I 

111TH CONGRESS 

1ST SESSION H. R. 4173 

To provide for financial regulatory reform, to protect consumers and investors, 

to enhance Federal understanding of insurance issues, to regulate the 

over-the-counter derivatives markets, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

DECEMBER 2, 2009 

Mr. FRANK of Massachusetts introduced the following bill; which was referred 

to the Committee on Financial Services, and in addition to the Committees on Agriculture, Energy and Commerce, the Judiciary, Rules, the 

Budget, Oversight and Government Reform, and Ways and Means, for 

a period to be subsequently determined by the Speaker, in each case for 

consideration of such provisions as fall within the jurisdiction of the committee concerned 

A BILL 

To provide for financial regulatory reform, to protect consumers and investors, to enhance Federal understanding 

of insurance issues, to regulate the over-the-counter derivatives markets, and for other purposes. 

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 ‘‘The Wall Street Re5 form and Consumer Protection Act of 2009’’. 


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1 SEC. 2. TABLE OF CONTENTS. 

2 The table of contents for this Act is as follows: 

Sec. 1. Short title. 

Sec. 2. Table of contents. 

TITLE I—FINANCIAL STABILITY IMPROVEMENT ACT 

Sec. 1000. Short title; definitions. 

Sec. 1000A. Restrictions on the Federal Reserve System pending audit report. 

Subtitle A—The Financial Services Oversight Council 

Sec. 1001. Financial Services Oversight Council established. 

Sec. 1002. Resolution of disputes among Federal financial regulatory agencies. 

Sec. 1003. Technical and professional advisory committees. 

Sec. 1004. Financial Services Oversight Council meetings and council governance. 

Sec. 1005. Council staff and funding. 

Sec. 1006. Reports to the Congress. 

Sec. 1007. Applicability of certain Federal laws. 

Sec. 1008. Oversight by GAO. 

Subtitle B—Prudential Regulation of Companies and Activities for Financial 

Stability Purposes 

Sec. 1101. Council and Board authority to obtain information. 

Sec. 1102. Council prudential regulation recommendations to Federal financial 

regulatory agencies. 

Sec. 1103. Subjecting financial companies to stricter prudential standards for 

financial stability purposes. 

Sec. 1104. Stricter prudential standards for certain financial holding companies 

for financial stability purposes. 

Sec. 1105. Mitigation of systemic risk. 

Sec. 1106. Subjecting activities or practices to stricter prudential standards for 

financial stability purposes. 

Sec. 1107. Stricter regulation of activities and practices for financial stability 

purposes. 

Sec. 1108. Effect of rescission of identification. 

Sec. 1109. Emergency financial stabilization. 

Sec. 1110. Corporation must receive warrants when paying or risking taxpayer 

funds. 

Sec. 1111. Examinations and enforcement actions for insurance and resolutions 

purposes. 

Sec. 1112. Study of the effects of size and complexity of financial institutions 

on capital market efficiency and economic growth. 

Sec. 1113. Exercise of Federal Reserve authority. 

Sec. 1114. Stress tests. 

Sec. 1115. Contingent Capital. 

Sec. 1116. Restriction on proprietary trading by designated financial holding 

companies. 

Sec. 1117. Rule of construction. 

Subtitle C—Improvements to Supervision and Regulation of Federal 

Depository Institutions 


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Sec. 1201. Definitions. 

Sec. 1202. Amendments to the Home Owners’ Loan Act relating to transfer of 

functions. 

Sec. 1203. Amendments to the revised statutes. 

Sec. 1204. Power and duties transferred. 

Sec. 1205. Transfer date. 

Sec. 1206. Expiration of term of comptroller. 

Sec. 1207. Office of Thrift Supervision abolished. 

Sec. 1208. Savings provisions. 

Sec. 1209. Regulations and orders. 

Sec. 1210. Coordination of transition activities. 

Sec. 1211. Interim responsibilities of office of the comptroller of the currency 

and office of thrift supervision. 

Sec. 1212. Employees transferred. 

Sec. 1213. Property transferred. 

Sec. 1214. Funds transferred. 

Sec. 1215. Disposition of affairs. 

Sec. 1216. Continuation of services. 

Sec. 1217. Contracting and leasing authority. 

Sec. 1218. Treatment of savings and loan holding companies. 

Sec. 1219. Practices of certain mutual thrift holding companies preserved. 

Sec. 1220. Implementation plan and reports. 

Sec. 1221. Composition of board of directors of the Federal Deposit Insurance 

Corporation. 

Sec. 1222. Amendments to section 3. 

Sec. 1223. Amendments to section 7. 

Sec. 1224. Amendments to section 8. 

Sec. 1225. Amendments to section 11. 

Sec. 1226. Amendments to section 13. 

Sec. 1227. Amendments to section 18. 

Sec. 1228. Amendments to section 28. 

Sec. 1229. Amendments to the Alternative Mortgage Transaction Parity Act of 

1982. 

Sec. 1230. Amendments to the Bank Holding Company Act of 1956. 

Sec. 1231. Amendments to the Bank Protection Act of 1968. 

Sec. 1232. Amendments to the Bank Service Company Act. 

Sec. 1233. Amendments to the Community Reinvestment Act of 1977. 

Sec. 1234. Amendments to the Depository Institution Management Interlocks 

Act. 

Sec. 1235. Amendments to the Emergency Homeowners’ Relief Act. 

Sec. 1236. Amendments to the Equal Credit Opportunity Act. 

Sec. 1237. Amendments to the Federal Credit Union Act. 

Sec. 1238. Amendments to the Federal Financial Institutions Examination 

Council Act of 1978. 

Sec. 1239. Amendments to the Federal Home Loan Bank Act. 

Sec. 1240. Amendments to the Federal Reserve Act. 

Sec. 1241. Amendments to the Financial Institutions Reform, Recovery, and 

Enforcement Act of 1989. 

Sec. 1242. Amendments to the Housing Act of 1948. 

Sec. 1243. Amendments to the Housing and Community Development Act of 

1992 and the Federal Housing Enterprises Financial Safety 

and Soundness Act of 1992. 

Sec. 1244. Amendment to the Housing and Urban-Rural Recovery Act of 1983. 

Sec. 1245. Amendments to the National Housing Act. 

Sec. 1246. Amendments to the Right to Financial Privacy Act of 1978. 


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Sec. 1247. Amendments to the Balanced Budget and Emergency Deficit Control Act of 1985. 

Sec. 1248. Amendments to the Crime Control Act of 1990. 

Sec. 1249. Amendment to the Flood Disaster Protection Act of 1973. 

Sec. 1250. Amendment to the Investment Company Act of 1940. 

Sec. 1251. Amendment to the Neighborhood Reinvestment Corporation Act. 

Sec. 1252. Amendments to the Securities Exchange Act of 1934. 

Sec. 1253. Amendments to title 18, United States Code. 

Sec. 1254. Amendments to title 31, United States Code. 

Sec. 1255. Requirement for Countercyclical Capital Requirements. 

Sec. 1256. Transfer of authority to the Board with respect to savings and loan 

holding companies. 

Subtitle D—Further Improvements to the Regulation of Bank Holding 

Companies and Depository Institutions 

Sec. 1301. Treatment of industrial loan companies, savings associations, and 

certain other companies under the bank holding company act. 

Sec. 1302. Registration of certain companies as bank holding companies. 

Sec. 1303. Reports and examinations of bank holding companies; regulation of 

functionally regulated subsidiaries. 

Sec. 1304. Requirements for financial holding companies to remain well capitalized and well managed. 

Sec. 1305. Standards for interstate acquisitions. 

Sec. 1306. Enhancing existing restrictions on bank transactions with affiliates. 

Sec. 1307. Eliminating exceptions for transactions with financial subsidiaries. 

Sec. 1308. Lending limits applicable to credit exposure on derivative transactions, repurchase agreements, reverse repurchase agreements, and securities lending and borrowing transactions. 

Sec. 1309. Restriction on conversions of troubled banks and thrifts. 

Sec. 1310. Lending limits to insiders. 

Sec. 1311. Limitations on purchases of assets from insiders. 

Sec. 1312. Rules regarding capital levels of bank holding companies. 

Sec. 1313. Enhancements to factors to be considered in certain acquisitions. 

Sec. 1314. Elimination of elective investment bank holding company framework. 

Sec. 1315. Examination fees for large bank holding companies. 

Subtitle E—Improvements to the Federal Deposit Insurance Fund 

Sec. 1401. Accounting for actual risk to the Deposit Insurance Fund. 

Sec. 1402. Creating a risk-focused assessment base. 

Sec. 1403. Elimination of procyclical assessments. 

Sec. 1404. Enhanced access to information for deposit insurance purposes. 

Sec. 1405. Transition reserve ratio requirements to reflect new assessment 

base. 

Subtitle F—Improvements to the Asset-backed Securitization Process 

Sec. 1501. Short title. 

Sec. 1502. Credit risk retention. 

Sec. 1503. Periodic and other reporting under the Securities Exchange Act of 

1934 for asset-backed securities. 

Sec. 1504. Representations and warranties in asset-backed offerings. 

Sec. 1505. Exempted transactions under the Securities Act of 1933. 

Sec. 1506. Study on the macroeconomic effects of risk retention requirements. 


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Subtitle G—Enhanced Dissolution Authority 

Sec. 1601. Short title. 

Sec. 1602. Definitions. 

Sec. 1603. Systemic risk determination. 

Sec. 1604. Resolution; stabilization. 

Sec. 1605. Judicial review. 

Sec. 1606. Directors not liable for acquiescing in appointment of receiver. 

Sec. 1607. Termination and exclusion of other actions. 

Sec. 1608. Rulemaking. 

Sec. 1609. Powers and duties of corporation. 

Sec. 1610. Clarification of prohibition regarding concealment of assets from receiver or liquidating agent. 

Sec. 1611. Office of Resolution. 

Sec. 1612. Miscellaneous provisions. 

Sec. 1613. Amendment to Federal Deposit Insurance Act. 

Sec. 1614. Application of executive compensation limitations. 

Subtitle H—Additional Improvements for Financial Crisis Management 

Sec. 1701. Additional improvements for financial crisis management. 

Sec. 1702. Certain restrictions related to foreign currency swap authority. 

Sec. 1703. Additional oversight of financial regulatory system. 

Subtitle I—Miscellaneous 

Sec. 1801. Inclusion of minorities and women; Diversity in agency workforce. 

Subtitle J—International Policy Coordination 

Sec. 1901. International policy coordination. 

Subtitle K—International Financial Provisions 

Sec. 1951. Access to United States financial market by foreign institutions. 

TITLE II—CORPORATE AND FINANCIAL INSTITUTION 

COMPENSATION FAIRNESS ACT 

Sec. 2001. Short title. 

Sec. 2002. Shareholder vote on executive compensation disclosures. 

Sec. 2003. Compensation committee independence. 

Sec. 2004. Enhanced compensation structure reporting to reduce perverse incentives. 

TITLE III—OVER-THE-COUNTER DERIVATIVES MARKETS ACT 

Sec. 3001. Short title. 

Subtitle A—Regulation of Swap Markets 

Sec. 3101. Definitions. 

Sec. 3102. Jurisdiction. 

Sec. 3103. Clearing. 

Sec. 3104. Public reporting of aggregate swap data. 

Sec. 3105. Swap repositories. 

Sec. 3106. Reporting and recordkeeping. 

Sec. 3107. Registration and regulation of swap dealers and major swap participants. 


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Sec. 3108. Segregation of assets held as collateral in swap transactions. 

Sec. 3109. Conflicts of interest. 

Sec. 3110. Swap execution facilities. 

Sec. 3111. Derivatives transaction execution facilities and exempt boards of 

trade. 

Sec. 3112. Designated contract markets. 

Sec. 3113. Position limits. 

Sec. 3114. Enhanced authority over registered entities. 

Sec. 3115. Foreign boards of trade. 

Sec. 3116. Legal certainty for swaps. 

Sec. 3117. Multilateral clearing organizations. 

Sec. 3118. Primary enforcement authority. 

Sec. 3119. Enforcement. 

Sec. 3120. Retail commodity transactions. 

Sec. 3121. Large swap trader reporting. 

Sec. 3122. Authority to ban abusive swaps. 

Sec. 3123. International harmonization. 

Sec. 3124. Authority to ban access to the United States Financial System. 

Sec. 3125. Other authority. 

Sec. 3126. Antitrust. 

Sec. 3127. Effective date. 

Subtitle B—Regulation of Security-Based Swap Markets 

Sec. 3201. Definitions under the Securities Exchange Act of 1934. 

Sec. 3202. Repeal of prohibition on regulation of security-based swaps. 

Sec. 3203. Amendments to the Securities Exchange Act of 1934. 

Sec. 3204. Registration and regulation of swap dealers and major swap participants. 

Sec. 3205. National security exchange registration requirements. 

Sec. 3206. Reporting and recordkeeping. 

Sec. 3207. State gaming and bucket shop laws. 

Sec. 3208. Amendments to the Securities Act of 1933; treatment of securitybased swaps. 

Sec. 3209. Other authority. 

Sec. 3210. Jurisdiction. 

Sec. 3211. Effective date. 

Subtitle C—Miscellaneous 

Sec. 3301. Study on feasibility of requiring use of standardized algorithmic descriptions for financial derivatives. 

Sec. 3302. Study of desirability and feasibility of establishing single regulator 

for all transactions involving financial derivatives. 

Sec. 3303. Recommendations for changes to insolvency laws. 

Sec. 3304. Prohibition against government assistance. 

TITLE IV—CONSUMER FINANCIAL PROTECTION AGENCY ACT 

Sec. 4001. Short title. 

Sec. 4002. Definitions. 

Subtitle A—Establishment of the Agency 

Sec. 4101. Establishment of the Consumer Financial Protection Agency. 

Sec. 4102. Director. 

Sec. 4103. Consumer Financial Protection Oversight Board. 


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Sec. 4104. Executive and administrative powers. 

Sec. 4105. Administration. 

Sec. 4106. Consumer Advisory Board. 

Sec. 4107. Coordination. 

Sec. 4108. Reports to the Congress. 

Sec. 4109. Funding; fees and assessments; penalties and fines. 

Sec. 4110. Amendments relating to other administrative provisions. 

Sec. 4111. Effective date. 

Subtitle B—General Powers of the Director and Agency 

Sec. 4201. Mandate and objectives. 

Sec. 4202. Authorities. 

Sec. 4203. Examination and enforcement for small banks, thrifts, and credit 

unions. 

Sec. 4204. Simultaneous and coordinated supervisory action. 

Sec. 4205. Limitations on authority of agency and director. 

Sec. 4206. Collection of information; confidentiality regulations. 

Sec. 4207. Monitoring; assessments of significant regulations; reports. 

Sec. 4208. Authority to restrict mandatory predispute arbitration. 

Sec. 4209. Registration and supervision of nondepository covered persons. 

Sec. 4210. Effective date. 

Subtitle C—Specific Authorities 

Sec. 4301. Prohibiting unfair, deceptive, or abusive acts or practices. 

Sec. 4302. Disclosures. 

Sec. 4303. Sales practices. 

Sec. 4304. Pilot disclosures. 

Sec. 4305. Adopting operational standards to deter unfair, deceptive, or abusive 

practices. 

Sec. 4306. Duties. 

Sec. 4307. Consumer rights to access information. 

Sec. 4308. Prohibited acts. 

Sec. 4309. Treatment of remittance transfers. 

Sec. 4310. Effective date. 

Sec. 4311. No authority to require the offering of financial products or services. 

Sec. 4312. Appraisal independence requirements. 

Subtitle D—Preservation of State Law 

Sec. 4401. Relation to State law. 

Sec. 4402. Preservation of enforcement powers of States. 

Sec. 4403. Preservation of existing contracts. 

Sec. 4404. State law preemption standards for national banks and subsidiaries 

clarified. 

Sec. 4405. Visitorial standards. 

Sec. 4406. Clarification of law applicable to nondepository institution subsidiaries. 

Sec. 4407. State law preemption standards for Federal savings associations and 

subsidiaries clarified. 

Sec. 4408. Visitorial standards. 

Sec. 4409. Clarification of law applicable to nondepository institution subsidiaries. 

Sec. 4410. Effective date. 

Subtitle E—Enforcement Powers 


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Sec. 4501. Definitions. 

Sec. 4502. Investigations and administrative discovery. 

Sec. 4503. Hearings and adjudication proceedings. 

Sec. 4504. Litigation authority. 

Sec. 4505. Relief available. 

Sec. 4506. Referrals for criminal proceedings. 

Sec. 4507. Employee protection. 

Sec. 4508. Effective date. 

Subtitle F—Transfer of Functions and Personnel; Transitional Provisions 

Sec. 4601. Transfer of certain functions. 

Sec. 4602. Designated transfer date. 

Sec. 4603. Savings provisions. 

Sec. 4604. Transfer of certain personnel. 

Sec. 4605. Incidental transfers. 

Sec. 4606. Interim authority of the Secretary. 

Subtitle G—Regulatory Improvements 

Sec. 4701. Collection of deposit account data. 

Sec. 4702. Small business data collection. 

Sec. 4703. Annual financial autopsy. 

Subtitle H—Conforming Amendments 

Sec. 4801. Amendments to the Inspector General Act of 1978. 

Sec. 4802. Amendments to the Privacy Act of 1974. 

Sec. 4803. Amendments to the Alternative Mortgage Transaction Parity Act of 

1982. 

Sec. 4804. Amendments to the Consumer Credit Protection Act. 

Sec. 4805. Amendments to the Expedited Funds Availability Act. 

Sec. 4806. Amendments to the Federal Deposit Insurance Act. 

Sec. 4807. Amendments to the Gramm-Leach-Bliley Act. 

Sec. 4808. Amendments to the Home Mortgage Disclosure Act of 1975. 

Sec. 4809. Amendments to division D of the Omnibus Appropriations Act, 

2009. 

Sec. 4810. Amendments to the Homeowners Protection Act of 1998. 

Sec. 4811. Amendments to the Real Estate Settlement Procedures Act of 1974. 

Sec. 4812. Amendments to the Right to Financial Privacy Act of 1978. 

Sec. 4813. Amendments to the Secure and Fair Enforcement for Mortgage Licensing Act of 2008. 

Sec. 4814. Amendments to the Truth in Savings Act. 

Sec. 4815. Amendments to the Telemarketing and Consumer Fraud and Abuse 

Prevention Act. 

Sec. 4816. Membership in Financial Literacy and Education Commission. 

Sec. 4817. Effective date. 

Subtitle I—Improvements to the Federal Trade Commission Act 

Sec. 4901. Amendments to the Federal Trade Commission Act. 

TITLE V—CAPITAL MARKETS 

Subtitle A—Private Fund Investment Advisers Registration Act 

Sec. 5001. Short title. 

Sec. 5002. Definitions. 


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Sec. 5003. Elimination of private adviser exemption; Limited exemption for foreign private fund advisers; Limited intrastate exemption. 

Sec. 5004. Collection of systemic risk data. 

Sec. 5005. Elimination of disclosure provision. 

Sec. 5006. Exemption of and reporting by venture capital fund advisers. 

Sec. 5007. Exemption of and reporting by certain private fund advisers. 

Sec. 5008. Clarification of rulemaking authority. 

Sec. 5009. GAO study. 

Sec. 5010. Effective date; Transition period. 

Sec. 5011. Qualified client standard. 

Subtitle B—Accountability and Transparency in Rating Agencies Act 

Sec. 6001. Short title. 

Sec. 6002. Enhanced regulation of nationally recognized statistical rating organizations. 

Sec. 6003. Standards for private actions. 

Sec. 6004. Issuer disclosure of preliminary ratings. 

Sec. 6005. Change to designation. 

Sec. 6006. Timeline for regulations. 

Sec. 6007. Elimination of exemption from fair disclosure rule. 

Sec. 6008. Advisory Board. 

Sec. 6009. Removal of statutory references to credit ratings. 

Sec. 6010. Review of reliance on ratings. 

Sec. 6011. Publication of rating histories on the EDGAR system. 

Sec. 6012. Effect of Rule 436(g). 

Sec. 6013. Studies. 

Subtitle C—Investor Protection Act 

Sec. 7001. Short title. 

PART 1—DISCLOSURE

Sec. 7101. Investor Advisory Committee established. 

Sec. 7102. Clarification of the Commission’s authority to engage in consumer 

testing. 

Sec. 7103. Establishment of a fiduciary duty for brokers, dealers, and investment advisers, and harmonization of regulation. 

Sec. 7104. Commission study on disclosure to retail customers before purchase 

of products or services. 

Sec. 7105. Beneficial ownership and short-swing profit reporting. 

Sec. 7106. Revision to recordkeeping rules. 

Sec. 7107. Study on enhancing investment advisor examinations. 

Sec. 7108. GAO study of financial planning. 

PART 2—ENFORCEMENT AND REMEDIES

Sec. 7201. Authority to restrict mandatory pre-dispute arbitration. 

Sec. 7202. Comptroller General study to review securities arbitration system. 

Sec. 7203. Whistleblower protection. 

Sec. 7204. Conforming amendments for whistleblower protection. 

Sec. 7205. Implementation and transition provisions for whistleblower protections. 

Sec. 7206. Collateral bars. 

Sec. 7207. Aiding and abetting authority under the Securities Act and the Investment Company Act. 


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Sec. 7208. Authority to impose penalties for aiding and abetting violations of 

the Investment Advisers Act. 

Sec. 7209. Deadline for completing examinations, inspections and enforcement 

actions. 

Sec. 7210. Nationwide service of subpoenas. 

Sec. 7211. Authority to impose civil penalties in cease and desist proceedings. 

Sec. 7212. Formerly associated persons. 

Sec. 7213. Sharing privileged information with other authorities. 

Sec. 7214. Expanded access to grand jury material. 

Sec. 7215. Aiding and abetting standard of knowledge satisfied by recklessness. 

Sec. 7216. Extraterritorial jurisdiction of the antifraud provisions of the Federal securities laws. 

Sec. 7217. Fidelity bonding. 

Sec. 7218. Enhanced SEC authority to conduct surveillance and risk assessment. 

Sec. 7219. Investment company examinations. 

Sec. 7220. Control person liability under the Securities Exchange Act. 

Sec. 7221. Enhanced application of anti-fraud provisions. 

Sec. 7222. SEC authority to issue rules on proxy access. 

PART 3—COMMISSION FUNDING AND ORGANIZATION

Sec. 7301. Authorization of appropriations. 

Sec. 7302. Investment adviser regulation funding. 

Sec. 7303. Amendments to section 31 of the Securities Exchange Act of 1934. 

Sec. 7304. Commission organizational study and reform. 

Sec. 7305. Capital Markets Safety Board. 

Sec. 7306. Report on implementation of ‘‘post-Madoff reforms’’. 

Sec. 7307. Joint Advisory Committee. 

PART 4—ADDITIONAL COMMISSION REFORMS

Sec. 7401. Regulation of securities lending. 

Sec. 7402. Lost and stolen securities. 

Sec. 7403. Fingerprinting. 

Sec. 7404. Equal treatment of self-regulatory organization rules. 

Sec. 7405. Clarification that section 205 of the Investment Advisers Act of 

1940 does not apply to State-registered advisers. 

Sec. 7406. Conforming amendments for the repeal of the Public Utility Holding 

Company Act of 1935. 

Sec. 7407. Promoting transparency in financial reporting. 

Sec. 7408. Unlawful margin lending. 

Sec. 7409. Protecting confidentiality of materials submitted to the Commission. 

Sec. 7410. Technical corrections. 

Sec. 7411. Municipal securities. 

Sec. 7412. Interested person definition. 

Sec. 7413. Rulemaking authority to protect redeeming investors. 

Sec. 7414. Study on SEC revolving door. 

Sec. 7415. Study on internal control evaluation and reporting cost burdens on 

smaller issuers. 

Sec. 7416. Analysis of rule regarding smaller reporting companies. 

Sec. 7417. Financial Reporting Forum. 

Sec. 7418. Investment advisers subject to State authorities. 

Sec. 7419. Custodial requirements. 

Sec. 7420. Ombudsman. 


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PART 5—SECURITIES INVESTOR PROTECTION ACT AMENDMENTS

Sec. 7501. Increasing the minimum assessment paid by SIPC members. 

Sec. 7502. Increasing the borrowing limit on treasury loans. 

Sec. 7503. Increasing the cash limit of protection. 

Sec. 7504. SIPC as trustee in SIPA liquidation proceedings. 

Sec. 7505. Insiders ineligible for SIPC advances. 

Sec. 7506. Eligibility for direct payment procedure. 

Sec. 7507. Increasing the fine for prohibited acts under SIPA. 

Sec. 7508. Penalty for misrepresentation of SIPC membership or protection. 

Sec. 7509. Futures held in a portfolio margin securities account protection. 

Sec. 7510. Study and report on the feasibility of risk-based assessments for 

SIPC members. 

Sec. 7511. Budgetary treatment of Commission loans to SIPC. 

PART 6—SARBANES-OXLEY ACT AMENDMENTS

Sec. 7601. Public Company Accounting Oversight Board oversight of auditors 

of brokers and dealers. 

Sec. 7602. Foreign regulatory information sharing. 

Sec. 7603. Expansion of audit information to be produced and exchanged with 

foreign counterparts. 

Sec. 7604. Conforming amendment related to registration. 

Sec. 7605. Fair fund amendments. 

Sec. 7606. Exemption for nonaccelerated filers. 

Sec. 7607. Whistleblower protection against retaliation by a subsidiary of an 

issuer. 

Sec. 7608. Congressional access to information. 

Sec. 7609. Creation of ombudsman for the PCAOB. 

Sec. 7610. Auditing Oversight Board. 

PART 7—SENIOR INVESTMENT PROTECTION

Sec. 7701. Findings. 

Sec. 7702. Definitions. 

Sec. 7703. Grants to States for enhanced protection of seniors from being mislead by false designations. 

Sec. 7704. Applications. 

Sec. 7705. Length of participation. 

Sec. 7706. Authorization of appropriations. 

PART 8—REGISTRATION OF MUNICIPAL FINANCIAL ADVISORS

Sec. 7801. Municipal financial adviser registration requirement. 

Sec. 7802. Conforming amendments. 

Sec. 7803. Effective dates. 

TITLE VI—FEDERAL INSURANCE OFFICE 

Sec. 8001. Short title. 

Sec. 8002. Federal Insurance Office established. 

Sec. 8003. Report on global reinsurance market. 

Sec. 8004. Study on modernization and improvement of insurance regulation in 

the United States. 


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1 TITLE I—FINANCIAL STABILITY 

2 IMPROVEMENT ACT 

3 SEC. 1000. SHORT TITLE; DEFINITIONS. 

4 (a) SHORT TITLE.—This title may be cited as the 

5 ‘‘Financial Stability Improvement Act of 2009’’. 

6 (b) DEFINITIONS.—For purposes of this title, the fol7 lowing definitions shall apply: 

8 (1) The term ‘‘Board’’ means the Board of 

9 Governors of the Federal Reserve System. 

10 (2) The term ‘‘Council’’ means the Financial 

11 Services Oversight Council established under section 

12 1001. 

13 (3) The term ‘‘Federal financial regulatory 

14 agency’’ means any agency that has a voting mem15 ber of the Council as set forth in section 1001(b)(1). 

16 (4) The term ‘‘financial company’’ means a 

17 company or other entity— 

18 (A) that is— 

19 (i) incorporated or organized under 

20 the laws of the United States or any State, 

21 territory, or possession of the United 

22 States, the District of Columbia, Common23 wealth of Puerto Rico, Commonwealth of 

24 Northern Mariana Islands, Guam, AmerVerDate Nov 24 2008 22:04 Dec 02, 2009 Jkt 089200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H4173.IH H4173

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1 ican Samoa, or the United States Virgin 

2 Islands; or 

3 (ii) a company incorporated in or or4 ganized in a country other than the United 

5 States that has significant operations in 

6 the United States through— 

7 (I) a Federal or State branch or 

8 agency of a foreign bank as such 

9 terms are defined in the International 

10 Banking Act of 1978 (12 U.S.C. 3101 

11 et seq.); or 

12 (II) a United States affiliate or 

13 other United States operating entity 

14 of a company that is incorporated or 

15 organized in a country other than the 

16 United States; and 

17 (B) that is, in whole or in part, directly or 

18 indirectly, engaged in financial activities. 

19 (5) FINANCIAL HOLDING COMPANY SUBJECT TO

20 STRICTER STANDARDS.—The term ‘‘financial holding 

21 company subject to stricter standards’’ means— 

22 (A) a financial company that has been sub23 jected to stricter prudential standards under 

24 subtitle B; or 


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1 (B) in the case of a financial company de2 scribed in subparagraph (A) that is required to 

3 establish an intermediate holding company 

4 under section 6 of the Bank Holding Company 

5 Act, the section 6 holding company through 

6 which the financial company is required to con7 duct its financial activities. 

8 (6) The term ‘‘primary financial regulatory 

9 agency’’ means the following: 

10 (A) The Comptroller of the Currency, with 

11 respect to any national bank, any Federal 

12 branch or Federal agency of a foreign bank, 

13 and, after the date on which the functions of 

14 the Office of Thrift Supervision and the Direc15 tor of the Office of Thrift Supervision are 

16 transferred under subtitle C, a Federal savings 

17 association. 

18 (B) The Board, with respect to— 

19 (i) any State member bank; 

20 (ii) any bank holding company and 

21 any subsidiary of such company (as such 

22 terms are defined in the Bank Holding 

23 Company Act), other than a subsidiary 

24 that is described in any other subpara25 graph of this paragraph to the extent that 


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1 the subsidiary is engaged in an activity de2 scribed in such subparagraph; 

3 (iii) any financial holding company 

4 subject to stricter standards and any sub5 sidiary (as such term is defined in the 

6 Bank Holding Company Act) of such com7 pany, other than a subsidiary that is de8 scribed in any other subparagraph of this 

9 paragraph to the extent that the subsidiary 

10 is engaged in an activity described in such 

11 subparagraph; 

12 (iv) any organization organized and 

13 operated under section 25 or 25A of the 

14 Federal Reserve Act (12 U.S.C. 601 et 

15 seq. or 611 et seq.); and 

16 (v) any foreign bank or company that 

17 is treated as a bank holding company 

18 under subsection (a) of section 8 of the 

19 International Banking Act of 1978 and 

20 any subsidiary (other than a bank or other 

21 subsidiary that is described in any other 

22 subparagraph of this paragraph) of any 

23 such foreign bank or company. 

24 (C) The Federal Deposit Insurance Cor25 poration, with respect to a State nonmember 


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1 bank, any insured State branch of a foreign 

2 bank (as such terms are defined in section 3 of 

3 the Federal Deposit Insurance Act), and, after 

4 the date on which the functions of the Office of 

5 Thrift Supervision are transferred under sub6 title C, any State savings association. 

7 (D) The National Credit Union Adminis8 tration, with respect to any insured credit union 

9 under the Federal Credit Union Act (12 U.S.C. 

10 1751 et seq.). 

11 (E) The Securities and Exchange Commis12 sion, with respect to— 

13 (i) any broker or dealer registered 

14 with the Securities and Exchange Commis15 sion under the Securities Exchange Act of 

16 1934 (15 U.S.C. 78a et seq.); 

17 (ii) any investment company reg18 istered with the Securities and Exchange 

19 Commission under the Investment Com20 pany Act of 1940 (15 U.S.C. 80a–1 et 

21 seq.); 

22 (iii) any investment adviser registered 

23 with the Securities and Exchange Commis24 sion under the Investment Advisers Act of 

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1 spect to the investment advisory activities 

2 of such company and activities incidental 

3 to such advisory activities; 

4 (iv) any clearing agency (as defined in 

5 section 3(a)(23) of the Securities Ex6 change Act of 1934; 

7 (v) any exchange registered as a na8 tional securities exchange with the Securi9 ties and Exchange Commission under the 

10 Securities Exchange Act of 1934 (15 

11 U.S.C. 78a et seq.); 

12 (vi) any credit rating agency reg13 istered with the Securities and Exchange 

14 Commission under the Securities Exchange 

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

16 (vii) any securities information proc17 essor registered with the Securities and 

18 Exchange Commission under the Securities 

19 Exchange Act of 1934 (15 U.S.C. 78a et 

20 seq.); and 

21 (viii) any transfer agent registered 

22 with the Securities and Exchange Commis23 sion under the Securities Exchange Act of 

24 1934 (15 U.S.C. 78a et seq.). 


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1 (F) The Commodity Futures Trading 

2 Commission, with respect to— 

3 (i) any futures commission merchant, 

4 any commodity trading adviser, and any 

5 commodity pool operator registered with 

6 the Commodity Futures Trading Commis7 sion under the Commodity Exchange Act 

8 (7 U.S.C. 1 et seq.) with respect to the 

9 commodities activities of such entity and 

10 activities incidental to such commodities 

11 activities; and 

12 (ii) any derivatives clearing organiza13 tion (as defined in the Commodity Ex14 change Act). 

15 (G) The Federal Housing Finance Agency 

16 with respect to the Federal National Mortgage 

17 Association, the Federal Home Loan Mortgage 

18 Corporation, and the Federal home loan banks. 

19 (H) The State insurance authority of the 

20 State in which an insurance company is domi21 ciled, with respect to the insurance activities 

22 and activities incidental to such insurance ac23 tivities of an insurance company that is subject 

24 to supervision by the State insurance authority 

25 under State insurance law. 


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1 (I) The Office of Thrift Supervision, with 

2 respect to any Federal savings association, 

3 State savings association, or savings and loan 

4 holding company, until the date on which the 

5 functions of the Office of Thrift Supervision are 

6 transferred under subtitle C. 

7 (7) TERMS DEFINED IN OTHER LAWS.— 

8 (A) AFFILIATE.—The term ‘‘affiliate’’ has 

9 the meaning given such term in section 2(k) of 

10 the Bank Holding Company Act of 1956. 

11 (B) STATE MEMBER BANK, STATE NON12 MEMBER BANK.—The terms ‘‘State member 

13 bank’’ and ‘‘State nonmember bank’’ have the 

14 same meanings as in subsections (d)(2) and 

15 (e)(2), respectively, of section 3 of the Federal 

16 Deposit Insurance Act. 

17 SEC. 1000A. RESTRICTIONS ON THE FEDERAL RESERVE 

18 SYSTEM PENDING AUDIT REPORT. 

19 (a) IN GENERAL.—Notwithstanding any other provi20 sion of law, the Comptroller General of the United States 

21 shall perform an audit of all actions taken by the Board 

22 of Governors of the Federal Reserve System and the Fed23 eral reserve banks during the current economic crisis pur24 suant to the authority granted under section 13(c) of the 

25 Federal Reserve Act. Such audit shall be completed as exVerDate Nov 24 2008 22:04 Dec 02, 2009 Jkt 089200 PO 00000 Frm 00019 Fmt 6652 Sfmt 6201 E:\BILLS\H4173.IH H4173

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1 peditiously as possible after the date of the enactment of 

2 the Financial Stability Improvement Act of 2009. 

3 (b) REPORT.— 

4 (1) REQUIRED.—Not later than the end of the 

5 90-day period beginning on the date the audit re6 ferred to in subsection (a) is completed, the Comp7 troller General of the United States shall submit a 

8 report to the Congress, and make such report avail9 able to the public. 

10 (2) CONTENTS.—The report under paragraph 

11 (1) shall include a detailed description of the find12 ings and conclusion of the Comptroller General with 

13 respect to the audit that is the subject of the report, 

14 together with such recommendations for legislative 

15 or administrative action as the Comptroller General 

16 may determine to be appropriate. 

17 Subtitle A—The Financial Services 

18 Oversight Council 

19 SEC. 1001. FINANCIAL SERVICES OVERSIGHT COUNCIL ES20 TABLISHED. 

21 (a) ESTABLISHMENT.—Immediately upon enactment 

22 of this title, there is established a Financial Services Over23 sight Council. 

24 (b) MEMBERSHIP.—The Council shall consist of the 

25 following: 


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1 (1) VOTING MEMBERS.—Voting members, who 

2 shall each have one vote on the Council, as follows: 

3 (A) The Secretary of the Treasury, who 

4 shall serve as the Chairman of the Council. 

5 (B) The Chairman of the Board of Gov6 ernors of the Federal Reserve System. 

7 (C) The Comptroller of the Currency. 

8 (D) The Director of the Office of Thrift 

9 Supervision, until the functions of the Director 

10 of the Office of Thrift Supervision are trans11 ferred to pursuant to subtitle C. 

12 (E) The Chairman of the Securities and 

13 Exchange Commission. 

14 (F) The Chairman of the Commodity Fu15 tures Trading Commission. 

16 (G) The Chairperson of the Federal De17 posit Insurance Corporation. 

18 (H) The Director of the Federal Housing 

19 Finance Agency. 

20 (I) The Chairman of the National Credit 

21 Union Administration. 

22 (2) NONVOTING MEMBERS.—Nonvoting mem23 bers, who shall serve in an advisory capacity: 

24 (A) A State insurance commissioner, to be 

25 designated by a selection process determined by 


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1 the State insurance commissioners, provided 

2 that the term for which a State insurance com3 missioner may serve shall last no more than the 

4 2-year period beginning on the date that the 

5 commissioner is selected. 

6 (B) A State banking supervisor, to be des7 ignated by a selection process determined by 

8 the State bank supervisors, provided that the 

9 term for which a State banking supervisor may 

10 serve shall last no more than the 2-year period 

11 beginning on the date that the supervisor is se12 lected. 

13 (c) DUTIES.—The Council shall have the following 

14 duties: 

15 (1) To advise the Congress on financial domes16 tic and international regulatory developments, in17 cluding insurance and accounting developments, and 

18 make recommendations that will enhance the integ19 rity, efficiency, orderliness, competitiveness, and sta20 bility of the United States financial markets. 

21 (2) To monitor the financial services market22 place to identify potential threats to the stability of 

23 the United States financial system. 


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1 (3) To identify potential threats to the stability 

2 of the United States financial system that do not 

3 arise out of the financial services marketplace. 

4 (4) To develop plans (and conduct exercises in 

5 furtherance of those plans) to prepare for potential 

6 threats identified under paragraphs (2) and (3). 

7 (5) To subject financial companies and financial 

8 activities to stricter prudential standards in order to 

9 promote financial stability and mitigate systemic 

10 risk in accordance with subtitle B. 

11 (6) To issue formal recommendations that a 

12 Council member agency adopt stricter prudential 

13 standards for firms it regulates to mitigate systemic 

14 risk in accordance with subtitle B of this title. 

15 (7) To monitor international regulatory develop16 ments, including both insurance and accounting de17 velopments, and to identify those developments that 

18 may conflict with the policies of the United States 

19 or place United States financial services firms or 

20 United States financial markets at a competitive dis21 advantage. 

22 (8) To facilitate information sharing and co23 ordination among the members of the Council re24 garding financial services policy development, 


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1 rulemakings, examinations, reporting requirements, 

2 and enforcement actions. 

3 (9) To provide a forum for discussion and anal4 ysis of emerging market developments and financial 

5 regulatory issues among its members. 

6 (10) At the request of an agency that is a 

7 Council member, to resolve a jurisdictional dispute 

8 between that agency and another agency that is a 

9 Council member in accordance with section 1002. 

10 (11) To review and submit comments to the Se11 curities and Exchange Commission and any stand12 ards setting body with respect to an existing or pro13 posed accounting principle, standard, or procedure. 

14 SEC. 1002. RESOLUTION OF DISPUTES AMONG FEDERAL FI15 NANCIAL REGULATORY AGENCIES. 

16 (a) REQUEST FOR DISPUTE RESOLUTION.—The 

17 Council shall resolve a dispute among 2 or more Federal 

18 financial regulatory agencies if— 

19 (1) a Federal financial regulatory agency has a 

20 dispute with another Federal financial regulatory 

21 agency about the agencies’ respective jurisdiction 

22 over a particular financial company or financial ac23 tivity or product (excluding matters for which an24 other dispute mechanism specifically has been pro25 vided under Federal law); 


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1 (2) the disputing agencies cannot, after a dem2 onstrated good faith effort, resolve the dispute 

3 among themselves; and 

4 (3) any of the Federal financial regulatory 

5 agencies involved in the dispute— 

6 (A) provides all other disputants prior no7 tice of its intent to request dispute resolution 

8 by the Council; and 

9 (B) requests in writing, no earlier than 14 

10 days after providing the notice described in 

11 paragraph (A), that the Council resolve the dis12 pute. 

13 (b) COUNCIL DECISION.—The Council shall decide 

14 the dispute— 

15 (1) within a reasonable time after receiving the 

16 dispute resolution request; 

17 (2) after consideration of relevant information 

18 provided by each party to the dispute; and 

19 (3) by agreeing with 1 of the disputants regard20 ing the entirety of the matter or by determining a 

21 compromise position. 

22 (c) FORM AND BINDING EFFECT.—A Council deci23 sion under this section shall be in writing and include an 

24 explanation and shall be binding on all Federal financial 

25 regulatory agencies that are parties to the dispute. 


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1 SEC. 1003. TECHNICAL AND PROFESSIONAL ADVISORY 

2 COMMITTEES. 

3 The Council is authorized to appoint— 

4 (1) subsidiary working groups composed of 

5 Council members and their staff, Council staff, or a 

6 combination; and 

7 (2) such temporary special advisory, technical, 

8 or professional committees as may be useful in car9 rying out its functions, which may be composed of 

10 Council members and their staff, other persons, or 

11 a combination. 

12 SEC. 1004. FINANCIAL SERVICES OVERSIGHT COUNCIL 

13 MEETINGS AND COUNCIL GOVERNANCE. 

14 (a) MEETINGS.—The Council shall meet as fre15 quently as the Chairman deems necessary, but not less 

16 than quarterly. 

17 (b) VOTING.—Unless otherwise provided, the Council 

18 shall make all decisions the Council is required or author19 ized to make by a majority of the total voting membership 

20 of the Council under section 1001(b)(1). 

21 SEC. 1005. COUNCIL STAFF AND FUNDING. 

22 (a) DEPARTMENT OF THE TREASURY.—The Sec23 retary of the Treasury shall— 

24 (1) detail permanent staff from the Department 

25 of the Treasury to provide the Council (and any 

26 temporary special advisory, technical, or professional 


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1 committees appointed by the Council) with profes2 sional and expert support; and 

3 (2) provide such other services and facilities 

4 necessary for the performance of the Council’s func5 tions and fulfillment of the duties and mission of the 

6 Council. 

7 (b) OTHER DEPARTMENTS AND AGENCIES.—In addi8 tion to the assistance prescribed in subsection (a), depart9 ments and agencies of the United States may, with the 

10 approval of the Secretary of the Treasury— 

11 (1) detail department or agency staff on a tem12 porary basis to provide additional support to the 

13 Council (and any special advisory, technical, or pro14 fessional committees appointed by the Council); and 

15 (2) provide such services, and facilities as the 

16 other departments or agencies may determine advis17 able. 

18 (c) STAFF STATUS; COUNCIL FUNDING.— 

19 (1) STATUS.—Staff detailed to the Council by 

20 the Secretary of the Treasury and other United 

21 States departments or agencies shall— 

22 (A) report to and be subject to oversight 

23 by the Council during their assignment to the 

24 Council; and 


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1 (B) be compensated by the department of 

2 agency from which the staff was detailed. 

3 (2) FUNDING.—The administrative expense of 

4 the Council shall be paid by the departments and 

5 agencies represented by voting members of the 

6 Council on an equal basis. 

7 SEC. 1006. REPORTS TO THE CONGRESS. 

8 (a) IN GENERAL.—Semiannually the Council shall 

9 submit a report to the Committee on Financial Services 

10 of the House of Representatives, the Committee on Bank11 ing, Housing, and Urban Affairs of the Senate, and the 

12 Comptroller General of the United States that— 

13 (1) describes significant financial and regu14 latory developments, including insurance and ac15 counting regulations and standards, and assesses the 

16 impact of those developments on the stability of the 

17 financial system; 

18 (2) recommends actions that will improve finan19 cial stability; 

20 (3) details the size, scale, scope, concentration, 

21 activities, and interconnectedness of the 50 largest 

22 financial institutions, by total assets, in the United 

23 States; 

24 (4) describes plans developed by the Council to 

25 respond to potential threats to the stability of the 


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1 United States financial system and the outcome of 

2 exercises conducted in furtherance of those plans; 

3 (5) describes the nature and scope of any com4 pany or activities identified under subtitle B and 

5 steps taken to address them; and 

6 (6) describes any dispute resolutions under7 taken under section 1002 and the result of such res8 olutions. 

9 (b) EVALUATION OF ANNUAL REPORT BY GAO.— 

10 Not later than 120 days after receiving the report required 

11 by subsection (a), the Comptroller General of the United 

12 States shall submit an evaluation of such report to the 

13 Committee on Financial Services of the House of Rep14 resentatives and the Committee on Banking, Housing, and 

15 Urban Affairs of the Senate. 

16 (c) STATEMENTS BY VOTING MEMBERS OF THE

17 COUNCIL.—At the time each report is submitted under 

18 subsection (a), each voting member of the Council shall— 

19 (1) if such member believes that the Council, 

20 the Government, and the private sector are taking 

21 all reasonable steps to ensure financial stability and 

22 to prevent systemic risk that would negatively affect 

23 the economy, submit a signed statement to the Com24 mittee on Financial Services of the House of Rep25 resentatives and the Committee on Banking, HousVerDate Nov 24 2008 22:04 Dec 02, 2009 Jkt 089200 PO 00000 Frm 00029 Fmt 6652 Sfmt 6201 E:\BILLS\H4173.IH H4173

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1 ing, and Urban Affairs of the Senate stating such 

2 belief; or 

3 (2) if such member does not believe that all rea4 sonable steps described under paragraph (1) are 

5 being taken, submit a signed statement to the Com6 mittee on Financial Services of the House of Rep7 resentatives and the Committee on Banking, Hous8 ing, and Urban Affairs of the Senate stating what 

9 actions such member believes need to be taken in 

10 order to ensure that all reasonable steps described 

11 under paragraph (1) are taken. 

12 (d) TESTIMONY BY THE CHAIRMAN.—The Chairman 

13 of the Council shall appear before the Committee on Fi14 nancial Services of the House of Representatives and the 

15 Committee on Banking, Housing, and Urban Affairs of 

16 the Senate at a semi-annual hearing, after the report is 

17 submitted under subsection (a)— 

18 (1) to discuss the efforts, activities, objectives, 

19 and plans of the Council; and 

20 (2) to discuss and answer questions concerning 

21 such report. 

22 SEC. 1007. APPLICABILITY OF CERTAIN FEDERAL LAWS. 

23 (a) The Federal Advisory Committee Act shall not 

24 apply to the Financial Services Oversight Council, or any 

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1 pointed by the Council (except that, if an advisory, tech2 nical, or professional committee has one or more members 

3 who are not employees of or affiliated with the United 

4 States government, the Council shall publish a list of the 

5 names of the members of such committee). 

6 (b) The Council shall not be deemed an ‘‘agency’’ for 

7 purposes of any State or Federal law. 

8 SEC. 1008. OVERSIGHT BY GAO. 

9 (a) AUTHORITY TO AUDIT.—The Comptroller Gen10 eral of the United States may audit the activities and fi11 nancial transactions of— 

12 (1) the Council; and 

13 (2) any person or entity acting on behalf of or 

14 under the authority of the Council, to the extent 

15 such activities and financial transactions relate to 

16 such person’s or entity’s work for the Council. 

17 (b) ACCESS TO INFORMATION.— 

18 (1) IN GENERAL.—Notwithstanding any other 

19 provision of law, the Comptroller General of the 

20 United States shall have access, upon request and at 

21 such reasonable time and in such reasonable form as 

22 the Comptroller General may request, to— 

23 (A) any records or other information under 

24 the control of the Council; and 


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1 (B) any records or other information under 

2 the control of a person or entity acting on be3 half of or under the authority of the Council, to 

4 the extent such records or other information is 

5 relevant to an audit under subsection (a). 

6 (2) CERTAIN INFORMATION SPECIFIED.—Access 

7 under paragraph (1) includes access to— 

8 (A) information provided to the Council by 

9 its voting and nonvoting members under section 

10 1101; and 

11 (B) the identity of each financial holding 

12 company subject to stricter standards. 

13 (c) PERIODIC EVALUATIONS.—The Comptroller Gen14 eral of the United States shall periodically evaluate the 

15 processes and activities of the Council and the extent to 

16 which the Council is fulfilling its duties under this title. 

17 The Comptroller General shall submit to the Committee 

18 on Financial Services of the House of Representatives and 

19 the Committee on Banking, Housing, and Urban Affairs 

20 of the Senate a report on the results of each such evalua21 tion. 

22 (d) CONFIDENTIALITY.—Any committees or Mem23 bers of Congress receiving reports or other information 

24 from the Comptroller General of the United States shall 


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1 maintain the confidentiality of any such information relat2 ing to— 

3 (1) dispute resolutions undertaken under sec4 tion 1002, including the result of such dispute reso5 lutions; and 

6 (2) financial holding companies subject to 

7 stricter standards. 

8 Subtitle B—Prudential Regulation 

9 of Companies and Activities for 

10 Financial Stability Purposes 

11 SEC. 1101. COUNCIL AND BOARD AUTHORITY TO OBTAIN 

12 INFORMATION. 

13 (a) IN GENERAL.—The Council and the Board are 

14 authorized to receive, and may request the production of, 

15 any data or information from members of the Council, as 

16 necessary— 

17 (1) to monitor the financial services market18 place to identify potential threats to the stability of 

19 the United States financial system; 

20 (2) to identify global trends and developments 

21 that could pose systemic risks to the stability of the 

22 economy of the United States or other economies; or 

23 (3) to otherwise carry out any of the provisions 

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1 cial regulatory agency’s implementation of rec2 ommended prudential standards under this subtitle. 

3 (b) SUBMISSION BY COUNCIL MEMBERS.—Notwith4 standing any provision of law, any voting or nonvoting 

5 member of the Council is authorized to provide informa6 tion to the Council, and the members of the Council shall 

7 maintain the confidentiality of such information. 

8 (c) FINANCIAL COMPANY DATA COLLECTION.— 

9 (1) IN GENERAL.—The Council or the Board 

10 may require the submission of periodic and other re11 ports from any financial company solely for the pur12 pose of assessing the extent to which a financial ac13 tivity or financial market in which the financial com14 pany participates, or the company itself, poses a 

15 threat to financial stability. 

16 (2) MITIGATION OF REPORT BURDEN.—Before 

17 requiring the submission of reports from financial 

18 companies that are regulated by the primary finan19 cial regulatory agencies, the Council or the Board 

20 shall coordinate with such agencies and shall, when21 ever possible, rely on information already being col22 lected by such agencies. 

23 (d) CONSULTATION WITH AGENCIES AND ENTI24 TIES.—The Council or the Board, as appropriate, may 


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1 consult with Federal and State agencies and other entities 

2 to carry out any of the provisions of this subtitle. 

3 (e) ADDITIONAL PROVISIONS.— 

4 (1) DATA AND INFORMATION SHARING.—The 

5 Chairman of the Council, in consultation with the 

6 other members of the Council may— 

7 (A) establish procedures to share data and 

8 information collected by the Council under this 

9 section with the members of the Council; 

10 (B) develop an electronic process for shar11 ing all information collected by the Council with 

12 the Chairman of the Board on a real-time basis; 

13 and 

14 (C) issue any regulations necessary to 

15 carry out this subsection; and 

16 (D) designate the format in which re17 quested data and information must be sub18 mitted to the Council, including any electronic, 

19 digital, or other format that facilitates the use 

20 of such data by the Council in its analysis. 

21 (2) APPLICABLE PRIVILEGES NOT WAIVED.—A 

22 Federal financial regulator, State financial regu23 lator, United States financial company, foreign fi24 nancial company operating in the United States, fi25 nancial market utility, or other person shall not be 


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1 deemed to have waived any privilege otherwise appli2 cable to any data or information by transferring the 

3 data or information to, or permitting that data or 

4 information to be used by— 

5 (A) the Council; 

6 (B) any Federal financial regulator or 

7 State financial regulator, in any capacity; or 

8 (C) any other agency of the Federal Gov9 ernment (as defined in section 6 of title 18, 

10 United States Code). 

11 (3) DISCLOSURE EXEMPTION.—Any informa12 tion obtained by the Council under this section shall 

13 be exempt from the disclosure requirements under 

14 section 552 of title 5, United States Code. 

15 (4) CONSULTATION WITH FOREIGN GOVERN16 MENTS.—Under the supervision of the President, 

17 and in a manner consistent with section 207 of the 

18 Foreign Service Act of 1980 (22 U.S.C. 3927), the 

19 Chairman of the Council, in consultation with the 

20 other members of the Council, shall regularly consult 

21 with the financial regulatory entities and other ap22 propriate organizations of foreign governments or 

23 international organizations on matters relating to 

24 systemic risk to the international financial system. 


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1 (5) REPORT.—Not later than 6 months after 

2 the date of the enactment of this title, the Chairman 

3 of the Council shall report to the Financial Services 

4 Committee of the House of Representatives and the 

5 Banking, Housing, and Urban Affairs Committee of 

6 the Senate the opinion of the Council as to whether 

7 setting up an electronic database as described in 

8 paragraph (1)(B) would aid the Council in carrying 

9 out this section. 

10 SEC. 1102. COUNCIL PRUDENTIAL REGULATION REC11 OMMENDATIONS TO FEDERAL FINANCIAL 

12 REGULATORY AGENCIES. 

13 (a) IN GENERAL.—The Council is authorized to issue 

14 formal recommendations, publicly or privately, that a Fed15 eral financial regulatory agency adopt stricter prudential 

16 standards for firms it regulates to mitigate systemic risk. 

17 (b) AGENCY AUTHORITY TO IMPLEMENT STAND18 ARDS.—A Federal financial regulatory agency specifically 

19 is authorized to impose, require reports regarding, exam20 ine for compliance with, and enforce stricter prudential 

21 standards and safeguards for the firms it regulates to 

22 mitigate systemic risk. This authority is in addition to and 

23 does not limit any other authority of the Federal financial 

24 regulatory agencies. Compliance by an entity with actions 

25 taken by a Federal financial regulatory agency under this 


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1 section shall be enforceable in accordance with the statutes 

2 governing the respective Federal financial regulatory 

3 agency’s jurisdiction over the entity as if the agency action 

4 were taken under those statutes. 

5 (c) AGENCY NOTICE TO COUNCIL.—A Federal finan6 cial regulatory agency shall, within 60 days of receiving 

7 a Council recommendation under this section, notify the 

8 Council in writing regarding— 

9 (1) the actions the Federal financial regulatory 

10 agency has taken in response to the Council’s rec11 ommendation, additional actions contemplated, and 

12 timetables therefore; or 

13 (2) the reason the Federal financial regulatory 

14 agency has failed to respond to the Council’s re15 quest. 

16 SEC. 1103. SUBJECTING FINANCIAL COMPANIES TO STRICT17 ER PRUDENTIAL STANDARDS FOR FINANCIAL 

18 STABILITY PURPOSES. 

19 (a) IN GENERAL.—The Council shall, in consultation 

20 with the Board and any other primary financial regulatory 

21 agency that regulates the financial company or a sub22 sidiary of such company, subject a financial company to 

23 stricter prudential standards under this subtitle if the 

24 Council determines that— 


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1 (1) material financial distress at the company 

2 could pose a threat to financial stability or the econ3 omy; or 

4 (2) the nature, scope, size, scale, concentration, 

5 and interconnectedness, or mix of the company’s ac6 tivities could pose a threat to financial stability or 

7 the economy. 

8 (b) CRITERIA.—In making a determination under 

9 subsection (a), the Council shall consider the following cri10 teria: 

11 (1) The amount and nature of the company’s fi12 nancial assets. 

13 (2) The amount and nature of the company’s li14 abilities, including the degree of reliance on short15 term funding. 

16 (3) The extent of the company’s leverage. 

17 (4) The extent and nature of the company’s off18 balance sheet exposures. 

19 (5) The extent and nature of the company’s 

20 transactions and relationships with other financial 

21 companies. 

22 (6) The company’s importance as a source of 

23 credit for households, businesses, and State and 

24 local governments and as a source of liquidity for 

25 the financial system. 


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1 (7) The nature, scope, and mix of the com2 pany’s activities. 

3 (8) The degree to which the company is already 

4 regulated by one or more Federal financial regu5 latory agencies. 

6 (9) Any other factors that the Council deems 

7 appropriate. 

8 (c) NOTIFICATION OF DECISION.—The Board, in an 

9 executive capacity on behalf of the Council, shall imme10 diately upon the Council’s decision notify the financial 

11 company by order, which shall be public, that the financial 

12 company is subject to stricter prudential standards, as 

13 prescribed by the Board in accordance with section 1104. 

14 (d) PERIODIC REVIEW AND RESCISSION OF FIND15 INGS.— 

16 (1) SUBMISSION OF ASSESSMENT.—The Board 

17 shall periodically submit a report to the Council con18 taining an assessment of whether each company sub19 jected to stricter prudential standards should con20 tinue to be subject to such standards. 

21 (2) REVIEW AND RESCISSION.—The Council 

22 shall— 

23 (A) review the assessment submitted pur24 suant to paragraph (1) and any information or 

25 recommendation submitted by members of the 


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1 Council regarding whether a financial holding 

2 company subject to stricter standards continues 

3 to merit stricter prudential standards; and 

4 (B) rescind the action subjecting a com5 pany to stricter prudential standards if the 

6 Council determines that the company no longer 

7 meets the conditions for being subjected to 

8 stricter prudential standards in subsections (a) 

9 and (b). 

10 (e) EMERGENCY EXCEPTION TO MAJORITY VOTE OF

11 COUNCIL REQUIREMENT.—If each of the Secretary of the 

12 Treasury, the Board, and the Federal Deposit Insurance 

13 Corporation determines that a financial company must be 

14 subjected to stricter prudential standards in accordance 

15 with this section immediately to prevent destabilization of 

16 the financial system or economy, the Secretary, the Board, 

17 and the Corporation may, upon approval by the President, 

18 subject such company to stricter prudential standards 

19 under this section. 

20 (f) APPEAL.— 

21 (1) ADMINISTRATIVE.—The Council and the 

22 Board, in an executive capacity on behalf of the 

23 Council, shall establish a procedure through which a 

24 financial company that has been subjected to stricter 

25 prudential standards in accordance with this section 


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1 may appeal being subjected to stricter prudential 

2 standards. 

3 (2) JUDICIAL REVIEW.—Any financial company 

4 which has been subjected to stricter prudential 

5 standards may seek judicial review by filing a peti6 tion for such review in the United States Court of 

7 Appeals for the District of Columbia. 

8 (g) EFFECT OF COUNCIL DECISION.— 

9 (1) APPLICATION OF THE BANK HOLDING COM10 PANY ACT.—A financial company that is not a bank 

11 holding company as defined in the Bank Holding 

12 Company Act at the time the financial company is 

13 subjected to stricter prudential standards in accord14 ance with this section, shall— 

15 (A) if such company conducts at the time 

16 such company is subjected to stricter prudential 

17 standards in accordance with this section only 

18 activities that are determined to be financial in 

19 nature or incidental thereto under section 4(k) 

20 of the Bank Holding Company Act of 1956, be 

21 treated as a bank holding company that has 

22 elected to be a financial holding company for 

23 purposes of the Bank Holding Company Act of 

24 1956, the Federal Deposit Insurance Act, and 

25 all other Federal laws and regulations govVerDate Nov 24 2008 22:04 Dec 02, 2009 Jkt 089200 PO 00000 Frm 00042 Fmt 6652 Sfmt 6201 E:\BILLS\H4173.IH H4173

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1 erning bank holding companies and financial 

2 holding companies and be the financial holding 

3 company subject to stricter standards for pur4 poses of this subtitle; or 

5 (B) if such company conducts at the time 

6 that such company is subjected to stricter pru7 dential standards in accordance with this sec8 tion activities other than those that are deter9 mined to be financial in nature or incidental 

10 thereto under section 4(k) of the Bank Holding 

11 Company Act, be required to establish and con12 duct all its activities that are determined to be 

13 financial in nature or incidental thereto under 

14 section 4(k) of the Bank Holding Company Act 

15 of 1956 in an intermediate holding company es16 tablished under section 6 of the Bank Holding 

17 Company Act of 1956, which intermediate hold18 ing company shall be treated as a bank holding 

19 company that has elected to be a financial hold20 ing company for purposes of the Bank Holding 

21 Company Act of 1956, the Federal Deposit In22 surance Act, and all other Federal laws and 

23 regulations governing bank holding companies 

24 and financial holding companies, and such sec25 tion 6 holding company shall be a financial 


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1 holding company subject to stricter standards 

2 for purposes of this title. 

3 (2) EXEMPTIVE AUTHORITY.—Notwithstanding 

4 any provision of the Bank Holding Company Act of 

5 1956, the Board may, if it determines such action 

6 is necessary to ensure appropriate stricter prudential 

7 supervision, issue such exemptions from that Act as 

8 may be necessary with regard to financial holding 

9 companies subject to stricter standards that do not 

10 control an insured depository institution. 

11 (3) LEVERAGE LIMITATION.—The Board shall 

12 require each financial holding company subject to 

13 stricter standards to maintain a debt to equity ratio 

14 of no more than 15 to 1, and the Board shall issue 

15 regulations containing procedures and timelines for 

16 how a financial holding company subject to stricter 

17 standards with a debt to equity ratio of more than 

18 15 to 1 at the time such company becomes a finan19 cial holding company subject to stricter standards 

20 shall reduce such ratio. 

21 SEC. 1104. STRICTER PRUDENTIAL STANDARDS FOR CER22 TAIN FINANCIAL HOLDING COMPANIES FOR 

23 FINANCIAL STABILITY PURPOSES. 

24 (a) STRICTER PRUDENTIAL STANDARDS.— 


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1 (1) IN GENERAL.—To mitigate risks to finan2 cial stability and the economy posed by a financial 

3 holding company that has been subjected to stricter 

4 prudential standards in accordance with section 

5 1103, the Board shall impose stricter prudential 

6 standards on such company. Such standards shall be 

7 designed to maximize financial stability taking costs 

8 to long-term financial and economic growth into ac9 count, be heightened when compared to the stand10 ards that otherwise would apply to financial holding 

11 companies that are not subjected to stricter pruden12 tial standards pursuant to this subtitle (including by 

13 addressing additional or different types of risks than 

14 otherwise applicable standards), and reflect the po15 tential risk posed to financial stability by the finan16 cial holding company subject to stricter standards. 

17 (2) STANDARDS.— 

18 (A) REQUIRED STANDARDS.—The height19 ened standards imposed by the Board under 

20 this section shall include— 

21 (i) risk-based capital requirements; 

22 (ii) leverage limits; 

23 (iii) liquidity requirements; 

24 (iv) concentration requirements (as 

25 specified in subsection (c)); 


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1 (v) prompt corrective action require2 ments (as specified in subsection (e)); 

3 (vi) resolution plan requirements (as 

4 specified in subsection (f)); 

5 (vii) overall risk management require6 ments; and 

7 (viii) and may establish short-term 

8 debt limits in accordance with subsection 

9 (d). 

10 (B) ADDITIONAL STANDARDS.—The 

11 heightened standards imposed by the Board 

12 under this section also may include any other 

13 prudential standards that the Board deems ad14 visable, including taking actions to mitigate sys15 temic risk. 

16 (C) CONSULTATION WITH FEDERAL FI17 NANCIAL REGULATORY AGENCIES.—The Board, 

18 in developing stricter prudential standards 

19 under this subsection, shall consult with other 

20 Federal financial regulatory agencies with re21 spect to any standard that is likely to have a 

22 significant impact on a functionally regulated 

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1 ject to stricter prudential standards under this 

2 title. 

3 (3) APPLICATION OF REQUIRED STANDARDS.— 

4 In imposing prudential standards under this sub5 section, the Board may differentiate among financial 

6 holding companies subject to stricter standards on 

7 an individual basis or by category, taking into con8 sideration their capital structure, risk, complexity, 

9 financial activities, the financial activities of their 

10 subsidiaries, and any other factors that the Board 

11 deems appropriate. 

12 (4) WELL CAPITALIZED AND WELL MAN13 AGED.—A financial holding company subject to 

14 stricter standards shall at all times after it is subject 

15 to such standards be well capitalized and well man16 aged as defined by the Board. 

17 (5) APPLICATION TO FOREIGN FINANCIAL COM18 PANIES.—The Board shall prescribe regulations re19 garding the application of stricter prudential stand20 ards to financial companies that are organized or in21 corporated in a country other than the United 

22 States, and that own or control a Federal or State 

23 branch, subsidiary, or operating entity that is a fi24 nancial holding company subject to stricter stand25 ards, giving due regard to the principle of national 


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1 treatment and equality of competitive opportunity 

2 and taking into account the extent to which such 

3 companies are subject to home country standards 

4 comparable to those applied to financial holding 

5 companies in the United States. 

6 (6) INCLUSION OF OFF BALANCE SHEET AC7 TIVITIES IN COMPUTING CAPITAL REQUIREMENTS.— 

8 (A) IN GENERAL.—In the case of any fi9 nancial holding company subject to stricter 

10 standards, the computation of capital require11 ments shall take into account off balance sheet 

12 activities for such a company. 

13 (B) EXEMPTION.—If the Board determines 

14 that an exemption from the requirements under 

15 subparagraph (A) is appropriate, the Board 

16 may exempt a financial holding company sub17 ject to stricter standards from the requirements 

18 under subparagraph (A) or any transaction or 

19 transactions engaged in by such a company. 

20 (C) OFF BALANCE SHEET ACTIVITIES DE21 FINED.—For purposes of this paragraph, the 

22 term ‘‘off balance sheet activities’’ means a li23 ability that is not currently a balance sheet li24 ability but may become one upon the happening 

25 of some future event, including the following 


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1 transactions, to the extent they may create a li2 ability: 

3 (i) Direct credit substitutes in which a 

4 bank substitutes its own credit for a third 

5 party, including standby letters of credit. 

6 (ii) Irrevocable letters of credit that 

7 guarantee repayment of commercial paper 

8 or tax-exempt securities. 

9 (iii) Risk participation in bankers’ ac10 ceptances. 

11 (iv) Sale and repurchase agreements. 

12 (v) Asset sales with recourse against 

13 the seller. 

14 (vi) Interest rate swaps. 

15 (vii) Credit swaps. 

16 (viii) Commodity contracts. 

17 (ix) Forward contracts. 

18 (x) Securities contracts. 

19 (xi) Such other activities or trans20 actions as the Board may, by rule, define. 

21 (b) PRUDENTIAL STANDARDS AT FUNCTIONALLY

22 REGULATED SUBSIDIARIES AND SUBSIDIARY DEPOSI23 TORY INSTITUTIONS.— 

24 (1) BOARD AUTHORITY TO RECOMMEND STAND25 ARDS.—With respect to a functionally regulated subVerDate Nov 24 2008 22:04 Dec 02, 2009 Jkt 089200 PO 00000 Frm 00049 Fmt 6652 Sfmt 6201 E:\BILLS\H4173.IH H4173

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1 sidiary (as such term is defined in section 5 of the 

2 Bank Holding Company Act) or a subsidiary deposi3 tory institution of a financial holding company sub4 ject to stricter standards, the Board may rec5 ommend that the relevant Federal financial regu6 latory agency for such functionally regulated sub7 sidiary or subsidiary depository institution prescribe 

8 stricter prudential standards on such functionally 

9 regulated subsidiary or subsidiary depository institu10 tion. Any standards recommended by the Board 

11 under this section shall be of the same type as those 

12 described in subsection (a)(2) that the Board is re13 quired or authorized to impose directly on the finan14 cial holding company subject to stricter standards. 

15 (2) AGENCY AUTHORITY TO IMPLEMENT

16 HEIGHTENED STANDARDS AND SAFEGUARDS.—Each 

17 Federal financial regulatory agency that receives a 

18 Board recommendation under paragraph (1) is au19 thorized to impose, require reports regarding, exam20 ine for compliance with, and enforce standards 

21 under this subsection with respect to the entities 

22 such agency regulates, as such entities are described 

23 in section 1006(b)(6). This authority is in addition 

24 to and does not limit any other authority of the Fed25 eral financial regulatory agencies. Compliance by an 


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1 entity with actions taken by a Federal financial reg2 ulatory agency under this section shall be enforce3 able in accordance with the statutes governing the 

4 respective agency’s jurisdiction over the entity as if 

5 the agency action were taken under those statutes. 

6 (3) IMPOSITION OF STANDARDS.—Standards 

7 imposed by a Federal financial regulatory agency 

8 under this subsection shall be the standards rec9 ommended by the Board in accordance with para10 graph (1) or any other similar standards that the 

11 Board deems acceptable after consultation between 

12 the Board and the primary financial regulatory 

13 agency. 

14 (4) FEDERAL FINANCIAL REGULATORY AGENCY

15 RESPONSE; NOTICE TO COUNCIL AND BOARD.—A 

16 Federal financial regulatory agency shall notify the 

17 Council and the Board in writing on whether and to 

18 what extent the agency has imposed the stricter pru19 dential standards described in paragraph (3) within 

20 60 days of the Board’s recommendation under para21 graph (1). A Federal financial regulatory agency 

22 that fails to impose such standards shall provide 

23 specific justification for such failure to act in the 

24 written notice from the agency to the Council and 

25 Board. 


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1 (c) CONCENTRATION LIMITS FOR FINANCIAL HOLD2 ING COMPANIES SUBJECT TO STRICTER STANDARDS.— 

3 (1) STANDARDS.—In order to limit the risks 

4 that the failure of any company could pose to a fi5 nancial holding company subject to stricter stand6 ards and to the stability of the United States finan7 cial system, the Board, by regulation, shall prescribe 

8 standards that limit the risks posed by the exposure 

9 of a financial holding company subject to stricter 

10 standards to any other company. 

11 (2) LIMITATION ON CREDIT EXPOSURE.—The 

12 regulations prescribed by the Board shall prohibit 

13 each financial holding company subject to stricter 

14 standards from having credit exposure to any unaf15 filiated company that exceeds 25 percent of capital 

16 stock and surplus of the financial holding company 

17 subject to stricter standards, or such lower amount 

18 as the Board may determine by regulation to be nec19 essary to mitigate risks to financial stability. 

20 (3) CREDIT EXPOSURE.—For purposes of this 

21 subsection and with respect to a financial holding 

22 company subject to stricter standards, the term 

23 ‘‘credit exposure’’ to a company means— 

24 (A) all extensions of credit to the company, 

25 including loans, deposits, and lines of credit; 


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1 (B) all repurchase agreements and reverse 

2 repurchase agreement with the company; 

3 (C) all securities borrowing and lending 

4 transactions with the company to the extent 

5 that such transactions create credit exposure of 

6 the financial holding company subject to strict7 er standards to the company; 

8 (D) all guarantees, acceptances, or letters 

9 of credit (including endorsement or standby let10 ters of credit) issued on behalf of the company; 

11 (E) all purchases of or investment in secu12 rities issued by the company; 

13 (F) counterparty credit exposure to the 

14 company in connection with a derivative trans15 action between the financial holding company 

16 subject to stricter standards and the company; 

17 and 

18 (G) any other similar transactions that the 

19 Board by regulation determines to be a credit 

20 exposure for purposes of this section. 

21 (4) ATTRIBUTION RULE.—For purposes of this 

22 subsection, any transaction by a financial holding 

23 company subject to stricter standards with any per24 son is deemed a transaction with a company to the 


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1 extent that the proceeds of the transaction are used 

2 for the benefit of, or transferred to, that company. 

3 (5) RULEMAKING.—The Board may issue such 

4 regulations and orders, including definitions con5 sistent with this subsection, as may be necessary to 

6 administer and carry out the purpose of this sub7 section. 

8 (6) EXEMPTIONS.— 

9 (A) IN GENERAL.— 

10 (i) FEDERAL HOME LOAN BANKS.— 

11 This subsection shall not apply to any Fed12 eral home loan bank, but Federal home 

13 loan banks are not exempt from any other 

14 provision of this title. 

15 (ii) APPLICABILITY TO OTHER ENTI16 TIES.—The Federal National Mortgage As17 sociation and the Federal Home Loan 

18 Mortgage Corporation are not exempt from 

19 any provision of this title. 

20 (B) REGULATIONS.—The Board may, by 

21 regulation or order, exempt transactions, in 

22 whole or in part, from the definition of credit 

23 exposure if it finds that the exemption is in the 

24 public interest and consistent with the purpose 

25 of this subsection. 


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1 (7) TRANSITION PERIOD.—This subsection and 

2 any regulations and orders of the Board under the 

3 authority of this subsection shall not take effect 

4 until the date that is 3 years from the date of the 

5 enactment of this subsection. The Board may extend 

6 the effective date for up to 2 additional years to pro7 mote financial stability. 

8 (d) SHORT-TERM DEBT LIMITS FOR CERTAIN FI9 NANCIAL HOLDING COMPANIES.— 

10 (1) IN GENERAL.—In order to limit the risks 

11 that an overaccumulation of short-term debt could 

12 pose to financial holding companies and to the sta13 bility of the United States financial system, the 

14 Board shall by regulation prescribe a limit on the 

15 amount of short-term debt, including off-balance 

16 sheet exposures, that may be accumulated by any fi17 nancial holding company subject to stricter stand18 ards for purposes of this title. 

19 (2) BASIS OF LIMIT.—The limit prescribed 

20 under paragraph (1) shall be based on a financial 

21 holding company’s short-term debt as a percentage 

22 of its capital stock and surplus or on such other 

23 measure as the Board considers appropriate. 

24 (3) SHORT-TERM DEBT DEFINED.—For pur25 poses of this subsection, the term ‘‘short-term debt’’ 


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1 means such liabilities with short-dated maturity that 

2 the Board identifies by regulation, except that such 

3 term does not include insured deposits. 

4 (4) RULEMAKING AUTHORITY.—In addition to 

5 prescribing regulations under paragraphs (1) and 

6 (3), the Board may prescribe such regulations, in7 cluding definitions consistent with this subsection, 

8 and issue such orders as may be necessary to carry 

9 out this subsection. 

10 (5) AUTHORITY TO ISSUE EXEMPTIONS AND

11 ADJUSTMENTS.—Notwithstanding the Bank Holding 

12 Company Act of 1956 (12 U.S.C. 1841 et seq.), the 

13 Board may, if it determines such action is necessary 

14 to ensure appropriate heightened prudential super15 vision, with respect to a financial holding company 

16 that does not control an insured depository institu17 tion, issue to such company an exemption from or 

18 adjustment to the limit prescribed under paragraph 

19 (1). 

20 (6) TRANSITION PERIOD.—This subsection and 

21 any regulation or order of the Board under this sub22 section shall take effect 3 years after the date of the 

23 enactment of this title. The Board may postpone the 

24 date when this subsection takes effect by not more 

25 than 2 years in order to promote financial stability. 


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1 (e) PROMPT CORRECTIVE ACTION FOR FINANCIAL

2 HOLDING COMPANIES SUBJECT TO STRICTER STAND3 ARDS.— 

4 (1) PROMPT CORRECTIVE ACTION REQUIRED.— 

5 The Board shall take prompt corrective action to re6 solve the problems of financial holding companies 

7 subject to stricter standards. Except as specifically 

8 provided otherwise, this subsection shall apply only 

9 to financial holding companies that are incorporated 

10 or organized under United States laws. 

11 (2) DEFINITIONS.—For purposes of this sec12 tion— 

13 (A) CAPITAL CATEGORIES.— 

14 (i) WELL CAPITALIZED.—A financial 

15 holding company subject to stricter stand16 ards is ‘‘well capitalized’’ if it exceeds the 

17 required minimum level for each relevant 

18 capital measure. 

19 (ii) UNDERCAPITALIZED.—A financial 

20 holding company subject to stricter stand21 ards is ‘‘undercapitalized’’ if it fails to 

22 meet the required minimum level for any 

23 relevant capital measure. 

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1 ject to stricter standards is ‘‘significantly 

2 undercapitalized’’ if it is significantly below 

3 the required minimum level for any rel4 evant capital measure. 

5 (iv) CRITICALLY UNDERCAPITAL6 IZED.—A financial holding company sub7 ject to stricter standards is ‘‘critically 

8 undercapitalized’’ if it fails to meet any 

9 level specified in paragraph (4)(C)(i). 

10 (3) OTHER DEFINITIONS.— 

11 (A) AVERAGE.—The ‘‘average’’ of an ac12 counting item (such as total assets or tangible 

13 equity) during a given period means the sum of 

14 that item at the close of business on each busi15 ness day during that period divided by the total 

16 number of business days in that period. 

17 (B) CAPITAL DISTRIBUTION.—The term 

18 ‘‘capital distribution’’ means— 

19 (i) a distribution of cash or other 

20 property by a financial holding company 

21 subject to stricter standards to its owners 

22 made on account of that ownership, but 

23 not including any dividend consisting only 

24 of shares of the financial holding company 


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1 subject to stricter standards or rights to 

2 purchase such shares; 

3 (ii) a payment by a financial holding 

4 company subject to stricter standards to 

5 repurchase, redeem, retire, or otherwise ac6 quire any of its shares or other ownership 

7 interests, including any extension of credit 

8 to finance any person’s acquisition of those 

9 shares or interests; and 

10 (iii) a transaction that the Board de11 termines, by order or regulation, to be in 

12 substance a distribution of capital to the 

13 owners of the financial holding company 

14 subject to stricter standards. 

15 (C) CAPITAL RESTORATION PLAN.—The 

16 term ‘‘capital restoration plan’’ means a plan 

17 submitted under paragraph (6)(B). 

18 (D) COMPENSATION.—The term ‘‘com19 pensation’’ includes any payment of money or 

20 provision of any other thing of value in consid21 eration of employment. 

22 (E) RELEVANT CAPITAL MEASURE.—The 

23 term ‘‘relevant capital measure’’ means the 

24 measures described in paragraph (4). 


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1 (F) REQUIRED MINIMUM LEVEL.—The 

2 term ‘‘required minimum level’’ means, with re3 spect to each relevant capital measure, the min4 imum acceptable capital level specified by the 

5 Board by regulation. 

6 (G) SENIOR EXECUTIVE OFFICER.—The 

7 term ‘‘senior executive officer’’ has the same 

8 meaning as the term ‘‘executive officer’’ in sec9 tion 22(h) of the Federal Reserve Act (12 

10 U.S.C. 375b). 

11 (4) CAPITAL STANDARDS.— 

12 (A) RELEVANT CAPITAL MEASURES.— 

13 (i) IN GENERAL.—Except as provided 

14 in clause (ii)(II), the capital standards pre15 scribed by the Board under section 

16 1104(a)(2) shall include— 

17 (I) a leverage limit; and 

18 (II) a risk-based capital require19 ment. 

20 (ii) OTHER CAPITAL MEASURES.—The 

21 Board may by regulation— 

22 (I) establish any additional rel23 evant capital measures to carry out 

24 this section; or 


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1 (II) rescind any relevant capital 

2 measure required under clause (i) 

3 upon determining that the measure is 

4 no longer an appropriate means for 

5 carrying out this section. 

6 (B) CAPITAL CATEGORIES GENERALLY.— 

7 The Board shall, by regulation, specify for each 

8 relevant capital measure the levels at which a 

9 financial holding company subject to stricter 

10 standards is well capitalized, undercapitalized, 

11 and significantly undercapitalized. 

12 (C) CRITICAL CAPITAL.— 

13 (i) BOARD TO SPECIFY LEVEL.— 

14 (I) LEVERAGE LIMIT.—The 

15 Board shall, by regulation, specify the 

16 ratio of tangible equity to total assets 

17 at which a financial holding company 

18 subject to stricter standards is criti19 cally undercapitalized. 

20 (II) OTHER RELEVANT CAPITAL

21 MEASURES.—The Board may, by reg22 ulation, specify for 1 or more other 

23 relevant capital measures, the level at 

24 which a financial holding company 


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1 subject to stricter standards is criti2 cally undercapitalized. 

3 (ii) LEVERAGE LIMIT RANGE.—The 

4 level specified under clause (i)(I) shall re5 quire tangible equity in an amount— 

6 (I) not less than 2 percent of 

7 total assets; and 

8 (II) except as provided in sub9 clause (I), not more than 65 percent 

10 of the required minimum level of cap11 ital under the leverage limit. 

12 (5) CAPITAL DISTRIBUTIONS RESTRICTED.— 

13 (A) IN GENERAL.—A financial holding 

14 company subject to stricter standards shall 

15 make no capital distribution if, after making 

16 the distribution, the financial holding company 

17 subject to stricter standards would be under18 capitalized. 

19 (B) EXCEPTION.—Notwithstanding sub20 paragraph (A), the Board may permit a finan21 cial holding company subject to stricter stand22 ards to repurchase, redeem, retire, or otherwise 

23 acquire shares or ownership interests if the re24 purchase, redemption, retirement, or other ac25 quisition— 


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1 (i) is made in connection with the 

2 issuance of additional shares or obligations 

3 of the financial holding company subject to 

4 stricter standards in at least an equivalent 

5 amount; and 

6 (ii) will reduce the financial obliga7 tions of the financial holding company sub8 ject to stricter standards or otherwise im9 prove the financial condition of the finan10 cial holding company subject to stricter 

11 standards. 

12 (6) PROVISIONS APPLICABLE TO UNDER13 CAPITALIZED FINANCIAL HOLDING COMPANY SUB14 JECT TO STRICTER STANDARDS.— 

15 (A) MONITORING REQUIRED.—The Board 

16 shall— 

17 (i) closely monitor the condition of 

18 any undercapitalized financial holding com19 pany subject to stricter standards; 

20 (ii) closely monitor compliance by any 

21 undercapitalized financial holding company 

22 subject to stricter standards with capital 

23 restoration plans, restrictions, and require24 ments imposed under this section; and 


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1 (iii) periodically review the plan, re2 strictions, and requirements applicable to 

3 any undercapitalized financial holding com4 pany subject to stricter standards to deter5 mine whether the plan, restrictions, and 

6 requirements are effective. 

7 (B) CAPITAL RESTORATION PLAN RE8 QUIRED.— 

9 (i) IN GENERAL.—Any undercapital10 ized financial holding company subject to 

11 stricter standards shall submit an accept12 able capital restoration plan to the Board 

13 within the time allowed by the Board 

14 under clause (iv). 

15 (ii) CONTENTS OF PLAN.—The capital 

16 restoration plan shall— 

17 (I) specify— 

18 (aa) the steps the financial 

19 holding company subject to 

20 stricter standards will take to be21 come well capitalized; 

22 (bb) the levels of capital to 

23 be attained by the financial hold24 ing company subject to stricter 


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1 standards during each year in 

2 which the plan will be in effect; 

3 (cc) how the financial hold4 ing company subject to stricter 

5 standards will comply with the 

6 restrictions or requirements then 

7 in effect under this section; and 

8 (dd) the types and levels of 

9 activities in which the financial 

10 holding company subject to 

11 stricter standards will engage; 

12 and 

13 (II) contain such other informa14 tion that the Board may require. 

15 (iii) CRITERIA FOR ACCEPTING

16 PLAN.—The Board shall not accept a cap17 ital restoration plan unless it determines 

18 that the plan— 

19 (I) complies with clause (ii); 

20 (II) is based on realistic assump21 tions, and is likely to succeed in re22 storing the capital of the financial 

23 holding company subject to stricter 

24 standards; and 


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1 (III) would not appreciably in2 crease the risk (including credit risk, 

3 interest-rate risk, and other types of 

4 risk) to which the financial holding 

5 company subject to stricter standards 

6 is exposed. 

7 (iv) DEADLINES FOR SUBMISSION AND

8 REVIEW OF PLANS.—The Board shall, by 

9 regulation, establish deadlines that— 

10 (I) provide financial holding com11 panies subject to stricter standards 

12 with reasonable time to submit capital 

13 restoration plans, and generally re14 quire a financial holding company 

15 subject to stricter standards to submit 

16 a plan not later than 45 days after it 

17 becomes undercapitalized; and 

18 (II) require the Board to act on 

19 capital restoration plans expeditiously, 

20 and generally not later than 60 days 

21 after the plan is submitted. 

22 (C) ASSET GROWTH RESTRICTED.—An 

23 undercapitalized financial holding company sub24 ject to stricter standards shall not permit its 

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1 ter to exceed its average total assets during the 

2 preceding calendar quarter unless— 

3 (i) the Board has accepted the capital 

4 restoration plan of the financial holding 

5 company subject to stricter standards; 

6 (ii) any increase in total assets is con7 sistent with the plan; and 

8 (iii) the ratio of tangible equity to 

9 total assets of the financial holding com10 pany subject to stricter standards increases 

11 during the calendar quarter at a rate suffi12 cient to enable it to become well capitalized 

13 within a reasonable time. 

14 (D) PRIOR APPROVAL REQUIRED FOR AC15 QUISITIONS AND NEW LINES OF BUSINESS.—An 

16 undercapitalized financial holding company sub17 ject to stricter standards shall not, directly or 

18 indirectly, acquire any interest in any company 

19 or insured depository institution, or engage in 

20 any new line of business, unless— 

21 (i) the Board has accepted the capital 

22 restoration plan of the financial holding 

23 company subject to stricter standards, the 

24 financial holding company subject to strict25 er standards is implementing the plan, and 


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1 the Board determines that the proposed 

2 action is consistent with and will further 

3 the achievement of the plan; 

4 (ii) the Board determines that the 

5 specific proposed action is appropriate; or 

6 (iii) the Board has exempted the fi7 nancial holding company subject to stricter 

8 standards from the requirements of this 

9 paragraph with respect to the class of ac10 quisitions that includes the proposed ac11 tion. 

12 (E) DISCRETIONARY SAFEGUARDS.—The 

13 Board may, with respect to any undercapital14 ized financial holding company subject to strict15 er standards, take actions described in any 

16 clause of paragraph (7)(B) if the Board deter17 mines that those actions are necessary. 

18 (7) PROVISIONS APPLICABLE TO SIGNIFICANTLY

19 UNDERCAPITALIZED FINANCIAL HOLDING COMPA20 NIES SUBJECT TO STRICTER STANDARDS AND

21 UNDERCAPITALIZED FINANCIAL HOLDING COMPA22 NIES SUBJECT TO STRICTER STANDARDS THAT FAIL

23 TO SUBMIT AND IMPLEMENT CAPITAL RESTORATION

24 PLANS.— 


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1 (A) IN GENERAL.—This paragraph shall 

2 apply with respect to any financial holding com3 pany subject to stricter standards that— 

4 (i) is significantly undercapitalized; or 

5 (ii) is undercapitalized and— 

6 (I) fails to submit an acceptable 

7 capital restoration plan within the 

8 time allowed by the Board under 

9 paragraph (6)(B)(iv); or 

10 (II) fails in any material respect 

11 to implement a capital restoration 

12 plan accepted by the Board. 

13 (B) SPECIFIC ACTIONS AUTHORIZED.—The 

14 Board shall carry out this paragraph by taking 

15 1 or more of the following actions— 

16 (i) REQUIRING RECAPITALIZATION.— 

17 Doing one or more of the following: 

18 (I) Requiring the financial hold19 ing company subject to stricter stand20 ards to sell enough shares or obliga21 tions of the financial holding company 

22 subject to stricter standards so that 

23 the financial holding company subject 

24 to stricter standards will be well cap25 italized after the sale. 


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1 (II) Further requiring that in2 struments sold under subclause (I) be 

3 voting shares. 

4 (III) Requiring the financial 

5 holding company subject to stricter 

6 standards to be acquired by or com7 bine with another company. 

8 (ii) RESTRICTING TRANSACTIONS

9 WITH AFFILIATES.— 

10 (I) Requiring the financial hold11 ing company subject to stricter stand12 ards to comply with section 23A of 

13 the Federal Reserve Act (12 U.S.C. 

14 371c), as if it were a member bank. 

15 (II) Further restricting the 

16 transactions of the financial holding 

17 company subject to stricter standards 

18 with affiliates and insiders. 

19 (iii) RESTRICTING ASSET GROWTH.— 

20 Restricting the asset growth of the finan21 cial holding company subject to stricter 

22 standards more stringently than paragraph 

23 (6)(C), or requiring the financial holding 

24 company subject to stricter standards to 

25 reduce its total assets. 


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1 (iv) RESTRICTING ACTIVITIES.—Re2 quiring the financial holding company sub3 ject to stricter standards or any of its sub4 sidiaries to alter, reduce, or terminate any 

5 activity that the Board determines poses 

6 excessive risk to the financial holding com7 pany subject to stricter standards. 

8 (v) IMPROVING MANAGEMENT.—Doing 

9 one or more of the following: 

10 (I) NEW ELECTION OF DIREC11 TORS.—Ordering a new election for 

12 the board of directors of the financial 

13 holding company subject to stricter 

14 standards. 

15 (II) DISMISSING DIRECTORS OR

16 SENIOR EXECUTIVE OFFICERS.—Re17 quiring the financial holding company 

18 subject to stricter standards to dis19 miss from office any director or senior 

20 executive officer who had held office 

21 for more than 180 days immediately 

22 before the financial holding company 

23 subject to stricter standards became 

24 undercapitalized. Dismissal under this 

25 clause shall not be construed to be a 


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1 removal under section 8 of the Fed2 eral Deposit Insurance Act (12 U.S.C. 

3 1818). 

4 (III) EMPLOYING QUALIFIED

5 SENIOR EXECUTIVE OFFICERS.—Re6 quiring the financial holding company 

7 subject to stricter standards to employ 

8 qualified senior executive officers 

9 (who, if the Board so specifies, shall 

10 be subject to approval by the Board). 

11 (vi) REQUIRING DIVESTITURE.—Re12 quiring the financial holding company sub13 ject to stricter standards to divest itself of 

14 or liquidate any subsidiary if the Board de15 termines that the subsidiary is in danger 

16 of becoming insolvent, poses a significant 

17 risk to the financial holding company sub18 ject to stricter standards, or is likely to 

19 cause a significant dissipation of the assets 

20 or earnings of the financial holding com21 pany subject to stricter standards. 

22 (vii) REQUIRING OTHER ACTION.—Re23 quiring the financial holding company sub24 ject to stricter standards to take any other 

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1 ter carry out the purpose of this section 

2 than any of the actions described in this 

3 subparagraph. 

4 (C) PRESUMPTION IN FAVOR OF CERTAIN

5 ACTIONS.—In complying with subparagraph 

6 (B), the Board shall take the following actions, 

7 unless the Board determines that the actions 

8 would not be appropriate— 

9 (i) The action described in subclause 

10 (I) or (III) of subparagraph (B)(i) (relat11 ing to requiring the sale of shares or obli12 gations, or requiring the financial holding 

13 company subject to stricter standards to be 

14 acquired by or combine with another com15 pany). 

16 (ii) The action described in subpara17 graph (B)(ii) (relating to restricting trans18 actions with affiliates). 

19 (D) SENIOR EXECUTIVE OFFICERS’ COM20 PENSATION RESTRICTED.— 

21 (i) IN GENERAL.—The financial hold22 ing company subject to stricter standards 

23 shall not do any of the following without 

24 the prior written approval of the Board: 


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1 (I) Pay any bonus to any senior 

2 executive officer. 

3 (II) Provide compensation to any 

4 senior executive officer at a rate ex5 ceeding that officer’s average rate of 

6 compensation (excluding bonuses, 

7 stock options, and profit-sharing) dur8 ing the 12 calendar months preceding 

9 the calendar month in which the fi10 nancial holding company subject to 

11 stricter standards became under12 capitalized. 

13 (ii) FAILING TO SUBMIT PLAN.—The 

14 Board shall not grant any approval under 

15 clause (i) with respect to a financial hold16 ing company subject to stricter standards 

17 that has failed to submit an acceptable 

18 capital restoration plan. 

19 (E) CONSULTATION WITH OTHER REGU20 LATORS.—Before the Board makes a deter21 mination under subparagraph (B)(vi) with re22 spect to a subsidiary that is a broker, dealer, 

23 government securities broker, government secu24 rities dealer, investment company, or invest25 ment adviser, the Board shall consult with the 


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1 Securities and Exchange Commission and, in 

2 the case of any other subsidiary which is sub3 ject to any financial responsibility or capital re4 quirement, any other appropriate regulator of 

5 such subsidiary with respect to the proposed de6 termination of the Board and actions pursuant 

7 to such determination. 

8 (8) MORE STRINGENT TREATMENT BASED ON

9 OTHER SUPERVISORY CRITERIA.— 

10 (A) IN GENERAL.—If the Board deter11 mines (after notice and an opportunity for 

12 hearing) that a financial holding company sub13 ject to stricter standards is in an unsafe or un14 sound condition or, pursuant to section 8(b)(8) 

15 of the Federal Deposit Insurance Act (12 

16 U.S.C. 1818(b)(8)), deems the financial holding 

17 company subject to stricter standards to be en18 gaging in an unsafe or unsound practice, the 

19 Board may— 

20 (i) if the financial holding company 

21 subject to stricter standards is well capital22 ized, require the financial holding company 

23 subject to stricter standards to comply 

24 with one or more provisions of paragraphs 


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1 (6) and (7), as if the institution were 

2 undercapitalized; or 

3 (ii) if the financial holding company 

4 subject to stricter standards is under5 capitalized, take any one or more actions 

6 authorized under paragraph (7)(B) as if 

7 the financial holding company subject to 

8 stricter standards were significantly under9 capitalized. 

10 (B) CONTENTS OF PLAN.—A plan that 

11 may be required pursuant to subparagraph 

12 (A)(i) shall specify the steps that the financial 

13 holding company subject to stricter standards 

14 will take to correct the unsafe or unsound con15 dition or practice. 

16 (9) IMPLEMENTATION.—The Board shall pre17 scribe such regulations, issue such orders, and take 

18 such other actions the Board determines to be nec19 essary to carry out this subsection. 

20 (10) OTHER AUTHORITY NOT AFFECTED.—This 

21 section does not limit any authority of the Board, 

22 any other Federal regulatory agency, or a State to 

23 take action in addition to (but not in derogation of) 

24 that required under this section. 


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1 (11) CONSULTATION.—The Board and the Sec2 retary of the Treasury shall consult with their for3 eign counterparts and through appropriate multilat4 eral organizations to reach agreement to extend 

5 comprehensive and robust prudential supervision and 

6 regulation to all highly leveraged and substantially 

7 interconnected financial companies. 

8 (12) ADMINISTRATIVE REVIEW OF DISMISSAL

9 ORDERS.— 

10 (A) TIMELY PETITION REQUIRED.—A di11 rector or senior executive officer dismissed pur12 suant to an order under paragraph 

13 (7)(B)(v)(II) may obtain review of that order 

14 by filing a written petition for reinstatement 

15 with the Board not later than 10 days after re16 ceiving notice of the dismissal. 

17 (B) PROCEDURE.— 

18 (i) HEARING REQUIRED.—The Board 

19 shall give the petitioner an opportunity 

20 to— 

21 (I) submit written materials in 

22 support of the petition; and 

23 (II) appear, personally or 

24 through counsel, before 1 or more 


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1 members of the Board or designated 

2 employees of the Board. 

3 (ii) DEADLINE FOR HEARING.—The 

4 Board shall— 

5 (I) schedule the hearing referred 

6 to in clause (i)(II) promptly after the 

7 petition is filed; and 

8 (II) hold the hearing not later 

9 than 30 days after the petition is 

10 filed, unless the petitioner requests 

11 that the hearing be held at a later 

12 time. 

13 (iii) DEADLINE FOR DECISION.—Not 

14 later than 60 days after the date of the 

15 hearing, the Board shall— 

16 (I) by order, grant or deny the 

17 petition; 

18 (II) if the order is adverse to the 

19 petitioner, set forth the basis for the 

20 order; and 

21 (III) notify the petitioner of the 

22 order. 

23 (C) STANDARD FOR REVIEW OF DISMISSAL

24 ORDERS.—The petitioner shall bear the burden 

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1 ployment would materially strengthen the abil2 ity of the financial holding company subject to 

3 stricter standards— 

4 (i) to become well capitalized, to the 

5 extent that the order is based on the cap6 ital level of the financial holding company 

7 subject to stricter standards or such com8 pany’s failure to submit or implement a 

9 capital restoration plan; and 

10 (ii) to correct the unsafe or unsound 

11 condition or unsafe or unsound practice, to 

12 the extent that the order is based on para13 graph (8)(A). 

14 (13) ENFORCEMENT AUTHORITY FOR FOREIGN

15 FINANCIAL HOLDING COMPANY SUBJECT TO STRICT16 ER STANDARDS.— 

17 (A) TERMINATION AUTHORITY.—If the 

18 Board believes that a condition, practice, or ac19 tivity of a foreign financial holding company 

20 subject to stricter standards does not comply 

21 with this title or the rules or orders prescribed 

22 by the Board under this title or otherwise poses 

23 a threat to financial stability, the Board may, 

24 after notice and opportunity for a hearing, take 

25 such actions as necessary to mitigate such risk, 


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1 including ordering a foreign financial holding 

2 company subject to stricter standards in the 

3 United States to terminate the activities of such 

4 branch, agency, or subsidiary. 

5 (B) DISCRETION TO DENY HEARING.—The 

6 Board may issue an order under paragraph (1) 

7 without providing for an opportunity for a hear8 ing if the Board determines that expeditious ac9 tion is necessary in order to protect the public 

10 interest. 

11 (f) REPORTS REGARDING RAPID AND ORDERLY RES12 OLUTION AND CREDIT EXPOSURE.— 

13 (1) IN GENERAL.—The Board shall require 

14 each financial holding company subject to stricter 

15 standards incorporated or organized in the United 

16 States to report periodically to the Board on— 

17 (A) its plan for rapid and orderly resolu18 tion in the event of severe financial distress; 

19 (B) the nature and extent to which the fi20 nancial holding company subject to stricter 

21 standards has credit exposure to other signifi22 cant financial companies; and 

23 (C) the nature and extent to which other 

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1 posure to the financial holding company subject 

2 to stricter standards. 

3 (2) NO LIMITING EFFECT.—A rapid resolution 

4 plan submitted in accordance with this subsection 

5 shall not be binding on a receiver appointed under 

6 subtitle G, a bankruptcy court, or any other author7 ity that is authorized or required to resolve the fi8 nancial holding company subject to stricter stand9 ards or any of its subsidiaries or affiliates. 

10 (3) REPORTING TRIGGERED BY STRESS TEST

11 RESULTS.— 

12 (A) FINANCIAL HOLDING COMPANIES SUB13 JECT TO STRICTER STANDARDS.—Each time 

14 the results of a quarterly stress test under base15 line or adverse conditions conducted by a finan16 cial holding company subject to stricter stand17 ards under section 1114(a) or the results of a 

18 stress test of that financial holding company 

19 subject to stricter standards conducted by the 

20 Board under subsection (g) indicate that the fi21 nancial holding company subject to stricter 

22 standards is, in the determination of the Board, 

23 significantly or critically undercapitalized, that 

24 financial holding company subject to stricter 

25 standards shall submit a rapid resolution plan 


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1 in accordance with this subsection that has 

2 been revised to address the causes of those re3 sults. 

4 (B) FINANCIAL COMPANIES THAT ARE NOT

5 FINANCIAL HOLDING COMPANIES SUBJECT TO

6 STRICTER STANDARDS.—Each time the results 

7 of a semiannual stress test under baseline or 

8 adverse conditions conducted by a financial 

9 company under section 1114(b) indicate that 

10 the financial company is, in the determination 

11 of the Board, significantly or critically under12 capitalized, that financial company shall be re13 quired to report under this subsection. The 

14 Board shall prescribe regulations establishing 

15 expedited procedures for such reporting. 

16 (C) TRANSPARENCY.—Any rapid resolution 

17 plan submitted pursuant to this paragraph shall 

18 be subject to any restrictions regarding the dis19 closure of any other rapid resolution plan sub20 mitted pursuant to this subsection. 

21 (g) STRESS TESTS.— 

22 (1) The Board, in coordination with the appro23 priate primary financial regulatory agency, shall 

24 conduct annual stress tests of each financial holding 

25 company subject to stricter standards. The Board 


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1 may, as the Board determines appropriate, conduct 

2 stress tests of financial companies that are not fi3 nancial holding companies subject to stricter stand4 ards. The Board shall publish a summary of the re5 sults of such stress tests. 

6 (2) The Board shall issue regulations to define 

7 the term ‘‘stress test’’ for purposes of this sub8 section. Such a definition shall provide for not less 

9 than 3 different sets of conditions under which a 

10 stress test should be conducted: baseline, adverse, 

11 and severely adverse scenarios. 

12 (h) AVOIDING DUPLICATION.—The Board shall take 

13 any action the Board deems appropriate to avoid imposing 

14 duplicative requirements under this subtitle for financial 

15 holding companies subject to stricter standards that are 

16 also bank holding companies. 

17 (i) RESOLUTION PLANS REQUIRED.— 

18 (1) IN GENERAL.—The Corporation and the 

19 Board, after consultation with the Council, shall 

20 jointly issue regulations requiring financial holding 

21 companies subject to stricter standards to develop 

22 plans designed to assist in the rapid and orderly res23 olution of the company. 

24 (2) STANDARDS FOR RESOLUTION PLANS.—The 

25 regulations required by paragraph (1) shall— 


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1 (A) define the scope of financial holding 

2 companies subject to stricter standards covered 

3 by these requirements and may exempt finan4 cial holding companies subject to stricter stand5 ards from the requirements of this subsection if 

6 the Corporation and the Board jointly deter7 mine that exemption is consistent with the pur8 poses of this title; 

9 (B) require each plan to demonstrate that 

10 any insured depository institution affiliated 

11 with a financial holding company subject to 

12 stricter standards is adequately insulated from 

13 the activities of any non-bank subsidiary of the 

14 institution or financial holding companies sub15 ject to stricter standards; 

16 (C) require that each plan include informa17 tion detailing— 

18 (i) the nature and extent to which the 

19 financial holding company subject to strict20 er standards has credit exposure to other 

21 significant financial companies; 

22 (ii) the nature and extent to which 

23 other significant financial companies have 

24 credit exposure to the financial holding 

25 company subject to stricter standards; 


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1 (iii) full descriptions of the financial 

2 holding company subject to stricter stand3 ards’ ownership structure, assets, liabil4 ities, and contractual obligations; and 

5 (iv) the cross-guarantees tied to dif6 ferent securities, a list of major counter7 parties, and a process for determining 

8 where the financial holding company sub9 ject to stricter standards’ collateral is 

10 pledged; and 

11 (D) establish such other standards as the 

12 Corporation and the Board may jointly deem 

13 necessary to carry out this subsection. 

14 (3) REVIEW OF PLANS.— 

15 (A) SUBMISSION OF PLANS.—Each finan16 cial holding company subject to stricter stand17 ards that is subject to the requirement under 

18 paragraph (1) shall submit its plan to the Cor19 poration and the Board. 

20 (B) REVIEW.—Upon the submission of a 

21 plan pursuant to subparagraph (A), and not 

22 less often than annually thereafter, the Cor23 poration and the Board, after consultation with 

24 any Federal financial regulatory agencies with 

25 jurisdiction over the financial holding company 


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1 subject to stricter standards, shall jointly review 

2 such plan and may require a financial holding 

3 company subject to stricter standards to revise 

4 its plan consistent with the standards estab5 lished pursuant to paragraph (2). 

6 (4) ENFORCEMENT.— 

7 (A) IN GENERAL.—The Corporation, after 

8 consultation with the Board, shall have the au9 thority to take any enforcement action in sec10 tion 8 of the Federal Deposit Insurance Act (12 

11 U.S.C. 1818) against any financial holding 

12 company subject to stricter standards that fails 

13 to comply with the requirements of this section 

14 or any regulations issued pursuant to this sec15 tion. 

16 (B) NO LIMITATION ON BOARD AUTHOR17 ITY.—Nothing under this subsection shall be 

18 construed as limiting any enforcement authority 

19 available to the Board under any other provi20 sion of law. 

21 (5) NO LIMITING EFFECT ON RECEIVER.—A 

22 rapid resolution plan submitted under this section 

23 shall not be binding on a receiver appointed under 

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1 nancial holding company subject to stricter stand2 ards or any of its subsidiaries or affiliates. 

3 (6) NO PRIVATE RIGHT OF ACTION.—No pri4 vate right of action may be based on any resolution 

5 plan submitted under this section. 

6 SEC. 1105. MITIGATION OF SYSTEMIC RISK. 

7 (a) COUNCIL AUTHORITY TO RESTRICT OPERATIONS

8 AND ACTIVITIES.—If the Council determines, after notice 

9 and an opportunity for hearing, that despite the higher 

10 prudential standards imposed pursuant to section 

11 1104(a)(2), the size of a financial holding company sub12 ject to stricter standards or the scope, nature, scale, con13 centration, interconnectedness, or mix of activities directly 

14 or indirectly conducted by a financial holding company 

15 subject to stricter standards poses a grave threat to the 

16 financial stability or economy of the United States, the 

17 Council shall require the company to undertake 1 or more 

18 mitigatory actions described in subsection (d). 

19 (b) CONSULTATION WITH FEDERAL FINANCIAL

20 REGULATORY AGENCIES.—The Council, in determining 

21 whether to impose any requirement under this section that 

22 is likely to have a significant impact on a functionally reg23 ulated subsidiary, or a subsidiary depository institution, 

24 of a financial company subjected to stricter prudential 


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1 standards under this title, shall consult with the Federal 

2 financial regulatory agency for any such subsidiary. 

3 (c) FACTORS FOR CONSIDERATION.—In reaching a 

4 determination described in subsection (a), the Council 

5 shall take into consideration the following factors, as ap6 propriate— 

7 (1) the amount and nature of the company’s fi8 nancial assets; 

9 (2) the amount and nature of the company’s li10 abilities, including the degree of reliance on short11 term funding; 

12 (3) the extent and nature of the company’s off13 balance sheet exposures; 

14 (4) the company’s reliance on leverage; 

15 (5) the extent and nature of the company’s 

16 transactions, relationships, and interconnectedness 

17 with other financial and non-financial companies; 

18 (6) the company’s importance as a source of 

19 credit for households, businesses, and State and 

20 local governments and as a source of liquidity for 

21 the financial system; 

22 (7) the scope, nature, size, scale, concentration, 

23 interconnectedness and mix of the company’s activi24 ties; 


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1 (8) the extent to which prudential regulations 

2 mitigate the risk posed; and 

3 (9) any other factors identified that the Council 

4 determines appropriate. 

5 (d) MITIGATORY ACTIONS.— 

6 (1) IN GENERAL.—Mitigatory action may in7 clude— 

8 (A) modifying the prudential standards im9 posed pursuant to section 1104(a); 

10 (B) terminating 1 or more activities; 

11 (C) imposing conditions on the manner in 

12 which a financial holding company subject to 

13 stricter standards conducts 1 or more activities; 

14 (D) limiting the ability to merge with, ac15 quire, consolidate with, or otherwise become af16 filiated with another company; 

17 (E) restricting the ability to offer a finan18 cial product or products; and 

19 (F) in the event the Council deems sub20 paragraphs (A) through (E) inadequate as a 

21 means to address the identified risks, selling, 

22 divesting, or otherwise transferring business 

23 units, branches, assets, or off-balance sheet 

24 items to unaffiliated companies. 


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1 (2) INTERNATIONAL COMPETITIVENESS CON2 SIDERATIONS.—In making any decision pursuant to 

3 paragraph (1), the Council shall consider— 

4 (A) the need to maintain the international 

5 competitiveness of the United States financial 

6 services industry; and 

7 (B) the extent to which other countries 

8 with a significant financial services industry 

9 have established corresponding regimes to miti10 gate threats to financial stability or the econ11 omy posed by financial companies. 

12 (e) DUE PROCESS.— 

13 (1) NOTICE AND HEARING.—The Council shall 

14 give notice to a financial company subject to stricter 

15 prudential standards, and opportunity for hearing if 

16 requested, that the financial company is being con17 sidered for mitigatory action pursuant to subsection 

18 (a). The hearing shall occur no later than 30 days 

19 after the financial company receives notice of the 

20 proposed action from the Council. 

21 (2) NOTICE.—The Council shall notify the fi22 nancial company subject to stricter prudential stand23 ards of the Council’s determination, and, if the 

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1 priate, require the company to submit a plan to the 

2 Council to implement the required mitigatory action. 

3 (3) SUBMISSION OF PLAN.—The financial hold4 ing company subject to stricter standards shall sub5 mit its proposed plan to implement the required 

6 mitigatory action or actions to the Council within 60 

7 days from the date it receives notice under para8 graph (2) or such shorter timeframe as the Council 

9 may require, if the Council determines an emergency 

10 situation merits expeditious implementation. 

11 (4) APPROVAL OR AMENDMENT OF THE

12 PLAN.—The Council shall review the plan submitted 

13 pursuant to paragraph (3) and determine whether 

14 the plan achieves the goal of mitigating a grave 

15 threat to the financial stability or the economy of 

16 the United States. The Council may approve or dis17 approve the plan with or without amendment. 

18 (5) EFFECT OF PLAN APPROVAL.—The Council 

19 shall— 

20 (A) notify a financial holding company 

21 subject to stricter standards by order, which 

22 shall be public, that the Council has approved 

23 the plan with or without amendment; and 

24 (B) direct the Board to require a financial 

25 holding company subject to stricter standards 


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1 to comply with the plan to implement mitiga2 tory action or actions within a reasonable time3 frame after the Council’s approval and in ac4 cordance with such deadlines established in the 

5 plan. 

6 (f) TREASURY SECRETARY CONCURRENCE.—Mitiga7 tory action imposed by the Council involving the sale, di8 vestiture, or transfer of more than $10,000,000,000 in 

9 total assets by a financial holding company subject to 

10 stricter standards shall require the Secretary of the Treas11 ury’s concurrence before the issuance of the notice in sub12 section (e)(5)(A). If the sale, divestiture, or transfer of 

13 total assets by a financial holding company subject to 

14 stricter standards exceeds $100,000,000,000, the Sec15 retary of the Treasury shall consult with the President be16 fore concurrence. 

17 (g) FAILURE TO IMPLEMENT THE PLAN.—If a finan18 cial holding company subject to stricter standards fails to 

19 implement a plan for mitigatory action imposed pursuant 

20 to subsection (e)(5) within a reasonable timeframe, the 

21 Council shall direct the Board to take such actions as nec22 essary to ensure compliance with the plan. 

23 (h) JUDICIAL REVIEW.—For any plan required under 

24 this section, a financial holding company subject to strict25 er standards may, not later than 30 days after receipt of 


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1 the Council’s notice under subsection (e)(5), bring an ac2 tion in the United States district court for the judicial dis3 trict in which the home office of such company is located, 

4 or in the United States District Court for the District of 

5 Columbia, for an order requiring that the requirement for 

6 a mitigatory action be rescinded. Judicial review under 

7 this section shall be limited to the imposition of a mitiga8 tory action. In reviewing the Council’s imposition of a 

9 mitigatory action, the court shall rescind or dismiss only 

10 those mitigatory actions it finds to be imposed in an arbi11 trary and capricious manner. 

12 SEC. 1106. SUBJECTING ACTIVITIES OR PRACTICES TO 

13 STRICTER PRUDENTIAL STANDARDS FOR FI14 NANCIAL STABILITY PURPOSES. 

15 (a) IN GENERAL.—The Council may subject a finan16 cial activity or practice to stricter prudential standards 

17 under this subtitle if the Council determines that the con18 duct, scope, nature, size, scale, concentration, or inter19 connectedness of such activity or practice could create or 

20 increase the risk of significant liquidity, credit, or other 

21 problems spreading among financial institutions or mar22 kets and local, minority, or underserved communities, and 

23 thereby threaten the stability of the financial system or 

24 economy. 


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1 (b) PERIODIC REVIEW OF ACTIVITY IDENTIFICA2 TIONS.— 

3 (1) SUBMISSION OF ASSESSMENT.—The Board 

4 shall periodically submit a report to the Council con5 taining an assessment of whether each activity or 

6 practice subjected to stricter prudential standards 

7 should continue to be subject to such standards. 

8 (2) REVIEW AND RECISION.—The Council 

9 shall— 

10 (A) review the assessment submitted pur11 suant to paragraph (1) and any information or 

12 recommendation submitted by members of the 

13 Council regarding whether a financial activity 

14 subjected to stricter prudential standards con15 tinues to merit stricter prudential standards; 

16 and 

17 (B) rescind the action subjecting an activ18 ity to heightened prudential supervision if the 

19 Council determines that the activity no longer 

20 meets the criteria in subsection (a). 

21 (c) PROCEDURE FOR SUBJECTING OR CEASING TO

22 SUBJECT AN ACTIVITY OR PRACTICE TO STRICTER PRU23 DENTIAL STANDARDS.— 

24 (1) COUNCIL AND BOARD COORDINATION.—The 

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1 sidering whether to subject or cease to subject an 

2 activity to stricter prudential standards in accord3 ance with this section. 

4 (2) NOTICE AND OPPORTUNITY FOR CONSIDER5 ATION OF WRITTEN MATERIALS.— 

6 (A) IN GENERAL.—The Board shall, in an 

7 executive capacity on behalf of the Council, pro8 vide notice to financial companies that the 

9 Council is considering whether to subject an ac10 tivity or practice to heightened prudential regu11 lation, and shall provide a financial company 

12 engaged in such activity or practice 30 days to 

13 submit written materials to inform the Coun14 cil’s decision. The Council shall decide, and the 

15 Board shall provide notice of the Council’s deci16 sion, within 60 days of the due date for such 

17 written materials. 

18 (B) EMERGENCY EXCEPTION.—The Coun19 cil may waive or modify the requirements of 

20 subparagraph (A) if the Council determines 

21 that such waiver or modification is necessary or 

22 appropriate to prevent or mitigate threats posed 

23 by an activity to financial stability. The Board 

24 shall, in an executive capacity on behalf of the 

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1 fication to financial companies as soon as prac2 ticable, which shall be no later than 24 hours 

3 after the waiver or modification. 

4 (3) FORM OF DECISION.—The Board shall pro5 vide all notices required under this subsection by 

6 posting a notice on the Board’s web site and pub7 lishing a notice in the Federal Register. 

8 SEC. 1107. STRICTER REGULATION OF ACTIVITIES AND 

9 PRACTICES FOR FINANCIAL STABILITY PUR10 POSES. 

11 (a) PRUDENTIAL STANDARDS.— 

12 (1) BOARD AUTHORITY TO RECOMMEND.— 

13 (A) IN GENERAL.—To mitigate the risks to 

14 United States financial stability and the United 

15 States economy posed by financial activities and 

16 practices that the Council identifies for stricter 

17 prudential standards under section 1106 the 

18 Board shall recommend prudential standards to 

19 the appropriate primary financial regulatory 

20 agencies to apply to such identified activities 

21 and practices. 

22 (B) CONSULTATION WITH PRIMARY FINAN23 CIAL REGULATORY AGENCIES.—The Board, in 

24 developing recommendations under this sub25 section, shall consult with the relevant primary 


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1 financial regulatory agencies with respect to 

2 any standard that is likely to have a significant 

3 effect on entities described in section 

4 1000(b)(6). 

5 (2) CRITERIA.—The actions recommended 

6 under paragraph (1)— 

7 (A) shall be designed to maximize financial 

8 stability, taking costs to long-term financial and 

9 economic growth into account; and 

10 (B) may include prescribing the conduct of 

11 the activity or practice in specific ways (such as 

12 by limiting its scope, nature, size, scale, con13 centration, or interconnectedness, or applying 

14 particular capital or risk-management require15 ments to the conduct of the activity) or prohib16 iting the activity or practice altogether. 

17 (b) IMPLEMENTATION OF RECOMMENDED STAND18 ARDS.— 

19 (1) ROLE OF PRIMARY FINANCIAL REGULATORY

20 AGENCY.—Each primary financial regulatory agency 

21 is authorized to impose, require reports regarding, 

22 examine for compliance with, and enforce standards 

23 in accordance with this section with respect to those 

24 entities described in section 1000(b)(6) for which it 

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1 thority is in addition to and does not limit any other 

2 authority of the primary financial regulatory agen3 cies. Compliance by an entity with actions taken by 

4 a primary financial regulatory agency under this sec5 tion shall be enforceable in accordance with the stat6 utes governing the respective primary financial regu7 latory agency’s jurisdiction over the entity as if the 

8 agency action were taken under those statutes. 

9 (2) IMPOSITION OF STANDARDS.—Standards 

10 imposed under this subsection shall be the standards 

11 recommended by the Board in accordance with sub12 section (a) or any other similar standards that the 

13 Board deems acceptable after consultation between 

14 the Board and the primary financial regulatory 

15 agency. 

16 (3) PRIMARY FINANCIAL REGULATORY AGENCY

17 RESPONSE.—A primary financial regulatory agency 

18 shall notify the Council and the Board in writing on 

19 whether and to what extent the agency has imposed 

20 the stricter prudential standards described in para21 graph (2) within 60 days of the Board’s rec22 ommendation. A primary financial regulatory agency 

23 that fails to impose such standards shall provide 

24 specific justification for such failure to act in the 


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1 written notice from the agency to the Council and 

2 Board. 

3 SEC. 1108. EFFECT OF RESCISSION OF IDENTIFICATION. 

4 (a) NOTICE.—When the Council determines that a 

5 company or activity or practice no longer is subject to 

6 heightened prudential scrutiny, the Board shall inform the 

7 relevant primary financial regulatory agency or agencies 

8 (if different from the Board) of that finding. 

9 (b) DETERMINATION OF PRIMARY FINANCIAL REGU10 LATORY AGENCY TO CONTINUE.—A primary financial 

11 regulatory agency that has imposed stricter prudential 

12 standards for financial stability purposes under this sub13 title shall determine whether standards that it has im14 posed under this subtitle should remain in effect. 

15 SEC. 1109. EMERGENCY FINANCIAL STABILIZATION. 

16 (a) IN GENERAL.—Upon the written determination 

17 of the Council that a liquidity event exists that could de18 stabilize the financial system (which determination shall 

19 be made upon a vote of not less than two-thirds of the 

20 members of the Council then serving) and with the written 

21 consent of the Secretary of the Treasury (after certifi22 cation by the President that an emergency exists), the 

23 Corporation may create a widely-available program de24 signed to avoid or mitigate adverse effects on systemic eco25 nomic conditions or financial stability by guaranteeing obVerDate Nov 24 2008 22:04 Dec 02, 2009 Jkt 089200 PO 00000 Frm 00099 Fmt 6652 Sfmt 6201 E:\BILLS\H4173.IH H4173

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1 ligations of solvent insured depository institutions or other 

2 solvent companies that are predominantly engaged in ac3 tivities that are financial in nature or are incidental there4 to pursuant to section 4(k) of the Bank Holding Company 

5 Act, if necessary to prevent systemic financial instability 

6 during times of severe economic distress, except that a 

7 guarantee of obligations under this section may not in8 clude provision of equity in any form. 

9 (b) POLICIES AND PROCEDURES.—Prior to exercising 

10 any authority under this section, the Corporation shall es11 tablish policies and procedures governing the issuance of 

12 guarantees. The terms and conditions of any guarantees 

13 issued shall be established by the Corporation with the ap14 proval of the Secretary of the Treasury and the Financial 

15 Stability Oversight Council. 

16 (c) FUNDING.— 

17 (1) ADMINISTRATIVE EXPENSES AND COST OF

18 GUARANTEES.—A program established pursuant to 

19 this section shall require funding only for the pur20 poses of paying administrative expenses and for pay21 ing a guarantee in the event that a guaranteed loan 

22 defaults. 

23 (2) FEES AND OTHER CHARGES.—The Corpora24 tion shall charge fees or other charges to all partici25 pants in such program established pursuant to this 


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1 section. To the extent that a program established 

2 pursuant to this section has expenses or losses, the 

3 program will be funded entirely through fees or 

4 other charges assessed on participants in such pro5 gram. 

6 (3) EXCESS FUNDS.—If at the conclusion of 

7 such program there are any excess funds collected 

8 from the fees associated with such program, the 

9 funds will be deposited into the Systemic Resolution 

10 Fund established pursuant to section 1609(n). 

11 (4) AUTHORITY OF CORPORATION.—For pur12 poses of conducting a program established pursuant 

13 to this section, the Corporation— 

14 (A) may borrow funds from the Secretary 

15 of the Treasury, which shall be repaid in full 

16 with interest through fees and charges paid by 

17 participants in accordance with paragraph (2), 

18 and, to the extent such additional amounts are 

19 necessary, assessments on large financial com20 panies under paragraph (5), and there shall be 

21 available to the Corporation amounts in the 

22 Treasury not otherwise appropriated, including 

23 for the payment of reasonable administrative 

24 expenses; 


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1 (B) may not borrow funds from the De2 posit Insurance Fund established pursuant to 

3 section 11(a)(4) of the Federal Deposit Insur4 ance Act; and 

5 (C) may not borrow funds from the Sys6 temic Resolution Fund established pursuant to 

7 section 1609(n). 

8 (5) BACK-UP SPECIAL ASSESSMENT.—To the 

9 extent that the funds collected pursuant to para10 graph (2) are insufficient to cover any losses or ex11 penses (including monies borrowed pursuant to 

12 paragraph (4)) arising from a program established 

13 pursuant to this section, the Corporation shall im14 pose a special assessment on— 

15 (A) large financial companies subject to as16 sessments under section 1609(n) (whether or 

17 not such company participated in such pro18 gram) in the manner provided in such section 

19 1609(n); and 

20 (B) participants in the program that are 

21 not large financial companies paying assess22 ments pursuant to section 1609(n). 

23 (d) PLAN FOR MAINTENANCE OR INCREASE OF

24 LENDING.—In connection with any application or request 

25 to participate in such program authorized pursuant to this 


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1 section, a solvent company seeking to participate in such 

2 program shall be required to submit to the Corporation 

3 a plan detailing how the use of such guaranteed funds will 

4 facilitate the increase or maintenance of such solvent com5 pany’s level of lending to consumers or small businesses. 

6 (e) DEFINITIONS.—For purposes of this section, the 

7 following definitions apply: 

8 (1) ACTIVITIES THAT ARE FINANCIAL IN NA9 TURE.—The term ‘‘activities that are financial in 

10 nature’’ means activities that are determined to be 

11 financial in nature, or incidental to such activities, 

12 under section 4(k) of the Bank Holding Company 

13 Act of 1956 (12 U.S.C. 1843(k)) and activities that 

14 are identified for stricter prudential standards under 

15 section 1106. 

16 (2) COMPANY.—The term ‘‘company’’ means 

17 any entity other than a natural person that is incor18 porated or organized under Federal law or the laws 

19 of any State. 

20 (3) CORPORATION.—The term ‘‘Corporation’’ 

21 means the Federal Deposit Insurance Corporation. 

22 (4) INSURED DEPOSITORY INSTITUTION.—The 

23 term ‘‘insured depository institution’’ shall have the 

24 same meaning as in section 3 of the Federal Deposit 

25 Insurance Act (12 U.S.C. 1813). 


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1 (5) SOLVENT.—The term ‘‘solvent’’ means as2 sets are more than the obligations to creditors. 

3 (f) SUNSET OF CORPORATION’S AUTHORITY.—The 

4 Corporation’s authority under subsections (a) and (c) and 

5 the authority to borrow or obligate funds under section 

6 1609(n) shall expire on December 31, 2013, unless the 

7 President transmits to the Congress a request for renewal 

8 of the authority and there is enacted a joint resolution, 

9 as defined in subsection (g). 

10 (g) JOINT RESOLUTION.— 

11 (1) TERMS.—For purposes of subsection (f), 

12 the term ‘‘joint resolution’’ means only a joint reso13 lution which is introduced within a 2-day period be14 ginning on the date on which the President trans15 mits the request to the Congress under subsection 

16 (f), and— 

17 (A) which does not have a preamble; 

18 (B) the matter after the resolving clause of 

19 which is as follows: ‘‘That Congress approves 

20 the request for renewal of authority provided 

21 under sections 1108 and 1609(n) of the Finan22 cial Stability Improvement Act of 2009 as sub23 mitted by the President on lllllll’’, 

24 the blank space being filled in with the appro25 priate date; and 


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1 (C) the title of which is as follows: ‘‘Joint 

2 resolution approving the renewal of financial 

3 stabilization authority.’’. 

4 (2) REFERRAL.—A resolution described in 

5 paragraph (1) that is introduced in the House of 

6 Representatives shall be referred to the Committee 

7 on Financial Services of the House of Representa8 tives. A resolution described in paragraph (1) intro9 duced in the Senate shall be referred to the Com10 mittee on Banking, Housing, and Urban Affairs of 

11 the Senate. 

12 (3) DISCHARGE.—If the committee to which a 

13 resolution described in paragraph (1) is referred has 

14 not reported such resolution (or an identical resolu15 tion) by the end of the 2-day period beginning on 

16 the date on which the President transmits the re17 quest to the Congress under subsection (f), such 

18 committee shall be, at the end of such period, dis19 charged from further consideration of such resolu20 tion, and such resolution shall be placed on the ap21 propriate calendar of the House involved. 

22 (4) CONSIDERATION.— 

23 (A) IN GENERAL.—On or after the day 

24 after the date on which the committee to which 

25 such a resolution is referred has reported, or 


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1 has been discharged (under paragraph (3)) 

2 from further consideration of, such a resolution, 

3 it is in order (even though a previous motion to 

4 the same effect has been disagreed to) for any 

5 Member of the respective House to move to pro6 ceed to the consideration of the resolution. A 

7 Member may make the motion only on the day 

8 after the calendar day on which the Member 

9 announces to the House concerned the Mem10 ber’s intention to make the motion, except that, 

11 in the case of the House of Representatives, the 

12 motion may be made without such prior an13 nouncement if the motion is made by direction 

14 of the committee to which the resolution was re15 ferred. All points of order against the resolution 

16 (and against consideration of the resolution) 

17 are waived. The motion is highly privileged in 

18 the House of Representatives and is privileged 

19 in the Senate and is not debatable. The motion 

20 is not subject to amendment, or to a motion to 

21 postpone, or to a motion to proceed to the con22 sideration of other business. A motion to recon23 sider the vote by which the motion is agreed to 

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1 lution is agreed to, the respective House shall 

2 immediately proceed to consideration of the 

3 joint resolution without intervening motion, 

4 order, or other business, and the resolution 

5 shall remain the unfinished business of the re6 spective House until disposed of. 

7 (B) DEBATE.—Debate on the resolution, 

8 and on all debatable motions and appeals in 

9 connection therewith, shall be limited to not 

10 more than 2 hours, which shall be divided 

11 equally between those favoring and those oppos12 ing the resolution. An amendment to the resolu13 tion is not in order. A motion to limit further 

14 debate is in order and not debatable. A motion 

15 to postpone, or a motion to proceed to the con16 sideration of other business, or a motion to re17 commit the resolution is not in order. A motion 

18 to reconsider the vote by which the resolution is 

19 agreed to or disagreed to is not in order. 

20 (C) VOTE.—Immediately following the con21 clusion of the debate on a resolution described 

22 in paragraph (1) and a single quorum call at 

23 the conclusion of the debate, if requested in ac24 cordance with the rules of the appropriate 


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1 House, the vote on final passage of the resolu2 tion shall occur. 

3 (D) RULES APPEALS.—Appeals of the de4 cisions of the Chair relating to the application 

5 of the rules of the Senate or the House of Rep6 resentatives, as the case may be, to the proce7 dure relating to a resolution described in para8 graph (1) shall be decided without debate. 

9 (5) CONSIDERATION BY OTHER HOUSE.— 

10 (A) IN GENERAL.—If, before the passage 

11 by one House of a resolution of that House de12 scribed in paragraph (1), that House receives 

13 from the other House a resolution described in 

14 paragraph (1), then the following procedures 

15 shall apply: 

16 (i) The resolution of the other House 

17 shall not be referred to a committee and 

18 may not be considered in the House receiv19 ing it except in the case of final passage as 

20 provided in clause (ii)(II). 

21 (ii) With respect to a resolution de22 scribed in paragraph (1) of the House re23 ceiving the resolution— 

24 (I) the procedure in that House 

25 shall be the same as if no resolution 


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1 had been received from the other 

2 House; but 

3 (II) the vote on final passage 

4 shall be on the resolution of the other 

5 House. 

6 (B) CONSIDERATION.—Upon disposition of 

7 the resolution received from the other House, it 

8 shall no longer be in order to consider the reso9 lution that originated in the receiving House. 

10 (6) RULES OF THE SENATE AND HOUSE.—This 

11 subsection is enacted by the Congress— 

12 (A) as an exercise of the rulemaking power 

13 of the Senate and House of Representatives, re14 spectively, and as such it is deemed a part of 

15 the rules of each House, respectively, but appli16 cable only with respect to the procedure to be 

17 followed in that House in the case of a resolu18 tion described in paragraph (1), and it super19 sedes other rules only to the extent that it is in20 consistent with such rules; and 

21 (B) with full recognition of the constitu22 tional right of either House to change the rules 

23 (so far as relating to the procedure of that 

24 House) at any time, in the same manner, and 


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1 to the same extent as in the case of any other 

2 rule of that House. 

3 (7) EFFECTIVE PERIOD.—The Presidential re4 quest referred to in paragraph (1) shall specify the 

5 period of time that such authority is extended and 

6 the adoption of the joint resolution shall extend such 

7 powers for such period of time. 

8 SEC. 1110. CORPORATION MUST RECEIVE WARRANTS WHEN 

9 PAYING OR RISKING TAXPAYER FUNDS. 

10 (a) IN GENERAL.—The Federal Deposit Insurance 

11 Corporation (hereinafter in this section referred to as the 

12 ‘‘Corporation’’) may not provide any payment, credit ex13 tension, or guarantee, or make any such commitment 

14 under the authority of section 1109 or 1604, unless the 

15 Corporation receives from the financial company for which 

16 the credit extension or guarantee is intended, as fair mar17 ket value consideration for such payment, credit extension 

18 or guarantee— 

19 (1) in the case of a financial company, the secu20 rities of which are traded on a national securities ex21 change, a warrant giving the right to the Corpora22 tion to receive nonvoting common stock or preferred 

23 stock in such financial institution, or voting stock 

24 with respect to which, the Corporation agrees not to 


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1 exercise voting power, as the Corporation determines 

2 appropriate; or 

3 (2) in the case of any financial company other 

4 than one described in paragraph (1), a warrant for 

5 common or preferred stock, or a senior debt instru6 ment from such financial institution, as described in 

7 subsection (b)(3). 

8 (b) TERMS AND CONDITIONS.—The terms and condi9 tions of any warrant or senior debt instrument required 

10 under subsection (a) shall meet the following require11 ments: 

12 (1) PURPOSES.—Such terms and conditions 

13 shall, at a minimum, be designed— 

14 (A) to provide for reasonable participation 

15 by the Corporation, for the benefit of taxpayers, 

16 in equity appreciation in the case of a warrant 

17 or other equity security, or a reasonable interest 

18 rate premium, in the case of a debt instrument; 

19 and 

20 (B) to provide additional protection for the 

21 taxpayer against losses from such payment, ex22 tension of credit, or guarantee by the Corpora23 tion under this title. 

24 (2) AUTHORITY TO SELL, EXERCISE, OR SUR25 RENDER.—The Corporation may sell, exercise, or 


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1 surrender a warrant or any senior debt instrument 

2 received under this subsection, based on the condi3 tions established under paragraph (1). 

4 (3) CONVERSION.—The warrant shall provide 

5 that if, after the warrant is received by the Corpora6 tion under this subsection, the financial company 

7 that issued the warrant is no longer listed or traded 

8 on a national securities exchange or securities asso9 ciation, as described in subsection (a)(1), such war10 rants shall convert to senior debt, or contain appro11 priate protections for the Corporation to ensure that 

12 the Corporation is appropriately compensated for the 

13 value of the warrant, in an amount determined by 

14 the Corporation. 

15 (4) PROTECTIONS.—Any warrant representing 

16 securities to be received by the Corporation under 

17 this subsection shall contain anti-dilution provisions 

18 of the type employed in capital market transactions, 

19 as determined by the Corporation. Such provisions 

20 shall protect the value of the securities from market 

21 transactions such as stock splits, stock distributions, 

22 dividends, and other distributions, mergers, and 

23 other forms of reorganization or recapitalization. 

24 (5) EXERCISE PRICE.—The exercise price for 

25 any warrant issued pursuant to this subsection shall 


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1 be set by the Corporation, in the interest of the tax2 payers. 

3 (6) SUFFICIENCY.—The financial company 

4 shall guarantee to the Corporation that it has au5 thorized shares of nonvoting stock available to fulfill 

6 its obligations under this subsection. Should the fi7 nancial company not have sufficient authorized 

8 shares, including preferred shares that may carry 

9 dividend rights equal to a multiple number of com10 mon shares, the Corporation may, to the extent nec11 essary, accept a senior debt note in an amount, and 

12 on such terms as will compensate the Corporation 

13 with equivalent value, in the event that a sufficient 

14 shareholder vote to authorize the necessary addi15 tional shares cannot be obtained. 

16 (c) EXCEPTIONS.— 

17 (1) The Corporation shall establish an exception 

18 to the requirements of this section and appropriate 

19 alternative requirements for any participating finan20 cial company that is legally prohibited from issuing 

21 securities and debt instruments, so as not to allow 

22 circumvention of the requirements of this section. 

23 (2) If the Corporation is providing a payment, 

24 extension of credit, or guarantee with regard to its 

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1 termines that it is certain that at the conclusion of 

2 the Resolution Process the shareholders of all classes 

3 shall lose their entire investment and receive nothing 

4 therefor, then the requirements of this section shall 

5 not apply. 

6 SEC. 1111. EXAMINATIONS AND ENFORCEMENT ACTIONS 

7 FOR INSURANCE AND RESOLUTIONS PUR8 POSES. 

9 (a) EXAMINATIONS FOR INSURANCE AND RESOLU10 TIONS PURPOSES.—Section 10(b)(3) of the Federal De11 posit Insurance Act (12 U.S.C. 1820(b)(3)) is amended 

12 by striking ‘‘whenever the Board of Directors determines’’ 

13 and all that follows through the period and inserting ‘‘or 

14 financial holding company subject to stricter standards (as 

15 defined in section 1000(b)(5) of the Financial Stability 

16 Improvement Act of 2009) whenever the Board of Direc17 tors determines a special examination of any such deposi18 tory institution is necessary to determine the condition of 

19 such depository institution for insurance or such financial 

20 holding company subject to stricter standards for resolu21 tion purposes.’’. 

22 (b) ENFORCEMENT AUTHORITY.—Section 8(t) of the 

23 Federal Deposit Insurance Act (12 U.S.C. 1818(t)) is 

24 amended— 

25 (1) in paragraph (2)— 


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1 (A) at the end of subparagraph (B), by 

2 striking ‘‘or’’; 

3 (B) at the end of subparagraph (C), by 

4 striking the period and inserting ‘‘; or’’; and 

5 (C) by inserting at the end the following 

6 new subparagraph: 

7 ‘‘(D) the conduct or threatened conduct 

8 (including any acts or omissions) of the deposi9 tory institution holding company poses a risk to 

10 the Deposit Insurance Fund.’’; and 

11 (2) by adding at the end the following new 

12 paragraph: 

13 ‘‘(6) For purposes of this subsection: 

14 ‘‘(A) The Corporation shall have the same 

15 powers with respect to a depository institution 

16 holding company and its affiliates as the appro17 priate Federal banking agency has with respect 

18 to the holding company and its affiliates; and 

19 ‘‘(B) the holding company and its affiliates 

20 shall have the same duties and obligations with 

21 respect to the Corporation as the holding com22 pany and its affiliates have with respect to the 

23 appropriate Federal banking agency.’’. 


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1 SEC. 1112. STUDY OF THE EFFECTS OF SIZE AND COM2 PLEXITY OF FINANCIAL INSTITUTIONS ON 

3 CAPITAL MARKET EFFICIENCY AND ECO4 NOMIC GROWTH. 

5 (a) STUDY REQUIRED.—The Chairman of the Coun6 cil shall carry out a study of the economic impact of pos7 sible financial services regulatory limitations intended to 

8 reduce systemic risk. Such study shall estimate the effect 

9 on the efficiency of capital markets, costs imposed on the 

10 financial sector, and on national economic growth, of— 

11 (1) explicit or implicit limits on the maximum 

12 size of banks, bank holding companies, and other 

13 large financial institutions; 

14 (2) limits on the organizational complexity and 

15 diversification of large financial institutions; 

16 (3) requirements for operational separation be17 tween business units of large financial institutions in 

18 order to expedite resolution in case of failure; 

19 (4) limits on risk transfer between business 

20 units of large financial institutions; 

21 (5) requirements to carry contingent capital or 

22 similar mechanisms; 

23 (6) limits on commingling of commercial and fi24 nancial activities by large financial institutions; 


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1 (7) segregation requirements between tradi2 tional financial activities and trading or other high3 risk operations in large financial institutions; and 

4 (8) other limitations on the activities or struc5 ture of large financial institutions that may be use6 ful to limit systemic risk. 

7 The study shall include recommendations for the optimal 

8 structure of any limits considered in paragraphs (1) 

9 through (5) in order to maximize their effectiveness and 

10 minimize their economic impact. 

11 (b) REPORT.—Not later than the end of the 180-day 

12 period beginning on the date of the enactment of this title, 

13 the Chairman shall issue a report to the Congress con14 taining any findings and determinations made in carrying 

15 out the study required under subsection (a). 

16 SEC. 1113. EXERCISE OF FEDERAL RESERVE AUTHORITY. 

17 (a) NO DECISIONS BY FEDERAL RESERVE BANK

18 PRESIDENTS.—No provision of this title relating to the 

19 authority of the Board shall be construed as conferring 

20 any decision-making authority on presidents of Federal re21 serve banks. 

22 (b) VOTING DECISIONS BY BOARD.—The Board of 

23 Governors of the Federal Reserve System shall not dele24 gate the authority to make any voting decision that the 

25 Board is authorized or required to make under this title 


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1 in contravention of section 11(k) of the Federal Reserve 

2 Act. 

3 SEC. 1114. STRESS TESTS. 

4 (a) A financial holding company subject to stricter 

5 standards shall— 

6 (1) conduct quarterly stress tests; and 

7 (2) submit a report on its quarterly stress test 

8 to the head of the primary financial regulatory agen9 cy and to the Board at such time, in such form, and 

10 containing such information as the head of the pri11 mary financial regulatory agency may require. 

12 (b) A financial company that has more than 

13 $10,000,000,000 in total assets and is not a financial 

14 holding company subject to stricter standards shall— 

15 (1) conduct semiannual stress tests; and 

16 (2) submit a report on its semiannual stress 

17 test to the head of the primary financial regulatory 

18 agency and to the Board at such time, in such form, 

19 and containing such information as the head of the 

20 primary financial regulatory agency may require. 

21 (c) A stress test under this section shall provide for 

22 testing under each of the following sets of conditions: 

23 (1) Baseline. 

24 (2) Adverse. 

25 (3) Severely adverse. 


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1 (d) The head of each primary financial regulatory 

2 agency, in coordination with the Board, shall issue regula3 tions to define the term ‘‘stress test’’ for purposes of this 

4 section. 

5 SEC. 1115. CONTINGENT CAPITAL. 

6 (a) IN GENERAL.—The Board, in coordination with 

7 the appropriate primary financial regulatory agency, may 

8 promulgate regulations that require a financial holding 

9 company subject to stricter standards to maintain a min10 imum amount of long-term hybrid debt that is convertible 

11 to equity when— 

12 (1) a specified financial company fails to meet 

13 prudential standards established by the agency; and 

14 (2) the agency has determined that threats to 

15 United States financial system stability make such a 

16 conversion necessary. 

17 (b) FACTORS TO CONSIDER.—In establishing regula18 tions under this section, the Board shall consider— 

19 (1) an appropriate transition period for imple20 mentation of a conversion under this section; 

21 (2) capital requirements applicable to the speci22 fied financial company and its subsidiaries; and 

23 (3) any other factor that the Board deems ap24 propriate. 


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1 (c) STUDY REQUIRED.—The Chairman of the Coun2 cil shall carry out a study to determine an optimal imple3 mentation of contingent capital requirements to maximize 

4 financial stability, minimize the probability of drawing on 

5 the Systemic Resolution Fund established under section 

6 1609(n) in a financial crisis, and minimize costs for finan7 cial holding companies subject to stricter standards. To 

8 the extent practicable, the study shall take place with 

9 input from industry participants and international finan10 cial regulators. Such study shall include— 

11 (1) an evaluation of the characteristics and 

12 amounts of convertible debt that should be required, 

13 including possible tranche structure; 

14 (2) an analysis of possible trigger mechanisms 

15 for debt conversion, including violation of regulatory 

16 capital requirements, failure of stress tests, declara17 tion of systemic emergency by regulators, market18 based triggers and other trigger mechanisms; 

19 (3) an estimate of the costs of carrying contin20 gent capital; 

21 (4) an estimate of the effectiveness of contin22 gent capital requirements in reducing losses to the 

23 systemic resolution fund in cases of single-firm or 

24 systemic failure; and 


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1 (5) recommendations for implementing legisla2 tion. 

3 (d) REPORT.—Not later than the end of the 180-day 

4 period beginning on the date of the enactment of this title, 

5 the Chairman of Council shall issue a report to the Con6 gress containing any findings and determinations made in 

7 carrying out the study required under subsection (c). 

8 SEC. 1116. RESTRICTION ON PROPRIETARY TRADING BY 

9 DESIGNATED FINANCIAL HOLDING COMPA10 NIES. 

11 (a) IN GENERAL.—If the Board determines that pro12 priety trading by a financial holding company subject to 

13 stricter standards poses an existing or foreseeable threat 

14 to the safety and soundness of such company or to the 

15 financial stability of the United States, the Board may 

16 prohibit such company from engaging in propriety trading. 

17 (b) EXCEPTIONS PERMITTED.—The Board may ex18 empt from the prohibition of subsection (a) proprietary 

19 trading that the Board determines to be ancillary to other 

20 operations of such company and not to pose a threat to 

21 the safety and soundness of such company or to the finan22 cial stability of the United States, including— 

23 (1) making a market in securities issued by 

24 such company; 

25 (2) hedging or managing risk; 


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1 (3) determining the market value of assets of 

2 such company; and 

3 (4) propriety trading for such other purposes 

4 allowed by the Board by rule. 

5 (c) RULEMAKING AUTHORITY.—The primary finan6 cial regulatory agencies of banks and bank holding compa7 nies shall jointly issue regulations to carry out this section. 

8 (d) EFFECTIVE DATE.—The provisions of this sec9 tion shall take effect after the end of the 180-day period 

10 beginning on the date of the enactment of this title. 

11 (e) PROPRIETARY TRADING DEFINED.—For pur12 poses of this section and with respect to a company, the 

13 term ‘‘proprietary trading’’ means the trading of stocks, 

14 bonds, options, commodities, derivatives, or other financial 

15 instruments with the company’s own money and for the 

16 company’s own account. 

17 SEC. 1117. RULE OF CONSTRUCTION. 

18 The authorities granted to agencies under this sub19 title are in addition to any rulemaking, report-related, ex20 amination, enforcement, or other authority that such 

21 agencies may have under other law and in no way shall 

22 be construed to limit such other authority, except that any 

23 standards imposed for financial stability purposes under 

24 this subtitle shall supersede any conflicting less stringent 


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1 requirements of the primary financial regulatory agency 

2 but only the extent of the conflict. 

3 Subtitle C—Improvements to Su4 pervision and Regulation of 

5 Federal Depository Institutions 

6 SEC. 1201. DEFINITIONS. 

7 For purposes of this subtitle, the following definitions 

8 shall apply: 

9 (1) BOARD OF GOVERNORS.—The term ‘‘Board 

10 of Governors’’ means the Board of Governors of the 

11 Federal Reserve System. 

12 (2) CORPORATION.—The term ‘‘Corporation’’ 

13 means the Federal Deposit Insurance Corporation. 

14 (3) OFFICE OF THE COMPTROLLER OF THE

15 CURRENCY.—The term ‘‘Office of the Comptroller of 

16 the Currency’’ means the office established by sec17 tion 324 of the Revised Statutes (12 U.S.C. 1). 

18 (4) OFFICE OF THRIFT SUPERVISION.—The 

19 term ‘‘Office of Thrift Supervision’’ means the office 

20 established by section 3 of the Home Owners’ Loan 

21 Act (12 U.S.C. 1462a). 

22 (5) SECRETARY.—The term ‘‘Secretary’’ means 

23 the Secretary of the Treasury. 

24 (6) TRANSFER DATE.—The term ‘‘transfer 

25 date’’ has the meaning provided in section 1205. 


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1 (7) CERTAIN OTHER TERMS.—The terms ‘‘affil2 iate’’, ‘‘bank holding company’’, ‘‘control’’ (when 

3 used with respect to a depository institution), ‘‘de4 pository institution’’, ‘‘Federal banking agency’’, 

5 ‘‘Federal savings association’’, ‘‘including’’, ‘‘insured 

6 branch’’, ‘‘insured depository institution’’, ‘‘savings 

7 association’’, ‘‘State savings association’’, and ‘‘sub8 sidiary’’ have the same meanings as in section 3 of 

9 the Federal Deposit Insurance Act. 

10 SEC. 1202. AMENDMENTS TO THE HOME OWNERS’ LOAN 

11 ACT RELATING TO TRANSFER OF FUNCTIONS. 

12 (a) AMENDMENTS TO SECTION 2.—Section 2 of the 

13 Home Owners’ Loan Act (12 U.S.C. 1462) is amended— 

14 (1) by striking paragraph (1) and inserting the 

15 following new paragraph: 

16 ‘‘(1) BOARD OF GOVERNORS.—The term ‘Board 

17 of Governors’ means the Board of Governors of the 

18 Federal Reserve System.’’; and 

19 (2) by striking paragraph (3) and inserting the 

20 following new paragraph: 

21 ‘‘(3) [repealed]’’. 

22 (b) AMENDMENTS TO SECTION 3.—Section 3 of the 

23 Home Owners’ Loan Act (12 U.S.C. 1462a) is amended— 

24 (1) by striking subsection (a) and inserting the 

25 following new subsection: 


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1 ‘‘(a) ESTABLISHMENT OF DIVISION OF THRIFT SU2 PERVISION.—To carry out the purposes of this Act, there 

3 is hereby established the Division of Thrift Supervision, 

4 which shall be a division within the Office of the Comp5 troller of the Currency.’’; 

6 (2) in subsection (b)— 

7 (A) by striking paragraph (1) and insert8 ing the following new paragraph: 

9 ‘‘(1) IN GENERAL.—The Division of Thrift Su10 pervision shall be headed by a Senior Deputy Comp11 troller of the Currency who shall be subject to the 

12 general oversight of the Comptroller of the Cur13 rency.’’; 

14 (B) in paragraph (2), by striking ‘‘Direc15 tor’’ and inserting ‘‘Comptroller of the Cur16 rency’’; and 

17 (C) by striking paragraphs (3) and (4); 

18 (3) by striking subsections (c), (d), and (e) and 

19 inserting the following new subsection: 

20 ‘‘(c) POWERS OF THE COMPTROLLER OF THE CUR21 RENCY.—The Comptroller of the Currency shall have all 

22 the powers, duties, and functions transferred by the Fi23 nancial Stability Improvement Act of 2009 to the Comp24 troller of the Currency to carry out this Act.’’; 


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1 (4) by redesignating subsections (f) and (i) as 

2 subsections (d) and (e), respectively; 

3 (5) in subsection (d) (as so redesignated), by 

4 striking ‘‘Director’’ each place such term appears 

5 and inserting ‘‘Comptroller of the Currency’’; 

6 (6) by striking subsections (g), (h), and (j); and 

7 (7) in subsection (e) (as so redesignated), by 

8 striking ‘‘compensation of the Director and other 

9 employees of the Office and all other expenses there10 of’’ and inserting ‘‘expenses incurred by the Comp11 troller of the Currency in carrying out this Act’’. 

12 (c) AMENDMENTS TO SECTION 4.—Section 4 of the 

13 Home Owners’ Loan Act (12 U.S.C. 1463) is amended 

14 by striking ‘‘Director’’ each time it appears and inserting 

15 ‘‘Comptroller of the Currency’’. 

16 (d) AMENDMENTS TO SECTION 5.— 

17 (1) UNIVERSAL.—Section 5 of the Home Own18 ers’ Loan Act (12 U.S.C. 1464) is amended— 

19 (A) by striking ‘‘Director’’ and ‘‘Director 

20 of the Office of Thrift Supervision’’ each place 

21 such terms appear and inserting ‘‘Comptroller 

22 of the Currency’’; and 

23 (B) by striking ‘‘Director’s’’ each place 

24 such term appears and inserting ‘‘Comptroller 

25 of the Currency’s’’. 


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1 (2) SPECIFIC PROVISIONS.— 

2 (A) Section 5(d)(2)(E) of the Home Own3 ers’ Loan Act is amended by striking ‘‘or the 

4 Resolution Trust Corporation, as appropriate,’’ 

5 each place such term appears. 

6 (B) Section 5(d)(3)(B) of the Home Own7 ers’ Loan Act is amended by striking ‘‘or the 

8 Resolution Trust Corporation’’. 

9 (e) AMENDMENTS TO SECTIONS 8 AND 9.—Sections 

10 8 and 9 of the Home Owners’ Loan Act (12 U.S.C. 1466a 

11 and 1467) are each amended by striking ‘‘Director’’ each 

12 place such term appears and inserting ‘‘Comptroller of the 

13 Currency’’. 

14 (f) TECHNICAL AND CONFORMING AMENDMENTS.— 

15 (1) SECTION 3.—The heading for section 3 of 

16 the Home Owners’ Loan Act is amended by striking 

17 ‘‘DIRECTOR OF THE OFFICE OF THRIFT SUPER18 VISION’’ and inserting ‘‘DIVISION OF THRIFT SU19 PERVISION’’. 

20 (2) SECTION 5.—The heading for paragraph 

21 (2)(E)(ii) of section 5(d) of the Home Owners’ Loan 

22 Act and the heading for paragraph (3)(B) of such 

23 section are each amended by striking ‘‘OR RTC’’. 

24 (g) CLERICAL AMENDMENT.—The table of contents 

25 section for the Home Owners’ Loan Act is amended by 


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1 striking the item relating to section 3 and inserting the 

2 following new item: 

‘‘Sec. 3. Division of Thrift Supervision.’’. 

3 SEC. 1203. AMENDMENTS TO THE REVISED STATUTES. 

4 (a) AMENDMENT TO SECTION 324.—Section 324 of 

5 the Revised Statutes of the United States (12 U.S.C. 1) 

6 is amended to read as follows: 

7 ‘‘SEC. 324. COMPTROLLER OF THE CURRENCY. 

8 ‘‘There shall be in the Department of the Treasury 

9 a bureau, the chief officer of which bureau shall be called 

10 the Comptroller of the Currency, and shall perform the 

11 duties of the Comptroller of the Currency under the gen12 eral direction of the Secretary of the Treasury. The Comp13 troller of the Currency shall have the same authority over 

14 matters as were vested in the Director of the Office of 

15 Thrift Supervision or the Office of Thrift Supervision on 

16 the day before the date of enactment of the Financial Sta17 bility Improvement Act of 2009 other than those authori18 ties with respect to savings and loan holding companies 

19 and any affiliate of any such company (other than a sav20 ings association) as were vested in the Director of the Of21 fice of Thrift Supervision on such date. The Secretary of 

22 the Treasury may not delay or prevent the issuance of any 

23 rule or the promulgation of any regulation by the Comp24 troller of the Currency and may not intervene in any mat25 ter or proceeding before the Comptroller of the Currency 


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1 (including agency enforcement actions) unless otherwise 

2 specifically provided by law.’’. 

3 (b) AMENDMENTS TO SECTION 327.—Section 327 of 

4 the Revised Statutes of the United States (12 U.S.C. 4) 

5 is amended to read as follows: 

6 ‘‘SEC. 327 DEPUTY COMPTROLLERS. 

7 ‘‘(a) APPOINTMENT.—The Secretary of the Treasury 

8 shall appoint no more than 5 Deputy Comptrollers of the 

9 Currency— 

10 ‘‘(1) 1 of whom shall be designated the Senior 

11 Deputy Comptroller for National Banks, who shall 

12 oversee the regulation and supervision of national 

13 banks; and 

14 ‘‘(2) 1 of whom shall be designated the Senior 

15 Deputy Comptroller for Thrift Supervision, who 

16 shall oversee the regulation and supervision of Fed17 eral savings associations. 

18 ‘‘(b) PAY.—The Secretary of the Treasury shall fix 

19 the compensation of the Deputy Comptrollers of the Cur20 rency and provide such other benefits as the Secretary 

21 may determine to be appropriate. 

22 ‘‘(c) OATH OF OFFICE; DUTIES.—Each Deputy 

23 Comptroller shall take the oath of office and shall perform 

24 such duties as the Comptroller of the Currency shall di25 rect. 


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1 ‘‘(d) SERVICE AS ACTING COMPTROLLER.—During a 

2 vacancy in the office or during the absence or disability 

3 of the Comptroller, each Deputy Comptroller shall possess 

4 the power and perform the duties attached by law to the 

5 Office of the Comptroller under such order of succession 

6 as the Comptroller shall direct.’’. 

7 (c) AMENDMENT TO SECTION 329.—Section 329 of 

8 the Revised Statutes of the United States (12 U.S.C. 11) 

9 is amended by inserting ‘‘or any Federal savings associa10 tion’’ before the period at the end. 

11 (d) AMENDMENT TO SECTION 5240.—The fourth 

12 sentence of the second undesignated paragraph of Section 

13 5240 of the Revised Statutes of the United States (12 

14 U.S.C. 481) is amended by striking ‘‘Secretary of the 

15 Treasury;’’ and all that follows through the end of the sen16 tence, and inserting ‘‘Secretary of the Treasury; the em17 ployment and compensation of examiners, chief examiners, 

18 reviewing examiners, assistant examiners, and of the other 

19 employees of the office of the Comptroller of the Currency 

20 whose compensation is and shall be paid from assessments 

21 on banks or affiliates thereof or from other fees or charges 

22 imposed pursuant to this subchapter shall be set and ad23 justed pursuant to chapter 71 of title 5, United States 

24 Code and without regard to the provisions of other laws 

25 applicable to officers or employees of the United States.’’ 


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1 (e) AMENDMENT TO SECTION 5240.—The first sen2 tence in the first undesignated paragraph of Section 5240 

3 of the Revised Statutes of the United States (12 U.S.C. 

4 482) is amended by inserting ‘‘pursuant to chapter 71 of 

5 title 5, United States Code,’’ after ‘‘shall,’’. 

6 SEC. 1204. POWER AND DUTIES TRANSFERRED. 

7 (a) DIRECTOR OF THE OFFICE OF THRIFT SUPER8 VISION.— 

9 (1) TRANSFER OF FUNCTIONS.—Except as oth10 erwise provided in this subtitle, all functions of the 

11 Director of the Office of Thrift Supervision are 

12 transferred to the Office of the Comptroller of the 

13 Currency. 

14 (2) COMPTROLLER’S AUTHORITY.—Except as 

15 otherwise provided in this subtitle, the Comptroller 

16 of the Currency shall succeed to all powers, authori17 ties, rights, and duties that were vested in the Direc18 tor of the Office of Thrift Supervision under Federal 

19 law, including the Home Owners’ Loan Act, on the 

20 day before the transfer date other than those pow21 ers, authorities, rights, and duties with respect to 

22 savings and loan holding companies and any affiliate 

23 of any such company (other than a savings associa24 tion) as were vested in the Director of the Office of 

25 Thrift Supervision on such date. 


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1 (3) FUNCTIONS RELATING TO SUPERVISION OF

2 STATE SAVINGS ASSOCIATIONS.— 

3 (A) TRANSFER OF FUNCTIONS.—All func4 tions of the Director of the Office of Thrift Su5 pervision relating to the supervision and regula6 tion of State savings associations are trans7 ferred to the Corporation. 

8 (B) CORPORATION’S AUTHORITY.—The 

9 Corporation shall succeed to all powers, au10 thorities, rights, and duties that were vested in 

11 the Director of the Office of Thrift Supervision 

12 under Federal law, including the Home Owners’ 

13 Loan Act, on the day before the transfer date, 

14 relating to the supervision and regulation of 

15 State savings associations. 

16 (b) APPROPRIATE FEDERAL BANKING AGENCY.— 

17 Section 3 of the Federal Deposit Insurance Act (12 U.S.C. 

18 1813) is amended in subsection (q)— 

19 (1) by amending paragraph (1) to read as fol20 lows: 

21 ‘‘(1) the Comptroller of the Currency in the 

22 case of any national bank, Federal savings associa23 tion or any Federal branch or agency of a foreign 

24 bank;’’; 


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1 (2) in paragraph (2)(F), by adding ‘‘and’’ at 

2 the end after the semicolon; 

3 (3) by amending paragraph (3) to read as fol4 lows: 

5 ‘‘(3) the Federal Deposit Insurance Corporation 

6 in the case of a State nonmember insured bank, a 

7 State savings association or a foreign bank having 

8 an insured branch.’’; and 

9 (4) by striking paragraph (4). 

10 (c) TRANSFER OF CONSUMER FINANCIAL PROTEC11 TION FUNCTIONS.—Nothing in subsection (a) or (b) shall 

12 affect any transfer of consumer financial protection func13 tions of the Comptroller of the Currency and the Director 

14 of the Office of Thrift Supervision to the Consumer Finan15 cial Protection Agency as provided in the Consumer Fi16 nancial Protection Agency Act of 2009. 

17 (d) EFFECTIVE DATE.—Subsections (a) and (b) shall 

18 become effective on the transfer date. 

19 SEC. 1205. TRANSFER DATE. 

20 (a) IN GENERAL.—Except as provided in subsection 

21 (b), the date for the transfer of functions to the Office 

22 of the Comptroller of the Currency and the Corporation 

23 under section 1204 shall be 1 year after the date of enact24 ment of this title. 

25 (b) EXTENSION PERMITTED.— 


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1 (1) NOTICE REQUIRED.—The Secretary, in con2 sultation with the Comptroller of the Currency and 

3 the Director of the Office of Thrift Supervision, may 

4 designate a calendar date for the transfer of func5 tions of the Office of Thrift Supervision to the Of6 fice of the Comptroller of the Currency, and the Cor7 poration under section 1204 that is later than 1 

8 year after the date of enactment of this title if the 

9 Secretary— 

10 (A) transmits to the Committee on Bank11 ing, Housing, and Urban Affairs of the Senate 

12 and the Committee on Financial Services of the 

13 House of Representatives— 

14 (i) a written determination that or15 derly implementation of this subtitle is not 

16 feasible on the date that is 1 year after the 

17 date of enactment of this subtitle; 

18 (ii) an explanation of why an exten19 sion is necessary for the orderly implemen20 tation of this subtitle; and 

21 (iii) a description of the steps that will 

22 be taken to effect an orderly and timely 

23 implementation of this subtitle within the 

24 extended time period; and 


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1 (B) publishes notice of that designated 

2 later date in the Federal Register. 

3 (2) EXTENSION LIMITED.—In no case shall any 

4 date designated under paragraph (1) be later than 

5 18 months after the date of enactment of this sub6 title. 

7 (3) EFFECT ON REFERENCES TO ‘‘TRANSFER

8 DATE’’.—If the Secretary takes the actions provided 

9 in paragraph (1) for designating a date for the 

10 transfer of functions to the Office of the Comptroller 

11 of the Currency, and the Corporation under section 

12 1204, references in this title to ‘‘transfer date’’ shall 

13 mean the date designated by the Secretary. 

14 SEC. 1206. EXPIRATION OF TERM OF COMPTROLLER. 

15 (a) IN GENERAL.—Notwithstanding section 325 of 

16 the Revised Statutes of the United States, the term of the 

17 person serving as Comptroller on the date of the enact18 ment of this title shall terminate as of such date. 

19 (b) ACTING COMPTROLLER.—Subject to sections 

20 3345, 3346, and 3347 of title 5, United States Code, the 

21 President may designate a person to serve as acting 

22 Comptroller and perform the functions and duties of the 

23 Comptroller until a Comptroller has been appointed and 

24 qualified in the manner established in section 325 of the 

25 Revised Statutes of the United States. 


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1 SEC. 1207. OFFICE OF THRIFT SUPERVISION ABOLISHED. 

2 Effective 90 days after the transfer date, the position 

3 of Director of the Office of Thrift Supervision and the Of4 fice of Thrift Supervision are abolished. 

5 SEC. 1208. SAVINGS PROVISIONS. 

6 (a) OFFICE OF THRIFT SUPERVISION.— 

7 (1) EXISTING RIGHTS, DUTIES, AND OBLIGA8 TIONS NOT AFFECTED.—Sections 1204(a) and 1207 

9 shall not affect the validity of any right, duty, or ob10 ligation of the United States, the Director of the Of11 fice of Thrift Supervision, the Office of Thrift Su12 pervision, or any other person, that existed on the 

13 day before the transfer date. 

14 (2) CONTINUATION OF SUITS.—This subtitle 

15 shall not abate any action or proceeding commenced 

16 by or against the Director of the Office of Thrift Su17 pervision or the Office of Thrift Supervision before 

18 the transfer date, except that— 

19 (A) for any action or proceeding arising 

20 out of a function of the Director of the Office 

21 of Thrift Supervision transferred to the Comp22 troller of the Currency by this title, the Comp23 troller of the Currency or the Office of the 

24 Comptroller of the Currency shall be sub25 stituted for the Director of the Office of Thrift 

26 Supervision or the Office of Thrift Supervision, 


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1 as the case may be, as a party to the action or 

2 proceeding as of the transfer date; and 

3 (B) for any action or proceeding arising 

4 out of a function of the Director of the Office 

5 of Thrift Supervision transferred to the Cor6 poration by this title, the Chairman of the Cor7 poration shall be substituted for the Director of 

8 the Office of Thrift Supervision as a party to 

9 the action or proceeding as of the transfer date. 

10 (b) CONTINUATION OF EXISTING OTS ORDERS, RES11 OLUTIONS, DETERMINATIONS, AGREEMENTS, REGULA12 TIONS, ETC.—All orders, resolutions, determinations, 

13 agreements, and regulations, interpretative rules, other in14 terpretations, guidelines, procedures, and other advisory 

15 materials, that have been issued, made, prescribed, or al16 lowed to become effective by the Office of Thrift Super17 vision, or by a court of competent jurisdiction, in the per18 formance of functions that are transferred by this title and 

19 that are in effect on the day before the transfer date, shall 

20 continue in effect according to the terms of those orders, 

21 resolutions, determinations, agreements, and regulations, 

22 interpretative rules, other interpretations, guidelines, pro23 cedures, and other advisory materials, and shall be en24 forceable by or against— 


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1 (1) the Office of the Comptroller of the Cur2 rency, in the case of a function of the Director of 

3 the Office of Thrift Supervision transferred to the 

4 Comptroller of the Currency, until modified, termi5 nated, set aside, or superseded in accordance with 

6 applicable law by the Office of the Comptroller of 

7 the Currency, by any court of competent jurisdic8 tion, or by operation of law; and 

9 (2) the Corporation, in the case of a function 

10 of the Director of the Office of Thrift Supervision 

11 transferred to the Corporation, until modified, termi12 nated, set aside, or superseded in accordance with 

13 applicable law by the Corporation, by any court of 

14 competent jurisdiction, or by operation of law. 

15 (c) CONTINUATION OF EXISTING OTS ENFORCE16 MENT ACTIONS.—Any formal or informal enforcement ac17 tion taken by the Director of the Office of Thrift Super18 vision with respect to a savings and loan holding company, 

19 a subsidiary of a savings and loan holding company (other 

20 than a savings association) or an institution-affiliated 

21 party of a savings and loan holding company or such a 

22 subsidiary, that is in effect on the day before the date of 

23 the enactment of this title shall continue to be effective 

24 and enforceable against such company, subsidiary, or in25 stitution-affiliated party after such date as if— 


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1 (1) such savings and loan holding company, or 

2 the savings and loan holding company related to 

3 such subsidiary or institution-affiliated party, had 

4 been a bank holding company on the effective date 

5 of the final enforcement action; and 

6 (2) the action had been taken by the Board, un7 less otherwise terminated or modified by the Board. 

8 (d) IDENTIFICATION OF REGULATIONS CONTIN9 UED.— 

10 (1) BY OFFICE OF THE COMPTROLLER OF THE

11 CURRENCY.—Not later than the transfer date, the 

12 Comptroller of the Currency shall— 

13 (A) after consultation with the Chairperson 

14 of the Corporation, identify the regulations con15 tinued under subsection (b) that will be en16 forced by the Office of the Comptroller of the 

17 Currency; and 

18 (B) publish a list of such regulations in the 

19 Federal Register. 

20 (2) BY THE CORPORATION.—Not later than the 

21 transfer date, the Corporation shall— 

22 (A) after consultation with the Office of 

23 the Comptroller of the Currency, identify the 

24 regulations continued under subsection (b) that 

25 will be enforced by the Corporation; and 


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1 (B) publish a list of such regulations in the 

2 Federal Register. 

3 (e) STATUS OF REGULATIONS PROPOSED OR NOT

4 YET EFFECTIVE.— 

5 (1) PROPOSED REGULATIONS.—Any proposed 

6 regulation of the Office of Thrift Supervision, which 

7 that agency, in performing functions transferred by 

8 this title, has proposed before the transfer date but 

9 has not published as a final regulation before that 

10 date, shall be deemed to be a proposed regulation of 

11 the Office of the Comptroller of the Currency, or the 

12 Corporation, as appropriate, according to its terms. 

13 (2) REGULATIONS NOT YET EFFECTIVE.—Any 

14 interim or final regulation of the Office of Thrift Su15 pervision, which that agency, in performing func16 tions transferred by this title, has published before 

17 the transfer date but which has not become effective 

18 before that date, shall become effective as a regula19 tion of the Office of the Comptroller of the Cur20 rency, or the Corporation, as appropriate, according 

21 to its terms. 

22 SEC. 1209. REGULATIONS AND ORDERS. 

23 In addition to any powers transferred to the Comp24 troller of the Currency by this title, the Comptroller of 

25 the Currency may prescribe such regulations and issue 


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1 such orders as the Comptroller of the Currency determines 

2 to be appropriate to carry out this title and the powers 

3 and duties transferred to the Comptroller of the Currency 

4 by this title. 

5 SEC. 1210. COORDINATION OF TRANSITION ACTIVITIES. 

6 Before the transfer date, the Comptroller of the Cur7 rency shall— 

8 (1) consult and cooperate with the Office of 

9 Thrift Supervision to facilitate the orderly transfer 

10 of functions to the Comptroller of the Currency; 

11 (2) determine and redetermine, from time to 

12 time— 

13 (A) the amount of funds necessary to pay 

14 any expenses associated with the transfer of 

15 functions (including expenses for personnel, 

16 property, and administrative services) during 

17 the period beginning on the date of enactment 

18 of this title and ending on the transfer date; 

19 (B) what personnel are appropriate to fa20 cilitate the orderly transfer of functions by this 

21 title; and 

22 (C) what property and administrative serv23 ices are necessary to support the Office of the 

24 Comptroller of the Currency during the period 


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1 beginning on the date of enactment of this title 

2 and ending on the transfer date; and 

3 (3) take such actions as may be necessary to 

4 provide for the orderly implementation of this title. 

5 SEC. 1211. INTERIM RESPONSIBILITIES OF OFFICE OF THE 

6 COMPTROLLER OF THE CURRENCY AND OF7 FICE OF THRIFT SUPERVISION. 

8 (a) IN GENERAL.—When requested by the Comp9 troller of the Currency to do so before the transfer date, 

10 the Office of Thrift Supervision shall— 

11 (1) pay to the Comptroller of the Currency, 

12 from funds obtained by the Office of Thrift Super13 vision through assessments, fees, or other charges 

14 that the Office of Thrift Supervision is authorized 

15 by law to impose, such amounts that the Comp16 troller of the Currency determines to be necessary 

17 under section 1210(2)(A); 

18 (2) detail to the Office of the Comptroller of the 

19 Currency such personnel as the Comptroller of the 

20 Currency determines to be appropriate under section 

21 1210(2)(B); and 

22 (3) make available to the Office of the Comp23 troller of the Currency such property and provide 

24 the Office of the Comptroller of the Currency such 

25 administrative services as the Comptroller of the 


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1 Currency determines to be necessary under section 

2 1210(2)(C). 

3 (b) NOTICE REQUIRED.—The Comptroller of the 

4 Currency shall give the Office of Thrift Supervision rea5 sonable prior notice of any request that the Office of the 

6 Comptroller of the Currency intends to make under sub7 section (a). 

8 SEC. 1212. EMPLOYEES TRANSFERRED. 

9 (a) IN GENERAL.— 

10 (1) OTS EMPLOYEES.— 

11 (A) IN GENERAL.—All employees of the 

12 Office of Thrift Supervision shall be transferred 

13 to either the Comptroller of the Currency or the 

14 Corporation for employment. 

15 (B) ALLOCATING EMPLOYEES FOR TRANS16 FER TO RECEIVING AGENCIES.—The Director of 

17 the Office of Thrift Supervision, the Comp18 troller of the Currency, and the Chairperson of 

19 the Corporation shall— 

20 (i) jointly determine the number of 

21 employees of the Office of Thrift Super22 vision necessary to perform or support— 

23 (I) the functions of the Office of 

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1 ferred to the Office of the Comptroller 

2 of the Currency by this title; and 

3 (II) the functions of the Office of 

4 Thrift Supervision that are trans5 ferred to the Corporation by this title; 

6 (ii) consistent with the numbers deter7 mined under clause (ii), jointly identify 

8 employees of the Office of Thrift Super9 vision for transfer to the Office of the 

10 Comptroller of the Currency or the Cor11 poration in a manner that the Director of 

12 the Office of Thrift Supervision, the Comp13 troller of the Currency, and the Chair14 person of the Corporation, in their discre15 tion, deem equitable. 

16 (2) TRANSFER OF EMPLOYEES PERFORMING

17 CONSUMER FINANCIAL PROTECTION FUNCTIONS.— 

18 Nothing in paragraph (1) shall affect the transfer of 

19 employees performing or supporting consumer finan20 cial protection functions of the Comptroller of the 

21 Currency and the Director of the Office of Thrift 

22 Supervision to the Consumer Financial Protection 

23 Agency as provided in the Consumer Financial Pro24 tection Agency Act of 2009. 


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1 (3) APPOINTMENT AUTHORITY FOR EXCEPTED

2 SERVICE TRANSFERRED.— 

3 (A) IN GENERAL.—In the case of employ4 ees occupying positions in the excepted service, 

5 any appointment authority established pursuant 

6 to law or regulations of the Office of Personnel 

7 Management for filling such positions shall be 

8 transferred, subject to subparagraph (B). 

9 (B) DECLINING TRANSFERS ALLOWED.— 

10 The Office of the Comptroller of the Currency 

11 and the Corporation may decline to accept a 

12 transfer of authority under subparagraph (A) 

13 (and the employees appointed pursuant thereto) 

14 to the extent that such authority relates to posi15 tions excepted from the competitive service be16 cause of their confidential, policy-making, pol17 icy-determining, or policy-advocating character. 

18 (b) TIMING OF TRANSFERS AND POSITION ASSIGN19 MENTS.—Each employee to be transferred under this sec20 tion shall— 

21 (1) be transferred not later than 90 days after 

22 the transfer date; and 

23 (2) receive notice of his or her position assign24 ment not later than 120 days after the effective date 

25 of his or her transfer. 


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1 (c) TRANSFER OF FUNCTION.— 

2 (1) IN GENERAL.—Notwithstanding any other 

3 provision of law, the transfer of employees shall be 

4 deemed a transfer of functions for the purpose of 

5 section 3503 of title 5, United States Code. 

6 (2) PRIORITY OF THIS SUBTITLE.—If any pro7 vision of this subtitle conflicts with any protection 

8 provided to transferred employees under section 

9 3503 of title 5, United States Code, the provisions 

10 of this subtitle shall control. 

11 (d) EMPLOYEES’ STATUS AND ELIGIBILITY.—The 

12 transfer of functions and employees under this title, and 

13 the abolition of the Office of Thrift Supervision, shall not 

14 affect the status of the transferred employees as employ15 ees of an agency of the United States under any provision 

16 of law. 

17 (e) EQUAL STATUS AND TENURE POSITIONS.—Each 

18 employee transferred from the Office of Thrift Supervision 

19 shall be placed in a position at either the Office of the 

20 Comptroller of the Currency or the Corporation with the 

21 same status and tenure as he or she held on the day before 

22 the transfer date. 

23 (f) NO ADDITIONAL CERTIFICATION REQUIRE24 MENTS.—Examiners transferred to the Office of the 

25 Comptroller of the Currency or the Corporation shall not 


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1 be subject to any additional certification requirements be2 fore being placed in a comparable examiner’s position at 

3 the Office of the Comptroller of the Currency or the Cor4 poration examining the same types of institutions as they 

5 examined before they were transferred. 

6 (g) PERSONNEL ACTIONS LIMITED.— 

7 (1) 3-YEAR PROTECTION.— 

8 (A) IN GENERAL.—Except as provided in 

9 paragraph (2), each affected employee shall not, 

10 during the 3-year period beginning on the 

11 transfer date, be involuntarily separated, or in12 voluntarily reassigned outside his or her locality 

13 pay area as defined by the Office of Personnel 

14 Management. 

15 (B) AFFECTED EMPLOYEES.—For pur16 poses of this paragraph, the term ‘‘affected em17 ployee’’ means— 

18 (i) an employee transferred from the 

19 Office of Thrift Supervision holding a per20 manent position on the day before the 

21 transfer date; 

22 (ii) an employee of the Office of the 

23 Comptroller of the Currency holding a per24 manent position on the day before the 

25 transfer date; and 


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1 (iii) an employee of the Corporation 

2 holding a permanent position on the day 

3 before the transfer date. 

4 (2) EXCEPTIONS.—Paragraph (1) does not 

5 limit the right of the Office of the Comptroller of the 

6 Currency or the Corporation to— 

7 (A) separate an employee for cause or for 

8 unacceptable performance; or 

9 (B) terminate an appointment to a position 

10 excepted from the competitive service because of 

11 its confidential policy-making, policy-deter12 mining, or policy-advocating character. 

13 (h) PAY.— 

14 (1) 1-YEAR PROTECTION.—Except as provided 

15 in paragraph (2), each employee transferred from 

16 the Office of Thrift Supervision shall, during the 1- 

17 year period beginning on the transfer date, receive 

18 pay at a rate not less than the basic rate of pay (in19 cluding any geographic differential) that the em20 ployee received during the 1-year period immediately 

21 before the transfer. 

22 (2) EXCEPTIONS.—Paragraph (1) does not 

23 limit the right of the Office of the Comptroller of the 

24 Currency or the Corporation to reduce a transferred 

25 employee’s rate of basic pay— 


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1 (A) for cause; 

2 (B) for unacceptable performance; or 

3 (C) with the employee’s consent. 

4 (3) PROTECTION ONLY WHILE EMPLOYED.— 

5 Paragraph (1) applies to a transferred employee 

6 only while that employee remains employed by the 

7 Office of the Comptroller of the Currency or the 

8 Corporation. 

9 (4) PAY INCREASES PERMITTED.—Paragraph 

10 (1) does not limit the authority of the Office of the 

11 Comptroller of the Currency or the Corporation to 

12 increase a transferred employee’s pay. 

13 (i) BENEFITS.— 

14 (1) RETIREMENT BENEFITS FOR TRANSFERRED

15 EMPLOYEES.— 

16 (A) IN GENERAL.— 

17 (i) CONTINUATION OF EXISTING RE18 TIREMENT PLAN.—Each employee trans19 ferred from the Office of Thrift Super20 vision may remain enrolled in his or her 

21 existing retirement plan or plans as long as 

22 he or she remains employed by the Office 

23 of the Comptroller of the Currency or the 

24 Corporation. 


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1 (ii) EMPLOYER’S CONTRIBUTION.— 

2 The Office of the Comptroller of the Cur3 rency or the Corporation shall pay any em4 ployer contributions to the existing retire5 ment plan of each employee transferred 

6 from the Office of Thrift Supervision as 

7 required under that plan. 

8 (B) DEFINITION.—For purposes of this 

9 paragraph, the term ‘‘existing retirement plan’’ 

10 means, with respect to any employee trans11 ferred under this section, the particular retire12 ment plan (including the Financial Institutions 

13 Retirement Fund) and any associated thrift 

14 savings plan of the agency from which the em15 ployee was transferred, which the employee was 

16 enrolled in on the day before the transfer date. 

17 (2) BENEFITS OTHER THAN RETIREMENT BEN18 EFITS.— 

19 (A) DURING 1ST YEAR.— 

20 (i) EXISTING PLANS CONTINUE.— 

21 Each transferred employee may, for 1 year 

22 after the transfer date, retain membership 

23 in any other employee benefit program of 

24 the Office of Thrift Supervision, including 

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1 surance program, to which the employee 

2 belonged on the day before the transfer 

3 date. 

4 (ii) EMPLOYER’S CONTRIBUTION.— 

5 The Office of the Comptroller of the Cur6 rency or the Corporation shall pay any em7 ployer cost in continuing to extend cov8 erage in the benefit program to the em9 ployee as required under that program or 

10 negotiated agreements. 

11 (B) DENTAL, VISION, OR LIFE INSURANCE

12 AFTER 1ST YEAR.—If, after the 1-year period 

13 beginning on the transfer date, the Office of the 

14 Comptroller of the Currency or the Corporation 

15 decides not to continue participation in any 

16 dental, vision, or life insurance program of the 

17 Office of Thrift Supervision, an employee trans18 ferred from the Office of Thrift Supervision 

19 pursuant to this title who is a member of such 

20 a program may, before the decision of the Of21 fice of the Comptroller of the Currency or the 

22 Corporation takes effect, elect to enroll, without 

23 regard to any regularly scheduled open season, 

24 in— 


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1 (i) the enhanced dental benefits pro2 gram established by chapter 89A of title 5, 

3 United States Code; 

4 (ii) the enhanced vision benefits estab5 lished by chapter 89B of title 5, United 

6 States Code; and 

7 (iii) the Federal Employees Group 

8 Life Insurance Program established by 

9 chapter 87 of title 5, United States Code, 

10 without regard to any requirement of in11 surability. 

12 (C) LONG TERM CARE INSURANCE AFTER

13 1ST YEAR.—If, after the 1-year period begin14 ning on the transfer date, the Office of the 

15 Comptroller of the Currency or the Corporation 

16 decides not to continue participation in any 

17 long term care insurance program of the Office 

18 of Thrift Supervision, an employee transferred 

19 from the Office of Thrift Supervision pursuant 

20 to this title who is a member of such a program 

21 may, before the decision of the Office of the 

22 Comptroller of the Currency or the Corporation 

23 takes effect, elect to apply for coverage under 

24 the Federal Long Term Care Insurance Pro25 gram established by chapter 90 of title 5, 


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1 United States Code, under the underwriting re2 quirements applicable to a new active workforce 

3 member (as defined in Part 875, title 5, Code 

4 of Federal Regulations). 

