section, the following
definitions shall apply:
``(1) Banking entity.--The term `banking entity'
means any insured depository institution (as defined in
section 3 of the Federal Deposit Insurance Act (12
U.S.C. 1813)), any company that controls an insured
depository institution, or that is treated as a bank
holding company for purposes of section 8 of the
International Banking Act of 1978, and any affiliate or
subsidiary of any such entity. For purposes of this
paragraph, the term `insured depository institution'
does not include an institution that functions solely
in a trust or fiduciary capacity, if--
``(A) all or substantially all of the
deposits of such institution are in trust funds
and are received in a bona fide fiduciary
capacity;
``(B) no deposits of such institution which
are insured by the Federal Deposit Insurance
Corporation are offered or marketed by or
through an affiliate of such institution;
``(C) such institution does not accept
demand deposits or deposits that the depositor
may withdraw by check or similar means for
payment to third parties or others or make
commercial loans; and
``(D) such institution does not--
``(i) obtain payment or payment
related services from any Federal
Reserve bank, including any service
referred to in section 11A of the
Federal Reserve Act (12 U.S.C. 248a);
or
``(ii) exercise discount or
borrowing privileges pursuant to
section 19(b)(7) of the Federal Reserve
Act (12 U.S.C. 461(b)(7)).
``(2) Hedge fund; private equity fund.--The terms
`hedge fund' and `private equity fund' mean an issuer
that would be an investment company, as defined in the
Investment Company Act of 1940 (15 U.S.C. 80a-1 et
seq.), but for section 3(c)(1) or 3(c)(7) of that Act,
or such similar funds as the appropriate Federal
banking agencies, the Securities and Exchange
Commission, and the Commodity Futures Trading
Commission may, by rule, as provided in subsection
(b)(2), determine.
``(3) Nonbank financial company supervised by the
board.--The term `nonbank financial company supervised
by the Board' means a nonbank financial company
supervised by the Board of Governors, as defined in
section 102 of the Financial Stability Act of 2010.
``(4) Proprietary trading.--The term `proprietary
trading', when used with respect to a banking entity or
nonbank financial company supervised by the Board,
means engaging as a principal for the trading account
of the banking entity or nonbank financial company
supervised by the Board in any transaction to purchase
or sell, or otherwise acquire or dispose of, any
security, any derivative, any contract of sale of a
commodity for future delivery, any option on any such
security, derivative, or contract, or any other
security or financial instrument that the appropriate
Federal banking agencies, the Securities and Exchange
Commission, and the Commodity Futures Trading
Commission may, by rule as provided in subsection
(b)(2), determine.
``(5) Sponsor.--The term to `sponsor' a fund
means--
``(A) to serve as a general partner,
managing member, or trustee of a fund;
``(B) in any manner to select or to control
(or to have employees, officers, or directors,
or agents who constitute) a majority of the
directors, trustees, or management of a fund;
or
``(C) to share with a fund, for corporate,
marketing, promotional, or other purposes, the
same name or a variation of the same name.
``(6) Trading account.--The term `trading account'
means any account used for acquiring or taking
positions in the securities and instruments described
in paragraph (4) principally for the purpose of selling
in the near term (or otherwise with the intent to
resell in order to profit from short-term price
movements), and any such other accounts as the
appropriate Federal banking agencies, the Securities
and Exchange Commission, and the Commodity Futures
Trading Commission may, by rule as provided in
subsection (b)(2), determine.
``(7) Illiquid fund.--
``(A) In general.--The term `illiquid fund'
means a hedge fund or private equity fund
that--
``(i) as of May 1, 2010, was
principally invested in, or was
invested and contractually committed to
principally invest in, illiquid assets,
such as portfolio companies, real
estate investments, and venture capital
investments; and
``(ii) makes all investments
pursuant to, and consistent with, an
investment strategy to principally
invest in illiquid assets. In issuing
rules regarding this subparagraph, the
Board shall take into consideration the
terms of investment for the hedge fund
or private equity fund, including
contractual obligations, the ability of
the fund to divest of assets held by
the fund, and any other factors that
the Board determines are appropriate.
``(B) Hedge fund.--For the purposes of this
paragraph, the term `hedge fund' means any fund
identified under subsection (h)(2), and does
not include a private equity fund, as such term
is used in section 203(m) of the Investment
Advisers Act of 1940 (15 U.S.C. 80b-3(m)).''.
SEC. 620. STUDY OF BANK INVESTMENT ACTIVITIES.
(a) Study.--
(1) In general.--Not later than 18 months after the
date of enactment of this Act, the appropriate Federal
banking agencies shall jointly review and prepare a
report on the activities that a banking entity, as such
term is defined in the Bank Holding Company Act of 1956
(12 U.S.C. 1841 et seq.), may engage in under Federal
and State law, including activities authorized by
statute and by order, interpretation and guidance.
(2) Content.--In carrying out the study under
paragraph (1), the appropriate Federal banking agencies
shall review and consider--
(A) the type of activities or investments;
(B) any financial, operational, managerial,
or reputation risks associated with or
presented as a result of the banking entity
engaged in the activity or making the
investment; and
(C) risk mitigation activities undertaken
by the banking entity with regard to the risks.
(b) Report and Recommendations to the Council and to
Congress.--The appropriate Federal banking agencies shall
submit to the Council, the Committee on Financial Services of
the House of Representatives, and the Committee on Banking,
Housing, and Urban Affairs of the Senate the study conducted
pursuant to subsection (a) no later than 2 months after its
completion. In addition to the information described in
subsection (a), the report shall include recommendations
regarding--
(1) whether each activity or investment has or
could have a negative effect on the safety and
soundness of the banking entity or the United States
financial system;
(2) the appropriateness of the conduct of each
activity or type of investment by banking entities; and
(3) additional restrictions as may be necessary to
address risks to safety and soundness arising from the
activities or types of investments described in
subsection (a).
SEC. 621. CONFLICTS OF INTEREST.
(a) In General.--The Securities Act of 1933 (15 U.S.C. 77a
et seq.) is amended by inserting after section 27A the
following:
``SEC. 27B. CONFLICTS OF INTEREST RELATING TO CERTAIN SECURITIZATIONS.
``(a) In General.--An underwriter, placement agent, initial
purchaser, or sponsor, or any affiliate or subsidiary of any
such entity, of an asset-backed security (as such term is
defined in section 3 of the Securities and Exchange Act of 1934
(15 U.S.C. 78c), which for the purposes of this section shall
include a synthetic asset-backed security), shall not, at any
time for a period ending on the date that is one year after the
date of the first closing of the sale of the asset-backed
security, engage in any transaction that would involve or
result in any material conflict of interest with respect to any
investor in a transaction arising out of such activity.
``(b) Rulemaking.--Not later than 270 days after the date
of enactment of this section, the Commission shall issue rules
for the purpose of implementing subsection (a).
``(c) Exception.--The prohibitions of subsection (a) shall
not apply to--
``(1) risk-mitigating hedging activities in
connection with positions or holdings arising out of
the underwriting, placement, initial purchase, or
sponsorship of an asset-backed security, provided that
such activities are designed to reduce the specific
risks to the underwriter, placement agent, initial
purchaser, or sponsor associated with positions or
holdings arising out of such underwriting, placement,
initial purchase, or sponsorship; or
``(2) purchases or sales of asset-backed securities
made pursuant to and consistent with--
``(A) commitments of the underwriter,
placement agent, initial purchaser, or sponsor,
or any affiliate or subsidiary of any such
entity, to provide liquidity for the asset-
backed security, or
``(B) bona fide market-making in the asset
backed security.
``(d) Rule of Construction.--This subsection shall not
otherwise limit the application of section 15G of the
Securities Exchange Act of 1934.''.
(b) Effective Date.--Section 27B of the Securities Act of
1933, as added by this section, shall take effect on the
effective date of final rules issued by the Commission under
subsection (b) of such section 27B, except that subsections (b)
and (d) of such section 27B shall take effect on the date of
enactment of this Act.
SEC. 622. 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:
``SEC. 14. CONCENTRATION LIMITS ON LARGE FINANCIAL FIRMS.
``(a) Definitions.--In this section--
``(1) the term `Council' means the Financial
Stability Oversight Council;
``(2) the term `financial company' means--
``(A) an insured depository institution;
``(B) a bank holding company;
``(C) a savings and loan holding company;
``(D) a company that controls an insured
depository institution;
``(E) a nonbank financial company
supervised by the Board under title I of the
Dodd-Frank Wall Street Reform and Consumer
Protection Act; and
``(F) a foreign bank or company that is
treated as a bank holding company for purposes
of this Act; and
``(3) the term `liabilities' means--
``(A) with respect to a United States
financial company--
``(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; less
``(ii) the total regulatory capital
of the financial company under the
risk-based capital rules applicable to
bank holding companies;
``(B) with respect to a foreign-based
financial company--
``(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; less
``(ii) the total regulatory capital
of the United States operations of the
financial company, as determined under
the applicable risk-based capital
rules; and
``(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.
``(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.
``(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--
``(1) of a bank in default or in danger of default;
``(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)); or
``(3) that would result only in a de minimis
increase in the liabilities of the financial company.
``(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.
``(e) Council Study and Rulemaking.--
``(1) Study and recommendations.--Not later than 6
months after the date of enactment of this section, the
Council shall--
``(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; and
``(B) make recommendations regarding any
modifications to the concentration limit that
the Council determines would more effectively
implement this section.
``(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).''.
SEC. 623. INTERSTATE MERGER TRANSACTIONS.
(a) Interstate Merger Transactions.--Section 18(c) of the
Federal Deposit Insurance Act (12 U.S.C. 1828(c)) is amended by
adding at the end the following:
``(13)(A) Except as provided in subparagraph (B), the
responsible agency may not approve an application for an
interstate merger transaction if the resulting insured
depository institution (including all insured depository
institutions which are affiliates of the resulting insured
depository institution), upon consummation of the transaction,
would control more than 10 percent of the total amount of
deposits of insured depository institutions in the United
States.
``(B) Subparagraph (A) shall not apply to an interstate
merger transaction that involves 1 or more insured depository
institutions in default or in danger of default, or with
respect to which the Corporation provides assistance under
section 13.
``(C) In this paragraph--
``(i) the term `interstate merger transaction'
means a merger transaction involving 2 or more insured
depository institutions that have different home States
and that are not affiliates; and
``(ii) the term `home State' means--
``(I) with respect to a national bank, the
State in which the main office of the bank is
located;
``(II) with respect to a State bank or
State savings association, the State by which
the State bank or State savings association is
chartered; and
``(III) with respect to a Federal savings
association, the State in which the home office
(as defined by the regulations of the Director
of the Office of Thrift Supervision, or, on and
after the transfer date, the Comptroller of the
Currency) of the Federal savings association is
located.''.
(b) Acquisitions by Bank Holding Companies.--
(1) In general.--Section 4 of the Bank Holding
Company Act of 1956 (12 U.S.C. 1843) is amended--
(A) in subsection (i), by adding at the end
the following:
``(8) Interstate acquisitions.--
``(A) In general.--The Board may not
approve an application by a bank holding
company to acquire an insured depository
institution under subsection (c)(8) or any
other provision of this Act if--
``(i) the home State of such
insured depository institution is a
State other than the home State of the
bank holding company; and
``(ii) the applicant (including all
insured depository institutions which
are affiliates of the applicant)
controls, or upon consummation of the
transaction would control, more than 10
percent of the total amount of deposits
of insured depository institutions in
the United States.
``(B) Exception.--Subparagraph (A) shall
not apply to an acquisition that involves an
insured depository institution in default or in
danger of default, or with respect to which the
Federal Deposit Insurance Corporation provides
assistance under section 13 of the Federal
Deposit Insurance Act (12 U.S.C. 1823).''; and
(B) in subsection (k)(6)(B), by striking
``savings association'' and inserting ``insured
depository institution''.
(2) Definitions.--Section 2(o)(4) of the Bank
Holding Company Act of 1956 (12 U.S.C. 1841(o)(4)) is
amended--
(A) in subparagraph (B), by striking
``and'' at the end;
(B) in subparagraph (C)(ii), by striking
the period at the end and inserting a
semicolon; and
(C) by adding at the end the following:
``(D) with respect to a State savings
association, the State by which the savings
association is chartered; and
``(E) with respect to a Federal savings
association, the State in which the home office
(as defined by the regulations of the Director
of the Office of Thrift Supervision, or, on and
after the transfer date, the Comptroller of the
Currency) of the Federal savings association is
located.''.
(c) Acquisitions by Savings and Loan Holding Companies.--
Section 10(e)(2) of the Home Owners' Loan Act (12 U.S.C.
1467a(e)(2)) is amended--
(1) in paragraph (2)--
(A) in subparagraph (C), by striking ``or''
at the end;
(B) in subparagraph (D), by striking the
period at the end and inserting ``, or''; and
(C) by adding at the end the following:
``(E) in the case of an application by a
savings and loan holding company to acquire an
insured depository institution, if--
``(i) the home State of the insured
depository institution is a State other
than the home State of the savings and
loan holding company;
``(ii) the applicant (including all
insured depository institutions which
are affiliates of the applicant)
controls, or upon consummation of the
transaction would control, more than 10
percent of the total amount of deposits
of insured depository institutions in
the United States; and
``(iii) the acquisition does not
involve an insured depository
institution in default or in danger of
default, or with respect to which the
Federal Deposit Insurance Corporation
provides assistance under section 13 of
the Federal Deposit Insurance Act (12
U.S.C. 1823).''; and
(2) by adding at the end the following:
``(7) Definitions.--For purposes of paragraph
(2)(E)--
``(A) the terms `default', `in danger of
default', and `insured depository institution'
have the same meanings as in section 3 of the
Federal Deposit Insurance Act (12 U.S.C. 1813);
and
``(B) the term `home State' means--
``(i) with respect to a national
bank, the State in which the main
office of the bank is located;
``(ii) with respect to a State bank
or State savings association, the State
by which the savings association is
chartered;
``(iii) with respect to a Federal
savings association, the State in which
the home office (as defined by the
regulations of the Director of the
Office of Thrift Supervision, or, on
and after the transfer date, the
Comptroller of the Currency) of the
Federal savings association is located;
and
``(iv) with respect to a savings
and loan holding company, the State in
which the amount of total deposits of
all insured depository institution
subsidiaries of such company was the
greatest on the date on which the
company became a savings and loan
holding company.''.
SEC. 624. QUALIFIED THRIFT LENDERS.
Section 10(m)(3) of the Home Owners' Loan Act (12 U.S.C.
1467a(m)(3)) is amended--
(1) by striking subparagraph (A) and inserting the
following:
``(A) In general.--A savings association
that fails to become or remain a qualified
thrift lender shall immediately be subject to
the restrictions under subparagraph (B).''; and
(2) in subparagraph (B)(i), by striking subclause
(III) and inserting the following:
``(III) Dividends.--The
savings association may not pay
dividends, except for dividends
that--
``(aa) would be
permissible for a
national bank;
``(bb) are
necessary to meet
obligations of a
company that controls
such savings
association; and
``(cc) are
specifically approved
by the Comptroller of
the Currency and the
Board after a written
request submitted to
the Comptroller of the
Currency and the Board
by the savings
association not later
than 30 days before the
date of the proposed
payment.
``(IV) Regulatory
authority.--A savings
association that fails to
become or remain a qualified
thrift lender shall be deemed
to have violated section 5 of
the Home Owners' Loan Act (12
U.S.C. 1464) and subject to
actions authorized by section
5(d) of the Home Owners' Loan
Act (12 U.S.C. 1464(d)).''.
SEC. 625. TREATMENT OF DIVIDENDS BY CERTAIN MUTUAL HOLDING COMPANIES.
(a) In General.--Section 10(o) of the Home Owners' Loan Act
(12 U.S.C. 1467a(o) is amended by adding at the end the
following:
``(11) Dividends.--
``(A) Declaration of dividends.--
``(i) Advance notice required.--
Each subsidiary of a mutual holding
company that is a savings association
shall give the appropriate Federal
banking agency and the Board notice not
later than 30 days before the date of a
proposed declaration by the board of
directors of the savings association of
any dividend on the guaranty,
permanent, or other nonwithdrawable
stock of the savings association.
``(ii) Invalid dividends.--Any
dividend described in clause (i) that
is declared without giving notice to
the appropriate Federal banking agency
and the Board under clause (i), or that
is declared during the 30-day period
preceding the date of a proposed
declaration for which notice is given
to the appropriate Federal banking
agency and the Board under clause (i),
shall be invalid and shall confer no
rights or benefits upon the holder of
any such stock.
``(B) Waiver of dividends.--A mutual
holding company may waive the right to receive
any dividend declared by a subsidiary of the
mutual holding company, if--
``(i) no insider of the mutual
holding company, associate of an
insider, or tax-qualified or non-tax-
qualified employee stock benefit plan
of the mutual holding company holds any
share of the stock in the class of
stock to which the waiver would apply;
or
``(ii) the mutual holding company
gives written notice to the Board of
the intent of the mutual holding
company to waive the right to receive
dividends, not later than 30 days
before the date of the proposed date of
payment of the dividend, and the Board
does not object to the waiver.
``(C) Resolution included in waiver
notice.--A notice of a waiver under
subparagraph (B) shall include a copy of the
resolution of the board of directors of the
mutual holding company, in such form and
substance as the Board may determine, together
with any supporting materials relied upon by
the board of directors of the mutual holding
company, concluding that the proposed dividend
waiver is consistent with the fiduciary duties
of the board of directors to the mutual members
of the mutual holding company.
``(D) Standards for waiver of dividend.--
The Board may not object to a waiver of
dividends under subparagraph (B) if--
``(i) the waiver would not be
detrimental to the safe and sound
operation of the savings association;
``(ii) the board of directors of
the mutual holding company expressly
determines that a waiver of the
dividend by the mutual holding company
is consistent with the fiduciary duties
of the board of directors to the mutual
members of the mutual holding company;
and
``(iii) the mutual holding company
has, prior to December 1, 2009--
``(I) reorganized into a
mutual holding company under
subsection (o);
``(II) issued minority
stock either from its mid-tier
stock holding company or its
subsidiary stock savings
association; and
``(III) waived dividends it
had a right to receive from the
subsidiary stock savings
association.
``(E) Valuation.--
``(i) In general.--The appropriate
Federal banking agency shall consider
waived dividends in determining an
appropriate exchange ratio in the event
of a full conversion to stock form.
``(ii) Exception.--In the case of a
savings association that has
reorganized into a mutual holding
company, has issued minority stock from
a mid-tier stock holding company or a
subsidiary stock savings association of
the mutual holding company, and has
waived dividends it had a right to
receive from a subsidiary savings
association before December 1, 2009,
the appropriate Federal banking agency
shall not consider waived dividends in
determining an appropriate exchange
ratio in the event of a full conversion
to stock form.''.
(b) Effective Date.--The amendment made by subsection (a)
shall take effect on the transfer date.
SEC. 626. INTERMEDIATE HOLDING COMPANIES.
The Home Owners' Loan Act (12 U.S.C. 1461 et seq.) is
amended by inserting after section 10 (12 U.S.C. 1467a) the
following new section:
``SEC. 10A. INTERMEDIATE HOLDING COMPANIES.
``(a) Definition.--For purposes of this section:
``(1) Financial activities.--The term `financial
activities' means activities described in clauses (i)
and (ii) of section 10(c)(9)(A).
``(2) Grandfathered unitary savings and loan
holding company.--The term `grandfathered unitary
savings and loan holding company' means a company
described in section 10(c)(9)(C).
``(3) Internal financial activities.--The term
`internal financial activities' includes--
``(A) internal financial activities
conducted by a grandfathered savings and loan
holding company or any affiliate; and
``(B) internal treasury, investment, and
employee benefit functions.
``(b) Requirement.--
``(1) In general.--
``(A) Activities other than financial
activities.--If a grandfathered unitary savings
and loan holding company conducts activities
other than financial activities, the Board may
require such company to establish and conduct
all or a portion of such financial activities
in or through an intermediate holding company,
which shall be a savings and loan holding
company, established pursuant to regulations of
the Board, not later than 90 days (or such
longer period as the Board may deem
appropriate) after the transfer date.
``(B) Other activities.--Notwithstanding
subparagraph (A), the Board shall require a
grandfathered unitary savings and loan holding
company to establish an intermediate holding
company if the Board makes a determination that
the establishment of such intermediate holding
company is necessary--
``(i) to appropriately supervise
activities that are determined to be
financial activities; or
``(ii) to ensure that supervision
by the Board does not extend to the
activities of such company that are not
financial activities.
``(2) Internal financial activities.--
``(A) Treatment of internal financial
activities.--For purposes of this subsection,
the internal financial activities of a
grandfathered unitary savings and loan holding
company shall not be required to be placed in
an intermediate holding company.
``(B) Grandfathered activities.--A
grandfathered unitary savings and loan holding
company may continue to engage in an internal
financial activity, subject to review by the
Board to determine whether engaging in such
activity presents undue risk to the
grandfathered unitary savings and loan holding
company or to the financial stability of the
United States, if--
``(i) the grandfathered unitary
savings and loan holding company
engaged in the activity during the year
before the date of enactment of this
section; and
``(ii) at least \2/3\ of the assets
or \2/3\ of the revenues generated from
the activity are from or attributable
to the grandfathered unitary savings
and loan holding company.
``(3) Source of strength.--A grandfathered unitary
savings and loan holding company that directly or
indirectly controls an intermediate holding company
established under this section shall serve as a source
of strength to its subsidiary intermediate holding
company.
``(4) Parent company reports.--The Board, may from
time to time, examine and require reports under oath
from a grandfathered unitary savings and loan holding
company that controls an intermediate holding company,
and from the appropriate officers or directors of such
company, solely for purposes of ensuring compliance
with the provisions of this section, including
assessing the ability of the company to serve as a
source of strength to its subsidiary intermediate
holding company as required under paragraph (3) and
enforcing compliance with such requirement.
``(5) Limited parent company enforcement.--
``(A) In general.--In addition to any other
authority of the Board, the Board may enforce
compliance with the provisions of this
subsection that are applicable to any company
described in paragraph (1)(A) that controls an
intermediate holding company under section 8 of
the Federal Deposit Insurance Act, and a
company described in paragraph (1)(A) shall be
subject to such section (solely for purposes of
this subparagraph) in the same manner and to
the same extent as if the company described in
paragraph (1)(A) were a savings and loan
holding company.
``(B) Application of other act.--Any
violation of this subsection by a grandfathered
unitary savings and loan holding company that
controls an intermediate holding company may
also be treated as a violation of the Federal
Deposit Insurance Act for purposes of
subparagraph (A).
``(C) No effect on other authority.--No
provision of this paragraph shall be construed
as limiting any authority of the Board or any
other Federal agency under any other provision
of law.
``(c) Regulations.--The Board--
``(1) shall promulgate regulations to establish the
criteria for determining whether to require a
grandfathered unitary savings and loan holding company
to establish an intermediate holding company under
subsection (b); and
``(2) may promulgate regulations to establish any
restrictions or limitations on transactions between an
intermediate holding company or a parent of such
company and its affiliates, as necessary to prevent
unsafe and unsound practices in connection with
transactions between the intermediate holding company,
or any subsidiary thereof, and its parent company or
affiliates that are not subsidiaries of the
intermediate holding 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.
``(d) Rules of Construction.--
``(1) Activities.--Nothing in this section shall be
construed to require a grandfathered unitary savings
and loan holding company to conform its activities to
permissible activities.
``(2) Permissible corporate reorganization.--The
formation of an intermediate holding company as
required in subsection (b) shall be presumed to be a
permissible corporate reorganization as described in
section 10(c)(9)(D).''.
SEC. 627. INTEREST-BEARING TRANSACTION ACCOUNTS AUTHORIZED.
(a) Repeal of Prohibition on Payment of Interest on Demand
Deposits.--
(1) Federal reserve act.--Section 19(i) of the
Federal Reserve Act (12 U.S.C. 371a) is amended to read
as follows:
``(i) [Repealed]''.
(2) Home owners' loan act.--The first sentence of
section 5(b)(1)(B) of the Home Owners' Loan Act (12
U.S.C. 1464(b)(1)(B)) is amended by striking ``savings
association may not--'' and all that follows through
``(ii) permit any'' and inserting ``savings association
may not permit any''.
(3) Federal deposit insurance act.--Section 18(g)
of the Federal Deposit Insurance Act (12 U.S.C.
1828(g)) is amended to read as follows:
``(g) [Repealed]''.
(b) Effective Date.--The amendments made by subsection (a)
shall take effect 1 year after the date of the enactment of
this Act.
SEC. 628. CREDIT CARD BANK SMALL BUSINESS LENDING.
Section 2(c)(2)(F)(v) of the Bank Holding Company Act of
1956 (12 U.S.C. 1841(c)(2)(F)(v)) is amended by inserting
before the period the following: ``, other than credit card
loans that are made to businesses that meet the criteria for a
small business concern to be eligible for business loans under
regulations established by the Small Business Administration
under part 121 of title 13, Code of Federal Regulations''.
TITLE VII--WALL STREET TRANSPARENCY AND ACCOUNTABILITY
SEC. 701. SHORT TITLE.
This title may be cited as the ``Wall Street Transparency
and Accountability Act of 2010''.
Subtitle A--Regulation of Over-the-Counter Swaps Markets
PART I--REGULATORY AUTHORITY
SEC. 711. DEFINITIONS.
In this subtitle, the terms ``prudential regulator'',
``swap'', ``swap dealer'', ``major swap participant'', ``swap
data repository'', ``associated person of a swap dealer or
major swap participant'', ``eligible contract participant'',
``swap execution facility'', ``security-based swap'',
``security-based swap dealer'', ``major security-based swap
participant'', and ``associated person of a security-based swap
dealer or major security-based swap participant'' have the
meanings given the terms in section 1a of the Commodity
Exchange Act (7 U.S.C. 1a), including any modification of the
meanings under section 721(b) of this Act.
SEC. 712. REVIEW OF REGULATORY AUTHORITY.
(a) Consultation.--
(1) Commodity futures trading commission.--Before
commencing any rulemaking or issuing an order regarding
swaps, swap dealers, major swap participants, swap data
repositories, derivative clearing organizations with
regard to swaps, persons associated with a swap dealer
or major swap participant, eligible contract
participants, or swap execution facilities pursuant to
this subtitle, the Commodity Futures Trading Commission
shall consult and coordinate to the extent possible
with the Securities and Exchange Commission and the
prudential regulators for the purposes of assuring
regulatory consistency and comparability, to the extent
possible.
(2) Securities and exchange commission.--Before
commencing any rulemaking or issuing an order regarding
security-based swaps, security-based swap dealers,
major security-based swap participants, security-based
swap data repositories, clearing agencies with regard
to security-based swaps, persons associated with a
security-based swap dealer or major security-based swap
participant, eligible contract participants with regard
to security-based swaps, or security-based swap
execution facilities pursuant to subtitle B, the
Securities and Exchange Commission shall consult and
coordinate to the extent possible with the Commodity
Futures Trading Commission and the prudential
regulators for the purposes of assuring regulatory
consistency and comparability, to the extent possible.
(3) Procedures and deadline.--Such regulations
shall be prescribed in accordance with applicable
requirements of title 5, United States Code, and shall
be issued in final form not later than 360 days after
the date of enactment of this Act.
(4) Applicability.--The requirements of paragraphs
(1) and (2) shall not apply to an order issued--
(A) in connection with or arising from a
violation or potential violation of any
provision of the Commodity Exchange Act (7
U.S.C. 1 et seq.);
(B) in connection with or arising from a
violation or potential violation of any
provision of the securities laws; or
(C) in any proceeding that is conducted on
the record in accordance with sections 556 and
557 of title 5, United States Code.
(5) Effect.--Nothing in this subsection authorizes
any consultation or procedure for consultation that is
not consistent with the requirements of subchapter II
of chapter 5, and chapter 7, of title 5, United States
Code (commonly known as the ``Administrative Procedure
Act'').
(6) Rules; orders.--In developing and promulgating
rules or orders pursuant to this subsection, each
Commission shall consider the views of the prudential
regulators.
(7) Treatment of similar products and entities.--
(A) In general.--In adopting rules and
orders under this subsection, the Commodity
Futures Trading Commission and the Securities
and Exchange Commission shall treat
functionally or economically similar products
or entities described in paragraphs (1) and (2)
in a similar manner.
(B) Effect.--Nothing in this subtitle
requires the Commodity Futures Trading
Commission or the Securities and Exchange
Commission to adopt joint rules or orders that
treat functionally or economically similar
products or entities described in paragraphs
(1) and (2) in an identical manner.
(8) Mixed swaps.--The Commodity Futures Trading
Commission and the Securities and Exchange Commission,
after consultation with the Board of Governors, shall
jointly prescribe such regulations regarding mixed
swaps, as described in section 1a(47)(D) of the
Commodity Exchange Act (7 U.S.C. 1a(47)(D)) and in
section 3(a)(68)(D) of the Securities Exchange Act of
1934 (15 U.S.C. 78c(a)(68)(D)), as may be necessary to
carry out the purposes of this title.
(b) Limitation.--
(1) Commodity futures trading commission.--Nothing
in this title, unless specifically provided, confers
jurisdiction on the Commodity Futures Trading
Commission to issue a rule, regulation, or order
providing for oversight or regulation of--
(A) security-based swaps; or
(B) with regard to its activities or
functions concerning security-based swaps--
(i) security-based swap dealers;
(ii) major security-based swap
participants;
(iii) security-based swap data
repositories;
(iv) associated persons of a
security-based swap dealer or major
security-based swap participant;
(v) eligible contract participants
with respect to security-based swaps;
or
(vi) swap execution facilities with
respect to security-based swaps.
(2) Securities and exchange commission.--Nothing in
this title, unless specifically provided, confers
jurisdiction on the Securities and Exchange Commission
or State securities regulators to issue a rule,
regulation, or order providing for oversight or
regulation of--
(A) swaps; or
(B) with regard to its activities or
functions concerning swaps--
(i) swap dealers;
(ii) major swap participants;
(iii) swap data repositories;
(iv) persons associated with a swap
dealer or major swap participant;
(v) eligible contract participants
with respect to swaps; or
(vi) swap execution facilities with
respect to swaps.
(3) Prohibition on certain futures associations and
national securities associations.--
(A) Futures associations.--Notwithstanding
any other provision of law (including
regulations), unless otherwise authorized by
this title, no futures association registered
under section 17 of the Commodity Exchange Act
(7 U.S.C. 21) may issue a rule, regulation, or
order for the oversight or regulation of, or
otherwise assert jurisdiction over, for any
purpose, any security-based swap, except that
this subparagraph shall not limit the authority
of a registered futures association to examine
for compliance with, and enforce, its rules on
capital adequacy.
(B) National securities associations.--
Notwithstanding any other provision of law
(including regulations), unless otherwise
authorized by this title, no national
securities association registered under section
15A of the Securities Exchange Act of 1934 (15
U.S.C. 78o-3) may issue a rule, regulation, or
order for the oversight or regulation of, or
otherwise assert jurisdiction over, for any
purpose, any swap, except that this
subparagraph shall not limit the authority of a
national securities association to examine for
compliance with, and enforce, its rules on
capital adequacy.
(c) Objection to Commission Regulation.--
(1) Filing of petition for review.--
(A) In general.--If either Commission
referred to in this section determines that a
final rule, regulation, or order of the other
Commission conflicts with subsection (a)(7) or
(b), then the complaining Commission may obtain
review of the final rule, regulation, or order
in the United States Court of Appeals for the
District of Columbia Circuit by filing in the
court, not later than 60 days after the date of
publication of the final rule, regulation, or
order, a written petition requesting that the
rule, regulation, or order be set aside.
(B) Expedited proceeding.--A proceeding
described in subparagraph (A) shall be
expedited by the United States Court of Appeals
for the District of Columbia Circuit.
(2) Transmittal of petition and record.--
(A) In general.--A copy of a petition
described in paragraph (1) shall be transmitted
not later than 1 business day after the date of
filing by the complaining Commission to the
Secretary of the responding Commission.
(B) Duty of responding commission.--On
receipt of the copy of a petition described in
paragraph (1), the responding Commission shall
file with the United States Court of Appeals
for the District of Columbia Circuit--
(i) a copy of the rule, regulation,
or order under review (including any
documents referred to therein); and
(ii) any other materials prescribed
by the United States Court of Appeals
for the District of Columbia Circuit.
(3) Standard of review.--The United States Court of
Appeals for the District of Columbia Circuit shall--
(A) give deference to the views of neither
Commission; and
(B) determine to affirm or set aside a
rule, regulation, or order of the responding
Commission under this subsection, based on the
determination of the court as to whether the
rule, regulation, or order is in conflict with
subsection (a)(7) or (b), as applicable.
(4) Judicial stay.--The filing of a petition by the
complaining Commission pursuant to paragraph (1) shall
operate as a stay of the rule, regulation, or order
until the date on which the determination of the United
States Court of Appeals for the District of Columbia
Circuit is final (including any appeal of the
determination).
(d) Joint Rulemaking.--
(1) In general.--Notwithstanding any other
provision of this title and subsections (b) and (c),
the Commodity Futures Trading Commission and the
Securities and Exchange Commission, in consultation
with the Board of Governors, shall further define the
terms ``swap'', ``security-based swap'', ``swap
dealer'', ``security-based swap dealer'', ``major swap
participant'', ``major security-based swap
participant'', ``eligible contract participant'', and
``security-based swap agreement'' in section
1a(47)(A)(v) of the Commodity Exchange Act (7 U.S.C.
1a(47)(A)(v)) and section 3(a)(78) of the Securities
Exchange Act of 1934 (15 U.S.C. 78c(a)(78)).
(2) Authority of the commissions.--
(A) In general.--Notwithstanding any other
provision of this title, the Commodity Futures
Trading Commission and the Securities and
Exchange Commission, in consultation with the
Board of Governors, shall jointly adopt such
other rules regarding such definitions as the
Commodity Futures Trading Commission and the
Securities and Exchange Commission determine
are necessary and appropriate, in the public
interest, and for the protection of investors.
(B) Trade repository recordkeeping.--
Notwithstanding any other provision of this
title, the Commodity Futures Trading Commission
and the Securities and Exchange Commission, in
consultation with the Board of Governors, shall
engage in joint rulemaking to jointly adopt a
rule or rules governing the books and records
that are required to be kept and maintained
regarding security-based swap agreements by
persons that are registered as swap data
repositories under the Commodity Exchange Act,
including uniform rules that specify the data
elements that shall be collected and maintained
by each repository.
(C) Books and records.--Notwithstanding any
other provision of this title, the Commodity
Futures Trading Commission and the Securities
and Exchange Commission, in consultation with
the Board of Governors, shall engage in joint
rulemaking to jointly adopt a rule or rules
governing books and records regarding security-
based swap agreements, including daily trading
records, for swap dealers, major swap
participants, security-based swap dealers, and
security-based swap participants.
(D) Comparable rules.--Rules and
regulations prescribed jointly under this title
by the Commodity Futures Trading Commission and
the Securities and Exchange Commission shall be
comparable to the maximum extent possible,
taking into consideration differences in
instruments and in the applicable statutory
requirements.
(E) Tracking uncleared transactions.--Any
rules prescribed under subparagraph (A) shall
require the maintenance of records of all
activities relating to security-based swap
agreement transactions defined under
subparagraph (A) that are not cleared.
(F) Sharing of information.--The Commodity
Futures Trading Commission shall make available
to the Securities and Exchange Commission
information relating to security-based swap
agreement transactions defined in subparagraph
(A) that are not cleared.
(3) 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) or (2) in a
timely manner, at the request of either Commission, the
Financial Stability Oversight Council shall resolve the
dispute--
(A) within a reasonable time after
receiving the request;
(B) after consideration of relevant
information provided by each Commission; and
(C) by agreeing with 1 of the Commissions
regarding the entirety of the matter or by
determining a compromise position.
(4) Joint interpretation.--Any interpretation of,
or guidance by either Commission 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, after
consultation with the Board of Governors, if this title
requires the Commodity Futures Trading Commission and
the Securities and Exchange Commission to issue joint
regulations to implement the provision.
(e) Global Rulemaking Timeframe.--Unless otherwise provided
in this title, or an amendment made by this title, the
Commodity Futures Trading Commission or the Securities and
Exchange Commission, or both, shall individually, and not
jointly, promulgate rules and regulations required of each
Commission under this title or an amendment made by this title
not later than 360 days after the date of enactment of this
Act.
(f) Rules and Registration Before Final Effective Dates.--
Beginning on the date of enactment of this Act and
notwithstanding the effective date of any provision of this
Act, the Commodity Futures Trading Commission and the
Securities and Exchange Commission may, in order to prepare for
the effective dates of the provisions of this Act--
(1) promulgate rules, regulations, or orders
permitted or required by this Act;
(2) conduct studies and prepare reports and
recommendations required by this Act;
(3) register persons under the provisions of this
Act; and
(4) exempt persons, agreements, contracts, or
transactions from provisions of this Act, under the
terms contained in this Act,
provided, however, that no action by the Commodity Futures
Trading Commission or the Securities and Exchange Commission
described in paragraphs (1) through (4) shall become effective
prior to the effective date applicable to such action under the
provisions of this Act.
SEC. 713. PORTFOLIO MARGINING CONFORMING CHANGES.
(a) Securities Exchange Act of 1934.--Section 15(c)(3) of
the Securities Exchange Act of 1934 (15 U.S.C. 78o(c)(3)) is
amended by adding at the end the following:
``(C) Notwithstanding any provision of
sections 2(a)(1)(C)(i) or 4d(a)(2) of the
Commodity Exchange Act and the rules and
regulations thereunder, and pursuant to an
exemption granted by the Commission under
section 36 of this title or pursuant to a rule
or regulation, cash and securities may be held
by a broker or dealer registered pursuant to
subsection (b)(1) and also registered as a
futures commission merchant pursuant to section
4f(a)(1) of the Commodity Exchange Act, in a
portfolio margining account carried as a
futures account subject to section 4d of the
Commodity Exchange Act and the rules and
regulations thereunder, pursuant to a portfolio
margining program approved by the Commodity
Futures Trading Commission, and subject to
subchapter IV of chapter 7 of title 11 of the
United States Code and the rules and
regulations thereunder. The Commission shall
consult with the Commodity Futures Trading
Commission to adopt rules to ensure that such
transactions and accounts are subject to
comparable requirements to the extent
practicable for similar products.''.
(b) Commodity Exchange Act.--Section 4d of the Commodity
Exchange Act (7 U.S.C. 6d) is amended by adding at the end the
following:
``(h) Notwithstanding subsection (a)(2) or the rules and
regulations thereunder, and pursuant to an exemption granted by
the Commission under section 4(c) of this Act or pursuant to a
rule or regulation, a futures commission merchant that is
registered pursuant to section 4f(a)(1) of this Act and also
registered as a broker or dealer pursuant to section 15(b)(1)
of the Securities Exchange Act of 1934 may, pursuant to a
portfolio margining program approved by the Securities and
Exchange Commission pursuant to section 19(b) of the Securities
Exchange Act of 1934, hold in a portfolio margining account
carried as a securities account subject to section 15(c)(3) of
the Securities Exchange Act of 1934 and the rules and
regulations thereunder, a contract for the purchase or sale of
a commodity for future delivery or an option on such a
contract, and any money, securities or other property received
from a customer to margin, guarantee or secure such a contract,
or accruing to a customer as the result of such a contract. The
Commission shall consult with the Securities and Exchange
Commission to adopt rules to ensure that such transactions and
accounts are subject to comparable requirements to the extent
practical for similar products.''.
(c) Duty of Commodity Futures Trading Commission.--Section
20 of the Commodity Exchange Act (7 U.S.C. 24) is amended by
adding at the end the following:
``(c) The Commission shall exercise its authority to ensure
that securities held in a portfolio margining account carried
as a futures account are customer property and the owners of
those accounts are customers for the purposes of subchapter IV
of chapter 7 of title 11 of the United States Code.''.
SEC. 714. ABUSIVE SWAPS.
The Commodity Futures Trading Commission or the Securities
and Exchange Commission, or both, individually may, by rule or
order--
(1) collect information as may be necessary
concerning the markets for any types of--
(A) swap (as defined in section 1a of the
Commodity Exchange Act (7 U.S.C. 1a)); or
(B) security-based swap (as defined in
section 1a of the Commodity Exchange Act (7
U.S.C. 1a)); and
(2) issue a report with respect to any types of
swaps or security-based swaps that the Commodity
Futures Trading Commission or the Securities and
Exchange Commission determines to be detrimental to--
(A) the stability of a financial market; or
(B) participants in a financial market.
SEC. 715. AUTHORITY TO PROHIBIT PARTICIPATION IN SWAP ACTIVITIES.
Except as provided in section 4 of the Commodity Exchange
Act (7 U.S.C. 6), if the Commodity Futures Trading Commission
or the Securities and Exchange Commission determines that the
regulation of swaps or security-based swaps markets in a
foreign country undermines the stability of the United States
financial system, either Commission, in consultation with the
Secretary of the Treasury, may prohibit an entity domiciled in
the foreign country from participating in the United States in
any swap or security-based swap activities.
SEC. 716. PROHIBITION AGAINST FEDERAL GOVERNMENT BAILOUTS OF SWAPS
ENTITIES.
(a) Prohibition on Federal Assistance.--Notwithstanding any
other provision of law (including regulations), no Federal
assistance may be provided to any swaps entity with respect to
any swap, security-based swap, or other activity of the swaps
entity.
(b) Definitions.--In this section:
(1) Federal assistance.--The term ``Federal
assistance'' means the use of any advances from any
Federal Reserve credit facility or discount window that
is not part of a program or facility with broad-based
eligibility under section 13(3)(A) of the Federal
Reserve Act, Federal Deposit Insurance Corporation
insurance or guarantees for the purpose of--
(A) making any loan to, or purchasing any
stock, equity interest, or debt obligation of,
any swaps entity;
(B) purchasing the assets of any swaps
entity;
(C) guaranteeing any loan or debt issuance
of any swaps entity; or
(D) entering into any assistance
arrangement (including tax breaks), loss
sharing, or profit sharing with any swaps
entity.
(2) Swaps entity.--
(A) In general.--The term ``swaps entity''
means any swap dealer, security-based swap
dealer, major swap participant, major security-
based swap participant, that is registered
under--
(i) the Commodity Exchange Act (7
U.S.C. 1 et seq.); or
(ii) the Securities Exchange Act of
1934 (15 U.S.C. 78a et seq.).
(B) Exclusion.--The term ``swaps entity''
does not include any major swap participant or
major security-based swap participant that is
an insured depository institution.
(c) Affiliates of Insured Depository Institutions.--The
prohibition on Federal assistance contained in subsection (a)
does not apply to and shall not prevent an insured depository
institution from having or establishing an affiliate which is a
swaps entity, as long as such insured depository institution is
part of a bank holding company, or savings and loan holding
company, that is supervised by the Federal Reserve and such
swaps entity affiliate complies with sections 23A and 23B of
the Federal Reserve Act and such other requirements as the
Commodity Futures Trading Commission or the Securities Exchange
Commission, as appropriate, and the Board of Governors of the
Federal Reserve System, may determine to be necessary and
appropriate.
(d) Only Bona Fide Hedging and Traditional Bank Activities
Permitted.--The prohibition in subsection (a) shall apply to
any insured depository institution unless the insured
depository institution limits its swap or security-based swap
activities to:
(1) Hedging and other similar risk mitigating
activities directly related to the insured depository
institution's activities.
(2) Acting as a swaps entity for swaps or security-
based swaps involving rates or reference assets that
are permissible for investment by a national bank under
the paragraph designated as ``Seventh.'' of section
5136 of the Revised Statutes of the United States ( 12
U.S.C. 24), other than as described in paragraph (3).
(3) Limitation on credit default swaps.--Acting as
a swaps entity for credit default swaps, including
swaps or security-based swaps referencing the credit
risk of asset-backed securities as defined in section
3(a)(77) of the Securities Exchange Act of 1934 (15
U.S.C. 78c(a)(77)) (as amended by this Act) shall not
be considered a bank permissible activity for purposes
of subsection (d)(2) unless such swaps or security-
based swaps are cleared by a derivatives clearing
organization (as such term is defined in section la of
the Commodity Exchange Act (7 U.S.C. la)) or a clearing
agency (as such term is defined in section 3 of the
Securities Exchange Act (15 U.S.C. 78c)) that is
registered, or exempt from registration, as a
derivatives clearing organization under the Commodity
Exchange Act or as a clearing agency under the
Securities Exchange Act, respectively.
(e) Existing Swaps and Security-based Swaps.--The
prohibition in subsection (a) shall only apply to swaps or
security-based swaps entered into by an insured depository
institution after the end of the transition period described in
subsection (f).
(f) Transition Period.--To the extent an insured depository
institution qualifies as a ``swaps entity'' and would be
subject to the Federal assistance prohibition in subsection
(a), the appropriate Federal banking agency, after consulting
with and considering the views of the Commodity Futures Trading
Commission or the Securities Exchange Commission, as
appropriate, shall permit the insured depository institution up
to 24 months to divest the swaps entity or cease the activities
that require registration as a swaps entity. In establishing
the appropriate transition period to effect such divestiture or
cessation of activities, which may include making the swaps
entity an affiliate of the insured depository institution, the
appropriate Federal banking agency shall take into account and
make written findings regarding the potential impact of such
divestiture or cessation of activities on the insured
depository institution's (1) mortgage lending, (2) small
business lending, (3) job creation, and (4) capital formation
versus the potential negative impact on insured depositors and
the Deposit Insurance Fund of the Federal Deposit Insurance
Corporation. The appropriate Federal banking agency may
consider such other factors as may be appropriate. The
appropriate Federal banking agency may place such conditions on
the insured depository institution's divestiture or ceasing of
activities of the swaps entity as it deems necessary and
appropriate. The transition period under this subsection may be
extended by the appropriate Federal banking agency, after
consultation with the Commodity Futures Trading Commission and
the Securities and Exchange Commission, for a period of up to 1
additional year.
(g) Excluded Entities.--For purposes of this section, the
term ``swaps entity'' shall not include any insured depository
institution under the Federal Deposit Insurance Act or a
covered financial company under title II which is in a
conservatorship, receivership, or a bridge bank operated by the
Federal Deposit Insurance Corporation.
(h) Effective Date.--The prohibition in subsection (a)
shall be effective 2 years following the date on which this Act
is effective.
(i) Liquidation Required.--
(1) In general.--
(A) FDIC insured institutions.--All swaps
entities that are FDIC insured institutions
that are put into receivership or declared
insolvent as a result of swap or security-based
swap activity of the swaps entities shall be
subject to the termination or transfer of that
swap or security-based swap activity in
accordance with applicable law prescribing the
treatment of those contracts. No taxpayer funds
shall be used to prevent the receivership of
any swap entity resulting from swap or
security-based swap activity of the swaps
entity.
(B) Institutions that pose a systemic risk
and are subject to heightened prudential
supervision as regulated under section 113.--
All swaps entities that are institutions that
pose a systemic risk and are subject to
heightened prudential supervision as regulated
under section 113, that are put into
receivership or declared insolvent as a result
of swap or security-based swap activity of the
swaps entities shall be subject to the
termination or transfer of that swap or
security-based swap activity in accordance with
applicable law prescribing the treatment of
those contracts. No taxpayer funds shall be
used to prevent the receivership of any swap
entity resulting from swap or security-based
swap activity of the swaps entity.
(C) Non-FDIC insured, non-systemically
significant institutions not subject to
heightened prudential supervision as regulated
under section 113.--No taxpayer resources shall
be used for the orderly liquidation of any
swaps entities that are non-FDIC insured, non-
systemically significant institutions not
subject to heightened prudential supervision as
regulated under section 113.
(2) Recovery of funds.--All funds expended on the
termination or transfer of the swap or security-based
swap activity of the swaps entity shall be recovered in
accordance with applicable law from the disposition of
assets of such swap entity or through assessments,
including on the financial sector as provided under
applicable law.
(3) No losses to taxpayers.--Taxpayers shall bear
no losses from the exercise of any authority under this
title.
(j) Prohibition on Unregulated Combination of Swaps
Entities and Banking.--At no time following adoption of the
rules in subsection (k) may a bank or bank holding company be
permitted to be or become a swap entity unless it conducts its
swap or security-based swap activity in compliance with such
minimum standards set by its prudential regulator as are
reasonably calculated to permit the swaps entity to conduct its
swap or security-based swap activities in a safe and sound
manner and mitigate systemic risk.
(k) Rules.--In prescribing rules, the prudential regulator
for a swaps entity shall consider the following factors:
(1) The expertise and managerial strength of the
swaps entity, including systems for effective
oversight.
(2) The financial strength of the swaps entity.
(3) Systems for identifying, measuring and
controlling risks arising from the swaps entity's
operations.
(4) Systems for identifying, measuring and
controlling the swaps entity's participation in
existing markets.
(5) Systems for controlling the swaps entity's
participation or entry into in new markets and
products.
(l) Authority of the Financial Stability Oversight
Council.--The Financial Stability Oversight Council may
determine that, when other provisions established by this Act
are insufficient to effectively mitigate systemic risk and
protect taxpayers, that swaps entities may no longer access
Federal assistance with respect to any swap, security-based
swap, or other activity of the swaps entity. Any such
determination by the Financial Stability Oversight Council of a
prohibition of federal assistance shall be made on an
institution-by-institution basis, and shall require the vote of
not fewer than two-thirds of the members of the Financial
Stability Oversight Council, which must include the vote by the
Chairman of the Council, the Chairman of the Board of Governors
of the Federal Reserve System, and the Chairperson of the
Federal Deposit Insurance Corporation. Notice and hearing
requirements for such determinations shall be consistent with
the standards provided in title I.
(m) Ban on Proprietary Trading in Derivatives.--An insured
depository institution shall comply with the prohibition on
proprietary trading in derivatives as required by section 619
of the Dodd-Frank Wall Street Reform and Consumer Protection
Act.
SEC. 717. NEW PRODUCT APPROVAL CFTC--SEC PROCESS.
(a) Amendments to the Commodity Exchange Act.--Section
2(a)(1)(C) of the Commodity Exchange Act (7 U.S.C. 2(a)(1)(C))
is amended--
(1) in clause (i) by striking ``This'' and
inserting ``(I) Except as provided in subclause (II),
this''; and
(2) by adding at the end of clause (i) the
following:
``(II) This Act shall apply
to and the Commission shall
have jurisdiction with respect
to accounts, agreements, and
transactions involving, and may
permit the listing for trading
pursuant to section 5c(c) of, a
put, call, or other option on 1
or more securities (as defined
in section 2(a)(1) of the
Securities Act of 1933 or
section 3(a)(10) of the
Securities Exchange Act of 1934
on the date of enactment of the
Futures Trading Act of 1982),
including any group or index of
such securities, or any
interest therein or based on
the value thereof, that is
exempted by the Securities and
Exchange Commission pursuant to
section 36(a)(1) of the
Securities Exchange Act of 1934
with the condition that the
Commission exercise concurrent
jurisdiction over such put,
call, or other option;
provided, however, that nothing
in this paragraph shall be
construed to affect the
jurisdiction and authority of
the Securities and Exchange
Commission over such put, call,
or other option.''.
(b) Amendments to the Securities Exchange Act of 1934.--The
Securities Exchange Act of 1934 is amended by adding the
following section after section 3A (15 U.S.C. 78c-1):
``SEC. 3B. SECURITIES-RELATED DERIVATIVES.
``(a) Any agreement, contract, or transaction (or class
thereof) that is exempted by the Commodity Futures Trading
Commission pursuant to section 4(c)(1) of the Commodity
Exchange Act (7 U.S.C. 6(c)(1)) with the condition that the
Commission exercise concurrent jurisdiction over such
agreement, contract, or transaction (or class thereof) shall be
deemed a security for purposes of the securities laws.
``(b) With respect to any agreement, contract, or
transaction (or class thereof) that is exempted by the
Commodity Futures Trading Commission pursuant to section
4(c)(1) of the Commodity Exchange Act (7 U.S.C. 6(c)(1)) with
the condition that the Commission exercise concurrent
jurisdiction over such agreement, contract, or transaction (or
class thereof), references in the securities laws to the
`purchase' or `sale' of a security shall be deemed to 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 such
agreement, contract, or transaction, as the context may
require.''.
(c) Amendment to Securities Exchange Act of 1934.--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:
``(10) Notwithstanding paragraph (2), the time
period within which the Commission is required by order
to approve a proposed rule change or institute
proceedings to determine whether the proposed rule
change should be disapproved is stayed pending a
determination by the Commission upon the request of the
Commodity Futures Trading Commission or its Chairman
that the Commission issue a determination as to whether
a product that is the subject of such proposed rule
change is a security pursuant to section 718 of the
Wall Street Transparency and Accountability Act of
2010.''.
(d) Amendment to Commodity Exchange Act.--Section 5c(c)(1)
of the Commodity Exchange Act (7 U.S.C. 7a-2(c)(1)) is
amended--
(1) by striking ``Subject to paragraph (2)'' and
inserting the following:
``(A) Election.--Subject to paragraph
(2)''; and
(2) by adding at the end the following:
``(B) Certification.--The certification of
a product pursuant to this paragraph shall be
stayed pending a determination by the
Commission upon the request of the Securities
and Exchange Commission or its Chairman that
the Commission issue a determination as to
whether the product that is the subject of such
certification is a contract of sale of a
commodity for future delivery, an option on
such a contract, or an option on a commodity
pursuant to section 718 of the Wall Street
Transparency and Accountability Act of 2010.''.
SEC. 718. DETERMINING STATUS OF NOVEL DERIVATIVE PRODUCTS.
(a) Process for Determining the Status of a Novel
Derivative Product.--
(1) Notice.--
(A) In general.--Any person filing a
proposal to list or trade a novel derivative
product that may have elements of both
securities and contracts of sale of a commodity
for future delivery (or options on such
contracts or options on commodities) may
concurrently provide notice and furnish a copy
of such filing with the Securities and Exchange
Commission and the Commodity Futures Trading
Commission. Any such notice shall state that
notice has been made with both Commissions.
(B) Notification.--If no concurrent notice
is made pursuant to subparagraph (A), within 5
business days after determining that a proposal
that seeks to list or trade a novel derivative
product may have elements of both securities
and contracts of sale of a commodity for future
delivery (or options on such contracts or
options on commodities), the Securities and
Exchange Commission or the Commodity Futures
Trading Commission, as applicable, shall notify
the other Commission and provide a copy of such
filing to the other Commission.
(2) Request for determination.--
(A) In general.--No later than 21 days
after receipt of a notice under paragraph (1),
or upon its own initiative if no such notice is
received, the Commodity Futures Trading
Commission may request that the Securities and
Exchange Commission issue a determination as to
whether a product is a security, as defined in
section 3(a)(10) of the Securities Exchange Act
of 1934 (15 U.S.C. 78c(a)(10)).
(B) Request.--No later than 21 days after
receipt of a notice under paragraph (1), or
upon its own initiative if no such notice is
received, the Securities and Exchange
Commission may request that the Commodity
Futures Trading Commission issue a
determination as to whether a product is a
contract of sale of a commodity for future
delivery, an option on such a contract, or an
option on a commodity subject to the Commodity
Futures Trading Commission's exclusive
jurisdiction under section 2(a)(1)(A) of the
Commodity Exchange Act (7 U.S.C. 2(a)(1)(A)).
(C) Requirement relating to request.--A
request under subparagraph (A) or (B) shall be
made by submitting such request, in writing, to
the Securities and Exchange Commission or the
Commodity Futures Trading Commission, as
applicable.
(D) Effect.--Nothing in this paragraph
shall be construed to prevent--
(i) the Commodity Futures Trading
Commission from requesting that the
Securities and Exchange Commission
grant an exemption pursuant to section
36(a)(1) of the Securities Exchange Act
of 1934 (15 U.S.C. 78mm(a)(1)) with
respect to a product that is the
subject of a filing under paragraph
(1); or
(ii) the Securities and Exchange
Commission from requesting that the
Commodity Futures Trading Commission
grant an exemption pursuant to section
4(c)(1) of the Commodity Exchange Act
(7 U.S.C. 6(c)(1)) with respect to a
product that is the subject of a filing
under paragraph (1),
Provided, however, that nothing in this
subparagraph shall be construed to require the
Commodity Futures Trading Commission or the
Securities and Exchange Commission to issue an
exemption requested pursuant to this
subparagraph; provided further, That an order
granting or denying an exemption described in
this subparagraph and issued under paragraph
(3)(B) shall not be subject to judicial review
pursuant to subsection (b).
(E) Withdrawal of request.--A request under
subparagraph (A) or (B) may be withdrawn by the
Commission making the request at any time prior
to a determination being made pursuant to
paragraph (3) for any reason by providing
written notice to the head of the other
Commission.
(3) Determination.--Notwithstanding any other
provision of law, no later than 120 days after the date
of receipt of a request--
(A) under subparagraph (A) or (B) of
paragraph (2), unless such request has been
withdrawn pursuant to paragraph (2)(E), the
Securities and Exchange Commission or the
Commodity Futures Trading Commission, as
applicable, shall, by order, issue the
determination requested in subparagraph (A) or
(B) of paragraph (2), as applicable, and the
reasons therefor; or
(B) under paragraph (2)(D), unless such
request has been withdrawn, the Securities and
Exchange Commission or the Commodity Futures
Trading Commission, as applicable, shall grant
an exemption or provide reasons for not
granting such exemption, provided that any
decision by the Securities and Exchange
Commission not to grant such exemption shall
not be reviewable under section 25 of the
Securities Exchange Act of 1934 (15 U.S.C.
78y).
(b) Judicial Resolution.--
(1) In general.--The Commodity Futures Trading
Commission or the Securities and Exchange Commission
may petition the United States Court of Appeals for the
District of Columbia Circuit for review of a final
order of the other Commission issued pursuant to
subsection (a)(3)(A), with respect to a novel
derivative product that may have elements of both
securities and contracts of sale of a commodity for
future delivery (or options on such contracts or
options on commodities) that it believes affects its
statutory jurisdiction within 60 days after the date of
entry of such order, a written petition requesting a
review of the order. Any such proceeding shall be
expedited by the Court of Appeals.
(2) Transmittal of petition and record.--A copy of
a petition described in paragraph (1) shall be
transmitted not later than 1 business day after filing
by the complaining Commission to the responding
Commission. On receipt of the petition, the responding
Commission shall file with the court a copy of the
order under review and any documents referred to
therein, and any other materials prescribed by the
court.
(3) Standard of review.--The court, in considering
a petition filed pursuant to paragraph (1), shall give
no deference to, or presumption in favor of, the views
of either Commission.
(4) Judicial stay.--The filing of a petition by the
complaining Commission pursuant to paragraph (1) shall
operate as a stay of the order, until the date on which
the determination of the court is final (including any
appeal of the determination).
SEC. 719. STUDIES.
(a) Study on Effects of Position Limits on Trading on
Exchanges in the United States.--
(1) Study.--The Commodity Futures Trading
Commission, in consultation with each entity that is a
designated contract market under the Commodity Exchange
Act, shall conduct a study of the effects (if any) of
the position limits imposed pursuant to the other
provisions of this title on excessive speculation and
on the movement of transactions from exchanges in the
United States to trading venues outside the United
States.
(2) Report to the congress.--Within 12 months after
the imposition of position limits pursuant to the other
provisions of this title, the Commodity Futures Trading
Commission, in consultation with each entity that is a
designated contract market under the Commodity Exchange
Act, shall submit to the Congress a report on the
matters described in paragraph (1).
(3) Required hearing.--Within 30 legislative days
after the submission to the Congress of the report
described in paragraph (2), the Committee on
Agriculture of the House of Representatives shall hold
a hearing examining the findings of the report.
(4) Biennial reporting.--In addition to the study
required in paragraph (1), the Chairman of the
Commodity Futures Trading Commission shall prepare and
submit to the Congress biennial reports on the growth
or decline of the derivatives markets in the United
States and abroad, which shall include assessments of
the causes of any such growth or decline, the
effectiveness of regulatory regimes in managing
systemic risk, a comparison of the costs of compliance
at the time of the report for market participants
subject to regulation by the United States with the
costs of compliance in December 2008 for the market
participants, and the quality of the available data. In
preparing the report, the Chairman shall solicit the
views of, consult with, and address the concerns raised
by, market participants, regulators, legislators, and
other interested parties.
(b) Study on Feasibility of Requiring Use of Standardized
Algorithmic Descriptions for Financial Derivatives.--
(1) In general.--The Securities and Exchange
Commission and the Commodity Futures Trading Commission
shall conduct a joint study of the feasibility of
requiring the derivatives industry to adopt
standardized computer-readable algorithmic descriptions
which may be used to describe complex and standardized
financial derivatives.
(2) Goals.--The algorithmic descriptions defined in
the study shall be designed to facilitate computerized
analysis of individual derivative contracts and to
calculate net exposures to complex derivatives. The
algorithmic descriptions shall be optimized for
simultaneous use by--
(A) commercial users and traders of
derivatives;
(B) derivative clearing houses, exchanges
and electronic trading platforms;
(C) trade repositories and regulator
investigations of market activities; and
(D) systemic risk regulators.
The study will also examine the extent to which the
algorithmic description, together with standardized and
extensible legal definitions, may serve as the binding
legal definition of derivative contracts. The study
will examine the logistics of possible implementations
of standardized algorithmic descriptions for
derivatives contracts. The study shall be limited to
electronic formats for exchange of derivative contract
descriptions and will not contemplate disclosure of
proprietary valuation models.
(3) International coordination.--In conducting the
study, the Securities and Exchange Commission and the
Commodity Futures Trading Commission shall coordinate
the study with international financial institutions and
regulators as appropriate and practical.
(4) Report.--Within 8 months after the date of the
enactment of this Act, the Securities and Exchange
Commission and the Commodity Futures Trading Commission
shall jointly submit to the Committees on Agriculture
and on Financial Services of the House of
Representatives and the Committees on Agriculture,
Nutrition, and Forestry and on Banking, Housing, and
Urban Affairs of the Senate a written report which
contains the results of the study required by
paragraphs (1) through (3).
(c) International Swap Regulation.--
(1) In general.--The Commodity Futures Trading
Commission and the Securities and Exchange Commission
shall jointly conduct a study--
(A) relating to--
(i) swap regulation in the United
States, Asia, and Europe; and
(ii) clearing house and clearing
agency regulation in the United States,
Asia, and Europe; and
(B) that identifies areas of regulation
that are similar in the United States, Asia and
Europe and other areas of regulation that could
be harmonized
(2) Report.--Not later than 18 months after the
date of enactment of this Act, the Commodity Futures
Trading Commission and the Securities and Exchange
Commission shall submit to the Committee on
Agriculture, Nutrition, and Forestry and the Committee
on Banking, Housing, and Urban Affairs of the Senate
and the Committee on Agriculture and the Committee on
Financial Services of the House of Representatives a
report that includes a description of the results of
the study under subsection (a), including--
(A) identification of the major exchanges
and their regulator in each geographic area for
the trading of swaps and security-based swaps
including a listing of the major contracts and
their trading volumes and notional values as
well as identification of the major swap
dealers participating in such markets;
(B) identification of the major clearing
houses and clearing agencies and their
regulator in each geographic area for the
clearing of swaps and security-based swaps,
including a listing of the major contracts and
the clearing volumes and notional values as
well as identification of the major clearing
members of such clearing houses and clearing
agencies in such markets;
(C) a description of the comparative
methods of clearing swaps in the United States,
Asia, and Europe; and
(D) a description of the various systems
used for establishing margin on individual
swaps, security-based swaps, and swap
portfolios.
(d) Stable Value Contracts.--
(1) Determination.--
(A) Status.--Not later than 15 months after
the date of the enactment of this Act, the
Securities and Exchange Commission and the
Commodity Futures Trading Commission shall,
jointly, conduct a study to determine whether
stable value contracts fall within the
definition of a swap. In making the
determination required under this subparagraph,
the Commissions jointly shall consult with the
Department of Labor, the Department of the
Treasury, and the State entities that regulate
the issuers of stable value contracts.
(B) Regulations.--If the Commissions
determine that stable value contracts fall
within the definition of a swap, the
Commissions jointly shall determine if an
exemption for stable value contracts from the
definition of swap is appropriate and in the
public interest. The Commissions shall issue
regulations implementing the determinations
required under this paragraph. Until the
effective date of such regulations, and
notwithstanding any other provision of this
title, the requirements of this title shall not
apply to stable value contracts.
(C) Legal certainty.--Stable value
contracts in effect prior to the effective date
of the regulations described in subparagraph
(B) shall not be considered swaps.
(2) Definition.--For purposes of this subsection,
the term ``stable value contract'' means any contract,
agreement, or transaction that provides a crediting
interest rate and guaranty or financial assurance of
liquidity at contract or book value prior to maturity
offered by a bank, insurance company, or other State or
federally regulated financial institution for the
benefit of any individual or commingled fund available
as an investment in an employee benefit plan (as
defined in section 3(3) of the Employee Retirement
Income Security Act of 1974, including plans described
in section 3(32) of such Act) subject to participant
direction, an eligible deferred compensation plan (as
defined in section 457(b) of the Internal Revenue Code
of 1986) that is maintained by an eligible employer
described in section 457(e)(1)(A) of such Code, an
arrangement described in section 403(b) of such Code,
or a qualified tuition program (as defined in section
529 of such Code).
SEC. 720. MEMORANDUM.
(a)(1) The Commodity Futures Trading Commission and the
Federal Energy Regulatory Commission shall, not later than 180
days after the date of the enactment of this Act, negotiate a
memorandum of understanding to establish procedures for--
(A) applying their respective authorities in a
manner so as to ensure effective and efficient
regulation in the public interest;
(B) resolving conflicts concerning overlapping
jurisdiction between the 2 agencies; and
(C) avoiding, to the extent possible, conflicting
or duplicative regulation.
(2) Such memorandum and any subsequent amendments to the
memorandum shall be promptly submitted to the appropriate
committees of Congress.
(b) The Commodity Futures Trading Commission and the
Federal Energy Regulatory Commission shall, not later than 180
days after the date of the enactment of this section, negotiate
a memorandum of understanding to share information that may be
requested where either Commission is conducting an
investigation into potential manipulation, fraud, or market
power abuse in markets subject to such Commission's regulation
or oversight. Shared information shall remain subject to the
same restrictions on disclosure applicable to the Commission
initially holding the information.
PART II--REGULATION OF SWAP MARKETS
SEC. 721. DEFINITIONS.
(a) In General.--Section 1a of the Commodity Exchange Act
(7 U.S.C. 1a) is amended--
(1) by redesignating paragraphs (2), (3) and (4),
(5) through (17), (18) through (23), (24) through (28),
(29), (30), (31) through (33), and (34) as paragraphs
(6), (8) and (9), (11) through (23), (26) through (31),
(34) through (38), (40), (41), (44) through (46), and
(51), respectively;
(2) by inserting after paragraph (1) the following:
``(2) Appropriate federal banking agency.--The term
`appropriate Federal banking agency'--
``(A) has the meaning given the term in
section 3 of the Federal Deposit Insurance Act
(12 U.S.C. 1813);
``(B) means the Board in the case of a
noninsured State bank; and
``(C) is the Farm Credit Administration for
farm credit system institutions.
``(3) Associated person of a security-based swap
dealer or major security-based swap participant.--The
term `associated person of a security-based swap dealer
or major security-based swap participant' has the
meaning given the term in section 3(a) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)).
``(4) Associated person of a swap dealer or major
swap participant.--
``(A) In general.--The term `associated
person of a swap dealer or major swap
participant' means a person who is associated
with a swap dealer or major swap participant as
a partner, officer, employee, or agent (or any
person occupying a similar status or performing
similar functions), in any capacity that
involves--
``(i) the solicitation or
acceptance of swaps; or
``(ii) the supervision of any
person or persons so engaged.
``(B) Exclusion.--Other than for purposes
of section 4s(b)(6), the term `associated
person of a swap dealer or major swap
participant' does not include any person
associated with a swap dealer or major swap
participant the functions of which are solely
clerical or ministerial.
``(5) Board.--The term `Board' means the Board of
Governors of the Federal Reserve System.'';
(3) by inserting after paragraph (6) (as
redesignated by paragraph (1)) the following:
``(7) Cleared swap.--The term `cleared swap' means
any swap that is, directly or indirectly, submitted to
and cleared by a derivatives clearing organization
registered with the Commission.'';
(4) in paragraph (9) (as redesignated by paragraph
(1)), by striking ``except onions'' and all that
follows through the period at the end and inserting the
following: ``except onions (as provided by the first
section of Public Law 85-839 (7 U.S.C. 13-1)) and
motion picture box office receipts (or any index,
measure, value, or data related to such receipts), and
all services, rights, and interests (except motion
picture box office receipts, or any index, measure,
value or data related to such receipts) in which
contracts for future delivery are presently or in the
future dealt in.'';
(5) by inserting after paragraph (9) (as
redesignated by paragraph (1)) the following:
``(10) Commodity pool.--
``(A) In general.--The term `commodity
pool' means any investment trust, syndicate, or
similar form of enterprise operated for the
purpose of trading in commodity interests,
including any--
``(i) commodity for future
delivery, security futures product, or
swap;
``(ii) agreement, contract, or
transaction described in section
2(c)(2)(C)(i) or section 2(c)(2)(D)(i);
``(iii) commodity option authorized
under section 4c; or
``(iv) leverage transaction
authorized under section 19.
``(B) Further definition.--The Commission,
by rule or regulation, may include within, or
exclude from, the term `commodity pool' any
investment trust, syndicate, or similar form of
enterprise if the Commission determines that
the rule or regulation will effectuate the
purposes of this Act.'';
(6) by striking paragraph (11) (as redesignated by
paragraph (1)) and inserting the following:
``(11) Commodity pool operator.--
``(A) In general.--The term `commodity pool
operator' means any person--
``(i) engaged in a business that is
of the nature of a commodity pool,
investment trust, syndicate, or similar
form of enterprise, and who, in
connection therewith, solicits,
accepts, or receives from others,
funds, securities, or property, either
directly or through capital
contributions, the sale of stock or
other forms of securities, or
otherwise, for the purpose of trading
in commodity interests, including any--
``(I) commodity for future
delivery, security futures
product, or swap;
``(II) agreement, contract,
or transaction described in
section 2(c)(2)(C)(i) or
section 2(c)(2)(D)(i);
``(III) commodity option
authorized under section 4c; or
``(IV) leverage transaction
authorized under section 19; or
``(ii) who is registered with the
Commission as a commodity pool
operator.
``(B) Further definition.--The Commission,
by rule or regulation, may include within, or
exclude from, the term `commodity pool
operator' any person engaged in a business that
is of the nature of a commodity pool,
investment trust, syndicate, or similar form of
enterprise if the Commission determines that
the rule or regulation will effectuate the
purposes of this Act.'';
(7) in paragraph (12) (as redesignated by paragraph
(1)), in subparagraph (A)--
(A) in clause (i)--
(i) in subclause (I), by striking
``made or to be made on or subject to
the rules of a contract market or
derivatives transaction execution
facility'' and inserting ``, security
futures product, or swap'';
(ii) by redesignating subclauses
(II) and (III) as subclauses (III) and
(IV);
(iii) by inserting after subclause
(I) the following:
``(II) any agreement,
contract, or transaction
described in section
2(c)(2)(C)(i) or section
2(c)(2)(D)(i)''; and
(iv) in subclause (IV) (as so
redesignated), by striking ``or'';
(B) in clause (ii), by striking the period
at the end and inserting a semicolon; and
(C) by adding at the end the following:
``(iii) is registered with the
Commission as a commodity trading
advisor; or
``(iv) the Commission, by rule or
regulation, may include if the
Commission determines that the rule or
regulation will effectuate the purposes
of this Act.'';
(8) in paragraph (17) (as redesignated by paragraph
(1)), in subparagraph (A), in the matter preceding
clause (i), by striking ``paragraph (12)(A)'' and
inserting ``paragraph (18)(A)'';
(9) in paragraph (18) (as redesignated by paragraph
(1))--
(A) in subparagraph (A)--
(i) in the matter following clause
(vii)(III)--
(I) by striking ``section
1a (11)(A)'' and inserting
``paragraph (17)(A)''; and
(II) by striking
``$25,000,000'' and inserting
``$50,000,000''; and
(ii) in clause (xi), in the matter
preceding subclause (I), by striking
``total assets in an amount'' and
inserting ``amounts invested on a
discretionary basis, the aggregate of
which is'';
(10) by striking paragraph (22) (as redesignated by
paragraph (1)) and inserting the following:
``(22) Floor broker.--
``(A) In general.--The term `floor broker'
means any person--
``(i) who, in or surrounding any
pit, ring, post, or other place
provided by a contract market for the
meeting of persons similarly engaged,
shall purchase or sell for any other
person--
``(I) any commodity for
future delivery, security
futures product, or swap; or
``(II) any commodity option
authorized under section 4c; or
``(ii) who is registered with the
Commission as a floor broker.
``(B) Further definition.--The Commission,
by rule or regulation, may include within, or
exclude from, the term `floor broker' any
person in or surrounding any pit, ring, post,
or other place provided by a contract market
for the meeting of persons similarly engaged
who trades for any other person if the
Commission determines that the rule or
regulation will effectuate the purposes of this
Act.'';
(11) by striking paragraph (23) (as redesignated by
paragraph (1)) and inserting the following:
``(23) Floor trader.--
``(A) In general.--The term `floor trader'
means any person--
``(i) who, in or surrounding any
pit, ring, post, or other place
provided by a contract market for the
meeting of persons similarly engaged,
purchases, or sells solely for such
person's own account--
``(I) any commodity for
future delivery, security
futures product, or swap; or
``(II) any commodity option
authorized under section 4c; or
``(ii) who is registered with the
Commission as a floor trader.
``(B) Further definition.--The Commission,
by rule or regulation, may include within, or
exclude from, the term `floor trader' any
person in or surrounding any pit, ring, post,
or other place provided by a contract market
for the meeting of persons similarly engaged
who trades solely for such person's own account
if the Commission determines that the rule or
regulation will effectuate the purposes of this
Act.'';
(12) by inserting after paragraph (23) (as
redesignated by paragraph (1)) the following:
``(24) 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 upon on the
inception of the contract covering the exchange.
``(25) Foreign exchange swap.--The term `foreign
exchange swap' means a transaction that solely
involves--
``(A) an exchange of 2 different currencies
on a specific date at a fixed rate that is
agreed upon on the inception of the contract
covering the exchange; and
``(B) a reverse exchange of the 2
currencies described in subparagraph (A) at a
later date and at a fixed rate that is agreed
upon on the inception of the contract covering
the exchange.'';
(13) by striking paragraph (28) (as redesignated by
paragraph (1)) and inserting the following:
``(28) Futures commission merchant.--
``(A) In general.--The term `futures
commission merchant' means an individual,
association, partnership, corporation, or
trust--
``(i) that--
``(I) is--
``(aa) engaged in
soliciting or in
accepting orders for--
``(AA) the purchase
or sale of a commodity
for future delivery;
``(BB) a security
futures product;
``(CC) a swap;
``(DD) any
agreement, contract, or
transaction described
in section
2(c)(2)(C)(i) or
section 2(c)(2)(D)(i);
``(EE) any
commodity option
authorized under
section 4c; or
``(FF) any leverage
transaction authorized
under section 19; or
``(bb) acting as a
counterparty in any
agreement, contract, or
transaction described
in section
2(c)(2)(C)(i) or
section 2(c)(2)(D)(i);
and
``(II) in or in connection
with the activities described
in items (aa) or (bb) of
subclause (I), accepts any
money, securities, or property
(or extends credit in lieu
thereof) to margin, guarantee,
or secure any trades or
contracts that result or may
result therefrom; or
``(ii) that is registered with the
Commission as a futures commission
merchant.
``(B) Further definition.--The Commission,
by rule or regulation, may include within, or
exclude from, the term `futures commission
merchant' any person who engages in soliciting
or accepting orders for, or acting as a
counterparty in, any agreement, contract, or
transaction subject to this Act, and who
accepts any money, securities, or property (or
extends credit in lieu thereof) to margin,
guarantee, or secure any trades or contracts
that result or may result therefrom, if the
Commission determines that the rule or
regulation will effectuate the purposes of this
Act.'';
(14) in paragraph (30) (as redesignated by
paragraph (1)), in subparagraph (B), by striking
``state'' and inserting ``State'';
(15) by striking paragraph (31) (as redesignated by
paragraph (1)) and inserting the following:
``(31) Introducing broker.--
``(A) In general.--The term `introducing
broker' means any person (except an individual
who elects to be and is registered as an
associated person of a futures commission
merchant)--
``(i) who--
``(I) is engaged in
soliciting or in accepting
orders for--
``(aa) the purchase
or sale of any
commodity for future
delivery, security
futures product, or
swap;
``(bb) any
agreement, contract, or
transaction described
in section
2(c)(2)(C)(i) or
section 2(c)(2)(D)(i);
``(cc) any
commodity option
authorized under
section 4c; or
``(dd) any leverage
transaction authorized
under section 19; and
``(II) does not accept any
money, securities, or property
(or extend credit in lieu
thereof) to margin, guarantee,
or secure any trades or
contracts that result or may
result therefrom; or
``(ii) who is registered with the
Commission as an introducing broker.
``(B) Further definition.--The Commission,
by rule or regulation, may include within, or
exclude from, the term `introducing broker' any
person who engages in soliciting or accepting
orders for any agreement, contract, or
transaction subject to this Act, and who does
not accept any money, securities, or property
(or extend credit in lieu thereof) to margin,
guarantee, or secure any trades or contracts
that result or may result therefrom, if the
Commission determines that the rule or
regulation will effectuate the purposes of this
Act.'';
(16) by inserting after paragraph (31) (as
redesignated by paragraph (1)) the following:
``(32) Major security-based swap participant.--The
term `major security-based swap participant' has the
meaning given the term in section 3(a) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)).
``(33) Major swap participant.--
``(A) In general.--The term `major swap
participant' means any person who is not a swap
dealer, and--
``(i) maintains a substantial
position in swaps for any of the major
swap categories as determined by the
Commission, excluding--
``(I) positions held for
hedging or mitigating
commercial risk; and
``(II) positions maintained
by any employee benefit plan
(or any contract held by such a
plan) as defined in paragraphs
(3) and (32) of section 3 of
the Employee Retirement Income
Security Act of 1974 (29 U.S.C.
1002) for the primary purpose
of hedging or mitigating any
risk directly associated with
the operation of the plan;
``(ii) whose outstanding swaps
create substantial counterparty
exposure that could have serious
adverse effects on the financial
stability of the United States banking
system or financial markets; or
``(iii)(I) is a financial entity
that is highly leveraged relative to
the amount of capital it holds and that
is not subject to capital requirements
established by an appropriate Federal
banking agency; and
``(II) maintains a substantial
position in outstanding swaps in any
major swap category as determined by
the Commission.
``(B) Definition of substantial position.--
For purposes of subparagraph (A), the
Commission shall define by rule or regulation
the term `substantial position' at the
threshold that the Commission determines to be
prudent for the effective monitoring,
management, and oversight of entities that are
systemically important or can significantly
impact the financial system of the United
States. In setting the definition under this
subparagraph, the Commission shall consider the
person's relative position in uncleared as
opposed to cleared swaps and may take into
consideration the value and quality of
collateral held against counterparty exposures.
``(C) Scope of designation.--For purposes
of subparagraph (A), a person may be designated
as a major swap participant for 1 or more
categories of swaps without being classified as
a major swap participant for all classes of
swaps.
``(D) Exclusions.--The definition under
this paragraph shall not include an entity
whose primary business is providing financing,
and uses derivatives for the purpose of hedging
underlying commercial risks related to interest
rate and foreign currency exposures, 90 percent
or more of which arise from financing that
facilitates the purchase or lease of products,
90 percent or more of which are manufactured by
the parent company or another subsidiary of the
parent company.'';
(17) by inserting after paragraph (38) (as
redesignated by paragraph (1)) the following:
``(39) Prudential regulator.--The term `prudential
regulator' means--
``(A) the Board in the case of a swap
dealer, major swap participant, security-based
swap dealer, or major security-based swap
participant that is--
``(i) a State-chartered bank that
is a member of the Federal Reserve
System;
``(ii) a State-chartered branch or
agency of a foreign bank;
``(iii) any foreign bank which does
not operate an insured branch;
``(iv) any organization operating
under section 25A of the Federal
Reserve Act or having an agreement with
the Board under section 225 of the
Federal Reserve Act;
``(v) any bank holding company (as
defined in section 2 of the Bank
Holding Company Act of 1965 (12 U.S.C.
1841)), any foreign bank (as defined in
section 1(b)(7) of the International
Banking Act of 1978 (12 U.S.C.
3101(b)(7)) that is treated as a bank
holding company under section 8(a) of
the International Banking Act of 1978
(12 U.S.C. 3106(a)), and any subsidiary
of such a company or foreign bank
(other than a subsidiary that is
described in subparagraph (A) or (B) or
that is required to be registered with
the Commission as a swap dealer or
major swap participant under this Act
or with the Securities and Exchange
Commission as a security-based swap
dealer or major security-based swap
participant);
``(vi) after the transfer date (as
defined in section 311 of the Dodd-
Frank Wall Street Reform and Consumer
Protection Act), any savings and loan
holding company (as defined in section
10 of the Home Owners' Loan Act (12
U.S.C. 1467a)) and any subsidiary of
such company (other than a subsidiary
that is described in subparagraph (A)
or (B) or that is required to be
registered as a swap dealer or major
swap participant with the Commission
under this Act or with the Securities
and Exchange Commission as a security-
based swap dealer or major security-
based swap participant); or
``(vii) any organization operating
under section 25A of the Federal
Reserve Act (12 U.S.C. 611 et seq.) or
having an agreement with the Board
under section 25 of the Federal Reserve
Act (12 U.S.C. 601 et seq.);
``(B) the Office of the Comptroller of the
Currency in the case of a swap dealer, major
swap participant, security-based swap dealer,
or major security-based swap participant that
is--
``(i) a national bank;
``(ii) a federally chartered branch
or agency of a foreign bank; or
``(iii) any Federal savings
association;
``(C) the Federal Deposit Insurance
Corporation in the case of a swap dealer, major
swap participant, security-based swap dealer,
or major security-based swap participant that
is--
``(i) a State-chartered bank that
is not a member of the Federal Reserve
System; or
``(ii) any State savings
association;
``(D) the Farm Credit Administration, in
the case of a swap dealer, major swap
participant, security-based swap dealer, or
major security-based swap participant that is
an institution chartered under the Farm Credit
Act of 1971 (12 U.S.C. 2001 et seq.); and
``(E) the Federal Housing Finance Agency in
the case of a swap dealer, major swap
participant, security-based swap dealer, or
major security-based swap participant that is a
regulated entity (as such term is defined in
section 1303 of the Federal Housing Enterprises
Financial Safety and Soundness Act of 1992).'';
(18) in paragraph (40) (as redesignated by
paragraph (1))--
(A) by striking subparagraph (B);
(B) by redesignating subparagraphs (C),
(D), and (E) as subparagraphs (B), (C), and
(F), respectively;
(C) in subparagraph (C) (as so
redesignated), by striking ``and''; and
(D) by inserting after subparagraph (C) (as
so redesignated) the following:
``(D) a swap execution facility registered
under section 5h;
``(E) a swap data repository registered
under section 21; and'';
(19) by inserting after paragraph (41) (as
redesignated by paragraph (1)) the following:
``(42) Security-based swap.--The term `security-
based swap' has the meaning given the term in section
3(a) of the Securities Exchange Act of 1934 (15 U.S.C.
78c(a)).
``(43) Security-based swap dealer.--The term
`security-based swap dealer' has the meaning given the
term in section 3(a) of the Securities Exchange Act of
1934 (15 U.S.C. 78c(a)).'';
(20) in paragraph (46) (as redesignated by
paragraph (1)), by striking ``subject to section
2(h)(7)'' and inserting ``subject to section 2(h)(5)'';
(21) by inserting after paragraph (46) (as
redesignated by paragraph (1)) the following:
``(47) Swap.--
``(A) In general.--Except as provided in
subparagraph (B), the term `swap' means any
agreement, contract, or transaction--
``(i) that is a put, call, cap,
floor, collar, or similar option of any
kind that is for the purchase or sale,
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;
``(ii) that 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;
``(iii) that 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--
``(I) an interest rate
swap;
``(II) a rate floor;
``(III) a rate cap;
``(IV) a rate collar;
``(V) a cross-currency rate
swap;
``(VI) a basis swap;
``(VII) a currency swap;
``(VIII) a foreign exchange
swap;
``(IX) a total return swap;
``(X) an equity index swap;
``(XI) an equity swap;
``(XII) a debt index swap;
``(XIII) a debt swap;
``(XIV) a credit spread;
``(XV) a credit default
swap;
``(XVI) a credit swap;
``(XVII) a weather swap;
``(XVIII) an energy swap;
``(XIX) a metal swap;
``(XX) an agricultural
swap;
``(XXI) an emissions swap;
and
``(XXII) a commodity swap;
``(iv) that is an agreement,
contract, or transaction that is, or in
the future becomes, commonly known to
the trade as a swap;
``(v) including any security-based
swap agreement which meets the
definition of `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;
or
``(vi) that is any combination or
permutation of, or option on, any
agreement, contract, or transaction
described in any of clauses (i) through
(v).
``(B) Exclusions.--The term `swap' does not
include--
``(i) any contract of sale of a
commodity for future delivery (or
option on such a contract), leverage
contract authorized under section 19,
security futures product, or agreement,
contract, or transaction described in
section 2(c)(2)(C)(i) or section
2(c)(2)(D)(i);
``(ii) any sale of a nonfinancial
commodity or security for deferred
shipment or delivery, so long as the
transaction is intended to be
physically settled;
``(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, that is subject to--
``(I) the Securities Act of
1933 (15 U.S.C. 77a et seq.);
and
``(II) the Securities
Exchange Act of 1934 (15 U.S.C.
78a et seq.);
``(iv) any put, call, straddle,
option, or privilege relating to a
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));
``(v) any agreement, contract, or
transaction providing for the purchase
or sale of 1 or more securities on a
fixed basis that is subject to--
``(I) the Securities Act of
1933 (15 U.S.C. 77a et seq.);
and
``(II) the Securities
Exchange Act of 1934 (15 U.S.C.
78a et seq.);
``(vi) any agreement, contract, or
transaction providing for the purchase
or sale of 1 or more securities on a
contingent basis that is subject to the
Securities Act of 1933 (15 U.S.C. 77a
et seq.) and the Securities Exchange
Act of 1934 (15 U.S.C. 78a et seq.),
unless the agreement, contract, or
transaction predicates the 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;
``(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));
``(viii) any agreement, contract,
or transaction that is--
``(I) based on a security;
and
``(II) entered into
directly or through an
underwriter (as 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 the agreement, contract,
or transaction is entered into
to manage a risk associated
with capital raising;
``(ix) any agreement, contract, or
transaction a counterparty of which is
a Federal Reserve bank, the Federal
Government, or a Federal agency that is
expressly backed by the full faith and
credit of the United States; and
``(x) any security-based swap,
other than a security-based swap as
described in subparagraph (D).
``(C) Rule of construction regarding master
agreements.--
``(i) In general.--Except as
provided in clause (ii), the term
`swap' includes a master agreement that
provides for an agreement, contract, or
transaction that is a swap under
subparagraph (A), together with each
supplement to any master agreement,
without regard to whether the master
agreement contains an agreement,
contract, or transaction that is not a
swap pursuant to subparagraph (A).
``(ii) Exception.--For purposes of
clause (i), the master agreement shall
be considered to be a swap only with
respect to each agreement, contract, or
transaction covered by the master
agreement that is a swap pursuant to
subparagraph (A).
``(D) Mixed swap.--The term `security-based
swap' includes any agreement, contract, or
transaction that is as described in section
3(a)(68)(A) of the Securities Exchange Act of
1934 (15 U.S.C. 78c(a)(68)(A)) and also is
based on 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 a single security or a narrow-based
security index), or the occurrence, non-
occurrence, or the extent of the occurrence of
an event or contingency associated with a
potential financial, economic, or commercial
consequence (other than an event described in
subparagraph (A)(iii)).
``(E) Treatment of foreign exchange swaps
and forwards.--
``(i) In general.--Foreign exchange
swaps and foreign exchange forwards
shall be considered swaps under this
paragraph unless the Secretary makes a
written determination under section 1b
that either foreign exchange swaps or
foreign exchange forwards or both--
``(I) should be not be
regulated as swaps under this
Act; and
``(II) are not structured
to evade the Dodd-Frank Wall
Street Reform and Consumer
Protection Act in violation of
any rule promulgated by the
Commission pursuant to section
721(c) of that Act.
``(ii) Congressional notice;
effectiveness.--The Secretary shall
submit any written determination under
clause (i) to the appropriate
committees of Congress, including the
Committee on Agriculture, Nutrition,
and Forestry of the Senate and the
Committee on Agriculture of the House
of Representatives. Any such written
determination by the Secretary shall
not be effective until it is submitted
to the appropriate committees of
Congress.
``(iii) Reporting.--Notwithstanding
a written determination by the
Secretary under clause (i), all foreign
exchange swaps and foreign exchange
forwards shall be reported to either a
swap data repository, or, if there is
no swap data repository that would
accept such swaps or forwards, to the
Commission pursuant to section 4r
within such time period as the
Commission may by rule or regulation
prescribe.
``(iv) Business standards.--
Notwithstanding a written determination
by the Secretary pursuant to clause
(i), any party to a foreign exchange
swap or forward that is a swap dealer
or major swap participant shall conform
to the business conduct standards
contained in section 4s(h).
``(v) Secretary.--For purposes of
this subparagraph, the term `Secretary'
means the Secretary of the Treasury.
``(F) Exception for certain foreign
exchange swaps and forwards.--
``(i) Registered entities.--Any
foreign exchange swap and any foreign
exchange forward that is listed and
traded on or subject to the rules of a
designated contract market or a swap
execution facility, or that is cleared
by a derivatives clearing organization,
shall not be exempt from any provision
of this Act or amendments made by the
Wall Street Transparency and
Accountability Act of 2010 prohibiting
fraud or manipulation.
``(ii) Retail transactions.--
Nothing in subparagraph (E) shall
affect, or be construed to affect, the
applicability of this Act or the
jurisdiction of the Commission with
respect to agreements, contracts, or
transactions in foreign currency
pursuant to section 2(c)(2).
``(48) Swap data repository.--The term `swap data
repository' means any person that collects and
maintains information or records with respect to
transactions or positions in, or the terms and
conditions of, swaps entered into by third parties for
the purpose of providing a centralized recordkeeping
facility for swaps.
``(49) Swap dealer.--
``(A) In general.--The term `swap dealer'
means any person who--
``(i) holds itself out as a dealer
in swaps;
``(ii) makes a market in swaps;
``(iii) regularly enters into swaps
with counterparties as an ordinary
course of business for its own account;
or
``(iv) engages in any activity
causing the person to be commonly known
in the trade as a dealer or market
maker in swaps,
provided however, in no event shall an insured
depository institution be considered to be a
swap dealer to the extent it offers to enter
into a swap with a customer in connection with
originating a loan with that customer.
``(B) Inclusion.--A person may be
designated as a swap dealer for a single type
or single class or category of swap or
activities and considered not to be a swap
dealer for other types, classes, or categories
of swaps or activities.
``(C) Exception.--The term `swap dealer'
does not include a person that enters into
swaps for such person's own account, either
individually or in a fiduciary capacity, but
not as a part of a regular business.
``(D) De minimis exception.--The Commission
shall exempt from designation as a swap dealer
an entity that engages in a de minimis quantity
of swap dealing in connection with transactions
with or on behalf of its customers. The
Commission shall promulgate regulations to
establish factors with respect to the making of
this determination to exempt.
``(50) Swap execution facility.--The term `swap
execution facility' means a trading system or platform
in which multiple participants have the ability to
execute or trade swaps by accepting bids and offers
made by multiple participants in the facility or
system, through any means of interstate commerce,
including any trading facility, that--
``(A) facilitates the execution of swaps
between persons; and
``(B) is not a designated contract
market.''.
(22) in paragraph (51) (as redesignated by
paragraph (1)), in subparagraph (A)(i), by striking
``partipants'' and inserting ``participants''.
(b) Authority To Define Terms.--The Commodity Futures
Trading Commission may adopt a rule to define--
(1) the term ``commercial risk''; and
(2) any other term included in an amendment to the
Commodity Exchange Act (7 U.S.C. 1 et seq.) made by
this subtitle.
(c) Modification of Definitions.--To include transactions
and entities that have been structured to evade this subtitle
(or an amendment made by this subtitle), the Commodity Futures
Trading Commission shall adopt a rule to further define the
terms ``swap'', ``swap dealer'', ``major swap participant'',
and ``eligible contract participant''.
(d) Exemptions.--Section 4(c)(1) of the Commodity Exchange
Act (7 U.S.C. 6(c)(1)) is amended by striking ``except that''
and all that follows through the period at the end and
inserting the following: ``except that--
``(A) unless the Commission is expressly authorized
by any provision described in this subparagraph to
grant exemptions, with respect to amendments made by
subtitle A of the Wall Street Transparency and
Accountability Act of 2010--
``(i) with respect to--
``(I) paragraphs (2), (3), (4),
(5), and (7), paragraph
(18)(A)(vii)(III), paragraphs (23),
(24), (31), (32), (38), (39), (41),
(42), (46), (47), (48), and (49) of
section 1a, and sections 2(a)(13),
2(c)(1)(D), 4a(a), 4a(b), 4d(c), 4d(d),
4r, 4s, 5b(a), 5b(b), 5(d), 5(g), 5(h),
5b(c), 5b(i), 8e, and 21; and
``(II) section 206(e) of the Gramm-
Leach-Bliley Act (Public Law 106-102;
15 U.S.C. 78c note); and
``(ii) in sections 721(c) and 742 of the
Dodd-Frank Wall Street Reform and Consumer
Protection Act; and
``(B) the Commission and the Securities and
Exchange Commission may by rule, regulation, or order
jointly exclude any agreement, contract, or transaction
from section 2(a)(1)(D)) if the Commissions determine
that the exemption would be consistent with the public
interest.''.
(e) Conforming Amendments.--
(1) Section 2(c)(2)(B)(i)(II) of the Commodity
Exchange Act (7 U.S.C. 2(c)(2)(B)(i)(II)) is amended--
(A) in item (cc)--
(i) in subitem (AA), by striking
``section 1a(20)'' and inserting
``section 1a''; and
(ii) in subitem (BB), by striking
``section 1a(20)'' and inserting
``section 1a''; and
(B) in item (dd), by striking ``section
1a(12)(A)(ii)'' and inserting ``section
1a(18)(A)(ii)''.
(2) Section 4m(3) of the Commodity Exchange Act (7
U.S.C. 6m(3)) is amended by striking ``section 1a(6)''
and inserting ``section 1a''.
(3) Section 4q(a)(1) of the Commodity Exchange Act
(7 U.S.C. 6o-1(a)(1)) is amended by striking ``section
1a(4)'' and inserting ``section 1a(9)''.
(4) Section 5(e)(1) of the Commodity Exchange Act
(7 U.S.C. 7(e)(1)) is amended by striking ``section
1a(4)'' and inserting ``section 1a(9)''.
(5) Section 5a(b)(2)(F) of the Commodity Exchange
Act (7 U.S.C. 7a(b)(2)(F)) is amended by striking
``section 1a(4)'' and inserting ``section 1a(9)''.
(6) Section 5b(a) of the Commodity Exchange Act (7
U.S.C. 7a-1(a)) is amended, in the matter preceding
paragraph (1), by striking ``section 1a(9)'' and
inserting ``section 1a''.
(7) Section 5c(c)(2)(B) of the Commodity Exchange
Act (7 U.S.C. 7a-2(c)(2)(B)) is amended by striking
``section 1a(4)'' and inserting ``section 1a(9)''.
(8) Section 6(g)(5)(B)(i) of the Securities
Exchange Act of 1934 (15 U.S.C. 78f(g)(5)(B)(i)) is
amended--
(A) in subclause (I), by striking ``section
1a(12)(B)(ii)'' and inserting ``section
1a(18)(B)(ii)''; and
(B) in subclause (II), by striking
``section 1a(12)'' and inserting ``section
1a(18)''.
(9) Section 402 of the Legal Certainty for Bank
Products Act of 2000 (7 U.S.C. 27 et seq.) is amended--
(A) in subsection (a)(7), by striking
``section 1a(20)'' and inserting ``section
1a'';
(B) in subsection (b)(2), by striking
``section 1a(12)'' and inserting ``section
1a''; and
(C) in subsection (c), by striking
``section 1a(4)'' and inserting ``section 1a''.
(10) The first section of Public Law 85-839 (7
U.S.C. 13-1) is amended in subsection (a), in the first
sentence, by inserting ``motion picture box office
receipts (or any index, measure, value, or data related
to such receipts) or'' after ``sale of''.
(f) Effective Date.--Notwithstanding any other provision of
this Act, the amendments made by subsection (a)(4) shall take
effect on June 1, 2010.
SEC. 722. JURISDICTION.
(a) Exclusive Jurisdiction.--Section 2(a)(1) of the
Commodity Exchange Act (7 U.S.C. 2(a)(1)) is amended--
(1) in subparagraph (A), in the first sentence--
(A) by inserting ``the Wall Street
Transparency and Accountability Act of 2010
(including an amendment made by that Act) and''
after ``otherwise provided in'';
(B) by striking ``(C) and (D)'' and
inserting ``(C), (D), and (I)'';
(C) by striking ``(c) through (i) of this
section'' and inserting ``(c) and (f)'';
(D) by striking ``contracts of sale'' and
inserting ``swaps or contracts of sale''; and
(E) by striking ``or derivatives
transaction execution facility registered
pursuant to section 5 or 5a'' and inserting
``pursuant to section 5 or a swap execution
facility pursuant to section 5h''; and
(2) by adding at the end the following:
``(G)(i) Nothing in this paragraph shall
limit the jurisdiction conferred on the
Securities and Exchange Commission by the Wall
Street Transparency and Accountability Act of
2010 with regard to security-based swap
agreements as defined pursuant to section
3(a)(78) of the Securities Exchange Act of
1934, and security-based swaps.
``(ii) In addition to the authority of the
Securities and Exchange Commission described in
clause (i), nothing in this subparagraph shall
limit or affect any statutory authority of the
Commission with respect to an agreement,
contract, or transaction described in clause
(i).
``(H) Notwithstanding any other provision
of law, the Wall Street Transparency and
Accountability 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.''.
(b) Regulation of Swaps Under Federal and State Law.--
Section 12 of the Commodity Exchange Act (7 U.S.C. 16) is
amended by adding at the end the following:
``(h) Regulation of Swaps as Insurance Under State Law.--A
swap--
``(1) shall not be considered to be insurance; and
``(2) may not be regulated as an insurance contract
under the law of any State.''.
(c) Agreements, Contracts, and Transactions Traded on an
Organized Exchange.--Section 2(c)(2)(A) of the Commodity
Exchange Act (7 U.S.C. 2(c)(2)(A)) is amended--
(1) in clause (i), by striking ``or'' at the end;
(2) by redesignating clause (ii) as clause (iii);
and
(3) by inserting after clause (i) the following:
``(ii) a swap; or''.
(d) Applicability.--Section 2 of the Commodity Exchange Act
(7 U.S.C. 2) (as amended by section 723(a)(3)) is amended by
adding at the end the following:
``(i) Applicability.--The provisions of this Act relating
to swaps that were enacted by the Wall Street Transparency and
Accountability Act of 2010 (including any rule prescribed or
regulation promulgated under that Act), shall not apply to
activities outside the United States unless those activities--
``(1) have a direct and significant connection with
activities in, or effect on, commerce of the United
States; or
``(2) contravene such rules or regulations as the
Commission may prescribe or promulgate as are necessary
or appropriate to prevent the evasion of any provision
of this Act that was enacted by the Wall Street
Transparency and Accountability Act of 2010.''.
(e) Federal Energy Regulatory Commission.--Section 2(a)(1)
of the Commodity Exchange Act (7 U.S.C. 2(a)(1)) is amended by
adding at the end the following:
``(I)(i) Nothing in this Act shall limit or
affect any statutory authority of the Federal
Energy Regulatory Commission or a State
regulatory authority (as defined in section
3(21) of the Federal Power Act (16 U.S.C.
796(21)) with respect to an agreement,
contract, or transaction that is entered into
pursuant to a tariff or rate schedule approved
by the Federal Energy Regulatory Commission or
a State regulatory authority and is--
``(I) not executed, traded, or
cleared on a registered entity or
trading facility; or
``(II) executed, traded, or cleared
on a registered entity or trading
facility owned or operated by a
regional transmission organization or
independent system operator.
``(ii) In addition to the authority of the
Federal Energy Regulatory Commission or a State
regulatory authority described in clause (i),
nothing in this subparagraph shall limit or
affect--
``(I) any statutory authority of
the Commission with respect to an
agreement, contract, or transaction
described in clause (i); or
``(II) the jurisdiction of the
Commission under subparagraph (A) with
respect to an agreement, contract, or
transaction that is executed, traded,
or cleared on a registered entity or
trading facility that is not owned or
operated by a regional transmission
organization or independent system
operator (as defined by sections 3(27)
and (28) of the Federal Power Act (16
U.S.C. 796(27), 796(28)).''.
(f) Public Interest Waiver.--Section 4(c) of the Commodity
Exchange Act (7 U.S.C. 6(c)) (as amended by section 721(d)) is
amended by adding at the end the following:
``(6) If the Commission determines that the
exemption would be consistent with the public interest
and the purposes of this Act, the Commission shall, in
accordance with paragraphs (1) and (2), exempt from the
requirements of this Act an agreement, contract, or
transaction that is entered into--
``(A) pursuant to a tariff or rate schedule
approved or permitted to take effect by the
Federal Energy Regulatory Commission;
``(B) pursuant to a tariff or rate schedule
establishing rates or charges for, or protocols
governing, the sale of electric energy approved
or permitted to take effect by the regulatory
authority of the State or municipality having
jurisdiction to regulate rates and charges for
the sale of electric energy within the State or
municipality; or
``(C) between entities described in section
201(f) of the Federal Power Act (16 U.S.C.
824(f)).''.
(g) Authority of FERC.--Nothing in the Wall Street
Transparency and Accountability Act of 2010 or the amendments
to the Commodity Exchange Act made by such Act shall limit or
affect any statutory enforcement authority of the Federal
Energy Regulatory Commission pursuant to section 222 of the
Federal Power Act and section 4A of the Natural Gas Act that
existed prior to the date of enactment of the Wall Street
Transparency and Accountability Act of 2010.
(h) Determination.--The Commodity Exchange Act is amended
by inserting after section 1a (7 U.S.C. 1a) the following:
``SEC. 1B. REQUIREMENTS OF SECRETARY OF THE TREASURY REGARDING
EXEMPTION OF FOREIGN EXCHANGE SWAPS AND FOREIGN
EXCHANGE FORWARDS FROM DEFINITION OF THE TERM
`SWAP'.
``(a) Required Considerations.--In determining whether to
exempt foreign exchange swaps and foreign exchange forwards
from the definition of the term `swap', the Secretary of the
Treasury (referred to in this section as the `Secretary') shall
consider--
``(1) whether the required trading and clearing of
foreign exchange swaps and foreign exchange forwards
would create systemic risk, lower transparency, or
threaten the financial stability of the United States;
``(2) whether foreign exchange swaps and foreign
exchange forwards are already subject to a regulatory
scheme that is materially comparable to that
established by this Act for other classes of swaps;
``(3) the extent to which bank regulators of
participants in the foreign exchange market provide
adequate supervision, including capital and margin
requirements;
``(4) the extent of adequate payment and settlement
systems; and
``(5) the use of a potential exemption of foreign
exchange swaps and foreign exchange forwards to evade
otherwise applicable regulatory requirements.
``(b) Determination.--If the Secretary makes a
determination to exempt foreign exchange swaps and foreign
exchange forwards from the definition of the term `swap', the
Secretary shall submit to the appropriate committees of
Congress a determination that contains--
``(1) an explanation regarding why foreign exchange
swaps and foreign exchange forwards are qualitatively
different from other classes of swaps in a way that
would make the foreign exchange swaps and foreign
exchange forwards ill-suited for regulation as swaps;
and
``(2) an identification of the objective
differences of foreign exchange swaps and foreign
exchange forwards with respect to standard swaps that
warrant an exempted status.
``(c) Effect of Determination.--A determination by the
Secretary under subsection (b) shall not exempt any foreign
exchange swaps and foreign exchange forwards traded on a
designated contract market or swap execution facility from any
applicable antifraud and antimanipulation provision under this
title.''.
SEC. 723. CLEARING.
(a) Clearing Requirement.--
(1) In general.--Section 2 of the Commodity
Exchange Act (7 U.S.C. 2) is amended--
(A) by striking subsections (d), (e), (g),
and (h); and
(B) by redesignating subsection (i) as
subsection (g).
(2) Swaps; limitation on participation.--Section 2
of the Commodity Exchange Act (7 U.S.C. 2) (as amended
by paragraph (1)) is amended by inserting after
subsection (c) the following:
``(d) Swaps.--Nothing in this Act (other than subparagraphs
(A), (B), (C), (D), (G), and (H) of subsection (a)(1),
subsections (f) and (g), sections 1a, 2(a)(13), 2(c)(2)(A)(ii),
2(e), 2(h), 4(c), 4a, 4b, and 4b-1, subsections (a), (b), and
(g) of section 4c, sections 4d, 4e, 4f, 4g, 4h, 4i, 4j, 4k, 4l,
4m, 4n, 4o, 4p, 4r, 4s, 4t, 5, 5b, 5c, 5e, and 5h, subsections
(c) and (d) of section 6, sections 6c, 6d, 8, 8a, and 9,
subsections (e)(2), (f), and (h) of section 12, subsections (a)
and (b) of section 13, sections 17, 20, 21, and 22(a)(4), and
any other provision of this Act that is applicable to
registered entities or Commission registrants) governs or
applies to a swap.
``(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.''.
(3) Mandatory clearing of swaps.--Section 2 of the
Commodity Exchange Act (7 U.S.C. 2) is amended by
inserting after subsection (g) (as redesignated by
paragraph (1)(B)) the following:
``(h) Clearing Requirement.--
``(1) In general.--
``(A) Standard for clearing.--It shall be
unlawful for any person to engage in a swap
unless that person submits 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 this Act if the
swap is required to be cleared.
``(B) Open access.--The rules of a
derivatives clearing organization described in
subparagraph (A) shall--
``(i) prescribe that all swaps (but
not contracts of sale of a commodity
for future delivery or options on such
contracts) submitted to the derivatives
clearing organization with the same
terms and conditions are economically
equivalent within the derivatives
clearing organization and may be offset
with each other within the derivatives
clearing organization; and
``(ii) provide for non-
discriminatory clearing of a swap (but
not a contract of sale of a commodity
for future delivery or option on such
contract) executed bilaterally or on or
through the rules of an unaffiliated
designated contract market or swap
execution facility.
``(2) Commission review.--
``(A) Commission-initiated review.--
``(i) The Commission on an ongoing
basis shall review each swap, or any
group, category, type, or class of
swaps to make a determination as to
whether the swap or group, category,
type, or class of swaps should be
required to be cleared.
``(ii) The Commission shall provide
at least a 30-day public comment period
regarding any determination made under
clause (i).
``(B) Swap submissions.--
``(i) A derivatives clearing
organization shall submit to the
Commission each swap, or any group,
category, type, or class of swaps that
it plans to accept for clearing, and
provide notice to its members (in a
manner to be determined by the
Commission) of the submission.
``(ii) Any swap or group, category,
type, or class of swaps listed for
clearing by a derivative clearing
organization as of the date of
enactment of this subsection shall be
considered submitted to the Commission.
``(iii) The Commission shall--
``(I) make available to the
public submissions received
under clauses (i) and (ii);
``(II) review each
submission made under clauses
(i) and (ii), and determine
whether the swap, or group,
category, type, or class of
swaps described in the
submission is required to be
cleared; and
``(III) provide at least a
30-day public comment period
regarding its determination as
to whether the clearing
requirement under paragraph
(1)(A) shall apply to the
submission.
``(C) Deadline.--The Commission shall make
its determination under subparagraph (B)(iii)
not later than 90 days after receiving a
submission made under subparagraphs (B)(i) and
(B)(ii), unless the submitting derivatives
clearing organization agrees to an extension
for the time limitation established under this
subparagraph.
``(D) Determination.--
``(i) In reviewing a submission
made under subparagraph (B), the
Commission shall review whether the
submission is consistent with section
5b(c)(2).
``(ii) In reviewing a swap, group
of swaps, or class of swaps pursuant to
subparagraph (A) or a submission made
under subparagraph (B), the Commission
shall take into account the following
factors:
``(I) The existence of
significant outstanding
notional exposures, trading
liquidity, and adequate pricing
data.
``(II) The availability of
rule framework, capacity,
operational expertise and
resources, and credit support
infrastructure to clear the
contract on terms that are
consistent with the material
terms and trading conventions
on which the contract is then
traded.
``(III) The effect on the
mitigation of systemic risk,
taking into account the size of
the market for such contract
and the resources of the
derivatives clearing
organization available to clear
the contract.
``(IV) The effect on
competition, including
appropriate fees and charges
applied to clearing.
``(V) The existence of
reasonable legal certainty in
the event of the insolvency of
the relevant derivatives
clearing organization or 1 or
more of its clearing members
with regard to the treatment of
customer and swap counterparty
positions, funds, and property.
``(iii) In making a determination
under subparagraph (A) or (B)(iii) that
the clearing requirement shall apply,
the Commission may require such terms
and conditions to the requirement as
the Commission determines to be
appropriate.
``(E) Rules.--Not later than 1 year after
the date of the enactment of this subsection,
the Commission shall adopt rules for a
derivatives clearing organization's submission
for review, pursuant to this paragraph, of a
swap, or a group, category, type, or class of
swaps, that it seeks to accept for clearing.
Nothing in this subparagraph limits the
Commission from making a determination under
subparagraph (B)(iii) for swaps described in
subparagraph (B)(ii).
``(3) Stay of clearing requirement.--
``(A) In general.--After making a
determination pursuant to paragraph (2)(B), 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.
``(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
group, category, type, or class of swaps agrees
to an extension of the time limitation
established under this subparagraph.
``(C) Determination.--Upon completion of
the review undertaken pursuant to subparagraph
(A), the Commission may--
``(i) determine, unconditionally or
subject to such terms and conditions as
the Commission determines to be
appropriate, that the swap, or group,
category, type, or class of swaps must
be cleared pursuant to this subsection
if it finds that such clearing is
consistent with paragraph (2)(D); or
``(ii) determine that the clearing
requirement of paragraph (1) shall not
apply to the swap, or group, category,
type, or class of swaps.
``(D) Rules.--Not later than 1 year after
the date of the enactment of the Wall Street
Transparency and Accountability 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 it has accepted for clearing.
``(4) Prevention of evasion.--
``(A) In general.--The Commission shall
prescribe rules under this subsection (and
issue interpretations of rules prescribed under
this subsection) as determined by the
Commission to be necessary to prevent evasions
of the mandatory clearing requirements under
this Act.
``(B) Duty of commission to investigate and
take certain actions.--To the extent the
Commission finds that a particular swap, group,
category, type, or class of swaps would
otherwise be subject to mandatory clearing but
no derivatives clearing organization has listed
the swap, group, category, type, or class of
swaps for clearing, the Commission shall--
``(i) investigate the relevant
facts and circumstances;
``(ii) within 30 days issue a
public report containing the results of
the investigation; and
``(iii) take such actions as the
Commission determines to be necessary
and in the public interest, which may
include requiring the retaining of
adequate margin or capital by parties
to the swap, group, category, type, or
class of swaps.
``(C) Effect on authority.--Nothing in this
paragraph--
``(i) authorizes the Commission to
adopt rules requiring a derivatives
clearing organization to list for
clearing a swap, group, category, type,
or class of swaps if the clearing of
the swap, group, category, type, or
class of swaps would threaten the
financial integrity of the derivatives
clearing organization; and
``(ii) affects the authority of the
Commission to enforce the open access
provisions of paragraph (1)(B) with
respect to a swap, group, category,
type, or class of swaps that is listed
for clearing by a derivatives clearing
organization.
``(5) Reporting transition rules.--Rules adopted by
the Commission under this section shall provide for the
reporting of data, as follows:
``(A) Swaps entered into before the date of
the enactment of this subsection shall be
reported to a registered swap data repository
or the Commission no later than 180 days after
the effective date of this subsection.
``(B) Swaps entered into on or after such
date of enactment shall be reported to a
registered swap data repository or the
Commission no later than the later of--
``(i) 90 days after such effective
date; or
``(ii) such other time after
entering into the swap as the
Commission may prescribe by rule or
regulation.
``(6) Clearing transition rules.--
``(A) 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 paragraph
(5)(A).
``(B) 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 paragraph (5)(B).
``(7) Exceptions.--
``(A) In general.--The requirements of
paragraph (1)(A) shall not apply to a swap if 1
of the counterparties to the swap--
``(i) is not a financial entity;
``(ii) is using swaps to hedge or
mitigate commercial risk; and
``(iii) notifies the Commission, in
a manner set forth by the Commission,
how it generally meets its financial
obligations associated with entering
into non-cleared swaps.
``(B) Option to clear.--The application of
the clearing exception in subparagraph (A) is
solely at the discretion of the counterparty to
the swap that meets the conditions of clauses
(i) through (iii) of subparagraph (A).
``(C) Financial entity definition.--
``(i) In general.--For the purposes
of this paragraph, the term `financial
entity' means--
``(I) a swap dealer;
``(II) a security-based
swap dealer;
``(III) a major swap
participant;
``(IV) a major security-
based swap participant;
``(V) a commodity pool;
``(VI) a private fund as
defined in section 202(a) of
the Investment Advisers Act of
1940 (15 U.S.C. 80-b-2(a));
``(VII) an employee benefit
plan as defined in paragraphs
(3) and (32) of section 3 of
the Employee Retirement Income
Security Act of 1974 (29 U.S.C.
1002);
``(VIII) a person
predominantly engaged in
activities that are in the
business of banking, or in
activities that are financial
in nature, as defined in
section 4(k) of the Bank
Holding Company Act of 1956.
``(ii) Exclusion.--The Commission
shall consider whether to exempt small
banks, savings associations, farm
credit system institutions, and credit
unions, including--
``(I) depository
institutions with total assets
of $10,000,000,000 or less;
``(II) farm credit system
institutions with total assets
of $10,000,000,000 or less; or
``(III) credit unions with
total assets of $10,000,000,000
or less.
``(iii) Limitation.--Such
definition shall not include an entity
whose primary business is providing
financing, and uses derivatives for the
purpose of hedging underlying
commercial risks related to interest
rate and foreign currency exposures, 90
percent or more of which arise from
financing that facilitates the purchase
or lease of products, 90 percent or
more of which are manufactured by the
parent company or another subsidiary of
the parent company.
``(D) Treatment of affiliates.--
``(i) In general.--An affiliate of
a person that qualifies for an
exception under subparagraph (A)
(including affiliate entities
predominantly engaged in providing
financing for the purchase of the
merchandise or manufactured goods of
the person) may qualify for the
exception only if the affiliate, acting
on behalf of the person and as an
agent, uses the swap to hedge or
mitigate the commercial risk of the
person or other affiliate of the person
that is not a financial entity.
``(ii) Prohibition relating to
certain affiliates.--The exception in
clause (i) shall not apply if the
affiliate is--
``(I) a swap dealer;
``(II) a security-based
swap dealer;
``(III) a major swap
participant;
``(IV) a major security-
based swap participant;
``(V) 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
paragraph (1) or (7) of
subsection (c) of that Act (15
U.S.C. 80a-3(c));
``(VI) a commodity pool; or
``(VII) a bank holding
company with over
$50,000,000,000 in consolidated
assets.
``(iii) Transition rule for
affiliates.--An affiliate, subsidiary,
or a wholly owned entity of a person
that qualifies for an exception under
subparagraph (A) and is predominantly
engaged in providing financing for the
purchase or lease of merchandise or
manufactured goods of the person shall
be exempt from the margin requirement
described in section 4s(e) and the
clearing requirement described in
paragraph (1) with regard to swaps
entered into to mitigate the risk of
the financing activities for not less
than a 2-year period beginning on the
date of enactment of this clause.
``(E) Election of counterparty.--
``(i) Swaps required to be
cleared.--With respect to any swap that
is subject to the mandatory clearing
requirement under this subsection and
entered into by a swap dealer or a
major swap participant with a
counterparty that is not a swap dealer,
major swap participant, security-based
swap dealer, or major security-based
swap participant, the counterparty
shall have the sole right to select the
derivatives clearing organization at
which the swap will be cleared.
``(ii) Swaps not required to be
cleared.--With respect to any swap that
is not subject to the mandatory
clearing requirement under this
subsection and entered into by a swap
dealer or a major swap participant with
a counterparty that is not a swap
dealer, major swap participant,
security-based swap dealer, or major
security-based swap participant, the
counterparty--
``(I) may elect to require
clearing of the swap; and
``(II) shall have the sole
right to select the derivatives
clearing organization at which
the swap will be cleared.
``(F) Abuse of exception.--The Commission
may prescribe such rules or issue
interpretations of the rules as the Commission
determines to be necessary to prevent abuse of
the exceptions described in this paragraph. The
Commission may also request information from
those persons claiming the clearing exception
as necessary to prevent abuse of the exceptions
described in this paragraph.
``(8) Trade execution.--
``(A) In general.--With respect to
transactions involving swaps subject to the
clearing requirement of paragraph (1),
counterparties shall--
``(i) execute the transaction on a
board of trade designated as a contract
market under section 5; or
``(ii) execute the transaction on a
swap execution facility registered
under 5h or a swap execution facility
that is exempt from registration under
section 5h(f) of this Act.
``(B) Exception.--The requirements of
clauses (i) and (ii) of subparagraph (A) shall
not apply if no board of trade or swap
execution facility makes the swap available to
trade or for swap transactions subject to the
clearing exception under paragraph (7).''.
(b) Commodity Exchange Act.--Section 2 of the Commodity
Exchange Act (7 U.S.C. 2) is amended by adding at the end the
following:
``(j) Committee Approval by Board.--Exemptions from the
requirements of subsection (h)(1) to clear a swap and
subsection (h)(8) to execute a swap through a board of trade or
swap execution facility shall be available to a counterparty
that is an issuer of securities that are registered under
section 12 of the Securities Exchange Act of 1934 (15 U.S.C.
78l) or that is required to file reports pursuant to section
15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78o)
only if an appropriate committee of the issuer's board or
governing body has reviewed and approved its decision to enter
into swaps that are subject to such exemptions.''.
(c) Grandfather Provisions.--
(1) Legal certainty for certain transactions in
exempt commodities.--Not later than 60 days after the
date of enactment of this Act, a person may submit to
the Commodity Futures Trading Commission a petition to
remain subject to section 2(h) of the Commodity
Exchange Act (7 U.S.C. 2(h)) (as in effect on the day
before the date of enactment of this Act).
(2) Consideration; authority of commodity futures
trading commission.--The Commodity Futures Trading
Commission--
(A) shall consider any petition submitted
under subparagraph (A) in a prompt manner; and
(B) may allow a person to continue
operating subject to section 2(h) of the
Commodity Exchange Act (7 U.S.C. 2(h)) (as in
effect on the day before the date of enactment
of this Act) for not longer than a 1-year
period.
(3) Agricultural swaps.--
(A) In general.--Except as provided in
subparagraph (B), no person shall offer to
enter into, enter into, or confirm the
execution of, any swap in an agricultural
commodity (as defined by the Commodity Futures
Trading Commission).
(B) Exception.--Notwithstanding
subparagraph (A), a person may offer to enter
into, enter into, or confirm the execution of,
any swap in an agricultural commodity pursuant
to section 4(c) of the Commodity Exchange Act
(7 U.S.C. 6(c)) or any rule, regulation, or
order issued thereunder (including any rule,
regulation, or order in effect as of the date
of enactment of this Act) by the Commodity
Futures Trading Commission to allow swaps under
such terms and conditions as the Commission
shall prescribe.
(4) Required reporting.--If the exception described
in section 2(h)(8)(B) of the Commodity Exchange Act
applies, the counterparties shall comply with any
recordkeeping and transaction reporting requirements
that may be prescribed by the Commission with respect
to swaps subject to section 2(h)(8)(B) of the Commodity
Exchange Act.
SEC. 724. SWAPS; SEGREGATION AND BANKRUPTCY TREATMENT.
(a) Segregation Requirements for Cleared Swaps.--Section 4d
of the Commodity Exchange Act (7 U.S.C. 6d) (as amended by
section 732) is amended by adding at the end the following:
``(f) Swaps.--
``(1) Registration requirement.--It shall be
unlawful for any person to accept any money,
securities, or property (or to extend any credit in
lieu of money, securities, or property) from, for, or
on behalf of a swaps customer to margin, guarantee, or
secure a swap cleared by or through a derivatives
clearing organization (including money, securities, or
property accruing to the customer as the result of such
a swap), unless the person shall have registered under
this Act with the Commission as a futures commission
merchant, and the registration shall not have expired
nor been suspended nor revoked.
``(2) Cleared swaps.--
``(A) Segregation required.--A futures
commission merchant shall treat and deal with
all money, securities, and property of any
swaps customer received to margin, guarantee,
or secure a swap cleared by or through a
derivatives clearing organization (including
money, securities, or property accruing to the
swaps customer as the result of such a swap) as
belonging to the swaps customer.
``(B) Commingling prohibited.--Money,
securities, and property of a swaps customer
described in subparagraph (A) shall be
separately accounted for and shall not be
commingled with the funds of the futures
commission merchant or be used to margin,
secure, or guarantee any trades or contracts of
any swaps customer or person other than the
person for whom the same are held.
``(3) Exceptions.--
``(A) Use of funds.--
``(i) In general.--Notwithstanding
paragraph (2), money, securities, and
property of swap customers of a futures
commission merchant described in
paragraph (2) may, for convenience, be
commingled and deposited in the same
account or accounts with any bank or
trust company or with a derivatives
clearing organization.
``(ii) Withdrawal.--Notwithstanding
paragraph (2), such share of the money,
securities, and property described in
clause (i) as in the normal course of
business shall be necessary to margin,
guarantee, secure, transfer, adjust, or
settle a cleared swap with a
derivatives clearing organization, or
with any member of the derivatives
clearing organization, may be withdrawn
and applied to such purposes, including
the payment of commissions, brokerage,
interest, taxes, storage, and other
charges, lawfully accruing in
connection with the cleared swap.
``(B) Commission action.--Notwithstanding
paragraph (2), in accordance with such terms
and conditions as the Commission may prescribe
by rule, regulation, or order, any money,
securities, or property of the swaps customers
of a futures commission merchant described in
paragraph (2) may be commingled and deposited
in customer accounts with any other money,
securities, or property received by the futures
commission merchant and required by the
Commission to be separately accounted for and
treated and dealt with as belonging to the
swaps customer of the futures commission
merchant.
``(4) Permitted investments.--Money described in
paragraph (2) may be invested in obligations of the
United States, in general obligations of any State or
of any political subdivision of a State, and in
obligations fully guaranteed as to principal and
interest by the United States, or in any other
investment that the Commission may by rule or
regulation prescribe, and such investments shall be
made in accordance with such rules and regulations and
subject to such conditions as the Commission may
prescribe.
``(5) Commodity contract.--A swap cleared by or
through a derivatives clearing organization shall be
considered to be a commodity contract as such term is
defined in section 761 of title 11, United States Code,
with regard to all money, securities, and property of
any swaps customer received by a futures commission
merchant or a derivatives clearing organization to
margin, guarantee, or secure the swap (including money,
securities, or property accruing to the customer as the
result of the swap).
``(6) Prohibition.--It shall be unlawful for any
person, including any derivatives clearing organization
and any depository institution, that has received any
money, securities, or property for deposit in a
separate account or accounts as provided in paragraph
(2) to hold, dispose of, or use any such money,
securities, or property as belonging to the depositing
futures commission merchant or any person other than
the swaps customer of the futures commission
merchant.''.
(b) Bankruptcy Treatment of Cleared Swaps.--Section 761 of
title 11, United States Code, is amended--
(1) in paragraph (4), by striking subparagraph (F)
and inserting the following:
``(F)(i) any other contract, option,
agreement, or transaction that is similar to a
contract, option, agreement, or transaction
referred to in this paragraph; and
``(ii) with respect to a futures commission
merchant or a clearing organization, any other
contract, option, agreement, or transaction, in
each case, that is cleared by a clearing
organization;''; and
(2) in paragraph (9)(A)(i), by striking ``the
commodity futures account'' and inserting ``a commodity
contract account''.
(c) Segregation Requirements for Uncleared Swaps.--Section
4s of the Commodity Exchange Act (as added by section 731) is
amended by adding at the end the following:
``(l) Segregation Requirements.--
``(1) Segregation of assets held as collateral in
uncleared swap transactions.--
``(A) Notification.--A swap dealer or major
swap participant shall be required to notify
the counterparty of the swap dealer or major
swap participant at the beginning of a swap
transaction that the counterparty has the right
to require segregation of the funds or other
property supplied to margin, guarantee, or
secure the obligations of the counterparty.
``(B) Segregation and maintenance of
funds.--At the request of a counterparty to a
swap that provides funds or other property to a
swap dealer or major swap participant to
margin, guarantee, or secure the obligations of
the counterparty, the swap dealer or major swap
participant shall--
``(i) segregate the funds or other
property for the benefit of the
counterparty; and
``(ii) in accordance with such
rules and regulations as the Commission
may promulgate, maintain the funds or
other property in a segregated account
separate from the assets and other
interests of the swap dealer or major
swap participant.
``(2) Applicability.--The requirements described in
paragraph (1) shall--
``(A) apply only to a swap between a
counterparty and a swap dealer or major swap
participant that is not submitted for clearing
to a derivatives clearing organization; and
``(B)(i) not apply to variation margin
payments; or
``(ii) not preclude any commercial
arrangement regarding--
``(I) the investment of segregated
funds or other property that may only
be invested in such investments as the
Commission may permit by rule or
regulation; and
``(II) the related allocation of
gains and losses resulting from any
investment of the segregated funds or
other property.
``(3) Use of independent third-party custodians.--
The segregated account described in paragraph (1) shall
be--
``(A) carried by an independent third-party
custodian; and
``(B) designated as a segregated account
for and on behalf of the counterparty.
``(4) Reporting requirement.--If the counterparty
does not choose to require segregation of the funds or
other property supplied to margin, guarantee, or secure
the obligations of the counterparty, the swap dealer or
major swap participant shall report to the counterparty
of the swap dealer or major swap participant on a
quarterly basis that the back office procedures of the
swap dealer or major swap participant relating to
margin and collateral requirements are in compliance
with the agreement of the counterparties.''.
SEC. 725. DERIVATIVES CLEARING ORGANIZATIONS.
(a) Registration Requirement.--Section 5b of the Commodity
Exchange Act (7 U.S.C. 7a-1) is amended by striking subsections
(a) and (b) and inserting the following:
``(a) Registration Requirement.--
``(1) In general.--Except as provided in paragraph
(2), it shall be unlawful for a derivatives clearing
organization, 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 with respect to--
``(A) a contract of sale of a commodity for
future delivery (or an option on the contract
of sale) or option on a commodity, in each
case, unless the contract or option is--
``(i) excluded from this Act by
subsection (a)(1)(C)(i), (c), or (f) of
section 2; or
``(ii) 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.); or
``(B) a swap.
``(2) Exception.--Paragraph (1) shall not apply to
a derivatives clearing organization that is registered
with the Commission.
``(b) Voluntary Registration.--A person that clears 1 or
more agreements, contracts, or transactions that are not
required to be cleared under this Act may register with the
Commission as a derivatives clearing organization.''.
(b) Registration for Depository Institutions and Clearing
Agencies; Exemptions; Compliance Officer; Annual Reports.--
Section 5b of the Commodity Exchange Act (7 U.S.C. 7a-1) is
amended by adding at the end the following:
``(g) Existing Depository Institutions and Clearing
Agencies.--
``(1) In general.--A depository institution or
clearing agency registered with the Securities and
Exchange Commission under the Securities Exchange Act
of 1934 (15 U.S.C. 78a et seq.) that is required to be
registered as a derivatives clearing organization under
this section is deemed to be registered under this
section to the extent that, before the date of
enactment of this subsection--
``(A) the depository institution cleared
swaps as a multilateral clearing organization;
or
``(B) the clearing agency cleared swaps.
``(2) Conversion of depository institutions.--A
depository institution to which this subsection applies
may, by the vote of the shareholders owning not less
than 51 percent of the voting interests of the
depository institution, be converted into a State
corporation, partnership, limited liability company, or
similar legal form pursuant to a plan of conversion, if
the conversion is not in contravention of applicable
State law.
``(3) Sharing of information.--The Securities and
Exchange Commission shall make available to the
Commission, upon request, all information determined to
be relevant by the Securities and Exchange Commission
regarding a clearing agency deemed to be registered
with the Commission under paragraph (1).
``(h) 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 determines that the derivatives clearing
organization is subject to comparable, comprehensive
supervision and regulation by the Securities and Exchange
Commission or the appropriate government authorities in the
home country of the organization. Such conditions may include,
but are not limited to, requiring that the derivatives clearing
organization be available for inspection by the Commission and
make available all information requested by the Commission.
``(i) Designation of Chief Compliance Officer.--
``(1) In general.--Each derivatives clearing
organization shall designate an individual to serve as
a chief compliance officer.
``(2) Duties.--The chief compliance officer shall--
``(A) report directly to the board or to
the senior officer of the derivatives clearing
organization;
``(B) review the compliance of the
derivatives clearing organization with respect
to the core principles described in subsection
(c)(2);
``(C) in consultation with the board of the
derivatives clearing organization, a body
performing a function similar to the board of
the derivatives clearing organization, or the
senior officer of the derivatives clearing
organization, resolve any conflicts of interest
that may arise;
``(D) be responsible for administering each
policy and procedure that is required to be
established pursuant to this section;
``(E) ensure compliance with this Act
(including regulations) relating to agreements,
contracts, or transactions, including each rule
prescribed by the Commission under this
section;
``(F) establish procedures for the
remediation of noncompliance issues identified
by the compliance officer through any--
``(i) compliance office review;
``(ii) look-back;
``(iii) internal or external audit
finding;
``(iv) self-reported error; or
``(v) validated complaint; and
``(G) establish and follow appropriate
procedures for the handling, management
response, remediation, retesting, and closing
of noncompliance issues.
``(3) Annual reports.--
``(A) In general.--In accordance with rules
prescribed by the Commission, the chief
compliance officer shall annually prepare and
sign a report that contains a description of--
``(i) the compliance of the
derivatives clearing organization of
the compliance officer with respect to
this Act (including regulations); and
``(ii) each policy and procedure of
the derivatives clearing organization
of the compliance officer (including
the code of ethics and conflict of
interest policies of the derivatives
clearing organization).
``(B) Requirements.--A compliance report
under subparagraph (A) shall--
``(i) accompany each appropriate
financial report of the derivatives
clearing organization that is required
to be furnished to the Commission
pursuant to this section; and
``(ii) include a certification
that, under penalty of law, the
compliance report is accurate and
complete.''.
(c) Core Principles for Derivatives Clearing
Organizations.--Section 5b(c) of the Commodity Exchange Act (7
U.S.C. 7a-1(c)) is amended by striking paragraph (2) and
inserting the following:
``(2) Core principles for derivatives clearing
organizations.--
``(A) Compliance.--
``(i) In general.--To be registered
and to maintain registration as a
derivatives clearing organization, a
derivatives clearing organization shall
comply with each core principle
described in this paragraph and any
requirement that the Commission may
impose by rule or regulation pursuant
to section 8a(5).
``(ii) Discretion of derivatives
clearing organization.--Subject to any
rule or regulation prescribed by the
Commission, a derivatives clearing
organization shall have reasonable
discretion in establishing the manner
by which the derivatives clearing
organization complies with each core
principle described in this paragraph.
``(B) Financial resources.--
``(i) In general.--Each derivatives
clearing organization shall have
adequate financial, operational, and
managerial resources, as determined by
the Commission, to discharge each
responsibility of the derivatives
clearing organization.
``(ii) Minimum amount of financial
resources.--Each derivatives clearing
organization shall possess financial
resources that, at a minimum, exceed
the total amount that would--
``(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; and
``(II) enable the
derivatives clearing
organization to cover the
operating costs of the
derivatives clearing
organization for a period of 1
year (as calculated on a
rolling basis).
``(C) Participant and product
eligibility.--
``(i) In general.--Each derivatives
clearing organization shall establish--
``(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
derivatives clearing
organization; and
``(II) appropriate
standards for determining the
eligibility of agreements,
contracts, or transactions
submitted to the derivatives
clearing organization for
clearing.
``(ii) Required procedures.--Each
derivatives clearing organization shall
establish and implement procedures to
verify, on an ongoing basis, the
compliance of each participation and
membership requirement of the
derivatives clearing organization.
``(iii) Requirements.--The
participation and membership
requirements of each derivatives
clearing organization shall--
``(I) be objective;
``(II) be publicly
disclosed; and
``(III) permit fair and
open access.
``(D) Risk management.--
``(i) In general.--Each derivatives
clearing organization shall ensure that
the derivatives clearing organization
possesses the ability to manage the
risks associated with discharging the
responsibilities of the derivatives
clearing organization through the use
of appropriate tools and procedures.
``(ii) Measurement of credit
exposure.--Each derivatives clearing
organization shall--
``(I) not less than once
during each business day of the
derivatives clearing
organization, measure the
credit exposures of the
derivatives clearing
organization to each member and
participant of the derivatives
clearing organization; and
``(II) monitor each
exposure described in subclause
(I) periodically during the
business day of the derivatives
clearing organization.
``(iii) Limitation of exposure to
potential losses from defaults.--Each
derivatives clearing organization,
through margin requirements and other
risk control mechanisms, shall limit
the exposure of the derivatives
clearing organization to potential
losses from defaults by members and
participants of the derivatives
clearing organization to ensure that--
``(I) the operations of the
derivatives clearing
organization would not be
disrupted; and
``(II) nondefaulting
members or participants would
not be exposed to losses that
nondefaulting members or
participants cannot anticipate
or control.
``(iv) Margin requirements.--The
margin required from each member and
participant of a derivatives clearing
organization shall be sufficient to
cover potential exposures in normal
market conditions.
``(v) Requirements regarding models
and parameters.--Each model and
parameter used in setting margin
requirements under clause (iv) shall
be--
``(I) risk-based; and
``(II) reviewed on a
regular basis.
``(E) Settlement procedures.--Each
derivatives clearing organization shall--
``(i) complete money settlements on
a timely basis (but not less frequently
than once each business day);
``(ii) employ money settlement
arrangements to eliminate or strictly
limit the exposure of the derivatives
clearing organization to settlement
bank risks (including credit and
liquidity risks from the use of banks
to effect money settlements);
``(iii) ensure that money
settlements are final when effected;
``(iv) maintain an accurate record
of the flow of funds associated with
each money settlement;
``(v) possess the ability to comply
with each term and condition of any
permitted netting or offset arrangement
with any other clearing organization;
``(vi) regarding physical
settlements, establish rules that
clearly state each obligation of the
derivatives clearing organization with
respect to physical deliveries; and
``(vii) ensure that each risk
arising from an obligation described in
clause (vi) is identified and managed.
``(F) Treatment of funds.--
``(i) Required standards and
procedures.--Each derivatives clearing
organization shall establish standards
and procedures that are designed to
protect and ensure the safety of member
and participant funds and assets.
``(ii) Holding of funds and
assets.--Each derivatives clearing
organization shall hold member and
participant funds and assets in a
manner by which to minimize the risk of
loss or of delay in the access by the
derivatives clearing organization to
the assets and funds.
``(iii) Permissible investments.--
Funds and assets invested by a
derivatives clearing organization shall
be held in instruments with minimal
credit, market, and liquidity risks.
``(G) Default rules and procedures.--
``(i) In general.--Each derivatives
clearing organization shall have rules
and procedures designed to allow for
the efficient, fair, and safe
management of events during which
members or participants--
``(I) become insolvent; or
``(II) otherwise default on
the obligations of the members
or participants to the
derivatives clearing
organization.
``(ii) Default procedures.--Each
derivatives clearing organization
shall--
``(I) clearly state the
default procedures of the
derivatives clearing
organization;
``(II) make publicly
available the default rules of
the derivatives clearing
organization; and
``(III) ensure that the
derivatives clearing
organization may take timely
action--
``(aa) to contain
losses and liquidity
pressures; and
``(bb) to continue
meeting each obligation
of the derivatives
clearing organization.
``(H) Rule enforcement.--Each derivatives
clearing organization shall--
``(i) maintain adequate
arrangements and resources for--
``(I) the effective
monitoring and enforcement of
compliance with the rules of
the derivatives clearing
organization; and
``(II) the resolution of
disputes;
``(ii) have the authority and
ability to discipline, limit, suspend,
or terminate the activities of a member
or participant due to a violation by
the member or participant of any rule
of the derivatives clearing
organization; and
``(iii) report to the Commission
regarding rule enforcement activities
and sanctions imposed against members
and participants as provided in clause
(ii).
``(I) System safeguards.--Each derivatives
clearing organization shall--
``(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 automated systems, that
are reliable, secure, and have adequate
scalable capacity;
``(ii) establish and maintain
emergency procedures, backup
facilities, and a plan for disaster
recovery that allows for--
``(I) the timely recovery
and resumption of operations of
the derivatives clearing
organization; and
``(II) the fulfillment of
each obligation and
responsibility of the
derivatives clearing
organization; and
``(iii) periodically conduct tests
to verify that the backup resources of
the derivatives clearing organization
are sufficient to ensure daily
processing, clearing, and settlement.
``(J) Reporting.--Each derivatives clearing
organization shall provide to the Commission
all information that the Commission determines
to be necessary to conduct oversight of the
derivatives clearing organization.
``(K) Recordkeeping.--Each derivatives
clearing organization shall maintain records of
all activities related to the business of the
derivatives clearing organization as a
derivatives clearing organization--
``(i) in a form and manner that is
acceptable to the Commission; and
``(ii) for a period of not less
than 5 years.
``(L) Public information.--
``(i) In general.--Each derivatives
clearing organization shall provide to
market participants sufficient
information to enable the market
participants to identify and evaluate
accurately the risks and costs
associated with using the services of
the derivatives clearing organization.
``(ii) Availability of
information.--Each derivatives clearing
organization shall make information
concerning the rules and operating and
default procedures governing the
clearing and settlement systems of the
derivatives clearing organization
available to market participants.
``(iii) Public disclosure.--Each
derivatives clearing organization shall
disclose publicly and to the Commission
information concerning--
``(I) the terms and
conditions of each contract,
agreement, and transaction
cleared and settled by the
derivatives clearing
organization;
``(II) each clearing and
other fee that the derivatives
clearing organization charges
the members and participants of
the derivatives clearing
organization;
``(III) the margin-setting
methodology, and the size and
composition, of the financial
resource package of the
derivatives clearing
organization;
``(IV) daily settlement
prices, volume, and open
interest for each contract
settled or cleared by the
derivatives clearing
organization; and
``(V) any other matter
relevant to participation in
the settlement and clearing
activities of the derivatives
clearing organization.
``(M) Information-sharing.--Each
derivatives clearing organization shall--
``(i) enter into, and abide by the
terms of, each appropriate and
applicable domestic and international
information-sharing agreement; and
``(ii) use relevant information
obtained from each agreement described
in clause (i) in carrying out the risk
management program of the derivatives
clearing organization.
``(N) Antitrust considerations.--Unless
necessary or appropriate to achieve the
purposes of this Act, a derivatives clearing
organization shall not--
``(i) adopt any rule or take any
action that results in any unreasonable
restraint of trade; or
``(ii) impose any material
anticompetitive burden.
``(O) Governance fitness standards.--
``(i) Governance arrangements.--
Each derivatives clearing organization
shall establish governance arrangements
that are transparent--
``(I) to fulfill public
interest requirements; and
``(II) to permit the
consideration of the views of
owners and participants.
``(ii) Fitness standards.--Each
derivatives clearing organization shall
establish and enforce appropriate
fitness standards for--
``(I) directors;
``(II) members of any
disciplinary committee;
``(III) members of the
derivatives clearing
organization;
``(IV) any other individual
or entity with direct access to
the settlement or clearing
activities of the derivatives
clearing organization; and
``(V) any party affiliated
with any individual or entity
described in this clause.
``(P) Conflicts of interest.--Each
derivatives clearing organization shall--
``(i) establish and enforce rules
to minimize conflicts of interest in
the decision-making process of the
derivatives clearing organization; and
``(ii) establish a process for
resolving conflicts of interest
described in clause (i).
``(Q) Composition of governing boards.--
Each derivatives clearing organization shall
ensure that the composition of the governing
board or committee of the derivatives clearing
organization includes market participants.
``(R) Legal risk.--Each derivatives
clearing organization shall have a well-
founded, transparent, and enforceable legal
framework for each aspect of the activities of
the derivatives clearing organization.''.
(d) Conflicts of Interest.--The Commodity Futures Trading
Commission shall adopt rules mitigating conflicts of interest
in connection with the conduct of business by a swap dealer or
a major swap participant with a derivatives clearing
organization, board of trade, or a swap execution facility that
clears or trades swaps in which the swap dealer or major swap
participant has a material debt or material equity investment.
(e) Reporting Requirements.--Section 5b of the Commodity
Exchange Act (7 U.S.C. 7a-1) (as amended by subsection (b)) is
amended by adding at the end the following:
``(k) Reporting Requirements.--
``(1) Duty of derivatives clearing organizations.--
Each derivatives clearing organization that clears
swaps shall provide to the Commission all information
that is determined by the Commission to be necessary to
perform each responsibility of the Commission under
this Act.
``(2) Data collection and maintenance
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--
``(A) swaps data reported to swap data
repositories; and
``(B) swaps traded on swap execution
facilities.
``(3) Reports on security-based swap agreements to
be shared with the securities and exchange
commission.--
``(A) In general.--A derivatives clearing
organization that clears security-based swap
agreements (as defined in section 1a(47)(A)(v))
shall, upon request, open to inspection and
examination to the Securities and Exchange
Commission all books and records relating to
such security-based swap agreements, consistent
with the confidentiality and disclosure
requirements of section 8.
``(B) Jurisdiction.--Nothing in this
paragraph shall affect the exclusive
jurisdiction of the Commission to prescribe
recordkeeping and reporting requirements for a
derivatives clearing organization that is
registered with the Commission.
``(4) Information sharing.--Subject to section 8,
and upon request, the Commission shall share
information collected under paragraph (2) with--
``(A) the Board;
``(B) the Securities and Exchange
Commission;
``(C) each appropriate prudential
regulator;
``(D) the Financial Stability Oversight
Council;
``(E) the Department of Justice; and
``(F) any other person that the Commission
determines to be appropriate, including--
``(i) foreign financial supervisors
(including foreign futures
authorities);
``(ii) foreign central banks; and
``(iii) foreign ministries.
``(5) Confidentiality and indemnification
agreement.--Before the Commission may share information
with any entity described in paragraph (4)--
``(A) the Commission shall receive a
written agreement from each entity stating that
the entity shall abide by the confidentiality
requirements described in section 8 relating to
the information on swap transactions that is
provided; and
``(B) each entity shall agree to indemnify
the Commission for any expenses arising from
litigation relating to the information provided
under section 8.
``(6) Public information.--Each derivatives
clearing organization that clears swaps shall provide
to the Commission (including any designee of the
Commission) information under paragraph (2) in such
form and at such frequency as is required by the
Commission to comply with the public reporting
requirements contained in section 2(a)(13).''.
(f) Public Disclosure.--Section 8(e) of the Commodity
Exchange Act (7 U.S.C. 12(e)) is amended in the last sentence--
(1) by inserting ``, central bank and ministries,''
after ``department'' each place it appears; and
(2) by striking ``. is a party.'' and inserting ``,
is a party.''.
(g) Legal Certainty for Identified Banking Products.--
(1) Repeals.--The Legal Certainty for Bank Products
Act of 2000 (7 U.S.C. 27 et seq.) is amended--
(A) by striking sections 404 and 407 (7
U.S.C. 27b, 27e);
(B) in section 402 (7 U.S.C. 27), by
striking subsection (d); and
(C) in section 408 (7 U.S.C. 27f)--
(i) in subsection (c)--
(I) by striking ``in the
case'' and all that follows
through ``a hybrid'' and
inserting ``in the case of a
hybrid'';
(II) by striking ``; or''
and inserting a period; and
(III) by striking paragraph
(2);
(ii) by striking subsection (b);
and
(iii) by redesignating subsection
(c) as subsection (b).
(2) Legal certainty for bank products act of
2000.--Section 403 of the Legal Certainty for Bank
Products Act of 2000 (7 U.S.C. 27a) is amended to read
as follows:
``SEC. 403. EXCLUSION OF IDENTIFIED BANKING PRODUCT.
``(a) Exclusion.--Except as provided in subsection (b) or
(c)--
``(1) the Commodity Exchange Act (7 U.S.C. 1 et
seq.) shall not apply to, and the Commodity Futures
Trading Commission shall not exercise regulatory
authority under the Commodity Exchange Act (7 U.S.C. 1
et seq.) with respect to, an identified banking
product; and
``(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
1a(47)(A)(v) of the Commodity Exchange Act and section
3(a)(78) of the Securities Exchange Act of 1934 do not
include any identified bank product.
``(b) Exception.--An appropriate Federal banking agency may
except an identified banking product of a bank under its
regulatory jurisdiction from the exclusion in subsection (a) if
the agency determines, in consultation with the Commodity
Futures Trading Commission and the Securities and Exchange
Commission, that the product--
``(1) would meet the definition of a `swap' under
section 1a(47) of the Commodity Exchange Act (7 U.S.C.
1a) or a `security-based swap' under that section
3(a)(68) of the Securities Exchange Act of 1934; and
``(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.).
``(c) Exception.--The exclusions in subsection (a) shall
not apply to an identified bank product that--
``(1) is a product of a bank that is not under the
regulatory jurisdiction of an appropriate Federal
banking agency;
``(2) meets the definition of swap in section
1a(47) of the Commodity Exchange Act or security-based
swap in section 3(a)(68) of the Securities Exchange Act
of 1934; and
``(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.).''.
(h) Reducing Clearing Systemic Risk.--Section 5b(f)(1) of
the Commodity Exchange Act (7 U.S.C. 7a-1(F)(i)) is amended by
adding at the end the following: ``In order to minimize
systemic risk, under no circumstances shall a derivatives
clearing organization be compelled to accept the counterparty
credit risk of another clearing organization.''.
SEC. 726. RULEMAKING ON CONFLICT OF INTEREST.
(a) In General.--In order to mitigate conflicts of
interest, not later than 180 days after the date of enactment
of the Wall Street Transparency and Accountability Act of 2010,
the Commodity Futures Trading Commission shall adopt rules
which may include numerical limits on the control of, or the
voting rights with respect to, any derivatives clearing
organization that clears swaps, or swap execution facility or
board of trade designated as a contract market that posts swaps
or makes swaps available for trading, by a bank holding company
(as defined in section 2 of the Bank Holding Company Act of
1956 (12 U.S.C. 1841)) with total consolidated assets of
$50,000,000,000 or more, a nonbank financial company (as
defined in section 102) supervised by the Board, an affiliate
of such a bank holding company or nonbank financial company, a
swap dealer, major swap participant, or associated person of a
swap dealer or major swap participant.
(b) Purposes.--The Commission shall adopt rules if it
determines, after the review described in subsection (a), that
such rules are necessary or appropriate to improve the
governance of, or to mitigate systemic risk, promote
competition, or mitigate conflicts of interest in connection
with a swap dealer or major swap participant's conduct of
business with, a derivatives clearing organization, contract
market, or swap execution facility that clears or posts swaps
or makes swaps available for trading and in which such swap
dealer or major swap participant has a material debt or equity
investment.
(c) Considerations.--In adopting rules pursuant to this
section, the Commodity Futures Trading Commission shall
consider any conflicts of interest arising from the amount of
equity owned by a single investor, the ability to vote, cause
the vote of, or withhold votes entitled to be cast on any
matters by the holders of the ownership interest, and the
governance arrangements of any derivatives clearing
organization that clears swaps, or swap execution facility or
board of trade designated as a contract market that posts swaps
or makes swaps available for trading.
SEC. 727. PUBLIC REPORTING OF SWAP TRANSACTION DATA.
Section 2(a) of the Commodity Exchange Act (7 U.S.C. 2(a))
is amended by adding at the end the following:
``(13) Public availability of swap transaction
data.--
``(A) Definition of real-time public
reporting.--In this paragraph, the term `real-
time public reporting' means to report data
relating to a swap transaction, including price
and volume, as soon as technologically
practicable after the time at which the swap
transaction has been executed.
``(B) Purpose.--The purpose of this section
is to authorize the Commission to make swap
transaction and pricing data available to the
public in such form and at such times as the
Commission determines appropriate to enhance
price discovery.
``(C) General rule.--The Commission is
authorized and required to provide by rule for
the public availability of swap transaction and
pricing data as follows:
``(i) With respect to those swaps
that are subject to the mandatory
clearing requirement described in
subsection (h)(1) (including those
swaps that are excepted from the
requirement pursuant to subsection
(h)(7)), the Commission shall require
real-time public reporting for such
transactions.
``(ii) With respect to those swaps
that are not subject to the mandatory
clearing requirement described in
subsection (h)(1), but are cleared at a
registered derivatives clearing
organization, the Commission shall
require real-time public reporting for
such transactions.
``(iii) With respect to swaps that
are not cleared at a registered
derivatives clearing organization and
which are reported to a swap data
repository or the Commission under
subsection (h)(6), the Commission shall
require real-time public reporting for
such transactions, in a manner that
does not disclose the business
transactions and market positions of
any person.
``(iv) With respect to swaps that
are determined to be required to be
cleared under subsection (h)(2) but are
not cleared, the Commission shall
require real-time public reporting for
such transactions.
``(D) Registered entities and public
reporting.--The Commission may require
registered entities to publicly disseminate the
swap transaction and pricing data required to
be reported under this paragraph.
``(E) Rulemaking required.--With respect to
the rule providing for the public availability
of transaction and pricing data for swaps
described in clauses (i) and (ii) of
subparagraph (C), the rule promulgated by the
Commission shall contain provisions--
``(i) to ensure such information
does not identify the participants;
``(ii) to specify the criteria for
determining what constitutes a large
notional swap transaction (block trade)
for particular markets and contracts;
``(iii) to specify the appropriate
time delay for reporting large notional
swap transactions (block trades) to the
public; and
``(iv) that take into account
whether the public disclosure will
materially reduce market liquidity.
``(F) Timeliness of reporting.--Parties to
a swap (including agents of the parties to a
swap) shall be responsible for reporting swap
transaction information to the appropriate
registered entity in a timely manner as may be
prescribed by the Commission.
``(G) Reporting of swaps to registered swap
data repositories.--Each swap (whether cleared
or uncleared) shall be reported to a registered
swap data repository.
``(14) Semiannual and annual public reporting of
aggregate swap data.--
``(A) In general.--In accordance with
subparagraph (B), the Commission shall issue a
written report on a semiannual and annual basis
to make available to the public information
relating to--
``(i) the trading and clearing in
the major swap categories; and
``(ii) the market participants and
developments in new products.
``(B) Use; consultation.--In preparing a
report under subparagraph (A), the Commission
shall--
``(i) use information from swap
data repositories and derivatives
clearing organizations; and
``(ii) consult with the Office of
the Comptroller of the Currency, the
Bank for International Settlements, and
such other regulatory bodies as may be
necessary.
``(C) Authority of the commission.--The
Commission may, by rule, regulation, or order,
delegate the public reporting responsibilities
of the Commission under this paragraph in
accordance with such terms and conditions as
the Commission determines to be appropriate and
in the public interest.''.
SEC. 728. SWAP DATA REPOSITORIES.
The Commodity Exchange Act is amended by inserting after
section 20 (7 U.S.C. 24) the following:
``SEC. 21. SWAP DATA REPOSITORIES.
``(a) Registration Requirement.--
``(1) Requirement; authority of derivatives
clearing organization.--
``(A) In general.--It shall be unlawful for
any person, 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 swap data repository.
``(B) Registration of derivatives clearing
organizations.--A derivatives clearing
organization may register as a swap data
repository.
``(2) Inspection and examination.--Each registered
swap data repository shall be subject to inspection and
examination by any representative of the Commission.
``(3) Compliance with core principles.--
``(A) In general.--To be registered, and
maintain registration, as a swap data
repository, the swap data repository shall
comply with--
``(i) the requirements and core
principles described in this section;
and
``(ii) any requirement that the
Commission may impose by rule or
regulation pursuant to section 8a(5).
``(B) Reasonable discretion of swap data
repository.--Unless otherwise determined by the
Commission by rule or regulation, a swap data
repository described in subparagraph (A) shall
have reasonable discretion in establishing the
manner in which the swap data repository
complies with the core principles described in
this section.
``(b) Standard Setting.--
``(1) Data identification.--
``(A) In general.--In accordance with
subparagraph (B), the Commission shall
prescribe standards that specify the data
elements for each swap that shall be collected
and maintained by each registered swap data
repository.
``(B) Requirement.--In carrying out
subparagraph (A), the Commission shall
prescribe consistent data element standards
applicable to registered entities and reporting
counterparties.
``(2) Data collection and maintenance.--The
Commission shall prescribe data collection and data
maintenance standards for swap data repositories.
``(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 in
connection with their clearing of swaps.
``(c) Duties.--A swap data repository shall--
``(1) accept data prescribed by the Commission for
each swap under subsection (b);
``(2) confirm with both counterparties to the swap
the accuracy of the data that was submitted;
``(3) maintain the data described in paragraph (1)
in such form, in such manner, and for such period as
may be required by the Commission;
``(4)(A) provide direct electronic access to the
Commission (or any designee of the Commission,
including another registered entity); and
``(B) provide the information described in
paragraph (1) in such form and at such frequency as the
Commission may require to comply with the public
reporting requirements contained in section 2(a)(13);
``(5) at the direction of the Commission, establish
automated systems for monitoring, screening, and
analyzing swap data, including compliance and frequency
of end user clearing exemption claims by individual and
affiliated entities;
``(6) maintain the privacy of any and all swap
transaction information that the swap data repository
receives from a swap dealer, counterparty, or any other
registered entity; and
``(7) on a confidential basis pursuant to section
8, upon request, and after notifying the Commission of
the request, make available all data obtained by the
swap data repository, including individual counterparty
trade and position data, to--
``(A) each appropriate prudential
regulator;
``(B) the Financial Stability Oversight
Council;
``(C) the Securities and Exchange
Commission;
``(D) the Department of Justice; and
``(E) any other person that the Commission
determines to be appropriate, including--
``(i) foreign financial supervisors
(including foreign futures
authorities);
``(ii) foreign central banks; and
``(iii) foreign ministries; and
``(8) 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.
``(d) Confidentiality and Indemnification Agreement.--
Before the swap data repository may share information with any
entity described in subsection (c)(7)--
``(1) the swap data repository shall receive a
written agreement from each entity stating that the
entity shall abide by the confidentiality requirements
described in section 8 relating to the information on
swap transactions that is provided; and
``(2) each entity shall agree to indemnify the swap
data repository and the Commission for any expenses
arising from litigation relating to the information
provided under section 8.
``(e) Designation of Chief Compliance Officer.--
``(1) In general.--Each swap data repository shall
designate an individual to serve as a chief compliance
officer.
``(2) Duties.--The chief compliance officer shall--
``(A) report directly to the board or to
the senior officer of the swap data repository;
``(B) review the compliance of the swap
data repository with respect to the
requirements and core principles described in
this section;
``(C) in consultation with the board of the
swap data repository, a body performing a
function similar to the board of the swap data
repository, or the senior officer of the swap
data repository, resolve any conflicts of
interest that may arise;
``(D) be responsible for administering each
policy and procedure that is required to be
established pursuant to this section;
``(E) ensure compliance with this Act
(including regulations) relating to agreements,
contracts, or transactions, including each rule
prescribed by the Commission under this
section;
``(F) establish procedures for the
remediation of noncompliance issues identified
by the chief compliance officer through any--
``(i) compliance office review;
``(ii) look-back;
``(iii) internal or external audit
finding;
``(iv) self-reported error; or
``(v) validated complaint; and
``(G) establish and follow appropriate
procedures for the handling, management
response, remediation, retesting, and closing
of noncompliance issues.
``(3) Annual reports.--
``(A) In general.--In accordance with rules
prescribed by the Commission, the chief
compliance officer shall annually prepare and
sign a report that contains a description of--
``(i) the compliance of the swap
data repository of the chief compliance
officer with respect to this Act
(including regulations); and
``(ii) each policy and procedure of
the swap data repository of the chief
compliance officer (including the code
of ethics and conflict of interest
policies of the swap data repository).
``(B) Requirements.--A compliance report
under subparagraph (A) shall--
``(i) accompany each appropriate
financial report of the swap data
repository that is required to be
furnished to the Commission pursuant to
this section; and
``(ii) include a certification
that, under penalty of law, the
compliance report is accurate and
complete.
``(f) Core Principles Applicable To Swap Data
Repositories.--
``(1) Antitrust considerations.--Unless necessary
or appropriate to achieve the purposes of this Act, a
swap data repository shall not--
``(A) adopt any rule or take any action
that results in any unreasonable restraint of
trade; or
``(B) impose any material anticompetitive
burden on the trading, clearing, or reporting
of transactions.
``(2) Governance arrangements.--Each swap data
repository shall establish governance arrangements that
are transparent--
``(A) to fulfill public interest
requirements; and
``(B) to support the objectives of the
Federal Government, owners, and participants.
``(3) Conflicts of interest.--Each swap data
repository shall--
``(A) establish and enforce rules to
minimize conflicts of interest in the decision-
making process of the swap data repository; and
``(B) establish a process for resolving
conflicts of interest described in subparagraph
(A).
``(4) Additional duties developed by commission.--
``(A) In general.--The Commission may
develop 1 or more additional duties applicable
to swap data repositories.
``(B) Consideration of evolving
standards.--In developing additional duties
under subparagraph (A), the Commission may take
into consideration any evolving standard of the
United States or the international community.
``(C) Additional duties for commission
designees.--The Commission shall establish
additional duties for any registrant described
in section 1a(48) in order to minimize
conflicts of interest, protect data, ensure
compliance, and guarantee the safety and
security of the swap data repository.
``(g) Required Registration for Swap Data Repositories.--
Any person that is required to be registered as a swap data
repository under this section shall register with the
Commission regardless of whether that person is also licensed
as a bank or registered with the Securities and Exchange
Commission as a swap data repository.
``(h) Rules.--The Commission shall adopt rules governing
persons that are registered under this section.''.
SEC. 729. REPORTING AND RECORDKEEPING.
The Commodity Exchange Act is amended by inserting after
section 4q (7 U.S.C. 6o-1) the following:
``SEC. 4R. REPORTING AND RECORDKEEPING FOR UNCLEARED SWAPS.
``(a) Required Reporting of Swaps Not Accepted by Any
Derivatives Clearing Organization.--
``(1) In general.--Each swap that is not accepted
for clearing by any derivatives clearing organization
shall be reported to--
``(A) a swap data repository described in
section 21; or
``(B) in the case in which there is no swap
data repository that would accept the swap, to
the Commission pursuant to this section within
such time period as the Commission may by rule
or regulation prescribe.
``(2) Transition rule for preenactment swaps.--
``(A) Swaps entered into before the date of
enactment of the wall street transparency and
accountability act of 2010.--Each swap entered
into before the date of enactment of the Wall
Street Transparency and Accountability Act of
2010, the terms of which have not expired as of
the date of enactment of that Act, shall be
reported to a registered swap data repository
or the Commission by a date that is not later
than--
``(i) 30 days after issuance of the
interim final rule; or
``(ii) such other period as the
Commission determines to be
appropriate.
``(B) Commission rulemaking.--The
Commission shall promulgate an interim final
rule within 90 days of the date of enactment of
this section providing for the reporting of
each swap entered into before the date of
enactment as referenced in subparagraph (A).
``(C) Effective date.--The reporting
provisions described in this section shall be
effective upon the enactment of this section.
``(3) Reporting obligations.--
``(A) Swaps in which only 1 counterparty is
a swap dealer or major swap participant.--With
respect to a swap in which only 1 counterparty
is a swap dealer or major swap participant, the
swap dealer or major swap participant shall
report the swap as required under paragraphs
(1) and (2).
``(B) Swaps in which 1 counterparty is a
swap dealer and the other a major swap
participant.--With respect to a swap in which 1
counterparty is a swap dealer and the other a
major swap participant, the swap dealer shall
report the swap as required under paragraphs
(1) and (2).
``(C) Other swaps.--With respect to any
other swap not described in subparagraph (A) or
(B), the counterparties to the swap shall
select a counterparty to report the swap as
required under paragraphs (1) and (2).
``(b) Duties of Certain Individuals.--Any individual or
entity that enters into a swap shall meet each requirement
described in subsection (c) if the individual or entity did
not--
``(1) clear the swap in accordance with section
2(h)(1); or
``(2) have the data regarding the swap accepted by
a swap data repository in accordance with rules
(including timeframes) adopted by the Commission under
section 21.
``(c) Requirements.--An individual or entity described in
subsection (b) shall--
``(1) upon written request from the Commission,
provide reports regarding the swaps held by the
individual or entity to the Commission in such form and
in such manner as the Commission may request; and
``(2) maintain books and records pertaining to the
swaps held by the individual or entity in such form, in
such manner, and for such period as the Commission may
require, which shall be open to inspection by--
``(A) any representative of the Commission;
``(B) an appropriate prudential regulator;
``(C) the Securities and Exchange
Commission;
``(D) the Financial Stability Oversight
Council; and
``(E) the Department of Justice.
``(d) Identical Data.--In prescribing rules under this
section, the Commission shall require individuals and entities
described in subsection (b) to submit to the Commission a
report that contains data that is not less comprehensive than
the data required to be collected by swap data repositories
under section 21.''.
SEC. 730. LARGE SWAP TRADER REPORTING.
The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended
by adding after section 4s (as added by section 731) the
following:
``SEC. 4T. LARGE SWAP TRADER REPORTING.
``(a) Prohibition.--
``(1) In general.--Except as provided in paragraph
(2), it shall be unlawful for any person to enter into
any swap that the Commission determines to perform a
significant price discovery function with respect to
registered entities if--
``(A) the person directly or indirectly
enters into the swap during any 1 day in an
amount equal to or in excess of such amount as
shall be established periodically by the
Commission; and
``(B) the person directly or indirectly has
or obtains a position in the swap equal to or
in excess of such amount as shall be
established periodically by the Commission.
``(2) Exception.--Paragraph (1) shall not apply
if--
``(A) the person files or causes to be
filed with the properly designated officer of
the Commission such reports regarding any
transactions or positions described in
subparagraphs (A) and (B) of paragraph (1) as
the Commission may require by rule or
regulation; and
``(B) in accordance with the rules and
regulations of the Commission, the person keeps
books and records of all such swaps and any
transactions and positions in any related
commodity traded on or subject to the rules of
any designated contract market or swap
execution facility, and of cash or spot
transactions in, inventories of, and purchase
and sale commitments of, such a commodity.
``(b) Requirements.--
``(1) In general.--Books and records described in
subsection (a)(2)(B) shall--
``(A) show such complete details concerning
all transactions and positions as the
Commission may prescribe by rule or regulation;
``(B) be open at all times to inspection
and examination by any representative of the
Commission; and
``(C) 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 swaps (as
that term is defined in section 1a(47)(A)(v)),
and consistent with the confidentiality and
disclosure requirements of section 8.
``(2) Jurisdiction.--Nothing in paragraph (1) shall
affect the exclusive jurisdiction of the Commission to
prescribe recordkeeping and reporting requirements for
large swap traders under this section.
``(c) Applicability.--For purposes of this section, the
swaps, futures, and cash or spot transactions and positions of
any person shall include the swaps, futures, and cash or spot
transactions and positions of any persons directly or
indirectly controlled by the person.
``(d) Significant Price Discovery Function.--In making a
determination as to whether a swap performs or affects a
significant price discovery function with respect to registered
entities, the Commission shall consider the factors described
in section 4a(a)(3).''.
SEC. 731. REGISTRATION AND REGULATION OF SWAP DEALERS AND MAJOR SWAP
PARTICIPANTS.
The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended
by inserting after section 4r (as added by section 729) the
following:
``SEC. 4S. REGISTRATION AND REGULATION OF SWAP DEALERS AND MAJOR SWAP
PARTICIPANTS.
``(a) Registration.--
``(1) Swap dealers.--It shall be unlawful for any
person to act as a swap dealer unless the person is
registered as a swap dealer with the Commission.
``(2) Major swap participants.--It shall be
unlawful for any person to act as a major swap
participant unless the person is registered as a major
swap participant with the Commission.
``(b) Requirements.--
``(1) In general.--A person shall register as a
swap dealer or major swap participant by filing a
registration application with the Commission.
``(2) Contents.--
``(A) In general.--The application shall be
made in such form and manner as prescribed by
the Commission, and shall contain such
information, as the Commission considers
necessary concerning the business in which the
applicant is or will be engaged.
