II 

114TH CONGRESS 

1ST SESSION S. 1709 

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certain Glass-Steagall Act protections that were repealed by the GrammLeach-Bliley Act, and for other purposes.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 7, 2015 

Ms. WARREN (for herself, Mr. MCCAIN, Mr. KING, and Ms. CANTWELL) 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Act protections that were repealed by the Gramm-LeachBliley Act, and for other purposes. 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 2015’’. 

6 SEC. 2. FINDINGS AND PURPOSE. 

7 (a) FINDINGS.—Congress finds that— 


smartinez on DSK4TPTVN1PROD with BILLS
2 

•S 1709 IS

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16 (3) in 1999, Congress enacted the ‘‘Gramm17 Leach-Bliley Act’’, which repealed the Glass-Steagall 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


smartinez on DSK4TPTVN1PROD with BILLS
3 

•S 1709 IS

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 


smartinez on DSK4TPTVN1PROD with BILLS
4 

•S 1709 IS

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 Sep 11 2014 00:41 Jul 08, 2015 Jkt 049200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1709.IS S1709

smartinez on DSK4TPTVN1PROD with BILLS
5 

•S 1709 IS

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; 


smartinez on DSK4TPTVN1PROD with BILLS
6 

•S 1709 IS

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. 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 Sep 11 2014 00:41 Jul 08, 2015 Jkt 049200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1709.IS S1709

smartinez on DSK4TPTVN1PROD with BILLS
7 

•S 1709 IS

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) shall 

13 not apply with respect to service by any in14 dividual which is otherwise prohibited 

15 under clause (i), if the appropriate Federal 

16 banking agency determines, by regulation 

17 with respect to a limited number of cases, 

18 that service by such an individual as an of19 ficer, director, employee, or other institu20 tion-affiliated party of an insured deposi21 tory institution would not unduly influ22 ence— 

23 ‘‘(I) the investment policies of 

24 the depository institution; or 


smartinez on DSK4TPTVN1PROD with BILLS
8 

•S 1709 IS

1 ‘‘(II) the advice that the institu2 tion provides to customers. 

3 ‘‘(iii) TERMINATION OF SERVICE.— 

4 Subject to a determination under clause 

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

6 who, as of the date of enactment of the 

7 21st Century Glass-Steagall Act of 2015, 

8 is serving as an officer, director, employee, 

9 or other institution-affiliated party of any 

10 insured depository institution shall termi11 nate such service as soon as is practicable 

12 after such date of enactment, and in no 

13 event, later than the end of the 60-day pe14 riod beginning on that date of enactment. 

15 ‘‘(C) TERMINATION OF EXISTING AFFILI16 ATIONS AND ACTIVITIES.— 

17 ‘‘(i) ORDERLY TERMINATION OF EX18 ISTING AFFILIATIONS AND ACTIVITIES.— 

19 Any affiliation, common ownership or con20 trol, or activity of an insured depository in21 stitution with any securities entity, insur22 ance company, swaps entity, or any other 

23 person, as of the date of enactment of the 

24 21st Century Glass-Steagall Act of 2015, 

25 which is prohibited under subparagraph 


smartinez on DSK4TPTVN1PROD with BILLS
9 

•S 1709 IS

1 (A) shall be terminated as soon as is prac2 ticable, and in no event later than the end 

3 of the 5-year period beginning on that date 

4 of enactment. 

5 ‘‘(ii) EARLY TERMINATION.—The ap6 propriate Federal banking agency, at any 

7 time after opportunity for hearing, may 

8 order termination of an affiliation, common 

9 ownership or control, or activity prohibited 

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

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

12 determines that such action— 

13 ‘‘(I) is necessary to prevent 

14 undue concentration of resources, de15 creased or unfair competition, con16 flicts of interest, or unsound banking 

17 practices; and 

18 ‘‘(II) is in the public interest. 

19 ‘‘(iii) EXTENSION.—Subject to a de20 termination under clause (ii), an appro21 priate Federal banking agency may extend 

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

23 to any particular insured depository insti24 tution for not more than an additional 6 

25 months at a time, if— 


smartinez on DSK4TPTVN1PROD with BILLS
10 

•S 1709 IS

1 ‘‘(I) the agency certifies that 

2 such extension would promote the 

3 public interest and would not pose a 

4 significant threat to the stability of 

5 the banking system or financial mar6 kets in the United States; and 

7 ‘‘(II) such extension, in the ag8 gregate, does not exceed 1 year for 

9 any single insured depository institu10 tion. 

