Systemic Risk Designation Improvement Act of 2016

Summary: Systemic Risk Designation Improvement Act of 2016   (Sec. 3) This bill amends the Dodd-Frank Wall Street Reform and Consumer Protection Act to authorize the Financial Stability Oversight Council (FSOC) to subject a bank holding company to enhanced supervision and prudential standards by the Board of Governors of the Federal Reserve System if FSOC makes a final determination that material financial distress at the bank holding company, or the nature, scope, size, scale, concentration, interconnectedness, or mix of its activities, could threaten the financial stability of the United States. This FSOC determination procedure replaces the current process under which bank holding companies with total consolidated assets of $50 billion or more are automatically subject to such enhanced supervision and prudential standards. FSOC must make these final determinations using an indicator-based measurement approach established by the Basel Committee on Banking Supervision to determine systemic importance, which considers each bank holding company's size, interconnectedness, available substitutes, global cross-jurisdictional activity, and complexity.  A bank holding company designated, as of this bill's enactment, as a Global Systemically Important Bank (GSIB) by the Financial Stability Board (FSB) shall be deemed to have been the subject of a final determination that it could pose a threat to U.S. financial stability, thereby making these GSIBs subject to enhanced supervision. (Sec. 4) The bill revises the Federal Reserve Board's authority over bank holding company acquisition restrictions, prohibitions on interlocks between management of different financial companies, and enhanced supervision and prudential standards to make these requirements subject to FSOC's determination instead of operating automatically when a bank meets a $50 billion threshold.  (Sec. 5) FSOC is prohibited from making a final determination concerning a bank holding company under this bill before one year after its enactment. A bank holding company shall be deemed to have been the subject of such a final determination during this one-year period, however, if its total consolidated assets are $50 billion or more. (Sec. 6) Bank holding companies with total consolidated assets of $50 billion or more that have not been the subject of a final determination for enhanced supervision and prudential standards remain subject to assessments by the Department of the Treasury for a temporary period to the same extent as a bank holding company that has been subject to a final determination. But the aggregate amount collected from all bank holding companies so assessed is limited to a specified amount to be transferred to: (1) FSOC to distribute to the Federal Reserve Board, the Federal Deposit Insurance Corporation (FDIC), and the general fund of the Treasury for administrative costs resulting from this bill; and (2) the FDIC for resolution costs resulting from this bill. A bank holding company so assessed shall no longer be subject to such assessments in the event it is subject to a final determination.  Assessments collected shall be in addition to, and not as a replacement of, any other assessments required by law.  (Sec. 7) Nothing in this bill may be construed as broadly applying international standards except as specifically provided for FSOC's use of Basel Committee determination factors and the oversight of FSB-designated GSIBs. 

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Systemic Risk Designation 
Improvement Act of 2016''.

SEC. 2. TABLE OF CONTENTS.

    The table of contents for the Dodd-Frank Wall Street Reform and 
Consumer Protection Act (12 U.S.C. 5301 et seq.) is amended by striking 
the item relating to section 113 and inserting the following:

``Sec. 113. Authority to require enhanced supervision and regulation of 
                            certain nonbank financial companies and 
                            certain bank holding companies.''.

SEC. 3. REVISIONS TO COUNCIL AUTHORITY.

