II 

115TH CONGRESS 

1ST SESSION S. 881 

To reduce risks to the financial system by limiting banks’ ability to engage 

in certain risky activities and limiting conflicts of interest, to reinstate 

certain Glass-Steagall Act protections that were repealed by the GrammLeach-Bliley Act, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

APRIL 6 (legislative day, APRIL 4), 2017 

Ms. WARREN (for herself, Mr. MCCAIN, Ms. CANTWELL, and Mr. KING) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs 

A BILL 

To reduce risks to the financial system by limiting banks’ 

ability to engage in certain risky activities and limiting 

conflicts of interest, to reinstate certain Glass-Steagall 

Act protections that were repealed by the Gramm-LeachBliley Act, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘21st Century Glass5 Steagall Act of 2017’’. 

6 SEC. 2. FINDINGS AND PURPOSE. 

7 (a) FINDINGS.—Congress finds that— 


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1 (1) in response to a financial crisis and the en2 suing Great Depression, Congress enacted the Bank3 ing Act of 1933, known as the ‘‘Glass-Steagall Act’’, 

4 to prohibit commercial banks from offering invest5 ment banking and insurance services; 

6 (2) a series of deregulatory decisions by the 

7 Board of Governors of the Federal Reserve System 

8 and the Office of the Comptroller of the Currency, 

9 in addition to decisions by Federal courts, permitted 

10 commercial banks to engage in an increasing num11 ber of risky financial activities that had previously 

12 been restricted under the Glass-Steagall Act, and 

13 also vastly expanded the meaning of the ‘‘business of 

14 banking’’ and ‘‘closely related activities’’ in banking 

15 law; 

16 (3) in 1999, Congress enacted the ‘‘Gramm17 Leach-Bliley Act’’, which repealed the Glass-Steagall 

18 Act separation between commercial and investment 

19 banking and allowed for complex cross-subsidies and 

20 interconnections between commercial and investment 

21 banks; 

22 (4) former Kansas City Federal Reserve Presi23 dent Thomas Hoenig observed that ‘‘with the elimi24 nation of Glass-Steagall, the largest institutions with 

25 the greatest ability to leverage their balance sheets 


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1 increased their risk profile by getting into trading, 

2 market making, and hedge fund activities, adding 

3 ever greater complexity to their balance sheets.’’; 

4 (5) the Financial Crisis Inquiry Report issued 

5 by the Financial Crisis Inquiry Commission con6 cluded that, in the years between the passage of the 

7 Gramm-Leach Bliley Act and the global financial 

8 crisis, ‘‘regulation and supervision of traditional 

9 banking had been weakened significantly, allowing 

10 commercial banks and thrifts to operate with fewer 

11 constraints and to engage in a wider range of finan12 cial activities, including activities in the shadow 

13 banking system.’’. The Commission also concluded 

14 that ‘‘[t]his deregulation made the financial system 

15 especially vulnerable to the financial crisis and exac16 erbated its effects.’’; 

17 (6) a report by the Financial Stability Over18 sight Council pursuant to section 123 of the Dodd19 Frank Wall Street Reform and Consumer Protection 

20 Act (12 U.S.C. 5333) states that increased com21 plexity and diversity of financial activities at finan22 cial institutions may ‘‘shift institutions towards more 

23 risk-taking, increase the level of interconnectedness 

24 among financial firms, and therefore may increase 

25 systemic default risk. These potential costs may be 


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1 exacerbated in cases where the market perceives di2 verse and complex financial institutions as ‘too big 

3 to fail,’ which may lead to excessive risk taking and 

4 concerns about moral hazard.’’; 

5 (7) the Senate Permanent Subcommittee on In6 vestigations report, ‘‘Wall Street and the Financial 

7 Crisis: Anatomy of a Financial Collapse’’, states that 

8 repeal of the Glass-Steagall Act ‘‘made it more dif9 ficult for regulators to distinguish between activities 

10 intended to benefit customers versus the financial in11 stitution itself. The expanded set of financial serv12 ices investment banks were allowed to offer also con13 tributed to the multiple and significant conflicts of 

14 interest that arose between some investment banks 

15 and their clients during the financial crisis.’’; 

16 (8) the Senate Permanent Subcommittee on In17 vestigations report, ‘‘JPMorgan Chase Whale 

18 Trades: A Case History of Derivatives Risks and 

19 Abuses’’, describes how traders at JPMorgan Chase 

20 made risky bets using excess deposits that were 

21 partly insured by the Federal Government; 

22 (9) in Europe, the Vickers Independent Com23 mission on Banking (for the United Kingdom) and 

24 the Liikanen Report (for the Euro area) have both 

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1 tail banking’’ with ‘‘investment banking’’ or other 

2 forms of relatively high risk securities trading, and 

3 European countries are set on a path of separating 

4 various activities that are currently bundled together 

5 in the business of banking; 

6 (10) private sector actors prefer having access 

7 to underpriced public sector insurance, whether ex8 plicit (for insured deposits) or implicit (for ‘‘too big 

9 to fail’’ financial institutions), to subsidize dan10 gerous levels of risk-taking, which, from a broader 

11 social perspective, is not an advantageous arrange12 ment; and 

13 (11) the financial crisis, and the regulatory re14 sponse to the crisis, has led to more mergers be15 tween financial institutions, creating greater finan16 cial sector consolidation and increasing the domi17 nance of a few large, complex financial institutions 

18 that are generally considered to be ‘‘too big to fail’’, 

19 and therefore are perceived by the markets as hav20 ing an implicit guarantee from the Federal Govern21 ment to bail them out in the event of their failure. 