11 ‘‘(iv) REQUIREMENTS FOR ENTITIES

12 RECEIVING AN EXTENSION.—Upon receipt 

13 of an extension under clause (iii), the in14 sured depository institution shall notify 

15 shareholders of the insured depository in16 stitution and the general public that it has 

17 failed to comply with the requirements of 

18 clause (i). 

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

20 paragraph, the following definitions shall apply: 

21 ‘‘(i) INSURANCE COMPANY.—The term 

22 ‘insurance company’ has the meaning given 

23 the term in section 2(q) of the Bank Hold24 ing Company Act of 1956 (12 U.S.C. 

25 1841(q)). 


smartinez on DSK4TPTVN1PROD with BILLS
11 

•S 1709 IS

1 ‘‘(ii) INSURED DEPOSITORY INSTITU2 TION.—The term ‘insured depository insti3 tution’— 

4 ‘‘(I) has the meaning given the 

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

6 ‘‘(II) does not include a savings 

7 association controlled by a savings 

8 and loan holding company, as de9 scribed in section 10(c)(9)(C) of the 

10 Home Owners’ Loan Act (12 U.S.C. 

11 1467a(c)(9)(C)). 

12 ‘‘(iii) SECURITIES ENTITY.—Except as 

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

14 entity’— 

15 ‘‘(I) includes any entity engaged 

16 in— 

17 ‘‘(aa) the issue, flotation, 

18 underwriting, public sale, or dis19 tribution of stocks, bonds, deben20 tures, notes, or other securities; 

21 ‘‘(bb) market making; 

22 ‘‘(cc) activities of a broker 

23 or dealer, as those terms are de24 fined in section 3(a) of the SecuVerDate Sep 11 2014 00:41 Jul 08, 2015 Jkt 049200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S1709.IS S1709

smartinez on DSK4TPTVN1PROD with BILLS
12 

•S 1709 IS

1 rities Exchange Act of 1934 (15 

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

3 ‘‘(dd) activities of a futures 

4 commission merchant; 

5 ‘‘(ee) activities of an invest6 ment adviser or investment com7 pany, as those terms are defined 

8 in section 202(a) of the Invest9 ment Advisers Act of 1940 (15 

10 U.S.C. 80b–2(a)) and section 

11 3(a)(1) of the Investment Com12 pany Act of 1940 (15 U.S.C. 

13 80a-3(a)(1)), respectively; or 

14 ‘‘(ff) hedge fund or private 

15 equity investments in the securi16 ties of either privately or publicly 

17 held companies; and 

18 ‘‘(II) does not include a bank 

19 that, pursuant to its authorized trust 

20 and fiduciary activities— 

21 ‘‘(aa) purchases and sells in22 vestments for the account of its 

23 customers; or 


smartinez on DSK4TPTVN1PROD with BILLS
13 

•S 1709 IS

1 ‘‘(bb) provides financial or 

2 investment advice to its cus3 tomers. 

4 ‘‘(iv) SWAPS ENTITY.—The term 

5 ‘swaps entity’ means any swap dealer, se6 curity-based swap dealer, major swap par7 ticipant, or major security-based swap par8 ticipant, that is registered under— 

9 ‘‘(I) the Commodity Exchange 

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

11 ‘‘(II) the Securities Exchange 

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

13 (b) LIMITATION ON BANKING ACTIVITIES.—Section 

14 21 of the Banking Act of 1933 (12 U.S.C. 378) is amend15 ed by adding at the end the following: 

16 ‘‘(c) BUSINESS OF RECEIVING DEPOSITS.—For pur17 poses of this section, the term ‘business of receiving depos18 its’ includes the establishment and maintenance of any 

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

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

21 (c) PERMITTED ACTIVITIES OF NATIONAL BANKS.— 

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

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

24 as follows: 


smartinez on DSK4TPTVN1PROD with BILLS
14 

•S 1709 IS

1 ‘‘Seventh. (A) To exercise by its board of direc2 tors or duly authorized officers or agents, subject to 

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

4 business of banking. 

5 ‘‘(B) As used in this paragraph, the term ‘busi6 ness of banking’ shall be limited to the following 

7 core banking services: 

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

9 banking association may engage in the business 

10 of receiving deposits. 