``(B) Continual reporting.--A person that
is registered as a swap dealer or major swap
participant shall continue to submit to the
Commission reports that contain such
information pertaining to the business of the
person as the Commission may require.
``(3) Expiration.--Each registration under this
section shall expire at such time as the Commission may
prescribe by rule or regulation.
``(4) Rules.--Except as provided in subsections (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.
``(5) Transition.--Rules under this section shall
provide for the registration of swap dealers and major
swap participants not later than 1 year after the date
of enactment of the Wall Street Transparency and
Accountability Act of 2010.
``(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 the swap dealer or major swap
participant, if the swap dealer or major swap
participant knew, or in the exercise of reasonable care
should have known, of the statutory disqualification.
``(c) Dual Registration.--
``(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 the
person also is a depository institution or is
registered with the Securities and Exchange Commission
as a security-based swap dealer.
``(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 the person also is a depository
institution or is registered with the Securities and
Exchange Commission as a major security-based swap
participant.
``(d) Rulemakings.--
``(1) In general.--The Commission shall adopt rules
for persons that are registered as swap dealers or
major swap participants under this section.
``(2) Exception for prudential requirements.--
``(A) In general.--The Commission may not
prescribe rules imposing prudential
requirements on swap dealers or major swap
participants for which there is a prudential
regulator.
``(B) Applicability.--Subparagraph (A) does
not limit the authority of the Commission to
prescribe rules as directed under this section.
``(e) Capital and Margin Requirements.--
``(1) In general.--
``(A) Swap dealers and major swap
participants that are banks.--Each registered
swap dealer and major swap participant for
which there is a prudential regulator shall
meet such minimum capital requirements and
minimum initial and variation margin
requirements as the prudential regulator shall
by rule or regulation prescribe under paragraph
(2)(A).
``(B) Swap dealers and major swap
participants that are not banks.--Each
registered swap dealer and major swap
participant for which there is not a prudential
regulator shall meet such minimum capital
requirements and minimum initial and variation
margin requirements as the Commission shall by
rule or regulation prescribe under paragraph
(2)(B).
``(2) Rules.--
``(A) Swap dealers and major swap
participants that are banks.--The prudential
regulators, in consultation with the Commission
and the Securities and Exchange Commission,
shall jointly adopt rules for swap dealers and
major swap participants, with respect to their
activities as a swap dealer or major swap
participant, for which there is a prudential
regulator imposing--
``(i) capital requirements; and
``(ii) both initial and variation
margin requirements on all swaps that
are not cleared by a registered
derivatives clearing organization.
``(B) Swap dealers and major swap
participants that are not banks.--The
Commission shall adopt rules for swap dealers
and major swap participants, with respect to
their activities as a swap dealer or major swap
participant, for which there is not a
prudential regulator imposing--
``(i) capital requirements; and
``(ii) both initial and variation
margin requirements on all swaps that
are not cleared by a registered
derivatives clearing organization.
``(C) Capital.--In setting capital
requirements for a person that is designated as
a swap dealer or a major swap participant for a
single type or single class or category of swap
or activities, the prudential regulator and the
Commission shall take into account the risks
associated with other types of swaps or classes
of swaps or categories of swaps engaged in and
the other activities conducted by that person
that are not otherwise subject to regulation
applicable to that person by virtue of the
status of the person as a swap dealer or a
major swap participant.
``(3) Standards for capital and margin.--
``(A) In general.--To offset the greater
risk to the swap dealer or major swap
participant and the financial system arising
from the use of swaps that are not cleared, the
requirements imposed under paragraph (2)
shall--
``(i) help ensure the safety and
soundness of the swap dealer or major
swap participant; and
``(ii) be appropriate for the risk
associated with the non-cleared swaps
held as a swap dealer or major swap
participant.
``(B) Rule of construction.--
``(i) In general.--Nothing in this
section shall limit, or be construed to
limit, the authority--
``(I) of the Commission to
set financial responsibility
rules for a futures commission
merchant or introducing broker
registered pursuant to section
4f(a) (except for section
4f(a)(3)) in accordance with
section 4f(b); or
``(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 (15 U.S.C.
78o(b)) (except for section
15(b)(11) of that Act (15
U.S.C. 78o(b)(11)) in
accordance with section
15(c)(3) of the Securities
Exchange Act of 1934 (15 U.S.C.
78o(c)(3)).
``(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 Act or the
Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.).
``(C) Margin requirements.--In prescribing
margin requirements under this subsection, the
prudential regulator with respect to swap
dealers and major swap participants for which
it is the prudential regulator and the
Commission with respect to swap dealers and
major swap participants for which there is no
prudential regulator shall permit the use of
noncash collateral, as the regulator or the
Commission determines to be consistent with--
``(i) preserving the financial
integrity of markets trading swaps; and
``(ii) preserving the stability of
the United States financial system.
``(D) Comparability of capital and margin
requirements.--
``(i) In general.--The prudential
regulators, the Commission, and the
Securities and Exchange Commission
shall periodically (but not less
frequently than annually) consult on
minimum capital requirements and
minimum initial and variation margin
requirements.
``(ii) Comparability.--The entities
described in clause (i) shall, to the
maximum extent practicable, establish
and maintain comparable minimum capital
requirements and minimum initial and
variation margin requirements,
including the use of non cash
collateral, for--
``(I) swap dealers; and
``(II) major swap
participants.
``(f) Reporting and Recordkeeping.--
``(1) In general.--Each registered swap dealer and
major swap participant--
``(A) shall make such reports as are
required by the Commission by rule or
regulation regarding the transactions and
positions and financial condition of the
registered swap dealer or major swap
participant;
``(B)(i) for which there is a prudential
regulator, shall keep books and records of all
activities related to the business as a swap
dealer or major swap participant in such form
and manner and for such period as may be
prescribed by the Commission by rule or
regulation; and
``(ii) for which there is no prudential
regulator, shall keep books and records in such
form and manner and for such period as may be
prescribed by the Commission by rule or
regulation;
``(C) shall keep books and records
described in subparagraph (B) open to
inspection and examination by any
representative of the Commission; and
``(D) shall keep any such books and records
relating to swaps defined in section
1a(47)(A)(v) open to inspection and examination
by the Securities and Exchange Commission.
``(2) Rules.--The Commission shall adopt rules
governing reporting and recordkeeping for swap dealers
and major swap participants.
``(g) Daily Trading Records.--
``(1) In general.--Each registered swap dealer and
major swap participant shall maintain daily trading
records of the swaps of the registered swap dealer and
major swap participant and all related records
(including related cash or forward transactions) and
recorded communications, including electronic mail,
instant messages, and recordings of telephone calls,
for such period as may be required by the Commission by
rule or regulation.
``(2) Information requirements.--The daily trading
records shall include such information as the
Commission shall require by rule or regulation.
``(3) Counterparty records.--Each registered swap
dealer and major swap participant shall maintain daily
trading records for each counterparty in a manner and
form that is identifiable with each swap transaction.
``(4) Audit trail.--Each registered swap dealer and
major swap participant shall maintain a complete audit
trail for conducting comprehensive and accurate trade
reconstructions.
``(5) Rules.--The Commission shall adopt rules
governing daily trading records for swap dealers and
major swap participants.
``(h) Business Conduct Standards.--
``(1) In general.--Each registered swap dealer and
major swap participant shall conform with such business
conduct standards as prescribed in paragraph (3) and as
may be prescribed by the Commission by rule or
regulation that relate to--
``(A) fraud, manipulation, and other
abusive practices involving swaps (including
swaps that are offered but not entered into);
``(B) diligent supervision of the business
of the registered swap dealer and major swap
participant;
``(C) adherence to all applicable position
limits; and
``(D) such other matters as the Commission
determines to be appropriate.
``(2) Responsibilities with respect to special
entities.--
``(A) Advising special entities.--A swap
dealer or major swap participant that acts as
an advisor to a special entity regarding a swap
shall comply with the requirements of
subparagraph (4) with respect to such Special
Entity.
``(B) Entering of swaps with respect to
special entities.--A swap dealer that enters
into or offers to enter into swap with a
Special Entity shall comply with the
requirements of subparagraph (5) with respect
to such Special Entity.
``(C) Special entity defined.--For purposes
of this subsection, the term `special entity'
means--
``(i) a Federal agency;
``(ii) a State, State agency, city,
county, municipality, or other
political subdivision of a State;
``(iii) any employee benefit plan,
as defined in section 3 of the Employee
Retirement Income Security Act of 1974
(29 U.S.C. 1002);
``(iv) any governmental plan, as
defined in section 3 of the Employee
Retirement Income Security Act of 1974
(29 U.S.C. 1002); or
``(v) any endowment, including an
endowment that is an organization
described in section 501(c)(3) of the
Internal Revenue Code of 1986.
``(3) Business conduct requirements.--Business
conduct requirements adopted by the Commission shall--
``(A) establish a duty for a swap dealer or
major swap participant to verify that any
counterparty meets the eligibility standards
for an eligible contract participant;
``(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--
``(i) information about the
material risks and characteristics of
the swap;
``(ii) any material incentives or
conflicts of interest that the swap
dealer or major swap participant may
have in connection with the swap; and
``(iii)(I) for cleared swaps, upon
the request of the counterparty,
receipt of the daily mark of the
transaction from the appropriate
derivatives clearing organization; and
``(II) for uncleared swaps, receipt
of the daily mark of the transaction
from the swap dealer or the major swap
participant;
``(C) establish a duty 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; and
``(D) establish such other standards and
requirements as the Commission may determine
are appropriate in the public interest, for the
protection of investors, or otherwise in
furtherance of the purposes of this Act.
``(4) Special requirements for swap dealers acting
as advisors.--
``(A) In general.--It shall be unlawful for
a swap dealer or major swap participant--
``(i) to employ any device, scheme,
or artifice to defraud any Special
Entity or prospective customer who is a
Special Entity;
``(ii) to engage in any
transaction, practice, or course of
business that operates as a fraud or
deceit on any Special Entity or
prospective customer who is a Special
Entity; or
``(iii) to engage in any act,
practice, or course of business that is
fraudulent, deceptive or manipulative.
``(B) Duty.--Any swap dealer that acts as
an advisor to a Special Entity shall have a
duty to act in the best interests of the
Special Entity.
``(C) Reasonable efforts.--Any swap dealer
that acts as an advisor to a Special Entity
shall make reasonable efforts to obtain such
information as is necessary to make a
reasonable determination that any swap
recommended by the swap dealer is in the best
interests of the Special Entity, including
information relating to--
``(i) the financial status of the
Special Entity;
``(ii) the tax status of the
Special Entity;
``(iii) the investment or financing
objectives of the Special Entity; and
``(iv) any other information that
the Commission may prescribe by rule or
regulation.
``(5) Special requirements for swap dealers as
counterparties to special entities.--
``(A) Any swap dealer or major swap
participant that offers to enter or enters into
a swap with a Special Entity shall--
``(i) comply with any duty
established by the Commission 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(18) of this
Act, that requires the swap dealer or
major swap participant to have a
reasonable basis to believe that the
counterparty that is a Special Entity
has an independent representative
that--
``(I) has sufficient
knowledge to evaluate the
transaction and risks;
``(II) is not subject to a
statutory disqualification;
``(III) is independent of
the swap dealer or major swap
participant;
``(IV) undertakes a duty to
act in the best interests of
the counterparty it represents;
``(V) makes appropriate
disclosures;
``(VI) will provide written
representations to the Special
Entity regarding fair pricing
and the appropriateness of the
transaction; and
``(VII) in the case of
employee benefit plans subject
to the Employee Retirement
Income Security act of 1974, is
a fiduciary as defined in
section 3 of that Act (29
U.S.C. 1002); and
``(ii) before the initiation of the
transaction, disclose to the Special
Entity in writing the capacity in which
the swap dealer is acting; and
``(B) the Commission may establish such
other standards and requirements as the
Commission may determine are appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of the
purposes of this Act.
``(6) Rules.--The Commission shall prescribe rules
under this subsection governing business conduct
standards for swap dealers and major swap participants.
``(7) Applicability.--This section shall not apply
with respect to a transaction that is--
``(A) initiated by a Special Entity on an
exchange or swap execution facility; and
``(B) one in which the swap dealer or major
swap participant does not know the identity of
the counterparty to the transaction.
``(i) Documentation Standards.--
``(1) In general.--Each registered swap dealer and
major swap participant shall conform with such
standards as may be prescribed by the Commission by
rule or regulation that relate to timely and accurate
confirmation, processing, netting, documentation, and
valuation of all swaps.
``(2) Rules.--The Commission shall adopt rules
governing documentation standards for swap dealers and
major swap participants.
``(j) Duties.--Each registered swap dealer and major swap
participant at all times shall comply with the following
requirements:
``(1) Monitoring of trading.--The swap dealer or
major swap participant shall monitor its trading in
swaps to prevent violations of applicable position
limits.
``(2) Risk management procedures.--The swap dealer
or major swap participant shall establish robust and
professional risk management systems adequate for
managing the day-to-day business of the swap dealer or
major swap participant.
``(3) Disclosure of general information.--The swap
dealer or major swap participant shall disclose to the
Commission and to the prudential regulator for the swap
dealer or major swap participant, as applicable,
information concerning--
``(A) terms and conditions of its swaps;
``(B) swap trading operations, mechanisms,
and practices;
``(C) financial integrity protections
relating to swaps; and
``(D) other information relevant to its
trading in swaps.
``(4) Ability to obtain information.--The swap
dealer or major swap participant shall--
``(A) establish and enforce internal
systems and procedures to obtain any necessary
information to perform any of the functions
described in this section; and
``(B) provide the information to the
Commission and to the prudential regulator for
the swap dealer or major swap participant, as
applicable, on request.
``(5) Conflicts of interest.--The swap dealer and
major swap participant shall implement conflict-of-
interest systems and procedures that--
``(A) establish structural and
institutional safeguards to ensure that the
activities of any person within the firm
relating to research or analysis of the price
or market for any commodity or swap or acting
in a role of providing clearing activities or
making determinations as to accepting clearing
customers are separated by appropriate
informational partitions within the firm from
the review, pressure, or oversight of persons
whose involvement in pricing, trading, or
clearing activities might potentially bias
their judgment or supervision and contravene
the core principles of open access and the
business conduct standards described in this
Act; and
``(B) address such other issues as the
Commission determines to be appropriate.
``(6) Antitrust considerations.--Unless necessary
or appropriate to achieve the purposes of this Act, a
swap dealer or major swap participant shall not--
``(A) adopt any process or take any action
that results in any unreasonable restraint of
trade; or
``(B) impose any material anticompetitive
burden on trading or clearing.
``(7) Rules.--The Commission shall prescribe rules
under this subsection governing duties of swap dealers
and major swap participants.
``(k) Designation of Chief Compliance Officer.--
``(1) In general.--Each swap dealer and major swap
participant shall designate an individual to serve as a
chief compliance officer.
``(2) Duties.--The chief compliance officer shall--
``(A) report directly to the board or to
the senior officer of the swap dealer or major
swap participant;
``(B) review the compliance of the swap
dealer or major swap participant with respect
to the swap dealer and major swap participant
requirements described in this section;
``(C) in consultation with the board of
directors, a body performing a function similar
to the board, or the senior officer of the
organization, resolve any conflicts of interest
that may arise;
``(D) be responsible for administering each
policy and procedure that is required to be
established pursuant to this section;
``(E) ensure compliance with this Act
(including regulations) relating to swaps,
including each rule prescribed by the
Commission under this section;
``(F) establish procedures for the
remediation of noncompliance issues identified
by the chief compliance officer through any--
``(i) compliance office review;
``(ii) look-back;
``(iii) internal or external audit
finding;
``(iv) self-reported error; or
``(v) validated complaint; and
``(G) establish and follow appropriate
procedures for the handling, management
response, remediation, retesting, and closing
of noncompliance issues.
``(3) Annual reports.--
``(A) In general.--In accordance with rules
prescribed by the Commission, the chief
compliance officer shall annually prepare and
sign a report that contains a description of--
``(i) the compliance of the swap
dealer or major swap participant with
respect to this Act (including
regulations); and
``(ii) each policy and procedure of
the swap dealer or major swap
participant of the chief compliance
officer (including the code of ethics
and conflict of interest policies).
``(B) Requirements.--A compliance report
under subparagraph (A) shall--
``(i) accompany each appropriate
financial report of the swap dealer or
major swap participant that is required
to be furnished to the Commission
pursuant to this section; and
``(ii) include a certification
that, under penalty of law, the
compliance report is accurate and
complete.''.
SEC. 732. CONFLICTS OF INTEREST.
Section 4d of the Commodity Exchange Act (7 U.S.C. 6d) is
amended--
(1) by redesignating subsection (c) as subsection
(e); and
(2) by inserting after subsection (b) the
following:
``(c) Conflicts of Interest.--The Commission shall require
that futures commission merchants and introducing brokers
implement conflict-of-interest systems and procedures that--
``(1) establish structural and institutional
safeguards to ensure 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 persons
whose involvement in trading or clearing activities
might potentially bias the judgment or supervision of
the persons; and
``(2) address such other issues as the Commission
determines to be appropriate.
``(d) Designation of Chief Compliance Officer.--Each
futures commission merchant shall designate an individual to
serve as its Chief Compliance Officer and perform such duties
and responsibilities as shall be set forth in regulations to be
adopted by the Commission or rules to be adopted by a futures
association registered under section 17.''.
SEC. 733. SWAP EXECUTION FACILITIES.
The Commodity Exchange Act is amended by inserting after
section 5g (7 U.S.C. 7b-2) the following:
``SEC. 5H. SWAP EXECUTION FACILITIES.
``(a) Registration.--
``(1) In general.--No person may operate a facility
for the trading or processing of swaps unless the
facility is registered as a swap execution facility or
as a designated contract market under this section.
``(2) Dual registration.--Any person that is
registered as a swap execution facility under this
section shall register with the Commission regardless
of whether the person also is registered with the
Securities and Exchange Commission as a swap execution
facility.
``(b) Trading and Trade Processing.--
``(1) In general.--Except as specified in paragraph
(2), a swap execution facility that is registered under
subsection (a) may--
``(A) make available for trading any swap;
and
``(B) facilitate trade processing of any
swap.
``(2) Agricultural swaps.--A swap execution
facility may not list for trading or confirm the
execution of any swap in an agricultural commodity (as
defined by the Commission) except pursuant to a rule or
regulation of the Commission allowing the swap under
such terms and conditions as the Commission shall
prescribe.
``(c) Identification of Facility Used To Trade Swaps by
Contract Markets.--A board of trade that operates a contract
market shall, to the extent that the board of trade also
operates a swap execution facility and uses the same electronic
trade execution system for listing and executing trades of
swaps on or through the contract market and the swap execution
facility, identify whether the electronic trading of such swaps
is taking place on or through the contract market or the swap
execution facility.
``(d) Rule-writing.--
``(1) The Securities and Exchange Commission and
Commodity Futures Trading Commission may promulgate
rules defining the universe of swaps that can be
executed on a swap execution facility. These rules
shall take into account the price and nonprice
requirements of the counterparties to a swap and the
goal of this section as set forth in subsection (e).
``(2) For all swaps that are not required to be
executed through a swap execution facility as defined
in paragraph (1), such trades may be executed through
any other available means of interstate commerce.
``(3) The Securities and Exchange Commission and
Commodity Futures Trading Commission shall update these
rules as necessary to account for technological and
other innovation.
``(e) Rule of Construction.--The goal of this section is to
promote the trading of swaps on swap execution facilities and
to promote pre-trade price transparency in the swaps market.
``(f) Core Principles for Swap Execution Facilities.--
``(1) Compliance with core principles.--
``(A) In general.--To be registered, and
maintain registration, as a swap execution
facility, the swap execution facility shall
comply with--
``(i) the core principles described
in this subsection; and
``(ii) any requirement that the
Commission may impose by rule or
regulation pursuant to section 8a(5).
``(B) Reasonable discretion of swap
execution facility.--Unless otherwise
determined by the Commission by rule or
regulation, a swap execution facility described
in subparagraph (A) shall have reasonable
discretion in establishing the manner in which
the swap execution facility complies with the
core principles described in this subsection.
``(2) Compliance with rules.--A swap execution
facility shall--
``(A) establish and enforce compliance with
any rule of the swap execution facility,
including--
``(i) the terms and conditions of
the swaps traded or processed on or
through the swap execution facility;
and
``(ii) any limitation on access to
the swap execution facility;
``(B) establish and enforce trading, trade
processing, and participation rules that will
deter abuses and have the capacity to detect,
investigate, and enforce those rules, including
means--
``(i) to provide market
participants with impartial access to
the market; and
``(ii) to capture information that
may be used in establishing whether
rule violations have occurred;
``(C) establish rules governing the
operation of the facility, including rules
specifying trading procedures to be used in
entering and executing orders traded or posted
on the facility, including block trades; and
``(D) provide by its rules that when a swap
dealer or major swap participant enters into or
facilitates a swap that is subject to the
mandatory clearing requirement of section 2(h),
the swap dealer or major swap participant shall
be responsible for compliance with the
mandatory trading requirement under section
2(h)(8).
``(3) Swaps not readily susceptible to
manipulation.--The swap execution facility shall permit
trading only in swaps that are not readily susceptible
to manipulation.
``(4) Monitoring of trading and trade processing.--
The swap execution facility shall--
``(A) establish and enforce rules or terms
and conditions defining, or specifications
detailing--
``(i) trading procedures to be used
in entering and executing orders traded
on or through the facilities of the
swap execution facility; and
``(ii) procedures for trade
processing of swaps on or through the
facilities of the swap execution
facility; and
``(B) 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.
``(5) Ability to obtain information.--The swap
execution facility shall--
``(A) establish and enforce rules that will
allow the facility to obtain any necessary
information to perform any of the functions
described in this section;
``(B) provide the information to the
Commission on request; and
``(C) have the capacity to carry out such
international information-sharing agreements as
the Commission may require.
``(6) Position limits or accountability.--
``(A) In general.--To reduce the potential
threat of market manipulation or congestion,
especially during trading in the delivery
month, a swap execution facility that is a
trading facility shall adopt for each of the
contracts of the facility, as is necessary and
appropriate, position limitations or position
accountability for speculators.
``(B) Position limits.--For any contract
that is subject to a position limitation
established by the Commission pursuant to
section 4a(a), the swap execution facility
shall--
``(i) set its position limitation
at a level no higher than the
Commission limitation; and
``(ii) monitor positions
established on or through the swap
execution facility for compliance with
the limit set by the Commission and the
limit, if any, set by the swap
execution facility.
``(7) Financial integrity of transactions.--The
swap execution facility shall establish and enforce
rules and procedures for ensuring the financial
integrity of swaps entered on or through the facilities
of the swap execution facility, including the clearance
and settlement of the swaps pursuant to section
2(h)(1).
``(8) Emergency authority.--The swap execution
facility shall adopt rules to provide for the exercise
of emergency authority, in consultation or cooperation
with the Commission, as is necessary and appropriate,
including the authority to liquidate or transfer open
positions in any swap or to suspend or curtail trading
in a swap.
``(9) Timely publication of trading information.--
``(A) In general.--The 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.
``(B) Capacity of swap execution
facility.--The swap execution facility shall be
required to have the capacity to electronically
capture and transmit trade information with
respect to transactions executed on the
facility.
``(10) Recordkeeping and reporting.--
``(A) In general.--A swap execution
facility shall--
``(i) maintain records of all
activities relating 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;
``(ii) report to the Commission, in
a form and manner acceptable to the
Commission, such information as the
Commission determines to be necessary
or appropriate for the Commission to
perform the duties of the Commission
under this Act; and
``(iii) shall keep any such records
relating to swaps defined in section
1a(47)(A)(v) open to inspection and
examination by the Securities and
Exchange Commission.''
``(B) Requirements.--The Commission shall
adopt data collection and reporting
requirements for swap execution facilities that
are comparable to corresponding requirements
for derivatives clearing organizations and swap
data repositories.
``(11) Antitrust considerations.--Unless necessary
or appropriate to achieve the purposes of this Act, the
swap execution facility shall not--
``(A) adopt any rules or take any actions
that result in any unreasonable restraint of
trade; or
``(B) impose any material anticompetitive
burden on trading or clearing.
``(12) Conflicts of interest.--The swap execution
facility shall--
``(A) establish and enforce rules to
minimize conflicts of interest in its decision-
making process; and
``(B) establish a process for resolving the
conflicts of interest.
``(13) Financial resources.--
``(A) In general.--The swap execution
facility shall have adequate financial,
operational, and managerial resources to
discharge each responsibility of the swap
execution facility.
``(B) Determination of resource adequacy.--
The financial resources of a swap execution
facility shall be considered to be adequate if
the value of the financial resources exceeds
the total amount that would enable the swap
execution facility to cover the operating costs
of the swap execution facility for a 1-year
period, as calculated on a rolling basis.
``(14) System safeguards.--The swap execution
facility shall--
``(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 automated systems, that--
``(i) are reliable and secure; and
``(ii) have adequate scalable
capacity;
``(B) establish and maintain emergency
procedures, backup facilities, and a plan for
disaster recovery that allow for--
``(i) the timely recovery and
resumption of operations; and
``(ii) the fulfillment of the
responsibilities and obligations of the
swap execution facility; and
``(C) periodically conduct tests to verify
that the backup resources of the swap execution
facility are sufficient to ensure continued--
``(i) order processing and trade
matching;
``(ii) price reporting;
``(iii) market surveillance and
``(iv) maintenance of a
comprehensive and accurate audit trail.
``(15) Designation of chief compliance officer.--
``(A) In general.--Each swap execution
facility shall designate an individual to serve
as a chief compliance officer.
``(B) Duties.--The chief compliance officer
shall--
``(i) report directly to the board
or to the senior officer of the
facility;
``(ii) review compliance with the
core principles in this subsection;
``(iii) in consultation with the
board of the facility, a body
performing a function similar to that
of a board, or the senior officer of
the facility, resolve any conflicts of
interest that may arise;
``(iv) be responsible for
establishing and administering the
policies and procedures required to be
established pursuant to this section;
``(v) ensure compliance with this
Act and the rules and regulations
issued under this Act, including rules
prescribed by the Commission pursuant
to this section; and
``(vi) establish procedures for the
remediation of noncompliance issues
found during compliance office reviews,
look backs, internal or external audit
findings, self-reported errors, or
through validated complaints.
``(C) Requirements for procedures.--In
establishing procedures under subparagraph
(B)(vi), the chief compliance officer shall
design the procedures to establish the
handling, management response, remediation,
retesting, and closing of noncompliance issues.
``(D) Annual reports.--
``(i) In general.--In accordance
with rules prescribed by the
Commission, the chief compliance
officer shall annually prepare and sign
a report that contains a description
of--
``(I) the compliance of the
swap execution facility with
this Act; and
``(II) the policies and
procedures, including the code
of ethics and conflict of
interest policies, of the swap
execution facility.
``(ii) Requirements.--The chief
compliance officer shall--
``(I) submit each report
described in clause (i) with
the appropriate financial
report of the swap execution
facility that is required to be
submitted to the Commission
pursuant to this section; and
``(II) include in the
report a certification that,
under penalty of law, the
report is accurate and
complete.
``(g) Exemptions.--The Commission may exempt, conditionally
or unconditionally, a swap execution facility from registration
under this section if the Commission finds that the facility is
subject to comparable, comprehensive supervision and regulation
on a consolidated basis by the Securities and Exchange
Commission, a prudential regulator, or the appropriate
governmental authorities in the home country of the facility.
``(h) Rules.--The Commission shall prescribe rules
governing the regulation of alternative swap execution
facilities under this section.''.
SEC. 734. 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, 7a-3) are repealed.
(b) Conforming Amendments.--
(1) Section 2 of the Commodity Exchange Act (7
U.S.C. 2) is amended--
(A) in subsection (a)(1)(A), in the first
sentence, by striking ``or 5a''; and
(B) in paragraph (2) of subsection (g) (as
redesignated by section 723(a)(1)(B)), by
striking ``section 5a of this Act'' and all
that follows through ``5d of this Act'' and
inserting ``section 5b of this Act''.
(2) Section 6(g)(1)(A) of the Securities Exchange
Act of 1934 (15 U.S.C. 78f(g)(1)(A)) is amended--
(A) by striking ``that--'' and all that
follows through ``(i) has been designated'' and
inserting ``that has been designated'';
(B) by striking ``; or'' and inserting ``;
and'' and
(C) by striking clause (ii).
(c) Ability to Petition Commission.--
(1) In general.--Prior to the final effective dates
in this title, a person may petition the Commodity
Futures Trading Commission to remain subject to the
provisions of section 5d of the Commodity Exchange Act,
as such provisions existed prior to the effective date
of this subtitle.
(2) Consideration of petition.--The Commodity
Futures Trading Commission shall consider any petition
submitted under paragraph (1) in a prompt manner and
may allow a person to continue operating subject to the
provisions of section 5d of the Commodity Exchange Act
for up to 1 year after the effective date of this
subtitle.
SEC. 735. DESIGNATED CONTRACT MARKETS.
(a) Criteria for Designation.--Section 5 of the Commodity
Exchange Act (7 U.S.C. 7) is amended by striking subsection
(b).
(b) Core Principles for Contract Markets.--Section 5 of the
Commodity Exchange Act (7 U.S.C. 7) is amended by striking
subsection (d) and inserting the following:
``(d) Core Principles for Contract Markets.--
``(1) Designation as contract market.--
``(A) In general.--To be designated, and
maintain a designation, as a contract market, a
board of trade shall comply with--
``(i) any core principle described
in this subsection; and
``(ii) any requirement that the
Commission may impose by rule or
regulation pursuant to section 8a(5).
``(B) Reasonable discretion of contract
market.--Unless otherwise determined by the
Commission by rule or regulation, a board of
trade described in subparagraph (A) shall have
reasonable discretion in establishing the
manner in which the board of trade complies
with the core principles described in this
subsection.
``(2) Compliance with rules.--
``(A) In general.--The board of trade shall
establish, monitor, and enforce compliance with
the rules of the contract market, including--
``(i) access requirements;
``(ii) the terms and conditions of
any contracts to be traded on the
contract market; and
``(iii) rules prohibiting abusive
trade practices on the contract market.
``(B) Capacity of contract market.--The
board of trade shall have the capacity to
detect, investigate, and apply appropriate
sanctions to any person that violates any rule
of the contract market.
``(C) Requirement of rules.--The rules of
the contract market shall provide the board of
trade with the ability and authority to obtain
any necessary information to perform any
function described in this subsection,
including the capacity to carry out such
international information-sharing agreements as
the Commission may require.
``(3) Contracts not readily subject to
manipulation.--The board of trade shall list on the
contract market only contracts that are not readily
susceptible to manipulation.
``(4) Prevention of market disruption.--The board
of trade shall have the capacity and responsibility to
prevent manipulation, price distortion, and disruptions
of the delivery or cash-settlement process through
market surveillance, compliance, and enforcement
practices and procedures, including--
``(A) methods for conducting real-time
monitoring of trading; and
``(B) comprehensive and accurate trade
reconstructions.
``(5) Position limitations or accountability.--
``(A) In general.--To reduce the potential
threat of market manipulation or congestion
(especially during trading in the delivery
month), the board of trade shall adopt for each
contract of the board of trade, as is necessary
and appropriate, position limitations or
position accountability for speculators.
``(B) Maximum allowable position
limitation.--For any contract that is subject
to a position limitation established by the
Commission pursuant to section 4a(a), the board
of trade shall set the position limitation of
the board of trade at a level not higher than
the position limitation established by the
Commission.
``(6) Emergency authority.--The board of trade, in
consultation or cooperation with the Commission, shall
adopt rules to provide for the exercise of emergency
authority, as is necessary and appropriate, including
the authority--
``(A) to liquidate or transfer open
positions in any contract;
``(B) to suspend or curtail trading in any
contract; and
``(C) to require market participants in any
contract to meet special margin requirements.
``(7) Availability of general information.--The
board of trade shall make available to market
authorities, market participants, and the public
accurate information concerning--
``(A) the terms and conditions of the
contracts of the contract market; and
``(B)(i) the rules, regulations, and
mechanisms for executing transactions on or
through the facilities of the contract market;
and
``(ii) the rules and specifications
describing the operation of the contract
market's--
``(I) electronic matching platform;
or
``(II) trade execution facility.
``(8) Daily publication of trading information.--
The board of trade shall make public daily information
on settlement prices, volume, open interest, and
opening and closing ranges for actively traded
contracts on the contract market.
``(9) Execution of transactions.--
``(A) In general.--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 centralized market of the board
of trade.
``(B) Rules.--The rules of the board of
trade may authorize, for bona fide business
purposes--
``(i) transfer trades or office
trades;
``(ii) an exchange of--
``(I) futures in connection
with a cash commodity
transaction;
``(II) futures for cash
commodities; or
``(III) futures for swaps;
or
``(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.
``(10) Trade information.--The board of trade shall
maintain rules and procedures to provide for the
recording and safe storage of all identifying trade
information in a manner that enables the contract
market to use the information--
``(A) to assist in the prevention of
customer and market abuses; and
``(B) to provide evidence of any violations
of the rules of the contract market.
``(11) Financial integrity of transactions.--The
board of trade shall establish and enforce--
``(A) rules and procedures for ensuring the
financial integrity of transactions entered
into on or through the facilities of the
contract market (including the clearance and
settlement of the transactions with a
derivatives clearing organization); and
``(B) rules to ensure--
``(i) the financial integrity of
any--
``(I) futures commission
merchant; and
``(II) introducing broker;
and
``(ii) the protection of customer
funds.
``(12) Protection of markets and market
participants.--The board of trade shall establish and
enforce rules--
``(A) to protect markets and market
participants from abusive practices committed
by any party, including abusive practices
committed by a party acting as an agent for a
participant; and
``(B) to promote fair and equitable trading
on the contract market.
``(13) Disciplinary procedures.--The board of trade
shall establish and enforce disciplinary procedures
that authorize the board of trade to discipline,
suspend, or expel members or market participants that
violate the rules of the board of trade, or similar
methods for performing the same functions, including
delegation of the functions to third parties.
``(14) Dispute resolution.--The board of trade
shall establish and enforce rules regarding, and
provide facilities for alternative dispute resolution
as appropriate for, market participants and any market
intermediaries.
``(15) Governance fitness standards.--The board of
trade shall establish and enforce appropriate fitness
standards for directors, members of any disciplinary
committee, members of the contract market, and any
other person with direct access to the facility
(including any party affiliated with any person
described in this paragraph).
``(16) Conflicts of interest.--The board of trade
shall establish and enforce rules--
``(A) to minimize conflicts of interest in
the decision-making process of the contract
market; and
``(B) to establish a process for resolving
conflicts of interest described in subparagraph
(A).
``(17) Composition of governing boards of contract
markets.--The governance arrangements of the board of
trade shall be designed to permit consideration of the
views of market participants.
``(18) Recordkeeping.--The board of trade shall
maintain records of all activities relating to the
business of the contract market--
``(A) in a form and manner that is
acceptable to the Commission; and
``(B) for a period of at least 5 years.
``(19) Antitrust considerations.--Unless necessary
or appropriate to achieve the purposes of this Act, the
board of trade shall not--
``(A) adopt any rule or taking any action
that results in any unreasonable restraint of
trade; or
``(B) impose any material anticompetitive
burden on trading on the contract market.
``(20) System safeguards.--The board of trade
shall--
``(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 have
adequate scalable capacity;
``(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 responsibilities and
obligations of the board of trade; and
``(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.
``(21) Financial resources.--
``(A) In general.--The board of trade shall
have adequate financial, operational, and
managerial resources to discharge each
responsibility of the board of trade.
``(B) Determination of adequacy.--The
financial resources of the board of trade shall
be considered to be adequate if the value of
the financial resources exceeds the total
amount that would enable the contract market to
cover the operating costs of the contract
market for a 1-year period, as calculated on a
rolling basis.
``(22) Diversity of board of directors.--The board
of trade, if a publicly traded company, shall endeavor
to recruit individuals to serve on the board of
directors and the other decision-making bodies (as
determined by the Commission) of the board of trade
from among, and to have the composition of the bodies
reflect, a broad and culturally diverse pool of
qualified candidates.
``(23) Securities and exchange commission.--The
board of trade shall keep any such records relating to
swaps defined in section 1a(47)(A)(v) open to
inspection and examination by the Securities and
Exchange Commission.''.
SEC. 736. MARGIN.
Section 8a(7) of the Commodity Exchange Act (7 U.S.C.
12a(7)) is amended--
(1) in subparagraph (C), by striking ``, excepting
the setting of levels of margin'';
(2) by redesignating subparagraphs (D) through (F)
as subparagraphs (E) through (G), respectively; and
(3) by inserting after subparagraph (C) the
following:
``(D) margin requirements, provided that
the rules, regulations, or orders shall--
``(i) be limited to protecting the
financial integrity of the derivatives
clearing organization;
``(ii) be designed for risk
management purposes to protect the
financial integrity of transactions;
and
``(iii) not set specific margin
amounts;''.
SEC. 737. POSITION LIMITS.
(a) Aggregate Position Limits.--Section 4a(a) of the
Commodity Exchange Act (7 U.S.C. 6a(a)) is amended--
(1) by inserting after ``(a)'' the following:
``(1) In general.--'';
(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 registered
entities'';
(3) in the second sentence--
(A) by inserting ``, including any group or
class of traders,'' after ``held by any
person''; and
(B) by striking ``on an electronic trading
facility with respect to a significant price
discovery contract,'' and inserting ``swaps
traded on or subject to the rules of a
designated contract market or a swap execution
facility, or swaps not traded on or subject to
the rules of a designated contract market or a
swap execution facility that performs a
significant price discovery function with
respect to a registered entity,''; and
(4) by adding at the end the following:
``(2) Establishment of limitations.--
``(A) In general.--In accordance with the
standards set forth in paragraph (1) of this
subsection and consistent with the good faith
exception cited in subsection (b)(2), with
respect to physical commodities other than
excluded commodities as defined by the
Commission, the Commission shall by rule,
regulation, or order establish limits on the
amount of positions, as appropriate, other than
bona fide hedge positions, that may be held by
any person with respect to contracts of sale
for future delivery or with respect to options
on the contracts or commodities traded on or
subject to the rules of a designated contract
market.
``(B) Timing.--
``(i) Exempt commodities.--For
exempt commodities, the limits required
under subparagraph (A) shall be
established within 180 days after the
date of the enactment of this
paragraph.
``(ii) Agricultural commodities.--
For agricultural commodities, the
limits required under subparagraph (A)
shall be established within 270 days
after the date of the enactment of this
paragraph.
``(C) Goal.--In establishing the limits
required under subparagraph (A), the Commission
shall strive to ensure that trading on foreign
boards of trade in the same commodity will be
subject to comparable limits and that any
limits to be imposed by the Commission will not
cause price discovery in the commodity to shift
to trading on the foreign boards of trade.
``(3) Specific limitations.--In establishing the
limits required in paragraph (2), the Commission, as
appropriate, shall set limits--
``(A) on the number of positions that may
be held by any person for the spot month, each
other month, and the aggregate number of
positions that may be held by any person for
all months; and
``(B) to the maximum extent practicable, in
its discretion--
``(i) to diminish, eliminate, or
prevent excessive speculation as
described under this section;
``(ii) to deter and prevent market
manipulation, squeezes, and corners;
``(iii) to ensure sufficient market
liquidity for bona fide hedgers; and
``(iv) to ensure that the price
discovery function of the underlying
market is not disrupted.
``(4) Significant price discovery function.--In
making a determination whether a swap performs or
affects a significant price discovery function with
respect to regulated markets, the Commission shall
consider, as appropriate:
``(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.
``(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.
``(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.
``(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.
``(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.
``(5) Economically equivalent contracts.--
``(A) Notwithstanding any other provision
of this section, the Commission shall establish
limits on the amount of positions, including
aggregate position limits, as appropriate,
other than bona fide hedge positions, that may
be held by any person with respect to swaps
that are economically equivalent to contracts
of sale for future delivery or to options on
the contracts or commodities traded on or
subject to the rules of a designated contract
market subject to paragraph (2).
``(B) In establishing limits pursuant to
subparagraph (A), the Commission shall--
``(i) develop the limits
concurrently with limits established
under paragraph (2), and the limits
shall have similar requirements as
under paragraph (3)(B); and
``(ii) establish the limits
simultaneously with limits established
under paragraph (2).
``(6) Aggregate position limits.--The Commission
shall, 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--
``(A) contracts listed by designated
contract markets;
``(B) 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, 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;
and
``(C) swap contracts that perform or affect
a significant price discovery function with
respect to regulated entities.
``(7) 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, any contract of sale of a
commodity for future delivery or class of such
contracts, any option or class of options, or any
transaction or class of transactions from any
requirement it may establish under this section with
respect to position limits.''.
(b) Conforming Amendments.--Section 4a(b) of the Commodity
Exchange Act (7 U.S.C. 6a(b)) is amended--
(1) in paragraph (1), by striking ``or derivatives
transaction execution facility or facilities or
electronic trading facility'' and inserting ``or swap
execution facility or facilities''; and
(2) in paragraph (2), by striking ``or derivatives
transaction execution facility or facilities or
electronic trading facility'' and inserting ``or swap
execution facility''.
(c) Bona Fide Hedging Transaction.--Section 4a(c) of the
Commodity Exchange Act is amended--
(1) by inserting ``(1)'' after ``(c)''; and
(2) by adding at the end the following:
``(2) For the purposes of implementation of
subsection (a)(2) for contracts of sale for future
delivery or options on the contracts or commodities,
the Commission shall define what constitutes a bona
fide hedging transaction or position as a transaction
or position that--
``(A)(i) represents a substitute for
transactions made or to be made or positions
taken or to be taken at a later time in a
physical marketing channel;
``(ii) is economically appropriate to the
reduction of risks in the conduct and
management of a commercial enterprise; and
``(iii) arises from the potential change in
the value of--
``(I) assets that a person owns,
produces, manufactures, processes, or
merchandises or anticipates owning,
producing, manufacturing, processing,
or merchandising;
``(II) liabilities that a person
owns or anticipates incurring; or
``(III) services that a person
provides, purchases, or anticipates
providing or purchasing; or
``(B) reduces risks attendant to a position
resulting from a swap that--
``(i) was executed opposite a
counterparty for which the transaction
would qualify as a bona fide hedging
transaction pursuant to subparagraph
(A); or
``(ii) meets the requirements of
subparagraph (A).''.
(d) Effective Date.--This section and the amendments made
by this section shall become effective on the date of the
enactment of this section.
SEC. 738. FOREIGN BOARDS OF TRADE.
(a) In General.--Section 4(b) of the Commodity Exchange Act
(7 U.S.C. 6(b)) is amended--
(1) in the first sentence, by striking ``The
Commission'' and inserting the following:
``(2) Persons located in the united states.--
``(A) In general.--The Commission'';
(2) in the second sentence, by striking ``Such
rules and regulations'' and inserting the following:
``(B) Different requirements.--Rules and
regulations described in subparagraph (A)'';
(3) in the third sentence--
(A) by striking ``No rule or regulation''
and inserting the following:
``(C) Prohibition.--Except as provided in
paragraphs (1) and (2), no rule or
regulation'';
(B) by striking ``that (1) requires'' and
inserting the following: ``that--
``(i) requires''; and
(C) by striking ``market, or (2) governs''
and inserting the following: ``market; or
``(ii) governs''; and
(4) by inserting before paragraph (2) (as
designated by paragraph (1)) the following:
``(1) Foreign boards of trade.--
``(A) 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 with 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 trade matching
system of the foreign board of trade. In
adopting such rules and regulations, the
commission shall consider--
``(i) whether any such foreign
board of trade is subject to
comparable, comprehensive supervision
and regulation by the appropriate
governmental authorities in the foreign
board of trade's home country; and
``(ii) any previous commission
findings that the foreign board of
trade is subject to comparable
comprehensive supervision and
regulation by the appropriate
government authorities in the foreign
board of trade's home country.
``(B) Linked contracts.--The Commission may
not permit 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--
``(i) 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; and
``(ii) the foreign board of trade
(or the foreign futures authority that
oversees the foreign board of trade)--
``(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;
``(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;
``(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--
``(aa) the
information that the
foreign board of trade
will make publicly
available;
``(bb) the position
limits that the foreign
board of trade or
foreign futures
authority will adopt
and enforce;
``(cc) 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; and
``(dd) any other
area of interest
expressed by the
Commission to the
foreign board of trade
or foreign futures
authority;
``(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;
and
``(V) provides the
Commission such information as
is 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.
``(C) Existing foreign boards of trade.--
Subparagraphs (A) and (B) shall not be
effective with respect to any foreign board of
trade to which, prior to the date of enactment
of this paragraph, the Commission granted
direct access permission until the date that is
180 days after that date of enactment.''.
(b) Liability of Registered Persons Trading on a Foreign
Board of Trade.--Section 4 of the Commodity Exchange Act (7
U.S.C. 6) is amended--
(1) in subsection (a), in the matter preceding
paragraph (1), by inserting ``or by subsection (e)''
after ``Unless exempted by the Commission pursuant to
subsection (c)''; and
(2) by adding at the end the following:
``(e) Liability of Registered Persons Trading on a Foreign
Board of Trade.--
``(1) In general.--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--
``(A) 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 is--
``(i) legally organized under the
laws of a foreign country;
``(ii) authorized to act as a board
of trade by a foreign futures
authority; and
``(iii) subject to regulation by
the foreign futures authority; and
``(B) has not been determined by the
Commission to be operating in violation of
subsection (a).
``(2) Rule of construction.--Nothing in this
subsection shall be construed as implying or creating
any presumption that a board of trade, exchange, or
market is located outside the United States, or its
territories or possessions, for purposes of subsection
(a).''.
(c) Contract Enforcement for Foreign Futures Contracts.--
Section 22(a) of the Commodity Exchange Act (7 U.S.C. 25(a))
(as amended by section 739) is amended by adding at the end the
following:
``(6) 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.''.
SEC. 739. LEGAL CERTAINTY FOR SWAPS.
Section 22(a) of the Commodity Exchange Act (7 U.S.C.
25(a)) is amended by striking paragraph (4) and inserting the
following:
``(4) Contract Enforcement Between Eligible
Counterparties.--
``(A) In general.--No hybrid instrument sold to any
investor shall be void, voidable, or unenforceable, and
no party to a hybrid instrument shall be entitled to
rescind, or recover any payment made with respect to,
the 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.
``(B) Swaps.--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 to such agreement, contract, or
transaction shall be entitled to rescind, or recover
any payment made with respect to, the 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--
``(i) to meet the definition of a swap
under section 1a; or
``(ii) to be cleared in accordance with
section 2(h)(1).
``(5) Legal Certainty for Long-term Swaps Entered Into
Before the Date of Enactment of the Wall Street Transparency
and Accountability Act of 2010.--
``(A) Effect on swaps.--Unless specifically
reserved in the applicable swap, neither the enactment
of the Wall Street Transparency and Accountability Act
of 2010, nor any requirement under that Act or an
amendment made by that Act, shall constitute a
termination event, force majeure, illegality, increased
costs, regulatory change, or similar event under a swap
(including any related credit support arrangement) that
would permit a party to terminate, renegotiate, modify,
amend, or supplement 1 or more transactions under the
swap.
``(B) Position limits.--Any position limit
established under the Wall Street Transparency and
Accountability Act of 2010 shall not apply to a
position acquired in good faith prior to the effective
date of any rule, regulation, or order under the Act
that establishes the position limit; provided, however,
that such positions shall be attributed to the trader
if the trader's position is increased after the
effective date of such position limit rule, regulation,
or order.''.
SEC. 740. MULTILATERAL CLEARING ORGANIZATIONS.
Sections 408 and 409 of the Federal Deposit Insurance
Corporation Improvement Act of 1991 (12 U.S.C. 4421, 4422) are
repealed.
SEC. 741. ENFORCEMENT.
(a) Enforcement Authority.--The Commodity Exchange Act is
amended by inserting after section 4b (7 U.S.C. 6b) the
following:
``SEC. 4B-1. ENFORCEMENT AUTHORITY.
``(a) Commodity Futures Trading Commission.--Except as
provided in subsections (b), (c), and (d), the Commission shall
have exclusive authority to enforce the provisions of subtitle
A of the Wall Street Transparency and Accountability Act of
2010 with respect to any person.
``(b) Prudential Regulators.--The prudential regulators
shall have exclusive authority to enforce the provisions of
section 4s(e) with respect to swap dealers or major swap
participants for which they are the prudential regulator.
``(c) Referrals.--
``(1) Prudential regulators.--If the prudential
regulator for a swap dealer or major swap participant
has cause to believe that the swap dealer or major swap
participant, or any affiliate or division of the swap
dealer or major swap participant, may have engaged in
conduct that constitutes a violation of the
nonprudential requirements of this Act (including
section 4s or rules adopted by the Commission under
that section), the prudential regulator may promptly
notify the Commission in a written report that
includes--
``(A) a request that the Commission
initiate an enforcement proceeding under this
Act; and
``(B) an explanation of the facts and
circumstances that led to the preparation of
the written report.
``(2) Commission.--If the Commission has cause to
believe that a swap dealer or major swap participant
that has a prudential regulator may have engaged in
conduct that constitutes a violation of any prudential
requirement of section 4s or rules adopted by the
Commission under that section, the Commission may
notify the prudential regulator of the conduct in a
written report that includes--
``(A) a request that the prudential
regulator initiate an enforcement proceeding
under this Act or any other Federal law
(including regulations); and
``(B) an explanation of the concerns of the
Commission, and a description of the facts and
circumstances, that led to the preparation of
the written report.
``(d) Backstop Enforcement Authority.--
``(1) Initiation of enforcement proceeding by
prudential regulator.--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 written report under subsection
(c)(1), the prudential regulator may initiate an
enforcement proceeding.
``(2) Initiation of enforcement proceeding by
commission.--If the prudential regulator does not
initiate an enforcement proceeding before the end of
the 90-day period beginning on the date on which the
prudential regulator receives a written report under
subsection (c)(2), the Commission may initiate an
enforcement proceeding.''.
(b) Conforming Amendments.--
(1) Section 4b of the Commodity Exchange Act (7
U.S.C. 6b) is amended--
(A) in subsection (a)(2), by striking ``or
other agreement, contract, or transaction
subject to paragraphs (1) and (2) of section
5a(g),'' and inserting ``or swap,'';
(B) in subsection (b), by striking ``or
other agreement, contract or transaction
subject to paragraphs (1) and (2) of section
5a(g),'' and inserting ``or swap,''; and
(C) by adding at the end the following:
``(e) 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
registered entity, in or in connection with any order to make,
or the making of, any contract of sale of any commodity for
future delivery (or option on such a contract), or any swap, on
a group or index of securities (or any interest therein or
based on the value thereof)--
``(1) to employ any device, scheme, or artifice to
defraud;
``(2) to make any untrue statement of a material
fact or to omit to state a material fact necessary in
order to make the statements made, in the light of the
circumstances under which they were made, not
misleading; or
``(3) to engage in any act, practice, or course of
business which operates or would operate as a fraud or
deceit upon any person.''.
(2) Section 4c(a)(1) of the Commodity Exchange Act
(7 U.S.C. 6c(a)(1)) is amended by inserting ``or swap''
before ``if the transaction is used or may be used''.
(3) Section 6(c) of the Commodity Exchange Act (7
U.S.C. 9) is amended in the first sentence by inserting
``or of any swap,'' before ``or has willfully made''.
(4) Section 6(d) of the Commodity Exchange Act (7
U.S.C. 13b) is amended in the first sentence, in the
matter preceding the proviso, by inserting ``or of any
swap,'' before ``or otherwise is violating''.
(5) Section 6c(a) of the Commodity Exchange Act (7
U.S.C. 13a-1(a)) is amended in the matter preceding the
proviso by inserting ``or any swap'' after ``commodity
for future delivery''.
(6) Section 9 of the Commodity Exchange Act (7
U.S.C. 13) is amended--
(A) in subsection (a)--
(i) in paragraph (2), by inserting
``or of any swap,'' before ``or to
corner''; and
(ii) in paragraph (4), by inserting
``swap data repository,'' before ``or
futures association'' and
(B) in subsection (e)(1)--
(i) by inserting ``swap data
repository,'' before ``or registered
futures association''; and
(ii) by inserting ``, or swaps,''
before ``on the basis''.
(7) Section 9(a) of the Commodity Exchange Act (7
U.S.C. 13(a)) is amended by adding at the end the
following:
``(6) Any person to abuse the end user clearing
exemption under section 2(h)(4), as determined by the
Commission.''.
(8) Section 2(c)(2)(B) of the Commodity Exchange
Act (7 U.S.C. 2(c)(2)(B)) is amended--
(A) by striking ``(dd),'' each place it
appears;
(B) in clause (iii), by inserting ``, and
accounts or pooled investment vehicles
described in clause (vi),'' before ``shall be
subject to''; and
(C) by adding at the end the following:
``(vi) This Act applies to, and the
Commission shall have jurisdiction
over, an account or pooled investment
vehicle that is offered for the purpose
of trading, or that trades, any
agreement, contract, or transaction in
foreign currency described in clause
(i).''.
(9) Section 2(c)(2)(C) of the Commodity Exchange
Act (7 U.S.C. 2(c)(2)(C)) is amended--
(A) by striking ``(dd),'' each place it
appears;
(B) in clause (ii)(I), by inserting ``, and
accounts or pooled investment vehicles
described in clause (vii),'' before ``shall be
subject to''; and
(C) by adding at the end the following:
``(vii) This Act applies to, and
the Commission shall have jurisdiction
over, an account or pooled investment
vehicle that is offered for the purpose
of trading, or that trades, any
agreement, contract, or transaction in
foreign currency described in clause
(i).''.
(10) Section 1a(19)(A)(iv)(II) of the Commodity
Exchange Act (7 U.S.C. 1a(19)(A)(iv)(II)) (as
redesignated by section 721(a)(1)) is amended by
inserting before the semicolon at the end the
following: ``provided, however, that for purposes of
section 2(c)(2)(B)(vi) and section 2(c)(2)(C)(vii), the
term `eligible contract participant' shall not include
a commodity pool in which any participant is not
otherwise an eligible contract participant''.
(11) Section 6(e) of the Commodity Exchange Act (7
U.S.C. 9a) is amended by adding at the end the
following:
``(4) Any designated clearing organization that
knowingly or recklessly evades or participates in or
facilitates an evasion of the requirements of section
2(h) shall be liable for a civil money penalty in twice
the amount otherwise available for a violation of
section 2(h).
``(5) Any swap dealer or major swap participant
that knowingly or recklessly evades or participates in
or facilitates an evasion of the requirements of
section 2(h) shall be liable for a civil money penalty
in twice the amount otherwise available for a violation
of section 2(h).''.
(c) Savings Clause.--Notwithstanding any other provision of
this title, nothing in this subtitle shall be construed as
divesting any appropriate Federal banking agency of any
authority it may have to establish or enforce, with respect to
a person for which such agency is the appropriate Federal
banking agency, prudential or other standards pursuant to
authority granted by Federal law other than this title.
SEC. 742. RETAIL COMMODITY TRANSACTIONS.
(a) In General.--Section 2(c) of the Commodity Exchange Act
(7 U.S.C. 2(c)) is amended--
(1) in paragraph (1), by striking ``5a (to the
extent provided in section 5a(g)), 5b, 5d, or
12(e)(2)(B))'' and inserting ``, 5b, or 12(e)(2)(B))'';
and
(2) in paragraph (2), by adding at the end the
following:
``(D) Retail commodity transactions.--
``(i) Applicability.--Except as
provided in clause (ii), this
subparagraph shall apply to any
agreement, contract, or transaction in
any commodity that is--
``(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; and
``(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.
``(ii) Exceptions.--This
subparagraph shall not apply to--
``(I) an agreement,
contract, or transaction
described in paragraph (1) or
subparagraphs (A), (B), or (C),
including any agreement,
contract, or transaction
specifically excluded from
subparagraph (A), (B), or (C);
``(II) any security;
``(III) a contract of sale
that--
``(aa) results in
actual delivery within
28 days or such other
longer 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; or
``(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 the
line of business of the
seller and buyer; or
``(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)); or
``(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)).
``(iii) Enforcement.--Sections
4(a), 4(b), and 4b apply to any
agreement, contract, or transaction
described in clause (i), as if the
agreement, contract, or transaction was
a contract of sale of a commodity for
future delivery.
``(iv) Eligible commercial
entity.--For purposes of this
subparagraph, an agricultural producer,
packer, or handler shall be considered
to be an eligible commercial entity for
any agreement, contract, or transaction
for a commodity in connection with the
line of business of the agricultural
producer, packer, or handler.''.
(b) Gramm-Leach-Bliley Act.--Section 206(a) of the Gramm-
Leach-Bliley Act (Public Law 106-102; 15 U.S.C. 78c note) is
amended, in the matter preceding paragraph (1), by striking
``For purposes of'' and inserting ``Except as provided in
subsection (e), for purposes of''.
(c) Conforming Amendments Relating to Retail Foreign
Exchange Transactions.--
(1) Section 2(c)(2)(B)(i)(II) of the Commodity
Exchange Act (7 U.S.C. 2(c)(2)(B)(i)(II)) is amended--
(A) in item (aa), by inserting ``United
States'' before ``financial institution'';
(B) by striking items (dd) and (ff);
(C) by redesignating items (ee) and (gg) as
items (dd) and (ff), respectively; and
(D) in item (dd) (as so redesignated), by
striking the semicolon and inserting ``; or''.
(2) Section 2(c)(2) of the Commodity Exchange Act
(7 U.S.C. 2(c)(2)) (as amended by subsection (a)(2)) is
amended by adding at the end the following:
``(E) Prohibition.--
``(i) Definition of federal
regulatory agency.--In this
subparagraph, the term `Federal
regulatory agency' means--
``(I) the Commission;
``(II) the Securities and
Exchange Commission;
``(III) an appropriate
Federal banking agency;
``(IV) the National Credit
Union Association; and
``(V) the Farm Credit
Administration.
``(ii) Prohibition.--
``(I) In general.--Except
as provided in subclause (II),
a person described in
subparagraph (B)(i)(II) for
which there is a Federal
regulatory agency shall not
offer to, or enter into with, a
person that is not an eligible
contract participant, any
agreement, contract, or
transaction in foreign currency
described in subparagraph
(B)(i)(I) except pursuant to a
rule or regulation of a Federal
regulatory agency allowing the
agreement, contract, or
transaction under such terms
and conditions as the Federal
regulatory agency shall
prescribe.
``(II) Effective date.--
With regard to persons
described in subparagraph
(B)(i)(II) for which a Federal
regulatory agency has issued a
proposed rule concerning
agreements, contracts, or
transactions in foreign
currency described in
subparagraph (B)(i)(I) prior to
the date of enactment of this
subclause, subclause (I) shall
take effect 90 days after the
date of enactment of this
subclause.
``(iii) Requirements of rules and
regulations.--
``(I) In general.--The
rules and regulations described
in clause (ii) shall prescribe
appropriate requirements with
respect to--
``(aa) disclosure;
``(bb)
recordkeeping;
``(cc) capital and
margin;
``(dd) reporting;
``(ee) business
conduct;
``(ff)
documentation; and
``(gg) such other
standards or
requirements as the
Federal regulatory
agency shall determine
to be necessary.
``(II) Treatment.--The
rules or regulations described
in clause (ii) shall treat all
agreements, contracts, and
transactions in foreign
currency described in
subparagraph (B)(i)(I), and all
agreements, contracts, and
transactions in foreign
currency that are functionally
or economically similar to
agreements, contracts, or
transactions described in
subparagraph (B)(i)(I),
similarly.''.
SEC. 743. OTHER AUTHORITY.
Unless otherwise provided by the amendments made by this
subtitle, the amendments made by this subtitle do not divest
any appropriate Federal banking agency, the Commodity Futures
Trading Commission, the Securities and Exchange Commission, or
other Federal or State agency of any authority derived from any
other applicable law.
SEC. 744. RESTITUTION REMEDIES.
Section 6c(d) of the Commodity Exchange Act (7 U.S.C. 13a-
1(d)) is amended by adding at the end the following:
``(3) Equitable remedies.--In any action brought
under this section, the Commission may seek, and the
court may impose, on a proper showing, on any person
found in the action to have committed any violation,
equitable remedies including--
``(A) restitution to persons who have
sustained losses proximately caused by such
violation (in the amount of such losses); and
``(B) disgorgement of gains received in
connection with such violation.''.
SEC. 745. ENHANCED COMPLIANCE BY REGISTERED ENTITIES.
(a) Effect of Interpretation.--Section 5c(a) of the
Commodity Exchange Act (7 U.S.C. 7a-2(a)) is amended by
striking paragraph (2) and inserting the following:
``(2) Effect of interpretation.--An interpretation
issued under paragraph (1) may provide the exclusive
means for complying with each section described in
paragraph (1).''.
(b) New Contracts, New Rules, and Rule Amendments.--Section
5c of the Commodity Exchange Act (7 U.S.C. 7a-2) is amended by
striking subsection (c) and inserting the following:
``(c) New Contracts, New Rules, and Rule Amendments.--
``(1) In general.--A registered entity may elect to
list for trading or accept for clearing any new
contract, or other instrument, or may elect to approve
and implement any new rule or rule amendment, by
providing to the Commission (and the Secretary of the
Treasury, in the case of a contract of sale of a
government security for future delivery (or option on
such a contract) or a rule or rule amendment
specifically related to such a contract) a written
certification that the new contract or instrument or
clearing of the new contract or instrument, new rule,
or rule amendment complies with this Act (including
regulations under this Act).
``(2) Rule review.--The new rule or rule amendment
described in paragraph (1) shall become effective,
pursuant to the certification of the registered entity
and notice of such certification to its members (in a
manner to be determined by the Commission), on the date
that is 10 business days after the date on which the
Commission receives the certification (or such shorter
period as determined by the Commission by rule or
regulation) unless the Commission notifies the
registered entity within such time that it 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).
``(3) Stay of certification for rules.--
``(A) A notification by the Commission
pursuant to paragraph (2) shall stay the
certification of the new rule or rule amendment
for up to an additional 90 days from the date
of the notification.
``(B) A rule or rule amendment subject to a
stay pursuant to subparagraph (A) shall become
effective, pursuant to the certification of the
registered entity, at the expiration of the
period described in subparagraph (A) unless the
Commission--
``(i) withdraws the stay prior to
that time; or
``(ii) notifies the registered
entity during such period that it
objects to the proposed certification
on the grounds that it is inconsistent
with this Act (including regulations
under this Act).
``(C) The Commission shall provide a not
less than 30-day public comment period, within
the 90-day period in which the stay is in
effect as described in subparagraph (A),
whenever the Commission reviews a rule or rule
amendment pursuant to a notification by the
Commission under this paragraph.
``(4) Prior approval.--
``(A) In general.--A registered entity may
request that the Commission grant prior
approval to any new contract or other
instrument, new rule, or rule amendment.
``(B) Prior approval required.--
Notwithstanding any other provision of this
section, a designated contract market shall
submit to the Commission for prior approval
each rule amendment that materially changes the
terms and conditions, as determined by the
Commission, in any contract of sale for future
delivery of a commodity specifically enumerated
in section 1a(10) (or any option thereon)
traded through its facilities if the rule
amendment applies to contracts and delivery
months which have already been listed for
trading and have open interest.
``(C) Deadline.--If prior approval is
requested under subparagraph (A), the
Commission shall take final action on the
request not later than 90 days after submission
of the request, unless the person submitting
the request agrees to an extension of the time
limitation established under this subparagraph.
``(5) Approval.--
``(A) Rules.--The Commission shall approve
a new rule, or rule amendment, of a registered
entity unless the Commission finds that the new
rule, or rule amendment, is inconsistent with
this subtitle (including regulations).
``(B) Contracts and instruments.--The
Commission shall approve a new contract or
other instrument unless the Commission finds
that the new contract or other instrument would
violate this Act (including regulations).
``(C) Special rule for review and approval
of event contracts and swaps contracts.--
``(i) Event contracts.--In
connection with the listing of
agreements, contracts, transactions, or
swaps in excluded commodities that are
based upon the occurrence, extent of an
occurrence, or contingency (other than
a change in the price, rate, value, or
levels of a commodity described in
section 1a(2)(i)), by a designated
contract market or swap execution
facility, the Commission may determine
that such agreements, contracts, or
transactions are contrary to the public
interest if the agreements, contracts,
or transactions involve--
``(I) activity that is
unlawful under any Federal or
State law;
``(II) terrorism;
``(III) assassination;
``(IV) war;
``(V) gaming; or
``(VI) other similar
activity determined by the
Commission, by rule or
regulation, to be contrary to
the public interest.
``(ii) Prohibition.--No agreement,
contract, or transaction determined by
the Commission to be contrary to the
public interest under clause (i) may be
listed or made available for clearing
or trading on or through a registered
entity.
``(iii) Swaps contracts.--
``(I) In general.--In
connection with the listing of
a swap for clearing by a
derivatives clearing
organization, the Commission
shall determine, upon request
or on its own motion, the
initial eligibility, or the
continuing qualification, of a
derivatives clearing
organization to clear such a
swap under those criteria,
conditions, or rules that the
Commission, in its discretion,
determines.
``(II) Requirements.--Any
such criteria, conditions, or
rules shall consider--
``(aa) the
financial integrity of
the derivatives
clearing organization;
and
``(bb) any other
factors which the
Commission determines
may be appropriate.
``(iv) Deadline.--The Commission
shall take final action under clauses
(i) and (ii) in not later than 90 days
from the commencement of its review
unless the party seeking to offer the
contract or swap agrees to an extension
of this time limitation.''.
(c) Violation of Core Principles.--Section 5c of the
Commodity Exchange Act (7 U.S.C. 7a-2) is amended by striking
subsection (d).
SEC. 746. INSIDER TRADING.
Section 4c(a) of the Commodity Exchange Act (7 U.S.C.
6c(a)) is amended by adding at the end the following:
``(3) Contract of sale.--It shall be unlawful for
any employee or agent of any department or agency of
the Federal Government who, by virtue of the employment
or position of the employee or agent, acquires
information that may affect or tend to affect the price
of any commodity in interstate commerce, or for future
delivery, or any swap, and which information has not
been disseminated by the department or agency of the
Federal Government holding or creating the information
in a manner which makes it generally available to the
trading public, or disclosed in a criminal, civil, or
administrative hearing, or in a congressional,
administrative, or Government Accountability Office
report, hearing, audit, or investigation, to use the
information in his personal capacity and for personal
gain to enter into, or offer to enter into--
``(A) a contract of sale of a commodity for
future delivery (or option on such a contract);
``(B) an option (other than an option
executed or traded on a national securities
exchange registered pursuant to section 6(a) of
the Securities Exchange Act of 1934 (15 U.S.C.
78f(a)); or
``(C) a swap.''
``(4) Nonpublic information.--
``(A) Imparting of nonpublic information.--
It shall be unlawful for any employee or agent
of any department or agency of the Federal
government who, by virtue of the employment or
position of the employee or agent, acquires
information that may affect or tend to affect
the price of any commodity in interstate
commerce, or for future delivery, or any swap,
and which information has not been disseminated
by the department or agency of the Federal
Government holding or creating the information
in a manner which makes it generally available
to the trading public, or disclosed in a
criminal, civil, or administrative hearing, or
in a congressional, administrative, or
Government Accountability Office report,
hearing, audit, or investigation, to use the
information in his personal capacity and for
personal gain to enter into, or offer to enter
into--
``(i) a contract of sale of a
commodity for future delivery (or
option on such a contract);
``(ii) an option (other than an
option executed or traded on a national
securities exchange registered pursuant
to section 6(a) of the Securities
Exchange Act of 1934 (15 U.S.C.
78f(a)); or
``(iii) a swap.
``(B) Knowing use.--It shall be unlawful
for any person who receives information
imparted by any employee or agent of any
department or agency of the Federal Government
as described in subparagraph (A) to knowingly
use such information to enter into, or offer to
enter into--
``(i) a contract of sale of a
commodity for future delivery (or
option on such a contract);
``(ii) an option (other than an
option executed or traded on a national
securities exchange registered pursuant
to section 6(a) of the Securities
Exchange Act of 1934 (15 U.S.C.
78f(a)); or
``(iii) a swap.
``(C) Theft of nonpublic information.--It
shall be unlawful for any person to steal,
convert, or misappropriate, by any means
whatsoever, information held or created by any
department or agency of the Federal Government
that may affect or tend to affect the price of
any commodity in interstate commerce, or for
future delivery, or any swap, where such person
knows, or acts in reckless disregard of the
fact, that such information has not been
disseminated by the department or agency of the
Federal Government holding or creating the
information in a manner which makes it
generally available to the trading public, or
disclosed in a criminal, civil, or
administrative hearing, or in a congressional,
administrative, or Government Accountability
Office report, hearing, audit, or
investigation, and to use such information, or
to impart such information with the intent to
assist another person, directly or indirectly,
to use such information to enter into, or offer
to enter into--
``(i) a contract of sale of a
commodity for future delivery (or
option on such a contract);
``(ii) an option (other than an
option executed or traded on a national
securities exchange registered pursuant
to section 6(a) of the Securities
Exchange Act of 1934 (15 U.S.C.
78f(a)); or
``(iii) a swap, provided, however,
that nothing in this subparagraph shall
preclude a person that has provided
information concerning, or generated
by, the person, its operations or
activities, to any employee or agent of
any department or agency of the Federal
Government, voluntarily or as required
by law, from using such information to
enter into, or offer to enter into, a
contract of sale, option, or swap
described in clauses (i), (ii), or
(iii).''.
SEC. 747. ANTIDISRUPTIVE PRACTICES AUTHORITY.
Section 4c(a) of the Commodity Exchange Act (7 U.S.C.
6c(a)) (as amended by section 746) is amended by adding at the
end the following:
``(5) Disruptive practices.--It shall be unlawful
for any person to engage in any trading, practice, or
conduct on or subject to the rules of a registered
entity that--
``(A) violates bids or offers;
``(B) demonstrates intentional or reckless
disregard for the orderly execution of
transactions during the closing period; or
``(C) is, is of the character of, or is
commonly known to the trade as, `spoofing'
(bidding or offering with the intent to cancel
the bid or offer before execution).
``(6) Rulemaking authority.--The Commission may
make and promulgate such rules and regulations as, in
the judgment of the Commission, are reasonably
necessary to prohibit the trading practices described
in paragraph (5) and any other trading practice that is
disruptive of fair and equitable trading.
``(7) Use of swaps to defraud.--It shall be
unlawful for any person to enter into a swap knowing,
or acting in reckless disregard of the fact, that its
counterparty will use the swap as part of a device,
scheme, or artifice to defraud any third party.''.
SEC. 748. COMMODITY WHISTLEBLOWER INCENTIVES AND PROTECTION.
The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended
by adding at the end the following:
``SEC. 23. COMMODITY WHISTLEBLOWER INCENTIVES AND PROTECTION.
``(a) Definitions.--In this section:
``(1) Covered judicial or administrative action.--
The term `covered judicial or administrative action'
means any judicial or administrative action brought by
the Commission under this Act that results in monetary
sanctions exceeding $1,000,000.
``(2) Fund.--The term `Fund' means the Commodity
Futures Trading Commission Customer Protection Fund
established under subsection (g).
``(3) Monetary sanctions.--The term `monetary
sanctions', when used with respect to any judicial or
administrative action means--
``(A) any monies, including penalties,
disgorgement, restitution, and interest ordered
to be paid; and
``(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.
``(4) Original information.--The term `original
information' means information that--
``(A) is derived from the independent
knowledge or analysis of a whistleblower;
``(B) is not known to the Commission from
any other source, unless the whistleblower is
the original source of the information; and
``(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.
``(5) Related action.--The term `related action',
when used with respect to any judicial or
administrative action brought by the Commission under
this Act, means any judicial or administrative action
brought by an entity described in subclauses (I)
through (VI) of subsection (h)(2)(C) 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.
``(6) Successful resolution.--The term `successful
resolution', when used with respect to any judicial or
administrative action brought by the Commission under
this Act, includes any settlement of such action.
``(7) Whistleblower.--The term `whistleblower'
means any individual, or 2 or more individuals acting
jointly, who provides information relating to a
violation of this Act to the Commission, in a manner
established by rule or regulation by the Commission.
``(b) Awards.--
``(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--
``(A) not less than 10 percent, in total,
of what has been collected of the monetary
sanctions imposed in the action or related
actions; and
``(B) not more than 30 percent, in total,
of what has been collected of the monetary
sanctions imposed in the action or related
actions.
``(2) Payment of awards.--Any amount paid under
paragraph (1) shall be paid from the Fund.
``(c) Determination of Amount of Award; Denial of Award.--
``(1) Determination of amount of award.--
``(A) Discretion.--The determination of the
amount of an award made under subsection (b)
shall be in the discretion of the Commission.
``(B) Criteria.--In determining the amount
of an award made under subsection (b), the
Commission--
``(i) shall take into
consideration--
``(I) the significance of
the information provided by the
whistleblower to the success of
the covered judicial or
administrative action;
``(II) the degree of
assistance provided by the
whistleblower and any legal
representative of the
whistleblower in a covered
judicial or administrative
action;
``(III) the programmatic
interest of the Commission in
deterring violations of the Act
(including regulations under
the Act) by making awards to
whistleblowers who provide
information that leads to the
successful enforcement of such
laws; and
``(IV) such additional
relevant factors as the
Commission may establish by
rule or regulation; and
``(ii) shall not take into
consideration the balance of the Fund.
``(2) Denial of award.--No award under subsection
(b) shall be made--
``(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--
``(i) an appropriate regulatory
agency;
``(ii) the Department of Justice;
``(iii) a registered entity;
``(iv) a registered futures
association;
``(v) a self-regulatory
organization as defined in section 3(a)
of the Securities Exchange Act of 1934
(15 U.S.C. 78c(a)); or
``(vi) a law enforcement
organization;
``(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;
``(C) to any whistleblower who submits
information to the Commission that is based on
the facts underlying the covered action
submitted previously by another whistleblower;
``(D) to any whistleblower who fails to
submit information to the Commission in such
form as the Commission may, by rule or
regulation, require.
``(d) Representation.--
``(1) Permitted representation.--Any whistleblower
who makes a claim for an award under subsection (b) may
be represented by counsel.
``(2) Required representation.--
``(A) In general.--Any whistleblower who
anonymously makes a claim for an award under
subsection (b) shall be represented by counsel
if the whistleblower submits the information
upon which the claim is based.
``(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.
``(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.
``(f) Appeals.--
``(1) In general.--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.
``(2) Appeals.--Any determination described in
paragraph (1) 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.
``(3) Review.--The court shall review the
determination made by the Commission in accordance with
section 7064 of title 5, United States Code.
``(g) Commodity Futures Trading Commission Customer
Protection Fund.--
``(1) Establishment.--There is established in the
Treasury of the United States a revolving fund to be
known as the `Commodity Futures Trading Commission
Customer Protection Fund'.
``(2) Use of fund.--The Fund shall be available to
the Commission, without further appropriation or fiscal
year limitation, for--
``(A) the payment of awards to
whistleblowers as provided in subsection (a);
and
``(B) the funding of customer education
initiatives designed to help customers protect
themselves against fraud or other violations of
this Act, or the rules and regulations
thereunder.
``(3) Deposits and credits.--There shall be
deposited into or credited to the Fund:
``(A) Monetary sanctions.--Any monetary
sanctions collected by the Commission in any
covered judicial or administrative action that
is not otherwise distributed to victims of a
violation of this Act or the rules and
regulations thereunder underlying such action,
unless the balance of the Fund at the time the
monetary judgment is collected exceeds
$100,000,000.
``(B) Additional amounts.--If the amounts
deposited into or credited to the Fund under
subparagraph (A) are not sufficient to satisfy
an award made under subsection (b), there shall
be deposited into or credited to the Fund an
amount equal to the unsatisfied portion of the
award from any monetary sanction collected by
the Commission in any judicial or
administrative action brought by the Commission
under this Act that is based on information
provided by a whistleblower.
``(C) Investment income.--All income from
investments made under paragraph (4).
``(4) Investments.--
``(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 Commission's judgment, required
to meet the current needs of the Fund.
``(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.
``(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, and form a part of, the
Fund.
``(5) Reports to congress.--Not later than October
30 of each year, the Commission shall transmit to the
Committee on Agriculture, Nutrition, and Forestry of
the Senate, and the Committee on Agriculture of the
House of Representatives a report on--
``(A) the Commission's whistleblower award
program under this section, including a
description of the number of awards granted and
the types of cases in which awards were granted
during the preceding fiscal year;
``(B) customer education initiatives
described in paragraph (2)(B) that were funded
by the Fund during the preceding fiscal year;
``(C) the balance of the Fund at the
beginning of the preceding fiscal year;
``(D) the amounts deposited into or
credited to the Fund during the preceding
fiscal year;
``(E) the amount of earnings on investments
of amounts in the Fund during the preceding
fiscal year;
``(F) the amount paid from the Fund during
the preceding fiscal year to whistleblowers
pursuant to subsection (b);
``(G) the amount paid from the Fund during
the preceding fiscal year for customer
education initiatives described in paragraph
(2)(B);
``(H) the balance of the Fund at the end of
the preceding fiscal year; and
``(I) a complete set of audited financial
statements, including a balance sheet, income
statement, and cash flow analysis.
``(h) Protection of Whistleblowers.--
``(1) Prohibition against retaliation.--
``(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--
``(i) in providing information to
the Commission in accordance with
subsection (b); or
``(ii) in assisting in any
investigation or judicial or
administrative action of the Commission
based upon or related to such
information.
``(B) Enforcement.--
``(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), unless the
individual who is alleging discharge or
other discrimination in violation of
subparagraph (A) is an employee of the
Federal Government, in which case the
individual shall only bring an action
under section 1221 of title 5, United
States Code.
``(ii) Subpoenas.--A subpoena
requiring the attendance of a witness
at a trial or hearing conducted under
this subsection may be served at any
place in the United States.
``(iii) Statute of limitations.--An
action under this subsection may not be
brought more than 2 years after the
date on which the violation reported in
subparagraph (A) is committed.
``(C) Relief.--Relief for an individual
prevailing in an action brought under
subparagraph (B) shall include--
``(i) reinstatement with the same
seniority status that the individual
would have had, but for the
discrimination;
``(ii) the amount of back pay
otherwise owed to the individual, with
interest; and
``(iii) compensation for any
special damages sustained as a result
of the discharge or discrimination,
including litigation costs, expert
witness fees, and reasonable attorney's
fees.
``(2) Confidentiality.--
``(A) In general.--Except as provided in
subparagraphs (B) and (C), the Commission, and
any officer or employee of the Commission,
shall not disclose any information, including
information provided by a whistleblower to the
Commission, which could reasonably be expected
to reveal the identity of a whistleblower,
except in accordance with the provisions of
section 552a of title 5, United States Code,
unless and until required to be disclosed to a
defendant or respondent in connection with a
public proceeding instituted by the Commission
or any entity described in subparagraph (C).
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.
``(B) Effect.--Nothing in this paragraph is
intended 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.
``(C) Availability to government
agencies.--
``(i) In general.--Without the loss
of its status as confidential 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 or
appropriate to accomplish the purposes
of this Act and protect customers and
in accordance with clause (ii), be made
available to--
``(I) the Department of
Justice;
``(II) an appropriate
department or agency of the
Federal Government, acting
within the scope of its
jurisdiction;
``(III) a registered
entity, registered futures
association, or self-regulatory
organization as defined in
section 3(a) of the Securities
Exchange Act of 1934 (15 U.S.C.
78c(a));
``(IV) a State attorney
general in connection with any
criminal investigation;
``(V) an appropriate
department or agency of any
State, acting within the scope
of its jurisdiction; and
``(VI) a foreign futures
authority.
``(ii) Maintenance of
information.--Each of the entities,
agencies, or persons described in
clause (i) shall maintain information
described in that clause as
confidential, in accordance with the
requirements in subparagraph (A).
``(iii) Study on impact of foia
exemption on commodity futures trading
commission.--
``(I) Study.--The Inspector
General of the Commission shall
conduct a study--
``(aa) on whether
the exemption under
section 552(b)(3) of
title 5, United States
Code (known as the
Freedom of Information
Act) established in
paragraph (2)(A) aids
whistleblowers in
disclosing information
to the Commission;
``(bb) on what
impact the exemption
has had on the public's
ability to access
information about the
Commission's regulation
of commodity futures
and option markets; and
``(cc) to make any
recommendations on
whether the Commission
should continue to use
the exemption.
``(II) Report.--Not later
than 30 months after the date
of enactment of this clause,
the Inspector General shall--
``(aa) submit a
report on the findings
of the study required
under this clause to
the Committee on
Banking, Housing, and
Urban Affairs of the
Senate and the
Committee on Financial
Services of the House
of Representatives; and
``(bb) make the
report available to the
public through
publication of a report
on the website of the
Commission.
``(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.
``(i) 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.
``(j) Implementing Rules.--The Commission shall issue final
rules or regulations implementing the provisions of this
section not later than 270 days after the date of enactment of
the Wall Street Transparency and Accountability Act of 2010.
``(k) Original Information.--Information submitted to the
Commission by a whistleblower in accordance with rules or
regulations implementing this section shall not lose its status
as original information solely because the whistleblower
submitted such information prior to the effective date of such
rules or regulations, provided such information was submitted
after the date of enactment of the Wall Street Transparency and
Accountability Act of 2010.
``(l) Awards.--A whistleblower may receive an award
pursuant to this section regardless of whether any violation of
a provision of this Act, 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 the
Wall Street Transparency and Accountability Act of 2010.
``(m) Provision of False Information.--A whistleblower who
knowingly and willfully makes any false, fictitious, or
fraudulent statement or representation, or who makes or uses
any false writing or document knowing the same to contain any
false, fictitious, or fraudulent statement or entry, shall not
be entitled to an award under this section and shall be subject
to prosecution under section 1001 of title 18, United States
Code.
``(n) Nonenforceability of Certain Provisions Waiving
Rights and Remedies or Requiring Arbitration of Disputes.--
``(1) Waiver of rights and remedies.--The rights
and remedies provided for in this section may not be
waived by any agreement, policy form, or condition of
employment including by a predispute arbitration
agreement.
``(2) Predispute arbitration agreements.--No
predispute arbitration agreement shall be valid or
enforceable, if the agreement requires arbitration of a
dispute arising under this section.''.
SEC. 749. CONFORMING AMENDMENTS.
(a) Section 4d of the Commodity Exchange Act (7 U.S.C. 6d)
(as amended by section 724) is amended--
(1) in subsection (a)--
(A) in the matter preceding paragraph (1)--
(i) by striking ``engage as'' and
inserting ``be a''; and
(ii) by striking ``or introducing
broker'' and all that follows through
``or derivatives transaction execution
facility'';
(B) in paragraph (1), by striking ``or
introducing broker''; and
(C) in paragraph (2), by striking ``if a
futures commission merchant,''; and
(2) by adding at the end the following:
``(g) It shall be unlawful for any person to be an
introducing broker unless such person shall have registered
under this Act with the Commission as an introducing broker and
such registration shall not have expired nor been suspended nor
revoked.''.
(b) Section 4m(3) of the Commodity Exchange Act (7 U.S.C.
6m(3)) is amended--
(1) by striking ``(3) Subsection (1) of this
section'' and inserting the following:
``(3) Exception.--
``(A) In general.--Paragraph (1)''; and
(2) by striking ``to any investment trust'' and all
that follows through the period at the end and
inserting the following: ``to any commodity pool that
is engaged primarily in trading commodity interests.
``(B) Engaged primarily.--For purposes of
subparagraph (A), a commodity trading advisor or a
commodity pool shall be considered to be `engaged
primarily' in the business of being a commodity trading
advisor or commodity pool if it is or holds itself out
to the public as being engaged primarily, or proposes
to engage primarily, in the business of advising on
commodity interests or investing, reinvesting, owning,
holding, or trading in commodity interests,
respectively.
``(C) Commodity interests.--For purposes of this
paragraph, commodity interests shall include contracts
of sale of a commodity for future delivery, options on
such contracts, security futures, swaps, leverage
contracts, foreign exchange, spot and forward contracts
on physical commodities, and any monies held in an
account used for trading commodity interests.''.
(c) Section 5c of the Commodity Exchange Act (7 U.S.C. 7a-
2) is amended--
(1) in subsection (a)(1)--
(A) by striking ``, 5a(d),''; and
(B) by striking ``and section (2)(h)(7)
with respect to significant price discovery
contracts,''; and
(2) in subsection (f)(1), by striking ``section
4d(c) of this Act'' and inserting ``section 4d(e)''.
(d) Section 5e of the Commodity Exchange Act (7 U.S.C. 7b)
is amended by striking ``or revocation of the right of an
electronic trading facility to rely on the exemption set forth
in section 2(h)(3) with respect to a significant price
discovery contract,''.
(e) Section 6(b) of the Commodity Exchange Act (7 U.S.C.
8(b)) is amended in the first sentence by striking ``, or to
revoke the right of an electronic trading facility to rely on
the exemption set forth in section 2(h)(3) with respect to a
significant price discovery contract,''.
(f) Section 12(e)(2)(B) of the Commodity Exchange Act (7
U.S.C. 16(e)(2)(B)) is amended--
(1) by striking ``section 2(c), 2(d), 2(f), or 2(g)
of this Act'' and inserting ``section 2(c) or 2(f) of
this Act''; and
(2) by striking ``2(h) or''.
(g) Section 17(r)(1) of the Commodity Exchange Act (7
U.S.C. 21(r)(1)) is amended by striking ``section 4d(c) of this
Act'' and inserting ``section 4d(e)''.
(h) Section 22 of the Commodity Exchange Act is amended--
(1) in subsection (a)(1)(B), by--
(A) inserting ``or any swap'' after
``commodity)''; and
(B) inserting ``or any swap'' after ``such
contract'';
(2) in subsection (a)(1)(C), by adding at the end
the following:
``(iv) a swap; or''; and
(3) in subsection (b)(1)(A), by striking ``section
2(h)(7) or sections 5 through 5c'' and inserting
``section 5, 5b, 5c, 5h, or 21''.
(i) Section 408(2)(C) of the Federal Deposit Insurance
Corporation Improvement Act of 1991 (12 U.S.C. 4421(2)(C)) is
amended--
(1) by striking ``section 2(c), 2(d), 2(f), or
(2)(g) of such Act'' and inserting ``section 2(c),
2(f), or 2(i) of that Act''; and
(2) by striking ``2(h) or''.
SEC. 750. STUDY ON OVERSIGHT OF CARBON MARKETS.
(a) Interagency Working Group.--There is established to
carry out this section an interagency working group (referred
to in this section as the ``interagency group'') composed of
the following members or designees:
(1) The Chairman of the Commodity Futures Trading
Commission (referred to in this section as the
``Commission''), who shall serve as Chairman of the
interagency group.
(2) The Secretary of Agriculture.
(3) The Secretary of the Treasury.
(4) The Chairman of the Securities and Exchange
Commission.
(5) The Administrator of the Environmental
Protection Agency.
(6) The Chairman of the Federal Energy Regulatory
Commission.
(7) The Commissioner of the Federal Trade
Commission.
(8) The Administrator of the Energy Information
Administration.
(b) Administrative Support.--The Commission shall provide
the interagency group such administrative support services as
are necessary to enable the interagency group to carry out the
functions of the interagency group under this section.
(c) Consultation.--In carrying out this section, the
interagency group shall consult with representatives of
exchanges, clearinghouses, self-regulatory bodies, major carbon
market participants, consumers, and the general public, as the
interagency group determines to be appropriate.
(d) Study.--The interagency group shall conduct a study on
the oversight of existing and prospective carbon markets to
ensure an efficient, secure, and transparent carbon market,
including oversight of spot markets and derivative markets.
(e) Report.--Not later than 180 days after the date of
enactment of this Act, the interagency group shall submit to
Congress a report on the results of the study conducted under
subsection (b), including recommendations for the oversight of
existing and prospective carbon markets to ensure an efficient,
secure, and transparent carbon market, including oversight of
spot markets and derivative markets.
SEC. 751. ENERGY AND ENVIRONMENTAL MARKETS ADVISORY COMMITTEE.
Section 2(a) of the Commodity Exchange Act (7 U.S.C. 2(a))
(as amended by section 727) is amended by adding at the end the
following:
``(15) Energy and environmental markets advisory
committee.--
``(A) Establishment.--
``(i) In general.--An Energy and
Environmental Markets Advisory
Committee is hereby established.
``(ii) Membership.--The Committee
shall have 9 members.
``(iii) Activities.--The
Committee's objectives and scope of
activities shall be--
``(I) to conduct public
meetings;
``(II) to submit reports
and recommendations to the
Commission (including
dissenting or minority views,
if any); and
``(III) otherwise to serve
as a vehicle for discussion and
communication on matters of
concern to exchanges, firms,
end users, and regulators
regarding energy and
environmental markets and their
regulation by the Commission.
``(B) Requirements.--
``(i) In general.--The Committee
shall hold public meetings at such
intervals as are necessary to carry out
the functions of the Committee, but not
less frequently than 2 times per year.
``(ii) Members.--Members shall be
appointed to 3-year terms, but may be
removed for cause by vote of the
Commission.
``(C) Appointment.--The Commission shall
appoint members with a wide diversity of
opinion and who represent a broad spectrum of
interests, including hedgers and consumers.
``(D) Reimbursement.--Members shall be
entitled to per diem and travel expense
reimbursement by the Commission.
``(E) FACA.--The Committee shall not be
subject to the Federal Advisory Committee Act
(5 U.S.C. App.).''.
SEC. 752. INTERNATIONAL HARMONIZATION.
(a) In order to promote effective and consistent global
regulation of swaps and security-based swaps, the Commodity
Futures Trading Commission, the Securities and Exchange
Commission, and the prudential regulators (as that term is
defined in section 1a(39) of the Commodity Exchange Act), as
appropriate, shall consult and coordinate with foreign
regulatory authorities on the establishment of consistent
international standards with respect to the regulation
(including fees) of swaps, security-based swaps, swap entities,
and security-based swap entities and may 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, swap counterparties, and security-
based swap counterparties.
(b) In order to promote effective and consistent global
regulation of contracts of sale of a commodity for future
delivery and options on such contracts, the Commodity Futures
Trading Commission shall consult and coordinate with foreign
regulatory authorities on the establishment of consistent
international standards with respect to the regulation of
contracts of sale of a commodity for future delivery and
options on such contracts, and may agree to such information-
sharing arrangements as may be deemed necessary or appropriate
in the public interest for the protection of users of contracts
of sale of a commodity for future delivery.
SEC. 753. ANTI-MANIPULATION AUTHORITY.
(a) Prohibition Regarding Manipulation and False
Information.--Subsection (c) of section 6 of the Commodity
Exchange Act (7 U.S.C. 9, 15) is amended to read as follows:
``(c) Prohibition Regarding Manipulation and False
Information.--
``(1) Prohibition against manipulation.--It shall
be unlawful for any person, directly or indirectly, to
use or employ, or attempt to use or employ, in
connection with any swap, or a contract of sale of any
commodity in interstate commerce, or for future
delivery on or subject to the rules of any registered
entity, any manipulative or deceptive device or
contrivance, in contravention of such rules and
regulations as the Commission shall promulgate by not
later than 1 year after the date of enactment of the
Dodd-Frank Wall Street Reform and Consumer Protection
Act, provided no rule or regulation promulgated by the
Commission shall require any person to disclose to
another person nonpublic information that may be
material to the market price, rate, or level of the
commodity transaction, except as necessary to make any
statement made to the other person in or in connection
with the transaction not misleading in any material
respect.
``(A) Special provision for manipulation by
false reporting.--Unlawful manipulation for
purposes of this paragraph shall include, but
not be limited to, delivering, or causing to be
delivered for transmission through the mails or
interstate commerce, by any means of
communication whatsoever, a false or misleading
or inaccurate report concerning crop or market
information or conditions that affect or tend
to affect the price of any commodity in
interstate commerce, knowing, or acting in
reckless disregard of the fact that such report
is false, misleading or inaccurate.
``(B) Effect on other law.--Nothing in this
paragraph shall affect, or be construed to
affect, the applicability of section 9(a)(2).
``(C) Good faith mistakes.--Mistakenly
transmitting, in good faith, false or
misleading or inaccurate information to a price
reporting service would not be sufficient to
violate subsection (c)(1)(A).
``(2) Prohibition regarding false information.--It
shall be unlawful for any person to make any false or
misleading statement of a material fact to the
Commission, including in any registration application
or any report filed with the Commission under this Act,
or any other information relating to a swap, or a
contract of sale of a commodity, in interstate
commerce, or for future delivery on or subject to the
rules of any registered entity, or to omit to state in
any such statement any material fact that is necessary
to make any statement of a material fact made not
misleading in any material respect, if the person knew,
or reasonably should have known, the statement to be
false or misleading.
``(3) Other manipulation.--In addition to the
prohibition in paragraph (1), it shall be unlawful for
any person, directly or indirectly, to manipulate or
attempt to manipulate the price of any swap, or of any
commodity in interstate commerce, or for future
delivery on or subject to the rules of any registered
entity.
``(4) Enforcement.--
``(A) Authority of commission.--If the
Commission has reason to believe that any
person (other than a registered entity) is
violating or has violated this subsection, or
any other provision of this Act (including any
rule, regulation, or order of the Commission
promulgated in accordance with this subsection
or any other provision of this Act), the
Commission may serve upon the person a
complaint.
``(B) Contents of complaint.--A complaint
under subparagraph (A) shall--
``(i) contain a description of the
charges against the person that is the
subject of the complaint; and
``(ii) have attached or contain a
notice of hearing that specifies the
date and location of the hearing
regarding the complaint.
``(C) Hearing.--A hearing described in
subparagraph (B)(ii)--
``(i) shall be held not later than
3 days after service of the complaint
described in subparagraph (A);
``(ii) shall require the person to
show cause regarding why--
``(I) an order should not
be made--
``(aa) to prohibit
the person from trading
on, or subject to the
rules of, any
registered entity; and
``(bb) to direct
all registered entities
to refuse all
privileges to the
person until further
notice of the
Commission; and
``(II) the registration of
the person, if registered with
the Commission in any capacity,
should not be suspended or
revoked; and
``(iii) may be held before--
``(I) the Commission; or
``(II) an administrative
law judge designated by the
Commission, under which the
administrative law judge shall
ensure that all evidence is
recorded in written form and
submitted to the Commission.
``(5) Subpoena.--For the purpose of securing
effective enforcement of the provisions of this Act,
for the purpose of any investigation or proceeding
under this Act, and for the purpose of any action taken
under section 12(f), any member of the Commission or
any Administrative Law Judge or other officer
designated by the Commission (except as provided in
paragraph (7)) may administer oaths and affirmations,
subpoena witnesses, compel their attendance, take
evidence, and require the production of any books,
papers, correspondence, memoranda, or other records
that the Commission deems relevant or material to the
inquiry.
``(6) Witnesses.--The attendance of witnesses and
the production of any such records may be required from
any place in the United States, any State, or any
foreign country or jurisdiction at any designated place
of hearing.
``(7) Service.--A subpoena issued under this
section may be served upon any person who is not to be
found within the territorial jurisdiction of any court
of the United States in such manner as the Federal
Rules of Civil Procedure prescribe for service of
process in a foreign country, except that a subpoena to
be served on a person who is not to be found within the
territorial jurisdiction of any court of the United
States may be issued only on the prior approval of the
Commission.
``(8) Refusal to obey.--In case of contumacy by, or
refusal to obey a subpoena issued to, any person, the
Commission may invoke the aid of any court of the
United States within the jurisdiction in which the
investigation or proceeding is conducted, or where such
person resides or transacts business, in requiring the
attendance and testimony of witnesses and the
production of books, papers, correspondence, memoranda,
and other records. Such court may issue an order
requiring such person to appear before the Commission
or member or Administrative Law Judge or other officer
designated by the Commission, there to produce records,
if so ordered, or to give testimony touching the matter
under investigation or in question.
``(9) Failure to obey.--Any failure to obey such
order of the court may be punished by the court as a
contempt thereof. All process in any such case may be
served in the judicial district wherein such person is
an inhabitant or transacts business or wherever such
person may be found.
``(10) Evidence.--On the receipt of evidence under
paragraph (4)(C)(iii), the Commission may--
``(A) prohibit the person that is the
subject of the hearing from trading on, or
subject to the rules of, any registered entity
and require all registered entities to refuse
the person all privileges on the registered
entities for such period as the Commission may
require in the order;
``(B) if the person is registered with the
Commission in any capacity, suspend, for a
period not to exceed 180 days, or revoke, the
registration of the person;
``(C) assess such person--
``(i) a civil penalty of not more
than an amount equal to the greater
of--
``(I) $140,000; or
``(II) triple the monetary
gain to such person for each
such violation; or
``(ii) in any case of manipulation
or attempted manipulation in violation
of this subsection or section 9(a)(2),
a civil penalty of not more than an
amount equal to the greater of--
``(I) $1,000,000; or
``(II) triple the monetary
gain to the person for each
such violation; and
``(D) require restitution to customers of
damages proximately caused by violations of the
person.
``(11) Orders.--
``(A) Notice.--The Commission shall provide
to a person described in paragraph (10) and the
appropriate governing board of the registered
entity notice of the order described in
paragraph (10) by--
``(i) registered mail;
``(ii) certified mail; or
``(iii) personal delivery.
``(B) Review.--
``(i) In general.--A person
described in paragraph (10) may obtain
a review of the order or such other
equitable relief as determined to be
appropriate by a court described in
clause (ii).
``(ii) Petition.--To obtain a
review or other relief under clause
(i), a person may, not later than 15
days after notice is given to the
person under clause (i), file a written
petition to set aside the order with
the United States Court of Appeals--
``(I) for the circuit in
which the petitioner carries
out the business of the
petitioner; or
``(II) in the case of an
order denying registration, the
circuit in which the principal
place of business of the
petitioner is located, as
listed on the application for
registration of the petitioner.
``(C) Procedure.--
``(i) Duty of clerk of appropriate
court.--The clerk of the appropriate
court under subparagraph (B)(ii) shall
transmit to the Commission a copy of a
petition filed under subparagraph
(B)(ii).
``(ii) Duty of commission.--In
accordance with section 2112 of title
28, United States Code, the Commission
shall file in the appropriate court
described in subparagraph (B)(ii) the
record theretofore made.
``(iii) Jurisdiction of appropriate
court.--Upon the filing of a petition
under subparagraph (B)(ii), the
appropriate court described in
subparagraph (B)(ii) may affirm, set
aside, or modify the order of the
Commission.''.
(b) Cease and Desist Orders, Fines.--Section 6(d) of the
Commodity Exchange Act (7 U.S.C. 13b) is amended to read as
follows:
``(d) If any person (other than a registered entity), is
violating or has violated subsection (c) or any other
provisions of this Act or of the rules, regulations, or orders
of the Commission thereunder, the Commission may, upon notice
and hearing, and subject to appeal as in other cases provided
for in subsection (c), make and enter an order directing that
such person shall cease and desist therefrom and, if such
person thereafter and after the lapse of the period allowed for
appeal of such order or after the affirmance of such order,
shall knowingly fail or refuse to obey or comply with such
order, such person, upon conviction thereof, shall be fined not
more than the higher of $140,000 or triple the monetary gain to
such person, or imprisoned for not more than 1 year, or both,
except that if such knowing failure or refusal to obey or
comply with such order involves any offense within subsection
(a) or (b) of section 9, such person, upon conviction thereof,
shall be subject to the penalties of said subsection (a) or
(b): Provided, That any such cease and desist order under this
subsection against any respondent in any case of manipulation
shall be issued only in conjunction with an order issued
against such respondent under subsection (c).''.
(c) Manipulations; Private Rights of Action.--Section
22(a)(1) of the Commodity Exchange Act (7 U.S.C. 25(a)(1)) is
amended by striking subparagraph (D) and inserting the
following:
``(D) who purchased or sold a contract referred to
in subparagraph (B) hereof or swap if the violation
constitutes--
``(i) the use or employment of, or an
attempt to use or employ, in connection with a
swap, or a contract of sale of a commodity, in
interstate commerce, or for future delivery on
or subject to the rules of any registered
entity, any manipulative device or contrivance
in contravention of such rules and regulations
as the Commission shall promulgate by not later
than 1 year after the date of enactment of the
Dodd-Frank Wall Street Reform and Consumer
Protection Act; or
``(ii) a manipulation of the price of any
such contract or swap or the price of the
commodity underlying such contract or swap.''.
(d) Effective Date.--
(1) The amendments made by this section shall take
effect on the date on which the final rule promulgated
by the Commodity Futures Trading Commission pursuant to
this Act takes effect.
(2) Paragraph (1) shall not preclude the Commission
from undertaking prior to the effective date any
rulemaking necessary to implement the amendments
contained in this section.
SEC. 754. EFFECTIVE DATE.
Unless otherwise provided in this title, the provisions of
this subtitle shall take effect on the later of 360 days after
the date of the enactment of this subtitle or, to the extent a
provision of this subtitle requires a rulemaking, not less than
60 days after publication of the final rule or regulation
implementing such provision of this subtitle.
Subtitle B--Regulation of Security-Based Swap Markets
SEC. 761. DEFINITIONS UNDER THE SECURITIES EXCHANGE ACT OF 1934.
(a) Definitions.--Section 3(a) of the Securities Exchange
Act of 1934 (15 U.S.C. 78c(a)) is amended--
(1) in subparagraphs (A) and (B) of paragraph (5),
by inserting ``(not including 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;
(2) in paragraph (10), by inserting ``security-
based swap,'' after ``security future,'';
(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.'';
(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.'';
(5) in paragraph (39)--
(A) in subparagraph (B)(i)--
(i) in subclause (I), by striking
``or government securities dealer'' and
inserting ``government securities
dealer, security-based swap dealer, or
major security-based swap
participant''; and
(ii) in subclause (II), by
inserting ``security-based swap dealer,
major security-based swap
participant,'' after ``government
securities dealer,'';
(B) in subparagraph (C), by striking ``or
government securities dealer'' and inserting
``government securities dealer, security-based
swap dealer, or major security-based swap
participant''; and
(C) in subparagraph (D), by inserting
``security-based swap dealer, major security-
based swap participant,'' after ``government
securities dealer,''; and
(6) by adding at the end the following:
``(65) Eligible contract participant.--The term
`eligible contract participant' has the same meaning as
in section 1a of the Commodity Exchange Act (7 U.S.C.
1a).
``(66) Major swap participant.--The term `major
swap participant' has the same meaning as in section 1a
of the Commodity Exchange Act (7 U.S.C. 1a).
``(67) Major security-based swap participant.--
``(A) In general.--The term `major
security-based swap participant' means any
person--
``(i) who is not a security-based
swap dealer; and
``(ii)(I) who maintains a
substantial position in security-based
swaps for any of the major security-
based swap categories, as such
categories are determined by the
Commission, excluding both positions
held for hedging or mitigating
commercial risk and positions
maintained by any employee benefit plan
(or any contract held by such a plan)
as defined in paragraphs (3) and (32)
of section 3 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C.
1002) for the primary purpose of
hedging or mitigating any risk directly
associated with the operation of the
plan;
``(II) whose outstanding security-
based swaps create substantial
counterparty exposure that could have
serious adverse effects on the
financial stability of the United
States banking system or financial
markets; or
``(III) that is a financial entity
that--
``(aa) is highly leveraged
relative to the amount of
capital such entity holds and
that is not subject to capital
requirements established by an
appropriate Federal banking
agency; and
``(bb) maintains a
substantial position in
outstanding security-based
swaps in any major security-
based swap category, as such
categories are determined by
the Commission.
``(B) Definition of substantial position.--
For purposes of subparagraph (A), the
Commission shall define, by rule or regulation,
the term `substantial position' at the
threshold that the Commission determines to be
prudent for the effective monitoring,
management, and oversight of entities that are
systemically important or can significantly
impact the financial system of the United
States. In setting the definition under this
subparagraph, the Commission shall consider the
person's relative position in uncleared as
opposed to cleared security-based swaps and may
take into consideration the value and quality
of collateral held against counterparty
exposures.
``(C) Scope of designation.--For purposes
of subparagraph (A), a person may be designated
as a major security-based swap participant for
1 or more categories of security-based swaps
without being classified as a major security-
based swap participant for all classes of
security-based swaps.
``(68) Security-based swap.--
``(A) In general.--Except as provided in
subparagraph (B), the term `security-based
swap' means any agreement, contract, or
transaction that--
``(i) is a swap, as that term is
defined under section 1a of the
Commodity Exchange Act (without regard
to paragraph (47)(B)(x) of such
section); and
``(ii) is based on--
``(I) an index that is a
narrow-based security index,
including any interest therein
or on the value thereof;
``(II) a single security or
loan, including any interest
therein or on the value
thereof; or
``(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.
``(B) 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).
``(C) Exclusions.--The term `security-based
swap' does not include any agreement, contract,
or transaction that meets the definition of a
security-based swap only because such
agreement, contract, or transaction references,
is based upon, or settles through the transfer,
delivery, or receipt of an exempted security
under paragraph (12), as in effect on the date
of enactment of the Futures Trading Act of 1982
(other than any municipal security as defined
in paragraph (29) as in effect on the date of
enactment of the Futures Trading Act of 1982),
unless such agreement, contract, or transaction
is of the character of, or is commonly known in
the trade as, a put, call, or other option.
``(D) Mixed swap.--The term `security-based
swap' includes any agreement, contract, or
transaction that is as described in
subparagraph (A) and also is based on 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 a single
security or a narrow-based security index), or
the occurrence, non-occurrence, or the extent
of the occurrence of an event or contingency
associated with a potential financial,
economic, or commercial consequence (other than
an event described in subparagraph
(A)(ii)(III)).
``(E) Rule of construction regarding use of
the term index.--The term `index' means an
index or group of securities, including any
interest therein or based on the value thereof.
``(69) Swap.--The term `swap' has the same meaning
as in section 1a of the Commodity Exchange Act (7
U.S.C. 1a).
``(70) Person associated with a security-based swap
dealer or major security-based swap participant.--
``(A) In general.--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--
``(i) 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);
``(ii) any person directly or
indirectly controlling, controlled by,
or under common control with such
security-based swap dealer or major
security-based swap participant; or
``(iii) any employee of such
security-based swap dealer or major
security-based swap participant.
``(B) Exclusion.--Other than for purposes
of section 15F(l)(2), 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' does not include any person
associated with a security-based swap dealer or
major security-based swap participant whose
functions are solely clerical or ministerial.
``(71) Security-based swap dealer.--
``(A) In general.--The term `security-based
swap dealer' means any person who--
``(i) holds themself out as a
dealer in security-based swaps;
``(ii) makes a market in security-
based swaps;
``(iii) regularly enters into
security-based swaps with
counterparties as an ordinary course of
business for its own account; or
``(iv) engages in any activity
causing it to be commonly known in the
trade as a dealer or market maker in
security-based swaps.
``(B) Designation by type or class.--A
person may be designated as a security-based
swap dealer for a single type or single class
or category of security-based swap or
activities and considered not to be a security-
based swap dealer for other types, classes, or
categories of security-based swaps or
activities.
``(C) Exception.--The term `security-based
swap dealer' does not include a person that
enters into security-based swaps for such
person's own account, either individually or in
a fiduciary capacity, but not as a part of
regular business.
``(D) De minimis exception.--The Commission
shall exempt from designation as a security-
based swap dealer an entity that engages in a
de minimis quantity of security-based swap
dealing in connection with transactions with or
on behalf of its customers. The Commission
shall promulgate regulations to establish
factors with respect to the making of any
determination to exempt.
``(72) 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)).
``(73) Board.--The term `Board' means the Board of
Governors of the Federal Reserve System.
``(74) Prudential regulator.--The term `prudential
regulator' has the same meaning as in section 1a of the
Commodity Exchange Act (7 U.S.C. 1a).
``(75) Security-based swap data repository.--The
term `security-based swap data repository' means any
person that collects and maintains information or
records with respect to transactions or positions in,
or the terms and conditions of, security-based swaps
entered into by third parties for the purpose of
providing a centralized recordkeeping facility for
security-based swaps.
``(76) Swap dealer.--The term `swap dealer' has the
same meaning as in section 1a of the Commodity Exchange
Act (7 U.S.C. 1a).
``(77) Security-based swap execution facility.--The
term `security-based swap execution facility' means a
trading system or platform in which multiple
participants have the ability to execute or trade
security-based swaps by accepting bids and offers made
by multiple participants in the facility or system,
through any means of interstate commerce, including any
trading facility, that--
``(A) facilitates the execution of
security-based swaps between persons; and
``(B) is not a national securities
exchange.
``(78) Security-based swap agreement.--
``(A) In general.--For purposes of sections
9, 10, 16, 20, and 21A of this Act, and section
17 of the Securities Act of 1933 (15 U.S.C.
77q), 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.
``(B) Exclusions.--The term `security-based
swap agreement' does not include any security-
based swap.''.
(b) Authority To Further Define Terms.--The Securities and
Exchange Commission may, by rule, further define--
(1) the term ``commercial risk'';
(2) any other term included in an amendment to the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)) made
by this subtitle; and
(3) the terms ``security-based swap'', ``security-
based swap dealer'', ``major security-based swap
participant'', and ``eligible contract participant'',
with regard to security-based swaps (as such terms are
defined in the amendments made by subsection (a)) for
the purpose of including transactions and entities that
have been structured to evade this subtitle or the
amendments made by this subtitle.
SEC. 762. REPEAL OF PROHIBITION ON REGULATION OF SECURITY-BASED SWAP
AGREEMENTS.
(a) Repeal.--Sections 206B and 206C of the Gramm-Leach-
Bliley Act (Public Law 106-102; 15 U.S.C. 78c note) are
repealed.
(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--''.
(c) Conforming Amendments to the Securities Act of 1933.--
(1) Section 2A of the Securities Act of 1933 (15
U.S.C. 77b-1) is amended--
(A) by striking subsection (a) and
reserving that subsection; and
(B) by striking ``(as defined in section
206B of the Gramm-Leach-Bliley Act)'' each
place that such term appears and inserting
``(as defined in section 3(a)(78) of the
Securities Exchange Act of 1934)''.
(2) Section 17 of the Securities Act of 1933 (15
U.S.C. 77q) is amended--
(A) in subsection (a)--
(i) by inserting ``(including
security-based swaps)'' after
``securities''; and
(ii) by striking ``(as defined in
section 206B of the Gramm-Leach-Bliley
Act)'' and inserting ``(as defined in
section 3(a)(78) of the Securities
Exchange Act)''; and
(B) in subsection (d), by striking ``206B
of the Gramm-Leach-Bliley Act'' and inserting
``3(a)(78) of the Securities Exchange Act of
1934''.
(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--
(1) in section 3A (15 U.S.C. 78c-1)--
(A) by striking subsection (a) and
reserving that subsection; and
(B) by striking ``(as defined in section
206B of the Gramm-Leach-Bliley Act)'' each
place that the term appears;
(2) in section 9 (15 U.S.C. 78i)--
(A) in subsection (a), by striking
paragraphs (2) through (5) and inserting the
following:
``(2) To effect, alone or with 1 or more other persons, a
series of transactions in any security registered on a national
securities exchange, any security not so registered, 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.
``(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, a security-based swap, or a security-based swap
agreement with respect to such security, to induce the purchase
or sale of any security registered on a national securities
exchange, any security not so registered, any security-based
swap, or any 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.
``(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, 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, any
security not so registered, any security-based swap, or any
security-based swap agreement with respect to such security,
for the purpose of inducing the purchase or sale of such
security, such security-based swap, or such 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 that
person knew or had reasonable ground to believe was so false or
misleading.
``(5) For a consideration, received directly or indirectly
from a broker, dealer, 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, a security-based swap, or security-based swap
agreement with respect to such security, to induce the purchase
of any security registered on a national securities exchange,
any security not so registered, any security-based swap, or any
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.''; and
(B) in subsection (i), by striking ``(as
defined in section 206B of the Gramm-Leach-
Bliley Act)'';
(3) in section 10 (15 U.S.C. 78j)--
(A) in subsection (b), by striking ``(as
defined in section 206B of the Gramm-Leach-
Bliley Act),'' each place that term appears;
and
(B) in the matter following subsection (b),
by striking ``(as defined in section 206B of
the Gramm-Leach-Bliley Act), in each place that
such terms appear'';
(4) in section 15 (15 U.S.C. 78o)--
(A) in subsection (c)(1)(A), by striking
``(as defined in section 206B of the Gramm-
Leach-Bliley Act),'';
(B) in subparagraphs (B) and (C) of
subsection (c)(1), by striking ``(as defined in
section 206B of the Gramm-Leach-Bliley Act)''
each place that term appears;
(C) by redesignating subsection (i), as
added by section 303(f) of the Commodity
Futures Modernization Act of 2000 (Public Law
106-554; 114 Stat. 2763A-455), as subsection
(j); and
(D) in subsection (j), as redesignated by
subparagraph (C), by striking ``(as defined in
section 206B of the Gramm-Leach-Bliley Act)'';
(5) in section 16 (15 U.S.C. 78p)--
(A) in subsection (a)(2)(C), by striking
``(as defined in section 206(b) of the Gramm-
Leach-Bliley Act (15 U.S.C. 78c note))'';
(B) in subsection (a)(3)(B), by inserting
``or security-based swaps'' after ``security-
based swap agreement'';
(C) in the first sentence of subsection
(b), by striking ``(as defined in section 206B
of the Gramm-Leach-Bliley Act)'';
(D) in the third sentence of subsection
(b), by striking ``(as defined in section 206B
of the Gramm-Leach Bliley Act)'' and inserting
``or a security-based swap''; and
(E) in subsection (g), by striking ``(as
defined in section 206B of the Gramm-Leach-
Bliley Act)'';
(6) in section 20 (15 U.S.C. 78t),
(A) in subsection (d), by striking ``(as
defined in section 206B of the Gramm-Leach-
Bliley Act)''; and
(B) in subsection (f), by striking ``(as
defined in section 206B of the Gramm-Leach-
Bliley Act)''; and
(7) in section 21A (15 U.S.C. 78u-1)--
(A) in subsection (a)(1), by striking ``(as
defined in section 206B of the Gramm-Leach-
Bliley Act)''; and
(B) in subsection (g), by striking ``(as
defined in section 206B of the Gramm-Leach-
Bliley Act)''.
SEC. 763. AMENDMENTS TO THE SECURITIES EXCHANGE ACT OF 1934.
(a) Clearing for Security-based Swaps.--The Securities
Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended by
inserting after section 3B (as added by section 717 of this
Act):
``SEC. 3C. CLEARING FOR SECURITY-BASED SWAPS.
``(a) In General.--
``(1) Standard for clearing.--It shall be unlawful
for any person to engage in a security-based swap
unless that person submits such security-based swap for
clearing to a clearing agency that is registered under
this Act or a clearing agency that is exempt from
registration under this Act if the security-based swap
is required to be cleared.
``(2) Open access.--The rules of a clearing agency
described in paragraph (1) shall--
``(A) prescribe that all security-based
swaps submitted to the clearing agency with the
same terms and conditions are economically
equivalent within the clearing agency and may
be offset with each other within the clearing
agency; and
``(B) provide for non-discriminatory
clearing of a security-based swap executed
bilaterally or on or through the rules of an
unaffiliated national securities exchange or
security-based swap execution facility.
``(b) Commission Review.--
``(1) Commission-initiated review.--
``(A) The Commission on an ongoing basis
shall review each security-based swap, or any
group, category, type, or class of security-
based swaps to make a determination that such
security-based swap, or group, category, type,
or class of security-based swaps should be
required to be cleared.
``(B) The Commission shall provide at least
a 30-day public comment period regarding any
determination under subparagraph (A).
``(2) Swap submissions.--
``(A) A clearing agency shall submit to the
Commission each security-based swap, or any
group, category, type, or class of security-
based swaps that it plans to accept for
clearing and provide notice to its members (in
a manner to be determined by the Commission) of
such submission.
``(B) Any security-based swap or group,
category, type, or class of security-based
swaps listed for clearing by a clearing agency
as of the date of enactment of this subsection
shall be considered submitted to the
Commission.
``(C) The Commission shall--
``(i) make available to the public
any submission received under
subparagraphs (A) and (B);
``(ii) review each submission made
under subparagraphs (A) and (B), and
determine whether the security-based
swap, or group, category, type, or
class of security-based swaps,
described in the submission is required
to be cleared; and
``(iii) provide at least a 30-day
public comment period regarding its
determination whether the clearing
requirement under subsection (a)(1)
shall apply to the submission.
``(3) Deadline.--The Commission shall make its
determination under paragraph (2)(C) not later than 90
days after receiving a submission made under paragraphs
(2)(A) and (2)(B), unless the submitting clearing
agency agrees to an extension for the time limitation
established under this paragraph.
``(4) Determination.--
``(A) In reviewing a submission made under
paragraph (2), the Commission shall review
whether the submission is consistent with
section 17A.
``(B) In reviewing a security-based swap,
group of security-based swaps or class of
security-based swaps pursuant to paragraph (1)
or a submission made under paragraph (2), the
Commission shall take into account the
following factors:
``(i) The existence of significant
outstanding notional exposures, trading
liquidity and adequate pricing data.
``(ii) The availability of rule
framework, capacity, operational
expertise and resources, and credit
support infrastructure to clear the
contract on terms that are consistent
with the material terms and trading
conventions on which the contract is
then traded.
``(iii) The effect on the
mitigation of systemic risk, taking
into account the size of the market for
such contract and the resources of the
clearing agency available to clear the
contract.
``(iv) The effect on competition,
including appropriate fees and charges
applied to clearing.
``(v) The existence of reasonable
legal certainty in the event of the
insolvency of the relevant clearing
agency or 1 or more of its clearing
members with regard to the treatment of
customer and security-based swap
counterparty positions, funds, and
property.
``(C) In making a determination under
subsection (b)(1) or paragraph (2)(C) that the
clearing requirement shall apply, the
Commission may require such terms and
conditions to the requirement as the Commission
determines to be appropriate.
``(5) Rules.--Not later than 1 year after the date
of the enactment of this section, the Commission shall
adopt rules for a clearing agency's submission for
review, pursuant to this subsection, of a security-
based swap, or a group, category, type, or class of
security-based swaps, that it seeks to accept for
clearing. Nothing in this paragraph limits the
Commission from making a determination under paragraph
(2)(C) for security-based swaps described in paragraph
(2)(B).
``(c) Stay of Clearing Requirement.--
``(1) In general.--After making a determination
pursuant to subsection (b)(2), the Commission, on
application of a counterparty to a security-based swap
or on its own initiative, may stay the clearing
requirement of subsection (a)(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.
``(2) Deadline.--The Commission shall complete a
review undertaken pursuant to paragraph (1) not later
than 90 days after issuance of the stay, unless the
clearing agency that clears the security-based swap, or
group, category, type, or class of security-based
swaps, agrees to an extension of the time limitation
established under this paragraph.
``(3) Determination.--Upon completion of the review
undertaken pursuant to paragraph (1), the Commission
may--
``(A) determine, unconditionally or subject
to such terms and conditions as the Commission
determines to be appropriate, that the
security-based swap, or group, category, type,
or class of security-based swaps, must be
cleared pursuant to this subsection if it finds
that such clearing is consistent with
subsection (b)(4); or
``(B) determine that the clearing
requirement of subsection (a)(1) shall not
apply to the security-based swap, or group,
category, type, or class of security-based
swaps.
``(4) Rules.--Not later than 1 year after the date
of the enactment of this section, the Commission shall
adopt rules for reviewing, pursuant to this subsection,
a clearing agency's clearing of a security-based swap,
or a group, category, type, or class of security-based
swaps, that it has accepted for clearing.
``(d) Prevention of Evasion.--
``(1) In general.--The Commission shall prescribe
rules under this section (and issue interpretations of
rules prescribed under this section), as determined by
the Commission to be necessary to prevent evasions of
the mandatory clearing requirements under this Act.
``(2) Duty of commission to investigate and take
certain actions.--To the extent the Commission finds
that a particular security-based swap or any group,
category, type, or class of security-based swaps that
would otherwise be subject to mandatory clearing but no
clearing agency has listed the security-based swap or
the group, category, type, or class of security-based
swaps for clearing, the Commission shall--
``(A) investigate the relevant facts and
circumstances;
``(B) within 30 days issue a public report
containing the results of the investigation;
and
``(C) take such actions as the Commission
determines to be necessary and in the public
interest, which may include requiring the
retaining of adequate margin or capital by
parties to the security-based swap or the
group, category, type, or class of security-
based swaps.
``(3) Effect on authority.--Nothing in this
subsection--
``(A) authorizes the Commission to adopt
rules requiring a clearing agency to list for
clearing a security-based swap or any group,
category, type, or class of security-based
swaps if the clearing of the security-based
swap or the group, category, type, or class of
security-based swaps would threaten the
financial integrity of the clearing agency; and
``(B) affects the authority of the
Commission to enforce the open access
provisions of subsection (a)(2) with respect to
a security-based swap or the group, category,
type, or class of security-based swaps that is
listed for clearing by a clearing agency.
``(e) Reporting Transition Rules.--Rules adopted by the
Commission under this section shall provide for the reporting
of data, as follows:
``(1) Security-based swaps entered into before the
date of the enactment of this section shall be reported
to a registered security-based swap data repository or
the Commission no later than 180 days after the
effective date of this section.
``(2) Security-based swaps entered into on or after
such date of enactment shall be reported to a
registered security-based swap data repository or the
Commission no later than the later of--
``(A) 90 days after such effective date; or
``(B) such other time after entering into
the security-based swap as the Commission may
prescribe by rule or regulation.
``(f) Clearing Transition Rules.--
``(1) 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 subsection (e)(1).
``(2) 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 subsection
(e)(2).
``(g) Exceptions.--
``(1) In general.--The requirements of subsection
(a)(1) shall not apply to a security-based swap if 1 of
the counterparties to the security-based swap--
``(A) is not a financial entity;
``(B) is using security-based swaps to
hedge or mitigate commercial risk; and
``(C) notifies the Commission, in a manner
set forth by the Commission, how it generally
meets its financial obligations associated with
entering into non-cleared security-based swaps.
``(2) Option to clear.--The application of the
clearing exception in paragraph (1) is solely at the
discretion of the counterparty to the security-based
swap that meets the conditions of subparagraphs (A)
through (C) of paragraph (1).
``(3) Financial entity definition.--
``(A) In general.--For the purposes of this
subsection, the term `financial entity' means--
``(i) a swap dealer;
``(ii) a security-based swap
dealer;
``(iii) a major swap participant;
``(iv) a major security-based swap
participant;
``(v) a commodity pool as defined
in section 1a(10) of the Commodity
Exchange Act;
``(vi) a private fund as defined in
section 202(a) of the Investment
Advisers Act of 1940 (15 U.S.C. 80-b-
2(a));
``(vii) an employee benefit plan as
defined in paragraphs (3) and (32) of
section 3 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C.
1002);
``(viii) a person predominantly
engaged in activities that are in the
business of banking or financial in
nature, as defined in section 4(k) of
the Bank Holding Company Act of 1956.
``(B) Exclusion.--The Commission shall
consider whether to exempt small banks, savings
associations, farm credit system institutions,
and credit unions, including--
``(i) depository institutions with
total assets of $10,000,000,000 or
less;
``(ii) farm credit system
institutions with total assets of
$10,000,000,000 or less; or
``(iii) credit unions with total
assets of $10,000,000,000 or less.
``(4) Treatment of affiliates.--
``(A) In general.--An affiliate of a person
that qualifies for an exception under this
subsection (including affiliate entities
predominantly engaged in providing financing
for the purchase of the merchandise or
manufactured goods of the person) may qualify
for the exception only if the affiliate, acting
on behalf of the person and as an agent, uses
the security-based swap to hedge or mitigate
the commercial risk of the person or other
affiliate of the person that is not a financial
entity.
``(B) Prohibition relating to certain
affiliates.--The exception in subparagraph (A)
shall not apply if the affiliate is--
``(i) a swap dealer;
``(ii) a security-based swap
dealer;
``(iii) a major swap participant;
``(iv) a major security-based swap
participant;
``(v) 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
paragraph (1) or (7) of subsection (c)
of that Act (15 U.S.C. 80a-3(c));
``(vi) a commodity pool; or
``(vii) a bank holding company with
over $50,000,000,000 in consolidated
assets.
``(C) Transition rule for affiliates.--An
affiliate, subsidiary, or a wholly owned entity
of a person that qualifies for an exception
under subparagraph (A) and is predominantly
engaged in providing financing for the purchase
or lease of merchandise or manufactured goods
of the person shall be exempt from the margin
requirement described in section 15F(e) and the
clearing requirement described in subsection
(a) with regard to security-based swaps entered
into to mitigate the risk of the financing
activities for not less than a 2-year period
beginning on the date of enactment of this
subparagraph.
``(5) Election of counterparty.--
``(A) Security-based swaps required to be
cleared.--With respect to any security-based
swap that is subject to the mandatory clearing
requirement under subsection (a) and entered
into by a security-based swap dealer or a major
security-based swap participant with a
counterparty that is not a swap dealer, major
swap participant, security-based swap dealer,
or major security-based swap participant, the
counterparty shall have the sole right to
select the clearing agency at which the
security-based swap will be cleared.
``(B) Security-based swaps not required to
be cleared.--With respect to any security-based
swap that is not subject to the mandatory
clearing requirement under subsection (a) and
entered into by a security-based swap dealer or
a major security-based swap participant with a
counterparty that is not a swap dealer, major
swap participant, security-based swap dealer,
or major security-based swap participant, the
counterparty--
``(i) may elect to require clearing
of the security-based swap; and
``(ii) shall have the sole right to
select the clearing agency at which the
security-based swap will be cleared.
``(6) Abuse of exception.--The Commission may
prescribe such rules or issue interpretations of the
rules as the Commission determines to be necessary to
prevent abuse of the exceptions described in this
subsection. The Commission may also request information
from those persons claiming the clearing exception as
necessary to prevent abuse of the exceptions described
in this subsection.
``(h) Trade Execution.--
``(1) In general.--With respect to transactions
involving security-based swaps subject to the clearing
requirement of subsection (a)(1), counterparties
shall--
``(A) execute the transaction on an
exchange; or
``(B) execute the transaction on a
security-based swap execution facility
registered under section 3D or a security-based
swap execution facility that is exempt from
registration under section 3D(e).
``(2) Exception.--The requirements of subparagraphs
(A) and (B) of paragraph (1) shall not apply if no
exchange or security-based swap execution facility
makes the security-based swap available to trade or for
security-based swap transactions subject to the
clearing exception under subsection (g).
``(i) Board Approval.--Exemptions from the requirements of
this section to clear a security-based swap or execute a
security-based swap through a national securities exchange or
security-based swap execution facility shall be available to a
counterparty that is an issuer of securities that are
registered under section 12 or that is required to file reports
pursuant to section 15(d), only if an appropriate committee of
the issuer's board or governing body has reviewed and approved
the issuer's decision to enter into security-based swaps that
are subject to such exemptions.
``(j) Designation of Chief Compliance Officer.--
``(1) In general.--Each registered clearing agency
shall designate an individual to serve as a chief
compliance officer.
``(2) Duties.--The chief compliance officer shall--
``(A) report directly to the board or to
the senior officer of the clearing agency;
``(B) in consultation with its board, a
body performing a function similar thereto, or
the senior officer of the registered clearing
agency, resolve any conflicts of interest that
may arise;
``(C) be responsible for administering each
policy and procedure that is required to be
established pursuant to this section;
``(D) ensure compliance with this title
(including regulations issued under this title)
relating to agreements, contracts, or
transactions, including each rule prescribed by
the Commission under this section;
``(E) establish procedures for the
remediation of noncompliance issues identified
by the compliance officer through any--
``(i) compliance office review;
``(ii) look-back;
``(iii) internal or external audit
finding;
``(iv) self-reported error; or
``(v) validated complaint; and
``(F) establish and follow appropriate
procedures for the handling, management
response, remediation, retesting, and closing
of noncompliance issues.
``(3) Annual reports.--
``(A) In general.--In accordance with rules
prescribed by the Commission, the chief
compliance officer shall annually prepare and
sign a report that contains a description of--
``(i) the compliance of the
registered clearing agency or security-
based swap execution facility of the
compliance officer with respect to this
title (including regulations under this
title); and
``(ii) each policy and procedure of
the registered clearing agency of the
compliance officer (including the code
of ethics and conflict of interest
policies of the registered clearing
agency).
``(B) Requirements.--A compliance report
under subparagraph (A) shall--
``(i) accompany each appropriate
financial report of the registered
clearing agency that is required to be
furnished to the Commission pursuant to
this section; and
``(ii) include a certification
that, under penalty of law, the
compliance report is accurate and
complete.''.
(b) Clearing Agency Requirements.--Section 17A of the
Securities Exchange Act of 1934 (15 U.S.C. 78q-1) is amended by
adding at the end the following:
``(g) Registration Requirement.--It shall be unlawful for a
clearing agency, 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 clearing agency with respect to a security-based swap.
``(h) Voluntary Registration.--A person that clears
agreements, contracts, or transactions that are not required to
be cleared under this title may register with the Commission as
a clearing agency.
``(i) Standards for Clearing Agencies Clearing Security-
based Swap Transactions.--To be registered and to maintain
registration as a clearing agency that clears security-based
swap transactions, a clearing agency shall comply with such
standards as the Commission may establish by rule. In
establishing any such standards, and in the exercise of its
oversight of such a clearing agency pursuant to this title, the
Commission may conform such standards or oversight to reflect
evolving United States and international standards. Except
where the Commission determines otherwise by rule or
regulation, a clearing agency shall have reasonable discretion
in establishing the manner in which it complies with any such
standards.
``(j) Rules.--The Commission shall adopt rules governing
persons that are registered as clearing agencies for security-
based swaps under this title.
``(k) Exemptions.--The Commission may exempt, conditionally
or unconditionally, a clearing agency from registration under
this section for the clearing of security-based swaps if the
Commission determines that the clearing agency is subject to
comparable, comprehensive supervision and regulation by the
Commodity Futures Trading Commission or the appropriate
government authorities in the home country of the agency. Such
conditions may include, but are not limited to, requiring that
the clearing agency be available for inspection by the
Commission and make available all information requested by the
Commission.
``(l) Existing Depository Institutions and Derivative
Clearing Organizations.--
``(1) In general.--A depository institution or
derivative clearing organization registered with the
Commodity Futures Trading Commission under the
Commodity Exchange Act that is required to be
registered as a clearing agency under this section is
deemed to be registered under this section solely for
the purpose of clearing security-based swaps to the
extent that, before the date of enactment of this
subsection--
``(A) the depository institution cleared
swaps as a multilateral clearing organization;
or
``(B) the derivative clearing organization
cleared swaps pursuant to an exemption from
registration as a clearing agency.
``(2) Conversion of depository institutions.--A
depository institution to which this subsection applies
may, by the vote of the shareholders owning not less
than 51 percent of the voting interests of the
depository institution, be converted into a State
corporation, partnership, limited liability company, or
similar legal form pursuant to a plan of conversion, if
the conversion is not in contravention of applicable
State law.
``(3) Sharing of information.--The Commodity
Futures Trading Commission shall make available to the
Commission, upon request, all information determined to
be relevant by the Commodity Futures Trading Commission
regarding a derivatives clearing organization deemed to
be registered with the Commission under paragraph (1).
``(m) Modification of Core Principles.--The Commission may
conform the core principles established in this section to
reflect evolving United States and international standards.''.
(c) Security-based Swap Execution Facilities.--The
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is
amended by inserting after section 3C (as added by subsection
(a) of this section) the following:
``SEC. 3D. SECURITY-BASED SWAP EXECUTION FACILITIES.
``(a) Registration.--
``(1) In general.--No person may operate a facility
for the trading or processing of security-based swaps,
unless the facility is registered as a security-based
swap execution facility or as a national securities
exchange under this section.
``(2) Dual registration.--Any person that is
registered as a security-based swap execution facility
under this section shall register with the Commission
regardless of whether the person also is registered
with the Commodity Futures Trading Commission as a swap
execution facility.
``(b) Trading and Trade Processing.--A security-based swap
execution facility that is registered under subsection (a)
may--
``(1) make available for trading any security-based
swap; and
``(2) facilitate trade processing of any security-
based swap.
``(c) Identification of Facility Used To Trade Security-
based Swaps by National Securities Exchanges.--A national
securities exchange shall, to the extent that the exchange also
operates a security-based swap execution facility and uses the
same electronic trade execution system for listing and
executing trades of security-based swaps on or through the
exchange and the facility, identify whether electronic trading
of such security-based swaps is taking place on or through the
national securities exchange or the security-based swap
execution facility.
``(d) Core Principles for Security-based Swap Execution
Facilities.--
``(1) Compliance with core principles.--
``(A) In general.--To be registered, and
maintain registration, as a security-based swap
execution facility, the security-based swap
execution facility shall comply with--
``(i) the core principles described
in this subsection; and
``(ii) any requirement that the
Commission may impose by rule or
regulation.
``(B) Reasonable discretion of security-
based swap execution facility.--Unless
otherwise determined by the Commission, by rule
or regulation, a security-based swap execution
facility described in subparagraph (A) shall
have reasonable discretion in establishing the
manner in which it complies with the core
principles described in this subsection.
``(2) Compliance with rules.--A security-based swap
execution facility shall--
``(A) establish and enforce compliance with
any rule established by such security-based
swap execution facility, including--
``(i) the terms and conditions of
the security-based swaps traded or
processed on or through the facility;
and
``(ii) any limitation on access to
the facility;
``(B) establish and enforce trading, trade
processing, and participation rules that will
deter abuses and have the capacity to detect,
investigate, and enforce those rules, including
means--
``(i) to provide market
participants with impartial access to
the market; and
``(ii) to capture information that
may be used in establishing whether
rule violations have occurred; and
``(C) establish rules governing the
operation of the facility, including rules
specifying trading procedures to be used in
entering and executing orders traded or posted
on the facility, including block trades.
``(3) Security-based swaps not readily susceptible
to manipulation.--The security-based swap execution
facility shall permit trading only in security-based
swaps that are not readily susceptible to manipulation.
``(4) Monitoring of trading and trade processing.--
The security-based swap execution facility shall--
``(A) establish and enforce rules or terms
and conditions defining, or specifications
detailing--
``(i) trading procedures to be used
in entering and executing orders traded
on or through the facilities of the
security-based swap execution facility;
and
``(ii) procedures for trade
processing of security-based swaps on
or through the facilities of the
security-based swap execution facility;
and
``(B) monitor trading in security-based
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.
``(5) Ability to obtain information.--The security-
based swap execution facility shall--
``(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;
``(B) provide the information to the
Commission on request; and
``(C) have the capacity to carry out such
international information-sharing agreements as
the Commission may require.
``(6) Financial integrity of transactions.--The
security-based swap execution facility shall establish
and enforce rules and procedures for ensuring the
financial integrity of security-based swaps entered on
or through the facilities of the security-based swap
execution facility, including the clearance and
settlement of security-based swaps pursuant to section
3C(a)(1).
``(7) Emergency authority.--The security-based swap
execution facility shall adopt rules to provide for the
exercise of emergency authority, in consultation or
cooperation with the Commission, as is necessary and
appropriate, including the authority to liquidate or
transfer open positions in any security-based swap or
to suspend or curtail trading in a security-based swap.
``(8) Timely publication of trading information.--
``(A) In general.--The security-based swap
execution facility shall make public timely
information on price, trading volume, and other
trading data on security-based swaps to the
extent prescribed by the Commission.
``(B) Capacity of security-based swap
execution facility.--The security-based swap
execution facility shall be required to have
the capacity to electronically capture and
transmit and disseminate trade information with
respect to transactions executed on or through
the facility.
``(9) Recordkeeping and reporting.--
``(A) In general.--A security-based swap
execution facility shall--
``(i) maintain records of all
activities relating 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; and
``(ii) report to the Commission, in
a form and manner acceptable to the
Commission, such information as the
Commission determines to be necessary
or appropriate for the Commission to
perform the duties of the Commission
under this title.
``(B) Requirements.--The Commission shall
adopt data collection and reporting
requirements for security-based swap execution
facilities that are comparable to corresponding
requirements for clearing agencies and
security-based swap data repositories.
``(10) Antitrust considerations.--Unless necessary
or appropriate to achieve the purposes of this title,
the security-based swap execution facility shall not--
``(A) adopt any rules or taking any actions
that result in any unreasonable restraint of
trade; or
``(B) impose any material anticompetitive
burden on trading or clearing.
``(11) Conflicts of interest.--The security-based
swap execution facility shall--
``(A) establish and enforce rules to
minimize conflicts of interest in its decision-
making process; and
``(B) establish a process for resolving the
conflicts of interest.
``(12) Financial resources.--
``(A) In general.--The security-based swap
execution facility shall have adequate
financial, operational, and managerial
resources to discharge each responsibility of
the security-based swap execution facility, as
determined by the Commission.
``(B) Determination of resource adequacy.--
The financial resources of a security-based
swap execution facility shall be considered to
be adequate if the value of the financial
resources--
``(i) enables 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; and
``(ii) exceeds the total amount
that would enable the security-based
swap execution facility to cover the
operating costs of the security-based
swap execution facility for a 1-year
period, as calculated on a rolling
basis.
``(13) System safeguards.--The security-based swap
execution facility shall--
``(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 automated systems, that--
``(i) are reliable and secure; and
``(ii) have adequate scalable
capacity;
``(B) establish and maintain emergency
procedures, backup facilities, and a plan for
disaster recovery that allow for--
``(i) the timely recovery and
resumption of operations; and
``(ii) the fulfillment of the
responsibilities and obligations of the
security-based swap execution facility;
and
``(C) periodically conduct tests to verify
that the backup resources of the security-based
swap execution facility are sufficient to
ensure continued--
``(i) order processing and trade
matching;
``(ii) price reporting;
``(iii) market surveillance; and
``(iv) maintenance of a
comprehensive and accurate audit trail.
``(14) Designation of chief compliance officer.--
``(A) In general.--Each security-based swap
execution facility shall designate an
individual to serve as a chief compliance
officer.
``(B) Duties.--The chief compliance officer
shall--
``(i) report directly to the board
or to the senior officer of the
facility;
``(ii) review compliance with the
core principles in this subsection;
``(iii) in consultation with the
board of the facility, a body
performing a function similar to that
of a board, or the senior officer of
the facility, resolve any conflicts of
interest that may arise;
``(iv) be responsible for
establishing and administering the
policies and procedures required to be
established pursuant to this section;
``(v) ensure compliance with this
title and the rules and regulations
issued under this title, including
rules prescribed by the Commission
pursuant to this section;
``(vi) establish procedures for the
remediation of noncompliance issues
found during--
``(I) compliance office
reviews;
``(II) look backs;
``(III) internal or
external audit findings;
``(IV) self-reported
errors; or
``(V) through validated
complaints; and
``(vii) establish and follow
appropriate procedures for the
handling, management response,
remediation, retesting, and closing of
noncompliance issues.
``(C) Annual reports.--
``(i) In general.--In accordance
with rules prescribed by the
Commission, the chief compliance
officer shall annually prepare and sign
a report that contains a description
of--
``(I) the compliance of the
security-based swap execution
facility with this title; and
``(II) the policies and
procedures, including the code
of ethics and conflict of
interest policies, of the
security-based security-based
swap execution facility.
``(ii) Requirements.--The chief
compliance officer shall--
``(I) submit each report
described in clause (i) with
the appropriate financial
report of the security-based
swap execution facility that is
required to be submitted to the
Commission pursuant to this
section; and
``(II) include in the
report a certification that,
under penalty of law, the
report is accurate and
complete.
``(e) Exemptions.--The Commission may exempt, conditionally
or unconditionally, a security-based swap execution facility
from registration under this section if the Commission finds
that the facility is subject to comparable, comprehensive
supervision and regulation on a consolidated basis by the
Commodity Futures Trading Commission.
``(f) Rules.--The Commission shall prescribe rules
governing the regulation of security-based swap execution
facilities under this section.''.
(d) 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 amended by inserting after section
3D (as added by subsection (b)) the following:
``SEC. 3E. SEGREGATION OF ASSETS HELD AS COLLATERAL IN SECURITY-BASED
SWAP TRANSACTIONS.
``(a) Registration Requirement.--It shall be unlawful for
any person to accept any money, securities, or property (or to
extend any credit in lieu of money, securities, or property)
from, for, or on behalf of a security-based swaps customer to
margin, guarantee, or secure a security-based swap cleared by
or through a clearing agency (including money, securities, or
property accruing to the customer as the result of such a
security-based swap), unless the person shall have registered
under this title with the Commission as a broker, dealer, or
security-based swap dealer, and the registration shall not have
expired nor been suspended nor revoked.
``(b) Cleared Security-based Swaps.--
``(1) Segregation required.--A broker, dealer, or
security-based swap dealer shall treat and deal with
all money, securities, and property of any security-
based swaps customer received to margin, guarantee, or
secure a security-based swap cleared by or though a
clearing agency (including money, securities, or
property accruing to the security-based swaps customer
as the result of such a security-based swap) as
belonging to the security-based swaps customer.
``(2) Commingling prohibited.--Money, securities,
and property of a security-based swaps customer
described in paragraph (1) shall be separately
accounted for and shall not be commingled with the
funds of the broker, dealer, or security-based swap
dealer or be used to margin, secure, or guarantee any
trades or contracts of any security-based swaps
customer or person other than the person for whom the
same are held.
``(c) Exceptions.--
``(1) Use of funds.--
``(A) In general.--Notwithstanding
subsection (b), money, securities, and property
of a security-based swaps customer of a broker,
dealer, or security-based swap dealer described
in subsection (b) may, for convenience, be
commingled and deposited in the same 1 or more
accounts with any bank or trust company or with
a clearing agency.
``(B) Withdrawal.--Notwithstanding
subsection (b), such share of the money,
securities, and property described in
subparagraph (A) as in the normal course of
business shall be necessary to margin,
guarantee, secure, transfer, adjust, or settle
a cleared security-based swap with a clearing
agency, or with any member of the clearing
agency, may be withdrawn and applied to such
purposes, including the payment of commissions,
brokerage, interest, taxes, storage, and other
charges, lawfully accruing in connection with
the cleared security-based swap.
``(2) Commission action.--Notwithstanding
subsection (b), in accordance with such terms and
conditions as the Commission may prescribe by rule,
regulation, or order, any money, securities, or
property of the security-based swaps customer of a
broker, dealer, or security-based swap dealer described
in subsection (b) may be commingled and deposited as
provided in this section with any other money,
securities, or property received by the broker, dealer,
or security-based swap dealer and required by the
Commission to be separately accounted for and treated
and dealt with as belonging to the security-based swaps
customer of the broker, dealer, or security-based swap
dealer.
``(d) Permitted Investments.--Money described in subsection
(b) may be invested in obligations of the United States, in
general obligations of any State or of any political
subdivision of a State, and in obligations fully guaranteed as
to principal and interest by the United States, or in any other
investment that the Commission may by rule or regulation
prescribe, and such investments shall be made in accordance
with such rules and regulations and subject to such conditions
as the Commission may prescribe.
``(e) Prohibition.--It shall be unlawful for any person,
including any clearing agency and any depository institution,
that has received any money, securities, or property for
deposit in a separate account or accounts as provided in
subsection (b) to hold, dispose of, or use any such money,
securities, or property as belonging to the depositing broker,
dealer, or security-based swap dealer or any person other than
the swaps customer of the broker, dealer, or security-based
swap dealer.
``(f) Segregation Requirements for Uncleared Security-based
Swaps.--
``(1) Segregation of assets held as collateral in
uncleared security-based swap transactions.--
``(A) Notification.--A security-based swap
dealer or major security-based swap participant
shall be required to notify the counterparty of
the security-based swap dealer or major
security-based swap participant at the
beginning of a security-based swap transaction
that the counterparty has the right to require
segregation of the funds of other property
supplied to margin, guarantee, or secure the
obligations of the counterparty.
``(B) Segregation and maintenance of
funds.--At the request of a counterparty to a
security-based swap that provides funds or
other property to a security-based swap dealer
or major security-based swap participant to
margin, guarantee, or secure the obligations of
the counterparty, the security-based swap
dealer or major security-based swap participant
shall--
``(i) segregate the funds or other
property for the benefit of the
counterparty; and
``(ii) in accordance with such
rules and regulations as the Commission
may promulgate, maintain the funds or
other property in a segregated account
separate from the assets and other
interests of the security-based swap
dealer or major security-based swap
participant.
``(2) Applicability.--The requirements described in
paragraph (1) shall--
``(A) apply only to a security-based swap
between a counterparty and a security-based
swap dealer or major security-based swap
participant that is not submitted for clearing
to a clearing agency; and
``(B)(i) not apply to variation margin
payments; or
``(ii) not preclude any commercial
arrangement regarding--
``(I) the investment of segregated
funds or other property that may only
be invested in such investments as the
Commission may permit by rule or
regulation; and
``(II) the related allocation of
gains and losses resulting from any
investment of the segregated funds or
other property.
``(3) Use of independent third-party custodians.--
The segregated account described in paragraph (1) shall
be--
``(A) carried by an independent third-party
custodian; and
``(B) designated as a segregated account
for and on behalf of the counterparty.
``(4) Reporting requirement.--If the counterparty
does not choose to require segregation of the funds or
other property supplied to margin, guarantee, or secure
the obligations of the counterparty, the security-based
swap dealer or major security-based swap participant
shall report to the counterparty of the security-based
swap dealer or major security-based swap participant on
a quarterly basis that the back office procedures of
the security-based swap dealer or major security-based
swap participant relating to margin and collateral
requirements are in compliance with the agreement of
the counterparties.
``(g) Bankruptcy.--A security-based swap, as defined in
section 3(a)(68) shall be considered to be a security as such
term is used in section 101(53A)(B) and subchapter III of title
11, United States Code. An account that holds a security-based
swap, other than a portfolio margining account referred to in
section 15(c)(3)(C) shall be considered to be a securities
account, as that term is defined in section 741 of title 11,
United States Code. The definitions of the terms `purchase' and
`sale' in section 3(a)(13) and (14) shall be applied to the
terms `purchase' and `sale', as used in section 741 of title
11, United States Code. The term `customer', as defined in
section 741 of title 11, United States Code, excludes any
person, to the extent that such person has a claim based on any
open repurchase agreement, open reverse repurchase agreement,
stock borrowed agreement, non-cleared option, or non-cleared
security-based swap except to the extent of any margin
delivered to or by the customer with respect to which there is
a customer protection requirement under section 15(c)(3) or a
segregation requirement.''.
(e) Trading in Security-based Swaps.--Section 6 of the
Securities Exchange Act of 1934 (15 U.S.C. 78f) is amended by
adding at the end the following:
``(l) Security-based Swaps.--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).''.
(f) Additions of Security-based Swaps to Certain
Enforcement Provisions.--Section 9(b) of the Securities
Exchange Act of 1934 (15 U.S.C. 78i(b)) is amended by striking
paragraphs (1) through (3) and inserting the following:
``(1) any transaction in connection with any
security whereby any party to such transaction
acquires--
``(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;
``(B) any security futures product on the
security; or
``(C) any security-based swap involving the
security or the issuer of the security;
``(2) any transaction in connection with any
security with relation to which such person has,
directly or indirectly, any interest in any--
``(A) such put, call, straddle, option, or
privilege;
``(B) such security futures product; or
``(C) such security-based swap; or
``(3) any transaction in any security for the
account of any person who such person has reason to
believe has, and who actually has, directly or
indirectly, any interest in any--
``(A) such put, call, straddle, option, or
privilege;
``(B) such security futures product with
relation to such security; or
``(C) any security-based swap involving
such security or the issuer of such
security.''.
(g) Rulemaking Authority To Prevent Fraud, Manipulation and
Deceptive Conduct in Security-based Swaps.--Section 9 of the
Securities Exchange Act of 1934 (15 U.S.C. 78i) is amended by
adding at the end the following:
``(j) 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, 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.''.
(h) 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:
``SEC. 10B. POSITION LIMITS AND POSITION ACCOUNTABILITY FOR SECURITY-
BASED SWAPS AND LARGE TRADER REPORTING.
``(a) Position Limits.--As a means reasonably designed to
prevent fraud and manipulation, the Commission shall, 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 size of
positions in any security-based swap that may be held by any
person. In establishing such limits, the Commission may require
any person to aggregate positions in--
``(1) any security-based swap and any security or
loan or group of securities or loans on which such
security-based swap is based, which such security-based
swap references, or to which such security-based swap
is related as described in paragraph (68) of section
3(a), and any other instrument relating to such
security or loan or group or index of securities or
loans; or
``(2) any security-based swap and--
``(A) any security or group or index of
securities, the price, yield, value, or
volatility of which, or of which any interest
therein, is the basis for a material term of
such security-based swap as described in
paragraph (68) of section 3(a); and
``(B) any other instrument relating to the
same security or group or index of securities
described under subparagraph (A).
``(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 the Commission may establish
under this section with respect to position limits.
``(c) SRO Rules.--
``(1) In general.--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--
``(A) to adopt rules regarding the size of
positions in any security-based swap that may
be held by--
``(i) any member of such self-
regulatory organization; or
``(ii) any person for whom a member
of such self-regulatory organization
effects transactions in such security-
based swap; and
``(B) to adopt rules reasonably designed to
ensure compliance with requirements prescribed
by the Commission under this subsection.
``(2) Requirement to aggregate positions.--In
establishing the limits under paragraph (1), the self-
regulatory organization may require such member or
person to aggregate positions in--
``(A) any security-based swap and any
security or loan or group or narrow-based
security index of securities or loans on which
such security-based swap is based, which such
security-based swap references, or to which
such security-based swap is related as
described in section 3(a)(68), and any other
instrument relating to such security or loan or
group or narrow-based security index of
securities or loans; or
``(B)(i) any security-based swap; and
``(ii) any security-based swap and any
other instrument relating to the same security
or group or narrow-based security index of
securities.
``(d) Large Trader Reporting.--The Commission, by rule or
regulation, may require any person that effects transactions
for such person's own account or the account of others in any
securities-based swap or uncleared security-based swap and any
security or loan or group or narrow-based security index of
securities or loans as set forth in paragraphs (1) and (2) of
subsection (a) under this section to report such information as
the Commission may prescribe regarding any position or
positions in any security-based swap or uncleared security-
based swap and any security or loan or group or narrow-based
security index of securities or loans and any other instrument
relating to such security or loan or group or narrow-based
security index of securities or loans as set forth in
paragraphs (1) and (2) of subsection (a) under this section.''.
(i) Public Reporting and Repositories for Security-based
Swaps.--Section 13 of the Securities Exchange Act of 1934 (15
U.S.C. 78m) is amended by adding at the end the following:
``(m) Public Availability of Security-based Swap
Transaction Data.--
``(1) In general.--
``(A) Definition of real-time public
reporting.--In this paragraph, the term `real-
time public reporting' means to report data
relating to a security-based swap transaction,
including price and volume, as soon as
technologically practicable after the time at
which the security-based swap transaction has
been executed.
``(B) Purpose.--The purpose of this
subsection is to authorize the Commission to
make security-based swap transaction and
pricing data available to the public in such
form and at such times as the Commission
determines appropriate to enhance price
discovery.
``(C) General rule.--The Commission is
authorized to provide by rule for the public
availability of security-based swap
transaction, volume, and pricing data as
follows:
``(i) With respect to those
security-based swaps that are subject
to the mandatory clearing requirement
described in section 3C(a)(1)
(including those security-based swaps
that are excepted from the requirement
pursuant to section 3C(g)), the
Commission shall require real-time
public reporting for such transactions.
``(ii) With respect to those
security-based swaps that are not
subject to the mandatory clearing
requirement described in section
3C(a)(1), but are cleared at a
registered clearing agency, the
Commission shall require real-time
public reporting for such transactions.
``(iii) With respect to security-
based swaps that are not cleared at a
registered clearing agency and which
are reported to a security-based swap
data repository or the Commission under
section 3C(a)(6), the Commission shall
require real-time public reporting for
such transactions, in a manner that
does not disclose the business
transactions and market positions of
any person.
``(iv) With respect to security-
based swaps that are determined to be
required to be cleared under section
3C(b) but are not cleared, the
Commission shall require real-time
public reporting for such transactions.
``(D) Registered entities and public
reporting.--The Commission may require
registered entities to publicly disseminate the
security-based swap transaction and pricing
data required to be reported under this
paragraph.
``(E) Rulemaking required.--With respect to
the rule providing for the public availability
of transaction and pricing data for security-
based swaps described in clauses (i) and (ii)
of subparagraph (C), the rule promulgated by
the Commission shall contain provisions--
``(i) to ensure such information
does not identify the participants;
``(ii) to specify the criteria for
determining what constitutes a large
notional security-based swap
transaction (block trade) for
particular markets and contracts;
``(iii) to specify the appropriate
time delay for reporting large notional
security-based swap transactions (block
trades) to the public; and
``(iv) that take into account
whether the public disclosure will
materially reduce market liquidity.
``(F) Timeliness of reporting.--Parties to
a security-based swap (including agents of the
parties to a security-based swap) shall be
responsible for reporting security-based swap
transaction information to the appropriate
registered entity in a timely manner as may be
prescribed by the Commission.
``(G) Reporting of swaps to registered
security-based swap data repositories.--Each
security-based swap (whether cleared or
uncleared) shall be reported to a registered
security-based swap data repository.
``(H) Registration of clearing agencies.--A
clearing agency may register as a security-
based swap data repository.
``(2) Semiannual and annual public reporting of
aggregate security-based swap data.--
``(A) In general.--In accordance with
subparagraph (B), the Commission shall issue a
written report on a semiannual and annual basis
to make available to the public information
relating to--
``(i) the trading and clearing in
the major security-based swap
categories; and
``(ii) the market participants and
developments in new products.
``(B) Use; consultation.--In preparing a
report under subparagraph (A), the Commission
shall--
``(i) use information from
security-based swap data repositories
and clearing agencies; and
``(ii) consult with the Office of
the Comptroller of the Currency, the
Bank for International Settlements, and
such other regulatory bodies as may be
necessary.
``(C) Authority of commission.--The
Commission may, by rule, regulation, or order,
delegate the public reporting responsibilities
of the Commission under this paragraph in
accordance with such terms and conditions as
the Commission determines to be appropriate and
in the public interest.
``(n) Security-based Swap Data Repositories.--
``(1) Registration requirement.--It shall be
unlawful for any person, 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 security-based
swap data repository.
``(2) Inspection and examination.--Each registered
security-based swap data repository shall be subject to
inspection and examination by any representative of the
Commission.
``(3) Compliance with core principles.--
``(A) In general.--To be registered, and
maintain registration, as a security-based swap
data repository, the security-based swap data
repository shall comply with--
``(i) the requirements and core
principles described in this
subsection; and
``(ii) any requirement that the
Commission may impose by rule or
regulation.
``(B) Reasonable discretion of security-
based swap data repository.--Unless otherwise
determined by the Commission, by rule or
regulation, a security-based swap data
repository described in subparagraph (A) shall
have reasonable discretion in establishing the
manner in which the security-based swap data
repository complies with the core principles
described in this subsection.
``(4) Standard setting.--
``(A) Data identification.--
``(i) In general.--In accordance
with clause (ii), the Commission shall
prescribe standards that specify the
data elements for each security-based
swap that shall be collected and
maintained by each registered security-
based swap data repository.
``(ii) Requirement.--In carrying
out clause (i), the Commission shall
prescribe consistent data element
standards applicable to registered
entities and reporting counterparties.
``(B) Data collection and maintenance.--The
Commission shall prescribe data collection and
data maintenance standards for security-based
swap data repositories.
``(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 in connection with their clearing of
security-based swaps.
``(5) Duties.--A security-based swap data
repository shall--
``(A) accept data prescribed by the
Commission for each security-based swap under
subsection (b);
``(B) confirm with both counterparties to
the security-based swap the accuracy of the
data that was submitted;
``(C) maintain the data described in
subparagraph (A) in such form, in such manner,
and for such period as may be required by the
Commission;
``(D)(i) provide direct electronic access
to the Commission (or any designee of the
Commission, including another registered
entity); and
``(ii) provide the information described in
subparagraph (A) in such form and at such
frequency as the Commission may require to
comply with the public reporting requirements
set forth in subsection (m);
``(E) at the direction of the Commission,
establish automated systems for monitoring,
screening, and analyzing security-based swap
data;
``(F) maintain the privacy of any and all
security-based swap transaction information
that the security-based swap data repository
receives from a security-based swap dealer,
counterparty, or any other registered entity;
and
``(G) on a confidential basis pursuant to
section 24, upon request, and after notifying
the Commission of the request, make available
all data obtained by the security-based swap
data repository, including individual
counterparty trade and position data, to--
``(i) each appropriate prudential
regulator;
``(ii) the Financial Stability
Oversight Council;
``(iii) the Commodity Futures
Trading Commission;
``(iv) the Department of Justice;
and
``(v) any other person that the
Commission determines to be
appropriate, including--
``(I) foreign financial
supervisors (including foreign
futures authorities);
``(II) foreign central
banks; and
``(III) foreign ministries.
``(H) Confidentiality and indemnification
agreement.--Before the security-based swap data
repository may share information with any
entity described in subparagraph (G)--
``(i) the security-based swap data
repository shall receive a written
agreement from each entity stating that
the entity shall abide by the
confidentiality requirements described
in section 24 relating to the
information on security-based swap
transactions that is provided; and
``(ii) each entity shall agree to
indemnify the security-based swap data
repository and the Commission for any
expenses arising from litigation
relating to the information provided
under section 24.
``(6) Designation of chief compliance officer.--
``(A) In general.--Each security-based swap
data repository shall designate an individual
to serve as a chief compliance officer.
``(B) Duties.--The chief compliance officer
shall--
``(i) report directly to the board
or to the senior officer of the
security-based swap data repository;
``(ii) review the compliance of the
security-based swap data repository
with respect to the requirements and
core principles described in this
subsection;
``(iii) in consultation with the
board of the security-based swap data
repository, a body performing a
function similar to the board of the
security-based swap data repository, or
the senior officer of the security-
based swap data repository, resolve any
conflicts of interest that may arise;
``(iv) be responsible for
administering each policy and procedure
that is required to be established
pursuant to this section;
``(v) ensure compliance with this
title (including regulations) relating
to agreements, contracts, or
transactions, including each rule
prescribed by the Commission under this
section;
``(vi) establish procedures for the
remediation of noncompliance issues
identified by the chief compliance
officer through any--
``(I) compliance office
review;
``(II) look-back;
``(III) internal or
external audit finding;
``(IV) self-reported error;
or
``(V) validated complaint;
and
``(vii) establish and follow
appropriate procedures for the
handling, management response,
remediation, retesting, and closing of
noncompliance issues.
``(C) Annual reports.--
``(i) In general.--In accordance
with rules prescribed by the
Commission, the chief compliance
officer shall annually prepare and sign
a report that contains a description
of--
``(I) the compliance of the
security-based swap data
repository of the chief
compliance officer with respect
to this title (including
regulations); and
``(II) each policy and
procedure of the security-based
swap data repository of the
chief compliance officer
(including the code of ethics
and conflict of interest
policies of the security-based
swap data repository).
``(ii) Requirements.--A compliance
report under clause (i) shall--
``(I) accompany each
appropriate financial report of
the security-based swap data
repository that is required to
be furnished to the Commission
pursuant to this section; and
``(II) include a
certification that, under
penalty of law, the compliance
report is accurate and
complete.
``(7) Core principles applicable to security-based
swap data repositories.--
``(A) Antitrust considerations.--Unless
necessary or appropriate to achieve the
purposes of this title, the swap data
repository shall not--
``(i) adopt any rule or take any
action that results in any unreasonable
restraint of trade; or
``(ii) impose any material
anticompetitive burden on the trading,
clearing, or reporting of transactions.
``(B) Governance arrangements.--Each
security-based swap data repository shall
establish governance arrangements that are
transparent--
``(i) to fulfill public interest
requirements; and
``(ii) to support the objectives of
the Federal Government, owners, and
participants.
``(C) Conflicts of interest.--Each
security-based swap data repository shall--
``(i) establish and enforce rules
to minimize conflicts of interest in
the decision-making process of the
security-based swap data repository;
and
``(ii) establish a process for
resolving any conflicts of interest
described in clause (i).
``(D) Additional duties developed by
commission.--
``(i) In general.--The Commission
may develop 1 or more additional duties
applicable to security-based swap data
repositories.
``(ii) Consideration of evolving
standards.--In developing additional
duties under subparagraph (A), the
Commission may take into consideration
any evolving standard of the United
States or the international community.
``(iii) Additional duties for
commission designees.--The Commission
shall establish additional duties for
any registrant described in section
13(m)(2)(C) in order to minimize
conflicts of interest, protect data,
ensure compliance, and guarantee the
safety and security of the security-
based swap data repository.
``(8) Required registration for security-based swap
data repositories.--Any person that is required to be
registered as a security-based swap data repository
under this subsection shall register with the
Commission, regardless of whether that person is also
licensed under the Commodity Exchange Act as a swap
data repository.
``(9) Rules.--The Commission shall adopt rules
governing persons that are registered under this
subsection.''.
SEC. 764. REGISTRATION AND REGULATION OF SECURITY-BASED SWAP DEALERS
AND MAJOR SECURITY-BASED SWAP PARTICIPANTS.
(a) In General.--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:
``SEC. 15F. REGISTRATION AND REGULATION OF SECURITY-BASED SWAP DEALERS
AND MAJOR SECURITY-BASED SWAP PARTICIPANTS.
``(a) Registration.--
``(1) Security-based swap dealers.--It shall be
unlawful for any person to act as a security-based swap
dealer unless the person is registered as a security-
based swap dealer with the Commission.
``(2) Major security-based swap participants.--It
shall be unlawful for any person to act as a major
security-based swap participant unless the person is
registered as a major security-based swap participant
with the Commission.
``(b) Requirements.--
``(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.
``(2) Contents.--
``(A) In general.--The application shall be
made in such form and manner as prescribed by
the Commission, and shall contain such
information, as the Commission considers
necessary concerning the business in which the
applicant is or will be engaged.
``(B) Continual reporting.--A person that
is registered as a security-based swap dealer
or major security-based swap participant shall
continue to submit to the Commission reports
that contain such information pertaining to the
business of the person as the Commission may
require.
``(3) Expiration.--Each registration under this
section shall expire at such time as the Commission may
prescribe by rule or regulation.
``(4) Rules.--Except as provided in subsections (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 non-bank security-based swap dealers and
major security-based swap participants.
``(5) Transition.--Not later than 1 year after the
date of enactment of the Wall Street Transparency and
Accountability Act of 2010, the Commission shall issue
rules under this section to provide for the
registration of security-based swap dealers and major
security-based swap participants.
``(6) 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 the
security-based swap dealer or major security-based swap
participant, if the security-based swap dealer or major
security-based swap participant knew, or in the
exercise of reasonable care should have known, of the
statutory disqualification.
``(c) Dual Registration.--
``(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 the person also is
registered with the Commodity Futures Trading
Commission as a swap dealer.
``(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 the person also is registered with the
Commodity Futures Trading Commission as a major swap
participant.
``(d) Rulemaking.--
``(1) In general.--The Commission shall adopt rules
for persons that are registered as security-based swap
dealers or major security-based swap participants under
this section.
``(2) Exception for prudential requirements.--
``(A) In general.--The Commission may not
prescribe rules imposing prudential
requirements on security-based swap dealers or
major security-based swap participants for
which there is a prudential regulator.
``(B) Applicability.--Subparagraph (A) does
not limit the authority of the Commission to
prescribe rules as directed under this section.
``(e) Capital and Margin Requirements.--
``(1) In general.--
``(A) Security-based swap dealers and major
security-based swap participants that are
banks.--Each registered security-based swap
dealer and major security-based swap
participant for which there is not a prudential
regulator shall meet such minimum capital
requirements and minimum initial and variation
margin requirements as the prudential regulator
shall by rule or regulation prescribe under
paragraph (2)(A).
``(B) Security-based swap dealers and major
security-based swap participants that are not
banks.--Each registered security-based swap
dealer and major security-based swap
participant for which there is not a prudential
regulator shall meet such minimum capital
requirements and minimum initial and variation
margin requirements as the Commission shall by
rule or regulation prescribe under paragraph
(2)(B).
``(2) Rules.--
``(A) Security-based swap dealers and major
security-based swap participants that are
banks.--The prudential regulators, in
consultation with the Commission and the
Commodity Futures Trading Commission, shall
adopt rules for security-based swap dealers and
major security-based swap participants, with
respect to their activities as a swap dealer or
major swap participant, for which there is a
prudential regulator imposing--
``(i) capital requirements; and
``(ii) both initial and variation
margin requirements on all security-
based swaps that are not cleared by a
registered clearing agency.
``(B) Security-based swap dealers and major
security-based swap participants that are not
banks.--The Commission shall adopt rules for
security-based swap dealers and major security-
based swap participants, with respect to their
activities as a swap dealer or major swap
participant, for which there is not a
prudential regulator imposing--
``(i) capital requirements; and
``(ii) both initial and variation
margin requirements on all swaps that
are not cleared by a registered
clearing agency.