5 (D) EMPLOYEE’S CONTRIBUTION.— 

6 (i) IN GENERAL.—Subject to clause 

7 (ii), an individual enrolled in the Federal 

8 Employees Health Benefits program under 

9 this subparagraph shall pay any employee 

10 contribution required by the plan. 

11 (ii) COST DIFFERENTIAL.—The dif12 ference in costs between the benefits that 

13 the Office of Thrift Supervision is pro14 viding on the date of enactment of this 

15 title and the benefits provided by this sec16 tion shall be paid by the Comptroller of the 

17 Currency or the Corporation. 

18 (iii) FUNDS TRANSFER.—The Office 

19 of the Comptroller of the Currency or the 

20 Corporation shall transfer to the Federal 

21 Employees Health Benefits Fund estab22 lished under section 8909 of title 5, United 

23 States Code, an amount determined by the 

24 Director of the Office of Personnel Man25 agement, after consultation with the Office 


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1 of the Comptroller of the Currency or the 

2 Corporation and the Office of Management 

3 and Budget, to be necessary to reimburse 

4 the Fund for the cost to the Fund of pro5 viding benefits under this subparagraph 

6 not otherwise paid for by the employee 

7 under clause (i). 

8 (E) SPECIAL PROVISIONS TO ENSURE CON9 TINUATION OF LIFE INSURANCE BENEFITS.— 

10 (i) IN GENERAL.—An annuitant (as 

11 defined in section 8901(3) of title 5, 

12 United States Code) who is enrolled in a 

13 life insurance plan administered by the Of14 fice of Thrift Supervision on the day before 

15 the transfer date shall be eligible for cov16 erage by a life insurance plan under sec17 tions 8706(b), 8714a, 8714b, and 8714c of 

18 title 5, United States Code, or in a life in19 surance plan established by the Office of 

20 the Comptroller of the Currency or the 

21 Corporation, without regard to any regu22 larly scheduled open season and require23 ment of insurability. 

24 (ii) EMPLOYEE’S CONTRIBUTION.— 


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1 (I) IN GENERAL.—Subject to 

2 subclause (II), an individual enrolled 

3 in a life insurance plan under this 

4 clause shall pay any employee con5 tribution required by the plan. 

6 (II) COST DIFFERENTIAL.—The 

7 difference in costs between the bene8 fits that the Office of Thrift Super9 vision is providing on the date of en10 actment of this title and the benefits 

11 provided by this section shall be paid 

12 by the Comptroller of the Currency or 

13 the Corporation. 

14 (III) FUNDS TRANSFER.—The 

15 Office of the Comptroller of the Cur16 rency or the Corporation shall trans17 fer to the Employees’ Life Insurance 

18 Fund established under section 8714 

19 of title 5, United States Code, an 

20 amount determined by the Director of 

21 the Office of Personnel Management, 

22 after consultation with the Office of 

23 the Comptroller of the Currency or 

24 the Corporation and the Office of 

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1 essary to reimburse the Fund for the 

2 cost to the Fund of providing benefits 

3 under this subparagraph not other4 wise paid for by the employee under 

5 subclause (I). 

6 (IV) CREDIT FOR TIME EN7 ROLLED IN OTHER PLANS.—For em8 ployees transferred under this section, 

9 enrollment in a life insurance plan ad10 ministered by the Office of the Comp11 troller of the Currency, the Office of 

12 Thrift Supervision, or the Corporation 

13 immediately before enrollment in a life 

14 insurance plan under chapter 87 of 

15 title 5, United States Code, shall be 

16 considered as enrollment in a life in17 surance plan under that chapter for 

18 purposes of section 8706(b)(1)(A) of 

19 title 5, United States Code. 

20 (j) EQUITABLE TREATMENT.—In administering the 

21 provisions of this section, the Office of the Comptroller 

22 of the Currency and the Corporation— 

23 (1) shall take no action that would unfairly dis24 advantage transferred employees relative to other 

25 employees of the Office of the Comptroller of the 


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1 Currency or the Corporation based on their prior 

2 employment by the Office of Thrift Supervision; 

3 (2) may take such action as is appropriate in 

4 individual cases so that employees transferred under 

5 this section receive equitable treatment, with respect 

6 to those employees’ status, tenure, pay, benefits 

7 (other than benefits under programs administered by 

8 the Office of Personnel Management), and accrued 

9 leave or vacation time, for prior periods of service 

10 with any Federal agency; 

11 (3) shall, jointly with the Director of the Office 

12 of Thrift Supervision, develop and adopt procedures 

13 and safeguards designed to ensure that the require14 ments of this subsection are met; and 

15 (4) shall conduct a study detailing the position 

16 assignments of all employees transferred pursuant to 

17 subsection (a), describing the procedures and safe18 guards adopted pursuant to paragraph (3), and 

19 demonstrating that the requirements of this sub20 section have been met; and shall, not later than 365 

21 days after the transfer date, submit a copy of such 

22 study to Congress. 

23 SEC. 1213. PROPERTY TRANSFERRED. 

24 (a) IN GENERAL.—Not later than 90 days after the 

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1 vision shall be transferred to the Office of the Comptroller 

2 of the Currency or the Corporation, allocated in a manner 

3 consistent with section 1212(a). 

4 (b) CONTRACTS RELATED TO PROPERTY TRANS5 FERRED.—All contracts, agreements, leases, licenses, per6 mits, and similar arrangements relating to property trans7 ferred to the Office of the Comptroller of the Currency 

8 or the Corporation by this section shall be transferred to 

9 the Office of the Comptroller of the Currency or the Cor10 poration together with that property. 

11 (c) PRESERVATION OF PROPERTY.—Property identi12 fied for transfer under this section shall not be altered, 

13 destroyed, or deleted before transfer under this section. 

14 (d) PROPERTY DEFINED.—For purposes of this sec15 tion, the term ‘‘property’’ includes all real property (in16 cluding leaseholds) and all personal property (including 

17 computers, furniture, fixtures, equipment, books, ac18 counts, records, reports, files, memoranda, paper, reports 

19 of examination, work papers and correspondence related 

20 to such reports, and any other information or materials). 

21 SEC. 1214. FUNDS TRANSFERRED. 

22 Except to the extent needed to dispose of affairs 

23 under section 1215, all funds that, on the day before the 

24 transfer date, are available to the Director of the Office 

25 of Thrift Supervision to pay the expenses of the Office 


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1 of Thrift Supervision shall be transferred to the Office of 

2 the Comptroller of the Currency or the Corporation, allo3 cated in a manner consistent with section 1212(a), on the 

4 transfer date. 

5 SEC. 1215. DISPOSITION OF AFFAIRS. 

6 (a) IN GENERAL.—During the 90-day period begin7 ning on the transfer date, the Director of the Office of 

8 Thrift Supervision— 

9 (1) shall, solely for the purpose of winding up 

10 the affairs of the agency related to any function 

11 transferred to the Office of the Comptroller of the 

12 Currency or the Corporation by this subtitle— 

13 (A) manage any employees of the Office of 

14 Thrift Supervision and provide for the payment 

15 of the compensation and benefits of any such 

16 employees that accrue before the transfer date; 

17 and 

18 (B) manage any property of the Office of 

19 Thrift Supervision until the property is trans20 ferred under section 1213; and 

21 (2) may take any other action necessary to 

22 wind up the affairs of the Office of Thrift Super23 vision relating to the transferred functions. 

24 (b) AUTHORITY AND STATUS OF DIRECTOR.— 


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1 (1) IN GENERAL.—Notwithstanding the trans2 fers of functions under this subtitle, the Director of 

3 the Office of Thrift Supervision shall, during the 90- 

4 day period beginning on the transfer date, retain 

5 and may exercise any authority vested in the Direc6 tor on the day before the transfer date that is nec7 essary to carry out the requirements of this subtitle 

8 during that period. 

9 (2) OTHER PROVISIONS.—For purposes of 

10 paragraph (1), the Director of the Office of Thrift 

11 Supervision shall, during the 90-day period begin12 ning on the transfer date, continue to be— 

13 (A) treated as an officer of the United 

14 States; and 

15 (B) entitled to receive compensation at the 

16 same annual rate of basic pay that he or she 

17 was receiving on the day before the transfer 

18 date. 

19 SEC. 1216. CONTINUATION OF SERVICES. 

20 Any agency, department, or other instrumentality of 

21 the United States, and any successor to any such agency, 

22 department, or instrumentality, that was, before the trans23 fer date, providing support services to the Office of Thrift 

24 Supervision in connection with functions to be transferred 


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1 to the Office of the Comptroller of the Currency or the 

2 Corporation, shall— 

3 (1) continue to provide those services, subject to 

4 reimbursement, until the transfer of those functions 

5 is complete; and 

6 (2) consult with any such agency to coordinate 

7 and facilitate a prompt and orderly transition. 

8 SEC. 1217. CONTRACTING AND LEASING AUTHORITY. 

9 In addition to any powers transferred to the Comp10 troller of the Currency by this subtitle, the Comptroller 

11 of the Currency may— 

12 (1) enter into and perform contracts, execute 

13 instruments, and acquire in any lawful manner such 

14 goods and services, or real or personal property, or 

15 interest in property, as the Comptroller of the Cur16 rency determines to be necessary or convenient to 

17 carry out the duties and responsibilities of the 

18 Comptroller of the Currency; and 

19 (2) hold, maintain, sell, lease, or otherwise dis20 pose of any real or personal property or interest in 

21 property without regard to title 40, United States 

22 Code, title III of the Federal Properties and Admin23 istrative Services Act of 1949 (41 U.S.C. 251 et 

24 seq.), and other Federal laws of a similar type gov25 erning the procurement of goods and services or the 


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1 acquisition or disposition of any property or interest 

2 in property by Federal agencies. 

3 SEC. 1218. TREATMENT OF SAVINGS AND LOAN HOLDING 

4 COMPANIES. 

5 Section 10 of the Home Owners’ Loan Act (12 U.S.C. 

6 1467a) is amended as follows: 

7 (1) In subsection (m)— 

8 (A) in paragraph (2), by striking ‘‘Direc9 tor’’ and inserting ‘‘Comptroller’’; 

10 (B) in paragraph (2), by striking ‘‘Director 

11 may grant’’ and inserting ‘‘Comptroller of the 

12 Currency may grant’’; 

13 (C) in paragraph (2), by striking ‘‘the Di14 rector deems’’ and inserting ‘‘the Comptroller 

15 deems’’; 

16 (D) in paragraph (2)(A), by striking ‘‘Di17 rector’’ and inserting ‘‘Comptroller’’; 

18 (E) in paragraph (2)(B), by striking ‘‘Di19 rector’’ and inserting ‘‘Comptroller’’; 

20 (F) in paragraph (2)(B)(iii), by striking 

21 ‘‘Director’’ and inserting ‘‘Comptroller’’; 

22 (G) by striking subparagraph (A) of para23 graph (3) and inserting the following new sub24 paragraph: 


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1 ‘‘(A) IN GENERAL.—A savings association 

2 that fails to become or remain a qualified thrift 

3 lender shall— 

4 ‘‘(i) immediately be subject to the re5 strictions in subparagraph (B); and 

6 ‘‘(ii) become one or more banks (other 

7 than a savings bank) within one year after 

8 the date on which the savings association 

9 should have become or ceases to be a quali10 fied thrift lender, except as provided in 

11 subparagraph (C)(i).’’; 

12 (H) by striking subclause (III) of para13 graph (3)(B)(i) and inserting the following new 

14 subclause: 

15 ‘‘(III) DIVIDENDS.—The savings 

16 association shall be prohibited from 

17 paying dividends except for such divi18 dends— 

19 ‘‘(aa) as would be permis20 sible for a national bank; 

21 ‘‘(bb) that are necessary to 

22 meet obligations of a company 

23 that controls such savings asso24 ciation; and 


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1 ‘‘(cc) that are specifically 

2 approved by the Comptroller and 

3 the Board of Governors after 

4 prior written request of at least 

5 30 days to the Comptroller and 

6 the Board of Governors.’’; 

7 (I) by striking clause (ii) of paragraph 

8 (3)(B); 

9 (J) by striking subparagraphs (C) and (D) 

10 of paragraph (3) and inserting the following 

11 new subparagraphs: 

12 ‘‘(C) REGULATORY AUTHORITY.—A sav13 ings association that fails to become or remain 

14 a qualified thrift lender shall be deemed to have 

15 violated section 5 of the Home Owners’ Loan 

16 Act and subject to actions authorized by section 

17 5(d) of the Home Owners’ Loan Act. 

18 ‘‘(D) REQUALIFICATIONS.— 

19 ‘‘(i) A savings association that should 

20 have become or ceases to be a qualified 

21 thrift lender shall not be subject to sub22 paragraph (A)(ii) if the savings association 

23 becomes a qualified thrift lender by meet24 ing the qualified thrift lender requirement 

25 in paragraph (1) on a monthly average 


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1 basis in 9 out of the preceding 12 months 

2 and remains a qualified thrift lender. 

3 ‘‘(ii) If the savings association re4 ferred to in clause (i) (or any savings asso5 ciation that acquired all or substantially all 

6 of its assets from that savings association) 

7 at any time thereafter ceases to be a quali8 fied thrift lender it shall immediately be 

9 subject to subparagraph (A)(ii) as if the 

10 one-year time period provided for in sub11 paragraph (A)(ii) already has expired, and 

12 as if the exception in clause (i) was not ap13 plicable or available to such savings asso14 ciation.’’; 

15 (K) in paragraph (4)(D) by striking ‘‘Di16 rector’’ and inserting ‘‘Comptroller’’; 

17 (L) in paragraph (4)(E) by striking ‘‘Di18 rector’’ and inserting ‘‘Comptroller’’; and 

19 (M) in paragraph (7)(B) by striking ‘‘Di20 rector’’ and inserting ‘‘Comptroller’’. 

21 (2) In subsection (o)— 

22 (A) in paragraph (3) in the heading by 

23 striking ‘‘DIRECTOR’’ and inserting ‘‘BOARD’’; 

24 (B) in paragraph (3)(A) by striking ‘‘Di25 rector’’ and inserting ‘‘Board’’; 


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1 (C) in paragraph (3)(B) by striking ‘‘Di2 rector’’ and inserting ‘‘Board’’; 

3 (D) in paragraph (3)(C) by striking ‘‘Di4 rector’’ and inserting ‘‘Board’’; 

5 (E) in paragraph (3)(D) by striking ‘‘Di6 rector’’ and inserting ‘‘Comptroller’’; 

7 (F) in paragraph (5)(E), by striking ‘‘ac8 tivities described in subsection (c)(2) or 

9 (c)(9)(A)(ii)’’ and inserting ‘‘activities otherwise 

10 permissible for the company pursuant to, and in 

11 accordance with, section 4 of the Bank Holding 

12 Company Act of 1956’’; 

13 (G) in paragraph (7) by striking ‘‘char14 tered by the Director’’ and inserting ‘‘chartered 

15 by the Comptroller’’; and 

16 (H) in paragraph (7) by striking ‘‘regula17 tions as the Director may’’ and inserting ‘‘regu18 lations as the Board may’’. 

19 SEC. 1219. PRACTICES OF CERTAIN MUTUAL THRIFT HOLD20 ING COMPANIES PRESERVED. 

21 (a) TREATMENT OF DIVIDENDS BY CERTAIN MU22 TUAL HOLDING COMPANIES.—Section 3(g) of the Bank 

23 Holding Company Act of 1956 (12 U.S. C. 1842(g)) is 

24 amended by adding at the end the following new para25 graphs: 


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1 ‘‘(3) DECLARATION OF DIVIDENDS.—Every 

2 subsidiary savings association of a mutual holding 

3 company shall give the Board not less than 30 days 

4 advance notice of the proposed declaration by its di5 rectors of any dividend on its guaranty, permanent, 

6 or other nonwithdrawable stock. Such notice period 

7 shall commence to run from the date of receipt of 

8 such notice by the Board. Any such dividend de9 clared within such period, or without the giving of 

10 such notice to the Board, shall be invalid and shall 

11 confer no rights or benefits upon the holder of any 

12 such stock. 

13 ‘‘(4) WAIVER OF DIVIDENDS.—Any mutual 

14 thrift holding company organized under section 

15 10(b) of the Home Owners’ Loan Act shall be per16 mitted to waive such company’s right to receive any 

17 dividend declared by a subsidiary, if— 

18 ‘‘(A) no insider of the mutual holding com19 pany, associate of an insider, or tax-qualified or 

20 non-tax-qualified employee stock benefit plan of 

21 the mutual holding company holds any share of 

22 the stock in the class of stock to which the 

23 waiver would apply; or 

24 ‘‘(B) the mutual holding company provides 

25 the Board with written notice of its intent to 


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1 waive its right to receive dividends 30 days 

2 prior to the proposed date of payment of the 

3 dividend and the Board does not object. 

4 ‘‘(5) STANDARDS FOR WAIVER OF DIVIDEND.— 

5 The Board shall not object to a notice of intent to 

6 waive dividends under paragraph (4) if— 

7 ‘‘(A) the waiver would not be detrimental 

8 to the safe and sound operation of the savings 

9 association; and 

10 ‘‘(B) the board of directors of the mutual 

11 holding company expressly determines that a 

12 waiver of the dividend by the mutual holding 

13 company is consistent with the directors’ fidu14 ciary duties to the mutual members of such 

15 company. 

16 ‘‘(6) RESOLUTION INCLUDED IN WAIVER NO17 TICE.—A dividend waiver notice shall include a copy 

18 of the resolution of the board of directors of the mu19 tual holding company, in form and substance satis20 factory to the Board, together with any supporting 

21 materials relied upon by the board of directors, con22 cluding that the proposed dividend waiver is con23 sistent with the board of director’s fiduciary duties 

24 to the mutual members of the mutual holding com25 pany. 


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1 ‘‘(7) VALUATION.—The Board will not consider 

2 waived dividends in determining an appropriate ex3 change ratio in the event of a full conversion to 

4 stock form.’’. 

5 SEC. 1220. IMPLEMENTATION PLAN AND REPORTS. 

6 (a) PLAN SUBMISSION.—Within 90 days of the enact7 ment of the Financial Stability Improvement Act of 2009, 

8 the Secretary and the Corporation, in consultation with 

9 the Office of the Comptroller of the Currency and the Of10 fice of Thrift Supervision, shall jointly submit a plan to 

11 the Congress and the Inspectors General of the Depart12 ment of the Treasury and of the Corporation detailing the 

13 steps the Secretary, the Corporation, the Office of the 

14 Comptroller of the Currency, and the Office of Thrift Su15 pervision will take to implement the provisions of sections 

16 1201 through 1216, and the provisions of the amendments 

17 made by such sections. 

18 (b) INSPECTORS GENERAL REVIEW OF THE PLAN.— 

19 Within 60 days of the date on which the Congress receives 

20 the plan required under subsection (a), the Inspectors 

21 General of the Department of the Treasury and of the 

22 Corporation shall jointly provide a written report to the 

23 Secretary and the Corporation and shall submit a copy 

24 to the Congress detailing whether the plan conforms with 

25 the intent of the provisions of sections 1201 through 1216, 


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1 and the provisions of the amendments made by such sec2 tions, including— 

3 (1) whether the plan sufficiently takes into con4 sideration the orderly transfer of personnel; 

5 (2) whether the plan describes procedures and 

6 safeguards to ensure that the Office of Thrift Super7 vision employees are not unfairly disadvantaged rel8 ative to employees of the Office of the Comptroller 

9 of the Currency and the Corporation; 

10 (3) whether the plan sufficiently takes into con11 sideration the orderly transfer of authority and re12 sponsibilities; 

13 (4) whether the plan sufficiently takes into con14 sideration the effective transfer of funds; 

15 (5) whether the plan sufficiently takes in con16 sideration the orderly transfer of property; and 

17 (6) any additional recommendations for an or18 derly and effective process. 

19 (c) IMPLEMENTATION REPORTS.—Not later than 6 

20 months after the date on which the Congress receives the 

21 report required under subsection (b), and every 6 months 

22 thereafter until all aspects of the plan have been imple23 mented, the Inspectors General of the Department of the 

24 Treasury and the Corporation shall jointly provide a writ25 ten report on the status of the implementation of the plan 


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1 to the Secretary and the Corporation and shall submit a 

2 copy to the Congress. 

3 SEC. 1221. COMPOSITION OF BOARD OF DIRECTORS OF THE 

4 FEDERAL DEPOSIT INSURANCE CORPORA5 TION. 

6 Section 2 of the Federal Deposit Insurance Act (12 

7 U.S.C. 1812) is amended— 

8 (1) in subsection (a)(1)— 

9 (A) in subparagraph (B), by striking ‘‘Di10 rector of the Office of Thrift Supervision’’ and 

11 inserting ‘‘Chairman of the Board of Governors 

12 of the Federal Reserve System, or such other 

13 member of the Board of Governors as the 

14 Chairman of the Board of Governors shall des15 ignate’’; 

16 (2) by amending subsection (d)(2) to read as 

17 follows: 

18 ‘‘(2) ACTING OFFICIALS MAY SERVE.—In the 

19 event of a vacancy in the office of the Comptroller 

20 of the Currency and pending the appointment of a 

21 successor, or during the absence or disability of the 

22 Comptroller of the Currency, the acting Comptroller 

23 of the Currency shall be a member of the Board of 

24 Directors in the place of the Comptroller of the Cur25 rency.’’; and 


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1 (3) in subsection (f)(2), by striking ‘‘or of the 

2 Office of Thrift Supervision’’. 

3 SEC. 1222. AMENDMENTS TO SECTION 3. 

4 Section 3 of the Federal Deposit Insurance Act (12 

5 U.S.C. 1813) is amended— 

6 (1) in subsection (b)(1)(C) (relating to the defi7 nition of the term ‘‘savings association’’), by striking 

8 ‘‘Director of the Office of Thrift Supervision’’ and 

9 inserting ‘‘Comptroller of the Currency’’; 

10 (2) in subsection (l)(5) (relating to the defini11 tion of the term ‘‘deposit’’), in the introductory text, 

12 by striking ‘‘Director of the Office of Thrift Super13 vision,’’; and 

14 (3) in subsection (z) (relating to the definition 

15 of the term ‘‘Federal banking agency’’), by striking 

16 ‘‘the Director of the Office of Thrift Supervision,’’. 

17 SEC. 1223. AMENDMENTS TO SECTION 7. 

18 Section 7(a) of the Federal Deposit Insurance Act 

19 (12 U.S.C. 1817) is amended— 

20 (1) in paragraph (2)(A)— 

21 (A) in the first sentence, by striking ‘‘the 

22 Director of the Office of Thrift Supervision’’; 

23 (B) in the second sentence, by striking 

24 ‘‘the Director of the Office of Thrift Super25 vision,’’; 


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1 (2) in paragraph (3), in the first sentence, by 

2 striking ‘‘, the Comptroller of the Currency, the 

3 Chairman of the Board of Governors of the Federal 

4 Reserve System, and the Director of the Office of 

5 Thrift Supervision’’ and inserting ‘‘Comptroller of 

6 the Currency and the Chairman of the Board of 

7 Governors of the Federal Reserve System’’; and 

8 (3) in paragraph (7), by striking ‘‘, the Director 

9 of the Office of Thrift Supervision,’’. 

10 SEC. 1224. AMENDMENTS TO SECTION 8. 

11 Section 8 of the Federal Deposit Insurance Act (12 

12 U.S.C. 1818) is amended— 

13 (1) in subsection (a)(8)(B)(ii), in the last sen14 tence— 

15 (A) by striking ‘‘Director of the Office of 

16 Thrift Supervision’’ each place it appears and 

17 inserting ‘‘Comptroller of the Currency’’; and 

18 (B) by inserting ‘‘the Office of Thrift Su19 pervision, as a successor to’’ after ‘‘as a suc20 cessor to’’; 

21 (2) in subsection (o), by striking ‘‘Director of 

22 the Office of Thrift Supervision’’ and inserting 

23 ‘‘Comptroller of the Currency’’; and 


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1 (3) in subsection (w)(3)(A), by striking ‘‘Office 

2 of Thrift Supervision’’ and inserting ‘‘Office of the 

3 Comptroller of the Currency’’. 

4 SEC. 1225. AMENDMENTS TO SECTION 11. 

5 Section 11 of the Federal Deposit Insurance Act (12 

6 U.S.C. 1821) is amended— 

7 (1) in subsection (c)(6)— 

8 (A) in the heading, by striking ‘‘DIRECTOR

9 OF THE OFFICE OF THRIFT SUPERVISION’’ and 

10 inserting ‘‘COMPTROLLER OF THE CURRENCY’’; 

11 (B) in subparagraph (A), by striking ‘‘Di12 rector of the Office of Thrift Supervision’’ and 

13 inserting ‘‘Comptroller of the Currency’’; 

14 (C) in subparagraph (B), by striking ‘‘Di15 rector of the Office of Thrift Supervision’’ and 

16 inserting ‘‘Comptroller of the Currency’’; 

17 (2) in subsection (d)— 

18 (A) in paragraph (17)(A)— 

19 (i) by striking ‘‘, or the Director of 

20 the Office of Thrift Supervision’’; and 

21 (ii) by striking ‘‘appropriate’’; and 

22 (B) in paragraph (18)(B), by striking ‘‘or 

23 the Director of the Office of Thrift Super24 vision’’; and 

25 (3) in subsection (n)— 


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1 (A) in paragraph (1)(A), by striking ‘‘the 

2 Director of the Office of Thrift Supervision, 

3 with respect to 1 or more insured’’ 

4 (B) in paragraph (2)(A), by striking ‘‘the 

5 Director of the Office of Thrift Supervision’’; 

6 (C) in paragraph (4)(D), by striking ‘‘and 

7 the Director of the Office of Thrift Supervision, 

8 as appropriate,’’; 

9 (D) in paragraph (4)(G), by striking ‘‘and 

10 the Director of the Office of Thrift Supervision, 

11 as appropriate,’’; and 

12 (E) in paragraph (12)(B), by striking ‘‘or 

13 the Director of the Office of Thrift Supervision, 

14 as appropriate,’’. 

15 SEC. 1226. AMENDMENTS TO SECTION 13. 

16 Section 13(k)(1)(A)(iv) of the Federal Deposit Insur17 ance Act (12 U.S.C. 1823(k)(1)(A)(iv)) is amended by 

18 striking ‘‘Director of the Office of Thrift Supervision’’ and 

19 inserting ‘‘Comptroller of the Currency’’. 

20 SEC. 1227. AMENDMENTS TO SECTION 18. 

21 Section 18 of the Federal Deposit Insurance Act (12 

22 U.S.C. 1828) is amended— 

23 (1) in subsection (c)(2)— 


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1 (A) in subparagraph (A), by striking 

2 ‘‘bank;’’ and inserting ‘‘bank or a savings asso3 ciation; and’’; 

4 (B) in subparagraph (B), by inserting 

5 ‘‘and’’ at the end after the semicolon; 

6 (C) in subparagraph (C), by striking 

7 ‘‘bank (except a savings bank supervised by the 

8 Director of the Office of Thrift Supervision); 

9 and’’ and inserting ‘‘bank or State savings as10 sociation.’’; and 

11 (D) by striking subparagraph (D); and 

12 (2) in subsection (g)(1), by striking ‘‘Director 

13 of the Office of Thrift Supervision’’ and inserting 

14 ‘‘Comptroller of the Currency’’; 

15 (3) in subsection (i)(2)— 

16 (A) by striking subparagraph (B) and in17 serting the following new subparagraph: 

18 ‘‘(B) the Corporation, if the resulting insti19 tution is to be a State nonmember insured bank 

20 or insured State savings association.’’; and 

21 (B) by striking subparagraph (C); 

22 (4) in subsection (m)— 

23 (A) in paragraph (1)— 

24 (i) in subparagraph (A), by striking 

25 ‘‘Director of the Office of Thrift SuperVerDate Nov 24 2008 22:04 Dec 02, 2009 Jkt 089200 PO 00000 Frm 00176 Fmt 6652 Sfmt 6201 E:\BILLS\H4173.IH H4173

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1 vision’’ and inserting ‘‘Comptroller of the 

2 Currency’’; and 

3 (ii) in subparagraph (B), by striking 

4 ‘‘Director of the Office of Thrift Super5 vision’’ and inserting ‘‘Comptroller of the 

6 Currency’’; 

7 (B) in paragraph (2)— 

8 (i) in subparagraph (A), by striking 

9 ‘‘Director of the Office of Thrift Super10 vision’’ and inserting ‘‘Comptroller of the 

11 Currency’’; and 

12 (ii) in subparagraph (B)— 

13 (I) by striking ‘‘Director of the 

14 Office of Thrift Supervision’’ each 

15 place it appears and inserting ‘‘Comp16 troller of the Currency’’; and 

17 (II) by striking ‘‘Director may 

18 deem appropriate’’ and inserting 

19 ‘‘Comptroller may deem appropriate’’; 

20 and 

21 (C) in paragraph (3)— 

22 (i) in subparagraph (A), by striking 

23 ‘‘Director of the Office of Thrift Super24 vision’’ and inserting ‘‘Comptroller of the 

25 Currency’’; and 


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1 (ii) in subparagraph (B), by striking 

2 ‘‘Office of Thrift Supervision’’ and insert3 ing ‘‘Comptroller of the Currency’’. 

4 SEC. 1228. AMENDMENTS TO SECTION 28. 

5 Section 28 of the Federal Deposit Insurance Act (12 

6 U.S.C. 1831e) is amended— 

7 (1) in subsection (e)— 

8 (A) in paragraph (2)— 

9 (i) in subparagraph (A)(ii), by strik10 ing ‘‘Director of the Office of Thrift Su11 pervision’’ and inserting ‘‘Comptroller of 

12 the Currency’’; 

13 (ii) in subparagraph (C), by striking 

14 ‘‘Director of the Office of Thrift Super15 vision’’ and inserting ‘‘Comptroller of the 

16 Currency’’; and 

17 (iii) in subparagraph (F), by striking 

18 ‘‘Director of the Office of Thrift Super19 vision’’ and inserting ‘‘Comptroller of the 

20 Currency’’; and 

21 (B) in paragraph (3)— 

22 (i) in subparagraph (A), by striking 

23 ‘‘Director of the Office of Thrift Super24 vision’’ and inserting ‘‘Comptroller of the 

25 Currency’’; and 


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1 (ii) in subparagraph (B), by striking 

2 ‘‘Director of the Office of Thrift Super3 vision’’ and inserting ‘‘Comptroller of the 

4 Currency’’; and 

5 (2) in subsection (h)(2), by striking ‘‘Director 

6 of the Office of Thrift Supervision’’ and inserting 

7 ‘‘Comptroller of the Currency’’. 

8 SEC. 1229. AMENDMENTS TO THE ALTERNATIVE MORT9 GAGE TRANSACTION PARITY ACT OF 1982. 

10 (a) AMENDMENTS TO SECTION 802.—Section 

11 802(a)(3) of the Alternative Mortgage Transaction Parity 

12 Act of 1982 (12 U.S.C. 3801(a)(3)) is amended— 

13 (1) by striking ‘‘Comptroller of the Currency,’’ 

14 and inserting ‘‘Comptroller of the Currency and’’; 

15 and 

16 (2) by striking ‘‘, and the Director of the Office 

17 of Thrift Supervision’’. 

18 (b) AMENDMENTS TO SECTION 804.—Section 804(a) 

19 of the Alternative Mortgage Transaction Parity Act of 

20 1982 (12 U.S.C. 3803(a)) is amended— 

21 (1) by amending paragraph (1) to read as fol22 lows: 

23 ‘‘(1) with respect to banks, savings associations, 

24 mutual savings banks, and savings banks, only to 

25 transactions made in accordance with regulations 


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1 governing alternative mortgage transactions as pre2 scribed by the Comptroller of the Currency to the 

3 extent that such regulations are authorized by rule4 making authority granted to the Comptroller of the 

5 Currency under laws other than this section; and’’; 

6 (2) in paragraph (2), by striking ‘‘; and’’ and 

7 inserting a period; and 

8 (3) by striking paragraph (3). 

9 SEC. 1230. AMENDMENTS TO THE BANK HOLDING COM10 PANY ACT OF 1956. 

11 Section 4(f)(12)(A) of the Bank Holding Company 

12 Act of 1956 (12 U.S.C. 1843(f)(12)(A)) is amended strik13 ing ‘‘the Resolution Trust Corporation, the Federal De14 posit Insurance Corporation, or’’ and inserting ‘‘the Fed15 eral Deposit Insurance Corporation or’’. 

16 SEC. 1231. AMENDMENTS TO THE BANK PROTECTION ACT 

17 OF 1968. 

18 Section 2 of the Bank Protection Act of 1968 (12 

19 U.S.C. 1881) is amended— 

20 (1) in paragraph (1), by striking ‘‘national 

21 banks,’’ and inserting ‘‘national banks and federal 

22 savings associations,’’; 

23 (2) in paragraph (2), by inserting ‘‘and’’ at the 

24 end; 


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1 (3) in paragraph (3), by striking ‘‘, and’’ and 

2 inserting a period; and 

3 (4) by striking paragraph (4). 

4 SEC. 1232. AMENDMENTS TO THE BANK SERVICE COMPANY 

5 ACT. 

6 Section 1(b) of the Bank Service Company Act (12 

7 U.S.C. 1861(b)) is amended— 

8 (1) in paragraph (4), by striking ‘‘insured 

9 bank,’’ and inserting ‘‘insured bank or’’; 

10 (2) by striking ‘‘Director of the Office of Thrift 

11 Supervision’’ and inserting ‘‘Comptroller of the Cur12 rency’’; and 

13 (3) by striking ‘‘, the Federal Savings and Loan 

14 Insurance Corporation,’’. 

15 SEC. 1233. AMENDMENTS TO THE COMMUNITY REINVEST16 MENT ACT OF 1977. 

17 Section 803 of the Community Reinvestment Act of 

18 1977 (12 U.S.C. 2902) is amended— 

19 (1) in paragraph (1)— 

20 (A) in subparagraph (A), by striking ‘‘na21 tional banks’’ and inserting ‘‘national banks or 

22 savings associations (the deposits of which are 

23 insured by the Federal Deposit Insurance Cor24 poration)’’; and 


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1 (B) in subparagraph (B), by striking ‘‘and 

2 bank holding companies;’’ and inserting ‘‘, bank 

3 holding companies and savings and loan holding 

4 companies;’’; and 

5 (2) by striking the first paragraph (2) (relating 

6 to section 8 of the Federal Deposit Insurance Act). 

7 SEC. 1234. AMENDMENTS TO THE DEPOSITORY INSTITU8 TION MANAGEMENT INTERLOCKS ACT. 

9 (a) AMENDMENT TO SECTION 207.—Section 207 of 

10 the Depository Institution Management Interlocks Act (12 

11 U.S.C. 3206) is amended— 

12 (1) in paragraph (1), by striking ‘‘national 

13 banks,’’ and inserting ‘‘national banks and Federal 

14 savings associations (the deposits of which are in15 sured by the Federal Deposit Insurance Corpora16 tion),’’; 

17 (2) in paragraph (2), by striking ‘‘and bank 

18 holding companies,’’ and inserting ‘‘, bank holding 

19 companies, and savings and loan holding compa20 nies,’’ 

21 (3) by striking paragraph (4); and 

22 (4) by redesignating paragraphs (5) and (6) as 

23 paragraphs (4) and (5), respectively. 


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1 (b) AMENDMENT TO SECTION 209.—Section 209 of 

2 the Depository Institution Management Interlocks Act (12 

3 U.S.C. 3207) is amended— 

4 (1) in paragraph (1), by striking ‘‘national 

5 banks,’’ and inserting ‘‘national banks and Federal 

6 savings associations (the deposits of which are in7 sured by the Federal Deposit Insurance Corpora8 tion),’’; 

9 (2) in paragraph (2), by striking ‘‘and bank 

10 holding companies,’’ and inserting ‘‘, bank holding 

11 companies, and savings and loan holding compa12 nies,’’; 

13 (3) at the end of paragraph (3), by inserting 

14 ‘‘and’’ after the comma; 

15 (4) by striking paragraph (4); and 

16 (5) by redesignating paragraph (5) as para17 graph (4). 

18 (c) AMENDMENT TO SECTION 210.—Subsection 

19 210(a) of the Depository Institution Management Inter20 locks Act (12 U.S.C. 3208(a)) is amended— 

21 (1) by striking ‘‘his’’ and inserting ‘‘the’’; and 

22 (2) by inserting ‘‘of the Attorney General’’ after 

23 ‘‘enforcement functions’’. 


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1 SEC. 1235. AMENDMENTS TO THE EMERGENCY HOME2 OWNERS’ RELIEF ACT. 

3 Section 110 of the Emergency Homeowners’ Relief 

4 Act (12 U.S.C. 2709) is amended— 

5 (1) by striking the ‘‘Federal Home Loan Bank 

6 Board’’ and inserting ‘‘Federal Housing Finance 

7 Agency’’; and 

8 (2) by striking ‘‘the Federal Savings and Loan 

9 Insurance Corporation,’’. 

10 SEC. 1236. AMENDMENTS TO THE EQUAL CREDIT OPPOR11 TUNITY ACT. 

12 Section 704(a) of the Equal Credit Opportunity Act 

13 (15 U.S.C. 1691c(a)) is amended— 

14 (1) in paragraph (1)(A), by striking ‘‘and Fed15 eral branches and Federal agencies of foreign 

16 banks,’’ and inserting ‘‘Federal branches and Fed17 eral agencies of foreign banks, or a savings associa18 tion the deposits of which are insured by the Federal 

19 Deposit Insurance Corporation,’’; 

20 (2) by striking paragraph (2); and 

21 (3) by redesignating paragraphs (3) through 

22 (9) as paragraphs (2) through (8). 


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1 SEC. 1237. AMENDMENTS TO THE FEDERAL CREDIT UNION 

2 ACT. 

3 (a) AMENDMENTS TO SECTION 206.—Section 

4 206(g)(7) of the Federal Credit Union Act (12 U.S.C. 

5 1786(g)(7)) is amended— 

6 (1) in subparagraph (A)— 

7 (A) in clause (v), by inserting ‘‘and’’ after 

8 the semicolon; 

9 (B) in clause (vi)— 

10 (i) by striking ‘‘Federal Housing Fi11 nance Board’’ and inserting ‘‘Federal 

12 Housing Finance Agency’’; and 

13 (ii) by striking ‘‘; and’’ and inserting 

14 a period; and 

15 (C) by striking clause (vii); and 

16 (2) in subparagraph (D)— 

17 (A) in clause (iii), by inserting ‘‘and’’ after 

18 the semicolon; 

19 (B) in clause (iv), by striking ‘‘; and’’ and 

20 inserting a period; and 

21 (C) by striking clause (v). 

22 SEC. 1238. AMENDMENTS TO THE FEDERAL FINANCIAL IN23 STITUTIONS EXAMINATION COUNCIL ACT OF 

24 1978. 

25 (a) AMENDMENT TO SECTION 1002.—Section 1002 

26 of the Federal Financial Institutions Examination Council 


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1 Act of 1978 (12 U.S.C. 3301) is amended by striking 

2 ‘‘Federal Home Loan Bank Board’’ and inserting ‘‘Fed3 eral Housing Finance Agency’’. 

4 (b) AMENDMENT TO SECTION 1003.—Section 

5 1003(1) of the Federal Financial Institutions Examina6 tion Council Act of 1978 (12 U.S.C. 3302(1)) is amended 

7 by striking ‘‘the Office of Thrift Supervision,’’. 

8 (c) AMENDMENTS TO SECTION 1004.—Section 

9 1004(a) of the Federal Financial Institutions Examina10 tion Council Act of 1978 (12 U.S.C. 3303(a)) is amend11 ed— 

12 (1) by striking paragraph (4); and 

13 (2) by redesignating paragraphs (5) and (6) as 

14 paragraphs (4) and (5), respectively. 

15 SEC. 1239. AMENDMENTS TO THE FEDERAL HOME LOAN 

16 BANK ACT. 

17 (a) AMENDMENTS TO SECTION 18.—Section 18(c) of 

18 the Federal Home Loan Bank Act (12 U.S.C. 1438(c)) 

19 is amended— 

20 (1) by striking ‘‘Director of the Office of Thrift 

21 Supervision’’ each place it appears and inserting 

22 ‘‘Comptroller of the Currency’’; 

23 (2) in paragraph (1)(B), by striking ‘‘and the 

24 agencies under its administration or supervision’’; 

25 and 


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1 (3) in paragraph (5), by striking ‘‘and such 

2 agencies’’. 

3 (b) REPEAL OF SECTION 21A.—Section 21A of the 

4 Federal Home Loan Bank Act (12 U.S.C. 1441a) is here5 by repealed. 

6 SEC. 1240. AMENDMENTS TO THE FEDERAL RESERVE ACT. 

7 Section 19(b) of the Federal Reserve Act (12 U.S.C. 

8 461) is amended— 

9 (1) in paragraph (1)(F), by striking ‘‘the Direc10 tor of the Office of Thrift Supervision’’ and insert11 ing ‘‘the Comptroller of the Currency’’; and 

12 (2) in paragraph (4)(B), by striking ‘‘the Direc13 tor of the Office of Thrift Supervision’’ and insert14 ing ‘‘the Comptroller of the Currency’’. 

15 SEC. 1241. AMENDMENTS TO THE FINANCIAL INSTITUTIONS 

16 REFORM, RECOVERY, AND ENFORCEMENT 

17 ACT OF 1989. 

18 (a) AMENDMENTS TO SECTION 302.—Section 302(1) 

19 of the Financial Institutions Reform, Recovery, and En20 forcement Act of 1989 is amended by striking ‘‘Director 

21 of the Office of Thrift Supervision’’ and inserting ‘‘Comp22 troller of the Currency’’. 

23 (b) AMENDMENT TO SECTION 305.—Section 

24 305(b)(1) of the Financial Institutions Reform, Recovery, 

25 and Enforcement Act of 1989 is amended by striking ‘‘DiVerDate Nov 24 2008 22:04 Dec 02, 2009 Jkt 089200 PO 00000 Frm 00187 Fmt 6652 Sfmt 6201 E:\BILLS\H4173.IH H4173

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1 rector of the Office of Thrift Supervision’’ and inserting 

2 ‘‘Comptroller of the Currency’’. 

3 (c) AMENDMENT TO SECTION 308.—Section 308(a) 

4 of the Financial Institutions Reform, Recovery, and En5 forcement Act of 1989 (12 U.S.C. 1463 note) is amended 

6 by striking ‘‘Director of the Office of Supervision’’ and 

7 inserting ‘‘Comptroller of the Currency’’. 

8 (d) AMENDMENTS TO SECTION 402.—Section 402 of 

9 the Financial Institutions Reform, Recovery, and Enforce10 ment Act of 1989 (12 U.S.C. 1437 note) is amended— 

11 (1) in subsection (a), by striking ‘‘Director of 

12 the Office of Thrift Supervision’’ and inserting 

13 ‘‘Comptroller of the Currency’’; 

14 (2) in subsection (b), by striking ‘‘Director of 

15 the Office of Thrift Supervision’’ and inserting 

16 ‘‘Comptroller of the Currency’’; and 

17 (3) in subsection (e)— 

18 (A) in paragraph (1), by striking ‘‘Office 

19 of Thrift Supervision’’ and inserting ‘‘Office of 

20 the Comptroller of the Currency’’; 

21 (B) in paragraph (2), by striking ‘‘Director 

22 of the Office of Thrift Supervision’’ each place 

23 it appears and inserting ‘‘Comptroller of the 

24 Currency’’; 


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1 (C) in paragraph (3), by striking ‘‘Director 

2 of the Office of Thrift Supervision’’ and insert3 ing ‘‘Comptroller of the Currency’’; and 

4 (D) in paragraph (4), by striking ‘‘Direc5 tor of the Office of Thrift Supervision’’ and in6 serting ‘‘Comptroller of the Currency’’. 

7 (e) AMENDMENT TO SECTION 1103.—Section 

8 1103(a)(2) of the Financial Institutions Reform, Recov9 ery, and Enforcement Act of 1989 (12 U.S.C. 3332(a)(2)) 

10 is amended by striking ‘‘and the Resolution Trust Cor11 poration’’. 

12 (f) AMENDMENTS TO SECTION 1205.—Subsection 

13 1205(b) of the Financial Institutions Reform, Recovery, 

14 and Enforcement Act of 1989 (12 U.S.C. 1818 note) is 

15 amended— 

16 (1) in paragraph (1)— 

17 (A) in subparagraph (B), by striking ‘‘Di18 rector of the Office of Thrift Supervision, or the 

19 Director’s designee’’ and inserting ‘‘Comptroller 

20 of the Currency, or the Comptroller’s designee’’; 

21 (B) by striking subparagraph (D); and 

22 (C) by redesignating subparagraphs (E) 

23 and (F) as subparagraphs (D) and (E), respec24 tively; 


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1 (2) in paragraph (2), by striking ‘‘paragraph 

2 (1)(F)’’ and inserting ‘‘paragraph (1)(E)’’; 

3 (3) in paragraph (3), by striking ‘‘paragraph 

4 (1)(F)’’ and inserting ‘‘paragraph (1)(E)’’; and 

5 (4) in paragraph (5), by striking ‘‘through (E)’’ 

6 and inserting ‘‘through (D)’’. 

7 (g) AMENDMENTS TO SECTION 1206.—Section 

8 1206(a) of the Financial Institutions Reform, Recovery, 

9 and Enforcement Act of 1989 (12 U.S.C. 1833b(a)) is 

10 amended— 

11 (1) by striking ‘‘the Oversight Board of the 

12 Resolution Trust Corporation’’ and inserting ‘‘and’’; 

13 and 

14 (2) by striking ‘‘, and the Office of Thrift Su15 pervision,’’. 

16 (h) AMENDMENTS TO SECTION 1216.—Section 1216 

17 of the Financial Institutions Reform, Recovery, and En18 forcement Act of 1989 (12 U.S.C. 1833e) is amended— 

19 (1) in subsection (a)— 

20 (A) by striking paragraphs (2), (5), and 

21 (6); 

22 (B) by redesignating paragraphs (3) and 

23 (4) as paragraphs (2) and (3), respectively; and 

24 (C) in paragraph (2) (as redesignated), by 

25 adding ‘‘and’’ at the end; 


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1 (2) in subsection (c)— 

2 (A) by striking ‘‘the Director of the Office 

3 of Thrift Supervision,’’ and inserting ‘‘and’’; 

4 and 

5 (B) by striking ‘‘, the Oversight Board of 

6 the Resolution Trust Corporation, and the Res7 olution Trust Corporation’’; and 

8 (3) in subsection (d)— 

9 (A) by striking paragraphs (3), (5) and 

10 (6); and 

11 (B) by redesignating paragraphs (4), (7), 

12 and (8) as paragraphs (3), (4), and (5), respec13 tively. 

14 SEC. 1242. AMENDMENTS TO THE HOUSING ACT OF 1948. 

15 Section 502(c) of the Housing Act of 1948 (12 

16 U.S.C. 1701c(c)) is amended in the introductory text by 

17 striking ‘‘Director of the Office of Thrift Supervision’’ and 

18 inserting ‘‘Comptroller of the Currency’’. 

19 SEC. 1243. AMENDMENTS TO THE HOUSING AND COMMU20 NITY DEVELOPMENT ACT OF 1992 AND THE 

21 FEDERAL HOUSING ENTERPRISES FINANCIAL 

22 SAFETY AND SOUNDNESS ACT OF 1992. 

23 (a) AMENDMENTS TO SECTION 543 OF THE HOUSING

24 AND COMMUNITY DEVELOPMENT ACT OF 1992.—Section 


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1 543 of the Housing and Community Development Act of 

2 1992 (12 U.S.C. 1707 note) is amended— 

3 (1) in subsection (c)(1)— 

4 (A) by striking subparagraphs (D) through 

5 (F); and 

6 (B) by redesignating subparagraphs (G) 

7 and (H) as subparagraphs (D) and (E), respec8 tively; and 

9 (2) in subsection (f)— 

10 (A) in paragraph (2)— 

11 (i) by striking ‘‘the Office of Thrift 

12 Supervision,’’; and 

13 (ii) in subparagraph (D), by striking 

14 ‘‘the Office of Thrift Supervision,’’; and 

15 (B) in paragraph (3)— 

16 (i) by striking ‘‘the Office of Thrift 

17 Supervision,’’; and 

18 (ii) in subparagraph (D), by striking 

19 ‘‘Office of Thrift Supervision,’’ and insert20 ing ‘‘Comptroller of the Currency,’’. 

21 (b) AMENDMENT TO SECTION 1315 OF THE FED22 ERAL HOUSING ENTERPRISES FINANCIAL SAFETY AND

23 SOUNDNESS ACT OF 1992.—Section 1315(b) of the Fed24 eral Housing Enterprises Financial Safety and Soundness 

25 Act of 1992 (12 U.S.C. 4515(b)) is amended by striking 


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1 ‘‘the Federal Deposit Insurance Corporation, and the Of2 fice of Thrift Supervision.’’ and inserting ‘‘and the Fed3 eral Deposit Insurance Corporation.’’. 

4 (c) AMENDMENT TO SECTION 1317 OF THE FED5 ERAL HOUSING ENTERPRISES FINANCIAL SAFETY AND

6 SOUNDNESS ACT OF 1992.—Section 1317(c) of the of the 

7 Federal Housing Enterprises Financial Safety and Sound8 ness Act of 1992 (12 U.S.C. 4517(c)) is amended by strik9 ing ‘‘the Federal Deposit Insurance Corporation, or the 

10 Director of the Office of Thrift Supervision’’ and inserting 

11 ‘‘or the Federal Deposit Insurance Corporation’’. 

12 SEC. 1244. AMENDMENT TO THE HOUSING AND URBAN13 RURAL RECOVERY ACT OF 1983. 

14 Section 469 of the Housing and Urban-Rural Recov15 ery Act of 1983 (12 U.S.C. 1701p–1) is amended in the 

16 first sentence by striking ‘‘Federal Home Loan Bank 

17 Board’’ and inserting ‘‘Federal Housing Finance Agency’’. 

18 SEC. 1245. AMENDMENTS TO THE NATIONAL HOUSING ACT. 

19 Section 202(f) of the National Housing Act is amend20 ed— 

21 (1) by amending paragraph (5) to read as fol22 lows: 

23 ‘‘(5) if the mortgagee is a national bank, a sub24 sidiary or affiliate of such a bank, a Federal savings 


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1 association or a subsidiary or affiliate of a savings 

2 association, the Comptroller of the Currency;’’; 

3 (2) in paragraph (6), by adding ‘‘and’’ at the 

4 end; 

5 (3) in paragraph (7)— 

6 (A) by inserting ‘‘or State savings associa7 tion’’ after ‘‘State bank’’; and 

8 (B) by striking ‘‘; and’’ and inserting a pe9 riod; and 

10 (4) by striking paragraph (8). 

11 SEC. 1246. AMENDMENTS TO THE RIGHT TO FINANCIAL 

12 PRIVACY ACT OF 1978. 

13 Section 1101(7) of the Right to Financial Privacy 

14 Act of 1978 (12 U.S.C. 3401(7)) is amended by striking 

15 subparagraph (B). 

16 SEC. 1247. AMENDMENTS TO THE BALANCED BUDGET AND 

17 EMERGENCY DEFICIT CONTROL ACT OF 1985. 

18 (a) AMENDMENTS TO SECTION 255.—Section 

19 255(g)(1)(A) of the Balanced Budget and Emergency 

20 Deficit Control Act of 1985 (2 U.S.C. 905(g)(1)(A)) is 

21 amended by striking ‘‘Office of Thrift Supervision (20– 

22 4108–0–3–373);’’. 

23 (b) AMENDMENTS TO SECTION 256.—Section 

24 256(h)(4) of the Balanced Budget and Emergency Deficit 

25 Control Act of 1985 (2 U.S.C. 906(h)(4)) is amended— 


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1 (1) by striking subparagraphs (C) and (G); and 

2 (2) by redesignating subparagraphs (D), (E), 

3 (F), and (H) as subparagraphs (C) through (G), re4 spectively. 

5 SEC. 1248. AMENDMENTS TO THE CRIME CONTROL ACT OF 

6 1990. 

7 (a) AMENDMENTS TO SECTION 2539.—Section 

8 2539(c)(2) of the Crime Control Act of 1990 (Public Law 

9 101–647) is amended by striking subparagraph (F) and 

10 redesignating subparagraphs (G) and (H) as subpara11 graphs (F) through (G), respectively. 

12 (b) AMENDMENT TO SECTION 2554.—Section 

13 2554(b)(2) of the Crime Control Act of 1990 (Public Law 

14 101–647) is amended by striking ‘‘Director of the Office 

15 of Thrift Supervision’’ and inserting ‘‘Comptroller of the 

16 Currency’’. 

17 SEC. 1249. AMENDMENT TO THE FLOOD DISASTER PROTEC18 TION ACT OF 1973. 

19 Section 3(a)(5) of the Flood Disaster Protection Act 

20 of 1973 (42 U.S.C. 4003(a)(5)) is amended by striking 

21 ‘‘the Office of Thrift Supervision,’’. 

22 SEC. 1250. AMENDMENT TO THE INVESTMENT COMPANY 

23 ACT OF 1940. 

24 Section 6(a)(3) of the Investment Company Act of 

25 1940 (15 U.S.C. 80a–6(a)(3)) is amended by striking 


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1 ‘‘Federal Savings and Loan Insurance Corporation’’ and 

2 inserting ‘‘Comptroller of the Currency’’. 

3 SEC. 1251. AMENDMENT TO THE NEIGHBORHOOD REIN4 VESTMENT CORPORATION ACT. 

5 Section 606(c)(3) of the Neighborhood Reinvestment 

6 Corporation Act is amended by striking ‘‘Federal Home 

7 Loan Bank Board’’ and inserting ‘‘Federal Housing Fi8 nance Agency’’. 

9 SEC. 1252. AMENDMENTS TO THE SECURITIES EXCHANGE 

10 ACT OF 1934. 

11 (a) AMENDMENTS TO SECTION 3.—Section 3(a)(34) 

12 of the Securities Exchange Act of 1934 (15 U.S.C. 

13 78c(a)(34)) is amended— 

14 (1) in subparagraph (A)— 

15 (A) in clause (i), by striking ‘‘bank;’’ and 

16 inserting ‘‘bank, or a savings association (as de17 fined in section 3(b) of the Federal Deposit In18 surance Act (12 U.S.C. 1813(b))), the deposits 

19 of which are insured by the Federal Deposit In20 surance Corporation, a subsidiary or a depart21 ment or division of any such savings associa22 tion, or a savings and loan holding;’’; 

23 (B) in clause (iii), by adding ‘‘and’’ at the 

24 end; 

25 (C) by striking clause (iv); and 


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1 (D) by redesignating clause (v) as clause 

2 (iv); 

3 (2) in subparagraph (B)— 

4 (A) in clause (i), by striking ‘‘bank;’’ and 

5 inserting ‘‘bank, or a savings association (as de6 fined in section 3(b) of the Federal Deposit In7 surance Act (12 U.S.C. 1813 (b))), the deposits 

8 of which are insured by the Federal Deposit In9 surance Corporation, a subsidiary or a depart10 ment or division of any such savings associa11 tion, or a savings and loan holding;’’; 

12 (B) in clause (iii), by adding ‘‘and’’ and 

13 the end; 

14 (C) by striking clause (iv); and 

15 (D) by redesignating clause (v) as clause 

16 (iv); 

17 (3) in subparagraph (C)— 

18 (A) in clause (i), by striking ‘‘bank;’’ and 

19 inserting ‘‘bank, or a savings association (as de20 fined in section 3(b) of the Federal Deposit In21 surance Act (12 U.S.C. 1813 (b))), the deposits 

22 of which are insured by the Federal Deposit In23 surance Corporation, a subsidiary or a depart24 ment or division of any such savings associa25 tion, or a savings and loan holding;’’; 


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1 (B) in clause (iii), by adding ‘‘and’’ at the 

2 end; 

3 (C) by striking clause (iv); and 

4 (D) by redesignating clause (v) as clause 

5 (iv); and 

6 (4) in subparagraph (F)— 

7 (A) in clause (i), by striking ‘‘bank;’’ and 

8 inserting ‘‘or a savings association (as defined 

9 in section 3(b) of the Federal Deposit Insur10 ance Act (12 U.S.C. 1813 (b))), the deposits of 

11 which are insured by the Federal Deposit In12 surance Corporation;’’; 

13 (B) by striking clause (ii); and 

14 (C) redesignating clauses (iii), (iv), and (v) 

15 as clauses (ii), (iii) and (iv), respectively. 

16 (b) AMENDMENTS TO SECTION 15C.—Section 15C of 

17 the Securities Exchange Act of 1934 (15 U.S.C. 78o-5) 

18 is amended in subsection (g)(1) by striking ‘‘the Director 

19 of the Office of Thrift Supervision, the Federal Savings 

20 and Loan Insurance Corporation,’’. 

21 SEC. 1253. AMENDMENTS TO TITLE 18, UNITED STATES 

22 CODE. 

23 (a) AMENDMENT TO SECTION 212.—Section 

24 212(c)(2) of title 18, United States Code, is amended— 

25 (1) by striking subparagraph (C); and 


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1 (2) by redesignating subparagraphs (D) 

2 through (H) as subparagraphs (C) through (G), re3 spectively. 

4 (b) AMENDMENT TO SECTION 657.—Section 657 of 

5 title 18, United States Code, is amended by striking ‘‘Of6 fice of Thrift Supervision, the Resolution Trust Corpora7 tion,’’. 

8 (c) AMENDMENT TO SECTION 981.—Section 

9 981(a)(1)(D) of title 18, United States Code, is amend10 ed— 

11 (1) by striking ‘‘the Resolution Trust Corpora12 tion,’’; and 

13 (2) by striking ‘‘or the Office of Thrift Super14 vision’’. 

15 (d) AMENDMENT TO SECTION 982.—Section 

16 982(a)(3) of title 18, United States Code, is amended— 

17 (1) by striking ‘‘the Resolution Trust Corpora18 tion,’’;and 

19 (2) by striking ‘‘or the Office of Thrift Super20 vision’’. 

21 (e) AMENDMENT TO SECTION 1006.—Section 1006 

22 of title 18, United States Code, is amended— 

23 (1) by striking ‘‘Office of Thrift Supervision,’’; 

24 and 


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1 (2) by striking ‘‘the Resolution Trust Corpora2 tion,’’. 

3 (f) AMENDMENT TO SECTION 1014.—Section 1014 

4 of title 18, United States Code, is amended— 

5 (1) by striking ‘‘the Office of Thrift Super6 vision,’’; and 

7 (2) by striking ‘‘the Resolution Trust Corpora8 tion,’’. 

9 (g) AMENDMENT TO SECTION 1032.—Section 

10 1032(1) of title 18, United States Code, is amended— 

11 (1) by striking ‘‘the Resolution Trust Corpora12 tion,’’; and 

13 (2) by striking ‘‘or the Director of the Office of 

14 Thrift Supervision’’. 

15 SEC. 1254. AMENDMENTS TO TITLE 31, UNITED STATES 

16 CODE. 

17 (a) AMENDMENT TO SECTION 309.—Section 309 of 

18 title 31, United States Code, is amended to read as fol19 lows: 

20 ‘‘§ 309. Division of Thrift Supervision 

21 ‘‘The Division of Thrift Supervision established 

22 under section 3(a) of the Home Owners’ Loan Act shall 

23 be a division in the Office of the Comptroller of the Cur24 rency.’’. 


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1 (b) AMENDMENTS TO SECTION 321.—Section 321 of 

2 title 31, United States Code, is amended— 

3 (1) in subsection (c)— 

4 (A) in paragraph (1), by adding ‘‘and’’ at 

5 the end; 

6 (B) in paragraph (2), by striking ‘‘; and’’ 

7 and inserting a period; and 

8 (C) by striking paragraph (3); and 

9 (2) by striking subsection (e). 

10 (c) AMENDMENTS TO SECTION 714.—Section 714 of 

11 title 31, United States Code, is amended— 

12 (1) in subsection (a), by striking ‘‘the Office of 

13 the Comptroller of the Currency, and the Office of 

14 Thrift Supervision.’’ and inserting ‘‘and the Office of 

15 the Comptroller of the Currency.’’; 

16 (2) in subsection (b), by striking all after ‘‘has 

17 consented in writing.’’ and inserting the following: 

18 ‘‘Audits of the Federal Reserve Board and Federal 

19 reserve banks shall not include unreleased tran20 scripts or minutes of meetings of the Board of Gov21 ernors or of the Federal Open Market Committee. 

22 To the extent that an audit deals with individual 

23 market actions, records related to such actions shall 

24 only be released by the Comptroller General after 


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1 180 days have elapsed following the effective date of 

2 such actions.’’; 

3 (3) in subsection (c)(1), in the first sentence, by 

4 striking ‘‘subsection,’’ and inserting ‘‘subsection or 

5 in the audits or audit reports referring or relating 

6 to the Federal Reserve Board or Reserve Banks,’’; 

7 and 

8 (4) by adding at the end the following: 

9 ‘‘(f) AUDIT AND REPORT OF THE FEDERAL RESERVE

10 SYSTEM.— 

11 ‘‘(1) IN GENERAL.—An audit of the Board of 

12 Governors of the Federal Reserve System and the 

13 Federal reserve banks under subsection (b) shall be 

14 completed within 12 months of the enactment of the 

15 Financial Stability Improvement Act of 2009. 

16 ‘‘(2) REPORT.— 

17 ‘‘(A) REQUIRED.—A report on the audit 

18 referred to in paragraph (1) shall be submitted 

19 by the Comptroller General to the Congress be20 fore the end of the 90-day period beginning on 

21 the date on which such audit is completed and 

22 made available to— 

23 ‘‘(i) the Speaker of the House of Rep24 resentatives; 


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1 ‘‘(ii) the majority and minority leaders 

2 of the House of Representatives; 

3 ‘‘(iii) the majority and minority lead4 ers of the Senate; 

5 ‘‘(iv) the Chairman and Ranking 

6 Member of the committee and each sub7 committee of jurisdiction in the House of 

8 Representatives and the Senate; and 

9 ‘‘(v) any other Member of Congress 

10 who requests it. 

11 ‘‘(B) CONTENTS.—The report under sub12 paragraph (A) shall include a detailed descrip13 tion of the findings and conclusion of the 

14 Comptroller General with respect to the audit 

15 that is the subject of the report. 

16 ‘‘(3) CONSTRUCTION.—Nothing in this sub17 section shall be construed— 

18 ‘‘(A) as interference in or dictation of mon19 etary policy to the Federal Reserve System by 

20 the Congress or the Government Accountability 

21 Office; or 

22 ‘‘(B) to limit the ability of the Government 

23 Accountability Office to perform additional au24 dits of the Board of Governors of the Federal 


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1 Reserve System or of the Federal reserve 

2 banks.’’. 

3 SEC. 1255. REQUIREMENT FOR COUNTERCYCLICAL CAP4 ITAL REQUIREMENTS. 

5 Section 908(a) of the International Lending Super6 vision Act of 1983 (12 U.S.C. 3907(a)) is amended by 

7 adding at the end the following new paragraph: 

8 ‘‘(3) Each appropriate Federal banking agency 

9 shall, in establishing capital requirements under this 

10 Act or other provisions of Federal law for banking 

11 institutions, seek to make such requirements coun12 tercyclical so that the amount of capital required to 

13 be maintained by a banking institution increases in 

14 times of economic expansion and may decrease in 

15 times of economic contraction, consistent with the 

16 safety and soundness of the institution.’’. 

17 SEC. 1256. TRANSFER OF AUTHORITY TO THE BOARD WITH 

18 RESPECT TO SAVINGS AND LOAN HOLDING 

19 COMPANIES. 

20 (a) TRANSFER OF FUNCTIONS.—Notwithstanding 

21 any other provision of this subtitle, all functions of the 

22 Director of the Office of Thrift Supervision with respect 

23 to savings and loan holding companies that are, on a con24 solidated basis, predominantly engaged in the business of 

25 insurance are transferred to the Board. 


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1 (b) BOARD’S AUTHORITY.—Notwithstanding any 

2 other provision of this subtitle, the Board shall succeed 

3 to all powers, authorities, rights, and duties with respect 

4 to savings and loan holding companies that are, on a con5 solidated basis, predominantly engaged in the business of 

6 insurance that were vested in the Director of the Office 

7 of Thrift Supervision under Federal law, including the 

8 Home Owners’ Loan Act, on the day before the transfer 

9 date. 

10 (c) SAVINGS AND LOAN HOLDING COMPANY DE11 FINED.—The term ‘‘savings and loan holding company’’ 

12 shall have the meaning given such term under section 10 

13 of the Home Owners’ Loan Act. 

14 Subtitle D—Further Improvements 

15 to the Regulation of Bank Hold16 ing Companies and Depository 

17 Institutions 

18 SEC. 1301. TREATMENT OF INDUSTRIAL LOAN COMPANIES, 

19 SAVINGS ASSOCIATIONS, AND CERTAIN 

20 OTHER COMPANIES UNDER THE BANK HOLD21 ING COMPANY ACT. 

22 (a) DEFINITIONS.—Section 2 of the Bank Holding 

23 Company Act of 1956 (12 U.S.C. 1841) is amended— 

24 (1) by striking subsection (a)(1) and inserting 

25 the following: 


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1 ‘‘(a) BANK HOLDING COMPANY.— 

2 ‘‘(1) IN GENERAL.—Except as provided in para3 graph (5), the term ‘bank holding company’ 

4 means— 

5 ‘‘(A) any company, other than a company 

6 described in section 4(p), which has control over 

7 any bank or over any company that is or be8 comes a bank holding company by virtue of this 

9 Act; and 

10 ‘‘(B) any section 6 holding company estab11 lished by a company described in section 

12 6(a)(1)(C).’’. 

13 (2) in subsection (a)(5), by adding at the end 

14 the following new subparagraph: 

15 ‘‘(G) No company is a bank holding com16 pany by virtue of its ownership or control of a 

17 section 6 holding company or any subsidiary of 

18 a section 6 holding company, so long as the re19 quirements of sections 4(p) and 6 of this Act 

20 are met, as applicable, by the section 6 holding 

21 company;’’; 

22 (3) in subsection (c)(1)(A), by striking ‘‘insured 

23 bank’’ and inserting ‘‘insured depository institu24 tion’’, and by striking ‘‘section 3(h) of the Federal 


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1 Deposit Insurance Act’’ and inserting ‘‘section 

2 3(c)(2) of the Federal Deposit Insurance Act’’; 

3 (4) in subsection (c)(2)— 

4 (A) in subparagraph (B), by inserting be5 fore the period the following: ‘‘that is controlled 

6 by a company that is, on a consolidated basis, 

7 predominantly engaged in the business of insur8 ance’’; and 

9 (B) by striking subparagraph (H); and 

10 (5) by adding at the end the following new sub11 section: 

12 ‘‘(r) SECTION 6 HOLDING COMPANIES.—The term 

13 ‘section 6 holding company’ means a company that is re14 quired to be established as an intermediate holding com15 pany under section 6 of this Act.’’. 

16 (b) NONBANKING ACTIVITIES EXCEPTIONS.—Section 

17 4 of the Bank Holding Company Act of 1956 (12 U.S.C. 

18 1843) is amended— 

19 (1) in subsection (f)(1)(B) by striking ‘‘for pur20 poses of this Act’’ and inserting ‘‘for purposes of 

21 section 4(a)’’; and 

22 (2) in subsection (f)(2)— 

23 (A) in subparagraph (B)(ii), by striking ‘‘; 

24 or’’ and inserting a semicolon; 


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1 (B) in subparagraph (C), by striking the 

2 period and inserting ‘‘; or’’; and 

3 (C) by adding at the end the following new 

4 subparagraph: 

5 ‘‘(D) such company fails to— 

6 ‘‘(i) establish and register a section 6 

7 holding company pursuant to section 6 of 

8 this Act within 180 days after the adoption 

9 of rules required by this section; and 

10 ‘‘(ii) conduct such activities which are 

11 permissible for a financial holding com12 pany, as determined under section 4(k), 

13 through such section 6 holding company, 

14 other than internal financial activities con15 ducted for such company or any affiliate, 

16 including, but not limited to internal treas17 ury, investment, and employee benefit 

18 functions, provided that with respect to 

19 any internal financial activity engaged in 

20 for the company or an affiliate and a non21 affiliate during the year prior to date of 

22 enactment, the company (or an affiliate 

23 not a subsidiary of the section 6 company) 

24 may continue to engage in that activity so 

25 long as at least two-thirds of the assets or 


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1 two-thirds of the revenues generated from 

2 the activity are from or attributable to the 

3 company or an affiliate, subject to review 

4 by the Board to determine whether engag5 ing in such activity presents undue risk to 

6 the section 6 company or undue systemic 

7 risk.’’; and 

8 (3) by inserting at the end the following new 

9 subsections: 

10 ‘‘(p) CERTAIN COMPANIES NOT SUBJECT TO THIS

11 ACT.— 

12 ‘‘(1) IN GENERAL.—Except as provided in para13 graphs (6) and (7), any company which— 

14 ‘‘(A) was— 

15 ‘‘(i) a unitary savings and loan hold16 ing company on May 4, 1999, or became 

17 a unitary savings and loan holding com18 pany pursuant to an application pending 

19 before the Director of the Office of Thrift 

20 Supervision on of before that date, and 

21 that— 

22 ‘‘(I) on June 30, 2009, continued 

23 to control not fewer than 1 savings 

24 association that it controlled on May 

25 4, 1999, or that such company acVerDate Nov 24 2008 22:04 Dec 02, 2009 Jkt 089200 PO 00000 Frm 00209 Fmt 6652 Sfmt 6201 E:\BILLS\H4173.IH H4173

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1 quired pursuant to an application 

2 pending before the Director of the Of3 fice of Thrift Supervision on or before 

4 such date, which became a bank for 

5 purposes of the Bank Holding Com6 pany Act as a result of the enactment 

7 of section 1301(a)(4)(A); and 

8 ‘‘(II) on June 30, 2009, and the 

9 date of enactment of the Financial 

10 Stability Improvement Act of 2009, 

11 such savings association subsidiary 

12 was and remains a qualified thrift 

13 lender (as determined by section 10 of 

14 the Home Owners’ Loan Act); or 

15 ‘‘(ii) on November 23, 2009— 

16 ‘‘(I) controlled an institution 

17 which became a bank as a result of 

18 the enactment of section 

19 1301(a)(3)(B) of the Financial Sta20 bility Improvement Act of 2009; 

21 ‘‘(II) had an application pending, 

22 or approved but not executed, before 

23 the Federal Deposit Insurance Cor24 poration, that, if approved, would per25 mit the applicant to control an indusVerDate Nov 24 2008 22:04 Dec 02, 2009 Jkt 089200 PO 00000 Frm 00210 Fmt 6652 Sfmt 6201 E:\BILLS\H4173.IH H4173

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1 trial loan company, industrial bank, or 

2 other similar institution— 

3 ‘‘(aa) that is a federally in4 sured, State-chartered depository 

5 institution; 

6 ‘‘(bb) that is organized 

7 under the laws of a State that on 

8 March 5, 1987, had in effect, or 

9 had under consideration in the 

10 legislature of such State, a stat11 ute that required such institution 

12 to obtain insurance under the 

13 Federal Deposit Insurance Act; 

14 and 

15 ‘‘(cc) that— 

16 ‘‘(AA) does not accept 

17 demand deposits that the 

18 depositor may withdraw by 

19 check or similar means for 

20 payment to third parties; or 

21 ‘‘(BB) maintains total 

22 assets of less than 

23 $100,000,000; or 

24 ‘‘(III) controlled an institution it 

25 has continuously controlled since 


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1 March 5, 1987, which became a bank 

2 as a result of the enactment of the 

3 Competitive Equality Banking Act of 

4 1987, pursuant to subsection (f); 

5 ‘‘(B) was not on June 30, 2009— 

6 ‘‘(i) a bank holding company; or 

7 ‘‘(ii) subject to the Bank Holding 

8 Company Act of 1956 by reason of section 

9 8(a) of the International Banking Act of 

10 1978 (12 U.S.C. 3106(a)); and 

11 ‘‘(C) on June 30, 2009, directly or indi12 rectly controlled shares or engaged in activities 

13 that did not, on the day before the date of en14 actment of the Financial Stability Act of 2009, 

15 comply with the activity or investment restric16 tions on financial holding companies in section 

17 4 in accordance with regulations prescribed by 

18 the Board, 

19 shall not be treated as a bank holding company for 

20 purposes of this Act solely by virtue of such com21 pany’s control of such institution and control of a 

22 section 6 holding company established pursuant to 

23 section 6. 


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1 ‘‘(2) LOSS OF EXEMPTION.—A company de2 scribed in paragraph (1) shall no longer qualify for 

3 the exemption provided under that paragraph if— 

4 ‘‘(A) such company fails to— 

5 ‘‘(i) establish and register a section 6 

6 holding company pursuant to section 6 of 

7 this Act within 180 days after adoption of 

8 rules required by this section, unless the 

9 Board grants an extension of such period 

10 for compliance which shall not exceed 180 

11 additional days; and 

12 ‘‘(ii) maintain a section 6 holding 

13 company in compliance with all the re14 quirements for a section 6 holding com15 pany under section 6 of this Act. 

16 ‘‘(B) such company directly or indirectly 

17 (including through the section 6 holding com18 pany it must form pursuant to this subsection 

19 and section 6 of this Act) acquires control of an 

20 additional bank or insured depository institu21 tion after June 30, 2009, provided that such 

22 company directly or indirectly (including 

23 through the section 6 holding company) may 

24 acquire— 


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1 ‘‘(i) shares held as a bona fide fidu2 ciary (whether with or without the sole dis3 cretion to vote such shares); 

4 ‘‘(ii) shares held by any person as a 

5 bona fide fiduciary solely for the benefit of 

6 employees of either the company described 

7 in paragraph (1) or any subsidiary of that 

8 company and the beneficiaries of those em9 ployees; 

10 ‘‘(iii) shares held temporarily pursu11 ant to an underwriting commitment in the 

12 normal course of an underwriting business; 

13 ‘‘(iv) shares held in an account solely 

14 for trading purposes; 

15 ‘‘(v) shares over which no control is 

16 held other than control of voting rights ac17 quired in the normal course of a proxy so18 licitation; 

19 ‘‘(vi) loans or other accounts receiv20 able acquired from an insured depository 

21 institution in the normal course of busi22 ness; 

23 ‘‘(vii) shares or assets acquired in se24 curing or collecting a debt previously con25 tracted in good faith, during the 2-year peVerDate Nov 24 2008 22:04 Dec 02, 2009 Jkt 089200 PO 00000 Frm 00214 Fmt 6652 Sfmt 6201 E:\BILLS\H4173.IH H4173

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1 riod beginning on the date of such acquisi2 tion or for such additional time (not ex3 ceeding 3 years) as the Board may permit 

4 if the Board determines that such an ex5 tension will not be detrimental to the pub6 lic interest; 

7 ‘‘(viii) shares or assets acquired di8 rectly or indirectly by a depository institu9 tion controlled by such company in a 

10 transaction involving an insured depository 

11 institution for which the Federal Deposit 

12 Insurance Corporation has been appointed 

13 as receiver or which has been found to be 

14 in danger of default (as defined in section 

15 3 of the Federal Deposit Insurance Act) by 

16 the appropriate Federal or State authority; 

17 ‘‘(ix) shares or assets of another in18 dustrial loan company meeting the require19 ments of this Act if such company continu20 ously controlled an industrial loan com21 pany since the date of enactment of the Fi22 nancial Stability Improvement Act of 

23 2009; and 

24 ‘‘(x) shares or assets of a savings as25 sociation acquired directly or indirectly by 


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1 the savings association controlled by such 

2 company if such company continuously 

3 controlled a savings association since the 

4 date of enactment of the Financial Sta5 bility Improvement Act of 2009; 

6 ‘‘(C)(i) the section 6 holding company re7 quired to be established by such company, or 

8 any subsidiary bank of such company undergoes 

9 a change in control after the date of enactment 

10 of the Financial Stability Improvement Act of 

11 2009, other than— 

12 ‘‘(I) the merger or whole acquisition 

13 of such parent company in a bona fide 

14 merger or acquisition (as shall be deter15 mined by the Board, which is authorized to 

16 find that a transaction is not a bona fide 

17 merger or acquisition and thus results in 

18 the loss of exemption), with a company 

19 that is predominantly engaged in activities 

20 not permissible for a financial holding com21 pany pursuant to section 4(k), or 

22 ‘‘(II) the acquisition of additional 

23 shares by a company that owned or con24 trolled 7.5 percent or more of any class of 

25 such parent company’s outstanding voting 


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1 stock on or before June 30, 2009, and con2 tinuously owned or controlled at least such 

3 7.5 percent since June 30, 2009. 

4 ‘‘(ii) Nothing in this subparagraph shall be 

5 construed as preventing the Board from requir6 ing compliance with this subsection, section 6 

7 or the requirements of the Change in Bank 

8 Control Act, as applicable to a company that is 

9 permitted to acquire control without loss of the 

10 exemption in this subsection 4(p)(2); or 

11 ‘‘(D) any subsidiary bank of such company 

12 engages in any activity after the date of enact13 ment of the Financial Stability Improvement 

14 Act of 2009 which would have caused such in15 stitution to be a bank (as defined in section 

16 2(c) of this Act, as in effect before such date) 

17 if such activities had been engaged in before 

18 such date. 

19 ‘‘(3) DIVESTITURE IN CASE OF LOSS OF EX20 EMPTION.—If any company described in paragraph 

21 (1) fails to qualify for the exemption provided under 

22 paragraph (1) by operation of paragraph (2), such 

23 exemption shall cease to apply to such company and 

24 such company shall divest control of each bank it 

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1 ning on the date on which the company receives no2 tice from the Board that the company has failed to 

3 continue to qualify for such exemption, unless, be4 fore the end of such 180-day period, the company 

5 has— 

6 ‘‘(A) either— 

7 ‘‘(i) corrected the condition or ceased 

8 the activity that caused the company to 

9 fail to continue to qualify for the exemp10 tion; or 

11 ‘‘(ii) submitted a plan to the Board 

12 for approval to cease the activity or correct 

13 the condition in a timely manner (which 

14 shall not exceed 1 year); and 

15 ‘‘(B) implemented procedures that are rea16 sonably adapted to avoid the reoccurrence of 

17 such condition or activity. 

18 ‘‘(4) SUBSECTION CEASES TO APPLY UNDER

19 CERTAIN CIRCUMSTANCES.—This subsection shall 

20 cease to apply to any company described in para21 graph (1) if such company— 

22 ‘‘(A) registers as a bank holding company 

23 under section 2(a) of this Act; 

24 ‘‘(B) immediately upon such registration, 

25 complies with all of the requirements of this 


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1 chapter, and regulations prescribed by the 

2 Board pursuant to this chapter, including the 

3 nonbanking restrictions of this section; and 

4 ‘‘(C) does not, at the time of such registra5 tion, control banks in more than one State, the 

6 acquisition of which would be prohibited by sec7 tion 3(d) of this Act if an application for such 

8 acquisition by such company were filed under 

9 section 3(a) of this Act. 

10 ‘‘(5) INFORMATION REQUIREMENT.—Each com11 pany described in paragraph (1) shall, within 60 

12 days after the date of enactment of the Financial 

13 Stability Improvement Act of 2009, provide the 

14 Board with the name and address of such company, 

15 the name and address of each bank such company 

16 controls, and a description of each such bank’s ac17 tivities. 

18 ‘‘(6) EXAMINATIONS AND REPORTS.—The 

19 Board may, from time to time, examine a company 

20 described in paragraph (1) or a bank controlled by 

21 such a company, and may require reports under 

22 oath from a company described in paragraph (1), 

23 and appropriate officers or directors of such com24 pany, in each case solely for purposes of assuring 


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1 compliance with the provisions of this subsection and 

2 enforcing such compliance. 

3 ‘‘(7) LIMITED ENFORCEMENT.— 

4 ‘‘(A) IN GENERAL.—In addition to any 

5 other power of the Board, the Board may en6 force compliance with the provisions of this sub7 section which are applicable to any company de8 scribed in paragraph (1), and any bank con9 trolled by such company, under section 8 of the 

10 Federal Deposit Insurance Act, and such com11 pany or bank shall be subject to such section 

12 (for such purposes) in the same manner and to 

13 the same extent as if such company were a 

14 bank holding company. 

15 ‘‘(B) APPLICATION OF OTHER ACT.—Any 

16 violation of this subsection by any company de17 scribed in paragraph (1) or any bank controlled 

18 by such a company, may also be treated as a 

19 violation of the Federal Deposit Insurance Act 

20 for purposes of subparagraph (A). 

21 ‘‘(C) NO EFFECT ON OTHER AUTHOR22 ITY.—No provision of this paragraph shall be 

23 construed as limiting any authority of the 

24 Board or any other Federal agency under any 

25 other provision of law. 


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1 ‘‘(q) PRESERVATION OF CERTAIN SAVINGS AND

2 LOAN HOLDING COMPANY AUTHORITIES.—Notwith3 standing subsection (a), a company that was a savings and 

4 loan holding company on June 30, 2009, that became a 

5 bank holding company by operation of section 1301 of the 

6 Financial Stability Improvement Act of 2009 may con7 tinue to engage in the following activities in which such 

8 company was continuously engaged on June 30, 2009 

9 through the day of enactment of the Financial Stability 

10 Improvement Act of 2009: 

11 ‘‘(1) Furnishing or performing management 

12 services for a savings association subsidiary of such 

13 company. 

14 ‘‘(2) Conducting an insurance agency or escrow 

15 business. 

16 ‘‘(3) Holding, managing, or liquidating assets 

17 owned or acquired from a savings association sub18 sidiary of such company. 

19 ‘‘(4) Holding or managing properties used or 

20 occupied by a savings association subsidiary of such 

21 company. 

22 ‘‘(5) Acting as trustee under deed of trust. 

23 ‘‘(6) Any other activity in which multiple sav24 ings and loan holding companies were authorized (by 

25 regulation) to directly engage on March 5, 1987.’’. 


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1 (c) SECTION 6 HOLDING COMPANIES.—The Bank 

2 Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) 

3 is amended by inserting after section 5 the following new 

4 section: 

5 ‘‘SEC. 6. SPECIAL-PURPOSE HOLDING COMPANIES. 

6 ‘‘(a) ESTABLISHMENT, PURPOSE AND REQUIRE7 MENTS OF SPECIAL PURPOSE HOLDING COMPANIES.— 

8 ‘‘(1) REQUIREMENT.—A special purpose hold9 ing company (hereafter in this section referred to as 

10 a ‘section 6 holding company’) shall be established 

11 and maintained by a company— 

12 ‘‘(A) described in section 4(f)(1) as re13 quired by section 4(f)(2)(D) of this Act; 

14 ‘‘(B) described in section 4(p)(1) as re15 quired by section 4(p)(2)(A) of this Act; or 

16 ‘‘(C) that— 

17 ‘‘(i) is subject to stricter prudential 

18 standards under subtitle B of the Finan19 cial Stability Improvement Act of 2009; 

20 ‘‘(ii) is not— 

21 ‘‘(I) a bank holding company, or 

22 ‘‘(II) subject to the Bank Hold23 ing Company Act by reason of section 

24 8(a) of the International Banking Act 

25 of 1978 (12 U.S.C. 3106(a)); and 


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1 ‘‘(iii) directly or indirectly controlled 

2 shares or engaged in activities that did 

3 not, on the date the company is first sub4 ject to stricter prudential standards pursu5 ant to subtitle B of the Financial Stability 

6 Improvement Act of 2009, comply with the 

7 activity or investment restrictions on finan8 cial holding companies in section 4 in ac9 cordance with regulations prescribed by the 

10 Board. 

11 ‘‘(2) PURPOSE.— 

12 ‘‘(A) The purpose of this section is to pro13 vide for consolidated supervision of certain fi14 nancial companies by the Board. 

15 ‘‘(B) A company that is required to form 

16 a section 6 holding company shall conduct such 

17 activities which are permissible for a financial 

18 holding company, as determined under section 

19 4(k), through such section 6 holding company, 

20 other than internal financial activities con21 ducted for such company or any affiliate, in22 cluding, but not limited to internal treasury, in23 vestment, and employee benefit functions, pro24 vided that with respect to any internal financial 

25 activity engaged in for the company or an affilVerDate Nov 24 2008 22:04 Dec 02, 2009 Jkt 089200 PO 00000 Frm 00223 Fmt 6652 Sfmt 6201 E:\BILLS\H4173.IH H4173

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1 iate and a nonaffiliate during the year prior to 

2 date of enactment, the company (or an affiliate 

3 not a subsidiary of the section 6 company) may 

4 continue to engage in that activity so long as at 

5 least two-thirds of the assets or two-thirds of 

6 the revenues of generated from the activity are 

7 from or attributable to the company or an affil8 iate, subject to review by the Board to deter9 mine whether engaging in such activity presents 

10 undue risk to the section 6 company or undue 

11 systemic risk. 

12 ‘‘(C) A section 6 holding company shall be 

13 prohibited from conducting any nonbanking ac14 tivities or investing in any nonbank companies 

15 other than those permissible for a financial 

16 holding company under sections 3 and 4, unless 

17 the Board specifically determines otherwise in 

18 accordance with paragraph (6), and provided 

19 that, for purposes of this paragraph, a company 

20 designated as a section 6 holding company and 

21 described under paragraph (4) (or any per22 mitted successor) is not prohibited from con23 tinuing to engage in any impermissible activity 

24 in which it was engaged continuously during the 

25 6 months prior to the date of enactment, from 


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1 owning any shares or types of assets related to 

2 such activity, or continuing to own such other 

3 shares or assets that it owned on the date of 

4 enactment. 

5 ‘‘(3) REGISTRATION.— 

6 ‘‘(A) A section 6 holding company required 

7 to be established by a company described in 

8 paragraph (1)(A) shall be established, and such 

9 company shall register with the Board as a 

10 bank holding company, pursuant to the require11 ments in section 4(f). 

12 ‘‘(B) A section 6 holding company required 

13 to be established by a company described in 

14 paragraph (1)(B) shall be established, and such 

15 company shall register with the Board as a 

16 bank holding company, pursuant to the require17 ments in section 4(p). 

18 ‘‘(C) A section 6 holding company required 

19 to be established by a company described in 

20 paragraph (1)(C) shall be— 

21 ‘‘(i) established, and such company 

22 shall register with the Board, as a bank 

23 holding company within 90 days after such 

24 company or such company’s parent holding 

25 company has been notified by the Board 


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1 that such company is subject to stricter 

2 prudential standards under subtitle B of 

3 the Financial Stability Improvement Act of 

4 2009, unless the Board grants an exten5 sion of such period for compliance which 

6 shall not exceed 180 additional days; 

7 ‘‘(ii) treated as a financial holding 

8 company under this Act; and 

9 ‘‘(iii) subject to the authority of the 

10 Board to enforce compliance with the pro11 visions of this section under section 8 of 

12 the Federal Deposit Insurance Act in the 

13 same manner and to the same extent as if 

14 such company were a bank holding com15 pany. 

16 ‘‘(4) RULE OF CONSTRUCTION.—For purposes 

17 of this section, designation of an already established 

18 intermediate holding company that will serve as the 

19 section 6 holding company shall satisfy the require20 ment to establish a section 6 holding company, pro21 vided that such existing intermediate holding com22 pany complies with all other provisions applicable to 

23 a section 6 holding company. 

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1 ing company or treated as a bank holding company 

2 pursuant to section 8(a) of the International Bank 

3 Act of 1978 that has been notified that it is a finan4 cial holding company subject to stricter standards, 

5 pursuant to subtitle A of the Financial Stability Im6 provement Act of 2009, shall— 

7 ‘‘(A) not be deemed to be, or treated as, a 

8 bank holding company, solely because of its 

9 ownership or control of a section 6 holding com10 pany; and 

11 ‘‘(B) not be subject to this Act, except for 

12 such provisions as are explicitly made applicable 

13 in this section. 

14 ‘‘(6) BOARD AUTHORITY.— 

15 ‘‘(A) RULES AND EXEMPTIONS.—In addi16 tion to any other authority of the Board, the 

17 Board shall prescribe rules and regulations or 

18 issue orders providing for the establishment and 

19 registration of section 6 holding companies and 

20 shall provide exemptions from the requirements 

21 of this Act (including an order in response to 

22 a request from an affected company), including, 

23 but not limited to, exemptions— 

24 ‘‘(i) with respect to the requirement to 

25 conduct such activities which are financial 


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1 in nature, as determined under section 

2 4(k), other than financial activities con3 ducted for such company or any affiliate, 

4 including any financial activity engaged in 

5 for both the company or an affiliate and a 

6 nonaffiliate as permitted under section 

7 4(f)(2)(D) or section 6(a)(2)(B), through 

8 such section 6 holding company, if the 

9 Board makes a finding that such exemp10 tion— 

11 ‘‘(I)(aa) would facilitate the ex12 tension of credit to individuals, house13 holds, and businesses; or 

14 ‘‘(bb) would allow for greater ef15 ficiency, improved customer service, or 

16 other public benefits in the conduct of 

17 financial activities by affected compa18 nies; 

19 ‘‘(II) would not threaten the 

20 safety and soundness of the section 6 

21 holding company, or of any insured 

22 depository institution or other sub23 sidiary of the section 6 holding com24 pany; 


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1 ‘‘(III) would not increase sys2 temic risk or threaten the stability of 

3 the overall financial system; 

4 ‘‘(IV) would not, as applied to 

5 the activities that are the subject of 

6 the rule, order or request, result in 

7 substantially lessening competition, or 

8 to tend to create a monopoly, or which 

9 in any other manner would be in re10 straint of trade, unless the Board 

11 finds that the anticompetitive effects 

12 are outweighed in the public interest 

13 by the probable effect of the exemp14 tion in meeting the convenience and 

15 needs of the community to be served; 

16 and 

17 ‘‘(V) would meet the financial 

18 and managerial standards for finan19 cial holding companies described in 

20 subparagraphs (A) and (B) of section 

21 4(j)(4); and 

22 ‘‘(ii) from the affiliate transaction re23 quirements of subsection (b), including but 

24 not limited to exemptions that would facili25 tate extensions of credit to unaffiliated 


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1 persons for the personal, household, or 

2 business purposes of such unaffiliated per3 sons, unless the Board makes a finding 

4 that such exemption— 

5 ‘‘(I) is not consistent with the 

6 purposes of section 23A and section 

7 23B of the Federal Reserve Act; 

8 ‘‘(II) would threaten the safety 

9 and soundness of the section 6 hold10 ing company, or any insured deposi11 tory institution or other subsidiary of 

12 the section 6 holding company; 

13 ‘‘(III) would increase systemic 

14 risk or threaten the stability of the 

15 overall financial system; 

16 ‘‘(IV) would not, as applied to 

17 the activities that are the subject of 

18 the rule, order or request result in 

19 substantially lessening competition, or 

20 to tend to create a monopoly, or which 

21 in any other manner would be in re22 straint of trade, unless the Board 

23 finds that the anticompetitive effects 

24 are outweighed in the public interest 

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1 tion in meeting the convenience and 

2 needs of the community to be served; 

3 or 

4 ‘‘(V) would permit an unfair, de5 ceptive, abusive, or unsafe-and-un6 sound act or practice. 

7 ‘‘(B) PARENT COMPANY REPORTS.—The 

8 Board may, from time to time, require reports 

9 under oath from a company that controls a sec10 tion 6 holding company, and appropriate offi11 cers or directors of such company, solely for 

12 purposes of ensuring compliance with the provi13 sions of this section (including assessing the 

14 company’s ability to serve as a source of finan15 cial strength pursuant to subsection (g)) and 

16 enforcing such compliance. 

17 ‘‘(C) LIMITED PARENT COMPANY EN18 FORCEMENT.— 

19 ‘‘(i) IN GENERAL.—In addition to any 

20 other power of the Board, the Board may 

21 enforce compliance with the provisions of 

22 this subsection which are applicable to any 

23 company described in paragraph (1), and 

24 any bank controlled by such company, 

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1 surance Act and such company or bank 

2 shall be subject to such section (for such 

3 purposes) in the same manner and to the 

4 same extent as if such company were a 

5 bank holding company. 

6 ‘‘(ii) APPLICATION OF OTHER ACT.— 

7 Any violation of this subsection by any 

8 company that controls a section 6 holding 

9 company or any bank controlled by such a 

10 company, may also be treated as a viola11 tion of the Federal Deposit Insurance Act 

12 for purposes of clause (i). 

13 ‘‘(iii) NO EFFECT ON OTHER AUTHOR14 ITY.—No provision of this subparagraph 

15 shall be construed as limiting any author16 ity of the Board or any other Federal 

17 agency under any other provision of law. 

18 ‘‘(b) RESTRICTIONS ON AFFILIATE TRANS19 ACTIONS.— 

20 ‘‘(1) SECTION 23A AND 23B APPLICABILITY.— 

21 ‘‘(A) IN GENERAL.—Transactions between 

22 a section 6 holding company (or any nonbank 

23 subsidiary thereof) and any affiliate not con24 trolled by the section 6 holding company shall 

25 be subject to the restrictions and limitations 


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1 contained in section 23A and section 23B of the 

2 Federal Reserve Act as if the section 6 holding 

3 company were a member bank, provided, that a 

4 transaction that otherwise would be a covered 

5 transaction shall not be a covered transaction if 

6 the transaction is in connection with the bona 

7 fide acquisition or lease by an unaffiliated per8 son of assets, goods or services but shall be sub9 ject to review under section 23A(f)(1) of such 

10 Act. 

11 ‘‘(B) COVERED TRANSACTIONS.—A deposi12 tory institution controlled by a section 6 holding 

13 company may not engage in a covered trans14 action (as defined in section 23A(b)(7) of the 

15 Federal Reserve Act) with any affiliate that is 

16 not the section 6 holding company or a sub17 sidiary of the section 6 holding company; pro18 vided that, for purposes of the prohibition, a 

19 transaction that otherwise would be a covered 

20 transaction shall not be a covered transaction if 

21 the transaction is in connection with the bona 

22 fide acquisition or lease by an unaffiliated per23 son of assets, goods or services, but shall be 

24 subject to review under section 23A(f)(1) of the 

25 Federal Reserve Act. 


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1 ‘‘(2) RULE OF CONSTRUCTION.—No provision 

2 of this subsection shall be construed as exempting 

3 any subsidiary insured depository institution of a 

4 section 6 holding company from compliance with sec5 tion 23A or 23B of the Federal Reserve Act with re6 spect to each affiliate of such institution (as defined 

7 in section 23A or 23B of the Federal Reserve Act), 

8 including any affiliate that is the section 6 holding 

9 company or subsidiary of the section 6 holding com10 pany. 

11 ‘‘(c) TYING PROVISIONS.—A company that directly or 

12 indirectly controls a section 6 holding company shall be— 

13 ‘‘(1) treated as a bank holding company for 

14 purposes of section 106 of the Bank Holding Com15 pany Act Amendments of 1970 and section 22(h) of 

16 the Federal Reserve Act and any regulation pre17 scribed under any such section; and 

18 ‘‘(2) subject to the restrictions of section 106 of 

19 the Bank Holding Company Act Amendments of 

20 1970, in connection with any transaction involving 

21 the products or services of such company or affiliate 

22 and those of a bank affiliate, as if such company or 

23 affiliate were a bank and such bank were a sub24 sidiary of a bank holding company. 


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1 ‘‘(d) FINANCIAL HOLDING COMPANY REQUIRE2 MENTS.—A section 6 holding company shall be subject 

3 to— 

4 ‘‘(1) the conditions for engaging in expanded fi5 nancial activities in section 4(l); and 

6 ‘‘(2) the provisions applicable to financial hold7 ing companies that fail to meet certain requirements 

8 in section 4(m). 

9 ‘‘(e) INDEPENDENCE OF SECTION 6 HOLDING COM10 PANY.— 

11 ‘‘(1) No less than 25 percent of the members 

12 of the board of directors of a section 6 holding com13 pany, and each subsidiary of a section 6 holding 

14 company, shall be independent of the parent com15 pany of the section 6 holding company and any sub16 sidiary of such parent company. For purposes of this 

17 subsection, a director shall be independent of the 

18 parent company if such person is not currently serv19 ing, and has not within the previous two-year period 

20 served, as a director, officer, or employee of any af21 filiate of the section 6 holding company that is not 

22 a subsidiary of the section 6 holding company. 

23 ‘‘(2) No executive officer of a section 6 holding 

24 company or any subsidiary of a section 6 holding 

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1 ployee of an affiliate of the section 6 holding com2 pany that is not a subsidiary of the section 6 holding 

3 company. 

4 ‘‘(3) The Board shall issue regulations that re5 quire effective legal and operational separation of 

6 the functions of a section 6 holding company from 

7 its affiliates that are not subsidiaries of such section 

8 6 holding company, provided, however that such 

9 rules shall not require operational separation of in10 ternal functions including, but not limited to, human 

11 resources management, employee benefit plans, and 

12 information technology. 

13 ‘‘(f) SOURCE OF STRENGTH.—A company that di14 rectly or indirectly controls a section 6 holding company 

15 shall serve as a source of financial strength to its sub16 sidiary section 6 holding company.’’. 

17 (d) CONFORMING CHANGES.—Section 4(h) of the 

18 Bank Holding Company Act of 1956 (12 U.S.C. 1843(h)), 

19 is amended— 

20 (1) in paragraph (1), by striking ‘‘subpara21 graph (D), (F), (G), or (H)’’ and inserting ‘‘sub22 paragraph (C) or (D)’’; and 

23 (2) in paragraph (2), by striking ‘‘subpara24 graph (D), (F), (G), or (H)’’ and inserting ‘‘sub25 paragraph (C) or (D)’’. 


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1 SEC. 1302. REGISTRATION OF CERTAIN COMPANIES AS 

2 BANK HOLDING COMPANIES. 

3 Section 5 of the Bank Holding Company Act of 1956 

4 (12 U.S.C. 1844) is amended by inserting at the end the 

5 following new subsection: 

6 ‘‘(h) CONVERSION TO BANK HOLDING COMPANY BY

7 OPERATION OF LAW.— 

8 ‘‘(1) CONVERSION BY OPERATION OF LAW.—A 

9 company that, on the day before the date of enact10 ment of the Financial Stability Improvement Act of 

11 2009, was not a bank holding company but which, 

12 by reason of sections 4(p) and 6 becomes a bank 

13 holding company by operation of law, shall register 

14 as a bank holding company with the Board in ac15 cordance with section 5(a) within 90 days of the 

16 date of enactment of that Act. 

17 ‘‘(2) COMPLIANCE WITH BANK HOLDING COM18 PANY ACT.—With respect to any company described 

19 in paragraph (1), the Board may grant temporary 

20 exemptions or provide other appropriate temporary 

21 relief to permit such company to implement meas22 ures necessary to comply with the requirements 

23 under the Bank Holding Company Act.’’. 


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1 SEC. 1303. REPORTS AND EXAMINATIONS OF BANK HOLD2 ING COMPANIES; REGULATION OF FUNCTION3 ALLY REGULATED SUBSIDIARIES. 

4 (a) REPORTS OF BANK HOLDING COMPANIES.—Sec5 tions 5(c)(1)(A) and (B) of the Bank Holding Company 

6 Act of 1956 (12 U.S.C. 1844(c)(1)(A) and (B)) are 

7 amended to read as follows: 

8 ‘‘(A) IN GENERAL.—The Board, from time 

9 to time, may require a bank holding company 

10 and any subsidiary of such company to submit 

11 reports under oath that the Board determines 

12 are necessary or appropriate for the Board to 

13 carry out the purposes of this chapter, prevent 

14 evasions thereof, and monitor compliance by the 

15 company or subsidiary with the applicable pro16 visions of law. 

17 ‘‘(B) USE OF EXISTING REPORTS.— 

18 ‘‘(i) IN GENERAL.—The Board shall, 

19 to the fullest extent possible, use: 

20 ‘‘(I) reports that a bank holding 

21 company or any subsidiary of such 

22 company has been required to provide 

23 to other Federal or State regulatory 

24 agencies; 


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1 ‘‘(II) information that is other2 wise required to be reported publicly; 

3 and 

4 ‘‘(III) externally audited financial 

5 statements. 

6 ‘‘(ii) AVAILABILITY.—A bank holding 

7 company or a subsidiary of such company 

8 shall promptly provide to the Board, at the 

9 request of the Board, a report referred to 

10 in clause (i)(I).’’. 

11 (b) FUNCTIONALLY REGULATED SUBSIDIARY.—Sec12 tion 5(c)(1) of the Bank Holding Company Act of 1956 

13 (12 U.S.C. 1844(c)(1)) is amended by inserting at the end 

14 the following new subparagraph: 

15 ‘‘(C) DEFINITION.—For purposes of this 

16 subsection and section 6, the term ‘functionally 

17 regulated subsidiary’ means any subsidiary 

18 (other than a depository institution) of a bank 

19 holding company that is— 

20 ‘‘(i) a broker or dealer registered with 

21 the Securities and Exchange Commission 

22 under the Securities Exchange Act of 

23 1934, for which the Securities and Ex24 change Commission is the Federal regu25 latory agency; 


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1 ‘‘(ii) an investment company reg2 istered with the Securities and Exchange 

3 Commission under the Investment Com4 pany Act of 1940, for which the Securities 

5 and Exchange Commission is the Federal 

6 regulatory agency; 

7 ‘‘(iii) an investment adviser registered 

8 with the Securities and Exchange Commis9 sion under the Investment Advisers Act of 

10 1940, for which the Securities and Ex11 change Commission is the Federal regu12 latory agency, with respect to the invest13 ment advisory activities of such investment 

14 adviser and activities incidental to such in15 vestment advisory activities; and 

16 ‘‘(iv) a futures commission merchant, 

17 commodity trading advisor, and commodity 

18 pool operator registered with the Com19 modity Futures Trading Commission 

20 under the Commodity Exchange Act, for 

21 which the Commodity Futures Trading 

22 Commission is the Federal regulatory 

23 agency, with respect to the commodities 

24 activities of such entity and activities inci25 dental to such commodities activities.’’. 


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1 (c) EXAMINATIONS OF BANK HOLDING COMPA2 NIES.—Sections 5(c)(2)(A) and (B) of the Bank Holding 

3 Company Act of 1956 (12 U.S.C. 1844(c)(2)(A) and (B)) 

4 are amended to read as follows: 

5 ‘‘(A) IN GENERAL.—The Board may make 

6 examinations of a bank holding company and 

7 any subsidiary of such a company to carry out 

8 the purposes of this chapter, prevent evasions 

9 thereof, and monitor compliance by the com10 pany or subsidiary with applicable provisions of 

11 law. 

12 ‘‘(B) FUNCTIONALLY REGULATED AND DE13 POSITORY INSTITUTION SUBSIDIARIES.—The 

14 Board shall, to the fullest extent possible, use 

15 reports of examination of functionally regulated 

16 subsidiaries and subsidiary depository institu17 tions made by other Federal or State regulatory 

18 authorities.’’. 

19 (d) REGULATION OF FINANCIAL HOLDING COMPA20 NIES.—Section 5(c)(2) of the Bank Holding Company Act 

21 of 1956 (12 U.S.C. 1844(c)) is amended by striking sub22 paragraphs (C), (D), and (E). 

23 (e) AUTHORITY TO REGULATE FUNCTIONALLY REG24 ULATED SUBSIDIARIES OF BANK HOLDING COMPA25 NIES.—The Bank Holding Company Act of 1956 (12 


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1 U.S.C. 1841, et seq.) is amended by striking section 10A 

2 (12 U.S.C. 1848a). 

3 SEC. 1304. REQUIREMENTS FOR FINANCIAL HOLDING COM4 PANIES TO REMAIN WELL CAPITALIZED AND 

5 WELL MANAGED. 

6 Section 4(l)(1) of the Bank Holding Company Act of 

7 1956 (12 U.S.C. 1843(l)(1)) is amended— 

8 (1) in subparagraph (B), by striking ‘‘and’’; 

9 (2) by redesignating subparagraph (C) as sub10 paragraph (D); 

11 (3) by inserting after subparagraph (B) the fol12 lowing new subparagraph: 

13 ‘‘(C) the bank holding company is well 

14 capitalized and well managed; and’’; and 

15 (4) in subparagraph (D) (as so redesignated) 

16 by amending clause (ii) to read as follows: 

17 ‘‘(ii) a certification that the company 

18 meets the requirements of subparagraphs 

19 (A) through (C).’’. 

20 SEC. 1305. STANDARDS FOR INTERSTATE ACQUISITIONS. 

21 (a) BANK HOLDING COMPANY ACT OF 1956 AMEND22 MENT.—Section 3(d)(1)(A) of the Bank Holding Company 

23 Act of 1956 (12 U.S.C. 1842(d)(1)(A)) is amended— 

24 (1) by striking ‘‘adequately capitalized’’ and in25 serting ‘‘well capitalized’’; and 


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1 (2) by striking ‘‘adequately managed’’ and in2 serting ‘‘well managed’’. 

3 (b) FEDERAL DEPOSIT INSURANCE ACT AMEND4 MENT.—Section 44(b)(4)(B) of the Federal Deposit In5 surance Act (12 U.S.C. 1831u(b)(4)(B)) is amended to 

6 read as follows: 

7 ‘‘(B) the responsible agency determines 

8 that the resulting bank will be well capitalized 

9 and well managed upon the consummation of 

10 the transaction.’’. 

11 SEC. 1306. ENHANCING EXISTING RESTRICTIONS ON BANK 

12 TRANSACTIONS WITH AFFILIATES. 

13 (a) Section 23A of the Federal Reserve Act (12 

14 U.S.C. 371c) is amended— 

15 (1) in subsection (b)(1), by striking subpara16 graph (D) and inserting the following new subpara17 graph: 

18 ‘‘(D) any investment fund with respect to 

19 which a member bank or affiliate thereof is an 

20 investment adviser; and’’ 

21 (2) in subsection (b)(7)(A), by inserting ‘‘(in22 cluding a purchase of assets subject to an agreement 

23 to repurchase)’’ after ‘‘affiliate’’; 


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1 (3) in subsection (b)(7)(C), by striking ‘‘, in2 cluding assets subject to an agreement to repur3 chase,’’; 

4 (4) in subsection (b)(7)(D)— 

5 (A) by inserting ‘‘or other debt obliga6 tions’’ after ‘‘acceptance of securities’’, and 

7 (B) by striking ‘‘or’’ after the semicolon; 

8 (5) in subsection (b)(7), by inserting at the end 

9 the following new subparagraphs: 

10 ‘‘(F) any securities borrowing and lending 

11 transactions with an affiliate to the extent that 

12 the transactions create credit exposure of the 

13 member bank to the affiliate; or 

14 ‘‘(G) current and potential future credit 

15 exposure to the affiliate on derivative trans16 actions with the affiliate;’’; 

17 (6) in subsection (c)(1), by striking ‘‘at the 

18 time of the transaction,’’ and inserting ‘‘at all 

19 times’’; 

20 (7) in subsection (c)— 

21 (A) by striking paragraph (2); 

22 (B) by redesignating paragraphs (3), (4), 

23 and (5) as paragraphs (2), (3), and (4), respec24 tively; 


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1 (8) in subsection (c)(3) (as so redesignated by 

2 paragraph (7)), by inserting ‘‘or other debt obliga3 tions’’ after ‘‘securities’’; 

4 (9) in subsection (f)(2), by inserting at the end 

5 the following: ‘‘The Board may not, by regulation or 

6 order, grant an exemption under this section unless 

7 the Board obtains the concurrence of the Chairman 

8 of the Federal Deposit Insurance Corporation.’’; and 

9 (10) in subsection (f)— 

10 (A) by redesignating paragraph (3) as 

11 paragraph (4); 

12 (B) and inserting after paragraph (2) the 

13 following new paragraph: 

14 ‘‘(3) CONCURRENCE OF THE COMPTROLLER OF

15 THE CURRENCY.—With respect to a transaction or 

16 relationship involving a national bank or Federal 

17 savings association, the Board may not grant an ex18 emption under this section unless the Board obtains 

19 the concurrence of the Comptroller of the Currency 

20 (in addition to obtaining the concurrence of the 

21 Chairman of the Federal Deposit Insurance Cor22 poration under paragraph (2)).’’. 

23 (b) TECHNICAL AND CONFORMING AMENDMENT.— 

24 Section 23B(e) of the Federal Reserve Act (12 U.S.C. 


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1 371–1(e)), is amended by inserting at the end the fol2 lowing new paragraph: 

3 ‘‘(3) The Board may not grant an exemption or 

4 exclusion under this section unless the Board ob5 tains the concurrence of the Chairman of the Fed6 eral Deposit Insurance Corporation.’’. 

7 SEC. 1307. ELIMINATING EXCEPTIONS FOR TRANSACTIONS 

8 WITH FINANCIAL SUBSIDIARIES. 

9 Section 23A(e) of the Federal Reserve Act (12 U.S.C. 

10 371c(e)) is amended— 

11 (1) by striking paragraph (3); and 

12 (2) by redesignating paragraph (4) as para13 graph (3). 

14 SEC. 1308. LENDING LIMITS APPLICABLE TO CREDIT EXPO15 SURE ON DERIVATIVE TRANSACTIONS, RE16 PURCHASE AGREEMENTS, REVERSE REPUR17 CHASE AGREEMENTS, AND SECURITIES 

18 LENDING AND BORROWING TRANSACTIONS. 

19 Section 5200 of the Revised Statutes of the United 

20 States (12 U.S.C. 84) is amended— 

21 (1) in subsection (b)(1), by striking ‘‘shall in22 clude all direct or indirect’’ and all that follows 

23 through ‘‘commitment;’’ and inserting: ‘‘shall in24 clude— 


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1 ‘‘(A) all direct or indirect advances of 

2 funds to a person made on the basis of any ob3 ligation of that person to repay the funds or re4 payable from specific property pledged by or on 

5 behalf of the person; 

6 ‘‘(B) to the extent specified by the Comp7 troller of the Currency, such term shall also in8 clude any liability of a national banking associa9 tion to advance funds to or on behalf of a per10 son pursuant to a contractual commitment; and 

11 ‘‘(C) credit exposure to a person arising 

12 from a derivative transaction, repurchase agree13 ment, reverse repurchase agreement, securities 

14 lending transaction, or securities borrowing 

15 transaction between the national banking asso16 ciation and the person;’’; 

17 (2) in subsection (b)(2) by striking the period 

18 at the end and inserting ‘‘; and’’; 

19 (3) in subsection (b), by inserting after para20 graph (2) the following new paragraph: 

21 ‘‘(3) the term ‘derivative transaction’ means 

22 any transaction that is a contract, agreement, swap, 

23 warrant, note, or option that is based, in whole or 

24 in part, on the value of, any interest in, or any 

25 quantitative measure or the occurrence of any event 


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1 relating to, one or more commodities, securities, cur2 rencies, interest or other rates, indices, or other as3 sets.’’; and 

4 (4) in subsection (d), by inserting after para5 graph (2) the following new paragraph: 

6 ‘‘(3) The Comptroller of the Currency shall pre7 scribe rules to administer and carry out the pur8 poses of this section with respect to credit exposures 

9 arising from any derivative transaction, repurchase 

10 agreement, reverse repurchase agreement, securities 

11 lending transaction, or securities borrowing trans12 action. Rules required to be prescribed under this 

13 paragraph (3) shall take effect, in final form, not 

14 later than 180 days after the date of enactment of 

15 the Financial Stability Improvement Act of 2009.’’. 

16 SEC. 1309. RESTRICTION ON CONVERSIONS OF TROUBLED 

17 BANKS AND THRIFTS. 

18 (a) CONVERSION OF A NATIONAL BANKING ASSOCIA19 TION TO A STATE BANK.—The National Bank Consolida20 tion and Merger Act (12 U.S.C. 215 et seq.) is amended 

21 by redesignating section 7 as section 8 and by inserting 

22 after section 6 the following: 

23 ‘‘SEC. 7. PROHIBITION ON CERTAIN CONVERSIONS. 

24 ‘‘A national bank may not convert to a State bank 

25 during any period of time in which it is subject to a cease 


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1 and desist order, memorandum of understanding, or other 

2 enforcement action entered into with or issued by the 

3 Comptroller of the Currency.’’ 

4 (b) CONVERSION OF A STATE BANK TO A NATIONAL

5 BANK.—Section 5154 of the Revised Statutes (12 U.S.C. 

6 35) is amended by adding at the end the following new 

7 sentence: ‘‘The Comptroller of the Currency shall not ap8 prove the conversion of a State bank to a national bank 

9 during any period of time in which the State bank is sub10 ject to a cease and desist order, memorandum of under11 standing, or other enforcement action entered into or 

12 issued by a State bank supervisor, the Federal Deposit 

13 Insurance Corporation, the Board of Governors of the 

14 Federal Reserve System or a Federal Reserve Bank.’’. 

15 (c) CONVERSION BETWEEN A FEDERAL SAVINGS AS16 SOCIATION AND A STATE SAVINGS ASSOCIATION.—Section 

17 5(i) of the Home Owners’ Loan Act (12 U.S.C. 1464(i)) 

18 is amended by adding at the end the following new para19 graph: 

20 ‘‘(6) PROHIBITION ON CERTAIN CONVER21 SIONS.—A Federal savings association may not con22 vert to a State savings association, and a State sav23 ings association may not convert to a Federal sav24 ings association, during any period of time in which 

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1 sist order, memorandum of understanding, or other 

2 enforcement action entered into with or issued by 

3 the Director of the Office of Thrift Supervision or 

4 a State savings association supervisor.’’. 

5 SEC. 1310. LENDING LIMITS TO INSIDERS. 

6 Section 22(h)(9)(D)(ii) of the Federal Reserve Act 

7 (12 U.S.C. 375b(h)(9)(D)(ii)) is amended by inserting ‘‘, 

8 except that a member bank shall be deemed to have ex9 tended credit to a person if the member bank has credit 

10 exposure to the person arising from a derivative trans11 action, repurchase agreement, reverse repurchase agree12 ment, securities lending transaction, or securities bor13 rowing transaction between the member bank and the per14 son’’ before the period at the end. 

15 SEC. 1311. LIMITATIONS ON PURCHASES OF ASSETS FROM 

16 INSIDERS. 

17 (a) Section 18 of the Federal Deposit Insurance Act 

18 (12 U.S.C. 1828) is amended by inserting after subsection 

19 (y) (as added by section 1408) the following new sub20 section: 

21 ‘‘(z) GENERAL PROHIBITION.—An insured depository 

22 institution shall not purchase an asset from, or sell an 

23 asset to, one of its executive officers, directors, or principal 

24 shareholders or any related interest of such person (as 

25 such terms are defined in section 22(h) of Federal Reserve 


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1 Act) unless the transaction is on market terms and, if the 

2 transaction represents more than 10 percent of the insti3 tution’s capital stock and surplus, the transaction has 

4 been approved in advance by a majority of the institution’s 

5 board of directors (with interested directors of the insured 

6 depository institution not participating in the approval of 

7 the transaction).’’. 

8 (b) FDIC RULEMAKING AUTHORITY.—The Federal 

9 Deposit Insurance Corporation may prescribe rules to im10 plement the requirements of subsection (a) and the 

11 amendments made by subsection (a). 

12 (c) AMENDMENTS TO THE FEDERAL RESERVE

13 ACT.—Section 22 of the Federal Reserve Act (12 U.S.C. 

14 375) is amended by striking subsection (d). 

15 SEC. 1312. RULES REGARDING CAPITAL LEVELS OF BANK 

16 HOLDING COMPANIES. 

17 Section 5(b) of the Bank Holding Company Act of 

18 1956 (12 U.S.C. 1844(b)) is amended by inserting ‘‘, in19 cluding regulations relating to the capital levels of bank 

20 holding companies’’ before the period at the end. 

21 SEC. 1313. ENHANCEMENTS TO FACTORS TO BE CONSID22 ERED IN CERTAIN ACQUISITIONS. 

23 (a) BANK ACQUISITIONS.—Section 3(c) of the Bank 

24 Holding Company Act of 1956 (12 U.S.C. 1842(c)) is 


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1 amended by inserting at the end the following new para2 graph: 

3 ‘‘(7) FINANCIAL STABILITY.— 

4 ‘‘(A) IN GENERAL.—In every case, the 

5 Board shall take into consideration the extent 

6 to which the proposed acquisition, merger, or 

7 consolidation may pose risk to the stability of 

8 the United States financial system or the econ9 omy of the United States , including the result10 ing scope, nature, size, scale, concentration, or 

11 interconnectedness of activities that are finan12 cial in nature. 

13 ‘‘(B) STANDARDS FOR APPROVAL.—The 

14 Board may in its sole discretion disapprove any 

15 acquisition, merger, or consolidation of, or by, 

16 a financial company subject to stricter pruden17 tial standards if the Board determines that the 

18 resulting concentration of liabilities on a con19 solidated basis is likely to pose a greater threat 

20 to financial stability during times of severe eco21 nomic distress.’’. 

22 (b) NONBANK ACQUISITIONS.— 

23 (1) Section 4(j)(2)(A) of the Bank Holding 

24 Company is amended by— 


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1 (A) striking ‘‘or’’ before ‘‘unsound banking 

2 practices’’; and 

3 (B) inserting before the period at the end 

4 the following: ‘‘, or risk to the stability of the 

5 United States financial system or the economy 

6 of the United States’’. 

7 (2) Section 4(k)(6) of the Bank Holding Com8 pany Act of 1956 is amended by striking subpara9 graph (B) and inserting the following new subpara10 graph: 

11 ‘‘(B) A financial holding company may 

12 commence any activity or acquire any company, 

13 pursuant to paragraph (4) or any regulation 

14 prescribed or order issued under paragraph (5), 

15 without prior approval of the Board, except— 

16 ‘‘(i) for a transaction in which the 

17 total assets to be acquired by the financial 

18 holding company exceed $25 billion; and 

19 ‘‘(ii) as provided in subsection (j) with 

20 regard to the acquisition of a savings asso21 ciation.’’. 

22 (c) BANK MERGER ACT TRANSACTIONS.—Section 

23 8(c)(5) of the Federal Deposit Insurance Act (12 U.S.C. 

24 1828(c)(5)) is amended by— 


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1 (1) by striking ‘‘and’’ before ‘‘the convenience 

2 and needs of the community to be served’’; and 

3 (2) by inserting before the period at the end the 

4 following: ‘‘, and the risk to the stability of the 

5 United States financial system and the economy of 

6 the United States based on, among other things, the 

7 scope, nature, size, scale, concentration, or inter8 connectedness of activities that are financial in na9 ture’’. 

10 SEC. 1314. ELIMINATION OF ELECTIVE INVESTMENT BANK 

11 HOLDING COMPANY FRAMEWORK. 

12 Section 17 of the Securities Exchange Act of 1934 

13 (15 U.S.C. 78q) is amended— 

14 (1) by striking subsection (i); and 

15 (2) by redesignating subsections (j) and (k) as 

16 subsections (i) and (j), respectively. 

17 SEC. 1315. EXAMINATION FEES FOR LARGE BANK HOLDING 

18 COMPANIES. 

19 The Bank Holding Company Act of 1956 is amended 

20 by inserting after section 5 the following new section: 

21 ‘‘SEC. 5A. EXAMINATION FEES. 

22 ‘‘The Board of Governors of the Federal Reserve Sys23 tem or the Federal Reserve Banks shall assess fees on 

24 bank holding companies with total consolidated assets of 

25 $10 billion or more. Such fees shall be sufficient to defray 


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1 the cost of the examination of such bank holding compa2 nies.’’. 

3 Subtitle E—Improvements to the 

4 Federal Deposit Insurance Fund 

5 SEC. 1401. ACCOUNTING FOR ACTUAL RISK TO THE DE6 POSIT INSURANCE FUND. 

7 (a) Section 7(b)(1)(C) of the Federal Deposit Insur8 ance Act is amended to read as follows: 

9 ‘‘(C) ‘RISK-BASED ASSESSMENT SYSTEM’ 

10 DEFINED.—For purposes of this paragraph, the 

11 term ‘risk-based assessment system’ means a 

12 system for calculating a depository institution’s 

13 assessment based on— 

14 ‘‘(i) the probability that the Deposit 

15 Insurance Fund will incur a loss with re16 spect to the institution; 

17 ‘‘(ii) the likely amount of any such 

18 loss; 

19 ‘‘(iii) the risks to the Deposit Insur20 ance Fund attributable to such depository 

21 institution, including risks posed by its af22 filiates to the extent the Corporation deter23 mines appropriate, taking into account— 

24 ‘‘(I) the amount, different cat25 egories, and concentrations of assets 


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1 of the insured depository institution 

2 and its affiliates, including both on3 balance sheet and off-balance sheet 

4 assets; 

5 ‘‘(II) the amount, different cat6 egories, and concentrations of liabil7 ities, both insured and uninsured, con8 tingent and noncontingent, including 

9 both on-balance sheet and off-balance 

10 sheet liabilities, of the insured deposi11 tory institution and its affiliates; and 

12 ‘‘(III) any other factors the Cor13 poration determines are relevant to 

14 assessing the risks; and 

15 ‘‘(iv) the revenue needs of the Deposit 

16 Insurance Fund.’’. 

17 (b) Section 7(b)(2) of the Federal Deposit Insurance 

18 Act is amended by striking subparagraph (D) and by re19 designating subparagraph (E) as subparagraph (D). 

20 SEC. 1402. CREATING A RISK-FOCUSED ASSESSMENT BASE. 

21 Section 7(b)(2) of such Act, as amended, is further 

22 amended by amending subparagraph (C) to read as fol23 lows: 

24 ‘‘(C) ASSESSMENT.—The assessment of 

25 any insured depository institution imposed 


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1 under this subsection shall be an amount equal 

2 to the product of— 

3 ‘‘(i) an assessment rate established by 

4 the Corporation; and 

5 ‘‘(ii) the amount of the insured depos6 itory institution’s average total assets dur7 ing the assessment period minus the 

8 amount of the insured depository institu9 tion’s average tangible equity during the 

10 assessment period.’’. 

11 SEC. 1403. ELIMINATION OF PROCYCLICAL ASSESSMENTS. 

12 Section 7(e) of the Federal Deposit Insurance Act is 

13 amended— 

14 (1) in paragraph (2)— 

15 (A) by amending subparagraph (B) to read 

16 as follows: 

17 ‘‘(B) LIMITATION.—The Board of Direc18 tors may, in its sole discretion, suspend or limit 

19 the declaration of payment of dividends under 

20 subparagraph (A).’’; 

21 (B) by amending subparagraph (C) to read 

22 as follows: 

23 ‘‘(C) NOTICE AND OPPORTUNITY FOR COM24 MENT.—The Corporation shall prescribe, by 

25 regulation, after notice and opportunity for 


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1 comment, the method for the declaration, cal2 culation, distribution, and payment of dividends 

3 under this paragraph’’; and 

4 (C) by striking subparagraphs (D) through 

5 (G); and 

6 (2) in paragraph (4)(A) by striking ‘‘para7 graphs (2)(D) and’’ and inserting ‘‘paragraphs (2) 

8 and’’. 

9 SEC. 1404. ENHANCED ACCESS TO INFORMATION FOR DE10 POSIT INSURANCE PURPOSES. 

11 (a) Section 7(a)(2)(B) of the Federal Deposit Insur12 ance Act is amended by striking ‘‘, after agreement with 

13 the Comptroller of the Currency, the Board of Governors 

14 of the Federal Reserve ystem, and the Director of the Of15 fice of Thrift Supervision, as appropriate,’’. 

16 (b) Section 7(b)(1)(E) of the Federal Deposit Insur17 ance Act is amended— 

18 (1) in clause (i), by striking ‘‘such as’’ and in19 serting ‘‘including’’; and 

20 (2) by striking clause (iii). 

21 SEC. 1405. TRANSITION RESERVE RATIO REQUIREMENTS 

22 TO REFLECT NEW ASSESSMENT BASE. 

23 (a) Section 7(b)(3)(B) of the Federal Deposit Insur24 ance Act is amended to read as follows: 


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1 ‘‘(B) MINIMUM RESERVE RATIO.—The re2 serve ratio designated by the Board of Direc3 tors for any year may not be less than 1.15 per4 cent of estimated insured deposits, or the com5 parable percentage of the assessment base set 

6 forth in paragraph (2)(C).’’. 

7 (b) Section 3(y)(3) of the Federal Deposit Insurance 

8 Act is amended by inserting ‘‘, or such comparable per9 centage of the assessment base set forth in section 

10 7(b)(2)(C)’’ before the period. 

11 (c) For a period of not less than 5 years after the 

12 date of the enactment of this title, the Federal Deposit 

13 Insurance Corporation shall make available to the public 

14 the reserve ratio and the designated reserve ratio using 

15 both estimated insured deposits and the assessment base 

16 under section 7(b)(2)(C) of the Federal Deposit Insurance 

17 Act. 

18 Subtitle F—Improvements to the 

19 Asset-backed Securitization 

20 Process 

21 SEC. 1501. SHORT TITLE. 

22 This subtitle may be cited as the ‘‘Credit Risk Reten23 tion Act of 2009’’. 


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1 SEC. 1502. CREDIT RISK RETENTION. 

2 (a) AMENDMENT.—The Securities Act of 1933 (15 

3 U.S.C. 77a et seq.) is amended by inserting after section 

4 28 the following new section: 

5 ‘‘SEC. 29. CREDIT RISK RETENTION. 

6 ‘‘(a) IN GENERAL.— 

7 ‘‘(1) INTEREST IN LOANS MADE BY CREDI8 TORS.—Within 180 days of the date of the enact9 ment of this section, the appropriate agencies shall 

10 prescribe regulations to require any creditor that 

11 makes a loan to retain an economic interest in a ma12 terial portion of the credit risk of any such loan that 

13 the creditor transfers, sells, or conveys to a third 

14 party, including for the purpose of including such 

15 loan in a pool of loans backing an issuance of asset16 backed securities. 

17 ‘‘(2) INTEREST IN ASSETS BACKING ASSET18 BACKED SECURITIES.—The appropriate agencies 

19 shall prescribe regulations to require any securitizer 

20 of asset-backed securities that are backed by assets 

21 not described in paragraph (1) to retain an economic 

22 interest in a material portion of any such asset used 

23 to back an issuance of securities. 

24 ‘‘(b) ALTERNATIVE RISK RETENTION FOR CREDIT

25 SECURITIZERS.—The appropriate agencies may apply the 

26 risk retention requirements of this section to securitizers 


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1 of loans or particular types of loans in addition to or in 

2 substitution for any or all of the requirements that apply 

3 to creditors that make such loans or types of loans, if the 

4 agencies determine that applying the requirements to such 

5 securitizers would— 

6 ‘‘(1) be consistent with helping to ensure high 

7 quality underwriting standards for creditors, taking 

8 into account other applicable laws, regulations, and 

9 standards; and 

10 ‘‘(2) facilitate appropriate risk management 

11 practices by such creditors, improve access of con12 sumers to credit on reasonable terms, or otherwise 

13 serve the public interest. 

14 ‘‘(c) STANDARDS FOR REGULATION.—Regulations 

15 prescribed under subsections (a) and (b) shall— 

16 ‘‘(1) prohibit a creditor or securitizer from di17 rectly or indirectly hedging or otherwise transferring 

18 the credit risk such creditor or securitizer is required 

19 to retain under the regulations; 

20 ‘‘(2) require a creditor or securitizer to retain 

21 5 percent of the credit risk on any loan that is 

22 transferred, sold, or conveyed by such creditor or 

23 securitized by such securitizer except— 

24 ‘‘(A) an appropriate agency may specify 

25 that the percentage of risk may be less than 5 


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1 percent of the credit risk, or exempt such cred2 itor or securitizer from the risk retention re3 quirement, if— 

4 ‘‘(i) the credit underwriting by the 

5 creditor or the due diligence by the 

6 securitizer meets such standards as an ap7 propriate agency prescribes; and 

8 ‘‘(ii) the loan that is transferred, sold, 

9 or conveyed by such creditor or securitized 

10 by such securitizer meets terms, condi11 tions, and characteristics that are deter12 mined by an appropriate agency to reflect 

13 loans with reduced credit risk, such as 

14 loans that meet certain interest rate 

15 thresholds, loans that are fully amortizing, 

16 and loans that are included in a 

17 securitization in which a third-party pur18 chaser specifically negotiates for the pur19 chase of the first-loss position and provides 

20 due diligence on all individual loans in the 

21 pool prior to the issuance of the asset22 backed securities, and retains a first-loss 

23 position; and 

24 ‘‘(B) an appropriate agency may specify 

25 that the percentage of risk may be more than 


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1 5 percent of the credit risk if the underwriting 

2 by the creditor or due diligence by the 

3 securitizer is insufficient; 

4 ‘‘(3) specify that the credit risk retained must 

5 be no less at risk for loss than the average of the 

6 credit risk not so retained; and 

7 ‘‘(4) set the minimum duration of the required 

8 risk retention. 

9 ‘‘(d) EXEMPTIONS AND ADJUSTMENTS.— 

10 ‘‘(1) IN GENERAL.—The appropriate agencies 

11 shall have authority to provide exemptions or adjust12 ments to the requirements of this section, including 

13 exemptions or adjustments relating to the percent14 age of risk retention required to be held and the 

15 hedging prohibition. 

16 ‘‘(2) APPLICABLE STANDARDS.—Any exemp17 tions or adjustments provided under paragraph (1) 

18 shall— 

19 ‘‘(A) be consistent with the purpose of en20 suring high quality underwriting standards for 

21 creditors, taking into account other applicable 

22 laws, regulations, or standards; and 

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1 cess for consumers to credit on reasonable 

2 terms, or otherwise serve the public interest. 

3 ‘‘(e) APPROPRIATE AGENCY DEFINED.—For pur4 poses of this section, the term ‘appropriate agency’ means 

5 any of the following agencies with regard to the respective 

6 loans and asset-backed securities: 

7 ‘‘(1) BANKING AGENCIES.—The Federal bank8 ing agencies, the National Credit Union Administra9 tion Board, and the Commission, with respect to any 

10 loan or asset-backed security for which there is no 

11 appropriate agency under paragraph (2). 

12 ‘‘(2) OTHER AGENCIES.— 

13 ‘‘(A) With regard to any mortgage insured 

14 under title II of the National Housing Act, the 

15 Secretary of Housing and Urban Development. 

16 ‘‘(B) With regard to any loan meeting the 

17 conforming loan standards of the Federal Na18 tional Mortgage Corporation or the Federal 

19 Home Loan Mortgage Corporation or any 

20 asset-backed security issued by either such cor21 poration, the Federal Housing Finance Agency. 

22 ‘‘(C) With regard to any loan insured by 

23 the Rural Housing Service, the Rural Housing 

24 Service. 


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1 ‘‘(f) JOINT APPROPRIATE AGENCY REGULATIONS.— 

2 All regulations prescribed by the agencies identified in 

3 subsection (e)(1) shall be prescribed jointly by such agen4 cies. 

5 ‘‘(g) ENFORCEMENT.— 

6 ‘‘(1) Compliance with the requirements imposed 

7 under this section shall be enforced under— 

8 ‘‘(A) section 8 of the Federal Deposit In9 surance Act (12 U.S.C. 1818), in the case of— 

10 ‘‘(i) national banks, and Federal 

11 branches and Federal agencies of foreign 

12 banks, by the Office of the Comptroller of 

13 the Currency; 

14 ‘‘(ii) member banks of the Federal 

15 Reserve System (other than national 

16 banks), branches and agencies of foreign 

17 banks (other than Federal branches, Fed18 eral agencies, and insured State branches 

19 of foreign banks), commercial lending com20 panies owned or controlled by foreign 

21 banks, and organizations operating under 

22 section 25 or 25A of the Federal Reserve 

23 Act, bank holding companies, and subsidi24 aries of bank holding companies (other 


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1 than insured depository institutions), by 

2 the Board; and 

3 ‘‘(iii) banks insured by the Federal 

4 Deposit Insurance Corporation (other than 

5 members of the Federal Reserve System) 

6 and insured State branches of foreign 

7 banks, by the Board of Directors of the 

8 Federal Deposit Insurance Corporation; 

9 ‘‘(B) section 8 of the Federal Deposit In10 surance Act (12 U.S.C. 1818), by the Director 

11 of the Office of Thrift Supervision, in the case 

12 of a savings association the deposits of which 

13 are insured by the Federal Deposit Insurance 

14 Corporation and a savings and loan holding 

15 company and to any subsidiary (other than a 

16 bank or subsidiary of that bank); and 

17 ‘‘(C) the Federal Credit Union Act (12 

18 U.S.C. 1751 et seq.), by the National Credit 

19 Union Administration Board with respect to 

20 any Federal credit union. 

21 ‘‘(2) Except to the extent that enforcement of 

22 the requirements imposed under this section is spe23 cifically committed to some other Federal agency 

24 under paragraph (1), the Commission shall enforce 

25 such requirements. 


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1 ‘‘(3) The authority of the Commission under 

2 this section shall be in addition to its existing au3 thority to enforce the securities laws. 

4 ‘‘(h) EXCLUSIONS.—Notwithstanding any other pro5 vision of this section, the requirements of this section shall 

6 not apply to any loan— 

7 ‘‘(1) insured, guaranteed, or administered by 

8 the Secretary of Education, the Secretary of Agri9 culture, the Secretary of Veterans Affairs, or the 

10 Small Business Administration; or 

11 ‘‘(2) made, insured, guaranteed, or purchased 

12 by any person that is subject to the supervision of 

13 the Farm Credit Administration, including the Fed14 eral Agricultural Mortgage Corporation. 

15 ‘‘(i) DEFINITIONS.—For purposes of this section: 

16 ‘‘(1) The term ‘asset-backed security’ has the 

17 meaning given such term in section 229.1101(c) of 

18 title 17, Code of Federal Regulations, or any suc19 cessor thereto. 

20 ‘‘(2) The term ‘Federal banking agencies’ 

21 means the Board of Governors of the Federal Re22 serve System, the Office of the Comptroller of the 

23 Currency, the Office of Thrift Supervision, and the 

24 Federal Deposit Insurance Corporation. 


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1 ‘‘(3) The term ‘insured depository institution’ 

2 has the meaning given such term in section 3(c) of 

3 the Federal Deposit Insurance Act (12 U.S.C. 

4 1813(c)). 

5 ‘‘(4) The term ‘securitization vehicle’ means a 

6 trust, corporation, partnership, limited liability enti7 ty, special purpose entity, or other structure that— 

8 ‘‘(A) is the issuer, or is created by the 

9 issuer, of pass-through certificates, participa10 tion certificates, asset-backed securities, or 

11 other similar securities backed by a pool of as12 sets that includes loans; and 

13 ‘‘(B) holds such loans. 

14 ‘‘(5) The term ‘securitizer’ means the person 

15 that transfers, conveys, or assigns, or causes the 

16 transfer, conveyance, or assignment of, loans, includ17 ing through a special purpose vehicle, to any 

18 securitization vehicle, excluding any trustee that 

19 holds such loans for the benefit of the securitization 

20 vehicle.’’. 

21 (b) STUDY ON RISK RETENTION.— 

22 (1) STUDY.—The Board, in coordination and 

23 consultation with the Comptroller of the Currency, 

24 the Office of Thrift Supervision, the Federal Deposit 

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1 change Commission, shall conduct a study of the 

2 combined impact by each individual class of asset3 backed security of— 

4 (A) the new credit risk retention require5 ments contained in the amendment made by 

6 subsection (a); and 

7 (B) the Financial Accounting Statements 

8 166 and 167 issued by the Financial Account9 ing Standards Board. 

10 (2) REPORT.—Not later than 90 days after the 

11 date of enactment of this title, the Board shall sub12 mit to Congress a report on the study conducted 

13 under paragraph (1). Such report shall include stat14 utory and regulatory recommendations for elimi15 nating any negative impacts on the continued viabil16 ity of the asset-backed securitization markets and on 

17 the availability of credit for new lending identified 

18 by the study conducted under paragraph (1). 

19 SEC. 1503. PERIODIC AND OTHER REPORTING UNDER THE 

20 SECURITIES EXCHANGE ACT OF 1934 FOR 

21 ASSET-BACKED SECURITIES. 

22 Section 15(d) of Securities Exchange Act of 1934 (15 

23 U.S.C. 78o(d)) is amended— 

24 (1) by inserting ‘‘, other than securities of any 

25 class of asset-backed security (as defined in section 


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1 229.1101(c) of title 17, Code of Federal Regula2 tions, or any successor thereto),’’ after ‘‘securities of 

3 each class’’; 

4 (2) by inserting at the end the following: ‘‘The 

5 Commission may by rules and regulations provide 

6 for the suspension or termination of the duty to file 

7 under this subsection for any class of issuer of asset8 backed security upon such terms and conditions and 

9 for such period or periods as it deems necessary or 

10 appropriate in the public interest or for the protec11 tion of investors. The Commission may, for the pur12 poses of this subsection, classify issuers and pre13 scribe requirements appropriate for each class of 

14 issuer of asset-backed security.’’; and 

15 (3) by inserting after the fifth sentence the fol16 lowing: ‘‘The Commission shall adopt regulations 

17 under this subsection requiring each issuer of an 

18 asset-backed security to disclose, for each tranche or 

19 class of security, information regarding the assets 

20 backing that security. In adopting regulations under 

21 this subsection, the Commission shall set standards 

22 for the format of the data provided by issuers of an 

23 asset-backed security, which shall, to the extent fea24 sible, facilitate comparison of such data across secu25 rities in similar types of asset classes. The CommisVerDate Nov 24 2008 22:04 Dec 02, 2009 Jkt 089200 PO 00000 Frm 00270 Fmt 6652 Sfmt 6201 E:\BILLS\H4173.IH H4173

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1 sion shall require issuers of asset-backed securities 

2 at a minimum to disclose asset-level or loan-level 

3 data necessary for investors to independently per4 form due diligence. Asset-level or loan-level data 

5 shall include data with unique identifiers relating to 

6 loan brokers or originators, the nature and extent of 

7 the compensation of the broker or originator of the 

8 assets backing the security, and the amount of risk 

9 retention of the originator or the securitizer of such 

10 assets.’’. 

11 SEC. 1504. REPRESENTATIONS AND WARRANTIES IN ASSET12 BACKED OFFERINGS. 

13 The Commission shall prescribe regulations on the 

14 use of representations and warranties in the asset-backed 

15 securities market that— 

16 (1) require credit rating agencies to include in 

17 reports accompanying credit ratings a description of 

18 the representations, warranties, and enforcement 

19 mechanisms available to investors and how they dif20 fer from representations, warranties, and enforce21 ment mechanisms in similar issuances; and 

22 (2) require disclosure on fulfilled repurchase re23 quests across all trusts aggregated by originator, so 

24 that investors may identify asset originators with 

25 clear underwriting deficiencies. 


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1 SEC. 1505. EXEMPTED TRANSACTIONS UNDER THE SECURI2 TIES ACT OF 1933. 

3 (a) IN GENERAL.—Section 4 of the Securities Act of 

4 1933 (15 U.S.C. 77d) is amended— 

5 (1) by striking paragraph (5); and 

6 (2) by redesignating paragraph (6) as para7 graph (5). 

8 (b) CONFORMING AMENDMENT.—Section 

9 3(a)(4)(B)(vii)(I) of the Securities Exchange Act of 1934 

10 (15 U.S.C. 78c(a)(4)(B)(vii)(I)) is amended by striking 

11 ‘‘4(6)’’ and inserting ‘‘4(5)’’. 

12 SEC. 1506. STUDY ON THE MACROECONOMIC EFFECTS OF 

13 RISK RETENTION REQUIREMENTS. 

14 (a) STUDY REQUIRED.—The Chairman of the Finan15 cial Services Oversight Council shall carry out a study on 

16 the macroeconomic effects of the risk retention require17 ments under this subtitle, and the amendments made by 

18 this subtitle, with emphasis placed on potential beneficial 

19 effects with respect to stabilizing the real estate market. 

20 Such study shall include— 

21 (1) an analysis of the effects of risk retention 

22 on real estate asset price bubbles, including a retro23 spective estimate of what fraction of real estate 

24 losses may have been averted had such requirements 

25 been in force in recent years; 


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1 (2) an analysis of the feasibility of minimizing 

2 real estate price bubbles by proactively adjusting the 

3 percentage of risk retention that must be borne by 

4 creditors and securitizers of real estate debt, as a 

5 function of regional or national market conditions; 

6 (3) a comparable analysis for proactively ad7 justing mortgage origination requirements; 

8 (4) an assessment of whether such proactive ad9 justments should be made by an independent regu10 lator, or in a formulaic and transparent manner; 

11 (5) an assessment of whether such adjustments 

12 should take place independently or in concert with 

13 monetary policy; and 

14 (6) recommendations for implementation and 

15 enabling legislation. 

16 (b) REPORT.—Not later than the end of the 180-day 

17 period beginning on the date of the enactment of this title, 

18 the Chairman of the Financial Services Oversight Council 

19 shall issue a report to the Congress containing any find20 ings and determinations made in carrying out the study 

21 required under subsection (a). 


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1 Subtitle G—Enhanced Dissolution 

2 Authority 

3 SEC. 1601. SHORT TITLE. 

4 This subtitle may be cited as the ‘‘Dissolution Au5 thority for Large, Interconnected Financial Companies 

6 Act of 2009’’. 

7 SEC. 1602. DEFINITIONS. 

8 For purposes of this subtitle, the following definitions 

9 shall apply: 

10 (1) APPROPRIATE REGULATORY AGENCY.— 

11 (A) CORPORATION AND COMMISSION.—The 

12 term ‘‘appropriate regulatory agency’’ means— 

13 (i) the Corporation; 

14 (ii) the Commission, if the financial 

15 company, or an affiliate thereof, is a 

16 broker or dealer registered with the Com17 mission under section 15(b) of the Securi18 ties Exchange Act of 1934 (15 U.S.C. 

19 78o(b) (other than an insured depository 

20 institution)); and 

21 (iii) if the financial company or an af22 filiate of the financial company is an insur23 ance company (other than an insured de24 pository institution), the applicable State 


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1 insurance authority of the State in which 

2 the insurance company is domiciled. 

3 (B) RULES OF CONSTRUCTION.—More 

4 than 1 agency may be an appropriate regu5 latory agency with respect to any given finan6 cial company. In such instances, the Commis7 sion shall be the appropriate regulatory agency 

8 for purposes of section 1603 if the largest sub9 sidiary of the financial company is a broker or 

10 dealer as measured by total assets as of the end 

11 of the previous calendar quarter, the applicable 

12 State insurance authority of the State in which 

13 the insurance company is domiciled shall be the 

14 appropriate regulatory agency for purposes of 

15 section 1603 if the largest subsidiary of the fi16 nancial company is an insurance company as 

17 measured by total assets as of the end of the 

18 previous calendar quarter, and otherwise the 

19 Corporation shall be the appropriate regulatory 

20 agency for purposes of section 1603. 

21 (2) BRIDGE FINANCIAL COMPANY.—The term 

22 ‘‘bridge financial company’’ means a new financial 

23 company organized in accordance with section 

24 1609(h) by the Corporation. 


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1 (3) COMMISSION.—The term ‘‘Commission’’ 

2 means the Securities and Exchange Commission. 

3 (4) CORPORATION.—The term ‘‘Corporation’’ 

4 means the Federal Deposit Insurance Corporation. 

5 (5) COVERED FINANCIAL COMPANY.—The term 

6 ‘‘covered financial company’’ means a financial com7 pany for which a determination has been made pur8 suant to and in accordance with section 1603(b). 

9 (6) COVERED SUBSIDIARY.—The term ‘‘covered 

10 subsidiary’’ means a subsidiary covered in paragraph 

11 (9)(B)(v). 

12 (7) CUSTOMER PROPERTY.—The term ‘‘cus13 tomer property’’ has the meaning ascribed to it in 

14 the Securities Investor Protection Act of 1970. 

15 (8) FEDERAL RESERVE BOARD.—The term 

16 ‘‘Federal Reserve Board’’ means the Board of Gov17 ernors of the Federal Reserve System. 

18 (9) FINANCIAL COMPANY.—The term ‘‘financial 

19 company’’ means any company that— 

20 (A) is incorporated or organized under 

21 Federal law or the laws of any State; 

22 (B) is— 

23 (i) any bank holding company as de24 fined in section 2(a) of the Bank Holding 


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

2 1841(a)); 

3 (ii) any company that has been sub4 jected to stricter prudential regulation 

5 under section 1103; 

6 (iii) any insurance company; 

7 (iv) any company predominantly en8 gaged in activities that are financial in na9 ture or incidental thereto for purposes of 

10 section 4(k) of the Bank Holding Company 

11 Act of 1956 (12 U.S.C. 1843(k)) or that 

12 have been identified for stricter prudential 

13 standards under section 1103 of this title; 

14 or 

15 (v) any subsidiary of companies de16 scribed in clauses (i) through (iv) (other 

17 than an insured depository institution or 

18 any broker or dealer registered with the 

19 Commission under section 15(b) of the Se20 curities Exchange Act of 1934 (15 U.S.C. 

21 78o(b)) that is a member of the Securities 

22 Investor Protection Corporation). 

23 (10) FUND.—The term ‘‘Fund’’ means the Sys24 temic Dissolution Fund established in accordance 

25 with section 1609(n). 


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1 (11) INSURANCE COMPANY.—The term ‘‘insur2 ance company’’ includes any person engaged in the 

3 business of insurance to the extent of such activities. 

4 (12) SECRETARY.—The term ‘‘Secretary’’ shall 

5 mean the Secretary of the Treasury. 

6 (13) STATE.—The term ‘‘State’’ means any 

7 State, commonwealth, territory, or possession of the 

8 United States, the District of Columbia, the Com9 monwealth of Puerto Rico, the Commonwealth of the 

10 Northern Mariana Islands, American Samoa, Guam, 

11 and the United States Virgin Islands. 

12 (14) CERTAIN OTHER TERMS.—The terms ‘‘af13 filiate,’’ ‘‘company,’’ ‘‘control,’’ ‘‘deposit,’’ ‘‘deposi14 tory institution,’’ ‘‘foreign bank,’’ ‘‘insured deposi15 tory institution,’’ and ‘‘subsidiary’’ have the same 

16 meanings as in section 3 of the Federal Deposit In17 surance Act (12 U.S.C. 1813). 

18 SEC. 1603. SYSTEMIC RISK DETERMINATION. 

19 (a) WRITTEN RECOMMENDATION OF THE FEDERAL

20 RESERVE BOARD AND THE APPROPRIATE REGULATORY

21 AGENCY.— 

22 (1) VOTE REQUIRED.—At the request of the 

23 Secretary or the Chairman of the Federal Reserve 

24 Board or, in cases where an financial company has 

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1 ured by total assets as of the end of the previous 

2 calendar quarter, the Commission, the Federal Re3 serve Board and the appropriate regulatory agency 

4 shall; or on their own initiative, the Federal Reserve 

5 Board and the appropriate regulatory agency may; 

6 consider whether to make the written recommenda7 tion provided for in paragraph (2) with respect to a 

8 financial company, which recommendation shall be 

9 made upon a vote of not less than two-thirds of the 

10 members of the Federal Reserve Board then serving 

11 and two-thirds of the members of the board or of the 

12 commission then serving of the appropriate regu13 latory agency, as applicable. 

14 (2) RECOMMENDATION REQUIRED.—Any writ15 ten recommendations made by the Federal Reserve 

16 Board and the appropriate regulatory agency under 

17 paragraph (1) shall contain the following: 

18 (A) A description of the effect that the de19 fault of the financial company would have on 

20 economic conditions or financial stability in the 

21 United States. 

22 (B) A description of the effect that the de23 fault of the financial company would have on 

24 economic conditions or financial stability for 


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1 low-income, minority, or underserved commu2 nities. 

3 (C) A recommendation regarding the na4 ture and the extent of actions that the Board 

5 and the appropriate regulatory agency rec6 ommend be taken under section 1604 regarding 

7 the financial holding company subject to strict8 er standards. 

9 (b) DETERMINATION BY THE SECRETARY.—Notwith10 standing any other provision of Federal law or the law 

11 of any State, if, upon the written recommendation of the 

12 Federal Reserve Board and the board of directors or com13 mission of the appropriate regulatory agency as provided 

14 for in subsection (a)(1), the Secretary (in consultation 

15 with the President) determines that— 

16 (1) the financial company is in default or is in 

17 danger of default; 

18 (2) the failure of the financial company and its 

19 resolution under otherwise applicable Federal or 

20 State law would have serious adverse effects on fi21 nancial stability or economic conditions in the 

22 United States; and 

23 (3) any action under section 1604 would avoid 

24 or mitigate such adverse effects, taking into consid25 eration the effectiveness of the action in mitigating 


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1 potential adverse effects on the financial system or 

2 economic conditions, the cost to the general fund of 

3 the Treasury, and the potential to increase moral 

4 hazard on the part of creditors, counterparties, and 

5 shareholders in the financial company, 

6 then the Secretary must take action under section 

7 1604(a), the Corporation must act in accordance with sec8 tion 1604(b), and the Corporation may take 1 or more 

9 actions specified in section 1604(c) in accordance with the 

10 requirements of that subsection, except that, prior to the 

11 Secretary or Corporation taking any action under section 

12 1604, the Federal Reserve Board or the appropriate Fed13 eral regulatory agency shall take action to avoid or miti14 gate potential adverse effects on low-income, minority, or 

15 underserved communities affected by the failure of such 

16 financial company. 

17 (c) DOCUMENTATION AND REVIEW.— 

18 (1) IN GENERAL.—The Secretary shall— 

19 (A) document any determination under 

20 subsection (b); and, 

21 (B) retain the documentation for review 

22 under paragraph (2). 

23 (2) GAO REVIEW.—The Comptroller General of 

24 the United States shall review and report to the 


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1 Congress on any determination under subsection (b), 

2 including— 

3 (A) the basis for the determination; 

4 (B) the purpose for which any action was 

5 taken pursuant thereto; and 

6 (C) the likely effect of the determination 

7 and such action on the incentives and conduct 

8 of financial holding companies subject to strict9 er standards and their creditors, counterparties, 

10 and shareholders. 

11 (3) REPORT TO CONGRESS.—Within 48 hours 

12 after a determination is made under subsection (b), 

13 the Secretary shall provide written notice of the de14 termination to the Committee on Banking, Housing, 

15 and Urban Affairs of the Senate and the Committee 

16 on Financial Services of the House of Representa17 tives. The notice shall include a description of the 

18 basis for the determination. 

19 (d) DEFAULT OR IN DANGER OF DEFAULT.—For 

20 purposes of subsection (b), a financial holding company 

21 subject to stricter standards shall be considered to be in 

22 default or in danger of default if any of the following con23 ditions exist, as determined in accordance with that sub24 section: 


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1 (1) A case has been, or likely will promptly be, 

2 commenced with respect to the financial holding 

3 company subject to stricter standards under title 11, 

4 United States Code. 

5 (2) The financial holding company subject to 

6 stricter standards is critically undercapitalized, as 

7 such term has been or may be defined by the Fed8 eral Reserve Board. 

9 (3) The financial holding company subject to 

10 stricter standards has incurred, or is likely to incur, 

11 losses that will deplete all or substantially all of its 

12 capital, and there is no reasonable prospect for the 

13 company to avoid such depletion without assistance 

14 under section 1604. 

15 (4) The assets of the financial holding company 

16 subject to stricter standards are, or are likely to be, 

17 less than its obligations to creditors and others. 

18 (5) The financial holding company subject to 

19 stricter standards is, or is likely to be, unable to pay 

20 its obligations (other than those subject to a bona 

21 fide dispute) in the normal course of business. 

22 SEC. 1604. RESOLUTION; STABILIZATION. 

23 (a) APPOINTMENT OF RECEIVER.— 

24 (1) IN GENERAL.—Upon the Secretary making 

25 a determination in accordance with section 1603(b), 


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1 the Secretary shall appoint the Corporation as re2 ceiver for the covered financial company. 

3 (2) TIME LIMIT ON RECEIVERSHIP AUTHOR4 ITY.—Any appointment of the Corporation as re5 ceiver under paragraph (1) shall terminate on the 

6 date that is the end of the 1-year period beginning 

7 on the date such appointment is made. 

8 (b) RESOLUTION LIMITATIONS.— 

9 (1) IN GENERAL.—An insolvent financial com10 pany may be resolved under this subtitle only if the 

11 failure and resolution of such company under title 

12 11, United States Code, would be systemically desta13 bilizing, as determined by the appropriate Federal 

14 regulatory agencies and the Secretary of the Treas15 ury (in consultation with the President) in accord16 ance with section 1603(b). 

17 (2) LIQUIDATION.—A financial company that 

18 comes within coverage of this subtitle for resolution 

19 shall be placed in liquidation, and the associated liq20 uidation costs shall be paid from the company’s as21 sets and borne by the shareholders and unsecured 

22 creditors of such company. 

23 (3) ASSESSMENT FOR EXCESS LIQUIDATION

24 COSTS.—Any liquidation costs that exceed the 

25 amount of liquidated assets of the company shall be 


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1 paid through assessments on large financial compa2 nies. 

3 (c) CONSULTATION.—The Corporation, as receiver— 

4 (1) shall consult with the regulators of the cov5 ered financial company and its covered subsidiaries 

6 for purposes of ensuring an orderly resolution of the 

7 covered financial company; 

8 (2) may consult with, or under section 

9 1609(a)(1)(B)(v) or section 1609(a)(1)(K) acquire 

10 services of, any outside experts as appropriate to in11 form and aid the Corporation in the resolution proc12 ess; and 

13 (3) shall consult with the primary regulators of 

14 any subsidiaries of the covered financial company 

15 that are not covered subsidiaries as described in sec16 tion 1602(9)(B)(iv) and coordinate with such regu17 lators regarding the treatment of such solvent sub18 sidiaries and the separate resolution of any such in19 solvent subsidiaries under other governmental au20 thority, as appropriate. 

21 (d) EMERGENCY STABILIZATION AFTER APPOINT22 MENT OF RECEIVER.—Upon the Secretary appointing the 

23 Corporation as receiver under subsection (a), the Corpora24 tion may, in its corporate capacity and as an agency of 

25 the United States, with the approval of the Secretary and 


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1 subject to the conditions in subsections (f) through (g), 

2 take the following actions under such terms and conditions 

3 that the Corporation and the Secretary jointly deem ap4 propriate: 

5 (1) Making loans to, or purchasing any debt ob6 ligation of, the covered financial company or any 

7 covered subsidiary. 

8 (2) Purchasing assets of the covered financial 

9 company or any covered subsidiary directly or 

10 through an entity established by the Corporation for 

11 such purpose. 

12 (3) Assuming or guaranteeing the obligations of 

13 the covered financial company or any covered sub14 sidiary to one or more third parties. 

15 (4) Taking a lien on any or all assets of the 

16 covered financial company or any covered subsidiary, 

17 including a first priority lien on all unencumbered 

18 assets of the company or any covered subsidiary to 

19 secure repayment of any transactions conducted 

20 under this subsection. 

21 (5) Selling or transferring all, or any part 

22 thereof, of such acquired assets, liabilities, or obliga23 tions of the covered financial company or any cov24 ered subsidiary. 


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1 (e) TREATMENT OF CERTAIN INSURANCE SUBSIDI2 ARIES.— 

3 (1) IN GENERAL.—Notwithstanding subsection 

4 (a), if a covered financial company is an insurance 

5 company covered by a State law designed specifically 

6 to deal with the insolvency of an insurance company, 

7 resolution of such company, and any subsidiary of 

8 such company, will be conducted as provided under 

9 such State law. 

10 (2) EXCEPTION FOR COVERED SUBSIDIARIES.— 

11 The requirement of paragraph (1) shall not apply 

12 with respect to any covered subsidiary of such an in13 surance company. 

14 (3) BACKUP AUTHORITY.—Notwithstanding 

15 paragraph (1), with respect to a covered financial 

16 company described under paragraph (1), if, after the 

17 end of the 60-day period beginning on the date a de18 termination is made under section 1603(b) with re19 spect to such company, the appropriate regulatory 

20 agency has not filed the appropriate judicial action 

21 in the appropriate State court to place such com22 pany into resolution under the State’s laws and re23 quirements, the Corporation shall have the authority 

24 to stand in the place of the appropriate regulatory 

25 agency and file the appropriate judicial action in the 


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1 appropriate State court to place such company into 

2 resolution under the State’s laws and requirements. 

3 (f) MANDATORY TERMS AND CONDITIONS FOR ALL

4 STABILIZATION ACTIONS.—The Corporation as receiver is 

5 authorized to take the stabilization actions listed in sub6 section (d) only if— 

7 (1) the Secretary and the Corporation deter8 mine that such action is necessary for the purpose 

9 of financial stability and not for the purpose of pre10 serving the covered financial company; 

11 (2) the Corporation ensures that the share12 holders of a covered financial company do not re13 ceive payment until after all other claims are fully 

14 paid; 

15 (3) the Corporation ensures that any funds 

16 from taxpayers shall be repaid as part of the resolu17 tion process before payments are made to creditors; 

18 (4) the Corporation ensures that unsecured 

19 creditors bear losses; 

20 (5) the Corporation ensures that management 

21 responsible for the failed condition of the covered fi22 nancial company is removed (if such management 

23 has not already been removed at the time the Cor24 poration is appointed as receiver); and 


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1 (6) the Corporation ensures that the members 

2 of the board of directors (or body performing similar 

3 functions) responsible for the failed condition of the 

4 covered financial company are removed (if such 

5 members have not already been removed at the time 

6 the Corporation is appointed as receiver). 

7 (g) RECOUPMENT OF FUNDS EXPENDED FOR SYS8 TEMIC STABILIZATION PURPOSES.—Amounts expended 

9 from the Fund by the Corporation under this section shall 

10 be repaid in full to the Fund from the following sources: 

11 (1) RESOLUTION PROCESS.—Amounts attrib12 utable to the proceeds of the sale of, or income from, 

13 the assets of the covered financial company. 

14 (2) INDUSTRY ASSESSMENTS.—If the sources 

15 described in paragraph (1) are insufficient to repay 

16 the amount of the stabilization action in full, the dif17 ference shall be recouped through assessments on fi18 nancial companies in accordance with section 

19 1609(o). 

20 SEC. 1605. JUDICIAL REVIEW. 

21 If a receiver is appointed, the covered financial com22 pany may, not later than 30 days thereafter, bring an ac23 tion in the United States district court for the judicial dis24 trict in which the home office of such covered financial 

25 company is located, or in the United States District Court 


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1 for the District of Columbia, for an order requiring that 

2 the receiver be removed, and the court shall, upon the 

3 merits, dismiss such action or direct the receiver to be re4 moved. Review of such an action shall be limited to the 

5 appointment of a receiver under section 1604. 

6 SEC. 1606. DIRECTORS NOT LIABLE FOR ACQUIESCING IN 

7 APPOINTMENT OF RECEIVER. 

8 The members of the board of directors (or body per9 forming similar functions) of a covered financial company 

10 shall not be liable to the covered financial company’s 

11 shareholders or creditors for acquiescing in or consenting 

12 in good faith to— 

13 (1) the Secretary’s appointment of the Corpora14 tion as receiver for the covered financial company 

15 under section 1604; or 

16 (2) an acquisition, combination, or transfer of 

17 assets or liabilities under section 1609. 

18 SEC. 1607. TERMINATION AND EXCLUSION OF OTHER AC19 TIONS. 

20 The Corporation’s acting as receiver for a covered fi21 nancial company under this title shall immediately, and 

22 by operation of law, terminate any case commenced with 

23 respect to the covered financial company under title 11, 

24 United States Code, or any proceeding under any State 

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1 pany, and no such case or proceeding may be commenced 

2 with respect to the covered financial company at any time 

3 while the Corporation acts as receiver for the covered fi4 nancial company. 

5 SEC. 1608. RULEMAKING. 

6 The Corporation may prescribe such regulations as 

7 the Corporation considers necessary or appropriate to im8 plement the provisions of this title. 

9 SEC. 1609. POWERS AND DUTIES OF CORPORATION. 

10 (a) POWERS AND AUTHORITIES.— 

11 (1) GENERAL POWERS.— 

12 (A) SUCCESSOR TO COVERED FINANCIAL

13 COMPANY.—The Corporation shall, upon ap14 pointment as receiver for a covered financial 

15 company under section 1604, and by operation 

16 of law, succeed to— 

17 (i) all rights, titles, powers, and privi18 leges of the covered financial company, and 

19 of any stockholder, member, officer, or di20 rector of such institution with respect to 

21 the covered financial company and the as22 sets of the covered financial company; and 

23 (ii) title to the books, records, and as24 sets of any previous receiver or other legal 


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1 custodian of such covered financial com2 pany. 

3 (B) OPERATE THE COVERED FINANCIAL

4 COMPANY.—The Corporation as receiver for a 

5 covered financial company may— 

6 (i) take over the assets of and operate 

7 the covered financial company with all the 

8 powers of the members or shareholders, 

9 the directors, and the officers of the cov10 ered financial company and conduct all 

11 business of the covered financial company; 

12 (ii) collect all obligations and money 

13 due the covered financial company; 

14 (iii) perform all functions of the cov15 ered financial company in the name of the 

16 covered financial company; 

17 (iv) preserve and conserve the assets 

18 and property of the covered financial com19 pany; and 

20 (v) provide by contract for assistance 

21 in fulfilling any function, activity, action, 

22 or duty of the Corporation as receiver. 

23 (C) FUNCTIONS OF COVERED FINANCIAL

24 COMPANY’S OFFICERS, DIRECTORS, AND SHARE25 HOLDERS.— 


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1 (i) IN GENERAL.—The Corporation 

2 may provide for the exercise of any func3 tion by any member or stockholder, direc4 tor, or officer of any covered financial com5 pany for which the Corporation has been 

6 appointed as receiver under this section. 

7 (ii) PRESUMPTION.—There shall be a 

8 strong presumption that the Corporation, 

9 as receiver, will remove management re10 sponsible for the failed condition of the 

11 covered financial company (if such man12 agement has not already been removed at 

13 the time the Corporation is appointed as 

14 receiver). 

15 (D) ADDITIONAL POWERS AS RECEIVER.— 

16 The Corporation may, as receiver, and subject 

17 to all legally enforceable and perfected security 

18 interests, place the covered financial company 

19 in liquidation and proceed to realize upon the 

20 assets of the covered financial company in such 

21 manner as the Corporation deems appropriate, 

22 including through the sale of assets, the trans23 fer of assets to a bridge financial company es24 tablished under subsection (h), or the exercise 


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1 of any other rights or privileges granted to the 

2 receiver under this section. 

3 (E) ORGANIZATION OF NEW COMPANIES.— 

4 The Corporation as receiver may organize a 

5 bridge financial company under subsection (h). 

6 (F) MERGER; TRANSFER OF ASSETS AND

7 LIABILITIES.— 

8 (i) IN GENERAL.—Subject to clause 

9 (ii), the Corporation as receiver may— 

10 (I) merge the covered financial 

11 company with another company; or 

12 (II) transfer any asset or liability 

13 of the covered financial company (in14 cluding assets and liabilities associ15 ated with any trust or custody busi16 ness) without obtaining any approval, 

17 assignment, or consent with respect to 

18 such transfer. 

19 (ii) FEDERAL AGENCY APPROVAL; 

20 ANTITRUST REVIEW.— 

21 (I) IN GENERAL.—If a trans22 action described in clause (i) requires 

23 approval by a Federal agency, the 

24 transaction may not be consummated 

25 before the 5th calendar day after the 


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1 date of approval by the Federal agen2 cy responsible for such approval with 

3 respect thereto. If, in connection with 

4 any such approval, a report on com5 petitive factors is required, the Fed6 eral agency responsible for such ap7 proval shall promptly notify the Attor8 ney General of the proposed trans9 action and the Attorney General shall 

10 provide the required report within 10 

11 days of the request. If a filing is re12 quired under the Hart Scott-Rodino 

13 Antitrust Improvements Act of 1976 

14 with the Department of Justice or the 

15 Federal Trade Commission, the wait16 ing period shall expire not later than 

17 the 30th day following such filing not18 withstanding any other provision of 

19 Federal law or any attempt by any 

20 Federal agency to extend such waiting 

21 period, and no further request for in22 formation by any Federal agency shall 

23 be permitted. 

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1 man of the Federal Reserve Board 

2 has found that the Corporation must 

3 act immediately to prevent the prob4 able failure of 1 or more of the cov5 ered financial companies involved, the 

6 approvals and filings referred to in 

7 subclause (I) shall not be required 

8 and the transactions may be con9 summated immediately by the Cor10 poration. 

11 (G) PAYMENT OF VALID OBLIGATIONS.— 

12 The Corporation, as receiver, shall, to the ex13 tent funds are available, pay all valid obliga14 tions of the covered financial company that are 

15 due and payable at the time of the appointment 

16 of the Corporation as receiver in accordance 

17 with the prescriptions and limitations of this 

18 title. 

19 (H) SUBPOENA AUTHORITY.— 

20 (i) IN GENERAL.—The Corporation 

21 may, for purposes of carrying out any 

22 power, authority, or duty with respect to a 

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1 izing upon any asset of any person in the 

2 course of collecting money due the covered 

3 financial company), exercise any power es4 tablished under section 8(n) of the Federal 

5 Deposit Insurance Act as if the covered fi6 nancial company were an insured deposi7 tory institution. 

8 (ii) RULE OF CONSTRUCTION.—This 

9 section shall not be construed as limiting 

10 any rights that the Corporation, in any ca11 pacity, might otherwise have to exercise 

12 any powers described in clause (i) under 

13 any other provision of law. 

14 (I) INCIDENTAL POWERS.—The Corpora15 tion, as receiver, may— 

16 (i) exercise all powers and authorities 

17 specifically granted to receivers under this 

18 section and such incidental powers as shall 

19 be necessary to carry out such powers; and 

20 (ii) take any action authorized by this 

21 section, which the Corporation determines 

22 is in the best interests of the covered fi23 nancial company, its customers, its credi24 tors, its counterparties, or the stability of 

25 the financial system. 


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1 (J) UTILIZATION OF PRIVATE SECTOR.—In 

2 carrying out its responsibilities in the manage3 ment and disposition of assets from a covered 

4 financial company, the Corporation, as receiver, 

5 may utilize the services of private persons, in6 cluding real estate and loan portfolio asset 

7 management, property management, auction 

8 marketing, legal, and brokerage services, if such 

9 services are available in the private sector and 

10 the Corporation determines utilization of such 

11 services is practicable, efficient, and cost effec12 tive. 

13 (K) SHAREHOLDERS AND CREDITORS OF

14 COVERED FINANCIAL COMPANY.—Notwith15 standing any other provision of law, the Cor16 poration as receiver for a covered financial com17 pany pursuant to this section and its succes18 sion, by operation of law, to the rights, titles, 

19 powers, and privileges described in subpara20 graph (A) shall terminate all rights and claims 

21 that the stockholders and creditors of the cov22 ered financial company may have against the 

23 assets of the covered financial company or the 

24 Corporation arising out of their status as stock25 holders or creditors, except for their right to 


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1 payment, resolution, or other satisfaction of 

2 their claims, as permitted under this section. 

3 The Corporation shall ensure that shareholders 

4 and unsecured creditors bear losses, consistent 

5 with the priority of claims provisions in section 

6 1609(b). 

7 (L) COORDINATION WITH FOREIGN FINAN8 CIAL AUTHORITIES.—The Corporation as re9 ceiver for a covered financial company shall co10 ordinate with the appropriate foreign financial 

11 authorities regarding the resolution of subsidi12 aries of the covered financial company that are 

13 established in a country other than the United 

14 States. 

15 (2) AUTHORITY OF CORPORATION TO DETER16 MINE CLAIMS.— 

17 (A) IN GENERAL.—The Corporation may, 

18 as receiver, determine claims in accordance with 

19 the requirements of this subsection and regula20 tions prescribed under paragraph (3). 

21 (B) NOTICE REQUIREMENTS.—The re22 ceiver, in any case involving the liquidation or 

23 winding up of the affairs of a covered financial 

24 company, shall— 


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1 (i) promptly publish a notice to the 

2 covered financial company’s creditors to 

3 present their claims, together with proof, 

4 to the receiver by a date specified in the 

5 notice which shall be not less than 90 days 

6 after the publication of such notice; and 

7 (ii) republish such notice approxi8 mately 1 month and 2 months, respec9 tively, after the publication under clause 

10 (i). 

11 (C) MAILING REQUIRED.—The receiver 

12 shall mail a notice similar to the notice pub13 lished under subparagraph (B)(i) at the time of 

14 such publication to any creditor shown on the 

15 covered financial company’s books— 

16 (i) at the creditor’s last address ap17 pearing in such books; or 

18 (ii) upon discovery of the name and 

19 address of a claimant not appearing on the 

20 covered financial company’s books, within 

21 30 days after the discovery of such name 

22 and address. 

23 (3) RULEMAKING AUTHORITY RELATING TO DE24 TERMINATION OF CLAIMS.— 


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1 (A) IN GENERAL.—Subject to subsection 

2 (b), the Corporation shall prescribe rules and 

3 regulations regarding the allowance or disallow4 ance of claims by the Corporation and providing 

5 for administrative determination of claims and 

6 review of such determination. 

7 (B) EXISTING RULES.—The Corporation 

8 may elect to use the regulations adopted pursu9 ant to the provisions of section 11 of the Fed10 eral Deposit Insurance Act with respect to the 

11 determination of claims for a covered financial 

12 company as if the covered financial company 

13 were an insured depository institution. 

14 (4) PROCEDURES FOR DETERMINATION OF

15 CLAIMS.— 

16 (A) DETERMINATION PERIOD.— 

17 (i) IN GENERAL.—Before the end of 

18 the 180-day period beginning on the date 

19 any claim against a covered financial com20 pany is filed with the Corporation as re21 ceiver, the Corporation shall determine 

22 whether to allow or disallow the claim and 

23 shall notify the claimant of any determina24 tion with respect to such claim. 


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1 (ii) EXTENSION OF TIME.—The period 

2 described in clause (i) may be extended by 

3 a written agreement between the claimant 

4 and the Corporation. 

5 (iii) MAILING OF NOTICE SUFFI6 CIENT.—The requirements of clause (i) 

7 shall be deemed to be satisfied if the notice 

8 of any determination with respect to any 

9 claim is mailed to the last address of the 

10 claimant which appears— 

11 (I) on the covered financial com12 pany’s books; 

13 (II) in the claim filed by the 

14 claimant; or 

15 (III) in documents submitted in 

16 proof of the claim. 

17 (iv) CONTENTS OF NOTICE OF DIS18 ALLOWANCE.—If any claim filed under 

19 clause (i) is disallowed, the notice to the 

20 claimant shall contain— 

21 (I) a statement of each reason 

22 for the disallowance; and 

23 (II) the procedures available for 

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1 mination to disallow the claim or judi2 cial determination of the claim. 

3 (B) ALLOWANCE OF PROVEN CLAIM.—The 

4 Corporation shall allow any claim received on or 

5 before the date specified in the notice published 

6 under paragraph (2)(B)(i) by the Corporation 

7 from any claimant which is proved to the satis8 faction of the Corporation. 

9 (C) DISALLOWANCE OF CLAIMS FILED

10 AFTER END OF FILING PERIOD.— 

11 (i) IN GENERAL.—Except as provided 

12 in clause (ii), claims filed after the date 

13 specified in the notice published under 

14 paragraph (2)(B)(i) shall be disallowed 

15 and such disallowance shall be final. 

16 (ii) CERTAIN EXCEPTIONS.—Clause 

17 (i) shall not apply with respect to any 

18 claim filed by any claimant after the date 

19 specified in the notice published under 

20 paragraph (2)(B)(i) and such claim may 

21 be considered by the receiver if— 

22 (I) the claimant did not receive 

23 notice of the appointment of the re24 ceiver in time to file such claim before 

25 such date; and 


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1 (II) such claim is filed in time to 

2 permit payment of such claim. 

3 (D) AUTHORITY TO DISALLOW CLAIMS.— 

4 (i) IN GENERAL.—The Corporation 

5 may disallow any portion of any claim by 

6 a creditor or claim of security, preference, 

7 or priority which is not proved to the satis8 faction of the Corporation. 

9 (ii) PAYMENTS TO LESS THAN FULLY

10 SECURED CREDITORS.—In the case of a 

11 claim of a creditor against a covered finan12 cial company which is secured by any prop13 erty or other asset of such covered finan14 cial company, the receiver— 

15 (I) may treat the portion of such 

16 claim which exceeds an amount equal 

17 to the fair market value of such prop18 erty or other asset as an unsecured 

19 claim against the covered financial 

20 company; and 

21 (II) may not make any payment 

22 with respect to such unsecured por23 tion of the claim other than in connec24 tion with the disposition of all claims 


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1 of unsecured creditors of the covered 

2 financial company. 

3 (iii) EXCEPTIONS.—No provision of 

4 this paragraph shall apply with respect 

5 to— 

6 (I) any extension of credit from 

7 any Federal Reserve bank, or the Cor8 poration, to any covered financial 

9 company; or 

10 (II) subject to clause (ii), any le11 gally enforceable or perfected security 

12 interest in the assets of the covered fi13 nancial company securing any such 

14 extension of credit. 

15 (iv) PAYMENTS TO FULLY SECURED

16 CREDITORS.—Notwithstanding any other 

17 provision of law, in any receivership of a 

18 covered financial company in which 

19 amounts realized from the resolution are 

20 insufficient to satisfy completely any 

21 amounts owed to the United States or to 

22 the Fund, as determined in the receiver’s 

23 sole discretion, an allowed claim under a 

24 legally enforceable or perfected security in25 terest (that became a legally enforceable or 


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1 perfected security interest after the date of 

2 the enactment of this clause), other than a 

3 legally enforceable or perfected security in4 terest of the Federal Government, in any 

5 of the assets of the covered financial com6 pany in receivership may be treated as an 

7 unsecured claim in the amount of up to 20 

8 percent as necessary to satisfy any 

9 amounts owed to the United States or to 

10 the Fund. Any balance of such claim that 

11 is treated as an unsecured claim under this 

12 subparagraph shall be paid as a general li13 ability of the covered financial company. 

14 (E) NO JUDICIAL REVIEW OF DETERMINA15 TION PURSUANT TO SUBPARAGRAPH (D).—No 

16 court may review the Corporation determination 

17 pursuant to subparagraph (D) to disallow a 

18 claim. 

19 (F) LEGAL EFFECT OF FILING.— 

20 (i) STATUTE OF LIMITATION

21 TOLLED.—For purposes of any applicable 

22 statute of limitations, the filing of a claim 

23 with the Corporation shall constitute a 

24 commencement of an action. 


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1 (ii) NO PREJUDICE TO OTHER AC2 TIONS.—Subject to paragraph (9), the fil3 ing of a claim with the Corporation shall 

4 not prejudice any right of the claimant to 

5 continue any action which was filed before 

6 the appointment of the Corporation as re7 ceiver for the covered financial company. 

8 (5) PROVISION FOR JUDICIAL DETERMINATION

9 OF CLAIMS.— 

10 (A) IN GENERAL.—Before the end of the 

11 60-day period beginning on the earlier of— 

12 (i) the end of the period described in 

13 paragraph (4)(A)(i) (or, if extended by 

14 agreement of the Corporation and the 

15 claimant, the period described in para16 graph (4)(A)(ii)) with respect to any claim 

17 against a covered financial company for 

18 which the Corporation is receiver; or 

19 (ii) the date of any notice of disallow20 ance of such claim pursuant to paragraph 

21 (4)(A)(i), 

22 the claimant may file suit on a claim (or con23 tinue an action commenced before the appoint24 ment of the receiver) in the district or terri25 torial court of the United States for the district 


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1 within which the covered financial company’s 

2 principal place of business is located or the 

3 United States District Court for the District of 

4 Columbia (and such court shall have jurisdic5 tion to hear such claim). 

6 (B) STATUTE OF LIMITATIONS.—If any 

7 claimant fails to file suit on such claim (or con8 tinue an action commenced before the appoint9 ment of the receiver) before the end of the 60- 

10 day period described in subparagraph (A), the 

11 claim shall be deemed to be disallowed (other 

12 than any portion of such claim which was al13 lowed by the receiver) as of the end of such pe14 riod, such disallowance shall be final, and the 

15 claimant shall have no further rights or rem16 edies with respect to such claim. 

17 (6) EXPEDITED DETERMINATION OF CLAIMS.— 

18 (A) ESTABLISHMENT REQUIRED.—The 

19 Corporation shall establish a procedure for ex20 pedited relief outside of the routine claims proc21 ess established under paragraph (4) for claim22 ants who— 

23 (i) allege the existence of legally valid 

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1 pany for which the Corporation has been 

2 appointed as receiver; and 

3 (ii) allege that irreparable injury will 

4 occur if the routine claims procedure is fol5 lowed. 

6 (B) DETERMINATION PERIOD.—Before the 

7 end of the 90-day period beginning on the date 

8 any claim is filed in accordance with the proce9 dures established pursuant to subparagraph 

10 (A), the Corporation shall— 

11 (i) determine— 

12 (I) whether to allow or disallow 

13 such claim; or 

14 (II) whether such claim should be 

15 determined pursuant to the proce16 dures established pursuant to para17 graph (4); and 

18 (ii) notify the claimant of the deter19 mination, and if the claim is disallowed, 

20 provide a statement of each reason for the 

21 disallowance and the procedure for obtain22 ing judicial determination. 

23 (C) PERIOD FOR FILING OR RENEWING

24 SUIT.—Any claimant who files a request for ex25 pedited relief shall be permitted to file a suit, 


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1 or to continue such a suit filed before the ap2 pointment of the Corporation as receiver, seek3 ing a determination of the claimant’s rights 

4 with respect to such security interest after the 

5 earlier of— 

6 (i) the end of the 90-day period begin7 ning on the date of the filing of a request 

8 for expedited relief; or 

9 (ii) the date the Corporation denies 

10 the claim. 

11 (D) STATUTE OF LIMITATIONS.—If an ac12 tion described in subparagraph (C) is not filed, 

13 or the motion to renew a previously filed suit is 

14 not made, before the end of the 30-day period 

15 beginning on the date on which such action or 

16 motion may be filed in accordance with sub17 paragraph (B), the claim shall be deemed to be 

18 disallowed as of the end of such period (other 

19 than any portion of such claim which was al20 lowed by the receiver), such disallowance shall 

21 be final, and the claimant shall have no further 

22 rights or remedies with respect to such claim. 