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

12 banking association may— 

13 ‘‘(I) extend credit to individuals, busi14 nesses, not for profit organizations, and 

15 other entities; 

16 ‘‘(II) discount and negotiate promis17 sory notes, drafts, bills of exchange, and 

18 other evidences of debt; and 

19 ‘‘(III) loan money on personal secu20 rity. 

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

22 banking association may participate in payment 

23 systems, defined as instruments, banking proce24 dures, and interbank funds transfer systems 

25 that ensure the circulation of money. 


smartinez on DSK4TPTVN1PROD with BILLS
15 

•S 1709 IS

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

2 banking association may buy, sell, and exchange 

3 coin and bullion. 

4 ‘‘(v) INVESTMENTS IN SECURITIES.— 

5 ‘‘(I) IN GENERAL.—A national bank6 ing association may invest in investment 

7 securities, defined as marketable obliga8 tions evidencing indebtedness of any per9 son, copartnership, association, or corpora10 tion in the form of bonds, notes, or deben11 tures (commonly known as ‘investment se12 curities’), obligations of the Federal Gov13 ernment, or any State or subdivision there14 of, and includes the definition of ‘invest15 ment securities’, as may be jointly pre16 scribed by regulation by— 

17 ‘‘(aa) the Comptroller of the Cur18 rency; 

19 ‘‘(bb) the Federal Deposit Insur20 ance Corporation; and 

21 ‘‘(cc) the Board of Governors of 

22 the Federal Reserve System. 

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

24 dealing in securities and stock by the asso25 ciation shall be limited to— 


smartinez on DSK4TPTVN1PROD with BILLS
16 

•S 1709 IS

1 ‘‘(aa) purchasing and selling such 

2 securities and stock without recourse, 

3 solely upon the order, and for the ac4 count of, customers, and in no case 

5 for its own account, and the associa6 tion shall not underwrite any issue of 

7 securities or stock; and 

8 ‘‘(bb) purchasing for its own ac9 count investment securities under 

10 such limitations and restrictions as 

11 the Comptroller of the Currency, the 

12 Federal Deposit Insurance Corpora13 tion, and the Board of Governors of 

14 the Federal Reserve System may 

15 jointly prescribe, by regulation. 

16 ‘‘(III) PROHIBITION ON AMOUNT OF

17 INVESTMENT.—In no event shall the total 

18 amount of the investment securities of any 

19 single obligor or maker, held by the asso20 ciation for its own account, exceed 10 per21 cent of its capital stock actually paid in 

22 and unimpaired and 10 percent of its 

23 unimpaired surplus fund, except that such 

24 limitation shall not require any association 


smartinez on DSK4TPTVN1PROD with BILLS
17 

•S 1709 IS

1 to dispose of any securities lawfully held by 

2 it on August 23, 1935. 

3 ‘‘(C) PROHIBITION AGAINST TRANSACTIONS IN4 VOLVING STRUCTURED OR SYNTHETIC PRODUCTS.— 

5 A national banking association may not— 

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

7 product, a financial instrument in which a re8 turn is calculated based on the value of, or by 

9 reference to the performance of, a security, 

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

11 any index or basket composed of securities, 

12 commodities, swaps, other assets, or entities, 

13 other than customarily determined interest 

14 rates; or 

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

16 receiving deposits or extending credit for trans17 actions involving structured or synthetic prod18 ucts.’’. 

19 (d) PERMITTED ACTIVITIES OF FEDERAL SAVINGS

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

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

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

23 (2) by redesignating subparagraphs (R) 

24 through (U) as subparagraphs (Q) through (T), re25 spectively. 


smartinez on DSK4TPTVN1PROD with BILLS
18 

•S 1709 IS

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

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

3 1843(c)) is amended— 

4 (1) in paragraph (8), by striking ‘‘had been de5 termined’’ and all that follows through the end and 

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

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

8 provided under this paragraph or any rule or regula9 tion issued by the Board under this paragraph, pro10 vided that the following shall not be considered 

11 closely related for purposes of this paragraph: 

12 ‘‘(A) Serving as an investment adviser (as 

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

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

15 2(a)(20))) to an investment company registered 

16 under that Act, including sponsoring, orga17 nizing, and managing a closed-end investment 

18 company. 