22 (b) PURPOSES.—The purposes of this Act are— 

23 (1) to reduce risks to the financial system by 

24 limiting the ability of banks to engage in activities 

25 other than socially valuable core banking activities; 


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1 (2) to protect taxpayers and reduce moral haz2 ard by removing explicit and implicit government 

3 guarantees for high-risk activities outside of the core 

4 business of banking; and 

5 (3) to eliminate any conflict of interest that 

6 arises from banks engaging in activities from which 

7 their profits are earned at the expense of their cus8 tomers or clients. 

9 SEC. 3. DEFINITIONS. 

10 In this Act— 

11 (1) the term ‘‘bank holding company’’ has the 

12 meaning given the term in section 2 of the Bank 

13 Holding Company Act of 1956 (12 U.S.C. 1841); 

14 and 

15 (2) the terms ‘‘insurance company’’, ‘‘insured 

16 depository institution’’, ‘‘securities entity’’, and 

17 ‘‘swaps entity’’ have the meanings given those terms 

18 in section 18(s)(6)(D) of the Federal Deposit Insur19 ance Act, as added by section 4(a) of this Act. 

20 SEC. 4. SAFE AND SOUND BANKING. 

21 (a) INSURED DEPOSITORY INSTITUTIONS.—Section 

22 18(s) of the Federal Deposit Insurance Act (12 U.S.C. 

23 1828(s)) is amended by adding at the end the following: 

24 ‘‘(6) LIMITATIONS ON BANKING AFFILI25 ATIONS.— 


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1 ‘‘(A) PROHIBITION ON AFFILIATIONS WITH

2 NONDEPOSITORY ENTITIES.—An insured depos3 itory institution may not— 

4 ‘‘(i) be or become an affiliate of any 

5 insurance company, securities entity, or 

6 swaps entity; 

7 ‘‘(ii) be in common ownership or con8 trol with any insurance company, securities 

9 entity, or swaps entity; or 

10 ‘‘(iii) engage in any activity that 

11 would cause the insured depository institu12 tion to qualify as an insurance company, 

13 securities entity, or swaps entity. 

14 ‘‘(B) INDIVIDUALS ELIGIBLE TO SERVE ON

15 BOARDS OF DEPOSITORY INSTITUTIONS.— 

16 ‘‘(i) IN GENERAL.—An individual who 

17 is an officer, director, partner, or employee 

18 of any securities entity, insurance com19 pany, or swaps entity may not serve at the 

20 same time as an officer, director, employee, 

21 or other institution-affiliated party of any 

22 insured depository institution. 

23 ‘‘(ii) EXCEPTION.—Clause (i) shall 

24 not apply with respect to service by any in25 dividual which is otherwise prohibited 


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1 under clause (i), if the appropriate Federal 

2 banking agency determines, by regulation 

3 with respect to a limited number of cases, 

4 that service by such an individual as an of5 ficer, director, employee, or other institu6 tion-affiliated party of an insured deposi7 tory institution would not unduly influ8 ence— 

9 ‘‘(I) the investment policies of 

10 the depository institution; or 

11 ‘‘(II) the advice that the institu12 tion provides to customers. 

13 ‘‘(iii) TERMINATION OF SERVICE.— 

14 Subject to a determination under clause 

15 (i), any individual described in clause (i) 

16 who, as of the date of enactment of the 

17 21st Century Glass-Steagall Act of 2017, 

18 is serving as an officer, director, employee, 

19 or other institution-affiliated party of any 

20 insured depository institution shall termi21 nate such service as soon as is practicable 

22 after such date of enactment, and in no 

23 event, later than the end of the 60-day pe24 riod beginning on that date of enactment. 


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1 ‘‘(C) TERMINATION OF EXISTING AFFILI2 ATIONS AND ACTIVITIES.— 

3 ‘‘(i) ORDERLY TERMINATION OF EX4 ISTING AFFILIATIONS AND ACTIVITIES.— 

5 Any affiliation, common ownership or con6 trol, or activity of an insured depository in7 stitution with any securities entity, insur8 ance company, swaps entity, or any other 

9 person, as of the date of enactment of the 

10 21st Century Glass-Steagall Act of 2017, 

11 which is prohibited under subparagraph 

12 (A) shall be terminated as soon as is prac13 ticable, and in no event later than the end 

14 of the 5-year period beginning on that date 

15 of enactment. 

16 ‘‘(ii) EARLY TERMINATION.—The ap17 propriate Federal banking agency, at any 

18 time after opportunity for hearing, may 

19 order termination of an affiliation, common 

20 ownership or control, or activity prohibited 

21 by clause (i) before the end of the 5-year 

22 period described in clause (i), if the agency 

23 determines that such action— 

24 ‘‘(I) is necessary to prevent 

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1 creased or unfair competition, con2 flicts of interest, or unsound banking 

3 practices; and 

4 ‘‘(II) is in the public interest. 

5 ‘‘(iii) EXTENSION.—Subject to a de6 termination under clause (ii), an appro7 priate Federal banking agency may extend 

8 the 5-year period described in clause (i) as 

9 to any particular insured depository insti10 tution for not more than an additional 6 

11 months at a time, if— 

12 ‘‘(I) the agency certifies that 

13 such extension would promote the 

14 public interest and would not pose a 

15 significant threat to the stability of 

16 the banking system or financial mar17 kets in the United States; and 

18 ‘‘(II) such extension, in the ag19 gregate, does not exceed 1 year for 

20 any single insured depository institu21 tion. 