23 (E) LEGAL EFFECT OF FILING.— 

24 (i) STATUTE OF LIMITATION

25 TOLLED.—For purposes of any applicable 


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1 statute of limitations, the filing of a claim 

2 with the receiver shall constitute a com3 mencement of an action. 

4 (ii) NO PREJUDICE TO OTHER AC5 TIONS.—Subject to paragraph (9), the fil6 ing of a claim with the receiver shall not 

7 prejudice any right of the claimant to con8 tinue any action which was filed before the 

9 appointment of the Corporation as receiver 

10 for the covered financial company. 

11 (7) AGREEMENTS AGAINST INTEREST OF THE

12 RECEIVER.—No agreement that tends to diminish or 

13 defeat the interest of the Corporation as receiver in 

14 any asset acquired by the receiver under this section 

15 shall be valid against the receiver unless such agree16 ment is in writing and executed by an authorized of17 ficer or representative of the covered financial com18 pany. 

19 (8) PAYMENT OF CLAIMS.— 

20 (A) IN GENERAL.—The Corporation as re21 ceiver may, in its discretion and to the extent 

22 funds are available, pay creditor claims, in such 

23 manner and amounts as are authorized under 

24 this section, which are— 

25 (i) allowed by the receiver; 


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1 (ii) approved by the Corporation pur2 suant to a final determination pursuant to 

3 paragraph (6); or 

4 (ii) determined by the final judgment 

5 of any court of competent jurisdiction. 

6 (B) PAYMENT OF DIVIDENDS ON

7 CLAIMS.—The receiver may, in the receiver’s 

8 sole discretion and to the extent otherwise per9 mitted by this section, pay dividends on proven 

10 claims at any time, and no liability shall attach 

11 to the Corporation (in the Corporation’s capac12 ity as receiver), by reason of any such payment, 

13 for failure to pay dividends to a claimant whose 

14 claim is not proved at the time of any such pay15 ment. 

16 (C) RULEMAKING AUTHORITY OF COR17 PORATION.—The Corporation may prescribe 

18 such rules, including definitions of terms, as it 

19 deems appropriate to establish a single uniform 

20 interest rate for, or to make payments of post 

21 insolvency interest to creditors holding proven 

22 claims against the receivership estates of a cov23 ered financial company following satisfaction by 

24 the receiver of the principal amount of all cred25 itor claims. 


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1 (9) SUSPENSION OF LEGAL ACTIONS.— 

2 (A) IN GENERAL.—After the appointment 

3 of the Corporation as receiver for a covered fi4 nancial company, the Corporation may request 

5 a stay for a period not to exceed 90 days in any 

6 noncriminal judicial action or proceeding to 

7 which such covered financial company is or be8 comes a party. 

9 (B) GRANT OF STAY BY ALL COURTS RE10 QUIRED.—Upon receipt of a request by the Cor11 poration pursuant to subparagraph (A) for a 

12 stay of any non-criminal judicial action or pro13 ceeding in any court with jurisdiction of such 

14 action or proceeding, the court shall grant such 

15 stay as to all parties. 

16 (10) ADDITIONAL RIGHTS AND DUTIES.— 

17 (A) PRIOR FINAL ADJUDICATION.—The 

18 Corporation shall abide by any final 

19 unappealable judgment of any court of com20 petent jurisdiction which was rendered before 

21 the appointment of the Corporation as receiver. 

22 (B) RIGHTS AND REMEDIES OF RE23 CEIVER.—In the event of any appealable judg24 ment, the Corporation as receiver shall— 


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1 (i) have all the rights and remedies 

2 available to the covered financial company 

3 (before the appointment of the receiver 

4 under section 1604) and the Corporation, 

5 including but not limited to removal to 

6 Federal court and all appellate rights; and 

7 (ii) not be required to post any bond 

8 in order to pursue such remedies. 

9 (C) NO ATTACHMENT OR EXECUTION.—No 

10 attachment or execution may issue by any court 

11 upon assets in the possession of the receiver. 

12 (D) LIMITATION ON JUDICIAL REVIEW.— 

13 Except as otherwise provided in this subsection, 

14 no court shall have jurisdiction over— 

15 (i) any claim or action for payment 

16 from, or any action seeking a determina17 tion of rights with respect to, the assets of 

18 any covered financial company for which 

19 the Corporation has been appointed re20 ceiver, including any assets which the Cor21 poration may acquire from itself as such 

22 receiver; or 

23 (ii) any claim relating to any act or 

24 omission of such covered financial company 

25 or the Corporation as receiver. 


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1 (E) DISPOSITION OF ASSETS.—In exer2 cising any right, power, privilege, or authority 

3 as receiver in connection with any covered fi4 nancial company for which the Corporation is 

5 acting as receiver under this section, the Cor6 poration shall, to the greatest extent prac7 ticable, conduct its operations in a manner 

8 which— 

9 (i) maximizes the net present value 

10 return from the sale or disposition of such 

11 assets; 

12 (ii) minimizes the amount of any loss 

13 realized in the resolution of cases; 

14 (iii) minimizes the cost to the general 

15 fund of the Treasury; 

16 (iv) mitigates the potential for serious 

17 adverse effects to the financial system and 

18 the U.S. economy; 

19 (v) ensures timely and adequate com20 petition and fair and consistent treatment 

21 of offerors; and 

22 (vi) prohibits discrimination on the 

23 basis of race, sex, or ethnic groups in the 

24 solicitation and consideration of offers. 


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1 (11) STATUTE OF LIMITATIONS FOR ACTIONS

2 BROUGHT BY RECEIVER.— 

3 (A) IN GENERAL.—Notwithstanding any 

4 provision of any contract, the applicable statute 

5 of limitations with regard to any action brought 

6 by the Corporation as receiver shall be— 

7 (i) in the case of any contract claim, 

8 the longer of— 

9 (I) the 6-year period beginning 

10 on the date the claim accrues; or 

11 (II) the period applicable under 

12 State law; and 

13 (ii) in the case of any tort claim, the 

14 longer of— 

15 (I) the 3-year period beginning 

16 on the date the claim accrues; or 

17 (II) the period applicable under 

18 State law. 

19 (B) DETERMINATION OF THE DATE ON

20 WHICH A CLAIM ACCRUES.—For purposes of 

21 subparagraph (A), the date on which the stat22 ute of limitations begins to run on any claim 

23 described in such subparagraph shall be the 

24 later of— 


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1 (i) the date of the appointment of the 

2 Corporation as receiver under this title; or 

3 (ii) the date on which the cause of ac4 tion accrues. 

5 (C) REVIVAL OF EXPIRED STATE CAUSES

6 OF ACTION.— 

7 (i) IN GENERAL.—In the case of any 

8 tort claim described in clause (ii) for which 

9 the statute of limitation applicable under 

10 State law with respect to such claim has 

11 expired not more than 5 years before the 

12 appointment of the Corporation as re13 ceiver, the Corporation may bring an ac14 tion as receiver on such claim without re15 gard to the expiration of the statute of lim16 itation applicable under State law. 

17 (ii) CLAIMS DESCRIBED.—A tort 

18 claim referred to in clause (i) is a claim 

19 arising from fraud, intentional misconduct 

20 resulting in unjust enrichment, or inten21 tional misconduct resulting in substantial 

22 loss to the covered financial company. 

23 (12) FRAUDULENT TRANSFERS.— 

24 (A) IN GENERAL.—The Corporation, as re25 ceiver for any covered financial company, may 


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1 avoid a transfer of any interest of an institution 

2 affiliated party, or any person who the Corpora3 tion determines is a debtor of the covered finan4 cial company, in property, or any obligation in5 curred by such party or person, that was made 

6 within 5 years of the date on which the Cor7 poration was appointed receiver if such party or 

8 person voluntarily or involuntarily made such 

9 transfer or incurred such liability with the in10 tent to hinder, delay, or defraud the covered fi11 nancial company or the Corporation. 

12 (B) RIGHT OF RECOVERY.—To the extent 

13 a transfer is avoided under subparagraph (A), 

14 the Corporation may recover, for the benefit of 

15 the covered financial company, the property 

16 transferred or, if a court so orders, the value of 

17 such property (at the time of such transfer) 

18 from— 

19 (i) the initial transferee of such trans20 fer or the institution-affiliated party or 

21 person for whose benefit such transfer was 

22 made; or 

23 (ii) any immediate or mediate trans24 feree of any such initial transferee. 


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1 (C) RIGHTS OF TRANSFEREE OR OBLI2 GEE.—The Corporation may not recover under 

3 subparagraph (B)— 

4 (i) any transfer that takes for value, 

5 including satisfaction or securing of a 

6 present or antecedent debt, in good faith, 

7 or 

8 (ii) any immediate or mediate good 

9 faith transferee of such transferee. 

10 (D) RIGHTS UNDER THIS SUBSECTION.— 

11 The rights of the Corporation as receiver of a 

12 covered financial company under this subsection 

13 shall be superior to any rights of a trustee or 

14 any other party (other than any party which is 

15 a Federal agency) under title 11, United States 

16 Code. 

17 (E) DEFINITION.—For purposes of this 

18 subsection, the term ‘‘institution affiliated 

19 party’’ means— 

20 (i) any director, officer, employee, or 

21 controlling stockholder of, or agent for, a 

22 covered financial company; 

23 (ii) any shareholder, consultant, joint 

24 venture partner, and any other person as 

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1 tion or otherwise) who participates in the 

2 conduct of the affairs of a covered finan3 cial company; and 

4 (iii) any independent contractor (in5 cluding any attorney, appraiser, or ac6 countant) who knowingly or recklessly par7 ticipates in— 

8 (I) any violation of any law or 

9 regulation; 

10 (II) any breach of fiduciary duty; 

11 or 

12 (III) any unsafe or unsound 

13 practice, 

14 which caused or is likely to cause more 

15 than a minimal financial loss to, or a sig16 nificant adverse effect on, the covered fi17 nancial company. 

18 (13) ATTACHMENT OF ASSETS AND OTHER IN19 JUNCTIVE RELIEF.—Subject to paragraph (14), any 

20 court of competent jurisdiction may, at the request 

21 of the Corporation, issue an order in accordance 

22 with Rule 65 of the Federal Rules of Civil Proce23 dure, including an order placing the assets of any 

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1 trol of the court and appointing a trustee to hold 

2 such assets. 

3 (14) STANDARDS.— 

4 (A) SHOWING.—Rule 65 of the Federal 

5 Rules of Civil Procedure shall apply with re6 spect to any proceeding under paragraph (13) 

7 without regard to the requirement of such rule 

8 that the applicant show that the injury, loss, or 

9 damage is irreparable and immediate. 

10 (B) STATE PROCEEDING.—If, in the case 

11 of any proceeding in a State court, the court 

12 determines that rules of civil procedure avail13 able under the laws of such State provide sub14 stantially similar protections to such party’s 

15 right to due process as Rule 65 (as modified 

16 with respect to such proceeding by subpara17 graph (A)), the relief sought by the Corporation 

18 pursuant to paragraph (14) may be requested 

19 under the laws of such State. 

20 (15) TREATMENT OF CLAIMS ARISING FROM

21 BREACH OF CONTRACTS EXECUTED BY THE COR22 PORATION AS RECEIVER.—Notwithstanding any 

23 other provision of this subsection, any final and 

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1 ered financial company for the breach of an agree2 ment executed or approved by the Corporation after 

3 the date of its appointment shall be paid as an ad4 ministrative expense of the receiver. Nothing in this 

5 paragraph shall be construed to limit the power of 

6 a receiver to exercise any rights under contract or 

7 law, including to terminate, breach, cancel, or other8 wise discontinue such agreement. 

9 (16) ACCOUNTING AND RECORDKEEPING RE10 QUIREMENTS.— 

11 (A) IN GENERAL.—The Corporation as re12 ceiver shall, consistent with the accounting and 

13 reporting practices and procedures established 

14 by the Corporation, maintain a full accounting 

15 of each receivership or other disposition of any 

16 covered financial company. 

17 (B) ANNUAL ACCOUNTING OR REPORT.— 

18 With respect to each receivership to which the 

19 Corporation was appointed, the Corporation 

20 shall make an annual accounting or report, as 

21 appropriate, available to the Secretary and the 

22 Comptroller General of the United States. 

23 (C) AVAILABILITY OF REPORTS.—Any re24 port prepared pursuant to subparagraph (B) 


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1 shall be made available by the Corporation upon 

2 request to any member of the public. 

3 (D) RECORDKEEPING REQUIREMENT.— 

4 (i) IN GENERAL.—Except as provided 

5 in clause (ii), after the end of the 6-year 

6 period beginning on the date the Corpora7 tion is appointed as receiver of a covered 

8 financial company the Corporation may de9 stroy any records of such covered financial 

10 company which the Corporation, in the 

11 Corporation’s discretion, determines to be 

12 unnecessary unless directed not to do so by 

13 a court of competent jurisdiction or gov14 ernmental agency, or prohibited by law. 

15 (ii) OLD RECORDS.—Notwithstanding 

16 clause (i), the Corporation may destroy 

17 records of a covered financial company 

18 which are at least 10 years old as of the 

19 date on which the Corporation is appointed 

20 as the receiver of such company in accord21 ance with clause (i) at any time after such 

22 appointment is final, without regard to the 

23 6-year period of limitation contained in 

24 clause (i). 


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1 (b) PRIORITY OF EXPENSES AND UNSECURED

2 CLAIMS.— 

3 (1) IN GENERAL.—Unsecured claims against a 

4 covered financial company, or the receiver for such 

5 covered financial company under this section, that 

6 are proven to the satisfaction of the receiver shall 

7 have priority in the following order: 

8 (A) Administrative expenses of the re9 ceiver. 

10 (B) Any amounts owed to the United 

11 States, unless the United States agrees or con12 sents otherwise. 

13 (C) Any other general or senior liability of 

14 the covered financial company (which is not a 

15 liability described under subparagraph (D) or 

16 (E)). 

17 (D) Any obligation subordinated to general 

18 creditors (which is not an obligation described 

19 under subparagraph (E)). 

20 (E) Any obligation to shareholders, mem21 bers, general partners, limited partners or other 

22 persons with interests in the equity of the cov23 ered financial company arising as a result of 

24 their status as shareholders, members, general 

25 partners, limited partners or other persons with 


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1 interests in the equity of the covered financial 

2 company. 

3 (2) POST-RECEIVERSHIP FINANCING PRI4 ORITY.—In the event that the Corporation as re5 ceiver is unable to obtain unsecured credit for the 

6 covered financial company from commercial sources, 

7 the Corporation as receiver may obtain credit or 

8 incur debt on the part of the covered financial com9 pany which shall have priority over any or all admin10 istrative expenses of the receiver under paragraph 

11 (1)(A). 

12 (3) CLAIMS OF THE UNITED STATES.—Unse13 cured claims of the United States shall, at a min14 imum, have a higher priority than liabilities of the 

15 covered financial company that count as regulatory 

16 capital. 

17 (4) CREDITORS SIMILARLY SITUATED.—Subject 

18 to the priorities established under paragraphs (2) 

19 and (3), all claimants of a covered financial company 

20 that are similarly situated under paragraph (1) shall 

21 be treated in a similar manner, except that the re22 ceiver may take any action (including making pay23 ments) that does not comply with this subsection, 

24 if— 


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1 (A) the Corporation determines that such 

2 action is necessary to maximize the value of the 

3 assets of the covered financial company, to 

4 maximize the present value return from the sale 

5 or other disposition of the assets of the covered 

6 financial company, to minimize the amount of 

7 any loss realized upon the sale or other disposi8 tion of the assets of the covered financial com9 pany, or to contain or address serious adverse 

10 effects on financial stability or the U.S. econ11 omy; and 

12 (B) all claimants that are similarly situ13 ated under paragraph (1) receive not less than 

14 the amount provided in subsection (d)(2). 

15 (3) SECURED CLAIMS UNAFFECTED.—This sub16 section shall not affect secured claims, except to the 

17 extent that the security is insufficient to satisfy the 

18 claim and then only with regard to the difference be19 tween the claim and the amount realized from the 

20 security. 

21 (4) DEFINITIONS.—As used in this subsection, 

22 the term ‘‘administrative expenses of the receiver’’ 

23 includes— 

24 (A) the actual, necessary costs and ex25 penses incurred by the receiver in preserving 


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1 the assets of a covered financial company or liq2 uidating or otherwise resolving the affairs of a 

3 covered financial company for which the Cor4 poration has been appointed as receiver; and 

5 (B) any obligations that the receiver deter6 mines are necessary and appropriate to facili7 tate the smooth and orderly liquidation or other 

8 resolution of the covered financial company. 

9 (c) PROVISIONS RELATING TO CONTRACTS ENTERED

10 INTO BEFORE APPOINTMENT OF RECEIVER.— 

11 (1) AUTHORITY TO REPUDIATE CONTRACTS.— 

12 In addition to any other rights a receiver may have, 

13 the Corporation as receiver for any covered financial 

14 company may disaffirm or repudiate any contract or 

15 lease— 

16 (A) to which the covered financial company 

17 is a party; 

18 (B) the performance of which the receiver, 

19 in the receiver’s discretion, determines to be 

20 burdensome; and 

21 (C) the disaffirmance or repudiation of 

22 which the receiver determines, in the receiver’s 

23 discretion, will promote the orderly administra24 tion of the covered financial company’s affairs. 


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1 (2) TIMING OF REPUDIATION.—The receiver 

2 appointed for any covered financial company under 

3 section 1604 shall determine whether or not to exer4 cise the rights of repudiation under this subsection 

5 within a reasonable period following such appoint6 ment. 

7 (3) CLAIMS FOR DAMAGES FOR REPUDI8 ATION.— 

9 (A) IN GENERAL.—Except as otherwise 

10 provided in subparagraph (C) and paragraphs 

11 (4), (5), and (6), the liability of the receiver for 

12 the disaffirmance or repudiation of any contract 

13 pursuant to paragraph (1) shall be— 

14 (i) limited to actual direct compen15 satory damages; and 

16 (ii) determined as of— 

17 (I) the date of the appointment 

18 of the receiver; or 

19 (II) in the case of any contract 

20 or agreement referred to in paragraph 

21 (8), the date of the disaffirmance or 

22 repudiation of such contract or agree23 ment. 

24 (B) NO LIABILITY FOR OTHER DAM25 AGES.—For purposes of subparagraph (A), the 


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1 term ‘‘actual direct compensatory damages’’ 

2 does not include— 

3 (i) punitive or exemplary damages; 

4 (ii) damages for lost profits or oppor5 tunity; or 

6 (iii) damages for pain and suffering. 

7 (C) MEASURE OF DAMAGES FOR REPUDI8 ATION OF QUALIFIED FINANCIAL CONTRACTS.— 

9 In the case of any qualified financial contract 

10 or agreement to which paragraph (8) applies, 

11 compensatory damages shall be— 

12 (i) deemed to include normal and rea13 sonable costs of cover or other reasonable 

14 measures of damages utilized in the indus15 tries for such contract and agreement 

16 claims; and 

17 (ii) paid in accordance with this sub18 section and subsection (d) except as other19 wise specifically provided in this sub20 section. 

21 (4) LEASES UNDER WHICH THE COVERED FI22 NANCIAL COMPANY IS THE LESSEE.— 

23 (A) IN GENERAL.—If the receiver dis24 affirms or repudiates a lease under which the 

25 covered financial company was the lessee, the 


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1 receiver shall not be liable for any damages 

2 (other than damages determined pursuant to 

3 subparagraph (B)) for the disaffirmance or re4 pudiation of such lease. 

5 (B) PAYMENTS OF RENT.—Notwith6 standing subparagraph (A), the lessor under a 

7 lease to which such subparagraph applies 

8 shall— 

9 (i) be entitled to the contractual rent 

10 accruing before the later of the date— 

11 (I) the notice of disaffirmance or 

12 repudiation is mailed; or 

13 (II) the disaffirmance or repudi14 ation becomes effective, unless the les15 sor is in default or breach of the 

16 terms of the lease; 

17 (ii) have no claim for damages under 

18 any acceleration clause or other penalty 

19 provision in the lease; and 

20 (iii) have a claim for any unpaid rent, 

21 subject to all appropriate offsets and de22 fenses, due as of the date of the appoint23 ment which shall be paid in accordance 

24 with this subsection and subsection (d). 


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1 (5) LEASES UNDER WHICH THE COVERED FI2 NANCIAL COMPANY IS THE LESSOR.— 

3 (A) IN GENERAL.—If the receiver repudi4 ates an unexpired written lease of real property 

5 of the covered financial company under which 

6 the covered financial company is the lessor and 

7 the lessee is not, as of the date of such repudi8 ation, in default, the lessee under such lease 

9 may either— 

10 (i) treat the lease as terminated by 

11 such repudiation; or 

12 (ii) remain in possession of the lease13 hold interest for the balance of the term of 

14 the lease unless the lessee defaults under 

15 the terms of the lease after the date of 

16 such repudiation. 

17 (B) PROVISIONS APPLICABLE TO LESSEE

18 REMAINING IN POSSESSION.—If any lessee 

19 under a lease described in subparagraph (A) re20 mains in possession of a leasehold interest pur21 suant to clause (ii) of such subparagraph— 

22 (i) the lessee— 

23 (I) shall continue to pay the con24 tractual rent pursuant to the terms of 


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1 the lease after the date of the repudi2 ation of such lease; 

3 (II) may offset against any rent 

4 payment which accrues after the date 

5 of the repudiation of the lease, any 

6 damages which accrue after such date 

7 due to the nonperformance of any ob8 ligation of the covered financial com9 pany under the lease after such date; 

10 and 

11 (ii) the receiver shall not be liable to 

12 the lessee for any damages arising after 

13 such date as a result of the repudiation 

14 other than the amount of any offset al15 lowed under clause (i)(II). 

16 (6) CONTRACTS FOR THE SALE OF REAL PROP17 ERTY.— 

18 (A) IN GENERAL.—If the receiver repudi19 ates any contract (which meets the require20 ments of subsection (a)(7)) for the sale of real 

21 property and the purchaser of such real prop22 erty under such contract is in possession and is 

23 not, as of the date of such repudiation, in de24 fault, such purchaser may either— 


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1 (i) treat the contract as terminated by 

2 such repudiation; or 

3 (ii) remain in possession of such real 

4 property. 

5 (B) PROVISIONS APPLICABLE TO PUR6 CHASER REMAINING IN POSSESSION.—If any 

7 purchaser of real property under any contract 

8 described in subparagraph (A) remains in pos9 session of such property pursuant to clause (ii) 

10 of such subparagraph— 

11 (i) the purchaser— 

12 (I) shall continue to make all 

13 payments due under the contract after 

14 the date of the repudiation of the con15 tract; and 

16 (II) may offset against any such 

17 payments any damages which accrue 

18 after such date due to the non19 performance (after such date) of any 

20 obligation of the covered financial 

21 company under the contract; and 

22 (ii) the receiver shall— 

23 (I) not be liable to the purchaser 

24 for any damages arising after such 

25 date as a result of the repudiation 


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1 other than the amount of any offset 

2 allowed under clause (i)(II); 

3 (II) deliver title to the purchaser 

4 in accordance with the provisions of 

5 the contract; and 

6 (III) have no obligation under 

7 the contract other than the perform8 ance required under subclause (II). 

9 (C) ASSIGNMENT AND SALE ALLOWED.— 

10 (i) IN GENERAL.—No provision of this 

11 paragraph shall be construed as limiting 

12 the right of the receiver to assign the con13 tract described in subparagraph (A) and 

14 sell the property subject to the contract 

15 and the provisions of this paragraph. 

16 (ii) NO LIABILITY AFTER ASSIGNMENT

17 AND SALE.—If an assignment and sale de18 scribed in clause (i) is consummated, the 

19 receiver shall have no further liability 

20 under the contract described in subpara21 graph (A) or with respect to the real prop22 erty which was the subject of such con23 tract. 

24 (7) PROVISIONS APPLICABLE TO SERVICE CON25 TRACTS.— 


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1 (A) SERVICES PERFORMED BEFORE AP2 POINTMENT.—In the case of any contract for 

3 services between any person and any covered fi4 nancial company for which the Corporation has 

5 been appointed receiver, any claim of such per6 son for services performed before the appoint7 ment of the receiver shall be— 

8 (i) a claim to be paid in accordance 

9 with subsections (a), (b) and (d); and 

10 (ii) deemed to have arisen as of the 

11 date the receiver was appointed. 

12 (B) SERVICES PERFORMED AFTER AP13 POINTMENT AND PRIOR TO REPUDIATION.—If, 

14 in the case of any contract for services de15 scribed in subparagraph (A), the receiver ac16 cepts performance by the other person before 

17 the receiver makes any determination to exer18 cise the right of repudiation of such contract 

19 under this section— 

20 (i) the other party shall be paid under 

21 the terms of the contract for the services 

22 performed; and 

23 (ii) the amount of such payment shall 

24 be treated as an administrative expense of 

25 the receivership. 


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1 (C) ACCEPTANCE OF PERFORMANCE NO

2 BAR TO SUBSEQUENT REPUDIATION.—The ac3 ceptance by any receiver of services referred to 

4 in subparagraph (B) in connection with a con5 tract described in such subparagraph shall not 

6 affect the right of the receiver to repudiate such 

7 contract under this section at any time after 

8 such performance. 

9 (8) CERTAIN QUALIFIED FINANCIAL CON10 TRACTS.— 

11 (A) RIGHTS OF PARTIES TO CONTRACTS.— 

12 Subject to paragraphs (9) and (10) of this sub13 section and notwithstanding any other provision 

14 of this section (other than subsection (a)(7)), 

15 any other Federal law, or the law of any State, 

16 no person shall be stayed or prohibited from ex17 ercising— 

18 (i) any right such person has to cause 

19 the termination, liquidation, or acceleration 

20 of any qualified financial contract with a 

21 covered financial company which arises 

22 upon the appointment of the Corporation 

23 as receiver for such covered financial com24 pany at any time after such appointment; 


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1 (ii) any right under any security 

2 agreement or arrangement or other credit 

3 enhancement related to one or more quali4 fied financial contracts described in clause 

5 (i). 

6 (iii) any right to offset or net out any 

7 termination value, payment amount, or 

8 other transfer obligation arising under or 

9 in connection with 1 or more contracts and 

10 agreements described in clause (i), includ11 ing any master agreement for such con12 tracts or agreements. 

13 (B) APPLICABILITY OF OTHER PROVI14 SIONS.—Subsection (a)(9) shall apply in the 

15 case of any judicial action or proceeding 

16 brought against any receiver referred to in sub17 paragraph (A), or the covered financial com18 pany for which such receiver was appointed, by 

19 any party to a contract or agreement described 

20 in subparagraph (A)(i) with such company. 

21 (C) CERTAIN TRANSFERS NOT AVOID22 ABLE.— 

23 (i) IN GENERAL.—Notwithstanding 

24 paragraph (11), section 5242 of the Re25 vised Statutes of the United States or any 


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1 other provision of Federal or State law re2 lating to the avoidance of preferential or 

3 fraudulent transfers, the Corporation, 

4 whether acting as such or as receiver of a 

5 covered financial company, may not avoid 

6 any transfer of money or other property in 

7 connection with any qualified financial con8 tract with a covered financial company. 

9 (ii) EXCEPTION FOR CERTAIN TRANS10 FERS.—Clause (i) shall not apply to any 

11 transfer of money or other property in con12 nection with any qualified financial con13 tract with a covered financial company if 

14 the Corporation determines that the trans15 feree had actual intent to hinder, delay, or 

16 defraud such company, the creditors of 

17 such company, or any receiver appointed 

18 for such company. 

19 (D) CERTAIN CONTACTS AND AGREE20 MENTS DEFINED.—For purposes of this sub21 section, the following definitions shall apply: 

22 (i) QUALIFIED FINANCIAL CON23 TRACT.—The term ‘‘qualified financial 

24 contract’’ means any securities contract, 

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1 purchase agreement, swap agreement, and 

2 any similar agreement that the Corpora3 tion determines by regulation, resolution, 

4 or order to be a qualified financial contract 

5 for purposes of this paragraph. 

6 (ii) SECURITIES CONTRACT.—The 

7 term ‘‘securities contract’’— 

8 (I) means a contract for the pur9 chase, sale, or loan of a security, a 

10 certificate of deposit, a mortgage loan, 

11 any interest in a mortgage loan, a 

12 group or index of securities, certifi13 cates of deposit, or mortgage loans or 

14 interests therein (including any inter15 est therein or based on the value 

16 thereof) or any option on any of the 

17 foregoing, including any option to 

18 purchase or sell any such security, 

19 certificate of deposit, mortgage loan, 

20 interest, group or index, or option, 

21 and including any repurchase or re22 verse repurchase transaction on any 

23 such security, certificate of deposit, 

24 mortgage loan, interest, group or 

25 index, or option (whether or not such 


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1 repurchase or reverse repurchase 

2 transaction is a ‘‘repurchase agree3 ment,’’ as defined in clause (v)); 

4 (II) does not include any pur5 chase, sale, or repurchase obligation 

6 under a participation in a commercial 

7 mortgage loan unless the Corporation 

8 determines by regulation, resolution, 

9 or order to include any such agree10 ment within the meaning of such 

11 term; 

12 (III) means any option entered 

13 into on a national securities exchange 

14 relating to foreign currencies; 

15 (IV) means the guarantee (in16 cluding by novation) by or to any se17 curities clearing agency of any settle18 ment of cash, securities, certificates of 

19 deposit, mortgage loans or interests 

20 therein, group or index of securities, 

21 certificates of deposit or mortgage 

22 loans or interests therein (including 

23 any interest therein or based on the 

24 value thereof) or option on any of the 

25 foregoing, including any option to 


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1 purchase or sell any such security, 

2 certificate of deposit, mortgage loan, 

3 interest, group or index, or option 

4 (whether or not such settlement is in 

5 connection with any agreement or 

6 transaction referred to in subclauses 

7 (I) through (XII) (other than sub8 clause (II)); 

9 (V) means any margin loan; 

10 (VI) means any extension of 

11 credit for the clearance or settlement 

12 of securities transactions; 

13 (VII) means any loan transaction 

14 coupled with a securities collar trans15 action, any prepaid securities forward 

16 transaction, or any total return swap 

17 transaction coupled with a securities 

18 sale transaction; 

19 (VIII) means any other agree20 ment or transaction that is similar to 

21 any agreement or transaction referred 

22 to in this clause; 

23 (IX) means any combination of 

24 the agreements or transactions re25 ferred to in this clause; 


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1 (X) means any option to enter 

2 into any agreement or transaction re3 ferred to in this clause; 

4 (XI) means a master agreement 

5 that provides for an agreement or 

6 transaction referred to in subclause 

7 (I), (III), (IV), (V), (VI), (VII), 

8 (VIII), (IX), or (X), together with all 

9 supplements to any such master 

10 agreement, without regard to whether 

11 the master agreement provides for an 

12 agreement or transaction that is not a 

13 securities contract under this clause, 

14 except that the master agreement 

15 shall be considered to be a securities 

16 contract under this clause only with 

17 respect to each agreement or trans18 action under the master agreement 

19 that is referred to in subclause (I), 

20 (III), (IV), (V), (VI), (VII), (VIII), 

21 (IX), or (X); and 

22 (XII) means any security agree23 ment or arrangement or other credit 

24 enhancement related to any agree25 ment or transaction referred to in this 


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1 clause, including any guarantee or re2 imbursement obligation in connection 

3 with any agreement or transaction re4 ferred to in this clause. 

5 (iii) COMMODITY CONTRACT.—The 

6 term ‘‘commodity contract’’ means— 

7 (I) with respect to a futures com8 mission merchant, a contract for the 

9 purchase or sale of a commodity for 

10 future delivery on, or subject to the 

11 rules of, a contract market or board 

12 of trade; 

13 (II) with respect to a foreign fu14 tures commission merchant, a foreign 

15 future; 

16 (III) with respect to a leverage 

17 transaction merchant, a leverage 

18 transaction; 

19 (IV) with respect to a clearing 

20 organization, a contract for the pur21 chase or sale of a commodity for fu22 ture delivery on, or subject to the 

23 rules of, a contract market or board 

24 of trade that is cleared by such clear25 ing organization, or commodity option 


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1 traded on, or subject to the rules of, 

2 a contract market or board of trade 

3 that is cleared by such clearing orga4 nization; 

5 (V) with respect to a commodity 

6 options dealer, a commodity option; 

7 (VI) any other agreement or 

8 transaction that is similar to any 

9 agreement or transaction referred to 

10 in this clause; 

11 (VII) any combination of the 

12 agreements or transactions referred to 

13 in this clause; 

14 (VIII) any option to enter into 

15 any agreement or transaction referred 

16 to in this clause; 

17 (IX) a master agreement that 

18 provides for an agreement or trans19 action referred to in subclause (I), 

20 (II), (III), (IV), (V), (VI), (VII), or 

21 (VIII), together with all supplements 

22 to any such master agreement, with23 out regard to whether the master 

24 agreement provides for an agreement 

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1 modity contract under this clause, ex2 cept that the master agreement shall 

3 be considered to be a commodity con4 tract under this clause only with re5 spect to each agreement or trans6 action under the master agreement 

7 that is referred to in subclause (I), 

8 (II), (III), (IV), (V), (VI), (VII), or 

9 (VIII); or 

10 (X) any security agreement or 

11 arrangement or other credit enhance12 ment related to any agreement or 

13 transaction referred to in this clause, 

14 including any guarantee or reimburse15 ment obligation in connection with 

16 any agreement or transaction referred 

17 to in this clause. 

18 (iv) FORWARD CONTRACT.—The term 

19 ‘‘forward contract’’ means— 

20 (I) a contract (other than a com21 modity contract) for the purchase, 

22 sale, or transfer of a commodity or 

23 any similar good, article, service, 

24 right, or interest which is presently or 

25 in the future becomes the subject of 


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1 dealing in the forward contract trade, 

2 or product or byproduct thereof, with 

3 a maturity date more than 2 days 

4 after the date the contract is entered 

5 into, including a repurchase or reverse 

6 repurchase transaction (whether or 

7 not such repurchase or reverse repur8 chase transaction is a ‘‘repurchase 

9 agreement’’, as defined in clause (v)), 

10 consignment, lease, swap, hedge 

11 transaction, deposit, loan, option, allo12 cated transaction, unallocated trans13 action, or any other similar agree14 ment; 

15 (II) any combination of agree16 ments or transactions referred to in 

17 subclauses (I) and (III); 

18 (III) any option to enter into any 

19 agreement or transaction referred to 

20 in subclause (I) or (II); 

21 (IV) a master agreement that 

22 provides for an agreement or trans23 action referred to in subclauses (I), 

24 (II), or (III), together with all supple25 ments to any such master agreement, 


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1 without regard to whether the master 

2 agreement provides for an agreement 

3 or transaction that is not a forward 

4 contract under this clause, except that 

5 the master agreement shall be consid6 ered to be a forward contract under 

7 this clause only with respect to each 

8 agreement or transaction under the 

9 master agreement that is referred to 

10 in subclause (I), (II), or (III); or 

11 (V) any security agreement or ar12 rangement or other credit enhance13 ment related to any agreement or 

14 transaction referred to in subclause 

15 (I), (II), (III), or (IV), including any 

16 guarantee or reimbursement obliga17 tion in connection with any agreement 

18 or transaction referred to in any such 

19 subclause. 

20 (v) REPURCHASE AGREEMENT.—The 

21 term ‘‘repurchase agreement’’ (which defi22 nition also applies to a reverse repurchase 

23 agreement)— 

24 (I) means an agreement, includ25 ing related terms, which provides for 


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1 the transfer of one or more certifi2 cates of deposit, mortgage-related se3 curities (as such term is defined in 

4 the Securities Exchange Act of 1934), 

5 mortgage loans, interests in mortgage6 related securities or mortgage loans, 

7 eligible bankers’ acceptances, qualified 

8 foreign government securities (which 

9 for purposes of this clause shall mean 

10 a security that is a direct obligation 

11 of, or that is fully guaranteed by, the 

12 central government of a member of 

13 the Organization for Economic Co14 operation and Development as deter15 mined by regulation or order adopted 

16 by the Federal Reserve Board) or se17 curities that are direct obligations of, 

18 or that are fully guaranteed by, the 

19 United States or any agency of the 

20 United States against the transfer of 

21 funds by the transferee of such certifi22 cates of deposit, eligible bankers’ ac23 ceptances, securities, mortgage loans, 

24 or interests with a simultaneous 

25 agreement by such transferee to 


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1 transfer to the transferor thereof cer2 tificates of deposit, eligible bankers’ 

3 acceptances, securities, mortgage 

4 loans, or interests as described above, 

5 at a date certain not later than 1 year 

6 after such transfers or on demand, 

7 against the transfer of funds, or any 

8 other similar agreement; 

9 (II) does not include any repur10 chase obligation under a participation 

11 in a commercial mortgage loan unless 

12 the Corporation determines by regula13 tion, resolution, or order to include 

14 any such participation within the 

15 meaning of such term; 

16 (III) means any combination of 

17 agreements or transactions referred to 

18 in subclauses (I) and (IV); 

19 (IV) means any option to enter 

20 into any agreement or transaction re21 ferred to in subclause (I) or (III); 

22 (V) means a master agreement 

23 that provides for an agreement or 

24 transaction referred to in subclause 

25 (I), (III), or (IV), together with all 


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1 supplements to any such master 

2 agreement, without regard to whether 

3 the master agreement provides for an 

4 agreement or transaction that is not a 

5 repurchase agreement under this 

6 clause, except that the master agree7 ment shall be considered to be a re8 purchase agreement under this sub9 clause only with respect to each agree10 ment or transaction under the master 

11 agreement that is referred to in sub12 clause (I), (III), or (IV); and 

13 (VI) means any security agree14 ment or arrangement or other credit 

15 enhancement related to any agree16 ment or transaction referred to in 

17 subclause (I), (III), (IV), or (V), in18 cluding any guarantee or reimburse19 ment obligation in connection with 

20 any agreement or transaction referred 

21 to in any such subclause. 

22 (vi) SWAP AGREEMENT.—The term 

23 ‘‘swap agreement’’ means— 

24 (I) any agreement, including the 

25 terms and conditions incorporated by 


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1 reference in any such agreement, 

2 which is an interest rate swap, option, 

3 future, or forward agreement, includ4 ing a rate floor, rate cap, rate collar, 

5 cross-currency rate swap, and basis 

6 swap; a spot, same day-tomorrow, to7 morrow-next, forward, or other for8 eign exchange, precious metals, or 

9 other commodity agreement; a cur10 rency swap, option, future, or forward 

11 agreement; an equity index or equity 

12 swap, option, future, or forward 

13 agreement; a debt index or debt swap, 

14 option, future, or forward agreement; 

15 a total return, credit spread or credit 

16 swap, option, future, or forward 

17 agreement; a commodity index or 

18 commodity swap, option, future, or 

19 forward agreement; weather swap, op20 tion, future, or forward agreement; an 

21 emissions swap, option, future, or for22 ward agreement; or an inflation swap, 

23 option, future, or forward agreement; 

24 (II) any agreement or transaction 

25 that is similar to any other agreement 


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1 or transaction referred to in this 

2 clause and that is of a type that has 

3 been, is presently, or in the future be4 comes, the subject of recurrent deal5 ings in the swap or other derivatives 

6 markets (including terms and condi7 tions incorporated by reference in 

8 such agreement) and that is a for9 ward, swap, future, option or spot 

10 transaction on one or more rates, cur11 rencies, commodities, equity securities 

12 or other equity instruments, debt se13 curities or other debt instruments, 

14 quantitative measures associated with 

15 an occurrence, extent of an occur16 rence, or contingency associated with 

17 a financial, commercial, or economic 

18 consequence, or economic or financial 

19 indices or measures of economic or fi20 nancial risk or value; 

21 (III) any combination of agree22 ments or transactions referred to in 

23 this clause; 


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1 (IV) any option to enter into any 

2 agreement or transaction referred to 

3 in this clause; 

4 (V) a master agreement that pro5 vides for an agreement or transaction 

6 referred to in subclause (I), (II), (III), 

7 or (IV), together with all supplements 

8 to any such master agreement, with9 out regard to whether the master 

10 agreement contains an agreement or 

11 transaction that is not a swap agree12 ment under this clause, except that 

13 the master agreement shall be consid14 ered to be a swap agreement under 

15 this clause only with respect to each 

16 agreement or transaction under the 

17 master agreement that is referred to 

18 in subclause (I), (II), (III), or (IV); 

19 and 

20 (VI) any security agreement or 

21 arrangement or other credit enhance22 ment related to any agreements or 

23 transactions referred to in subclause 

24 (I), (II), (III), (IV), or (V), including 

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1 gation in connection with any agree2 ment or transaction referred to in any 

3 such subclause. 

4 (vii) DEFINITIONS RELATING TO DE5 FAULT.—When used in this paragraph and 

6 paragraph (10)— 

7 (I) The term ‘‘default’’ shall 

8 mean, with respect to a covered finan9 cial company, any adjudication or 

10 other official determination by any 

11 court of competent jurisdiction, or 

12 other public authority pursuant to 

13 which a conservator, receiver, or other 

14 legal custodian is appointed; and 

15 (II) The term ‘‘in danger of de16 fault’’ shall mean a covered financial 

17 company with respect to which the 

18 Corporation or appropriate State au19 thority has determined that— 

20 (aa) in the opinion of the 

21 Corporation or such authority— 

22 (AA) the covered finan23 cial company is not likely to 

24 be able to pay its obligations 


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1 in the normal course of busi2 ness; and 

3 (BB) there is no rea4 sonable prospect that the 

5 covered financial company 

6 will be able to pay such obli7 gations without Federal as8 sistance; or 

9 (CC) in the opinion of 

10 the Corporation or such au11 thority— 

12 (bb) the covered financial 

13 company has incurred or is likely 

14 to incur losses that will deplete 

15 all or substantially all of its cap16 ital; and 

17 (cc) there is no reasonable 

18 prospect that the capital will be 

19 replenished without Federal as20 sistance. 

21 (viii) TREATMENT OF MASTER AGREE22 MENT AS ONE AGREEMENT.—Any master 

23 agreement for any contract or agreement 

24 described in any preceding clause of this 

25 subparagraph (or any master agreement 


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1 for such master agreement or agreements), 

2 together with all supplements to such mas3 ter agreement, shall be treated as a single 

4 agreement and a single qualified financial 

5 contact. If a master agreement contains 

6 provisions relating to agreements or trans7 actions that are not themselves qualified fi8 nancial contracts, the master agreement 

9 shall be deemed to be a qualified financial 

10 contract only with respect to those trans11 actions that are themselves qualified finan12 cial contracts. 

13 (ix) TRANSFER.—The term ‘‘transfer’’ 

14 means every mode, direct or indirect, abso15 lute or conditional, voluntary or involun16 tary, of disposing of or parting with prop17 erty or with an interest in property, includ18 ing retention of title as a security interest 

19 and foreclosure of the covered financial 

20 company’s equity of redemption. 

21 (x) PERSON.—The term ‘‘person’’ in22 cludes any governmental entity in addition 

23 to any entity included in the definition of 

24 such term in section 1, title 1, United 

25 States Code. 


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1 (E) CLARIFICATION.—No provision of law 

2 shall be construed as limiting the right or 

3 power of the Corporation, or authorizing any 

4 court or agency to limit or delay, in any man5 ner, the right or power of the Corporation to 

6 transfer any qualified financial contract in ac7 cordance with paragraphs (9) and (10) of this 

8 subsection or to disaffirm or repudiate any such 

9 contract in accordance with subsection (c)(1) of 

10 this section. 

11 (F) WALKAWAY CLAUSES NOT EFFEC12 TIVE.— 

13 (i) IN GENERAL.—Notwithstanding 

14 the provisions of subparagraph (A) and 

15 sections 403 and 404 of the Federal De16 posit Insurance Corporation Improvement 

17 Act of 1991, no walkaway clause shall be 

18 enforceable in a qualified financial contract 

19 of a covered financial company in default. 

20 (ii) LIMITED SUSPENSION OF CERTAIN

21 OBLIGATIONS.—In the case of a qualified 

22 financial contract referred to in clause (i), 

23 any payment or delivery obligations other24 wise due from a party pursuant to the 

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1 pended from the time the receiver is ap2 pointed until the earlier of— 

3 (I) the time such party receives 

4 notice that such contract has been 

5 transferred pursuant to paragraph 

6 (10)(A); or 

7 (II) 5:00 p.m. (eastern time) on 

8 the business day following the date of 

9 the appointment of the receiver. 

10 (iii) WALKAWAY CLAUSE DEFINED.— 

11 For purposes of this subparagraph, the 

12 term ‘‘walkaway clause’’ means any provi13 sion in a qualified financial contract that 

14 suspends, conditions, or extinguishes a 

15 payment obligation of a party, in whole or 

16 in part, or does not create a payment obli17 gation of a party that would otherwise 

18 exist, solely because of such party’s status 

19 as a nondefaulting party in connection 

20 with the insolvency of a covered financial 

21 company that is a party to the contract or 

22 the appointment of or the exercise of rights 

23 or powers by a receiver of such covered fi24 nancial company, and not as a result of a 

25 party’s exercise of any right to offset, 


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1 setoff, or net obligations that exist under 

2 the contract, any other contract between 

3 those parties, or applicable law. 

4 (G) RECORDKEEPING.—The Corporation, 

5 in consultation with the Federal Reserve Board, 

6 may prescribe regulations requiring that the 

7 covered financial company maintain such 

8 records with respect to qualified financial con9 tracts (including market valuations) as the Cor10 poration determines to be necessary or appro11 priate in order to assist the receiver of the cov12 ered financial company in being able to exercise 

13 its rights and fulfill its obligations under this 

14 paragraph or paragraph (9) or (10). 

15 (9) TRANSFER OF QUALIFIED FINANCIAL CON16 TRACTS.— 

17 (A) IN GENERAL.—In making any transfer 

18 of assets or liabilities of a covered financial 

19 company in default which includes any qualified 

20 financial contract, the receiver for such covered 

21 financial company shall either— 

22 (i) transfer to one financial institu23 tion, other than a financial institution for 

24 which a conservator, receiver, trustee in 

25 bankruptcy, or other legal custodian has 


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1 been appointed or which is otherwise the 

2 subject of a bankruptcy or insolvency pro3 ceeding— 

4 (I) all qualified financial con5 tracts between any person or any af6 filiate of such person and the covered 

7 financial company in default; 

8 (II) all claims of such person or 

9 any affiliate of such person against 

10 such covered financial company under 

11 any such contract (other than any 

12 claim which, under the terms of any 

13 such contract, is subordinated to the 

14 claims of general unsecured creditors 

15 of such company); 

16 (III) all claims of such covered fi17 nancial company against such person 

18 or any affiliate of such person under 

19 any such contract; and 

20 (IV) all property securing or any 

21 other credit enhancement for any con22 tract described in subclause (I) or any 

23 claim described in subclause (II) or 

24 (III) under any such contract; or 


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1 (ii) transfer none of the qualified fi2 nancial contracts, claims, property or other 

3 credit enhancement referred to in clause (i) 

4 (with respect to such person and any affil5 iate of such person). 

6 (B) TRANSFER TO FOREIGN BANK, FINAN7 CIAL INSTITUTION, OR BRANCH OR AGENCY

8 THEREOF.—In transferring any qualified finan9 cial contracts and related claims and property 

10 under subparagraph (A)(i), the receiver for the 

11 covered financial company shall not make such 

12 transfer to a foreign bank, financial institution 

13 organized under the laws of a foreign country, 

14 or a branch or agency of a foreign bank or fi15 nancial institution unless, under the law appli16 cable to such bank, financial institution, branch 

17 or agency, to the qualified financial contracts, 

18 and to any netting contract, any security agree19 ment or arrangement or other credit enhance20 ment related to one or more qualified financial 

21 contracts, the contractual rights of the parties 

22 to such qualified financial contracts, netting 

23 contracts, security agreements or arrangements, 

24 or other credit enhancements are enforceable 


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1 substantially to the same extent as permitted 

2 under this section. 

3 (C) TRANSFER OF CONTRACTS SUBJECT

4 TO THE RULES OF A CLEARING ORGANIZA5 TION.—In the event that a receiver transfers 

6 any qualified financial contract and related 

7 claims, property, and credit enhancements pur8 suant to subparagraph (A)(i) and such contract 

9 is cleared by or subject to the rules of a clear10 ing organization, the clearing organization shall 

11 not be required to accept the transferee as a 

12 member by virtue of the transfer. 

13 (D) DEFINITIONS.—For purposes of this 

14 paragraph, the term ‘‘financial institution’’ 

15 means a broker or dealer, a depository institu16 tion, a futures commission merchant, a bridge 

17 financial company, or any other institution de18 termined by the Corporation by regulation to be 

19 a financial institution, and the term ‘‘clearing 

20 organization’’ has the same meaning as in sec21 tion 402 of the Federal Deposit Insurance Cor22 poration Improvement Act of 1991. 

23 (10) NOTIFICATION OF TRANSFER.— 

24 (A) IN GENERAL.—If— 


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1 (i) the receiver for a covered financial 

2 company in default or in danger of default 

3 transfers any assets and liabilities of the 

4 covered financial company; and 

5 (ii) the transfer includes any qualified 

6 financial contract, 

7 the receiver shall notify any person who is a 

8 party to any such contract of such transfer by 

9 5:00 p.m. (eastern time) on the business day 

10 following the date of the appointment of the re11 ceiver. 

12 (B) CERTAIN RIGHTS NOT ENFORCE13 ABLE.— 

14 (i) RECEIVERSHIP.—A person who is 

15 a party to a qualified financial contract 

16 with a covered financial company may not 

17 exercise any right that such person has to 

18 terminate, liquidate, or net such contract 

19 under paragraph (8)(A) of this subsection 

20 solely by reason of or incidental to the ap21 pointment under this section of a receiver 

22 for the covered financial company (or the 

23 insolvency or financial condition of the cov24 ered financial company for which the re25 ceiver has been appointed)— 


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1 (I) until 5:00 p.m. (eastern time) 

2 on the business day following the date 

3 of the appointment of the receiver; or 

4 (II) after the person has received 

5 notice that the contract has been 

6 transferred pursuant to paragraph 

7 (9)(A). 

8 (ii) NOTICE.—For purposes of this 

9 paragraph, the receiver for a covered fi10 nancial company shall be deemed to have 

11 notified a person who is a party to a quali12 fied financial contract with such covered fi13 nancial company if the receiver has taken 

14 steps reasonably calculated to provide no15 tice to such person by the time specified in 

16 subparagraph (A). 

17 (C) TREATMENT OF BRIDGE FINANCIAL

18 COMPANY.—For purposes of paragraph (9), a 

19 bridge financial company shall not be consid20 ered to be a financial institution for which a 

21 conservator, receiver, trustee in bankruptcy, or 

22 other legal custodian has been appointed or 

23 which is otherwise the subject of a bankruptcy 

24 or insolvency proceeding. 


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1 (D) BUSINESS DAY DEFINED.—For pur2 poses of this paragraph, the term ‘‘business 

3 day’’ means any day other than any Saturday, 

4 Sunday, or any day on which either the New 

5 York Stock Exchange or the Federal Reserve 

6 Bank of New York is closed. 

7 (11) DISAFFIRMANCE OR REPUDIATION OF

8 QUALIFIED FINANCIAL CONTRACTS.—In exercising 

9 the rights of disaffirmance or repudiation of a re10 ceiver with respect to any qualified financial contract 

11 to which a covered financial company is a party, the 

12 receiver for such covered financial shall either— 

13 (A) disaffirm or repudiate all qualified fi14 nancial contracts between— 

15 (i) any person or any affiliate of such 

16 person; and 

17 (ii) the covered financial company in 

18 default; or 

19 (B) disaffirm or repudiate none of the 

20 qualified financial contracts referred to in sub21 paragraph (A) (with respect to such person or 

22 any affiliate of such person). 

23 (12) CERTAIN SECURITY AND CUSTOMER IN24 TERESTS NOT AVOIDABLE.—No provision of this 


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1 subsection shall be construed as permitting the 

2 avoidance of any— 

3 (A) legally enforceable or perfected secu4 rity interest in any of the assets of any covered 

5 financial company except where such an inter6 est is taken in contemplation of the company’s 

7 insolvency or with the intent to hinder, delay, or 

8 defraud the company or the creditors of such 

9 company; or 

10 (B) legally enforceable interest in customer 

11 property. 

12 (13) AUTHORITY TO ENFORCE CONTRACTS.— 

13 (A) IN GENERAL.—The receiver may en14 force any contract, other than a director’s or of15 ficer’s liability insurance contract or a financial 

16 institution bond, entered into by the covered fi17 nancial company notwithstanding any provision 

18 of the contract providing for termination, de19 fault, acceleration, or exercise of rights upon, or 

20 solely by reason of, insolvency or the appoint21 ment of or the exercise of rights or powers by 

22 a receiver. 

23 (B) CERTAIN RIGHTS NOT AFFECTED.— 

24 No provision of this paragraph may be con25 strued as impairing or affecting any right of the 


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1 receiver to enforce or recover under a director’s 

2 or officer’s liability insurance contract or finan3 cial institution bond under other applicable law. 

4 (C) CONSENT REQUIREMENT.— 

5 (i) IN GENERAL.—Except as otherwise 

6 provided by this section, no person may ex7 ercise any right or power to terminate, ac8 celerate, or declare a default under any 

9 contract to which the covered financial 

10 company is a party, or to obtain possession 

11 of or exercise control over any property of 

12 the covered financial company or affect 

13 any contractual rights of the covered finan14 cial company, without the consent of the 

15 receiver, as appropriate, of the covered fi16 nancial company during the 90-day period 

17 beginning on the date of the appointment 

18 of the receiver, as applicable. 

19 (ii) CERTAIN EXCEPTIONS.—No provi20 sion of this subparagraph shall apply to a 

21 director or officer liability insurance con22 tract or a financial institution bond, to the 

23 rights of parties to certain qualified finan24 cial contracts pursuant to paragraph (8), 

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1 tracts pursuant to subtitle A of title IV of 

2 the Federal Deposit Insurance Corporation 

3 Improvement Act of 1991 (12 U.S.C. 4401 

4 et seq.), or shall be construed as permit5 ting the receiver to fail to comply with oth6 erwise enforceable provisions of such con7 tract. 

8 (14) EXCEPTION FOR FEDERAL RESERVE

9 BANKS AND CORPORATION SECURITY INTEREST.— 

10 No provision of this subsection shall apply with re11 spect to— 

12 (A) any extension of credit from any Fed13 eral Reserve bank or the Corporation to any 

14 covered financial company; or 

15 (B) any security interest in the assets of 

16 the covered financial company securing any 

17 such extension of credit. 

18 (15) SAVINGS CLAUSE.—The meanings of terms 

19 used in this subsection are applicable for purposes of 

20 this subsection only, and shall not be construed or 

21 applied so as to challenge or affect the characteriza22 tion, definition, or treatment of any similar terms 

23 under any other statute, regulation, or rule, includ24 ing, but not limited, to the Gramm-Leach-Bliley Act, 

25 the Legal Certainty for Bank Products Act of 2000, 


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1 the securities laws (as that term is defined in section 

2 3(a)(47) of the Securities Exchange Act of 1934), 

3 and the Commodity Exchange Act. 

4 (d) VALUATION OF CLAIMS IN DEFAULT.— 

5 (1) IN GENERAL.—Notwithstanding any other 

6 provision of Federal law or the law of any State, and 

7 regardless of the method which the Corporation de8 termines to utilize with respect to a covered financial 

9 company, including transactions authorized under 

10 subsection (h), this subsection shall govern the 

11 rights of the creditors of such covered financial com12 pany. 

13 (2) MAXIMUM LIABILITY.—The maximum li14 ability of the Corporation, acting as receiver or in 

15 any other capacity, to any person having a claim 

16 against the receiver or the covered financial com17 pany for which such receiver is appointed shall equal 

18 the amount such claimant would have received if— 

19 (A) a determination had not been made 

20 under section 1603(b) with respect to the cov21 ered financial company; and 

22 (B) the covered financial company had 

23 been liquidated under title 11, United States 

24 Code, or any case related to title 11, United 

25 States Code (including a case initiated by the 


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1 Securities Investor Protection Corporation with 

2 respect to a financial company subject to the 

3 Securities Investor Protection Act of 1970), or 

4 any State insolvency law. 

5 (3) ADDITIONAL PAYMENTS AUTHORIZED.— 

6 (A) IN GENERAL.—The Corporation may, 

7 as receiver and with the approval of the Sec8 retary, make additional payments or credit ad9 ditional amounts to or with respect to or for the 

10 account of any claimant or category of claim11 ants of a covered financial company if the Cor12 poration determines that such payments or 

13 credits are necessary or appropriate to— 

14 (i) minimize losses to the receiver 

15 from the resolution of the covered financial 

16 company under this section; or 

17 (ii) prevent or mitigate serious ad18 verse effects to financial stability or the 

19 United States economy. 

20 (B) MANNER OF PAYMENT.—The Corpora21 tion may make payments or credit amounts 

22 under subparagraph (A) directly to the claim23 ants or may make such payments or credit such 

24 amounts to a company other than a covered fi25 nancial company or a bridge financial company 


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1 established with respect thereto in order to in2 duce such other company to accept liability for 

3 such claims. 

4 (e) LIMITATION ON COURT ACTION.—Except as pro5 vided in this section or at the request of the receiver ap6 pointed for a covered financial company, no court may 

7 take any action to restrain or affect the exercise of powers 

8 or functions of the receiver hereunder. 

9 (f) LIABILITY OF DIRECTORS AND OFFICERS.— 

10 (1) IN GENERAL.—A director or officer of a 

11 covered financial company may be held personally 

12 liable for monetary damages in any civil action de13 scribed in paragraph (2) by, on behalf of, or at the 

14 request or direction of the Corporation, which action 

15 is prosecuted wholly or partially for the benefit of 

16 the Corporation— 

17 (A) acting as receiver of such covered fi18 nancial company; 

19 (B) acting based upon a suit, claim, or 

20 cause of action purchased from, assigned by, or 

21 otherwise conveyed by such receiver; or 

22 (C) acting based upon a suit, claim, or 

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1 nection with assistance provided under section 

2 1604. 

3 (2) ACTIONS COVERED.—Paragraph (1) shall 

4 apply with respect to actions for gross negligence, 

5 including any similar conduct or conduct that dem6 onstrates a greater disregard of a duty of care (than 

7 gross negligence) including intentional tortious con8 duct, as such terms are defined and determined 

9 under applicable State law. 

10 (3) SAVINGS CLAUSE.—Nothing in this sub11 section shall impair or affect any right of the Cor12 poration under other applicable law. 

13 (g) DAMAGES.—In any proceeding related to any 

14 claim against a covered financial company’s director, offi15 cer, employee, agent, attorney, accountant, appraiser, or 

16 any other party employed by or providing services to a 

17 covered financial company, recoverable damages deter18 mined to result from the improvident or otherwise im19 proper use or investment of any covered financial com20 pany’s assets shall include principal losses and appropriate 

21 interest. 

22 (h) BRIDGE FINANCIAL COMPANIES.— 

23 (1) ORGANIZATION.— 

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1 nies may organize one or more bridge financial 

2 companies in accordance with this subsection. 

3 (B) AUTHORITIES.—Upon the creation of 

4 a bridge financial company under subparagraph 

5 (A) with respect to a covered financial com6 pany, such bridge financial company may— 

7 (i) assume such liabilities (including 

8 liabilities associated with any trust or cus9 tody business but excluding any liabilities 

10 that count as regulatory capital) of such 

11 covered financial company as the Corpora12 tion may, in its discretion, determine to be 

13 appropriate; 

14 (ii) purchase such assets (including 

15 assets associated with any trust or custody 

16 business) of such covered financial com17 pany as the Corporation may, in its discre18 tion, determine to be appropriate; and 

19 (iii) perform any other temporary 

20 function which the Corporation may, in its 

21 discretion, prescribe in accordance with 

22 this section. 

23 (2) CHARTER AND ESTABLISHMENT.— 

24 (A) ESTABLISHMENT.—If the Corporation 

25 is appointed as receiver for a covered financial 


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1 company, the Corporation may grant a Federal 

2 charter to and approve articles of association 

3 for one or more bridge financial company or 

4 companies with respect to such covered finan5 cial company which shall, by operation of law 

6 and immediately upon issuance of its charter 

7 and approval of its articles of association, be es8 tablished and operate in accordance with, and 

9 subject to, such charter, articles, and this sec10 tion. 

11 (B) MANAGEMENT.—Upon its establish12 ment, a bridge financial company shall be under 

13 the management of a board of directors ap14 pointed by the Corporation. 

15 (C) ARTICLES OF ASSOCIATION.—The arti16 cles of association and organization certificate 

17 of a bridge financial shall have such terms as 

18 the Corporation may provide, and shall be exe19 cuted by such representatives as the Corpora20 tion may designate. 

21 (D) TERMS OF CHARTER; RIGHTS AND

22 PRIVILEGES.—Subject to and in accordance 

23 with the provisions of this subsection, the Cor24 poration shall— 


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1 (i) establish the terms of the charter 

2 of a bridge financial company and the 

3 rights, powers, authorities and privileges of 

4 a bridge financial company granted by the 

5 charter or as an incident thereto; and 

6 (ii) provide for, and establish the 

7 terms and conditions governing, the man8 agement (including, but not limited to, the 

9 bylaws and the number of directors of the 

10 board of directors) and operations of the 

11 bridge financial company. 

12 (E) TRANSFER OF RIGHTS AND PRIVI13 LEGES OF COVERED FINANCIAL COMPANY.— 

14 (i) IN GENERAL.—Notwithstanding 

15 any other provision of Federal law or the 

16 law of any State, the Corporation may pro17 vide for a bridge financial company to suc18 ceed to and assume any rights, powers, au19 thorities or privileges of the covered finan20 cial company with respect to which the 

21 bridge financial company was established 

22 and, upon such determination by the Cor23 poration, the bridge financial company 

24 shall immediately and by operation of law 


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1 succeed to and assume such rights, powers, 

2 authorities and privileges. 

3 (ii) EFFECTIVE WITHOUT AP4 PROVAL.—Any succession to or assumption 

5 by a bridge financial company of rights, 

6 powers, authorities or privileges of a cov7 ered financial company under clause (i) or 

8 otherwise shall be effective without any 

9 further approval under Federal or State 

10 law, assignment, or consent with respect 

11 thereto. 

12 (F) CORPORATE GOVERNANCE AND ELEC13 TION AND DESIGNATION OF BODY OF LAW.—To 

14 the extent permitted by the Corporation and 

15 consistent with this section and any rules, regu16 lations or directives issued by the Corporation 

17 under this section, a bridge financial company 

18 may elect to follow the corporate governance 

19 practices and procedures as are applicable to a 

20 corporation incorporated under the general cor21 poration law of the State of Delaware, or the 

22 State of incorporation or organization of the 

23 covered financial company with respect to which 

24 the bridge financial company was established, 

25 as such law may be amended from time to time. 


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1 (G) CAPITAL.— 

2 (i) CAPITAL NOT REQUIRED.—Not3 withstanding any other provision of Fed4 eral or State law, a bridge financial com5 pany may, if permitted by the Corporation, 

6 operate without any capital or surplus, or 

7 with such capital or surplus as the Cor8 poration may in its discretion determine to 

9 be appropriate. 

10 (ii) NO CONTRIBUTION BY THE COR11 PORATION REQUIRED.—The Corporation is 

12 not required to pay capital into a bridge fi13 nancial company or to issue any capital 

14 stock on behalf of a bridge financial com15 pany established under this subsection. 

16 (iii) AUTHORITY.—If the Corporation 

17 determines that such action is advisable, 

18 the Corporation may cause capital stock or 

19 other securities of a bridge financial com20 pany established with respect to a covered 

21 financial company to be issued and offered 

22 for sale in such amounts and on such 

23 terms and conditions as the Corporation 

24 may, in its discretion, determine. 


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1 (3) INTERESTS IN AND ASSETS AND OBLIGA2 TIONS OF COVERED FINANCIAL COMPANY.—Notwith3 standing paragraphs (1) or (2) or any other provi4 sion of law— 

5 (A) a bridge financial company shall as6 sume, acquire, or succeed to the assets or liabil7 ities of a covered financial company (including 

8 the assets or liabilities associated with any trust 

9 or custody business) only to the extent that 

10 such assets or liabilities are transferred by the 

11 Corporation to the bridge financial company in 

12 accordance with, and subject to the restrictions 

13 set forth in, paragraph (1)(B); and 

14 (B) a bridge financial company shall not 

15 assume, acquire, or succeed to any obligation 

16 that a covered financial company for which a 

17 receiver has been appointed may have to any 

18 shareholder, member, general partner, limited 

19 partner, or other person with an interest in the 

20 equity of the covered financial company that 

21 arises as a result of the status of that person 

22 having an equity claim in the covered financial 

23 company. 

24 (4) BRIDGE FINANCIAL COMPANY TREATED AS

25 BEING IN DEFAULT FOR CERTAIN PURPOSES.—A 


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1 bridge financial company shall be treated as a cov2 ered financial company in default at such times and 

3 for such purposes as the Corporation may, in its dis4 cretion, determine. 

5 (5) TRANSFER OF ASSETS AND LIABILITIES.— 

6 (A) TRANSFER OF ASSETS AND LIABIL7 ITIES.—The Corporation, as receiver, may 

8 transfer any assets and liabilities of a covered 

9 financial company (including any assets or li10 abilities associated with any trust or custody 

11 business) to one or more bridge financial com12 panies in accordance with and subject to the re13 strictions of paragraph (1)(B). 

14 (B) SUBSEQUENT TRANSFERS.—At any 

15 time after the establishment of a bridge finan16 cial company with respect to a covered financial 

17 company, the Corporation, as receiver, may 

18 transfer any assets and liabilities of such cov19 ered financial company as the Corporation may, 

20 in its discretion, determine to be appropriate in 

21 accordance with and subject to the restrictions 

22 of paragraph (1)(B). 

23 (C) TREATMENT OF TRUST OR CUSTODY

24 BUSINESS.—For purposes of this paragraph, 

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1 ciary appointments, held by any covered finan2 cial company is included among its assets and 

3 liabilities. 

4 (D) EFFECTIVE WITHOUT APPROVAL.— 

5 The transfer of any assets or liabilities, includ6 ing those associated with any trust or custody 

7 business of a covered financial company to a 

8 bridge financial company shall be effective with9 out any further approval under Federal or 

10 State law, assignment, or consent with respect 

11 thereto. 

12 (E) EQUITABLE TREATMENT OF SIMI13 LARLY SITUATED CREDITORS.—The Corpora14 tion shall treat all creditors of a covered finan15 cial company that are similarly situated under 

16 subsection (b)(1) in a similar manner in exer17 cising the authority of the Corporation under 

18 this subsection to transfer any assets or liabil19 ities of the covered financial company to one or 

20 more bridge financial companies established 

21 with respect to such covered financial company, 

22 except that the Corporation may take actions 

23 (including making payments) that do not com24 ply with this subparagraph, if— 


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1 (i) the Corporation determines that 

2 such actions are necessary to maximize the 

3 value of the assets of the covered financial 

4 company, to maximize the present value 

5 return from the sale or other disposition of 

6 the assets of the covered financial com7 pany, to minimize the amount of any loss 

8 realized upon the sale or other disposition 

9 of the assets of the covered financial com10 pany, or to contain or address serious ad11 verse effects to financial stability or the 

12 U.S. economy; and 

13 (ii) all creditors that are similarly sit14 uated under subsection (b)(1) receive not 

15 less than the amount provided in sub16 section (d)(2). 

17 (F) LIMITATION ON TRANSFER OF LIABIL18 ITIES.—Notwithstanding any other provision of 

19 law, the aggregate amount of liabilities of a cov20 ered financial company that are transferred to, 

21 or assumed by, a bridge financial company from 

22 a covered financial company may not exceed the 

23 aggregate amount of the assets of the covered 

24 financial company that are transferred to, or 


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1 purchased by, the bridge financial company 

2 from the covered financial company. 

3 (6) STAY OF JUDICIAL ACTION.—Any judicial 

4 action to which a bridge financial company becomes 

5 a party by virtue of its acquisition of any assets or 

6 assumption of any liabilities of a covered financial 

7 company shall be stayed from further proceedings 

8 for a period of up to 45 days (or such longer period 

9 as may be agreed to upon the consent of all parties) 

10 at the request of the bridge financial company. 

11 (7) AGREEMENTS AGAINST INTEREST OF THE

12 BRIDGE FINANCIAL COMPANY.—No agreement that 

13 tends to diminish or defeat the interest of the bridge 

14 financial company in any asset of a covered financial 

15 company acquired by the bridge financial company 

16 shall be valid against the bridge financial company 

17 unless such agreement is in writing and executed by 

18 an authorized officer or representative of the covered 

19 financial company. 

20 (8) NO FEDERAL STATUS.— 

21 (A) AGENCY STATUS.—A bridge financial 

22 company is not an agency, establishment, or in23 strumentality of the United States. 

24 (B) EMPLOYEE STATUS.—Representatives 

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1 ficers, employees, or agents of a bridge financial 

2 company are not, solely by virtue of service in 

3 any such capacity, officers or employees of the 

4 United States. Any employee of the Corporation 

5 or of any Federal instrumentality who serves at 

6 the request of the Corporation as a representa7 tive for purposes of paragraph (1)(B), director, 

8 officer, employee, or agent of a bridge financial 

9 company shall not— 

10 (i) solely by virtue of service in any 

11 such capacity lose any existing status as 

12 an officer or employee of the United States 

13 for purposes of title 5, United States Code, 

14 or any other provision of law; or 

15 (ii) receive any salary or benefits for 

16 service in any such capacity with respect to 

17 a bridge financial company in addition to 

18 such salary or benefits as are obtained 

19 through employment with the Corporation 

20 or such Federal instrumentality. 

21 (9) EXEMPT TAX STATUS.—Notwithstanding 

22 any other provision of Federal or State law, a bridge 

23 financial company, its franchise, property, and in24 come shall be exempt from all taxation now or here25 after imposed by the United States, by any territory, 


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1 dependency, or possession thereof, or by any State, 

2 county, municipality, or local taxing authority. 

3 (10) FEDERAL AGENCY APPROVAL; ANTITRUST

4 REVIEW.— 

5 (A) IN GENERAL.—If a transaction involv6 ing the merger or sale of a bridge financial 

7 company requires approval by a Federal agency, 

8 the transaction may not be consummated before 

9 the 5th calendar day after the date of approval 

10 by the Federal agency responsible for such ap11 proval with respect thereto. If, in connection 

12 with any such approval a report on competitive 

13 factors from the Attorney General is required, 

14 the Federal agency responsible for such ap15 proval shall promptly notify the Attorney Gen16 eral of the proposed transaction and the Attor17 ney General shall provide the required report 

18 within 10 days of the request. If a filing is re19 quired under the Hart-Scott-Rodino Antitrust 

20 Improvements Act of 1976 with the Depart21 ment of Justice or the Federal Trade Commis22 sion, the waiting period shall expire not later 

23 than the 30th day following such filing notwith24 standing any other provision of Federal law or 

25 any attempt by any Federal agency to extend 


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1 such waiting period, and no further request for 

2 information by any Federal agency shall be per3 mitted. 

4 (B) EMERGENCY.—If the Secretary, in 

5 consultation with the Chairman of the Federal 

6 Reserve Board, has found that the Corporation 

7 must act immediately to prevent the probable 

8 failure of the covered financial company in9 volved, the approvals and filings referred to in 

10 subparagraph (A) shall not be required and the 

11 transaction may be consummated immediately 

12 by the Corporation. 

13 (11) DURATION OF BRIDGE FINANCIAL COM14 PANY.—Subject to paragraphs (12), (13) and (14), 

15 the status of a bridge financial company as such 

16 shall terminate at the end of the 2-year period fol17 lowing the date it was granted a charter. The Cor18 poration may, in its discretion, extend the status of 

19 the bridge financial company as such for 3 addi20 tional 1-year periods. 

21 (12) TERMINATION OF BRIDGE FINANCIAL COM22 PANY STATUS.—The status of any bridge financial 

23 company as such shall terminate upon the earliest 

24 of— 


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1 (A) the merger or consolidation of the 

2 bridge financial company with a company that 

3 is not a bridge financial company; 

4 (B) at the election of the Corporation, the 

5 sale of a majority of the capital stock of the 

6 bridge financial company to a company other 

7 than the Corporation and other than another 

8 bridge financial company; 

9 (C) the sale of 80 percent, or more, of the 

10 capital stock of the bridge financial company to 

11 a person other than the Corporation and other 

12 than another bridge financial company; 

13 (D) at the election of the Corporation, ei14 ther the assumption of all or substantially all of 

15 the liabilities of the bridge financial company by 

16 a company that is not a bridge financial com17 pany, or the acquisition of all or substantially 

18 all of the assets of the bridge financial company 

19 by a company that is not a bridge financial 

20 company, or other entity as permitted under 

21 applicable law; and 

22 (E) the expiration of the period provided in 

23 paragraph (11), or the earlier dissolution of the 

24 bridge financial company as provided in para25 graph (14). 


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1 (13) EFFECT OF TERMINATION EVENTS.— 

2 (A) MERGER OR CONSOLIDATION.—A 

3 merger or consolidation as provided in para4 graph (12)(A) shall be conducted in accordance 

5 with, and shall have the effect provided in, the 

6 provisions of applicable law. For the purpose of 

7 effecting such a merger or consolidation, the 

8 bridge financial company shall be treated as a 

9 corporation organized under the laws of the 

10 State of Delaware (unless the law of another 

11 State has been selected by the bridge financial 

12 company in accordance with paragraph (2)(F)), 

13 and the Corporation shall be treated as the sole 

14 shareholder thereof, notwithstanding any other 

15 provision of State or Federal law. 

16 (B) CHARTER CONVERSION.—Following 

17 the sale of a majority of the capital stock of the 

18 bridge financial company as provided in para19 graph (12)(B), the Corporation may amend the 

20 charter of the bridge financial company to re21 flect the termination of the status of the bridge 

22 financial company as such, whereupon the com23 pany shall have all of the rights, powers, and 

24 privileges under its constituent documents and 

25 applicable State or Federal law. In connection 


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1 therewith, the Corporation may take such steps 

2 as may be necessary or convenient to reincor3 porate the bridge financial company under the 

4 laws of a State and, notwithstanding any provi5 sions of State or Federal law, such State-char6 tered corporation shall be deemed to succeed by 

7 operation of law to such rights, titles, powers 

8 and interests of the bridge financial company as 

9 the Corporation may provide, with the same ef10 fect as if the bridge financial company had 

11 merged with the State-chartered corporation 

12 under provisions of the corporate laws of such 

13 State. 

14 (C) SALE OF STOCK.—Following the sale 

15 of 80 percent or more of the capital stock of a 

16 bridge financial company as provided in para17 graph (12)(C), the company shall have all of 

18 the rights, powers, and privileges under its con19 stituent documents and applicable State or Fed20 eral law. In connection therewith, the Corpora21 tion may take such steps as may be necessary 

22 or convenient to reincorporate the bridge finan23 cial company under the laws of a State and, 

24 notwithstanding any provisions of State or Fed25 eral law, the State-chartered corporation shall 


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1 be deemed to succeed by operation of law to 

2 such rights, titles, powers and interests of the 

3 bridge financial company as the Corporation 

4 may provide, with the same effect as if the 

5 bridge financial company had merged with the 

6 State-chartered corporation under provisions of 

7 the corporate laws of such State. 

8 (D) ASSUMPTION OF LIABILITIES AND

9 SALE OF ASSETS.—Following the assumption of 

10 all or substantially all of the liabilities of the 

11 bridge financial company, or the sale of all or 

12 substantially all of the assets of the bridge fi13 nancial company, as provided in paragraph 

14 (12)(D), at the election of the Corporation the 

15 bridge financial company may retain its status 

16 as such for the period provided in paragraph 

17 (11) or may be dissolved at the election of the 

18 Corporation. 

19 (E) AMENDMENTS TO CHARTER.—Fol20 lowing the consummation of a transaction de21 scribed in subparagraph (A), (B), (C), or (D) 

22 of paragraph (12), the charter of the resulting 

23 company shall be amended to reflect the termi24 nation of bridge financial company status, if ap25 propriate. 


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1 (14) DISSOLUTION OF BRIDGE FINANCIAL COM2 PANY.— 

3 (A) IN GENERAL.—Notwithstanding any 

4 other provision of State or Federal law, if a 

5 bridge financial company’s status as such has 

6 not previously been terminated by the occur7 rence of an event specified in subparagraph (A), 

8 (B), (C), or (D) of paragraph (12)— 

9 (i) the Corporation may, in its discre10 tion, dissolve the bridge financial company 

11 in accordance with this paragraph at any 

12 time; and 

13 (ii) the Corporation shall promptly 

14 commence dissolution proceedings in ac15 cordance with this paragraph upon the ex16 piration of the 2-year period following the 

17 date the bridge financial company was 

18 chartered, or any extension thereof, as pro19 vided in paragraph (11). 

20 (B) PROCEDURES.—The Corporation shall 

21 remain the receiver of a bridge financial com22 pany for the purpose of dissolving the bridge fi23 nancial company. The Corporation as such re24 ceiver shall wind up the affairs of the bridge fi25 nancial company in conformity with the proviVerDate Nov 24 2008 22:04 Dec 02, 2009 Jkt 089200 PO 00000 Frm 00390 Fmt 6652 Sfmt 6201 E:\BILLS\H4173.IH H4173

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1 sions of law relating to the liquidation of cov2 ered financial companies. With respect to any 

3 such bridge financial company, the Corporation 

4 as receiver shall have all the rights, powers, and 

5 privileges and shall perform the duties related 

6 to the exercise of such rights, powers, or privi7 leges granted by law to a receiver of a covered 

8 financial company and, notwithstanding any 

9 other provision of law, in the exercise of such 

10 rights, powers, and privileges the Corporation 

11 shall not be subject to the direction or super12 vision of any State agency or other Federal 

13 agency. 

14 (15) AUTHORITY TO OBTAIN CREDIT.— 

15 (A) IN GENERAL.—A bridge financial com16 pany may obtain unsecured credit and issue un17 secured debt. 

18 (B) INABILITY TO OBTAIN CREDIT.—If a 

19 bridge financial company is unable to obtain 

20 unsecured credit or issue unsecured debt, the 

21 Corporation may authorize the obtaining of 

22 credit or the issuance of debt by the bridge fi23 nancial company— 


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1 (i) with priority over any or all of the 

2 obligations of the bridge financial com3 pany; 

4 (ii) secured by a lien on property of 

5 the bridge financial company that is not 

6 otherwise subject to a lien; or 

7 (iii) secured by a junior lien on prop8 erty of the bridge financial company that 

9 is subject to a lien. 

10 (C) LIMITATIONS.— 

11 (i) IN GENERAL.—The Corporation, 

12 after notice and a hearing, may authorize 

13 the obtaining of credit or the issuance of 

14 debt by a bridge financial company that is 

15 secured by a senior or equal lien on prop16 erty of the bridge financial company that 

17 is subject to a lien only if— 

18 (I) the bridge financial company 

19 is unable to otherwise obtain such 

20 credit or issue such debt; and 

21 (II) there is adequate protection 

22 of the interest of the holder of the lien 

23 on the property with respect to which 

24 such senior or equal lien is proposed 

25 to be granted. 


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1 (D) BURDEN OF PROOF.—In any hearing 

2 under this subsection, the Corporation has the 

3 burden of proof on the issue of adequate protec4 tion. 

5 (16) EFFECT ON DEBTS AND LIENS.—The re6 versal or modification on appeal of an authorization 

7 under this subsection to obtain credit or issue debt, 

8 or of a grant under this section of a priority or a 

9 lien, does not affect the validity of any debt so 

10 issued, or any priority or lien so granted, to an enti11 ty that extended such credit in good faith, whether 

12 or not such entity knew of the pendency of the ap13 peal, unless such authorization and the issuance of 

14 such debt, or the granting of such priority or lien, 

15 were stayed pending appeal. 

16 (i) SHARING RECORDS.—Whenever the Corporation 

17 has been appointed as receiver for a covered financial com18 pany, the Federal Reserve Board and the company’s pri19 mary appropriate regulatory agency, if any, shall each 

20 make all records relating to the company available to the 

21 receiver which may be used by the receiver in any manner 

22 the receiver determines to be appropriate. 

23 (j) EXPEDITED PROCEDURES FOR CERTAIN

24 CLAIMS.— 


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1 (1) TIME FOR FILING NOTICE OF APPEAL.— 

2 The notice of appeal of any order, whether interlocu3 tory or final, entered in any case brought by the 

4 Corporation against a covered financial company’s 

5 director, officer, employee, agent, attorney, account6 ant, or appraiser or any other person employed by 

7 or providing services to a covered financial company 

8 shall be filed not later than 30 days after the date 

9 of entry of the order. The hearing of the appeal shall 

10 be held not later than 120 days after the date of the 

11 notice of appeal. The appeal shall be decided not 

12 later than 180 days after the date of the notice of 

13 appeal. 

14 (2) SCHEDULING.—A court of the United 

15 States shall expedite the consideration of any case 

16 brought by the Corporation against a covered finan17 cial company’s director, officer, employee, agent, at18 torney, accountant, or appraiser or any other person 

19 employed by or providing services to a covered finan20 cial company. As far as practicable, the court shall 

21 give such case priority on its docket. 

22 (3) JUDICIAL DISCRETION.—The court may 

23 modify the schedule and limitations stated in para24 graphs (1) and (2) in a particular case, based on a 

25 specific finding that the ends of justice that would 


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1 be served by making such a modification would out2 weigh the best interest of the public in having the 

3 case resolved expeditiously. 

4 (k) FOREIGN INVESTIGATIONS.—The Corporation, as 

5 receiver of any covered financial company and for pur6 poses of carrying out any power, authority, or duty with 

7 respect to a covered financial company— 

8 (1) may request the assistance of any foreign fi9 nancial authority and provide assistance to any for10 eign financial authority in accordance with section 

11 8(v) of the Federal Deposit Insurance Act as if the 

12 covered financial company were an insured deposi13 tory institution, the Corporation were the appro14 priate Federal banking agency for the company and 

15 any foreign financial authority were the foreign 

16 banking authority; and 

17 (2) may maintain an office to coordinate for18 eign investigations or investigations on behalf of for19 eign financial authorities. 

20 (l) PROHIBITION ON ENTERING SECRECY AGREE21 MENTS AND PROTECTIVE ORDERS.—The Corporation 

22 may not enter into any agreement or approve any protec23 tive order which prohibits the Corporation from disclosing 

24 the terms of any settlement of an administrative or other 

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1 tion in its capacity as receiver for a covered financial com2 pany. 

3 (m) LIQUIDATION OF CERTAIN COVERED FINANCIAL

4 COMPANIES OR BRIDGE FINANCIAL COMPANIES.—Not5 withstanding any other provision of law (other than a con6 flicting provision of this section), the Corporation, in con7 nection with the liquidation of any covered financial com8 pany or bridge financial company with respect to which 

9 the Corporation has been appointed as receiver, shall— 

10 (1) in the case of any covered financial com11 pany or bridge financial company that is or has a 

12 subsidiary that is a stockbroker (as that term is de13 fined in section 101 of title 11 of the United States 

14 Code) but is not a member of the Securities Investor 

15 Protection Corporation, apply the provisions of sub16 chapter III of chapter 7 of title 11 of the United 

17 States Code in respect of the distribution to any 

18 ‘‘customer’’ of all ‘‘customer name securities’’ and 

19 ‘‘customer property’’ (as such terms are defined in 

20 section 741 of such title 11) as if such covered fi21 nancial company or bridge financial company were a 

22 debtor for purposes of such subchapter; or 

23 (2) in the case of any covered financial com24 pany or bridge financial company that is a com25 modity broker (as that term is defined in section 


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1 101 of title 11 of the United States Code), apply the 

2 provisions of subchapter IV of chapter 7 of title 11 

3 of the United States Code in respect of the distribu4 tion to any ‘‘customer’’ of all ‘‘customer property’’ 

5 (as such terms are defined in section 761 of such 

6 title 11) as if such covered financial company or 

7 bridge financial company were a debtor for purposes 

8 of such subchapter. 

9 (n) SYSTEMIC DISSOLUTION FUND.— 

10 (1) ESTABLISHMENT AND PURPOSE.— 

11 (A) IN GENERAL.—There is established in 

12 the Treasury a separate fund to be known as 

13 the ‘‘Systemic Dissolution Fund’’— 

14 (i) to facilitate and provide for the or15 derly and complete dissolution of any failed 

16 financial company or companies that pose 

17 a systemic threat to the financial markets 

18 or economy, as determined under 1603(b); 

19 and 

20 (ii) to ensure that any taxpayer funds 

21 utilized to facilitate such liquidations are 

22 fully repaid from assessments levied on fi23 nancial companies that have assets of 

24 $50,000,000,000, adjusted for inflation, or 

25 more. 


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1 (B) ADJUSTMENT OF THRESHOLD.—The 

2 threshold referred to in subparagraph (A)(ii) 

3 shall be adjusted on an annual basis, based on 

4 the growth of assets owned or managed by fi5 nancial companies (as defined in section 

6 1602(9)). 

7 (2) AUTHORITY.—The Systemic Dissolution 

8 Fund shall be administered by the Corporation, 

9 which shall have exclusive authority to— 

10 (A) impose assessments on covered finan11 cial companies in accordance with paragraphs 

12 (6) through (8); 

13 (B) maintain and administer the Fund in 

14 a manner so as to make clear to the general 

15 public that such Fund is unrelated to any other 

16 Fund maintained and administered by the Cor17 poration, including the Deposit Insurance 

18 Fund; 

19 (C) utilize the Fund to facilitate the dis20 solution of a covered financial company (as de21 fined by section 1602(5)) as provided in para22 graph (3), or take such other actions as are au23 thorized by this subtitle; 


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1 (D) invest the Fund in accordance with 

2 section 13(a) of the Federal Deposit Insurance 

3 Act; and 

4 (E) exercise borrowing authority as pre5 scribed in subsection (o). 

6 (3) USES.— 

7 (A) The Fund shall be available to the 

8 Corporation for use with respect to the dissolu9 tion of a covered financial company to— 

10 (i) cover the costs incurred by the 

11 Corporation, including as receiver, in exer12 cising its rights, authorities, and powers 

13 and fulfilling its obligations and respon14 sibilities under this section; 

15 (ii) repay such funds in accordance 

16 with subsection (o)(6); and 

17 (iii) cover the costs of systemic sta18 bilization actions, pursuant to subsections 

19 (d) and (f) of section 1604. 

20 (B) The Fund shall not be used in any 

21 manner to benefit any officer or director of 

22 such company removed pursuant to section 

23 1604(f)(6). 


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1 (4) DEPOSITS TO FUND.—All amounts assessed 

2 against a financial company under this section shall 

3 be deposited into the Fund. 

4 (5) SIZE OF FUND.—The Corporation shall, by 

5 rule, establish the minimum size of the Fund con6 sistent with subparagraphs (C) and (D) of para7 graph (6). 

8 (6) ASSESSMENTS.— 

9 (A) ASSESSMENTS TO MAINTAIN FUND.— 

10 The Corporation shall impose risk-based assess11 ments on financial companies in such amount 

12 and manner and subject to such terms and con13 ditions that the Corporation determines, by reg14 ulation and in consultation with the Council, 

15 are necessary for the amount in the Fund to at 

16 least equal the minimum size established pursu17 ant to paragraph (5). 

18 (B) ASSESSMENTS TO REPLENISH THE

19 FUND.—If the Fund falls below the minimum 

20 size established pursuant to paragraph (5), the 

21 Corporation shall impose assessments on finan22 cial companies in such amounts and manner 

23 and subject to such terms and conditions as the 

24 Corporation determines, by regulation and in 

25 consultation with the Council, are necessary to 


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1 replenish the fund subject to the limitations in 

2 subparagraph (D). 

3 (C) MINIMUM ASSESSMENT THRESHOLD.— 

4 (i) IN GENERAL.—The Corporation 

5 shall not assess financial companies with 

6 less than $50,000,000,000, adjusted for in7 flation, of assets on a consolidated basis, 

8 subject to any differentiation as permitted 

9 in paragraph (8) and shall assess financial 

10 companies with $10,000,000,000, adjusted 

11 for inflation or more in assets in accord12 ance with paragraphs (7) and (8). 

13 (ii) HEDGE FUNDS.—The Corporation 

14 shall not assess financial companies that 

15 manage hedge funds (as defined by the 

16 Corporation for the purpose of this section, 

17 in consultation with the Securities and Ex18 change Commission) with less than 

19 $10,000,000,000, adjusted for inflation, of 

20 assets, under management on a consoli21 dated basis, subject to any differentiation 

22 as permitted in paragraph (8) and shall 

23 assess any financial companies that man24 age hedge funds with $10,000,000,000 or 


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1 more of assets under management in ac2 cordance with paragraphs (7) and (8). 

3 (D) MAXIMUM SIZE OF FUND VIA ASSESS4 MENTS.— 

5 (i) IN GENERAL.—The Corporation 

6 shall suspend assessments on financial 

7 companies on the day after the date on 

8 which the total of the assessments, exclud9 ing interest or other earnings from invest10 ments made pursuant to paragraph (2)(D), 

11 equals $150,000,000,000. 

12 (ii) EXCEPTIONS.—Any suspension of 

13 assessments under clause (i)— 

14 (I) may be set aside if the Fund 

15 falls below $150,000,000,000; and 

16 (II) shall be set aside if the Fund 

17 falls below the minimum level estab18 lished in subparagraph (C). 

19 (7) FACTORS.—The Corporation, in consulta20 tion with the Council shall establish a risk matrix to 

21 be used in establishing assessments that takes into 

22 account— 

23 (A) the actual or expected risk of losses to 

24 the Fund; 


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1 (B) economic conditions generally affecting 

2 financial companies so as to allow assessments 

3 and the Fund to increase during more favorable 

4 economic conditions and to decrease during less 

5 favorable economic conditions; 

6 (C) any assessments imposed on a finan7 cial company or an affiliate of a financial com8 pany that— 

9 (i) is an insured depository institu10 tion, assessed pursuant to section 7 or 

11 13(c)(4)(G) of the Federal Deposit Insur12 ance Act; 

13 (ii) is a member of the Securities In14 vestor Protection Corporation, assessed 

15 pursuant to section 4 of the Securities In16 vestor Protection Act of 1970 (15 U.S.C. 

17 78ddd); 

18 (iii) is an insured credit union, as19 sessed pursuant to section 202(c)(1)(A)(i) 

20 of the Federal Credit Union Act (12 

21 U.S.C. 1782(c)(1)(A)(i)); or 

22 (iv) is an insurance company, assessed 

23 pursuant to applicable State law to cover 

24 (or reimburse payments made to cover) the 

25 costs of the rehabilitation, liquidation or 


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1 other State insolvency proceeding with re2 spect to 1 or more insurance companies; 

3 (D) the risks presented by the financial 

4 company to the financial system and the extent 

5 to which the financial company has benefitted, 

6 or likely would benefit, from the dissolution of 

7 a financial company under this title, includ8 ing— 

9 (i) the amount, different categories, 

10 and concentrations of assets of the finan11 cial company and its affiliates, including 

12 both on-balance sheet and off-balance sheet 

13 assets; 

14 (ii) the activities of the financial com15 pany and its affiliates; 

16 (iii) the relevant market share of the 

17 financial company and its affiliates; 

18 (iv) the extent to which the financial 

19 company is leveraged; 

20 (v) the potential exposure to sudden 

21 calls on liquidity precipitated by economic 

22 distress; 

23 (vi) the amount, maturity, volatility, 

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1 ligations to, and relationship with, other fi2 nancial companies; 

3 (vii) the amount, maturity, volatility, 

4 and stability of the company’s liabilities, 

5 including the degree of reliance on short6 term funding, taking into consideration ex7 isting systems for measuring a company’s 

8 risk-based capital; 

9 (viii) the stability and variety of the 

10 company’s sources of funding; 

11 (ix) the company’s importance as a 

12 source of credit for households, businesses, 

13 and State and local governments and as a 

14 source of liquidity for the financial system; 

15 (x) the extent to which assets are sim16 ply managed and not owned by the finan17 cial company and the extent to which own18 ership of assets under management is dif19 fuse; and 

20 (xi) the amount, different categories, 

21 and concentrations of liabilities, both in22 sured and uninsured, contingent and non23 contingent, including both on-balance sheet 

24 and off-balance sheet liabilities, of the fi25 nancial company and its affiliates; and 


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1 (E) such other factors as the Corporation, 

2 in consultation with the Council, may determine 

3 to be appropriate. 

4 (8) REQUIREMENT FOR EQUITABLE TREAT5 MENT IN ASSESSMENTS.—In establishing the assess6 ment system for the Fund, the Corporation, by regu7 lation and in consultation with the Council, shall dif8 ferentiate among financial companies based on com9 plexity of operations or organization, interconnected10 ness, size, direct or indirect activities, and any other 

11 factors the Corporation or the Council may deem ap12 propriate to ensure that the assessments charged eq13 uitably reflect the risk posed to the Fund by par14 ticular classes of financial companies. 

15 (9) MINIMUM COMMENT PERIOD.—In order to 

16 ensure sufficient opportunity for public and congres17 sional review and evaluation of any assessment sys18 tem, any proposed regulations regarding the imple19 mentation of the assessment system under this sub20 title shall provide an opportunity for public comment 

21 during a period of not less than 60 days. 

22 (o) BORROWING AUTHORITY.— 

23 (1) BORROWING FROM TREASURY.— 

24 (A) IN GENERAL.—Subject to paragraphs 

25 (3), (4), and (5), the Corporation may borrow 


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1 from the Treasury, and the Secretary of the 

2 Treasury is authorized to lend to the Corpora3 tion on such terms as may be fixed by the Cor4 poration and the Secretary, such funds as in 

5 the judgment of the Board of Directors of the 

6 Corporation are required, in addition to the 

7 funds available in the Systemic Dissolution 

8 Fund, to permit the orderly dissolution of 1 or 

9 more covered systemically significant financial 

10 companies, covered affiliates, or covered sub11 sidiaries under this title. 

12 (B) RATE OF INTEREST.—The rate of in13 terest to be charged in connection with any loan 

14 made pursuant to this subsection shall not be 

15 less than an amount determined by the Sec16 retary of the Treasury, taking into consider17 ation current market yields on outstanding 

18 marketable obligations of the United States of 

19 comparable maturities. 

20 (2) PUBLIC DEBT ISSUANCES.—For the pur21 poses described in subsection (1), the Secretary of 

22 the Treasury may use as a public-debt transaction 

23 the proceeds of the sale of any securities hereafter 

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1 ter 31 of title 31 are extended to include such loans. 

2 All loans and repayments under this subsection shall 

3 be treated as public-debt transactions of the United 

4 States. 

5 (3) BORROWING AUTHORITY WHEN FUND AS6 SETS ARE LESS THAN $150,000,000,000.— 

7 (A) Subject to paragraph (B), the bor8 rowing authority granted in paragraph (1) shall 

9 be available to the Corporation where— 

10 (i) the value of the Fund is less than 

11 $150,000,000,000; 

12 (ii) the Corporation determines that 

13 the immediate dissolution of a financial 

14 company or financial companies requires 

15 more funds than are available in the Fund; 

16 and 

17 (iii) the Corporation has provided a 

18 specific plan for repayment under para19 graph (7)(A). 

20 (B) The Corporation may borrow, and the 

21 Secretary may lend, any amount of funds that, 

22 when added to the amount available in the 

23 Fund on the date the Corporation makes a re24 quest to borrow funds, would not exceed 

25 $150,000,000,000. 


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1 (C) For purposes of paragraph (1), the 

2 Corporation’s total debt may not exceed 

3 $150,000,000,000 (not including any funds bor4 rowed pursuant to subsection (s)). 

5 (4) ADDITIONAL BORROWING AUTHORITY.— 

6 (A) If at any time the Corporation antici7 pates that the dissolution of any financial com8 pany or financial companies will require funds 

9 in excess of $150,000,000,000— 

10 (i) the Corporation shall submit to the 

11 Secretary and the President a written re12 quest for additional borrowing authority 

13 subject to the limitation in subparagraph 

14 (5), which shall be accompanied by a cer15 tification indicating the anticipated amount 

16 needed, the basis on which such amount 

17 was determined, and any such information 

18 as the Secretary may deem necessary; and 

19 (ii) the President shall transmit a re20 quest to the House of Representatives and 

21 the Senate requesting the additional bor22 rowing authority, which shall include the 

23 certification referred to in clause (i) and 

24 which includes a repayment schedule as 

25 outlined in paragraph (7). 


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1 (B) Any request for borrowing authority 

2 under paragraph (A) shall be effective only if 

3 approved by affirmative vote of the House of 

4 Representatives and the Senate in accordance 

5 with subsection (s). 

6 (5) LIMITATIONS ON ADDITIONAL BORROWING

7 AUTHORITY.— 

8 (A) No request for borrowing authority is 

9 permitted under paragraph (4) unless the 

10 President, in consultation with the Council, cer11 tifies to the House of Representatives and the 

12 Senate that the borrowing authority is nec13 essary to avoid or mitigate an imminent finan14 cial emergency. 

15 (B) The amount of borrowing authority re16 quested under subparagraph (A)(i) may not ex17 ceed $50,000,000,000. 

18 (6) PROCEEDS FROM LIQUIDATION, REPAYMENT

19 OF FUNDS.— 

20 (A) IN GENERAL.—The Corporation shall 

21 take such measures as may be appropriate to 

22 maximize the amount of funds from any dis23 solution that may be available for repayment 

24 under subparagraph (B) consistent with sys25 temic concerns. 


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1 (B) REPAYMENT PRIORITY.—Amounts re2 alized from the dissolution of any financial com3 pany under this subtitle that are not otherwise 

4 utilized by the Corporation to dissolve a finan5 cial company under subsection (n)(3)(A) shall 

6 be paid— 

7 (i) first, to repay any costs incurred 

8 in exercising the borrowing authority 

9 granted in paragraph (1); and 

10 (ii) second, to recapitalize the Fund to 

11 such level as the Corporation deems nec12 essary, but not to exceed 

13 $150,000,000,000. 

14 (7) REPAYMENT PLAN AND SCHEDULES RE15 QUIRED FOR ANY BORROWING.— 

16 (A) IN GENERAL.—No amount may be 

17 provided by the Secretary of the Treasury to 

18 the Corporation under paragraph (1) unless an 

19 agreement is in effect between the Secretary 

20 and the Corporation which— 

21 (i) provides a specific plan and sched22 ule for assessments under (n)(6) to achieve 

23 the repayment of the outstanding amount 

24 of any borrowing under such subsection; 

25 and 


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1 (ii) demonstrates that income to the 

2 Corporation from assessments under this 

3 section will be sufficient to amortize the 

4 outstanding balance within the period es5 tablished in the repayment schedule and 

6 pay the interest accruing on such balance. 

7 (B) CONSULTATION WITH AND REPORT TO

8 CONGRESS.—The Secretary of the Treasury and 

9 the Corporation shall— 

10 (i) consult with the Committee on Fi11 nancial Services of the House of Rep12 resentatives and the Committee on Bank13 ing, Housing, and Urban Affairs of the 

14 Senate on the terms of any repayment 

15 schedule agreement; and 

16 (ii) submit a copy of each repayment 

17 schedule agreement to the Committee on 

18 Financial Services of the House of Rep19 resentatives and the Committee on Bank20 ing, Housing, and Urban Affairs of the 

21 Senate before the end of the 30-day period 

22 beginning on the date any amount is pro23 vided by the Secretary of the Treasury to 

24 the Corporation under paragraph (1). 


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1 (p) INFORMATION GATHERING AND VERIFICATION; 

2 PAYMENTS .— 

3 (1) IN GENERAL.—The Corporation may re4 quire each financial company to make available such 

5 information as the Corporation may require— 

6 (A) for purposes of— 

7 (i) determining the financial com8 pany’s assessment under this section; 

9 (ii) verifying the accuracy of informa10 tion; and 

11 (iii) preparing for resolution, includ12 ing a resolution plan as required by this 

13 section; and 

14 (B) for such other purposes as may be ap15 propriate and necessary to promote the orderly 

16 dissolution of the financial company. 

17 (2) USE OF EXISTING REPORTS.—The Corpora18 tion shall, to the fullest extent possible, accept— 

19 (A) reports that a financial company has 

20 provided or been required to provide to other 

21 Federal or State supervisors or to appropriate 

22 self-regulatory organizations; 

23 (B) information that is otherwise required 

24 to be reported publicly; and 

25 (C) externally audited financial statements. 


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1 (3) AUTHORITY FOR ON-SITE INSPECTION.— 

2 The Corporation may make on-site inspections of a 

3 financial company’s books and records as necessary 

4 to carry out the purposes of this subsection. 

5 (4) RULEMAKING.—The Corporation may pro6 mulgate such rules or regulations as are necessary 

7 or appropriate to implement this subsection. 

8 (5) PAYMENTS OF ASSESSMENTS REQUIRED .— 

9 (A) IN GENERAL.—Any financial company 

10 subject to an assessment under this section 

11 shall pay to the Corporation such assessment. 

12 (B) FORM OF PAYMENT.—The payments 

13 required under this section shall be made in 

14 such manner and at such time or times as the 

15 Corporation, in consultation with the Council, 

16 shall prescribe by regulation. 

17 (6) PENALTY FOR FAILURE TO TIMELY PAY AS18 SESSMENTS.—Any financial company that fails or 

19 refuses to pay any assessment under this section 

20 shall be subject to a penalty under section 18(h) of 

21 the Federal Deposit Insurance Act, as if that finan22 cial company were an insured depository institution. 

23 (q) ASSESSMENT ACTIONS.— 

24 (1) IN GENERAL.—The Corporation, in any 

25 court of competent jurisdiction, shall be entitled to 


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1 recover from any financial company the amount of 

2 any unpaid assessment lawfully payable by such 

3 company. 

4 (2) STATUTE OF LIMITATIONS.—Notwith5 standing any other provision in Federal law, or the 

6 law of any State— 

7 (A) any action by a financial company to 

8 recover from the Corporation the overpaid 

9 amount of any assessment shall be brought 

10 within 3 years after the date the assessment 

11 payment was due, subject to subparagraph (C); 

12 (B) any action by the Corporation to re13 cover from a financial company the underpaid 

14 amount of any assessment shall be brought 

15 within 3 years after the date the assessment 

16 payment was due, subject to subparagraph (C); 

17 and 

18 (C) if a financial company has made a 

19 false or fraudulent statement with intent to 

20 evade any or all of its assessment, the Corpora21 tion shall have until 3 years after the date of 

22 discovery of the false or fraudulent statement in 

23 which to bring an action to recover the under24 paid amount. 


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1 (r) REQUIREMENT TO MAINTAIN SYSTEMIC DIS2 SOLUTION FUND AS SEPARATE FUND.—The Systemic 

3 Dissolution Fund shall at all times be administered in a 

4 manner that is separate and distinct from the Deposit In5 surance Fund, and the Corporation shall take such actions 

6 as may be necessary to ensure that such distinction is 

7 made with respect to internal processes and procedures 

8 as well as with regard to any public information, discus9 sion or other communications involving either Fund. 

10 (s) CONGRESSIONAL APPROVAL OF ADDITIONAL

11 BORROWING AUTHORITY.— 

12 (1) INTRODUCTION.—On the day on which the 

13 request of the President is received by the House of 

14 Representatives and the Senate under subsection 

15 (o)(4)(A)(ii), a joint resolution specified in para16 graph (5) shall be introduced in the House by the 

17 majority leader and minority leader of the House 

18 and in the Senate by the majority leader and minor19 ity leader of the Senate. If either House is not in 

20 session on the day on which such a request is re21 ceived, the joint resolution with respect to such re22 quest shall be introduced in that House, as provided 

23 in the preceding sentence, on the first day thereafter 

24 on which that House is in session. 


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1 (2) CONSIDERATION IN THE HOUSE OF REP2 RESENTATIVES.— 

3 (A) REPORTING AND DISCHARGE.—Any 

4 committee of the House of Representatives to 

5 which a joint resolution introduced under para6 graph (1) is referred shall report such joint res7 olution to the House not later than 5 calendar 

8 days after the applicable date of introduction of 

9 the joint resolution. If a committee fails to re10 port such joint resolution within that period, 

11 the committee shall be discharged from further 

12 consideration of the joint resolution and the 

13 joint resolution shall be referred to the appro14 priate calendar. 

15 (B) PROCEEDING TO CONSIDERATION.— 

16 After all committees authorized to consider a 

17 joint resolution have reported such joint resolu18 tion to the House or have been discharged from 

19 its consideration, it shall be in order, not later 

20 than the sixth day after the applicable date of 

21 introduction of the joint resolution, to move to 

22 proceed to consider the joint resolution in the 

23 House. Such a motion shall not be in order 

24 after the House has disposed of a motion to 

25 proceed on the joint resolution and shall not be 


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1 in order if the House has received a message 

2 from the Senate under paragraph (4)(C). The 

3 previous question shall be considered as ordered 

4 on the motion to its adoption without inter5 vening motion. A motion to reconsider the vote 

6 by which the motion is disposed of shall not be 

7 in order. 

8 (C) CONSIDERATION.—The joint resolution 

9 shall be considered in the House and shall be 

10 considered as read. All points of order against 

11 a joint resolution and against its consideration 

12 are waived. The previous question shall be con13 sidered as ordered on the joint resolution to its 

14 passage without intervening motion except two 

15 hours of debate equally divided and controlled 

16 by the proponent and an opponent. A motion to 

17 reconsider the vote on passage of a joint resolu18 tion shall not be in order. 

19 (3) CONSIDERATION IN THE SENATE.— 

20 (A) PLACEMENT ON CALENDAR.—Upon in21 troduction in the Senate, the joint resolution 

22 shall be placed immediately on the calendar. 

23 (B) FLOOR CONSIDERATION.— 

24 (i) IN GENERAL.—Notwithstanding 

25 rule XXII of the Standing Rules of the 


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1 Senate, it is in order at any time during 

2 the period beginning on the 4th day after 

3 the applicable date of introduction in the 

4 Senate and ending on the 6th day after the 

5 applicable date of introduction in the Sen6 ate (even though a previous motion to the 

7 same effect has been disagreed to) to move 

8 to proceed to the consideration of the joint 

9 resolution, and all points of order against 

10 the joint resolution (and against consider11 ation of the joint resolution) are waived. 

12 The motion to proceed is not debatable. 

13 The motion is not subject to a motion to 

14 postpone. A motion to reconsider the vote 

15 by which the motion is agreed to or dis16 agreed to shall not be in order. If a motion 

17 to proceed to the consideration of the reso18 lution is agreed to, the joint resolution 

19 shall remain the unfinished business until 

20 disposed of. 

21 (ii) DEBATE.—Debate on the joint 

22 resolution, and on all debatable motions 

23 and appeals in connection therewith, shall 

24 be limited to not more than 10 hours, 

25 which shall be divided equally between the 


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1 majority and minority leaders or their des2 ignees. A motion further to limit debate is 

3 in order and not debatable. An amendment 

4 to, or a motion to postpone, or a motion to 

5 proceed to the consideration of other busi6 ness, or a motion to recommit the joint 

7 resolution is not in order. 

8 (iii) VOTE ON PASSAGE.—The vote on 

9 passage shall occur immediately following 

10 the conclusion of the debate on a joint res11 olution, and a single quorum call at the 

12 conclusion of the debate if requested in ac13 cordance with the rules of the Senate. 

14 (iv) RULINGS OF THE CHAIR ON PRO15 CEDURE.—Appeals from the decisions of 

16 the Chair relating to the application of the 

17 rules of the Senate, as the case may be, to 

18 the procedure relating to a joint resolution 

19 shall be decided without debate. 

20 (4) RULES RELATING TO SENATE AND HOUSE

21 OF REPRESENTATIVES.— 

22 (A) COORDINATION WITH ACTION BY

23 OTHER HOUSE.—If, before the passage by one 

24 House of a joint resolution of that House, that 

25 House receives from the other House a joint 


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1 resolution, then the following procedures shall 

2 apply: 

3 (i) The joint resolution of the other 

4 House shall not be referred to a com5 mittee. 

6 (ii) With respect to the joint resolu7 tion of the House receiving the resolution, 

8 the procedure in that House shall be the 

9 same as if no such joint resolution had 

10 been received from the other House; but 

11 the vote on passage shall be on the joint 

12 resolution of the other House. 

13 (B) TREATMENT OF COMPANION MEAS14 URES.—If, following passage of a joint resolu15 tion in the Senate, the Senate then receives the 

16 companion measure from the House of Rep17 resentatives, the companion measure shall not 

18 be debatable. 

19 (C) FAILURE OF JOINT RESOLUTION IN

20 THE SENATE.— 

21 (i) If, in the Senate, the motion to 

22 proceed to the consideration of the joint 

23 resolution fails on adoption, the Secretary 

24 of the Senate shall transmit a message to 


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1 that effect to the House of Representa2 tives. 

3 (ii) If, in the Senate, the joint resolu4 tion fails on passage, the Secretary of the 

5 Senate shall transmit a message to that ef6 fect to the House of Representatives. 

7 (D) RULES OF HOUSE OF REPRESENTA8 TIVES AND SENATE.—This paragraph and the 

9 preceding paragraphs are enacted by Con10 gress— 

11 (i) as an exercise of the rulemaking 

12 power of the Senate and House of Rep13 resentatives, respectively, and as such it is 

14 deemed a part of the rules of each House, 

15 respectively, but applicable only with re16 spect to the procedure to be followed in 

17 that House in the case of a joint resolu18 tion, and it supersedes other rules only to 

19 the extent that it is inconsistent with such 

20 rules; and 

21 (ii) with full recognition of the con22 stitutional right of either House to change 

23 the rules (so far as relating to the proce24 dure of that House) at any time, in the 


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1 same manner, and to the same extent as in 

2 the case of any other rule of that House. 

3 (5) DEFINITION.—In this section, the term 

4 ‘‘joint resolution’’ means only a joint resolution— 

5 (A) which does not have a preamble; 

6 (B) the title of which is as follows: ‘‘Joint 

7 resolution relating to the approval of request 

8 for borrowing authority under the Financial 

9 Stability Improvement Act of 2009.’’; and 

10 (C) the sole matter after the resolving 

11 clause of which is as follows: ‘‘That the Con12 gress approves the request for additional bor13 rowing authority transmitted to the Congress 

14 on lll by the President under section 

15 1609(o)(4)(A)(ii) of the Financial Stability Im16 provement Act of 2009.’’, the blank space being 

17 filled with the appropriate date. 

18 (t) NO FEDERAL STATUS.— 

19 (1) AGENCY STATUS.—A covered financial com20 pany (or any covered subsidiary thereof) that is 

21 placed into receivership is not a department, agency, 

22 or instrumentality of the United States for purposes 

23 of statutes that confer powers on or impose obliga24 tions on government entities. 


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1 (2) EMPLOYEE STATUS.—Interim directors, di2 rectors, officers, employees, or agents of a covered 

3 financial company that is placed into receivership 

4 are not, solely by virtue of service in any such capac5 ity, officers or employees of the United States. Any 

6 employee of the Corporation, acting as receiver or of 

7 any Federal agency who serves at the request of the 

8 receiver as an interim director, director, officer, em9 ployee, or agent of a covered financial company that 

10 is placed into receivership shall not— 

11 (A) solely by virtue of service in any such 

12 capacity lose any existing status as an officer or 

13 employee of the United States for purposes of 

14 title 5, United States Code, or any other provi15 sion of law, or; 

16 (B) receive any salary or benefits for serv17 ice in any such capacity with respect to a cov18 ered financial company that is placed into re19 ceivership in addition to such salary or benefits 

20 as are obtained through employment with the 

21 Corporation or other Federal agency. 


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1 SEC. 1610. CLARIFICATION OF PROHIBITION REGARDING 

2 CONCEALMENT OF ASSETS FROM RECEIVER 

3 OR LIQUIDATING AGENT. 

4 (a) IN GENERAL.—Section 1032 of title 18, United 

5 States Code, is amended in paragraph (1) by deleting ‘‘or’’ 

6 before ‘‘the National Credit Union Administration 

7 Board,’’ and by inserting immediately thereafter ‘‘or the 

8 Corporation, as defined in section 1602 of the Resolution 

9 Authority for Large, Interconnected Financial Companies 

10 Act of 2009,’’. 

11 (b) CONFORMING CHANGE.—The heading of section 

12 1032 of title 18, United States Code, is amended by strik13 ing ‘‘of financial institution’’. 

14 SEC. 1611. OFFICE OF RESOLUTION. 

15 (a) TRIGGER OF AND PLAN FOR ESTABLISHMENT.— 

16 (1) TRIGGER.—If the Secretary appoints the 

17 Corporation as receiver for a financial company 

18 under section 1604, the Inspector General of the 

19 Corporation shall, as soon as possible after such ap20 pointment, establish in accordance with this section 

21 the Office of Resolution as an office within the Of22 fice of the Inspector General of the Corporation. 

23 (2) PLAN.—The Inspector General of the Cor24 poration shall, in consultation with the Council of 

25 Inspectors General on Financial Oversight estab26 lished under section 1702, formulate and maintain a 


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1 plan to allow for the timely establishment of an Of2 fice of Resolution in accordance with paragraph (1). 

3 The Inspector General of the Corporation shall make 

4 such plan available to the Financial Services Over5 sight Council established under section 1001. 

6 (b) SPECIAL DEPUTY INSPECTOR GENERAL.—The 

7 head of the Office of Resolution is the Special Deputy In8 spector General for Resolution (in this section referred to 

9 as the ‘‘Special Deputy Inspector General’’), who shall be 

10 appointed by and report to the Inspector General of the 

11 Corporation. 

12 (c) DUTIES.— 

13 (1) AUDITS AND INVESTIGATIONS.—It shall be 

14 the duty of the Special Deputy Inspector General, in 

15 consultation with and subject to the approval of the 

16 Inspector General of the Corporation, to conduct, 

17 supervise, and coordinate audits and investigations 

18 of the activities of the Corporation in its capacity as 

19 receiver for a financial company under section 1604, 

20 including by collecting the following information: 

21 (A) A description of each financial com22 pany for which the Corporation has been ap23 pointed as receiver under section 1604. 

24 (B) A description of the activities and fu25 ture plans of the Corporation with respect to 


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1 each financial company for which it has been 

2 appointed as receiver, and an analysis of wheth3 er such activities and plans conform to the re4 quirements of this subtitle and other applicable 

5 law and are in the best interest of the overall 

6 stability of the financial system. 

7 (C) Such other information as the Special 

8 Deputy Inspector General considers appro9 priate, in consultation with and subject to the 

10 approval of the Inspector General of the Cor11 poration. 

12 (2) ADDITIONAL DUTIES.— 

13 (A) SYSTEMS, PROCEDURES, AND CON14 TROLS.—The Special Deputy Inspector General 

15 shall establish, maintain, and oversee such sys16 tems, procedures, and controls as the Special 

17 Deputy Inspector General considers appro18 priate, in consultation with and subject to the 

19 approval of the Inspector General of the Cor20 poration, to discharge the duties under para21 graph (1). 

22 (B) REPORTING OF CRIMINAL VIOLATIONS

23 TO ATTORNEY GENERAL.—If the Special Dep24 uty Inspector General, in carrying out this sec25 tion, discovers facts that give the Special DepVerDate Nov 24 2008 22:04 Dec 02, 2009 Jkt 089200 PO 00000 Frm 00427 Fmt 6652 Sfmt 6201 E:\BILLS\H4173.IH H4173

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1 uty Inspector General reasonable grounds to be2 lieve there has been a violation of Federal 

3 criminal law, the Special Deputy Inspector Gen4 eral shall expeditiously report such facts to the 

5 Attorney General. 

6 (C) MINIMIZING DUPLICATION OF EF7 FORT.—The Inspector General of the Corpora8 tion and the Special Deputy Inspector General 

9 shall coordinate to minimize duplication of ef10 fort in the oversight of the Corporation’s activi11 ties as receiver for financial companies under 

12 section 1604. 

13 (3) DUTIES UNDER THE INSPECTOR GENERAL

14 ACT OF 1978.—In addition to the duties specified in 

15 paragraphs (1) and (2), the Special Deputy Inspec16 tor General shall assist the Inspector General of the 

17 Corporation in carrying out such duties and respon18 sibilities of inspectors general under the Inspector 

19 General Act of 1978 as the Inspector General of the 

20 Corporation considers appropriate. 

21 (d) AUTHORITIES UNDER THE INSPECTOR GENERAL

22 ACT OF 1978.—The Inspector General of the Corporation 

23 may confer on the Special Deputy Inspector General such 

24 authorities provided to the Inspector General of the Cor25 poration in section 6 of the Inspector General Act of 1978 


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1 as the Inspector General of the Corporation considers nec2 essary to enable the Special Deputy Inspector General to 

3 carry out the duties specified in subsection (c). 

4 (e) PERSONNEL, FACILITIES, AND OTHER RE5 SOURCES.— 

6 (1) IN GENERAL.—The Special Deputy Inspec7 tor General may, in consultation with and subject to 

8 the approval of the Inspector General of the Cor9 poration, expend such amounts from the fund estab10 lished under section 1609(n) as are necessary to 

11 carry out the duties described in subsection (c) and 

12 to submit the reports required by subsection (h). 

13 (2) ADDITIONAL FUNDS.—If the fund estab14 lished under section 1609(n) is insufficient to enable 

15 the Special Deputy Inspector General to begin car16 rying out the duties of the Special Deputy Inspector 

17 General in a timely fashion or later becomes insuffi18 cient to enable the Special Deputy Inspector General 

19 to carry out such duties, the Inspector General of 

20 the Corporation shall detail the necessary personnel, 

21 facilities, or other resources to the Special Deputy 

22 Inspector General. 

23 (f) CORRECTIVE RESPONSES TO AUDIT PROB24 LEMS.—The Chairman of the Corporation shall— 


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1 (1) take action to address deficiencies identified 

2 by a report or investigation of the Special Deputy 

3 Inspector General; or 

4 (2) certify to the appropriate committees of 

5 Congress that no action is necessary or appropriate. 

6 (g) COOPERATION AND COORDINATION WITH OTHER

7 ENTITIES.—In carrying out the duties, responsibilities, 

8 and authorities of the Special Deputy Inspector General 

9 under this section, the Special Deputy Inspector General 

10 shall work with each of the inspectors general who is a 

11 member of the Council of Inspectors General on Financial 

12 Oversight established under section 1703(a)(1), in order 

13 to avoid duplication of effort and ensure comprehensive 

14 oversight of the Corporation’s activities as a receiver ap15 pointed under section 1604. 

16 (h) REPORTS.— 

17 (1) IN GENERAL.—In lieu of the semiannual re18 ports required by section 5(a) of the Inspector Gen19 eral Act of 1978, the Special Deputy Inspector Gen20 eral shall submit to the appropriate committees of 

21 Congress at the following times a report prepared in 

22 consultation with and approved by the Inspector 

23 General of the Corporation: 


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1 (A) Not later than 30 days after the ap2 pointment of the Special Deputy Inspector Gen3 eral. 

4 (B) During the first 3 years after such ap5 pointment, not later than 30 days after the end 

6 of each fiscal quarter during which the Cor7 poration acts as receiver for a financial com8 pany under section 1604. 

9 (C) During the 4th year after such ap10 pointment and each year thereafter, not later 

11 than 30 days after the end of the 2nd and the 

12 4th fiscal quarters, if the Corporation acts as 

13 receiver for a financial company under section 

14 1604 during such semiannual period. 

15 (2) CONTENT OF REPORTS.—Each report re16 quired by paragraph (1) shall include a summary, 

17 for the period since the last required report (or, in 

18 the case of the first report, for the period since the 

19 Corporation was first appointed as a receiver under 

20 section 1604) of— 

21 (A) the activities of the Special Deputy In22 spector General; and 

23 (B) the activities and future plans of the 

24 Corporation with respect to each financial com25 pany for which it served as receiver. 


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1 (i) TERMINATION.—The Office of Resolution shall 

2 terminate 6 months after the Corporation ceases to serve 

3 as a receiver for any financial company under section 

4 1604, subject to reestablishment pursuant to subsection 

5 (a)(1). 

6 SEC. 1612. MISCELLANEOUS PROVISIONS. 

7 (a) BANKRUPTCY CODE AMENDMENTS.—Section 

8 109(b)(2) of title 11 of the United States Code is amended 

9 by inserting ‘‘covered financial company (as that term is 

10 defined in section 1602(5) of the Dissolution Authority for 

11 Large, Interconnected Financial Companies Act of 

12 2009),’’ after ‘‘a domestic insurance company,’’. 

13 (b) FEDERAL DEPOSIT INSURANCE ACT AND FED14 ERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT

15 ACT OF 1991.— 

16 (1) Section 18(c)(4)(G)(i) of the Federal De17 posit Insurance Act (12 U.S.C. 1823(c)(4)(G)(i)) is 

18 amended by inserting at the end the following new 

19 sentence: ‘‘The determination with regard to the 

20 Corporation’s exercise of authority under this sub21 paragraph shall apply to only an insured depository 

22 institution except when severe financial conditions 

23 exist which threaten the stability of a significant 

24 number of insured depository institutions.’’. 


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1 (2) Section 403(a) of the Federal Deposit In2 surance Corporation Improvement Act of 1991 (12 

3 U.S.C. 4403(a)) is amended by inserting ‘‘section 

4 1609(c) of the Resolution Authority for Large, 

5 Interconnected Financial Companies Act of 2009, 

6 section 1367 of the Federal Housing Enterprises Fi7 nancial Safety and Soundness Act of 1992 (12 

8 U.S.C. 4617(d)),’’ after ‘‘section 11(e) of the Fed9 eral Deposit Insurance Act,’’. 

10 SEC. 1613. AMENDMENT TO FEDERAL DEPOSIT INSURANCE 

11 ACT. 

12 The Federal Deposit Insurance Act (12 U.S.C. 1811 

13 et seq.) is amended by inserting after section 11A the fol14 lowing new section: 

15 ‘‘SEC. 11B. SYSTEMIC DISSOLUTION AUTHORITY AND FUND. 

16 ‘‘(a) SYSTEMIC DISSOLUTION AUTHORITY.—The 

17 Corporation shall establish a Systemic Dissolution Author18 ity, which shall function as a subsidiary of the Corpora19 tion. 

20 ‘‘(b) SYSTEMIC DISSOLUTION FUND.—Any fund es21 tablished for the purpose of facilitating the dissolution of 

22 a financial company under subtitle G of the Financial Sta23 bility Improvement Act shall be called the Systemic Dis24 solution Fund, which shall be managed by the Corpora25 tion, through the Systemic Dissolution Authority. 


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1 ‘‘(c) MANAGEMENT OF FUND.— 

2 ‘‘(1) SEPARATE MAINTENANCE.—The Systemic 

3 Dissolution Fund shall be separately maintained and 

4 not commingled with any other fund of the Corpora5 tion. 

6 ‘‘(2) TREATMENT OF AND ACCOUNTING FOR AS7 SETS.—The assets and liabilities of the Systemic 

8 Dissolution Fund— 

9 ‘‘(A) shall be the assets and liabilities of 

10 the Fund and not of the Corporation; and 

11 ‘‘(B) shall not be consolidated with the as12 sets and liabilities of the Deposit Insurance 

13 Fund or the Corporation for accounting, report14 ing, or any other purpose. 

15 ‘‘(d) RIGHTS, POWERS, AND DUTIES.— 

16 ‘‘(1) IN GENERAL.—The Corporation, in addi17 tion to any rights, powers, and duties under this Act 

18 or any other law, shall, through the Systemic Dis19 solution Authority, have all rights, powers, and du20 ties necessary to implement and maintain the Sys21 temic Dissolution Fund in accordance with subtitle 

22 G of the Financial Stability Improvement Act of 

23 2009. 

24 ‘‘(2) POWERS AS RECEIVER FOR COVERED FI25 NANCIAL COMPANY.—When acting as receiver with 


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1 respect to any covered financial company, as defined 

2 in subtitle G of the Financial Stability Improvement 

3 Act of 2009, the Corporation, through the Systemic 

4 Dissolution Authority, shall have all rights, powers, 

5 and duties that the Corporation has as receiver 

6 under such subtitle. 

7 ‘‘(3) SPECIFIC AND INCIDENTAL POWERS.—The 

8 Corporation, through the Systemic Dissolution Au9 thority, or any duly authorized officer or agent of 

10 the Authority, may exercise all powers specifically 

11 granted by the provisions of this Act and subtitle G 

12 of the Financial Stability Improvement Act and such 

13 incidental powers as shall be necessary to carry out 

14 the powers so granted and accomplish the purposes 

15 of subtitle G of the Financial Stability Improvement 

16 Act. 

17 ‘‘(e) STAFF AND RESOURCES.— 

18 ‘‘(1) IN GENERAL.—The Corporation shall as19 sign such staff, and provide such administrative and 

20 other support services to the Systemic Dissolution 

21 Authority as is necessary to fulfill the statutory re22 sponsibilities of the Authority. 

23 ‘‘(2) ADMINISTRATIVE EXPENSES.— The cost 

24 of all personnel, services, and resources provided on 


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1 behalf of the Systemic Dissolution Authority shall be 

2 paid from the Systemic Dissolution Fund.’’. 

3 SEC. 1614. APPLICATION OF EXECUTIVE COMPENSATION 

4 LIMITATIONS. 

5 The provisions of section 111 of the Emergency Eco6 nomic Stabilization Act of 2008 shall apply to a covered 

7 financial institution for which a receiver has been ap8 pointed pursuant to section 1604. Such covered financial 

9 institution shall be considered a TARP recipient for pur10 poses of such section 111 for so long as such institution 

11 is in receivership. 

12 Subtitle H—Additional Improve13 ments for Financial Crisis Man14 agement 

15 SEC. 1701. ADDITIONAL IMPROVEMENTS FOR FINANCIAL 

16 CRISIS MANAGEMENT. 

17 Section 13 of the Federal Reserve Act (12 U.S.C. 

18 343) is amended by striking the 3rd undesignated para19 graph and inserting the following new subsection: 

20 ‘‘(c) FINANCIAL CRISIS MANAGEMENT.— 

21 ‘‘(1) IN GENERAL.—In unusual and exigent cir22 cumstances, the Board of Governors of the Federal 

23 Reserve System, upon the written determination, 

24 pursuant to section 1109 of the Financial Stability 

25 Improvement Act of 2009, of the Financial Stability 


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1 Oversight Council, that a liquidity event exists that 

2 could destabilize the financial system (which deter3 mination shall be made upon a vote of not less than 

4 two-thirds of the members of such Council then serv5 ing), and with the written consent of the Secretary 

6 of the Treasury (after certification by the President 

7 that an emergency exists), may authorize any Fed8 eral reserve bank, during such periods as the Board 

9 may determine and at rates established in accord10 ance with the provision designated as (d) of section 

11 14, to discount for an individual, partnership, or 

12 corporation, notes, drafts, and bills of exchange 

13 when such notes, drafts, and bills of exchange are 

14 indorsed or otherwise secured to the satisfaction of 

15 the Federal reserve bank and in conformance with 

16 regulations or guidelines issued by the Board of 

17 Governors regarding the quality of notes, drafts, and 

18 bills of exchange available for discount and of the se19 curity for those notes, drafts and bills of exchange, 

20 unless a joint resolution (as defined in paragraph 

21 (5)) is adopted. Upon making any determination 

22 under this paragraph, with the consent of the Sec23 retary of the Treasury, the Financial Stability Over24 sight Council shall promptly submit a notice of such 

25 determination to the Congress. The amounts made 


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1 available under this subsection shall not exceed 

2 $4,000,000,000,000. 

3 ‘‘(2) CLARIFICATION OF ‘SECURED TO THE SAT4 ISFACTION OF THE FEDERAL RESERVE BANK’.—No 

5 member of the Board of Governors of the Federal 

6 Reserve System shall vote to authorize any action 

7 permitted under paragraph (1) and the Secretary of 

8 the Treasury shall not provide the written consent 

9 required by paragraph (1) unless that member be10 lieves and the Secretary of the Treasury believes: 

11 ‘‘(A) that there is at least a 99 percent 

12 likelihood that all funds disbursed or put at risk 

13 by such action will be repaid to the Federal Re14 serve System; and 

15 ‘‘(B) that there is at least a 99 percent 

16 likelihood that all interest due on any funds dis17 bursed will also be paid to the Federal Reserve 

18 System. 

19 ‘‘(3) LOW QUALITY ASSETS EXCLUDED.—The 

20 notes, drafts, and bills of exchange available for dis21 count for purposes of paragraph (1), and the secu22 rity for those notes, drafts and bills of exchange may 

23 only include any of the following assets if such asset 

24 is used to further enhance the security for those 

25 notes, drafts and bills of exchange which shall be 


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1 fully secured with assets that are not any of the fol2 lowing assets: 

3 ‘‘(A) An asset (including a security) that 

4 would be classified as ‘‘substandard,’’ ‘‘doubt5 ful,’’ or ‘‘loss,’’ or treated as ‘‘special mention’’ 

6 or ‘‘other transfer risk problems,’’ in a report 

7 of examination or inspection of bank or an affil8 iate of a bank prepared by either a Federal or 

9 State supervisory agency or in any internal 

10 classification system used by such individual, 

11 partnership or corporation. 

12 ‘‘(B) An asset in a nonaccrual status. 

13 ‘‘(C) An asset on which principal or inter14 est payments are more than 30 days past due. 

15 ‘‘(D) An asset whose terms have been re16 negotiated or compromised due to the deterio17 rating financial condition of the obligor unless 

18 such asset has been performing for at least 6 

19 months since the renegotiation. 

20 ‘‘(4) NO SINGLE OR SPECIFIC BENE21 FICIARIES.—The Board of Governors of the Federal 

22 Reserve System may authorize a Federal reserve 

23 bank to discount notes, drafts, or bills of exchange 

24 under this section only as part of a broadly available 

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1 eral Reserve bank to discount notes, drafts, or bills 

2 of exchange for only a single and specific individual, 

3 partnership, or corporation. 

4 ‘‘(5) EVIDENCE OF UNAVAILABILITY OF CRED5 IT.—Before discounting any note, draft, or bill of ex6 change under this subsection for an individual, a 

7 partnership or corporation as part of a broadly 

8 available credit or other facility the Federal reserve 

9 bank shall obtain evidence that such individual, part10 nership, or corporation is unable to secure adequate 

11 credit accommodations from other banking institu12 tions. All discounts under this subsection for individ13 uals, partnerships, or corporations shall be subject 

14 to such limitations, restrictions, and regulations as 

15 the Board of Governors of the Federal Reserve Sys16 tem may prescribe. 

17 ‘‘(6) CONGRESSIONAL DISAPPROVAL OF ADDI18 TIONAL BORROWING AUTHORITY.— 

19 ‘‘(A) INTRODUCTION.—Within 90 days of 

20 the day on which notice from the Financial Sta21 bility Oversight Council is received by the 

22 House of Representatives and the Senate under 

23 paragraph (1), a joint resolution specified in 

24 subparagraph (E) may be introduced in the 

25 House by the majority leader and minority 


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1 leader of the House and in the Senate by the 

2 majority leader and minority leader of the Sen3 ate. 

4 ‘‘(B) CONSIDERATION IN THE HOUSE OF

5 REPRESENTATIVES.— 

6 ‘‘(i) REPORTING AND DISCHARGE.— 

7 Any committee of the House of Represent8 atives to which a joint resolution intro9 duced under subparagraph (A) is referred 

10 shall report such joint resolution to the 

11 House not later than 5 calendar days after 

12 the applicable date of introduction of the 

13 joint resolution. If a committee fails to re14 port such joint resolution within that pe15 riod, the committee shall be discharged 

16 from further consideration of the joint res17 olution and the joint resolution shall be re18 ferred to the appropriate calendar. 

19 ‘‘(ii) PROCEEDING TO CONSIDER20 ATION.—After each committee authorized 

21 to consider a joint resolution reports such 

22 joint resolution to the House or has been 

23 discharged from its consideration, it shall 

24 be in order, not later than the sixth day 

25 after the applicable date of introduction of 


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1 the joint resolution, to move to proceed to 

2 consider the joint resolution in the House. 

3 Such a motion shall not be in order after 

4 the House has disposed of a motion to pro5 ceed on the joint resolution and shall not 

6 be in order if the House has received a 

7 message from the Senate under subpara8 graph (D)(iii)(I). The previous question 

9 shall be considered as ordered on the mo10 tion to its adoption without intervening 

11 motion. A motion to reconsider the vote by 

12 which the motion is disposed of shall not 

13 be in order. 

14 ‘‘(iii) CONSIDERATION.—The joint 

15 resolution shall be considered in the House 

16 and shall be considered as read. All points 

17 of order against a joint resolution and 

18 against its consideration are waived. The 

19 previous question shall be considered as or20 dered on the joint resolution to its passage 

21 without intervening motion except two 

22 hours of debate equally divided and con23 trolled by the proponent and an opponent. 

24 A motion to reconsider the vote on passage 

25 of a joint resolution shall not be in order. 


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1 ‘‘(C) CONSIDERATION IN THE SENATE.— 

2 ‘‘(i) PLACEMENT ON CALENDAR.— 

3 Upon introduction in the Senate, the joint 

4 resolution shall be placed immediately on 

5 the calendar. 

6 ‘‘(ii) FLOOR CONSIDERATION.— 

7 ‘‘(I) IN GENERAL.—Notwith8 standing rule XXII of the Standing 

9 Rules of the Senate, it is in order at 

10 any time during the period beginning 

11 on the 4th day after the applicable 

12 date of introduction of the joint reso13 lution and ending on the 6th day after 

14 the applicable date of introduction 

15 (even though a previous motion to the 

16 same effect has been disagreed to) to 

17 move to proceed to the consideration 

18 of the joint resolution, and all points 

19 of order against the joint resolution 

20 (and against consideration of the joint 

21 resolution) are waived. The motion to 

22 proceed is not debatable. The motion 

23 is not subject to a motion to postpone. 

24 A motion to reconsider the vote by 

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1 agreed to shall not be in order. If a 

2 motion to proceed to the consideration 

3 of the resolution is agreed to, the joint 

4 resolution shall remain the unfinished 

5 business until disposed of. 

6 ‘‘(II) DEBATE.—Debate on the 

7 joint resolution, and on all debatable 

8 motions and appeals in connection 

9 therewith, shall be limited to not more 

10 than 10 hours, which shall be divided 

11 equally between the majority and mi12 nority leaders or their designees. A 

13 motion further to limit debate is in 

14 order and not debatable. An amend15 ment to, or a motion to postpone, or 

16 a motion to proceed to the consider17 ation of other business, or a motion to 

18 recommit the joint resolution is not in 

19 order. 

20 ‘‘(III) VOTE ON PASSAGE.—The 

21 vote on passage shall occur imme22 diately following the conclusion of the 

23 debate on a joint resolution, and a 

24 single quorum call at the conclusion of 


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1 the debate if requested in accordance 

2 with the rules of the Senate. 

3 ‘‘(IV) RULINGS OF THE CHAIR

4 ON PROCEDURE.—Appeals from the 

5 decisions of the Chair relating to the 

6 application of the rules of the Senate, 

7 as the case may be, to the procedure 

8 relating to a joint resolution shall be 

9 decided without debate. 

10 ‘‘(D) RULES RELATING TO SENATE AND

11 HOUSE OF REPRESENTATIVES.— 

12 ‘‘(i) COORDINATION WITH ACTION BY

13 OTHER HOUSE.—If, before the passage by 

14 one House of a joint resolution of that 

15 House, that House receives from the other 

16 House a joint resolution, then the following 

17 procedures shall apply: 

18 ‘‘(I) The joint resolution of the 

19 other House shall not be referred to a 

20 committee. 

21 ‘‘(II) With respect to the joint 

22 resolution of the House receiving the 

23 resolution, the procedure in that 

24 House shall be the same as if no such 

25 joint resolution had been received 


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1 from the other House; but the vote on 

2 passage shall be on the joint resolu3 tion of the other House. 

4 ‘‘(ii) TREATMENT OF COMPANION

5 MEASURES.—If, following passage of a 

6 joint resolution in the Senate, the Senate 

7 then receives the companion measure from 

8 the House of Representatives, the com9 panion measure shall not be debatable. 

10 ‘‘(iii) FAILURE OF JOINT RESOLUTION

11 IN THE SENATE.— 

12 ‘‘(I) If, in the Senate, the motion 

13 to proceed to the consideration of the 

14 joint resolution fails, the Secretary of 

15 the Senate shall transmit a message 

16 to that effect to the House of Rep17 resentatives. 

18 ‘‘(II) If, in the Senate, the joint 

19 resolution fails on passage, the Sec20 retary of the Senate shall transmit a 

21 message to that effect to the House of 

22 Representatives. 

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1 graph and the preceding paragraphs are 

2 enacted by Congress— 

3 ‘‘(I) as an exercise of the rule4 making power of the Senate and 

5 House of Representatives, respec6 tively, and as such it is deemed a part 

7 of the rules of each House, respec8 tively, but applicable only with respect 

9 to the procedure to be followed in that 

10 House in the case of a joint resolu11 tion, and it supersedes other rules 

12 only to the extent that it is incon13 sistent with such rules; and 

14 ‘‘(II) with full recognition of the 

15 constitutional right of either House to 

16 change the rules (so far as relating to 

17 the procedure of that House) at any 

18 time, in the same manner, and to the 

19 same extent as in the case of any 

20 other rule of that House. 

21 ‘‘(E) DEFINITION.—In this paragraph, the 

22 term ‘joint resolution’ means only a joint reso23 lution— 

24 ‘‘(i) which does not have a preamble; 


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1 ‘‘(ii) the title of which is as follows: 

2 ‘Joint resolution relating to the use of au3 thority relevant to section 13(c) of the 

4 Federal Reserve Act under the Financial 

5 Stability Improvement Act of 2009.’; and 

6 ‘‘(iii) the sole matter after the resolv7 ing clause of which is as follows: ‘That the 

8 Congress disapproves the use of authority 

9 pursuant to use of authority relevant to 

10 section 13(c) of the Federal Reserve Act 

11 transmitted to the Congress on lll by 

12 the Board of Governors of the Federal Re13 serve System’, the blank space being filled 

14 with the appropriate date. 

15 ‘‘(F) NONSCORING OF JOINT RESOLUTIONS

16 OF DISAPPROVAL.—A joint resolution of dis17 approval shall be treated as having no budg18 etary effect by the Congressional Budget Office 

19 and the Office of Management and Budget for 

20 any purpose under the Rules of the House of 

21 Representatives, the Standing Rules of the Sen22 ate, the Congressional Budget Act of 1974, or 

23 any statutory pay-as-you-go requirement.’’. 


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1 SEC. 1702. CERTAIN RESTRICTIONS RELATED TO FOREIGN 

2 CURRENCY SWAP AUTHORITY. 

3 Section 14 of the Federal Reserve Act is amended 

4 by adding at the end the following new subsection: 

5 ‘‘(h) CERTAIN RESTRICTIONS RELATED TO FOREIGN

6 CURRENCY SWAP AUTHORITY.—A Federal reserve bank 

7 may not take any action pursuant to the authority pro8 vided under this section with respect to foreign currency 

9 swaps unless— 

10 ‘‘(1) such action is approved in advance by the 

11 affirmative vote of not less than five members of the 

12 Board of Governors of the Federal Reserve System; 

13 and 

14 ‘‘(2) such action is taken with the written con15 currence of the Secretary of the Treasury.’’. 

16 SEC. 1703. ADDITIONAL OVERSIGHT OF FINANCIAL REGU17 LATORY SYSTEM. 

18 (a) COUNCIL OF INSPECTORS GENERAL ON FINAN19 CIAL OVERSIGHT.— 

20 (1) ESTABLISHMENT AND MEMBERSHIP.— 

21 There is established a Council of Inspectors General 

22 on Financial Oversight (in this section referred to as 

23 the ‘‘Council of Inspectors General’’) chaired by the 

24 Inspector General of the Department of the Treas25 ury and composed of the inspectors general of the 

26 following: 


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1 (A) The Board of Governors of the Federal 

2 Reserve System. 

3 (B) The Commodity Futures Trading 

4 Commission. 

5 (C) The Department of Housing and 

6 Urban Development. 

7 (D) The Department of the Treasury. 

8 (E) The Federal Deposit Insurance Cor9 poration. 

10 (F) The Federal Housing Finance Agency. 

11 (G) The National Credit Union Adminis12 tration. 

13 (H) The Securities and Exchange Commis14 sion. 

15 (I) The Troubled Asset Relief Program 

16 (until the termination of the authority of the 

17 Special Inspector General for such program 

18 under section 121(h) of the Emergency Eco19 nomic Stabilization Act of 2008 (12 U.S.C. 

20 5231(h))). 

21 (2) DUTIES.— 

22 (A) MEETINGS.—The Council of Inspec23 tors General shall meet not less than once each 

24 quarter, or more frequently if the chair con25 siders it appropriate, to facilitate the sharing of 


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1 information among inspectors general and to 

2 discuss the ongoing work of each inspector gen3 eral who is a member of the Council of Inspec4 tors General, with a focus on concerns that may 

5 apply to the broader financial sector and ways 

6 to improve financial oversight. 

7 (B) ANNUAL REPORT.—The Council of In8 spectors General shall, each year within a time9 frame that permits consideration by the Finan10 cial Services Oversight Council (in this section 

11 referred to as the ‘‘Oversight Council’’) prior to 

12 the submission of its report for such year under 

13 section 1006, submit to the Oversight Council 

14 and to Congress a report including— 

15 (i) for each inspector general who is a 

16 member of the Council of Inspectors Gen17 eral, a section within the exclusive editorial 

18 control of such inspector general that high19 lights the concerns and recommendations 

20 of such inspector general in such inspector 

21 general’s ongoing and completed work, 

22 with a focus on issues that may apply to 

23 the broader financial sector; and 

24 (ii) a summary of the general observa25 tions of the Council of Inspectors General 


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1 based on the views expressed by each in2 spector general as required by clause (i), 

3 with a focus on measures that should be 

4 taken to improve financial oversight. 

5 (3) COUNCIL OF INSPECTORS GENERAL WORK6 ING GROUPS.— 

7 (A) WORKING GROUPS TO EVALUATE

8 OVERSIGHT COUNCIL.— 

9 (i) CONVENING A WORKING GROUP.— 

10 The Council of Inspectors General may, by 

11 majority vote, convene a Council of Inspec12 tors General Working Group to evaluate 

13 the effectiveness and internal operations of 

14 the Oversight Council. 

15 (ii) PERSONNEL AND RESOURCES.— 

16 The inspectors general who are members 

17 of the Council of Inspectors General may 

18 detail staff and resources to a Council of 

19 Inspectors General Working Group estab20 lished under this subparagraph to enable it 

21 to carry out its duties. 

22 (iii) REPORTS.—A Council of Inspec23 tors General Working Group established 

24 under this subparagraph shall submit reg25 ular reports to the Oversight Council and 


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1 to Congress on its evaluations pursuant to 

2 this subparagraph. 

3 (B) WORKING GROUPS FOR FINANCIAL

4 COMPANIES UNDERGOING RESOLUTION.— 

5 (i) CONVENING A WORKING GROUP.— 

6 The Council of Inspectors General shall 

7 convene a Council of Inspectors General 

8 Working Group for each financial company 

9 for which the Secretary of the Treasury 

10 appoints the Federal Deposit Insurance 

11 Corporation as receiver under section 

12 1604. 

13 (ii) PERSONNEL AND RESOURCES.— 

14 The inspectors general who are members 

15 of the Council of Inspectors General may 

16 detail staff and resources to a Council of 

17 Inspectors General Working Group estab18 lished under this subparagraph to enable it 

19 to carry out its duties. 

20 (iii) REPORTS.—Not later than 270 

21 days after the appointment of the Federal 

22 Deposit Insurance Corporation as receiver 

23 for the financial company for which a 

24 Council of Inspectors General Working 

25 Group is convened under clause (i), such 


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1 Working Group shall submit to the pri2 mary financial regulatory agency and to 

3 Congress a report that includes— 

4 (I) the reasons for such financial 

5 company’s failure; 

6 (II) the reasons for the Secretary 

7 of the Treasury’s appointment of the 

8 Federal Deposit Insurance Corpora9 tion as receiver for such financial 

10 company; and 

11 (III) recommendations for pre12 venting future failures of financial 

13 companies. 

14 (b) RESPONSE TO REPORT BY OVERSIGHT COUN15 CIL.—The Oversight Council shall include in its annual 

16 report under section 1006 responses to the concerns raised 

17 in the report of the Council of Inspectors General under 

18 subsection (a)(2)(B) for such year. 

19 Subtitle I—Miscellaneous 

20 SEC. 1801. INCLUSION OF MINORITIES AND WOMEN; DIVER21 SITY IN AGENCY WORKFORCE. 

22 (a) OFFICE OF MINORITY AND WOMEN INCLU23 SION.— 

24 (1) ESTABLISHMENT.—Not later than 180 days 

25 following the enactment of this title, each agency 


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1 shall establish an Office of Minority and Women In2 clusion (hereinafter in this section referred to as the 

3 ‘‘Office’’) that shall advise the agency administrator 

4 of the impact of policies and regulations of the agen5 cy on minority-owned and women-owned businesses, 

6 and shall be responsible for all matters of the agency 

7 relating to diversity in management, employment, 

8 and business activities, including the coordination of 

9 technical assistance, in accordance with such stand10 ards and requirements as the Director of the Office 

11 shall establish. 

12 (2) CONSOLIDATION.—Each agency that has 

13 assigned these or comparable responsibilities to ex14 isting offices shall ensure that such responsibilities 

15 are consolidated within the Office. 

16 (b) DIRECTOR.— 

17 (1) IN GENERAL.—For each Office, the Presi18 dent shall appoint, by and with the advice and con19 sent of the Senate, a Director of Minority and 

20 Women Inclusion (hereinafter in this section re21 ferred to as the ‘‘Director’’), who shall also hold a 

22 title within such agency comparable to that of other 

23 senior level staff who are, as applicable, either ap24 pointed by the President, by and with the advice and 

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1 ity that requires reporting directly to the agency ad2 ministrator. 

3 (2) DUTIES.—Each Director shall— 

4 (A) ensure equal employment opportunity 

5 and the racial, ethnic and gender diversity of 

6 the agency’s workforce and senior management; 

7 (B) increase the participation of minority8 owned and women-owned businesses in the pro9 grams and contracts of the agency; 

10 (C) provide guidance to the agency admin11 istrator to ensure that the policies and regula12 tions of the agency strengthen minority-owned 

13 and women-owned businesses; and 

14 (D) conduct an assessment, as part of the 

15 examination process for the entities regulated 

16 or monitored by the agency of the diversity and 

17 inclusion efforts by such entities. 

18 (c) INCLUSION IN ALL LEVELS OF BUSINESS ACTIVI19 TIES.— 

20 (1) IN GENERAL.—Each Director shall develop 

21 and implement standards and procedures to ensure, 

22 to the maximum extent possible, the inclusion and 

23 utilization of minorities (as such term is defined in 

24 section 1204(c) of the Financial Institutions Re25 form, Recovery, and Enforcement Act of 1989 (12 


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1 U.S.C. 1811 note)), women, and minority-owned and 

2 women-owned businesses (as such terms are defined 

3 in section 21A(r)(4) of the Federal Home Loan 

4 Bank Act (12 U.S.C. 1441a(r)(4)) (including finan5 cial institutions, investment banking firms, mortgage 

6 banking firms, asset management firms, broker-deal7 ers, financial services firms, underwriters, account8 ants, brokers, investment consultants, and providers 

9 of legal services) in all business and activities of the 

10 agency at all levels, including in procurement, insur11 ance, and all types of contracts (including, as appli12 cable, contracts for the issuance or guarantee of any 

13 debt, equity, or security, the sale of assets, the man14 agement of its assets, the making of its equity in15 vestments, and the implementation of programs to 

16 address economic recovery). 

17 (2) CONTRACTS.—The processes established by 

18 each agency for review and evaluation for contract 

19 proposals and to hire service providers shall include 

20 a component that gives consideration to the diversity 

21 of the applicant. 

22 (3) WRITTEN ASSURANCE.—All such contract 

23 proposals, provided such proposals are of an amount 

24 greater than $50,000 and the contractor employs 

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1 surance, in a form and substance that the Director 

2 shall prescribe, that the contractor shall ensure, to 

3 the maximum extent possible, the inclusion of mi4 norities and women in its workforce and, as applica5 ble, by its subcontractors. 

6 (4) TERMINATION.—A Director may terminate 

7 any contract upon a finding that the contractor has 

8 failed to make a good faith effort to comply with 

9 paragraph (3), except that a contractor may appeal 

10 such finding and termination to the agency adminis11 trator within a reasonable amount of time as deter12 mined by the Director. 

13 (d) APPLICABILITY.—This section shall apply to all 

14 contracts of an agency for services of any kind, including 

15 services that require the services of investment banking, 

16 asset management entities, broker-dealers, financial serv17 ices entities, underwriters, accountants, investment con18 sultants, and providers of legal services. 

19 (e) REPORTS.—Not later than 90 days before the end 

20 of each Federal fiscal year, each Director shall report to 

21 the Congress detailed information describing the actions 

22 taken by the agency and the Director pursuant to this sec23 tion, which shall— 

24 (1) to the extent contracts exceed the contract 

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1 section (c)(3), include a statement of the total 

2 amounts paid by the agency to third party contrac3 tors since the last such report; 

4 (2) the percentage of such amounts paid to 

5 businesses described in subsection (c)(1); 

6 (3) the successes achieved and challenges faced 

7 by the agency in operating minority and women out8 reach programs; 

9 (4) the challenges the agency may face in hiring 

10 qualified minority and women employees and con11 tracting with qualified minority-owned and women12 owned businesses; and 

13 (5) such other information, findings, conclu14 sions, and recommendations for legislative or agency 

15 action, as the Director may determine to be appro16 priate to include in such report. 

17 (f) DIVERSITY IN AGENCY WORKFORCE.—Each 

18 agency shall take affirmative steps to seek diversity in its 

19 workforce at all levels of the agency consistent with the 

20 demographic diversity of the United States and the Fed21 eral government, which shall include— 

22 (1) heavily recruiting at historically black col23 leges and universities, Hispanic-serving institutions, 

24 women’s colleges, and colleges that typically serve 

25 majority minority populations; 


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1 (2) sponsoring and recruiting at job fairs in 

2 urban communities, and placing employment adver3 tisements in newspapers and magazines oriented to4 ward women and people of color; 

5 (3) partnering with organizations that are fo6 cused on developing opportunities for minorities and 

7 women to place talented young minorities and 

8 women in industry internships, summer employment, 

9 and full-time positions; 

10 (4) where feasible, partnering with inner-city 

11 high schools, girls’ high schools, and high schools 

12 with majority minority populations to establish or 

13 enhance financial literacy programs and provide 

14 mentoring; and 

15 (5) such other mass media communications that 

16 the Director determines are necessary. 

17 (g) DEFINITIONS.—For purposes of this section: 

18 (1) AGENCY.—The term ‘‘agency’’ means— 

19 (A) the Department of the Treasury, 

20 (B) the Federal Deposit Insurance Cor21 poration, 

22 (C) the Federal Housing Finance Agency, 

23 (D) each of the Federal reserve banks, 

24 (E) the Board, 


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1 (F) the National Credit Union Administra2 tion, 

3 (G) the Office of the Comptroller of the 

4 Currency, 

5 (H) the Office of Thrift Supervision, 

6 (I) the Securities and Exchange Commis7 sion, 

8 (J) the Federal department or agency that 

9 the President has identified as the main depart10 ment or agency responsible for consumer finan11 cial protection, 

12 (K) the Federal department or agency that 

13 the President has identified as the main depart14 ment or agency responsible for insurance infor15 mation, 

16 and any successors to such entities. 

17 (2) AGENCY ADMINISTRATOR.—The term 

18 ‘‘agency administrator’’ means the head of an agen19 cy. 

20 Subtitle J—International Policy 

21 Coordination 

22 SEC. 1901. INTERNATIONAL POLICY COORDINATION. 

23 The President of the United States, or a designee of 

24 the President, shall coordinate through all available inter25 national policy channels similar policies as found in United 


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1 States law related to limiting the scope, nature, size, scale, 

2 concentration, and interconnectedness of financial compa3 nies in order to protect financial stability and the global 

4 economy. 

5 Subtitle K—International Financial 

6 Provisions 

7 SEC. 1951. ACCESS TO UNITED STATES FINANCIAL MARKET 

8 BY FOREIGN INSTITUTIONS. 

9 (a) ESTABLISHMENT OF FOREIGN BANK OFFICES IN

10 THE UNITED STATES.—Subsection 7(d)(3) of the Inter11 national Banking Act of 1978 ( U.S.C. 3105(d)(3)) is 

12 amended— 

13 (1) by striking ‘‘and’’ at the end of subpara14 graph (C); 

15 (2) by striking the period at the end of sub16 paragraph (D) and inserting ‘‘; and’’; and 

17 (3) by adding at the end the following new sub18 paragraph: 

19 ‘‘(E) for a foreign bank that presents a 

20 systemic risk to the United States (as deter21 mined in accordance with section 1603 of the 

22 Financial Stability Improvement Act of 2009), 

23 whether the home country of the foreign bank 

24 has adopted, or is making demonstrable 

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1 tem of financial regulation for the financial sys2 tem of such home country to mitigate such sys3 temic risk.’’. 

4 (b) TERMINATION OF FOREIGN BANK OFFICES IN

5 THE UNITED STATES.—Subsection 7(e)(1) of the Inter6 national Banking Act of 1978 ( U.S.C. 3105(e)(1)) is 

7 amended— 

8 (1) by striking ‘‘or’’ at the end of subparagraph 

9 (A); 

10 (2) by striking the period at the end of sub11 paragraph (B) and inserting ‘‘; or’’; and 

12 (3) by inserting after subparagraph (B), the 

13 following new subparagraph: 

14 ‘‘(C) for a foreign bank that presents a 

15 systemic risk to the United States (as deter16 mined in accordance with section 1603 of the 

17 Financial Stability Improvement Act of 2009), 

18 the home country of the foreign bank has not 

19 adopted or made demonstrable progress toward 

20 adopting an appropriate system of financial reg21 ulation to mitigate such systemic risk.’’. 

22 (c) REGISTRATION OR SUCCESSION TO UNITED

23 STATES BROKERAGE OR DEALER AND TERMINATION OF

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1 change Act of 1934 (15 U.S.C. 78o) is amended by adding 

2 at the end the following new subsections: 

3 ‘‘(k) REGISTRATION OR SUCCESSION TO A UNITED

4 STATES BROKER OR DEALER.—In determining whether 

5 to permit a foreign person or an affiliate of a foreign per6 son to register as a United States broker or dealer, or 

7 succeed to the registration of a United States broker or 

8 dealer, the Securities and Exchange Commission may con9 sider whether, for a foreign person, or an affiliate of a 

10 foreign person that presents a systemic risk to the United 

11 States (as determined in accordance with section 1603 of 

12 the Financial Stability Improvement Act of 2009), the 

13 home country of the foreign person has adopted or made 

14 demonstrable progress toward adopting an appropriate 

15 system of financial regulation to mitigate such systemic 

16 risk. 

17 ‘‘(l) TERMINATION OF A UNITED STATES BROKER

18 OR DEALER.—For a foreign person or an affiliate of a 

19 foreign person that presents such a systemic risk to the 

20 United States, the Securities and Exchange Commission 

21 may determine to terminate the registration of such for22 eign person or an affiliate of such foreign person as a 

23 broker or dealer in the United States if the Commission 

24 determines that the home country of the foreign person 

25 has not adopted, or made demonstrable progress toward 


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1 adopting, an appropriate system of financial regulation to 

2 mitigate such systemic risk.’’. 

3 TITLE II—CORPORATE AND FI4 NANCIAL INSTITUTION COM5 PENSATION FAIRNESS ACT 

6 SEC. 2001. SHORT TITLE. 

7 This title may be cited as the ‘‘Corporate and Finan8 cial Institution Compensation Fairness Act of 2009’’. 

9 SEC. 2002. SHAREHOLDER VOTE ON EXECUTIVE COM10 PENSATION DISCLOSURES. 

11 Section 14 of the Securities Exchange Act of 1934 

12 (15 U.S.C. 78n) is amended by adding at the end the fol13 lowing new subsection: 

14 ‘‘(i) ANNUAL SHAREHOLDER APPROVAL OF EXECU15 TIVE COMPENSATION.— 

16 ‘‘(1) ANNUAL VOTE.—Any proxy or consent or 

17 authorization (the solicitation of which is subject to 

18 the rules of the Commission pursuant to subsection 

19 (a)) for an annual meeting of the shareholders to 

20 elect directors (or a special meeting in lieu of such 

21 meeting) where proxies are solicited in respect of 

22 any security registered under section 12 occurring 

23 on or after the date that is 6 months after the date 

24 on which final rules are issued under paragraph (4), 

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1 prove the compensation of executives as disclosed 

2 pursuant to the Commission’s compensation disclo3 sure rules for named executive officers (which disclo4 sure shall include the compensation committee re5 port, the compensation discussion and analysis, the 

6 compensation tables, and any related materials, to 

7 the extent required by such rules). The shareholder 

8 vote shall not be binding on the issuer or the board 

9 of directors and shall not be construed as overruling 

10 a decision by such board, nor to create or imply any 

11 additional fiduciary duty by such board, nor shall 

12 such vote be construed to restrict or limit the ability 

13 of shareholders to make proposals for inclusion in 

14 such proxy materials related to executive compensa15 tion. 

16 ‘‘(2) SHAREHOLDER APPROVAL OF GOLDEN

17 PARACHUTE COMPENSATION.— 

18 ‘‘(A) DISCLOSURE.—In any proxy or con19 sent solicitation material (the solicitation of 

20 which is subject to the rules of the Commission 

21 pursuant to subsection (a)) for a meeting of the 

22 shareholders occurring on or after the date that 

23 is 6 months after the date on which final rules 

24 are issued under paragraph (4), at which share25 holders are asked to approve an acquisition, 


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1 merger, consolidation, or proposed sale or other 

2 disposition of all or substantially all the assets 

3 of an issuer, the person making such solicita4 tion shall disclose in the proxy or consent solici5 tation material, in a clear and simple form in 

6 accordance with regulations to be promulgated 

7 by the Commission, any agreements or under8 standings that such person has with any named 

9 executive officers of such issuer (or of the ac10 quiring issuer, if such issuer is not the acquir11 ing issuer) concerning any type of compensation 

12 (whether present, deferred, or contingent) that 

13 is based on or otherwise relates to the acquisi14 tion, merger, consolidation, sale, or other dis15 position of all or substantially all of the assets 

16 of the issuer and the aggregate total of all such 

17 compensation that may (and the conditions 

18 upon which it may) be paid or become payable 

19 to or on behalf of such executive officer. 

20 ‘‘(B) SHAREHOLDER APPROVAL.—Any 

21 proxy or consent or authorization relating to 

22 the proxy or consent solicitation material con23 taining the disclosure required by subparagraph 

24 (A) shall provide for a separate shareholder 

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1 standings and compensation as disclosed, unless 

2 such agreements or understandings have been 

3 subject to a shareholder vote under paragraph 

4 (1). A vote by the shareholders shall not be 

5 binding on the issuer or the board of directors 

6 of the issuer or the person making the solicita7 tion and shall not be construed as overruling a 

8 decision by any such person or issuer, nor to 

9 create or imply any additional fiduciary duty by 

10 any such person or issuer. 

11 ‘‘(3) DISCLOSURE OF VOTES.—Every institu12 tional investment manager subject to section 13(f) 

13 shall report at least annually how it voted on any 

14 shareholder vote pursuant to paragraphs (1) or (2) 

15 of this section, unless such vote is otherwise required 

16 to be reported publicly by rule or regulation of the 

17 Commission. 

18 ‘‘(4) RULEMAKING.—Not later than 6 months 

19 after the date of the enactment of the Corporate and 

20 Financial Institution Compensation Fairness Act of 

21 2009, the Commission shall issue final rules to im22 plement this subsection. 

23 ‘‘(5) EXEMPTION AUTHORITY.—The Commis24 sion may exempt certain categories of issuers from 

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1 priate in view of the purpose of this subsection. In 

2 determining appropriate exemptions, the Commis3 sion shall take into account, among other consider4 ations, the potential impact on smaller reporting 

5 issuers.’’. 

6 SEC. 2003. COMPENSATION COMMITTEE INDEPENDENCE. 

7 (a) STANDARDS RELATING TO COMPENSATION COM8 MITTEES.—The Securities Exchange Act of 1934 (15 

9 U.S.C. 78a et seq.) is amended by inserting after section 

10 10A the following new section: 

11 ‘‘SEC. 10B. STANDARDS RELATING TO COMPENSATION COM12 MITTEES. 

13 ‘‘(a) COMMISSION RULES.— 

14 ‘‘(1) IN GENERAL.—Effective not later than 9 

15 months after the date of enactment of the Corporate 

16 and Financial Institution Compensation Fairness 

17 Act of 2009, the Commission shall, by rule, direct 

18 the national securities exchanges and national secu19 rities associations to prohibit the listing of any class 

20 of equity security of an issuer that is not in compli21 ance with the requirements of any portion of sub22 sections (b) through (f). 

23 ‘‘(2) OPPORTUNITY TO CURE DEFECTS.—The 

24 rules of the Commission under paragraph (1) shall 

25 provide for appropriate procedures for an issuer to 


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1 have an opportunity to cure any defects that would 

2 be the basis for a prohibition under paragraph (1) 

3 before the imposition of such prohibition. 

4 ‘‘(3) EXEMPTION AUTHORITY.—The Commis5 sion may exempt certain categories of issuers from 

6 the requirements of subsections (b) through (f), 

7 where appropriate in view of the purpose of this sec8 tion. In determining appropriate exemptions, the 

9 Commission shall take into account, among other 

10 considerations, the potential impact on smaller re11 porting issuers. 

12 ‘‘(b) INDEPENDENCE OF COMPENSATION COMMIT13 TEES.— 

14 ‘‘(1) IN GENERAL.—Each member of the com15 pensation committee of the board of directors of the 

16 issuer shall be independent. 

17 ‘‘(2) CRITERIA.—In order to be considered to 

18 be independent for purposes of this subsection, a 

19 member of a compensation committee of an issuer 

20 may not, other than in his or her capacity as a 

21 member of the compensation committee, the board 

22 of directors, or any other board committee accept 

23 any consulting, advisory, or other compensatory fee 

24 from the issuer. 


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1 ‘‘(3) EXEMPTION AUTHORITY.—The Commis2 sion may exempt from the requirements of para3 graph (2) a particular relationship with respect to 

4 compensation committee members, where appro5 priate in view of the purpose of this section. 

6 ‘‘(4) DEFINITION.—As used in this section, the 

7 term ‘compensation committee’ means— 

8 ‘‘(A) a committee (or equivalent body) es9 tablished by and amongst the board of directors 

10 of an issuer for the purpose of determining and 

11 approving the compensation arrangements for 

12 the executive officers of the issuer; and 

13 ‘‘(B) if no such committee exists with re14 spect to an issuer, the independent members of 

15 the entire board of directors. 

16 ‘‘(c) INDEPENDENCE STANDARDS FOR COMPENSA17 TION CONSULTANTS AND OTHER COMMITTEE ADVI18 SORS.—Any compensation consultant or other similar ad19 viser to the compensation committee of any issuer shall 

20 meet standards for independence established by the Com21 mission by regulation. 

22 ‘‘(d) COMPENSATION COMMITTEE AUTHORITY RE23 LATING TO COMPENSATION CONSULTANTS.— 

24 ‘‘(1) IN GENERAL.—The compensation com25 mittee of each issuer, in its capacity as a committee 


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1 of the board of directors, shall have the authority, 

2 in its sole discretion, to retain and obtain the advice 

3 of a compensation consultant meeting the standards 

4 for independence promulgated pursuant to sub5 section (c), and the compensation committee shall be 

6 directly responsible for the appointment, compensa7 tion, and oversight of the work of such independent 

8 compensation consultant. This provision shall not be 

9 construed to require the compensation committee to 

10 implement or act consistently with the advice or rec11 ommendations of the compensation consultant, and 

12 shall not otherwise affect the compensation commit13 tee’s ability or obligation to exercise its own judg14 ment in fulfillment of its duties. 

15 ‘‘(2) DISCLOSURE.—In any proxy or consent 

16 solicitation material for an annual meeting of the 

17 shareholders (or a special meeting in lieu of the an18 nual meeting) occurring on or after the date that is 

19 1 year after the date of enactment of the Corporate 

20 and Financial Institution Compensation Fairness 

21 Act of 2009, each issuer shall disclose in the proxy 

22 or consent material, in accordance with regulations 

23 to be promulgated by the Commission whether the 

24 compensation committee of the issuer retained and 

25 obtained the advice of a compensation consultant 


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1 meeting the standards for independence promulgated 

2 pursuant to subsection (c). 

3 ‘‘(3) REGULATIONS.—In promulgating regula4 tions under this subsection or any other provision of 

5 law with respect to compensation consultants, the 

6 Commission shall ensure that such regulations are 

7 competitively neutral among categories of consult8 ants and preserve the ability of compensation com9 mittees to retain the services of members of any 

10 such category. 

11 ‘‘(e) AUTHORITY TO ENGAGE INDEPENDENT COUN12 SEL AND OTHER ADVISORS.—The compensation com13 mittee of each issuer, in its capacity as a committee of 

14 the board of directors, shall have the authority, in its sole 

15 discretion, to retain and obtain the advice of independent 

16 counsel and other advisers meeting the standards for inde17 pendence promulgated pursuant to subsection (c), and the 

18 compensation committee shall be directly responsible for 

19 the appointment, compensation, and oversight of the work 

20 of such independent counsel and other advisers. This pro21 vision shall not be construed to require the compensation 

22 committee to implement or act consistently with the advice 

23 or recommendations of such independent counsel and 

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1 pensation committee’s ability or obligation to exercise its 

2 own judgment in fulfillment of its duties. 

3 ‘‘(f) FUNDING.—Each issuer shall provide for appro4 priate funding, as determined by the compensation com5 mittee, in its capacity as a committee of the board of direc6 tors, for payment of compensation— 

7 ‘‘(1) to any compensation consultant to the 

8 compensation committee that meets the standards 

9 for independence promulgated pursuant to sub10 section (c), and 

11 ‘‘(2) to any independent counsel or other ad12 viser to the compensation committee.’’. 

13 (b) STUDY AND REVIEW REQUIRED.— 

14 (1) IN GENERAL.—The Securities and Ex15 change Commission shall conduct a study and review 

16 of the use of compensation consultants meeting the 

17 standards for independence promulgated pursuant to 

18 section 10B(c) of the Securities Exchange Act of 

19 1934 (as added by subsection (a)), and the effects 

20 of such use. 

21 (2) REPORT TO CONGRESS.—Not later than 2 

22 years after the rules required by the amendment 

23 made by this section take effect, the Commission 

24 shall submit a report to the Congress on the results 

25 of the study and review required by this paragraph. 


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1 SEC. 2004. ENHANCED COMPENSATION STRUCTURE RE2 PORTING TO REDUCE PERVERSE INCEN3 TIVES. 

4 (a) ENHANCED DISCLOSURE AND REPORTING OF

5 COMPENSATION ARRANGEMENTS.— 

6 (1) IN GENERAL.—Not later than 9 months 

7 after the date of enactment of this title, the appro8 priate Federal regulators jointly shall prescribe regu9 lations to require each covered financial institution 

10 to disclose to the appropriate Federal regulator the 

11 structures of all incentive-based compensation ar12 rangements offered by such covered financial institu13 tions sufficient to determine whether the compensa14 tion structure— 

15 (A) is aligned with sound risk manage16 ment; 

17 (B) is structured to account for the time 

18 horizon of risks; and 

19 (C) meets such other criteria as the appro20 priate Federal regulators jointly may determine 

21 to be appropriate to reduce unreasonable incen22 tives offered by such institutions for employees 

23 to take undue risks that— 

24 (i) could threaten the safety and 

25 soundness of covered financial institutions; 

26 or 


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1 (ii) could have serious adverse effects 

2 on economic conditions or financial sta3 bility. 

4 (2) RULES OF CONSTRUCTION.—Nothing in 

5 this subsection shall be construed as requiring the 

6 reporting of the actual compensation of particular 

7 individuals. Nothing in this subsection shall be con8 strued to require a covered financial institution that 

9 does not have an incentive-based payment arrange10 ment to make the disclosures required under this 

11 subsection. 

12 (b) PROHIBITION ON CERTAIN COMPENSATION AR13 RANGEMENTS.—Not later than 9 months after the date 

14 of enactment of this title, and taking into account the fac15 tors described in subparagraphs (A), (B), and (C) of sub16 section (a)(1), the appropriate Federal regulators shall 

17 jointly prescribe regulations that prohibit any incentive18 based payment arrangement, or any feature of any such 

19 arrangement, that the regulators determine encourages in20 appropriate risks by covered financial institutions that— 

21 (1) could threaten the safety and soundness of 

22 covered financial institutions; or 

23 (2) could have serious adverse effects on eco24 nomic conditions or financial stability. 


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1 (c) ENFORCEMENT.—The provisions of this section 

2 shall be enforced under section 505 of the Gramm-Leach3 Bliley Act and, for purposes of such section, a violation 

4 of this section shall be treated as a violation of subtitle 

5 A of title V of such Act. 

6 (d) DEFINITIONS.—As used in this section— 

7 (1) the term ‘‘appropriate Federal regulator’’ 

8 means— 

9 (A) the Board of Governors of the Federal 

10 Reserve System; 

11 (B) the Office of the Comptroller of the 

12 Currency; 

13 (C) the Board of Directors of the Federal 

14 Deposit Insurance Corporation; 

15 (D) the Director of the Office of Thrift 

16 Supervision; 

17 (E) the National Credit Union Administra18 tion Board; 

19 (F) the Securities and Exchange Commis20 sion; and 

21 (G) the Federal Housing Finance Agency; 

22 and 

23 (2) the term ‘‘covered financial institution’’ 

24 means— 


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1 (A) a depository institution or depository 

2 institution holding company, as such terms are 

3 defined in section 3 of the Federal Deposit In4 surance Act (12 U.S.C. 1813); 

5 (B) a broker-dealer registered under sec6 tion 15 of the Securities Exchange Act of 1934 

7 (15 U.S.C. 78o); 

8 (C) a credit union, as described in section 

9 19(b)(1)(A)(iv) of the Federal Reserve Act; 

10 (D) an investment advisor, as such term is 

11 defined in section 202(a)(11) of the Investment 

12 Advisers Act of 1940 (15 U.S.C. 80b–2(a)(11)); 

13 (E) the Federal National Mortgage Asso14 ciation; 

15 (F) the Federal Home Loan Mortgage 

16 Corporation; and 

17 (G) any other financial institution that the 

18 appropriate Federal regulators, jointly, by rule, 

19 determine should be treated as a covered finan20 cial institution for purposes of this section. 

21 (e) EXEMPTION FOR CERTAIN FINANCIAL INSTITU22 TIONS.—The requirements of this section shall not apply 

23 to covered financial institutions with assets of less than 

24 $1,000,000,000. 


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1 (f) LIMITATION.—No regulation promulgated pursu2 ant to this section shall be allowed to require the recovery 

3 of incentive-based compensation under compensation ar4 rangements in effect on the date of enactment of this title, 

5 provided such compensation agreements are for a period 

6 of no more than 24 months. Nothing in this title shall 

7 prevent or limit the recovery of incentive-based compensa8 tion under any other applicable law. 

9 (g) GAO STUDY.— 

10 (1) STUDY REQUIRED.— 

11 (A) IN GENERAL.—The Comptroller Gen12 eral of the United States shall carry out a 

13 study to determine whether there is a correla14 tion between compensation structures and ex15 cessive risk taking. 

16 (B) FACTORS TO CONSIDER.—In carrying 

17 out the study required under subparagraph (A), 

18 the Comptroller General shall— 

19 (i) consider compensation structures 

20 used by companies from 2000 to 2008; and 

21 (ii) compare companies that failed, or 

22 nearly failed but for government assist23 ance, to companies that remained viable 

24 throughout the housing and credit market 

25 crisis of 2007 and 2008, including the 


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1 compensation practices of all such compa2 nies. 

3 (C) DETERMINING COMPANIES THAT

4 FAILED OR NEARLY FAILED.—In determining 

5 whether a company failed, or nearly failed but 

6 for government assistance, for purposes of sub7 paragraph (B)(ii), the Comptroller General 

8 shall focus on— 

9 (i) companies that received excep10 tional assistance under the Troubled Asset 

11 Relief Program under title I of the Emer12 gency Economic Stabilization Act of 2009 

13 (12 U.S.C. 5211 et seq.) or other forms of 

14 significant government assistance, includ15 ing under the Automotive Industry Financ16 ing Program, the Targeted Investment 

17 Program, the Asset Guarantee Program, 

18 and the Systemically Significant Failing 

19 Institutions Program; 

20 (ii) the Federal National Mortgage 

21 Association; 

22 (iii) the Federal Home Loan Mort23 gage Corporation; and 

24 (iv) companies that participated in the 

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1 solidated Supervised Entities Program as 

2 of January 2008. 

3 (2) REPORT.—Not later than the end of the 1- 

4 year period beginning on the date of the enactment 

5 of this title, the Comptroller General shall issue a re6 port to the Congress containing the results of the 

7 study required under paragraph (1). 

8 TITLE III—OVER-THE-COUNTER 

9 DERIVATIVES MARKETS ACT 

10 SEC. 3001. SHORT TITLE. 

11 This title may be cited as the ‘‘Over-the-Counter De12 rivatives Markets Act of 2009’’. 

13 Subtitle A—Regulation of Swap 

14 Markets 

15 SEC. 3101. DEFINITIONS. 

16 (a) AMENDMENTS TO DEFINITIONS IN THE COM17 MODITY EXCHANGE ACT.—Section 1a of the Commodity 

18 Exchange Act (7 U.S.C. 1a) is amended— 

19 (1) by redesignating paragraphs (9) through 

20 (34) as paragraphs (10) through (35), respectively; 

21 (2) by adding after paragraph (8) the following: 

22 ‘‘(9) DERIVATIVE.—The term ‘derivative’ 

23 means— 

24 ‘‘(A) a contract of sale of a commodity for 

25 future delivery; or 


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1 ‘‘(B) a swap.’’; 

2 (3) by redesignating paragraph (35) (as redes3 ignated by paragraph (1)) as paragraph (36); 

4 (4) by adding after paragraph (34) (as redesig5 nated by paragraph (1)) the following: 

6 ‘‘(35) SWAP.— 

7 ‘‘(A) IN GENERAL.—Except as provided in 

8 subparagraph (B), the term ‘swap’ means any 

9 agreement, contract, or transaction that— 

10 ‘‘(i) is a put, call, cap, floor, collar, or 

11 similar option of any kind for the purchase 

12 or sale of, or based on the value of, one or 

13 more interest or other rates, currencies, 

14 commodities, securities, instruments of in15 debtedness, indices, quantitative measures, 

16 or other financial or economic interests or 

17 property of any kind; 

18 ‘‘(ii) provides for any purchase, sale, 

19 payment, or delivery (other than a dividend 

20 on an equity security) that is dependent on 

21 the occurrence, non-occurrence, or the ex22 tent of the occurrence of an event or con23 tingency associated with a potential finan24 cial, economic, or commercial consequence; 


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1 ‘‘(iii) provides on an executory basis 

2 for the exchange, on a fixed or contingent 

3 basis, of one or more payments based on 

4 the value or level of one or more interest 

5 or other rates, currencies, commodities, se6 curities, instruments of indebtedness, indi7 ces, quantitative measures, or other finan8 cial or economic interests or property of 

9 any kind, or any interest therein or based 

10 on the value thereof, and that transfers, as 

11 between the parties to the transaction, in 

12 whole or in part, the financial risk associ13 ated with a future change in any such 

14 value or level without also conveying a cur15 rent or future direct or indirect ownership 

16 interest in an asset (including any enter17 prise or investment pool) or liability that 

18 incorporates the financial risk so trans19 ferred, including any agreement, contract, 

20 or transaction commonly known as an in21 terest rate swap, a rate floor, rate cap, 

22 rate collar, cross-currency rate swap, basis 

23 swap, currency swap, total return swap, 

24 equity index swap, equity swap, debt index 

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1 fault swap, credit swap, weather swap, en2 ergy swap, metal swap, agricultural swap, 

3 emissions swap, or commodity swap; 

4 ‘‘(iv) is an agreement, contract, or 

5 transaction that is, or in the future be6 comes, commonly known to the trade as a 

7 swap; or 

8 ‘‘(v) is any combination or permuta9 tion of, or option on, any agreement, con10 tract, or transaction described in any of 

11 clauses (i) through (iv). 

12 ‘‘(B) EXCLUSIONS.—The term ‘swap’ does 

13 not include: 

14 ‘‘(i) any contract of sale of a com15 modity for future delivery or security fu16 tures product traded on or subject to the 

17 rules of any board of trade designated as 

18 a contract market under section 5 or 5f; 

19 ‘‘(ii) any sale of a nonfinancial com20 modity for deferred shipment or delivery, 

21 so long as such transaction is physically 

22 settled; 

23 ‘‘(iii) any put, call, straddle, option, or 

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1 cluding any interest therein or based on 

2 the value thereof, that is subject to the Se3 curities Act of 1933 (15 U.S.C. 77a et 

4 seq.) and the Securities Exchange Act of 

5 1934 (15 U.S.C. 78a et seq.); 

6 ‘‘(iv) any put, call, straddle, option, or 

7 privilege relating to foreign currency en8 tered into on a national securities exchange 

9 registered pursuant to section 6(a) of the 

10 Securities Exchange Act of 1934 (15 

11 U.S.C. 78f(a)); 

12 ‘‘(v) any agreement, contract, or 

13 transaction providing for the purchase or 

14 sale of one or more securities on a fixed 

15 basis that is subject to the Securities Act 

16 of 1933 (15 U.S.C. 77a et seq.) and the 

17 Securities Exchange Act of 1934 (15 

18 U.S.C. 78a et seq.); 

19 ‘‘(vi) any agreement, contract, or 

20 transaction providing for the purchase or 

21 sale of one or more securities on a contin22 gent basis that is subject to the Securities 

23 Act of 1933 (15 U.S.C. 77a et seq.) and 

24 the Securities Exchange Act of 1934 (15 

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1 ment, contract, or transaction predicates 

2 such purchase or sale on the occurrence of 

3 a bona fide contingency that might reason4 ably be expected to affect or be affected by 

5 the creditworthiness of a party other than 

6 a party to the agreement, contract, or 

7 transaction; 

8 ‘‘(vii) any note, bond, or evidence of 

9 indebtedness that is a security as defined 

10 in section 2(a)(1) of the Securities Act of 

11 1933 (15 U.S.C. 77b(a)(1)); 

12 ‘‘(viii) any agreement, contract, or 

13 transaction that is— 

14 ‘‘(I) based on a security; and 

15 ‘‘(II) entered into directly or 

16 through an underwriter (as defined in 

17 section 2(a)(11) of the Securities Act 

18 of 1933) (15 U.S.C. 77b(a)(11)) by 

19 the issuer of such security for the 

20 purposes of raising capital, unless 

21 such agreement, contract, or trans22 action is entered into to manage a 

23 risk associated with capital raising; 

24 ‘‘(ix) any foreign exchange swap; 

25 ‘‘(x) any foreign exchange forward; 


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1 ‘‘(xi) any agreement, contract, or 

2 transaction a counterparty of which is a 

3 Federal Reserve bank or the United States 

4 Government, or an agency of the United 

5 States Government that is expressly 

6 backed by the full faith and credit of the 

7 United States; and 

8 ‘‘(xii) any security-based swap, other 

9 than a security-based swap as described in 

10 paragraph (38)(C). 