19 ‘‘(B) Agency transactional services for cus20 tomer investments, except that this subpara21 graph may not be construed as prohibiting pur22 chases and sales of investments for the account 

23 of customers conducted by a bank (or sub24 sidiary thereof) pursuant to the bank’s trust 

25 and fiduciary powers. 


smartinez on DSK4TPTVN1PROD with BILLS
19 

•S 1709 IS

1 ‘‘(C) Investment transactions as principal, 

2 except for activities specifically allowed by para3 graph (14). 

4 ‘‘(D) Management consulting and coun5 seling activities.’’; 

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

7 end; 

8 (3) by redesignating paragraph (14) as para9 graph (15); and 

10 (4) by inserting after paragraph (13) the fol11 lowing: 

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

13 the extent that— 

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

15 contemporaneously with the underlying hedged 

16 item or hedged transaction; 

17 ‘‘(B) there is formal documentation identi18 fying the hedging relationship with particularity 

19 at the inception of the hedge; and 

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

21 against exposure to— 

22 ‘‘(i) changes in the value of an indi23 vidual recognized asset or liability or an 

24 identified portion thereof that is attrib25 utable to a particular risk; 


smartinez on DSK4TPTVN1PROD with BILLS
20 

•S 1709 IS

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

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

3 or’’. 

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

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

6 is amended— 

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

8 end and inserting a semicolon; 

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

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

11 (3) by inserting before the undesignated matter 

12 following paragraph (2) the following: 

13 ‘‘(3) with the exception of the activities per14 mitted under subsection (c), engage in the business 

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

16 terms are defined in section 18(s)(6)(D) of the Fed17 eral Deposit Insurance Act (12 U.S.C. 

18 1828(s)(6)(D)), including dealing or making mar19 kets in securities, repurchase agreements, exchange 

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

21 Commodity Futures Trading Commission and the 

22 Securities and Exchange Commission, or structured 

23 or synthetic products, as defined in the paragraph 

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

25 Statutes (12 U.S.C. 24), or any other over-theVerDate Sep 11 2014 00:41 Jul 08, 2015 Jkt 049200 PO 00000 Frm 00020 Fmt 6652 Sfmt 6201 E:\BILLS\S1709.IS S1709

smartinez on DSK4TPTVN1PROD with BILLS
21 

•S 1709 IS

1 counter securities, swaps, contracts, or any other 

2 agreement that derives its value from, or takes on 

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

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

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

6 section; 

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

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

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

10 section, or any other fund which exhibits the charac11 teristics of a fund that takes on proprietary trading 

12 activities or positions; 

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

14 ‘‘(7) engage in market-making; or 

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

16 (g) ANTI-EVASION.— 

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

18 any contract, investment, instrument, or product in 

19 such a manner that the purpose or effect of such 

20 contract, investment, instrument, or product is to 

21 evade or attempt to evade the prohibitions described 

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

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

24 Banking Act of 1933 (12 U.S.C. 378(c)), the para25 graph designated as ‘‘Seventh’’ of section 24 of the 


smartinez on DSK4TPTVN1PROD with BILLS
22 

•S 1709 IS

1 Revised Statutes, section 5(c)(1) of the Home Own2 ers’ Loan Act (12 U.S.C. 1464(c)(1)), or section 

3 4(a) of the Bank Holding Company Act of 1956 (12 

4 U.S.C. 1843(a)), as added or amended by this sec5 tion, shall be considered a violation of the Federal 

6 Deposit Insurance Act (12 U.S.C. 1811 et seq.), the 

7 Banking Act of 1933 (Public Law 73–66; 48 Stat. 

8 162), section 24 of the Revised Statutes (12 U.S.C. 

9 24), the Home Owners’ Loan Act (12 U.S.C. 1461 

10 et seq.), and the Bank Holding Company Act of 

11 1956 (12 U.S.C. 1841 et seq.), respectively. 

12 (2) TERMINATION.— 

13 (A) IN GENERAL.—Notwithstanding any 

14 other provision of law, if a Federal agency has 

15 reasonable cause to believe that an insured de16 pository institution, securities entity, swaps en17 tity, insurance company, bank holding company, 

18 or other entity over which that agency has reg19 ulatory authority has made an investment or 

20 engaged in an activity in a manner that func21 tions as an evasion of the prohibitions described 

22 in paragraph (1) (including through an abuse 

23 of any permitted activity) or otherwise violates 

24 such prohibitions, the agency shall— 


smartinez on DSK4TPTVN1PROD with BILLS
23 

•S 1709 IS

1 (i) order, after due notice and oppor2 tunity for hearing, the entity to terminate 

3 the activity and, as relevant, dispose of the 

4 investment; 

5 (ii) order, after the procedures de6 scribed in clause (i), the entity to pay a 

7 penalty equal to 10 percent of the entity’s 

8 net profits, averaged over the previous 3 

9 years, into the United States Treasury; 

10 and 

11 (iii) initiate proceedings described in 

12 section 8(e) of the Federal Deposit Insur13 ance Act (12 U.S.C. 1818(e)) for individ14 uals involved in evading the prohibitions 

15 described in paragraph (1). 