22 ‘‘(iv) REQUIREMENTS FOR ENTITIES

23 RECEIVING AN EXTENSION.—Upon receipt 

24 of an extension under clause (iii), the in25 sured depository institution shall notify 


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1 shareholders of the insured depository in2 stitution and the general public that it has 

3 failed to comply with the requirements of 

4 clause (i). 

5 ‘‘(D) DEFINITIONS.—For purposes of this 

6 paragraph, the following definitions shall apply: 

7 ‘‘(i) INSURANCE COMPANY.—The term 

8 ‘insurance company’ has the meaning given 

9 the term in section 2(q) of the Bank Hold10 ing Company Act of 1956 (12 U.S.C. 

11 1841(q)). 

12 ‘‘(ii) INSURED DEPOSITORY INSTITU13 TION.—The term ‘insured depository insti14 tution’— 

15 ‘‘(I) has the meaning given the 

16 term in section 3(c)(2); and 

17 ‘‘(II) does not include a savings 

18 association controlled by a savings 

19 and loan holding company, as de20 scribed in section 10(c)(9)(C) of the 

21 Home Owners’ Loan Act (12 U.S.C. 

22 1467a(c)(9)(C)). 

23 ‘‘(iii) SECURITIES ENTITY.—The term 

24 ‘securities entity’— 


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1 ‘‘(I) includes any entity engaged 

2 in— 

3 ‘‘(aa) the issue, flotation, 

4 underwriting, public sale, or dis5 tribution of stocks, bonds, deben6 tures, notes, or other securities; 

7 ‘‘(bb) market making; 

8 ‘‘(cc) activities of a broker 

9 or dealer, as those terms are de10 fined in section 3(a) of the Secu11 rities Exchange Act of 1934 (15 

12 U.S.C. 78c(a)); 

13 ‘‘(dd) activities of a futures 

14 commission merchant; 

15 ‘‘(ee) activities of an invest16 ment adviser or investment com17 pany, as those terms are defined 

18 in section 202(a) of the Invest19 ment Advisers Act of 1940 (15 

20 U.S.C. 80b–2(a)) and section 

21 3(a)(1) of the Investment Com22 pany Act of 1940 (15 U.S.C. 

23 80a–3(a)(1)), respectively; or 

24 ‘‘(ff) hedge fund or private 

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1 ties of either privately or publicly 

2 held companies; and 

3 ‘‘(II) does not include a bank 

4 that, pursuant to its authorized trust 

5 and fiduciary activities— 

6 ‘‘(aa) purchases and sells in7 vestments for the account of its 

8 customers; or 

9 ‘‘(bb) provides financial or 

10 investment advice to its cus11 tomers. 

12 ‘‘(iv) SWAPS ENTITY.—The term 

13 ‘swaps entity’ means any swap dealer, se14 curity-based swap dealer, major swap par15 ticipant, or major security-based swap par16 ticipant, that is registered under— 

17 ‘‘(I) the Commodity Exchange 

18 Act (7 U.S.C. 1 et seq.); or 

19 ‘‘(II) the Securities Exchange 

20 Act of 1934 (15 U.S.C. 78a et seq.).’’. 

21 (b) LIMITATION ON BANKING ACTIVITIES.—Section 

22 21 of the Banking Act of 1933 (12 U.S.C. 378) is amend23 ed by adding at the end the following: 

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1 its’ includes the establishment and maintenance of any 

2 transaction account (as defined in section 19(b)(1)(C) of 

3 the Federal Reserve Act (12 U.S.C. 461(b)(1)(C))).’’. 

4 (c) PERMITTED ACTIVITIES OF NATIONAL BANKS.— 

5 The paragraph designated as ‘‘Seventh’’ of section 24 of 

6 the Revised Statutes (12 U.S.C. 24) is amended to read 

7 as follows: 

8 ‘‘Seventh. (A) To exercise by its board of direc9 tors or duly authorized officers or agents, subject to 

10 law, all such powers as are necessary to carry on the 

11 business of banking. 

12 ‘‘(B) As used in this paragraph, the term ‘busi13 ness of banking’ shall be limited to the following 

14 core banking services: 

15 ‘‘(i) RECEIVING DEPOSITS.—A national 

16 banking association may engage in the business 

17 of receiving deposits. 

18 ‘‘(ii) EXTENSIONS OF CREDIT.—A national 

19 banking association may— 

20 ‘‘(I) extend credit to individuals, busi21 nesses, not for profit organizations, and 

22 other entities; 

23 ‘‘(II) discount and negotiate promis24 sory notes, drafts, bills of exchange, and 

25 other evidences of debt; and 


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1 ‘‘(III) loan money on personal secu2 rity. 

3 ‘‘(iii) PAYMENT SYSTEMS.—A national 

4 banking association may participate in payment 

5 systems, defined as instruments, banking proce6 dures, and interbank funds transfer systems 

7 that ensure the circulation of money. 

8 ‘‘(iv) COIN AND BULLION.—A national 

9 banking association may buy, sell, and exchange 

10 coin and bullion. 

11 ‘‘(v) INVESTMENTS IN SECURITIES.— 

12 ‘‘(I) IN GENERAL.—A national bank13 ing association may invest in investment 

14 securities, defined as marketable obliga15 tions evidencing indebtedness of any per16 son, copartnership, association, or corpora17 tion in the form of bonds, notes, or deben18 tures (commonly known as ‘investment se19 curities’), obligations of the Federal Gov20 ernment, or any State or subdivision there21 of, and includes the definition of ‘invest22 ment securities’, as may be jointly pre23 scribed by regulation by— 

24 ‘‘(aa) the Comptroller of the Cur25 rency; 


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1 ‘‘(bb) the Federal Deposit Insur2 ance Corporation; and 

3 ‘‘(cc) the Board of Governors of 

4 the Federal Reserve System. 