11 ‘‘(C) RULE OF CONSTRUCTION REGARDING

12 MASTER AGREEMENTS.—The term ‘swap’ shall 

13 be construed to include a master agreement 

14 that provides for an agreement, contract, or 

15 transaction that is a swap pursuant to subpara16 graph (A), together with all supplements to any 

17 such master agreement, without regard to 

18 whether the master agreement contains an 

19 agreement, contract, or transaction that is not 

20 a swap pursuant to subparagraph (A), except 

21 that the master agreement shall be considered 

22 to be a swap only with respect to each agree23 ment, contract, or transaction under the master 

24 agreement that is a swap pursuant to subpara25 graph (A).’’; 


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1 (5) in paragraph (13) (as redesignated by para2 graph (1))— 

3 (A) in subparagraph (A)— 

4 (i) in clause (vii), by striking 

5 ‘‘$25,000,000’’ and inserting 

6 ‘‘$50,000,000’’; and 

7 (ii) in clause (xi), by striking ‘‘total 

8 assets in an amount’’ and inserting 

9 ‘‘amounts invested on a discretionary 

10 basis’’; and 

11 (B) in subparagraph (C), by striking ‘‘de12 termines’’ and inserting ‘‘and the Securities and 

13 Exchange Commission may jointly determine’’; 

14 (6) in paragraph (30) (as redesignated by para15 graph (1)), by— 

16 (A) redesignating subparagraph (E) as 

17 subparagraph (G); 

18 (B) in subparagraph (D), by striking 

19 ‘‘and’’; and 

20 (C) inserting after subparagraph (D) the 

21 following: 

22 ‘‘(E) a swap execution facility registered 

23 under section 5h; 

24 ‘‘(F) a swap repository; and’’; 


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1 (7) by adding after paragraph (36) (as redesig2 nated by paragraph (3)) the following: 

3 ‘‘(37) BOARD.—The term ‘Board’ means the 

4 Board of Governors of the Federal Reserve Sys5 tem.’’; 

6 (8) by adding after paragraph (37) the fol7 lowing: 

8 ‘‘(38) SECURITY-BASED SWAP.— 

9 ‘‘(A) IN GENERAL.—Except as provided in 

10 subparagraph (B), the term ‘security-based 

11 swap’ means any agreement, contract, or trans12 action that would be a swap under paragraph 

13 (35) (without regard to paragraph 

14 (35)(B)(xii)), and that— 

15 ‘‘(i) is based on an index that is a 

16 narrow-based security index, including any 

17 interest therein or based on the value 

18 thereof; 

19 ‘‘(ii) is based on a single security or 

20 loan, including any interest therein or 

21 based on the value thereof; or 

22 ‘‘(iii) is based on the occurrence, non23 occurrence, or extent of the occurrence of 

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1 row-based security index, provided that 

2 such event must directly affect the finan3 cial statements, financial condition, or fi4 nancial obligations of the issuer. 

5 ‘‘(B) EXCLUSION.—The term ‘security6 based swap’ does not include any agreement, 

7 contract, or transaction that meets the defini8 tion of security-based swap only because it ref9 erences or is based upon a government security. 

10 ‘‘(C) MIXED SWAP.—The term ‘security11 based swap’ includes any agreement, contract, 

12 or transaction that is as described in subpara13 graph (A) and also is based on the value of one 

14 or more interest or other rates, currencies, com15 modities, instruments of indebtedness, indices, 

16 quantitative measures, other financial or eco17 nomic interest or property of any kind (other 

18 than a single security or a narrow-based secu19 rity index), or the occurrence, non-occurrence, 

20 or the extent of the occurrence of an event or 

21 contingency associated with a potential finan22 cial, economic, or commercial consequence 

23 (other than an event described in subparagraph 

24 (A)(iii)). 


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1 ‘‘(D) RULE OF CONSTRUCTION REGARDING

2 MASTER AGREEMENTS.—The term ‘security3 based swap’ shall be construed to include a 

4 master agreement that provides for an agree5 ment, contract, or transaction that is a secu6 rity-based swap pursuant to subparagraph (A), 

7 together with all supplements to any such mas8 ter agreement, without regard to whether the 

9 master agreement contains an agreement, con10 tract, or transaction that is not a security-based 

11 swap pursuant to subparagraph (A), except 

12 that the master agreement shall be considered 

13 to be a security-based swap only with respect to 

14 each agreement, contract, or transaction under 

15 the master agreement that is a security-based 

16 swap pursuant to subparagraph (A).’’; 

17 (9) by adding after paragraph (38) the fol18 lowing: 

19 ‘‘(39) SWAP DEALER.— 

20 ‘‘(A) IN GENERAL.—The term ‘swap deal21 er’ means any person engaged in the business 

22 of buying and selling swaps for such person’s 

23 own account, through a broker or otherwise. 

24 ‘‘(B) EXCEPTION.—The term ‘swap dealer’ 

25 does not include a person that buys or sells 


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1 swaps for such person’s own account, either in2 dividually or in a fiduciary capacity, but not as 

3 a part of a regular business.’’; 

4 (10) by adding after paragraph (39) the fol5 lowing: 

6 ‘‘(40) MAJOR SWAP PARTICIPANT.— 

7 ‘‘(A) IN GENERAL.—The term ‘major swap 

8 participant’ means any person who is not a 

9 swap dealer and— 

10 ‘‘(i) who maintains a substantial net 

11 position in outstanding swaps, excluding 

12 positions held primarily for hedging, reduc13 ing, or otherwise mitigating commercial 

14 risk; or 

15 ‘‘(ii) whose outstanding swaps create 

16 substantial net counterparty exposure (cur17 rent and potential future) that would ex18 pose counterparties to significant credit 

19 losses that could have a material adverse 

20 effect on capital of the counterparties. 

21 ‘‘(B) DEFINITIONS.—The Commission and 

22 the Securities and Exchange Commission shall 

23 jointly define by rule or regulation the term 

24 ‘substantial net position’ and ‘substantial net 

25 counterparty exposure’ at a threshold that the 


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1 Commissions determine prudent for the effec2 tive monitoring of, management and oversight 

3 of the financial system. In the event the Com4 missions are unable to agree upon a level within 

5 60 days of the commencement of such consulta6 tions, the Secretary of the Treasury shall make 

7 such determination, which shall be binding on 

8 and adopted by such Commissions. 

9 ‘‘(41) MAJOR SECURITY-BASED SWAP PARTICI10 PANT.— 

11 ‘‘(A) IN GENERAL.—The term ‘major secu12 rity-based swap participant’ means any person 

13 who is not a swap dealer and— 

14 ‘‘(i) who maintains a substantial net 

15 position in outstanding security-based 

16 swaps, excluding positions held primarily 

17 for hedging, reducing, or otherwise miti18 gating commercial risk; or 

19 ‘‘(ii) whose outstanding security-based 

20 swaps create substantial net counterparty 

21 exposure (current and potential future) 

22 that would expose counterparties to signifi23 cant credit losses that could have a mate24 rial adverse effect on capital of the 

25 counterparties. 


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1 ‘‘(B) DEFINITIONS.—The Commission and 

2 the Securities and Exchange Commission shall 

3 jointly define by rule or regulation the term 

4 ‘substantial net position’ and ‘substantial net 

5 counterparty exposure’ at a threshold that the 

6 Commissions determine prudent for the effec7 tive monitoring of, management and oversight 

8 of the financial system. In the event the Com9 missions are unable to agree upon a level within 

10 60 days of the commencement of such consulta11 tions, the Secretary of the Treasury shall make 

12 such determination, which shall be binding on 

13 and adopted by such Commissions.’’; 

14 (11) by adding after paragraph (41) the fol15 lowing: 

16 ‘‘(42) APPROPRIATE FEDERAL BANKING AGEN17 CY.—The term ‘appropriate Federal banking agency’ 

18 has the same meaning as in section 3(q) of the Fed19 eral Deposit Insurance Act (12 U.S.C. 1813(q)).’’; 

20 (12) by adding after paragraph (42) the fol21 lowing: 

22 ‘‘(43) PRUDENTIAL REGULATOR.—The term 

23 ‘Prudential Regulator’ means— 

24 ‘‘(A) the Board in the case of a swap deal25 er, major swap participant, security-based swap 


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1 dealer or major security-based swap participant 

2 that is— 

3 ‘‘(i) a State-chartered bank that is a 

4 member of the Federal Reserve System; or 

5 ‘‘(ii) a State-chartered branch or 

6 agency of a foreign bank; 

7 ‘‘(B) the Office of the Comptroller of the 

8 Currency in the case of a swap dealer, major 

9 swap participant, security-based swap dealer or 

10 major security-based swap participant that is— 

11 ‘‘(i) a national bank; or 

12 ‘‘(ii) a federally chartered branch or 

13 agency of a foreign bank; and 

14 ‘‘(C) the Federal Deposit Insurance Cor15 poration in the case of a swap dealer, major 

16 swap participant, security-based swap dealer or 

17 major security-based swap participant that is a 

18 State-chartered bank that is not a member of 

19 the Federal Reserve System.’’; 

20 (13) by adding after paragraph (43) the fol21 lowing: 

22 ‘‘(44) SECURITY-BASED SWAP DEALER.— 

23 ‘‘(A) IN GENERAL.—The term ‘security24 based swap dealer’ means any person engaged 

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1 based swaps for such person’s own account, 

2 through a broker or otherwise. 

3 ‘‘(B) EXCEPTION.—The term ‘security4 based swap dealer’ does not include a person 

5 that buys or sells security-based swaps for such 

6 person’s own account, either individually or in 

7 a fiduciary capacity, but not as a part of a reg8 ular business.’’; 

9 (14) by adding after paragraph (44) the fol10 lowing: 

11 ‘‘(45) GOVERNMENT SECURITY.—The term 

12 ‘government security’ has the same meaning as in 

13 section 3(a)(42) of the Securities Exchange Act of 

14 1934 (15 U.S.C. 78c(a)(42)).’’; 

15 (15) by adding after paragraph (45) the fol16 lowing: 

17 ‘‘(46) FOREIGN EXCHANGE FORWARD.—The 

18 term ‘foreign exchange forward’ means a transaction 

19 that solely involves the exchange of 2 different cur20 rencies on a specific future date at a fixed rate 

21 agreed at the inception of the contract.’’; 

22 (16) by adding after paragraph (46) the fol23 lowing: 

24 ‘‘(47) FOREIGN EXCHANGE SWAP.—The term 

25 ‘foreign exchange swap’ means a transaction that 


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1 solely involves the exchange of 2 different currencies 

2 on a specific date at a fixed rate agreed at the incep3 tion of the contract, and a reverse exchange of the 

4 same 2 currencies at a date further in the future 

5 and at a fixed rate agreed at the inception of the 

6 contract.’’; 

7 (17) by adding after paragraph (47) the fol8 lowing: 

9 ‘‘(48) PERSON ASSOCIATED WITH A SECURITY10 BASED SWAP DEALER OR MAJOR SECURITY-BASED

11 SWAP PARTICIPANT.—The term ‘person associated 

12 with a security-based swap dealer or major security13 based swap participant’ or ‘associated person of a 

14 security-based swap dealer or major security-based 

15 swap participant’ means any partner, officer, direc16 tor, or branch manager of such security-based swap 

17 dealer or major security-based swap participant (or 

18 any person occupying a similar status or performing 

19 similar functions), any person directly or indirectly 

20 controlling, controlled by, or under common control 

21 with such security-based swap dealer or major secu22 rity-based swap participant, or any employee of such 

23 security-based swap dealer or major security-based 

24 swap participant, except that any person associated 

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1 based swap participant whose functions are solely 

2 clerical or ministerial shall not be included in the 

3 meaning of such term other than for purposes of 

4 section 15F(e)(2) of the Securities Exchange Act of 

5 1934 (15 U.S.C. 78o–10).’’; 

6 (18) by adding after paragraph (48) the fol7 lowing: 

8 ‘‘(49) PERSON ASSOCIATED WITH A SWAP

9 DEALER OR MAJOR SWAP PARTICIPANT.—The term 

10 ‘person associated with a swap dealer or major swap 

11 participant’ or ‘associated person of a swap dealer or 

12 major swap participant’ means any partner, officer, 

13 director, or branch manager of such swap dealer or 

14 major swap participant (or any person occupying a 

15 similar status or performing similar functions), any 

16 person directly or indirectly controlling, controlled 

17 by, or under common control with such swap dealer 

18 or major swap participant, or any employee of such 

19 swap dealer or major swap participant, except that 

20 any person associated with a swap dealer or major 

21 swap participant whose functions are solely clerical 

22 or ministerial shall not be included in the meaning 

23 of such term other than for purposes of section 

24 4s(b)(6).’’; and 


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1 (19) by adding after paragraph (49) the fol2 lowing: 

3 ‘‘(50) SWAP REPOSITORY.—The term ‘swap re4 pository’ means an entity that collects and maintains 

5 the records of the terms and conditions of swaps or 

6 security-based swaps entered into by third parties. 

7 ‘‘(51) RESTRICTED OWNER.—The term ‘re8 stricted owner’ means any swap dealer, security9 based swap dealer, major swap participant, major 

10 security-based swap participant, person associated 

11 with a swap dealer or major swap participant, or 

12 person associated with a security-based swap dealer 

13 or major security-based swap participant.’’. 

14 (b) JOINT RULEMAKING ON FURTHER DEFINITION

15 OF TERMS.— 

16 (1) IN GENERAL.—The Commodity Futures 

17 Trading Commission and the Securities and Ex18 change Commission shall jointly adopt a rule further 

19 defining the terms ‘‘swap’’, ‘‘security-based swap’’, 

20 ‘‘swap dealer’’, ‘‘security-based swap dealer’’, ‘‘major 

21 swap participant’’,‘‘major security-based swap par22 ticipant’’, and ‘‘eligible contract participant’’ no 

23 later than 180 days after the effective date of this 

24 title. 


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1 (2) PREVENTION OF EVASIONS.—The Com2 modity Futures Trading Commission and the Securi3 ties and Exchange Commission may prescribe rules 

4 defining the term ‘‘swap’’ or ‘‘security-based swap’’ 

5 to include transactions that have been structured to 

6 evade this title. 

7 (c) JOINT RULEMAKING UNDER THIS TITLE.— 

8 (1) UNIFORM RULES.—Rules and regulations 

9 prescribed jointly under this title by the Commodity 

10 Futures Trading Commission and the Securities and 

11 Exchange Commission shall be uniform. 

12 (2) TREASURY DEPARTMENT.—In the event 

13 that the Commodity Futures Trading Commission 

14 and the Securities and Exchange Commission fail to 

15 jointly prescribe uniform rules and regulations under 

16 any provision of this title in a timely manner, the 

17 Secretary of the Treasury, in consultation with the 

18 Commodity Futures Trading Commission and the 

19 Securities and Exchange Commission, shall prescribe 

20 rules and regulations under such provision. A rule 

21 prescribed by the Secretary of the Treasury shall be 

22 enforced as if prescribed jointly by the Commodity 

23 Futures Trading Commission and the Securities and 

24 Exchange Commission and shall remain in effect 

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1 fective date of a corresponding rule prescribed joint2 ly by the Commodity Futures Trading Commission 

3 and the Securities and Exchange Commission in ac4 cordance with this section, whichever is later. 

5 (3) DEADLINE.—The Secretary of the Treasury 

6 shall adopt rules and regulations under paragraph 

7 (2) within 180 days of the time that the Commodity 

8 Futures Trading Commission and the Securities and 

9 Exchange Commission failed to adopt uniform rules 

10 and regulations. 

11 (4) TREATMENT OF SIMILAR PRODUCTS.—In 

12 adopting joint rules and regulations under this title, 

13 the Commodity Futures Trading Commission and 

14 the Securities and Exchange Commission shall pre15 scribe requirements to treat functionally or economi16 cally similar products similarly. 

17 (5) TREATMENT OF DISSIMILAR PRODUCTS.— 

18 Nothing in this title shall be construed to require 

19 the Commodity Futures Trading Commission and 

20 the Securities and Exchange Commission to adopt 

21 joint rules that treat functionally or economically 

22 different products identically. 

23 (6) JOINT INTERPRETATION.—Any interpreta24 tion of, or guidance regarding, a provision of this 

25 title, shall be effective only if issued jointly by the 


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1 Commodity Futures Trading Commission and the 

2 Securities and Exchange Commission if this title re3 quires the Commodity Futures Trading Commission 

4 and the Securities and Exchange Commission to 

5 issue joint regulations to implement the provision. 

6 SEC. 3102. JURISDICTION. 

7 (a) EXCLUSIVE JURISDICTION.—The first sentence 

8 of section 2(a)(1)(A) of the Commodity Exchange Act (7 

9 U.S.C. 2(a)(1)(A)) is amended— 

10 (1) by striking ‘‘(C) and (D)’’ and inserting 

11 ‘‘(C), (D), and (G)’’; 

12 (2) by striking ‘‘subsections (c) through (i)’’ 

13 and inserting ‘‘subsections (c) and (f)’’; and 

14 (3) by striking ‘‘involving contracts of sale’’ and 

15 inserting ‘‘involving swaps or contracts of sale’’. 

16 (b) NO LIMITATION.—Section 2(a)(1) of the Com17 modity Exchange Act (7 U.S.C. 2(a)(1)) is amended by 

18 inserting after subparagraph (F) the following: 

19 ‘‘(G) Nothing contained in this paragraph 

20 shall supersede or limit the jurisdiction con21 ferred on the Securities and Exchange Commis22 sion or other regulatory authority by, or other23 wise restrict the authority of the Securities and 

24 Exchange Commission or other regulatory au25 thority under, the Over-the-Counter Derivatives 


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1 Markets Act of 2009, including with respect to 

2 a security-based swap as described in section 

3 1a(38)(C) of this Act.’’. 

4 (c) ADDITIONS.—Section 2(c)(2)(A) of the Com5 modity Exchange Act (7 U.S.C. 2(c)(2)(A)) is amended— 

6 (1) in clause (i), by striking ‘‘or’’ at the end; 

7 (2) by redesignating clause (ii) as clause (iii); 

8 and 

9 (3) by inserting after clause (i) the following: 

10 ‘‘(ii) a swap; or’’. 

11 SEC. 3103. CLEARING. 

12 (a) CLEARING REQUIREMENT.— 

13 (1) Sections 2(d), 2(e), 2(g), and 2(h) of the 

14 Commodity Exchange Act (7 U.S.C. 2(d), 2(e), 2(g), 

15 and 2(h)) are repealed. 

16 (2) Section 2 of the Commodity Exchange Act 

17 (7 U.S.C. 2) is further amended by inserting after 

18 subsection (c) the following: 

19 ‘‘(d) SWAPS.—Nothing in this Act (other than sub20 sections (a)(1)(A), (a)(1)(B), (f), and (j), sections 4a, 4b, 

21 4b-1, 4c(a), 4c(b), 4o, 4r, 4s, 4t, 4u, 5b, 5c, 5h, 6(c), 6(d), 

22 6c, 6d, 8, 8a, 9, 12(e)(2), 12(f), 13(a), 13(b), 21, and 

23 22(a)(4) and such other provisions of this Act as are appli24 cable by their terms to registered entities and Commission 

25 registrants) governs or applies to a swap. 


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1 ‘‘(e) LIMITATION ON PARTICIPATION.—It shall be 

2 unlawful for any person, other than an eligible contract 

3 participant, to enter into a swap unless the swap is en4 tered into on or subject to the rules of a board of trade 

5 designated as a contract market under section 5.’’. 

6 (3) Section 2 of the Commodity Exchange Act 

7 (7 U.S.C. 2) is further amended by inserting after 

8 subsection (i) the following: 

9 ‘‘(j) CLEARING OF SWAPS.— 

10 ‘‘(1) IN GENERAL.— 

11 ‘‘(A) PRESUMPTION OF CLEARING.—A 

12 swap shall be submitted for clearing if a deriva13 tives clearing organization that is registered 

14 under this Act will accept the swap for clearing. 

15 ‘‘(B) OPEN ACCESS.—The rules of a de16 rivatives clearing organization described in sub17 paragraph (A) shall— 

18 ‘‘(i) prescribe that all swaps submitted 

19 to the derivatives clearing organization 

20 with the same terms and conditions are 

21 economically equivalent and may be offset 

22 with each other within the derivatives 

23 clearing organization; and 

24 ‘‘(ii) provide for non-discriminatory 

25 clearing of a swap executed on or through 


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1 the rules of an unaffiliated designated con2 tract market or swap execution facility. 

3 ‘‘(2) COMMISSION APPROVAL.— 

4 ‘‘(A) IN GENERAL.—A derivatives clearing 

5 organization shall submit to the Commission for 

6 prior approval each swap, or any group, cat7 egory, type, or class of swaps, that it seeks to 

8 accept for clearing, which submission the Com9 mission shall make available to the public. 

10 ‘‘(B) DEADLINE.—The Commission shall 

11 take final action on a request submitted pursu12 ant to subparagraph (A) not later than 90 days 

13 after submission of the request, unless the de14 rivatives clearing organization submitting the 

15 request agrees to an extension of the time limi16 tation established under this subparagraph. A 

17 request on which the Commission fails to take 

18 final action within the time limitation estab19 lished under this subparagraph is deemed ap20 proved. 

21 ‘‘(C) APPROVAL.—The Commission shall 

22 approve, unconditionally or subject to such 

23 terms and conditions as the Commission deter24 mines to be appropriate, any request submitted 

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1 sion finds that the request is consistent with 

2 section 5b(c)(2). 

3 ‘‘(D) RULES.—Not later than 180 days 

4 after the date of the enactment of the Over-the5 Counter Derivatives Markets Act of 2009, the 

6 Commission shall adopt rules for a derivatives 

7 clearing organization’s submission for approval, 

8 pursuant to this paragraph, of a swap, or a 

9 group, category, type or class of swaps, that it 

10 seeks to accept for clearing. 

11 ‘‘(3) STAY OF CLEARING REQUIREMENT.—At 

12 any time after issuance of an approval pursuant to 

13 paragraph (2): 

14 ‘‘(A) REVIEW PROCESS.—The Commission, 

15 on application of a counterparty to a swap or 

16 on its own initiative, may stay the clearing re17 quirement of paragraph (1) until the Commis18 sion completes a review of the terms of the 

19 swap (or the group, category, type, or class of 

20 swaps) and the clearing arrangement. 

21 ‘‘(B) DEADLINE.—The Commission shall 

22 complete a review undertaken pursuant to sub23 paragraph (A) not later than 90 days after 

24 issuance of the stay, unless the derivatives 

25 clearing organization that clears the swap, or 


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1 group, category, type or class of swaps, agrees 

2 to an extension of the time limitation estab3 lished under this subparagraph. 

4 ‘‘(C) DETERMINATION.—Upon completion 

5 of the review undertaken pursuant to subpara6 graph (A), the Commission may— 

7 ‘‘(i) determine, unconditionally or sub8 ject to such terms and conditions as the 

9 Commission determines to be appropriate, 

10 that the swap, or group, category, type, or 

11 class of swaps, must be cleared pursuant 

12 to this subsection if it finds that such 

13 clearing is consistent with section 5b(c)(2); 

14 or 

15 ‘‘(ii) determine that the clearing re16 quirement of paragraph (1) shall not apply 

17 to the swap, or group, category, type, or 

18 class of swaps. 

19 ‘‘(D) RULES.—Not later than 180 days 

20 after the date of the enactment of the Over-the21 Counter Derivatives Markets Act of 2009, the 

22 Commission shall adopt rules for reviewing, 

23 pursuant to this paragraph, a derivatives clear24 ing organization’s clearing of a swap, or a 


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1 group, category, type, or class of swaps, that it 

2 has accepted for clearing. 

3 ‘‘(4) PREVENTION OF EVASION.—The Commis4 sion and the Securities and Exchange Commission 

5 shall have authority to prescribe rules under this 

6 subsection, or issue interpretations of such rules, as 

7 necessary to prevent evasions of this Act provided 

8 that any such rules or interpretations must be issued 

9 jointly to be effective. 

10 ‘‘(5) REQUIRED REPORTING.— 

11 ‘‘(A) IN GENERAL.—All swap transactions 

12 that are not accepted for clearing by any de13 rivatives clearing organization shall be reported 

14 to either a swap repository described in section 

15 21 or, if there is no repository that would ac16 cept the swap, to the Commission pursuant to 

17 section 4r within such time period as the Com18 mission may by rule or regulation prescribe. 

19 ‘‘(B) AUTHORITY OF SWAP DEALER TO RE20 PORT.—Counterparties may agree which 

21 counterparty will report the swap transaction. 

22 In transactions where only 1 counterparty is a 

23 swap dealer, the swap dealer will report the 

24 transaction. 


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1 ‘‘(6) TRANSITION RULES.—Rules adopted by 

2 the Commission under this section shall provide for 

3 the reporting of data, as follows: 

4 ‘‘(A) Swaps that were entered into before 

5 the date of enactment of the Over-the-Counter 

6 Derivatives Markets Act of 2009 shall be re7 ported to a registered swap repository or the 

8 Commission no later than 180 days after the 

9 effective date of the Over-the-Counter Deriva10 tives Markets Act of 2009. 

11 ‘‘(B) Swaps that were entered into on or 

12 after the date of enactment of the Over-the13 Counter Derivatives Markets Act of 2009 shall 

14 be reported to a registered swap repository or 

15 the Commission no later than the later of— 

16 ‘‘(i) 90 days after the effective date of 

17 the Over-the-Counter Derivatives Markets 

18 Act of 2009; or 

19 ‘‘(ii) such other time after entering 

20 into the swap as the Commission may pre21 scribe by rule or regulation. 

22 ‘‘(7) TRADE EXECUTION.— 

23 ‘‘(A) IN GENERAL.—With respect to trans24 actions involving swaps subject to the clearing 

25 requirement of paragraph (1) and where both 


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1 counterparties are either swap dealers or major 

2 swap participants, such counterparties shall— 

3 ‘‘(i) execute the transaction on a 

4 board of trade designated as a contract 

5 market under section 5; or 

6 ‘‘(ii) execute the transaction on a 

7 swap execution facility registered with the 

8 Commission. 

9 ‘‘(B) EXCEPTION.—The requirements of 

10 clauses (i) and (ii) of subparagraph (A) shall 

11 not apply if no board of trade or swap execution 

12 facility makes the swap available to trade. 

13 ‘‘(C) REQUIRED REPORTING.—If the ex14 ception of subparagraph (B) applies and there 

15 is no facility that makes the swap available to 

16 trade, the counterparties shall comply with any 

17 recordkeeping and transaction reporting re18 quirements as may be prescribed by the Com19 mission with respect to swaps subject to the re20 quirements of paragraph (1). 

21 ‘‘(8) EXCHANGE TRADING.—In adopting rules 

22 and regulations, the Commission shall endeavor to 

23 eliminate unnecessary impediments to the trading on 

24 boards of trade designated as contract markets 

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1 actions that would be security-based swaps but for 

2 the trading of such contracts, agreements or trans3 actions on such a designated contract market. 

4 ‘‘(9) EXCEPTIONS.—The requirements of para5 graph (1) shall not apply to a swap if— 

6 ‘‘(A) no derivatives clearing organization 

7 registered under this Act will accept the swap 

8 for clearing; or 

9 ‘‘(B) one of the counterparties to the swap 

10 is not a swap dealer or major swap participant. 

11 ‘‘(10) EXCLUSION.—Paragraph (1) shall not 

12 apply to a swap 1 party to which is not a swap deal13 er or major swap participant, and which is entered 

14 into before the end of the 90-day period that begins 

15 with the effective date of this paragraph.’’. 

16 (b) DERIVATIVES CLEARING ORGANIZATIONS.— 

17 (1) Subsections (a) and (b) of section 5b of the 

18 Commodity Exchange Act (7 U.S.C. 7a-1) are 

19 amended to read as follows: 

20 ‘‘(a) REGISTRATION REQUIREMENT.—It shall be un21 lawful for a derivatives clearing organization, unless reg22 istered with the Commission, directly or indirectly to make 

23 use of the mails or any means or instrumentality of inter24 state commerce to perform the functions of a derivatives 


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1 clearing organization described in section 1a(10) of this 

2 Act with respect to— 

3 ‘‘(1) a contract of sale of a commodity for fu4 ture delivery (or option on such a contract) or option 

5 on a commodity, in each case unless the contract or 

6 option is— 

7 ‘‘(A) excluded from this Act by section 

8 2(a)(1)(C)(i), 2(c), or 2(f); or 

9 ‘‘(B) a security futures product cleared by 

10 a clearing agency registered with the Securities 

11 and Exchange Commission under the Securities 

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

13 or 

14 ‘‘(2) a swap. 

15 ‘‘(b) VOLUNTARY REGISTRATION.— 

16 ‘‘(1) DERIVATIVES CLEARING ORGANIZA17 TIONS.—A person that clears agreements, contracts, 

18 or transactions that are not required to be cleared 

19 under this Act may register with the Commission as 

20 a derivatives clearing organization. 

21 ‘‘(2) CLEARING AGENCIES.—A derivatives clear22 ing organization may clear security-based swaps that 

23 are required to be cleared by a person who is reg24 istered as a clearing agency under the Securities Ex25 change Act of 1934 (15 U.S.C. 78a et seq.).’’. 


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1 (2) Section 5b of the Commodity Exchange Act 

2 (7 U.S.C. 7a–1) is amended by adding at the end 

3 the following: 

4 ‘‘(g) REQUIRED REGISTRATION FOR BANKS AND

5 CLEARING AGENCIES.—A person that is required to be 

6 registered as a derivatives clearing organization under this 

7 section shall register with the Commission regardless of 

8 whether the person is also a bank or a clearing agency 

9 registered with the Securities and Exchange Commission 

10 under the Securities Exchange Act of 1934 (15 U.S.C. 

11 78a et seq.). 

12 ‘‘(h) HARMONIZATION OF RULES.—Not later than 

13 180 days after the effective date of the Over-the-Counter 

14 Derivatives Markets Act of 2009, the Commission and the 

15 Securities and Exchange Commission shall jointly adopt 

16 uniform rules governing persons that are registered as de17 rivatives clearing organizations for swaps under this sub18 section and persons that are registered as clearing agen19 cies for security-based swaps under the Securities Ex20 change Act of 1934 (15 U.S.C. 78a et seq.). 

21 ‘‘(i) CONSULTATION.—The Commission and the Se22 curities and Exchange Commission shall consult with the 

23 appropriate Federal banking agencies prior to adopting 

24 rules under this section with respect to swaps. 


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1 ‘‘(j) EXEMPTIONS.—The Commission may exempt, 

2 conditionally or unconditionally, a derivatives clearing or3 ganization from registration under this section for the 

4 clearing of swaps if the Commission finds that such de5 rivatives clearing organization is subject to comparable, 

6 comprehensive supervision and regulation on a consoli7 dated basis by the Securities and Exchange Commission, 

8 a Prudential Regulator or the appropriate governmental 

9 authorities in the organization’s home country. 

10 ‘‘(k) DESIGNATION OF COMPLIANCE OFFICER.— 

11 ‘‘(1) IN GENERAL.—Each derivatives clearing 

12 organization shall designate an individual to serve as 

13 a compliance officer. 

14 ‘‘(2) DUTIES.—The compliance officer— 

15 ‘‘(A) shall report directly to the board or 

16 to the senior officer of the derivatives clearing 

17 organization; 

18 ‘‘(B) shall— 

19 ‘‘(i) review compliance with the core 

20 principles in section 5b(c)(2); 

21 ‘‘(ii) in consultation with the board of 

22 the derivatives clearing organization, a 

23 body performing a function similar to that 

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1 rivatives clearing organization, resolve any 

2 conflicts of interest that may arise; 

3 ‘‘(iii) be responsible for administering 

4 the policies and procedures required to be 

5 established pursuant to this section; and 

6 ‘‘(iv) ensure compliance with com7 modity laws and the rules and regulations 

8 issued thereunder, including rules pre9 scribed by the Commission pursuant to 

10 this section; and 

11 ‘‘(C) shall establish procedures for remedi12 ation of noncompliance issues found during 

13 compliance office reviews, lookbacks, internal or 

14 external audit findings, self-reported errors, or 

15 through validated complaints. Procedures will 

16 establish the handling, management response, 

17 remediation, retesting, and closing of non18 compliant issues. 

19 ‘‘(3) ANNUAL REPORTS REQUIRED.—The com20 pliance officer shall annually prepare and sign a re21 port on the compliance of the derivatives clearing or22 ganization with the commodity laws and its policies 

23 and procedures, including its code of ethics and con24 flict of interest policies, in accordance with rules pre25 scribed by the Commission. Such compliance report 


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1 shall accompany the financial reports of the deriva2 tives clearing organization that are required to be 

3 furnished to the Commission pursuant to this sec4 tion and shall include a certification that, under pen5 alty of law, the report is accurate and complete.’’. 

6 (3) Section 5b(c)(2) of the Commodity Ex7 change Act (7 U.S.C. 7a–1(c)(2)) is amended to 

8 read as follows: 

9 ‘‘(2) CORE PRINCIPLES FOR DERIVATIVES

10 CLEARING ORGANIZATIONS.—To be registered and to 

11 maintain registration as a derivatives clearing orga12 nization, a derivatives clearing organization shall 

13 comply with the core principles specified in subpara14 graphs (B) through (N) this paragraph. The Com15 mission may conform the core principles to reflect 

16 evolving United States and international stand17 ards.’’. 

18 (4) Section 5b of the Commodity Exchange Act 

19 (7 U.S.C. 7a–1) is further amended by adding after 

20 subsection (k), as added by paragraph (2), the fol21 lowing: 

22 ‘‘(l) REPORTING.— 

23 ‘‘(1) IN GENERAL.—A derivatives clearing orga24 nization that clears swaps shall provide to the Com25 mission and any designated swap repository all inVerDate Nov 24 2008 22:04 Dec 02, 2009 Jkt 089200 PO 00000 Frm 00516 Fmt 6652 Sfmt 6201 E:\BILLS\H4173.IH H4173

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1 formation determined by the Commission to be nec2 essary to perform its responsibilities under this Act. 

3 The Commission shall adopt data collection and 

4 maintenance requirements for swaps cleared by de5 rivatives clearing organizations that are comparable 

6 to the corresponding requirements for swaps accept7 ed by swap repositories and swaps traded on swap 

8 execution facilities. A derivatives clearing organiza9 tion that clears security-based swap agreements (as 

10 defined in section 3(a)(76) of the Securities Ex11 change Act of 1934) shall, upon request, make avail12 able to the Securities and Exchange Commission all 

13 information (including information on a real-time 

14 basis) relating to such security-based swap agree15 ments. Subject to section 8, the Commission shall 

16 share such information, upon request, with the 

17 Board, the Securities and Exchange Commission 

18 (with respect to swaps other than security-based 

19 swap agreements), the appropriate Federal banking 

20 agencies, the Financial Services Oversight Council, 

21 and the Department of Justice or to other persons 

22 the Commission deems appropriate, including for23 eign financial supervisors (including foreign futures 

24 authorities), foreign central banks, and foreign min25 istries. 


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1 ‘‘(2) PUBLIC INFORMATION.—A derivatives 

2 clearing organization that clears swaps shall provide 

3 to the Commission, or its designee, such information 

4 as is required by, and in a form and at a frequency 

5 to be determined by, the Commission, in order to 

6 comply with the public reporting requirements con7 tained in section 8(j).’’. 

8 (5) Section 8(e) of the Commodity Exchange 

9 Act (7 U.S.C. 12(e)) is amended in the last sentence 

10 by adding ‘‘central bank and ministries’’ after ‘‘de11 partment’’ each place it appears. 

12 (c) LEGAL CERTAINTY FOR IDENTIFIED BANKING

13 PRODUCTS.— 

14 (1) REPEAL.—Sections 402(d), 404, 407, 

15 408(b), and 408(c)(2) of the Legal Certainty for 

16 Bank Products Act of 2000 (7 U.S.C. 27(d), 27b, 

17 27e, 27f(b), and 27f(c)(2)) are repealed. 

18 (2) LEGAL CERTAINTY.—Section 403 of the 

19 Legal Certainty for Bank Products Act of 2000 (7 

20 U.S.C. 27a) is amended to read as follows: 

21 ‘‘SEC. 403. EXCLUSION OF IDENTIFIED BANKING PRODUCT. 

22 ‘‘(a) EXCLUSION.—Except as provided in subsection 

23 (b) or (c), no provisions of the Commodity Exchange Act 

24 (7 U.S.C. 1 et seq.) shall apply to, and the Commodity 

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1 change Commission shall not exercise regulatory authority 

2 under the Commodity Exchange Act with respect to, an 

3 identified banking product. 

4 ‘‘(b) EXCEPTION.—An appropriate Federal banking 

5 agency may except an identified banking product or a 

6 bank under its regulatory jurisdiction from the exclusion 

7 in subsection (a) if the agency determines, in consultation 

8 with the Commodity Futures Trading Commission and the 

9 Securities and Exchange Commission, that the product— 

10 ‘‘(1) would meet the definition of swap in sec11 tion 1a(35) of the Commodity Exchange Act (7 

12 U.S.C. 1a(35)) or security-based swap in section 

13 1a(38) of the Commodity Exchange Act (7 U.S.C. 

14 1a(38)); and 

15 ‘‘(2) has become known to the trade as a swap 

16 or security-based swap, or otherwise has been struc17 tured as an identified banking product for the pur18 pose of evading the provisions of the Commodity Ex19 change Act (7 U.S.C. 1 et seq.), the Securities Act 

20 of 1933 (15 U.S.C. 77a et seq.), or the Securities 

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

22 ‘‘(c) ADDITIONAL EXCEPTION.—The exclusion in 

23 subsection (a) shall not apply to an identified banking 

24 product that— 


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1 ‘‘(1) is a product of a bank that is not under 

2 the regulatory jurisdiction of an appropriate Federal 

3 banking agency; 

4 ‘‘(2) meets the definition of swap in section 

5 1a(35) of the Commodity Exchange Act or security6 based swap in section 3(a)(68) of the Securities and 

7 Exchange Act of 1934; and 

8 ‘‘(3) has become known to the trade as a swap 

9 or security-based swap, or has been structured as an 

10 identified banking product for the purpose of evad11 ing the provisions of the Commodity Exchange Act 

12 (7 U.S.C. 1 et seq.), the Securities Act of 1933 (15 

13 U.S.C. 77a et seq.), or the Securities Exchange Act 

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

15 SEC. 3104. PUBLIC REPORTING OF AGGREGATE SWAP 

16 DATA. 

17 Section 8 of the Commodity Exchange Act (7 U.S.C. 

18 12) is amended by adding after subsection (i) the fol19 lowing: 

20 ‘‘(j) PUBLIC REPORTING OF AGGREGATE SWAP

21 DATA.— 

22 ‘‘(1) IN GENERAL.—The Commission, or a per23 son designated by the Commission pursuant to para24 graph (2), shall make available to the public, in a 

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1 actions and market positions of any person, aggre2 gate data on swap trading volumes and positions 

3 from the sources set forth in paragraph (3). 

4 ‘‘(2) DESIGNEE OF THE COMMISSION.—The 

5 Commission may designate a derivatives clearing or6 ganization or a swap repository to carry out the 

7 public reporting described in paragraph (1). 

8 ‘‘(3) SOURCES OF INFORMATION.—The sources 

9 of the information to be publicly reported as de10 scribed in paragraph (1) are— 

11 ‘‘(A) derivatives clearing organizations 

12 pursuant to section 5b(k)(2); 

13 ‘‘(B) swap repositories pursuant to section 

14 21(c)(3); and 

15 ‘‘(C) reports received by the Commission 

16 pursuant to section 4r.’’. 

17 SEC. 3105. SWAP REPOSITORIES. 

18 The Commodity Exchange Act (7 U.S.C. 1 et seq.) 

19 is amended by inserting after section 20 the following: 

20 ‘‘SEC. 21. SWAP REPOSITORIES. 

21 ‘‘(a) REGISTRATION REQUIREMENT.— 

22 ‘‘(1) IN GENERAL.—It shall be unlawful for any 

23 person, unless registered with the Commission, di24 rectly or indirectly to make use of the mails or any 


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1 means or instrumentality of interstate commerce to 

2 perform the functions of a swap repository. 

3 ‘‘(2) INSPECTION AND EXAMINATION.—Reg4 istered swap repositories shall be subject to inspec5 tion and examination by any representative of the 

6 Commission. 

7 ‘‘(b) STANDARD SETTING.— 

8 ‘‘(1) DATA IDENTIFICATION.—The Commission 

9 shall prescribe standards that specify the data ele10 ments for each swap that shall be collected and 

11 maintained by each registered swap repository. 

12 ‘‘(2) DATA COLLECTION AND MAINTENANCE.— 

13 The Commission shall prescribe data collection and 

14 data maintenance standards for swap repositories. 

15 ‘‘(3) COMPARABILITY.—The standards pre16 scribed by the Commission under this subsection 

17 shall be comparable to the data standards imposed 

18 by the Commission on derivatives clearing organiza19 tions that clear swaps. 

20 ‘‘(c) DUTIES.—A swap repository shall— 

21 ‘‘(1) accept data prescribed by the Commission 

22 for each swap under subsection (b); 

23 ‘‘(2) maintain such data in such form and man24 ner and for such period as may be required by the 

25 Commission; 


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1 ‘‘(3) provide to the Commission, or its designee, 

2 such information as is required by, and in a form 

3 and at a frequency to be determined by, the Com4 mission, in order to comply with the public reporting 

5 requirements contained in section 8(j); and 

6 ‘‘(4) make available, on a confidential basis 

7 pursuant to section 8, all data obtained by the swap 

8 repository, including individual counterparty trade 

9 and position data, to the Commission, the appro10 priate Federal banking agencies, the Financial Serv11 ices Oversight Council, the Securities and Exchange 

12 Commission, and the Department of Justice or to 

13 other persons the Commission deems appropriate, 

14 including foreign financial supervisors (including for15 eign futures authorities), foreign central banks, and 

16 foreign ministries. 

17 ‘‘(d) REQUIRED REGISTRATION FOR SECURITY18 BASED SWAP REPOSITORIES.—Any person that is re19 quired to be registered as a swap repository under this 

20 section shall register with the Commission regardless of 

21 whether that person also is registered with the Securities 

22 and Exchange Commission as a security-based swap re23 pository. 

24 ‘‘(e) HARMONIZATION OF RULES.—Not later than 

25 180 days after the effective date of the Over-the-Counter 


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1 Derivatives Markets Act of 2009, the Commission and the 

2 Securities and Exchange Commission shall jointly adopt 

3 uniform rules governing persons that are registered under 

4 this section and persons that are registered as security5 based swap repositories under the Securities Exchange 

6 Act of 1934 (15 U.S.C. 78a et seq.), including uniform 

7 rules that specify the data elements that shall be collected 

8 and maintained by each repository. 

9 ‘‘(f) EXEMPTIONS.—The Commission may exempt, 

10 conditionally or unconditionally, a swap repository from 

11 the requirements of this section if the Commission finds 

12 that such swap repository is subject to comparable, com13 prehensive supervision and regulation on a consolidated 

14 basis by the Securities and Exchange Commission, a Pru15 dential Regulator or the appropriate governmental au16 thorities in the organization’s home country.’’. 

17 SEC. 3106. REPORTING AND RECORDKEEPING. 

18 The Commodity Exchange Act (7 U.S.C. 1 et seq.) 

19 is amended by inserting after section 4q the following: 

20 ‘‘SEC. 4r. REPORTING AND RECORDKEEPING FOR CERTAIN 

21 SWAPS. 

22 ‘‘(a) IN GENERAL.—Any person who enters into a 

23 swap and— 

24 ‘‘(1) did not clear the swap in accordance with 

25 section 2(j)(1); and 


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1 ‘‘(2) did not have data regarding the swap ac2 cepted by a swap repository in accordance with rules 

3 (including time frames) adopted by the Commission 

4 under section 21, 

5 shall meet the requirements in subsection (b). 

6 ‘‘(b) REPORTS.—Any person described in subsection 

7 (a) shall— 

8 ‘‘(1) make such reports in such form and man9 ner and for such period as the Commission shall pre10 scribe by rule or regulation regarding the swaps held 

11 by the person; and 

12 ‘‘(2) keep books and records pertaining to the 

13 swaps held by the person in such form and manner 

14 and for such period as may be required by the Com15 mission, which books and records shall be open to 

16 inspection by any representative of the Commission, 

17 an appropriate Federal banking agency, the Securi18 ties and Exchange Commission, the Financial Serv19 ices Oversight Council, and the Department of Jus20 tice. 

21 ‘‘(c) IDENTICAL DATA.—In adopting rules under this 

22 section, the Commission shall require persons described in 

23 subsection (a) to report the same or a more comprehensive 

24 set of data than the Commission requires swap reposi25 tories to collect under section 21.’’. 


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1 SEC. 3107. REGISTRATION AND REGULATION OF SWAP 

2 DEALERS AND MAJOR SWAP PARTICIPANTS. 

3 The Commodity Exchange Act (7 U.S.C. 1 et seq.) 

4 is amended by inserting after section 4r (as added by sec5 tion 3106) the following: 

6 ‘‘SEC. 4s. REGISTRATION AND REGULATION OF SWAP DEAL7 ERS AND MAJOR SWAP PARTICIPANTS. 

8 ‘‘(a) REGISTRATION.— 

9 ‘‘(1) It shall be unlawful for any person to act 

10 as a swap dealer unless such person is registered as 

11 a swap dealer with the Commission. 

12 ‘‘(2) It shall be unlawful for any person to act 

13 as a major swap participant unless such person shall 

14 have registered as a major swap participant with the 

15 Commission. 

16 ‘‘(b) REQUIREMENTS.— 

17 ‘‘(1) IN GENERAL.—A person shall register as 

18 a swap dealer or major swap participant by filing a 

19 registration application with the Commission. 

20 ‘‘(2) CONTENTS.—The application shall be 

21 made in such form and manner as prescribed by the 

22 Commission, giving any information and facts as the 

23 Commission may deem necessary concerning the 

24 business in which the applicant is or will be engaged. 

25 Such person, when registered as a swap dealer or 

26 major swap participant, shall continue to report and 


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1 furnish to the Commission such information per2 taining to such person’s business as the Commission 

3 may require. 

4 ‘‘(3) EXPIRATION.—Each registration shall ex5 pire at such time as the Commission may by rule or 

6 regulation prescribe. 

7 ‘‘(4) RULES.—Except as provided in sub8 sections (c), (d) and (e), the Commission may pre9 scribe rules applicable to swap dealers and major 

10 swap participants, including rules that limit the ac11 tivities of swap dealers and major swap participants. 

12 ‘‘(5) TRANSITION.—Rules adopted under this 

13 section shall provide for the registration of swap 

14 dealers and major swap participants no later than 

15 one year after the effective date of the Over-the16 Counter Derivatives Markets Act of 2009. 

17 ‘‘(6) STATUTORY DISQUALIFICATION.—Except 

18 to the extent otherwise specifically provided by rule, 

19 regulation, or order, it shall be unlawful for a swap 

20 dealer or a major swap participant to permit any 

21 person associated with a swap dealer or a major 

22 swap participant who is subject to a statutory dis23 qualification to effect or be involved in effecting 

24 swaps on behalf of such swap dealer or major swap 

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1 ticipant knew, or in the exercise of reasonable care 

2 should have known, of such statutory disqualifica3 tion. 

4 ‘‘(c) DUAL REGISTRATION.— 

5 ‘‘(1) SWAP DEALER.—Any person that is re6 quired to be registered as a swap dealer under this 

7 section shall register with the Commission regardless 

8 of whether that person also is a bank or is registered 

9 with the Securities and Exchange Commission as a 

10 security-based swap dealer. 

11 ‘‘(2) MAJOR SWAP PARTICIPANT.—Any person 

12 that is required to be registered as a major swap 

13 participant under this section shall register with the 

14 Commission regardless of whether that person also 

15 is a bank or is registered with the Securities and 

16 Exchange Commission as a major security-based 

17 swap participant. 

18 ‘‘(d) JOINT RULES.— 

19 ‘‘(1) IN GENERAL.—Not later than 180 days 

20 after the effective date of the Over-the-Counter De21 rivatives Markets Act of 2009, the Commission and 

22 the Securities and Exchange Commission shall joint23 ly adopt uniform rules for persons that are reg24 istered as swap dealers or major swap participants 

25 under this section and persons that are registered as 


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1 security-based swap dealers or major security-based 

2 swap participants under the Securities Exchange Act 

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

4 ‘‘(2) EXCEPTION FOR PRUDENTIAL REQUIRE5 MENTS.—The Commission and the Securities and 

6 Exchange Commission shall not prescribe rules im7 posing prudential requirements (including activity 

8 restrictions) on swap dealers, major swap partici9 pants, security-based swap dealers, or major secu10 rity-based swap participants for which there is a 

11 Prudential Regulator. This provision shall not be 

12 construed as limiting the authority of the Commis13 sion and the Securities and Exchange Commission to 

14 prescribe appropriate business conduct, reporting, 

15 and recordkeeping requirements to protect investors. 

16 ‘‘(e) CAPITAL AND MARGIN REQUIREMENTS.— 

17 ‘‘(1) IN GENERAL.— 

18 ‘‘(A) BANK SWAP DEALERS AND MAJOR

19 SWAP PARTICIPANTS.—Each registered swap 

20 dealer and major swap participant for which 

21 there is a Prudential Regulator shall meet such 

22 minimum capital requirements and minimum 

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1 scribe to help ensure the safety and soundness 

2 of the swap dealer or major swap participant. 

3 ‘‘(B) NONBANK SWAP DEALERS AND

4 MAJOR SWAP PARTICIPANTS.—Each registered 

5 swap dealer and major swap participant for 

6 which there is not a Prudential Regulator shall 

7 meet such minimum capital requirements and 

8 minimum margin requirements as the Commis9 sion and the Securities and Exchange Commis10 sion shall by rule or regulation jointly prescribe 

11 to help ensure the safety and soundness of the 

12 swap dealer or major swap participant. 

13 ‘‘(2) JOINT RULES.— 

14 ‘‘(A) BANK SWAP DEALERS AND MAJOR

15 SWAP PARTICIPANTS.—Within 180 days of the 

16 enactment of the Over-the-Counter Derivatives 

17 Markets Act of 2009, the Prudential Regu18 lators, in consultation with the Commission and 

19 the Securities and Exchange Commission, shall 

20 jointly adopt rules imposing capital and margin 

21 requirements under this subsection for swap 

22 dealers and major swap participants. 

23 ‘‘(B) NONBANK SWAP DEALERS AND

24 MAJOR SWAP PARTICIPANTS.—Within 180 days 

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1 rivatives Markets Act of 2009, the Commission 

2 and the Securities and Exchange Commission, 

3 in consultation with the Prudential Regulators, 

4 shall jointly adopt rules imposing capital and 

5 margin requirements under this subsection for 

6 swap dealers and major swap participants for 

7 which there is no Prudential Regulator. 

8 ‘‘(3) CAPITAL.— 

9 ‘‘(A) BANK SWAP DEALERS AND MAJOR

10 SWAP PARTICIPANTS.—In setting capital re11 quirements under this subsection, the Pruden12 tial Regulators shall impose: 

13 ‘‘(i) a capital requirement that is 

14 greater than zero for swaps that are 

15 cleared by a derivatives clearing organiza16 tion; and 

17 ‘‘(ii) to offset the greater risk to the 

18 swap dealer or major swap participant and 

19 to the financial system arising from the 

20 use of swaps that are not centrally cleared, 

21 higher capital requirements for swaps that 

22 are not cleared by a registered derivatives 

23 clearing organization than for swaps that 

24 are centrally cleared. 


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1 ‘‘(B) EXCLUSION.—Subparagraph (A) 

2 shall not apply to a swap 1 party to which is 

3 not a swap dealer or major swap participant, 

4 and which is entered into before the end of the 

5 90-day period that begins with the effective 

6 date of this subparagraph. 

7 ‘‘(C) NONBANK SWAP DEALERS AND

8 MAJOR SWAP PARTICIPANTS.—Capital require9 ments set by the Commission and the Securities 

10 and Exchange Commission under this sub11 section shall be as strict as or stricter than the 

12 capital requirements set by the Prudential Reg13 ulators under this subsection. 

14 ‘‘(D) BANK HOLDING COMPANIES.—Cap15 ital requirements set by the Board for swaps of 

16 bank holding companies on a consolidated basis 

17 shall be as strict as or stricter than the capital 

18 requirements set by the Prudential Regulators 

19 under this subsection. 

20 ‘‘(E) A futures commission merchant, in21 troducing broker, broker or dealer shall main22 tain sufficient capital to comply with the strict23 er of any applicable capital requirements to 

24 which it is subject. 

25 ‘‘(4) MARGIN.— 


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1 ‘‘(A) BANK SWAP DEALERS AND MAJOR

2 SWAP PARTICIPANTS.—The Prudential Regu3 lators shall impose margin requirements under 

4 this subsection on all swaps that are not cleared 

5 by a registered derivatives clearing organiza6 tion. 

7 ‘‘(B) NON-SWAP DEALERS OR MAJOR SWAP

8 PARTICIPANTS.—The Prudential Regulators 

9 may, but are not required to, impose margin re10 quirements with respect to swaps in which one 

11 of the counterparties is neither a swap dealer, 

12 major swap participant, security-based swap 

13 dealer nor a major security-based swap partici14 pant. Any such margin requirements for swaps 

15 shall provide for the use of non-cash collateral. 

16 ‘‘(C) EXCLUSION.—Subparagraph (B) 

17 shall not apply to a swap 1 party to which is 

18 not a swap dealer or major swap participant, 

19 and which is entered into before the end of the 

20 90-day period that begins with the effective 

21 date of this subparagraph. 

22 ‘‘(D) NONBANK SWAP DEALERS AND

23 MAJOR SWAP PARTICIPANTS.—Margin require24 ments for swaps set by the Commission and the 

25 Securities and Exchange Commission under this 


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1 subsection shall be as strict as or stricter than 

2 margin requirements for swaps set by the Pru3 dential Regulators. 

4 ‘‘(f) REPORTING AND RECORDKEEPING.— 

5 ‘‘(1) IN GENERAL.—Each registered swap deal6 er and major swap participant— 

7 ‘‘(A) shall make such reports as are pre8 scribed by the Commission by rule or regulation 

9 regarding the transactions and positions and fi10 nancial condition of such person; 

11 ‘‘(B) for which— 

12 ‘‘(i) there is a Prudential Regulator 

13 shall keep books and records of all activi14 ties related to its business as a swap dealer 

15 or major swap participant in such form 

16 and manner and for such period as may be 

17 prescribed by the Commission by rule or 

18 regulation; 

19 ‘‘(ii) there is no Prudential Regulator 

20 shall keep books and records in such form 

21 and manner and for such period as may be 

22 prescribed by the Commission by rule or 

23 regulation; 


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1 ‘‘(C) shall keep such books and records 

2 open to inspection and examination by any rep3 resentative of the Commission; and 

4 ‘‘(D) shall keep any such books and 

5 records relating to transactions in swaps based 

6 on one or more securities open to inspection 

7 and examination by the Securities and Ex8 change Commission. 

9 ‘‘(2) RULES.—Within 365 days of the enact10 ment of the Over-the-Counter Derivatives Markets 

11 Act of 2009, the Commission and the Securities and 

12 Exchange Commission, in consultation with the ap13 propriate Federal banking agencies, shall jointly 

14 adopt rules governing reporting and recordkeeping 

15 for swap dealers, major swap participants, security16 based swap dealers, and major security-based swap 

17 participants. 

18 ‘‘(g) DAILY TRADING RECORDS.— 

19 ‘‘(1) IN GENERAL.—Each registered swap deal20 er and major swap participant shall maintain daily 

21 trading records of its swaps and all related records 

22 (including related cash or forward transactions) and 

23 recorded communications including but not limited 

24 to electronic mail, instant messages, and recordings 


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1 of telephone calls, for such period as may be pre2 scribed by the Commission by rule or regulation. 

3 ‘‘(2) INFORMATION REQUIREMENTS.—The daily 

4 trading records shall include such information as the 

5 Commission shall prescribe by rule or regulation. 

6 ‘‘(3) CUSTOMER RECORDS.—Each registered 

7 swap dealer and major swap participant shall main8 tain daily trading records for each customer or 

9 counterparty in such manner and form as to be 

10 identifiable with each swap transaction. 

11 ‘‘(4) AUDIT TRAIL.—Each registered swap deal12 er and major swap participant shall maintain a com13 plete audit trail for conducting comprehensive and 

14 accurate trade reconstructions. 

15 ‘‘(5) RULES.—Within 365 days of the enact16 ment of the Over-the-Counter Derivatives Markets 

17 Act of 2009, the Commission and the Securities and 

18 Exchange Commission, in consultation with the ap19 propriate Federal banking agencies, shall jointly 

20 adopt rules governing daily trading records for swap 

21 dealers, major swap participants, security-based 

22 swap dealers, and major security-based swap partici23 pants. 

24 ‘‘(h) BUSINESS CONDUCT STANDARDS.— 


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1 ‘‘(1) IN GENERAL.—Each registered swap deal2 er and major swap participant shall conform with 

3 business conduct standards as may be prescribed by 

4 the Commission by rule or regulation addressing— 

5 ‘‘(A) fraud, manipulation, and other abu6 sive practices involving swaps (including swaps 

7 that are offered but not entered into); 

8 ‘‘(B) diligent supervision of its business as 

9 a swap dealer; 

10 ‘‘(C) adherence to all applicable position 

11 limits; 

12 ‘‘(D) the prevention of self-dealing, by lim13 iting the extent to which such a swap dealer or 

14 major swap participant may conduct business 

15 with a derivatives clearing organization, a board 

16 of trade, or an alternative swap execution facil17 ity that clears or trades swaps and in which 

18 such a swap dealer or major swap participant 

19 has a material debt or equity investment; and 

20 ‘‘(D) such other matters as the Commis21 sion shall determine to be necessary or appro22 priate. 

23 ‘‘(2) BUSINESS CONDUCT REQUIREMENTS.— 

24 Business conduct requirements adopted by the Com25 mission shall— 


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1 ‘‘(A) establish the standard of care for a 

2 swap dealer or major swap participant to verify 

3 that any counterparty meets the eligibility 

4 standards for an eligible contract participant; 

5 ‘‘(B) require disclosure by the swap dealer 

6 or major swap participant to any counterparty 

7 to the transaction (other than a swap dealer, 

8 major swap participant, security-based swap 

9 dealer or major security-based swap partici10 pant) of— 

11 ‘‘(i) information about the material 

12 risks and characteristics of the swap; 

13 ‘‘(ii) for cleared swaps, upon the re14 quest of the counterparty, the daily mark 

15 from the appropriate clearinghouse and for 

16 non-cleared swaps, upon the request of the 

17 counterparty, the daily mark of the swap 

18 dealer or major swap participant; and 

19 ‘‘(iii) any other material incentives or 

20 conflicts of interest that the swap dealer or 

21 major swap participant may have in con22 nection with the swap; and 

23 ‘‘(C) establish such other standards and 

24 requirements as the Commission may determine 

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1 est, for the protection of investors, or otherwise 

2 in furtherance of the purposes of this Act. 

3 ‘‘(3) RULES.—The Commission and the Securi4 ties and Exchange Commission, in consultation with 

5 the appropriate Federal banking agencies, shall 

6 jointly prescribe rules under this subsection gov7 erning business conduct standards for swap dealers, 

8 major swap participants, security-based swap deal9 ers, and major security-based swap participants 

10 within 365 days of the enactment of the Over-the11 Counter Derivatives Markets Act of 2009. 

12 ‘‘(i) DOCUMENTATION AND BACK OFFICE STAND13 ARDS.— 

14 ‘‘(1) IN GENERAL.—Each registered swap deal15 er and major swap participant shall conform with 

16 standards, as may be prescribed by the Commission 

17 by rule or regulation, addressing timely and accurate 

18 confirmation, processing, netting, documentation, 

19 and valuation of all swaps. 

20 ‘‘(2) RULES.—Within 365 days of the enact21 ment of the Over-the-Counter Derivatives Markets 

22 Act of 2009, the Commission and the Securities and 

23 Exchange Commission, in consultation with the ap24 propriate Federal banking agencies, shall adopt rules 

25 governing documentation and back office standards 


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•HR 4173 IH

1 for swap dealers, major swap participants, security2 based swap dealers, and major security-based swap 

3 participants. 

4 ‘‘(j) DEALER RESPONSIBILITIES.—Each registered 

5 swap dealer and major swap participant at all times shall 

6 comply with the following requirements: 

7 ‘‘(1) MONITORING OF TRADING.—The swap 

8 dealer or major swap participant shall monitor its 

9 trading in swaps to prevent violations of applicable 

10 position limits. 

11 ‘‘(2) DISCLOSURE OF GENERAL INFORMA12 TION.—The swap dealer or major swap participant 

13 shall disclose to the Commission and to the Pruden14 tial Regulator for such swap dealer or major swap 

15 participant, as applicable, information concerning— 

16 ‘‘(A) terms and conditions of its swaps; 

17 ‘‘(B) swap trading operations, mechanisms, 

18 and practices; 

19 ‘‘(C) financial integrity protections relating 

20 to swaps; and 

21 ‘‘(D) other information relevant to its trad22 ing in swaps. 

23 ‘‘(3) ABILITY TO OBTAIN INFORMATION.—The 

24 swap dealer or major swap participant shall— 


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•HR 4173 IH

1 ‘‘(A) establish and enforce internal systems 

2 and procedures to obtain any necessary infor3 mation to perform any of the functions de4 scribed in this section; and 

5 ‘‘(B) provide the information to the Com6 mission and to the Prudential Regulator for 

7 such swap dealer or major swap participant, as 

8 applicable, upon request. 

9 ‘‘(4) CONFLICTS OF INTEREST.—The swap 

10 dealer and major swap participant shall implement 

11 conflict-of-interest systems and procedures that— 

12 ‘‘(A) establish structural and institutional 

13 safeguards to assure that the activities of any 

14 person within the firm relating to research or 

15 analysis of the price or market for any com16 modity are separated by appropriate informa17 tional partitions within the firm from the re18 view, pressure, or oversight of those whose in19 volvement in trading or clearing activities might 

20 potentially bias their judgment or supervision; 

21 and 

22 ‘‘(B) address such other issues as the 

23 Commission determines appropriate. 

24 ‘‘(5) ANTITRUST CONSIDERATIONS.—Unless 

25 necessary or appropriate to achieve the purposes of 


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1 this Act, the swap dealer or major swap participant 

2 shall avoid— 

3 ‘‘(A) adopting any processes or taking any 

4 actions that result in any unreasonable re5 straints of trade; or 

6 ‘‘(B) imposing any material anticompeti7 tive burden on trading. 

8 ‘‘(k) RULES.—The Commission, the Securities and 

9 Exchange Commission, and the Prudential Regulators 

10 shall consult with each other prior to adopting any rules 

11 under the Over-the-Counter Derivatives Markets Act of 

12 2009. 

13 ‘‘(l) EXEMPTIONS.—The Commission may exempt, 

14 conditionally or unconditionally, a swap dealer or major 

15 swap participant from the prudential requirements of the 

16 Over-the-Counter Derivatives Markets Act of 2009 if the 

17 Commission finds that such swap dealer or major swap 

18 participant is subject to comparable, comprehensive super19 vision and regulation on a consolidated basis by the Secu20 rities and Exchange Commission, a Prudential Regulator 

21 or the appropriate governmental authorities in the organi22 zation’s home country. 

23 ‘‘(m) EXEMPTIVE AUTHORITY.— 

24 ‘‘(1) IN GENERAL.—The Commission, by rule 

25 or regulation, may conditionally or unconditionally 


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1 exempt any person, derivative, or transaction, or any 

2 class or classes of persons, derivatives, or trans3 actions, from any provision of this Act that was 

4 added by an amendment in the Over-the-Counter 

5 Derivatives Markets Act of 2009, to the extent that 

6 such exemption is necessary or appropriate in the 

7 public interest, and is consistent with the purposes 

8 of such Act. 

9 ‘‘(2) PROCEDURES.—The Commission shall, by 

10 rule or regulation, determine the procedures under 

11 which an exemptive order under this subsection shall 

12 be granted and may, in its sole discretion, decline to 

13 entertain any application for an order of exemption 

14 under this subsection.’’. 

15 SEC. 3108. SEGREGATION OF ASSETS HELD AS COLLAT16 ERAL IN SWAP TRANSACTIONS. 

17 The Commodity Exchange Act (7 U.S.C. 1 et seq.) 

18 is further amended by inserting after section 4s the fol19 lowing: 

20 ‘‘SEC. 4t. SEGREGATION OF ASSETS HELD AS COLLATERAL 

21 IN OVER-THE-COUNTER SWAP TRANS22 ACTIONS. 

23 ‘‘(a) SEGREGATION.—At the request of a swap 

24 counterparty who provides funds or other property to a 

25 swap dealer as variation or initial margin or collateral to 


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1 secure the obligations of the counterparty under a swap 

2 between the counterparty and the swap dealer that is not 

3 submitted for clearing to a derivatives clearing organiza4 tion, the swap dealer shall segregate the funds or other 

5 property for the benefit of the counterparty, and maintain 

6 the variation or initial margin or collateral in an account 

7 which is carried by an independent third-party custodian 

8 and designated as a segregated account for the 

9 counterparty, in accordance with such rules and regula10 tions as the Commission or Prudential Regulator may pre11 scribe. If a swap counterparty is a swap dealer or major 

12 swap participant who owns more than 20 percent of, or 

13 has more than 50 percent representation on the board of 

14 directors of, a custodian, the custodian shall not be consid15 ered independent from the swap counterparties for pur16 poses of the preceding sentence. This subsection shall not 

17 be interpreted to preclude commercial arrangements re18 garding the investment of the segregated funds or other 

19 property and the related allocation of gains and losses re20 sulting from any such investment. 

21 ‘‘(b) BACK OFFICE AUDIT REPORTING.—If a swap 

22 dealer does not segregate funds at the request of a swap 

23 counterparty in accordance with subsection (a), the swap 

24 dealer shall report to its counterparty on a quarterly basis 

25 that its back office procedures relating to margin and colVerDate Nov 24 2008 22:04 Dec 02, 2009 Jkt 089200 PO 00000 Frm 00544 Fmt 6652 Sfmt 6201 E:\BILLS\H4173.IH H4173

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1 lateral requirements are in compliance with the agreement 

2 of the counterparties.’’. 

3 SEC. 3109. CONFLICTS OF INTEREST. 

4 Section 4d of the Commodity Exchange Act (7 U.S.C. 

5 6d) is amended by— 

6 (1) redesignating subsection (c) as subsection 

7 (d); and 

8 (2) inserting after subsection (b) the following: 

9 ‘‘(c) CONFLICTS OF INTEREST.—The Commission 

10 shall require that futures commission merchants and in11 troducing brokers implement conflict-of-interest systems 

12 and procedures that— 

13 ‘‘(1) establish structural and institutional safe14 guards to assure that the activities of any person 

15 within the firm relating to research or analysis of 

16 the price or market for any commodity are separated 

17 by appropriate informational partitions within the 

18 firm from the review, pressure, or oversight of those 

19 whose involvement in trading or clearing activities 

20 might potentially bias their judgment or supervision; 

21 and 

22 ‘‘(2) address such other issues as the Commis23 sion determines appropriate.’’. 


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1 SEC. 3110. SWAP EXECUTION FACILITIES. 

2 The Commodity Exchange Act (7 U.S.C. 1 et seq.) 

3 is amended by inserting after section 5g the following: 

4 ‘‘SEC. 5h. SWAP EXECUTION FACILITIES. 

5 ‘‘(a) REGISTRATION.— 

6 ‘‘(1) IN GENERAL.— 

7 ‘‘(A) No person may operate a swap execu8 tion facility unless the facility is registered 

9 under this section. 

10 ‘‘(B) The term ‘swap execution facility’ 

11 means an entity that facilitates the execution of 

12 swaps between two persons through any means 

13 of interstate commerce but which is not a des14 ignated contract market. 

15 ‘‘(2) DUAL REGISTRATION.—Any person that is 

16 required to be registered as a swap execution facility 

17 under this section shall register with the Commis18 sion regardless of whether that person also is reg19 istered with the Securities and Exchange Commis20 sion as a swap execution facility. 

21 ‘‘(b) REQUIREMENTS FOR TRADING.—A swap execu22 tion facility that is registered under subsection (a) may 

23 trade any swap. 

24 ‘‘(c) TRADING BY CONTRACT MARKETS.—A board of 

25 trade that operates a contract market shall, to the extent 

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1 cility and uses the same electronic trade execution system 

2 for trading on the contract market and the swap execution 

3 facility, identify whether the electronic trading is taking 

4 place on the contract market or the swap execution facil5 ity. 

6 ‘‘(d) CRITERIA FOR REGISTRATION.— 

7 ‘‘(1) IN GENERAL.—To be registered as a swap 

8 execution facility, the facility shall be required to 

9 demonstrate to the Commission that it meets the 

10 criteria specified herein. 

11 ‘‘(2) DETERRENCE OF ABUSES.—The swap exe12 cution facility shall establish and enforce trading 

13 and participation rules that will deter abuses and 

14 have the capacity to detect, investigate, and enforce 

15 those rules, including means to— 

16 ‘‘(A) obtain information necessary to per17 form the functions required under this section; 

18 or 

19 ‘‘(B) use means to— 

20 ‘‘(i) provide market participants with 

21 impartial access to the market; and 

22 ‘‘(ii) capture information that may be 

23 used in establishing whether rule violations 

24 have occurred. 


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1 ‘‘(3) TRADING PROCEDURES.—The swap execu2 tion facility shall establish and enforce rules or 

3 terms and conditions defining, or specifications de4 tailing, trading procedures to be used in entering 

5 and executing orders traded on or through its facili6 ties. 

7 ‘‘(4) FINANCIAL INTEGRITY OF TRANS8 ACTIONS.—The swap execution facility shall estab9 lish and enforce rules and procedures for ensuring 

10 the financial integrity of swaps entered on or 

11 through its facilities, including the clearance and 

12 settlement of the swaps pursuant to section 2(j)(1). 

13 ‘‘(e) CORE PRINCIPLES FOR SWAP EXECUTION FA14 CILITIES.— 

15 ‘‘(1) IN GENERAL.—To maintain its registra16 tion as a swap execution facility, the facility shall 

17 comply with the core principles specified in this sub18 section and any requirement that the Commission 

19 may impose by rule or regulation pursuant to section 

20 8a(5). Except where the Commission determines 

21 otherwise by rule or regulation, the facility shall 

22 have reasonable discretion in establishing the man23 ner in which it complies with these core principles. 

24 ‘‘(2) COMPLIANCE WITH RULES.—The swap 

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1 ance with any of the rules of the facility, including 

2 the terms and conditions of the swaps traded on or 

3 through the facility and any limitations on access to 

4 the facility. 

5 ‘‘(3) SWAPS NOT READILY SUSCEPTIBLE TO MA6 NIPULATION.—The swap execution facility shall per7 mit trading only in swaps that are not readily sus8 ceptible to manipulation. 

9 ‘‘(4) MONITORING OF TRADING.—The swap 

10 execution facility shall monitor trading in swaps to 

11 prevent manipulation, price distortion, and disrup12 tions of the delivery or cash settlement process 

13 through surveillance, compliance, and disciplinary 

14 practices and procedures, including methods for con15 ducting real-time monitoring of trading and com16 prehensive and accurate trade reconstructions. 

17 ‘‘(5) ABILITY TO OBTAIN INFORMATION.—The 

18 swap execution facility shall— 

19 ‘‘(A) establish and enforce rules that will 

20 allow the facility to obtain any necessary infor21 mation to perform any of the functions de22 scribed in this subsection; 

23 ‘‘(B) provide the information to the Com24 mission upon request; and 


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1 ‘‘(C) have the capacity to carry out such 

2 international information-sharing agreements as 

3 the Commission may require. 

4 ‘‘(6) EMERGENCY AUTHORITY.—The swap exe5 cution facility shall adopt rules to provide for the ex6 ercise of emergency authority, in consultation or co7 operation with the Commission, where necessary and 

8 appropriate, including the authority to liquidate or 

9 transfer open positions in any swap or to suspend or 

10 curtail trading in a swap. 

11 ‘‘(7) TIMELY PUBLICATION OF TRADING INFOR12 MATION.—The swap execution facility shall make 

13 public timely information on price, trading volume, 

14 and other trading data on swaps to the extent pre15 scribed by the Commission. 

16 ‘‘(8) RECORDKEEPING AND REPORTING.—The 

17 swap execution facility shall maintain records of all 

18 activities related to the business of the facility, in19 cluding a complete audit trail, in a form and manner 

20 acceptable to the Commission for a period of 5 

21 years, and report to the Commission all information 

22 determined by the Commission to be necessary or 

23 appropriate for the Commission to perform its re24 sponsibilities under this Act in a form and manner 

25 acceptable to the Commission. The swap execution 


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1 facility shall, upon request, make available to the Se2 curities and Exchange Commission all information 

3 (including information on a real-time basis) relating 

4 to transactions in security-based swap agreements 

5 (as defined in section 3(a)(76) of the Securities Ex6 change Act of 1934). The Commission shall adopt 

7 data collection and reporting requirements for swap 

8 execution facilities that are comparable to cor9 responding requirements for derivatives clearing or10 ganizations and swap repositories. 

11 ‘‘(9) ANTITRUST CONSIDERATIONS.—Unless 

12 necessary or appropriate to achieve the purposes of 

13 this Act, the swap execution facility shall avoid— 

14 ‘‘(A) adopting any rules or taking any ac15 tions that result in any unreasonable restraints 

16 of trade; or 

17 ‘‘(B) imposing any material anticompeti18 tive burden on trading on the swap execution 

19 facility. 

20 ‘‘(10) CONFLICTS OF INTEREST.— 

21 ‘‘(A) The swap execution facility shall es22 tablish and enforce rules to minimize conflicts 

23 of interest in its decision-making process, and 

24 establish a process for resolving any such con25 flicts of interest. 


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1 ‘‘(B) The rules of the swap execution facil2 ity shall provide that a restricted owner shall 

3 not be permitted directly or indirectly to ac4 quire beneficial ownership of interests in the fa5 cility or in persons with a controlling interest in 

6 the facility, to the extent that such an acquisi7 tion would result in restricted owners control8 ling more than 20 percent of the votes entitled 

9 to be cast on any matter by the holders of the 

10 ownership interests. 

11 ‘‘(C) The rules of the swap execution facil12 ity shall provide that a majority of the directors 

13 of the facility shall not be associated with a re14 stricted owner. 

15 ‘‘(11) DESIGNATION OF COMPLIANCE OFFI16 CER.— 

17 ‘‘(A) IN GENERAL.—Each swap execution 

18 facility shall designate an individual to serve as 

19 a compliance officer. 

20 ‘‘(B) DUTIES.—The compliance officer 

21 shall— 

22 ‘‘(i) report directly to the board or to 

23 the senior officer of the facility; 

24 ‘‘(ii) shall— 


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1 ‘‘(I) review compliance with the 

2 core principles in this subsection; 

3 ‘‘(II) in consultation with the 

4 board of the facility, a body per5 forming a function similar to that of 

6 a board, or the senior officer of the 

7 facility, resolve any conflicts of inter8 est that may arise; 

9 ‘‘(III) be responsible for admin10 istering the policies and procedures 

11 required to be established pursuant to 

12 this section; and 

13 ‘‘(IV) ensure compliance with 

14 commodity laws and the rules and 

15 regulations issued thereunder, includ16 ing rules prescribed by the Commis17 sion pursuant to this section; and 

18 ‘‘(iii) establish procedures for remedi19 ation of non-compliance issues found dur20 ing compliance office reviews, lookbacks, 

21 internal or external audit findings, self-re22 ported errors, or through validated com23 plaints. Procedures will establish the han24 dling, management response, remediation, 


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1 re-testing, and closing of non-compliant 

2 issues. 

3 ‘‘(C) ANNUAL REPORTS REQUIRED.—The 

4 compliance officer shall annually prepare and 

5 sign a report on the compliance of the facility 

6 with the commodity laws and its policies and 

7 procedures, including its code of ethics and con8 flict of interest policies, in accordance with 

9 rules prescribed by the Commission. Such com10 pliance report shall accompany the financial re11 ports of the facility that are required to be fur12 nished to the Commission pursuant to this sec13 tion and shall include a certification that, under 

14 penalty of law, the report is accurate and com15 plete. 

16 ‘‘(f) EXEMPTIONS.—The Commission may exempt, 

17 conditionally or unconditionally, a swap execution facility 

18 from registration under this section if the Commission 

19 finds that such facility is subject to comparable, com20 prehensive supervision and regulation on a consolidated 

21 basis by the Securities and Exchange Commission, a Pru22 dential Regulator or the appropriate governmental au23 thorities in the organization’s home country. 

24 ‘‘(g) HARMONIZATION OF RULES.—Within 180 days 

25 of the enactment of the Over-the-Counter Derivatives 


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1 Markets Act of 2009, the Commission and the Securities 

2 and Exchange Commission shall jointly prescribe rules 

3 governing the regulation of swap execution facilities under 

4 this section and section 3B of the Securities Exchange Act 

5 of 1934 (15 U.S.C. 78c–2).’’. 

6 SEC. 3111. DERIVATIVES TRANSACTION EXECUTION FACILI7 TIES AND EXEMPT BOARDS OF TRADE. 

8 Sections 5a and 5d of the Commodity Exchange Act 

9 (7 U.S.C. 7 and 7a-3) are repealed. 

10 SEC. 3112. DESIGNATED CONTRACT MARKETS. 

11 (a) Section 5(d) of the Commodity Exchange Act (7 

12 U.S.C. 7(d)) is amended by striking paragraph (9) and 

13 inserting the following: 

14 ‘‘(9) EXECUTION OF TRANSACTIONS.— 

15 ‘‘(A) The board of trade shall provide a 

16 competitive, open, and efficient market and 

17 mechanism for executing transactions that pro18 tects the price discovery process of trading in 

19 the board of trade’s centralized market. 

20 ‘‘(B) The rules may authorize, for bona 

21 fide business purposes— 

22 ‘‘(i) transfer trades or office trades; 

23 ‘‘(ii) an exchange of— 

24 ‘‘(I) futures in connection with a 

25 cash commodity transaction; 


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1 ‘‘(II) futures for cash commod2 ities; or 

3 ‘‘(III) futures for swaps; or 

4 ‘‘(iii) a futures commission merchant, 

5 acting as principal or agent, to enter into 

6 or confirm the execution of a contract for 

7 the purchase or sale of a commodity for fu8 ture delivery if the contract is reported, re9 corded, or cleared in accordance with the 

10 rules of the contract market or a deriva11 tives clearing organization.’’. 

12 (b) Section 5(d) of the Commodity Exchange Act (7 

13 U.S.C. 7(d)) is amended by striking paragraph (15) and 

14 inserting the following: 

15 ‘‘(15) CONFLICTS OF INTEREST.— 

16 ‘‘(A) The board of trade shall establish 

17 and enforce rules to minimize conflicts of inter18 est in the decisionmaking process of the con19 tract market, and establish a process for resolv20 ing any such conflicts of interest. 

21 ‘‘(B) The rules of a board of trade that 

22 trades swaps shall provide that a restricted 

23 owner shall not be permitted directly or indi24 rectly to acquire beneficial ownership of inter25 ests in the board of trade or in persons with a 


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1 controlling interest in the board of trade, to the 

2 extent that such an acquisition would result in 

3 restricted owners controlling more than 20 per4 cent of the votes entitled to be cast on any mat5 ter by the holders of the ownership interests. 

6 ‘‘(C) The rules of a board of trade that 

7 trades swaps shall provide that a majority of 

8 the directors of the board of trade shall not be 

9 associated with a restricted owner.’’. 

10 (c) Section 5(d) of the Commodity Exchange Act (7 

11 U.S.C. 7(d)) is amended by adding after paragraph (18) 

12 the following: 

13 ‘‘(19) FINANCIAL RESOURCES.—The board of 

14 trade shall demonstrate that it has adequate finan15 cial, operational, and managerial resources to dis16 charge the responsibilities of a contract market. For 

17 the board of trade’s financial resources to be consid18 ered adequate, their value shall exceed the total 

19 amount that would enable the contract market to 

20 cover its operating costs for a period of one year, 

21 calculated on a rolling basis. 

22 ‘‘(20) SYSTEM SAFEGUARDS.—The board of 

23 trade shall— 

24 ‘‘(A) establish and maintain a program of 

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1 mize sources of operational risk through the de2 velopment of appropriate controls and proce3 dures, and the development of automated sys4 tems, that are reliable, secure, and give ade5 quate scalable capacity; 

6 ‘‘(B) establish and maintain emergency 

7 procedures, backup facilities, and a plan for dis8 aster recovery that allow for the timely recovery 

9 and resumption of operations and the fulfill10 ment of the board of trade’s responsibilities and 

11 obligations; and 

12 ‘‘(C) periodically conduct tests to verify 

13 that back-up resources are sufficient to ensure 

14 continued order processing and trade matching, 

15 price reporting, market surveillance, and main16 tenance of a comprehensive and accurate audit 

17 trail.’’. 

18 SEC. 3113. POSITION LIMITS. 

19 (a) Section 4a(a) of the Commodity Exchange Act (7 

20 U.S.C. 6a(a)) is amended by— 

21 (1) inserting ‘‘(1)’’ after ‘‘(a)’’; 

22 (2) striking ‘‘on electronic trading facilities with 

23 respect to a significant price discovery contract’’ in 

24 the first sentence and inserting ‘‘swaps that perform 


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1 or affect a significant price discovery function with 

2 respect to regulated markets’’; 

3 (3) inserting ‘‘, including any group or class of 

4 traders,’’ in the second sentence after ‘‘held by any 

5 person’’; 

6 (4) striking ‘‘on an electronic trading facility 

7 with respect to a significant price discovery con8 tract,’’ in the second sentence and inserting ‘‘swaps 

9 that perform or affect a significant price discovery 

10 function with respect to regulated markets,’’; and 

11 (5) inserting at the end the following: 

12 ‘‘(2) AGGREGATE POSITION LIMITS.—The Com13 mission may, by rule or regulation, establish limits 

14 (including related hedge exemption provisions) on 

15 the aggregate number or amount of positions in con16 tracts based upon the same underlying commodity 

17 (as defined by the Commission) that may be held by 

18 any person, including any group or class of traders, 

19 for each month across— 

20 ‘‘(A) contracts listed by designated con21 tract markets; 

22 ‘‘(B) contracts traded on a foreign board 

23 of trade that provides members or other partici24 pants located in the United States with direct 


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1 access to its electronic trading and order 

2 matching system; and 

3 ‘‘(C) swap contracts that perform or affect 

4 a significant price discovery function with re5 spect to regulated markets. 

6 ‘‘(3) SIGNIFICANT PRICE DISCOVERY FUNC7 TION.—In making a determination whether a swap 

8 performs or affects a significant price discovery 

9 function with respect to regulated markets, the Com10 mission shall consider, as appropriate: 

11 ‘‘(A) PRICE LINKAGE.—The extent to 

12 which the swap uses or otherwise relies on a 

13 daily or final settlement price, or other major 

14 price parameter, of another contract traded on 

15 a regulated market based upon the same under16 lying commodity, to value a position, transfer or 

17 convert a position, financially settle a position, 

18 or close out a position. 

19 ‘‘(B) ARBITRAGE.—The extent to which 

20 the price for the swap is sufficiently related to 

21 the price of another contract traded on a regu22 lated market based upon the same underlying 

23 commodity so as to permit market participants 

24 to effectively arbitrage between the markets by 

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1 cuting trades in the swaps on a frequent and 

2 recurring basis. 

3 ‘‘(C) MATERIAL PRICE REFERENCE.—The 

4 extent to which, on a frequent and recurring 

5 basis, bids, offers, or transactions in a contract 

6 traded on a regulated market are directly based 

7 on, or are determined by referencing, the price 

8 generated by the swap. 

9 ‘‘(D) MATERIAL LIQUIDITY.—The extent 

10 to which the volume of swaps being traded in 

11 the commodity is sufficient to have a material 

12 effect on another contract traded on a regulated 

13 market. 

14 ‘‘(E) OTHER MATERIAL FACTORS.—Such 

15 other material factors as the Commission speci16 fies by rule or regulation as relevant to deter17 mine whether a swap serves a significant price 

18 discovery function with respect to a regulated 

19 market. 

20 ‘‘(4) EXEMPTIONS.—The Commission, by rule, 

21 regulation, or order, may exempt, conditionally or 

22 unconditionally, any person or class of persons, any 

23 swap or class of swaps, or any transaction or class 

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1 lish under this section with respect to position lim2 its.’’. 

3 (b) Section 4a(b) of the Commodity Exchange Act 

4 (7 U.S.C. 6a(b)) is amended— 

5 (1) in paragraph (1), by striking ‘‘or derivatives 

6 transaction execution facility or facilities or elec7 tronic trading facility’’ and inserting ‘‘or swap exe8 cution facility or facilities’’; and 

9 (2) in paragraph (2), by striking ‘‘or derivatives 

10 transaction execution facility or electronic trading 

11 facility’’ and inserting ‘‘or swap execution facility’’. 

12 SEC. 3114. ENHANCED AUTHORITY OVER REGISTERED EN13 TITIES. 

14 (a) Section 5(d)(1) of the Commodity Exchange Act 

15 (7 U.S.C. 7(d)(1)) is amended by striking ‘‘The board of 

16 trade shall have’’ and inserting ‘‘Except where the Com17 mission otherwise determines by rule or regulation pursu18 ant to section 8a(5), the board of trade shall have’’. 

19 (b) Section 5c(c) of the Commodity Exchange Act (7 

20 U.S.C. 7a-2(c)) is amended to read as follows: 

21 ‘‘(c) NEW CONTRACTS, NEW RULES, AND RULE

22 AMENDMENTS.— 

23 ‘‘(1) IN GENERAL.—Subject to paragraph (2), a 

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1 ment, or may elect to approve and implement any 

2 new rule or rule amendment, by providing to the 

3 Commission (and the Secretary of the Treasury, in 

4 the case of a contract of sale of a government secu5 rity for future delivery (or option on such a con6 tract) or a rule or rule amendment specifically re7 lated to such a contract) a written certification that 

8 the new contract or instrument or clearing of the 

9 new contract or instrument, new rule, or rule 

10 amendment complies with this Act (including regula11 tions under this Act). 

12 ‘‘(2) PRIOR APPROVAL.— 

13 ‘‘(A) IN GENERAL.—A registered entity 

14 may request that the Commission grant prior 

15 approval to any new contract or other instru16 ment, new rule, or rule amendment. 

17 ‘‘(B) PRIOR APPROVAL REQUIRED.—Not18 withstanding any other provision of this section, 

19 a designated contract market shall submit to 

20 the Commission for prior approval under sub21 paragraph (A) each rule amendment that mate22 rially changes the terms and conditions, as de23 termined by the Commission, in any contract of 

24 sale for future delivery of a commodity (or any 

25 option thereon) traded through its facilities if 


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1 the rule amendment applies to contracts and 

2 delivery months which have already been listed 

3 for trading and for which there is open interest. 

4 ‘‘(C) DEADLINE.—If prior approval is re5 quested under subparagraph (A), the Commis6 sion shall take final action on the request not 

7 later than 90 days after submission of the re8 quest, unless the person submitting the request 

9 agrees to an extension of the time limitation es10 tablished under this subparagraph. 

11 ‘‘(3) APPROVAL.—The Commission shall ap12 prove any such new contract or instrument, new 

13 rule, or rule amendment unless the Commission 

14 finds that the new contract or instrument, new rule, 

15 or rule amendment would violate this Act.’’. 

16 SEC. 3115. FOREIGN BOARDS OF TRADE. 

17 (a) Section 4(b) of the Commodity Exchange Act (7 

18 U.S.C. 6(b)) is amended by striking ‘‘No rule or regula19 tion’’ and inserting ‘‘Except as provided in paragraphs (1) 

20 and (2), no rule or regulation’’. 

21 (b) Section 4(b) of the Commodity Exchange Act (7 

22 U.S.C. 6(b)) is further amended by inserting before ‘‘The 

23 Commission’’ the following: ‘‘(1) The Commission may 

24 adopt rules and regulations requiring registration with the 

25 Commission for a foreign board of trade that provides the 


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1 members of the foreign board of trade or other partici2 pants located in the United States direct access to the 

3 electronic trading and order matching system of the for4 eign board of trade, including rules and regulations pre5 scribing procedures and requirements applicable to the 

6 registration of such foreign boards of trade. For purposes 

7 of this paragraph, ‘direct access’ refers to an explicit grant 

8 of authority by a foreign board of trade to an identified 

9 member or other participant located in the United States 

10 to enter trades directly into the trade matching system 

11 of the foreign board of trade. 

12 ‘‘(2) It shall be unlawful for a foreign board of trade 

13 to provide to the members of the foreign board of trade 

14 or other participants located in the United States direct 

15 access to the electronic trading and order-matching system 

16 of the foreign board of trade with respect to an agreement, 

17 contract, or transaction that settles against any price (in18 cluding the daily or final settlement price) of 1 or more 

19 contracts listed for trading on a registered entity, unless 

20 the Commission determines that— 

21 ‘‘(A) the foreign board of trade makes public 

22 daily trading information regarding the agreement, 

23 contract, or transaction that is comparable to the 

24 daily trading information published by the registered 

25 entity for the 1 or more contracts against which the 


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1 agreement, contract, or transaction traded on the 

2 foreign board of trade settles; and 

3 ‘‘(B) the foreign board of trade (or the foreign 

4 futures authority that oversees the foreign board of 

5 trade)— 

6 ‘‘(i) adopts position limits (including re7 lated hedge exemption provisions) for the agree8 ment, contract, or transaction that are com9 parable to the position limits (including related 

10 hedge exemption provisions) adopted by the reg11 istered entity for the 1 or more contracts 

12 against which the agreement, contract, or 

13 transaction traded on the foreign board of trade 

14 settles; 

15 ‘‘(ii) has the authority to require or direct 

16 market participants to limit, reduce, or liq17 uidate any position the foreign board of trade 

18 (or the foreign futures authority that oversees 

19 the foreign board of trade) determines to be 

20 necessary to prevent or reduce the threat of 

21 price manipulation, excessive speculation as de22 scribed in section 4a, price distortion, or disrup23 tion of delivery or the cash settlement process; 

24 ‘‘(iii) agrees to promptly notify the Com25 mission, with regard to the agreement, contract, 


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1 or transaction that settles against any price (in2 cluding the daily or final settlement price) of 1 

3 or more contracts listed for trading on a reg4 istered entity, of any change regarding— 

5 ‘‘(I) the information that the foreign 

6 board of trade will make publicly available; 

7 ‘‘(II) the position limits that the for8 eign board of trade or foreign futures au9 thority will adopt and enforce; 

10 ‘‘(III) the position reductions required 

11 to prevent manipulation, excessive specula12 tion as described in section 4a, price dis13 tortion, or disruption of delivery or the 

14 cash settlement process; and 

15 ‘‘(IV) any other area of interest ex16 pressed by the Commission to the foreign 

17 board of trade or foreign futures authority; 

18 ‘‘(iv) provides information to the Commis19 sion regarding large trader positions in the 

20 agreement, contract, or transaction that is com21 parable to the large trader position information 

22 collected by the Commission for the 1 or more 

23 contracts against which the agreement, con24 tract, or transaction traded on the foreign 

25 board of trade settles; and 


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1 ‘‘(v) provides the Commission with infor2 mation necessary to publish reports on aggre3 gate trader positions for the agreement, con4 tract, or transaction traded on the foreign 

5 board of trade that are comparable to such re6 ports on aggregate trader positions for the 1 or 

7 more contracts against which the agreement, 

8 contract, or transaction traded on the foreign 

9 board of trade settles. 

10 ‘‘(3) Paragraphs (1) and (2) shall not be effective 

11 with respect to any foreign board of trade to which the 

12 Commission has granted direct access permission before 

13 the date of the enactment of this subsection until the date 

14 that is 180 days after such date of enactment. 

15 ‘‘(4)’’. 

16 (c) LIABILITY OF REGISTERED PERSONS TRADING

17 ON A FOREIGN BOARD OF TRADE.— 

18 (1) Section 4(a) of the Commodity Exchange 

19 Act (7. U.S.C. 6(a)) is amended by inserting ‘‘or by 

20 subsection (f)’’ after ‘‘Unless exempted by the Com21 mission pursuant to subsection (c)’’; and 

22 (2) Section 4 of the Commodity Exchange Act 

23 (7 U.S.C. 6) is further amended by adding at the 

24 end the following: 


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1 ‘‘(f) A person registered with the Commission, or ex2 empt from registration by the Commission, under this Act 

3 may not be found to have violated subsection (a) with re4 spect to a transaction in, or in connection with, a contract 

5 of sale of a commodity for future delivery if the person 

6 has reason to believe that the transaction and the contract 

7 is made on or subject to the rules of a foreign board of 

8 trade that has complied with subsections (b)(1) and 

9 (b)(2).’’. 

10 (d) CONTRACT ENFORCEMENT FOR FOREIGN FU11 TURES CONTRACTS.—Section 22(a) of the Commodity Ex12 change Act (7 U.S.C. 25(a)) is amended by adding at the 

13 end the following: 

14 ‘‘(5) CONTRACT ENFORCEMENT FOR FOREIGN

15 FUTURES CONTRACTS.—A contract of sale of a com16 modity for future delivery traded or executed on or 

17 through the facilities of a board of trade, exchange, 

18 or market located outside the United States for pur19 poses of section 4(a) shall not be void, voidable, or 

20 unenforceable, and a party to such a contract shall 

21 not be entitled to rescind or recover any payment 

22 made with respect to the contract, based on the fail23 ure of the foreign board of trade to comply with any 

24 provision of this Act.’’. 


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1 SEC. 3116. LEGAL CERTAINTY FOR SWAPS. 

2 Section 22(a)(4) of the Commodity Exchange Act (7 

3 U.S.C. 25(a)(4)) is amended to read as follows: 

4 ‘‘(4) CONTRACT ENFORCEMENT BETWEEN ELI5 GIBLE COUNTERPARTIES.— 

6 ‘‘(A) No hybrid instrument sold to any in7 vestor shall be void, voidable, or unenforceable, 

8 and no party to such hybrid instrument shall be 

9 entitled to rescind, or recover any payment 

10 made with respect to, such a hybrid instrument 

11 under this section or any other provision of 

12 Federal or State law, based solely on the failure 

13 of the hybrid instrument to comply with the 

14 terms or conditions of section 2(f) or regula15 tions of the Commission. 

16 ‘‘(B) No agreement, contract, or trans17 action between eligible contract participants or 

18 persons reasonably believed to be eligible con19 tract participants shall be void, voidable, or un20 enforceable, and no party thereto shall be enti21 tled to rescind, or recover any payment made 

22 with respect to, such agreement, contract, or 

23 transaction under this section or any other pro24 vision of Federal or State law, based solely on 

25 the failure of the agreement, contract, or trans26 action to meet the definition of a swap set forth 


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1 in section 1a or to be cleared pursuant to sec2 tion 2(j)(1).’’. 

3 SEC. 3117. MULTILATERAL CLEARING ORGANIZATIONS. 

4 (a) Section 408(2)(C) of the Federal Deposit Insur5 ance Corporation Improvement Act of 1991 (12 U.S.C. 

6 4421(2)(C)) is amended by striking ‘‘section 2(c), 2(d), 

7 2(f), or 2(g) of such Act, or exempted under section 2(h) 

8 or 4(c) of such Act’’ and inserting ‘‘section 2(c) or 2(f) 

9 of such Act’’. 

10 (b) Section 408 of the Federal Deposit Insurance 

11 Corporation Improvement Act of 1991 (12 U.S.C. 4421) 

12 is further amended by inserting at the end the following: 

13 ‘‘(4) The term ‘over-the-counter derivative in14 strument’ does not include a swap or a security15 based swap as defined in sections 1a(35) and 1a(38) 

16 of the Commodity Exchange Act (7 U.S.C. 1a(35) 

17 and 1a(38)).’’. 

18 SEC. 3118. PRIMARY ENFORCEMENT AUTHORITY. 

19 The Commodity Exchange Act (7 U.S.C. 1 et seq.) 

20 is amended by adding the following new section after sec21 tion 4b: 

22 ‘‘SEC. 4b–1. PRIMARY ENFORCEMENT AUTHORITY. 

23 ‘‘(a) CFTC.—Except as provided in subsections (b), 

24 (c), and (d), the Commission shall have primary authority 

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1 Counter Derivatives Markets Act of 2009 with respect to 

2 any person. 

3 ‘‘(b) PRUDENTIAL REGULATORS.—The Prudential 

4 Regulators shall have exclusive authority to enforce the 

5 provisions of section 4s(e) and other prudential require6 ments of this Act with respect to banks, and branches or 

7 agencies of foreign banks that are swap dealers or major 

8 swap participants. 

9 ‘‘(c) REFERRAL.—If the Prudential Regulator for a 

10 swap dealer or major swap participant has cause to believe 

11 that such swap dealer or major swap participant may have 

12 engaged in conduct that constitutes a violation of the non13 prudential requirements of section 4s or rules adopted by 

14 the Commission thereunder, that Prudential Regulator 

15 may recommend in writing to the Commission that the 

16 Commission initiate an enforcement proceeding as author17 ized under this Act. The recommendation shall be accom18 panied by a written explanation of the concerns giving rise 

19 to the recommendation. 

20 ‘‘(d) BACKSTOP ENFORCEMENT AUTHORITY.—If the 

21 Commission does not initiate an enforcement proceeding 

22 before the end of the 90-day period beginning on the date 

23 on which the Commission receives a recommendation 

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1 tiate an enforcement proceeding as permitted under Fed2 eral law.’’. 

3 SEC. 3119. ENFORCEMENT. 

4 (a) Section 4b(a)(2) of the Commodity Exchange Act 

5 (7 U.S.C. 6b(a)(2)) is amended by striking ‘‘or other 

6 agreement, contract, or transaction subject to paragraphs 

7 (1) and (2) of section 5a(g),’’ and inserting ‘‘or swap,’’. 

8 (b) Section 4b(b) of the Commodity Exchange Act 

9 (7 U.S.C. 6b(b)) is amended by striking ‘‘or other agree10 ment, contract or transaction subject to paragraphs (1) 

11 and (2) of section 5a(g),’’ and inserting ‘‘or swap,’’. 

12 (c) Section 4c(a) of the Commodity Exchange Act (7 

13 U.S.C. 6c(a)) is amended by inserting ‘‘or swap’’ before 

14 ‘‘if the transaction is used or may be used’’. 

15 (d) Section 9(a)(2) of the Commodity Exchange Act 

16 (7 U.S.C. 13(a)(2)) is amended by inserting ‘‘or of any 

17 swap,’’ before ‘‘or to corner’’. 

18 (e) Section 9(a)(4) of the Commodity Exchange Act 

19 (7 U.S.C. 13(a)(4)) is amended by inserting ‘‘swap reposi20 tory,’’ before ‘‘or futures association’’. 

21 (f) Section 9(e)(1) of the Commodity Exchange Act 

22 (7 U.S.C. 13(e)(1)) is amended by inserting ‘‘swap reposi23 tory,’’ before ‘‘or registered futures association’’ and by 

24 inserting ‘‘, or swaps,’’ before ‘‘on the basis’’. 


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1 (g) Section 8(b) of the Federal Deposit Insurance Act 

2 (12 U.S.C. 1818(b)) is amended by redesignating para3 graphs (6) through (10) as paragraphs (7) through (11), 

4 respectively, and by inserting after paragraph (5) the fol5 lowing: 

6 ‘‘(6) This section shall apply to any swap deal7 er, major swap participant, security-based swap 

8 dealer, major security-based swap participant, de9 rivatives clearing organization, swap repository or 

10 swap execution facility, whether or not it is an in11 sured depository institution, for which the Board, 

12 the Corporation, or the Office of the Comptroller of 

13 the Currency is the appropriate Federal banking 

14 agency or Prudential Regulator for purposes of the 

15 Over-the-Counter Derivatives Markets Act of 

16 2009.’’. 

17 SEC. 3120. RETAIL COMMODITY TRANSACTIONS. 

18 Section 2(c) of the Commodity Exchange Act (7 

19 U.S.C. 2(c)) is amended— 

20 (1) in paragraph (1), by striking ‘‘(to the extent 

21 provided in section 5a(g)), 5b, 5d, or 12(e)(2)(B))’’ 

22 and inserting ‘‘, 5b, or 12(e)(2)(B))’’; 

23 (2) in paragraph (2), by inserting after sub24 paragraph (C) the following: 


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1 ‘‘(D) RETAIL COMMODITY TRANS2 ACTIONS.— 

3 ‘‘(i) This subparagraph shall apply to 

4 any agreement, contract, or transaction in 

5 any commodity that is— 

6 ‘‘(I) entered into with, or offered 

7 to (even if not entered into with), a 

8 person that is not an eligible contract 

9 participant or eligible commercial en10 tity; and 

11 ‘‘(II) entered into, or offered 

12 (even if not entered into), on a lever13 aged or margined basis, or financed 

14 by the offeror, the counterparty, or a 

15 person acting in concert with the of16 feror or counterparty on a similar 

17 basis. 

18 ‘‘(ii) Clause (i) shall not apply to— 

19 ‘‘(I) an agreement, contract, or 

20 transaction described in paragraph (1) 

21 or subparagraphs (A), (B), or (C), in22 cluding any agreement, contract, or 

23 transaction specifically excluded from 

24 subparagraph (A), (B), or (C); 

25 ‘‘(II) any security; 


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1 ‘‘(III) a contract of sale that— 

2 ‘‘(aa) results in actual deliv3 ery within 28 days or such other 

4 period as the Commission may 

5 determine by rule or regulation 

6 based upon the typical commer7 cial practice in cash or spot mar8 kets for the commodity involved; 

9 or 

10 ‘‘(bb) creates an enforceable 

11 obligation to deliver between a 

12 seller and a buyer that have the 

13 ability to deliver and accept deliv14 ery, respectively, in connection 

15 with their line of business; 

16 ‘‘(IV) an agreement, contract, or 

17 transaction that is listed on a national 

18 securities exchange registered under 

19 section 6(a) of the Securities Ex20 change Act of 1934 (15 U.S.C. 

21 78f(a)); or 

22 ‘‘(V) an identified banking prod23 uct, as defined in section 402(b) of 

24 the Legal Certainty for Bank Prod25 ucts Act of 2000 (7 U.S.C. 27(b)). 


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1 ‘‘(iii) Sections 4(a), 4(b) and 4b shall 

2 apply to any agreement, contract or trans3 action described in clause (i), that is not 

4 excluded from clause (i) by clause (ii), as 

5 if the agreement, contract, or transaction 

6 were a contract of sale of a commodity for 

7 future delivery. 

8 ‘‘(iv) This subparagraph shall not be 

9 construed to limit any jurisdiction that the 

10 Commission may otherwise have under any 

11 other provision of this Act over an agree12 ment, contract, or transaction that is a 

13 contract of sale of a commodity for future 

14 delivery. 

15 ‘‘(v) This subparagraph shall not be 

16 construed to limit any jurisdiction that the 

17 Commission or the Securities and Ex18 change Commission may otherwise have 

19 under any other provisions of this Act with 

20 respect to security futures products and 

21 persons effecting transactions in security 

22 futures products. 

23 ‘‘(vi) For the purposes of this sub24 paragraph, an agricultural producer, pack25 er, or handler shall be considered an eligiVerDate Nov 24 2008 22:04 Dec 02, 2009 Jkt 089200 PO 00000 Frm 00577 Fmt 6652 Sfmt 6201 E:\BILLS\H4173.IH H4173

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1 ble commercial entity for any agreement, 

2 contract, or transaction for a commodity in 

3 connection with its line of business.’’. 

4 SEC. 3121. LARGE SWAP TRADER REPORTING. 

5 The Commodity Exchange Act (7 U.S.C. 1 et seq.) 

6 is amended by adding after section 4t (as added by section 

7 3108) the following: 

8 ‘‘SEC. 4u. LARGE SWAP TRADER REPORTING. 

9 ‘‘(a) It shall be unlawful for any person to enter into 

10 any swap that performs or affects a significant price dis11 covery function with respect to regulated markets if— 

12 ‘‘(1) such person shall directly or indirectly 

13 enter into such swaps during any one day in an 

14 amount equal to or in excess of such amount as 

15 shall be fixed from time to time by the Commission; 

16 and 

17 ‘‘(2) such person shall directly or indirectly 

18 have or obtain a position in such swaps equal to or 

19 in excess of such amount as shall be fixed from time 

20 to time by the Commission, 

21 unless such person files or causes to be filed with the prop22 erly designated officer of the Commission such reports re23 garding any transactions or positions described in para24 graphs (1) and (2) as the Commission may by rule or reg25 ulation require and unless, in accordance with the rules 


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1 and regulations of the Commission, such person shall keep 

2 books and records of all such swaps and any transactions 

3 and positions in any related commodity traded on or sub4 ject to the rules of any board of trade, and of cash or 

5 spot transactions in, inventories of, and purchase and sale 

6 commitments of, such a commodity. 

7 ‘‘(b) Such books and records shall show complete de8 tails concerning all transactions and positions as the Com9 mission may by rule or regulation prescribe. 

10 ‘‘(c) Such books and records shall be open at all times 

11 to inspection and examination by any representative of the 

12 Commission. 

13 ‘‘(d) Any such books and records relating to trans14 actions in security-based swap agreements (as defined in 

15 section 3(a)(76) of the Securities Exchange Act of 1934) 

16 shall be open at all times to inspection and examination 

17 by the Securities and Exchange Commission. 

18 ‘‘(e) For the purpose of this section, the swaps, fu19 tures and cash or spot transactions and positions of any 

20 person shall include such transactions and positions of any 

21 persons directly or indirectly controlled by such person. 

22 ‘‘(f) In making a determination whether a swap per23 forms or affects a significant price discovery function with 

24 respect to regulated markets, the Commission shall con25 sider the factors set forth in section 4a(a)(3).’’. 


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1 SEC. 3122. AUTHORITY TO BAN ABUSIVE SWAPS. 

2 The Commodity Futures Trading Commission and 

3 the Securities and Exchange Commission may, by rule or 

4 order, jointly collect information as may be necessary con5 cerning the markets for any types of swap (as defined in 

6 section 1a(35) of the Commodity Exchange Act) or secu7 rity-based swap (as defined in section 1a(38) of the such 

8 Act) and jointly issue a report with respect to any types 

9 of swaps or security-based swaps which the Commodity 

10 Futures Trading Commission and the Securities and Ex11 change Commission find are detrimental to the stability 

12 of a financial market or of participants in a financial mar13 ket. 

14 SEC. 3123. INTERNATIONAL HARMONIZATION. 

15 In order to promote effective and consistent global 

16 regulation of swaps, the Securities and Exchange Commis17 sion, the Commodity Futures Trading Commission, the 

18 Prudential Regulators (as defined in section 1a(43) of the 

19 Commodity Exchange Act), and the financial stability reg20 ulator, shall consult and coordinate with foreign regu21 latory authorities on the establishment of consistent inter22 national standards with respect to the regulation of swaps, 

23 and may agree to such information-sharing arrangements 

24 as may be deemed to be necessary or appropriate in the 

25 public interest or for the protection of investors and swap 

26 counterparties. 


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1 SEC. 3124. AUTHORITY TO BAN ACCESS TO THE UNITED 

2 STATES FINANCIAL SYSTEM. 

3 If the Commodity Futures Trading Commission or 

4 the Securities and Exchange Commission determines that 

5 the regulation of swaps or security-based swaps markets 

6 in a foreign country undermines the stability of the U.S. 

7 financial system, either Commission, in consultation with 

8 the Secretary of the Treasury, may prohibit an entity 

9 domiciled in that country from participating in the United 

10 States in any swap or security-based swap activities. 

11 SEC. 3125. OTHER AUTHORITY. 

12 Unless otherwise provided by its terms, this title does 

13 not divest any appropriate Federal banking agency, the 

14 Commission, the Securities and Exchange Commission, or 

15 other Federal or State agency, of any authority derived 

16 from any other applicable law. 

17 SEC. 3126. ANTITRUST. 

18 Nothing in the amendments made by this title shall 

19 be construed to modify, impair, or supersede the operation 

20 of any of the antitrust laws. For purposes of this subtitle, 

21 the term ‘‘antitrust laws’’ has the same meaning given 

22 such term in subsection (a) of the first section of the Clay23 ton Act, except that such term includes section 5 of the 

24 Federal Trade Commission Act to the extent that such 

25 section 5 applies to unfair methods of competition. 


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1 SEC. 3127. EFFECTIVE DATE. 

2 This subtitle is effective 270 days after the date of 

3 enactment. 

4 Subtitle B—Regulation of Security5 Based Swap Markets 

6 SEC. 3201. DEFINITIONS UNDER THE SECURITIES EX7 CHANGE ACT OF 1934. 

8 Section 3(a) of the Securities Exchange Act of 1934 

9 (15 U.S.C. 78c(a)) is amended— 

10 (1) in paragraph (5)(A) and (B), by inserting 

11 ‘‘(but not security-based swaps, other than security12 based swaps with or for persons that are not eligible 

13 contract participants)’’ after ‘‘securities’’ in each 

14 place it appears; 

15 (2) in paragraph (10) by inserting ‘‘security16 based swaps’’ after ‘‘security future,’’ 

17 (3) in paragraph (13), by adding at the end the 

18 following: ‘‘For security-based swaps, such terms in19 clude the execution, termination (prior to its sched20 uled maturity date), assignment, exchange, or simi21 lar transfer or conveyance of, or extinguishing of 

22 rights or obligations under, a security-based swap, 

23 as the context may require.’’; 

24 (4) in paragraph (14), by adding at the end the 

25 following: ‘‘For security-based swaps, such terms in26 clude the execution, termination (prior to its schedVerDate Nov 24 2008 22:04 Dec 02, 2009 Jkt 089200 PO 00000 Frm 00582 Fmt 6652 Sfmt 6201 E:\BILLS\H4173.IH H4173

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1 uled maturity date), assignment, exchange, or simi2 lar transfer or conveyance of, or extinguishing of 

3 rights or obligations under, a security-based swap, 

4 as the context may require.’’; 

5 (5) in paragraph (39)— 

6 (A) by striking ‘‘or government securities 

7 dealer’’ and inserting ‘‘government securities 

8 dealer, security-based swap dealer or major se9 curity-based swap participant’’ in subparagraph 

10 (B)(i)(I); 

11 (B) by inserting ‘‘security-based swap deal12 er, major security-based swap participant,’’ 

13 after ‘‘government securities dealer,’’ in sub14 paragraph (B)(i)(II); 

15 (C) by striking ‘‘or government securities 

16 dealer’’ and inserting ‘‘government securities 

17 dealer, security-based swap dealer or major se18 curity-based swap participant’’ in subparagraph 

19 (C); and 

20 (D) by inserting ‘‘security-based swap 

21 dealer, major security-based swap participant,’’ 

22 after ‘‘government securities dealer,’’ in sub23 paragraph (D); and 

24 (6) by adding at the end the following: 


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1 ‘‘(65) ELIGIBLE CONTRACT PARTICIPANT.—The 

2 term ‘eligible contract participant’ has the same 

3 meaning as in section 1a(13) of the Commodity Ex4 change Act (7 U.S.C. 1a(13)). 

5 ‘‘(66) MAJOR SWAP PARTICIPANT.—The term 

6 ‘major swap participant’ has the same meaning as in 

7 section 1a(40) of the Commodity Exchange Act (7 

8 U.S.C. 1a(40)). 

9 ‘‘(67) MAJOR SECURITY-BASED SWAP PARTICI10 PANT.—The term ‘major security-based swap partic11 ipant’ has the same meaning as in section 1a(41) of 

12 the Commodity Exchange Act (7 U.S.C. 1a(41)). 

13 ‘‘(68) SECURITY-BASED SWAP.—The term ‘se14 curity-based swap’ has the same meaning as in sec15 tion 1a(38) of the Commodity Exchange Act (7 

16 U.S.C. 1a(38)). 

17 ‘‘(69) SWAP.—The term ‘swap’ has the same 

18 meaning as in section 1a(35) of the Commodity Ex19 change Act (7 U.S.C. 1a(35)). 

20 ‘‘(70) PERSON ASSOCIATED WITH A SECURITY21 BASED SWAP DEALER OR MAJOR SECURITY-BASED

22 SWAP PARTICIPANT.—The term ‘person associated 

23 with a security-based swap dealer or major security24 based swap participant’ or ‘associated person of a 

25 security-based swap dealer or major security-based 


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1 swap participant’ has the same meaning as in sec2 tion 1a(48) of the Commodity Exchange Act (7 

3 U.S.C. 1a(48)). 

4 ‘‘(71) SECURITY-BASED SWAP DEALER.—The 

5 term ‘security-based swap dealer’ has the same 

6 meaning as in section 1a(44) of the Commodity Ex7 change Act (7 U.S.C. 1a(44)). 

8 ‘‘(72) APPROPRIATE FEDERAL BANKING AGEN9 CY.—The term ‘appropriate Federal banking agency’ 

10 has the same meaning as in section 3(q) of the Fed11 eral Deposit Insurance Act (12 U.S.C. 1813(q)). 

12 ‘‘(73) BOARD.—The term ‘Board’ means the 

13 Board of Governors of the Federal Reserve System. 

14 ‘‘(74) PRUDENTIAL REGULATOR.—The term 

15 ‘Prudential Regulator’ has the same meaning as in 

16 section 1a(43) of the Commodity Exchange Act (7 

17 U.S.C. 1a(43)). 

18 ‘‘(75) SWAP DEALER.—The term ‘swap dealer’ 

19 has the same meaning as in section 1a(39) of the 

20 Commodity Exchange Act (7 U.S.C. 1a(39)). 

21 ‘‘(76) SECURITY-BASED SWAP AGREEMENT.— 

22 ‘‘(A) IN GENERAL.—For purposes of sec23 tions 10, 16, 20, and 21A of this Act, and sec24 tion 17 of the Securities Act of 1933 (15 

25 U.S.C. 77q), the term ‘security-based swap 


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1 agreement’ means a swap agreement as defined 

2 in section 206A of the Gramm-Leach-Bliley Act 

3 (15 U.S.C. 78c note) of which a material term 

4 is based on the price, yield, value, or volatility 

5 of any security or any group or index of securi6 ties, or any interest therein. 

7 ‘‘(B) EXCLUSIONS.—The term ‘security8 based swap agreement’ does not include any se9 curity-based swap. 

10 ‘‘(77) RESTRICTED OWNER.—The term ‘re11 stricted owner’ has the same meaning as in section 

12 1a(51) of the Commodity Exchange Act.’’. 

13 SEC. 3202. REPEAL OF PROHIBITION ON REGULATION OF 

14 SECURITY-BASED SWAPS. 

15 (a) REPEAL OF LAW.—Section 206B of the Gramm16 Leach-Bliley Act (15 U.S.C. 78c note) is repealed. 

17 (b) CONFORMING AMENDMENTS TO THE SECURITIES

18 ACT OF 1933.— 

19 (1) Section 2A(b) of the Securities Act of 1933 

20 (15 U.S.C. 77b–1) is amended by striking ‘‘(as de21 fined in section 206B of the Gramm-Leach-Bliley 

22 Act)’’ each place that such term appears. 

23 (2) Section 17 of the Securities Act of 1933 (15 

24 U.S.C. 77q) is amended— 

25 (A) in subsection (a)— 


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1 (i) by inserting ‘‘(including security2 based swaps)’’ after ‘‘securities’’; and 

3 (ii) by striking ‘‘206B of the Gramm4 Leach-Bliley Act’’ and inserting ‘‘3(a)(76) 

5 of the Securities Exchange Act of 1934’’; 

6 and 

7 (B) in subsection (d), by striking ‘‘206B of 

8 the Gramm-Leach-Bliley Act’’ and inserting 

9 ‘‘3(a)(76) of the Securities Exchange Act of 

10 1934’’. 

11 (c) CONFORMING AMENDMENTS TO THE SECURITIES

12 EXCHANGE ACT OF 1934.—The Securities Exchange Act 

13 of 1934 (15 U.S.C. 78a, et seq.) is amended as follows: 

14 (1) Section 3A (15 U.S.C. 78c–1) is amended 

15 by striking ‘‘(as defined in section 206B of the 

16 Gramm-Leach-Bliley Act)’’ each place that the term 

17 appears. 

18 (2) Section 9(a) (15 U.S.C. 78i(a)) is amended 

19 by striking paragraphs (2) through (5) and insert20 ing: 

21 ‘‘(2) To effect, alone or with one or more other per22 sons, a series of transactions in any security registered 

23 on a national securities exchange or in connection with 

24 any security-based swap or security-based swap agreement 

25 with respect to such security creating actual or apparent 


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1 active trading in such security, or raising or depressing 

2 the price of such security, for the purpose of inducing the 

3 purchase or sale of such security by others. 

4 ‘‘(3) If a dealer, broker, security-based swap dealer, 

5 major security-based swap participant or other person sell6 ing or offering for sale or purchasing or offering to pur7 chase the security, or a security-based swap or security8 based swap agreement with respect to such security, to 

9 induce the purchase or sale of any security registered on 

10 a national securities exchange or any security-based swap 

11 or security-based swap agreement with respect to such se12 curity by the circulation or dissemination in the ordinary 

13 course of business of information to the effect that the 

14 price of any such security will or is likely to rise or fall 

15 because of market operations of any one or more persons 

16 conducted for the purpose of raising or depressing the 

17 price of such security. 

18 ‘‘(4) If a dealer, broker, security-based swap dealer, 

19 major security-based swap participant or other person sell20 ing or offering for sale or purchasing or offering to pur21 chase the security, or a security-based swap or security22 based swap agreement with respect to such security, to 

23 make, regarding any security registered on a national se24 curities exchange or any security-based swap or security25 based swap agreement with respect to such security, for 


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1 the purpose of inducing the purchase or sale of such secu2 rity or such security-based swap or security-based swap 

3 agreement, any statement which was at the time and in 

4 the light of the circumstances under which it was made, 

5 false or misleading with respect to any material fact, and 

6 which he knew or had reasonable ground to believe was 

7 so false or misleading. 

8 ‘‘(5) For a consideration, received directly or indi9 rectly from a dealer, broker, security-based swap dealer, 

10 major security-based swap participant or other person sell11 ing or offering for sale or purchasing or offering to pur12 chase the security, or a security-based swap or security13 based swap agreement with respect to such security, to 

14 induce the purchase of any security registered on a na15 tional securities exchange or any security-based swap or 

16 security-based swap agreement with respect to such secu17 rity by the circulation or dissemination of information to 

18 the effect that the price of any such security will or is 

19 likely to rise or fall because of the market operations of 

20 any one or more persons conducted for the purpose of rais21 ing or depressing the price of such security.’’. 

22 (3) Section 9(i) (15 U.S.C. 78i(i)) is amended 

23 by striking ‘‘(as defined in section 206B of the 

24 Gramm-Leach-Bliley Act)’’; 


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1 (4) Section 10 (15 U.S.C. 78j) is amended by 

2 striking ‘‘(as defined in section 206B of the Gramm3 Leach-Bliley Act)’’ each place that the term appears. 

4 (5) Section 15(c)(1) is amended— 

5 (A) in subparagraph (A), by striking ‘‘, or 

6 any security-based swap agreement (as defined 

7 in section 206B of the Gramm-Leach-Bliley 

8 Act),’’; and 

9 (B) in subparagraphs (B) and (C), by 

10 striking ‘‘agreement (as defined in section 206B 

11 of the Gramm-Leach-Bliley Act)’’ in each place 

12 that the term appears. 

13 (6) Section 15(i) (15 U.S.C. 78o(i), as added 

14 by section 303(f) of the Commodity Futures Mod15 ernization Act of 2000 (Public Law 106–554; 114 

16 Stat. 2763A–455) is amended by striking ‘‘(as de17 fined in section 206B of the Gramm-Leach-Bliley 

18 Act)’’. 

19 (7) Section 16 (15 U.S.C. 78p) is amended— 

20 (A) in subsection (a)(2)(C), by striking 

21 ‘‘(as defined in section 206(b) of the Gramm22 Leach-Bliley Act (15 U.S.C. 78c note))’’; 

23 (B) in subsection (b), by striking ‘‘(as de24 fined in section 206B of the Gramm-Leach-BliVerDate Nov 24 2008 22:04 Dec 02, 2009 Jkt 089200 PO 00000 Frm 00590 Fmt 6652 Sfmt 6201 E:\BILLS\H4173.IH H4173

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1 ley Act)’’ in each place that the term appears; 

2 and 

3 (C) in subsection (g), by striking ‘‘(as de4 fined in section 206B of the Gramm-Leach-Bli5 ley Act)’’; 

6 (8) Section 20 (15 U.S.C. 78t) is amended— 

7 (A) in subsection (d), by striking ‘‘(as de8 fined in section 206B of the Gramm-Leach-Bli9 ley Act)’’; and 

10 (B) in subsection (f), by striking ‘‘(as de11 fined in section 206B of the Gramm-Leach-Bli12 ley Act)’’; and 

13 (9) Section 21A (15 U.S.C. 78u–1) is amend14 ed— 

15 (A) in subsection (a)(1), by striking ‘‘(as 

16 defined in section 206B of the Gramm-Leach17 Bliley Act)’’; and 

18 (B) in subsection (g), by striking ‘‘(as de19 fined in section 206B of the Gramm-Leach-Bli20 ley Act)’’. 

21 SEC. 3203. AMENDMENTS TO THE SECURITIES EXCHANGE 

22 ACT OF 1934. 

23 (a) CLEARING FOR SECURITY-BASED SWAPS.—The 

24 Securities Exchange Act of 1934 (15 U.S.C. 78a, et seq.) 


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1 is amended by adding the following section after section 

2 3A: 

3 ‘‘SEC. 3B. CLEARING OF SECURITY-BASED SWAPS. 

4 ‘‘(a) CLEARING REQUIREMENT.— 

5 ‘‘(1) IN GENERAL.— 

6 ‘‘(A) PRESUMPTION OF CLEARING.—A se7 curity-based swap shall be submitted for clear8 ing if a clearing agency that is registered under 

9 this Act will accept the security-based swap for 

10 clearing; 

11 ‘‘(B) OPEN ACCESS.—The rules of a clear12 ing agency described in subparagraph (A) 

13 shall— 

14 ‘‘(i) prescribe that all security-based 

15 swaps submitted to the clearing agency 

16 with the same terms and conditions are 

17 fungible and may be offset with each other; 

18 and 

19 ‘‘(ii) provide for non-discriminatory 

20 clearing of a security-based swap executed 

21 on or through the rules of an unaffiliated 

22 exchange or alternative swap execution fa23 cility. 

24 ‘‘(2) COMMISSION APPROVAL.— 


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1 ‘‘(A) IN GENERAL.—A clearing agency 

2 shall submit to the Commission for prior ap3 proval each security-based swap, or any group, 

4 category, type or class of security-based swaps, 

5 that it seeks to accept for clearing, which sub6 mission the Commission shall make available to 

7 the public. 

8 ‘‘(B) DEADLINE.—The Commission shall 

9 take final action on a request submitted pursu10 ant to subparagraph (A) not later than 90 days 

11 after submission of the request, unless the 

12 clearing agency submitting the request agrees 

13 to an extension of the time limitation estab14 lished under this subparagraph. A request on 

15 which the Commission fails to take final action 

16 within the time limitation established under this 

17 subparagraph shall be deemed approved. 

18 ‘‘(C) APPROVAL.—The Commission shall 

19 approve, unconditionally or subject to such 

20 terms and conditions as the Commission deter21 mines to be appropriate, any request submitted 

22 pursuant to subparagraph (A) if it finds that 

23 the request is consistent with the core principles 

24 specified under subsection (l). 


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1 ‘‘(D) RULES.—Not later than 180 days 

2 after the date of enactment of the Over-the3 Counter Derivatives Markets Act of 2009, the 

4 Commission shall adopt rules for a clearing 

5 agency’s submission for approval, pursuant to 

6 this paragraph, of a security-based swap, or a 

7 group, category, type or class of security-based 

8 swaps, that it seeks to accept for clearing. 

9 ‘‘(3) STAY OF CLEARING REQUIREMENT.—At 

10 any time after issuance of an approval pursuant to 

11 paragraph (2)— 

12 ‘‘(A) REVIEW PROCESS.—The Commission, 

13 on application of a counterparty to a security14 based swap or on its own initiative, may stay 

15 the clearing requirement of paragraph (1) until 

16 the Commission completes a review of the terms 

17 of the security-based swap (or the group, cat18 egory, type or class of security-based swaps) 

19 and the clearing arrangement. 

20 ‘‘(B) DEADLINE.—The Commission shall 

21 complete a review undertaken pursuant to sub22 paragraph (A) not later than 90 days after 

23 issuance of the stay, unless the clearing agency 

24 that clears the security-based swap, or group, 

25 category, type or class of security-based swaps, 


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1 agrees to an extension of the time limitation es2 tablished under this subparagraph. 

3 ‘‘(C) DETERMINATION.—Upon completion 

4 of the review undertaken pursuant to subpara5 graph (A), the Commission may— 

6 ‘‘(i) determine, unconditionally or sub7 ject to such terms and conditions as the 

8 Commission determines to be appropriate, 

9 that the security-based swap, or group, 

10 category, type or class of security-based 

11 swaps, must be cleared pursuant to this 

12 subsection if it finds that such clearing is 

13 consistent with the securities laws; or 

14 ‘‘(ii) determine that the clearing re15 quirement of paragraph (1) shall not apply 

16 to the security-based swap, or group, cat17 egory, type or class of security-based 

18 swaps. 

19 ‘‘(D) RULES.—Not later than 180 days 

20 after the date of enactment of the Over-the21 Counter Derivatives Markets Act of 2009, the 

22 Commission shall adopt rules for reviewing, 

23 pursuant to this paragraph, a clearing agency’s 

24 clearing of a security-based swap, or a group, 


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1 category, type or class of security-based swaps, 

2 that it has accepted for clearing. 

3 ‘‘(4) PREVENTION OF EVASION.—The Commis4 sion and the Commodities Futures Trading Commis5 sion shall have authority to prescribe rules under 

6 this section, or issue interpretations of such rules, as 

7 necessary to prevent evasions of this Act. Any such 

8 rules or interpretations of rules shall be prescribed 

9 and issued jointly by both Commissions. 

10 ‘‘(5) REQUIRED REPORTING.— 

11 ‘‘(A) IN GENERAL.—Any security-based 

12 swap that is not accepted for clearing by any 

13 clearing agency shall be reported to either a se14 curity-based swap repository described in sec15 tion 13(n) or, if there is no repository that 

16 would accept the security-based swap, to the 

17 Commission pursuant to section 13A within 

18 such time period as the Commission may by 

19 rule prescribe. 

20 ‘‘(B) REPORTING BY SECURITY-BASED

21 SWAP DEALERS AND MAJOR SECURITY-BASED

22 SWAP PARTICIPANTS.—In transactions where 

23 only 1 counterparty is a security-based swap 

24 dealer or major security-based swap participant, 

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1 rity-based swap participant shall report the 

2 transaction. In transactions where neither 

3 counterparty is a security-based swap dealer or 

4 major security-based swap participant, only 1 

5 counterparty shall be required to report the 

6 transaction and the counterparties shall deter7 mine the reporting party by contract or other8 wise. 

9 ‘‘(6) TRANSITION RULES.—Rules adopted by 

10 the Commission under this section shall provide for 

11 the reporting of data, as follows: 

12 ‘‘(A) Security-based swaps that were en13 tered into before the date of enactment of the 

14 Over-the-Counter Derivatives Markets Act of 

15 2009 shall be reported to a registered security16 based swap repository or the Commission no 

17 later than 180 days after the effective date of 

18 such Act. 

19 ‘‘(B) Security-based swaps that were en20 tered into on or after the date of enactment of 

21 the Over-the-Counter Derivatives Markets Act 

22 of 2009 shall be reported to a registered secu23 rity-based swap repository or the Commission 

24 no later than the later of— 


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1 ‘‘(i) 90 days after the effective date of 

2 such Act; or 

3 ‘‘(ii) such other time after entering 

4 into the swap as the Commission may pre5 scribe by rule or regulation. 

6 ‘‘(7) EXCEPTION.—The requirements of para7 graph (1) shall not apply to a security-based swap 

8 if— 

9 ‘‘(A) no clearing agency registered under 

10 this Act will accept the security-based swap for 

11 clearing; or 

12 ‘‘(B) one of the counterparties to the secu13 rity-based swap is not a security-based swap 

14 dealer or major security-based swap participant. 

15 ‘‘(8) EXCLUSION.—Paragraph (1) shall not 

16 apply to a security-based swap one party to which is 

17 not a security-based swap dealer or major security18 based swap participant, and which is entered into 

19 before the end of the 180-day period that begins 

20 with the effective date of this paragraph. 

21 ‘‘(b) CONSULTATION.—The Commission and the 

22 Commodity Futures Trading Commission shall consult 

23 with the appropriate Federal banking agencies and each 

24 other prior to adopting rules under this section.’’. 


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1 (b) CLEARING AGENCY REQUIREMENTS.—Section 

2 17A of the Securities Exchange Act of 1934 (15 U.S.C. 

3 78q) is amended by adding at the end the following new 

4 subsections: 

5 ‘‘(g) REGISTRATION REQUIREMENT.—It shall be un6 lawful for a clearing agency, unless registered with the 

7 Commission, directly or indirectly to make use of the mails 

8 or any means or instrumentality of interstate commerce 

9 to perform the functions of a clearing agency with respect 

10 to a swap. 

11 ‘‘(h) VOLUNTARY REGISTRATION.— 

12 ‘‘(1) CLEARING AGENCIES.—A person that 

13 clears agreements, contracts, or transactions that 

14 are not required to be cleared under this Act may 

15 register with the Commission as a clearing agency. 

16 ‘‘(2) DERIVATIVES CLEARING ORGANIZA17 TIONS.—A clearing agency may clear swaps that are 

18 required to be cleared by a person who is registered 

19 as a derivatives clearing organization under the 

20 Commodity Exchange Act (7 U.S.C. 1, et seq.). 

21 ‘‘(i) REQUIRED REGISTRATION FOR BANKS AND

22 CLEARING AGENCIES.—A person that is required to be 

23 registered as a clearing agency under this section shall 

24 register with the Commission regardless of whether the 

25 person is also a bank or a derivatives clearing organization 


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1 registered with the Commodity Futures Trading Commis2 sion under the Commodity Exchange Act (7 U.S.C. 1, et 

3 seq.). 

4 ‘‘(j) REPORTING.— 

5 ‘‘(1) IN GENERAL.—A clearing agency that 

6 clears security-based swaps shall provide to the 

7 Commission and any designated swap repository all 

8 information determined by the Commission to be 

9 necessary to perform its responsibilities under this 

10 Act. The Commission shall adopt data collection and 

11 maintenance requirements for security-based swaps 

12 cleared by clearing agencies that are comparable to 

13 the corresponding requirements for security-based 

14 swaps accepted by security-based swap repositories 

15 and security-based swaps traded on swap execution 

16 facilities. The Commission shall share such informa17 tion, upon request, with the Board, the Commodity 

18 Futures Trading Commission, the appropriate Fed19 eral banking agencies, the Financial Services Over20 sight Council, and the Department of Justice or to 

21 other persons the Commission deems appropriate, 

22 including foreign financial supervisors (including for23 eign futures authorities), foreign central banks, and 

24 foreign ministries. 


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1 ‘‘(2) PUBLIC INFORMATION.—A clearing agency 

2 that clears security-based swaps shall provide to the 

3 Commission, or its designee, such information as is 

4 required by, and in a form and at a frequency to be 

5 determined by, the Commission, in order to comply 

6 with the public reporting requirements contained in 

7 section 13. 

8 ‘‘(k) DESIGNATION OF COMPLIANCE OFFICER.— 

9 ‘‘(1) IN GENERAL.—Each clearing agency that 

10 clears security-based swaps shall designate an indi11 vidual to serve as a compliance officer. 

12 ‘‘(2) DUTIES.—The compliance officer shall— 

13 ‘‘(A) report directly to the board or to the 

14 senior officer of the clearing agency; 

15 ‘‘(B) in consultation with the board of the 

16 clearing agency, a body performing a function 

17 similar to that of a board, or the senior officer 

18 of the clearing agency, resolve any conflicts of 

19 interest that may arise; 

20 ‘‘(C) be responsible for administering the 

21 policies and procedures required to be estab22 lished pursuant to this section; 

23 ‘‘(D) ensure compliance with securities 

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1 under, including rules prescribed by the Com2 mission pursuant to this section; and 

3 ‘‘(E) establish procedures for remediation 

4 of noncompliance issues found during compli5 ance office reviews, lookbacks, internal or exter6 nal audit findings, self-reported errors, or 

7 through validated complaints which will estab8 lish the handling, management response, reme9 diation, retesting, and closing of noncompliance 

10 issues. 

11 ‘‘(3) ANNUAL REPORTS REQUIRED.—The com12 pliance officer shall annually prepare and sign a re13 port on the compliance of the clearing agency with 

14 the securities laws and its policies and procedures, 

15 including its code of ethics and conflict of interest 

16 policies, in accordance with rules prescribed by the 

17 Commission. Such compliance report shall accom18 pany the financial reports of the clearing agency 

19 that are required to be furnished to the Commission 

20 pursuant to this section and shall include a certifi21 cation that, under penalty of law, the report is accu22 rate and complete. 

23 ‘‘(l) STANDARDS FOR CLEARING AGENCIES CLEAR24 ING SWAP TRANSACTIONS.—To be registered and to main25 tain registration as a clearing agency that clears swap 


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1 transactions, a clearing agency shall comply with such 

2 standards as the Commission may establish by rule. In 

3 establishing any such standards, and in the exercise of its 

4 oversight of such a clearing agency pursuant to this title, 

5 the Commission may conform such standards or oversight 

6 to reflect evolving United States and international stand7 ards. Except where the Commission determines otherwise 

8 by rule or regulation, a clearing agency shall have reason9 able discretion in establishing the manner in which it com10 plies with any such standards. 

11 ‘‘(m) CONSULTATION.—The Commission and the 

12 Commodity Futures Trading Commission shall consult 

13 with the appropriate Federal banking agencies and each 

14 other prior to adopting rules under this section. 

15 ‘‘(n) HARMONIZATION OF RULES.—Not later than 

16 180 days after the effective date of the Over-the-Counter 

17 Derivatives Markets Act of 2009, the Commission and the 

18 Commodity Futures Trading Commission shall jointly 

19 adopt uniform rules governing persons that are registered 

20 as derivatives clearing organizations for swaps under the 

21 Commodity Exchange Act (7 U.S.C. 1, et seq.) and per22 sons that are registered as clearing agencies for security23 based swaps under the Securities Exchange Act of 1934 

24 (15 U.S.C. 78a, et seq.).’’. 


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1 (c) EXECUTION OF SECURITY-BASED SWAPS.—The 

2 Securities Exchange Act of 1934 (15 U.S.C. 78a, et seq.) 

3 is amended by inserting after section 5 the following: 

4 ‘‘SEC. 5A. EXECUTION OF SECURITY-BASED SWAPS. 

5 ‘‘(a) TRADE EXECUTION.— 

6 ‘‘(1) IN GENERAL.—With respect to trans7 actions involving security-based swaps subject to the 

8 clearing requirement of section 3B and where both 

9 counterparties are either security-based swap dealers 

10 or major security-based swap participants, such 

11 counterparties shall— 

12 ‘‘(A) execute the transaction on a national 

13 securities exchange registered pursuant to sec14 tion 6(a) (in which event such transaction shall 

15 be subject to regulation under this title as a 

16 transaction in a security); or 

17 ‘‘(B) execute the transaction on a swap 

18 execution facility registered with the Commis19 sion. 

20 ‘‘(2) EXCEPTION.—The requirements of sub21 paragraphs (A) or (B) of paragraph (1) shall not 

22 apply if no board of trade or swap execution facility 

23 makes the swap available to trade. 

24 ‘‘(3) REQUIRED REPORTING.—If the exception 

25 of paragraph (2) applies and there is no facility that 


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1 makes the swap available to trade, the counterpar2 ties shall comply with any recordkeeping and trans3 action reporting requirements as may be prescribed 

4 by the Commission with respect to security-based 

5 swaps subject to the requirements of section 3B and 

6 where both counterparties are either security-based 

7 swap dealers or major security-based swap partici8 pants. 

9 ‘‘(b) EXCHANGE TRADING.—In adopting rules and 

10 regulations, the Commission shall endeavor to eliminate 

11 unnecessary impediments to the trading on national secu12 rities exchanges or swap execution facilities, agreements 

13 or transactions that would be commodity swaps but for 

14 the trading of such contracts, agreements or transactions 

15 on such a designated contract market.’’. 

16 (d) SWAP EXECUTION FACILITIES.—The Securities 

17 Exchange Act of 1934 (15 U.S.C. 78a, et seq.) is further 

18 amended by adding after section 3B (as added by sub19 section (a)) the following: 

20 ‘‘SEC. 3C. SWAP EXECUTION FACILITIES. 

21 ‘‘(a) REGISTRATION.— 

22 ‘‘(1) IN GENERAL.— 

23 ‘‘(A) No person may operate a swap execu24 tion facility unless such facility is registered 

25 under this section. 


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1 ‘‘(B) For purposes of this section, the term 

2 ‘swap execution facility’ means an entity that 

3 facilitates the execution of swaps between 2 

4 persons through any means of interstate com5 merce but which is not a designated contract 

6 market. 

7 ‘‘(2) DUAL REGISTRATION.—Any person that is 

8 required to be registered as a swap execution facility 

9 under this section shall register with the Commis10 sion regardless of whether that person also is reg11 istered with the Commodity Futures Trading Com12 mission as a swap execution facility. 

13 ‘‘(b) REQUIREMENTS FOR TRADING.—A swap execu14 tion facility that is registered under subsection (a) may 

15 trade any security-based swap. 

16 ‘‘(c) TRADING BY EXCHANGES.—An exchange shall, 

17 to the extent that the exchange also operates a swap exe18 cution facility and uses the same electronic trade execution 

19 system for trading on the exchange and the swap execu20 tion facility, identify whether the electronic trading is tak21 ing place on the exchange or the swap execution facility. 

22 ‘‘(d) CRITERIA FOR REGISTRATION.— 

23 ‘‘(1) IN GENERAL.—To be registered as a swap 

24 execution facility, the facility shall be required to 


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1 demonstrate to the Commission that it meets the 

2 criteria specified herein. 

3 ‘‘(2) DETERRENCE OF ABUSES.—The swap exe4 cution facility shall establish and enforce trading 

5 and participation rules that will deter abuses and 

6 have the capacity to detect, investigate, and enforce 

7 those rules, including means to— 

8 ‘‘(A) obtain information necessary to per9 form the functions required under this section; 

10 or 

11 ‘‘(B) use means to— 

12 ‘‘(i) provide market participants with 

13 impartial access to the market; and 

14 ‘‘(ii) capture information that may be 

15 used in establishing whether rule violations 

16 have occurred. 

17 ‘‘(3) TRADING PROCEDURES.—The swap execu18 tion facility shall establish and enforce rules or 

19 terms and conditions defining, or specifications de20 tailing, trading procedures to be used in entering 

21 and executing orders traded on or through its facili22 ties. 

23 ‘‘(4) FINANCIAL INTEGRITY OF TRANS24 ACTIONS.—The swap execution facility shall estab25 lish and enforce rules and procedures for ensuring 


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1 the financial integrity of security-based swaps en2 tered on or through its facilities, including the clear3 ance and settlement of the security-based swaps. 

4 ‘‘(e) CORE PRINCIPLES FOR SWAP EXECUTION FA5 CILITIES.— 

6 ‘‘(1) IN GENERAL.—To maintain its registra7 tion as a swap execution facility, the facility shall 

8 comply with the core principles specified in this sub9 section and any requirement that the Commission 

10 may impose by rule or regulation. Except where the 

11 Commission determines otherwise by rule or regula12 tion, the facility shall have reasonable discretion in 

13 establishing the manner in which it complies with 

14 these core principles. 

15 ‘‘(2) COMPLIANCE WITH RULES.—The swap 

16 execution facility shall monitor and enforce compli17 ance with any of the rules of the facility, including 

18 the terms and conditions of the security-based swaps 

19 traded on or through the facility and any limitations 

20 on access to the facility. 

21 ‘‘(3) SECURITY-BASED SWAPS NOT READILY

22 SUSCEPTIBLE TO MANIPULATION.—The swap execu23 tion facility shall permit trading only in security24 based swaps that are not readily susceptible to ma25 nipulation. 


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1 ‘‘(4) MONITORING OF TRADING.—The swap 

2 execution facility shall monitor trading in security3 based swaps to prevent manipulation and price dis4 tortion through surveillance, compliance, and dis5 ciplinary practices and procedures, including meth6 ods for conducting real-time monitoring of trading 

7 and comprehensive and accurate trade reconstruc8 tions. 

9 ‘‘(5) ABILITY TO OBTAIN INFORMATION.—The 

10 swap execution facility shall— 

11 ‘‘(A) establish and enforce rules that will 

12 allow the facility to obtain any necessary infor13 mation to perform any of the functions de14 scribed in this subsection; 

15 ‘‘(B) provide the information to the Com16 mission upon request; and 

17 ‘‘(C) have the capacity to carry out such 

18 international information-sharing agreements as 

19 the Commission may require. 

20 ‘‘(6) EMERGENCY AUTHORITY.—The swap exe21 cution facility shall adopt rules to provide for the ex22 ercise of emergency authority, in consultation or co23 operation with the Commission, where necessary and 

24 appropriate, including the authority to suspend or 

25 curtail trading in a security-based swap. 


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1 ‘‘(7) TIMELY PUBLICATION OF TRADING INFOR2 MATION.—The swap execution facility shall make 

3 public timely information on price, trading volume, 

4 and other trading data to the extent prescribed by 

5 the Commission. 

6 ‘‘(8) RECORDKEEPING AND REPORTING.—The 

7 swap execution facility shall maintain records of all 

8 activities related to the business of the facility, in9 cluding a complete audit trail, in a form and manner 

10 acceptable to the Commission for a period of 5 

11 years, and report to the Commission all information 

12 determined by the Commission to be necessary or 

13 appropriate for the Commission to perform its re14 sponsibilities under this Act in a form and manner 

15 acceptable to the Commission. The Commission shall 

16 adopt data collection and reporting requirements for 

17 swap execution facilities that are comparable to cor18 responding requirements for clearing agencies and 

19 security-based swap repositories. 

20 ‘‘(9) ANTITRUST CONSIDERATIONS.—Unless 

21 necessary or appropriate to achieve the purposes of 

22 this Act, the swap execution facility shall avoid— 

23 ‘‘(A) adopting any rules or taking any ac24 tions that result in any unreasonable restraints 

25 of trade; or 


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1 ‘‘(B) imposing any material anticompeti2 tive burden on trading on the swap execution 

3 facility. 

4 ‘‘(10) CONFLICTS OF INTEREST.— 

5 ‘‘(A) IN GENERAL.—The swap execution 

6 facility shall establish and enforce rules to mini7 mize conflicts of interest in its decision-making 

8 process and establish a process for resolving 

9 such conflicts of interest. 

10 ‘‘(B) BENEFICIAL OWNERSHIP BY A RE11 STRICTED OWNER.—The rules of the swap exe12 cution facility shall provide that a restricted 

13 owner shall not be permitted directly or indi14 rectly to acquire beneficial ownership of inter15 ests in the facility or in persons with a control16 ling interest in the facility, to the extent that 

17 such an acquisition would result in restricted 

18 owners controlling more than 20 percent of the 

19 votes entitled to be cast on any matter by the 

20 holders of the ownership interests. 

21 ‘‘(C) ASSOCIATION WITH A RESTRICTED

22 OWNER.—The rules of the swap execution facil23 ity shall provide that a majority of the directors 

24 of the facility shall not be associated with a re25 stricted owner. 


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1 ‘‘(11) DESIGNATION OF COMPLIANCE OFFI2 CER.— 

3 ‘‘(A) IN GENERAL.—Each swap execution 

4 facility shall designate an individual to serve as 

5 a compliance officer. 

6 ‘‘(B) DUTIES.—The compliance officer— 

7 ‘‘(i) shall report directly to the board 

8 or to the senior officer of the facility; 

9 ‘‘(ii) shall— 

10 ‘‘(I) review compliance with the 

11 core principles in section 3B(e); 

12 ‘‘(II) in consultation with the 

13 board of the facility, a body per14 forming a function similar to that of 

15 a board, or the senior officer of the 

16 facility, resolve any conflicts of inter17 est that may arise; 

18 ‘‘(III) be responsible for admin19 istering the policies and procedures 

20 required to be established pursuant to 

21 this section; and 

22 ‘‘(IV) ensure compliance with se23 curities laws and the rules and regula24 tions issued thereunder, including 


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1 rules prescribed by the Commission 

2 pursuant to this section; and 

3 ‘‘(iii) shall establish procedures for re4 mediation of non-compliance issues found 

5 during compliance office reviews, 

6 lookbacks, internal or external audit find7 ings, self-reported errors, or through vali8 dated complaints. Procedures will establish 

9 the handling, management response, reme10 diation, retesting, and closing of non11 compliant issues. 

12 ‘‘(C) ANNUAL REPORTS REQUIRED.—The 

13 compliance officer shall annually prepare and 

14 sign a report on the compliance of the facility 

15 with the securities laws and its policies and pro16 cedures, including its code of ethics and conflict 

17 of interest policies, in accordance with rules 

18 prescribed by the Commission. Such compliance 

19 report shall accompany the financial reports of 

20 the facility that are required to be furnished to 

21 the Commission pursuant to this section and 

22 shall include a certification that, under penalty 

23 of law, the report is accurate and complete. 

24 ‘‘(f) EXEMPTIONS.—The Commission may exempt, 

25 conditionally or unconditionally, a swap execution facility 


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1 from registration under this section if the Commission 

2 finds that such organization is subject to comparable, 

3 comprehensive supervision and regulation on a consoli4 dated basis by the Commodity Futures Trading Commis5 sion, a Prudential Regulator or the appropriate govern6 mental authorities in the organization’s home country. 

7 ‘‘(g) HARMONIZATION OF RULES.—Not later than 

8 180 days after the date of enactment of the Over-the9 Counter Derivatives Markets Act of 2009, the Commission 

10 and the Commodity Futures Trading Commission shall 

11 jointly prescribe rules governing the regulation of swap 

12 execution facilities under this section and section 5h of 

13 the Commodity Exchange Act (7 U.S.C. 7b–3).’’. 

14 (e) SEGREGATION OF ASSETS HELD AS COLLATERAL

15 IN SWAP TRANSACTIONS.—The Securities Exchange Act 

16 of 1934 (15 U.S.C. 78a, et seq.) is further amended by 

17 adding after section 3C (as added by subsection (b)) the 

18 following: 

19 ‘‘SEC. 3D. SEGREGATION OF ASSETS HELD AS COLLATERAL 

20 IN OVER-THE-COUNTER SWAP TRANS21 ACTIONS. 

22 ‘‘(a) SEGREGATION.—At the request of a 

23 counterparty to a security-based swap who provides funds 

24 or other property to a swap dealer as variation or initial 

25 margin or collateral to secure the obligations of the 


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1 counterparty under a security-based swap between the 

2 counterparty and the swap dealer that is not submitted 

3 for clearing to a derivatives clearing agency, the swap 

4 dealer shall segregate the variation or initial margin or 

5 collateral for the benefit of the counterparty, and maintain 

6 the variation or initial margin or collateral in an account 

7 which is carried by an independent third-party custodian 

8 and designated as a segregated account for the 

9 counterparty, in accordance with such rules and regula10 tions as the Commission or Prudential Regulator may pre11 scribe. If a securities-based swap counterparty is a swap 

12 dealer or major securities-based swap participant who 

13 owns more than 20 percent of, or has more than 50 per14 cent representation on the board of directors of, a custo15 dian, the custodian shall not be considered independent 

16 from the securities-based swap counterparties for purposes 

17 of the preceding sentence. This subsection shall not be in18 terpreted to preclude commercial arrangements regarding 

19 the investment of the segregated funds or other property 

20 and the related allocation of gains and losses resulting 

21 from any such investment. 

22 ‘‘(b) BACK OFFICE AUDIT REPORTING.—If a secu23 rity-based swap dealer does not segregate funds at the re24 quest of a security-based swap counterparty in accordance 

25 with subsection (a), the security-based swap dealer shall 


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1 report to its counterparty on a quarterly basis that its 

2 back office procedures relating to margin and collateral 

3 requirements are in compliance with the agreement of the 

4 counterparties.’’. 

5 (f) TRADING IN SECURITY-BASED SWAP AGREE6 MENTS.—Section 6 of the Securities Exchange Act of 

7 1934 (15 U.S.C. 78f) is amended by adding at the end 

8 the following: 

9 ‘‘(l) It shall be unlawful for any person to effect a 

10 transaction in a security-based swap with or for a person 

11 that is not an eligible contract participant unless such 

12 transaction is effected on a national securities exchange 

13 registered pursuant to subsection (b).’’. 

14 (g) ADDITIONS OF SECURITY-BASED SWAPS TO CER15 TAIN ENFORCEMENT PROVISIONS.—Paragraphs (1) 

16 through (3) of section 9(b) of the Securities Exchange Act 

17 of 1934 (15 U.S.C. 78i(b)(1)–(3)) are amended to read 

18 as follows: 

19 ‘‘(1) any transaction in connection with any se20 curity whereby any party to such transaction ac21 quires (A) any put, call, straddle, or other option or 

22 privilege of buying the security from or selling the 

23 security to another without being bound to do so; 

24 (B) any security futures product on the security; or 


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1 (C) any security-based swap involving the security or 

2 the issuer of the security; 

3 ‘‘(2) any transaction in connection with any se4 curity with relation to which he has, directly or indi5 rectly, any interest in any (A) such put, call, strad6 dle, option, or privilege; (B) such security futures 

7 product; or (C) such security-based swap; or 

8 ‘‘(3) any transaction in any security for the ac9 count of any person who he has reason to believe 

10 has, and who actually has, directly or indirectly, any 

11 interest in (A) any such put, call, straddle, option, 

12 or privilege; (B) such security futures product with 

13 relation to such security; or (C) any security-based 

14 swap involving such security or the issuer of such se15 curity.’’. 

16 (h) RULEMAKING AUTHORITY TO PREVENT FRAUD, 

17 MANIPULATION, AND DECEPTIVE CONDUCT IN SECURITY18 BASED SWAPS AND SECURITY-BASED SWAP AGREE19 MENTS.—Section 9 of the Securities Exchange Act of 

20 1934 (15 U.S.C. 78i) is amended by adding at the end 

21 the following: 

22 ‘‘(j) It shall be unlawful for any person, directly or 

23 indirectly, by the use of any means or instrumentality of 

24 interstate commerce or of the mails, or of any facility of 

25 any national securities exchange, to effect any transaction 


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1 in, or to induce or attempt to induce the purchase or sale 

2 of, any security-based swap or any security-based swap 

3 agreement, in connection with which such person engages 

4 in any fraudulent, deceptive, or manipulative act or prac5 tice, makes any fictitious quotation, or engages in any 

6 transaction, practice, or course of business which operates 

7 as a fraud or deceit upon any person. The Commission 

8 shall, for the purposes of this subsection, by rules and reg9 ulations define, and prescribe means reasonably designed 

10 to prevent, such transactions, acts, practices, and courses 

11 of business as are fraudulent, deceptive, or manipulative, 

12 and such quotations as are fictitious.’’. 

13 (i) POSITION LIMITS AND POSITION ACCOUNT14 ABILITY FOR SECURITY-BASED SWAPS.—The Securities 

15 Exchange Act of 1934 is further amended by inserting 

16 after section 10B (15 U.S.C. 78j–1) (as added by section 

17 2003(a)) the following new section: 

18 ‘‘SEC. 10C. POSITION LIMITS AND POSITION ACCOUNT19 ABILITY FOR SECURITY-BASED SWAPS AND 

20 LARGE TRADER REPORTING. 

21 ‘‘(a) POSITION LIMITS.—As a means reasonably de22 signed to prevent fraud and manipulation, the Commission 

23 may, by rule or regulation, as necessary or appropriate 

24 in the public interest or for the protection of investors, 

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1 sions) on the size of positions in any security-based swap 

2 or security-based swap agreement that may be held by any 

3 person. In establishing such limits, the Commission may 

4 require any person to aggregate positions in— 

5 ‘‘(1) any security-based swap and any security 

6 or loan or group or index of securities or loans on 

7 which such security-based swap is based, which such 

8 security-based swap references, or to which such se9 curity-based swap is related as described in section 

10 3(a)(68), and any security-based swap agreement 

11 and any other instrument relating to such security 

12 or loan or group or index of securities or loans; or 

13 ‘‘(2) any security-based swap and (A) any secu14 rity or group or index of securities, the price, yield, 

15 value, or volatility of which, or of which any interest 

16 therein, is the basis for a material term of such se17 curity-based swap as described in section 3(a)(76) 

18 and (B) any security-based swap and any other in19 strument relating to the same security or group or 

20 index of securities. 

21 ‘‘(b) EXEMPTIONS.—The Commission, by rule, regu22 lation, or order, may conditionally or unconditionally ex23 empt any person or class of persons, any security-based 

24 swap or class of security-based swaps, or any transaction 


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1 or class of transactions from any requirement it may es2 tablish under this section with respect to position limits. 

3 ‘‘(c) SRO RULES.— 

4 ‘‘(1) IN GENERAL.—As a means reasonably de5 signed to prevent fraud or manipulation, the Com6 mission, by rule, regulation, or order, as necessary 

7 or appropriate in the public interest, for the protec8 tion of investors, or otherwise in furtherance of the 

9 purposes of this title, may direct a self-regulatory 

10 organization— 

11 ‘‘(A) to adopt rules regarding the size of 

12 positions in any security-based swap that may 

13 be held by— 

14 ‘‘(i) any member of such self-regu15 latory organization; or 

16 ‘‘(ii) any person for whom a member 

17 of such self-regulatory organization effects 

18 transactions in such security-based swap or 

19 other security-based swap agreement; and 

20 ‘‘(B) to adopt rules reasonably designed to 

21 ensure compliance with requirements prescribed 

22 by the Commission under subparagraph (A). 

23 ‘‘(2) REQUIREMENT TO AGGREGATE POSI24 TIONS.—In establishing such limits, the self-reguVerDate Nov 24 2008 22:04 Dec 02, 2009 Jkt 089200 PO 00000 Frm 00620 Fmt 6652 Sfmt 6201 E:\BILLS\H4173.IH H4173

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1 latory organization may require such member or per2 son to aggregate positions in— 

3 ‘‘(A) any security-based swap and any se4 curity or loan or group or index of securities or 

5 loans on which such security-based swap is 

6 based, which such security-based swap ref7 erences, or to which such security-based swap is 

8 related as described in section 3(a)(68), and 

9 any security-based swap agreement and any 

10 other instrument relating to such security or 

11 loan or group or index of securities or loans; or 

12 ‘‘(B)(i) any security-based swap; 

13 ‘‘(ii) any security or group or index of se14 curities, the price, yield, value, or volatility of 

15 which, or of which any interest therein, is the 

16 basis for a material term of such security-based 

17 swap as described in section 3(a)(76); and 

18 ‘‘(iii) any security-based swap and any 

19 other instrument relating to the same security 

20 or group or index of securities. 

21 ‘‘(d) LARGE TRADER REPORTING.—The Commis22 sion, by rule or regulation, may require any person that 

23 effects transactions for such person’s own account or the 

24 account of others in any securities-based swap or security25 based swap agreement and any security or loan or group 


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1 or index of securities or loans as set forth in paragraphs 

2 (1) and (2) of subsection (a) to report such information 

3 as the Commission may prescribe regarding any position 

4 or positions in any security-based swap or security-based 

5 swap agreement and any security or loan or group or index 

6 of securities or loans and any other instrument relating 

7 to such security or loan or group or index of securities 

8 or loans as set forth in paragraphs (1) and (2) of sub9 section (a).’’. 

10 (j) PUBLIC REPORTING AND REPOSITORIES FOR SE11 CURITY-BASED SWAP AGREEMENTS.—Section 13 of the 

12 Securities Exchange Act of 1934 (15 U.S.C. 78m) is 

13 amended by adding at the end the following: 

14 ‘‘(m) PUBLIC REPORTING OF AGGREGATE SECURITY15 BASED SWAP DATA.— 

16 ‘‘(1) IN GENERAL.—The Commission, or a per17 son designated by the Commission pursuant to para18 graph (2), shall make available to the public, in a 

19 manner that does not disclose the business trans20 actions and market positions of any person, aggre21 gate data on security-based swap trading volumes 

22 and positions from the sources set forth in para23 graph (3). 

24 ‘‘(2) DESIGNEE OF THE COMMISSION.—The 

25 Commission may designate a clearing agency or a 


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1 security-based swap repository to carry out the pub2 lic reporting described in paragraph (1). 

3 ‘‘(3) SOURCES OF INFORMATION.—The sources 

4 of the information to be publicly reported as de5 scribed in paragraph (1) are— 

6 ‘‘(A) clearing agencies pursuant to section 

7 3A; 

8 ‘‘(B) security-based swap repositories pur9 suant to subsection (n); and 

10 ‘‘(C) reports received by the Commission 

11 pursuant to section 13A. 

12 ‘‘(n) SECURITY-BASED SWAP REPOSITORIES.— 

13 ‘‘(1) REGISTRATION REQUIREMENT.— 

14 ‘‘(A) IN GENERAL.—It shall be unlawful 

15 for a security-based swap repository, unless reg16 istered with the Commission, directly or indi17 rectly to make use of the mails or any means 

18 or instrumentality of interstate commerce to 

19 perform the functions of a security-based swap 

20 repository. 

21 ‘‘(B) INSPECTION AND EXAMINATION.— 

22 Registered security-based swap repositories 

23 shall be subject to inspection and examination 

24 by any representatives of the Commission. 

25 ‘‘(2) STANDARD SETTING.— 


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1 ‘‘(A) DATA IDENTIFICATION.—The Com2 mission shall prescribe standards that specify 

3 the data elements for each security-based swap 

4 that shall be collected and maintained by each 

5 security-based swap repository. 

6 ‘‘(B) DATA COLLECTION AND MAINTE7 NANCE.—The Commission shall prescribe data 

8 collection and data maintenance standards for 

9 security-based swap repositories. 

10 ‘‘(C) COMPARABILITY.—The standards 

11 prescribed by the Commission under this sub12 section shall be comparable to the data stand13 ards imposed by the Commission on clearing 

14 agencies that clear security-based swaps. 

15 ‘‘(3) DUTIES.—A security-based swap reposi16 tory shall— 

17 ‘‘(A) accept data prescribed by the Com18 mission for each security-based swap under this 

19 paragraph (2); 

20 ‘‘(B) maintain such data in such form and 

21 manner and for such period as may be required 

22 by the Commission; 

23 ‘‘(C) provide to the Commission, or its des24 ignee, such information as is required by, and 

25 in a form and at a frequency to be determined 


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1 by, the Commission, in order to comply with the 

2 public reporting requirements contained in sub3 section (m); and 

4 ‘‘(D) make available, on a confidential 

5 basis, all data obtained by the security-based 

6 swap repository, including individual 

7 counterparty trade and position data, to the 

8 Commission, the appropriate Federal banking 

9 agencies, the Commodity Futures Trading 

10 Commission, the Financial Services Oversight 

11 Council, and the Department of Justice or to 

12 other persons the Commission deems appro13 priate, including foreign financial supervisors 

14 (including foreign futures authorities), foreign 

15 central banks, and foreign ministries. 

16 ‘‘(4) REQUIRED REGISTRATION FOR SECURITY17 BASED SWAP REPOSITORIES.—Any person that is re18 quired to be registered as a securities-based swap re19 pository under this subsection shall register with the 

20 Commission, regardless of whether that person also 

21 is registered with the Commodity Futures Trading 

22 Commission as a swap repository. 

23 ‘‘(5) HARMONIZATION OF RULES.—Not later 

24 than 180 days after the date of enactment of the 

25 Over-the-Counter Derivatives Markets Act of 2009, 


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1 the Commission and the Commodity Futures Trad2 ing Commission shall jointly adopt uniform rules 

3 governing persons that are registered under this sec4 tion and persons that are registered as swap reposi5 tories under the Commodity Exchange Act (7 U.S.C. 

6 1, et seq.), including uniform rules that specify the 

7 data elements that shall be collected and maintained 

8 by each repository. 

9 ‘‘(6) EXEMPTIONS.—The Commission may ex10 empt, conditionally or unconditionally, a security11 based swap repository from the requirements of this 

12 section if the Commission finds that such security13 based swap repository is subject to comparable, com14 prehensive supervision or regulation on a consoli15 dated basis by the Commodity Futures Trading 

16 Commission, a Prudential Regulator or the appro17 priate governmental authorities in the organization’s 

18 home country.’’. 

19 SEC. 3204. REGISTRATION AND REGULATION OF SWAP 

20 DEALERS AND MAJOR SWAP PARTICIPANTS. 

21 The Securities Exchange Act of 1934 (15 U.S.C. 78a, 

22 et seq.) is amended by inserting after section 15E (15 

23 U.S.C. 78o-7) the following: 


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1 ‘‘SEC. 15F. REGISTRATION AND REGULATION OF SECURITY2 BASED SWAP DEALERS AND MAJOR SECU3 RITY-BASED SWAP PARTICIPANTS. 

4 ‘‘(a) REGISTRATION.— 

5 ‘‘(1) It shall be unlawful for any person to act 

6 as a security-based swap dealer unless such person 

7 is registered as a security-based swap dealer with 

8 the Commission. 

9 ‘‘(2) It shall be unlawful for any person to act 

10 as a major security-based swap participant unless 

11 such person is registered as a major security-based 

12 swap participant with the Commission. 

13 ‘‘(b) REQUIREMENTS.— 

14 ‘‘(1) IN GENERAL.—A person shall register as 

15 a security-based swap dealer or major security-based 

16 swap participant by filing a registration application 

17 with the Commission. 

18 ‘‘(2) CONTENTS.—The application shall be 

19 made in such form and manner as prescribed by the 

20 Commission, giving any information and facts as the 

21 Commission may deem necessary concerning the 

22 business in which the applicant is or will be engaged. 

23 Such person, when registered as a security-based 

24 swap dealer or major security-based swap partici25 pant, shall continue to report and furnish to the 


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1 Commission such information pertaining to such 

2 person’s business as the Commission may require. 

3 ‘‘(3) EXPIRATION.—Each registration shall ex4 pire at such time as the Commission may by rule or 

5 regulation prescribe. 

6 ‘‘(4) RULES.—Except as provided in sub7 sections (c), (d) and (e), the Commission may pre8 scribe rules applicable to security-based swap dealers 

9 and major security-based swap participants, includ10 ing rules that limit the activities of security-based 

11 swap dealers and major security-based swap partici12 pants. Except as provided in subsections (c) and (e), 

13 the Commission may provide conditional or uncondi14 tional exemptions from rules prescribed under this 

15 section for security-based swap dealers and major 

16 security-based swap participants that are subject to 

17 substantially similar requirements as brokers or 

18 dealers. 

19 ‘‘(5) TRANSITION.—Rules adopted under this 

20 section shall provide for the registration of security21 based swap dealers and major security-based swap 

22 participants no later than 1 year after the effective 

23 date of the Over-the-Counter Derivatives Markets 

24 Act of 2009. 

25 ‘‘(c) DUAL REGISTRATION.— 


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1 ‘‘(1) SECURITY-BASED SWAP DEALERS.—Any 

2 person that is required to be registered as a secu3 rity-based swap dealer under this section shall reg4 ister with the Commission regardless of whether that 

5 person also is a bank or is registered with the Com6 modity Futures Trading Commission as a swap deal7 er. 

8 ‘‘(2) MAJOR SECURITY-BASED SWAP PARTICI9 PANTS.—Any person that is required to be reg10 istered as a major security-based swap participant 

11 under this section shall register with the Commis12 sion regardless of whether that person also is a bank 

13 or is registered with the Commodity Futures Trad14 ing Commission as a major swap participant. 

15 ‘‘(d) JOINT RULES.— 

16 ‘‘(1) IN GENERAL.—Not later than 180 days 

17 after the effective date of the Over-the-Counter De18 rivatives Markets Act of 2009, the Commission and 

19 the Commodity Futures Trading Commission shall 

20 jointly adopt uniform rules for persons that are reg21 istered as security-based swap dealers or major secu22 rity-based swap participants under this Act and per23 sons that are registered as swap dealers or major 

24 swap participants under the Commodity Exchange 

25 Act (7 U.S.C. 1, et seq.). 


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1 ‘‘(2) EXCEPTION FOR PRUDENTIAL REQUIRE2 MENTS.—The Commission and the Commodity Fu3 tures Trading Commission shall not prescribe rules 

4 imposing prudential requirements (including activity 

5 restrictions) on security-based swap dealers or major 

6 security-based swap participants for which there is a 

7 Prudential Regulator. This provision shall not be 

8 construed as limiting the authority of the Commis9 sion and the Commodity Futures Trading Commis10 sion to prescribe appropriate business conduct, re11 porting, and recordkeeping requirements to protect 

12 investors. 

13 ‘‘(e) CAPITAL AND MARGIN REQUIREMENTS.— 

14 ‘‘(1) IN GENERAL.— 

15 ‘‘(A) BANK SECURITY-BASED SWAP DEAL16 ERS AND MAJOR SECURITY-BASED SWAP PAR17 TICIPANTS.—Each registered security-based 

18 swap dealer and major security-based swap par19 ticipant for which there is a Prudential Regu20 lator shall meet such minimum capital require21 ments and minimum margin requirements as 

22 the Prudential Regulators shall by rule or regu23 lation jointly prescribe to help ensure the safety 

24 and soundness of the security-based swap deal25 er or major security-based swap participant. 


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1 ‘‘(B) NONBANK SECURITY-BASED SWAP

2 DEALERS AND MAJOR SECURITY-BASED SWAP

3 PARTICIPANTS.—Each registered security-based 

4 swap dealer and major security-based swap par5 ticipant for which there is not a Prudential 

6 Regulator shall meet such minimum capital re7 quirements and minimum margin requirements 

8 as the Commission and the Commodity Futures 

9 Trading Commission shall by rule or regulation 

10 jointly prescribe to help ensure the safety and 

11 soundness of the security-based swap dealer or 

12 major security-based swap participant. 

13 ‘‘(2) JOINT RULES.— 

14 ‘‘(A) BANK SECURITY-BASED SWAP DEAL15 ERS AND MAJOR SECURITY-BASED SWAP PAR16 TICIPANTS.—Within 180 days of the enactment 

17 of the Over-the-Counter Derivatives Markets 

18 Act of 2009, the Prudential Regulators, in con19 sultation with the Commission and the Com20 modity Futures Trading Commission, shall 

21 jointly adopt rules imposing capital and margin 

22 requirements under this subsection for security23 based swap dealers and major security-based 

24 swap participants. 


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1 ‘‘(B) NONBANK SECURITY-BASED SWAP

2 DEALERS AND MAJOR SECURITY-BASED SWAP

3 PARTICIPANTS.—Within 180 days of the enact4 ment of the Over-the-Counter Derivatives Mar5 kets Act of 2009, the Commission and the 

6 Commodity Futures Trading Commission, in 

7 consultation with the Prudential Regulators, 

8 shall jointly adopt rules imposing capital and 

9 margin requirements under this subsection for 

10 security-based swap dealers and major security11 based swap participants for which there is no 

12 Prudential Regulator. 

13 ‘‘(3) CAPITAL.— 

14 ‘‘(A) BANK SECURITY-BASED SWAP DEAL15 ERS AND MAJOR SECURITY-BASED SWAP PAR16 TICIPANTS.—In setting capital requirements 

17 under this subsection, the Prudential Regu18 lators shall impose— 

19 ‘‘(i) a capital requirement that is 

20 greater than zero for security-based swaps 

21 that are cleared by a clearing agency; and 

22 ‘‘(ii) to offset the greater risk to the 

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1 curity-based swaps that are not centrally 

2 cleared, higher capital requirements for se3 curity-based swaps that are not cleared by 

4 a clearing agency than for security-based 

5 swaps that are centrally cleared. 

6 ‘‘(B) EXCLUSION.—Subparagraph (A) 

7 shall not apply to a security-based swap one 

8 party to which is not a security-based swap 

9 dealer or major security-based swap participant, 

10 and which is entered into before the end of the 

11 90-day period that begins with the effective 

12 date of this subparagraph. 

13 ‘‘(C) NONBANK SECURITY-BASED SWAP

14 DEALERS AND MAJOR SECURITY-BASED SWAP

15 PARTICIPANTS.—Capital requirements set by 

16 the Commission and the Commodity Futures 

17 Trading Commission under this subsection shall 

18 be as strict as or stricter than the capital re19 quirements set by the Prudential Regulators 

20 under this subsection. 

21 ‘‘(D) BANK HOLDING COMPANIES.—Cap22 ital requirements set by the Board for security23 based swaps of bank holding companies on a 

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1 er than the capital requirements set by the Pru2 dential Regulators under this subsection. 

3 ‘‘(4) MARGIN.— 

4 ‘‘(A) BANK SECURITY-BASED SWAP DEAL5 ERS AND MAJOR SECURITY-BASED SWAP PAR6 TICIPANTS.—The Prudential Regulators shall 

7 impose margin requirements under this sub8 section on all security-based swaps that are not 

9 cleared by a registered clearing agency. 

10 ‘‘(B) NON-SWAP DEALERS AND MAJOR

11 MARKET PARTICIPANTS.—The Prudential Regu12 lators may, but are not required to, impose 

13 margin requirements with respect to security14 based swaps in which one of the counterparties 

15 is not a swap dealer, major swap participant, 

16 security-based swap dealer or major security17 based swap participant. Margin requirements 

18 for swaps set by the Commission and the Com19 modity Futures Trading Commission shall pro20 vide for the use of non-cash assets as collateral. 

21 ‘‘(C) EXCLUSION.—Subparagraph (B) 

22 shall not apply to a security-based swap one 

23 party to which is not a security-based swap 

24 dealer or major security-based swap participant, 

25 and which is entered into before the end of the 


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1 90-day period that begins with the effective 

2 date of this subparagraph. 

3 ‘‘(D) NONBANK SECURITY-BASED SWAP

4 DEALERS AND MAJOR SECURITY-BASED SWAP

5 PARTICIPANTS.—Margin requirements for secu6 rity-based swaps set by the Commission and the 

7 Commodity Futures Trading Commission under 

8 this subsection shall be as strict as or stricter 

9 than margin requirements for security-based 

10 swaps set by the Prudential Regulators. 

11 ‘‘(f) REPORTING AND RECORDKEEPING.— 

12 ‘‘(1) IN GENERAL.—Each registered security13 based swap dealer and major security-based swap 

14 participant— 

15 ‘‘(A) shall make such reports as are pre16 scribed by the Commission by rule or regulation 

17 regarding the transactions and positions and fi18 nancial condition of such person; 

19 ‘‘(B) for which— 

20 ‘‘(i) there is a Prudential Regulator, 

21 shall keep books and records of all activi22 ties related to its business as a security23 based swap dealer or major security-based 

24 swap participant in such form and manner 

25 and for such period as may be prescribed 


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1 by the Commission by rule or regulation; 

2 or 

3 ‘‘(ii) there is no Prudential Regulator, 

4 shall keep books and records in such form 

5 and manner and for such period as may be 

6 prescribed by the Commission by rule or 

7 regulation; 

8 ‘‘(C) shall keep such books and records 

9 open to inspection and examination by any rep10 resentative of the Commission; and 

11 ‘‘(D) shall keep any such books and 

12 records relating to transactions in swaps based 

13 on 1 or more securities open to inspection and 

14 examination by the Commission. 

15 ‘‘(2) RULES.—Not later than 1 year after the 

16 date of enactment of the Over-the-Counter Deriva17 tives Markets Act of 2009, the Commission and the 

18 Commodity Futures Trading Commission, in con19 sultation with the appropriate Federal banking agen20 cies, shall jointly adopt rules governing reporting 

21 and recordkeeping for swap dealers, major swap par22 ticipants, security-based swap dealers and major se23 curity-based swap participants. 

24 ‘‘(g) DAILY TRADING RECORDS.— 


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1 ‘‘(1) IN GENERAL.—Each registered security2 based swap dealer and major security-based swap 

3 participant shall maintain daily trading records of 

4 its security-based swaps and all related records (in5 cluding related transactions) and recorded commu6 nications including but not limited to electronic mail, 

7 instant messages, and recordings of telephone calls, 

8 for such period as may be prescribed by the Com9 mission by rule or regulation. 

10 ‘‘(2) INFORMATION REQUIREMENTS.—The daily 

11 trading records shall include such information as the 

12 Commission shall prescribe by rule or regulation. 

13 ‘‘(3) CUSTOMER RECORDS.—Each registered se14 curity-based swap dealer or major security-based 

15 swap participant shall maintain daily trading records 

16 for each customer or counterparty in such manner 

17 and form as to be identifiable with each security18 based swap transaction. 

19 ‘‘(4) AUDIT TRAIL.—Each registered security20 based swap dealer or major security-based swap par21 ticipant shall maintain a complete audit trail for 

22 conducting comprehensive and accurate trade recon23 structions. 

24 ‘‘(5) RULES.—Not later than 1 year after the 

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1 tives Markets Act of 2009, the Commission and the 

2 Commodity Futures Trading Commission, in con3 sultation with the appropriate Federal banking agen4 cies, shall jointly adopt rules governing daily trading 

5 records for swap dealers, major swap participants, 

6 security-based swap dealers, and major security7 based swap participants. 

8 ‘‘(h) BUSINESS CONDUCT STANDARDS.— 

9 ‘‘(1) IN GENERAL.—Each registered security10 based swap dealer and major security-based swap 

11 participant shall conform with business conduct 

12 standards as may be prescribed by the Commission 

13 by rule or regulation addressing— 

14 ‘‘(A) fraud, manipulation, and other abu15 sive practices involving security-based swaps 

16 (including security-based swaps that are offered 

17 but not entered into); 

18 ‘‘(B) diligent supervision of its business as 

19 a security-based swap dealer; 

20 ‘‘(C) adherence to all applicable position 

21 limits; 

22 ‘‘(D) the prevention of self-dealing by lim23 iting the extent to which a security-based swap 

24 dealer or major security-based swap participant 

25 may conduct business with a clearing agency, 


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1 an exchange, or an alternative swap execution 

2 facility that clears or trades security-based 

3 swaps and in which such a dealer or participant 

4 has a material debt or equity investment; and 

5 ‘‘(E) such other matters as the Commis6 sion shall determine to be necessary or appro7 priate. 

8 ‘‘(2) BUSINESS CONDUCT REQUIREMENTS.— 

9 Business conduct requirements adopted by the Com10 mission shall— 

11 ‘‘(A) establish the standard of care for a 

12 security-based swap dealer or major security13 based swap participant to verify that any secu14 rity-based swap counterparty meets the eligi15 bility standards for an eligible contract partici16 pant; 

17 ‘‘(B) require disclosure by the security18 based swap dealer or major security-based swap 

19 participant to any counterparty to the security20 based swap (other than a swap dealer, major 

21 swap participant, security-based swap dealer or 

22 major security-based swap participant) of— 

23 ‘‘(i) information about the material 

24 risks and characteristics of the security25 based swap; 


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1 ‘‘(ii) for cleared swaps, upon the re2 quest of the counterparty, the daily mark 

3 from the appropriate clearinghouse and for 

4 non-cleared swaps, upon the request of the 

5 counterparty, the daily mark of the secu6 rity-based swap dealer or major security7 based swap participant; and 

8 ‘‘(iii) any other material incentives or 

9 conflicts of interest that the security-based 

10 swap dealer or major security-based swap 

11 participant may have in connection with 

12 the security-based swap; and 

13 ‘‘(C) establish such other standards and 

14 requirements as the Commission may determine 

15 are necessary or appropriate in the public inter16 est, for the protection of investors, or otherwise 

17 in furtherance of the purposes of this title. 

18 ‘‘(3) RULES.—Not later than 1 year after the 

19 date of enactment of the Over-the-Counter Deriva20 tives Markets Act of 2009, the Commission and the 

21 Commodity Futures Trading Commission, in con22 sultation with the appropriate Federal banking agen23 cies, shall jointly prescribe rules under this sub24 section governing business conduct standards for 

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1 based swap dealers, and major security-based swap 

2 participants. 

3 ‘‘(i) DOCUMENTATION AND BACK OFFICE STAND4 ARDS.— 

5 ‘‘(1) IN GENERAL.—Each registered security6 based swap dealer and major security-based swap 

7 participant shall conform with standards, as may be 

8 prescribed by the Commission by rule or regulation, 

9 addressing timely and accurate confirmation, proc10 essing, netting, documentation, and valuation of all 

11 security-based swaps. 

12 ‘‘(2) RULES.—Not later than 1 year after the 

13 date of enactment of the Over-the-Counter Deriva14 tives Markets Act of 2009, the Commission and the 

15 Commodity Futures Trading Commission, in con16 sultation with the appropriate Federal banking agen17 cies, shall jointly adopt rules governing documenta18 tion and back office standards for swap dealers, 

19 major swap participants, security-based swap deal20 ers, and major security-based swap participants. 

