II 

113TH CONGRESS 

1ST SESSION S. 1282 

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certain Glass-Steagall Act protections that were repealed by the GrammLeach-Bliley Act, and for other purposes.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

JULY 11, 2013 

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Act protections that were repealed by the Gramm-LeachBliley Act, and for other purposes. 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 2013’’. 

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16 (3) in 1999, Congress enacted the ‘‘Gramm17 Leach-Bliley Act’’, which repealed the Glass-Steagall 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

7 Gramm-Leach Bliley and the global financial crisis, 

8 ‘‘regulation and supervision of traditional banking 

9 had been weakened significantly, allowing commer10 cial banks and thrifts to operate with fewer con11 straints and to engage in a wider range of financial 

12 activities, including activities in the shadow banking 

13 system.’’. The Commission also concluded that 

14 ‘‘[t]his deregulation made the financial system espe15 cially vulnerable to the financial crisis and exacer16 bated 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 states that increased complexity and diversity of 

21 financial activities at financial institutions may 

22 ‘‘shift institutions towards more risk-taking, increase 

23 the level of interconnectedness among financial 

24 firms, and therefore may increase systemic default 

25 risk. These potential costs may be exacerbated in 


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1 cases where the market perceives diverse and com2 plex financial institutions as ‘too big to fail,’ which 

3 may lead to excessive risk taking and concerns about 

4 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 Glass-Steagall ‘‘made it more difficult for 

9 regulators to distinguish between activities intended 

10 to benefit customers versus the financial institution 

11 itself. The expanded set of financial services invest12 ment banks were allowed to offer also contributed to 

13 the multiple and significant conflicts of interest that 

14 arose between some investment banks and their cli15 ents 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 

25 found that there is no inherent reason to bundle ‘‘reVerDate Mar 15 2010 23:54 Jul 11, 2013 Jkt 029200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1282.IS S1282

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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) PURPOSE.—The purposes of this Act are— 

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

24 limiting banks’ ability to engage in activities other 

25 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 conflicts of interest that arise 

6 from banks engaging in activities from which their 

7 profits are earned at the expense of their customers 

8 or clients. 

9 SEC. 3. SAFE AND SOUND BANKING. 

10 (a) INSURED DEPOSITORY INSTITUTIONS.—Section 

11 18(s) of the Federal Deposit Insurance Act (12 U.S.C. 

12 1828(s)) is amended by adding at the end the following: 

13 ‘‘(6) LIMITATIONS ON BANKING AFFILI14 ATIONS.— 

15 ‘‘(A) PROHIBITION ON AFFILIATIONS WITH

16 NONDEPOSITORY ENTITIES.—An insured depos17 itory institution may not— 

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

19 insurance company, securities entity, or 

20 swaps entity; 

21 ‘‘(ii) be in common ownership or con22 trol with any insurance company, securities 

23 entity, or swaps entity; or 

24 ‘‘(iii) engage in any activity that 

25 would cause the insured depository instituVerDate Mar 15 2010 23:54 Jul 11, 2013 Jkt 029200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1282.IS S1282

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1 tion to qualify as an insurance company, 

2 securities entity, or swaps entity. 

3 ‘‘(B) INDIVIDUALS ELIGIBLE TO SERVE ON

4 BOARDS OF DEPOSITORY INSTITUTIONS.— 

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

6 is an officer, director, partner, or employee 

7 of any securities entity, insurance com8 pany, or swaps entity may not serve at the 

9 same time as an officer, director, employee, 

10 or other institution-affiliated party of any 

11 insured depository institution. 

12 ‘‘(ii) EXCEPTION.—Clause (i) does not 

13 apply with respect to service by any indi14 vidual which is otherwise prohibited under 

15 clause (i), if the appropriate Federal bank16 ing agency determines, by regulation with 

17 respect to a limited number of cases, that 

18 service by such an individual as an officer, 

19 director, employee, or other institution-af20 filiated party of an insured depository in21 stitution would not unduly influence the in22 vestment policies of the depository institu23 tion or the advice that the institution pro24 vides to customers. 