    (a) Purposes and Duties.--Section 112 of the Dodd-Frank Wall Street 
Reform and Consumer Protection Act (12 U.S.C. 5322) is amended in 
subsection (a)(2)(I) by inserting before the semicolon ``, which have 
been the subject of a final determination under section 113''.
    (b) Bank Holding Company Designation.--Section 113 of the Dodd-
Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 5323) 
is amended--
            (1) by amending the heading for such section to read as 
        follows: ``authority to require enhanced supervision and 
        regulation of certain nonbank financial companies and certain 
        bank holding companies'';
            (2) by redesignating subsections (c), (d), (e), (f), (g), 
        (h), and (i) as subsections (d), (e), (f), (g), (h), (i), and 
        (j), respectively;
            (3) by inserting after subsection (b) the following:
    ``(c) Bank Holding Companies Subject to Enhanced Supervision and 
Prudential Standards Under Section 165.--
            ``(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 bank holding company shall be subject to 
        enhanced supervision and prudential standards by the Board of 
        Governors, in accordance with section 165, if the Council 
        determines, based on the considerations in paragraph (2), that 
        material financial distress at the bank holding company, or the 
        nature, scope, size, scale, concentration, interconnectedness, 
        or mix of the activities of the bank holding 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 use the indicator-based 
        measurement approach established by the Basel Committee on 
        Banking Supervision to determine systemic importance, which 
        considers--
                    ``(A) the size of the bank holding company;
                    ``(B) the interconnectedness of the bank holding 
                company;
                    ``(C) the extent of readily available substitutes 
                or financial institution infrastructure for the 
                services of the bank holding company;
                    ``(D) the global cross-jurisdictional activity of 
                the bank holding company; and
                    ``(E) the complexity of the bank holding company.
            ``(3) GSIBs designated by operation of law.--
        Notwithstanding any other provision of this subsection, a bank 
        holding company that is designated, as of the date of enactment 
        of this subsection, as a Global Systemically Important Bank by 
        the Financial Stability Board shall be deemed to have been the 
        subject of a final determination under paragraph (1).'';
            (4) in subsection (d), as so redesignated--
                    (A) in paragraph (1)(A), by striking ``subsection 
                (a)(2) or (b)(2)'' and inserting ``subsection (a)(2), 
                (b)(2), or (c)(2)''; and
                    (B) in paragraph (4), by striking ``Subsections (d) 
                through (h)'' and inserting ``Subsections (e) through 
                (i)'';
            (5) in subsections (e), (f), (g), (h), (i), and (j)--
                    (A) by striking ``subsections (a) and (b)'' each 
                place such term appears and inserting ``subsections 
                (a), (b), and (c)''; and
                    (B) by striking ``nonbank financial company'' each 
                place such term appears and inserting ``bank holding 
                company for which there has been a determination under 
                subsection (c) or nonbank financial company'';
            (6) in subsection (g), as so redesignated, by striking 
        ``subsection (e)'' and inserting ``subsection (f)'';
            (7) in subsection (h), as so redesignated, by striking 
        ``subsection (a), (b), or (c)'' and inserting ``subsection (a), 
        (b), (c), or (d)''; and
            (8) in subsection (i), as so redesignated, by striking 
        ``subsection (d)(2), (e)(3), or (f)(5)'' and inserting 
        ``subsection (e)(2), (f)(3), or (g)(5)''.
    (c) Enhanced Supervision.--Section 115 of the Dodd-Frank Wall 
Street Reform and Consumer Protection Act (12 U.S.C. 5325) is amended--
            (1) in subsection (a)(1), by striking ``large, 
        interconnected bank holding companies'' and inserting ``bank 
        holding companies which have been the subject of a final 
        determination under section 113'';
            (2) in subsection (a)(2)--
                    (A) in subparagraph (A), by striking ``; or'' at 
                the end and inserting a period;
                    (B) by striking ``the Council may'' and all that 
                follows through ``differentiate'' and inserting ``the 
                Council may differentiate''; and
                    (C) by striking subparagraph (B); and
            (3) in subsection (b)(3), by striking ``subsections (a) and 
        (b) of section 113'' each place such term appears and inserting 
        ``subsections (a), (b), and (c) of section 113''.
    (d) Reports.--Section 116(a) of the Dodd-Frank Wall Street Reform 
and Consumer Protection Act (12 U.S.C. 5326(a)) is amended by striking 
``with total consolidated assets of $50,000,000,000 or greater'' and 
inserting ``which has been the subject of a final determination under 
section 113''.
    (e) Mitigation.--Section 121 of the Dodd-Frank Wall Street Reform 
and Consumer Protection Act (12 U.S.C. 5331) is amended--
            (1) in subsection (a), by striking ``with total 
        consolidated assets of $50,000,000,000 or more'' and inserting 
        ``which has been the subject of a final determination under 
        section 113''; and
            (2) in subsection (c), by striking ``subsection (a) or (b) 
        of section 113'' and inserting ``subsection (a), (b), or (c) of 
        section 113''.
    (f) Office of Financial Research.--Section 155 of the Dodd-Frank 
Wall Street Reform and Consumer Protection Act (12 U.S.C. 5345) is 
amended in subsection (d) by striking ``with total consolidated assets 
of 50,000,000,000 or greater'' and inserting ``which have been the 
subject of a final determination under section 113''.

SEC. 4. REVISIONS TO BOARD AUTHORITY.

    (a) Acquisitions.--Section 163 of the Dodd-Frank Wall Street Reform 
and Consumer Protection Act (12 U.S.C. 5363) is amended by striking 
``with total consolidated assets equal to or greater than 
$50,000,000,000'' each place such term appears and inserting ``which 
has been the subject of a final determination under section 113''.
    (b) Management Interlocks.--Section 164 of the Dodd-Frank Wall 
Street Reform and Consumer Protection Act (12 U.S.C. 5364) is amended 
by striking ``with total consolidated assets equal to or greater than 
$50,000,000,000'' and inserting ``which has been the subject of a final 
determination under section 113''.
    (c) Enhanced Supervision and Prudential Standards.--Section 165 of 
the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 
U.S.C. 5365) is amended--
            (1) in subsection (a), by striking ``with total 
        consolidated assets equal to or greater than $50,000,000,000'' 
        and inserting ``which have been the subject of a final 
        determination under section 113'';
            (2) in subsection (a)(2)--
                    (A) by striking ``(A) In general.--''; and
                    (B) by striking subparagraph (B);
            (3) by striking ``subsections (a) and (b) of section 113'' 
        each place such term appears and inserting ``subsections (a), 
        (b), and (c) of section 113''; and
            (4) in subsection (j), by striking ``with total 
        consolidated assets equal to or greater than $50,000,000,000'' 
        and inserting ``which has been the subject of a final 
        determination under section 113''.
    (d) Conforming Amendment.--The second subsection (s) (relating to 
``Assessments, Fees, and Other Charges for Certain Companies'') of 
section 11 of the Federal Reserve Act (12 U.S.C. 248) is amended--
            (1) by redesignating such subsection as subsection (t); and
            (2) in paragraph (2)--
                    (A) in subparagraph (A), by striking ``having total 
                consolidated assets of $50,000,000,000 or more;'' and 
                inserting ``which have been the subject of a final 
                determination under section 113 of the Dodd-Frank Wall 
                Street Reform and Consumer Protection Act; and'';
                    (B) by striking subparagraph (B); and
                    (C) by redesignating subparagraph (C) as 
                subparagraph (B).