21 ‘‘(j) DEALER RESPONSIBILITIES.—Each registered 

22 security-based swap dealer and major security-based swap 

23 participant at all times shall comply with the following re24 quirements: 


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1 ‘‘(1) MONITORING OF TRADING.—The security2 based swap dealer or major security-based swap par3 ticipant shall monitor its trading in security-based 

4 swaps to prevent violations of applicable position 

5 limits. 

6 ‘‘(2) DISCLOSURE OF GENERAL INFORMA7 TION.—The security-based swap dealer or major se8 curity-based swap participant shall disclose to the 

9 Commission and to the Prudential Regulator for 

10 such security-based swap dealer or major security11 based swap participant, as applicable, information 

12 concerning— 

13 ‘‘(A) terms and conditions of its security14 based swaps; 

15 ‘‘(B) security-based swap trading oper16 ations, mechanisms, and practices; 

17 ‘‘(C) financial integrity protections relating 

18 to security-based swaps; and 

19 ‘‘(D) other information relevant to its trad20 ing in security-based swaps. 

21 ‘‘(3) ABILITY TO OBTAIN INFORMATION.—The 

22 security-based swap dealer or major swap security23 based participant shall— 

24 ‘‘(A) establish and enforce internal systems 

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1 mation to perform any of the functions de2 scribed in this section; and 

3 ‘‘(B) provide the information to the Com4 mission and to the Prudential Regulator for 

5 such security-based swap dealer or major secu6 rity-based swap participant, as applicable, upon 

7 request. 

8 ‘‘(4) CONFLICTS OF INTEREST.—The security9 based swap dealer and major security-based swap 

10 participant shall implement conflict-of-interest sys11 tems and procedures that— 

12 ‘‘(A) establish structural and institutional 

13 safeguards to assure that the activities of any 

14 person within the firm relating to research or 

15 analysis of the price or market for any security 

16 are separated by appropriate informational par17 titions within the firm from the review, pres18 sure, or oversight of those whose involvement in 

19 trading or clearing activities might potentially 

20 bias their judgment or supervision; and 

21 ‘‘(B) address such other issues as the 

22 Commission determines appropriate. 

23 ‘‘(5) ANTITRUST CONSIDERATIONS.—Unless 

24 necessary or appropriate to achieve the purposes of 


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1 this Act, the security-based swap dealer or major se2 curity-based swap participant shall avoid— 

3 ‘‘(A) adopting any processes or taking any 

4 actions that result in any unreasonable re5 straints of trade; or 

6 ‘‘(B) imposing any material anticompeti7 tive burden on trading. 

8 ‘‘(k) RULES.—The Commission, the Commodity Fu9 tures Trading Commission, and the Prudential Regulators 

10 shall consult with each other prior to adopting any rules 

11 under the Over-the-Counter Derivatives Markets Act of 

12 2009. 

13 ‘‘(l) STATUTORY DISQUALIFICATION.—Except to the 

14 extent otherwise specifically provided by rule, regulation, 

15 or order of the Commission, it shall be unlawful for a secu16 rity-based swap dealer or a major security-based swap par17 ticipant to permit any person associated with a security18 based swap dealer or a major security-based swap partici19 pant who is subject to a statutory disqualification to effect 

20 or be involved in effecting security-based swaps on behalf 

21 of such security-based swap dealer or major security-based 

22 swap participant, if such security-based swap dealer or 

23 major security-based swap participant knew, or in the ex24 ercise of reasonable care should have known, of such stat25 utory disqualification. 


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1 ‘‘(m) ENFORCEMENT AND ADMINISTRATIVE PRO2 CEEDING AUTHORITY.— 

3 ‘‘(1) PRIMARY ENFORCEMENT AUTHORITY.— 

4 ‘‘(A) SEC.—Except as provided in sub5 section (b), the Commission shall have primary 

6 authority to enforce the provisions of the 

7 amendments made by subtitle B of the Over8 the-Counter Derivatives Markets Act of 2009 

9 with respect to any person. 

10 ‘‘(B) PRUDENTIAL REGULATORS.—The 

11 Prudential Regulators shall have exclusive au12 thority to enforce the provisions of subsection 

13 (e) and other prudential requirements of this 

14 Act with respect to banks, and branches or 

15 agencies of foreign banks that are security16 based swap dealers or major security-based 

17 swap participants. 

18 ‘‘(C) REFERRAL.—If the Prudential Regu19 lator for a security-based swap dealer or major 

20 security-based swap participant has cause to be21 lieve that such security-based swap dealer or 

22 major security-based swap participant may have 

23 engaged in conduct that constitutes a violation 

24 of the nonprudential requirements of section 

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1 under, that Prudential Regulator may rec2 ommend in writing to the Commission that the 

3 Commission initiate an enforcement proceeding 

4 as authorized under this Act. The recommenda5 tion shall be accompanied by a written expla6 nation of the concerns giving rise to the rec7 ommendation. 

8 ‘‘(D) BACKSTOP ENFORCEMENT AUTHOR9 ITY.—If the Commission does not initiate an 

10 enforcement proceeding before the end of the 

11 90 day period beginning on the date on which 

12 the Commission receives a recommendation 

13 under subparagraph (C), the Prudential Regu14 lator may initiate an enforcement proceeding as 

15 permitted under Federal law. 

16 ‘‘(2) CENSURE, DENIAL, SUSPENSION; NOTICE

17 AND HEARING.—The Commission, by order, shall 

18 censure, place limitations on the activities, functions, 

19 or operations of, or revoke the registration of any se20 curity-based swap dealer or major security-based 

21 swap participant that has registered with the Com22 mission pursuant to subsection (b) if it finds, on the 

23 record after notice and opportunity for hearing, that 

24 such censure, placing of limitations, or revocation is 

25 in the public interest and that such security-based 


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1 swap dealer or major security-based swap partici2 pant, or any person associated with such security3 based swap dealer or major security-based swap par4 ticipant effecting or involved in effecting trans5 actions in security-based swaps on behalf of such se6 curity-based swap dealer or major security-based 

7 swap participant, whether prior or subsequent to be8 coming so associated— 

9 ‘‘(A) has committed or omitted any act, or 

10 is subject to an order or finding, enumerated in 

11 subparagraph (A), (D), or (E) of paragraph (4) 

12 of section 15(b); 

13 ‘‘(B) has been convicted of any offense 

14 specified in subparagraph (B) of such para15 graph (4) within 10 years of the commencement 

16 of the proceedings under this subsection; 

17 ‘‘(C) is enjoined from any action, conduct, 

18 or practice specified in subparagraph (C) of 

19 such paragraph (4); 

20 ‘‘(D) is subject to an order or a final order 

21 specified in subparagraph (F) or (H), respec22 tively, of such paragraph (4); or 

23 ‘‘(E) has been found by a foreign financial 

24 regulatory authority to have committed or omit25 ted any act, or violated any foreign statute or 


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1 regulation, enumerated in subparagraph (G) of 

2 such paragraph (4). 

3 ‘‘(3) With respect to any person who is associ4 ated, who is seeking to become associated, or, at the 

5 time of the alleged misconduct, who was associated 

6 or was seeking to become associated with a security7 based swap dealer or major security-based swap par8 ticipant for the purpose of effecting or being in9 volved in effecting security-based swaps on behalf of 

10 such security-based swap dealer or major security11 based swap participant, the Commission, by order, 

12 shall censure, place limitations on the activities or 

13 functions of such person, or suspend for a period not 

14 exceeding 12 months, or bar such person from being 

15 associated with a security-based swap dealer or 

16 major security-based swap participant, if the Com17 mission finds, on the record after notice and oppor18 tunity for a hearing, that such censure, placing of 

19 limitations, suspension, or bar is in the public inter20 est and that such person— 

21 ‘‘(A) has committed or omitted any act, or 

22 is subject to an order or finding, enumerated in 

23 subparagraph (A), (D), or (E) of paragraph (4) 

24 of section 15(b); 


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1 ‘‘(B) has been convicted of any offense 

2 specified in subparagraph (B) of such para3 graph (4) within 10 years of the commencement 

4 of the proceedings under this subsection; 

5 ‘‘(C) is enjoined from any action, conduct, 

6 or practice specified in subparagraph (C) of 

7 such paragraph (4); 

8 ‘‘(D) is subject to an order or a final order 

9 specified in subparagraph (F) or (H), respec10 tively, of such paragraph (4); or 

11 ‘‘(E) has been found by a foreign financial 

12 regulatory authority to have committed or omit13 ted any act, or violated any foreign statute or 

14 regulation, enumerated in subparagraph (G) of 

15 such paragraph (4). 

16 ‘‘(4) It shall be unlawful— 

17 ‘‘(A) for any person as to whom an order 

18 under paragraph (3) is in effect, without the 

19 consent of the Commission, willfully to become, 

20 or to be, associated with a security-based swap 

21 dealer or major security-based swap participant 

22 in contravention of such order; or 

23 ‘‘(B) for any security-based swap dealer or 

24 major security-based swap participant to permit 

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1 mission, to become or remain a person associ2 ated with the security-based swap dealer or 

3 major security-based swap participant in con4 travention of such order, if such security-based 

5 swap dealer or major security-based swap par6 ticipant knew, or in the exercise of reasonable 

7 care should have known, of such order. 

8 ‘‘(5) EXEMPTIONS.—The Commission may ex9 empt, conditionally or unconditionally, a security10 based swap dealer or major security-based swap par11 ticipant from the prudential requirements of the 

12 Over-the-Counter Derivatives Markets Act of 2009 if 

13 the Commission finds that such security-based swap 

14 dealer or major security-based swap participant is 

15 subject to comparable, comprehensive supervision 

16 and regulation on a consolidated basis by the Com17 modity Futures Trading Commission, a Prudential 

18 Regulator or the appropriate governmental authori19 ties in the organization’s home country. 

20 ‘‘(n) EXEMPTIVE AUTHORITY.— 

21 ‘‘(1) IN GENERAL.—The Commission, by rule 

22 or regulation, may conditionally or unconditionally 

23 exempt any person, derivative, or transaction, or any 

24 class or classes of persons, derivatives, or trans25 actions, from any provision of this Act that was 


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1 added by an amendment in the Over-the-Counter 

2 Derivatives Markets Act of 2009, to the extent that 

3 such exemption is necessary or appropriate in the 

4 public interest, and is consistent with the purposes 

5 of such Act. 

6 ‘‘(2) PROCEDURES.—The Commission shall, by 

7 rule or regulation, determine the procedures under 

8 which an exemptive order under this subsection shall 

9 be granted and may, in its sole discretion, decline to 

10 entertain any application for an order of exemption 

11 under this subsection.’’. 

12 SEC. 3205. NATIONAL SECURITY EXCHANGE REGISTRATION 

13 REQUIREMENTS. 

14 Section 6(b) of the Securities Exchange Act of 1934 

15 (15 U.S.C. 78f(b)) is amended by adding at the end the 

16 following new paragraphs: 

17 ‘‘(10) The rules of the exchange minimize con18 flicts of interest in its decision-making process and 

19 establish a process for resolving such conflicts of in20 terest. 

21 ‘‘(11) The rules of an exchange that trades se22 curity-based swaps provide that a majority of the di23 rectors of the exchange shall not be associated with 

24 a restricted owner. 


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1 ‘‘(12) The rules of an exchange that trades se2 curity-based swaps provide that a restricted owner 

3 shall not be permitted directly or indirectly to ac4 quire beneficial ownership of interests in the ex5 change or in persons with a controlling interest in 

6 the exchange, to the extent that such an acquisition 

7 would result in restricted owners controlling more 

8 than 20 percent of the votes entitled to be cast on 

9 any matter by the holders of the ownership inter10 ests.’’. 

11 SEC. 3206. REPORTING AND RECORDKEEPING. 

12 (a) IN GENERAL.—The Securities Exchange Act of 

13 1934 (15 U.S.C. 78a, et seq.) is amended by inserting 

14 after section 13 the following section: 

15 ‘‘SEC. 13A. REPORTING AND RECORDKEEPING FOR CER16 TAIN SECURITY-BASED SWAPS. 

17 ‘‘(a) IN GENERAL.—Any person who enters into a se18 curity-based swap and— 

19 ‘‘(1) did not clear the security-based swap in 

20 accordance with section 3A; and 

21 ‘‘(2) did not have data regarding the security22 based swap accepted by a security-based swap repos23 itory in accordance with rules adopted by the Com24 mission under section 13(n), 

25 shall meet the requirements in subsection (b). 


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1 ‘‘(b) REPORTS.—Any person described in subsection 

2 (a) shall— 

3 ‘‘(1) make such reports in such form and man4 ner and for such period as the Commission shall pre5 scribe by rule or regulation regarding the security6 based swaps held by the person; and 

7 ‘‘(2) keep books and records pertaining to the 

8 security-based swaps held by the person in such 

9 form and manner and for such period as may be re10 quired by the Commission, which books and records 

11 shall be open to inspection by any representative of 

12 the Commission, an appropriate Federal banking 

13 agency, the Commodity Futures Trading Commis14 sion, the Financial Services Oversight Council, and 

15 the Department of Justice. 

16 ‘‘(c) IDENTICAL DATA.—In adopting rules under this 

17 section, the Commission shall require persons described in 

18 subsection (a) to report the same or more comprehensive 

19 data than the Commission requires security-based swap 

20 repositories to collect under subsection (n).’’. 

21 (b) BENEFICIAL OWNERSHIP REPORTING.— 

22 (1) Section 13(d)(1) of the Securities Exchange 

23 Act of 1934 (15 U.S.C. 78m(d)(1)) is amended by 

24 inserting ‘‘or otherwise becomes or is deemed to be25 come a beneficial owner of any of the foregoing upon 


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1 the purchase or sale of a security-based swap or 

2 other derivative instrument as the Commission may 

3 define by rule, and’’ after ‘‘Alaska Native Claims 

4 Settlement Act,’’. 

5 (2) Section 13(g)(1) of the Securities Exchange 

6 Act of 1934 (15 U.S.C. 78m(g)(1)) is amended by 

7 inserting ‘‘or otherwise becomes or is deemed to be8 come a beneficial owner of any security of a class de9 scribed in subsection (d)(1) upon the purchase or 

10 sale of a security-based swap or other derivative in11 strument, as the Commission may define by rule’’ 

12 after ‘‘subsection (d)(1) of this section’’. 

13 (c) REPORTS BY INSTITUTIONAL INVESTMENT MAN14 AGERS.—Section 13(f)(1) of the Securities Exchange Act 

15 of 1934 (15 U.S.C. 78m(f)(1)) is amended by striking 

16 ‘‘section 13(d)(1) of this title’’ and inserting ‘‘subsection 

17 (d)(1), or otherwise becomes or is deemed to become a 

18 beneficial owner of any security of a class described in sub19 section (d)(1) upon the purchase or sale of a security20 based swap or other derivative instrument, as the Commis21 sion may define by rule,’’. 

22 (d) ADMINISTRATIVE PROCEEDING AUTHORITY.— 

23 Section 15(b)(4) of the Securities Exchange Act of 1934 

24 (15 U.S.C. 78o(b)(4)) is amended— 


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1 (1) in subparagraph (C), by inserting ‘‘security2 based swap dealer, major security-based swap partic3 ipant,’’ after ‘‘government securities dealer,’’; and 

4 (2) in subparagraph (F), by inserting ‘‘, or se5 curity-based swap dealer, or a major security-based 

6 swap participant’’ after ‘‘or dealer’’. 

7 (e) DERIVATIVES BENEFICIAL OWNERSHIP.—Section 

8 13 of the Securities Exchange Act of 1934 (15 U.S.C. 

9 78m) is amended by adding at the end the following: 

10 ‘‘(o) BENEFICIAL OWNERSHIP.—For purposes of this 

11 section and section 16, a person shall be deemed to acquire 

12 beneficial ownership of an equity security based on the 

13 purchase or sale of a security-based swap or other deriva14 tive instrument only to the extent that the Commission, 

15 by rule, determines after consultation with the Prudential 

16 Regulators and the Secretary of the Treasury, that the 

17 purchase or sale of the security-based swap or other deriv18 ative instrument, or class of security-based swaps or other 

19 derivative instruments, provides incidents of ownership 

20 comparable to direct ownership of the equity security, and 

21 that it is necessary to achieve the purposes of this section 

22 that the purchase or sale of the security-based swaps or 

23 instrument, or class of security-based swap or instru24 ments, be deemed the acquisition of beneficial ownership 

25 of the equity security.’’. 


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1 SEC. 3207. STATE GAMING AND BUCKET SHOP LAWS. 

2 Section 28(a) of the Securities Exchange Act of 1934 

3 (15 U.S.C. 78bb(a)) is amended to read as follows: 

4 ‘‘(a) Except as provided in subsection (f), the rights 

5 and remedies provided by this title shall be in addition 

6 to any and all other rights and remedies that may exist 

7 at law or in equity; but no person permitted to maintain 

8 a suit for damages under the provisions of this title shall 

9 recover, through satisfaction of judgment in one or more 

10 actions, a total amount in excess of his actual damages 

11 on account of the act complained of. Except as otherwise 

12 specifically provided in this title, nothing in this title shall 

13 affect the jurisdiction of the securities commission (or any 

14 agency or officer performing like functions) of any State 

15 over any security or any person insofar as it does not con16 flict with the provisions of this title or the rules and regu17 lations thereunder. No State law which prohibits or regu18 lates the making or promoting of wagering or gaming con19 tracts, or the operation of ‘bucket shops’ or other similar 

20 or related activities, shall invalidate (1) any put, call, 

21 straddle, option, privilege, or other security subject to this 

22 title (except a security-based swap agreement and any se23 curity that has a pari-mutuel payout or otherwise is deter24 mined by the Commission, acting by rule, regulation, or 

25 order, to be appropriately subject to such laws), or apply 

26 to any activity which is incidental or related to the offer, 


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1 purchase, sale, exercise, settlement, or closeout of any 

2 such security, (2) any security-based swap between eligible 

3 contract participants, or (3) any security-based swap ef4 fected on a national securities exchange registered pursu5 ant to section 6(b). No provision of State law regarding 

6 the offer, sale, or distribution of securities shall apply to 

7 any transaction in a security-based swap or a security fu8 tures product, except that this sentence shall not be con9 strued as limiting any State antifraud law of general ap10 plicability.’’. 

11 SEC. 3208. AMENDMENTS TO THE SECURITIES ACT OF 1933; 

12 TREATMENT OF SECURITY-BASED SWAPS. 

13 (a) DEFINITIONS.—Section 2(a) of the Securities Act 

14 of 1933 (15 U.S.C. 77b(a)) is amended— 

15 (1) in paragraph (1), by inserting ‘‘security16 based swap,’’ after ‘‘security future,’’; 

17 (2) in paragraph (3) by adding at the end the 

18 following: ‘‘Any offer or sale of a security-based 

19 swap by or on behalf of the issuer of the securities 

20 upon which such security-based swap is based or is 

21 referenced, an affiliate of the issuer, or an under22 writer, shall constitute a contract for sale of, sale of, 

23 offer for sale, or offer to sell such securities.’’; and 

24 (3) by adding at the end the following: 


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1 ‘‘(17) The terms ‘swap’ and ‘security-based 

2 swap’ have the same meanings as provided in sec3 tions 1a(35) and (38) of the Commodity Exchange 

4 Act (7 U.S.C. 1a(35) and (38)). 

5 ‘‘(18) The terms ‘purchase’ or ‘sale’ of a secu6 rity-based swap shall be deemed to mean the execu7 tion, termination (prior to its scheduled maturity 

8 date), assignment, exchange, or similar transfer or 

9 conveyance of, or extinguishing of rights or obliga10 tions under, a security-based swap, as the context 

11 may require.’’. 

12 (b) EXEMPTION FROM REGISTRATION.—Section 3(a) 

13 of the Securities Act of 1933 is amended by adding at 

14 the end the following: 

15 ‘‘(15) Any security-based swap, as defined in 

16 section 2(a)(17) that is not otherwise a security as 

17 defined in section 2(a)(1) and that satisfies such 

18 conditions as established by rule or regulation by the 

19 Commission consistent with the provisions of the 

20 Over-the-Counter Derivatives Markets Act of 2009. 

21 The Commission shall promulgate rules imple22 menting this exemption.’’. 

23 (c) REGISTRATION OF SECURITY-BASED SWAPS.— 

24 Section 5 of the Securities Act of 1933 (15 U.S.C. 77e) 

25 is amended by adding at the end the following: 


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1 ‘‘(d) Notwithstanding the provisions of section 3 or 

2 section 4, unless a registration statement meeting the re3 quirements of subsection (a) of section 10 is in effect as 

4 to a security-based swap, it shall be unlawful for any per5 son, directly or indirectly, to make use of any means or 

6 instruments of transportation or communication in inter7 state commerce or of the mails to offer to sell, offer to 

8 buy or purchase or sell a security-based swap to any per9 son who is not an eligible contract participant as defined 

10 in section 1a(13) of the Commodity Exchange Act (7 

11 U.S.C. 1a(13)).’’. 

12 SEC. 3209. OTHER AUTHORITY. 

13 Unless otherwise provided by its terms, this subtitle 

14 does not divest any appropriate Federal banking agency, 

15 the Commission, the Commodity Futures Trading Com16 mission, or other Federal or State agency, of any authority 

17 derived from any other applicable law. 

18 SEC. 3210. JURISDICTION. 

19 Section 36 of the Securities Exchange Act of 1934 

20 (15 U.S.C. 78mm) is amended by adding at the end the 

21 following new subsection: 

22 ‘‘(c) EXEMPTIVE AUTHORITY.—The Commission 

23 may use its authority under subsection (a) to exempt any 

24 person, security, or transaction, or any class of persons, 

25 securities, or transactions from any provision or provisions 


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1 of this title or of any rule or regulation thereunder that 

2 applies to such person, security, or transaction solely be3 cause a security-based swap is a security, as such term 

4 is defined in section 3(a) of this title.’’. 

5 SEC. 3211. EFFECTIVE DATE. 

6 This subtitle is effective 270 days after the date of 

7 enactment. 

8 Subtitle C—Miscellaneous 

9 SEC. 3301. STUDY ON FEASIBILITY OF REQUIRING USE OF 

10 STANDARDIZED ALGORITHMIC DESCRIP11 TIONS FOR FINANCIAL DERIVATIVES. 

12 (a) IN GENERAL.—The Securities and Exchange 

13 Commission and the Commodity Futures Trading Com14 mission shall conduct a joint study of the feasibility of re15 quiring the derivatives industry to adopt standardized 

16 computer-readable algorithmic descriptions which may be 

17 used to describe complex and standardized financial de18 rivatives. 

19 (b) GOALS.—The algorithmic descriptions defined in 

20 the study shall be designed to facilitate computerized anal21 ysis of individual derivative contracts and to calculate net 

22 exposures to complex derivatives. The algorithmic descrip23 tions shall be optimized for simultaneous use by: 

24 (1) commercial users and traders of derivatives; 


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1 (2) derivative clearing houses, exchanges and 

2 electronic trading platforms; 

3 (3) trade repositories and regulator investiga4 tions of market activities; and 

5 (4) systemic risk regulators. 

6 The study will also examine the extent to which the algo7 rithmic description, together with standardized and exten8 sible legal definitions, may serve as the binding legal defi9 nition of derivative contracts. The study will examine the 

10 logistics of possible implementations of standardized algo11 rithmic descriptions for derivatives contracts. The study 

12 shall be limited to electronic formats for exchange of deriv13 ative contract descriptions and will not contemplate disclo14 sure of proprietary valuation models. 

15 (c) INTERNATIONAL COORDINATION.—In conducting 

16 the study, the Securities and Exchange Commission and 

17 the Commodity Futures Trading Commission shall coordi18 nate the study with international financial institutions and 

19 regulators as appropriate and practical. 

20 (d) REPORT.—Within 8 months after the date of the 

21 enactment of this title, the Securities and Exchange Com22 mission and the Commodity Futures Trading Commission 

23 shall jointly submit to the Committees on Agriculture and 

24 on Financial Services of the House of Representatives and 

25 the Committees on Agriculture, Nutrition, and Forestry 


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1 and on Banking, Housing, and Urban Affairs of the Sen2 ate a written report which contains the results of the study 

3 required by subsections (a) through (c). 

4 SEC. 3302. STUDY OF DESIRABILITY AND FEASIBILITY OF 

5 ESTABLISHING SINGLE REGULATOR FOR ALL 

6 TRANSACTIONS INVOLVING FINANCIAL DE7 RIVATIVES. 

8 (a) IN GENERAL.—The Secretary of the Treasury, 

9 the Commodity Futures Trading Commission, and the Se10 curities and Exchange Commission shall conduct a joint 

11 study of the desirability and feasibility of establishing, by 

12 January 1, 2012, a single regulator for all transactions 

13 involving financial derivatives. 

14 (b) REPORT TO THE CONGRESS.—Not later than De15 cember 1, 2010, Secretary of the Treasury, the Com16 modity Futures Trading Commission, and the Securities 

17 and Exchange Commission shall jointly submit to the 

18 Committees on Agriculture and on Financial Services of 

19 the House of Representatives and the Committees on Ag20 riculture, Nutrition, and Forestry and on Banking, Hous21 ing, and Urban Affairs of the Senate a written report that 

22 contains the results of the study required by subsection 

23 (a). 


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1 SEC. 3303. RECOMMENDATIONS FOR CHANGES TO INSOL2 VENCY LAWS. 

3 Not later than 180 days after the date of enactment 

4 of this title, the Securities and Exchange Commission, the 

5 Commodity Futures Trading Commission, and the Pru6 dential Regulators (as defined in section 1a of the Com7 modity Exchange Act, as amended by section 3101 of this 

8 title) shall transmit to Congress recommendations for leg9 islative changes to the Federal insolvency laws— 

10 (1) in order to enhance the legal certainty with 

11 respect to swap participants clearing non-proprietary 

12 swap positions with a swap clearinghouse, includ13 ing— 

14 (A) customer rights to recover margin de15 posits or custodial property held at or through 

16 an insolvent swap clearinghouse, or clearing 

17 participant; and 

18 (B) the enforceability of clearing rules re19 lating to the portability of customer swap posi20 tions (and associated margin) upon the insol21 vency of a clearing participant; 

22 (2) to clarify and harmonize the insolvency law 

23 framework applicable to entities that are both com24 modity brokers (as defined in section 101(6) of title 

25 11, United States Code) and registered brokers or 


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1 dealers (as defined in section 3(a) of the Securities 

2 Exchange Act of 1934 (15 U.S.C. 78c(a))); and 

3 (3) to facilitate the portfolio margining of secu4 rities and commodity futures and options positions 

5 held through entities that are both futures commis6 sion merchants (as defined in section 1a of the Com7 modity Exchange Act) and registered brokers or 

8 dealers (as defined in section 3 of the Securities Ex9 change Act of 1934 (15 U.S.C. 78c(a))). 

10 SEC. 3304. PROHIBITION AGAINST GOVERNMENT ASSIST11 ANCE. 

12 (a) IN GENERAL.—No provision of this title shall be 

13 construed to authorize Federal assistance to support the 

14 clearing operations or liquidation of a derivatives clearing 

15 organization described in the Commodity Exchange Act, 

16 except where explicitly authorized by an Act of Congress. 

17 (b) DEFINITION.—For the purposes of this section, 

18 the term ‘‘Federal assistance’’ shall be defined as the use 

19 of public funds for the purposes of— 

20 (1) making loans to, or purchasing any debt ob21 ligation of, a derivatives clearing organization or a 

22 subsidiary; 

23 (2) purchasing assets of a derivatives clearing 

24 organization or a subsidiary; 


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1 (3) assuming or guaranteeing the obligations of 

2 a derivatives clearing organization or a subsidiary; 

3 or 

4 (4) acquiring any type of equity interest or se5 curity of a derivatives clearing organization or a sub6 sidiary. 

7 TITLE IV—CONSUMER FINAN8 CIAL PROTECTION AGENCY 

9 ACT 

10 SEC. 4001. SHORT TITLE. 

11 This title may be cited as the ‘‘Consumer Financial 

12 Protection Agency Act of 2009’’. 

13 SEC. 4002. DEFINITIONS. 

14 For the purposes of subtitles A through F of this 

15 title, the following definitions shall apply: 

16 (1) AFFILIATE.—The term ‘‘affiliate’’ means 

17 any person that controls, is controlled by, or is 

18 under common control with another person. 

19 (2) AGENCY.—The term ‘‘Agency’’ means the 

20 Consumer Financial Protection Agency. 

21 (3) BANK HOLDING COMPANY.—The term 

22 ‘‘bank holding company’’ has the same meaning as 

23 in section 2(a) of the Bank Holding Company Act 

24 of 1956. 


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1 (4) BOARD.—Except when used in connection 

2 with the term ‘‘Board of Governors’’, the term 

3 ‘‘Board’’ means the Consumer Financial Protection 

4 Oversight Board. 

5 (5) BOARD OF GOVERNORS.—The term ‘‘Board 

6 of Governors’’ means the Board of Governors of the 

7 Federal Reserve System. 

8 (6) BUSINESS OF INSURANCE.—The term 

9 ‘‘business of insurance’’ means the writing of insur10 ance or the reinsuring of risks by an insurer, includ11 ing all acts necessary to such writing or reinsuring 

12 and the activities relating to the writing of insurance 

13 or the reinsuring of risks conducted by persons who 

14 act as, or are, officers, directors, agents, or employ15 ees of insurers or who are other persons authorized 

16 to act on behalf of such persons. 

17 (7) CONSUMER.—The term ‘‘consumer’’ means 

18 an individual or an agent, trustee, or representative 

19 acting on behalf of an individual. 

20 (8) CONSUMER FINANCIAL PRODUCT OR SERV21 ICE.—The term ‘‘consumer financial product or 

22 service’’ means any financial product, other than a 

23 Federal tax return, or service to be used by a con24 sumer primarily for personal, family, or household 

25 purposes. 


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1 (9) COVERED PERSON.— 

2 (A) IN GENERAL.—The term ‘‘covered per3 son’’ means any person who engages directly or 

4 indirectly in a financial activity, in connection 

5 with the provision of a consumer financial prod6 uct or service. 

7 (B) EXCLUSION.—The term ‘‘covered per8 son’’ shall not include the Secretary, the De9 partment of the Treasury, any agency or bu10 reau under the jurisdiction of the Secretary, or 

11 any person collecting Federal taxes for the 

12 United States to the extent such person is act13 ing in such capacity. 

14 (10) CREDIT.—The term ‘‘credit’’ means the 

15 right granted by a person to a consumer to defer 

16 payment of a debt, incur debt and defer its payment, 

17 or purchase property or services and defer payment 

18 for such purchase. 

19 (11) CREDIT UNION.—The term ‘‘credit union’’ 

20 means a Federal credit union or a State credit union 

21 as defined in section 101 of the Federal Credit 

22 Union Act. 

23 (12) DEPOSIT.—The term ‘‘deposit’’— 

24 (A) has the same meaning as in section 

25 3(l) of the Federal Deposit Insurance Act; and 


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1 (B) includes a share in a member account 

2 (as defined in section 101(5) of the Federal 

3 Credit Union Act) at a credit union. 

4 (13) DEPOSIT-TAKING ACTIVITY.—The term 

5 ‘‘deposit-taking activity’’ means— 

6 (A) the acceptance of deposits, the mainte7 nance of deposit accounts, or the provision of 

8 services related to the acceptance of deposits; 

9 (B) the acceptance of money, the provision 

10 of other services related to the acceptance of 

11 money, or the maintenance of members’ share 

12 accounts by a credit union; or 

13 (C) the receipt of money or its equivalent, 

14 as the Director may determine by regulation or 

15 order, received or held by the covered person 

16 (or an agent for the person) for the purpose of 

17 facilitating a payment or transferring funds or 

18 value of funds by a consumer to a third party. 

19 (14) DESIGNATED TRANSFER DATE.—The term 

20 ‘‘designated transfer date’’ has the meaning pro21 vided in section 4602. 

22 (15) DIRECTOR.—The term ‘‘Director’’ means 

23 the Director of the Agency. 


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1 (16) ENUMERATED CONSUMER LAWS.—The 

2 term ‘‘enumerated consumer laws’’ means each of 

3 the following: 

4 (A) The Alternative Mortgage Transaction 

5 Parity Act (12 U.S.C. 3801 et seq.). 

6 (B) The Electronic Funds Transfer Act 

7 (15 U.S.C. 1693 et seq.) 

8 (C) The Equal Credit Opportunity Act (15 

9 U.S.C. 1691 et seq.). 

10 (D) The Fair Credit Reporting Act (15 

11 U.S.C. 1681 et seq.), except with respect to sec12 tions 615(e) and 628 of such Act. 

13 (E) The Fair Debt Collection Practices Act 

14 (15 U.S.C. 1692 et seq.). 

15 (F) Subsections (c), (d), (e), and (f) of sec16 tion 43 of the Federal Deposit Insurance Act 

17 (12 U.S.C. 1831t). 

18 (G) Sections 502, 503, 504, 505, 506, 

19 507, 508, and 509 of the Gramm-Leach-Bliley 

20 Act (15 U.S.C. 6802 et seq.). 

21 (H) The Homeowners Protection Act of 

22 1998. 

23 (I) The Home Mortgage Disclosure Act 

24 (12 U.S.C. 2801 et seq.). 


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1 (J) The Real Estate Settlement Proce2 dures Act (12 U.S.C. 2601 et seq.). 

3 (K) The Secure and Fair Enforcement for 

4 Mortgage Licensing Act (12 U.S.C. 5101 et 

5 seq.). 

6 (L) The Truth in Lending Act (15 U.S.C. 

7 1601 et seq.). 

8 (M) The Truth in Savings Act (12 U.S.C. 

9 4301 et seq.). 

10 (17) FEDERAL BANKING AGENCY.—The term 

11 ‘‘Federal banking agency’’ means the Board of Gov12 ernors, the Comptroller of the Currency, the Direc13 tor of the Office of Thrift Supervision, the Federal 

14 Deposit Insurance Corporation, or the National 

15 Credit Union Administration and the term ‘‘Federal 

16 banking agencies’’ means all of such agencies. 

17 (18) FAIR LENDING.—The term ‘‘fair lending’’ 

18 means fair, equitable, and nondiscriminatory access 

19 to credit for both individuals and communities. 

20 (19) FINANCIAL ACTIVITY.— 

21 (A) IN GENERAL.—The term ‘‘financial ac22 tivity’’ means any of the following activities: 

23 (i) Deposit-taking activities. 

24 (ii) Extending credit and servicing 

25 loans, including— 


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1 (I) acquiring, purchasing, selling, 

2 brokering, or servicing loans or other 

3 extensions of credit; 

4 (II) engaging in any other activ5 ity usual in connection with extensions 

6 of credit or servicing loans, including 

7 performing appraisals of real estate 

8 and personal property. 

9 (iii) Check cashing and check-guar10 anty services, including— 

11 (I) authorizing a subscribing 

12 merchant to accept personal checks 

13 tendered by the merchant’s customers 

14 in payment for goods and services; 

15 and 

16 (II) purchasing from a sub17 scribing merchant validly authorized 

18 checks that are subsequently dishon19 ored. 

20 (iv) Collecting, analyzing, maintain21 ing, and providing consumer report infor22 mation or other account information by 

23 covered persons, including information re24 lating to the credit history of consumers 

25 and providing the information to a credit 


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1 grantor who is considering a consumer ap2 plication for credit or who has extended 

3 credit to the borrower. 

4 (v) Collection of debt related to any 

5 consumer financial product or service. 

6 (vi) Providing real estate settlement 

7 services. 

8 (vii) Leasing personal or real property 

9 or acting as agent, broker, or adviser in 

10 leasing such property if— 

11 (I) the lease is on a non-oper12 ating basis; 

13 (II) the initial term of the lease 

14 is at least 90 days; and 

15 (III) in the case of leases involv16 ing real property, at the inception of 

17 the initial lease, the transaction is in18 tended to result in ownership of the 

19 leased property to be transferred to 

20 the lessee, subject to standards pre21 scribed by the Director. 

22 (viii) Acting as an investment adviser 

23 to any person (excluding an investment ad24 viser that is a person regulated by the 

25 Commodity Futures Trading Commission, 


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1 the Securities and Exchange Commission, 

2 or any securities commission (or any agen3 cy or office performing like functions) of 

4 any State). 

5 (ix) Acting as financial adviser to any 

6 person (excluding an investment adviser 

7 that is a person regulated by the Com8 modity Futures Trading Commission, the 

9 Securities and Exchange Commission, or 

10 any securities commission (or any agency 

11 or office performing like functions) of any 

12 State), including— 

13 (I) providing financial and other 

14 related advisory services; 

15 (II) providing educational 

16 courses, and instructional materials to 

17 consumers on individual financial 

18 management matters; 

19 (III) providing credit counseling 

20 or tax planning services to any person 

21 (excluding the preparation of returns, 

22 or claims for refund, of tax imposed 

23 by the Internal Revenue Code or ad24 vice with respect to positions taken 

25 therein, or services regulated by the 


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1 Secretary of the Treasury under sec2 tion 330 of title 31, United States 

3 Code); or 

4 (IV) providing services to assist a 

5 consumer with debt management or 

6 debt settlement, with modifying the 

7 terms of any extension of credit, or 

8 with avoiding foreclosure. 

9 (x) For purposes of this title, the fol10 lowing shall not be considered acting as fi11 nancial adviser: 

12 (I) Publishing any bona fide 

13 newspaper, news magazine or business 

14 or financial publication of general and 

15 regular circulation, including pub16 lishing market data, news, or data 

17 analytics or investment information or 

18 recommendations that are not tailored 

19 to the individual needs of a particular 

20 consumer. 

21 (II) Providing advice, analyses, 

22 or reports that do not relate to any 

23 securities other than securities which 

24 are direct obligations of or obligations 

25 guaranteed as to principal or interest 


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1 by the United States, or securities 

2 issued or guaranteed by corporations 

3 in which the United States has a di4 rect or indirect interest which shall 

5 have been designated by the Secretary 

6 of the Treasury, pursuant to section 

7 3(a)(12) of the Securities Exchange 

8 Act of 1934, as exempted securities 

9 for the purposes of that Act. 

10 (xi) Financial data processing by any 

11 technological means, including providing 

12 data processing, access to or use of data13 bases or facilities, or advice regarding 

14 processing or archiving, if the data to be 

15 processed, furnished, stored, or archived 

16 are financial, banking, or economic, except 

17 that it shall not be considered a ‘‘financial 

18 activity’’ if with respect to financial data 

19 processing the person— 

20 (I) unknowingly or incidentally 

21 transmits, processes, or stores finan22 cial data in a manner that such data 

23 is undifferentiated from other types of 

24 data that the person transmits, proc25 esses, or stores; 


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1 (II) does not provide to any con2 sumer a consumer financial product 

3 or service in connection with or relat4 ing to in any manner financial data 

5 processing; and 

6 (III) does not provide a material 

7 service to any covered person in con8 nection with the provision of a con9 sumer financial product or service. 

10 (xii) Money transmitting. 

11 (xiii) Sale, provision or issuance of 

12 stored value, except that, in the case of a 

13 sale, only if the seller influences the terms 

14 or conditions of the stored value provided 

15 to the consumer. 

16 (xiv) Acting as a money services busi17 ness. 

18 (xv) Acting as a custodian of money 

19 or any financial instrument. 

20 (xvi)(I) Any other activity that the Di21 rector defines, by regulation, as a financial 

22 activity after finding that— 

23 (aa) the activity has, or 

24 there is a substantial likelihood 

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1 terial adverse impact on the cred2 itworthiness or financial well 

3 being of consumers; 

4 (bb) the activity is incidental 

5 or complementary to any other fi6 nancial activity regulated by the 

7 Agency; or 

8 (cc) the activity is entered 

9 into or conducted as a subterfuge 

10 or with a purpose to evade any 

11 requirement under this title, the 

12 enumerated consumer laws, and 

13 the authorities transferred under 

14 subtitles F and H. 

15 (II) For purposes of subclause (I)(bb), 

16 the following activities provided to a cov17 ered person shall not be ‘‘incidental or 

18 complementary’’: 

19 (aa) Providing information prod20 ucts or services to a covered person 

21 for identity authentication. 

22 (bb) Providing information prod23 ucts or services for fraud or identify 

24 theft detection, prevention, or inves25 tigation. 


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1 (cc) Providing document retrieval 

2 or delivery services. 

3 (dd) Providing public records in4 formation retrieval. 

5 (ee) Providing information prod6 ucts or services for anti-money laun7 dering activities. 

8 (B) BUSINESS OF INSURANCE EXCEP9 TION.—The term ‘‘financial activity’’ shall not 

10 include the business of insurance. 

11 (20) FINANCIAL PRODUCT OR SERVICE.—The 

12 term ‘‘financial product or service’’ means any prod13 uct or service that, directly or indirectly, results 

14 from or is related to engaging in 1 or more financial 

15 activities. 

16 (21) FOREIGN EXCHANGE.—The term ‘‘foreign 

17 exchange’’ means the exchange, for compensation, of 

18 currency of the United States or of a foreign govern19 ment for currency of another government. 

20 (22) INSURED CREDIT UNION.—The term ‘‘in21 sured credit union’’ has the same meaning as in sec22 tion 101 of the National Credit Union Act. 

23 (23) INSURED DEPOSITORY INSTITUTION.—The 

24 term ‘‘insured depository institution’’ has the same 


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1 meaning as in section 3 of the Federal Deposit In2 surance Act. 

3 (24) MONEY SERVICES BUSINESS.—The term 

4 ‘‘money services business’’ means a person that— 

5 (A) receives currency, monetary value, or 

6 payment instruments for the purpose of ex7 changing or transmitting the same by any 

8 means, including transmission by wire, fac9 simile, electronic transfer, courier, the Internet, 

10 or through bill payment services, or other busi11 nesses that facilitate third-party transfers with12 in the United States or to or from the United 

13 States; or 

14 (B) issues payment instruments or stored 

15 value. 

16 (25) MONEY TRANSMITTING.—The term 

17 ‘‘money transmitting’’ means the receipt by a cov18 ered person of currency, monetary value, or payment 

19 instruments for the purpose of transmitting the 

20 same to any third-party by any means, including 

21 transmission by wire, facsimile, electronic transfer, 

22 courier, the Internet, or through bill payment serv23 ices. 

24 (26) PAYMENT INSTRUMENT.—The term ‘‘pay25 ment instrument’’ means a check, draft, warrant, 


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1 money order, traveler’s check, electronic instrument, 

2 or other instrument, payment of money, or monetary 

3 value (other than currency). 

4 (27) PERSON.—The term ‘‘person’’ means an 

5 individual, partnership, company, corporation, asso6 ciation (incorporated or unincorporated), trust, es7 tate, cooperative organization, or other entity. 

8 (28) PERSON REGULATED BY A STATE INSUR9 ANCE REGULATOR.—The term ‘‘person regulated by 

10 a State insurance regulator’’ means any person who 

11 is— 

12 (A) engaged in the business of insurance, 

13 and 

14 (B) subject to regulation by any State in15 surance regulator, 

16 but only to the extent that such person acts in such 

17 capacity. 

18 (29) PERSON REGULATED BY THE COMMODITY

19 FUTURES TRADING COMMISSION.—The term ‘‘person 

20 regulated by the Commodity Futures Trading Com21 mission’’ means any futures commission merchant, 

22 commodity trading adviser, commodity pool oper23 ator, introducing broker, boards of trade, derivatives 

24 clearing organizations, or multilateral clearing orga25 nizations to the extent that such person’s actions are 


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1 subject to the jurisdiction of the Commodity Futures 

2 Trading Commission under the Commodity Ex3 change Act and any agent, employee, or contractor 

4 acting on behalf of, registered with, or providing 

5 services to such person but only to the extent the 

6 person, or the employee, agent, or contractor of such 

7 person, acts in a registered capacity. 

8 (30) PERSON REGULATED BY THE SECURITIES

9 AND EXCHANGE COMMISSION.—The term ‘‘person 

10 regulated by the Securities and Exchange Commis11 sion’’ means— 

12 (A) a broker or dealer that is required to 

13 be registered under the Securities Exchange Act 

14 of 1934; 

15 (B) an investment adviser that is reg16 istered under the Investment Advisers Act of 

17 1940; 

18 (C) an investment company that is re19 quired to be registered under the Investment 

20 Company Act of 1940; 

21 (D) a national securities exchange that is 

22 required to be registered under the Securities 

23 Exchange Act of 1934; 


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1 (E) a transfer agent that is required to be 

2 registered under the Securities Exchange Act of 

3 1934; 

4 (F) a clearing corporation that is required 

5 to be registered under the Securities Exchange 

6 Act of 1934; 

7 (G) any municipal securities dealer that is 

8 registered with the Securities and Exchange 

9 Commission; 

10 (H) any self-regulatory organization that is 

11 registered with the Securities and Exchange 

12 Commission; 

13 (I) any national securities exchange or 

14 other entity that is required to be registered 

15 under the Securities Exchange Act of 1934; 

16 and 

17 (J) the Municipal Securities Rulemaking 

18 Board, 

19 and any employee, agent, or contractor acting on be20 half of, registered with, or providing services to, any 

21 such person, but only to the extent that the person, 

22 or the employee agent, or contractor of such person, 

23 acts in a registered capacity. 

24 (31) PROVISION OF A CONSUMER FINANCIAL

25 PRODUCT OR SERVICE.—The terms ‘‘provision of a 


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1 consumer financial product or service’’ and ‘‘pro2 viding a consumer financial product or service’’ 

3 mean the advertisement, marketing, solicitation, 

4 sale, disclosure, delivery, or account maintenance or 

5 servicing of a consumer financial product or service. 

6 (32) PERSON THAT PERFORMS INCOME TAX

7 PREPARATION ACTIVITIES FOR CONSUMERS.—The 

8 term ‘‘person that performs income tax preparation 

9 activities for consumers’’ means— 

10 (A) any tax return preparer (as defined in 

11 section 7701(a)(36) of the Internal Revenue 

12 Code of 1986), regardless of whether com13 pensated, but only to the extent that the person 

14 acts in such capacity; 

15 (B) any person regulated by the Secretary 

16 of the Treasury under section 330 of title 31, 

17 United States Code, but only to the extent that 

18 the person acts in such capacity; and 

19 (C) any authorized IRS e-file Providers (as 

20 defined for purposes of section 7216 of the In21 ternal Revenue Code of 1986), but only to the 

22 extent that the person acts in such capacity. 

23 (33) RELATED PERSON.— 

24 (A) IN GENERAL.—The term ‘‘related per25 son’’, when used in connection with a covered 


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1 person that is not a bank holding company, 

2 credit union, depository institution, means— 

3 (i) any director, officer, employee 

4 charged with managerial responsibility, or 

5 controlling stockholder of, or agent for, 

6 such covered person; 

7 (ii) any shareholder, consultant, joint 

8 venture partner, and any other person as 

9 determined by the Director (by regulation 

10 or on a case-by-case basis) who materially 

11 participates in the conduct of the affairs of 

12 such covered person; and 

13 (iii) any independent contractor (in14 cluding any attorney, appraiser, or ac15 countant), with respect to such covered 

16 person, who knowingly or recklessly par17 ticipates in any— 

18 (I) violation of any law or regula19 tion; or 

20 (II) breach of fiduciary duty. 

21 (B) TREATMENT OF A RELATED PERSON

22 AS A COVERED PERSON.—Any person who is a 

23 related person under subparagraph (A) shall be 

24 deemed to be a covered person for all purposes 

25 of this title, any enumerated consumer law, and 


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1 any law for which authorities were transferred 

2 by subtitles F and H. 

3 (34) SECRETARY.—The term ‘‘Secretary’’ 

4 means the Secretary of the Treasury. 

5 (35) SERVICE PROVIDER.— 

6 (A) IN GENERAL.—The term ‘‘service pro7 vider’’ means any person who provides a mate8 rial service to a covered person in the provision 

9 of a consumer financial product or service, in10 cluding a person who— 

11 (i) facilitates the design of, or oper12 ations relating to the provision of, the con13 sumer financial product or service; 

14 (ii) has direct interaction with a con15 sumer (whether in person or via tele16 communication device or other similar 

17 technology) regarding the consumer finan18 cial product or service; or 

19 (iii) processes transactions relating to 

20 the consumer financial product or service. 

21 (B) EXCEPTIONS.—The term ‘‘service pro22 vider’’ shall not apply to a person solely by vir23 tue of such person providing or selling to a cov24 ered person— 


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1 (i) a support service of a type pro2 vided to businesses generally or a similar 

3 ministerial service; 

4 (ii) a service that does not materially 

5 affect the terms or conditions of the con6 sumer financial product or service, its per7 formance or operation, or the propensity of 

8 a consumer to obtain or use such product 

9 or service; or 

10 (iii) time or space for an advertise11 ment for a consumer financial product or 

12 service through print, newspaper, or elec13 tronic media. 

14 (36) STATE.—The term ‘‘State’’ means any 

15 State, territory, or possession of the United States, 

16 the District of Columbia, Commonwealth of Puerto 

17 Rico, Commonwealth of the Northern Mariana Is18 lands, Guam, American Samoa, or the United States 

19 Virgin Islands. 

20 (37) STORED VALUE.—The term ‘‘stored 

21 value’’— 

22 (A) means funds or monetary value rep23 resented in any electronic format, whether or 

24 not specially encrypted, and stored or capable 

25 of storage on electronic media in such a way as 


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1 to be retrievable and transferred electronically; 

2 and 

3 (B) includes a prepaid debit card or prod4 uct (other than a card or product used solely 

5 for telephone services) or any other similar 

6 product, 

7 regardless of whether the amount of the funds or 

8 monetary value may be increased or reloaded. 

9 Subtitle A—Establishment of the 

10 Agency 

11 SEC. 4101. ESTABLISHMENT OF THE CONSUMER FINANCIAL 

12 PROTECTION AGENCY. 

13 (a) AGENCY ESTABLISHED.—There is established the 

14 Consumer Financial Protection Agency as an independent 

15 agency to regulate the provision of consumer financial 

16 products or services under this title, the enumerated con17 sumer laws, and the authorities transferred under sub18 titles F and H. 

19 (b) PRINCIPAL OFFICE.—The principal office of the 

20 Agency shall be located in the city of Washington, District 

21 of Columbia, at 1 or more sites. 

22 SEC. 4102. DIRECTOR. 

23 (a) ESTABLISHMENT OF POSITION.— 


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1 (1) IN GENERAL.—There is hereby established 

2 the position of the Director of the Agency who shall 

3 be the head of the Agency. 

4 (2) AUTHORITY TO PRESCRIBE REGULA5 TIONS.—The Director may prescribe such regula6 tions and issue such orders in accordance with this 

7 title as the Director may determine to be necessary 

8 for carrying out this title and all other laws within 

9 the Director’s jurisdiction. 

10 (b) APPOINTMENT; TERM.— 

11 (1) APPOINTMENT.—The Director shall be ap12 pointed by the President, by and with the advice and 

13 consent of the Senate, from among individuals who 

14 are citizens of the United States. 

15 (2) TERM.—The Director shall be appointed for 

16 a term of 5 years. 

17 (3) REMOVAL.—The Director may be removed 

18 before the end of a term only for cause. 

19 (4) VACANCY.— 

20 (A) IN GENERAL.—A vacancy in the posi21 tion of Director which occurs before the expira22 tion of the term for which a Director was ap23 pointed shall be filled in the manner established 

24 in paragraph (1) and the Director appointed to 


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1 fill such vacancy shall be appointed only for the 

2 remainder of such term. 

3 (B) ACTING DIRECTOR.— 

4 (i) IN GENERAL.—In the event of a 

5 vacancy in the position of Director or dur6 ing the absence or disability of the Direc7 tor, an Acting Director shall be appointed 

8 in the manner provided in section 3345, of 

9 title 5, United States Code. 

10 (ii) AUTHORITY OF ACTING DIREC11 TOR.—Any individual serving as Acting Di12 rector under this subparagraph shall be 

13 vested with all authority, duties, and privi14 leges of the Director. 

15 (5) SERVICE AFTER END OF TERM.—An indi16 vidual may serve as Director after the expiration of 

17 the term for which appointed until a successor Di18 rector has been appointed and qualified. 

19 (c) PROHIBITION ON FINANCIAL INTERESTS.—The 

20 Director shall not have a direct or indirect financial inter21 est in any covered person. 

22 (d) COMPENSATION.—The Director shall receive com23 pensation at the rate prescribed for Level I of the Execu24 tive Schedule under section 5313 of title 5, United States 

25 Code. 


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1 SEC. 4103. CONSUMER FINANCIAL PROTECTION OVER2 SIGHT BOARD. 

3 (a) ESTABLISHED.—There is hereby established the 

4 Consumer Financial Protection Oversight Board as an in5 strumentality of the United States. 

6 (b) DUTIES AND POWERS.— 

7 (1) DUTY TO ADVISE DIRECTOR.—The Board 

8 shall advise the Director on— 

9 (A) the consistency of a proposed regula10 tion of the Director with prudential, market, or 

11 systemic objectives administered by the agencies 

12 that comprise the Board; 

13 (B) the overall strategies and policies in 

14 carrying out the duties of the Director under 

15 this title; and 

16 (C) actions the Director can take to en17 hance and ensure that all consumers are subject 

18 to robust financial protection. 

19 (2) LIMITATION ON POWERS.—The Board may 

20 not exercise any executive authority, and the Direc21 tor may not delegate to the Board any of the func22 tions, powers, or duties of the Director. 

23 (c) COMPOSITION.—The Board shall be comprised of 

24 7 members as follows: 

25 (1) The Chairman of the Board of Governors. 


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1 (2) The head of the agency responsible for 

2 chartering and regulating national banks. 

3 (3) The Chairperson of the Federal Deposit In4 surance Corporation. 

5 (4) The Chairman of the National Credit Union 

6 Administration. 

7 (5) The Chairman of the Federal Trade Com8 mission. 

9 (6) The Secretary of Housing and Urban Devel10 opment. 

11 (7) The Chairman of the liaison committee of 

12 representatives of State agencies to the Financial In13 stitutions Examination Council. 

14 (d) REPRESENTATIVE OF ADDITIONAL INTERESTS.— 

15 (1) COMPOSITION.—Notwithstanding subsection 

16 (c), the President, by and with the advice and con17 sent of the Senate, shall appoint 5 additional mem18 bers of the Board from among experts in the fields 

19 of consumer protection, fair lending and civil rights, 

20 representatives of depository institutions that pri21 marily serve underserved communities, or represent22 atives of communities that have been significantly 

23 impacted by higher-priced mortgage loans, as such 

24 communities are identified by the Director through 

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1 sions of the Home Mortgage Disclosure Act of 1975 

2 or other data on lending patterns. 

3 (2) AFFILIATION.—With respect to members 

4 appointed pursuant to paragraph (1), not more than 

5 3 shall be members of any one political party. 

6 (e) MEETINGS.— 

7 (1) IN GENERAL.—The Board shall meet upon 

8 notice by the Director, but in no event shall the 

9 Board meet less frequently than once every 3 

10 months. 

11 (2) SPECIAL MEETINGS.—Any member of the 

12 Board may, upon giving written notice to the Direc13 tor, require a special meeting of the Board. 

14 (f) PROHIBITION ON ADDITIONAL COMPENSATION.— 

15 Members of the Board may not receive additional pay, al16 lowances, or benefits by reason of their service on the 

17 Board. 

18 (g) COMPLAINTS RELATED TO REQUIRED OFFERING

19 OF SPECIFIC FINANCIAL PRODUCTS OR SERVICES.—The 

20 Board shall establish procedures to receive and analyze 

21 complaints from any person claiming that the Director is 

22 not in compliance with the requirements under section 

23 4311. 


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1 SEC. 4104. EXECUTIVE AND ADMINISTRATIVE POWERS. 

2 The Director may exercise all executive and adminis3 trative functions of the Agency, including to— 

4 (1) establish regulations for conducting the 

5 Agency’s general business in a manner not incon6 sistent with this title; 

7 (2) bind the Agency and enter into contracts; 

8 (3) direct the establishment of and maintain di9 visions or other offices within the Agency in order to 

10 fulfill the responsibilities of this title, the enumer11 ated consumer laws, and the authorities transferred 

12 under subtitles F and H, and to satisfy the require13 ments of other applicable law; 

14 (4) coordinate and oversee the operation of all 

15 administrative, enforcement, and research activities 

16 of the Agency; 

17 (5) adopt and use a seal; 

18 (6) determine the character of and the necessity 

19 for the Agency’s obligations and expenditures, and 

20 the manner in which they shall be incurred, allowed, 

21 and paid; 

22 (7) delegate authority, at the Director’s discre23 tion, to any officer or employee of the Agency to 

24 take action under any provision of this title or under 

25 other applicable law; 


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1 (8) to implement this title and the Agency’s au2 thorities under the enumerated consumer laws and 

3 under subtitles F and H through regulations, orders, 

4 guidance, interpretations, statements of policy, ex5 aminations, and enforcement actions; and 

6 (9) perform such other functions as may be au7 thorized or required by law. 

8 SEC. 4105. ADMINISTRATION. 

9 (a) OFFICERS.—The Director shall appoint the fol10 lowing officials: 

11 (1) A secretary, who shall be charged with 

12 maintaining the records of the Agency and per13 forming such other activities as the Director directs. 

14 (2) A general counsel, who shall be charged 

15 with overseeing the legal affairs of the Agency and 

16 performing such other activities as the Director di17 rects. 

18 (3) An inspector general, who shall have the au19 thority and functions of an inspector general of a 

20 designated Federal entity under the Inspector Gen21 eral Act of 1978 (5 U.S.C. App. 3). 

22 (4) An Ombudsperson, who shall— 

23 (A) develop and maintain expertise in and 

24 understanding of the law relating to consumer 

25 financial products; 


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1 (B) at the request of a Federal agency or 

2 a State agency, and with the prior approval of 

3 the Director, advise such agency with respect to 

4 actions that may affect consumers; 

5 (C) advise consumers who may have a le6 gitimate potential or actual claim against a 

7 Federal agency involving the provision of con8 sumer financial products regarding their rights 

9 under this title; 

10 (D) identify Federal agency actions that 

11 have potential implications for consumers and, 

12 if appropriate, and with the prior approval of 

13 the Director, advise the relevant Federal agen14 cies with respect to those implications; 

15 (E) provide information to private citizens, 

16 civic groups, Federal agencies, State agencies, 

17 and other interested parties regarding the 

18 rights of those parties under this title; 

19 (F) develop, maintain, and provide exper20 tise designed to assist covered persons, espe21 cially smaller depository institutions and other 

22 smaller entities to comply with regulations and 

23 other requirements issued to implement the pro24 visions of this title, and where such assistance 

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1 vided jointly by the Agency and the appropriate 

2 Federal banking agency; 

3 (G) develop procedures to assist covered 

4 persons, especially smaller depository institu5 tions and other smaller entities, in responding 

6 to or challenging actions taken by the Director 

7 or the Agency to implement the provisions of 

8 this title and to ensure that safeguards exist to 

9 preserve the confidentiality of covered persons 

10 using those procedures; and 

11 (H) perform such other duties as the Di12 rector may delegate to the Ombudsperson. 

13 (b) PERSONNEL.— 

14 (1) APPOINTMENT.— 

15 (A) IN GENERAL.—The Director may fix 

16 the number of, and appoint and direct, all em17 ployees of the Agency. 

18 (B) EXPEDITED HIRING.—The Director 

19 may appoint, without regard to the provisions 

20 of sections 3309 through 3318, of title 5, 

21 United States Code, candidates directly to posi22 tions for which public notice has been given. 

23 (C) HIRING VETERANS.—In hiring employ24 ees of the Agency, the Director shall establish 

25 appropriate targets, including timetables, to 


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1 hire veterans (as defined in paragraphs (1) and 

2 (2) of section 2108 of title 5, United States 

3 Code) as employees of the Agency. In estab4 lishing appropriate targets under this para5 graph, the Director may consider, among other 

6 relevant factors, the proportion of veterans 

7 hired by Federal agencies with comparable 

8 functions or types of occupations and their ex9 periences in hiring veterans. 

10 (2) COMPENSATION.— 

11 (A) PAY.—The Director shall fix, adjust, 

12 and administer the pay for all employees of the 

13 Agency without regard to the provisions of 

14 chapter 51 or subchapter III of chapter 53 of 

15 title 5, United States Code. 

16 (B) BENEFITS.—The Director may provide 

17 additional benefits to Agency employees if the 

18 same type of benefits are then being provided 

19 by the Board of Governors or, if not then being 

20 provided, could be provided by the Board of 

21 Governors under applicable provisions of law or 

22 regulations. 

23 (C) MINIMUM STANDARD.—The Director 

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1 imum, are equivalent to the compensation and 

2 benefits provided by the Board of Governors for 

3 the corresponding class of employees in any fis4 cal year. 

5 (c) SPECIFIC FUNCTIONAL UNITS.— 

6 (1) RESEARCH.—The Agency shall establish a 

7 unit whose functions shall include— 

8 (A) conducting research on consumer fi9 nancial counseling and education, including— 

10 (i) on the topics of debt, credit, sav11 ings, financial product usage, and financial 

12 planning; 

13 (ii) exploring effective methods, tools, 

14 and approaches; and 

15 (iii) identifying ways to incorporate 

16 new technology for the delivery and evalua17 tion of financial counseling and education 

18 efforts; 

19 (B) researching, analyzing, and reporting 

20 on— 

21 (i) current and prospective develop22 ments in markets for consumer financial 

23 products or services, including market 

24 areas of alternative consumer financial 


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1 products or services with high growth 

2 rates; 

3 (ii) consumer awareness, under4 standing, and use of disclosures and com5 munications regarding consumer financial 

6 products or services; 

7 (iii) consumer awareness and under8 standing of costs, risks, and benefits of 

9 consumer financial products or services; 

10 (iv) consumer behavior with respect to 

11 consumer financial products or services, in12 cluding performance on mortgage loan; 

13 and 

14 (v) experiences of traditionally under15 served consumers, including un-banked and 

16 under-banked consumers, regarding con17 sumer financial products or services; 

18 (C) identifying priorities for consumer fi19 nancial education efforts, based on consumer 

20 complaints, research or analysis conducted pur21 suant to subparagraph (A), or other informa22 tion; and 

23 (D) testing and identifying methods of 

24 educating consumers to determine which meth25 ods are most effective. 


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1 (2) COMMUNITY AFFAIRS.—The Director shall 

2 establish a unit whose functions shall include pro3 viding information, guidance, and technical assist4 ance regarding the provision of consumer financial 

5 products or services to traditionally underserved con6 sumers and communities. 

7 (3) CONSUMER COMPLAINTS.— 

8 (A) IN GENERAL.—The Director shall es9 tablish a unit whose functions shall include es10 tablishing a central database, or utilizing an ex11 isting database, for collecting and tracking in12 formation on consumer complaints about con13 sumer financial products or services and resolu14 tion of complaints. 

15 (B) COORDINATION.—In performing the 

16 functions described in subparagraph (A), the 

17 Director shall coordinate with the Federal 

18 banking agencies, other Federal agencies, and 

19 other regulatory agencies or enforcement au20 thorities. 

21 (C) DATA SHARING REQUIRED.—To the 

22 extent permitted by law and the regulations 

23 prescribed by the Director regarding the con24 fidential treatment of information, the Director 

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1 plaints with Federal banking agencies, other 

2 Federal agencies, and State regulators. To the 

3 extent permitted by law and the regulations 

4 prescribed by the Federal banking agencies and 

5 other Federal agencies regarding the confiden6 tial treatment of information, the Federal bank7 ing agencies and other Federal agencies, respec8 tively, shall share data relating to consumer 

9 complaints with the Director and the Agency. 

10 (4) CONSUMER FINANCIAL EDUCATION.— 

11 (A) IN GENERAL.—The Agency shall es12 tablish a unit to be named the Office of Finan13 cial Literacy, whose functions shall include ac14 tivities designed to facilitate the education of 

15 consumers on consumer financial products and 

16 services, including through the dissemination of 

17 materials to consumers on such topics. 

18 (B) DIRECTOR.—The Office of Financial 

19 Literacy shall be headed by a director. 

20 (C) DUTIES.—Such unit shall— 

21 (i) develop goals for programs to be 

22 provided by persons that provide consumer 

23 financial education and counseling, includ24 ing programs through which such per25 sons— 


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1 (I) provide one-on-one financial 

2 counseling; 

3 (II) help individuals understand 

4 basic banking and savings tools; 

5 (III) help individuals understand 

6 their credit history and credit score; 

7 (IV) assist individuals in efforts 

8 to plan for major purchases, reduce 

9 their debt, and improve their financial 

10 stability; and 

11 (V) work with individuals to de12 sign plans for long-term savings; 

13 (ii) develop recommendations regard14 ing effective certification of persons pro15 viding programs, or performing the activi16 ties, described in clause (i), including rec17 ommendations regarding— 

18 (I) certification processes and 

19 standards for certification; 

20 (II) appropriate certifying bodies; 

21 and 

22 (III) mechanisms for funding the 

23 certification processes; 


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1 (iii) develop a technology tool to col2 lect data on financial education and coun3 seling outcomes; and 

4 (iv) conduct research to identify effec5 tive methods, tools, technoloy, and strate6 gies to educate and counsel consumers 

7 about personal finance management, in8 cluding on the topics of debt, credit, sav9 ings, financial product usage, and financial 

10 planning. 

11 (D) COORDINATION.—Such unit shall co12 ordinate with other units within the Agency in 

13 carrying out its functions, including— 

14 (i) working with the unit established 

15 under paragraph (2) to— 

16 (I) provide information and re17 sources to community organizations, 

18 nonprofit organizations, and other en19 tities to assist in helping educate con20 sumers about consumer financial 

21 products and services; and 

22 (II) develop a marketing strategy 

23 to promote financial education and 

24 one-on-one counseling; and 


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1 (ii) working with the unit established 

2 under paragraph (1) to conduct research 

3 related to consumer financial education 

4 and counseling. 

5 (d) SINGLE TOLL-FREE TELEPHONE NUMBER FOR

6 CONSUMER COMPLAINTS AND INQUIRIES.— 

7 (1) CALL INTAKE SYSTEM.—The Consumer Fi8 nancial Protection Agency shall establish a single, 

9 toll-free telephone number for consumer complaints 

10 and inquiries concerning institutions regulated by 

11 such agencies and a system for collecting and moni12 toring complaints and, as soon as practicable, a sys13 tem for routing such calls to the Federal financial 

14 institution regulatory agency that primarily super15 vises the financial institution, or that is otherwise 

16 the appropriate Federal agency to address the sub17 ject of the complaint or inquiry. 

18 (2) ROUTING CALLS TO STATES.—To the extent 

19 practicable, State agencies may receive appropriate 

20 call transfers from the system established under 

21 paragraph (1) if— 

22 (A) the State agency’s system has the 

23 functional capacity to receive calls routed by the 

24 system; and 


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1 (B) the State agency has satisfied any con2 ditions of participation in the system that the 

3 Council, coordinating with State agencies 

4 through the chairperson of the State Liaison 

5 Committee, may establish. 

6 (e) REPORT TO THE CONGRESS.—Before the end of 

7 the 6-month period beginning on the date of the enact8 ment of this title, the Federal financial institution regu9 latory agencies shall submit a report to the Committee on 

10 Financial Services of the House of Representatives and 

11 the Committee on Banking, Housing, and Urban Affairs 

12 of the Senate describing the agencies’ efforts to estab13 lish— 

14 (1) a public interagency Web site for directing 

15 and referring Internet consumer complaints and in16 quiries concerning any financial institution to the 

17 Consumer Financial Protection Agency for purposes 

18 of collecting, monitoring, and responding to such 

19 complaints and, where appropriate, a system for re20 ferring complaints to the Federal financial institu21 tion regulatory agency, other Federal agency, or 

22 State agency that is otherwise the appropriate agen23 cy to address the subject of the complaint or inquiry; 

24 and 


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1 (2) a system to expedite the prompt and effec2 tive rerouting of any misdirected consumer com3 plaint or inquiry documents between or among the 

4 agencies, with prompt referral of any complaint or 

5 inquiry to the appropriate Federal financial institu6 tion regulatory agency, and to participating State 

7 agencies. 

8 (f) OFFICE OF FAIR LENDING AND EQUAL OPPOR9 TUNITY.— 

10 (1) ESTABLISHMENT.—Before the end of the 

11 180-day period beginning on the date of the enact12 ment of this title, the Director shall establish within 

13 the Agency the Office of Fair Lending and Equal 

14 Opportunity. 

15 (2) FUNCTIONS.—The Office of Fair Lending 

16 and Equal Opportunity shall have such powers and 

17 duties as the Director may delegate the Office which 

18 shall include the following functions: 

19 (A) Providing oversight and enforcement of 

20 Federal laws intended to ensure the fair, equi21 table, and nondiscriminatory access to credit for 

22 both individuals and communities that are en23 forced by the Agency, including the Equal 

24 Credit Opportunity Act and the Home Mort25 gage Disclosure Act. 


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1 (B) Coordinating fair lending enforcement 

2 efforts of the Agency with other Federal agen3 cies and State regulators, as appropriate, to 

4 promote consistent, efficient and effective en5 forcement of Federal fair lending laws. 

6 (C) Working with private industry, fair 

7 lending, civil rights, consumer and community 

8 advocates on the promotion of fair lending com9 pliance and education. 

10 (D) Providing annual reports to the Con11 gress on the Agency’s efforts to fulfill its fair 

12 lending mandate. 

13 (3) ADMINISTRATION OF OFFICE.—There is 

14 hereby established the position of Assistant Director 

15 of the Agency for Fair Lending and Equal Oppor16 tunity who— 

17 (A) shall be appointed by the Director; 

18 (B) shall carry out such duties as the Di19 rector may delegate to such Assistant Director; 

20 and 

21 (C) shall serve as the Director of the Of22 fice of Fair Lending and Equal Opportunity. 

23 (4) PROHIBITIONS ON PARTICIPATION IN PRO24 GRAMS WITH RESPECT TO CERTAIN INDICTED ORGA25 NIZATIONS.— 


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1 (A) PROHIBITION.—The Director of the 

2 Office of Fair Lending and Equal Opportunity 

3 may not allow a covered organization to partici4 pate in any program established by such Direc5 tor. 

6 (B) COVERED ORGANIZATION.—In this 

7 paragraph, the term ‘‘covered organization’’ 

8 means any of the following: 

9 (i) Any organization that has been in10 dicted for a violation under any Federal or 

11 State law governing the financing of a 

12 campaign for election for public office or 

13 any law governing the administration of an 

14 election for public office, including a law 

15 relating to voter registration. 

16 (ii) Any organization that had its 

17 State corporate charter terminated due to 

18 its failure to comply with Federal or State 

19 lobbying disclosure requirements. 

20 (iii) Any organization that has filed a 

21 fraudulent form with any Federal or State 

22 regulatory agency. 

23 (iv) Any organization that— 


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1 (I) employs any applicable indi2 vidual, in a permanent or temporary 

3 capacity; 

4 (II) has under contract or retains 

5 any applicable individual; or 

6 (III) has any applicable indi7 vidual acting on the organization’s be8 half or with the express or apparent 

9 authority of the organization. 

10 (C) ADDITIONAL DEFINITIONS.—In this 

11 paragraph: 

12 (i) The term ‘‘organization’’ includes 

13 the Association of Community Organiza14 tions for Reform Now (in this paragraph 

15 referred to as ‘‘ACORN’’) and any 

16 ACORN-related affiliate. 

17 (ii) The term ‘‘ACORN-related affil18 iate’’ means any of the following: 

19 (I) Any State chapter of ACORN 

20 registered with the Secretary of 

21 State’s office in that State. 

22 (II) Any organization that shares 

23 directors, employees, or independent 

24 contractors with ACORN. 


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1 (III) Any organization that has a 

2 financial stake in ACORN. 

3 (IV) Any organization whose fi4 nances, whether federally funded, 

5 donor-funded, or raised through orga6 nizational goods and services, are 

7 shared or controlled by ACORN. 

8 (iii) The term ‘‘applicable individual’’ 

9 means an individual who has been indicted 

10 for a violation under Federal or State law 

11 relating to an election for Federal or State 

12 office. 

13 (D) REVISION OF FEDERAL ACQUISITION

14 REGULATION.—The Federal Acquisition Regu15 lation shall be revised to carry out the provi16 sions of this paragraph relating to contracts. 

17 (E) SEVERABILITY.—If any provision of 

18 this section or any application of such provision 

19 to any person or circumstance is held to be un20 constitutional, the remainder of this section and 

21 the application of the provision to any other 

22 person or circumstance shall not be affected. 

23 SEC. 4106. CONSUMER ADVISORY BOARD. 

24 (a) ESTABLISHMENT REQUIRED.—The Director shall 

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1 sult with the Director in the exercise of the functions of 

2 the Director and the Agency under this title, the enumer3 ated consumer laws, and to provide information on emerg4 ing practices in the consumer financial products or serv5 ices industry. 

6 (b) MEMBERSHIP.— 

7 (1) IN GENERAL.—In appointing the members 

8 of the Consumer Advisory Board, the Director shall 

9 seek— 

10 (A) to assemble experts in financial serv11 ices, community development, fair lending and 

12 civil rights, consumer protection, and consumer 

13 financial products or services; and 

14 (B) to represent the interests of covered 

15 persons and consumers. 

16 (2) PROHIBITION ON MEMBERSHIP WITH RE17 SPECT TO CERTAIN INDICTED ORGANIZATIONS.—The 

18 director may not appoint an employee of a covered 

19 organization (as defined in section 4105(f)(4)(B)) to 

20 the Consumer Advisory Board. 

21 (c) POLITICAL AFFILIATION.—Not more than 1 more 

22 than half of the members of the Consumer Advisory Board 

23 may be members of the same political party. 


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1 (d) MEETINGS.—The Consumer Advisory Board shall 

2 meet from time to time at the call of the Director, but, 

3 at a minimum, shall meet at least twice in each year. 

4 (e) COMPENSATION AND TRAVEL EXPENSES.—Mem5 bers of the Consumer Advisory Board who are not full6 time employees of the United States shall— 

7 (1) be entitled to receive compensation at a rate 

8 fixed by the Director while attending meetings of the 

9 Consumer Advisory Board, including travel time; 

10 and 

11 (2) be allowed travel expenses, including trans12 portation and subsistence, while away from their 

13 homes or regular places of business. 

14 SEC. 4107. COORDINATION. 

15 (a) COORDINATION WITH OTHER FEDERAL AGEN16 CIES AND STATE REGULATORS.—The Director shall co17 ordinate with the Securities and Exchange Commission, 

18 the Commodity Futures Trading Commission, the Sec19 retary of the Treasury, and other Federal agencies and 

20 State regulators, as appropriate, to promote consistent 

21 regulatory treatment of, and enforcement related to, con22 sumer and investment products, services, and laws. 

23 (b) COORDINATION OF CONSUMER EDUCATION INI24 TIATIVES.— 


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1 (1) IN GENERAL.—The Director shall coordi2 nate with each agency that is a member of the Fi3 nancial Literacy and Education Commission estab4 lished by the Financial Literacy and Education Im5 provement Act (20 U.S.C. 9701 et seq.) to assist 

6 each agency in enhancing its existing financial lit7 eracy and education initiatives to better achieve the 

8 goals in paragraph (2) and to ensure the consistency 

9 of such initiatives across Federal agencies. 

10 (2) GOALS OF COORDINATION.—In coordinating 

11 with the agencies described in paragraph (1), the 

12 Director shall seek to improve efforts to educate 

13 consumers about financial matters generally, the 

14 management of their own financial affairs, and their 

15 judgments about the appropriateness of certain fi16 nancial products. 

17 (c) COORDINATION.—The Agency may coordinate in18 vestigations, compliance examinations, information shar19 ing, and related activities in support of activities under20 taken pursuant to the Fair Housing Act by other Federal 

21 agencies. 

22 SEC. 4108. REPORTS TO THE CONGRESS. 

23 (a) REPORTS REQUIRED.—The Director shall pre24 pare and submit to the President and the appropriate 

25 committees of the Congress a report at the beginning of 


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1 each regular session of the Congress, beginning with the 

2 session following the designated transfer date. 

3 (b) CONTENTS.—The reports required by subsection 

4 (a) shall include— 

5 (1) a list of the significant regulations and or6 ders adopted by the Director, as well as other sig7 nificant initiatives conducted by the Director, during 

8 the preceding year and the Director’s plan for regu9 lations, orders, or other initiatives to be undertaken 

10 during the upcoming period; 

11 (2) an analysis of complaints about consumer 

12 financial products or services that the Agency has 

13 received and collected in its central database on 

14 complaints during the preceding year; 

15 (3) a list, with a brief statement of the issues, 

16 of the public supervisory and enforcement actions to 

17 which the Agency is a party (including adjudication 

18 proceedings conducted under subtitle E) during the 

19 preceding year; 

20 (4) the actions taken regarding regulations, or21 ders, and supervisory actions with respect to covered 

22 persons which are not credit unions or depository in23 stitutions, including descriptions of the types of such 

24 covered persons, financial activities, and consumer 


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1 financial products or services affected by such regu2 lations, orders, and supervisory actions; 

3 (5) an appraisal of significant actions, including 

4 actions under Federal or State law, by State attor5 neys general or State regulators relating to this title, 

6 the authorities transferred under subtitles F and H, 

7 and the enumerated consumer laws; 

8 (6) an analysis of the Agency’s efforts to fulfill 

9 the fair lending mission of the Agency; and 

10 (7) an appraisal of the regulatory and legal dif11 ficulties encountered by the Agency in carrying out 

12 the mission and duties of the Agency with respect to 

13 consumer protection, including a description of— 

14 (A) the difficulties and hardships encoun15 tered with respect to coordinating with other 

16 Federal and State government entities; 

17 (B) the regulatory and enforcement limita18 tions placed on the Agency by this title; 

19 (C) the practices of persons, covered and 

20 uncovered under this title, that allow such per21 sons to harm consumers and escape regulation 

22 or enforcement, including any trends identified; 

23 and 


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1 (D) legislative and administrative rec2 ommendations with respect to solving or alle3 viating identified difficulties. 

4 (c) ANNUAL APPEARANCE BEFORE THE CON5 GRESS.—The Director shall appear before the House 

6 Committee on Financial Services at an annual hearing, 

7 after the report is submitted under subsection (a)— 

8 (1) to discuss the efforts, activities, objectives 

9 and plans of the Agency; and 

10 (2) discuss and answer questions concerning 

11 such report. 

12 SEC. 4109. FUNDING; FEES AND ASSESSMENTS; PENALTIES 

13 AND FINES. 

14 (a) TRANSFER OF FUNDS FROM THE BOARD OF

15 GOVERNORS.— 

16 (1) TRANSFER REQUIRED.—Each year, begin17 ning on the designated transfer date, the Board of 

18 Governors shall transfer funds in an amount equal19 ing 10 percent of the Federal Reserve System’s total 

20 system expenses (as reported in the Budget Review 

21 of the Board of Governors most recent Annual Re22 port to Congress) to the Director for the purposes 

23 of carrying out the authorities granted in this title, 

24 under the enumerated consumer laws, and trans25 ferred under subtitles F and H. 


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1 (2) PROCEDURES.—The Board of Governors, in 

2 consultation with the Agency, shall make appro3 priate arrangements to transfer funds to the Direc4 tor in accordance with this subsection. 

5 (b) FEES AND ASSESSMENTS.— 

6 (1) ASSESSMENT REQUIRED.— 

7 (A) IN GENERAL.—Taking into account 

8 such other sums available to the Agency and 

9 subject to the provisions of this subsection and 

10 subsection (d), the Director shall assess fees on 

11 covered persons to meet the Agency’s expenses 

12 for carrying out the duties and responsibilities 

13 of the Agency, including supervising such cov14 ered persons. 

15 (B) BASIS FOR ASSESSMENT.—The Agency 

16 shall assess fees on covered persons pursuant to 

17 this subsection based on the size and complexity 

18 of the covered person, and the compliance 

19 record of the covered person under the enumer20 ated consumer laws, the laws and authorities 

21 transferred under subtitles F and H, and this 

22 title. 

23 (2) REGULATIONS.— 


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1 (A) IN GENERAL.—The Director shall pre2 scribe regulations to govern the imposition and 

3 collection of fees and assessments. 

4 (B) FACTORS REQUIRED TO BE AD5 DRESSED.—Regulations prescribed by the Di6 rector under this subsection shall specify and 

7 define— 

8 (i) the basis of fees or assessments 

9 (such as the outstanding number of con10 sumer credit accounts, off-balance sheet re11 ceivables attributable to the covered per12 son, total consolidated assets, total assets 

13 under management, or volume of consumer 

14 financial transactions or use of service pro15 viders); 

16 (ii) the amount and frequency of fees 

17 or assessments; and 

18 (iii) such other factors that the Direc19 tor determines are appropriate, which shall 

20 include a covered person’s compliance 

21 record under the enumerated consumer 

22 laws, the authorities transferred under 

23 subtitles F and H, and this title. 

24 (3) ASSESSMENTS ON DEPOSITORY INSTITU25 TION COVERED PERSONS.— 


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1 (A) DEPOSITORY INSTITUTION COVERED

2 PERSON DEFINED.—For purposes of this sec3 tion, the term ‘‘depository institution covered 

4 person’’ means a covered person that is an in5 sured depository institution or credit union. 

6 (B) ASSESSMENTS.— 

7 (i) FEES REQUIRED.—The Director 

8 shall assess fees for supervision as are ap9 propriate on depository institution covered 

10 persons, taking into account the size and 

11 complexity of the covered person, and the 

12 compliance record of the covered person 

13 under the enumerated consumer laws, the 

14 laws and authorities transferred under 

15 subtitles F and H, and this title. 

16 (ii) LIMITATION ON CERTAIN FEES.— 

17 The Agency shall not assess examination 

18 fees on an institution referred to in section 

19 4203(a), or an institution whose examina20 tion responsibilities have been delegated to 

21 an appropriate agency, pursuant to section 

22 4202(c)(11). 

23 (iii) BASIS FOR FEE AMOUNTS.—Fees 

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1 essary to meet the Agency’s expenses for 

2 carrying out the duties and responsibilities 

3 of the Director and the Agency under this 

4 title with regard to depository institution 

5 covered persons. 

6 (C) COORDINATION DURING IMPLEMENTA7 TION PERIOD.—The Director and the agencies 

8 responsible for chartering and or supervising 

9 depository institution covered persons shall co10 ordinate on the levels of fees assessed on depos11 itory institution covered persons under this 

12 paragraph, so that levels of assessments under 

13 this subparagraph combined with levels of as14 sessments by agencies responsible for chartering 

15 and or supervising depository institution cov16 ered persons shall be no more than the assess17 ments such depository institution covered per18 son was required to pay for the 12-month pe19 riod ending on December 31, 2009. 

20 (D) MARGINAL ASSESSMENT RATE.— 

21 (i) IN GENERAL.—In setting assess22 ment rates for depository institution cov23 ered persons, the Director shall not impose 

24 assessments that result in higher marginal 

25 assessment rates for depository institution 


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1 covered persons with assets of less than 

2 $25,000,000,000 than the marginal rates 

3 for depository institutions covered persons 

4 with assets that exceed that amount. 

5 (ii) RULE OF CONSTRUCTION.— 

6 Clause (i) shall not be construed as lim7 iting or impairing the authority of the Di8 rector to set assessments that would result 

9 in higher marginal assessment rates on the 

10 larger depository institution covered per11 sons. 

12 (E) LIMITATIONS ON ASSESSMENTS.— 

13 (i) ASSESSMENTS FOR ADMINISTRA14 TIVE COSTS.—Notwithstanding any provi15 sion in this title, no depository institution 

16 covered person shall be charged an assess17 ment to be used for the supervision, exam18 ination, enforcement or regulation by the 

19 Agency of nondepository covered persons. 

20 (ii) AMOUNTS PAID FOR CONSUMER

21 COMPLIANCE SUPERVISION.—Notwith22 standing any provision in this title, no de23 pository institution covered person shall 

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1 vision than it paid before the date of en2 actment of this title. 

3 (4) ASSESSMENTS ON NONDEPOSITORY COV4 ERED PERSONS.— 

5 (A) NONDEPOSITORY COVERED PERSON

6 DEFINED.—For purposes of this section, the 

7 term ‘‘nondepository covered person’’— 

8 (i) means a covered person that is not 

9 a credit union or insured depository insti10 tution; and 

11 (ii) includes any bank holding com12 pany. 

13 (B) ASSESSMENTS.— 

14 (i) FEES REQUIRED.—The Director 

15 shall assess fees for registration, examina16 tion, and supervision of nondepository cov17 ered persons. 

18 (ii) BASIS FOR FEE AMOUNTS.—Fees 

19 assessed by the Director under this sub20 paragraph may be established at levels nec21 essary to meet the Agency’s expenses for 

22 carrying out the duties and responsibilities 

23 of the Director and the Agency, including 

24 supervising such covered persons, taking 


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1 into account such other sums available to 

2 the Agency. 

3 (iii) REGISTRATION FEE MINIMUMS.— 

4 Registration fees imposed on a nondeposi5 tory covered person under this paragraph 

6 shall, at a minimum, be imposed on such 

7 covered person at the time the person reg8 isters (or periodically renews any such reg9 istration) with the Agency, in accordance 

10 with regulations prescribed by the Direc11 tor. 

12 (C) NONDEPOSITORY COVERED PERSON

13 ASSESSMENT NOT LESS THAN FOR DEPOSITORY

14 COVERED PERSONS.—Assessment rates levied 

15 by the Director under this section on a non16 depository institution covered persons shall be 

17 no less than assessments levied by the Agency 

18 under this section on a depository institution 

19 covered person with similar characteristics. 

20 (c) AUTHORIZATION OF APPROPRIATIONS.— 

21 (1) IN GENERAL.—For the purposes of carrying 

22 out the authorities granted in this title, under the 

23 enumerated consumer laws, and the laws and au24 thorities transferred under subtitles F and H, there 


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1 are authorized to be appropriated to the Director 

2 such sums as may be necessary for any fiscal year. 

3 (2) APPORTIONMENT.—Notwithstanding any 

4 other provision of law, such amounts shall be subject 

5 to apportionment under section 1517 of title 31, 

6 United States Code, and restrictions that generally 

7 apply to the use of appropriated funds in title 31, 

8 United States Code, and other laws. 

9 (3) OTHER AVAILABLE FUNDS TAKEN INTO AC10 COUNT.—Sums appropriated under this subsection 

11 shall take into account such other sums available to 

12 the Agency under this section. 

13 (d) CONSUMER FINANCIAL PROTECTION AGENCY

14 DEPOSITORY INSTITUTION FUND.— 

15 (1) ESTABLISHMENT.— 

16 (A) IN GENERAL.—There is established in 

17 the Treasury a separate fund to be known as 

18 the ‘‘Consumer Financial Protection Agency 

19 Depository Institution Fund’’ (hereafter in this 

20 section referred to as the ‘‘CFPA Depository 

21 Fund’’). 

22 (B) AMOUNTS IN FUND NOT AVAILABLE

23 FOR CERTAIN PURPOSES.—Other than pursuant 

24 to subsection (f), amounts on deposit in the 

25 CFPA Depository Fund shall not be used in the 


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1 supervision and examination of nondepository 

2 institution covered persons. 

3 (2) ALL TRANSFERRED FUNDS DEPOSITED.— 

4 All amounts transferred to the Agency under sub5 section (a) shall be deposited into the CFPA Deposi6 tory Fund. 

7 (3) ALL APPLICABLE SUPERVISORY FEES AND

8 ASSESSMENTS DEPOSITED.—The Director shall de9 posit all amounts received from assessments under 

10 subsection (b)(3) in the CFPA Depository Fund. 

11 (e) CONSUMER FINANCIAL PROTECTION AGENCY

12 NONDEPOSITORY INSTITUTION FUND.— 

13 (1) ESTABLISHMENT.— 

14 (A) IN GENERAL.—There is established in 

15 the Treasury a separate fund called the Con16 sumer Financial Protection Agency Nondeposi17 tory Institution Fund (hereafter in this section 

18 referred to as the ‘‘CFPA Nondepository 

19 Fund’’). 

20 (B) AMOUNTS IN FUND NOT AVAILABLE

21 FOR CERTAIN PURPOSES.—Other than pursuant 

22 to subsection (f), amounts on deposit in the 

23 CFPA Nondepository Fund shall not be used 

24 for the supervision and examination of deposi25 tory institution covered persons. 


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1 (2) ALL APPLICABLE SUPERVISORY FEES AND

2 ASSESSMENTS DEPOSITED.—The Director shall de3 posit all amounts received from assessments under 

4 subsection (b)(4) in the CFPA Nondepository Fund. 

5 (f) GENERAL PROVISIONS RELATING TO FUNDS.— 

6 (1) MAINTENANCE OF FUNDS.— 

7 (A) AGENCY FUNDS MAINTAINED BY

8 TREASURY.—The Consumer Financial Protec9 tion Agency Depository Institution Fund estab10 lished under subsection (d) and the Consumer 

11 Financial Protection Agency Nondepository In12 stitution Fund established under subsection (e) 

13 shall each be— 

14 (i) maintained and administered by 

15 the Secretary; and 

16 (ii) maintained separately and not 

17 commingled. 

18 (B) AGENCY’S AUTHORITY.—Any provision 

19 of this title forbidding the commingling or use 

20 of the CFPA Depository Fund and the CFPA 

21 Nondepository Fund shall not be construed as 

22 limiting or impairing the authority of the Agen23 cy to use the same facilities and resources in 

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1 tutions and nondepository institutions, or to in2 tegrate such functions. 

3 (C) ACCOUNTING REQUIREMENTS.— 

4 (i) ACCOUNTING FOR USE OF FACILI5 TIES AND RESOURCES.—The Agency shall 

6 keep a full and complete accounting of all 

7 costs and expenses associated with the use 

8 of any facility or resource used in the 

9 course of any function specified in sub10 paragraph (B) and shall allocate, in the 

11 manner provided in subparagraph (D), any 

12 such costs and expenses incurred by the 

13 Agency— 

14 (I) with respect to depository in15 stitution covered persons, to the 

16 CFPA Depository Fund; and 

17 (II) with respect to nondepository 

18 covered persons, to the CFPA Non19 depository fund. 

20 (D) ALLOCATION OF ADMINISTRATIVE EX21 PENSES.—Any personnel, administrative, or 

22 other overhead expense of the Agency shall be 

23 allocated— 

24 (i) fully to the CFPA Depository 

25 Fund if the expense was incurred directly 


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1 as a result of the Agency’s responsibilities 

2 solely with respect to depository institution 

3 covered persons; 

4 (ii) fully to the CFPA Nondepository 

5 Fund, if the expense was incurred directly 

6 as a result of the Agency’s responsibilities 

7 solely with respect to nondepository cov8 ered persons; 

9 (iii) between the CFPA Depository 

10 Fund and the CFPA Nondepository Fund, 

11 in amounts reflecting the relative degree to 

12 which the expense was incurred as a result 

13 of the activities of depository institution 

14 covered persons, and nondepository covered 

15 persons; and 

16 (iv) if the Director is unable to make 

17 a complete allocation under clause (i), (ii), 

18 or (iii), between the CFPA Depository 

19 Fund and the CFPA Nondepository Fund, 

20 in amounts reflecting the relative propor21 tion that, as of the end of the preceding 

22 year— 

23 (I) the aggregate assets of all de24 pository institution covered persons 


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1 bears to the aggregate assets of all 

2 covered persons; and 

3 (II) the aggregate assets of all 

4 nondepository covered persons bears 

5 to the aggregate assets of all covered 

6 persons. 

7 (E) AGENCY FUND.—The ‘‘Agency fund’’ 

8 means the Consumer Financial Protection 

9 Agency Depository Institution Fund established 

10 under subsection (d), and, the Consumer Fi11 nancial Protection Agency Nondepository Insti12 tution Fund established under subsection (e), 

13 and the Consumer Financial Protection Agency 

14 Civil Penalty Fund established under subsection 

15 (g). 

16 (2) INVESTMENT.— 

17 (A) AMOUNTS IN FUNDS MAY BE IN18 VESTED.—The Director may request the Sec19 retary to invest the portion of any Agency fund 

20 that, in the Director’s judgment, is not required 

21 to meet the current needs of such fund. 

22 (B) ELIGIBLE INVESTMENTS.—Invest23 ments pursuant to subparagraph (A) shall be 

24 made by the Secretary in obligations of the 

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1 teed as to principal and interest by the United 

2 States, with maturities suitable to the needs of 

3 the Agency fund involved, as determined by the 

4 Director. 

5 (C) INTEREST AND PROCEEDS CRED6 ITED.—The interest on, and the proceeds from 

7 the sale or redemption of, any obligations held 

8 in the respective Agency Fund shall be credited 

9 to and form a part of the respective Agency 

10 Fund. 

11 (3) USE OF FUNDS.—Funds obtained by, trans12 ferred to, or credited to any Agency fund shall be 

13 immediately available to the Agency, and remain 

14 available until expended, to pay the expenses of the 

15 Agency in carrying out the duties and responsibil16 ities of the Director and the Agency, including the 

17 payment of compensation of the Director and offi18 cers and employees of the Agency. 

19 (2) FEES, ASSESSMENTS AND OTHER FUNDS

20 NOT GOVERNMENT FUNDS.—Funds obtained by or 

21 transferred to any Agency fund shall not be con22 strued to be Government funds or appropriated 

23 monies. 

24 (3) AMOUNTS NOT SUBJECT TO APPORTION25 MENT.—Notwithstanding any other provision of law, 


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1 amounts in any Agency fund shall not be subject to 

2 apportionment for purposes of chapter 15 of title 31, 

3 United States Code, or under any other authority. 

4 (g) PENALTIES AND FINES.— 

5 (1) ESTABLISHMENT OF VICTIMS RELIEF

6 FUND.—There is established in the Treasury of the 

7 United States a fund to be known as the ‘‘Consumer 

8 Financial Protection Agency Civil Penalty Fund’’ 

9 (hereafter in this section referred to as the ‘‘Civil 

10 Penalty Fund’’). 

11 (2) DEPOSITS.—If the Agency obtains a civil 

12 penalty against any person in any judicial or admin13 istrative action under this title, any law or authority 

14 transferred under subtitles F and H, or any enumer15 ated consumer law, the Agency shall deposit into the 

16 Civil Penalty Fund the amount of the penalty col17 lected. 

18 (3) PAYMENT TO VICTIMS.—Amounts in the 

19 Civil Penalty Fund shall be available to the Director, 

20 without fiscal year limitation, for payments to the 

21 victims of activities for which civil penalties have 

22 been imposed under this title, the law and authori23 ties transferred under subtitles F and H, or any 

24 enumerated consumer law. 


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1 SEC. 4110. AMENDMENTS RELATING TO OTHER ADMINIS2 TRATIVE PROVISIONS. 

3 (a) ACT OF OCTOBER 28, 1974.—Section 111 of 

4 Public Law 93–495 (12 U.S.C. 250) is amended by insert5 ing ‘‘the Consumer Financial Protection Agency,’’ after 

6 ‘‘Federal Deposit Insurance Corporation,’’. 

7 (b) PAPERWORK REDUCTION ACT.—Section 2(5) of 

8 the Paperwork Reduction Act (44 U.S.C. 3502(5)) by in9 serting ‘‘the Consumer Financial Protection Agency,’’ 

10 after ‘‘the Securities and Exchange Commission,’’. 

11 SEC. 4111. EFFECTIVE DATE. 

12 This subtitle shall take effect on the date of the en13 actment of this title. 

14 Subtitle B—General Powers of the 

15 Director and Agency 

16 SEC. 4201. MANDATE AND OBJECTIVES. 

17 (a) MANDATE.—The Director shall seek to promote 

18 transparency, simplicity, fairness, accountability, and 

19 equal access in the market for consumer financial products 

20 or services. 

21 (b) OBJECTIVES.—The Director may exercise the au22 thorities granted in this title, in the enumerated consumer 

23 laws, and transferred under subtitles F and H for the pur24 poses of ensuring that, with respect to consumer financial 

25 products or services— 


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1 (1) consumers have and can use the informa2 tion they need to make responsible decisions about 

3 consumer financial products or services; 

4 (2) consumers are protected from abuse, unfair5 ness, deception, and discrimination; 

6 (3) markets for consumer financial products or 

7 services operate fairly and efficiently with ample 

8 room for sustainable growth and innovation; and 

9 (4) traditionally underserved consumers and 

10 communities have equal access to responsible finan11 cial services. 

12 SEC. 4202. AUTHORITIES. 

13 (a) IN GENERAL.—The Director may exercise the au14 thorities granted in this title, in the enumerated consumer 

15 laws, and transferred under subtitles F and H, to admin16 ister, enforce, and otherwise implement the provisions of 

17 this title, the authorities transferred in subtitles F and 

18 H, and the enumerated consumer laws. 

19 (b) RULEMAKING, ORDERS, AND GUIDANCE.— 

20 (1) IN GENERAL.—The Director may prescribe 

21 regulations and issue orders and guidance as may be 

22 necessary or appropriate to enable it to administer 

23 and carry out the purposes and objectives of this 

24 title, the authorities transferred under subtitles F 

25 and H, and the enumerated consumer laws, and to 


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1 prevent evasions of this title, any such authority, 

2 and any such law. 

3 (2) STANDARDS FOR RULEMAKING.—In pre4 scribing a regulation under this title or pursuant to 

5 the authorities transferred under subtitles F and H 

6 or the enumerated consumer laws, the Director 

7 shall— 

8 (A) consider the potential benefits and 

9 costs to consumers and covered persons, includ10 ing the potential reduction of consumers’ access 

11 to consumer financial products or services, re12 sulting from such regulation; and 

13 (B) consult with the Federal banking agen14 cies, State bank supervisors, the Federal Trade 

15 Commission, or other Federal agencies, as ap16 propriate, regarding the consistency of a pro17 posed regulation with prudential, consumer pro18 tection, civil rights, market, or systemic objec19 tives administered by such agencies or super20 visors. 

21 (3) EXEMPTIONS.— 

22 (A) IN GENERAL.—The Director, by regu23 lation or order, may conditionally or uncondi24 tionally exempt any covered person, service pro25 vider, or any consumer financial product or 


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1 service or any class of covered persons, class of 

2 service providers, or consumer financial prod3 ucts or services, from any provision of this title, 

4 any enumerated consumer law, or from any reg5 ulation under any such provision or law, as the 

6 Director deems necessary or appropriate to 

7 carry out the purposes and objectives of this 

8 title taking into consideration the factors in 

9 subparagraph (B). 

10 (B) FACTORS.—In issuing an exemption 

11 by regulation or order as permitted in subpara12 graph (A), the Director shall as appropriate 

13 take into consideration the following: 

14 (i) The total assets of the covered per15 son. 

16 (ii) The volume of transactions involv17 ing consumer financial products or services 

18 in which the covered person engages. 

19 (iii) The extent to which the covered 

20 person engages in 1 or more financial ac21 tivities. 

22 (iv) Existing laws or regulations which 

23 are applicable to the consumer financial 

24 product or service and the extent to which 


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1 such laws or regulations provide consumers 

2 with adequate protections. 

3 (C) RULE OF CONSTRUCTION.—No provi4 sion of this section shall be construed as alter5 ing, amending, or affecting any authority under 

6 sections 304(a), 304(i), 305(a), and 306(b) of 

7 the Home Mortgage Disclosure Act of 1975 and 

8 sections 703(a)(1), 703(a)(2), 703(a)(3), 

9 705(f), and 705(g) of the Equal Credit Oppor10 tunity Act for determining whether a covered 

11 person should be provided an exemption. 

12 (c) EXAMINATIONS AND REPORTS.— 

13 (1) IN GENERAL.—Except as provided under 

14 section 4203, the Director may on a periodic basis 

15 examine a covered person or service provider, with 

16 respect to any consumer financial product or service, 

17 for purposes of ensuring compliance with the re18 quirements of this title, the enumerated consumer 

19 laws, and any regulations prescribed by the Director 

20 under this title or pursuant to the authorities trans21 ferred under subtitles F and H, and enforcing com22 pliance with such requirements. 

23 (2) EXAMINATION PROGRAM.—The Director 

24 shall exercise any authority of the Director under 

25 paragraph (1) in a manner designed to ensure that 


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1 such authorities are exercised with respect to cov2 ered persons or service providers, without regard to 

3 charter or corporate form, based on the Director’s 

4 assessment of the risks posed to consumers in the 

5 relevant product markets and geographic markets, 

6 and taking into consideration, as applicable, the fol7 lowing factors: 

8 (A) The asset size of the covered persons. 

9 (B) The volume of transactions involving 

10 consumer financial products or services in 

11 which the covered persons engage. 

12 (C) The risks to consumers created by the 

13 provision of such consumer financial products 

14 or services. 

15 (D) In the case of State-chartered institu16 tions, the extent to which such institutions are 

17 subject to oversight by State authorities for 

18 consumer protection. 

19 (3) COORDINATION.—The Director shall coordi20 nate the Agency’s supervisory activities with the su21 pervisory activities conducted by the Federal bank22 ing agencies and the State bank supervisors, includ23 ing establishing their respective schedules for exam24 ining covered persons and requirements regarding 

25 reports to be submitted by covered persons. 


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1 (4) REPORTS.—The Director may require re2 ports from a covered person for purposes of ensuring 

3 compliance with the requirements of this title, the 

4 enumerated consumers laws, and any regulation pre5 scribed by the Director under this title or pursuant 

6 to the authorities transferred under subtitles F and 

7 H, and enforcing compliance with such require8 ments. 

9 (5) CONTENT OF REPORTS.—The reports au10 thorized in paragraph (4) may include such informa11 tion as necessary to keep the Agency informed as 

12 to— 

13 (A) the compliance systems or procedures 

14 of the covered person or any affiliate thereof, 

15 with applicable provisions of this title or any 

16 other law that the Agency has jurisdiction to 

17 enforce; and 

18 (B) matters related to the provision of con19 sumer financial products or services including 

20 the servicing or maintenance of accounts or ex21 tensions of credit. 

22 (6) USE OF EXISTING REPORTS.—In general, 

23 the Agency shall, to the fullest extent possible, use— 

24 (A) reports that a covered person, or any 

25 affiliate thereof, or any service provider to such 


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1 covered person or affiliate, has provided or been 

2 required to provide to a Federal or State agen3 cy; and 

4 (B) information that has been reported 

5 publicly. 

6 (7) ACCESS BY THE AGENCY TO REPORTS OF

7 OTHER REGULATORS.— 

8 (A) EXAMINATION AND FINANCIAL CONDI9 TION REPORTS.—Upon providing reasonable as10 surances of confidentiality, the Agency shall 

11 have access to any report of examination or fi12 nancial condition, including a report containing 

13 data regarding consumer complaints, made by a 

14 Federal banking agency or other Federal agen15 cy having supervision of a covered person, or a 

16 service provider, (other than returns and return 

17 information described in section 6103 of the In18 ternal Revenue Code of 1986) and to all revi19 sions made to any such report. 

20 (B) PROVISION OF OTHER REPORTS TO

21 AGENCY.—In addition to the reports described 

22 in subparagraph (A), a Federal banking agency 

23 may, in its discretion, furnish to the Agency 

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1 pository institution, any credit union, or other 

2 entity examined by such agency under authority 

3 of any Federal law. 

4 (8) ACCESS BY OTHER REGULATORS TO RE5 PORTS OF THE AGENCY.— 

6 (A) EXAMINATION REPORTS.—Upon pro7 viding reasonable assurances of confidentiality, 

8 a Federal banking agency, a State regulator, or 

9 any other Federal agency having supervision of 

10 a covered person shall have access to any report 

11 of examination made by the Agency with re12 spect to the covered person or service provider, 

13 and to all revisions made to any such report. 

14 (B) PROVISION OF OTHER REPORTS TO

15 OTHER REGULATORS.—In addition to the re16 ports described in paragraph (A), the Agency 

17 may, in the discretion of the Agency, furnish to 

18 a Federal banking agency any other report or 

19 other confidential supervisory information con20 cerning any insured depository institution, any 

21 credit union, or other entity examined by the 

22 Agency under authority of any Federal law. 

23 (9) PRESERVATION OF AUTHORITY.—No provi24 sion in paragraph (3) shall be construed as pre25 venting the Agency from conducting an examination 


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1 authorized by this title or under the authorities 

2 transferred under subtitles F and H or pursuant to 

3 any enumerated consumer law. No provision of this 

4 title shall be construed as limiting the authority of 

5 the Director to require reports from a covered per6 son, as permitted under paragraph (4), regarding in7 formation owned or under the control of the covered 

8 person, regardless of whether such information is 

9 maintained, stored, or processed by another person. 

10 (10) REPORTS OF TAX LAW NONCOMPLI11 ANCE.—The Director shall provide the Commis12 sioner of Internal Revenue with any report of exam13 ination or related information identifying possible 

14 tax law noncompliance. 

15 (11) DELEGATION.— 

16 (A) IN GENERAL.—The Director may dele17 gate the examination authorities of the Agency 

18 under this title to any appropriate agency, as 

19 defined in section 4203, for any insured deposi20 tory institution or insured credit union that is 

21 not subject to section 4203 upon a petition by 

22 an appropriate agency. 

23 (B) STANDARD FOR DELEGATION.—The 

24 Director shall provide such delegation if, in the 


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1 Director’s sole discretion, the Director deter2 mines that— 

3 (i) the delegation is consistent with 

4 the public interest; 

5 (ii) the appropriate agency is capable 

6 of enforcing compliance with this title, and 

7 with any regulation prescribed under this 

8 title; and 

9 (iii) such capability is comparable to 

10 or superior to the capability of the Agency, 

11 in terms of expertise, demonstrated com12 mitment, and overall effectiveness, in en13 forcing such compliance. 

14 (C) EFFECT OF DELEGATION.—The in15 sured depository institution or insured credit 

16 union shall be subject to the examination proc17 ess described in section 4203(b). 

18 (D) NO EFFECT ON ENFORCEMENT.—The 

19 Director’s delegation authority under this para20 graph shall not apply to the Director’s enforce21 ment responsibilities under subsection (e). 

22 (d) EXCLUSIVE RULEMAKING AND EXAMINATION

23 AUTHORITY.—Notwithstanding any other provision of 

24 Federal law other than section 4203 and subsections (f) 

25 and (h) of this section, to the extent that a Federal law 


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1 authorizes the Director and another Federal agency to 

2 prescribe regulations, issue guidance, conduct examina3 tions, or require reports under that law for purposes of 

4 assuring compliance with this title, any enumerated con5 sumer law, the laws for which authorities were transferred 

6 under subtitles F and H, and any regulations prescribed 

7 under this title or pursuant to any such authority, the Di8 rector shall have the exclusive authority to prescribe regu9 lations, issue guidance, conduct examinations, require re10 ports, or issue exemptions with regard to any person sub11 ject to that law and with respect to any activity regulated 

12 under any enumerated consumer law. 

13 (e) PRIMARY ENFORCEMENT AUTHORITY.— 

14 (1) THE AGENCY TO HAVE PRIMARY ENFORCE15 MENT AUTHORITY.—To the extent that a Federal 

16 law authorizes the Agency and another Federal 

17 agency to enforce that law, the Agency shall have 

18 primary authority to enforce that Federal law with 

19 respect to any person in accordance with this sub20 section. 

21 (2) COORDINATION WITH FEDERAL TRADE

22 COMMISSION.— 

23 (A) NOTICE.—If the Commission is au24 thorized to enforce any Federal law described in 

25 paragraph (1), or a regulation prescribed under 


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1 any such Federal law, the Commission shall 

2 serve written notice to the Director of any en3 forcement action at least 30 days prior to initi4 ating such an enforcement action, except that if 

5 exigent circumstances are present, the Commis6 sion may provide notice immediately upon initi7 ating such enforcement action. 

8 (B) INTERVENTION BY THE DIRECTOR.— 

9 Upon receiving any notice under subparagraph 

10 (A) with respect to an enforcement action, the 

11 Director may intervene in such enforcement ac12 tion and upon intervening— 

13 (i) be heard on all matters arising in 

14 such enforcement action; and 

15 (ii) file petitions for appeal in such 

16 enforcement action. 

17 (C) PENDENCY OF AGENCY ACTION.— 

18 Whenever a civil action has been instituted by 

19 or on behalf of the Agency for any violation of 

20 any Federal law described in paragraph (1), or 

21 a regulation prescribed under any such Federal 

22 law, the Commission may not, during the pend23 ency of that action instituted by or on behalf of 

24 the Agency, institute a civil action under such 

25 law or regulation against any defendant named 


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1 in the Agency complaint in such action for any 

2 violation alleged in the Agency complaint. 

3 (D) AGREEMENTS BETWEEN AGENCIES.— 

4 (i) NEGOTIATIONS AUTHORIZED.— 

5 The Director may negotiate an agreement 

6 with the Commission to establish proce7 dures to ensure that the enforcement ac8 tions of the 2 agencies are appropriately 

9 coordinated. 

10 (ii) SCOPE OF NEGOTIATED AGREE11 MENT.—The terms of any agreement nego12 tiated pursuant to clause (i) may modify or 

13 supersede the provisions of subparagraphs 

14 (A), (B), and (C). 

15 (3) COORDINATION WITH OTHER FEDERAL

16 AGENCY.— 

17 (A) REFERRAL.—Any Federal agency 

18 (other than the Federal Trade Commission) 

19 that is authorized to enforce a Federal law de20 scribed in paragraph (1) may recommend in 

21 writing to the Director that the Agency initiate 

22 an enforcement proceeding to the extent the 

23 Agency is authorized by that Federal law or by 

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1 panied by a written explanation of the concerns 

2 giving rise to the recommendation. 

3 (B) BACKSTOP ENFORCEMENT AUTHORITY

4 OF OTHER FEDERAL AGENCY.—If the Agency 

5 does not, before the end of the 120-day period 

6 beginning on the date on which the Director re7 ceives a recommendation under subparagraph 

8 (A), initiate an enforcement proceeding, the 

9 other agency referred to in subparagraph (A) 

10 may initiate an enforcement proceeding as per11 mitted by that Federal law. 

12 (4) INSTITUTIONS SUBJECT TO SPECIAL EXAM13 INATION AND ENFORCEMENT PROCEDURES.—This 

14 subsection shall not apply to institutions subject to 

15 section 4203. 

16 (f) PRESERVATION OF OTHER AUTHORITY.— 

17 (1) ATTORNEY GENERAL.—No provision of this 

18 title shall be construed as affecting any authority of 

19 the Attorney General. 

20 (2) SECRETARY OF THE TREASURY.—No provi21 sion of this title shall be construed as affecting any 

22 authority of the Secretary of the Treasury, including 

23 with respect to prescribing regulations, initiating en24 forcement proceedings, or taking other actions with 


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1 respect to a person providing tax planning or tax 

2 preparation services. 

3 (3) FAIR HOUSING ACT.—No provision of this 

4 title shall be construed as affecting any authority 

5 arising under the Fair Housing Act. 

6 (g) EFFECT ON OTHER AUTHORITY.—No provision 

7 of this section or section 4203 shall be construed as modi8 fying or limiting the authority of any appropriate Federal 

9 banking agency or the Director or Agency to interpret, 

10 or take enforcement action under, any law or regulation 

11 the interpretation or enforcement of which is committed 

12 to the banking agency or the Director or Agency, which 

13 shall include, in the case of the Director and the Agency, 

14 this title, the enumerated consumer laws, and the regula15 tions prescribed under this title or such laws. 

16 (h) PRESERVATION OF FEDERAL TRADE COMMIS17 SION AUTHORITY.—No provision of this title shall be con18 strued as modifying, limiting, or otherwise affecting the 

19 authority of the Federal Trade Commission under the 

20 Federal Trade Commission Act or other laws other than 

21 the enumerated consumer laws. 

22 SEC. 4203. EXAMINATION AND ENFORCEMENT FOR SMALL 

23 BANKS, THRIFTS, AND CREDIT UNIONS. 

24 (a) SCOPE OF INSTITUTIONS SUBJECT TO THIS SEC25 TION.— 


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1 (1) INSTITUTIONS COVERED.—This section 

2 shall apply to— 

3 (A) any insured depository institution with 

4 total assets of $10,000,000,000 or less; or 

5 (B) any insured credit union with total as6 sets of $1,500,000,000 or less. 

7 (2) APPROPRIATE AGENCY.—For purposes of 

8 this title, the term ‘‘appropriate agency’’ means— 

9 (A) in the case of an insured depository in10 stitution, the appropriate Federal banking 

11 agency as such term is defined in section 3 of 

12 the Federal Deposit Insurance Act; and 

13 (B) in the case of an insured credit union, 

14 the National Credit Union Administration. 

15 (b) EXAMINATIONS.— 

16 (1) IN GENERAL.—The appropriate agency 

17 shall on a periodic basis examine, or require reports 

18 from, an institution referred to in subsection (a) for 

19 purposes of ensuring compliance with the require20 ments of this title, the enumerated consumer laws, 

21 and any regulation prescribed by the Director under 

22 this title or pursuant to the authorities transferred 

23 under subtitles F and H, and enforcing compliance 

24 with such requirements. 

25 (2) AGENCY ROLE IN EXAMINATIONS.— 


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1 (A) The appropriate agency shall provide 

2 all reports, records, and documentation related 

3 to the examination process to the Agency on a 

4 timely and ongoing basis. 

5 (B) The Director and Agency may, at its 

6 discretion, include an examiner on any examina7 tion conducted under paragraph (1). The ap8 propriate agency shall involve such Agency ex9 aminer in the entire examination process, in10 cluding setting the scope of an examination, 

11 participating in the examination, and providing 

12 input on the examination report, matters re13 quiring attention and examination ratings. 

14 (c) ENFORCEMENT.— 

15 (1) IN GENERAL.—Notwithstanding any other 

16 provision of this title other than this subsection, the 

17 appropriate agency shall have primary authority to 

18 enforce violations identified at institutions referred 

19 to in subsection (a) of any of the requirements of 

20 this title, the enumerated consumers laws, and any 

21 regulation prescribed by the Director under this title 

22 or pursuant to the authorities transferred under 

23 subtitles F and H. 

24 (2) COORDINATION WITH APPROPRIATE AGEN25 CY.— 


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1 (A) REFERRAL.— 

2 (i) IN GENERAL.—The Agency may 

3 recommend in writing to the appropriate 

4 agency that the appropriate agency initiate 

5 an enforcement proceeding to the extent 

6 the appropriate agency is authorized by 

7 that Federal law or by this title. 

8 (ii) EXPLANATION.—Any rec9 ommendation under clause (i) shall be ac10 companied by a written explanation of the 

11 concerns giving rise to the recommenda12 tion. 

13 (B) BACKSTOP ENFORCEMENT AUTHORITY

14 OF AGENCY.—If the appropriate agency does 

15 not, before the end of the 120-day period begin16 ning on the date on which the appropriate 

17 agency receives a recommendation under sub18 paragraph (A), initiate an enforcement pro19 ceeding, the Agency may initiate an enforce20 ment proceeding as permitted by Federal law. 

21 (d) ACTIONS ARISING OUT OF CONSUMER COM22 PLAINT SYSTEM.—Notwithstanding any provision of this 

23 section, if through the consumer complaint system admin24 istered by the Agency under section 4105(c)(3), the Direc25 tor has reasonable cause to believe that an institution reVerDate Nov 24 2008 22:04 Dec 02, 2009 Jkt 089200 PO 00000 Frm 00750 Fmt 6652 Sfmt 6201 E:\BILLS\H4173.IH H4173

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1 ferred to in subsection (a) demonstrates noncompliance 

2 with any provision of this title, the enumerated consumer 

3 laws, or any regulation prescribed by the Director under 

4 this title or pursuant to the authorities transferred under 

5 subtitles F and H, the Director may directly investigate 

6 such institution for such noncompliance and take any ac7 tion permitted under subtitle E that the Director deems 

8 appropriate. 

9 (e) REMOVAL OF APPROPRIATE AGENCY FOR PAR10 TICULAR INSTITUTION.— 

11 (1) HEIGHTENED SUPERVISION.—The Direc12 tor— 

13 (A) may provide notice to an appropriate 

14 agency that the Director is considering issuing 

15 a removal order under paragraph (2); and 

16 (B) shall have an Agency examiner partici17 pate in the examination process under sub18 section (b) for at least 1 examination cycle. 

19 (2) REMOVAL BY ORDER.—If, after the comple20 tion of at least 1 examination cycle following the 

21 provision of notice to an appropriate agency under 

22 paragraph (1), the Director determines in writing 

23 that the appropriate agency has failed to adequately 

24 conduct consumer compliance examinations or bring 

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1 tion referred to in subsection (a), the Director may 

2 order the removal of the appropriate agency from its 

3 responsibilities under this section for such institu4 tion. 

5 (3) AGENCY AUTHORITY UPON REMOVAL.— 

6 Upon removal pursuant to paragraph (2), the Agen7 cy shall examine and enforce against such institution 

8 as if the institution were subject to section 4202. 

9 (4) EFFECTIVE DATE.—An order under para10 graph (2) shall take effect 30 days after a deter11 mination by the Secretary of the Treasury pursuant 

12 to paragraphs (5) and (6). 

13 (5) AUTOMATIC APPEAL.—An order issued by 

14 the Director pursuant to paragraph (2) shall be 

15 automatically appealed to the Secretary. 

16 (6) DECISION BY THE SECRETARY OF THE

17 TREASURY.— 

18 (A) DETERMINATION.—The order issued 

19 pursuant to paragraph (2) shall be deemed af20 firmed unless the Secretary of the Treasury de21 nies the determination of the Director within 

22 120 days of the issuance of the order pursuant 

23 to paragraph (2). 

24 (B) RULE OF CONSTRUCTION.—Nothing in 

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1 iting the Secretary of the Treasury from mak2 ing a determination to either affirm or deny an 

3 order issued pursuant to paragraph (2) prior to 

4 the passage of the time period in subparagraph 

5 (A). 

6 (7) REGULATIONS.—By the transfer date, the 

7 Secretary shall issue regulations that establish the 

8 standards the Director shall apply in making a de9 termination to remove an appropriate agency and 

10 the process, procedures, and standards for an ap11 peal. Such standards shall require the Director to 

12 consider at least the following in issuing an order re13 moving an appropriate agency for an institution re14 ferred to in subsection (a)(1): 

15 (A) Reports of examination of such institu16 tion. 

17 (B) Any enforcement actions taken by an 

18 appropriate agency against such institution and 

19 the results of those actions. 

20 (C) Consumer complaints issued against 

21 such institution. 

22 (D) Actions taken by State attorneys gen23 eral and private rights of action against such 

24 institution. 


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1 (f) POLICIES AND PROCEDURES.—Within 180 days 

2 after the designated transfer date, the Agency and the ap3 propriate agency shall develop policies and procedures for 

4 implementing this section. 

5 (g) ASSESSMENTS.— 

6 (1) LIMITATION ON CERTAIN FEES.—The Agen7 cy shall not assess examination fees on an institution 

8 referred to in subsection (a). 

9 (2) RULE OF CONSTRUCTION.—No provision of 

10 this section shall be construed as preventing the ap11 propriate agency from assessing fees on an institu12 tion referred to in paragraph (1) to meet the appro13 priate agency’s expenses for carrying out such exam14 ination and supervision responsibilities pursuant to 

15 this section. 

16 SEC. 4204. SIMULTANEOUS AND COORDINATED SUPER17 VISORY ACTION. 

18 (a) EXAMINATIONS.—A Federal banking agency and 

19 the Agency shall, with respect to each insured depository 

20 institution, credit union, or other covered person super21 vised by the Federal banking agency and the Agency, re22 spectively— 

23 (1) coordinate the scheduling of examinations of 

24 the insured depository institution, and credit union, 

25 or other covered person; 


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1 (2) conduct simultaneous examinations of each 

2 insured depository institution, credit union or other 

3 covered person, unless such institution requests ex4 aminations to be conducted separately; 

5 (3) share each draft report of examination with 

6 the other agency and permit the receiving agency a 

7 reasonable opportunity (which shall not be less than 

8 a period of 30 days after the date of receipt) to com9 ment on the draft report before such report is made 

10 final; and 

11 (4) prior to issuing a final report of examina12 tion or taking supervisory action, an agency shall 

13 take into consideration concerns, if any, raised in 

14 the comments made by the other agency. 

15 (b) COORDINATION WITH STATE BANK SUPER16 VISORS.—The Agency shall pursue arrangements and 

17 agreements with State bank supervisors to coordinate ex18 aminations consistent with subsection (a). 

19 (c) RESOLUTION OF CONFLICT IN SUPERVISION.— 

20 (1) REQUEST OF DEPOSITORY INSTITUTION.— 

21 (A) IN GENERAL.—If the proposed mate22 rial supervisory determinations of the Agency 

23 and a Federal banking agency are conflicting, 

24 an insured depository institution, credit union, 

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1 cies to coordinate and present a joint statement 

2 of coordinated supervisory action. 

3 (B) LIMITATION.—A request of an insured 

4 depository institution, credit union, or other 

5 covered person shall not be used to appeal a su6 pervisory rating or determination by the Agency 

7 or a Federal banking agency. 

8 (2) JOINT STATEMENT.—The agencies receiving 

9 a request from an insured depository institution, 

10 credit union, or covered person under paragraph (1) 

11 shall provide a joint statement resolving the conflict 

12 under such subparagraph before the end of the 30- 

13 day period beginning on the date the agencies re14 ceive such request. 

15 (d) APPEALS TO GOVERNING PANEL.— 

16 (1) IN GENERAL.—If the agencies receiving a 

17 request from an insured depository institution, credit 

18 union, or covered person under subsection (c)(1) do 

19 not issue a joint statement under subsection (c)(2), 

20 or if either agency takes or attempts to take any su21 pervisory action relating to the request for the joint 

22 statement without the consent of the other agency, 

23 the insured depository institution, credit union, or 

24 other covered person may institute an appeal to a 

25 governing panel under this subsection. 


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1 (2) TIMETABLE.—Any appeal under paragraph 

2 (1) with regard to a failure of agencies to issue a 

3 joint statement shall be filed before the end of the 

4 30-day period beginning at the end of the 30-day pe5 riod during which such joint statement was due 

6 under subsection (c)(2). 

7 (e) COMPOSITION OF GOVERNING PANEL.—The gov8 erning panel for an appeal under this section shall be com9 posed of— 

10 (1) 2 individuals— 

11 (A) 1 of whom is a representative from the 

12 Agency; 

13 (B) 1 of whom is a representative of the 

14 Federal banking agency which received the re15 quest to which the appeal relates; and 

16 (C) neither of whom— 

17 (i) have participated in the material 

18 supervisory determinations under appeal; 

19 and 

20 (ii) report directly or indirectly to the 

21 individual who made the supervisory deter22 minations under appeal; and 

23 (2) 1 individual who is a representative from— 


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1 (A) the Federal banking agency that heads 

2 the Financial Institution Examination Council; 

3 or 

4 (B) if the Financial Institutions Examina5 tion Council is headed by a Federal banking 

6 agency that is a party to the appeal, the Fed7 eral banking agency that is next scheduled to 

8 head the Financial Institutions Examination 

9 Council. 

10 (f) CONDUCT OF APPEAL.— 

11 (1) CONTENT OF FILING APPEAL.—The insured 

12 depository institution, credit union, or other covered 

13 person which institutes an appeal under subsection 

14 (d)(1) shall include in the filing of such appeal all 

15 the facts and legal arguments pertaining to the mat16 ter appealed. 

17 (2) APPEARANCE.—The insured depository in18 stitution, credit union, or other covered person which 

19 institutes an appeal under this section may appear 

20 before the governing panel in person or by telephone, 

21 through counsel, employees, or representatives of, or 

22 for, such institution, credit union, or other covered 

23 person. 

24 (3) REQUESTS FOR ADDITIONAL INFORMA25 TION.—Any governing panel convened under this 


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1 section may request the insured depository institu2 tion, credit union, or other covered person, the 

3 Agency, or the Federal banking agency to produce 

4 additional information relevant to the appeal. 

5 (4) FINAL WRITTEN DETERMINATIONS .—Any 

6 governing panel convened under this section, by a 

7 majority vote of the members of the panel, shall pro8 vide a final determination, in writing, within 30 days 

9 of the filing of an informationally complete appeal, 

10 or such longer period as the panel and the insured 

11 depository institution, credit union, or other covered 

12 person may jointly agree. 

13 (5) PUBLIC INFORMATION.—A redacted copy of 

14 any determination by a governing panel convened 

15 under this section shall be made public upon the 

16 issuance of such determination. 

17 (g) PROHIBITION AGAINST RETALIATION.—The Di18 rector and the Federal banking agencies shall prescribe 

19 regulations to provide safeguards from retaliation against 

20 any insured depository institution, credit union, or other 

21 covered person which institutes an appeal under this sec22 tion, as well as against any officer or and employee of any 

23 such institution, credit union, or other person. 


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1 (h) MATERIAL SUPERVISORY DETERMINATION DE2 FINED.—For purposes of this section, the term ‘‘material 

3 supervisory determination’’— 

4 (1) includes any action relating to any super5 vision or examinations; and 

6 (2) does not include— 

7 (A) a determination by any Federal bank8 ing agency to appoint a conservator or receiver 

9 for an insured depository institution or a liqui10 dating agent for an insured credit union, as the 

11 case may be, or a decision to take action pursu12 ant to section 38 of the Federal Deposit Insur13 ance Act or section 212 of the Federal Credit 

14 Union Act, as the case may be; or 

15 (B) any regulation or guidance, or order of 

16 general applicability. 

17 SEC. 4205. LIMITATIONS ON AUTHORITY OF AGENCY AND 

18 DIRECTOR. 

19 (a) EXCLUSION FOR MERCHANTS, RETAILERS, AND

20 SELLERS OF NONFINANCIAL SERVICES.— 

21 (1) IN GENERAL.—Notwithstanding any provi22 sion of this title (other than paragraph (4)) and sub23 ject to paragraph (2), the Director and the Agency 

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1 forcement or other authority, including authority to 

2 order assessments, under this title with respect to— 

3 (A) credit extended directly by a merchant, 

4 retailer, or seller of nonfinancial services to a 

5 consumer, in a case in which the good or service 

6 being provided is not itself a consumer financial 

7 product or service, exclusively for the purpose 

8 of enabling that consumer to purchase goods or 

9 services directly from the merchant, retailer, or 

10 seller of nonfinancial services; or 

11 (B) collection of debt, directly by the mer12 chant, retailer, or seller of nonfinancial services, 

13 arising from such credit extended. 

14 (2) EXCEPTION FOR EXISTING AUTHORITY.— 

15 The Director may exercise any rulemaking authority 

16 regarding an extension of credit described in para17 graph (1)(A) or the collection of debt arising from 

18 such extension, as may be authorized by the enumer19 ated consumer laws or any law or authority trans20 ferred under subtitle F or H. 

21 (3) RULE OF CONSTRUCTION.—No provision of 

22 this title shall be construed as modifying, limiting, 

23 or superseding the authority of the Federal Trade 

24 Commission or any other agency with respect to 

25 credit extended, or the collection of debt arising 


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1 from such extension, directly by a merchant, retailer, 

2 or seller of nonfinancial services to a consumer ex3 clusively for the purpose of enabling that consumer 

4 to purchase goods or services directly from the mer5 chant, retailer, or seller of nonfinancial services. 

6 (4) EXCLUSION NOT APPLICABLE TO CERTAIN

7 CREDIT TRANSACTIONS.—Paragraph (1) shall not 

8 apply to— 

9 (A) any credit transaction, including the 

10 collection of the debt arising from such exten11 sion, in which the merchant, retailer, or seller 

12 of nonfinancial services assigns, sells, or other13 wise conveys such debt owed by the consumer 

14 to another person; or 

15 (B) any credit transaction— 

16 (i) in which the credit provided sig17 nificantly exceeds the market value of the 

18 product or service provided, and 

19 (ii) with respect to which the Director 

20 finds that the sale of the product or service 

21 is done as a subterfuge so as to evade or 

22 circumvent the provisions of this title. 

23 (b) EXCLUSION FOR PERSONS REGULATED BY THE

24 SECURITIES AND EXCHANGE COMMISSION.— 


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1 (1) IN GENERAL.—No provision of this title 

2 shall be construed as altering, amending, or affect3 ing the authority of the Securities and Exchange 

4 Commission or any securities commission (or any 

5 agency or office performing like functions) of any 

6 State to adopt rules, initiate enforcement pro7 ceedings, or take any other action with respect to a 

8 person regulated by the Securities and Exchange 

9 Commission or any securities commission (or any 

10 agency or office performing like functions) of any 

11 State. The Director and Agency shall have no au12 thority to exercise any power to enforce this title 

13 with respect to a person regulated by the Securities 

14 and Exchange Commission or any securities commis15 sion (or any agency or office performing like func16 tions) of any State. 

17 (2) CONSULTATION AND COORDINATION.—Not18 withstanding paragraph (1), the Securities and Ex19 change Commission shall consult and coordinate 

20 with the Director with respect to any rule (including 

21 any advance notice of proposed rulemaking) regard22 ing an investment product or service that is the 

23 same type of product as, or that competes directly 

24 with, a consumer financial product or service that is 


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1 subject to the jurisdiction of the Agency under this 

2 title or under any other law. 

3 (c) EXCLUSION FOR PERSONS REGULATED BY THE

4 COMMODITY FUTURES TRADING COMMISSION.— 

5 (1) IN GENERAL.—No provision of this title 

6 shall be construed as altering, amending, or affect7 ing the authority of the Commodity Futures Trading 

8 Commission to adopt rules, initiate enforcement pro9 ceedings, or take any other action with respect to a 

10 person regulated by the Commodity Futures Trading 

11 Commission. The Director and the Agency shall 

12 have no authority to exercise any power to enforce 

13 this title with respect to a person regulated by the 

14 Commodity Futures Trading Commission. 

15 (2) CONSULTATION AND COORDINATION.—Not16 withstanding paragraph (1), the Commodity Futures 

17 Trading Commission shall consult and coordinate 

18 with the Director with respect to any rule (including 

19 any advance notice of proposed rulemaking) regard20 ing a product or service that is the same type of 

21 product as, or that competes directly with, a con22 sumer financial product or service that is subject to 

23 the jurisdiction of the Agency under this title or 

24 under any other law. 


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1 (d) EXCLUSION FOR PERSONS REGULATED BY A

2 STATE INSURANCE REGULATOR.— 

3 (1) IN GENERAL.—No provision of this title 

4 shall be construed as altering, amending, or affect5 ing the authority of any State insurance regulator to 

6 adopt rules, initiate enforcement proceedings, or 

7 take any other action with respect to a person regu8 lated by any State insurance regulator. Except as 

9 provided in paragraphs (2) and (3), the Agency shall 

10 have no authority to exercise any power to enforce 

11 this title with respect to a person regulated by any 

12 State insurance regulator. 

13 (2) DESCRIPTION OF ACTIVITIES.—Paragraph 

14 (1) shall not apply to any person described in such 

15 paragraph to the extent such person is engaged in 

16 any financial activity described in any subparagraph 

17 of section 4002(19) or is otherwise subject to any of 

18 the enumerated consumer laws or the authorities 

19 transferred under subtitle F or H. 

20 (3) PRESERVATION OF CERTAIN AUTHORI21 TIES.—Nothing in this title shall be construed as 

22 limiting the authority of the Director and the Agen23 cy from exercising powers under this title with re24 spect to the provision by a covered person of a prod25 uct or service, not otherwise subject to this title, for 


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1 or on behalf of a person regulated by a State insur2 ance regulator, in connection with a financial activ3 ity. 

4 (e) EXCLUSION FOR PERSONS REGULATED BY THE

5 FEDERAL HOUSING FINANCE AGENCY.—No provision of 

6 this title shall be construed as altering, amending, or af7 fecting the authority of the Federal Housing Finance 

8 Agency to adopt rules, initiate enforcement proceedings, 

9 or take any other action with respect to a person regulated 

10 by the Federal Housing Finance Agency. The Director 

11 and Agency shall have no authority to exercise any power 

12 to enforce this title with respect to a person regulated by 

13 the Federal Housing Agency. For purposes of this sub14 section, the term ‘‘person regulated by the Federal Hous15 ing Finance Agency’’ means any Federal home loan bank, 

16 and any joint office of 1 or more Federal home loan banks. 

17 (f) EXCLUSION FOR QUALIFIED RETIREMENT OR EL18 IGIBLE DEFERRED COMPENSATION PLANS AND AR19 RANGEMENTS.— 

20 (1) IN GENERAL.—No provision of this title 

21 shall be construed as altering, amending, or affect22 ing the authority of the Secretary of the Treasury, 

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1 ment proceedings, or take any actions with respect 

2 to— 

3 (A) any retirement or eligible deferred 

4 compensation plan or arrangement qualified 

5 under or meeting the requirements of section 

6 401(a), 403(a), 403(b), 457(b), 408 or 408A of 

7 the Internal Revenue Code; or 

8 (B) any educational savings arrangement 

9 under section 529 of such Code. 

10 (2) LIMITATION ON AGENCY AUTHORITY.— 

11 (A) IN GENERAL.—The Director and the 

12 Agency may not exercise any power to enforce 

13 this title with respect to services provided di14 rectly (or indirectly if the services relate to the 

15 operation of such plan or arrangement) to— 

16 (i) any retirement or eligible deferred 

17 compensation plan or arrangement quali18 fied under or meeting the requirements of 

19 section 401(a), 403(a), 403(b), 457(b), 

20 408, or 408A of the Internal Revenue 

21 Code; or 

22 (ii) any educational savings arrange23 ment under section 529 of such Code. 

24 (B) SERVICES DEFINED.—For purposes 

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1 clude, for example, services for custody and in2 vestment of assets, administration, compliance, 

3 and participant assistance. 

4 (g) EXCLUSION FOR ACCOUNTANTS, TAX PRE5 PARERS, AND ATTORNEYS.— 

6 (1) IN GENERAL.—Except as permitted in para7 graph (2), the Director and the Agency may not ex8 ercise any rulemaking, supervisory, enforcement or 

9 other authority, including authority to order assess10 ments, over— 

11 (A) any person that is a certified public ac12 countant, permitted to practice as a certified 

13 public accounting firm, or certified or licensed 

14 for such purpose by a State, or any individual 

15 who is employed by or holds an ownership inter16 est with respect to a person described in this 

17 subparagraph when such person is performing 

18 or offering to perform customary and usual ac19 counting activities, including the provision of 

20 accounting, tax, advisory, other services that 

21 are subject to the regulatory authority of a 

22 state board of accountancy or a federal author23 ity, or other services that are incidental to such 

24 customary and usual accounting activities, to 

25 the extent that such incidental services are not 


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1 offered or provided by the person separate and 

2 apart from such customary and usual account3 ing activities and are not offered or provided to 

4 consumers who are not receiving such cus5 tomary and usual accounting activities; 

6 (B) any person other than a person de7 scribed in subparagraph (A) that performs in8 come tax preparation activities for consumers; 

9 or 

10 (C) any individual who is providing legal 

11 advice or services for which a license to practice 

12 law is required under the law of the State in 

13 which the advice or services are provided and 

14 which are performed within the scope of an at15 torney-client relationship established by an 

16 agreement, but only to the extent of such legal 

17 advice or services. 

18 (2) NO EXCLUSION WITH RESPECT TO REG19 ISTRATION OF MOST ATTORNEYS.—Notwithstanding 

20 paragraph (1), this subsection shall not apply to any 

21 authority granted to the Director or the Agency 

22 under section 4209 with respect to a licensed attor23 ney, except to the extent a licensed attorney is solely 

24 providing legal services in connection with— 


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1 (A) the preparation and filing of a bank2 ruptcy petition; or 

3 (B) court proceedings to avoid a fore4 closure. 

5 (3) DESCRIPTION OF ACTIVITIES.—Paragraph 

6 (1) shall not apply to— 

7 (A) any person described in paragraph 

8 (1)(A) to the extent such person is engaged in 

9 any activity which is not a customary and usual 

10 accounting activity described in paragraph 

11 (1)(A) or incidental thereto but which is a fi12 nancial activity described in any subparagraph 

13 of section 4002(19); 

14 (B) any person described in paragraph 

15 (1)(B) or (1)(C) to the extent such person is 

16 engaged in any activity which is a financial ac17 tivity described in any subparagraph of section 

18 4002(19); or 

19 (C) any person described in paragraph 

20 (1)(A), (1)(B) or (1)(C) that is otherwise sub21 ject to any of the enumerated consumer laws or 

22 the authorities transferred under subtitle F or 

23 H. 

24 (h) EXCLUSION FOR REAL ESTATE LICENSEES.— 


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1 (1) IN GENERAL.—Except as permitted in para2 graph (2), the Director and the Agency may not ex3 ercise any rulemaking, supervisory, enforcement or 

4 other authority, including authority to order assess5 ments, over a person that is licensed or registered as 

6 a real estate broker, real estate agent, in accordance 

7 with State law, but only to the extent that such per8 son— 

9 (A) acts as a real estate agent or broker 

10 for a buyer, seller, lessor, or lessee of real prop11 erty; 

12 (B) brings together parties interested in 

13 the sale, purchase, lease, rental, or exchange of 

14 real property; 

15 (C) negotiates, on behalf of any party, any 

16 portion of a contract relating to the sale, pur17 chase, lease, rental, or exchange of real prop18 erty (other than in connection with providing fi19 nancing with respect to any such transaction); 

20 (D) engages in any activity for which a 

21 person engaged in the activity is required to be 

22 registered or licensed as a real estate agent or 

23 real estate broker under any applicable law; or 


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1 (E) offers to engage in any activity, or act 

2 in any capacity, described in subparagraph (A), 

3 (B), (C), or (D). 

4 (2) DESCRIPTION OF ACTIVITIES.—Paragraph 

5 (1) shall not apply to any person described in such 

6 paragraph to the extent such person is engaged in 

7 any financial activity described in any subparagraph 

8 of section 4002(19) or is otherwise subject to any of 

9 the enumerated consumer laws or the authorities 

10 transferred under subtitle F or H. 

11 (i) EXCLUSION FOR AUTO DEALERS.— 

12 (1) IN GENERAL.—The Director and the Agen13 cy may not exercise any rulemaking, supervisory, en14 forcement or any other authority, including author15 ity to order assessments, over— 

16 (A) a motor vehicle dealer that is primarily 

17 engaged in the sale and servicing of motor vehi18 cles, the leasing and servicing of motor vehicles, 

19 or both; or 

20 (B) a person that— 

21 (i) is controlled by, or is under com22 mon control with, one or more motor vehi23 cle dealers; and 

24 (ii) primarily engages in the extension 

25 of, or arranging for the extension of, retail 


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1 credit or retail leases involving motor vehi2 cles, where 90 percent of such extension, 

3 or arranging for such extension, is made 

4 with respect to customers of one or more 

5 motor vehicle dealers that control such per6 son or with which such person is under 

7 common control. 

8 (2) CERTAIN FUNCTIONS EXCEPTED.—The pro9 visions of paragraph (1) shall not apply to any per10 son to the extent that person— 

11 (A) provides consumers with any services 

12 related to residential mortgages; or 

13 (B) operates a line of business that in14 volves the extension of retail credit or retail 

15 leases involving motor vehicles, and in which— 

16 (i) the extension of retail credit or re17 tail leases is routinely provided directly to 

18 consumers; and 

19 (ii) the contract governing such exten20 sion of retail credit or retail leases is not 

21 routinely assigned to a third party finance 

22 or leasing source. 

23 (3) NO IMPACT ON PRIOR AUTHORITY.—Noth24 ing in this subsection shall be construed to modify, 

25 limit, or supersede the rulemaking or enforcement 


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1 authority over motor vehicle dealers that could be 

2 exercised by any Federal department or agency on 

3 the day prior to the enactment of this title. 

4 (4) NO TRANSFER OF CERTAIN AUTHORITY.— 

5 Notwithstanding subtitle F or any other provision of 

6 law under this title, the consumer financial protec7 tion functions of the Board of Governors and the 

8 Federal Trade Commission shall not be transferred 

9 to the Director or the Agency to the extent such 

10 functions are with respect to a person described 

11 under paragraph (1). 

12 (5) DEFINITIONS.—For purposes of this sub13 section: 

14 (A) MOTOR VEHICLE.—The term ‘‘motor 

15 vehicle’’ means any self-propelled vehicle de16 signed for transporting persons or property on 

17 a street, highway, or other road. 

18 (B) MOTOR VEHICLE DEALER.—The term 

19 ‘‘motor vehicle dealer’’ means any person resi20 dent in the United States or any territory of 

21 the United States, and licensed by a State, a 

22 territory of the United States, or the District of 

23 Columbia to engage in the sale of motor vehi24 cles. 


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1 (j) NO AUTHORITY TO IMPOSE USURY LIMIT.—No 

2 provision of this title shall be construed as conferring au3 thority on the Director or the Agency to establish a usury 

4 limit applicable to an extension of credit offered or made 

5 by a covered person to a consumer, unless explicitly au6 thorized by law. 

7 (k) EXCLUSION FOR MANUFACTURED HOME RE8 TAILERS AND MODULAR HOME RETAILERS.— 

9 (1) IN GENERAL.—The Director and the Agen10 cy may not exercise any rulemaking, supervisory, en11 forcement or other authority, including authority to 

12 order assessments, over a person to the extent such 

13 person— 

14 (A) acts as an agent or broker for a buyer 

15 or seller of a manufactured home or a modular 

16 home; 

17 (B) facilitates the purchase by a consumer 

18 of a manufactured home or modular home, by 

19 negotiating the purchase price or terms of the 

20 sales contract (other than providing financing 

21 with respect to such transaction); or 

22 (C) offers to engage in any activity de23 scribed in subparagraphs (A) or (B). 

24 (2) DESCRIPTION OF ACTIVITIES.—Paragraph 

25 (1) shall not apply to any person described in such 


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1 paragraph to the extent such person is engaged in 

2 any financial activity described in any subparagraph 

3 of section 4002(19) or is otherwise subject to any of 

4 the enumerated consumer laws or the authorities 

5 transferred under subtitle F or H. 

6 (3) DEFINITIONS.—For purposes of this sub7 section: 

8 (A) MANUFACTURED HOME.—The term 

9 ‘‘manufactured home’’ has the meaning given 

10 such term in section 603 of the National Manu11 factured Housing Construction and Safety 

12 Standards Act of 1974 (42 U.S.C. 5402). 

13 (B) MODULAR HOME.—The term ‘‘mod14 ular home’’ means a house built in a factory in 

15 two or more modules that meet the State or 

16 local building codes where the house will be lo17 cated and where such modules are transported 

18 to the building site, installed on foundations, 

19 and completed. 

20 SEC. 4206. COLLECTION OF INFORMATION; CONFIDEN21 TIALITY REGULATIONS. 

22 (a) COLLECTION OF INFORMATION.— 

23 (1) IN GENERAL.—In conducting research on 

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1 formation from time to time regarding the organiza2 tion, business conduct, and practices of covered per3 sons or service providers. 

4 (2) SPECIFIC AUTHORITY.—In order to gather 

5 such information, the Director shall have the 

6 power— 

7 (A) to gather and compile information; 

8 (B) to require persons to file with the 

9 Agency, in such form and within such reason10 able period of time as the Director may pre11 scribe, by regulation or order, annual or special 

12 reports, or answers in writing to specific ques13 tions, furnishing information the Director may 

14 require; and 

15 (C) to make public such information ob16 tained by it under this section as is in the pub17 lic interest in reports or otherwise in the man18 ner best suited for public information and use. 

19 (b) CONFIDENTIALITY REGULATIONS.—The Director 

20 shall prescribe regulations regarding the confidential 

21 treatment of information obtained from persons in connec22 tion with the exercise of any authority of the Agency or 

23 Director under this title and the enumerated consumer 

24 laws and the authorities transferred under subtitles F and 

25 H. 


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1 (c) PRIVACY CONSIDERATIONS.—In collecting infor2 mation from any person, publicly releasing information 

3 held by the Agency, or requiring covered persons to pub4 licly report information, the Director and the Agency shall 

5 take steps to ensure that proprietary, personal or con6 fidential consumer information that are protected from 

7 public disclosure under section 552(b) or 552a of title 5, 

8 United States Code, or any other provision of law are not 

9 made public under this title. 

10 SEC. 4207. MONITORING; ASSESSMENTS OF SIGNIFICANT 

11 REGULATIONS; REPORTS. 

12 (a) MONITORING.— 

13 (1) IN GENERAL.—The Agency shall monitor 

14 for risks to consumers in the provision of consumer 

15 financial products or services, including develop16 ments in markets for such products or services. 

17 (2) MEANS OF MONITORING.—Such monitoring 

18 may be conducted by examinations of covered per19 sons or service providers, analysis of reports ob20 tained from covered persons or service providers, as21 sessment of consumer complaints, surveys and inter22 views of covered persons, service providers, and con23 sumers, and review of available databases. 

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1 quired by this section, the Director may consider, 

2 among other factors— 

3 (A) likely risks and costs to consumers as4 sociated with buying or using a type of con5 sumer financial product or service; 

6 (B) consumers’ understanding of the risks 

7 of a type of consumer financial product or serv8 ice; 

9 (C) the state of the law that applies to the 

10 provision of a consumer financial product or 

11 service, including the extent to which the law is 

12 likely to adequately protect consumers; 

13 (D) rates of growth in the provision of a 

14 consumer financial product or service; 

15 (E) extent, if any, to which the risks of a 

16 consumer financial product or service may dis17 proportionately affect traditionally underserved 

18 consumers, if any; or 

19 (F) types, number, and other pertinent 

20 characteristics of covered persons that provide 

21 the product or service. 

22 (4) REPORTS.—The Agency shall publish at 

23 least 1 report of significant findings of the moni24 toring required by paragraph (1) in each calendar 


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1 year, beginning in the calendar year that is 1 year 

2 after the designated transfer date. 

3 (b) ASSESSMENT OF SIGNIFICANT REGULATIONS.— 

4 (1) IN GENERAL.—The Agency shall conduct an 

5 assessment of each significant regulation prescribed 

6 or order issued by the Director under this title, 

7 under the authorities transferred under subtitles F 

8 and H or pursuant to any enumerated consumer law 

9 that addresses, among other relevant factors, the ef10 fectiveness of the regulation in meeting the purposes 

11 and objectives of this title and the specific goals 

12 stated by the Director. 

13 (2) BASIS FOR ASSESSMENT.—The assessment 

14 shall reflect available evidence and any data that the 

15 Agency reasonably may collect. 

16 (3) REPORTS.—The Agency shall publish a re17 port of an assessment under this subsection not 

18 later than 3 years after the effective date of the reg19 ulation or order, unless the Director determines that 

20 3 years is not sufficient time to study or review the 

21 impact of the regulation, but in no event shall the 

22 Agency publish a report of such assessment more 

23 than 5 years after the effective date of the regula24 tion or order. 


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1 (4) PUBLIC COMMENTED REQUIRED.—Before 

2 publishing a report of its assessment, the Agency 

3 shall invite, with sufficient time allotted, public com4 ment on, and may hold public hearings on, rec5 ommendations for modifying, expanding, or elimi6 nating the newly adopted significant regulation or 

7 order. 

8 (c) INFORMATION GATHERING.—In conducting any 

9 monitoring or assessment required by this section, the 

10 Agency may gather information through a variety of meth11 ods, including by conducting surveys or interviews of con12 sumers. 

13 SEC. 4208. AUTHORITY TO RESTRICT MANDATORY 

14 PREDISPUTE ARBITRATION. 

15 (a) IN GENERAL.—The Director, by regulation, may 

16 prohibit or impose conditions or limitations on the use of 

17 any agreement between a covered person and a consumer 

18 for a consumer financial product or service providing for 

19 arbitration of any future dispute between the parties if 

20 the Director finds that such a prohibition or imposition 

21 of conditions or limitations are in the public interest and 

22 for the protection of consumers. 

23 (b) EFFECTIVE DATE.—Notwithstanding any other 

24 provision of law, any regulation prescribed by the Director 

25 under subsection (a) shall apply, consistent with the terms 


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1 of the regulation, to any agreement between a consumer 

2 and a covered person entered into after the end of the 

3 180-day period beginning on the effective date of the regu4 lation, as established by the Director. 

5 SEC. 4209. REGISTRATION AND SUPERVISION OF NON6 DEPOSITORY COVERED PERSONS. 

7 (a) RISK-BASED PROGRAMS.— 

8 (1) IN GENERAL.—The Agency shall develop 

9 risk-based programs to supervise covered persons 

10 that are not credit unions, depository institutions, or 

11 persons excluded under section 4205 by prescribing 

12 registration requirements, reporting requirements, 

13 and examination standards and procedures. 

14 (2) BASIS FOR PROGRAMS.—The risk-based su15 pervisory programs established pursuant to para16 graph (1) shall be based on— 

17 (A) relevant registration and reporting in18 formation about such covered persons, as deter19 mined by the Agency; and 

20 (B) the Agency’s assessment of risks posed 

21 to consumers in the relevant geographic mar22 kets and markets for consumer financial prod23 ucts and services. 

24 (b) REGISTRATION.— 


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1 (1) IN GENERAL.—The Director shall prescribe 

2 regulations regarding registration requirements for 

3 covered persons that are not credit unions or deposi4 tory institutions. 

5 (2) CONSULTATION WITH STATE AGENCIES.— 

6 In developing and implementing registration require7 ments under this subsection, the Agency shall con8 sult with State agencies regarding requirements or 

9 systems for registration (including coordinated or 

10 combined systems), where appropriate. 

11 (3) EXCEPTION FOR RELATED PERSONS.—The 

12 Agency shall not impose requirements regarding the 

13 registration of a related person. 

14 (4) REGISTRATION INFORMATION.—Subject to 

15 regulations prescribed by the Director, the Agency 

16 shall publicly disclose the registration information 

17 about a covered person which is not a bank holding 

18 company, credit union, or depository institution for 

19 the purposes of facilitating the ability of consumers 

20 to identify the covered person as registered with the 

21 Agency. 

22 (c) REPORTING REQUIREMENTS.— 

23 (1) IN GENERAL.—The Agency may require re24 ports from covered persons that are not credit 

25 unions or depository institutions, or service providers 


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1 thereto, for the purposes of facilitating supervision 

2 of such covered persons or service providers. 

3 (2) CONSISTENCY OF REPORTING REQUIRE4 MENTS AND RISK-BASED STANDARDS.—The Agency 

5 shall impose reporting requirements under this sub6 section that are consistent with the risk-based stand7 ards developed and implemented under this section 

8 and the registration information pertaining to the 

9 relevant types or classes of covered persons. 

10 (3) CONTENTS OF REPORTS.—Reporting re11 quirements imposed under this paragraph may in12 clude information regarding— 

13 (A) the nature of the covered person’s 

14 business; 

15 (B) the covered person’s name, legal form, 

16 ownership and management structure, and re17 lated persons; 

18 (C) the covered person’s locations of oper19 ation; 

20 (D) the covered person’s types and number 

21 of consumer financial products and services 

22 provided by the covered person; 

23 (E) compliance with any requirement im24 posed or enforced by the Agency, including any 


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1 requirement relating to registration, licensing, 

2 fees, or assessments; and 

3 (F) the financial condition of such covered 

4 person, including a related person, for the pur5 pose of assessing the ability of such person to 

6 perform its obligation to consumers. 

7 (4) EXCEPTION FOR RELATED PERSONS.— 

8 Other than reports permitted under paragraph 

9 (3)(F) or in connection with a supervisory action or 

10 examination or pursuant to the powers granted in 

11 subtitle E, the Agency shall not impose requirements 

12 regarding reports of any related person. 

13 (d) EXAMINATIONS.— 

14 (1) EXAMINATIONS REQUIRED.—The Agency 

15 shall conduct examinations of covered persons that 

16 are not credit unions or depository institutions as 

17 part of the programs implemented under paragraphs 

18 (2) and (3) of section 4202(c). 

19 (2) EXAMINATION STANDARDS AND PROCE20 DURES.—The Director shall establish risk-based 

21 standards and procedures for conducting examina22 tions of covered persons required to be examined 

23 under paragraph (1), including the frequency and 

24 scope of such examinations, except that the Agency 

25 shall conduct examinations of such covered persons 


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1 that are determined to pose the highest risk to con2 sumers based on factors determined by the Director, 

3 such as the operations, sales practices, or consumer 

4 financial products or services provided by such cov5 ered persons. 

6 (e) AUTHORITY TO COLLECT INFORMATION REGARD7 ING FEES OR ASSESSMENTS.—To the extent permitted by 

8 Federal law, the Agency may obtain from the Secretary 

9 of the Treasury information relating to a covered person 

10 which is not a bank holding company, credit union, or de11 pository institution, including information regarding com12 pliance with a reporting or registration requirement under 

13 the subchapter II of chapter 53 of title 31, United States 

14 Code, for the purposes of, and only to the extent necessary 

15 in, investigating, determining, or enforcing compliance 

16 with a requirement relating to any fee or assessment im17 posed by the Agency under this title. 

18 SEC. 4210. EFFECTIVE DATE. 

19 This subtitle shall take effect on the designated 

20 transfer date. 

21 Subtitle C—Specific Authorities 

22 SEC. 4301. PROHIBITING UNFAIR, DECEPTIVE, OR ABUSIVE 

23 ACTS OR PRACTICES. 

24 (a) IN GENERAL.—The Agency may take any action 

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1 mitting or engaging in an unfair, deceptive, or abusive act 

2 or practice under Federal law in connection with any 

3 transaction with a consumer for a consumer financial 

4 product or service, or the offering of a consumer financial 

5 product or service. 

6 (b) REGULATIONS.— 

7 (1) IN GENERAL.—The Director may prescribe 

8 regulations identifying as unlawful unfair, deceptive, 

9 or abusive acts or practices in connection with any 

10 transaction with a consumer for a consumer finan11 cial product or service or the offering of a consumer 

12 financial product or service. 

13 (2) INCLUDES PREVENTION MEASURES.—Regu14 lations prescribed under this section may include re15 quirements for the purpose of preventing such acts 

16 or practices. 

17 (c) UNFAIRNESS.— 

18 (1) IN GENERAL.—The Director and the Agen19 cy shall have no authority under this section to de20 clare an act or practice in connection with a trans21 action with a consumer for a consumer financial 

22 product or service, or the offering of a consumer fi23 nancial product or service, to be unlawful on the 

24 grounds that such act or practice is unfair unless 

25 the Agency has a reasonable basis to conclude that 


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1 the act or practice causes or is likely to cause sub2 stantial injury to consumers which is not reasonably 

3 avoidable by consumers and such substantial injury 

4 is not outweighed by countervailing benefits to con5 sumers or to competition. 

6 (2) ESTABLISHED PUBLIC POLICY AS FAC7 TOR.—In determining whether an act or practice is 

8 unfair, the Agency may consider established public 

9 policies as evidence to be considered with all other 

10 evidence. 

11 (d) CONSULTATION.—In prescribing any regulation 

12 under this section, the Director shall consult with the Fed13 eral banking agencies, State bank supervisors, the Federal 

14 Trade Commission, or other Federal agencies, as appro15 priate, regarding the consistency of a proposed regulation 

16 with prudential, consumer protection, civil rights, market, 

17 or systemic objectives administered by such agencies or 

18 supervisors. 

19 SEC. 4302. DISCLOSURES. 

20 (a) IN GENERAL.—The Director may prescribe regu21 lations to ensure the timely, appropriate and effective dis22 closure to consumers of the costs, benefits, and risks asso23 ciated with any consumer financial product or service. 

24 (b) COORDINATION WITH OTHER LAWS.—In pre25 scribing regulations under subsection (a), the Director 


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1 shall take into account disclosure requirements under 

2 other laws in order to enhance consumer compliance and 

3 reduce regulatory burden. 

4 (c) COMPLIANCE.— 

5 (1) MODEL DISCLOSURES.—The Agency may 

6 provide model disclosures to facilitate compliance 

7 with the requirements of regulations prescribed 

8 under this section. 

9 (2) PER SE COMPLIANCE.—Compliance by a 

10 covered person with the model disclosures issued by 

11 the Agency under this subsection shall per se con12 stitute compliance with the disclosure requirements 

13 of this section. 

14 (3) ADDITIONAL GUIDANCE.—The Agency may 

15 issue exemptions, no action letters, and other guid16 ance to promote compliance with disclosures require17 ments of regulations prescribed under this section. 

18 (d) COMBINED MORTGAGE LOAN DISCLOSURE.— 

19 Within 1 year after the designated transfer date, the Di20 rector shall propose for public comment regulations and 

21 model disclosures that combine the disclosures required 

22 under the Truth in Lending Act and the Real Estate Set23 tlement Procedures Act into a single, integrated disclosure 

24 for mortgage loan transactions covered by those laws, un25 less the Director determines that any proposal issued by 


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1 the Board of Governors and the Department of Housing 

2 and Urban Development carries out the same purpose. 

3 SEC. 4303. SALES PRACTICES. 

4 The Director may prescribe regulations and issue or5 ders and guidance regarding the manner, settings, and cir6 cumstances for the provision of any consumer financial 

7 products or services to ensure that the risks, costs, and 

8 benefits of the products or services, both initially and over 

9 the term of the products or services, are fully and accu10 rately represented to consumers. 

11 SEC. 4304. PILOT DISCLOSURES. 

12 (a) PILOT DISCLOSURES.—The Agency shall estab13 lish standards and procedures for approval of pilot disclo14 sures to be provided or made available by a covered person 

15 to consumers in connection with the provision of a con16 sumer financial product or service, or the offering of a 

17 consumer financial product or service. 

18 (b) STANDARDS.—The procedures shall provide that 

19 a pilot disclosure must be limited in time and scope and 

20 reasonably designed to contribute materially to the under21 standing of consumer awareness and understanding of, 

22 and responses to, disclosures or communications about the 

23 risks, costs, and benefits of consumer financial products 

24 or services. 


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1 (c) TRANSPARENCY.—The procedures shall provide 

2 for public disclosure of pilots, but the Agency may limit 

3 disclosure to the extent necessary to encourage covered 

4 persons to conduct effective pilots. 

5 SEC. 4305. ADOPTING OPERATIONAL STANDARDS TO 

6 DETER UNFAIR, DECEPTIVE, OR ABUSIVE 

7 PRACTICES. 

8 (a) AUTHORITY TO PRESCRIBE STANDARDS.—The 

9 States are encouraged to prescribe standards applicable 

10 to covered persons who are not insured depository institu11 tions or credit unions, or service providers, to deter and 

12 detect unfair, deceptive, abusive, fraudulent, or illegal 

13 transactions in the provision of consumer financial prod14 ucts or services, including standards for— 

15 (1) background checks for principals, officers, 

16 directors, or key personnel; 

17 (2) registration, licensing, or certification; 

18 (3) bond or other appropriate financial require19 ments to provide reasonable assurance of ability to 

20 perform its obligations to consumers; 

21 (4) creating and maintaining records of trans22 actions or accounts; or 

23 (5) procedures and operations relating to the 

24 provision of, or maintenance of accounts for, con25 sumer financial products or services. 


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1 (b) AGENCY AUTHORITY TO PRESCRIBE STAND2 ARDS.— 

3 (1) IN GENERAL.—The Director may prescribe 

4 regulations establishing minimum standards under 

5 this section for any class of covered persons other 

6 than covered persons which are subject to the juris7 diction of a Federal banking agency or a State bank 

8 supervisor , or for any service provider. 

9 (2) REGISTRATION AND LICENSING STAND10 ARDS.—In addition to prescribing standards for the 

11 purposes described in subsection (a), the Director 

12 may prescribe registration or licensing standards ap13 plicable to covered persons for the purposes of im14 posing fees or assessments in accordance with this 

15 title. 

16 (3) ENFORCEMENT OF STANDARDS.—The Di17 rector may enforce under subtitle E compliance with 

18 standards adopted by the Director or a State pursu19 ant to this section for covered persons or service 

20 providers operating in that State. 

21 (c) CONSULTATION.—In prescribing minimum stand22 ards under this section, the Director shall consult with the 

23 Federal banking agencies, State bank supervisors, the 

24 Federal Trade Commission, or other Federal agencies, as 

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1 lation with prudential, consumer protection, civil rights, 

2 market, or systemic objectives administered by such agen3 cies or supervisors. 

4 SEC. 4306. DUTIES. 

5 (a) IN GENERAL.— 

6 (1) REGULATIONS ENSURING FAIR DEALING

7 WITH CONSUMERS.—The Director shall prescribe 

8 regulations imposing duties on a covered person, or 

9 an employee of a covered person, or an agent or 

10 independent contractor for a covered person, who 

11 deals or communicates directly with consumers in 

12 the provision of a consumer financial product or 

13 service, as the Director deems appropriate or nec14 essary to ensure fair dealing with consumers. 

15 (2) CONSIDERATIONS FOR DUTIES.—In pre16 scribing such regulations, the Director shall consider 

17 whether— 

18 (A) the covered person, employee, agent, or 

19 independent contractor represents implicitly or 

20 explicitly that the person, employee, agent, or 

21 contractor is acting in the interest of the con22 sumer with respect to any aspect of the trans23 action; 

24 (B) the covered person, employee, agent, 

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1 sumer with advice with respect to any aspect of 

2 the transaction; 

3 (C) the consumer’s reliance on or use of 

4 any advice from the covered person, employee, 

5 agent, or independent contractor would be rea6 sonable and justifiable under the circumstances; 

7 (D) the benefits to consumers of imposing 

8 a particular duty would outweigh the costs; and 

9 (E) any other factors as the Director con10 siders appropriate. 

11 (3) DUTIES RELATING TO COMPENSATION

12 PRACTICES.— 

13 (A) IN GENERAL.—The Director may pre14 scribe regulations establishing duties regarding 

15 compensation practices applicable to a covered 

16 person, employee, agent, or independent con17 tractor who deals or communicates directly with 

18 a consumer in the provision of a consumer fi19 nancial product or service for the purpose of 

20 promoting fair dealing with consumers. 

21 (B) NO COMPENSATION CAPS.—The Direc22 tor may not prescribe a limit on the total dollar 

23 amount of compensation paid to any person. 

24 (C) DISPARITY TREATMENT PROHIB25 ITED.—The Director may not prescribe regulaVerDate Nov 24 2008 22:04 Dec 02, 2009 Jkt 089200 PO 00000 Frm 00794 Fmt 6652 Sfmt 6201 E:\BILLS\H4173.IH H4173

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1 tions that directly or indirectly disparately 

2 treat, or are interpreted to disparately treat, or 

3 disparately impact any entity that employs cov4 ered persons. 

5 (4) REQUIREMENT TO INCLUDE DISCLAIMER ON

6 PUBLIC STATEMENTS.—The Director shall ensure 

7 that the Agency’s website, and any statement made 

8 by the Director or the Agency to the public, includes 

9 a disclaimer stating that the Agency does not en10 dorse any particular financial product or service and 

11 consumers are expected to exercise due diligence in 

12 deciding what financial products and services are ap13 propriate for them. 

14 (b) ADMINISTRATIVE PROCEEDINGS.— 

15 (1) IN GENERAL.—Any regulation prescribed by 

16 the Director under this section shall be enforceable 

17 only by the Agency through an adjudication pro18 ceeding under subtitle E or by a State regulator 

19 through an appropriate administrative proceeding as 

20 permitted under State law. 

21 (2) EXCLUSIVITY OF REMEDY.—No action may 

22 be commenced in any court to enforce any require23 ment of a regulation prescribed under this section, 

24 and no court may exercise supplemental jurisdiction 

25 over a claim asserted under a regulation prescribed 


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1 under this section based on allegations or evidence 

2 of conduct that otherwise may be subject to such 

3 regulation. 

4 (3) RULE OF CONSTRUCTION.—The Agency, 

5 the Attorney General, and any State attorney gen6 eral or State regulator shall not be precluded from 

7 enforcing any other Federal or State law against a 

8 person with respect to conduct that may be subject 

9 to a regulation prescribed by the Director under this 

10 section. 

11 (c) EXCLUSIONS.—This section shall not be con12 strued as authorizing the Director to prescribe regulations 

13 applicable to— 

14 (1) an attorney licensed to practice law and in 

15 compliance with the applicable rules and standards 

16 of professional conduct, but only to the extent that 

17 the consumer financial product or service provided is 

18 within the attorney-client relationship with the con19 sumer; or 

20 (2) any trustee, custodian, or other person that 

21 holds a fiduciary duty in connection with a trust, in22 cluding a fiduciary duty to a grantor or beneficiary 

23 of a trust, that is subject to and in compliance with 

24 the applicable law relating to such trust. 


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1 SEC. 4307. CONSUMER RIGHTS TO ACCESS INFORMATION. 

2 (a) IN GENERAL.—Subject to regulations prescribed 

3 by the Director, a covered person shall make available to 

4 a consumer, in an electronic form usable by the consumer, 

5 information in the control or possession of the covered per6 son concerning the consumer financial product or service 

7 that the consumer obtained from such covered person in8 cluding information relating to any transaction, series of 

9 transactions, or to the account including costs, charges 

10 and usage data. 

11 (b) EXCEPTIONS.—A covered person shall not be re12 quired by this section to make available to the consumer— 

13 (1) any confidential commercial information, in14 cluding an algorithm used to derive credit scores or 

15 other risk scores or predictors; 

16 (2) any information collected by the covered 

17 person for the purpose of preventing fraud or money 

18 laundering, or detecting, or making any report re19 garding other unlawful or potentially unlawful con20 duct; 

21 (3) any information required to be kept con22 fidential by any other law (including section 6103 of 

23 the Internal Revenue Code of 1986); or 

24 (4) any information that the covered person 

25 cannot retrieve in the ordinary course of its business 

26 with respect to that information. 


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1 (c) NO DUTY TO MAINTAIN RECORDS.—No provision 

2 of this section shall be construed as imposing any duty 

3 on a covered person to maintain or keep any information 

4 about a consumer. 

5 (d) STANDARDIZED FORMATS FOR DATA.—The Di6 rector, by regulation, shall prescribe standards applicable 

7 to covered persons to promote the development and use 

8 of standardized formats for information, including 

9 through the use of machine readable files, to be made 

10 available to consumers under this section. 

11 (e) CONSULTATION.—The Director shall, when pre12 scribing any regulation under this section, consult with the 

13 Federal banking agencies, State bank supervisors, the 

14 Federal Trade Commission, and the Commissioner of In15 ternal Revenue to ensure that the regulations— 

16 (1) impose substantively similar requirements 

17 on covered persons; 

18 (2) take into account conditions under which 

19 covered persons do business both in the United 

20 States and in other countries; and 

21 (3) do not require or promote the use of any 

22 particular technology in order to develop systems for 

23 compliance. 

24 SEC. 4308. PROHIBITED ACTS. 

25 It shall be unlawful for any person— 


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1 (1) to advertise, market, offer, sell, enforce, or 

2 attempt to enforce, any term, agreement, change in 

3 terms, fee, or charge in connection with a consumer 

4 financial product or service that is not in conformity 

5 with this title or applicable regulation prescribed or 

6 order issued by the Director or to engage in any un7 fair, deceptive, or abusive act or practice, except that 

8 no person shall be held to have violated this sub9 section solely by virtue of providing or selling time 

10 or space to a person placing an advertisement; 

11 (2) to fail or refuse to pay any fee or assess12 ment imposed by the Agency under this title, to fail 

13 or refuse to permit access to or copying of records, 

14 to fail or refuse to establish or maintain records, or 

15 to fail or refuse to make reports or provide informa16 tion to the Agency, as required by this title, an enu17 merated consumer law, or pursuant to the authori18 ties transferred by subtitles F and H, or any regula19 tion prescribed or order issued by the Director this 

20 title or pursuant to any such authority; or 

21 (3) to knowingly or recklessly provide substan22 tial assistance to another person in violation of the 

23 provisions of section 4301, or any regulation pre24 scribed or order issued under such section, and any 

25 such person shall be deemed to be in violation of 


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1 that section to the same extent as the person to 

2 whom such assistance is provided. 

3 SEC. 4309. TREATMENT OF REMITTANCE TRANSFERS. 

4 (a) DISCLOSURES REQUIRED FOR REMITTANCE

5 TRANSFERS.— 

6 (1) IN GENERAL.—Each remittance transfer 

7 provider shall make disclosures to consumers, as 

8 specified by this section and by regulation prescribed 

9 by the Director. 

10 (2) SPECIFIC DISCLOSURES.—In addition to 

11 any other disclosures applicable under this title, a 

12 remittance transfer provider shall— 

13 (A) disclose clearly and conspicuously, in 

14 writing and in a form that the consumer may 

15 keep, to each consumer who requests informa16 tion regarding the fees or exchange rate for a 

17 remittance transfer, prior to the consumer mak18 ing any payment in connection with the trans19 fer— 

20 (i) the total amount in United States 

21 dollars that will be required to be paid by 

22 the consumer in connection with the remit23 tance transfer; 

24 (ii) the amount of currency that the 

25 designated recipient of the remittance 


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1 transfer will receive, using the values of 

2 the currency into which the funds will be 

3 exchanged; 

4 (iii) the fee charged by the remittance 

5 transfer provider for the remittance trans6 fer; 

7 (iv) any exchange rate to be used by 

8 the remittance transfer provider for the re9 mittance transfer, unless the exchange rate 

10 is not fixed on send; 

11 (v) the amount of time for which the 

12 information specified in this subparagraph 

13 (A) will be in effect; 

14 (vi) the expected time interval within 

15 which the funds being transferred will be 

16 made available to the recipient; and 

17 (vii) the location where the funds 

18 being transferred will be made available to 

19 the recipient if the funds are to be made 

20 available only at one location, or if the re21 mittance transfer provider permits the re22 cipient to choose from multiple locations 

23 where the funds being transferred will be 

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1 able to the consumer or the recipient a re2 source that lists such locations; 

3 (B) at the time at which the consumer 

4 makes payment in connection with the remit5 tance transfer, a receipt in writing disclosing 

6 clearly and conspicuously— 

7 (i) the information described in sub8 paragraph (A); 

9 (ii) the expected time interval within 

10 which the funds being transferred will be 

11 made available to the recipient, which shall 

12 be not more than ten days after the date 

13 the consumer makes payment in connec14 tion with the remittance transfer unless 

15 otherwise prohibited by applicable State or 

16 Federal law or the law of another country, 

17 or as may be specified by the consumer so 

18 long as the consumer has the choice to 

19 order that the funds be made available to 

20 the recipient not more than ten days after 

21 the consumer makes payment in connec22 tion with the remittance transfer; 

23 (iii) the location where the funds 

24 being transferred will be made available to 

25 the recipient if the funds are to be made 


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1 available only at one location, or if the re2 mittance transfer provider permits the re3 cipient to choose from multiple locations 

4 where the funds being transferred will be 

5 made available to the recipient, the remit6 tance transfer provider shall make avail7 able to the consumer or the recipient a re8 source that lists such locations; 

9 (iv) the name and telephone number 

10 or address of the designated recipient, if 

11 provided to the remittance transfer pro12 vider by the consumer; 

13 (v) information about the rights of the 

14 consumer under this section to cancel the 

15 remittance transfer, to resolve errors and 

16 to receive refunds; 

17 (vi) appropriate contact information 

18 for the remittance transfer provider; 

19 (vii) a transaction reference number 

20 unique to that remittance transfer; and 

21 (viii) information as to when the ex22 change rate will be calculated (for example, 

23 when the funds are received by the recipi24 ent), if the customer has been notified that 

25 the exchange rate is not fixed on send; 


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1 (C) at the time at which the consumer ini2 tiates the remittance transfer, offer to provide 

3 in writing, prior to making any payment in con4 nection with the transfer, the information listed 

5 in subparagraph (A); and 

6 (D) in the case of an exchange rate not 

7 fixed on send, the remittance provider shall also 

8 disclose, at the time at which the consumer ini9 tiates the remittance transfer, the range, using 

10 the high and low rates, for the prior 30 day pe11 riod, that the consumer would have received if 

12 a representative amount had been exchanged by 

13 the remittance transfer provider, as well as a 

14 clear and conspicuous notice that the actual ex15 change rate may vary. 

16 If the actual rate used for the transfer is known to 

17 the remittance provider, either because such rate 

18 was set by the remittance provider itself or because 

19 the remittance provider receives confirmation of the 

20 actual exchange rate used, the remittance provider 

21 shall make available to consumers written or elec22 tronic confirmation of the actual exchange rate used 

23 and the amount of currency that the recipient or the 

24 remittance transfer received, using the values of the 

25 currency into which the funds were exchanged. The 


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1 Director shall within 2 years after the date of the 

2 enactment of the Consumer Financial Protection 

3 Agency Act of 2009 prescribe consumer disclosures 

4 for transfers with rates not fixed on send that are 

5 functionally equivalent to those applicable to remit6 tances where the exchange rate is specified by the 

7 remittance transfer provider at the time the con8 sumer initiates the remittance transfer. To the 

9 greatest extent possible, the Director shall ensure 

10 that functional equivalence will enable remittance 

11 transfer providers to comply with all requirements in 

12 this title and provide consumers with information 

13 sufficient to compare services providers, to time 

14 their use of the product, to discover errors in trans15 mission and to seek remedies. 

16 (3) EXEMPTION.—Notwithstanding require17 ments under paragraph (2)(A)(ii), (2)(A)(iv), or 

18 (2)(B)(i), no such disclosure is required— 

19 (A) because of the requirements of another 

20 law, including the law of another country; 

21 (B) because the transfer is being routed 

22 through the Directo a Me ́xico offered by the 

23 Federal reserve banks; or 

24 (C) because of any other circumstance 

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1 tor; If the actual rate used for the transfer is 

2 known to the remittance provider, the remit3 tance provider shall make available to con4 sumers written or electronic confirmation of the 

5 actual exchange rate used and the amount of 

6 currency that the recipient of the remittance 

7 transfer received, using the values of the cur8 rency into which the funds were exchanged. 

9 (4) PROVISION OF TOLL-FREE NUMBER AND

10 WEB ACCESS.— 

11 (A) In addition to providing the disclosures 

12 required by this section to a consumer at a re13 mittance transfer provider location, a remit14 tance transfer provider shall provide a toll-free 

15 telephone number or local number, and an 

16 Internet website that a consumer can access for 

17 which access no remittance transfer provider 

18 may assess a charge, to obtain the information 

19 required by paragraph (2)(A) for remittance 

20 transfers offered by that remittance transfer 

21 provider or information about the status of a 

22 remittance transfer for which a consumer has 

23 made payment. 

24 (B) A remittance transfer provider that on 

25 an aggregate basis originates 30,000 or fewer 


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1 transfers on a calendar year basis (or such 

2 other amount as may be prescribed by the Di3 rector) is not required to offer the web access 

4 prescribed in subparagraph (A), but is required 

5 to provide a toll-free telephone number or local 

6 number as prescribed in subparagraph (A). 

7 (5) ALTERNATIVE METHODS OF DISCLOSURE.— 

8 Subject to subsection (e)(2), a remittance transfer 

9 provider may— 

10 (A) if the transaction is conducted entirely 

11 by telephone (which shall include, but not be 

12 limited to, a mobile telephone) satisfy the re13 quirements of paragraph (2)(A) orally or, at the 

14 option of the consumer, electronically through a 

15 message sent to the consumer through any elec16 tronic means (including, but not limited to, an 

17 electronic mail address or a mobile telephone) 

18 as designated by the consumer; 

19 (B) satisfy the requirements of paragraph 

20 (2)(A) electronically if the transfer is initiated 

21 by the consumer electronically through the re22 mittance transfer provider’s website or through 

23 any other electronic means; and 

24 (C) satisfy the requirements of paragraph 

25 (2)(B) by mailing (or transmitting electronically 


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1 if the transfer is initiated electronically by the 

2 consumer through the remittance transfer pro3 vider’s website or the consumer otherwise con4 sents in accordance with the provisions of sec5 tion 101 of the Electronic Signatures in Global 

6 and National Commerce Act) the information 

7 required under such paragraph to the consumer 

8 not later than one business day after the date 

9 on which the transaction is conducted, if the 

10 transaction is conducted entirely by telephone 

11 (or electronically) and the consumer requests a 

12 written receipt. 

13 (b) WRITTEN FOREIGN LANGUAGE DISCLOSURES.— 

14 (1) IN GENERAL.—The disclosures required 

15 under subsections (a)(2)(A) and (a)(2)(B)(i) shall be 

16 made in English and— 

17 (A) at each remittance transfer provider 

18 location, shall be made in the same languages 

19 principally used by the remittance transfer pro20 vider, or any of its agents, to advertise, solicit, 

21 or market its remittance transfers business, ei22 ther orally or in writing, at that location, if 

23 other than English, provided that such lan24 guages are those for which the Director has 


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1 issued model disclosures as provided in sub2 section (g); or 

3 (B) on a remittance transfer provider’s 

4 website, shall at a minimum be made in any 

5 other language for which the Director has 

6 issued model disclosures as provided in sub7 section (g) if the remittance transfer provider, 

8 or any of its agents, advertises, solicits, or mar9 kets its remittance transfers business in such 

10 language. 

11 (2) DISPUTES CONCERNING TERMS.—If a dis12 closure is required by this section to be in English 

13 and another language, the English version of the 

14 disclosure shall govern any dispute concerning the 

15 terms of the receipt. However, any discrepancies be16 tween the English version and any other version due 

17 to the translation of the receipt from English to an18 other language including errors or ambiguities shall 

19 be construed against the remittance transfer pro20 vider or its agent and the remittance transfer pro21 vider or its agent shall be liable for any damages 

22 caused by these discrepancies. 

23 (c) REMITTANCE TRANSFER CANCELLATIONS, RE24 FUNDS, AND ERRORS.— 

25 (1) CANCELLATIONS.— 


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1 (A) After receiving the receipt required 

2 under subsection (a)(2)(B), a consumer may 

3 cancel the currency transaction— 

4 (i) before leaving the premises of the 

5 remittance transfer provider where the 

6 consumer received the receipt, and 

7 (ii) not later than 30 minutes after 

8 the time the consumer initiated the remit9 tance transfer with the remittance transfer 

10 provider. 

11 (B) If a consumer cancels the transaction, 

12 the remittance transfer provider shall imme13 diately refund to the consumer the fees paid 

14 and the currency to be transferred, and issue a 

15 receipt indicating that the transaction has been 

16 cancelled. 

17 (C) A consumer may not cancel a remit18 tance transfer after the remittance transfer pro19 vider has sent the funds to the recipient. 

20 (D) A remittance transfer provider shall 

21 not be required to provide a refund if providing 

22 a refund would violate State or Federal law. 