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1 ‘‘(iii) TERMINATION OF SERVICE.— 

2 Subject to a determination under clause 

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

4 who, as of the date of enactment of the 

5 21st Century Glass-Steagall Act of 2013, 

6 is serving as an officer, director, employee, 

7 or other institution-affiliated party of any 

8 insured depository institution shall termi9 nate such service as soon as is practicable 

10 after such date of enactment, and in no 

11 event, later than the end of the 60-day pe12 riod beginning on that date of enactment. 

13 ‘‘(C) TERMINATION OF EXISTING AFFILI14 ATIONS AND ACTIVITIES.— 

15 ‘‘(i) ORDERLY TERMINATION OF EX16 ISTING AFFILIATIONS AND ACTIVITIES.— 

17 Any affiliation, common ownership or con18 trol, or activity of an insured depository in19 stitution with any securities entity, insur20 ance company, or swaps entity, or any 

21 other person, as of the date of enactment 

22 of the 21st Century Glass-Steagall Act of 

23 2013, which is prohibited under subpara24 graph (A) shall be terminated as soon as 

25 is practicable, and in no event later than 


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1 the end of the 5-year period beginning on 

2 that date of enactment. 

3 ‘‘(ii) EARLY TERMINATION.—The ap4 propriate Federal banking agency, after 

5 opportunity for hearing, at any time, may 

6 order termination of an affiliation, common 

7 ownership or control, or activity prohibited 

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

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

10 determines that— 

11 ‘‘(I) such action is necessary to 

12 prevent undue concentration of re13 sources, decreased or unfair competi14 tion, conflicts of interest, or unsound 

15 banking practices; and 

16 ‘‘(II) is in the public interest. 

17 ‘‘(iii) EXTENSION.—Subject to a de18 termination under clause (ii), an appro19 priate Federal banking agency may extend 

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

21 to any particular insured depository insti22 tution for not more than an additional 6 

23 months at a time, if— 

24 ‘‘(I) the agency certifies that 

25 such extension would promote the 


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1 public interest and would not pose a 

2 significant threat to the stability of 

3 the banking system or financial mar4 kets in the United States; and 

5 ‘‘(II) such extension, in the ag6 gregate, does not exceed 1 year for 

7 any one insured depository institution. 

8 ‘‘(iv) REQUIREMENTS FOR ENTITIES

9 RECEIVING AN EXTENSION.—Upon receipt 

10 of an extension under clause (iii), the in11 sured depository institution shall notify its 

12 shareholders and the general public that it 

13 has failed to comply with the requirements 

14 of clause (i). 

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

16 paragraph, the following definitions shall apply: 

17 ‘‘(i) INSURANCE COMPANY.—The term 

18 ‘insurance company’ has the same meaning 

19 as in section 2(q) of the Bank Holding 

20 Company Act of 1956 (12 U.S.C. 

21 1841(q)). 

22 ‘‘(ii) SECURITIES ENTITY.—Except as 

23 provided in clause (iii), the term ‘securities 

24 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; 

12 ‘‘(dd) activities of a futures 

13 commission merchant; 

14 ‘‘(ee) activities of an invest15 ment adviser or investment com16 pany, as those terms are defined 

17 in the Investment Advisers Act of 

18 1940 and the Investment Com19 pany Act of 1940, respectively; or 

20 ‘‘(ff) hedge fund or private 

21 equity investments in the securi22 ties of either privately or publicly 

23 held companies; and 

24 ‘‘(II) does not include a bank 

25 that, pursuant to its authorized trust 


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1 and fiduciary activities, purchases and 

2 sells investments for the account of its 

3 customers or provides financial or in4 vestment advice to its customers. 

5 ‘‘(iii) SWAPS ENTITY.—The term 

6 ‘swaps entity’ means any swap dealer, se7 curity-based swap dealer, major swap par8 ticipant, or major security-based swap par9 ticipant, that is registered under— 

10 ‘‘(I) the Commodity Exchange 

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

12 ‘‘(II) the Securities Exchange 

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

14 ‘‘(iv) INSURED DEPOSITORY INSTITU15 TION.—The term ‘insured depository insti16 tution’— 

17 ‘‘(I) has the same meaning as in 

18 section 3(c)(2); and 

19 ‘‘(II) does not include a savings 

20 association controlled by a savings 

21 and loan holding company, as de22 scribed in section 10(c)(9)(C) of the 

23 Home Owners’ Loan Act (12 U.S.C. 

24 1467a(c)(9)(C)).’’. 