``(C) Capital.--In setting capital
requirements for a person that is designated as
a security-based swap dealer or a major
security-based swap participant for a single
type or single class or category of security-
based swap or activities, the prudential
regulator and the Commission shall take into
account the risks associated with other types
of security-based swaps or classes of security-
based swaps or categories of security-based
swaps engaged in and the other activities
conducted by that person that are not otherwise
subject to regulation applicable to that person
by virtue of the status of the person.
``(3) Standards for capital and margin.--
``(A) In general.--To offset the greater
risk to the security-based swap dealer or major
security-based swap participant and the
financial system arising from the use of
security-based swaps that are not cleared, the
requirements imposed under paragraph (2)
shall--
``(i) help ensure the safety and
soundness of the security-based swap
dealer or major security-based swap
participant; and
``(ii) be appropriate for the risk
associated with the non-cleared
security-based swaps held as a
security-based swap dealer or major
security-based swap participant.
``(B) Rule of construction.--
``(i) In general.--Nothing in this
section shall limit, or be construed to
limit, the authority--
``(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); or
``(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.
``(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.
``(C) Margin requirements.--In prescribing
margin requirements under this subsection, the
prudential regulator with respect to security-
based swap dealers and major security-based
swap participants that are depository
institutions, and the Commission with respect
to security-based swap dealers and major
security-based swap participants that are not
depository institutions shall permit the use of
noncash collateral, as the regulator or the
Commission determines to be consistent with--
``(i) preserving the financial
integrity of markets trading security-
based swaps; and
``(ii) preserving the stability of
the United States financial system.
``(D) Comparability of capital and margin
requirements.--
``(i) In general.--The prudential
regulators, the Commission, and the
Securities and Exchange Commission
shall periodically (but not less
frequently than annually) consult on
minimum capital requirements and
minimum initial and variation margin
requirements.
``(ii) Comparability.--The entities
described in clause (i) shall, to the
maximum extent practicable, establish
and maintain comparable minimum capital
requirements and minimum initial and
variation margin requirements,
including the use of noncash
collateral, for--
``(I) security-based swap
dealers; and
``(II) major security-based
swap participants.
``(f) Reporting and Recordkeeping.--
``(1) In general.--Each registered security-based
swap dealer and major security-based swap participant--
``(A) shall make such reports as are
required by the Commission, by rule or
regulation, regarding the transactions and
positions and financial condition of the
registered security-based swap dealer or major
security-based swap participant;
``(B)(i) for which there is a prudential
regulator, shall keep books and records of all
activities related to the 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 the
Commission by rule or regulation; and
``(ii) for which there is no prudential
regulator, shall keep books and records in such
form and manner and for such period as may be
prescribed by the Commission by rule or
regulation; and
``(C) shall keep books and records
described in subparagraph (B) open to
inspection and examination by any
representative of the Commission.
``(2) Rules.--The Commission shall adopt rules
governing reporting and recordkeeping for security-
based swap dealers and major security-based swap
participants.
``(g) Daily Trading Records.--
``(1) In general.--Each registered security-based
swap dealer and major security-based swap participant
shall maintain daily trading records of the security-
based swaps of the registered security-based swap
dealer and major security-based swap participant and
all related records (including related cash or forward
transactions) and recorded communications, including
electronic mail, instant messages, and recordings of
telephone calls, for such period as may be required by
the Commission by rule or regulation.
``(2) Information requirements.--The daily trading
records shall include such information as the
Commission shall require by rule or regulation.
``(3) Counterparty records.--Each registered
security-based swap dealer and major security-based
swap participant shall maintain daily trading records
for each counterparty in a manner and form that is
identifiable with each security-based swap transaction.
``(4) Audit trail.--Each registered security-based
swap dealer and major security-based swap participant
shall maintain a complete audit trail for conducting
comprehensive and accurate trade reconstructions.
``(5) Rules.--The Commission shall adopt rules
governing daily trading records for security-based swap
dealers and major security-based swap participants.
``(h) Business Conduct Standards.--
``(1) In general.--Each registered security-based
swap dealer and major security-based swap participant
shall conform with such business conduct standards as
prescribed in paragraph (3) and as may be prescribed by
the Commission by rule or regulation that relate to--
``(A) fraud, manipulation, and other
abusive practices involving security-based
swaps (including security-based swaps that are
offered but not entered into);
``(B) diligent supervision of the business
of the registered security-based swap dealer
and major security-based swap participant;
``(C) adherence to all applicable position
limits; and
``(D) such other matters as the Commission
determines to be appropriate.
``(2) Responsibilities with respect to special
entities.--
``(A) Advising special entities.--A
security-based swap dealer or major security-
based swap participant that acts as an advisor
to special entity regarding a security-based
swap shall comply with the requirements of
paragraph (4) with respect to such special
entity.
``(B) Entering of security-based swaps with
respect to special entities.--A security-based
swap dealer that enters into or offers to enter
into security-based swap with a special entity
shall comply with the requirements of paragraph
(5) with respect to such special entity.
``(C) Special entity defined.--For purposes
of this subsection, the term `special entity'
means--
``(i) a Federal agency;
``(ii) a State, State agency, city,
county, municipality, or other
political subdivision of a State or;
``(iii) any employee benefit plan,
as defined in section 3 of the Employee
Retirement Income Security Act of 1974
(29 U.S.C. 1002);
``(iv) any governmental plan, as
defined in section 3 of the Employee
Retirement Income Security Act of 1974
(29 U.S.C. 1002); or
``(v) any endowment, including an
endowment that is an organization
described in section 501(c)(3) of the
Internal Revenue Code of 1986.
``(3) Business conduct requirements.--Business
conduct requirements adopted by the Commission shall--
``(A) establish a duty for a security-based
swap dealer or major security-based swap
participant to verify that any counterparty
meets the eligibility standards for an eligible
contract participant;
``(B) require disclosure by the security-
based swap dealer or major security-based swap
participant to any counterparty to the
transaction (other than a security-based swap
dealer, major security-based swap participant,
security-based swap dealer, or major security-
based swap participant) of--
``(i) information about the
material risks and characteristics of
the security-based swap;
``(ii) any 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; and
``(iii)(I) for cleared security-
based swaps, upon the request of the
counterparty, receipt of the daily mark
of the transaction from the appropriate
derivatives clearing organization; and
``(II) for uncleared security-based
swaps, receipt of the daily mark of the
transaction from the security-based
swap dealer or the major security-based
swap participant;
``(C) establish a duty 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; and
``(D) establish such other standards and
requirements as the Commission may determine
are appropriate in the public interest, for the
protection of investors, or otherwise in
furtherance of the purposes of this Act.
``(4) Special requirements for security-based swap
dealers acting as advisors.--
``(A) In general.--It shall be unlawful for
a security-based swap dealer or major security-
based swap participant--
``(i) to employ any device, scheme,
or artifice to defraud any special
entity or prospective customer who is a
special entity;
``(ii) to engage in any
transaction, practice, or course of
business that operates as a fraud or
deceit on any special entity or
prospective customer who is a special
entity; or
``(iii) to engage in any act,
practice, or course of business that is
fraudulent, deceptive, or manipulative.
``(B) Duty.--Any security-based swap dealer
that acts as an advisor to a special entity
shall have a duty to act in the best interests
of the special entity.
``(C) Reasonable efforts.--Any security-
based swap dealer that acts as an advisor to a
special entity shall make reasonable efforts to
obtain such information as is necessary to make
a reasonable determination that any security-
based swap recommended by the security-based
swap dealer is in the best interests of the
special entity, including information relating
to--
``(i) the financial status of the
special entity;
``(ii) the tax status of the
special entity;
``(iii) the investment or financing
objectives of the special entity; and
``(iv) any other information that
the Commission may prescribe by rule or
regulation.
``(5) Special requirements for security-based swap
dealers as counterparties to special entities.--
``(A) In general.--Any security-based swap
dealer or major security-based swap participant
that offers to or enters into a security-based
swap with a special entity shall--
``(i) comply with any duty
established by the Commission 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) of section 1a(18) of the
Commodity Exchange Act, that requires
the security-based swap dealer or major
security-based swap participant to have
a reasonable basis to believe that the
counterparty that is a special entity
has an independent representative
that--
``(I) has sufficient
knowledge to evaluate the
transaction and risks;
``(II) is not subject to a
statutory disqualification;
``(III) is independent of
the security-based swap dealer
or major security-based swap
participant;
``(IV) undertakes a duty to
act in the best interests of
the counterparty it represents;
``(V) makes appropriate
disclosures;
``(VI) will provide written
representations to the special
entity regarding fair pricing
and the appropriateness of the
transaction; and
``(VII) in the case of
employee benefit plans subject
to the Employee Retirement
Income Security Act of 1974, is
a fiduciary as defined in
section 3 of that Act (29
U.S.C. 1002); and
``(ii) before the initiation of the
transaction, disclose to the special
entity in writing the capacity in which
the security-based swap dealer is
acting.
``(B) Commission authority.--The Commission
may establish such other standards and
requirements under this paragraph as the
Commission may determine are appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of the
purposes of this Act.
``(6) Rules.--The Commission shall prescribe rules
under this subsection governing business conduct
standards for security-based swap dealers and major
security-based swap participants.
``(7) Applicability.--This subsection shall not
apply with respect to a transaction that is--
``(A) initiated by a special entity on an
exchange or security-based swaps execution
facility; and
``(B) the security-based swap dealer or
major security-based swap participant does not
know the identity of the counterparty to the
transaction.''
``(i) Documentation Standards.--
``(1) In general.--Each registered security-based
swap dealer and major security-based swap participant
shall conform with such standards as may be prescribed
by the Commission, by rule or regulation, that relate
to timely and accurate confirmation, processing,
netting, documentation, and valuation of all security-
based swaps.
``(2) Rules.--The Commission shall adopt rules
governing documentation standards for security-based
swap dealers and major security-based swap
participants.
``(j) Duties.--Each registered security-based swap dealer
and major security-based swap participant shall, at all times,
comply with the following requirements:
``(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.
``(2) Risk management procedures.--The security-
based swap dealer or major security-based swap
participant shall establish robust and professional
risk management systems adequate for managing the day-
to-day business of the security-based swap dealer or
major security-based swap participant.
``(3) Disclosure of general information.--The
security-based swap dealer or major security-based swap
participant shall disclose to the Commission and to the
prudential regulator for the security-based swap dealer
or major security-based swap participant, as
applicable, information concerning--
``(A) terms and conditions of its security-
based swaps;
``(B) security-based swap trading
operations, mechanisms, and practices;
``(C) financial integrity protections
relating to security-based swaps; and
``(D) other information relevant to its
trading in security-based swaps.
``(4) Ability to obtain information.--The security-
based swap dealer or major security-based swap
participant shall--
``(A) establish and enforce internal
systems and procedures to obtain any necessary
information to perform any of the functions
described in this section; and
``(B) provide the information to the
Commission and to the prudential regulator for
the security-based swap dealer or major
security-based swap participant, as applicable,
on request.
``(5) Conflicts of interest.--The security-based
swap dealer and major security-based swap participant
shall implement conflict-of-interest systems and
procedures that--
``(A) establish structural and
institutional safeguards to ensure that the
activities of any person within the firm
relating to research or analysis of the price
or market for any security-based swap or acting
in a role of providing clearing activities or
making determinations as to accepting clearing
customers are separated by appropriate
informational partitions within the firm from
the review, pressure, or oversight of persons
whose involvement in pricing, trading, or
clearing activities might potentially bias
their judgment or supervision and contravene
the core principles of open access and the
business conduct standards described in this
title; and
``(B) address such other issues as the
Commission determines to be appropriate.
``(6) Antitrust considerations.--Unless necessary
or appropriate to achieve the purposes of this title,
the security-based swap dealer or major security-based
swap participant shall not--
``(A) adopt any process or take any action
that results in any unreasonable restraint of
trade; or
``(B) impose any material anticompetitive
burden on trading or clearing.
``(7) Rules.--The Commission shall prescribe rules
under this subsection governing duties of security-
based swap dealers and major security-based swap
participants.
``(k) Designation of Chief Compliance Officer.--
``(1) In general.--Each security-based swap dealer
and major security-based swap participant shall
designate an individual to serve as a chief compliance
officer.
``(2) Duties.--The chief compliance officer shall--
``(A) report directly to the board or to
the senior officer of the security-based swap
dealer or major security-based swap
participant;
``(B) review the compliance of the
security-based swap dealer or major security-
based swap participant with respect to the
security-based swap dealer and major security-
based swap participant requirements described
in this section;
``(C) in consultation with the board of
directors, a body performing a function similar
to the board, or the senior officer of the
organization, resolve any conflicts of interest
that may arise;
``(D) be responsible for administering each
policy and procedure that is required to be
established pursuant to this section;
``(E) ensure compliance with this title
(including regulations) relating to security-
based swaps, including each rule prescribed by
the Commission under this section;
``(F) establish procedures for the
remediation of noncompliance issues identified
by the chief compliance officer through any--
``(i) compliance office review;
``(ii) look-back;
``(iii) internal or external audit
finding;
``(iv) self-reported error; or
``(v) validated complaint; and
``(G) establish and follow appropriate
procedures for the handling, management
response, remediation, retesting, and closing
of noncompliance issues.
``(3) Annual reports.--
``(A) In general.--In accordance with rules
prescribed by the Commission, the chief
compliance officer shall annually prepare and
sign a report that contains a description of--
``(i) the compliance of the
security-based swap dealer or major
swap participant with respect to this
title (including regulations); and
``(ii) each policy and procedure of
the security-based swap dealer or major
security-based swap participant of the
chief compliance officer (including the
code of ethics and conflict of interest
policies).
``(B) Requirements.--A compliance report
under subparagraph (A) shall--
``(i) accompany each appropriate
financial report of the security-based
swap dealer or major security-based
swap participant that is required to be
furnished to the Commission pursuant to
this section; and
``(ii) include a certification
that, under penalty of law, the
compliance report is accurate and
complete.
``(l) Enforcement and Administrative Proceeding
Authority.--
``(1) Primary enforcement authority.--
``(A) Securities and exchange commission.--
Except as provided in subparagraph (B), (C), or
(D), the Commission shall have primary
authority to enforce subtitle B, and the
amendments made by subtitle B of the Wall
Street Transparency and Accountability Act of
2010, with respect to any person.
``(B) Prudential regulators.--The
prudential regulators shall have exclusive
authority to enforce the provisions of
subsection (e) and other prudential
requirements of this title (including risk
management standards), with respect to
security-based swap dealers or major security-
based swap participants for which they are the
prudential regulator.
``(C) Referral.--
``(i) Violations of nonprudential
requirements.--If the appropriate
Federal banking agency for security-
based swap dealers or 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 title. The recommendation
shall be accompanied by a written
explanation of the concerns giving rise
to the recommendation.
``(ii) Violations of prudential
requirements.--If the Commission has
cause to believe that a securities-
based swap dealer or major securities-
based swap participant that has a
prudential regulator may have engaged
in conduct that constitute a violation
of the prudential requirements of
subsection (e) or rules adopted
thereunder, the Commission may
recommend in writing to the prudential
regulator that the prudential regulator
initiate an enforcement proceeding as
authorized under this title. The
recommendation shall be accompanied by
a written explanation of the concerns
giving rise to the recommendation.
``(D) Backstop enforcement authority.--
``(i) Initiation of enforcement
proceeding by prudential regulator.--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
written report under subsection (C)(i),
the prudential regulator may initiate
an enforcement proceeding.
``(ii) Initiation of enforcement
proceeding by commission.--If the
prudential regulator does not initiate
an enforcement proceeding before the
end of the 90-day period beginning on
the date on which the prudential
regulator receives a written report
under subsection (C)(ii), the
Commission may initiate an enforcement
proceeding.
``(2) Censure, denial, suspension; notice and
hearing.--The Commission, by order, shall censure,
place limitations on the activities, functions, or
operations of, or revoke the registration of any
security-based swap dealer or major security-based swap
participant that has registered with the Commission
pursuant to subsection (b) if the Commission finds, on
the record after notice and opportunity for hearing,
that such censure, placing of limitations, or
revocation 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--
``(A) has committed or omitted any act, or
is subject to an order or finding, enumerated
in subparagraph (A), (D), or (E) of paragraph
(4) of section 15(b);
``(B) has been convicted of any offense
specified in subparagraph (B) of such paragraph
(4) within 10 years of the commencement of the
proceedings under this subsection;
``(C) is enjoined from any action, conduct,
or practice specified in subparagraph (C) of
such paragraph (4);
``(D) is subject to an order or a final
order specified in subparagraph (F) or (H),
respectively, of such paragraph (4); or
``(E) has been found by a foreign financial
regulatory authority to have committed or
omitted any act, or violated any foreign
statute or regulation, enumerated in
subparagraph (G) of such paragraph (4).
``(3) Associated persons.--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--
``(A) has committed or omitted any act, or
is subject to an order or finding, enumerated
in subparagraph (A), (D), or (E) of paragraph
(4) of section 15(b);
``(B) has been convicted of any offense
specified in subparagraph (B) of such paragraph
(4) within 10 years of the commencement of the
proceedings under this subsection;
``(C) is enjoined from any action, conduct,
or practice specified in subparagraph (C) of
such paragraph (4);
``(D) is subject to an order or a final
order specified in subparagraph (F) or (H),
respectively, of such paragraph (4); or
``(E) has been found by a foreign financial
regulatory authority to have committed or
omitted any act, or violated any foreign
statute or regulation, enumerated in
subparagraph (G) of such paragraph (4).
``(4) Unlawful conduct.--It shall be unlawful--
``(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; or
``(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.''.
(b) Savings Clause.--Notwithstanding any other provision of
this title, nothing in this subtitle shall be construed as
divesting any appropriate Federal banking agency of any
authority it may have to establish or enforce, with respect to
a person for which such agency is the appropriate Federal
banking agency, prudential or other standards pursuant to
authority by Federal law other than this title.
SEC. 765. RULEMAKING ON CONFLICT OF INTEREST.
(a) In General.--In order to mitigate conflicts of
interest, not later than 180 days after the date of enactment
of the Wall Street Transparency and Accountability Act of 2010,
the Securities and Exchange Commission shall adopt rules which
may include numerical limits on the control of, or the voting
rights with respect to, any clearing agency that clears
security-based swaps, or on the control of any security-based
swap execution facility or national securities exchange that
posts or makes available for trading security-based swaps, by a
bank holding company (as defined in section 2 of the Bank
Holding Company Act of 1956 (12 U.S.C. 1841)) with total
consolidated assets of $50,000,000,000 or more, a nonbank
financial company (as defined in section 102) supervised by the
Board of Governors of the Federal Reserve System, affiliate of
such a bank holding company or nonbank financial company, a
security-based swap dealer, major security-based swap
participant, or person associated with a security-based swap
dealer or major security-based swap participant.
(b) Purposes.--The Securities and Exchange Commission shall
adopt rules if the Commission determines, after the review
described in subsection (a), that such rules are necessary or
appropriate to improve the governance of, or to mitigate
systemic risk, promote competition, or mitigate conflicts of
interest in connection with a security-based swap dealer or
major security-based swap participant's conduct of business
with, a clearing agency, national securities exchange, or
security-based swap execution facility that clears, posts, or
makes available for trading security-based swaps and in which
such security-based swap dealer or major security-based swap
participant has a material debt or equity investment.
(c) Considerations.--In adopting rules pursuant to this
section, the Securities and Exchange Commission shall consider
any conflicts of interest arising from the amount of equity
owned by a single investor, the ability to vote, cause the vote
of, or withhold votes entitled to be cast on any matters by the
holders of the ownership interest, and the governance
arrangements of any derivatives clearing organization that
clears swaps, or swap execution facility or board of trade
designated as a contract market that posts swaps or makes swaps
available for trading.
SEC. 766. REPORTING AND RECORDKEEPING.
(a) In General.--The Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.) is amended by inserting after section 13
the following:
``SEC. 13A. REPORTING AND RECORDKEEPING FOR CERTAIN SECURITY-BASED
SWAPS.
``(a) Required Reporting of Security-based Swaps Not
Accepted by Any Clearing Agency or Derivatives Clearing
Organization.--
``(1) In general.--Each security-based swap that is
not accepted for clearing by any clearing agency or
derivatives clearing organization shall be reported
to--
``(A) a security-based swap data repository
described in section 13(n); or
``(B) in the case in which there is no
security-based swap data repository that would
accept the security-based swap, to the
Commission pursuant to this section within such
time period as the Commission may by rule or
regulation prescribe.
``(2) Transition rule for preenactment security-
based swaps.--
``(A) Security-based swaps entered into
before the date of enactment of the wall street
transparency and accountability act of 2010.--
Each security-based swap entered into before
the date of enactment of the Wall Street
Transparency and Accountability Act of 2010,
the terms of which have not expired as of the
date of enactment of that Act, shall be
reported to a registered security-based swap
data repository or the Commission by a date
that is not later than--
``(i) 30 days after issuance of the
interim final rule; or
``(ii) such other period as the
Commission determines to be
appropriate.
``(B) Commission rulemaking.--The
Commission shall promulgate an interim final
rule within 90 days of the date of enactment of
this section providing for the reporting of
each security-based swap entered into before
the date of enactment as referenced in
subparagraph (A).
``(C) Effective date.--The reporting
provisions described in this section shall be
effective upon the date of the enactment of
this section.
``(3) Reporting obligations.--
``(A) Security-based swaps in which only 1
counterparty is a security-based swap dealer or
major security-based swap participant.--With
respect to a security-based swap in which only
1 counterparty is a security-based swap dealer
or major security-based swap participant, the
security-based swap dealer or major security-
based swap participant shall report the
security-based swap as required under
paragraphs (1) and (2).
``(B) Security-based swaps in which 1
counterparty is a security-based swap dealer
and the other a major security-based swap
participant.--With respect to a security-based
swap in which 1 counterparty is a security-
based swap dealer and the other a major
security-based swap participant, the security-
based swap dealer shall report the security-
based swap as required under paragraphs (1) and
(2).
``(C) Other security-based swaps.--With
respect to any other security-based swap not
described in subparagraph (A) or (B), the
counterparties to the security-based swap shall
select a counterparty to report the security-
based swap as required under paragraphs (1) and
(2).
``(b) Duties of Certain Individuals.--Any individual or
entity that enters into a security-based swap shall meet each
requirement described in subsection (c) if the individual or
entity did not--
``(1) clear the security-based swap in accordance
with section 3C(a)(1); or
``(2) have the data regarding the security-based
swap accepted by a security-based swap data repository
in accordance with rules (including timeframes) adopted
by the Commission under this title.
``(c) Requirements.--An individual or entity described in
subsection (b) shall--
``(1) upon written request from the Commission,
provide reports regarding the security-based swaps held
by the individual or entity to the Commission in such
form and in such manner as the Commission may request;
and
``(2) maintain books and records pertaining to the
security-based swaps held by the individual or entity
in such form, in such manner, and for such period as
the Commission may require, which shall be open to
inspection by--
``(A) any representative of the Commission;
``(B) an appropriate prudential regulator;
``(C) the Commodity Futures Trading
Commission;
``(D) the Financial Stability Oversight
Council; and
``(E) the Department of Justice.
``(d) Identical Data.--In prescribing rules under this
section, the Commission shall require individuals and entities
described in subsection (b) to submit to the Commission a
report that contains data that is not less comprehensive than
the data required to be collected by security-based swap data
repositories under this title.''.
(b) Beneficial Ownership Reporting.--Section 13 of the
Securities Exchange Act of 1934 (15 U.S.C. 78m) is amended--
(1) in subsection (d)(1), 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 that the Commission may define
by rule, and'' after ``Alaska Native Claims Settlement
Act,''; and
(2) in subsection (g)(1), 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 that the Commission may define by
rule'' after ``subsection (d)(1) of this section''.
(c) Reports by Institutional Investment Managers.--Section
13(f)(1) of the Securities Exchange Act of 1934 (15 U.S.C.
78m(f)(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 that the Commission may define by rule,''
after ``subsection (d)(1) of this section''.
(d) Administrative Proceeding Authority.--Section 15(b)(4)
of the Securities Exchange Act of 1934 (15 U.S.C. 78o(b)(4)) is
amended--
(1) in subparagraph (C), by inserting ``security-
based swap dealer, major security-based swap
participant,'' after ``government securities dealer,'';
and
(2) in subparagraph (F), by striking ``broker or
dealer'' and inserting ``broker, dealer, security-based
swap dealer, or a major security-based swap
participant''.
(e) Security-based Swap Beneficial Ownership.--Section 13
of the Securities Exchange Act of 1934 (15 U.S.C. 78m) is
amended by adding at the end the following:
``(o) Beneficial Ownership.--For purposes of this section
and section 16, a person shall be deemed to acquire beneficial
ownership of an equity security based on the purchase or sale
of a security-based swap, only to the extent that the
Commission, by rule, determines after consultation with the
prudential regulators and the Secretary of the Treasury, that
the purchase or sale of the security-based swap, or class of
security-based swap, provides incidents of ownership comparable
to direct ownership of the equity security, and that it is
necessary to achieve the purposes of this section that the
purchase or sale of the security-based swaps, or class of
security-based swap, be deemed the acquisition of beneficial
ownership of the equity security.''.
SEC. 767. 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:
``(a) Limitation on Judgments.--
``(1) In general.--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 the actual
damages to that person 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 under this title.
``(2) Rule of construction.--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.
``(3) State bucket shop laws.--No State law which
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--
``(A) any put, call, straddle, option,
privilege, or other security subject to this
title (except 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;
``(B) any security-based swap between
eligible contract participants; or
``(C) any security-based swap effected on a
national securities exchange registered
pursuant to section 6(b).
``(4) Other state provisions.--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 paragraph may not be construed as
limiting any State antifraud law of general
applicability. A security-based swap may not be
regulated as an insurance contract under any provision
of State law.''.
SEC. 768. 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--
(1) in paragraph (1), by inserting ``security-based
swap,'' after ``security future,'';
(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.''; and
(3) by adding at the end the following:
``(17) The terms `swap' and `security-based swap'
have the same meanings as in section 1a of the
Commodity Exchange Act (7 U.S.C. 1a).
``(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.''.
(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:
``(d) Notwithstanding the provisions of section 3 or 4,
unless a registration statement meeting the requirements of
section 10(a) 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(18) of the Commodity Exchange Act (7
U.S.C. 1a(18)).''.
SEC. 769. DEFINITIONS UNDER THE INVESTMENT COMPANY ACT OF 1940.
Section 2(a) of the Investment Company Act of 1940 (15
U.S.C. 80a-2) is amended by adding at the end the following:
``(54) The terms `commodity pool', `commodity pool
operator', `commodity trading advisor', `major swap
participant', `swap', `swap dealer', and `swap
execution facility' have the same meanings as in
section 1a of the Commodity Exchange Act (7 U.S.C.
1a).''.
SEC. 770. DEFINITIONS UNDER THE INVESTMENT ADVISERS ACT OF 1940.
Section 202(a) of the Investment Advisers Act of 1940 (15
U.S.C. 80b-2) is amended by adding at the end the following:
``(29) The terms `commodity pool', `commodity pool
operator', `commodity trading advisor', `major swap
participant', `swap', `swap dealer', and `swap
execution facility' have the same meanings as in
section 1a of the Commodity Exchange Act (7 U.S.C.
1a).''.
SEC. 771. OTHER AUTHORITY.
Unless otherwise provided by its terms, this subtitle does
not divest any appropriate Federal banking agency, the
Securities and Exchange Commission, the Commodity Futures
Trading Commission, or any other Federal or State agency, of
any authority derived from any other provision of applicable
law.
SEC. 772. JURISDICTION.
(a) In General.--Section 36 of the Securities Exchange Act
of 1934 (15 U.S.C. 78mm) is amended by adding at the end the
following:
``(c) Derivatives.--Unless the Commission is expressly
authorized by any provision described in this subsection to
grant exemptions, the Commission shall not grant exemptions,
with respect to amendments made by subtitle B of the Wall
Street Transparency and Accountability Act of 2010, with
respect to paragraphs (65), (66), (68), (69), (70), (71), (72),
(73), (74), (75), (76), and (79) of section 3(a), and sections
10B(a), 10B(b), 10B(c), 13A, 15F, 17A(g), 17A(h), 17A(i),
17A(j), 17A(k), and 17A(l); provided that the Commission shall
have exemptive authority under this title with respect to
security-based swaps as to the same matters that the Commodity
Futures Trading Commission has under the Wall Street
Transparency and Accountability Act of 2010 with respect to
swaps, including under section 4(c) of the Commodity Exchange
Act.''.
(b) Rule of Construction.--Section 30 of the Securities
Exchange Act of 1934 (15 U.S.C. 78dd) is amended by adding at
the end the following:
``(c) Rule of Construction.--No provision of this title
that was added by the Wall Street Transparency and
Accountability Act of 2010, or any rule or regulation
thereunder, shall apply to any person insofar as such person
transacts a business in security-based swaps without the
jurisdiction of the United States, unless such person transacts
such business in contravention of such rules and regulations as
the Commission may prescribe as necessary or appropriate to
prevent the evasion of any provision of this title that was
added by the Wall Street Transparency and Accountability Act of
2010. This subsection shall not be construed to limit the
jurisdiction of the Commission under any provision of this
title, as in effect prior to the date of enactment of the Wall
Street Transparency and Accountability Act of 2010.''.
SEC. 773. CIVIL PENALTIES.
Section 21B of the Securities Exchange Act of 1934 (15
U.S.C. 78p-2) is amended by adding at the end the following:
``(f) Security-based Swaps.--
``(1) Clearing agency.--Any clearing agency that
knowingly or recklessly evades or participates in or
facilitates an evasion of the requirements of section
3C shall be liable for a civil money penalty in twice
the amount otherwise available for a violation of
section 3C.
``(2) Security-based swap dealer or major security-
based swap participant.--Any security-based swap dealer
or major security-based swap participant that knowingly
or recklessly evades or participates in or facilitates
an evasion of the requirements of section 3C shall be
liable for a civil money penalty in twice the amount
otherwise available for a violation of section 3C.''.
SEC. 774. EFFECTIVE DATE.
Unless otherwise provided, the provisions of this subtitle
shall take effect on the later of 360 days after the date of
the enactment of this subtitle or, to the extent a provision of
this subtitle requires a rulemaking, not less than 60 days
after publication of the final rule or regulation implementing
such provision of this subtitle.
TITLE VIII--PAYMENT, CLEARING, AND SETTLEMENT SUPERVISION
SEC. 801. SHORT TITLE.
This title may be cited as the ``Payment, Clearing, and
Settlement Supervision Act of 2010''.
SEC. 802. FINDINGS AND PURPOSES.
(a) Findings.--Congress finds the following:
(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.
(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.
(3) Payment, clearing, and settlement activities
conducted by financial institutions also present
important risks to the participating financial
institutions and to the financial system.
(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--
(A) to provide consistency;
(B) to promote robust risk management and
safety and soundness;
(C) to reduce systemic risks; and
(D) to support the stability of the broader
financial system.
(b) Purpose.--The purpose of this title is to mitigate
systemic risk in the financial system and promote financial
stability by--
(1) authorizing the Board of Governors to promote
uniform standards for the--
(A) management of risks by systemically
important financial market utilities; and
(B) conduct of systemically important
payment, clearing, and settlement activities by
financial institutions;
(2) providing the Board of Governors an enhanced
role in the supervision of risk management standards
for systemically important financial market utilities;
(3) strengthening the liquidity of systemically
important financial market utilities; and
(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.
SEC. 803. DEFINITIONS.
In this title, the following definitions shall apply:
(1) Appropriate financial regulator.--The term
``appropriate financial regulator'' means--
(A) the primary financial regulatory
agency, as defined in section 2 of this Act;
(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.); and
(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.
(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.
(3) Designated clearing entity.--The term
``designated clearing entity'' means a designated
financial market utility that is a derivatives clearing
organization registered under section 5b of the
Commodity Exchange Act (7 U.S.C. 7a-1) or a clearing
agency registered with the Securities and Exchange
Commission under section 17A of the Securities Exchange
Act of 1934 (15 U.S.C. 78q-1).
(4) 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.
(5) Financial institution.--
(A) In general.--The term ``financial
institution'' means--
(i) a depository institution, as
defined in section 3 of the Federal
Deposit Insurance Act (12 U.S.C. 1813);
(ii) 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);
(iii) an organization operating
under section 25 or 25A of the Federal
Reserve Act (12 U.S.C. 601-604a and 611
through 631);
(iv) a credit union, as defined in
section 101 of the Federal Credit Union
Act (12 U.S.C. 1752);
(v) a broker or dealer, as defined
in section 3 of the Securities Exchange
Act of 1934 (15 U.S.C. 78c);
(vi) an investment company, as
defined in section 3 of the Investment
Company Act of 1940 (15 U.S.C. 80a-3);
(vii) an insurance company, as
defined in section 2 of the Investment
Company Act of 1940 (15 U.S.C. 80a-2);
(viii) an investment adviser, as
defined in section 202 of the
Investment Advisers Act of 1940 (15
U.S.C. 80b-2);
(ix) 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); and
(x) 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)).
(B) Exclusions.--The term ``financial
institution'' does not include designated
contract markets, registered futures
associations, swap data repositories, and swap
execution facilities registered under the
Commodity Exchange Act (7 U.S.C. 1 et seq.), or
national securities exchanges, national
securities associations, alternative trading
systems, securities information processors
solely with respect to the activities of the
entity as a securities information processor,
security-based swap data repositories, and swap
execution facilities registered under the
Securities Exchange Act of 1934 (15 U.S.C. 78a
et seq.), or designated clearing entities,
provided that the exclusions in this
subparagraph apply only with respect to the
activities that require the entity to be so
registered.
(6) Financial market utility.--
(A) Inclusion.--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.
(B) Exclusions.--The term ``financial
market utility'' does not include--
(i) designated contract markets,
registered futures associations, swap
data repositories, and swap execution
facilities registered under the
Commodity Exchange Act (7 U.S.C. 1 et
seq.), or national securities
exchanges, national securities
associations, alternative trading
systems, security-based swap data
repositories, and swap execution
facilities registered under the
Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.), solely by reason
of their providing facilities for
comparison of data respecting the terms
of settlement of securities or futures
transactions effected on such exchange
or by means of any electronic system
operated or controlled by such
entities, provided that the exclusions
in this clause apply only with respect
to the activities that require the
entity to be so registered; and
(ii) any broker, dealer, transfer
agent, or investment company, or any
futures commission merchant,
introducing broker, commodity trading
advisor, or commodity pool operator,
solely by reason of functions performed
by such institution as part of
brokerage, dealing, transfer agency, or
investment company activities, or
solely by reason of acting on behalf of
a financial market utility or a
participant therein in connection with
the furnishing by the financial market
utility of services to its participants
or the use of services of the financial
market utility by its participants,
provided that services performed by
such institution do not constitute
critical risk management or processing
functions of the financial market
utility.
(7) Payment, clearing, or settlement activity.--
(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, but shall not include
any offer or sale of a security under the
Securities Act of 1933 (15 U.S.C. 77a et seq.),
or any quotation, order entry, negotiation, or
other pre-trade activity or execution activity.
(B) Financial transaction.--For the
purposes of subparagraph (A), the term
``financial transaction'' includes--
(i) funds transfers;
(ii) securities contracts;
(iii) contracts of sale of a
commodity for future delivery;
(iv) forward contracts;
(v) repurchase agreements;
(vi) swaps;
(vii) security-based swaps;
(viii) swap agreements;
(ix) security-based swap
agreements;
(x) foreign exchange contracts;
(xi) financial derivatives
contracts; and
(xii) any similar transaction that
the Council determines to be a
financial transaction for purposes of
this title.
(C) Included activities.--When conducted
with respect to a financial transaction,
payment, clearing, and settlement activities
may include--
(i) the calculation and
communication of unsettled financial
transactions between counterparties;
(ii) the netting of transactions;
(iii) provision and maintenance of
trade, contract, or instrument
information;
(iv) the management of risks and
activities associated with continuing
financial transactions;
(v) transmittal and storage of
payment instructions;
(vi) the movement of funds;
(vii) the final settlement of
financial transactions; and
(viii) other similar functions that
the Council may determine.
(D) Exclusion.--Payment, clearing, and
settlement activities shall not include public
reporting of swap transaction data under
section 727 or 763(i) of the Wall Street
Transparency and Accountability Act of 2010.
(8) Supervisory agency.--
(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:
(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.
(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.
(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.
(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).
(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.
(9) 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 of the United States.
SEC. 804. DESIGNATION OF SYSTEMIC IMPORTANCE.
(a) Designation.--
(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.
(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:
(A) The aggregate monetary value of
transactions processed by the financial market
utility or carried out through the payment,
clearing, or settlement activity.
(B) The aggregate exposure of the financial
market utility or a financial institution
engaged in payment, clearing, or settlement
activities to its counterparties.
(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.
(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.
(E) Any other factors that the Council
deems appropriate.
(b) Rescission of Designation.--
(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.
(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 under this title.
(c) Consultation and Notice and Opportunity for Hearing.--
(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.
(2) Advance notice and opportunity for hearing.--
(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.
(B) Notice in federal register.--The
Council shall provide such advance notice to
financial institutions by publishing a notice
in the Federal Register.
(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.
(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.
(3) Emergency exception.--
(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 fewer
than \2/3\ of 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.
(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.
(d) Notification of Final Determination.--
(1) After hearing.--Within 60 days of any hearing
under subsection (c)(2), 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.
(2) When no hearing requested.--If the Council does
not receive a timely request for a hearing under
subsection (c)(2), 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.
(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.
SEC. 805. STANDARDS FOR SYSTEMICALLY IMPORTANT FINANCIAL MARKET
UTILITIES AND PAYMENT, CLEARING, OR SETTLEMENT
ACTIVITIES.
(a) Authority to Prescribe Standards.--
(1) Board of governors.--Except as provided in
paragraph (2), the Board of Governors, 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--
(A) the operations related to the payment,
clearing, and settlement activities of
designated financial market utilities; and
(B) the conduct of designated activities by
financial institutions.
(2) Special procedures for designated clearing
entities and designated activities of certain financial
institutions.--
(A) CFTC and commission.--The Commodity
Futures Trading Commission and the Commission
may each prescribe regulations, in consultation
with the Council and the Board of Governors,
containing risk management standards, taking
into consideration relevant international
standards and existing prudential requirements,
for those designated clearing entities and
financial institutions engaged in designated
activities for which each is the Supervisory
Agency or the appropriate financial regulator,
governing--
(i) the operations related to
payment, clearing, and settlement
activities of such designated clearing
entities; and
(ii) the conduct of designated
activities by such financial
institutions.
(B) Review and determination.--The Board of
Governors may determine that existing
prudential requirements of the Commodity
Futures Trading Commission, the Commission, or
both (including requirements prescribed
pursuant to subparagraph (A)) with respect to
designated clearing entities and financial
institutions engaged in designated activities
for which the Commission or the Commodity
Futures Trading Commission is the Supervisory
Agency or the appropriate financial regulator
are insufficient to prevent or mitigate
significant liquidity, credit, operational, or
other risks to the financial markets or to the
financial stability of the United States.
(C) Written determination.--Any
determination by the Board of Governors under
subparagraph (B) shall be provided in writing
to the Commodity Futures Trading Commission or
the Commission, as applicable, and the Council,
and shall explain why existing prudential
requirements, considered as a whole, are
insufficient to ensure that the operations and
activities of the designated clearing entities
or the activities of financial institutions
described in subparagraph (B) will not pose
significant liquidity, credit, operational, or
other risks to the financial markets or to the
financial stability of the United States. The
Board of Governors' determination shall contain
a detailed analysis supporting its findings and
identify the specific prudential requirements
that are insufficient.
(D) CFTC and commission response.--The
Commodity Futures Trading Commission or the
Commission, as applicable, shall within 60 days
either object to the Board of Governors'
determination with a detailed analysis as to
why existing prudential requirements are
sufficient, or submit an explanation to the
Council and the Board of Governors describing
the actions to be taken in response to the
Board of Governors' determination.
(E) Authorization.--Upon an affirmative
vote by not fewer than \2/3\ of members then
serving on the Council, the Council shall
either find that the response submitted under
subparagraph (D) is sufficient, or require the
Commodity Futures Trading Commission, or the
Commission, as applicable, to prescribe such
risk management standards as the Council
determines is necessary to address the specific
prudential requirements that are determined to
be insufficient.''
(b) Objectives and Principles.--The objectives and
principles for the risk management standards prescribed under
subsection (a) shall be to--
(1) promote robust risk management;
(2) promote safety and soundness;
(3) reduce systemic risks; and
(4) support the stability of the broader financial
system.
(c) Scope.--The standards prescribed under subsection (a)
may address areas such as--
(1) risk management policies and procedures;
(2) margin and collateral requirements;
(3) participant or counterparty default policies
and procedures;
(4) the ability to complete timely clearing and
settlement of financial transactions;
(5) capital and financial resource requirements for
designated financial market utilities; and
(6) other areas that are necessary to achieve the
objectives and principles in subsection (b).
(d) Limitation on Scope.--Except as provided in subsections
(e) and (f) of section 807, nothing in this title shall be
construed to permit the Council or the Board of Governors to
take any action or exercise any authority granted to the
Commodity Futures Trading Commission under section 2(h) of the
Commodity Exchange Act or the Securities and Exchange
Commission under section 3C(a) of the Securities Exchange Act
of 1934, including--
(1) the approval of, disapproval of, or stay of the
clearing requirement for any group, category, type, or
class of swaps that a designated clearing entity may
accept for clearing;
(2) the determination that any group, category,
type, or class of swaps shall be subject to the
mandatory clearing requirement of section 2(h)(1) of
the Commodity Exchange Act or section 3C(a)(1) of the
Securities Exchange Act of 1934;
(3) the determination that any person is exempt
from the mandatory clearing requirement of section
2(h)(1) of the Commodity Exchange Act or section
3C(a)(1) of the Securities Exchange Act of 1934; or
(4) any authority granted to the Commodity Futures
Trading Commission or the Securities and Exchange
Commission with respect to transaction reporting or
trade execution.
(e) 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.
(f) Compliance Required.--Designated financial market
utilities and financial institutions subject to the standards
prescribed under subsection (a) for a designated activity shall
conduct their operations in compliance with the applicable risk
management standards.
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 the services listed in section 11A(b) of the
Federal Reserve Act (12 U.S.C. 248a(b)) and deposit accounts
under the first undesignated paragraph of section 13 of the
Federal Reserve Act (12 U.S.C. 342) 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.
(b) Advances.--The Board of Governors may authorize a
Federal Reserve bank under section 10B of the Federal Reserve
Act (12 U.S.C. 347b) to provide to a designated financial
market utility discount and borrowing privileges only in
unusual or exigent circumstances, upon the affirmative vote of
a majority of the Board of Governors then serving (or such
other number in accordance with the provisions of section
11(r)(2) of the Federal Reserve Act (12 U.S.C. 248(r)(2)) after
consultation with the Secretary, and upon a showing by the
designated financial market utility that it is unable to secure
adequate credit accommodations from other banking institutions.
All such discounts and borrowing privileges shall be subject to
such other limitations, restrictions, and regulations as the
Board of Governors may prescribe. Access to discount and
borrowing privileges under section 10B of the Federal Reserve
Act as authorized in this section does not require a designated
financial market utility to be or become a bank or bank holding
company.
(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.
(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.
(e) Changes to Rules, Procedures, or Operations.--
(1) Advance notice.--
(A) Advance notice of proposed changes
required.--A designated financial market
utility shall provide notice 60 days in advance
notice to its Supervisory Agency of any
proposed change to its rules, procedures, or
operations that could, as defined in rules of
each Supervisory Agency, materially affect, the
nature or level of risks presented by the
designated financial market utility.
(B) Terms and standards prescribed by the
supervisory agencies.--Each Supervisory Agency,
in consultation with 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).
(C) Contents of notice.--The notice of a
proposed change shall describe--
(i) the nature of the change and
expected effects on risks to the
designated financial market utility,
its participants, or the market; and
(ii) how the designated financial
market utility plans to manage any
identified risks.
(D) Additional information.--The
Supervisory Agency 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.
(E) Notice of objection.--The Supervisory
Agency shall notify the designated financial
market utility of any objection regarding the
proposed change within 60 days from the later
of--
(i) the date that the notice of the
proposed change is received; or
(ii) the date any further
information requested for consideration
of the notice is received.
(F) Change not allowed if objection.--A
designated financial market utility shall not
implement a change to which the Supervisory
Agency has an objection.
(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--
(i) the date that the Supervisory
Agency receives the notice of proposed
change; or
(ii) the date the Supervisory
Agency receives any further information
it requests for consideration of the
notice.
(H) Review extension for novel or complex
issues.--The Supervisory Agency 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 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 (E) and (G).
(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 date the Supervisory Agency receives any
further information it requested, if the
Supervisory Agency 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.
(2) Emergency changes.--
(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--
(i) an emergency exists; and
(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.
(B) Notice required within 24 hours.--The
designated financial market utility shall
provide notice of any such emergency change to
its Supervisory Agency, as soon as practicable,
which shall be no later than 24 hours after
implementation of the change.
(C) Contents of emergency notice.--In
addition to the information required for
changes requiring advance notice, the notice of
an emergency change shall describe--
(i) the nature of the emergency;
and
(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.
(D) Modification or rescission of change
may be required.--The Supervisory Agency 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
applicable rules, orders, or standards
prescribed under section 805(a).
(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.
(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.
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:
(1) The nature of the operations of, and the risks
borne by, the designated financial market utility.
(2) The financial and operational risks presented
by the designated financial market utility to financial
institutions, critical markets, or the broader
financial system.
(3) The resources and capabilities of the
designated financial market utility to monitor and
control such risks.
(4) The safety and soundness of the designated
financial market utility.
(5) The designated financial market utility's
compliance with--
(A) this title; and
(B) the rules and orders prescribed under
this title.
(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.
(c) Enforcement.--For purposes of enforcing the provisions
of this title, 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.
(d) Board of Governors Involvement in Examinations.--
(1) Board of governors consultation on examination
planning.--The Supervisory Agency shall consult
annually with the Board of Governors regarding the
scope and methodology of any examination conducted
under subsections (a) and (b). The Supervisory Agency
shall lead all examinations conducted under subsections
(a) and (b)
(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).
(e) Board of Governors Enforcement Recommendations.--
(1) Recommendation.--The Board of Governors may,
after consulting with the Council and the Supervisory
Agency, at any time recommend to the Supervisory Agency
that such agency take enforcement action against a
designated financial market utility in order to prevent
or mitigate significant liquidity, credit, operational,
or other risks to the financial markets or to the
financial stability of the United States. Any such
recommendation for enforcement action shall provide a
detailed analysis supporting the recommendation of the
Board of Governors.
(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.
(3) Binding arbitration.--If the Supervisory Agency
rejects, in whole or in part, the recommendation of the
Board of Governors, the Board of Governors may refer
the recommendation to the Council for a binding
decision on whether an enforcement action is warranted.
(4) Enforcement action.--Upon an affirmative vote
by a majority of the Council in favor of the Board of
Governors' recommendation under paragraph (3), the
Council may require the Supervisory Agency to--
(A) exercise the enforcement authority
referenced in subsection (c); and
(B) take enforcement action against the
designated financial market utility.
(f) Emergency Enforcement Actions by the Board of
Governors.--
(1) Imminent risk of substantial harm.--The Board
of Governors may, after consulting with the Supervisory
Agency and upon an affirmative vote by a majority the
Council, take enforcement action against a designated
financial market utility if the Board of Governors has
reasonable cause to conclude that--
(A) either--
(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 of the United States;
or
(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; and
(B) the imminent risk of substantial harm
precludes the Board of Governors' use of the
procedures in subsection (e).
(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.
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 under section 805(a) for a designated
activity in order to determine the following:
(1) The nature and scope of the designated
activities engaged in by the financial institution.
(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.
(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.
(4) The resources available to and the capabilities
of the financial institution to monitor and control the
risks described in paragraphs (2) and (3).
(5) The financial institution's compliance with
this title and the rules and orders prescribed under
section 805(a).
(b) Enforcement.--For purposes of enforcing the provisions
of this title, and the rules and orders prescribed under this
section, a financial institution subject to the standards
prescribed under section 805(a) 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.
(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 under this title are
interpreted and applied in as consistent and uniform a manner
as practicable.
(d) Delegation.--
(1) Examination.--
(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 under
section 805(a) for a designated activity in
order to assess the compliance of such
financial institution with--
(i) this title; or
(ii) the rules or orders prescribed
under this title.
(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.
(2) Enforcement.--
(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 under this title
against a financial institution that is subject
to the standards prescribed under section
805(a) for a designated activity.
(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 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 institution.
(e) Back-up Authority of the Board of Governors.--
(1) Examination and enforcement.--Notwithstanding
any other provision of law, the Board of Governors
may--
(A) conduct an examination of the type
described in subsection (a) of any financial
institution that is subject to the standards
prescribed under section 805(a) for a
designated activity; and
(B) enforce the provisions of this title or
any rules or orders prescribed under this title
against any financial institution that is
subject to the standards prescribed under
section 805(a) for a designated activity.
(2) Limitations.--
(A) Examination.--The Board of Governors
may exercise the authority described in
paragraph (1)(A) only if the Board of Governors
has--
(i) reasonable cause to believe
that a financial institution is not in
compliance with this title or the rules
or orders prescribed under this title
with respect to a designated activity;
(ii) notified, in writing, the
appropriate financial regulator and the
Council of its belief under clause (i)
with supporting documentation included;
(iii) requested the appropriate
financial regulator to conduct a prompt
examination of the financial
institution;
(iv) either--
(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);
or
(II) reasonable cause to
believe that the financial
institution's noncompliance
with this title or the rules or
orders prescribed 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;
and
(v) obtained the approval of the
Council upon an affirmative vote by a
majority of the Council.
(B) Enforcement.--The Board of Governors
may exercise the authority described in
paragraph (1)(B) only if the Board of Governors
has--
(i) reasonable cause to believe
that a financial institution is not in
compliance with this title or the rules
or orders prescribed under this title
with respect to a designated activity;
(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;
(iii) either--
(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);
or
(II) reasonable cause to
believe that the financial
institution's noncompliance
with this title or the rules or
orders prescribed under this
title poses significant
liquidity, credit, operational,
or other risks to the financial
markets or to the financial
stability of the United States,
subject to the Board of
Governors notifying the
appropriate financial regulator
of the Board's enforcement
action; and
(iv) obtained the approval of the
Council upon an affirmative vote by a
majority of the Council.
(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.
SEC. 809. REQUESTS FOR INFORMATION, REPORTS, OR RECORDS.
(a) Information To Assess Systemic Importance.--
(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.
(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.
(b) Reporting After Designation.--
(1) Designated financial market utilities.--The
Board of Governors and the Council may each 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 or 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.
(2) Financial institutions subject to standards for
designated activities.--The Board of Governors and the
Council may each require 1 or more financial
institutions subject to the standards prescribed under
section 805(a) for a designated activity to submit, in
such frequency and form as deemed necessary by the
Board of Governors or 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--
(A) the rules, orders, or standards
prescribed under section 805(a) with respect to
the designated activity appropriately address
the risks to the financial system presented by
such activity; and
(B) the financial institutions are in
compliance with this title and the rules and
orders prescribed under section 805(a) with
respect to the designated activity.
(3) Limitation.--The Board of Governors may, upon
an affirmative vote by a majority of the Council,
prescribe regulations under this section that impose a
recordkeeping or reporting requirement on designated
clearing entities or financial institutions engaged in
designated activities that are subject to standards
that have been prescribed under section 805(a)(2).
(c) Coordination With Appropriate Federal Supervisory
Agency.--
(1) Advance coordination.--Before 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 or 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 or the Council.
(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.
(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.
(e) Sharing of Information.--
(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--
(A) promptly notify each other of material
concerns about a designated financial market
utility or any financial institution engaged in
designated activities; and
(B) share appropriate reports, information,
or data relating to such concerns.
(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 each other, and to the Secretary, Federal
Reserve Banks, State financial institution supervisory
agencies, foreign financial supervisors, foreign
central banks, and foreign finance ministries, subject
to reasonable assurances of confidentiality, provided,
however, that no person or entity receiving information
pursuant to this section may disseminate such
information to entities or persons other than those
listed in this paragraph without complying with
applicable law, including section 8 of the Commodity
Exchange Act (7 U.S.C. 12).
(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.
(g) Disclosure Exemption.--Information obtained by the
Board of Governors, the Supervisory Agencies, or the Council
under this section and any materials prepared by the Board of
Governors, the Supervisory Agencies, or the Council regarding
their 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
their 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.
SEC. 810. RULEMAKING.
The Board of Governors, the Supervisory Agencies, and the
Council are authorized to prescribe such rules and issue such
orders as may be necessary to administer and carry out their
respective authorities and duties granted under this title and
prevent evasions thereof.
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.
SEC. 812. CONSULTATION.
(a) CFTC.--The Commodity Futures Trading Commission shall
consult with the Board of Governors--
(1) prior to exercising its authorities under
sections 2(h)(2)(C), 2(h)(3)(A), 2(h)(3)(C),
2(h)(4)(A), and 2(h)(4)(B) of the Commodity Exchange
Act, as amended by the Wall Street Transparency and
Accountability Act of 2010;
(2) with respect to any rule or rule amendment of a
derivatives clearing organization for which a stay of
certification has been issued under section 745(b)(3)
of the Wall Street Transparency and Accountability Act
of 2010; and
(3) prior to exercising its rulemaking authorities
under section 728 of the Wall Street Transparency and
Accountability Act of 2010.
(b) SEC.--The Commission shall consult with the Board of
Governors--
(1) prior to exercising its authorities under
sections 3C(a)(2)(C), 3C(a)(3)(A), 3C(a)(3)(C),
3C(a)(4)(A), and 3C(a)(4)(B) of the Securities Exchange
Act of 1934, as amended by the Wall Street Transparency
and Accountability Act of 2010;
(2) with respect to any proposed rule change of a
clearing agency for which an extension of the time for
review has been designated under section 19(b)(2) of
the Securities Exchange Act of 1934; and
(3) prior to exercising its rulemaking authorities
under section 13(n) of the Securities Exchange Act of
1934, as added by section 763(i) of the Wall Street
Transparency and Accountability Act of 2010.
SEC. 813. COMMON FRAMEWORK FOR DESIGNATED CLEARING ENTITY RISK
MANAGEMENT.
The Commodity Futures Trading Commission and the Commission
shall coordinate with the Board of Governors to jointly develop
risk management supervision programs for designated clearing
entities. Not later than 1 year after the date of enactment of
this Act, the Commodity Futures Trading Commission, the
Commission, and the Board of Governors shall submit a joint
report to the Committee on Banking, Housing, and Urban Affairs
and the Committee on Agriculture, Nutrition, and Forestry of
the Senate, and the Committee on Financial Services and the
Committee on Agriculture of the House of Representatives
recommendations for--
(1) improving consistency in the designated
clearing entity oversight programs of the Commission
and the Commodity Futures Trading Commission;
(2) promoting robust risk management by designated
clearing entities;
(3) promoting robust risk management oversight by
regulators of designated clearing entities; and
(4) improving regulators' ability to monitor the
potential effects of designated clearing entity risk
management on the stability of the financial system of
the United States.
SEC. 814. EFFECTIVE DATE.
This title is effective as of the date of enactment of this
Act.
TITLE IX--INVESTOR PROTECTIONS AND IMPROVEMENTS TO THE REGULATION OF
SECURITIES
SEC. 901. SHORT TITLE.
This title may be cited as the ``Investor Protection and
Securities Reform Act of 2010''.
Subtitle A--Increasing Investor Protection
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:
``SEC. 39. INVESTOR ADVISORY COMMITTEE.
``(a) Establishment and Purpose.--
``(1) Establishment.--There is established within
the Commission the Investor Advisory Committee
(referred to in this section as the `Committee').
``(2) Purpose.--The Committee shall--
``(A) advise and consult with the
Commission on--
``(i) regulatory priorities of the
Commission;
``(ii) issues relating to the
regulation of securities products,
trading strategies, and fee structures,
and the effectiveness of disclosure;
``(iii) initiatives to protect
investor interest; and
``(iv) initiatives to promote
investor confidence and the integrity
of the securities marketplace; and
``(B) submit to the Commission such
findings and recommendations as the Committee
determines are appropriate, including
recommendations for proposed legislative
changes.
``(b) Membership.--
``(1) In general.--The members of the Committee
shall be--
``(A) the Investor Advocate;
``(B) a representative of State securities
commissions;
``(C) a representative of the interests of
senior citizens; and
``(D) not fewer than 10, and not more than
20, members appointed by the Commission, from
among individuals who--
``(i) represent the interests of
individual equity and debt investors,
including investors in mutual funds;
``(ii) represent the interests of
institutional investors, including the
interests of pension funds and
registered investment companies;
``(iii) are knowledgeable about
investment issues and decisions; and
``(iv) have reputations of
integrity.
``(2) Term.--Each member of the Committee appointed
under paragraph (1)(B) shall serve for a term of 4
years.
``(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.
``(c) Chairman; Vice Chairman; Secretary; Assistant
Secretary.--
``(1) In general.--The members of the Committee
shall elect, from among the members of the Committee--
``(A) a chairman, who may not be employed
by an issuer;
``(B) a vice chairman, who may not be
employed by an issuer;
``(C) a secretary; and
``(D) an assistant secretary.
``(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).
``(d) Meetings.--
``(1) Frequency of meetings.--The Committee shall
meet--
``(A) not less frequently than twice
annually, at the call of the chairman of the
Committee; and
``(B) from time to time, at the call of the
Commission.
``(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.
``(e) Compensation and Travel Expenses.--Each member of the
Committee who is not a full-time employee of the United States
shall--
``(1) be entitled to receive compensation 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; and
``(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.
``(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.
``(g) Review by Commission.--The Commission shall--
``(1) review the findings and recommendations of
the Committee; and
``(2) each time the Committee submits a finding or
recommendation to the Commission, promptly issue a
public statement--
``(A) assessing the finding or
recommendation of the Committee; and
``(B) disclosing the action, if any, the
Commission intends to take with respect to the
finding or recommendation.
``(h) Committee Findings.--Nothing in this section shall
require the Commission to agree to or act upon any finding or
recommendation of the Committee.
``(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.
``(j) Authorization of Appropriations.--There is authorized
to be appropriated to the Commission such sums as are necessary
to carry out this section.''.
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:
``(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--
``(1) gather information from and communicate with
investors or other members of the public;
``(2) engage in such temporary investor testing
programs as the Commission determines are in the public
interest or would protect investors; and
``(3) consult with academics and consultants, as
necessary to carry out this subsection.
``(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.''.
SEC. 913. STUDY AND RULEMAKING REGARDING OBLIGATIONS OF BROKERS,
DEALERS, AND INVESTMENT ADVISERS.
(a) Definition.--For purposes of this section, the term
``retail customer'' means a natural person, or the legal
representative of such natural person, who--
(1) receives personalized investment advice about
securities from a broker or dealer or investment
adviser; and
(2) uses such advice primarily for personal,
family, or household purposes.
(b) Study.--The Commission shall conduct a study to
evaluate--
(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 a national
securities association, and other Federal and State
legal or regulatory standards; and
(2) whether there are legal or regulatory gaps,
shortcomings, or overlaps 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.
(c) Considerations.--In conducting the study required under
subsection (b), the Commission shall consider--
(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 a national
securities association, and other Federal and State
legal or regulatory standards;
(2) whether there are legal or regulatory gaps,
shortcomings, or overlaps 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;
(3) whether retail customers understand that there
are different standards of care applicable to brokers,
dealers, investment advisers, persons associated with
brokers or dealers, and persons associated with
investment advisers in the provision of personalized
investment advice about securities to retail customers;
(4) whether the existence of different standards of
care applicable to brokers, dealers, investment
advisers, persons associated with brokers or dealers,
and persons associated with investment advisers is a
source of confusion for retail customers regarding the
quality of personalized investment advice that retail
customers receive;
(5) the regulatory, examination, and enforcement
resources devoted to, and activities of, the
Commission, the States, and a national securities
association 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--
(A) the effectiveness of the examinations
of brokers, dealers, and investment advisers in
determining compliance with regulations;
(B) the frequency of the examinations; and
(C) the length of time of the examinations;
(6) the substantive differences in the regulation
of brokers, dealers, and investment advisers, when
providing personalized investment advice and
recommendations about securities to retail customers;
(7) the specific instances related to the provision
of personalized investment advice about securities in
which--
(A) the regulation and oversight of
investment advisers provide greater protection
to retail customers than the regulation and
oversight of brokers and dealers; and
(B) the regulation and oversight of brokers
and dealers provide greater protection to
retail customers than the regulation and
oversight of investment advisers;
(8) the existing legal or regulatory standards of
State securities regulators and other regulators
intended to protect retail customers;
(9) 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--
(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, as
interpreted by the Commission and the courts;
and
(B) other requirements of the Investment
Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.);
(10) 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--
(A) the impact and potential benefits and
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;
(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--
(i) any potential additional
associated person licensing,
registration, and examination
requirements; and
(ii) the additional costs, if any,
to the additional entities and
individuals; and
(C) the impact on Commission and State
resources to--
(i) conduct examinations of
registered investment advisers and the
representatives of registered
investment advisers, including the
impact on the examination cycle; and
(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.);
(11) 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;
(12) the potential impact upon retail customers
that could result from potential changes in the
regulatory requirements or legal standards of care
affecting brokers, dealers, investment advisers,
persons associated with brokers or dealers, and persons
associated with investment advisers relating to their
obligations to retail customers regarding the provision
of investment advice, including any potential impact
on--
(A) protection from fraud;
(B) access to personalized investment
advice, and recommendations about securities to
retail customers; or
(C) the availability of such advice and
recommendations;
(13) the potential additional costs and expenses
to--
(A) retail customers regarding and the
potential impact on the profitability of their
investment decisions; and
(B) 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,
including duty of care, to retail customers;
and
(14) any other consideration that the Commission
considers necessary and appropriate in determining
whether to conduct a rulemaking under subsection (f).
(d) Report.--
(1) In general.--Not later than 6 months after the
date of enactment of this Act, the Commission shall
submit a report on the study required under subsection
(b) to--
(A) the Committee on Banking, Housing, and
Urban Affairs of the Senate; and
(B) the Committee on Financial Services of
the House of Representatives.
(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--
(A) a description of the considerations,
analysis, and public and industry input that
the Commission considered, as required under
subsection (b), to make such findings,
conclusions, and policy recommendations; and
(B) an analysis of whether any identified
legal or regulatory gaps, shortcomings, 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.
(e) Public Comment.--The Commission shall seek and consider
public input, comments, and data in order to prepare the report
required under subsection (d).
(f) Rulemaking.--The Commission may commence a rulemaking,
as necessary or appropriate in the public interest and for the
protection of retail customers (and such other customers as the
Commission may by rule provide), to address the 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 about securities to such retail
customers. The Commission shall consider the findings
conclusions, and recommendations of the study required under
subsection (b).
(g) Authority to Establish a Fiduciary Duty for Brokers and
Dealers.--
(1) Securities exchange act of 1934.--Section 15 of
the Securities Exchange Act of 1934 (15 U.S.C. 78o) is
amended by adding at the end the following:
``(k) Standard of Conduct.--
``(1) In general.--Notwithstanding any other
provision of this Act or the Investment Advisers Act of
1940, the Commission may promulgate rules to provide
that, with respect to a broker or dealer, when
providing personalized investment advice about
securities to a retail customer (and such other
customers as the Commission may by rule provide), the
standard of conduct for such broker or dealer with
respect to such customer shall be the same as the
standard of conduct applicable to an investment adviser
under section 211 of the Investment Advisers Act of
1940. The receipt of compensation based on commission
or other standard compensation for the sale of
securities shall not, in and of itself, be considered a
violation of such standard applied to a broker or
dealer. Nothing in this section shall require a broker
or dealer or registered representative to have a
continuing duty of care or loyalty to the customer
after providing personalized investment advice about
securities.
``(2) Disclosure of range of products offered.--
Where a broker or dealer sells only proprietary or
other limited range of products, as determined by the
Commission, the Commission may by rule require that
such broker or dealer provide notice to each retail
customer and obtain the consent or acknowledgment of
the customer. The sale of only proprietary or other
limited range of products by a broker or dealer shall
not, in and of itself, be considered a violation of the
standard set forth in paragraph (1).
``(l) Other Matters.--The Commission shall--
``(1) facilitate the provision of simple and clear
disclosures to investors regarding the terms of their
relationships with brokers, dealers, and investment
advisers, including any material conflicts of interest;
and
``(2) examine and, where appropriate, promulgate
rules prohibiting or restricting certain sales
practices, conflicts of interest, and compensation
schemes for brokers, dealers, and investment advisers
that the Commission deems contrary to the public
interest and the protection of investors.''.
(2) Investment advisers act of 1940.--Section 211
of the Investment Advisers Act of 1940 is further
amended by adding at the end the following new
subsections:
``(g) Standard of Conduct.--
``(1) In general.--The Commission may promulgate
rules to provide that the standard of conduct for all
brokers, dealers, and investment advisers, when
providing personalized investment advice about
securities to retail customers (and such other
customers as the Commission may by rule provide), shall
be to act in the best interest of the customer without
regard to the financial or other interest of the
broker, dealer, or investment adviser providing the
advice. In accordance with such rules, any material
conflicts of interest shall be disclosed and may be
consented to by the customer. Such rules shall provide
that such standard of conduct shall be no less
stringent than the standard applicable to investment
advisers under sections 206(1) and (2) of this Act when
providing personalized investment advice about
securities, except the Commission shall not ascribe a
meaning to the term `customer' that would include an
investor in a private fund managed by an investment
adviser, where such private fund has entered into an
advisory contract with such adviser. The receipt of
compensation based on commission or fees shall not, in
and of itself, be considered a violation of such
standard applied to a broker, dealer, or investment
adviser.
``(2) Retail customer defined.--For purposes of
this subsection, the term `retail customer' means a
natural person, or the legal representative of such
natural person, who--
``(A) receives personalized investment
advice about securities from a broker, dealer,
or investment adviser; and
``(B) uses such advice primarily for
personal, family, or household purposes.
``(h) Other Matters.--The Commission shall--
``(1) facilitate the provision of simple and clear
disclosures to investors regarding the terms of their
relationships with brokers, dealers, and investment
advisers, including any material conflicts of interest;
and
``(2) examine and, where appropriate, promulgate
rules prohibiting or restricting certain sales
practices, conflicts of interest, and compensation
schemes for brokers, dealers, and investment advisers
that the Commission deems contrary to the public
interest and the protection of investors.''.
(h) Harmonization of Enforcement.--
(1) Securities exchange act of 1934.--Section 15 of
the Securities Exchange Act of 1934, as amended by
subsection (g)(1), is further amended by adding at the
end the following new subsection:
``(m) Harmonization of Enforcement.--The enforcement
authority of the Commission with respect to violations of the
standard of conduct applicable to a broker or dealer providing
personalized investment advice about securities to a retail
customer shall include--
``(1) the enforcement authority of the Commission
with respect to such violations provided under this
Act; and
``(2) the enforcement authority of the Commission
with respect to violations of the standard of conduct
applicable to an investment adviser under the
Investment Advisers Act of 1940, including the
authority to impose sanctions for such violations, and
the Commission shall seek to prosecute and sanction violators
of the standard of conduct applicable to a broker or dealer
providing personalized investment advice about securities to a
retail customer under this Act to same extent as the Commission
prosecutes and sanctions violators of the standard of conduct
applicable to an investment advisor under the Investment
Advisers Act of 1940.''.
(2) Investment advisers act of 1940.--Section 211
of the Investment Advisers Act of 1940, as amended by
subsection (g)(2), is further amended by adding at the
end the following new subsection:
``(i) Harmonization of Enforcement.--The enforcement
authority of the Commission with respect to violations of the
standard of conduct applicable to an investment adviser shall
include--
``(1) the enforcement authority of the Commission
with respect to such violations provided under this
Act; and
``(2) the enforcement authority of the Commission
with respect to violations of the standard of conduct
applicable to a broker or dealer providing personalized
investment advice about securities to a retail customer
under the Securities Exchange Act of 1934, including
the authority to impose sanctions for such violations,
and
the Commission shall seek to prosecute and sanction violators
of the standard of conduct applicable to an investment adviser
under this Act to same extent as the Commission prosecutes and
sanctions violators of the standard of conduct applicable to a
broker or dealer providing personalized investment advice about
securities to a retail customer under the Securities Exchange
Act of 1934.''.
SEC. 914. STUDY ON ENHANCING INVESTMENT ADVISER EXAMINATIONS.
(a) Study Required.--
(1) In general.--The Commission shall review and
analyze the need for enhanced examination and
enforcement resources for investment advisers.
(2) Areas of consideration.--The study required by
this subsection shall examine--
(A) the number and frequency of
examinations of investment advisers by the
Commission over the 5 years preceding the date
of the enactment of this subtitle;
(B) the extent to which having Congress
authorize the Commission to designate one or
more self-regulatory organizations to augment
the Commission's efforts in overseeing
investment advisers would improve the frequency
of examinations of investment advisers; and
(C) current and potential approaches to
examining the investment advisory activities of
dually registered broker-dealers and investment
advisers or affiliated broker-dealers and
investment advisers.
(b) Report Required.--The Commission shall report its
findings to the Committee on Financial Services of the House of
Representatives and the Committee on Banking, Housing, and
Urban Affairs of the Senate, not later than 180 days after the
date of enactment of this subtitle, and shall use such findings
to revise its rules and regulations, as necessary. The report
shall include a discussion of regulatory or legislative steps
that are recommended or that may be necessary to address
concerns identified in the study.
SEC. 915. 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:
``(g) Office of the Investor Advocate.--
``(1) Office established.--There is established
within the Commission the Office of the Investor
Advocate (in this subsection referred to as the
`Office').
``(2) Investor advocate.--
``(A) In general.--The head of the Office
shall be the Investor Advocate, who shall--
``(i) report directly to the
Chairman; and
``(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.
``(B) Compensation.--The annual rate of pay
for the Investor Advocate shall be equal to the
highest rate of annual pay for other senior
executives who report to the Chairman of the
Commission.
``(C) Limitation on service.--An individual
who serves as the Investor Advocate may not be
employed by the Commission--
``(i) during the 2-year period
ending on the date of appointment as
Investor Advocate; or
``(ii) during the 5-year period
beginning on the date on which the
person ceases to serve as the Investor
Advocate.
``(3) Staff of office.--The Investor Advocate,
after consultation with the Chairman of the Commission,
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.
``(4) Functions of the investor advocate.--The
Investor Advocate shall--
``(A) assist retail investors in resolving
significant problems such investors may have
with the Commission or with self-regulatory
organizations;
``(B) identify areas in which investors
would benefit from changes in the regulations
of the Commission or the rules of self-
regulatory organizations;
``(C) identify problems that investors have
with financial service providers and investment
products;
``(D) analyze the potential impact on
investors of--
``(i) proposed regulations of the
Commission; and
``(ii) proposed rules of self-
regulatory organizations registered
under this title; and
``(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.
``(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.
``(6) Annual reports.--
``(A) Report on objectives.--
``(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.
``(ii) Contents.--Each report
required under clause (i) shall contain
full and substantive analysis and
explanation.
``(B) Report on activities.--
``(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.
``(ii) Contents.--Each report
required under clause (i) shall
include--
``(I) appropriate
statistical information and
full and substantive analysis;
``(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;
``(III) a summary of the
most serious problems
encountered by investors during
the reporting period;
``(IV) an inventory of the
items described in subclause
(III) that includes--
``(aa)
identification of any
action taken by the
Commission or the self-
regulatory organization
and the result of such
action;
``(bb) the length
of time that each item
has remained on such
inventory; and
``(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;
``(V) recommendations for
such administrative and
legislative actions as may be
appropriate to resolve problems
encountered by investors; and
``(VI) any other
information, as determined
appropriate by the Investor
Advocate.
``(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.
``(iv) Confidentiality.--No report
required under clause (i) may contain
confidential information.
``(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.''.
SEC. 916. 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:
``(2) Approval process.--
``(A) Approval process established.--
``(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--
``(I) by order, approve or
disapprove the proposed rule
change; or
``(II) institute
proceedings under subparagraph
(B) to determine whether the
proposed rule change should be
disapproved.
``(ii) Extension of time period.--
The Commission may extend the period
established under clause (i) by not
more than an additional 45 days, if--
``(I) the Commission
determines that a longer period
is appropriate and publishes
the reasons for such
determination; or
``(II) the self-regulatory
organization that filed the
proposed rule change consents
to the longer period.
``(B) Proceedings.--
``(i) Notice and hearing.--If the
Commission does not approve or
disapprove a proposed rule change under
subparagraph (A), the Commission shall
provide to the self-regulatory
organization that filed the proposed
rule change--
``(I) notice of the grounds
for disapproval under
consideration; and
``(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.
``(ii) Order of approval or
disapproval.--
``(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.
``(II) Extension of time
period.--The Commission may
extend the period for issuance
under clause (I) by not more
than 60 days, if--
``(aa) the
Commission determines
that a longer period is
appropriate and
publishes the reasons
for such determination;
or
``(bb) the self-
regulatory organization
that filed the proposed
rule change consents to
the longer period.
``(C) Standards for approval and
disapproval.--
``(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.
``(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).
``(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.
``(D) Result of failure to institute or
conclude proceedings.--A proposed rule change
shall be deemed to have been approved by the
Commission, if--
``(i) the Commission does not
approve or disapprove the proposed rule
change or begin proceedings under
subparagraph (B) within the period
described in subparagraph (A); or
``(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).
``(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.
``(F) Rulemaking.--
``(i) In general.--Not later than
180 days after the date of enactment of
the Investor Protection and Securities
Reform Act of 2010, after consultation
with other regulatory agencies, the
Commission shall promulgate rules
setting forth the procedural
requirements of the proceedings
required under this paragraph.
``(ii) Notice and comment not
required.--The rules promulgated by the
Commission under clause (i) are not
required to include republication of
proposed rule changes or solicitation
of public comment.''.
(b) Clarification of Filing Date.--
(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:
``(10) Rule of construction relating to filing date
of proposed rule changes.--
``(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.
``(B) Exception.--A proposed rule change
has not been received by the Commission for
purposes of subparagraph (A) if, not later than
7 business 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, except that if the
Commission determines that the proposed rule
change is unusually lengthy and is complex or
raises novel regulatory issues, the Commission
shall inform the self-regulatory organization
of such determination not later than 7 business
days after the date of receipt by the
Commission and, for the purposes of
subparagraph (A), a proposed rule change has
not been received by the Commission, if, not
later than 21 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.''.
(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''.
(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--
(1) in subparagraph (A)--
(A) by striking ``may take effect'' and
inserting ``shall take effect''; and
(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'';
and
(2) in subparagraph (C)--
(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.'';
(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.''; and
(C) in the third sentence, by striking
``the preceding sentence'' and inserting ``this
subparagraph''.
(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:
``(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--
``(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;
and
``(II) the reasons for the
determination described in subclause
(I).
``(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.''.
SEC. 917. STUDY REGARDING FINANCIAL LITERACY AMONG INVESTORS.
(a) In General.--The Commission shall conduct a study to
identify--
(1) the existing level of financial literacy among
retail investors, including subgroups of investors
identified by the Commission;
(2) methods to improve the timing, content, and
format of disclosures to investors with respect to
financial intermediaries, investment products, and
investment services;
(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;
(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);
(5) the most effective existing private and public
efforts to educate investors; and
(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.
(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--
(1) the Committee on Banking, Housing, and Urban
Affairs of the Senate; and
(2) the Committee on Financial Services of the
House of Representatives.
SEC. 918. 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--
(1) existing and proposed regulatory requirements
for open-end investment company advertisements;
(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;
(3) the impact of such advertising on consumers;
and
(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.
(b) Report.--Not later than 18 months 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--
(1) the Committee on Banking, Housing, and Urban
Affairs of the United States Senate; and
(2) the Committee on Financial Services of the
House of Representatives.
SEC. 919. 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:
``(n) Disclosures to Retail Investors.--
``(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.
``(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.
``(3) Form and contents of documents and
information.--Any documents or information designated
under a rule promulgated under paragraph (1) shall--
``(A) be in a summary format; and
``(B) contain clear and concise information
about--
``(i) investment objectives,
strategies, costs, and risks; and
``(ii) any compensation or other
financial incentive received by a
broker, dealer, or other intermediary
in connection with the purchase of
retail investment products.''.
SEC. 919A. STUDY ON CONFLICTS OF INTEREST.
(a) In General.--The Comptroller General of the United
States shall conduct a study--
(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; and
(2) to make recommendations to Congress designed to
protect investors in light of such conflicts.
(b) Considerations.--In conducting the study under
subsection (a), the Comptroller General shall--
(1) consider--
(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'');
(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;
(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; and
(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; and
(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.
(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.
SEC. 919B. STUDY ON IMPROVED INVESTOR ACCESS TO INFORMATION ON
INVESTMENT ADVISERS AND BROKER-DEALERS.
(a) Study.--
(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.
(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--
(A) identification of those data pertinent
to investors; and
(B) the identification of the method and
format for displaying and publishing such data
to enhance accessibility by and utility to
investors.
(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.
SEC. 919C. 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--
(1) the effectiveness of State and Federal
regulations to protect investors and other consumers
from individuals who hold themselves out as financial
planners through the use of misleading titles,
designations, or marketing materials;
(2) current State and Federal oversight structure
and regulations for financial planners; and
(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.
(b) Considerations.--In conducting the study required under
subsection (a), the Comptroller General shall consider--
(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;
(2) whether current regulations at the State and
Federal level provide adequate ethical and professional
standards for financial planners;
(3) the possible risk posed to investors and other
consumers by individuals who hold themselves out as
financial planners or as otherwise providing financial
planning services in connection with the sale of
financial products, including insurance and securities;
(4) the possible risk posed to investors and other
consumers by individuals who otherwise use titles,
designations, or marketing materials in a misleading
way in connection with the delivery of financial
advice;
(6) the ability of investors and other consumers to
understand licensing requirements and standards of care
that apply to individuals who hold themselves out as
financial planners or as otherwise providing financial
planning services;
(7) the possible benefits to investors and other
consumers of regulation and professional oversight of
financial planners; and
(8) any other consideration that the Comptroller
General deems necessary or appropriate to effectively
execute the study required under subsection (a).
(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 investors and other consumers of
financial planning services, the Comptroller General shall
consider--
(1) the appropriate structure for regulation of
financial planners and individuals providing financial
planning services; and
(2) the appropriate scope of the regulations needed
to protect investors and other consumers, including but
not limited to the need to establish competency
standards, practice standards, ethical guidelines,
disciplinary authority, and transparency to investors
and other consumers.
(d) Report.--
(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--
(A) the Committee on Banking, Housing, and
Urban Affairs of the Senate;
(B) the Special Committee on Aging of the
Senate; and
(C) the Committee on Financial Services of
the House of Representatives.
(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.
SEC. 919D. OMBUDSMAN.
Section 4(g) of the Securities Exchange Act of 1934, as
added by section 914, is amended by adding at the end the
following:
``(8) Ombudsman.--
``(A) Appointment.--Not later than 180 days
after the date on which the first Investor
Advocate is appointed under paragraph
(2)(A)(i), the Investor Advocate shall appoint
an Ombudsman, who shall report directly to the
Investor Advocate.
``(B) Duties.--The Ombudsman appointed
under subparagraph (A) shall--
``(i) act as a liaison between the
Commission and any retail investor in
resolving problems that retail
investors may have with the Commission
or with self-regulatory organizations;
``(ii) review and make
recommendations regarding policies and
procedures to encourage persons to
present questions to the Investor
Advocate regarding compliance with the
securities laws; and
``(iii) establish safeguards to
maintain the confidentiality of
communications between the persons
described in clause (ii) and the
Ombudsman.
``(C) Limitation.--In carrying out the
duties of the Ombudsman under subparagraph (B),
the Ombudsman shall utilize personnel of the
Commission to the extent practicable. Nothing
in this paragraph shall be construed as
replacing, altering, or diminishing the
activities of any ombudsman or similar office
of any other agency.
``(D) Report.--The Ombudsman shall submit a
semiannual report to the Investor Advocate that
describes the activities and evaluates the
effectiveness of the Ombudsman during the
preceding year. The Investor Advocate shall
include the reports required under this section
in the reports required to be submitted by the
Inspector Advocate under paragraph (6).''.
Subtitle B--Increasing Regulatory Enforcement and Remedies
SEC. 921. AUTHORITY TO RESTRICT MANDATORY PRE-DISPUTE 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 this title, is further amended by adding at the end
the following new subsection:
``(o) Authority to Restrict Mandatory Pre-dispute
Arbitration.--The Commission, by rule, may prohibit, or 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 future dispute
between them arising under the Federal securities laws, the
rules and regulations thereunder, or the rules of a self-
regulatory organization if it finds that such prohibition,
imposition of conditions, or limitations are in the public
interest and for the protection of investors.''.
(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 new subsection:
``(f) Authority to Restrict Mandatory Pre-dispute
Arbitration.--The Commission, by rule, may prohibit, or impose
conditions or limitations on the use of, agreements that
require customers or clients of any investment adviser to
arbitrate any future dispute between them arising under the
Federal securities laws, the rules and regulations thereunder,
or the rules of a self-regulatory organization if it finds that
such prohibition, imposition of conditions, or limitations are
in the public interest and for the protection of investors.''.
SEC. 922. WHISTLEBLOWER PROTECTION.
(a) In General.--The Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.) is amended by inserting after section 21E
the following:
``SEC. 21F. SECURITIES WHISTLEBLOWER INCENTIVES AND PROTECTION.
``(a) Definitions.--In this section the following
definitions shall apply:
``(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.
``(2) Fund.--The term `Fund' means the Securities
and Exchange Commission Investor Protection Fund.
``(3) Original information.--The term `original
information' means information that--
``(A) is derived from the independent
knowledge or analysis of a whistleblower;
``(B) is not known to the Commission from
any other source, unless the whistleblower is
the original source of the information; and
``(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.
``(4) Monetary sanctions.--The term `monetary
sanctions', when used with respect to any judicial or
administrative action, means--
``(A) any monies, including penalties,
disgorgement, and interest, ordered to be paid;
and
``(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.
``(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.
``(6) Whistleblower.--The term `whistleblower'
means any individual who provides, or 2 or more
individuals acting jointly who provide, information
relating to a violation of the securities laws to the
Commission, in a manner established, by rule or
regulation, by the Commission.
``(b) Awards.--
``(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--
``(A) not less than 10 percent, in total,
of what has been collected of the monetary
sanctions imposed in the action or related
actions; and
``(B) not more than 30 percent, in total,
of what has been collected of the monetary
sanctions imposed in the action or related
actions.
``(2) Payment of awards.--Any amount paid under
paragraph (1) shall be paid from the Fund.
``(c) Determination of Amount of Award; Denial of Award.--
``(1) Determination of amount of award.--
``(A) Discretion.--The determination of the
amount of an award made under subsection (b)
shall be in the discretion of the Commission.
``(B) Criteria.--In determining the amount
of an award made under subsection (b), the
Commission--
``(i) shall take into
consideration--
``(I) the significance of
the information provided by the
whistleblower to the success of
the covered judicial or
administrative action;
``(II) the degree of
assistance provided by the
whistleblower and any legal
representative of the
whistleblower in a covered
judicial or administrative
action;
``(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; and
``(IV) such additional
relevant factors as the
Commission may establish by
rule or regulation; and
``(ii) shall not take into
consideration the balance of the Fund.
``(2) Denial of award.--No award under subsection
(b) shall be made--
``(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--
``(i) an appropriate regulatory
agency;
``(ii) the Department of Justice;
``(iii) a self-regulatory
organization;
``(iv) the Public Company
Accounting Oversight Board; or
``(v) a law enforcement
organization;
``(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;
``(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 10A of the Securities Exchange Act of
1934 (15 U.S.C. 78j-1); or
``(D) to any whistleblower who fails to
submit information to the Commission in such
form as the Commission may, by rule, require.
``(d) Representation.--
``(1) Permitted representation.--Any whistleblower
who makes a claim for an award under subsection (b) may
be represented by counsel.
``(2) Required representation.--
``(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.
``(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.
``(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.
``(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, except the determination of the amount of an
award if the award was made in accordance with subsection (b),
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.
``(g) Investor Protection Fund.--
``(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'.
``(2) Use of fund.--The Fund shall be available to
the Commission, without further appropriation or fiscal
year limitation, for--
``(A) paying awards to whistleblowers as
provided in subsection (b); and
``(B) funding the activities of the
Inspector General of the Commission under
section 4(i).
``(3) Deposits and credits.--
``(A) In general.--There shall be
deposited into or credited to the Fund an
amount equal to--
``(i) any monetary sanction
collected by the Commission in any
judicial or administrative action
brought by the Commission under the
securities laws that is not added to a
disgorgement fund or other fund under
section 308 of the Sarbanes-Oxley Act
of 2002 (15 U.S.C. 7246) or otherwise
distributed to victims of a violation
of the securities laws, or the rules
and regulations thereunder, underlying
such action, unless the balance of the
Fund at the time the monetary sanction
is collected exceeds $300,000,000;
``(ii) any monetary sanction added
to a disgorgement fund or other fund
under section 308 of the Sarbanes-Oxley
Act of 2002 (15 U.S.C. 7246) that is
not distributed to the victims for whom
the 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 $200,000,000; and
``(iii) all income from investments
made under paragraph (4).
``(B) Additional amounts.--If the amounts
deposited into or credited to the Fund under
subparagraph (A) are not sufficient to satisfy
an award made under subsection (b), there shall
be deposited into or credited to the Fund an
amount equal to the unsatisfied portion of the
award from any monetary sanction collected by
the Commission in the covered judicial or
administrative action on which the award is
based.
``(4) Investments.--
``(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.
``(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.
``(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.
``(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--
``(A) the whistleblower award program,
established under this section, including--
``(i) a description of the number
of awards granted; and
``(ii) the types of cases in which
awards were granted during the
preceding fiscal year;
``(B) the balance of the Fund at the
beginning of the preceding fiscal year;
``(C) the amounts deposited into or
credited to the Fund during the preceding
fiscal year;
``(D) the amount of earnings on investments
made under paragraph (4) during the preceding
fiscal year;
``(E) the amount paid from the Fund during
the preceding fiscal year to whistleblowers
pursuant to subsection (b);
``(F) the balance of the Fund at the end of
the preceding fiscal year; and
``(G) a complete set of audited financial
statements, including--
``(i) a balance sheet;
``(ii) income statement; and
``(iii) cash flow analysis.
``(h) Protection of Whistleblowers.--
``(1) Prohibition against retaliation.--
``(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--
``(i) in providing information to
the Commission in accordance with this
section;
``(ii) in initiating, testifying
in, or assisting in any investigation
or judicial or administrative action of
the Commission based upon or related to
such information; or
``(iii) in making disclosures that
are required or protected under the
Sarbanes-Oxley Act of 2002 (15 U.S.C.
7201 et seq.), the Securities Exchange
Act of 1934 (15 U.S.C. 78a et seq.),
including section 10A(m) of such Act
(15 U.S.C. 78f(m)), section 1513(e) of
title 18, United States Code, and any
other law, rule, or regulation subject
to the jurisdiction of the Commission.
``(B) Enforcement.--
``(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).
``(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.
``(iii) Statute of limitations.--
``(I) In general.--An
action under this subsection
may not be brought--
``(aa) more than 6
years after the date on
which the violation of
subparagraph (A)
occurred; or
``(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).
``(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.
``(C) Relief.--Relief for an individual
prevailing in an action brought under
subparagraph (B) shall include--
``(i) reinstatement with the same
seniority status that the individual
would have had, but for the
discrimination;
``(ii) 2 times the amount of back
pay otherwise owed to the individual,
with interest; and
``(iii) compensation for litigation
costs, expert witness fees, and
reasonable attorneys' fees.
``(2) Confidentiality.--
``(A) In general.--Except as provided in
subparagraphs (B) and (C), the Commission and
any officer or employee of the Commission shall
not disclose any information, including
information provided by a whistleblower to the
Commission, which could reasonably be expected
to reveal the identity of a whistleblower,
except in accordance with the provisions of
section 552a of title 5, United States Code,
unless and until required to be disclosed to a
defendant or respondent in connection with a
public proceeding instituted by the Commission
or any entity described in subparagraph (C).
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.
``(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.
``(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.
``(D) Availability to government
agencies.--
``(i) In general.--Without the loss
of its status as confidential 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--
``(I) the Attorney General
of the United States;
``(II) an appropriate
regulatory authority;
``(III) a self-regulatory
organization;
``(IV) a State attorney
general in connection with any
criminal investigation;
``(V) any appropriate State
regulatory authority;
``(VI) the Public Company
Accounting Oversight Board;
``(VII) a foreign
securities authority; and
``(VIII) a foreign law
enforcement authority.
``(ii) Confidentiality.--
``(I) In general.--Each of
the entities described in
subclauses (I) through (VI) of
clause (i) shall maintain such
information as confidential in
accordance with the
requirements established under
subparagraph (A).
``(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.
``(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.
``(i) Provision of False Information.--A whistleblower
shall not be entitled to an award under this section if the
whistleblower--
``(1) knowingly and willfully makes any false,
fictitious, or fraudulent statement or representation;
or
``(2) uses any false writing or document knowing
the writing or document contains any false, fictitious,
or fraudulent statement or entry.
``(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.''.
(b) Protection for Employees of Nationally Recognized
Statistical Rating Organizations.--Section 1514A(a) of title
18, United States Code, is amended--
(1) by inserting ``or nationally recognized
statistical rating organization (as defined in section
3(a) of the Securities Exchange Act of 1934 (15 U.S.C.
78c),'' after ``78o(d)),''; and
(2) by inserting ``or nationally recognized
statistical rating organization'' after ``such
company''.
(c) Section 1514A of Title 18, United States Code.--
(1) Statute of limitations; jury trial.--Section
1514A(b)(2) of title 18, United States Code, is
amended--
(A) in subparagraph (D)--
(i) by striking ``90'' and
inserting ``180''; and
(ii) by striking the period at the
end and inserting ``, or after the date
on which the employee became aware of
the violation.''; and
(B) by adding at the end the following:
``(E) Jury trial.--A party to an action
brought under paragraph (1)(B) shall be
entitled to trial by jury.''.
(2) Private securities litigation witnesses;
nonenforceability; information.--Section 1514A of title
18, United States Code, is amended by adding at the end
the following:
``(e) Nonenforceability of Certain Provisions Waiving
Rights and Remedies or Requiring Arbitration of Disputes.--
``(1) Waiver of rights and remedies.--The rights
and remedies provided for in this section may not be
waived by any agreement, policy form, or condition of
employment, including by a predispute arbitration
agreement.
``(2) Predispute arbitration agreements.--No
predispute arbitration agreement shall be valid or
enforceable, if the agreement requires arbitration of a
dispute arising under this section.''.
(d) Study of Whistleblower Protection Program.--
(1) Study.--The Inspector General of the Commission
shall conduct a study of the whistleblower protections
established under the amendments made by this section,
including--
(A) whether the final rules and regulation
issued under the amendments made by this
section have made the whistleblower protection
program (referred to in this subsection as the
``program'') clearly defined and user-friendly;
(B) whether the program is promoted on the
website of the Commission and has been widely
publicized;
(C) whether the Commission is prompt in--
(i) responding to--
(I) information provided by
whistleblowers; and
(II) applications for
awards filed by whistleblowers;
(ii) updating whistleblowers about
the status of their applications; and
(iii) otherwise communicating with
the interested parties;
(D) whether the minimum and maximum reward
levels are adequate to entice whistleblowers to
come forward with information and whether the
reward levels are so high as to encourage
illegitimate whistleblower claims;
(E) whether the appeals process has been
unduly burdensome for the Commission;
(F) whether the funding mechanism for the
Investor Protection Fund is adequate;
(G) whether, in the interest of protecting
investors and identifying and preventing fraud,
it would be useful for Congress to consider
empowering whistleblowers or other individuals,
who have already attempted to pursue the case
through the Commission, to have a private right
of action to bring suit based on the facts of
the same case, on behalf of the Government and
themselves, against persons who have committee
securities fraud;
(H)(i) whether the exemption under section
552(b)(3) of title 5 (known as the Freedom of
Information Act) established in section
21F(h)(2)(A) of the Securities Exchange Act of
1934, as added by this Act, aids whistleblowers
in disclosing information to the Commission;
(ii) what impact the exemption described in
clause (i) has had on the ability of the public
to access information about the regulation and
enforcement by the Commission of securities;
and
(iii) any recommendations on whether the
exemption described in clause (i) should remain
in effect; and
(I) such other matters as the Inspector
General deems appropriate.
(2) Report.--Not later than 30 months after the
date of enactment of this Act, the Inspector General
shall--
(A) submit a report on the findings of the
study required under paragraph (1) to the
Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on
Financial Services of the House; and
(B) make the report described in
subparagraph (A) available to the public
through publication of the report on the
website of the Commission.
SEC. 923. CONFORMING AMENDMENTS FOR WHISTLEBLOWER PROTECTION.
(a) In General.--
(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''.
(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''.
(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''.
(b) Securities Exchange Act.--
(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''.
(2) Section 21a.--Section 21A of the Securities
Exchange Act of 1934 (15 U.S.C. 78u-1) is amended--
(A) in subsection (d)(1) by--
(i) striking ``(subject to
subsection (e))''; and
(ii) inserting ``and section 21F of
this title'' after ``the Sarbanes-Oxley
Act of 2002'';
(B) by striking subsection (e); and
(C) by redesignating subsections (f) and
(g) as subsections (e) and (f), respectively.
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.
(b) Original Information.--Information provided to the
Commission in writing by a whistleblower shall not lose the
status of original information (as defined in section 21F(a)(3)
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, if
the information is provided by the whistleblower after the date
of enactment of this subtitle.
(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.
(d) Administration and Enforcement.--The Securities and
Exchange Commission shall establish a separate office within
the Commission to administer and enforce the provisions of
section 21F of the Securities Exchange Act of 1934 (as added by
section 922(a)). Such office shall report annually to the
Committee on Banking, Housing, and Urban Affairs of the Senate
and the Committee on Financial Services of the House of
Representatives on its activities, whistleblower complaints,
and the response of the Commission to such complaints.
SEC. 925. COLLATERAL BARS.
(a) Securities Exchange Act of 1934.--
(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,''.
(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,''.
(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,''.
(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,''.
SEC. 926. DISQUALIFYING FELONS AND OTHER ``BAD ACTORS'' FROM REGULATION
D OFFERINGS.
Not later than 1 year after the date of enactment of this
Act, the Commission shall issue rules for the disqualification
of offerings and sales of securities made under section 230.506
of title 17, Code of Federal Regulations, that--
(1) are substantially similar to the provisions of
section 230.262 of title 17, Code of Federal
Regulations, or any successor thereto; and
(2) disqualify any offering or sale of securities
by a person that--
(A) is subject to a final order of a State
securities commission (or an agency or officer
of a State performing like functions), a State
authority that supervises or examines banks,
savings associations, or credit unions, a State
insurance commission (or an agency or officer
of a State performing like functions), an
appropriate Federal banking agency, or the
National Credit Union Administration, that--
(i) bars the person from--
(I) association with an
entity regulated by such
commission, authority, agency,
or officer;
(II) engaging in the
business of securities,
insurance, or banking; or
(III) engaging in savings
association or credit union
activities; or
(ii) constitutes a final order
based on a violation of any law or
regulation that prohibits fraudulent,
manipulative, or deceptive conduct
within the 10-year period ending on the
date of the filing of the offer or
sale; or
(B) has been convicted of any felony or
misdemeanor in connection with the purchase or
sale of any security or involving the making of
any false filing with the Commission.
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,''.
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)--
(1) by striking ``, unless exempt from registration
pursuant to section 203(b),'' and inserting
``registered or required to be registered with the
Commission'';
(2) by striking ``make use of the mails or any
means or instrumentality of interstate commerce,
directly or indirectly, to''; and
(3) by striking ``to'' after ``in any way''.
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''.
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))''.
SEC. 929B. FAIR FUND AMENDMENTS.
Section 308 of the Sarbanes-Oxley Act of 2002 (15 U.S.C.
7246(a)) is amended--
(1) by striking subsection (a) and inserting the
following:
``(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.'';
(2) in subsection (b)--
(A) by striking ``for a disgorgement fund
described in subsection (a)'' and inserting
``for a disgorgement fund or other fund
described in subsection (a)''; and
(B) by striking ``in the disgorgement
fund'' and inserting ``in such fund''; and
(3) by striking subsection (e).
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''.
SEC. 929D. LOST AND STOLEN SECURITIES.
Section 17(f)(1) of the Securities Exchange Act of 1934 (15
U.S.C. 78q(f)(1)) is amended--
(1) in subparagraph (A), by striking ``missing,
lost, counterfeit, or stolen securities'' and inserting
``securities that are missing, lost, counterfeit,
stolen, or cancelled''; and
(2) in subparagraph (B), by striking ``or stolen''
and inserting ``stolen, cancelled, or reported in such
other manner as the Commission, by rule, may
prescribe''.
SEC. 929E. NATIONWIDE SERVICE OF SUBPOENAS.
(a) Securities Act of 1933.--Section 22(a) of the
Securities Act of 1933 (15 U.S.C. 77v(a)) is amended by
inserting after the second sentence the following: ``In any
action or proceeding instituted by the Commission under this
title in a United States district court for any judicial
district, a subpoena issued to compel the attendance of a
witness or the production of documents or tangible things (or
both) at a hearing or trial may be served at any place within
the United States. Rule 45(c)(3)(A)(ii) of the Federal Rules of
Civil Procedure shall not apply to a subpoena issued under the
preceding sentence.''.
(b) Securities Exchange Act of 1934.--Section 27 of the
Securities Exchange Act of 1934 (15 U.S.C. 78aa) is amended by
inserting after the third sentence the following: ``In any
action or proceeding instituted by the Commission under this
title in a United States district court for any judicial
district, a subpoena issued to compel the attendance of a
witness or the production of documents or tangible things (or
both) at a hearing or trial may be served at any place within
the United States. Rule 45(c)(3)(A)(ii) of the Federal Rules of
Civil Procedure shall not apply to a subpoena issued under the
preceding sentence.''.
(c) Investment Company Act of 1940.--Section 44 of the
Investment Company Act of 1940 (15 U.S.C. 80a-43) is amended by
inserting after the fourth sentence the following: ``In any
action or proceeding instituted by the Commission under this
title in a United States district court for any judicial
district, a subpoena issued to compel the attendance of a
witness or the production of documents or tangible things (or
both) at a hearing or trial may be served at any place within
the United States. Rule 45(c)(3)(A)(ii) of the Federal Rules of
Civil Procedure shall not apply to a subpoena issued under the
preceding sentence.''.
(d) Investment Advisers Act of 1940.--Section 214 of the
Investment Advisers Act of 1940 (15 U.S.C. 80b-14) is amended
by inserting after the third sentence the following: ``In any
action or proceeding instituted by the Commission under this
title in a United States district court for any judicial
district, a subpoena issued to compel the attendance of a
witness or the production of documents or tangible things (or
both) at a hearing or trial may be served at any place within
the United States. Rule 45(c)(3)(A)(ii) of the Federal Rules of
Civil Procedure shall not apply to a subpoena issued under the
preceding sentence.''.
SEC. 929F. FORMERLY ASSOCIATED PERSONS.
(a) Member or Employee of the Municipal Securities
Rulemaking Board.--Section 15B(c)(8) of the Securities Exchange
Act of 1934 (15 U.S.C. 78o-4(c)(8)) is amended by striking
``any member or employee'' and inserting ``any person who is,
or at the time of the alleged violation or abuse was, a member
or employee''.
(b) Person Associated With a Government Securities Broker
or Dealer.--Section 15C(c) of the Securities Exchange Act of
1934 (15 U.S.C. 78o-5(c)) is amended--
(1) in paragraph (1)(C), by striking ``any person
associated, or seeking to become associated,'' and
inserting ``any person who is, or at the time of the
alleged misconduct was, associated or seeking to become
associated''; and
(2) in paragraph (2)--
(A) in subparagraph (A), by inserting ``,
seeking to become associated, or, at the time
of the alleged misconduct, associated or
seeking to become associated'' after ``any
person associated''; and
(B) in subparagraph (B), by inserting ``,
seeking to become associated, or, at the time
of the alleged misconduct, associated or
seeking to become associated'' after ``any
person associated''.
(c) Person Associated With a Member of a National
Securities Exchange or Registered Securities Association.--
Section 21(a)(1) of the Securities Exchange Act of 1934 (15
U.S.C. 78u(a)(1)) is amended, in the first sentence, by
inserting ``, or, as to any act or practice, or omission to
act, while associated with a member, formerly associated''
after ``member or a person associated''.
(d) Participant of a Registered Clearing Agency.--Section
21(a)(1) of the Securities Exchange Act of 1934 (15 U.S.C.
78u(a)(1)) is amended, in the first sentence, by inserting
``or, as to any act or practice, or omission to act, while a
participant, was a participant,'' after ``in which such person
is a participant,''.
(e) Officer or Director of a Self-regulatory
Organization.--Section 19(h)(4) of the Securities Exchange Act
of 1934 (15 U.S.C. 78s(h)(4)) is amended--
(1) by striking ``any officer or director'' and
inserting ``any person who is, or at the time of the
alleged misconduct was, an officer or director''; and
(2) by striking ``such officer or director'' and
inserting ``such person''.
(f) Officer or Director of an Investment Company.--Section
36(a) of the Investment Company Act of 1940 (15 U.S.C. 80a-
35(a)) is amended--
(1) by striking ``a person serving or acting'' and
inserting ``a person who is, or at the time of the
alleged misconduct was, serving or acting''; and
(2) by striking ``such person so serves or acts''
and inserting ``such person so serves or acts, or at
the time of the alleged misconduct, so served or
acted''.
(g) Person Associated With a Public Accounting Firm.--
(1) Sarbanes-oxley act of 2002 amendment.--Section
2(a)(9) of the Sarbanes-Oxley Act of 2002 (15 U.S.C.
7201(9)) is amended by adding at the end the following:
``(C) Investigative and enforcement
authority.--For purposes of sections 3(c),
101(c), 105, and 107(c) and the rules of the
Board and Commission issued thereunder, except
to the extent specifically excepted by such
rules, the terms defined in subparagraph (A)
shall include any person associated, seeking to
become associated, or formerly associated with
a public accounting firm, except that--
``(i) the authority to conduct an
investigation of such person under
section 105(b) shall apply only with
respect to any act or practice, or
omission to act, by the person while
such person was associated or seeking
to become associated with a registered
public accounting firm; and
``(ii) the authority to commence a
disciplinary proceeding under section
105(c)(1), or impose sanctions under
section 105(c)(4), against such person
shall apply only with respect to--
``(I) conduct occurring
while such person was
associated or seeking to become
associated with a registered
public accounting firm; or
``(II) non-cooperation, as
described in section 105(b)(3),
with respect to a demand in a
Board investigation for
testimony, documents, or other
information relating to a
period when such person was
associated or seeking to become
associated with a registered
public accounting firm.''.
(2) Securities exchange act of 1934 amendment.--
Section 21(a)(1) of the Securities Exchange Act of 1934
(15 U.S.C. 78u(a)(1)) is amended by striking ``or a
person associated with such a firm'' and inserting ``,
a person associated with such a firm, or, as to any
act, practice, or omission to act, while associated
with such firm, a person formerly associated with such
a firm''.
(h) Supervisory Personnel of an Audit Firm.--Section
105(c)(6) of the Sarbanes-Oxley Act of 2002 (15 U.S.C.
7215(c)(6)) is amended--
(1) in subparagraph (A), by striking ``the
supervisory personnel'' and inserting ``any person who
is, or at the time of the alleged failure reasonably to
supervise was, a supervisory person''; and
(2) in subparagraph (B)--
(A) by striking ``No associated person''
and inserting ``No current or former
supervisory person''; and
(B) by striking ``any other person'' and
inserting ``any associated person''.
(i) Member of the Public Company Accounting Oversight
Board.--Section 107(d)(3) of the Sarbanes-Oxley Act of 2002 (15
U.S.C. 7217(d)(3)) is amended by striking ``any member'' and
inserting ``any person who is, or at the time of the alleged
misconduct was, a member''.
SEC. 929G. STREAMLINED HIRING AUTHORITY FOR MARKET SPECIALISTS.
(a) Appointment Authority.--Section 3114 of title 5, United
States Code, is amended by striking the section heading and all
that follows through the end of subsection (a) and inserting
the following:
``Sec. 3114. Appointment of candidates to certain positions in the
competitive service by the Securities and Exchange
Commission
``(a) Applicability.--This section applies with respect to
any position of accountant, economist, and securities
compliance examiner at the Commission that is in the
competitive service, and any position at the Commission in the
competitive service that requires specialized knowledge of
financial and capital market formation or regulation, financial
market structures or surveillance, or information
technology.''.
(b) Clerical Amendment.--The table of sections for chapter
31 of title 5, United States Code, is amended by striking the
item relating to section 3114 and inserting the following:
``3114. Appointment of candidates to positions in the competitive
service by the Securities and Exchange Commission.''.
(c) Pay Authority.--The Commission may set the rate of pay
for experts and consultants appointed under the authority of
section 3109 of title 5, United States Code, in the same manner
in which it sets the rate of pay for employees of the
Commission.
SEC. 929H. SIPC REFORMS.
(a) Increasing the Cash Limit of Protection.--Section 9 of
the Securities Investor Protection Act of 1970 (15 U.S.C.
78fff-3) is amended--
(1) in subsection (a)(1), by striking ``$100,000
for each such customer'' and inserting ``the standard
maximum cash advance amount for each such customer, as
determined in accordance with subsection (d)''; and
(2) by adding the following new subsections:
``(d) Standard Maximum Cash Advance Amount Defined.--For
purposes of this section, the term `standard maximum cash
advance amount' means $250,000, as such amount may be adjusted
after December 31, 2010, as provided under subsection (e).
``(e) Inflation Adjustment.--
``(1) In general.--Not later than January 1, 2011,
and every 5 years thereafter, and subject to the
approval of the Commission as provided under section
3(e)(2), the Board of Directors of SIPC shall determine
whether an inflation adjustment to the standard maximum
cash advance amount is appropriate. If the Board of
Directors of SIPC determines such an adjustment is
appropriate, then the standard maximum cash advance
amount shall be an amount equal to--
``(A) $250,000 multiplied by--
``(B) the ratio of the annual value of the
Personal Consumption Expenditures Chain-Type
Price Index (or any successor index thereto),
published by the Department of Commerce, for
the calendar year preceding the year in which
such determination is made, to the published
annual value of such index for the calendar
year preceding the year in which this
subsection was enacted.
The index values used in calculations under this
paragraph shall be, as of the date of the calculation,
the values most recently published by the Department of
Commerce.
``(2) Rounding.--If the standard maximum cash
advance amount determined under paragraph (1) for any
period is not a multiple of $10,000, the amount so
determined shall be rounded down to the nearest
$10,000.
``(3) Publication and report to the congress.--Not
later than April 5 of any calendar year in which a
determination is required to be made under paragraph
(1)--
``(A) the Commission shall publish in the
Federal Register the standard maximum cash
advance amount; and
``(B) the Board of Directors of SIPC shall
submit a report to the Congress stating the
standard maximum cash advance amount.
``(4) Implementation period.--Any adjustment to the
standard maximum cash advance amount shall take effect
on January 1 of the year immediately succeeding the
calendar year in which such adjustment is made.
``(5) Inflation adjustment considerations.--In
making any determination under paragraph (1) to
increase the standard maximum cash advance amount, the
Board of Directors of SIPC shall consider--
``(A) the overall state of the fund and the
economic conditions affecting members of SIPC;
``(B) the potential problems affecting
members of SIPC; and
``(C) such other factors as the Board of
Directors of SIPC may determine appropriate.''.
(b) Liquidation of a Carrying Broker-dealer.--Section
5(a)(3) of the Securities Investor Protection Act of 1970 (15
U.S.C. 78eee(a)(3)) is amended--
(1) by striking the undesignated matter immediately
following subparagraph (B);
(2) in subparagraph (A), by striking ``any member
of SIPC'' and inserting ``the member'';
(3) in subparagraph (B), by striking the comma at
the end and inserting a period;
(4) by striking ``If SIPC'' and inserting the
following:
``(A) In general.--SIPC may, upon notice to
a member of SIPC, file an application for a
protective decree with any court of competent
jurisdiction specified in section 21(e) or 27
of the Securities Exchange Act of 1934, except
that no such application shall be filed with
respect to a member, the only customers of
which are persons whose claims could not be
satisfied by SIPC advances pursuant to section
9, if SIPC''; and
(5) by adding at the end the following:
``(B) Consent required.--No member of SIPC
that has a customer may enter into an
insolvency, receivership, or bankruptcy
proceeding, under Federal or State law, without
the specific consent of SIPC, except as
provided in title II of the Dodd-Frank Wall
Street Reform and Consumer Protection Act.''.
SEC. 929I. PROTECTING CONFIDENTIALITY OF MATERIALS SUBMITTED TO THE
COMMISSION.
(a) Securities Exchange Act of 1934.--Section 24 of the
Securities Exchange Act of 1934 (15 U.S.C. 78x) is amended--
(1) in subsection (d), by striking ``subsection
(e)'' and inserting ``subsection (f)'';
(2) by redesignating subsection (e) as subsection
(f); and
(3) by inserting after subsection (d) the
following:
``(e) Records Obtained From Registered Persons.--
``(1) In general.--Except as provided in subsection
(f), the Commission shall not be compelled to disclose
records or information obtained pursuant to section
17(b), or records or information based upon or derived
from such records or information, if such records or
information have been obtained by the Commission for
use in furtherance of the purposes of this title,
including surveillance, risk assessments, or other
regulatory and oversight activities.
``(2) Treatment of information.--For purposes of
section 552 of title 5, United States Code, this
subsection shall be considered a statute described in
subsection (b)(3)(B) of such section 552. Collection of
information pursuant to section 17 shall be an
administrative action involving an agency against
specific individuals or agencies pursuant to section
3518(c)(1) of title 44, United States Code.''.
(b) Investment Company Act of 1940.--Section 31 of the
Investment Company Act of 1940 (15 U.S.C. 80a-30) is amended--
(1) by striking subsection (c) and inserting the
following:
``(c) Limitations on Disclosure by Commission.--
Notwithstanding any other provision of law, the Commission
shall not be compelled to disclose any records or information
provided to the Commission under this section, or records or
information based upon or derived from such records or
information, if such records or information have been obtained
by the Commission for use in furtherance of the purposes of
this title, including surveillance, risk assessments, or other
regulatory and oversight activities. Nothing in this subsection
authorizes the Commission to withhold information from the
Congress or prevent the Commission from complying with a
request for information from any other Federal department or
agency requesting the information for purposes within the scope
of jurisdiction of that department or agency, or complying with
an order of a court of the United States in an action brought
by the United States or the Commission. For purposes of section
552 of title 5, United States Code, this section shall be
considered a statute described in subsection (b)(3)(B) of such
section 552. Collection of information pursuant to section 31
shall be an administrative action involving an agency against
specific individuals or agencies pursuant to section 3518(c)(1)
of title 44, United States Code.'';
(2) by striking subsection (d); and
(3) by redesignating subsections (e) and (f) as
subsections (d) and (e), respectively.
(c) Investment Advisers Act of 1940.--Section 210 of the
Investment Advisers Act of 1940 (15 U.S.C. 80b-10) is amended
by adding at the end the following:
``(d) Limitations on Disclosure by the Commission.--
Notwithstanding any other provision of law, the Commission
shall not be compelled to disclose any records or information
provided to the Commission under section 204, or records or
information based upon or derived from such records or
information, if such records or information have been obtained
by the Commission for use in furtherance of the purposes of
this title, including surveillance, risk assessments, or other
regulatory and oversight activities. Nothing in this subsection
authorizes the Commission to withhold information from the
Congress or prevent the Commission from complying with a
request for information from any other Federal department or
agency requesting the information for purposes within the scope
of jurisdiction of that department or agency, or complying with
an order of a court of the United States in an action brought
by the United States or the Commission. For purposes of section
552 of title 5, United States Code, this subsection shall be
considered a statute described in subsection (b)(3)(B) of such
section 552. Collection of information pursuant to section 204
shall be an administrative action involving an agency against
specific individuals or agencies pursuant to section 3518(c)(1)
of title 44, United States Code.''.
SEC. 929J. EXPANSION OF AUDIT INFORMATION TO BE PRODUCED AND EXCHANGED.
Section 106 of the Sarbanes-Oxley Act of 2002 (15 U.S.C.
7216) is amended--
(1) by striking subsection (b) and inserting the
following:
``(b) Production of Documents.--
``(1) Production by foreign firms.--If a foreign
public accounting firm performs material services upon
which a registered public accounting firm relies in the
conduct of an audit or interim review, issues an audit
report, performs audit work, or conducts interim
reviews, the foreign public accounting firm shall--
``(A) produce the audit work papers of the
foreign public accounting firm and all other
documents of the firm related to any such audit
work or interim review to the Commission or the
Board, upon request of the Commission or the
Board; and
``(B) be subject to the jurisdiction of the
courts of the United States for purposes of
enforcement of any request for such documents.
``(2) Other production.--Any registered public
accounting firm that relies, in whole or in part, on
the work of a foreign public accounting firm in issuing
an audit report, performing audit work, or conducting
an interim review, shall--
``(A) produce the audit work papers of the
foreign public accounting firm and all other
documents related to any such work in response
to a request for production by the Commission
or the Board; and
``(B) secure the agreement of any foreign
public accounting firm to such production, as a
condition of the reliance by the registered
public accounting firm on the work of that
foreign public accounting firm.'';
(2) by redesignating subsection (d) as subsection
(g); and
(3) by inserting after subsection (c) the
following:
``(d) Service of Requests or Process.--
``(1) In general.--Any foreign public accounting
firm that performs work for a domestic registered
public accounting firm shall furnish to the domestic
registered public accounting firm a written irrevocable
consent and power of attorney that designates the
domestic registered public accounting firm as an agent
upon whom may be served any request by the Commission
or the Board under this section or upon whom may be
served any process, pleadings, or other papers in any
action brought to enforce this section.
``(2) Specific audit work.--Any foreign public
accounting firm that performs material services upon
which a registered public accounting firm relies in the
conduct of an audit or interim review, issues an audit
report, performs audit work, or, performs interim
reviews, shall designate to the Commission or the Board
an agent in the United States upon whom may be served
any request by the Commission or the Board under this
section or upon whom may be served any process,
pleading, or other papers in any action brought to
enforce this section.
``(e) Sanctions.--A willful refusal to comply, in whole in
or in part, with any request by the Commission or the Board
under this section, shall be deemed a violation of this Act.
``(f) Other Means of Satisfying Production Obligations.--
Notwithstanding any other provisions of this section, the staff
of the Commission or the Board may allow a foreign public
accounting firm that is subject to this section to meet
production obligations under this section through alternate
means, such as through foreign counterparts of the Commission
or the Board.''.
SEC. 929K. SHARING PRIVILEGED INFORMATION WITH OTHER AUTHORITIES.
Section 24 of the Securities Exchange Act of 1934 (15
U.S.C. 78x) is amended--
(1) in subsection (d), as amended by subsection
(d)(1)(A), by striking ``subsection (f)'' and inserting
``subsection (g)'';
(2) in subsection (e), as added by subsection
(d)(1)(C), by striking ``subsection (f)'' and inserting
``subsection (g)'';
(3) by redesignating subsection (f) as subsection
(g); and
(4) by inserting after subsection (e) the
following:
``(f) Sharing Privileged Information With Other
Authorities.--
``(1) Privileged information provided by the
commission.--The Commission shall not be deemed to have
waived any privilege applicable to any information by
transferring that information to or permitting that
information to be used by--
``(A) any agency (as defined in section 6
of title 18, United States Code);
``(B) the Public Company Accounting
Oversight Board;
``(C) any self-regulatory organization;
``(D) any foreign securities authority;
``(E) any foreign law enforcement
authority; or
``(F) any State securities or law
enforcement authority.
``(2) Nondisclosure of privileged information
provided to the commission.--The Commission shall not
be compelled to disclose privileged information
obtained from any foreign securities authority, or
foreign law enforcement authority, if the authority has
in good faith determined and represented to the
Commission that the information is privileged.
``(3) Nonwaiver of privileged information provided
to the commission.--
``(A) In general.--Federal agencies, State
securities and law enforcement authorities,
self-regulatory organizations, and the Public
Company Accounting Oversight Board shall not be
deemed to have waived any privilege applicable
to any information by transferring that
information to or permitting that information
to be used by the Commission.
``(B) Exception.--The provisions of
subparagraph (A) shall not apply to a self-
regulatory organization or the Public Company
Accounting Oversight Board with respect to
information used by the Commission in an action
against such organization.
``(4) Definitions.--For purposes of this
subsection--
``(A) the term `privilege' includes any
work-product privilege, attorney-client
privilege, governmental privilege, or other
privilege recognized under Federal, State, or
foreign law;
``(B) the term `foreign law enforcement
authority' means any foreign authority that is
empowered under foreign law to detect,
investigate or prosecute potential violations
of law; and
``(C) the term `State securities or law
enforcement authority' means the authority of
any State or territory that is empowered under
State or territory law to detect, investigate,
or prosecute potential violations of law.''.
SEC. 929L. ENHANCED APPLICATION OF ANTIFRAUD PROVISIONS.
The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.)
is amended--
(1) in section 9--
(A) by striking ``registered on a national
securities exchange'' each place that term
appears and inserting ``other than a government
security'';
(B) in subsection (b), by striking ``by use
of any facility of a national securities
exchange,''; and
(C) in subsection (c), by inserting after
``unlawful for any'' the following: ``broker,
dealer, or'';
(2) in section 10(a)(1), by striking ``registered
on a national securities exchange'' and inserting
``other than a government security''; and
(3) in section 15(c)(1)(A), by striking ``otherwise
than on a national securities exchange of which it is a
member''.
SEC. 929M. AIDING AND ABETTING AUTHORITY UNDER THE SECURITIES ACT AND
THE INVESTMENT COMPANY ACT.
(a) Under the Securities Act of 1933.--Section 15 of the
Securities Act of 1933 (15 U.S.C. 77o) is amended--
(1) by striking ``Every person who'' and inserting
``(a) Controlling Persons.--Every person who''; and
(2) by adding at the end the following:
``(b) Prosecution of Persons Who Aid and Abet Violations.--
For purposes of any action brought by the Commission under
subparagraph (b) or (d) of section 20, any person that
knowingly or recklessly provides substantial assistance to
another person in violation of a provision of this Act, or of
any rule or regulation issued under this Act, shall be deemed
to be in violation of such provision to the same extent as the
person to whom such assistance is provided.''.
(b) Under the Investment Company Act of 1940.--Section 48
of the Investment Company Act of 1940 (15 U.S.C. 80a-48) is
amended by redesignating subsection (b) as subsection (c) and
inserting after subsection (a) the following:
``(b) For purposes of any action brought by the Commission
under subsection (d) or (e) of section 42, any person that
knowingly or recklessly provides substantial assistance to
another person in violation of a provision of this Act, or of
any rule or regulation issued under this Act, shall be deemed
to be in violation of such provision to the same extent as the
person to whom such assistance is provided.''.
SEC. 929N. AUTHORITY TO IMPOSE PENALTIES FOR AIDING AND ABETTING
VIOLATIONS OF THE INVESTMENT ADVISERS ACT.
Section 209 of the Investment Advisers Act of 1940 (15
U.S.C. 80b-9) is amended by inserting at the end the following
new subsection:
``(f) Aiding and Abetting.--For purposes of any action
brought by the Commission under subsection (e), any person that
knowingly or recklessly has aided, abetted, counseled,
commanded, induced, or procured a violation of any provision of
this Act, or of any rule, regulation, or order hereunder, shall
be deemed to be in violation of such provision, rule,
regulation, or order to the same extent as the person that
committed such violation.''.
SEC. 929O. AIDING AND ABETTING STANDARD OF KNOWLEDGE SATISFIED BY
RECKLESSNESS.
Section 20(e) of the Securities Exchange Act of 1934 (15
U.S.C. 78t(e)) is amended by inserting ``or recklessly'' after
``knowingly''.
SEC. 929P. STRENGTHENING ENFORCEMENT BY THE COMMISSION.
(a) Authority to Impose Civil Penalties in Cease and Desist
Proceedings.--
(1) Under the securities act of 1933.--Section 8A
of the Securities Act of 1933 (15 U.S.C. 77h-1) is
amended by adding at the end the following new
subsection:
``(g) Authority to Impose Money Penalties.--
``(1) Grounds.--In any cease-and-desist proceeding
under subsection (a), the Commission may impose a civil
penalty on a person if the Commission finds, on the
record, after notice and opportunity for hearing,
that--
``(A) such person--
``(i) is violating or has violated
any provision of this title, or any
rule or regulation issued under this
title; or
``(ii) is or was a cause of the
violation of any provision of this
title, or any rule or regulation
thereunder; and
``(B) such penalty is in the public
interest.
``(2) Maximum amount of penalty.--
``(A) First tier.--The maximum amount of a
penalty for each act or omission described in
paragraph (1) shall be $7,500 for a natural
person or $75,000 for any other person.
``(B) Second tier.--Notwithstanding
subparagraph (A), the maximum amount of penalty
for each such act or omission shall be $75,000
for a natural person or $375,000 for any other
person, if the act or omission described in
paragraph (1) involved fraud, deceit,
manipulation, or deliberate or reckless
disregard of a regulatory requirement.
``(C) Third tier.--Notwithstanding
subparagraphs (A) and (B), the maximum amount
of penalty for each such act or omission shall
be $150,000 for a natural person or $725,000
for any other person, if--
``(i) the act or omission described
in paragraph (1) involved fraud,
deceit, manipulation, or deliberate or
reckless disregard of a regulatory
requirement; and
``(ii) such act or omission
directly or indirectly resulted in--
``(I) substantial losses or
created a significant risk of
substantial losses to other
persons; or
``(II) substantial
pecuniary gain to the person
who committed the act or
omission.
``(3) Evidence concerning ability to pay.--In any
proceeding in which the Commission may impose a penalty
under this section, a respondent may present evidence
of the ability of the respondent to pay such penalty.
The Commission may, in its discretion, consider such
evidence in determining whether such penalty is in the
public interest. Such evidence may relate to the extent
of the ability of the respondent to continue in
business and the collectability of a penalty, taking
into account any other claims of the United States or
third parties upon the assets of the respondent and the
amount of the assets of the respondent.''.
(2) Under the securities exchange act of 1934.--
Section 21B(a) of the Securities Exchange Act of 1934
(15 U.S.C. 78u-2(a)) is amended--
(A) by striking the matter following
paragraph (4);
(B) in the matter preceding paragraph (1),
by inserting after ``opportunity for hearing,''
the following: ``that such penalty is in the
public interest and'';
(C) by redesignating paragraphs (1) through
(4) as subparagraphs (A) through (D),
respectively, and adjusting the margins
accordingly;
(D) by striking ``In any proceeding'' and
inserting the following:
``(1) In general.--In any proceeding''; and
(E) by adding at the end the following:
``(2) Cease-and-desist proceedings.--In any
proceeding instituted under section 21C against any
person, the Commission may impose a civil penalty, if
the Commission finds, on the record after notice and
opportunity for hearing, that such person--
``(A) is violating or has violated any
provision of this title, or any rule or
regulation issued under this title; or
``(B) is or was a cause of the violation of
any provision of this title, or any rule or
regulation issued under this title.''.
(3) Under the investment company act of 1940.--
Section 9(d)(1) of the Investment Company Act of 1940
(15 U.S.C. 80a-9(d)(1)) is amended--
(A) by striking the matter following
subparagraph (C);
(B) in the matter preceding subparagraph
(A), by inserting after ``opportunity for
hearing,'' the following: ``that such penalty
is in the public interest, and'';
(C) by redesignating subparagraphs (A)
through (C) as clauses (i) through (iii),
respectively, and adjusting the margins
accordingly;
(D) by striking ``In any proceeding'' and
inserting the following:
``(A) In general.--In any proceeding''; and
(E) by adding at the end the following:
``(B) Cease-and-desist proceedings.--In any
proceeding instituted pursuant to subsection
(f) against any person, the Commission may
impose a civil penalty if the Commission finds,
on the record, after notice and opportunity for
hearing, that such person--
``(i) is violating or has violated
any provision of this title, or any
rule or regulation issued under this
title; or
``(ii) is or was a cause of the
violation of any provision of this
title, or any rule or regulation issued
under this title.''.
(4) Under the investment advisers act of 1940.--
Section 203(i)(1) of the Investment Advisers Act of
1940 (15 U.S.C. 80b-3(i)(1)) is amended--
(A) by striking the matter following
subparagraph (D);
(B) in the matter preceding subparagraph
(A), by inserting after ``opportunity for
hearing,'' the following: ``that such penalty
is in the public interest and'';
(C) by redesignating subparagraphs (A)
through (D) as clauses (i) through (iv),
respectively, and adjusting the margins
accordingly;
(D) by striking ``In any proceeding'' and
inserting the following:
``(A) In general.--In any proceeding''; and
(E) by adding at the end the following new
subparagraph:
``(B) Cease-and-desist proceedings.--In any
proceeding instituted pursuant to subsection
(k) against any person, the Commission may
impose a civil penalty if the Commission finds,
on the record, after notice and opportunity for
hearing, that such person--
``(i) is violating or has violated
any provision of this title, or any
rule or regulation issued under this
title; or
``(ii) is or was a cause of the
violation of any provision of this
title, or any rule or regulation issued
under this title.''.
(b) Extraterritorial Jurisdiction of the Antifraud
Provisions of the Federal Securities Laws.--
(1) Under the securities act of 1933.--Section 22
of the Securities Act of 1933 (15 U.S.C. 77v(a)) is
amended by adding at the end the following new
subsection:
``(c) Extraterritorial Jurisdiction.--The district courts
of the United States and the United States courts of any
Territory shall have jurisdiction of an action or proceeding
brought or instituted by the Commission or the United States
alleging a violation of section 17(a) involving--
``(1) conduct within the United States that
constitutes significant steps in furtherance of the
violation, even if the securities transaction occurs
outside the United States and involves only foreign
investors; or
``(2) conduct occurring outside the United States
that has a foreseeable substantial effect within the
United States.''.
(2) Under the securities exchange act of 1934.--
Section 27 of the Securities Exchange Act of 1934 (15
U.S.C. 78aa) is amended--
(A) by striking ``The district'' and
inserting the following:
``(a) In General.--The district''; and
(B) by adding at the end the following new
subsection:
``(b) Extraterritorial Jurisdiction.--The district courts
of the United States and the United States courts of any
Territory shall have jurisdiction of an action or proceeding
brought or instituted by the Commission or the United States
alleging a violation of the antifraud provisions of this title
involving--
``(1) conduct within the United States that
constitutes significant steps in furtherance of the
violation, even if the securities transaction occurs
outside the United States and involves only foreign
investors; or
``(2) conduct occurring outside the United States
that has a foreseeable substantial effect within the
United States.''.
(3) Under the investment advisers act of 1940.--
Section 214 of the Investment Advisers Act of 1940 (15
U.S.C. 80b-14) is amended--
(A) by striking ``The district'' and
inserting the following:
``(a) In General.--The district''; and
(B) by adding at the end the following new
subsection:
``(b) Extraterritorial Jurisdiction.--The district courts
of the United States and the United States courts of any
Territory shall have jurisdiction of an action or proceeding
brought or instituted by the Commission or the United States
alleging a violation of section 206 involving--
``(1) conduct within the United States that
constitutes significant steps in furtherance of the
violation, even if the violation is committed by a
foreign adviser and involves only foreign investors; or
``(2) conduct occurring outside the United States
that has a foreseeable substantial effect within the
United States.''.
(c) Control Person Liability Under the Securities Exchange
Act of 1934.--Section 20(a) of the Securities Exchange Act of
1934 (15 U.S.C. 78t(a)) is amended by inserting after
``controlled person is liable'' the following: ``(including to
the Commission in any action brought under paragraph (1) or (3)
of section 21(d))''.
SEC. 929Q. REVISION TO RECORDKEEPING RULE.
(a) Investment Company Act of 1940 Amendments.--Section 31
of the Investment Company Act of 1940 (15 U.S.C. 80a-30) is
amended--
(1) in subsection (a)(1), by adding at the end the
following: ``Each person having custody or use of the
securities, deposits, or credits of a registered
investment company shall maintain and preserve all
records that relate to the custody or use by such
person of the securities, deposits, or credits of the
registered investment company for such period or
periods as the Commission, by rule or regulation, may
prescribe, as necessary or appropriate in the public
interest or for the protection of investors.''; and
(2) in subsection (b), by adding at the end the
following:
``(4) Records of persons with custody or use.--
``(A) In general.--Records of persons
having custody or use of the securities,
deposits, or credits of a registered investment
company that relate to such custody or use, are
subject at any time, or from time to time, to
such reasonable periodic, special, or other
examinations and other information and document
requests by representatives of the Commission,
as the Commission deems necessary or
appropriate in the public interest or for the
protection of investors.
``(B) Certain persons subject to other
regulation.--Any person that is subject to
regulation and examination by a Federal
financial institution regulatory agency (as
such term is defined under section 212(c)(2) of
title 18, United States Code) may satisfy any
examination request, information request, or
document request described under subparagraph
(A), by providing to the Commission a detailed
listing, in writing, of the securities,
deposits, or credits of the registered
investment company within the custody or use of
such person.''.
(b) Investment Advisers Act of 1940 Amendment.--Section 204
of the Investment Advisers Act of 1940 (15 U.S.C. 80b-4) is
amended by adding at the end the following new subsection:
``(d) Records of Persons With Custody or Use.--
``(1) In general.--Records of persons having
custody or use of the securities, deposits, or credits
of a client, that relate to such custody or use, are
subject at any time, or from time to time, to such
reasonable periodic, special, or other examinations and
other information and document requests by
representatives of the Commission, as the Commission
deems necessary or appropriate in the public interest
or for the protection of investors.
``(2) Certain persons subject to other
regulation.--Any person that is subject to regulation
and examination by a Federal financial institution
regulatory agency (as such term is defined under
section 212(c)(2) of title 18, United States Code) may
satisfy any examination request, information request,
or document request described under paragraph (1), by
providing the Commission with a detailed listing, in
writing, of the securities, deposits, or credits of the
client within the custody or use of such person.''.
SEC. 929R. BENEFICIAL OWNERSHIP AND SHORT-SWING PROFIT REPORTING.
(a) Beneficial Ownership Reporting.--Section 13 of the
Securities Exchange Act of 1934 (15 U.S.C. 78m) is amended--
(1) in subsection (d)(1)--
(A) by inserting after ``within ten days
after such acquisition'' the following: ``or
within such shorter time as the Commission may
establish by rule''; and
(B) by striking ``send to the issuer of the
security at its principal executive office, by
registered or certified mail, send to each
exchange where the security is traded, and'';
(2) in subsection (d)(2)--
(A) by striking ``in the statements to the
issuer and the exchange, and''; and
(B) by striking ``shall be transmitted to
the issuer and the exchange and'';
(3) in subsection (g)(1), by striking ``shall send
to the issuer of the security and''; and
(4) in subsection (g)(2)--
(A) by striking ``sent to the issuer and'';
and
(B) by striking ``shall be transmitted to
the issuer and''.
(b) Short-swing Profit Reporting.--Section 16(a) of the
Securities Exchange Act of 1934 (15 U.S.C. 78p(a)) is amended--
(1) in paragraph (1), by striking ``(and, if such
security is registered on a national securities
exchange, also with the exchange)''; and
(2) in paragraph (2)(B), by inserting after
``officer'' the following: ``, or within such shorter
time as the Commission may establish by rule''.
SEC. 929S. FINGERPRINTING.
Section 17(f)(2) of the Securities Exchange Act of 1934 (15
U.S.C. 78q(f)(2)) is amended--
(1) in the first sentence, by striking ``and
registered clearing agency,'' and inserting
``registered clearing agency, registered securities
information processor, national securities exchange,
and national securities association''; and
(2) in the second sentence, by striking ``or
clearing agency,'' and inserting ``clearing agency,
securities information processor, national securities
exchange, or national securities association,''.
SEC. 929T. 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,''.
SEC. 929U. DEADLINE FOR COMPLETING EXAMINATIONS, INSPECTIONS AND
ENFORCEMENT ACTIONS.
The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.)
is amended by inserting after section 4D the following new
section:
``SEC. 4E. DEADLINE FOR COMPLETING ENFORCEMENT INVESTIGATIONS AND
COMPLIANCE EXAMINATIONS AND INSPECTIONS.
``(a) Enforcement Investigations.--
``(1) In general.--Not later than 180 days after
the date on which Commission staff provide a written
Wells notification to any person, the Commission staff
shall either file an action against such person or
provide notice to the Director of the Division of
Enforcement of its intent to not file an action.
``(2) Exceptions for certain complex actions.--
Notwithstanding paragraph (1), if the Director of the
Division of Enforcement of the Commission or the
Director's designee determines that a particular
enforcement investigation is sufficiently complex such
that a determination regarding the filing of an action
against a person cannot be completed within the
deadline specified in paragraph (1), the Director of
the Division of Enforcement of the Commission or the
Director's designee may, after providing notice to the
Chairman of the Commission, extend such deadline as
needed for one additional 180-day period. If after the
additional 180-day period the Director of the Division
of Enforcement of the Commission or the Director's
designee determines that a particular enforcement
investigation is sufficiently complex such that a
determination regarding the filing of an action against
a person cannot be completed within the additional 180-
day period, the Director of the Division of Enforcement
of the Commission or the Director's designee may, after
providing notice to and receiving approval of the
Commission, extend such deadline as needed for one or
more additional successive 180-day periods.
``(b) Compliance Examinations and Inspections.--
``(1) In general.--Not later than 180 days after
the date on which Commission staff completes the on-
site portion of its compliance examination or
inspection or receives all records requested from the
entity being examined or inspected, whichever is later,
Commission staff shall provide the entity being
examined or inspected with written notification
indicating either that the examination or inspection
has concluded, has concluded without findings, or that
the staff requests the entity undertake corrective
action.
``(2) Exception for certain complex actions.--
Notwithstanding paragraph (1), if the head of any
division or office within the Commission responsible
for compliance examinations and inspections or his
designee determines that a particular compliance
examination or inspection is sufficiently complex such
that a determination regarding concluding the
examination or inspection, or regarding the staff
requests the entity undertake corrective action, cannot
be completed within the deadline specified in paragraph
(1), the head of any division or office within the
Commission responsible for compliance examinations and
inspections or his designee may, after providing notice
to the Chairman of the Commission, extend such deadline
as needed for one additional 180-day period.''.
SEC. 929V. SECURITY INVESTOR PROTECTION ACT AMENDMENTS.
(a) Increasing the Minimum Assessment Paid by SIPC
Members.--Section 4(d)(1)(C) of the Securities Investor
Protection Act of 1970 (15 U.S.C. 78ddd(d)(1)(C)) is amended by
striking ``$150 per annum'' and inserting the following: ``0.02
percent of the gross revenues from the securities business of
such member of SIPC''.
(b) Increasing the Fine for Prohibited Acts Under SIPA.--
Section 14(c) of the Securities Investor Protection Act of 1970
(15 U.S.C. 78jjj(c)) is amended--
(1) in paragraph (1), by striking ``$50,000'' and
inserting ``$250,000''; and
(2) in paragraph (2), by striking ``$50,000'' and
inserting ``$250,000''.
(c) Penalty for Misrepresentation of SIPC Membership or
Protection.--Section 14 of the Securities Investor Protection
Act of 1970 (15 U.S.C. 78jjj) is amended by adding at the end
the following new subsection:
``(d) Misrepresentation of SIPC Membership or Protection.--
``(1) In general.--Any person who falsely
represents by any means (including, without limitation,
through the Internet or any other medium of mass
communication), with actual knowledge of the falsity of
the representation and with an intent to deceive or
cause injury to another, that such person, or another
person, is a member of SIPC or that any person or
account is protected or is eligible for protection
under this Act or by SIPC, shall be liable for any
damages caused thereby and shall be fined not more than
$250,000 or imprisoned for not more than 5 years.
``(2) Injunctions.--Any court having jurisdiction
of a civil action arising under this Act may grant
temporary injunctions and final injunctions on such
terms as the court deems reasonable to prevent or
restrain any violation of paragraph (1). Any such
injunction may be served anywhere in the United States
on the person enjoined, shall be operative throughout
the United States, and shall be enforceable, by
proceedings in contempt or otherwise, by any United
States court having jurisdiction over that person. The
clerk of the court granting the injunction shall, when
requested by any other court in which enforcement of
the injunction is sought, transmit promptly to the
other court a certified copy of all papers in the case
on file in such clerk's office.''.
SEC. 929W. NOTICE TO MISSING SECURITY HOLDERS.
Section 17A of the Securities Exchange Act of 1934 (15
U.S.C. 78q-1) is amended by adding at the end the following new
subsection:
``(g) Due Diligence for the Delivery of Dividends,
Interest, and Other Valuable Property Rights.--
``(1) Revision of rules required.--The Commission
shall revise its regulations in section 240.17Ad-17 of
title 17, Code of Federal Regulations, as in effect on
December 8, 1997, to extend the application of such
section to brokers and dealers and to provide for the
following:
``(A) A requirement that the paying agent
provide a single written notification to each
missing security holder that the missing
security holder has been sent a check that has
not yet been negotiated. The written
notification may be sent along with a check or
other mailing subsequently sent to the missing
security holder but must be provided no later
than 7 months after the sending of the not yet
negotiated check.
``(B) An exclusion for paying agents from
the notification requirements when the value of
the not yet negotiated check is less than $25.
``(C) A provision clarifying that the
requirements described in subparagraph (A)
shall have no effect on State escheatment laws.
``(D) For purposes of such revised
regulations--
``(i) a security holder shall be
considered a `missing security holder'
if a check is sent to the security
holder and the check is not negotiated
before the earlier of the paying agent
sending the next regularly scheduled
check or the elapsing of 6 months after
the sending of the not yet negotiated
check; and
``(ii) the term `paying agent'
includes any issuer, transfer agent,
broker, dealer, investment adviser,
indenture trustee, custodian, or any
other person that accepts payments from
the issuer of a security and
distributes the payments to the holders
of the security.
``(2) Rulemaking.--The Commission shall adopt such
rules, regulations, and orders necessary to implement
this subsection no later than 1 year after the date of
enactment of this subsection. In proposing such rules,
the Commission shall seek to minimize disruptions to
current systems used by or on behalf of paying agents
to process payment to account holders and avoid
requiring multiple paying agents to send written
notification to a missing security holder regarding the
same not yet negotiated check.''.
SEC. 929X. SHORT SALE REFORMS.
(a) Short Sale Disclosure.--Section 13(f) of the Securities
Exchange Act of 1934 (15 U.S.C. 78m(f)) is amended by
redesignating paragraphs (2), (3), (4), and (5) as paragraphs
(3), (4), (5), and (6), respectively, and inserting after
paragraph (1) the following:
``(2) The Commission shall prescribe rules
providing for the public disclosure of the name of the
issuer and the title, class, CUSIP number, aggregate
amount of the number of short sales of each security,
and any additional information determined by the
Commission following the end of the reporting period.
At a minimum, such public disclosure shall occur every
month.''.
(b) Short Selling Enforcement.--Section 9 of the Securities
Exchange Act of 1934 (15 U.S.C. 78i) is amended--
(1) by redesignating subsections (d), (e), (f),
(g), (h), and (i) as subsections (e), (f), (g), (h),
(i), and (j), respectively; and
(2) inserting after subsection (c), the following
new subsection:
``(d) Transactions Relating to Short Sales of Securities.--
It shall be unlawful for any person, directly or indirectly, by
the use of the mails or any means or instrumentality of
interstate commerce, or of any facility of any national
securities exchange, or for any member of a national securities
exchange to effect, alone or with one or more other persons, a
manipulative short sale of any security. The Commission shall
issue such other rules as are necessary or appropriate to
ensure that the appropriate enforcement options and remedies
are available for violations of this subsection in the public
interest or for the protection of investors.''.
(c) Investor Notification.--Section 15 of the Securities
Exchange Act of 1934 (15 U.S.C. 78o) is amended--
(1) by redesignating subsections (e), (f), (g),
(h), and (i) as subsections (f), (g), (h), (i), and
(j), respectively; and
(2) inserting after subsection (d) the following
new subsection:
``(e) Notices to Customers Regarding Securities Lending.--
Every registered broker or dealer shall provide notice to its
customers that they may elect not to allow their fully paid
securities to be used in connection with short sales. If a
broker or dealer uses a customer's securities in connection
with short sales, the broker or dealer shall provide notice to
its customer that the broker or dealer may receive compensation
in connection with lending the customer's securities. The
Commission, by rule, as it deems necessary or appropriate in
the public interest and for the protection of investors, may
prescribe the form, content, time, and manner of delivery of
any notice required under this paragraph.''.
SEC. 929Y. STUDY ON EXTRATERRITORIAL PRIVATE RIGHTS OF ACTION.
(a) In General.--The Securities and Exchange Commission of
the United States shall solicit public comment and thereafter
conduct a study to determine the extent to which private rights
of action under the antifraud provisions of the Securities and
Exchange Act of 1934 (15 U.S.C. 78u-4) should be extended to
cover--
(1) conduct within the United States that
constitutes a significant step in the furtherance of
the violation, even if the securities transaction
occurs outside the United States and involves only
foreign investors; and
(2) conduct occurring outside the United States
that has a foreseeable substantial effect within the
United States.
(b) Contents.--The study shall consider and analyze, among
other things--
(1) the scope of such a private right of action,
including whether it should extend to all private
actors or whether it should be more limited to extend
just to institutional investors or otherwise;
(2) what implications such a private right of
action would have on international comity;
(3) the economic costs and benefits of extending a
private right of action for transnational securities
frauds; and
(4) whether a narrower extraterritorial standard
should be adopted.
(c) Report.--A report of the study shall be submitted and
recommendations made to the Committee on Banking, Housing, and
Urban Affairs of the Senate and the Committee on Financial
Services of the House not later than 18 months after the date
of enactment of this Act.
SEC. 929Z. GAO STUDY ON SECURITIES LITIGATION.
(a) Study.--The Comptroller General of the United States
shall conduct a study on the impact of authorizing a private
right of action against any person who aids or abets another
person in violation of the securities laws. To the extent
feasible, this study shall include--
(1) a review of the role of secondary actors in
companies issuance of securities;
(2) the courts interpretation of the scope of
liability for secondary actors under Federal securities
laws after January 14, 2008; and
(3) the types of lawsuits decided under the Private
Securities Litigation Act of 1995.
(b) Report.--Not later than 1 year after the date of
enactment of this Act, the Comptroller General shall submit a
report to Congress on the findings of the study required under
subsection (a).
Subtitle C--Improvements to the Regulation of Credit Rating Agencies
SEC. 931. FINDINGS.
Congress finds the following:
(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.
(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.
(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.
(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.
(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.
SEC. 932. ENHANCED REGULATION, ACCOUNTABILITY, AND TRANSPARENCY OF
NATIONALLY RECOGNIZED STATISTICAL RATING
ORGANIZATIONS.
(a) In General.--Section 15E of the Securities Exchange Act
of 1934 (15 U.S.C. 78o-7) is amended--
(1) in subsection (b)--
(A) in paragraph (1)(A), by striking
``furnished'' and inserting ``filed'' and by
striking ``furnishing'' and inserting
``filing'';
(B) in paragraph (1)(B), by striking
``furnishing'' and inserting ``filing''; and
(C) in the first sentence of paragraph (2),
by striking ``furnish to'' and inserting ``file
with'';
(2) in subsection (c)--
(A) in paragraph (2)--
(i) in the second sentence, by
inserting ``any other provision of this
section, or'' after
``Notwithstanding''; and
(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.''; and
(B) by adding at the end the following:
``(3) Internal controls over processes for
determining credit ratings.--
``(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.
``(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--
``(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);
``(ii) an assessment of the
effectiveness of the internal control
structure of the nationally recognized
statistical rating organization; and
``(iii) the attestation of the
chief executive officer, or equivalent
individual, of the nationally
recognized statistical rating
organization.'';
(3) in subsection (d)--
(A) by inserting after ``or revoke the
registration of any nationally recognized
statistical rating organization'' the
following: ``, or with respect to any person
who is associated with, who is seeking to
become associated with, or, at the time of the
alleged misconduct, who was associated or was
seeking to become associated with a nationally
recognized statistical rating organization, the
Commission, by order, shall censure, place
limitations on the activities or functions of
such person, suspend for a period not exceeding
1 year, or bar such person from being
associated with a nationally recognized
statistical rating organization,'';
(B) by inserting ``bar'' after ``placing of
limitations, suspension,'';
(C) in paragraph (2), by striking
``furnished to'' and inserting ``filed with'';
(D) in paragraph (2), by redesignating
subparagraphs (A) and (B) as clauses (i) and
(ii), respectively, and adjusting the clause
margins accordingly;
(E) by redesignating paragraphs (1) through
(5) as subparagraphs (A) through (E),
respectively, and adjusting the subparagraph
margins accordingly;
(F) in the matter preceding subparagraph
(A), as so redesignated, by striking ``The
Commission'' and inserting the following:
``(1) In general.--The Commission'';
(G) in subparagraph (D), as so
redesignated--
(i) by striking ``furnish'' and
inserting ``file''; and
(ii) by striking ``or'' at the end.
(H) in subparagraph (E), as so
redesignated, by striking the period at the end
and inserting a semicolon; and
(I) by adding at the end the following:
``(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.
``(2) Suspension or revocation for particular class
of securities.--
``(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.
``(B) Considerations.--In making any
determination under subparagraph (A), the
Commission shall consider--
``(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; and
``(ii) such other factors as the
Commission may determine.'';
(4) in subsection (h), by adding at the end the
following:
``(3) Separation of ratings from sales and
marketing.--
``(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.
``(B) Contents of rules.--The rules issued
under subparagraph (A) shall provide for--
``(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; and
``(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--
``(I) the nationally
recognized statistical rating
organization has committed a
violation of a rule issued
under this subsection; and
``(II) the violation of a
rule issued under this
subsection affected a rating.
``(4) Look-back requirement.--
``(A) Review by the nationally recognized
statistical rating organization.--Each
nationally recognized statistical rating
organization shall establish, maintain, and
enforce policies and procedures reasonably
designed to ensure that, in any case in which
an employee of a person subject to a credit
rating of the nationally recognized statistical
rating organization or the issuer, underwriter,
or sponsor of a security or money market
instrument subject to a credit rating of the
nationally recognized statistical rating
organization was employed by the nationally
recognized statistical rating organization and
participated in any capacity in determining
credit ratings for the person or the securities
or money market instruments during the 1-year
period preceding the date an action was taken
with respect to the credit rating, the
nationally recognized statistical rating
organization shall--
``(i) conduct a review to determine
whether any conflicts of interest of
the employee influenced the credit
rating; and
``(ii) take action to revise the
rating if appropriate, in accordance
with such rules as the Commission shall
prescribe.
``(B) Review by commission.--
``(i) In general.--The Commission
shall conduct periodic reviews of the
policies described in subparagraph (A)
and the implementation of the policies
at each nationally recognized
statistical rating organization to
ensure they are reasonably designed and
implemented to most effectively
eliminate conflicts of interest.
``(ii) Timing of reviews.--The
Commission shall review the code of
ethics and conflict of interest policy
of each nationally recognized
statistical rating organization--
``(I) not less frequently
than annually; and
``(II) whenever such
policies are materially
modified or amended.
``(5) Report to commission on certain employment
transitions.--
``(A) Report required.--Each nationally
recognized statistical rating organization
shall report to the Commission any case such
organization knows or can reasonably be
expected to know where a person associated with
such organization within the previous 5 years
obtains employment with any obligor, issuer,
underwriter, or sponsor of a security or money
market instrument for which the organization
issued a credit rating during the 12-month
period prior to such employment, if such
employee--
``(i) was a senior officer of such
organization;
``(ii) participated in any capacity
in determining credit ratings for such
obligor, issuer, underwriter, or
sponsor; or
``(iii) supervised an employee
described in clause (ii).
``(B) Public disclosure.--Upon receiving
such a report, the Commission shall make such
information publicly available.'';
(5) in subsection (j)--
(A) by striking ``Each'' and inserting the
following:
``(1) In general.--Each''; and
(B) by adding at the end the following:
``(2) Limitations.--
``(A) In general.--Except as provided in
subparagraph (B), an individual designated
under paragraph (1) may not, while serving in
the designated capacity--
``(i) perform credit ratings;
``(ii) participate in the
development of ratings methodologies or
models;
``(iii) perform marketing or sales
functions; or
``(iv) participate in establishing
compensation levels, other than for
employees working for that individual.
``(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.
``(3) Other duties.--Each individual designated
under paragraph (1) shall establish procedures for the
receipt, retention, and treatment of--
``(A) complaints regarding credit ratings,
models, methodologies, and compliance with the
securities laws and the policies and procedures
developed under this section; and
``(B) confidential, anonymous complaints by
employees or users of credit ratings.
``(4) Compensation.--The compensation of each
compliance officer appointed under paragraph (1) shall
not be linked to the financial performance of the
nationally recognized statistical rating organization
and shall be arranged so as to ensure the independence
of the officer's judgment.
``(5) Annual reports required.--
``(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--
``(i) a description of any material
changes to the code of ethics and
conflict of interest policies of the
nationally recognized statistical
rating organization; and
``(ii) a certification that the
report is accurate and complete.
``(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.'';
(6) in subsection (k), by striking ``furnish to''
and inserting ``file with'';
(7) in subsection (l)(2)(A)(i), by striking
``furnished'' and inserting ``filed''; and
(8) by striking subsection (p) and inserting the
following:
``(p) Regulation of Nationally Recognized Statistical
Rating Organizations.--
``(1) Establishment of office of credit ratings.--
``(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--
``(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;
``(ii) to promote accuracy in
credit ratings issued by nationally
recognized statistical rating
organizations; and
``(iii) to ensure that such ratings
are not unduly influenced by conflicts
of interest.
``(B) Director of the office.--The head of
the Office shall be the Director, who shall
report to the Chairman.
``(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.
``(3) Commission examinations.--
``(A) Annual examinations required.--The
Office shall conduct an examination of each
nationally recognized statistical rating
organization at least annually.
``(B) Conduct of examinations.--Each
examination under subparagraph (A) shall
include a review of--
``(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;
``(ii) the management of conflicts
of interest by the nationally
recognized statistical rating
organization;
``(iii) implementation of ethics
policies by the nationally recognized
statistical rating organization;
``(iv) the internal supervisory
controls of the nationally recognized
statistical rating organization;
``(v) the governance of the
nationally recognized statistical
rating organization;
``(vi) the activities of the
individual designated by the nationally
recognized statistical rating
organization under subsection (j)(1);
``(vii) the processing of
complaints by the nationally recognized
statistical rating organization; and
``(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.
``(C) Inspection reports.--The Commission
shall make available to the public, in an
easily understandable format, an annual report
summarizing--
``(i) the essential findings of all
examinations conducted under
subparagraph (A), as deemed appropriate
by the Commission;
``(ii) the responses by the
nationally recognized statistical
rating organizations to any material
regulatory deficiencies identified by
the Commission under clause (i); and
``(iii) whether the nationally
recognized statistical rating
organizations have appropriately
addressed the recommendations of the
Commission contained in previous
reports under this subparagraph.
``(4) Rulemaking authority.--The Commission shall--
``(A) establish, by rule, fines, and other
penalties applicable to any nationally
recognized statistical rating organization that
violates the requirements of this section and
the rules thereunder; and
``(B) issue such rules as may be necessary
to carry out this section.
``(q) Transparency of Ratings Performance.--
``(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.
``(2) Content.--The rules of the Commission under
this subsection shall require, at a minimum,
disclosures that--
``(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;
``(B) are clear and informative for
investors having a wide range of sophistication
who use or might use credit ratings;
``(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;
``(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;
``(E) are appropriate to the business model
of a nationally recognized statistical rating
organization; and
``(F) each nationally recognized
statistical rating organization include an
attestation with any credit rating it issues
affirming that no part of the rating was
influenced by any other business activities,
that the rating was based solely on the merits
of the instruments being rated, and that such
rating was an independent evaluation of the
risks and merits of the instrument.
``(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--
``(1) to ensure that credit ratings are determined
using procedures and methodologies, including
qualitative and quantitative data and models, that
are--
``(A) approved by the board of the
nationally recognized statistical rating
organization, a body performing a function
similar to that of a board; and
``(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;
``(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--
``(A) the changes are applied consistently
to all credit ratings to which the changed
procedures and methodologies apply;
``(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; and
``(C) the nationally recognized statistical
rating organization publicly discloses the
reason for the change; and
``(3) to notify users of credit ratings--
``(A) of the version of a procedure or
methodology, including the qualitative
methodology or quantitative inputs, used with
respect to a particular credit rating;
``(B) when a material change is made to a
procedure or methodology, including to a
qualitative model or quantitative inputs;
``(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; and
``(D) of the likelihood of a material
change described in subparagraph (B) resulting
in a change in current credit ratings.
``(s) Transparency of Credit Rating Methodologies and
Information Reviewed.--
``(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--
``(A) information relating to--
``(i) the assumptions underlying
the credit rating procedures and
methodologies;
``(ii) the data that was relied on
to determine the credit rating; and
``(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; and
``(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.
``(2) Format.--The form developed under paragraph
(1) shall--
``(A) be easy to use and helpful for users
of credit ratings to understand the information
contained in the report;
``(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; and
``(C) be made readily available to users of
credit ratings, in electronic or paper form, as
the Commission may, by rule, determine.
``(3) Content of form.--
``(A) Qualitative content.--Each nationally
recognized statistical rating organization
shall disclose on the form developed under
paragraph (1)--
``(i) the credit ratings produced
by the nationally recognized
statistical rating organization;
``(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 underlying assets used in rating
structured products;
``(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;
``(iv) information on the
uncertainty of the credit rating,
including--
``(I) information on the
reliability, accuracy, and
quality of the data relied on
in determining the credit
rating; and
``(II) a statement relating
to the extent to which data
essential to the determination
of the credit rating were
reliable or limited,
including--
``(aa) any limits
on the scope of
historical data; and
``(bb) any limits
in accessibility to
certain documents or
other types of
information that would
have better informed
the credit rating;
``(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;
``(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;
``(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;
``(viii) information relating to
conflicts of interest of the nationally
recognized statistical rating
organization; and
``(ix) such additional information
as the Commission may require.
``(B) Quantitative content.--Each
nationally recognized statistical rating
organization shall disclose on the form
developed under this subsection--
``(i) an explanation or measure of
the potential volatility of the credit
rating, including--
``(I) any factors that
might lead to a change in the
credit ratings; and
``(II) the magnitude of the
change that a user can expect
under different market
conditions;
``(ii) information on the content
of the rating, including--
``(I) the historical
performance of the rating; and
``(II) the expected
probability of default and the
expected loss in the event of
default;
``(iii) information on the
sensitivity of the rating to
assumptions made by the nationally
recognized statistical rating
organization, including--
``(I) 5 assumptions made in
the ratings process that,
without accounting for any
other factor, would have the
greatest impact on a rating if
the assumptions were proven
false or inaccurate; and
``(II) an analysis, using
specific examples, of how each
of the 5 assumptions identified
under subclause (I) impacts a
rating;
``(iv) such additional information
as may be required by the Commission.
``(4) Due diligence services for asset-backed
securities.--
``(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.
``(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).
``(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.
``(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.
``(t) Corporate Governance, Organization, and Management of
Conflicts of Interest.--
``(1) Board of directors.--Each nationally
recognized statistical rating organization shall have a
board of directors.
``(2) Independent directors.--
``(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.
``(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--
``(i) may not, other than in his or
her capacity as a member of the board
of directors or any committee thereof--
``(I) accept any
consulting, advisory, or other
compensatory fee from the
nationally recognized
statistical rating
organization; or
``(II) be a person
associated with the nationally
recognized statistical rating
organization or with any
affiliated company thereof; and
``(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.
``(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.
``(3) Duties of board of directors.--In addition to
the overall responsibilities of the board of directors,
the board shall oversee--
``(A) the establishment, maintenance, and
enforcement of policies and procedures for
determining credit ratings;
``(B) the establishment, maintenance, and
enforcement of policies and procedures to
address, manage, and disclose any conflicts of
interest;
``(C) the effectiveness of the internal
control system with respect to policies and
procedures for determining credit ratings; and
``(D) the compensation and promotion
policies and practices of the nationally
recognized statistical rating organization.
``(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--
``(A) at least \1/2\ of the members of the
committee (including the chairperson of the
committee) are independent, as defined in this
section; and
``(B) at least 1 member of the committee is
a user of ratings from a nationally recognized
statistical rating organization.
``(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.''.
(b) Conforming Amendment.--Section 3(a)(62) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(62)) is
amended by striking subparagraph (A) and redesignating
subparagraphs (B) and (C) as subparagraphs (A) and (B),
respectively.
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:
``(m) Accountability.--
``(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.
``(2) Rulemaking.--The Commission shall issue such
rules as may be necessary to carry out this
subsection.''.
(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--
(1) by striking ``In any'' and inserting the
following:
``(A) In general.--Except as provided in
subparagraph (B), in any''; and
(2) by adding at the end the following:
``(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--
``(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; or
``(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.''.
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:
``(u) Duty To Report Tips Alleging Material Violations of
Law.--
``(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.
``(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).''.
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:
``(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 or
underwriter, that the nationally recognized statistical rating
organization finds credible and potentially significant to a
rating decision.''.
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--
(1) meets standards of training, experience, and
competence necessary to produce accurate ratings for
the categories of issuers whose securities the person
rates; and
(2) is tested for knowledge of the credit rating
process.
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.
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--
(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;
(2) clearly define and disclose the meaning of any
symbol used by the nationally recognized statistical
rating organization to denote a credit rating; and
(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.
(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.
SEC. 939. REMOVAL OF STATUTORY REFERENCES TO CREDIT RATINGS.
(a) Federal Deposit Insurance Act.--The Federal Deposit
Insurance Act (12 U.S.C. 1811 et seq.) is amended--
(1) in section 7(b)(1)(E)(i), by striking ``credit
rating entities, and other private economic'' and
insert ``private economic, credit,'';
(2) in section 28(d)--
(A) in the subsection heading, by striking
``Not of Investment Grade'';
(B) in paragraph (1), by striking ``not of
investment grade'' and inserting ``that does
not meet standards of credit-worthiness as
established by the Corporation'';
(C) in paragraph (2), by striking ``not of
investment grade'';
(D) by striking paragraph (3);
(E) by redesignating paragraph (4) as
paragraph (3); and
(F) in paragraph (3), as so redesignated--
(i) by striking subparagraph (A);
(ii) by redesignating subparagraphs
(B) and (C) as subparagraphs (A) and
(B), respectively; and
(iii) in subparagraph (B), as so
redesignated, by striking ``not of
investment grade'' and inserting ``that
does not meet standards of credit-
worthiness as established by the
Corporation''; and
(3) in section 28(e)--
(A) in the subsection heading, by striking
``Not of Investment Grade'';
(B) in paragraph (1), by striking ``not of
investment grade'' and inserting ``that does
not meet standards of credit-worthiness as
established by the Corporation''; and
(C) in paragraphs (2) and (3), by striking
``not of investment grade'' each place that it
appears and inserting ``that does not meet
standards of credit-worthiness established by
the Corporation''.
(b) Federal Housing Enterprises Financial Safety and
Soundness Act of 1992.--Section 1319 of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12
U.S.C. 4519) is amended by striking ``that is a nationally
recognized statistical rating organization, as such term is
defined in section 3(a) of the Securities Exchange Act of
1934,''.
(c) Investment Company Act of 1940.--Section
6(a)(5)(A)(iv)(I) Investment Company Act of 1940 (15 U.S.C.
80a-6(a)(5)(A)(iv)(I)) is amended by striking ``is rated
investment grade by not less than 1 nationally recognized
statistical rating organization'' and inserting ``meets such
standards of credit-worthiness as the Commission shall adopt''.
(d) Revised Statutes.--Section 5136A of title LXII of the
Revised Statutes of the United States (12 U.S.C. 24a) is
amended--
(1) in subsection (a)(2)(E), by striking ``any
applicable rating'' and inserting ``standards of
credit-worthiness established by the Comptroller of the
Currency'';
(2) in the heading for subsection (a)(3) by
striking ``Rating or Comparable Requirement'' and
inserting ``Requirement'';
(3) subsection (a)(3), by amending subparagraph (A)
to read as follows:
``(A) In general.--A national bank meets
the requirements of this paragraph if the bank
is one of the 100 largest insured banks and has
not fewer than 1 issue of outstanding debt that
meets standards of credit-worthiness or other
criteria as the Secretary of the Treasury and
the Board of Governors of the Federal Reserve
System may jointly establish.''.
(4) in the heading for subsection (f), by striking
``Maintain Public Rating or'' and inserting ``Meet
Standards of Credit-worthiness''; and
(5) in subsection (f)(1), by striking ``any
applicable rating'' and inserting ``standards of
credit-worthiness established by the Comptroller of the
Currency''.
(e) Securities Exchange Act of 1934.--Section 3(a)
Securities Exchange Act of 1934 (15 U.S.C. 78a(3)(a)) is
amended--
(1) in paragraph (41), by striking ``is rated in
one of the two highest rating categories by at least
one nationally recognized statistical rating
organization'' and inserting ``meets standards of
credit-worthiness as established by the Commission'';
and
(2) in paragraph (53)(A), by striking ``is rated in
1 of the 4 highest rating categories by at least 1
nationally recognized statistical rating organization''
and inserting ``meets standards of credit-worthiness as
established by the Commission''.
(f) World Bank Discussions.--Section 3(a)(6) of the
amendment in the nature of a substitute to the text of H.R.
4645, as ordered reported from the Committee on Banking,
Finance and Urban Affairs on September 22, 1988, as enacted
into law by section 555 of Public Law 100-461, (22 U.S.C.
286hh(a)(6)), is amended by striking ``credit rating'' and
inserting ``credit-worthiness''.
(g) Effective Date.--The amendments made by this section
shall take effect 2 years after the date of enactment of this
Act.
(h) Study and Report.--
(1) In general.--Commission shall undertake a study
on the feasability and desirability of--
(A) standardizing credit ratings
terminology, so that all credit rating agencies
issue credit ratings using identical terms;
(B) standardizing the market stress
conditions under which ratings are evaluated;
(C) requiring a quantitative correspondence
between credit ratings and a range of default
probabilities and loss expectations under
standardized conditions of economic stress; and
(D) standardizing credit rating terminology
across asset classes, so that named ratings
correspond to a standard range of default
probabilities and expected losses independent
of asset class and issuing entity.
(2) Report.--Not later than 1 year after the date
of enactment of this Act, the Commission shall submit
to Congress a report containing the findings of the
study under paragraph (1) and the recommendations, if
any, of the Commission with respect to the study.
SEC. 939A. REVIEW OF RELIANCE ON RATINGS.
(a) Agency Review.--Not later than 1 year after the date of
the enactment of this subtitle, each Federal agency shall, to
the extent applicable, review--
(1) any regulation issued by such agency that
requires the use of an assessment of the credit-
worthiness of a security or money market instrument;
and
(2) any references to or requirements in such
regulations regarding credit ratings.
(b) Modifications Required.--Each such agency shall modify
any such regulations identified by the review conducted under
subsection (a) to remove any reference to or requirement of
reliance on credit ratings and to substitute in such
regulations such standard of credit-worthiness as each
respective agency shall determine as appropriate for such
regulations. In making such determination, such agencies shall
seek to establish, to the extent feasible, uniform standards of
credit-worthiness for use by each such agency, taking into
account the entities regulated by each such agency and the
purposes for which such entities would rely on such standards
of credit-worthiness.
(c) Report.--Upon conclusion of the review required under
subsection (a), each Federal agency shall transmit a report to
Congress containing a description of any modification of any
regulation such agency made pursuant to subsection (b).
SEC. 939B. ELIMINATION OF EXEMPTION FROM FAIR DISCLOSURE RULE.
Not later than 90 days after the date of enactment of this
subtitle, the Securities Exchange Commission shall revise
Regulation FD (17 C.F.R. 243.100) to remove from such
regulation the exemption for entities whose primary business is
the issuance of credit ratings (17 C.F.R. 243.100(b)(2)(iii)).
SEC. 939C. SECURITIES AND EXCHANGE COMMISSION STUDY ON STRENGTHENING
CREDIT RATING AGENCY INDEPENDENCE.
(a) Study.--The Commission shall conduct a study of--
(1) the independence of nationally recognized
statistical rating organizations; and
(2) how the independence of nationally recognized
statistical rating organizations affects the ratings
issued by the nationally recognized statistical rating
organizations.
(b) Subjects for Evaluation.--In conducting the study under
subsection (a), the Commission shall evaluate--
(1) the management of conflicts of interest raised
by a nationally recognized statistical rating
organization providing other services, including risk
management advisory services, ancillary assistance, or
consulting services;
(2) the potential impact of rules prohibiting a
nationally recognized statistical rating organization
that provides a rating to an issuer from providing
other services to the issuer; and
(3) any other issue relating to nationally
recognized statistical rating organizations, as the
Chairman of the Commission determines is appropriate.