SEC. 5. EFFECTIVE DATE; RULE OF APPLICATION.

    (a) Effective Date.--The Financial Stability Oversight Council may 
begin proceedings with respect to a bank holding company under section 
113(c)(1) of the Dodd-Frank Wall Street Reform and Consumer Protection 
Act, as added by this Act, on the date of the enactment of this Act, 
but may not make a final determination under such section 113(c)(1) 
with respect to a bank holding company before the end of the 1-year 
period beginning on the date of the enactment of this Act.
    (b) Immediate Application to Large Bank Holding Companies.--During 
the 1-year period described under subsection (a), a bank holding 
company with total consolidated assets equal to or greater than 
$50,000,000,000 shall be deemed to have been the subject of a final 
determination under section 113(c)(1) of the Dodd-Frank Wall Street 
Reform and Consumer Protection Act.

SEC. 6. EXISTING ASSESSMENT TERMINATION SCHEDULE.

    (a) Temporary Extension of Existing Assessment.--
            (1) In general.--Each bank holding company with total 
        consolidated assets equal to or greater than $50,000,000,000 
        and which has not been the subject of a final determination 
        under section 113 of the Dodd-Frank Wall Street Reform and 
        Consumer Protection Act (12 U.S.C. 5323) shall be subject to 
        assessments by the Secretary of the Treasury to the same extent 
        as a bank holding company that has been subject to such a final 
        determination.
            (2) Limitation on amount of assessments.--The aggregate 
        amount collected pursuant to paragraph (1) from all bank 
        holding companies assessed under such paragraph shall be 
        $115,000,000.
            (3) Expedited assessments.--If necessary, the Secretary of 
        the Treasury shall expedite assessments made pursuant to 
        paragraph (1) to ensure that all $115,000,000 of assessments 
        permitted by paragraph (2) is collected before fiscal year 
        2018.
            (4) Payment period options.--The Secretary of the Treasury 
        shall offer the option of payments spread out before the end of 
        fiscal year 2018, or shorter periods including the option of a 
        one-time payment, at the discretion of each bank holding 
        company paying assessments pursuant to paragraph (1).
            (5) Assessments to be made in addition to any other 
        assessments.--The assessments collected pursuant to paragraph 
        (1) shall be in addition to, and not as a replacement of, any 
        assessments required under any other law.
    (b) Use of Assessments.--Of the total amount collected pursuant to 
subsection (a)--
            (1) $60,000,000 shall be transferred to the Financial 
        Stability Oversight Council to pay for any administrative costs 
        resulting from this Act and the amendments made by this Act, of 
        which the Financial Stability Oversight Council shall 
        distribute $20,000,000 to the Board of Governors of the Federal 
        Reserve System, $20,000,000 to the Federal Deposit Insurance 
        Corporation, and $20,000,000 to the general fund of the 
        Treasury; and
            (2) $55,000,000 shall be transferred to the Federal Deposit 
        Insurance Corporation to pay for any resolution costs resulting 
        from this Act and the amendments made by this Act.
    (c) Treatment Upon Determination.--A bank holding company assessed 
under this section shall no longer be subject to such assessments in 
the event it is subject to a final determination under section 113 of 
the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 
U.S.C. 5323). Any prior payments made by such a banking holding company 
pursuant to an assessment under this section shall be nonrefundable.
    (d) Rule of Construction.--A bank holding company deemed to have 
been the subject of a final determination under section 113 of the 
Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 
5323) under section 5(b) shall not be subject to assessments under 
subsection (a) solely by operation of section 5(b).

SEC. 7. RULE OF CONSTRUCTION.

    Nothing in this Act or the amendments made by this Act may be 
construed as broadly applying international standards except as 
specifically provided under paragraphs (2) and (3) of section 113(c) of 
the Dodd-Frank Wall Street Reform and Consumer Protection Act, as added 
by section 3.

            Passed the House of Representatives December 1, 2016.

            Attest:

                                                 KAREN L. HAAS,

                                                                 Clerk.