5 ‘‘(II) LIMITATIONS.—The business of 

6 dealing in securities and stock by the asso7 ciation shall be limited to— 

8 ‘‘(aa) purchasing and selling such 

9 securities and stock without recourse, 

10 solely upon the order, and for the ac11 count of, customers, and in no case 

12 for its own account, and the associa13 tion shall not underwrite any issue of 

14 securities or stock; and 

15 ‘‘(bb) purchasing for its own ac16 count investment securities under 

17 such limitations and restrictions as 

18 the Comptroller of the Currency, the 

19 Federal Deposit Insurance Corpora20 tion, and the Board of Governors of 

21 the Federal Reserve System may 

22 jointly prescribe, by regulation. 

23 ‘‘(III) PROHIBITION ON AMOUNT OF

24 INVESTMENT.—In no event shall the total 

25 amount of the investment securities of any 


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1 single obligor or maker, held by the asso2 ciation for its own account, exceed 10 per3 cent of its capital stock actually paid in 

4 and unimpaired and 10 percent of its 

5 unimpaired surplus fund, except that such 

6 limitation shall not require any association 

7 to dispose of any securities lawfully held by 

8 it on August 23, 1935. 

9 ‘‘(C) PROHIBITION AGAINST TRANSACTIONS IN10 VOLVING STRUCTURED OR SYNTHETIC PRODUCTS.— 

11 A national banking association may not— 

12 ‘‘(i) invest in a structured or synthetic 

13 product, a financial instrument in which a re14 turn is calculated based on the value of, or by 

15 reference to the performance of, a security, 

16 commodity, swap, other asset, or an entity, or 

17 any index or basket composed of securities, 

18 commodities, swaps, other assets, or entities, 

19 other than customarily determined interest 

20 rates; or 

21 ‘‘(ii) otherwise engage in the business of 

22 receiving deposits or extending credit for trans23 actions involving structured or synthetic prod24 ucts.’’. 


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1 (d) PERMITTED ACTIVITIES OF FEDERAL SAVINGS

2 ASSOCIATIONS.—Section 5(c)(1) of the Home Owners’ 

3 Loan Act (12 U.S.C. 1464(c)(1)) is amended— 

4 (1) by striking subparagraph (Q); and 

5 (2) by redesignating subparagraphs (R) 

6 through (U) as subparagraphs (Q) through (T), re7 spectively. 

8 (e) CLOSELY RELATED ACTIVITIES.—Section 4(c) of 

9 the Bank Holding Company Act of 1956 (12 U.S.C. 

10 1843(c)) is amended— 

11 (1) in paragraph (8), by striking ‘‘had been de12 termined’’ and all that follows through the end and 

13 inserting the following: ‘‘are so closely related to 

14 banking so as to be a proper incident thereto, as 

15 provided under this paragraph or any rule or regula16 tion issued by the Board under this paragraph, pro17 vided that for purposes of this paragraph, closely re18 lated shall not be considered to include— 

19 ‘‘(A) serving as an investment adviser (as 

20 defined in section 2(a) of the Investment Com21 pany Act of 1940 (15 U.S.C. 80a–2(a))) to an 

22 investment company registered under that Act, 

23 including sponsoring, organizing, and managing 

24 a closed-end investment company; 


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1 ‘‘(B) agency transactional services for cus2 tomer investments, except that this subpara3 graph may not be construed as prohibiting pur4 chases and sales of investments for the account 

5 of customers conducted by a bank (or sub6 sidiary thereof) pursuant to the bank’s trust 

7 and fiduciary powers; 

8 ‘‘(C) investment transactions as principal, 

9 except for activities specifically allowed by para10 graph (14); and 

11 ‘‘(D) management consulting and coun12 seling activities;’’; 

13 (2) in paragraph (13), by striking ‘‘or’’ at the 

14 end; 

15 (3) by redesignating paragraph (14) as para16 graph (15); and 

17 (4) by inserting after paragraph (13) the fol18 lowing: 

19 ‘‘(14) purchasing, as an end user, any swap, to 

20 the extent that— 

21 ‘‘(A) the purchase of any such swap occurs 

22 contemporaneously with the underlying hedged 

23 item or hedged transaction; 


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1 ‘‘(B) there is formal documentation identi2 fying the hedging relationship with particularity 

3 at the inception of the hedge; and 

4 ‘‘(C) the swap is being used to hedge 

5 against exposure to— 

6 ‘‘(i) changes in the value of an indi7 vidual recognized asset or liability or an 

8 identified portion thereof that is attrib9 utable to a particular risk; 

10 ‘‘(ii) changes in interest rates; or 

11 ‘‘(iii) changes in the value of currency; 

12 or’’. 

13 (f) PROHIBITED ACTIVITIES.—Section 4(a) of the 

14 Bank Holding Company Act of 1956 (12 U.S.C. 1843(a)) 

15 is amended— 

16 (1) in paragraph (1), by striking ‘‘, or’’ and in17 serting a semicolon; 

18 (2) in paragraph (2), by striking the ‘‘require19 ments of this Act.’’ and inserting ‘‘requirements of 

20 this Act; or’’; and 

21 (3) by inserting before the undesignated matter 

22 following paragraph (2) the following: 

23 ‘‘(3) with the exception of the activities per24 mitted under subsection (c), engage in the business 

25 of a ‘securities entity’ or a ‘swaps entity’, as those 


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1 terms are defined in section 18(s)(6)(D) of the Fed2 eral Deposit Insurance Act (12 U.S.C. 