(c) Report.--Not later than 3 years after the date of
enactment of this Act, the Chairman of 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 the results of the study
conducted under subsection (a), including recommendations, if
any, for improving the integrity of ratings issued by
nationally recognized statistical rating organizations.
SEC. 939D. GOVERNMENT ACCOUNTABILITY OFFICE STUDY ON ALTERNATIVE
BUSINESS MODELS.
(a) Study.--The Comptroller General of the United States
shall conduct a study on alternative means for compensating
nationally recognized statistical rating organizations in order
to create incentives for nationally recognized statistical
rating organizations to provide more accurate credit ratings,
including any statutory changes that would be required to
facilitate the use of an alternative means of compensation.
(b) 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 results of the study conducted
under subsection (a), including recommendations, if any, for
providing incentives to credit rating agencies to improve the
credit rating process.
SEC. 939E. GOVERNMENT ACCOUNTABILITY OFFICE STUDY ON THE CREATION OF AN
INDEPENDENT PROFESSIONAL ANALYST ORGANIZATION.
(a) Study.--The Comptroller General of the United States
shall conduct a study on the feasibility and merits of creating
an independent professional organization for rating analysts
employed by nationally recognized statistical rating
organizations that would be responsible for--
(1) establishing independent standards for
governing the profession of rating analysts;
(2) establishing a code of ethical conduct; and
(3) overseeing the profession of rating analysts.
(b) Report.--Not later than 1 year after the date of
publication of the rules issued by the Commission pursuant to
section 936, 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 results of the study conducted
under subsection (a).
SEC. 939F. STUDY AND RULEMAKING ON ASSIGNED CREDIT RATINGS.
(a) Definition.--In this section, the term ``structured
finance product'' means an asset-backed security, as defined in
section 3(a)(77) of the Securities Exchange Act of 1934, as
added by section 941, and any structured product based on an
asset-backed security, as determined by the Commission, by
rule.
(b) Study.--The Commission shall carry out a study of--
(1) the credit rating process for structured
finance products and the conflicts of interest
associated with the issuer-pay and the subscriber-pay
models;
(2) the feasibility of establishing a system in
which a public or private utility or a self-regulatory
organization assigns nationally recognized statistical
rating organizations to determine the credit ratings of
structured finance products, including--
(A) an assessment of potential mechanisms
for determining fees for the nationally
recognized statistical rating organizations;
(B) appropriate methods for paying fees to
the nationally recognized statistical rating
organizations;
(C) the extent to which the creation of
such a system would be viewed as the creation
of moral hazard by the Federal Government; and
(D) any constitutional or other issues
concerning the establishment of such a system;
(3) the range of metrics that could be used to
determine the accuracy of credit ratings; and
(4) alternative means for compensating nationally
recognized statistical rating organizations that would
create incentives for accurate credit ratings.
(c) Report and Recommendation.--Not later than 24 months
after the date of enactment of this Act, 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 that contains--
(1) the findings of the study required under
subsection (b); and
(2) any recommendations for regulatory or statutory
changes that the Commission determines should be made
to implement the findings of the study required under
subsection (b).
(d) Rulemaking.--
(1) Rulemaking.--After submission of the report
under subsection (c), the Commission shall, by rule, as
the Commission determines is necessary or appropriate
in the public interest or for the protection of
investors, establish a system for the assignment of
nationally recognized statistical rating organizations
to determine the initial credit ratings of structured
finance products, in a manner that prevents the issuer,
sponsor, or underwriter of the structured finance
product from selecting the nationally recognized
statistical rating organization that will determine the
initial credit ratings and monitor such credit ratings.
In issuing any rule under this paragraph, the
Commission shall give thorough consideration to the
provisions of section 15E(w) of the Securities Exchange
Act of 1934, as that provision would have been added by
section 939D of H.R. 4173 (111th Congress), as passed
by the Senate on May 20, 2010, and shall implement the
system described in such section 939D unless the
Commission determines that an alternative system would
better serve the public interest and the protection of
investors.
(2) Rule of construction.--Nothing in this
subsection may be construed to limit or suspend any
other rulemaking authority of the Commission.
SEC. 939G. EFFECT OF RULE 436(G).
Rule 436(g), promulgated by the Securities and Exchange
Commission under the Securities Act of 1933, shall have no
force or effect.
SEC. 939H. SENSE OF CONGRESS.
It is the sense of Congress that the Securities and
Exchange Commission should exercise the rulemaking authority of
the Commission under section 15E(h)(2)(B) of the Securities
Exchange Act of 1934 (15 U.S.C. 78o-7(h)(2)(B)) to prevent
improper conflicts of interest arising from employees of
nationally recognized statistical rating organizations
providing services to issuers of securities that are unrelated
to the issuance of credit ratings, including consulting,
advisory, and other services.
Subtitle D--Improvements to the Asset-Backed Securitization Process
SEC. 941. REGULATION OF CREDIT RISK RETENTION.
(a) Definition of Asset-backed Security.--Section 3(a) of
the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)) is
amended by adding at the end the following:
``(77) Asset-backed security.--The term `asset-
backed security'--
``(A) means a fixed-income or other
security collateralized by any type of self-
liquidating financial asset (including a loan,
a lease, a mortgage, or a secured or unsecured
receivable) that allows the holder of the
security to receive payments that depend
primarily on cash flow from the asset,
including--
``(i) a collateralized mortgage
obligation;
``(ii) a collateralized debt
obligation;
``(iii) a collateralized bond
obligation;
``(iv) a collateralized debt
obligation of asset-backed securities;
``(v) a collateralized debt
obligation of collateralized debt
obligations; and
``(vi) a security that the
Commission, by rule, determines to be
an asset-backed security for purposes
of this section; and
``(B) does not include a security issued by
a finance subsidiary held by the parent company
or a company controlled by the parent company,
if none of the securities issued by the finance
subsidiary are held by an entity that is not
controlled by the parent company.''.
(b) Credit Risk Retention.--The Securities Exchange Act of
1934 (15 U.S.C. 78a et seq.) is amended by inserting after
section 15F, as added by this Act, the following:
``SEC. 15G. CREDIT RISK RETENTION.
``(a) Definitions.--In this section--
``(1) the term `Federal banking agencies' means the
Office of the Comptroller of the Currency, the Board of
Governors of the Federal Reserve System, and the
Federal Deposit Insurance Corporation;
``(2) the term `insured depository institution' has
the same meaning as in section 3(c) of the Federal
Deposit Insurance Act (12 U.S.C. 1813(c));
``(3) the term `securitizer' means--
``(A) an issuer of an asset-backed
security; or
``(B) a person who organizes and initiates
an asset-backed securities transaction by
selling or transferring assets, either directly
or indirectly, including through an affiliate,
to the issuer; and
``(4) the term `originator' means a person who--
``(A) through the extension of credit or
otherwise, creates a financial asset that
collateralizes an asset-backed security; and
``(B) sells an asset directly or indirectly
to a securitizer.
``(b) Regulations Required.--
``(1) In general.--Not later than 270 days after
the date of enactment of this section, the Federal
banking agencies and the Commission shall jointly
prescribe regulations to require any securitizer to
retain an economic interest in a portion of the credit
risk for any asset that the securitizer, through the
issuance of an asset-backed security, transfers, sells,
or conveys to a third party.
``(2) Residential mortgages.--Not later than 270
days after the date of the enactment of this section,
the Federal banking agencies, the Commission, the
Secretary of Housing and Urban Development, and the
Federal Housing Finance Agency, shall jointly prescribe
regulations to require any securitizer to retain an
economic interest in a portion of the credit risk for
any residential mortgage asset that the securitizer,
through the issuance of an asset-backed security,
transfers, sells, or conveys to a third party.
``(c) Standards for Regulations.--
``(1) Standards.--The regulations prescribed under
subsection (b) shall--
``(A) prohibit a securitizer from directly
or indirectly hedging or otherwise transferring
the credit risk that the securitizer is
required to retain with respect to an asset;
``(B) require a securitizer to retain--
``(i) not less than 5 percent of
the credit risk for any asset--
``(I) that is not a
qualified residential mortgage
that is transferred, sold, or
conveyed through the issuance
of an asset-backed security by
the securitizer; or
``(II) that is a qualified
residential mortgage that is
transferred, sold, or conveyed
through the issuance of an
asset-backed security by the
securitizer, if 1 or more of
the assets that collateralize
the asset-backed security are
not qualified residential
mortgages; or
``(ii) less than 5 percent of the
credit risk for an asset that is not a
qualified residential mortgage that is
transferred, sold, or conveyed through
the issuance of an asset-backed
security by the securitizer, if the
originator of the asset meets the
underwriting standards prescribed under
paragraph (2)(B);
``(C) specify--
``(i) the permissible forms of risk
retention for purposes of this section;
``(ii) the minimum duration of the
risk retention required under this
section; and
``(iii) that a securitizer is not
required to retain any part of the
credit risk for an asset that is
transferred, sold or conveyed through
the issuance of an asset-backed
security by the securitizer, if all of
the assets that collateralize the
asset-backed security are qualified
residential mortgages;
``(D) apply, regardless of whether the
securitizer is an insured depository
institution;
``(E) with respect to a commercial
mortgage, specify the permissible types, forms,
and amounts of risk retention that would meet
the requirements of subparagraph (B), which in
the determination of the Federal banking
agencies and the Commission may include--
``(i) retention of a specified
amount or percentage of the total
credit risk of the asset;
``(ii) retention of the first-loss
position by a third-party purchaser
that specifically negotiates for the
purchase of such first loss position,
holds adequate financial resources to
back losses, provides due diligence on
all individual assets in the pool
before the issuance of the asset-backed
securities, and meets the same
standards for risk retention as the
Federal banking agencies and the
Commission require of the securitizer;
``(iii) a determination by the
Federal banking agencies and the
Commission that the underwriting
standards and controls for the asset
are adequate; and
``(iv) provision of adequate
representations and warranties and
related enforcement mechanisms; and
``(F) establish appropriate standards for
retention of an economic interest with respect
to collateralized debt obligations, securities
collateralized by collateralized debt
obligations, and similar instruments
collateralized by other asset-backed
securities; and
``(G) provide for--
``(i) a total or partial exemption
of any securitization, as may be
appropriate in the public interest and
for the protection of investors;
``(ii) a total or partial exemption
for the securitization of an asset
issued or guaranteed by the United
States, or an agency of the United
States, as the Federal banking agencies
and the Commission jointly determine
appropriate in the public interest and
for the protection of investors, except
that, for purposes of this clause, the
Federal National Mortgage Association
and the Federal Home Loan Mortgage
Corporation are not agencies of the
United States;
``(iii) a total or partial
exemption for any asset-backed security
that is a security issued or guaranteed
by any State of the United States, or
by any political subdivision of a State
or territory, or by any public
instrumentality of a State or territory
that is exempt from the registration
requirements of the Securities Act of
1933 by reason of section 3(a)(2) of
that Act (15 U.S.C. 77c(a)(2)), or a
security defined as a qualified
scholarship funding bond in section
150(d)(2) of the Internal Revenue Code
of 1986, as may be appropriate in the
public interest and for the protection
of investors; and
``(iv) the allocation of risk
retention obligations between a
securitizer and an originator in the
case of a securitizer that purchases
assets from an originator, as the
Federal banking agencies and the
Commission jointly determine
appropriate.
``(2) Asset classes.--
``(A) Asset classes.--The regulations
prescribed under subsection (b) shall establish
asset classes with separate rules for
securitizers of different classes of assets,
including residential mortgages, commercial
mortgages, commercial loans, auto loans, and
any other class of assets that the Federal
banking agencies and the Commission deem
appropriate.
``(B) Contents.--For each asset class
established under subparagraph (A), the
regulations prescribed under subsection (b)
shall include underwriting standards
established by the Federal banking agencies
that specify the terms, conditions, and
characteristics of a loan within the asset
class that indicate a low credit risk with
respect to the loan.
``(d) Originators.--In determining how to allocate risk
retention obligations between a securitizer and an originator
under subsection (c)(1)(E)(iv), the Federal banking agencies
and the Commission shall--
``(1) reduce the percentage of risk retention
obligations required of the securitizer by the
percentage of risk retention obligations required of
the originator; and
``(2) consider--
``(A) whether the assets sold to the
securitizer have terms, conditions, and
characteristics that reflect low credit risk;
``(B) whether the form or volume of
transactions in securitization markets creates
incentives for imprudent origination of the
type of loan or asset to be sold to the
securitizer; and
``(C) the potential impact of the risk
retention obligations on the access of
consumers and businesses to credit on
reasonable terms, which may not include the
transfer of credit risk to a third party.
``(e) Exemptions, Exceptions, and Adjustments.--
``(1) In general.--The Federal banking agencies and
the Commission may jointly adopt or issue exemptions,
exceptions, or adjustments to the rules issued under
this section, including exemptions, exceptions, or
adjustments for classes of institutions or assets
relating to the risk retention requirement and the
prohibition on hedging under subsection (c)(1).
``(2) Applicable standards.--Any exemption,
exception, or adjustment adopted or issued by the
Federal banking agencies and the Commission under this
paragraph shall--
``(A) help ensure high quality underwriting
standards for the securitizers and originators
of assets that are securitized or available for
securitization; and
``(B) encourage appropriate risk management
practices by the securitizers and originators
of assets, improve the access of consumers and
businesses to credit on reasonable terms, or
otherwise be in the public interest and for the
protection of investors.
``(3) Certain institutions and programs exempt.--
``(A) Farm credit system institutions.--
Notwithstanding any other provision of this
section, the requirements of this section shall
not apply to any loan or other financial asset
made, insured, guaranteed, or purchased by any
institution that is subject to the supervision
of the Farm Credit Administration, including
the Federal Agricultural Mortgage Corporation.
``(B) Other federal programs.--This section
shall not apply to any residential,
multifamily, or health care facility mortgage
loan asset, or securitization based directly or
indirectly on such an asset, which is insured
or guaranteed by the United States or an agency
of the United States. For purposes of this
subsection, the Federal National Mortgage
Association, the Federal Home Loan Mortgage
Corporation, and the Federal home loan banks
shall not be considered an agency of the United
States.
``(4) Exemption for qualified residential
mortgages.--
``(A) In general.--The Federal banking
agencies, the Commission, the Secretary of
Housing and Urban Development, and the Director
of the Federal Housing Finance Agency shall
jointly issue regulations to exempt qualified
residential mortgages from the risk retention
requirements of this subsection.
``(B) Qualified residential mortgage.--The
Federal banking agencies, the Commission, the
Secretary of Housing and Urban Development, and
the Director of the Federal Housing Finance
Agency shall jointly define the term `qualified
residential mortgage' for purposes of this
subsection, taking into consideration
underwriting and product features that
historical loan performance data indicate
result in a lower risk of default, such as--
``(i) documentation and
verification of the financial resources
relied upon to qualify the mortgagor;
``(ii) standards with respect to--
``(I) the residual income
of the mortgagor after all
monthly obligations;
``(II) the ratio of the
housing payments of the
mortgagor to the monthly income
of the mortgagor;
``(III) the ratio of total
monthly installment payments of
the mortgagor to the income of
the mortgagor;
``(iii) mitigating the potential
for payment shock on adjustable rate
mortgages through product features and
underwriting standards;
``(iv) mortgage guarantee insurance
or other types of insurance or credit
enhancement obtained at the time of
origination, to the extent such
insurance or credit enhancement reduces
the risk of default; and
``(v) prohibiting or restricting
the use of balloon payments, negative
amortization, prepayment penalties,
interest-only payments, and other
features that have been demonstrated to
exhibit a higher risk of borrower
default.
``(C) Limitation on definition.--The
Federal banking agencies, the Commission, the
Secretary of Housing and Urban Development, and
the Director of the Federal Housing Finance
Agency in defining the term `qualified
residential mortgage', as required by
subparagraph (B), shall define that term to be
no broader than the definition `qualified
mortgage' as the term is defined under section
129C(c)(2) of the Truth in Lending Act, as
amended by the Consumer Financial Protection
Act of 2010, and regulations adopted
thereunder.
``(5) Condition for qualified residential mortgage
exemption.--The regulations issued under paragraph (4)
shall provide that an asset-backed security that is
collateralized by tranches of other asset-backed
securities shall not be exempt from the risk retention
requirements of this subsection.
``(6) Certification.--The Commission shall require
an issuer to certify, for each issuance of an asset-
backed security collateralized exclusively by qualified
residential mortgages, that the issuer has evaluated
the effectiveness of the internal supervisory controls
of the issuer with respect to the process for ensuring
that all assets that collateralize the asset-backed
security are qualified residential mortgages.
``(f) Enforcement.--The regulations issued under this
section shall be enforced by--
``(1) the appropriate Federal banking agency, with
respect to any securitizer that is an insured
depository institution; and
``(2) the Commission, with respect to any
securitizer that is not an insured depository
institution.
``(g) Authority of Commission.--The authority of the
Commission under this section shall be in addition to the
authority of the Commission to otherwise enforce the securities
laws.
``(h) Authority to Coordinate on Rulemaking.--The
Chairperson of the Financial Stability Oversight Council shall
coordinate all joint rulemaking required under this section.
``(i) Effective Date of Regulations.--The regulations
issued under this section shall become effective--
``(1) with respect to securitizers and originators
of asset-backed securities backed by residential
mortgages, 1 year after the date on which final rules
under this section are published in the Federal
Register; and
``(2) with respect to securitizers and originators
of all other classes of asset-backed securities, 2
years after the date on which final rules under this
section are published in the Federal Register.''.
(c) Study on Risk Retention.--
(1) Study.--The Board of Governors of the Federal
Reserve System, in coordination and consultation with
the Comptroller of the Currency, the Director of the
Office of Thrift Supervision, the Chairperson of the
Federal Deposit Insurance Corporation, and the
Securities and Exchange Commission shall conduct a
study of the combined impact on each individual class
of asset-backed security established under section
15G(c)(2) of the Securities Exchange Act of 1934, as
added by subsection (b), of--
(A) the new credit risk retention
requirements contained in the amendment made by
subsection (b), including the effect credit
risk retention requirements have on increasing
the market for Federally subsidized loans; and
(B) the Financial Accounting Statements 166
and 167 issued by the Financial Accounting
Standards Board.
(2) Report.--Not later than 90 days after the date
of enactment of this Act, the Board of Governors of the
Federal Reserve System shall submit to Congress a
report on the study conducted under paragraph (1). Such
report shall include statutory and regulatory
recommendations for eliminating any negative impacts on
the continued viability of the asset-backed
securitization markets and on the availability of
credit for new lending identified by the study
conducted under paragraph (1).
SEC. 942. DISCLOSURES AND REPORTING FOR ASSET-BACKED SECURITIES.
(a) Securities Exchange Act of 1934.--Section 15(d) of the
Securities Exchange Act of 1934 (15 U.S.C. 78o(d)) is amended--
(1) by striking ``(d) Each'' and inserting the
following:
``(d) Supplementary and Periodic Information.--
``(1) In general.--Each'';
(2) in the third sentence, by inserting after
``securities of each class'' the following: ``, other
than any class of asset-backed securities,''; and
(3) by adding at the end the following:
``(2) Asset-backed securities.--
``(A) Suspension of duty to file.--The
Commission may, by rule or regulation, provide
for the suspension or termination of the duty
to file under this subsection for any class of
asset-backed security, on such terms and
conditions and for such period or periods as
the Commission deems necessary or appropriate
in the public interest or for the protection of
investors.
``(B) Classification of issuers.--The
Commission may, for purposes of this
subsection, classify issuers and prescribe
requirements appropriate for each class of
issuers of asset-backed securities.''.
(b) Securities Act of 1933.--Section 7 of the Securities
Act of 1933 (15 U.S.C. 77g) is amended by adding at the end the
following:
``(c) Disclosure Requirements.--
``(1) In general.--The Commission shall adopt
regulations under this subsection requiring each issuer
of an asset-backed security to disclose, for each
tranche or class of security, information regarding the
assets backing that security.
``(2) Content of regulations.--In adopting
regulations under this subsection, the Commission
shall--
``(A) set standards for the format of the
data provided by issuers of an asset-backed
security, which shall, to the extent feasible,
facilitate comparison of such data across
securities in similar types of asset classes;
and
``(B) require issuers of asset-backed
securities, at a minimum, to disclose asset-
level or loan-level data, if such data are
necessary for investors to independently
perform due diligence, including--
``(i) data having unique
identifiers relating to loan brokers or
originators;
``(ii) the nature and extent of the
compensation of the broker or
originator of the assets backing the
security; and
``(iii) the amount of risk
retention by the originator and the
securitizer of such assets.''.
SEC. 943. REPRESENTATIONS AND WARRANTIES IN ASSET-BACKED OFFERINGS.
Not later than 180 days after the date of enactment of this
Act, the Securities and Exchange Commission shall prescribe
regulations on the use of representations and warranties in the
market for asset-backed securities (as that term is defined in
section 3(a)(77) of the Securities Exchange Act of 1934, as
added by this subtitle) that--
(1) require each national recognized statistical
rating organization to include in any report
accompanying a credit rating a description of--
(A) the representations, warranties, and
enforcement mechanisms available to investors;
and
(B) how they differ from the
representations, warranties, and enforcement
mechanisms in issuances of similar securities;
and
(2) require any securitizer (as that term is
defined in section 15G(a) of the Securities Exchange
Act of 1934, as added by this subtitle) to disclose
fulfilled and unfulfilled repurchase requests across
all trusts aggregated by the securitizer, so that
investors may identify asset originators with clear
underwriting deficiencies.
SEC. 944. EXEMPTED TRANSACTIONS UNDER THE SECURITIES ACT OF 1933.
(a) Exemption Eliminated.--Section 4 of the Securities Act
of 1933 (15 U.S.C. 77d) is amended--
(1) by striking paragraph (5); and
(2) by striking ``(6) transactions'' and inserting
the following:
``(5) transactions''.
(b) Conforming Amendment.--Section 3(a)(4)(B)(vii)(I) of
the Securities Exchange Act of 1934 (15 U.S.C.
78c(a)(4)(B)(vii)(I)) is amended by striking ``4(6)'' and
inserting ``4(5)''.
SEC. 945. DUE DILIGENCE ANALYSIS AND DISCLOSURE IN ASSET-BACKED
SECURITIES ISSUES.
Section 7 of the Securities Act of 1933 (15 U.S.C. 77g), as
amended by this subtitle, is amended by adding at the end the
following:
``(d) Registration Statement for Asset-backed Securities.--
Not later than 180 days after the date of enactment of this
subsection, the Commission shall issue rules relating to the
registration statement required to be filed by any issuer of an
asset-backed security (as that term is defined in section
3(a)(77) of the Securities Exchange Act of 1934) that require
any issuer of an asset-backed security--
``(1) to perform a review of the assets underlying
the asset-backed security; and
``(2) to disclose the nature of the review under
paragraph (1).''.
SEC. 946. STUDY ON THE MACROECONOMIC EFFECTS OF RISK RETENTION
REQUIREMENTS.
(a) Study Required.--The Chairman of the Financial Services
Oversight Council shall carry out a study on the macroeconomic
effects of the risk retention requirements under this subtitle,
and the amendments made by this subtitle, with emphasis placed
on potential beneficial effects with respect to stabilizing the
real estate market. Such study shall include--
(1) an analysis of the effects of risk retention on
real estate asset price bubbles, including a
retrospective estimate of what fraction of real estate
losses may have been averted had such requirements been
in force in recent years;
(2) an analysis of the feasibility of minimizing
real estate price bubbles by proactively adjusting the
percentage of risk retention that must be borne by
creditors and securitizers of real estate debt, as a
function of regional or national market conditions;
(3) a comparable analysis for proactively adjusting
mortgage origination requirements;
(4) an assessment of whether such proactive
adjustments should be made by an independent regulator,
or in a formulaic and transparent manner;
(5) an assessment of whether such adjustments
should take place independently or in concert with
monetary policy; and
(6) recommendations for implementation and enabling
legislation.
(b) Report.--Not later than the end of the 180-day period
beginning on the date of the enactment of this title, the
Chairman of the Financial Services Oversight Council shall
issue a report to the Congress containing any findings and
determinations made in carrying out the study required under
subsection (a).
Subtitle E--Accountability and Executive Compensation
SEC. 951. SHAREHOLDER VOTE ON EXECUTIVE COMPENSATION DISCLOSURES.
The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.)
is amended by inserting after section 14 (15 U.S.C. 78n) the
following:
``SEC. 14A. SHAREHOLDER APPROVAL OF EXECUTIVE COMPENSATION.
``(a) Separate Resolution Required.--
``(1) In general.--Not less frequently than once
every 3 years, a proxy or consent or authorization for
an annual or other meeting of the shareholders for
which the proxy solicitation rules of the Commission
require compensation disclosure shall include a
separate resolution subject to shareholder vote to
approve the compensation of executives, as disclosed
pursuant to section 229.402 of title 17, Code of
Federal Regulations, or any successor thereto.
``(2) Frequency of vote.--Not less frequently than
once every 6 years, a proxy or consent or authorization
for an annual or other meeting of the shareholders for
which the proxy solicitation rules of the Commission
require compensation disclosure shall include a
separate resolution subject to shareholder vote to
determine whether votes on the resolutions required
under paragraph (1) will occur every 1, 2, or 3 years.
``(3) Effective date.--The proxy or consent or
authorization for the first annual or other meeting of
the shareholders occurring after the end of the 6-month
period beginning on the date of enactment of this
section shall include--
``(A) the resolution described in paragraph
(1); and
``(B) a separate resolution subject to
shareholder vote to determine whether votes on
the resolutions required under paragraph (1)
will occur every 1, 2, or 3 years.
``(b) Shareholder Approval of Golden Parachute
Compensation.--
``(1) Disclosure.--In any proxy or consent
solicitation material (the solicitation of which is
subject to the rules of the Commission pursuant to
subsection (a)) for a meeting of the shareholders
occurring after the end of the 6-month period beginning
on the date of enactment of this section, at which
shareholders are asked to approve an acquisition,
merger, consolidation, or proposed sale or other
disposition of all or substantially all the assets of
an issuer, the person making such solicitation shall
disclose in the proxy or consent solicitation material,
in a clear and simple form in accordance with
regulations to be promulgated by the Commission, any
agreements or understandings that such person has with
any named executive officers of such issuer (or of the
acquiring issuer, if such issuer is not the acquiring
issuer) concerning any type of compensation (whether
present, deferred, or contingent) that is based on or
otherwise relates to the acquisition, merger,
consolidation, sale, or other disposition of all or
substantially all of the assets of the issuer and the
aggregate total of all such compensation that may (and
the conditions upon which it may) be paid or become
payable to or on behalf of such executive officer.
``(2) Shareholder approval.--Any proxy or consent
or authorization relating to the proxy or consent
solicitation material containing the disclosure
required by paragraph (1) shall include a separate
resolution subject to shareholder vote to approve such
agreements or understandings and compensation as
disclosed, unless such agreements or understandings
have been subject to a shareholder vote under
subsection (a).
``(c) Rule of Construction.--The shareholder vote referred
to in subsections (a) and (b) shall not be binding on the
issuer or the board of directors of an issuer, and may not be
construed--
``(1) as overruling a decision by such issuer or
board of directors;
``(2) to create or imply any change to the
fiduciary duties of such issuer or board of directors;
``(3) to create or imply any additional fiduciary
duties for such issuer or board of directors; or
``(4) to restrict or limit the ability of
shareholders to make proposals for inclusion in proxy
materials related to executive compensation.
``(d) Disclosure of Votes.--Every institutional investment
manager subject to section 13(f) shall report at least annually
how it voted on any shareholder vote pursuant to subsections
(a) and (b), unless such vote is otherwise required to be
reported publicly by rule or regulation of the Commission.
``(e) Exemption.--The Commission may, by rule or order,
exempt an issuer or class of issuers from the requirement under
subsection (a) or (b). In determining whether to make an
exemption under this subsection, the Commission shall take into
account, among other considerations, whether the requirements
under subsections (a) and (b) disproportionately burdens small
issuers.''.
SEC. 952. COMPENSATION COMMITTEE INDEPENDENCE.
(a) In General.--The Securities Exchange Act of 1934 (15
U.S.C. 78 et seq.) is amended by inserting after section 10B,
as added by section 753, the following:
``SEC. 10C. COMPENSATION COMMITTEES.
``(a) Independence of Compensation Committees.--
``(1) Listing standards.--The Commission shall, by
rule, direct the national securities exchanges and
national securities associations to prohibit the
listing of any equity security of an issuer, other than
an issuer that is a controlled company, limited
partnership, company in bankruptcy proceedings, open-
ended management investment company that is registered
under the Investment Company Act of 1940, or a foreign
private issuer that provides annual disclosures to
shareholders of the reasons that the foreign private
issuer does not have an independent compensation
committee, that does not comply with the requirements
of this subsection.
``(2) Independence of compensation committees.--The
rules of the Commission under paragraph (1) shall
require that each member of the compensation committee
of the board of directors of an issuer be--
``(A) a member of the board of directors of
the issuer; and
``(B) independent.
``(3) Independence.--The rules of the Commission
under paragraph (1) shall require that, in determining
the definition of the term `independence' for purposes
of paragraph (2), the national securities exchanges and
the national securities associations shall consider
relevant factors, including--
``(A) the source of compensation of a
member of the board of directors of an issuer,
including any consulting, advisory, or other
compensatory fee paid by the issuer to such
member of the board of directors; and
``(B) whether a member of the board of
directors of an issuer is affiliated with the
issuer, a subsidiary of the issuer, or an
affiliate of a subsidiary of the issuer.
``(4) Exemption authority.--The rules of the
Commission under paragraph (1) shall permit a national
securities exchange or a national securities
association to exempt a particular relationship from
the requirements of paragraph (2), with respect to the
members of a compensation committee, as the national
securities exchange or national securities association
determines is appropriate, taking into consideration
the size of an issuer and any other relevant factors.
``(b) Independence of Compensation Consultants and Other
Compensation Committee Advisers.--
``(1) In general.--The compensation committee of an
issuer may only select a compensation consultant, legal
counsel, or other adviser to the compensation committee
after taking into consideration the factors identified
by the Commission under paragraph (2).
``(2) Rules.--The Commission shall identify factors
that affect the independence of a compensation
consultant, legal counsel, or other adviser to a
compensation committee of an issuer. Such factors shall
be competitively neutral among categories of
consultants, legal counsel, or other advisers and
preserve the ability of compensation committees to
retain the services of members of any such category,
and shall include--
``(A) the provision of other services to
the issuer by the person that employs the
compensation consultant, legal counsel, or
other adviser;
``(B) the amount of fees received from the
issuer by the person that employs the
compensation consultant, legal counsel, or
other adviser, as a percentage of the total
revenue of the person that employs the
compensation consultant, legal counsel, or
other adviser;
``(C) the policies and procedures of the
person that employs the compensation
consultant, legal counsel, or other adviser
that are designed to prevent conflicts of
interest;
``(D) any business or personal relationship
of the compensation consultant, legal counsel,
or other adviser with a member of the
compensation committee; and
``(E) any stock of the issuer owned by the
compensation consultant, legal counsel, or
other adviser.
``(c) Compensation Committee Authority Relating to
Compensation Consultants.--
``(1) Authority to retain compensation
consultant.--
``(A) In general.--The compensation
committee of an issuer, in its capacity as a
committee of the board of directors, may, in
its sole discretion, retain or obtain the
advice of a compensation consultant.
``(B) Direct responsibility of compensation
committee.--The compensation committee of an
issuer shall be directly responsible for the
appointment, compensation, and oversight of the
work of a compensation consultant.
``(C) Rule of construction.--This paragraph
may not be construed--
``(i) to require the compensation
committee to implement or act
consistently with the advice or
recommendations of the compensation
consultant; or
``(ii) to affect the ability or
obligation of a compensation committee
to exercise its own judgment in
fulfillment of the duties of the
compensation committee.
``(2) Disclosure.--In any proxy or consent
solicitation material for an annual meeting of the
shareholders (or a special meeting in lieu of the
annual meeting) occurring on or after the date that is
1 year after the date of enactment of this section,
each issuer shall disclose in the proxy or consent
material, in accordance with regulations of the
Commission, whether--
``(A) the compensation committee of the
issuer retained or obtained the advice of a
compensation consultant; and
``(B) the work of the compensation
consultant has raised any conflict of interest
and, if so, the nature of the conflict and how
the conflict is being addressed.
``(d) Authority To Engage Independent Legal Counsel and
Other Advisers.--
``(1) In general.--The compensation committee of an
issuer, in its capacity as a committee of the board of
directors, may, in its sole discretion, retain and
obtain the advice of independent legal counsel and
other advisers.
``(2) Direct responsibility of compensation
committee.--The compensation committee of an issuer
shall be directly responsible for the appointment,
compensation, and oversight of the work of independent
legal counsel and other advisers.
``(3) Rule of construction.--This subsection may
not be construed--
``(A) to require a compensation committee
to implement or act consistently with the
advice or recommendations of independent legal
counsel or other advisers under this
subsection; or
``(B) to affect the ability or obligation
of a compensation committee to exercise its own
judgment in fulfillment of the duties of the
compensation committee.
``(e) Compensation of Compensation Consultants, Independent
Legal Counsel, and Other Advisers.--Each issuer shall provide
for appropriate funding, as determined by the compensation
committee in its capacity as a committee of the board of
directors, for payment of reasonable compensation--
``(1) to a compensation consultant; and
``(2) to independent legal counsel or any other
adviser to the compensation committee.
``(f) Commission Rules.--
``(1) In general.--Not later than 360 days after
the date of enactment of this section, the Commission
shall, by rule, direct the national securities
exchanges and national securities associations to
prohibit the listing of any security of an issuer that
is not in compliance with the requirements of this
section.
``(2) Opportunity to cure defects.--The rules of
the Commission under paragraph (1) shall provide for
appropriate procedures for an issuer to have a
reasonable opportunity to cure any defects that would
be the basis for the prohibition under paragraph (1),
before the imposition of such prohibition.
``(3) Exemption authority.--
``(A) In general.--The rules of the
Commission under paragraph (1) shall permit a
national securities exchange or a national
securities association to exempt a category of
issuers from the requirements under this
section, as the national securities exchange or
the national securities association determines
is appropriate.
``(B) Considerations.--In determining
appropriate exemptions under subparagraph (A),
the national securities exchange or the
national securities association shall take into
account the potential impact of the
requirements of this section on smaller
reporting issuers.
``(g) Controlled Company Exemption.--
``(1) In general.--This section shall not apply to
any controlled company.
``(2) Definition.--For purposes of this section,
the term `controlled company' means an issuer--
``(A) that is listed on a national
securities exchange or by a national securities
association; and
``(B) that holds an election for the board
of directors of the issuer in which more than
50 percent of the voting power is held by an
individual, a group, or another issuer.''.
(b) Study and Report.--
(1) Study.--The Securities and Exchange Commission
shall conduct a study and review of the use of
compensation consultants and the effects of such use.
(2) Report.--Not later than 2 years after the date
of the enactment of this Act, the Commission shall
submit a report to Congress on the results of the study
and review required by this subsection.
SEC. 953. EXECUTIVE COMPENSATION DISCLOSURES.
(a) Disclosure of Pay Versus Performance.--Section 14 of
the Securities Exchange Act of 1934 (15 U.S.C. 78n), as amended
by this title, is amended by adding at the end the following:
``(i) Disclosure of Pay Versus Performance.--The Commission
shall, by rule, require each issuer to disclose in any proxy or
consent solicitation material for an annual meeting of the
shareholders of the issuer a clear description of any
compensation required to be disclosed by the issuer under
section 229.402 of title 17, Code of Federal Regulations (or
any successor thereto), including information that shows the
relationship between executive compensation actually paid and
the financial performance of the issuer, taking into account
any change in the value of the shares of stock and dividends of
the issuer and any distributions. The disclosure under this
subsection may include a graphic representation of the
information required to be disclosed.''.
(b) Additional Disclosure Requirements.--
(1) In general.--The Commission shall amend section
229.402 of title 17, Code of Federal Regulations, to
require each issuer to disclose in any filing of the
issuer described in section 229.10(a) of title 17, Code
of Federal Regulations (or any successor thereto)--
(A) the median of the annual total
compensation of all employees of the issuer,
except the chief executive officer (or any
equivalent position) of the issuer;
(B) the annual total compensation of the
chief executive officer (or any equivalent
position) of the issuer; and
(C) the ratio of the amount described in
subparagraph (A) to the amount described in
subparagraph (B).
(2) Total compensation.--For purposes of this
subsection, the total compensation of an employee of an
issuer shall be determined in accordance with section
229.402(c)(2)(x) of title 17, Code of Federal
Regulations, as in effect on the day before the date of
enactment of this Act.
SEC. 954. RECOVERY OF ERRONEOUSLY AWARDED COMPENSATION.
The Securities Exchange Act of 1934 is amended by inserting
after section 10C, as added by section 952, the following:
``SEC. 10D. RECOVERY OF ERRONEOUSLY AWARDED COMPENSATION POLICY.
``(a) Listing Standards.--The Commission shall, by rule,
direct the national securities exchanges and national
securities associations to prohibit the listing of any security
of an issuer that does not comply with the requirements of this
section.
``(b) Recovery of Funds.--The rules of the Commission under
subsection (a) shall require each issuer to develop and
implement a policy providing--
``(1) for disclosure of the policy of the issuer on
incentive-based compensation that is based on financial
information required to be reported under the
securities laws; and
``(2) that, in the event that the issuer is
required to prepare an accounting restatement due to
the material noncompliance of the issuer with any
financial reporting requirement under the securities
laws, the issuer will recover from any current or
former executive officer of the issuer who received
incentive-based compensation (including stock options
awarded as compensation) during the 3-year period
preceding the date on which the issuer is required to
prepare an accounting restatement, based on the
erroneous data, in excess of what would have been paid
to the executive officer under the accounting
restatement.''.
SEC. 955. DISCLOSURE REGARDING EMPLOYEE AND DIRECTOR HEDGING.
Section 14 of the Securities Exchange Act of 1934 (15
U.S.C. 78n), as amended by this title, is amended by adding at
the end the following:
``(j) Disclosure of Hedging by Employees and Directors.--
The Commission shall, by rule, require each issuer to disclose
in any proxy or consent solicitation material for an annual
meeting of the shareholders of the issuer whether any employee
or member of the board of directors of the issuer, or any
designee of such employee or member, is permitted to purchase
financial instruments (including prepaid variable forward
contracts, equity swaps, collars, and exchange funds) that are
designed to hedge or offset any decrease in the market value of
equity securities--
``(1) granted to the employee or member of the
board of directors by the issuer as part of the
compensation of the employee or member of the board of
directors; or
``(2) held, directly or indirectly, by the employee
or member of the board of directors.''.
SEC. 956. ENHANCED COMPENSATION STRUCTURE REPORTING.
(a) Enhanced Disclosure and Reporting of Compensation
Arrangements.--
(1) In general.--Not later than 9 months after the
date of enactment of this title, the appropriate
Federal regulators jointly shall prescribe regulations
or guidelines to require each covered financial
institution to disclose to the appropriate Federal
regulator the structures of all incentive-based
compensation arrangements offered by such covered
financial institutions sufficient to determine whether
the compensation structure--
(A) provides an executive officer,
employee, director, or principal shareholder of
the covered financial institution with
excessive compensation, fees, or benefits; or
(B) could lead to material financial loss
to the covered financial institution.
(2) Rules of construction.--Nothing in this section
shall be construed as requiring the reporting of the
actual compensation of particular individuals. Nothing
in this section shall be construed to require a covered
financial institution that does not have an incentive-
based payment arrangement to make the disclosures
required under this subsection.
(b) Prohibition on Certain Compensation Arrangements.--Not
later than 9 months after the date of enactment of this title,
the appropriate Federal regulators shall jointly prescribe
regulations or guidelines that prohibit any types of incentive-
based payment arrangement, or any feature of any such
arrangement, that the regulators determine encourages
inappropriate risks by covered financial institutions--
(1) by providing an executive officer, employee,
director, or principal shareholder of the covered
financial institution with excessive compensation,
fees, or benefits; or
(2) that could lead to material financial loss to
the covered financial institution.
(c) Standards.--The appropriate Federal regulators shall--
(1) ensure that any standards for compensation
established under subsections (a) or (b) are comparable
to the standards established under section of the
Federal Deposit Insurance Act (12 U.S.C. 2 1831p-1) for
insured depository institutions; and
(2) in establishing such standards under such
subsections, take into consideration the compensation
standards described in section 39(c) of the Federal
Deposit Insurance Act (12 U.S.C. 1831p-9 1(c)).
(d) Enforcement.--The provisions of this section and the
regulations issued under this section shall be enforced under
section 505 of the Gramm-Leach-Bliley Act and, for purposes of
such section, a violation of this section or such regulations
shall be treated as a violation of subtitle A of title V of
such Act.
(e) Definitions.--As used in this section--
(1) the term ``appropriate Federal regulator''
means the Board of Governors of the Federal Reserve
System, the Office of the Comptroller of the Currency,
the Board of Directors of the Federal Deposit Insurance
Corporation, the Director of the Office of Thrift
Supervision, the National Credit Union Administration
Board, the Securities and Exchange Commission, the
Federal Housing Finance Agency; and
(2) the term ``covered financial institution''
means--
(A) a depository institution or depository
institution holding company, as such terms are
defined in section 3 of the Federal Deposit
Insurance Act (12 U.S.C. 1813);
(B) a broker-dealer registered under
section 15 of the Securities Exchange Act of
1934 (15 U.S.C. 78o);
(C) a credit union, as described in section
19(b)(1)(A)(iv) of the Federal Reserve Act;
(D) an investment advisor, as such term is
defined in section 202(a)(11) of the Investment
Advisers Act of 1940 (15 U.S.C. 80b-2(a)(11));
(E) the Federal National Mortgage
Association;
(F) the Federal Home Loan Mortgage
Corporation; and
(G) any other financial institution that
the appropriate Federal regulators, jointly, by
rule, determine should be treated as a covered
financial institution for purposes of this
section.
(f) Exemption for Certain Financial Institutions.--The
requirements of this section shall not apply to covered
financial institutions with assets of less than $1,000,000,000.
SEC. 957. VOTING BY BROKERS.
Section 6(b) of the Securities Exchange Act of 1934 (15
U.S.C. 78f(b)) is amended--
(1) in paragraph (9)--
(A) in subparagraph (A), by redesignating
clauses (i) through (v) as subclauses (I)
through (V), respectively, and adjusting the
margins accordingly;
(B) by redesignating subparagraphs (A)
through (D) as clauses (i) through (iv),
respectively, and adjusting the margins
accordingly;
(C) by inserting ``(A)'' after ``(9)''; and
(D) in the matter immediately following
clause (iv), as so redesignated, by striking
``As used'' and inserting the following:
``(B) As used''.
(2) by adding at the end the following:
``(10)(A) The rules of the exchange prohibit any
member that is not the beneficial owner of a security
registered under section 12 from granting a proxy to
vote the security in connection with a shareholder vote
described in subparagraph (B), unless the beneficial
owner of the security has instructed the member to vote
the proxy in accordance with the voting instructions of
the beneficial owner.
``(B) A shareholder vote described in this
subparagraph is a shareholder vote with respect to the
election of a member of the board of directors of an
issuer, executive compensation, or any other
significant matter, as determined by the Commission, by
rule, and does not include a vote with respect to the
uncontested election of a member of the board of
directors of any investment company registered under
the Investment Company Act of 1940 (15 U.S.C. 80b-1 et
seq.).
``(C) Nothing in this paragraph shall be construed
to prohibit a national securities exchange from
prohibiting a member that is not the beneficial owner
of a security registered under section 12 from granting
a proxy to vote the security in connection with a
shareholder vote not described in subparagraph (A).''.
Subtitle F--Improvements to the Management of the Securities and
Exchange Commission
SEC. 961. REPORT AND CERTIFICATION OF INTERNAL SUPERVISORY CONTROLS.
(a) Annual Reports and Certification.--Not later than 90
days after the end of each fiscal year, the Commission 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 conduct by the
Commission of examinations of registered entities, enforcement
investigations, and review of corporate financial securities
filings.
(b) Contents of Reports.--Each report under subsection (a)
shall contain--
(1) an assessment, as of the end of the most recent
fiscal year, of the effectiveness of--
(A) the internal supervisory controls of
the Commission; and
(B) the procedures of the Commission
applicable to the staff of the Commission who
perform examinations of registered entities,
enforcement investigations, and reviews of
corporate financial securities filings;
(2) a certification that the Commission has
adequate internal supervisory controls to carry out the
duties of the Commission described in paragraph (1)(B);
and
(3) a summary by the Comptroller General of the
United States of the review carried out under
subsection (d).
(c) Certification.--
(1) Signature.--The certification under subsection
(b)(2) shall be signed by the Director of the Division
of Enforcement, the Director of the Division of
Corporation Finance, and the Director of the Office of
Compliance Inspections and Examinations (or the head of
any successor division or office).
(2) Content of certification.--Each individual
described in paragraph (1) shall certify that the
individual--
(A) is directly responsible for
establishing and maintaining the internal
supervisory controls of the Division or Office
of which the individual is the head;
(B) is knowledgeable about the internal
supervisory controls of the Division or Office
of which the individual is the head;
(C) has evaluated the effectiveness of the
internal supervisory controls during the 90-day
period ending on the final day of the fiscal
year to which the report relates; and
(D) has disclosed to the Commission any
significant deficiencies in the design or
operation of internal supervisory controls that
could adversely affect the ability of the
Division or Office to consistently conduct
inspections, or investigations, or reviews of
filings with professional competence and
integrity.
(d) New Director or Acting Director.--Notwithstanding
subsection (a), if the Director of the Division of Enforcement,
the Director of the Division of Corporate Finance, or the
Director of the Office of Compliance Inspections and
Examinations has served as Director of the Division or Office
for less than 90 days on the date on which a report is required
to be submitted under subsection (a), the Commission may submit
the report on the date on which the Director has served as
Director for 90 days. If there is no Director of the Division
of Enforcement, the Division of Corporate Finance, or the
Office of Compliance Inspections and Examinations, on the date
on which a report is required to be submitted under subsection
(a), the Acting Director of the Division or Office may make the
certification required under subsection (c).
(e) Review by the Comptroller General.--
(1) Report.--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 that contains a review of the
adequacy and effectiveness of the internal supervisory
control structure and procedures described in
subsection (b)(1), not less frequently than once every
3 years, at a time to coincide with the publication of
the reports of the Commission under this section.
(2) Authority to hire experts.--The Comptroller
General of the United States may hire independent
consultants with specialized expertise in any area
relevant to the duties of the Comptroller General
described in this section, in order to assist the
Comptroller General in carrying out such duties.
SEC. 962. TRIENNIAL REPORT ON PERSONNEL MANAGEMENT.
(a) Triennial Report Required.--Once every 3 years, the
Comptroller General of the United States 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 quality of personnel management by the
Commission.
(b) Contents of Report.--Each report under subsection (a)
shall include--
(1) an evaluation of--
(A) the effectiveness of supervisors in
using the skills, talents, and motivation of
the employees of the Commission to achieve the
goals of the Commission;
(B) the criteria for promoting employees of
the Commission to supervisory positions;
(C) the fairness of the application of the
promotion criteria to the decisions of the
Commission;
(D) the competence of the professional
staff of the Commission;
(E) the efficiency of communication between
the units of the Commission regarding the work
of the Commission (including communication
between divisions and between subunits of a
division) and the efforts by the Commission to
promote such communication;
(F) the turnover within subunits of the
Commission, including the consideration of
supervisors whose subordinates have an
unusually high rate of turnover;
(G) whether there are excessive numbers of
low-level, mid-level, or senior-level managers;
(H) any initiatives of the Commission that
increase the competence of the staff of the
Commission;
(I) the actions taken by the Commission
regarding employees of the Commission who have
failed to perform their duties and
circumstances under which the Commission has
issued to employees a notice of termination;
and
(J) such other factors relating to the
management of the Commission as the Comptroller
General determines are appropriate;
(2) an evaluation of any improvements made with
respect to the areas described in paragraph (1) since
the date of submission of the previous report; and
(3) recommendations for how the Commission can use
the human resources of the Commission more effectively
and efficiently to carry out the mission of the
Commission.
(c) Consultation.--In preparing the report under subsection
(a), the Comptroller General shall consult with current
employees of the Commission, retired employees and other former
employees of the Commission, the Inspector General of the
Commission, persons that have business before the Commission,
any union representing the employees of the Commission, private
management consultants, academics, and any other source that
the Comptroller General deems appropriate.
(d) Report by Commission.--Not later than 90 days after the
date on which the Comptroller General submits each report under
subsection (a), 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 describing the actions taken by the Commission in
response to the recommendations contained in the report under
subsection (a).
(e) Reimbursements for Cost of Reports.--
(1) Reimbursements required.--The Commission shall
reimburse the Government Accountability Office for the
full cost of making the reports under this section, as
billed therefor by the Comptroller General.
(2) Crediting and use of reimbursements.--Such
reimbursements shall--
(A) be credited to the appropriation
account ``Salaries and Expenses, Government
Accountability Office'' current when the
payment is received; and
(B) remain available until expended.
(f) Authority to Hire Experts.--The Comptroller General of
the United States may hire independent consultants with
specialized expertise in any area relevant to the duties of the
Comptroller General described in this section, in order to
assist the Comptroller General in carrying out such duties.
SEC. 963. ANNUAL FINANCIAL CONTROLS AUDIT.
(a) Reports of Commission.--
(1) Annual reports required.--Not later than 6
months after the end of each fiscal year, the
Commission shall publish and submit to Congress a
report that--
(A) describes the responsibility of the
management of the Commission for establishing
and maintaining an adequate internal control
structure and procedures for financial
reporting; and
(B) contains an assessment of the
effectiveness of the internal control structure
and procedures for financial reporting of the
Commission during that fiscal year.
(2) Attestation.--The reports required under
paragraph (1) shall be attested to by the Chairman and
chief financial officer of the Commission.
(b) Report by Comptroller General.--
(1) Report required.--Not later than 6 months after
the end of the first fiscal year after the date of
enactment of this Act, the Comptroller General of the
United States shall submit a report to Congress that
assesses--
(A) the effectiveness of the internal
control structure and procedures of the
Commission for financial reporting; and
(B) the assessment of the Commission under
subsection (a)(1)(B).
(2) Attestation.--The Comptroller General shall
attest to, and report on, the assessment made by the
Commission under subsection (a).
(c) Reimbursements for Cost of Reports.--
(1) Reimbursements required.--The Commission shall
reimburse the Government Accountability Office for the
full cost of making the reports under subsection (b),
as billed therefor by the Comptroller General.
(2) Crediting and use of reimbursements.--Such
reimbursements shall--
(A) be credited to the appropriation
account ``Salaries and Expenses, Government
Accountability Office'' current when the
payment is received; and
(B) remain available until expended.
SEC. 964. REPORT ON OVERSIGHT OF NATIONAL SECURITIES ASSOCIATIONS.
(a) Report Required.--Not later than 2 years after the date
of enactment of this Act, and every 3 years thereafter, 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 that includes an evaluation of the
oversight by the Commission of national securities associations
registered under section 15A of the Securities Exchange Act of
1934 (15 U.S.C. 78o-3) with respect to--
(1) the governance of such national securities
associations, including the identification and
management of conflicts of interest by such national
securities associations, together with an analysis of
the impact of any conflicts of interest on the
regulatory enforcement or rulemaking by such national
securities associations;
(2) the examinations carried out by the national
securities associations, including the expertise of the
examiners;
(3) the executive compensation practices of such
national securities associations;
(4) the arbitration services provided by the
national securities associations;
(5) the review performed by national securities
associations of advertising by the members of the
national securities associations;
(6) the cooperation with and assistance to State
securities administrators by the national securities
associations to promote investor protection;
(7) how the funding of national securities
associations is used to support the mission of the
national securities associations, including--
(A) the methods of funding;
(B) the sufficiency of funds;
(C) how funds are invested by the national
securities association pending use; and
(D) the impact of the methods, sufficiency,
and investment of funds on regulatory
enforcement by the national securities
associations;
(8) the policies regarding the employment of former
employees of national securities associations by
regulated entities;
(9) the ongoing effectiveness of the rules of the
national securities associations in achieving the goals
of the rules;
(10) the transparency of governance and activities
of the national securities associations; and
(11) any other issue that has an impact, as
determined by the Comptroller General, on the
effectiveness of such national securities associations
in performing their mission and in dealing fairly with
investors and members;
(b) Reimbursements for Cost of Reports.--
(1) Reimbursements required.--The Commission shall
reimburse the Government Accountability Office for the
full cost of making the reports under subsection (a),
as billed therefor by the Comptroller General.
(2) Crediting and use of reimbursements.--Such
reimbursements shall--
(A) be credited to the appropriation
account ``Salaries and Expenses, Government
Accountability Office'' current when the
payment is received; and
(B) remain available until expended.
SEC. 965. COMPLIANCE EXAMINERS.
Section 4 of the Securities Exchange Act of 1934 (15 U.S.C.
78d) is amended by adding at the end the following:
``(h) Examiners.--
``(1) Division of trading and markets.--The
Division of Trading and Markets of the Commission, or
any successor organizational unit, shall have a staff
of examiners who shall--
``(A) perform compliance inspections and
examinations of entities under the jurisdiction
of that Division; and
``(B) report to the Director of that
Division.
``(2) Division of investment management.--The
Division of Investment Management of the Commission, or
any successor organizational unit, shall have a staff
of examiners who shall--
``(A) perform compliance inspections and
examinations of entities under the jurisdiction
of that Division; and
``(B) report to the Director of that
Division.''.
SEC. 966. SUGGESTION PROGRAM FOR EMPLOYEES OF THE COMMISSION.
The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.)
is amended by inserting after section 4C (15 U.S.C. 78d-3) the
following:
``SEC. 4D. ADDITIONAL DUTIES OF INSPECTOR GENERAL.
``(a) Suggestion Submissions by Commission Employees.--
``(1) Hotline established.--The Inspector General
of the Commission shall establish and maintain a
telephone hotline or other electronic means for the
receipt of--
``(A) suggestions by employees of the
Commission for improvements in the work
efficiency, effectiveness, and productivity,
and the use of the resources, of the
Commission; and
``(B) allegations by employees of the
Commission of waste, abuse, misconduct, or
mismanagement within the Commission.
``(2) Confidentiality.--The Inspector General shall
maintain as confidential--
``(A) the identity of any individual who
provides information by the means established
under paragraph (1), unless the individual
requests otherwise, in writing; and
``(B) at the request of any such
individual, any specific information provided
by the individual.
``(b) Consideration of Reports.--The Inspector General
shall consider any suggestions or allegations received by the
means established under subsection (a)(1), and shall recommend
appropriate action in relation to such suggestions or
allegations.
``(c) Recognition.--The Inspector General may recognize any
employee who makes a suggestion under subsection (a)(1) (or by
other means) that would or does--
``(1) increase the work efficiency, effectiveness,
or productivity of the Commission; or
``(2) reduce waste, abuse, misconduct, or
mismanagement within the Commission.
``(d) Report.--The Inspector General of the Commission
shall submit to Congress an annual report containing a
description of--
``(1) the nature, number, and potential benefits of
any suggestions received under subsection (a);
``(2) the nature, number, and seriousness of any
allegations received under subsection (a);
``(3) any recommendations made or actions taken by
the Inspector General in response to substantiated
allegations received under subsection (a); and
``(4) any action the Commission has taken in
response to suggestions or allegations received under
subsection (a).
``(e) Funding.--The activities of the Inspector General
under this subsection shall be funded by the Securities and
Exchange Commission Investor Protection Fund established under
section 21F.''.
SEC. 967. COMMISSION ORGANIZATIONAL STUDY AND REFORM.
(a) Study Required.--
(1) In general.--Not later than the end of the 90-
day period beginning on the date of the enactment of
this subtitle, the Securities and Exchange Commission
(hereinafter in this section referred to as the
``SEC'') shall hire an independent consultant of high
caliber and with expertise in organizational
restructuring and the operations of capital markets to
examine the internal operations, structure, funding,
and the need for comprehensive reform of the SEC, as
well as the SEC's relationship with and the reliance on
self-regulatory organizations and other entities
relevant to the regulation of securities and the
protection of securities investors that are under the
SEC's oversight.
(2) Specific areas for study.--The study required
under paragraph (1) shall, at a minimum, include the
study of--
(A) the possible elimination of unnecessary
or redundant units at the SEC;
(B) improving communications between SEC
offices and divisions;
(C) the need to put in place a clear chain-
of-command structure, particularly for
enforcement examinations and compliance
inspections;
(D) the effect of high-frequency trading
and other technological advances on the market
and what the SEC requires to monitor the effect
of such trading and advances on the market;
(E) the SEC's hiring authorities, workplace
policies, and personal practices, including--
(i) whether there is a need to
further streamline hiring authorities
for those who are not lawyers,
accountants, compliance examiners, or
economists;
(ii) whether there is a need for
further pay reforms;
(iii) the diversity of skill sets
of SEC employees and whether the
present skill set diversity efficiently
and effectively fosters the SEC's
mission of investor protection; and
(iv) the application of civil
service laws by the SEC;
(F) whether the SEC's oversight and
reliance on self-regulatory organizations
promotes efficient and effective governance for
the securities markets; and
(G) whether adjusting the SEC's reliance on
self-regulatory organizations is necessary to
promote more efficient and effective governance
for the securities markets.
(b) Consultant Report.--Not later than the end of the 150-
day period after being retained, the independent consultant
hired pursuant to subsection (a)(1) shall issue a report to the
SEC and the Congress containing--
(1) a detailed description of any findings and
conclusions made while carrying out the study required
under subsection (a)(1); and
(2) recommendations for legislative, regulatory, or
administrative action that the consultant determines
appropriate to enable the SEC and other entities on
which the consultant reports to perform their
statutorily or otherwise mandated missions.
(c) SEC Report.--Not later than the end of the 6-month
period beginning on the date the consultant issues the report
under subsection (b), and every 6 months thereafter during the
2-year period following the date on which the consultant issues
such report, the SEC shall issue a report to the Committee on
Financial Services of the House of Representatives and the
Committee on Banking, Housing, and Urban Affairs of the Senate
describing the SEC's implementation of the regulatory and
administrative recommendations contained in the consultant's
report.
SEC. 968. STUDY ON SEC REVOLVING DOOR.
(a) Government Accountability Office Study.--The
Comptroller General of the United States shall conduct a study
that will--
(1) review the number of employees who leave the
Securities and Exchange Commission to work for
financial institutions regulated by such Commission;
(2) determine how many employees who leave the
Securities and Exchange Commission worked on cases that
involved financial institutions regulated by such
Commission;
(3) review the length of time employees work for
the Securities and Exchange Commission before leaving
to be employed by financial institutions regulated by
such Commission;
(4) review existing internal controls and make
recommendations on strengthening such controls to
ensure that employees of the Securities and Exchange
Commission who are later employed by financial
institutions did not assist such institutions in
violating any rules or regulations of the Commission
during the course of their employment with such
Commission;
(5) determine if greater post-employment
restrictions are necessary to prevent employees of the
Securities and Exchange Commission from being employed
by financial institutions after employment with such
Commission;
(6) determine if the volume of employees of the
Securities and Exchange Commission who are later
employed by financial institutions has led to
inefficiencies in enforcement;
(7) determine if employees of the Securities and
Exchange Commission who are later employed by financial
institutions assisted such institutions in
circumventing Federal rules and regulations while
employed by such Commission;
(8) review any information that may address the
volume of employees of the Securities and Exchange
Commission who are later employed by financial
institutions, and make recommendations to Congress; and
(9) review other additional issues as may be raised
during the course of the study conducted under this
subsection.
(b) Report.--Not later than 1 year after the date of the
enactment of this subtitle, the Comptroller General of the
United States shall submit to the Committee on Financial
Services of the House of Representatives and the Committee on
Banking, Housing, and Urban Affairs of the Senate a report on
the results of the study required by subsection (a).
Subtitle G--Strengthening Corporate Governance
SEC. 971. PROXY ACCESS.
(a) Proxy Access.--Section 14(a) of the Securities Exchange
Act of 1934 (15 U.S.C. 78n(a)) is amended--
(1) by inserting ``(1)'' after ``(a)''; and
(2) by adding at the end the following:
``(2) The rules and regulations prescribed by the
Commission under paragraph (1) may include--
``(A) a requirement that a solicitation of proxy,
consent, or authorization by (or on behalf of) an
issuer include a nominee submitted by a shareholder to
serve on the board of directors of the issuer; and
``(B) a requirement that an issuer follow a certain
procedure in relation to a solicitation described in
subparagraph (A).''.
(b) Regulations.--The Commission may issue rules permitting
the use by a shareholder of proxy solicitation materials
supplied by an issuer of securities for the purpose of
nominating individuals to membership on the board of directors
of the issuer, under such terms and conditions as the
Commission determines are in the interests of shareholders and
for the protection of investors.
(c) Exemptions.--The Commission may, by rule or order,
exempt an issuer or class of issuers from the requirement made
by this section or an amendment made by this section. In
determining whether to make an exemption under this subsection,
the Commission shall take into account, among other
considerations, whether the requirement in the amendment made
by subsection (a) disproportionately burdens small issuers.
SEC. 972. DISCLOSURES REGARDING CHAIRMAN AND CEO STRUCTURES.
The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.)
is amended by inserting after section 14A, as added by this
title, the following:
``SEC. 14B. CORPORATE GOVERNANCE.
``Not later than 180 days after the date of enactment of
this subsection, the Commission shall issue rules that require
an issuer to disclose in the annual proxy sent to investors the
reasons why the issuer has chosen--
``(1) the same person to serve as chairman of the
board of directors and chief executive officer (or in
equivalent positions); or
``(2) different individuals to serve as chairman of
the board of directors and chief executive officer (or
in equivalent positions of the issuer).''.
Subtitle H--Municipal Securities
SEC. 975. REGULATION OF MUNICIPAL SECURITIES AND CHANGES TO THE BOARD
OF THE MSRB.
(a) Registration of Municipal Securities Dealers and
Municipal Advisors.--Section 15B(a) of the Securities Exchange
Act of 1934 (15 U.S.C. 78o-4(a)) is amended--
(1) in paragraph (1)--
(A) by inserting ``(A)'' after ``(1)''; and
(B) by adding at the end the following:
``(B) It shall be unlawful for a municipal
advisor to provide advice to or on behalf of a
municipal entity or obligated person with
respect to municipal financial products or the
issuance of municipal securities, or to
undertake a solicitation of a municipal entity
or obligated person, unless the municipal
advisor is registered in accordance with this
subsection.'';
(2) in paragraph (2), by inserting ``or municipal
advisor'' after ``municipal securities dealer'' each
place that term appears;
(3) in paragraph (3), by inserting ``or municipal
advisor'' after ``municipal securities dealer'' each
place that term appears;
(4) in paragraph (4), by striking ``dealer, or
municipal securities dealer or class of brokers,
dealers, or municipal securities dealers'' and
inserting ``dealer, municipal securities dealer, or
municipal advisor, or class of brokers, dealers,
municipal securities dealers, or municipal advisors'';
and
(5) by adding at the end the following:
``(5) No municipal advisor shall make use of the
mails or any means or instrumentality of interstate
commerce to provide advice to or on behalf of a
municipal entity or obligated person with respect to
municipal financial products, the issuance of municipal
securities, or to undertake a solicitation of a
municipal entity or obligated person, in connection
with which such municipal advisor engages in any
fraudulent, deceptive, or manipulative act or
practice.''.
(b) Municipal Securities Rulemaking Board.--Section 15B(b)
of the Securities Exchange Act of 1934 (15 U.S.C. 78o-4(b)) is
amended--
(1) in paragraph (1)--
(A) in the first sentence, by striking
``Not later than'' and all that follows through
``appointed by the Commission'' and inserting
``The Municipal Securities Rulemaking Board
shall be composed of 15 members, or such other
number of members as specified by rules of the
Board pursuant to paragraph (2)(B),'';
(B) by striking the second sentence and
inserting the following: ``The members of the
Board shall serve as members for a term of 3
years or for such other terms as specified by
rules of the Board pursuant to paragraph
(2)(B), and shall consist of (A) 8 individuals
who are independent of any municipal securities
broker, municipal securities dealer, or
municipal advisor, at least 1 of whom shall be
representative of institutional or retail
investors in municipal securities, at least 1
of whom shall be representative of municipal
entities, and at least 1 of whom shall be a
member of the public with knowledge of or
experience in the municipal industry (which
members are hereinafter referred to as `public
representatives'); and (B) 7 individuals who
are associated with a broker, dealer, municipal
securities dealer, or municipal advisor,
including at least 1 individual who is
associated with and representative of brokers,
dealers, or municipal securities dealers that
are not banks or subsidiaries or departments or
divisions of banks (which members are
hereinafter referred to as `broker-dealer
representatives'), at least 1 individual who is
associated with and representative of municipal
securities dealers which are banks or
subsidiaries or departments or divisions of
banks (which members are hereinafter referred
to as `bank representatives'), and at least 1
individual who is associated with a municipal
advisor (which members are hereinafter referred
to as `advisor representatives' and, together
with the broker-dealer representatives and the
bank representatives, are referred to as
`regulated representatives'). Each member of
the board shall be knowledgeable of matters
related to the municipal securities markets.'';
and
(C) in the third sentence, by striking
``initial'';
(2) in paragraph (2)--
(A) in the matter preceding subparagraph
(A)--
(i) by inserting before the period
at the end of the first sentence the
following: ``and advice provided to or
on behalf of municipal entities or
obligated persons by brokers, dealers,
municipal securities dealers, and
municipal advisors with respect to
municipal financial products, the
issuance of municipal securities, and
solicitations of municipal entities or
obligated persons undertaken by
brokers, dealers, municipal securities
dealers, and municipal advisors''; and
(ii) by striking the second
sentence;
(B) in subparagraph (A)--
(i) in the matter preceding clause
(i)--
(I) by inserting ``, and no
broker, dealer, municipal
securities dealer, or municipal
advisor shall provide advice to
or on behalf of a municipal
entity or obligated person with
respect to municipal financial
products or the issuance of
municipal securities,'' after
``sale of, any municipal
security''; and
(II) by inserting ``and
municipal entities or obligated
persons'' after ``protection of
investors'';
(ii) in clause (i), by striking
``municipal securities brokers and
municipal securities dealers'' each
place that term appears and inserting
``municipal securities brokers,
municipal securities dealers, and
municipal advisors'';
(iii) in clause (ii), by adding
``and'' at the end;
(iv) in clause (iii), by striking
``; and'' and inserting a period; and
(v) by striking clause (iv);
(C) by amending subparagraph (B) to read as
follows:
``(B) establish fair procedures for the nomination
and election of members of the Board and assure fair
representation in such nominations and elections of
public representatives, broker dealer representatives,
bank representatives, and advisor representatives. Such
rules--
``(i) shall provide that the number of
public representatives of the Board shall at
all times exceed the total number of regulated
representatives and that the membership shall
at all times be as evenly divided in number as
possible between public representatives and
regulated representatives;
``(ii) shall specify the length or lengths
of terms members shall serve;
``(iii) may increase the number of members
which shall constitute the whole Board,
provided that such number is an odd number; and
``(iv) shall establish requirements
regarding the independence of public
representatives.''.
(D) in subparagraph (C)--
(i) by inserting ``and municipal
financial products'' after ``municipal
securities'' the first two times that
term appears;
(ii) by inserting ``, municipal
entities, obligated persons,'' before
``and the public interest'';
(iii) by striking ``between'' and
inserting ``among'';
(iv) by striking ``issuers,
municipal securities brokers, or
municipal securities dealers, to fix''
and inserting ``municipal entities,
obligated persons, municipal securities
brokers, municipal securities dealers,
or municipal advisors, to fix''; and
(v) by striking ``brokers or
municipal securities dealers, to
regulate'' and inserting ``brokers,
municipal securities dealers, or
municipal advisors, to regulate'';
(E) in subparagraph (D)--
(i) by inserting ``and advice
concerning municipal financial
products'' after ``transactions in
municipal securities'';
(ii) by striking ``That no'' and
inserting ``that no'';
(iii) by inserting ``municipal
advisor,'' before ``or person
associated''; and
(iv) by striking ``a municipal
securities broker or municipal
securities dealer may be compelled''
and inserting ``a municipal securities
broker, municipal securities dealer, or
municipal advisor may be compelled'';
(F) in subparagraph (E)--
(i) by striking ``municipal
securities brokers and municipal
securities dealers'' and inserting
``municipal securities brokers,
municipal securities dealers, and
municipal advisors''; and
(ii) by striking ``municipal
securities broker or municipal
securities dealer'' and inserting
``municipal securities broker,
municipal securities dealer, or
municipal advisor'';
(G) in subparagraph (G), by striking
``municipal securities brokers and municipal
securities dealers'' and inserting ``municipal
securities brokers, municipal securities
dealers, and municipal advisors'';
(H) in subparagraph (J)--
(i) by striking ``municipal
securities broker and each municipal
securities dealer'' and inserting
``municipal securities broker,
municipal securities dealer, and
municipal advisor''; and
(ii) by striking the period at the
end of the second sentence and
inserting ``, which may include charges
for failure to submit to the Board, or
to any information system operated by
the Board, within the prescribed
timeframes, any items of information or
documents required to be submitted
under any rule issued by the Board.'';
(I) in subparagraph (K)--
(i) by inserting ``broker, dealer,
or'' before ``municipal securities
dealer'' each place that term appears;
and
(ii) by striking ``municipal
securities investment portfolio'' and
inserting ``related account of a
broker, dealer, or municipal securities
dealer''; and
(J) by adding at the end the following:
``(L) with respect to municipal advisors--
``(i) prescribe means reasonably
designed to prevent acts, practices,
and courses of business as are not
consistent with a municipal advisor's
fiduciary duty to its clients;
``(ii) provide continuing education
requirements for municipal advisors;
``(iii) provide professional
standards; and
``(iv) not impose a regulatory
burden on small municipal advisors that
is not necessary or appropriate in the
public interest and for the protection
of investors, municipal entities, and
obligated persons, provided that there
is robust protection of investors
against fraud.'';
(3) by redesignating paragraph (3) as paragraph
(7); and
(4) by inserting after paragraph (2) the following:
``(3) The Board, in conjunction with or on behalf
of any Federal financial regulator or self-regulatory
organization, may--
``(A) establish information systems; and
``(B) assess such reasonable fees and
charges for the submission of information to,
or the receipt of information from, such
systems from any persons which systems may be
developed for the purposes of serving as a
repository of information from municipal market
participants or otherwise in furtherance of the
purposes of the Board, a Federal financial
regulator, or a self-regulatory organization,
except that the Board--
``(i) may not charge a fee to
municipal entities or obligated persons
to submit documents or other
information to the Board or charge a
fee to any person to obtain, directly
from the Internet site of the Board,
documents or information submitted by
municipal entities, obligated persons,
brokers, dealers, municipal securities
dealers, or municipal advisors,
including documents submitted under the
rules of the Board or the Commission;
and
``(ii) shall not be prohibited from
charging commercially reasonable fees
for automated subscription-based feeds
or similar services, or for charging
for other data or document-based
services customized upon request of any
person, made available to commercial
enterprises, municipal securities
market professionals, or the general
public, whether delivered through the
Internet or any other means, that
contain all or part of the documents or
information, subject to approval of the
fees by the Commission under section
19(b).
``(4) The Board may provide guidance and assistance
in the enforcement of, and examination for, compliance
with the rules of the Board to the Commission, a
registered securities association under section 15A, or
any other appropriate regulatory agency, as applicable.
``(5) The Board, the Commission, and a registered
securities association under section 15A, or the
designees of the Board, the Commission, or such
association, shall meet not less frequently than 2
times a year--
``(A) to describe the work of the Board,
the Commission, and the registered securities
association involving the regulation of
municipal securities; and
``(B) to share information about--
``(i) the interpretation of the
Board, the Commission, and the
registered securities association of
Board rules; and
``(ii) examination and enforcement
of compliance with Board rules.''.
(c) Discipline of Brokers, Dealers, Municipal Securities
Dealers and Municipal Advisors; Fiduciary Duty of Municipal
Advisors.--Section 15B(c) of the Securities Exchange Act of
1934 (15 U.S.C. 78o-4(c)) is amended--
(1) in paragraph (1), by inserting ``, and no
broker, dealer, municipal securities dealer, or
municipal advisor shall make use of the mails or any
means or instrumentality of interstate commerce to
provide advice to or on behalf of a municipal entity or
obligated person with respect to municipal financial
products, the issuance of municipal securities, or to
undertake a solicitation of a municipal entity or
obligated person,'' after ``any municipal security'';
(2) by adding at the end of paragraph (1) the
following: ``A municipal advisor and any person
associated with such municipal advisor shall be deemed
to have a fiduciary duty to any municipal entity for
whom such municipal advisor acts as a municipal
advisor, and no municipal advisor may engage in any
act, practice, or course of business which is not
consistent with a municipal advisor's fiduciary duty or
that is in contravention of any rule of the Board.''.
(3) in paragraph (2), by inserting ``or municipal
advisor'' after ``municipal securities dealer'' each
place that term appears;
(4) in paragraph (3)--
(A) by inserting ``or municipal entities or
obligated person'' after ``protection of
investors'' each place that term appears; and
(B) by inserting ``or municipal advisor''
after ``municipal securities dealer'' each
place that term appears;
(5) in paragraph (4), by inserting ``or municipal
advisor'' after ``municipal securities dealer or
obligated person'' each place that term appears;
(6) in paragraph (6)(B), by inserting ``or
municipal entities or obligated person'' after
``protection of investors'';
(7) in paragraph (7)--
(A) in subparagraph (A)--
(i) in clause (i), by striking ``;
and'' and inserting a semicolon;
(ii) in clause (ii), by striking
the period and inserting ``; and''; and
(iii) by adding at the end the
following:
``(iii) the Commission, or its
designee, in the case of municipal
advisors.''.
(B) in subparagraph (B), by inserting ``or
municipal entities or obligated person'' after
``protection of investors''; and
(8) by adding at the end the following:
``(9)(A) Fines collected by the Commission for
violations of the rules of the Board shall be equally
divided between the Commission and the Board.
``(B) Fines collected by a registered securities
association under section 15A(7) with respect to
violations of the rules of the Board shall be accounted
for by such registered securities association
separately from other fines collected under section
15A(7) and shall be allocated between such registered
securities association and the Board, and such
allocation shall require the registered securities
association to pay to the Board \1/3\ of all fines
collected by the registered securities association
reasonably allocable to violations of the rules of the
Board, or such other portion of such fines as may be
directed by the Commission upon agreement between the
registered securities association and the Board.''.
(d) Issuance of Municipal Securities.--Section 15B(d)(2) of
the Securities Exchange Act of 1934 (15 U.S.C. 78o-4(d)) is
amended--
(1) by striking ``through a municipal securities
broker or municipal securities dealer or otherwise''
and inserting ``through a municipal securities broker,
municipal securities dealer, municipal advisor, or
otherwise''; and
(2) by inserting ``or municipal advisors'' before
``to furnish''.
(e) Definitions.--Section 15B of the Securities Exchange
Act of 1934 (15 U.S.C. 78o-4) is amended by adding at the end
the following:
``(e) Definitions.--For purposes of this section--
``(1) the term `Board' means the Municipal
Securities Rulemaking Board established under
subsection (b)(1);
``(2) the term `guaranteed investment contract'
includes any investment that has specified withdrawal
or reinvestment provisions and a specifically
negotiated or bid interest rate, and also includes any
agreement to supply investments on 2 or more future
dates, such as a forward supply contract;
``(3) the term `investment strategies' includes
plans or programs for the investment of the proceeds of
municipal securities that are not municipal
derivatives, guaranteed investment contracts, and the
recommendation of and brokerage of municipal escrow
investments;
``(4) the term `municipal advisor'--
``(A) means a person (who is not a
municipal entity or an employee of a municipal
entity) that--
``(i) provides advice to or on
behalf of a municipal entity or
obligated person with respect to
municipal financial products or the
issuance of municipal securities,
including advice with respect to the
structure, timing, terms, and other
similar matters concerning such
financial products or issues; or
``(ii) undertakes a solicitation of
a municipal entity;
``(B) includes financial advisors,
guaranteed investment contract brokers, third-
party marketers, placement agents, solicitors,
finders, and swap advisors, if such persons are
described in any of clauses (i) through (iii)
of subparagraph (A); and
``(C) does not include a broker, dealer, or
municipal securities dealer serving as an
underwriter (as defined in section 2(a)(11) of
the Securities Act of 1933) (15 U.S.C.
77b(a)(11)), any investment adviser registered
under the Investment Advisers Act of 1940, or
persons associated with such investment
advisers who are providing investment advice,
any commodity trading advisor registered under
the Commodity Exchange Act or persons
associated with a commodity trading advisor who
are providing advice related to swaps,
attorneys offering legal advice or providing
services that are of a traditional legal
nature, or engineers providing engineering
advice;
``(5) the term `municipal financial product' means
municipal derivatives, guaranteed investment contracts,
and investment strategies;
``(6) the term `rules of the Board' means the rules
proposed and adopted by the Board under subsection
(b)(2);
``(7) the term `person associated with a municipal
advisor' or `associated person of an advisor' means--
``(A) any partner, officer, director, or
branch manager of such municipal advisor (or
any person occupying a similar status or
performing similar functions);
``(B) any other employee of such municipal
advisor who is engaged in the management,
direction, supervision, or performance of any
activities relating to the provision of advice
to or on behalf of a municipal entity or
obligated person with respect to municipal
financial products or the issuance of municipal
securities; and
``(C) any person directly or indirectly
controlling, controlled by, or under common
control with such municipal advisor;
``(8) the term `municipal entity' means any State,
political subdivision of a State, or municipal
corporate instrumentality of a State, including--
``(A) any agency, authority, or
instrumentality of the State, political
subdivision, or municipal corporate
instrumentality;
``(B) any plan, program, or pool of assets
sponsored or established by the State,
political subdivision, or municipal corporate
instrumentality or any agency, authority, or
instrumentality thereof; and
``(C) any other issuer of municipal
securities;
``(9) the term `solicitation of a municipal entity
or obligated person' means a direct or indirect
communication with a municipal entity or obligated
person made by a person, for direct or indirect
compensation, on behalf of a broker, dealer, municipal
securities dealer, municipal advisor, or investment
adviser (as defined in section 202 of the Investment
Advisers Act of 1940) that does not control, is not
controlled by, or is not under common control with the
person undertaking such solicitation for the purpose of
obtaining or retaining an engagement by a municipal
entity or obligated person of a broker, dealer,
municipal securities dealer, or municipal advisor for
or in connection with municipal financial products, the
issuance of municipal securities, or of an investment
adviser to provide investment advisory services to or
on behalf of a municipal entity; and
``(10) the term `obligated person' means any
person, including an issuer of municipal securities,
who is either generally or through an enterprise, fund,
or account of such person, committed by contract or
other arrangement to support the payment of all or part
of the obligations on the municipal securities to be
sold in an offering of municipal securities.''.
(f) Registered Securities Association.--Section 15A(b) of
the Securities Exchange Act of 1934 (15 U.S.C. 78o-3(b)) is
amended by adding at the end the following:
``(15) The rules of the association provide that
the association shall--
``(A) request guidance from the Municipal
Securities Rulemaking Board in interpretation
of the rules of the Municipal Securities
Rulemaking Board; and
``(B) provide information to the Municipal
Securities Rulemaking Board about the
enforcement actions and examinations of the
association under section 15B(b)(2)(E), so that
the Municipal Securities Rulemaking Board may--
``(i) assist in such enforcement
actions and examinations; and
``(ii) evaluate the ongoing
effectiveness of the rules of the
Board.''.
(g) Registration and Regulation of Brokers and Dealers.--
Section 15 of the Securities Exchange Act of 1934 is amended--
(1) in subsection (b)(4), by inserting ``municipal
advisor,'' after ``municipal securities dealer'' each
place that term appears; and
(2) in subsection (c), by inserting ``broker,
dealer, or'' before ``municipal securities dealer''
each place that term appears.
(h) Accounts and Records, Reports, Examinations of
Exchanges, Members, and Others.--Section 17(a)(1) of the
Securities Exchange Act of 1934 is amended by inserting
``municipal advisor,'' after ``municipal securities dealer''.
(i) Effective Date.--This section, and the amendments made
by this section, shall take effect on October 1, 2010.
SEC. 976. GOVERNMENT ACCOUNTABILITY OFFICE STUDY OF INCREASED
DISCLOSURE TO INVESTORS.
(a) Study.--The Comptroller General of the United States
shall conduct a study and review of the disclosure required to
be made by issuers of municipal securities.
(b) Subjects for Evaluation.--In conducting the study under
subsection (a), the Comptroller General of the United States
shall--
(1) broadly describe--
(A) the size of the municipal securities
markets and the issuers and investors; and
(B) the disclosures provided by issuers to
investors;
(2) compare the amount, frequency, and quality of
disclosures that issuers of municipal securities are
required by law to provide for the benefit of municipal
securities holders, including the amount of and
frequency of disclosures actually provided by issuers
of municipal securities, with the amount of and
frequency of disclosures that issuers of corporate
securities provide for the benefit of corporate
securities holders, taking into account the differences
between issuers of municipal securities and issuers of
corporate securities;
(3) evaluate the costs and benefits to various
types of issuers of municipal securities of requiring
issuers of municipal bonds to provide additional
financial disclosures for the benefit of investors;
(4) evaluate the potential benefit to investors
from additional financial disclosures by issuers of
municipal bonds; and
(5) make recommendations relating to disclosure
requirements for municipal issuers, including the
advisability of the repeal or retention of section
15B(d) of the Securities Exchange Act of 1934 (15
U.S.C. 78o-4(d)) (commonly known as the ``Tower
Amendment'').
(c) Report.--Not later than 24 months after the date of
enactment of this Act, the Comptroller General of the United
States shall submit a report to Congress on the results of the
study conducted under subsection (a), including recommendations
for how to improve disclosure by issuers of municipal
securities.
SEC. 977. GOVERNMENT ACCOUNTABILITY OFFICE STUDY ON THE MUNICIPAL
SECURITIES MARKETS.
(a) Study.--The Comptroller General of the United States
shall conduct a study of the municipal securities markets.
(b) Report.--Not later than 18 months after the date of
enactment of this Act, the Comptroller General of the United
States 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, with copies
to the Special Committee on Aging of the Senate and the
Commission, on the results of the study conducted under
subsection (a), including--
(1) an analysis of the mechanisms for trading,
quality of trade executions, market transparency, trade
reporting, price discovery, settlement clearing, and
credit enhancements;
(2) the needs of the markets and investors and the
impact of recent innovations;
(3) recommendations for how to improve the
transparency, efficiency, fairness, and liquidity of
trading in the municipal securities markets, including
with reference to items listed in paragraph (1); and
(4) potential uses of derivatives in the municipal
securities markets.
(c) Responses.--Not later than 180 days after receipt of
the report required under subsection (b), the Commission shall
submit a response to the Committee on Banking, Housing, and
Urban Affairs of the Senate, and the Committee on Financial
Services of the House of Representatives, with a copy to the
Special Committee on Aging of the Senate, stating the actions
the Commission has taken in response to the recommendations
contained in such report.
SEC. 978. FUNDING FOR GOVERNMENTAL ACCOUNTING STANDARDS BOARD.
(a) Amendment to the Securities Act of 1933.--Section 19 of
the Securities Act of 1933 (15 U.S.C. 77s), as amended by
section 912, is further amended by adding at the end the
following:
``(g) Funding for the GASB.--
``(1) In general.--The Commission may, subject to
the limitations imposed by section 15B of the
Securities Exchange Act of 1934 (15 U.S.C. 78o-4),
require a national securities association registered
under the Securities Exchange Act of 1934 to
establish--
``(A) a reasonable annual accounting
support fee to adequately fund the annual
budget of the Governmental Accounting Standards
Board (referred to in this subsection as the
`GASB'); and
``(B) rules and procedures, in consultation
with the principal organizations representing
State governors, legislators, local elected
officials, and State and local finance
officers, to provide for the equitable
allocation, assessment, and collection of the
accounting support fee established under
subparagraph (A) from the members of the
association, and the remittance of all such
accounting support fees to the Financial
Accounting Foundation.
``(2) Annual budget.--For purposes of this
subsection, the annual budget of the GASB is the annual
budget reviewed and approved according to the internal
procedures of the Financial Accounting Foundation.
``(3) Use of funds.--Any fees or funds collected
under this subsection shall be used to support the
efforts of the GASB to establish standards of financial
accounting and reporting recognized as generally
accepted accounting principles applicable to State and
local governments of the United States.
``(4) Limitation on fee.--The annual accounting
support fees collected under this subsection for a
fiscal year shall not exceed the recoverable annual
budgeted expenses of the GASB (which may include
operating expenses, capital, and accrued items).
``(5) Rules of construction.--
``(A) Fees not public monies.--Accounting
support fees collected under this subsection
and other receipts of the GASB shall not be
considered public monies of the United States.
``(B) Limitation on authority of the
commission.--Nothing in this subsection shall
be construed to--
``(i) provide the Commission or any
national securities association direct
or indirect oversight of the budget or
technical agenda of the GASB; or
``(ii) affect the setting of
generally accepted accounting
principles by the GASB.
``(C) Noninterference with states.--Nothing
in this subsection shall be construed to impair
or limit the authority of a State or local
government to establish accounting and
financial reporting standards.''
(b) Study of Funding for Governmental Accounting Standards
Board.--
(1) Study.--The Comptroller General of the United
States shall conduct a study that evaluates--
(A) the role and importance of the
Governmental Accounting Standards Board in the
municipal securities markets; and
(B) the manner and the level at which the
Governmental Accounting Standards Board has
been funded.
(2) Consultation.--In conducting the study required
under paragraph (1), the Comptroller General shall
consult with the principal organizations representing
State governors, legislators, local elected officials,
and State and local finance officers.
(3) Report.--Not later than 180 days 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).
SEC. 979. COMMISSION OFFICE OF MUNICIPAL SECURITIES.
(a) In General.--There shall be in the Commission an Office
of Municipal Securities, which shall--
(1) administer the rules of the Commission with
respect to the practices of municipal securities
brokers and dealers, municipal securities advisors,
municipal securities investors, and municipal
securities issuers; and
(2) coordinate with the Municipal Securities
Rulemaking Board for rulemaking and enforcement actions
as required by law.
(b) Director of the Office.--The head of the Office of
Municipal Securities shall be the Director, who shall report to
the Chairman.
(c) Staffing.--
(1) In general.--The Office of Municipal Securities
shall be staffed sufficiently to carry out the
requirements of this section.
(2) Requirement.--The staff of the Office of
Municipal Securities shall include individuals with
knowledge of and expertise in municipal finance.
Subtitle I--Public Company Accounting Oversight Board, Portfolio
Margining, and Other Matters
SEC. 981. AUTHORITY TO SHARE CERTAIN INFORMATION WITH FOREIGN
AUTHORITIES.
(a) Definition.--Section 2(a) of the Sarbanes-Oxley Act of
2002 (15 U.S.C. 7201(a)) is amended by adding at the end the
following:
``(17) Foreign auditor oversight authority.--The
term `foreign auditor oversight authority' means any
governmental body or other entity empowered by a
foreign government to conduct inspections of public
accounting firms or otherwise to administer or enforce
laws related to the regulation of public accounting
firms.''.
(b) Availability to Share Information.--Section 105(b)(5)
of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7215(b)(5)) is
amended by adding at the end the following:
``(C) Availability to foreign oversight
authorities.--Without the loss of its status as
confidential and privileged in the hands of the
Board, all information referred to in
subparagraph (A) that relates to a public
accounting firm that a foreign government has
empowered a foreign auditor oversight authority
to inspect or otherwise enforce laws with
respect to, may, at the discretion of the
Board, be made available to the foreign auditor
oversight authority, if--
``(i) the Board finds that it is
necessary to accomplish the purposes of
this Act or to protect investors;
``(ii) the foreign auditor
oversight authority provides--
``(I) such assurances of
confidentiality as the Board
may request;
``(II) a description of the
applicable information systems
and controls of the foreign
auditor oversight authority;
and
``(III) a description of
the laws and regulations of the
foreign government of the
foreign auditor oversight
authority that are relevant to
information access; and
``(iii) the Board determines that
it is appropriate to share such
information.''.
(c) Conforming Amendment.--Section 105(b)(5)(A) of the
Sarbanes-Oxley Act of 2002 (15 U.S.C. 7215(b)(5)(A)) is amended
by striking ``subparagraph (B)'' and inserting ``subparagraphs
(B) and (C)''.
SEC. 982. OVERSIGHT OF BROKERS AND DEALERS.
(a) Definitions.--
(1) Definitions amended.--Title I of the Sarbanes-
Oxley Act of 2002 (15 U.S.C. 7201 et seq.) is amended
by adding at the end the following new section:
``SEC. 110. DEFINITIONS.
``For the purposes of this title, the following definitions
shall apply:
``(1) Audit.--The term `audit' means an examination
of the financial statements, reports, documents,
procedures, controls, or notices of any issuer, broker,
or dealer by an independent public accounting firm in
accordance with the rules of the Board or the
Commission, for the purpose of expressing an opinion on
the financial statements or providing an audit report.
``(2) Audit report.--The term `audit report' means
a document, report, notice, or other record--
``(A) prepared following an audit performed
for purposes of compliance by an issuer,
broker, or dealer with the requirements of the
securities laws; and
``(B) in which a public accounting firm
either--
``(i) sets forth the opinion of
that firm regarding a financial
statement, report, notice, or other
document, procedures, or controls; or
``(ii) asserts that no such opinion
can be expressed.
``(3) Broker.--The term `broker' means a broker (as
such term is defined in section 3(a)(4) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(4)))
that is required to file a balance sheet, income
statement, or other financial statement under section
17(e)(1)(A) of such Act (15 U.S.C. 78q(e)(1)(A)), where
such balance sheet, income statement, or financial
statement is required to be certified by a registered
public accounting firm.
``(4) Dealer.--The term `dealer' means a dealer (as
such term is defined in section 3(a)(5) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(5)))
that is required to file a balance sheet, income
statement, or other financial statement under section
17(e)(1)(A) of such Act (15 U.S.C. 78q(e)(1)(A)), where
such balance sheet, income statement, or financial
statement is required to be certified by a registered
public accounting firm.
``(5) Professional standards.--The term
`professional standards' means--
``(A) accounting principles that are--
``(i) established by the standard
setting body described in section 19(b)
of the Securities Act of 1933, as
amended by this Act, or prescribed by
the Commission under section 19(a) of
that Act (15 U.S.C. 17a(s)) or section
13(b) of the Securities Exchange Act of
1934 (15 U.S.C. 78a(m)); and
``(ii) relevant to audit reports
for particular issuers, brokers, or
dealers, or dealt with in the quality
control system of a particular
registered public accounting firm; and
``(B) auditing standards, standards for
attestation engagements, quality control
policies and procedures, ethical and competency
standards, and independence standards
(including rules implementing title II) that
the Board or the Commission determines--
``(i) relate to the preparation or
issuance of audit reports for issuers,
brokers, or dealers; and
``(ii) are established or adopted
by the Board under section 103(a), or
are promulgated as rules of the
Commission.
``(6) Self-regulatory organization.--The term
`self-regulatory organization' has the same meaning as
in section 3(a) of the Securities Exchange Act of 1934
(15 U.S.C. 78c(a)).''.
(2) Conforming amendment.--Section 2(a) of the
Sarbanes-Oxley Act of 2002 (15 U.S.C. 7201(a)) is
amended in the matter preceding paragraph (1), by
striking ``In this'' and inserting ``Except as
otherwise specifically provided in this Act, in this''.
(b) Establishment and Administration of the Public Company
Accounting Oversight Board.--Section 101 of the Sarbanes-Oxley
Act of 2002 (15 U.S.C. 7211) is amended--
(1) by striking ``issuers'' each place that term
appears and inserting ``issuers, brokers, and
dealers''; and
(2) in subsection (a)--
(A) by striking ``public companies'' and
inserting ``companies''; and
(B) by striking ``for companies the
securities of which are sold to, and held by
and for, public investors''.
(c) Registration With the Board.--Section 102 of the
Sarbanes-Oxley Act of 2002 (15 U.S.C. 7212) is amended--
(1) in subsection (a)--
(A) by striking ``Beginning 180'' and all
that follows through ``101(d), it'' and
inserting ``It''; and
(B) by striking ``issuer'' and inserting
``issuer, broker, or dealer'';
(2) in subsection (b)--
(A) in paragraph (2)(A), by striking
``issuers'' and inserting ``issuers, brokers,
and dealers''; and
(B) by striking ``issuer'' each place that
term appears and inserting ``issuer, broker, or
dealer''.
(d) Auditing and Independence.--Section 103(a) of the
Sarbanes-Oxley Act of 2002 (15 U.S.C. 7213(a)) is amended--
(1) in paragraph (1), by striking ``and such ethics
standards'' and inserting ``such ethics standards, and
such independence standards'';
(2) in paragraph (2)(A)(iii), by striking
``describe in each audit report'' and inserting ``in
each audit report for an issuer, describe''; and
(3) in paragraph (2)(B)(i), by striking ``issuers''
and inserting ``issuers, brokers, and dealers''.
(e) Inspections of Registered Public Accounting Firms.--
(1) Amendments.--Section 104(a) of the Sarbanes-
Oxley Act of 2002 (15 U.S.C. 7214(a)) is amended--
(A) by striking ``The Board shall'' and
inserting the following:
``(1) Inspections generally.--The Board shall'';
and
(B) by adding at the end the following:
``(2) Inspections of audit reports for brokers and
dealers.--
``(A) The Board may, by rule, conduct and
require a program of inspection in accordance
with paragraph (1), on a basis to be determined
by the Board, of registered public accounting
firms that provide one or more audit reports
for a broker or dealer. The Board, in
establishing such a program, may allow for
differentiation among classes of brokers and
dealers, as appropriate.
``(B) If the Board determines to establish
a program of inspection pursuant to
subparagraph (A), the Board shall consider in
establishing any inspection schedules whether
differing schedules would be appropriate with
respect to registered public accounting firms
that issue audit reports only for one or more
brokers or dealers that do not receive, handle,
or hold customer securities or cash or are not
a member of the Securities Investor Protection
Corporation.
``(C) Any rules of the Board pursuant to
this paragraph shall be subject to prior
approval by the Commission pursuant to section
107(b) before the rules become effective,
including an opportunity for public notice and
comment.
``(D) Notwithstanding anything to the
contrary in section 102 of this Act, a public
accounting firm shall not be required to
register with the Board if the public
accounting firm is exempt from the inspection
program which may be established by the Board
under subparagraph (A).''.
(2) Conforming amendment.--Section 17(e)(1)(A) of
the Securities Exchange Act of 1934 (15 U.S.C.
78q(e)(1)(A)) is amended by striking ``registered
public accounting firm'' and inserting ``independent
public accounting firm, or by a registered public
accounting firm if the firm is required to be
registered under the Sarbanes-Oxley Act of 2002,''.
(f) Investigations and Disciplinary Proceedings.--Section
105(c)(7)(B) of the Sarbanes-Oxley Act of 2002 (15 U.S.C.
7215(c)(7)(B)) is amended--
(1) in the subparagraph heading, by inserting ``,
broker, or dealer'' after ``issuer'';
(2) by striking ``any issuer'' each place that term
appears and inserting ``any issuer, broker, or
dealer''; and
(3) by striking ``an issuer under this subsection''
and inserting ``a registered public accounting firm
under this subsection''.
(g) Foreign Public Accounting Firms.--Section 106(a) of the
Sarbanes-Oxley Act of 2002 (15 U.S.C. 7216(a)) is amended--
(1) in paragraph (1), by striking ``issuer'' and
inserting ``issuer, broker, or dealer''; and
(2) in paragraph (2), by striking ``issuers'' and
inserting ``issuers, brokers, or dealers''.
(h) Funding.--Section 109 of the Sarbanes-Oxley Act of 2002
(15 U.S.C. 7219) is amended--
(1) in subsection (c)(2), by striking ``subsection
(i)'' and inserting ``subsection (j)'';
(2) in subsection (d)--
(A) in paragraph (2), by striking
``allowing for differentiation among classes of
issuers, as appropriate'' and inserting ``and
among brokers and dealers, in accordance with
subsection (h), and allowing for
differentiation among classes of issuers,
brokers and dealers, as appropriate''; and
(B) by adding at the end the following:
``(3) Brokers and dealers.--The Board shall begin
the allocation, assessment, and collection of fees
under paragraph (2) with respect to brokers and dealers
with the payment of support fees to fund the first full
fiscal year beginning after the date of enactment of
the Investor Protection and Securities Reform Act of
2010.'';
(3) by redesignating subsections (h), (i), and (j)
as subsections (i), (j), and (k), respectively; and
(4) by inserting after subsection (g) the
following:
``(h) Allocation of Accounting Support Fees Among Brokers
and Dealers.--
``(1) Obligation to pay.--Each broker or dealer
shall pay to the Board the annual accounting support
fee allocated to such broker or dealer under this
section.
``(2) Allocation.--Any amount due from a broker or
dealer (or from a particular class of brokers and
dealers) under this section shall be allocated among
brokers and dealers and payable by the broker or dealer
(or the brokers and dealers in the particular class, as
applicable).
``(3) Proportionality.--The amount due from a
broker or dealer shall be in proportion to the net
capital of the broker or dealer (before or after any
adjustments), compared to the total net capital of all
brokers and dealers (before or after any adjustments),
in accordance with rules issued by the Board.''.
(i) Referral of Investigations to a Self-regulatory
Organization.--Section 105(b)(4)(B) of the Sarbanes-Oxley Act
of 2002 (15 U.S.C. 7215(b)(4)(B)) is amended--
(1) by redesignating clauses (ii) and (iii) as
clauses (iii) and (iv), respectively; and
(2) by inserting after clause (i) the following:
``(ii) to a self-regulatory
organization, in the case of an
investigation that concerns an audit
report for a broker or dealer that is
under the jurisdiction of such self-
regulatory organization;''.
(j) Use of Documents Related to an Inspection or
Investigation.--Section 105(b)(5)(B)(ii) of the Sarbanes-Oxley
Act of 2002 (15 U.S.C. 7215(b)(5)(B)(ii)) is amended--
(1) in subclause (III), by striking ``and'' at the
end;
(2) in subclause (IV), by striking the comma and
inserting ``; and''; and
(3) by inserting after subclause (IV) the
following:
``(V) a self-regulatory
organization, with respect to
an audit report for a broker or
dealer that is under the
jurisdiction of such self-
regulatory organization,''.
SEC. 983. PORTFOLIO MARGINING.
(a) Advances.--Section 9(a)(1) of the Securities Investor
Protection Act of 1970 (15 U.S.C. 78fff3(a)(1)) is amended by
inserting ``or options on commodity futures contracts'' after
``claim for securities''.
(b) Definitions.--Section 16 of the Securities Investor
Protection Act of 1970 (15 U.S.C. 78lll) is amended--
(1) by striking paragraph (2) and inserting the
following:
``(2) Customer.--
``(A) In general.--The term `customer' of a
debtor means any person (including any person
with whom the debtor deals as principal or
agent) who has a claim on account of securities
received, acquired, or held by the debtor in
the ordinary course of its business as a broker
or dealer from or for the securities accounts
of such person for safekeeping, with a view to
sale, to cover consummated sales, pursuant to
purchases, as collateral, security, or for
purposes of effecting transfer.
``(B) Included persons.--The term
`customer' includes--
``(i) any person who has deposited
cash with the debtor for the purpose of
purchasing securities;
``(ii) any person who has a claim
against the debtor for cash,
securities, futures contracts, or
options on futures contracts received,
acquired, or held in a portfolio
margining account carried as a
securities account pursuant to a
portfolio margining program approved by
the Commission; and
``(iii) any person who has a claim
against the debtor arising out of sales
or conversions of such securities.
``(C) Excluded persons.--The term
`customer' does not include any person, to the
extent that--
``(i) the claim of such person
arises out of transactions with a
foreign subsidiary of a member of SIPC;
or
``(ii) such person has a claim for
cash or securities which by contract,
agreement, or understanding, or by
operation of law, is part of the
capital of the debtor, or is
subordinated to the claims of any or
all creditors of the debtor,
notwithstanding that some ground exists
for declaring such contract, agreement,
or understanding void or voidable in a
suit between the claimant and the
debtor.'';
(2) in paragraph (4)--
(A) in subparagraph (C), by striking
``and'' at the end;
(B) by redesignating subparagraph (D) as
subparagraph (E); and
(C) by inserting after subparagraph (C) the
following:
``(D) in the case of a portfolio margining
account of a customer that is carried as a
securities account pursuant to a portfolio
margining program approved by the Commission, a
futures contract or an option on a futures
contract received, acquired, or held by or for
the account of a debtor from or for such
portfolio margining account, and the proceeds
thereof; and'';
(3) in paragraph (9), in the matter following
subparagraph (L), by inserting after ``Such term'' the
following: ``includes revenues earned by a broker or
dealer in connection with a transaction in the
portfolio margining account of a customer carried as
securities accounts pursuant to a portfolio margining
program approved by the Commission. Such term''; and
(4) in paragraph (11)--
(A) in subparagraph (A)--
(i) by striking ``filing date,
all'' and all that follows through the
end of the subparagraph and inserting
the following: ``filing date--
``(i) all securities positions of
such customer (other than customer name
securities reclaimed by such customer);
and
``(ii) all positions in futures
contracts and options on futures
contracts held in a portfolio margining
account carried as a securities account
pursuant to a portfolio margining
program approved by the Commission,
including all property collateralizing
such positions, to the extent that such
property is not otherwise included
herein; minus''; and
(B) in the matter following subparagraph
(C), by striking ``In determining'' and
inserting the following: ``A claim for a
commodity futures contract received, acquired,
or held in a portfolio margining account
pursuant to a portfolio margining program
approved by the Commission or a claim for a
security futures contract, shall be deemed to
be a claim with respect to such contract as of
the filing date, and such claim shall be
treated as a claim for cash. In determining''.
SEC. 984. LOAN OR BORROWING OF SECURITIES.
(a) Rulemaking Authority.--Section 10 of the Securities
Exchange Act of 1934 (15 U.S.C. 78j) is amended by adding at
the end the following:
``(c)(1) To effect, accept, or facilitate a transaction
involving the loan or borrowing of securities in contravention
of such rules and regulations as the Commission may prescribe
as necessary or appropriate in the public interest or for the
protection of investors.
``(2) Nothing in paragraph (1) may be construed to limit
the authority of the appropriate Federal banking agency (as
defined in section 3(q) of the Federal Deposit Insurance Act
(12 U.S.C. 1813(q))), the National Credit Union Administration,
or any other Federal department or agency having a
responsibility under Federal law to prescribe rules or
regulations restricting transactions involving the loan or
borrowing of securities in order to protect the safety and
soundness of a financial institution or to protect the
financial system from systemic risk.''.
(b) Rulemaking Required.--Not later than 2 years after the
date of enactment of this Act, the Commission shall promulgate
rules that are designed to increase the transparency of
information available to brokers, dealers, and investors, with
respect to the loan or borrowing of securities.
SEC. 985. TECHNICAL CORRECTIONS TO FEDERAL SECURITIES LAWS.
(a) Securities Act of 1933.--The Securities Act of 1933 (15
U.S.C. 77a et seq.) is amended--
(1) in section 3(a)(4) (15 U.S.C. 77c(a)(4)), by
striking ``individual;'' and inserting ``individual,'';
(2) in section 18 (15 U.S.C. 77r)--
(A) in subsection (b)(1)(C), by striking
``is a security'' and inserting ``a security'';
and
(B) in subsection (c)(2)(B)(i), by striking
``State, or'' and inserting ``State or'';
(3) in section 19(d)(6)(A) (15 U.S.C.
77s(d)(6)(A)), by striking ``in paragraph (1) of (3)''
and inserting ``in paragraph (1) or (3)''; and
(4) in section 27A(c)(1)(B)(ii) (15 U.S.C. 77z-
2(c)(1)(B)(ii)), by striking ``business entity;'' and
inserting ``business entity,''.
(b) Securities Exchange Act of 1934.--The Securities
Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended--
(1) in section 2 (15 U.S.C. 78b), by striking
``affected'' and inserting ``effected'';
(2) in section 3 (15 U.S.C. 78c)--
(A) in subsection (a)(55)(A), by striking
``section 3(a)(12) of the Securities Exchange
Act of 1934'' and inserting ``section 3(a)(12)
of this title''; and
(B) in subsection (g), by striking
``company, account person, or entity'' and
inserting ``company, account, person, or
entity'';
(3) in section 10A(i)(1)(B) (15 U.S.C. 78j-
1(i)(1)(B))--
(A) in the subparagraph heading, by
striking ``minimus'' and inserting ``minimis'';
and
(B) in clause (i), by striking ``nonaudit''
and inserting ``non-audit'';
(4) in section 13(b)(1) (15 U.S.C. 78m(b)(1)), by
striking ``earning statement'' and inserting ``earnings
statement'';
(5) in section 15 (15 U.S.C. 78o)--
(A) in subsection (b)(1)--
(i) in subparagraph (B), by
striking ``The order granting'' and all
that follows through ``from such
membership.''; and
(ii) in the undesignated matter
immediately following subparagraph (B),
by inserting after the first sentence
the following: ``The order granting
registration shall not be effective
until such broker or dealer has become
a member of a registered securities
association, or until such broker or
dealer has become a member of a
national securities exchange, if such
broker or dealer effects transactions
solely on that exchange, unless the
Commission has exempted such broker or
dealer, by rule or order, from such
membership.'';
(6) in section 15C(a)(2) (15 U.S.C. 78o-5(a)(2))--
(A) by redesignating clauses (i) and (ii)
as subparagraphs (A) and (B), respectively, and
adjusting the subparagraph margins accordingly;
(B) in subparagraph (B), as so
redesignated, by striking ``The order
granting'' and all that follows through ``from
such membership.''; and
(C) in the matter following subparagraph
(B), as so redesignated, by inserting after the
first sentence the following: ``The order
granting registration shall not be effective
until such government securities broker or
government securities dealer has become a
member of a national securities exchange
registered under section 6 of this title, or a
securities association registered under section
15A of this title, unless the Commission has
exempted such government securities broker or
government securities dealer, by rule or order,
from such membership.'';
(7) in section 17(b)(1)(B) (15 U.S.C.
78q(b)(1)(B)), by striking ``15A(k) gives'' and
inserting ``15A(k), give''; and
(8) in section 21C(c)(2) (15 U.S.C. 78u-3(c)(2)),
by striking ``paragraph (1) subsection'' and inserting
``Paragraph (1)''.
(c) Trust Indenture Act of 1939.--The Trust Indenture Act
of 1939 (15 U.S.C. 77aaa et seq.) is amended--
(1) in section 304(b) (15 U.S.C. 77ddd(b)), by
striking ``section 2 of such Act'' and inserting
``section 2(a) of such Act''; and
(2) in section 317(a)(1) (15 U.S.C. 77qqq(a)(1)),
by striking ``, in the'' and inserting ``in the''.
(d) Investment Company Act of 1940.--The Investment Company
Act of 1940 (15 U.S.C. 80a-1 et seq.) is amended--
(1) in section 2(a)(19) (15 U.S.C. 80a-2(a)(19)),
in the matter following subparagraph (B)(vii)--
(A) by striking ``clause (vi)'' each place
that term appears and inserting ``clause
(vii)''; and
(B) in each of subparagraphs (A)(vi) and
(B)(vi), by adding ``and'' at the end of
subclause (III);
(2) in section 9(b)(4)(B) (15 U.S.C. 80a-
9(b)(4)(B)), by adding ``or'' after the semicolon at
the end;
(3) in section 12(d)(1)(J) (15 U.S.C. 80a-
12(d)(1)(J)), by striking ``any provision of this
subsection'' and inserting ``any provision of this
paragraph'';
(4) in section 17(f) (15 U.S.C. 80a-17(f))--
(A) in paragraph (4), by striking ``No such
member'' and inserting ``No member of a
national securities exchange''; and
(B) in paragraph (6), by striking ``company
may serve'' and inserting ``company, may
serve''; and
(5) in section 61(a)(3)(B)(iii) (15 U.S.C. 80a-
60(a)(3)(B)(iii))--
(A) by striking ``paragraph (1) of section
205'' and inserting ``section 205(a)(1)''; and
(B) by striking ``clause (A) or (B) of that
section'' and inserting ``paragraph (1) or (2)
of section 205(b)''.
(e) Investment Advisers Act of 1940.--The Investment
Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) is amended--
(1) in section 203 (15 U.S.C. 80b-3)--
(A) in subsection (c)(1)(A), by striking
``principal business office and'' and inserting
``principal office, principal place of
business, and''; and
(B) in subsection (k)(4)(B), in the matter
following clause (ii), by striking ``principal
place of business'' and inserting ``principal
office or place of business'';
(2) in section 206(3) (15 U.S.C. 80b-6(3)), by
adding ``or'' after the semicolon at the end;
(3) in section 213(a) (15 U.S.C. 80b-13(a)), by
striking ``principal place of business'' and inserting
``principal office or place of business''; and
(4) in section 222 (15 U.S.C. 80b-18a), by striking
``principal place of business'' each place that term
appears and inserting ``principal office and place of
business''.
SEC. 986. CONFORMING AMENDMENTS RELATING TO REPEAL OF THE PUBLIC
UTILITY HOLDING COMPANY ACT OF 1935.
(a) Securities Exchange Act of 1934.--The Securities
Exchange Act of 1934 (15 U.S.C. 78 et seq.) is amended--
(1) in section 3(a)(47) (15 U.S.C. 78c(a)(47)), by
striking ``the Public Utility Holding Company Act of
1935 (15 U.S.C. 79a et seq.),'';
(2) in section 12(k) (15 U.S.C. 78l(k)), by
amending paragraph (7) to read as follows:
``(7) Definition.--For purposes of this subsection,
the term `emergency' means--
``(A) a major market disturbance
characterized by or constituting--
``(i) sudden and excessive
fluctuations of securities prices
generally, or a substantial threat
thereof, that threaten fair and orderly
markets; or
``(ii) a substantial disruption of
the safe or efficient operation of the
national system for clearance and
settlement of transactions in
securities, or a substantial threat
thereof; or
``(B) a major disturbance that
substantially disrupts, or threatens to
substantially disrupt--
``(i) the functioning of securities
markets, investment companies, or any
other significant portion or segment of
the securities markets; or
``(ii) the transmission or
processing of securities
transactions.''; and
(3) in section 21(h)(2) (15 U.S.C. 78u(h)(2)), by
striking ``section 18(c) of the Public Utility Holding
Company Act of 1935,''.
(b) Trust Indenture Act of 1939.--The Trust Indenture Act
of 1939 (15 U.S.C. 77aaa et seq.) is amended--
(1) in section 303 (15 U.S.C. 77ccc), by striking
paragraph (17) and inserting the following:
``(17) The terms `Securities Act of 1933' and
`Securities Exchange Act of 1934' shall be deemed to
refer, respectively, to such Acts, as amended, whether
amended prior to or after the enactment of this
title.'';
(2) in section 308 (15 U.S.C. 77hhh), by striking
``Securities Act of 1933, the Securities Exchange Act
of 1934, or the Public Utility Holding Company Act of
1935'' each place that term appears and inserting
``Securities Act of 1933 or the Securities Exchange Act
of 1934'';
(3) in section 310 (15 U.S.C. 77jjj), by striking
subsection (c);
(4) in section 311 (15 U.S.C. 77kkk), by striking
subsection (c);
(5) in section 323(b) (15 U.S.C. 77www(b)), by
striking ``Securities Act of 1933, or the Securities
Exchange Act of 1934, or the Public Utility Holding
Company Act of 1935'' and inserting ``Securities Act of
1933 or the Securities Exchange Act of 1934''; and
(6) in section 326 (15 U.S.C. 77zzz), by striking
``Securities Act of 1933, or the Securities Exchange
Act of 1934, or the Public Utility Holding Company Act
of 1935,'' and inserting ``Securities Act of 1933 or
the Securities Exchange Act of 1934''.
(c) Investment Company Act of 1940.--The Investment Company
Act of 1940 (15 U.S.C. 80a-1 et seq.) is amended--
(1) in section 2(a)(44) (15 U.S.C. 80a-2(a)(44)),
by striking ```Public Utility Holding Company Act of
1935','';
(2) in section 3(c) (15 U.S.C. 80a-3(c)), by
striking paragraph (8) and inserting the following:
``(8) [Repealed]'';
(3) in section 38(b) (15 U.S.C. 80a-37(b)), by
striking ``the Public Utility Holding Company Act of
1935,''; and
(4) in section 50 (15 U.S.C. 80a-49), by striking
``the Public Utility Holding Company Act of 1935,''.
(d) Investment Advisers Act of 1940.--Section 202(a)(21) of
the Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)(21)) is
amended by striking ```Public Utility Holding Company Act of
1935',''.
SEC. 987. AMENDMENT TO DEFINITION OF MATERIAL LOSS AND NONMATERIAL
LOSSES TO THE DEPOSIT INSURANCE FUND FOR PURPOSES
OF INSPECTOR GENERAL REVIEWS.
(a) In General.--Section 38(k) of the Federal Deposit
Insurance Act (U.S.C. 1831o(k)) is amended--
(1) in paragraph (2), by striking subparagraph (B)
and inserting the following:
``(B) Material loss defined.--The term
`material loss' means any estimated loss in
excess of--
``(i) $200,000,000, if the loss
occurs during the period beginning on
January 1, 2010, and ending on December
31, 2011;
``(ii) $150,000,000, if the loss
occurs during the period beginning on
January 1, 2012, and ending on December
31, 2013; and
``(iii) $50,000,000, if the loss
occurs on or after January 1, 2014,
provided that if the inspector general
of a Federal banking agency certifies
to the Committee on Banking, Housing,
and Urban Affairs of the Senate and the
Committee on Financial Services of the
House of Representatives that the
number of projected failures of
depository institutions that would
require material loss reviews for the
following 12 months will be greater
than 30 and would hinder the
effectiveness of its oversight
functions, then the definition of
`material loss' shall be $75,000,000
for a duration of 1 year from the date
of the certification.'';
(2) in paragraph (4)(A) by striking ``the report''
and inserting ``any report on losses required under
this subsection,'';
(3) by striking paragraph (6);
(4) by redesignating paragraph (5) as paragraph
(6); and
(5) by inserting after paragraph (4) the following:
``(5) Losses that are not material.--
``(A) Semiannual report.--For the 6-month
period ending on March 31, 2010, and each 6-
month period thereafter, the Inspector General
of each Federal banking agency shall--
``(i) identify losses that the
Inspector General estimates have been
incurred by the Deposit Insurance Fund
during that 6-month period, with
respect to the insured depository
institutions supervised by the Federal
banking agency;
``(ii) for each loss incurred by
the Deposit Insurance Fund that is not
a material loss, determine--
``(I) the grounds
identified by the Federal
banking agency or State bank
supervisor for appointing the
Corporation as receiver under
section 11(c)(5); and
``(II) whether any unusual
circumstances exist that might
warrant an in-depth review of
the loss; and
``(iii) prepare and submit a
written report to the appropriate
Federal banking agency and to Congress
on the results of any determination by
the Inspector General, including--
``(I) an identification of
any loss that warrants an in-
depth review, together with the
reasons why such review is
warranted, or, if the Inspector
General determines that no
review is warranted, an
explanation of such
determination; and
``(II) for each loss
identified under subclause (I)
that warrants an in-depth
review, the date by which such
review, and a report on such
review prepared in a manner
consistent with reports under
paragraph (1)(A), will be
completed and submitted to the
Federal banking agency and
Congress.
``(B) Deadline for semiannual report.--The
Inspector General of each Federal banking
agency shall--
``(i) submit each report required
under paragraph (A) expeditiously, and
not later than 90 days after the end of
the 6-month period covered by the
report; and
``(ii) provide a copy of the report
required under paragraph (A) to any
Member of Congress, upon request.''.
(b) Technical and Conforming Amendment.--The heading for
subsection (k) of section 38 of the Federal Deposit Insurance
Act (U.S.C. 1831o(k)) is amended to read as follows:
``(k) Reviews Required When Deposit Insurance Fund Incurs
Losses.--''.
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.
(a) In General.--Section 216(j) of the Federal Credit Union
Act (12 U.S.C. 1790d(j)) is amended to read as follows:
``(j) Reviews Required When Share Insurance Fund
Experiences Losses.--
``(1) In general.--If the Fund incurs a material
loss with respect to an insured credit union, the
Inspector General of the Board shall--
``(A) submit to the Board a written report
reviewing the supervision of the credit union
by the Administration (including the
implementation of this section by the
Administration), which shall include--
``(i) a description of the reasons
why the problems of the credit union
resulted in a material loss to the
Fund; and
``(ii) recommendations for
preventing any such loss in the future;
and
``(B) submit a copy of the report under
subparagraph (A) to--
``(i) the Comptroller General of
the United States;
``(ii) the Corporation;
``(iii) in the case of a report
relating to a State credit union, the
appropriate State supervisor; and
``(iv) to any Member of Congress,
upon request.
``(2) Material loss defined.--For purposes of
determining whether the Fund has incurred a material
loss with respect to an insured credit union, a loss is
material if it exceeds the sum of--
``(A) $25,000,000; and
``(B) an amount equal to 10 percent of the
total assets of the credit union on the date on
which the Board initiated assistance under
section 208 or was appointed liquidating agent.
``(3) Public disclosure required.--
``(A) In general.--The Board shall disclose
a report under this subsection, upon request
under section 552 of title 5, United States
Code, without excising--
``(i) any portion under section
552(b)(5) of title 5, United States
Code; or
``(ii) any information about the
insured credit union (other than trade
secrets) under section 552(b)(8) of
title 5, United States Code.
``(B) Rule of construction.--Subparagraph
(A) may not be construed as requiring the
agency to disclose the name of any customer of
the insured credit union (other than an
institution-affiliated party), or information
from which the identity of such customer could
reasonably be ascertained.
``(4) Losses that are not material.--
``(A) Semiannual report.--For the 6-month
period ending on March 31, 2010, and each 6-
month period thereafter, the Inspector General
of the Board shall--
``(i) identify any losses that the
Inspector General estimates were
incurred by the Fund during such 6-
month period, with respect to insured
credit unions;
``(ii) for each loss to the Fund
that is not a material loss,
determine--
``(I) the grounds
identified by the Board or the
State official having
jurisdiction over a State
credit union for appointing the
Board as the liquidating agent
for any Federal or State credit
union; and
``(II) whether any unusual
circumstances exist that might
warrant an in-depth review of
the loss; and
``(iii) prepare and submit a
written report to the Board and to
Congress on the results of the
determinations of the Inspector General
that includes--
``(I) an identification of
any loss that warrants an in-
depth review, and the reasons
such review is warranted, or if
the Inspector General
determines that no review is
warranted, an explanation of
such determination; and
``(II) for each loss
identified in subclause (I)
that warrants an in-depth
review, the date by which such
review, and a report on the
review prepared in a manner
consistent with reports under
paragraph (1)(A), will be
completed.
``(B) Deadline for semiannual report.--The
Inspector General of the Board shall--
``(i) submit each report required
under subparagraph (A) expeditiously,
and not later than 90 days after the
end of the 6-month period covered by
the report; and
``(ii) provide a copy of the report
required under subparagraph (A) to any
Member of Congress, upon request.
``(5) GAO review.--The Comptroller General of the
United States shall, under such conditions as the
Comptroller General determines to be appropriate--
``(A) review each report made under
paragraph (1), including the extent to which
the Inspector General of the Board complied
with the requirements under section 8L of the
Inspector General Act of 1978 (5 U.S.C. App.)
with respect to each such report; and
``(B) recommend improvements to the
supervision of insured credit unions (including
improvements relating to the implementation of
this section).''.
SEC. 989. GOVERNMENT ACCOUNTABILITY OFFICE STUDY ON PROPRIETARY
TRADING.
(a) Definitions.--In this section--
(1) the term ``covered entity'' means--
(A) an insured depository institution, an
affiliate of an insured depository institution,
a bank holding company, a financial holding
company, or a subsidiary of a bank holding
company or a financial holding company, as
those terms are defined in the Bank Holding
Company Act of 1956 (12 U.S.C. 1841 et seq.);
and
(B) any other entity, as the Comptroller
General of the United States may determine; and
(2) the term ``proprietary trading'' means the act
of a covered entity investing as a principal in
securities, commodities, derivatives, hedge funds,
private equity firms, or such other financial products
or entities as the Comptroller General may determine.
(b) Study.--
(1) In general.--The Comptroller General of the
United States shall conduct a study regarding the risks
and conflicts associated with proprietary trading by
and within covered entities, including an evaluation
of--
(A) whether proprietary trading presents a
material systemic risk to the stability of the
United States financial system, and if so, the
costs and benefits of options for mitigating
such systemic risk;
(B) whether proprietary trading presents
material risks to the safety and soundness of
the covered entities that engage in such
activities, and if so, the costs and benefits
of options for mitigating such risks;
(C) whether proprietary trading presents
material conflicts of interest between covered
entities that engage in proprietary trading and
the clients of the institutions who use the
firm to execute trades or who rely on the firm
to manage assets, and if so, the costs and
benefits of options for mitigating such
conflicts of interest;
(D) whether adequate disclosure regarding
the risks and conflicts of proprietary trading
is provided to the depositors, trading and
asset management clients, and investors of
covered entities that engage in proprietary
trading, and if not, the costs and benefits of
options for the improvement of such disclosure;
and
(E) whether the banking, securities, and
commodities regulators of institutions that
engage in proprietary trading have in place
adequate systems and controls to monitor and
contain any risks and conflicts of interest
related to proprietary trading, and if not, the
costs and benefits of options for the
improvement of such systems and controls.
(2) Considerations.--In carrying out the study
required under paragraph (1), the Comptroller General
shall consider--
(A) current practice relating to
proprietary trading;
(B) the advisability of a complete ban on
proprietary trading;
(C) limitations on the scope of activities
that covered entities may engage in with
respect to proprietary trading;
(D) the advisability of additional capital
requirements for covered entities that engage
in proprietary trading;
(E) enhanced restrictions on transactions
between affiliates related to proprietary
trading;
(F) enhanced accounting disclosures
relating to proprietary trading;
(G) enhanced public disclosure relating to
proprietary trading; and
(H) any other options the Comptroller
General deems appropriate.
(c) Report to Congress.--Not later than 15 months after the
date of enactment of this Act, the Comptroller General shall
submit a report to Congress on the results of the study
conducted under subsection (b).
(d) Access by Comptroller General.--For purposes of
conducting the study required under subsection (b), the
Comptroller General shall have access, upon request, to any
information, data, schedules, books, accounts, financial
records, reports, files, electronic communications, or other
papers, things, or property belonging to or in use by a covered
entity that engages in proprietary trading, and to the
officers, directors, employees, independent public accountants,
financial advisors, staff, and agents and representatives of a
covered entity (as related to the activities of the agent or
representative on behalf of the covered entity), at such
reasonable times as the Comptroller General may request. The
Comptroller General may make and retain copies of books,
records, accounts, and other records, as the Comptroller
General deems appropriate.
(e) Confidentiality of Reports.--
(1) In general.--Except as provided in paragraph
(2), the Comptroller General may not disclose
information regarding--
(A) any proprietary trading activity of a
covered entity, unless such information is
disclosed at a level of generality that does
not reveal the investment or trading position
or strategy of the covered entity for any
specific security, commodity, derivative, or
other investment or financial product; or
(B) any individual interviewed by the
Comptroller General for purposes of the study
under subsection (b), unless such information
is disclosed at a level of generality that does
not reveal--
(i) the name of or identifying
details relating to such individual; or
(ii) in the case of an individual
who is an employee of a third party
that provides professional services to
a covered entity believed to be engaged
in proprietary trading, the name of or
any identifying details relating to
such third party.
(2) Exceptions.--The Comptroller General may
disclose the information described in paragraph (1)--
(A) to a department, agency, or official of
the Federal Government, for official use, upon
request;
(B) to a committee of Congress, upon
request; and
(C) to a court, upon an order of such
court.
SEC. 989A. SENIOR INVESTOR PROTECTIONS.
(a) Definitions.--As used in this section--
(1) the term ``eligible entity'' means--
(A) a securities commission (or any agency
or office performing like functions) of a State
that the Office determines has adopted rules on
the appropriate use of designations in the
offer or sale of securities or the provision of
investment advice that meet or exceed the
minimum requirements of the NASAA Model Rule on
the Use of Senior-Specific Certifications and
Professional Designations (or any successor
thereto);
(B) the insurance commission (or any agency
or office performing like functions) of any
State that the Office determines has--
(i) adopted rules on the
appropriate use of designations in the
sale of insurance products that, to the
extent practicable, conform to the
minimum requirements of the National
Association of Insurance Commissioners
Model Regulation on the Use of Senior-
Specific Certifications and
Professional Designations in the Sale
of Life Insurance and Annuities (or any
successor thereto); and
(ii) adopted rules with respect to
fiduciary or suitability requirements
in the sale of annuities that meet or
exceed the minimum requirements
established by the Suitability in
Annuity Transactions Model Regulation
of the National Association of
Insurance Commissioners (or any
successor thereto); or
(C) a consumer protection agency of any
State, if--
(i) the securities commission (or
any agency or office performing like
functions) of the State is eligible
under subparagraph (A); or
(ii) the insurance commission (or
any agency or office performing like
functions) of the State is eligible
under subparagraph (B);
(2) the term ``financial product'' means a
security, an insurance product (including an insurance
product that pays a return, whether fixed or variable),
a bank product, and a loan product;
(3) the term ``misleading designation''--
(A) means a certification, professional
designation, or other purported credential that
indicates or implies that a salesperson or
adviser has special certification or training
in advising or servicing seniors; and
(B) does not include a certification,
professional designation, license, or other
credential that--
(i) was issued by or obtained from
an academic institution having regional
accreditation;
(ii) meets the standards for
certifications and professional
designations outlined by the NASAA
Model Rule on the Use of Senior-
Specific Certifications and
Professional Designations (or any
successor thereto) or by the Model
Regulations on the Use of Senior-
Specific Certifications and
Professional Designations in the Sale
of Life Insurance and Annuities,
adopted by the National Association of
Insurance Commissioners (or any
successor thereto); or
(iii) was issued by or obtained
from a State;
(4) the term ``misleading or fraudulent marketing''
means the use of a misleading designation by a person
that sells to or advises a senior in connection with
the sale of a financial product;
(5) the term ``NASAA'' means the North American
Securities Administrators Association;
(6) the term ``Office'' means the Office of
Financial Literacy of the Bureau;
(7) the term ``senior'' means any individual who
has attained the age of 62 years or older; and
(8) the term ``State'' has the same meaning as in
section 3 of the Securities Exchange Act of 1934 (15
U.S.C. 78c(a)).
(b) Grants to States for Enhanced Protection of Seniors
From Being Misled by False Designations.--The Office shall
establish a program under which the Office may make grants to
States or eligible entities--
(1) to hire staff to identify, investigate, and
prosecute (through civil, administrative, or criminal
enforcement actions) cases involving misleading or
fraudulent marketing;
(2) to fund technology, equipment, and training for
regulators, prosecutors, and law enforcement officers,
in order to identify salespersons and advisers who
target seniors through the use of misleading
designations;
(3) to fund technology, equipment, and training for
prosecutors to increase the successful prosecution of
salespersons and advisers who target seniors with the
use of misleading designations;
(4) to provide educational materials and training
to regulators on the appropriateness of the use of
designations by salespersons and advisers in connection
with the sale and marketing of financial products;
(5) to provide educational materials and training
to seniors to increase awareness and understanding of
misleading or fraudulent marketing;
(6) to develop comprehensive plans to combat
misleading or fraudulent marketing of financial
products to seniors; and
(7) to enhance provisions of State law to provide
protection for seniors against misleading or fraudulent
marketing.
(c) Applications.--A State or eligible entity desiring a
grant under this section shall submit an application to the
Office, in such form and in such a manner as the Office may
determine, that includes--
(1) a proposal for activities to protect seniors
from misleading or fraudulent marketing that are
proposed to be funded using a grant under this section,
including--
(A) an identification of the scope of the
problem of misleading or fraudulent marketing
in the State;
(B) a description of how the proposed
activities would--
(i) protect seniors from misleading
or fraudulent marketing in the sale of
financial products, including by
proactively identifying victims of
misleading and fraudulent marketing who
are seniors;
(ii) assist in the investigation
and prosecution of those using
misleading or fraudulent marketing; and
(iii) discourage and reduce cases
of misleading or fraudulent marketing;
and
(C) a description of how the proposed
activities would be coordinated with other
State efforts; and
(2) any other information, as the Office determines
is appropriate.
(d) Performance Objectives and Reporting Requirements.--The
Office may establish such performance objectives and reporting
requirements for States and eligible entities receiving a grant
under this section as the Office determines are necessary to
carry out and assess the effectiveness of the program under
this section.
(e) Maximum Amount.--The amount of a grant under this
section may not exceed--
(1) $500,000 for each of 3 consecutive fiscal
years, if the recipient is a State, or an eligible
entity of a State, that has adopted rules--
(A) on the appropriate use of designations
in the offer or sale of securities or
investment advice that meet or exceed the
minimum requirements of the NASAA Model Rule on
the Use of Senior-Specific Certifications and
Professional Designations (or any successor
thereto);
(B) on the appropriate use of designations
in the sale of insurance products that, to the
extent practicable, conform to the minimum
requirements of the National Association of
Insurance Commissioners Model Regulation on the
Use of Senior-Specific Certifications and
Professional Designations in the Sale of Life
Insurance and Annuities (or any successor
thereto); and
(C) with respect to fiduciary or
suitability requirements in the sale of
annuities that meet or exceed the minimum
requirements established by the Suitability in
Annuity Transactions Model Regulation of the
National Association of Insurance Commissioners
(or any successor thereto); and
(2) $100,000 for each of 3 consecutive fiscal
years, if the recipient is a State, or an eligible
entity of a State, that has adopted--
(A) rules on the appropriate use of
designations in the offer or sale of securities
or investment advice that meet or exceed the
minimum requirements of the NASAA Model Rule on
the Use of Senior-Specific Certifications and
Professional Designations (or any successor
thereto); or
(B) rules--
(i) on the appropriate use of
designations in the sale of insurance
products that, to the extent
practicable, conform to the minimum
requirements of the National
Association of Insurance Commissioners
Model Regulation on the Use of Senior-
Specific Certifications and
Professional Designations in the Sale
of Life Insurance and Annuities (or any
successor thereto); and
(ii) with respect to fiduciary or
suitability requirements in the sale of
annuities that meet or exceed the
minimum requirements established by the
Suitability in Annuity Transactions
Model Regulation of the National
Association of Insurance Commissioners
(or any successor thereto).
(f) Subgrants.--A State or eligible entity that receives a
grant under this section may make a subgrant, as the State or
eligible entity determines is necessary to carry out the
activities funded using a grant under this section.
(g) Reapplication.--A State or eligible entity that
receives a grant under this section may reapply for a grant
under this section, notwithstanding the limitations on grant
amounts under subsection (e).
(h) Authorization of Appropriations.--There are authorized
to be appropriated to carry out this section, $8,000,000 for
each of fiscal years 2011 through 2015.
SEC. 989B. DESIGNATED FEDERAL ENTITY INSPECTORS GENERAL INDEPENDENCE.
Section 8G of the Inspector General Act of 1978 (5 U.S.C.
App.) is amended--
(1) in subsection (a)(4)--
(A) in the matter preceding subparagraph
(A), by inserting ``the board or commission of
the designated Federal entity, or in the event
the designated Federal entity does not have a
board or commission,'' after ``means'';
(B) in subparagraph (A), by striking
``and'' after the semicolon; and
(C) by adding after subparagraph (B) the
following:
``(C) with respect to the Federal Labor
Relations Authority, such term means the
members of the Authority (described under
section 7104 of title 5, United States Code);
``(D) with respect to the National Archives
and Records Administration, such term means the
Archivist of the United States;
``(E) with respect to the National Credit
Union Administration, such term means the
National Credit Union Administration Board
(described under section 102 of the Federal
Credit Union Act (12 U.S.C. 1752a));
``(F) with respect to the National
Endowment of the Arts, such term means the
National Council on the Arts;
``(G) with respect to the National
Endowment for the Humanities, such term means
the National Council on the Humanities; and
``(H) with respect to the Peace Corps, such
term means the Director of the Peace Corps;'';
and
(2) in subsection (h), by inserting ``if the
designated Federal entity is not a board or commission,
include'' after ``designated Federal entities and''.
SEC. 989C. STRENGTHENING INSPECTOR GENERAL ACCOUNTABILITY.
Section 5(a) of the Inspector General Act of 1978 (5 U.S.C.
App.) is amended--
(1) in paragraph (12), by striking ``and'' after
the semicolon;
(2) in paragraph (13), by striking the period and
inserting a semicolon; and
(3) by adding at the end the following:
``(14)(A) an appendix containing the results of any
peer review conducted by another Office of Inspector
General during the reporting period; or
``(B) if no peer review was conducted within that
reporting period, a statement identifying the date of
the last peer review conducted by another Office of
Inspector General;
``(15) a list of any outstanding recommendations
from any peer review conducted by another Office of
Inspector General that have not been fully implemented,
including a statement describing the status of the
implementation and why implementation is not complete;
and
``(16) a list of any peer reviews conducted by the
Inspector General of another Office of the Inspector
General during the reporting period, including a list
of any outstanding recommendations made from any
previous peer review (including any peer review
conducted before the reporting period) that remain
outstanding or have not been fully implemented.''.
SEC. 989D. REMOVAL OF INSPECTORS GENERAL OF DESIGNATED FEDERAL
ENTITIES.
Section 8G(e) of the Inspector General Act of 1978 (5
U.S.C. App.) is amended--
(1) by redesignating the sentences following
``(e)'' as paragraph (2); and
(2) by striking ``(e)'' and inserting the
following:
``(e)(1) In the case of a designated Federal entity for
which a board or commission is the head of the designated
Federal entity, a removal under this subsection may only be
made upon the written concurrence of a \2/3\ majority of the
board or commission.''.
SEC. 989E. ADDITIONAL OVERSIGHT OF FINANCIAL REGULATORY SYSTEM.
(a) Council of Inspectors General on Financial Oversight.--
(1) Establishment and membership.--There is
established a Council of Inspectors General on
Financial Oversight (in this section referred to as the
``Council of Inspectors General'') chaired by the
Inspector General of the Department of the Treasury and
composed of the inspectors general of the following:
(A) The Board of Governors of the Federal
Reserve System.
(B) The Commodity Futures Trading
Commission.
(C) The Department of Housing and Urban
Development.
(D) The Department of the Treasury.
(E) The Federal Deposit Insurance
Corporation.
(F) The Federal Housing Finance Agency.
(G) The National Credit Union
Administration.
(H) The Securities and Exchange Commission.
(I) The Troubled Asset Relief Program
(until the termination of the authority of the
Special Inspector General for such program
under section 121(k) of the Emergency Economic
Stabilization Act of 2008 (12 U.S.C. 5231(k))).
(2) Duties.--
(A) Meetings.--The Council of Inspectors
General shall meet not less than once each
quarter, or more frequently if the chair
considers it appropriate, to facilitate the
sharing of information among inspectors general
and to discuss the ongoing work of each
inspector general who is a member of the
Council of Inspectors General, with a focus on
concerns that may apply to the broader
financial sector and ways to improve financial
oversight.
(B) Annual report.--Each year the Council
of Inspectors General shall submit to the
Council and to Congress a report including--
(i) for each inspector general who
is a member of the Council of
Inspectors General, a section within
the exclusive editorial control of such
inspector general that highlights the
concerns and recommendations of such
inspector general in such inspector
general's ongoing and completed work,
with a focus on issues that may apply
to the broader financial sector; and
(ii) a summary of the general
observations of the Council of
Inspectors General based on the views
expressed by each inspector general as
required by clause (i), with a focus on
measures that should be taken to
improve financial oversight.
(3) Working groups to evaluate council.--
(A) Convening a working group.--The Council
of Inspectors General may, by majority vote,
convene a Council of Inspectors General Working
Group to evaluate the effectiveness and
internal operations of the Council.
(B) Personnel and resources.--The
inspectors general who are members of the
Council of Inspectors General may detail staff
and resources to a Council of Inspectors
General Working Group established under this
paragraph to enable it to carry out its duties.
(C) Reports.--A Council of Inspectors
General Working Group established under this
paragraph shall submit regular reports to the
Council and to Congress on its evaluations
pursuant to this paragraph.
(b) Response to Report by Council.--The Council shall
respond to the concerns raised in the report of the Council of
Inspectors General under subsection (a)(2)(B) for such year.
SEC. 989F. GAO STUDY OF PERSON TO PERSON LENDING.
(a) Study.--
(1) In general.--The Comptroller General of the
United States shall conduct a study of person to person
lending to determine the optimal Federal regulatory
structure.
(2) Consultation.--In conducting the study required
under paragraph (1), the Comptroller General shall
consult with Federal banking agencies, the Commission,
consumer groups, outside experts, and the person to
person lending industry.
(3) Content of study.--The study required under
paragraph (1) shall include an examination of--
(A) the regulatory structure as it exists
on the date of enactment of this Act, as
determined by the Commission, with particular
attention to--
(i) the application of the
Securities Act of 1933 to person to
person lending platforms;
(ii) the posting of consumer loan
information on the EDGAR database of
the Commission; and
(iii) the treatment of privately
held person to person lending platforms
as public companies;
(B) the State and other Federal regulators
responsible for the oversight and regulation of
person to person lending markets;
(C) any Federal, State, or local government
or private studies of person to person lending
completed or in progress on the date of
enactment of this Act;
(D) consumer privacy and data protections,
minimum credit standards, anti-money laundering
and risk management in the regulatory structure
as it exists on the date of enactment of this
Act, and whether additional or alternative
safeguards are needed; and
(E) the uses of person to person lending.
(b) Report.--
(1) In general.--Not later than 1 year after the
date of enactment of this Act, the Comptroller General
shall submit a report on the study required under
subsection (a) to the Committee on Banking, Housing,
and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives.
(2) Content of report.--The report required under
paragraph (1) shall include alternative regulatory
options, including--
(A) the involvement of other Federal
agencies; and
(B) alternative approaches by the
Commission and recommendations on whether the
alternative approaches are effective.
SEC. 989G. EXEMPTION FOR NONACCELERATED FILERS.
(a) Exemption.--Section 404 of the Sarbanes-Oxley Act of
2002 is amended by adding at the end the following:
``(c) Exemption for Smaller Issuers.--Subsection (b) shall
not apply with respect to any audit report prepared for an
issuer that is neither a `large accelerated filer' nor an
`accelerated filer' as those terms are defined in Rule 12b-2 of
the Commission (17 C.F.R. 240.12b-2).''.
(b) Study.--The Securities and Exchange Commission shall
conduct a study to determine how the Commission could reduce
the burden of complying with section 404(b) of the Sarbanes-
Oxley Act of 2002 for companies whose market capitalization is
between $75,000,000 and $250,000,000 for the relevant reporting
period while maintaining investor protections for such
companies. The study shall also consider whether any such
methods of reducing the compliance burden or a complete
exemption for such companies from compliance with such section
would encourage companies to list on exchanges in the United
States in their initial public offerings. Not later than 9
months after the date of the enactment of this subtitle, the
Commission shall transmit a report of such study to Congress.
SEC. 989H. CORRECTIVE RESPONSES BY HEADS OF CERTAIN ESTABLISHMENTS TO
DEFICIENCIES IDENTIFIED BY INSPECTORS GENERAL.
The Chairman of the Board of Governors of the Federal
Reserve System, the Chairman of the Commodity Futures Trading
Commission, the Chairman of the National Credit Union
Administration, the Director of the Pension Benefit Guaranty
Corporation, and the Chairman of the Securities and Exchange
Commission shall each--
(1) take action to address deficiencies identified
by a report or investigation of the Inspector General
of the establishment concerned; or
(2) certify to both Houses of Congress that no
action is necessary or appropriate in connection with a
deficiency described in paragraph (1).
SEC. 989I. GAO STUDY REGARDING EXEMPTION FOR SMALLER ISSUERS.
(a) Study Regarding Exemption for Smaller Issuers.--The
Comptroller General of the United States shall carry out a
study on the impact of the amendments made by this Act to
section 404(b) of the Sarbanes-Oxley Act of 2002 (15 U.S.C.
7262(b)), which shall include an analysis of--
(1) whether issuers that are exempt from such
section 404(b) have fewer or more restatements of
published accounting statements than issuers that are
required to comply with such section 404(b);
(2) the cost of capital for issuers that are exempt
from such section 404(b) compared to the cost of
capital for issuers that are required to comply with
such section 404(b);
(3) whether there is any difference in the
confidence of investors in the integrity of financial
statements of issuers that comply with such section
404(b) and issuers that are exempt from compliance with
such section 404(b);
(4) whether issuers that do not receive the
attestation for internal controls required under such
section 404(b) should be required to disclose the lack
of such attestation to investors; and
(5) the costs and benefits to issuers that are
exempt from such section 404(b) that voluntarily have
obtained the attestation of an independent auditor.
(b) Report.--Not later than 3 years 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 results of the study required
under subsection (a).
SEC. 989J. FURTHER PROMOTING THE ADOPTION OF THE NAIC MODEL REGULATIONS
THAT ENHANCE PROTECTION OF SENIORS AND OTHER
CONSUMERS.
(a) In General.--The Commission shall treat as exempt
securities described under section 3(a)(8) of the Securities
Act of 1933 (15 U.S.C. 77c(a)(8)) any insurance or endowment
policy or annuity contract or optional annuity contract--
(1) the value of which does not vary according to
the performance of a separate account;
(2) that--
(A) satisfies standard nonforfeiture laws
or similar requirements of the applicable State
at the time of issue; or
(B) in the absence of applicable standard
nonforfeiture laws or requirements, satisfies
the Model Standard Nonforfeiture Law for Life
Insurance or Model Standard Nonforfeiture Law
for Individual Deferred Annuities, or any
successor model law, as published by the
National Association of Insurance
Commissioners; and
(3) that is issued--
(A) on and after June 16, 2013, in a State,
or issued by an insurance company that is
domiciled in a State, that--
(i) adopts rules that govern
suitability requirements in the sale of
an insurance or endowment policy or
annuity contract or optional annuity
contract, which shall substantially
meet or exceed the minimum requirements
established by the Suitability in
Annuity Transactions Model Regulation
adopted by the National Association of
Insurance Commissioners in March 2010;
and
(ii) adopts rules that
substantially meet or exceed the
minimum requirements of any successor
modifications to the model regulations
described in subparagraph (A) within 5
years of the adoption by the
Association of any further successors
thereto; or
(B) by an insurance company that adopts and
implements practices on a nationwide basis for
the sale of any insurance or endowment policy
or annuity contract or optional annuity
contract that meet or exceed the minimum
requirements established by the National
Association of Insurance Commissioners
Suitability in Annuity Transactions Model
Regulation (Model 275), and any successor
thereto, and is therefore subject to
examination by the State of domicile of the
insurance company, or by any other State where
the insurance company conducts sales of such
products, for the purpose of monitoring
compliance under this section.
(b) Rule of Construction.--Nothing in this section shall be
construed to affect whether any insurance or endowment policy
or annuity contract or optional annuity contract that is not
described in this section is or is not an exempt security under
section 3(a)(8) of the Securities Act of 1933 (15 U.S.C.
77c(a)(8)).
Subtitle J--Securities and Exchange Commission Match Funding
SEC. 991. SECURITIES AND EXCHANGE COMMISSION MATCH FUNDING.
(a) Match Funding Authority.--
(1) Amendments.--Section 31 of the Securities
Exchange Act of 1934 (15 U.S.C. 78ee) is amended--
(A) by striking subsection (a) and
inserting the following:
``(a) Recovery of Costs of Annual Appropriation.--The
Commission shall, in accordance with this section, collect
transaction fees and assessments that are designed to recover
the costs to the Government of the annual appropriation to the
Commission by Congress.'';
(B) in subsection (e)(2), by striking
``September 30'' and inserting ``September
25'';
(C) in subsection (g), by striking ``April
30 of the fiscal year preceding the fiscal year
to which such rate applies'' and inserting ``30
days after the date on which an Act making a
regular appropriation to the Commission for
such fiscal year is enacted'';
(D) by striking subsection (j) and
inserting the following:
``(j) Adjustments to Fee Rates.--
``(1) Annual adjustment.--Subject to subsections
(i)(1)(B) and (k), for each fiscal year, the Commission
shall by order adjust each of the rates applicable
under subsections (b) and (c) for such fiscal year to a
uniform adjusted rate that, when applied to the
baseline estimate of the aggregate dollar amount of
sales for such fiscal year, is reasonably likely to
produce aggregate fee collections under this section
(including assessments collected under subsection (d)
of this section) that are equal to the regular
appropriation to the Commission by Congress for such
fiscal year.
``(2) Mid-year adjustment.--Subject to subsections
(i)(1)(B) and (k), for each fiscal year, the Commission
shall determine, by March 1 of such fiscal year,
whether, based on the actual aggregate dollar volume of
sales during the first 5 months of such fiscal year,
the baseline estimate of the aggregate dollar volume of
sales used under paragraph (1) for such fiscal year is
reasonably likely to be 10 percent (or more) greater or
less than the actual aggregate dollar volume of sales
for such fiscal year. If the Commission so determines,
the Commission shall by order, no later than March 1,
adjust each of the rates applicable under subsections
(b) and (c) for such fiscal year to a uniform adjusted
rate that, when applied to the revised estimate of the
aggregate dollar amount of sales for the remainder of
such fiscal year, is reasonably likely to produce
aggregate fee collections under this section (including
fees collected during such five-month period and
assessments collected under subsection (d) of this
section) that are equal to the regular appropriation to
the Commission by Congress for such fiscal year. In
making such revised estimate, the Commission shall,
after consultation with the Congressional Budget Office
and the Office of Management and Budget, use the same
methodology required by subsection (l).
``(3) Review.--In exercising its authority under
this subsection, the Commission shall not be required
to comply with the provisions of section 553 of title
5, United States Code. An adjusted rate prescribed
under paragraph (1) or (2) and published under
subsection (g) shall not be subject to judicial review.
``(4) Effective date.--
``(A) Annual adjustment.--Subject to
subsections (i)(1)(B) and (k), an adjusted rate
prescribed under paragraph (1) shall take
effect on the later of--
``(i) the first day of the fiscal
year to which such rate applies; or
``(ii) 60 days after the date on
which an Act making a regular
appropriation to the Commission for
such fiscal year is enacted.
``(B) Mid-year adjustment.--An adjusted
rate prescribed under paragraph (2) shall take
effect on April 1 of the fiscal year to which
such rate applies.'';
(E) in subsection (k), by striking ``30
days'' and inserting ``60 days''; and
(F) in subsection (l), by striking
``Definitions.--'' and all that follows through
``sales.--The baseline'' and inserting
``Baseline Estimate of the Aggregate Dollar
Amount of Sales.--The baseline''.
(2) Effective date.--The amendments made by this
subsection shall take effect on the later of--
(A) October 1, 2011; or
(B) the date of enactment of an Act making
a regular appropriation to the Commission for
fiscal year 2012.
(b) Amendments to Registration Fee Provisions.--
(1) Section 6(b) of the securities act of 1933.--
Section 6(b) of the Securities Act of 1933 (15 U.S.C.
77f(b)) is amended--
(A) by striking ``offsetting'' each place
that term appears and inserting ``fee'';
(B) by striking paragraphs (1), (3), (4),
(6), (8), and (9);
(C) by redesignating paragraph (2) as
paragraph (1);
(D) by redesignating paragraph (5) as
paragraph (2);
(E) by redesignating paragraph (7) as
paragraph (3);
(F) by redesignating paragraph (10) as
paragraph (5);
(G) by redesignating paragraph (11) as
paragraph (6);
(H) in paragraph (1), as so redesignated,
by striking ``paragraph (5) or (6).'' and
inserting ``paragraph (2).'';
(I) in paragraph (2), as so redesignated--
(i) by striking ``of the fiscal
years 2003 through 2011'' and inserting
``fiscal year''; and
(ii) by striking ``paragraph (2)''
and inserting ``paragraph (1)'';
(J) by inserting after paragraph (3), as so
redesignated, the following:
``(4) Review and effective date.--In exercising its
authority under this subsection, the Commission shall
not be required to comply with the provisions of
section 553 of title 5, United States Code. An adjusted
rate prescribed under paragraph (2) and published under
paragraph (5) shall not be subject to judicial review.
An adjusted rate prescribed under paragraph (2) shall
take effect on the first day of the fiscal year to
which such rate applies.'';
(K) in paragraph (5), as redesignated, by
striking ``April 30'' and inserting ``August
31'';
(L) in paragraph (6), as so redesignated--
(i) by striking ``of the fiscal
years 2002 through 2011'' and inserting
``fiscal year''; and
(ii) by inserting at the end of the
table in subparagraph (A) the
following:
``2012................................ $425,000,000
2013.................................. $455,000,000
2014.................................. $485,000,000
2015.................................. $515,000,000
2016.................................. $550,000,000
2017.................................. $585,000,000
2018.................................. $620,000,000
2019.................................. $660,000,000
2020.................................. $705,000,000
2021 and each fiscal year thereafter.. An amount that is equal to the
target fee collection amount
for the prior fiscal year,
adjusted by the rate of
inflation.''.
(2) Section 13(e) of the securities exchange act of
1934.--Section 13(e) of the Securities Exchange Act of
1934 (15 U.S.C. 78m(e)) is amended--
(A) in paragraph (3), by striking
``paragraphs (5) and (6)'' and inserting
``paragraph (4)'';
(B) by striking paragraphs (4), (5), and
(6);
(C) by inserting after paragraph (3) the
following:
``(4) Annual adjustment.--For each fiscal year, the
Commission shall by order adjust the rate required by
paragraph (3) for such fiscal year to a rate that is
equal to the rate (expressed in dollars per million)
that is applicable under section 6(b) of the Securities
Act of 1933 for such fiscal year.
``(5) Fee collections.--Fees collected pursuant to
this subsection for fiscal year 2012 and each fiscal
year thereafter shall be deposited and credited as
general revenue of the Treasury and shall not be
available for obligation.
``(6) Effective date; publication.--In exercising
its authority under this subsection, the Commission
shall not be required to comply with the provisions of
section 553 of title 5, United States Code. An adjusted
rate prescribed under paragraph (4) shall be published
and take effect in accordance with section 6(b) of the
Securities Act of 1933 (15 U.S.C. 77f(b)).''; and
(D) by striking paragraphs (8), (9), and
(10).
(3) Section 14(g) of the securities exchange act of
1934.--Section 14(g) of the Securities Exchange Act of
1934 (15 U.S.C. 78n(g)) is amended--
(A) in paragraph (1), by striking
``paragraphs (5) and (6)'' each time that term
appears and inserting ``paragraph (4)'';
(B) in paragraph (3), by striking
``paragraphs (5) and (6)'' and inserting
``paragraph (4)'';
(C) by striking paragraphs (4), (5), and
(6);
(D) by inserting after paragraph (3) the
following:
``(4) Annual adjustment.--For each fiscal year, the
Commission shall by order adjust the rate required by
paragraphs (1) and (3) for such fiscal year to a rate
that is equal to the rate (expressed in dollars per
million) that is applicable under section 6(b) of the
Securities Act of 1933 (15 U.S.C. 77f(b)) for such
fiscal year.
``(5) Fee collection.--Fees collected pursuant to
this subsection for fiscal year 2012 and each fiscal
year thereafter shall be deposited and credited as
general revenue of the Treasury and shall not be
available for obligation.
``(6) Review; effective date; publication.--In
exercising its authority under this subsection, the
Commission shall not be required to comply with the
provisions of section 553 of title 5, United States
Code. An adjusted rate prescribed under paragraph (4)
shall be published and take effect in accordance with
section 6(b) of the Securities Act of 1933 (15 U.S.C.
77f(b)).'';
(E) by striking paragraphs (8), (9), and
(10); and
(F) by redesignating paragraph (11) as
paragraph (8).
(4) Effective date.--The amendments made by this
subsection shall take effect on October 1, 2011, except
that for fiscal year 2012, the Commission shall publish
the rate established under section 6(b) of the
Securities Act of 1933 (15 U.S.C. 77f(b)), as amended
by this Act, on August 31, 2011.
(c) Authorization of Appropriations.--Section 35 of the
Securities Exchange Act of 1934 (15 U.S.C. 78kk) is amended to
read as follows:
``SEC. 35. AUTHORIZATION OF APPROPRIATIONS.
``In addition to any other funds authorized to be
appropriated to the Commission, there are authorized to be
appropriated to carry out the functions, powers, and duties of
the Commission--
``(1) for fiscal year 2011, $1,300,000,000;
``(2) for fiscal year 2012, $1,500,000,000;
``(3) for fiscal year 2013, $1,750,000,000;
``(4) for fiscal year 2014, $2,000,000,000; and
``(5) for fiscal year 2015, $2,250,000,000.''.
(d) Transmittal of Budget Requests.--
(1) Amendment.--Section 31 of the Securities
Exchange Act of 1934 (15 U.S.C. 78ee) is amended by
adding at the end the following:
``(m) Transmittal of Commission Budget Requests.--
``(1) Budget required.--For fiscal year 2012, and
each fiscal year thereafter, the Commission shall
prepare and submit a budget to the President. Whenever
the Commission submits a budget estimate or request to
the President or the Office of Management and Budget,
the Commission shall concurrently transmit copies of
the estimate or request to the Committee on
Appropriations of the Senate, the Committee on
Appropriations 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.
``(2) Submission to congress.--The President shall
submit each budget submitted under paragraph (1) to
Congress, in unaltered form, together with the annual
budget for the Administration submitted by the
President.
``(3) Contents.--The Commission shall include in
each budget submitted under paragraph (1)--
``(A) an itemization of the amount of funds
necessary to carry out the functions of the
Commission.
``(B) an amount to be designated as
contingency funding to be used by the
Commission to address unanticipated needs; and
``(C) a designation of any activities of
the Commission for which multi-year budget
authority would be suitable.''.
(2) Budget of the president.--For fiscal year 2012,
and each fiscal year thereafter, the annual budget for
the Administration submitted by the President to
Congress shall reflect the amendments made by this
section.
(e) Securities and Exchange Commission Reserve Fund.--
(1) Amendment.--Section 4 of the Securities
Exchange Act of 1934 (15 U.S.C. 78d), as amended by
this Act, is amended by adding at the end the
following:
``(i) Securities and Exchange Commission Reserve Fund.--
``(1) Reserve fund established.--There is
established in the Treasury of the United States a
separate fund, to be known as the `Securities and
Exchange Commission Reserve Fund' (referred to in this
subsection as the `Reserve Fund').
``(2) Reserve fund amounts.--
``(A) In general.--Except as provided in
subparagraph (B), any registration fees
collected by the Commission under section 6(b)
of the Securities Act of 1933 (15 U.S.C.
77f(b)) or section 24(f) of the Investment
Company Act of 1940 (15 U.S.C. 80a-24(f)) shall
be deposited into the Reserve Fund.
``(B) Limitations.--For any 1 fiscal year--
``(i) the amount deposited in the
Fund may not exceed $50,000,000; and
``(ii) the balance in the Fund may
not exceed $100,000,000.
``(C) Excess fees.--Any amounts in excess
of the limitations described in subparagraph
(B) that the Commission collects from
registration fees under section 6(b) of the
Securities Act of 1933 (15 U.S.C. 77f(b)) or
section 24(f) of the Investment Company Act of
1940 (15 U.S.C. 80a-24(f)) shall be deposited
in the General Fund of the Treasury of the
United States and shall not be available for
obligation by the Commission.
``(3) Use of amounts in reserve fund.--The
Commission may obligate amounts in the Reserve Fund,
not to exceed a total of $100,000,000 in any 1 fiscal
year, as the Commission determines is necessary to
carry out the functions of the Commission. Any amounts
in the reserve fund shall remain available until
expended. Not later than 10 days after the date on
which the Commission obligates amounts under this
paragraph, the Commission shall notify Congress of the
date, amount, and purpose of the obligation.
``(4) Rule of construction.--Amounts collected and
deposited in the Reserve Fund shall not be construed to
be Government funds or appropriated monies and shall
not be subject to apportionment for the purpose of
chapter 15 of title 31, United States Code, or under
any other authority.''.
(2) Effective date.--The amendment made by this
subsection shall take effect on October 1, 2011.
TITLE X--BUREAU OF CONSUMER FINANCIAL PROTECTION
SEC. 1001. SHORT TITLE.
This title may be cited as the ``Consumer Financial
Protection Act of 2010''.
SEC. 1002. DEFINITIONS.
Except as otherwise provided in this title, for purposes of
this title, the following definitions shall apply:
(1) Affiliate.--The term ``affiliate'' means any
person that controls, is controlled by, or is under
common control with another person.
(2) Bureau.--The term ``Bureau'' means the Bureau
of Consumer Financial Protection.
(3) Business of insurance.--The term ``business of
insurance'' means the writing of insurance or the
reinsuring of risks by an insurer, including all acts
necessary to such writing or reinsuring and the
activities relating to the writing of insurance or the
reinsuring of risks conducted by persons who act as, or
are, officers, directors, agents, or employees of
insurers or who are other persons authorized to act on
behalf of such persons.
(4) Consumer.--The term ``consumer'' means an
individual or an agent, trustee, or representative
acting on behalf of an individual.
(5) Consumer financial product or service.--The
term ``consumer financial product or service'' means
any financial product or service that is described in
one or more categories under--
(A) paragraph (15) and is offered or
provided for use by consumers primarily for
personal, family, or household purposes; or
(B) clause (i), (iii), (ix), or (x) of
paragraph (15)(A), and is delivered, offered,
or provided in connection with a consumer
financial product or service referred to in
subparagraph (A).
(6) Covered person.--The term ``covered person''
means--
(A) any person that engages in offering or
providing a consumer financial product or
service; and
(B) any affiliate of a person described in
subparagraph (A) if such affiliate acts as a
service provider to such person.
(7) Credit.--The term ``credit'' means the right
granted by a person to a consumer to defer payment of a
debt, incur debt and defer its payment, or purchase
property or services and defer payment for such
purchase.
(8) Deposit-taking activity.--The term ``deposit-
taking activity'' means--
(A) the acceptance of deposits, maintenance
of deposit accounts, or the provision of
services related to the acceptance of deposits
or the maintenance of deposit accounts;
(B) the acceptance of funds, the provision
of other services related to the acceptance of
funds, or the maintenance of member share
accounts by a credit union; or
(C) the receipt of funds or the equivalent
thereof, as the Bureau may determine by rule or
order, received or held by a covered person (or
an agent for a covered person) for the purpose
of facilitating a payment or transferring funds
or value of funds between a consumer and a
third party.
(9) Designated transfer date.--The term
``designated transfer date'' means the date established
under section 1062.
(10) Director.--The term ``Director'' means the
Director of the Bureau.
(11) Electronic conduit services.--The term
``electronic conduit services''--
(A) means the provision, by a person, of
electronic data transmission, routing,
intermediate or transient storage, or
connections to a telecommunications system or
network; and
(B) does not include a person that provides
electronic conduit services if, when providing
such services, the person--
(i) selects or modifies the content
of the electronic data;
(ii) transmits, routes, stores, or
provides connections for electronic
data, including financial data, in a
manner that such financial data is
differentiated from other types of data
of the same form that such person
transmits, routes, or stores, or with
respect to which, provides connections;
or
(iii) is a payee, payor,
correspondent, or similar party to a
payment transaction with a consumer.
(12) Enumerated consumer laws.--Except as otherwise
specifically provided in section 1029, subtitle G or
subtitle H, the term ``enumerated consumer laws''
means--
(A) the Alternative Mortgage Transaction
Parity Act of 1982 (12 U.S.C. 3801 et seq.);
(B) the Consumer Leasing Act of 1976 (15
U.S.C. 1667 et seq.);
(C) the Electronic Fund Transfer Act (15
U.S.C. 1693 et seq.), except with respect to
section 920 of that Act;
(D) the Equal Credit Opportunity Act (15
U.S.C. 1691 et seq.);
(E) the Fair Credit Billing Act (15 U.S.C.
1666 et seq.);
(F) the Fair Credit Reporting Act (15
U.S.C. 1681 et seq.), except with respect to
sections 615(e) and 628 of that Act (15 U.S.C.
1681m(e), 1681w);
(G) the Home Owners Protection Act of 1998
(12 U.S.C. 4901 et seq.);
(H) the Fair Debt Collection Practices Act
(15 U.S.C. 1692 et seq.);
(I) subsections (b) through (f) of section
43 of the Federal Deposit Insurance Act (12
U.S.C. 1831t(c)-(f));
(J) sections 502 through 509 of the Gramm-
Leach-Bliley Act (15 U.S.C. 6802-6809) except
for section 505 as it applies to section
501(b);
(K) the Home Mortgage Disclosure Act of
1975 (12 U.S.C. 2801 et seq.);
(L) the Home Ownership and Equity
Protection Act of 1994 (15 U.S.C. 1601 note);
(M) the Real Estate Settlement Procedures
Act of 1974 (12 U.S.C. 2601 et seq.);
(N) the S.A.F.E. Mortgage Licensing Act of
2008 (12 U.S.C. 5101 et seq.);
(O) the Truth in Lending Act (15 U.S.C.
1601 et seq.);
(P) the Truth in Savings Act (12 U.S.C.
4301 et seq.);
(Q) section 626 of the Omnibus
Appropriations Act, 2009 (Public Law 111-8);
and
(R) the Interstate Land Sales Full
Disclosure Act (15 U.S.C. 1701).
(13) Fair lending.--The term ``fair lending'' means
fair, equitable, and nondiscriminatory access to credit
for consumers.
(14) Federal consumer financial law.--The term
``Federal consumer financial law'' means the provisions
of this title, the enumerated consumer laws, the laws
for which authorities are transferred under subtitles F
and H, and any rule or order prescribed by the Bureau
under this title, an enumerated consumer law, or
pursuant to the authorities transferred under subtitles
F and H. The term does not include the Federal Trade
Commission Act.
(15) Financial product or service.--
(A) In general.--The term ``financial
product or service'' means--
(i) extending credit and servicing
loans, including acquiring, purchasing,
selling, brokering, or other extensions
of credit (other than solely extending
commercial credit to a person who
originates consumer credit
transactions);
(ii) extending or brokering leases
of personal or real property that are
the functional equivalent of purchase
finance arrangements, if--
(I) the lease is on a non-
operating basis;
(II) the initial term of
the lease is at least 90 days;
and
(III) in the case of a
lease involving real property,
at the inception of the initial
lease, the transaction is
intended to result in ownership
of the leased property to be
transferred to the lessee,
subject to standards prescribed
by the Bureau;
(iii) providing real estate
settlement services, except such
services excluded under subparagraph
(C), or performing appraisals of real
estate or personal property;
(iv) engaging in deposit-taking
activities, transmitting or exchanging
funds, or otherwise acting as a
custodian of funds or any financial
instrument for use by or on behalf of a
consumer;
(v) selling, providing, or issuing
stored value or payment instruments,
except that, in the case of a sale of,
or transaction to reload, stored value,
only if the seller exercises
substantial control over the terms or
conditions of the stored value provided
to the consumer where, for purposes of
this clause--
(I) a seller shall not be
found to exercise substantial
control over the terms or
conditions of the stored value
if the seller is not a party to
the contract with the consumer
for the stored value product,
and another person is
principally responsible for
establishing the terms or
conditions of the stored value;
and
(II) advertising the
nonfinancial goods or services
of the seller on the stored
value card or device is not in
itself an exercise of
substantial control over the
terms or conditions;
(vi) providing check cashing, check
collection, or check guaranty services;
(vii) providing payments or other
financial data processing products or
services to a consumer by any
technological means, including
processing or storing financial or
banking data for any payment
instrument, or through any payments
systems or network used for processing
payments data, including payments made
through an online banking system or
mobile telecommunications network,
except that a person shall not be
deemed to be a covered person with
respect to financial data processing
solely because the person--
(I) is a merchant,
retailer, or seller of any
nonfinancial good or service
who engages in financial data
processing by transmitting or
storing payments data about a
consumer exclusively for
purpose of initiating payments
instructions by the consumer to
pay such person for the
purchase of, or to complete a
commercial transaction for,
such nonfinancial good or
service sold directly by such
person to the consumer; or
(II) provides access to a
host server to a person for
purposes of enabling that
person to establish and
maintain a website;
(viii) providing financial advisory
services (other than services relating
to securities provided by a person
regulated by the Commission or a person
regulated by a State securities
Commission, but only to the extent that
such person acts in a regulated
capacity) to consumers on individual
financial matters or relating to
proprietary financial products or
services (other than by publishing any
bona fide newspaper, news magazine, or
business or financial publication of
general and regular circulation,
including publishing market data, news,
or data analytics or investment
information or recommendations that are
not tailored to the individual needs of
a particular consumer), including--
(I) providing credit
counseling to any consumer; and
(II) providing services to
assist a consumer with debt
management or debt settlement,
modifying the terms of any
extension of credit, or
avoiding foreclosure;
(ix) collecting, analyzing,
maintaining, or providing consumer
report information or other account
information, including information
relating to the credit history of
consumers, used or expected to be used
in connection with any decision
regarding the offering or provision of
a consumer financial product or
service, except to the extent that--
(I) a person--
(aa) collects,
analyzes, or maintains
information that
relates solely to the
transactions between a
consumer and such
person;
(bb) provides the
information described
in item (aa) to an
affiliate of such
person; or
(cc) provides
information that is
used or expected to be
used solely in any
decision regarding the
offering or provision
of a product or service
that is not a consumer
financial product or
service, including a
decision for
employment, government
licensing, or a
residential lease or
tenancy involving a
consumer; and
(II) the information
described in subclause (I)(aa)
is not used by such person or
affiliate in connection with
any decision regarding the
offering or provision of a
consumer financial product or
service to the consumer, other
than credit described in
section 1027(a)(2)(A);
(x) collecting debt related to any
consumer financial product or service;
and
(xi) such other financial product
or service as may be defined by the
Bureau, by regulation, for purposes of
this title, if the Bureau finds that
such financial product or service is--
(I) entered into or
conducted as a subterfuge or
with a purpose to evade any
Federal consumer financial law;
or
(II) permissible for a bank
or for a financial holding
company to offer or to provide
under any provision of a
Federal law or regulation
applicable to a bank or a
financial holding company, and
has, or likely will have, a
material impact on consumers.