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1 (b) LIMITATION ON BANKING ACTIVITIES.—Section 

2 21 of the Banking Act of 1933 (12 U.S.C. 378) is amend3 ed by adding at the end the following: 

4 ‘‘(c) BUSINESS OF RECEIVING DEPOSITS.—For pur5 poses of this section, the term ‘business of receiving depos6 its’ includes the establishment and maintenance of any 

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

8 the Federal Reserve Act).’’. 

9 (c) PERMITTED ACTIVITIES OF NATIONAL BANKS.— 

10 Section 24 (Seventh) of the Revised Statutes of the United 

11 States (12 U.S.C. 24 (Seventh)) is amended to read as 

12 follows: 

13 ‘‘Seventh. (A) To exercise by its board of direc14 tors or duly authorized officers or agents, subject to 

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

16 business of banking. 

17 ‘‘(B) As used in this paragraph, the term ‘busi18 ness of banking’ shall be limited to the following 

19 core banking services: 

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

21 banking association may engage in the business 

22 of receiving deposits. 

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

24 banking association may— 


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1 ‘‘(I) extend credit to individuals, busi2 nesses, not for profit organizations, and 

3 other entities; 

4 ‘‘(II) discount and negotiate promis5 sory notes, drafts, bills of exchange, and 

6 other evidences of debt; and 

7 ‘‘(III) loan money on personal secu8 rity. 

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

10 banking association may participate in payment 

11 systems, defined as instruments, banking proce12 dures, and interbank funds transfer systems 

13 that ensure the circulation of money. 

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

15 banking association may buy, sell, and exchange 

16 coin and bullion. 

17 ‘‘(v) INVESTMENTS IN SECURITIES.— 

18 ‘‘(I) IN GENERAL.—A national bank19 ing association may invest in investment 

20 securities, defined as marketable obliga21 tions evidencing indebtedness of any per22 son, copartnership, association, or corpora23 tion in the form of bonds, notes, or deben24 tures (commonly known as ‘investment se25 curities’), obligations of the Federal GovVerDate Mar 15 2010 23:54 Jul 11, 2013 Jkt 029200 PO 00000 Frm 00014 Fmt 6652 Sfmt 6201 E:\BILLS\S1282.IS S1282

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1 ernment, or any State or subdivision there2 of, under such further definition of the 

3 term ‘investment securities’ as the Comp4 troller of the Currency, the Federal De5 posit Insurance Corporation, and the 

6 Board of Governors of the Federal Reserve 

7 System may jointly prescribe, by regula8 tion. 

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

10 dealing in securities and stock by the asso11 ciation shall be limited to purchasing and 

12 selling such securities and stock without 

13 recourse, solely upon the order, and for the 

14 account of, customers, and in no case for 

15 its own account, and the association shall 

16 not underwrite any issue of securities or 

17 stock. The association may purchase for its 

18 own account investment securities under 

19 such limitations and restrictions as the 

20 Comptroller of the Currency, the Federal 

21 Deposit Insurance Corporation, and the 

22 Board of Governors of the Federal Reserve 

23 System may jointly prescribe, by regula24 tion. In no event shall the total amount of 

25 the investment securities of any one obligor 


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1 or maker, held by the association for its 

2 own account, exceed at any time 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 shall not invest in a 

12 structured or synthetic product, a financial instru13 ment in which a return is calculated based on the 

14 value of, or by reference to the performance of, a se15 curity, commodity, swap, other asset, or an entity, or 

16 any index or basket composed of securities, commod17 ities, swaps, other assets, or entities, other than cus18 tomarily determined interest rates, or otherwise en19 gage in the business of receiving deposits or extend20 ing credit for transactions involving structured or 

21 synthetic products.’’. 

22 (d) PERMITTED ACTIVITIES OF FEDERAL SAVINGS

23 ASSOCIATIONS.— 


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1 (1) IN GENERAL.—Section 5(c)(1) of the Home 

2 Owners’ Loan Act (12 U.S.C. 1464(c)(1)) is amend3 ed— 

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

5 (B) by redesignating subparagraphs (R) 

6 through (U) as subparagraphs (Q) through (T), 

7 respectively. 