3 1828(s)(6)(D)), including dealing or making mar4 kets in securities, repurchase agreements, exchange 

5 traded and over-the-counter swaps, as defined by the 

6 Commodity Futures Trading Commission and the 

7 Securities and Exchange Commission, or structured 

8 or synthetic products, as defined in the paragraph 

9 designated as ‘Seventh’ of section 24 of the Revised 

10 Statutes (12 U.S.C. 24), or any other over-the11 counter securities, swaps, contracts, or any other 

12 agreement that derives its value from, or takes on 

13 the form of, such securities, derivatives, or contracts; 

14 ‘‘(4) engage in proprietary trading, as provided 

15 by section 13, or any rule or regulation under that 

16 section; 

17 ‘‘(5) own, sponsor, or invest in a hedge fund, or 

18 private equity fund, or any other fund, as provided 

19 by section 13, or any rule or regulation under that 

20 section, or any other fund that exhibits the charac21 teristics of a fund that takes on proprietary trading 

22 activities or positions; 

23 ‘‘(6) hold ineligible securities or derivatives; 

24 ‘‘(7) engage in market-making; or 

25 ‘‘(8) engage in prime brokerage activities.’’. 


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1 (g) ANTI-EVASION.— 

2 (1) IN GENERAL.—Any attempt to structure 

3 any contract, investment, instrument, or product in 

4 such a manner that the purpose or effect of such 

5 contract, investment, instrument, or product is to 

6 evade or attempt to evade the prohibitions described 

7 in section 18(s)(6) of the Federal Deposit Insurance 

8 Act (12 U.S.C. 1828(s)(6)), section 21(c) of the 

9 Banking Act of 1933 (12 U.S.C. 378(c)), the para10 graph designated as ‘‘Seventh’’ of section 24 of the 

11 Revised Statutes (12 U.S.C. 24), section 5(c)(1) of 

12 the Home Owners’ Loan Act (12 U.S.C. 

13 1464(c)(1)), or section 4(a) of the Bank Holding 

14 Company Act of 1956 (12 U.S.C. 1843(a)), as 

15 added or amended by this section, shall be consid16 ered a violation of the Federal Deposit Insurance 

17 Act (12 U.S.C. 1811 et seq.), the Banking Act of 

18 1933 (Public Law 73–66; 48 Stat. 162), section 24 

19 of the Revised Statutes (12 U.S.C. 24), the Home 

20 Owners’ Loan Act (12 U.S.C. 1461 et seq.), and the 

21 Bank Holding Company Act of 1956 (12 U.S.C. 

22 1841 et seq.), respectively. 

23 (2) TERMINATION.— 

24 (A) IN GENERAL.—Notwithstanding any 

25 other provision of law, if a Federal agency has 


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1 reasonable cause to believe that an insured de2 pository institution, securities entity, swaps en3 tity, insurance company, bank holding company, 

4 or other entity over which that Federal agency 

5 has regulatory authority has made an invest6 ment or engaged in an activity in a manner 

7 that functions as an evasion of the prohibitions 

8 described in paragraph (1) (including through 

9 an abuse of any permitted activity) or otherwise 

10 violates such prohibitions, the Federal agency 

11 shall— 

12 (i) order, after due notice and oppor13 tunity for hearing, the entity to terminate 

14 the activity and, as relevant, dispose of the 

15 investment; 

16 (ii) order, after the procedures de17 scribed in clause (i), the entity to pay a 

18 penalty equal to 10 percent of the entity’s 

19 net profits, averaged over the previous 3 

20 years, into the Treasury of the United 

21 States; and 

22 (iii) initiate proceedings described in 

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1 uals involved in evading the prohibitions 

2 described in paragraph (1). 

3 (B) CONSTRUCTION.—Nothing in this 

4 paragraph shall be construed to limit the inher5 ent authority of any Federal agency or State 

6 regulatory authority to further restrict any in7 vestments or activities under otherwise applica8 ble provisions of law. 

9 (3) REPORTING REQUIREMENT.— 

10 (A) IN GENERAL.—Not later than 1 year 

11 after the date of enactment of this Act, and 

12 every year thereafter, each Federal agency hav13 ing regulatory authority over any entity de14 scribed in paragraph (2)(A) shall submit to the 

15 Committee on Banking, Housing, and Urban 

16 Affairs of the Senate and the Committee on Fi17 nancial Services of the House of Representa18 tives and make available to the public a report, 

19 which shall identify— 

20 (i) the number and character of any 

21 activities that took place in the preceding 

22 year that function as an evasion of the 

23 prohibitions described in paragraph (1); 

24 (ii) the names of the particular enti25 ties engaged in those activities; and 


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•S 881 IS

1 (iii) the actions of the Federal agency 

2 taken under paragraph (2). 

3 (h) ATTESTATION.—Section 4 of the Bank Holding 

4 Company Act of 1956 (12 U.S.C. 1843), as amended by 

5 section 4(a)(1) of this Act, is amended by adding at the 

6 end the following: 

7 ‘‘(k) ATTESTATION.—Executives of any bank holding 

8 company or its affiliate shall attest in writing, under pen9 alty of perjury, that the bank holding company or affiliate 

10 is not engaged in any activity that is prohibited under sub11 section (a), except to the extent that such activity is per12 mitted under subsection (c).’’. 

13 SEC. 5. REPEAL OF GRAMM-LEACH-BLILEY ACT PROVI14 SIONS. 

15 (a) TERMINATION OF FINANCIAL HOLDING COM16 PANY DESIGNATION.— 

17 (1) IN GENERAL.—Section 4 of the Bank Hold18 ing Company Act of 1956 (12 U.S.C. 1843) is 

19 amended by striking subsections (k), (l), (m), (n), 

20 and (o). 