(B) Rule of construction.--
(i) In general.--For purposes of
subparagraph (A)(xi)(II), and subject
to clause (ii) of this subparagraph,
the following activities provided to a
covered person shall not, for purposes
of this title, be considered incidental
or complementary to a financial
activity permissible for a financial
holding company to engage in under any
provision of a Federal law or
regulation applicable to a financial
holding company:
(I) Providing information
products or services to a
covered person for identity
authentication.
(II) Providing information
products or services for fraud
or identify theft detection,
prevention, or investigation.
(III) Providing document
retrieval or delivery services.
(IV) Providing public
records information retrieval.
(V) Providing information
products or services for anti-
money-laundering activities.
(ii) Limitation.--Nothing in clause
(i) may be construed as modifying or
limiting the authority of the Bureau to
exercise any--
(I) examination or
enforcement powers authority
under this title with respect
to a covered person or service
provider engaging in an
activity described in
subparagraph (A)(ix); or
(II) powers authorized by
this title to prescribe rules,
issue orders, or take other
actions under any enumerated
consumer law or law for which
the authorities are transferred
under subtitle F or H.
(C) Exclusions.--The term ``financial
product or service'' does not include--
(i) the business of insurance; or
(ii) electronic conduit services.
(16) Foreign exchange.--The term ``foreign
exchange'' means the exchange, for compensation, of
currency of the United States or of a foreign
government for currency of another government.
(17) Insured credit union.--The term ``insured
credit union'' has the same meaning as in section 101
of the Federal Credit Union Act (12 U.S.C. 1752).
(18) Payment instrument.--The term ``payment
instrument'' means a check, draft, warrant, money
order, traveler's check, electronic instrument, or
other instrument, payment of funds, or monetary value
(other than currency).
(19) Person.--The term ``person'' means an
individual, partnership, company, corporation,
association (incorporated or unincorporated), trust,
estate, cooperative organization, or other entity.
(20) Person regulated by the commodity futures
trading commission.--The term ``person regulated by the
Commodity Futures Trading Commission'' means any person
that is registered, or required by statute or
regulation to be registered, with the Commodity Futures
Trading Commission, but only to the extent that the
activities of such person are subject to the
jurisdiction of the Commodity Futures Trading
Commission under the Commodity Exchange Act.
(21) Person regulated by the commission.--The term
``person regulated by the Commission'' means a person
who is--
(A) a broker or dealer that is required to
be registered under the Securities Exchange Act
of 1934;
(B) an investment adviser that is
registered under the Investment Advisers Act of
1940;
(C) an investment company that is required
to be registered under the Investment Company
Act of 1940, and any company that has elected
to be regulated as a business development
company under that Act;
(D) a national securities exchange that is
required to be registered under the Securities
Exchange Act of 1934;
(E) a transfer agent that is required to be
registered under the Securities Exchange Act of
1934;
(F) a clearing corporation that is required
to be registered under the Securities Exchange
Act of 1934;
(G) any self-regulatory organization that
is required to be registered with the
Commission;
(H) any nationally recognized statistical
rating organization that is required to be
registered with the Commission;
(I) any securities information processor
that is required to be registered with the
Commission;
(J) any municipal securities dealer that is
required to be registered with the Commission;
(K) any other person that is required to be
registered with the Commission under the
Securities Exchange Act of 1934; and
(L) any employee, agent, or contractor
acting on behalf of, registered with, or
providing services to, any person described in
any of subparagraphs (A) through (K), but only
to the extent that any person described in any
of subparagraphs (A) through (K), or the
employee, agent, or contractor of such person,
acts in a regulated capacity.
(22) Person regulated by a state insurance
regulator.--The term ``person regulated by a State
insurance regulator'' means any person that is engaged
in the business of insurance and subject to regulation
by any State insurance regulator, but only to the
extent that such person acts in such capacity.
(23) Person that performs income tax preparation
activities for consumers.--The term ``person that
performs income tax preparation activities for
consumers'' means--
(A) any tax return preparer (as defined in
section 7701(a)(36) of the Internal Revenue
Code of 1986), regardless of whether
compensated, but only to the extent that the
person acts in such capacity;
(B) any person regulated by the Secretary
under section 330 of title 31, United States
Code, but only to the extent that the person
acts in such capacity; and
(C) any authorized IRS e-file Providers (as
defined for purposes of section 7216 of the
Internal Revenue Code of 1986), but only to the
extent that the person acts in such capacity.
(24) Prudential regulator.--The term ``prudential
regulator'' means--
(A) in the case of an insured depository
institution or depository institution holding
company (as defined in section 3 of the Federal
Deposit Insurance Act), or subsidiary of such
institution or company, the appropriate Federal
banking agency, as that term is defined in
section 3 of the Federal Deposit Insurance Act;
and
(B) in the case of an insured credit union,
the National Credit Union Administration.
(25) Related person.--The term ``related person''--
(A) shall apply only with respect to a
covered person that is not a bank holding
company (as that term is defined in section 2
of the Bank Holding Company Act of 1956),
credit union, or depository institution;
(B) shall be deemed to mean a covered
person for all purposes of any provision of
Federal consumer financial law; and
(C) means--
(i) any director, officer, or
employee charged with managerial
responsibility for, or controlling
shareholder of, or agent for, such
covered person;
(ii) any shareholder, consultant,
joint venture partner, or other person,
as determined by the Bureau (by rule or
on a case-by-case basis) who materially
participates in the conduct of the
affairs of such covered person; and
(iii) any independent contractor
(including any attorney, appraiser, or
accountant) who knowingly or recklessly
participates in any--
(I) violation of any
provision of law or regulation;
or
(II) breach of a fiduciary
duty.
(26) Service provider.--
(A) In general.--The term ``service
provider'' means any person that provides a
material service to a covered person in
connection with the offering or provision by
such covered person of a consumer financial
product or service, including a person that--
(i) participates in designing,
operating, or maintaining the consumer
financial product or service; or
(ii) processes transactions
relating to the consumer financial
product or service (other than
unknowingly or incidentally
transmitting or processing financial
data in a manner that such data is
undifferentiated from other types of
data of the same form as the person
transmits or processes).
(B) Exceptions.--The term ``service
provider'' does not include a person solely by
virtue of such person offering or providing to
a covered person--
(i) a support service of a type
provided to businesses generally or a
similar ministerial service; or
(ii) time or space for an
advertisement for a consumer financial
product or service through print,
newspaper, or electronic media.
(C) Rule of construction.--A person that is
a service provider shall be deemed to be a
covered person to the extent that such person
engages in the offering or provision of its own
consumer financial product or service.
(27) State.--The term ``State'' means any State,
territory, or possession of the United States, the
District of Columbia, the Commonwealth of Puerto Rico,
the Commonwealth of the Northern Mariana Islands, Guam,
American Samoa, or the United States Virgin Islands or
any federally recognized Indian tribe, as defined by
the Secretary of the Interior under section 104(a) of
the Federally Recognized Indian Tribe List Act of 1994
(25 U.S.C. 479a-1(a)).
(28) Stored value.--
(A) In general.--The term ``stored value''
means funds or monetary value represented in
any electronic format, whether or not specially
encrypted, and stored or capable of storage on
electronic media in such a way as to be
retrievable and transferred electronically, and
includes a prepaid debit card or product, or
any other similar product, regardless of
whether the amount of the funds or monetary
value may be increased or reloaded.
(B) Exclusion.--Notwithstanding
subparagraph (A), the term ``stored value''
does not include a special purpose card or
certificate, which shall be defined for
purposes of this paragraph as funds or monetary
value represented in any electronic format,
whether or not specially encrypted, that is--
(i) issued by a merchant, retailer,
or other seller of nonfinancial goods
or services;
(ii) redeemable only for
transactions with the merchant,
retailer, or seller of nonfinancial
goods or services or with an affiliate
of such person, which affiliate itself
is a merchant, retailer, or seller of
nonfinancial goods or services;
(iii) issued in a specified amount
that, except in the case of a card or
product used solely for telephone
services, may not be increased or
reloaded;
(iv) purchased on a prepaid basis
in exchange for payment; and
(v) honored upon presentation to
such merchant, retailer, or seller of
nonfinancial goods or services or an
affiliate of such person, which
affiliate itself is a merchant,
retailer, or seller of nonfinancial
goods or services, only for any
nonfinancial goods or services.
(29) Transmitting or exchanging funds.--The term
``transmitting or exchanging funds'' means receiving
currency, monetary value, or payment instruments from a
consumer for the purpose of exchanging or transmitting
the same by any means, including transmission by wire,
facsimile, electronic transfer, courier, the Internet,
or through bill payment services or through other
businesses that facilitate third-party transfers within
the United States or to or from the United States.
Subtitle A--Bureau of Consumer Financial Protection
SEC. 1011. ESTABLISHMENT OF THE BUREAU OF CONSUMER FINANCIAL
PROTECTION.
(a) Bureau Established.--There is established in the
Federal Reserve System, an independent bureau to be known as
the ``Bureau of Consumer Financial Protection'', which shall
regulate the offering and provision of consumer financial
products or services under the Federal consumer financial laws.
The Bureau shall be considered an Executive agency, as defined
in section 105 of title 5, United States Code. Except as
otherwise provided expressly by law, all Federal laws dealing
with public or Federal contracts, property, works, officers,
employees, budgets, or funds, including the provisions of
chapters 5 and 7 of title 5, shall apply to the exercise of the
powers of the Bureau.
(b) Director and Deputy Director.--
(1) In general.--There is established the position
of the Director, who shall serve as the head of the
Bureau.
(2) Appointment.--Subject to paragraph (3), the
Director shall be appointed by the President, by and
with the advice and consent of the Senate.
(3) Qualification.--The President shall nominate
the Director from among individuals who are citizens of
the United States.
(4) Compensation.--The Director shall be
compensated at the rate prescribed for level II of the
Executive Schedule under section 5313 of title 5,
United States Code.
(5) Deputy director.--There is established the
position of Deputy Director, who shall--
(A) be appointed by the Director; and
(B) serve as acting Director in the absence
or unavailability of the Director.
(c) Term.--
(1) In general.--The Director shall serve for a
term of 5 years.
(2) Expiration of term.--An individual may serve as
Director after the expiration of the term for which
appointed, until a successor has been appointed and
qualified.
(3) Removal for cause.--The President may remove
the Director for inefficiency, neglect of duty, or
malfeasance in office.
(d) Service Restriction.--No Director or Deputy Director
may hold any office, position, or employment in any Federal
reserve bank, Federal home loan bank, covered person, or
service provider during the period of service of such person as
Director or Deputy Director.
(e) Offices.--The principal office of the Bureau shall be
in the District of Columbia. The Director may establish
regional offices of the Bureau, including in cities in which
the Federal reserve banks, or branches of such banks, are
located, in order to carry out the responsibilities assigned to
the Bureau under the Federal consumer financial laws.
SEC. 1012. EXECUTIVE AND ADMINISTRATIVE POWERS.
(a) Powers of the Bureau.--The Bureau is authorized to
establish the general policies of the Bureau with respect to
all executive and administrative functions, including--
(1) the establishment of rules for conducting the
general business of the Bureau, in a manner not
inconsistent with this title;
(2) to bind the Bureau and enter into contracts;
(3) directing the establishment and maintenance of
divisions or other offices within the Bureau, in order
to carry out the responsibilities under the Federal
consumer financial laws, and to satisfy the
requirements of other applicable law;
(4) to coordinate and oversee the operation of all
administrative, enforcement, and research activities of
the Bureau;
(5) to adopt and use a seal;
(6) to determine the character of and the necessity
for the obligations and expenditures of the Bureau;
(7) the appointment and supervision of personnel
employed by the Bureau;
(8) the distribution of business among personnel
appointed and supervised by the Director and among
administrative units of the Bureau;
(9) the use and expenditure of funds;
(10) implementing the Federal consumer financial
laws through rules, orders, guidance, interpretations,
statements of policy, examinations, and enforcement
actions; and
(11) performing such other functions as may be
authorized or required by law.
(b) Delegation of Authority.--The Director of the Bureau
may delegate to any duly authorized employee, representative,
or agent any power vested in the Bureau by law.
(c) Autonomy of the Bureau.--
(1) Coordination with the board of governors.--
Notwithstanding any other provision of law applicable
to the supervision or examination of persons with
respect to Federal consumer financial laws, the Board
of Governors may delegate to the Bureau the authorities
to examine persons subject to the jurisdiction of the
Board of Governors for compliance with the Federal
consumer financial laws.
(2) Autonomy.--Notwithstanding the authorities
granted to the Board of Governors under the Federal
Reserve Act, the Board of Governors may not--
(A) intervene in any matter or proceeding
before the Director, including examinations or
enforcement actions, unless otherwise
specifically provided by law;
(B) appoint, direct, or remove any officer
or employee of the Bureau; or
(C) merge or consolidate the Bureau, or any
of the functions or responsibilities of the
Bureau, with any division or office of the
Board of Governors or the Federal reserve
banks.
(3) Rules and orders.--No rule or order of the
Bureau shall be subject to approval or review by the
Board of Governors. The Board of Governors may not
delay or prevent the issuance of any rule or order of
the Bureau.
(4) Recommendations and testimony.--No officer or
agency of the United States shall have any authority to
require the Director or any other officer of the Bureau
to submit legislative recommendations, or testimony or
comments on legislation, to any officer or agency of
the United States for approval, comments, or review
prior to the submission of such recommendations,
testimony, or comments to the Congress, if such
recommendations, testimony, or comments to the Congress
include a statement indicating that the views expressed
therein are those of the Director or such officer, and
do not necessarily reflect the views of the Board of
Governors or the President.
(5) Clarification of autonomy of the bureau in
legal proceedings.--The Bureau shall not be liable
under any provision of law for any action or inaction
of the Board of Governors, and the Board of Governors
shall not be liable under any provision of law for any
action or inaction of the Bureau.
SEC. 1013. ADMINISTRATION.
(a) Personnel.--
(1) Appointment.--
(A) In general.--The Director may fix the
number of, and appoint and direct, all
employees of the Bureau, in accordance with the
applicable provisions of title 5, United States
Code.
(B) Employees of the bureau.--The Director
is authorized to employ attorneys, compliance
examiners, compliance supervision analysts,
economists, statisticians, and other employees
as may be deemed necessary to conduct the
business of the Bureau. Unless otherwise
provided expressly by law, any individual
appointed under this section shall be an
employee as defined in section 2105 of title 5,
United States Code, and subject to the
provisions of such title and other laws
generally applicable to the employees of an
Executive agency.
(C) Waiver authority.--
(i) In general.--In making any
appointment under subparagraph (A), the
Director may waive the requirements of
chapter 33 of title 5, United States
Code, and the regulations implementing
such chapter, to the extent necessary
to appoint employees on terms and
conditions that are consistent with
those set forth in section 11(1) of the
Federal Reserve Act (12 U.S.C. 248(1)),
while providing for--
(I) fair, credible, and
transparent methods of
establishing qualification
requirements for, recruitment
for, and appointments to
positions;
(II) fair and open
competition and equitable
treatment in the consideration
and selection of individuals to
positions;
(III) fair, credible, and
transparent methods of
assigning, reassigning,
detailing, transferring, and
promoting employees.
(ii) Veterans preferences.--In
implementing this subparagraph, the
Director shall comply with the
provisions of section 2302(b)(11),
regarding veterans' preference
requirements, in a manner consistent
with that in which such provisions are
applied under chapter 33 of title 5,
United States Code. The authority under
this subparagraph to waive the
requirements of that chapter 33 shall
expire 5 years after the date of
enactment of this Act.
(2) Compensation.--Notwithstanding any otherwise
applicable provision of title 5, United States Code,
concerning compensation, including the provisions of
chapter 51 and chapter 53, the following provisions
shall apply with respect to employees of the Bureau:
(A) The rates of basic pay for all
employees of the Bureau may be set and adjusted
by the Director.
(B) The Director shall at all times provide
compensation (including benefits) to each class
of employees that, at a minimum, are comparable
to the compensation and benefits then being
provided by the Board of Governors for the
corresponding class of employees.
(C) All such employees shall be compensated
(including benefits) on terms and conditions
that are consistent with the terms and
conditions set forth in section 11(l) of the
Federal Reserve Act (12 U.S.C. 248(l)).
(3) Bureau participation in federal reserve system
retirement plan and federal reserve system thrift
plan.--
(A) Employee election.--Employees appointed
to the Bureau may elect to participate in
either--
(i) both the Federal Reserve System
Retirement Plan and the Federal Reserve
System Thrift Plan, under the same
terms on which such participation is
offered to employees of the Board of
Governors who participate in such plans
and under the terms and conditions
specified under section 1064(i)(1)(C);
or
(ii) the Civil Service Retirement
System under chapter 83 of title 5,
United States Code, or the Federal
Employees Retirement System under
chapter 84 of title 5, United States
Code, if previously covered under one
of those Federal employee retirement
systems.
(B) Election period.--Bureau employees
shall make an election under this paragraph not
later than 1 year after the date of appointment
by, or transfer under subtitle F to, the
Bureau. Participation in, and benefit accruals
under, any other retirement plan established or
maintained by the Federal Government shall end
not later than the date on which participation
in, and benefit accruals under, the Federal
Reserve System Retirement Plan and Federal
Reserve System Thrift Plan begin.
(C) Employer contribution.--The Bureau
shall pay an employer contribution to the
Federal Reserve System Retirement Plan, in the
amount established as an employer contribution
under the Federal Employees Retirement System,
as established under chapter 84 of title 5,
United States Code, for each Bureau employee
who elects to participate in the Federal
Reserve System Retirement Plan. The Bureau
shall pay an employer contribution to the
Federal Reserve System Thrift Plan for each
Bureau employee who elects to participate in
such plan, as required under the terms of such
plan.
(D) Controlled group status.--The Bureau is
the same employer as the Federal Reserve System
(as comprised of the Board of Governors and
each of the 12 Federal reserve banks prior to
the date of enactment of this Act) for purposes
of subsections (b), (c), (m), and (o) of
section 414 of the Internal Revenue Code of
1986, (26 U.S.C. 414).
(4) Labor-management relations.--Chapter 71 of
title 5, United States Code, shall apply to the Bureau
and the employees of the Bureau.
(5) Agency ombudsman.--
(A) Establishment required.--Not later than
180 days after the designated transfer date,
the Bureau shall appoint an ombudsman.
(B) Duties of ombudsman.--The ombudsman
appointed in accordance with subparagraph (A)
shall--
(i) act as a liaison between the
Bureau and any affected person with
respect to any problem that such party
may have in dealing with the Bureau,
resulting from the regulatory
activities of the Bureau; and
(ii) assure that safeguards exist
to encourage complainants to come
forward and preserve confidentiality.
(b) Specific Functional Units.--
(1) Research.--The Director shall establish a unit
whose functions shall include researching, analyzing,
and reporting on--
(A) developments in markets for consumer
financial products or services, including
market areas of alternative consumer financial
products or services with high growth rates and
areas of risk to consumers;
(B) access to fair and affordable credit
for traditionally underserved communities;
(C) consumer awareness, understanding, and
use of disclosures and communications regarding
consumer financial products or services;
(D) consumer awareness and understanding of
costs, risks, and benefits of consumer
financial products or services;
(E) consumer behavior with respect to
consumer financial products or services,
including performance on mortgage loans; and
(F) experiences of traditionally
underserved consumers, including un-banked and
under-banked consumers.
(2) Community affairs.--The Director shall
establish a unit whose functions shall include
providing information, guidance, and technical
assistance regarding the offering and provision of
consumer financial products or services to
traditionally underserved consumers and communities.
(3) Collecting and tracking complaints.--
(A) In general.--The Director shall
establish a unit whose functions shall include
establishing a single, toll-free telephone
number, a website, and a database or utilizing
an existing database to facilitate the
centralized collection of, monitoring of, and
response to consumer complaints regarding
consumer financial products or services. The
Director shall coordinate with the Federal
Trade Commission or other Federal agencies to
route complaints to such agencies, where
appropriate.
(B) Routing calls to states.--To the extent
practicable, State agencies may receive
appropriate complaints from the systems
established under subparagraph (A), if--
(i) the State agency system has the
functional capacity to receive calls or
electronic reports routed by the Bureau
systems;
(ii) the State agency has satisfied
any conditions of participation in the
system that the Bureau may establish,
including treatment of personally
identifiable information and sharing of
information on complaint resolution or
related compliance procedures and
resources; and
(iii) participation by the State
agency includes measures necessary to
provide for protection of personally
identifiable information that conform
to the standards for protection of the
confidentiality of personally
identifiable information and for data
integrity and security that apply to
the Federal agencies described in
subparagraph (D).
(C) Reports to the congress.--The Director
shall present an annual report to Congress not
later than March 31 of each year on the
complaints received by the Bureau in the prior
year regarding consumer financial products and
services. Such report shall include information
and analysis about complaint numbers, complaint
types, and, where applicable, information about
resolution of complaints.
(D) Data sharing required.--To facilitate
preparation of the reports required under
subparagraph (C), supervision and enforcement
activities, and monitoring of the market for
consumer financial products and services, the
Bureau shall share consumer complaint
information with prudential regulators, the
Federal Trade Commission, other Federal
agencies, and State agencies, subject to the
standards applicable to Federal agencies for
protection of the confidentiality of personally
identifiable information and for data security
and integrity. The prudential regulators, the
Federal Trade Commission, and other Federal
agencies shall share data relating to consumer
complaints regarding consumer financial
products and services with the Bureau, subject
to the standards applicable to Federal agencies
for protection of confidentiality of personally
identifiable information and for data security
and integrity.
(c) Office of Fair Lending and Equal Opportunity.--
(1) Establishment.--The Director shall establish
within the Bureau the Office of Fair Lending and Equal
Opportunity.
(2) Functions.--The Office of Fair Lending and
Equal Opportunity shall have such powers and duties as
the Director may delegate to the Office, including--
(A) providing oversight and enforcement of
Federal laws intended to ensure the fair,
equitable, and nondiscriminatory access to
credit for both individuals and communities
that are enforced by the Bureau, including the
Equal Credit Opportunity Act and the Home
Mortgage Disclosure Act;
(B) coordinating fair lending efforts of
the Bureau with other Federal agencies and
State regulators, as appropriate, to promote
consistent, efficient, and effective
enforcement of Federal fair lending laws;
(C) working with private industry, fair
lending, civil rights, consumer and community
advocates on the promotion of fair lending
compliance and education; and
(D) providing annual reports to Congress on
the efforts of the Bureau to fulfill its fair
lending mandate.
(3) Administration of office.--There is established
the position of Assistant Director of the Bureau for
Fair Lending and Equal Opportunity, who--
(A) shall be appointed by the Director; and
(B) shall carry out such duties as the
Director may delegate to such Assistant
Director.
(d) Office of Financial Education.--
(1) Establishment.--The Director shall establish an
Office of Financial Education, which shall be
responsible for developing and implementing initiatives
intended to educate and empower consumers to make
better informed financial decisions.
(2) Other duties.--The Office of Financial
Education shall develop and implement a strategy to
improve the financial literacy of consumers that
includes measurable goals and objectives, in
consultation with the Financial Literacy and Education
Commission, consistent with the National Strategy for
Financial Literacy, through activities including
providing opportunities for consumers to access--
(A) financial counseling, including
community-based financial counseling, where
practicable;
(B) information to assist with the
evaluation of credit products and the
understanding of credit histories and scores;
(C) savings, borrowing, and other services
found at mainstream financial institutions;
(D) activities intended to--
(i) prepare the consumer for
educational expenses and the submission
of financial aid applications, and
other major purchases;
(ii) reduce debt; and
(iii) improve the financial
situation of the consumer;
(E) assistance in developing long-term
savings strategies; and
(F) wealth building and financial services
during the preparation process to claim earned
income tax credits and Federal benefits.
(3) Coordination.--The Office of Financial
Education shall coordinate with other units within the
Bureau in carrying out its functions, including--
(A) working with the Community Affairs
Office to implement the strategy to improve
financial literacy of consumers; and
(B) working with the research unit
established by the Director to conduct research
related to consumer financial education and
counseling.
(4) Report.--Not later than 24 months after the
designated transfer date, and annually thereafter, the
Director shall submit a report on its financial
literacy activities and strategy to improve financial
literacy of consumers to--
(A) the Committee on Banking, Housing, and
Urban Affairs of the Senate; and
(B) the Committee on Financial Services of
the House of Representatives.
(5) Membership in financial literacy and education
commission.--Section 513(c)(1) of the Financial
Literacy and Education Improvement Act (20 U.S.C.
9702(c)(1)) is amended--
(A) in subparagraph (B), by striking
``and'' at the end;
(B) by redesignating subparagraph (C) as
subparagraph (D); and
(C) by inserting after subparagraph (B) the
following new subparagraph:
``(C) the Director of the Bureau of
Consumer Financial Protection; and''.
(6) Conforming amendment.--Section 513(d) of the
Financial Literacy and Education Improvement Act (20
U.S.C. 9702(d)) is amended by adding at the end the
following: ``The Director of the Bureau of Consumer
Financial Protection shall serve as the Vice
Chairman.''.
(7) Study and report on financial literacy
program.--
(A) In general.--The Comptroller General of
the United States shall conduct a study to
identify--
(i) the feasibility of
certification of persons providing the
programs or performing the activities
described in paragraph (2), including
recognizing outstanding programs, and
developing guidelines and resources for
community-based practitioners,
including--
(I) a potential
certification process and
standards for certification;
(II) appropriate certifying
entities;
(III) resources required
for funding such a process; and
(IV) a cost-benefit
analysis of such certification;
(ii) technological resources
intended to collect, analyze, evaluate,
or promote financial literacy and
counseling programs;
(iii) effective methods, tools, and
strategies intended to educate and
empower consumers about personal
finance management; and
(iv) recommendations intended to
encourage the development of programs
that effectively improve financial
education outcomes and empower
consumers to make better informed
financial decisions based on findings.
(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 this paragraph to the Committee
on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services
of the House of Representatives.
(e) Office of Service Member Affairs.--
(1) In general.--The Director shall establish an
Office of Service Member Affairs, which shall be
responsible for developing and implementing initiatives
for service members and their families intended to--
(A) educate and empower service members and
their families to make better informed
decisions regarding consumer financial products
and services;
(B) coordinate with the unit of the Bureau
established under subsection (b)(3), in order
to monitor complaints by service members and
their families and responses to those
complaints by the Bureau or other appropriate
Federal or State agency; and
(C) coordinate efforts among Federal and
State agencies, as appropriate, regarding
consumer protection measures relating to
consumer financial products and services
offered to, or used by, service members and
their families.
(2) Coordination.--
(A) Regional services.--The Director is
authorized to assign employees of the Bureau as
may be deemed necessary to conduct the business
of the Office of Service Member Affairs,
including by establishing and maintaining the
functions of the Office in regional offices of
the Bureau located near military bases,
military treatment facilities, or other similar
military facilities.
(B) Agreements.--The Director is authorized
to enter into memoranda of understanding and
similar agreements with the Department of
Defense, including any branch or agency as
authorized by the department, in order to carry
out the business of the Office of Service
Member Affairs.
(3) Definition.--As used in this subsection, the
term ``service member'' means any member of the United
States Armed Forces and any member of the National
Guard or Reserves.
(f) Timing.--The Office of Fair Lending and Equal
Opportunity, the Office of Financial Education, and the Office
of Service Member Affairs shall each be established not later
than 1 year after the designated transfer date.
(g) Office of Financial Protection for Older Americans.--
(1) Establishment.--Before the end of the 180-day
period beginning on the designated transfer date, the
Director shall establish the Office of Financial
Protection for Older Americans, the functions of which
shall include activities designed to facilitate the
financial literacy of individuals who have attained the
age of 62 years or more (in this subsection, referred
to as ``seniors'') on protection from unfair,
deceptive, and abusive practices and on current and
future financial choices, including through the
dissemination of materials to seniors on such topics.
(2) Assistant director.--The Office of Financial
Protection for Older Americans (in this subsection
referred to as the ``Office'') shall be headed by an
assistant director.
(3) Duties.--The Office shall--
(A) develop goals for programs that provide
seniors financial literacy and counseling,
including programs that--
(i) help seniors recognize warning
signs of unfair, deceptive, or abusive
practices, protect themselves from such
practices;
(ii) provide one-on-one financial
counseling on issues including long-
term savings and later-life economic
security; and
(iii) provide personal consumer
credit advocacy to respond to consumer
problems caused by unfair, deceptive,
or abusive practices;
(B) monitor certifications or designations
of financial advisors who advise seniors and
alert the Commission and State regulators of
certifications or designations that are
identified as unfair, deceptive, or abusive;
(C) not later than 18 months after the date
of the establishment of the Office, submit to
Congress and the Commission any legislative and
regulatory recommendations on the best
practices for--
(i) disseminating information
regarding the legitimacy of
certifications of financial advisers
who advise seniors;
(ii) methods in which a senior can
identify the financial advisor most
appropriate for the senior's needs; and
(iii) methods in which a senior can
verify a financial advisor's
credentials;
(D) conduct research to identify best
practices and effective methods, tools,
technology and strategies to educate and
counsel seniors about personal finance
management with a focus on--
(i) protecting themselves from
unfair, deceptive, and abusive
practices;
(ii) long-term savings; and
(iii) planning for retirement and
long-term care;
(E) coordinate consumer protection efforts
of seniors with other Federal agencies and
State regulators, as appropriate, to promote
consistent, effective, and efficient
enforcement; and
(F) work with community organizations, non-
profit organizations, and other entities that
are involved with educating or assisting
seniors (including the National Education and
Resource Center on Women and Retirement
Planning).
SEC. 1014. CONSUMER ADVISORY BOARD.
(a) Establishment Required.--The Director shall establish a
Consumer Advisory Board to advise and consult with the Bureau
in the exercise of its functions under the Federal consumer
financial laws, and to provide information on emerging
practices in the consumer financial products or services
industry, including regional trends, concerns, and other
relevant information.
(b) Membership.--In appointing the members of the Consumer
Advisory Board, the Director shall seek to assemble experts in
consumer protection, financial services, community development,
fair lending and civil rights, and consumer financial products
or services and representatives of depository institutions that
primarily serve underserved communities, and representatives of
communities that have been significantly impacted by higher-
priced mortgage loans, and seek representation of the interests
of covered persons and consumers, without regard to party
affiliation. Not fewer than 6 members shall be appointed upon
the recommendation of the regional Federal Reserve Bank
Presidents, on a rotating basis.
(c) Meetings.--The Consumer Advisory Board shall meet from
time to time at the call of the Director, but, at a minimum,
shall meet at least twice in each year.
(d) Compensation and Travel Expenses.--Members of the
Consumer Advisory Board who are not full-time employees of the
United States shall--
(1) be entitled to receive compensation at a rate
fixed by the Director while attending meetings of the
Consumer Advisory Board, including travel time; and
(2) be allowed travel expenses, including
transportation and subsistence, while away from their
homes or regular places of business.
SEC. 1015. COORDINATION.
The Bureau shall coordinate with the Commission, the
Commodity Futures Trading Commission, the Federal Trade
Commission, and other Federal agencies and State regulators, as
appropriate, to promote consistent regulatory treatment of
consumer financial and investment products and services.
SEC. 1016. APPEARANCES BEFORE AND REPORTS TO CONGRESS.
(a) Appearances Before Congress.--The Director of the
Bureau shall appear before the Committee on Banking, Housing,
and Urban Affairs of the Senate and the Committee on Financial
Services and the Committee on Energy and Commerce of the House
of Representatives at semi-annual hearings regarding the
reports required under subsection (b).
(b) Reports Required.--The Bureau shall, concurrent with
each semi-annual hearing referred to in subsection (a), prepare
and submit to the President and to the Committee on Banking,
Housing, and Urban Affairs of the Senate and the Committee on
Financial Services and the Committee on Energy and Commerce of
the House of Representatives, a report, beginning with the
session following the designated transfer date. The Bureau may
also submit such report to the Committee on Commerce, Science,
and Transportation of the Senate.
(c) Contents.--The reports required by subsection (b) shall
include--
(1) a discussion of the significant problems faced
by consumers in shopping for or obtaining consumer
financial products or services;
(2) a justification of the budget request of the
previous year;
(3) a list of the significant rules and orders
adopted by the Bureau, as well as other significant
initiatives conducted by the Bureau, during the
preceding year and the plan of the Bureau for rules,
orders, or other initiatives to be undertaken during
the upcoming period;
(4) an analysis of complaints about consumer
financial products or services that the Bureau has
received and collected in its central database on
complaints during the preceding year;
(5) a list, with a brief statement of the issues,
of the public supervisory and enforcement actions to
which the Bureau was a party during the preceding year;
(6) the actions taken regarding rules, orders, and
supervisory actions with respect to covered persons
which are not credit unions or depository institutions;
(7) an assessment of significant actions by State
attorneys general or State regulators relating to
Federal consumer financial law;
(8) an analysis of the efforts of the Bureau to
fulfill the fair lending mission of the Bureau; and
(9) an analysis of the efforts of the Bureau to
increase workforce and contracting diversity consistent
with the procedures established by the Office of
Minority and Women Inclusion.
SEC. 1017. FUNDING; PENALTIES AND FINES.
(a) Transfer of Funds From Board Of Governors.--
(1) In general.--Each year (or quarter of such
year), beginning on the designated transfer date, and
each quarter thereafter, the Board of Governors shall
transfer to the Bureau from the combined earnings of
the Federal Reserve System, the amount determined by
the Director to be reasonably necessary to carry out
the authorities of the Bureau under Federal consumer
financial law, taking into account such other sums made
available to the Bureau from the preceding year (or
quarter of such year).
(2) Funding cap.--
(A) In general.--Notwithstanding paragraph
(1), and in accordance with this paragraph, the
amount that shall be transferred to the Bureau
in each fiscal year shall not exceed a fixed
percentage of the total operating expenses of
the Federal Reserve System, as reported in the
Annual Report, 2009, of the Board of Governors,
equal to--
(i) 10 percent of such expenses in
fiscal year 2011;
(ii) 11 percent of such expenses in
fiscal year 2012; and
(iii) 12 percent of such expenses
in fiscal year 2013, and in each year
thereafter.
(B) Adjustment of amount.--The dollar
amount referred to in subparagraph (A)(iii)
shall be adjusted annually, using the percent
increase, if any, in the employment cost index
for total compensation for State and local
government workers published by the Federal
Government, or the successor index thereto, for
the 12-month period ending on September 30 of
the year preceding the transfer.
(C) Reviewability.--Notwithstanding any
other provision in this title, the funds
derived from the Federal Reserve System
pursuant to this subsection shall not be
subject to review by the Committees on
Appropriations of the House of Representatives
and the Senate.
(3) Transition period.--Beginning on the date of
enactment of this Act and until the designated transfer
date, the Board of Governors shall transfer to the
Bureau the amount estimated by the Secretary needed to
carry out the authorities granted to the Bureau under
Federal consumer financial law, from the date of
enactment of this Act until the designated transfer
date.
(4) Budget and financial management.--
(A) Financial operating plans and
forecasts.--The Director shall provide to the
Director of the Office of Management and Budget
copies of the financial operating plans and
forecasts of the Director, as prepared by the
Director in the ordinary course of the
operations of the Bureau, and copies of the
quarterly reports of the financial condition
and results of operations of the Bureau, as
prepared by the Director in the ordinary course
of the operations of the Bureau.
(B) Financial statements.--The Bureau shall
prepare annually a statement of--
(i) assets and liabilities and
surplus or deficit;
(ii) income and expenses; and
(iii) sources and application of
funds.
(C) Financial management systems.--The
Bureau shall implement and maintain financial
management systems that comply substantially
with Federal financial management systems
requirements and applicable Federal accounting
standards.
(D) Assertion of internal controls.--The
Director shall provide to the Comptroller
General of the United States an assertion as to
the effectiveness of the internal controls that
apply to financial reporting by the Bureau,
using the standards established in section
3512(c) of title 31, United States Code.
(E) Rule of construction.--This subsection
may not be construed as implying any obligation
on the part of the Director to consult with or
obtain the consent or approval of the Director
of the Office of Management and Budget with
respect to any report, plan, forecast, or other
information referred to in subparagraph (A) or
any jurisdiction or oversight over the affairs
or operations of the Bureau.
(F) Financial statements.--The financial
statements of the Bureau shall not be
consolidated with the financial statements of
either the Board of Governors or the Federal
Reserve System.
(5) Audit of the bureau.--
(A) In general.--The Comptroller General
shall annually audit the financial transactions
of the Bureau in accordance with the United
States generally accepted government auditing
standards, as may be prescribed by the
Comptroller General of the United States. The
audit shall be conducted at the place or places
where accounts of the Bureau are normally kept.
The representatives of the Government
Accountability Office shall have access to the
personnel and to all books, accounts,
documents, papers, records (including
electronic records), reports, files, and all
other papers, automated data, things, or
property belonging to or under the control of
or used or employed by the Bureau pertaining to
its financial transactions and necessary to
facilitate the audit, and such representatives
shall be afforded full facilities for verifying
transactions with the balances or securities
held by depositories, fiscal agents, and
custodians. All such books, accounts,
documents, records, reports, files, papers, and
property of the Bureau shall remain in
possession and custody of the Bureau. The
Comptroller General may obtain and duplicate
any such books, accounts, documents, records,
working papers, automated data and files, or
other information relevant to such audit
without cost to the Comptroller General, and
the right of access of the Comptroller General
to such information shall be enforceable
pursuant to section 716(c) of title 31, United
States Code.
(B) Report.--The Comptroller General shall
submit to the Congress a report of each annual
audit conducted under this subsection. The
report to the Congress shall set forth the
scope of the audit and shall include the
statement of assets and liabilities and surplus
or deficit, the statement of income and
expenses, the statement of sources and
application of funds, and such comments and
information as may be deemed necessary to
inform Congress of the financial operations and
condition of the Bureau, together with such
recommendations with respect thereto as the
Comptroller General may deem advisable. A copy
of each report shall be furnished to the
President and to the Bureau at the time
submitted to the Congress.
(C) Assistance and costs.--For the purpose
of conducting an audit under this subsection,
the Comptroller General may, in the discretion
of the Comptroller General, employ by contract,
without regard to section 3709 of the Revised
Statutes of the United States (41 U.S.C. 5),
professional services of firms and
organizations of certified public accountants
for temporary periods or for special purposes.
Upon the request of the Comptroller General,
the Director of the Bureau shall transfer to
the Government Accountability Office from funds
available, the amount requested by the
Comptroller General to cover the full costs of
any audit and report conducted by the
Comptroller General. The Comptroller General
shall credit funds transferred to the account
established for salaries and expenses of the
Government Accountability Office, and such
amount shall be available upon receipt and
without fiscal year limitation to cover the
full costs of the audit and report.
(b) Consumer Financial Protection Fund.--
(1) Separate fund in federal reserve established.--
There is established in the Federal Reserve a separate
fund, to be known as the ``Bureau of Consumer Financial
Protection Fund'' (referred to in this section as the
``Bureau Fund''). The Bureau Fund shall be maintained
and established at a Federal reserve bank, in
accordance with such requirements as the Board of
Governors may impose.
(2) Fund receipts.--All amounts transferred to the
Bureau under subsection (a) shall be deposited into the
Bureau Fund.
(3) Investment authority.--
(A) Amounts in bureau fund may be
invested.--The Bureau may request the Board of
Governors to direct the investment of the
portion of the Bureau Fund that is not, in the
judgment of the Bureau, required to meet the
current needs of the Bureau.
(B) Eligible investments.--Investments
authorized by this paragraph shall be made 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 Bureau Fund, as
determined by the Bureau.
(C) Interest and proceeds credited.--The
interest on, and the proceeds from the sale or
redemption of, any obligations held in the
Bureau Fund shall be credited to the Bureau
Fund.
(c) Use of Funds.--
(1) In general.--Funds obtained by, transferred to,
or credited to the Bureau Fund shall be immediately
available to the Bureau and under the control of the
Director, and shall remain available until expended, to
pay the expenses of the Bureau in carrying out its
duties and responsibilities. The compensation of the
Director and other employees of the Bureau and all
other expenses thereof may be paid from, obtained by,
transferred to, or credited to the Bureau Fund under
this section.
(2) Funds that are not government funds.--Funds
obtained by or transferred to the Bureau Fund shall not
be construed to be Government funds or appropriated
monies.
(3) Amounts not subject to apportionment.--
Notwithstanding any other provision of law, amounts in
the Bureau Fund and in the Civil Penalty Fund
established under subsection (d) shall not be subject
to apportionment for purposes of chapter 15 of title
31, United States Code, or under any other authority.
(d) Penalties and Fines.--
(1) Establishment of victims relief fund.--There is
established in the Federal Reserve a separate fund, to
be known as the ``Consumer Financial Civil Penalty
Fund'' (referred to in this section as the ``Civil
Penalty Fund''). The Civil Penalty Fund shall be
maintained and established at a Federal reserve bank,
in accordance with such requirements as the Board of
Governors may impose. If the Bureau obtains a civil
penalty against any person in any judicial or
administrative action under Federal consumer financial
laws, the Bureau shall deposit into the Civil Penalty
Fund, the amount of the penalty collected.
(2) Payment to victims.--Amounts in the Civil
Penalty Fund shall be available to the Bureau, without
fiscal year limitation, for payments to the victims of
activities for which civil penalties have been imposed
under the Federal consumer financial laws. To the
extent that such victims cannot be located or such
payments are otherwise not practicable, the Bureau may
use such funds for the purpose of consumer education
and financial literacy programs.
(e) Authorization of Appropriations; Annual Report.--
(1) Determination regarding need for appropriated
funds.--
(A) In general.--The Director is authorized
to determine that sums available to the Bureau
under this section will not be sufficient to
carry out the authorities of the Bureau under
Federal consumer financial law for the upcoming
year.
(B) Report required.--When making a
determination under subparagraph (A), the
Director shall prepare a report regarding the
funding of the Bureau, including the assets and
liabilities of the Bureau, and the extent to
which the funding needs of the Bureau are
anticipated to exceed the level of the amount
set forth in subsection (a)(2). The Director
shall submit the report to the President and to
the Committee on Appropriations of the Senate
and the Committee on Appropriations of the
House of Representatives.
(2) Authorization of appropriations.--If the
Director makes the determination and submits the report
pursuant to paragraph (1), there are hereby authorized
to be appropriated to the Bureau, for the purposes of
carrying out the authorities granted in Federal
consumer financial law, $200,000,000 for each of fiscal
years 2010, 2011, 2012, 2013, and 2014.
(3) Apportionment.--Notwithstanding any other
provision of law, the amounts in paragraph (2) shall be
subject to apportionment under section 1517 of title
31, United States Code, and restrictions that generally
apply to the use of appropriated funds in title 31,
United States Code, and other laws.
(4) Annual report.--The Director shall prepare and
submit a report, on an annual basis, to the Committee
on Appropriations of the Senate and the Committee on
Appropriations of the House of Representatives
regarding the financial operating plans and forecasts
of the Director, the financial condition and results of
operations of the Bureau, and the sources and
application of funds of the Bureau, including any funds
appropriated in accordance with this subsection.
SEC. 1018. EFFECTIVE DATE.
This subtitle shall become effective on the date of
enactment of this Act.
Subtitle B--General Powers of the Bureau
SEC. 1021. PURPOSE, OBJECTIVES, AND FUNCTIONS.
(a) Purpose.--The Bureau shall seek to implement and, where
applicable, enforce Federal consumer financial law consistently
for the purpose of ensuring that all consumers have access to
markets for consumer financial products and services and that
markets for consumer financial products and services are fair,
transparent, and competitive.
(b) Objectives.--The Bureau is authorized to exercise its
authorities under Federal consumer financial law for the
purposes of ensuring that, with respect to consumer financial
products and services--
(1) consumers are provided with timely and
understandable information to make responsible
decisions about financial transactions;
(2) consumers are protected from unfair, deceptive,
or abusive acts and practices and from discrimination;
(3) outdated, unnecessary, or unduly burdensome
regulations are regularly identified and addressed in
order to reduce unwarranted regulatory burdens;
(4) Federal consumer financial law is enforced
consistently, without regard to the status of a person
as a depository institution, in order to promote fair
competition; and
(5) markets for consumer financial products and
services operate transparently and efficiently to
facilitate access and innovation.
(c) Functions.--The primary functions of the Bureau are--
(1) conducting financial education programs;
(2) collecting, investigating, and responding to
consumer complaints;
(3) collecting, researching, monitoring, and
publishing information relevant to the functioning of
markets for consumer financial products and services to
identify risks to consumers and the proper functioning
of such markets;
(4) subject to sections 1024 through 1026,
supervising covered persons for compliance with Federal
consumer financial law, and taking appropriate
enforcement action to address violations of Federal
consumer financial law;
(5) issuing rules, orders, and guidance
implementing Federal consumer financial law; and
(6) performing such support activities as may be
necessary or useful to facilitate the other functions
of the Bureau.
SEC. 1022. RULEMAKING AUTHORITY.
(a) In General.--The Bureau is authorized to exercise its
authorities under Federal consumer financial law to administer,
enforce, and otherwise implement the provisions of Federal
consumer financial law.
(b) Rulemaking, Orders, and Guidance.--
(1) General authority.--The Director may prescribe
rules and issue orders and guidance, as may be
necessary or appropriate to enable the Bureau to
administer and carry out the purposes and objectives of
the Federal consumer financial laws, and to prevent
evasions thereof.
(2) Standards for rulemaking.--In prescribing a
rule under the Federal consumer financial laws--
(A) the Bureau shall consider--
(i) the potential benefits and
costs to consumers and covered persons,
including the potential reduction of
access by consumers to consumer
financial products or services
resulting from such rule; and
(ii) the impact of proposed rules
on covered persons, as described in
section 1026, and the impact on
consumers in rural areas;
(B) the Bureau shall consult with the
appropriate prudential regulators or other
Federal agencies prior to proposing a rule and
during the comment process regarding
consistency with prudential, market, or
systemic objectives administered by such
agencies; and
(C) if, during the consultation process
described in subparagraph (B), a prudential
regulator provides the Bureau with a written
objection to the proposed rule of the Bureau or
a portion thereof, the Bureau shall include in
the adopting release a description of the
objection and the basis for the Bureau
decision, if any, regarding such objection,
except that nothing in this clause shall be
construed as altering or limiting the
procedures under section 1023 that may apply to
any rule prescribed by the Bureau.
(3) Exemptions.--
(A) In general.--The Bureau, by rule, may
conditionally or unconditionally exempt any
class of covered persons, service providers, or
consumer financial products or services, from
any provision of this title, or from any rule
issued under this title, as the Bureau
determines necessary or appropriate to carry
out the purposes and objectives of this title,
taking into consideration the factors in
subparagraph (B).
(B) Factors.--In issuing an exemption, as
permitted under subparagraph (A), the Bureau
shall, as appropriate, take into
consideration--
(i) the total assets of the class
of covered persons;
(ii) the volume of transactions
involving consumer financial products
or services in which the class of
covered persons engages; and
(iii) existing provisions of law
which are applicable to the consumer
financial product or service and the
extent to which such provisions provide
consumers with adequate protections.
(4) Exclusive rulemaking authority.--
(A) In general.--Notwithstanding any other
provisions of Federal law and except as
provided in section 1061(b)(5), to the extent
that a provision of Federal consumer financial
law authorizes the Bureau and another Federal
agency to issue regulations under that
provision of law for purposes of assuring
compliance with Federal consumer financial law
and any regulations thereunder, the Bureau
shall have the exclusive authority to prescribe
rules subject to those provisions of law.
(B) Deference.--Notwithstanding any power
granted to any Federal agency or to the Council
under this title, and subject to section
1061(b)(5)(E), the deference that a court
affords to the Bureau with respect to a
determination by the Bureau regarding the
meaning or interpretation of any provision of a
Federal consumer financial law shall be applied
as if the Bureau were the only agency
authorized to apply, enforce, interpret, or
administer the provisions of such Federal
consumer financial law.
(c) Monitoring.--
(1) In general.--In order to support its rulemaking
and other functions, the Bureau shall monitor for risks
to consumers in the offering or provision of consumer
financial products or services, including developments
in markets for such products or services.
(2) Considerations.--In allocating its resources to
perform the monitoring required by this section, the
Bureau may consider, among other factors--
(A) likely risks and costs to consumers
associated with buying or using a type of
consumer financial product or service;
(B) understanding by consumers of the risks
of a type of consumer financial product or
service;
(C) the legal protections applicable to the
offering or provision of a consumer financial
product or service, including the extent to
which the law is likely to adequately protect
consumers;
(D) rates of growth in the offering or
provision of a consumer financial product or
service;
(E) the extent, if any, to which the risks
of a consumer financial product or service may
disproportionately affect traditionally
underserved consumers; or
(F) the types, number, and other pertinent
characteristics of covered persons that offer
or provide the consumer financial product or
service.
(3) Significant findings.--
(A) In general.--The Bureau shall publish
not fewer than 1 report of significant findings
of its monitoring required by this subsection
in each calendar year, beginning with the first
calendar year that begins at least 1 year after
the designated transfer date.
(B) Confidential information.--The Bureau
may make public such information obtained by
the Bureau under this section as is in the
public interest, through aggregated reports or
other appropriate formats designed to protect
confidential information in accordance with
paragraphs (4), (6), (8), and (9).
(4) Collection of information.--
(A) In general.--In conducting any
monitoring or assessment required by this
section, the Bureau shall have the authority to
gather information from time to time regarding
the organization, business conduct, markets,
and activities of covered persons and service
providers.
(B) Methodology.--In order to gather
information described in subparagraph (A), the
Bureau may--
(i) gather and compile information
from a variety of sources, including
examination reports concerning covered
persons or service providers, consumer
complaints, voluntary surveys and
voluntary interviews of consumers,
surveys and interviews with covered
persons and service providers, and
review of available databases; and
(ii) require covered persons and
service providers participating in
consumer financial services markets to
file with the Bureau, under oath or
otherwise, in such form and within such
reasonable period of time as the Bureau
may prescribe by rule or order, annual
or special reports, or answers in
writing to specific questions,
furnishing information described in
paragraph (4), as necessary for the
Bureau to fulfill the monitoring,
assessment, and reporting
responsibilities imposed by Congress.
(C) Limitation.--The Bureau may not use its
authorities under this paragraph to obtain
records from covered persons and service
providers participating in consumer financial
services markets for purposes of gathering or
analyzing the personally identifiable financial
information of consumers.
(5) Limited information gathering.--In order to
assess whether a nondepository is a covered person, as
defined in section 1002, the Bureau may require such
nondepository to file with the Bureau, under oath or
otherwise, in such form and within such reasonable
period of time as the Bureau may prescribe by rule or
order, annual or special reports, or answers in writing
to specific questions.
(6) Confidentiality rules.--
(A) Rulemaking.--The Bureau shall prescribe
rules regarding the confidential treatment of
information obtained from persons in connection
with the exercise of its authorities under
Federal consumer financial law.
(B) Access by the bureau to reports of
other regulators.--
(i) Examination and financial
condition reports.--Upon providing
reasonable assurances of
confidentiality, the Bureau shall have
access to any report of examination or
financial condition made by a
prudential regulator or other Federal
agency having jurisdiction over a
covered person or service provider, and
to all revisions made to any such
report.
(ii) Provision of other reports to
the bureau.--In addition to the reports
described in clause (i), a prudential
regulator or other Federal agency
having jurisdiction over a covered
person or service provider may, in its
discretion, furnish to the Bureau any
other report or other confidential
supervisory information concerning any
insured depository institution, credit
union, or other entity examined by such
agency under authority of any provision
of Federal law.
(C) Access by other regulators to reports
of the bureau.--
(i) Examination reports.--Upon
providing reasonable assurances of
confidentiality, a prudential
regulator, a State regulator, or any
other Federal agency having
jurisdiction over a covered person or
service provider shall have access to
any report of examination made by the
Bureau with respect to such person, and
to all revisions made to any such
report.
(ii) Provision of other reports to
other regulators.--In addition to the
reports described in clause (i), the
Bureau may, in its discretion, furnish
to a prudential regulator or other
agency having jurisdiction over a
covered person or service provider any
other report or other confidential
supervisory information concerning such
person examined by the Bureau under the
authority of any other provision of
Federal law.
(7) Registration.--
(A) In general.--The Bureau may prescribe
rules regarding registration requirements
applicable to a covered person, other than an
insured depository institution, insured credit
union, or related person.
(B) Registration information.--Subject to
rules prescribed by the Bureau, the Bureau may
publicly disclose registration information to
facilitate the ability of consumers to identify
covered persons that are registered with the
Bureau.
(C) Consultation with state agencies.--In
developing and implementing registration
requirements under this paragraph, the Bureau
shall consult with State agencies regarding
requirements or systems (including coordinated
or combined systems for registration), where
appropriate.
(8) Privacy considerations.--In collecting
information from any person, publicly releasing
information held by the Bureau, or requiring covered
persons to publicly report information, the Bureau
shall take steps to ensure that proprietary, personal,
or confidential consumer information that is protected
from public disclosure under section 552(b) or 552a of
title 5, United States Code, or any other provision of
law, is not made public under this title.
(9) Consumer privacy.--
(A) In general.--The Bureau may not obtain
from a covered person or service provider any
personally identifiable financial information
about a consumer from the financial records of
the covered person or service provider,
except--
(i) if the financial records are
reasonably described in a request by
the Bureau and the consumer provides
written permission for the disclosure
of such information by the covered
person or service provider to the
Bureau; or
(ii) as may be specifically
permitted or required under other
applicable provisions of law and in
accordance with the Right to Financial
Privacy Act of 1978 (12 U.S.C. 3401 et
seq.).
(B) Treatment of covered person or service
provider.--With respect to the application of
any provision of the Right to Financial Privacy
Act of 1978, to a disclosure by a covered
person or service provider subject to this
subsection, the covered person or service
provider shall be treated as if it were a
``financial institution'', as defined in
section 1101 of that Act (12 U.S.C. 3401).
(d) Assessment of Significant Rules.--
(1) In general.--The Bureau shall conduct an
assessment of each significant rule or order adopted by
the Bureau under Federal consumer financial law. The
assessment shall address, among other relevant factors,
the effectiveness of the rule or order in meeting the
purposes and objectives of this title and the specific
goals stated by the Bureau. The assessment shall
reflect available evidence and any data that the Bureau
reasonably may collect.
(2) Reports.--The Bureau shall publish a report of
its assessment under this subsection not later than 5
years after the effective date of the subject rule or
order.
(3) Public comment required.--Before publishing a
report of its assessment, the Bureau shall invite
public comment on recommendations for modifying,
expanding, or eliminating the newly adopted significant
rule or order.
SEC. 1023. REVIEW OF BUREAU REGULATIONS.
(a) Review of Bureau Regulations.--On the petition of a
member agency of the Council, the Council may set aside a final
regulation prescribed by the Bureau, or any provision thereof,
if the Council decides, in accordance with subsection (c), that
the regulation or provision would put the safety and soundness
of the United States banking system or the stability of the
financial system of the United States at risk.
(b) Petition.--
(1) Procedure.--An agency represented by a member
of the Council may petition the Council, in writing,
and in accordance with rules prescribed pursuant to
subsection (f), to stay the effectiveness of, or set
aside, a regulation if the member agency filing the
petition--
(A) has in good faith attempted to work
with the Bureau to resolve concerns regarding
the effect of the rule on the safety and
soundness of the United States banking system
or the stability of the financial system of the
United States; and
(B) files the petition with the Council not
later than 10 days after the date on which the
regulation has been published in the Federal
Register.
(2) Publication.--Any petition filed with the
Council under this section shall be published in the
Federal Register and transmitted contemporaneously with
filing to the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Financial
Services of the House of Representatives.
(c) Stays and Set Asides.--
(1) Stay.--
(A) In general.--Upon the request of any
member agency, the Chairperson of the Council
may stay the effectiveness of a regulation for
the purpose of allowing appropriate
consideration of the petition by the Council.
(B) Expiration.--A stay issued under this
paragraph shall expire on the earlier of--
(i) 90 days after the date of
filing of the petition under subsection
(b); or
(ii) the date on which the Council
makes a decision under paragraph (3).
(2) No adverse inference.--After the expiration of
any stay imposed under this section, no inference shall
be drawn regarding the validity or enforceability of a
regulation which was the subject of the petition.
(3) Vote.--
(A) In general.--The decision to issue a
stay of, or set aside, any regulation under
this section shall be made only with the
affirmative vote in accordance with
subparagraph (B) of \2/3\ of the members of the
Council then serving.
(B) Authorization to vote.--A member of the
Council may vote to stay the effectiveness of,
or set aside, a final regulation prescribed by
the Bureau only if the agency or department
represented by that member has--
(i) considered any relevant
information provided by the agency
submitting the petition and by the
Bureau; and
(ii) made an official
determination, at a public meeting
where applicable, that the regulation
which is the subject of the petition
would put the safety and soundness of
the United States banking system or the
stability of the financial system of
the United States at risk.
(4) Decisions to set aside.--
(A) Effect of decision.--A decision by the
Council to set aside a regulation prescribed by
the Bureau, or provision thereof, shall render
such regulation, or provision thereof,
unenforceable.
(B) Timely action required.--The Council
may not issue a decision to set aside a
regulation, or provision thereof, which is the
subject of a petition under this section after
the expiration of the later of--
(i) 45 days following the date of
filing of the petition, unless a stay
is issued under paragraph (1); or
(ii) the expiration of a stay
issued by the Council under this
section.
(C) Separate authority.--The issuance of a
stay under this section does not affect the
authority of the Council to set aside a
regulation.
(5) Dismissal due to inaction.--A petition under
this section shall be deemed dismissed if the Council
has not issued a decision to set aside a regulation, or
provision thereof, within the period for timely action
under paragraph (4)(B).
(6) Publication of decision.--Any decision under
this subsection to issue a stay of, or set aside, a
regulation or provision thereof shall be published by
the Council in the Federal Register as soon as
practicable after the decision is made, with an
explanation of the reasons for the decision.
(7) Rulemaking procedures inapplicable.--The notice
and comment procedures under section 553 of title 5,
United States Code, shall not apply to any decision
under this section of the Council to issue a stay of,
or set aside, a regulation.
(8) Judicial review of decisions by the council.--A
decision by the Council to set aside a regulation
prescribed by the Bureau, or provision thereof, shall
be subject to review under chapter 7 of title 5, United
States Code.
(d) Application of Other Law.--Nothing in this section
shall be construed as altering, limiting, or restricting the
application of any other provision of law, except as otherwise
specifically provided in this section, including chapter 5 and
chapter 7 of title 5, United States Code, to a regulation which
is the subject of a petition filed under this section.
(e) Savings Clause.--Nothing in this section shall be
construed as limiting or restricting the Bureau from engaging
in a rulemaking in accordance with applicable law.
(f) Implementing Rules.--The Council shall prescribe
procedural rules to implement this section.
SEC. 1024. SUPERVISION OF NONDEPOSITORY COVERED PERSONS.
(a) Scope of Coverage.--
(1) Applicability.--Notwithstanding any other
provision of this title, and except as provided in
paragraph (3), this section shall apply to any covered
person who--
(A) offers or provides origination,
brokerage, or servicing of loans secured by
real estate for use by consumers primarily for
personal, family, or household purposes, or
loan modification or foreclosure relief
services in connection with such loans;
(B) is a larger participant of a market for
other consumer financial products or services,
as defined by rule in accordance with paragraph
(2);
(C) the Bureau has reasonable cause to
determine, by order, after notice to the
covered person and a reasonable opportunity for
such covered person to respond, based on
complaints collected through the system under
section 1013(b)(3) or information from other
sources, that such covered person is engaging,
or has engaged, in conduct that poses risks to
consumers with regard to the offering or
provision of consumer financial products or
services;
(D) offers or provides to a consumer any
private education loan, as defined in section
140 of the Truth in Lending Act (15 U.S.C.
1650), notwithstanding section 1027(a)(2)(A)
and subject to section 1027(a)(2)(C); or
(E) offers or provides to a consumer a
payday loan.
(2) Rulemaking to define covered persons subject to
this section.--The Bureau shall consult with the
Federal Trade Commission prior to issuing a rule, in
accordance with paragraph (1)(B), to define covered
persons subject to this section. The Bureau shall issue
its initial rule not later than 1 year after the
designated transfer date.
(3) Rules of construction.--
(A) Certain persons excluded.--This section
shall not apply to persons described in section
1025(a) or 1026(a).
(B) Activity levels.--For purposes of
computing activity levels under paragraph (1)
or rules issued thereunder, activities of
affiliated companies (other than insured
depository institutions or insured credit
unions) shall be aggregated.
(b) Supervision.--
(1) In general.--The Bureau shall require reports
and conduct examinations on a periodic basis of persons
described in subsection (a)(1) for purposes of--
(A) assessing compliance with the
requirements of Federal consumer financial law;
(B) obtaining information about the
activities and compliance systems or procedures
of such person; and
(C) detecting and assessing risks to
consumers and to markets for consumer financial
products and services.
(2) Risk-based supervision program.--The Bureau
shall exercise its authority under paragraph (1) in a
manner designed to ensure that such exercise, with
respect to persons described in subsection (a)(1), is
based on the assessment by the Bureau of the risks
posed to consumers in the relevant product markets and
geographic markets, and taking into consideration, as
applicable--
(A) the asset size of the covered person;
(B) the volume of transactions involving
consumer financial products or services in
which the covered person engages;
(C) the risks to consumers created by the
provision of such consumer financial products
or services;
(D) the extent to which such institutions
are subject to oversight by State authorities
for consumer protection; and
(E) any other factors that the Bureau
determines to be relevant to a class of covered
persons.
(3) Coordination.--To minimize regulatory burden,
the Bureau shall coordinate its supervisory activities
with the supervisory activities conducted by prudential
regulators and the State bank regulatory authorities,
including establishing their respective schedules for
examining persons described in subsection (a)(1) and
requirements regarding reports to be submitted by such
persons.
(4) Use of existing reports.--The Bureau shall, to
the fullest extent possible, use--
(A) reports pertaining to persons described
in subsection (a)(1) that have been provided or
required to have been provided to a Federal or
State agency; and
(B) information that has been reported
publicly.
(5) Preservation of authority.--Nothing in this
title may be construed as limiting the authority of the
Director to require reports from persons described in
subsection (a)(1), as permitted under paragraph (1),
regarding information owned or under the control of
such person, regardless of whether such information is
maintained, stored, or processed by another person.
(6) Reports of tax law noncompliance.--The Bureau
shall provide the Commissioner of Internal Revenue with
any report of examination or related information
identifying possible tax law noncompliance.
(7) Registration, recordkeeping and other
requirements for certain persons.--
(A) In general.--The Bureau shall prescribe
rules to facilitate supervision of persons
described in subsection (a)(1) and assessment
and detection of risks to consumers.
(B) Recordkeeping.--The Bureau may require
a person described in subsection (a)(1), to
generate, provide, or retain records for the
purposes of facilitating supervision of such
persons and assessing and detecting risks to
consumers.
(C) Requirements concerning obligations.--
The Bureau may prescribe rules regarding a
person described in subsection (a)(1), to
ensure that such persons are legitimate
entities and are able to perform their
obligations to consumers. Such requirements may
include background checks for principals,
officers, directors, or key personnel and
bonding or other appropriate financial
requirements.
(D) Consultation with state agencies.--In
developing and implementing requirements under
this paragraph, the Bureau shall consult with
State agencies
regarding requirements or systems (including
coordinated or combined systems for
registration), where appropriate.
(c) Enforcement Authority.--
(1) The bureau to have enforcement authority.--
Except as provided in paragraph (3) and section 1061,
with respect to any person described in subsection
(a)(1), to the extent that Federal law authorizes the
Bureau and another Federal agency to enforce Federal
consumer financial law, the Bureau shall have exclusive
authority to enforce that Federal consumer financial
law.
(2) Referral.--Any Federal agency authorized to
enforce a Federal consumer financial law described in
paragraph (1) may recommend in writing to the Bureau
that the Bureau initiate an enforcement proceeding, as
the Bureau is authorized by that Federal law or by this
title.
(3) Coordination with the federal trade
commission.--
(A) In general.--The Bureau and the Federal
Trade Commission shall negotiate an agreement
for coordinating with respect to enforcement
actions by each agency regarding the offering
or provision of consumer financial products or
services by any covered person that is
described in subsection (a)(1), or service
providers thereto. The agreement shall include
procedures for notice to the other agency,
where feasible, prior to initiating a civil
action to enforce any Federal law regarding the
offering or provision of consumer financial
products or services.
(B) Civil actions.--Whenever a civil action
has been filed by, or on behalf of, the Bureau
or the Federal Trade Commission for any
violation of any provision of Federal law
described in subparagraph (A), or any
regulation prescribed under such provision of
law--
(i) the other agency may not,
during the pendency of that action,
institute a civil action under such
provision of law against any defendant
named in the complaint in such pending
action for any violation alleged in the
complaint; and
(ii) the Bureau or the Federal
Trade Commission may intervene as a
party in any such action brought by the
other agency, and, upon intervening--
(I) be heard on all matters
arising in such enforcement
action; and
(II) file petitions for
appeal in such actions.
(C) Agreement terms.--The terms of any
agreement negotiated under subparagraph (A) may
modify or supersede the provisions of
subparagraph (B).
(D) Deadline.--The agencies shall reach the
agreement required under subparagraph (A) not
later than 6 months after the designated
transfer date.
(d) Exclusive Rulemaking and Examination Authority.--
Notwithstanding any other provision of Federal law and except
as provided in section 1061, to the extent that Federal law
authorizes the Bureau and another Federal agency to issue
regulations or guidance, conduct examinations, or require
reports from a person described in subsection (a)(1) under such
law for purposes of assuring compliance with Federal consumer
financial law and any regulations thereunder, the Bureau shall
have the exclusive authority to prescribe rules, issue
guidance, conduct examinations, require reports, or issue
exemptions with regard to a person described in subsection
(a)(1), subject to those provisions of law.
(e) Service Providers.--A service provider to a person
described in subsection (a)(1) shall be subject to the
authority of the Bureau under this section, to the same extent
as if such service provider were engaged in a service
relationship with a bank, and the Bureau were an appropriate
Federal banking agency under section 7(c) of the Bank Service
Company Act (12 U.S.C. 1867(c)). In conducting any examination
or requiring any report from a service provider subject to this
subsection, the Bureau shall coordinate with the appropriate
prudential regulator, as applicable.
(f) Preservation of Farm Credit Administration Authority.--
No provision of this title may be construed as modifying,
limiting, or otherwise affecting the authority of the Farm
Credit Administration.
SEC. 1025. SUPERVISION OF VERY LARGE BANKS, SAVINGS ASSOCIATIONS, AND
CREDIT UNIONS.
(a) Scope of Coverage.--This section shall apply to any
covered person that is--
(1) an insured depository institution with total
assets of more than $10,000,000,000 and any affiliate
thereof; or
(2) an insured credit union with total assets of
more than $10,000,000,000 and any affiliate thereof.
(b) Supervision.--
(1) In general.--The Bureau shall have exclusive
authority to require reports and conduct examinations
on a periodic basis of persons described in subsection
(a) for purposes of--
(A) assessing compliance with the
requirements of Federal consumer financial
laws;
(B) obtaining information about the
activities subject to such laws and the
associated compliance systems or procedures of
such persons; and
(C) detecting and assessing associated
risks to consumers and to markets for consumer
financial products and services.
(2) Coordination.--To minimize regulatory burden,
the Bureau shall coordinate its supervisory activities
with the supervisory activities conducted by prudential
regulators and the State bank regulatory authorities,
including consultation regarding their respective
schedules for examining such persons described in
subsection (a) and requirements regarding reports to be
submitted by such persons.
(3) Use of existing reports.--The Bureau shall, to
the fullest extent possible, use--
(A) reports pertaining to a person
described in subsection (a) that have been
provided or required to have been provided to a
Federal or State agency; and
(B) information that has been reported
publicly.
(4) Preservation of authority.--Nothing in this
title may be construed as limiting the authority of the
Director to require reports from a person described in
subsection (a), as permitted under paragraph (1),
regarding information owned or under the control of
such person, regardless of whether such information is
maintained, stored, or processed by another person.
(5) Reports of tax law noncompliance.--The Bureau
shall provide the Commissioner of Internal Revenue with
any report of examination or related information
identifying possible tax law noncompliance.
(c) Primary Enforcement Authority.--
(1) The bureau to have primary enforcement
authority.--To the extent that the Bureau and another
Federal agency are authorized to enforce a Federal
consumer financial law, the Bureau shall have primary
authority to enforce that Federal consumer financial
law with respect to any person described in subsection
(a).
(2) Referral.--Any Federal agency, other than the
Federal Trade Commission, that is authorized to enforce
a Federal consumer financial law may recommend, in
writing, to the Bureau that the Bureau initiate an
enforcement proceeding with respect to a person
described in subsection (a), as the Bureau is
authorized to do by that Federal consumer financial
law.
(3) Backup enforcement authority of other federal
agency.--If the Bureau does not, before the end of the
120-day period beginning on the date on which the
Bureau receives a recommendation under paragraph (2),
initiate an enforcement proceeding, the other agency
referred to in paragraph (2) may initiate an
enforcement proceeding, including performing follow up
supervisory and support functions incidental thereto,
to assure compliance with such proceeding.
(d) Service Providers.--A service provider to a person
described in subsection (a) shall be subject to the authority
of the Bureau under this section, to the same extent as if the
Bureau were an appropriate Federal banking agency under section
7(c) of the Bank Service Company Act 12 U.S.C. 1867(c). In
conducting any examination or requiring any report from a
service provider subject to this subsection, the Bureau shall
coordinate with the appropriate prudential regulator.
(e) Simultaneous and Coordinated Supervisory Action.--
(1) Examinations.--A prudential regulator and the
Bureau shall, with respect to each insured depository
institution, insured credit union, or other covered
person described in subsection (a) that is supervised
by the prudential regulator and the Bureau,
respectively--
(A) coordinate the scheduling of
examinations of the insured depository
institution, insured credit union, or other
covered person described in subsection (a);
(B) conduct simultaneous examinations of
each insured depository institution or insured
credit union, unless such institution requests
examinations to be conducted separately;
(C) share each draft report of examination
with the other agency and permit the receiving
agency a reasonable opportunity (which shall
not be less than a period of 30 days after the
date of receipt) to comment on the draft report
before such report is made final; and
(D) prior to issuing a final report of
examination or taking supervisory action, take
into consideration concerns, if any, raised in
the comments made by the other agency.
(2) Coordination with state bank supervisors.--The
Bureau shall pursue arrangements and agreements with
State bank supervisors to coordinate examinations,
consistent with paragraph (1).
(3) Avoidance of conflict in supervision.--
(A) Request.--If the proposed supervisory
determinations of the Bureau and a prudential
regulator (in this section referred to
collectively as the ``agencies'') are
conflicting, an insured depository institution,
insured credit union, or other covered person
described in subsection (a) may request the
agencies to coordinate and present a joint
statement of coordinated supervisory action.
(B) Joint statement.--The agencies shall
provide a joint statement under subparagraph
(A), not later than 30 days after the date of
receipt of the request of the insured
depository institution, credit union, or
covered person described in subsection (a).
(4) Appeals to governing panel.--
(A) In general.--If the agencies do not
resolve the conflict or issue a joint statement
required by subparagraph (B), or if either of
the agencies takes or attempts to take any
supervisory action relating to the request for
the joint statement without the consent of the
other agency, an insured depository
institution, insured credit union, or other
covered person described in subsection (a) may
institute an appeal to a governing panel, as
provided in this subsection, not later than 30
days after the expiration of the period during
which a joint statement is required to be filed
under paragraph (3)(B).
(B) Composition of governing panel.--The
governing panel for an appeal under this
paragraph shall be composed of--
(i) a representative from the
Bureau and a representative of the
prudential regulator, both of whom--
(I) have not participated
in the material supervisory
determinations under appeal;
and
(II) do not directly or
indirectly report to the person
who participated materially in
the supervisory determinations
under appeal; and
(ii) one individual representative,
to be determined on a rotating basis,
from among the Board of Governors, the
Corporation, the National Credit Union
Administration, and the Office of the
Comptroller of the Currency, other than
any agency involved in the subject
dispute.
(C) Conduct of appeal.--In an appeal under
this paragraph--
(i) the insured depository
institution, insured credit union, or
other covered person described in
subsection (a)--
(I) shall include in its
appeal all the facts and legal
arguments pertaining to the
matter; and
(II) may, through counsel,
employees, or representatives,
appear before the governing
panel in person or by
telephone; and
(ii) the governing panel--
(I) may request the insured
depository institution, insured
credit union, or other covered
person described in subsection
(a), the Bureau, or the
prudential regulator to produce
additional information relevant
to the appeal; and
(II) by a majority vote of
its members, shall provide a
final determination, in
writing, not later than 30 days
after the date of filing of an
informationally complete
appeal, or such longer period
as the panel and the insured
depository institution, insured
credit union, or other covered
person described in subsection
(a) may jointly agree.
(D) Public availability of
determinations.--A governing panel shall
publish all information contained in a
determination by the governing panel, with
appropriate redactions of information that
would be subject to an exemption from
disclosure under section 552 of title 5, United
States Code.
(E) Prohibition against retaliation.--The
Bureau and the prudential regulators shall
prescribe rules to provide safeguards from
retaliation against the insured depository
institution, insured credit union, or other
covered person described in subsection (a)
instituting an appeal under this paragraph, as
well as their officers and employees.
(F) Limitation.--The process provided in
this paragraph shall not apply to a
determination by a prudential regulator to
appoint a conservator or receiver for an
insured depository institution or a liquidating
agent for an insured credit union, as the case
may be, or a decision to take action pursuant
to section 38 of the Federal Deposit Insurance
Act (12 U.S.C. 1831o) or section 212 of the
Federal Credit Union Act (112 U.S.C. 1790a), as
applicable.
(G) Effect on other authority.--Nothing in
this section shall modify or limit the
authority of the Bureau to interpret, or take
enforcement action under, any Federal consumer
financial law, or the authority of a prudential
regulator to interpret or take enforcement
action under any other provision of Federal law
for safety and soundness purposes.
SEC. 1026. OTHER BANKS, SAVINGS ASSOCIATIONS, AND CREDIT UNIONS.
(a) Scope of Coverage.--This section shall apply to any
covered person that is--
(1) an insured depository institution with total
assets of $10,000,000,000 or less; or
(2) an insured credit union with total assets of
$10,000,000,000 or less.
(b) Reports.--The Director may require reports from a
person described in subsection (a), as necessary to support the
role of the Bureau in implementing Federal consumer financial
law, to support its examination activities under subsection
(c), and to assess and detect risks to consumers and consumer
financial markets.
(1) Use of existing reports.--The Bureau shall, to
the fullest extent possible, use--
(A) reports pertaining to a person
described in subsection (a) that have been
provided or required to have been provided to a
Federal or State agency; and
(B) information that has been reported
publicly.
(2) Preservation of authority.--Nothing in this
subsection may be construed as limiting the authority
of the Director from requiring from a person described
in subsection (a), as permitted under paragraph (1),
information owned or under the control of such person,
regardless of whether such information is maintained,
stored, or processed by another person.
(3) Reports of tax law noncompliance.--The Bureau
shall provide the Commissioner of Internal Revenue with
any report of examination or related information
identifying possible tax law noncompliance.
(c) Examinations.--
(1) In general.--The Bureau may, at its discretion,
include examiners on a sampling basis of the
examinations performed by the prudential regulator to
assess compliance with the requirements of Federal
consumer financial law of persons described in
subsection (a).
(2) Agency coordination.--The prudential regulator
shall--
(A) provide all reports, records, and
documentation related to the examination
process for any institution included in the
sample referred to in paragraph (1) to the
Bureau on a timely and continual basis;
(B) involve such Bureau examiner in the
entire examination process for such person; and
(C) consider input of the Bureau concerning
the scope of an examination, conduct of the
examination, the contents of the examination
report, the designation of matters requiring
attention, and examination ratings.
(d) Enforcement.--
(1) In general.--Except for requiring reports under
subsection (b), the prudential regulator is authorized
to enforce the requirements of Federal consumer
financial laws and, with respect to a covered person
described in subsection (a), shall have exclusive
authority (relative to the Bureau) to enforce such
laws.
(2) Coordination with prudential regulator.--
(A) Referral.--When the Bureau has reason
to believe that a person described in
subsection (a) has engaged in a material
violation of a Federal consumer financial law,
the Bureau shall notify the prudential
regulator in writing and recommend appropriate
action to respond.
(B) Response.--Upon receiving a
recommendation under subparagraph (A), the
prudential regulator shall provide a written
response to the Bureau not later than 60 days
thereafter.
(e) Service Providers.--A service provider to a substantial
number of persons described in subsection (a) shall be subject
to the authority of the Bureau under section 1025 to the same
extent as if the Bureau were an appropriate Federal bank agency
under section 7(c) of the Bank Service Company Act (12 U.S.C.
1867(c)). When conducting any examination or requiring any
report from a service provider subject to this subsection, the
Bureau shall coordinate with the appropriate prudential
regulator.
SEC. 1027. LIMITATIONS ON AUTHORITIES OF THE BUREAU; PRESERVATION OF
AUTHORITIES.
(a) Exclusion for Merchants, Retailers, and Other Sellers
of Nonfinancial Goods or Services.--
(1) Sale or brokerage of nonfinancial good or
service.--The Bureau may not exercise any rulemaking,
supervisory, enforcement or other authority under this
title with respect to a person who is a merchant,
retailer, or seller of any nonfinancial good or service
and is engaged in the sale or brokerage of such
nonfinancial good or service, except to the extent that
such person is engaged in offering or providing any
consumer financial product or service, or is otherwise
subject to any enumerated consumer law or any law for
which authorities are transferred under subtitle F or
H.
(2) Offering or provision of certain consumer
financial products or services in connection with the
sale or brokerage of nonfinancial good or service.--
(A) In general.--Except as provided in
subparagraph (B), and subject to subparagraph
(C), the Bureau may not exercise any
rulemaking, supervisory, enforcement, or other
authority under this title with respect to a
merchant, retailer, or seller of nonfinancial
goods or services, but only to the extent that
such person--
(i) extends credit directly to a
consumer, in a case in which the good
or service being provided is not itself
a consumer financial product or service
(other than credit described in this
subparagraph), exclusively for the
purpose of enabling that consumer to
purchase such nonfinancial good or
service directly from the merchant,
retailer, or seller;
(ii) directly, or through an
agreement with another person, collects
debt arising from credit extended as
described in clause (i); or
(iii) sells or conveys debt
described in clause (i) that is
delinquent or otherwise in default.
(B) Applicability.--Subparagraph (A) does
not apply to any credit transaction or
collection of debt, other than as described in
subparagraph (C)(i), arising from a transaction
described in subparagraph (A)--
(i) in which the merchant,
retailer, or seller of nonfinancial
goods or services assigns, sells or
otherwise conveys to another person
such debt owed by the consumer (except
for a sale of debt that is delinquent
or otherwise in default, as described
in subparagraph (A)(iii));
(ii) in which the credit extended
significantly exceeds the market value
of the nonfinancial good or service
provided, or the Bureau otherwise finds
that the sale of the nonfinancial good
or service is done as a subterfuge, so
as to evade or circumvent the
provisions of this title; or
(iii) in which the merchant,
retailer, or seller of nonfinancial
goods or services regularly extends
credit and the credit is subject to a
finance charge.
(C) Limitations.--
(i) In general.--Notwithstanding
subparagraph (B), subparagraph (A)
shall apply with respect to a merchant,
retailer, or seller of nonfinancial
goods or services that is not engaged
significantly in offering or providing
consumer financial products or
services.
(ii) Exception.--Subparagraph (A)
and clause (i) of this subparagraph do
not apply to any merchant, retailer, or
seller of nonfinancial goods or
services--
(I) if such merchant,
retailer, or seller of
nonfinancial goods or services
is engaged in a transaction
described in subparagraph
(B)(i) or (B)(ii); or
(II) to the extent that
such merchant, retailer, or
seller is subject to any
enumerated consumer law or any
law for which authorities are
transferred under subtitle F or
H, but the Bureau may exercise
such authority only with
respect to that law.
(D) Rules.--
(i) Authority of other agencies.--
No provision of this title shall be
construed as modifying, limiting, or
superseding the supervisory or
enforcement authority of the Federal
Trade Commission or any other agency
(other than the Bureau) with respect to
credit extended, or the collection of
debt arising from such extension,
directly by a merchant or retailer to a
consumer exclusively for the purpose of
enabling that consumer to purchase
nonfinancial goods or services directly
from the merchant or retailer.
(ii) Small businesses.--A merchant,
retailer, or seller of nonfinancial
goods or services that would otherwise
be subject to the authority of the
Bureau solely by virtue of the
application of subparagraph (B)(iii)
shall be deemed not to be engaged
significantly in offering or providing
consumer financial products or services
under subparagraph (C)(i), if such
person--
(I) only extends credit for
the sale of nonfinancial goods
or services, as described in
subparagraph (A)(i);
(II) retains such credit on
its own accounts (except to
sell or convey such debt that
is delinquent or otherwise in
default); and
(III) meets the relevant
industry size threshold to be a
small business concern, based
on annual receipts, pursuant to
section 3 of the Small Business
Act (15 U.S.C. 632) and the
implementing rules thereunder.
(iii) Initial year.--A merchant,
retailer, or seller of nonfinancial
goods or services shall be deemed to
meet the relevant industry size
threshold described in clause (ii)(III)
during the first year of operations of
that business concern if, during that
year, the receipts of that business
concern reasonably are expected to meet
that size threshold.
(iv) Other standards for small
business.--With respect to a merchant,
retailer, or seller of nonfinancial
goods or services that is a classified
on a basis other than annual receipts
for the purposes of section 3 of the
Small Business Act (15 U.S.C. 632) and
the implementing rules thereunder, such
merchant, retailer, or seller shall be
deemed to meet the relevant industry
size threshold described in clause
(ii)(III) if such merchant, retailer,
or seller meets the relevant industry
size threshold to be a small business
concern based on the number of
employees, or other such applicable
measure, established under that Act.
(E) Exception from state enforcement.--To
the extent that the Bureau may not exercise
authority under this subsection with respect to
a merchant, retailer, or seller of nonfinancial
goods or services, no action by a State
attorney general or State regulator with
respect to a claim made under this title may be
brought under subsection 1042(a), with respect
to an activity described in any of clauses (i)
through (iii) of subparagraph (A) by such
merchant, retailer, or seller of nonfinancial
goods or services.
(b) Exclusion for Real Estate Brokerage Activities.--
(1) Real estate brokerage activities excluded.--
Without limiting subsection (a), and except as
permitted in paragraph (2), the Bureau may not exercise
any rulemaking, supervisory, enforcement, or other
authority under this title with respect to a person
that is licensed or registered as a real estate broker
or real estate agent, in accordance with State law, to
the extent that such person--
(A) acts as a real estate agent or broker
for a buyer, seller, lessor, or lessee of real
property;
(B) brings together parties interested in
the sale, purchase, lease, rental, or exchange
of real property;
(C) negotiates, on behalf of any party, any
portion of a contract relating to the sale,
purchase, lease, rental, or exchange of real
property (other than in connection with the
provision of financing with respect to any such
transaction); or
(D) offers to engage in any activity, or
act in any capacity, described in subparagraph
(A), (B), or (C).
(2) Description of activities.--The Bureau may
exercise rulemaking, supervisory, enforcement, or other
authority under this title with respect to a person
described in paragraph (1) when such person is--
(A) engaged in an activity of offering or
providing any consumer financial product or
service, except that the Bureau may exercise
such authority only with respect to that
activity; or
(B) otherwise subject to any enumerated
consumer law or any law for which authorities
are transferred under subtitle F or H, but the
Bureau may exercise such authority only with
respect to that law.
(c) Exclusion for Manufactured Home Retailers and Modular
Home Retailers.--
(1) In general.--The Director may not exercise any
rulemaking, supervisory, enforcement, or other
authority over a person to the extent that--
(A) such person is not described in
paragraph (2); and
(B) such person--
(i) acts as an agent or broker for
a buyer or seller of a manufactured
home or a modular home;
(ii) facilitates the purchase by a
consumer of a manufactured home or
modular home, by negotiating the
purchase price or terms of the sales
contract (other than providing
financing with respect to such
transaction); or
(iii) offers to engage in any
activity described in clause (i) or
(ii).
(2) Description of activities.--A person is
described in this paragraph to the extent that such
person is engaged in the offering or provision of any
consumer financial product or service or is otherwise
subject to any enumerated consumer law or any law for
which authorities are transferred under subtitle F or
H.
(3) Definitions.--For purposes of this subsection,
the following definitions shall apply:
(A) Manufactured home.--The term
``manufactured home'' has the same meaning as
in section 603 of the National Manufactured
Housing Construction and Safety Standards Act
of 1974 (42 U.S.C. 5402).
(B) Modular home.--The term ``modular
home'' means a house built in a factory in 2 or
more modules that meet the State or local
building codes where the house will be located,
and where such modules are transported to the
building site, installed on foundations, and
completed.
(d) Exclusion for Accountants and Tax Preparers.--
(1) In general.--Except as permitted in paragraph
(2), the Bureau may not exercise any rulemaking,
supervisory, enforcement, or other authority over--
(A) any person that is a certified public
accountant, permitted to practice as a
certified public accounting firm, or certified
or licensed for such purpose by a State, or any
individual who is employed by or holds an
ownership interest with respect to a person
described in this subparagraph, when such
person is performing or offering to perform--
(i) customary and usual accounting
activities, including the provision of
accounting, tax, advisory, or other
services that are subject to the
regulatory authority of a State board
of accountancy or a Federal authority;
or
(ii) other services that are
incidental to such customary and usual
accounting activities, to the extent
that such incidental services are not
offered or provided--
(I) by the person separate
and apart from such customary
and usual accounting
activities; or
(II) to consumers who are
not receiving such customary
and usual accounting
activities; or
(B) any person, other than a person
described in subparagraph (A) that performs
income tax preparation activities for
consumers.
(2) Description of activities.--
(A) In general.--Paragraph (1) shall not
apply to any person described in paragraph
(1)(A) or (1)(B) to the extent that such person
is engaged in any activity which is not a
customary and usual accounting activity
described in paragraph (1)(A) or incidental
thereto but which is the offering or provision
of any consumer financial product or service,
except to the extent that a person described in
paragraph (1)(A) is engaged in an activity
which is a customary and usual accounting
activity described in paragraph (1)(A), or
incidental thereto.
(B) Not a customary and usual accounting
activity.--For purposes of this subsection,
extending or brokering credit is not a
customary and usual accounting activity, or
incidental thereto.
(C) Rule of construction.--For purposes of
subparagraphs (A) and (B), a person described
in paragraph (1)(A) shall not be deemed to be
extending credit, if such person is only
extending credit directly to a consumer,
exclusively for the purpose of enabling such
consumer to purchase services described in
clause (i) or (ii) of paragraph (1)(A) directly
from such person, and such credit is--
(i) not subject to a finance
charge; and
(ii) not payable by written
agreement in more than 4 installments.
(D) Other limitations.--Paragraph (1) does
not apply to any person described in paragraph
(1)(A) or (1)(B) that is otherwise subject to
any enumerated consumer law or any law for
which authorities are transferred under
subtitle F or H.
(e) Exclusion for Practice of Law.--
(1) In general.--Except as provided under
paragraph (2), the Bureau may not exercise any
supervisory or enforcement authority with respect to an
activity engaged in by an attorney as part of the
practice of law under the laws of a State in which the
attorney is licensed to practice law.
(2) Rule of construction.--Paragraph (1) shall not
be construed so as to limit the exercise by the Bureau
of any supervisory, enforcement, or other authority
regarding the offering or provision of a consumer
financial product or service described in any
subparagraph of section 1002(5)--
(A) that is not offered or provided as part
of, or incidental to, the practice of law,
occurring exclusively within the scope of the
attorney-client relationship; or
(B) that is otherwise offered or provided
by the attorney in question with respect to any
consumer who is not receiving legal advice or
services from the attorney in connection with
such financial product or service.
(3) Existing authority.--Paragraph (1) shall not
be construed so as to limit the authority of the Bureau
with respect to any attorney, to the extent that such
attorney is otherwise subject to any of the enumerated
consumer laws or the authorities transferred under
subtitle F or H.
(f) Exclusion for Persons Regulated by a State Insurance
Regulator.--
(1) In general.--No provision of this title shall
be construed as altering, amending, or affecting the
authority of any State insurance regulator to adopt
rules, initiate enforcement proceedings, or take any
other action with respect to a person regulated by a
State insurance regulator. Except as provided in
paragraph (2), the Bureau shall have no authority to
exercise any power to enforce this title with respect
to a person regulated by a State insurance regulator.
(2) Description of activities.--Paragraph (1) does
not apply to any person described in such paragraph to
the extent that such person is engaged in the offering
or provision of any consumer financial product or
service or is otherwise subject to any enumerated
consumer law or any law for which authorities are
transferred under subtitle F or H.
(3) State insurance authority under gramm-leach-
bliley.--Notwithstanding paragraph (2), the Bureau
shall not exercise any authorities that are granted a
State insurance authority under section 505(a)(6) of
the Gramm-Leach-Bliley Act with respect to a person
regulated by a State insurance authority.
(g) Exclusion for Employee Benefit and Compensation Plans
and Certain Other Arrangements Under the Internal Revenue Code
of 1986.--
(1) Preservation of authority of other agencies.--
No provision of this title shall be construed as
altering, amending, or affecting the authority of the
Secretary of the Treasury, the Secretary of Labor, or
the Commissioner of Internal Revenue to adopt
regulations, initiate enforcement proceedings, or take
any actions with respect to any specified plan or
arrangement.
(2) Activities not constituting the offering or
provision of any consumer financial product or
service.--For purposes of this title, a person shall
not be treated as having engaged in the offering or
provision of any consumer financial product or service
solely because such person is--
(A) a specified plan or arrangement;
(B) engaged in the activity of establishing
or maintaining, for the benefit of employees of
such person (or for members of an employee
organization), any specified plan or
arrangement; or
(C) engaged in the activity of establishing
or maintaining a qualified tuition program
under section 529(b)(1) of the Internal Revenue
Code of 1986 offered by a State or other
prepaid tuition program offered by a State.
(3) Limitation on bureau authority.--
(A) In general.--Except as provided under
subparagraphs (B) and (C), the Bureau may not
exercise any rulemaking or enforcement
authority with respect to products or services
that relate to any specified plan or
arrangement.
(B) Bureau action pursuant to agency
request.--
(i) Agency request.--The Secretary
and the Secretary of Labor may jointly
issue a written request to the Bureau
regarding implementation of appropriate
consumer protection standards under
this title with respect to the
provision of services relating to any
specified plan or arrangement.
(ii) Agency response.--In response
to a request by the Bureau, the
Secretary and the Secretary of Labor
shall jointly issue a written response,
not later than 90 days after receipt of
such request, to grant or deny the
request of the Bureau regarding
implementation of appropriate consumer
protection standards under this title
with respect to the provision of
services relating to any specified plan
or arrangement.
(iii) Scope of bureau action.--
Subject to a request or response
pursuant to clause (i) or clause (ii)
by the agencies made under this
subparagraph, the Bureau may exercise
rulemaking authority, and may act to
enforce a rule prescribed pursuant to
such request or response, in accordance
with the provisions of this title. A
request or response made by the
Secretary and the Secretary of Labor
under this subparagraph shall describe
the basis for, and scope of,
appropriate consumer protection
standards to be implemented under this
title with respect to the provision of
services relating to any specified plan
or arrangement.
(C) Description of products or services.--
To the extent that a person engaged in
providing products or services relating to any
specified plan or arrangement is subject to any
enumerated consumer law or any law for which
authorities are transferred under subtitle F or
H, subparagraph (A) shall not apply with
respect to that law.
(4) Specified plan or arrangement.--For purposes of
this subsection, the term ``specified plan or
arrangement'' means any plan, account, or arrangement
described in section 220, 223, 401(a), 403(a), 403(b),
408, 408A, 529, or 530 of the Internal Revenue Code of
1986, or any employee benefit or compensation plan or
arrangement, including a plan that is subject to title
I of the Employee Retirement Income Security Act of
1974, or any prepaid tuition program offered by a
State.
(h) Persons Regulated by a State Securities Commission.--
(1) In general.--No provision of this title shall
be construed as altering, amending, or affecting the
authority of any securities commission (or any agency
or office performing like functions) of any State to
adopt rules, initiate enforcement proceedings, or take
any other action with respect to a person regulated by
any securities commission (or any agency or office
performing like functions) of any State. Except as
permitted in paragraph (2) and subsection (f), the
Bureau shall have no authority to exercise any power to
enforce this title with respect to a person regulated
by any securities commission (or any agency or office
performing like functions) of any State, but only to
the extent that the person acts in such regulated
capacity.
(2) Description of activities.--Paragraph (1) shall
not apply to any person to the extent such person is
engaged in the offering or provision of any consumer
financial product or service, or is otherwise subject
to any enumerated consumer law or any law for which
authorities are transferred under subtitle F or H.
(i) Exclusion for Persons Regulated by the Commission.--
(1) In general.--No provision of this title may be
construed as altering, amending, or affecting the
authority of the Commission to adopt rules, initiate
enforcement proceedings, or take any other action with
respect to a person regulated by the Commission. The
Bureau shall have no authority to exercise any power to
enforce this title with respect to a person regulated
by the Commission.
(2) Consultation and coordination.--Notwithstanding
paragraph (1), the Commission shall consult and
coordinate, where feasible, with the Bureau with
respect to any rule (including any advance notice of
proposed rulemaking) regarding an investment product or
service that is the same type of product as, or that
competes directly with, a consumer financial product or
service that is subject to the jurisdiction of the
Bureau under this title or under any other law. In
carrying out this paragraph, the agencies shall
negotiate an agreement to establish procedures for such
coordination, including procedures for providing
advance notice to the Bureau when the Commission is
initiating a rulemaking.
(j) Exclusion for Persons Regulated by the Commodity
Futures Trading Commission.--
(1) In general.--No provision of this title shall
be construed as altering, amending, or affecting the
authority of the Commodity Futures Trading Commission
to adopt rules, initiate enforcement proceedings, or
take any other action with respect to a person
regulated by the Commodity Futures Trading Commission.
The Bureau shall have no authority to exercise any
power to enforce this title with respect to a person
regulated by the Commodity Futures Trading Commission.
(2) Consultation and coordination.--Notwithstanding
paragraph (1), the Commodity Futures Trading Commission
shall consult and coordinate with the Bureau with
respect to any rule (including any advance notice of
proposed rulemaking) regarding a product or service
that is the same type of product as, or that competes
directly with, a consumer financial product or service
that is subject to the jurisdiction of the Bureau under
this title or under any other law.
(k) Exclusion for Persons Regulated by the Farm Credit
Administration.--
(1) In general.--No provision of this title shall
be construed as altering, amending, or affecting the
authority of the Farm Credit Administration to adopt
rules, initiate enforcement proceedings, or take any
other action with respect to a person regulated by the
Farm Credit Administration. The Bureau shall have no
authority to exercise any power to enforce this title
with respect to a person regulated by the Farm Credit
Administration.
(2) Definition.--For purposes of this subsection,
the term ``person regulated by the Farm Credit
Administration'' means any Farm Credit System
institution that is chartered and subject to the
provisions of the Farm Credit Act of 1971 (12 U.S.C.
2001 et seq.).
(l) Exclusion for Activities Relating to Charitable
Contributions.--
(1) In general.--The Director and the Bureau may
not exercise any rulemaking, supervisory, enforcement,
or other authority, including authority to order
penalties, over any activities related to the
solicitation or making of voluntary contributions to a
tax-exempt organization as recognized by the Internal
Revenue Service, by any agent, volunteer, or
representative of such organizations to the extent the
organization, agent, volunteer, or representative
thereof is soliciting or providing advice, information,
education, or instruction to any donor or potential
donor relating to a contribution to the organization.
(2) Limitation.--The exclusion in paragraph (1)
does not apply to other activities not described in
paragraph (1) that are the offering or provision of any
consumer financial product or service, or are otherwise
subject to any enumerated consumer law or any law for
which authorities are transferred under subtitle F or
H.
(m) Insurance.--The Bureau may not define as a financial
product or service, by regulation or otherwise, engaging in the
business of insurance.
(n) Limited Authority of the Bureau.--Notwithstanding
subsections (a) through (h) and (l), a person subject to or
described in one or more of such provisions--
(1) may be a service provider; and
(2) may be subject to requests from, or
requirements imposed by, the Bureau regarding
information in order to carry out the responsibilities
and functions of the Bureau and in accordance with
section 1022, 1052, or 1053.
(o) No Authority To Impose Usury Limit.--No provision of
this title shall be construed as conferring authority on the
Bureau to establish a usury limit applicable to an extension of
credit offered or made by a covered person to a consumer,
unless explicitly authorized by law.
(p) Attorney General.--No provision of this title,
including section 1024(c)(1), shall affect the authorities of
the Attorney General under otherwise applicable provisions of
law.
(q) Secretary of the Treasury.--No provision of this title
shall affect the authorities of the Secretary, including with
respect to prescribing rules, initiating enforcement
proceedings, or taking other actions with respect to a person
that performs income tax preparation activities for consumers.
(r) Deposit Insurance and Share Insurance.--Nothing in this
title shall affect the authority of the Corporation under the
Federal Deposit Insurance Act or the National Credit Union
Administration Board under the Federal Credit Union Act as to
matters related to deposit insurance and share insurance,
respectively.
(s) Fair Housing Act.--No provision of this title shall be
construed as affecting any authority arising under the Fair
Housing Act.
SEC. 1028. AUTHORITY TO RESTRICT MANDATORY PRE-DISPUTE ARBITRATION.
(a) Study and Report.--The Bureau shall conduct a study of,
and shall provide a report to Congress concerning, the use of
agreements providing for arbitration of any future dispute
between covered persons and consumers in connection with the
offering or providing of consumer financial products or
services.
(b) Further Authority.--The Bureau, by regulation, may
prohibit or impose conditions or limitations on the use of an
agreement between a covered person and a consumer for a
consumer financial product or service providing for arbitration
of any future dispute between the parties, if the Bureau finds
that such a prohibition or imposition of conditions or
limitations is in the public interest and for the protection of
consumers. The findings in such rule shall be consistent with
the study conducted under subsection (a).
(c) Limitation.--The authority described in subsection (b)
may not be construed to prohibit or restrict a consumer from
entering into a voluntary arbitration agreement with a covered
person after a dispute has arisen.
(d) Effective Date.--Notwithstanding any other provision of
law, any regulation prescribed by the Bureau under subsection
(b) shall apply, consistent with the terms of the regulation,
to any agreement between a consumer and a covered person
entered into after the end of the 180-day period beginning on
the effective date of the regulation, as established by the
Bureau.
SEC. 1029. EXCLUSION FOR AUTO DEALERS.
(a) Sale, Servicing, and Leasing of Motor Vehicles
Excluded.--Except as permitted in subsection (b), the Bureau
may not exercise any rulemaking, supervisory, enforcement or
any other authority, including any authority to order
assessments, over a motor vehicle dealer that is predominantly
engaged in the sale and servicing of motor vehicles, the
leasing and servicing of motor vehicles, or both.
(b) Certain Functions Excepted.--Subsection (a) shall not
apply to any person, to the extent that such person--
(1) provides consumers with any services related to
residential or commercial mortgages or self-financing
transactions involving real property;
(2) operates a line of business--
(A) that involves the extension of retail
credit or retail leases involving motor
vehicles; and
(B) in which--
(i) the extension of retail credit
or retail leases are provided directly
to consumers; and
(ii) the contract governing such
extension of retail credit or retail
leases is not routinely assigned to an
unaffiliated third party finance or
leasing source; or
(3) offers or provides a consumer financial product
or service not involving or related to the sale,
financing, leasing, rental, repair, refurbishment,
maintenance, or other servicing of motor vehicles,
motor vehicle parts, or any related or ancillary
product or service.
(c) Preservation of Authorities of Other Agencies.--Except
as provided in subsections (b) and (d), nothing in this title,
including subtitle F, shall be construed as modifying,
limiting, or superseding the operation of any provision of
Federal law, or otherwise affecting the authority of the Board
of Governors, the Federal Trade Commission, or any other
Federal agency, with respect to a person described in
subsection (a).
(d) Federal Trade Commission Authority.--Notwithstanding
section 18 of the Federal Trade Commission Act, the Federal
Trade Commission is authorized to prescribe rules under
sections 5 and 18(a)(1)(B) of the Federal Trade Commission Act,
in accordance with section 553 of title 5, United States Code,
with respect to a person described in subsection (a).
(e) Coordination With Office of Service Member Affairs.--
The Board of Governors and the Federal Trade Commission shall
coordinate with the Office of Service Member Affairs, to ensure
that--
(1) service members and their families are educated
and empowered to make better informed decisions
regarding consumer financial products and services
offered by motor vehicle dealers, with a focus on motor
vehicle dealers in the proximity of military
installations; and
(2) complaints by service members and their
families concerning such motor vehicle dealers are
effectively monitored and responded to, and where
appropriate, enforcement action is pursued by the
authorized agencies.
(f) Definitions.--For purposes of this section, the
following definitions shall apply:
(1) Motor vehicle.--The term ``motor vehicle''
means--
(A) any self-propelled vehicle designed for
transporting persons or property on a street,
highway, or other road;
(B) recreational boats and marine
equipment;
(C) motorcycles;
(D) motor homes, recreational vehicle
trailers, and slide-in campers, as those terms
are defined in sections 571.3 and 575.103 (d)
of title 49, Code of Federal Regulations, or
any successor thereto; and
(E) other vehicles that are titled and sold
through dealers.
(2) Motor vehicle dealer.--The term ``motor vehicle
dealer'' means any person or resident in the United
States, or any territory of the United States, who--
(A) is licensed by a State, a territory of
the United States, or the District of Columbia
to engage in the sale of motor vehicles; and
(B) takes title to, holds an ownership in,
or takes physical custody of motor vehicles.
SEC. 1029A. EFFECTIVE DATE.
This subtitle shall become effective on the designated
transfer date, except that sections 1022, 1024, and 1025(e)
shall become effective on the date of enactment of this Act.
Subtitle C--Specific Bureau Authorities
SEC. 1031. PROHIBITING UNFAIR, DECEPTIVE, OR ABUSIVE ACTS OR PRACTICES.
(a) In General.--The Bureau may take any action authorized
under subtitle E to prevent a covered person or service
provider from committing or engaging in an unfair, deceptive,
or abusive act or practice under Federal law in connection with
any transaction with a consumer for a consumer financial
product or service, or the offering of a consumer financial
product or service.
(b) Rulemaking.--The Bureau may prescribe rules applicable
to a covered person or service provider identifying as
unlawful, unfair, deceptive, or abusive acts or practices in
connection with any transaction with a consumer for a consumer
financial product or service, or the offering of a consumer
financial product or service. Rules under this section may
include requirements for the purpose of preventing such acts or
practices.
(c) Unfairness.--
(1) In general.--The Bureau shall have no authority
under this section to declare an act or practice in
connection with a transaction with a consumer for a
consumer financial product or service, or the offering
of a consumer financial product or service, to be
unlawful on the grounds that such act or practice is
unfair, unless the Bureau has a reasonable basis to
conclude that--
(A) the act or practice causes or is likely
to cause substantial injury to consumers which
is not reasonably avoidable by consumers; and
(B) such substantial injury is not
outweighed by countervailing benefits to
consumers or to competition.
(2) Consideration of public policies.--In
determining whether an act or practice is unfair, the
Bureau may consider established public policies as
evidence to be considered with all other evidence. Such
public policy considerations may not serve as a primary
basis for such determination.
(d) Abusive.--The Bureau shall have no authority under this
section to declare an act or practice abusive in connection
with the provision of a consumer financial product or service,
unless the act or practice--
(1) materially interferes with the ability of a
consumer to understand a term or condition of a
consumer financial product or service; or
(2) takes unreasonable advantage of--
(A) a lack of understanding on the part of
the consumer of the material risks, costs, or
conditions of the product or service;
(B) the inability of the consumer to
protect the interests of the consumer in
selecting or using a consumer financial product
or service; or
(C) the reasonable reliance by the consumer
on a covered person to act in the interests of
the consumer.
(e) Consultation.--In prescribing rules under this section,
the Bureau shall consult with the Federal banking agencies, or
other Federal agencies, as appropriate, concerning the
consistency of the proposed rule with prudential, market, or
systemic objectives administered by such agencies.
(f) Consideration of Seasonal Income.--The rules of the
Bureau under this section shall provide, with respect to an
extension of credit secured by residential real estate or a
dwelling, if documented income of the borrower, including
income from a small business, is a repayment source for an
extension of credit secured by residential real estate or a
dwelling, the creditor may consider the seasonality and
irregularity of such income in the underwriting of and
scheduling of payments for such credit.
SEC. 1032. DISCLOSURES.
(a) In General.--The Bureau may prescribe rules to ensure
that the features of any consumer financial product or service,
both initially and over the term of the product or service, are
fully, accurately, and effectively disclosed to consumers in a
manner that permits consumers to understand the costs,
benefits, and risks associated with the product or service, in
light of the facts and circumstances.
(b) Model Disclosures.--
(1) In general.--Any final rule prescribed by the
Bureau under this section requiring disclosures may
include a model form that may be used at the option of
the covered person for provision of the required
disclosures.
(2) Format.--A model form issued pursuant to
paragraph (1) shall contain a clear and conspicuous
disclosure that, at a minimum--
(A) uses plain language comprehensible to
consumers;
(B) contains a clear format and design,
such as an easily readable type font; and
(C) succinctly explains the information
that must be communicated to the consumer.
(3) Consumer testing.--Any model form issued
pursuant to this subsection shall be validated through
consumer testing.
(c) Basis for Rulemaking.--In prescribing rules under this
section, the Bureau shall consider available evidence about
consumer awareness, understanding of, and responses to
disclosures or communications about the risks, costs, and
benefits of consumer financial products or services.
(d) Safe Harbor.--Any covered person that uses a model form
included with a rule issued under this section shall be deemed
to be in compliance with the disclosure requirements of this
section with respect to such model form.
(e) Trial Disclosure Programs.--
(1) In general.--The Bureau may permit a covered
person to conduct a trial program that is limited in
time and scope, subject to specified standards and
procedures, for the purpose of providing trial
disclosures to consumers that are designed to improve
upon any model form issued pursuant to subsection
(b)(1), or any other model form issued to implement an
enumerated statute, as applicable.
(2) Safe harbor.--The standards and procedures
issued by the Bureau shall be designed to encourage
covered persons to conduct trial disclosure programs.
For the purposes of administering this subsection, the
Bureau may establish a limited period during which a
covered person conducting a trial disclosure program
shall be deemed to be in compliance with, or may be
exempted from, a requirement of a rule or an enumerated
consumer law.
(3) Public disclosure.--The rules of the Bureau
shall provide for public disclosure of trial disclosure
programs, which public disclosure may be limited, to
the extent necessary to encourage covered persons to
conduct effective trials.
(f) Combined Mortgage Loan Disclosure.--Not later than 1
year after the designated transfer date, the Bureau shall
propose for public comment rules and model disclosures that
combine the disclosures required under the Truth in Lending Act
and sections 4 and 5 of the Real Estate Settlement Procedures
Act of 1974, into a single, integrated disclosure for mortgage
loan transactions covered by those laws, unless the Bureau
determines that any proposal issued by the Board of Governors
and the Secretary of Housing and Urban Development carries out
the same purpose.
SEC. 1033. CONSUMER RIGHTS TO ACCESS INFORMATION.
(a) In General.--Subject to rules prescribed by the Bureau,
a covered person shall make available to a consumer, upon
request, information in the control or possession of the
covered person concerning the consumer financial product or
service that the consumer obtained from such covered person,
including information relating to any transaction, series of
transactions, or to the account including costs, charges and
usage data. The information shall be made available in an
electronic form usable by consumers.
(b) Exceptions.--A covered person may not be required by
this section to make available to the consumer--
(1) any confidential commercial information,
including an algorithm used to derive credit scores or
other risk scores or predictors;
(2) any information collected by the covered person
for the purpose of preventing fraud or money
laundering, or detecting, or making any report
regarding other unlawful or potentially unlawful
conduct;
(3) any information required to be kept
confidential by any other provision of law; or
(4) any information that the covered person cannot
retrieve in the ordinary course of its business with
respect to that information.
(c) No Duty To Maintain Records.--Nothing in this section
shall be construed to impose any duty on a covered person to
maintain or keep any information about a consumer.
(d) Standardized Formats for Data.--The Bureau, by rule,
shall prescribe standards applicable to covered persons to
promote the development and use of standardized formats for
information, including through the use of machine readable
files, to be made available to consumers under this section.
(e) Consultation.--The Bureau shall, when prescribing any
rule under this section, consult with the Federal banking
agencies and the Federal Trade Commission to ensure, to the
extent appropriate, that the rules--
(1) impose substantively similar requirements on
covered persons;
(2) take into account conditions under which
covered persons do business both in the United States
and in other countries; and
(3) do not require or promote the use of any
particular technology in order to develop systems for
compliance.
SEC. 1034. RESPONSE TO CONSUMER COMPLAINTS AND INQUIRIES.
(a) Timely Regulator Response to Consumers.--The Bureau
shall establish, in consultation with the appropriate Federal
regulatory agencies, reasonable procedures to provide a timely
response to consumers, in writing where appropriate, to
complaints against, or inquiries concerning, a covered person,
including--
(1) steps that have been taken by the regulator in
response to the complaint or inquiry of the consumer;
(2) any responses received by the regulator from
the covered person; and
(3) any follow-up actions or planned follow-up
actions by the regulator in response to the complaint
or inquiry of the consumer.
(b) Timely Response to Regulator by Covered Person.--A
covered person subject to supervision and primary enforcement
by the Bureau pursuant to section 1025 shall provide a timely
response, in writing where appropriate, to the Bureau, the
prudential regulators, and any other agency having jurisdiction
over such covered person concerning a consumer complaint or
inquiry, including--
(1) steps that have been taken by the covered
person to respond to the complaint or inquiry of the
consumer;
(2) responses received by the covered person from
the consumer; and
(3) follow-up actions or planned follow-up actions
by the covered person to respond to the complaint or
inquiry of the consumer.
(c) Provision of Information to Consumers.--
(1) In general.--A covered person subject to
supervision and primary enforcement by the Bureau
pursuant to section 1025 shall, in a timely manner,
comply with a consumer request for information in the
control or possession of such covered person concerning
the consumer financial product or service that the
consumer obtained from such covered person, including
supporting written documentation, concerning the
account of the consumer.
(2) Exceptions.--A covered person subject to
supervision and primary enforcement by the Bureau
pursuant to section 1025, a prudential regulator, and
any other agency having jurisdiction over a covered
person subject to supervision and primary enforcement
by the Bureau pursuant to section 1025 may not be
required by this section to make available to the
consumer--
(A) any confidential commercial
information, including an algorithm used to
derive credit scores or other risk scores or
predictors;
(B) any information collected by the
covered person for the purpose of preventing
fraud or money laundering, or detecting or
making any report regarding other unlawful or
potentially unlawful conduct;
(C) any information required to be kept
confidential by any other provision of law; or
(D) any nonpublic or confidential
information, including confidential supervisory
information.
(d) Agreements With Other Agencies.--The Bureau shall enter
into a memorandum of understanding with any affected Federal
regulatory agency regarding procedures by which any covered
person, and the prudential regulators, and any other agency
having jurisdiction over a covered person, including the
Secretary of the Department of Housing and Urban Development
and the Secretary of Education, shall comply with this section.
SEC. 1035. PRIVATE EDUCATION LOAN OMBUDSMAN.
(a) Establishment.--The Secretary, in consultation with the
Director, shall designate a Private Education Loan Ombudsman
(in this section referred to as the ``Ombudsman'') within the
Bureau, to provide timely assistance to borrowers of private
education loans.
(b) Public Information.--The Secretary and the Director
shall disseminate information about the availability and
functions of the Ombudsman to borrowers and potential
borrowers, as well as institutions of higher education,
lenders, guaranty agencies, loan servicers, and other
participants in private education student loan programs.
(c) Functions of Ombudsman.--The Ombudsman designated under
this subsection shall--
(1) in accordance with regulations of the Director,
receive, review, and attempt to resolve informally
complaints from borrowers of loans described in
subsection (a), including, as appropriate, attempts to
resolve such complaints in collaboration with the
Department of Education and with institutions of higher
education, lenders, guaranty agencies, loan servicers,
and other participants in private education loan
programs;
(2) not later than 90 days after the designated
transfer date, establish a memorandum of understanding
with the student loan ombudsman established under
section 141(f) of the Higher Education Act of 1965 (20
U.S.C. 1018(f)), to ensure coordination in providing
assistance to and serving borrowers seeking to resolve
complaints related to their private education or
Federal student loans;
(3) compile and analyze data on borrower complaints
regarding private education loans; and
(4) make appropriate recommendations to the
Director, the Secretary, the Secretary of Education,
the Committee on Banking, Housing, and Urban Affairs
and the Committee on Health, Education, Labor, and
Pensions of the Senate and the Committee on Financial
Services and the Committee on Education and Labor of
the House of Representatives.
(d) Annual Reports.--
(1) In general.--The Ombudsman shall prepare an
annual report that describes the activities, and
evaluates the effectiveness of the Ombudsman during the
preceding year.
(2) Submission.--The report required by paragraph
(1) shall be submitted on the same date annually to the
Secretary, the Secretary of Education, the Committee on
Banking, Housing, and Urban Affairs and the Committee
on Health, Education, Labor, and Pensions of the Senate
and the Committee on Financial Services and the
Committee on Education and Labor of the House of
Representatives.
(e) Definitions.--For purposes of this section, the terms
``private education loan'' and ``institution of higher
education'' have the same meanings as in section 140 of the
Truth in Lending Act (15 U.S.C. 1650).
SEC. 1036. PROHIBITED ACTS.
(a) In General.--It shall be unlawful for--
(1) any covered person or service provider--
(A) to offer or provide to a consumer any
financial product or service not in conformity
with Federal consumer financial law, or
otherwise commit any act or omission in
violation of a Federal consumer financial law;
or
(B) to engage in any unfair, deceptive, or
abusive act or practice;
(2) any covered person or service provider to fail
or refuse, as required by Federal consumer financial
law, or any rule or order issued by the Bureau
thereunder--
(A) to permit access to or copying of
records;
(B) to establish or maintain records; or
(C) to make reports or provide information
to the Bureau; or
(3) any person to knowingly or recklessly provide
substantial assistance to a covered person or service
provider in violation of the provisions of section
1031, or any rule or order issued thereunder, and
notwithstanding any provision of this title, the
provider of such substantial assistance shall be deemed
to be in violation of that section to the same extent
as the person to whom such assistance is provided.
(b) Exception.--No person shall be held to have violated
subsection (a)(1) solely by virtue of providing or selling time
or space to a covered person or service provider placing an
advertisement.
SEC. 1037. EFFECTIVE DATE.
This subtitle shall take effect on the designated transfer
date.
Subtitle D--Preservation of State Law
SEC. 1041. RELATION TO STATE LAW.
(a) In General.--
(1) Rule of construction.--This title, other than
sections 1044 through 1048, may not be construed as
annulling, altering, or affecting, or exempting any
person subject to the provisions of this title from
complying with, the statutes, regulations, orders, or
interpretations in effect in any State, except to the
extent that any such provision of law is inconsistent
with the provisions of this title, and then only to the
extent of the inconsistency.
(2) Greater protection under state law.--For
purposes of this subsection, a statute, regulation,
order, or interpretation in effect in any State is not
inconsistent with the provisions of this title if the
protection that such statute, regulation, order, or
interpretation affords to consumers is greater than the
protection provided under this title. A determination
regarding whether a statute, regulation, order, or
interpretation in effect in any State is inconsistent
with the provisions of this title may be made by the
Bureau on its own motion or in response to a
nonfrivolous petition initiated by any interested
person.
(b) Relation to Other Provisions of Enumerated Consumer
Laws That Relate to State Law.--No provision of this title,
except as provided in section 1083, shall be construed as
modifying, limiting, or superseding the operation of any
provision of an enumerated consumer law that relates to the
application of a law in effect in any State with respect to
such Federal law.
(c) Additional Consumer Protection Regulations in Response
to State Action.--
(1) Notice of proposed rule required.--The Bureau
shall issue a notice of proposed rulemaking whenever a
majority of the States has enacted a resolution in
support of the establishment or modification of a
consumer protection regulation by the Bureau.
(2) Bureau considerations required for issuance of
final regulation.--Before prescribing a final
regulation based upon a notice issued pursuant to
paragraph (1), the Bureau shall take into account
whether--
(A) the proposed regulation would afford
greater protection to consumers than any
existing regulation;
(B) the intended benefits of the proposed
regulation for consumers would outweigh any
increased costs or inconveniences for
consumers, and would not discriminate unfairly
against any category or class of consumers; and
(C) a Federal banking agency has advised
that the proposed regulation is likely to
present an unacceptable safety and soundness
risk to insured depository institutions.
(3) Explanation of considerations.--The Bureau--
(A) shall include a discussion of the
considerations required in paragraph (2) in the
Federal Register notice of a final regulation
prescribed pursuant to this subsection; and
(B) whenever the Bureau determines not to
prescribe a final regulation, shall publish an
explanation of such determination in the
Federal Register, and provide a copy of such
explanation to each State that enacted a
resolution in support of the proposed
regulation, the Committee on Banking, Housing,
and Urban Affairs of the Senate, and the
Committee on Financial Services of the House of
Representatives.
(4) Reservation of authority.--No provision of this
subsection shall be construed as limiting or
restricting the authority of the Bureau to enhance
consumer protection standards established pursuant to
this title in response to its own motion or in response
to a request by any other interested person.
(5) Rule of construction.--No provision of this
subsection shall be construed as exempting the Bureau
from complying with subchapter II of chapter 5 of title
5, United States Code.
(6) Definition.--For purposes of this subsection,
the term ``consumer protection regulation'' means a
regulation that the Bureau is authorized to prescribe
under the Federal consumer financial laws.
SEC. 1042. PRESERVATION OF ENFORCEMENT POWERS OF STATES.
(a) In General.--
(1) Action by state.--Except as provided in
paragraph (2), the attorney general (or the equivalent
thereof) of any State may bring a civil action in the
name of such State in any district court of the United
States in that State or in State court that is located
in that State and that has jurisdiction over the
defendant, to enforce provisions of this title or
regulations issued under this title, and to secure
remedies under provisions of this title or remedies
otherwise provided under other law. A State regulator
may bring a civil action or other appropriate
proceeding to enforce the provisions of this title or
regulations issued under this title with respect to any
entity that is State-chartered, incorporated, licensed,
or otherwise authorized to do business under State law
(except as provided in paragraph (2)), and to secure
remedies under provisions of this title or remedies
otherwise provided under other provisions of law with
respect to such an entity.
(2) Action by state against national bank or
federal savings association to enforce rules.--
(A) In general.--Except as permitted under
subparagraph (B), the attorney general (or
equivalent thereof) of any State may not bring
a civil action in the name of such State
against a national bank or Federal savings
association to enforce a provision of this
title.
(B) Enforcement of rules permitted.--The
attorney general (or the equivalent thereof) of
any State may bring a civil action in the name
of such State against a national bank or
Federal savings association in any district
court of the United States in the State or in
State court that is located in that State and
that has jurisdiction over the defendant to
enforce a regulation prescribed by the Bureau
under a provision of this title and to secure
remedies under provisions of this title or
remedies otherwise provided under other law.
(3) Rule of construction.--No provision of this
title shall be construed as modifying, limiting, or
superseding the operation of any provision of an
enumerated consumer law that relates to the authority
of a State attorney general or State regulator to
enforce such Federal law.
(b) Consultation Required.--
(1) Notice.--
(A) In general.--Before initiating any
action in a court or other administrative or
regulatory proceeding against any covered
person as authorized by subsection (a) to
enforce any provision of this title, including
any regulation prescribed by the Bureau under
this title, a State attorney general or State
regulator shall timely provide a copy of the
complete complaint to be filed and written
notice describing such action or proceeding to
the Bureau and the prudential regulator, if
any, or the designee thereof.
(B) Emergency action.--If prior notice is
not practicable, the State attorney general or
State regulator shall provide a copy of the
complete complaint and the notice to the Bureau
and the prudential regulator, if any,
immediately upon instituting the action or
proceeding.
(C) Contents of notice.--The notification
required under this paragraph shall, at a
minimum, describe--
(i) the identity of the parties;
(ii) the alleged facts underlying
the proceeding; and
(iii) whether there may be a need
to coordinate the prosecution of the
proceeding so as not to interfere with
any action, including any rulemaking,
undertaken by the Bureau, a prudential
regulator, or another Federal agency.
(2) Bureau response.--In any action described in
paragraph (1), the Bureau may--
(A) intervene in the action as a party;
(B) upon intervening--
(i) remove the action to the
appropriate United States district
court, if the action was not originally
brought there; and
(ii) be heard on all matters
arising in the action; and
(C) appeal any order or judgment, to the
same extent as any other party in the
proceeding may.
(c) Regulations.--The Bureau shall prescribe regulations to
implement the requirements of this section and, from time to
time, provide guidance in order to further coordinate actions
with the State attorneys general and other regulators.
(d) Preservation of State Authority.--
(1) State claims.--No provision of this section
shall be construed as altering, limiting, or affecting
the authority of a State attorney general or any other
regulatory or enforcement agency or authority to bring
an action or other regulatory proceeding arising solely
under the law in effect in that State.
(2) State securities regulators.--No provision of
this title shall be construed as altering, limiting, or
affecting the authority of a State securities
commission (or any agency or office performing like
functions) under State law to adopt rules, initiate
enforcement proceedings, or take any other action with
respect to a person regulated by such commission or
authority.
(3) State insurance regulators.--No provision of
this title shall be construed as altering, limiting, or
affecting the authority of a State insurance commission
or State insurance regulator under State law to adopt
rules, initiate enforcement proceedings, or take any
other action with respect to a person regulated by such
commission or regulator.
SEC. 1043. PRESERVATION OF EXISTING CONTRACTS.
This title, and regulations, orders, guidance, and
interpretations prescribed, issued, or established by the
Bureau, shall not be construed to alter or affect the
applicability of any regulation, order, guidance, or
interpretation prescribed, issued, and established by the
Comptroller of the Currency or the Director of the Office of
Thrift Supervision regarding the applicability of State law
under Federal banking law to any contract entered into on or
before the date of enactment of this Act, by national banks,
Federal savings associations, or subsidiaries thereof that are
regulated and supervised by the Comptroller of the Currency or
the Director of the Office of Thrift Supervision, respectively.
SEC. 1044. STATE LAW PREEMPTION STANDARDS FOR NATIONAL BANKS AND
SUBSIDIARIES CLARIFIED.
(a) In General.--Chapter one of title LXII of the Revised
Statutes of the United States (12 U.S.C. 21 et seq.) is amended
by inserting after section 5136B the following new section:
``SEC. 5136C. STATE LAW PREEMPTION STANDARDS FOR NATIONAL BANKS AND
SUBSIDIARIES CLARIFIED.
``(a) Definitions.--For purposes of this section, the
following definitions shall apply:
``(1) National bank.--The term `national bank'
includes--
``(A) any bank organized under the laws of
the United States; and
``(B) any Federal branch established in
accordance with the International Banking Act
of 1978.
``(2) State consumer financial laws.--The term
`State consumer financial law' means a State law that
does not directly or indirectly discriminate against
national banks and that directly and specifically
regulates the manner, content, or terms and conditions
of any financial transaction (as may be authorized for
national banks to engage in), or any account related
thereto, with respect to a consumer.
``(3) Other definitions.--The terms `affiliate',
`subsidiary', `includes', and `including' have the same
meanings as in section 3 of the Federal Deposit
Insurance Act.
``(b) Preemption Standard.--
``(1) In general.--State consumer financial laws
are preempted, only if--
``(A) application of a State consumer
financial law would have a discriminatory
effect on national banks, in comparison with
the effect of the law on a bank chartered by
that State;
``(B) in accordance with the legal standard
for preemption in the decision of the Supreme
Court of the United States in Barnett Bank of
Marion County, N. A. v. Nelson, Florida
Insurance Commissioner, et al., 517 U.S. 25
(1996), the State consumer financial law
prevents or significantly interferes with the
exercise by the national bank of its powers;
and any preemption determination under this
subparagraph may be made by a court, or by
regulation or order of the Comptroller of the
Currency on a case-by-case basis, in accordance
with applicable law; or
``(C) the State consumer financial law is
preempted by a provision of Federal law other
than this title.
``(2) Savings clause.--This title and section 24 of
the Federal Reserve Act (12 U.S.C. 371) do not preempt,
annul, or affect the applicability of any State law to
any subsidiary or affiliate of a national bank (other
than a subsidiary or affiliate that is chartered as a
national bank).
``(3) Case-by-case basis.--
``(A) Definition.--As used in this section
the term `case-by-case basis' refers to a
determination pursuant to this section made by
the Comptroller concerning the impact of a
particular State consumer financial law on any
national bank that is subject to that law, or
the law of any other State with substantively
equivalent terms.
``(B) Consultation.--When making a
determination on a case-by-case basis that a
State consumer financial law of another State
has substantively equivalent terms as one that
the Comptroller is preempting, the Comptroller
shall first consult with the Bureau of Consumer
Financial Protection and shall take the views
of the Bureau into account when making the
determination.
``(4) Rule of construction.--This title does not
occupy the field in any area of State law.
``(5) Standards of review.--
``(A) Preemption.--A court reviewing any
determinations made by the Comptroller
regarding preemption of a State law by this
title or section 24 of the Federal Reserve Act
(12 U.S.C. 371) shall assess the validity of
such determinations, depending upon the
thoroughness evident in the consideration of
the agency, the validity of the reasoning of
the agency, the consistency with other valid
determinations made by the agency, and other
factors which the court finds persuasive and
relevant to its decision.
``(B) Savings clause.--Except as provided
in subparagraph (A), nothing in this section
shall affect the deference that a court may
afford to the Comptroller in making
determinations regarding the meaning or
interpretation of title LXII of the Revised
Statutes of the United States or other Federal
laws.
``(6) Comptroller determination not delegable.--Any
regulation, order, or determination made by the
Comptroller of the Currency under paragraph (1)(B)
shall be made by the Comptroller, and shall not be
delegable to another officer or employee of the
Comptroller of the Currency.
``(c) Substantial Evidence.--No regulation or order of the
Comptroller of the Currency prescribed under subsection
(b)(1)(B), shall be interpreted or applied so as to invalidate,
or otherwise declare inapplicable to a national bank, the
provision of the State consumer financial law, unless
substantial evidence, made on the record of the proceeding,
supports the specific finding regarding the preemption of such
provision in accordance with the legal standard of the decision
of the Supreme Court of the United States in Barnett Bank of
Marion County, N.A. v. Nelson, Florida Insurance Commissioner,
et al., 517 U.S. 25 (1996).
``(d) Periodic Review of Preemption Determinations.--
``(1) In general.--The Comptroller of the Currency
shall periodically conduct a review, through notice and
public comment, of each determination that a provision
of Federal law preempts a State consumer financial law.
The agency shall conduct such review within the 5-year
period after prescribing or otherwise issuing such
determination, and at least once during each 5-year
period thereafter. After conducting the review of, and
inspecting the comments made on, the determination, the
agency shall publish a notice in the Federal Register
announcing the decision to continue or rescind the
determination or a proposal to amend the determination.
Any such notice of a proposal to amend a determination
and the subsequent resolution of such proposal shall
comply with the procedures set forth in subsections (a)
and (b) of section 5244 of the Revised Statutes of the
United States (12 U.S.C. 43 (a), (b)).
``(2) Reports to congress.--At the time of issuing
a review conducted under paragraph (1), the Comptroller
of the Currency shall submit a report regarding such
review to the Committee on Financial Services of the
House of Representatives and the Committee on Banking,
Housing, and Urban Affairs of the Senate. The report
submitted to the respective committees shall address
whether the agency intends to continue, rescind, or
propose to amend any determination that a provision of
Federal law preempts a State consumer financial law,
and the reasons therefor.
``(e) Application of State Consumer Financial Law to
Subsidiaries and Affiliates.--Notwithstanding any provision of
this title or section 24 of Federal Reserve Act (12 U.S.C.
371), a State consumer financial law shall apply to a
subsidiary or affiliate of a national bank (other than a
subsidiary or affiliate that is chartered as a national bank)
to the same extent that the State consumer financial law
applies to any person, corporation, or other entity subject to
such State law.
``(f) Preservation of Powers Related to Charging
Interest.--No provision of this title shall be construed as
altering or otherwise affecting the authority conferred by
section 5197 of the Revised Statutes of the United States (12
U.S.C. 85) for the charging of interest by a national bank at
the rate allowed by the laws of the State, territory, or
district where the bank is located, including with respect to
the meaning of `interest' under such provision.
``(g) Transparency of OCC Preemption Determinations.--The
Comptroller of the Currency shall publish and update no less
frequently than quarterly, a list of preemption determinations
by the Comptroller of the Currency then in effect that
identifies the activities and practices covered by each
determination and the requirements and constraints determined
to be preempted.''.
(b) Clerical Amendment.--The table of sections for chapter
one of title LXII of the Revised Statutes of the United States
is amended by inserting after the item relating to section
5136B the following new item:
``Sec. 5136C. State law preemption standards for national banks and
subsidiaries clarified.''.
SEC. 1045. CLARIFICATION OF LAW APPLICABLE TO NONDEPOSITORY INSTITUTION
SUBSIDIARIES.
Section 5136C of the Revised Statutes of the United States
(as added by this subtitle) is amended by adding at the end the
following:
``(h) Clarification of Law Applicable to Nondepository
Institution Subsidiaries and Affiliates of National Banks.--
``(1) Definitions.--For purposes of this
subsection, the terms `depository institution',
`subsidiary', and `affiliate' have the same meanings as
in section 3 of the Federal Deposit Insurance Act.
``(2) Rule of construction.--No provision of this
title or section 24 of the Federal Reserve Act (12
U.S.C. 371) shall be construed as preempting,
annulling, or affecting the applicability of State law
to any subsidiary, affiliate, or agent of a national
bank (other than a subsidiary, affiliate, or agent that
is chartered as a national bank).''.
SEC. 1046. STATE LAW PREEMPTION STANDARDS FOR FEDERAL SAVINGS
ASSOCIATIONS AND SUBSIDIARIES CLARIFIED.
(a) In General.--The Home Owners' Loan Act (12 U.S.C. 1461
et seq.) is amended by inserting after section 5 the following
new section:
``SEC. 6. STATE LAW PREEMPTION STANDARDS FOR FEDERAL SAVINGS
ASSOCIATIONS CLARIFIED.
``(a) In General.--Any determination by a court or by the
Director or any successor officer or agency regarding the
relation of State law to a provision of this Act or any
regulation or order prescribed under this Act shall be made in
accordance with the laws and legal standards applicable to
national banks regarding the preemption of State law.
``(b) Principles of Conflict Preemption Applicable.--
Notwithstanding the authorities granted under sections 4 and 5,
this Act does not occupy the field in any area of State law.''.
(b) Clerical Amendment.--The table of sections for the Home
Owners' Loan Act (12 U.S.C. 1461 et seq.) is amended by
striking the item relating to section 6 and inserting the
following new item:
``Sec. 6. State law preemption standards for Federal savings
associations and subsidiaries clarified.''.
SEC. 1047. VISITORIAL STANDARDS FOR NATIONAL BANKS AND SAVINGS
ASSOCIATIONS.
(a) National Banks.--Section 5136C of the Revised Statutes
of the United States (as added by this subtitle) is amended by
adding at the end the following:
``(i) Visitorial Powers.--
``(1) In general.--In accordance with the decision
of the Supreme Court of the United States in Cuomo v.
Clearing House Assn., L. L. C. (129 S. Ct. 2710
(2009)), no provision of this title which relates to
visitorial powers or otherwise limits or restricts the
visitorial authority to which any national bank is
subject shall be construed as limiting or restricting
the authority of any attorney general (or other chief
law enforcement officer) of any State to bring an
action against a national bank in a court of
appropriate jurisdiction to enforce an applicable law
and to seek relief as authorized by such law.
``(j) Enforcement Actions.--The ability of the Comptroller
of the Currency to bring an enforcement action under this title
or section 5 of the Federal Trade Commission Act does not
preclude any private party from enforcing rights granted under
Federal or State law in the courts.''.
(b) Savings Associations.--Section 6 of the Home Owners'
Loan Act (as added by this title) is amended by adding at the
end the following:
``(c) Visitorial Powers.--The provisions of sections
5136C(i) of the Revised Statutes of the United States shall
apply to Federal savings associations, and any subsidiary
thereof, to the same extent and in the same manner as if such
savings associations, or subsidiaries thereof, were national
banks or subsidiaries of national banks, respectively.''
``(d) Enforcement Actions.--The ability of the Comptroller
of the Currency to bring an enforcement action under this Act
or section 5 of the Federal Trade Commission Act does not
preclude any private party from enforcing rights granted under
Federal or State law in the courts.''.
SEC. 1048. EFFECTIVE DATE.
This subtitle shall become effective on the designated
transfer date.
Subtitle E--Enforcement Powers
SEC. 1051. DEFINITIONS.
For purposes of this subtitle, the following definitions
shall apply:
(1) Bureau investigation.--The term ``Bureau
investigation'' means any inquiry conducted by a Bureau
investigator for the purpose of ascertaining whether
any person is or has been engaged in any conduct that
is a violation, as defined in this section.
(2) Bureau investigator.--The term ``Bureau
investigator'' means any attorney or investigator
employed by the Bureau who is charged with the duty of
enforcing or carrying into effect any Federal consumer
financial law.
(3) Custodian.--The term ``custodian'' means the
custodian or any deputy custodian designated by the
Bureau.
(4) Documentary material.--The term ``documentary
material'' includes the original or any copy of any
book, document, record, report, memorandum, paper,
communication, tabulation, chart, logs, electronic
files, or other data or data compilations stored in any
medium.
(5) Violation.--The term ``violation'' means any
act or omission that, if proved, would constitute a
violation of any provision of Federal consumer
financial law.
SEC. 1052. INVESTIGATIONS AND ADMINISTRATIVE DISCOVERY.
(a) Joint Investigations.--
(1) In general.--The Bureau or, where appropriate,
a Bureau investigator, may engage in joint
investigations and requests for information, as
authorized under this title.
(2) Fair lending.--The authority under paragraph
(1) includes matters relating to fair lending, and
where appropriate, joint investigations with, and
requests for information from, the Secretary of Housing
and Urban Development, the Attorney General of the
United States, or both.
(b) Subpoenas.--
(1) In general.--The Bureau or a Bureau
investigator may issue subpoenas for the attendance and
testimony of witnesses and the production of relevant
papers, books, documents, or other material in
connection with hearings under this title.
(2) Failure to obey.--In the case of contumacy or
refusal to obey a subpoena issued pursuant to this
paragraph and served upon any person, the district
court of the United States for any district in which
such person is found, resides, or transacts business,
upon application by the Bureau or a Bureau investigator
and after notice to such person, may issue an order
requiring such person to appear and give testimony or
to appear and produce documents or other material.
(3) Contempt.--Any failure to obey an order of the
court under this subsection may be punished by the
court as a contempt thereof.
(c) Demands.--
(1) In general.--Whenever the Bureau has reason to
believe that any person may be in possession, custody,
or control of any documentary material or tangible
things, or may have any information, relevant to a
violation, the Bureau may, before the institution of
any proceedings under the Federal consumer financial
law, issue in writing, and cause to be served upon such
person, a civil investigative demand requiring such
person to--
(A) produce such documentary material for
inspection and copying or reproduction in the
form or medium requested by the Bureau;
(B) submit such tangible things;
(C) file written reports or answers to
questions;
(D) give oral testimony concerning
documentary material, tangible things, or other
information; or
(E) furnish any combination of such
material, answers, or testimony.
(2) Requirements.--Each civil investigative demand
shall state the nature of the conduct constituting the
alleged violation which is under investigation and the
provision of law applicable to such violation.
(3) Production of documents.--Each civil
investigative demand for the production of documentary
material shall--
(A) describe each class of documentary
material to be produced under the demand with
such definiteness and certainty as to permit
such material to be fairly identified;
(B) prescribe a return date or dates which
will provide a reasonable period of time within
which the material so demanded may be assembled
and made available for inspection and copying
or reproduction; and
(C) identify the custodian to whom such
material shall be made available.
(4) Production of things.--Each civil investigative
demand for the submission of tangible things shall--
(A) describe each class of tangible things
to be submitted under the demand with such
definiteness and certainty as to permit such
things to be fairly identified;
(B) prescribe a return date or dates which
will provide a reasonable period of time within
which the things so demanded may be assembled
and submitted; and
(C) identify the custodian to whom such
things shall be submitted.
(5) Demand for written reports or answers.--Each
civil investigative demand for written reports or
answers to questions shall--
(A) propound with definiteness and
certainty the reports to be produced or the
questions to be answered;
(B) prescribe a date or dates at which time
written reports or answers to questions shall
be submitted; and
(C) identify the custodian to whom such
reports or answers shall be submitted.
(6) Oral testimony.--Each civil investigative
demand for the giving of oral testimony shall--
(A) prescribe a date, time, and place at
which oral testimony shall be commenced; and
(B) identify a Bureau investigator who
shall conduct the investigation and the
custodian to whom the transcript of such
investigation shall be submitted.
(7) Service.--Any civil investigative demand
issued, and any enforcement petition filed, under this
section may be served--
(A) by any Bureau investigator at any place
within the territorial jurisdiction of any
court of the United States; and
(B) upon any person who is not found within
the territorial jurisdiction of any court of
the United States--
(i) in such manner as the Federal
Rules of Civil Procedure prescribe for
service in a foreign nation; and
(ii) to the extent that the courts
of the United States have authority to
assert jurisdiction over such person,
consistent with due process, the United
States District Court for the District
of Columbia shall have the same
jurisdiction to take any action
respecting compliance with this section
by such person that such district court
would have if such person were
personally within the jurisdiction of
such district court.
(8) Method of service.--Service of any civil
investigative demand or any enforcement petition filed
under this section may be made upon a person, including
any legal entity, by--
(A) delivering a duly executed copy of such
demand or petition to the individual or to any
partner, executive officer, managing agent, or
general agent of such person, or to any agent
of such person authorized by appointment or by
law to receive service of process on behalf of
such person;
(B) delivering a duly executed copy of such
demand or petition to the principal office or
place of business of the person to be served;
or
(C) depositing a duly executed copy in the
United States mails, by registered or certified
mail, return receipt requested, duly addressed
to such person at the principal office or place
of business of such person.
(9) Proof of service.--
(A) In general.--A verified return by the
individual serving any civil investigative
demand or any enforcement petition filed under
this section setting forth the manner of such
service shall be proof of such service.
(B) Return receipts.--In the case of
service by registered or certified mail, such
return shall be accompanied by the return post
office receipt of delivery of such demand or
enforcement petition.
(10) Production of documentary material.--The
production of documentary material in response to a
civil investigative demand shall be made under a sworn
certificate, in such form as the demand designates, by
the person, if a natural person, to whom the demand is
directed or, if not a natural person, by any person
having knowledge of the facts and circumstances
relating to such production, to the effect that all of
the documentary material required by the demand and in
the possession, custody, or control of the person to
whom the demand is directed has been produced and made
available to the custodian.
(11) Submission of tangible things.--The submission
of tangible things in response to a civil investigative
demand shall be made under a sworn certificate, in such
form as the demand designates, by the person to whom
the demand is directed or, if not a natural person, by
any person having knowledge of the facts and
circumstances relating to such production, to the
effect that all of the tangible things required by the
demand and in the possession, custody, or control of
the person to whom the demand is directed have been
submitted to the custodian.
(12) Separate answers.--Each reporting requirement
or question in a civil investigative demand shall be
answered separately and fully in writing under oath,
unless it is objected to, in which event the reasons
for the objection shall be stated in lieu of an answer,
and it shall be submitted under a sworn certificate, in
such form as the demand designates, by the person, if a
natural person, to whom the demand is directed or, if
not a natural person, by any person responsible for
answering each reporting requirement or question, to
the effect that all information required by the demand
and in the possession, custody, control, or knowledge
of the person to whom the demand is directed has been
submitted.
(13) Testimony.--
(A) In general.--
(i) Oath and recordation.--The
examination of any person pursuant to a
demand for oral testimony served under
this subsection shall be taken before
an officer authorized to administer
oaths and affirmations by the laws of
the United States or of the place at
which the examination is held. The
officer before whom oral testimony is
to be taken shall put the witness on
oath or affirmation and shall
personally, or by any individual acting
under the direction of and in the
presence of the officer, record the
testimony of the witness.
(ii) Transcription.--The testimony
shall be taken stenographically and
transcribed.
(iii) Transmission to custodian.--
After the testimony is fully
transcribed, the officer investigator
before whom the testimony is taken
shall promptly transmit a copy of the
transcript of the testimony to the
custodian.
(B) Parties present.--Any Bureau
investigator before whom oral testimony is to
be taken shall exclude from the place where the
testimony is to be taken all other persons,
except the person giving the testimony, the
attorney for that person, the officer before
whom the testimony is to be taken, an
investigator or representative of an agency
with which the Bureau is engaged in a joint
investigation, and any stenographer taking such
testimony.
(C) Location.--The oral testimony of any
person taken pursuant to a civil investigative
demand shall be taken in the judicial district
of the United States in which such person
resides, is found, or transacts business, or in
such other place as may be agreed upon by the
Bureau investigator before whom the oral
testimony of such person is to be taken and
such person.
(D) Attorney representation.--
(i) In general.--Any person
compelled to appear under a civil
investigative demand for oral testimony
pursuant to this section may be
accompanied, represented, and advised
by an attorney.
(ii) Authority.--The attorney may
advise a person described in clause
(i), in confidence, either upon the
request of such person or upon the
initiative of the attorney, with
respect to any question asked of such
person.
(iii) Objections.--A person
described in clause (i), or the
attorney for that person, may object on
the record to any question, in whole or
in part, and such person shall briefly
state for the record the reason for the
objection. An objection may properly be
made, received, and entered upon the
record when it is claimed that such
person is entitled to refuse to answer
the question on grounds of any
constitutional or other legal right or
privilege, including the privilege
against self-incrimination, but such
person shall not otherwise object to or
refuse to answer any question, and such
person or attorney shall not otherwise
interrupt the oral examination.
(iv) Refusal to answer.--If a
person described in clause (i) refuses
to answer any question--
(I) the Bureau may petition
the district court of the
United States pursuant to this
section for an order compelling
such person to answer such
question; and
(II) if the refusal is on
grounds of the privilege
against self-incrimination, the
testimony of such person may be
compelled in accordance with
the provisions of section 6004
of title 18, United States
Code.
(E) Transcripts.--For purposes of this
subsection--
(i) after the testimony of any
witness is fully transcribed, the
Bureau investigator shall afford the
witness (who may be accompanied by an
attorney) a reasonable opportunity to
examine the transcript;
(ii) the transcript shall be read
to or by the witness, unless such
examination and reading are waived by
the witness;
(iii) any changes in form or
substance which the witness desires to
make shall be entered and identified
upon the transcript by the Bureau
investigator, with a statement of the
reasons given by the witness for making
such changes;
(iv) the transcript shall be signed
by the witness, unless the witness in
writing waives the signing, is ill,
cannot be found, or refuses to sign;
and
(v) if the transcript is not signed
by the witness during the 30-day period
following the date on which the witness
is first afforded a reasonable
opportunity to examine the transcript,
the Bureau investigator shall sign the
transcript and state on the record the
fact of the waiver, illness, absence of
the witness, or the refusal to sign,
together with any reasons given for the
failure to sign.
(F) Certification by investigator.--The
Bureau investigator shall certify on the
transcript that the witness was duly sworn by
him or her and that the transcript is a true
record of the testimony given by the witness,
and the Bureau investigator shall promptly
deliver the transcript or send it by registered
or certified mail to the custodian.
(G) Copy of transcript.--The Bureau
investigator shall furnish a copy of the
transcript (upon payment of reasonable charges
for the transcript) to the witness only, except
that the Bureau may for good cause limit such
witness to inspection of the official
transcript of his testimony.
(H) Witness fees.--Any witness appearing
for the taking of oral testimony pursuant to a
civil investigative demand shall be entitled to
the same fees and mileage which are paid to
witnesses in the district courts of the United
States.
(d) Confidential Treatment of Demand Material.--
(1) In general.--Documentary materials and tangible
things received as a result of a civil investigative
demand shall be subject to requirements and procedures
regarding confidentiality, in accordance with rules
established by the Bureau.
(2) Disclosure to congress.--No rule established by
the Bureau regarding the confidentiality of materials
submitted to, or otherwise obtained by, the Bureau
shall be intended to prevent disclosure to either House
of Congress or to an appropriate committee of the
Congress, except that the Bureau is permitted to adopt
rules allowing prior notice to any party that owns or
otherwise provided the material to the Bureau and had
designated such material as confidential.
(e) Petition for Enforcement.--
(1) In general.--Whenever any person fails to
comply with any civil investigative demand duly served
upon him under this section, or whenever satisfactory
copying or reproduction of material requested pursuant
to the demand cannot be accomplished and such person
refuses to surrender such material, the Bureau, through
such officers or attorneys as it may designate, may
file, in the district court of the United States for
any judicial district in which such person resides, is
found, or transacts business, and serve upon such
person, a petition for an order of such court for the
enforcement of this section.
(2) Service of process.--All process of any court
to which application may be made as provided in this
subsection may be served in any judicial district.
(f) Petition for Order Modifying or Setting Aside Demand.--
(1) In general.--Not later than 20 days after the
service of any civil investigative demand upon any
person under subsection (b), or at any time before the
return date specified in the demand, whichever period
is shorter, or within such period exceeding 20 days
after service or in excess of such return date as may
be prescribed in writing, subsequent to service, by any
Bureau investigator named in the demand, such person
may file with the Bureau a petition for an order by the
Bureau modifying or setting aside the demand.
(2) Compliance during pendency.--The time permitted
for compliance with the demand in whole or in part, as
determined proper and ordered by the Bureau, shall not
run during the pendency of a petition under paragraph
(1) at the Bureau, except that such person shall comply
with any portions of the demand not sought to be
modified or set aside.
(3) Specific grounds.--A petition under paragraph
(1) shall specify each ground upon which the petitioner
relies in seeking relief, and may be based upon any
failure of the demand to comply with the provisions of
this section, or upon any constitutional or other legal
right or privilege of such person.
(g) Custodial Control.--At any time during which any
custodian is in custody or control of any documentary material,
tangible things, reports, answers to questions, or transcripts
of oral testimony given by any person in compliance with any
civil investigative demand, such person may file, in the
district court of the United States for the judicial district
within which the office of such custodian is situated, and
serve upon such custodian, a petition for an order of such
court requiring the performance by such custodian of any duty
imposed upon him by this section or rule promulgated by the
Bureau.
(h) Jurisdiction of Court.--
(1) In general.--Whenever any petition is filed in
any district court of the United States under this
section, such court shall have jurisdiction to hear and
determine the matter so presented, and to enter such
order or orders as may be required to carry out the
provisions of this section.
(2) Appeal.--Any final order entered as described
in paragraph (1) shall be subject to appeal pursuant to
section 1291 of title 28, United States Code.
SEC. 1053. HEARINGS AND ADJUDICATION PROCEEDINGS.
(a) In General.--The Bureau is authorized to conduct
hearings and adjudication proceedings with respect to any
person in the manner prescribed by chapter 5 of title 5, United
States Code in order to ensure or enforce compliance with--
(1) the provisions of this title, including any
rules prescribed by the Bureau under this title; and
(2) any other Federal law that the Bureau is
authorized to enforce, including an enumerated consumer
law, and any regulations or order prescribed
thereunder, unless such Federal law specifically limits
the Bureau from conducting a hearing or adjudication
proceeding and only to the extent of such limitation.
(b) Special Rules for Cease-and-desist Proceedings.--
(1) Orders authorized.--
(A) In general.--If, in the opinion of the
Bureau, any covered person or service provider
is engaging or has engaged in an activity that
violates a law, rule, or any condition imposed
in writing on the person by the Bureau, the
Bureau may, subject to sections 1024, 1025, and
1026, issue and serve upon the covered person
or service provider a notice of charges in
respect thereof.
(B) Content of notice.--The notice under
subparagraph (A) shall contain a statement of
the facts constituting the alleged violation or
violations, and shall fix a time and place at
which a hearing will be held to determine
whether an order to cease and desist should
issue against the covered person or service
provider, such hearing to be held not earlier
than 30 days nor later than 60 days after the
date of service of such notice, unless an
earlier or a later date is set by the Bureau,
at the request of any party so served.
(C) Consent.--Unless the party or parties
served under subparagraph (B) appear at the
hearing personally or by a duly authorized
representative, such person shall be deemed to
have consented to the issuance of the cease-
and-desist order.
(D) Procedure.--In the event of consent
under subparagraph (C), or if, upon the record,
made at any such hearing, the Bureau finds that
any violation specified in the notice of
charges has been established, the Bureau may
issue and serve upon the covered person or
service provider an order to cease and desist
from the violation or practice. Such order may,
by provisions which may be mandatory or
otherwise, require the covered person or
service provider to cease and desist from the
subject activity, and to take affirmative
action to correct the conditions resulting from
any such violation.
(2) Effectiveness of order.--A cease-and-desist
order shall become effective at the expiration of 30
days after the date of service of an order under
paragraph (1) upon the covered person or service
provider concerned (except in the case of a cease-and-
desist order issued upon consent, which shall become
effective at the time specified therein), and shall
remain effective and enforceable as provided therein,
except to such extent as the order is stayed, modified,
terminated, or set aside by action of the Bureau or a
reviewing court.
(3) Decision and appeal.--Any hearing provided for
in this subsection shall be held in the Federal
judicial district or in the territory in which the
residence or principal office or place of business of
the person is located unless the person consents to
another place, and shall be conducted in accordance
with the provisions of chapter 5 of title 5 of the
United States Code. After such hearing, and within 90
days after the Bureau has notified the parties that the
case has been submitted to the Bureau for final
decision, the Bureau shall render its decision (which
shall include findings of fact upon which its decision
is predicated) and shall issue and serve upon each
party to the proceeding an order or orders consistent
with the provisions of this section. Judicial review of
any such order shall be exclusively as provided in this
subsection. Unless a petition for review is timely
filed in a court of appeals of the United States, as
provided in paragraph (4), and thereafter until the
record in the proceeding has been filed as provided in
paragraph (4), the Bureau may at any time, upon such
notice and in such manner as the Bureau shall determine
proper, modify, terminate, or set aside any such order.
Upon filing of the record as provided, the Bureau may
modify, terminate, or set aside any such order with
permission of the court.
(4) Appeal to court of appeals.--Any party to any
proceeding under this subsection may obtain a review of
any order served pursuant to this subsection (other
than an order issued with the consent of the person
concerned) by the filing in the court of appeals of the
United States for the circuit in which the principal
office of the covered person is located, or in the
United States Court of Appeals for the District of
Columbia Circuit, within 30 days after the date of
service of such order, a written petition praying that
the order of the Bureau be modified, terminated, or set
aside. A copy of such petition shall be forthwith
transmitted by the clerk of the court to the Bureau,
and thereupon the Bureau shall file in the court the
record in the proceeding, as provided in section 2112
of title 28 of the United States Code. Upon the filing
of such petition, such court shall have jurisdiction,
which upon the filing of the record shall except as
provided in the last sentence of paragraph (3) be
exclusive, to affirm, modify, terminate, or set aside,
in whole or in part, the order of the Bureau. Review of
such proceedings shall be had as provided in chapter 7
of title 5 of the United States Code. The judgment and
decree of the court shall be final, except that the
same shall be subject to review by the Supreme Court of
the United States, upon certiorari, as provided in
section 1254 of title 28 of the United States Code.
(5) No stay.--The commencement of proceedings for
judicial review under paragraph (4) shall not, unless
specifically ordered by the court, operate as a stay of
any order issued by the Bureau.
(c) Special Rules for Temporary Cease-and-desist
Proceedings.--
(1) In general.--Whenever the Bureau determines
that the violation specified in the notice of charges
served upon a person, including a service provider,
pursuant to subsection (b), or the continuation
thereof, is likely to cause the person to be insolvent
or otherwise prejudice the interests of consumers
before the completion of the proceedings conducted
pursuant to subsection (b), the Bureau may issue a
temporary order requiring the person to cease and
desist from any such violation or practice and to take
affirmative action to prevent or remedy such insolvency
or other condition pending completion of such
proceedings. Such order may include any requirement
authorized under this subtitle. Such order shall become
effective upon service upon the person and, unless set
aside, limited, or suspended by a court in proceedings
authorized by paragraph (2), shall remain effective and
enforceable pending the completion of the
administrative proceedings pursuant to such notice and
until such time as the Bureau shall dismiss the charges
specified in such notice, or if a cease-and-desist
order is issued against the person, until the effective
date of such order.
(2) Appeal.--Not later than 10 days after the
covered person or service provider concerned has been
served with a temporary cease-and-desist order, the
person may apply to the United States district court
for the judicial district in which the residence or
principal office or place of business of the person is
located, or the United States District Court for the
District of Columbia, for an injunction setting aside,
limiting, or suspending the enforcement, operation, or
effectiveness of such order pending the completion of
the administrative proceedings pursuant to the notice
of charges served upon the person under subsection (b),
and such court shall have jurisdiction to issue such
injunction.
(3) Incomplete or inaccurate records.--
(A) Temporary order.--If a notice of
charges served under subsection (b) specifies,
on the basis of particular facts and
circumstances, that the books and records of a
covered person or service provider are so
incomplete or inaccurate that the Bureau is
unable to determine the financial condition of
that person or the details or purpose of any
transaction or transactions that may have a
material effect on the financial condition of
that person, the Bureau may issue a temporary
order requiring--
(i) the cessation of any activity
or practice which gave rise, whether in
whole or in part, to the incomplete or
inaccurate state of the books or
records; or
(ii) affirmative action to restore
such books or records to a complete and
accurate state, until the completion of
the proceedings under subsection
(b)(1).
(B) Effective period.--Any temporary order
issued under subparagraph (A)--
(i) shall become effective upon
service; and
(ii) unless set aside, limited, or
suspended by a court in proceedings
under paragraph (2), shall remain in
effect and enforceable until the
earlier of--
(I) the completion of the
proceeding initiated under
subsection (b) in connection
with the notice of charges; or
(II) the date the Bureau
determines, by examination or
otherwise, that the books and
records of the covered person
or service provider are
accurate and reflect the
financial condition thereof.
(d) Special Rules for Enforcement of Orders.--
(1) In general.--The Bureau may in its discretion
apply to the United States district court within the
jurisdiction of which the principal office or place of
business of the person is located, for the enforcement
of any effective and outstanding notice or order issued
under this section, and such court shall have
jurisdiction and power to order and require compliance
herewith.
(2) Exception.--Except as otherwise provided in
this subsection, no court shall have jurisdiction to
affect by injunction or otherwise the issuance or
enforcement of any notice or order or to review,
modify, suspend, terminate, or set aside any such
notice or order.
(e) Rules.--The Bureau shall prescribe rules establishing
such procedures as may be necessary to carry out this section.
SEC. 1054. LITIGATION AUTHORITY.
(a) In General.--If any person violates a Federal consumer
financial law, the Bureau may, subject to sections 1024, 1025,
and 1026, commence a civil action against such person to impose
a civil penalty or to seek all appropriate legal and equitable
relief including a permanent or temporary injunction as
permitted by law.
(b) Representation.--The Bureau may act in its own name and
through its own attorneys in enforcing any provision of this
title, rules thereunder, or any other law or regulation, or in
any action, suit, or proceeding to which the Bureau is a party.
(c) Compromise of Actions.--The Bureau may compromise or
settle any action if such compromise is approved by the court.
(d) Notice to the Attorney General.--
(1) In general.--When commencing a civil action
under Federal consumer financial law, or any rule
thereunder, the Bureau shall notify the Attorney
General and, with respect to a civil action against an
insured depository institution or insured credit union,
the appropriate prudential regulator.
(2) Notice and coordination.--
(A) Notice of other actions.--In addition
to any notice required under paragraph (1), the
Bureau shall notify the Attorney General
concerning any action, suit, or proceeding to
which the Bureau is a party, except an action,
suit, or proceeding that involves the offering
or provision of consumer financial products or
services.
(B) Coordination.--In order to avoid
conflicts and promote consistency regarding
litigation of matters under Federal law, the
Attorney General and the Bureau shall consult
regarding the coordination of investigations
and proceedings, including by negotiating an
agreement for coordination by not later than
180 days after the designated transfer date.
The agreement under this subparagraph shall
include provisions to ensure that parallel
investigations and proceedings involving the
Federal consumer financial laws are conducted
in a manner that avoids conflicts and does not
impede the ability of the Attorney General to
prosecute violations of Federal criminal laws.
(C) Rule of construction.--Nothing in this
paragraph shall be construed to limit the
authority of the Bureau under this title,
including the authority to interpret Federal
consumer financial law.
(e) Appearance Before the Supreme Court.--The Bureau may
represent itself in its own name before the Supreme Court of
the United States, provided that the Bureau makes a written
request to the Attorney General within the 10-day period which
begins on the date of entry of the judgment which would permit
any party to file a petition for writ of certiorari, and the
Attorney General concurs with such request or fails to take
action within 60 days of the request of the Bureau.
(f) Forum.--Any civil action brought under this title may
be brought in a United States district court or in any court of
competent jurisdiction of a state in a district in which the
defendant is located or resides or is doing business, and such
court shall have jurisdiction to enjoin such person and to
require compliance with any Federal consumer financial law.
(g) Time for Bringing Action.--
(1) In general.--Except as otherwise permitted by
law or equity, no action may be brought under this
title more than 3 years after the date of discovery of
the violation to which an action relates.
(2) Limitations under other federal laws.--
(A) In general.--An action arising under
this title does not include claims arising
solely under enumerated consumer laws.
(B) Bureau authority.--In any action
arising solely under an enumerated consumer
law, the Bureau may commence, defend, or
intervene in the action in accordance with the
requirements of that provision of law, as
applicable.
(C) Transferred authority.--In any action
arising solely under laws for which authorities
were transferred under subtitles F and H, the
Bureau may commence, defend, or intervene in
the action in accordance with the requirements
of that provision of law, as applicable.
SEC. 1055. RELIEF AVAILABLE.
(a) Administrative Proceedings or Court Actions.--
(1) Jurisdiction.--The court (or the Bureau, as the
case may be) in an action or adjudication proceeding
brought under Federal consumer financial law, shall
have jurisdiction to grant any appropriate legal or
equitable relief with respect to a violation of Federal
consumer financial law, including a violation of a rule
or order prescribed under a Federal consumer financial
law.
(2) Relief.--Relief under this section may include,
without limitation--
(A) rescission or reformation of contracts;
(B) refund of moneys or return of real
property;
(C) restitution;
(D) disgorgement or compensation for unjust
enrichment;
(E) payment of damages or other monetary
relief;
(F) public notification regarding the
violation, including the costs of notification;
(G) limits on the activities or functions
of the person; and
(H) civil money penalties, as set forth
more fully in subsection (c).
(3) No exemplary or punitive damages.--Nothing in
this subsection shall be construed as authorizing the
imposition of exemplary or punitive damages.
(b) Recovery of Costs.--In any action brought by the
Bureau, a State attorney general, or any State regulator to
enforce any Federal consumer financial law, the Bureau, the
State attorney general, or the State regulator may recover its
costs in connection with prosecuting such action if the Bureau,
the State attorney general, or the State regulator is the
prevailing party in the action.
(c) Civil Money Penalty in Court and Administrative
Actions.--
(1) In general.--Any person that violates, through
any act or omission, any provision of Federal consumer
financial law shall forfeit and pay a civil penalty
pursuant to this subsection.
(2) Penalty amounts.--
(A) First tier.--For any violation of a
law, rule, or final order or condition imposed
in writing by the Bureau, a civil penalty may
not exceed $5,000 for each day during which
such violation or failure to pay continues.
(B) Second tier.--Notwithstanding paragraph
(A), for any person that recklessly engages in
a violation of a Federal consumer financial
law, a civil penalty may not exceed $25,000 for
each day during which such violation continues.
(C) Third tier.--Notwithstanding
subparagraphs (A) and (B), for any person that
knowingly violates a Federal consumer financial
law, a civil penalty may not exceed $1,000,000
for each day during which such violation
continues.
(3) Mitigating factors.--In determining the amount
of any penalty assessed under paragraph (2), the Bureau
or the court shall take into account the
appropriateness of the penalty with respect to--
(A) the size of financial resources and
good faith of the person charged;
(B) the gravity of the violation or failure
to pay;
(C) the severity of the risks to or losses
of the consumer, which may take into account
the number of products or services sold or
provided;
(D) the history of previous violations; and
(E) such other matters as justice may
require.
(4) Authority to modify or remit penalty.--The
Bureau may compromise, modify, or remit any penalty
which may be assessed or had already been assessed
under paragraph (2). The amount of such penalty, when
finally determined, shall be exclusive of any sums owed
by the person to the United States in connection with
the costs of the proceeding, and may be deducted from
any sums owing by the United States to the person
charged.
(5) Notice and hearing.--No civil penalty may be
assessed under this subsection with respect to a
violation of any Federal consumer financial law,
unless--
(A) the Bureau gives notice and an
opportunity for a hearing to the person accused
of the violation; or
(B) the appropriate court has ordered such
assessment and entered judgment in favor of the
Bureau.
SEC. 1056. REFERRALS FOR CRIMINAL PROCEEDINGS.
If the Bureau obtains evidence that any person, domestic or
foreign, has engaged in conduct that may constitute a violation
of Federal criminal law, the Bureau shall transmit such
evidence to the Attorney General of the United States, who may
institute criminal proceedings under appropriate law. Nothing
in this section affects any other authority of the Bureau to
disclose information.
SEC. 1057. EMPLOYEE PROTECTION.
(a) In General.--No covered person or service provider
shall terminate or in any other way discriminate against, or
cause to be terminated or discriminated against, any covered
employee or any authorized representative of covered employees
by reason of the fact that such employee or representative,
whether at the initiative of the employee or in the ordinary
course of the duties of the employee (or any person acting
pursuant to a request of the employee), has--
(1) provided, caused to be provided, or is about to
provide or cause to be provided, information to the
employer, the Bureau, or any other State, local, or
Federal, government authority or law enforcement agency
relating to any violation of, or any act or omission
that the employee reasonably believes to be a violation
of, any provision of this title or any other provision
of law that is subject to the jurisdiction of the
Bureau, or any rule, order, standard, or prohibition
prescribed by the Bureau;
(2) testified or will testify in any proceeding
resulting from the administration or enforcement of any
provision of this title or any other provision of law
that is subject to the jurisdiction of the Bureau, or
any rule, order, standard, or prohibition prescribed by
the Bureau;
(3) filed, instituted, or caused to be filed or
instituted any proceeding under any Federal consumer
financial law; or
(4) objected to, or refused to participate in, any
activity, policy, practice, or assigned task that the
employee (or other such person) reasonably believed to
be in violation of any law, rule, order, standard, or
prohibition, subject to the jurisdiction of, or
enforceable by, the Bureau.
(b) Definition of Covered Employee.--For the purposes of
this section, the term ``covered employee'' means any
individual performing tasks related to the offering or
provision of a consumer financial product or service.
(c) Procedures and Timetables.--
(1) Complaint.--
(A) In general.--A person who believes that
he or she has been discharged or otherwise
discriminated against by any person in
violation of subsection (a) may, not later than
180 days after the date on which such alleged
violation occurs, file (or have any person file
on his or her behalf) a complaint with the
Secretary of Labor alleging such discharge or
discrimination and identifying the person
responsible for such act.
(B) Actions of secretary of labor.--Upon
receipt of such a complaint, the Secretary of
Labor shall notify, in writing, the person
named in the complaint who is alleged to have
committed the violation, of--
(i) the filing of the complaint;
(ii) the allegations contained in
the complaint;
(iii) the substance of evidence
supporting the complaint; and
(iv) opportunities that will be
afforded to such person under paragraph
(2).