23 (2) REFUNDS.— 

24 (A) If a remittance transfer provider re25 ceives written notice from the consumer within 


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1 ten days of the promised date of delivery of a 

2 remittance transfer that no amount of the 

3 funds to be remitted was made available to the 

4 designated recipient in the foreign country, the 

5 remittance transfer provider shall— 

6 (i) refund to the consumer the total 

7 amount in U.S. dollars that was paid by 

8 the consumer in connection with such re9 mittance transfer; 

10 (ii) promptly transmit the remittance 

11 transfer in accordance with the terms in 

12 the written receipt provided to the con13 sumer pursuant to subsection (a)(2)(B); 

14 (iii) provide such other remedy, as de15 termined appropriate by rule of the Direc16 tor for the protection of consumers; or 

17 (iv) demonstrate to the consumer that 

18 the proceeds of the remittance transfer 

19 were made available to the recipient of the 

20 remittance provider. 

21 (B) A remittance transfer provider shall 

22 not be required to provide a refund if providing 

23 a refund would violate State or Federal law. 

24 (3) ERROR RESOLUTION.— 


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1 (A) IN GENERAL.—If a remittance transfer 

2 provider receives written notice from the con3 sumer within 60 days of the promised date of 

4 delivery that an error occurred with respect to 

5 a remittance transfer, including that the full 

6 amount of the funds to be remitted was not 

7 made available to the designated recipient in 

8 the foreign country, the remittance transfer 

9 provider shall resolve the error pursuant to this 

10 paragraph. 

11 (B) REMEDIES.—Not later than 120 days 

12 after the date of receipt of a notice from the 

13 consumer pursuant to subparagraph (A), the 

14 remittance transfer provider shall— 

15 (i) as applicable to the error and as 

16 designated by the consumer— 

17 (I) refund to the consumer the 

18 total amount in U.S. dollars that was 

19 paid by the consumer in connection 

20 with the remittance transfer that was 

21 not properly transmitted; 

22 (II) make available to the des23 ignated recipient, without additional 

24 cost to the designated recipient or to 


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1 the consumer, the amount appropriate 

2 to resolve the error; 

3 (III) provide such other remedy, 

4 as determined appropriate by regula5 tion of the Director for the protection 

6 of consumers; or 

7 (ii) demonstrate to the consumer that 

8 there was no error. 

9 (4) REGULATIONS.—The Director, in order to 

10 protect consumers, shall establish, by regulation, 

11 clear and appropriate standards for remittance 

12 transfer providers with respect to error resolution, 

13 cancellation and refunds. 

14 (d) ENFORCEMENT AUTHORITY.—The Director shall 

15 have the sole authority to enforce the provisions of this 

16 section, and any regulations established pursuant to this 

17 section. 

18 (e) APPLICABILITY OF OTHER PROVISIONS OF

19 LAW.— 

20 (1) APPLICABILITY OF TITLE 18 AND TITLE 31

21 PROVISIONS.—A remittance transfer provider that is 

22 a money transmitting business as defined in section 

23 5330 of title 31, United States Code, may provide 

24 remittance transfers only if such provider is in com25 pliance with the requirements of section 5330 of title 


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1 31, United States Code, and section 1960 of title 

2 18, United States Code, as applicable. 

3 (2) RULE OF CONSTRUCTION.—Nothing in this 

4 section shall be construed— 

5 (A) to affect the application to any trans6 action, to any remittance provider, or to any 

7 other person of any of the provisions of sub8 chapter II of chapter 53 of title 31, United 

9 States Code, section 21 of the Federal Deposit 

10 Insurance Act, or chapter 2 of title I of Public 

11 Law 91–508, or any regulations promulgated 

12 thereunder; or 

13 (B) to cause any fund transfer that would 

14 not otherwise be treated as such under para15 graph (2) to be treated as an electronic fund 

16 transfer, or as otherwise subject to this title, for 

17 the purposes of any of the provisions referred to 

18 in subparagraph (A) or any regulation pre19 scribed under such subparagraph. 

20 (f) DEFINITIONS.—For purposes of this section, the 

21 following definitions shall apply: 

22 (1) DEPOSITORY INSTITUTION.—the term ‘‘de23 pository institution’’ has the same meaning as in 

24 section 3 of the Federal Deposit Insurance Act and 

25 includes a credit union. 


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1 (2) NOT FIXED ON SEND.—The term ‘‘not fixed 

2 on send’’ when referring to an exchange rate used 

3 in a remittance transfer means an exchange rate 

4 that is not set by the remittance transfer provider 

5 at the time the consumer initiates the remittance 

6 transfer. 

7 (3) REMITTANCE TRANSFER.—The term ‘‘re8 mittance transfer’’ means the electronic (as defined 

9 in section 106(2) of the Electronic Signatures in 

10 Global and National Commerce Act) transfer of 

11 funds at the request of a consumer located in any 

12 State to a person in another country that is initiated 

13 by a remittance transfer provider, whether or not 

14 the consumer is an account holder of the remittance 

15 transfer provider or whether or not the remittance 

16 transfer is also an electronic fund transfer, as de17 fined in section 903 of the Electronic Fund Transfer 

18 Act. 

19 (4) REMITTANCE TRANSFER PROVIDER.—The 

20 term ‘‘remittance transfer provider’’ means any per21 son or depository institution, or agent thereof, that 

22 originates remittance transfers on behalf of con23 sumers in the normal course of its business, whether 

24 or not the consumer is an account holder of that 

25 person or depository institution. 


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1 (g) MODEL DISCLOSURES.— 

2 (1) PUBLICATION.—Notwithstanding any provi3 sions of this title, the Director shall establish and 

4 publish model disclosure forms to facilitate compli5 ance with the disclosure requirements of this section 

6 and to aid the consumer in understanding the trans7 action to which the subject disclosure form relates. 

8 (2) LANGUAGES TO BE USED IN MODEL DIS9 CLOSURES.—The Director shall make these disclo10 sures available within 1 year of the effective date of 

11 this title— 

12 (A) in English, and 

13 (B) the ten most frequently spoken lan14 guages in the United States, other than 

15 English, used by consumers initiating remit16 tance transfers, as may be determined by the 

17 Director. 

18 (3) USE OF AUTOMATED EQUIPMENT.—In es19 tablishing model forms under this subsection, the 

20 Director shall consider the use by lessors of data 

21 processing or similar automated equipment. 

22 (4) USE OPTIONAL.—A remittance transfer pro23 vider may utilize a model disclosure form established 

24 by the Director under this subsection for purposes 


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1 of compliance with this section, at the discretion of 

2 the remittance transfer provider. 

3 (5) EFFECT OF USE.—Any remittance transfer 

4 provider that properly uses the material aspects of 

5 any model disclosure form established by the Direc6 tor under this subsection shall be deemed to be in 

7 compliance with the disclosure requirements to 

8 which the form relates. 

9 (h) REGULATION AND EXEMPTION AUTHORITY.— 

10 Notwithstanding any other provisions of this title, the Di11 rector, in the sole discretion of the Director, in consulta12 tion with relevant Federal and State government agencies 

13 may by regulation exempt from one or more requirements 

14 of this section, any category of remittance transfer pro15 vider if the Director determines that under applicable Fed16 eral or State law that such category of remittance transfer 

17 provider is subject to requirements substantially similar 

18 to those imposed under this section or that such law gives 

19 greater protection and benefit to the consumer, and that 

20 there is adequate provision for enforcement. 

21 (i) APPLICABILITY OF STATE LAW.— 

22 (1) This section does not annul, alter, affect, or 

23 exempt any person subject to the provisions of this 

24 section from complying with other applicable Federal 

25 law and the laws of any State relating to remittance 


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1 transfers and remittance transfer providers, except 

2 to the extent that those laws are inconsistent with 

3 the provisions of this section, and then only to the 

4 extent of the inconsistency. 

5 (2) Notwithstanding any other provisions of 

6 this title, the Director may determine whether such 

7 inconsistencies exist. A State law is not inconsistent 

8 with this section if the protection such law affords 

9 any consumer is greater than the protection afforded 

10 by this section. If the Director determines that a 

11 State requirement is inconsistent, remittance trans12 fer providers shall incur no liability under the law of 

13 that State for a good faith failure to comply with 

14 that law, notwithstanding that such determination is 

15 subsequently amended, rescinded, or determined by 

16 judicial or other authority to be invalid for any rea17 son. This section does not extend the applicability of 

18 any such law to any class of persons or transactions 

19 to which it would not otherwise apply. 

20 (3) This section does not annul, alter, or affect 

21 the laws of any State relating to the licensing or 

22 registration, supervision or examination of remit23 tance transfer providers. 

24 (4) Nothing in this section shall be construed as 

25 limiting the authority of a State attorney general or 


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1 State regulator to bring an action or other regu2 latory proceeding arising solely under the law of that 

3 State. 

4 (j) FEDERAL CREDIT UNION ACT AMENDMENT.— 

5 Paragraph (12)(A) of section 107 of the Federal Credit 

6 Union Act (12 U.S.C. 1757(12)(A)) is amended by insert7 ing ‘‘and remittance transfers, as defined in section 4309 

8 of the Consumer Financial Protection Agency Act of 

9 2009’’ after ‘‘and domestic electronic fund transfers’’. 

10 (k) AUTOMATED CLEARINGHOUSE SYSTEM.— 

11 (1) EXPANSION OF SYSTEM.—The Board of 

12 Governors of the Federal Reserve System shall work 

13 with the Federal reserve banks to expand the use of 

14 the automated clearinghouse system for remittance 

15 transfers to foreign countries, with a focus on coun16 tries that receive significant remittance transfers 

17 from the United States, based on— 

18 (A) the volume and dollar amount of re19 mittance transfers to those countries; 

20 (B) the significance of the volume of such 

21 transfers, relative to the external financial flows 

22 of the receiving country; and 

23 (C) the feasibility of such an expansion. 

24 (2) REPORT TO THE CONGRESS.—Before the 

25 end of the 180-day period beginning on the date of 


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1 the enactment of this title, and on April 30 bienni2 ally thereafter, the Board of Governors of the Fed3 eral Reserve System shall submit a report to the Di4 rector, the Committee on Banking, Housing, and 

5 Urban Affairs of the Senate, and the Committee on 

6 Financial Services of the House of Representatives 

7 on the status of the automated clearinghouse system 

8 and its progress in complying with the requirements 

9 of this section. 

10 (l) REGULATORY GUIDANCE ON REMITTANCE

11 TRANSFERS.— 

12 (1) PROVISION OF GUIDELINES TO INSTITU13 TIONS.—The Director shall provide guidelines to all 

14 remittance transfer providers regarding— 

15 (A) the offering of low-cost remittance 

16 transfers; 

17 (B) the availability of agency services to 

18 remittance transfer providers; 

19 (C) compliance with the provisions of this 

20 title; and 

21 (D) specific options that allow remittance 

22 transfer providers to take advantage of auto23 mated clearing systems, including the FedACH 

24 International Services offered by the Board of 

25 Governors of the Federal Reserve System and 


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1 the Federal reserve banks, to transmit remit2 tances at low cost. 

3 (2) CONTENT OF GUIDELINES.—Guidelines pro4 vided to remittance transfer providers under this 

5 section shall include— 

6 (A) information as to the methods of pro7 viding remittance transfer services; 

8 (B) the potential economic opportunities in 

9 providing low-cost remittance transfers; and 

10 (C) the potential value to depository insti11 tutions of broadening their financial bases to 

12 include persons that use remittance transfers. 

13 (3) ASSISTANCE TO FINANCIAL LITERACY COM14 MISSION.—The Secretary of the Treasury and each 

15 agency referred to in subsection (a) shall, as part of 

16 their duties as members of the Financial Literacy 

17 and Education Commission, assist that Commission 

18 in improving the financial literacy and education of 

19 consumers who send remittances. 

20 (m) REPORT ON FEASIBILITY OF AND IMPEDIMENTS

21 TO USE OF REMITTANCE HISTORY IN CALCULATION OF

22 CREDIT SCORE.—Before the end of the 365-day period 

23 beginning on the date of the enactment of this title, the 

24 Director shall submit a report to the President, the Com25 mittee on Banking, Housing, and Urban Affairs of the 


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1 Senate, and the Committee on Financial Services of the 

2 House of Representatives regarding— 

3 (1) the manner in which a consumer’s remit4 tance history could be used to enhance a consumer’s 

5 credit score; 

6 (2) the current legal and business model bar7 riers and impediments that impede the use of a con8 sumer’s remittance history to enhance the con9 sumer’s credit score; and 

10 (3) recommendations on the manner in which 

11 maximum transparency and disclosure to consumers 

12 of exchange rates for remittance transfers subject to 

13 this title may be accomplished, whether or not such 

14 exchange rates are known at the time of origination 

15 or payment by the consumer for the remittance 

16 transfer, including disclosure to the sender of the ac17 tual exchange rate used and the amount of currency 

18 that the recipient of the remittance transfer re19 ceived, using the values of the currency into which 

20 the funds were exchanged, as contained in section s 

21 919(a)(2)(D) and 919(a)(3) of the Electronic Fund 

22 Transfer Act (as amended by subsection (a)). 

23 (n) EFFECTIVE DATE.—This section shall apply with 

24 respect to remittance transfers made after the end of the 


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1 180-day period beginning on the date of the enactment 

2 of this title. 

3 SEC. 4310. EFFECTIVE DATE. 

4 This subtitle shall take effect on the designated 

5 transfer date. 

6 SEC. 4311. NO AUTHORITY TO REQUIRE THE OFFERING OF 

7 FINANCIAL PRODUCTS OR SERVICES. 

8 The Director may not prescribe any regulation, issue 

9 any order or guidance, or take any other action, including 

10 any enforcement action, the effect of which would be to 

11 require a covered person to offer to any consumer a spe12 cific financial product or service. 

13 SEC. 4312. APPRAISAL INDEPENDENCE REQUIREMENTS. 

14 (a) PROMULGATION OF NEW REQUIREMENTS.—The 

15 Director shall lead a Negotiated Rulemaking Committee 

16 under the Federal Advisory Committee Act and the Nego17 tiated Rulemaking Act to promulgate appraisal independ18 ence requirements for residential loan purposes, and such 

19 Committee shall promulgate such requirements not later 

20 than the end of the 60-day period beginning on the date 

21 of the enactment of this title. 

22 (b) CERTAIN REGULATION REQUIREMENTS.—Regu23 lations promulgated by the Negotiated Rulemaking Com24 mittee under this section— 


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1 (1) shall not prohibit lenders, the Federal Na2 tional Mortgage Association, or the Federal Home 

3 Loan Mortgage Corporation from accepting any ap4 praisal report completed by an appraiser selected, 

5 retained, or compensated in any manner by a mort6 gage loan originator— 

7 (A) licensed or registered in accordance 

8 with section 1501 et seq. of the SAFE Mort9 gage Licensing Act of 2008; and 

10 (B) subject to State or Federal laws that 

11 make it unlawful for a mortgage loan originator 

12 to make any payment, threat, or promise, di13 rectly or indirectly, to any appraiser of a prop14 erty, for the purposes of influencing the inde15 pendent judgment of the appraiser with respect 

16 to the value of the property, except that nothing 

17 in this section shall prohibit a person with an 

18 interest in a real estate transaction from asking 

19 an appraiser to— 

20 (i) consider additional, appropriate 

21 property information; 

22 (ii) provide further detail, substan23 tiation, or explanation for the appraiser’s 

24 value conclusion; or 


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1 (iii) correct errors in the appraisal re2 port; and 

3 (2) shall include a requirement that lenders and 

4 their agents compensate appraisers at a rate that is 

5 customary and reasonable for appraisal services per6 formed in the market area of the property being ap7 praised. 

8 (c) SUNSET.—Effective on the date the appraisal 

9 independence requirements are promulgated pursuant to 

10 subsection (a), the Home Valuation Code of Conduct an11 nounced by the Federal Housing Finance Agency on De12 cember 23, 2008, shall have no force or effect. 

13 Subtitle D—Preservation of State 

14 Law 

15 SEC. 4401. RELATION TO STATE LAW. 

16 (a) IN GENERAL.— 

17 (1) RULE OF CONSTRUCTION.—This title shall 

18 not be construed as annulling, altering, or affecting, 

19 or exempting any person subject to the provisions of 

20 this title from complying with, the laws, regulations, 

21 orders, or interpretations, in effect in any State, ex22 cept to the extent that such statute, regulation, 

23 order, or interpretation is inconsistent with the pro24 visions of this title and then only to the extent of the 

25 inconsistency. 


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1 (2) GREATER PROTECTION UNDER STATE

2 LAW.—For the purposes of this subsection, a stat3 ute, regulation, order, or interpretation in effect in 

4 any State is not inconsistent with the provisions of 

5 this title if the protection such statute, regulation, 

6 order, or interpretation affords consumers is greater 

7 than the protection provided under this title. A de8 termination regarding whether a statute, regulation, 

9 order, or interpretation in effect in any State is in10 consistent with the provisions of this title may be 

11 made by the Agency on its own motion or in re12 sponse to a nonfrivolous petition initiated by any in13 terested person. 

14 (b) RELATION TO OTHER PROVISIONS OF ENUMER15 ATED CONSUMER LAWS THAT RELATE TO STATE LAW.— 

16 No provision of this title, except as provided in section 

17 4803, shall be construed as modifying, limiting, or super18 seding the operation of any provision of an enumerated 

19 consumer law that relates to the application of a law in 

20 effect in any State with respect to such Federal law. 

21 SEC. 4402. PRESERVATION OF ENFORCEMENT POWERS OF 

22 STATES. 

23 (a) IN GENERAL.— 

24 (1) ACTION BY STATE.—Any State attorney 

25 general may bring a civil action in the name of such 


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1 State, as parens patriae on behalf of natural persons 

2 residing in such State, in any district court of the 

3 United States or State court having jurisdiction of 

4 the defendant, to secure monetary or equitable relief 

5 for violation of any provisions of this title or regula6 tions issued thereunder. 

7 (2) RULE OF CONSTRUCTION.—No provision of 

8 this title shall be construed as modifying, limiting, 

9 or superseding the operation of any provision of an 

10 enumerated consumer law that relates to the author11 ity of a State attorney general or State regulator to 

12 enforce such Federal law. 

13 (b) CONSULTATION REQUIRED.— 

14 (1) NOTICE.— 

15 (A) IN GENERAL.—Before initiating any 

16 action in a court or other administrative or reg17 ulatory proceeding against any covered person 

18 to enforce any provision of this title, including 

19 any regulation prescribed by the Director under 

20 this title, a State attorney general or State reg21 ulator shall timely provide a copy of the com22 plete complaint to be filed and written notice 

23 describing such action or proceeding to the 

24 Agency, or the Agency’s designee. 


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1 (B) EMERGENCY ACTION.—If prior notice 

2 is not practicable, the State attorney general or 

3 State regulator shall provide a copy of the com4 plete complaint and the notice to the Agency 

5 immediately upon instituting the action or pro6 ceeding. 

7 (C) CONTENTS OF NOTICE.—The notifica8 tion required under this section shall, at a min9 imum, describe— 

10 (i) the identity of the parties; 

11 (ii) the alleged facts underlying the 

12 proceeding; and 

13 (iii) whether there may be a need to 

14 coordinate the prosecution of the pro15 ceeding so as not to interfere with any ac16 tion, including any rulemaking, undertaken 

17 by the Director or Agency or another Fed18 eral agency. 

19 (2) AGENCY RESPONSE.—In any action de20 scribed in paragraph (1), the Agency may— 

21 (A) intervene in the action as a party; 

22 (B) upon intervening— 

23 (i) remove the action to the appro24 priate United States district court, if the 


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1 action was not originally brought there; 

2 and 

3 (ii) be heard on all matters arising in 

4 the action; and 

5 (C) appeal any order or judgment to the 

6 same extent as any other party in the pro7 ceeding may. 

8 (c) REGULATIONS.—The Director shall prescribe reg9 ulations to implement the requirements of this section 

10 and, from time to time, provide guidance in order to fur11 ther coordinate actions with the State attorneys general 

12 and other regulators. 

13 (d) PRESERVATION OF STATE AUTHORITY.— 

14 (1) STATE CLAIMS.—No provision of this sec15 tion shall be construed as limiting the authority of 

16 a State attorney general or State regulator to bring 

17 an action or other regulatory proceeding arising sole18 ly under the law of that State. 

19 (2) STATE SECURITIES REGULATORS.—No pro20 vision of this title shall be construed as altering, lim21 iting, or affecting the authority of a State securities 

22 commission (or any agency or office performing like 

23 functions) under State law to adopt rules, initiate 

24 enforcement proceedings, or take any other action 


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1 with respect to a person regulated by such commis2 sion or authority. 

3 (3) STATE INSURANCE REGULATORS.—No pro4 vision of this title shall be construed as altering, lim5 iting, or affecting the authority of a State insurance 

6 commission or State insurance regulator under State 

7 law to adopt rules, initiate enforcement proceedings, 

8 or take any other action with respect to a person 

9 regulated by such commission or regulator. 

10 SEC. 4403. PRESERVATION OF EXISTING CONTRACTS. 

11 This title, and regulations, orders, guidance, and in12 terpretations prescribed, issued, and established by the 

13 Agency, shall not be construed to alter or affect the appli14 cability of any regulation, order, guidance, or interpreta15 tion prescribed, issued, and established by the Comptroller 

16 of the Currency or the Director of the Office of Thrift 

17 Supervision regarding the applicability of State law under 

18 Federal banking law to any contract entered into on or 

19 before the date of the enactment of this title, by national 

20 banks, Federal savings associations, or subsidiaries there21 of that are regulated and supervised by the Comptroller 

22 of the Currency or the Director of the Office of Thrift 

23 Supervision, respectively. 


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1 SEC. 4404. STATE LAW PREEMPTION STANDARDS FOR NA2 TIONAL BANKS AND SUBSIDIARIES CLARI3 FIED. 

4 (a) IN GENERAL.—Chapter one of title LXII of the 

5 Revised Statutes of the United States (12 U.S.C. 21 et 

6 1 seq.) is amended by inserting after section 5136B the 

7 following new section: 

8 ‘‘SEC. 5136C. STATE LAW PREEMPTION STANDARDS FOR NA9 TIONAL BANKS AND SUBSIDIARIES CLARI10 FIED. 

11 ‘‘(a) DEFINITIONS.—For purposes of this section, the 

12 following definitions shall apply: 

13 ‘‘(1) NATIONAL BANK.—The term ‘national 

14 bank’ includes— 

15 ‘‘(A) any bank organized under the laws of 

16 the United States; and 

17 ‘‘(B) any Federal branch established in ac18 cordance with the International Banking Act of 

19 1978. 

20 ‘‘(2) STATE CONSUMER FINANCIAL LAWS.—The 

21 term ‘State consumer financial law’ means a State 

22 law that does not directly or indirectly discriminate 

23 against national banks and that regulates the man24 ner, content, or terms and conditions of any finan25 cial transaction (as may be authorized for national 


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1 banks to engage in), or any account related thereto, 

2 with respect to a consumer. 

3 ‘‘(3) OTHER DEFINITIONS.—The terms ‘affil4 iate’, ‘subsidiary’, ‘includes’, and ‘including’ have the 

5 same meaning as in section 3 of the Federal Deposit 

6 Insurance Act. 

7 ‘‘(b) PREEMPTION STANDARD.— 

8 ‘‘(1) IN GENERAL.—National banks shall gen9 erally comply with State laws. State laws are pre10 empted only if— 

11 ‘‘(A) application of a state law would have 

12 a discriminatory effect on national banks in 

13 comparison with the effect of the law on a bank 

14 chartered by that State; 

15 ‘‘(B) the Comptroller of the Currency de16 termines by regulation or order on a case-by17 case basis that a State law prevents or signifi18 cantly interferes with the ability of an insured 

19 depository institution chartered as national 

20 bank to engage in the business of banking; or 

21 ‘‘(C) the State law is preempted by Fed22 eral law other than this Act. 

23 ‘‘(2) SAVINGS CLAUSE.—This Act does not pre24 empt or alter the applicability of any State law to 

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1 ty that is not an insured depository institution char2 tered as a national bank. 

3 ‘‘(3) RULE OF CONSTRUCTION.—This Act does 

4 not occupy the field in any area of State law and a 

5 court shall review any claim that a State law is pre6 empted by this Act as a matter of law and without 

7 deference to any agency claim that a State law is 

8 preempted under this Act. 

9 ‘‘(4) REVIEW OF PREEMPTION DECISIONS.—A 

10 court shall review any claim that a State law is pre11 empted by this Act as a matter of law and without 

12 deference to any agency claim that a state law is 

13 preempted under this Act. Nothing in this sub14 section shall affect the deference that a court affords 

15 to the Comptroller of the Currency regarding the 

16 meaning or interpretation of the National Bank Act 

17 or other Federal laws. 

18 ‘‘(c) SUBSTANTIAL EVIDENCE.—No regulation of the 

19 Comptroller of the Currency prescribed under subsection 

20 (b)(1)(B), shall be interpreted or applied so as to invali21 date, or otherwise declare inapplicable to a national bank, 

22 the provision of the State consumer financial law unless 

23 substantial evidence, made on the record of the pro24 ceeding, supports the specific finding that the provision 

25 prevents or significantly interferes with the national 


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1 bank’s exercise of a power explicitly granted by the Con2 gress. 

3 ‘‘(d) OTHER FEDERAL LAWS.—Notwithstanding any 

4 other provision of law, the Comptroller of the Currency 

5 may not prescribe regulation pursuant to subsection 

6 (b)(1)(B) until the Comptroller of the Currency, after con7 sultation with the Consumer Financial Protection Agency, 

8 makes a finding, in writing, that a Federal law provides 

9 a substantive standard, applicable to a national bank, 

10 which regulates the particular conduct, activity, or author11 ity that is subject to such provision of the State consumer 

12 financial law. 

13 ‘‘(e) PERIODIC REVIEW OF PREEMPTION DETER14 MINATIONS.—The Comptroller of the Currency shall peri15 odically conduct a review, through notice and public com16 ment, of each determination that a provision of Federal 

17 law preempts a State consumer financial law. The agency 

18 shall conduct such review within the 5-year period after 

19 prescribing or otherwise issuing such determination, and 

20 at least once during each 5-year period thereafter. After 

21 conducting the review of, and inspecting the comments 

22 made on, the determination, the agency shall timely pro23 pose to continue, amend or rescind it, as may be appro24 priate, in accordance with the procedures set forth in subVerDate Nov 24 2008 22:04 Dec 02, 2009 Jkt 089200 PO 00000 Frm 00834 Fmt 6652 Sfmt 6201 E:\BILLS\H4173.IH H4173

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1 sections (a) and (b) of section 5244 (12 U.S.C. 43(a)– 

2 (b)). 

3 ‘‘(f) APPLICATION OF STATE CONSUMER FINANCIAL

4 LAW TO SUBSIDIARIES AND AFFILIATES.—Notwith5 standing any provision of this title, a State consumer fi6 nancial law shall apply to a subsidiary or affiliate of a 

7 national bank to the same extent that the State consumer 

8 financial law applies to any person, corporation, or other 

9 entity subject to such State law.’’. 

10 (b) CLERICAL AMENDMENT.—The table of sections 

11 for chapter one of title LXII of the Revised Statutes of 

12 the United States is amended by inserting after the item 

13 relating to section 5136B the following new item: 

‘‘5136C. State law preemption standards for national banks and subsidiaries 

clarified.’’. 

14 SEC. 4405. VISITORIAL STANDARDS. 

15 Section 5136C of the Revised Statutes of the United 

16 States (as added by section 4404) is amended by adding 

17 at the end the following new subsections: 

18 ‘‘(g) VISITORIAL POWERS.— 

19 ‘‘(1) RULE OF CONSTRUCTION.—No provision 

20 of this title which relates to visitorial powers or oth21 erwise limits or restricts the supervisory, examina22 tion, or regulatory authority to which any national 

23 bank is subject shall be construed as limiting or re24 stricting the authority of any attorney general (or 


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1 other chief law enforcement officer) of any State to 

2 bring any action in any court of appropriate jurisdic3 tion— 

4 ‘‘(A) to require a national bank to produce 

5 records relative to the investigation of violations 

6 of State consumer law, or Federal consumer 

7 laws; 

8 ‘‘(B) to enforce any applicable Federal or 

9 State law, as authorized by such law; or 

10 ‘‘(C) on behalf of residents of such State, 

11 to enforce any applicable provision of any Fed12 eral or State law against a national bank, as 

13 authorized by such law, or to seek relief and re14 cover damages for such residents from any vio15 lation of any such law by any national bank. 

16 ‘‘(2) CONSULTATION.—The attorney general (or 

17 other chief law enforcement officer) of any State 

18 shall consult with the head of the agency responsible 

19 for chartering and regulating national banks before 

20 acting under paragraph (1). 

21 ‘‘(h) ENFORCEMENT ACTIONS.—The ability of the 

22 head of the agency responsible for chartering and regu23 lating national banks to bring an enforcement action 

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1 ties from enforcing rights granted under Federal or State 

2 law in the courts.’’. 

3 SEC. 4406. CLARIFICATION OF LAW APPLICABLE TO NON4 DEPOSITORY INSTITUTION SUBSIDIARIES. 

5 Section 5136C of the Revised Statutes of the United 

6 States is amended by inserting after subsection (h) (as 

7 added by section 4405) the following new subsection: 

8 ‘‘(i) CLARIFICATION OF LAW APPLICABLE TO NON9 DEPOSITORY INSTITUTION SUBSIDIARIES AND AFFILI10 ATES OF NATIONAL BANKS.— 

11 ‘‘(1) DEFINITIONS.—For purposes of this sec12 tion, the following definitions shall apply: 

13 ‘‘(A) DEPOSITORY INSTITUTION, SUB14 SIDIARY, AFFILIATE.—The terms ‘depository in15 stitution’, ‘subsidiary’, and ‘affiliate’ have the 

16 same meanings as in section 3 of the Federal 

17 Deposit Insurance Act. 

18 ‘‘(B) NONDEPOSITORY INSTITUTION.—The 

19 term ‘nondepository institution’ means any enti20 ty that is not a depository institution. 

21 ‘‘(2) IN GENERAL.—No provision of this title 

22 shall be construed as annulling, altering, or affecting 

23 the applicability of State law to any nondepository 

24 institution, subsidiary, other affiliate, or agent of a 

25 national bank.’’. 


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1 SEC. 4407. STATE LAW PREEMPTION STANDARDS FOR FED2 ERAL SAVINGS ASSOCIATIONS AND SUBSIDI3 ARIES CLARIFIED. 

4 (a) IN GENERAL.—The Home Owners’ Loan Act (12 

5 U.S.C. 1461 et seq.) is amended by inserting after section 

6 5 the following new section: 

7 ‘‘SEC. 6. STATE LAW PREEMPTION STANDARDS FOR FED8 ERAL SAVINGS ASSOCIATIONS CLARIFIED. 

9 ‘‘(a) STATE CONSUMER FINANCIAL LAW DE10 FINED.—For purposes of this section, the term ‘State con11 sumer financial law’ means a State law that does not di12 rectly or indirectly discriminate against Federal savings 

13 associations and that regulates the manner, content, or 

14 terms and conditions of any financial transaction (as may 

15 be authorized for Federal savings associations to engage 

16 in), or any account related thereto, with respect to a con17 sumer. 

18 ‘‘(b) PREEMPTION STANDARD.— 

19 ‘‘(1) IN GENERAL.—Federal savings associa20 tions shall generally comply with State laws. State 

21 laws are preempted only if— 

22 ‘‘(A) application of a state law would have 

23 a discriminatory effect on Federal savings asso24 ciations in comparison with the effect of the law 

25 on a bank chartered by that State; 


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1 ‘‘(B) the Director of the Office of Thrift 

2 Supervision determines by regulation or order 

3 on a case-by-case basis that a State law pre4 vents or significantly interferes with the ability 

5 of an insured depository institution chartered as 

6 a Federal savings associations to engage in the 

7 business of banking; or 

8 ‘‘(C) the State law is preempted by Fed9 eral law other than this Act. 

10 ‘‘(2) SAVINGS CLAUSE.—This Act does not pre11 empt or alter the applicability of any State law to 

12 any Federal savings associations subsidiary, affiliate, 

13 or other entity that is not an insured depository in14 stitution chartered as a national bank. 

15 ‘‘(3) RULE OF CONSTRUCTION.—This Act does 

16 not occupy the field in any area of State law and a 

17 court shall review any claim that a State law is pre18 empted by this Act as a matter of law and without 

19 deference to any agency claim that a State law is 

20 preempted under this Act. 

21 ‘‘(4) REVIEW OF PREEMPTION DECISIONS.—A 

22 court shall review any claim that a State law is pre23 empted by this Act as a matter of law and without 

24 deference to any agency claim that a state law is 

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1 section shall affect the deference that a court affords 

2 to the Director of the Office of Thrift Supervision 

3 regarding the meaning or interpretation of the Na4 tional Bank Act or other Federal laws. 

5 ‘‘(c) OTHER FEDERAL LAW.—Notwithstanding any 

6 other provision of law, the Director of the Office of Thrift 

7 Supervision may not prescribe any regulation pursuant to 

8 subsection (b)(1)(B) until such Director, after consulta9 tion with the Consumer Financial Protection Agency, 

10 makes a finding, in writing, that a Federal law provides 

11 a substantive standard, applicable to a Federal savings as12 sociation, which regulates the particular conduct, activity, 

13 or authority that is subject to such provision of the State 

14 consumer financial law. 

15 ‘‘(d) SUBSTANTIAL EVIDENCE.—No regulation pre16 scribed by the Director of the Office of Thrift Supervision 

17 issued under subsection (b)(1)(B) shall be interpreted or 

18 applied so as to invalidate, or otherwise declare inappli19 cable to a Federal savings association, the provision of the 

20 State consumer financial law unless substantial evidence, 

21 made on the record of the proceeding, supports the specific 

22 finding that the provision prevents or significantly inter23 feres with the Federal savings association’s exercise of a 

24 power explicitly granted by the Congress. 


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1 ‘‘(e) PERIODIC REVIEW OF PREEMPTION DETER2 MINATIONS.—The Director of the Office of Thrift Super3 vision shall periodically conduct a review, through notice 

4 and public comment, of each determination that a provi5 sion of Federal law preempts a State consumer financial 

6 law. The agency shall conduct such review within the 5- 

7 year period after prescribing or otherwise issuing such de8 termination, and at least once during each 5-year period 

9 thereafter. After conducting the review of, and inspecting 

10 the comments made on, the determination, the agency 

11 shall timely propose to continue, amend or rescind it, as 

12 may be appropriate, in accordance with the procedures set 

13 forth in subsections (a) and (b) of section 5244 of the 

14 Revised Statutes of the United States (12 U.S.C. 43(a)- 

15 (b)). 

16 ‘‘(f) APPLICATION OF STATE CONSUMER FINANCIAL

17 LAW TO SUBSIDIARIES AND AFFILIATES.—Notwith18 standing any provision of this Act, a State consumer fi19 nancial law shall apply to a subsidiary or affiliate of a 

20 Federal savings association to the same extent that the 

21 State consumer financial law applies to any person, cor22 poration, or other entity subject to such State law and 

23 consistent with Federal law.’’. 

24 (b) CLERICAL AMENDMENT.—The table of sections 

25 for the Home Owners’ Loan Act (12 U.S.C. 1461 et seq.) 


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1 is amended by striking the item relating to section 6 and 

2 inserting the following new item: 

‘‘Sec. 6. State law preemption standards for Federal savings associations clarified.’’. 

3 SEC. 4408. VISITORIAL STANDARDS. 

4 Section 6 of the Home Owners’ Loan Act (as added 

5 by section 4407 of this title) is amended by adding at the 

6 end the following new subsections: 

7 ‘‘(g) VISITORIAL POWERS.— 

8 ‘‘(1) IN GENERAL.—No provision of this Act 

9 shall be construed as limiting or restricting the au10 thority of any attorney general (or other chief law 

11 enforcement officer) of any State to bring any action 

12 in any court of appropriate jurisdiction— 

13 ‘‘(A) to require a Federal savings associa14 tion to produce records relative to the investiga15 tion of violations of State consumer law, or 

16 Federal consumer laws; 

17 ‘‘(B) to enforce any applicable Federal or 

18 State law, as authorized by such law; or 

19 ‘‘(C) on behalf of residents of such State, 

20 to enforce any applicable provision of any Fed21 eral or State law against a Federal savings as22 sociation, as authorized by such law, or to seek 

23 relief and recover damages for such residents 


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1 from any violation of any such law by any Fed2 eral savings association. 

3 ‘‘(2) CONSULTATION.—The attorney general (or 

4 other chief law enforcement officer) of any State 

5 shall consult with the Director or any successor 

6 agency before acting under paragraph (1). 

7 ‘‘(h) ENFORCEMENT ACTIONS.—The ability of the 

8 Director or any successor officer or agency to bring an 

9 enforcement action under this Act or section 5 of the Fed10 eral Trade Commission Act shall not be construed as pre11 cluding private parties from enforcing rights granted 

12 under Federal or State law in the courts.’’. 

13 SEC. 4409. CLARIFICATION OF LAW APPLICABLE TO NON14 DEPOSITORY INSTITUTION SUBSIDIARIES. 

15 Section 6 of the Home Owners’ Loan Act is amended 

16 by adding after subsection (h) (as added by section 4408) 

17 the following new subsection: 

18 ‘‘(i) CLARIFICATION OF LAW APPLICABLE TO NON19 DEPOSITORY INSTITUTION SUBSIDIARIES AND AFFILI20 ATES OF FEDERAL SAVINGS ASSOCIATIONS.— 

21 ‘‘(1) DEFINITIONS.—For purposes of this sec22 tion, the following definitions shall apply: 

23 ‘‘(A) DEPOSITORY INSTITUTION, SUB24 SIDIARY, AFFILIATE.—The terms ‘depository in25 stitution’, ‘subsidiary’, and ‘affiliate’ have the 


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1 same meanings as in section 3 of the Federal 

2 Deposit Insurance Act. 

3 ‘‘(B) NONDEPOSITORY INSTITUTION.—The 

4 term ‘nondepository institution’ means any enti5 ty that is not a depository institution. 

6 ‘‘(2) IN GENERAL.—No provision of this title 

7 shall be construed as preempting the applicability of 

8 State law to any nondepository institution, sub9 sidiary, other affiliate, or agent of a Federal savings 

10 association.’’. 

11 SEC. 4410. EFFECTIVE DATE. 

12 This subtitle shall take effect on the designated 

13 transfer date. 

14 Subtitle E—Enforcement Powers 

15 SEC. 4501. DEFINITIONS. 

16 For purposes of this subtitle, the following definitions 

17 shall apply: 

18 (1) CIVIL INVESTIGATIVE DEMAND AND DE19 MAND.—The terms ‘‘civil investigative demand’’ and 

20 ‘‘demand’’ mean any demand issued by the Agency. 

21 (2) AGENCY INVESTIGATION.—The term 

22 ‘‘Agency investigation’’ means any inquiry conducted 

23 by an Agency investigator for the purpose of 

24 ascertaining whether any person is or has been en25 gaged in any conduct that violates this title, any 


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1 enumerated consumer law, or any regulation pre2 scribed or order issued by the Director under this 

3 title or under the authorities transferred under sub4 titles F and H. 

5 (3) AGENCY INVESTIGATOR.—The term ‘‘Agen6 cy investigator’’ means any attorney or investigator 

7 employed by the Agency who is charged with the 

8 duty of enforcing or carrying into effect any provi9 sions of this title, any enumerated consumer law, the 

10 authorities transferred under subtitles F and H, or 

11 any regulation prescribed or order issued under this 

12 title or pursuant to any such authority by the Direc13 tor. 

14 (4) CUSTODIAN.—The term ‘‘custodian’’ means 

15 the custodian or any deputy custodian designated by 

16 the Agency. 

17 (5) DOCUMENTARY MATERIAL.—The term 

18 ‘‘documentary material’’ includes the original or any 

19 copy of any book, document, record, report, memo20 randum, paper, communication, tabulation, chart, 

21 log, electronic file, or other data or data compila22 tions stored in any medium. 

23 (6) VIOLATION.—The term ‘‘violation’’ means 

24 any act or omission that, if proved, would constitute 

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1 ated consumer law, any law for which authorities 

2 were transferred under subtitles F and H, or of any 

3 regulation prescribed or order issued by the Director 

4 under this title or pursuant to any such authority. 

5 SEC. 4502. INVESTIGATIONS AND ADMINISTRATIVE DIS6 COVERY. 

7 (a) JOINT INVESTIGATIONS.— 

8 (1) IN GENERAL.—The Agency or, where ap9 propriate, an Agency representative may engage in 

10 joint investigations and requests for information. 

11 (2) FAIR LENDING.—The authority under para12 graph (1) includes matters relating to fair lending, 

13 and where appropriate, joint investigations and re14 quests for information with the Secretary of Hous15 ing and Urban Development, the Attorney General, 

16 or both.’’ 

17 (b) SUBPOENAS.— 

18 (1) IN GENERAL.—The Agency or an Agency 

19 investigator may issue subpoenas for the attendance 

20 and testimony of witnesses and the production of 

21 relevant papers, books, documents, or other material 

22 in connection with hearings under this title. 

23 (2) FAILURE TO OBEY.—In case of contumacy 

24 or refusal to obey a subpoena issued pursuant to 

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1 trict court of the United States for any district in 

2 which such person is found, resides, or transacts 

3 business, upon application by the Agency or an 

4 Agency investigator and after notice to such person, 

5 shall have jurisdiction to issue an order requiring 

6 such person to appear and give testimony or to ap7 pear and produce documents or other material, or 

8 both. 

9 (3) CONTEMPT.—Any failure to obey an order 

10 of the court under this subsection may be punished 

11 by the court as a contempt thereof. 

12 (c) DEMANDS.— 

13 (1) IN GENERAL.—Whenever the Agency has 

14 reason to believe that any person may be in posses15 sion, custody, or control of any documentary mate16 rial or tangible things, or may have any information, 

17 relevant to a violation, the Agency may, before the 

18 institution of any proceedings under this title or 

19 under any enumerated consumer law or pursuant to 

20 the authorities transferred under subtitles F and H, 

21 issue in writing, and cause to be served upon such 

22 person, a civil investigative demand requiring such 

23 person to— 


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1 (A) produce such documentary material for 

2 inspection and copying or reproduction in the 

3 form or medium requested by the Agency; 

4 (B) submit such tangible things; 

5 (C) file written reports or answers to ques6 tions; 

7 (D) give oral testimony concerning docu8 mentary material or other information; or 

9 (E) furnish any combination of such mate10 rial, answers, or testimony. 

11 (2) REQUIREMENTS.—Each civil investigative 

12 demand shall state the nature of the conduct consti13 tuting the alleged violation which is under investiga14 tion and the provision of law applicable to such vio15 lation. 

16 (3) PRODUCTION OF DOCUMENTS.—Each civil 

17 investigative demand for the production of documen18 tary material shall— 

19 (A) describe each class of documentary 

20 material to be produced under the demand with 

21 such definiteness and certainty as to permit 

22 such material to be fairly identified; 

23 (B) prescribe a return date or dates which 

24 will provide a reasonable period of time within 

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1 bled and made available for inspection and 

2 copying or reproduction; and 

3 (C) identify the custodian to whom such 

4 material shall be made available. 

5 (4) PRODUCTION OF THINGS.—Each civil inves6 tigative demand for the submission of tangible 

7 things shall— 

8 (A) describe each class of tangible things 

9 to be submitted under the demand with such 

10 definiteness and certainty as to permit such 

11 things to be fairly identified; 

12 (B) prescribe a return date or dates which 

13 will provide a reasonable period of time within 

14 which the things so demanded may be assem15 bled and submitted; and 

16 (C) identify the custodian to whom such 

17 things shall be submitted. 

18 (5) DEMAND FOR WRITTEN REPORTS OR AN19 SWERS.—Each civil investigative demand for written 

20 reports or answers to questions shall— 

21 (A) propound with definiteness and cer22 tainty the reports to be produced or the ques23 tions to be answered; 


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1 (B) prescribe a date or dates at which time 

2 written reports or answers to questions shall be 

3 submitted; and 

4 (C) identify the custodian to whom such 

5 reports or answers shall be submitted. 

6 (6) ORAL TESTIMONY.—Each civil investigative 

7 demand for the giving of oral testimony shall— 

8 (A) prescribe a date, time, and place at 

9 which oral testimony shall be commenced; and 

10 (B) identify a Agency investigator who 

11 shall conduct the investigation and the custo12 dian to whom the transcript of such investiga13 tion shall be submitted. 

14 (7) SERVICE.— 

15 (A) Any civil investigative demand may be 

16 served by any Agency investigator at any place 

17 within the territorial jurisdiction of any court of 

18 the United States. 

19 (B) Any such demand or any enforcement 

20 petition filed under this section may be served 

21 upon any person who is not found within the 

22 territorial jurisdiction of any court of the 

23 United States, in such manner as the Federal 

24 Rules of Civil Procedure prescribe for service in 

25 a foreign nation. 


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1 (C) To the extent that the courts of the 

2 United States have authority to assert jurisdic3 tion over such person consistent with due proc4 ess, the United States District Court for the 

5 District of Columbia shall have the same juris6 diction to take any action respecting compliance 

7 with this section by such person that such dis8 trict court would have if such person were per9 sonally within the jurisdiction of such district 

10 court. 

11 (8) METHOD OF SERVICE.—Service of any civil 

12 investigative demand or any enforcement petition 

13 filed under this section may be made upon a person, 

14 including any legal entity, by— 

15 (A) delivering a duly executed copy of such 

16 demand or petition to the individual or to any 

17 partner, executive officer, managing agent, or 

18 general agent of such person, or to any agent 

19 of such person authorized by appointment or by 

20 law to receive service of process on behalf of 

21 such person; 

22 (B) delivering a duly executed copy of such 

23 demand or petition to the principal office or 

24 place of business of the person to be served; or 


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1 (C) depositing a duly executed copy in the 

2 United States mails, by registered or certified 

3 mail, return receipt requested, duly addressed 

4 to such person at its principal office or place of 

5 business. 

6 (9) PROOF OF SERVICE.— 

7 (A) A verified return by the individual 

8 serving any civil investigative demand or any 

9 enforcement petition filed under this section 

10 setting forth the manner of such service shall 

11 be proof of such service. 

12 (B) In the case of service by registered or 

13 certified mail, such return shall be accompanied 

14 by the return post office receipt of delivery of 

15 such demand or enforcement petition. 

16 (10) PRODUCTION OF DOCUMENTARY MATE17 RIAL.—The production of documentary material in 

18 response to a civil investigative demand shall be 

19 made under a sworn certificate, in such form as the 

20 demand designates, by the person, if a natural per21 son, to whom the demand is directed or, if not a 

22 natural person, by any person having knowledge of 

23 the facts and circumstances relating to such produc24 tion, to the effect that all of the documentary mate25 rial required by the demand and in the possession, 


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1 custody, or control of the person to whom the de2 mand is directed has been produced and made avail3 able to the custodian. 

4 (11) SUBMISSION OF TANGIBLE THINGS.—The 

5 submission of tangible things in response to a civil 

6 investigative demand shall be made under a sworn 

7 certificate, in such form as the demand designates, 

8 by the person to whom the demand is directed or, 

9 if not a natural person, by any person having knowl10 edge of the facts and circumstances relating to such 

11 production, to the effect that all of the tangible 

12 things required by the demand and in the posses13 sion, custody, or control of the person to whom the 

14 demand is directed have been submitted to the cus15 todian. 

16 (12) SEPARATE ANSWERS.—Each reporting re17 quirement or question in a civil investigative demand 

18 shall be answered separately and fully in writing 

19 under oath, unless it is objected to, in which event 

20 the reasons for the objection shall be stated in lieu 

21 of an answer, and it shall be submitted under a 

22 sworn certificate, in such form as the demand des23 ignates, by the person, if a natural person, to whom 

24 the demand is directed or, if not a natural person, 

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1 ing requirement or question, to the effect that all in2 formation required by the demand and in the posses3 sion, custody, control, or knowledge of the person to 

4 whom the demand is directed has been submitted. 

5 (13) TESTIMONY.— 

6 (A) PROCEDURE.— 

7 (i) OATH AND RECORDATION.—Any 

8 Agency investigator before whom oral testi9 mony is to be taken shall put the witness 

10 on oath or affirmation and shall person11 ally, or by any individual acting under the 

12 direction of and in the presence of the in13 vestigator, record the testimony of the wit14 ness. 

15 (ii) TRANSCRIPTIONS.—The testimony 

16 shall be taken stenographically and tran17 scribed. 

18 (iii) COPY TO CUSTODIAN.—After the 

19 testimony is fully transcribed, the Agency 

20 investigator before whom the testimony is 

21 taken shall promptly transmit a copy of 

22 the transcript of the testimony to the cus23 todian. 

24 (B) PARTIES PRESENT.—Any Agency in25 vestigator before whom oral testimony is to be 


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1 taken shall exclude from the place where the 

2 testimony is to be taken all other persons ex3 cept the person giving the testimony, the attor4 ney for such person, the officer before whom 

5 the testimony is to be taken, an investigator or 

6 representative of an agency with which the 

7 Agency is engaged in a joint investigation, and 

8 any stenographer taking such testimony. 

9 (C) LOCATION.—The oral testimony of any 

10 person taken pursuant to a civil investigative 

11 demand shall be taken in the judicial district of 

12 the United States in which such person resides, 

13 is found, or transacts business, or in such other 

14 place as may be agreed upon by the Agency in15 vestigator before whom the oral testimony of 

16 such person is to be taken and such person. 

17 (D) ATTORNEY REPRESENTATION.— 

18 (i) IN GENERAL.—Any person com19 pelled to appear under a civil investigative 

20 demand for oral testimony pursuant to this 

21 section may be accompanied, represented, 

22 and advised by an attorney. 

23 (ii) CONFIDENTIAL ADVICE.—The at24 torney may advise the person summoned, 

25 in confidence, either upon the request of 


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1 such person or upon the initiative of the 

2 attorney, with respect to any question 

3 asked of such person. 

4 (iii) OBJECTIONS.—The person sum5 moned or the attorney may object on the 

6 record to any question, in whole or in part, 

7 and shall briefly state for the record the 

8 reason for the objection. 

9 (iv) REFUSAL TO ANSWER.—An objec10 tion may properly be made, received, and 

11 entered upon the record when it is claimed 

12 that the person summoned is entitled to 

13 refuse to answer the question on grounds 

14 of any constitutional or other legal right or 

15 privilege, including the privilege against 

16 self-incrimination, but such person shall 

17 not otherwise object to or refuse to answer 

18 any question, and shall not otherwise inter19 rupt the oral examination, directly or 

20 through such person’s attorney. 

21 (v) PETITION FOR ORDER.—If such 

22 person refuses to answer any question, the 

23 Agency may petition the district court of 

24 the United States pursuant to this section 


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1 for an order compelling such person to an2 swer such question. 

3 (vi) BASIS FOR COMPELLING TESTI4 MONY.—If such person refuses to answer 

5 any question on grounds of the privilege 

6 against self-incrimination, the testimony of 

7 such person may be compelled in accord8 ance with the provisions of section 6004 of 

9 title 18, United States Code. 

10 (E) TRANSCRIPTS.— 

11 (i) RIGHT TO EXAMINE.—After the 

12 testimony of any witness is fully tran13 scribed, the Agency investigator shall af14 ford the witness (who may be accompanied 

15 by an attorney) a reasonable opportunity 

16 to examine the transcript. 

17 (ii) READING THE TRANSCRIPT.—The 

18 transcript shall be read to or by the wit19 ness, unless such examination and reading 

20 are waived by the witness. 

21 (iii) REQUEST FOR CHANGES.—Any 

22 changes in form or substance which the 

23 witness desires to make shall be entered 

24 and identified upon the transcript by the 

25 Agency investigator with a statement of 


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1 the reasons given by the witness for mak2 ing such changes. 

3 (iv) SIGNATURE.—The transcript 

4 shall be signed by the witness, unless the 

5 witness in writing waives the signing, is ill, 

6 cannot be found, or refuses to sign. 

7 (v) AGENCY ACTION IN LIEU OF SIG8 NATURE.—If the transcript is not signed 

9 by the witness during the 30-day period 

10 following the date upon which the witness 

11 is first afforded a reasonable opportunity 

12 to examine it, the Agency investigator shall 

13 sign the transcript and state on the record 

14 the fact of the waiver, illness, absence of 

15 the witness, or the refusal to sign, together 

16 with any reasons given for the failure to 

17 sign. 

18 (F) CERTIFICATION BY INVESTIGATOR.— 

19 The Agency investigator shall certify on the 

20 transcript that the witness was duly sworn by 

21 the investigator and that the transcript is a 

22 true record of the testimony given by the wit23 ness, and the Agency investigator shall prompt24 ly deliver the transcript or send it by registered 

25 or certified mail to the custodian. 


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1 (G) COPY OF TRANSCRIPT.—The Agency 

2 investigator shall furnish a copy of the tran3 script (upon payment of reasonable charges for 

4 the transcript) to the witness only, except that 

5 the Agency may for good cause limit such wit6 ness to inspection of the official transcript of 

7 the testimony of such witness. 

8 (H) WITNESS FEES.—Any witness appear9 ing for the taking of oral testimony pursuant to 

10 a civil investigative demand shall be entitled to 

11 the same fees and mileage which are paid to 

12 witnesses in the district courts of the United 

13 States. 

14 (d) CONFIDENTIAL TREATMENT OF DEMAND MATE15 RIAL.— 

16 (1) IN GENERAL.—Materials received as a re17 sult of a civil investigative demand shall be subject 

18 to requirements and procedures regarding confiden19 tiality, in accordance with regulations established by 

20 the Director. 

21 (2) DISCLOSURE TO CONGRESS.—No regulation 

22 established by the Director regarding the confiden23 tiality of materials submitted to, or otherwise ob24 tained by, the Agency shall be intended to prevent 

25 disclosure to either House of the Congress or to an 


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1 appropriate committee of the Congress, except that 

2 the Director may prescribe regulations allowing prior 

3 notice to any party that owns or otherwise provided 

4 the material to the Agency and has designated such 

5 material as confidential. 

6 (e) PETITION FOR ENFORCEMENT.— 

7 (1) IN GENERAL.—Whenever any person fails 

8 to comply with any civil investigative demand duly 

9 served upon such person under this section, or when10 ever satisfactory copying or reproduction of material 

11 requested pursuant to the demand cannot be accom12 plished and such person refuses to surrender such 

13 material, the Agency, through such officers or attor14 neys as the Director may designate, may file, in the 

15 district court of the United States for any judicial 

16 district in which such person resides, is found, or 

17 transacts business, and serve upon such person, a 

18 petition for an order of such court for the enforce19 ment of this section. 

20 (2) SERVICE OF PROCESS.—All process of any 

21 court to which application may be made as provided 

22 in this subsection may be served in any judicial dis23 trict. 

24 (f) PETITION FOR ORDER MODIFYING OR SETTING

25 ASIDE DEMAND.— 


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1 (1) IN GENERAL.—Not later than 20 days after 

2 the service of any civil investigative demand upon 

3 any person under subsection (b), or at any time be4 fore the return date specified in the demand, which5 ever period is shorter, or within such period exceed6 ing 20 days after service or in excess of such return 

7 date as may be prescribed in writing, subsequent to 

8 service, by any Agency investigator named in the de9 mand, such person may file with the Agency a peti10 tion for an order by the Agency modifying or setting 

11 aside the demand. 

12 (2) COMPLIANCE DURING PENDENCY.—The 

13 time permitted for compliance with the demand in 

14 whole or in part, as deemed proper and ordered by 

15 the Agency, shall not run during the pendency of 

16 such petition at the Agency, except that such person 

17 shall comply with any portions of the demand not 

18 sought to be modified or set aside. 

19 (3) SPECIFIC GROUNDS.—Such petition shall 

20 specify each ground upon which the petitioner relies 

21 in seeking such relief, and may be based upon any 

22 failure of the demand to comply with the provisions 

23 of this section, or upon any constitutional or other 

24 legal right or privilege of such person. 


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1 (g) CUSTODIAL CONTROL.—At any time during 

2 which any custodian is in custody or control of any docu3 mentary material, tangible things, reports, answers to 

4 questions, or transcripts of oral testimony given by any 

5 person in compliance with any civil investigative demand, 

6 such person may file, in the district court of the United 

7 States for the judicial district within which the office of 

8 such custodian is situated, and serve upon such custodian, 

9 a petition for an order of such court requiring the per10 formance by such custodian of any duty imposed upon 

11 such custodian by this section or regulation prescribed by 

12 the Director. 

13 (h) JURISDICTION OF COURT.— 

14 (1) IN GENERAL.—Whenever any petition is 

15 filed in any district court of the United States under 

16 this section, such court shall have jurisdiction to 

17 hear and determine the matter so presented, and to 

18 enter such order or orders as may be required to 

19 carry into effect the provisions of this section. 

20 (2) APPEAL.—Any final order so entered shall 

21 be subject to appeal pursuant to section 1291 of title 

22 28, United States Code. 

23 SEC. 4503. HEARINGS AND ADJUDICATION PROCEEDINGS. 

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1 son in the manner prescribed by chapter 5 of title 5, 

2 United States Code in order to ensure or enforce compli3 ance with— 

4 (1) the provisions of this title, including any 

5 regulations prescribed by the Director under this 

6 title; and 

7 (2) any other Federal law that the Agency is 

8 authorized to enforce, including an enumerated con9 sumer law, and any regulations or order prescribed 

10 thereunder, unless such Federal law specifically lim11 its the Agency from conducting a hearing or adju12 dication proceeding and only to the extent of such 

13 limitation. 

14 (b) SPECIAL RULES FOR CEASE-AND-DESIST PRO15 CEEDINGS.— 

16 (1) ISSUANCE.— 

17 (A) NOTICE OF CHARGES.—If, in the opin18 ion of the Agency, any covered person or service 

19 provider is engaging or has engaged in an activ20 ity that violates a law, regulation, or any condi21 tion imposed in writing on the person by the 

22 Agency, the Agency may issue and serve upon 

23 the person a notice of charges with respect to 

24 such violation. 


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1 (B) CONTENTS OF NOTICE.—The notice 

2 shall contain a statement of the facts consti3 tuting any alleged violation and shall fix a time 

4 and place at which a hearing will be held to de5 termine whether an order to cease-and-desist 

6 there from should issue against the person. 

7 (C) TIME OF HEARING.—A hearing under 

8 this subsection shall be fixed for a date not ear9 lier than 30 days nor later than 60 days after 

10 service of such notice unless an earlier or a 

11 later date is set by the Agency at the request 

12 of any party so served. 

13 (D) NONAPPEARANCE DEEMED TO BE

14 CONSENT TO ORDER.—Unless the party or par15 ties so served shall appear at the hearing per16 sonally or by a duly authorized representative, 

17 they shall be deemed to have consented to the 

18 issuance of the cease-and-desist order. 

19 (E) ISSUANCE OF ORDER.—In the event of 

20 such consent, or if upon the record made at any 

21 such hearing, the Agency shall find that any 

22 violation specified in the notice of charges has 

23 been established, the Agency may issue and 

24 serve upon the person an order to cease-and-de25 sist from any such violation or practice. 


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1 (F) INCLUDES REQUIREMENT FOR COR2 RECTIVE ACTION.—Such order may, by provi3 sions which may be mandatory or otherwise, re4 quire the person to cease-and-desist from the 

5 same, and, further, to take affirmative action to 

6 correct the conditions resulting from any such 

7 violation. 

8 (2) EFFECTIVENESS OF ORDER.—A cease-and9 desist order shall take effect at the end of the 30- 

10 day period beginning on the date of the service of 

11 such order upon the covered person or service pro12 vider concerned (except in the case of a cease-and13 desist order issued upon consent, which shall take 

14 effect at the time specified therein), and shall re15 main effective and enforceable as provided therein, 

16 except to such extent as it is stayed, modified, termi17 nated, or set aside by action of the Agency or a re18 viewing court. 

19 (3) DECISION AND APPEAL.— 

20 (A) PLACE OF AND PROCEDURES FOR

21 HEARING.—Any hearing provided for in this 

22 subsection shall be held in the Federal judicial 

23 district or in the territory in which the resi24 dence or home office of the person is located 

25 unless the person consents to another place, 


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1 and shall be conducted in accordance with the 

2 provisions of chapter 5 of title 5 of the United 

3 States Code. 

4 (B) TIME LIMIT FOR DECISION.—After 

5 such hearing, and within 90 days after the 

6 Agency has notified the parties that the case 

7 has been submitted to it for final decision, the 

8 Agency shall— 

9 (i) render its decision (which shall in10 clude findings of fact upon which its deci11 sion is predicated) and shall issue; and 

12 (ii) serve upon each party to the pro13 ceeding an order or orders consistent with 

14 the provisions of this section. Judicial re15 view of any such order shall be exclusively 

16 as provided in this subsection. 

17 (C) MODIFICATION OF ORDER GEN18 ERALLY.—Unless a petition for review is timely 

19 filed in a court of appeals of the United States, 

20 as hereinafter provided in paragraph (4), and 

21 thereafter until the record in the proceeding has 

22 been filed as so provided, the Agency may at 

23 any time, upon such notice and in such manner 

24 as it shall deem proper, modify, terminate, or 

25 set aside any such order. 


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1 (D) MODIFICATION OF ORDER AFTER FIL2 ING RECORD ON APPEAL.—Upon such filing of 

3 the record, the Agency may modify, terminate, 

4 or set aside any such order with permission of 

5 the court. 

6 (4) APPEAL TO COURT OF APPEALS.— 

7 (A) IN GENERAL.—Any party to any pro8 ceeding under this subsection may obtain a re9 view of any order served pursuant to this sub10 section (other than an order issued with the 

11 consent of the person concerned) by the filing 

12 in the court of appeals of the United States for 

13 the circuit in which the principal office of the 

14 covered person is located, or in the United 

15 States Court of Appeals for the District of Co16 lumbia Circuit, within 30 days after the date of 

17 service of such order, a written petition praying 

18 that the order of the Agency be modified, termi19 nated, or set aside. 

20 (B) TRANSMITTAL OF COPY TO THE AGEN21 CY.—A copy of such petition shall be forthwith 

22 transmitted by the clerk of the court to the 

23 Agency, and thereupon the Agency shall file in 

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1 vided in section 2112 of title 28 of the United 

2 States Code. 

3 (C) JURISDICTION OF COURT.—Upon the 

4 filing of a petition under subparagraph (A), 

5 such court shall have jurisdiction, which upon 

6 the filing of the record shall except as provided 

7 in the last sentence of paragraph (3) be exclu8 sive, to affirm, modify, terminate, or set aside, 

9 in whole or in part, the order of the Agency. 

10 (D) SCOPE OF REVIEW.—Review of such 

11 proceedings shall be had as provided in chapter 

12 7 of title 5 of the United States Code. 

13 (E) FINALITY.—The judgment and decree 

14 of the court shall be final, except that the same 

15 shall be subject to review by the Supreme Court 

16 upon certiorari, as provided in section 1254 of 

17 title 28 of the United States Code. 

18 (5) NO STAY.—The commencement of pro19 ceedings for judicial review under paragraph (4) 

20 shall not, unless specifically ordered by the court, 

21 operate as a stay of any order issued by the Agency. 

22 (c) SPECIAL RULES FOR TEMPORARY CEASE-AND23 DESIST PROCEEDINGS.— 

24 (1) ISSUANCE.— 


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1 (A) IN GENERAL.—Whenever the Agency 

2 determines that the violation specified in the 

3 notice of charges served upon a person, includ4 ing a service provider, pursuant to subsection 

5 (b), or the continuation of such violation, is 

6 likely to cause the person to be insolvent or oth7 erwise prejudice the interests of consumers be8 fore the completion of the proceedings con9 ducted pursuant to subsection (b), the Agency 

10 may issue a temporary order requiring the per11 son to cease-and-desist from any such violation 

12 or practice and to take affirmative action to 

13 prevent or remedy such insolvency or other con14 dition pending completion of such proceedings. 

15 (B) OTHER REQUIREMENTS.—Any tem16 porary order issued under this paragraph may 

17 include any requirement authorized under this 

18 subtitle. 

19 (C) EFFECT DATE OF ORDER.—Any tem20 porary order issued under this paragraph shall 

21 take effect upon service upon the person and, 

22 unless set aside, limited, or suspended by a 

23 court in proceedings authorized by paragraph 

24 (2) of this subsection, shall remain effective and 

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1 ministrative proceedings pursuant to such no2 tice and until such time as the Agency shall dis3 miss the charges specified in such notice, or if 

4 a cease-and-desist order is issued against the 

5 person, until the effective date of such order. 

6 (2) APPEAL.—Within 10 days after the person 

7 concerned has been served with a temporary cease8 and-desist order, the person may apply to the United 

9 States district court for the judicial district in which 

10 the home office of the person is located, or the 

11 United States District Court for the District of Co12 lumbia, for an injunction setting aside, limiting, or 

13 suspending the enforcement, operation, or effective14 ness of such order pending the completion of the ad15 ministrative proceedings pursuant to the notice of 

16 charges served upon the person under subsection 

17 (b), and such court shall have jurisdiction to issue 

18 such injunction. 

19 (3) INCOMPLETE OR INACCURATE RECORDS.— 

20 (A) TEMPORARY ORDER.—If a notice of 

21 charges served under subsection (b) specifies, 

22 on the basis of particular facts and cir23 cumstances, that a person’s books and records 

24 are so incomplete or inaccurate that the Agency 

25 is unable to determine the financial condition of 


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1 that person or the details or purpose of any 

2 transaction or transactions that may have a 

3 material effect on the financial condition of that 

4 person, the Agency may issue a temporary 

5 order requiring— 

6 (i) the cessation of any activity or 

7 practice which gave rise, whether in whole 

8 or in part, to the incomplete or inaccurate 

9 state of the books or records; or 

10 (ii) affirmative action to restore such 

11 books or records to a complete and accu12 rate state, until the completion of the pro13 ceedings under subsection (b)(1). 

14 (B) EFFECTIVE PERIOD.—Any temporary 

15 order issued under subparagraph (A)— 

16 (i) shall take effect upon service; and 

17 (ii) unless set aside, limited, or sus18 pended by a court in proceedings under 

19 paragraph (2), shall remain in effect and 

20 enforceable until the earlier of— 

21 (I) the completion of the pro22 ceeding initiated under subsection (b) 

23 in connection with the notice of 

24 charges; or 


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1 (II) the date the Agency deter2 mines, by examination or otherwise, 

3 that the person’s books and records 

4 are accurate and reflect the financial 

5 condition of the person. 

6 (d) SPECIAL RULES FOR ENFORCEMENT OF OR7 DERS.— 

8 (1) IN GENERAL.—The Agency may in its dis9 cretion apply to the United States district court 

10 within the jurisdiction of which the principal office 

11 of the person is located, for the enforcement of any 

12 effective and outstanding notice or order issued 

13 under this section, and such court shall have juris14 diction and power to order and require compliance 

15 herewith. 

16 (2) EXCEPTION.—Except as otherwise provided 

17 in this subsection, no court shall have jurisdiction to 

18 affect by injunction or otherwise the issuance or en19 forcement of any notice or order or to review, mod20 ify, suspend, terminate, or set aside any such notice 

21 or order. 

22 (e) REGULATIONS.—The Director shall prescribe reg23 ulations establishing such procedures as may be necessary 

24 to carry out this section. 


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1 SEC. 4504. LITIGATION AUTHORITY. 

2 (a) IN GENERAL.—If any person violates a provision 

3 of this title, any enumerated consumer law, any law for 

4 which authorities were transferred under subtitles F and 

5 H, or any regulation prescribed or order issued by the Di6 rector under this title or pursuant to any such authority, 

7 the Agency may commence a civil action against such per8 son to impose a civil penalty and to seek all appropriate 

9 legal and equitable relief including a permanent or tem10 porary injunction as permitted by law. 

11 (b) REPRESENTATION.—The Agency may act in its 

12 own name and through its own attorneys in enforcing any 

13 provision of this title, regulations under this title, or any 

14 other law or regulation, or in any action, suit, or pro15 ceeding to which the Agency is a party. 

16 (c) COMPROMISE OF ACTIONS.—The Agency may 

17 compromise or settle any action if such compromise is ap18 proved by the court. 

19 (d) NOTICE TO THE ATTORNEY GENERAL.—When 

20 commencing a civil action under this title, any enumerated 

21 consumer law, any law for which authorities were trans22 ferred under subtitles F and H, or any regulation there23 under, the Agency shall notify the Attorney General. 

24 (e) APPEARANCE BEFORE THE SUPREME COURT.— 

25 The Agency may represent itself in its own name before 

26 the Supreme Court of the United States, if— 


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1 (1) the Agency makes a written request to the 

2 Attorney General within the 10-day period which be3 gins on the date of entry of the judgment which 

4 would permit any party to file a petition for writ of 

5 certiorari; and 

6 (2) the Attorney General concurs with such re7 quest or fails to take action within 60 days of the 

8 Agency’s request. 

9 (f) FORUM.—Any civil action brought under this title 

10 may be brought in a United States district court or in 

11 any court of competent jurisdiction of a state in a district 

12 in which the defendant is located or resides or is doing 

13 business, and such court shall have jurisdiction to enjoin 

14 such person and to require compliance with this title, any 

15 enumerated consumer law, any law for which authorities 

16 were transferred under subtitles F and H, or any regula17 tion prescribed or order issued by the Director under this 

18 title or pursuant to any such authority. 

19 (g) TIME FOR BRINGING ACTION.— 

20 (1) IN GENERAL.—Except as otherwise per21 mitted by law or equity, no action may be brought 

22 under this title more than 3 years after the date of 

23 the discovery of the violation to which an action re24 lates. 


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1 (2) LIMITATIONS UNDER OTHER FEDERAL

2 LAWS.— 

3 (A) For purposes of this section, an action 

4 arising under this title shall not include claims 

5 arising solely under enumerated consumer laws. 

6 (B) In any action arising solely under an 

7 enumerated consumer law, the Agency may 

8 commence, defend, or intervene in the action in 

9 accordance with the requirements of that law, 

10 as applicable. 

11 (C) In any action arising solely under the 

12 laws for which authorities were transferred by 

13 subtitles F and H, the Agency may commence, 

14 defend, or intervene in the action in accordance 

15 with the requirements of that law, as applicable. 

16 SEC. 4505. RELIEF AVAILABLE. 

17 (a) ADMINISTRATIVE PROCEEDINGS OR COURT AC18 TIONS.— 

19 (1) JURISDICTION.—The court (or Agency, as 

20 the case may be) in an action or adjudication pro21 ceeding brought under this title, any enumerated 

22 consumer law, or any law for which authorities were 

23 transferred by subtitles F and H, shall have jurisdic24 tion to grant any appropriate legal or equitable relief 

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1 ated consumer law, and any law for which authori2 ties were transferred by subtitles F and H, including 

3 a violation of a regulation prescribed or order issued 

4 under this title, any enumerated consumer law and 

5 any law for which authorities were transferred by 

6 subtitles F and H. 

7 (2) RELIEF.—Such relief may include— 

8 (A) rescission or reformation of contracts; 

9 (B) refund of moneys or return of real 

10 property; 

11 (C) restitution; 

12 (D) disgorgement or compensation for un13 just enrichment; 

14 (E) payment of damages; 

15 (F) public notification regarding the viola16 tion, including the costs of notification; 

17 (G) limits on the activities or functions of 

18 the person; and 

19 (H) civil money penalties under subsection 

20 (c). 

21 (3) NO EXEMPLARY OR PUNITIVE DAMAGES.— 

22 Nothing in this subsection shall be construed as au23 thorizing the imposition of exemplary or punitive 

24 damages. 


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1 (b) RECOVERY OF COSTS.—In any action brought by 

2 the Agency, a State attorney general, or a State bank su3 pervisor to enforce any provision of this title, any enumer4 ated consumer law, any law for which authorities were 

5 transferred by subtitles F and H, or any regulation pre6 scribed or order issued by the Director under this title 

7 or pursuant to any such authority, the Agency, State at8 torney general, or State bank supervisor may recover the 

9 costs incurred by such Agency, attorney general, or super10 visor in connection with prosecuting such action if the 

11 Agency, State attorney general, or State bank supervisors 

12 (as the case may be) is the prevailing party in the action. 

13 (c) CIVIL MONEY PENALTY IN COURT AND ADMINIS14 TRATIVE ACTIONS.— 

15 (1) Any person that violates, through any act or 

16 omission, any provision of this title, any enumerated 

17 consumer law, or any regulation prescribed or order 

18 issued by the Director under this title shall forfeit 

19 and pay a civil penalty pursuant to this subsection 

20 determined as follows: 

21 (A) FIRST TIER.—For any violation of any 

22 law, regulation, final order or condition imposed 

23 in writing by the Agency, or for any failure to 

24 pay any fee or assessment imposed by the 

25 Agency (including any fee or assessment for 


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1 which a related person may be liable), a civil 

2 penalty shall not exceed $5,000 for each day 

3 during which such violation continues. 

4 (B) SECOND TIER.—Notwithstanding 

5 paragraph (A), for any violation of a regulation 

6 prescribed under section 4306 or for any person 

7 that recklessly engages in a violation of this 

8 title, any enumerated consumer law, or any reg9 ulation prescribed or order issued by the Direc10 tor under this title, relating to the provision of 

11 an alternative consumer financial product or 

12 service, a civil penalty shall not exceed $25,000 

13 for each day during which such violation con14 tinues. 

15 (C) THIRD TIER.—Notwithstanding sub16 paragraphs (A) and (B), for any person that 

17 knowingly violates this title, any enumerated 

18 consumer law, or any regulation prescribed or 

19 order issued by the Director under this title, a 

20 civil penalty shall not exceed $1,000,000 for 

21 each day during which such violation continues. 

22 (2) MITIGATING FACTORS.—In determining the 

23 amount of any penalty assessed under paragraph 

24 (1), the Agency or the court shall take into account 

25 the appropriateness of the penalty with respect to— 


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1 (A) the size of financial resources and good 

2 faith of the person charged; 

3 (B) the gravity of the violation or failure 

4 to pay; 

5 (C) the severity of the risks to or losses of 

6 the consumer, which may take into account the 

7 number of products or services sold or provided; 

8 (D) the history of previous violations; and 

9 (E) such other matters as justice may re10 quire. 

11 (3) AUTHORITY TO MODIFY OR REMIT PEN12 ALTY.—The Agency may compromise, modify, or 

13 remit any penalty which may be assessed or had al14 ready been assessed under paragraph (1). The 

15 amount of such penalty, when finally determined, 

16 shall be exclusive of any sums owed by the person 

17 to the United States in connection with the costs of 

18 the proceeding, and may be deducted from any sums 

19 owing by the United States to the person charged. 

20 (4) NOTICE AND HEARING.—No civil penalty 

21 may be assessed with respect to a violation of this 

22 title, any enumerated consumer law, or any regula23 tion prescribed or order issued by the Director, un24 less— 


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1 (A) the Agency gives notice and an oppor2 tunity for a hearing to the person accused of 

3 the violation; or 

4 (B) the appropriate court has ordered such 

5 assessment and entered judgment in favor of 

6 the Agency. 

7 SEC. 4506. REFERRALS FOR CRIMINAL PROCEEDINGS. 

8 Whenever the Agency obtains evidence that any per9 son, either domestic or foreign, has engaged in conduct 

10 that may constitute a violation of Federal criminal law, 

11 the Agency may transmit such evidence to the Attorney 

12 General, who may institute criminal proceedings under ap13 propriate law. No provision of this section shall be con14 strued as affecting any other authority of the Agency to 

15 disclose information. 

16 SEC. 4507. EMPLOYEE PROTECTION. 

17 (a) IN GENERAL.—No covered person or service pro18 vider shall terminate or in any other way discriminate 

19 against, or cause to be terminated or discriminated 

20 against, any covered employee or any authorized rep21 resentative of covered employees by reason of the fact that 

22 such employee or representative, whether at the employ23 ee’s initiative or in the ordinary course of the employee’s 

24 duties (or any person acting pursuant to a request of the 

25 employee)— 


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1 (1) has provided information to the Agency or 

2 to any other State, local, or Federal Government au3 thority or law enforcement official information relat4 ing to any violation of, or any act or omission the 

5 employee reasonably believes to be a violation of any 

6 provision of this title or any other law that is subject 

7 to the jurisdiction of the Agency, or any regulation, 

8 order, standard, or prohibition prescribed by the Di9 rector; 

10 (2) has testified or is about to testify in any 

11 proceeding resulting from the administration or en12 forcement of any provision of this title or any other 

13 law that is subject to the jurisdiction of the Agency, 

14 or any regulation, order, standard, or prohibition 

15 prescribed by the Director; 

16 (3) has filed or instituted, or has caused to be 

17 filed or instituted, any proceeding under any enu18 merated consumer law or any law for which authori19 ties were transferred by subtitles F and H; or 

20 (4) has objected to, or refused to participate in, 

21 any activity, policy, practice, or assigned task that 

22 the employee (or other such person) reasonably be23 lieved to be in violation of any law, regulation, order, 

24 standard, or prohibition, subject to the jurisdiction 

25 of, or enforceable by, the Agency. 


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1 (b) COVERED EMPLOYEE DEFINED.—For the pur2 poses of this section, the term ‘‘covered employee’’ means 

3 any individual performing tasks related to the provision 

4 of a financial product or service to a consumer. 

5 (c) TIMETABLES.— 

6 (1) FILING COMPLAINT.—Any individual who 

7 believes that such individual has been discharged or 

8 otherwise discriminated against by any person in 

9 violation of subsection (a) may, before the end of the 

10 180-day period beginning on the date on which such 

11 violation occurs, file (or have any person file on be12 half of such individual) a complaint with the Sec13 retary of Labor (hereafter in this subsection referred 

14 to as the ‘‘Secretary’’, notwithstanding section 

15 4002(34)) alleging such discharge or discrimination 

16 and identifying the person responsible for such act. 

17 (2) SECRETARY’S ACTION ON RECEIPT OF COM18 PLAINT.—Upon receipt of a complaint by any indi19 vidual under paragraph (1), the Secretary shall no20 tify, in writing, the person named in the complaint 

21 who is alleged to have committed the violation of— 

22 (A) the filing of the complaint; 

23 (B) the allegations contained in the com24 plaint; 


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1 (C) the substance of the evidence sup2 porting the complaint; and 

3 (D) the opportunities that will be afforded 

4 to such person under paragraph (3). 

5 (3) INVESTIGATION, HEARING, AND ORDERS.— 

6 (A) FINDINGS.—Not later than 60 days 

7 after the date of receipt of a complaint filed 

8 under paragraph (1) and after affording the in9 dividual filing the complaint and the person 

10 named in the complaint who is alleged to have 

11 committed the violation an opportunity to sub12 mit to the Secretary a written response to the 

13 complaint and an opportunity to meet with a 

14 representative of the Secretary to present state15 ments from witnesses, the Secretary shall ini16 tiate an investigation and determine whether 

17 there is reasonable cause to believe that the 

18 complaint has merit and notify, in writing, the 

19 complainant and the person alleged to have 

20 committed a violation of subsection (a) of the 

21 Secretary’s findings. 

22 (B) PRELIMINARY ORDER.—If the Sec23 retary concludes that there is reasonable cause 

24 to believe that a violation of subsection (a) has 

25 occurred, the Secretary shall accompany the 


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1 Secretary’s findings with a preliminary order 

2 providing the relief prescribed by paragraph 

3 (3)(B). 

4 (C) OBJECTIONS TO FINDINGS OR PRE5 LIMINARY ORDER.—Not later than 30 days 

6 after the date of notification of findings under 

7 subparagraph (A), the person alleged to have 

8 committed the violation or the complainant may 

9 file objections to the findings or preliminary 

10 order, or both, and request a hearing on the 

11 record. 

12 (D) OBJECTIONS DO NOT CONSTITUTE A

13 STAY.—The filing of objections under subpara14 graph (C) shall not operate to stay any rein15 statement remedy contained in the preliminary 

16 order. 

17 (E) EXPEDITIOUS HEARING.—Any hearing 

18 requested under subparagraph (C) shall be con19 ducted expeditiously. 

20 (F) FINALITY OF ORDER.—If a hearing is 

21 not requested under subparagraph (C) with re22 spect to any findings of the Secretary under 

23 subparagraph (A) within the 30-day period de24 scribed in subparagraph (C), the preliminary 


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1 order shall be deemed a final order that is not 

2 subject to judicial review. 

3 (4) STANDARDS FOR DETERMINATION.— 

4 (A) PRIMA FACIE EVIDENCE OF CONTRIBU5 TION.—The Secretary shall dismiss a complaint 

6 filed under paragraph (1) and shall not conduct 

7 an investigation otherwise required under para8 graph (3)(A) unless the individual filing the 

9 complaint makes a prima facie showing that 

10 any behavior described in paragraph (1), (2), 

11 (3), or (4) of subsection (a) was a contributing 

12 factor in the unfavorable personnel action al13 leged in the complaint. 

14 (B) PROHIBITION ON INVESTIGATION IN

15 CASE OF CLEAR AND CONVINCING EVIDENCE OF

16 INDEPENDENT BASIS.—Notwithstanding a find17 ing by the Secretary that the complainant has 

18 made the showing required under subparagraph 

19 (A), no investigation otherwise required under 

20 paragraph (3) shall be conducted if the em21 ployer demonstrates, by clear and convincing 

22 evidence, that the employer would have taken 

23 the same unfavorable personnel action in the 

24 absence of that behavior. 


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1 (C) CONTRIBUTING FACTOR REQUIRE2 MENT.—The Secretary may determine that a 

3 violation of subsection (a) has occurred only if 

4 the complainant demonstrates that any behavior 

5 described in paragraph (1), (2), (3), or (4) of 

6 subsection (a) was a contributing factor in the 

7 unfavorable personnel action alleged in the com8 plaint. 

9 (D) PROHIBITION ON FINAL ORDER IN

10 CASE OF CLEAR AND CONVINCING EVIDENCE OF

11 INDEPENDENT BASIS.—Relief may not be or12 dered under paragraph (3) if the employer dem13 onstrates by clear and convincing evidence that 

14 the employer would have taken the same unfa15 vorable personnel action in the absence of that 

16 behavior. 

17 (5) FINAL ORDER.— 

18 (A) IN GENERAL.—Not later than 120 

19 days after the date of conclusion of any hearing 

20 under paragraph (3), the Secretary shall issue 

21 a final order providing the relief prescribed by 

22 this subsection or denying the complaint. 

23 (B) SETTLEMENT AGREEMENT.—At any 

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1 nated on the basis of a settlement agreement 

2 entered into by the Secretary, the complainant, 

3 and the person alleged to have committed the 

4 violation. 

5 (C) CONTENTS OF ORDER.—If, in response 

6 to a complaint filed under paragraph (1), the 

7 Secretary determines that a violation of sub8 section (a) has occurred, the Secretary shall 

9 order the person who committed such viola10 tion— 

11 (i) to take affirmative action to abate 

12 the violation; 

13 (ii) to reinstate the complainant to 

14 such individual’s former position together 

15 with compensation (including back pay) 

16 and restore the terms, conditions, and 

17 privileges associated with such individual’s 

18 employment; and 

19 (iii) to provide compensatory damages 

20 to the complainant. 

21 (D) COSTS AND ATTORNEYS FEES.—If an 

22 order is issued under this paragraph, the Sec23 retary, at the request of the complainant, shall 

24 assess against the person against whom the 

25 order is issued a sum equal to the aggregate 


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1 amount of all costs and expenses (including at2 torneys’ and expert witness fees) reasonably in3 curred, as determined by the Secretary, by the 

4 complainant for, or in connection with, the 

5 bringing of the complaint upon which the order 

6 was issued. 

7 (E) FRIVOLOUS OR BAD FAITH COM8 PLAINTS.—If the Secretary finds that a com9 plaint under paragraph (1) is frivolous or has 

10 been brought in bad faith, the Secretary may 

11 award to the prevailing employer a reasonable 

12 attorneys’ fee, not exceeding $1,000, to be paid 

13 by the complainant. 

14 (6) DE NOVO ACTION ON CLAIM.— 

15 (A) ACTION AT LAW OR EQUITY.—If the 

16 Secretary has not issued a final decision within 

17 210 days after the filing of the complaint, or 

18 within 90 days after receiving a written deter19 mination, the complainant who filed such com20 plaint may bring an action at law or equity for 

21 de novo review in the appropriate district court 

22 of the United States. 

23 (B) JURY TRIAL.—At the request of either 

24 party to an action brought under subparagraph 


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1 (A), such action shall be tried by the court with 

2 a jury. 

3 (C) STANDARDS FOR DETERMINATION.— 

4 The standards for determination established 

5 under paragraph (4) shall apply in any action 

6 under this paragraph. 

7 (D) RELIEF.—The court shall have juris8 diction to grant all relief, including injunctive 

9 relief and compensatory damages , that nec10 essary to make the complainant who sought de 

11 novo review whole, including— 

12 (i) reinstatement with the same se13 niority status that the complainant would 

14 have had, but for the discharge or dis15 crimination; 

16 (ii) the amount of back pay, with in17 terest; and 

18 (iii) compensation for any special 

19 damages sustained as a result of the dis20 charge or discrimination, including litiga21 tion costs, expert witness fees, and reason22 able attorney’s fees. 

23 (E) NOT REVIEWABLE.—The decision of 

24 the court shall be final without further review. 

25 (7) JUDICIAL REVIEW OF FINAL ORDER.— 


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1 (A) IN GENERAL.—Unless a complainant 

2 brings a de novo action under paragraph (6), 

3 any person adversely affected or aggrieved by a 

4 final order issued under paragraph (5) may ob5 tain review of the order in the United States 

6 Court of Appeals for the circuit in which the 

7 violation, with respect to which the order was 

8 issued, allegedly occurred or the circuit in which 

9 the complainant resided on the date of such vio10 lation. 

11 (B) STATUTE OF LIMITATION .—Any peti12 tion for review of a final order under subsection 

13 shall be filed not later than 60 days after the 

14 date of the issuance of the final order by the 

15 Secretary. 

16 (C) STANDARDS FOR REVIEW.—The stand17 ards for review established under chapter 7 of 

18 title 5, United States Code, shall apply in any 

19 review of a final order under this paragraph. 

20 (D) EFFECT OF PROCEEDINGS AS STAY.— 

21 The commencement of proceedings under this 

22 paragraph shall not operate as a stay of the 

23 final order of the Secretary under review, unless 

24 so ordered by the court. 


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1 (E) LIMITATION ON EFFECT OF OTHER

2 PROCEEDINGS.—Except as provided in para3 graph (6) and this paragraph, an order of the 

4 Secretary with respect to which review could 

5 have been obtained under subparagraph (A) 

6 shall not be subject to judicial review in any 

7 criminal or other civil proceeding. 

8 (8) ENFORCEMENT OF ORDERS BY SEC9 RETARY.— 

10 (A) IN GENERAL.—Whenever any person 

11 has failed to comply with an order issued under 

12 paragraph (5), the Secretary may file a civil ac13 tion in the United States district court for the 

14 district in which the violation was found to 

15 occur, or in the United States district court for 

16 the District of Columbia, to enforce such order. 

17 (B) RELIEF.—In actions brought under 

18 this paragraph, the district courts shall have ju19 risdiction to grant all appropriate relief includ20 ing injunctive relief and compensatory damages. 

21 (9) ENFORCEMENT OF ORDER BY AGGRIEVED

22 PARTY .— 

23 (A) IN GENERAL.—A person on whose be24 half an order was issued under paragraph (5) 

25 may commence a civil action against the person 


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1 to whom such order was issued to require com2 pliance with such order. 

3 (B) RELIEF.—The court, in issuing any 

4 final order under this paragraph, may award 

5 costs of litigation (including reasonable attor6 neys’ and expert witness fees) to any party 

7 whenever the court determines such award is 

8 appropriate. 

9 (d) ACTION IN NATURE OF MANDAMUS.—Any non10 discretionary duty imposed by this section shall be enforce11 able in a mandamus proceeding brought under section 

12 1361 of title 28, United States Code. 

13 (e) UNENFORCEABILITY OF CERTAIN AGREE14 MENTS.— 

15 (1) NO WAIVER OF RIGHTS AND REMEDIES.— 

16 Notwithstanding any law and except as provided 

17 under paragraph (3), the rights and remedies pro18 vided for in this section may not be waived by any 

19 agreement, policy, form, or condition of employment, 

20 including by any predispute arbitration agreement. 

21 (2) PREDISPUTE ARBITRATION AGREEMENTS.— 

22 Notwithstanding any law and except as provided 

23 under paragraph (3), no predispute arbitration 

24 agreement shall be valid or enforceable and to the 


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1 extent the agreement requires arbitration of a dis2 pute arising under this section. 

3 (3) EXCEPTION.—Notwithstanding paragraphs 

4 (1) and (2), an arbitration provision in a collective 

5 bargaining agreement shall be enforceable as to dis6 putes arising under subsection (a)(2) unless the Di7 rector determines by regulation that such provision 

8 is inconsistent with the purposes of this title. 

9 SEC. 4508. EFFECTIVE DATE. 

10 This subtitle shall take effect on the designated 

11 transfer date. 

12 Subtitle F—Transfer of Functions 

13 and Personnel; Transitional 

14 Provisions 

15 SEC. 4601. TRANSFER OF CERTAIN FUNCTIONS. 

16 (a) IN GENERAL.—Except as provided in subsection 

17 (b), consumer financial protection functions are trans18 ferred as follows: 

19 (1) BOARD OF GOVERNORS.— 

20 (A) TRANSFER OF FUNCTIONS.—All con21 sumer financial protection functions of the 

22 Board of Governors are transferred to the Di23 rector. 

24 (B) BOARD OF GOVERNORS’ AUTHORITY.— 

25 The Director shall have all powers and duties 


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1 that were vested in the Board of Governors, re2 lating to consumer financial protection func3 tions, on the day before the designated transfer 

4 date. 

5 (2) COMPTROLLER OF THE CURRENCY.— 

6 (A) TRANSFER OF FUNCTIONS.—All con7 sumer financial protection functions of the 

8 Comptroller of the Currency are transferred to 

9 the Director. 

10 (B) COMPTROLLER’S AUTHORITY.—The 

11 Director shall have all powers and duties that 

12 were vested in the Comptroller of the Currency, 

13 relating to consumer financial protection func14 tions, on the day before the designated transfer 

15 date. 

16 (3) DIRECTOR OF THE OFFICE OF THRIFT SU17 PERVISION.— 

18 (A) TRANSFER OF FUNCTIONS.—All con19 sumer financial protection functions of the Di20 rector of the Office of Thrift Supervision are 

21 transferred to the Director. 

22 (B) DIRECTOR’S AUTHORITY.—The Direc23 tor shall have all powers and duties that were 

24 vested in the Director of the Office of Thrift 

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1 tection functions, on the day before the des2 ignated transfer date. 

3 (4) FEDERAL DEPOSIT INSURANCE CORPORA4 TION.— 

5 (A) TRANSFER OF FUNCTIONS.—All con6 sumer financial protection functions of the Fed7 eral Deposit Insurance Corporation are trans8 ferred to the Director. 

9 (B) CORPORATION’S AUTHORITY.—The Di10 rector shall have all powers and duties that 

11 were vested in the Federal Deposit Insurance 

12 Corporation, relating to consumer financial pro13 tection functions, on the day before the des14 ignated transfer date. 

15 (5) FEDERAL TRADE COMMISSION.— 

16 (A) TRANSFER OF FUNCTIONS.—Except as 

17 provided in subparagraph (C), the consumer fi18 nancial protection functions of the Federal 

19 Trade Commission that are contained within 

20 the enumerated consumer laws are transferred 

21 to the Agency, except as provided in section 

22 4202(e). 

23 (B) COMMISSION’S AUTHORITY.—Except 

24 as provided in subparagraph (C), the Director 

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1 ed in the Federal Trade Commission, relating 

2 to consumer financial protection functions, on 

3 the day before the designated transfer date. 

4 (C) CONTINUATION OF CERTAIN COMMIS5 SION AUTHORITIES.—Notwithstanding subpara6 graphs (A) and (B), the Federal Trade Com7 mission shall continue to enforce the following 

8 provisions of law and prescribe regulations 

9 under such provisions: 

10 (i) The Credit Repair Organizations 

11 Act. 

12 (ii) Section 5 of the Federal Trade 

13 Commission Act. 

14 (iii) The Telemarketing and Consumer 

15 Fraud and Abuse Prevention Act. 

16 (6) NATIONAL CREDIT UNION ADMINISTRA17 TION.— 

18 (A) TRANSFER OF FUNCTIONS.—All con19 sumer financial protection functions of the Na20 tional Credit Union Administration are trans21 ferred to the Director. 

22 (B) NATIONAL CREDIT UNION ADMINIS23 TRATION’S AUTHORITY.—The Director shall 

24 have all powers and duties that were vested in 

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1 lating to consumer financial protection func2 tions, on the day before the designated transfer 

3 date. 

4 (7) SECRETARY OF HOUSING AND URBAN DE5 VELOPMENT.— 

6 (A) TRANSFER OF FUNCTIONS.—All con7 sumer protection functions of the Secretary of 

8 Housing and Urban Development relating to 

9 the Real Estate Settlement Procedures Act of 

10 1974 and the Secure and Fair Enforcement for 

11 Mortgage Licensing Act of 2008 are transferred 

12 to the Director. 

13 (B) SECRETARY OF HUD’S AUTHORITY.— 

14 The Director shall have all powers and duties 

15 that were vested in the Secretary of Housing 

16 and Urban Development relating to the Real 

17 Estate Settlement Procedures Act of 1974 and 

18 the Secure and Fair Enforcement for Mortgage 

19 Licensing Act of 2008, on the day before the 

20 designated transfer date 

21 (b) TRANSFERS OF FUNCTIONS SUBJECT TO BACK22 STOP ENFORCEMENT AUTHORITY REMAINING WITH

23 TRANSFEROR AGENCIES.—The transfers of functions in 

24 subsection (a) shall not affect the authority of the agencies 

25 identified in subsection (a) from initiating enforcement 


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1 proceedings under the circumstances described in section 

2 4202(e)(3). 

3 (c) TERMINATION OF AUTHORITY OF TRANSFEROR

4 AGENCIES TO COLLECT FEES FOR CONSUMER FINAN5 CIAL PROTECTION PURPOSES.—Authorities of the agen6 cies identified in subsection (a) to assess and collect fees 

7 to cover the cost of conducting consumer financial protec8 tion functions shall terminate on the day before the des9 ignated transfer date. 

10 (d) CONSUMER FINANCIAL PROTECTION FUNCTIONS

11 DEFINED.—For purposes of this subtitle, the term ‘‘con12 sumer financial protection functions’’ means research, 

13 rulemaking, issuance of orders or guidance, supervision, 

14 examination, and enforcement activities, powers, and du15 ties relating to the provision of consumer financial prod16 ucts or services, including the authority to assess and col17 lect fees for those purposes, except that such term shall 

18 not include any such function relating to an agency’s re19 sponsibilities under the Community Reinvestment Act of 

20 1977. 

21 (e) EFFECTIVE DATE.—Subsections (a) and (b) shall 

22 take effect on the designated transfer date. 

23 SEC. 4602. DESIGNATED TRANSFER DATE. 

24 (a) IN GENERAL.—Not later than 60 days after the 

25 date of the enactment of this title, the Secretary— 


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1 (1) shall, in consultation with the Chairman of 

2 the Board of Governors, the Chairperson of the Fed3 eral Deposit Insurance Corporation, the Chairman 

4 of the Federal Trade Commission, the Chairman of 

5 the National Credit Union Administration Board, 

6 the Comptroller of the Currency, the Director of the 

7 Office of Thrift Supervision, the Secretary of Hous8 ing and Urban Development, and the Director of the 

9 Office of Management and Budget, designate a sin10 gle calendar date for the transfer of functions to the 

11 Director under section 4601; and 

12 (2) shall publish notice of that designation in 

13 the Federal Register. 

14 (b) CHANGING DESIGNATION.—The Secretary— 

15 (1) may, in consultation with the Chairman of 

16 the Board of Governors, the Chairperson of the Fed17 eral Deposit Insurance Corporation, the Chairman 

18 of the Federal Trade Commission, the Chairman of 

19 the National Credit Union Administration Board, 

20 the Comptroller of the Currency, the Director of the 

21 Office of Thrift Supervision, the Secretary of Hous22 ing and Urban Development, and the Director of the 

23 Office of Management and Budget, change the date 

24 designated under subsection (a); and 


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1 (2) shall publish notice of any changed designa2 tion in the Federal Register. 

3 (c) PERMISSIBLE DATES.— 

4 (1) IN GENERAL.—Except as provided in para5 graph (2), any date designated under this section 

6 shall be not earlier than 180 days nor later than 18 

7 months after the date of the enactment of this title. 

8 (2) EXTENSION OF TIME.—The Secretary may 

9 designate a date that is later than 18 months after 

10 the date of the enactment of this title if the Sec11 retary transmits to appropriate committees of Con12 gress— 

13 (A) a written determination that orderly 

14 implementation of this title is not feasible on 

15 the date that is 18 months after the date of the 

16 enactment of this title; 

17 (B) an explanation of why an extension is 

18 necessary for the orderly implementation of this 

19 title; and 

20 (C) a description of the steps that will be 

21 taken to effect an orderly and timely implemen22 tation of this title within the extended time pe23 riod. 


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1 (3) EXTENSION LIMITED.—In no case shall any 

2 date designated under this section be later than 24 

3 months after the date of the enactment of this title. 

4 SEC. 4603. SAVINGS PROVISIONS. 

5 (a) BOARD OF GOVERNORS.— 

6 (1) EXISTING RIGHTS, DUTIES, AND OBLIGA7 TIONS NOT AFFECTED.—Section 4601(a)(1) shall 

8 not affect the validity of any right, duty, or obliga9 tion of the United States, the Board of Governors 

10 (or any Federal reserve bank), or any other person 

11 that— 

12 (A) arises under any provision of law relat13 ing to any consumer financial protection func14 tion of the Board of Governors transferred to 

15 the Director by this title; and 

16 (B) existed on the day before the des17 ignated transfer date. 

18 (2) CONTINUATION OF SUITS.—this title shall 

19 not abate any proceeding commenced by or against 

20 the Board of Governors (or any Federal reserve 

21 bank) before the designated transfer date with re22 spect to any consumer financial protection function 

23 of the Board of Governors (or any Federal reserve 

24 bank) transferred to the Director by this title, ex25 cept that the Director shall be substituted for the 


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1 Board of Governors (or Federal reserve bank) as a 

2 party to any such proceeding as of the designated 

3 transfer date. 

4 (b) FEDERAL DEPOSIT INSURANCE CORPORATION.— 

5 (1) EXISTING RIGHTS, DUTIES, AND OBLIGA6 TIONS NOT AFFECTED.—Section 4601(a)(4) shall 

7 not affect the validity of any right, duty, or obliga8 tion of the United States, the Federal Deposit In9 surance Corporation, the Board of Directors of that 

10 Corporation, or any other person, that— 

11 (A) arises under any provision of law relat12 ing to any consumer financial protection func13 tion of the Federal Deposit Insurance Corpora14 tion transferred to the Director by this title; 

15 and 

16 (B) existed on the day before the des17 ignated transfer date. 

18 (2) CONTINUATION OF SUITS.—this title shall 

19 not abate any proceeding commenced by or against 

20 the Federal Deposit Insurance Corporation (or the 

21 Board of Directors of that Corporation) before the 

22 designated transfer date with respect to any con23 sumer financial protection function of the Federal 

24 Deposit Insurance Corporation transferred to the 

25 Director by this title, except that the Director shall 


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1 be substituted for the Federal Deposit Insurance 

2 Corporation (or Board of Directors) as a party to 

3 any such proceeding as of the designated transfer 

4 date. 

5 (c) FEDERAL TRADE COMMISSION.— 

6 (1) EXISTING RIGHTS, DUTIES, AND OBLIGA7 TIONS NOT AFFECTED.—Section 4601(a)(5) shall 

8 not affect the validity of any right, duty, or obliga9 tion of the United States, the Federal Trade Com10 mission, or any other person, that— 

11 (A) arises under any provision of law relat12 ing to any consumer financial protection func13 tion of the Federal Trade Commission trans14 ferred to the Director by this title; and 

15 (B) existed on the day before the des16 ignated transfer date. 

17 (2) CONTINUATION OF SUITS.—this title shall 

18 not abate any proceeding commenced by or against 

19 the Federal Trade Commission before the designated 

20 transfer date with respect to any consumer financial 

21 protection function of the Federal Trade Commis22 sion transferred to the Director by this title, except 

23 that the Director shall be substituted for the Federal 

24 Trade Commission as a party to any such pro25 ceeding as of the designated transfer date. 


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1 (d) NATIONAL CREDIT UNION ADMINISTRATION.— 

2 (1) EXISTING RIGHTS, DUTIES, AND OBLIGA3 TIONS NOT AFFECTED.—Section 4601(a)(6) shall 

4 not affect the validity of any right, duty, or obliga5 tion of the United States, the National Credit Union 

6 Administration, the National Credit Union Adminis7 tration Board, or any other person, that— 

8 (A) arises under any provision of law relat9 ing to any consumer financial protection func10 tion of the National Credit Union Administra11 tion transferred to the Director by this title; 

12 and 

13 (B) existed on the day before the des14 ignated transfer date. 

15 (2) CONTINUATION OF SUITS.—this title shall 

16 not abate any proceeding commenced by or against 

17 the National Credit Union Administration (or the 

18 National Credit Union Administration Board) before 

19 the designated transfer date with respect to any con20 sumer financial protection function of the National 

21 Credit Union Administration transferred to the Di22 rector by this title, except that the Director shall be 

23 substituted for the National Credit Union Adminis24 tration (or National Credit Union Administration 


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1 Board) as a party to any such proceeding as of the 

2 designated transfer date. 

3 (e) COMPTROLLER OF THE CURRENCY.— 

4 (1) EXISTING RIGHTS, DUTIES, AND OBLIGA5 TIONS NOT AFFECTED.—Section 4601(a)(2) shall 

6 not affect the validity of any right, duty, or obliga7 tion of the United States, the Comptroller of the 

8 Currency, the Office of the Comptroller of the Cur9 rency, or any other person, that— 

10 (A) arises under any provision of law relat11 ing to any consumer financial protection func12 tion of the Comptroller of the Currency trans13 ferred to the Director by this title; and 

14 (B) existed on the day before the des15 ignated transfer date. 

16 (2) CONTINUATION OF SUITS.—this title shall 

17 not abate any proceeding commenced by or against 

18 the Comptroller of the Currency (or the Office of the 

19 Comptroller of the Currency) with respect to any 

20 consumer financial protection function of the Comp21 troller of the Currency transferred to the Director 

22 by this title before the designated transfer date, ex23 cept that the Director shall be substituted for the 

24 Comptroller of the Currency (or the Office of the 


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1 Comptroller of the Currency) as a party to any such 

2 proceeding as of the designated transfer date. 

3 (f) DIRECTOR OF THE OFFICE OF THRIFT SUPER4 VISION.— 

5 (1) EXISTING RIGHTS, DUTIES, AND OBLIGA6 TIONS NOT AFFECTED.—Section 4601(a)(3) shall 

7 not affect the validity of any right, duty, or obliga8 tion of the United States, the Director of the Office 

9 of Thrift Supervision, the Office of Thrift Super10 vision, or any other person, that— 

11 (A) arises under any provision of law relat12 ing to any consumer financial protection func13 tion of the Director of the Office of Thrift Su14 pervision transferred to the Director by this 

15 title; and 

16 (B) that existed on the day before the des17 ignated transfer date. 

18 (2) CONTINUATION OF SUITS.—this title shall 

19 not abate any proceeding commenced by or against 

20 the Director of the Office of Thrift Supervision (or 

21 the Office of Thrift Supervision) with respect to any 

22 consumer financial protection function of the Direc23 tor of the Office of Thrift Supervision transferred to 

24 the Director by this title before the designated 

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1 stituted for the Director (or the Office of Thrift Su2 pervision) as a party to any such proceeding as of 

3 the designated transfer date. 

4 (g) SECRETARY OF HOUSING AND URBAN DEVELOP5 MENT.— 

6 (1) EXISTING RIGHTS, DUTIES, AND OBLIGA7 TIONS NOT AFFECTED.—Section 4601(a)(7) shall 

8 not affect the validity of any right, duty, or obliga9 tion of the United States, the Secretary of Housing 

10 and Urban Development, the Department of Hous11 ing and Urban Development, or any other person, 

12 that— 

13 (A) arises under any provision of law relat14 ing to any function of the Secretary of Housing 

15 and Urban Development under the Real Estate 

16 Settlement Procedures Act of 1974 and the Se17 cure and Fair Enforcement for Mortgage Li18 censing Act of 2008 transferred to the Director 

19 by this title; and 

20 (B) that existed on the day before the des21 ignated transfer date. 

22 (2) CONTINUATION OF SUITS.—this title shall 

23 not abate any proceeding commenced by or against 

24 the Secretary of Housing and Urban Development 

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1 ment) with respect to any consumer financial protec2 tion function of the Secretary of Housing and Urban 

3 Development transferred to the Director by this title 

4 before the designated transfer date, except that the 

5 Director shall be substituted for the Secretary of 

6 Housing and Urban Development (or such Depart7 ment) as a party to any such proceeding as of the 

8 designated transfer date. 

9 (h) CONTINUATION OF EXISTING ORDERS, REGULA10 TIONS, DETERMINATIONS, AGREEMENTS, AND RESOLU11 TIONS.—All orders, resolutions, determinations, agree12 ments, and regulations that have been issued, made, pre13 scribed, or allowed to become effective by the Board of 

14 Governors (or any Federal reserve bank), the Federal De15 posit Insurance Corporation, the Federal Trade Commis16 sion, the National Credit Union Administration, the 

17 Comptroller of the Currency, the Director of the Office 

18 of Thrift Supervision, the Secretary of Housing and 

19 Urban Development, or by a court of competent jurisdic20 tion, in the performance of consumer financial protection 

21 functions that are transferred by this title and that are 

22 in effect on the day before the designated transfer date, 

23 shall continue in effect according to the terms of those 

24 orders, resolutions, determinations, agreements, and regu25 lations, and shall be enforceable by or against the Director 


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1 until modified, terminated, set aside, or superseded in ac2 cordance with applicable law by the Director, by any court 

3 of competent jurisdiction, or by operation of law. 

4 (i) IDENTIFICATION OF REGULATIONS CONTIN5 UED.—Not later than the designated transfer date, the 

6 Director— 

7 (1) shall, after consultation with the Chairman 

8 of the Board of Governors, the Chairperson of the 

9 Federal Deposit Insurance Corporation, the Chair10 man of the Federal Trade Commission, the Chair11 man of the National Credit Union Administration 

12 Board, the Comptroller of the Currency, the Direc13 tor of the Office of Thrift Supervision, and the Sec14 retary of Housing and Urban Development identify 

15 the regulations continued under subsection (g) that 

16 will be enforced by the Director; and 

17 (2) shall publish a list of such regulations in 

18 the Federal Register. 

19 (j) STATUS OF REGULATIONS PROPOSED OR NOT

20 YET EFFECTIVE.— 

21 (1) PROPOSED REGULATIONS.—Any proposed 

22 regulation of the Board of Governors, the Federal 

23 Deposit Insurance Corporation, the Federal Trade 

24 Commission, the National Credit Union Administra25 tion, the Comptroller of the Currency, the Director 


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1 of the Office of Thrift Supervision, or the Secretary 

2 of Housing and Urban Development which that 

3 agency, in performing consumer financial protection 

4 functions transferred by this title, has proposed be5 fore the designated transfer date but has not pub6 lished as a final regulation before that date, shall be 

7 deemed to be a proposed regulation of the Director. 

8 (2) REGULATIONS NOT YET EFFECTIVE.—Any 

9 interim or final regulation of Board of Governors, 

10 the Federal Deposit Insurance Corporation, the Fed11 eral Trade Commission, the National Credit Union 

12 Administration, the Comptroller of the Currency, the 

13 Director of the Office of Thrift Supervision, or the 

14 Secretary of Housing and Urban Development which 

15 that agency, in performing consumer financial pro16 tection functions transferred by this title, has pub17 lished before the designated transfer date but which 

18 has not become effective before that date, shall take 

19 effect as a regulation of the Director according to its 

20 terms. 

21 SEC. 4604. TRANSFER OF CERTAIN PERSONNEL. 

22 (a) IN GENERAL.— 

23 (1) CERTAIN FEDERAL RESERVE SYSTEM EM24 PLOYEES TRANSFERRED.— 


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1 (A) IDENTIFYING EMPLOYEES FOR TRANS2 FER.—The Director and the Board of Gov3 ernors shall— 

4 (i) jointly determine the number of 

5 employees of the Board necessary to per6 form or support the consumer financial 

7 protection functions of the Board of Gov8 ernors that are transferred to the Director 

9 by this title; and 

10 (ii) consistent with the number deter11 mined under clause (i), jointly identify em12 ployees of the Board of Governors for 

13 transfer to the Agency in a manner that 

14 the Director and the Board of Governors, 

15 in their sole discretion, deem equitable. 

16 (B) IDENTIFIED EMPLOYEES TRANS17 FERRED.—All employees of the Board of Gov18 ernors identified under subparagraph (A)(ii) 

19 shall be transferred to the Agency for employ20 ment. 

21 (C) FEDERAL RESERVE BANK EMPLOY22 EES.—Employees of any Federal reserve bank 

23 who, on the day before the designated transfer 

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1 ernors shall be treated as employees of the 

2 Board of Governors for purposes of subpara3 graphs (A) and (B). 

4 (2) CERTAIN FDIC EMPLOYEES TRANS5 FERRED.— 

6 (A) IDENTIFYING EMPLOYEES FOR TRANS7 FER.—The Director and the Board of Directors 

8 of the Federal Deposit Insurance Corporation 

9 shall— 

10 (i) jointly determine the number of 

11 employees of that Corporation necessary to 

12 perform or support the consumer financial 

13 protection functions of the Corporation 

14 that are transferred to the Director by this 

15 title; and 

16 (ii) consistent with the number deter17 mined under clause (i), jointly identify em18 ployees of the Corporation for transfer to 

19 the Agency in a manner that the Director 

20 and the Board of Directors of the Corpora21 tion, in their discretion, deem equitable. 

22 (B) IDENTIFIED EMPLOYEES TRANS23 FERRED.—All employees of the Corporation 

24 identified under subparagraph (A)(ii) shall be 

25 transferred to the Agency for employment. 


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1 (3) CERTAIN NCUA EMPLOYEES TRANS2 FERRED.— 

3 (A) IDENTIFYING EMPLOYEES FOR TRANS4 FER.—The Director and the National Credit 

5 Union Administration Board shall— 

6 (i) jointly determine the number of 

7 employees of the National Credit Union 

8 Administration necessary to perform or 

9 support the consumer financial protection 

10 functions of the National Credit Union Ad11 ministration that are transferred to the Di12 rector by this title; and 

13 (ii) consistent with the number deter14 mined under clause (i), jointly identify em15 ployees of the National Credit Union Ad16 ministration for transfer to the Agency in 

17 a manner that the Director and the Na18 tional Credit Union Administration Board, 

19 in their discretion, deem equitable. 

20 (B) IDENTIFIED EMPLOYEES TRANS21 FERRED.—All employees of the National Credit 

22 Union Administration identified under subpara23 graph (A)(ii) shall be transferred to the Agency 

24 for employment. 


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1 (4) CERTAIN HUD EMPLOYEES TRANS2 FERRED.— 

3 (A) IDENTIFYING EMPLOYEES FOR TRANS4 FER.—The Director and the Secretary of Hous5 ing and Urban Development shall— 

6 (i) jointly determine the number of 

7 employees of the Department of Housing 

8 and Urban Development necessary to per9 form or support the consumer financial 

10 protection functions of the Secretary of 

11 Housing and Urban Development that are 

12 transferred to the Director by this title; 

13 and 

14 (ii) consistent with the number deter15 mined under clause (i), jointly identify em16 ployees of the Department of Housing and 

17 Urban Development for transfer to the 

18 Agency in a manner that the Director and 

19 the Secretary of Housing and Urban De20 velopment, in their discretion, deem equi21 table. 

22 (B) IDENTIFIED EMPLOYEES TRANS23 FERRED.—All employees of the Department of 

24 Housing and Urban Development identified 


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1 under subparagraph (A)(ii) shall be transferred 

2 to the Agency for employment. 

3 (5) APPOINTMENT AUTHORITY FOR EXCEPTED

4 SERVICE AND SENIOR EXECUTIVE SERVICE TRANS5 FERRED.— 

6 (A) IN GENERAL.—In the case of employ7 ees occupying positions in the excepted service 

8 or the Senior Executive Service, any appoint9 ment authority established pursuant to law or 

10 regulations of the Director of the Office of Per11 sonnel Management for filling such positions 

12 shall be transferred, subject to subparagraph 

13 (B). 

14 (B) DECLINING TRANSFERS ALLOWED.— 

15 An agency or entity may decline to make a 

16 transfer of authority under subparagraph (A) 

17 (and the employees appointed pursuant to such 

18 subparagraph) to the extent that such authority 

19 relates to positions excepted from the competi20 tive service because of their confidential, policy21 making, policy-determining, or policy-advocating 

22 character, and non-career positions in the Sen23 ior Executive Service (within the meaning of 

24 section 3132(a)(7) of title 5, United States 

25 Code). 


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1 (b) TIMING OF TRANSFERS AND POSITION ASSIGN2 MENTS.—Each employee to be transferred under this sec3 tion shall— 

4 (1) be transferred not later than 90 days after 

5 the designated transfer date; and 

6 (2) receive notice of such employee’s position 

7 assignment not later than 120 days after the effec8 tive date of the employee’s transfer. 

9 (c) TRANSFER OF FUNCTION.— 

10 (1) IN GENERAL.—Notwithstanding any other 

11 provision of law, the transfer of employees shall be 

12 deemed a transfer of functions for the purpose of 

13 section 3503 of title 5, United States Code. 

14 (2) PRIORITY OF THIS TITLE.—If any provi15 sions of this title conflict with any protection pro16 vided to transferred employees under section 3503 of 

17 title 5, United States Code, the provisions of this 

18 title shall control. 

19 (d) EQUAL STATUS AND TENURE POSITIONS.— 

20 (1) EMPLOYEES TRANSFERRED FROM FDIC, 

21 FTC, HUD, NCUA, OCC, AND OTS.—Each employee 

22 transferred from the Federal Deposit Insurance Cor23 poration, the Federal Trade Commission, the De24 partment of Housing and Urban Development, the 

25 National Credit Union Administration, the Office of 


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1 the Comptroller of the Currency, or the Office of 

2 Thrift Supervision shall be placed in a position at 

3 the Agency with the same status and tenure as he 

4 or she held on the day before the designated transfer 

5 date. 

6 (2) EMPLOYEES TRANSFERRED FROM THE

7 FEDERAL RESERVE SYSTEM.— 

8 (A) COMPARABILITY.—Each employee 

9 transferred from the Board of Governors or 

10 from a Federal reserve bank shall be placed in 

11 a position with the same status and tenure as 

12 that of employees transferring to the Agency 

13 from the Office of the Comptroller of the Cur14 rency who perform similar functions and have 

15 similar periods of service. 

16 (B) SERVICE PERIODS CREDITED.—For 

17 purposes of this paragraph, periods of service 

18 with the Board of Governors or a Federal re19 serve bank shall be credited as periods of serv20 ice with a Federal agency. 

21 (e) ADDITIONAL CERTIFICATION REQUIREMENTS

22 LIMITED.—Examiners transferred to the Agency shall not 

23 be subject to any additional certification requirements be24 fore being placed in a comparable examiner’s position at 

25 the Agency examining the same types of institutions as 


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1 the transferred examiners examined before such examiners 

2 were transferred. 

3 (f) PERSONNEL ACTIONS LIMITED.— 

4 (1) 5-YEAR PROTECTION.—Except as provided 

5 in paragraph (2), each transferred employee holding 

6 a permanent position on the day before the des7 ignated transfer date shall not, during the 5-year pe8 riod beginning on the designated transfer date, be 

9 involuntarily separated, or involuntarily reassigned 

10 outside such transferred employee’s local locality pay 

11 area as defined by the Director of the Office of Per12 sonnel Management. 

13 (2) EXCEPTIONS.—Paragraph (1) shall not be 

14 construed as limiting the right of the Director to— 

15 (A) separate an employee for cause or for 

16 unacceptable performance; 

17 (B) terminate an appointment to a position 

18 excepted from the competitive service because of 

19 its confidential policy-making, policy-deter20 mining, or policy-advocating character; or 

21 (C) reassign a supervisory employee out22 side such employee’s locality pay area as de23 fined by the Director of the Office of Personnel 

24 Management when the Director determines that 


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1 the reassignment is necessary for the efficient 

2 operation of the Agency. 

3 (g) PAY.— 

4 (1) 1-YEAR PROTECTION.—Except as provided 

5 in paragraph (2), each transferred employee shall, 

6 during the 1-year period beginning on the des7 ignated transfer date, receive pay at a rate not less 

8 than the basic rate of pay (including any geographic 

9 differential) that the employee received during the 1- 

10 year period immediately before the transfer. 

11 (2) EXCEPTIONS.—Paragraph (1) shall not be 

12 construed as limiting the right of the Agency to re13 duce the rate of basic pay of a transferred em14 ployee— 

15 (A) for cause; 

16 (B) for unacceptable performance; or 

17 (C) with the employee’s consent. 

18 (3) PROTECTION ONLY WHILE EMPLOYED.— 

19 Paragraph (1) applies to a transferred employee 

20 only while that employee remains employed by the 

21 Agency. 

22 (4) PAY INCREASES PERMITTED.—Paragraph 

23 (1) shall not be construed as limiting the authority 

24 of the Agency to increase a transferred employee’s 

25 pay. 


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1 (h) REORGANIZATION.— 

2 (1) BETWEEN 1ST AND 3RD YEAR.— 

3 (A) IN GENERAL.—If the Agency deter4 mines, during the period beginning 1 year after 

5 the designated transfer date and ending 3 years 

6 after the designated transfer date, that a reor7 ganization of the staff of the Agency is re8 quired— 

9 (i) that reorganization shall be 

10 deemed a ‘‘major reorganization’’ for pur11 poses of affording affected employees re12 tirement under section 8336(d)(2) or 

13 8414(b)(1)(B) of title 5, United States 

14 Code; 

15 (ii) before the reorganization occurs, 

16 all employees in the same locality pay area 

17 as defined by the Director of the Office of 

18 Personnel Management shall be placed in a 

19 uniform position classification system; and 

20 (iii) any resulting reduction in force 

21 shall be governed by the provisions of 

22 chapter 35 of title 5, United States Code, 

23 except that the Agency shall— 

24 (I) establish competitive areas 

25 (as that term is defined in regulations 


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1 issued by the Director of the Office of 

2 Personnel Management) to include at 

3 a minimum all employees in the same 

4 locality pay area as defined by the Of5 fice of Personnel Management; 

6 (II) establish competitive levels 

7 (as that term is defined in regulations 

8 issued by the Director of the Office of 

9 Personnel Management) without re10 gard to whether the particular em11 ployees have been appointed to posi12 tions in the competitive service or the 

13 excepted service; and 

14 (III) afford employees appointed 

15 to positions in the excepted service 

16 (other than to a position excepted 

17 from the competitive service because 

18 of its confidential policy-making, pol19 icy-determining, or policy-advocating 

20 character) the same assignment rights 

21 to positions within the Agency as em22 ployees appointed to positions in the 

23 competitive service. 

24 (B) SERVICE CREDIT FOR REDUCTIONS IN

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1 ods of service with a Federal home loan bank, 

2 a joint office of the Federal home loan banks, 

3 the Board of Governors, a Federal reserve 

4 bank, the Federal Deposit Insurance Corpora5 tion, or the National Credit Union Administra6 tion shall be credited as periods of service with 

7 a Federal agency. 

8 (2) AFTER 3RD YEAR.— 

9 (A) IN GENERAL.—If the Agency deter10 mines, at any time after the 3-year period be11 ginning on the designated transfer date, that a 

12 reorganization of the staff of the Agency is re13 quired, any resulting reduction in force shall be 

14 governed by the provisions of chapter 35 of title 

15 5, United States Code, except that the Agency 

16 shall establish competitive levels (as that term 

17 is defined in regulations issued by the Office of 

18 Personnel Management) without regard to 

19 types of appointment held by particular employ20 ees transferred under this section. 

21 (B) SERVICE CREDIT FOR REDUCTIONS IN

22 FORCE.—For purposes of this paragraph, peri23 ods of service with a Federal home loan bank, 

24 a joint office of the Federal home loan banks, 

25 the Board of Governors, a Federal reserve 


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1 bank, the Federal Deposit Insurance Corpora2 tion, or the National Credit Union Administra3 tion shall be credited as periods of service with 

4 a Federal agency. 

5 (i) BENEFITS.— 

6 (1) RETIREMENT BENEFITS FOR TRANSFERRED

7 EMPLOYEES.— 

8 (A) IN GENERAL.— 

9 (i) CONTINUATION OF EXISTING RE10 TIREMENT PLAN.—Except as provided in 

11 subparagraph (B), each transferred em12 ployee shall remain enrolled in such em13 ployee’s existing retirement plan as long as 

14 the employee remains employed by the 

15 Agency. 

16 (ii) EMPLOYER’S CONTRIBUTION.— 

17 The Director shall pay any employer con18 tributions to the existing retirement plan 

19 of each transferred employee as required 

20 under that plan. 

21 (B) OPTION FOR EMPLOYEES TRANS22 FERRED FROM FEDERAL RESERVE SYSTEM TO

23 BE SUBJECT TO FEDERAL EMPLOYEE RETIRE24 MENT PROGRAM.— 


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1 (i) ELECTION.—Any transferred em2 ployee who was enrolled in a Federal Re3 serve System retirement plan on the day 

4 before the date of the employee’s transfer 

5 to the Agency may, during the period be6 ginning 6 months after the designated 

7 transfer date and ending 1 year after the 

8 designated transfer date, elect to be sub9 ject to the Federal employee retirement 

10 program. 

11 (ii) EFFECTIVE DATE OF COV12 ERAGE.—For any employee making an 

13 election under clause (i), coverage by the 

14 Federal employee retirement program shall 

15 begin 1 year after the designated transfer 

16 date. 

17 (C) AGENCY PARTICIPATION IN FEDERAL

18 RESERVE SYSTEM RETIREMENT PLAN.— 

19 (i) SEPARATE ACCOUNT IN FEDERAL

20 RESERVE SYSTEM RETIREMENT PLAN ES21 TABLISHED.—A separate account in the 

22 Federal Reserve System retirement plan 

23 shall be established for Agency employees 

24 who do not make the election under sub25 paragraph (B). 


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1 (ii) FUNDS ATTRIBUTABLE TO TRANS2 FERRED EMPLOYEES REMAINING IN FED3 ERAL RESERVE SYSTEM RETIREMENT

4 PLAN TRANSFERRED.—The proportionate 

5 share of funds in the Federal Reserve Sys6 tem retirement plan, including the propor7 tionate share of any funding surplus in 

8 that plan, attributable to a transferred em9 ployee who does not make the election 

10 under subparagraph (B), shall be trans11 ferred to the account established under 

12 clause (i). 

13 (iii) EMPLOYER CONTRIBUTIONS DE14 POSITED.—The Director shall deposit into 

15 the account established under clause (i) 

16 the employer contributions that the Agency 

17 makes on behalf of employees who do not 

18 make the election under subparagraph (B). 

19 (iv) ACCOUNT ADMINISTRATION.—The 

20 Director shall administer the account es21 tablished under clause (i) as a partici22 pating employer in the Federal Reserve 

23 System retirement plan. 

24 (D) DEFINITIONS.—For purposes of this 

25 paragraph, the following definitions shall apply: 


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1 (i) EXISTING RETIREMENT PLAN.— 

2 The term ‘‘existing retirement plan’’ 

3 means, with respect to any employee trans4 ferred under this section, the particular re5 tirement plan (including the Financial In6 stitutions Retirement Fund) and any asso7 ciated thrift savings plan of the agency or 

8 Federal reserve bank from which the em9 ployee was transferred, which the employee 

10 was enrolled in on the day before the des11 ignated transfer date. 

12 (ii) FEDERAL EMPLOYEE RETIRE13 MENT PLAN.—The term ‘‘Federal employee 

14 retirement program’’ means the retirement 

15 program for Federal employees established 

16 by chapters 83 and 84 of title 5, United 

17 States Code. 

18 (2) BENEFITS OTHER THAN RETIREMENT BEN19 EFITS FOR TRANSFERRED EMPLOYEES.— 

20 (A) DURING 1ST YEAR.— 

21 (i) EXISTING PLANS CONTINUE.— 

22 Each transferred employee may, for 1 year 

23 after the designated transfer date, retain 

24 membership in any other employee benefit 

25 program of the agency or bank from which 


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1 the employee transferred, including a den2 tal, vision, long-term care, or life insurance 

3 program, to which the employee belonged 

4 on the day before the designated transfer 

5 date. 

6 (ii) EMPLOYER’S CONTRIBUTION.— 

7 The Director shall reimburse the agency or 

8 bank from which an employee was trans9 ferred for any cost incurred by that agency 

10 or bank in continuing to extend coverage 

11 in the benefit program to the employee as 

12 required under that program or negotiated 

13 agreements. 

14 (B) DENTAL, VISION, OR LIFE INSURANCE

15 AFTER 1ST YEAR.—If, after the 1-year period 

16 beginning on the designated transfer date, the 

17 Director decides not to continue participation in 

18 any dental, vision, or life insurance program of 

19 an agency or bank from which employees trans20 ferred, a transferred employee who is a member 

21 of such a program may, before the Director’s 

22 decision takes effect, elect to enroll, without re23 gard to any regularly scheduled open season, 

24 in— 


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1 (i) the enhanced dental benefits estab2 lished by chapter 89A of title 5, United 

3 States Code; 

4 (ii) the enhanced vision benefits estab5 lished by chapter 89B of title 5, United 

6 States Code; and 

7 (iii) the Federal Employees Group 

8 Life Insurance Program established by 

9 chapter 87 of title 5, United States Code, 

10 without regard to any requirement of in11 surability. 

12 (C) LONG-TERM CARE INSURANCE AFTER

13 1ST YEAR.—If, after the 1-year period begin14 ning on the designated transfer date, the Direc15 tor decides not to continue participation in any 

16 long-term care insurance program of an agency 

17 or bank from which employees transferred, a 

18 transferred employee who is a member of such 

19 a program may, before the Director’s decision 

20 takes effect, elect to apply for coverage under 

21 the Federal Long Term Care Insurance Pro22 gram established by chapter 90 of title 5, 

23 United States Code, under the underwriting re24 quirements applicable to a new active workforce 


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1 member (as defined in Part 875, title 5, Code 

2 of Federal Regulations). 

3 (D) EMPLOYEE’S CONTRIBUTION.—An in4 dividual enrolled in the Federal Employees 

5 Health Benefits program shall pay any em6 ployee contribution required by the plan. 

7 (E) ADDITIONAL FUNDING.—The Director 

8 shall transfer to the Federal Employees Health 

9 Benefits Fund established under section 8909 

10 of title 5, United States Code, an amount deter11 mined by the Director of the Office of Per12 sonnel Management, after consultation with the 

13 Director and the Director of the Office of Man14 agement and Budget, to be necessary to reim15 burse the Fund for the cost to the Fund of pro16 viding benefits under this subparagraph. 

17 (F) CREDIT FOR TIME ENROLLED IN

18 OTHER PLANS.—For employees transferred 

19 under this section, enrollment in a health bene20 fits plan administered by the Comptroller of the 

21 Currency, the Director of the Office of Thrift 

22 Supervision, the Federal Deposit Insurance 

23 Corporation, the National Credit Union Admin24 istration, the Board of Governors, the Secretary 

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1 eral reserve bank, immediately before enroll2 ment in a health benefits plan under chapter 89 

3 of title 5, United States Code, shall be consid4 ered as enrollment in a health benefits plan 

5 under that chapter for purposes of section 

6 8905(b)(1)(A) of title 5, United States Code. 

7 (G) SPECIAL PROVISIONS TO ENSURE CON8 TINUATION OF LIFE INSURANCE BENEFITS.— 

9 (i) IN GENERAL.—An annuitant (as 

10 defined in section 8901(3) of title 5, 

11 United States Code) who is enrolled in a 

12 life insurance plan administered by the 

13 Board of Governors of the Federal Reserve 

14 System, the Federal Deposit Insurance 

15 Corporation, the Federal Trade Commis16 sion, the Secretary of Housing and Urban 

17 Development, the National Credit Union 

18 Administration, the Comptroller of the 

19 Currency, or the Director of the Office of 

20 Thrift Supervision on the day before the 

21 designated transfer date shall be eligible 

22 for coverage by a life insurance plan under 

23 sections 8706(b), 8714a, 8714b, and 

24 8714c of title 5, United States Code, or in 

25 a life insurance plan established by the 


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1 Agency, without regard to any regularly 

2 scheduled open season and requirement of 

3 insurability. 

4 (ii) EMPLOYEE’S CONTRIBUTION.—An 

5 individual enrolled in a life insurance plan 

6 under this clause shall pay any employee 

7 contribution required by the plan. 

8 (iii) ADDITIONAL FUNDING.—The Di9 rector shall transfer to the Employees’ Life 

10 Insurance Fund established under section 

11 8714 of title 5, United States Code, an 

12 amount determined by the Director of the 

13 Office of Personnel Management, after 

14 consultation with the Director and the Di15 rector of the Office of Management and 

16 Budget, to be necessary to reimburse the 

17 Fund for the cost to the Fund of providing 

18 benefits under this subparagraph not oth19 erwise paid for by the employee under 

20 clause (ii). 

21 (iv) CREDIT FOR TIME ENROLLED IN

22 OTHER PLANS.—For employees transferred 

23 under this section, enrollment in a life in24 surance plan administered by the Board of 

25 Governors, the Federal Deposit Insurance 


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1 Corporation, the Federal Trade Commis2 sion, the Secretary of Housing and Urban 

3 Development, the National Credit Union 

4 Administration, the Comptroller of the 

5 Currency, the Director of the Office of 

6 Thrift Supervision, or a Federal reserve 

7 bank immediately before enrollment in a 

8 life insurance plan under chapter 87 of 

9 title 5, United States Code, shall be con10 sidered as enrollment in a life insurance 

11 plan under that chapter for purposes of 

12 section 8706(b)(1)(A) of title 5, United 

13 States Code. 

14 (j) IMPLEMENTATION OF UNIFORM PAY AND CLASSI15 FICATION SYSTEM.—Not later than 2 years after the des16 ignated transfer date, the Director shall implement a uni17 form pay and classification system for all transferred em18 ployees. 

19 (k) EQUITABLE TREATMENT.—In administering the 

20 provisions of this section, the Director— 

21 (1) shall take no action that would unfairly dis22 advantage transferred employees relative to each 

23 other based on their prior employment by the Board 

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1 retary of Housing and Urban Development, the Na2 tional Credit Union Administration, the Office of the 

3 Comptroller of the Currency, the Office of Thrift 

4 Supervision, a Federal reserve bank, a Federal home 

5 loan bank, or a joint office of the Federal home loan 

6 banks; and 

7 (2) may take such action as is appropriate in 

8 individual cases so that employees transferred under 

9 this section receive equitable treatment, with respect 

10 to those employees’ status, tenure, pay, benefits 

11 (other than benefits under programs administered by 

12 the Office of Personnel Management), and accrued 

13 leave or vacation time, for prior periods of service 

14 with any Federal agency, including the Board of 

15 Governors of the Federal Reserve System, the Fed16 eral Deposit Insurance Corporation, the Federal 

17 Trade Commission, the Department of Housing and 

18 Urban Development, the National Credit Union Ad19 ministration, the Office of the Comptroller of the 

20 Currency, the Office of Thrift Supervision, a Federal 

21 reserve bank, a Federal home loan bank, or a joint 

22 office of the Federal home loan banks. 

23 (l) IMPLEMENTATION.—In implementing the provi24 sions of this section, the Director shall work with the Di25 rector of the Office of Personnel Management and other 


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1 entities with expertise in matters related to employment 

2 to ensure a fair and orderly transition for affected employ3 ees. 

4 SEC. 4605. INCIDENTAL TRANSFERS. 

5 (a) INCIDENTAL TRANSFERS AUTHORIZED.—The Di6 rector of the Office of Management and Budget, in con7 sultation with the Secretary, shall make such additional 

8 incidental transfers and dispositions of assets and liabil9 ities held, used, arising from, available, or to be made 

10 available, in connection with the functions transferred by 

11 this title, as the Director may determine necessary to ac12 complish the purposes of this title. 

13 (b) SUNSET.—The authority provided in this section 

14 shall terminate 5 years after the date of the enactment 

15 of this title. 

16 SEC. 4606. INTERIM AUTHORITY OF THE SECRETARY. 

17 (a) IN GENERAL.—The Secretary is authorized to 

18 perform the functions of the Director under this subtitle 

19 until the appointment of the Director is confirmed by the 

20 Senate in accordance with section 4102. 

21 (b) INTERIM ADMINISTRATIVE SERVICES BY THE

22 DEPARTMENT OF THE TREASURY.—The Secretary of the 

23 Treasury may provide administrative services necessary to 

24 support the Agency before the designated transfer date. 


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1 (c) INTERIM FUNDING FOR THE DEPARTMENT OF

2 THE TREASURY.—For the purposes of carrying out the 

3 authorities granted in this section, there are appropriated 

4 to the Secretary of the Treasury such sums as are nec5 essary. Notwithstanding any other provision of law, such 

6 amounts shall be subject to apportionment under section 

7 1517 of title 31, United States Code, and restrictions that 

8 generally apply to the use of appropriated funds in title 

9 31, United States Code, and other laws. 

10 Subtitle G—Regulatory 

11 Improvements 

12 SEC. 4701. COLLECTION OF DEPOSIT ACCOUNT DATA. 

13 (a) PURPOSE.—The purpose of this section is to pro14 mote awareness and understanding of the access of indi15 viduals and communities to financial services, and to iden16 tify business and community development needs and op17 portunities. 

18 (b) IN GENERAL.— 

19 (1) RECORDS REQUIRED.—For each branch, 

20 automated teller machine at which deposits are ac21 cepted, and other deposit taking service facility with 

22 respect to any financial institution, the financial in23 stitution shall maintain records of the number and 

24 dollar amounts of deposit accounts of customers. 


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1 (2) GEO-CODED ADDRESSES OF DEPOSITORS.— 

2 The customers’ addresses maintained pursuant to 

3 paragraph (1) shall be geo-coded so that data shall 

4 be collected regarding the census tracts of the resi5 dence or business location of the customers. 

6 (3) IDENTIFICATION OF DEPOSITOR TYPE.—In 

7 maintaining records on any deposit account under 

8 this section, the financial institution shall also 

9 record whether the deposit account is for a residen10 tial or commercial customer. 

11 (4) PUBLIC AVAILABILITY.— 

12 (A) IN GENERAL.—The following informa13 tion shall be publicly available on an annual 

14 basis— 

15 (i) the address and census tracts of 

16 each branch, automated teller machine at 

17 which deposits are accepted, and other de18 posit taking service facility with respect to 

19 any financial institution; 

20 (ii) the type of deposit account includ21 ing whether the account was a checking or 

22 savings account; and 

23 (iii) data on the number and dollar 

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1 sus tract location of the residential and 

2 commercial customers. 

3 (iv) any other data deemed appro4 priate by the Director. 

5 (B) PROTECTION OF IDENTITY.—In the 

6 publicly available data, any personally identifi7 able data element shall be removed so as to pro8 tect the identities of the commercial and resi9 dential customers. 

10 (c) AVAILABILITY OF INFORMATION.— 

11 (1) SUBMISSION TO AGENCIES.—The data re12 quired to be compiled and maintained under this 

13 section by any financial institution shall be sub14 mitted annually to the Agency, or to a Federal bank15 ing agency, in accordance with regulations pre16 scribed by the Director. 

17 (2) AVAILABILITY OF INFORMATION.—Informa18 tion compiled and maintained under this section 

19 shall be retained for not less than 3 years after the 

20 date of preparation and shall be made available to 

21 the public, upon request, in the form required under 

22 regulations prescribed by the Director. 

23 (d) AGENCY USE.—The Director— 

24 (1) shall assess the distribution of residential 

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1 tion across income and minority level of census 

2 tracts; and 

3 (2) may use the data for any other purpose as 

4 permitted by law. 

5 (e) REGULATIONS AND GUIDANCE.— 

6 (1) IN GENERAL.—The Director shall prescribe 

7 such regulations and issue guidance as may be nec8 essary to carry out, enforce, and compile data pursu9 ant to this section. 

10 (2) DATA COMPILATION REGULATIONS.—The 

11 Director shall prescribe regulations regarding the 

12 provision of data compiled under this section to the 

13 Federal banking agencies to carry out the purposes 

14 of this section and shall issue guidance to financial 

15 institutions regarding measures to facilitate compli16 ance with the this section and the requirements of 

17 regulations prescribed under this section. 

18 (f) DEFINITIONS.—For purposes of this section, the 

19 following definitions shall apply: 

20 (1) AGENCY.—The term ‘‘Agency’’ means the 

21 Consumer Financial Protection Agency. 

22 (2) CREDIT UNION.—The term ‘‘credit union’’ 

23 means a Federal credit union or a State-chartered 

24 credit union (as such terms are defined in section 

25 101 of the Federal Credit Union Act). 


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1 (3) DEPOSIT ACCOUNT.—The term ‘‘deposit ac2 count’’ includes any checking account, savings ac3 count, credit union share account, and other type of 

4 account as defined by the Director. 

5 (4) DIRECTOR.—The term ‘‘Director’’ means 

6 the Director of the Agency. 

7 (5) FEDERAL BANKING AGENCY.—The term 

8 ‘‘Federal banking agency’’ means the Board of Gov9 ernors of the Federal Reserve System, the head of 

10 the agency responsible for chartering and regulating 

11 national banks, the Director of the Office of Thrift 

12 Supervision, the Federal Deposit Insurance Corpora13 tion, and the National Credit Union Administration; 

14 and the term ‘‘Federal banking agencies’’ means all 

15 of those agencies. 

16 (6) FINANCIAL INSTITUTION.—The term ‘‘fi17 nancial institution’’— 

18 (A) has the meaning given to the term ‘‘in19 sured depository institution’’ in section 3(c)(2) 

20 of the Federal Deposit Insurance Act; and 

21 (B) includes any credit union. 

22 (g) EFFECTIVE DATE.—This section shall take effect 

23 on the designated transfer date. 


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1 SEC. 4702. SMALL BUSINESS DATA COLLECTION. 

2 (a) IN GENERAL.—The Equal Credit Opportunity 

3 Act (15 U.S.C. 1691 et seq.) is amended by inserting after 

4 section 704A the following new section: 

5 ‘‘§ 704B. Small business loan data collection 

6 ‘‘(a) PURPOSE.—The purpose of this section is to fa7 cilitate enforcement of fair lending laws and enable com8 munities, governmental entities, and creditors to identify 

9 business and community development needs and opportu10 nities of women- and minority-owned small businesses. 

11 ‘‘(b) IN GENERAL.—Subject to the requirements of 

12 this section, in the case of any application to a financial 

13 institution for credit for a small business, the financial in14 stitution shall— 

15 ‘‘(1) inquire whether the business is a women16 or minority-owned business, without regard to 

17 whether such application is received in person, by 

18 mail, by telephone, by electronic mail or other form 

19 of electronic transmission, or by any other means 

20 and whether or not such application is in response 

21 to a solicitation by the financial institution; and 

22 ‘‘(2) maintain a record of the responses to such 

23 inquiry separate from the application and accom24 panying information. 

25 ‘‘(c) RIGHT TO REFUSE.—Any applicant for credit 

26 may refuse to provide any information requested pursuant 


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1 to subsection (b) in connection with any application for 

2 credit. 

3 ‘‘(d) NO ACCESS BY UNDERWRITERS.— 

4 ‘‘(1) IN GENERAL.—Where feasible, no loan un5 derwriter or other officer or employee of a financial 

6 institution, or any affiliate of a financial institution, 

7 involved in making any determination concerning an 

8 application for credit shall have access to any infor9 mation provided by the applicant pursuant to a re10 quest under subsection (b) in connection with such 

11 application. 

12 ‘‘(2) EXCEPTION.—If a financial institution de13 termines that loan underwriter or other officer or 

14 employee of a financial institution, or any affiliate of 

15 a financial institution, involved in making any deter16 mination concerning an application for credit should 

17 have access to any information provided by the ap18 plicant pursuant to a request under subsection (b), 

19 the financial institution will provide notice to the ap20 plicant of the access of the underwriter to this infor21 mation, along with notice that the financial institu22 tion may not discriminate on this basis of this infor23 mation. 

24 ‘‘(e) FORM AND MANNER OF INFORMATION.— 


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1 ‘‘(1) IN GENERAL.—Each financial institution 

2 shall compile and maintain, in accordance with regu3 lations of the Agency, a record of the information 

4 provided by any loan applicant pursuant to a request 

5 under subsection (b). 

6 ‘‘(2) ITEMIZATION.—Information compiled and 

7 maintained under paragraph (1) shall also be 

8 itemized in order to clearly and conspicuously dis9 close the following: 

10 ‘‘(A) The number of the application and 

11 the date the application was received. 

12 ‘‘(B) The type and purpose of the loan or 

13 other credit being applied for. 

14 ‘‘(C) The amount of the credit or credit 

15 limit applied for and the amount of the credit 

16 transaction or the credit limit approved for such 

17 applicant. 

18 ‘‘(D) The type of action taken with respect 

19 to such application and the date of such action. 

20 ‘‘(E) The census tract in which is located 

21 the principal place of business of the small busi22 ness loan applicant. 

23 ‘‘(F) The gross annual revenue of the busi24 ness in the last fiscal year of the small business 


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1 loan applicant preceding the date of the appli2 cation. 

3 ‘‘(G) The race, sex, and ethnicity of the 

4 principal owners of the business. 

5 ‘‘(H) Any additional data the Agency de6 termines would aid in fulfilling the purposes of 

7 this section. 

8 ‘‘(3) INCLUSION OF PERSONALLY IDENTIFIABLE

9 INFORMATION PROHIBITED.—In compiling and 

10 maintaining any record of information under this 

11 section, a financial institution may not include in 

12 such record the name, specific address (other than 

13 the census tract required under paragraph (1)(E)), 

14 telephone number, electronic mail address, and any 

15 other personally identifiable information concerning 

16 any individual who is, or is connected with, the small 

17 business loan applicant. 

18 ‘‘(4) DISCRETION TO DELETE OR MODIFY PUB19 LICLY AVAILABLE DATA.—The Agency may, in the 

20 discretion of the Agency, delete or modify data col21 lected under this section which is or will be available 

22 to the public if the Agency determines that the dele23 tion or modification of the data would advance a 

24 compelling privacy interest. 

25 ‘‘(f) AVAILABILITY OF INFORMATION.— 


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1 ‘‘(1) SUBMISSION TO AGENCY.—The data re2 quired to be compiled and maintained under this 

3 section by any financial institution shall be sub4 mitted annually to the Agency. 

5 ‘‘(2) AVAILABILITY OF INFORMATION.— 

6 ‘‘(A) IN GENERAL.—Information compiled 

7 and maintained under this section shall be re8 tained for not less than 3 years after the date 

9 of preparation and shall be made available to 

10 the public, upon request, in the form required 

11 under regulations prescribed by the Agency. 

12 ‘‘(B) ANNUAL DISCLOSURE TO THE PUB13 LIC.—In addition to the availability by request 

14 under subparagraph (A) of data compiled and 

15 maintained under this section, the Agency shall 

16 annually provide such data to the public. 

17 ‘‘(C) PROCEDURES.—The procedures for 

18 disclosing data compiled and maintained under 

19 this section to the public shall be determined by 

20 the Agency by regulation. 

21 ‘‘(3) COMPILATION OF AGGREGATE DATA.— 

22 ‘‘(A) IN GENERAL.—The Agency may, in 

23 the discretion of the Agency, compile for the 

24 Agency’s own use compilations of aggregate 

25 data. 


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1 ‘‘(B) PUBLIC AVAILABILITY OF AGGRE2 GATE DATA.—The Agency may, in the discre3 tion of the Agency, make public compilations of 

4 aggregate data in such manner as the Agency 

5 may determine to be appropriate. 

6 ‘‘(g) DEFINITIONS.—For purposes of this section, the 

7 following definitions shall apply: 

8 ‘‘(1) FINANCIAL INSTITUTION.—The term ‘fi9 nancial institution’ means any partnership, com10 pany, corporation, association (incorporated or unin11 corporated), trust, estate, cooperative organization, 

12 or other entity that engages in any financial activity. 

13 ‘‘(2) MINORITY-OWNED BUSINESS.—The term 

14 ‘minority-owned business’ means a business— 

15 ‘‘(A) more than 50 percent of the owner16 ship or control of which is held by 1 or more 

17 minority individuals; and 

18 ‘‘(B) more than 50 percent of the net prof19 it or loss of which accrues to 1 or more minor20 ity individuals. 

21 ‘‘(3) WOMEN-OWNED BUSINESS.—The term 

22 ‘women-owned business’ means a business— 

23 ‘‘(A) more than 50 percent of the owner24 ship or control of which is held by 1 or more 

25 women; and 


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1 ‘‘(B) more than 50 percent of the net prof2 it or loss of which accrues to 1 or more women. 

3 ‘‘(4) MINORITY.—The term ‘minority’ has the 

4 meaning given to such term by section 1204(c)(3) of 

5 the Financial Institutions Reform, Recovery, and 

6 Enforcement Act of 1989. 

7 ‘‘(5) SMALL BUSINESS LOAN.—The term ‘small 

8 business loan’ shall be defined by the Agency, which 

9 may take into account— 

10 ‘‘(A) the gross revenues of the borrower; 

11 ‘‘(B) the total number of employees of the 

12 borrower; 

13 ‘‘(C) the industry in which the borrower 

14 has its primary operations; and 

15 ‘‘(D) the size of the loan. 

16 ‘‘(h) AGENCY ACTION.— 

17 ‘‘(1) IN GENERAL.—The Agency shall prescribe 

18 such regulations and issue such guidance as may be 

19 necessary to carry out, enforce, and compile data 

20 pursuant to this section. 

21 ‘‘(2) EXCEPTIONS.—The Agency, by regulation 

22 or order, may adopt exceptions to any requirement 

23 of this section and may, conditionally or uncondi24 tionally, exempt any financial institution or class of 

25 institutions from the requirements of this section as 


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1 the Agency determines to be necessary or appro2 priate to carry out the purposes and objectives of 

3 this section. 

4 ‘‘(3) GUIDANCE.—The Agency shall issue guid5 ance designed to facilitate compliance with the re6 quirements of this section, including assisting finan7 cial institutions in working with applicants to deter8 mine whether the applicants are women- or minor9 ity-owned for the purposes of this section.’’. 

10 (b) TECHNICAL AND CONFORMING AMENDMENT.— 

11 Section 701(b) of the Equal Credit Opportunity Act (15 

12 U.S.C. 1691(b)) is amended— 

13 (1) by striking ‘‘or’’ after the semicolon at the 

14 end of paragraph (3); 

15 (2) by striking the period at the end of para16 graph (4) and inserting ‘‘; or’’; and 

17 (3) by inserting after paragraph (4), the fol18 lowing new paragraph: 

19 ‘‘(5) to make an inquiry under section 704B in 

20 accordance with the requirements of such section.’’. 

21 (c) CLERICAL AMENDMENT.—The table of sections 

22 for the Equal Credit Opportunity Act is amended by in23 serting after the item relating to section 704A the fol24 lowing new item: 

‘‘704B. Small business loan data collection.’’. 


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1 (d) EFFECTIVE DATE.—This section shall take effect 

2 on the designated transfer date. 

3 SEC. 4703. ANNUAL FINANCIAL AUTOPSY. 

4 (a) STUDY REQUIRED.—Not later than March 31 of 

5 each calendar year, the Director shall— 

6 (1) conduct a scientific sampling of foreclosures 

7 and bankruptcies during the previous calendar year 

8 in each State or territory of the United States; and 

9 (2) identify any underlying causes of such 

10 bankruptcies or foreclosures, including any specific 

11 financial products or services that have been the 

12 cause of substantial numbers of such bankruptcies 

13 or foreclosures. 

14 (b) REPORT.—After the completion of each study re15 quired under subsection (a), the Director shall submit a 

16 report to the Congress containing— 

17 (1) any conclusions made by the Director in 

18 carrying out such study; 

19 (2) any specific financial products or services 

20 that the Director has identified to have caused a 

21 substantial number of bankruptcies or foreclosures, 

22 as well as which companies or individuals provided 

23 such financial products or services; and 

24 (3) any recommendations the Director has for 

25 legislation that would reduce the underlying causes 


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1 of bankruptcies and foreclosures identified in such 

2 study. 

3 Subtitle H—Conforming 

4 Amendments 

5 SEC. 4801. AMENDMENTS TO THE INSPECTOR GENERAL 

6 ACT OF 1978. 

7 (a) ESTABLISHMENT.—Section 8G(a)(2) of the In8 spector General Act of 1978 (5 U.S.C. App.) is amended 

9 by inserting ‘‘the Consumer Financial Protection Agency,’’ 

10 before ‘‘the Consumer Product Safety Commission,’’. 

11 (b) EFFECTIVE DATE.—This section shall take effect 

12 on the date of the enactment of this title. 

13 SEC. 4802. AMENDMENTS TO THE PRIVACY ACT OF 1974. 

14 (a) APPLICABILITY.—Section 552a of title 5, United 

15 States Code, is amended by adding at the end the fol16 lowing new subsection: 

17 ‘‘(w) APPLICABILITY TO CONSUMER FINANCIAL PRO18 TECTION AGENCY.—Except as provided in the Consumer 

19 Financial Protection Agency Act of 2009, this section 

20 shall apply with respect to the Consumer Financial Protec21 tion Agency.’’. 

22 (b) EFFECTIVE DATE.—This section shall take effect 

23 on the date of the enactment of this title. 


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1 SEC. 4803. AMENDMENTS TO THE ALTERNATIVE MORT2 GAGE TRANSACTION PARITY ACT OF 1982. 

3 (a) SECTION 803(1).—Section 803(1) of the Alter4 native Mortgage Transaction Parity Act of 1982 (12 

5 U.S.C. 3802(1)) is amended by striking paragraphs (B) 

6 and (C). 

7 (b) SECTION 804(a).—Section 804(a) of the Alter8 native Mortgage Transaction Parity Act of l982 (12 

9 U.S.C. 3803(a)) is amended— 

10 (1) in paragraphs (1), (2), and (3), by inserting 

11 ‘‘on or before the designated transfer date, as deter12 mined in section 4602 of the Consumer Financial 

13 Protection Agency Act of 2009’’ after ‘‘transactions 

14 made’’ each place such term appears; 

15 (2) in paragraph (2), by striking ‘‘and’’ at the 

16 end; 

17 (3) in paragraph (3), by striking the period at 

18 the end and inserting ‘‘; and’’; and 

19 (4) by adding at the end the following new 

20 paragraph: 

21 ‘‘(4) with respect to transactions made after the 

22 designated transfer date, as determined in section 

23 4602 of the Consumer Financial Protection Agency 

24 Act of 2009, only in accordance with regulations 

25 governing alternative mortgage transactions as 

26 issued by the Consumer Financial Protection Agency 


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1 for federally chartered housing creditors, in accord2 ance with the rulemaking authority granted to the 

3 Consumer Financial Protection Agency with regard 

4 to federally chartered housing creditors under laws 

5 other than this section.’’. 

6 (c) SECTION 804.—Section 804 of the Alternative 

7 Mortgage Transaction Parity Act of l982 (12 U.S.C. 

8 3803) is amended— 

9 (1) by striking subsection (c) and inserting the 

10 following new subsection: 

11 ‘‘(c) EFFECT OF STATE LAW.— 

12 ‘‘(1) IN GENERAL.—An alternative mortgage 

13 transaction may be made by a housing creditor in 

14 accordance with this section, notwithstanding any 

15 State Constitution, law, or regulation that prohibits 

16 an alternative mortgage transaction. 

17 ‘‘(2) RULE OF CONSTRUCTION.—For purposes 

18 of this subsection, a State Constitution, law, or reg19 ulation that prohibits an alternative mortgage trans20 action does not include any State Constitution, law, 

21 or regulation that regulates mortgage transactions 

22 generally, including any restriction on prepayment 

23 penalties or late charges.’’; and 

24 (2) by adding at the end the following new sub25 section: 


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1 ‘‘(d) DUTIES OF CONSUMER FINANCIAL PROTECTION

2 AGENCY.—The Consumer Financial Protection Agency 

3 shall— 

4 ‘‘(1) review the regulations identified by the 

5 Comptroller of the Currency, the National Credit 

6 Union Administration, and the Director of the Office 

7 of Thrift Supervision (as those regulations exist on 

8 the designated transfer date, as determined in sec9 tion 4602 of the Consumer Financial Protection 

10 Agency Act of 2009) as applicable under paragraphs 

11 (1), (2), and (3) of subsection (a); 

12 ‘‘(2) determine whether such regulations are 

13 fair and not deceptive and otherwise meet the objec14 tives of section 4201 of the Consumer Financial 

15 Protection Agency Act of 2009; and 

16 ‘‘(3) prescribe regulations under subsection 

17 (a)(4) after the designated transfer date, as deter18 mined under such Act.’’. 

19 (d) EFFECTIVE DATE AND SCOPE OF APPLICA20 TION.— 

21 (1) EFFECTIVE DATE.—This section shall take 

22 effect on the designated transfer date. 

23 (2) SCOPE OF APPLICATION.—The amendments 

24 made by subsection (a) shall not affect any trans25 action covered by the Alternative Mortgage TransVerDate Nov 24 2008 22:04 Dec 02, 2009 Jkt 089200 PO 00000 Frm 00952 Fmt 6652 Sfmt 6201 E:\BILLS\H4173.IH H4173

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1 action Parity Act of l982 which is entered into on 

2 or before the designated transfer date. 

3 SEC. 4804. AMENDMENTS TO THE CONSUMER CREDIT PRO4 TECTION ACT. 

5 (a) TRUTH IN LENDING ACT.— 

6 (1) SECTION 103.—Section 103 of the Truth in 

7 Lending Act (15 U.S.C. 1602) is amended by strik8 ing subsection (b) and inserting the following new 

9 subsection: 

10 ‘‘(b) AGENCY DEFINITIONS.— 

11 ‘‘(1) BOARD.—The term ‘Board’ means the 

12 ‘Board of Governors of the Federal Reserve System’. 

13 ‘‘(2) AGENCY.—The term ‘Agency’ means the 

14 Consumer Financial Protection Agency.’’. 

15 (2) UNIVERSAL AMENDMENT RELATING TO

16 BOARD OF GOVERNORS OF THE FEDERAL RESERVE

17 SYSTEM.— 

18 (A) IN GENERAL.—Except as provided in 

19 subparagraph (B), the Truth in Lending Act 

20 (15 U.S.C. 1601 et seq.) is amended by striking 

21 ‘‘Board’’ each place such term appears, includ22 ing in chapters 4 and 5 relating to credit billing 

23 and consumer leases, and inserting ‘‘Agency’’. 

24 (B) EXCEPTIONS.—The amendment de25 scribed in subparagraph (A) shall not apply to 


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1 sections 108(a) (as amended by paragraph (4)) 

2 and 140(d). 

3 (3) SECTION 105.—Section 105(b) of the Truth 

4 in Lending Act (15 U.S.C. 1604(b)) is amended by 

5 striking the first sentence and inserting the fol6 lowing: ‘‘The Agency shall publish a single, inte7 grated disclosure for mortgage loan transactions, in8 cluding real estate settlement cost statements, which 

9 include the disclosure requirements of this title, in 

10 conjunction with the disclosure requirements of the 

11 Real Estate Settlement Procedures Act that, taken 

12 together, may apply to transactions subject to both 

13 or either law. The purpose of such model disclosure 

14 shall be to facilitate compliance with the disclosure 

15 requirements of those titles, and to aid the borrower 

16 or lessee in understanding the transaction by uti17 lizing readily understandable language to simplify 

18 the technical nature of the disclosures.’’. 

19 (4) SECTION 108.—Section 108 of the Truth in 

20 Lending Act (15 U.S.C. 1607) is amended— 

21 (A) by striking subsection (a) and insert22 ing the following new subsection: 

23 ‘‘(a) ENFORCING AGENCIES.—Subject to section 

24 4202 of the Consumer Financial Protection Agency Act 


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1 of 2009, compliance with the requirements imposed under 

2 this title shall be enforced as follows: 

3 ‘‘(1) Under section 8 of the Federal Deposit In4 surance Act, in the case of— 

5 ‘‘(A) national banks, and Federal branches 

6 and Federal agencies of foreign banks, by the 

7 head of the agency responsible for chartering 

8 and regulating national banks; 

9 ‘‘(B) member banks of the Federal Reserve 

10 System (other than national banks), branches 

11 and agencies of foreign banks (other than Fed12 eral branches, Federal agencies, and insured 

13 State branches of foreign banks), commercial 

14 lending companies owned or controlled by for15 eign banks, and organizations operating under 

16 section 25 or 25(a) of the Federal Reserve Act, 

17 by the Board; 

18 ‘‘(C) depository institution insured by the 

19 Federal Deposit Insurance Corporation (other 

20 than members of the Federal Reserve System, 

21 Federal savings associations, and savings and 

22 loan holding companies) and insured State 

23 branches of foreign banks, by the Board of Di24 rectors of the Federal Deposit Insurance Cor25 poration; and 


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1 ‘‘(D) Federal savings associations and sav2 ings and loan holding companies, by the Direc3 tor of the Office of Thrift Supervision. 

4 ‘‘(2) Under subtitle E of the Consumer Finan5 cial Protection Agency Act of 2009, by the Agency. 

6 ‘‘(3) Under the Federal Credit Union Act, by 

7 the head of the agency responsible for chartering 

8 and regulating Federal credit unions. 

9 ‘‘(4) Under the Federal Aviation Act of 1958, 

10 by the Secretary of Transportation with respect to 

11 any air carrier or foreign air carrier subject to that 

12 Act. 

13 ‘‘(5) Under the Packers and Stockyards Act, 

14 1921 (except as provided in section 406 of that Act), 

15 by the Secretary of Agriculture with respect to any 

16 activities subject to that Act. 

17 ‘‘(6) Under the Farm Credit Act of 1971, by 

18 the Farm Credit Administration with respect to any 

19 Federal land bank, Federal land bank association, 

20 Federal intermediate credit bank, or production 

21 credit association.’’; and 

22 (B) by striking subsection (c) and insert23 ing the following new subsection: 

24 ‘‘(c) OVERALL ENFORCEMENT AUTHORITY OF THE

25 FEDERAL TRADE COMMISSION.—Except to the extent 


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1 that enforcement of the requirements imposed under this 

2 title is specifically committed to some other Government 

3 agency under subsection (a) and subject to section 4202 

4 of the Consumer Financial Protection Agency Act of 2009, 

5 the Federal Trade Commission shall enforce such require6 ments. For the purpose of the exercise by the Federal 

7 Trade Commission of its functions and powers under the 

8 Federal Trade Commission Act, a violation of any require9 ment imposed under this title shall be deemed a violation 

10 of a requirement imposed under that Act. All of the func11 tions and powers of the Federal Trade Commission under 

12 the Federal Trade Commission Act are available to the 

13 Commission to enforce compliance by any person with the 

14 requirements under this title, irrespective of whether that 

15 person is engaged in commerce or meets any other juris16 dictional tests in the Federal Trade Commission Act.’’. 

17 (5) UNIVERSAL AMENDMENT RELATING TO THE

18 FEDERAL TRADE COMMISSION.— 

19 (A) IN GENERAL.—Except as provided in 

20 subparagraph (B), the Truth in Lending Act 

21 (15 U.S.C. 1601 et seq.) is amended by striking 

22 ‘‘Federal Trade Commission’’ each place such 

23 term appears and inserting ‘‘Agency’’. 

24 (B) EXCEPTIONS.—The amendment de25 scribed in subparagraph (A) shall not apply to 


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1 sections 108(c) (as amended by paragraph (4)) 

2 and 129(m) (as amended by paragraph (7)). 

3 (6) SECTION 127.—Subparagraph (C) of section 

4 127(b)(11) of the Truth in Lending Act (15 U.S.C. 

5 1637(b)(11)) is amended to read as follows: 

6 ‘‘(C) Notwithstanding subparagraphs (A) 

7 and (B), in the case of a creditor with respect 

8 to which compliance with this title is enforced 

9 by the Agency, the following statement, in a 

10 prominent location on the front of the billing 

11 statement, disclosed clearly and conspicuously: 

12 ‘Minimum Payment Warning: Making only the 

13 required minimum payment will increase the in14 terest you pay and the time it takes to repay 

15 your balance. For example, making only the 

16 typical 5 percent minimum monthly payment on 

17 a balance of $300 at an interest rate of 17 per18 cent would take 24 months to repay the balance 

19 in full. For an estimate of the time it would 

20 take to repay your balance, making only min21 imum monthly payments, call the Consumer Fi22 nancial Protection Agency at this toll-free num23 ber: lllllllll [the blank space to 

24 be filled in by the creditor].’ A creditor who is 


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1 subject to this subparagraph shall not be sub2 ject to subparagraph (A) or (B).’’. 

3 (7) SECTION 129.—Section 129(m) of the Truth 

4 in Lending Act (15 U.S.C. 1639(m)) is amended to 

5 read as follows: 

6 ‘‘(m) CIVIL PENALTIES IN FEDERAL TRADE COM7 MISSION ENFORCEMENT ACTIONS.—For purposes of en8 forcement by the Federal Trade Commission, any violation 

9 of a regulation issued by the Agency pursuant to sub10 section (l)(2) of this section shall be treated as a violation 

11 of a regulation promulgated under section 18 of the Fed12 eral Trade Commission Act (15 U.S.C. 57a) regarding un13 fair or deceptive acts or practices.’’. 

14 (b) FAIR CREDIT REPORTING ACT.— 

15 (1) SECTION 603.—Section 603 of the Fair 

16 Credit Reporting Act (15 U.S.C. 1681a) is amend17 ed— 

18 (A) by redesignating subsections (w) and 

19 (x) as subsections (x) and (y), respectively; and 

20 (B) by inserting after subsection (v) the 

21 following new subsection: 

22 ‘‘(w) AGENCY.—The term ‘Agency’ means the Con23 sumer Financial Protection Agency.’’. 

24 (2) UNIVERSAL AMENDMENTS RELATING TO

25 THE FEDERAL TRADE COMMISSION.—Other than in 


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1 connection with the amendment made by paragraph 

2 (7)(A), the Fair Credit Reporting Act (15 U.S.C. 

3 1681a) is amended— 

4 (A) by striking ‘‘Federal Trade Commis5 sion’’ each place such term appears and insert6 ing ‘‘Agency’’; 

7 (B) by striking ‘‘Commission’’ each place 

8 such term appears (other than in connection 

9 with the term amended in subparagraph (A)) 

10 and inserting ‘‘Agency’’; and 

11 (C) by striking ‘‘Federal banking agencies, 

12 the National Credit Union Administration, and 

13 the Commission shall jointly’’ each place such 

14 term appears in sections 605(h)(2) and 

15 623(a)(8)(A) and inserting ‘‘Agency shall’’. 

16 (3) SECTION 603.—Section 603(k)(2) of the 

17 Fair Credit Reporting Act (15 U.S.C. 1681a(k)(2)) 

18 is amended by striking ‘‘Board of Governors of the 

19 Federal Reserve System’’ and inserting ‘‘Agency’’. 

20 (4) SECTION 604.—Subsection 604(g) of the 

21 Fair Credit Reporting Act (15 U.S.C. 1681b(g)) is 

22 amended— 

23 (A) by striking subparagraph (C) of para24 graph (3) and inserting the following new sub25 paragraph: 


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1 ‘‘(C) as otherwise determined to be nec2 essary and appropriate, by regulation or order 

3 and subject to paragraph (6), by the Agency 

4 (with respect to any covered person subject to 

5 the jurisdiction of such agency under paragraph 

6 (2) of section 621(b)), or the applicable State 

7 insurance authority (with respect to any person 

8 engaged in providing insurance or annuities).’’; 

9 and 

10 (B) by striking paragraph (5) and insert11 ing the following new paragraph: 

12 ‘‘(5) REGULATIONS REQUIRED.—The Agency 

13 may, after notice and opportunity for comment, pre14 scribe regulations that permit transactions under 

15 paragraph (2) that are determined to be necessary 

16 and appropriate to protect legitimate operational, 

17 transactional, risk, consumer, and other needs (and 

18 which shall include permitting actions necessary for 

19 administrative verification purposes), consistent with 

20 the intent of paragraph (2) to restrict the use of 

21 medical information for inappropriate purposes.’’. 

22 (5) SECTION 611.—Section 611(e)(2) of the 

23 Fair Credit Reporting Act (15 U.S.C.1681i(e)(2)) is 

24 amended to read as follows: 


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1 ‘‘(2) EXCLUSION.—Complaints received or ob2 tained by the Agency pursuant to its investigative 

3 authority under the Consumer Financial Protection 

4 Agency Act of 2009 shall not be subject to para5 graph (1).’’. 

6 (6) SECTION 615.—Section 615(h)(6)(A) of the 

7 Fair Credit Reporting Act (15 U.S.C. 

8 1681m(h)(6)(A)) is amended to read as follows: 

9 ‘‘(A) RULES REQUIRED.—The Agency 

10 shall prescribe rules.’’. 

11 (7) SECTION 621.—Section 621 of the Fair 

12 Credit Reporting Act (15 U.S.C. 1681s) is amend13 ed— 

14 (A) by striking subsection (a) and insert15 ing the following new subsection: 

16 ‘‘(a) ENFORCEMENT BY FEDERAL TRADE COMMIS17 SION.— 

18 ‘‘(1) IN GENERAL.—Subject to section 4202 of 

19 the Consumer Financial Protection Agency Act of 

20 2009, compliance with the requirements imposed 

21 under this title shall be enforced under the Federal 

22 Trade Commission Act by the Federal Trade Com23 mission with respect to consumer reporting agencies 

24 and all other persons subject thereto, except to the 

25 extent that enforcement of the requirements imposed 


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1 under this title is specifically committed to some 

2 other government agency under subsection (b) here3 of. For the purpose of the exercise by the Federal 

4 Trade Commission of its functions and powers under 

5 the Federal Trade Commission Act, a violation of 

6 any requirement or prohibition imposed under this 

7 title shall constitute an unfair or deceptive act or 

8 practice in commerce in violation of section 5(a) of 

9 the Federal Trade Commission Act and shall be sub10 ject to enforcement by the Federal Trade Commis11 sion under section 5(b) of such Act with respect to 

12 any consumer reporting agency or person subject to 

13 enforcement by the Federal Trade Commission pur14 suant to this subsection, irrespective of whether that 

15 person is engaged in commerce or meets any other 

16 jurisdictional tests in the Federal Trade Commission 

17 Act. The Federal Trade Commission shall have such 

18 procedural, investigative, and enforcement powers 

19 (subject to section 4202 of the Consumer Financial 

20 Protection Agency Act of 2009), including the power 

21 to issue procedural rules in enforcing compliance 

22 with the requirements imposed under this title and 

23 to require the filing of reports, the production of 

24 documents, and the appearance of witnesses as 

25 though the applicable terms and conditions of the 


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1 Federal Trade Commission Act were part of this 

2 title. Any person violating any of the provisions of 

3 this title shall be subject to the penalties and enti4 tled to the privileges and immunities provided in the 

5 Federal Trade Commission Act as though the appli6 cable terms and provisions thereof were part of this 

7 title. 

8 ‘‘(2) CIVIL MONEY PENALTIES.— 

9 ‘‘(A) IN GENERAL.—Subject to section 

10 4202 of the Consumer Financial Protection 

11 Agency Act of 2009, in the event of a knowing 

12 violation, which constitutes a pattern or prac13 tice of violations of this title, the Commission 

14 may commence a civil action to recover a civil 

15 penalty in a district court of the United States 

16 against any person that violates this title. In 

17 such action, such person shall be liable for a 

18 civil penalty of not more than $2,500 per viola19 tion. 

20 ‘‘(B) FACTORS IN DETERMINING

21 AMOUNT.—In determining the amount of a civil 

22 penalty under subparagraph (A), the court shall 

23 take into account the degree of culpability, any 

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1 fect on ability to continue to do business, and 

2 such other matters as justice may require. 

3 ‘‘(3) EXCEPTION.—Notwithstanding paragraph 

4 (2), a court may not impose any civil penalty on a 

5 person for a violation of section 623(a)(1) unless the 

6 person has been enjoined from committing the viola7 tion, or ordered not to commit the violation, in an 

8 action or proceeding brought by or on behalf of the 

9 Federal Trade Commission or the Agency, as the 

10 case may be, and has violated the injunction or 

11 order, and the court may not impose any civil pen12 alty for any violation occurring before the date of 

13 the violation of the injunction or order.’’; 

14 (B) by striking subsection (b) and insert15 ing the following new subsection: 

16 ‘‘(b) ENFORCEMENT BY OTHER AGENCIES.—Subject 

17 to section 4202 of the Consumer Financial Protection 

18 Agency Act of 2009, compliance with the requirements im19 posed under this title with respect to consumer reporting 

20 agencies, persons who use consumer reports from such 

21 agencies, persons who furnish information to such agen22 cies, and users of information that are subject to sub23 section (d) of section 615 shall be enforced as follows: 

24 ‘‘(1) Under section 8 of the Federal Deposit In25 surance Act, in the case of— 


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1 ‘‘(A) national banks, and Federal branches 

2 and Federal agencies of foreign banks, by the 

3 head of the agency responsible for chartering 

4 and regulating national banks; 

5 ‘‘(B) member banks of the Federal Reserve 

6 System (other than national banks), branches 

7 and agencies of foreign banks (other than Fed8 eral branches, Federal agencies, and insured 

9 State branches of foreign banks), commercial 

10 lending companies owned or controlled by for11 eign banks, and organizations operating under 

12 section 25 or 25A of the Federal Reserve Act, 

13 by the Board of Governors of the Federal Re14 serve System; 

15 ‘‘(C) banks insured by the Federal Deposit 

16 Insurance Corporation (other than members of 

17 the Federal Reserve System, Federal savings 

18 associations, and savings and loan holding com19 panies) and insured State branches of foreign 

20 banks, by the Board of Directors of the Federal 

21 Deposit Insurance Corporation; and 

22 ‘‘(D) Federal savings associations and sav23 ings and loan holding companies, by the Direc24 tor of the Office of Thrift Supervision. 


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1 ‘‘(2) Under subtitle E of the Consumer Finan2 cial Protection Agency Act of 2009, by the Agency 

3 in the case of a covered person under that Act. 

4 ‘‘(3) Under the Federal Credit Union Act, by 

5 the National Credit Union Administration Board 

6 with respect to any Federal credit union. 

7 ‘‘(4) Under subtitle IV of title 49, United 

8 States Code, by the Secretary of Transportation, 

9 with respect to all carriers subject to the jurisdiction 

10 of the Surface Transportation Board. 

11 ‘‘(5) Under the Federal Aviation Act of 1958, 

12 by the Secretary of Transportation with respect to 

13 any air carrier or foreign air carrier subject to that 

14 Act. 

15 ‘‘(6) Under the Packers and Stockyards Act, 

16 1921 (except as provided in section 406 of that Act), 

17 by the Secretary of Agriculture with respect to any 

18 activities subject to that Act. 

19 ‘‘(7) Under the Commodity Exchange Act, with 

20 respect to a person subject to the jurisdiction of the 

21 Commodity Futures Trading Commission. 

22 ‘‘(8) Under the Federal securities law and any 

23 other laws subject to the jurisdiction of the Securi24 ties and Exchange Commission, with respect to a 


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1 person subject to the jurisdiction of the Securities 

2 and Exchange Commission. 

3 Any term used in paragraph (1) that is not defined in 

4 this title or otherwise defined in section 3(s) of the Federal 

5 Deposit Insurance Act shall have the meaning given to 

6 such term in section 1(b) of the International Banking Act 

7 of 1978.’’; 

8 (C) by striking subsection (e) and inserting 

9 the following new subsection: 

10 ‘‘(e) REGULATORY AUTHORITY.—The Agency shall 

11 prescribe such regulations as necessary to carry out the 

12 purposes of this Act with respect to a covered person de13 scribed in subsection (b).’’; and 

14 (D) in the heading of subsection (g) by 

15 striking ‘‘FTC’’. 

16 (8) SECTION 623.—Section 623 of the Fair 

17 Credit Reporting Act (15 U.S.C. 1681s–2) is 

18 amended— 

19 (A) by amending subparagraph (a)(7)(D) 

20 to read as follows: 

21 ‘‘(D) MODEL DISCLOSURE.— 

22 ‘‘(i) DUTY OF AGENCY TO PRE23 PARE.—The Agency shall prescribe a brief 

24 model disclosure a financial institution 


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1 may use to comply with subparagraph (A), 

2 which shall not exceed 30 words. 

3 ‘‘(ii) USE OF MODEL NOT RE4 QUIRED.—No provision of this paragraph 

5 shall be construed as requiring a financial 

6 institution to use any such model form pre7 scribed by the Agency. 

8 ‘‘(iii) COMPLIANCE USING MODEL.—A 

9 financial institution shall be deemed to be 

10 in compliance with subparagraph (A) if the 

11 financial institution uses any such model 

12 form prescribed by the Agency, or the fi13 nancial institution uses any such model 

14 form and rearranges its format.’’. 

15 (B) by amending subsection (e) to read as 

16 follows: 

17 ‘‘(e) ACCURACY GUIDELINES AND REGULATIONS RE18 QUIRED.— 

19 ‘‘(1) GUIDELINES.—The Agency shall, with re20 spect to the entities that are subject to its enforce21 ment authority under section 621— 

22 ‘‘(A) establish and maintain guidelines for 

23 use by each person that furnishes information 

24 to a consumer reporting agency regarding the 

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1 ing to consumers that such entities furnish to 

2 consumer reporting agencies, and update such 

3 guidelines as often as necessary; and 

4 ‘‘(B) prescribe regulations requiring each 

5 person that furnishes information to a con6 sumer reporting agency to establish reasonable 

7 policies and procedures or implementing the 

8 guidelines established pursuant to subpara9 graph (A). 

10 ‘‘(2) CRITERIA.—In developing the guidelines 

11 required by paragraph (1)(A), the Agency shall— 

12 ‘‘(A) identify patterns, practices, and spe13 cific forms of activity that can compromise the 

14 accuracy and integrity of information furnished 

15 to consumer reporting agencies; 

16 ‘‘(B) review the methods (including techno17 logical means) used to furnish information re18 lating to consumers to consumer reporting 

19 agencies; 

20 ‘‘(C) determine whether persons that fur21 nish information to consumer reporting agen22 cies maintain and enforce policies to ensure the 

23 accuracy and integrity of information furnished 

24 to consumer reporting agencies; and 


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1 ‘‘(D) examine the policies and processes 

2 that persons that furnish information to con3 sumer reporting agencies employ to conduct re4 investigations and correct inaccurate informa5 tion relating to consumers that has been fur6 nished to consumer reporting agencies.’’ 

7 (c) EQUAL CREDIT OPPORTUNITY ACT.— 

8 (1) SECTION 701.—Section 701 of the Equal 

9 Credit Opportunity Act (15 U.S.C. 1691) is amend10 ed by striking ‘‘Board’’ each place such term ap11 pears and inserting ‘‘Agency’’. 

12 (2) SECTION 702.—Section 702(c) of the Equal 

13 Credit Opportunity Act (15 U.S.C. 1691a) is 

14 amended to read as follows: 

15 ‘‘(c) The term ‘Agency’ means the Consumer Finan16 cial Protection Agency.’’. 

17 (3) SECTION 703.—Section 703 of the Equal 

18 Credit Opportunity Act (15 U.S.C. 1691b) is 

19 amended— 

20 (A) by striking subsection (b); 

21 (B) in subsection (a)— 

22 (i) by striking ‘‘(1)’’; and 

23 (ii) by redesignating paragraphs (2), 

24 (3), (4), and (5) as subsections (b), (c), 

25 (d), and (e), respectively; 


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1 (C) in subsection (c) (as so redesig2 nated)— 

3 (i) by striking ‘‘paragraph (2)’’ and 

4 inserting ‘‘subsection (b)’’; and 

5 (ii) by striking ‘‘such paragraph’’ and 

6 inserting ‘‘such subsection’’; 

7 (D) in subsection (d) (as so redesig8 nated)— 

9 (i) by striking ‘‘subsection’’ and in10 serting ‘‘section’ ’’ 

11 (ii) by striking ‘‘Act’’ and inserting 

12 ‘‘title’’; and 

13 (iii) by striking ‘‘this paragraph’’ and 

14 inserting ‘‘this subsection’’; and 

15 (E) by striking ‘‘Board’’ each place such 

16 term appears in such section and inserting 

17 ‘‘Agency’’. 

18 (4) SECTION 704.—Section 704 of the Equal 

19 Credit Opportunity Act (15 U.S.C. 1691c) is amend20 ed— 

21 (A) in subsection (a)— 

22 (i) in the matter preceding paragraph 

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1 sumer Financial Protection Agency Act of 

2 2009, compliance’’; 

3 (ii) in paragraph (1)(A), by striking 

4 ‘‘Office of the Comptroller of the Cur5 rency’’ and inserting ‘‘head of the agency 

6 responsible for chartering and regulating 

7 national banks’’; 

8 (iii) in paragraph (1)(B), by striking 

9 ‘‘and’’ after the semicolon; 

10 (iv) in paragraph (1)(C), by inserting 

11 ‘‘and’’ after the semicolon; 

12 (v) by inserting after subparagraph 

13 (C) of paragraph (1) the following new 

14 subparagraph: 

15 ‘‘(D) savings associations and savings and 

16 loan holding companies by the Director of the 

17 Office of Thrift Supervision;’’; and 

18 (vi) by amending paragraph (2) to 

19 read as follows: 

20 ‘‘(2) Subtitle E of the Consumer Financial Pro21 tection Agency Act of 2009, by the Agency.’’; 

22 (B) by striking subsection (c) and insert23 ing the following new subsection: 

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1 forcement of the requirements imposed under this title is 

2 specifically committed to some other Government agency 

3 under subsection (a) and subject to section 4202 of the 

4 Consumer Financial Protection Agency Act of 2009, the 

5 Federal Trade Commission shall enforce such require6 ments. For the purpose of the exercise by the Federal 

7 Trade Commission of its functions and powers under the 

8 Federal Trade Commission Act, a violation of any require9 ment imposed under this title shall be deemed a violation 

10 of a requirement imposed under that Act. All of the func11 tions and powers of the Federal Trade Commission under 

12 the Federal Trade Commission Act are available to the 

13 Commission to enforce compliance by any person with the 

14 requirements imposed under this title, irrespective of 

15 whether that person is engaged in commerce or meets any 

16 other jurisdictional tests in the Federal Trade Commission 

17 Act, including the power to enforce any regulation pre18 scribed by the Director under this title in the same man19 ner as if the violation had been a violation of a Federal 

20 Trade Commission trade regulation rule.’’; and 

21 (C) in subsection (d), by striking ‘‘Board’’ 

22 and inserting ‘‘Agency’’. 