21 (2) TRANSITION.— 

22 (A) ORDERLY TERMINATION OF EXISTING

23 AFFILIATION.—In the case of a bank holding 

24 company which, pursuant to the amendments 

25 made by paragraph (1), is no longer authorized 


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1 to control or be affiliated with any entity that 

2 was permissible for a financial holding company 

3 on the day before the date of enactment of this 

4 Act, any affiliation, ownership or control, or ac5 tivity by the bank holding company that is not 

6 permitted for a bank holding company shall be 

7 terminated as soon as is practicable, and in no 

8 event later than the end of the 5-year period 

9 beginning on the date of enactment of this Act. 

10 (B) EARLY TERMINATION.—The Board of 

11 Governors of the Federal Reserve System (in 

12 this section referred to as the ‘‘Board’’), after 

13 opportunity for hearing, at any time, may ter14 minate an affiliation prohibited by subpara15 graph (A) before the end of the 5-year period 

16 described in subparagraph (A) if the Board de17 termines that such action— 

18 (i) is necessary to prevent undue con19 centration of resources, decreased or unfair 

20 competition, conflicts of interest, or un21 sound banking practices; and 

22 (ii) is in the public interest. 

23 (C) EXTENSION.—Subject to a determina24 tion under subparagraph (B), the Board may 

25 extend the 5-year period described in subparaVerDate Sep 11 2014 00:43 Apr 18, 2017 Jkt 069200 PO 00000 Frm 00026 Fmt 6652 Sfmt 6201 E:\BILLS\S881.IS S881

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•S 881 IS

1 graph (A), as to any particular bank holding 

2 company, for not more than an additional 6 

3 months at a time, if— 

4 (i) the Board certifies that such ex5 tension would promote the public interest 

6 and would not pose a significant risk to 

7 the stability of the banking system or fi8 nancial markets of the United States; and 

9 (ii) such extension, in the aggregate, 

10 does not exceed 1 year for any single bank 

11 holding company. 

12 (D) REQUIREMENTS FOR ENTITIES RE13 CEIVING AN EXTENSION.—Upon receipt of an 

14 extension under subparagraph (C), a bank hold15 ing company shall notify the shareholders of the 

16 bank holding company and the general public 

17 that the bank holding company has failed to 

18 comply with the requirements of subparagraph 

19 (A). 

20 (b) FINANCIAL SUBSIDIARIES OF NATIONAL BANKS

21 DISALLOWED.— 

22 (1) IN GENERAL.—Section 5136A of the Re23 vised Statutes (12 U.S.C. 24a) is repealed. 

24 (2) TRANSITION.— 


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1 (A) ORDERLY TERMINATION OF EXISTING

2 AFFILIATION.—In the case of a national bank 

3 which, pursuant to the amendment made by 

4 paragraph (1), is no longer authorized to con5 trol or be affiliated with a financial subsidiary 

6 as of the date of enactment of this Act, such af7 filiation, ownership or control, or activity shall 

8 be terminated as soon as is practicable, and in 

9 no event later than the end of the 5-year period 

10 beginning on the date of enactment of this Act. 

11 (B) EARLY TERMINATION.—The Comp12 troller of the Currency (in this section referred 

13 to as the ‘‘Comptroller’’), after opportunity for 

14 hearing, at any time, may terminate an affili15 ation prohibited by subparagraph (A) before the 

16 end of the 5-year period described in subpara17 graph (A) if the Comptroller determines, having 

18 due regard for the purposes of this Act, that 

19 such action— 

20 (i) is necessary to prevent undue con21 centration of resources, decreased or unfair 

22 competition, conflicts of interest, or un23 sound banking practices; and 

24 (ii) is in the public interest. 


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1 (C) EXTENSION.—Subject to a determina2 tion under subparagraph (B), the Comptroller 

3 may extend the 5-year period described in sub4 paragraph (A) as to any particular national 

5 bank for not more than an additional 6 months 

6 at a time, if— 

7 (i) the Comptroller certifies that such 

8 extension would promote the public inter9 est and would not pose a significant risk to 

10 the stability of the banking system or fi11 nancial markets of the United States; and 

12 (ii) such extension, in the aggregate, 

13 does not exceed 1 year for any single na14 tional bank. 

15 (D) REQUIREMENTS FOR ENTITIES RE16 CEIVING AN EXTENSION.—Upon receipt of an 

17 extension under subparagraph (C), a national 

18 bank shall notify the shareholders of the na19 tional bank and the general public that the na20 tional bank has failed to comply with the re21 quirements described in subparagraph (A). 

22 (3) CLERICAL AMENDMENT.—The table of sec23 tions for chapter one of title LXII of the Revised 

24 Statutes is amended by striking the item relating to 

25 section 5136A. 


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1 (c) REPEAL OF PROVISION RELATING TO FOREIGN

2 BANKS FILING AS FINANCIAL HOLDING COMPANIES.— 

3 Section 8(c) of the International Banking Act of 1978 (12 

4 U.S.C. 3106(c)) is amended by striking paragraph (3). 

5 SEC. 6. REPEAL OF BANKRUPTCY PROVISIONS. 

6 Title 11, United States Code, is amended by repeal7 ing sections 555, 559, 560, and 562. 

8 SEC. 7. TECHNICAL AND CONFORMING AMENDMENTS. 

9 (a) BANK HOLDING COMPANY ACT OF 1956.—The 

10 Bank Holding Company Act of 1956 (12 U.S.C. 1841 et 

11 seq.) is amended— 

12 (1) in section 2 (12 U.S.C. 1841)— 

13 (A) by striking subsection (p); and 

14 (B) by redesignating subsection (q) as sub15 section (p); and 

16 (2) in section 5 (12 U.S.C. 1844)— 

17 (A) in subsection (a), by striking the last 

18 sentence; 

19 (B) in subsection (c), by striking para20 graphs (3), (4), and (5); and 

21 (C) by striking subsection (g). 