16 (B) CONSTRUCTION.—Nothing in this 

17 paragraph shall be construed to limit the inher18 ent authority of any Federal agency or State 

19 regulatory authority to further restrict any in20 vestments or activities under otherwise applica21 ble provisions of law. 

22 (3) REPORTING REQUIREMENT.— 

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

24 after the date of enactment of this Act, and 

25 every year thereafter, each Federal agency havVerDate Sep 11 2014 00:41 Jul 08, 2015 Jkt 049200 PO 00000 Frm 00023 Fmt 6652 Sfmt 6201 E:\BILLS\S1709.IS S1709

smartinez on DSK4TPTVN1PROD with BILLS
24 

•S 1709 IS

1 ing regulatory authority over any entity de2 scribed in paragraph (2)(A) shall submit to the 

3 Committee on Banking, Housing, and Urban 

4 Affairs of the Senate and the Committee on Fi5 nancial Services of the House of Representa6 tives and make available to the public a report, 

7 which shall identify— 

8 (i) the number and character of any 

9 activities that took place in the preceding 

10 year that function as an evasion of the 

11 prohibitions described in paragraph (1); 

12 (ii) the names of the particular enti13 ties engaged in those activities; and 

14 (iii) the actions of the Federal agency 

15 taken under paragraph (2). 

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

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

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

19 end the following: 

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

21 company or its affiliate shall attest in writing, under pen22 alty of perjury, that the bank holding company or affiliate 

23 is not engaged in any activity that is prohibited under sub24 section (a), except to the extent that such activity is per25 mitted under subsection (c).’’. 


smartinez on DSK4TPTVN1PROD with BILLS
25 

•S 1709 IS

1 SEC. 4. REPEAL OF GRAMM-LEACH-BLILEY ACT PROVI2 SIONS. 

3 (a) TERMINATION OF FINANCIAL HOLDING COM4 PANY DESIGNATION.— 

5 (1) IN GENERAL.—Section 4 of the Bank Hold6 ing Company Act of 1956 (12 U.S.C. 1843) is 

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

8 and (o). 

9 (2) TRANSITION.— 

10 (A) ORDERLY TERMINATION OF EXISTING

11 AFFILIATION.—In the case of a bank holding 

12 company which, pursuant to the amendments 

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

14 to control or be affiliated with any entity that 

15 was permissible for a financial holding company 

16 on the day before the date of enactment of this 

17 Act, any affiliation, ownership or control, or ac18 tivity by the bank holding company which is not 

19 permitted for a bank holding company shall be 

20 terminated as soon as is practicable, and in no 

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

22 beginning on the date of enactment of this Act. 

23 (B) EARLY TERMINATION.—The Board of 

24 Governors of the Federal Reserve System (in 

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

26 opportunity for hearing, at any time, may terVerDate Sep 11 2014 00:41 Jul 08, 2015 Jkt 049200 PO 00000 Frm 00025 Fmt 6652 Sfmt 6201 E:\BILLS\S1709.IS S1709

smartinez on DSK4TPTVN1PROD with BILLS
26 

•S 1709 IS

1 minate an affiliation prohibited by subpara2 graph (A) before the end of the 5-year period 

3 described in subparagraph (A), if the Board de4 termines that such action— 

5 (i) is necessary to prevent undue con6 centration of resources, decreased or unfair 

7 competition, conflicts of interest, or un8 sound banking practices; and 

9 (ii) is in the public interest. 

10 (C) EXTENSION.—Subject to a determina11 tion under subparagraph (B), the Board may 

12 extend the 5-year period described in subpara13 graph (A), as to any particular bank holding 

14 company, for not more than an additional 6 

15 months at a time, if— 

16 (i) the Board certifies that such ex17 tension would promote the public interest 

18 and would not pose a significant risk to 

19 the stability of the banking system or fi20 nancial markets of the United States; and 

21 (ii) such extension, in the aggregate, 

22 does not exceed 1 year for any single bank 

23 holding company. 