23 (5) SECTION 704a.—Section 704A(a)(1) of the 

24 Equal Credit Opportunity Act (15 U.S.C. 1691c– 


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1 1(a)(1)) is amended in by striking ‘‘Board’’ and in2 serting ‘‘Agency’’. 

3 (6) SECTION 705.—Section 705 of the Equal 

4 Credit Opportunity Act (15 U.S.C. 1691d) is 

5 amended— 

6 (A) in subsection (f), by striking ‘‘Board’’ 

7 each place such term appears and inserting 

8 ‘‘Agency’’; and 

9 (B) in subsection (g), by striking ‘‘Board’’ 

10 and inserting ‘‘Agency’’. 

11 (7) SECTION 706.—Section 706 of the Equal 

12 Credit Opportunity Act (15 U.S.C. 1691e) is amend13 ed— 

14 (A) in subsection (e)— 

15 (i) by striking ‘‘Board’’ each place 

16 such term appears and inserting ‘‘Agency’’; 

17 and 

18 (ii) by striking ‘‘Federal Reserve Sys19 tem’’ and inserting ‘‘Consumer Financial 

20 Protection Agency’’; 

21 (B) in subsection (f), by striking ‘‘two 

22 years’’ each place such term appears and insert23 ing ‘‘5 years’’; 

24 (C) in subsection (g)— 


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1 (i) by striking ‘‘The agencies having’’, 

2 in the 1st sentence, and inserting ‘‘The 

3 Agency and the agencies having’’ 

4 (ii) by striking ‘‘Each agency re5 ferred’’, in the 2nd sentence, and inserting 

6 ‘‘The Agency and each agency referred’’; 

7 (iii) by striking ‘‘Each such agency’’, 

8 in the 3rd sentence, and inserting ‘‘The 

9 Agency and each such agency’’; and 

10 (iv) by striking ‘‘whenever the agen11 cy’’ in the 3rd sentence, and inserting 

12 ‘‘whenever the Agency or an agency having 

13 responsibility for administrative enforce14 ment under section 704’’; and 

15 (D) in subsection (k)— 

16 (i) by striking ‘‘Whenever an agency’’ 

17 and inserting ‘‘Whenever the Agency or an 

18 agency’’; and 

19 (ii) by striking ‘‘the agency shall no20 tify’’ and inserting ‘‘the Agency, or an 

21 agency referred to in any such paragraph, 

22 as the case may be, shall notify’’. 

23 (8) SECTION 707.—Section 707 of the Equal 

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1 ed by striking ‘‘Board’’ each place such term ap2 pears and inserting ‘‘Agency’’. 

3 (d) FAIR DEBT COLLECTION PRACTICES ACT.— 

4 (1) SECTION 803.—Section 803 of the Fair 

5 Debt Collection Practices Act (15 U.S.C. 1692a) is 

6 amended— 

7 (A) by redesignating paragraphs (1), (2), 

8 (3), (4), (5), (6), (7), and (8) as paragraphs 

9 (2), (3), (4), (5), (6), (7), (8), and (9), respec10 tively; and 

11 (B) by inserting before paragraph (2) (as 

12 so redesignated) the following new paragraph: 

13 ‘‘(1) The term ‘Agency’ means the Consumer 

14 Financial Protection Agency.’’. 

15 (2) SECTION 813.—Section 813(e) of the Fair 

16 Debt Collection Practices Act (15 U.S.C. 1692k(e)) 

17 is amended by striking ‘‘Commission’’ and inserting 

18 ‘‘Agency’’. 

19 (3) SECTION 814.—Section 814 of the Fair 

20 Debt Collection Practices Act (15 U.S.C. 1692l) is 

21 amended— 

22 (A) by striking subsection (a) and insert23 ing the following new subsection: 

24 ‘‘(a) FEDERAL TRADE COMMISSION.—Subject to sec25 tion 4202 of the Consumer Financial Protection Agency 


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1 Act of 2009, compliance with this title shall be enforced 

2 by the Commission, except to the extent that enforcement 

3 of the requirements imposed under this title is specifically 

4 committed to another agency under subsection (b). For 

5 purpose of the exercise by the Commission of its functions 

6 and powers under the Federal Trade Commission Act, a 

7 violation of this title shall be deemed an unfair or decep8 tive act or practice in violation of that Act. All of the func9 tions and powers of the Commission under the Federal 

10 Trade Commission Act are available to the Commission 

11 to enforce compliance by any person with this title, irre12 spective of whether that person is engaged in commerce 

13 or meets any other jurisdictional tests in the Federal 

14 Trade Commission Act, including the power to enforce the 

15 provisions of this title in the same manner as if the viola16 tion had been a violation of a Federal Trade Commission 

17 trade regulation rule.’’; 

18 (B) in subsection (b)— 

19 (i) in the matter preceding paragraph 

20 (1), by striking ‘‘Compliance’’ and insert21 ing ‘‘ENFORCEMENT BY OTHER AGEN22 CY.—Subject to section 4202 of the Con23 sumer Financial Protection Agency Act of 

24 2009, compliance’’. 


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1 (ii) in paragraph (1)(A), by striking 

2 ‘‘Office of the Comptroller of the Cur3 rency;’’ and inserting ‘‘head of the agency 

4 responsible for chartering and regulating 

5 national banks;’’; 

6 (iii) in paragraph (1)(B), by striking 

7 ‘‘and’’ after the semicolon; 

8 (iv) in paragraph (1)(C), by inserting 

9 ‘‘and’’ after the semicolon; 

10 (v) by inserting after subparagraph 

11 (C) of paragraph (1) the following new 

12 subparagraph: 

13 ‘‘(D) savings associations and savings and 

14 loan holding companies by the Director of the 

15 Office of Thrift Supervision;’’; and 

16 (vi) by striking paragraph (2) and in17 serting the following new paragraph: 

18 ‘‘(2) subtitle E of the Consumer Financial Pro19 tection Agency Act of 2009, by the Agency;’’; and 

20 (C) by striking subsection (d) and insert21 ing the following new subsection:. 

22 ‘‘(d) REGULATIONS.—The Agency may prescribe reg23 ulations with respect to the collection of debts by any debt 

24 collector.’’. 


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1 (4) SECTION 815.—Section 815 (15 U.S.C. 

2 1692m) is amended— 

3 (A) in the section heading, by striking 

4 ‘‘Commission’’ and inserting ‘‘Agency’’; 

5 and 

6 (B) by striking ‘‘Commission’’ each place 

7 such term appears and inserting ‘‘Agency’’. 

8 (5) SECTION 817.—Section 817 (15 U.S.C. 

9 1692o) is amended by striking ‘‘Commission’’ each 

10 place such term appears and inserting ‘‘Agency’’. 

11 (e) ELECTRONIC FUND TRANSFER ACT.— 

12 (1) SECTION 903.—Section 903 of the Elec13 tronic Fund Transfer Act (15 U.S.C. 1693a) is 

14 amended— 

15 (A) by striking paragraph (3) and insert16 ing the following new paragraph: 

17 ‘‘(3) the term ‘Agency’ means the Consumer Fi18 nancial Protection Agency;’’; and 

19 (B) in paragraph (6), by striking ‘‘Board’’ 

20 and inserting ‘‘Agency’’. 

21 (2) SECTION 904.—Section 904 of the Elec22 tronic Fund Transfer Act (15 U.S.C. 1693b) is 

23 amended by striking ‘‘Board’’ each place such term 

24 appears and inserting ‘‘Agency’’. 


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1 (3) SECTION 905.—Section 905 of the Elec2 tronic Fund Transfer Act (15 U.S.C. 1693c) is 

3 amended by striking ‘‘Board’’ each place such term 

4 appears and inserting ‘‘Agency’’. 

5 (4) SECTION 906.—Section 906(b) of the Elec6 tronic Fund Transfer Act (15 U.S.C. 1693d(b)) is 

7 amended by striking ‘‘Board’’ and inserting ‘‘Agen8 cy’’. 

9 (5) SECTION 907.—Section 907(b) of the Elec10 tronic Fund Transfer Act (15 U.S.C. 1693e(b)) is 

11 amended by striking ‘‘Board’’ and inserting ‘‘Agen12 cy’’. 

13 (6) SECTION 908.—Section 908(f)(7) of the 

14 Electronic Fund Transfer Act (15 U.S.C. 

15 1693f(f)(7)) is amended by striking ‘‘Board’’ and in16 serting ‘‘Agency’’. 

17 (7) SECTION 910.—Section 910(a)(1)(E) of the 

18 Electronic Fund Transfer Act (15 U.S.C. 

19 1693h(a)(1)(E)) is amended by striking ‘‘Board’’ 

20 and inserting ‘‘Agency’’. 

21 (8) SECTION 911.—Section 911(b)(3) of the 

22 Electronic Fund Transfer Act (15 U.S.C. 

23 1693i(b)(3) is amended by striking ‘‘Board’’ and in24 serting ‘‘Agency’’. 


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1 (9) SECTION 915.—Section 915(d) of the Elec2 tronic Fund Transfer Act (15 U.S.C. 1693m(d)) is 

3 amended— 

4 (A) by striking ‘‘Board’’ each place such 

5 term appears and inserting ‘‘Agency’’; and 

6 (B) by striking ‘‘Federal Reserve System’’ 

7 and inserting ‘‘Consumer Financial Protection 

8 Agency’’. 

9 (10) SECTION 917.—Section 917 of the Elec10 tronic Fund Transfer Act (15 U.S.C. 1693o) is 

11 amended— 

12 (A) in subsection (a)— 

13 (i) by striking ‘‘Compliance’’ and in14 serting ‘‘Subject to section 4202 of the 

15 Consumer Financial Protection Agency Act 

16 of 2009, compliance’’; 

17 (ii) in paragraph (1)(A), by striking 

18 ‘‘Office of the Comptroller of the Cur19 rency’’ and inserting ‘‘head of the agency 

20 responsible for chartering and regulating 

21 national banks’’; and 

22 (iii) by striking paragraph (2) and in23 serting: 

24 ‘‘(2) subtitle E of the Consumer Financial Pro25 tection Agency Act of 2009, by the Agency;’’; and 


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1 (B) by striking subsection (c) and insert2 ing the following new subsection: 

3 ‘‘(c) OVERALL ENFORCEMENT AUTHORITY OF THE

4 FEDERAL TRADE COMMISSION.—Except to the extent 

5 that enforcement of the requirements imposed under this 

6 title is specifically committed to some other Government 

7 agency under subsection (a) and subject to section 4202 

8 of the Consumer Financial Protection Agency Act of 2009, 

9 the Federal Trade Commission shall enforce such require10 ments. For the purpose of the exercise by the Federal 

11 Trade Commission of its functions and powers under the 

12 Federal Trade Commission Act, a violation of any require13 ment imposed under this title shall be deemed a violation 

14 of a requirement imposed under that Act. All of the func15 tions and powers of the Federal Trade Commission under 

16 the Federal Trade Commission Act are available to the 

17 Commission to enforce compliance by any person subject 

18 to the jurisdiction of the Commission with the require19 ments imposed under this title, irrespective of whether 

20 that person is engaged in commerce or meets any other 

21 jurisdictional tests in the Federal Trade Commission 

22 Act.’’. 

23 (11) SECTION 918.—Section 918 of the Elec24 tronic Fund Transfer Act (15 U.S.C. 1693p) is 


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1 amended by striking ‘‘Board’’ each place such term 

2 appears and inserting ‘‘Agency’’. 

3 (12) SECTION 919.—Section 919 of the Elec4 tronic Fund Transfer Act (15 U.S.C. 1693q) is 

5 amended by striking ‘‘Board’’ each place such term 

6 appears and inserting ‘‘Agency’’. 

7 (13) SECTION 920.—Section 920 of the Elec8 tronic Fund Transfer Act (15 U.S.C. 1693r) is 

9 amended by striking ‘‘Board’’ each place such term 

10 appears and inserting ‘‘Agency’’. 

11 (f) AMENDMENTS TO HOEPA RELATING TO THE

12 TRUTH IN LENDING ACT.—Section 158 of the Home 

13 Ownership and Equity Protection Act of 1994 (15 U.S.C. 

14 1601 nt.) (relating to hearings on home equity lending) 

15 is amended— 

16 (1) in subsection (a), by striking ‘‘Board of 

17 Governors of the Federal Reserve System, in con18 sultation with the Consumer Advisory Council of the 

19 Board,’’ and inserting ‘‘Consumer Financial Protec20 tion Agency, in consultation with the Advisory 

21 Board to the Agency’’; and 

22 (2) in subsection (b), by striking ‘‘Board of 

23 Governors of the Federal Reserve System’’ and in24 serting ‘‘Consumer Financial Protection Agency’’. 


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1 (g) AMENDMENT TO THE FAIR AND ACCURATE

2 CREDIT TRANSACTIONS ACT OF 2003 RELATING TO THE

3 FAIR CREDIT REPORTING ACT.—Section 214(b)(1) of the 

4 Fair and Accurate Credit Transactions Act of 2003 (15 

5 U.S.C. 1681s–3 nt.) is amended by striking ‘‘The Federal 

6 banking agencies, the National Credit Union Administra7 tion, and the Commission, with respect to the entities that 

8 are subject to their respective enforcement authority under 

9 section 621 of the Fair Credit Reporting Act and’’ and 

10 inserting ‘‘The Consumer Financial Protection Agency, 

11 with respect to a person subject to the enforcement au12 thority of the Agency, the Commodity Futures Trading 

13 Commission, and’’. 

14 SEC. 4805. AMENDMENTS TO THE EXPEDITED FUNDS 

15 AVAILABILITY ACT. 

16 (a) SECTION 605.—Section 605(f)(1) of the Expe17 dited Funds Availability Act (12 U.S.C. 4004(f)(1)) is 

18 amended by inserting ‘‘, in consultation with the Director 

19 of the Consumer Financial Protection Agency,’’after 

20 ‘‘Board’’. 

21 (b) SECTION 609.—Section 609(a) of the Expedited 

22 Funds Availability Act (12 U.S.C. 4008(a)) is amended 

23 by inserting ‘‘, in consultation with the Director of the 

24 Consumer Financial Protection Agency,’’after ‘‘Board’’. 


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1 SEC. 4806. AMENDMENTS TO THE FEDERAL DEPOSIT IN2 SURANCE ACT. 

3 (a) SECTION 8.—Section 8(t) the Federal Deposit In4 surance Act (12 U.S.C. 1818(t)), as amended by section 

5 1111(b)(2), is further amended by adding at the end the 

6 following new paragraph: 

7 ‘‘(7) REFERRAL TO CONSUMER FINANCIAL PRO8 TECTION COMMISSION.—Each appropriate Federal 

9 banking agency shall make a referral to the Con10 sumer Financial Protection Agency when the Fed11 eral banking agency has a reasonable belief that a 

12 violation of an enumerated consumer law, as defined 

13 in section 4202(e)(2) of the Consumer Financial 

14 Protection Agency Act of 2009, by any insured de15 pository institution or institution-affiliated party 

16 within the jurisdiction of that appropriate Federal 

17 banking agency.’’. 

18 (b) SECTION 43.—Section 43 of the Federal Deposit 

19 Insurance Act (12 U.S.C. 1831t) is amended— 

20 (1) in subsection (c), by striking ‘‘Federal 

21 Trade Commission’’ and inserting ‘‘Agency’’; 

22 (2) in subsection (d), by striking ‘‘Federal 

23 Trade Commission’’ and inserting ‘‘Agency’’; 

24 (3) in subsection (e)— 


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1 (A) in paragraph (2)(B), by striking ‘‘Fed2 eral Trade Commission’’ and inserting ‘‘Agen3 cy’’; and 

4 (B) by adding at the end the following new 

5 paragraph: 

6 ‘‘(5) AGENCY.—The term ‘Agency’ means the 

7 Consumer Financial Protection Agency.’’. 

8 (c) SECTION 43(f).—Section 43(f) of the Federal De9 posit Insurance Act (12 U.S.C. 1831t(f)) is amended— 

10 (1) by striking paragraph (1) and inserting the 

11 following new paragraph: 

12 ‘‘(1) LIMITED ENFORCEMENT AUTHORITY.— 

13 Compliance with the requirements of subsections (b), 

14 (c) and (e), and any regulation prescribed or order 

15 issued under such subsection, shall be enforced 

16 under the Consumer Financial Protection Agency 

17 Act of 2009 by the Agency with respect to any per18 son (and without regard to the provision of a con19 sumer financial product or service).’’; and 

20 (2) in paragraph (2), by striking subparagraph 

21 (C) and inserting the following new subparagraph: 

22 ‘‘(C) LIMITATION ON STATE ACTION

23 WHILE FEDERAL ACTION PENDING.—If the 

24 Agency has instituted an enforcement action for 

25 a violation of this section, no appropriate State 


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1 supervisory may, during the pendency of such 

2 action, bring an action under this section 

3 against any defendant named in the complaint 

4 of the Agency for any violation of this section 

5 that is alleged in that complaint.’’. 

6 SEC. 4807. AMENDMENTS TO THE GRAMM-LEACH-BLILEY 

7 ACT. 

8 (a) SECTION 504.—Section 504(a)(1) of the Gramm9 Leach-Bliley Act (15 U.S.C. 6804(a)(1)) is amended— 

10 (1) by striking ‘‘The Federal banking agencies, 

11 the National Credit Union Administration, the Sec12 retary of the Treasury,’’ and inserting ‘‘The Con13 sumer Financial Protection Agency and’’; and 

14 (2) by striking ‘‘, and the Federal Trade Com15 mission’’. 

16 (b) SECTION 505.— 

17 (1) Section 505(a) of the Gramm-Leach-Bliley 

18 Act (15 U.S.C. 6805(a)) is amended— 

19 (A) in the matter preceding paragraph (1), 

20 by striking ‘‘This subtitle and the regulations 

21 prescribed thereunder shall be enforced by’’ and 

22 inserting ‘‘Subject to section 4202 of the Con23 sumer Financial Protection Agency Act of 

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1 scribed under this title shall be enforced by the 

2 Consumer Financial Protection Agency,’’; and 

3 (B) by inserting after paragraph (7) the 

4 following new paragraph: 

5 ‘‘(8) Under the Consumer Financial Protection 

6 Agency Act of 2009, by the Consumer Financial 

7 Protection Agency in the case of financial institu8 tions and other covered persons and service pro9 viders subject to the jurisdiction of the Agency 

10 under that Act, but not with respect to the stand11 ards under section 501.’’. 

12 (2) Section 505(b)(1) of the Gramm-Leach-Bli13 ley Act (15 U.S.C. 6805(b)(1)) is amended by in14 serting ‘‘, other than the Consumer Financial Pro15 tection Agency,’’ after ‘‘described in subsection (a)’’. 

16 SEC. 4808. AMENDMENTS TO THE HOME MORTGAGE DIS17 CLOSURE ACT OF 1975. 

18 (a) SECTION 303.—Section 303 of the Home Mort19 gage Disclosure Act of 1975 (12 U.S.C. 2802) is amend20 ed— 

21 (1) by redesignating paragraphs (1), (2), (3), 

22 (4), (5), and (6) as paragraphs (2), (3), (4), (5), 

23 (6), and (7), respectively; and 

24 (2) by inserting before paragraph (2) (as so re25 designated) the following new paragraph: 


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1 ‘‘(1) The term ‘Agency’ means the Consumer 

2 Financial Protection Agency.’’. 

3 (b) UNIVERSAL AMENDMENT RELATING TO AGEN4 CY.—Except as provided in subsections (c), (d), (e), and 

5 (f), the Home Mortgage Disclosure Act of 1975 (12 

6 U.S.C. 2801–11) is amended by striking ‘‘Board’’ each 

7 place such term appears and inserting ‘‘Agency’’. 

8 (c) SECTION 304.—Section 304 of the Home Mort9 gage Disclosure Act of 1975 (12 U.S.C. 2803(h)) is 

10 amended— 

11 (1) in subsection (b)— 

12 (A) by striking ‘‘and’’ after the semicolon 

13 at the end of paragraph (3); 

14 (B) by striking ‘‘and gender’’ in paragraph 

15 (4), and inserting ‘‘age, and gender’’; 

16 (C) by striking the period at the end of 

17 paragraph (4) and inserting a semicolon; and 

18 (D) by inserting after paragraph (4) the 

19 following new paragraphs: 

20 ‘‘(5) the number and dollar amount of mort21 gage loans grouped according to the following meas22 urements: 

23 ‘‘(A) the total points and fees payable at 

24 origination in connection with the mortgage as 

25 determined by the Agency, taking into account 


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1 section 103(aa)(4) of the Truth in Lending Act 

2 (15 U.S.C. 1602(aa)(4)); 

3 ‘‘(B) the difference between the annual 

4 percentage rate associated with the loan and a 

5 benchmark rate or rates for all loans; 

6 ‘‘(C) the term in months of any prepay7 ment penalty or other fee or charge payable on 

8 repayment of some portion of principal or the 

9 entire principal in advance of scheduled pay10 ments; and 

11 ‘‘(D) such other information as the Agency 

12 may require; and 

13 ‘‘(6) the number and dollar amount of mort14 gage loans and completed applications grouped ac15 cording to the following measurements: 

16 ‘‘(A) the value of the real property pledged 

17 or proposed to be pledged as collateral; 

18 ‘‘(B) the actual or proposed term in 

19 months of any introductory period after which 

20 the rate of interest may change; 

21 ‘‘(C) the presence of contractual terms or 

22 proposed contractual terms that would allow the 

23 mortgagor or applicant to make payments other 

24 than fully-amortizing payments during any por25 tion of the loan term; 


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1 ‘‘(D) the actual or proposed term in 

2 months of the mortgage loan; 

3 ‘‘(E) the channel through which applica4 tion was made, including retail, broker, and 

5 other relevant categories; 

6 ‘‘(F) as the Agency may determine to be 

7 appropriate, a unique identifier that identifies 

8 the loan originator as set forth in section 1503 

9 of the Secure and Fair Enforcement for Mort10 gage Licensing Act of 2008; 

11 ‘‘(G) as the Agency may determine to be 

12 appropriate, a universal loan identifier; 

13 ‘‘(H) as the Agency may determine to be 

14 appropriate, the parcel number that cor15 responds to the real property pledged or pro16 posed to be pledged as collateral; 

17 ‘‘(I) the credit score of mortgage appli18 cants and mortgagors in such form as the 

19 Agency may prescribe, except that the Agency 

20 shall modify or require modification of credit 

21 score data that is or will be available to the 

22 public to protect the compelling privacy interest 

23 of the mortgage applicant or mortgagors; and 

24 ‘‘(J) such other information as the Agency 

25 may require.’’; 


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1 (2) by striking subsection (h) and inserting the 

2 following new subsection: 

3 ‘‘(h) SUBMISSION TO AGENCIES.— 

4 ‘‘(1) IN GENERAL.—The data required to be 

5 disclosed under subsection (b) shall be submitted to 

6 the Agency or to the appropriate agency for any in7 stitution reporting under this title, in accordance 

8 with regulations prescribed by the Agency. Institu9 tions will not be required to report new data re10 quired under section 4808(c) before the first Janu11 ary 1 that occurs after the end of the 9-month pe12 riod beginning on the date that regulations pre13 scribed by the Agency are prescribed in final form. 

14 ‘‘(2) REGULATIONS.—Notwithstanding the re15 quirement of section 304(a)(2)(A) for disclosure by 

16 census tract, the Agency, in cooperation with other 

17 appropriate regulators, including— 

18 ‘‘(A) the head of the agency responsible for 

19 chartering and regulating national banks for 

20 national banks and Federal branches, Federal 

21 agencies of foreign banks, and savings associa22 tions; 

23 ‘‘(B) the Federal Deposit Insurance Cor24 poration for depository institutions insured by 

25 the Federal Deposit Insurance Corporation 


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1 (other than members of the Federal Reserve 

2 System, Federal savings associations, and sav3 ings and loan holding companies) and insured 

4 State branches of foreign banks; 

5 ‘‘(C) the Director of the Office of Thrift 

6 Supervision for Federal savings associations 

7 and savings and loan holding companies; 

8 ‘‘(D) the National Credit Union Adminis9 tration Board for credit unions; and 

10 ‘‘(E) the Secretary of Housing and Urban 

11 Development for other lending institutions not 

12 regulated by an agency referred to in subpara13 graphs (A), (B), (C), or (D), 

14 shall develop regulations prescribing the format for 

15 such disclosures, the method for submission of the 

16 data to the appropriate regulatory agency, and the 

17 procedures for disclosing the information to the pub18 lic. 

19 ‘‘(3) REQUIRED DISCLOSURES.—The regula20 tions prescribed under paragraph (2) shall require 

21 the collection of data required to be disclosed under 

22 subsection (b) with respect to loans sold by each in23 stitution reporting under this title, and, in addition, 

24 shall require disclosure of the class of the purchaser 

25 of such loans. 


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1 ‘‘(4) ADDITIONAL DATA OR EXPLANATIONS.— 

2 Any reporting institution may submit in writing to 

3 the Agency or to the appropriate agency such addi4 tional data or explanations as it deems relevant to 

5 the decision to originate or purchase mortgage 

6 loans.’’; 

7 (3) in subsection (i), by striking ‘‘subsection 

8 (b)(4)’’ and inserting ‘‘paragraphs (4), (5), and (6) 

9 of subsection (b)’’; 

10 (4) in subsection (j)— 

11 (A) by striking ‘‘(as’’ where such term ap12 pears in paragraph (1) and inserting ‘‘(con13 taining loan-level and application-level informa14 tion relating to disclosures required under sub15 sections (a) and (b) and as otherwise’’; 

16 (B) by striking ‘‘in the format in which 

17 such information is maintained by the institu18 tion’’ where such term appears in paragraph 

19 (2)(A), and inserting ‘‘in such formats as the 

20 Agency may require’’; and 

21 (C) by striking paragraph (3) and insert22 ing the following new paragraph: 

23 ‘‘(3) CHANGE OF FORM NOT REQUIRED.—A de24 pository institution meets the disclosure requirement 

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1 mation required under such paragraph in such for2 mats as the Agency may require.’’; and 

3 (5) by striking paragraph (2) of subsection (m) 

4 and inserting the following new paragraph: 

5 ‘‘(2) FORM OF INFORMATION.—In complying 

6 with paragraph (1), a depository institution shall 

7 provide the person requesting the information with 

8 a copy of the information requested in such formats 

9 as the Agency may require.’’. 

10 (d) SECTION 305.—Section 305 of the Home Mort11 gage Disclosure Act of 1975 (12 U.S.C. 2804) is amend12 ed— 

13 (1) by striking subsection (b) and inserting the 

14 following new subsection: 

15 ‘‘(b) POWERS OF CERTAIN OTHER AGENCIES.—Com16 pliance with the requirements imposed under this title 

17 shall be enforced under— 

18 ‘‘(1) section 8 of the Federal Deposit Insurance 

19 Act, in the case of— 

20 ‘‘(A) national banks, and Federal branches 

21 and Federal agencies of foreign banks, by the 

22 head of the agency responsible for chartering 

23 and regulating national banks; 

24 ‘‘(B) member banks of the Federal Reserve 

25 System (other than national banks), branches 


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1 and agencies of foreign banks (other than Fed2 eral branches, Federal agencies, and insured 

3 State branches of foreign banks), commercial 

4 lending companies owned or controlled by for5 eign banks, and organizations operating under 

6 section 25 or 25(a) of the Federal Reserve Act, 

7 by the Board; 

8 ‘‘(C) depository institutions insured by the 

9 Federal Deposit Insurance Corporation (other 

10 than members of the Federal Reserve System, 

11 Federal savings associations, and savings and 

12 loan holding companies) and insured State 

13 branches of foreign banks, by the Board of Di14 rectors of the Federal Deposit Insurance Cor15 poration; and 

16 ‘‘(D) Federal savings associations, and 

17 savings and loan holding companies, by the Di18 rector of the Office of Thrift Supervision; 

19 ‘‘(2) subtitle E of the Consumer Financial Pro20 tection Agency Act of 2009, by the Agency; 

21 ‘‘(3) the Federal Credit Union Act, by the Ad22 ministrator of the National Credit Union Adminis23 tration with respect to any credit union; and 

24 ‘‘(4) other lending institutions, by the Secretary 

25 of Housing and Urban Development. The terms 


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1 used in paragraph (1) that are not defined in this 

2 title or otherwise defined in section 3(s) of the Fed3 eral Deposit Insurance Act (12 U.S.C. 1813(s)) 

4 shall have the meaning given to them in section 1(b) 

5 of the International Banking Act of 1978 (12 U.S.C. 

6 3101). 

7 The terms used in paragraph (1) that are not defined in 

8 this title or otherwise defined in section 3(s) of the Federal 

9 Deposit Insurance Act (12 U.S.C. 1813(s)) shall have the 

10 meaning given to them in section 1(b) of the International 

11 Banking Act of 1978.’’; and 

12 (2) by inserting at the end of section 305 the 

13 following new subsection: 

14 ‘‘(d) OVERALL ENFORCEMENT AUTHORITY OF THE

15 CONSUMER FINANCIAL PROTECTION AGENCY.—Subject 

16 to section 4202 of the Consumer Financial Protection 

17 Agency Act of 2009, enforcement of the requirements im18 posed under this title is committed to each of the agencies 

19 under subsection (b). The Agency may exercise its authori20 ties under the Consumer Financial Protection Agency Act 

21 of 2009 to exercise principal authority to examine and en22 force compliance by any person with the requirements 

23 under this title.’’. 


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1 (e) SECTION 306.—Subsection 306(b) of the Home 

2 Mortgage Disclosure Act of 1975 (12 U.S.C. 2805(b)) is 

3 amended to read as follows: 

4 ‘‘(b) The Agency may, by regulation, exempt from the 

5 requirements of this title any State chartered depository 

6 institution within any State or subdivision of any state if 

7 the Agency determines that, under the law of such State 

8 or subdivision, that institution is subject to requirements 

9 substantially similar to those imposed under this title, and 

10 that such law contains adequate provisions for enforce11 ment. Notwithstanding any other provision of this sub12 section, compliance with the requirements imposed under 

13 this subsection shall be enforced by the head of the agency 

14 responsible for chartering and regulating national banks 

15 under section 8 of the Federal Deposit Insurance Act in 

16 the case of national banks and savings association the de17 posits of which are insured by the Federal Deposit Insur18 ance Corporation.’’. 

19 (f) SECTION 307.—Section 307 of the Home Mort20 gage Disclosure Act of 1975 (12 U.S.C. 2806) is amended 

21 to read as follows: 

22 ‘‘SEC. 307. RESEARCH AND IMPROVED METHODS. 

23 ‘‘(a) ENHANCED COMPLIANCE IN ECONOMICAL MAN24 NER.— 


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1 ‘‘(1) IN GENERAL.—The Director of the Con2 sumer Financial Protection Agency, with the assist3 ance of the Secretary, the Director of the Bureau of 

4 the Census, the Board of Governors of the Federal 

5 Reserve System, the Federal Deposit Insurance Cor6 poration, and such other persons as the Consumer 

7 Financial Protection Agency deems appropriate, 

8 shall develop or assist in the improvement of, meth9 ods of matching addresses and census tracts to fa10 cilitate compliance by depository institutions in as 

11 economical a manner as possible with the require12 ments of this title. 

13 ‘‘(2) AUTHORIZATION OF APPROPRIATION.— 

14 There is authorized to be appropriated such sums as 

15 may be necessary to carry out this subsection. 

16 ‘‘(3) AUTHORITY OF AGENCY.—The Director of 

17 the Consumer Financial Protection Agency is au18 thorized to utilize, contract with, act through, or 

19 compensate any person or agency in order to carry 

20 out this subsection. 

21 ‘‘(b) RECOMMENDATIONS TO THE CONGRESS.—The 

22 Director of the Consumer Financial Protection Agency 

23 shall recommend to the Committee on Financial Services 

24 of the House of Representatives and the Committee on 

25 Banking, Housing, and Urban Affairs of the Senate such 


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1 additional legislation as the Director of the Consumer Fi2 nancial Protection Agency deems appropriate to carry out 

3 the purpose of this title.’’. 

4 SEC. 4809. AMENDMENTS TO DIVISION D OF THE OMNIBUS 

5 APPROPRIATIONS ACT, 2009. 

6 (a) Section 626(a) of title VI of division D of the 

7 Omnibus Appropriations Act, 2009 (15 U.S.C. 1638 nt.) 

8 (as amended by the Credit Card Accountability Responsi9 bility and Disclosure Act of 2009) is amended— 

10 (1) by striking by paragraph (1) and inserting 

11 the following new paragraph: ‘‘(1) The Director of 

12 the Consumer Financial Protection Agency shall 

13 have authority to prescribe regulations with respect 

14 to mortgage loans in accordance with section 553 of 

15 title 5, United States Code. Such rulemaking shall 

16 relate to unfair or deceptive acts or practices regard17 ing mortgage loans, which may include unfair or de18 ceptive acts or practices involving loan modification 

19 and foreclosure rescue services. Any violation of a 

20 regulation prescribed under this subsection shall be 

21 treated as a violation of a regulation prohibiting un22 fair, deceptive, or abusive acts or practices under the 

23 Consumer Financial Protection Agency Act of 

24 2009.’’; 

25 (2) by striking paragraph (2); 


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1 (3) by striking paragraph (3); and 

2 (4) by striking paragraph (4) and inserting the 

3 following new paragraph: 

4 ‘‘(2) The Director of the Consumer Financial Protec5 tion Agency shall enforce the regulations issued under 

6 paragraph (1) in the same manner, by the same means, 

7 and with the same jurisdiction, powers, and duties as 

8 though all applicable terms and provisions of the Con9 sumer Financial Protection Agency Act of 2009 were in10 corporated into and made part of this section.’’. 

11 (b) Section 626(b) of title VI of division D of the 

12 Omnibus Appropriations Act, 2009 (15 U.S.C. 1638 nt.) 

13 (as amended by the Credit Card Accountability Responsi14 bility and Disclosure Act of 2009) is amended by striking 

15 ‘‘primary Federal regulator’’ each place it appears and in16 serting ‘‘Consumer Financial Protection Agency’’. 

17 SEC. 4810. AMENDMENTS TO THE HOMEOWNERS PROTEC18 TION ACT OF 1998. 

19 Section 10 of the Homeowners Protection Act of 

20 1998 (12 U.S.C. 4909) is amended— 

21 (1) in the matter preceding paragraph (1) of 

22 subsection (a), by striking ‘‘Compliance’’ and insert23 ing ‘‘Subject to section 4202 of the Consumer Fi24 nancial Protection Agency Act of 2009, compliance’’; 


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1 (2) in subsection (a)(2), by striking ‘‘and’’ after 

2 the semicolon at the end; 

3 (3) in subsection (a)(3), by striking the period 

4 at the end and inserting ‘‘; and’’; 

5 (4) by inserting after subsection (a)(3), the fol6 lowing new paragraph: 

7 ‘‘(4) subtitle E of the Consumer Financial Pro8 tection Agency Act of 2009, by the Consumer Fi9 nancial Protection Agency.’’; and. 

10 (5) in subsection (b)(2), by inserting ‘‘, subject 

11 to section 4202 of the Consumer Financial Protec12 tion Agency Act of 2009’’ before the period at the 

13 end. 

14 SEC. 4811. AMENDMENTS TO THE REAL ESTATE SETTLE15 MENT PROCEDURES ACT OF 1974. 

16 (a) SECTION 3.—Section 3 of the Real Estate Settle17 ment Procedures Act of 1974 (12 U.S.C. 2602) is amend18 ed— 

19 (1) in paragraph (7), by striking ‘‘and’’ after 

20 the semicolon at the end; 

21 (2) in paragraph (8), by striking the period at 

22 the end and inserting ‘‘; and’’; and 

23 (3) by adding at the end the following new 

24 paragraph 


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1 ‘‘(9) the term ‘Agency’ means the Consumer Fi2 nancial Protection Agency.’’. 

3 (b) SECTION 4.—Section 4 of the Real Estate Settle4 ment Procedures Act of 1974 (12 U.S.C. 2603) is amend5 ed— 

6 (1) in subsection (a), by striking the first sen7 tence and inserting the following: ‘‘The Agency shall 

8 publish a single, integrated disclosure for mortgage 

9 loan transactions, including real estate settlement 

10 cost statements, which include the disclosure re11 quirements of this title, in conjunction with the dis12 closure requirements of the Truth in Lending Act 

13 (15 U.S.C. 1601 note et seq.) that, taken together, 

14 may apply to transactions subject to both or either 

15 law. The purpose of such model disclosure shall be 

16 to facilitate compliance with the disclosure require17 ments of those titles, and to aid the borrower or les18 see in understanding the transaction by utilizing 

19 readily understandable language to simplify the tech20 nical nature of the disclosures.’’; 

21 (2) by striking ‘‘Secretary’’ each place such 

22 term appears and inserting ‘‘Agency’’; and 

23 (3) by striking ‘‘form’’ each place such term ap24 pears and inserting ‘‘forms’’. 


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1 (c) SECTION 5.—Section 5 of the Real Estate Settle2 ment Procedures Act of 1974 (12 U.S.C. 2604) is amend3 ed— 

4 (1) by striking ‘‘Secretary’’ each place such 

5 term appears, and inserting ‘‘Agency’’; and 

6 (2) by striking the first sentence of subsection 

7 (a), and inserting ‘‘The Agency shall prepare and 

8 distribute booklets jointly complying with the re9 quirements of the Truth in Lending Act (15 U.S.C. 

10 1601 note et seq.) and the provisions of this title, 

11 in order to help persons borrowing money to finance 

12 the purchase of residential real estate better to un13 derstand the nature and costs of real estate settle14 ment services.’’. 

15 (d) SECTION 6.—Section 6(j)(3) of the Real Estate 

16 Settlement Procedures Act of 1974 (12 U.S.C. 2605(j)(3)) 

17 is amended— 

18 (1) by striking ‘‘Secretary’’ and inserting ‘‘Di19 rector of the Agency’’; and 

20 (2) by striking ‘‘by regulations that shall take 

21 effect not later than April 20, 1991,’’ and inserting 

22 ‘‘by regulation,’’. 

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1 ed by striking ‘‘Secretary’’ and inserting ‘‘the Director of 

2 the Agency’’. 

3 (f) SECTION 8.—Section 8 of the Real Estate Settle4 ment Procedures Act of 1974 (12 U.S.C. 2607) is amend5 ed— 

6 (1) in subsection (c)(5), by striking ‘‘prescribed 

7 by the Secretary’’ and inserting ‘‘prescribed by the 

8 Director of the Agency’’; and 

9 (2) in subsection (d)(4)— 

10 (A) by striking ‘‘The Secretary,’’ and in11 serting ‘‘The Agency, the Secretary,’’; and 

12 (B) by adding at the end the following new 

13 sentence: ‘‘However, to the extent that a Fed14 eral law authorizes the Agency and other Fed15 eral and State agencies to enforce or administer 

16 the law, the Agency shall have primary author17 ity to enforce or administer that Federal law in 

18 accordance with section 4202 of the Consumer 

19 Financial Protection Agency Act of 2009.’’. 

20 (g) SECTION 10.—Section 10(d) of the Real Estate 

21 Settlement Procedures Act of 1974 (12 U.S.C. 2609(d)) 

22 is amended by striking ‘‘Secretary’’ and inserting ‘‘Agen23 cy’’. 

24 (h) SECTION 16.—Section 16 of the Real Estate Set25 tlement Procedures Act of 1974 (12 U.S.C. 2614) is 


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1 amended by inserting ‘‘the Agency,’’ before ‘‘the Sec2 retary’’. 

3 (i) SECTION 18.—Section 18 of the Real Estate Set4 tlement Procedures Act of 1974 (12 U.S.C. 2616) is 

5 amended by striking ‘‘Secretary’’ each place such term ap6 pears and inserting ‘‘Agency’’. 

7 (j) SECTION 19.—Section 19 of the Real Estate Set8 tlement Procedures Act of 1974 (12 U.S.C. 2617) is 

9 amended— 

10 (1) in the section heading, by striking ‘‘SEC11 RETARY’’ and inserting ‘‘AGENCY’’; and 

12 (2) by striking ‘‘Secretary’’ each place such 

13 term appears and inserting ‘‘Agency’’. 

14 SEC. 4812. AMENDMENTS TO THE RIGHT TO FINANCIAL 

15 PRIVACY ACT OF 1978. 

16 (a) AMENDMENTS TO SECTION 1101.—Section 1101 

17 of the Right to Financial Privacy Act of 1978 (12 U.S.C. 

18 3401) is amended— 

19 (1) by striking paragraph (1) and inserting the 

20 following new paragraph: 

21 ‘‘(1) ‘financial institution’ means any bank, sav22 ings association, card issuer as defined in section 

23 103(n) of the Truth in Lending Act, credit union, or 

24 consumer finance institution located in any State or 

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1 bia, Puerto Rico, Guam, American Samoa, or the 

2 Virgin Islands;’’; and 

3 (2) in paragraph (7), by inserting after sub4 paragraph (A) the following new subparagraph: 

5 ‘‘(B) the Consumer Financial Protection 

6 Agency;’’. 

7 (b) AMENDMENTS TO SECTION 1112.—Section 

8 1112(e) of the Right to Financial Privacy Act of 1978 

9 (12 U.S.C. 3412) is amended by striking ‘‘and the Com10 modity Futures Trading Commission is permitted’’ and in11 serting ‘‘the Commodity Futures Trading Commission, 

12 and the Consumer Financial Protection Agency is per13 mitted’’. 

14 (c) AMENDMENTS TO SECTION 1113.—Section 1113 

15 of the Right to Financial Privacy Act of 1978 (12 U.S.C. 

16 3413) is amended by adding at the end the following new 

17 subsection— 

18 ‘‘(r) DISCLOSURE TO THE CONSUMER FINANCIAL

19 PROTECTION AGENCY.—Nothing in this chapter shall 

20 apply to the examination by or disclosure to the Consumer 

21 Financial Protection Agency of financial records or infor22 mation in the exercise of its authority with respect to a 

23 financial institution.’’. 


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1 SEC. 4813. AMENDMENTS TO THE SECURE AND FAIR EN2 FORCEMENT FOR MORTGAGE LICENSING ACT 

3 OF 2008. 

4 (a) SECTION 1503.—Section 1503 of the Secure and 

5 Fair Enforcement for Mortgage Licensing Act of 2008 (12 

6 U.S.C. 5102) is amended— 

7 (1) by striking paragraph (9); 

8 (2) by redesignating paragraph (1) as para9 graph (4), and transferring paragraph (4) (as so re10 designated) and inserting such paragraph after 

11 paragraph (3) (as added by paragraph (5)); 

12 (3) by redesignating paragraphs (3), (4), (5), 

13 (6), (7), (8), (10), (11), and (12) as paragraphs (5), 

14 (6), (7), (8), (9), (10), (11), (12), and (13), respec15 tively; 

16 (4) by inserting before paragraph (2) the fol17 lowing new paragraph: 

18 ‘‘(1) AGENCY.—The term ‘Agency’ means the 

19 Consumer Financial Protection Agency.’’; and 

20 (5) by inserting after paragraph (2) the fol21 lowing new paragraph: 

22 ‘‘(3) DIRECTOR.—The term ‘Director’ means 

23 the Director of the Agency.’’. 

24 (b) UNIVERSAL AMENDMENTS RELATING TO AGEN25 CY.—The Secure and Fair Enforcement for Mortgage LiVerDate Nov 24 2008 22:04 Dec 02, 2009 Jkt 089200 PO 00000 Frm 01009 Fmt 6652 Sfmt 6201 E:\BILLS\H4173.IH H4173

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1 censing Act of 2008 (12 U.S.C. 5101 et seq.) is amend2 ed— 

3 (1) by striking ‘‘Federal banking agencies’’ 

4 each place such term appears (other than in sub5 section (a)(4) (as so redesignated by subsection (a), 

6 relating to the definition of Federal banking agen7 cies) or in connection with a reference that is specifi8 cally amended by another provision of this section) 

9 and inserting ‘‘Agency’’; and 

10 (2) by striking ‘‘Secretary’’ each place such 

11 term appears (other than in connection with a ref12 erence that is specifically amended by another provi13 sion of this section) and inserting ‘‘Director’’. 

14 (c) SECTION 1507.—Section 1507 of the Secure and 

15 Fair Enforcement for Mortgage Licensing Act of 2008 (12 

16 U.S.C. 5106) is amended— 

17 (1) in subsection (a)— 

18 (A) by striking paragraph (1) and insert19 ing the following new paragraph: 

20 ‘‘(1) IN GENERAL.—The Agency shall develop 

21 and maintain a system for registering employees of 

22 any depository institution, employees of a subsidiary 

23 that is owned and controlled by a depository institu24 tion and regulated by a Federal banking agency, or 

25 employees of an institution regulated by the Farm 


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1 Credit Administration, as registered loan originators 

2 with the Nationwide Mortgage Licensing System and 

3 Registry. The system shall be implemented before 

4 July 30, 2010.’’; and 

5 (B) by striking ‘‘appropriate Federal bank6 ing agency and the Farm Credit Administra7 tion’’ in paragraph (2) and inserting ‘‘Agency’’; 

8 and 

9 (2) in subsection (b), by striking ‘‘Federal 

10 banking agencies, through the Financial Institutions 

11 Examination Council, and the Farm Credit Adminis12 tration’’ each place such term appears and inserting 

13 ‘‘Agency’’. 

14 (d) SECTION 1508.— 

15 (1) IN GENERAL.—Section 1508 of the Secure 

16 and Fair Enforcement for Mortgage Licensing Act 

17 of 2008 (12 U.S.C. 5107) is amended by adding at 

18 the end the following new subsection— 

19 ‘‘(f) REGULATIONS.— 

20 ‘‘(1) IN GENERAL.—The Agency may prescribe 

21 regulations setting minimum net worth or surety 

22 bond requirements for residential mortgage loan 

23 originators and minimum requirements for recovery 

24 funds paid into by loan originators. 


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1 ‘‘(2) FACTORS TAKEN INTO ACCOUNT.—Such 

2 regulations shall take into account the need to pro3 vide originators adequate incentives to originate af4 fordable and sustainable mortgage loans as well as 

5 the need to ensure a competitive origination market 

6 that maximizes consumers’ access to affordable and 

7 sustainable mortgage loans.’’. 

8 (2) CLERICAL AMENDMENT.—The heading for 

9 section 1508 of the Secure and Fair Enforcement 

10 for Mortgage Licensing Act of 2008 is amended by 

11 striking ‘‘SECRETARY OF HOUSING AND URBAN

12 DEVELOPMENT’’ and inserting ‘‘CONSUMER FI13 NANCIAL PROTECTION AGENCY’’. 

14 (e) SECTION 1510.—Section 1510 of the Secure and 

15 Fair Enforcement for Mortgage Licensing Act of 2008 (12 

16 U.S.C. 5109) is amended to read as follows: 

17 ‘‘SEC. 1510. FEES. 

18 ‘‘The Agency and the Nationwide Mortgage Licensing 

19 System and Registry may charge reasonable fees to cover 

20 the costs of maintaining and providing access to informa21 tion from the Nationwide Mortgage Licensing System and 

22 Registry, to the extent that such fees are not charged to 

23 consumers for access to such system and registry.’’. 


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1 (f) SECTION 1513.—Section 1513 of the Secure and 

2 Fair Enforcement for Mortgage Licensing Act of 2008 (12 

3 U.S.C. 5112) is amended to read as follows: 

4 ‘‘SEC. 1513. LIABILITY PROVISIONS. 

5 ‘‘The Agency, any State official or agency, or any or6 ganization serving as the administrator of the Nationwide 

7 Mortgage Licensing System and Registry or a system es8 tablished by the Director under section 1509, or any offi9 cer or employee of any such entity, shall not by subject 

10 to any civil action or proceeding for monetary damages 

11 by reason of the good faith action or omission of any offi12 cer or employee of any such entity, while acting within 

13 the scope of office or employment, relating to the collec14 tion, furnishing, or dissemination of information con15 cerning persons who are loan originators or are applying 

16 for licensing or registration as loan originators.’’. 

17 (g) SECTION 1514.—The heading for section 1514 

18 of the Secure and Fair Enforcement for Mortgage Licens19 ing Act of 2008 (12 U.S.C. 5113) is amended by striking 

20 ‘‘UNDER HUD BACKUP LICENSING SYSTEM’’ and in21 serting ‘‘BY THE AGENCY’’. 

22 SEC. 4814. AMENDMENTS TO THE TRUTH IN SAVINGS ACT. 

23 (a) SECTION 263.—Section 263 of the Truth in Sav24 ings Act (12 U.S.C. 4302) is amended in subsection (b) 


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1 by striking ‘‘Board’’ each place such term appears and 

2 inserting ‘‘Agency’’. 

3 (b) SECTION 265.—Section 265 of the Truth in Sav4 ings Act (12 U.S.C. 4304) is amended by striking 

5 ‘‘Board’’ each place such term appears and inserting 

6 ‘‘Agency’’. 

7 (c) SECTION 266.—Section 266(e) of the Truth in 

8 Savings Act is amended (12 U.S.C. 4305) by striking 

9 ‘‘Board’’ and inserting ‘‘Agency’’. 

10 (d) SECTION 269.—Section 269 of the Truth in Sav11 ings Act (12 U.S.C. 4308) is amended by striking 

12 ‘‘Board’’ each place such term appears and inserting 

13 ‘‘Agency’’. 

14 (e) SECTION 270.—Section 270 of the Truth in Sav15 ings Act (12 U.S.C. 4309) is amended— 

16 (1) in subsection (a)— 

17 (A) by striking ‘‘Compliance’’ and insert18 ing ‘‘Subject to section 4202 of the Consumer 

19 Financial Protection Agency Act of 2009, com20 pliance’’; 

21 (B) by striking subparagraph (A) of para22 graph (1) and inserting the following new sub23 paragraph: 

24 ‘‘(A) by the head of the agency responsible 

25 for chartering and regulating national banks for 


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1 national banks, and Federal branches and Fed2 eral agencies of foreign banks;’’; and 

3 (C) by adding at the end, the following 

4 new paragraph: 

5 ‘‘(3) subtitle E of the Consumer Financial Pro6 tection Agency Act of 2009, by the Agency.’’; and 

7 (2) in subsection (c)— 

8 (A) in the subsection heading, by striking 

9 ‘‘BOARD’’ and insert ‘‘AGENCY’’; and 

10 (B) by striking ‘‘Board’’ and inserting 

11 ‘‘Agency’’. 

12 (f) SECTION 272.—Section 272 of the Truth in Sav13 ings Act (12 U.S.C. 4311) is amended— 

14 (1) in subsection (a), by striking ‘‘Board’’ and 

15 inserting ‘‘Agency’’; and 

16 (2) in subsection (b), by striking ‘‘regulation 

17 prescribed by the Board’’ each place such term ap18 pears and inserting ‘‘regulation prescribed by the 

19 Agency’’. 

20 (g) SECTION 273.—Section 273 of the Truth in Sav21 ings Act (12 U.S.C. 4312) is amended in the last sentence 

22 by striking ‘‘Board’’ and inserting ‘‘Agency’’. 

23 (h) SECTION 274.—Section 274 of the Truth in Sav24 ings Act (12 U.S.C. 4313) is amended— 


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1 (1) in paragraph (2) by striking ‘‘Board’’ and 

2 inserting ‘‘Agency’’; and 

3 (2) by striking paragraph (4) and inserting the 

4 following new paragraph: 

5 ‘‘(4) AGENCY.—The term ‘Agency’ means the 

6 Consumer Financial Protection Agency.’’. 

7 SEC. 4815. AMENDMENTS TO THE TELEMARKETING AND 

8 CONSUMER FRAUD AND ABUSE PREVENTION 

9 ACT. 

10 (a) SECTION 3.—Section 3 of the Telemarketing and 

11 Consumer Fraud and Abuse Prevention Act (15 U.S.C. 

12 6102) is amended— 

13 (1) in subsection (b), by inserting after the 2nd 

14 sentence ‘‘In prescribing a regulation under this Act 

15 that relates to the provision of a consumer financial 

16 product or service that is subject to the Consumer 

17 Financial Protection Agency Act, including any enu18 merated consumer law thereunder, the Commission 

19 shall consult with the Consumer Financial Protec20 tion Agency regarding the consistency of a proposed 

21 regulation with standards, purposes, or objectives 

22 administered by the Consumer Financial Protection 

23 Agency.’’; and 

24 (2) in subsection (c), by adding at the end 

25 ‘‘Any violation of any regulation prescribed under 


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1 subsection (a) committed by a person subject to the 

2 Consumer Financial Protection Agency Act shall be 

3 treated as a violation of a regulation under section 

4 4301 of the Consumer Financial Protection Agency 

5 Act regarding unfair, deceptive, or abusive acts or 

6 practices.’’. 

7 (b) AMENDMENTS TO SECTION 4.—Section 4(d) of 

8 the Telemarketing and Consumer Fraud and Abuse Pre9 vention Act (15 U.S.C. 6103(d)) is amended— 

10 (1) in the subsection heading, by inserting after 

11 ‘‘COMMISSION’’ the following: ‘‘OR THE CONSUMER

12 FINANCIAL PROTECTION AGENCY’’; and 

13 (2) by inserting after ‘‘Commission’’ each place 

14 such term appears ‘‘or the Consumer Financial Pro15 tection Agency’’. 

16 (c) AMENDMENTS TO SECTION 5.—Section 5(c) of 

17 the Telemarketing and Consumer Fraud and Abuse Pre18 vention Act (15 U.S.C. 6104(c)) is amended by inserting 

19 after ‘‘Commission’’ each place such term appears ‘‘or the 

20 Consumer Financial Protection Agency’’. 

21 (d) AMENDMENT TO SECTION 6.—Section 6 of the 

22 Telemarketing and Consumer Fraud and Abuse Preven23 tion Act (15 U.S.C. 6105) is amended by adding at the 

24 end the following new subsection: 


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1 ‘‘(d) ENFORCEMENT BY CONSUMER FINANCIAL PRO2 TECTION AGENCY.—Except as otherwise provided in sec3 tions 3(d), 3(e), 4, and 5, this Act shall be enforced by 

4 the Consumer Financial Protection Agency under subtitle 

5 E of the Consumer Financial Protection Agency Act.’’. 

6 SEC. 4816. MEMBERSHIP IN FINANCIAL LITERACY AND 

7 EDUCATION COMMISSION. 

8 Section 513(c)(1) of the Financial Literacy and Edu9 cation Improvement Act (20 U.S.C. 9702(c)(1)) is amend10 ed— 

11 (1) in subparagraph (B), by striking ‘‘and’’ at 

12 the end; 

13 (2) by redesignating subparagraph (C) as sub14 paragraph (D); and 

15 (3) by inserting after subparagraph (B) the fol16 lowing new subparagraph: 

17 ‘‘(C) the Director of the Consumer Finan18 cial Protection Agency; and’’. 

19 SEC. 4817. EFFECTIVE DATE. 

20 The amendments made by sections 4803 through 

21 4815 shall take effect on the designated transfer date. 


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1 Subtitle I—Improvements to the 

2 Federal Trade Commission Act 

3 SEC. 4901. AMENDMENTS TO THE FEDERAL TRADE COM4 MISSION ACT. 

5 (a) Section 5(m)(1)(A) of the Federal Trade Com6 mission Act (15 U.S.C. 45(m)(1)(A)) is amended— 

7 (1) by inserting ‘‘this Act or’’ after ‘‘violates’’ 

8 the first place such term appears; and 

9 (2) by inserting ‘‘a violation of this Act or is’’ 

10 before ‘‘prohibited’’. 

11 (b) Section 5 of the Federal Trade Commission Act 

12 (15 U.S.C. 45) is amended by adding at the end thereof 

13 the following new subsection: 

14 ‘‘(o) UNLAWFUL ASSISTANCE.—It is unlawful for any 

15 person, knowingly or recklessly, to provide substantial as16 sistance to another in violating any provision of this Act 

17 or of any other Act enforceable by the Commission that 

18 relates to unfair or deceptive acts or practices. Any such 

19 violation shall constitute an unfair or deceptive act or 

20 practice described in section 5(a)(1) of this Act.’’. 

21 (c) Section 18 of the Federal Trade Commission Act 

22 (15 U.S.C. 57a(b)) is amended— 

23 (1) by amending subsection (b) to read as fol24 lows: 


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1 ‘‘(b) PROCEDURE APPLICABLE.—When prescribing a 

2 rule under subsection (a)(1)(B) of this section, the Com3 mission shall proceed in accordance with section 553 of 

4 Title 5 (without regard to any reference in such section 

5 to sections 556 and 557 of such title).’’; 

6 (2)(A) in subsection (d), by striking all that 

7 precedes paragraph (3); 

8 (B) by striking subsections (c), (f), (i), and (j); 

9 and 

10 (C) by redesignating subsections (e), (g) and 

11 (h) as subsections (d), (e) and (f); 

12 (3) by redesignating paragraph (3) of sub13 section (d) as subsection (c); and 

14 (4) in subsection (d) (as redesignated)— 

15 (A) in paragraph (1)(B), by striking ‘‘the 

16 transcript required by subsection (c)(5),’’; 

17 (B) in paragraph (3), by striking ‘‘error)’’ 

18 all that follows and inserting ‘‘error).’’; and 

19 (C) in paragraph (5), by striking subpara20 graph (C). 


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1 TITLE V—CAPITAL MARKETS 

2 Subtitle A—Private Fund Invest3 ment Advisers Registration Act 

4 SEC. 5001. SHORT TITLE. 

5 This subtitle may be cited as the ‘‘Private Fund In6 vestment Advisers Registration Act of 2009’’. 

7 SEC. 5002. DEFINITIONS. 

8 Section 202(a) of the Investment Advisers Act of 

9 1940 (15 U.S.C. 80b-2(a)) is amended by adding at the 

10 end the following new paragraphs: 

11 ‘‘(29) PRIVATE FUND.—The term ‘private fund’ 

12 means an issuer that would be an investment com13 pany under section 3(a) of the Investment Company 

14 Act of 1940 (15 U.S.C. 80a-3(a)) but for the excep15 tion provided from that definition by either section 

16 3(c)(1) or section 3(c)(7) of such Act. 

17 ‘‘(30) FOREIGN PRIVATE FUND ADVISER.—The 

18 term ‘foreign private fund adviser’ means an invest19 ment adviser who— 

20 ‘‘(A) has no place of business in the 

21 United States; 

22 ‘‘(B) during the preceding 12 months has 

23 had— 

24 ‘‘(i) fewer than 15 clients in the 

25 United States; and 


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1 ‘‘(ii) assets under management attrib2 utable to clients in the United States of 

3 less than $25,000,000, or such higher 

4 amount as the Commission may, by rule, 

5 deem appropriate in the public interest or 

6 for the protection of investors; and 

7 ‘‘(C) neither holds itself out generally to 

8 the public in the United States as an invest9 ment adviser, nor acts as an investment adviser 

10 to any investment company registered under the 

11 Investment Company Act of 1940, or a com12 pany which has elected to be a business devel13 opment company pursuant to section 54 of the 

14 Investment Company Act of 1940 (15 U.S.C. 

15 80a-53) and has not withdrawn such election.’’. 

16 SEC. 5003. ELIMINATION OF PRIVATE ADVISER EXEMPTION; 

17 LIMITED EXEMPTION FOR FOREIGN PRIVATE 

18 FUND ADVISERS; LIMITED INTRASTATE EX19 EMPTION. 

20 Section 203(b) of the Investment Advisers Act of 

21 1940 (15 U.S.C. 80b-3(b)) is amended— 

22 (1) in paragraph (1), by inserting ‘‘, except an 

23 investment adviser who acts as an investment ad24 viser to any private fund,’’ after ‘‘any investment ad25 viser’’; 


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1 (2) by amending paragraph (3) to read as fol2 lows: 

3 ‘‘(3) any investment adviser that is a foreign 

4 private fund adviser;’’; 

5 (3) in paragraph (5), by striking ‘‘or’’ at the 

6 end; 

7 (4) in paragraph (6)— 

8 (A) in subparagraph (A), by striking ‘‘or’’; 

9 (B) in subparagraph (B), by striking the 

10 period at the end and adding ‘‘; or’’; and 

11 (C) by adding at the end the following new 

12 subparagraph: 

13 ‘‘(C) a private fund; or’’; and 

14 (5) by adding at the end the following: 

15 ‘‘(7) any investment adviser who solely ad16 vises— 

17 ‘‘(A) small business investment companies 

18 licensed under the Small Business Investment 

19 Act of 1958; 

20 ‘‘(B) entities that have received from the 

21 Small Business Administration notice to pro22 ceed to qualify for a license, which notice or li23 cense has not been revoked; or 

24 ‘‘(C) applicants, related to one or more li25 censed small business investment companies 


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1 covered in subparagraph (A), that have applied 

2 for another license, which application remains 

3 pending.’’. 

4 SEC. 5004. COLLECTION OF SYSTEMIC RISK DATA. 

5 Section 204 of the Investment Advisers Act of 1940 

6 (15 U.S.C. 80b-4) is amended— 

7 (1) by redesignating subsections (b) and (c) as 

8 subsections (c) and (d), respectively; and 

9 (2) by inserting after subsection (a) the fol10 lowing new subsection: 

11 ‘‘(b) RECORDS AND REPORTS OF PRIVATE FUNDS.— 

12 ‘‘(1) IN GENERAL.—The Commission is author13 ized to require any investment adviser registered 

14 under this Act to maintain such records of and file 

15 with the Commission such reports regarding private 

16 funds advised by the investment adviser as are nec17 essary or appropriate in the public interest and for 

18 the protection of investors or for the assessment of 

19 systemic risk as the Commission determines in con20 sultation with the Board of Governors of the Federal 

21 Reserve System. The Commission is authorized to 

22 provide or make available to the Board of Governors 

23 of the Federal Reserve System, and to any other en24 tity that the Commission identifies as having sys25 temic risk responsibility, those reports or records or 


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1 the information contained therein. The records and 

2 reports of any private fund, to which any such in3 vestment adviser provides investment advice, main4 tained or filed by an investment adviser registered 

5 under this Act, shall be deemed to be the records 

6 and reports of the investment adviser. 

7 ‘‘(2) REQUIRED INFORMATION.—The records 

8 and reports required to be maintained or filed with 

9 the Commission under this subsection shall include, 

10 for each private fund advised by the investment ad11 viser— 

12 ‘‘(A) the amount of assets under manage13 ment; 

14 ‘‘(B) the use of leverage (including off-bal15 ance sheet leverage); 

16 ‘‘(C) counterparty credit risk exposures; 

17 ‘‘(D) trading and investment positions; 

18 ‘‘(E) trading practices; and 

19 ‘‘(F) such other information as the Com20 mission, in consultation with the Board of Gov21 ernors of the Federal Reserve System, deter22 mines necessary or appropriate in the public in23 terest and for the protection of investors or for 

24 the assessment of systemic risk. 


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1 ‘‘(3) OPTIONAL INFORMATION.—The Commis2 sion may require the reporting of such additional in3 formation from private fund advisers as the Com4 mission determines necessary. In making such deter5 mination, the Commission, taking into account the 

6 public interest and potential to contribute to sys7 temic risk, may set different reporting requirements 

8 for different classes of private fund advisers, based 

9 on the particular types or sizes of private funds ad10 vised by such advisers. 

11 ‘‘(4) MAINTENANCE OF RECORDS.—An invest12 ment adviser registered under this Act is required to 

13 maintain and keep such records of private funds ad14 vised by the investment adviser for such period or 

15 periods as the Commission, by rule or regulation, 

16 may prescribe as necessary or appropriate in the 

17 public interest and for the protection of investors or 

18 for the assessment of systemic risk. 

19 ‘‘(5) EXAMINATION OF RECORDS.— 

20 ‘‘(A) PERIODIC AND SPECIAL EXAMINA21 TIONS.—All records of a private fund main22 tained by an investment adviser registered 

23 under this Act shall be subject at any time and 

24 from time to time to such periodic, special, and 

25 other examinations by the Commission, or any 


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1 member or representative thereof, as the Com2 mission may prescribe. 

3 ‘‘(B) AVAILABILITY OF RECORDS.—An in4 vestment adviser registered under this Act shall 

5 make available to the Commission or its rep6 resentatives any copies or extracts from such 

7 records as may be prepared without undue ef8 fort, expense, or delay as the Commission or its 

9 representatives may reasonably request. 

10 ‘‘(6) INFORMATION SHARING.—The Commission 

11 shall make available to the Board of Governors of 

12 the Federal Reserve System, and to any other entity 

13 that the Commission identifies as having systemic 

14 risk responsibility, copies of all reports, documents, 

15 records, and information filed with or provided to 

16 the Commission by an investment adviser under this 

17 subsection as the Board, or such other entity, may 

18 consider necessary for the purpose of assessing the 

19 systemic risk of a private fund. All such reports, 

20 documents, records, and information obtained by the 

21 Board, or such other entity, from the Commission 

22 under this subsection shall be kept confidential in a 

23 manner consistent with confidentiality established by 

24 the Commission pursuant to paragraph (8). 


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1 ‘‘(7) DISCLOSURES OF CERTAIN PRIVATE FUND

2 INFORMATION.—An investment adviser registered 

3 under this Act shall provide such reports, records, 

4 and other documents to investors, prospective inves5 tors, counterparties, and creditors, of any private 

6 fund advised by the investment adviser as the Com7 mission, by rule or regulation, may prescribe as nec8 essary or appropriate in the public interest and for 

9 the protection of investors or for the assessment of 

10 systemic risk. 

11 ‘‘(8) CONFIDENTIALITY OF REPORTS.—Not12 withstanding any other provision of law, the Com13 mission shall not be compelled to disclose any report 

14 or information contained therein required to be filed 

15 with the Commission under this subsection. Nothing 

16 in this paragraph shall authorize the Commission to 

17 withhold information from the Congress or prevent 

18 the Commission from complying with a request for 

19 information from any other Federal department or 

20 agency or any self-regulatory organization requesting 

21 the report or information for purposes within the 

22 scope of its jurisdiction, or complying with an order 

23 of a court of the United States in an action brought 

24 by the United States or the Commission. For pur25 poses of section 552 of title 5, United States Code, 


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1 this paragraph shall be considered a statute de2 scribed in subsection (b)(3)(B) of such section.’’. 

3 SEC. 5005. ELIMINATION OF DISCLOSURE PROVISION. 

4 Section 210 of the Investment Advisers Act of 1940 

5 (15 U.S.C. 80b-10) is amended by striking subsection (c). 

6 SEC. 5006. EXEMPTION OF AND REPORTING BY VENTURE 

7 CAPITAL FUND ADVISERS. 

8 Section 203 of the Investment Advisers Act of 1940 

9 (15 U.S.C. 80b-3) is amended by adding at the end the 

10 following new subsection: 

11 ‘‘(l) EXEMPTION OF AND REPORTING BY VENTURE

12 CAPITAL FUND ADVISERS.—The Commission shall iden13 tify and define the term ‘venture capital fund’ and shall 

14 provide an adviser to such a fund an exemption from the 

15 registration requirements under this section (excluding 

16 any such fund whose adviser is exempt from registration 

17 pursuant to paragraph (7) of subsection (b)). The Com18 mission shall require such advisers to maintain such 

19 records and provide to the Commission such annual or 

20 other reports as the Commission determines necessary or 

21 appropriate in the public interest or for the protection of 

22 investors.’’. 


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1 SEC. 5007. EXEMPTION OF AND REPORTING BY CERTAIN 

2 PRIVATE FUND ADVISERS. 

3 Section 203 of the Investment Advisers Act of 1940 

4 (15 U.S.C. 80b-3), as amended by section 5006, is further 

5 amended by adding at the end the following new sub6 sections: 

7 ‘‘(m) EXEMPTION OF AND REPORTING BY CERTAIN

8 PRIVATE FUND ADVISERS.— 

9 ‘‘(1) IN GENERAL.—The Commission shall pro10 vide an exemption from the registration require11 ments under this section to any investment adviser 

12 of private funds, if each of such private funds has 

13 assets under management in the United States of 

14 less than $150,000,000. 

15 ‘‘(2) REPORTING.—The Commission shall re16 quire investment advisers exempted by reason of this 

17 subsection to maintain such records and provide to 

18 the Commission such annual or other reports as the 

19 Commission determines necessary or appropriate in 

20 the public interest or for the protection of investors. 

21 ‘‘(n) REGISTRATION AND EXAMINATION OF MID22 SIZED PRIVATE FUND ADVISERS.—In prescribing regula23 tions to carry out the requirements of this section with 

24 respect to investment advisers acting as investment advis25 ers to mid-sized private funds, the Commission shall take 

26 into account the size, governance, and investment strategy 


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1 of such funds to determine whether they pose systemic 

2 risk, and shall provide for registration and examination 

3 procedures with respect to the investment advisers of such 

4 funds which reflect the level of systemic risk posed by such 

5 funds.’’. 

6 SEC. 5008. CLARIFICATION OF RULEMAKING AUTHORITY. 

7 Section 211 of the Investment Advisers Act of 1940 

8 (15 U.S.C. 80b-11) is amended— 

9 (1) by amending subsection (a) to read as fol10 lows: 

11 ‘‘(a) The Commission shall have authority from time 

12 to time to make, issue, amend, and rescind such rules and 

13 regulations and such orders as are necessary or appro14 priate to the exercise of the functions and powers con15 ferred upon the Commission elsewhere in this title, includ16 ing rules and regulations defining technical, trade, and 

17 other terms used in this title. For the purposes of its rules 

18 and regulations, the Commission may— 

19 ‘‘(1) classify persons and matters within its ju20 risdiction based upon, but not limited to— 

21 ‘‘(A) size; 

22 ‘‘(B) scope; 

23 ‘‘(C) business model; 

24 ‘‘(D) compensation scheme; or 


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1 ‘‘(E) potential to create or increase sys2 temic risk; 

3 ‘‘(2) prescribe different requirements for dif4 ferent classes of persons or matters; and 

5 ‘‘(3) ascribe different meanings to terms (in6 cluding the term ‘client’, except the Commission 

7 shall not ascribe a meaning to the term ‘client’ that 

8 would include an investor in a private fund managed 

9 by an investment adviser, where such private fund 

10 has entered into an advisory contract with such ad11 viser) used in different sections of this title as the 

12 Commission determines necessary to effect the pur13 poses of this title.’’; and 

14 (2) by adding at the end the following new sub15 section: 

16 ‘‘(e) The Commission and the Commodity Futures 

17 Trading Commission shall, after consultation with the 

18 Board of Governors of the Federal Reserve System, within 

19 12 months after the date of enactment of the Private 

20 Fund Investment Advisers Registration Act of 2009, joint21 ly promulgate rules to establish the form and content of 

22 the reports required to be filed with the Commission under 

23 sections 203(l) and 204(b) and with the Commodity Fu24 tures Trading Commission by investment advisers that are 

25 registered both under the Investment Advisers Act of 1940 


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1 (15 U.S.C. 80b-1 et seq.) and the Commodity Exchange 

2 Act (7 U.S.C. 1 et seq.).’’. 

3 SEC. 5009. GAO STUDY. 

4 (a) STUDY REQUIRED.—The Comptroller General of 

5 the United States shall carry out a study to assess the 

6 annual costs on industry members and their investors due 

7 to the registration requirements and ongoing reporting re8 quirements under this subtitle and the amendments made 

9 by this subtitle. 

10 (b) REPORT TO THE CONGRESS.—Not later than the 

11 end of the 2-year period beginning on the date of the en12 actment of this title, the Comptroller General of the 

13 United States shall submit a report to the Congress con14 taining the findings and determinations made by the 

15 Comptroller General in carrying out the study required 

16 under subsection (a). 

17 SEC. 5010. EFFECTIVE DATE; TRANSITION PERIOD. 

18 (a) EFFECTIVE DATE.—This subtitle, and the 

19 amendments made by this subtitle, shall take effect with 

20 respect to investment advisers after the end of the 1-year 

21 period beginning on the date of the enactment of this title. 

22 (b) TRANSITION PERIOD.—The Securities and Ex23 change Commission shall prescribe rules and regulations 

24 to permit an investment adviser who will be required to 

25 register with the Securities and Exchange Commission by 


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1 reason of this subtitle with the option of registering with 

2 the Securities and Exchange Commission before the date 

3 described under subsection (a). 

4 SEC. 5011. QUALIFIED CLIENT STANDARD. 

5 Section 205(e) of the Investment Advisers Act of 

6 1940 (15 U.S.C. 80b-5(e)) is amended by adding at the 

7 end the following: ‘‘With respect to any factor used by the 

8 Commission in making a determination under this sub9 section, if the Commission uses a dollar amount test in 

10 connection with such factor, such as a net asset threshold, 

11 the Commission shall, not later than one year after the 

12 date of the enactment of the Private Fund Investment Ad13 visers Registration Act of 2009, and every 5 years there14 after, adjust for the effects of inflation on such test. Any 

15 such adjustment that is not a multiple of $1,000 shall be 

16 rounded to the nearest multiple of $1,000.’’. 

17 Subtitle B—Accountability and 

18 Transparency in Rating Agen19 cies Act 

20 SEC. 6001. SHORT TITLE. 

21 This subtitle may be cited as the ‘‘Accountability and 

22 Transparency in Rating Agencies Act of 2009’’. 


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1 SEC. 6002. ENHANCED REGULATION OF NATIONALLY REC2 OGNIZED STATISTICAL RATING ORGANIZA3 TIONS. 

4 Section 15E of the Securities Exchange Act of 1934 

5 (15 U.S.C. 78o–7) is amended— 

6 (1) in subsection (a)— 

7 (A) in paragraph (1)(A), by striking ‘‘fur8 nish to’’ and inserting ‘‘file with’’; 

9 (B) in paragraph (2)(A), by striking ‘‘fur10 nished to’’ and inserting ‘‘filed with’’; and 

11 (C) in paragraph (2)(B)(i)(II), by striking 

12 ‘‘furnished to’’ and inserting ‘‘filed with’’; 

13 (2) in subsection (b)— 

14 (A) in paragraph (1)(A), by striking ‘‘fur15 nished’’ and inserting ‘‘filed’’ and by striking 

16 ‘‘furnishing’’ and inserting ‘‘filing’’; 

17 (B) in paragraph (1)(B), by striking ‘‘fur18 nishing’’ and inserting ‘‘filing’’; and 

19 (C) in the first sentence of paragraph (2), 

20 by striking ‘‘furnish to’’ and inserting ‘‘file 

21 with’’; 

22 (3) in subsection (c)— 

23 (A) paragraph (2)— 

24 (i) in the second sentence by inserting 

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1 tion,’’ after ‘‘Notwithstanding any other 

2 provision of law,’’; and 

3 (ii) by inserting before the period at 

4 the end of the last sentence ‘‘, provided 

5 that this paragraph does not afford a de6 fense against any action or proceeding 

7 brought by the Commission to enforce the 

8 antifraud provision of the securities laws’’; 

9 (B) by adding at the end the following new 

10 paragraph: 

11 ‘‘(3) REVIEW OF INTERNAL PROCESSES FOR

12 DETERMINING CREDIT RATINGS.— 

13 ‘‘(A) IN GENERAL.—The Commission shall 

14 examine credit ratings issued by, and the poli15 cies, procedures, and methodologies employed 

16 by, each nationally recognized statistical rating 

17 organization to review whether— 

18 ‘‘(i) the nationally recognized statis19 tical rating organization has established 

20 and documented a system of internal con21 trols, due diligence and implementation of 

22 methodologies for determining credit rat23 ings, taking into consideration such factors 

24 as the Commission may prescribe by rule; 


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1 ‘‘(ii) the nationally recognized statis2 tical rating organization adheres to such 

3 system; and 

4 ‘‘(iii) the public disclosures of the na5 tionally recognized statistical rating orga6 nization required under this section about 

7 its credit ratings, methodologies, and pro8 cedures are consistent with such system. 

9 ‘‘(B) MANNER AND FREQUENCY.—The 

10 Commission shall conduct reviews required by 

11 this paragraph no less frequently than annually 

12 in a manner to be determined by the Commis13 sion. 

14 ‘‘(4) PROVISION OF INFORMATION TO THE COM15 MISSION.—Each nationally recognized statistical rat16 ing organization shall make available and maintain 

17 such records and information, for such a period of 

18 time, as the Commission may prescribe, by rule, as 

19 necessary for the Commission to conduct the reviews 

20 under paragraph (3). 

21 ‘‘(5) DISCLOSURES WITH RESPECT TO STRUC22 TURED SECURITIES.— 

23 ‘‘(A) REGULATIONS REQUIRED.—The rules 

24 and regulations prescribed by the Commission 

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1 ally recognized statistical rating organizations 

2 shall, with respect to the procedures and meth3 odologies by which any nationally recognized 

4 statistical rating organization determines credit 

5 ratings for structured securities— 

6 ‘‘(i) specify the information required 

7 to be disclosed to such rating organizations 

8 by the sponsor, issuers, and underwriters 

9 of such structured securities on the collat10 eral underlying such structured securities; 

11 and 

12 ‘‘(ii) establish and implement proce13 dures to collect and disclose information 

14 about the processes used by such sponsor, 

15 issuers, and underwriters to assess the ac16 curacy and integrity of their data and 

17 fraud detection. 

18 ‘‘(B) DEFINITION.—For purposes of this 

19 paragraph, the Commission shall, by rule or 

20 regulation, define the term ‘structured securi21 ties’ as appropriate in the public interest and 

22 for the protection of investors. 

23 ‘‘(6) HISTORICAL DEFAULT RATE DISCLO24 SURES.—The rules and regulations prescribed by the 

25 Commission pursuant to this section with respect to 


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1 nationally recognized statistical rating organizations 

2 shall require each nationally recognized statistical 

3 rating organization to establish and maintain, on a 

4 publicly accessible Internet site, a facility to disclose, 

5 in a central database, the historical default rates of 

6 all classes of financial products rated by such orga7 nization.’’ 

8 (4) in subsection (d)— 

9 (A) in the heading, by inserting ‘‘FINE,’’ 

10 after ‘‘CENSURE,’’; 

11 (B) by striking ‘‘shall censure’’ and all 

12 that follows through ‘‘revocation’’ and inserting 

13 the following: ‘‘shall censure, fine in accordance 

14 with section 21B(a), place limitations on the ac15 tivities, functions, or operations of, suspend for 

16 a period not exceeding 12 months, or revoke the 

17 registration of any nationally recognized statis18 tical rating organization (or with respect to any 

19 person who is associated, who is seeking to be20 come associated, or, at the time of the alleged 

21 misconduct, who was associated or was seeking 

22 to become associated with a nationally recog23 nized statistical rating organization, the Com24 mission, by order, shall censure, fine in accord25 ance with section 21B(a), place limitations on 


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1 the activities or functions of such person, sus2 pend for a period not exceeding 12 months, or 

3 bar such person from being associated with a 

4 nationally recognized statistical rating organiza5 tion), if the Commission finds, on the record 

6 after notice and opportunity for hearing, that 

7 such censure, fine, placing of limitations, bar, 

8 suspension, or revocation’’; 

9 (C) in paragraph (2), by striking ‘‘fur10 nished to’’ and inserting ‘‘filed with’’; 

11 (D) in paragraph (4)— 

12 (i) by striking ‘‘furnish’’ and inserting 

13 ‘‘file’’; 

14 (ii) by striking ‘‘or’’ at the end; 

15 (E) in paragraph (5), by striking the pe16 riod at the end and inserting a semicolon; and 

17 (F) by adding at the end the following: 

18 ‘‘(6) has failed reasonably to supervise another 

19 person who commits a violation of the securities 

20 laws, the rules or regulations thereunder, or any 

21 rules of the Municipal Securities Rulemaking Board 

22 if such other person is subject to his or her super23 vision, except that no person shall be deemed to have 

24 failed reasonably to supervise any other person 

25 under this paragraph, if— 


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1 ‘‘(A) there have been established proce2 dures, and a system for applying such proce3 dures, which would reasonably be expected to 

4 prevent and detect, insofar as practicable, any 

5 such violation by such other person, and 

6 ‘‘(B) such person has reasonably dis7 charged the duties and obligations incumbent 

8 upon him or her by reason of such procedures 

9 and system without reasonable cause to believe 

10 that such procedures and system were not being 

11 complied with; or 

12 ‘‘(7) fails to conduct sufficient surveillance to 

13 ensure that credit ratings remain current and reli14 able, as applicable.’’; 

15 (5) in subsection (e)— 

16 (A) by striking paragraph (1); and 

17 (B) in paragraph (2), by striking ‘‘(2) 

18 COMMISSION AUTHORITY.—’’ and moving the 

19 text of such paragraph to follow the heading of 

20 subsection (e); 

21 (6) by amending subsection (h) to read as fol22 lows: 

23 ‘‘(h) CORPORATE GOVERNANCE, ORGANIZATION, AND

24 MANAGEMENT OF CONFLICTS OF INTEREST.— 

25 ‘‘(1) BOARD OF DIRECTORS.— 


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1 ‘‘(A) IN GENERAL.—Each nationally recog2 nized statistical rating organization or its ulti3 mate holding company shall have a board of di4 rectors. 

5 ‘‘(B) INDEPENDENT DIRECTORS.—At least 

1 6 ⁄3 of such board, but no less than 2 of the 

7 members of the board of directors, shall be 

8 independent directors. In order to be considered 

9 independent for purposes of this subsection, a 

10 director of a nationally recognized statistical 

11 rating organization may not, other than in his 

12 or her capacity as a member of the board of di13 rectors or any committee thereof— 

14 ‘‘(i) accept any consulting, advisory, 

15 or other compensatory fee from the nation16 ally recognized statistical rating organiza17 tion; or 

18 ‘‘(ii) be a person associated with the 

19 nationally recognized statistical rating or20 ganization or with any affiliated company 

21 thereof. 

22 ‘‘(C) COMPENSATION AND TERM.—The 

23 compensation of the independent directors shall 

24 not be linked to the business performance of the 

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1 tion and shall be arranged so as to ensure the 

2 independence of their judgment. The term of 

3 office of the independent directors shall be for 

4 a pre-agreed fixed period not exceeding 5 years 

5 and shall not be renewable. 

6 ‘‘(D) DUTIES.—In addition to the overall 

7 responsibility of the board of directors, the 

8 board shall oversee— 

9 ‘‘(i) the establishment, maintenance, 

10 and enforcement of policies and procedures 

11 for determining credit ratings; 

12 ‘‘(ii) the establishment, maintenance, 

13 and enforcement of policies and procedures 

14 to address, manage, and disclose any con15 flicts of interest; 

16 ‘‘(iii) the effectiveness of the internal 

17 control system with respect to policies and 

18 procedures for determining credit ratings; 

19 and 

20 ‘‘(iv) the compensation and promotion 

21 policies and practices of the nationally rec22 ognized statistical rating organization. 

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1 force written policies and procedures reasonably de2 signed, taking into consideration the nature of the 

3 business of the nationally recognized statistical rat4 ing organization and affiliated persons and affiliated 

5 companies thereof, to address, manage, and disclose 

6 any conflicts of interest that can arise from such 

7 business. 

8 ‘‘(3) COMMISSION RULES.—The Commission 

9 shall issue rules to prohibit, or require the manage10 ment and disclosure of, any conflicts of interest re11 lating to the issuance of credit ratings by a nation12 ally recognized statistical rating organization, includ13 ing rules regarding— 

14 ‘‘(A) conflicts of interest relating to the 

15 manner in which a nationally recognized statis16 tical rating organization is compensated by the 

17 obligor, or any affiliate of the obligor, for 

18 issuing credit ratings or providing related serv19 ices; 

20 ‘‘(B) conflicts of interest relating to busi21 ness relationships, ownership interests, and af22 filiations of nationally recognized statistical rat23 ing organization board members with obligors, 

24 or any other financial or personal interests be25 tween a nationally recognized statistical rating 


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1 organization, or any person associated with 

2 such nationally recognized statistical rating or3 ganization, and the obligor, or any affiliate of 

4 the obligor; 

5 ‘‘(C) conflicts of interest relating to any af6 filiation of a nationally recognized statistical 

7 rating organization, or any person associated 

8 with such nationally recognized statistical rat9 ing organization, with any person who under10 writes securities, money market instruments, or 

11 other instruments that are the subject of a 

12 credit rating; 

13 ‘‘(D) a requirement that each nationally 

14 recognized statistical rating organization dis15 close on such organization’s website a consoli16 dated report at the end of each fiscal year that 

17 shows— 

18 ‘‘(i) the percent of net revenue earned 

19 by the nationally recognized statistical rat20 ing organization or an affiliate of a nation21 ally recognized statistical rating organiza22 tion, or any person associated with a na23 tionally recognized statistical rating orga24 nization, to the extent determined appro25 priate by the Commission, for that fiscal 


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1 year for providing services and products 

2 other than credit rating services to each 

3 person who paid for a credit rating; and 

4 ‘‘(ii) the relative standing of each per5 son who paid for a credit rating that was 

6 outstanding as of the end of the fiscal year 

7 in terms of the amount of net revenue 

8 earned by the nationally recognized statis9 tical rating organization attributable to 

10 each such person and classified by the 

11 highest 5, 10, 25, and 50 percentiles and 

12 lowest 50 and 25 percentiles; 

13 ‘‘(E) the establishment of a system of pay14 ment for credit ratings issued by each nation15 ally recognized statistical rating organization 

16 that requires that payments are structured in a 

17 manner designed to ensure that the nationally 

18 recognized statistical rating organization con19 ducts accurate and reliable surveillance of credit 

20 ratings over time, as applicable, and that incen21 tives for reliable credit ratings are in place; 

22 ‘‘(F) a requirement that a nationally rec23 ognized statistical rating organization disclose 

24 with the publication of a credit rating the type 

25 and number of credit ratings it has provided to 


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1 the person being rated or affiliates of such per2 son, the fees it has billed for the credit rating, 

3 and the aggregate amount of net revenue 

4 earned by the nationally recognized statistical 

5 rating organization in the preceding 2 fiscal 

6 years attributable to the person being rated and 

7 its affiliates; and 

8 ‘‘(G) any other potential conflict of inter9 est, as the Commission determines necessary or 

10 appropriate in the public interest or for the pro11 tection of investors. 

12 ‘‘(4) LOOK-BACK REQUIREMENT.— 

13 ‘‘(A) REVIEW BY THE NATIONALLY RECOG14 NIZED STATISTICAL RATING ORGANIZATION.— 

15 Each nationally recognized statistical rating or16 ganization shall establish, maintain, and enforce 

17 policies and procedures reasonably designed to 

18 ensure that, in any case in which an employee 

19 of a person subject to a credit rating of the na20 tionally recognized statistical rating organiza21 tion or the issuer, underwriter, or sponsor of a 

22 security or money market instrument subject to 

23 a credit rating of the nationally recognized sta24 tistical rating organization was employed by the 

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1 tion and participated in any capacity in deter2 mining credit ratings for the person or the se3 curities or money market instruments during 

4 the 1-year period preceding the date an action 

5 was taken with respect to the credit rating, the 

6 nationally recognized statistical rating organiza7 tion shall— 

8 ‘‘(i) conduct a review to determine 

9 whether any conflicts of interest of the em10 ployee influenced the credit rating; and 

11 ‘‘(ii) take action to revise the rating if 

12 appropriate, in accordance with such rules 

13 as the Commission shall prescribe. 

14 ‘‘(B) REVIEW BY COMMISSION.— 

15 ‘‘(i) IN GENERAL.—The Commission 

16 shall conduct periodic reviews of the poli17 cies described in subparagraph (A) and the 

18 implementation of the policies at each na19 tionally recognized statistical rating orga20 nization to ensure they are reasonably de21 signed and implemented to most effectively 

22 eliminate conflicts of interest. 

23 ‘‘(ii) TIMING OF REVIEWS.—The Com24 mission shall review the code of ethics and 


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1 conflict of interest policy of each nationally 

2 recognized statistical rating organization— 

3 ‘‘(I) not less frequently than an4 nually; and 

5 ‘‘(II) whenever such policies are 

6 materially modified or amended. 

7 ‘‘(5) REPORT TO COMMISSION ON CERTAIN EM8 PLOYMENT TRANSITIONS.— 

9 ‘‘(A) REPORT REQUIRED.—Each nationally 

10 recognized statistical rating organization shall 

11 report to the Commission any case such organi12 zation knows or can reasonably be expected to 

13 know where a person associated with such orga14 nization within the previous 5 years obtains em15 ployment with any obligor, issuer, underwriter, 

16 or sponsor of a security or money market in17 strument for which the organization issued a 

18 credit rating during the 12-month period prior 

19 to such employment, if such employee— 

20 ‘‘(i) was a senior officer of such orga21 nization; 

22 ‘‘(ii) participated in any capacity in 

23 determining credit ratings for such obligor, 

24 issuer, underwriter, or sponsor; or 


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1 ‘‘(iii) supervised an employee de2 scribed in clause (ii). 

3 ‘‘(B) PUBLIC DISCLOSURE.—Upon receiv4 ing such a report, the Commission shall make 

5 such information publicly available.’’; 

6 (7) by amending subsection (j) to read as fol7 lows: 

8 ‘‘(j) DESIGNATION OF COMPLIANCE OFFICER.— 

9 ‘‘(1) IN GENERAL.—Each nationally recognized 

10 statistical rating organization shall designate an in11 dividual to serve as a compliance officer. 

12 ‘‘(2) DUTIES.—The compliance officer shall— 

13 ‘‘(A) report directly to the board of the na14 tionally recognized statistical rating organiza15 tion; 

16 ‘‘(B) review compliance with policies and 

17 procedures to manage conflicts of interest and 

18 assess the risk that the compliance (or lack of 

19 such compliance) may compromise the integrity 

20 of the credit rating process; 

21 ‘‘(C) review compliance with the internal 

22 control system with respect to the procedures 

23 and methodologies for determining credit rat24 ings, including qualitative methodologies and 

25 quantitative inputs used in the rating process, 


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1 and assess the risk that such internal control 

2 system is reasonably designed to ensure the in3 tegrity and quality of the credit rating process; 

4 ‘‘(D) in consultation with the board of the 

5 nationally recognized statistical rating organiza6 tion, resolve any conflicts of interest that may 

7 arise; 

8 ‘‘(E) be responsible for administering the 

9 policies and procedures required to be estab10 lished pursuant to this section; 

11 ‘‘(F) ensure compliance with securities 

12 laws and the rules and regulations issued there13 under, including rules prescribed by the Com14 mission pursuant to this section; and 

15 ‘‘(G) establish procedures— 

16 ‘‘(i) for the receipt, retention, and 

17 treatment of complaints regarding credit 

18 ratings, models, methodologies, and com19 pliance with the securities laws and the 

20 policies and procedures required under this 

21 section; 

22 ‘‘(ii) for the receipt, retention, and 

23 treatment of confidential, anonymous com24 plaints by employees, obligors, issuers, and 

25 investors; 


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1 ‘‘(iii) for the remediation of non-com2 pliance issues found during compliance of3 fice reviews, the reviews required under 

4 paragraph (7), internal or external audit 

5 findings, self-reported errors, or through 

6 validated complaints; and 

7 ‘‘(iv) designed so that ratings that the 

8 nationally recognized statistical rating or9 ganization disseminates reflect consider10 ation of all information in a manner gen11 erally consistent with the nationally recog12 nized statistical rating organization’s pub13 lished rating methodology, including infor14 mation which is provided, received, or oth15 erwise obtained from obligor, issuer and 

16 non-issuer sources, such as investors, the 

17 media, and other interested or informed 

18 parties. 

19 ‘‘(3) LIMITATIONS.—The compliance officer 

20 shall not, while serving in that capacity— 

21 ‘‘(A) determine credit ratings; 

22 ‘‘(B) participate in the establishment of 

23 the procedures and methodologies or the quali24 tative methodologies and quantitative inputs 

25 used to determine credit ratings; 


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1 ‘‘(C) perform marketing or sales functions; 

2 or 

3 ‘‘(D) participate in establishing compensa4 tion levels, other than for employees working 

5 for the compliance officer. 

6 ‘‘(4) ANNUAL REPORTS REQUIRED.—The com7 pliance officer shall annually prepare and sign a re8 port on the compliance of the nationally recognized 

9 statistical rating organization with the securities 

10 laws and such organization’s internal policies and 

11 procedures, including its code of ethics and conflict 

12 of interest policies, in accordance with rules pre13 scribed by the Commission. Such compliance report 

14 shall accompany the financial reports of the nation15 ally recognized statistical rating organization that 

16 are required to be filed with the Commission pursu17 ant to this section and shall include a certification 

18 that, under penalty of law, the report is accurate 

19 and complete. 

20 ‘‘(5) COMPENSATION.—The compensation of 

21 the compliance officer shall not be linked to the 

22 business performance of the nationally recognized 

23 statistical rating organization and shall be arranged 

24 so as to ensure the independence of the officer’s 

25 judgment.’’; 


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1 (8) in subsection (k)— 

2 (A) by striking ‘‘, on a confidential basis,’’; 

3 (B) by striking ‘‘furnish to’’ and inserting 

4 ‘‘file with’’; 

5 (C) by striking ‘‘Each nationally’’ and in6 serting the following: 

7 ‘‘(1) IN GENERAL.—Each nationally’’; and 

8 (D) by adding at the end the following new 

9 paragraph: 

10 ‘‘(2) EXCEPTION.—The Commission may treat 

11 as confidential any information provided by a na12 tionally recognized statistical rating organization 

13 under this section consistent with applicable Federal 

14 laws or Commission rules.’’; 

15 (9) in subsection (l)(2)(A)(i), by striking ‘‘fur16 nished’’ and inserting ‘‘filed’’; 

17 (10) by amending subsection (p) to read as fol18 lows: 

19 ‘‘(p) ESTABLISHMENT OF SEC OFFICE.— 

20 ‘‘(1) IN GENERAL.—The Commission shall es21 tablish an office that administers the rules of the 

22 Commission with respect to the practices of nation23 ally recognized statistical rating organizations. 

24 ‘‘(2) STAFFING.—The office of the Commission 

25 established under this subsection shall be staffed 


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1 sufficiently to carry out fully the requirements of 

2 this section. 

3 ‘‘(3) RULEMAKING AUTHORITY.—The Commis4 sion shall— 

5 ‘‘(A) establish, by rule, fines and other 

6 penalties for any nationally recognized statis7 tical rating organization that violates the appli8 cable requirements of this title; and 

9 ‘‘(B) issue such rules as may be necessary 

10 to carry out this section with respect to nation11 ally recognized statistical rating organiza12 tions.’’; and 

13 (11) by adding after subsection (p) the fol14 lowing new subsections: 

15 ‘‘(q) TRANSPARENCY OF RATINGS PERFORMANCE.— 

16 ‘‘(1) RULEMAKING REQUIRED.—The Commis17 sion shall, by rule, require each nationally recognized 

18 statistical rating organization to publicly disclose in19 formation on initial ratings and subsequent changes 

20 to such ratings for the purpose of providing a gauge 

21 of the performance of ratings and allowing investors 

22 to compare performance of ratings by different na23 tionally recognized statistical rating organizations. 


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1 ‘‘(2) CONTENT.—The rules of the Commission 

2 under this subsection shall require, at a minimum, 

3 disclosures that— 

4 ‘‘(A) are comparable among nationally rec5 ognized statistical rating organizations, so that 

6 investors can compare rating performance 

7 across rating organizations; 

8 ‘‘(B) are clear and informative for a wide 

9 range of investor sophistication; 

10 ‘‘(C) include performance information over 

11 a range of years and for a variety of classes of 

12 credit ratings, as determined by the Commis13 sion; 

14 ‘‘(D) are published and made freely avail15 able by the nationally recognized statistical rat16 ing organization, on an easily accessible portion 

17 of its website and in written form when re18 quested by investors; and 

19 ‘‘(E) each nationally recognized statistical 

20 rating organization include an attestation with 

21 any credit rating it issues affirming that no 

22 part of the rating was influenced by any other 

23 business activities, that the rating was based 

24 solely on the merits of the instruments being 

25 rated, and that such rating was an independent 


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1 evaluation of the risks and merits of the instru2 ment. 

3 ‘‘(r) CREDIT RATINGS METHODOLOGIES.— 

4 ‘‘(1) IN GENERAL.—The Commission shall pre5 scribe rules, in the public interest and for the pro6 tection of investors, that require each nationally rec7 ognized statistical rating organization to establish, 

8 maintain, and enforce written procedures and meth9 odologies and an internal control system with respect 

10 to such procedures and methodologies that are rea11 sonably designed to— 

12 ‘‘(A) ensure that credit ratings are deter13 mined using procedures and methodologies, in14 cluding qualitative methodologies and quan15 titative inputs that are determined in accord16 ance with the policies and procedures of the na17 tionally recognized statistical rating organiza18 tion for developing and modifying credit rating 

19 procedures and methodologies; 

20 ‘‘(B) ensure that when major changes to 

21 credit rating procedures and methodologies, in22 cluding to qualitative methodologies and quan23 titative inputs, are made, that the changes are 

24 applied consistently to all credit ratings to 

25 which the changed procedures and methodoloVerDate Nov 24 2008 22:04 Dec 02, 2009 Jkt 089200 PO 00000 Frm 01057 Fmt 6652 Sfmt 6201 E:\BILLS\H4173.IH H4173

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1 gies apply and, to the extent the changes are 

2 made to credit rating surveillance procedures 

3 and methodologies, they are applied to current 

4 credit ratings within a time period to be deter5 mined by the Commission by rule, and that the 

6 reason for the change is publicly disclosed; 

7 ‘‘(C) notify persons who have access to the 

8 credit ratings of the nationally recognized sta9 tistical rating organization, regardless of wheth10 er they are made readily accessible for free or 

11 a reasonable fee, of the procedure or method12 ology, including qualitative methodologies and 

13 quantitative inputs, used with respect to a par14 ticular credit rating; 

15 ‘‘(D) notify persons who have access to the 

16 credit ratings of the nationally recognized sta17 tistical rating organization, regardless of wheth18 er they are made readily accessible for free or 

19 a reasonable fee, when a change is made to a 

20 procedure or methodology, including to quali21 tative methodologies and quantitative inputs, or 

22 an error is identified in a procedure or method23 ology that may result in credit rating actions, 

24 and the likelihood of the change resulting in 


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1 current credit ratings being subject to rating 

2 actions; and 

3 ‘‘(E) use credit rating symbols that distin4 guish credit ratings for structured products 

5 from credit ratings for other products that the 

6 Commission determines appropriate or nec7 essary in the public interest and for the protec8 tion of investors. 

9 ‘‘(2) RATING CLARITY AND CONSISTENCY.— 

10 ‘‘(A) COMMISSION OBLIGATION.—Subject 

11 to subparagraphs (B) and (C), the Commission 

12 shall require, by rule, each nationally recognized 

13 statistical rating organization to establish, 

14 maintain, and enforce written policies and pro15 cedures reasonably designed— 

16 ‘‘(i) with respect to credit ratings of 

17 securities and money market instruments, 

18 to assess the risk that investors in securi19 ties and money market instruments may 

20 not receive payment in accordance with the 

21 terms of such securities and instruments; 

22 ‘‘(ii) to define clearly any credit rating 

23 symbol used by that organization; and 


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1 ‘‘(iii) to apply such credit rating sym2 bol in a consistent manner for all types of 

3 securities and money market instruments. 

4 ‘‘(B) ADDITIONAL CREDIT FACTORS.— 

5 Nothing in subparagraph (A)— 

6 ‘‘(i) prohibits a nationally recognized 

7 statistical rating organization from using 

8 additional credit factors that are docu9 mented and disclosed by the organization 

10 and that have a demonstrated impact on 

11 the risk an investor in a security or money 

12 market instrument will not receive repay13 ment in accordance with the terms of 

14 issuance; 

15 ‘‘(ii) prohibits a nationally recognized 

16 statistical rating organization from consid17 ering credit factors that are unique to mu18 nicipal securities; or 

19 ‘‘(iii) prohibits a nationally recognized 

20 statistical rating organization from using 

21 an additional symbol with respect to the 

22 ratings described in subparagraph (A)(i) 

23 for the purpose of distinguishing the rat24 ings of a certain type of security or money 

25 market instrument from ratings of any 


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1 other types of securities or money market 

2 instruments. 

3 ‘‘(C) COMPLEMENTARY RATINGS.—The 

4 Commission shall not impose any requirement 

5 under subparagraph (A) that prevents nation6 ally recognized statistical rating organizations 

7 from establishing ratings that are complemen8 tary to the ratings described in subparagraph 

9 (A)(i) and that are created to measure a dis10 crete aspect of the security’s or instrument’s 

11 risk. 

12 ‘‘(s) TRANSPARENCY OF CREDIT RATING METH13 ODOLOGIES AND INFORMATION REVIEWED.— 

14 ‘‘(1) IN GENERAL.—The Commission shall re15 quire, by rule, a nationally recognized statistical rat16 ing organization to include with the publication of 

17 each credit rating regardless of whether the credit 

18 rating is made readily accessible for free or a rea19 sonable fee a form that discloses information about 

20 the assumptions underlying the procedures and 

21 methodologies used, and the data relied on, to deter22 mine the credit rating in the format prescribed in 

23 paragraph (2) and containing the information de24 scribed in paragraph (3). 


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1 ‘‘(2) FORMAT.—The Commission shall prescribe 

2 a form for use under paragraph (1) that— 

3 ‘‘(A) is designed in a user-friendly and 

4 helpful manner for investors to understand the 

5 information contained in the report; 

6 ‘‘(B) requires the nationally recognized 

7 statistical rating organization to provide the 

8 content, as required by paragraph (3), in a 

9 manner that is directly comparable across secu10 rities; and 

11 ‘‘(C) the nationally recognized statistical 

12 rating organization certifies the information on 

13 the form as true and accurate. 

14 ‘‘(3) CONTENT.—The Commission shall pre15 scribe a form that requires a nationally recognized 

16 statistical rating organization to disclose — 

17 ‘‘(A) the main assumptions included in 

18 constructing procedures and methodologies, in19 cluding qualitative methodologies and quan20 titative inputs and assumptions about the cor21 relation of defaults across underlying assets 

22 used in rating certain structured products; 

23 ‘‘(B) the potential shortcomings of the 

24 credit ratings, and the types of risks not meas25 ured in the credit ratings that the nationally 


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1 recognized statistical rating organization is not 

2 commenting on, such as liquidity, market, and 

3 other risks; 

4 ‘‘(C) information on the certainty of the 

5 rating, including information on the reliability, 

6 accuracy, and quality of the data relied on in 

7 determining the ultimate credit rating and a 

8 statement on the extent to which key data in9 puts for the credit rating were reliable or lim10 ited, including any limits on the reach of histor11 ical data, limits in accessibility to certain docu12 ments or other forms of information that would 

13 have better informed the credit rating, and the 

14 completeness of certain information considered; 

15 ‘‘(D) whether and to what extent third 

16 party due diligence services have been utilized, 

17 and a description of the information that such 

18 third party reviewed in conducting due diligence 

19 services; 

20 ‘‘(E) a description of relevant data about 

21 any obligor, issuer, security, or money market 

22 instrument that was used and relied on for the 

23 purpose of determining the credit rating; 

24 ‘‘(F) a statement containing an overall as25 sessment of the quality of information available 


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1 and considered in producing a credit rating for 

2 a security in relation to the quality of informa3 tion available to the nationally recognized sta4 tistical rating organization in rating similar ob5 ligors, securities, or money market instruments; 

6 ‘‘(G) an explanation or measure of the po7 tential volatility for the credit rating, including 

8 any factors that might lead to a change in the 

9 credit rating, and the extent of the change that 

10 might be anticipated under different conditions; 

11 ‘‘(H) information on the content of the 

12 credit rating, including— 

13 ‘‘(i) the expected default probability; 

14 and 

15 ‘‘(ii) the loss given default; 

16 ‘‘(I) information on the sensitivity of the 

17 rating to assumptions made by the nationally 

18 recognized statistical rating organization, in19 cluding— 

20 ‘‘(i) 5 assumptions made in the rat21 ings process that, without accounting for 

22 any other factor, would have the greatest 

23 impact on a rating if such assumptions 

24 were proven false or inaccurate; and 


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1 ‘‘(ii) an analysis, using concrete exam2 ples, on how each of the 5 assumptions 

3 identified under clause (i) impacts a rat4 ing. 

5 ‘‘(J) where applicable, how the nationally 

6 recognized statistical rating organization used 

7 servicer or remittance reports, and with what 

8 frequency, to conduct surveillance of the credit 

9 rating; and 

10 ‘‘(K) such additional information as may 

11 be required by the Commission. 

12 ‘‘(4) DUE DILIGENCE SERVICES.— 

13 ‘‘(A) CERTIFICATION REQUIRED.—In any 

14 case in which third-party due diligence services 

15 are employed by a nationally recognized statis16 tical rating organization or an issuer, under17 writer, or sponsor in connection with the 

18 issuance of a credit rating, the firm providing 

19 the due diligence services shall provide to the 

20 nationally recognized statistical rating organiza21 tion written certification of such due diligence, 

22 which shall be subject to review by the Commis23 sion, and the issuer, underwriter, or sponsor 

24 shall provide any reports issued by the provider 


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1 of such due diligence services to the nationally 

2 recognized statistical rating organization. 

3 ‘‘(B) FORMAT AND CONTENT.—The Com4 mission shall establish the appropriate format 

5 and content for written certifications required 

6 under subparagraph (A) to ensure that pro7 viders of due diligence services have conducted 

8 a thorough review of data, documentation, and 

9 other relevant information necessary for the na10 tionally recognized statistical rating organiza11 tion to provide a reliable rating. 

12 ‘‘(C) DISCLOSURE OF CERTIFICATION.— 

13 The Commission shall adopt rules requiring a 

14 nationally recognized statistical rating organiza15 tion to disclose to persons who have access to 

16 the credit ratings of the nationally recognized 

17 statistical rating organization regardless of 

18 whether they are made readily accessible for 

19 free or a reasonable fee the certification de20 scribed in subparagraph (A) with the publica21 tion of the applicable credit rating in a manner 

22 that may permit the persons to determine the 

23 adequacy and level of due diligence services pro24 vided by the third party. 


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1 ‘‘(t) PROHIBITED ACTIVITIES.—Beginning 180 days 

2 from the date of enactment of the Accountability, Reli3 ability, and Transparency in Rating Agencies Act, it shall 

4 be unlawful for a nationally recognized statistical rating 

5 organization, or an affiliate of a nationally recognized sta6 tistical rating organization, or any person associated with 

7 a nationally recognized statistical rating organization, that 

8 provides a credit rating for an issuer, underwriter, or 

9 placement agent of a security to provide any non-rating 

10 service, including— 

11 ‘‘(1) risk management advisory services; 

12 ‘‘(2) advice or consultation relating to any 

13 merger, sales, or disposition of assets of the issuer; 

14 ‘‘(3) ancillary assistance, advice, or consulting 

15 services unrelated to any specific credit rating 

16 issuance; and 

17 ‘‘(4) such further activities or services as the 

18 Commission may determine as necessary or appro19 priate in the public interest or for the protection of 

20 investors.’’. 

21 SEC. 6003. STANDARDS FOR PRIVATE ACTIONS. 

22 (a) IN GENERAL.—Section 21D(b)(2) of the Securi23 ties Exchange Act of 1934 (15 U.S.C. 78u-4(b)(2)) is 

24 amended by inserting before the period at the end of the 

25 following: ‘‘, and in the case of an action brought under 


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1 this title for money damages against a nationally recog2 nized statistical rating organization, it shall be sufficient 

3 for purposes of pleading any required state of mind for 

4 purposes of such action that the complaint shall state with 

5 particularity facts giving rise to a strong inference that 

6 the nationally recognized statistical rating organization 

7 knowingly or recklessly violated the securities laws’’. 

8 (b) PLEADING STANDARD.—Section 15E(m) of the 

9 Securities Exchange Act of 1934 (15 U.S.C. 78o-7(m)) 

10 amended to read as follows: 

11 ‘‘(m) APPLICATION OF ENFORCEMENT PROVISIONS; 

12 PLEADING STANDARD IN PRIVATE RIGHTS OF ACTION.— 

13 Statements made by nationally recognized statistical rat14 ing organizations shall not be deemed forward looking 

15 statements for purposes of section 21E. In any private 

16 right of action commenced against a nationally recognized 

17 statistical rating organization under this title, the same 

18 pleading standards with respect to knowledge and reck19 lessness shall apply to the nationally recognized statistical 

20 rating organization as would apply to any other person 

21 in the same or a similar private right of action against 

22 such person.’’. 

23 SEC. 6004. ISSUER DISCLOSURE OF PRELIMINARY RATINGS. 

24 The Securities and Exchange Commission shall adopt 

25 rules under authority of the Securities Act of 1933 (15 


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1 U.S.C. 77a, et seq.) to require issuers to disclose prelimi2 nary credit ratings received from nationally recognized 

3 statistical rating agencies on structured products and all 

4 forms of corporate debt. 

5 SEC. 6005. CHANGE TO DESIGNATION. 

6 The Securities Act of 1933 and the Securities Ex7 change Act of 1934 are each amended by striking ‘‘nation8 ally recognized statistical rating’’ each place it appears 

9 and inserting ‘‘nationally registered statistical rating’’. 

10 SEC. 6006. TIMELINE FOR REGULATIONS. 

11 Unless otherwise specified in this subtitle, the Securi12 ties and Exchange Commission shall adopt rules and regu13 lations, as required by the amendments made by this sub14 title, not later than 365 days after the date of enactment. 

15 SEC. 6007. ELIMINATION OF EXEMPTION FROM FAIR DIS16 CLOSURE RULE. 

17 Not later than 90 days after the date of enactment 

18 of this subtitle, the Securities Exchange Commission shall 

19 revise Regulation FD (17 C.F.R. 243.100) to remove from 

20 such regulation the exemption for entities whose primary 

21 business is the issuance of credit ratings (17 C.F.R. 

22 243.100(b)(2)(iii)). 

23 SEC. 6008. ADVISORY BOARD. 

24 (a) ESTABLISHMENT.—Not later than 90 days after 

25 the date of the enactment of this subtitle, the Securities 


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1 and Exchange Commission shall establish an advisory 

2 board to be known as the Credit Ratings Agency Advisory 

3 Board (in this section referred to as ‘‘the Board’’). 

4 (b) APPOINTMENT AND TERMS OF SERVICE.—The 

5 Board shall consist of 7 members appointed by the Com6 mission, no more than 2 of whom may be former employ7 ees of a credit rating agency. Members of the Board shall 

8 be prominent individuals of integrity and reputation who 

9 have a demonstrated commitment to the interests of inves10 tors and the public, and an understanding of the role that 

11 credit ratings play to a broad range of investors. Terms 

12 of service shall be staggered as determined by the Com13 mission. 

14 (c) DUTIES.—The Board shall— 

15 (1) advise the Commission concerning the rules 

16 and regulations required by the amendments made 

17 by this subtitle; 

18 (2) ensure that the Commission properly and 

19 fully executes its oversight functions and responsibil20 ities with the respect to nationally recognized statis21 tical rating organizations and individual partici22 pants; and 

23 (3) issue an annual report to Congress detailing 

24 its work and recommending any additional Congres25 sional actions necessary to aid the Commission and 


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1 such additional reports from time to time as appro2 priate when it feels that the Commission is not prop3 erly executing its oversight functions. 

4 SEC. 6009. REMOVAL OF STATUTORY REFERENCES TO 

5 CREDIT RATINGS. 

6 (a) FEDERAL DEPOSIT INSURANCE ACT.—The Fed7 eral Deposit Insurance Act (12 U.S.C. 1811 et seq.) is 

8 amended— 

9 (1) in section 28(d)— 

10 (A) in the subsection heading, by striking 

11 ‘‘NOT OF INVESTMENT GRADE’’; 

12 (B) in paragraph (1), by striking ‘‘not of 

13 investment grade’’ and inserting ‘‘that does not 

14 meet standards of credit-worthiness as estab15 lished by the Corporation’’; 

16 (C) in paragraph (2), by striking ‘‘not of 

17 investment grade’’; 

18 (D) by striking paragraph (3) and redesig19 nating paragraph (4) as paragraph (3); and 

20 (E) in paragraph (3) (as so redesig21 nated)— 

22 (i) by striking subparagraph (A) and 

23 redesignating subparagraphs (B) and (C) 

24 as subparagraphs (A) and (B), respec25 tively; and 


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1 (ii) in subparagraph (B) (as so redes2 ignated), by striking ‘‘not of investment 

3 grade’’ and inserting ‘‘that does not meet 

4 standards of credit-worthiness as estab5 lished by the Corporation’’; 

6 (2) in section 28(e)— 

7 (A) in the subsection heading, by striking 

8 ‘‘NOT OF INVESTMENT GRADE’’; 

9 (B) in paragraph (1), by striking ‘‘not of 

10 investment grade’’ and inserting ‘‘that does not 

11 meet standards of credit-worthiness as estab12 lished by the Corporation’’; and 

13 (C) in paragraphs (2) and (3), by striking 

14 ‘‘not of investment grade’’ each place that it ap15 pears and inserting ‘‘that does not meet stand16 ards of credit-worthiness established by the 

17 Corporation’’; and 

18 (3) in section 7(b)(1)(E)(i), by striking ‘‘credit 

19 rating entities, and other private economic’’ and in20 sert ‘‘private economic, credit,’’. 

21 (b) FEDERAL HOUSING ENTERPRISES FINANCIAL

22 SAFETY AND SOUNDNESS ACT OF 1992.—Section 1319 

23 of the Federal Housing Enterprises Financial Safety and 

24 Soundness Act of 1992 (12 U.S.C. 4519) is amended— 


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1 (1) in the section heading, by striking ‘‘BY

2 RATING ORGANIZATION’’; and 

3 (2) by striking ‘‘that is a nationally recognized 

4 statistical rating organization, as such term is de5 fined in section 3(a) of the Securities Exchange Act 

6 of 1934,’’. 

7 (c) INVESTMENT COMPANY ACT OF 1940.—Section 

8 6(a)(5)(A)(iv)(I) Investment Company Act of 1940 (15 

9 U.S.C. 80a-6(a)(5)(A)(iv)(I)) is amended by striking ‘‘is 

10 rated investment grade by not less than 1 nationally recog11 nized statistical rating organization’’ and inserting ‘‘meets 

12 such standards of credit-worthiness that the Commission 

13 shall adopt’’. 

14 (d) REVISED STATUTES.—Section 5136A of title 

15 LXII of the Revised Statutes of the United States (12 

16 U.S.C. 24a) is amended— 

17 (1) in subsection (a)(2)(E), by striking ‘‘any 

18 applicable rating’’ and inserting ‘‘standards of cred19 it-worthiness established by the Comptroller of the 

20 Currency’’; 

21 (2) in the heading for subsection (a)(3) by 

22 striking ‘‘RATING OR COMPARABLE REQUIREMENT’’ 

23 and inserting ‘‘REQUIREMENT’’; 

24 (3) subsection (a)(3), by amending subpara25 graph (A) to read as follows: 


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1 ‘‘(A) IN GENERAL.—A national bank meets 

2 the requirements of this paragraph if the bank 

3 is one of the 100 largest insured banks and has 

4 not fewer than 1 issue of outstanding debt that 

5 meets standards of credit-worthiness or other 

6 criteria as the Secretary of the Treasury and 

7 the Board of Governors of the Federal Reserve 

8 System may jointly establish.’’. 

9 (4) in the heading for subsection (f), by striking 

10 ‘‘MAINTAIN PUBLIC RATING OR’’ and inserting 

11 ‘‘MEET STANDARDS OF CREDIT-WORTHINESS’’; and 

12 (5) in subsection (f)(1), by striking ‘‘any appli13 cable rating’’ and inserting ‘‘standards of credit-wor14 thiness established by the Comptroller of the Cur15 rency’’. 

16 (e) SECURITIES EXCHANGE ACT OF 1934.—Section 

17 3(a) Securities Exchange Act of 1934 (15 U.S.C. 

18 78a(3)(a)) is amended— 

19 (1) in paragraph (41), by striking ‘‘is rated in 

20 one of the two highest rating categories by at least 

21 one nationally recognized statistical rating organiza22 tion’’ and inserting ‘‘meets standards of credit-wor23 thiness as defined by the Commission’’; and 

24 (2) in paragraph (53)(A), by striking ‘‘is rated 

25 in 1 of the 4 highest rating categories by at least 1 


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1 nationally recognized statistical rating organization’’ 

2 and inserting ‘‘meets standards of credit-worthiness 

3 as defined by the Commission’’. 

4 (f) WORLD BANK DISCUSSIONS.—Section 3(a)(6) of 

5 the amendment in the nature of a substitute to the text 

6 of H.R. 4645, as ordered reported from the Committee 

7 on Banking, Finance and Urban Affairs on September 22, 

8 1988, as enacted into law by section 555 of Public Law 

9 100-461, (22 U.S.C. 286hh(a)(6)), is amended by striking 

10 ‘‘rating’’ and inserting ‘‘worthiness’’. 

11 (g) EFFECTIVE DATE.—The amendments made by 

12 this section shall take effect after the end of the 6-month 

13 period beginning on the date of the enactment of this sub14 title. 

15 SEC. 6010. REVIEW OF RELIANCE ON RATINGS. 

16 (a) AGENCY REVIEW.— 

17 (1) REVIEW.—Not later than 1 year after the 

18 date of the enactment of this subtitle, each Federal 

19 agency listed in paragraph (4) shall, to the extent 

20 applicable, review— 

21 (A) any regulation issued by such agency 

22 that requires the use of an assessment of the 

23 credit-worthiness of a security or money market 

24 instrument, and 


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1 (B) any references to or requirements in 

2 such regulations regarding credit ratings. 

3 (2) MODIFICATIONS REQUIRED.—Each such 

4 agency shall modify any such regulations identified 

5 by the review conducted under paragraph (1) to re6 move any reference to or requirement of reliance on 

7 credit ratings and to substitute in such regulations 

8 such standard of credit-worthiness as each respective 

9 agency shall determine as appropriate for such regu10 lations. In making such determination, such agencies 

11 shall seek to establish, to the extent feasible, uni12 form standards of credit-worthiness for use by each 

13 such agency, taking into account the entities regu14 lated by each such agency and the purposes for 

15 which such entities would rely on such standards of 

16 credit-worthiness. 

17 (3) REPORT.—Upon conclusion of the review 

18 required under paragraph (1), each Federal agency 

19 listed in paragraph (4) shall transmit a report to 

20 Congress containing a description of any modifica21 tion of any regulation such agency made pursuant to 

22 paragraph (2). 

23 (4) APPLICABLE AGENCIES.—The agencies re24 quired to conduct the review and report required by 

25 this subsection are— 


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1 (A) the Securities and Exchange Commis2 sion; 

3 (B) the Federal Deposit Insurance Cor4 poration; 

5 (C) the Office of Thrift Supervision; 

6 (D) the Office of the Comptroller of the 

7 Currency; 

8 (E) the Board of Governors of the Federal 

9 Reserve; 

10 (F) the National Credit Union Administra11 tion; and 

12 (G) the Federal Housing Finance Agency. 

13 (b) GAO REVIEW OF OTHER AGENCIES.— 

14 (1) REVIEW.—The Comptroller General shall 

15 conduct a comprehensive review of the use of credit 

16 ratings by Federal agencies other than those listed 

17 in subsection (a)(3), including an analysis of the 

18 provisions of law or regulation applicable to each 

19 such agency that refer to and require the use of 

20 credit ratings by the agency, and the policies and 

21 practices of each agency with respect to credit rat22 ings. 

23 (2) REPORT.—Not later than 1 year after the 

24 date of the enactment of this subtitle, the Comp25 troller General shall transmit to Congress a report 


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1 on the findings of the study conducted pursuant to 

2 paragraph (1), including recommendations for any 

3 legislation or rulemaking necessary or appropriate in 

4 order for such agencies to reduce their reliance on 

5 credit ratings. 

6 SEC. 6011. PUBLICATION OF RATING HISTORIES ON THE 

7 EDGAR SYSTEM. 

8 Not later than 180 days after the date of the enact9 ment of this subtitle, the Securities and Exchange Com10 mission shall revise its rules in section 240.17g-2(a) and 

11 (d) of title 17, Code of Federal Regulations, to require 

12 that the random sample of ratings histories of credit rat13 ings required under such rules to be disclosed on the 

14 website of a nationally recognized statistical rating organi15 zation also be provided to the Commission in a format con16 sistent with publication by the Commission on the 

17 EDGAR system. 

18 SEC. 6012. EFFECT OF RULE 436(G). 

19 Rule 436(g), promulgated by the Securities and Ex20 change Commission under the Securities Act of 1933, 

21 shall have no force or effect. 

22 SEC. 6013. STUDIES. 

23 (a) GAO STUDY.— 

24 (1) IN GENERAL.—The Comptroller General 

25 shall conduct a study of— 


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1 (A) the implementation of this subtitle and 

2 the amendments made by this subtitle by the 

3 Securities and Exchange Commission; 

4 (B) the appropriateness of relying on rat5 ings for use in Federal, State, and local securi6 ties and banking regulations, including for de7 termining capital requirements; and 

8 (C) the effect of liability in private actions 

9 arising under the Securities Exchange Act of 

10 1934; 

11 (D) alternative means for compensating 

12 credit rating agencies that would create incen13 tives for accurate credit ratings and what, if 

14 any, statutory changes would be required to 

15 permit or facilitate the use of such alternative 

16 means of compensation; and 

17 (E) alternative methodologies to assess 

18 credit risk, including market-based measures. 

19 (2) REPORT.—Not later than 30 months after 

20 the date of enactment of this subtitle, the Comp21 troller General shall submit to Congress and the Se22 curities Exchange Commission, a report containing 

23 the findings under the study required by subsection 

24 (a). 


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1 (b) SEC STUDY ON ASSIGNING CREDIT RATING

2 AGENCIES ON A ROTATING BASIS.—The Securities and 

3 Exchange Commission shall undertake a study on creating 

4 a system whereby nationally recognized statistical rating 

5 organizations are assigned on a rotating basis to issuers 

6 and obligors seeking a credit rating. Not later than 1 year 

7 after the date of enactment of this subtitle, the Securities 

8 and Exchange Commission shall transmit to Congress a 

9 report containing the findings of the study. 

10 (c) SEC STUDY ON EFFECT OF NEW REQUIRE11 MENTS ON NRSRO REGISTRATION.—The Securities and 

12 Exchange Commission shall conduct a study on the effect 

13 of the amendments made by section 2 on credit rating 

14 agencies seeking to register as nationally recognized sta15 tistical rating organizations, including whether the new re16 quirements in such amendments deter credit rating agen17 cies from registering as nationally recognized statistical 

18 rating organizations. Not later than 1 year after the date 

19 of enactment of this subtitle, the Commission shall trans20 mit to the Committee on Financial Services of the House 

21 of Representatives and the Committee on Banking, Hous22 ing, and Urban Affairs of the Senate a report on the find23 ings of such study. 

24 (d) STUDY OF CREDIT RATINGS OF DIFFERENT

25 CLASSES OF BONDS.— 


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1 (1) STUDY.—The Securities and Exchange 

2 Commission shall conduct a study of the treatment 

3 of different classes of bonds (municipal versus cor4 porate) by the nationally recognized statistical rating 

5 organizations. Such study shall examine— 

6 (A) whether there are fundamental dif7 ferences in the treatment of different classes of 

8 bonds by such rating organizations that cause 

9 some classes of bonds to suffer from undue dis10 crimination; 

11 (B) if there are such differences, what are 

12 the causes of such differences and how can they 

13 be alleviated; 

14 (C) whether there are factors other than 

15 risk of loss that are appropriate for the credit 

16 ratings agencies to consider when rating bonds, 

17 and do those factors vary across different sec18 tors 

19 (D) the types of financing arrangement 

20 used by municipal issuers 

21 (E) the differing legal and regulatory re22 gimes governing disclosures for corporate bonds 

23 and municipal bonds; 


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1 (F) the extent to which retail investors 

2 could be disadvantaged by a single ratings 

3 scale; and 

4 (G) practices, policies, and methodologies 

5 by the nationally recognized statistical rating 

6 organizations with respect to rating municipal 

7 bonds. 

8 (2) REPORT.—Within 6 months after the date 

9 of enactment of this subtitle, the Securities and Ex10 change Commission shall submit a report on the re11 sults of the study required by paragraph (1) to the 

12 Committee on Financial Services of the House of 

13 Representatives and the Committee on Banking, 

14 Housing, and Urban Development of the Senate. 

15 Such report shall include as assessment of each of 

16 the issues and subjects described in subparagraphs 

17 (A) through (G) of paragraph (1). 

18 (e) SEC STUDY ON MEANINGFUL MULTI DIGIT RAT19 ING SYMBOLS.— 

20 (1) STUDY.—The Securities and Exchange 

21 Commission shall conduct a study on the feasibility 

22 and desirability of implementing a standardized rat23 ing system whereby ratings symbols contain multiple 

24 characters, each representing a range of default 

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1 ized and increasingly severe levels of market stress. 

2 The study shall optimize the definitions of the sym3 bols to maximize their overall usefulness for users of 

4 credit ratings. 

5 (2) INITIAL EXAMPLE FOR GUIDANCE.—An ex6 ample to provide initial guidance for the study is a 

7 ratings symbol consisting of three digits, each of 

8 which corresponds to default probabilities under dif9 ferent levels of market stress as follows: 

10 (A) The first digit represents the default 

11 probability under ‘‘normal’’ market stress, char12 acterized by normal economic fluctuations in 

13 addition to a 5 percent decline in asset value 

14 and 2 percent increase in unemployment. 

15 (B) The second digit represents the default 

16 probability under more severe market stress, 

17 characterized a 20 percent decline in asset 

18 value and 5 percent increase in unemployment. 

19 (C) The third digit represents the default 

20 probability under extreme market stress, char21 acterized by a 50 percent decline in asset value 

22 and 10 percent increase in unemployment. 

23 (3) REPORT.—Not later than 1 year after the 

24 date of the enactment of this subtitle, the Commis25 sion shall transmit to Congress a report of the study 


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1 conducted pursuant to paragraph (1), including rec2 ommendations on whether the system similar to that 

3 described in paragraph (2) should be implemented 

4 and, if so, any necessary legislation required to im5 plement such a system. 

6 (f) SEC STUDY ON RATINGS STANDARDIZATION.— 

7 (1) IN GENERAL.—The Securities and Ex8 change Commission shall undertake a study on the 

9 feasability and desirability of— 

10 (A) standardizing credit ratings termi11 nology, so that all credit rating agencies issue 

12 credit ratings using identical terms; 

13 (B) standardizing the market stress condi14 tions under which ratings are evaluated; 

15 (C) requiring a quantitative correspond16 ence between credit ratings and a range of de17 fault probabilities and loss expectations under 

18 standardized conditions of economic stress; and 

19 (D) standardizing credit rating termi20 nology across asset classes, so that named rat21 ings shall correspond to a standard range of de22 fault probabilities and expected losses inde23 pendent of asset class and issuing entity. 

24 (2) REPORT.—Not later than 1 year after the 

25 date of enactment of this subtitle, the Securities and 


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1 Exchange Commission shall transmit to Congress a 

2 report containing the findings of the study and the 

3 recommendations of the Commission. 

4 Subtitle C—Investor Protection Act 

5 SEC. 7001. SHORT TITLE. 

6 This subtitle may be cited as the ‘‘Investor Protection 

7 Act of 2009’’. 

8 PART 1—DISCLOSURE 

9 SEC. 7101. INVESTOR ADVISORY COMMITTEE ESTAB10 LISHED. 

11 The Securities Exchange Act of 1934 (15 U.S.C. 78a 

12 et seq.) is amended by adding after section 4C the fol13 lowing new section: 

14 ‘‘SEC. 4D. INVESTOR ADVISORY COMMITTEE. 

15 ‘‘(a) ESTABLISHMENT AND PURPOSE.—There is es16 tablished an Investor Advisory Committee (in this section 

17 referred to as the ‘Committee’) to advise and consult with 

18 the Commission on— 

19 ‘‘(1) regulatory priorities and issues regarding 

20 new products, trading strategies, fee structures and 

21 the effectiveness of disclosures; 

22 ‘‘(2) initiatives to protect investor interest; and 

23 ‘‘(3) initiatives to promote investor confidence 

24 in the integrity of the marketplace. 

25 ‘‘(b) MEMBERSHIP.— 


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1 ‘‘(1) APPOINTMENT.—The Chairman of the 

2 Commission shall appoint the members of the Com3 mittee, which members shall— 

4 ‘‘(A) represent the interests of individual 

5 investors; 

6 ‘‘(B) represent the interests of institutional 

7 investors; and 

8 ‘‘(C) use a wide range of investment ap9 proaches. 

10 ‘‘(2) MEMBERS NOT COMMISSION EMPLOY11 EES.—Members shall not be considered employees or 

12 agents of the Commission solely because of member13 ship on the Committee. 

14 ‘‘(c) MEETINGS.—The Committee shall meet from 

15 time to time at the call of the Commission, but, at a min16 imum, shall meet at least twice each year. 

17 ‘‘(d) COMPENSATION AND TRAVEL EXPENSES.— 

18 Members of the Committee who are not full-time employ19 ees of the United States shall— 

20 ‘‘(1) be entitled to receive compensation at a 

21 rate fixed by the Commission while attending meet22 ings of the Committee, including travel time; and 

23 ‘‘(2) be allowed travel expenses, including trans24 portation and subsistence, while away from their 

25 homes or regular places of business. 


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1 ‘‘(e) COMMITTEE FINDINGS.—Nothing in this section 

2 requires the Commission to accept, agree, or act upon the 

3 findings or recommendations of the Committee. 

4 ‘‘(f) AUTHORIZATION OF APPROPRIATIONS.—There 

5 is authorized to be appropriated to the Commission such 

6 sums as are necessary for the activities of the Com7 mittee.’’. 

8 SEC. 7102. CLARIFICATION OF THE COMMISSION’S AUTHOR9 ITY TO ENGAGE IN CONSUMER TESTING. 

10 (a) AMENDMENT TO SECURITIES ACT OF 1933.— 

11 Section 19 of the Securities Act of 1933 (15 U.S.C. 77s) 

12 is amended by adding at the end the following new sub13 section: 

14 ‘‘(e) For the purposes of evaluating its rules and pro15 grams and for considering, proposing, adopting, or engag16 ing in rules or programs, the Commission is authorized 

17 to gather information, communicate with investors or 

18 other members of the public, and engage in such tem19 porary or experimental programs as the Commission in its 

20 discretion determines is in the public interest or for the 

21 protection of investors. The Commission may delegate to 

22 its staff some or all of the authority conferred by this sub23 section.’’. 

24 (b) AMENDMENT TO SECURITIES EXCHANGE ACT OF

25 1934.—Section 23 of the Securities Exchange Act of 1934 


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1 (15 U.S.C. 78w) is amended by redesignating subsections 

2 (b), (c), and (d) as subsections (c), (d), and (e), respec3 tively, and inserting after subsection (a) the following: 

4 ‘‘(b) For the purposes of evaluating its rules and pro5 grams and for considering proposing, adopting, or engag6 ing in rules or programs, the Commission is authorized 

7 to gather information, communicate with investors or 

8 other members of the public, and engage in such tem9 porary or experimental programs as the Commission in its 

10 discretion determines is in the public interest or for the 

11 protection of investors. The Commission may delegate to 

12 its staff some or all of the authority conferred by this sub13 section.’’. 

14 (c) AMENDMENT TO INVESTMENT COMPANY ACT OF

15 1940.—Section 38 of the Investment Company Act of 

16 1940 (15 U.S.C. 80a–38) is amended by adding at the 

17 end the following new subsection: 

18 ‘‘(d) GATHERING INFORMATION.—For the purposes 

19 of evaluating its rules and programs and for considering 

20 proposing, adopting, or engaging in rules or programs, the 

21 Commission is authorized to gather information, commu22 nicate with investors or other members of the public, and 

23 engage in such temporary or experimental programs as 

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1 sion may delegate to its staff some or all of the authority 

2 conferred by this subsection.’’. 

3 (d) AMENDMENT TO THE INVESTMENT ADVISERS

4 ACT OF 1940.—Section 211 of the Investment Advisers 

5 Act of 1940 (15 U.S.C. 80b–11) (as amended by section 

6 5008(2)) is further amended by adding at the end the fol7 lowing new subsection: 

8 ‘‘(f) For the purposes of evaluating its rules and pro9 grams and for considering proposing, adopting, or engag10 ing in rules or programs, the Commission is authorized 

11 to gather information, communicate with investors or 

12 other members of the public, and engage in such tem13 porary or experimental programs as the Commission in its 

14 discretion determines is in the public interest or for the 

15 protection of investors. The Commission may delegate to 

16 its staff some or all of the authority conferred by this sub17 section.’’. 

18 SEC. 7103. ESTABLISHMENT OF A FIDUCIARY DUTY FOR 

19 BROKERS, DEALERS, AND INVESTMENT AD20 VISERS, AND HARMONIZATION OF REGULA21 TION. 

22 (a) IN GENERAL.— 

23 (1) SECURITIES EXCHANGE ACT OF 1934.—Sec24 tion 15 of the Securities Exchange Act of 1934 (15 

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1 ther amended by adding at the end the following 

2 new subsections: 

3 ‘‘(m) STANDARD OF CONDUCT.— 

4 ‘‘(1) IN GENERAL.—Notwithstanding any other 

5 provision of this Act or the Investment Advisers Act 

6 of 1940, the Commission shall promulgate rules to 

7 provide that, with respect to a broker or dealer, 

8 when providing personalized investment advice about 

9 securities to a retail customer (and such other cus10 tomers as the Commission may by rule provide), the 

11 standard of conduct for such broker or dealer with 

12 respect to such customer shall be the same as the 

13 standard of conduct applicable to an investment ad14 viser under the Investment Advisers Act of 1940. 

15 The receipt of compensation based on commission or 

16 other standard compensation for the sale of securi17 ties shall not, in and of itself, be considered a viola18 tion of such standard applied to a broker or dealer. 

19 ‘‘(2) DISCLOSURE OF RANGE OF PRODUCTS OF20 FERED.—Where a broker or dealer sells only propri21 etary or other limited range of products, as deter22 mined by the Commission, the Commission shall by 

23 rule require that such broker or dealer provide no24 tice to each retail customer and obtain the consent 

25 or acknowledgment of the customer. The sale of only 


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1 proprietary or other limited range of products by a 

2 broker or dealer shall not, in and of itself, be consid3 ered a violation of the standard set forth in para4 graph (1). 

5 ‘‘(3) RETAIL CUSTOMER DEFINED.—For pur6 poses of this subsection, the term ‘retail customer’ 

7 means a natural person, or the legal representative 

8 of such natural person, who— 

9 ‘‘(A) receives personalized investment ad10 vice about securities from a broker or dealer; 

11 and 

12 ‘‘(B) uses such advice primarily for per13 sonal, family, or household purposes. 

14 ‘‘(n) OTHER MATTERS.—The Commission shall— 

15 ‘‘(1) facilitate the provision of simple and clear 

16 disclosures to investors regarding the terms of their 

17 relationships with brokers, dealers, and investment 

18 advisers, including any material conflicts of interest; 

19 and 

20 ‘‘(2) examine and, where appropriate, promul21 gate rules prohibiting or restricting certain sales 

22 practices, conflicts of interest, and compensation 

23 schemes for brokers, dealers, and investment advis24 ers that the Commission deems contrary to the pub25 lic interest and the protection of investors.’’. 


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1 (3) INVESTMENT ADVISERS ACT OF 1940.—Sec2 tion 211 of the Investment Advisers Act of 1940, as 

3 amended by section 7102(d), is further amended by 

4 adding at the end the following new subsections: 

5 ‘‘(g) STANDARD OF CONDUCT.— 

6 ‘‘(1) IN GENERAL.—The Commission shall pro7 mulgate rules to provide that the standard of con8 duct for all brokers, dealers, and investment advis9 ers, when providing personalized investment advice 

10 about securities to retail customers (and such other 

11 customers as the Commission may by rule provide), 

12 shall be to act in the best interest of the customer 

13 without regard to the financial or other interest of 

14 the broker, dealer, or investment adviser providing 

15 the advice. In accordance with such rules, any mate16 rial conflicts of interest shall be disclosed and may 

17 be consented to by the customer. Such rules shall 

18 provide that such standard of conduct shall be no 

19 less stringent than the standard applicable to invest20 ment advisers under section 206(1) and (2) of this 

21 Act when providing personalized investment advice 

22 about securities, except the Commission shall not as23 cribe a meaning to the term ‘customer’ that would 

24 include an investor in a private fund managed by an 

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1 tered into an advisory contract with such adviser. 

2 The receipt of compensation based on commission or 

3 fees shall not, in and of itself, be considered a viola4 tion of such standard applied to a broker, dealer, or 

5 investment adviser. 

6 ‘‘(2) RETAIL CUSTOMER DEFINED.—For pur7 poses of this subsection, the term ‘retail customer’ 

8 means a natural person, or the legal representative 

9 of such natural person, who— 

10 ‘‘(A) receives personalized investment ad11 vice about securities from a broker, dealer, or 

12 investment adviser; and 

13 ‘‘(B) uses such advice primarily for per14 sonal, family, or household purposes. 

15 ‘‘(h) OTHER MATTERS.—The Commission shall— 

16 ‘‘(1) facilitate the provision of simple and clear 

17 disclosures to investors regarding the terms of their 

18 relationships with brokers, dealers, and investment 

19 advisers, including any material conflicts of interest; 

20 and 

21 ‘‘(2) examine and, where appropriate, promul22 gate rules prohibiting or restricting certain sales 

23 practices, conflicts of interest, and compensation 

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1 ers that the Commission deems contrary to the pub2 lic interest and the protection of investors.’’. 

3 (b) HARMONIZATION OF ENFORCEMENT.— 

4 (1) SECURITIES EXCHANGE ACT OF 1934.—Sec5 tion 15 of the Securities Exchange Act of 1934, as 

6 amended by subsection (a)(1), is further amended by 

7 adding at the end the following new subsection: 

8 ‘‘(o) HARMONIZATION OF ENFORCEMENT.—The en9 forcement authority of the Commission with respect to vio10 lations of the standard of conduct applicable to a broker 

11 or dealer providing personalized investment advice about 

12 securities to a retail customer shall include— 

13 ‘‘(1) the enforcement authority of the Commis14 sion with respect to such violations provided under 

15 this Act, and 

16 ‘‘(2) the enforcement authority of the Commis17 sion with respect to violations of the standard of 

18 conduct applicable to an investment advisor under 

19 the Investment Advisers Act of 1940, including the 

20 authority to impose sanctions for such violations, 

21 and 

22 the Commission shall seek to prosecute and sanction viola23 tors of the standard of conduct applicable to a broker or 

24 dealer providing personalized investment advice about se25 curities to a retail customer under this Act to same extent 


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1 as the Commission prosecutes and sanctions violators of 

2 the standard of conduct applicable to an investment advi3 sor under the Investment Advisers Act of 1940.’’. 

4 (2) INVESTMENT ADVISERS ACT OF 1940.—Sec5 tion 211 of the Investment Advisers Act of 1940, as 

6 amended by subsection (a)(2), is further amended by 

7 adding at the end the following new subsection: 

8 ‘‘(i) HARMONIZATION OF ENFORCEMENT.—The en9 forcement authority of the Commission with respect to vio10 lations of the standard of conduct applicable to an invest11 ment adviser shall include— 

12 ‘‘(1) the enforcement authority of the Commis13 sion with respect to such violations provided under 

14 this Act, and 

15 ‘‘(2) the enforcement authority of the Commis16 sion with respect to violations of the standard of 

17 conduct applicable to a broker or dealer providing 

18 personalized investment advice about securities to a 

19 retail customer under the Securities Exchange Act 

20 of 1934, including the authority to impose sanctions 

21 for such violations, and 

22 the Commission shall seek to prosecute and sanction viola23 tors of the standard of conduct applicable to an invest24 ment advisor under this Act to same extent as the Com25 mission prosecutes and sanctions violators of the standard 


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1 of conduct applicable to a broker or dealer providing per2 sonalized investment advice about securities to a retail 

3 customer under the Securities Exchange Act of 1934.’’. 

4 SEC. 7104. COMMISSION STUDY ON DISCLOSURE TO RETAIL 

5 CUSTOMERS BEFORE PURCHASE OF PROD6 UCTS OR SERVICES. 

7 (a) STUDY REQUIRED.—Prior to proposing any rules 

8 or regulations pursuant to subsection (b)(1) regarding the 

9 manner in which investment products or services are sold 

10 or provided in the United States to retail customers or 

11 the information that must be provided to retail customers 

12 prior to the purchase of such products or services, and 

13 within 180 days after the date of the enactment of this 

14 subtitle, the Securities and Exchange Commission shall 

15 publish a study that examines— 

16 (1) the nature of a ‘‘retail customer’’, taking 

17 into consideration the definition in section 15(k) of 

18 the Securities Exchange Act of 1934 (15 U.S.C. 

19 78o), as amended by section 7103 of this subtitle; 

20 (2) the range of products and services sold or 

21 provided to retail customers, and the sellers or pro22 viders of such products and services, that are within 

23 the Commission’s jurisdiction; 

24 (3) how such products and services are sold or 

25 provided to retail customers, the fees charged for 


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1 such products and services, and the conflicts of in2 terest that may arise during the sales process or 

3 provision of services; 

4 (4) information that retail customers should re5 ceive prior to purchasing each product or service, 

6 and the appropriate person or entity to provide such 

7 information; and 

8 (5) ways to ensure that, where possible, reason9 ably similar products and services are subject to 

10 similar regulatory treatment, including with respect 

11 to information that must be provided to retail cus12 tomers prior to the purchase of such products or 

13 services and how such information is provided. 

14 (b) RULEMAKING.— 

15 (1) Notwithstanding any other provision of the 

16 Securities Act of 1933 (15 U.S.C. 77a et seq.) or 

17 the Investment Company Act of 1940 (15 U.S.C. 

18 80a–1 et seq.), following completion of the study re19 quired by subsection (a), the Commission is author20 ized to promulgate rules to require that the appro21 priate persons or entities provide designated docu22 ments or information to retail customers prior to the 

23 purchase of identified investment products or serv24 ices. Any such rules shall— 


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1 (A) take into account the findings of the 

2 study conducted pursuant to subsection (a); 

3 (B) take into consideration, to the extent 

4 possible, the need for such documents and in5 formation to be consistent and comparable 

6 across investment products or services sold or 

7 provided to retail customers; and 

8 (C) reduce, to the extent possible, disrup9 tions to the purchase process for investment 

10 products and services sold or provided to retail 

11 customers, by means such as permitting re12 quired disclosures to be made via the Internet. 

13 (2) Notwithstanding paragraph (1), the Com14 mission is authorized to promulgate rules in connec15 tion with— 

16 (A) the implementation of section 7103; 

17 and 

18 (B) disclosure to retail customers other 

19 than in connection with the purchase of invest20 ment products or services. 

21 SEC. 7105. BENEFICIAL OWNERSHIP AND SHORT-SWING 

22 PROFIT REPORTING. 

23 (a) BENEFICIAL OWNERSHIP REPORTING.—Section 

24 13 of the Securities Exchange Act of 1934 (15 U.S.C. 

25 78m) is amended— 


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1 (1) in subsection (d)(1)— 

2 (A) by inserting after ‘‘within ten days 

3 after such acquisition’’ the following: ‘‘or within 

4 such shorter time as the Commission may es5 tablish by rule’’; and 

6 (B) by striking ‘‘send to the issuer of the 

7 security at its principal executive office, by reg8 istered or certified mail, send to each exchange 

9 where the security is traded, and’’; 

10 (2) in subsection (d)(2)— 

11 (A) by striking ‘‘in the statements to the 

12 issuer and the exchange, and’’; and 

13 (B) by striking ‘‘shall be transmitted to 

14 the issuer and the exchange and’’; 

15 (3) in subsection (g)(1), by striking ‘‘shall send 

16 to the issuer of the security and’’; and 

17 (4) in subsection (g)(2)— 

18 (A) by striking ‘‘sent to the issuer and’’; 

19 and 

20 (B) by striking ‘‘shall be transmitted to 

21 the issuer and’’. 

22 (b) SHORT-SWING PROFIT REPORTING.—Section 

23 16(a) of the Securities Exchange Act of 1934 (15 U.S.C. 

24 78p(a)) is amended— 


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1 (1) in paragraph (1), by striking ‘‘(and, if such 

2 security is registered on a national securities ex3 change, also with the exchange)’’; and 

4 (2) in paragraph (2)(B), by inserting after ‘‘of5 ficer’’ the following: ‘‘, or within such shorter time 

6 as the Commission may establish by rule’’. 

7 SEC. 7106. REVISION TO RECORDKEEPING RULES. 

8 (a) INVESTMENT COMPANY ACT OF 1940 AMEND9 MENTS.—Section 31 of the Investment Company Act of 

10 1940 (15 U.S.C. 80a–30) is amended— 

11 (1) in subsection (a)(1), by adding at the end 

12 the following: ‘‘Each person with custody or use of 

13 a registered investment company’s securities, depos14 its, or credits shall maintain and preserve all records 

15 that relate to the person’s custody or use of the reg16 istered investment company’s securities, deposits, or 

17 credits for such period or periods as the Commis18 sion, by rules and regulations, may prescribe as nec19 essary or appropriate in the public interest or for 

20 the protection of investors.’’; and 

21 (2) in subsection (b), by adding at the end the 

22 following new paragraph: 

23 ‘‘(4) RECORDS OF PERSONS WITH CUSTODY OR

24 USE.— 


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1 ‘‘(A) IN GENERAL.—Notwithstanding para2 graph (1), records of persons with custody or 

3 use of a registered investment company’s secu4 rities, deposits, or credits, that relate to such 

5 custody or use, are subject at any time, or from 

6 time to time, to such reasonable periodic, spe7 cial, or other examinations and other informa8 tion and document requests by representatives 

9 of the Commission as the Commission deems 

10 necessary or appropriate in the public interest 

11 or for the protection of investors. 

12 ‘‘(B) CERTAIN PERSONS SUBJECT TO

13 OTHER REGULATION.—Persons subject to regu14 lation and examination by a Federal financial 

15 institution regulatory agency (as such term is 

16 defined under section 212(c)(2) of title 18, 

17 United States Code) may satisfy any examina18 tion request, information request, or document 

19 request described under subparagraph (A), by 

20 providing the Commission with a detailed list21 ing, in writing, of the registered investment 

22 company’s securities, deposits, or credits within 

23 such person’s custody or use.’’. 

24 (b) INVESTMENT ADVISERS ACT OF 1940 AMEND25 MENT.—Section 204 of the Investment Advisers Act of 


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1 1940 (15 U.S.C. 80b–4) is amended by adding at the end 

2 the following new subsection: 

3 ‘‘(d) RECORDS OF PERSONS WITH CUSTODY OR

4 USE.— 

5 ‘‘(1) IN GENERAL.—Records of persons with 

6 custody or use of a client’s securities, deposits, or 

7 credits, that relate to such custody or use, are sub8 ject at any time, or from time to time, to such rea9 sonable periodic, special, or other examinations and 

10 other information and document requests by rep11 resentatives of the Commission as the Commission 

12 deems necessary or appropriate in the public interest 

13 or for the protection of investors. 

14 ‘‘(2) CERTAIN PERSONS SUBJECT TO OTHER

15 REGULATION.—Persons subject to regulation and ex16 amination by a Federal financial institution regu17 latory agency (as such term is defined under section 

18 212(c)(2) of title 18, United States Code) may sat19 isfy any examination request, information request, 

20 or document request described under paragraph (1), 

21 by providing the Commission with a detailed listing, 

22 in writing, of the client’s securities, deposits, or 

23 credits within such person’s custody or use.’’. 


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1 SEC. 7107. STUDY ON ENHANCING INVESTMENT ADVISOR 

2 EXAMINATIONS. 

3 (a) STUDY REQUIRED.— 

4 (1) IN GENERAL.—The Commission shall review 

5 and analyze the need for enhanced examination and 

6 enforcement resources for investment advisers. 

7 (2) AREAS OF CONSIDERATION.—The study re8 quired by this subsection shall examine— 

9 (A) the number and frequency of examina10 tions of investment advisers by the Commission 

11 over the 5 years preceding the date of the en12 actment of this subtitle; 

13 (B) the extent to which having Congress 

14 authorize the Commission to designate one or 

15 more self-regulatory organizations to augment 

16 the Commission’s efforts in overseeing invest17 ment advisers would improve the frequency of 

18 examinations of investment advisers; and 

19 (C) current and potential approaches to ex20 amining the investment advisory activities of 

21 dually registered broker-dealers and investment 

22 advisers or affiliated broker-dealers and invest23 ment advisers. 

24 (b) REPORT REQUIRED.—The Commission shall re25 port its findings to the Committee on Financial Services 

26 of the House of Representatives and the Committee on 


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1 Banking, Housing, and Urban Affairs of the Senate, not 

2 later than 180 days after the date of enactment of this 

3 subtitle, and shall use such findings to revise its rules and 

4 regulations, as necessary. The report shall include a dis5 cussion of regulatory or legislative steps that are rec6 ommended or that may be necessary to address concerns 

7 identified in the study. 

8 SEC. 7108. GAO STUDY OF FINANCIAL PLANNING. 

9 (a) STUDY REQUIRED.—The Comptroller General of 

10 the United States shall conduct a study on the regulation 

11 and oversight of financial planning. The study shall con12 sider— 

13 (1) the unique role of financial planners in pro14 viding comprehensive advice in investment planning, 

15 income tax planning, education planning, retirement 

16 planning, estate planning, risk management, and 

17 other areas with respect to the management of fi18 nancial resources; and 

19 (2) any gaps in the regulation of financial plan20 ners given existing State and Federal regulation of 

21 financial planning activities and the need to provide 

22 related consumer protections for such financial plan23 ning activities. 

24 (b) REPORT.—Not later than the end of the 180-day 

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1 title, the Comptroller General of the United States shall 

2 submit to the Congress a report containing the findings 

3 and determinations made by the Comptroller General in 

4 carrying out the study required under subsection (a), in5 cluding recommendations for the appropriate regulation 

6 of, or standards for, financial planners as a profession and 

7 how such regulations or standards should be established. 

8 PART 2—ENFORCEMENT AND REMEDIES 

9 SEC. 7201. AUTHORITY TO RESTRICT MANDATORY PRE-DIS10 PUTE ARBITRATION. 

11 (a) AMENDMENT TO SECURITIES EXCHANGE ACT OF

12 1934.—Section 15 of the Securities Exchange Act of 1934 

13 (15 U.S.C. 78o), as amended by section 7103, is further 

14 amended by adding at the end the following new sub15 section: 

16 ‘‘(p) AUTHORITY TO RESTRICT MANDATORY PRE17 DISPUTE ARBITRATION.—The Commission, by rule, may 

18 prohibit, or impose conditions or limitations on the use 

19 of, agreements that require customers or clients of any 

20 broker, dealer, or municipal securities dealer to arbitrate 

21 any future dispute between them arising under the Fed22 eral securities laws, the rules and regulations thereunder, 

23 or the rules of a self-regulatory organization if it finds 

24 that such prohibition, imposition of conditions, or limitaVerDate Nov 24 2008 22:04 Dec 02, 2009 Jkt 089200 PO 00000 Frm 01105 Fmt 6652 Sfmt 6201 E:\BILLS\H4173.IH H4173

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1 tions are in the public interest and for the protection of 

2 investors.’’. 

3 (b) AMENDMENT TO INVESTMENT ADVISERS ACT OF

4 1940.—Section 205 of the Investment Advisers Act of 

5 1940 (15 U.S.C. 80b–5) is amended by adding at the end 

6 the following new subsection: 

7 ‘‘(f) AUTHORITY TO RESTRICT MANDATORY PRE8 DISPUTE ARBITRATION.—The Commission, by rule, may 

9 prohibit, or impose conditions or limitations on the use 

10 of, agreements that require customers or clients of any 

11 investment adviser to arbitrate any future dispute between 

12 them arising under the Federal securities laws, the rules 

13 and regulations thereunder, or the rules of a self-regu14 latory organization if it finds that such prohibition, impo15 sition of conditions, or limitations are in the public inter16 est and for the protection of investors.’’. 

17 SEC. 7202. COMPTROLLER GENERAL STUDY TO REVIEW SE18 CURITIES ARBITRATION SYSTEM. 

19 (a) STUDY.—The Comptroller General of the United 

20 States shall conduct a study to review— 

21 (1) the costs to parties of an arbitration pro22 ceeding using the arbitration system operated by the 

23 Financial Industry Regulatory Authority and over24 seen by the Securities and Exchange Commission as 

25 compared to litigation; 


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1 (2) the percentage of recovery of the total 

2 amount of a claim in an arbitration proceeding using 

3 the arbitration system operated by the Financial In4 dustry Regulatory Authority and overseen by the Se5 curities and Exchange Commission; and 

6 (3) other additional issues as may be raised 

7 during the course of the study conducted under this 

8 subsection. 

9 (b) REPORT.—Not later than 1 year after the date 

10 of enactment of this subtitle, the Comptroller General of 

11 the United States shall submit to the Committee on Fi12 nancial Services of the House of Representatives and the 

13 Committee on Banking, Housing, and Urban Affairs of 

14 the Senate a report on the results of the study required 

15 by subsection (a), including in such report recommenda16 tions for improvements to the arbitration system ref17 erenced in such subsection. 

18 SEC. 7203. WHISTLEBLOWER PROTECTION. 

19 (a) IN GENERAL.—The Securities Exchange Act of 

20 1934 (15 U.S.C. 78a et seq.) is amended by adding after 

21 section 21E the following new section: 

22 ‘‘SEC. 21F. SECURITIES WHISTLEBLOWER INCENTIVES AND 

23 PROTECTION. 

24 ‘‘(a) IN GENERAL.—In any judicial or administrative 

25 action brought by the Commission under the securities 


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1 laws that results in monetary sanctions exceeding 

2 $1,000,000, the Commission, under regulations prescribed 

3 by the Commission and subject to subsection (b), may pay 

4 an award or awards not exceeding an amount equal to 30 

5 percent, in total, of the monetary sanctions imposed in the 

6 action or related actions to one or more whistleblowers 

7 who voluntarily provided original information to the Com8 mission that led to the successful enforcement of the ac9 tion. Any amount payable under the preceding sentence 

10 shall be paid from the fund described in subsection (f). 

11 ‘‘(b) DETERMINATION OF AMOUNT OF AWARD; DE12 NIAL OF AWARD.— 

13 ‘‘(1) DETERMINATION OF AMOUNT OF

14 AWARD.—The determination of the amount of an 

15 award, within the limit specified in subsection (a), 

16 shall be in the sole discretion of the Commission. 

17 The Commission may take into account the signifi18 cance of the whistleblower’s information to the suc19 cess of the judicial or administrative action described 

20 in subsection (a), the degree of assistance provided 

21 by the whistleblower and any legal representative of 

22 the whistleblower in such action, the Commission’s 

23 programmatic interest in deterring violations of the 

24 securities laws by making awards to whistleblowers 

25 who provide information that leads to the successful 


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1 enforcement of such laws, and such additional fac2 tors as the Commission may establish by rules or 

3 regulations. 

4 ‘‘(2) DENIAL OF AWARD.—No award under 

5 subsection (a) shall be made— 

6 ‘‘(A) to any whistleblower who is, or was at 

7 the time he or she acquired the original infor8 mation submitted to the Commission, a mem9 ber, officer, or employee of any appropriate reg10 ulatory agency, the Department of Justice, the 

11 Public Company Accounting Oversight Board, 

12 or a self-regulatory organization; 

13 ‘‘(B) to any whistleblower who is convicted 

14 of a criminal violation related to the judicial or 

15 administrative action for which the whistle16 blower otherwise could receive an award under 

17 this section; or 

18 ‘‘(C) to any whistleblower who fails to sub19 mit information to the Commission in such 

20 form as the Commission may, by rule, require. 

21 ‘‘(c) REPRESENTATION.— 

22 ‘‘(1) PERMITTED REPRESENTATION.—Any 

23 whistleblower who makes a claim for an award under 

24 subsection (a) may be represented by counsel. 


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1 ‘‘(2) REQUIRED REPRESENTATION.—Any whis2 tleblower who makes a claim for an award under 

3 subsection (a) must be represented by counsel if the 

4 whistleblower submits the information upon which 

5 the claim is based anonymously. Prior to the pay6 ment of an award, the whistleblower must disclose 

7 his or her identity and provide such other informa8 tion as the Commission may require. 

9 ‘‘(d) NO CONTRACT NECESSARY.—No contract with 

10 the Commission is necessary for any whistleblower to re11 ceive an award under subsection (a), unless the Commis12 sion, by rule or regulation, so requires. 

13 ‘‘(e) APPEALS.—Any determinations under this sec14 tion, including whether, to whom, or in what amounts to 

15 make awards, shall be in the sole discretion of the Com16 mission, and any such determinations shall be final and 

17 not subject to judicial review. 

18 ‘‘(f) INVESTOR PROTECTION FUND.— 

19 ‘‘(1) FUND ESTABLISHED.—There is estab20 lished in the Treasury of the United States a fund 

21 to be known as the ‘Securities and Exchange Com22 mission Investor Protection Fund’ (referred to in 

23 this section as the ‘Fund’). 

24 ‘‘(2) USE OF FUND.—The Fund shall be avail25 able to the Commission, without further appropriaVerDate Nov 24 2008 22:04 Dec 02, 2009 Jkt 089200 PO 00000 Frm 01110 Fmt 6652 Sfmt 6201 E:\BILLS\H4173.IH H4173

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1 tion or fiscal year limitation, for the following pur2 poses: 

3 ‘‘(A) Paying awards to whistleblowers as 

4 provided in subsection (a). 

5 ‘‘(B) Funding investor education initiatives 

6 designed to help investors protect themselves 

7 against securities fraud or other violations of 

8 the securities laws, or the rules and regulations 

9 thereunder. 

10 ‘‘(3) DEPOSITS AND CREDITS.—There shall be 

11 deposited into or credited to the Fund— 

12 ‘‘(A) any monetary sanction collected by 

13 the Commission in any judicial or administra14 tive action brought by the Commission under 

15 the securities laws that is not added to a 

16 disgorgement fund or other fund pursuant to 

17 section 308 of the Sarbanes-Oxley Act of 2002 

18 or otherwise distributed to victims of a violation 

19 of the securities laws, or the rules and regula20 tions thereunder, underlying such action, unless 

21 the balance of the Fund at the time the mone22 tary sanction is collected exceeds $100,000,000; 

23 ‘‘(B) any monetary sanction added to a 

24 disgorgement fund or other fund pursuant to 

25 section 308 of the Sarbanes-Oxley Act of 2002 


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1 that is not distributed to the victims for whom 

2 the disgorgement fund or other fund was estab3 lished, unless the balance of the Fund at the 

4 time the determination is made not to dis5 tribute the monetary sanction to such victims 

6 exceeds $100,000,000; and 

7 ‘‘(C) all income from investments made 

8 under paragraph (4). 

9 ‘‘(4) INVESTMENTS.— 

10 ‘‘(A) AMOUNTS IN FUND MAY BE IN11 VESTED.—The Commission may request the 

12 Secretary of the Treasury to invest the portion 

13 of the Fund that is not, in the Commission’s 

14 judgment, required to meet the current needs of 

15 the Fund. 

16 ‘‘(B) ELIGIBLE INVESTMENTS.—Invest17 ments shall be made by the Secretary of the 

18 Treasury in obligations of the United States or 

19 obligations that are guaranteed as to principal 

20 and interest by the United States, with matu21 rities suitable to the needs of the Fund as de22 termined by the Commission. 

23 ‘‘(C) INTEREST AND PROCEEDS CRED24 ITED.—The interest on, and the proceeds from 

25 the sale or redemption of, any obligations held 


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1 in the Fund shall be credited to, and form a 

2 part of, the Fund. 

3 ‘‘(5) REPORTS TO CONGRESS.—Not later than 

4 October 30 of each year, the Commission shall 

5 transmit to the Committee on Banking, Housing, 

6 and Urban Affairs of the Senate, and the Committee 

7 on Financial Services of the House of Representa8 tives a report on— 

9 ‘‘(A) the Commission’s whistleblower 

10 award program under this section, including a 

11 description of the number of awards that were 

12 granted and the types of cases in which awards 

13 were granted during the preceding fiscal year; 

14 ‘‘(B) investor education initiatives de15 scribed in paragraph (2)(B) that were funded 

16 by the Fund during the preceding fiscal year; 

17 ‘‘(C) the balance of the Fund at the begin18 ning of the preceding fiscal year; 

19 ‘‘(D) the amounts deposited into or cred20 ited to the Fund during the preceding fiscal 

21 year; 

22 ‘‘(E) the amount of earnings on invest23 ments of amounts in the Fund during the pre24 ceding fiscal year; 


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1 ‘‘(F) the amount paid from the Fund dur2 ing the preceding fiscal year to whistleblowers 

3 pursuant to subsection (a); 

4 ‘‘(G) the amount paid from the Fund dur5 ing the preceding fiscal year for investor edu6 cation initiatives described in paragraph (1)(B); 

7 ‘‘(H) the balance of the Fund at the end 

8 of the preceding fiscal year; and 

9 ‘‘(I) a complete set of audited financial 

10 statements, including a balance sheet, income 

11 statement, and cash flow analysis. 

12 ‘‘(g) PROTECTION OF WHISTLEBLOWERS.— 

13 ‘‘(1) PROHIBITION AGAINST RETALIATION.— 

14 ‘‘(A) IN GENERAL.—No employer may dis15 charge, demote, suspend, threaten, harass, or in 

16 any other manner discriminate against an em17 ployee, contractor, or agent in the terms and 

18 conditions of employment because of any lawful 

19 act done by the employee, contractor, or agent 

20 in providing information to the Commission in 

21 accordance with subsection (a), or in assisting 

22 in any investigation or judicial or administrative 

23 action of the Commission based upon or related 

24 to such information. 

25 ‘‘(B) ENFORCEMENT.— 


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1 ‘‘(i) CAUSE OF ACTION.—An indi2 vidual who alleges discharge or other dis3 crimination in violation of subparagraph 

4 (A) may bring an action under this sub5 section in the appropriate district court of 

6 the United States for the relief provided in 

7 subparagraph (C). 

8 ‘‘(ii) SUBPOENAS.—A subpoena re9 quiring the attendance of a witness at a 

10 trial or hearing conducted under this sec11 tion may be served at any place in the 

12 United States. 

13 ‘‘(iii) STATUTE OF LIMITATIONS.—An 

14 action under this subsection may not be 

15 brought more than 6 years after the date 

16 on which the violation of subparagraph (A) 

17 occurred, or more than 3 years after the 

18 date when facts material to the right of ac19 tion are known or reasonably should have 

20 been known by the employee alleging a vio21 lation of subparagraph (A), but in no event 

22 after 10 years after the date on which the 

23 violation occurs. 

24 ‘‘(C) RELIEF.—An employee, contractor, 

25 or agent prevailing in any action brought under 


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1 subparagraph (B) shall be entitled to all relief 

2 necessary to make that employee, contractor, or 

3 agent whole, including reinstatement with the 

4 same seniority status that the employee, con5 tractor, or agent would have had, but for the 

6 discrimination, 2 times the amount of back pay, 

7 with interest, and compensation for any special 

8 damages sustained as a result of the discrimi9 nation, including litigation costs, expert witness 

10 fees, and reasonable attorneys’ fees. 

11 ‘‘(2) CONFIDENTIALITY.— 

12 ‘‘(A) IN GENERAL.—Except as provided in 

13 subparagraph (B), all information provided to 

14 the Commission by a whistleblower shall be con15 fidential and privileged as an evidentiary matter 

16 (and shall not be subject to civil discovery or 

17 other legal process) in any proceeding in any 

18 Federal or State court or administrative agen19 cy, and shall be exempt from disclosure, in the 

20 hands of an agency or establishment of the 

21 Federal Government, under the Freedom of In22 formation Act (5 U.S.C. 552), or otherwise, un23 less and until required to be disclosed to a de24 fendant or respondent in connection with a pro25 ceeding instituted by the Commission or any 


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1 entity described in subparagraph (B). For pur2 poses of section 552 of title 5, United States 

3 Code, this paragraph shall be considered a stat4 ute described in subsection (b)(3)(B) of such 

5 section 552. Nothing herein is intended to limit 

6 the Attorney General’s ability to present such 

7 evidence to a grand jury or to share such evi8 dence with potential witnesses or defendants in 

9 the course of an ongoing criminal investigation. 

10 ‘‘(B) AVAILABILITY TO GOVERNMENT

11 AGENCIES.—Without the loss of its status as 

12 confidential and privileged in the hands of the 

13 Commission, all information referred to in sub14 paragraph (A) may, in the discretion of the 

15 Commission, when determined by the Commis16 sion to be necessary to accomplish the purposes 

17 of this Act and protect investors, be made avail18 able to— 

19 ‘‘(i) the Attorney General of the 

20 United States, 

21 ‘‘(ii) an appropriate regulatory au22 thority, 

23 ‘‘(iii) a self-regulatory organization, 

24 ‘‘(iv) the Public Company Accounting 

25 Oversight Board, 


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1 ‘‘(v) State attorneys general in con2 nection with any criminal investigation, 

3 and 

4 ‘‘(vi) any appropriate State regulatory 

5 authority, 

6 each of which shall maintain such information 

7 as confidential and privileged, in accordance 

8 with the requirements in subparagraph (A). 

9 ‘‘(3) RIGHTS RETAINED.—Nothing in this sec10 tion shall be deemed to diminish the rights, privi11 leges, or remedies of any whistleblower under any 

12 Federal or State law, or under any collective bar13 gaining agreement. 

14 ‘‘(h) PROVISION OF FALSE INFORMATION.—Any 

15 whistleblower who knowingly and willfully makes any 

16 false, fictitious, or fraudulent statement or representation, 

17 or makes or uses any false writing or document knowing 

18 the same to contain any false, fictitious, or fraudulent 

19 statement or entry, shall not be entitled to an award under 

20 this section and shall be subject to prosecution under sec21 tion 1001 of title 18, United States Code. 

22 ‘‘(i) RULEMAKING AUTHORITY.—The Commission 

23 shall have the authority to issue such rules and regulations 

24 as may be necessary or appropriate to implement the pro25 visions of this section. 


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1 ‘‘(j) DEFINITIONS.—For purposes of this section, the 

2 following terms have the following meanings: 

3 ‘‘(1) ORIGINAL INFORMATION.—The term 

4 ‘original information’ means information that— 

5 ‘‘(A) is based on the direct and inde6 pendent knowledge or analysis of a whistle7 blower; 

8 ‘‘(B) is not known to the Commission from 

9 any other source, unless the whistleblower is the 

10 initial source of the information; and 

11 ‘‘(C) is not based on allegations in a judi12 cial or administrative hearing, in a govern13 mental report, hearing, audit, or investigation, 

14 or from the news media, unless the whistle15 blower is the initial source of the information 

16 that resulted in the judicial or administrative 

17 hearing, governmental report, hearing, audit, or 

18 investigation, or the news media’s report on the 

19 allegations. 

20 ‘‘(2) MONETARY SANCTIONS.—The term ‘mone21 tary sanctions’, when used with respect to any judi22 cial or administrative action, means any monies, in23 cluding but not limited to penalties, disgorgement, 

24 and interest, ordered to be paid, and any monies de25 posited into a disgorgement fund or other fund purVerDate Nov 24 2008 22:04 Dec 02, 2009 Jkt 089200 PO 00000 Frm 01119 Fmt 6652 Sfmt 6201 E:\BILLS\H4173.IH H4173

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1 suant to section 308(b) of the Sarbanes-Oxley Act of 

2 2002 (15 U.S.C. 7246(b)), as a result of such action 

3 or any settlement of such action. 

4 ‘‘(3) RELATED ACTION.—The term ‘related ac5 tion’, when used with respect to any judicial or ad6 ministrative action brought by the Commission 

7 under the securities laws, means any judicial or ad8 ministrative action brought by an entity described in 

9 subsection (g)(2)(B) that is based upon the same 

10 original information provided by a whistleblower 

11 pursuant to subsection (a) that led to the successful 

12 enforcement of the Commission action. 

13 ‘‘(4) WHISTLEBLOWER.—The term ‘whistle14 blower’ means an individual, or two or more individ15 uals acting jointly, who submit information to the 

16 Commission as provided in this section.’’. 

17 (b) ADMINISTRATION AND ENFORCEMENT.—The Se18 curities and Exchange Commission shall establish a sepa19 rate office within the Commission to administer and en20 force the provisions of section 21F of the Securities Ex21 change Act of 1934, as added by subsection (a). Such of22 fice shall report annually to Congress on its activities, 

23 whistleblower complaints, and the response of the Com24 mission to such complaints. 


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1 SEC. 7204. CONFORMING AMENDMENTS FOR WHISTLE2 BLOWER PROTECTION. 

3 (a) IN GENERAL.—Each of the following provisions 

4 is amended by inserting ‘‘and section 21F of the Securities 

5 Exchange Act of 1934’’ after ‘‘the Sarbanes-Oxley Act of 

6 2002’’: 

7 (1) Section 20(d)(3)(A) of the Securities Act of 

8 1933 (15 U.S.C. 77t(d)(3)(A)). 

9 (2) Section 42(e)(3)(A) of the Investment Com10 pany Act of 1940 (15 U.S.C. 80a–41(e)(3)(A)). 

11 (3) Section 209(e)(3)(A) of the Investment Ad12 visers Act of 1940 (15 U.S.C. 80b–9(e)(3)(A)). 

13 (b) SECURITIES EXCHANGE ACT.—The Securities 

14 Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amend15 ed— 

16 (1) in section 21(d)(3)(C)(i) (15 U.S.C. 

17 78u(d)(3)(C)(i)), by inserting ‘‘and section 21F of 

18 this title’’ after ‘‘the Sarbanes-Oxley Act of 2002’’; 

19 (2) in section 21A(d)(1) (15 U.S.C. 78u– 

20 1(d)(1))— 

21 (A) by striking ‘‘(subject to subsection 

22 (e))’’; and 

23 (B) by inserting ‘‘and section 21F of this 

24 title’’ after ‘‘the Sarbanes-Oxley Act of 2002’’; 

25 and 


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1 (3) in section 21A, by striking subsection (e) 

2 and redesignating subsections (f) and (g) as sub3 section (e) and (f), respectively. 

4 SEC. 7205. IMPLEMENTATION AND TRANSITION PROVI5 SIONS FOR WHISTLEBLOWER PROTECTIONS. 

6 (a) IMPLEMENTING RULES.—The Securities and Ex7 change Commission shall issue final regulations imple8 menting the provisions of section 21F of the Securities 

9 Exchange Act of 1934, as added by this part, no later 

10 than 270 days after the date of enactment of this subtitle. 

11 (b) ORIGINAL INFORMATION.—Information sub12 mitted to the Commission by a whistleblower in accord13 ance with regulations implementing the provisions of sec14 tion 21F of the Securities Exchange Act of 1934, as added 

15 by this part, shall not lose its status as original informa16 tion, as defined in subsection (i)(1) of such section, solely 

17 because the whistleblower submitted such information 

18 prior to the effective date of such regulations, provided 

19 such information was submitted after the date of enact20 ment of this subtitle, or related to insider trading viola21 tions for which a bounty could have been paid at the time 

22 such information was submitted. 

23 (c) AWARDS.—A whistleblower may receive an award 

24 pursuant to section 21F of the Securities Exchange Act 

25 of 1934, as added by this part, regardless of whether any 


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1 violation of a provision of the securities laws, or a rule 

2 or regulation thereunder, underlying the judicial or admin3 istrative action upon which the award is based occurred 

4 prior to the date of enactment of this subtitle. 

5 SEC. 7206. COLLATERAL BARS. 

6 (a) SECTION 15 OF THE SECURITIES EXCHANGE ACT

7 OF 1934.—Section 15(b)(6)(A) of the Securities Ex8 change Act of 1934 (15 U.S.C. 78o(b)(6)(A)) is amended 

9 by striking ‘‘12 months, or bar such person from being 

10 associated with a broker or dealer,’’ and inserting ‘‘12 

11 months, or bar any such person from being associated with 

12 a broker, dealer, investment adviser, municipal securities 

13 dealer, transfer agent, or nationally recognized statistical 

14 rating organization,’’. 

15 (b) SECTION 15B OF THE SECURITIES EXCHANGE

16 ACT OF 1934.—Section 15B(c)(4) of the Securities Ex17 change Act of 1934 (15 U.S.C. 78o–4(c)(4)) is amended 

18 by striking ‘‘twelve months or bar any such person from 

19 being associated with a municipal securities dealer,’’ and 

20 inserting ‘‘12 months or bar any such person from being 

21 associated with a broker, dealer, investment adviser, mu22 nicipal securities dealer, transfer agent, or nationally rec23 ognized statistical rating organization,’’. 

24 (c) SECTION 17A OF THE SECURITIES EXCHANGE

25 ACT OF 1934.—Section 17A(c)(4)(C) of the Securities 


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1 Exchange Act of 1934 (15 U.S.C. 78q–1(c)(4)(C)) is 

2 amended by striking ‘‘twelve months or bar any such per3 son from being associated with the transfer agent,’’ and 

4 inserting ‘‘12 months or bar any such person from being 

5 associated with any transfer agent, broker, dealer, invest6 ment adviser, municipal securities dealer, or nationally 

7 recognized statistical rating organization,’’. 

8 (d) SECTION 203 OF THE INVESTMENT ADVISERS

9 ACT OF 1940.—Section 203(f) of the Investment Advisers 

10 Act of 1940 (15 U.S.C. 80b–3(f)) is amended by striking 

11 ‘‘twelve months or bar any such person from being associ12 ated with an investment adviser,’’ and inserting ‘‘12 

13 months or bar any such person from being associated with 

14 an investment adviser, broker, dealer, municipal securities 

15 dealer, transfer agent, or nationally recognized statistical 

16 rating organization,’’. 

17 SEC. 7207. AIDING AND ABETTING AUTHORITY UNDER THE 

18 SECURITIES ACT AND THE INVESTMENT COM19 PANY ACT. 

20 (a) UNDER THE SECURITIES ACT OF 1933.—Section 

21 15 of the Securities Act of 1933 (15 U.S.C. 77o) is 

22 amended— 

23 (1) by striking ‘‘Every person who’’ and insert24 ing ‘‘(a) CONTROLLING PERSONS.—Every person 

25 who’’; and 


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1 (2) by adding at the end the following: 

2 ‘‘(b) PROSECUTION OF PERSONS WHO AID AND

3 ABET VIOLATIONS.—For purposes of any action brought 

4 by the Commission under subparagraph (b) or (d) of sec5 tion 20, any person that knowingly or recklessly provides 

6 substantial assistance to another person in violation of a 

7 provision of this Act, or of any rule or regulation issued 

8 under this Act, shall be deemed to be in violation of such 

9 provision to the same extent as the person to whom such 

10 assistance is provided.’’. 

11 (c) UNDER THE INVESTMENT COMPANY ACT OF

12 1940.—Section 48 of the Investment Company Act of 

13 1940 (15 U.S.C. 80a–48) is amended by redesignating 

14 subsection (b) as subsection (c) and inserting after sub15 section (a) the following: 

16 ‘‘(b) For purposes of any action brought by the Com17 mission under subsection (d) or (e) of section 42, any per18 son that knowingly or recklessly provides substantial as19 sistance to another person in violation of a provision of 

20 this Act, or of any rule or regulation issued under this 

21 Act, shall be deemed to be in violation of such provision 

22 to the same extent as the person to whom such assistance 

23 is provided.’’. 


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1 SEC. 7208. AUTHORITY TO IMPOSE PENALTIES FOR AIDING 

2 AND ABETTING VIOLATIONS OF THE INVEST3 MENT ADVISERS ACT. 

4 Section 209 of the Investment Advisers Act of 1940 

5 (15 U.S.C. 80b–9) is amended by inserting at the end the 

6 following new subsections: 

7 ‘‘(f) AIDING AND ABETTING.—For purposes of any 

8 action brought by the Commission under subsection (e), 

9 any person that knowingly or recklessly has aided, abetted, 

10 counseled, commanded, induced, or procured a violation 

11 of any provision of this Act, or of any rule, regulation, 

12 or order hereunder, shall be deemed to be in violation of 

13 such provision, rule, regulation, or order to the same ex14 tent as the person that committed such violation. 

15 ‘‘(g) ENFORCEMENT BY NATIONAL SECURITIES AS16 SOCIATIONS.—The Commission may permit or require a 

17 national securities association registered under the Securi18 ties Exchange Act of 1934 to enforce compliance by its 

19 members and persons associated with its members with 

20 the provisions of this Act, the rules and regulations there21 under, and to adopt such rules (subject to any rule or 

22 order of the Commission pursuant to the Securities Ex23 change Act of 1934) as the association may deem nec24 essary and in the public interest to further the purposes 

25 of this Act.’’. 


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1 SEC. 7209. DEADLINE FOR COMPLETING EXAMINATIONS, 

2 INSPECTIONS AND ENFORCEMENT ACTIONS. 

3 The Securities Exchange Act of 1934 (15 U.S.C. 78a 

4 et seq.) is amended by inserting after section 4D (as added 

5 by section 7101) the following new section: 

6 ‘‘SEC. 4E. DEADLINE FOR COMPLETING ENFORCEMENT IN7 VESTIGATIONS AND COMPLIANCE EXAMINA8 TIONS AND INSPECTIONS. 

9 ‘‘(a) ENFORCEMENT INVESTIGATIONS.— 

10 ‘‘(1) IN GENERAL.—Not later than 180 days 

11 after the date on which Commission staff provide a 

12 written Wells notification to any person, the Com13 mission staff shall either file an action against such 

14 person or provide notice to the Director of the Divi15 sion of Enforcement of its intent to not file an ac16 tion. 