8 (2) CONFORMING AMENDMENT.—Section 

9 10(c)(9)(A) of the Home Owners’ Loan Act (12 

10 U.S.C. 1467a(c)(9)(A)) is amended by striking ‘‘per11 mitted—’’ and all that follows through clause (ii) 

12 and inserting ‘‘permitted under paragraph (1)(C) or 

13 (2).’’. 

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

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

16 1843(c)) is amended— 

17 (1) in paragraph (8), by striking ‘‘had been de18 termined’’ and all that follows through the end and 

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

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

21 provided under this paragraph or any rule or regula22 tion issued by the Board under this paragraph, pro23 vided that the following shall not be considered 

24 closely related for purposes of this paragraph: 


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1 ‘‘(A) Serving as an investment advisor (as 

2 defined in section 2(a)(20) of the Investment 

3 Company Act of 1940 (15 U.S.C. 80a– 

4 2(a)(20))) to an investment company registered 

5 under that Act, including sponsoring, orga6 nizing, and managing a closed-end investment 

7 company. 

8 ‘‘(B) Agency transactional services for cus9 tomer investments, except that this subpara10 graph may not be construed as prohibiting pur11 chases and sales of investments for the account 

12 of customers conducted by a bank (or sub13 sidiary thereof) pursuant to the bank’s trust 

14 and fiduciary powers. 

15 ‘‘(C) Investment transactions as principal, 

16 except for activities specifically allowed by para17 graph (14). 

18 ‘‘(D) Management consulting and coun19 seling activities.’’; 

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

21 end; 

22 (3) by redesignating paragraph (14) as para23 graph (15); and 

24 (4) by inserting after paragraph (13) the fol25 lowing: 


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

2 the extent that— 

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

4 contemporaneously with the underlying hedged 

5 item or hedged transaction; 

6 ‘‘(B) there is formal documentation identi7 fying the hedging relationship with particularity 

8 at the inception of the hedge; and 

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

10 against exposure to— 

11 ‘‘(i) changes in the value of an indi12 vidual recognized asset or liability or an 

13 identified portion thereof that is attrib14 utable to a particular risk; 

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

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

17 or’’. 

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

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

20 is amended— 

21 (1) in paragraph (1), by striking ‘‘or’’ at the 

22 end; 

23 (2) in paragraph (2), by striking the period at 

24 the end and inserting ‘‘; or’’; and 


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1 (3) by inserting before the undesignated matter 

2 following paragraph (2), the following: 

3 ‘‘(3) with the exception of the activities per4 mitted under subsection (c), engage in the business 

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

6 terms are defined in section 18(s)(6)(D) of the Fed7 eral Deposit Insurance Act (12 U.S.C. 

8 1828(s)(6)(D)), including, without limitation, deal9 ing or making markets in securities, repurchase 

10 agreements, exchange traded and over-the-counter 

11 swaps, as defined by the Commodity Futures Trad12 ing Commission and the Securities and Exchange 

13 Commission, or structured or synthetic products, as 

14 defined in section 24 (Seventh) of the Revised Stat15 utes of the United States (12 U.S.C. 24 (Seventh)), 

16 or any other over-the-counter securities, swaps, con17 tracts, or any other agreement that derives its value 

18 from, or takes on the form of, such securities, de19 rivatives, or contracts; 

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

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

22 section; 

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

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

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


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1 section, or any other fund which exhibits the charac2 teristics of a fund that takes on proprietary trading 

3 activities or positions; 

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

5 ‘‘(7) engage in market-making; or 

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

7 (g) ANTI-EVASION.— 

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

9 any contract, investment, instrument, or product in 

10 such a manner that the purpose or effect of such 

11 contract, investment, instrument, or product is to 

12 evade or attempt to evade the prohibitions described 

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

14 Act, section 21(c) of the Banking Act of 1933, para15 graph (Seventh) of section 24 of the Revised Stat16 utes of the United States, section 5(c)(1) of the 

17 Home Owners’ Loan Act, or section 4(a) of the 

18 Bank Holding Company Act of 1956, as added or 

19 amended by this section, shall be considered a viola20 tion of the Federal Deposit Insurance Act, the 

21 Banking Act of 1933, section 24 of the Revised 

22 Statutes of the United States, the Home Owners’ 

23 Loan Act, and the Bank Holding Company Act of 

24 1956, respectively. 