24 (D) REQUIREMENTS FOR ENTITIES RE25 CEIVING AN EXTENSION.—Upon receipt of an 


smartinez on DSK4TPTVN1PROD with BILLS
27 

•S 1709 IS

1 extension under subparagraph (C), the bank 

2 holding company shall notify the shareholders 

3 of the bank holding company and the general 

4 public that it has failed to comply with the re5 quirements of subparagraph (A). 

6 (b) FINANCIAL SUBSIDIARIES OF NATIONAL BANKS

7 DISALLOWED.— 

8 (1) IN GENERAL.—Section 5136A of the Re9 vised Statutes (12 U.S.C. 24a) is repealed. 

10 (2) TRANSITION.— 

11 (A) ORDERLY TERMINATION OF EXISTING

12 AFFILIATION.—In the case of a national bank 

13 which, pursuant to the amendment made by 

14 paragraph (1), is no longer authorized to con15 trol or be affiliated with a financial subsidiary 

16 as of the date of enactment of this Act, such af17 filiation, ownership or control, or activity shall 

18 be terminated as soon as is practicable, and in 

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

20 beginning on the date of enactment of this Act. 

21 (B) EARLY TERMINATION.—The Comp22 troller of the Currency (in this section referred 

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

24 hearing, at any time, may terminate an affili25 ation prohibited by subparagraph (A) before the 


smartinez on DSK4TPTVN1PROD with BILLS
28 

•S 1709 IS

1 end of the 5-year period described in subpara2 graph (A), if the Comptroller determines, hav3 ing due regard for the purposes of this Act, 

4 that— 

5 (i) such action is necessary to prevent 

6 undue concentration of resources, de7 creased or unfair competition, conflicts of 

8 interest, or unsound banking practices; and 

9 (ii) is in the public interest. 

10 (C) EXTENSION.—Subject to a determina11 tion under subparagraph (B), the Comptroller 

12 may extend the 5-year period described in sub13 paragraph (A) as to any particular national 

14 bank for not more than an additional 6 months, 

15 if— 

16 (i) the Comptroller certifies that such 

17 extension would promote the public inter18 est and would not pose a significant risk to 

19 the stability of the banking system or fi20 nancial markets of the United States; and 

21 (ii) such extension, in the aggregate, 

22 does not exceed 1 year for any single na23 tional bank. 

24 (D) REQUIREMENTS FOR ENTITIES RE25 CEIVING AN EXTENSION.—Upon receipt of an 


smartinez on DSK4TPTVN1PROD with BILLS
29 

•S 1709 IS

1 extension under subparagraph (C), the national 

2 bank shall notify its shareholders and the gen3 eral public that it has failed to comply with the 

4 requirements described in subparagraph (A). 

5 (3) CLERICAL AMENDMENT.—The table of sec6 tions for chapter one of title LXII of the Revised 

7 Statutes is amended by striking the item relating to 

8 section 5136A. 

9 (c) REPEAL OF PROVISION RELATING TO FOREIGN

10 BANKS FILING AS FINANCIAL HOLDING COMPANIES.— 

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

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

13 SEC. 5. REPEAL OF BANKRUPTCY PROVISIONS. 

14 Title 11, United States Code, is amended by repeal15 ing sections 555, 559, 560, and 562. 

16 SEC. 6. TECHNICAL AND CONFORMING AMENDMENTS. 

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

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

19 seq.) is amended— 

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

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

22 (B) by redesignating subsection (q) as sub23 section (p); and 

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


smartinez on DSK4TPTVN1PROD with BILLS
30 

•S 1709 IS

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

2 sentence; 

3 (B) in subsection (c), by striking para4 graphs (3), (4), and (5); and 

5 (C) by striking subsection (g). 

6 (b) BANK HOLDING COMPANY ACT AMENDMENTS OF

7 1970.—Section 106(a) of the Bank Holding Company Act 

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

9 striking the last sentence. 

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

11 (15 U.S.C. 18a(c)) is amended— 

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

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

14 and 

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

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

17 (d) COMMODITY EXCHANGE ACT.—Section 

18 2(h)(7)(C)(i)(VIII) of the Commodity Exchange Act (7 

19 U.S.C. 2(h)(7)(C)(i)(VIII)) is amended by striking ‘‘, as 

20 defined in section 4(k) of the Bank Holding Company Act 

21 of 1956’’. 