17 ‘‘(2) EXCEPTIONS FOR CERTAIN COMPLEX AC18 TIONS.—Notwithstanding paragraph (1), if the head 

19 of any division or office within the Commission or 

20 his designee determines that a particular enforce21 ment investigation is sufficiently complex such that 

22 a determination regarding the filing of an action 

23 against a person cannot be completed within the 

24 deadline specified in paragraph (1), the head of any 

25 division or office within the Commission or his des26 ignee may, after providing notice to the Chairman of 


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1 the Commission, extend such deadline as needed for 

2 one additional 180-day period. If after the additional 

3 180-day period the head of any division or office 

4 within the Commission or his designee determines 

5 that a particular enforcement investigation is suffi6 ciently complex such that a determination regarding 

7 the filing of an action against a person cannot be 

8 completed within the additional 180-day period, the 

9 head of any division or office within the Commission 

10 or his designee may, after providing notice to and 

11 receiving approval of the Commission, extend such 

12 deadline as needed for one or more additional suc13 cessive 180-day periods. 

14 ‘‘(b) COMPLIANCE EXAMINATIONS AND INSPEC15 TIONS.— 

16 ‘‘(1) IN GENERAL.—Not later than 180 days 

17 after the date on which Commission staff completes 

18 the on-site portion of its compliance examination or 

19 inspection or receives all records requested from the 

20 entity being examined or inspected, whichever is 

21 later, Commission staff shall provide the entity being 

22 examined or inspected with written notification indi23 cating either that the examination or inspection has 

24 concluded without findings or that the staff requests 

25 the entity undertake corrective action. 


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1 ‘‘(2) EXCEPTION FOR CERTAIN COMPLEX AC2 TIONS.—Notwithstanding paragraph (1), if the head 

3 of any division or office within the Commission or 

4 his designee determines that a particular compliance 

5 examination or inspection is sufficiently complex 

6 such that a determination regarding concluding the 

7 examination or inspection or regarding the staff re8 quests the entity undertake corrective action cannot 

9 be completed within the deadline specified in para10 graph (1), the head of any division or office within 

11 the Commission or his designee may, after providing 

12 notice to the Chairman of the Commission, extend 

13 such deadline as needed for one additional 180-day 

14 period.’’. 

15 SEC. 7210. NATIONWIDE SERVICE OF SUBPOENAS. 

16 (a) SECURITIES ACT OF 1933.—Section 22(a) of the 

17 Securities Act of 1933 (15 U.S.C. 77v(a)) is amended by 

18 inserting after the second sentence the following: ‘‘In any 

19 action or proceeding instituted by the Commission under 

20 this title in a United States district court for any judicial 

21 district, subpoenas issued to compel the attendance of wit22 nesses or the production of documents or tangible things 

23 (or both) at a hearing or trial may be served at any place 

24 within the United States.’’. 


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1 (b) SECURITIES EXCHANGE ACT OF 1934.—Section 

2 27 of the Securities Exchange Act of 1934 (15 U.S.C. 

3 78aa) is amended by inserting after the third sentence the 

4 following: ‘‘In any action or proceeding instituted by the 

5 Commission under this title in a United States district 

6 court for any judicial district, subpoenas issued to compel 

7 the attendance of witnesses or the production of docu8 ments or tangible things (or both) at a hearing or trial 

9 may be served at any place within the United States.’’. 

10 (c) INVESTMENT COMPANY ACT OF 1940.—Section 

11 44 of the Investment Company Act of 1940 (15 U.S.C. 

12 80a–43) is amended by inserting after the fourth sentence 

13 the following: ‘‘In any action or proceeding instituted by 

14 the Commission under this title in a United States district 

15 court for any judicial district, subpoenas issued to compel 

16 the attendance of witnesses or the production of docu17 ments or tangible things (or both) at a hearing or trial 

18 may be served at any place within the United States.’’. 

19 (d) INVESTMENT ADVISERS ACT OF 1940.—Section 

20 214 of the Investment Advisers Act of 1940 (15 U.S.C. 

21 80b–14) is amended by inserting after the third sentence 

22 the following: ‘‘In any action or proceeding instituted by 

23 the Commission under this title in a United States district 

24 court for any judicial district, subpoenas issued to compel 

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1 ments or tangible things (or both) at a hearing or trial 

2 may be served at any place within the United States.’’. 

3 SEC. 7211. AUTHORITY TO IMPOSE CIVIL PENALTIES IN 

4 CEASE AND DESIST PROCEEDINGS. 

5 (a) UNDER THE SECURITIES ACT OF 1933.—Section 

6 8A of the Securities Act of 1933 (15 U.S.C. 77h–1) is 

7 amended by adding at the end the following new sub8 section: 

9 ‘‘(g) AUTHORITY TO IMPOSE MONEY PENALTIES.— 

10 ‘‘(1) GROUNDS FOR IMPOSING.—In any cease11 and-desist proceeding under subsection (a), the 

12 Commission may impose a civil penalty on a person 

13 if it finds, on the record after notice and opportunity 

14 for hearing, that— 

15 ‘‘(A) such person— 

16 ‘‘(i) is violating or has violated any 

17 provision of this title, or any rule or regu18 lation thereunder; or 

19 ‘‘(ii) is or was a cause of the violation 

20 of any provision of this title, or any rule or 

21 regulation thereunder; and 

22 ‘‘(B) such penalty is in the public interest. 

23 ‘‘(2) MAXIMUM AMOUNT OF PENALTY.— 

24 ‘‘(A) FIRST TIER.—The maximum amount 

25 of penalty for each act or omission described in 


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1 paragraph (1) shall be $7,500 for a natural 

2 person or $75,000 for any other person. 

3 ‘‘(B) SECOND TIER.—Notwithstanding 

4 paragraph (A), the maximum amount of pen5 alty for each such act or omission shall be 

6 $75,000 for a natural person or $375,000 for 

7 any other person if the act or omission de8 scribed in paragraph (1) involved fraud, deceit, 

9 manipulation, or deliberate or reckless dis10 regard of a regulatory requirement. 

11 ‘‘(C) THIRD TIER.—Notwithstanding para12 graphs (A) and (B), the maximum amount of 

13 penalty for each such act or omission shall be 

14 $150,000 for a natural person or $725,000 for 

15 any other person if— 

16 ‘‘(i) the act or omission described in 

17 paragraph (1) involved fraud, deceit, ma18 nipulation, or deliberate or reckless dis19 regard of a regulatory requirement; and 

20 ‘‘(ii) such act or omission directly or 

21 indirectly resulted in substantial losses or 

22 created a significant risk of substantial 

23 losses to other persons or resulted in sub24 stantial pecuniary gain to the person who 

25 committed the act or omission. 


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1 ‘‘(3) EVIDENCE CONCERNING ABILITY TO

2 PAY.—In any proceeding in which the Commission 

3 may impose a penalty under this section, a respond4 ent may present evidence of the respondent’s ability 

5 to pay such penalty. The Commission may, in its 

6 discretion, consider such evidence in determining 

7 whether such penalty is in the public interest. Such 

8 evidence may relate to the extent of such person’s 

9 ability to continue in business and the collectability 

10 of a penalty, taking into account any other claims of 

11 the United States or third parties upon such per12 son’s assets and the amount of such person’s as13 sets.’’. 

14 (b) UNDER THE SECURITIES EXCHANGE ACT OF

15 1934.—Subsection (a) of section 21B of the Securities 

16 Exchange Act of 1934 (15 U.S.C. 78u–2(a)) is amend17 ed— 

18 (1) by striking ‘‘(a) COMMISSION AUTHORITY

19 TO ASSESS MONEY PENALTIES.—In any pro20 ceeding’’ and inserting the following: 

21 ‘‘(a) COMMISSION AUTHORITY TO ASSESS MONEY

22 PENALTIES.— 

23 ‘‘(1) IN GENERAL.—In any proceeding’’; 

24 (2) by redesignating paragraphs (1) through 

25 (4) of such subsection as subparagraphs (A) through 


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1 (D), respectively, and moving such redesignated sub2 paragraphs and the matter following such subpara3 graphs 2 ems to the right; and 

4 (3) by adding at the end of such subsection the 

5 following new paragraph: 

6 ‘‘(2) CEASE-AND-DESIST PROCEEDINGS.—In 

7 any proceeding instituted pursuant to section 21C of 

8 this title against any person, the Commission may 

9 impose a civil penalty if it finds, on the record after 

10 notice and opportunity for hearing, that such per11 son— 

12 ‘‘(A) is violating or has violated any provi13 sion of this title, or any rule or regulation 

14 thereunder; or 

15 ‘‘(B) is or was a cause of the violation of 

16 any provision of this title, or any rule or regula17 tion thereunder.’’. 

18 (c) UNDER THE INVESTMENT COMPANY ACT OF

19 1940.—Paragraph (1) of section 9(d) of the Investment 

20 Company Act of 1940 (15 U.S.C. 80a–9(d)(1)) is amend21 ed— 

22 (1) by striking ‘‘(1) AUTHORITY OF COMMIS23 SION.—In any proceeding’’ and inserting the fol24 lowing: 

25 ‘‘(1) AUTHORITY OF COMMISSION.— 


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1 ‘‘(A) IN GENERAL.—In any proceeding’’; 

2 (2) by redesignating subparagraphs (A) through 

3 (C) of such paragraph as clauses (i) through (iii), 

4 respectively, and by moving such redesignated 

5 clauses and the matter following such subparagraphs 

6 2 ems to the right; and 

7 (3) by adding at the end of such paragraph the 

8 following new subparagraph: 

9 ‘‘(B) CEASE-AND-DESIST PROCEEDINGS.— 

10 In any proceeding instituted pursuant to sub11 section (f) against any person, the Commission 

12 may impose a civil penalty if it finds, on the 

13 record after notice and opportunity for hearing, 

14 that such person— 

15 ‘‘(i) is violating or has violated any 

16 provision of this title, or any rule or regu17 lation thereunder; or 

18 ‘‘(ii) is or was a cause of the violation 

19 of any provision of this title, or any rule or 

20 regulation thereunder.’’. 

21 (d) UNDER THE INVESTMENT ADVISERS ACT OF

22 1940.—Paragraph (1) of section 203(i) of the Investment 

23 Advisers Act of 1940 (15 U.S.C. 80b–3(i)(1)) is amend24 ed— 


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1 (1) by striking ‘‘(1) AUTHORITY OF COMMIS2 SION.—In any proceeding’’ and inserting the fol3 lowing: 

4 ‘‘(1) AUTHORITY OF COMMISSION.— 

5 ‘‘(A) IN GENERAL.—In any proceeding’’; 

6 (2) by redesignating subparagraphs (A) through 

7 (D) of such paragraph as clauses (i) through (iv), 

8 respectively, and moving such redesignated clauses 

9 and the matter following such subparagraphs 2 ems 

10 to the right; and 

11 (3) by adding at the end of such paragraph the 

12 following new subparagraph: 

13 ‘‘(B) CEASE-AND-DESIST PROCEEDINGS.— 

14 In any proceeding instituted pursuant to sub15 section (k) against any person, the Commission 

16 may impose a civil penalty if it finds, on the 

17 record after notice and opportunity for hearing, 

18 that such person— 

19 ‘‘(i) is violating or has violated any 

20 provision of this title, or any rule or regu21 lation thereunder; or 

22 ‘‘(ii) is or was a cause of the violation 

23 of any provision of this title, or any rule or 

24 regulation thereunder.’’. 


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1 SEC. 7212. FORMERLY ASSOCIATED PERSONS. 

2 (a) MEMBER OR EMPLOYEE OF THE MUNICIPAL SE3 CURITIES RULEMAKING BOARD.—Section 15B(c)(8) of 

4 the Securities Exchange Act of 1934 (15 U.S.C. 78o– 

5 4(c)(8)) is amended by striking ‘‘any member or em6 ployee’’ and inserting ‘‘any person who is, or at the time 

7 of the alleged misconduct was, a member or employee’’. 

8 (b) PERSON ASSOCIATED WITH A GOVERNMENT SE9 CURITIES BROKER OR DEALER.—Section 15C of the Se10 curities Exchange Act of 1934 (15 U.S.C. 78o–5) is 

11 amended— 

12 (1) in subsection (c)(1)(C), by striking ‘‘or 

13 seeking to become associated,’’ and inserting ‘‘seek14 ing to become associated, or, at the time of the al15 leged misconduct, associated or seeking to become 

16 associated’’; 

17 (2) in subsection (c)(2)(A), by inserting ‘‘, seek18 ing to become associated, or, at the time of the al19 leged misconduct, associated or seeking to become 

20 associated’’ after ‘‘any person associated’’; and 

21 (3) in subsection (c)(2)(B), by inserting ‘‘, 

22 seeking to become associated, or, at the time of the 

23 alleged misconduct, associated or seeking to become 

24 associated’’ after ‘‘any person associated’’. 

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1 TIES ASSOCIATION.—Section 21(a)(1) of the Securities 

2 Exchange Act of 1934 (15 U.S.C. 78u(a)(1)) is amended 

3 by inserting ‘‘, or, as to any act or practice, or omission 

4 to act, while associated with a member, formerly associ5 ated’’ after ‘‘member or a person associated’’. 

6 (d) PARTICIPANT OF A REGISTERED CLEARING

7 AGENCY.—Section 21(a)(1) of the Securities Exchange 

8 Act of 1934 (15 U.S.C. 78u(a)(1)) is amended by insert9 ing ‘‘or, as to any act or practice, or omission to act, while 

10 a participant, was a participant,’’ after ‘‘in which such 

11 person is a participant,’’. 

12 (e) OFFICER OR DIRECTOR OF A SELF-REGULATORY

13 ORGANIZATION.—Section 19(h)(4) of the Securities Ex14 change Act of 1934 (15 U.S.C. 78s(h)(4)) is amended— 

15 (1) by striking ‘‘any officer or director’’ and in16 serting ‘‘any person who is, or at the time of the al17 leged misconduct was, an officer or director’’; and 

18 (2) by striking ‘‘such officer or director’’ and 

19 inserting ‘‘such person’’. 

20 (f) OFFICER OR DIRECTOR OF AN INVESTMENT COM21 PANY.—Section 36(a) of the Investment Company Act of 

22 1940 (15 U.S.C. 80a–35(a)) is amended— 

23 (1) by striking ‘‘a person serving or acting’’ and 

24 inserting ‘‘a person who is, or at the time of the al25 leged misconduct was, serving or acting’’; and 


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1 (2) by striking ‘‘such person so serves or acts’’ 

2 and inserting ‘‘such person so serves or acts, or at 

3 the time of the alleged misconduct, so served or 

4 acted’’. 

5 (g) PERSON ASSOCIATED WITH A PUBLIC ACCOUNT6 ING FIRM.— 

7 (1) SARBANES-OXLEY ACT OF 2002 AMEND8 MENT.—Section 2(a)(9) of the Sarbanes-Oxley Act 

9 of 2002 (15 U.S.C. 7201(9)) is amended by adding 

10 at the end the following new subparagraph: 

11 ‘‘(C) INVESTIGATIVE AND ENFORCEMENT

12 AUTHORITY.—For purposes of the provisions of 

13 sections 3(c), 101(c), 105, and 107(c) and 

14 Board or Commission rules thereunder, except 

15 to the extent specifically excepted by such rules, 

16 the terms defined in subparagraph (A) shall in17 clude any person associated, seeking to become 

18 associated, or formerly associated with a public 

19 accounting firm, except— 

20 ‘‘(i) the authority to conduct an inves21 tigation of such person under section 

22 105(b) shall apply only with respect to any 

23 act or practice, or omission to act, while 

24 such person was associated or seeking to 


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1 become associated with a registered public 

2 accounting firm; and 

3 ‘‘(ii) the authority to commence a pro4 ceeding under section 105(c)(1), or impose 

5 disciplinary sanctions under section 

6 105(c)(4), against such person shall apply 

7 only on— 

8 ‘‘(I) the basis of conduct occur9 ring while such person was associated 

10 or seeking to become associated with 

11 a registered public accounting firm; or 

12 ‘‘(II) non-cooperation as de13 scribed in section 105(b)(3) with re14 spect to a demand in a Board inves15 tigation for testimony, documents, or 

16 other information relating to a period 

17 when such person was associated or 

18 seeking to become associated with a 

19 registered public accounting firm.’’. 

20 (2) SECURITIES EXCHANGE ACT OF 1934

21 AMENDMENT.—Section 21(a)(1) of the Securities 

22 Exchange Act of 1934 (15 U.S.C. 78u(a)(1)) is 

23 amended by striking ‘‘or a person associated with 

24 such a firm’’ and inserting ‘‘, a person associated 

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1 sion to act while associated with such firm, a person 

2 formerly associated with such a firm’’. 

3 (h) SUPERVISORY PERSONNEL OF AN AUDIT

4 FIRM.—Section 105(c)(6) of the Sarbanes-Oxley Act of 

5 2002 (15 U.S.C. 7215(c)(6)) is amended— 

6 (1) in subparagraph (A), by striking ‘‘the su7 pervisory personnel’’ and inserting ‘‘any person who 

8 is, or at the time of the alleged failure reasonably to 

9 supervise was, a supervisory person’’; and 

10 (2) in subparagraph (B)— 

11 (A) by striking ‘‘No associated person’’ 

12 and inserting ‘‘No current or former super13 visory person’’; and 

14 (B) by striking ‘‘any other person’’ and in15 serting ‘‘any associated person’’. 

16 (i) MEMBER OF THE PUBLIC COMPANY ACCOUNTING

17 OVERSIGHT BOARD.—Section 107(d)(3) of the Sarbanes18 Oxley Act of 2002 (15 U.S.C. 7217(d)(3)) is amended by 

19 striking ‘‘any member’’ and inserting ‘‘any person who is, 

20 or at the time of the alleged misconduct was, a member’’. 

21 SEC. 7213. SHARING PRIVILEGED INFORMATION WITH 

22 OTHER AUTHORITIES. 

23 Section 24 of the Securities Exchange Act of 1934 

24 (15 U.S.C. 78x) is amended— 


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1 (1) by redesignating subsections (d) and (e) as 

2 subsections (e) and (f), respectively; 

3 (2) in subsection (e), as redesignated, by strik4 ing ‘‘as provided in subsection (e)’’ and inserting ‘‘as 

5 provided in subsection (f)’’; and 

6 (3) by inserting after subsection (c) the fol7 lowing new subsection: 

8 ‘‘(d) SHARING PRIVILEGED INFORMATION WITH

9 OTHER AUTHORITIES.— 

10 ‘‘(1) PRIVILEGED INFORMATION PROVIDED BY

11 THE COMMISSION.—The Commission shall not be 

12 deemed to have waived any privilege applicable to 

13 any information by transferring that information to 

14 or permitting that information to be used by— 

15 ‘‘(A) any agency (as defined in section 6 of 

16 title 18, United States Code); 

17 ‘‘(B) any foreign securities authority; 

18 ‘‘(C) the Public Company Accounting 

19 Oversight Board; 

20 ‘‘(D) any self-regulatory organization; 

21 ‘‘(E) any foreign law enforcement author22 ity; or 

23 ‘‘(F) any State securities or law enforce24 ment authority. 


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1 ‘‘(2) NON-DISCLOSURE OF PRIVILEGED INFOR2 MATION PROVIDED TO THE COMMISSION.—Except as 

3 provided in subsection (f), the Commission shall not 

4 be compelled to disclose privileged information ob5 tained from any foreign securities authority, or for6 eign law enforcement authority, if the authority has 

7 in good faith determined and represented to the 

8 Commission that the information is privileged. 

9 ‘‘(3) NON-WAIVER OF PRIVILEGED INFORMA10 TION PROVIDED TO THE COMMISSION.— 

11 ‘‘(A) IN GENERAL.—Federal agencies, 

12 State securities and law enforcement authori13 ties, self-regulatory organizations, and the Pub14 lic Company Accounting Oversight Board shall 

15 not be deemed to have waived any privilege ap16 plicable to any information by transferring that 

17 information to or permitting that information 

18 to be used by the Commission. 

19 ‘‘(B) EXCEPTION WITH RESPECT TO CER20 TAIN ACTIONS.—The provisions of subpara21 graph (A) shall not apply to a self-regulatory 

22 organization or the Public Company Accounting 

23 Oversight Board with respect to information 

24 used by the Commission in an action against 

25 such organization. 


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1 ‘‘(4) DEFINITIONS.—For purposes of this sub2 section: 

3 ‘‘(A) The term ‘privilege’ includes any 

4 work-product privilege, attorney-client privilege, 

5 governmental privilege, or other privilege recog6 nized under Federal, foreign, or State law. 

7 ‘‘(B) The term ‘foreign law enforcement 

8 authority’ means any foreign authority that is 

9 empowered under foreign law to detect, inves10 tigate or prosecute potential violations of law. 

11 ‘‘(C) The term ‘State securities or law en12 forcement authority’ means the authority of any 

13 State or territory that is empowered under 

14 State or territory law to detect, investigate or 

15 prosecute potential violations of law.’’. 

16 SEC. 7214. EXPANDED ACCESS TO GRAND JURY MATERIAL. 

17 (a) IN GENERAL.—Title VI of the Sarbanes-Oxley 

18 Act of 2002 is amended by adding at the end the following 

19 new section: 

20 ‘‘SEC. 605. ACCESS TO GRAND JURY INFORMATION. 

21 ‘‘(a) DISCLOSURE.— 

22 ‘‘(1) IN GENERAL.—Upon motion of an attor23 ney for the government, a court may direct disclo24 sure of matters occurring before a grand jury during 

25 an investigation of conduct that may constitute a 


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1 violation of any provision of the securities laws to 

2 the Commission for use in relation to any matter 

3 within the jurisdiction of the Commission. 

4 ‘‘(2) SUBSTANTIAL NEED REQUIRED.—A court 

5 may issue an order under paragraph (1) only upon 

6 a finding of a substantial need in the public interest. 

7 ‘‘(b) USE OF MATTER.—A person to whom a matter 

8 has been disclosed under this section shall not use such 

9 matter other than for the purpose for which such disclo10 sure was authorized. 

11 ‘‘(c) DEFINITIONS.—As used in this section, the 

12 terms ‘attorney for the government’ and ‘grand jury infor13 mation’ have the meanings given to those terms in section 

14 3322 of title 18, United States Code.’’. 

15 (b) CONFORMING AMENDMENT.—The table of con16 tents in section 1(b) of the Sarbanes-Oxley Act of 2002 

17 is amended by inserting after the item relating to section 

18 604 the following: 

‘‘Sec. 605. Access to grand jury information.’’. 

19 SEC. 7215. AIDING AND ABETTING STANDARD OF KNOWL20 EDGE SATISFIED BY RECKLESSNESS. 

21 Section 20(e) of the Securities Exchange Act of 1934 

22 (15 U.S.C. 78t(e)) is amended by inserting ‘‘or recklessly’’ 

23 after ‘‘knowingly’’. 


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1 SEC. 7216. EXTRATERRITORIAL JURISDICTION OF THE 

2 ANTIFRAUD PROVISIONS OF THE FEDERAL 

3 SECURITIES LAWS. 

4 (a) UNDER THE SECURITIES ACT OF 1933.—Section 

5 22 of the Securities Act of 1933 (15 U.S.C. 77v(a)) is 

6 amended by adding at the end the following new sub7 section: 

8 ‘‘(c) EXTRATERRITORIAL JURISDICTION.—The juris9 diction of the district courts of the United States and the 

10 United States courts of any Territory described under 

11 subsection (a) includes violations of section 17(a), and all 

12 suits in equity and actions at law under that section, in13 volving— 

14 ‘‘(1) conduct within the United States that con15 stitutes significant steps in furtherance of the viola16 tion, even if the securities transaction occurs outside 

17 the United States and involves only foreign inves18 tors; or 

19 ‘‘(2) conduct occurring outside the United 

20 States that has a foreseeable substantial effect with21 in the United States.’’. 

22 (b) UNDER THE SECURITIES EXCHANGE ACT OF

23 1934.—Section 27 of the Securities Exchange Act of 1934 

24 (15 U.S.C. 78aa) is amended— 

25 (1) by striking ‘‘The district’’ and inserting the 

26 following: 


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1 ‘‘(a) IN GENERAL.—The district’’; and 

2 (2) by inserting at the end the following new 

3 subsection: 

4 ‘‘(b) EXTRATERRITORIAL JURISDICTION.—The juris5 diction of the district courts of the United States and the 

6 United States courts of any Territory or other place sub7 ject to the jurisdiction of the United States described 

8 under subsection (a) includes violations of the antifraud 

9 provisions of this title, and all suits in equity and actions 

10 at law under those provisions, involving— 

11 ‘‘(1) conduct within the United States that con12 stitutes significant steps in furtherance of the viola13 tion, even if the securities transaction occurs outside 

14 the United States and involves only foreign inves15 tors; or 

16 ‘‘(2) conduct occurring outside the United 

17 States that has a foreseeable substantial effect with18 in the United States.’’. 

19 (c) UNDER THE INVESTMENT ADVISERS ACT OF

20 1940.—Section 214 of the Investment Advisers Act of 

21 1940 (15 U.S.C. 80b–14) is amended— 

22 (1) by striking ‘‘The district’’ and inserting the 

23 following: 

24 ‘‘(a) IN GENERAL.—The district’’; and 


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1 (2) by inserting at the end the following new 

2 subsection: 

3 ‘‘(b) EXTRATERRITORIAL JURISDICTION.—The juris4 diction of the district courts of the United States and the 

5 United States courts of any Territory or other place sub6 ject to the jurisdiction of the United States described 

7 under subsection (a) includes violations of section 206, 

8 and all suits in equity and actions at law under that sec9 tion, involving— 

10 ‘‘(1) conduct within the United States that con11 stitutes significant steps in furtherance of the viola12 tion, even if the violation is committed by a foreign 

13 adviser and involves only foreign investors; or 

14 ‘‘(2) conduct occurring outside the United 

15 States that has a foreseeable substantial effect with16 in the United States.’’. 

17 SEC. 7217. FIDELITY BONDING. 

18 Section 17(g) of the Investment Company Act of 

19 1940 (15 U.S.C. 80a–17(g)) is amended to read as fol20 lows: 

21 ‘‘(g) FIDELITY BONDING.— 

22 ‘‘(1) IN GENERAL.—The Commission is author23 ized to require that a registered management com24 pany provide and maintain a fidelity bond against 

25 loss as to any officer or employee who has access to 


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1 securities or funds of the company, either directly or 

2 through authority to draw upon such funds or to di3 rect generally the disposition of such securities (un4 less the officer or employee has such access solely 

5 through his position as an officer or employee of a 

6 bank), in such form and amount as the Commission 

7 may prescribe by rule, regulation, or order for the 

8 protection of investors. 

9 ‘‘(2) DEFINITIONS.—For purposes of this sub10 section: 

11 ‘‘(A) MANAGEMENT COMPANY.—The term 

12 ‘management company’ has the meaning given 

13 such term under section 4 of the Investment 

14 Company Act of 1940. 

15 ‘‘(B) OFFICER OR EMPLOYEE.—The term 

16 ‘officer or employee’ means— 

17 ‘‘(i) any officer or employee of the 

18 management company; and; 

19 ‘‘(ii) any officer or employee of any 

20 investment adviser to the management 

21 company, or of any affiliated company of 

22 any such investment adviser, as the Com23 mission may prescribe by rule, regulation, 

24 or order for the protection of investors. 


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1 ‘‘(C) OTHER DEFINITIONS.—The terms 

2 ‘affiliated company’ and ‘investment adviser’ 

3 shall have the meaning given such terms under 

4 section 2 of the Investment Company Act of 

5 1940.’’. 

6 SEC. 7218. ENHANCED SEC AUTHORITY TO CONDUCT SUR7 VEILLANCE AND RISK ASSESSMENT. 

8 (a) SECURITIES EXCHANGE ACT OF 1934 AMEND9 MENTS.—Section 17(b) of the Securities Exchange Act of 

10 1934 (15 U.S.C. 78q(b)) is amended by adding at the end 

11 the following new paragraph: 

12 ‘‘(5) SURVEILLANCE AND RISK ASSESSMENT.— 

13 All persons described in subsection (a) of this sec14 tion are subject at any time, or from time to time, 

15 to such reasonable periodic, special, or other infor16 mation and document requests by representatives of 

17 the Commission as the Commission by rule or order 

18 deems necessary or appropriate to conduct surveil19 lance or risk assessments of the securities markets, 

20 persons registered with the Commission under this 

21 title, or otherwise in furtherance of the purposes of 

22 this title.’’. 

23 (b) INVESTMENT COMPANY ACT OF 1940 AMEND24 MENTS.—Section 31(b) of the Investment Company Act 

25 of 1940 (15 U.S.C. 80a–30(b)), as amended by section 


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1 7106(a)(2), is further amended by adding at the end the 

2 following new paragraph: 

3 ‘‘(5) SURVEILLANCE AND RISK ASSESSMENT.— 

4 All persons described in paragraph (1) are subject at 

5 any time, or from time to time, to such reasonable 

6 periodic, special, or other information and document 

7 requests by representatives of the Commission as the 

8 Commission by rule or order deems necessary or ap9 propriate to conduct surveillance or risk assessments 

10 of the securities markets, persons registered with the 

11 Commission under this title, or otherwise in further12 ance of the purposes of this title.’’. 

13 (c) INVESTMENT ADVISERS ACT OF 1940 AMEND14 MENTS.—Section 204 of the Investment Advisers Act of 

15 1940 (15 U.S.C. 80b–4), as amended by section 7106(b), 

16 is further amended by adding at the end the following new 

17 subsection: 

18 ‘‘(e) SURVEILLANCE AND RISK ASSESSMENT.—All 

19 persons described in subsection (a) are subject at any 

20 time, or from time to time, to such reasonable periodic, 

21 special, or other information and document requests by 

22 representatives of the Commission as the Commission by 

23 rule or order deems necessary or appropriate to conduct 

24 surveillance or risk assessments of the securities markets, 


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1 persons registered with the Commission under this title, 

2 or otherwise in furtherance of the purposes of this title.’’. 

3 SEC. 7219. INVESTMENT COMPANY EXAMINATIONS. 

4 Section 31(b)(1) of the Investment Company Act of 

5 1940 (15 U.S.C. 80a–30) is amended to read as follows: 

6 ‘‘(1) IN GENERAL.—All records of each reg7 istered investment company, and each underwriter, 

8 broker, dealer, or investment adviser that is a major9 ity-owned subsidiary of such a company, shall be 

10 subject at any time, or from time to time, to such 

11 reasonable periodic, special, or other examinations 

12 by representatives of the Commission as the Com13 mission deems necessary or appropriate in the public 

14 interest or for the protection of investors.’’. 

15 SEC. 7220. CONTROL PERSON LIABILITY UNDER THE SECU16 RITIES EXCHANGE ACT. 

17 Section 20(a) of the Securities Exchange Act of 1934 

18 (15 U.S.C. 78t(a)) is amended by inserting after ‘‘con19 trolled person is liable,’’ the following: ‘‘including to the 

20 Commission in any action brought under paragraph (1) 

21 or (3) of section 21(d),’’. 

22 SEC. 7221. ENHANCED APPLICATION OF ANTI-FRAUD PRO23 VISIONS. 

24 The Securities Exchange Act of 1934 (15 U.S.C. 78a 

25 et seq.) is amended— 


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1 (1) in section 9— 

2 (A) by striking ‘‘registered on a national 

3 securities exchange’’ each place it appears and 

4 inserting ‘‘other than a government security’’; 

5 (B) in subsection (b), by striking ‘‘by use 

6 of any facility of a national securities ex7 change,’’; and 

8 (C) in subsection (c), by inserting after 

9 ‘‘unlawful for any’’ the following: ‘‘broker, deal10 er, or’’; 

11 (2) in section 10(a)(1), by striking ‘‘registered 

12 on a national securities exchange’’ and inserting 

13 ‘‘other than a government security’’; and 

14 (3) in section 15(c)(1)(A), by striking ‘‘other15 wise than on a national securities exchange of which 

16 it is a member’’. 

17 SEC. 7222. SEC AUTHORITY TO ISSUE RULES ON PROXY AC18 CESS. 

19 Section 14(a) of the Securities Exchange Act of 1934 

20 (15 U.S.C. 78n(a)) is amended— 

21 (1) by inserting ‘‘(1)’’ after ‘‘(a)’’; and 

22 (2) by adding at the end the following: 

23 ‘‘(2) The authority of the Commission to prescribe 

24 rules and regulations under paragraph (1) includes rules 

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1 dures relating to the inclusion, in a solicitation of a proxy 

2 or consent or authorization by or on behalf of an issuer, 

3 of a nominee or nominees submitted by shareholders to 

4 serve on the issuer’s board of directors.’’. 

5 PART 3—COMMISSION FUNDING AND 

6 ORGANIZATION 

7 SEC. 7301. AUTHORIZATION OF APPROPRIATIONS. 

8 Section 35 of the Securities Exchange Act of 1934 

9 (15 U.S.C. 78kk) is amended to read as follows: 

10 ‘‘SEC. 35. AUTHORIZATION OF APPROPRIATIONS. 

11 ‘‘In addition to any other funds authorized to be ap12 propriated to the Commission, there are authorized to be 

13 appropriated to carry out the functions, powers, and du14 ties of the Commission— 

15 ‘‘(1) for fiscal year 2010, $1,115,000,000; 

16 ‘‘(2) for fiscal year 2011, $1,300,000,000; 

17 ‘‘(3) for fiscal year 2012, $1,500,000,000; 

18 ‘‘(4) for fiscal year 2013, $1,750,000,000; 

19 ‘‘(5) for fiscal year 2014, $2,000,000,000; and 

20 ‘‘(6) for fiscal year 2015, $2,250,000,000.’’. 

21 SEC. 7302. INVESTMENT ADVISER REGULATION FUNDING. 

22 Section 203 of the Investment Advisers Act of 1940 

23 (15 U.S.C. 80b–3) (as amended by sections 5006 and 

24 5007) is further amended by adding at the end the fol25 lowing new subsection: 


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1 ‘‘(o) ANNUAL ASSESSMENT.— 

2 ‘‘(1) IN GENERAL.—The Commission shall, in 

3 accordance with this subsection, promulgate rules 

4 pursuant to which it may collect from investment 

5 advisers required to register with the Commission 

6 under this title, fees designed to help recover the 

7 cost of inspections and examinations of registered 

8 investment advisers conducted by the Commission 

9 pursuant to this title. 

10 ‘‘(2) FEE PAYMENT REQUIRED.—An investment 

11 adviser shall, at the time of registration with the 

12 Commission, and each fiscal year thereafter during 

13 which such adviser is so registered, pay to the Com14 mission a fair and reasonable fee determined by the 

15 Commission. In determining such fee, the Commis16 sion shall consider objective factors such as— 

17 ‘‘(A) the investment adviser’s size; 

18 ‘‘(B) the number of clients of the invest19 ment adviser; 

20 ‘‘(C) the types of clients of the investment 

21 adviser; and 

22 ‘‘(D) such other relevant factors as the 

23 Commission determines to be appropriate. 

24 ‘‘(3) AMOUNT AND USE OF FEES.— 


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1 ‘‘(A) MINIMUM AGGREGATE AMOUNT.— 

2 The aggregate amount of fees determined by 

3 the Commission under this subsection for any 

4 fiscal year shall be greater than the amount the 

5 Commission spent on inspections and examina6 tions of registered investment advisers during 

7 the 2009 fiscal year. 

8 ‘‘(B) EXCESS FEES.—The Commission 

9 may retain any excess fees collected under this 

10 subsection during a fiscal year for application 

11 towards the costs of inspections and examina12 tions of investment advisers in future fiscal 

13 years. 

14 ‘‘(4) REVIEW AND ADJUSTMENT OF FEES.— 

15 The Commission may review fee rates established 

16 pursuant to this section before the end of any fiscal 

17 year and make any appropriate adjustments prior to 

18 collecting any such fee in the following fiscal year. 

19 ‘‘(5) PENALTY FEE.—The Commission shall 

20 prescribe by rule or regulation an additional fee to 

21 be assessed as a penalty for late payment of fees re22 quired by this subsection. 

23 ‘‘(6) JUDICIAL REVIEW.—Increases or decreases 

24 in fees made pursuant to this section shall not be 

25 subject to judicial review.’’. 


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1 SEC. 7303. AMENDMENTS TO SECTION 31 OF THE SECURI2 TIES EXCHANGE ACT OF 1934. 

3 Section 31 of the Securities Exchange Act of 1934 

4 (15 U.S.C. 78ee) is amended— 

5 (1) in subsection (e)(2), by striking ‘‘September 

6 30’’ and inserting ‘‘September 25’’; 

7 (2) in subsection (g), by striking ‘‘April 30’’ 

8 and inserting ‘‘August 31’’; and 

9 (3) in subsection (j)(2)— 

10 (A) by striking ‘‘5 months’’ and inserting 

11 ‘‘4 months’’; and 

12 (B) by striking ‘‘(including fees collected 

13 during such 5-month period and assessments 

14 collected under subsection (d))’’ and inserting 

15 ‘‘(including fees estimated to be collected under 

16 subsections (b) and (c) prior to the effective 

17 date of the uniform adjusted rate and assess18 ments estimated to be collected under sub19 section (d))’’. 

20 SEC. 7304. COMMISSION ORGANIZATIONAL STUDY AND RE21 FORM. 

22 (a) STUDY REQUIRED.— 

23 (1) IN GENERAL.—Not later than the end of 

24 the 90-day period beginning on the date of the en25 actment of this subtitle, the Securities and Ex26 change Commission (hereinafter in this section reVerDate Nov 24 2008 22:04 Dec 02, 2009 Jkt 089200 PO 00000 Frm 01157 Fmt 6652 Sfmt 6201 E:\BILLS\H4173.IH H4173

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1 ferred to as the ‘‘SEC’’) shall hire an independent 

2 consultant of high caliber and with expertise in orga3 nizational restructuring and the operations of capital 

4 markets to examine the internal operations, struc5 ture, funding, and the need for comprehensive re6 form of the SEC, as well as the SEC’s relationship 

7 with the reliance on self-regulatory organizations 

8 and other entities relevant to the regulation of secu9 rities and the protection of securities investors that 

10 are under the SEC’s oversight. 

11 (2) SPECIFIC AREAS FOR STUDY.—The study 

12 required under paragraph (1) shall, at a minimum, 

13 include the study of— 

14 (A) the possible elimination of unnecessary 

15 or redundant units at the SEC; 

16 (B) improving communications between 

17 SEC offices and divisions; 

18 (C) the need to put in place a clear chain19 of-command structure, particularly for enforce20 ment examinations and compliance inspections; 

21 (D) the effect of high-frequency trading 

22 and other technological advances on the market 

23 and what the SEC requires to monitor the ef24 fect of such trading and advances on the mar25 ket; 


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1 (E) the SEC’s hiring authorities, work2 place policies, and personal practices, includ3 ing— 

4 (i) whether there is a need to further 

5 streamline hiring authorities for those who 

6 are not lawyers, accountants, compliance 

7 examiners, or economists; 

8 (ii) whether there is a need for further 

9 pay reforms; 

10 (iii) the diversity of skill sets of SEC 

11 employees and whether the present skill set 

12 diversity efficiently and effectively fosters 

13 the SEC’s mission of investor protection; 

14 and 

15 (iv) the application of civil service 

16 laws by the SEC; 

17 (F) whether the SEC’s oversight and reli18 ance on self-regulatory organizations promotes 

19 efficient and effective governance for the securi20 ties markets; and 

21 (G) whether adjusting the SEC’s reliance 

22 on self-regulatory organizations is necessary to 

23 promote more efficient and effective governance 

24 for the securities markets. 


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1 (b) CONSULTANT REPORT.—Not later than the end 

2 of the 150-day period after being retained, the inde3 pendent consultant hired pursuant to subsection (a)(1) 

4 shall issue a report to the SEC and the Congress con5 taining— 

6 (1) a detailed description of any findings and 

7 conclusions made while carrying out the study re8 quired under subsection (a)(1); 

9 (2) recommendations for legislative, regulatory, 

10 or administrative action that the consultant deter11 mines appropriate to enable the SEC and other enti12 ties on which it reports to perform their statutorily 

13 or otherwise mandated missions. 

14 (c) SEC REPORT.—Not later than the end of the 6- 

15 month period beginning on the date the consultant issues 

16 the report under subsection (b), and every 6-months there17 after during the 2-year period following the date on which 

18 the consultant issues such report, the SEC shall issue a 

19 report to the Committee on Financial Services of the 

20 House of Representatives and the Committee on Banking, 

21 Housing, and Urban Affairs of the Senate describing the 

22 SEC’s implementation of the regulatory and administra23 tive recommendations contained in the consultant’s report. 


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1 SEC. 7305. CAPITAL MARKETS SAFETY BOARD. 

2 There is established within the Securities and Ex3 change Commission an office to be known as the Capital 

4 Markets Safety Board whose purpose shall be to conduct 

5 investigations, at the direction of the Commission, of 

6 failed institutions registered with the Commission, to de7 termine what caused such institutions to fail. Upon the 

8 conclusion of an investigation, the Board shall make avail9 able on the Commission’s website a report of its findings, 

10 including recommendations regarding how others can 

11 avoid similar mistakes. No information that may com12 promise an ongoing Federal investigation shall be made 

13 available in any such report. 

14 SEC. 7306. REPORT ON IMPLEMENTATION OF ‘‘POST15 MADOFF REFORMS’’. 

16 (a) IN GENERAL.—Not later than 6 months after the 

17 date of the enactment of this subtitle, the Securities and 

18 Exchange Commission shall provide to the Committee on 

19 Financial Services of the House of Representatives and 

20 the Committee on Banking, Housing, and Urban Affairs 

21 of the Senate a report describing the implementation of 

22 reforms outlined by the Commission in the wake of the 

23 discovery of fraud by Bernie Madoff. 

24 (b) CONTENTS OF REPORT.—The report required by 

25 subsection (a) shall include an analysis of— 


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1 (1) how many of the post-Madoff reforms have 

2 been implemented and to what extent; and 

3 (2) whether there is overlap between any of the 

4 Commission’s reform proposals and those rec5 ommended by the Inspector General of the Commis6 sion. 

7 (c) PUBLICATION OF REPORT.—The Commission and 

8 the Committees referred to in subsection (a) shall publish 

9 the report required by such subsection on their Web sites. 

10 SEC. 7307. JOINT ADVISORY COMMITTEE. 

11 The Securities and Exchange Commission and the 

12 Commodities Futures Trading Commission may jointly 

13 form and operate a joint advisory committee composed of 

14 members of each Commission and industry experts and 

15 participants. The purposes of such an advisory committee 

16 include— 

17 (1) considering and developing solutions to 

18 emerging and ongoing issues of common interest in 

19 the futures and securities markets; 

20 (2) identifying emerging regulatory risks and 

21 assess and quantify their implications for investors 

22 and other market participants, and provide rec23 ommendations for solutions; 

24 (3) serving as a vehicle for discussion and com25 munication on regulatory issues of mutual concerns 


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1 affecting each Commission, the regulated markets, 

2 and the industry generally; and 

3 (4) reporting regularly to each Commission and 

4 to Congress on its activities. 

5 PART 4—ADDITIONAL COMMISSION REFORMS 

6 SEC. 7401. REGULATION OF SECURITIES LENDING. 

7 Section 10 of the Securities Exchange Act of 1934 

8 (15 U.S.C. 78j) is amended by adding at the end the fol9 lowing new subsection: 

10 ‘‘(c)(1) To effect, accept, or facilitate a transaction 

11 involving the loan or borrowing of securities in contraven12 tion of such rules and regulations as the Commission may 

13 prescribe as necessary or appropriate in the public interest 

14 or for the protection of investors. 

15 ‘‘(2) Nothing in paragraph (1) shall be construed to 

16 limit the authority of an appropriate Federal banking 

17 agency (as defined in section 3 of the Federal Deposit In18 surance Act (12 U.S.C. 1813(q))), the National Credit 

19 Union Administration, or any other Federal department 

20 or agency identified under law as having a systemic risk 

21 responsibility from prescribing rules or regulations to im22 pose restrictions on transactions involving the loan or bor23 rowing of securities in order to protect the safety and 

24 soundness of a financial institution or to protect the finan25 cial system from systemic risk.’’. 


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1 SEC. 7402. LOST AND STOLEN SECURITIES. 

2 Section 17(f)(1) of the Securities Exchange Act of 

3 1934 (15 U.S.C. 78q(f)(1)) is amended— 

4 (1) in subparagraph (A), by striking ‘‘missing, 

5 lost, counterfeit, or stolen securities’’ and inserting 

6 ‘‘securities that are missing, lost, counterfeit, stolen, 

7 cancelled, or any other category of securities as the 

8 Commission, by rule, may prescribe’’; and 

9 (2) in subparagraph (B), by striking ‘‘or sto10 len’’ and inserting ‘‘stolen, cancelled, or reported in 

11 such other manner as the Commission, by rule, may 

12 prescribe’’. 

13 SEC. 7403. FINGERPRINTING. 

14 Section 17(f)(2) of the Securities Exchange Act of 

15 1934 (15 U.S.C. 78q(f)(2)) is amended— 

16 (1) by striking ‘‘and registered clearing agen17 cy,’’ and inserting ‘‘registered clearing agency, reg18 istered securities information processor, national se19 curities exchange, and national securities associa20 tion’’; and 

21 (2) by striking ‘‘or clearing agency,’’ and insert22 ing ‘‘clearing agency, securities information proc23 essor, national securities exchange, or national secu24 rities association,’’. 


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1 SEC. 7404. EQUAL TREATMENT OF SELF-REGULATORY OR2 GANIZATION RULES. 

3 Section 29(a) of the Securities Exchange Act of 1934 

4 (15 U.S.C. 78cc(a)) is amended by striking ‘‘an exchange 

5 required thereby’’ and inserting ‘‘a self-regulatory organi6 zation,’’. 

7 SEC. 7405. CLARIFICATION THAT SECTION 205 OF THE IN8 VESTMENT ADVISERS ACT OF 1940 DOES NOT 

9 APPLY TO STATE-REGISTERED ADVISERS. 

10 Section 205(a) of the Investment Advisers Act of 

11 1940 (15 U.S.C. 80b–5(a)) is amended— 

12 (1) by striking ‘‘, unless exempt from registra13 tion pursuant to section 203(b),’’ and inserting 

14 ‘‘registered or required to be registered with the 

15 Commission’’; 

16 (2) by striking ‘‘make use of the mails or any 

17 means or instrumentality of interstate commerce, di18 rectly or indirectly, to’’; and 

19 (3) by striking ‘‘to’’ after ‘‘in any way’’. 

20 SEC. 7406. CONFORMING AMENDMENTS FOR THE REPEAL 

21 OF THE PUBLIC UTILITY HOLDING COMPANY 

22 ACT OF 1935. 

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

25 amended— 


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1 (1) in section 3(a)(47) (15 U.S.C. 78c(a)(47)), 

2 by striking ‘‘the Public Utility Holding Company 

3 Act of 1935 (15 U.S.C. 79a et seq.),’’; and 

4 (2) in section 12(k) (15 U.S.C. 78l(k)), by 

5 amending paragraph (7) to read as follows:

6 ‘‘(7) DEFINITION.—For purposes of this sub7 section, the term ‘emergency’ means— 

8 ‘‘(A) a major market disturbance charac9 terized by or constituting— 

10 ‘‘(i) sudden and excessive fluctuations 

11 of securities prices generally, or a substan12 tial threat thereof, that threaten fair and 

13 orderly markets; or 

14 ‘‘(ii) a substantial disruption of the 

15 safe or efficient operation of the national 

16 system for clearance and settlement of 

17 transactions in securities, or a substantial 

18 threat thereof; or 

19 ‘‘(B) a major disturbance that substan20 tially disrupts, or threatens to substantially dis21 rupt— 

22 ‘‘(i) the functioning of securities mar23 kets, investment companies, or any other 

24 significant portion or segment of the secu25 rities markets; or 


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1 ‘‘(ii) the transmission or processing of 

2 securities transactions.’’. 

3 (3) in section 21(h)(2) (15 U.S.C. 78u(h)(2)), 

4 by striking ‘‘section 18(c) of the Public Utility Hold5 ing Company Act of 1935,’’. 

6 (b) TRUST INDENTURE ACT OF 1939.—The Trust 

7 Indenture Act of 1939 (15 U.S.C. 77aaa et seq.) is 

8 amended— 

9 (1) in section 303 (15 U.S.C. 77ccc), by 

10 amending paragraph (17) to read as follows: 

11 ‘‘(17) The terms ‘Securities Act of 1933’ and 

12 ‘Securities Exchange Act of 1934’ shall be deemed 

13 to refer, respectively, to such Acts, as amended, 

14 whether amended prior to or after the enactment of 

15 this title.’’; 

16 (2) in section 308 (15 U.S.C. 77hhh), by strik17 ing ‘‘Securities Act of 1933, the Securities Exchange 

18 Act of 1934, or the Public Utility Holding Company 

19 Act of 1935’’ each place it appears and inserting 

20 ‘‘Securities Act of 1933 or the Securities Exchange 

21 Act of 1934’’; 

22 (3) in section 310 (15 U.S.C. 77jjj), by striking 

23 subsection (c); 

24 (4) in section 311 (15 U.S.C. 77kkk) by strik25 ing subsection (c); 


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1 (5) in section 323(b) (15 U.S.C. 77www(b)), by 

2 striking ‘‘Securities Act of 1933, or the Securities 

3 Exchange Act of 1934, or the Public Utility Holding 

4 Company Act of 1935’’ and inserting ‘‘Securities Act 

5 of 1933 or the Securities Exchange Act of 1934’’; 

6 and 

7 (6) in section 326 (15 U.S.C. 77zzz), by strik8 ing ‘‘Securities Act of 1933, or the Securities Ex9 change Act of 1934, or the Public Utility Holding 

10 Company Act of 1935,’’ and inserting ‘‘Securities 

11 Act of 1933 or the Securities Exchange Act of 

12 1934’’. 

13 (c) INVESTMENT COMPANY ACT OF 1940.—The In14 vestment Company Act of 1940 (15 U.S.C. 80a–1 et seq.) 

15 is amended— 

16 (1) in section 2(a)(44) (15 U.S.C. 80a– 

17 2(a)(44)), by striking ‘‘ ‘Public Utility Holding Com18 pany Act of 1935’,’’; 

19 (2) in section 3(c) (15 U.S.C. 80a–3(c)), by 

20 amending paragraph (8) to read as follows: 

21 ‘‘(8) [Repealed]’’; 

22 (3) in section 38(b) (15 U.S.C. 80a–37(b)), by 

23 striking ‘‘the Public Utility Holding Company Act of 

24 1935,’’; and 


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1 (4) in section 50 (15 U.S.C. 80a–49), by strik2 ing ‘‘the Public Utility Holding Company Act of 

3 1935,’’. 

4 (d) INVESTMENT ADVISERS ACT OF 1940.—Section 

5 202(a)(21) of the Investment Advisers Act of 1940 (15 

6 U.S.C. 80b–2(a)(21)) is amended by striking ‘‘ ‘Public 

7 Utility Holding Company Act of 1935’,’’. 

8 SEC. 7407. PROMOTING TRANSPARENCY IN FINANCIAL RE9 PORTING. 

10 (a) FINDINGS.—Congress finds the following: 

11 (1) Transparent and clear financial reporting is 

12 integral to the continued growth and strength of our 

13 capital markets and the confidence of investors. 

14 (2) The increasing detail and volume of ac15 counting, auditing, and reporting guidance pose a 

16 major challenge. 

17 (3) The complexity of accounting and auditing 

18 standards in the United States has added to the 

19 costs and effort involved in financial reporting. 

20 (b) TESTIMONY REQUIRED ON REDUCING COM21 PLEXITY IN FINANCIAL REPORTING.—The Securities and 

22 Exchange Commission, the Public Company Accounting 

23 Oversight Board, and the standard setting body des24 ignated pursuant to section 19(b) of the Securities Act 

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1 spective Chairpersons or a designee of the Chairperson, 

2 beginning in 2010, and for 5 years thereafter, to the Com3 mittee on Financial Services of the House of Representa4 tives on their efforts to reduce the complexity in financial 

5 reporting to provide more accurate and clear financial in6 formation to investors, including— 

7 (1) reassessing complex and outdated account8 ing standards; 

9 (2) improving the understandability, consist10 ency, and overall usability of the existing accounting 

11 and auditing literature; 

12 (3) developing principles-based accounting 

13 standards; 

14 (4) encouraging the use and acceptance of 

15 interactive data; and 

16 (5) promoting disclosures in ‘‘plain English’’. 

17 SEC. 7408. UNLAWFUL MARGIN LENDING. 

18 Section 7(c)(1)(A) of the Securities Exchange Act of 

19 1934 (15 U.S.C. 78g(c)(1)(A)) is amended by striking ‘‘; 

20 and’’ and inserting ‘‘; or’’. 

21 SEC. 7409. PROTECTING CONFIDENTIALITY OF MATERIALS 

22 SUBMITTED TO THE COMMISSION. 

23 (a) SECURITIES EXCHANGE ACT OF 1934.—Section 

24 17(i) of the Securities Exchange Act of 1934 (as amended 

25 by section 1314(2)) is amended to read as follows: 


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1 ‘‘(i) AUTHORITY TO LIMIT DISCLOSURE OF INFOR2 MATION.— 

3 ‘‘(1) IN GENERAL.—Notwithstanding any other 

4 provision of law, the Commission shall not be com5 pelled to disclose any information, documents, 

6 records, or reports that relate to an examination, 

7 surveillance, or risk assessment of a person subject 

8 to or described in this section, or the financial or 

9 operational condition of such persons, or any infor10 mation supplied to the Commission by any domestic 

11 or foreign regulatory agency or self-regulatory orga12 nization that relates to the financial or operational 

13 condition of such persons, of any associated person 

14 of such persons, or any affiliate of an investment 

15 bank holding company. 

16 ‘‘(2) CERTAIN EXCEPTIONS.—Nothing in this 

17 subsection shall authorize the Commission to with18 hold information from the Congress, prevent the 

19 Commission from complying with a request for infor20 mation from any other Federal department or agen21 cy, the Public Company Accounting Oversight 

22 Board, or any self-regulatory organization request23 ing the information for purposes within the scope of 

24 its jurisdiction, or prevent the Commission from 

25 complying with an order of a court of the United 


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1 States in an action brought by the United States or 

2 the Commission against a person subject to or de3 scribed in this section to produce information, docu4 ments, records, or reports relating directly to the ex5 amination, surveillance, or risk assessment of that 

6 person or the financial or operational condition of 

7 that person or an associated or affiliated person of 

8 that person. 

9 ‘‘(3) TREATMENT UNDER SECTION 552 OF

10 TITLE 5, UNITED STATES CODE.—For purposes of 

11 section 552 of title 5, United States Code, this sub12 section shall be considered a statute described in 

13 subsection (b)(3)(B) of that section. 

14 ‘‘(4) CERTAIN INFORMATION TO BE CONFIDEN15 TIAL.—In prescribing regulations to carry out the 

16 requirements of this subsection, the Commission 

17 shall designate information described in or obtained 

18 pursuant to subparagraphs (A), (B), and (C) of sub19 section (i)(3) as confidential information for pur20 poses of section 24(b)(2) of this title.’’. 

21 (b) INVESTMENT COMPANY ACT OF 1940.—Section 

22 31(b) of the Investment Company Act of 1940 (15 U.S.C. 

23 80a–30(b)), as amended by sections 7106(a)(2) and 

24 7218(b)(4), is further amended by adding at the end the 

25 following new paragraph: 


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1 ‘‘(6) CONFIDENTIALITY.— 

2 ‘‘(A) IN GENERAL.—Notwithstanding any 

3 other provision of law, the Commission shall not 

4 be compelled to disclose any information, docu5 ments, records, or reports that relate to an ex6 amination, surveillance, or risk assessment of a 

7 person subject to or described in this section. 

8 ‘‘(B) CERTAIN EXCEPTIONS.—Nothing in 

9 this subsection shall authorize the Commission 

10 to withhold information from the Congress, pre11 vent the Commission from complying with a re12 quest for information from any other Federal 

13 department or agency, or the Public Company 

14 Accounting Oversight Board requesting the in15 formation for purposes within the scope of its 

16 jurisdiction, or prevent the Commission from 

17 complying with an order of a court of the 

18 United States in an action brought by the 

19 United States or the Commission against a per20 son subject to or described in this section to 

21 produce information, documents, records, or re22 ports relating directly to the examination of 

23 that person or the financial or operational con24 dition of that person or an associated or affili25 ated person of that person. 


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1 ‘‘(C) TREATMENT UNDER SECTION 552 OF

2 TITLE 5, UNITED STATES CODE.—For purposes 

3 of section 552 of title 5, United States Code, 

4 this subsection shall be considered a statute de5 scribed in subsection (b)(3)(B) of that sec6 tion.’’. 

7 (c) INVESTMENT ADVISERS ACT OF 1940.—Section 

8 204 of the Investment Advisers Act of 1940 (15 U.S.C. 

9 80b–4), as amended by sections 7106(b) and 7218(c), is 

10 further amended by adding at the end the following new 

11 subsection: 

12 ‘‘(f) CONFIDENTIALITY.— 

13 ‘‘(1) IN GENERAL.—Notwithstanding any other 

14 provision of law, the Commission shall not be com15 pelled to disclose any information, documents, 

16 records, or reports that relate to an examination of 

17 a person subject to or described in this section. 

18 ‘‘(2) CERTAIN EXCEPTIONS.—Nothing in this 

19 subsection shall authorize the Commission to with20 hold information from Congress, prevent the Com21 mission from complying with a request for informa22 tion from any other Federal department or agency, 

23 the Public Company Accounting Oversight Board, or 

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1 tion, or prevent the Commission from complying 

2 with an order of a court of the United States in an 

3 action brought by the United States or the Commis4 sion against a person subject to or described in this 

5 section to produce information, documents, records, 

6 or reports relating directly to the examination of 

7 that person or the financial or operational condition 

8 of that person or an associated or affiliated person 

9 of that person. 

10 ‘‘(3) TREATMENT UNDER SECTION 552 OF

11 TITLE 5, UNITED STATES CODE.—For purposes of 

12 section 552 of title 5, United States Code, this sub13 section shall be considered a statute described in 

14 subsection (b)(3)(B) of that section.’’. 

15 SEC. 7410. TECHNICAL CORRECTIONS. 

16 (a) SECURITIES ACT OF 1933.—The Securities Act 

17 of 1933 (15 U.S.C. 77a et seq.) is amended— 

18 (1) in section 3(a)(4) (15 U.S.C. 77c(a)(4)), by 

19 striking ‘‘individual;’’ and inserting ‘‘individual,’’; 

20 (2) in the matter following paragraph (5) of 

21 section 11(a), by striking ‘‘earning statement’’ and 

22 inserting ‘‘earnings statement’’. 

23 (3) in section 18(b)(1)(C) (15 U.S.C. 

24 77r(b)(1)(C)), by striking ‘‘is a security’’ and insert25 ing ‘‘a security’’; 


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1 (4) in section 18(c)(2)(B)(i) (15 U.S.C. 

2 77r(c)(2)(B)(i)), by striking ‘‘State, or’’ and insert3 ing ‘‘State or’’; 

4 (5) in section 19(d)(6)(A) (15 U.S.C. 

5 77s(d)(6)(A)), by striking ‘‘in paragraph (1) of (3)’’ 

6 and inserting ‘‘in paragraph (1) or (3)’’; and 

7 (6) in section 27A(c)(1)(B)(ii) (15 U.S.C. 77z– 

8 2(c)(1)(B)(ii)), by striking ‘‘business entity;’’ and in9 serting ‘‘business entity,’’. 

10 (b) SECURITIES EXCHANGE ACT OF 1934.—The Se11 curities Exchange Act of 1934 (15 U.S.C. 78 et seq.) is 

12 amended— 

13 (1) in section 2(1)(a) (15 U.S.C. 78b(1)(a)), by 

14 striking ‘‘affected’’ and inserting ‘‘effected’’; 

15 (2) in section 3(a)(55)(A) (15 U.S.C. 

16 78c(a)(55)(A)), by striking ‘‘section 3(a)(12) of the 

17 Securities Exchange Act of 1934’’ and inserting 

18 ‘‘section 3(a)(12) of this Act’’; 

19 (3) in section 3(g) (15 U.S.C. 78c(g)), by strik20 ing ‘‘company, account person, or entity’’ and insert21 ing ‘‘company, account, person, or entity’’; 

22 (4) in section 10A(i)(1)(B)(i) (15 U.S.C. 78j– 

23 1(i)(1)(B)(i)), by striking ‘‘nonaudit’’ and inserting 

24 ‘‘non-audit’’; 


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1 (5) in section 13(b)(1) (15 U.S.C. 78m(b)(1)), 

2 by striking ‘‘earning statement’’ and inserting 

3 ‘‘earnings statement’’; 

4 (6) in section 15(b)(1) (15 U.S.C. 78o(b)(1))— 

5 (A) by striking the sentence beginning 

6 ‘‘The order granting’’ and ending ‘‘from such 

7 membership.’’ in subparagraph (B); and 

8 (B) by inserting such sentence in the mat9 ter following such subparagraph after ‘‘are sat10 isfied.’’; 

11 (7) in section 15C(a)(2) (15 U.S.C. 78o– 

12 5(a)(2))— 

13 (A) by redesignating clauses (i) and (ii) as 

14 subparagraphs (A) and (B), respectively; 

15 (B) by striking the sentence beginning 

16 ‘‘The order granting’’ and ending ‘‘from such 

17 membership.’’ in such subparagraph (B), as re18 designated; and 

19 (C) by inserting such sentence in the mat20 ter following such redesignated subparagraph 

21 after ‘‘are satisfied.’’; 

22 (8) in section 17(b)(1)(B) (15 U.S.C. 

23 78q(b)(1)(B)), by striking ‘‘15A(k) gives’’ and in24 serting ‘‘15A(k), give’’; and 


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1 (9) in section 21C(c)(2) (15 U.S.C. 78u– 

2 3(c)(2)), by striking ‘‘paragraph (1) subsection’’ and 

3 inserting ‘‘Paragraph (1)’’. 

4 (c) TRUST INDENTURE ACT OF 1939.—The Trust 

5 Indenture Act of 1939 (15 U.S.C. 77aaa et seq.) is 

6 amended— 

7 (1) in section 304(b) (15 U.S.C. 77ddd(b)), by 

8 striking ‘‘section 2 of such Act’’ and inserting ‘‘sec9 tion 2(a) of such Act’’; 

10 (2) in section 313(a)(4) (15 U.S.C. 

11 77mmm(a)(4)) by striking ‘‘subsection (b) of section 

12 311’’ and inserting ‘‘section 311(b)’’; and 

13 (3) in section 317(a)(1) (15 U.S.C. 

14 77qqq(a)(1)), by striking ‘‘(1),’’ and inserting ‘‘(1)’’. 

15 (d) INVESTMENT COMPANY ACT OF 1940.—The In16 vestment Company Act of 1940 (15 U.S.C. 80a–1 et seq.) 

17 is amended— 

18 (1) in section 2(a)(19)(B) (15 U.S.C. 80a– 

19 2(a)(19)(B)) by striking ‘‘clause (vi)’’ both places it 

20 appears in the last two sentences and inserting 

21 ‘‘clause (vii)’’; 

22 (2) in section 9(b)(4)(B) (15 U.S.C. 80a– 

23 9(b)(4)(B)), by inserting ‘‘or’’ after the semicolon at 

24 the end; 


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1 (3) in section 12(d)(1)(J) (15 U.S.C. 80a– 

2 12(d)(1)(J)), by striking ‘‘any provision of this sub3 section’’ and inserting ‘‘any provision of this para4 graph’’; 

5 (4) in section 13(a)(3) (15 U.S.C. 80a– 

6 13(a)(3)), by inserting ‘‘or’’ after the semicolon at 

7 the end; 

8 (5) in section 17(f)(4) (15 U.S.C. 80a– 

9 17(f)(4)), by striking ‘‘No such member’’ and insert10 ing ‘‘No member of a national securities exchange’’; 

11 (6) in section 17(f)(6) (15 U.S.C. 80a– 

12 17(f)(6)), by striking ‘‘company may serve’’ and in13 serting ‘‘company, may serve’’; and 

14 (7) in section 61(a)(3)(B)(iii) (15 U.S.C. 80a– 

15 60(a)(3)(B)(iii))— 

16 (A) by striking ‘‘paragraph (1) of section 

17 205’’ and inserting ‘‘section 205(a)(1)’’; and 

18 (B) by striking ‘‘clause (A) or (B) of that 

19 section’’ and inserting ‘‘section 205(b)(1) or 

20 (2)’’. 

21 (e) INVESTMENT ADVISERS ACT OF 1940.—The In22 vestment Advisers Act of 1940 (15 U.S.C. 80b–1 et seq.) 

23 is amended— 

24 (1) in each of the following sections, by striking 

25 ‘‘principal business office’’ or ‘‘principal place of 


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1 business’’ (whichever and wherever it appears) and 

2 inserting ‘‘principal office and place of business’’: 

3 sections 203(c)(1)(A), 203(k)(4)(B), 213(a), 222(b), 

4 and 222(c) (15 U.S.C. 80b–3(c)(1)(A), 80b– 

5 3(k)(4)(B), 80b–13(a), 80b–18a(b), and 80b– 

6 18a(c)); and 

7 (2) in section 206(3) (15 U.S.C. 80b–6(3)), by 

8 inserting ‘‘or’’ after the semicolon at the end. 

9 SEC. 7411. MUNICIPAL SECURITIES. 

10 Section 15B(b) of the Securities Exchange Act of 

11 1934 (15 U.S.C. 78o–4(b)) is amended— 

12 (1) by amending paragraph (1) to read as fol13 lows: 

14 ‘‘(1) COMPOSITION OF THE MUNICIPAL SECURI15 TIES RULEMAKING BOARD.—Not later than October 

16 1, 2010, the Municipal Securities Rulemaking Board 

17 (hereinafter in this section referred to as the 

18 ‘Board’), shall be composed of members which shall 

19 perform the duties set forth in this section and shall 

20 consist of— 

21 ‘‘(A) a majority of independent public rep22 resentatives, at least one of whom shall be rep23 resentative of investors in municipal securities 

24 and at least one of whom shall be representative 

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1 bers are hereinafter referred to as ‘public rep2 resentatives’); 

3 ‘‘(B) at least one individual who is rep4 resentative of municipal securities brokers and 

5 municipal securities dealers which are not 

6 banks or subsidiaries or departments or divi7 sions of banks (which members are hereinafter 

8 referred to as ‘broker-dealer representatives’); 

9 and 

10 ‘‘(C) at least one individual who is rep11 resentative of municipal securities dealers which 

12 are banks or subsidiaries or departments or di13 visions of banks (which members are herein14 after referred to as ‘bank representatives’).’’; 

15 and 

16 (2) by amending paragraph (2)(B) to read as 

17 follows: 

18 ‘‘(B) Establish fair procedures for the nomina19 tion and election of members of the Board and as20 sure fair representation in such nominations and 

21 elections of municipal securities brokers and munic22 ipal securities dealers. Such rules— 

23 ‘‘(i) shall establish requirements regarding 

24 the independence of public representatives; 


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1 ‘‘(ii) shall provide that the number of pub2 lic representatives of the Board shall at all 

3 times exceed the total number of broker-dealer 

4 representatives and bank representatives; 

5 ‘‘(iii) shall establish minimum knowledge, 

6 experience, and other appropriate qualifications 

7 for individuals to serve as public representa8 tives, which may include, among other things, 

9 prior work experience in the securities, munic10 ipal finance, or municipal securities industries; 

11 ‘‘(iv) shall specify the term members shall 

12 serve; and 

13 ‘‘(v) may increase or decrease the number 

14 of members which shall constitute the whole 

15 Board, but in no case may such number be an 

16 even number.’’. 

17 SEC. 7412. INTERESTED PERSON DEFINITION. 

18 Section 2(a)(19)(A) of the Investment Company Act 

19 of 1940 (15 U.S.C. 80a–2(a)(19)(A)) is amended— 

20 (1) by striking clauses (v) and (vi); 

21 (2) by inserting after clause (iv) the following 

22 new clause: 

23 ‘‘(v) any natural person who is a 

24 member of a class of persons who the 

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1 mines are unlikely to exercise an appro2 priate degree of independence as a result 

3 of— 

4 ‘‘(I) a material business or pro5 fessional relationship with such com6 pany or any affiliated person of such 

7 company; or 

8 ‘‘(II) a close familial relationship 

9 with any natural person who is an af10 filiated person of such company;’’; 

11 (3) by redesignating clause (vii) as clause (vi); 

12 and 

13 (4) in clause (vi), as redesignated, by striking 

14 ‘‘two completed fiscal years’’ and inserting ‘‘five 

15 completed fiscal years’’. 

16 SEC. 7413. RULEMAKING AUTHORITY TO PROTECT RE17 DEEMING INVESTORS. 

18 Section 22(e) of the Investment Company Act of 

19 1940 (15 U.S.C. 80a–22(e)) is amended by adding at the 

20 end the following: ‘‘The Commission may, by rules and 

21 regulations, limit the extent to which a registered open22 end investment company may own, hold, or invest in il23 liquid securities or other illiquid property.’’. 


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1 SEC. 7414. STUDY ON SEC REVOLVING DOOR. 

2 (a) GOVERNMENT ACCOUNTABILITY OFFICE

3 STUDY.—The Comptroller General of the United States 

4 shall conduct a study that will— 

5 (1) review the number of employees who leave 

6 the Securities and Exchange Commission to work 

7 for financial institutions regulated by such Commis8 sion; 

9 (2) determine how many employees who leave 

10 the Securities and Exchange Commission worked on 

11 cases that involved financial institutions regulated by 

12 such Commission; 

13 (3) review the length of time employees work 

14 for the Securities and Exchange Commission before 

15 leaving to be employed by financial institutions regu16 lated by such Commission; 

17 (4) review existing internal controls and make 

18 recommendations on strengthening such controls to 

19 ensure that employees of the Securities and Ex20 change Commission who are later employed by fi21 nancial institutions did not assist such institutions 

22 in violating any rules or regulations of the Commis23 sion during the course of their employment with 

24 such Commission; 

25 (5) determine if greater post-employment re26 strictions are necessary to prevent employees of the 


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1 Securities and Exchange Commission from being 

2 employed by financial institutions after employment 

3 with such Commission; 

4 (6) determine if the volume of employees of the 

5 Securities and Exchange Commission who are later 

6 employed by financial institutions has led to ineffi7 ciencies in enforcement; 

8 (7) determine if employees of the Securities and 

9 Exchange Commission who are later employed by fi10 nancial institutions have engaged in information 

11 sharing or assisted such institutions in circum12 venting Federal rules and regulations while em13 ployed by such Commission; 

14 (8) review any information that may address 

15 the volume of employees of the Securities and Ex16 change Commission who are later employed by fi17 nancial institutions, and make recommendations to 

18 Congress; and 

19 (9) review other additional issues as may be 

20 raised during the course of the study conducted 

21 under this subsection. 

22 (b) REPORT.—Not later than 1 year after the date 

23 of the enactment of this subtitle, the Comptroller General 

24 of the United States shall submit to the Committee on 

25 Financial Services of the House of Representatives and 


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1 the Committee on Banking, Housing, and Urban Affairs 

2 of the Senate a report on the results of the study required 

3 by subsection (a). 

4 SEC. 7415. STUDY ON INTERNAL CONTROL EVALUATION 

5 AND REPORTING COST BURDENS ON SMALL6 ER ISSUERS. 

7 (a) STUDY REQUIRED.—The Government Account8 ability Office and the Securities and Exchange Commis9 sion shall each conduct a study evaluating the costs and 

10 benefits of complying with section 404(b) of the Sarbanes11 Oxley Act of 2002 (15 U.S.C. § 7262(b)) on issuers who 

12 are not accelerated or large accelerated filers as defined 

13 by Commission Rule 12b-2. The study shall— 

14 (1) include recommendations, administrative re15 forms, and legislative proposals on implementation 

16 steps that could be taken to reduce compliance bur17 dens on these issuers; and 

18 (2) determine the efficacy of the Securities and 

19 Exchange Commission’s measures to limit the cost 

20 of compliance on smaller issuers. 

21 (b) REPORTS REQUIRED.—On or before June 1, 

22 2010, the Government Accountability Office and the Secu23 rities and Exchange Commission shall submit separate re24 ports to Congress containing the findings and conclusions 

25 of the studies required under subsection (a), together with 


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1 such recommendations for regulatory, legislative, or ad2 ministrative action as may be appropriate. 

3 (c) EFFECTIVE DATE CONTINGENT ON REPORTS.— 

4 Requirements under section 404(b) of the Sarbanes-Oxley 

5 Act of 2002 on issuers described under subsection (a) shall 

6 not become effective until the results of the report are de7 livered, but in no case before June 1, 2011. 

8 SECTION 7416. ANALYSIS OF RULE REGARDING SMALLER 

9 REPORTING COMPANIES. 

10 (a) FINDINGS.—Congress finds the following: 

11 (1) Many small businesses in cutting-edge tech12 nology sectors require significant capital investment 

13 to develop new technologies related to clean energy, 

14 drug treatments for terminal diseases and food pro15 duction in hunger-stricken areas of the World. 

16 (2) Many technology companies conducting re17 search do not meet the definition of ‘‘smaller report18 ing company’’ under the Securities and Exchange 

19 Commission’s Rule 12b–2 due to unusually high 

20 public floats despite low or zero revenue. 

21 (3) The Final Report of the Advisory Com22 mittee on Smaller Public Companies to the Securi23 ties and Exchange Commission recommended that a 

24 company with a market capitalization of less than 

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1 pany and that the Commission provide exemptions 

2 from section 404(b) of the Sarbanes-Oxley Act to 

3 companies with less than $250,000,000 in annual 

4 revenues. 

5 (b) STUDY OF USING REVENUE AS CRITERIA TO DE6 FINE SMALLER REPORTING COMPANY.—The Securities 

7 and Exchange Commission shall conduct a study of the 

8 inclusion of revenue as a criteria used in defining smaller 

9 reporting company as defined under the Commission’s 

10 Rule 12b-2 to account for smaller public companies with 

11 public floats less than $700,000,000 and revenues less 

12 than $250,000,000. Not later than 180 days after the date 

13 of enactment of this subtitle, the Commission shall provide 

14 the Committee on Financial Services of the House of Rep15 resentatives and the Committee on Banking, Housing and 

16 Urban Affairs of the Senate a report of the findings of 

17 the study. 

18 SEC. 7417. FINANCIAL REPORTING FORUM. 

19 (a) ESTABLISHMENT.—There is hereby established a 

20 Financial Reporting Forum (hereinafter referred to as the 

21 ‘‘Forum’’), which shall consist of— 

22 (1) the Chairman of the Securities Exchange 

23 Commission (hereinafter referred to as the ‘‘SEC’’); 

24 (2) the head of the Financial Accounting 

25 Standards Board; 


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1 (3) the Chairman of the Public Company Ac2 counting Oversight Board; 

3 (4) the head of each appropriate Federal bank4 ing agency, as such term is defined under section 

5 3(q) of the Federal Deposit Insurance Act (12 

6 U.S.C. 1813(q)); 

7 (5) the Administrator of the National Credit 

8 Union Administration; 

9 (6) the Secretary of the Treasury; 

10 (7) a representative of a non-financial institu11 tion, appointed by the SEC; 

12 (8) a representative of a financial institution, 

13 appointed by the SEC; 

14 (9) a representative of auditors, appointed by 

15 the SEC; and 

16 (10) a representative of investors, appointed by 

17 the SEC. 

18 (b) MEETINGS.—The Forum shall meet no less often 

19 than quarterly. 

20 (c) DUTIES.—The Forum shall meet to discuss im21 mediate and long-term issues critical to financial report22 ing. 

23 (d) REPORTING.—The Forum shall issue an annual 

24 report to the Congress detailing any determinations or 

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1 cluding any legislative recommendations the Forum may 

2 have related to financial reporting matters. 

3 SEC. 7418. INVESTMENT ADVISERS SUBJECT TO STATE AU4 THORITIES. 

5 Section 203A(a) of the Investment Advisers Act of 

6 1940 (15 U.S.C. 80b–3a(a)) is amended— 

7 (1) by redesignating paragraph (2) as para8 graph (3); and 

9 (2) by inserting after paragraph (1) the fol10 lowing new paragraph: 

11 ‘‘(2) TREATMENT OF CERTAIN MID-SIZED IN12 VESTMENT ADVISERS.—Notwithstanding paragraph 

13 (1), an investment adviser that— 

14 ‘‘(A) is regulated and examined, or re15 quired to be regulated and examined, by a 

16 State; and 

17 ‘‘(B) has assets under management be18 tween— 

19 ‘‘(i) the amount specified under sub20 paragraph (A) of paragraph (1), as such 

21 amount may have been adjusted by the 

22 Commission pursuant to that subpara23 graph, and 

24 ‘‘(ii) $100,000,000, or such higher 

25 amount as the Commission may, by rule, 


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1 deem appropriate in accordance with the 

2 purposes of this title, 

3 shall register with, and be subject to examina4 tion by, such State. The Commission shall pub5 lish a list of the States that regulate and exam6 ine, or require regulation and examination of, 

7 investment advisers to which the requirements 

8 of this paragraph apply.’’. 

9 SEC. 7419. CUSTODIAL REQUIREMENTS. 

10 Not later than 180 days after the date of the enact11 ment of this subtitle, the Securities and Exchange Com12 mission shall adopt a rule pursuant to its authority under 

13 section 211(a) of the Investment Advisers Act of 1940 

14 making it unlawful under section 206(4) of such Act for 

15 an investment adviser registered under the Act to have 

16 custody of funds or securities of a client the value of which 

17 exceeds $10,000,000, subject to such exception the Com18 mission determines in such rule are in the public interest 

19 and consistent with the protection of investors, unless— 

20 (1) the funds and securities are maintained 

21 with a qualified custodian either in a separate ac22 count for each client under the client’s name, or in 

23 accounts that contain only client funds and securi24 ties under the name of the investment adviser as 

25 agent or trustee for the client; and 


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1 (2) the qualified custodian does not directly or 

2 indirectly provide investment advice with respect to 

3 such funds or securities. 

4 SEC. 7420. OMBUDSMAN. 

5 (a) APPOINTMENT.—Not later than 180 days after 

6 the date of the enactment of this subtitle, the Chairman 

7 of the Securities and Exchange Commission shall appoint 

8 an Ombudsman who shall report directly to the Chairman. 

9 (b) DUTIES.—The Ombudsman appointed under sub10 section (a) shall— 

11 (1) act as a liaison between the Commission 

12 and any affected person with respect to any problem 

13 such person may have in dealing with the Commis14 sion resulting from the regulatory activities of the 

15 Commission; 

16 (2) review and make recommendations regard17 ing Commission policies and procedures to encour18 age persons to present questions to the Commission 

19 regarding compliance with Federal securities laws; 

20 and 

21 (3) maintain confidentiality of communications 

22 between such persons and the Ombudsman. 

23 (c) LIMITATION.—In carrying out the duties under 

24 subsection (b), the Ombudsman shall utilize personnel of 

25 the Commission to the extent practicable. Nothing in this 


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1 section shall be construed as replacing, altering, or dimin2 ishing the activities of any ombudsman or similar office 

3 in any other agency. 

4 (d) REPORT.—Each year, the Ombudsman shall sub5 mit a report to the Commission for inclusion in the annual 

6 report that describes the activities and evaluates the effec7 tiveness of the Ombudsman during the preceding year. In 

8 that report, the Ombudsman shall include solicited com9 ments and evaluations from registrants in regards to the 

10 effectiveness of the Ombudsman. 

11 PART 5—SECURITIES INVESTOR PROTECTION 

12 ACT AMENDMENTS 

13 SEC. 7501. INCREASING THE MINIMUM ASSESSMENT PAID 

14 BY SIPC MEMBERS. 

15 Section 4(d)(1)(C) of the Securities Investor Protec16 tion Act of 1970 (15 U.S.C. 78ddd(d)(1)(C)) is amended 

17 by striking ‘‘$150 per annum’’ and inserting the following: 

18 ‘‘0.02 percent of the gross revenues from the securities 

19 business of such member of SIPC’’. 

20 SEC. 7502. INCREASING THE BORROWING LIMIT ON TREAS21 URY LOANS. 

22 Section 4(h) of the Securities Investor Protection Act 

23 of 1970 (15 U.S.C. 78ddd(h)) is amended by striking ‘‘of 

24 not to exceed $1,000,000,000’’ and inserting ‘‘the lesser 


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1 of $2,500,000,000 or the target amount of the SIPC Fund 

2 specified in the bylaws of SIPC’’. 

3 SEC. 7503. INCREASING THE CASH LIMIT OF PROTECTION. 

4 Section 9 of the Securities Investor Protection Act 

5 of 1970 (15 U.S.C. 78fff–3) is amended— 

6 (1) in subsection (a)(1), by striking ‘‘$100,000 

7 for each such customer’’ and inserting ‘‘the standard 

8 maximum cash advance amount for each such cus9 tomer, as determined in accordance with subsection 

10 (d)’’; and 

11 (2) by adding the following new subsections: 

12 ‘‘(d) STANDARD MAXIMUM CASH ADVANCE AMOUNT

13 DEFINED.—For purposes of this section, the term ‘stand14 ard maximum cash advance amount’ means $250,000, as 

15 such amount may be adjusted after March 31, 2010, as 

16 provided under subsection (e). 

17 ‘‘(e) INFLATION ADJUSTMENT.— 

18 ‘‘(1) IN GENERAL.—No later than April 1, 

19 2010, and every 5 years thereafter, and subject to 

20 the approval of the Commission as provided under 

21 section 3(e)(2), the Board of Directors of SIPC shall 

22 determine whether an inflation adjustment to the 

23 standard maximum cash advance amount is appro24 priate. If the Board of Directors of SIPC determines 

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1 ard maximum cash advance amount shall be an 

2 amount equal to— 

3 ‘‘(A) $250,000 multiplied by, 

4 ‘‘(B) the ratio of the annual value of the 

5 Personal Consumption Expenditures Chain6 Type Price Index (or any successor index there7 to), published by the Department of Commerce, 

8 for the calendar year preceding the year in 

9 which such determination is made, to the pub10 lished annual value of such index for the cal11 endar year preceding the year in which this 

12 subsection was enacted. 

13 The index values used in calculations under this 

14 paragraph shall be, as of the date of the calculation, 

15 the values most recently published by the Depart16 ment of Commerce. 

17 ‘‘(2) ROUNDING.—If the standard maximum 

18 cash advance amount determined under paragraph 

19 (1) for any period is not a multiple of $10,000, the 

20 amount so determined shall be rounded down to the 

21 nearest $10,000. 

22 ‘‘(3) PUBLICATION AND REPORT TO THE CON23 GRESS.—Not later than April 5 of any calendar year 

24 in which a determination is required to be made 

25 under paragraph (1)— 


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1 ‘‘(A) the Commission shall publish in the 

2 Federal Register the standard maximum cash 

3 advance amount; and 

4 ‘‘(B) the Board of Directors of SIPC shall 

5 submit a report to the Congress containing 

6 stating the standard maximum cash advance 

7 amount. 

8 ‘‘(4) IMPLEMENTATION PERIOD.—Any adjust9 ment to the standard maximum cash advance 

10 amount shall take effect on January 1 of the year 

11 immediately succeeding the calendar year in which 

12 such adjustment is made. 

13 ‘‘(5) INFLATION ADJUSTMENT CONSIDER14 ATIONS.—In making any determination under para15 graph (1) to increase the standard maximum cash 

16 advance amount, the Board of Directors of SIPC 

17 shall consider— 

18 ‘‘(A) the overall state of the fund and the 

19 economic conditions affecting members of 

20 SIPC; 

21 ‘‘(B) the potential problems affecting mem22 bers of SIPC; and 

23 ‘‘(C) such other factors as the Board of 

24 Directors of SIPC may determine appro25 priate.’’. 


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1 SEC. 7504. SIPC AS TRUSTEE IN SIPA LIQUIDATION PRO2 CEEDINGS. 

3 Section 5(b)(3) of the Securities Investor Protection 

4 Act of 1970 (15 U.S.C. 78eee(b)(3)) is amended— 

5 (1) by striking ‘‘SIPC has determined that the 

6 liabilities of the debtor to unsecured general credi7 tors and to subordinated lenders appear to aggre8 gate less than $750,000 and that’’; and 

9 (2) by striking ‘‘five hundred’’ and inserting 

10 ‘‘five thousand’’. 

11 SEC. 7505. INSIDERS INELIGIBLE FOR SIPC ADVANCES. 

12 Section 9(a)(4) of the Securities Investor Protection 

13 Act of 1970 (15 U.S.C. 78fff–3(a)(4)) is amended by in14 serting ‘‘an insider,’’ after ‘‘or net profits of the debtor,’’. 

15 SEC. 7506. ELIGIBILITY FOR DIRECT PAYMENT PROCE16 DURE. 

17 Section 10(a)(4) of the Securities Investor Protection 

18 Act of 1970 (15 U.S.C. 78fff–4(a)(4)) is amended by 

19 striking ‘‘$250,000’’ and inserting ‘‘$850,000’’. 

20 SEC. 7507. INCREASING THE FINE FOR PROHIBITED ACTS 

21 UNDER SIPA. 

22 Section 14(c) of the Securities Investor Protection 

23 Act of 1970 (15 U.S.C. 78jjj(c)) is amended— 

24 (1) in paragraph (1), by striking ‘‘$50,000’’ 

25 and inserting ‘‘$250,000’’; and 


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1 (2) in paragraph (2), by striking ‘‘$50,000’’ 

2 and inserting ‘‘$250,000’’. 

3 SEC. 7508. PENALTY FOR MISREPRESENTATION OF SIPC 

4 MEMBERSHIP OR PROTECTION. 

5 Section 14 of the Securities Investor Protection Act 

6 of 1970 (15 U.S.C. 78jjj) is amended by adding at the 

7 end the following new subsection: 

8 ‘‘(d) MISREPRESENTATION OF SIPC MEMBERSHIP

9 OR PROTECTION.— 

10 ‘‘(1) IN GENERAL.—Any person who falsely 

11 represents by any means (including, without limita12 tion, through the Internet or any other medium of 

13 mass communication), with actual knowledge of the 

14 falsity of the representation and with an intent to 

15 deceive or cause injury to another, that such person, 

16 or another person, is a member of SIPC or that any 

17 person or account is protected or is eligible for pro18 tection under this Act or by SIPC, shall be liable for 

19 any damages caused thereby and shall be fined not 

20 more than $250,000 or imprisoned for not more 

21 than five years. 

22 ‘‘(2) INTERNET SERVICE PROVIDERS.—Any 

23 Internet service provider that, on or through a sys24 tem or network controlled or operated by the Inter25 net service provider, transmits, routes, provides conVerDate Nov 24 2008 22:04 Dec 02, 2009 Jkt 089200 PO 00000 Frm 01198 Fmt 6652 Sfmt 6201 E:\BILLS\H4173.IH H4173

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1 nections for, or stores any material containing any 

2 misrepresentation of the kind prohibited in para3 graph (1) shall be liable for any damages caused 

4 thereby, including damages suffered by SIPC, if the 

5 Internet service provider— 

6 ‘‘(A) has actual knowledge that the mate7 rial contains a misrepresentation of the kind 

8 prohibited in paragraph (1), or 

9 ‘‘(B) in the absence of actual knowledge, is 

10 aware of facts or circumstances from which it 

11 is apparent that the material contains a mis12 representation of the kind prohibited in para13 graph (1), and 

14 upon obtaining such knowledge or awareness, fails to 

15 act expeditiously to remove, or disable access to, the 

16 material. 

17 ‘‘(3) INJUNCTIONS.—Any court having jurisdic18 tion of a civil action arising under this Act may 

19 grant temporary injunctions and final injunctions on 

20 such terms as the court deems reasonable to prevent 

21 or restrain any violation of paragraph (1) or (2). 

22 Any such injunction may be served anywhere in the 

23 United States on the person enjoined, shall be oper24 ative throughout the United States, and shall be en25 forceable, by proceedings in contempt or otherwise, 


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1 by any United States court having jurisdiction over 

2 that person. The clerk of the court granting the in3 junction shall, when requested by any other court in 

4 which enforcement of the injunction is sought, trans5 mit promptly to the other court a certified copy of 

6 all papers in the case on file in such clerk’s office.’’. 

7 SEC. 7509. FUTURES HELD IN A PORTFOLIO MARGIN SECU8 RITIES ACCOUNT PROTECTION. 

9 (a) SIPC ADVANCES.—Section 9(a)(1) of the Securi10 ties Investor Protection Act of 1970 (15 U.S.C. 78fff– 

11 3(a)(1)) is amended by inserting ‘‘or options on futures 

12 contracts’’ after ‘‘claim for securities’’. 

13 (b) DEFINITIONS.—Section 16 of such Act (15 

14 U.S.C. 78lll) is amended— 

15 (1) by amending paragraph (2) to read as fol16 lows: 

17 ‘‘(2) CUSTOMER.— 

18 ‘‘(A) IN GENERAL.—The term ‘customer’ 

19 of a debtor means any person (including any 

20 person with whom the debtor deals as principal 

21 or agent) who has a claim on account of securi22 ties received, acquired, or held by the debtor in 

23 the ordinary course of its business as a broker 

24 or dealer from or for the securities accounts of 

25 such person for safekeeping, with a view to sale, 


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1 to cover consummated sales, pursuant to pur2 chases, as collateral, security, or for purposes of 

3 effecting transfer. The term ‘customer’ includes 

4 any person who has a claim against the debtor 

5 arising out of sales or conversions of such secu6 rities. 

7 ‘‘(B) INCLUDED PERSONS.—The term 

8 ‘customer’ includes— 

9 ‘‘(i) any person who has deposited 

10 cash with the debtor for the purpose of 

11 purchasing securities; and 

12 ‘‘(ii) any person who has a claim 

13 against the debtor for, or a claim against 

14 the debtor arising out of sales or conver15 sions of, cash, securities, futures contracts, 

16 or options on futures contracts received, 

17 acquired, or held in a portfolio margining 

18 account carried as a securities account 

19 pursuant to a portfolio margining program 

20 approved by the Commission. 

21 ‘‘(C) EXCLUDED PERSONS.—The term 

22 ‘customer’ does not include— 

23 ‘‘(i) any person to the extent that the 

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1 actions with a foreign subsidiary of a mem2 ber of SIPC; 

3 ‘‘(ii) any person to the extent that 

4 such person has a claim for cash or securi5 ties which by contract, agreement, or un6 derstanding, or by operation of law, is part 

7 of the capital of the debtor, or is subordi8 nated to the claims of any or all creditors 

9 of the debtor, notwithstanding that some 

10 ground exists for declaring such contract, 

11 agreement, or understanding void or void12 able in a suit between the claimant and the 

13 debtor; or 

14 ‘‘(iii) any person to the extent such 

15 person has a claim relating to any open re16 purchase or open reverse repurchase agree17 ment. 

18 For purposes of this paragraph, the term ‘re19 purchase agreement’ means the sale of a secu20 rity at a specified price with a simultaneous 

21 agreement or obligation to repurchase the secu22 rity at a specified price on a specified future 

23 date.’’; 

24 (2) in paragraph (4), by inserting after the first 

25 sentence the following new sentence: ‘‘In the case of 


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1 portfolio margining accounts of customers that are 

2 carried as securities accounts pursuant to a portfolio 

3 margining program approved by the Commission, 

4 such term shall also include futures contracts and 

5 options on futures contracts received, acquired, or 

6 held by or for the account of a debtor from or for 

7 such accounts, and the proceeds thereof.’’; 

8 (3) in paragraph (9), by inserting before ‘‘Such 

9 term’’ in the matter following subparagraph (L) the 

10 following: ‘‘The term includes revenues earned by a 

11 broker or dealer in connection with transactions in 

12 customers’ portfolio margining accounts carried as 

13 securities accounts pursuant to a portfolio margining 

14 program approved by the Commission.’’; and 

15 (4) in paragraph (11)— 

16 (A) by amending subparagraph (A) to read 

17 as follows: 

18 ‘‘(A) calculating the sum which would have 

19 been owed by the debtor to such customer if the 

20 debtor had liquidated, by sale or purchase on 

21 the filing date— 

22 ‘‘(i) all securities positions of such 

23 customer (other than customer name secu24 rities reclaimed by such customer); and 


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1 ‘‘(ii) all positions in futures contracts 

2 and options on futures contracts held in a 

3 portfolio margining account carried as a 

4 securities account pursuant to a portfolio 

5 margining program approved by the Com6 mission; minus’’; and 

7 (B) by inserting before ‘‘In determining’’ 

8 in the matter following subparagraph (C) the 

9 following: ‘‘A claim for a commodity futures 

10 contract received, acquired, or held in a port11 folio margining account pursuant to a portfolio 

12 margining program approved by the Commis13 sion, or a claim for a security futures contract, 

14 shall be deemed to be a claim for the mark-to15 market (variation) payments due with respect 

16 to such contract as of the filing date, and such 

17 claim shall be treated as a claim for cash.’’. 

18 SEC. 7510. STUDY AND REPORT ON THE FEASIBILITY OF 

19 RISK-BASED ASSESSMENTS FOR SIPC MEM20 BERS. 

21 (a) STUDY REQUIRED.—The Comptroller General of 

22 the United States shall conduct a study on whether the 

23 Securities Investor Protection Corporation (hereafter in 

24 this section referred to as ‘‘SIPC’’) should be required to 

25 impose assessments, on its member brokers and dealers, 


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1 based on risk for the purpose of adequately maintaining 

2 the SIPC Fund. 

3 (b) CONTENT.—The Comptroller General in con4 ducting this study shall— 

5 (1) identify and examine available approaches, 

6 including modeling, to measure broker and dealer 

7 operational risk; 

8 (2) analyze whether the available approaches to 

9 measure broker and dealer operational risk can be 

10 used in managing the aggregate risk to the SIPC 

11 Fund; 

12 (3) explore whether objective measures like the 

13 volume of assets of the SIPC member, previous en14 forcement and compliance actions taken by regu15 latory bodies against the SIPC member, or the num16 ber of years the SIPC member has been in oper17 ation, among other factors, can be used to assess the 

18 probability the fund will incur a loss with respect to 

19 the SIPC member; 

20 (4) examine the impact that risk-based assess21 ments could have on large and small brokers and 

22 dealers; and 

23 (5) examine the impact that risk-based assess24 ments could have on institutional and retail brokers 

25 and dealers. 


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1 (c) CONSULTATION.—The Comptroller General in 

2 planning and conducting this study shall consult with the 

3 Securities and Exchange Commission, the Federal Deposit 

4 Insurance Corporation, SIPC, the Financial Industry Reg5 ulatory Authority, and any other public or private sector 

6 organization that the Comptroller General considers ap7 propriate. 

8 (d) REPORT REQUIRED.—Not later than one year 

9 after the date of enactment of this subtitle, the Comp10 troller general shall submit a report of the results of the 

11 study required by this section to the Committee on Bank12 ing, Housing, and Urban Affairs of the Senate and the 

13 Committee on Financial Services of the House of Rep14 resentatives. 

15 SEC. 7511. BUDGETARY TREATMENT OF COMMISSION 

16 LOANS TO SIPC. 

17 Section 4(g) of the Securities Investor Protection Act 

18 of 1970 (15 U.S.C. 78ddd(g)) is amended by adding at 

19 the end the following: ‘‘Any loan made by the Commission 

20 to SIPC under this subsection shall not be considered to 

21 result in a new direct loan obligation or a new loan guar22 antee commitment for purposes of section 504 of the Fed23 eral Credit Reform Act of 1990.’’. 


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1 PART 6—SARBANES-OXLEY ACT AMENDMENTS 

2 SEC. 7601. PUBLIC COMPANY ACCOUNTING OVERSIGHT 

3 BOARD OVERSIGHT OF AUDITORS OF BRO4 KERS AND DEALERS. 

5 (a) DEFINITIONS.—(1) Title I of the Sarbanes-Oxley 

6 Act of 2002 is amended by adding at the end the following 

7 new section: 

8 ‘‘SEC. 110. DEFINITIONS. 

9 ‘‘For the purposes of this title, and notwithstanding 

10 section 2: 

11 ‘‘(1) AUDIT.—The term ‘audit’ means an exam12 ination of the financial statements, reports, docu13 ments, procedures or controls, or notices, of any 

14 issuer, broker, or dealer by an independent public 

15 accounting firm in accordance with the rules of the 

16 Board or the Commission (or, for the period pre17 ceding the adoption of applicable rules of the Board 

18 under section 103, in accordance with then-applica19 ble generally accepted auditing and related stand20 ards for such purposes), for the purpose of express21 ing an opinion on such financial statements, reports, 

22 documents, procedures or controls, or notices. 

23 ‘‘(2) AUDIT REPORT.—The term ‘audit report’ 

24 means a document, report, notice, or other record— 

25 ‘‘(A) prepared following an audit per26 formed for purposes of compliance by an issuer, 


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1 broker, or dealer with the requirements of the 

2 securities laws; and 

3 ‘‘(B) in which a public accounting firm ei4 ther— 

5 ‘‘(i) sets forth the opinion of that firm 

6 regarding a financial statement, report, no7 tice, other document, procedures, or con8 trols; or 

9 ‘‘(ii) asserts that no such opinion can 

10 be expressed. 

11 ‘‘(3) PROFESSIONAL STANDARDS.—The term 

12 ‘professional standards’ means— 

13 ‘‘(A) accounting principles that are— 

14 ‘‘(i) established by the standard set15 ting body described in section 19(b) of the 

16 Securities Act of 1933, as amended by this 

17 Act, or prescribed by the Commission 

18 under section 19(a) of that Act (15 U.S.C. 

19 17a(s)) or section 13(b) of the Securities 

20 Exchange Act of 1934 (15 U.S.C. 78a(m)); 

21 and 

22 ‘‘(ii) relevant to audit reports for par23 ticular issuers, brokers, or dealers, or dealt 

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1 ticular registered public accounting firm; 

2 and 

3 ‘‘(B) auditing standards, standards for at4 testation engagements, quality control policies 

5 and procedures, ethical and competency stand6 ards, and independence standards (including 

7 rules implementing title II) that the Board or 

8 the Commission determines— 

9 ‘‘(i) relate to the preparation or 

10 issuance of audit reports for issuers, bro11 kers, or dealers; and 

12 ‘‘(ii) are established or adopted by the 

13 Board under section 103(a), or are pro14 mulgated as rules of the Commission. 

15 ‘‘(4) BROKER.—The term ‘broker’ means a 

16 broker (as such term is defined in section 3(a)(4) of 

17 the Securities Exchange Act of 1934 (15 U.S.C. 

18 78c(a)(4))) that is required to file a balance sheet, 

19 income statement, or other financial statement 

20 under section 17(e)(1)(A) of such Act (15 U.S.C. 

21 78q(e)(1)(A)), where such balance sheet, income 

22 statement, or financial statement is required to be 

23 certified by a registered public accounting firm. 

24 ‘‘(5) DEALER.—The term ‘dealer’ means a 

25 dealer (as such term is defined in section 3(a)(5) of 


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1 the Securities Exchange Act of 1934 (15 U.S.C. 

2 78c(a)(5))) that is required to file a balance sheet, 

3 income statement, or other financial statement 

4 under section 17(e)(1)(A) of such Act (15 U.S.C. 

5 78q(e)(1)(A)), where such balance sheet, income 

6 statement, or financial statement is required to be 

7 certified by a registered public accounting firm. 

8 ‘‘(6) SELF-REGULATORY ORGANIZATION.—The 

9 term ‘self-regulatory organization’ has the same 

10 meaning as in section 3(a)(26) of the Securities Ex11 change Act of 1934 (15 U.S.C. 78c(a)(26)).’’. 

12 (2) The table of sections in section 1(b) of such Act 

13 is amended, by inserting after the item relating to section 

14 109 the following new item: 

‘‘Sec. 110. Definitions.’’. 

15 (b) ESTABLISHMENT AND ADMINISTRATION OF THE

16 PUBLIC COMPANY ACCOUNTING OVERSIGHT BOARD.— 

17 Section 101 of such Act is amended— 

18 (1) by striking ‘‘issuers’’ each place it appears 

19 and inserting ‘‘issuers, brokers, and dealers’’; 

20 (2) in subsection (a), by striking ‘‘public com21 panies’’ and inserting ‘‘companies’’; and 

22 (3) in subsection (a), by striking ‘‘for compa23 nies the securities of which are sold to, and held by 

24 and for, public investors’’. 


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1 (c) REGISTRATION WITH THE BOARD.—Section 102 

2 of such Act is amended— 

3 (1) in subsection (a), by striking ‘‘Beginning 

4 180 days after the date of the determination of the 

5 Commission under section 101(d), it’’ and inserting 

6 ‘‘It’’; 

7 (2) in subsections (a) and (b)(2)(G), by striking 

8 ‘‘issuer’’ each place it appears and inserting ‘‘issuer, 

9 broker, or dealer’’; and 

10 (3) in subsection (b)(2)(A), by striking 

11 ‘‘issuers’’ and inserting ‘‘issuers, brokers, and deal12 ers’’. 

13 (d) AUDITING AND INDEPENDENCE.—Section 103(a) 

14 of such Act is amended— 

15 (1) in paragraph (1), by striking ‘‘and such eth16 ics standards’’ and inserting ‘‘such ethics standards, 

17 and such independence standards’’; 

18 (2) in paragraph (2)(A)(iii), by striking ‘‘de19 scribe in each audit report’’ and inserting ‘‘in each 

20 audit report for an issuer, describe’’; and 

21 (3) in paragraph (2)(B)(i), by striking 

22 ‘‘issuers’’ and inserting ‘‘issuers, brokers, and deal23 ers’’. 

24 (e) INSPECTIONS OF REGISTERED PUBLIC ACCOUNT25 ING FIRMS.—Section 104 of such Act is amended— 


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1 (1) in subsection (a), by striking ‘‘issuers’’ and 

2 inserting ‘‘issuers, brokers, and dealers’’; 

3 (2) in subsection (b)(1)(A)— 

4 (A) by striking ‘‘audit reports’’ and insert5 ing ‘‘audit reports on annual financial state6 ments’’; and 

7 (B) by striking ‘‘and’’; 

8 (3) in subsection (b)(1)(B)— 

9 (A) by striking ‘‘audit reports’’ and insert10 ing ‘‘audit reports on annual financial state11 ments’’; and 

12 (B) by striking the period at the end and 

13 inserting ‘‘; and’’; and 

14 (4) by adding at the end of subsection (b)(1) 

15 the following new subparagraph: 

16 ‘‘(C) with respect to each registered public 

17 accounting firm that regularly provides audit 

18 reports and is not described under subpara19 graph (A) or (B), on a basis to be determined 

20 by the Board, by rule, consistent with the pub21 lic interest and protection of investors.’’. 

22 (f) INVESTIGATIONS AND DISCIPLINARY PRO23 CEEDINGS.—Section 105(c)(7)(B) of such Act is amend24 ed— 


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1 (1) in the subparagraph heading, by inserting 

2 ‘‘, BROKER, OR DEALER’’ after ‘‘ISSUER’’; 

3 (2) by striking ‘‘any issuer’’ each place it ap4 pears and inserting ‘‘any issuer, broker, or dealer’’; 

5 and 

6 (3) by striking ‘‘an issuer under this sub7 section’’ and inserting ‘‘a registered public account8 ing firm under this subsection’’. 

9 (g) FOREIGN PUBLIC ACCOUNTING FIRMS.—Section 

10 106 of such Act is amended— 

11 (1) in subsection (a)(1), by striking ‘‘issuer’’ 

12 and inserting ‘‘issuer, broker, or dealer’’; and 

13 (2) in subsection (a)(2), by striking ‘‘issuers’’ 

14 and inserting ‘‘issuers, brokers, or dealers’’. 

15 (h) FUNDING.—Section 109 of such Act is amend16 ed— 

17 (1) in subsection (c)(2), by striking ‘‘subsection 

18 (i)’’ and inserting ‘‘subsection (j)’’; 

19 (2) in subsection (d)(2), by striking ‘‘allowing 

20 for differentiation among classes of issuers, as ap21 propriate’’ and inserting ‘‘and among brokers and 

22 dealers in accordance with subsection (h), and allow23 ing for differentiation among classes of issuers and 

24 brokers and dealers, as appropriate’’; 


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1 (3) in subsection (d), by inserting at the end 

2 the following new paragraph: 

3 ‘‘(3) BROKERS AND DEALERS.—The rules of 

4 the Board under paragraph (1) shall provide that 

5 the allocation, assessment, and collection by the 

6 Board (or an agent appointed by the Board) of the 

7 fee established under paragraph (1) with respect to 

8 brokers and dealers shall not begin until the first 

9 day of the first full fiscal year beginning after the 

10 date of the enactment of this paragraph.’’; 

11 (4) by redesignating subsections (h), (i), and (j) 

12 as subsections (i), (j), and (k), respectively; and 

13 (5) by inserting after subsection (g) the fol14 lowing new subsection: 

15 ‘‘(h) ALLOCATION OF ACCOUNTING SUPPORT FEES

16 AMONG BROKERS AND DEALERS.— 

17 ‘‘(1) IN GENERAL.—Any amount due from bro18 kers and dealers (or a particular class of such bro19 kers and dealers) under this section to fund the 

20 budget of the Board shall be allocated among and 

21 payable by such brokers and dealers (or such bro22 kers and dealers in a particular class, as applicable). 

23 A broker or dealer’s allocation shall be in proportion 

24 to the broker or dealer’s net capital compared to the 


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1 total net capital of all brokers and dealer, in accord2 ance with the rules of the Board. 

3 ‘‘(2) OBLIGATION TO PAY.—Every broker or 

4 dealer shall pay the share of a reasonable annual ac5 counting support fee or fees allocated to such broker 

6 or dealer under this section.’’. 

7 (i) REFERRAL OF INVESTIGATIONS TO A SELF-REGU8 LATORY ORGANIZATION.—Section 105(b)(4)(B) of the 

9 Sarbanes-Oxley Act of 2002 is amended— 

10 (1) by redesignating clauses (ii) and (iii) as 

11 clauses (iii) and (iv), respectively; and 

12 (2) by inserting after clause (i) the following 

13 new clause: 

14 ‘‘(ii) to a self-regulatory organization, 

15 in the case of an investigation that con16 cerns an audit report for a broker or deal17 er that is subject to the jurisdiction of 

18 such self-regulatory organization;’’. 

19 (j) USE OF DOCUMENTS RELATED TO AN INSPEC20 TION OR INVESTIGATION.—Section 105(b)(5)(B)(ii) of 

21 such Act is amended— 

22 (1) in subclause (III), by striking ‘‘and’’; 

23 (2) in subclause (IV), by striking the comma 

24 and inserting ‘‘; and’’; and 


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1 (3) by inserting after subclause (IV) the fol2 lowing new subclause: 

3 ‘‘(V) a self-regulatory organiza4 tion, with respect to an audit report 

5 for a broker or dealer that is subject 

6 to the jurisdiction of such self-regu7 latory organization,’’. 

8 SEC. 7602. FOREIGN REGULATORY INFORMATION SHARING. 

9 (a) DEFINITION.—Section 2(a) of the Sarbanes10 Oxley Act of 2002 (15 U.S.C. 7201(a)) is amended by 

11 inserting after paragraph (16) the following: 

12 ‘‘(17) FOREIGN AUDITOR OVERSIGHT AUTHOR13 ITY.—The term ‘foreign auditor oversight authority’ 

14 means any governmental body or other entity em15 powered by a foreign government to conduct inspec16 tions of public accounting firms or otherwise to ad17 minister or enforce laws related to the regulation of 

18 public accounting firms.’’. 

19 (b) AVAILABILITY TO SHARE INFORMATION.—Sec20 tion 105(b)(5) of the Sarbanes-Oxley Act of 2002 (15 

21 U.S.C. 7215(b)(5)) is amended by adding at the end the 

22 following: 

23 ‘‘(C) AVAILABILITY TO FOREIGN OVER24 SIGHT AUTHORITIES.—When in the Board’s 

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1 poses of this Act or to protect investors, and 

2 without the loss of its status as confidential and 

3 privileged in the hands of the Board, all infor4 mation referred to in subparagraph (A) that re5 lates to a public accounting firm within the in6 spection authority, or other regulatory or law 

7 enforcement jurisdiction, of a foreign auditor 

8 oversight authority may be made available to 

9 the foreign auditor oversight authority if the 

10 foreign auditor oversight authority provides 

11 such assurances of confidentiality as the Board 

12 determines appropriate.’’. 

13 (c) CONFORMING AMENDMENT.—Section 

14 105(b)(5)(A) of the Sarbanes-Oxley Act of 2002 (15 

15 U.S.C. 7215(b)(5)(A)) is amended by striking ‘‘subpara16 graph (B)’’ and inserting ‘‘subparagraphs (B) and (C)’’. 

17 SEC. 7603. EXPANSION OF AUDIT INFORMATION TO BE PRO18 DUCED AND EXCHANGED WITH FOREIGN 

19 COUNTERPARTS. 

20 Section 106 of the Sarbanes-Oxley Act of 2002 (15 

21 U.S.C. 7216) is amended— 

22 (1) by amending subsection (b) to read as fol23 lows: 

24 ‘‘(b) PRODUCTION OF DOCUMENTS.— 


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1 ‘‘(1) PRODUCTION BY FOREIGN FIRMS.—If a 

2 foreign public accounting firm issues an audit re3 port, performs audit work, conducts interim reviews, 

4 or performs material services upon which a reg5 istered public accounting firm relies in the conduct 

6 of an audit or interim review, the foreign public ac7 counting firm shall produce its audit work papers 

8 and all other documents related to any such audit 

9 work or interim review to the Commission or the 

10 Board when requested by the Commission or the 

11 Board and the foreign public accounting firm shall 

12 be subject to the jurisdiction of the courts of the 

13 United States for purposes of enforcement of any re14 quest of such documents. 

15 ‘‘(2) OTHER PRODUCTION.—Any registered 

16 public accounting firm that relies, in whole or in 

17 part, on the work of a foreign public accounting firm 

18 in issuing an audit report, performing audit work, or 

19 conducting an interim review, shall— 

20 ‘‘(A) produce the foreign public accounting 

21 firm’s audit work papers and all other docu22 ments related to any such work in response to 

23 a request for production by the Commission or 

24 the Board; and 


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1 ‘‘(B) secure the agreement of any foreign 

2 public accounting firm to such production, as a 

3 condition of its reliance on the work of that for4 eign public accounting firm.’’; 

5 (2) by redesignating subsection (d) as sub6 section (g); and 

7 (3) by inserting after subsection (c) the fol8 lowing new subsections: 

9 ‘‘(d) SERVICE OF REQUESTS OR PROCESS.—Any for10 eign public accounting firm that performs work for a do11 mestic registered public accounting firm shall furnish to 

12 the domestic firm a written irrevocable consent and power 

13 of attorney that designates the domestic firm as an agent 

14 upon whom may be served any process, pleadings, or other 

15 papers in any action brought to enforce this section. Any 

16 foreign public accounting firm that issues an audit report, 

17 performs audit work, performs interim reviews, or per18 forms other material services upon which a registered pub19 lic accounting firm relies in the conduct of an audit or 

20 interim review, shall designate to the Commission or the 

21 Board an agent in the United States upon whom may be 

22 served any process, pleading, or other papers in any action 

23 brought to enforce this section or any request by the Com24 mission or the Board under this section. 


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1 ‘‘(e) SANCTIONS.—A willful refusal to comply, in 

2 whole in or in part, with any request by the Commission 

3 or the Board under this section, shall be a violation of 

4 this Act. 

5 ‘‘(f) OTHER MEANS OF SATISFYING PRODUCTION

6 OBLIGATIONS.—Notwithstanding any other provision of 

7 this section, the staff of the Commission or Board may 

8 allow foreign public accounting firms subject to this sec9 tion to meet production obligations under this section 

10 though alternate means, such as through foreign counter11 parts of the Commission or Board.’’. 

12 SEC. 7604. CONFORMING AMENDMENT RELATED TO REG13 ISTRATION. 

14 Section 102(b)(3)(A) of the Sarbanes-Oxley Act of 

15 2002 (15 U.S. Code 7212(b)(3)(A)) is amended by strik16 ing ‘‘by the Board’’ and inserting ‘‘by the Commission or 

17 the Board’’. 

18 SEC. 7605. FAIR FUND AMENDMENTS. 

19 Section 308 of the Sarbanes-Oxley Act of 2002 (15 

20 U.S.C. 7246(a)) is amended— 

21 (1) by amending subsection (a) to read as fol22 lows: 

23 ‘‘(a) CIVIL PENALTIES TO BE USED FOR THE RE24 LIEF OF VICTIMS.—If in any judicial or administrative ac25 tion brought by the Commission under the securities laws 


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1 (as such term is defined in section 3(a)(47) of the Securi2 ties Exchange Act of 1934 (15 U.S.C. 78c(a)(47)), the 

3 Commission obtains a civil penalty against any person for 

4 a violation of such laws or the rules and regulations there5 under, or such person agrees in settlement of any such 

6 action to such civil penalty, the amount of such civil pen7 alty or settlement shall, on the motion or at the direction 

8 of the Commission, be added to and become part of a 

9 disgorgement fund or other fund established for the ben10 efit of the victims of such violation.’’; 

11 (2) in subsection (b), by— 

12 (A) striking ‘‘for a disgorgement fund de13 scribed in subsection (a)’’ and inserting ‘‘for a 

14 disgorgement fund or other fund described in 

15 subsection (a)’’; and 

16 (B) striking ‘‘in the disgorgement fund’’ 

17 and inserting ‘‘in such fund’’; and 

18 (3) by striking subsection (e). 

19 SEC. 7606. EXEMPTION FOR NONACCELERATED FILERS. 

20 (a) EXEMPTION.—Section 404 of the Sarbanes-Oxley 

21 Act of 2002 is amended by adding at the end the fol22 lowing: 

23 ‘‘(c) EXEMPTION FOR SMALLER ISSUERS.—Sub24 section (b) shall not apply with respect to any audit report 

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1 in the meaning Rule 12b–2 of the Commission (17 C.F.R. 

2 240.12b–2).’’. 

3 (b) STUDY.—The Securities and Exchange Commis4 sion and the Comptroller General shall jointly conduct a 

5 study to determine how the Commission could reduce the 

6 burden of complying with section 404(b) of the Sarbanes7 Oxley Act of 2002 for companies whose market capitaliza8 tion is between $75,000,000 and $250,000,000 for the rel9 evant reporting period while maintaining investor protec10 tions for such companies. The study shall also consider 

11 whether any such methods of reducing the compliance bur12 den or a complete exemption for such companies from 

13 compliance with such section would encourage companies 

14 to list on exchanges in the United States in their initial 

15 public offerings. Not later than 180 days after the date 

16 of the enactment of this subtitle, the Commission and the 

17 Comptroller General shall transmit a report of such study 

18 to Congress. 

19 SEC. 7607. WHISTLEBLOWER PROTECTION AGAINST RETAL20 IATION BY A SUBSIDIARY OF AN ISSUER. 

21 Section 1514A(a) of title 18, United States Code, is 

22 amended by inserting ‘‘including any subsidiary or affil23 iate whose financial information is included in the consoli24 dated financial statements of such company,’’ after ‘‘(15 

25 U.S.C. 78o(d)),’’. 


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1 SEC. 7608. CONGRESSIONAL ACCESS TO INFORMATION. 

2 Section 101 of the Sarbanes-Oxley Act of 2002 is 

3 amended by adding at the end the following: 

4 ‘‘(i) CONGRESSIONAL ACCESS TO INFORMATION.— 

5 Nothing in this section shall— 

6 ‘‘(1) affect the Boards obligations, if any, to 

7 provide access to records under the Right to Finan8 cial Privacy Act; or 

9 ‘‘(2) authorize the Board to withhold informa10 tion from Congress or prevent the Board from com11 plying with an order of a court of the United States 

12 in an action commenced by the United States or the 

13 Board.’’. 

14 SEC. 7609. CREATION OF OMBUDSMAN FOR THE PCAOB. 

15 (a) OMBUDSMAN.—Title I of the Sarbanes-Oxley Act 

16 of 2002 (15 U.S.C. 7211 et seq.), as amended by section 

17 7601(a)(1), is further amended by adding at the end the 

18 following new section: 

19 ‘‘SEC. 111. OMBUDSMAN. 

20 ‘‘(a) ESTABLISHMENT REQUIRED.—Not later than 

21 180 days after the date of enactment of the Investor Pro22 tection Act, the Board shall appoint an ombudsman for 

23 the Board. The Ombudsman shall report directly to the 

24 Chairman. 


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1 ‘‘(b) DUTIES OF OMBUDSMAN.—The ombudsman ap2 pointed in accordance with subsection (a) for the Board 

3 shall— 

4 ‘‘(1) act as a liaison between the Board and— 

5 ‘‘(A) any registered public accounting firm 

6 or issuer with respect to issues or disputes con7 cerning the preparation or issuance of any audit 

8 report with respect to that issuer; and 

9 ‘‘(B) any affected registered public ac10 counting firm or issuer with respect to— 

11 ‘‘(i) any problem such firm or issuer 

12 may have in dealing with the Board result13 ing from the regulatory activities of the 

14 Board, particularly with regard to the im15 plementation of section 404; and 

16 ‘‘(ii) issues caused by the relationships 

17 of registered public accounting firms and 

18 issuers generally; and 

19 ‘‘(2) assure that safeguards exist to encourage 

20 complainants to come forward and to preserve con21 fidentiality; and 

22 ‘‘(3) carry out such activities, and any other ac23 tivities assigned by the Board, in accordance with 

24 guidelines prescribed by the Board.’’. 


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1 (b) CONFORMING AMENDMENT.—The table of sec2 tions in section 1(b) of such Act is amended, by inserting 

3 after the item relating to section 110 (as added by section 

4 601(a)(2)) the following new item: 

‘‘Sec. 111. Ombudsman.’’. 

5 SEC. 7610. AUDITING OVERSIGHT BOARD. 

6 The Sarbanes-Oxley Act of 2002 is amended— 

7 (1) in section 2(a)(5), by striking ‘‘Public Com8 pany Accounting Oversight Board’’ and inserting 

9 ‘‘Auditing Oversight Board’’; 

10 (2) in section 101(a), by striking ‘‘Public Com11 pany Accounting Oversight Board’’ and inserting 

12 ‘‘Auditing Oversight Board’’; and 

13 (3) in the heading of title I, by striking ‘‘PUB14 LIC COMPANY ACCOUNTING OVER15 SIGHT BOARD’’ and inserting ‘‘AUDITING 

16 OVERSIGHT BOARD’’. 

17 PART 7—SENIOR INVESTMENT PROTECTION 

18 SEC. 7701. FINDINGS. 

19 Congress finds that— 

20 (1) many seniors are targeted by salespersons 

21 and advisers using misleading certifications and pro22 fessional designations; 

23 (2) many certifications and professional des24 ignations used by salespersons and advisers rep25 resent limited training or expertise, and may in fact 


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1 be of no value with respect to advising seniors on fi2 nancial and estate planning matters, and far too 

3 often, such designations are obtained simply by at4 tending a weekend seminar and passing an open 

5 book, multiple choice test; 

6 (3) many seniors have lost their life savings be7 cause salespersons and advisers holding a misleading 

8 designation have steered them toward products that 

9 were unsuitable for them, given their retirement 

10 needs and life expectancies; 

11 (4) seniors have a right to clearly know whether 

12 they are working with a qualified adviser who under13 stands the products and is working in their best in14 terest or a self-interested salesperson or adviser ad15 vocating particular products; and 

16 (5) many existing State laws and enforcement 

17 measures addressing the use of certifications, profes18 sional designations, and suitability standards in sell19 ing financial products to seniors are inadequate to 

20 protect senior investors from salespersons and advis21 ers using such designations. 

22 SEC. 7702. DEFINITIONS. 

23 For purposes of this part: 

24 (1) MISLEADING DESIGNATION.—The term 

25 ‘‘misleading designation’’— 


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1 (A) means the use of a purported certifi2 cation, professional designation, or other cre3 dential, that indicates or implies that a sales4 person or adviser has special certification or 

5 training in advising or servicing seniors; and 

6 (B) does not include any legitimate certifi7 cation, professional designation, license, or 

8 other credential, if— 

9 (i) it has been offered by an academic 

10 institution having regional accreditation; or 

11 (ii) it meets the standards for certifi12 cations, licenses, and professional designa13 tions outlined by the North American Se14 curities Administrators Association (in this 

15 part referred to as the ‘‘NASAA’’) Model 

16 Rule on the Use of Senior-Specific Certifi17 cations and Professional Designations, as 

18 in effect on the date of the enactment of 

19 this subtitle, or any successor thereto, or it 

20 was issued by or obtained from any State. 

21 (2) FINANCIAL PRODUCT.—The term ‘‘financial 

22 product’’ means securities, insurance products (in23 cluding insurance products which pay a return, 

24 whether fixed or variable), and bank and loan prod25 ucts. 


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1 (3) MISLEADING OR FRAUDULENT MAR2 KETING.—The term ‘‘misleading or fraudulent mar3 keting’’ means the use of a misleading designation 

4 when selling to or advising a senior about the sale 

5 of a financial product. 

6 (4) SENIOR.—The term ‘‘senior’’ means any in7 dividual who has attained the age of 62 years or 

8 more. 

9 (5) STATE.—The term ‘‘State’’ means each of 

10 the 50 States, the District of Columbia, and the un11 incorporated territories of Puerto Rico and the U.S. 

12 Virgin Islands. 

13 SEC. 7703. GRANTS TO STATES FOR ENHANCED PROTEC14 TION OF SENIORS FROM BEING MISLEAD BY 

15 FALSE DESIGNATIONS. 

16 (a) GRANT PROGRAM.—The Securities and Exchange 

17 Commission (in this part referred to as the ‘‘Commis18 sion’’)— 

19 (1) shall establish a program in accordance with 

20 this part to provide grants to States— 

21 (A) to investigate and prosecute misleading 

22 and fraudulent marketing practices; or 

23 (B) to develop educational materials and 

24 training aimed at reducing misleading and 


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1 fraudulent marketing of financial products to2 ward seniors; and 

3 (2) may establish such performance objectives, 

4 reporting requirements, and application procedures 

5 for States and State agencies receiving grants under 

6 this part as the Commission determines are nec7 essary to carry out and assess the effectiveness of 

8 the program under this part. 

9 (b) USE OF GRANT AMOUNTS.—A grant under this 

10 part may be used (including through subgrants) by the 

11 State or the appropriate State agency designated by the 

12 State— 

13 (1) to fund additional staff to identify, inves14 tigate, and prosecute (through civil, administrative, 

15 or criminal enforcement actions) cases involving mis16 leading or fraudulent marketing of financial prod17 ucts to seniors; 

18 (2) to fund technology, equipment, and training 

19 for regulators, prosecutors, and law enforcement in 

20 order to identify salespersons and advisers who tar21 get seniors through the use of misleading designa22 tions; 

23 (3) to fund technology, equipment, and training 

24 for prosecutors to increase the successful prosecution 


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1 of those targeting seniors with the use of misleading 

2 designations; 

3 (4) to provide educational materials and train4 ing to regulators on the appropriateness of the use 

5 of designations by salespersons and advisers of fi6 nancial products; 

7 (5) to provide educational materials and train8 ing to seniors to increase their awareness and under9 standing of designations; and 

10 (6) to develop comprehensive plans to combat 

11 misleading or fraudulent marketing of financial 

12 products to seniors. 

13 (c) GRANT REQUIREMENTS.— 

14 (1) MAXIMUM.—The amount of a grant under 

15 this part may not exceed $500,000 per fiscal year 

16 per State, if all requirements of paragraphs (2), (3), 

17 (4), and (5) are met. Such amount shall be limited 

18 to $100,000 per fiscal year per State in any case in 

19 which the State meets the requirements of— 

20 (A) paragraphs (2) and (3), but not each 

21 of paragraphs (4) and (5); or 

22 (B) paragraphs (4) and (5), but not each 

23 of paragraphs (2) and (3). 

24 (2) STANDARD DESIGNATION RULES FOR SECU25 RITIES.—A State shall have adopted rules on the apVerDate Nov 24 2008 22:04 Dec 02, 2009 Jkt 089200 PO 00000 Frm 01230 Fmt 6652 Sfmt 6201 E:\BILLS\H4173.IH H4173

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1 propriate use of designations in the offer or sale of 

2 securities or investment advice, which shall meet or 

3 exceed the minimum requirements of the NASAA 

4 Model Rule on the Use of Senior-Specific Certifi5 cations and Professional Designations, as in effect 

6 on the date of the enactment of this subtitle, or any 

7 successor thereto. 

8 (3) SUITABILITY RULES FOR SECURITIES.—A 

9 State shall have adopted standard rules on the suit10 ability requirements in the sale of securities, which 

11 shall, to the extent practicable, conform to the min12 imum requirements on suitability imposed by self13 regulatory organization rules under the securities 

14 laws (as defined in section 3 of the Securities Ex15 change Act of 1934). 

16 (4) STANDARD DESIGNATION RULES FOR IN17 SURANCE PRODUCTS.—A State shall have adopted 

18 standard rules on the appropriate use of designa19 tions in the sale of insurance products, which shall, 

20 to the extent practicable, conform to the minimum 

21 requirements of the National Association of Insur22 ance Commissioners Model Regulation on the Use of 

23 Senior-Specific Certifications and Professional Des24 ignations in the Sale of Life Insurance and AnnuVerDate Nov 24 2008 22:04 Dec 02, 2009 Jkt 089200 PO 00000 Frm 01231 Fmt 6652 Sfmt 6201 E:\BILLS\H4173.IH H4173

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1 ities, as in effect on the date of the enactment of 

2 this subtitle, or any successor thereto. 

3 (5) SUITABILITY AND SUPERVISION RULES FOR

4 ANNUITY PRODUCTS.— 

5 (A) IN GENERAL.—A State shall have 

6 adopted rules governing insurer supervision of, 

7 suitability of, and insurer and insurance pro8 ducer conduct relating to, the sale of annuity 

9 products, including fixed and index annuities. 

10 (B) ANNUITY PRODUCTS CRITERIA.—The 

11 rules required by subparagraph (A) shall, to the 

12 extent practicable, provide— 

13 (i) that insurers, and insurance pro14 ducers are responsible for, and liable for 

15 penalties for, the suitability of each rec16 ommended annuity transaction; 

17 (ii) that insurers and insurance pro18 ducers are required to apply a standard for 

19 determining the suitability of each rec20 ommended annuity transaction, including 

21 fixed and index annuities, that is at least 

22 as protective of the interests of the con23 sumer as rule 2821(b) of the Financial In24 dustry Regulatory Authority (in this para25 graph referred to as ‘‘FINRA’’), as in efVerDate Nov 24 2008 22:04 Dec 02, 2009 Jkt 089200 PO 00000 Frm 01232 Fmt 6652 Sfmt 6201 E:\BILLS\H4173.IH H4173

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1 fect on the date of the enactment of this 

2 subtitle, or any successor to such rule; 

3 (iii) that insurers and insurance pro4 ducers are required to maintain a process 

5 for review of the suitability, and approval 

6 or disapproval, of each recommended annu7 ity transaction that is at least as protective 

8 of the interests of the consumer as the 

9 principal review required under rule 

10 2821(c) of FINRA, as in effect on the date 

11 of the enactment of this subtitle, or any 

12 successor to such rule; 

13 (iv) that insurers and insurance pro14 ducers are required to maintain processes 

15 for the supervision of direct annuity sales 

16 and insurance producer-recommended an17 nuity sales (including procedures for the 

18 insurer to obtain and confirm consumer 

19 suitability information and for the insurer 

20 to confirm consumer understanding of the 

21 annuity transaction) that are at least as 

22 protective of the interests of the consumer 

23 as member broker and dealer supervision 

24 requirements of FINRA, as in effect on 


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1 the date of the enactment of this subtitle, 

2 or any successor to such requirements; 

3 (v) that insurers are required to verify 

4 that each insurance producer successfully 

5 completes, and each insurance producer is 

6 required to receive, training designed to 

7 ensure that the insurance producer is com8 petent to recommend each class of annuity; 

9 (vi) that insurers are required to 

10 verify that insurance producers receive, 

11 and insurance producers are required to 

12 receive, training regarding the features of 

13 each offered annuity product, to an extent 

14 that is at least as protective of the inter15 ests of the consumer as the FINRA firm 

16 element training requirements, as in effect 

17 on the date of the enactment of this sub18 title, or any successor to such require19 ments; 

20 (vii) for coordination of such rules 

21 with the rules of FINRA governing mem22 ber brokers, dealers, and security rep23 resentatives, to the extent appropriate, 

24 consistent with protecting the interests of 

25 consumers, for State insurance regulators 


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1 to rely on, or to avoid duplication of 

2 FINRA rules; and 

3 (viii) for exemption from such rules 

4 only if such exemption is consistent with 

5 the protection of consumers. 

6 SEC. 7704. APPLICATIONS. 

7 To be eligible for a grant under this part, the State 

8 or appropriate State agency shall submit to the Commis9 sion a proposal to use the grant money to protect seniors 

10 from misleading or fraudulent marketing techniques in the 

11 offer and sale of financial products, which application 

12 shall— 

13 (1) identify the scope of the problem; 

14 (2) describe how the proposed program will help 

15 to protect seniors from misleading or fraudulent 

16 marketing in the sale of financial products, includ17 ing, at a minimum— 

18 (A) by proactively identifying senior vic19 tims of misleading and fraudulent marketing in 

20 the offer and sale of financial products; 

21 (B) how the proposed program can assist 

22 in the investigation and prosecution of those 

23 using misleading or fraudulent marketing in the 

24 offer and sale of financial products to seniors; 

25 and 


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1 (C) how the proposed program can help 

2 discourage and reduce future cases of mis3 leading or fraudulent marketing in the offer 

4 and sale of financial products to seniors; and 

5 (3) describe how the proposed program is to be 

6 integrated with other existing State efforts. 

7 SEC. 7705. LENGTH OF PARTICIPATION. 

8 A State receiving a grant under this part shall be 

9 provided assistance funds for a period of 3 years, after 

10 which the State may reapply for additional funding. 

11 SEC. 7706. AUTHORIZATION OF APPROPRIATIONS. 

12 There are authorized to be appropriated to carry out 

13 this part, $8,000,000 for each of the fiscal years 2011 

14 through 2015. 

15 PART 8—REGISTRATION OF MUNICIPAL 

16 FINANCIAL ADVISORS 

17 SEC. 7801. MUNICIPAL FINANCIAL ADVISER REGISTRATION 

18 REQUIREMENT. 

19 (a) IN GENERAL.—The Securities Exchange Act of 

20 1934 (as amended by section 3204) is amended by insert21 ing after section 15F (15 U.S.C. 78o–7) the following new 

22 section: 


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1 ‘‘SEC. 15G. MUNICIPAL FINANCIAL ADVISER REGISTRATION 

2 REQUIREMENT. 

3 ‘‘(a)(1)(A) It shall be unlawful for any person to 

4 make use of the mails or any means or instrumentality 

5 of interstate commerce to act as a municipal financial ad6 viser unless such person is registered as a municipal finan7 cial adviser in accordance with subsection (b). 

8 ‘‘(B) Subparagraph (A) shall not apply to a natural 

9 person associated with a municipal financial adviser, as 

10 long as such adviser is registered in accordance with sub11 section (b) and is not a natural person. 

12 ‘‘(2) The Commission, by rule or order, as it deems 

13 consistent with the public interest and the protection of 

14 investors, may conditionally or unconditionally exempt 

15 from paragraph (1) of this section any municipal financial 

16 adviser or class of municipal financial advisers specified 

17 in such rule or order. 

18 ‘‘(b)(1) A municipal financial adviser may be reg19 istered by filing with the Commission an application for 

20 registration in such form and containing such information 

21 and documents concerning such municipal financial ad22 viser and any persons associated with such municipal fi23 nancial adviser as the Commission, by rule, may prescribe 

24 as necessary or appropriate in the public interest or for 

25 the protection of investors. Within 45 days of the date of 

26 the filing of such application (or within such longer period 


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1 as to which the applicant consents), the Commission 

2 shall— 

3 ‘‘(A) by order grant registration, or 

4 ‘‘(B) institute proceedings to determine whether reg5 istration should be denied. Such proceedings shall include 

6 notice of the grounds for denial under consideration and 

7 opportunity for hearing and shall be concluded within 120 

8 days of the date of the filing of the application for reg9 istration. At the conclusion of such proceedings, the Com10 mission, by order, shall grant or deny such registration. 

11 The Commission may extend the time for conclusion of 

12 such proceedings for up to 90 days if it finds good cause 

13 for such extension and publishes its reasons for so finding 

14 or for such longer period as to which the applicant con15 sents. 

16 The Commission shall grant such registration if the Com17 mission finds that the requirements of this section are sat18 isfied. The Commission shall deny such registration if it 

19 does not make such a finding or if it finds that if the 

20 applicant were so registered, its registration would be sub21 ject to suspension or revocation under paragraph (4). 

22 ‘‘(2) An application for registration of a municipal 

23 financial adviser to be formed or organized may be made 

24 by a municipal financial adviser to which the municipal 

25 financial adviser to be formed or organized is to be the 


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1 successor. Such application, in such form as the Commis2 sion, by rule, may prescribe, shall contain such informa3 tion and documents concerning the applicant, the suc4 cessor, and any persons associated with the applicant or 

5 the successor, as the Commission, by rule, may prescribe 

6 as necessary or appropriate in the public interest or for 

7 the protection of investors. The grant or denial of registra8 tion to such an applicant shall be in accordance with the 

9 procedures set forth in paragraph (1) of this subsection. 

10 If the Commission grants such registration, the registra11 tion shall terminate on the 45th day after the effective 

12 date thereof, unless prior thereto the successor shall, in 

13 accordance with such rules and regulations as the Com14 mission may prescribe, adopt the application for registra15 tion as its own. 

16 ‘‘(3) Any provision of this title (other than section 

17 5 and subsection (a) of this section) which prohibits any 

18 act, practice, or course of business if the mails or any 

19 means or instrumentality of interstate commerce is used 

20 in connection therewith shall also prohibit any such act, 

21 practice, or course of business by any registered municipal 

22 financial adviser or any person acting on behalf of such 

23 a municipal financial adviser, irrespective of any use of 

24 the mails or any means or instrumentality of interstate 

25 commerce in connection therewith. 


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1 ‘‘(4) The Commission, by order, shall censure, place 

2 limitations on the activities, functions, or operations of, 

3 suspend for a period not exceeding 12 months, or revoke 

4 the registration of any municipal financial adviser if it 

5 finds, on the record after notice and opportunity for hear6 ing, that such censure, placing of limitations, suspension, 

7 or revocation is in the public interest and that such munic8 ipal financial adviser, whether prior or subsequent to be9 coming such, or any person associated with such municipal 

10 financial adviser, whether prior or subsequent to becoming 

11 so associated— 

12 ‘‘(A) has willfully made or caused to be made 

13 in any application for registration or report required 

14 to be filed with the Commission or with any other 

15 appropriate regulatory agency under this title, or in 

16 any proceeding before the Commission with respect 

17 to registration, any statement which was at the time 

18 and in the light of the circumstances under which it 

19 was made false or misleading with respect to any 

20 material fact, or has omitted to state in any such 

21 application or report any material fact which is re22 quired to be stated therein; 

23 ‘‘(B) has been convicted within 10 years pre24 ceding the filing of any application for registration 

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1 demeanor or of a substantially equivalent crime by 

2 a foreign court of competent jurisdiction which the 

3 Commission finds— 

4 ‘‘(i) involves the purchase or sale of any 

5 security, the taking of a false oath, the making 

6 of a false report, bribery, perjury, burglary, any 

7 substantially equivalent activity however de8 nominated by the laws of the relevant foreign 

9 government, or conspiracy to commit any such 

10 offense; 

11 ‘‘(ii) arises out of the conduct of the busi12 ness of a municipal financial adviser, broker, 

13 dealer, municipal securities dealer, government 

14 securities broker, government securities dealer, 

15 investment adviser, bank, insurance company, 

16 fiduciary, transfer agent, nationally recognized 

17 statistical rating organization, foreign person 

18 performing a function substantially equivalent 

19 to any of the above, or entity or person required 

20 to be registered under the Commodity Ex21 change Act (7 U.S.C. 1 et seq.) or any substan22 tially equivalent foreign statute or regulation; 

23 ‘‘(iii) involves the larceny, theft, robbery, 

24 extortion, forgery, counterfeiting, fraudulent 

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1 sion, or misappropriation of funds, or securities, 

2 or substantially equivalent activity however de3 nominated by the laws of the relevant foreign 

4 government; or 

5 ‘‘(iv) involves the violation of section 152, 

6 1341, 1342, or 1343 or chapter 25 or 47 of 

7 title 18, or a violation of a substantially equiva8 lent foreign statute; 

9 ‘‘(C) is permanently or temporarily enjoined by 

10 order, judgment, or decree of any court of competent 

11 jurisdiction from acting as a municipal financial ad12 viser, investment adviser, underwriter, broker, deal13 er, municipal securities dealer, government securities 

14 broker, government securities dealer, transfer agent, 

15 nationally recognized statistical rating organization, 

16 foreign person performing a function substantially 

17 equivalent to any of the above, or entity or person 

18 required to be registered under the Commodity Ex19 change Act or any substantially equivalent foreign 

20 statute or regulation, or as an affiliated person or 

21 employee of any investment company, bank, insur22 ance company, foreign entity substantially equivalent 

23 to any of the above, or entity or person required to 

24 be registered under the Commodity Exchange Act or 

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1 lation or from engaging in or continuing any con2 duct or practice in connection with any such activity, 

3 or in connection with the purchase or sale of any se4 curity; 

5 ‘‘(D) has willfully violated any provision of the 

6 Securities Act of 1933, the Investment Advisers Act 

7 of 1940, the Investment Company Act of 1940, the 

8 Commodity Exchange Act, this title, the rules or 

9 regulations under any of such statutes, or is unable 

10 to comply with any such provision; 

11 ‘‘(E) has willfully aided, abetted, counseled, 

12 commanded, induced, or procured the violation by 

13 any other person of any provision of the Securities 

14 Act of 1933, the Investment Advisers Act of 1940, 

15 the Investment Company Act of 1940, the Com16 modity Exchange Act, this title, the rules or regula17 tions under any of such statutes, or has failed rea18 sonably to supervise, with a view to preventing viola19 tions of the provisions of such statutes, rules, and 

20 regulations, another person who commits such a vio21 lation, if such other person is subject to his super22 vision. For the purposes of this subparagraph, no 

23 person shall be deemed to have failed reasonably to 

24 supervise any other person, if— 


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1 ‘‘(i) there have been established proce2 dures, and a system for applying such proce3 dures, which would reasonably be expected to 

4 prevent and detect, insofar as practicable, any 

5 such violation by such other person, and 

6 ‘‘(ii) such person has reasonably dis7 charged the duties and obligations incumbent 

8 upon him by reason of such procedures and sys9 tem without reasonable cause to believe that 

10 such procedures and system were not being 

11 complied with; 

12 ‘‘(F) is subject to any order of the Commission 

13 barring or suspending the right of the person to be 

14 associated with a municipal financial adviser; 

15 ‘‘(G) has been found by a foreign financial reg16 ulatory authority to have— 

17 ‘‘(i) made or caused to be made in any ap18 plication for registration or report required to 

19 be filed with a foreign financial regulatory au20 thority, or in any proceeding before a foreign fi21 nancial regulatory authority with respect to reg22 istration, any statement that was at the time 

23 and in the light of the circumstances under 

24 which it was made false or misleading with re25 spect to any material fact, or has omitted to 


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1 state in any application or report to the foreign 

2 financial regulatory authority any material fact 

3 that is required to be stated therein; 

4 ‘‘(ii) violated any foreign statute or regula5 tion regarding transactions in securities, or con6 tracts of sale of a commodity for future deliv7 ery, traded on or subject to the rules of a con8 tract market or any board of trade; or 

9 ‘‘(iii) aided, abetted, counseled, com10 manded, induced, or procured the violation by 

11 any person of any provision of any statutory 

12 provisions enacted by a foreign government, or 

13 rules or regulations thereunder, empowering a 

14 foreign financial regulatory authority regarding 

15 transactions in securities, or contracts of sale of 

16 a commodity for future delivery, traded on or 

17 subject to the rules of a contract market or any 

18 board of trade, or has been found, by a foreign 

19 financial regulatory authority, to have failed 

20 reasonably to supervise, with a view to pre21 venting violations of such statutory provisions, 

22 rules, and regulations, another person who com23 mits such a violation, if such other person is 

24 subject to his supervision; or 


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1 ‘‘(H) is subject to any final order of a State se2 curities commission (or any agency or officer per3 forming like functions), State authority that super4 vises or examines banks, savings associations, or 

5 credit unions, State insurance commission (or any 

6 agency or office performing like functions), an ap7 propriate Federal banking agency (as defined in sec8 tion 3 of the Federal Deposit Insurance Act (12 

9 U.S.C. 1813(q))), or the National Credit Union Ad10 ministration, that— 

11 ‘‘(i) bars such person from association with 

12 an entity regulated by such commission, author13 ity, agency, or officer, or from engaging in the 

14 business of securities, insurance, banking, sav15 ings association activities, or credit union activi16 ties; or 

17 ‘‘(ii) constitutes a final order based on vio18 lations of any laws or regulations that prohibit 

19 fraudulent, manipulative, or deceptive conduct. 

20 ‘‘(5) Pending final determination whether any reg21 istration under this subsection shall be revoked, the Com22 mission, by order, may suspend such registration, if such 

23 suspension appears to the Commission, after notice and 

24 opportunity for hearing, to be necessary or appropriate in 

25 the public interest or for the protection of investors. Any 


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1 registered municipal financial adviser may, upon such 

2 terms and conditions as the Commission deems necessary 

3 or appropriate in the public interest or for the protection 

4 of investors, withdraw from registration by filing a written 

5 notice of withdrawal with the Commission. If the Commis6 sion finds that any registered municipal financial adviser 

7 is no longer in existence or has ceased to do business as 

8 a municipal financial adviser, the Commission, by order, 

9 shall cancel the registration of such municipal financial 

10 adviser. 

11 ‘‘(6)(A) With respect to any person who is associated, 

12 who is seeking to become associated, or, at the time of 

13 the alleged misconduct, who was associated or was seeking 

14 to become associated with a municipal financial adviser, 

15 the Commission, by order, shall censure, place limitations 

16 on the activities or functions of such person, or suspend 

17 for a period not exceeding 12 months, or bar such person 

18 from being associated with a municipal financial adviser, 

19 if the Commission finds, on the record after notice and 

20 opportunity for a hearing, that such censure, placing of 

21 limitations, suspension, or bar is in the public interest and 

22 that such person— 

23 ‘‘(i) has committed or omitted any act, or is 

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1 paragraph (A), (D), or (E) of paragraph (4) of this 

2 subsection; 

3 ‘‘(ii) has been convicted of any offense specified 

4 in subparagraph (B) of such paragraph (4) within 

5 10 years of the commencement of the proceedings 

6 under this paragraph; or 

7 ‘‘(iii) is enjoined from any action, conduct, or 

8 practice specified in subparagraph (C) of such para9 graph (4). 

10 ‘‘(B) It shall be unlawful— 

11 ‘‘(i) for any person as to whom an order under 

12 subparagraph (A) is in effect, without the consent of 

13 the Commission, willfully to become, or to be, associ14 ated with a municipal financial adviser in contraven15 tion of such order; or 

16 ‘‘(ii) for any municipal financial adviser to per17 mit such a person, without the consent of the Com18 mission, to become or remain, a person associated 

19 with the municipal financial adviser in contravention 

20 of such order, if such municipal financial adviser 

21 knew, or in the exercise of reasonable care should 

22 have known, of such order. 

23 ‘‘(7) No registered municipal financial adviser shall 

24 act as such unless it meets such standards of operational 

25 capability and such municipal financial adviser and all 


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1 natural persons associated with such municipal financial 

2 adviser meet such standards of training, experience, com3 petence, and such other qualifications as the Commission 

4 finds necessary or appropriate in the public interest or for 

5 the protection of investors. The Commission shall establish 

6 such standards by rules and regulations, which may— 

7 ‘‘(A) specify that all or any portion of such 

8 standards shall be applicable to any class of munic9 ipal financial advisers and persons associated with 

10 municipal financial advisers; 

11 ‘‘(B) require persons in any such class to pass 

12 tests prescribed in accordance with such rules and 

13 regulations, which tests shall, with respect to any 

14 class of partners, officers, or supervisory employees 

15 (which latter term may be defined by the Commis16 sion’s rules and regulations) engaged in the manage17 ment of the municipal financial adviser, include 

18 questions relating to bookkeeping, accounting, super19 vision of employees, maintenance of records, and 

20 other appropriate matters; and 

21 ‘‘(C) provide that persons in any such class 

22 other than municipal financial advisers and partners, 

23 officers, and supervisory employees of municipal fi24 nancial advisers, may be qualified solely on the basis 

25 of compliance with such standards of training and 


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1 such other qualifications as the Commission finds 

2 appropriate. 

3 The Commission, by rule, may prescribe reasonable fees 

4 and charges to defray its costs in carrying out this para5 graph, including, but not limited to, fees for any test ad6 ministered by it or under its direction. 

7 ‘‘(c)(1)(A) No municipal financial adviser shall make 

8 use of the mails or any means or instrumentality of inter9 state commerce in connection with which such municipal 

10 financial adviser engages in any fraudulent, deceptive, or 

11 manipulative act or practice or violates such rules and reg12 ulations regarding conflicts of interest or fair practices, 

13 including but not limited to rules and regulations related 

14 to political contributions, as the Commission shall pre15 scribe in the public interest or for the protection of inves16 tors or to maintain fair and orderly markets. 

17 ‘‘(B) The Commission shall, for the purposes of this 

18 paragraph as the Commission finds necessary or appro19 priate in the public interest or for the protection of inves20 tors, by rules and regulations define, and prescribe means 

21 reasonably designed to prevent, such acts and practices 

22 as are fraudulent, deceptive, or manipulative. 

23 ‘‘(2) If the Commission finds, after notice and oppor24 tunity for a hearing, that any person subject to the provi25 sions of this section or any rule or regulation thereunder 


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1 has failed to comply with any such provision, rule, or regu2 lation in any material respect, the Commission may pub3 lish its findings and issue an order requiring such person, 

4 and any person who was a cause of the failure to comply 

5 due to an act or omission the person knew or should have 

6 known would contribute to the failure to comply, to com7 ply, or to take steps to effect compliance, with such provi8 sion or such rule or regulation thereunder upon such 

9 terms and conditions and within such time as the Commis10 sion may specify in such order. 

11 ‘‘(d) Every registered municipal financial adviser 

12 shall establish, maintain, and enforce written policies and 

13 procedures reasonably designed, taking into consideration 

14 the nature of such municipal financial adviser’s business, 

15 to prevent the misuse in violation of this title, or the rules 

16 or regulations thereunder, of material, nonpublic informa17 tion by such municipal financial adviser or any person as18 sociated with such municipal financial adviser. The Com19 mission, as it deems necessary or appropriate in the public 

20 interest or for the protection of investors, shall adopt rules 

21 or regulations to require specific policies or procedures 

22 reasonably designed to prevent misuse in violation of this 

23 title (or the rules or regulations thereunder) of material, 

24 nonpublic information. 


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1 ‘‘(e) A municipal financial adviser and any person as2 sociated with such municipal financial adviser shall be 

3 deemed to have a fiduciary duty to any municipal securi4 ties issuer for whom such municipal financial adviser acts 

5 as a municipal financial adviser. A municipal financial ad6 viser may not engage in any act, practice, or course of 

7 business which is not consistent with a municipal financial 

8 adviser’s fiduciary duty. The Commission shall, for the 

9 purposes of this paragraph, by rules and regulations de10 fine, and prescribe means reasonably designed to prevent, 

11 such acts, practices, and courses of business as are not 

12 consistent with a municipal financial adviser’s fiduciary 

13 duty to its clients.’’. 

14 (b) DEFINITION.—Section 3(a) of the Securities Ex15 change Act of 1934 (15 U.S.C. 78c(a)) (as amended by 

16 section 3201(6)) is amended by adding at the end the fol17 lowing new paragraphs: 

18 ‘‘(78) MUNICIPAL FINANCIAL ADVISER.— 

19 ‘‘(A) The term ‘municipal financial adviser’ 

20 means a person who, for compensation, engages 

21 in the business of— 

22 ‘‘(i) providing advice to a municipal 

23 securities issuer with respect to— 

24 ‘‘(I) the issuance or proposed 

25 issuance of securities, including any 


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1 remarketing of municipal securities 

2 directly or indirectly by or on behalf 

3 of a municipal securities issuer; 

4 ‘‘(II) the investment of proceeds 

5 from securities issued by such munic6 ipal securities issuer; 

7 ‘‘(III) the hedging of any risks 

8 associated with subclauses (I) or (II), 

9 including advice as to swap agree10 ments (as defined in section 206A of 

11 the Gramm-Leach-Bliley Act regard12 less of whether the counterparties 

13 constitute eligible contract partici14 pants); or 

15 ‘‘(IV) preparation of disclosure 

16 documents in connection with the 

17 issuance, proposed issuance, or pre18 vious issuance of securities issued by 

19 a municipal securities issuer, includ20 ing, without limitation, official state21 ments and documents prepared in 

22 connection with a written agreement 

23 or contract for the benefit of holders 

24 of such securities described in section 


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1 240.15c2–12 of title 17, Code of Fed2 eral Regulations; 

3 ‘‘(ii) assisting a municipal securities 

4 issuer in selecting or negotiating guaran5 teed investment contracts or other invest6 ment products; or 

7 ‘‘(iii) assisting any municipal securi8 ties issuer in the primary offering of secu9 rities not involving a public offering. 

10 ‘‘(B) Such term does not include— 

11 ‘‘(i) an attorney, if the attorney is of12 fering advice or providing services that are 

13 of a traditional legal nature; 

14 ‘‘(ii) a nationally recognized statistical 

15 rating organization to the extent it is in16 volved in the process of developing credit 

17 ratings; 

18 ‘‘(iii) a registered broker-dealer when 

19 acting as an underwriter, as such term is 

20 defined in section 2(a)(11) of the Securi21 ties Act of 1933 (15 U.S.C. section 

22 77b(a)(11)); or 

23 ‘‘(iv) a State or any political subdivi24 sion thereof. 


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1 ‘‘(79) MUNICIPAL SECURITIES ISSUER.—The 

2 term ‘municipal securities issuer’ means— 

3 ‘‘(A) any entity that has the ability to 

4 issue a security the interest on which is exclud5 able from gross income under section 103 of the 

6 Internal Revenue Code of 1986 and the regula7 tions thereunder; or 

8 ‘‘(B) any person who receives the proceeds 

9 generated from the issuance of municipal secu10 rities. 

11 ‘‘(80) PERSON ASSOCIATED WITH A MUNICIPAL

12 FINANCIAL ADVISER; ASSOCIATED PERSON OF A MU13 NICIPAL FINANCIAL ADVISER.—The term ‘person as14 sociated with a municipal financial adviser’ or ‘asso15 ciated person of a municipal financial adviser’ means 

16 any partner, officer, director, or branch manager of 

17 such municipal financial adviser (or any person oc18 cupying a similar status or performing similar func19 tions), any person directly or indirectly controlling, 

20 controlled by, or under common control with such 

21 municipal financial adviser, or any employee of such 

22 municipal financial adviser, except that any person 

23 associated with a municipal financial adviser whose 

24 functions are solely clerical or ministerial shall not 

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1 poses of section 15G(b) (other than paragraph (6) 

2 thereof).’’. 

3 SEC. 7802. CONFORMING AMENDMENTS. 

4 (a) SECURITIES EXCHANGE ACT OF 1934 .—The Se5 curities Exchange Act of 1934 is amended— 

6 (1) in section 15(b)(4)(B)(ii) (15 U.S.C. 

7 78o(b)(4)(B)(ii)), by inserting ‘‘municipal finance 

8 adviser,’’ after ‘‘nationally recognized statistical rat9 ing organization,’’; 

10 (2) in section 15(b)(4)(C) (15 U.S.C. 

11 78o(b)(4)(C)), by inserting ‘‘municipal finance ad12 viser,’’ after ‘‘nationally recognized statistical rating 

13 organization,’’; and 

14 (3) in section 17(a)(1) (15 U.S.C. 78q(a)(1)), 

15 by inserting ‘‘registered municipal financial adviser,’’ 

16 after ‘‘nationally recognized statistical rating organi17 zation,’’. 

18 (b) INVESTMENT COMPANY ACT OF 1940.—The In19 vestment Company Act of 1940 is amended— 

20 (1) in section 2(a) (15 U.S.C. 80a–2(a)), by in21 serting at the end the following new paragraph: 

22 ‘‘(54) The term ‘municipal finance adviser’ has 

23 the same meaning as in section 3 of the Securities 

24 Exchange Act of 1934.’’; 


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1 (2) in section 9(a)(1) (15 U.S.C. 80a–9(a)(1)), 

2 by inserting ‘‘municipal finance adviser,’’ after 

3 ‘‘credit rating agency,’’; and 

4 (3) in section 9(a)(2) (15 U.S.C. 80a–9(a)(2)), 

5 by inserting ‘‘municipal finance adviser,’’ after 

6 ‘‘credit rating agency,’’. 

7 (c) INVESTMENT ADVISERS ACT OF 1940.—The In8 vestment Advisers Act of 1940 is amended— 

9 (1) in section 202(a) (15 U.S.C. 80b–2(a)), by 

10 inserting at the end the following new paragraph: 

11 ‘‘(31) The term ‘municipal finance adviser’ has 

12 the same meaning as in section 3 of the Securities 

13 Exchange Act of 1934.’’; 

14 (2) in section 203(e)(2)(B) (15 U.S.C. 80b– 

15 3(e)(2)(B)), by inserting ‘‘municipal finance ad16 viser,’’ after ‘‘credit rating agency,’’; and 

17 (3) in section 203(e)(4) (15 U.S.C. 80b– 

18 3(e)(4)) is amended by inserting ‘‘municipal finance 

19 adviser,’’ after ‘‘credit rating agency,’’. 

20 SEC. 7803. EFFECTIVE DATES. 

21 (a) IN GENERAL.—The amendments made by this 

22 part shall take effect 30 days after the date of the enact23 ment of this subtitle. 

24 (b) EFFECTIVE DATE AND REQUIREMENTS FOR

25 REGULATIONS.—Notwithstanding subsection (a), the SeVerDate Nov 24 2008 22:04 Dec 02, 2009 Jkt 089200 PO 00000 Frm 01257 Fmt 6652 Sfmt 6201 E:\BILLS\H4173.IH H4173

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1 curities and Exchange Commission shall, within 120 days 

2 after the date of the enactment of this subtitle, publish 

3 for notice and public comment such regulations as are ini4 tially required to implement this part, and shall take final 

5 action with respect to such regulations not later than 270 

6 days after the date of enactment of this subtitle. 

7 (c) REGISTRATION DATE.—No person may continue 

8 to act as a municipal financial adviser, as such term is 

9 defined in section 3(a)(65) of the Securities Exchange Act 

10 of 1934 (as added by this part), after 30 days after the 

11 date the regulations described in subsection (b) become 

12 effective unless such person has been registered as re13 quired by the amendment made by section 7701 of this 

14 part. 

15 TITLE VI—FEDERAL INSURANCE 

16 OFFICE 

17 SEC. 8001. SHORT TITLE. 

18 This title may be cited as the ‘‘Federal Insurance Of19 fice Act of 2009’’. 

20 SEC. 8002. FEDERAL INSURANCE OFFICE ESTABLISHED. 

21 (a) ESTABLISHMENT OF OFFICE.—Subchapter I of 

22 chapter 3 of title 31, United States Code, is amended— 

23 (1) by transferring and inserting section 312 

24 after section 313; 


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1 (2) by redesignating sections 313 and 312 (as 

2 so transferred) as sections 312 and 315, respec3 tively; and 

4 (3) by inserting after section 312 (as so redes5 ignated) the following new sections: 

6 ‘‘SEC. 313. FEDERAL INSURANCE OFFICE. 

7 ‘‘(a) ESTABLISHMENT OF OFFICE.—There is estab8 lished the Federal Insurance Office as an office in the De9 partment of the Treasury. 

10 ‘‘(b) LEADERSHIP.—The Office shall be headed by a 

11 Director, who shall be appointed by the Secretary of the 

12 Treasury. The position of such Director shall be a career 

13 reserved position in the Senior Executive Service. 

14 ‘‘(c) FUNCTIONS.— 

15 ‘‘(1) AUTHORITY PURSUANT TO DIRECTION OF

16 SECRETARY.—The Office shall have the authority, 

17 pursuant to the direction of the Secretary, as fol18 lows: 

19 ‘‘(A) To monitor the insurance industry to 

20 gain expertise. 

21 ‘‘(B) To identify issues or gaps in the reg22 ulation of insurers that could contribute to a 

23 systemic crisis in the insurance industry or the 

24 United States financial system. 


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1 ‘‘(C) To recommend to the Financial Serv2 ices Oversight Council that it designate an in3 surer, including its affiliates, as an entity sub4 ject to stricter standards. 

5 ‘‘(D) To assist the Secretary in admin6 istering the Terrorism Insurance Program es7 tablished in the Department of the Treasury 

8 under the Terrorism Risk Insurance Act of 

9 2002 (15 U.S.C. 6701 note). 

10 ‘‘(E) To coordinate Federal efforts and de11 velop Federal policy on prudential aspects of 

12 international insurance matters, including rep13 resenting the United States as appropriate in 

14 the International Association of Insurance Su15 pervisors or any successor organization and as16 sisting the Secretary in negotiating covered 

17 agreements. 

18 ‘‘(F) To determine, in accordance with 

19 subsection (f), whether State insurance meas20 ures are preempted by covered agreements. 

21 ‘‘(G) To consult with the States regarding 

22 insurance matters of national importance and 

23 prudential insurance matters of international 

24 importance. 


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1 ‘‘(H) To perform such other related duties 

2 and authorities as may be assigned to it by the 

3 Secretary. 

4 ‘‘(2) ADVISORY FUNCTIONS.—The Office shall 

5 advise the Secretary on major domestic and pruden6 tial international insurance policy issues. 

7 ‘‘(d) SCOPE.—The authority of the Office shall ex8 tend to all lines of insurance except health insurance, as 

9 determined by the Secretary based on section 2791 of the 

10 Public Health Service Act (42 U.S.C. 300gg-91). 

11 ‘‘(e) GATHERING OF INFORMATION.— 

12 ‘‘(1) GENERAL.—In carrying out its functions 

13 under subsection (c), the Office may request, receive, 

14 and collect data and information on and from the in15 surance industry and insurers, enter into informa16 tion-sharing agreements, analyze and disseminate 

17 data and information, and issue reports regarding 

18 all lines of insurance except health insurance. 

19 ‘‘(2) COLLECTION OF INFORMATION FROM IN20 SURERS AND AFFILIATES.—Except as provided in 

21 paragraph (3) and subject to paragraph (4), the Of22 fice may require an insurer, or affiliate of an in23 surer, to submit such data or information that the 

24 Office may reasonably require in carrying out its 

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1 section (p) and for the purposes of this paragraph 

2 only, the term ‘insurer’ means any entity that is au3 thorized to write insurance or reinsure risks and 

4 issue contracts or policies in one or more States. 

5 ‘‘(3) EXCEPTION FOR SMALL INSURERS.—Para6 graph (2) shall not apply with respect to any insurer 

7 or affiliate thereof that meets a minimum size 

8 threshold that may be established by the Office by 

9 order or rule. Such threshold shall be appropriate to 

10 the particular request and need for the data or in11 formation. 

12 ‘‘(4) ADVANCE COORDINATION.—Before col13 lecting any data or information under paragraph (2) 

14 from an insurer, or affiliate of an insurer, the Office 

15 shall coordinate with each relevant Federal agency 

16 and State insurance regulator (or other relevant 

17 Federal or State regulatory agency, if any, in the 

18 case of an affiliate of an insurer) and any publicly 

19 available sources to determine if the information to 

20 be collected is available from, or may be obtained in 

21 a timely manner by, such Federal agency or State 

22 insurance regulator, individually or collectively, other 

23 regulatory agency, or publicly available sources. If 

24 the Director determines that such data or informa25 tion is available, or may be obtained in a timely 


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1 manner, from such an agency, regulator, regulatory 

2 agency, or source, the Director shall obtain the data 

3 or information from such agency, regulator, regu4 latory agency, or source. If the Director determines 

5 that such data or information is not so available, the 

6 Director may collect such data or information from 

7 an insurer (or affiliate) only if the Director complies 

8 with the requirements of subchapter I of chapter 35 

9 of title 44, United States Code (relating to Federal 

10 information policy; commonly known as the Paper11 work Reduction Act) in collecting such data or infor12 mation. Notwithstanding any other provision of law, 

13 each such relevant Federal agency and State insur14 ance regulator or other Federal or State regulatory 

15 agency is authorized to provide to the Office such 

16 data or information. 

17 ‘‘(5) CONFIDENTIALITY.— 

18 ‘‘(A) The submission of any non-publicly 

19 available data and information to the Office 

20 under this subsection shall not constitute a 

21 waiver of, or otherwise affect, any privilege aris22 ing under Federal or State law (including the 

23 rules of any Federal or State Court) to which 

24 the data or information is otherwise subject. 


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1 ‘‘(B) Any requirement under Federal or 

2 State law to the extent otherwise applicable, or 

3 any requirement pursuant to a written agree4 ment in effect between the original source of 

5 any non-publicly available data or information 

6 and the source of such data or information to 

7 the Office, regarding the privacy or confiden8 tiality of any data or information in the posses9 sion of the source to the Office, shall continue 

10 to apply to such data or information after the 

11 data or information has been provided pursuant 

12 to this subsection to the Office. 

13 ‘‘(C) Any data or information obtained by 

14 the Office may be made available to State in15 surance regulators individually or collectively 

16 through an information sharing agreement that 

17 shall comply with applicable Federal law and 

18 that shall not constitute a waiver of, or other19 wise affect, any privilege under Federal or 

20 State law (including the rules of any Federal or 

21 State Court) to which the data or information 

22 is otherwise subject. 

23 ‘‘(D) Section 552 of title 5, United States 

24 Code, shall apply to any data or information 


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1 submitted by an insurer or affiliate of an in2 surer. 

3 ‘‘(f) PREEMPTION OF STATE INSURANCE MEAS4 URES.— 

5 ‘‘(1) STANDARD.—A State insurance measure 

6 shall be preempted pursuant to this section or sec7 tion 314 if, and only to the extent that the Director 

8 determines, in accordance with this subsection, that 

9 the measure— 

10 ‘‘(A) directly results in less favorable treat11 ment of a non-United States insurer domiciled 

12 in a foreign jurisdiction that is subject to a cov13 ered agreement than a United States insurer 

14 domiciled, licensed, admitted, or otherwise au15 thorized in that State; and 

16 ‘‘(B) is inconsistent with a covered agree17 ment that is entered into on a date after the 

18 date of the enactment of this Act. 

19 ‘‘(2) DETERMINATION.— 

20 ‘‘(A) NOTICE OF POTENTIAL INCONSIST21 ENCY.—Before making any determination of in22 consistency, the Director shall— 

23 ‘‘(i) notify and consult with the appro24 priate State regarding any potential incon25 sistency or preemption; 


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1 ‘‘(ii) notify and consult with the 

2 United States Trade Representative re3 garding any potential inconsistency or pre4 emption; 

5 ‘‘(iii) cause to be published in the 

6 Federal Register notice of the issue re7 garding the potential inconsistency or pre8 emption, including a description of each 

9 State insurance measure at issue and any 

10 applicable covered agreement; 

11 ‘‘(iv) provide interested parties a rea12 sonable opportunity to submit written com13 ments to the Office; 

14 ‘‘(v) consider the effect of preemption 

15 on— 

16 ‘‘(I) the protection of policy17 holders and policy claimants; 

18 ‘‘(II) the maintenance of the 

19 safety, soundness, integrity, and fi20 nancial responsibility of any entity in21 volved in the business of insurance or 

22 insurance operations; 

23 ‘‘(III) ensuring the integrity and 

24 stability of the United States financial 

25 system; and 


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1 ‘‘(IV) the creation of a gap or 

2 void in financial or market conduct 

3 regulation of any entity involved in 

4 the business of insurance or insurance 

5 operations in the United States; and 

6 ‘‘(vi) consider any comments received. 

7 The Director shall provide the notifications re8 quired under clauses (i), (ii), and (iii) contem9 poraneously. 

10 ‘‘(B) SCOPE OF REVIEW.—For purposes of 

11 this section, the Director’s determination of 

12 State insurance measures shall be limited to the 

13 subject matter of the prudential measures ap14 plicable to the business of insurance contained 

15 within the covered agreement involved. 

16 ‘‘(C) NOTICE OF DETERMINATION OF IN17 CONSISTENCY.—Upon making any determina18 tion of inconsistency, the Director shall— 

19 ‘‘(i) notify the appropriate State of 

20 the determination and the extent of the in21 consistency; 

22 ‘‘(ii) establish a reasonable period of 

23 time, which shall not be shorter than 90 

24 days, before the determination shall be25 come effective; and 


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1 ‘‘(iii) notify the Committee on Finan2 cial Services of the House of Representa3 tives and the Committee on Banking, 

4 Housing, and Urban Affairs of the Senate 

5 of the inconsistency. 

6 ‘‘(3) NOTICE OF EFFECTIVENESS.—Upon the 

7 conclusion of the period referred to in paragraph 

8 (2)(C)(ii), if the basis for the determination of in9 consistency still exists, the determination shall be10 come effective and the Director shall— 

11 ‘‘(A) cause to be published notice in the 

12 Federal Register that the preemption has be13 come effective, as well as the effective date; and 

14 ‘‘(B) notify the appropriate State. 

15 ‘‘(4) LIMITATION.—No State may enforce a 

16 State insurance measure to the extent that it has 

17 been preempted under this subsection. 

18 ‘‘(g) APPLICABILITY OF ADMINISTRATIVE PROCE19 DURE ACT.—Determinations of inconsistency pursuant to 

20 subsection (f)(2) shall be subject to the applicable provi21 sions of subchapter II of chapter 5 of title 5, United 

22 States Code (relating to administrative procedure), and 

23 chapter 7 of such title (relating to judicial review), except 

24 that in any action for judicial review of a determination 


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1 of inconsistency, the court shall determine the matter de 

2 novo. 

3 ‘‘(h) REGULATIONS, POLICIES, AND PROCEDURES.— 

4 The Secretary may issue orders, regulations, policies and 

5 procedures to implement this section. 

6 ‘‘(i) CONSULTATION.—The Director shall consult 

7 with State insurance regulators, individually and collec8 tively, to the extent the Director determines appropriate, 

9 in carrying out the functions of the Office. 

10 ‘‘(j) SAVINGS PROVISIONS.—Nothing in this section 

11 shall— 

12 ‘‘(1) preempt any State insurance measure that 

13 governs any insurer’s rates, premiums, underwriting 

14 or sales practices, or State coverage requirements 

15 for insurance, or to the application of the antitrust 

16 laws of any State to the business of insurance; 

17 ‘‘(2) preempt any State insurance measure gov18 erning the capital or solvency of an insurer, except 

19 to the extent that such State insurance measure di20 rectly results in less favorable treatment of a non21 United States insurer than a United States insurer; 

22 ‘‘(3) be construed to alter, amend, or limit the 

23 responsibility of the Consumer Financial Protection 

24 Agency; 


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1 ‘‘(4) preempt any State insurance measure be2 cause of inconsistency with any agreement that is 

3 not a covered agreement (as such term in defined in 

4 subsection (p)); or 

5 ‘‘(5) affect the preemption of any State insur6 ance measure otherwise inconsistent with and pre7 empted by Federal law. 

8 ‘‘(k) RETENTION OF EXISTING STATE REGULATORY

9 AUTHORITY.—Nothing in this section or section 314 shall 

10 be construed to establish a general supervisory or regu11 latory authority of the Office or the Department of the 

12 Treasury over the business of insurance. 

13 ‘‘(l) RETENTION OF AUTHORITY OF FEDERAL FI14 NANCIAL REGULATORY AGENCIES.—Nothing in this sec15 tion or section 314 shall be construed to limit the author16 ity of any Federal financial regulatory agency, including 

17 the authority to develop and coordinate policy, negotiate, 

18 and enter into agreements with foreign governments, au19 thorities, regulators, and multi-national regulatory com20 mittees and to preempt State measures to affect uni21 formity with international regulatory agreements. 

22 ‘‘(m) RETENTION OF AUTHORITY OF UNITED

23 STATES TRADE REPRESENTATIVE.—Nothing in this sec24 tion or section 314 shall be construed to affect the author25 ity of the Office of the United States Trade Representative 


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1 pursuant to section 141 of the Trade Act of 1974 (19 

2 U.S.C. 2171) or any other provision of law, including au3 thority over the development and coordination of United 

4 States international trade policy and the administration 

5 of the United States trade agreements program. 

6 ‘‘(n) REPORTS TO CONGRESS.— 

7 ‘‘(1) ANNUAL REPORT.—Beginning September 

8 30, 2011, the Director shall submit a report on or 

9 before September 30 of each calendar year to the 

10 President and to the Committees on Financial Serv11 ices and Ways and Means of the House of Rep12 resentatives and the Committees on Banking, Hous13 ing, and Urban Affairs and Finance of the Senate 

14 on the insurance industry, any actions taken by the 

15 office pursuant to subsection (f) (regarding preemp16 tion of inconsistent State insurance measures). 

17 ‘‘(2) OTHER REPORTS.—The Director shall sub18 mit to the President and the Committees referred to 

19 in paragraph (1) any other information or reports as 

20 deemed relevant by the Director or as requested by 

21 the Chairman or Ranking Member of any of such 

22 Committees. 

23 ‘‘(o) USE OF EXISTING RESOURCES.—To carry out 

24 this section, the Office may employ personnel, facilities, 

25 and other Department of the Treasury resources available 


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1 to the Secretary and the Secretary shall dedicate specific 

2 personnel to the Office. 

3 ‘‘(p) DEFINITIONS.—For purposes of this section and 

4 section 314, the following definitions shall apply: 

5 ‘‘(1) AFFILIATE.—The term ‘affiliate’ means, 

6 with respect to an insurer, any person that controls, 

7 is controlled by, or is under common control with the 

8 insurer. 

9 ‘‘(2) COVERED AGREEMENT.—The term ‘cov10 ered agreement’ means a written bilateral or multi11 lateral recognition agreement that— 

12 ‘‘(A) is entered into between the United 

13 States and one or more foreign governments, 

14 authorities, or regulatory entities; and 

15 ‘‘(B) provides for recognition of prudential 

16 measures with respect to the business of insur17 ance or reinsurance that achieves a level of pro18 tection for insurance or reinsurance consumers 

19 that is substantially equivalent to the level of 

20 protection achieved under State insurance or re21 insurance regulation. 

22 ‘‘(3) DETERMINATION OF INCONSISTENCY.— 

23 The term ‘determination of inconsistency’ means a 

24 determination that a State insurance measure is pre25 empted under subsection (f). 


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1 ‘‘(4) FEDERAL FINANCIAL REGULATORY AGEN2 CY.—The term ‘Federal financial regulatory agency’ 

3 means the Department of the Treasury, the Board 

4 of Governors of the Federal Reserve System, the Of5 fice of the Comptroller of the Currency, the Office 

6 of Thrift Supervision, the Securities and Exchange 

7 Commission, the Commodity Futures Trading Com8 mission, the Federal Deposit Insurance Corporation, 

9 the Federal Housing Finance Agency, or the Na10 tional Credit Union Administration. 

11 ‘‘(5) INSURER.—The term ‘insurer’ means any 

12 person engaged in the business of insurance, includ13 ing reinsurance. 

14 ‘‘(6) NON-UNITED STATES INSURER.—The term 

15 ‘non-United States insurer’ means an insurer that is 

16 organized under the laws of a jurisdiction other than 

17 a State, but does not include any United States 

18 branch of such an insurer. 

19 ‘‘(7) OFFICE.—The term ‘Office’ means the 

20 Federal Insurance Office established by this section. 

21 ‘‘(8) SECRETARY.—The term ‘Secretary’ means 

22 the Secretary of the Treasury. 

23 ‘‘(9) STATE.—The term ‘State’ means any 

24 State, commonwealth, territory, or possession of the 

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1 monwealth of Puerto Rico, the Commonwealth of the 

2 Northern Mariana Islands, American Samoa, Guam, 

3 or the United States Virgin Islands. 

4 ‘‘(10) STATE INSURANCE MEASURE.—The term 

5 ‘State insurance measure’ means any State law, reg6 ulation, administrative ruling, bulletin, guideline, or 

7 practice relating to or affecting prudential measures 

8 applicable to insurance or reinsurance. 

9 ‘‘(11) STATE INSURANCE REGULATOR.—The 

10 term ‘State insurance regulator’ means any State 

11 regulatory authority responsible for the supervision 

12 of insurers. 

13 ‘‘(12) UNITED STATES INSURER.—The term 

14 ‘United States insurer’ means— 

15 ‘‘(A) an insurer that is organized under 

16 the laws of a State; or 

17 ‘‘(B) a United States branch of a non18 United States insurer. 

19 ‘‘(q) AUTHORIZATION OF APPROPRIATIONS.—There 

20 are authorized to be appropriated for the Office such sums 

21 as may be necessary for each fiscal year. 

22 ‘‘SEC. 314. COVERED AGREEMENTS. 

23 ‘‘(a) AUTHORITY.—The Secretary and the United 

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1 gotiate and enter into covered agreements on behalf of the 

2 United States. 

3 ‘‘(b) REQUIREMENTS FOR CONSULTATION WITH

4 CONGRESS.— 

5 ‘‘(1) IN GENERAL.—Before initiating negotia6 tions to enter into a covered agreement under sub7 section (a), during such negotiations, and before en8 tering into any such agreement, the Secretary and 

9 the United States Trade Representative shall jointly 

10 consult with the Committee on Financial Services 

11 and the Committee on Ways and Means of the 

12 House of Representatives and the Committee on 

13 Banking, Housing, and Urban Affairs and the Com14 mittee on Finance of the Senate. 

15 ‘‘(2) SCOPE.—The consultation described in 

16 paragraph (1) shall include consultation with respect 

17 to— 

18 ‘‘(A) the nature of the agreement; 

19 ‘‘(B) how and to what extent the agree20 ment will achieve the applicable purposes, poli21 cies, priorities, and objectives of section 313 

22 and this section; and 

23 ‘‘(C) the implementation of the agreement, 

24 including the general effect of the agreement on 

25 existing State laws. 


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1 ‘‘(c) SUBMISSION AND LAYOVER PROVISIONS.—A 

2 covered agreement under subsection (a) may enter into 

3 force with respect to the United States only if— 

4 ‘‘(1) the Secretary and the United States Trade 

5 Representative jointly submit to the congressional 

6 committees specified in subsection (b)(1), on a day 

7 on which both Houses of Congress are in session, a 

8 copy of the final legal text of the agreement; and 

9 ‘‘(2) a period of 90 calendar days beginning on 

10 the date on which the copy of the final legal text of 

11 the agreement is submitted to the congressional 

12 committees under paragraph (1) has expired.’’. 

13 (b) DUTIES OF SECRETARY.—Section 321(a) of title 

14 31, United States Code, is amended— 

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

16 end; 

17 (2) in paragraph (8)(C), by striking the period 

18 at the end and inserting ‘‘; and’’; and 

19 (3) by adding at the end the following new 

20 paragraph: 

21 ‘‘(9) advise the President on major domestic 

22 and international prudential policy issues in connec23 tion with all lines of insurance except health insur24 ance.’’. 


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1 (c) CLERICAL AMENDMENT.—The table of sections 

2 for subchapter I of chapter 3 of title 31, United States 

3 Code, is amended by striking the item relating to section 

4 312 and inserting the following new items: 

‘‘Sec. 312. Terrorism and Financial Intelligence. 

‘‘Sec. 313. Federal Insurance Office. 

‘‘Sec. 314. Covered agreements. 

‘‘Sec. 315. Continuing in office.’’. 

5 SEC. 8003. REPORT ON GLOBAL REINSURANCE MARKET. 

6 Not later than September 30, 2011, the Director of 

7 the Federal Insurance Office appointed under section 

8 313(b) of title 31, United States Code (as amended by 

9 section 8002(a)(3) of this title) shall submit to the Com10 mittee on Financial Services of the House of Representa11 tives and the Committee on Banking, Housing, and Urban 

12 Affairs of the Senate a report describing the breadth and 

13 scope of the global reinsurance market and the critical role 

14 such market plays in supporting insurance in the United 

15 States. 

16 SEC. 8004. STUDY ON MODERNIZATION AND IMPROVEMENT 

17 OF INSURANCE REGULATION IN THE UNITED 

18 STATES. 

19 (a) STUDY.—The Director of the Federal Insurance 

20 Office appointed under section 313(b) of title 31, United 

21 States Code (as amended by section 8002(a)(3) of this 

22 title) shall conduct a study on how to modernize and im23 prove the system of insurance regulation in the United 


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1 States. Such study shall include consideration of the fol2 lowing: 

3 (1) Effective systemic risk regulation with re4 spect to insurance. 

5 (2) Strong capital standards and an appro6 priate match between capital allocation and liabil7 ities for all risk. 

8 (3) Meaningful and consistent consumer protec9 tion for insurance products and practices. 

10 (4) Increased national uniformity through ei11 ther a Federal charter or effective action by the 

12 States. 

13 (5) Improved and broadened regulation of in14 surance companies and affiliates on a consolidated 

15 basis, including affiliates outside of the traditional 

16 insurance business. 

17 (6) International coordination. 

18 (b) REPORT.—Not later than one year after the date 

19 of the enactment of this Act, the Director shall submit 

20 to the Committee on Financial Services of the House of 

21 Representatives and the Committee on Banking, Housing, 

22 and Urban Affairs of the Senate a report containing— 

23 (1) the results of the study conducted under 

24 subsection (a); and 


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1 (2) any legislative, administrative, or regulatory 

2 recommendations that the Director considers appro3 priate to modernize and improve the system of in4 surance regulation in the United States. 

5 (c) CONSULTATION.—In carrying out subsections (a) 

6 and (b), the Director shall consult with State insurance 

7 commissioners, consumer organizations, representatives of 

8 the insurance industry, policyholders, and other persons, 

9 as the Director considers appropriate. 

Æ 


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