22 (b) BANK HOLDING COMPANY ACT AMENDMENTS OF

23 1970.—Section 106(a) of the Bank Holding Company Act 

24 Amendments of 1970 (12 U.S.C. 1971(a)) is amended by 

25 striking the last sentence. 


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1 (c) CLAYTON ACT.—Section 7A(c) of the Clayton Act 

2 (15 U.S.C. 18a(c)) is amended— 

3 (1) in paragraph (7), by striking ‘‘, except 

4 that’’ and all that follows and inserting a semicolon; 

5 and 

6 (2) in paragraph (8), by striking ‘‘, except 

7 that’’ and all that follows and inserting a semicolon. 

8 (d) COMMODITY EXCHANGE ACT.—The Commodity 

9 Exchange Act (7 U.S.C. 1 et seq.) is amended— 

10 (1) in section 1a(21)(G) (7 U.S.C. 1a(21)(G)), 

11 by striking ‘‘(as defined in section 2 of the Bank 

12 Holding Company Act of 1956)’’; 

13 (2) in section 2(c)(2)(B)(i)(II)(dd) (7 U.S.C. 

14 2(c)(2)(B)(i)(II)(dd)), by striking ‘‘(as defined in 

15 section 2 of the Bank Holding Company Act of 

16 1956)’’; and 

17 (3) in section 2(h)(7)(C)(i)(VIII) (7 U.S.C. 

18 2(h)(7)(C)(i)(VIII)), by striking ‘‘, as defined in sec19 tion 4(k) of the Bank Holding Company Act of 

20 1956’’. 

21 (e) COMMUNITY REINVESTMENT ACT OF 1977.— 

22 Section 804 of the Community Reinvestment Act of 1977 

23 (12 U.S.C. 2903) is amended— 

24 (1) by striking subsection (c); and 


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1 (2) by redesignating subsection (d) as sub2 section (c). 

3 (f) DODD-FRANK WALL STREET REFORM AND CON4 SUMER PROTECTION ACT.—Section 201(a)(11)(B) of the 

5 Dodd-Frank Wall Street Reform and Consumer Protec6 tion Act (12 U.S.C. 5381(a)(11)(B)) is amended by strik7 ing ‘‘for purposes of section 4(k) of the Bank Holding 

8 Company Act of 1956 (12 U.S.C. 1843(k))’’ each place 

9 that term appears. 

10 (g) FEDERAL DEPOSIT INSURANCE ACT.—The Fed11 eral Deposit Insurance Act (12 U.S.C. 1811 et seq.) is 

12 amended— 

13 (1) in section 8(b)(3) (12 U.S.C. 1818(b)(3)), 

14 by striking ‘‘section 50’’ and inserting ‘‘section 48’’; 

15 (2) in section 18(u)(1)(B) (12 U.S.C. 

16 1828(u)(1)(B)), by striking ‘‘or section 45 of this 

17 Act’’; 

18 (3) by striking sections 45 and 46 (12 U.S.C. 

19 1831v and 1831w); and 

20 (4) by redesignating sections 47 through 50 as 

21 sections 45 through 48, respectively. 

22 (h) FEDERAL RESERVE ACT.—The Federal Reserve 

23 Act (12 U.S.C. 221 et seq.) is amended— 


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1 (1) in the 20th undesignated paragraph of sec2 tion 9 (12 U.S.C. 335), by striking the last sentence; 

3 and 

4 (2) in section 23A (12 U.S.C. 371c)— 

5 (A) in subsection (b)(11), by striking ‘‘sub6 paragraph (H) or (I) of section 4(k)(4) of the 

7 Bank Holding Company Act of 1956 or’’; 

8 (B) by striking subsection (e); and 

9 (C) by redesignating subsection (f) as sub10 section (e). 

11 (i) FINANCIAL STABILITY ACT OF 2010.—The Fi12 nancial Stability Act of 2010 (12 U.S.C. 5301 et seq.) 

13 is amended— 

14 (1) in section 113(c)(5) (12 U.S.C. 5323(c)(5)), 

15 by striking ‘‘(as defined in section 4(k) of the Bank 

16 Holding Company Act of 1956)’’; 

17 (2) in section 163 (12 U.S.C. 5363)— 

18 (A) by striking subsection (b); and 

19 (B) in subsection (a), by striking ‘‘(a)’’ 

20 and all that follows through ‘‘For purposes’’ 

21 and inserting ‘‘For purposes’’; 

22 (3) in section 167(b) (12 U.S.C. 5367(b)), by 

23 striking ‘‘under section 4(k) of the Bank Holding 

24 Company Act of 1956’’ each place that term ap25 pears; and 


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1 (4) in section 171(b) (12 U.S.C. 5371(b))— 

2 (A) by striking paragraph (3); and 

3 (B) by redesignating paragraphs (4) 

4 through (7) as paragraphs (3) through (6), re5 spectively. 