22 (e) COMMUNITY REINVESTMENT ACT OF 1977.— 

23 Section 804 of the Community Reinvestment Act of 1977 

24 (12 U.S.C. 2903) is amended— 

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


smartinez on DSK4TPTVN1PROD with BILLS
31 

•S 1709 IS

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— 


smartinez on DSK4TPTVN1PROD with BILLS
32 

•S 1709 IS

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 


smartinez on DSK4TPTVN1PROD with BILLS
33 

•S 1709 IS

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 505(c) (15 U.S.C. 6805(c))— 

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

12 the Federal Deposit Insurance Act’’ and insert13 ing ‘‘section 45(g)(2)(B)(iii) of the Federal De14 posit Insurance Act’’; and 

15 (B) by striking ‘‘section 47(a)’’ and insert16 ing ‘‘section 45(a)’’; and 

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

18 6809(3)(A)), by striking ‘‘as described in section 

19 4(k) of the Bank Holding Company Act of 1956’’. 

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

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

22 amended— 

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

24 (H); and 


smartinez on DSK4TPTVN1PROD with BILLS
34 

•S 1709 IS

1 (2) in paragraph (9)(A), by striking ‘‘per2 mitted’’ and all that follows and inserting ‘‘per3 mitted under paragraph (1)(C) or (2) of this sub4 section.’’. 

5 (l) PAYMENT, CLEARING, AND SETTLEMENT SUPER6 VISION ACT OF 2010.—Section 803(5)(A) of the Payment, 

7 Clearing, and Settlement Supervision Act of 2010 (12 

8 U.S.C. 5462(5)(A)) is amended— 

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

10 (2) in clause (ix), by striking ‘‘; and’’ and in11 serting a period; and 

12 (3) by striking clause (x). 

13 (m) SECURITIES EXCHANGE ACT OF 1934.—The Se14 curities Exchange Act of 1934 (15 U.S.C. 78a et seq.) 

15 is amended— 

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

17 78c(a)(4)(B)(vi)(II)), by striking ‘‘other than’’ and 

18 all that follows and inserting ‘‘other than a reg19 istered broker or dealer.’’; and 

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

21 3(g)(3)(A))— 

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

23 end; 

24 (B) in clause (vii), by striking the semi25 colon and inserting a period; and 


smartinez on DSK4TPTVN1PROD with BILLS
35 

•S 1709 IS

1 (C) by striking clause (viii). 

2 (n) TITLE 11.—Title 11, United States Code, is 

3 amended— 

4 (1) in section 101— 

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

6 measured in accordance with section 562’’; 

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

8 measured in accordance with section 562 of this 

9 title’’; and 

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

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

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

13 557, and 559 through 562’’ and inserting ‘‘and 

14 555’’; 

15 (3) in section 362(b)— 

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

17 each place that term appears; 

18 (B) in paragraph (7), by striking ‘‘(as de19 fined in section 559)’’ each place that term ap20 pears; 

21 (C) in paragraph (17), by striking ‘‘(as de22 fined in section 560)’’ each place that term ap23 pears; and 

24 (D) in paragraph (27), by striking ‘‘(as de25 fined in section 555, 556, 559, or 560)’’ each 


smartinez on DSK4TPTVN1PROD with BILLS
36 

•S 1709 IS

1 place that term appears and inserting ‘‘(as de2 fined in section 556)’’; 

3 (4) in section 502(g)— 

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

5 and 

6 (B) by striking paragraph (2); 

7 (5) in section 553— 

8 (A) in subsection (a)— 

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

10 ‘‘555, 556, 559, 560, or 561’’ and insert11 ing ‘‘or 556’’; and 

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

13 ‘‘555, 556, 559, 560, or 561’’ and insert14 ing ‘‘or 556’’; and 

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

16 556, 559, 560, 561’’ and inserting ‘‘556’’; 

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

18 559, or 560’’ and inserting ‘‘556’’; 

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

20 measured in accordance with section 562’’; 

21 (8) in section 761(4)(J), by striking ‘‘, meas22 ured in accordance with section 562’’; and 

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

24 557, 559, 560, 561, 562’’ and inserting ‘‘556, 557’’. 

Æ 


smartinez on DSK4TPTVN1PROD with BILLS