25 (2) TERMINATION.— 


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1 (A) IN GENERAL.—Notwithstanding any 

2 other provision of law, if a Federal agency has 

3 reasonable cause to believe that an insured de4 pository institution, securities entity, swaps en5 tity, insurance company, bank holding company, 

6 or other entity over which that agency has reg7 ulatory authority has made an investment or 

8 engaged in an activity in a manner that func9 tions as an evasion of the prohibitions described 

10 in paragraph (1) (including through an abuse 

11 of any permitted activity) or otherwise violates 

12 such prohibitions, the agency shall— 

13 (i) order, after due notice and oppor14 tunity for hearing, the entity to terminate 

15 the activity and, as relevant, dispose of the 

16 investment; 

17 (ii) order, after the procedures de18 scribed in clause (i), the entity to pay a 

19 penalty equal to 10 percent of the entity’s 

20 net profits, averaged over the previous 3 

21 years, into the United States Treasury; 

22 and 

23 (iii) initiate proceedings described in 

24 12 U.S.C. 1818(e) for individuals involved 


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1 in evading the prohibitions described in 

2 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.—Each year, 

10 each Federal agency having regulatory authority 

11 over any entity described in paragraph (2)(A) shall 

12 issue a report to the Committee on Banking, Hous13 ing, and Urban Affairs of the Senate and the Com14 mittee on Financial Services of the House of Rep15 resentatives, and shall make such report available to 

16 the public. The report shall identify the number and 

17 character of any activities that took place in the pre18 ceding year that function as an evasion of the prohi19 bitions described in paragraph (1), the names of the 

20 particular entities engaged in those activities, and 

21 the actions of the agency taken under paragraph 

22 (2). 

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

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


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1 section 3(a)(1) of this Act, is amended by adding at the 

2 end the following: 

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

4 company or its affiliate shall attest in writing, under pen5 alty of perjury, that the bank holding company or affiliate 

6 is not engaged in any activity that is prohibited under sub7 section (a), except to the extent that such activity is per8 mitted under subsection (c).’’. 

9 SEC. 4. REPEAL OF GRAMM-LEACH-BLILEY ACT PROVI10 SIONS. 

11 (a) TERMINATION OF FINANCIAL HOLDING COM12 PANY DESIGNATION.— 

13 (1) IN GENERAL.—Section 4 of the Bank Hold14 ing Company Act of 1956 (12 U.S.C. 1843) is 

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

16 and (o). 

17 (2) TRANSITION.— 

18 (A) ORDERLY TERMINATION OF EXISTING

19 AFFILIATION.—In the case of a bank holding 

20 company which, pursuant to the amendments 

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

22 to control or be affiliated with any entity that 

23 was permissible for a financial holding company 

24 on the day before the date of enactment of this 

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1 tivity by the bank holding company which is not 

2 permitted for a bank holding company shall be 

3 terminated as soon as is practicable, and in no 

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

5 beginning on the date of enactment of this Act. 

6 (B) EARLY TERMINATION.—The Board of 

7 Governors of the Federal Reserve System (in 

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

9 opportunity for hearing, at any time, may ter10 minate an affiliation prohibited by subpara11 graph (A) before the end of the 5-year period 

12 described in subparagraph (A), if the Board de13 termines that such action— 

14 (i) is necessary to prevent undue con15 centration of resources, decreased or unfair 

16 competition, conflicts of interest, or un17 sound banking practices; and 

18 (ii) is in the public interest. 

19 (C) EXTENSION.—Subject to a determina20 tion under subparagraph (B), the Board may 

21 extend the 5-year period described in subpara22 graph (A), as to any particular bank holding 

23 company, for not more than an additional 6 

24 months at a time, if— 


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1 (i) the Board certifies that such ex2 tension would promote the public interest 

3 and would not pose a significant risk to 

4 the stability of the banking system or fi5 nancial markets of the United States; and 

6 (ii) such extension, in the aggregate, 

7 does not exceed 1 year for any one bank 

8 holding company. 

9 (D) REQUIREMENTS FOR ENTITIES RE10 CEIVING AN EXTENSION.—Upon receipt of an 

11 extension under subparagraph (C), the bank 

12 holding company shall notify its shareholders 

13 and the general public that it has failed to com14 ply with the requirements of subparagraph (A). 