6 (j) GRAMM-LEACH-BLILEY ACT.—The Gramm7 Leach-Bliley Act (Public Law 106–102; 113 Stat. 1338) 

8 is amended— 

9 (1) by striking section 115 (12 U.S.C. 1820a); 

10 (2) in section 307(f) (15 U.S.C. 6715(f)), by 

11 amending paragraph (2) to read as follows: 

12 ‘‘(2) BOARD.—The term ‘Board’ has the mean13 ing given the term in section 2 of the Bank Holding 

14 Company Act of 1956 (12 U.S.C. 1841).’’; 

15 (3) in section 505(c) (15 U.S.C. 6805(c))— 

16 (A) by striking ‘‘section 47(g)(2)(B)(iii) of 

17 the Federal Deposit Insurance Act’’ and insert18 ing ‘‘section 45(g)(2)(B)(iii) of the Federal De19 posit Insurance Act’’; and 

20 (B) by striking ‘‘section 47(a)’’ and insert21 ing ‘‘section 45(a)’’; and 

22 (4) in section 509(3)(A) (15 U.S.C. 

23 6809(3)(A)), by striking ‘‘as described in section 

24 4(k) of the Bank Holding Company Act of 1956’’. 


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1 (k) HOME OWNERS’ LOAN ACT.—Section 10(c) of 

2 the Home Owners’ Loan Act (12 U.S.C. 1467a(c)) is 

3 amended— 

4 (1) in paragraph (2), by striking subparagraph 

5 (H); and 

6 (2) in paragraph (9)(A), by striking ‘‘per7 mitted’’ and all that follows and inserting ‘‘per8 mitted under paragraph (1)(C) or (2) of this sub9 section.’’. 

10 (l) INTERNAL REVENUE CODE.—Section 

11 864(f)(4)(C)(ii) of the Internal Revenue Code of 1986 is 

12 amended by striking ‘‘(within the meaning of section 2(p) 

13 of the Bank Holding Company Act of 1956 (12 U.S.C. 

14 1841(p))’’. 

15 (m) PAYMENT, CLEARING, AND SETTLEMENT SU16 PERVISION ACT OF 2010.—Section 803(5)(A) of the Pay17 ment, Clearing, and Settlement Supervision Act of 2010 

18 (12 U.S.C. 5462(5)(A)) is amended— 

19 (1) in clause (viii), by adding ‘‘and’’ at the end; 

20 (2) in clause (ix), by striking ‘‘; and’’ and in21 serting a period; and 

22 (3) by striking clause (x). 

23 (n) SECURITIES EXCHANGE ACT OF 1934.—The Se24 curities Exchange Act of 1934 (15 U.S.C. 78a et seq.) 

25 is amended— 


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1 (1) in section 3(a)(4)(B)(vi)(II) (15 U.S.C. 

2 78c(a)(4)(B)(vi)(II)), by striking ‘‘other than’’ and 

3 all that follows and inserting ‘‘other than a reg4 istered broker or dealer.’’; and 

5 (2) in section 3C(g)(3)(A) (15 U.S.C. 78c– 

6 3(g)(3)(A))— 

7 (A) in clause (vi), by adding ‘‘and’’ at the 

8 end; 

9 (B) in clause (vii), by striking the semi10 colon and inserting a period; and 

11 (C) by striking clause (viii). 

12 (o) TITLE 11.—Title 11, United States Code, is 

13 amended— 

14 (1) in section 101— 

15 (A) in paragraph (25)(E), by striking ‘‘, 

16 measured in accordance with section 562’’; 

17 (B) in paragraph (47)(A)(v), by striking ‘‘, 

18 measured in accordance with section 562 of this 

19 title’’; and 

20 (C) in paragraph (53B)(A)(vi), by striking 

21 ‘‘, measured in accordance with section 562’’; 

22 (2) in section 103(a), by striking ‘‘555 through 

23 557, and 559 through 562’’ and inserting ‘‘556, 

24 557, and 561’’; 

25 (3) in section 362(b)— 


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1 (A) in paragraph (6), by striking ‘‘555 or’’ 

2 each place that term appears; 

3 (B) in paragraph (7), by striking ‘‘(as de4 fined in section 559)’’ each place that term ap5 pears; 

6 (C) in paragraph (17), by striking ‘‘(as de7 fined in section 560)’’ each place that term ap8 pears; and 

9 (D) in paragraph (27), by striking ‘‘(as de10 fined in section 555, 556, 559, or 560)’’ each 

11 place that term appears and inserting ‘‘(as de12 fined in section 556)’’; 

13 (4) in section 502(g)— 

14 (A) by striking ‘‘(1)’’ before ‘‘A claim’’; 

15 and 

16 (B) by striking paragraph (2); 

17 (5) in section 553— 

18 (A) in subsection (a)— 

19 (i) in paragraph (2)(B)(ii), by striking 

20 ‘‘555, 556, 559, 560, or 561’’ and insert21 ing ‘‘556 or 561’’; and 

22 (ii) in paragraph (3)(C), by striking 

23 ‘‘555, 556, 559, 560, or 561’’ and insert24 ing ‘‘556 or 561’’; and 


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1 (B) in subsection (b)(1), by striking ‘‘555, 

2 556, 559, 560, 561’’ and inserting ‘‘556, 561’’; 

3 (6) in section 561(b)(1), by striking ‘‘555, 556, 

4 559, or 560’’ and inserting ‘‘556’’; 

5 (7) in section 741(7)(A)(xi), by striking ‘‘, 

6 measured in accordance with section 562’’; 

7 (8) in section 761(4)(J), by striking ‘‘, meas8 ured in accordance with section 562’’; and 

9 (9) in section 901(a), by striking ‘‘555, 556, 

10 557, 559, 560, 561, 562’’ and inserting ‘‘556, 557, 

11 561’’. 

Æ 


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