(2) Investigation by secretary of labor.--
(A) In general.--Not later than 60 days
after the date of receipt of a complaint filed
under paragraph (1), and after affording the
complainant and the person named in the
complaint who is alleged to have committed the
violation that is the basis for the complaint
an opportunity to submit to the Secretary of
Labor a written response to the complaint and
an opportunity to meet with a representative of
the Secretary of Labor to present statements
from witnesses, the Secretary of Labor shall--
(i) initiate an investigation and
determine whether there is reasonable
cause to believe that the complaint has
merit; and
(ii) notify the complainant and the
person alleged to have committed the
violation of subsection (a), in
writing, of such determination.
(B) Notice of relief available.--If the
Secretary of Labor concludes that there is
reasonable cause to believe that a violation of
subsection (a) has occurred, the Secretary of
Labor shall, together with the notice under
subparagraph (A)(ii), issue a preliminary order
providing the relief prescribed by paragraph
(4)(B).
(C) Request for hearing.--Not later than 30
days after the date of receipt of notification
of a determination of the Secretary of Labor
under this paragraph, either the person alleged
to have committed the violation or the
complainant may file objections to the findings
or preliminary order, or both, and request a
hearing on the record. The filing of such
objections shall not operate to stay any
reinstatement remedy contained in the
preliminary order. Any such hearing shall be
conducted expeditiously, and if a hearing is
not requested in such 30-day period, the
preliminary order shall be deemed a final order
that is not subject to judicial review.
(3) Grounds for determination of complaints.--
(A) In general.--The Secretary of Labor
shall dismiss a complaint filed under this
subsection, and shall not conduct an
investigation otherwise required under
paragraph (2), unless the complainant makes a
prima facie showing that any behavior described
in paragraphs (1) through (4) of subsection (a)
was a contributing factor in the unfavorable
personnel action alleged in the complaint.
(B) Rebuttal evidence.--Notwithstanding a
finding by the Secretary of Labor that the
complainant has made the showing required under
subparagraph (A), no investigation otherwise
required under paragraph (2) shall be
conducted, if the employer demonstrates, by
clear and convincing evidence, that the
employer would have taken the same unfavorable
personnel action in the absence of that
behavior.
(C) Evidentiary standards.--The Secretary
of Labor may determine that a violation of
subsection (a) has occurred only if the
complainant demonstrates that any behavior
described in paragraphs (1) through (4) of
subsection (a) was a contributing factor in the
unfavorable personnel action alleged in the
complaint. Relief may not be ordered under
subparagraph (A) if the employer demonstrates
by clear and convincing evidence that the
employer would have taken the same unfavorable
personnel action in the absence of that
behavior.
(4) Issuance of final orders; review procedures.--
(A) Timing.--Not later than 120 days after
the date of conclusion of any hearing under
paragraph (2), the Secretary of Labor shall
issue a final order providing the relief
prescribed by this paragraph or denying the
complaint. At any time before issuance of a
final order, a proceeding under this subsection
may be terminated on the basis of a settlement
agreement entered into by the Secretary of
Labor, the complainant, and the person alleged
to have committed the violation.
(B) Penalties.--
(i) Order of secretary of labor.--
If, in response to a complaint filed
under paragraph (1), the Secretary of
Labor determines that a violation of
subsection (a) has occurred, the
Secretary of Labor shall order the
person who committed such violation--
(I) to take affirmative
action to abate the violation;
(II) to reinstate the
complainant to his or her
former position, together with
compensation (including back
pay) and restore the terms,
conditions, and privileges
associated with his or her
employment; and
(III) to provide
compensatory damages to the
complainant.
(ii) Penalty.--If an order is
issued under clause (i), the Secretary
of Labor, at the request of the
complainant, shall assess against the
person against whom the order is
issued, a sum equal to the aggregate
amount of all costs and expenses
(including attorney fees and expert
witness fees) reasonably incurred, as
determined by the Secretary of Labor,
by the complainant for, or in
connection with, the bringing of the
complaint upon which the order was
issued.
(C) Penalty for frivolous claims.--If the
Secretary of Labor finds that a complaint under
paragraph (1) is frivolous or has been brought
in bad faith, the Secretary of Labor may award
to the prevailing employer a reasonable
attorney fee, not exceeding $1,000, to be paid
by the complainant.
(D) De novo review.--
(i) Failure of the secretary to
act.--If the Secretary of Labor has not
issued a final order within 210 days
after the date of filing of a complaint
under this subsection, or within 90
days after the date of receipt of a
written determination, the complainant
may bring an action at law or equity
for de novo review in the appropriate
district court of the United States
having jurisdiction, which shall have
jurisdiction over such an action
without regard to the amount in
controversy, and which action shall, at
the request of either party to such
action, be tried by the court with a
jury.
(ii) Procedures.--A proceeding
under clause (i) shall be governed by
the same legal burdens of proof
specified in paragraph (3). The court
shall have jurisdiction to grant all
relief necessary to make the employee
whole, including injunctive relief and
compensatory damages, including--
(I) reinstatement with the
same seniority status that the
employee would have had, but
for the discharge or
discrimination;
(II) the amount of back
pay, with interest; and
(III) compensation for any
special damages sustained as a
result of the discharge or
discrimination, including
litigation costs, expert
witness fees, and reasonable
attorney fees.
(E) Other appeals.--Unless the complainant
brings an action under subparagraph (D), any
person adversely affected or aggrieved by a
final order issued under subparagraph (A) may
file a petition for review of the order in the
United States Court of Appeals for the circuit
in which the violation with respect to which
the order was issued, allegedly occurred or the
circuit in which the complainant resided on the
date of such violation, not later than 60 days
after the date of the issuance of the final
order of the Secretary of Labor under
subparagraph (A). Review shall conform to
chapter 7 of title 5, United States Code. The
commencement of proceedings under this
subparagraph shall not, unless ordered by the
court, operate as a stay of the order. An order
of the Secretary of Labor with respect to which
review could have been obtained under this
subparagraph shall not be subject to judicial
review in any criminal or other civil
proceeding.
(5) Failure to comply with order.--
(A) Actions by the secretary.--If any
person has failed to comply with a final order
issued under paragraph (4), the Secretary of
Labor may file a civil action in the United
States district court for the district in which
the violation was found to have occurred, or in
the United States district court for the
District of Columbia, to enforce such order. In
actions brought under this paragraph, the
district courts shall have jurisdiction to
grant all appropriate relief including
injunctive relief and compensatory damages.
(B) Civil actions to compel compliance.--A
person on whose behalf an order was issued
under paragraph (4) may commence a civil action
against the person to whom such order was
issued to require compliance with such order.
The appropriate United States district court
shall have jurisdiction, without regard to the
amount in controversy or the citizenship of the
parties, to enforce such order.
(C) Award of costs authorized.--The court,
in issuing any final order under this
paragraph, may award costs of litigation
(including reasonable attorney and expert
witness fees) to any party, whenever the court
determines such award is appropriate.
(D) Mandamus proceedings.--Any
nondiscretionary duty imposed by this section
shall be enforceable in a mandamus proceeding
brought under section 1361 of title 28, United
States Code.
(d) Unenforceability of Certain Agreements.--
(1) No waiver of rights and remedies.--Except as
provided under paragraph (3), and notwithstanding any
other provision of law, the rights and remedies
provided for in this section may not be waived by any
agreement, policy, form, or condition of employment,
including by any predispute arbitration agreement.
(2) No predispute arbitration agreements.--Except
as provided under paragraph (3), and notwithstanding
any other provision of law, no predispute arbitration
agreement shall be valid or enforceable to the extent
that it requires arbitration of a dispute arising under
this section.
(3) Exception.--Notwithstanding paragraphs (1) and
(2), an arbitration provision in a collective
bargaining agreement shall be enforceable as to
disputes arising under subsection (a)(4), unless the
Bureau determines, by rule, that such provision is
inconsistent with the purposes of this title.
SEC. 1058. EFFECTIVE DATE.
This subtitle shall become effective on the designated
transfer date.
Subtitle F--Transfer of Functions and Personnel; Transitional
Provisions
SEC. 1061. TRANSFER OF CONSUMER FINANCIAL PROTECTION FUNCTIONS.
(a) Defined Terms.--For purposes of this subtitle--
(1) the term ``consumer financial protection
functions'' means--
(A) all authority to prescribe rules or
issue orders or guidelines pursuant to any
Federal consumer financial law, including
performing appropriate functions to promulgate
and review such rules, orders, and guidelines;
and
(B) the examination authority described in
subsection (c)(1), with respect to a person
described in subsection 1025(a); and
(2) the terms ``transferor agency'' and
``transferor agencies'' mean, respectively--
(A) the Board of Governors (and any Federal
reserve bank, as the context requires), the
Federal Deposit Insurance Corporation, the
Federal Trade Commission, the National Credit
Union Administration, the Office of the
Comptroller of the Currency, the Office of
Thrift Supervision, and the Department of
Housing and Urban Development, and the heads of
those agencies; and
(B) the agencies listed in subparagraph
(A), collectively.
(b) In General.--Except as provided in subsection (c),
consumer financial protection functions are transferred as
follows:
(1) Board of governors.--
(A) Transfer of functions.--All consumer
financial protection functions of the Board of
Governors are transferred to the Bureau.
(B) Board of governors authority.--The
Bureau shall have all powers and duties that
were vested in the Board of Governors, relating
to consumer financial protection functions, on
the day before the designated transfer date.
(2) Comptroller of the currency.--
(A) Transfer of functions.--All consumer
financial protection functions of the
Comptroller of the Currency are transferred to
the Bureau.
(B) Comptroller authority.--The Bureau
shall have all powers and duties that were
vested in the Comptroller of the Currency,
relating to consumer financial protection
functions, on the day before the designated
transfer date.
(3) Director of the office of thrift supervision.--
(A) Transfer of functions.--All consumer
financial protection functions of the Director
of the Office of Thrift Supervision are
transferred to the Bureau.
(B) Director authority.--The Bureau shall
have all powers and duties that were vested in
the Director of the Office of Thrift
Supervision, relating to consumer financial
protection functions, on the day before the
designated transfer date.
(4) Federal deposit insurance corporation.--
(A) Transfer of functions.--All consumer
financial protection functions of the Federal
Deposit Insurance Corporation are transferred
to the Bureau.
(B) Corporation authority.--The Bureau
shall have all powers and duties that were
vested in the Federal Deposit Insurance
Corporation, relating to consumer financial
protection functions, on the day before the
designated transfer date.
(5) Federal trade commission.--
(A) Transfer of functions.--The authority
of the Federal Trade Commission under an
enumerated consumer law to prescribe rules,
issue guidelines, or conduct a study or issue a
report mandated under such law shall be
transferred to the Bureau on the designated
transfer date. Nothing in this title shall be
construed to require a mandatory transfer of
any employee of the Federal Trade Commission.
(B) Bureau authority.--
(i) In general.--The Bureau shall
have all powers and duties under the
enumerated consumer laws to prescribe
rules, issue guidelines, or to conduct
studies or issue reports mandated by
such laws, that were vested in the
Federal Trade Commission on the day
before the designated transfer date.
(ii) Federal trade commission
act.--Subject to subtitle B, the Bureau
may enforce a rule prescribed under the
Federal Trade Commission Act by the
Federal Trade Commission with respect
to an unfair or deceptive act or
practice to the extent that such rule
applies to a covered person or service
provider with respect to the offering
or provision of a consumer financial
product or service as if it were a rule
prescribed under section 1031 of this
title.
(C) Authority of the federal trade
commission.--
(i) In general.--No provision of
this title shall be construed as
modifying, limiting, or otherwise
affecting the authority of the Federal
Trade Commission (including its
authority with respect to affiliates
described in section 1025(a)(1)) under
the Federal Trade Commission Act or any
other law, other than the authority
under an enumerated consumer law to
prescribe rules, issue official
guidelines, or conduct a study or issue
a report mandated under such law.
(ii) Commission authority relating
to rules prescribed by the bureau.--
Subject to subtitle B, the Federal
Trade Commission shall have authority
to enforce under the Federal Trade
Commission Act (15 U.S.C. 41 et seq.) a
rule prescribed by the Bureau under
this title with respect to a covered
person subject to the jurisdiction of
the Federal Trade Commission under that
Act, and a violation of such a rule by
such a person shall be treated as a
violation of a rule issued under
section 18 of that Act (15 U.S.C. 57a)
with respect to unfair or deceptive
acts or practices.
(D) Coordination.--To avoid duplication of
or conflict between rules prescribed by the
Bureau under section 1031 of this title and the
Federal Trade Commission under section
18(a)(1)(B) of the Federal Trade Commission Act
that apply to a covered person or service
provider with respect to the offering or
provision of consumer financial products or
services, the agencies shall negotiate an
agreement with respect to rulemaking by each
agency, including consultation with the other
agency prior to proposing a rule and during the
comment period.
(E) Deference.--No provision of this title
shall be construed as altering, limiting,
expanding, or otherwise affecting the deference
that a court affords to the--
(i) Federal Trade Commission in
making determinations regarding the
meaning or interpretation of any
provision of the Federal Trade
Commission Act, or of any other Federal
law for which the Commission has
authority to prescribe rules; or
(ii) Bureau in making
determinations regarding the meaning or
interpretation of any provision of a
Federal consumer financial law (other
than any law described in clause (i)).
(6) National credit union administration.--
(A) Transfer of functions.--All consumer
financial protection functions of the National
Credit Union Administration are transferred to
the Bureau.
(B) National credit union administration
authority.--The Bureau shall have all powers
and duties that were vested in the National
Credit Union Administration, relating to
consumer financial protection functions, on the
day before the designated transfer date.
(7) Department of housing and urban development.--
(A) Transfer of functions.--All consumer
protection functions of the Secretary of the
Department of Housing and Urban Development
relating to the Real Estate Settlement
Procedures Act of 1974 (12 U.S.C. 2601 et
seq.), the Secure and Fair Enforcement for
Mortgage Licensing Act of 2008 (12 U.S.C. 5102
et seq.), and the Interstate Land Sales Full
Disclosure Act (15 U.S.C. 1701 et seq.) are
transferred to the Bureau.
(B) Authority of the department of housing
and urban development.--The Bureau shall have
all powers and duties that were vested in the
Secretary of the Department of Housing and
Urban Development relating to the Real Estate
Settlement Procedures Act of 1974 (12 U.S.C.
2601 et seq.), the Secure and Fair Enforcement
for Mortgage Licensing Act of 2008 (12 U.S.C.
5101 et seq.), and the Interstate Land Sales
Full Disclosure Act (15 U.S.C. 1701 et seq.),
on the day before the designated transfer date.
(c) Authorities of the Prudential Regulators.--
(1) Examination.--A transferor agency that is a
prudential regulator shall have--
(A) authority to require reports from and
conduct examinations for compliance with
Federal consumer financial laws with respect to
a person described in section 1025(a), that is
incidental to the backup and enforcement
procedures provided to the regulator under
section 1025(c); and
(B) exclusive authority (relative to the
Bureau) to require reports from and conduct
examinations for compliance with Federal
consumer financial laws with respect to a
person described in section 1026(a), except as
provided to the Bureau under subsections (b)
and (c) of section 1026.
(2) Enforcement.--
(A) Limitation.--The authority of a
transferor agency that is a prudential
regulator to enforce compliance with Federal
consumer financial laws with respect to a
person described in section 1025(a), shall be
limited to the backup and enforcement
procedures in described in section 1025(c).
(B) Exclusive authority.--A transferor
agency that is a prudential regulator shall
have exclusive authority (relative to the
Bureau) to enforce compliance with Federal
consumer financial laws with respect to a
person described in section 1026(a), except as
provided to the Bureau under subsections (b)
and (c) of section 1026.
(C) Statutory enforcement.--For purposes of
carrying out the authorities under, and subject
to the limitations of, subtitle B, each
prudential regulator may enforce compliance
with the requirements imposed under this title,
and any rule or order prescribed by the Bureau
under this title, under--
(i) the Federal Credit Union Act
(12 U.S.C. 1751 et seq.), by the
National Credit Union Administration
Board with respect to any covered
person or service provider that is an
insured credit union, or service
provider thereto, or any affiliate of
an insured credit union, who is subject
to the jurisdiction of the Board under
that Act; and
(ii) section 8 of the Federal
Deposit Insurance Act (12 U.S.C. 1818),
by the appropriate Federal banking
agency, as defined in section 3(q) of
the Federal Deposit Insurance Act (12
U.S.C. 1813(q)), with respect to a
covered person or service provider that
is a person described in section 3(q)
of that Act and who is subject to the
jurisdiction of that agency, as set
forth in sections 3(q) and 8 of the
Federal Deposit Insurance Act; or
(iii) the Bank Service Company Act
(12 U.S.C. 1861 et seq.).
(d) Effective Date.--Subsections (b) and (c) shall become
effective on the designated transfer date.
SEC. 1062. DESIGNATED TRANSFER DATE.
(a) In General.--Not later than 60 days after the date of
enactment of this Act, the Secretary shall--
(1) in consultation with the Chairman of the Board
of Governors, the Chairperson of the Corporation, the
Chairman of the Federal Trade Commission, the Chairman
of the National Credit Union Administration Board, the
Comptroller of the Currency, the Director of the Office
of Thrift Supervision, the Secretary of the Department
of Housing and Urban Development, and the Director of
the Office of Management and Budget, designate a single
calendar date for the transfer of functions to the
Bureau under section 1061; and
(2) publish notice of that designated date in the
Federal Register.
(b) Changing Designation.--The Secretary--
(1) may, in consultation with the Chairman of the
Board of Governors, the Chairperson of the Federal
Deposit Insurance Corporation, the Chairman of the
Federal Trade Commission, the Chairman of the National
Credit Union Administration Board, the Comptroller of
the Currency, the Director of the Office of Thrift
Supervision, the Secretary of the Department of Housing
and Urban Development, and the Director of the Office
of Management and Budget, change the date designated
under subsection (a); and
(2) shall publish notice of any changed designated
date in the Federal Register.
(c) Permissible Dates.--
(1) In general.--Except as provided in paragraph
(2), any date designated under this section shall be
not earlier than 180 days, nor later than 12 months,
after the date of enactment of this Act.
(2) Extension of time.--The Secretary may designate
a date that is later than 12 months after the date of
enactment of this Act if the Secretary transmits to
appropriate committees of Congress--
(A) a written determination that orderly
implementation of this title is not feasible
before the date that is 12 months after the
date of enactment of this Act;
(B) an explanation of why an extension is
necessary for the orderly implementation of
this title; and
(C) a description of the steps that will be
taken to effect an orderly and timely
implementation of this title within the
extended time period.
(3) Extension limited.--In no case may any date
designated under this section be later than 18 months
after the date of enactment of this Act.
SEC. 1063. SAVINGS PROVISIONS.
(a) Board of Governors.--
(1) Existing rights, duties, and obligations not
affected.--Section 1061(b)(1) does not affect the
validity of any right, duty, or obligation of the
United States, the Board of Governors (or any Federal
reserve bank), or any other person that--
(A) arises under any provision of law
relating to any consumer financial protection
function of the Board of Governors transferred
to the Bureau by this title; and
(B) existed on the day before the
designated transfer date.
(2) Continuation of suits.--No provision of this
Act shall abate any proceeding commenced by or against
the Board of Governors (or any Federal reserve bank)
before the designated transfer date with respect to any
consumer financial protection function of the Board of
Governors (or any Federal reserve bank) transferred to
the Bureau by this title, except that the Bureau,
subject to sections 1024, 1025, and 1026, shall be
substituted for the Board of Governors (or Federal
reserve bank) as a party to any such proceeding as of
the designated transfer date.
(b) Federal Deposit Insurance Corporation.--
(1) Existing rights, duties, and obligations not
affected.--Section 1061(b)(4) does not affect the
validity of any right, duty, or obligation of the
United States, the Federal Deposit Insurance
Corporation, the Board of Directors of that
Corporation, or any other person, that--
(A) arises under any provision of law
relating to any consumer financial protection
function of the Federal Deposit Insurance
Corporation transferred to the Bureau by this
title; and
(B) existed on the day before the
designated transfer date.
(2) Continuation of suits.--No provision of this
Act shall abate any proceeding commenced by or against
the Federal Deposit Insurance Corporation (or the Board
of Directors of that Corporation) before the designated
transfer date with respect to any consumer financial
protection function of the Federal Deposit Insurance
Corporation transferred to the Bureau by this title,
except that the Bureau, subject to sections 1024, 1025,
and 1026, shall be substituted for the Federal Deposit
Insurance Corporation (or Board of Directors) as a
party to any such proceeding as of the designated
transfer date.
(c) Federal Trade Commission.--Section 1061(b)(5) does not
affect the validity of any right, duty, or obligation of the
United States, the Federal Trade Commission, or any other
person, that--
(1) arises under any provision of law relating to
any consumer financial protection function of the
Federal Trade Commission transferred to the Bureau by
this title; and
(2) existed on the day before the designated
transfer date.
(d) National Credit Union Administration.--
(1) Existing rights, duties, and obligations not
affected.--Section 1061(b)(6) does not affect the
validity of any right, duty, or obligation of the
United States, the National Credit Union
Administration, the National Credit Union
Administration Board, or any other person, that--
(A) arises under any provision of law
relating to any consumer financial protection
function of the National Credit Union
Administration transferred to the Bureau by
this title; and
(B) existed on the day before the
designated transfer date.
(2) Continuation of suits.--No provision of this
Act shall abate any proceeding commenced by or against
the National Credit Union Administration (or the
National Credit Union Administration Board) before the
designated transfer date with respect to any consumer
financial protection function of the National Credit
Union Administration transferred to the Bureau by this
title, except that the Bureau, subject to sections
1024, 1025, and 1026, shall be substituted for the
National Credit Union Administration (or National
Credit Union Administration Board) as a party to any
such proceeding as of the designated transfer date.
(e) Office of the Comptroller of the Currency.--
(1) Existing rights, duties, and obligations not
affected.--Section 1061(b)(2) does not affect the
validity of any right, duty, or obligation of the
United States, the Comptroller of the Currency, the
Office of the Comptroller of the Currency, or any other
person, that--
(A) arises under any provision of law
relating to any consumer financial protection
function of the Comptroller of the Currency
transferred to the Bureau by this title; and
(B) existed on the day before the
designated transfer date.
(2) Continuation of suits.--No provision of this
Act shall abate any proceeding commenced by or against
the Comptroller of the Currency (or the Office of the
Comptroller of the Currency) with respect to any
consumer financial protection function of the
Comptroller of the Currency transferred to the Bureau
by this title before the designated transfer date,
except that the Bureau, subject to sections 1024, 1025,
and 1026, shall be substituted for the Comptroller of
the Currency (or the Office of the Comptroller of the
Currency) as a party to any such proceeding as of the
designated transfer date.
(f) Office of Thrift Supervision.--
(1) Existing rights, duties, and obligations not
affected.--Section 1061(b)(3) does 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--
(A) arises under any provision of law
relating to any consumer financial protection
function of the Director of the Office of
Thrift Supervision transferred to the Bureau by
this title; and
(B) that existed on the day before the
designated transfer date.
(2) Continuation of suits.--No provision of this
Act shall abate any proceeding commenced by or against
the Director of the Office of Thrift Supervision (or
the Office of Thrift Supervision) with respect to any
consumer financial protection function of the Director
of the Office of Thrift Supervision transferred to the
Bureau by this title before the designated transfer
date, except that the Bureau, subject to sections 1024,
1025, and 1026, shall be substituted for the Director
(or the Office of Thrift Supervision) as a party to any
such proceeding as of the designated transfer date.
(g) Department of Housing and Urban Development.--
(1) Existing rights, duties, and obligations not
affected.--Section 1061(b)(7) shall not affect the
validity of any right, duty, or obligation of the
United States, the Secretary of the Department of
Housing and Urban Development (or the Department of
Housing and Urban Development), or any other person,
that--
(A) arises under any provision of law
relating to any function of the Secretary of
the Department of Housing and Urban Development
with respect to the Real Estate Settlement
Procedures Act of 1974 (12 U.S.C. 2601 et
seq.), the Secure and Fair Enforcement for
Mortgage Licensing Act of 2008 (12 U.S.C. 5102
et seq.), or the Interstate Land Sales Full
Disclosure Act (15 U.S.C. 1701 et seq.)
transferred to the Bureau by this title; and
(B) existed on the day before the
designated transfer date.
(2) Continuation of suits.--This title shall not
abate any proceeding commenced by or against the
Secretary of the Department of Housing and Urban
Development (or the Department of Housing and Urban
Development) with respect to any consumer financial
protection function of the Secretary of the Department
of Housing and Urban Development transferred to the
Bureau by this title before the designated transfer
date, except that the Bureau, subject to sections 1024,
1025, and 1026, shall be substituted for the Secretary
of the Department of Housing and Urban Development (or
the Department of Housing and Urban Development) as a
party to any such proceeding as of the designated
transfer date.
(h) Continuation of Existing Orders, Rulings,
Determinations, Agreements, and Resolutions.--
(1) In general.--Except as provided in paragraph
(2) and under subsection (i), all orders, resolutions,
determinations, agreements, and rulings that have been
issued, made, prescribed, or allowed to become
effective by any transferor agency or by a court of
competent jurisdiction, in the performance of consumer
financial protection functions that are transferred by
this title and that are in effect on the day before the
designated transfer date, shall continue in effect, and
shall continue to be enforceable by the appropriate
transferor agency, according to the terms of those
orders, resolutions, determinations, agreements, and
rulings, and shall not be enforceable by or against the
Bureau.
(2) Exception for orders applicable to persons
described in section 1025(a).--All orders, resolutions,
determinations, agreements, and rulings that have been
issued, made, prescribed, or allowed to become
effective by any transferor agency or by a court of
competent jurisdiction, in the performance of consumer
financial protection functions that are transferred by
this title and that are in effect on the day before the
designated transfer date with respect to any person
described in section 1025(a), shall continue in effect,
according to the terms of those orders, resolutions,
determinations, agreements, and rulings, and shall be
enforceable by or against the Bureau or transferor
agency.
(i) Identification of Rules and Orders Continued.--Not
later than the designated transfer date, the Bureau--
(1) shall, after consultation with the head of each
transferor agency, identify the rules and orders that
will be enforced by the Bureau; and
(2) shall publish a list of such rules and orders
in the Federal Register.
(j) Status of Rules Proposed or Not Yet Effective.--
(1) Proposed rules.--Any proposed rule of a
transferor agency which that agency, in performing
consumer financial protection functions transferred by
this title, has proposed before the designated transfer
date, but has not been published as a final rule before
that date, shall be deemed to be a proposed rule of the
Bureau.
(2) Rules not yet effective.--Any interim or final
rule of a transferor agency which that agency, in
performing consumer financial protection functions
transferred by this title, has published before the
designated transfer date, but which has not become
effective before that date, shall become effective as a
rule of the Bureau according to its terms.
SEC. 1064. TRANSFER OF CERTAIN PERSONNEL.
(a) In General.--
(1) Certain federal reserve system employees
transferred.--
(A) Identifying employees for transfer.--
The Bureau and the Board of Governors shall--
(i) jointly determine the number of
employees of the Board of Governors
necessary to perform or support the
consumer financial protection functions
of the Board of Governors that are
transferred to the Bureau by this
title; and
(ii) consistent with the number
determined under clause (i), jointly
identify employees of the Board of
Governors for transfer to the Bureau,
in a manner that the Bureau and the
Board of Governors, in their sole
discretion, determine equitable.
(B) Identified employees transferred.--All
employees of the Board of Governors identified
under subparagraph (A)(ii) shall be transferred
to the Bureau for employment.
(C) Federal reserve bank employees.--
Employees of any Federal reserve bank who are
performing consumer financial protection
functions on behalf of the Board of Governors
shall be treated as employees of the Board of
Governors for purposes of subparagraphs (A) and
(B).
(2) Certain fdic employees transferred.--
(A) Identifying employees for transfer.--
The Bureau and the Board of Directors of the
Federal Deposit Insurance Corporation shall--
(i) jointly determine the number of
employees of that Corporation necessary
to perform or support the consumer
financial protection functions of the
Corporation that are transferred to the
Bureau by this title; and
(ii) consistent with the number
determined under clause (i), jointly
identify employees of the Corporation
for transfer to the Bureau, in a manner
that the Bureau and the Board of
Directors of the Corporation, in their
sole discretion, determine equitable.
(B) Identified employees transferred.--All
employees of the Corporation identified under
subparagraph (A)(ii) shall be transferred to
the Bureau for employment.
(3) Certain ncua employees transferred.--
(A) Identifying employees for transfer.--
The Bureau and the National Credit Union
Administration Board shall--
(i) jointly determine the number of
employees of the National Credit Union
Administration necessary to perform or
support the consumer financial
protection functions of the National
Credit Union Administration that are
transferred to the Bureau by this
title; and
(ii) consistent with the number
determined under clause (i), jointly
identify employees of the National
Credit Union Administration for
transfer to the Bureau, in a manner
that the Bureau and the National Credit
Union Administration Board, in their
sole discretion, determine equitable.
(B) Identified employees transferred.--All
employees of the National Credit Union
Administration identified under subparagraph
(A)(ii) shall be transferred to the Bureau for
employment.
(4) Certain office of the comptroller of the
currency employees transferred.--
(A) Identifying employees for transfer.--
The Bureau and the Comptroller of the Currency
shall--
(i) jointly determine the number of
employees of the Office of the
Comptroller of the Currency necessary
to perform or support the consumer
financial protection functions of the
Office of the Comptroller of the
Currency that are transferred to the
Bureau by this title; and
(ii) consistent with the number
determined under clause (i), jointly
identify employees of the Office of the
Comptroller of the Currency for
transfer to the Bureau, in a manner
that the Bureau and the Office of the
Comptroller of the Currency, in their
sole discretion, determine equitable.
(B) Identified employees transferred.--All
employees of the Office of the Comptroller of
the Currency identified under subparagraph
(A)(ii) shall be transferred to the Bureau for
employment.
(5) Certain office of thrift supervision employees
transferred.--
(A) Identifying employees for transfer.--
The Bureau and the Director of the Office of
Thrift Supervision shall--
(i) jointly determine the number of
employees of the Office of Thrift
Supervision necessary to perform or
support the consumer financial
protection functions of the Office of
Thrift Supervision that are transferred
to the Bureau by this title; and
(ii) consistent with the number
determined under clause (i), jointly
identify employees of the Office of
Thrift Supervision for transfer to the
Bureau, in a manner that the Bureau and
the Office of Thrift Supervision, in
their sole discretion, determine
equitable.
(B) Identified employees transferred.--All
employees of the Office of Thrift Supervision
identified under subparagraph (A)(ii) shall be
transferred to the Bureau for employment.
(6) Certain employees of department of housing and
urban development transferred.--
(A) Identifying employees for transfer.--
The Bureau and the Secretary of the Department
of Housing and Urban Development shall--
(i) jointly determine the number of
employees of the Department of Housing
and Urban Development necessary to
perform or support the consumer
protection functions of the Department
that are transferred to the Bureau by
this title; and
(ii) consistent with the number
determined under clause (i), jointly
identify employees of the Department of
Housing and Urban Development for
transfer to the Bureau in a manner that
the Bureau and the Secretary of the
Department of Housing and Urban
Development, in their sole discretion,
deem equitable.
(B) Identified employees transferred.--All
employees of the Department of Housing and
Urban Development identified under subparagraph
(A)(ii) shall be transferred to the Bureau for
employment.
(7) Consumer education, financial literacy,
consumer complaints, and research functions.--The
Bureau and each of the transferor agencies (except the
Federal Trade Commission) shall jointly determine the
number of employees and the types and grades of
employees necessary to perform the functions of the
Bureau under subtitle A, including consumer education,
financial literacy, policy analysis, responses to
consumer complaints and inquiries, research, and
similar functions. All employees jointly identified
under this paragraph shall be transferred to the Bureau
for employment.
(8) Authority of the president to resolve
disputes.--
(A) Action authorized.--In the event that
the Bureau and a transferor agency are unable
to reach an agreement under paragraphs (1)
through (7) by the designated transfer date,
the President, or the designee thereof, may
issue an order or directive to the transferor
agency to effect the transfer of personnel and
property under this subtitle.
(B) Transmittal to congress required.--If
an order or directive is issued under
subparagraph (A), the President shall transmit
a copy of the written determination made with
respect to such order or directive, including
an explanation for the need for the order or
directive, to the Committee on Banking,
Housing, and Urban Affairs and the Committee on
Appropriations of the Senate and the Committee
on Financial Services and the Committee on
Appropriations of the House of Representatives.
(C) Sunset.--The authority provided in this
paragraph shall terminate 3 years after the
designated transfer date.
(9) Appointment authority for excepted service and
senior executive service transferred.--
(A) In general.--In the case of an employee
occupying a position in the excepted service or
the Senior Executive Service, any appointment
authority established pursuant to law or
regulations of the Office of Personnel
Management for filling such positions shall be
transferred, subject to subparagraph (B).
(B) Declining transfers allowed.--An agency
or entity may decline to make a transfer of
authority under subparagraph (A) (and the
employees appointed pursuant thereto) 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,
and non-career positions in the Senior
Executive Service (within the meaning of
section 3132(a)(7) of title 5, United States
Code).
(b) Timing of Transfers and Position Assignments.--Each
employee to be transferred under this section shall--
(1) be transferred not later than 90 days after the
designated transfer date; and
(2) receive notice of a position assignment not
later than 120 days after the effective date of his or
her transfer.
(c) Transfer of Function.--
(1) In general.--Notwithstanding any other
provision of law, the transfer of employees shall be
deemed a transfer of functions for the purpose of
section 3503 of title 5, United States Code.
(2) Priority of this title.--If any provisions of
this title conflict with any protection provided to
transferred employees under section 3503 of title 5,
United States Code, the provisions of this title shall
control.
(d) Equal Status and Tenure Positions.--
(1) Employees transferred from the federal reserve
system, fdic, hud, ncua, occ, and ots.--Each employee
transferred to the Bureau from the Board of Governors,
a Federal reserve bank, the Federal Deposit Insurance
Corporation, the Department of Housing and Urban
Development, the National Credit Union Administration,
the Office of the Comptroller of the Currency, or the
Office of Thrift Supervision shall be placed in a
position at the Bureau with the same status and tenure
as that employee held on the day before the designated
transfer date.
(2) Employees transferred from the federal reserve
system.--For purposes of determining the status and
position placement of a transferred employee, any
period of service with the Board of Governors or a
Federal reserve bank shall be credited as a period of
service with a Federal agency.
(e) Additional Certification Requirements Limited.--
Examiners transferred to the Bureau are not subject to any
additional certification requirements before being placed in a
comparable examiner position at the Bureau examining the same
types of institutions as they examined before they were
transferred.
(f) Personnel Actions Limited.--
(1) 2-year protection.--Except as provided in
paragraph (2), each transferred employee holding a
permanent position on the day before the designated
transfer date may not, during the 2-year period
beginning on the designated transfer date, be
involuntarily separated, or involuntarily reassigned
outside his or her locality pay area.
(2) Exceptions.--Paragraph (1) does not limit the
right of the Bureau--
(A) to separate an employee for cause or
for unacceptable performance;
(B) to terminate an appointment to a
position excepted from the competitive service
because of its confidential policy-making,
policy-determining, or policy-advocating
character; or
(C) to reassign a supervisory employee
outside of his or her locality pay area when
the Bureau determines that the reassignment is
necessary for the efficient operation of the
Bureau.
(g) Pay.--
(1) 2-year protection.--
(A) In general.--Except as provided in
paragraph (2), each transferred employee shall,
during the 2-year period beginning on the
designated transfer date, receive pay at a rate
equal to not less than the basic rate of pay
(including any geographic differential) that
the employee received during the pay period
immediately preceding the date of transfer.
(B) Limitation.--Notwithstanding
subparagraph (A), if the employee was receiving
a higher rate of basic pay on a temporary basis
(because of a temporary assignment, temporary
promotion, or other temporary action)
immediately before the date of transfer, the
Bureau may reduce the rate of basic pay on the
date on which the rate would have been reduced
but for the transfer, and the protected rate
for the remainder of the 2-year period shall be
the reduced rate that would have applied, but
for the transfer.
(2) Exceptions.--Paragraph (1) does not limit the
right of the Bureau to reduce the rate of basic pay of
a transferred employee--
(A) for cause;
(B) for unacceptable performance; or
(C) with the consent of the employee.
(3) Protection only while employed.--Paragraph (1)
applies to a transferred employee only while that
employee remains employed by the Bureau.
(4) Pay increases permitted.--Paragraph (1) does
not limit the authority of the Bureau to increase the
pay of a transferred employee.
(h) Reorganization.--
(1) Between 1st and 3rd year.--
(A) In general.--If the Bureau determines,
during the 2-year period beginning 1 year after
the designated transfer date, that a
reorganization of the staff of the Bureau is
required--
(i) that reorganization shall be
deemed a ``substantial reorganization''
for purposes of affording affected
employees retirement under section
8336(d)(2) or 8414(b)(1)(B) of title 5,
United States Code;
(ii) before the reorganization
occurs, all employees in the same
locality pay area as defined by the
Office of Personnel Management shall be
placed in a uniform position
classification system; and
(iii) any resulting reduction in
force shall be governed by the
provisions of chapter 35 of title 5,
United States Code, except that the
Bureau shall--
(I) establish competitive
areas (as that term is defined
in regulations issued by the
Office of Personnel Management)
to include at a minimum all
employees in the same locality
pay area as defined by the
Office of Personnel Management;
(II) establish competitive
levels (as that term is defined
in regulations issued by the
Office of Personnel Management)
without regard to whether the
particular employees have been
appointed to positions in the
competitive service or the
excepted service; and
(III) afford employees
appointed to positions in the
excepted service (other than to
a position excepted from the
competitive service because of
its confidential policy-making,
policy-determining, or policy-
advocating character) the same
assignment rights to positions
within the Bureau as employees
appointed to positions in the
competitive service.
(B) Service credit for reductions in
force.--For purposes of this paragraph, periods
of service with a Federal home loan bank, a
joint office of the Federal home loan banks,
the Board of Governors, a Federal reserve bank,
the Federal Deposit Insurance Corporation, or
the National Credit Union Administration shall
be credited as periods of service with a
Federal agency.
(2) After 3rd year.--
(A) In general.--If the Bureau determines,
at any time after the 3-year period beginning
on the designated transfer date, that a
reorganization of the staff of the Bureau is
required, any resulting reduction in force
shall be governed by the provisions of chapter
35 of title 5, United States Code, except that
the Bureau shall establish competitive levels
(as that term is defined in regulations issued
by the Office of Personnel Management) without
regard to types of appointment held by
particular employees transferred under this
section.
(B) Service credit for reductions in
force.--For purposes of this paragraph, periods
of service with a Federal home loan bank, a
joint office of the Federal home loan banks,
the Board of Governors, a Federal reserve bank,
the Federal Deposit Insurance Corporation, or
the National Credit Union Administration shall
be credited as periods of service with a
Federal agency.
(i) Benefits.--
(1) Retirement benefits for transferred
employees.--
(A) In general.--
(i) Continuation of existing
retirement plan.--Unless an election is
made under clause (iii) or subparagraph
(B), each employee transferred pursuant
to this subtitle shall remain enrolled
in the existing retirement plan of that
employee as of the date of transfer,
through any period of continuous
employment with the Bureau.
(ii) Employer contribution.--The
Bureau shall pay any employer
contributions to the existing
retirement plan of each transferred
employee, as required under that plan.
(iii) Option to elect into the
federal reserve system retirement plan
and federal reserve system thrift
plan.--Any employee transferred
pursuant to this subtitle may, during
the 1-year period beginning 6 months
after the designated transfer date,
elect to end their participation and
benefit accruals under their existing
retirement plan or plans and elect to
participate in both the Federal Reserve
System Retirement Plan and the Federal
Reserve System Thrift Plan, through any
period of continuous employment with
the Bureau, under the same terms as are
applicable to Federal Reserve System
transferred employees, as provided in
subparagraph (C). An election of
coverage by the Federal Reserve System
Retirement Plan and the Federal Reserve
System Thrift Plan shall begin on the
day following the end of the 18-month
period beginning on the designated
transfer date, and benefit accruals
under the existing retirement plan of
the transferred employee shall end on
the last day of the 18-month period
beginning on the designated transfer
date. If an employee elects to
participate in the Federal Reserve
System Retirement Plan and the Federal
Reserve System Thrift Plan, all of the
service of the employee that was
creditable under their existing
retirement plan shall be transferred to
the Federal Reserve System Retirement
Plan on the day following the end of
the 18-month period beginning on the
designated transfer date.
(iv) Bureau contribution.--The
Bureau shall pay an employer
contribution to the Federal Reserve
System Retirement Plan, in the amount
established as an employer contribution
under the Federal Employees Retirement
System, as established under chapter 84
of title 5, United States Code, for
each Bureau employee who elects to
participate in the Federal Reserve
System Retirement Plan under this
subparagraph. The Bureau shall pay an
employer contribution to the Federal
Reserve System Thrift Plan for each
Bureau employee who elects to
participate in such plan, as required
under the terms of the Federal Reserve
System Thrift Plan.
(v) Additional funding.--The Bureau
shall transfer to the Federal Reserve
System Retirement Plan an amount
determined by the Board of Governors,
in consultation with the Bureau, to be
necessary to reimburse the Federal
Reserve System Retirement Plan for the
costs to such plan of providing
benefits to employees electing coverage
under the Federal Reserve System
Retirement Plan under subparagraph
(iii), and who were transferred to the
Bureau from outside of the Federal
Reserve System.
(vi) Option to elect into thrift
plan created by the bureau.--If the
Bureau chooses to establish a thrift
plan, the employees transferred
pursuant to this subtitle shall have
the option to elect, under such terms
and conditions as the Bureau may
establish, coverage under such a thrift
plan established by the Bureau.
Transferred employees may not remain in
the thrift plan of the agency from
which the employee transferred under
this subtitle, if the employee elects
to participate in a thrift plan
established by the Bureau.
(B) Option for employees transferred from
federal reserve system to be subject to the
federal employee retirement program.--
(i) Election.--Any Federal Reserve
System transferred employee who was
enrolled in the Federal Reserve System
Retirement Plan on the day before the
date of his or her transfer to the
Bureau may, during the 1-year period
beginning 6 months after the designated
transfer date, elect to be subject to
the Federal Employee Retirement
Program.
(ii) Effective date of coverage.--
An election of coverage by the Federal
Employee Retirement Program under this
subparagraph shall begin on the day
following the end of the 18-month
period beginning on the designated
transfer date, and benefit accruals
under the existing retirement plan of
the Federal Reserve System transferred
employee shall end on the last day of
the 18-month period beginning on the
designated transfer date.
(C) Bureau participation in federal reserve
system retirement plan.--
(i) Benefits provided.--Federal
Reserve System employees transferred
pursuant to this subtitle shall
continue to be eligible to participate
in the Federal Reserve System
Retirement Plan and Federal Reserve
System Thrift Plan through any period
of continuous employment with the
Bureau, unless the employee makes an
election under subparagraph (A)(vi) or
(B). The retirement benefits, formulas,
and features offered to the Federal
Reserve System transferred employees
shall be the same as those offered to
employees of the Board of Governors who
participate in the Federal Reserve
System Retirement Plan and the Federal
Reserve System Thrift Plan, as amended
from time to time.
(ii) Limitation.--The Bureau shall
not have responsibility or authority--
(I) to amend an existing
retirement plan (including the
Federal Reserve System
Retirement Plan or Federal
Reserve System Thrift Plan);
(II) for administering an
existing retirement plan
(including the Federal Reserve
System Retirement Plan or
Federal Reserve System Thrift
Plan); or
(III) for ensuring the
plans comply with applicable
laws, fiduciary rules, and
related responsibilities.
(iii) Tax qualified status.--
Notwithstanding any other provision of
law, providing benefits to Federal
Reserve System employees transferred to
the Bureau pursuant to this subtitle,
and to employees who elect coverage
pursuant to subparagraph (A)(iii) or
under section 1013(a)(2)(B), shall not
cause any existing retirement plan
(including the Federal Reserve System
Retirement Plan and the Federal Reserve
System Thrift Plan) to lose its tax-
qualified status under sections 401(a)
and 501(a) of the Internal Revenue Code
of 1986.
(iv) Bureau contribution.--The
Bureau shall pay any employer
contributions to the existing
retirement plan (including the Federal
Reserve System Retirement Plan and the
Federal Reserve System Thrift Plan) for
each Federal Reserve System transferred
employee participating in those plans,
as required under the plan, after the
designated transfer date.
(v) Controlled group status.--The
Bureau is the same employer as the
Federal Reserve System (as comprised of
the Board of Governors and each of the
12 Federal reserve banks prior to the
date of enactment of this Act) for
purposes of subsections (b), (c), (m),
and (o) of section 414 of the Internal
Revenue Code of 1986 (26 U.S.C. 414).
(D) Definitions.--For purposes of this
paragraph--
(i) the term ``existing retirement
plan'' means, with respect to an
employee transferred pursuant to this
subtitle, the retirement plan
(including the Financial Institutions
Retirement Fund) and any associated
thrift savings plan, of the agency from
which the employee was transferred
under this subtitle, in which the
employee was enrolled on the day before
the date on which the employee was
transferred;
(ii) the term ``Federal Employee
Retirement Program'' means either the
Civil Service Retirement System
established under chapter 83 of title
5, United States Code, or the Federal
Employees Retirement System established
under chapter 84 of title 5, United
States Code, depending upon the service
history of the individual;
(iii) the term ``Federal Reserve
System transferred employee'' means a
transferred employee who is an employee
of the Board of Governors or a Federal
reserve bank on the day before the
designated transfer date, and who is
transferred to the Bureau on the
designated transfer date pursuant to
this subtitle;
(iv) the term ``Federal Reserve
System Retirement Plan'' means the
Retirement Plan for Employees of the
Federal Reserve System; and
(v) the term ``Federal Reserve
System Thrift Plan'' means the Thrift
Plan for Employees of the Federal
Reserve System.
(2) Benefits other than retirement benefits for
transferred employees.--
(A) During 1st year.--
(i) Existing plans continue.--Each
employee transferred pursuant to this
subtitle may, for 1 year after the
designated transfer date, retain
membership in any other employee
benefit program of the agency or bank
from which the employee transferred,
including a medical, dental, vision,
long term care, or life insurance
program, to which the employee belonged
on the day before the designated
transfer date.
(ii) Employer contribution.--The
Bureau shall reimburse the agency or
bank from which an employee was
transferred for any cost incurred by
that agency or bank in continuing to
extend coverage in the benefit program
to the employee, as required under that
program or negotiated agreements.
(B) Medical, dental, vision, or life
insurance after first year.--If, at the end of
the 1-year period beginning on the designated
transfer date, the Bureau has not established
its own, or arranged for participation in
another entity's, medical, dental, vision, or
life insurance program, an employee transferred
pursuant to this subtitle who was a member of
such a program at the agency or Federal reserve
bank from which the employee transferred may,
before the coverage of that employee ends under
subparagraph (A)(i), elect to enroll, without
regard to any regularly scheduled open season,
in--
(i) the enhanced dental benefits
program established under chapter 89A
of title 5, United States Code;
(ii) the enhanced vision benefits
established under chapter 89B of title
5, United States Code;
(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; and
(iv) the Federal Employees Health
Benefits Program established under
chapter 89 of title 5, United States
Code.
(C) Long term care insurance after 1st
year.--If, at the end of the 1-year period
beginning on the designated transfer date, the
Bureau has not established its own, or arranged
for participation in another entity's, long
term care insurance program, an employee
transferred pursuant to this subtitle who was a
member of such a program at the agency or
Federal reserve bank from which the employee
transferred may, before the coverage of that
employee ends under subparagraph (A)(i), 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 defined in
part 875 of title 5, Code of Federal
Regulations).
(D) Employee contribution.--An individual
enrolled in the Federal Employees Health
Benefits program shall pay any employee
contribution required by the plan.
(E) Additional funding.--The Bureau shall
transfer to the Federal 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 Bureau and the Office of Management and
Budget, to be necessary to reimburse the Fund
for the cost to the Fund of providing benefits
under this paragraph.
(F) Credit for time enrolled in other
plans.--For employees transferred under this
title, enrollment in a health benefits plan
administered by a transferor agency or a
Federal reserve bank, as the case may be,
immediately before enrollment in a health
benefits plan under chapter 89 of title 5,
United States Code, shall be considered as
enrollment in a health benefits plan under that
chapter for purposes of section 8905(b)(1)(A)
of title 5, United States Code.
(G) Special provisions to ensure
continuation of life insurance benefits.--
(i) In general.--An annuitant (as
defined in section 8901(3) of title 5,
United States Code) who is enrolled in
a life insurance plan administered by a
transferor agency on the day before the
designated transfer date shall be
eligible for coverage by a life
insurance plan under sections 8706(b),
8714a, 8714b, and 8714c of title 5,
United States Code, or in a life
insurance plan established by the
Bureau, without regard to any regularly
scheduled open season and requirement
of insurability.
(ii) Employee contribution.--An
individual enrolled in a life insurance
plan under this subparagraph shall pay
any employee contribution required by
the plan.
(iii) Additional funding.--The
Bureau shall transfer to the Employees'
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
Bureau and the Office of Management and
Budget, to be necessary to reimburse
the Fund for the cost to the Fund of
providing benefits under this
subparagraph not otherwise paid for by
the employee under clause (ii).
(iv) Credit for time enrolled in
other plans.--For employees transferred
under this title, enrollment in a life
insurance plan administered by a
transferor agency 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.
(3) OPM rules.--The Office of Personnel Management
shall issue such rules as are necessary to carry out
this subsection.
(j) Implementation of Uniform Pay and Classification
System.--Not later than 2 years after the designated transfer
date, the Bureau shall implement a uniform pay and
classification system for all employees transferred under this
title.
(k) Equitable Treatment.--In administering the provisions
of this section, the Bureau--
(1) shall take no action that would unfairly
disadvantage transferred employees relative to each
other based on their prior employment by the Board of
Governors, the Federal Deposit Insurance Corporation,
the Department of Housing and Urban Development, the
National Credit Union Administration, the Office of the
Comptroller of the Currency, the Office of Thrift
Supervision, a Federal reserve bank, a Federal home
loan bank, or a joint office of the Federal home loan
banks; and
(2) may take such action as is appropriate in
individual cases so that employees transferred under
this section receive 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 of those employees, for prior periods of service
with any Federal agency, including the Board of
Governors, the Corporation, the Department of Housing
and Urban Development, the National Credit Union
Administration, the Office of the Comptroller of the
Currency, the Office of Thrift Supervision, a Federal
reserve bank, a Federal home loan bank, or a joint
office of the Federal home loan banks.
(l) Implementation.--In implementing the provisions of this
section, the Bureau shall coordinate with the Office of
Personnel Management and other entities having expertise in
matters related to employment to ensure a fair and orderly
transition for affected employees.
SEC. 1065. INCIDENTAL TRANSFERS.
(a) Incidental Transfers Authorized.--The Director of the
Office of Management and Budget, in consultation with the
Secretary, shall make such additional incidental transfers and
dispositions of assets and liabilities held, used, arising
from, available, or to be made available, in connection with
the functions transferred by this title, as the Director may
determine necessary to accomplish the purposes of this title.
(b) Sunset.--The authority provided in this section shall
terminate 5 years after the date of enactment of this Act.
SEC. 1066. INTERIM AUTHORITY OF THE SECRETARY.
(a) In General.--The Secretary is authorized to perform the
functions of the Bureau under this subtitle until the Director
of the Bureau is confirmed by the Senate in accordance with
section 1011.
(b) Interim Administrative Services by the Department of
the Treasury.--The Department of the Treasury may provide
administrative services necessary to support the Bureau before
the designated transfer date.
SEC. 1067. TRANSITION OVERSIGHT.
(a) Purpose.--The purpose of this section is to ensure that
the Bureau--
(1) has an orderly and organized startup;
(2) attracts and retains a qualified workforce; and
(3) establishes comprehensive employee training and
benefits programs.
(b) Reporting Requirement.--
(1) In general.--The Bureau 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).
(2) Plans.--The plans described in this paragraph
are as follows:
(A) Training and workforce development
plan.--The Bureau shall submit a training and
workforce development plan that includes, to
the extent practicable--
(i) identification of skill and
technical expertise needs and actions
taken to meet those requirements;
(ii) steps taken to foster
innovation and creativity;
(iii) leadership development and
succession planning; and
(iv) effective use of technology by
employees.
(B) Workplace flexibilities plan.--The
Bureau shall submit a workforce flexibility
plan that includes, to the extent practicable--
(i) telework;
(ii) flexible work schedules;
(iii) phased retirement;
(iv) reemployed annuitants;
(v) part-time work;
(vi) job sharing;
(vii) parental leave benefits and
childcare assistance;
(viii) domestic partner benefits;
(ix) other workplace flexibilities;
or
(x) any combination of the items
described in clauses (i) through (ix).
(C) Recruitment and retention plan.--The
Bureau shall submit a recruitment and retention
plan that includes, to the extent practicable,
provisions relating to--
(i) the steps necessary to target
highly qualified applicant pools with
diverse backgrounds;
(ii) streamlined employment
application processes;
(iii) the provision of timely
notification of the status of
employment applications to applicants;
and
(iv) the collection of information
to measure indicators of hiring
effectiveness.
(c) Expiration.--The reporting requirement under subsection
(b) shall terminate 5 years after the date of enactment of this
Act.
(d) Rule of Construction.--Nothing in this section may be
construed to affect--
(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; or
(2) the rights of employees under chapter 71 of
title 5, United States Code.
(e) Participation in Examinations.--In order to prepare the
Bureau to conduct examinations under section 1025 upon the
designated transfer date, the Bureau and the applicable
prudential regulator may agree to include, on a sampling basis,
examiners on examinations of the compliance with Federal
consumer financial law of institutions described in section
1025(a) conducted by the prudential regulators prior to the
designated transfer date.
Subtitle G--Regulatory Improvements
SEC. 1071. SMALL BUSINESS DATA COLLECTION.
(a) In General.--The Equal Credit Opportunity Act (15
U.S.C. 1691 et seq.) is amended by inserting after section 704A
the following:
``SEC. 704B. SMALL BUSINESS LOAN DATA COLLECTION.
``(a) Purpose.--The purpose of this section is to
facilitate enforcement of fair lending laws and enable
communities, governmental entities, and creditors to identify
business and community development needs and opportunities of
women-owned, minority-owned, and small businesses.
``(b) Information Gathering.--Subject to the requirements
of this section, in the case of any application to a financial
institution for credit for women-owned, minority-owned, or
small business, the financial institution shall--
``(1) inquire whether the business is a women-
owned, minority-owned, or small business, without
regard to whether such application is received in
person, by mail, by telephone, by electronic mail or
other form of electronic transmission, or by any other
means, and whether or not such application is in
response to a solicitation by the financial
institution; and
``(2) maintain a record of the responses to such
inquiry, separate from the application and accompanying
information.
``(c) Right To Refuse.--Any applicant for credit may refuse
to provide any information requested pursuant to subsection (b)
in connection with any application for credit.
``(d) No Access by Underwriters.--
``(1) Limitation.--Where feasible, no loan
underwriter or other officer or employee of a financial
institution, or any affiliate of a financial
institution, involved in making any determination
concerning an application for credit shall have access
to any information provided by the applicant pursuant
to a request under subsection (b) in connection with
such application.
``(2) Limited access.--If a financial institution
determines that a loan underwriter or other officer or
employee of a financial institution, or any affiliate
of a financial institution, involved in making any
determination concerning an application for credit
should have access to any information provided by the
applicant pursuant to a request under subsection (b),
the financial institution shall provide notice to the
applicant of the access of the underwriter to such
information, along with notice that the financial
institution may not discriminate on the basis of such
information.
``(e) Form and Manner of Information.--
``(1) In general.--Each financial institution shall
compile and maintain, in accordance with regulations of
the Bureau, a record of the information provided by any
loan applicant pursuant to a request under subsection
(b).
``(2) Itemization.--Information compiled and
maintained under paragraph (1) shall be itemized in
order to clearly and conspicuously disclose--
``(A) the number of the application and the
date on which the application was received;
``(B) the type and purpose of the loan or
other credit being applied for;
``(C) the amount of the credit or credit
limit applied for, and the amount of the credit
transaction or the credit limit approved for
such applicant;
``(D) the type of action taken with respect
to such application, and the date of such
action;
``(E) the census tract in which is located
the principal place of business of the women-
owned, minority-owned, or small business loan
applicant;
``(F) the gross annual revenue of the
business in the last fiscal year of the women-
owned, minority-owned, or small business loan
applicant preceding the date of the
application;
``(G) the race, sex, and ethnicity of the
principal owners of the business; and
``(H) any additional data that the Bureau
determines would aid in fulfilling the purposes
of this section.
``(3) No personally identifiable information.--In
compiling and maintaining any record of information
under this section, a financial institution may not
include in such record the name, specific address
(other than the census tract required under paragraph
(1)(E)), telephone number, electronic mail address, or
any other personally identifiable information
concerning any individual who is, or is connected with,
the women-owned, minority-owned, or small business loan
applicant.
``(4) Discretion to delete or modify publicly
available data.--The Bureau may, at its discretion,
delete or modify data collected under this section
which is or will be available to the public, if the
Bureau determines that the deletion or modification of
the data would advance a privacy interest.
``(f) Availability of Information.--
``(1) Submission to bureau.--The data required to
be compiled and maintained under this section by any
financial institution shall be submitted annually to
the Bureau.
``(2) Availability of information.--Information
compiled and maintained under this section shall be--
``(A) retained for not less than 3 years
after the date of preparation;
``(B) made available to any member of the
public, upon request, in the form required
under regulations prescribed by the Bureau;
``(C) annually made available to the public
generally by the Bureau, in such form and in
such manner as is determined by the Bureau, by
regulation.
``(3) Compilation of aggregate data.--The Bureau
may, at its discretion--
``(A) compile and aggregate data collected
under this section for its own use; and
``(B) make public such compilations of
aggregate data.
``(g) Bureau Action.--
``(1) In general.--The Bureau shall prescribe such
rules and issue such guidance as may be necessary to
carry out, enforce, and compile data pursuant to this
section.
``(2) Exceptions.--The Bureau, by rule or order,
may adopt exceptions to any requirement of this section
and may, conditionally or unconditionally, exempt any
financial institution or class of financial
institutions from the requirements of this section, as
the Bureau deems necessary or appropriate to carry out
the purposes of this section.
``(3) Guidance.--The Bureau shall issue guidance
designed to facilitate compliance with the requirements
of this section, including assisting financial
institutions in working with applicants to determine
whether the applicants are women-owned, minority-owned,
or small businesses for purposes of this section.
``(h) Definitions.--For purposes of this section, the
following definitions shall apply:
``(1) Financial institution.--The term `financial
institution' means any partnership, company,
corporation, association (incorporated or
unincorporated), trust, estate, cooperative
organization, or other entity that engages in any
financial activity.
``(2) Small business.--The term `small business'
has the same meaning as the term `small business
concern' in section 3 of the Small Business Act (15
U.S.C. 632).
``(3) Small business loan.--The term `small
business loan' means a loan made to a small business.
``(4) Minority.--The term `minority' has the same
meaning as in section 1204(c)(3) of the Financial
Institutions Reform, Recovery, and Enforcement Act of
1989.
``(5) Minority-owned business.--The term `minority-
owned business' means a business--
``(A) more than 50 percent of the ownership
or control of which is held by 1 or more
minority individuals; and
``(B) more than 50 percent of the net
profit or loss of which accrues to 1 or more
minority individuals.
``(6) Women-owned business.--The term `women-owned
business' means a business--
``(A) more than 50 percent of the ownership
or control of which is held by 1 or more women;
and
``(B) more than 50 percent of the net
profit or loss of which accrues to 1 or more
women.''.
(b) Technical and Conforming Amendments.--Section 701(b) of
the Equal Credit Opportunity Act (15 U.S.C. 1691(b)) is
amended--
(1) in paragraph (3), by striking ``or'' at the
end;
(2) in paragraph (4), by striking the period at the
end and inserting ``; or''; and
(3) by inserting after paragraph (4), the
following:
``(5) to make an inquiry under section 704B, in
accordance with the requirements of that section.''.
(c) Clerical Amendment.--The table of sections for title
VII of the Consumer Credit Protection Act is amended by
inserting after the item relating to section 704A the following
new item:
``704B. Small business loan data collection.''.
(d) Effective Date.--This section shall become effective on
the designated transfer date.
SEC. 1072. ASSISTANCE FOR ECONOMICALLY VULNERABLE INDIVIDUALS AND
FAMILIES.
(a) HERA Amendments.--Section 1132 of the Housing and
Economic Recovery Act of 2008 (12 U.S.C. 1701x note) is
amended--
(1) in subsection (a), by inserting in each of
paragraphs (1), (2), (3), and (4) ``or economically
vulnerable individuals and families'' after
``homebuyers'' each place that term appears;
(2) in subsection (b)(1), by inserting ``or
economically vulnerable individuals and families''
after ``homebuyers'';
(3) in subsection (c)(1)--
(A) in subparagraph (A), by striking ``or''
at the end;
(B) in subparagraph (B), by striking the
period at the end and inserting ``; or''; and
(C) by adding at the end the following:
``(C) a nonprofit corporation that--
``(i) is exempt from taxation under
section 501(c)(3) of the Internal
Revenue Code of 1986; and
``(ii) specializes or has expertise
in working with economically vulnerable
individuals and families, but whose
primary purpose is not provision of
credit counseling services.''; and
(4) in subsection (d)(1), by striking ``not more
than 5''.
(b) Applicability.--Amendments made by subsection (a) shall
not apply to programs authorized by section 1132 of the Housing
and Economic Recovery Act of 2008 (12 U.S.C. 1701x note) that
are funded with appropriations prior to fiscal year 2011.
SEC. 1073. REMITTANCE TRANSFERS.
(a) Treatment of Remittance Transfers.--The Electronic Fund
Transfer Act (15 U.S.C. 1693 et seq.) is amended--
(1) in section 902(b) (15 U.S.C. 1693(b)), by
inserting ``and remittance'' after ``electronic fund'';
(2) in section 904(c) (15 U.S.C. 1693b(c)), in the
first sentence, by inserting ``or remittance
transfers'' after ``electronic fund transfers'';
(3) by redesignating sections 919, 920, 921, and
922 as sections 920, 921, 922, and 923, respectively;
and
(4) by inserting after section 918 the following:
``SEC. 919. REMITTANCE TRANSFERS.
``(a) Disclosures Required for Remittance Transfers.--
``(1) In general.--Each remittance transfer
provider shall make disclosures as required under this
section and in accordance with rules prescribed by the
Board. Disclosures required under this section shall be
in addition to any other disclosures applicable under
this title.
``(2) Disclosures.--Subject to rules prescribed by
the Board, a remittance transfer provider shall
provide, in writing and in a form that the sender may
keep, to each sender requesting a remittance transfer,
as applicable to the transaction--
``(A) at the time at which the sender
requests a remittance transfer to be initiated,
and prior to the sender making any payment in
connection with the remittance transfer, a
disclosure describing--
``(i) the amount of currency that
will be received by the designated
recipient, using the values of the
currency into which the funds will be
exchanged;
``(ii) the amount of transfer and
any other fees charged by the
remittance transfer provider for the
remittance transfer; and
``(iii) any exchange rate to be
used by the remittance transfer
provider for the remittance transfer,
to the nearest 1/100th of a point; and
``(B) at the time at which the sender makes
payment in connection with the remittance
transfer--
``(i) a receipt showing--
``(I) the information
described in subparagraph (A);
``(II) the promised date of
delivery to the designated
recipient; and
``(III) the name and either
the telephone number or the
address of the designated
recipient, if either the
telephone number or the address
of the designated recipient is
provided by the sender; and
``(ii) a statement containing--
``(I) information about the
rights of the sender under this
section regarding the
resolution of errors; and
``(II) appropriate contact
information for--
``(aa) the
remittance transfer
provider; and
``(bb) the State
agency that regulates
the remittance transfer
provider and the Board,
including the toll-free
telephone number
established under
section 1013 of the
Consumer Financial
Protection Act of 2010.
``(3) Requirements relating to disclosures.--With
respect to each disclosure required to be provided
under paragraph (2) a remittance transfer provider
shall--
``(A) provide an initial notice and
receipt, as required by subparagraphs (A) and
(B) of paragraph (2), and an error resolution
statement, as required by subsection (d), that
clearly and conspicuously describe the
information required to be disclosed therein;
and
``(B) with respect to any transaction that
a sender conducts electronically, comply with
the Electronic Signatures in Global and
National Commerce Act (15 U.S.C. 7001 et seq.).
``(4) Exception for disclosures of amount
received.--
``(A) In general.--Subject to the rules
prescribed by the Board, and except as provided
under subparagraph (B), the disclosures
required regarding the amount of currency that
will be received by the designated recipient
shall be deemed to be accurate, so long as the
disclosures provide a reasonably accurate
estimate of the foreign currency to be
received. This paragraph shall apply only to a
remittance transfer provider who is an insured
depository institution, as defined in section 3
of the Federal Deposit Insurance Act (12 U.S.C.
1813), or an insured credit union, as defined
in section 101 of the Federal Credit Union Act
(12 U.S.C. 1752), and if--
``(i) a remittance transfer is
conducted through a demand deposit,
savings deposit, or other asset account
that the sender holds with such
remittance transfer provider; and
``(ii) at the time at which the
sender requests the transaction, the
remittance transfer provider is unable
to know, for reasons beyond its
control, the amount of currency that
will be made available to the
designated recipient.
``(B) Deadline.--The application of
subparagraph (A) shall terminate 5 years after
the date of enactment of the Consumer Financial
Protection Act of 2010, unless the Board
determines that termination of such provision
would negatively affect the ability of
remittance transfer providers described in
subparagraph (A) to send remittances to
locations in foreign countries, in which case,
the Board may, by rule, extend the application
of subparagraph (A) to not longer than 10 years
after the date of enactment of the Consumer
Financial Protection Act of 2010.
``(5) Exemption authority.--The Board may, by rule,
permit a remittance transfer provider to satisfy the
requirements of--
``(A) paragraph (2)(A) orally, if the
transaction is conducted entirely by telephone;
``(B) paragraph (2)(B), in the case of a
transaction conducted entirely by telephone, by
mailing the disclosures required under such
subparagraph to the sender, not later than 1
business day after the date on which the
transaction is conducted, or by including such
documents in the next periodic statement, if
the telephone transaction is conducted through
a demand deposit, savings deposit, or other
asset account that the sender holds with the
remittance transfer provider;
``(C) subparagraphs (A) and (B) of
paragraph (2) together in one written
disclosure, but only to the extent that the
information provided in accordance with
paragraph (3)(A) is accurate at the time at
which payment is made in connection with the
subject remittance transfer; and
``(D) paragraph (2)(A), without compliance
with section 101(c) of the Electronic
Signatures in Global Commerce Act, if a sender
initiates the transaction electronically and
the information is displayed electronically in
a manner that the sender can keep.
``(6) Storefront and internet notices.--
``(A) In general.--
``(i) Prominent posting.--Subject
to subparagraph (B), the Board may
prescribe rules to require a remittance
transfer provider to prominently post,
and timely update, a notice describing
a model remittance transfer for one or
more amounts, as the Board may
determine, which notice shall show the
amount of currency that will be
received by the designated recipient,
using the values of the currency into
which the funds will be exchanged.
``(ii) Onsite displays.--The Board
may require the notice prescribed under
this subparagraph to be displayed in
every physical storefront location
owned or controlled by the remittance
transfer provider.
``(iii) Internet notices.--Subject
to paragraph (3), the Board shall
prescribe rules to require a remittance
transfer provider that provides
remittance transfers via the Internet
to provide a notice, comparable to a
storefront notice described in this
subparagraph, located on the home page
or landing page (with respect to such
remittance transfer services) owned or
controlled by the remittance transfer
provider.
``(iv) Rulemaking authority.--In
prescribing rules under this
subparagraph, the Board may impose
standards or requirements regarding the
provision of the storefront and
Internet notices required under this
subparagraph and the provision of the
disclosures required under paragraphs
(2) and (3).
``(B) Study and analysis.--Prior to
proposing rules under subparagraph (A), the
Board shall undertake appropriate studies and
analyses, which shall be consistent with
section 904(a)(2), and may include an advanced
notice of proposed rulemaking, to determine
whether a storefront notice or Internet notice
facilitates the ability of a consumer--
``(i) to compare prices for
remittance transfers; and
``(ii) to understand the types and
amounts of any fees or costs imposed on
remittance transfers.
``(b) Foreign Language Disclosures.--The disclosures
required under this section shall be made in English and in
each of the foreign languages principally used by the
remittance transfer provider, or any of its agents, to
advertise, solicit, or market, either orally or in writing, at
that office.
``(c) Regulations Regarding Transfers to Certain Nations.--
If the Board determines that a recipient nation does not
legally allow, or the method by which transactions are made in
the recipient country do not allow, a remittance transfer
provider to know the amount of currency that will be received
by the designated recipient, the Board may prescribe rules (not
later than 18 months after the date of enactment of the
Consumer Financial Protection Act of 2010) addressing the
issue, which rules shall include standards for a remittance
transfer provider to provide--
``(1) a receipt that is consistent with subsections
(a) and (b); and
``(2) a reasonably accurate estimate of the foreign
currency to be received, based on the rate provided to
the sender by the remittance transfer provider at the
time at which the transaction was initiated by the
sender.
``(d) Remittance Transfer Errors.--
``(1) Error resolution.--
``(A) In general.--If a remittance transfer
provider receives oral or written notice from
the sender within 180 days of the promised date
of delivery that an error occurred with respect
to a remittance transfer, including the amount
of currency designated in subsection (a)(3)(A)
that was to be sent to the designated recipient
of the remittance transfer, using the values of
the currency into which the funds should have
been exchanged, but was not made available to
the designated recipient in the foreign
country, the remittance transfer provider shall
resolve the error pursuant to this subsection
and investigate the reason for the error.
``(B) Remedies.--Not later than 90 days
after the date of receipt of a notice from the
sender pursuant to subparagraph (A), the
remittance transfer provider shall, as
applicable to the error and as designated by
the sender--
``(i) refund to the sender the
total amount of funds tendered by the
sender in connection with the
remittance transfer which was not
properly transmitted;
``(ii) make available to the
designated recipient, without
additional cost to the designated
recipient or to the sender, the amount
appropriate to resolve the error;
``(iii) provide such other remedy,
as determined appropriate by rule of
the Board for the protection of
senders; or
``(iv) provide written notice to
the sender that there was no error with
an explanation responding to the
specific complaint of the sender.
``(2) Rules.--The Board shall establish, by rule
issued not later than 18 months after the date of
enactment of the Consumer Financial Protection Act of
2010, clear and appropriate standards for remittance
transfer providers with respect to error resolution
relating to remittance transfers, to protect senders
from such errors. Standards prescribed under this
paragraph shall include appropriate standards regarding
record keeping, as required, including documentation--
``(A) of the complaint of the sender;
``(B) that the sender provides the
remittance transfer provider with respect to
the alleged error; and
``(C) of the findings of the remittance
transfer provider regarding the investigation
of the alleged error that the sender brought to
their attention.
``(3) Cancellation and refund policy rules.--Not
later than 18 months after the date of enactment of the
Consumer Financial Protection Act of 2010, the Board
shall issue final rules regarding appropriate
remittance transfer cancellation and refund policies
for consumers.
``(e) Applicability of This Title.--
``(1) In general.--A remittance transfer that is
not an electronic fund transfer, as defined in section
903, shall not be subject to any of the provisions of
sections 905 through 913. A remittance transfer that is
an electronic fund transfer, as defined in section 903,
shall be subject to all provisions of this title,
except for section 908, that are otherwise applicable
to electronic fund transfers under this title.
``(2) Rule of construction.--Nothing in this
section shall be construed--
``(A) to affect the application to any
transaction, to any remittance provider, or to
any other person of any of the provisions of
subchapter II of chapter 53 of title 31, United
States Code, section 21 of the Federal Deposit
Insurance Act (12 U.S.C. 1829b), or chapter 2
of title I of Public Law 91-508 (12 U.S.C.
1951-1959), or any regulations promulgated
thereunder; or
``(B) to cause any fund transfer that would
not otherwise be treated as such under
paragraph (1) to be treated as an electronic
fund transfer, or as otherwise subject to this
title, for the purposes of any of the
provisions referred to in subparagraph (A) or
any regulations promulgated thereunder.
``(f) Acts of Agents.--
``(1) In general.--A remittance transfer provider
shall be liable for any violation of this section by
any agent, authorized delegate, or person affiliated
with such provider, when such agent, authorized
delegate, or affiliate acts for that remittance
transfer provider.
``(2) Obligations of remittance transfer
providers.--The Board shall prescribe rules to
implement appropriate standards or conditions of,
liability of a remittance transfer provider, including
a provider who acts through an agent or authorized
delegate. An agency charged with enforcing the
requirements of this section, or rules prescribed by
the Board under this section, may consider, in any
action or other proceeding against a remittance
transfer provider, the extent to which the provider had
established and maintained policies or procedures for
compliance, including policies, procedures, or other
appropriate oversight measures designed to assure
compliance by an agent or authorized delegate acting
for such provider.
``(g) Definitions.--As used in this section--
``(1) the term `designated recipient' means any
person located in a foreign country and identified by
the sender as the authorized recipient of a remittance
transfer to be made by a remittance transfer provider,
except that a designated recipient shall not be deemed
to be a consumer for purposes of this Act;
``(2) the term `remittance transfer'--
``(A) means the electronic (as defined in
section 106(2) of the Electronic Signatures in
Global and National Commerce Act (15 U.S.C.
7006(2))) transfer of funds requested by a
sender located in any State to a designated
recipient that is initiated by a remittance
transfer provider, whether or not the sender
holds an account with the remittance transfer
provider or whether or not the remittance
transfer is also an electronic fund transfer,
as defined in section 903; and
``(B) does not include a transfer described
in subparagraph (A) in an amount that is equal
to or lesser than the amount of a small-value
transaction determined, by rule, to be excluded
from the requirements under section 906(a);
``(3) the term `remittance transfer provider' means
any person or financial institution that provides
remittance transfers for a consumer in the normal
course of its business, whether or not the consumer
holds an account with such person or financial
institution; and
``(4) the term `sender' means a consumer who
requests a remittance provider to send a remittance
transfer for the consumer to a designated recipient.''.
(b) Automated Clearinghouse System.--
(1) Expansion of system.--The Board of Governors
shall work with the Federal reserve banks and the
Department of the Treasury to expand the use of the
automated clearinghouse system and other payment
mechanisms for remittance transfers to foreign
countries, with a focus on countries that receive
significant remittance transfers from the United
States, based on--
(A) the number, volume, and size of such
transfers;
(B) the significance of the volume of such
transfers relative to the external financial
flows of the receiving country, including--
(i) the total amount transferred;
and
(ii) the total volume of payments
made by United States Government
agencies to beneficiaries and retirees
living abroad;
(C) the feasibility of such an expansion;
and
(D) the ability of the Federal Reserve
System to establish payment gateways in
different geographic regions and currency zones
to receive remittance transfers and route them
through the payments systems in the destination
countries.
(2) Report to congress.--Not later than one
calendar year after the date of enactment of this Act,
and on April 30 biennially thereafter during the 10-
year period beginning on that date of enactment, the
Board of Governors 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 status of the automated
clearinghouse system and its progress in complying with
the requirements of this subsection. The report shall
include an analysis of adoption rates of International
ACH Transactions rules and formats, the efficacy of
increasing adoption rates, and potential
recommendations to increase adoption.
(c) Expansion of Financial Institution Provision of
Remittance Transfers.--
(1) Provision of guidelines to institutions.--Each
of the Federal banking agencies and the National Credit
Union Administration shall provide guidelines to
financial institutions under the jurisdiction of the
agency regarding the offering of low-cost remittance
transfers and no-cost or low-cost basic consumer
accounts, as well as agency services to remittance
transfer providers.
(2) Assistance to financial literacy commission.--
As part of its duties as members of the Financial
Literacy and Education Commission, the Bureau, the
Federal banking agencies, and the National Credit Union
Administration shall assist the Financial Literacy and
Education Commission in executing the Strategy for
Assuring Financial Empowerment (or the ``SAFE
Strategy''), as it relates to remittances.
(d) Federal Credit Union Act Conforming Amendment.--
Paragraph (12) of section 107 of the Federal Credit Union Act
(12 U.S.C. 1757) is amended to read as follows:
``(12) in accordance with regulations prescribed by
the Board--
``(A) to sell, to persons in the field of
membership, negotiable checks (including
travelers checks), money orders, and other
similar money transfer instruments (including
international and domestic electronic fund
transfers and remittance transfers, as defined
in section 919 of the Electronic Fund Transfer
Act); and
``(B) to cash checks and money orders for
persons in the field of membership for a
fee;''.
(e) Report on Feasibility of and Impediments to Use of
Remittance History in Calculation of Credit Score.--Before the
end of the 365-day period beginning on the date of enactment of
this Act, the Director shall submit a report to the President,
the Committee on Banking, Housing, and Urban Affairs of the
Senate, and the Committee on Financial Services of the House of
Representatives regarding--
(1) the manner in which the remittance history of a
consumer could be used to enhance the credit score of
the consumer;
(2) the current legal and business model barriers
and impediments that impede the use of the remittance
history of the consumer to enhance the credit score of
the consumer; and
(3) recommendations on the manner in which maximum
transparency and disclosure to consumers of exchange
rates for remittance transfers subject to this title
and the amendments made by this title may be
accomplished, whether or not such exchange rates are
known at the time of origination or payment by the
consumer for the remittance transfer, including
disclosure to the sender of the actual exchange rate
used and the amount of currency that the recipient of
the remittance transfer received, using the values of
the currency into which the funds were exchanged, as
contained in sections 919(a)(2)(D) and 919(a)(3) of the
Electronic Fund Transfer Act (as amended by this
section).
SEC. 1074. DEPARTMENT OF THE TREASURY STUDY ON ENDING THE
CONSERVATORSHIP OF FANNIE MAE, FREDDIE MAC, AND
REFORMING THE HOUSING FINANCE SYSTEM.
(a) Study Required.--
(1) In general.--The Secretary of the Treasury
shall conduct a study of and develop recommendations
regarding the options for ending the conservatorship of
the Federal National Mortgage Association (in this
section referred to as ``Fannie Mae'') and the Federal
Home Loan Mortgage Corporation (in this section
referred to as ``Freddie Mac''), while minimizing the
cost to taxpayers, including such options as--
(A) the gradual wind-down and liquidation
of such entities;
(B) the privatization of such entities;
(C) the incorporation of the functions of
such entities into a Federal agency;
(D) the dissolution of Fannie Mae and
Freddie Mac into smaller companies; or
(E) any other measures the Secretary
determines appropriate.
(2) Analyses.--The study required under paragraph
(1) shall include an analysis of--
(A) the role of the Federal Government in
supporting a stable, well-functioning housing
finance system, and whether and to what extent
the Federal Government should bear risks in
meeting Federal housing finance objectives;
(B) how the current structure of the
housing finance system can be improved;
(C) how the housing finance system should
support the continued availability of mortgage
credit to all segments of the market;
(D) how the housing finance system should
be structured to ensure that consumers continue
to have access to 30-year, fixed rate, pre-
payable mortgages and other mortgage products
that have simple terms that can be easily
understood;
(E) the role of the Federal Housing
Administration and the Department of Veterans
Affairs in a future housing system;
(F) the impact of reforms of the housing
finance system on the financing of rental
housing;
(G) the impact of reforms of the housing
finance system on secondary market liquidity;
(H) the role of standardization in the
housing finance system;
(I) how housing finance systems in other
countries offer insights that can help inform
options for reform in the United States; and
(J) the options for transition to a
reformed housing finance system.
(b) Report and Recommendations.--Not later than January 31,
2011, the Secretary of the Treasury shall submit the report and
recommendations required under subsection (a) to the Committee
on Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of
Representatives.
SEC. 1075. REASONABLE FEES AND RULES FOR PAYMENT CARD TRANSACTIONS.
(a) In General.--The Electronic Fund Transfer Act (15
U.S.C. 1693 et seq.) is amended--
(1) by redesignating sections 920 and 921 as
sections 921 and 922, respectively; and
(2) by inserting after section 919 the following:
``SEC. 920. REASONABLE FEES AND RULES FOR PAYMENT CARD TRANSACTIONS.
``(a) Reasonable Interchange Transaction Fees for
Electronic Debit Transactions.--
``(1) Regulatory authority over interchange
transaction fees.--The Board may prescribe regulations,
pursuant to section 553 of title 5, United States Code,
regarding any interchange transaction fee that an
issuer may receive or charge with respect to an
electronic debit transaction, to implement this
subsection (including related definitions), and to
prevent circumvention or evasion of this subsection.
``(2) Reasonable interchange transaction fees.--The
amount of any interchange transaction fee that an
issuer may receive or charge with respect to an
electronic debit transaction shall be reasonable and
proportional to the cost incurred by the issuer with
respect to the transaction.
``(3) Rulemaking required.--
``(A) In general.--The Board shall
prescribe regulations in final form not later
than 9 months after the date of enactment of
the Consumer Financial Protection Act of 2010,
to establish standards for assessing whether
the amount of any interchange transaction fee
described in paragraph (2) is reasonable and
proportional to the cost incurred by the issuer
with respect to the transaction.
``(B) Information collection.--The Board
may require any issuer (or agent of an issuer)
or payment card network to provide the Board
with such information as may be necessary to
carry out the provisions of this subsection and
the Board, in issuing rules under subparagraph
(A) and on at least a bi-annual basis
thereafter, shall disclose such aggregate or
summary information concerning the costs
incurred, and interchange transaction fees
charged or received, by issuers or payment card
networks in connection with the authorization,
clearance or settlement of electronic debit
transactions as the Board considers appropriate
and in the public interest.
``(4) Considerations; consultation.--In prescribing
regulations under paragraph (3)(A), the Board shall--
``(A) consider the functional similarity
between--
``(i) electronic debit
transactions; and
``(ii) checking transactions that
are required within the Federal Reserve
bank system to clear at par;
``(B) distinguish between--
``(i) the incremental cost incurred
by an issuer for the role of the issuer
in the authorization, clearance, or
settlement of a particular electronic
debit transaction, which cost shall be
considered under paragraph (2); and
``(ii) other costs incurred by an
issuer which are not specific to a
particular electronic debit
transaction, which costs shall not be
considered under paragraph (2); and
``(C) consult, as appropriate, with the
Comptroller of the Currency, the Board of
Directors of the Federal Deposit Insurance
Corporation, the Director of the Office of
Thrift Supervision, the National Credit Union
Administration Board, the Administrator of the
Small Business Administration, and the Director
of the Bureau of Consumer Financial Protection.
``(5) Adjustments to interchange transaction fees
for fraud prevention costs.--
``(A) Adjustments.--The Board may allow for
an adjustment to the fee amount received or
charged by an issuer under paragraph (2), if--
``(i) such adjustment is reasonably
necessary to make allowance for costs
incurred by the issuer in preventing
fraud in relation to electronic debit
transactions involving that issuer; and
``(ii) the issuer complies with the
fraud-related standards established by
the Board under subparagraph (B), which
standards shall--
``(I) be designed to ensure
that any fraud-related
adjustment of the issuer is
limited to the amount described
in clause (i) and takes into
account any fraud-related
reimbursements (including
amounts from charge-backs)
received from consumers,
merchants, or payment card
networks in relation to
electronic debit transactions
involving the issuer; and
``(II) require issuers to
take effective steps to reduce
the occurrence of, and costs
from, fraud in relation to
electronic debit transactions,
including through the
development and implementation
of cost-effective fraud
prevention technology.
``(B) Rulemaking required.--
``(i) In general.--The Board shall
prescribe regulations in final form not
later than 9 months after the date of
enactment of the Consumer Financial
Protection Act of 2010, to establish
standards for making adjustments under
this paragraph.
``(ii) Factors for consideration.--
In issuing the standards and
prescribing regulations under this
paragraph, the Board shall consider--
``(I) the nature, type, and
occurrence of fraud in
electronic debit transactions;
``(II) the extent to which
the occurrence of fraud depends
on whether authorization in an
electronic debit transaction is
based on signature, PIN, or
other means;
``(III) the available and
economical means by which fraud
on electronic debit
transactions may be reduced;
``(IV) the fraud prevention
and data security costs
expended by each party involved
in electronic debit
transactions (including
consumers, persons who accept
debit cards as a form of
payment, financial
institutions, retailers and
payment card networks);
``(V) the costs of
fraudulent transactions
absorbed by each party involved
in such transactions (including
consumers, persons who accept
debit cards as a form of
payment, financial
institutions, retailers and
payment card networks);
``(VI) the extent to which
interchange transaction fees
have in the past reduced or
increased incentives for
parties involved in electronic
debit transactions to reduce
fraud on such transactions; and
``(VII) such other factors
as the Board considers
appropriate.
``(6) Exemption for small issuers.--
``(A) In general.--This subsection shall
not apply to any issuer that, together with its
affiliates, has assets of less than
$10,000,000,000, and the Board shall exempt
such issuers from regulations prescribed under
paragraph (3)(A).
``(B) Definition.--For purposes of this
paragraph, the term ``issuer'' shall be limited
to the person holding the asset account that is
debited through an electronic debit
transaction.
``(7) Exemption for government-administered payment
programs and reloadable prepaid cards.--
``(A) In general.--This subsection shall
not apply to an interchange transaction fee
charged or received with respect to an
electronic debit transaction in which a person
uses--
``(i) a debit card or general-use
prepaid card that has been provided to
a person pursuant to a Federal, State
or local government-administered
payment program, in which the person
may only use the debit card or general-
use prepaid card to transfer or debit
funds, monetary value, or other assets
that have been provided pursuant to
such program; or
``(ii) a plastic card, payment
code, or device that is--
``(I) linked to funds,
monetary value, or assets which
are purchased or loaded on a
prepaid basis;
``(II) not issued or
approved for use to access or
debit any account held by or
for the benefit of the card
holder (other than a subaccount
or other method of recording or
tracking funds purchased or
loaded on the card on a prepaid
basis);
``(III) redeemable at
multiple, unaffiliated
merchants or service providers,
or automated teller machines;
``(IV) used to transfer or
debit funds, monetary value, or
other assets; and
``(V) reloadable and not
marketed or labeled as a gift
card or gift certificate.
``(B) Exception.--Notwithstanding
subparagraph (A), after the end of the 1-year
period beginning on the effective date provided
in paragraph (9), this subsection shall apply
to an interchange transaction fee charged or
received with respect to an electronic debit
transaction described in subparagraph (A)(i) in
which a person uses a general-use prepaid card,
or an electronic debit transaction described in
subparagraph (A)(ii), if any of the following
fees may be charged to a person with respect to
the card:
``(i) A fee for an overdraft,
including a shortage of funds or a
transaction processed for an amount
exceeding the account balance.
``(ii) A fee imposed by the issuer
for the first withdrawal per month from
an automated teller machine that is
part of the issuer's designated
automated teller machine network.
``(C) Definition.--For purposes of
subparagraph (B), the term `designated
automated teller machine network' means
either--
``(i) all automated teller machines
identified in the name of the issuer;
or
``(ii) any network of automated
teller machines identified by the
issuer that provides reasonable and
convenient access to the issuer's
customers.
``(D) Reporting.--Beginning 12 months after
the date of enactment of the Consumer Financial
Protection Act of 2010, the Board shall
annually provide a report to the Congress
regarding--
``(i) the prevalence of the use of
general-use prepaid cards in Federal,
State or local government-administered
payment programs; and
``(ii) the interchange transaction
fees and cardholder fees charged with
respect to the use of such general-use
prepaid cards.
``(8) Regulatory authority over network fees.--
``(A) In general.--The Board may prescribe
regulations, pursuant to section 553 of title
5, United States Code, regarding any network
fee.
``(B) Limitation.--The authority under
subparagraph (A) to prescribe regulations shall
be limited to regulations to ensure that--
``(i) a network fee is not used to
directly or indirectly compensate an
issuer with respect to an electronic
debit transaction; and
``(ii) a network fee is not used to
circumvent or evade the restrictions of
this subsection and regulations
prescribed under such subsection.
``(C) Rulemaking required.--The Board shall
prescribe regulations in final form before the
end of the 9-month period beginning on the date
of the enactment of the Consumer Financial
Protection Act of 2010, to carry out the
authorities provided under subparagraph (A).
``(9) Effective date.--This subsection shall take
effect at the end of the 12-month period beginning on
the date of the enactment of the Consumer Financial
Protection Act of 2010.
``(b) Limitation on Payment Card Network Restrictions.--
``(1) Prohibitions against exclusivity
arrangements.--
``(A) No exclusive network.--The Board
shall, before the end of the 1-year period
beginning on the date of the enactment of the
Consumer Financial Protection Act of 2010,
prescribe regulations providing that an issuer
or payment card network shall not directly or
through any agent, processor, or licensed
member of a payment card network, by contract,
requirement, condition, penalty, or otherwise,
restrict the number of payment card networks on
which an electronic debit transaction may be
processed to--
``(i) 1 such network; or
``(ii) 2 or more such networks
which are owned, controlled, or
otherwise operated by--
``(I) affiliated persons;
or
``(II) networks affiliated
with such issuer.
``(B) No routing restrictions.--The Board
shall, before the end of the 1-year period
beginning on the date of the enactment of the
Consumer Financial Protection Act of 2010,
prescribe regulations providing that an issuer
or payment card network shall not, directly or
through any agent, processor, or licensed
member of the network, by contract,
requirement, condition, penalty, or otherwise,
inhibit the ability of any person who accepts
debit cards for payments to direct the routing
of electronic debit transactions for processing
over any payment card network that may process
such transactions.
``(2) Limitation on restrictions on offering
discounts for use of a form of payment.--
``(A) In general.--A payment card network
shall not, directly or through any agent,
processor, or licensed member of the network,
by contract, requirement, condition, penalty,
or otherwise, inhibit the ability of any person
to provide a discount or in-kind incentive for
payment by the use of cash, checks, debit
cards, or credit cards to the extent that--
``(i) in the case of a discount or
in-kind incentive for payment by the
use of debit cards, the discount or in-
kind incentive does not differentiate
on the basis of the issuer or the
payment card network;
``(ii) in the case of a discount or
in-kind incentive for payment by the
use of credit cards, the discount or
in-kind incentive does not
differentiate on the basis of the
issuer or the payment card network; and
``(iii) to the extent required by
Federal law and applicable State law,
such discount or in-kind incentive is
offered to all prospective buyers and
disclosed clearly and conspicuously.
``(B) Lawful discounts.--For purposes of
this paragraph, the network may not penalize
any person for the providing of a discount that
is in compliance with Federal law and
applicable State law.
``(3) Limitation on restrictions on setting
transaction minimums or maximums.--
``(A) In general.--A payment card network
shall not, directly or through any agent,
processor, or licensed member of the network,
by contract, requirement, condition, penalty,
or otherwise, inhibit the ability--
``(i) of any person to set a
minimum dollar value for the acceptance
by that person of credit cards, to the
extent that--
``(I) such minimum dollar
value does not differentiate
between issuers or between
payment card networks; and
``(II) such minimum dollar
value does not exceed $10.00;
or
``(ii) of any Federal agency or
institution of higher education to set
a maximum dollar value for the
acceptance by that Federal agency or
institution of higher education of
credit cards, to the extent that such
maximum dollar value does not
differentiate between issuers or
between payment card networks.
``(B) Increase in minimum dollar amount.--
The Board may, by regulation prescribed
pursuant to section 553 of title 5, United
States Code, increase the amount of the dollar
value listed in subparagraph (A)(i)(II).
``(4) Rule of construction.--No provision of this
subsection shall be construed to authorize any person--
``(A) to discriminate between debit cards
within a payment card network on the basis of
the issuer that issued the debit card; or
``(B) to discriminate between credit cards
within a payment card network on the basis of
the issuer that issued the credit card.
``(c) Definitions.--For purposes of this section, the
following definitions shall apply:
``(1) Affiliate.--The term `affiliate' means any
company that controls, is controlled by, or is under
common control with another company.
``(2) Debit card.--The term `debit card'--
``(A) means any card, or other payment code
or device, issued or approved for use through a
payment card network to debit an asset account
(regardless of the purpose for which the
account is established), whether authorization
is based on signature, PIN, or other means;
``(B) includes a general-use prepaid card,
as that term is defined in section
915(a)(2)(A); and
``(C) does not include paper checks.
``(3) Credit card.--The term `credit card' has the
same meaning as in section 103 of the Truth in Lending
Act.
``(4) Discount.--The term `discount'--
``(A) means a reduction made from the price
that customers are informed is the regular
price; and
``(B) does not include any means of
increasing the price that customers are
informed is the regular price.
``(5) Electronic debit transaction.--The term
`electronic debit transaction' means a transaction in
which a person uses a debit card.
``(6) Federal agency.--The term `Federal agency'
means--
``(A) an agency (as defined in section 101
of title 31, United States Code); and
``(B) a Government corporation (as defined
in section 103 of title 5, United States Code).
``(7) Institution of higher education.--The term
`institution of higher education' has the same meaning
as in 101 and 102 of the Higher Education Act of 1965
(20 U.S.C. 1001, 1002).
``(8) Interchange transaction fee.--The term
`interchange transaction fee' means any fee
established, charged or received by a payment card
network for the purpose of compensating an issuer for
its involvement in an electronic debit transaction.
``(9) Issuer.--The term `issuer' means any person
who issues a debit card, or credit card, or the agent
of such person with respect to such card.
``(10) Network fee.--The term `network fee' means
any fee charged and received by a payment card network
with respect to an electronic debit transaction, other
than an interchange transaction fee.
``(11) Payment card network.--The term `payment
card network' means an entity that directly, or through
licensed members, processors, or agents, provides the
proprietary services, infrastructure, and software that
route information and data to conduct debit card or
credit card transaction authorization, clearance, and
settlement, and that a person uses in order to accept
as a form of payment a brand of debit card, credit card
or other device that may be used to carry out debit or
credit transactions.
``(d) Enforcement.--
``(1) In general.--Compliance with the requirements
imposed under this section shall be enforced under
section 918.
``(2) Exception.--Sections 916 and 917 shall not
apply with respect to this section or the requirements
imposed pursuant to this section.''.
(b) Amendment to the Food and Nutrition Act of 2008.--
Section 7(h)(10) of the Food and Nutrition Act of 2008 (7
U.S.C. 2016(h)(10)) is amended to read as follows:
``(10) Federal law not applicable.--Section 920 of
the Electronic Fund Transfer Act shall not apply to
electronic benefit transfer or reimbursement systems
under this Act.''.
(c) Amendment to the Farm Security and Rural Investment Act
of 2002.--Section 4402 of the Farm Security and Rural
Investment Act of 2002 (7 U.S.C. 3007) is amended by adding at
the end the following new subsection:
``(f) Federal Law Not Applicable.--Section 920 of the
Electronic Fund Transfer Act shall not apply to electronic
benefit transfer systems established under this section.''.
(d) Amendment to the Child Nutrition Act of 1966.--Section
11 of the Child Nutrition Act of 1966 (42 U.S.C. 1780) is
amended by adding at the end the following:
``(c) Federal Law Not Applicable.--Section 920 of the
Electronic Fund Transfer Act shall not apply to electronic
benefit transfer systems established under this Act or the
Richard B. Russell National School Lunch Act (42 U.S.C. 1751 et
seq.).''.
SEC. 1076. REVERSE MORTGAGE STUDY AND REGULATIONS.
(a) Study.--Not later than 1 year after the designated
transfer date, the Bureau shall conduct a study on reverse
mortgage transactions.
(b) Regulations.--
(1) In general.--If the Bureau determines through
the study required under subsection (a) that conditions
or limitations on reverse mortgage transactions are
necessary or appropriate for accomplishing the purposes
and objectives of this title, including protecting
borrowers with respect to the obtaining of reverse
mortgage loans for the purpose of funding investments,
annuities, and other investment products and the
suitability of a borrower in obtaining a reverse
mortgage for such purpose.
(2) Identified practices and integrated
disclosures.--The regulations prescribed under
paragraph (1) may, as the Bureau may so determine--
(A) identify any practice as unfair,
deceptive, or abusive in connection with a
reverse mortgage transaction; and
(B) provide for an integrated disclosure
standard and model disclosures for reverse
mortgage transactions, consistent with section
4302(d), that combines the relevant disclosures
required under the Truth in Lending Act (15
U.S.C. 1601 et seq.) and the Real Estate
Settlement Procedures Act, with the disclosures
required to be provided to consumers for Home
Equity Conversion Mortgages under section 255
of the National Housing Act.
(c) Rule of Construction.--This section shall not be
construed as limiting the authority of the Bureau to issue
regulations, orders, or guidance that apply to reverse
mortgages prior to the completion of the study required under
subsection (a).
SEC. 1077. REPORT ON PRIVATE EDUCATION LOANS AND PRIVATE EDUCATIONAL
LENDERS.
(a) Report.--Not later than 2 years after the date of
enactment of this Act, the Director and the Secretary of
Education, in consultation with the Commissioners of the
Federal Trade Commission, and the Attorney General of the
United States, shall submit a report to the Committee on
Banking, Housing, and Urban Affairs and the Committee on
Health, Education, Labor, and Pensions of the Senate and the
Committee on Financial Services and the Committee on Education
and Labor of the House of Representatives, on private education
loans (as that term is defined in section 140 of the Truth in
Lending Act (15 U.S.C. 1650)) and private educational lenders
(as that term is defined in such section).
(b) Content.--The report required by this section shall
examine, at a minimum--
(1) the growth and changes of the private education
loan market in the United States;
(2) factors influencing such growth and changes;
(3) the extent to which students and parents of
students rely on private education loans to finance
postsecondary education and the private education loan
indebtedness of borrowers;
(4) the characteristics of private education loan
borrowers, including--
(A) the types of institutions of higher
education that they attend;
(B) socioeconomic characteristics
(including income and education levels, racial
characteristics, geographical background, age,
and gender);
(C) what other forms of financing borrowers
use to pay for education;
(D) whether they exhaust their Federal loan
options before taking out a private loan;
(E) whether such borrowers are dependent or
independent students (as determined under part
F of title IV of the Higher Education Act of
1965) or parents of such students;
(F) whether such borrowers are students
enrolled in a program leading to a certificate,
license, or credential other than a degree, an
associates degree, a baccalaureate degree, or a
graduate or professional degree; and
(G) if practicable, employment and
repayment behaviors;
(5) the characteristics of private educational
lenders, including whether such creditors are for-
profit, non-profit, or institutions of higher
education;
(6) the underwriting criteria used by private
educational lenders, including the use of cohort
default rate (as such term is defined in section 435(m)
of the Higher Education Act of 1965);
(7) the terms, conditions, and pricing of private
education loans;
(8) the consumer protections available to private
education loan borrowers, including the effectiveness
of existing disclosures and requirements and borrowers'
awareness and understanding about terms and conditions
of various financial products;
(9) whether Federal regulators and the public have
access to information sufficient to provide them with
assurances that private education loans are provided in
accord with the Nation's fair lending laws and that
allows public officials to determine lender compliance
with fair lending laws; and
(10) any statutory or legislative recommendations
necessary to improve consumer protections for private
education loan borrowers and to better enable Federal
regulators and the public to ascertain private
educational lender compliance with fair lending laws.
SEC. 1078. STUDY AND REPORT ON CREDIT SCORES.
(a) Study.--The Bureau shall conduct a study on the nature,
range, and size of variations between the credit scores sold to
creditors and those sold to consumers by consumer reporting
agencies that compile and maintain files on consumers on a
nationwide basis (as defined in section 603(p) of the Fair
Credit Reporting Act; 15 U.S.C. 1681a(p)), and whether such
variations disadvantage consumers.
(b) Report to Congress.--The Bureau shall submit a report
to Congress on the results of the study conducted under
subsection (a) not later than 1 year after the date of
enactment of this Act.
SEC. 1079. REVIEW, REPORT, AND PROGRAM WITH RESPECT TO EXCHANGE
FACILITATORS.
(a) Review.--The Director shall review all Federal laws and
regulations relating to the protection of consumers who use
exchange facilitators for transactions primarily for personal,
family, or household purposes.
(b) Report.--Not later than 1 year after the designated
transfer date, the Director shall submit to Congress a report
describing--
(1) recommendations for legislation to ensure the
appropriate protection of consumers who use exchange
facilitators for transactions primarily for personal,
family, or household purposes;
(2) recommendations for updating the regulations of
Federal departments and agencies to ensure the
appropriate protection of such consumers; and
(3) recommendations for regulations to ensure the
appropriate protection of such consumers.
(c) Program.--Not later than 2 years after the date of the
submission of the report under subsection (b), the Bureau
shall, consistent with subtitle B, propose regulations or
otherwise establish a program to protect consumers who use
exchange facilitators.
(d) Exchange Facilitator Defined.--In this section, the
term ``exchange facilitator'' means a person that--
(1) facilitates, for a fee, an exchange of like
kind property by entering into an agreement with a
taxpayer by which the exchange facilitator acquires
from the taxpayer the contractual rights to sell the
taxpayer's relinquished property and transfers a
replacement property to the taxpayer as a qualified
intermediary (within the meaning of Treasury
Regulations section 1.1031(k)-1(g)(4)) or enters into
an agreement with the taxpayer to take title to a
property as an exchange accommodation titleholder
(within the meaning of Revenue Procedure 2000-37) or
enters into an agreement with a taxpayer to act as a
qualified trustee or qualified escrow holder (within
the meaning of Treasury Regulations section 1.1031(k)-
1(g)(3));
(2) maintains an office for the purpose of
soliciting business to perform the services described
in paragraph (1); or
(3) advertises any of the services described in
paragraph (1) or solicits clients in printed
publications, direct mail, television or radio
advertisements, telephone calls, facsimile
transmissions, or other electronic communications
directed to the general public for purposes of
providing any such services.
SEC. 1079A. FINANCIAL FRAUD PROVISIONS.
(a) Sentencing Guidelines.--
(1) Securities fraud.--
(A) Directive.--Pursuant to its authority
under section 994 of title 28, United States
Code, and in accordance with this paragraph,
the United States Sentencing Commission shall
review and, if appropriate, amend the Federal
Sentencing Guidelines and policy statements
applicable to persons convicted of offenses
relating to securities fraud or any other
similar provision of law, in order to reflect
the intent of Congress that penalties for the
offenses under the guidelines and policy
statements appropriately account for the
potential and actual harm to the public and the
financial markets from the offenses.
(B) Requirements.--In making any amendments
to the Federal Sentencing Guidelines and policy
statements under subparagraph (A), the United
States Sentencing Commission shall--
(i) ensure that the guidelines and
policy statements, particularly section
2B1.1(b)(14) and section 2B1.1(b)(17)
(and any successors thereto), reflect--
(I) the serious nature of
the offenses described in
subparagraph (A);
(II) the need for an
effective deterrent and
appropriate punishment to
prevent the offenses; and
(III) the effectiveness of
incarceration in furthering the
objectives described in
subclauses (I) and (II);
(ii) consider the extent to which
the guidelines appropriately account
for the potential and actual harm to
the public and the financial markets
resulting from the offenses;
(iii) ensure reasonable consistency
with other relevant directives and
guidelines and Federal statutes;
(iv) make any necessary conforming
changes to guidelines; and
(v) ensure that the guidelines
adequately meet the purposes of
sentencing, as set forth in section
3553(a)(2) of title 18, United States
Code.
(2) Financial institution fraud.--
(A) Directive.--Pursuant to its authority
under section 994 of title 28, United States
Code, and in accordance with this paragraph,
the United States Sentencing Commission shall
review and, if appropriate, amend the Federal
Sentencing Guidelines and policy statements
applicable to persons convicted of fraud
offenses relating to financial institutions or
federally related mortgage loans and any other
similar provisions of law, to reflect the
intent of Congress that the penalties for the
offenses under the guidelines and policy
statements ensure appropriate terms of
imprisonment for offenders involved in
substantial bank frauds or other frauds
relating to financial institutions.
(B) Requirements.--In making any amendments
to the Federal Sentencing Guidelines and policy
statements under subparagraph (A), the United
States Sentencing Commission shall--
(i) ensure that the guidelines and
policy statements reflect--
(I) the serious nature of
the offenses described in
subparagraph (A);
(II) the need for an
effective deterrent and
appropriate punishment to
prevent the offenses; and
(III) the effectiveness of
incarceration in furthering the
objectives described in
subclauses (I) and (II);
(ii) consider the extent to which
the guidelines appropriately account
for the potential and actual harm to
the public and the financial markets
resulting from the offenses;
(iii) ensure reasonable consistency
with other relevant directives and
guidelines and Federal statutes;
(iv) make any necessary conforming
changes to guidelines; and
(v) ensure that the guidelines
adequately meet the purposes of
sentencing, as set forth in section
3553(a)(2) of title 18, United States
Code.
(b) Extension of Statute of Limitations for Securities
Fraud Violations.--
(1) In general.--Chapter 213 of title 18, United
States Code, is amended by adding at the end the
following:
``Sec. 3301. Securities fraud offenses
``(a) Definition.--In this section, the term `securities
fraud offense' means a violation of, or a conspiracy or an
attempt to violate--
``(1) section 1348;
``(2) section 32(a) of the Securities Exchange Act
of 1934 (15 U.S.C. 78ff(a));
``(3) section 24 of the Securities Act of 1933 (15
U.S.C. 77x);
``(4) section 217 of the Investment Advisers Act of
1940 (15 U.S.C. 80b-17);
``(5) section 49 of the Investment Company Act of
1940 (15 U.S.C. 80a-48); or
``(6) section 325 of the Trust Indenture Act of
1939 (15 U.S.C. 77yyy).
``(b) Limitation.--No person shall be prosecuted, tried, or
punished for a securities fraud offense, unless the indictment
is found or the information is instituted within 6 years after
the commission of the offense.''.
(2) Technical and conforming amendment.--The table
of sections for chapter 213 of title 18, United States
Code, is amended by adding at the end the following:
``3301. Securities fraud offenses.''.
(c) Amendments to the False Claims Act Relating to
Limitations on Actions.--Section 3730(h) of title 31, United
States Code, is amended--
(1) in paragraph (1), by striking ``or agent on
behalf of the employee, contractor, or agent or
associated others in furtherance of other efforts to
stop 1 or more violations of this subchapter'' and
inserting ``agent or associated others in furtherance
of an action under this section or other efforts to
stop 1 or more violations of this subchapter''; and
(2) by adding at the end the following:
``(3) Limitation on bringing civil action.--A civil
action under this subsection may not be brought more
than 3 years after the date when the retaliation
occurred.''.
Subtitle H--Conforming Amendments
SEC. 1081. AMENDMENTS TO THE INSPECTOR GENERAL ACT.
Effective on the date of enactment of this Act, the
Inspector General Act of 1978 (5 U.S.C. App. 3) is amended--
(1) in section 8G(a)(2), by inserting ``and the
Bureau of Consumer Financial Protection'' after ``Board
of Governors of the Federal Reserve System'';
(2) in section 8G(c), by adding at the end the
following: ``For purposes of implementing this section,
the Chairman of the Board of Governors of the Federal
Reserve System shall appoint the Inspector General of
the Board of Governors of the Federal Reserve System
and the Bureau of Consumer Financial Protection. The
Inspector General of the Board of Governors of the
Federal Reserve System and the Bureau of Consumer
Financial Protection shall have all of the authorities
and responsibilities provided by this Act with respect
to the Bureau of Consumer Financial Protection, as if
the Bureau were part of the Board of Governors of the
Federal Reserve System.''; and
(3) in section 8G(g)(3), by inserting ``and the
Bureau of Consumer Financial Protection'' after ``Board
of Governors of the Federal Reserve System'' the first
place that term appears.
SEC. 1082. AMENDMENTS TO THE PRIVACY ACT OF 1974.
Effective on the date of enactment of this Act, section
552a of title 5, United States Code, is amended by adding at
the end the following:
``(w) Applicability to Bureau of Consumer Financial
Protection.--Except as provided in the Consumer Financial
Protection Act of 2010, this section shall apply with respect
to the Bureau of Consumer Financial Protection.''.
SEC. 1083. AMENDMENTS TO THE ALTERNATIVE MORTGAGE TRANSACTION PARITY
ACT OF 1982.
(a) In General.--The Alternative Mortgage Transaction
Parity Act of 1982 (12 U.S.C. 3801 et seq.) is amended--
(1) in section 803 (12 U.S.C. 3802(1)), by striking
``1974'' and all that follows through ``described and
defined'' and inserting the following: ``1974), in
which the interest rate or finance charge may be
adjusted or renegotiated, described and defined''; and
(2) in section 804 (12 U.S.C. 3803)--
(A) in subsection (a)--
(i) in each of paragraphs (1), (2),
and (3), by inserting after
``transactions made'' each place that
term appears ``on or before the
designated transfer date, as determined
under section 1062 of the Consumer
Financial Protection Act of 2010,'';
(ii) in paragraph (2), by striking
``and'' at the end;
(iii) in paragraph (3), by striking
the period at the end and inserting ``;
and''; and
(iv) by adding at the end the
following new paragraph:
``(4) with respect to transactions made after the
designated transfer date, only in accordance with
regulations governing alternative mortgage
transactions, as issued by the Bureau of Consumer
Financial Protection for federally chartered housing
creditors, in accordance with the rulemaking authority
granted to the Bureau of Consumer Financial Protection
with regard to federally chartered housing creditors
under provisions of law other than this section.'';
(B) by striking subsection (c) and
inserting the following:
``(c) Preemption of State Law.--An alternative mortgage
transaction may be made by a housing creditor in accordance
with this section, notwithstanding any State constitution, law,
or regulation that prohibits an alternative mortgage
transaction. For purposes of this subsection, a State
constitution, law, or regulation that prohibits an alternative
mortgage transaction does not include any State constitution,
law, or regulation that regulates mortgage transactions
generally, including any restriction on prepayment penalties or
late charges.''; and
(C) by adding at the end the following:
``(d) Bureau Actions.--The Bureau of Consumer Financial
Protection shall--
``(1) review the regulations identified by the
Comptroller of the Currency and the National Credit
Union Administration, (as those rules exist on the
designated transfer date), as applicable under
paragraphs (1) through (3) of subsection (a);
``(2) determine whether such regulations are fair
and not deceptive and otherwise meet the objectives of
the Consumer Financial Protection Act of 2010; and
``(3) promulgate regulations under subsection
(a)(4) after the designated transfer date.
``(e) Designated Transfer Date.--As used in this section,
the term `designated transfer date' means the date determined
under section 1062 of the Consumer Financial Protection Act of
2010.''.
(b) Effective Date.--This section and the amendments made
by this section shall become effective on the designated
transfer date.
(c) Rule of Construction.--The amendments made by
subsection (a) shall not affect any transaction covered by the
Alternative Mortgage Transaction Parity Act of l982 (12 U.S.C.
3801 et seq.) and entered into on or before the designated
transfer date.
SEC. 1084. AMENDMENTS TO THE ELECTRONIC FUND TRANSFER ACT.
The Electronic Fund Transfer Act (15 U.S.C. 1693 et seq.)
is amended--
(1) by striking ``Board'' each place that term
appears and inserting ``Bureau'', except in subsections
(a) and (e) of section 904 (as amended in paragraph (3)
of this section) and in 918 (15 U.S.C. 1693o) (as so
designated by the Credit Card Act of 2009) and section
920 (as added by section 1076);
(2) in section 903 (15 U.S.C. 1693a)--
(A) by redesignating paragraphs (3) through
(11) as paragraphs (4) through (12),
respectively; and
(B) by inserting after paragraph (3) the
following:
``(4) the term `Bureau' means the Bureau of
Consumer Financial Protection;'';
(3) in section 904 (15 U.S.C. 1693b)--
(A) in subsection (a), by striking ``(a)
Prescription by Board.--The Board shall
prescribe regulations to carry out the purposes
of this title.'' and inserting the following:
``(a) Prescription by the Bureau and the Board.--
``(1) In general.--Except as provided in paragraph
(2), the Bureau shall prescribe rules to carry out the
purposes of this title.
``(2) Authority of the board.--The Board shall have
sole authority to prescribe rules--
``(A) to carry out the purposes of this
title with respect to a person described in
section 1029(a) of the Consumer Financial
Protection Act of 2010; and
``(B) to carry out the purposes of section
920.''; and
(B) by adding at the end the following new
subsection:
``(e) Deference.--No provision of this title may be
construed as altering, limiting, or otherwise affecting the
deference that a court affords to--
``(1) the Bureau in making determinations regarding
the meaning or interpretation of any provision of this
title for which the Bureau has authority to prescribe
regulations; or
``(2) the Board in making determinations regarding
the meaning or interpretation of section 920.''.
(4) in section 916(d) (15 U.S.C. 1693m) (as so
designated by the Credit CARD Act of 2009)--
(A) in the subsection heading, by striking
``of Board or Approval of Duly Authorized
Official or Employee of Federal Reserve
System'';
(B) by inserting ``Bureau or the'' before
``Board'' each place that term appears; and
(C) by inserting ``Bureau of Consumer
Financial Protection or the'' before ``Federal
Reserve System''; and
(5) in section 918 (15 U.S.C. 1693o) (as so
designated by the Credit CARD Act of 2009)--
(A) in subsection (a)--
(i) by striking ``Compliance'' and
inserting ``Subject to subtitle B of
the Consumer Financial Protection Act
of 2010, compliance'';
(ii) by striking paragraphs (1) and
(2), and inserting the following:
``(1) section 8 of the Federal Deposit Insurance
Act, by the appropriate Federal banking agency, as
defined in section 3(q) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(q)), with respect to--
``(A) national banks, Federal savings
associations, and Federal branches and Federal
agencies of foreign banks;
``(B) member banks of the Federal Reserve
System (other than national banks), branches
and agencies of foreign banks (other than
Federal branches, Federal agencies, and insured
State branches of foreign banks), commercial
lending companies owned or controlled by
foreign banks, and organizations operating
under section 25 or 25A of the Federal Reserve
Act; and
``(C) banks and State savings associations
insured by the Federal Deposit Insurance
Corporation (other than members of the Federal
Reserve System), and insured State branches of
foreign banks;'';
(iii) by redesignating paragraphs
(3) through (5) as paragraphs (2)
through (4), respectively;
(iv) in paragraph (2) (as so
redesignated), by striking the period
at the end and inserting a semicolon;
(v) in paragraph (3) (as so
redesignated), by striking ``and'' at
the end;
(vi) in paragraph (4) (as so
redesignated), by striking the period
at the end and inserting ``and''; and
(vii) by adding at the end the
following:
``(5) subtitle E of the Consumer Financial
Protection Act of 2010, by the Bureau, with respect to
any person subject to this title, except that the
Bureau shall not have authority to enforce the
requirements of section 920 or any regulations
prescribed by the Board under section 920.'';
(B) in subsection (b), by inserting ``any
of paragraphs (1) through (4) of'' before
``subsection (a)'' each place that term
appears; and
(C) by striking subsection (c) and
inserting the following:
``(c) Overall Enforcement Authority of the Federal Trade
Commission.--Except to the extent that enforcement of the
requirements imposed under this title is specifically committed
to some other Government agency under any of paragraphs (1)
through (4) of subsection (a), and subject to subtitle B of the
Consumer Financial Protection Act of 2010, the Federal Trade
Commission shall be authorized to enforce such requirements.
For the purpose of the exercise by the Federal Trade Commission
of its functions and powers under the Federal Trade Commission
Act, a violation of any requirement imposed under this title
shall be deemed a violation of a requirement imposed under that
Act. All of the functions and powers of the Federal Trade
Commission under the Federal Trade Commission Act are available
to the Federal Trade Commission to enforce compliance by any
person subject to the jurisdiction of the Federal Trade
Commission with the requirements imposed under this title,
irrespective of whether that person is engaged in commerce or
meets any other jurisdictional tests under the Federal Trade
Commission Act.''.
SEC. 1085. AMENDMENTS TO THE EQUAL CREDIT OPPORTUNITY ACT.
The Equal Credit Opportunity Act (15 U.S.C. 1691 et seq.)
is amended--
(1) by striking ``Board'' each place that term
appears, other than in section 703(f) (as added by this
section) and section 704(a)(4) (15 U.S.C. 1691c(a)(4)),
and inserting ``Bureau'';
(2) in section 702 (15 U.S.C. 1691a), by striking
subsection (c) and inserting the following:
``(c) The term `Bureau' means the Bureau of Consumer
Financial Protection.'';
(3) in section 703 (15 U.S.C. 1691b)--
(A) by striking the section heading and
inserting the following:
``SEC. 703. PROMULGATION OF REGULATIONS BY THE BUREAU.'';
(B) by striking ``(a) Regulations.--'';
(C) by striking subsection (b);
(D) by redesignating paragraphs (1) through
(5) as subsections (a) through (e),
respectively;
(E) in subsection (c), as so redesignated,
by striking ``paragraph (2)'' and inserting
``subsection (b)''; and
(F) by adding at the end the following:
``(f) Board Authority.--Notwithstanding subsection (a), the
Board shall prescribe regulations to carry out the purposes of
this title with respect to a person described in section
1029(a) of the Consumer Financial Protection Act of 2010. These
regulations may contain but are not limited to such
classifications, differentiation, or other provision, and may
provide for such adjustments and exceptions for any class of
transactions, as in the judgment of the Board are necessary or
proper to effectuate the purposes of this title, to prevent
circumvention or evasion thereof, or to facilitate or
substantiate compliance therewith.
``(g) Deference.--Notwithstanding any power granted to any
Federal agency under this title, the deference that a court
affords to a Federal agency with respect to a determination
made by such agency relating to the meaning or interpretation
of any provision of this title that is subject to the
jurisdiction of such agency shall be applied as if that agency
were the only agency authorized to apply, enforce, interpret,
or administer the provisions of this title'';
(4) in section 704 (15 U.S.C. 1691c)--
(A) in subsection (a)--
(i) by striking ``Compliance'' and
inserting ``Subject to subtitle B of
the Consumer Protection Financial
Protection Act of 2010'';
(ii) by striking paragraphs (1) and
(2) and inserting the following:
``(1) section 8 of the Federal Deposit Insurance
Act, by the appropriate Federal banking agency, as
defined in section 3(q) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(q)), with respect to--
``(A) national banks, Federal savings
associations, and Federal branches and Federal
agencies of foreign banks;
``(B) member banks of the Federal Reserve
System (other than national banks), branches
and agencies of foreign banks (other than
Federal branches, Federal agencies, and insured
State branches of foreign banks), commercial
lending companies owned or controlled by
foreign banks, and organizations operating
under section 25 or 25A of the Federal Reserve
Act; and
``(C) banks and State savings associations
insured by the Federal Deposit Insurance
Corporation (other than members of the Federal
Reserve System), and insured State branches of
foreign banks;'';
(iii) by redesignating paragraphs
(3) through (9) as paragraphs (2)
through (8), respectively;
(iv) in paragraph (7) (as so
redesignated), by striking ``and'' at
the end;
(v) in paragraph (8) (as so
redesignated), by striking the period
at the end, and inserting ``; and'';
and
(vi) by adding at the end the
following:
``(9) Subtitle E of the Consumer Financial
Protection Act of 2010, by the Bureau, with respect to
any person subject to this title.'';
(B) by striking subsection (c) and
inserting the following:
``(c) Overall Enforcement Authority of Federal Trade
Commission.--Except to the extent that enforcement of the
requirements imposed under this title is specifically committed
to some other Government agency under any of paragraphs (1)
through (8) of subsection (a), and subject to subtitle B of the
Consumer Financial Protection Act of 2010, the Federal Trade
Commission shall be authorized to enforce such requirements.
For the purpose of the exercise by the Federal Trade Commission
of its functions and powers under the Federal Trade Commission
Act (15 U.S.C. 41 et seq.), a violation of any requirement
imposed under this subchapter shall be deemed a violation of a
requirement imposed under that Act. All of the functions and
powers of the Federal Trade Commission under the Federal Trade
Commission Act are available to the Federal Trade Commission to
enforce compliance by any person with the requirements imposed
under this title, irrespective of whether that person is
engaged in commerce or meets any other jurisdictional tests
under the Federal Trade Commission Act, including the power to
enforce any rule prescribed by the Bureau under this title in
the same manner as if the violation had been a violation of a
Federal Trade Commission trade regulation rule.''; and
(C) in subsection (d), by striking
``Board'' and inserting ``Bureau'';
(5) in section 706(e) (15 U.S.C. 1691e(e))--
(A) in the subsection heading--
(i) by striking ``Board'' each
place that term appears and inserting
``Bureau''; and
(ii) by striking ``Federal Reserve
System'' and inserting ``Bureau of
Consumer Financial Protection''; and
(B) by striking ``Federal Reserve System''
and inserting ``Bureau of Consumer Financial
Protection'';
(6) in section 706(g) (15 U.S.C. 1691e(g)), by
striking ``(3)'' and inserting ``(9)''; and
(7) in section 706(f) (15 U.S.C. 1691e(f)), by
striking ``two years from'' each place that term
appears and inserting ``5 years after''.
SEC. 1086. AMENDMENTS TO THE EXPEDITED FUNDS AVAILABILITY ACT.
(a) Amendment to Section 603.--Section 603(d)(1) of the
Expedited Funds Availability Act (12 U.S.C. 4002) is amended by
inserting after ``Board'' the following ``, jointly with the
Director of the Bureau of Consumer Financial Protection,''.
(b) Amendments to Section 604.--Section 604 of the
Expedited Funds Availability Act (12 U.S.C. 4003) is amended--
(1) by inserting after ``Board'' each place that
term appears, other than in subsection (f), the
following: ``, jointly with the Director of the Bureau
of Consumer Financial Protection,''; and
(2) in subsection (f), by striking ``Board.'' each
place that term appears and inserting the following:
``Board, jointly with the Director of the Bureau of
Consumer Financial Protection.''.
(c) Amendments to Section 605.--Section 605 of the
Expedited Funds Availability Act (12 U.S.C. 4004) is amended--
(1) by inserting after ``Board'' each place that
term appears, other than in the heading for section
605(f)(1), the following: ``, jointly with the Director
of the Bureau of Consumer Financial Protection,''; and
(2) in subsection (f)(1), in the paragraph heading,
by inserting ``and bureau'' after ``board''.
(d) Amendments to Section 609.--Section 609 of the
Expedited Funds Availability Act (12 U.S.C. 4008) is amended:
(1) in subsection (a), by inserting after ``Board''
the following ``, jointly with the Director of the
Bureau of Consumer Financial Protection,''; and
(2) by striking subsection (e) and inserting the
following:
``(e) Consultations.--In prescribing regulations under
subsections (a) and (b), the Board and the Director of the
Bureau of Consumer Financial Protection, in the case of
subsection (a), and the Board, in the case of subsection (b),
shall consult with the Comptroller of the Currency, the Board
of Directors of the Federal Deposit Insurance Corporation, and
the National Credit Union Administration Board.''.
(e) Expedited Funds Availability Improvements.--Section 603
of the Expedited Funds Availability Act (12 U.S.C. 4002) is
amended--
(1) in subsection (a)(2)(D), by striking ``$100''
and inserting ``$200''; and
(2) in subsection (b)(3)(C), in the subparagraph
heading, by striking ``$100'' and inserting ``$200'';
and
(3) in subsection (c)(1)(B)(iii), in the clause
heading, by striking ``$100'' and inserting ``$200''.
(f) Regular Adjustments for Inflation.--Section 607 of the
Expedited Funds Availability Act (12 U.S.C. 4006) is amended by
adding at the end the following:
``(f) Adjustments to Dollar Amounts for Inflation.--The
dollar amounts under this title shall be adjusted every 5 years
after December 31, 2011, by the annual percentage increase in
the Consumer Price Index for Urban Wage Earners and Clerical
Workers, as published by the Bureau of Labor Statistics,
rounded to the nearest multiple of $25.''.
SEC. 1087. AMENDMENTS TO THE FAIR CREDIT BILLING ACT.
The Fair Credit Billing Act (15 U.S.C. 1666-1666j) is
amended by striking ``Board'' each place that term appears,
other than in section 105(i) (as added by this subtitle) and
inserting ``Bureau''.
SEC. 1088. AMENDMENTS TO THE FAIR CREDIT REPORTING ACT AND THE FAIR AND
ACCURATE CREDIT TRANSACTIONS ACT OF 2003.
(a) Fair Credit Reporting Act.--The Fair Credit Reporting
Act (15 U.S.C. 1681 et seq.) is amended--
(1) in section 603 (15 U.S.C. 1681a)--
(A) by redesignating subsections (w) and
(x) as subsections (x) and (y), respectively;
and
(B) by inserting after subsection (v) the
following:
``(w) The term `Bureau' means the Bureau of Consumer
Financial Protection.''; and
(2) except as otherwise specifically provided in
this subsection--
(A) by striking ``Federal Trade
Commission'' each place that term appears and
inserting ``Bureau'';
(B) by striking ``FTC'' each place that
term appears and inserting ``Bureau'';
(C) by striking ``the Commission'' each
place that term appears, other than sections
615(e) (15 U.S.C. 1681m(e)) and 628(a)(1) (15
U.S.C. 1681w(a)(1)), and inserting ``the
Bureau''; and
(D) by striking ``The Federal banking
agencies, the National Credit Union
Administration, and the Commission shall
jointly'' each place that term appears, other
than section 615(e)(1) (15 U.S.C. 1681m(e)) and
section 628(a)(1) (15 U.S.C. 1681w(a)(1)), and
inserting ``The Bureau shall'';
(3) in section 603(k)(2) (15 U.S.C. 1681a(k)(2)),
by striking ``Board of Governors of the Federal Reserve
System'' and inserting ``Bureau'';
(4) in section 604(g) (15 U.S.C. 1681b(g))--
(A) in paragraph (3), by striking
subparagraph (C) and inserting the following:
``(C) as otherwise determined to be
necessary and appropriate, by regulation or
order, by the Bureau or the applicable State
insurance authority (with respect to any person
engaged in providing insurance or
annuities).''; and
(B) by striking paragraph (5) and inserting
the following:
``(5) Regulations and effective date for paragraph
(2).--
``(A) Regulations required.--The Bureau
may, after notice and opportunity for comment,
prescribe regulations that permit transactions
under paragraph (2) that are determined to be
necessary and appropriate to protect legitimate
operational, transactional, risk, consumer, and
other needs (and which shall include permitting
actions necessary for administrative
verification purposes), consistent with the
intent of paragraph (2) to restrict the use of
medical information for inappropriate
purposes.'';
(5) in section 605(h)(2)(A) (15 U.S.C.
1681c(h)(2)(A)), by striking ``with respect to the
entities that are subject to their respective
enforcement authority under section 621'' and inserting
``, in consultation with the Federal banking agencies,
the National Credit Union Administration, and the
Federal Trade Commission,''.
(6) in section 611(e)(2) (15 U.S.C. 1681i(e)), by
striking paragraph (2) and inserting the following:
``(2) Exclusion.--Complaints received or obtained
by the Bureau pursuant to its investigative authority
under the Consumer Financial Protection Act of 2010
shall not be subject to paragraph (1).'';
(7) in section 615(d)(2)(B) (15 U.S.C.
1681m(d)(2)(B)), by striking ``the Federal banking
agencies'' and inserting ``the Federal Trade
Commission, the Federal banking agencies,'';
(8) in section 615(e)(1) (15 U.S.C. 1681m(e)(1)),
by striking ``and the Commission'' and inserting ``the
Federal Trade Commission, the Commodity Futures Trading
Commission, and the Securities and Exchange
Commission'';
(9) in section 615(h)(6) (15 U.S.C. 1681m(h)(6)),
by striking subparagraph (A) and inserting the
following:
``(A) Rules required.--The Bureau shall
prescribe rules to carry out this
subsection.'';
(10) in section 621 (15 U.S.C. 1681s)--
(A) by striking subsection (a) and
inserting the following:
``(a) Enforcement by Federal Trade Commission.--
``(1) In general.--The Federal Trade Commission
shall be authorized to enforce compliance with the
requirements imposed by this title under the Federal
Trade Commission Act (15 U.S.C. 41 et seq.), with
respect to consumer reporting agencies and all other
persons subject thereto, except to the extent that
enforcement of the requirements imposed under this
title is specifically committed to some other
Government agency under any of subparagraphs (A)
through (G) of subsection (b)(1), and subject to
subtitle B of the Consumer Financial Protection Act of
2010, subsection (b). For the purpose of the exercise
by the Federal Trade Commission of its functions and
powers under the Federal Trade Commission Act, a
violation of any requirement or prohibition imposed
under this title shall constitute an unfair or
deceptive act or practice in commerce, in violation of
section 5(a) of the Federal Trade Commission Act (15
U.S.C. 45(a)), and shall be subject to enforcement by
the Federal Trade Commission under section 5(b) of that
Act with respect to any consumer reporting agency or
person that is subject to enforcement by the Federal
Trade Commission pursuant to this subsection,
irrespective of whether that person is engaged in
commerce or meets any other jurisdictional tests under
the Federal Trade Commission Act. The Federal Trade
Commission shall have such procedural, investigative,
and enforcement powers, including the power to issue
procedural rules in enforcing compliance with the
requirements imposed under this title and to require
the filing of reports, the production of documents, and
the appearance of witnesses, as though the applicable
terms and conditions of the Federal Trade Commission
Act were part of this title. Any person violating any
of the provisions of this title shall be subject to the
penalties and entitled to the privileges and immunities
provided in the Federal Trade Commission Act as though
the applicable terms and provisions of such Act are
part of this title.
``(2) Penalties.--
``(A) Knowing violations.--Except as
otherwise provided by subtitle B of the
Consumer Financial Protection Act of 2010, in
the event of a knowing violation, which
constitutes a pattern or practice of violations
of this title, the Federal Trade Commission may
commence a civil action to recover a civil
penalty in a district court of the United
States against any person that violates this
title. In such action, such person shall be
liable for a civil penalty of not more than
$2,500 per violation.
``(B) Determining penalty amount.--In
determining the amount of a civil penalty under
subparagraph (A), the court shall take into
account the degree of culpability, any history
of such prior conduct, ability to pay, effect
on ability to continue to do business, and such
other matters as justice may require.
``(C) Limitation.--Notwithstanding
paragraph (2), a court may not impose any civil
penalty on a person for a violation of section
623(a)(1), unless the person has been enjoined
from committing the violation, or ordered not
to commit the violation, in an action or
proceeding brought by or on behalf of the
Federal Trade Commission, and has violated the
injunction or order, and the court may not
impose any civil penalty for any violation
occurring before the date of the violation of
the injunction or order.'';
(B) by striking subsection (b) and
inserting the following:
``(b) Enforcement by Other Agencies.--
``(1) In general.--Subject to subtitle B of the
Consumer Financial Protection Act of 2010, compliance
with the requirements imposed under this title with
respect to consumer reporting agencies, persons who use
consumer reports from such agencies, persons who
furnish information to such agencies, and users of
information that are subject to section 615(d) shall be
enforced under--
``(A) section 8 of the Federal Deposit
Insurance Act (12 U.S.C. 1818), by the
appropriate Federal banking agency, as defined
in section 3(q) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(q)), with respect
to--
``(i) any national bank or State
savings association, and any Federal
branch or Federal agency of a foreign
bank;
``(ii) any member bank of the
Federal Reserve System (other than a
national bank), a branch or agency of a
foreign bank (other than a Federal
branch, Federal agency, or insured
State branch of a foreign bank), a
commercial lending company owned or
controlled by a foreign bank, and any
organization operating under section 25
or 25A of the Federal Reserve Act; and
``(iii) any bank or Federal savings
association insured by the Federal
Deposit Insurance Corporation (other
than a member of the Federal Reserve
System) and any insured State branch of
a foreign bank;
``(B) the Federal Credit Union Act (12
U.S.C. 1751 et seq.), by the Administrator of
the National Credit Union Administration with
respect to any Federal credit union;
``(C) subtitle IV of title 49, United
States Code, by the Secretary of
Transportation, with respect to all carriers
subject to the jurisdiction of the Surface
Transportation Board;
``(D) the Federal Aviation Act of 1958 (49
U.S.C. App. 1301 et seq.), by the Secretary of
Transportation, with respect to any air carrier
or foreign air carrier subject to that Act;
``(E) the Packers and Stockyards Act, 1921
(7 U.S.C. 181 et seq.) (except as provided in
section 406 of that Act), by the Secretary of
Agriculture, with respect to any activities
subject to that Act;
``(F) the Commodity Exchange Act, with
respect to a person subject to the jurisdiction
of the Commodity Futures Trading Commission;
``(G) the Federal securities laws, and any
other laws that are subject to the jurisdiction
of the Securities and Exchange Commission, with
respect to a person that is subject to the
jurisdiction of the Securities and Exchange
Commission; and
``(H) subtitle E of the Consumer Financial
Protection Act of 2010, by the Bureau, with
respect to any person subject to this title.
``(2) Incorporated definitions.--The terms used in
paragraph (1) that are not defined in this title or
otherwise defined in section 3(s) of the Federal
Deposit Insurance Act (12 U.S.C. 1813(s)) have the same
meanings as in section 1(b) of the International
Banking Act of 1978 (12 U.S.C. 3101).'';
(C) in subsection (c)(2)--
(i) by inserting ``and the Federal
Trade Commission'' before ``or the
appropriate''; and
(ii) by inserting ``and the Federal
Trade Commission'' before ``or
appropriate'' each place that term
appears;
(D) in subsection (c)(4), by inserting
before ``or the appropriate'' each place that
term appears the following: ``, the Federal
Trade Commission,'';
(E) by striking subsection (e) and
inserting the following:
``(e) Regulatory Authority.--
``(1) In general.--The Bureau shall prescribe such
regulations as are necessary to carry out the purposes
of this title, except with respect to sections 615(e)
and 628. The Bureau may prescribe regulations as may be
necessary or appropriate to administer and carry out
the purposes and objectives of this title, and to
prevent evasions thereof or to facilitate compliance
therewith. Except as provided in section 1029(a) of the
Consumer Financial Protection Act of 2010, the
regulations prescribed by the Bureau under this title
shall apply to any person that is subject to this
title, notwithstanding the enforcement authorities
granted to other agencies under this section.
``(2) Deference.--Notwithstanding any power granted
to any Federal agency under this title, the deference
that a court affords to a Federal agency with respect
to a determination made by such agency relating to the
meaning or interpretation of any provision of this
title that is subject to the jurisdiction of such
agency shall be applied as if that agency were the only
agency authorized to apply, enforce, interpret, or
administer the provisions of this title. The
regulations prescribed by the Bureau under this title
shall apply to any person that is subject to this
title, notwithstanding the enforcement authorities
granted to other agencies under this section.''; and
(F) in subsection (f)(2), by striking ``the
Federal banking agencies'' and insert ``the
Federal Trade Commission, the Federal banking
agencies,'';
(11) in section 623 (15 U.S.C. 1681s-2)--
(A) in subsection (a)(7), by striking
subparagraph (D) and inserting the following:
``(D) Model disclosure.--
``(i) Duty of bureau.--The Bureau
shall prescribe a brief model
disclosure that a financial institution
may use to comply with subparagraph
(A), which shall not exceed 30 words.
``(ii) Use of model not required.--
No provision of this paragraph may be
construed to require a financial
institution to use any such model form
prescribed by the Bureau.
``(iii) Compliance using model.--A
financial institution shall be deemed
to be in compliance with subparagraph
(A) if the financial institution uses
any model form prescribed by the Bureau
under this subparagraph, or the
financial institution uses any such
model form and rearranges its
format.'';
(B) in subsection (a)(8), by inserting ``,
in consultation with the Federal Trade
Commission, the Federal banking agencies, and
the National Credit Union Administration,''
before ``shall jointly''; and
(C) by striking subsection (e) and
inserting the following:
``(e) Accuracy Guidelines and Regulations Required.--
``(1) Guidelines.--The Bureau shall, with respect
to persons or entities that are subject to the
enforcement authority of the Bureau under section 621--
``(A) establish and maintain guidelines for
use by each person that furnishes information
to a consumer reporting agency regarding the
accuracy and integrity of the information
relating to consumers that such entities
furnish to consumer reporting agencies, and
update such guidelines as often as necessary;
and
``(B) prescribe regulations requiring each
person that furnishes information to a consumer
reporting agency to establish reasonable
policies and procedures for implementing the
guidelines established pursuant to subparagraph
(A).
``(2) Criteria.--In developing the guidelines
required by paragraph (1)(A), the Bureau shall--
``(A) identify patterns, practices, and
specific forms of activity that can compromise
the accuracy and integrity of information
furnished to consumer reporting agencies;
``(B) review the methods (including
technological means) used to furnish
information relating to consumers to consumer
reporting agencies;
``(C) determine whether persons that
furnish information to consumer reporting
agencies maintain and enforce policies to
ensure the accuracy and integrity of
information furnished to consumer reporting
agencies; and
``(D) examine the policies and processes
that persons that furnish information to
consumer reporting agencies employ to conduct
reinvestigations and correct inaccurate
information relating to consumers that has been
furnished to consumer reporting agencies.'';
(12) in section 628(a)(1) (15 U.S.C. 1681w(a)(1)),
by striking ``Not later than'' and all that follows
through ``Exchange Commission,'' and inserting ``The
Federal Trade Commission, the Securities and Exchange
Commission, the Commodity Futures Trading Commission,
the Federal banking agencies, and the National Credit
Union Administration, with respect to the entities that
are subject to their respective enforcement authority
under section 621,''; and
(13) in section 628(a)(3) (15 U.S.C. 1681w(a)(3)),
by striking ``the Federal banking agencies, the
National Credit Union Administration, the Commission,
and the Securities and Exchange Commission'' and
inserting ``the agencies identified in paragraph (1)''.
(b) Fair and Accurate Credit Transactions Act of 2003.--The
Fair and Accurate Credit Transactions Act of 2003 (Public Law
108-159) is amended--
(1) in section 112(b) (15 U.S.C. 1681c-1 note), by
striking ``Commission'' and inserting ``Bureau'';
(2) in section 211(d) (15 U.S.C. 1681j note), by
striking ``Commission'' each place that term appears
and inserting ``Bureau'';
(3) in section 214(b) (15 U.S.C. 1681s-3 note), by
striking paragraph (1) and inserting the following:
``(1) In general.--Regulations to carry out section
624 of the Fair Credit Reporting Act (15 U.S.C. 1681s-
3), shall be prescribed, as described in paragraph (2),
by--
``(A) the Commodity Futures Trading
Commission, with respect to entities subject to
its enforcement authorities;
``(B) the Securities and Exchange
Commission, with respect to entities subject to
its enforcement authorities; and
``(C) the Bureau, with respect to other
entities subject to this Act.''; and
(4) in section 214(e)(1) (15 U.S.C. 1681s-3 note),
by striking ``Commission'' and inserting ``Bureau''.
SEC. 1089. AMENDMENTS TO THE FAIR DEBT COLLECTION PRACTICES ACT.
The Fair Debt Collection Practices Act (15 U.S.C. 1692 et
seq.) is amended--
(1) by striking ``Commission'' each place that term
appears and inserting ``Bureau'';
(2) in section 803 (15 U.S.C. 1692a)--
(A) by striking paragraph (1) and inserting
the following:
``(1) The term `Bureau' means the Bureau of
Consumer Financial Protection.'';
(3) in section 814 (15 U.S.C. 1692l)--
(A) by striking subsection (a) and
inserting the following:
``(a) Federal Trade Commission.--The Federal Trade
Commission shall be authorized to enforce compliance with this
title, except to the extent that enforcement of the
requirements imposed under this title is specifically committed
to another Government agency under any of paragraphs (1)
through (5) of subsection (b), subject to subtitle B of the
Consumer Financial Protection Act of 2010. For purpose of the
exercise by the Federal Trade Commission of its functions and
powers under the Federal Trade Commission Act (15 U.S.C. 41 et
seq.), a violation of this title shall be deemed an unfair or
deceptive act or practice in violation of that Act. All of the
functions and powers of the Federal Trade Commission under the
Federal Trade Commission Act are available to the Federal Trade
Commission to enforce compliance by any person with this title,
irrespective of whether that person is engaged in commerce or
meets any other jurisdictional tests under the Federal Trade
Commission Act, including the power to enforce the provisions
of this title, in the same manner as if the violation had been
a violation of a Federal Trade Commission trade regulation
rule.''; and
(B) in subsection (b)--
(i) by striking ``Compliance'' and
inserting ``Subject to subtitle B of
the Consumer Financial Protection Act
of 2010, compliance'';
(ii) by striking paragraphs (1) and
(2) and inserting the following:
``(1) section 8 of the Federal Deposit Insurance
Act, by the appropriate Federal banking agency, as
defined in section 3(q) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(q)), with respect to--
``(A) national banks, Federal savings
associations, and Federal branches and Federal
agencies of foreign banks;
``(B) member banks of the Federal Reserve
System (other than national banks), branches
and agencies of foreign banks (other than
Federal branches, Federal agencies, and insured
State branches of foreign banks), commercial
lending companies owned or controlled by
foreign banks, and organizations operating
under section 25 or 25A of the Federal Reserve
Act; and
``(C) banks and State savings associations
insured by the Federal Deposit Insurance
Corporation (other than members of the Federal
Reserve System), and insured State branches of
foreign banks;'';
(iii) by redesignating paragraphs
(3) through (6), as paragraphs (2)
through (5), respectively;
(iv) in paragraph (4) (as so
redesignated), by striking ``and'' at
the end;
(v) in paragraph (5) (as so
redesignated), by striking the period
at the end and inserting ``; and''; and
(vi) by inserting before the
undesignated matter at the end the
following:
``(6) subtitle E of the Consumer Financial
Protection Act of 2010, by the Bureau, with respect to
any person subject to this title.''.
(4) in subsection (d), by striking ``Neither the
Commission'' and all that follows through the end of
the subsection and inserting the following: ``Except as
provided in section 1029(a) of the Consumer Financial
Protection Act of 2010, the Bureau may prescribe rules
with respect to the collection of debts by debt
collectors, as defined in this title.''.
SEC. 1090. AMENDMENTS TO THE FEDERAL DEPOSIT INSURANCE ACT.
The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.)
is amended--
(1) in section 8(t) (12 U.S.C. 1818(t)), by adding
at the end the following:
``(6) Referral to bureau of consumer financial
protection.--Subject to subtitle B of the Consumer
Financial Protection Act of 2010, each appropriate
Federal banking agency shall make a referral to the
Bureau of Consumer Financial Protection when the
Federal banking agency has a reasonable belief that a
violation of an enumerated consumer law, as defined in
the Consumer Financial Protection Act of 2010, has been
committed by any insured depository institution or
institution-affiliated party within the jurisdiction of
that appropriate Federal banking agency.''; and
(2) in section 43 (12 U.S.C. 1831t)--
(A) in subsection (c), by striking
``Federal Trade Commission'' and inserting
``Bureau'';
(B) in subsection (d), by striking
``Federal Trade Commission'' and inserting
``Bureau'';
(C) in subsection (e)--
(i) in paragraph (2), by striking
``Federal Trade Commission'' and
inserting ``Bureau''; and
(ii) by adding at the end the
following new paragraph:
``(5) Bureau.--The term `Bureau' means the Bureau
of Consumer Financial Protection.''; and
(D) in subsection (f)--
(i) by striking paragraph (1) and
inserting the following:
``(1) Limited enforcement authority.--Compliance
with the requirements of subsections (b), (c), and (e),
and any regulation prescribed or order issued under
such subsection, shall be enforced under the Consumer
Financial Protection Act of 2010, by the Bureau,
subject to subtitle B of the Consumer Financial
Protection Act of 2010, and under the Federal Trade
Commission Act (15 U.S.C. 41 et seq.) by the Federal
Trade Commission.''; and
(ii) in paragraph (2), by striking
subparagraph (C) and inserting the
following:
``(C) Limitation on state action while
federal action pending.--If the Bureau or
Federal Trade Commission has instituted an
enforcement action for a violation of this
section, no appropriate State supervisory
agency may, during the pendency of such action,
bring an action under this section against any
defendant named in the complaint of the Bureau
or Federal Trade Commission for any violation
of this section that is alleged in that
complaint.''.
SEC. 1091. AMENDMENT TO FEDERAL FINANCIAL INSTITUTIONS EXAMINATION
COUNCIL ACT OF 1978.
Section 1004(a)(4) of the Federal Financial Institutions
Examination Council Act of 1978 (12 U.S.C. 3303(a)(4)) is
amended by striking ``Director, Office of Thrift Supervision''
and inserting ``Director of the Consumer Financial Protection
Bureau''.
SEC. 1092. AMENDMENTS TO THE FEDERAL TRADE COMMISSION ACT.
Section 18(f) of the Federal Trade Commission Act (15
U.S.C. 57a(f)) is amended--
(1) by striking the subsection heading and
inserting the following:
``(f) Definitions of Banks, Savings and Loan Institutions,
and Federal Credit Unions.--''.
(2) by striking paragraph (1) and inserting the
following:
``(1) [Repealed.]'';
(3) by striking paragraphs (5) through (7);
(4) in paragraph (2)--
(A) by striking ``(2) Enforcement'' and all
that follows through ``in the case of'' and
inserting the following:
``(2) Definition.--For purposes of this Act, the
term `bank' means'';
(B) in subparagraph (A), by striking ``, by
the division'' and all that follows through
``Currency'';
(C) in subparagraph (B)--
(i) by striking ``, by the
division'' and all that follows through
``System''; and
(ii) by striking ``25(a)'' and
inserting ``25A''; and
(D) in subparagraph (C)--
(i) by striking ``(other'' and
inserting ``(other than''; and
(ii) by striking ``, by the
division'' and all that follows through
``Corporation'';
(5) in paragraph (3), by striking ``Compliance''
and all that follows through ``as defined in'' and
inserting the following: ``For purposes of this Act,
the term ``savings and loan institution'' has the same
meaning as in''; and
(6) in paragraph (4), by striking ``Compliance''
and all that follows through ``credit unions under''
and inserting the following: ``For purposes of this
Act, the term ``Federal credit union'' has the same
meaning as in''.
SEC. 1093. AMENDMENTS TO THE GRAMM-LEACH-BLILEY ACT.
Title V of the Gramm-Leach-Bliley Act (15 U.S.C. 6801 et
seq.) is amended--
(1) in section 501(b) (15 U.S.C. 6801(b)), by
inserting ``, other than the Bureau of Consumer
Financial Protection,'' after ``505(a)'';
(2) in section 502(e)(5) (15 U.S.C. 6802(e)(5)), by
inserting ``the Bureau of Consumer Financial
Protection'' after ``(including'';
(3) in section 504(a) (15 U.S.C. 6804(a))--
(A) by striking paragraphs (1) and (2) and
inserting the following:
``(1) Rulemaking.--
``(A) In general.--Except as provided in
subparagraph (C), the Bureau of Consumer
Financial Protection and the Securities and
Exchange Commission shall have authority to
prescribe such regulations as may be necessary
to carry out the purposes of this subtitle with
respect to financial institutions and other
persons subject to their respective
jurisdiction under section 505 (and
notwithstanding subtitle B of the Consumer
Financial Protection Act of 2010), except that
the Bureau of Consumer Financial Protection
shall not have authority to prescribe
regulations with respect to the standards under
section 501.
``(B) CFTC.--The Commodity Futures Trading
Commission shall have authority to prescribe
such regulations as may be necessary to carry
out the purposes of this subtitle with respect
to financial institutions and other persons
subject to the jurisdiction of the Commodity
Futures Trading Commission under section 5g of
the Commodity Exchange Act.
``(C) Federal trade commission authority.--
Notwithstanding the authority of the Bureau of
Consumer Financial Protection under
subparagraph (A), the Federal Trade Commission
shall have authority to prescribe such
regulations as may be necessary to carry out
the purposes of this subtitle with respect to
any financial institution that is a person
described in section 1029(a) of the Consumer
Financial Protection Act of 2010.
``(D) Rule of construction.--Nothing in
this paragraph shall be construed to alter,
affect, or otherwise limit the authority of a
State insurance authority to adopt regulations
to carry out this subtitle.
``(2) Coordination, consistency, and
comparability.--Each of the agencies authorized under
paragraph (1) to prescribe regulations shall consult
and coordinate with the other such agencies and, as
appropriate, and with representatives of State
insurance authorities designated by the National
Association of Insurance Commissioners, for the purpose
of assuring, to the extent possible, that the
regulations prescribed by each such agency are
consistent and comparable with the regulations
prescribed by the other such agencies.''; and
(B) in paragraph (3), by striking ``, and
shall be issued in final form not later than 6
months after the date of enactment of this
Act'';
(4) in section 505(a) (15 U.S.C. 6805(a))--
(A) by striking ``This subtitle'' and all
that follows through ``as follows:'' and
inserting ``Subject to subtitle B of the
Consumer Financial Protection Act of 2010, this
subtitle and the regulations prescribed
thereunder shall be enforced by the Bureau of
Consumer Financial Protection, the Federal
functional regulators, the State insurance
authorities, and the Federal Trade Commission
with respect to financial institutions and
other persons subject to their jurisdiction
under applicable law, as follows:'';
(B) in paragraph (1)--
(i) in the matter preceding
subparagraph (A), by inserting ``by the
appropriate Federal banking agency, as
defined in section 3(q) of the Federal
Deposit Insurance Act,'' after
``Act,'';
(ii) in subparagraph (A), by
striking ``, by the Office of the
Comptroller of the Currency'';
(iii) in subparagraph (B), by
striking ``, by the Board of Governors
of the Federal Reserve System'';
(iv) in subparagraph (C), by
striking ``, by the Board of Directors
of the Federal Deposit Insurance
Corporation''; and
(v) in subparagraph (D), by
striking ``, by the Director of the
Office of Thrift Supervision''; and
(C) by adding at the end the following:
``(8) Under subtitle E of the Consumer Financial
Protection Act of 2010, by the Bureau of Consumer
Financial Protection, in the case of any financial
institution and other covered person or service
provider that is subject to the jurisdiction of the
Bureau and any person subject to this subtitle, but not
with respect to the standards under section 501.'';
(5) in section 505(b)(1) (15 U.S.C. 6805(b)(1)), by
inserting ``, other than the Bureau of Consumer
Financial Protection,'' after ``subsection (a)''; and
(6) in section 507(b) (15 U.S.C. 6807), by striking
``Federal Trade Commission'' and inserting ``Bureau of
Consumer Financial Protection''.
SEC. 1094. AMENDMENTS TO THE HOME MORTGAGE DISCLOSURE ACT OF 1975.
The Home Mortgage Disclosure Act of 1975 (12 U.S.C. 2801 et
seq.) is amended--
(1) by striking ``Board'' each place that term
appears, other than in sections 303, 304(h), 305(b) (as
amended by this section), and 307(a) (as amended by
this section) and inserting ``Bureau''.
(2) in section 303 (12 U.S.C. 2802)--
(A) by redesignating paragraphs (1) through
(6) as paragraphs (2) through (7),
respectively; and
(B) by inserting before paragraph (2) the
following:
``(1) the term `Bureau' means the Bureau of
Consumer Financial Protection;'';
(3) in section 304 (12 U.S.C. 2803)--
(A) in subsection (b)--
(i) in paragraph (4), by inserting
``age,'' before ``and gender'';
(ii) in paragraph (3), by striking
``and'' at the end;
(iii) in paragraph (4), by striking
the period at the end and inserting a
semicolon; and
(iv) by adding at the end the
following:
``(5) the number and dollar amount of mortgage
loans grouped according to measurements of--
``(A) the total points and fees payable at
origination in connection with the mortgage as
determined by the Bureau, taking into account
15 U.S.C. 1602(aa)(4);
``(B) the difference between the annual
percentage rate associated with the loan and a
benchmark rate or rates for all loans;
``(C) the term in months of any prepayment
penalty or other fee or charge payable on
repayment of some portion of principal or the
entire principal in advance of scheduled
payments; and
``(D) such other information as the Bureau
may require; and
``(6) the number and dollar amount of mortgage
loans and completed applications grouped according to
measurements of--
``(A) the value of the real property
pledged or proposed to be pledged as
collateral;
``(B) the actual or proposed term in months
of any introductory period after which the rate
of interest may change;
``(C) the presence of contractual terms or
proposed contractual terms that would allow the
mortgagor or applicant to make payments other
than fully amortizing payments during any
portion of the loan term;
``(D) the actual or proposed term in months
of the mortgage loan;
``(E) the channel through which application
was made, including retail, broker, and other
relevant categories;
``(F) as the Bureau may determine to be
appropriate, a unique identifier that
identifies the loan originator as set forth in
section 1503 of the S.A.F.E. Mortgage Licensing
Act of 2008;
``(G) as the Bureau may determine to be
appropriate, a universal loan identifier;
``(H) as the Bureau may determine to be
appropriate, the parcel number that corresponds
to the real property pledged or proposed to be
pledged as collateral;
``(I) the credit score of mortgage
applicants and mortgagors, in such form as the
Bureau may prescribe; and
``(J) such other information as the Bureau
may require.'';
(B) by striking subsection (h) and
inserting the following:
``(h) Submission to Agencies.--
``(1) In general.--The data required to be
disclosed under subsection (b) shall be submitted to
the Bureau or to the appropriate agency for the
institution reporting under this title, in accordance
with rules prescribed by the Bureau. Notwithstanding
the requirement of subsection (a)(2)(A) for disclosure
by census tract, the Bureau, in consultation with other
appropriate agencies described in paragraph (2) and,
after notice and comment, shall develop regulations
that--
``(A) prescribe the format for such
disclosures, the method for submission of the
data to the appropriate agency, and the
procedures for disclosing the information to
the public;
``(B) require the collection of data
required to be disclosed under subsection (b)
with respect to loans sold by each institution
reporting under this title;
``(C) require disclosure of the class of
the purchaser of such loans;
``(D) permit any reporting institution to
submit in writing to the Bureau or to the
appropriate agency such additional data or
explanations as it deems relevant to the
decision to originate or purchase mortgage
loans; and
``(E) modify or require modification of
itemized information, for the purpose of
protecting the privacy interests of the
mortgage applicants or mortgagors, that is or
will be available to the public.
``(2) Other appropriate agencies.--The appropriate
agencies described in this paragraph are--
``(A) the appropriate Federal banking
agencies, as defined in section 3(q) of the
Federal Deposit Insurance Act (12 U.S.C.
1813(q)), with respect to the entities that are
subject to the jurisdiction of each such
agency, respectively;
``(B) the Federal Deposit Insurance
Corporation for banks insured by the Federal
Deposit Insurance Corporation (other than
members of the Federal Reserve System), mutual
savings banks, insured State branches of
foreign banks, and any other depository
institution described in section 303(2)(A)
which is not otherwise referred to in this
paragraph;
``(C) the National Credit Union
Administration Board with respect to credit
unions; and
``(D) the Secretary of Housing and Urban
Development with respect to other lending
institutions not regulated by the agencies
referred to in subparagraph (A) or (B).
``(3) Rules for modifications under paragraph
(1).--
``(A) Application.--A modification under
paragraph (1)(E) shall apply to information
concerning--
``(i) credit score data described
in subsection (b)(6)(I), in a manner
that is consistent with the purpose
described in paragraph (1)(E); and
``(ii) age or any other category of
data described in paragraph (5) or (6)
of subsection (b), as the Bureau
determines to be necessary to satisfy
the purpose described in paragraph
(1)(E), and in a manner consistent with
that purpose.
``(B) Standards.--The Bureau shall
prescribe standards for any modification under
paragraph (1)(E) to effectuate the purposes of
this title, in light of the privacy interests
of mortgage applicants or mortgagors. Where
necessary to protect the privacy interests of
mortgage applicants or mortgagors, the Bureau
shall provide for the disclosure of information
described in subparagraph (A) in aggregate or
other reasonably modified form, in order to
effectuate the purposes of this title.'';
(C) in subsection (i), by striking
``subsection (b)(4)'' and inserting
``subsections (b)(4), (b)(5), and (b)(6)'';
(D) in subsection (j)--
(i) by striking paragraph (3) and
inserting the following:
``(3) Change of form not required.--A depository
institution meets the disclosure requirement of
paragraph (1) if the institution provides the
information required under such paragraph in such
formats as the Bureau may require''; and
(ii) in paragraph (2)(A), by
striking ``in the format in which such
information is maintained by the
institution'' and inserting ``in such
formats as the Bureau may require'';
(E) in subsection (m), by striking
paragraph (2) and inserting the following:
``(2) Form of information.--In complying with
paragraph (1), a depository institution shall provide
the person requesting the information with a copy of
the information requested in such formats as the Bureau
may require.''; and
(F) by adding at the end the following:
``(n) Timing of Certain Disclosures.--The data required to
be disclosed under subsection (b) shall be submitted to the
Bureau or to the appropriate agency for any institution
reporting under this title, in accordance with regulations
prescribed by the Bureau. Institutions shall not be required to
report new data under paragraph (5) or (6) of subsection (b)
before the first January 1 that occurs after the end of the 9-
month period beginning on the date on which regulations are
issued by the Bureau in final form with respect to such
disclosures.'';
(4) in section 305 (12 U.S.C. 2804)--
(A) by striking subsection (b) and
inserting the following:
``(b) Powers of Certain Other Agencies.--
``(1) In general.--Subject to subtitle B of the
Consumer Financial Protection Act of 2010, compliance
with the requirements of this title shall be enforced--
``(A) under section 8 of the Federal
Deposit Insurance Act, the appropriate Federal
banking agency, as defined in section 3(q) of
the Federal Deposit Insurance Act (12 U.S.C.
1813(q)), with respect to--
``(i) any national bank or Federal
savings association, and any Federal
branch or Federal agency of a foreign
bank;
``(ii) any member bank of the
Federal Reserve System (other than a
national bank), branch or agency of a
foreign bank (other than a Federal
branch, Federal agency, and insured
State branch of a foreign bank),
commercial lending company owned or
controlled by a foreign bank, and any
organization operating under section 25
or 25A of the Federal Reserve Act; and
``(iii) any bank or State savings
association insured by the Federal
Deposit Insurance Corporation (other
than a member of the Federal Reserve
System), any mutual savings bank as,
defined in section 3(f) of the Federal
Deposit Insurance Act (12 U.S.C.
1813(f)), any insured State branch of a
foreign bank, and any other depository
institution not referred to in this
paragraph or subparagraph (B) or (C);
``(B) under subtitle E of the Consumer
Financial Protection Act of 2010, by the
Bureau, with respect to any person subject to
this subtitle;
``(C) under the Federal Credit Union Act,
by the Administrator of the National Credit
Union Administration with respect to any
insured credit union; and
``(D) with respect to other lending
institutions, by the Secretary of Housing and
Urban Development.
``(2) Incorporated definitions.--The terms used in
paragraph (1) that are not defined in this title or
otherwise defined in section 3(s) of the Federal
Deposit Insurance Act (12 U.S.C. 1813(s)) shall have
the same meanings as in section 1(b) of the
International Banking Act of 1978 (12 U.S.C. 3101).'';
and
(B) by adding at the end the following:
``(d) Overall Enforcement Authority of the Bureau of
Consumer Financial Protection.--Subject to subtitle B of the
Consumer Financial Protection Act of 2010, enforcement of the
requirements imposed under this title is committed to each of
the agencies under subsection (b). To facilitate research,
examinations, and enforcement, all data collected pursuant to
section 304 shall be available to the entities listed under
subsection (b). The Bureau may exercise its authorities under
the Consumer Financial Protection Act of 2010 to exercise
principal authority to examine and enforce compliance by any
person with the requirements of this title.'';
(5) in section 306 (12 U.S.C. 2805(b)), by striking
subsection (b) and inserting the following:
``(b) Exemption Authority.--The Bureau may, by regulation,
exempt from the requirements of this title any State-chartered
depository institution within any State or subdivision thereof,
if the agency determines that, under the law of such State or
subdivision, that institution is subject to requirements that
are substantially similar to those imposed under this title,
and that such law contains adequate provisions for enforcement.
Notwithstanding any other provision of this subsection,
compliance with the requirements imposed under this subsection
shall be enforced by the Office of the Comptroller of the
Currency under section 8 of the Federal Deposit Insurance Act,
in the case of national banks and Federal savings associations,
the deposits of which are insured by the Federal Deposit
Insurance Corporation.''; and
(6) by striking section 307 (12 U.S.C. 2806) and
inserting the following:
``SEC. 307. COMPLIANCE IMPROVEMENT METHODS.
``(a) In General.--
``(1) Consultation required.--The Director of the
Bureau of Consumer Financial Protection, with the
assistance of the Secretary, the Director of the Bureau
of the Census, the Board of Governors of the Federal
Reserve System, the Federal Deposit Insurance
Corporation, and such other persons as the Bureau deems
appropriate, shall develop or assist in the improvement
of, methods of matching addresses and census tracts to
facilitate compliance by depository institutions in as
economical a manner as possible with the requirements
of this title.
``(2) Authorization of appropriations.--There are
authorized to be appropriated, such sums as may be
necessary to carry out this subsection.
``(3) Contracting authority.--The Director of the
Bureau of Consumer Financial Protection is authorized
to utilize, contract with, act through, or compensate
any person or agency in order to carry out this
subsection.
``(b) Recommendations to Congress.--The Director of the
Bureau of Consumer Financial Protection shall recommend to the
Committee on Banking, Housing, and Urban Affairs of the Senate
and the Committee on Financial Services of the House of
Representatives, such additional legislation as the Director of
the Bureau of Consumer Financial Protection deems appropriate
to carry out the purpose of this title.''.
SEC. 1095. AMENDMENTS TO THE HOMEOWNERS PROTECTION ACT OF 1998.
Section 10 of the Homeowners Protection Act of 1998 (12
U.S.C. 4909) is amended--
(1) in subsection (a)--
(A) by striking ``Compliance'' and all that
follows through the end of paragraph (1) and
inserting the following: ``Subject to subtitle
B of the Consumer Financial Protection Act of
2010, compliance with the requirements imposed
under this Act shall be enforced under--
``(1) section 8 of the Federal Deposit Insurance
Act, by the appropriate Federal banking agency (as
defined in section 3(q) of that Act), with respect to--
``(A) insured depository institutions (as
defined in section 3(c)(2) of that Act);
``(B) depository institutions described in
clause (i), (ii), or (iii) of section
19(b)(1)(A) of the Federal Reserve Act which
are not insured depository institutions (as
defined in section 3(c)(2) of the Federal
Deposit Insurance Act); and
``(C) depository institutions described in
clause (v) or (vi) of section 19(b)(1)(A) of
the Federal Reserve Act which are not insured
depository institutions (as defined in section
3(c)(2) of the Federal Deposit Insurance
Act);'';
(B) in paragraph (2), by striking ``and''
at the end;
(C) in paragraph (3), by striking the
period at the end and inserting ``; and''; and
(D) by adding at the end the following:
``(4) subtitle E of the Consumer Financial
Protection Act of 2010, by the Bureau of Consumer
Financial Protection, with respect to any person
subject to this Act.''; and
(2) in subsection (b)(2), by inserting before the
period at the end the following: ``, subject to
subtitle B of the Consumer Financial Protection Act of
2010''.
SEC. 1096. AMENDMENTS TO THE HOME OWNERSHIP AND EQUITY PROTECTION ACT
OF 1994.
The Home Ownership and Equity Protection Act of 1994 (15
U.S.C. 1601 note) is amended--
(1) in section 158(a), by striking ``Board of
Governors of the Federal Reserve System, in
consultation with the Consumer Advisory Council of the
Board'' and inserting ``Bureau, in consultation with
the Advisory Board to the Bureau''; and
(2) in section 158(b), by striking ``Board of
Governors of the Federal Reserve System'' and inserting
``Bureau''.
SEC. 1097. AMENDMENTS TO THE OMNIBUS APPROPRIATIONS ACT, 2009.
Section 626 of the Omnibus Appropriations Act, 2009 (15
U.S.C. 1638 note) is amended--
(1) by striking subsection (a) and inserting the
following:
``(a)(1) The Bureau of Consumer Financial Protection shall
have authority to prescribe rules with respect to mortgage
loans in accordance with section 553 of title 5, United States
Code. Such rulemaking shall relate to unfair or deceptive acts
or practices regarding mortgage loans, which may include unfair
or deceptive acts or practices involving loan modification and
foreclosure rescue services. Any violation of a rule prescribed
under this paragraph shall be treated as a violation of a rule
prohibiting unfair, deceptive, or abusive acts or practices
under the Consumer Financial Protection Act of 2010 and a
violation of a rule under section 18 of the Federal Trade
Commission Act (15 U.S.C. 57a) regarding unfair or deceptive
acts or practices.
``(2) The Bureau of Consumer Financial Protection shall
enforce the rules issued under paragraph (1) in the same
manner, by the same means, and with the same jurisdiction,
powers, and duties, as though all applicable terms and
provisions of the Consumer Financial Protection Act of 2010
were incorporated into and made part of this subsection.