15 (3) TECHNICAL AND CONFORMING AMEND16 MENTS.— 

17 (A) BANK HOLDING COMPANY ACT OF

18 1956.—The Bank Holding Company Act of 

19 1956 (12 U.S.C. 1841 et seq.) is amended— 

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

21 (I) by striking subsection (p); 

22 and 

23 (II) by redesignating subsection 

24 (q) as subsection (p); 


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1 (ii) in section 5(c) (12 U.S.C. 

2 1844(c)), by striking paragraphs (3), (4), 

3 and (5); and 

4 (iii) in section 5 (12 U.S.C. 1844), by 

5 striking subsection (g). 

6 (4) FDIA.—The Federal Deposit Insurance Act 

7 (12 U.S.C. 1811 et seq.) is amended— 

8 (A) by striking sections 45 and 46 (12 

9 U.S.C. 1831v, 1831w); and 

10 (B) by redesignating sections 47 through 

11 50 as sections 45 through 48, respectively. 

12 (5) GRAMM-LEACH-BLILEY.—Subtitle B of title 

13 I of the Gramm-Leach-Bliley Act is amended by 

14 striking section 115 (12 U.S.C. 1820a). 

15 (b) FINANCIAL SUBSIDIARIES OF NATIONAL BANKS

16 DISALLOWED.— 

17 (1) IN GENERAL.—Section 5136A of the Re18 vised Statutes of the United States (12 U.S.C. 24a) 

19 is repealed. 

20 (2) TRANSITION.— 

21 (A) ORDERLY TERMINATION OF EXISTING

22 AFFILIATION.—In the case of a national bank 

23 which, pursuant to the amendment made by 

24 paragraph (1), is no longer authorized to con25 trol or be affiliated with a financial subsidiary 


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1 as of the date of enactment of this Act, such af2 filiation, ownership or control, or activity shall 

3 be terminated as soon as is practicable, and in 

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

5 beginning on the date of enactment of this Act. 

6 (B) EARLY TERMINATION.—The Comp7 troller of the Currency (in this section referred 

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

9 hearing, at any time, may terminate an affili10 ation prohibited by subparagraph (A) before the 

11 end of the 5-year period described in subpara12 graph (A), if the Comptroller determines, hav13 ing due regard for the purposes of this Act, 

14 that— 

15 (i) such action is necessary to prevent 

16 undue concentration of resources, de17 creased or unfair competition, conflicts of 

18 interest, or unsound banking practices; and 

19 (ii) is in the public interest. 

20 (C) EXTENSION.—Subject to a determina21 tion under subparagraph (B), the Comptroller 

22 may extend the 5-year period described in sub23 paragraph (A) as to any particular national 

24 bank for not more than an additional 6 months, 

25 if— 


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1 (i) the Comptroller certifies that such 

2 extension would promote the public inter3 est and would not pose a significant risk to 

4 the stability of the banking system or fi5 nancial markets of the United States; and 

6 (ii) such extension, in the aggregate, 

7 does not exceed 1 year for any single na8 tional bank. 

9 (D) REQUIREMENTS FOR ENTITIES RE10 CEIVING AN EXTENSION.—Upon receipt of an 

11 extension under subparagraph (C), the national 

12 bank shall notify its shareholders and the gen13 eral public that it has failed to comply with the 

14 requirements described in subparagraph (A). 

15 (3) TECHNICAL AND CONFORMING AMEND16 MENT.—The 20th undesignated paragraph of section 

17 9 of the Federal Reserve Act (12 U.S.C. 335) is 

18 amended by striking the last sentence. 

19 (4) CLERICAL AMENDMENT.—The table of sec20 tions for chapter one of title LXII of the Revised 

21 Statutes of the United States is amended by striking 

22 the item relating to section 5136A. 

23 (c) REPEAL OF PROVISION RELATING TO FOREIGN

24 BANKS FILING AS FINANCIAL HOLDING COMPANIES.— 


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

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

3 SEC. 5. REPEAL OF BANKRUPTCY PROVISIONS. 

4 Title 11, United States Code, is amended by striking 

5 sections 555, 559, 560, 561, and 562. 

Æ 


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