``(3) Subject to subtitle B of the Consumer Financial
Protection Act of 2010, the Federal Trade Commission shall
enforce the rules issued under paragraph (1), in the same
manner, by the same means, and with the same jurisdiction, as
though all applicable terms and provisions of the Federal Trade
Commission Act were incorporated into and made part of this
section.''; and
(2) in subsection (b)--
(A) by striking paragraph (1) and inserting
the following:
``(1) Except as provided in paragraph (6), in any
case in which the attorney general of a State has
reason to believe that an interest of the residents of
the State has been or is threatened or adversely
affected by the engagement of any person subject to a
rule prescribed under subsection (a) in practices that
violate such rule, the State, as parens patriae, may
bring a civil action on behalf of its residents in an
appropriate district court of the United States or
other court of competent jurisdiction--
``(A) to enjoin that practice;
``(B) to enforce compliance with the rule;
``(C) to obtain damages, restitution, or
other compensation on behalf of the residents
of the State; or
``(D) to obtain penalties and relief
provided under the Consumer Financial
Protection Act of 2010, the Federal Trade
Commission Act, and such other relief as the
court deems appropriate.'';
(B) in paragraphs (2) and (3), by striking
``the primary Federal regulator'' each time the
term appears and inserting ``the Bureau of
Consumer Financial Protection or the
Commission, as appropriate'';
(C) in paragraph (3), by inserting ``and
subject to subtitle B of the Consumer Financial
Protection Act of 2010,'' after ``paragraph
(2),''; and
(D) in paragraph (6), by striking ``the
primary Federal regulator'' each place that
term appears and inserting ``the Bureau of
Consumer Financial Protection or the
Commission''.
SEC. 1098. AMENDMENTS TO THE REAL ESTATE SETTLEMENT PROCEDURES ACT OF
1974.
The Real Estate Settlement Procedures Act of 1974 (12
U.S.C. 2601 et seq.) is amended--
(1) in section 3 (12 U.S.C. 2602)--
(A) in paragraph (7), by striking ``and''
at the end;
(B) in paragraph (8), by striking the
period at the end and inserting ``; and''; and
(C) by adding at the end the following:
``(9) the term `Bureau' means the Bureau of
Consumer Financial Protection.'';
(2) in section 4 (12 U.S.C. 2603)--
(A) in subsection (a), by striking the
first sentence and inserting the following:
``The Bureau shall publish a single, integrated
disclosure for mortgage loan transactions
(including real estate settlement cost
statements) which includes the disclosure
requirements of this section and section 5, in
conjunction with the disclosure requirements of
the Truth in Lending Act that, taken together,
may apply to a transaction that is subject to
both or either provisions of law. The purpose
of such model disclosure shall be to facilitate
compliance with the disclosure requirements of
this title and the Truth in Lending Act, and to
aid the borrower or lessee in understanding the
transaction by utilizing readily understandable
language to simplify the technical nature of
the disclosures.'';
(B) by striking ``Secretary'' each place
that term appears and inserting ``Bureau''; and
(C) by striking ``form'' each place that
term appears and inserting ``forms'';
(3) in section 5 (12 U.S.C. 2604)--
(A) by striking ``Secretary'' each place
that term appears and inserting ``Bureau''; and
(B) in subsection (a), by striking the
first sentence and inserting the following:
``The Bureau shall prepare and distribute
booklets jointly addressing compliance with the
requirements of the Truth in Lending Act and
the provisions of this title, in order to help
persons borrowing money to finance the purchase
of residential real estate better to understand
the nature and costs of real estate settlement
services.'';
(4) in section 6(j)(3) (12 U.S.C. 2605(j)(3))--
(A) by striking ``Secretary'' and inserting
``Bureau''; and
(B) by striking ``, by regulations that
shall take effect not later than April 20,
1991,'';
(5) in section 7(b) (12 U.S.C. 2606(b)) by striking
``Secretary'' and inserting ``Bureau'';
(6) in section 8(c)(5) (12 U.S.C. 2607(c)(5)), by
striking ``Secretary'' and inserting ``Bureau'';
(7) in section 8(d) (12 U.S.C. 2607(d))--
(A) in the subsection heading, by inserting
``Bureau and'' before ``Secretary''; and
(B) by striking paragraph (4), and
inserting the following:
``(4) The Bureau, the Secretary, or the attorney
general or the insurance commissioner of any State may
bring an action to enjoin violations of this section.
Except, to the extent that a person is subject to the
jurisdiction of the Bureau, the Secretary, or the
attorney general or the insurance commissioner of any
State, the Bureau shall have primary authority to
enforce or administer this section, subject to subtitle
B of the Consumer Financial Protection Act of 2010.'';
(8) in section 10(c) (12 U.S.C. 2609(c) and (d)),
by striking ``Secretary'' and inserting ``Bureau'';
(9) in section 16 (12 U.S.C. 2614), by inserting
``the Bureau,'' before ``the Secretary'';
(10) in section 18 (12 U.S.C. 2616), by striking
``Secretary'' each place that term appears and
inserting ``Bureau''; and
(11) in section 19 (12 U.S.C. 2617)--
(A) in the section heading by striking
``SECRETARY'' and inserting ``BUREAU'';
(B) in subsection (a), by striking
``Secretary'' each place that term appears and
inserting ``Bureau''; and
(C) in subsections (b) and (c), by striking
``the Secretary'' each place that term appears
and inserting ``the Bureau''.
SEC. 1098A. AMENDMENTS TO THE INTERSTATE LAND SALES FULL DISCLOSURE
ACT.
The Interstate Land Sales Full Disclosure Act (15 U.S.C.
1701 et seq.) is amended--
(1) by striking ``Secretary'' each place that term
appears and inserting ``Director'';
(2) by striking ``Department of Housing and Urban
Development'' each place that term appears and
inserting ``Bureau of Consumer Financial Protection'';
(3) by striking ``Department'' each place that term
appears and inserting ``Bureau'';
(4) in section 1402 (15 U.S.C. 1701)--
(A) by striking paragraph (1) and inserting
the following:
``(1) `Director' means the Director of the Bureau
of Consumer Financial Protection;'';
(B) in paragraph (10), by striking ``and''
at the end;
(C) in paragraph (11), by striking the
period at the end and inserting ``; and''; and
(D) by adding at the end the following:
``(12) `Bureau' means the Bureau of Consumer
Financial Protection.''; and
(5) in section 1416(a) (15 U.S.C. 1715(a)), by
striking ``Secretary of Housing and Urban Development''
and inserting ``Director of the Bureau of Consumer
Financial Protection''.
SEC. 1099. AMENDMENTS TO THE RIGHT TO FINANCIAL PRIVACY ACT OF 1978.
The Right to Financial Privacy Act of 1978 (12 U.S.C. 3401
et seq.) is amended--
(1) in section 1101--
(A) in paragraph (6)--
(i) in subparagraph (A), by
inserting ``and'' after the semicolon;
(ii) in subparagraph (B), by
striking ``and'' at the end; and
(iii) by striking subparagraph (C);
and
(B) in paragraph (7), by striking
subparagraph (B), and inserting the following:
``(B) the Bureau of Consumer Financial
Protection;'';
(2) in section 1112(e) (12 U.S.C. 3412(e)), by
striking ``and the Commodity Futures Trading Commission
is permitted'' and inserting ``the Commodity Futures
Trading Commission, and the Bureau of Consumer
Financial Protection is permitted''; and
(3) in section 1113 (12 U.S.C. 3413), by adding at
the end the following new subsection:
``(r) Disclosure to the Bureau of Consumer Financial
Protection.--Nothing in this title shall apply to the
examination by or disclosure to the Bureau of Consumer
Financial Protection of financial records or information in the
exercise of its authority with respect to a financial
institution.''.
SEC. 1100. AMENDMENTS TO THE SECURE AND FAIR ENFORCEMENT FOR MORTGAGE
LICENSING ACT OF 2008.
The S.A.F.E. Mortgage Licensing Act of 2008 (12 U.S.C. 5101
et seq.) is amended--
(1) by striking ``a Federal banking agency'' each
place that term appears, other than in paragraphs (7)
and (11) of section 1503 and section 1507(a)(1), and
inserting ``the Bureau'';
(2) by striking ``Federal banking agencies'' each
place that term appears and inserting ``Bureau''; and
(3) by striking ``Secretary'' each place that term
appears and inserting ``Director'';
(4) in section 1503 (12 U.S.C. 5102)--
(A) by redesignating paragraphs (2) through
(12) as (3) through (13), respectively;
(B) by striking paragraph (1) and inserting
the following:
``(1) Bureau.--The term `Bureau' means the Bureau
of Consumer Financial Protection.
``(2) Federal banking agency.--The term `Federal
banking agency' means the Board of Governors of the
Federal Reserve System, the Office of the Comptroller
of the Currency, the National Credit Union
Administration, and the Federal Deposit Insurance
Corporation.''; and
(C) by striking paragraph (10), as so
designated by this section, and inserting the
following:
``(10) Director.--The term `Director' means the
Director of the Bureau of Consumer Financial
Protection.''; and
(5) in section 1507 (12 U.S.C. 5106)--
(A) in subsection (a)--
(i) by striking paragraph (1) and
inserting the following:
``(1) In general.--The Bureau shall develop and
maintain a system for registering employees of a
depository institution, employees of a subsidiary that
is owned and controlled by a depository institution and
regulated by a Federal banking agency, or employees of
an institution regulated by the Farm Credit
Administration, as registered loan originators with the
Nationwide Mortgage Licensing System and Registry. The
system shall be implemented before the end of the 1-
year period beginning on the date of enactment of the
Consumer Financial Protection Act of 2010.''; and
(ii) in paragraph (2)--
(I) by striking
``appropriate Federal banking
agency and the Farm Credit
Administration'' and inserting
``Bureau''; and
(II) by striking
``employees's identity'' and
inserting ``identity of the
employee''; and
(B) in subsection (b), by striking
``through the Financial Institutions
Examination Council, and the Farm Credit
Administration'', and inserting ``and the
Bureau of Consumer Financial Protection'';
(6) in section 1508 (12 U.S.C. 5107)--
(A) by striking the section heading and
inserting the following: ``SEC. 1508. BUREAU OF
CONSUMER FINANCIAL PROTECTION BACKUP AUTHORITY
TO ESTABLISH LOAN ORIGINATOR LICENSING
SYSTEM.''; and
(B) by adding at the end the following:
``(f) Regulation Authority.--
``(1) In general.--The Bureau is authorized to
promulgate regulations setting minimum net worth or
surety bond requirements for residential mortgage loan
originators and minimum requirements for recovery funds
paid into by loan originators.
``(2) Considerations.--In issuing regulations under
paragraph (1), the Bureau shall take into account the
need to provide originators adequate incentives to
originate affordable and sustainable mortgage loans, as
well as the need to ensure a competitive origination
market that maximizes consumer access to affordable and
sustainable mortgage loans.'';
(7) by striking section 1510 (12 U.S.C. 5109) and
inserting the following:
``SEC. 1510. FEES.
``The Bureau, the Farm Credit Administration, and the
Nationwide Mortgage Licensing System and Registry may charge
reasonable fees to cover the costs of maintaining and providing
access to information from the Nationwide Mortgage Licensing
System and Registry, to the extent that such fees are not
charged to consumers for access to such system and registry.'';
(8) by striking section 1513 (12 U.S.C. 5112) and
inserting the following:
``SEC. 1513. LIABILITY PROVISIONS.
``The Bureau, any State official or agency, or any
organization serving as the administrator of the Nationwide
Mortgage Licensing System and Registry or a system established
by the Director under section 1509, or any officer or employee
of any such entity, shall not be subject to any civil action or
proceeding for monetary damages by reason of the good faith
action or omission of any officer or employee of any such
entity, while acting within the scope of office or employment,
relating to the collection, furnishing, or dissemination of
information concerning persons who are loan originators or are
applying for licensing or registration as loan originators.'';
and
(9) in section 1514 (12 U.S.C. 5113) in the section
heading, by striking ``UNDER HUD BACKUP LICENSING
SYSTEM'' and inserting ``BY THE BUREAU''.
SEC. 1100A. AMENDMENTS TO THE TRUTH IN LENDING ACT.
The Truth in Lending Act (15 U.S.C. 1601 et seq.) is
amended--
(1) in section 103 (15 U.S.C. 1602)--
(A) by redesignating subsections (b)
through (bb) as subsections (c) through (cc),
respectively; and
(B) by inserting after subsection (a) the
following:
``(b) Bureau.--The term `Bureau' means the Bureau of
Consumer Financial Protection.'';
(2) by striking ``Board'' each place that term
appears, other than in section 140(d) and sections
105(i) and 108(a), as amended by this section, and
inserting ``Bureau'';
(3) by striking ``Federal Trade Commission'' each
place that term appears, other than in section 108(c)
and section 129(m), as amended by this Act, and other
than in the context of a reference to the Federal Trade
Commission Act, and inserting ``Bureau'';
(4) in section 105(a) (15 U.S.C. 1604(a)), in the
second sentence--
(A) by striking ``Except in the case of a
mortgage referred to in section 103(aa), these
regulations may contain such'' and inserting
``Except with respect to the provisions of
section 129 that apply to a mortgage referred
to in section 103(aa), such regulations may
contain such additional requirements,''; and
(B) by inserting ``all or'' after
``exceptions for'';
(5) in section 105(b) (15 U.S.C. 1604(b)), by
striking the first sentence and inserting the
following: ``The Bureau shall publish a single,
integrated disclosure for mortgage loan transactions
(including real estate settlement cost statements)
which includes the disclosure requirements of this
title in conjunction with the disclosure requirements
of the Real Estate Settlement Procedures Act of 1974
that, taken together, may apply to a transaction that
is subject to both or either provisions of law. The
purpose of such model disclosure shall be to facilitate
compliance with the disclosure requirements of this
title and the Real Estate Settlement Procedures Act of
1974, and to aid the borrower or lessee in
understanding the transaction by utilizing readily
understandable language to simplify the technical
nature of the disclosures.'';
(6) in section 105(f)(1) (15 U.S.C. 1604(f)(1)), by
inserting ``all or'' after ``from all or part of this
title'';
(7) in section 105 (15 U.S.C. 1604), by adding at
the end the following:
``(i) Authority of the board to
prescribe rules.--Notwithstanding
subsection (a), the Board shall have
authority to prescribe rules under this
title with respect to a person
described in section 1029(a) of the
Consumer Financial Protection Act of
2010. Regulations prescribed under this
subsection may contain such
classifications, differentiations, or
other provisions, as in the judgment of
the Board are necessary or proper to
effectuate the purposes of this title,
to prevent circumvention or evasion
thereof, or to facilitate compliance
therewith.'';
(8) in section 108 (15 U.S.C. 1604), by adding at
the end the following:
(A) by striking subsection (a) and
inserting the following:
``(a) Enforcing Agencies.--Subject to subtitle B of the
Consumer Financial Protection Act of 2010, compliance with the
requirements imposed under this title shall be enforced under--
``(1) section 8 of the Federal Deposit Insurance
Act, by the appropriate Federal banking agency, as
defined in section 3(q) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(q)), with respect to--
``(A) national banks, Federal savings
associations, and Federal branches and Federal
agencies of foreign banks;
``(B) member banks of the Federal Reserve
System (other than national banks), branches
and agencies of foreign banks (other than
Federal branches, Federal agencies, and insured
State branches of foreign banks), commercial
lending companies owned or controlled by
foreign banks, and organizations operating
under section 25 or 25A of the Federal Reserve
Act; and
``(C) banks and State savings associations
insured by the Federal Deposit Insurance
Corporation (other than members of the Federal
Reserve System), and insured State branches of
foreign banks;
``(2) the Federal Credit Union Act, by the Director
of the National Credit Union Administration, with
respect to any Federal credit union;
``(3) the Federal Aviation Act of 1958, by the
Secretary of Transportation, with respect to any air
carrier or foreign air carrier subject to that Act;
``(4) the Packers and Stockyards Act, 1921 (except
as provided in section 406 of that Act), by the
Secretary of Agriculture, with respect to any
activities subject to that Act;
``(5) the Farm Credit Act of 1971, by the Farm
Credit Administration with respect to any Federal land
bank, Federal land bank association, Federal
intermediate credit bank, or production credit
association; and
``(6) subtitle E of the Consumer Financial
Protection Act of 2010, by the Bureau, with respect to
any person subject to this title.''; and
(B) by striking subsection (c) and
inserting the following:
``(c) Overall Enforcement Authority of the Federal Trade
Commission.--Except to the extent that enforcement of the
requirements imposed under this title is specifically committed
to some other Government agency under any of paragraphs (1)
through (5) of subsection (a), and subject to subtitle B of the
Consumer Financial Protection Act of 2010, the Federal Trade
Commission shall be authorized to enforce such requirements.
For the purpose of the exercise by the Federal Trade Commission
of its functions and powers under the Federal Trade Commission
Act, a violation of any requirement imposed under this title
shall be deemed a violation of a requirement imposed under that
Act. All of the functions and powers of the Federal Trade
Commission under the Federal Trade Commission Act are available
to the Federal Trade Commission to enforce compliance by any
person with the requirements under this title, irrespective of
whether that person is engaged in commerce or meets any other
jurisdictional tests under the Federal Trade Commission Act.'';
and
(9) in section 129 (15 U.S.C. 1639), by striking
subsection (m) and inserting the following:
``(m) Civil Penalties in Federal Trade Commission
Enforcement Actions.--For purposes of enforcement by the
Federal Trade Commission, any violation of a regulation issued
by the Bureau pursuant to subsection (l)(2) shall be treated as
a violation of a rule promulgated under section 18 of the
Federal Trade Commission Act (15 U.S.C. 57a) regarding unfair
or deceptive acts or practices.''; and
(10) in chapter 5 (15 U.S.C. 1667 et seq.)--
(A) by striking ``the Board'' each place
that term appears and inserting ``the Bureau'';
and
(B) by striking ``The Board'' each place
that term appears and inserting ``The Bureau''.
SEC. 1100B. AMENDMENTS TO THE TRUTH IN SAVINGS ACT.
The Truth in Savings Act (12 U.S.C. 4301 et seq.) is
amended--
(1) by striking ``Board'' each place that term
appears, other than in section 272(b) (12 U.S.C. 4311),
and inserting ``Bureau'';
(2) in section 270(a) (12 U.S.C. 4309)--
(A) by striking ``Compliance'' and all that
follows through the end of paragraph (1) and
inserting: ``Subject to subtitle B of the
Consumer Financial Protection Act of 2010,
compliance with the requirements imposed under
this subtitle shall be enforced under--
``(1) section 8 of the Federal Deposit Insurance
Act by the appropriate Federal banking agency (as
defined in section 3(q) of that Act), with respect to--
``(A) insured depository institutions (as
defined in section 3(c)(2) of that Act);
``(B) depository institutions described in
clause (i), (ii), or (iii) of section
19(b)(1)(A) of the Federal Reserve Act which
are not insured depository institutions (as
defined in section 3(c)(2) of the Federal
Deposit Insurance Act); and
``(C) depository institutions described in
clause (v) or (vi) of section 19(b)(1)(A) of
the Federal Reserve Act which are not insured
depository institutions (as defined in section
3(c)(2) of the Federal Deposit Insurance
Act);'';
(B) in paragraph (2), by striking the
period at the end and inserting ``; and''; and
(C) by adding at the end the following:
``(3) subtitle E of the Consumer Financial
Protection Act of 2010, by the Bureau, with respect to
any person subject to this subtitle.'';
(3) in section 272(b) (12 U.S.C. 4311(b)), by
striking ``regulation prescribed by the Board'' each
place that term appears and inserting ``regulation
prescribed by the Bureau''; and
(4) in section 274 (12 U.S.C. 4313), by striking
paragraph (4) and inserting the following:
``(4) Bureau.--The term `Bureau' means the Bureau
of Consumer Financial Protection.''.
SEC. 1100C. AMENDMENTS TO THE TELEMARKETING AND CONSUMER FRAUD AND
ABUSE PREVENTION ACT.
(a) Amendments to Section 3.--Section 3 of the
Telemarketing and Consumer Fraud and Abuse Prevention Act (15
U.S.C. 6102) is amended by striking subsections (b) and (c) and
inserting the following:
``(b) Rulemaking Authority.--The Commission shall have
authority to prescribe rules under subsection (a), in
accordance with section 553 of title 5, United States Code. In
prescribing a rule under this section that relates to the
provision of a consumer financial product or service that is
subject to the Consumer Financial Protection Act of 2010,
including any enumerated consumer law thereunder, the
Commission shall consult with the Bureau of Consumer Financial
Protection regarding the consistency of a proposed rule with
standards, purposes, or objectives administered by the Bureau
of Consumer Financial Protection.
``(c) Violations.--Any violation of any rule prescribed
under subsection (a)--
``(1) shall be treated as a violation of a rule
under section 18 of the Federal Trade Commission Act
regarding unfair or deceptive acts or practices; and
``(2) that is committed by a person subject to the
Consumer Financial Protection Act of 2010 shall be
treated as a violation of a rule under section 1031 of
that Act regarding unfair, deceptive, or abusive acts
or practices.''.
(b) Amendments to Section 4.--Section 4(d) of the
Telemarketing and Consumer Fraud and Abuse Prevention Act (15
U.S.C. 6103(d)) is amended by inserting after ``Commission''
each place that term appears the following: ``or the Bureau of
Consumer Financial Protection''.
(c) Amendments to Section 5.--Section 5(c) of the
Telemarketing and Consumer Fraud and Abuse Prevention Act (15
U.S.C. 6104(c)) is amended by inserting after ``Commission''
each place that term appears the following: ``or the Bureau of
Consumer Financial Protection''.
(d) Amendment to Section 6.--Section 6 of the Telemarketing
and Consumer Fraud and Abuse Prevention Act (15 U.S.C. 6105) is
amended by adding at the end the following:
``(d) Enforcement by Bureau of Consumer Financial
Protection.--Except as otherwise provided in sections 3(d),
3(e), 4, and 5, and subject to subtitle B of the Consumer
Financial Protection Act of 2010, this Act shall be enforced by
the Bureau of Consumer Financial Protection under subtitle E of
the Consumer Financial Protection Act of 2010, with respect to
the offering or provision of a consumer financial product or
service subject to that Act.''.
SEC. 1100D. AMENDMENTS TO THE PAPERWORK REDUCTION ACT.
(a) Designation as an Independent Agency.--Section 2(5) of
the Paperwork Reduction Act (44 U.S.C. 3502(5)) is amended by
inserting ``the Bureau of Consumer Financial Protection, the
Office of Financial Research,'' after ``the Securities and
Exchange Commission,''.
(b) Comparable Treatment.--Section 3513 of title 44, United
States Code, is amended by adding at the end the following:
``(c) Comparable Treatment.--Notwithstanding any other
provision of law, the Director shall treat or review a rule or
order prescribed or proposed by the Director of the Bureau of
Consumer Financial Protection on the same terms and conditions
as apply to any rule or order prescribed or proposed by the
Board of Governors of the Federal Reserve System.''.
SEC. 1100E. ADJUSTMENTS FOR INFLATION IN THE TRUTH IN LENDING ACT.
(a) Caps.--
(1) Credit transactions.--Section 104(3) of the
Truth in Lending Act (15 U.S.C. 1603(3)) is amended by
striking ``$25,000'' and inserting ``$50,000''.
(2) Consumer leases.--Section 181(1) of the Truth
in Lending Act (15 U.S.C. 1667(1)) is amended by
striking ``$25,000'' and inserting ``$50,000''.
(b) Adjustments for Inflation.--On and after December 31,
2011, the Bureau shall adjust annually the dollar amounts
described in sections 104(3) and 181(1) of the Truth in Lending
Act (as amended by this section), by the annual percentage
increase in the Consumer Price Index for Urban Wage Earners and
Clerical Workers, as published by the Bureau of Labor
Statistics, rounded to the nearest multiple of $100, or $1,000,
as applicable.
SEC. 1100F. USE OF CONSUMER REPORTS.
Section 615 of the Fair Credit Reporting Act (15 U.S.C.
1681m) is amended--
(1) in subsection (a)--
(A) by redesignating paragraphs (2) and (3)
as paragraphs (3) and (4), respectively;
(B) by inserting after paragraph (1) the
following:
``(2) provide to the consumer written or electronic
disclosure--
``(A) of a numerical credit score as
defined in section 609(f)(2)(A) used by such
person in taking any adverse action based in
whole or in part on any information in a
consumer report; and
``(B) of the information set forth in
subparagraphs (B) through (E) of section
609(f)(1);''; and
(C) in paragraph (4) (as so redesignated),
by striking ``paragraph (2)'' and inserting
``paragraph (3)''; and
(2) in subsection (h)(5)--
(A) in subparagraph (C), by striking ``;
and'' and inserting a semicolon;
(B) in subparagraph (D), by striking the
period and inserting ``; and''; and
(C) by inserting at the end the following:
``(E) include a statement informing the
consumer of--
``(i) a numerical credit score as
defined in section 609(f)(2)(A), used
by such person in making the credit
decision described in paragraph (1)
based in whole or in part on any
information in a consumer report; and
``(ii) the information set forth in
subparagraphs (B) through (E) of
section 609(f)(1).''.
SEC. 1100G. SMALL BUSINESS FAIRNESS AND REGULATORY TRANSPARENCY.
(a) Panel Requirement.--Section 609(d) of title 5, United
States Code, is amended by striking ``means the'' and all that
follows and inserting the following: ``means--
``(1) the Environmental Protection Agency;
``(2) the Consumer Financial Protection Bureau of
the Federal Reserve System; and
``(3) the Occupational Safety and Health
Administration of the Department of Labor.''.
(b) Initial Regulatory Flexibility Analysis.--Section 603
of title 5, United States Code, is amended by adding at the end
the following:
``(d)(1) For a covered agency, as defined in section
609(d)(2), each initial regulatory flexibility analysis shall
include a description of--
``(A) any projected increase in the cost of credit
for small entities;
``(B) any significant alternatives to the proposed
rule which accomplish the stated objectives of
applicable statutes and which minimize any increase in
the cost of credit for small entities; and
``(C) advice and recommendations of representatives
of small entities relating to issues described in
subparagraphs (A) and (B) and subsection (b).
``(2) A covered agency, as defined in section 609(d)(2),
shall, for purposes of complying with paragraph (1)(C)--
``(A) identify representatives of small entities in
consultation with the Chief Counsel for Advocacy of the
Small Business Administration; and
``(B) collect advice and recommendations from the
representatives identified under subparagraph (A)
relating to issues described in subparagraphs (A) and
(B) of paragraph (1) and subsection (b).''.
(c) Final Regulatory Flexibility Analysis.--Section 604(a)
of title 5, United States Code, is amended--
(1) in paragraph (4), by striking ``and'' at the
end;
(2) in paragraph (5), by striking the period at the
end and inserting ``; and''; and
(3) by adding at the end the following:
``(6) for a covered agency, as defined in section
609(d)(2), a description of the steps the agency has
taken to minimize any additional cost of credit for
small entities.''.
SEC. 1100H. EFFECTIVE DATE.
Except as otherwise provided in this subtitle and the
amendments made by this subtitle, this subtitle and the
amendments made by this subtitle, other than sections 1081 and
1082, shall become effective on the designated transfer date.
TITLE XI--FEDERAL RESERVE SYSTEM PROVISIONS
SEC. 1101. FEDERAL RESERVE ACT AMENDMENTS ON EMERGENCY LENDING
AUTHORITY.
(a) Federal Reserve Act.--The third undesignated paragraph
of section 13 of the Federal Reserve Act (12 U.S.C. 343)
(relating to emergency lending authority) is amended--
(1) by inserting ``(3)(A)'' before ``In unusual'';
(2) by striking ``individual, partnership, or
corporation'' the first place that term appears and
inserting the following: ``participant in any program
or facility with broad-based eligibility'';
(3) by striking ``exchange for an individual or a
partnership or corporation'' and inserting
``exchange,'';
(4) by striking ``such individual, partnership, or
corporation'' and inserting the following: ``such
participant in any program or facility with broad-based
eligibility'';
(5) by striking ``for individuals, partnerships,
corporations'' and inserting ``for any participant in
any program or facility with broad-based eligibility'';
and
(6) by striking ``may prescribe.'' and inserting
the following: ``may prescribe.
``(B)(i) As soon as is practicable after
the date of enactment of this subparagraph, the
Board shall establish, by regulation, in
consultation with the Secretary of the
Treasury, the policies and procedures governing
emergency lending under this paragraph. Such
policies and procedures shall be designed to
ensure that any emergency lending program or
facility is for the purpose of providing
liquidity to the financial system, and not to
aid a failing financial company, and that the
security for emergency loans is sufficient to
protect taxpayers from losses and that any such
program is terminated in a timely and orderly
fashion. The policies and procedures
established by the Board shall require that a
Federal reserve bank assign, consistent with
sound risk management practices and to ensure
protection for the taxpayer, a lendable value
to all collateral for a loan executed by a
Federal reserve bank under this paragraph in
determining whether the loan is secured
satisfactorily for purposes of this paragraph.
``(ii) The Board shall establish procedures
to prohibit borrowing from programs and
facilities by borrowers that are insolvent.
Such procedures may include a certification
from the chief executive officer (or other
authorized officer) of the borrower, at the
time the borrower initially borrows under the
program or facility (with a duty by the
borrower to update the certification if the
information in the certification materially
changes), that the borrower is not insolvent. A
borrower shall be considered insolvent for
purposes of this subparagraph, if the borrower
is in bankruptcy, resolution under title II of
the Dodd-Frank Wall Street Reform and Consumer
Protection Act, or any other Federal or State
insolvency proceeding.
``(iii) A program or facility that is
structured to remove assets from the balance
sheet of a single and specific company, or that
is established for the purpose of assisting a
single and specific company avoid bankruptcy,
resolution under title II of the Dodd-Frank
Wall Street Reform and Consumer Protection Act,
or any other Federal or State insolvency
proceeding, shall not be considered a program
or facility with broad-based eligibility.
``(iv) The Board may not establish any
program or facility under this paragraph
without the prior approval of the Secretary of
the Treasury.
``(C) The Board shall provide to the
Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on
Financial Services of the House of
Representatives--
``(i) not later than 7 days after
the Board authorizes any loan or other
financial assistance under this
paragraph, a report that includes--
``(I) the justification for
the exercise of authority to
provide such assistance;
``(II) the identity of the
recipients of such assistance;
``(III) the date and amount
of the assistance, and form in
which the assistance was
provided; and
``(IV) the material terms
of the assistance, including--
``(aa) duration;
``(bb) collateral
pledged and the value
thereof;
``(cc) all
interest, fees, and
other revenue or items
of value to be received
in exchange for the
assistance;
``(dd) any
requirements imposed on
the recipient with
respect to employee
compensation,
distribution of
dividends, or any other
corporate decision in
exchange for the
assistance; and
``(ee) the expected
costs to the taxpayers
of such assistance; and
``(ii) once every 30 days, with
respect to any outstanding loan or
other financial assistance under this
paragraph, written updates on--
``(I) the value of
collateral;
``(II) the amount of
interest, fees, and other
revenue or items of value
received in exchange for the
assistance; and
``(III) the expected or
final cost to the taxpayers of
such assistance.
``(D) The information required to be
submitted to Congress under subparagraph (C)
related to--
``(i) the identity of the
participants in an emergency lending
program or facility commenced under
this paragraph;
``(ii) the amounts borrowed by each
participant in any such program or
facility;
``(iii) identifying details
concerning the assets or collateral
held by, under, or in connection with
such a program or facility,
shall be kept confidential, upon the written
request of the Chairman of the Board, in which
case such information shall be made available
only to the Chairpersons or Ranking Members of
the Committees described in subparagraph (C).
``(E) If an entity to which a Federal
reserve bank has provided a loan under this
paragraph becomes a covered financial company,
as defined in section 201 of the Dodd-Frank
Wall Street Reform and Consumer Protection Act,
at any time while such loan is outstanding, and
the Federal reserve bank incurs a realized net
loss on the loan, then the Federal reserve bank
shall have a claim equal to the amount of the
net realized loss against the covered entity,
with the same priority as an obligation to the
Secretary of the Treasury under section 210(b)
of the Dodd-Frank Wall Street Reform and
Consumer Protection Act.''.
(b) Conforming Amendment.--Section 507(a)(2) of title 11,
United States Code, is amended by inserting ``unsecured claims
of any Federal reserve bank related to loans made through
programs or facilities authorized under section 13(3) of the
Federal Reserve Act (12 U.S.C. 343),'' after ``this title,''.
(c) References.--On and after the date of enactment of this
Act, any reference in any provision of Federal law to the third
undesignated paragraph of section 13 of the Federal Reserve Act
(12 U.S.C. 343) shall be deemed to be a reference to section
13(3) of the Federal Reserve Act, as so designated by this
section.
SEC. 1102. AUDITS OF SPECIAL FEDERAL RESERVE CREDIT FACILITIES.
(a) Audits.--Section 714 of title 31, United States Code,
is amended by adding at the end the following:
``(f) Audits of Credit Facilities of the Federal Reserve
System.--
``(1) Definitions.--In this subsection, the
following definitions shall apply:
``(A) Credit facility.--The term `credit
facility' means a program or facility,
including any special purpose vehicle or other
entity established by or on behalf of the Board
of Governors of the Federal Reserve System or a
Federal reserve bank, authorized by the Board
of Governors under section 13(3) of the Federal
Reserve Act (12 U.S.C. 343), that is not
subject to audit under subsection (e).
``(B) Covered transaction.--The term
`covered transaction' means any open market
transaction or discount window advance that
meets the definition of `covered transaction'
in section 11(s) of the Federal Reserve Act.
``(2) Authority for audits and examinations.--
Subject to paragraph (3), and notwithstanding any
limitation in subsection (b) on the auditing and
oversight of certain functions of the Board of
Governors of the Federal Reserve System or any Federal
reserve bank, the Comptroller General of the United
States may conduct audits, including onsite
examinations, of the Board of Governors, a Federal
reserve bank, or a credit facility, if the Comptroller
General determines that such audits are appropriate,
solely for the purposes of assessing, with respect to a
credit facility or a covered transaction--
``(A) the operational integrity,
accounting, financial reporting, and internal
controls governing the credit facility or
covered transaction;
``(B) the effectiveness of the security and
collateral policies established for the
facility or covered transaction in mitigating
risk to the relevant Federal reserve bank and
taxpayers;
``(C) whether the credit facility or the
conduct of a covered transaction
inappropriately favors one or more specific
participants over other institutions eligible
to utilize the facility; and
``(D) the policies governing the use,
selection, or payment of third-party
contractors by or for any credit facility or to
conduct any covered transaction.
``(3) Reports and delayed disclosure.--
``(A) Reports required.--A report on each
audit conducted under paragraph (2) shall be
submitted by the Comptroller General to the
Congress before the end of the 90-day period
beginning on the date on which such audit is
completed.
``(B) Contents.--The report under
subparagraph (A) shall include a detailed
description of the findings and conclusions of
the Comptroller General with respect to the
matters described in paragraph (2) that were
audited and are the subject of the report,
together with such recommendations for
legislative or administrative action relating
to such matters as the Comptroller General may
determine to be appropriate.
``(C) Delayed release of certain
information.--
``(i) In general.--The Comptroller
General shall not disclose to any
person or entity, including to
Congress, the names or identifying
details of specific participants in any
credit facility or covered transaction,
the amounts borrowed by or transferred
by or to specific participants in any
credit facility or covered transaction,
or identifying details regarding assets
or collateral held or transferred by,
under, or in connection with any credit
facility or covered transaction, and
any report provided under subparagraph
(A) shall be redacted to ensure that
such names and details are not
disclosed.
``(ii) Delayed release.--The
nondisclosure obligation under clause
(i) shall expire with respect to any
participant on the date on which the
Board of Governors, directly or through
a Federal reserve bank, publicly
discloses the identity of the subject
participant or the identifying details
of the subject assets, collateral, or
transaction.
``(iii) General release.--The
Comptroller General shall release a
nonredacted version of any report on a
credit facility 1 year after the
effective date of the termination by
the Board of Governors of the
authorization for the credit facility.
For purposes of this clause, a credit
facility shall be deemed to have
terminated 24 months after the date on
which the credit facility ceases to
make extensions of credit and loans,
unless the credit facility is otherwise
terminated by the Board of Governors.
``(iv) Exceptions.--The
nondisclosure obligation under clause
(i) shall not apply to the credit
facilities Maiden Lane, Maiden Lane II,
and Maiden Lane III.
``(v) Release of covered
transaction information.--The
Comptroller General shall release a
nonredacted version of any report
regarding covered transactions upon the
release of the information regarding
such covered transactions by the Board
of Governors of the Federal Reserve
System, as provided in section 11(s) of
the Federal Reserve Act.''.
(b) Access to Records.--Section 714(d) of title 31, United
States Code, is amended--
(1) in paragraph (2), by inserting ``or any person
or entity described in paragraph (3)(A)'' after ``used
by an agency'';
(2) in paragraph (3), by inserting ``or (f)'' after
``subsection (e)'' each place that term appears;
(3) in clauses (i) and (ii) of paragraph (3)(A), by
inserting ``or the Federal Reserve banks'' after ``by
the Board'' each place that term appears;
(4) in paragraph (3)(A)(ii), by inserting
``participating in or'' after ``any entity''; and
(5) in paragraph (3)(B), by adding at the end the
following: ``The Comptroller General may make and
retain copies of books, accounts, and other records
provided under subparagraph (A) as the Comptroller
General deems appropriate. The Comptroller General
shall provide to any person or entity described in
subparagraph (A) a current list of officers and
employees to whom, with proper identification, records
and property may be made available, and who may make
notes or copies necessary to carry out a audit or
examination under this subsection.''.
SEC. 1103. PUBLIC ACCESS TO INFORMATION.
(a) In General.--Section 2B of the Federal Reserve Act (12
U.S.C. 225b) is amended by adding at the end the following:
``(c) Public Access to Information.--The Board shall place
on its home Internet website, a link entitled `Audit', which
shall link to a webpage that shall serve as a repository of
information made available to the public for a reasonable
period of time, not less than 6 months following the date of
release of the relevant information, including--
``(1) the reports prepared by the Comptroller
General under section 714 of title 31, United States
Code;
``(2) the annual financial statements prepared by
an independent auditor for the Board in accordance with
section 11B;
``(3) the reports to the Committee on Banking,
Housing, and Urban Affairs of the Senate required under
section 13(3) (relating to emergency lending
authority); and
``(4) such other information as the Board
reasonably believes is necessary or helpful to the
public in understanding the accounting, financial
reporting, and internal controls of the Board and the
Federal reserve banks.''.
(b) Federal Reserve Transparency and Release of
Information.--Section 11 of the Federal Reserve Act (12 U.S.C.
248) is amended by adding at the end the following new
subsection:
``(s) Federal Reserve Transparency and Release of
Information.--
``(1) In general.--In order to ensure the
disclosure in a timely manner consistent with the
purposes of this Act of information concerning the
borrowers and counterparties participating in emergency
credit facilities, discount window lending programs,
and open market operations authorized or conducted by
the Board or a Federal reserve bank, the Board of
Governors shall disclose, as provided in paragraph
(2)--
``(A) the names and identifying details of
each borrower, participant, or counterparty in
any credit facility or covered transaction;
``(B) the amount borrowed by or transferred
by or to a specific borrower, participant, or
counterparty in any credit facility or covered
transaction;
``(C) the interest rate or discount paid by
each borrower, participant, or counterparty in
any credit facility or covered transaction; and
``(D) information identifying the types and
amounts of collateral pledged or assets
transferred in connection with participation in
any credit facility or covered transaction.
``(2) Mandatory release date.--In the case of--
``(A) a credit facility, the Board shall
disclose the information described in paragraph
(1) on the date that is 1 year after the
effective date of the termination by the Board
of the authorization of the credit facility;
and
``(B) a covered transaction, the Board
shall disclose the information described in
paragraph (1) on the last day of the eighth
calendar quarter following the calendar quarter
in which the covered transaction was conducted.
``(3) Earlier release date authorized.--The
Chairman of the Board may publicly release the
information described in paragraph (1) before the
relevant date specified in paragraph (2), if the
Chairman determines that such disclosure would be in
the public interest and would not harm the
effectiveness of the relevant credit facility or the
purpose or conduct of covered transactions.
``(4) Definitions.--For purposes of this
subsection, the following definitions shall apply:
``(A) Credit facility.--The term `credit
facility' has the same meaning as in section
714(f)(1)(A) of title 31, United States Code.
``(B) Covered transaction.--The term
`covered transaction' means--
``(i) any open market transaction
with a nongovernmental third party
conducted under the first undesignated
paragraph of section 14 or subparagraph
(a), (b), or (c) of the 2nd
undesignated paragraph of such section,
after the date of enactment of the
Dodd-Frank Wall Street Reform and
Consumer Protection Act; and
``(ii) any advance made under
section 10B after the date of enactment
of that Act.
``(5) Termination of credit facility by operation
of law.--A credit facility shall be deemed to have
terminated as of the end of the 24-month period
beginning on the date on which the credit facility
ceases to make extensions of credit and loans, unless
the credit facility is otherwise terminated by the
Board before such date.
``(6) Consistent treatment of information.--Except
as provided in this subsection or section 13(3)(D), or
in section 714(f)(3)(C) of title 31, United States
Code, the information described in paragraph (1) and
information concerning the transactions described in
section 714(f) of such title, shall be confidential,
including for purposes of section 552(b)(3) of title 5
of such Code, until the relevant mandatory release date
described in paragraph (2), unless the Chairman of the
Board determines that earlier disclosure of such
information would be in the public interest and would
not harm the effectiveness of the relevant credit
facility or the purpose of conduct of the relevant
transactions.
``(7) Protection of personal privacy.--This
subsection and section 13(3)(C), section 714(f)(3)(C)
of title 31, United States Code, and subsection (a) or
(c) of section 1109 of the Dodd-Frank Wall Street
Reform and Consumer Protection Act shall not be
construed as requiring any disclosure of nonpublic
personal information (as defined for purposes of
section 502 of the Gramm-Leach-Bliley Act (12 U.S.C.
6802)) concerning any individual who is referenced in
collateral pledged or assets transferred in connection
with a credit facility or covered transaction, unless
the person is a borrower, participant, or counterparty
under the credit facility or covered transaction.
``(8) Study of foia exemption impact.--
``(A) Study.--The Inspector General of the
Board of Governors of the Federal Reserve
System shall--
``(i) conduct a study on the impact
that the exemption from section
552(b)(3) of title 5 (known as the
Freedom of Information Act) established
under paragraph (6) has had on the
ability of the public to access
information about the administration by
the Board of Governors of emergency
credit facilities, discount window
lending programs, and open market
operations; and
``(ii) make any recommendations on
whether the exemption described in
clause (i) should remain in effect.
``(B) Report.--Not later than 30 months
after the date of enactment of this section,
the Inspector General of the Board of Governors
of the Federal Reserve System shall submit a
report on the findings of the study required
under subparagraph (A) to the Committee on
Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services
of the House of Representatives, and publish
the report on the website of the Board.
``(9) Rule of construction.--Nothing in this
section is meant to affect any pending litigation or
lawsuit filed under section 552 of title 5, United
States Code (popularly known as the Freedom of
Information Act), on or before the date of enactment of
the Dodd-Frank Wall Street Reform and Consumer
Protection Act.''.
SEC. 1104. LIQUIDITY EVENT DETERMINATION.
(a) Determination and Written Recommendation.--
(1) Determination request.--The Secretary may
request the Corporation and the Board of Governors to
determine whether a liquidity event exists that
warrants use of the guarantee program authorized under
section 1105.
(2) Requirements of determination.--Any
determination pursuant to paragraph (1) shall--
(A) be written; and
(B) contain an evaluation of the evidence
that--
(i) a liquidity event exists;
(ii) failure to take action would
have serious adverse effects on
financial stability or economic
conditions in the United States; and
(iii) actions authorized under
section 1105 are needed to avoid or
mitigate potential adverse effects on
the United States financial system or
economic conditions.
(b) Procedures.--Notwithstanding any other provision of
Federal or State law, upon the determination of both the
Corporation (upon a vote of not fewer than \2/3\ of the members
of the Corporation then serving) and the Board of Governors
(upon a vote of not fewer than \2/3\ of the members of the
Board of Governors then serving) under subsection (a) that a
liquidity event exists that warrants use of the guarantee
program authorized under section 1105, and with the written
consent of the Secretary--
(1) the Corporation shall take action in accordance
with section 1105(a); and
(2) the Secretary (in consultation with the
President) shall take action in accordance with section
1105(c).
(c) Documentation and Review.--
(1) Documentation.--The Secretary shall--
(A) maintain the written documentation of
each determination of the Corporation and the
Board of Governors under this section; and
(B) provide the documentation for review
under paragraph (2).
(2) GAO review.--The Comptroller General of the
United States shall review and report to Congress on
any determination of the Corporation and the Board of
Governors under subsection (a), including--
(A) the basis for the determination; and
(B) the likely effect of the actions taken.
(d) Report to Congress.--On the earlier of the date of a
submission made to Congress under section 1105(c), or within 30
days of the date of a determination under subsection (a), the
Secretary shall provide written notice of the determination of
the Corporation and the Board of Governors to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of
Representatives, including a description of the basis for the
determination.
SEC. 1105. EMERGENCY FINANCIAL STABILIZATION.
(a) In General.--Upon the written determination of the
Corporation and the Board of Governors under section 1104, the
Corporation shall create a widely available program to
guarantee obligations of solvent insured depository
institutions or solvent depository institution holding
companies (including any affiliates thereof) during times of
severe economic distress, except that a guarantee of
obligations under this section may not include the provision of
equity in any form.
(b) Rulemaking and Terms and Conditions.--
(1) Policies and procedures.--As soon as is
practicable after the date of enactment of this Act,
the Corporation shall establish, by regulation, and in
consultation with the Secretary, policies and
procedures governing the issuance of guarantees
authorized by this section. Such policies and
procedures may include a requirement of collateral as a
condition of any such guarantee.
(2) Terms and conditions.--The terms and conditions
of any guarantee program shall be established by the
Corporation, with the concurrence of the Secretary.
(c) Determination of Guaranteed Amount.--
(1) In general.--In connection with any program
established pursuant to subsection (a) and subject to
paragraph (2) of this subsection, the Secretary (in
consultation with the President) shall determine the
maximum amount of debt outstanding that the Corporation
may guarantee under this section, and the President may
transmit to Congress a written report on the plan of
the Corporation to exercise the authority under this
section to issue guarantees up to that maximum amount
and a request for approval of such plan. The
Corporation shall exercise the authority under this
section to issue guarantees up to that specified
maximum amount upon passage of the joint resolution of
approval, as provided in subsection (d). Absent such
approval, the Corporation shall issue no such
guarantees.
(2) Additional debt guarantee authority.--If the
Secretary (in consultation with the President)
determines, after a submission to Congress under
paragraph (1), that the maximum guarantee amount should
be raised, and the Council concurs with that
determination, the President may transmit to Congress a
written report on the plan of the Corporation to
exercise the authority under this section to issue
guarantees up to the increased maximum debt guarantee
amount. The Corporation shall exercise the authority
under this section to issue guarantees up to that
specified maximum amount upon passage of the joint
resolution of approval, as provided in subsection (d).
Absent such approval, the Corporation shall issue no
such guarantees.
(d) Resolution of Approval.--
(1) Additional debt guarantee authority.--A request
by the President under this section shall be considered
granted by Congress upon adoption of a joint resolution
approving such request. Such joint resolution shall be
considered in the Senate under expedited procedures.
(2) Fast track consideration in senate.--
(A) Reconvening.--Upon receipt of a request
under subsection (c), if the Senate has
adjourned or recessed for more than 2 days, the
majority leader of the Senate, after
consultation with the minority leader of the
Senate, shall notify the Members of the Senate
that, pursuant to this section, the Senate
shall convene not later than the second
calendar day after receipt of such message.
(B) Placement on calendar.--Upon
introduction in the Senate, the joint
resolution shall be placed immediately on the
calendar.
(C) Floor consideration.--
(i) In general.--Notwithstanding
Rule XXII of the Standing Rules of the
Senate, it is in order at any time
during the period beginning on the 4th
day after the date on which Congress
receives a request under subsection
(c), and ending on the 7th day after
that date (even though a previous
motion to the same effect has been
disagreed to) to move to proceed to the
consideration of the joint resolution,
and all points of order against the
joint resolution (and against
consideration of the joint resolution)
are waived. The motion to proceed is
not debatable. The motion is not
subject to a motion to postpone. A
motion to reconsider the vote by which
the motion is agreed to or disagreed to
shall not be in order. If a motion to
proceed to the consideration of the
resolution is agreed to, the joint
resolution shall remain the unfinished
business until disposed of.
(ii) Debate.--Debate on the joint
resolution, and on all debatable
motions and appeals in connection
therewith, shall be limited to not more
than 10 hours, which shall be divided
equally between the majority and
minority leaders or their designees. A
motion further to limit debate is in
order and not debatable. An amendment
to, or a motion to postpone, or a
motion to proceed to the consideration
of other business, or a motion to
recommit the joint resolution is not in
order.
(iii) Vote on passage.--The vote on
passage shall occur immediately
following the conclusion of the debate
on the joint resolution, and a single
quorum call at the conclusion of the
debate if requested in accordance with
the rules of the Senate.
(iv) Rulings of the chair on
procedure.--Appeals from the decisions
of the Chair relating to the
application of the rules of the Senate,
as the case may be, to the procedure
relating to a joint resolution shall be
decided without debate.
(3) Rules.--
(A) Coordination with action by house of
representatives.--If, before the passage by the
Senate of a joint resolution of the Senate, the
Senate receives a joint resolution, from the
House of Representatives, then the following
procedures shall apply:
(i) The joint resolution of the
House of Representatives shall not be
referred to a committee.
(ii) With respect to a joint
resolution of the Senate--
(I) the procedure in the
Senate shall be the same as if
no joint resolution had been
received from the other House;
but
(II) the vote on passage
shall be on the joint
resolution of the House of
Representatives.
(B) Treatment of joint resolution of house
of representatives.--If the Senate fails to
introduce or consider a joint resolution under
this section, the joint resolution of the House
of Representatives shall be entitled to
expedited floor procedures under this
subsection.
(C) Treatment of companion measures.--If,
following passage of the joint resolution in
the Senate, the Senate then receives the
companion measure from the House of
Representatives, the companion measure shall
not be debatable.
(D) Rules of the senate.--This subsection
is enacted by Congress--
(i) as an exercise of the
rulemaking power of the Senate, and as
such it is deemed a part of the rules
of the Senate, but applicable only with
respect to the procedure to be followed
in the Senate in the case of a joint
resolution, and it supersedes other
rules, only to the extent that it is
inconsistent with such rules; and
(ii) with full recognition of the
constitutional right of the Senate to
change the rules (so far as relating to
the procedure of the Senate) at any
time, in the same manner, and to the
same extent as in the case of any other
rule of the Senate.
(4) Definition.--As used in this subsection, the
term ``joint resolution'' means only a joint
resolution--
(A) that is introduced not later than 3
calendar days after the date on which the
request referred to in subsection (c) is
received by Congress;
(B) that does not have a preamble;
(C) the title of which is as follows:
``Joint resolution relating to the approval of
a plan to guarantee obligations under section
1105 of the Dodd-Frank Wall Street Reform and
Consumer Protection Act''; and
(D) the matter after the resolving clause
of which is as follows: ``That Congress
approves the obligation of any amount described
in section 1105(c) of the Dodd-Frank Wall
Street Reform and Consumer Protection Act.''.
(e) Funding.--
(1) Fees and other charges.--The Corporation shall
charge fees and other assessments to all participants
in the program established pursuant to this section, in
such amounts as are necessary to offset projected
losses and administrative expenses, including amounts
borrowed pursuant to paragraph (3), and such amounts
shall be available to the Corporation.
(2) Excess funds.--If, at the conclusion of the
program established under this section, there are any
excess funds collected from the fees associated with
such program, the funds shall be deposited in the
General Fund of the Treasury.
(3) Authority of corporation.--The Corporation--
(A) may borrow funds from the Secretary of
the Treasury and issue obligations of the
Corporation to the Secretary for amounts
borrowed, and the amounts borrowed shall be
available to the Corporation for purposes of
carrying out a program established pursuant to
this section, including the payment of
reasonable costs of administering the program,
and the obligations issued shall be repaid in
full with interest through fees and charges
paid by participants in accordance with
paragraphs (1) and (4), as applicable; and
(B) may not borrow funds from the Deposit
Insurance Fund established pursuant to section
11(a)(4) of the Federal Deposit Insurance Act.
(4) Backup special assessments.--To the extent that
the funds collected pursuant to paragraph (1) are
insufficient to cover any losses or expenses, including
amounts borrowed pursuant to paragraph (3), arising
from a program established pursuant to this section,
the Corporation shall impose a special assessment
solely on participants in the program, in amounts
necessary to address such insufficiency, and which
shall be available to the Corporation to cover such
losses or expenses.
(5) Authority of the secretary.--The Secretary may
purchase any obligations issued under paragraph (3)(A).
For such purpose, the Secretary may use 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 that chapter 31
are extended to include such purchases, and the amount
of any securities issued under that chapter 31 for such
purpose shall be treated in the same manner as
securities issued under section 208(n)(5)(E).
(f) Rule of Construction.--For purposes of this section, a
guarantee of deposits held by insured depository institutions
shall not be treated as a debt guarantee program.
(g) Definitions.--For purposes of this section, the
following definitions shall apply:
(1) Company.--The term ``company'' means any entity
other than a natural person that is incorporated or
organized under Federal law or the laws of any State.
(2) Depository institution holding company.--The
term ``depository institution holding company'' has the
same meaning as in section 3 of the Federal Deposit
Insurance Act (12 U.S.C. 1813).
(3) Liquidity event.--The term ``liquidity event''
means--
(A) an exceptional and broad reduction in
the general ability of financial market
participants--
(i) to sell financial assets
without an unusual and significant
discount; or
(ii) to borrow using financial
assets as collateral without an unusual
and significant increase in margin; or
(B) an unusual and significant reduction in
the ability of financial market participants to
obtain unsecured credit.
(4) Solvent.--The term ``solvent'' means that the
value of the assets of an entity exceed its obligations
to creditors.
SEC. 1106. ADDITIONAL RELATED AMENDMENTS.
(a) Suspension of Parallel Federal Deposit Insurance Act
Authority.--Effective upon the date of enactment of this
section, the Corporation may not exercise its authority under
section 13(c)(4)(G)(i) of the Federal Deposit Insurance Act (12
U.S.C. 1823(c)(4)(G)(i)) to establish any widely available debt
guarantee program for which section 1105 would provide
authority.
(b) Federal Deposit Insurance Act.--Section 13(c)(4)(G) of
the Federal Deposit Insurance Act (12 U.S.C. 1823(c)(4)(G)) is
amended--
(1) in clause (i)--
(A) in subclause (I), by inserting ``for
which the Corporation has been appointed
receiver'' before ``would have serious''; and
(B) in the undesignated matter following
subclause (II), by inserting ``for the purpose
of winding up the insured depository
institution for which the Corporation has been
appointed receiver'' after ``provide assistance
under this section''; and
(2) in clause (v)(I), by striking ``The'' and
inserting ``Not later than 3 days after making a
determination under clause (i), the''.
(c) Effect of Default on an FDIC Guarantee.--If an insured
depository institution or depository institution holding
company (as those terms are defined in section 3 of the Federal
Deposit Insurance Act) participating in a program under section
1105, or any participant in a debt guarantee program
established pursuant to section 13(c)(4)(G)(i) of the Federal
Deposit Insurance Act defaults on any obligation guaranteed by
the Corporation after the date of enactment of this Act, the
Corporation shall--
(1) appoint itself as receiver for the insured
depository institution that defaults; and
(2) with respect to any other participating company
that is not an insured depository institution that
defaults--
(A) require--
(i) consideration of whether a
determination shall be made, as
provided in section 203 to resolve the
company under section 202; and
(ii) the company to file a petition
for bankruptcy under section 301 of
title 11, United States Code, if the
Corporation is not appointed receiver
pursuant to section 202 within 30 days
of the date of default; or
(B) file a petition for involuntary
bankruptcy on behalf of the company under
section 303 of title 11, United States Code.
SEC. 1107. FEDERAL RESERVE ACT AMENDMENTS ON FEDERAL RESERVE BANK
GOVERNANCE.
The 5th subparagraph of the 4th undesignated paragraph of
section 4 of the Federal Reserve Act (12 U.S.C. 341) is amended
by striking the 2nd sentence and inserting the following: ``The
president shall be the chief executive officer of the bank and
shall be appointed by the Class B and Class C directors of the
bank, with the approval of the Board of Governors of the
Federal Reserve System, for a term of 5 years; and all other
executive officers and all employees of the bank shall be
directly responsible to the president.''.
SEC. 1108. FEDERAL RESERVE ACT AMENDMENTS ON SUPERVISION AND REGULATION
POLICY.
(a) Establishment of the Position of Vice Chairman for
Supervision.--
(1) Position established.--The second undesignated
paragraph of section 10 of the Federal Reserve Act (12
U.S.C. 242) (relating to the Chairman and Vice Chairman
of the Board) is amended by striking the third sentence
and inserting the following: ``Of the persons thus
appointed, 1 shall be designated by the President, by
and with the advice and consent of the Senate, to serve
as Chairman of the Board for a term of 4 years, and 2
shall be designated by the President, by and with the
advice and consent of the Senate, to serve as Vice
Chairmen of the Board, each for a term of 4 years, 1 of
whom shall serve in the absence of the Chairman, as
provided in the fourth undesignated paragraph of this
section, and 1 of whom shall be designated Vice
Chairman for Supervision. The Vice Chairman for
Supervision shall develop policy recommendations for
the Board regarding supervision and regulation of
depository institution holding companies and other
financial firms supervised by the Board, and shall
oversee the supervision and regulation of such
firms.''.
(2) Effective date.--The amendment made by
subsection (a) takes effect on the date of enactment of
this title and applies to individuals who are
designated by the President on or after that date to
serve as Vice Chairman of Supervision.
(b) Appearances Before Congress.--Section 10 of the Federal
Reserve Act (12 U.S.C. 241 et seq.) is amended by adding at the
end the following:
``(12) Appearances before congress.--The Vice
Chairman for Supervision shall appear before the
Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services of the
House of Representatives and at semi-annual hearings
regarding the efforts, activities, objectives, and
plans of the Board with respect to the conduct of
supervision and regulation of depository institution
holding companies and other financial firms supervised
by the Board.''.
(c) Board Responsibility To Set Supervision and Regulatory
Policy.--Section 11 of the Federal Reserve Act (12 U.S.C. 248)
(relating to enumerated powers of the Board) is amended by
adding at the end of subsection (k) (relating to delegation)
the following: ``The Board of Governors may not delegate to a
Federal reserve bank its functions for the establishment of
policies for the supervision and regulation of depository
institution holding companies and other financial firms
supervised by the Board of Governors.''.
(d) Exercise of Federal Reserve Authority.--
(1) No decisions by federal reserve bank
presidents.--No provision of title I relating to the
authority of the Board of Governors shall be construed
as conferring any decision-making authority on
presidents of Federal reserve banks.
(2) Voting decisions by board.--The Board of
Governors shall not delegate the authority to make any
voting decision that the Board of Governors is
authorized or required to make under title I of this
Act in contravention of section 11(k) of the Federal
Reserve Act.
SEC. 1109. GAO AUDIT OF THE FEDERAL RESERVE FACILITIES; PUBLICATION OF
BOARD ACTIONS.
(a) GAO Audit.--
(1) In general.--Notwithstanding section 714(b) of
title 31, United States Code, or any other provision of
law, the Comptroller General of the United States (in
this subsection referred to as the ``Comptroller
General'') shall conduct a one-time audit of all loans
and other financial assistance provided during the
period beginning on December 1, 2007 and ending on the
date of enactment of this Act by the Board of Governors
or a Federal reserve bank under the Asset-Backed
Commercial Paper Money Market Mutual Fund Liquidity
Facility, the Term Asset-Backed Securities Loan
Facility, the Primary Dealer Credit Facility, the
Commercial Paper Funding Facility, the Term Securities
Lending Facility, the Term Auction Facility, Maiden
Lane, Maiden Lane II, Maiden Lane III, the agency
Mortgage-Backed Securities program, foreign currency
liquidity swap lines, and any other program created as
a result of section 13(3) of the Federal Reserve Act
(as so designated by this title).
(2) Assessments.--In conducting the audit under
paragraph (1), the Comptroller General shall assess--
(A) the operational integrity, accounting,
financial reporting, and internal controls of
the credit facility;
(B) the effectiveness of the security and
collateral policies established for the
facility in mitigating risk to the relevant
Federal reserve bank and taxpayers;
(C) whether the credit facility
inappropriately favors one or more specific
participants over other institutions eligible
to utilize the facility;
(D) the policies governing the use,
selection, or payment of third-party
contractors by or for any credit facility; and
(E) whether there were conflicts of
interest with respect to the manner in which
such facility was established or operated.
(3) Timing.--The audit required by this subsection
shall be commenced not later than 30 days after the
date of enactment of this Act, and shall be completed
not later than 12 months after that date of enactment.
(4) Report required.--The Comptroller General shall
submit a report on the audit conducted under paragraph
(1) to the Congress not later than 12 months after the
date of enactment of this Act, and such report shall be
made available to--
(A) the Speaker of the House of
Representatives;
(B) the majority and minority leaders of
the House of Representatives;
(C) the majority and minority leaders of
the Senate;
(D) the Chairman and Ranking Member of the
Committee on Banking, Housing, and Urban
Affairs of the Senate and of the Committee on
Financial Services of the House of
Representatives; and
(E) any member of Congress who requests it.
(b) Audit of Federal Reserve Bank Governance.--
(1) Audit.--
(A) In general.--Not later than 1 year
after the date of enactment of this Act, the
Comptroller General shall complete an audit of
the governance of the Federal reserve bank
system.
(B) Required examinations.--The audit
required under subparagraph (A) shall--
(i) examine the extent to which the
current system of appointing Federal
reserve bank directors effectively
represents ``the public, without
discrimination on the basis of race,
creed, color, sex or national origin,
and with due but not exclusive
consideration to the interests of
agriculture, commerce, industry,
services, labor, and consumers'' in the
selection of bank directors, as such
requirement is set forth under section
4 of the Federal Reserve Act;
(ii) examine whether there are
actual or potential conflicts of
interest created when the directors of
Federal reserve banks, which execute
the supervisory functions of the Board
of Governors of the Federal Reserve
System, are elected by member banks;
(iii) examine the establishment and
operations of each facility described
in subsection (a)(1) and each Federal
reserve bank involved in the
establishment and operations thereof;
and
(iv) identify changes to selection
procedures for Federal reserve bank
directors, or to other aspects of
Federal reserve bank governance, that
would--
(I) improve how the public
is represented;
(II) eliminate actual or
potential conflicts of interest
in bank supervision;
(III) increase the
availability of information
useful for the formation and
execution of monetary policy;
or
(IV) in other ways increase
the effectiveness or efficiency
of reserve banks.
(2) Report required.--A report on the audit
conducted under paragraph (1) shall be submitted by the
Comptroller General to the Congress before the end of
the 90-day period beginning on the date on which such
audit is completed, and such report shall be made
available to--
(A) the Speaker of the House of
Representatives;
(B) the majority and minority leaders of
the House of Representatives;
(C) the majority and minority leaders of
the Senate;
(D) the Chairman and Ranking Member of the
Committee on Banking, Housing, and Urban
Affairs of the Senate and of the Committee on
Financial Services of the House of
Representatives; and
(E) any member of Congress who requests it.
(c) Publication of Board Actions.--Notwithstanding any
other provision of law, the Board of Governors shall publish on
its website, not later than December 1, 2010, with respect to
all loans and other financial assistance provided during the
period beginning on December 1, 2007 and ending on the date of
enactment of this Act under the Asset-Backed Commercial Paper
Money Market Mutual Fund Liquidity Facility, the Term Asset-
Backed Securities Loan Facility, the Primary Dealer Credit
Facility, the Commercial Paper Funding Facility, the Term
Securities Lending Facility, the Term Auction Facility, Maiden
Lane, Maiden Lane II, Maiden Lane III, the agency Mortgage-
Backed Securities program, foreign currency liquidity swap
lines, and any other program created as a result of section
13(3) of the Federal Reserve Act (as so designated by this
title)--
(1) the identity of each business, individual,
entity, or foreign central bank to which the Board of
Governors or a Federal reserve bank has provided such
assistance;
(2) the type of financial assistance provided to
that business, individual, entity, or foreign central
bank;
(3) the value or amount of that financial
assistance;
(4) the date on which the financial assistance was
provided;
(5) the specific terms of any repayment expected,
including the repayment time period, interest charges,
collateral, limitations on executive compensation or
dividends, and other material terms; and
(6) the specific rationale for each such facility
or program.
TITLE XII--IMPROVING ACCESS TO MAINSTREAM FINANCIAL INSTITUTIONS
SEC. 1201. SHORT TITLE.
This title may be cited as the ``Improving Access to
Mainstream Financial Institutions Act of 2010''.
SEC. 1202. PURPOSE.
The purpose of this title is to encourage initiatives for
financial products and services that are appropriate and
accessible for millions of Americans who are not fully
incorporated into the financial mainstream.
SEC. 1203. DEFINITIONS.
In this title, the following definitions shall apply:
(1) Account.--The term ``account'' means an
agreement between an individual and an eligible entity
under which the individual obtains from or through the
entity 1 or more banking products and services, and
includes a deposit account, a savings account
(including a money market savings account), an account
for a closed-end loan, and other products or services,
as the Secretary deems appropriate.
(2) Community development financial institution.--
The term ``community development financial
institution'' has the same meaning as in section 103(5)
of the Community Development Banking and Financial
Institutions Act of 1994 (12 U.S.C. 4702(5)).
(3) Eligible entity.--The term ``eligible entity''
means--
(A) an organization described in section
501(c)(3) of the Internal Revenue Code of 1986,
and exempt from tax under section 501(a) of
such Code;
(B) a federally insured depository
institution;
(C) a community development financial
institution;
(D) a State, local, or tribal government
entity; or
(E) a partnership or other joint venture
comprised of 1 or more of the entities
described in subparagraphs (A) through (D), in
accordance with regulations prescribed by the
Secretary under this title.
(4) Federally insured depository institution.--The
term ``federally insured depository institution'' means
any insured depository institution (as that term is
defined in section 3 of the Federal Deposit Insurance
Act (12 U.S.C. 1813)) and any insured credit union (as
that term is defined in section 101 of the Federal
Credit Union Act (12 U.S.C. 1752)).
SEC. 1204. EXPANDED ACCESS TO MAINSTREAM FINANCIAL INSTITUTIONS.
(a) In General.--The Secretary is authorized to establish a
multiyear program of grants, cooperative agreements, financial
agency agreements, and similar contracts or undertakings to
promote initiatives designed--
(1) to enable low- and moderate-income individuals
to establish one or more accounts in a federally
insured depository institution that are appropriate to
meet the financial needs of such individuals; and
(2) to improve access to the provision of accounts,
on reasonable terms, for low- and moderate-income
individuals.
(b) Program Eligibility and Activities.--
(1) In general.--The Secretary shall restrict
participation in any program established under
subsection (a) to an eligible entity. Subject to
regulations prescribed by the Secretary under this
title, 1 or more eligible entities may participate in 1
or several programs established under subsection (a).
(2) Account activities.--Subject to regulations
prescribed by the Secretary, an eligible entity may, in
participating in a program established under subsection
(a), offer or provide to low- and moderate-income
individuals products and services relating to accounts,
including--
(A) small-dollar value loans; and
(B) financial education and counseling
relating to conducting transactions in and
managing accounts.
SEC. 1205. LOW-COST ALTERNATIVES TO SMALL DOLLAR LOANS.
(a) Grants Authorized.--The Secretary is authorized to
establish multiyear demonstration programs by means of grants,
cooperative agreements, financial agency agreements, and
similar contracts or undertakings, with eligible entities to
provide low-cost, small loans to consumers that will provide
alternatives to more costly small dollar loans.
(b) Terms and Conditions.--
(1) In general.--Loans under this section shall be
made on terms and conditions, and pursuant to lending
practices, that are reasonable for consumers.
(2) Financial literacy and education
opportunities.--
(A) In general.--Each eligible entity
awarded a grant under this section shall
promote and take appropriate steps to ensure
the provision of financial literacy and
education opportunities, such as relevant
counseling services, educational courses, or
wealth building programs, to each consumer
provided with a loan pursuant to this section.
(B) Authority to expand access.--As part of
the grants, agreements, and undertakings
established under this section, the Secretary
may implement reasonable measures or programs
designed to expand access to financial literacy
and education opportunities, including relevant
counseling services, educational courses, or
wealth building programs to be provided to
individuals who obtain loans from eligible
entities under this section.
SEC. 1206. GRANTS TO ESTABLISH LOAN-LOSS RESERVE FUNDS.
The Community Development Banking and Financial
Institutions Act of 1994 (12 U.S.C. 4701 et seq.) is amended by
adding at the end the following:
``SEC. 122. GRANTS TO ESTABLISH LOAN-LOSS RESERVE FUNDS.
``(a) Purposes.--The purposes of this section are--
``(1) to make financial assistance available from
the Fund in order to help community development
financial institutions defray the costs of operating
small dollar loan programs, by providing the amounts
necessary for such institutions to establish their own
loan loss reserve funds to mitigate some of the losses
on such small dollar loan programs; and
``(2) to encourage community development financial
institutions to establish and maintain small dollar
loan programs that would help give consumers access to
mainstream financial institutions and combat high cost
small dollar lending.
``(b) Grants.--
``(1) Loan-loss reserve fund grants.--The Fund
shall make grants to community development financial
institutions or to any partnership between such
community development financial institutions and any
other federally insured depository institution with a
primary mission to serve targeted investment areas, as
such areas are defined under section 103(16), to enable
such institutions or any partnership of such
institutions to establish a loan-loss reserve fund in
order to defray the costs of a small dollar loan
program established or maintained by such institution.
``(2) Matching requirement.--A community
development financial institution or any partnership of
institutions established pursuant to paragraph (1)
shall provide non-Federal matching funds in an amount
equal to 50 percent of the amount of any grant received
under this section.
``(3) Use of funds.--Any grant amounts received by
a community development financial institution or any
partnership between or among such institutions under
paragraph (1)--
``(A) may not be used by such institution
to provide direct loans to consumers;
``(B) may be used by such institution to
help recapture a portion or all of a defaulted
loan made under the small dollar loan program
of such institution; and
``(C) may be used to designate and utilize
a fiscal agent for services normally provided
by such an agent.
``(4) Technical assistance grants.--The Fund shall
make technical assistance grants to community
development financial institutions or any partnership
between or among such institutions to support and
maintain a small dollar loan program. Any grant amounts
received under this paragraph may be used for
technology, staff support, and other costs associated
with establishing a small dollar loan program.
``(c) Definitions.--For purposes of this section--
``(1) the term `consumer reporting agency that
compiles and maintains files on consumers on a
nationwide basis' has the same meaning given such term
in section 603(p) of the Fair Credit Reporting Act (15
U.S.C. 1681a(p)); and
``(2) the term `small dollar loan program' means a
loan program wherein a community development financial
institution or any partnership between or among such
institutions offers loans to consumers that--
``(A) are made in amounts not exceeding
$2,500;
``(B) must be repaid in installments;
``(C) have no pre-payment penalty;
``(D) the institution has to report
payments regarding the loan to at least 1 of
the consumer reporting agencies that compiles
and maintains files on consumers on a
nationwide basis; and
``(E) meet any other affordability
requirements as may be established by the
Administrator.''.
SEC. 1207. PROCEDURAL PROVISIONS.
An eligible entity desiring to participate in a program or
obtain a grant under this title shall submit an application to
the Secretary, in such form and containing such information as
the Secretary may require.
SEC. 1208. AUTHORIZATION OF APPROPRIATIONS.
(a) Authorization to the Secretary.--There are authorized
to be appropriated to the Secretary, such sums as are necessary
to both administer and fund the programs and projects
authorized by this title, to remain available until expended.
(b) Authorization to the Fund.--There is authorized to be
appropriated to the Fund for each fiscal year beginning in
fiscal year 2010, an amount equal to the amount of the
administrative costs of the Fund for the operation of the grant
program established under this title.
SEC. 1209. REGULATIONS.
(a) In General.--The Secretary is authorized to promulgate
regulations to implement and administer the grant programs and
undertakings authorized by this title.
(b) Regulatory Authority.--Regulations prescribed under
this section may contain such classifications,
differentiations, or other provisions, and may provide for such
adjustments and exceptions for any class of grant programs,
undertakings, or eligible entities, as, in the judgment of the
Secretary, are necessary or proper to effectuate the purposes
of this title, to prevent circumvention or evasion of this
title, or to facilitate compliance with this title.
SEC. 1210. EVALUATION AND REPORTS TO CONGRESS.
For each fiscal year in which a program or project is
carried out under this title, the Secretary 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 containing a description of the
activities funded, amounts distributed, and measurable results,
as appropriate and available.
TITLE XIII--PAY IT BACK ACT
SEC. 1301. SHORT TITLE.
This title may be cited as the ``Pay It Back Act''.
SEC. 1302. AMENDMENT TO REDUCE TARP AUTHORIZATION.
Section 115(a) of the Emergency Economic Stabilization Act
of 2008 (12 U.S.C. 5225(a)) is amended--
(1) in paragraph (3)--
(A) by striking ``, $700,000,000,000, as
such amount is reduced by $1,259,000,000, as
such amount is reduced by $1,244,000,000'' and
inserting ``$475,000,000,000''; and
(B) by striking ``outstanding at any one
time''; and
(2) by adding at the end the following:
``(4) For purposes of this subsection, the amount
of authority considered to be exercised by the
Secretary shall not be reduced by--
``(A) any amounts received by the Secretary
before, on, or after the date of enactment of
the Pay It Back Act from repayment of the
principal of financial assistance by an entity
that has received financial assistance under
the TARP or any other program enacted by the
Secretary under the authorities granted to the
Secretary under this Act;
``(B) any amounts committed for any
guarantees pursuant to the TARP that became or
become uncommitted; or
``(C) any losses realized by the Secretary.
``(5) No authority under this Act may be used to
incur any obligation for a program or initiative that
was not initiated prior to June 25, 2010.''.
SEC. 1303. REPORT.
Section 106 of the Emergency Economic Stabilization Act of
2008 (12 U.S.C. 5216) is amended by inserting at the end the
following:
``(f) Report.--The Secretary of the Treasury shall report
to Congress every 6 months on amounts received and transferred
to the general fund under subsection (d).''.
SEC. 1304. AMENDMENTS TO HOUSING AND ECONOMIC RECOVERY ACT OF 2008.
(a) Sale of Fannie Mae Obligations and Securities by the
Treasury; Deficit Reduction.--Section 304(g)(2) of the Federal
National Mortgage Association Charter Act (12 U.S.C.
1719(g)(2)) is amended--
(1) by redesignating subparagraph (C) as
subparagraph (D); and
(2) by inserting after subparagraph (B) the
following:
``(C) Deficit reduction.--The Secretary of
the Treasury shall deposit in the General Fund
of the Treasury any amounts received by the
Secretary from the sale of any obligation
acquired by the Secretary under this
subsection, where such amounts shall be--
``(i) dedicated for the sole
purpose of deficit reduction; and
``(ii) prohibited from use as an
offset for other spending increases or
revenue reductions.''.
(b) Sale of Freddie Mac Obligations and Securities by the
Treasury; Deficit Reduction.--Section 306(l)(2) of the Federal
Home Loan Mortgage Corporation Act (12 U.S.C. 1455(l)(2)) is
amended--
(1) by redesignating subparagraph (C) as
subparagraph (D); and
(2) by inserting after subparagraph (B) the
following:
``(C) Deficit reduction.--The Secretary of
the Treasury shall deposit in the General Fund
of the Treasury any amounts received by the
Secretary from the sale of any obligation
acquired by the Secretary under this
subsection, where such amounts shall be--
``(i) dedicated for the sole
purpose of deficit reduction; and
``(ii) prohibited from use as an
offset for other spending increases or
revenue reductions.''.
(c) Sale of Federal Home Loan Banks Obligations by the
Treasury; Deficit Reduction.--Section 11(l)(2) of the Federal
Home Loan Bank Act (12 U.S.C. 1431(l)(2)) is amended--
(1) by redesignating subparagraph (C) as
subparagraph (D); and
(2) by inserting after subparagraph (B) the
following:
``(C) Deficit reduction.--The Secretary of
the Treasury shall deposit in the General Fund
of the Treasury any amounts received by the
Secretary from the sale of any obligation
acquired by the Secretary under this
subsection, where such amounts shall be--
``(i) dedicated for the sole
purpose of deficit reduction; and
``(ii) prohibited from use as an
offset for other spending increases or
revenue reductions.''.
(d) Repayment of Fees.--Any periodic commitment fee or any
other fee or assessment paid by the Federal National Mortgage
Association or Federal Home Loan Mortgage Corporation to the
Secretary of the Treasury as a result of any preferred stock
purchase agreement, mortgage-backed security purchase program,
or any other program or activity authorized or carried out
pursuant to the authorities granted to the Secretary of the
Treasury under section 1117 of the Housing and Economic
Recovery Act of 2008 (Public Law 110-289; 122 Stat. 2683),
including any fee agreed to by contract between the Secretary
and the Association or Corporation, shall be deposited in the
General Fund of the Treasury where such amounts shall be--
(1) dedicated for the sole purpose of deficit
reduction; and
(2) prohibited from use as an offset for other
spending increases or revenue reductions.
SEC. 1305. FEDERAL HOUSING FINANCE AGENCY REPORT.
The Director of the Federal Housing Finance Agency shall
submit to Congress a report on the plans of the Agency to
continue to support and maintain the Nation's vital housing
industry, while at the same time guaranteeing that the American
taxpayer will not suffer unnecessary losses.
SEC. 1306. REPAYMENT OF UNOBLIGATED ARRA FUNDS.
(a) Rejection of ARRA Funds by State.--Section 1607 of the
American Recovery and Reinvestment Act of 2009 (Public Law 111-
5; 123 Stat. 305) is amended by adding at the end the
following:
``(d) Statewide Rejection of Funds.--If funds provided to
any State in any division of this Act are not accepted for use
by the Governor of the State pursuant to subsection (a) or by
the State legislature pursuant to subsection (b), then all such
funds shall be--
``(1) rescinded; and
``(2) deposited in the General Fund of the Treasury
where such amounts shall be--
``(A) dedicated for the sole purpose of
deficit reduction; and
``(B) prohibited from use as an offset for
other spending increases or revenue
reductions.''.
(b) Withdrawal or Recapture of Unobligated Funds.--Title
XVI of the American Recovery and Reinvestment Act of 2009
(Public Law 111-5; 123 Stat. 302) is amended by adding at the
end the following:
``SEC. 1613. WITHDRAWAL OR RECAPTURE OF UNOBLIGATED FUNDS.
``Notwithstanding any other provision of this Act, if the
head of any executive agency withdraws or recaptures for any
reason funds appropriated or otherwise made available under
this division, and such funds have not been obligated by a
State to a local government or for a specific project, such
recaptured funds shall be--
``(1) rescinded; and
``(2) deposited in the General Fund of the Treasury
where such amounts shall be--
``(A) dedicated for the sole purpose of
deficit reduction; and
``(B) prohibited from use as an offset for
other spending increases or revenue
reductions.''.
(c) Return of Unobligated Funds by End of 2012.--Section
1603 of the American Recovery and Reinvestment Act of 2009
(Public Law 111-5; 123 Stat. 302) is amended by--
(1) striking ``All funds'' and inserting ``(a) In
General.--All funds''; and
(2) adding at the end the following:
``(b) Repayment of Unobligated Funds.--Any discretionary
appropriations made available in this division that have not
been obligated as of December 31, 2012, are hereby rescinded,
and such amounts shall be deposited in the General Fund of the
Treasury where such amounts shall be--
``(1) dedicated for the sole purpose of deficit
reduction; and
``(2) prohibited from use as an offset for other
spending increases or revenue reductions.
``(c) Presidential Waiver Authority.--
``(1) In general.--The President may waive the
requirements under subsection (b), if the President
determines that it is not in the best interest of the
Nation to rescind a specific unobligated amount after
December 31, 2012.
``(2) Requests.--The head of an executive agency
may also apply to the President for a waiver from the
requirements under subsection (b).''.
TITLE XIV--MORTGAGE REFORM AND ANTI-PREDATORY LENDING ACT
SEC. 1400. SHORT TITLE; DESIGNATION AS ENUMERATED CONSUMER LAW.
(a) Short Title.--This title may be cited as the ``Mortgage
Reform and Anti-Predatory Lending Act''.
(b) Designation as Enumerated Consumer Law Under the
Purview of the Bureau of Consumer Financial Protection.--
Subtitles A, B, C, and E and sections 1471, 1472, 1475, and
1476, and the amendments made by such subtitles and sections,
shall be enumerated consumer laws, as defined in section 1002,
and come under the purview of the Bureau of Consumer Financial
Protection for purposes of title X, including the transfer of
functions and personnel under subtitle F of title X and the
savings provisions of such subtitle.
(c) Regulations; Effective Date.--
(1) Regulations.--The regulations required to be
prescribed under this title or the amendments made by
this title shall--
(A) be prescribed in final form before the
end of the 18-month period beginning on the
designated transfer date; and
(B) take effect not later than 12 months
after the date of issuance of the regulations
in final form.
(2) Effective date established by rule.--Except as
provided in paragraph (3), a section, or provision
thereof, of this title shall take effect on the date on
which the final regulations implementing such section,
or provision, take effect.
(3) Effective date.--A section of this title for
which regulations have not been issued on the date that
is 18 months after the designated transfer date shall
take effect on such date.
Subtitle A--Residential Mortgage Loan Origination Standards
SEC. 1401. DEFINITIONS.
Section 103 of the Truth in Lending Act (15 U.S.C. 1602) is
amended by adding at the end the following new subsection:
``(cc) Definitions Relating to Mortgage Origination and
Residential Mortgage Loans.--
``(1) Commission.--Unless otherwise specified, the
term `Commission' means the Federal Trade Commission.
``(2) Mortgage originator.--The term `mortgage
originator'--
``(A) means any person who, for direct or
indirect compensation or gain, or in the
expectation of direct or indirect compensation
or gain--
``(i) takes a residential mortgage
loan application;
``(ii) assists a consumer in
obtaining or applying to obtain a
residential mortgage loan; or
``(iii) offers or negotiates terms
of a residential mortgage loan;
``(B) includes any person who represents to
the public, through advertising or other means
of communicating or providing information
(including the use of business cards,
stationery, brochures, signs, rate lists, or
other promotional items), that such person can
or will provide any of the services or perform
any of the activities described in subparagraph
(A);
``(C) does not include any person who is
(i) not otherwise described in subparagraph (A)
or (B) and who performs purely administrative
or clerical tasks on behalf of a person who is
described in any such subparagraph, or (ii) an
employee of a retailer of manufactured homes
who is not described in clause (i) or (iii) of
subparagraph (A) and who does not advise a
consumer on loan terms (including rates, fees,
and other costs);
``(D) does not include a person or entity
that only performs real estate brokerage
activities and is licensed or registered in
accordance with applicable State law, unless
such person or entity is compensated by a
lender, a mortgage broker, or other mortgage
originator or by any agent of such lender,
mortgage broker, or other mortgage originator;
``(E) does not include, with respect to a
residential mortgage loan, a person, estate, or
trust that provides mortgage financing for the
sale of 3 properties in any 12-month period to
purchasers of such properties, each of which is
owned by such person, estate, or trust and
serves as security for the loan, provided that
such loan--
``(i) is not made by a person,
estate, or trust that has constructed,
or acted as a contractor for the
construction of, a residence on the
property in the ordinary course of
business of such person, estate, or
trust;
``(ii) is fully amortizing;
``(iii) is with respect to a sale
for which the seller determines in good
faith and documents that the buyer has
a reasonable ability to repay the loan;
``(iv) has a fixed rate or an
adjustable rate that is adjustable
after 5 or more years, subject to
reasonable annual and lifetime
limitations on interest rate increases;
and
``(v) meets any other criteria the
Board may prescribe;
``(F) does not include the creditor (except
the creditor in a table-funded transaction)
under paragraph (1), (2), or (4) of section
129B(c); and
``(G) does not include a servicer or
servicer employees, agents and contractors,
including but not limited to those who offer or
negotiate terms of a residential mortgage loan
for purposes of renegotiating, modifying,
replacing and subordinating principal of
existing mortgages where borrowers are behind
in their payments, in default or have a
reasonable likelihood of being in default or
falling behind.
``(3) Nationwide mortgage licensing system and
registry.--The term `Nationwide Mortgage Licensing
System and Registry' has the same meaning as in the
Secure and Fair Enforcement for Mortgage Licensing Act
of 2008.
``(4) Other definitions relating to mortgage
originator.--For purposes of this subsection, a person
`assists a consumer in obtaining or applying to obtain
a residential mortgage loan' by, among other things,
advising on residential mortgage loan terms (including
rates, fees, and other costs), preparing residential
mortgage loan packages, or collecting information on
behalf of the consumer with regard to a residential
mortgage loan.
``(5) Residential mortgage loan.--The term
`residential mortgage loan' means any consumer credit
transaction that is secured by a mortgage, deed of
trust, or other equivalent consensual security interest
on a dwelling or on residential real property that
includes a dwelling, other than a consumer credit
transaction under an open end credit plan or, for
purposes of sections 129B and 129C and section 128(a)
(16), (17), (18), and (19), and sections 128(f) and
130(k), and any regulations promulgated thereunder, an
extension of credit relating to a plan described in
section 101(53D) of title 11, United States Code.
``(6) Secretary.--The term `Secretary', when used
in connection with any transaction or person involved
with a residential mortgage loan, means the Secretary
of Housing and Urban Development.
``(7) Servicer.--The term `servicer' has the same
meaning as in section 6(i)(2) of the Real Estate
Settlement Procedures Act of 1974 (12 U.S.C.
2605(i)(2)).''.
SEC. 1402. RESIDENTIAL MORTGAGE LOAN ORIGINATION.
(a) In General.--Chapter 2 of the Truth in Lending Act (15
U.S.C. 1631 et seq.) is amended--
(1) by redesignating the 2nd of the 2 sections
designated as section 129 (15 U.S.C. 1639a) (relating
to duty of servicers of residential mortgages) as
section 129A; and
(2) by inserting after section 129A (as so
redesignated) the following new section:
``Sec. 129B. Residential mortgage loan origination
``(a) Finding and Purpose.--
``(1) Finding.--The Congress finds that economic
stabilization would be enhanced by the protection,
limitation, and regulation of the terms of residential
mortgage credit and the practices related to such
credit, while ensuring that responsible, affordable
mortgage credit remains available to consumers.
``(2) Purpose.--It is the purpose of this section
and section 129C to assure that consumers are offered
and receive residential mortgage loans on terms that
reasonably reflect their ability to repay the loans and
that are understandable and not unfair, deceptive or
abusive.
``(b) Duty of Care.--
``(1) Standard.--Subject to regulations prescribed
under this subsection, each mortgage originator shall,
in addition to the duties imposed by otherwise
applicable provisions of State or Federal law--
``(A) be qualified and, when required,
registered and licensed as a mortgage
originator in accordance with applicable State
or Federal law, including the Secure and Fair
Enforcement for Mortgage Licensing Act of 2008;
and
``(B) include on all loan documents any
unique identifier of the mortgage originator
provided by the Nationwide Mortgage Licensing
System and Registry.
``(2) Compliance procedures required.--The Board
shall prescribe regulations requiring depository
institutions to establish and maintain procedures
reasonably designed to assure and monitor the
compliance of such depository institutions, the
subsidiaries of such institutions, and the employees of
such institutions or subsidiaries with the requirements
of this section and the registration procedures
established under section 1507 of the Secure and Fair
Enforcement for Mortgage Licensing Act of 2008.''.
(b) Clerical Amendment.--The table of sections for chapter
2 of the Truth in Lending Act is amended by inserting after the
item relating to section 129 the following new items:
``129A. Fiduciary duty of servicers of pooled residential mortgages.
``129B. Residential mortgage loan origination.''.
SEC. 1403. PROHIBITION ON STEERING INCENTIVES.
Section 129B of the Truth in Lending Act (as added by
section 1402(a)) is amended by inserting after subsection (b)
the following new subsection:
``(c) Prohibition on Steering Incentives.--
``(1) In general.--For any residential mortgage
loan, no mortgage originator shall receive from any
person and no person shall pay to a mortgage
originator, directly or indirectly, compensation that
varies based on the terms of the loan (other than the
amount of the principal).
``(2) Restructuring of financing origination fee.--
``(A) In general.--For any mortgage loan, a
mortgage originator may not receive from any
person other than the consumer and no person,
other than the consumer, who knows or has
reason to know that a consumer has directly
compensated or will directly compensate a
mortgage originator may pay a mortgage
originator any origination fee or charge except
bona fide third party charges not retained by
the creditor, mortgage originator, or an
affiliate of the creditor or mortgage
originator.
``(B) Exception.--Notwithstanding
subparagraph (A), a mortgage originator may
receive from a person other than the consumer
an origination fee or charge, and a person
other than the consumer may pay a mortgage
originator an origination fee or charge, if--
``(i) the mortgage originator does
not receive any compensation directly
from the consumer; and
``(ii) the consumer does not make
an upfront payment of discount points,
origination points, or fees, however
denominated (other than bona fide third
party charges not retained by the
mortgage originator, creditor, or an
affiliate of the creditor or
originator), except that the Board may,
by rule, waive or provide exemptions to
this clause if the Board determines
that such waiver or exemption is in the
interest of consumers and in the public
interest.
``(3) Regulations.--The Board shall prescribe
regulations to prohibit--
``(A) mortgage originators from steering
any consumer to a residential mortgage loan
that--
``(i) the consumer lacks a
reasonable ability to repay (in
accordance with regulations prescribed
under section 129C(a)); or
``(ii) has predatory
characteristics or effects (such as
equity stripping, excessive fees, or
abusive terms);
``(B) mortgage originators from steering
any consumer from a residential mortgage loan
for which the consumer is qualified that is a
qualified mortgage (as defined in section
129C(b)(2)) to a residential mortgage loan that
is not a qualified mortgage;
``(C) abusive or unfair lending practices
that promote disparities among consumers of
equal credit worthiness but of different race,
ethnicity, gender, or age; and
``(D) mortgage originators from--
``(i) mischaracterizing the credit
history of a consumer or the
residential mortgage loans available to
a consumer;
``(ii) mischaracterizing or
suborning the mischaracterization of
the appraised value of the property
securing the extension of credit; or
``(iii) if unable to suggest,
offer, or recommend to a consumer a
loan that is not more expensive than a
loan for which the consumer qualifies,
discouraging a consumer from seeking a
residential mortgage loan secured by a
consumer's principal dwelling from
another mortgage originator.
``(4) Rules of construction.--No provision of this
subsection shall be construed as--
``(A) permitting any yield spread premium
or other similar compensation that would, for
any residential mortgage loan, permit the total
amount of direct and indirect compensation from
all sources permitted to a mortgage originator
to vary based on the terms of the loan (other
than the amount of the principal);
``(B) limiting or affecting the amount of
compensation received by a creditor upon the
sale of a consummated loan to a subsequent
purchaser;
``(C) restricting a consumer's ability to
finance, at the option of the consumer,
including through principal or rate, any
origination fees or costs permitted under this
subsection, or the mortgage originator's right
to receive such fees or costs (including
compensation) from any person, subject to
paragraph (2)(B), so long as such fees or costs
do not vary based on the terms of the loan
(other than the amount of the principal) or the
consumer's decision about whether to finance
such fees or costs; or
``(D) prohibiting incentive payments to a
mortgage originator based on the number of
residential mortgage loans originated within a
specified period of time.''.
SEC. 1404. LIABILITY.
Section 129B of the Truth in Lending Act is amended by
inserting after subsection (c) (as added by section 1403) the
following new subsection:
``(d) Liability for Violations.--
``(1) In general.--For purposes of providing a
cause of action for any failure by a mortgage
originator, other than a creditor, to comply with any
requirement imposed under this section and any
regulation prescribed under this section, section 130
shall be applied with respect to any such failure by
substituting `mortgage originator' for `creditor' each
place such term appears in each such subsection.
``(2) Maximum.--The maximum amount of any liability
of a mortgage originator under paragraph (1) to a
consumer for any violation of this section shall not
exceed the greater of actual damages or an amount equal
to 3 times the total amount of direct and indirect
compensation or gain accruing to the mortgage
originator in connection with the residential mortgage
loan involved in the violation, plus the costs to the
consumer of the action, including a reasonable
attorney's fee.''.
SEC. 1405. REGULATIONS.
(a) Discretionary Regulatory Authority.--Section 129B of
the Truth in Lending Act is amended by inserting after
subsection (d) (as added by section 1404) the following new
subsection:
``(e) Discretionary Regulatory Authority.--
``(1) In general.--The Board shall, by regulations,
prohibit or condition terms, acts or practices relating
to residential mortgage loans that the Board finds to
be abusive, unfair, deceptive, predatory, necessary or
proper to ensure that responsible, affordable mortgage
credit remains available to consumers in a manner
consistent with the purposes of this section and
section 129C, necessary or proper to effectuate the
purposes of this section and section 129C, to prevent
circumvention or evasion thereof, or to facilitate
compliance with such sections, or are not in the
interest of the borrower.
``(2) Application.--The regulations prescribed
under paragraph (1) shall be applicable to all
residential mortgage loans and shall be applied in the
same manner as regulations prescribed under section
105.
``(f) Section 129B and any regulations promulgated
thereunder do not apply to an extension of credit relating to a
plan described in section 101(53D) of title 11, United States
Code.''.
(b) Disclosures.--Notwithstanding any other provision of
this title, in order to improve consumer awareness and
understanding of transactions involving residential mortgage
loans through the use of disclosures, the Board may, by rule,
exempt from or modify disclosure requirements, in whole or in
part, for any class of residential mortgage loans if the Board
determines that such exemption or modification is in the
interest of consumers and in the public interest.
SEC. 1406. STUDY OF SHARED APPRECIATION MORTGAGES.
(a) Study.--The Secretary of Housing and Urban Development,
in consultation with the Secretary of the Treasury and other
relevant agencies, shall conduct a comprehensive study to
determine prudent statutory and regulatory requirements
sufficient to provide for the widespread use of shared
appreciation mortgages to strengthen local housing markets,
provide new opportunities for affordable homeownership, and
enable homeowners at risk of foreclosure to refinance or modify
their mortgages.
(b) Report.--Not later than the expiration of the 6-month
period beginning on the date of the enactment of this Act, the
Secretary of Housing and Urban Development shall submit a
report to the Congress on the results of the study, which shall
include recommendations for the regulatory and legislative
requirements referred to in subsection (a).
Subtitle B--Minimum Standards For Mortgages
SEC. 1411. ABILITY TO REPAY.
(a) In General.--
(1) Rule of construction.--No regulation, order, or
guidance issued by the Bureau under this title shall be
construed as requiring a depository institution to
apply mortgage underwriting standards that do not meet
the minimum underwriting standards required by the
appropriate prudential regulator of the depository
institution.
(2) Amendment to truth in lending act.--Chapter 2
of the Truth in Lending Act (15 U.S.C. 1631 et seq.) is
amended by inserting after section 129B (as added by
section 1402(a)) the following new section:
``Sec. 129C. Minimum standards for residential mortgage loans
``(a) Ability To Repay.--
``(1) In general.--In accordance with regulations
prescribed by the Board, no creditor may make a
residential mortgage loan unless the creditor makes a
reasonable and good faith determination based on
verified and documented information that, at the time
the loan is consummated, the consumer has a reasonable
ability to repay the loan, according to its terms, and
all applicable taxes, insurance (including mortgage
guarantee insurance), and assessments.
``(2) Multiple loans.--If the creditor knows, or
has reason to know, that 1 or more residential mortgage
loans secured by the same dwelling will be made to the
same consumer, the creditor shall make a reasonable and
good faith determination, based on verified and
documented information, that the consumer has a
reasonable ability to repay the combined payments of
all loans on the same dwelling according to the terms
of those loans and all applicable taxes, insurance
(including mortgage guarantee insurance), and
assessments.
``(3) Basis for determination.--A determination
under this subsection of a consumer's ability to repay
a residential mortgage loan shall include consideration
of the consumer's credit history, current income,
expected income the consumer is reasonably assured of
receiving, current obligations, debt-to-income ratio or
the residual income the consumer will have after paying
non-mortgage debt and mortgage-related obligations,
employment status, and other financial resources other
than the consumer's equity in the dwelling or real
property that secures repayment of the loan. A creditor
shall determine the ability of the consumer to repay
using a payment schedule that fully amortizes the loan
over the term of the loan.
``(4) Income verification.--A creditor making a
residential mortgage loan shall verify amounts of
income or assets that such creditor relies on to
determine repayment ability, including expected income
or assets, by reviewing the consumer's Internal Revenue
Service Form W-2, tax returns, payroll receipts,
financial institution records, or other third-party
documents that provide reasonably reliable evidence of
the consumer's income or assets. In order to safeguard
against fraudulent reporting, any consideration of a
consumer's income history in making a determination
under this subsection shall include the verification of
such income by the use of--
``(A) Internal Revenue Service transcripts
of tax returns; or
``(B) a method that quickly and effectively
verifies income documentation by a third party
subject to rules prescribed by the Board.
``(5) Exemption.--With respect to loans made,
guaranteed, or insured by Federal departments or
agencies identified in subsection (b)(3)(B)(ii), such
departments or agencies may exempt refinancings under a
streamlined refinancing from this income verification
requirement as long as the following conditions are
met:
``(A) The consumer is not 30 days or more
past due on the prior existing residential
mortgage loan.
``(B) The refinancing does not increase the
principal balance outstanding on the prior
existing residential mortgage loan, except to
the extent of fees and charges allowed by the
department or agency making, guaranteeing, or
insuring the refinancing.
``(C) Total points and fees (as defined in
section 103(aa)(4), other than bona fide third
party charges not retained by the mortgage
originator, creditor, or an affiliate of the
creditor or mortgage originator) payable in
connection with the refinancing do not exceed 3
percent of the total new loan amount.
``(D) The interest rate on the refinanced
loan is lower than the interest rate of the
original loan, unless the borrower is
refinancing from an adjustable rate to a fixed-
rate loan, under guidelines that the department
or agency shall establish for loans they make,
guarantee, or issue.
``(E) The refinancing is subject to a
payment schedule that will fully amortize the
refinancing in accordance with the regulations
prescribed by the department or agency making,
guaranteeing, or insuring the refinancing.
``(F) The terms of the refinancing do not
result in a balloon payment, as defined in
subsection (b)(2)(A)(ii).
``(G) Both the residential mortgage loan
being refinanced and the refinancing satisfy
all requirements of the department or agency
making, guaranteeing, or insuring the
refinancing.
``(6) Nonstandard loans.--
``(A) Variable rate loans that defer
repayment of any principal or interest.--For
purposes of determining, under this subsection,
a consumer's ability to repay a variable rate
residential mortgage loan that allows or
requires the consumer to defer the repayment of
any principal or interest, the creditor shall
use a fully amortizing repayment schedule.
``(B) Interest-only loans.--For purposes of
determining, under this subsection, a
consumer's ability to repay a residential
mortgage loan that permits or requires the
payment of interest only, the creditor shall
use the payment amount required to amortize the
loan by its final maturity.
``(C) Calculation for negative
amortization.--In making any determination
under this subsection, a creditor shall also
take into consideration any balance increase
that may accrue from any negative amortization
provision.
``(D) Calculation process.--For purposes of
making any determination under this subsection,
a creditor shall calculate the monthly payment
amount for principal and interest on any
residential mortgage loan by assuming--
``(i) the loan proceeds are fully
disbursed on the date of the
consummation of the loan;
``(ii) the loan is to be repaid in
substantially equal monthly amortizing
payments for principal and interest
over the entire term of the loan with
no balloon payment, unless the loan
contract requires more rapid repayment
(including balloon payment), in which
case the calculation shall be made (I)
in accordance with regulations
prescribed by the Board, with respect
to any loan which has an annual
percentage rate that does not exceed
the average prime offer rate for a
comparable transaction, as of the date
the interest rate is set, by 1.5 or
more percentage points for a first lien
residential mortgage loan; and by 3.5
or more percentage points for a
subordinate lien residential mortgage
loan; or (II) using the contract's
repayment schedule, with respect to a
loan which has an annual percentage
rate, as of the date the interest rate
is set, that is at least 1.5 percentage
points above the average prime offer
rate for a first lien residential
mortgage loan; and 3.5 percentage
points above the average prime offer
rate for a subordinate lien residential
mortgage loan; and
``(iii) the interest rate over the
entire term of the loan is a fixed rate
equal to the fully indexed rate at the
time of the loan closing, without
considering the introductory rate.
``(E) Refinance of hybrid loans with
current lender.--In considering any application
for refinancing an existing hybrid loan by the
creditor into a standard loan to be made by the
same creditor in any case in which there would
be a reduction in monthly payment and the
mortgagor has not been delinquent on any
payment on the existing hybrid loan, the
creditor may--
``(i) consider the mortgagor's good
standing on the existing mortgage;
``(ii) consider if the extension of
new credit would prevent a likely
default should the original mortgage
reset and give such concerns a higher
priority as an acceptable underwriting
practice; and
``(iii) offer rate discounts and
other favorable terms to such mortgagor
that would be available to new
customers with high credit ratings
based on such underwriting practice.
``(7) Fully-indexed rate defined.--For purposes of
this subsection, the term `fully indexed rate' means
the index rate prevailing on a residential mortgage
loan at the time the loan is made plus the margin that
will apply after the expiration of any introductory
interest rates.
``(8) Reverse mortgages and bridge loans.--This
subsection shall not apply with respect to any reverse
mortgage or temporary or bridge loan with a term of 12
months or less, including to any loan to purchase a new
dwelling where the consumer plans to sell a different
dwelling within 12 months.
``(9) Seasonal income.--If documented income,
including income from a small business, is a repayment
source for a residential mortgage loan, a creditor may
consider the seasonality and irregularity of such
income in the underwriting of and scheduling of
payments for such credit.''.
(b) Clerical Amendment.--The table of sections for chapter
2 of the Truth in Lending Act is amended by inserting after the
item relating to section 129B (as added by section 1402(b)) the
following new item:
``129C. Minimum standards for residential mortgage loans.''.
SEC. 1412. SAFE HARBOR AND REBUTTABLE PRESUMPTION.
Section 129C of the Truth in Lending Act is amended by
inserting after subsection (a) (as added by section 1411) the
following new subsection:
``(b) Presumption of Ability To Repay.--
``(1) In general.--Any creditor with respect to any
residential mortgage loan, and any assignee of such
loan subject to liability under this title, may presume
that the loan has met the requirements of subsection
(a), if the loan is a qualified mortgage.
``(2) Definitions.--For purposes of this
subsection, the following definitions shall apply:
``(A) Qualified mortgage.--The term
`qualified mortgage' means any residential
mortgage loan--
``(i) for which the regular
periodic payments for the loan may
not--
``(I) result in an increase
of the principal balance; or
``(II) except as provided
in subparagraph (E), allow the
consumer to defer repayment of
principal;
``(ii) except as provided in
subparagraph (E), the terms of which do
not result in a balloon payment, where
a `balloon payment' is a scheduled
payment that is more than twice as
large as the average of earlier
scheduled payments;
``(iii) for which the income and
financial resources relied upon to
qualify the obligors on the loan are
verified and documented;
``(iv) in the case of a fixed rate
loan, for which the underwriting
process is based on a payment schedule
that fully amortizes the loan over the
loan term and takes into account all
applicable taxes, insurance, and
assessments;
``(v) in the case of an adjustable
rate loan, for which the underwriting
is based on the maximum rate permitted
under the loan during the first 5
years, and a payment schedule that
fully amortizes the loan over the loan
term and takes into account all
applicable taxes, insurance, and
assessments;
``(vi) that complies with any
guidelines or regulations established
by the Board relating to ratios of
total monthly debt to monthly income or
alternative measures of ability to pay
regular expenses after payment of total
monthly debt, taking into account the
income levels of the borrower and such
other factors as the Board may
determine relevant and consistent with
the purposes described in paragraph
(3)(B)(i);
``(vii) for which the total points
and fees (as defined in subparagraph
(C)) payable in connection with the
loan do not exceed 3 percent of the
total loan amount;
``(viii) for which the term of the
loan does not exceed 30 years, except
as such term may be extended under
paragraph (3), such as in high-cost
areas; and
``(ix) in the case of a reverse
mortgage (except for the purposes of
subsection (a) of section 129C, to the
extent that such mortgages are exempt
altogether from those requirements), a
reverse mortgage which meets the
standards for a qualified mortgage, as
set by the Board in rules that are
consistent with the purposes of this
subsection.
``(B) Average prime offer rate.--The term
`average prime offer rate' means the average
prime offer rate for a comparable transaction
as of the date on which the interest rate for
the transaction is set, as published by the
Board.
``(C) Points and fees.--
``(i) In general.--For purposes of
subparagraph (A), the term `points and
fees' means points and fees as defined
by section 103(aa)(4) (other than bona
fide third party charges not retained
by the mortgage originator, creditor,
or an affiliate of the creditor or
mortgage originator).
``(ii) Computation.--For purposes
of computing the total points and fees
under this subparagraph, the total
points and fees shall exclude either of
the amounts described in the following
subclauses, but not both:
``(I) Up to and including 2
bona fide discount points
payable by the consumer in
connection with the mortgage,
but only if the interest rate
from which the mortgage's
interest rate will be
discounted does not exceed by
more than 1 percentage point
the average prime offer rate.
``(II) Unless 2 bona fide
discount points have been
excluded under subclause (I),
up to and including 1 bona fide
discount point payable by the
consumer in connection with the
mortgage, but only if the
interest rate from which the
mortgage's interest rate will
be discounted does not exceed
by more than 2 percentage
points the average prime offer
rate.
``(iii) Bona fide discount points
defined.--For purposes of clause (ii),
the term `bona fide discount points'
means loan discount points which are
knowingly paid by the consumer for the
purpose of reducing, and which in fact
result in a bona fide reduction of, the
interest rate or time-price
differential applicable to the
mortgage.
``(iv) Interest rate reduction.--
Subclauses (I) and (II) of clause (ii)
shall not apply to discount points used
to purchase an interest rate reduction
unless the amount of the interest rate
reduction purchased is reasonably
consistent with established industry
norms and practices for secondary
mortgage market transactions.
``(D) Smaller loans.--The Board shall
prescribe rules adjusting the criteria under
subparagraph (A)(vii) in order to permit
lenders that extend smaller loans to meet the
requirements of the presumption of compliance
under paragraph (1). In prescribing such rules,
the Board shall consider the potential impact
of such rules on rural areas and other areas
where home values are lower.
``(E) Balloon loans.--The Board may, by
regulation, provide that the term `qualified
mortgage' includes a balloon loan--
``(i) that meets all of the
criteria for a qualified mortgage under
subparagraph (A) (except clauses
(i)(II), (ii), (iv), and (v) of such
subparagraph);
``(ii) for which the creditor makes
a determination that the consumer is
able to make all scheduled payments,
except the balloon payment, out of
income or assets other than the
collateral;
``(iii) for which the underwriting
is based on a payment schedule that
fully amortizes the loan over a period
of not more than 30 years and takes
into account all applicable taxes,
insurance, and assessments; and
``(iv) that is extended by a
creditor that--
``(I) operates
predominantly in rural or
underserved areas;
``(II) together with all
affiliates, has total annual
residential mortgage loan
originations that do not exceed
a limit set by the Board;
``(III) retains the balloon
loans in portfolio; and
``(IV) meets any asset size
threshold and any other
criteria as the Board may
establish, consistent with the
purposes of this subtitle.
``(3) Regulations.--
``(A) In general.--The Board shall
prescribe regulations to carry out the purposes
of this subsection.
``(B) Revision of safe harbor criteria.--
``(i) In general.--The Board may
prescribe regulations that revise, add
to, or subtract from the criteria that
define a qualified mortgage upon a
finding that such regulations are
necessary or proper to ensure that
responsible, affordable mortgage credit
remains available to consumers in a
manner consistent with the purposes of
this section, necessary and appropriate
to effectuate the purposes of this
section and section 129B, to prevent
circumvention or evasion thereof, or to
facilitate compliance with such
sections.
``(ii) Loan definition.--The
following agencies shall, in
consultation with the Board, prescribe
rules defining the types of loans they
insure, guarantee, or administer, as
the case may be, that are qualified
mortgages for purposes of paragraph
(2)(A), and such rules may revise, add
to, or subtract from the criteria used
to define a qualified mortgage under
paragraph (2)(A), upon a finding that
such rules are consistent with the
purposes of this section and section
129B, to prevent circumvention or
evasion thereof, or to facilitate
compliance with such sections:
``(I) The Department of
Housing and Urban Development,
with regard to mortgages
insured under the National
Housing Act (12 U.S.C. 1707 et
seq.).
``(II) The Department of
Veterans Affairs, with regard
to a loan made or guaranteed by
the Secretary of Veterans
Affairs.
``(III) The Department of
Agriculture, with regard to
loans guaranteed by the
Secretary of Agriculture
pursuant to 42 U.S.C. 1472(h).
``(IV) The Rural Housing
Service, with regard to loans
insured by the Rural Housing
Service.''.
SEC. 1413. DEFENSE TO FORECLOSURE.
Section 130 of the Truth in Lending Act (15 U.S.C. 1640) is
amended by adding at the end the following new subsection:
``(k) Defense to Foreclosure.--
``(1) In general.--Notwithstanding any other
provision of law, when a creditor, assignee, or other
holder of a residential mortgage loan or anyone acting
on behalf of such creditor, assignee, or holder,
initiates a judicial or nonjudicial foreclosure of the
residential mortgage loan, or any other action to
collect the debt in connection with such loan, a
consumer may assert a violation by a creditor of
paragraph (1) or (2) of section 129B(c), or of section
129C(a), as a matter of defense by recoupment or set
off without regard for the time limit on a private
action for damages under subsection (e).
``(2) Amount of recoupment or setoff.--
``(A) In general.--The amount of recoupment
or set-off under paragraph (1) shall equal the
amount to which the consumer would be entitled
under subsection (a) for damages for a valid
claim brought in an original action against the
creditor, plus the costs to the consumer of the
action, including a reasonable attorney's fee.
``(B) Special rule.--Where such judgment is
rendered after the expiration of the applicable
time limit on a private action for damages
under subsection (e), the amount of recoupment
or set-off under paragraph (1) derived from
damages under subsection (a)(4) shall not
exceed the amount to which the consumer would
have been entitled under subsection (a)(4) for
damages computed up to the day preceding the
expiration of the applicable time limit.''.
SEC. 1414. ADDITIONAL STANDARDS AND REQUIREMENTS.
(a) In General.--Section 129C of the Truth in Lending Act
is amended by inserting after subsection (b) (as added by this
title) the following new subsections:
``(c) Prohibition on Certain Prepayment Penalties.--
``(1) Prohibited on certain loans.--
``(A) In general.--A residential mortgage
loan that is not a `qualified mortgage', as
defined under subsection (b)(2), may not
contain terms under which a consumer must pay a
prepayment penalty for paying all or part of
the principal after the loan is consummated.
``(B) Exclusions.--For purposes of this
subsection, a `qualified mortgage' may not
include a residential mortgage loan that--
``(i) has an adjustable rate; or
``(ii) has an annual percentage
rate that exceeds the average prime
offer rate for a comparable
transaction, as of the date the
interest rate is set--
``(I) by 1.5 or more
percentage points, in the case
of a first lien residential
mortgage loan having an
original principal obligation
amount that is equal to or less
than the amount of the maximum
limitation on the original
principal obligation of
mortgage in effect for a
residence of the applicable
size, as of the date of such
interest rate set, pursuant to
the 6th sentence of section
305(a)(2) of the Federal Home
Loan Mortgage Corporation Act
(12 U.S.C. 1454(a)(2));
``(II) by 2.5 or more
percentage points, in the case
of a first lien residential
mortgage loan having a original
principal obligation amount
that is more than the amount of
the maximum limitation on the
original principal obligation
of mortgage in effect for a
residence of the applicable
size, as of the date of such
interest rate set, pursuant to
the 6th sentence of section
305(a)(2) the Federal Home Loan
Mortgage Corporation Act (12
U.S.C. 1454(a)(2)); and
``(III) by 3.5 or more
percentage points, in the case
of a subordinate lien
residential mortgage loan.
``(2) Publication of average prime offer rate and
apr thresholds.--The Board--
``(A) shall publish, and update at least
weekly, average prime offer rates;
``(B) may publish multiple rates based on
varying types of mortgage transactions; and
``(C) shall adjust the thresholds
established under subclause (I), (II), and
(III) of paragraph (1)(B)(ii) as necessary to
reflect significant changes in market
conditions and to effectuate the purposes of
the Mortgage Reform and Anti-Predatory Lending
Act.
``(3) Phased-out penalties on qualified
mortgages.--A qualified mortgage (as defined in
subsection (b)(2)) may not contain terms under which a
consumer must pay a prepayment penalty for paying all
or part of the principal after the loan is consummated
in excess of the following limitations:
``(A) During the 1-year period beginning on
the date the loan is consummated, the
prepayment penalty shall not exceed an amount
equal to 3 percent of the outstanding balance
on the loan.
``(B) During the 1-year period beginning
after the period described in subparagraph (A),
the prepayment penalty shall not exceed an
amount equal to 2 percent of the outstanding
balance on the loan.
``(C) During the 1-year period beginning
after the 1-year period described in
subparagraph (B), the prepayment penalty shall
not exceed an amount equal to 1 percent of the
outstanding balance on the loan.
``(D) After the end of the 3-year period
beginning on the date the loan is consummated,
no prepayment penalty may be imposed on a
qualified mortgage.
``(4) Option for no prepayment penalty required.--A
creditor may not offer a consumer a residential
mortgage loan product that has a prepayment penalty for
paying all or part of the principal after the loan is
consummated as a term of the loan without offering the
consumer a residential mortgage loan product that does
not have a prepayment penalty as a term of the loan.
``(d) Single Premium Credit Insurance Prohibited.--No
creditor may finance, directly or indirectly, in connection
with any residential mortgage loan or with any extension of
credit under an open end consumer credit plan secured by the
principal dwelling of the consumer, any credit life, credit
disability, credit unemployment, or credit property insurance,
or any other accident, loss-of-income, life, or health
insurance, or any payments directly or indirectly for any debt
cancellation or suspension agreement or contract, except that--
``(1) insurance premiums or debt cancellation or
suspension fees calculated and paid in full on a
monthly basis shall not be considered financed by the
creditor; and
``(2) this subsection shall not apply to credit
unemployment insurance for which the unemployment
insurance premiums are reasonable, the creditor
receives no direct or indirect compensation in
connection with the unemployment insurance premiums,
and the unemployment insurance premiums are paid
pursuant to another insurance contract and not paid to
an affiliate of the creditor.
``(e) Arbitration.--
``(1) In general.--No residential mortgage loan and
no extension of credit under an open end consumer
credit plan secured by the principal dwelling of the
consumer may include terms which require arbitration or
any other nonjudicial procedure as the method for
resolving any controversy or settling any claims
arising out of the transaction.
``(2) Post-controversy agreements.--Subject to
paragraph (3), paragraph (1) shall not be construed as
limiting the right of the consumer and the creditor or
any assignee to agree to arbitration or any other
nonjudicial procedure as the method for resolving any
controversy at any time after a dispute or claim under
the transaction arises.
``(3) No waiver of statutory cause of action.--No
provision of any residential mortgage loan or of any
extension of credit under an open end consumer credit
plan secured by the principal dwelling of the consumer,
and no other agreement between the consumer and the
creditor relating to the residential mortgage loan or
extension of credit referred to in paragraph (1), shall
be applied or interpreted so as to bar a consumer from
bringing an action in an appropriate district court of
the United States, or any other court of competent
jurisdiction, pursuant to section 130 or any other
provision of law, for damages or other relief in
connection with any alleged violation of this section,
any other provision of this title, or any other Federal
law.
``(f) Mortgages With Negative Amortization.--No creditor
may extend credit to a borrower in connection with a consumer
credit transaction under an open or closed end consumer credit
plan secured by a dwelling or residential real property that
includes a dwelling, other than a reverse mortgage, that
provides or permits a payment plan that may, at any time over
the term of the extension of credit, result in negative
amortization unless, before such transaction is consummated--
``(1) the creditor provides the consumer with a
statement that--
``(A) the pending transaction will or may,
as the case may be, result in negative
amortization;
``(B) describes negative amortization in
such manner as the Board shall prescribe;
``(C) negative amortization increases the
outstanding principal balance of the account;
and
``(D) negative amortization reduces the
consumer's equity in the dwelling or real
property; and
``(2) in the case of a first-time borrower with
respect to a residential mortgage loan that is not a
qualified mortgage, the first-time borrower provides
the creditor with sufficient documentation to
demonstrate that the consumer received homeownership
counseling from organizations or counselors certified
by the Secretary of Housing and Urban Development as
competent to provide such counseling.''.
(b) Conforming Amendment Relating to Enforcement.--Section
108(a) of the Truth in Lending Act (15 U.S.C. 1607(a)) is
amended by inserting after paragraph (6) the following new
paragraph:
``(7) sections 21B and 21C of the Securities
Exchange Act of 1934, in the case of a broker or
dealer, other than a depository institution, by the
Securities and Exchange Commission.''.
(c) Protection Against Loss of Anti-deficiency
Protection.--Section 129C of the Truth in Lending Act is
amended by inserting after subsection (f) (as added by
subsection (a)) the following new subsection:
``(g) Protection Against Loss of Anti-deficiency
Protection.--
``(1) Definition.--For purposes of this subsection,
the term `anti-deficiency law' means the law of any
State which provides that, in the event of foreclosure
on the residential property of a consumer securing a
mortgage, the consumer is not liable, in accordance
with the terms and limitations of such State law, for
any deficiency between the sale price obtained on such
property through foreclosure and the outstanding
balance of the mortgage.
``(2) Notice at time of consummation.--In the case
of any residential mortgage loan that is, or upon
consummation will be, subject to protection under an
anti-deficiency law, the creditor or mortgage
originator shall provide a written notice to the
consumer describing the protection provided by the
anti-deficiency law and the significance for the
consumer of the loss of such protection before such
loan is consummated.
``(3) Notice before refinancing that would cause
loss of protection.--In the case of any residential
mortgage loan that is subject to protection under an
anti-deficiency law, if a creditor or mortgage
originator provides an application to a consumer, or
receives an application from a consumer, for any type
of refinancing for such loan that would cause the loan
to lose the protection of such anti-deficiency law, the
creditor or mortgage originator shall provide a written
notice to the consumer describing the protection
provided by the anti-deficiency law and the
significance for the consumer of the loss of such
protection before any agreement for any such
refinancing is consummated.''.
(d) Policy Regarding Acceptance of Partial Payment.--
Section 129C of the Truth in Lending Act is amended by
inserting after subsection (g) (as added by subsection (c)) the
following new subsection:
``(h) Policy Regarding Acceptance of Partial Payment.--In
the case of any residential mortgage loan, a creditor shall
disclose prior to settlement or, in the case of a person
becoming a creditor with respect to an existing residential
mortgage loan, at the time such person becomes a creditor--
``(1) the creditor's policy regarding the
acceptance of partial payments; and
``(2) if partial payments are accepted, how such
payments will be applied to such mortgage and if such
payments will be placed in escrow.
``(i) Timeshare Plans.--This section and any regulations
promulgated under this section do not apply to an extension of
credit relating to a plan described in section 101(53D) of
title 11, United States Code.''.
SEC. 1415. RULE OF CONSTRUCTION.
Except as otherwise expressly provided in section 129B or
129C of the Truth in Lending Act (as added by this title), no
provision of such section 129B or 129C shall be construed as
superseding, repealing, or affecting any duty, right,
obligation, privilege, or remedy of any person under any other
provision of the Truth in Lending Act or any other provision of
Federal or State law.
SEC. 1416. AMENDMENTS TO CIVIL LIABILITY PROVISIONS.
(a) Increase in Amount of Civil Money Penalties for Certain
Violations.--Section 130(a) of the Truth in Lending Act (15
U.S.C. 1640(a)) is amended--
(1) in paragraph (2)(A)(ii)--
(A) by striking ``$100'' and inserting
``$200''; and
(B) by striking ``$1,000'' and inserting
``$2,000'';
(2) in paragraph (2)(B), by striking ``$500,000''
and inserting ``$1,000,000''; and
(3) in paragraph (4), by inserting ``, paragraph
(1) or (2) of section 129B(c), or section 129C(a)''
after ``section 129''.
(b) Statute of Limitations Extended for Section 129
Violations.--Section 130(e) of the Truth in Lending Act (15
U.S.C. 1640(e)) is amended--
(1) in the first sentence, by striking ``Any
action'' and inserting ``Except as provided in the
subsequent sentence, any action''; and
(2) by inserting after the first sentence the
following new sentence: ``Any action under this section
with respect to any violation of section 129, 129B, or
129C may be brought in any United States district
court, or in any other court of competent jurisdiction,
before the end of the 3-year period beginning on the
date of the occurrence of the violation.''.
SEC. 1417. LENDER RIGHTS IN THE CONTEXT OF BORROWER DECEPTION.
Section 130 of the Truth in Lending Act (15 U.S.C. 1640) is
amended by adding after subsection (k) (as added by this title)
the following new subsection:
``(l) Exemption From Liability and Rescission in Case of
Borrower Fraud or Deception.--In addition to any other remedy
available by law or contract, no creditor or assignee shall be
liable to an obligor under this section, if such obligor, or
co-obligor has been convicted of obtaining by actual fraud such
residential mortgage loan.''.
SEC. 1418. SIX-MONTH NOTICE REQUIRED BEFORE RESET OF HYBRID ADJUSTABLE
RATE MORTGAGES.
(a) In General.--Chapter 2 of the Truth in Lending Act (15
U.S.C. 1631 et seq.) is amended by inserting after section 128
the following new section:
``Sec. 128A. Reset of hybrid adjustable rate mortgages
``(a) Hybrid Adjustable Rate Mortgages Defined.--For
purposes of this section, the term `hybrid adjustable rate
mortgage' means a consumer credit transaction secured by the
consumer's principal residence with a fixed interest rate for
an introductory period that adjusts or resets to a variable
interest rate after such period.
``(b) Notice of Reset and Alternatives.--During the 1-month
period that ends 6 months before the date on which the interest
rate in effect during the introductory period of a hybrid
adjustable rate mortgage adjusts or resets to a variable
interest rate or, in the case of such an adjustment or
resetting that occurs within the first 6 months after
consummation of such loan, at consummation, the creditor or
servicer of such loan shall provide a written notice, separate
and distinct from all other correspondence to the consumer,
that includes the following:
``(1) Any index or formula used in making
adjustments to or resetting the interest rate and a
source of information about the index or formula.
``(2) An explanation of how the new interest rate
and payment would be determined, including an
explanation of how the index was adjusted, such as by
the addition of a margin.
``(3) A good faith estimate, based on accepted
industry standards, of the creditor or servicer of the
amount of the monthly payment that will apply after the
date of the adjustment or reset, and the assumptions on
which this estimate is based.
``(4) A list of alternatives consumers may pursue
before the date of adjustment or reset, and
descriptions of the actions consumers must take to
pursue these alternatives, including--
``(A) refinancing;
``(B) renegotiation of loan terms;
``(C) payment forbearances; and
``(D) pre-foreclosure sales.
``(5) The names, addresses, telephone numbers, and
Internet addresses of counseling agencies or programs
reasonably available to the consumer that have been
certified or approved and made publicly available by
the Secretary of Housing and Urban Development or a
State housing finance authority (as defined in section
1301 of the Financial Institutions Reform, Recovery,
and Enforcement Act of 1989).
``(6) The address, telephone number, and Internet
address for the State housing finance authority (as so
defined) for the State in which the consumer resides.
``(c) Savings Clause.--The Board may require the notice in
paragraph (b) or other notice consistent with this Act for
adjustable rate mortgage loans that are not hybrid adjustable
rate mortgage loans.''.
(b) Clerical Amendment.--The table of sections for chapter
2 of the Truth in Lending Act is amended by inserting after the
item relating to section 128 the following new item:
``128A. Reset of hybrid adjustable rate mortgages.''.
SEC. 1419. REQUIRED DISCLOSURES.
Section 128(a) of Truth in Lending Act (15 U.S.C. 1638(a))
is amended by adding at the end the following new paragraphs:
``(16) In the case of a variable rate residential
mortgage loan for which an escrow or impound account
will be established for the payment of all applicable
taxes, insurance, and assessments--
``(A) the amount of initial monthly payment
due under the loan for the payment of principal
and interest, and the amount of such initial
monthly payment including the monthly payment
deposited in the account for the payment of all
applicable taxes, insurance, and assessments;
and
``(B) the amount of the fully indexed
monthly payment due under the loan for the
payment of principal and interest, and the
amount of such fully indexed monthly payment
including the monthly payment deposited in the
account for the payment of all applicable
taxes, insurance, and assessments.
``(17) In the case of a residential mortgage loan,
the aggregate amount of settlement charges for all
settlement services provided in connection with the
loan, the amount of charges that are included in the
loan and the amount of such charges the borrower must
pay at closing, the approximate amount of the wholesale
rate of funds in connection with the loan, and the
aggregate amount of other fees or required payments in
connection with the loan.
``(18) In the case of a residential mortgage loan,
the aggregate amount of fees paid to the mortgage
originator in connection with the loan, the amount of
such fees paid directly by the consumer, and any
additional amount received by the originator from the
creditor.
``(19) In the case of a residential mortgage loan,
the total amount of interest that the consumer will pay
over the life of the loan as a percentage of the
principal of the loan. Such amount shall be computed
assuming the consumer makes each monthly payment in
full and on-time, and does not make any over-
payments.''.
SEC. 1420. DISCLOSURES REQUIRED IN MONTHLY STATEMENTS FOR RESIDENTIAL
MORTGAGE LOANS.
Section 128 of the Truth in Lending Act (15 U.S.C. 1638) is
amended by adding at the end the following new subsection:
``(f) Periodic Statements for Residential Mortgage Loans.--
``(1) In general.--The creditor, assignee, or
servicer with respect to any residential mortgage loan
shall transmit to the obligor, for each billing cycle,
a statement setting forth each of the following items,
to the extent applicable, in a conspicuous and
prominent manner:
``(A) The amount of the principal
obligation under the mortgage.
``(B) The current interest rate in effect
for the loan.
``(C) The date on which the interest rate
may next reset or adjust.
``(D) The amount of any prepayment fee to
be charged, if any.
``(E) A description of any late payment
fees.
``(F) A telephone number and electronic
mail address that may be used by the obligor to
obtain information regarding the mortgage.
``(G) The names, addresses, telephone
numbers, and Internet addresses of counseling
agencies or programs reasonably available to
the consumer that have been certified or
approved and made publicly available by the
Secretary of Housing and Urban Development or a
State housing finance authority (as defined in
section 1301 of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989).
``(H) Such other information as the Board
may prescribe in regulations.
``(2) Development and use of standard form.--The
Board shall develop and prescribe a standard form for
the disclosure required under this subsection, taking
into account that the statements required may be
transmitted in writing or electronically.
``(3) Exception.--Paragraph (1) shall not apply to
any fixed rate residential mortgage loan where the
creditor, assignee, or servicer provides the obligor
with a coupon book that provides the obligor with
substantially the same information as required in
paragraph (1).''.
SEC. 1421. REPORT BY THE GAO.
(a) Report Required.--The Comptroller General of the United
States shall conduct a study to determine the effects the
enactment of this Act will have on the availability and
affordability of credit for consumers, small businesses,
homebuyers, and mortgage lending, including the effect--
(1) on the mortgage market for mortgages that are
not within the safe harbor provided in the amendments
made by this subtitle;
(2) on the ability of prospective homebuyers to
obtain financing;
(3) on the ability of homeowners facing resets or
adjustments to refinance--for example, do they have
fewer refinancing options due to the unavailability of
certain loan products that were available before the
enactment of this Act;
(4) on minorities' ability to access affordable
credit compared with other prospective borrowers;
(5) on home sales and construction;
(6) of extending the rescission right, if any, on
adjustable rate loans and its impact on litigation;
(7) of State foreclosure laws and, if any, an
investor's ability to transfer a property after
foreclosure;
(8) of expanding the existing provisions of the
Home Ownership and Equity Protection Act of 1994;
(9) of prohibiting prepayment penalties on high-
cost mortgages; and
(10) of establishing counseling services under the
Department of Housing and Urban Development and offered
through the Office of Housing Counseling.
(b) Report.--Before the end of the 1-year period beginning
on the date of the enactment of this Act, the Comptroller
General shall submit a report to the Congress containing the
findings and conclusions of the Comptroller General with
respect to the study conducted pursuant to subsection (a).
(c) Examination Related to Certain Credit Risk Retention
Provisions.--The report required by subsection (b) shall also
include an analysis by the Comptroller General of the effect on
the capital reserves and funding of lenders of credit risk
retention provisions for non-qualified mortgages, including an
analysis of the exceptions and adjustments authorized in
section 129C(b)(3) of the Truth in Lending Act and a
recommendation on whether a uniform standard is needed.
(d) Analysis of Credit Risk Retention Provisions.--The
report required by subsection (b) shall also include--
(1) an analysis by the Comptroller General of
whether the credit risk retention provisions have
significantly reduced risks to the larger credit market
of the repackaging and selling of securitized loans on
a secondary market; and
(2) recommendations to the Congress on adjustments
that should be made, or additional measures that should
be undertaken.
SEC. 1422. STATE ATTORNEY GENERAL ENFORCEMENT AUTHORITY.
Section 130(e) of the Truth in Lending Act (15 U.S.C.
1640(e)) is amended by striking ``section 129 may also'' and
inserting ``section 129, 129B, 129C, 129D, 129E, 129F, 129G, or
129H of this Act may also''.
Subtitle C--High-Cost Mortgages
SEC. 1431. DEFINITIONS RELATING TO HIGH-COST MORTGAGES.
(a) High-cost Mortgage Defined.--Section 103(aa) of the
Truth in Lending Act (15 U.S.C. 1602(aa)) is amended by
striking all that precedes paragraph (2) and inserting the
following:
``(aa) High-cost Mortgage.--
``(1) Definition.--
``(A) In general.--The term `high-cost
mortgage', and a mortgage referred to in this
subsection, means a consumer credit transaction
that is secured by the consumer's principal
dwelling, other than a reverse mortgage
transaction, if--
``(i) in the case of a credit
transaction secured--
``(I) by a first mortgage
on the consumer's principal
dwelling, the annual percentage
rate at consummation of the
transaction will exceed by more
than 6.5 percentage points (8.5
percentage points, if the
dwelling is personal property
and the transaction is for less
than $50,000) the average prime
offer rate, as defined in
section 129C(b)(2)(B), for a
comparable transaction; or
``(II) by a subordinate or
junior mortgage on the
consumer's principal dwelling,
the annual percentage rate at
consummation of the transaction
will exceed by more than 8.5
percentage points the average
prime offer rate, as defined in
section 129C(b)(2)(B), for a
comparable transaction;
``(ii) the total points and fees
payable in connection with the
transaction, other than bona fide third
party charges not retained by the
mortgage originator, creditor, or an
affiliate of the creditor or mortgage
originator, exceed--
``(I) in the case of a
transaction for $20,000 or
more, 5 percent of the total
transaction amount; or
``(II) in the case of a
transaction for less than
$20,000, the lesser of 8
percent of the total
transaction amount or $1,000
(or such other dollar amount as
the Board shall prescribe by
regulation); or
``(iii) the credit transaction
documents permit the creditor to charge
or collect prepayment fees or penalties
more than 36 months after the
transaction closing or such fees or
penalties exceed, in the aggregate,
more than 2 percent of the amount
prepaid.
``(B) Introductory rates taken into
account.--For purposes of subparagraph (A)(i),
the annual percentage rate of interest shall be
determined based on the following interest
rate:
``(i) In the case of a fixed-rate
transaction in which the annual
percentage rate will not vary during
the term of the loan, the interest rate
in effect on the date of consummation
of the transaction.
``(ii) In the case of a transaction
in which the rate of interest varies
solely in accordance with an index, the
interest rate determined by adding the
index rate in effect on the date of
consummation of the transaction to the
maximum margin permitted at any time
during the loan agreement.
``(iii) In the case of any other
transaction in which the rate may vary
at any time during the term of the loan
for any reason, the interest charged on
the transaction at the maximum rate
that may be charged during the term of
the loan.
``(C) Mortgage insurance.--For the purposes
of computing the total points and fees under
paragraph (4), the total points and fees shall
exclude--
``(i) any premium provided by an
agency of the Federal Government or an
agency of a State;
``(ii) any amount that is not in
excess of the amount payable under
policies in effect at the time of
origination under section 203(c)(2)(A)
of the National Housing Act (12 U.S.C.
1709(c)(2)(A)), provided that the
premium, charge, or fee is required to
be refundable on a pro-rated basis and
the refund is automatically issued upon
notification of the satisfaction of the
underlying mortgage loan; and
``(iii) any premium paid by the
consumer after closing.''.
(b) Adjustment of Percentage Points.--Section 103(aa)(2) of
the Truth in Lending Act (15 U.S.C. 1602(aa)(2)) is amended by
striking subparagraph (B) and inserting the following new
subparagraph:
``(B) An increase or decrease under
subparagraph (A)--
``(i) may not result in the number
of percentage points referred to in
paragraph (1)(A)(i)(I) being less than
6 percentage points or greater than 10
percentage points; and
``(ii) may not result in the number
of percentage points referred to in
paragraph (1)(A)(i)(II) being less than
8 percentage points or greater than 12
percentage points.''.
(c) Points and Fees Defined.--
(1) In general.--Section 103(aa)(4) of the Truth in
Lending Act (15 U.S.C. 1602(aa)(4)) is amended--
(A) by striking subparagraph (B) and
inserting the following:
``(B) all compensation paid directly or
indirectly by a consumer or creditor to a
mortgage originator from any source, including
a mortgage originator that is also the creditor
in a table-funded transaction;'';
(B) by redesignating subparagraph (D) as
subparagraph (G); and
(C) by inserting after subparagraph (C) the
following new subparagraphs:
``(D) premiums or other charges payable at
or before closing for any credit life, credit
disability, credit unemployment, or credit
property insurance, or any other accident,
loss-of-income, life or health insurance, or
any payments directly or indirectly for any
debt cancellation or suspension agreement or
contract, except that insurance premiums or
debt cancellation or suspension fees calculated
and paid in full on a monthly basis shall not
be considered financed by the creditor;
``(E) the maximum prepayment fees and
penalties which may be charged or collected
under the terms of the credit transaction;
``(F) all prepayment fees or penalties that
are incurred by the consumer if the loan
refinances a previous loan made or currently
held by the same creditor or an affiliate of
the creditor; and''.
(2) Calculation of points and fees for open-end
consumer credit plans.--Section 103(aa) of the Truth in
Lending Act (15 U.S.C. 1602(aa)) is amended--
(A) by redesignating paragraph (5) as
paragraph (6); and
(B) by inserting after paragraph (4) the
following new paragraph:
``(5) Calculation of points and fees for open-end
consumer credit plans.--In the case of open-end
consumer credit plans, points and fees shall be
calculated, for purposes of this section and section
129, by adding the total points and fees known at or
before closing, including the maximum prepayment
penalties which may be charged or collected under the
terms of the credit transaction, plus the minimum
additional fees the consumer would be required to pay
to draw down an amount equal to the total credit
line.''.
(d) Bona Fide Discount Loan Discount Points.--Section 103
of the Truth in Lending Act (15 U.S.C. 1602) is amended by
inserting after subsection (cc) (as added by section 1401) the
following new subsection:
``(dd) Bona Fide Discount Points and Prepayment
Penalties.--For the purposes of determining the amount of
points and fees for purposes of subsection (aa), either the
amounts described in paragraph (1) or (2) of the following
paragraphs, but not both, shall be excluded:
``(1) Up to and including 2 bona fide discount
points payable by the consumer in connection with the
mortgage, but only if the interest rate from which the
mortgage's interest rate will be discounted does not
exceed by more than 1 percentage point--
``(A) the average prime offer rate, as
defined in section 129C; or
``(B) if secured by a personal property
loan, the average rate on a loan in connection
with which insurance is provided under title I
of the National Housing Act (12 U.S.C. 1702 et
seq.).
``(2) Unless 2 bona fide discount points have been
excluded under paragraph (1), up to and including 1
bona fide discount point payable by the consumer in
connection with the mortgage, but only if the interest
rate from which the mortgage's interest rate will be
discounted does not exceed by more than 2 percentage
points--
``(A) the average prime offer rate, as
defined in section 129C; or
``(B) if secured by a personal property
loan, the average rate on a loan in connection
with which insurance is provided under title I
of the National Housing Act (12 U.S.C. 1702 et
seq.).
``(3) For purposes of paragraph (1), the term `bona
fide discount points' means loan discount points which
are knowingly paid by the consumer for the purpose of
reducing, and which in fact result in a bona fide
reduction of, the interest rate or time-price
differential applicable to the mortgage.
``(4) Paragraphs (1) and (2) shall not apply to
discount points used to purchase an interest rate
reduction unless the amount of the interest rate
reduction purchased is reasonably consistent with
established industry norms and practices for secondary
mortgage market transactions.''.
SEC. 1432. AMENDMENTS TO EXISTING REQUIREMENTS FOR CERTAIN MORTGAGES.
(a) Prepayment Penalty Provisions.--Section 129(c)(2) of
the Truth in Lending Act (15 U.S.C. 1639(c)(2)) is hereby
repealed.
(b) No Balloon Payments.--Section 129(e) of the Truth in
Lending Act (15 U.S.C. 1639(e)) is amended to read as follows:
``(e) No Balloon Payments.--No high-cost mortgage may
contain a scheduled payment that is more than twice as large as
the average of earlier scheduled payments. This subsection
shall not apply when the payment schedule is adjusted to the
seasonal or irregular income of the consumer.''.
SEC. 1433. ADDITIONAL REQUIREMENTS FOR CERTAIN MORTGAGES.
(a) Additional Requirements for Certain Mortgages.--Section
129 of the Truth in Lending Act (15 U.S.C. 1639) is amended--
(1) by redesignating subsections (j), (k), (l) and
(m) as subsections (n), (o), (p), and (q) respectively;
and
(2) by inserting after subsection (i) the following
new subsections:
``(j) Recommended Default.--No creditor shall recommend or
encourage default on an existing loan or other debt prior to
and in connection with the closing or planned closing of a
high-cost mortgage that refinances all or any portion of such
existing loan or debt.
``(k) Late Fees.--
``(1) In general.--No creditor may impose a late
payment charge or fee in connection with a high-cost
mortgage--
``(A) in an amount in excess of 4 percent
of the amount of the payment past due;
``(B) unless the loan documents
specifically authorize the charge or fee;
``(C) before the end of the 15-day period
beginning on the date the payment is due, or in
the case of a loan on which interest on each
installment is paid in advance, before the end
of the 30-day period beginning on the date the
payment is due; or
``(D) more than once with respect to a
single late payment.
``(2) Coordination with subsequent late fees.--If a
payment is otherwise a full payment for the applicable
period and is paid on its due date or within an
applicable grace period, and the only delinquency or
insufficiency of payment is attributable to any late
fee or delinquency charge assessed on any earlier
payment, no late fee or delinquency charge may be
imposed on such payment.
``(3) Failure to make installment payment.--If, in
the case of a loan agreement the terms of which provide
that any payment shall first be applied to any past due
principal balance, the consumer fails to make an
installment payment and the consumer subsequently
resumes making installment payments but has not paid
all past due installments, the creditor may impose a
separate late payment charge or fee for any principal
due (without deduction due to late fees or related
fees) until the default is cured.
``(l) Acceleration of Debt.--No high-cost mortgage may
contain a provision which permits the creditor to accelerate
the indebtedness, except when repayment of the loan has been
accelerated by default in payment, or pursuant to a due-on-sale
provision, or pursuant to a material violation of some other
provision of the loan document unrelated to payment schedule.
``(m) Restriction on Financing Points and Fees.--No
creditor may directly or indirectly finance, in connection with
any high-cost mortgage, any of the following:
``(1) Any prepayment fee or penalty payable by the
consumer in a refinancing transaction if the creditor
or an affiliate of the creditor is the noteholder of
the note being refinanced.
``(2) Any points or fees.''.
(b) Prohibitions on Evasions.--Section 129 of the Truth in
Lending Act (15 U.S.C. 1639) is amended by inserting after
subsection (q) (as so redesignated by subsection (a)(1)) the
following new subsection:
``(r) Prohibitions on Evasions, Structuring of
Transactions, and Reciprocal Arrangements.--A creditor may not
take any action in connection with a high-cost mortgage--
``(1) to structure a loan transaction as an open-
end credit plan or another form of loan for the purpose
and with the intent of evading the provisions of this
title; or
``(2) to divide any loan transaction into separate
parts for the purpose and with the intent of evading
provisions of this title.''.
(c) Modification or Deferral Fees.--Section 129 of the
Truth in Lending Act (15 U.S.C. 1639) is amended by inserting
after subsection (r) (as added by subsection (b) of this
section) the following new subsection:
``(s) Modification and Deferral Fees Prohibited.--A
creditor, successor in interest, assignee, or any agent of any
of the above, may not charge a consumer any fee to modify,
renew, extend, or amend a high-cost mortgage, or to defer any
payment due under the terms of such mortgage.''.
(d) Payoff Statement.--Section 129 of the Truth in Lending
Act (15 U.S.C. 1639) is amended by inserting after subsection
(s) (as added by subsection (c) of this section) the following
new subsection:
``(t) Payoff Statement.--
``(1) Fees.--
``(A) In general.--Except as provided in
subparagraph (B), no creditor or servicer may
charge a fee for informing or transmitting to
any person the balance due to pay off the
outstanding balance on a high-cost mortgage.
``(B) Transaction fee.--When payoff
information referred to in subparagraph (A) is
provided by facsimile transmission or by a
courier service, a creditor or servicer may
charge a processing fee to cover the cost of
such transmission or service in an amount not
to exceed an amount that is comparable to fees
imposed for similar services provided in
connection with consumer credit transactions
that are secured by the consumer's principal
dwelling and are not high-cost mortgages.
``(C) Fee disclosure.--Prior to charging a
transaction fee as provided in subparagraph
(B), a creditor or servicer shall disclose that
payoff balances are available for free pursuant
to subparagraph (A).
``(D) Multiple requests.--If a creditor or
servicer has provided payoff information
referred to in subparagraph (A) without charge,
other than the transaction fee allowed by
subparagraph (B), on 4 occasions during a
calendar year, the creditor or servicer may
thereafter charge a reasonable fee for
providing such information during the remainder
of the calendar year.
``(2) Prompt delivery.--Payoff balances shall be
provided within 5 business days after receiving a
request by a consumer or a person authorized by the
consumer to obtain such information.''.
(e) Pre-Loan Counseling Required.--Section 129 of the Truth
in Lending Act (15 U.S.C. 1639) is amended by inserting after
subsection t) (as added by subsection (d) of this section) the
following new subsection:
``(u) Pre-Loan Counseling.--
``(1) In general.--A creditor may not extend credit
to a consumer under a high-cost mortgage without first
receiving certification from a counselor that is
approved by the Secretary of Housing and Urban
Development, or at the discretion of the Secretary, a
State housing finance authority, that the consumer has
received counseling on the advisability of the
mortgage. Such counselor shall not be employed by the
creditor or an affiliate of the creditor or be
affiliated with the creditor.
``(2) Disclosures required prior to counseling.--No
counselor may certify that a consumer has received
counseling on the advisability of the high-cost
mortgage unless the counselor can verify that the
consumer has received each statement required (in
connection with such loan) by this section or the Real
Estate Settlement Procedures Act of 1974 with respect
to the transaction.
``(3) Regulations.--The Board may prescribe such
regulations as the Board determines to be appropriate
to carry out the requirements of paragraph (1).''.
(f) Corrections and Unintentional Violations.--Section 129
of the Truth in Lending Act (15 U.S.C. 1639) is amended by
inserting after subsection (u) (as added by subsection (e)) the
following new subsection:
``(v) Corrections and Unintentional Violations.--A creditor
or assignee in a high-cost mortgage who, when acting in good
faith, fails to comply with any requirement under this section
will not be deemed to have violated such requirement if the
creditor or assignee establishes that either--
``(1) within 30 days of the loan closing and prior
to the institution of any action, the consumer is
notified of or discovers the violation, appropriate
restitution is made, and whatever adjustments are
necessary are made to the loan to either, at the choice
of the consumer--
``(A) make the loan satisfy the
requirements of this chapter; or
``(B) in the case of a high-cost mortgage,
change the terms of the loan in a manner
beneficial to the consumer so that the loan
will no longer be a high-cost mortgage; or
``(2) within 60 days of the creditor's discovery or
receipt of notification of an unintentional violation
or bona fide error and prior to the institution of any
action, the consumer is notified of the compliance
failure, appropriate restitution is made, and whatever
adjustments are necessary are made to the loan to
either, at the choice of the consumer--
``(A) make the loan satisfy the
requirements of this chapter; or
``(B) in the case of a high-cost mortgage,
change the terms of the loan in a manner
beneficial so that the loan will no longer be a
high-cost mortgage.''.
Subtitle D--Office of Housing Counseling
SEC. 1441. SHORT TITLE.
This subtitle may be cited as the ``Expand and Preserve
Home Ownership Through Counseling Act''.
SEC. 1442. ESTABLISHMENT OF OFFICE OF HOUSING COUNSELING.
Section 4 of the Department of Housing and Urban
Development Act (42 U.S.C. 3533) is amended by adding at the
end the following new subsection:
``(g) Office of Housing Counseling.--
``(1) Establishment.--There is established, in the
Department, the Office of Housing Counseling.
``(2) Director.--There is established the position
of Director of Housing Counseling. The Director shall
be the head of the Office of Housing Counseling and
shall be appointed by, and shall report to, the
Secretary. Such position shall be a career-reserved
position in the Senior Executive Service.
``(3) Functions.--
``(A) In general.--The Director shall have
primary responsibility within the Department
for all activities and matters relating to
homeownership counseling and rental housing
counseling, including--
``(i) research, grant
administration, public outreach, and
policy development relating to such
counseling; and
``(ii) establishment, coordination,
and administration of all regulations,
requirements, standards, and
performance measures under programs and
laws administered by the Department
that relate to housing counseling,
homeownership counseling (including
maintenance of homes), mortgage-related
counseling (including home equity
conversion mortgages and credit
protection options to avoid
foreclosure), and rental housing
counseling, including the requirements,
standards, and performance measures
relating to housing counseling.
``(B) Specific functions.--The Director
shall carry out the functions assigned to the
Director and the Office under this section and
any other provisions of law. Such functions
shall include establishing rules necessary
for--
``(i) the counseling procedures
under section 106(g)(1) of the Housing
and Urban Development Act of 1968 (12
U.S.C. 1701x(h)(1));
``(ii) carrying out all other
functions of the Secretary under
section 106(g) of the Housing and Urban
Development Act of 1968, including the
establishment, operation, and
publication of the availability of the
toll-free telephone number under
paragraph (2) of such section;
``(iii) contributing to the
distribution of home buying information
booklets pursuant to section 5 of the
Real Estate Settlement Procedures Act
of 1974 (12 U.S.C. 2604);
``(iv) carrying out the
certification program under section
106(e) of the Housing and Urban
Development Act of 1968 (12 U.S.C.
1701x(e));
``(v) carrying out the assistance
program under section 106(a)(4) of the
Housing and Urban Development Act of
1968, including criteria for selection
of applications to receive assistance;
``(vi) carrying out any functions
regarding abusive, deceptive, or
unscrupulous lending practices relating
to residential mortgage loans that the
Secretary considers appropriate, which
shall include conducting the study
under section 6 of the Expand and
Preserve Home Ownership Through
Counseling Act;
``(vii) providing for operation of
the advisory committee established
under paragraph (4) of this subsection;
``(viii) collaborating with
community-based organizations with
expertise in the field of housing
counseling; and
``(ix) providing for the building
of capacity to provide housing
counseling services in areas that lack
sufficient services, including
underdeveloped areas that lack basic
water and sewer systems, electricity
services, and safe, sanitary housing.
``(4) Advisory committee.--
``(A) In general.--The Secretary shall
appoint an advisory committee to provide advice
regarding the carrying out of the functions of
the Director.
``(B) Members.--Such advisory committee
shall consist of not more than 12 individuals,
and the membership of the committee shall
equally represent the mortgage and real estate
industry, including consumers and housing
counseling agencies certified by the Secretary.
``(C) Terms.--Except as provided in
subparagraph (D), each member of the advisory
committee shall be appointed for a term of 3
years. Members may be reappointed at the
discretion of the Secretary.
``(D) Terms of initial appointees.--As
designated by the Secretary at the time of
appointment, of the members first appointed to
the advisory committee, 4 shall be appointed
for a term of 1 year and 4 shall be appointed
for a term of 2 years.
``(E) Prohibition of pay; travel
expenses.--Members of the advisory committee
shall serve without pay, but shall receive
travel expenses, including per diem in lieu of
subsistence, in accordance with applicable
provisions under subchapter I of chapter 57 of
title 5, United States Code.
``(F) Advisory role only.--The advisory
committee shall have no role in reviewing or
awarding housing counseling grants.
``(5) Scope of homeownership counseling.--In
carrying out the responsibilities of the Director, the
Director shall ensure that homeownership counseling
provided by, in connection with, or pursuant to any
function, activity, or program of the Department
addresses the entire process of homeownership,
including the decision to purchase a home, the
selection and purchase of a home, issues arising during
or affecting the period of ownership of a home
(including refinancing, default and foreclosure, and
other financial decisions), and the sale or other
disposition of a home.''.
SEC. 1443. COUNSELING PROCEDURES.
(a) In General.--Section 106 of the Housing and Urban
Development Act of 1968 (12 U.S.C. 1701x) is amended by adding
at the end the following new subsection:
``(g) Procedures and Activities.--
``(1) Counseling procedures.--
``(A) In general.--The Secretary shall
establish, coordinate, and monitor the
administration by the Department of Housing and
Urban Development of the counseling procedures
for homeownership counseling and rental housing
counseling provided in connection with any
program of the Department, including all
requirements, standards, and performance
measures that relate to homeownership and
rental housing counseling.
``(B) Homeownership counseling.--For
purposes of this subsection and as used in the
provisions referred to in this subparagraph,
the term `homeownership counseling' means
counseling related to homeownership and
residential mortgage loans. Such term includes
counseling related to homeownership and
residential mortgage loans that is provided
pursuant to--
``(i) section 105(a)(20) of the
Housing and Community Development Act
of 1974 (42 U.S.C. 5305(a)(20));
``(ii) in the United States Housing
Act of 1937--
``(I) section 9(e) (42
U.S.C. 1437g(e));
``(II) section 8(y)(1)(D)
(42 U.S.C. 1437f(y)(1)(D));
``(III) section 18(a)(4)(D)
(42 U.S.C. 1437p(a)(4)(D));
``(IV) section 23(c)(4) (42
U.S.C. 1437u(c)(4));
``(V) section 32(e)(4) (42
U.S.C. 1437z-4(e)(4));
``(VI) section 33(d)(2)(B)
(42 U.S.C. 1437z-5(d)(2)(B));
``(VII) sections 302(b)(6)
and 303(b)(7) (42 U.S.C.
1437aaa-1(b)(6), 1437aaa-
2(b)(7)); and
``(VIII) section 304(c)(4)
(42 U.S.C. 1437aaa-3(c)(4));
``(iii) section 302(a)(4) of the
American Homeownership and Economic
Opportunity Act of 2000 (42 U.S.C.
1437f note);
``(iv) sections 233(b)(2) and
258(b) of the Cranston-Gonzalez
National Affordable Housing Act (42
U.S.C. 12773(b)(2), 12808(b));
``(v) this section and section
101(e) of the Housing and Urban
Development Act of 1968 (12 U.S.C.
1701x, 1701w(e));
``(vi) section 220(d)(2)(G) of the
Low-Income Housing Preservation and
Resident Homeownership Act of 1990 (12
U.S.C. 4110(d)(2)(G));
``(vii) sections 422(b)(6),
423(b)(7), 424(c)(4), 442(b)(6), and
443(b)(6) of the Cranston-Gonzalez
National Affordable Housing Act (42
U.S.C. 12872(b)(6), 12873(b)(7),
12874(c)(4), 12892(b)(6), and
12893(b)(6));
``(viii) section 491(b)(1)(F)(iii)
of the McKinney-Vento Homeless
Assistance Act (42 U.S.C.
11408(b)(1)(F)(iii));
``(ix) sections 202(3) and
810(b)(2)(A) of the Native American
Housing and Self-Determination Act of
1996 (25 U.S.C. 4132(3),
4229(b)(2)(A));
``(x) in the National Housing Act--
``(I) in section 203 (12
U.S.C. 1709), the penultimate
undesignated paragraph of
paragraph (2) of subsection
(b), subsection (c)(2)(A), and
subsection (r)(4);
``(II) subsections (a) and
(c)(3) of section 237 (12
U.S.C. 1715z-2); and
``(III) subsections
(d)(2)(B) and (m)(1) of section
255 (12 U.S.C. 1715z-20);
``(xi) section 502(h)(4)(B) of the
Housing Act of 1949 (42 U.S.C.
1472(h)(4)(B));
``(xii) section 508 of the Housing
and Urban Development Act of 1970 (12
U.S.C. 1701z-7); and
``(xiii) section 106 of the Energy
Policy Act of 1992 (42 U.S.C. 12712
note).
``(C) Rental housing counseling.--For
purposes of this subsection, the term `rental
housing counseling' means counseling related to
rental of residential property, which may
include counseling regarding future
homeownership opportunities and providing
referrals for renters and prospective renters
to entities providing counseling and shall
include counseling related to such topics that
is provided pursuant to--
``(i) section 105(a)(20) of the
Housing and Community Development Act
of 1974 (42 U.S.C. 5305(a)(20));
``(ii) in the United States Housing
Act of 1937--
``(I) section 9(e) (42
U.S.C. 1437g(e));
``(II) section 18(a)(4)(D)
(42 U.S.C. 1437p(a)(4)(D));
``(III) section 23(c)(4)
(42 U.S.C. 1437u(c)(4));
``(IV) section 32(e)(4) (42
U.S.C. 1437z-4(e)(4));
``(V) section 33(d)(2)(B)
(42 U.S.C. 1437z-5(d)(2)(B));
and
``(VI) section 302(b)(6)
(42 U.S.C. 1437aaa-1(b)(6));
``(iii) section 233(b)(2) of the
Cranston-Gonzalez National Affordable
Housing Act (42 U.S.C. 12773(b)(2));
``(iv) section 106 of the Housing
and Urban Development Act of 1968 (12
U.S.C. 1701x);
``(v) section 422(b)(6) of the
Cranston-Gonzalez National Affordable
Housing Act (42 U.S.C. 12872(b)(6));
``(vi) section 491(b)(1)(F)(iii) of
the McKinney-Vento Homeless Assistance
Act (42 U.S.C. 11408(b)(1)(F)(iii));
``(vii) sections 202(3) and
810(b)(2)(A) of the Native American
Housing and Self-Determination Act of
1996 (25 U.S.C. 4132(3),
4229(b)(2)(A)); and
``(viii) the rental assistance
program under section 8 of the United
States Housing Act of 1937 (42 U.S.C.
1437f).
``(2) Standards for materials.--The Secretary, in
consultation with the advisory committee established
under subsection (g)(4) of the Department of Housing
and Urban Development Act, shall establish standards
for materials and forms to be used, as appropriate, by
organizations providing homeownership counseling
services, including any recipients of assistance
pursuant to subsection (a)(4).
``(3) Mortgage software systems.--
``(A) Certification.--The Secretary shall
provide for the certification of various
computer software programs for consumers to use
in evaluating different residential mortgage
loan proposals. The Secretary shall require,
for such certification, that the mortgage
software systems take into account--
``(i) the consumer's financial
situation and the cost of maintaining a
home, including insurance, taxes, and
utilities;
``(ii) the amount of time the
consumer expects to remain in the home
or expected time to maturity of the
loan; and
``(iii) such other factors as the
Secretary considers appropriate to
assist the consumer in evaluating
whether to pay points, to lock in an
interest rate, to select an adjustable
or fixed rate loan, to select a
conventional or government-insured or
guaranteed loan and to make other
choices during the loan application
process.
If the Secretary determines that available
existing software is inadequate to assist
consumers during the residential mortgage loan
application process, the Secretary shall
arrange for the development by private sector
software companies of new mortgage software
systems that meet the Secretary's
specifications.
``(B) Use and initial availability.--Such
certified computer software programs shall be
used to supplement, not replace, housing
counseling. The Secretary shall provide that
such programs are initially used only in
connection with the assistance of housing
counselors certified pursuant to subsection
(e).
``(C) Availability.--After a period of
initial availability under subparagraph (B) as
the Secretary considers appropriate, the
Secretary shall take reasonable steps to make
mortgage software systems certified pursuant to
this paragraph widely available through the
Internet and at public locations, including
public libraries, senior-citizen centers,
public housing sites, offices of public housing
agencies that administer rental housing
assistance vouchers, and housing counseling
centers.
``(D) Budget compliance.--This paragraph
shall be effective only to the extent that
amounts to carry out this paragraph are made
available in advance in appropriations Acts.
``(4) National public service multimedia campaigns
to promote housing counseling.--
``(A) In general.--The Director of Housing
Counseling shall develop, implement, and
conduct national public service multimedia
campaigns designed to make persons facing
mortgage foreclosure, persons considering a
subprime mortgage loan to purchase a home,
elderly persons, persons who face language
barriers, low-income persons, minorities, and
other potentially vulnerable consumers aware
that it is advisable, before seeking or
maintaining a residential mortgage loan, to
obtain homeownership counseling from an
unbiased and reliable sources and that such
homeownership counseling is available,
including through programs sponsored by the
Secretary of Housing and Urban Development.
``(B) Contact information.--Each segment of
the multimedia campaign under subparagraph (A)
shall publicize the toll-free telephone number
and website of the Department of Housing and
Urban Development through which persons seeking
housing counseling can locate a housing
counseling agency in their State that is
certified by the Secretary of Housing and Urban
Development and can provide advice on buying a
home, renting, defaults, foreclosures, credit
issues, and reverse mortgages.
``(C) Authorization of appropriations.--
There are authorized to be appropriated to the
Secretary, not to exceed $3,000,000 for fiscal
years 2009, 2010, and 2011, for the
development, implementation, and conduct of
national public service multimedia campaigns
under this paragraph.
``(D) Foreclosure rescue education
programs.--
``(i) In general.--Ten percent of
any funds appropriated pursuant to the
authorization under subparagraph (C)
shall be used by the Director of
Housing Counseling to conduct an
education program in areas that have a
high density of foreclosure. Such
program shall involve direct mailings
to persons living in such areas
describing--
``(I) tips on avoiding
foreclosure rescue scams;
``(II) tips on avoiding
predatory lending mortgage
agreements;
``(III) tips on avoiding
for-profit foreclosure
counseling services; and
``(IV) local counseling
resources that are approved by
the Department of Housing and
Urban Development.
``(ii) Program emphasis.--In
conducting the education program
described under clause (i), the
Director of Housing Counseling shall
also place an emphasis on serving
communities that have a high percentage
of retirement communities or a high
percentage of low-income minority
communities.
``(iii) Terms defined.--For
purposes of this subparagraph:
``(I) High density of
foreclosures.--An area has a
`high density of foreclosures'
if such area is one of the
metropolitan statistical areas
(as that term is defined by the
Director of the Office of
Management and Budget) with the
highest home foreclosure rates.
``(II) High percentage of
retirement communities.--An
area has a `high percentage of
retirement communities' if such
area is one of the metropolitan
statistical areas (as that term
is defined by the Director of
the Office of Management and
Budget) with the highest
percentage of residents aged 65
or older.
``(III) High percentage of
low-income minority
communities.--An area has a
`high percentage of low-income
minority communities' if such
area contains a higher-than-
normal percentage of residents
who are both minorities and
low-income, as defined by the
Director of Housing Counseling.
``(5) Education programs.--The Secretary shall
provide advice and technical assistance to States,
units of general local government, and nonprofit
organizations regarding the establishment and operation
of, including assistance with the development of
content and materials for, educational programs to
inform and educate consumers, particularly those most
vulnerable with respect to residential mortgage loans
(such as elderly persons, persons facing language
barriers, low-income persons, minorities, and other
potentially vulnerable consumers), regarding home
mortgages, mortgage refinancing, home equity loans,
home repair loans, and where appropriate by region, any
requirements and costs associated with obtaining flood
or other disaster-specific insurance coverage.''.
(b) Conforming Amendments to Grant Program for
Homeownership Counseling Organizations.--Section
106(c)(5)(A)(ii) of the Housing and Urban Development Act of
1968 (12 U.S.C. 1701x(c)(5)(A)(ii)) is amended--
(1) in subclause (III), by striking ``and'' at the
end;
(2) in subclause (IV) by striking the period at the
end and inserting ``; and''; and
(3) by inserting after subclause (IV) the following
new subclause:
``(V) notify the housing or
mortgage applicant of the
availability of mortgage
software systems provided
pursuant to subsection
(g)(3).''.
SEC. 1444. GRANTS FOR HOUSING COUNSELING ASSISTANCE.
Section 106(a) of the Housing and Urban Development Act of
1968 (12 U.S.C. 1701x(a)) is amended by adding at the end the
following new paragraph:
``(4) Homeownership and Rental Counseling Assistance.--
``(A) In general.--The Secretary shall make
financial assistance available under this paragraph to
HUD-approved housing counseling agencies and State
housing finance agencies.
``(B) Qualified entities.--The Secretary shall
establish standards and guidelines for eligibility of
organizations (including governmental and nonprofit
organizations) to receive assistance under this
paragraph, in accordance with subparagraph (D).
``(C) Distribution.--Assistance made available
under this paragraph shall be distributed in a manner
that encourages efficient and successful counseling
programs and that ensures adequate distribution of
amounts for rural areas having traditionally low levels
of access to such counseling services, including areas
with insufficient access to the Internet. In
distributing such assistance, the Secretary may give
priority consideration to entities serving areas with
the highest home foreclosure rates.
``(D) Limitation on distribution of assistance.--
``(i) In general.--None of the amounts made
available under this paragraph shall be
distributed to--
``(I) any organization which has
been convicted for a violation under
Federal law relating to an election for
Federal office; or
``(II) any organization which
employs applicable individuals.
``(ii) Definition of applicable
individuals.--In this subparagraph, the term
`applicable individual' means an individual
who--
``(I) is--
``(aa) employed by the
organization in a permanent or
temporary capacity;
``(bb) contracted or
retained by the organization;
or
``(cc) acting on behalf of,
or with the express or apparent
authority of, the organization;
and
``(II) has been convicted for a
violation under Federal law relating to
an election for Federal office.
``(E) Grantmaking process.--In making assistance
available under this paragraph, the Secretary shall
consider appropriate ways of streamlining and improving
the processes for grant application, review, approval,
and award.
``(F) Authorization of appropriations.--There are
authorized to be appropriated $45,000,000 for each of
fiscal years 2009 through 2012 for--
``(i) the operations of the Office of
Housing Counseling of the Department of Housing
and Urban Development;
``(ii) the responsibilities of the Director
of Housing Counseling under paragraphs (2)
through (5) of subsection (g); and
``(iii) assistance pursuant to this
paragraph for entities providing homeownership
and rental counseling.''.
SEC. 1445. REQUIREMENTS TO USE HUD-CERTIFIED COUNSELORS UNDER HUD
PROGRAMS.
Section 106(e) of the Housing and Urban Development Act of
1968 (12 U.S.C. 1701x(e)) is amended--
(1) by striking paragraph (1) and inserting the
following new paragraph:
``(1) Requirement for assistance.--An organization
may not receive assistance for counseling activities
under subsection (a)(1)(iii), (a)(2), (a)(4), (c), or
(d) of this section, or under section 101(e), unless
the organization, or the individuals through which the
organization provides such counseling, has been
certified by the Secretary under this subsection as
competent to provide such counseling.'';
(2) in paragraph (2)--
(A) by inserting ``and for certifying
organizations'' before the period at the end of
the first sentence; and
(B) in the second sentence by striking
``for certification'' and inserting ``, for
certification of an organization, that each
individual through which the organization
provides counseling shall demonstrate, and, for
certification of an individual,'';
(3) in paragraph (3), by inserting ``organizations
and'' before ``individuals'';
(4) by redesignating paragraph (3) as paragraph
(5); and
(5) by inserting after paragraph (2) the following
new paragraphs:
``(3) Requirement under hud programs.--Any
homeownership counseling or rental housing counseling
(as such terms are defined in subsection (g)(1))
required under, or provided in connection with, any
program administered by the Department of Housing and
Urban Development shall be provided only by
organizations or counselors certified by the Secretary
under this subsection as competent to provide such
counseling.
``(4) Outreach.--The Secretary shall take such
actions as the Secretary considers appropriate to
ensure that individuals and organizations providing
homeownership or rental housing counseling are aware of
the certification requirements and standards of this
subsection and of the training and certification
programs under subsection (f).''.
SEC. 1446. STUDY OF DEFAULTS AND FORECLOSURES.
The Secretary of Housing and Urban Development shall
conduct an extensive study of the root causes of default and
foreclosure of home loans, using as much empirical data as are
available. The study shall also examine the role of escrow
accounts in helping prime and nonprime borrowers to avoid
defaults and foreclosures, and the role of computer registries
of mortgages, including those used for trading mortgage loans.
Not later than 12 months after the date of the enactment of
this Act, the Secretary shall submit to the Congress a
preliminary report regarding the study. Not later than 24
months after such date of enactment, the Secretary shall submit
a final report regarding the results of the study, which shall
include any recommended legislation relating to the study, and
recommendations for best practices and for a process to
identify populations that need counseling the most.
SEC. 1447. DEFAULT AND FORECLOSURE DATABASE.
(a) Establishment.--The Secretary of Housing and Urban
Development and the Director of the Bureau, in consultation
with the Federal agencies responsible for regulation of banking
and financial institutions involved in residential mortgage
lending and servicing, shall establish and maintain a database
of information on foreclosures and defaults on mortgage loans
for one- to four-unit residential properties and shall make
such information publicly available, subject to subsection (e).
(b) Census Tract Data.--Information in the database may be
collected, aggregated, and made available on a census tract
basis.
(c) Requirements.--Information collected and made available
through the database shall include--
(1) the number and percentage of such mortgage
loans that are delinquent by more than 30 days;
(2) the number and percentage of such mortgage
loans that are delinquent by more than 90 days;
(3) the number and percentage of such properties
that are real estate-owned;
(4) number and percentage of such mortgage loans
that are in the foreclosure process;
(5) the number and percentage of such mortgage
loans that have an outstanding principal obligation
amount that is greater than the value of the property
for which the loan was made; and
(6) such other information as the Secretary of
Housing and Urban Development and the Director of the
Bureau consider appropriate.
(d) Rule of Construction.--Nothing in this section shall be
construed to encourage discriminatory or unsound allocation of
credit or lending policies or practices.
(e) Privacy and Confidentiality.--In establishing and
maintaining the database described in subsection (a), the
Secretary of Housing and Urban Development and the Director of
the Bureau shall--
(1) be subject to the standards applicable to
Federal agencies for the protection of the
confidentiality of personally identifiable information
and for data security and integrity;
(2) implement the necessary measures to conform to
the standards for data integrity and security described
in paragraph (1); and
(3) collect and make available information under
this section, in accordance with paragraphs (5) and (6)
of section 1022(c) and the rules prescribed under such
paragraphs, in order to protect privacy and
confidentiality.
SEC. 1448. DEFINITIONS FOR COUNSELING-RELATED PROGRAMS.
Section 106 of the Housing and Urban Development Act of
1968 (12 U.S.C. 1701x), as amended by the preceding provisions
of this subtitle, is amended by adding at the end the following
new subsection:
``(h) Definitions.--For purposes of this section:
``(1) Nonprofit organization.--The term `nonprofit
organization' has the meaning given such term in
section 104(5) of the Cranston-Gonzalez National
Affordable Housing Act (42 U.S.C. 12704(5)), except
that subparagraph (D) of such section shall not apply
for purposes of this section.
``(2) State.--The term `State' means each of the
several States, the Commonwealth of Puerto Rico, the
District of Columbia, the Commonwealth of the Northern
Mariana Islands, Guam, the Virgin Islands, American
Samoa, the Trust Territories of the Pacific, or any
other possession of the United States.
``(3) Unit of general local government.--The term
`unit of general local government' means any city,
county, parish, town, township, borough, village, or
other general purpose political subdivision of a State.
``(4) HUD-approved counseling agency.--The term
`HUD-approved counseling agency' means a private or
public nonprofit organization that is--
``(A) exempt from taxation under section
501(c) of the Internal Revenue Code of 1986;
and
``(B) certified by the Secretary to provide
housing counseling services.
``(5) State housing finance agency.--The term
`State housing finance agency' means any public body,
agency, or instrumentality specifically created under
State statute that is authorised to finance activities
designed to provide housing and related facilities
throughout an entire State through land acquisition,
construction, or rehabilitation.''.
SEC. 1449. ACCOUNTABILITY AND TRANSPARENCY FOR GRANT RECIPIENTS.
Section 106 of the Housing and Urban Development Act of
1968 (12 U.S.C. 1701x), as amended by the preceding provisions
of this subtitle, is amended by adding at the end the
following:
``(i) Accountability for Recipients of Covered
Assistance.--
``(1) Tracking of funds.--The Secretary shall--
``(A) develop and maintain a system to
ensure that any organization or entity that
receives any covered assistance uses all
amounts of covered assistance in accordance
with this section, the regulations issued under
this section, and any requirements or
conditions under which such amounts were
provided; and
``(B) require any organization or entity,
as a condition of receipt of any covered
assistance, to agree to comply with such
requirements regarding covered assistance as
the Secretary shall establish, which shall
include--
``(i) appropriate periodic
financial and grant activity reporting,
record retention, and audit
requirements for the duration of the
covered assistance to the organization
or entity to ensure compliance with the
limitations and requirements of this
section, the regulations under this
section, and any requirements or
conditions under which such amounts
were provided; and
``(ii) any other requirements that
the Secretary determines are necessary
to ensure appropriate administration
and compliance.
``(2) Misuse of funds.--If any organization or
entity that receives any covered assistance is
determined by the Secretary to have used any covered
assistance in a manner that is materially in violation
of this section, the regulations issued under this
section, or any requirements or conditions under which
such assistance was provided--
``(A) the Secretary shall require that,
within 12 months after the determination of
such misuse, the organization or entity shall
reimburse the Secretary for such misused
amounts and return to the Secretary any such
amounts that remain unused or uncommitted for
use; and
``(B) such organization or entity shall be
ineligible, at any time after such
determination, to apply for or receive any
further covered assistance.
The remedies under this paragraph are in addition to
any other remedies that may be available under law.
``(3) Covered assistance.--For purposes of this
subsection, the term `covered assistance' means any
grant or other financial assistance provided under this
section.''.
SEC. 1450. UPDATING AND SIMPLIFICATION OF MORTGAGE INFORMATION BOOKLET.
Section 5 of the Real Estate Settlement Procedures Act of
1974 (12 U.S.C. 2604) is amended--
(1) in the section heading, by striking ``special''
and inserting ``home buying'';
(2) by striking subsections (a) and (b) and
inserting the following new subsections:
``(a) Preparation and Distribution.--The Director of the
Bureau of Consumer Financial Protection (hereafter in this
section referred to as the `Director') shall prepare, at least
once every 5 years, a booklet to help consumers applying for
federally related mortgage loans to understand the nature and
costs of real estate settlement services. The Director shall
prepare the booklet in various languages and cultural styles,
as the Director determines to be appropriate, so that the
booklet is understandable and accessible to homebuyers of
different ethnic and cultural backgrounds. The Director shall
distribute such booklets to all lenders that make federally
related mortgage loans. The Director shall also distribute to
such lenders lists, organized by location, of homeownership
counselors certified under section 106(e) of the Housing and
Urban Development Act of 1968 (12 U.S.C. 1701x(e)) for use in
complying with the requirement under subsection (c) of this
section.
``(b) Contents.--Each booklet shall be in such form and
detail as the Director shall prescribe and, in addition to such
other information as the Director may provide, shall include in
plain and understandable language the following information:
``(1) A description and explanation of the nature
and purpose of the costs incident to a real estate
settlement or a federally related mortgage loan. The
description and explanation shall provide general
information about the mortgage process as well as
specific information concerning, at a minimum--
``(A) balloon payments;
``(B) prepayment penalties;
``(C) the advantages of prepayment; and
``(D) the trade-off between closing costs
and the interest rate over the life of the
loan.
``(2) An explanation and sample of the uniform
settlement statement required by section 4.
``(3) A list and explanation of lending practices,
including those prohibited by the Truth in Lending Act
or other applicable Federal law, and of other unfair
practices and unreasonable or unnecessary charges to be
avoided by the prospective buyer with respect to a real
estate settlement.
``(4) A list and explanation of questions a
consumer obtaining a federally related mortgage loan
should ask regarding the loan, including whether the
consumer will have the ability to repay the loan,
whether the consumer sufficiently shopped for the loan,
whether the loan terms include prepayment penalties or
balloon payments, and whether the loan will benefit the
borrower.
``(5) An explanation of the right of rescission as
to certain transactions provided by sections 125 and
129 of the Truth in Lending Act.
``(6) A brief explanation of the nature of a
variable rate mortgage and a reference to the booklet
entitled `Consumer Handbook on Adjustable Rate
Mortgages', published by the Director, or to any
suitable substitute of such booklet that the Director
may subsequently adopt pursuant to such section.
``(7) A brief explanation of the nature of a home
equity line of credit and a reference to the pamphlet
required to be provided under section 127A of the Truth
in Lending Act.
``(8) Information about homeownership counseling
services made available pursuant to section 106(a)(4)
of the Housing and Urban Development Act of 1968 (12
U.S.C. 1701x(a)(4)), a recommendation that the consumer
use such services, and notification that a list of
certified providers of homeownership counseling in the
area, and their contact information, is available.
``(9) An explanation of the nature and purpose of
escrow accounts when used in connection with loans
secured by residential real estate and the requirements
under section 10 of this Act regarding such accounts.
``(10) An explanation of the choices available to
buyers of residential real estate in selecting persons
to provide necessary services incidental to a real
estate settlement.
``(11) An explanation of a consumer's
responsibilities, liabilities, and obligations in a
mortgage transaction.
``(12) An explanation of the nature and purpose of
real estate appraisals, including the difference
between an appraisal and a home inspection.
``(13) Notice that the Office of Housing of the
Department of Housing and Urban Development has made
publicly available a brochure regarding loan fraud and
a World Wide Web address and toll-free telephone number
for obtaining the brochure.
The booklet prepared pursuant to this section shall take into
consideration differences in real estate settlement procedures
that may exist among the several States and territories of the
United States and among separate political subdivisions within
the same State and territory.'';
(3) in subsection (c), by inserting at the end the
following new sentence: ``Each lender shall also
include with the booklet a reasonably complete or
updated list of homeownership counselors who are
certified pursuant to section 106(e) of the Housing and
Urban Development Act of 1968 (12 U.S.C. 1701x(e)) and
located in the area of the lender.''; and
(4) in subsection (d), by inserting after the
period at the end of the first sentence the following:
``The lender shall provide the booklet in the version
that is most appropriate for the person receiving
it.''.
SEC. 1451. HOME INSPECTION COUNSELING.
(a) Public Outreach.--
(1) In general.--The Secretary of Housing and Urban
Development (in this section referred to as the
``Secretary'') shall take such actions as may be
necessary to inform potential homebuyers of the
availability and importance of obtaining an independent
home inspection. Such actions shall include--
(A) publication of the HUD/FHA form HUD
92564-CN entitled ``For Your Protection: Get a
Home Inspection'', in both English and Spanish
languages;
(B) publication of the HUD/FHA booklet
entitled ``For Your Protection: Get a Home
Inspection'', in both English and Spanish
languages;
(C) development and publication of a HUD
booklet entitled ``For Your Protection--Get a
Home Inspection'' that does not reference FHA-
insured homes, in both English and Spanish
languages; and
(D) publication of the HUD document
entitled ``Ten Important Questions To Ask Your
Home Inspector'', in both English and Spanish
languages.
(2) Availability.--The Secretary shall make the
materials specified in paragraph (1) available for
electronic access and, where appropriate, inform
potential homebuyers of such availability through home
purchase counseling public service announcements and
toll-free telephone hotlines of the Department of
Housing and Urban Development. The Secretary shall give
special emphasis to reaching first-time and low-income
homebuyers with these materials and efforts.
(3) Updating.--The Secretary may periodically
update and revise such materials, as the Secretary
determines to be appropriate.
(b) Requirement for FHA-approved Lenders.--Each mortgagee
approved for participation in the mortgage insurance programs
under title II of the National Housing Act shall provide
prospective homebuyers, at first contact, whether upon pre-
qualification, pre-approval, or initial application, the
materials specified in subparagraphs (A), (B), and (D) of
subsection (a)(1).
(c) Requirements for HUD-approved Counseling Agencies.--
Each counseling agency certified pursuant by the Secretary to
provide housing counseling services shall provide each of their
clients, as part of the home purchase counseling process, the
materials specified in subparagraphs (C) and (D) of subsection
(a)(1).
(d) Training.--Training provided the Department of Housing
and Urban Development for housing counseling agencies, whether
such training is provided directly by the Department or
otherwise, shall include--
(1) providing information on counseling potential
homebuyers of the availability and importance of
getting an independent home inspection;
(2) providing information about the home inspection
process, including the reasons for specific inspections
such as radon and lead-based paint testing;
(3) providing information about advising potential
homebuyers on how to locate and select a qualified home
inspector; and
(4) review of home inspection public outreach
materials of the Department.
SEC. 1452. WARNINGS TO HOMEOWNERS OF FORECLOSURE RESCUE SCAMS.
(a) Assistance to NRC.--Notwithstanding any other provision
of law, of any amounts made available for any fiscal year
pursuant to section 106(a)(4)(F) of the Housing and Urban
Development Act of 1968 (12 U.S.C. 1701x(a)(4)(F)) (as added by
section 1444), 10 percent shall be used only for assistance to
the Neighborhood Reinvestment Corporation for activities, in
consultation with servicers of residential mortgage loans, to
provide notice to borrowers under such loans who are delinquent
with respect to payments due under such loans that makes such
borrowers aware of the dangers of fraudulent activities
associated with foreclosure.
(b) Notice.--The Neighborhood Reinvestment Corporation, in
consultation with servicers of residential mortgage loans,
shall use the amounts provided pursuant to subsection (a) to
carry out activities to inform borrowers under residential
mortgage loans--
(1) that the foreclosure process is complex and can
be confusing;
(2) that the borrower may be approached during the
foreclosure process by persons regarding saving their
home and they should use caution in any such dealings;
(3) that there are Federal Government and nonprofit
agencies that may provide information about the
foreclosure process, including the Department of
Housing and Urban Development;
(4) that they should contact their lender
immediately, contact the Department of Housing and
Urban Development to find a housing counseling agency
certified by the Department to assist in avoiding
foreclosure, or visit the Department's website
regarding tips for avoiding foreclosure; and
(5) of the telephone number of the loan servicer or
successor, the telephone number of the Department of
Housing and Urban Development housing counseling line,
and the Uniform Resource Locators (URLs) for the
Department of Housing and Urban Development Web sites
for housing counseling and for tips for avoiding
foreclosure.
Subtitle E--Mortgage Servicing
SEC. 1461. ESCROW AND IMPOUND ACCOUNTS RELATING TO CERTAIN CONSUMER
CREDIT TRANSACTIONS.
(a) In General.--Chapter 2 of the Truth in Lending Act (15
U.S.C. 1631 et seq.) is amended by inserting after section 129C
(as added by section 1411) the following new section:
``Sec. 129D. Escrow or impound accounts relating to certain consumer
credit transactions
``(a) In General.--Except as provided in subsection (b),
(c), (d), or (e), a creditor, in connection with the
consummation of a consumer credit transaction secured by a
first lien on the principal dwelling of the consumer, other
than a consumer credit transaction under an open end credit
plan or a reverse mortgage, shall establish, before the
consummation of such transaction, an escrow or impound account
for the payment of taxes and hazard insurance, and, if
applicable, flood insurance, mortgage insurance, ground rents,
and any other required periodic payments or premiums with
respect to the property or the loan terms, as provided in, and
in accordance with, this section.
``(b) When Required.--No impound, trust, or other type of
account for the payment of property taxes, insurance premiums,
or other purposes relating to the property may be required as a
condition of a real property sale contract or a loan secured by
a first deed of trust or mortgage on the principal dwelling of
the consumer, other than a consumer credit transaction under an
open end credit plan or a reverse mortgage, except when--
``(1) any such impound, trust, or other type of
escrow or impound account for such purposes is required
by Federal or State law;
``(2) a loan is made, guaranteed, or insured by a
State or Federal governmental lending or insuring
agency;
``(3) the transaction is secured by a first
mortgage or lien on the consumer's principal dwelling
having an original principal obligation amount that--
``(A) does not exceed the amount of the
maximum limitation on the original principal
obligation of mortgage in effect for a
residence of the applicable size, as of the
date such interest rate set, pursuant to the
sixth sentence of section 305(a)(2) the Federal
Home Loan Mortgage Corporation Act (12 U.S.C.
1454(a)(2)), and the annual percentage rate
will exceed the average prime offer rate as
defined in section 129C by 1.5 or more
percentage points; or
``(B) exceeds the amount of the maximum
limitation on the original principal obligation
of mortgage in effect for a residence of the
applicable size, as of the date such interest
rate set, pursuant to the sixth sentence of
section 305(a)(2) the Federal Home Loan
Mortgage Corporation Act (12 U.S.C.
1454(a)(2)), and the annual percentage rate
will exceed the average prime offer rate as
defined in section 129C by 2.5 or more
percentage points; or
``(4) so required pursuant to regulation.
``(c) Exemptions.--The Board may, by regulation, exempt
from the requirements of subsection (a) a creditor that--
``(1) operates predominantly in rural or
underserved areas;
``(2) together with all affiliates, has total
annual mortgage loan originations that do not exceed a
limit set by the Board;
``(3) retains its mortgage loan originations in
portfolio; and
``(4) meets any asset size threshold and any other
criteria the Board may establish, consistent with the
purposes of this subtitle.
``(d) Duration of Mandatory Escrow or Impound Account.--An
escrow or impound account established pursuant to subsection
(b) shall remain in existence for a minimum period of 5 years,
beginning with the date of the consummation of the loan, unless
and until--
``(1) such borrower has sufficient equity in the
dwelling securing the consumer credit transaction so as
to no longer be required to maintain private mortgage
insurance;
``(2) such borrower is delinquent;
``(3) such borrower otherwise has not complied with
the legal obligation, as established by rule; or
``(4) the underlying mortgage establishing the
account is terminated.
``(e) Limited Exemptions for Loans Secured by Shares in a
Cooperative or in Which an Association Must Maintain a Master
Insurance Policy.--Escrow accounts need not be established for
loans secured by shares in a cooperative. Insurance premiums
need not be included in escrow accounts for loans secured by
dwellings or units, where the borrower must join an association
as a condition of ownership, and that association has an
obligation to the dwelling or unit owners to maintain a master
policy insuring the dwellings or units.
``(f) Clarification on Escrow Accounts for Loans Not
Meeting Statutory Test.--For mortgages not covered by the
requirements of subsection (b), no provision of this section
shall be construed as precluding the establishment of an
impound, trust, or other type of account for the payment of
property taxes, insurance premiums, or other purposes relating
to the property--
``(1) on terms mutually agreeable to the parties to
the loan;
``(2) at the discretion of the lender or servicer,
as provided by the contract between the lender or
servicer and the borrower; or
``(3) pursuant to the requirements for the
escrowing of flood insurance payments for regulated
lending institutions in section 102(d) of the Flood
Disaster Protection Act of 1973.
``(g) Administration of Mandatory Escrow or Impound
Accounts.--
``(1) In general.--Except as may otherwise be
provided for in this title or in regulations prescribed
by the Board, escrow or impound accounts established
pursuant to subsection (b) shall be established in a
federally insured depository institution or credit
union.
``(2) Administration.--Except as provided in this
section or regulations prescribed under this section,
an escrow or impound account subject to this section
shall be administered in accordance with--
``(A) the Real Estate Settlement Procedures
Act of 1974 and regulations prescribed under
such Act;
``(B) the Flood Disaster Protection Act of
1973 and regulations prescribed under such Act;
and
``(C) the law of the State, if applicable,
where the real property securing the consumer
credit transaction is located.
``(3) Applicability of payment of interest.--If
prescribed by applicable State or Federal law, each
creditor shall pay interest to the consumer on the
amount held in any impound, trust, or escrow account
that is subject to this section in the manner as
prescribed by that applicable State or Federal law.
``(4) Penalty coordination with respa.--Any action
or omission on the part of any person which constitutes
a violation of the Real Estate Settlement Procedures
Act of 1974 or any regulation prescribed under such Act
for which the person has paid any fine, civil money
penalty, or other damages shall not give rise to any
additional fine, civil money penalty, or other damages
under this section, unless the action or omission also
constitutes a direct violation of this section.
``(h) Disclosures Relating to Mandatory Escrow or Impound
Account.--In the case of any impound, trust, or escrow account
that is required under subsection (b), the creditor shall
disclose by written notice to the consumer at least 3 business
days before the consummation of the consumer credit transaction
giving rise to such account or in accordance with timeframes
established in prescribed regulations the following
information:
``(1) The fact that an escrow or impound account
will be established at consummation of the transaction.
``(2) The amount required at closing to initially
fund the escrow or impound account.
``(3) The amount, in the initial year after the
consummation of the transaction, of the estimated taxes
and hazard insurance, including flood insurance, if
applicable, and any other required periodic payments or
premiums that reflects, as appropriate, either the
taxable assessed value of the real property securing
the transaction, including the value of any
improvements on the property or to be constructed on
the property (whether or not such construction will be
financed from the proceeds of the transaction) or the
replacement costs of the property.
``(4) The estimated monthly amount payable to be
escrowed for taxes, hazard insurance (including flood
insurance, if applicable) and any other required
periodic payments or premiums.
``(5) The fact that, if the consumer chooses to
terminate the account in the future, the consumer will
become responsible for the payment of all taxes, hazard
insurance, and flood insurance, if applicable, as well
as any other required periodic payments or premiums on
the property unless a new escrow or impound account is
established.
``(6) Such other information as the Board
determines necessary for the protection of the
consumer.
``(i) Definitions.--For purposes of this section, the
following definitions shall apply:
``(1) Flood insurance.--The term `flood insurance'
means flood insurance coverage provided under the
national flood insurance program pursuant to the
National Flood Insurance Act of 1968.
``(2) Hazard insurance.--The term `hazard
insurance' shall have the same meaning as provided for
`hazard insurance', `casualty insurance', `homeowner's
insurance', or other similar term under the law of the
State where the real property securing the consumer
credit transaction is located.''.
(b) Exemptions and Modifications.--The Board may prescribe
rules that revise, add to, or subtract from the criteria of
section 129D(b) of the Truth in Lending Act if the Board
determines that such rules are in the interest of consumers and
in the public interest.
(c) Clerical Amendment.--The table of sections for chapter
2 of the Truth in Lending Act is amended by inserting after the
item relating to section 129C (as added by section 1411) the
following new item:
``129D. Escrow or impound accounts relating to certain consumer credit
transactions.''.
SEC. 1462. DISCLOSURE NOTICE REQUIRED FOR CONSUMERS WHO WAIVE ESCROW
SERVICES.
Section 129D of the Truth in Lending Act (as added by
section 1461) is amended by adding at the end the following new
subsection:
``(j) Disclosure Notice Required for Consumers Who Waive
Escrow Services.--
``(1) In general.--If--
``(A) an impound, trust, or other type of
account for the payment of property taxes,
insurance premiums, or other purposes relating
to real property securing a consumer credit
transaction is not established in connection
with the transaction; or
``(B) a consumer chooses, and provides
written notice to the creditor or servicer of
such choice, at any time after such an account
is established in connection with any such
transaction and in accordance with any statute,
regulation, or contractual agreement, to close
such account,
the creditor or servicer shall provide a timely and
clearly written disclosure to the consumer that advises
the consumer of the responsibilities of the consumer
and implications for the consumer in the absence of any
such account.
``(2) Disclosure requirements.--Any disclosure
provided to a consumer under paragraph (1) shall
include the following:
``(A) Information concerning any applicable
fees or costs associated with either the non-
establishment of any such account at the time
of the transaction, or any subsequent closure
of any such account.
``(B) A clear and prominent statement that
the consumer is responsible for personally and
directly paying the non-escrowed items, in
addition to paying the mortgage loan payment,
in the absence of any such account, and the
fact that the costs for taxes, insurance, and
related fees can be substantial.
``(C) A clear explanation of the
consequences of any failure to pay non-escrowed
items, including the possible requirement for
the forced placement of insurance by the
creditor or servicer and the potentially higher
cost (including any potential commission
payments to the servicer) or reduced coverage
for the consumer in the event of any such
creditor-placed insurance.
``(D) Such other information as the Board
determines necessary for the protection of the
consumer.''.
SEC. 1463. REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974 AMENDMENTS.
(a) Servicer Prohibitions.--Section 6 of the Real Estate
Settlement Procedures Act of 1974 (12 U.S.C. 2605) is amended
by adding at the end the following new subsections:
``(k) Servicer Prohibitions.--
``(1) In general.--A servicer of a federally
related mortgage shall not--
``(A) obtain force-placed hazard insurance
unless there is a reasonable basis to believe
the borrower has failed to comply with the loan
contract's requirements to maintain property
insurance;
``(B) charge fees for responding to valid
qualified written requests (as defined in
regulations which the Bureau of Consumer
Financial Protection shall prescribe) under
this section;
``(C) fail to take timely action to respond
to a borrower's requests to correct errors
relating to allocation of payments, final
balances for purposes of paying off the loan,
or avoiding foreclosure, or other standard
servicer's duties;
``(D) fail to respond within 10 business
days to a request from a borrower to provide
the identity, address, and other relevant
contact information about the owner or assignee
of the loan; or
``(E) fail to comply with any other
obligation found by the Bureau of Consumer
Financial Protection, by regulation, to be
appropriate to carry out the consumer
protection purposes of this Act.
``(2) Force-placed insurance defined.--For purposes
of this subsection and subsections (l) and (m), the
term `force-placed insurance' means hazard insurance
coverage obtained by a servicer of a federally related
mortgage when the borrower has failed to maintain or
renew hazard insurance on such property as required of
the borrower under the terms of the mortgage.
``(l) Requirements for Force-placed Insurance.--A servicer
of a federally related mortgage shall not be construed as
having a reasonable basis for obtaining force-placed insurance
unless the requirements of this subsection have been met.
``(1) Written notices to borrower.--A servicer may
not impose any charge on any borrower for force-placed
insurance with respect to any property securing a
federally related mortgage unless--
``(A) the servicer has sent, by first-class
mail, a written notice to the borrower
containing--
``(i) a reminder of the borrower's
obligation to maintain hazard insurance
on the property securing the federally
related mortgage;
``(ii) a statement that the
servicer does not have evidence of
insurance coverage of such property;
``(iii) a clear and conspicuous
statement of the procedures by which
the borrower may demonstrate that the
borrower already has insurance
coverage; and
``(iv) a statement that the
servicer may obtain such coverage at
the borrower's expense if the borrower
does not provide such demonstration of
the borrower's existing coverage in a
timely manner;
``(B) the servicer has sent, by first-class
mail, a second written notice, at least 30 days
after the mailing of the notice under
subparagraph (A) that contains all the
information described in each clause of such
subparagraph; and
``(C) the servicer has not received from
the borrower any demonstration of hazard
insurance coverage for the property securing
the mortgage by the end of the 15-day period
beginning on the date the notice under
subparagraph (B) was sent by the servicer.
``(2) Sufficiency of demonstration.--A servicer of
a federally related mortgage shall accept any
reasonable form of written confirmation from a borrower
of existing insurance coverage, which shall include the
existing insurance policy number along with the
identity of, and contact information for, the insurance
company or agent, or as otherwise required by the
Bureau of Consumer Financial Protection.
``(3) Termination of force-placed insurance.--
Within 15 days of the receipt by a servicer of
confirmation of a borrower's existing insurance
coverage, the servicer shall--
``(A) terminate the force-placed insurance;
and
``(B) refund to the consumer all force-
placed insurance premiums paid by the borrower
during any period during which the borrower's
insurance coverage and the force-placed
insurance coverage were each in effect, and any
related fees charged to the consumer's account
with respect to the force-placed insurance
during such period.
``(4) Clarification with respect to flood disaster
protection act.--No provision of this section shall be
construed as prohibiting a servicer from providing
simultaneous or concurrent notice of a lack of flood
insurance pursuant to section 102(e) of the Flood
Disaster Protection Act of 1973.
``(m) Limitations on Force-placed Insurance Charges.--All
charges, apart from charges subject to State regulation as the
business of insurance, related to force-placed insurance
imposed on the borrower by or through the servicer shall be
bona fide and reasonable.''.
(b) Increase in Penalty Amounts.--Section 6(f) of the Real
Estate Settlement Procedures Act of 1974 (12 U.S.C. 2605(f)) is
amended--
(1) in paragraphs (1)(B) and (2)(B), by striking
``$1,000'' each place such term appears and inserting
``$2,000''; and
(2) in paragraph (2)(B)(i), by striking
``$500,000'' and inserting ``$1,000,000''.
(c) Decrease in Response Times.--Section 6(e) of the Real
Estate Settlement Procedures Act of 1974 (12 U.S.C. 2605(e)) is
amended--
(1) in paragraph (1)(A), by striking ``20 days''
and inserting ``5 days'';
(2) in paragraph (2), by striking ``60 days'' and
inserting ``30 days''; and
(3) by adding at the end the following new
paragraph:
``(4) Limited extension of response time.--The 30-
day period described in paragraph (2) may be extended
for not more than 15 days if, before the end of such
30-day period, the servicer notifies the borrower of
the extension and the reasons for the delay in
responding.''.
(d) Prompt Refund of Escrow Accounts Upon Payoff.--Section
6(g) of the Real Estate Settlement Procedures Act of 1974 (12
U.S.C. 2605(g)) is amended by adding at the end the following
new sentence: ``Any balance in any such account that is within
the servicer's control at the time the loan is paid off shall
be promptly returned to the borrower within 20 business days or
credited to a similar account for a new mortgage loan to the
borrower with the same lender.''.
SEC. 1464. TRUTH IN LENDING ACT AMENDMENTS.
(a) Requirements for Prompt Crediting of Home Loan
Payments.--Chapter 2 of the Truth in Lending Act (15 U.S.C.
1631 et seq.) is amended by inserting after section 129E (as
added by section 1472) the following new section:
``Sec. 129F. Requirements for prompt crediting of home loan payments
``(a) In General.--In connection with a consumer credit
transaction secured by a consumer's principal dwelling, no
servicer shall fail to credit a payment to the consumer's loan
account as of the date of receipt, except when a delay in
crediting does not result in any charge to the consumer or in
the reporting of negative information to a consumer reporting
agency, except as required in subsection (b).
``(b) Exception.--If a servicer specifies in writing
requirements for the consumer to follow in making payments, but
accepts a payment that does not conform to the requirements,
the servicer shall credit the payment as of 5 days after
receipt.''.
(b) Requests for Payoff Amounts.--Chapter 2 of the Truth in
Lending Act (15 U.S.C. 1631 et seq.), as amended by this title,
is amended by inserting after section 129F (as added by
subsection (a)) the following new section:
``Sec. 129G. Requests for payoff amounts of home loan
``A creditor or servicer of a home loan shall send an
accurate payoff balance within a reasonable time, but in no
case more than 7 business days, after the receipt of a written
request for such balance from or on behalf of the borrower.''.
SEC. 1465. ESCROWS INCLUDED IN REPAYMENT ANALYSIS.
Section 128(b) of the Truth in Lending Act (15 U.S.C.
1638(b)) is amended by adding at the end the following new
paragraph:
``(4) Repayment analysis required to include escrow
payments.--
``(A) In general.--In the case of any
consumer credit transaction secured by a first
mortgage or lien on the principal dwelling of
the consumer, other than a consumer credit
transaction under an open end credit plan or a
reverse mortgage, for which an impound, trust,
or other type of account has been or will be
established in connection with the transaction
for the payment of property taxes, hazard and
flood (if any) insurance premiums, or other
periodic payments or premiums with respect to
the property, the information required to be
provided under subsection (a) with respect to
the number, amount, and due dates or period of
payments scheduled to repay the total of
payments shall take into account the amount of
any monthly payment to such account for each
such repayment in accordance with section
10(a)(2) of the Real Estate Settlement
Procedures Act of 1974.
``(B) Assessment value.--The amount taken
into account under subparagraph (A) for the
payment of property taxes, hazard and flood (if
any) insurance premiums, or other periodic
payments or premiums with respect to the
property shall reflect the taxable assessed
value of the real property securing the
transaction after the consummation of the
transaction, including the value of any
improvements on the property or to be
constructed on the property (whether or not
such construction will be financed from the
proceeds of the transaction), if known, and the
replacement costs of the property for hazard
insurance, in the initial year after the
transaction.''.
Subtitle F--Appraisal Activities
SEC. 1471. PROPERTY APPRAISAL REQUIREMENTS.
Chapter 2 of the Truth in Lending Act (15 U.S.C. 1631 et
seq.) is amended by inserting after 129G (as added by section
1464(b)) the following new section:
``Sec. 129H. Property appraisal requirements
``(a) In General.--A creditor may not extend credit in the
form of a higher-risk mortgage to any consumer without first
obtaining a written appraisal of the property to be mortgaged
prepared in accordance with the requirements of this section.
``(b) Appraisal Requirements.--
``(1) Physical property visit.--Subject to the
rules prescribed under paragraph (4), an appraisal of
property to be secured by a higher-risk mortgage does
not meet the requirement of this section unless it is
performed by a certified or licensed appraiser who
conducts a physical property visit of the interior of
the mortgaged property.
``(2) Second appraisal under certain
circumstances.--
``(A) In general.--If the purpose of a
higher-risk mortgage is to finance the purchase
or acquisition of the mortgaged property from a
person within 180 days of the purchase or
acquisition of such property by that person at
a price that was lower than the current sale
price of the property, the creditor shall
obtain a second appraisal from a different
certified or licensed appraiser. The second
appraisal shall include an analysis of the
difference in sale prices, changes in market
conditions, and any improvements made to the
property between the date of the previous sale
and the current sale.
``(B) No cost to applicant.--The cost of
any second appraisal required under
subparagraph (A) may not be charged to the
applicant.
``(3) Certified or licensed appraiser defined.--For
purposes of this section, the term `certified or
licensed appraiser' means a person who--
``(A) is, at a minimum, certified or
licensed by the State in which the property to
be appraised is located; and
``(B) performs each appraisal in conformity
with the Uniform Standards of Professional
Appraisal Practice and title XI of the
Financial Institutions Reform, Recovery, and
Enforcement Act of 1989, and the regulations
prescribed under such title, as in effect on
the date of the appraisal.
``(4) Regulations.--
``(A) In general.--The Board, the
Comptroller of the Currency, the Federal
Deposit Insurance Corporation, the National
Credit Union Administration Board, the Federal
Housing Finance Agency, and the Bureau shall
jointly prescribe regulations to implement this
section.
``(B) Exemption.--The agencies listed in
subparagraph (A) may jointly exempt, by rule, a
class of loans from the requirements of this
subsection or subsection (a) if the agencies
determine that the exemption is in the public
interest and promotes the safety and soundness
of creditors.
``(c) Free Copy of Appraisal.--A creditor shall provide 1
copy of each appraisal conducted in accordance with this
section in connection with a higher-risk mortgage to the
applicant without charge, and at least 3 days prior to the
transaction closing date.
``(d) Consumer Notification.--At the time of the initial
mortgage application, the applicant shall be provided with a
statement by the creditor that any appraisal prepared for the
mortgage is for the sole use of the creditor, and that the
applicant may choose to have a separate appraisal conducted at
the expense of the applicant.
``(e) Violations.--In addition to any other liability to
any person under this title, a creditor found to have willfully
failed to obtain an appraisal as required in this section shall
be liable to the applicant or borrower for the sum of $2,000.
``(f) Higher-risk Mortgage Defined.--For purposes of this
section, the term `higher-risk mortgage' means a residential
mortgage loan, other than a reverse mortgage loan that is a
qualified mortgage, as defined in section 129C, secured by a
principal dwelling--
``(1) that is not a qualified mortgage, as defined
in section 129C; and
``(2) with an annual percentage rate that exceeds
the average prime offer rate for a comparable
transaction, as defined in section 129C, as of the date
the interest rate is set--
``(A) by 1.5 or more percentage points, in
the case of a first lien residential mortgage
loan having an original principal obligation
amount that does not exceed the amount of the
maximum limitation on the original principal
obligation of mortgage in effect for a
residence of the applicable size, as of the
date of such interest rate set, pursuant to the
sixth sentence of section 305(a)(2) the Federal
Home Loan Mortgage Corporation Act (12 U.S.C.
1454(a)(2));
``(B) by 2.5 or more percentage points, in
the case of a first lien residential mortgage
loan having an original principal obligation
amount that exceeds the amount of the maximum
limitation on the original principal obligation
of mortgage in effect for a residence of the
applicable size, as of the date of such
interest rate set, pursuant to the sixth
sentence of section 305(a)(2) the Federal Home
Loan Mortgage Corporation Act (12 U.S.C.
1454(a)(2)); and
``(C) by 3.5 or more percentage points for
a subordinate lien residential mortgage
loan.''.
SEC. 1472. APPRAISAL INDEPENDENCE REQUIREMENTS.
(a) In General.--Chapter 2 of the Truth in Lending Act (15
U.S.C. 1631 et seq.) is amended by inserting after section 129D
(as added by section 1461(a)) the following new section:
``Sec. 129E. Appraisal independence requirements
``(a) In General.--It shall be unlawful, in extending
credit or in providing any services for a consumer credit
transaction secured by the principal dwelling of the consumer,
to engage in any act or practice that violates appraisal
independence as described in or pursuant to regulations
prescribed under this section.
``(b) Appraisal Independence.--For purposes of subsection
(a), acts or practices that violate appraisal independence
shall include--
``(1) any appraisal of a property offered as
security for repayment of the consumer credit
transaction that is conducted in connection with such
transaction in which a person with an interest in the
underlying transaction compensates, coerces, extorts,
colludes, instructs, induces, bribes, or intimidates a
person, appraisal management company, firm, or other
entity conducting or involved in an appraisal, or
attempts, to compensate, coerce, extort, collude,
instruct, induce, bribe, or intimidate such a person,
for the purpose of causing the appraised value
assigned, under the appraisal, to the property to be
based on any factor other than the independent judgment
of the appraiser;
``(2) mischaracterizing, or suborning any
mischaracterization of, the appraised value of the
property securing the extension of the credit;
``(3) seeking to influence an appraiser or
otherwise to encourage a targeted value in order to
facilitate the making or pricing of the transaction;
and
``(4) withholding or threatening to withhold timely
payment for an appraisal report or for appraisal
services rendered when the appraisal report or services
are provided for in accordance with the contract
between the parties.
``(c) Exceptions.--The requirements of subsection (b) shall
not be construed as prohibiting a mortgage lender, mortgage
broker, mortgage banker, real estate broker, appraisal
management company, employee of an appraisal management
company, consumer, or any other person with an interest in a
real estate transaction from asking an appraiser to undertake 1
or more of the following:
``(1) Consider additional, appropriate property
information, including the consideration of additional
comparable properties to make or support an appraisal.
``(2) Provide further detail, substantiation, or
explanation for the appraiser's value conclusion.
``(3) Correct errors in the appraisal report.
``(d) Prohibitions on Conflicts of Interest.--No certified
or licensed appraiser conducting, and no appraisal management
company procuring or facilitating, an appraisal in connection
with a consumer credit transaction secured by the principal
dwelling of a consumer may have a direct or indirect interest,
financial or otherwise, in the property or transaction
involving the appraisal.
``(e) Mandatory Reporting.--Any mortgage lender, mortgage
broker, mortgage banker, real estate broker, appraisal
management company, employee of an appraisal management
company, or any other person involved in a real estate
transaction involving an appraisal in connection with a
consumer credit transaction secured by the principal dwelling
of a consumer who has a reasonable basis to believe an
appraiser is failing to comply with the Uniform Standards of
Professional Appraisal Practice, is violating applicable laws,
or is otherwise engaging in unethical or unprofessional
conduct, shall refer the matter to the applicable State
appraiser certifying and licensing agency.
``(f) No Extension of Credit.--In connection with a
consumer credit transaction secured by a consumer's principal
dwelling, a creditor who knows, at or before loan consummation,
of a violation of the appraisal independence standards
established in subsections (b) or (d) shall not extend credit
based on such appraisal unless the creditor documents that the
creditor has acted with reasonable diligence to determine that
the appraisal does not materially misstate or misrepresent the
value of such dwelling.
``(g) Rules and Interpretive Guidelines.--
``(1) In general.--Except as provided under
paragraph (2), the Board, the Comptroller of the
Currency, the Federal Deposit Insurance Corporation,
the National Credit Union Administration Board, the
Federal Housing Finance Agency, and the Bureau may
jointly issue rules, interpretive guidelines, and
general statements of policy with respect to acts or
practices that violate appraisal independence in the
provision of mortgage lending services for a consumer
credit transaction secured by the principal dwelling of
the consumer and mortgage brokerage services for such a
transaction, within the meaning of subsections (a),
(b), (c), (d), (e), (f), (h), and (i).
``(2) Interim final regulations.--The Board shall,
for purposes of this section, prescribe interim final
regulations no later than 90 days after the date of
enactment of this section defining with specificity
acts or practices that violate appraisal independence
in the provision of mortgage lending services for a
consumer credit transaction secured by the principal
dwelling of the consumer or mortgage brokerage services
for such a transaction and defining any terms in this
section or such regulations. Rules prescribed by the
Board under this paragraph shall be deemed to be rules
prescribed by the agencies jointly under paragraph (1).
``(h) Appraisal Report Portability.--Consistent with the
requirements of this section, the Board, the Comptroller of the
Currency, the Federal Deposit Insurance Corporation, the
National Credit Union Administration Board, the Federal Housing
Finance Agency, and the Bureau may jointly issue regulations
that address the issue of appraisal report portability,
including regulations that ensure the portability of the
appraisal report between lenders for a consumer credit
transaction secured by a 1-4 unit single family residence that
is the principal dwelling of the consumer, or mortgage
brokerage services for such a transaction.
``(i) Customary and Reasonable Fee.--
``(1) In general.--Lenders and their agents shall
compensate fee appraisers at a rate that is customary
and reasonable for appraisal services performed in the
market area of the property being appraised. Evidence
for such fees may be established by objective third-
party information, such as government agency fee
schedules, academic studies, and independent private
sector surveys. Fee studies shall exclude assignments
ordered by known appraisal management companies.
``(2) Fee appraiser definition.--For purposes of
this section, the term `fee appraiser' means a person
who is not an employee of the mortgage loan originator
or appraisal management company engaging the appraiser
and is--
``(A) a State licensed or certified
appraiser who receives a fee for performing an
appraisal and certifies that the appraisal has
been prepared in accordance with the Uniform
Standards of Professional Appraisal Practice;
or
``(B) a company not subject to the
requirements of section 1124 of the Financial
Institutions Reform, Recovery, and Enforcement
Act of 1989 (12 U.S.C. 3331 et seq.) that
utilizes the services of State licensed or
certified appraisers and receives a fee for
performing appraisals in accordance with the
Uniform Standards of Professional Appraisal
Practice.
``(3) Exception for complex assignments.--In the
case of an appraisal involving a complex assignment,
the customary and reasonable fee may reflect the
increased time, difficulty, and scope of the work
required for such an appraisal and include an amount
over and above the customary and reasonable fee for
non-complex assignments.
``(j) Sunset.--Effective on the date the interim final
regulations are promulgated pursuant to subsection (g), the
Home Valuation Code of Conduct announced by the Federal Housing
Finance Agency on December 23, 2008, shall have no force or
effect.
``(k) Penalties.--
``(1) First violation.--In addition to the
enforcement provisions referred to in section 130, each
person who violates this section shall forfeit and pay
a civil penalty of not more than $10,000 for each day
any such violation continues.
``(2) Subsequent violations.--In the case of any
person on whom a civil penalty has been imposed under
paragraph (1), paragraph (1) shall be applied by
substituting `$20,000' for `$10,000' with respect to
all subsequent violations.
``(3) Assessment.--The agency referred to in
subsection (a) or (c) of section 108 with respect to
any person described in paragraph (1) shall assess any
penalty under this subsection to which such person is
subject.''.
(b) Clerical Amendment.--The table of sections for chapter
2 of the Truth in Lending Act is amended by inserting after the
item relating to section 129D (as added by section 1461(c)) the
following new items:
``129E. Appraisal independence requirements.
``129F. Requirements for prompt crediting of home loan payments.
``129G. Requests for payoff amounts of home loan.
``129H. Property appraisal requirements.''.
(c) Deference.--Section 105 of the Truth in Lending Act (15
U.S.C. 1604) is amended by adding at the end the following:
``(h) Deference.--Notwithstanding any power granted to any
Federal agency under this title, the deference that a court
affords to the Bureau with respect to a determination made by
the Bureau relating to the meaning or interpretation of any
provision of this title, other than section 129E or 129H, shall
be applied as if the Bureau were the only agency authorized to
apply, enforce, interpret, or administer the provisions of this
title.''.
(d) Conforming Amendments in Title X Not Applicable to
Sections 129E and 129H.--Notwithstanding section 1099A, the
term ``Board'' in sections 129E and 129H, as added by this
subtitle, shall not be substituted by the term ``Bureau''.
SEC. 1473. AMENDMENTS RELATING TO APPRAISAL SUBCOMMITTEE OF FFIEC,
APPRAISER INDEPENDENCE MONITORING, APPROVED
APPRAISER EDUCATION, APPRAISAL MANAGEMENT
COMPANIES, APPRAISER COMPLAINT HOTLINE, AUTOMATED
VALUATION MODELS, AND BROKER PRICE OPINIONS.
(a) Threshold Levels.--Section 1112(b) of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12
U.S.C. 3341(b)) is amended by inserting before the period the
following: ``, and receives concurrence from the Bureau of
Consumer Financial Protection that such threshold level
provides reasonable protection for consumers who purchase 1-4
unit single-family residences''.
(b) Annual Report of Appraisal Subcommittee.--Section
1103(a) of the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 (12 U.S.C. 3332(a)) is amended at the
end by inserting the following new paragraph:
``(5) transmit an annual report to the Congress not
later than June 15 of each year that describes the
manner in which each function assigned to the Appraisal
Subcommittee has been carried out during the preceding
year. The report shall also detail the activities of
the Appraisal Subcommittee, including the results of
all audits of State appraiser regulatory agencies, and
provide an accounting of disapproved actions and
warnings taken in the previous year, including a
description of the conditions causing the disapproval
and actions taken to achieve compliance.''.
(c) Open Meetings.--Section 1104(b) of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12
U.S.C. 3333(b)) is amended--
(1) by inserting ``in public session after notice
in the Federal Register, but may close certain portions
of these meetings related to personnel and review of
preliminary State audit reports,'' after ``shall
meet''; and
(2) by adding after the final period the following:
``The subject matter discussed in any closed or
executive session shall be described in the Federal
Register notice of the meeting.''.
(d) Regulations.--Section 1106 of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12
U.S.C. 3335) is amended--
(1) by inserting ``prescribe regulations in
accordance with chapter 5 of title 5, United States
Code (commonly referred to as the Administrative
Procedures Act) after notice and opportunity for
comment,'' after ``hold hearings''; and
(2) at the end by inserting ``Any regulations
prescribed by the Appraisal Subcommittee shall (unless
otherwise provided in this title) be limited to the
following functions: temporary practice, national
registry, information sharing, and enforcement. For
purposes of prescribing regulations, the Appraisal
Subcommittee shall establish an advisory committee of
industry participants, including appraisers, lenders,
consumer advocates, real estate agents, and government
agencies, and hold meetings as necessary to support the
development of regulations.''.
(e) Appraisal Reviews and Complex Appraisals.--
(1) Section 1110.--Section 1110 of the Financial
Institutions Reform, Recovery, and Enforcement Act of
1989 (12 U.S.C. 3339) is amended--
(A) in paragraph (1), by striking ``and'';
(B) in paragraph (2), by striking the
period at the end and inserting ``; and''; and
(C) by inserting after paragraph (2) the
following:
``(3) that such appraisals shall be subject to
appropriate review for compliance with the Uniform
Standards of Professional Appraisal Practice.''.
(2) Section 1113.--Section 1113 of the Financial
Institutions and Reform, Recovery, and Enforcement Act
of 1989 (12 U.S.C. 3342) is amended by inserting before
the period the following: ``, where a complex 1- to 4-
unit single family residential appraisal means an
appraisal for which the property to be appraised, the
form of ownership, the property characteristics, or the
market conditions are atypical''.
(f) Appraisal Management Services.--
(1) Supervision of third-party providers of
appraisal management services.--Section 1103(a) of the
Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 (12 U.S.C. 3332(a)) (as
previously amended by this section) is amended--
(A) by amending paragraph (1) to read as
follows:
``(1) monitor the requirements established by
States--
``(A) for the certification and licensing
of individuals who are qualified to perform
appraisals in connection with federally related
transactions, including a code of professional
responsibility; and
``(B) for the registration and supervision
of the operations and activities of an
appraisal management company;''; and
(B) by adding at the end the following new
paragraph:
``(6) maintain a national registry of appraisal
management companies that either are registered with
and subject to supervision of a State appraiser
certifying and licensing agency or are operating
subsidiaries of a Federally regulated financial
institution.''.
(2) Appraisal management company minimum
requirements.--Title XI of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (12
U.S.C. 3331 et seq.) is amended by adding at the end
the following new section (and amending the table of
contents accordingly):
``SEC. 1124. APPRAISAL MANAGEMENT COMPANY MINIMUM REQUIREMENTS.
``(a) In General.--The Board of Governors of the Federal
Reserve System, the Comptroller of the Currency, the Federal
Deposit Insurance Corporation, the National Credit Union
Administration Board, the Federal Housing Finance Agency, and
the Bureau of Consumer Financial Protection shall jointly, by
rule, establish minimum requirements to be applied by a State
in the registration of appraisal management companies. Such
requirements shall include a requirement that such companies--
``(1) register with and be subject to supervision
by a State appraiser certifying and licensing agency in
each State in which such company operates;
``(2) verify that only licensed or certified
appraisers are used for federally related transactions;
``(3) require that appraisals coordinated by an
appraisal management company comply with the Uniform
Standards of Professional Appraisal Practice; and
``(4) require that appraisals are conducted
independently and free from inappropriate influence and
coercion pursuant to the appraisal independence
standards established under section 129E of the Truth
in Lending Act.
``(b) Relation to State Law.--Nothing in this section shall
be construed to prevent States from establishing requirements
in addition to any rules promulgated under subsection (a).
``(c) Federally Regulated Financial Institutions.--The
requirements of subsection (a) shall apply to an appraisal
management company that is a subsidiary owned and controlled by
a financial institution and regulated by a Federal financial
institution regulatory agency. An appraisal management company
that is a subsidiary owned and controlled by a financial
institution regulated by a Federal financial institution
regulatory agency shall not be required to register with a
State.
``(d) Registration Limitations.--An appraisal management
company shall not be registered by a State or included on the
national registry if such company, in whole or in part,
directly or indirectly, is owned by any person who has had an
appraiser license or certificate refused, denied, cancelled,
surrendered in lieu of revocation, or revoked in any State.
Additionally, each person that owns more than 10 percent of an
appraisal management company shall be of good moral character,
as determined by the State appraiser certifying and licensing
agency, and shall submit to a background investigation carried
out by the State appraiser certifying and licensing agency.
``(e) Reporting.--The Board of Governors of the Federal
Reserve System, the Comptroller of the Currency, the Federal
Deposit Insurance Corporation, the National Credit Union
Administration Board, the Federal Housing Finance Agency, and
the Bureau of Consumer Financial Protection shall jointly
promulgate regulations for the reporting of the activities of
appraisal management companies to the Appraisal Subcommittee in
determining the payment of the annual registry fee.
``(f) Effective Date.--
``(1) In general.--No appraisal management company
may perform services related to a federally related
transaction in a State after the date that is 36 months
after the date on which the regulations required to be
prescribed under subsection (a) are prescribed in final
form unless such company is registered with such State
or subject to oversight by a Federal financial
institutions regulatory agency.
``(2) Extension of effective date.--Subject to the
approval of the Council, the Appraisal Subcommittee may
extend by an additional 12 months the requirements for
the registration and supervision of appraisal
management companies if it makes a written finding that
a State has made substantial progress in establishing a
State appraisal management company registration and
supervision system that appears to conform with the
provisions of this title.''.
(3) State appraiser certifying and licensing agency
authority.--Section 1117 of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (12
U.S.C. 3346) is amended by adding at the end the
following: ``The duties of such agency may additionally
include the registration and supervision of appraisal
management companies and the addition of information
about the appraisal management company to the national
registry.''.
(4) Appraisal management company definition.--
Section 1121 of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3350)
is amended by adding at the end the following:
``(11) Appraisal management company.--The term
`appraisal management company' means, in connection
with valuing properties collateralizing mortgage loans
or mortgages incorporated into a securitization, any
external third party authorized either by a creditor of
a consumer credit transaction secured by a consumer's
principal dwelling or by an underwriter of or other
principal in the secondary mortgage markets, that
oversees a network or panel of more than 15 certified
or licensed appraisers in a State or 25 or more
nationally within a given year--
``(A) to recruit, select, and retain
appraisers;
``(B) to contract with licensed and
certified appraisers to perform appraisal
assignments;
``(C) to manage the process of having an
appraisal performed, including providing
administrative duties such as receiving
appraisal orders and appraisal reports,
submitting completed appraisal reports to
creditors and underwriters, collecting fees
from creditors and underwriters for services
provided, and reimbursing appraisers for
services performed; or
``(D) to review and verify the work of
appraisers.''.
(g) State Agency Reporting Requirement.--Section 1109(a) of
the Financial Institutions Reform, Recovery, and Enforcement
Act of 1989 (12 U.S.C. 3338(a)) is amended--
(1) by striking ``and'' after the semicolon in
paragraph (1);
(2) by redesignating paragraph (2) as paragraph
(4); and
(3) by inserting after paragraph (1) the following
new paragraphs:
``(2) transmit reports on the issuance and renewal
of licenses and certifications, sanctions, disciplinary
actions, license and certification revocations, and
license and certification suspensions on a timely basis
to the national registry of the Appraisal Subcommittee;
``(3) transmit reports on a timely basis of
supervisory activities involving appraisal management
companies or other third-party providers of appraisals
and appraisal management services, including
investigations initiated and disciplinary actions
taken; and''.
(h) Registry Fees Modified.--
(1) In general.--Section 1109(a) of the Financial
Institutions Reform, Recovery, and Enforcement Act of
1989 (12 U.S.C. 3338(a)) is amended--
(A) by amending paragraph (4) (as modified
by section 1473(g)) to read as follows:
``(4) collect--
``(A) from such individuals who perform or
seek to perform appraisals in federally related
transactions, an annual registry fee of not
more than $40, such fees to be transmitted by
the State agencies to the Council on an annual
basis; and
``(B) from an appraisal management company
that either has registered with a State
appraiser certifying and licensing agency in
accordance with this title or operates as a
subsidiary of a federally regulated financial
institution, an annual registry fee of--
``(i) in the case of such a company
that has been in existence for more
than a year, $25 multiplied by the
number of appraisers working for or
contracting with such company in such
State during the previous year, but
where such $25 amount may be adjusted,
up to a maximum of $50, at the
discretion of the Appraisal
Subcommittee, if necessary to carry out
the Subcommittee's functions under this
title; and
``(ii) in the case of such a
company that has not been in existence
for more than a year, $25 multiplied by
an appropriate number to be determined
by the Appraisal Subcommittee, and
where such number will be used for
determining the fee of all such
companies that were not in existence
for more than a year, but where such
$25 amount may be adjusted, up to a
maximum of $50, at the discretion of
the Appraisal Subcommittee, if
necessary to carry out the
Subcommittee's functions under this
title.''; and
(B) by amending the matter following
paragraph (4), as redesignated, to read as
follows:
``Subject to the approval of the Council, the Appraisal
Subcommittee may adjust the dollar amount of registry fees
under paragraph (4)(A), up to a maximum of $80 per annum, as
necessary to carry out its functions under this title. The
Appraisal Subcommittee shall consider at least once every 5
years whether to adjust the dollar amount of the registry fees
to account for inflation. In implementing any change in
registry fees, the Appraisal Subcommittee shall provide
flexibility to the States for multi-year certifications and
licenses already in place, as well as a transition period to
implement the changes in registry fees. In establishing the
amount of the annual registry fee for an appraisal management
company, the Appraisal Subcommittee shall have the discretion
to impose a minimum annual registry fee for an appraisal
management company to protect against the under reporting of
the number of appraisers working for or contracted by the
appraisal management company.''.
(2) Incremental revenues.--Incremental revenues
collected pursuant to the increases required by this
subsection shall be placed in a separate account at the
United States Treasury, entitled the ``Appraisal
Subcommittee Account''.
(i) Grants and Reports.--Section 1109(b) of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12
U.S.C. 3338(b)) is amended--
(1) by striking ``and'' after the semicolon in
paragraph (3);
(2) by striking the period at the end of paragraph
(4) and inserting a semicolon;
(3) by adding at the end the following new
paragraphs:
``(5) to make grants to State appraiser certifying
and licensing agencies, in accordance with policies to
be developed by the Appraisal Subcommittee, to support
the efforts of such agencies to comply with this title,
including--
``(A) the complaint process, complaint
investigations, and appraiser enforcement
activities of such agencies; and
``(B) the submission of data on State
licensed and certified appraisers and appraisal
management companies to the National appraisal
registry, including information affirming that
the appraiser or appraisal management company
meets the required qualification criteria and
formal and informal disciplinary actions; and
``(6) to report to all State appraiser certifying
and licensing agencies when a license or certification
is surrendered, revoked, or suspended.''.
Obligations authorized under this subsection may not exceed 75
percent of the fiscal year total of incremental increase in
fees collected and deposited in the ``Appraisal Subcommittee
Account'' pursuant to subsection (h).
(j) Criteria.--Section 1116 of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3345)
is amended--
(1) in subsection (c), by inserting ``whose
criteria for the licensing of a real estate appraiser
currently meet or exceed the minimum criteria issued by
the Appraisal Qualifications Board of The Appraisal
Foundation for the licensing of real estate
appraisers'' before the period at the end; and
(2) by striking subsection (e) and inserting the
following new subsection:
``(e) Minimum Qualification Requirements.--Any requirements
established for individuals in the position of `Trainee
Appraiser' and `Supervisory Appraiser' shall meet or exceed the
minimum qualification requirements of the Appraiser
Qualifications Board of The Appraisal Foundation. The Appraisal
Subcommittee shall have the authority to enforce these
requirements.''.
(k) Monitoring of State Appraiser Certifying and Licensing
Agencies.--Section 1118 of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3347) is
amended--
(1) by amending subsection (a) to read as follows:
``(a) In General.--The Appraisal Subcommittee shall monitor
each State appraiser certifying and licensing agency for the
purposes of determining whether such agency--
``(1) has policies, practices, funding, staffing,
and procedures that are consistent with this title;
``(2) processes complaints and completes
investigations in a reasonable time period;
``(3) appropriately disciplines sanctioned
appraisers and appraisal management companies;
``(4) maintains an effective regulatory program;
and
``(5) reports complaints and disciplinary actions
on a timely basis to the national registries on
appraisers and appraisal management companies
maintained by the Appraisal Subcommittee.
The Appraisal Subcommittee shall have the authority to remove a
State licensed or certified appraiser or a registered appraisal
management company from a national registry on an interim
basis, not to exceed 90 days, pending State agency action on
licensing, certification, registration, and disciplinary
proceedings. The Appraisal Subcommittee and all agencies,
instrumentalities, and Federally recognized entities under this
title shall not recognize appraiser certifications and licenses
from States whose appraisal policies, practices, funding,
staffing, or procedures are found to be inconsistent with this
title. The Appraisal Subcommittee shall have the authority to
impose sanctions, as described in this section, against a State
agency that fails to have an effective appraiser regulatory
program. In determining whether such a program is effective,
the Appraisal Subcommittee shall include an analysis of the
licensing and certification of appraisers, the registration of
appraisal management companies, the issuance of temporary
licenses and certifications for appraisers, the receiving and
tracking of submitted complaints against appraisers and
appraisal management companies, the investigation of
complaints, and enforcement actions against appraisers and
appraisal management companies. The Appraisal Subcommittee
shall have the authority to impose interim actions and
suspensions against a State agency as an alternative to, or in
advance of, the derecognition of a State agency.''.
(2) in subsection (b)(2), by inserting after
``authority'' the following: ``or sufficient funding''.
(l) Reciprocity.--Subsection (b) of section 1122 of the
Financial Institutions Reform, Recovery, and Enforcement Act of
1989 (12 U.S.C. 3351(b)) is amended to read as follows:
``(b) Reciprocity.--Notwithstanding any other provisions of
this title, a federally related transaction shall not be
appraised by a certified or licensed appraiser unless the State
appraiser certifying or licensing agency of the State
certifying or licensing such appraiser has in place a policy of
issuing a reciprocal certification or license for an individual
from another State when--
``(1) the appraiser licensing and certification
program of such other State is in compliance with the
provisions of this title; and
``(2) the appraiser holds a valid certification
from a State whose requirements for certification or
licensing meet or exceed the licensure standards
established by the State where an individual seeks
appraisal licensure.''.
(m) Consideration of Professional Appraisal Designations.--
Section 1122(d) of the Financial Institutions Reform, Recovery,
and Enforcement Act of 1989 (12 U.S.C. 3351(d)) is amended by
striking ``shall not exclude'' and all that follows through the
end of the subsection and inserting the following: ``may
include education achieved, experience, sample appraisals, and
references from prior clients. Membership in a nationally
recognized professional appraisal organization may be a
criteria considered, though lack of membership therein shall
not be the sole bar against consideration for an assignment
under these criteria.''.
(n) Appraiser Independence.--Section 1122 of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12
U.S.C. 3351) is amended by adding at the end the following new
subsection:
``(g) Appraiser Independence Monitoring.--The Appraisal
Subcommittee shall monitor each State appraiser certifying and
licensing agency for the purpose of determining whether such
agency's policies, practices, and procedures are consistent
with the purposes of maintaining appraiser independence and
whether such State has adopted and maintains effective laws,
regulations, and policies aimed at maintaining appraiser
independence.''.
(o) Appraiser Education.--Section 1122 of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12
U.S.C. 3351) is amended by inserting after subsection (g) (as
added by subsection (l) of this section) the following new
subsection:
``(h) Approved Education.--The Appraisal Subcommittee shall
encourage the States to accept courses approved by the
Appraiser Qualification Board's Course Approval Program.''.
(p) Appraisal Complaint Hotline.--Section 1122 of the
Financial Institutions Reform, Recovery, and Enforcement Act of
1989 (12 U.S.C. 3351), as amended by this section, is amended
by adding at the end the following new subsection:
``(i) Appraisal Complaint National Hotline.--If, 6 months
after the date of the enactment of this subsection, the
Appraisal Subcommittee determines that no national hotline
exists to receive complaints of non-compliance with appraisal
independence standards and Uniform Standards of Professional
Appraisal Practice, including complaints from appraisers,
individuals, or other entities concerning the improper
influencing or attempted improper influencing of appraisers or
the appraisal process, the Appraisal Subcommittee shall
establish and operate such a national hotline, which shall
include a toll-free telephone number and an email address. If
the Appraisal Subcommittee operates such a national hotline,
the Appraisal Subcommittee shall refer complaints for further
action to appropriate governmental bodies, including a State
appraiser certifying and licensing agency, a financial
institution regulator, or other appropriate legal authorities.
For complaints referred to State appraiser certifying and
licensing agencies or to Federal regulators, the Appraisal
Subcommittee shall have the authority to follow up such
complaint referrals in order to determine the status of the
resolution of the complaint.''.
(q) Automated Valuation Models.--Title XI of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12
U.S.C. 3331 et seq.), as amended by this section, is amended by
adding at the end the following new section (and amending the
table of contents accordingly):
``SEC. 1125. AUTOMATED VALUATION MODELS USED TO ESTIMATE COLLATERAL
VALUE FOR MORTGAGE LENDING PURPOSES.
``(a) In General.--Automated valuation models shall adhere
to quality control standards designed to--
``(1) ensure a high level of confidence in the
estimates produced by automated valuation models;
``(2) protect against the manipulation of data;
``(3) seek to avoid conflicts of interest;
``(4) require random sample testing and reviews;
and
``(5) account for any other such factor that the
agencies listed in subsection (b) determine to be
appropriate.
``(b) Adoption of Regulations.--The Board, the Comptroller
of the Currency, the Federal Deposit Insurance Corporation, the
National Credit Union Administration Board, the Federal Housing
Finance Agency, and the Bureau of Consumer Financial
Protection, in consultation with the staff of the Appraisal
Subcommittee and the Appraisal Standards Board of the Appraisal
Foundation, shall promulgate regulations to implement the
quality control standards required under this section.
``(c) Enforcement.--Compliance with regulations issued
under this subsection shall be enforced by--
``(1) with respect to a financial institution, or
subsidiary owned and controlled by a financial
institution and regulated by a Federal financial
institution regulatory agency, the Federal financial
institution regulatory agency that acts as the primary
Federal supervisor of such financial institution or
subsidiary; and
``(2) with respect to other participants in the
market for appraisals of 1-to-4 unit single family
residential real estate, the Federal Trade Commission,
the Bureau of Consumer Financial Protection, and a
State attorney general.
``(d) Automated Valuation Model Defined.--For purposes of
this section, the term `automated valuation model' means any
computerized model used by mortgage originators and secondary
market issuers to determine the collateral worth of a mortgage
secured by a consumer's principal dwelling.''.
(r) Broker Price Opinions.--Title XI of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12
U.S.C. 3331 et seq.), as amended by this section, is amended by
adding at the end the following new section (and amending the
table of contents accordingly):
``SEC. 1126. BROKER PRICE OPINIONS.
``(a) General Prohibition.--In conjunction with the
purchase of a consumer's principal dwelling, broker price
opinions may not be used as the primary basis to determine the
value of a piece of property for the purpose of a loan
origination of a residential mortgage loan secured by such
piece of property.
``(b) Broker Price Opinion Defined.--For purposes of this
section, the term `broker price opinion' means an estimate
prepared by a real estate broker, agent, or sales person that
details the probable selling price of a particular piece of
real estate property and provides a varying level of detail
about the property's condition, market, and neighborhood, and
information on comparable sales, but does not include an
automated valuation model, as defined in section 1125(c).''.
(s) Amendments to Appraisal Subcommittee.--Section 1011 of
the Federal Financial Institutions Examination Council Act of
1978 (12 U.S.C. 3310) is amended--
(1) in the first sentence, by adding before the
period the following: ``, the Bureau of Consumer
Financial Protection, and the Federal Housing Finance
Agency''; and
(2) by inserting at the end the following: ``At all
times at least one member of the Appraisal Subcommittee
shall have demonstrated knowledge and competence
through licensure, certification, or professional
designation within the appraisal profession.''.
(t) Technical Corrections.--
(1) Section 1119(a)(2) of the Financial
Institutions Reform, Recovery, and Enforcement Act of
1989 (12 U.S.C. 3348(a)(2)) is amended by striking
``council,'' and inserting ``Council,''.
(2) Section 1121(6) of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (12
U.S.C. 3350(6)) is amended by striking
``Corporations,'' and inserting ``Corporation,''.
(3) Section 1121(8) of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (12
U.S.C. 3350(8)) is amended by striking ``council'' and
inserting ``Council''.
(4) Section 1122 of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (12
U.S.C. 3351) is amended--
(A) in subsection (a)(1) by moving the left
margin of subparagraphs (A), (B), and (C) 2 ems
to the right; and
(B) in subsection (c)--
(i) by striking ``Federal Financial
Institutions Examination Council'' and
inserting ``Financial Institutions
Examination Council''; and
(ii) by striking ``the council's
functions'' and inserting ``the
Council's functions''.
SEC. 1474. EQUAL CREDIT OPPORTUNITY ACT AMENDMENT.
Subsection (e) of section 701 of the Equal Credit
Opportunity Act (15 U.S.C. 1691) is amended to read as follows:
``(e) Copies Furnished to Applicants.--
``(1) In general.--Each creditor shall furnish to
an applicant a copy of any and all written appraisals
and valuations developed in connection with the
applicant's application for a loan that is secured or
would have been secured by a first lien on a dwelling
promptly upon completion, but in no case later than 3
days prior to the closing of the loan, whether the
creditor grants or denies the applicant's request for
credit or the application is incomplete or withdrawn.
``(2) Waiver.--The applicant may waive the 3 day
requirement provided for in paragraph (1), except where
otherwise required in law.
``(3) Reimbursement.--The applicant may be required
to pay a reasonable fee to reimburse the creditor for
the cost of the appraisal, except where otherwise
required in law.
``(4) Free copy.--Notwithstanding paragraph (3),
the creditor shall provide a copy of each written
appraisal or valuation at no additional cost to the
applicant.
``(5) Notification to applicants.--At the time of
application, the creditor shall notify an applicant in
writing of the right to receive a copy of each written
appraisal and valuation under this subsection.
``(6) Valuation defined.--For purposes of this
subsection, the term `valuation' shall include any
estimate of the value of a dwelling developed in
connection with a creditor's decision to provide
credit, including those values developed pursuant to a
policy of a government sponsored enterprise or by an
automated valuation model, a broker price opinion, or
other methodology or mechanism.''.
SEC. 1475. REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974 AMENDMENT
RELATING TO CERTAIN APPRAISAL FEES.
Section 4 of the Real Estate Settlement Procedures Act of
1974 is amended by adding at the end the following new
subsection:
``(c) The standard form described in subsection (a) may
include, in the case of an appraisal coordinated by an
appraisal management company (as such term is defined in
section 1121(11) of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3350(11))), a
clear disclosure of--
``(1) the fee paid directly to the appraiser by
such company; and
``(2) the administration fee charged by such
company.''.
SEC. 1476. GAO STUDY ON THE EFFECTIVENESS AND IMPACT OF VARIOUS
APPRAISAL METHODS, VALUATION MODELS AND
DISTRIBUTIONS CHANNELS, AND ON THE HOME VALUATION
CODE OF CONDUCT AND THE APPRAISAL SUBCOMMITTEE.
(a) In General.--The Government Accountability Office shall
conduct a study on--
(1) the effectiveness and impact of--
(A) appraisal methods, including the cost
approach, the comparative sales approach, the
income approach, and others that may be
available;
(B) appraisal valuation models, including
licensed and certified appraisals, broker-
priced opinions, and automated valuation
models; and
(C) appraisal distribution channels,
including appraisal management companies,
independent appraisal operations within
mortgage originators, and fee-for-service
appraisers;
(2) the Home Valuation Code of Conduct; and
(3) the Appraisal Subcommittee's functions pursuant
to title XI of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989.
(b) Study.--Not later than--
(1) 12 months after the date of enactment of this
Act, the Government Accountability Office shall submit
a study to the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Financial
Services of the House of Representatives; and
(2) 90 days after the date of enactment of this
Act, the Government Accountability Office shall provide
a report on the status of the study and any preliminary
findings to the Committee on Banking, Housing, and
Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives.
(c) Content of Study.--The study required by this section
shall include an examination of the following:
(1) Appraisal approaches, valuation models, and
distribution channels.--
(A) The prevalence, alone or in
combination, of certain appraisal approaches,
models, and channels in purchase-money and
refinance mortgage transactions.
(B) The accuracy of these approaches,
models, and channels in assessing the property
as collateral.
(C) Whether and how these approaches,
models, and channels contributed to price
speculation during the previous cycle.
(D) The costs to consumers of these
approaches, models, and channels.
(E) The disclosure of fees to consumers in
the appraisal process.
(F) To what extent the usage of these
approaches, models, and channels may be
influenced by a conflict of interest between
the mortgage lender and the appraiser and the
mechanism by which the lender selects and
compensates the appraiser.
(G) The suitability of these approaches,
models, and channels in rural versus urban
areas.
(2) Home valuation code of conduct (hvcc).--
(A) How the HVCC affects mortgage lenders'
selection of appraisers.
(B) How the HVCC affects State regulation
of appraisers and appraisal distribution
channels.
(C) How the HVCC affects the quality and
cost of appraisals and the length of time to
obtain an appraisal.
(D) How the HVCC affects mortgage brokers,
small businesses, and consumers.
(d) Additional Study Required.--
(1) In general.--Not later than 18 months after the
date of enactment of this Act, the Government
Accountability Office shall submit a study to the
Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services of the
House of Representatives.
(2) Content of additional study.--The study
required under paragraph (1) shall include--
(A) an examination of--
(i) the Appraisal Subcommittee's
ability to monitor and enforce State
and Federal certification requirements
and standards, including by providing a
summary with a statistical breakdown of
enforcement actions taken during the
last 10 years;
(ii) whether existing Federal
financial institutions regulatory
agency exemptions on appraisals for
federally related transactions needs to
be revised; and
(iii) whether new means of data
collection, such as the establishment
of a national repository, would benefit
the Appraisal Subcommittee's ability to
perform its functions; and
(B) recommendations from this examination
for administrative and legislative action at
the Federal and State level.
Subtitle G--Mortgage Resolution and Modification
SEC. 1481. MULTIFAMILY MORTGAGE RESOLUTION PROGRAM.
(a) Establishment.--The Secretary of Housing and Urban
Development shall develop a program under this subsection to
ensure the protection of current and future tenants and at-risk
multifamily properties, where feasible, based on criteria that
may include--
(1) creating sustainable financing of such
properties, that may take into consideration such
factors as--
(A) the rental income generated by such
properties; and
(B) the preservation of adequate operating
reserves;
(2) maintaining the level of Federal, State, and
city subsidies in effect as of the date of the
enactment of this Act;
(3) providing funds for rehabilitation; and
(4) facilitating the transfer of such properties,
when appropriate and with the agreement of owners, to
responsible new owners and ensuring affordability of
such properties.
(b) Coordination.--The Secretary of Housing and Urban
Development may, in carrying out the program developed under
this section, coordinate with the Secretary of the Treasury,
the Federal Deposit Insurance Corporation, the Board of
Governors of the Federal Reserve System, the Federal Housing
Finance Agency, and any other Federal Government agency that
the Secretary considers appropriate.
(c) Definition.--For purposes of this section, the term
``multifamily properties'' means a residential structure that
consists of 5 or more dwelling units.
(d) Prevention of Qualification for Criminal Applicants.--
(1) In general.--No person shall be eligible to
begin receiving assistance from the Making Home
Affordable Program authorized under the Emergency
Economic Stabilization Act of 2008 (12 U.S.C. 5201 et
seq.), or any other mortgage assistance program
authorized or funded by that Act, on or after 60 days
after the date of the enactment of this Act, if such
person, in connection with a mortgage or real estate
transaction, has been convicted, within the last 10
years, of any one of the following:
(A) Felony larceny, theft, fraud, or
forgery.
(B) Money laundering.
(C) Tax evasion.
(2) Procedures.--The Secretary shall establish
procedures to ensure compliance with this subsection.
(3) Report.--The Secretary shall report to the
Committee on Financial Services of the House of
Representatives and the Committee on Banking, Housing,
and Urban Affairs of the Senate regarding the
implementation of this provision. The report shall also
describe the steps taken to implement this subsection.
SEC. 1482. HOME AFFORDABLE MODIFICATION PROGRAM GUIDELINES.
(a) Net Present Value Input Data.--The Secretary of the
Treasury (in this section referred to as the ``Secretary'')
shall revise the supplemental directives and other guidelines
for the Home Affordable Modification Program of the Making Home
Affordable initiative of the Secretary of the Treasury,
authorized under the Emergency Economic Stabilization Act of
2008 (Public Law 110-343), to require each mortgage servicer
participating in such program to provide each borrower under a
mortgage whose request for a mortgage modification under the
Program is denied with all borrower-related and mortgage-
related input data used in any net present value (NPV) analyses
performed in connection with the subject mortgage. Such input
data shall be provided to the borrower at the time of such
denial.
(b) Web-based Site for NPV Calculator and Application.--
(1) NPV calculator.--In carrying out the Home
Affordable Modification Program, the Secretary shall
establish and maintain a site on the World Wide Web
that provides a calculator for net present value
analyses of a mortgage, based on the Secretary's
methodology for calculating such value, that mortgagors
can use to enter information regarding their own
mortgages and that provides a determination after
entering such information regarding a mortgage of
whether such mortgage would be accepted or rejected for
modification under the Program, using such methodology.
(2) Disclosure.--Such Web site shall also
prominently disclose that each mortgage servicer
participating in such Program may use a method for
calculating net present value of a mortgage that is
different than the method used by such calculator.
(3) Application.--The Secretary shall make a
reasonable effort to include on such World Wide Web
site a method for homeowners to apply for a mortgage
modification under the Home Affordable Modification
Program.
(c) Public Availability of NPV Methodology, Computer Model,
and Variables.--The Secretary shall make publicly available,
including by posting on a World Wide Web site of the
Secretary--
(1) the Secretary's methodology and computer model,
including all formulae used in such computer model,
used for calculating net present value of a mortgage
that is used by the calculator established pursuant to
subsection (b); and
(2) all non-proprietary variables used in such net
present value analysis.
SEC. 1483. PUBLIC AVAILABILITY OF INFORMATION OF MAKING HOME AFFORDABLE
PROGRAM.
(a) Revisions to Program Guidelines.--The Secretary of the
Treasury (in this section referred to as the ``Secretary'')
shall revise the guidelines for the Home Affordable
Modification Program of the Making Home Affordable initiative
of the Secretary of the Treasury, authorized under the
Emergency Economic Stabilization Act of 2008 (Public Law 110-
343), to provide that the data being collected by the Secretary
from each mortgage servicer and lender participating in the
Program is made public in accordance with subsection (b).
(b) Public Availability.--Data shall be made available
according to the following guidelines:
(1) Not more than 14 days after each monthly
deadline for submission of data by mortgage servicers
and lenders participating in the Program, reports shall
be made publicly available by means of a World Wide Web
site of the Secretary, and by submitting a report to
the Congress, that shall include the following
information:
(A) The number of requests for mortgage
modifications under the Program that the
servicer or lender has received.
(B) The number of requests for mortgage
modifications under the Program that the
servicer or lender has processed.
(C) The number of requests for mortgage
modifications under the Program that the
servicer or lender has approved.
(D) The number of requests for mortgage
modifications under the Program that the
servicer or lender has denied.
(2) Not more than 60 days after each monthly
deadline for submission of data by mortgage servicers
and lenders participating in the Program, the Secretary
shall make data tables available to the public at the
individual record level. The Secretary shall issue
regulations prescribing--
(A) the procedures for disclosing such data
to the public; and
(B) such deletions as the Secretary may
determine to be appropriate to protect any
privacy interest of any mortgage modification
applicant, including the deletion or alteration
of the applicant's name and identification
number.
SEC. 1484. PROTECTING TENANTS AT FORECLOSURE EXTENSION AND
CLARIFICATION.
The Protecting Tenants at Foreclosure Act is amended--
(1) in section 702 (12 U.S.C. 5220 note)--
(A) in subsection (a)(2), by striking ``,
as of the date of such notice of foreclosure'';
and
(B) in subsection (c), by inserting after
the period the following: ``For purposes of
this section, the date of a notice of
foreclosure shall be deemed to be the date on
which complete title to a property is
transferred to a successor entity or person as
a result of an order of a court or pursuant to
provisions in a mortgage, deed of trust, or
security deed.''; and
(2) in section 704 (12 U.S.C. 5201 note), by
striking ``2012'' and inserting ``2014''.
Subtitle H--Miscellaneous Provisions
SEC. 1491. SENSE OF CONGRESS REGARDING THE IMPORTANCE OF GOVERNMENT-
SPONSORED ENTERPRISES REFORM TO ENHANCE THE
PROTECTION, LIMITATION, AND REGULATION OF THE TERMS
OF RESIDENTIAL MORTGAGE CREDIT.
(a) Findings.--The Congress finds as follows:
(1) The Government-sponsored enterprises, Federal
National Mortgage Association (Fannie Mae) and the
Federal Home Loan Mortgage Corporation (Freddie Mac),
were chartered by Congress to ensure a reliable and
affordable supply of mortgage funding, but enjoy a dual
legal status as privately owned corporations with
Government mandated affordable housing goals.
(2) In 1996, the Department of Housing and Urban
Development required that 42 percent of Fannie Mae's
and Freddie Mac's mortgage financing should go to
borrowers with income levels below the median for a
given area.
(3) In 2004, the Department of Housing and Urban
Development revised those goals, increasing them to 56
percent of their overall mortgage purchases by 2008,
and additionally mandated that 12 percent of all
mortgage purchases by Fannie Mae and Freddie Mac be
``special affordable'' loans made to borrowers with
incomes less than 60 percent of an area's median
income, a target that ultimately increased to 28
percent for 2008.
(4) To help fulfill those mandated affordable
housing goals, in 1995 the Department of Housing and
Urban Development authorized Fannie Mae and Freddie Mac
to purchase subprime securities that included loans
made to low-income borrowers.
(5) After this authorization to purchase subprime
securities, subprime and near-prime loans increased
from 9 percent of securitized mortgages in 2001 to 40
percent in 2006, while the market share of conventional
mortgages dropped from 78.8 percent in 2003 to 50.1
percent by 2007 with a corresponding increase in
subprime and Alt-A loans from 10.1 percent to 32.7
percent over the same period.
(6) In 2004 alone, Fannie Mae and Freddie Mac
purchased $175,000,000,000 in subprime mortgage
securities, which accounted for 44 percent of the
market that year, and from 2005 through 2007, Fannie
Mae and Freddie Mac purchased approximately
$1,000,000,000,000 in subprime and Alt-A loans, while
Fannie Mae's acquisitions of mortgages with less than
10 percent down payments almost tripled.
(7) According to data from the Federal Housing
Finance Agency (FHFA) for the fourth quarter of 2008,
Fannie Mae and Freddie Mac own or guarantee 75 percent
of all newly originated mortgages, and Fannie Mae and
Freddie Mac currently own 13.3 percent of outstanding
mortgage debt in the United States and have issued
mortgage-backed securities for 31.0 percent of the
residential debt market, a combined total of 44.3
percent of outstanding mortgage debt in the United
States.
(8) On September 7, 2008, the FHFA placed Fannie
Mae and Freddie Mac into conservatorship, with the
Treasury Department subsequently agreeing to purchase
at least $200,000,000,000 of preferred stock from each
enterprise in exchange for warrants for the purchase of
79.9 percent of each enterprise's common stock.
(9) The conservatorship for Fannie Mae and Freddie
Mac has potentially exposed taxpayers to upwards of
$5,300,000,000,000 worth of risk.
(10) The hybrid public-private status of Fannie Mae
and Freddie Mac is untenable and must be resolved to
assure that consumers are offered and receive
residential mortgage loans on terms that reasonably
reflect their ability to repay the loans and that are
understandable and not unfair, deceptive, or abusive.
(b) Sense of the Congress.--It is the sense of the Congress
that efforts to enhance by the protection, limitation, and
regulation of the terms of residential mortgage credit and the
practices related to such credit would be incomplete without
enactment of meaningful structural reforms of Fannie Mae and
Freddie Mac.
SEC. 1492. GAO STUDY REPORT ON GOVERNMENT EFFORTS TO COMBAT MORTGAGE
FORECLOSURE RESCUE SCAMS AND LOAN MODIFICATION
FRAUD.
(a) Study.--The Comptroller General of the United States
shall conduct a study of the current inter-agency efforts of
the Secretary of the Treasury, the Secretary of Housing and
Urban Development, the Attorney General, and the Federal Trade
Commission to crack down on mortgage foreclosure rescue scams
and loan modification fraud in order to advise the Congress to
the risks and vulnerabilities of emerging schemes in the loan
modification arena.
(b) Report.--
(1) In general.--The Comptroller General shall
submit a report to the Congress on the study conducted
under subsection (a) containing such recommendations
for legislative and administrative actions as the
Comptroller General may determine to be appropriate in
addition to the recommendations required under
paragraph (2).
(2) Specific topics.--The report made under
paragraph (1) shall include--
(A) an evaluation of the effectiveness of
the inter-agency task force current efforts to
combat mortgage foreclosure rescue scams and
loan modification fraud scams;
(B) specific recommendations on agency or
legislative action that are essential to
properly protect homeowners from mortgage
foreclosure rescue scams and loan modification
fraud scams; and
(C) the adequacy of financial resources
that the Federal Government is allocating to--
(i) crackdown on loan modification
and foreclosure rescue scams; and
(ii) the education of homeowners
about fraudulent scams relating to loan
modification and foreclosure rescues.
SEC. 1493. REPORTING OF MORTGAGE DATA BY STATE.
(a) In General.--Section 104(a) of the Helping Families
Save Their Homes Act of 2009 (division A of Public Law 111-22)
is amended--
(1) in paragraph (2), by striking ``resulting'' and
inserting ``in each State that result'';
(2) in paragraph (3), by inserting ``each State
for'' after ``modifications in''; and
(3) in paragraph (4), by inserting ``in each
State'' after ``total number of loans''.
(b) Conforming Amendment.--Section 104(b)(1)(A) of such Act
is amended by adding at the end the following sentence: ``Not
later than 60 days after the date of the enactment of the Dodd-
Frank Wall Street Reform and Consumer Protection Act, the
Comptroller of the Currency and the Director of the Office of
Thrift Supervision shall update such requirements to reflect
amendments made to this section by such Act.''.
SEC. 1494. STUDY OF EFFECT OF DRYWALL PRESENCE ON FORECLOSURES.
(a) Study.--The Secretary of Housing and Urban Development,
in consultation with the Secretary of the Treasury, shall
conduct a study of the effect on residential mortgage loan
foreclosures of--
(1) the presence in residential structures subject
to such mortgage loans of drywall that was imported
from China during the period beginning with 2004 and
ending at the end of 2007; and
(2) the availability of property insurance for
residential structures in which such drywall is
present.
(b) Report.--Not later than the expiration of the 120-day
period beginning on the date of the enactment of this Act, the
Secretary of Housing and Urban Development shall submit to the
Congress a report on the study conducted under subsection (a)
containing its findings, conclusions, and recommendations.
SEC. 1495. DEFINITION.
For purposes of this title, the term ``designated transfer
date'' means the date established under section 1062 of this
Act.
SEC. 1496. EMERGENCY MORTGAGE RELIEF.
(a) Emergency Homeowners' Relief Fund.--Effective October
1, 2010, and notwithstanding any other provision of law, there
is hereby made available to the Secretary of Housing and Urban
Development such sums as are necessary to provide
$1,000,000,000 in assistance through the Emergency Homeowners'
Relief Fund, which such Secretary shall establish pursuant to
section 107 of the Emergency Housing Act of 1975 (12 U.S.C.
2706), as such Act is amended by this section, for use for
emergency mortgage assistance in accordance with title I of
such Act.
(b) Reauthorization of Emergency Mortgage Relief Program.--
Title I of the Emergency Housing Act of 1975 is amended--
(1) in section 103 (12 U.S.C. 2702)--
(A) in paragraph (2)--
(i) by striking ``have indicated''
and all that follows through
``regulation of the holder'' and insert
``have certified'';
(ii) by striking ``(such as the
volume of delinquent loans in its
portfolio)''; and
(iii) by striking ``, except that
such statement'' and all that follows
through ``purposes of this title''; and
(B) in paragraph (4), by inserting ``or
medical conditions'' after ``adverse economic
conditions'';
(2) in section 104 (12 U.S.C. 2703)--
(A) in subsection (b), by striking ``, but
such assistance'' and all that follows through
the period at the end and inserting the
following: ``. The amount of assistance
provided to a homeowner under this title shall
be an amount that the Secretary determines is
reasonably necessary to supplement such amount
as the homeowner is capable of contributing
toward such mortgage payment, except that the
aggregate amount of such assistance provided
for any homeowner shall not exceed $50,000.'';
(B) in subsection (d), by striking
``interest on a loan or advance'' and all that
follows through the end of the subsection and
inserting the following: ``(1) the rate of
interest on any loan or advance of credit
insured under this title shall be fixed for the
life of the loan or advance of credit and shall
not exceed the rate of interest that is
generally charged for mortgages on single-
family housing insured by the Secretary of
Housing and Urban Development under title II of
the National Housing Act at the time such loan
or advance of credit is made, and (2) no
interest shall be charged on interest which is
deferred on a loan or advance of credit made
under this title. In establishing rates, terms
and conditions for loans or advances of credit
made under this title, the Secretary shall take
into account a homeowner's ability to repay
such loan or advance of credit.''; and
(C) in subsection (e), by inserting after
the period at the end of the first sentence the
following: ``Any eligible homeowner who
receives a grant or an advance of credit under
this title may repay the loan in full, without
penalty, by lump sum or by installment payments
at any time before the loan becomes due and
payable.'';
(3) in section 105 (12 U.S.C. 2704)--
(A) by striking subsection (b);
(B) in subsection (e)--
(i) by inserting ``and emergency
mortgage relief payments made under
section 106'' after ``insured under
this section''; and
(ii) by striking ``$1,500,000,000
at any one time'' and inserting
``$3,000,000,000'';
(C) by redesignating subsections (c), (d),
and (e) as subsections (b), (c), and (d),
respectively; and
(D) by adding at the end the following new
subsection:
``(e) The Secretary shall establish underwriting guidelines
or procedures to allocate amounts made available for loans and
advances insured under this section and for emergency relief
payments made under section 106 based on the likelihood that a
mortgagor will be able to resume mortgage payments, pursuant to
the requirement under section 103(5).'';
(4) in section 107--
(A) by striking ``(a)''; and
(B) by striking subsection (b);
(5) in section 108 (12 U.S.C. 2707), by adding at
the end the following new subsection:
``(d) Coverage of Existing Programs.--The Secretary shall
allow funds to be administered by a State that has an existing
program that is determined by the Secretary to provide
substantially similar assistance to homeowners. After such
determination is made such State shall not be required to
modify such program to comply with the provisions of this
title.'';
(6) in section 109 (12 U.S.C. 2708)--
(A) in the section heading, by striking
``authorization and'';
(B) by striking subsection (a);
(C) by striking ``(b)''; and
(D) by striking ``1977'' and inserting
``2011'';
(7) by striking sections 110, 111, and 113 (12
U.S.C. 2709, 2710, 2712); and
(8) by redesignating section 112 (12 U.S.C. 2711)
as section 110.
SEC. 1497. ADDITIONAL ASSISTANCE FOR NEIGHBORHOOD STABILIZATION
PROGRAM.
(a) In General.--Effective October 1, 2010, out of funds in
the Treasury not otherwise appropriated, there is hereby made
available to the Secretary of Housing and Urban Development
$1,000,000,000, and the Secretary of Housing and Urban
Development shall use such amounts for assistance to States and
units of general local government for the redevelopment of
abandoned and foreclosed homes, in accordance with the same
provisions applicable under the second undesignated paragraph
under the heading ``Community Planning and Development--
Community Development Fund'' in title XII of division A of the
American Recovery and Reinvestment Act of 2009 (Public Law 111-
5; 123 Stat. 217) to amounts made available under such second
undesignated paragraph, except as follows:
(1) Notwithstanding the matter of such second
undesignated paragraph that precedes the first proviso,
amounts made available by this section shall remain
available until expended.
(2) The 3rd, 4th, 5th, 6th, 7th, and 15th provisos
of such second undesignated paragraph shall not apply
to amounts made available by this section.
(3) Amounts made available by this section shall be
allocated based on a funding formula for such amounts
established by the Secretary in accordance with section
2301(b) of the Housing and Economic Recovery Act of
2008 (42 U.S.C. 5301 note), except that--
(A) notwithstanding paragraph (2) of such
section 2301(b), the formula shall be
established not later than 30 days after the
date of the enactment of this Act;
(B) notwithstanding such section 2301(b),
each State shall receive, at a minimum, not
less than 0.5 percent of funds made available
under this section;
(C) the Secretary may establish a minimum
grant amount for direct allocations to units of
general local government located within a
State, which shall not exceed $1,000,000;
(D) each State and local government
receiving grant amounts shall establish
procedures to create preferences for the
development of affordable rental housing for
properties assisted with amounts made available
by this section; and
(E) the Secretary may use not more than 2
percent of the funds made available under this
section for technical assistance to grantees.
(4) Paragraph (1) of section 2301(c) of the Housing
and Economic Recovery Act of 2008 shall not apply to
amounts made available by this section.
(5) The fourth proviso from the end of such second
undesignated paragraph shall be applied to amounts made
available by this section by substituting ``2013'' for
``2012''.
(6) Notwithstanding section 2301(a) of the Housing
and Economic Recovery Act of 2008, the term ``State''
means any State, as defined in section 102 of the
Housing and Community Development Act of 1974 (42
U.S.C. 5302), and the District of Columbia, for
purposes of this section and this title, as applied to
amounts made available by this section.
(7)(A) None of the amounts made available by this
section shall be distributed to--
(i) any organization which has been
convicted for a violation under Federal law
relating to an election for Federal office; or
(ii) any organization which employs
applicable individuals.
(B) In this paragraph, the term ``applicable
individual'' means an individual who--
(i) is--
(I) employed by the organization in
a permanent or temporary capacity;
(II) contracted or retained by the
organization; or
(III) acting on behalf of, or with
the express or apparent authority of,
the organization; and
(ii) has been convicted for a violation
under Federal law relating to an election for
Federal office.
(8) An eligible entity receiving a grant under this
section shall, to the maximum extent feasible, provide
for the hiring of employees who reside in the vicinity,
as such term is defined by the Secretary, of projects
funded under this section or contract with small
businesses that are owned and operated by persons
residing in the vicinity of such projects.
(b) Additional Amendments.--
(1) Section 2301.--Section 2301(f)(3)(A)(ii) of the
Housing and Economic Recovery Act of 2008 (42 U.S.C.
5301(f)(3)(A)(ii))--
(A) is amended by striking ``for the
purchase and redevelopment of abandoned and
foreclosed upon homes or residential properties
that will be used''; and
(B) shall apply with respect to any
unexpended or unobligated balances, including
recaptured and reallocated funds made available
under this Act, section 2301 of the Housing and
Economic Recovery Act of 2008 (42 U.S.C. 5301),
and the heading ``Community Planning and
Development--Community Development Fund'' in
title XII of division A of the American
Recovery and Reinvestment Act of 2009 (Public
Law 111-5; 123 Stat. 217).
(2) Notice of foreclosure.--For any amounts made
available under this section, under division B, title
III of the Housing and Economic Recovery Act of 2008
(42 U.S.C. 5301), or under the heading ``Community
Planning and Development--Community Development Fund''
in title XII of division A of the American Recovery and
Reinvestment Act of 2009 (Public Law 111-5; 123 Stat.
217), the date of a notice of foreclosure shall be
deemed to be the date on which complete title to a
property is transferred to a successor entity or person
as a result of an order of a court or pursuant to
provisions in a mortgage, deed of trust, or security
deed.
SEC. 1498. LEGAL ASSISTANCE FOR FORECLOSURE-RELATED ISSUES.
(a) Establishment.--The Secretary of Housing and Urban
Development (hereafter in this section referred to as the
``Secretary'') shall establish a program for making grants for
providing a full range of foreclosure legal assistance to low-
and moderate-income homeowners and tenants related to home
ownership preservation, home foreclosure prevention, and
tenancy associated with home foreclosure.
(b) Competitive Allocation.--The Secretary shall allocate
amounts made available for grants under this section to State
and local legal organizations on the basis of a competitive
process. For purposes of this subsection ``State and local
legal organizations'' are those State and local organizations
whose primary business or mission is to provide legal
assistance.
(c) Priority to Certain Areas.--In allocating amounts in
accordance with subsection (b), the Secretary shall give
priority consideration to State and local legal organizations
that are operating in the 125 metropolitan statistical areas
(as that term is defined by the Director of the Office of
Management and Budget) with the highest home foreclosure rates.
(d) Legal Assistance.--
(1) In general.--Any State or local legal
organization that receives financial assistance
pursuant to this section may use such amounts only to
assist--
(A) homeowners of owner-occupied homes with
mortgages in default, in danger of default, or
subject to or at risk of foreclosure; and
(B) tenants at risk of or subject to
eviction as a result of foreclosure of the
property in which such tenant resides.
(2) Commence use within 90 days.--Any State or
local legal organization that receives financial
assistance pursuant to this section shall begin using
any financial assistance received under this section
within 90 days after receipt of the assistance.
(3) Prohibition on class actions.--No funds
provided to a State or local legal organization under
this section may be used to support any class action
litigation.
(4) Limitation on legal assistance.--Legal
assistance funded with amounts provided under this
section shall be limited to mortgage-related default,
eviction, or foreclosure proceedings, without regard to
whether such foreclosure is judicial or nonjudicial.
(5) Effective date.--Notwithstanding any other
provision of this Act, this subsection shall take
effect on the date of the enactment of this Act.
(e) Limitation on Distribution of Assistance.--
(1) In general.--None of the amounts made available
under this section shall be distributed to--
(A) any organization which has been
convicted for a violation under Federal law
relating to an election for Federal office; or
(B) any organization which employs
applicable individuals.
(2) Definition of applicable individuals.--In this
subsection, the term ``applicable individual'' means an
individual who--
(A) is--
(i) employed by the organization in
a permanent or temporary capacity;
(ii) contracted or retained by the
organization; or
(iii) acting on behalf of, or with
the express or apparent authority of,
the organization; and
(B) has been convicted for a violation
under Federal law relating to an election for
Federal office.
(f) Authorization of Appropriations.--There are authorized
to be appropriated to the Secretary $35,000,000 for each of
fiscal years 2011 through 2012 for grants under this section.
TITLE XV--MISCELLANEOUS PROVISIONS
SEC. 1501. RESTRICTIONS ON USE OF UNITED STATES FUNDS FOR FOREIGN
GOVERNMENTS; PROTECTION OF AMERICAN TAXPAYERS.
The Bretton Woods Agreements Act (22 U.S.C. 286 et seq.) is
amended by adding at the end the following:
``SEC. 68. RESTRICTIONS ON USE OF UNITED STATES FUNDS FOR FOREIGN
GOVERNMENTS; PROTECTION OF AMERICAN TAXPAYERS.
``(a) In General.--The Secretary of the Treasury shall
instruct the United States Executive Director at the
International Monetary Fund--
``(1) to evaluate, prior to consideration by the
Board of Executive Directors of the Fund, any proposal
submitted to the Board for the Fund to make a loan to a
country if--
``(A) the amount of the public debt of the
country exceeds the gross domestic product of
the country as of the most recent year for
which such information is available; and
``(B) the country is not eligible for
assistance from the International Development
Association.
``(2) Opposition to loans unlikely to be repaid in
full.--If any such evaluation indicates that the
proposed loan is not likely to be repaid in full, the
Secretary of the Treasury shall instruct the United
States Executive Director at the Fund to use the voice
and vote of the United States to oppose the proposal.
``(b) Reports to Congress.--Within 30 days after the Board
of Executive Directors of the Fund approves a proposal
described in subsection (a), and annually thereafter by June
30, for the duration of any program approved under such
proposals, the Secretary of the Treasury shall report in
writing to the Committee on Financial Services of the House of
Representatives and the Committee on Foreign Relations and the
Committee on Banking, Housing, and Urban Affairs of the Senate
assessing the likelihood that loans made pursuant to such
proposals will be repaid in full, including--
``(1) the borrowing country's current debt status,
including, to the extent possible, its maturity
structure, whether it has fixed or floating rates,
whether it is indexed, and by whom it is held;
``(2) the borrowing country's external and internal
vulnerabilities that could potentially affect its
ability to repay; and
``(3) the borrowing country's debt management
strategy.''.
SEC. 1502. CONFLICT MINERALS.
(a) Sense of Congress on Exploitation and Trade of Conflict
Minerals Originating in the Democratic Republic of the Congo.--
It is the sense of Congress that the exploitation and trade of
conflict minerals originating in the Democratic Republic of the
Congo is helping to finance conflict characterized by extreme
levels of violence in the eastern Democratic Republic of the
Congo, particularly sexual- and gender-based violence, and
contributing to an emergency humanitarian situation therein,
warranting the provisions of section 13(p) of the Securities
Exchange Act of 1934, as added by subsection (b).
(b) Disclosure Relating to Conflict Minerals Originating in
the Democratic Republic of the Congo.--Section 13 of the
Securities Exchange Act of 1934 (15 U.S.C. 78m), as amended by
this Act, is amended by adding at the end the following new
subsection:
``(p) Disclosures Relating to Conflict Minerals Originating
in the Democratic Republic of the Congo.--
``(1) Regulations.--
``(A) In general.--Not later than 270 days
after the date of the enactment of this
subsection, the Commission shall promulgate
regulations requiring any person described in
paragraph (2) to disclose annually, beginning
with the person's first full fiscal year that
begins after the date of promulgation of such
regulations, whether conflict minerals that are
necessary as described in paragraph (2)(B), in
the year for which such reporting is required,
did originate in the Democratic Republic of the
Congo or an adjoining country and, in cases in
which such conflict minerals did originate in
any such country, submit to the Commission a
report that includes, with respect to the
period covered by the report--
``(i) a description of the measures
taken by the person to exercise due
diligence on the source and chain of
custody of such minerals, which
measures shall include an independent
private sector audit of such report
submitted through the Commission that
is conducted in accordance with
standards established by the
Comptroller General of the United
States, in accordance with rules
promulgated by the Commission, in
consultation with the Secretary of
State; and
``(ii) a description of the
products manufactured or contracted to
be manufactured that are not DRC
conflict free (`DRC conflict free' is
defined to mean the products that do
not contain minerals that directly or
indirectly finance or benefit armed
groups in the Democratic Republic of
the Congo or an adjoining country), the
entity that conducted the independent
private sector audit in accordance with
clause (i), the facilities used to
process the conflict minerals, the
country of origin of the conflict
minerals, and the efforts to determine
the mine or location of origin with the
greatest possible specificity.
``(B) Certification.--The person submitting
a report under subparagraph (A) shall certify
the audit described in clause (i) of such
subparagraph that is included in such report.
Such a certified audit shall constitute a
critical component of due diligence in
establishing the source and chain of custody of
such minerals.
``(C) Unreliable determination.--If a
report required to be submitted by a person
under subparagraph (A) relies on a
determination of an independent private sector
audit, as described under subparagraph (A)(i),
or other due diligence processes previously
determined by the Commission to be unreliable,
the report shall not satisfy the requirements
of the regulations promulgated under
subparagraph (A)(i).
``(D) DRC conflict free.--For purposes of
this paragraph, a product may be labeled as
`DRC conflict free' if the product does not
contain conflict minerals that directly or
indirectly finance or benefit armed groups in
the Democratic Republic of the Congo or an
adjoining country.
``(E) Information available to the
public.--Each person described under paragraph
(2) shall make available to the public on the
Internet website of such person the information
disclosed by such person under subparagraph
(A).
``(2) Person described.--A person is described in
this paragraph if--
``(A) the person is required to file
reports with the Commission pursuant to
paragraph (1)(A); and
``(B) conflict minerals are necessary to
the functionality or production of a product
manufactured by such person.
``(3) Revisions and waivers.--The Commission shall
revise or temporarily waive the requirements described
in paragraph (1) if the President transmits to the
Commission a determination that--
``(A) such revision or waiver is in the
national security interest of the United States
and the President includes the reasons
therefor; and
``(B) establishes a date, not later than 2
years after the initial publication of such
exemption, on which such exemption shall
expire.
``(4) Termination of disclosure requirements.--The
requirements of paragraph (1) shall terminate on the
date on which the President determines and certifies to
the appropriate congressional committees, but in no
case earlier than the date that is one day after the
end of the 5-year period beginning on the date of the
enactment of this subsection, that no armed groups
continue to be directly involved and benefitting from
commercial activity involving conflict minerals.
``(5) Definitions.--For purposes of this
subsection, the terms `adjoining country', `appropriate
congressional committees', `armed group', and `conflict
mineral' have the meaning given those terms under
section 1502 of the Dodd-Frank Wall Street Reform and
Consumer Protection Act.''.
(c) Strategy and Map To Address Linkages Between Conflict
Minerals and Armed Groups.--
(1) Strategy.--
(A) In general.--Not later than 180 days
after the date of the enactment of this Act,
the Secretary of State, in consultation with
the Administrator of the United States Agency
for International Development, shall submit to
the appropriate congressional committees a
strategy to address the linkages between human
rights abuses, armed groups, mining of conflict
minerals, and commercial products.
(B) Contents.--The strategy required by
subparagraph (A) shall include the following:
(i) A plan to promote peace and
security in the Democratic Republic of
the Congo by supporting efforts of the
Government of the Democratic Republic
of the Congo, including the Ministry of
Mines and other relevant agencies,
adjoining countries, and the
international community, in particular
the United Nations Group of Experts on
the Democratic Republic of Congo, to--
(I) monitor and stop
commercial activities involving
the natural resources of the
Democratic Republic of the
Congo that contribute to the
activities of armed groups and
human rights violations in the
Democratic Republic of the
Congo; and
(II) develop stronger
governance and economic
institutions that can
facilitate and improve
transparency in the cross-
border trade involving the
natural resources of the
Democratic Republic of the
Congo to reduce exploitation by
armed groups and promote local
and regional development.
(ii) A plan to provide guidance to
commercial entities seeking to exercise
due diligence on and formalize the
origin and chain of custody of conflict
minerals used in their products and on
their suppliers to ensure that conflict
minerals used in the products of such
suppliers do not directly or indirectly
finance armed conflict or result in
labor or human rights violations.
(iii) A description of punitive
measures that could be taken against
individuals or entities whose
commercial activities are supporting
armed groups and human rights
violations in the Democratic Republic
of the Congo.
(2) Map.--
(A) In general.--Not later than 180 days
after the date of the enactment of this Act,
the Secretary of State shall, in accordance
with the recommendation of the United Nations
Group of Experts on the Democratic Republic of
the Congo in their December 2008 report--
(i) produce a map of mineral-rich
zones, trade routes, and areas under
the control of armed groups in the
Democratic Republic of the Congo and
adjoining countries based on data from
multiple sources, including--
(I) the United Nations
Group of Experts on the
Democratic Republic of the
Congo;
(II) the Government of the
Democratic Republic of the
Congo, the governments of
adjoining countries, and the
governments of other Member
States of the United Nations;
and
(III) local and
international nongovernmental
organizations;
(ii) make such map available to the
public; and
(iii) provide to the appropriate
congressional committees an explanatory
note describing the sources of
information from which such map is
based and the identification, where
possible, of the armed groups or other
forces in control of the mines
depicted.
(B) Designation.--The map required under
subparagraph (A) shall be known as the
``Conflict Minerals Map'', and mines located in
areas under the control of armed groups in the
Democratic Republic of the Congo and adjoining
countries, as depicted on such Conflict
Minerals Map, shall be known as ``Conflict Zone
Mines''.
(C) Updates.--The Secretary of State shall
update the map required under subparagraph (A)
not less frequently than once every 180 days
until the date on which the disclosure
requirements under paragraph (1) of section
13(p) of the Securities Exchange Act of 1934,
as added by subsection (b), terminate in
accordance with the provisions of paragraph (4)
of such section 13(p).
(D) Publication in federal register.--The
Secretary of State shall add minerals to the
list of minerals in the definition of conflict
minerals under section 1502, as appropriate.
The Secretary shall publish in the Federal
Register notice of intent to declare a mineral
as a conflict mineral included in such
definition not later than one year before such
declaration.
(d) Reports.--
(1) Baseline report.--Not later than 1 year after
the date of the enactment of this Act and annually
thereafter until the termination of the disclosure
requirements under section 13(p) of the Securities
Exchange Act of 1934, the Comptroller General of the
United States shall submit to appropriate congressional
committees a report that includes an assessment of the
rate of sexual- and gender-based violence in war-torn
areas of the Democratic Republic of the Congo and
adjoining countries.
(2) Regular report on effectiveness.--Not later
than 2 years after the date of the enactment of this
Act and annually thereafter, the Comptroller General of
the United States shall submit to the appropriate
congressional committees a report that includes the
following:
(A) An assessment of the effectiveness of
section 13(p) of the Securities Exchange Act of
1934, as added by subsection (b), in promoting
peace and security in the Democratic Republic
of the Congo and adjoining countries.
(B) A description of issues encountered by
the Securities and Exchange Commission in
carrying out the provisions of such section
13(p).
(C)(i) A general review of persons
described in clause (ii) and whether
information is publicly available about--
(I) the use of conflict minerals by
such persons; and
(II) whether such conflict minerals
originate from the Democratic Republic
of the Congo or an adjoining country.
(ii) A person is described in this clause
if--
(I) the person is not required to
file reports with the Securities and
Exchange Commission pursuant to section
13(p)(1)(A) of the Securities Exchange
Act of 1934, as added by subsection
(b); and
(II) conflict minerals are
necessary to the functionality or
production of a product manufactured by
such person.
(3) Report on private sector auditing.--Not later
than 30 months after the date of the enactment of this
Act, and annually thereafter, the Secretary of Commerce
shall submit to the appropriate congressional
committees a report that includes the following:
(A) An assessment of the accuracy of the
independent private sector audits and other due
diligence processes described under section
13(p) of the Securities Exchange Act of 1934.
(B) Recommendations for the processes used
to carry out such audits, including ways to--
(i) improve the accuracy of such
audits; and
(ii) establish standards of best
practices.
(C) A listing of all known conflict mineral
processing facilities worldwide.
(e) Definitions.--For purposes of this section:
(1) Adjoining country.--The term ``adjoining
country'', with respect to the Democratic Republic of
the Congo, means a country that shares an
internationally recognized border with the Democratic
Republic of the Congo.
(2) Appropriate congressional committees.--The term
``appropriate congressional committees'' means--
(A) the Committee on Appropriations, the
Committee on Foreign Affairs, the Committee on
Ways and Means, and the Committee on Financial
Services of the House of Representatives; and
(B) the Committee on Appropriations, the
Committee on Foreign Relations, the Committee
on Finance, and the Committee on Banking,
Housing, and Urban Affairs of the Senate.
(3) Armed group.--The term ``armed group'' means an
armed group that is identified as perpetrators of
serious human rights abuses in the annual Country
Reports on Human Rights Practices under sections 116(d)
and 502B(b) of the Foreign Assistance Act of 1961 (22
U.S.C. 2151n(d) and 2304(b)) relating to the Democratic
Republic of the Congo or an adjoining country.
(4) Conflict mineral.--The term ``conflict
mineral'' means--
(A) columbite-tantalite (coltan),
cassiterite, gold, wolframite, or their
derivatives; or
(B) any other mineral or its derivatives
determined by the Secretary of State to be
financing conflict in the Democratic Republic
of the Congo or an adjoining country.
(5) Under the control of armed groups.--The term
``under the control of armed groups'' means areas
within the Democratic Republic of the Congo or
adjoining countries in which armed groups--
(A) physically control mines or force labor
of civilians to mine, transport, or sell
conflict minerals;
(B) tax, extort, or control any part of
trade routes for conflict minerals, including
the entire trade route from a Conflict Zone
Mine to the point of export from the Democratic
Republic of the Congo or an adjoining country;
or
(C) tax, extort, or control trading
facilities, in whole or in part, including the
point of export from the Democratic Republic of
the Congo or an adjoining country.
SEC. 1503. REPORTING REQUIREMENTS REGARDING COAL OR OTHER MINE SAFETY.
(a) Reporting Mine Safety Information.--Each issuer that is
required to file reports pursuant to section 13(a) or 15(d) of
the Securities Exchange Act of 1934 (15 U.S.C. 78m, 78o) and
that is an operator, or that has a subsidiary that is an
operator, of a coal or other mine shall include, in each
periodic report filed with the Commission under the securities
laws on or after the date of enactment of this Act, the
following information for the time period covered by such
report:
(1) For each coal or other mine of which the issuer
or a subsidiary of the issuer is an operator--
(A) the total number of violations of
mandatory health or safety standards that could
significantly and substantially contribute to
the cause and effect of a coal or other mine
safety or health hazard under section 104 of
the Federal Mine Safety and Health Act of 1977
(30 U.S.C. 814) for which the operator received
a citation from the Mine Safety and Health
Administration;
(B) the total number of orders issued under
section 104(b) of such Act (30 U.S.C. 814(b));
(C) the total number of citations and
orders for unwarrantable failure of the mine
operator to comply with mandatory health or
safety standards under section 104(d) of such
Act (30 U.S.C. 814(d));
(D) the total number of flagrant violations
under section 110(b)(2) of such Act (30 U.S.C.
820(b)(2));
(E) the total number of imminent danger
orders issued under section 107(a) of such Act
(30 U.S.C. 817(a));
(F) the total dollar value of proposed
assessments from the Mine Safety and Health
Administration under such Act (30 U.S.C. 801 et
seq.); and
(G) the total number of mining-related
fatalities.
(2) A list of such coal or other mines, of which
the issuer or a subsidiary of the issuer is an
operator, that receive written notice from the Mine
Safety and Health Administration of--
(A) a pattern of violations of mandatory
health or safety standards that are of such
nature as could have significantly and
substantially contributed to the cause and
effect of coal or other mine health or safety
hazards under section 104(e) of such Act (30
U.S.C. 814(e)); or
(B) the potential to have such a pattern.
(3) Any pending legal action before the Federal
Mine Safety and Health Review Commission involving such
coal or other mine.
(b) Reporting Shutdowns and Patterns of Violations.--
Beginning on and after the date of enactment of this Act, each
issuer that is an operator, or that has a subsidiary that is an
operator, of a coal or other mine shall file a current report
with the Commission on Form 8-K (or any successor form)
disclosing the following regarding each coal or other mine of
which the issuer or subsidiary is an operator:
(1) The receipt of an imminent danger order issued
under section 107(a) of the Federal Mine Safety and
Health Act of 1977 (30 U.S.C. 817(a)).
(2) The receipt of written notice from the Mine
Safety and Health Administration that the coal or other
mine has--
(A) a pattern of violations of mandatory
health or safety standards that are of such
nature as could have significantly and
substantially contributed to the cause and
effect of coal or other mine health or safety
hazards under section 104(e) of such Act (30
U.S.C. 814(e)); or
(B) the potential to have such a pattern.
(c) Rule of Construction.--Nothing in this section shall be
construed to affect any obligation of a person to make a
disclosure under any other applicable law in effect before, on,
or after the date of enactment of this Act.
(d) Commission Authority.--
(1) Enforcement.--A violation by any person of this
section, or any rule or regulation of the Commission
issued under this section, shall be treated for all
purposes in the same manner as a violation of the
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.)
or the rules and regulations issued thereunder,
consistent with the provisions of this section, and any
such person shall be subject to the same penalties, and
to the same extent, as for a violation of such Act or
the rules or regulations issued thereunder.
(2) Rules and regulations.--The Commission is
authorized to issue such rules or regulations as are
necessary or appropriate for the protection of
investors and to carry out the purposes of this
section.
(e) Definitions.--In this section--
(1) the terms ``issuer'' and ``securities laws''
have the meaning given the terms in section 3 of the
Securities Exchange Act of 1934 (15 U.S.C. 78c);
(2) the term ``coal or other mine'' means a coal or
other mine, as defined in section 3 of the Federal Mine
Safety and Health Act of 1977 (30 U.S.C. 802), that is
subject to the provisions of such Act (30 U.S.C. 801 et
seq.); and
(3) the term ``operator'' has the meaning given the
term in section 3 of the Federal Mine Safety and Health
Act of 1977 (30 U.S.C. 802).
(f) Effective Date.--This section shall take effect on the
day that is 30 days after the date of enactment of this Act.
SEC. 1504. DISCLOSURE OF PAYMENTS BY RESOURCE EXTRACTION ISSUERS.
Section 13 of the Securities Exchange Act of 1934 (15
U.S.C. 78m), as amended by this Act, is amended by adding at
the end the following:
``(q) Disclosure of Payments by Resource Extraction
Issuers.--
``(1) Definitions.--In this subsection--
``(A) the term `commercial development of
oil, natural gas, or minerals' includes
exploration, extraction, processing, export,
and other significant actions relating to oil,
natural gas, or minerals, or the acquisition of
a license for any such activity, as determined
by the Commission;
``(B) the term `foreign government' means a
foreign government, a department, agency, or
instrumentality of a foreign government, or a
company owned by a foreign government, as
determined by the Commission;
``(C) the term `payment'--
``(i) means a payment that is--
``(I) made to further the
commercial development of oil,
natural gas, or minerals; and
``(II) not de minimis; and
``(ii) includes taxes, royalties,
fees (including license fees),
production entitlements, bonuses, and
other material benefits, that the
Commission, consistent with the
guidelines of the Extractive Industries
Transparency Initiative (to the extent
practicable), determines are part of
the commonly recognized revenue stream
for the commercial development of oil,
natural gas, or minerals;
``(D) the term `resource extraction issuer'
means an issuer that--
``(i) is required to file an annual
report with the Commission; and
``(ii) engages in the commercial
development of oil, natural gas, or
minerals;
``(E) the term `interactive data format'
means an electronic data format in which pieces
of information are identified using an
interactive data standard; and
``(F) the term `interactive data standard'
means standardized list of electronic tags that
mark information included in the annual report
of a resource extraction issuer.
``(2) Disclosure.--
``(A) Information required.--Not later than
270 days after the date of enactment of the
Dodd-Frank Wall Street Reform and Consumer
Protection Act, the Commission shall issue
final rules that require each resource
extraction issuer to include in an annual
report of the resource extraction issuer
information relating to any payment made by the
resource extraction issuer, a subsidiary of the
resource extraction issuer, or an entity under
the control of the resource extraction issuer
to a foreign government or the Federal
Government for the purpose of the commercial
development of oil, natural gas, or minerals,
including--
``(i) the type and total amount of
such payments made for each project of
the resource extraction issuer relating
to the commercial development of oil,
natural gas, or minerals; and
``(ii) the type and total amount of
such payments made to each government.
``(B) Consultation in rulemaking.--In
issuing rules under subparagraph (A), the
Commission may consult with any agency or
entity that the Commission determines is
relevant.
``(C) Interactive data format.--The rules
issued under subparagraph (A) shall require
that the information included in the annual
report of a resource extraction issuer be
submitted in an interactive data format.
``(D) Interactive data standard.--
``(i) In general.--The rules issued
under subparagraph (A) shall establish
an interactive data standard for the
information included in the annual
report of a resource extraction issuer.
``(ii) Electronic tags.--The
interactive data standard shall include
electronic tags that identify, for any
payments made by a resource extraction
issuer to a foreign government or the
Federal Government--
``(I) the total amounts of
the payments, by category;
``(II) the currency used to
make the payments;
``(III) the financial
period in which the payments
were made;
``(IV) the business segment
of the resource extraction
issuer that made the payments;
``(V) the government that
received the payments, and the
country in which the government
is located;
``(VI) the project of the
resource extraction issuer to
which the payments relate; and
``(VII) such other
information as the Commission
may determine is necessary or
appropriate in the public
interest or for the protection
of investors.
``(E) International transparency efforts.--
To the extent practicable, the rules issued
under subparagraph (A) shall support the
commitment of the Federal Government to
international transparency promotion efforts
relating to the commercial development of oil,
natural gas, or minerals.
``(F) Effective date.--With respect to each
resource extraction issuer, the final rules
issued under subparagraph (A) shall take effect
on the date on which the resource extraction
issuer is required to submit an annual report
relating to the fiscal year of the resource
extraction issuer that ends not earlier than 1
year after the date on which the Commission
issues final rules under subparagraph (A).
``(3) Public availability of information.--
``(A) In general.--To the extent
practicable, the Commission shall make
available online, to the public, a compilation
of the information required to be submitted
under the rules issued under paragraph (2)(A).
``(B) Other information.--Nothing in this
paragraph shall require the Commission to make
available online information other than the
information required to be submitted under the
rules issued under paragraph (2)(A).
``(4) Authorization of appropriations.--There are
authorized to be appropriated to the Commission such
sums as may be necessary to carry out this
subsection.''.
SEC. 1505. STUDY BY THE COMPTROLLER GENERAL.
(a) In General.--Not later than 1 year after the date of
enactment of this Act, the Comptroller General of the United
States shall issue a report assessing the relative
independence, effectiveness, and expertise of presidentially
appointed inspectors general and inspectors general of
designated Federal entities, as such term is defined under
section 8G of the Inspector General Act of 1978, and the
effects on independence of the amendments to the Inspector
General Act of 1978 made by this Act.
(b) Report.--The report required by subsection (a) shall be
issued to the Committees on Financial Services and Oversight
and Government Reform of the House of Representatives and the
Committees on Banking, Housing, and Urban Affairs and Homeland
Security and Governmental Affairs of the Senate.
SEC. 1506. STUDY ON CORE DEPOSITS AND BROKERED DEPOSITS.
(a) Study.--The Corporation shall conduct a study to
evaluate--
(1) the definition of core deposits for the purpose
of calculating the insurance premiums of banks;
(2) the potential impact on the Deposit Insurance
Fund of revising the definitions of brokered deposits
and core deposits to better distinguish between them;
(3) an assessment of the differences between core
deposits and brokered deposits and their role in the
economy and banking sector of the United States;
(4) the potential stimulative effect on local
economies of redefining core deposits; and
(5) the competitive parity between large
institutions and community banks that could result from
redefining core deposits.
(b) Report to Congress.--Not later than 1 year after the
date of enactment of this Act, 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 on the results of the study under
subsection (a) that includes legislative recommendations, if
any, to address concerns arising in connection with the
definitions of core deposits and brokered deposits.
TITLE XVI--SECTION 1256 CONTRACTS
SEC. 1601. CERTAIN SWAPS, ETC., NOT TREATED AS SECTION 1256 CONTRACTS.
(a) In General.--Subsection (b) of section 1256 of the
Internal Revenue Code of 1986 is amended--
(1) by redesignating paragraphs (1) through (5) as
subparagraphs (A) through (E), respectively, and by
indenting such subparagraphs (as so redesignated)
accordingly,
(2) by striking ``For purposes of'' and inserting
the following:
``(1) In general.--For purposes of'', and
(3) by striking the last sentence and inserting the
following new paragraph:
``(2) Exceptions.--The term `section 1256 contract'
shall not include--
``(A) any securities futures contract or
option on such a contract unless such contract
or option is a dealer securities futures
contract, or
``(B) any interest rate swap, currency
swap, basis swap, interest rate cap, interest
rate floor, commodity swap, equity swap, equity
index swap, credit default swap, or similar
agreement.''.
(b) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after the date of the
enactment of this Act.
And the Senate agree to the same.
That the House recede from its disagreement to the
amendment of the Senate to the title of the bill, and agree to
the same.
From the Committee on Financial Services, for
consideration of the House bill and the Senate
amendment, and modifications committed to
conference:
Barney Frank of Massachusetts,
Paul E. Kanjorski,
Maxine Waters,
Carolyn B. Maloney,
Luis V. Gutierrez,
Melvin L. Watt,
Gregory W. Meeks of New York,
Dennis Moore of Kansas,
Mary Jo Kilroy,
Gary C. Peters,
From the Committee on Agriculture, for
consideration of subtitles A and B of title I,
secs. 1303, 1609, 1702, 1703, title III (except
secs. 3301 and 3302), secs. 4205(c),
4804(b)(8)(B), 5008, and 7509 of the House
bill, and sec. 102, subtitle A of title I,
secs. 406, 604(h), title VII, title VIII, secs.
983, 989E, 1027(j), 1088(a)(8), 1098, and 1099
of the Senate amendment, and modifications
committed to conference:
Collin C. Peterson,
Leonard L. Boswell,
From the Committee on Energy and Commerce, for
consideration of secs. 3009, 3102(a)(2), 4001,
4002, 4101-4114, 4201, 4202, 4204-4210, 4301-
4311, 4314, 4401-4403, 4410, 4501-4509, 4601-
4606, 4815, 4901, and that portion of sec.
8002(a)(3) which adds a new sec. 313(d) to
title 31, United States Code, of the House
bill, and that portion of sec. 502(a)(3) which
adds a new sec. 313(d) to title 31, United
States Code, secs. 722(e), 1001, 1002, 1011-
1018, 1021-1024, 1027-1029, 1031-1034, 1036,
1037, 1041, 1042, 1048, 1051-1058, 1061-1067,
1101, and 1105 of the Senate amendment, and
modifications committed to conference:
Bobby L. Rush,
From the Committee on Judiciary, for
consideration of secs. 1101(e)(2), 1103(e)(2),
1104(i)(5) and (i)(6), 1105(h) and (i), 1110(c)
and (d), 1601, 1605, 1607, 1609, 1610, 1612(a),
3002(c)(3) and (c)(4), 3006, 3119, 3206,
4205(n), 4306(b), 4501-4509, 4603,
4804(b)(8)(A), 4901(c)(8)(D) and (e), 6003,
7203(a), 7205, 7207, 7209, 7210, 7213-7216,
7220, 7302, 7507, 7508, 9004, 9104, 9105,
9106(a), 9110(b), 9111, 9118, 9203(c), and
9403(b) of the House bill, and secs.
112(b)(5)(B), 113(h), 153(f), 201, 202, 205,
208-210, 211(a) and (b), 316, 502(a)(3),
712(c), 718(b), 723(a)(3), 724(b), 725(c), 728,
731, 733, 735(b), 744, 748, 753, 763(a), (c)
and (i), 764, 767, 809(f), 922, 924, 929B, 932,
991(b)(5), (c)(2)(G) and (c)(3)(H), 1023(c)(7)
and (c)(8), 1024(c)(3)(B), 1027(e), 1042,
1044(a), 1046(a), 1047, 1051-1058, 1063,
1088(a)(7)(A), 1090, 1095, 1096, 1098, 1104,
1151(b), and 1156(c) of the Senate amendment,
and modifications committed to conference:
John Conyers, Jr.,
Howard L. Berman,
From the Committee on Oversight and Government
Reform, for consideration of secs. 1000A, 1007,
1101(e)(3), 1203(d), 1212, 1217, 1254(c),
1609(h)(8)(B), 1611(d), 3301, 3302, 3304,
4106(b)(2) and (g)(4)(D), 4604, 4801, 4802,
5004, 7203(a), 7409, and 8002(a)(3) of the
House bill, and secs. 111(g), (i) and (j),
152(d)(2), (g) and (k), 210(h)(8), 319, 322,
404, 502(a)(3), 723(a)(3), 748, 763(a), 809(g),
922(a), 988, 989B, 989C, 989D, 989E, 1013(a),
1022(c)(6), 1064, 1152, and 1159(a) and (b) of
the Senate amendment, and modifications
committed to conference:
Edolphus Towns,
Elijah E. Cummings,
From the Committee on Small Business, for
consideration of secs. 1071 and 1104 of the
Senate amendment, and modifications committed
to conference:
Nydia M. Velazquez,
Heath Shuler,
Managers on the Part of the House.
Christopher J. Dodd,
Tim Johnson,
Jack Reed,
Charles E. Schumer,
From the Committee on Agriculture, Nutrition,
and Forestry:
Blanche L. Lincoln,
Patrick J. Leahy,
Tom Harkin,
Managers on the Part of the Senate.
JOINT EXPLANATORY STATEMENT OF THE COMMITTEE OF CONFERENCE
The managers on the part of the House and the Senate at
the conference on the disagreeing votes of the two Houses on
the amendment of the Senate to the bill H.R. 4173, to provide
for financial regulatory reform, to protect consumers and
investors, to enhance Federal understanding of insurance
issues, to regulate the over-the-counter derivatives markets,
and for other purposes, submit the following joint statement to
the House and the Senate in explanation of the effect of the
action agreed upon by the managers and recommended in the
accompanying conference report:
The Senate amendment struck all of the House bill after
the enacting clause and inserted a substitute text.
The House recedes from its disagreement to the
amendment of the Senate with an amendment that is a substitute
for the House bill and the Senate amendment. The differences
between the House bill, the Senate amendment, and the
substitute agreed to in conference are noted below, except for
clerical corrections, conforming changes made necessary by
agreements reached by the conferees, and minor drafting and
clarifying changes.
TITLE I--FINANCIAL STABILITY
Title I, which establishes a specific framework for
ensuring financial stability, consists of three subtitles.
Subtitle A establishes a Financial Stability Oversight Council
to monitor potential threats to the financial system and
provide for more stringent regulation of nonbank financial
companies and financial activities that the Council determines,
based on consideration of risk-related factors, pose risks to
financial stability. Subtitle B establishes an Office of
Financial Research that supports the Council by collecting
information, conducting research, and analyzing data. Subtitle
C provides a specific, more stringent supervisory framework for
regulating large, interconnected bank holding companies,
nonbank financial companies that the Council subjects to more
stringent regulation, and activities and practices that the
Council determines may pose systemic threats.
TITLE II--ORDERLY LIQUIDATION AUTHORITY
Title II establishes an orderly liquidation authority
that may be used only if the Secretary of the Treasury (in
consultation with the President), based on the written
recommendation of two other federal regulators, agrees that
doing so is necessary to mitigate serious adverse effects on
financial stability in the United States. When the authority is
used, the FDIC is appointed receiver and must liquidate the
company in a manner that mitigates significant risks to
financial stability and minimizes moral hazard. All costs of an
orderly liquidation under this title are borne first by
shareholders and unsecured creditors, and, if necessary, by
risk-based assessments on large financial companies. Taxpayers
specifically are protected from losses associated with use of
this authority.
TITLE III--TRANSFER OF POWERS TO THE COMPTROLLER OF THE CURRENCY, THE
CORPORATION, AND THE BOARD OF GOVERNORS
Prudential Regulator Restructuring
Title III of the conference report transfers the
functions of the Office of Thrift Supervision to the Office of
the Comptroller of the Currency, which will now supervise
federal thrifts, to the Federal Deposit Insurance Corporation
(``FDIC''), which will supervise state-chartered thrifts, and
to the Federal Reserve Board, which will supervise thrift
holding companies.
The conference report also protects employees affected
by the regulatory streamlining by preserving pay and benefits,
and protecting them from involuntary separation or relocation
for a period of time. Title III requires comprehensive
coordination of the integration of the agencies, and reporting
to the House Financial Services Committee and Senate Banking
Committee regarding the implementation of the merger.
Federal Deposit Insurance Reforms
The title revises the FDIC's assessment base for
deposit insurance, maintaining the risk-based nature of the
assessment structure but transitioning to a broader assessment
base for bank premiums based on total assets (minus tangible
equity). The conference report also includes additional reforms
that will enhance FDIC's ability to manage the Deposit
Insurance Fund.
The title makes permanent the increase in deposit
insurance to $250,000, and makes the increase retroactive to
January 1, 2008. Full insurance of noninterest-bearing
transaction accounts is also extended for an additional two
years and a comparable program is authorized for credit unions.
Office of Minority and Women Inclusion
The title requires the establishment of offices of
Minority and Women Inclusion by the Treasury Department, and
the financial regulators, to coordinate technical assistance to
minority-owned and women-owned businesses and to promote
diversity in the workforce of the regulators.
TITLE IV--REGULATION OF ADVISERS TO HEDGE FUNDS AND OTHERS
The conference report eliminates the ``private
adviser'' exemption in the Investment Advisers Act of 1940
(``IAA'') thus registering advisers to private funds with the
U.S. Securities and Exchange Commission (``SEC''). It expands
the advisers' reporting requirements to the SEC as necessary or
appropriate in the public interest and for the protection of
investors or for the assessment of risk by the Financial
Stability Oversight Council. The SEC is authorized to take into
account the size, governance, and investment strategy of an
adviser to the fund to determine if the fund poses a systemic
risk. The conference report also amends the IAA to allow the
SEC to require investment advisers to disclose the identity,
investments, or affairs of their clients for purposes of
systemic risk.
The report includes exemptions for certain private fund
advisers. It provides an exemption from registration
requirements for advisers of private funds, each with less than
$150 million in assets under management, while maintaining
reporting requirements as directed by the SEC; an SEC reporting
requirement for advisers to venture capital funds, as defined
by the SEC and otherwise exempt from the framework; and an
exemption for Family Offices. The conference report raises the
assets threshold for federal regulation of investment advisers
from $30 million to $100 million. Those advisers who qualify to
register with their home state must register with the SEC
should the adviser operate in more than 15 states.
Finally, the report clarifies the SEC's authority to
make rules necessary for the exercise of the powers conferred
upon the SEC by the IAA. The SEC must adjust for the effects of
inflation any dollar amount measures used in making
determinations of the qualified client standard.
Advisers must comply with the new provisions within one
year of enactment of the conference report, though the report
allows advisers to register earlier with the SEC.
TITLE V--INSURANCE
Subtitle A, the Federal Insurance Office Act of 2010,
creates a Federal Insurance Office (FIO) in the Treasury
Department to provide the Executive Branch and the Congress
with a source of information on the national insurance
marketplace. FIO is not a federal regulator or supervisor of
insurance. Rather, its functions include collecting information
about the insurance industry; monitoring for systemic risk in
the insurance industry, including serving in an advisory
capacity to the Financial Stability Oversight Council; and
administering the Terrorism Risk Insurance Program. Further,
FIO will consult with the states regarding insurance matters of
national importance and prudential insurance matters of
international importance. FIO will also coordinate federal
efforts and develop federal policy on prudential aspects of
international insurance matters, including representing the
United States in international insurance fora, and assisting
the Treasury Secretary in negotiations of international
insurance agreements with respect to the business of insurance
or reinsurance. FIO will have a narrow and limited preemption
power over state insurance measures that are inconsistent with
such international insurance agreements.
The Federal Insurance Office Act of 2010 expressly
provides the Secretary of the Treasury, jointly with the USTR,
the authority to negotiate and enter into international
insurance agreements. To assure uniform, national application
of prudential measures such as reinsurance collateral
requirements, the Federal Insurance Office Act provides the
Director with the authority to identify and narrowly preempt
state insurance measures inconsistent with a defined category
of international insurance agreements.
Subtitle B, the Nonadmitted and Reinsurance Reform Act
of 2010, will reform and modernize two important sectors of the
commercial insurance marketplace, nonadmitted insurance (also
known as `surplus lines' insurance) and reinsurance.
Specifically, the Nonadmitted and Reinsurance Reform Act of
2010 creates a uniform system for nonadmitted insurance premium
tax payments based upon the home state of the policyholder,
encourages the states to develop a compact or other procedural
mechanism for uniform tax allocation, and establishes
regulatory deference for the home state of the insured. The Act
adopts uniform eligibility requirements for nonadmitted
insurers as developed and promulgated by the National
Association of Insurance Commissioners (NAIC) in the
Nonadmitted Insurance Model Act. The Nonadmitted and
Reinsurance Reform Act of 2010 will allow direct access to the
nonadmitted insurance markets for certain sophisticated
commercial purchasers. The Nonadmitted and Reinsurance Reform
Act also streamlines the regulation of reinsurance by applying
single state regulation for financial solvency and credit for
reinsurance. Credit for reinsurance determinations will be
controlled by the state of domicile of the ceding insurer.
Reinsurance solvency regulation will be controlled by the state
of domicile of the reinsurer provided such state is NAIC-
accredited or has financial solvency requirements substantially
similar to the requirements necessary for NAIC accreditation.
Under the Act, non-domiciliary states are specifically
prohibited from applying their reinsurance laws in an extra-
territorial manner.
TITLE VI--IMPROVEMENTS TO REGULATION OF BANK AND SAVINGS ASSOCIATION
HOLDING COMPANIES AND DEPOSITORY INSTITUTIONS
Title VI improves prudential regulation of banks,
saving associations, and their holding companies. The
improvements include significant limitations on proprietary
trading and sponsoring or investing in hedge funds or private
equity funds by banking entities through the Volcker rule,
better supervision of nonbank subsidiaries of holding
companies, enhanced restrictions on transactions with
affiliates, limits on derivatives and securities lending credit
exposure, and a requirement that any company that controls an
insured depository institution serve as a source of financial
strength to the institution.
TITLE VII--WALL STREET TRANSPARENCY AND ACCOUNTABILITY
The conference report establishes a new regulatory
framework to cover a broad range of participants and
institutions in the over-the-counter derivatives market. The
Commodity Futures Trading Commission (``CFTC'') and the
Securities and Exchange Commission (``SEC'') are authorized to
write rules for the swaps and security-based swaps markets,
respectively. The Commissions shall consult and coordinate on
rules and include the prudential regulators, to the extent
possible, to assure regulatory consistency and comparability.
The Commissions will register participants in the market
including dealers, major participants, clearing agencies and
organizations, exchanges, swap execution facilities, and trade
repositories. Exemptions and exclusions from registration will
apply as outlined in the report or at the discretion of the
regulators. The Commissions will have enforcement authority in
their jurisdictions while the prudential regulators maintain
exclusive authority to enforce provisions for capital and
margin for banks and branches or agencies of foreign banks.
The report provides definitions for terms used in the
Commodity Exchange Act and Securities Exchange Act of 1934. The
regulatory framework outlines provisions for:
Mandatory clearing of swaps and security-based
swaps for those trades that are eligible for clearing
as determined by both the clearing houses and the
regulators;
Mandatory trading on an exchange or swap (or
security based swap) execution facility should the
transactions be cleared and a facility will accept it
for trading;
Public trade reporting of all cleared and uncleared
swaps and security-based swaps;
Regulators have authority to impose capital on
dealers and major swap participants;
Regulators have authority to impose margin
requirements only on dealers and major participants for
uncleared swaps, adding safeguards to the system by
ensuring dealers and major swap participants have
adequate financial resources to meet obligations;
Position limits on swaps contracts that perform or
affect a significant price discovery function and
requirements to aggregate limits across markets; and
Prohibitions against market manipulation.
The report includes a prohibition of federal assistance
to swaps and security-based swap entities, including federal
deposit insurance, access to the Federal Reserve discount
window or Federal Reserve credit facility, to swaps entities in
connection with their trading in swaps or securities-based
swaps.
The report establishes a code of conduct for all
registered swap dealers and major swap participants requiring
them to disclose to the swap entity the material risks and
characteristics of a swap and any conflicts of interest or
material incentives. When acting as counterparties to a pension
fund, endowment fund, or state or local government, dealers are
to have a reasonable basis to believe that the fund or
governmental entity has an independent representative advising
them.
The report requires a number of studies, including
studies on international swap regulation, the regulation of
carbon markets, stable value contracts, and the effect of
position limits on exchanges.
TITLE VIII--PAYMENT, CLEARING, AND SETTLEMENT SUPERVISION
Title VIII establishes a specific framework for
promoting uniform risk-management standards for systemically
important financial market utilities (FMUs) and systemically
important payment, clearing, and settlement (PCS) activities
conducted by financial institutions. The Board of Governors of
the Federal Reserve System (Board), the Securities and Exchange
Commission (SEC), or the Commodity Futures Trading Commission
(CFTC), as appropriate, is primarily responsible for
establishing and enforcing risk-management standards for FMUs
and PCS activities that the Council identifies as systemically
important. If the Board determines that the standards imposed
by the SEC or the CFTC or the enforcement actions of such
agencies are insufficient, then the Council can require the SEC
or CFTC to impose additional standards or take additional
enforcement actions.
TITLE IX--INVESTOR PROTECTIONS AND IMPROVEMENTS TO THE REGULATION OF
SECURITIES
Subtitle A--Increasing Investor Protection establishes
mechanisms to assist investors in their dealings with the SEC
by creating an Office of Investor Advocate and an Ombudsman. It
also creates an Investor Advisory Committee at the SEC, and
clarifies the authority of the SEC to engage in investor
testing. Subtitle A directs the SEC to study the standards of
care applicable to broker-dealers and investment advisers
giving investment advice to retail customers, and it authorizes
the SEC to promulgate rules imposing a fiduciary duty on
broker-dealers and investment advisers to protect retail
customers. In addition, the subtitle streamlines filing
procedures for self-regulatory organizations. Subtitle A also
clarifies the authority of the SEC to require investor
disclosures before purchase of investment products and
services. Finally, the subtitle requires studies on the
enhancement of investment adviser examinations, financial
literacy, mutual fund advertising, conflicts of interest,
improved investor access to information on investment advisers
and broker-dealers, and financial planners and the use of
financial designations.
Subtitle B--Increasing Regulatory Enforcement and
Remedies strengthens the SEC's authority to conduct
investigations, impose liability on control persons, and assess
penalties for violations of the securities laws. It also makes
clear that the intent standard in SEC enforcement actions for
aiding and abetting is recklessness, and it requires a study
regarding the issue of aiding and abetting liability in private
actions. Under subtitle B, the SEC has the authority to
restrict pre-dispute mandatory arbitration. The subtitle
further enhances incentives and protections for whistleblowers
providing information leading to successful SEC enforcement
actions. Awards to whistleblowers will range from 10 percent to
30 percent of the amounts collected by the SEC in actions where
the SEC obtained monetary sanctions exceeding $1 million. The
subtitle also works to protect the confidentiality of
whistleblowers.
The subtitle further enhances the ability of the SEC to
ban violators from all parts of the securities industry,
disqualifies felons and other bad actors from using the
Regulation D offering exemption, and provides for the equal
treatment of self-regulatory organization (SRO) rules. It
streamlines SRO rule filing procedures by requiring the SEC to
complete the process of reviewing and taking action on proposed
SRO rules within specified time frames. The subtitle enhances
the ability of the SEC to issue subpoenas, bring cases against
individuals, and share information with other authorities. It
also updates the law governing the Securities Investor
Protection Corporation (SIPC). These reforms include increasing
the minimum assessments on SIPC members; raising penalties for
fraud; and establishing civil and criminal penalties against
any person who misrepresents membership in SIPC. Subtitle B
gives the SEC authority to enhance public reporting of
aggregate information on short selling, prohibits manipulative
short sales, and requires notification to customers that they
may choose not to allow their securities to be used in
connection with short sales. The subtitle further establishes
procedures to notify investors about missing securities, and it
requires the SEC to complete investigations and examinations
within certain time frames, subject to exceptions for complex
cases. Finally, the subtitle requires a study regarding the
issue of aiding and abetting liability in private actions for
securities fraud.
Subtitle C--Improvement to the Regulation of Credit
Rating Agencies gives broader powers to the SEC to regulate
nationally recognized statistical rating organizations
(``NRSROs''). A new Office of Credit Ratings (``Office'') is
required to examine NRSROs at least once a year and make key
findings public. The Office will write new rules, including
requiring NRSROs to (1) set up internal controls over the
process for determining credit ratings; (2) establish an
independent board of directors; (3) make greater disclosures to
the public and investors; and (4) develop universal ratings
across asset classes and types of issuer. The report also gives
the Office the authority to deregister an NRSRO for providing
bad ratings over time. New professional standards are
established that require ratings analysts to pass qualifying
exams and have continuing education.
The report includes provisions to address conflicts of
interest. It prohibits compliance officers from working on
ratings, methodologies, or sales and prevents other employees
from both marketing ratings services and performing the ratings
of securities. The subtitle includes on additional conflict of
interest mitigation including a new requirement for NRSROs to
conduct a one-year look-back review when an NRSRO employee goes
to work for an obligor or underwriter of a security or money
market instrument subject to a rating by that NRSRO; and report
to the SEC when certain employees of the NRSRO go to work for
an entity that the NRSRO has rated in the previous twelve
months. The SEC shall make such reports publicly available.
To reduce the reliance on ratings, the report amends
several statutes to remove references to credit ratings, credit
rating agencies and NRSROs. The subtitle includes a requirement
that all Federal agencies review their regulations, policies
and practices that reference credit ratings, credit rating
agencies, and NRSROs. After identifying where the agency relies
on or makes these references, the agencies shall modify their
regulations by striking these references and substituting a
standard of creditworthiness to be established by the agencies.
New provisions address information gathering. NRSROs
must consider information in their ratings that comes to their
attention from a source other than the organizations being
rated, if they find it credible. In addition, the subtitle
includes an elimination of the credit rating agency exemption
from Regulation Fair Disclosure, commonly known as Reg FD.
The report also addresses liability measures for the
NRSRO. The report allows investors to bring private rights of
action against credit rating agencies for a knowing or reckless
failure to conduct a reasonable investigation of the facts or
to obtain analysis from an independent source. The report also
nullifies Rule 436(g) which provides an exemption for credit
ratings provided by NRSROs from being considered a part of the
registration statement prepared or certified by a person under
the ``expert liability'' regime of Section 7 and Section 11 of
the Securities Act of 1933. The subtitle requires all
references to ``furnish'' be replaced with the word ``file'' in
existing law. Information that is ``furnished'' to the SEC is
subject to a lower standard of accuracy and liability than
information ``filed'' with the SEC.
The report also directs the SEC to establish a system
that prohibits issuers of structured finance from selecting the
NRSRO that will provide the initial credit rating. The system
would mandate that initial rating assignments for structured
finance securities be made on a random or semi-random basis,
unless the SEC determines, after study, that an alternative
system of assigning ratings would better protect investors and
serve the public interest.
Subtitle D--Improvements to Asset-Backed Securitization
Process requires securitizers to retain an economic interest in
a material portion of the credit risk for any asset that
securitizers transfer, sell, or convey to a third party. Risk
retention requirements and exemptions will be determined by
regulators, which will include setting risk retention
requirements for different asset classes that are securitized
and allocating risk retention obligations between securitizers
and originators. An exemption is provided for qualified
residential mortgages, as defined by the regulators, but which
can be no broader than the definition of qualified mortgage in
Title XIV. Regulators may tailor risk retention requirements as
appropriate to the structure of collateralized debt obligations
and other complex asset-backed securities. Subtitle D also
requires enhanced disclosure by issuers of asset-backed
securities, including data related to the underlying loans or
assets. Express exemptions are provided for the Farm Credit
System and any residential, multifamily, or health care
facility mortgage loan asset or securitization which is insured
or guaranteed by the United States or an agency of the United
States. Regulators also are required to issue total or partial
exemptions from risk retention and disclosure requirements for
municipal securities and for securitizations of assets issued
or guaranteed by federal agencies, as long as the exemption is
in the public interest and for the protection of investors.
Subtitle E--Accountability and Executive Compensation
is designed to address shareholder rights and executive
compensation practices. In this subtitle, Congress provides
shareholders in a public company with a vote on executive
compensation and additional disclosures involving compensation
practices. Under the conference report, at least every three
years shareholders can cast an advisory vote to approve the
compensation of executives and, where appropriate, golden
parachutes for executives. Also under this subtitle, (i) board
committees that set compensation policy will consist only of
directors who are independent; (ii) companies will tell
shareholders about the relationship between the executive
compensation the company paid and the company's financial
performance; (iii) companies will be required to have a policy
to recover money erroneously paid to executives based on
financials that later have to be restated due to an accounting
error; and (iv) companies will be required to disclose in the
annual proxy statement whether employees or members of the
board may hedge or offset any decrease in the market value of
equity securities granted. This subtitle also requires federal
financial regulators to monitor incentive-based payment
arrangements of federally regulated financial institutions
larger than $1 billion and prohibit incentive-based payment
arrangements that the regulators determine jointly could
threaten financial institutions' safety and soundness or could
have serious adverse effects on economic conditions or
financial stability. Finally, subtitle E prohibits brokers who
are not beneficial owners of a security from voting through
company proxies unless the beneficial owner has instructed the
broker to vote on the owner's behalf.
Subtitle F--Improvements to the Management of the
Securities and Exchange Commission requires several reports
designed to assess SEC performance and provide recommendations
for improvements. These involve assessment of the management of
the SEC related to internal supervisory controls, personnel
management, financial controls, and oversight of national
securities associations. Subtitle F also creates a suggestion
program for SEC employees and requires the Divisions of Trading
and Markets and Investment Management to have examiners on
their staffs. It requires the SEC to hire a consultant to study
the SEC's operations and determine whether there is a need for
comprehensive reform. Finally, Subtitle F requires the GAO to
study issues surrounding employees who leave the SEC to work in
the securities industry.
Subtitle G--Strengthening Corporate Governance
authorizes the SEC to write rules allowing shareholders to
nominate candidates for an issuer's board of directors, and to
have such candidates listed on the issuer's own proxy
materials. In writing such rules, the SEC must consider the
burden on small issuers, and may issue exemptions from proxy
access rules. Issuers must also disclose why the issuer has
chosen to have a single person, or different individuals, serve
as CEO and Chairman of the board of the company.
Subtitle H--Municipal Securities requires the
registration of municipal financial advisors and subjects them
to rules to be promulgated by the Municipal Securities
Rulemaking Board (MSRB), which will be enforced by the SEC. An
Office of Municipal Securities is created within the SEC. The
MSRB will be reconstituted, so that a majority of members are
independent of the municipal securities industry. Municipal
advisors will have a fiduciary duty to municipal entities.
Subtitle H calls for studies of municipal securities markets,
and ways to increase disclosure to investors. It also provides
a certain source of funding for the Government Accounting
Standards Board.
Subtitle I--Public Company Accounting Oversight Board,
Portfolio Margining, and Other Matters, subtitle I allows the
Public Company Accounting Oversight Board (PCAOB) to examine
the auditors of broker-dealers. It further authorizes the PCAOB
to share information with foreign authorities. The conference
report also authorizes portfolio margining for accounts that
hold both securities and futures. In response to problems
related to securities borrowing and lending, the conference
report requires more transparency. It also raises the dollar
threshold that triggers a full ``material loss review'' by
federal banking regulators' inspectors general. Subtitle I
improves the coordination, activities, flexibility, and
accountability of inspectors general at Federal financial
agencies. Subtitle I also exempts small issuers (those with
less than $75,000,000 in market capitalization) from the
external audit of internal controls requirements of Sarbanes-
Oxley Section 404(b), and requires studies on the impact of
such an exemption and the exemption for mid-sized companies.
The subtitle also creates an exemption for certain annuities
from federal securities regulation. Further, it makes numerous
technical and conforming changes to Federal securities laws.
Subtitle J--Securities and Exchange Commission Match
Funding maintains the role of the Appropriations Committees in
setting the Securities and Exchange Commission's annual budgets
on and after FY2012. Transaction fee receipts would be treated
as offsetting collections equal to the amount of the
appropriation. Any excess collections would go to the Treasury
as general revenue and not offset any current or future
appropriations. Subtitle J sets annual registration fee targets
that will produce $5 billion of revenues over ten years that
will go to the Treasury general fund. It also requires SEC's
budget to be submitted to Congress concurrent with the earliest
submission to the Office of Management and Budget and submitted
unaltered by the President; builds in flexibility for multi-
year budget authority and unanticipated needs; and authorizes
graduated funding level increases for the SEC for FYs 2011-
2015.
TITLE X--BUREAU OF CONSUMER FINANCIAL PROTECTION
Title X establishes the Bureau of Consumer Financial
Protection (Bureau), which will be an independent bureau within
the Federal Reserve System. It will be run by a Director who is
Presidentially appointed and Senate confirmed. The Bureau will
have the authority and accountability to ensure that existing
consumer protection laws and regulations are comprehensive,
fair, and vigorously enforced.
The Bureau will have authority to issue rules
applicable to all financial institutions, including depository
institutions that offer financial products and services to
consumers. It will also have authority to issue rules under
existing consumer banking statutes, including the Truth in
Lending Act, the Equal Credit Opportunity Act, and the Real
Estate Settlement Procedures Act. Furthermore, the Bureau will
have authority to regulate unfair, deceptive and abusive
practices and consumer products that it identifies (UDAP
authority). The Bureau also may issue regulations relating to
disclosures about consumer financial products and services.
Title X also establishes the Bureau as the federal
agency with examination and enforcement authority over very
large banks and nonbank financial institutions for compliance
with the consumer protection laws. The prudential regulators
will retain this authority for insured depository institutions
and credit unions with assets of $10 billion or less.
Exclusions from supervision and enforcement are provided for
nonfinancial companies, including merchants, retailers,
attorneys, accountants, and real estate brokers, that finance
the purchase of their nonfinancial consumer products and
services under certain conditions and where the nonfinancial
company is not significantly engaged in such financing. There
is also an exclusion from the authority of the Bureau for
automobile dealers, for which the Federal Reserve Board will
continue to write regulations under the enumerated federal
consumer laws, to be enforced by the Federal Trade Commission
(FTC). The FTC will also be able to write rules proscribing
unfair or deceptive acts or practices with regard to auto
dealers under the procedures set out under the Administrative
Procedures Act.
The conference report also revises the standard the OCC
will use to preempt state consumer protection laws. It codifies
the standard in the 1996 Supreme Court case Barnett Bank of
Marion County, N.A. v. Nelson to allow for the preemption of
State consumer financial laws that prevent or significantly
interfere with national banks' exercise of their powers. State
Attorneys General also are given authority to enforce the UDAP
and other authorities of the Bureau against banks and savings
associations.
To address consumer protection and fair lending
matters, Title X establishes the Office of Fair Lending and
Equal Opportunity within the Bureau. This Office will oversee
the enforcement of federal laws intended to ensure fair,
equitable and nondiscriminatory access to credit for
individuals and communities, including the Equal Credit
Opportunity Act (ECOA) and Home Mortgage Disclosure Act (HMDA).
The Office will promote coordination of fair lending
enforcement efforts with other federal agencies and State
regulators, as appropriate, to provide consistent, efficient
and effective enforcement of federal fair lending laws.
The Bureau will also include an Office for Financial
Education and an Office the Financial Protection of Older
Americans. In addition, Title X provides for enhanced data
collection required by HMDA and ECOA.
TITLE XI--FEDERAL RESERVE SYSTEM PROVISIONS
Liquidity Programs
The Federal Reserve will be able to make 13(3)
emergency loans only through widely available programs approved
by the Secretary of the Treasury, and not to individual firms.
FDIC programs to guarantee short-term debt during financial
crises will be limited to solvent depository institutions and
their holding companies, and can be created only after meeting
several conditions including Congressional approval.
Federal Reserve Governance and Oversight
The Government Accountability Office will conduct an
audit of Federal Reserve 13(3) emergency lending since December
1, 2007, and the Federal Reserve will publish details about
such lending on December 1, 2010. The GAO will have ongoing
audit authority over Federal Reserve discount window and open
market operation transactions, and emergency lending. The
Federal Reserve will publicly disclose data on discount window
and open market operations, and details about emergency
lending, after a delay that will allow these tools to function
effectively.
The position of Vice Chairman for Supervision on the
Federal Reserve Board of Governors is established, and the
Federal Reserve is formally prohibited from delegating its
functions for establishing regulatory or supervisory policy to
Federal Reserve banks. The presidents of each Federal Reserve
Bank will be elected by the directors selected to represent the
public (Class B and C directors), and the directors
representing the member banks (Class A directors) will no
longer be authorized to vote.
TITLE XII--IMPROVING ACCESS TO MAINSTREAM FINANCIAL INSTITUTIONS
This title will expand access to safe and affordable
bank accounts, credit and financial information for low-income,
minority and other underserved families. Specifically, the
title would address the following challenges facing low- and
moderate-income families with three authorized programs:
authorizes a program to help low- and moderate-
income individuals open low-cost checking or savings
accounts at banks or credit unions;
increases access to objective advice through non-
profits and others aiding in offering financial advice
to consumers; and
creates a pool of capital to enable community
development financial institutions (CDFIs) to establish
and maintain small dollar loan programs, creating an
alternative to pay day or car title loans in local
communities.
TITLE XIII--PAY IT BACK ACT
Title XIII, the TARP Pay it Back Act, reduces the
amount authorized under the Troubled Asset Repurchase Program
to $475 billion, from the original $700 billion; prohibits
Treasury from using repaid TARP funds; and prohibits Treasury
from initiating new programs under TARP.
TITLE XIV--MORTGAGE REFORM AND ANTI-PREDATORY LENDING ACT
Title XIV enacts the Mortgage Reform and Anti-Predatory
Lending Act. It sets minimum standards for mortgages by
requiring lenders to establish that consumers have a reasonable
ability to repay at the time the mortgage is consummated. It
provides that certain high-quality, low-cost loans (defined as
Qualified Mortgages) are presumed to meet this standard.
The Act also prohibits financial incentives (including
payments known as ``yield spread premiums'') that may encourage
mortgage originators, including mortgage brokers and loan
officers of lending institutions, to steer consumers to higher-
cost and more abusive mortgages. In addition, it prohibits
prepayment penalties for any adjustable rate mortgage and other
mortgages that do not meet the definition of Qualified
Mortgage; limits prepayment penalties charged to borrowers who
wish to prepay their mortgages (typically to refinance on more
affordable terms); bans single premium credit insurance and
prohibits mandatory arbitration clauses; and includes
protections for renters of foreclosed properties. Finally,
title XIV authorizes funds to provide legal assistance to
homeowners and renters who are experiencing problems related to
foreclosure.
Title XIV enhances and expands the scope of consumer
protections for high-cost loans under the Home Ownership and
Equity Protection Act (HOEPA) and requires additional
disclosures to consumers. This title revises the benchmarks for
determining loans subject to the heightened HOEPA standards. It
also prohibits the financing of points and fees; excessive fees
for payoff information, modifications, or late payments; and
practices that increase the risk of foreclosure, such as
balloon payments, encouraging a borrower to default, and call
provisions. The title adds a requirement for pre-loan
counseling.
The Act establishes an Office of Housing Counseling at
HUD that will carry out and coordinate homeownership and rental
housing counseling programs; requires the launch of a national
public-service, multimedia campaign to promote housing
counseling and the establishment of a website and toll-free
hotline; authorizes the issuance of homeownership and rental
housing counseling grants to HUD-approved housing counseling
agencies and State housing finance agencies; and requires HUD
to update the Mortgage Information Booklet to provide consumers
with a greater understanding of the terms of the home buying
process. Additionally, the title requires increased information
to consumers about the need for home inspections and ways to
avoid foreclosure scams.
Moreover, Title XIV requires all higher-cost mortgage
borrowers to have escrow accounts established. It also requires
lenders to provide written disclosures about the need to pay
taxes and insurance premiums to all borrowers if they opt out
of creating escrow accounts. With respect to mortgage servicing
reforms, Title XIV updates the Real Estate Settlement
Procedures Act to create new consumer protections related to
force-placed insurance, swifter responses to inquiries,
increased penalties, prompt crediting of payments, and the
timely receipt of payoff statement quotes.
Concerning appraisal practices, Title XIV prohibits
lenders from making a higher-cost mortgage without first
obtaining a written appraisal. Lenders must additionally
provide mortgage applicants with copies of any and all written
appraisal reports and valuations developed in connection with a
mortgage transaction at least 3 days before the scheduled
closing date on the property. Title XIV further creates
enforceable Federal appraisal independence standards with
penalties within the Truth in Lending Act. These standards
prohibit the parties involved in a real estate transaction from
influencing the independent judgment of an appraiser through
collusion, coercion, and bribery, among other activities. The
bill also reforms the Federal oversight of the State appraisal
regulatory system.
The Act provides $1 billion for ``Emergency Mortgage
Relief,'' in the form of loans to homeowners who lose their
jobs, to help make mortgage payments while the homeowner is out
of work. The Act also provides $1 billion for a third round of
funding for the Neighborhood Stabilization Program to enable
state and local governments to finance the purchase and
redevelopment of foreclosed homes and residential properties.
In addition, the Act authorizes a HUD-administered grant-making
program to help entities that provide legal assistance to low-
and moderate-income recipients on home ownership preservation,
foreclosure prevention, and the rights of tenants associated
with home foreclosure.
TITLE XV--MISCELLANEOUS PROVISIONS
Title XV of the conference report includes:
Restrictions on use of U.S. Funds for Foreign Governments
The conference report requires the Administration to
evaluate any proposed loan by the IMF to a middle-income
country if that country's public debt exceeds its annual Gross
Domestic Product, and to oppose the loan if it cannot certify
to Congress that the loan is likely to be repaid.
Extractive Industries Transparency
The conference report requires public disclosure to the
SEC of any payment relating to the commercial development of
oil, natural gas, and minerals made by any person to the U.S.
or a foreign government, and includes as a ``payment'' taxes,
royalties, fees, licenses, production entitlements, bonuses,
and other material benefits, as determined by the Securities
and Exchange Commission.
The conference report amends the Securities Exchange
Act of 1934 to require the SEC to issue rules requiring each
resource extraction issuer (an issuer that engages in the
commercial development of oil, natural gas, or minerals) to
include in an annual report information relating to any payment
made by the issuer, a subsidiary or partner, or an entity under
its control to the U.S. or a foreign government for the purpose
of such commercial development. Requires such rules, to the
extent practicable, to support the U.S. commitment to
international transparency promotion efforts relating to such
commercial development.
Conflict Minerals
The conference report requires disclosure to the SEC by
all persons otherwise required to file with the SEC for whom
minerals originating in the Democratic Republic of Congo and
adjoining countries are necessary to the functionality or
production of a product manufactured by such person. Such a
public disclosure report by the person must describe the
measures taken to exercise due diligence on the source and
chain of custody of such materials, the products manufactured,
and other matters; requires an independent audit of the report.
The conference report requires that the Department of
State, in consultation with others, submit to Congress a
strategy to address the illicit minerals trade in the region,
and a map to address linkages between conflict minerals and
armed groups.
Section 1503 requires mining companies to disclose
mining safety violations that are material to investors.
TITLE XVI--SECTION 1256 CONTRACTS
The title contains a provision to address the
recharacterization of income as a result of increased exchange-
trading of derivatives contracts by clarifying that section
1256 of the Internal Revenue Code does not apply to certain
derivatives contracts transacted on exchanges.
Compliance with clause 9 of Rule XXI.--Pursuant to
clause 9 of rule XXI of the Rules of the House of
Representatives, neither this conference report nor the
accompanying joint statement of managers contains any
congressional earmarks, limited tax benefits, or limited tariff
benefits as defined in clause 9 of rule XXI.
From the Committee on Financial Services, for
consideration of the House bill and the Senate
amendment, and modifications committed to
conference:
Barney Frank of Massachusetts,
Paul E. Kanjorski,
Maxine Waters,
Carolyn B. Maloney,
Luis V. Gutierrez,
Melvin L. Watt,
Gregory W. Meeks of New York,
Dennis Moore of Kansas,
Mary Jo Kilroy,
Gary C. Peters,
From the Committee on Agriculture, for
consideration of subtitles A and B of title I,
secs. 1303, 1609, 1702, 1703, title III (except
secs. 3301 and 3302), secs. 4205(c),
4804(b)(8)(B), 5008, and 7509 of the House
bill, and sec. 102, subtitle A of title I,
secs. 406, 604(h), title VII, title VIII, secs.
983, 989E, 1027(j), 1088(a)(8), 1098, and 1099
of the Senate amendment, and modifications
committed to conference:
Collin C. Peterson,
Leonard L. Boswell,
From the Committee on Energy and Commerce, for
consideration of secs. 3009, 3102(a)(2), 4001,
4002, 4101-4114, 4201, 4202, 4204-4210, 4301-
4311, 4314, 4401-4403, 4410, 4501-4509, 4601-
4606, 4815, 4901, and that portion of sec.
8002(a)(3) which adds a new sec.313(d) to title
31, United States Code, of the House bill, and
that portion of sec. 502(a)(3) which adds a new
sec. 313(d) to title 31, United States Code,
secs. 722(e), 1001, 1002, 1011-1018, 1021-1024,
1027-1029, 1031-1034, 1036, 1037, 1041, 1042,
1048, 1051-1058, 1061-1067, 1101, and 1105 of
the Senate amendment, and modifications
committed to conference:
Bobby L. Rush,
From the Committee on the Judiciary, for
consideration of secs. 1101(e)(2), 1103(e)(2),
1104(i)(5) and (i)(6), 1105(h) and (i), 1110(c)
and (d), 1601, 1605, 1607, 1609, 1610, 1612(a),
3002(c)(3) and (c)(4), 3006, 3119, 3206,
4205(n), 4306(b), 4501-4509, 4603,
4804(b)(8)(A), 4901(c)(8)(D) and (e), 6003,
7203(a), 7205, 7207, 7209, 7210, 7213-7216,
7220, 7302, 7507, 7508, 9004, 9104, 9105,
9106(a), 9110(b), 9111, 9118, 9203(c), and
9403(b) of the House bill, and secs.
112(b)(5)(B), 113(h), 153(f), 201, 202, 205,
208-210, 211(a) and (b), 316, 502(a)(3),
712(c), 718(b), 723(a)(3), 724(b), 725(c), 728,
731, 733, 735(b), 744, 748, 753, 763(a), (c)
and (i), 764, 767, 809(f), 922, 924, 929B, 932,
991(b)(5), (c)(2)(G) and (c)(3)(H), 1023(c)(7)
and (c)(8), 1024(c)(3)(B), 1027(e), 1042,
1044(a), 1046(a), 1047, 1051-1058, 1063,
1088(a)(7)(A), 1090, 1095, 1096, 1098, 1104,
1151(b), and 1156(c) of the Senate amendment,
and modifications committed to conference:
John Conyers, Jr.,
Howard L. Berman,
From the Committee on Oversight and Government
Reform, for consideration of secs. 1000A, 1007,
1101(e)(3), 1203(d), 1212, 1217, 1254(c),
1609(h)(8)(B), 1611(d), 3301, 3302, 3304,
4106(b)(2) and (g)(4)(D), 4604, 4801, 4802,
5004, 7203(a), 7409, and 8002(a)(3) of the
House bill, and secs. 111(g), (i) and (j),
152(d)(2), (g) and (k), 210(h)(8), 319, 322,
404, 502(a)(3), 723(a)(3), 748, 763(a), 809(g),
922(a), 988, 989B, 989C, 989D, 989E, 1013(a),
1022(c)(6), 1064, 1152, and 1159(a) and (b) of
the Senate amendment, and modifications
committed to conference:
Edolphus Towns,
Elijah E. Cummings,
From the Committee on Small Business, for
consideration of secs. 1071 and 1104 of the
Senate amendment, and modifications committed
to conference:
Nydia M. Velazquez,
Heath Shuler,
Managers on the Part of the House.
Christopher J. Dodd,
Tim Johnson,
Jack Reed,
Charles E. Schumer,
From the Committee on Agriculture, Nutrition,
and Forestry:
Blanche L. Lincoln,
Patrick J. Leahy,
Tom Harkin,
Managers on the Part of the Senate.